OAO TECHNOLOGY SOLUTIONS INC, S-1, 1997-08-19

OAO TECHNOLOGY SOLUTIONS INC
S-1, 1997-08-19

Previous: SOLUTIA INC, 10-12B/A, 1997-08-19

Next: ACCESS CORP, 10-Q, 1997-08-20

<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 19, 1997

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------

REGISTRATION STATEMENT
on Form S-1
Under
THE SECURITIES ACT OF 1933
------------------------

OAO TECHNOLOGY SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7373 52-1973990
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
</TABLE>

7500 GREENWAY CENTER DRIVE
GREENBELT, MARYLAND 20770
(301) 486-0400
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

------------------------
William R. Hill
Chief Executive Officer
OAO TECHNOLOGY SOLUTIONS, INC.
7500 Greenway Center Drive
Greenbelt, Maryland 20770
(301) 486-0400
(Name, address, including zip code, and telephone number,
including area code of agent for service),

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

COPIES OF ALL COMMUNICATIONS TO:

<TABLE>
<S> <C> <C>
JAMES A. OUNSWORTH, ESQ. N. JEFFREY KLAUDER, ESQ. ROBERT H. STROUSE, ESQ.
Safeguard Scientifics, Inc. Morgan, Lewis & Bockius LLP Drinker Biddle & Reath LLP
800 The Safeguard Building 2000 One Logan Square 1000 Westlakes Drive
435 Devon Park Drive Philadelphia, Pennsylvania 19103-6993 Suite 300
Wayne, Pennsylvania 19087 (215) 963-5694 Berwyn, Pennsylvania 19312-2409
(610) 293-0600 (610) 993-2213

</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/

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

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

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
AMOUNT TO PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PRICE PER UNIT(2) PRICE(2) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.01 per share........... 7,360,000 $5.00 $36,800,000 $12,689.66
- ---------------------------------------------------------------------------------------------------------------------
Subscription Rights (3).................. (3) --- --- ---
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes 640,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.

(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(g) under the Securities Act of 1933.

(3) Evidencing the rights to subscribe for 6,400,000 of the shares of Common
Stock described above.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 19, 1997

PROSPECTUS

6,720,000 Shares

OAO TECHNOLOGY SOLUTIONS, INC.
Common Stock
(and Rights to acquire
up to 6,400,000 of such shares)

OAO Technology Solutions, Inc. is granting at no cost to the holders of
common shares of Safeguard Scientifics, Inc. transferable rights to purchase
shares of our Common Stock. Safeguard shareholders will receive one right for
every five Safeguard common shares that they own as of , 1997. Each right
will entitle the holder to purchase one share of our Common Stock at an exercise
price of $5.00 per share. Up to 6,400,000 shares of our Common Stock will be
offered in the rights offering. Of these shares, we will be selling 5,915,000
shares and three of our existing stockholders will be selling 485,000 shares. If
any shares remain unsubscribed after the rights offering, the underwriters will
purchase all such shares pursuant to a standby underwriting agreement.

We will also be selling an additional 320,000 shares of our Common Stock to
certain persons selected by us. These persons may have a relationship with us,
Safeguard or one of Safeguard's other partnership companies.

The exercise period for the rights will expire at 5:00 p.m., New York City
time, on , 1997. You may only exercise your rights if you purchase at
least 20 shares of our Common Stock through such exercise. (Continued)

You should carefully consider the information regarding the risks associated
with an investment in our Common Stock that are discussed under the caption
"Risk Factors" beginning on page 8.

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

Per $ 5.00 Min. $0.15 Min. $0.15 Max. $4.85 Max. $4.85
Share.. Max. $0.35 Max. $0.35 Min. $4.65 Min. $4.65
- -----------------------------------------------------------------------------------------------------------------------------
Total.... Min. $935,250 Min. $72,750 Max. $30,239,750 Max. $2,352,250
$33,600,000 Max. $2,118,250 Max. $169,750 Min. $29,056,750 Min. $2,255,250

- -----------------------------------------------------------------------------------------------------------------------------
Total
with
Over- Min. $935,250 Min. $296,750 Max. $30,239,750 Max. $5,328,250
Allotment $36,800,000 Max. $2,118,250 Max. $393,750 Min. $29,056,750 Min. $5,231,250
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------

</TABLE>

The minimum underwriting discount assumes that all rights granted in the
rights offering are exercised and reflects the payment of a financial advisory
fee to the underwriters equal to 3% of the exercise price on the 6,720,000
shares sold in this offering. In such a case, the minimum underwriting discount
would yield the maximum proceeds to us and to the selling stockholders. The
maximum underwriting discount assumes that none of the rights granted in the
rights offering are exercised and reflects the payment of an underwriting
discount of 4% of the exercise price on the 6,400,000 shares which would then be
purchased by the underwriters plus an additional 3% financial advisory fee on
all of the 6,720,000 shares offered hereby. In such a case, the maximum
underwriting discount would yield the minimum proceeds to us and to the selling
stockholders.

The last row of the table assumes that the underwriters have exercised their
option granted by the selling stockholders to purchase an additional 640,000
shares of our Common Stock. The exercise of the over-allotment option would
yield additional proceeds to the selling stockholders and would require the
payment by the selling stockholders of both a 4% underwriting discount and a 3%
financial advisory fee on such shares.

Wheat First Butcher Singer Janney Montgomery Scott Inc.

The date of this Prospectus is , 1997.
<PAGE>

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.

<PAGE>

Once you exercise a right and we accept the exercise, you may not withdraw
the exercise. The shares of our Common Stock that are sold in the rights
offering will come first from the shares being issued by us, and then from the
shares being sold by the selling stockholders. If shares remain unsubscribed
after the end of the rights exercise period, the first 300,000 of such shares
will be offered by us to certain other persons. These persons may have a
relationship with us, Safeguard or one of Safeguard's other partnership
companies. All shares not purchased by such persons after this offer and all
unsubscribed shares in excess of 300,000 will be purchased by the underwriters
pursuant to a standby underwriting agreement.

There is no minimum number of shares that must be subscribed for in the
rights offering for it to be completed. The number of rights that will be
granted to the holders of Safeguard common shares is based upon the number of
Safeguard common shares that are outstanding on , 1997. If there are fewer
than 32,000,000 Safeguard common shares outstanding on , 1997, we will
grant fewer than 6,400,000 rights in the rights offering. If fewer than
6,400,000 rights are granted, we will offer the shares subject to the rights
which were not granted to Safeguard shareholders to certain persons selected by
us at a purchase price of $5.00 per share. In any event, all of the 6,400,000
shares of our Common Stock offered in the rights offering will be sold. However,
this offering may be canceled by the underwriters if certain conditions are not
satisfied. In that event, if you have made any payments to the rights agent,
ChaseMellon Shareholder Services, L.L.C., the full amount of your payments will
be promptly returned to you.

We will not receive any proceeds from the sale of shares by the selling
stockholders. After the completion of this offering, the selling stockholders
together will own approximately 21.6% of our Common Stock.

We have filed a Registration Statement with the SEC covering the rights and
the shares of Common Stock. Before this offering, our Common Stock has not been
listed on any stock exchange or The Nasdaq Stock Market. We have filed an
application to have the rights and our Common Stock approved for quotation on
the Nasdaq National Market.

The underwriters may engage in transactions involving the Common Stock
during and after the rights exercise period. As a result, the underwriters may
realize profit in addition to the underwriting compensation received for their
participation in this offering. We expect that we will deliver any remaining
shares on or about , 1997 at the offices of Wheat, First Securities, Inc.
in Richmond, Virginia.

After this offering, we intend to send to all of our stockholders annual
reports containing financial statements that have been examined and reported
upon, with an opinion expressed by, the Company's independent auditors.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF THE COMMON
STOCK OF THE COMPANY, INCLUDING INITIATING BIDS OR EFFECTING PURCHASES ON THE
NASDAQ NATIONAL MARKET FOR THE PURPOSE OF PREVENTING OR RETARDING A DECLINE IN
THE MARKET PRICE OF THE COMMON STOCK. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements of the Company and the
Notes thereto included elsewhere in this Prospectus. Unless otherwise
indicated, the information in this Prospectus assumes no exercise of the
underwriters' over-allotment option and assumes an exercise price of $5.00
per share. Unless the context otherwise indicates, OAO Technology Solutions,
Inc. and its subsidiaries are referred to collectively herein as the
"Company."

THE COMPANY

OAO Technology Solutions, Inc. (the "Company") provides a wide range of
outsourced information technology ("IT") solutions and professional services,
including the operation of large-scale data center complexes and networks
distributed systems management, staffing services and other IT services. The
Company provides these solutions and services, generally on a long-term,
fixed-price contractual basis, to strategic clients ("Strategic Clients")
which are global providers of IT outsourcing services. The Company works with
these Strategic Clients as part of the IT outsourcing team in providing
services to a wide range of corporate clients ("Engagement Clients"),
accepting delivery responsibility for specific functional roles within the
outsourcing engagements. The Company's primary Strategic Clients have been
IBM's Global Services ("IBM", formerly IBM's Integrated Systems Solutions
Corp.) and Digital Equipment Corporation ("Digital"). The Company is also
working towards establishing a Strategic Client relationship, with Perot
Systems Corp. ("Perot Systems"). Representative Engagement Clients currently
include Ameritech, Campbell Soup, Citibank, McDonnell Douglas, PECO Energy
and Ryder Systems Corp. The Company's revenues have expanded at a compound
annual growth rate of 60.5% to $57.9 million in 1996 from $22.5 million in
1994. Revenues in the first six months of 1997 increased by 61.7% to $39.3
million compared to $24.3 million in the first six months of 1996. For the
years ended December 31, 1995 and 1996 and for the six months ended June 30,
1997, approximately 92%, 74% and 62% of the Company's revenues, respectively,
were derived from fixed-price contracts. As of June 30, 1997, the Company had
over 1,300 employees in 14 Company offices and 82 engagement locations in the
United States, Canada, Mexico, Brazil and the United Kingdom.

The use of outsourcing has grown rapidly as corporations have
increasingly determined that it is advantageous to focus on their core
competencies and outsource those functions that are not central to their
primary mission. According to Dataquest, an industry research firm, the IT
outsourcing market in 1995 was approximately $38 billion in the United States
and approximately $93 billion worldwide. One of the key trends occurring in
the IT outsourcing industry is an increasing use of business partnerships and
alliances among outsourcing vendors to deliver more cost-effectively to the
engagement client a broader range of technical skills. Factors driving this
trend include the complexity and convergence of technology required in
outsourcing engagements, competition for technical resources, shortened
delivery times, and investment costs of internally building technical
capabilities. As a result, outsourcing providers recognize that it is not
practical to internally develop and manage all of the technical skills and
critical resources necessary to perform increasingly complex outsourcing
engagements.

The Company believes that it is differentiated from other IT service
providers through its focus on relationships with Strategic Clients, its
ability to perform successfully and profitably under multi-year, fixed-price
contracts and its ability to provide services on a national and international
basis. The Company's strategy is to build long-term relationships with
selected Strategic Clients by understanding their business needs and by
providing specific services within large-scale outsourcing engagements more
cost-effectively than its Strategic Clients. The Company's services range
from basic data center management operations to help desk services, business
process reengineering and software engineering support. The Company delivers
its services through customer teams, each of which has full responsibility
for the delivery of services to a specific Strategic Client. The Company's
close relationships with its Strategic Clients, its ability to rapidly
transition and integrate its management personnel into new engagements, and
its ability to effectively manage personnel in the client environment, allow
the Company to profitably price its services under fixed-price contracts. By
offering fixed-price contracts, the Company reduces the execution and pricing
risk for its Strategic Clients in their large-scale outsourcing engagements.
The Company has developed and is continuing to expand its international
service delivery capabilities in order to leverage its Strategic Clients'
increasingly global IT outsourcing efforts.

Large-scale outsourcing engagements typically involve the acquisition of
IT assets by the outsourcing provider from the engagement client. These
assets can range from fixed assets, such as entire data centers and computer
networks, to personnel, such as data center, help desk and programming staff.
The Company's role in outsourcing engagements usually involves the retention
of IT personnel from the Engagement Client. By retaining employees as part
of its new outsourcing engagements, to date the Company's growth has not been
impeded by the availability of qualified technical personnel and the Company
has avoided the significant staffing costs and expenses normally associated
with new engagements within the IT services industry. In each new outsourcing
engagement, the Company utilizes its expertise in IT staffing and operations
to evaluate and retain outsourced staff and to reengineer the operations of
the outsourced function. Through this process, the Company historically has
been able to improve the performance of, and manage on a more cost-effective
basis, the outsourced function for its clients.

-3-

<PAGE>

The Company's goal is to become one of the premier providers of
outsourced IT solutions and professional services by pursuing the following
principal strategies:

Leverage Existing Relationships. By establishing and nurturing close
relationships with a limited number of Strategic Clients, the Company intends
to continue building a reputation for performance that supports the Company's
selection by its clients as a value-added partner of choice. In support of
this strategy, the employees that deliver services to Strategic Clients are
organized in customer teams, with each customer team responsible for a
particular Strategic Client. In addition to designated customer teams, the
Company also maintains engagement managers who are responsible for each
Strategic Client relationship and who seek to identify additional business
opportunities within the Strategic Client organization. As a result of these
relationships, the Company has been granted several engagements by Strategic
Clients without the requirement that the Company submit to a competitive
selection process.

Selectively Expand Base of Strategic Clients. The Company intends to
selectively expand the number of Strategic Clients with which it maintains
relationships by carefully evaluating market opportunities with IT services
and product providers who value the Company's outsourcing approach. The
Company recently began its third engagement with the energy systems group of
Perot Systems and is working towards establishing a Strategic Client
relationship with Perot Systems. The Company is also working to establish
business opportunities with NCR also with the objective of achieving a
Strategic Client relationship. In expanding its base of Strategic Clients,
the Company intends to refrain from pursuing engagement or partnership
opportunities with organizations competing directly with its existing
Strategic Clients.

Increase International Presence. The Company plans to continue to expand
its international presence to capitalize on global outsourcing opportunities
with its Strategic Clients. The Company currently maintains offices in
Canada, Mexico, Brazil and the United Kingdom, and anticipates opening
additional offices within the next 18 months in Continental Europe and the
Asia-Pacific Rim. The Company also uses joint venture relationships with
local IT services providers in order to broaden its international service
capabilities. The Company has established a joint venture relationship with
Capita Managed Services Limited, a local IT service provider in the United
Kingdom, and has executed letters of understanding regarding the
establishment of joint venture relationships with Stefanini Consultoria e
Assessoria em informatica in Brazil and with Comtex Group Limited in New
Zealand.

Develop Industry-Specific Expertise. The Company intends to selectively
develop expertise in industries that may offer higher-margin opportunities
for the Company's IT solutions and professional services. The Company has
invested in developing expertise in the healthcare industry, and has recently
begun an engagement with IBM which leverages the Company's industry expertise
to provide a state-of-the-art health data network to healthcare service
providers. The Company will target other vertical markets that are undergoing
regulatory, technological or competitive changes which provide opportunities
for increased outsourcing of IT functions. The Company will likely make
investments in new technical and service capabilities to enhance its vertical
market strategy.

Pursue Acquisitions and Alliances. The Company intends to pursue
expansion opportunities with other IT service providers by means of
acquisitions or alliances. The Company believes that new technical skills,
additional industry expertise, a broader client base and an expanded
geographic presence may result from these activities.

In the years ended December 31, 1995 and 1996 and in the six months ended
June 30, 1997, the Company's largest Strategic Client, IBM, accounted for
approximately 88.7%, 82.2% and 76.2% of the Company's revenues, respectively.
Dataquest estimates that in 1995, IBM was the leading outsourcing provider in
the United States with a 28.9% market share and was one of the top two
outsourcing providers worldwide with a 19.7% market share. The Company's
relationship with Digital has grown by 252.4% from $2.1 million in the six
months ended June 30, 1996 to approximately $7.4 million in the six months
ended June 30, 1997. In early 1997, the Company also began its third
engagement with Perot Systems through its energy systems group.

The Company began operations in January 1993 as a division of OAO
Corporation, was incorporated in the State of Delaware in March 1996 and was
spun off from OAO Corporation in April 1996. The Company's principal
executive offices are located at 7500 Greenway Center Drive, Greenbelt,
Maryland 20770 and its telephone number is (301) 486-0400.

-4-

<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Description of the Rights Offering........... If you hold Safeguard common shares on
, 1997, you will receive one right to
purchase our Common Stock for every five
Safeguard common shares you own. Fractional
rights will be rounded up to the next whole
number in determining the number of rights to
be issued to Safeguard shareholders. Each
right entitles you to purchase one share of
our Common Stock at a purchase price of
$5.00. You must own at least 20 rights to be
eligible to exercise your rights. In other
words, if you own fewer than 96 Safeguard
common shares, you will receive fewer than 20
rights and you will not be eligible to
exercise your rights unless you purchase
additional rights in the market. Together
with the selling stockholders, we are
offering up to 6,400,000 shares of our Common
Stock for purchase through the exercise of
rights.

The Exercise Price of the Rights............. If you wish to exercise your rights to
purchase our Common Stock, the purchase price
will be $5.00 per share of Common Stock.

When You Can Exercise Your Rights............ The rights will only be exercisable from the
period beginning on , 1997 and ending
on , 1997 at 5:00 p.m., New York
City time.

How Your Rights Will be Evidenced............ You will receive certificates that represent
your transferable rights.

Offer of Unsubscribed Shares to Other
Purchasers................................. In the event that not all of the rights are
exercised, we will offer the first 300,000
unsubscribed shares and any shares of Common
Stock subject to rights that were not
distributed, to certain persons selected by
us. These persons may have a relationship
with us, Safeguard or one of Safeguard's
other partnership companies.

Obligations of the Underwriters.............. The underwriters will purchase any shares
offered in the rights offering that have not
been purchased through the exercise of rights
and have not otherwise been sold by us by
, 1997 at the exercise price, less a 4%
underwriters' discount and a 3% financial
advisory fee. The underwriters will then
offer these shares to the public.

-5-

<PAGE>

Number of Shares of Common Stock Offered in
the Rights Offering........................ Of the 6,400,000 shares offered in the rights
offering, we will be selling 5,915,000 shares
and the selling stockholders will be selling
485,000 shares.

Offer of Direct Shares to Direct
Purchasers................................. We are also offering up to 320,000 shares of
our Common Stock to certain persons selected
by us. These persons may have a relationship
with us, Safeguard or one of Safeguard's
other partnership companies.

Common Stock to be Outstanding After the
Offering................................... After this offering, 16,235,583 shares of
Common Stock will be outstanding, not
including 1,375,875 shares issuable upon the
exercise of outstanding stock options (at a
weighted average exercise price of $2.70 per
share) as of June 30, 1997.

How We Intend to Use the Proceeds............ We will use the money received from the sale
of our shares to repay our outstanding debt,
to invest in additional management
information systems, and for continued
international expansion, working capital,
general corporate purposes and other capital
expenditures. We may also use a portion of
the net proceeds for future acquisitions,
although we currently have no commitments
regarding any acquisition. We will not
receive any proceeds from the sale of our
shares by the selling stockholders.

Nasdaq National Market Symbols............... During the period in which you can exercise
your rights, the rights will trade on the
Nasdaq National Market under the symbol OAOTR
and the Common Stock will trade under the
symbol OAOTV on a when-issued basis. After
the expiration of the rights period, the
Common Stock will trade under the symbol
OAOT.
</TABLE>

-6-

<PAGE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
DECEMBER 31, JUNE 30,
------------------------------------------ --------------------
1993(1) 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- ---------

(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>

Statement of Operating Data:

Revenues................................................. $ 12,142 $ 22,472 $ 38,229 $ 57,891 $ 24,321 $ 39,338
Direct costs............................................. 8,944 16,503 28,548 43,896 18,170 30,773
--------- --------- --------- --------- --------- ---------
Gross profit............................................. 3,198 5,969 9,681 13,995 6,151 8,565
Income from operations................................... 586 1,226 2,343 3,171 1,277 2,250
Net income............................................... $ 322 $ 699 $ 1,089 $ 1,810 $ 725 $ 1,232
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Pro forma net income per common share (2)................ .17 .07 .12
Pro forma weighted average number of
common shares outstanding (2).......................... 10,422 10,422 10,414

</TABLE>

<TABLE>
<CAPTION>
AT JUNE 30, 1997
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA(3) AS ADJUSTED (4)
--------- ------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>

Balance Sheet Data:
Working capital.......................................................... $ 4,505 $ 32,498 $ 32,498
Total assets............................................................. 20,205 48,198 44,198
Total debt............................................................... 4,651 4,651 651
Total stockholders' equity............................................... 7,072 35,065 35,065
</TABLE>
- ------------------------

(1) The Company's initial year of operations began in January 1993.

(2) See Note 2 to Notes to the Consolidated Financial Statements for
information concerning calculation of pro forma net income per common
share.

(4) The "Pro Forma As Adjusted" balances reflect the repayment of the
outstanding principal balance under the Company's line of credit from the
proceeds of this offering (which was $4.0 million as of July 31, 1997).
See "Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."

-7-

<PAGE>

RISK FACTORS

An investment in the rights and the shares of Common Stock offered hereby
involves a high degree of risk. Prospective investors should carefully
consider the following risk factors, as well as all other information in this
Prospectus, before investing in the shares of the Common Stock offered
hereby. This Prospectus contains certain forward-looking statements that
involve risks and uncertainties. Future events and the Company's actual
results could differ materially from the results reflected in these
forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those discussed in the following risk
factors.

DEPENDENCE ON KEY STRATEGIC CLIENTS

Historically, substantially all of the Company's revenue has been derived
from its relationships with its largest Strategic Clients, IBM and Digital.
For the years ended December 31, 1995 and 1996 and for the six months ended
June 30, 1997, IBM accounted for approximately 88.7%, 82.2% and 76.2% of the
Company's revenues, respectively. For the years ended December 31, 1995 and
1996 and for the six months ended June 30, 1997, Digital accounted for
approximately 5.4%, 11.4% and 18.8% of the Company's total revenues,
respectively. The Company expects to continue to derive a significant portion
of its revenue from IBM and Digital for the foreseeable future. The Company's
future revenues are dependent to a large extent on the success of the
outsourcing businesses of IBM and Digital and their continued engagement of
the Company. The termination or nonrenewal of a Strategic Client's contract
by an Engagement Client could have a material adverse effect on the Company's
business, operating results and financial condition. The loss of IBM or
Digital as a Strategic Client or a decrease in the revenue derived from the
Company's relationships with either IBM or Digital would have a material
adverse effect on the Company's business, operating results and financial
condition. There can be no assurance that either Strategic Client will
continue to engage the Company's services at historical levels, if at all.

LIMITED ABILITY TO ESTABLISH NEW STRATEGIC CLIENT RELATIONSHIPS

Because the Company intends to maintain relationships with a limited
number of Strategic Clients, the Company's opportunity to obtain engagements
from other entities including major competitors of these Strategic Clients
will be significantly limited. There can be no assurance that the Company
will be able to establish new Strategic Client relationships. As a result,
the Company's revenue will likely continue to be derived from a limited
number of clients and the Company's future growth opportunities will likely
be tied to the opportunities presented to its Strategic Clients. There can be
no assurance that the Company's Strategic Clients will enjoy continued growth
opportunities in their outsourcing businesses, that they will retain the
Company to participate in any such opportunities, or that new contracts with
existing Strategic Clients will generate profits commensurate with the
Company's historical level of profits.

RISKS ASSOCIATED WITH FIXED-PRICE CONTRACTS

For the years ended December 31, 1995 and 1996 and for the six months
ended June 30, 1997, approximately 92%, 74% and 62% of the Company's
revenues, respectively, were derived from fixed-price contracts. The
successful use of fixed-price contracts by the Company is dependent on the
Company's ability to maintain a pre-established level of service while
achieving certain operating or managerial efficiencies during the course of
its fixed-price engagements. There can be no assurance that the Company will
successfully achieve these efficiencies, the failure of which would likely
have a material adverse effect on the Company's business, operating results
and financial condition.

ABILITY TO SUSTAIN AND MANAGE GROWTH

The Company's future growth is dependent upon a number of factors,
including successful execution of the Company's international expansion
plans, implementation of new management information systems, entrance into
new vertical markets, retention of employees, development of complementary
capabilities, execution of its acquisition strategy, and entrance into
alliances and business partnerships. The Company currently has limited
management and

-8-

<PAGE>

administrative resources. The Company's growth and expansion has placed and
will likely continue to place a significant strain on the Company's
resources, and the failure to manage growth effectively would have a material
adverse effect on the Company's business, operating results and financial
condition. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business--Growth Strategy" and "Management."

VARIABILITY OF QUARTERLY OPERATING RESULTS

The Company has experienced and may in the future continue to experience
fluctuations in its quarterly operating results. Factors that may cause the
Company's quarterly operating results to vary include the number of active
engagements, the loss of major Strategic Clients or Engagement Clients, the
timing of personnel cost increases and the portion of revenues derived from
new client engagements. In addition, certain of the Company's engagements are
terminable by its Strategic Clients without penalty and any such termination
could have an adverse effect on the Company's business, operating results and
financial condition. Due to these and other factors, there can be no
assurance that the Company's operating results will meet the expectations of
investors for any given fiscal period. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

DEPENDENCE ON KEY PERSONNEL

The Company believes that its continued success depends to a significant
extent upon the efforts and abilities of its executive officers and other key
employees. In particular, the loss of the services of William R. Hill, the
Company's President and Chief Executive Officer, or Edgar M. Fields, the
Company's Chief Operating Officer, or any of the Company's other executive
officers or key employees could have a material adverse effect on the
Company's business, operating results and financial condition. With the
exception of Mr. Hill, none of the Company's executive officers have entered
into employment contracts with the Company. Furthermore, the Company's
anticipated growth and expansion into activities requiring additional
expertise will require the hiring of highly skilled technical, management,
financial, sales and marketing personnel. Competition for such personnel is
intense, and the failure of the Company to effectively hire and retain such
personnel could have a material adverse effect on the Company's business,
operating results and financial condition. See "Management."

COMPETITION

The IT services market is highly competitive and is served by numerous
firms, including systems consulting and integration firms, professional
services companies, application software firms, temporary employment
agencies, the professional service groups of computer equipment companies,
facilities management and management information systems outsourcing
companies, certain "Big Six" accounting firms, and general management
consulting firms. Many participants in the commercial IT services market have
significantly greater financial, technical and marketing resources and
generate greater revenues than the Company. The Company believes that the
principal competitive factors in the commercial IT services industry include
responsiveness to client needs, the ability to cause the transition of the
outsourced services to occur on a prompt and seamless basis, quality of
service, employee relations, price, management capability and technical
expertise. The Company believes that its ability to compete also depends on a
number of competitive factors outside its control, including the ability of
its competitors to hire, retain and motivate skilled technical and management
personnel, the price at which others offer comparable services and the extent
of its competitors' responsiveness to client needs.

As the worldwide IT solutions and services market continues to grow, the
Company believes that it will attract new competitors. There can be no
assurance that the Company will be able to compete successfully which could
result in the failure to obtain new engagements or could compel the Company
to make significant price reductions. The inability of the Company to
successfully compete could result in a material adverse effect on the
Company's business, operating results and financial condition. See
"Business--Competition."

-9-

<PAGE>

RISKS ASSOCIATED WITH INTERNATIONAL SALES

The Company expects to expand its presence in international markets and
may in the future derive a significant portion of its revenues from these
markets. The Company's current and future international business activities
are subject to a variety of potential risks, including political, regulatory
and trade and economic policy risks. The Company will also be subject to the
risks attendant to transacting in foreign currencies. In addition, many
foreign governments have laws which provide employees with significantly more
favorable severance and other social welfare benefits than are generally
provided in the U.S. Accordingly, the Company may be subject to unanticipated
and significant severance costs upon the cancellation or expiration of any of
its international engagements. The realization by the Company of any of these
risks could have a material adverse effect on the Company's business,
operating results and financial condition. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 12 to the
Notes to Consolidated Financial Statements.

DEPENDENCE ON AVAILABILITY OF QUALIFIED TECHNICAL PERSONNEL

The Company is dependent upon its ability to attract, hire and retain
personnel who possess the technical skills and experience necessary to meet
the service requirements of its clients. The Company competes for these
individuals with other providers of technical services, systems integrators,
providers of outsourcing services, computer systems consultants, and
temporary personnel agencies. There can be no assurance that a sufficient
number of qualified technical personnel will be available to the Company or
that the Company will successfully retain its existing personnel. The
realization of any of such events could have a material adverse effect on the
Company's business, financial condition and results of operations.

LIABILITIES FOR CLIENT AND EMPLOYEE ACTIONS

The Company often places its employees in the workplace of Strategic
Clients and Engagement Clients. The Company is therefore exposed to potential
liability with respect to actions taken by its employees, such as damages
caused by employee errors, misuse of client-proprietary information or theft
of client property. Due to the nature of the Company's potential liability
with respect to any such actions, there can be no assurance that any
insurance maintained by the Company will be adequate to cover any such
liability. To the extent that such insurance is not sufficient in amount or
scope to cover a loss, the Company's business, financial condition and
results of operations could be materially adversely affected. Another
attendant risk involves possible claims of discrimination, harassment and
other similar claims. A failure to avoid these risks may result in negative
publicity for the Company and the payment by the Company of money damages or
fines or loss of a Strategic Client or Engagement Client relationship. There
can be no assurance that the Company will not experience such problems in the
future.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

The Company relies upon a combination of trade secret, nondisclosure and
other contractual arrangements to protect the proprietary rights of the
Company and the Company's Strategic Clients and Engagement Clients. The
Company generally enters into agreements with its clients which contain
covenants regarding confidentiality and limits access to, and distribution
of, its clients' proprietary information. There can be no assurance that the
steps taken by the Company in this regard will be adequate to deter
misappropriation of the Company's or its clients' proprietary information or
that the Company will be able to detect unauthorized use or take appropriate
steps to enforce its clients' intellectual property rights. The Company has
recently adopted a policy which requires each new employee to execute
restrictive covenants that require the employee to keep confidential all
proprietary information pertaining to the assets or business of the Company
and its clients.

-10-

<PAGE>

CONTROL BY PRINCIPAL STOCKHOLDERS

After the completion of this offering, Safeguard, Cecile D. Barker and
William R. Hill, the three largest stockholders of the Company (collectively,
the "Principal Stockholders") will beneficially own in the aggregate
approximately 57.5% of the outstanding Common Stock. As a result, the
Principal Stockholders will collectively have the voting power to elect the
Company's entire Board of Directors and to approve all matters requiring
stockholder approval. See "Management--Executive Officers and Directors" and
"Principal and Selling Stockholders."

BROAD DISCRETION IN APPLICATION OF PROCEEDS; ACQUISITION RISKS

The Company intends to use the net proceeds from this offering to repay
the outstanding principal balance under its line of credit (which was $4.0
million as of July 31, 1997), for an investment in additional management
information systems (estimated at approximately $4.0 million) and for
continued international expansion, working capital, general corporate
purposes and other capital expenditures. In addition, a portion of the net
proceeds may be used to make acquisitions. Accordingly, the specific uses for
a substantial portion of the net proceeds will be at the complete discretion
of the Board of Directors of the Company and may be allocated from time to
time based upon a variety of circumstances. No assurance can be given that
the Company will deploy such funds in a manner that will enhance the
financial condition of the Company. In addition, no assurance can be given
that acquisitions will be available on terms and conditions acceptable to the
Company. Acquisitions present numerous risks, including inaccurate assessment
of the benefits to be provided by an acquired business, the assumption of
unexpected liabilities, significant costs and expenses, costs and expenses
involved in the integration of the operations and services of an acquired
business, diversion of management's attention from other business concerns
and potential loss of key employees of the acquired business. Acquisitions of
foreign businesses may involve additional risks, including those associated
with assimilating differences in foreign business practices, overcoming
language barriers, transacting in foreign currencies and assuming severance
and other social welfare obligations. Furthermore, the Company has not
previously made any acquisitions and therefore has no history of avoiding any
of these risks. The realization of any of these risks could be expected to
have a material adverse effect on the Company's business, results of
operations and financial condition. See "Use of Proceeds."

NO PRIOR MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this offering, there has been no public market for the Common
Stock or the rights, and there can be no assurance that an active public
market will develop or be sustained. The exercise price of the rights has
been determined solely by negotiations among the Company, the selling
stockholders and the underwriters and does not necessarily reflect the price
at which shares of Common Stock may be sold in the public market during or
after this offering. See "The Offering--Why We are Selling Shares Through a
Rights Offering" for a discussion of the factors considered in determining
the exercise price. The public markets, in general, have from time to time
experienced extreme price and volume fluctuations, which have in some cases
been unrelated to the operating performance of particular companies, and the
market for the securities of IT services companies, may be subject to greater
price volatility than the stock market in general. In addition, factors such
as announcements of new engagements by the Company's competitors or third
parties; announcements of fluctuations in the operating results of the
Company or its Strategic Clients, Engagement Clients or its competitors;
strategic alliances involving the Company's competitors; or general market
conditions in the IT industry may have a significant impact on the market
price of the Common Stock.

DILUTION

The average price per share paid upon the original issuance by the
Company of Common Stock prior to this offering was $0.50. Purchasers of the
Common Stock in this offering will suffer an immediate dilution of $2.84 in
the net tangible book value per share of the Common Stock from the exercise
price of the rights. See "Dilution."

-11-

<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

A substantial number of outstanding shares of Common Stock and shares of
Common Stock issuable upon exercise of outstanding stock options will become
eligible for future sale in the public market at various times. In addition
to the factors affecting the stock market in general and the market for the
Common Stock discussed above, sales of substantial amounts of Common Stock in
the public market, or the perception that such sales could occur, could
adversely affect the market price of the Common Stock. Upon completion of
this offering, the Company will have 16,235,583 shares of Common Stock
outstanding, excluding 1,375,875 shares of Common Stock subject to stock
options outstanding as of June 30, 1997, and any stock options granted by the
Company after June 30, 1997. Of these shares, the Common Stock sold by the
Company in this offering, except for certain shares described below, will be
freely tradeable without restriction or further registration under the
Securities Act of 1933, as amended (the "Act"). The remaining 9,515,583
shares of Common Stock (the "Restricted Shares") were sold by the Company in
reliance on exemptions from the registration requirements of the Act and are
"restricted securities" as defined in Rule 144 under the Act ("Rule 144") and
may not be sold in the absence of registration under the Act unless an
exemption is available, including an exemption afforded by Rule 144 or Rule
701 ("Rule 701") under the Act.

Without considering the contractual restrictions described below, (i)
9,515,168 Restricted Shares will be eligible for sale ninety days after the
date of this Prospectus, subject to volume and other resale conditions
imposed by Rule 144, and (ii) 415 Restricted Shares will be eligible for
future sale subject to the holding period and other conditions imposed by
Rule 144. Certain restrictions on shares of Common Stock are applicable to
(i) any shares of Common Stock purchased in this offering by affiliates of
the Company, which may generally only be sold in compliance with the
limitations of Rule 144, except for the holding period requirements
thereunder, and (ii) the shares of Common Stock beneficially owned by the
Principal Stockholders all of which, together with the shares of Common Stock
beneficially owned by the other executive officers and directors of the
Company and 280,000 shares of Common Stock beneficially owned by Warren V.
Musser (and/or his assignees), are subject to lock-up agreements (the
"Lock-Up Agreements") and pursuant to such agreements will not be eligible
for sale or other disposition until 180 days after the expiration date of the
rights (the "Lock-Up Expiry Date") without the prior written consent of
Wheat, First Securities, Inc. In addition, the Company has granted certain
registration rights to certain of its shareholders whereby they may cause the
Company to register shares of Common Stock. See "Shares Eligible For Future
Sale."

It is anticipated that a registration statement (the "Form S-8
Registration Statement") covering the Common Stock that may be issued
pursuant to the exercise of options awarded by the Company will be filed and
become effective prior to the Lock-Up Expiry Date, and that shares of Common
Stock that are so acquired or offered thereafter pursuant to the Form S-8
Registration Statement generally may be resold in the public market without
restriction or limitation. Subject to the provisions of any Lock-Up
Agreement, shares of Common Stock may be resold in the public market
beginning 90 days after the date of this Prospectus pursuant to Rule 701 (i)
by persons who are not affiliates of the Company, without compliance with the
public information, holding period, volume limitation or notice provisions of
Rule 144 and (ii) by affiliates of the Company, without compliance with the
holding period requirements of Rule 144. See "Management--Equity Compensation
Plan," "Shares Eligible For Future Sale--Stock Options" and "Underwriting."

POSSIBLE ISSUANCE OF PREFERRED STOCK

Shares of preferred stock may be issued by the Company in the future
without stockholder approval and upon such terms as the Board of Directors
may determine. The rights of the holders of the Common Stock will be subject
to, and may be adversely affected by, the rights of the holders of any
preferred stock that may be issued in the future. The issuance of preferred
stock, while providing flexibility in connection with possible acquisitions
and other corporate purposes, could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
acquiring, a majority of the outstanding stock of the Company and potentially
prevent the payment of a premium to stockholders in an acquisition
transaction. There are no shares of preferred stock outstanding and the
Company has no present plans to issue any shares of preferred stock. See
"Description of Capital Stock--Preferred Stock."

-12-

<PAGE>

Requirements for Listing Securities on the Nasdaq National Market;
Application of the Penny Stock Rules

The Company has applied with the Nasdaq National Market to have the
Common Stock and rights (the "Listed Securities") approved for listing (upon
completion of this offering with respect to the Common Stock and from the
date of this Prospectus through the expiration date with respect to the
rights). If the Company is unable to maintain the standards for continued
listing, the Listed Securities could be subject to delisting from the Nasdaq
National Market. Trading, if any, in the Listed Securities would thereafter
be conducted on the Nasdaq Small Cap Market. If, however, the Company did not
meet the requirements of the Nasdaq Small Cap Market, trading of the Listed
Securities would be conducted on an electronic bulletin board established for
securities that do not meet the Nasdaq listing requirements or in what is
commonly referred to as the "pink sheets." As a result, an investor may find
it more difficult to dispose of, or to obtain accurate quotations as to the
price of, the Company's securities.

In addition, if the Company's securities were delisted, they would be
subject to the so-called penny stock rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally defined
as an investor with a net worth in excess of $1.0 million or annual income
exceeding $200,000, or $300,000 together with a spouse). For transactions
covered by this rule, the broker-dealer must make a special suitability
determination for the purchaser and must have received the purchaser's
written consent to the transaction prior to sale. Consequently, delisting, if
it occurred, may affect the ability of broker-dealers to sell the Company's
securities and the ability of purchasers in this offering to sell their
securities in the secondary market.

The SEC has adopted regulations that define a "penny stock" to be any
equity security that has a market price (as defined in the regulations) of
less than $5.00 per share or an exercise price of less than $5.00 per share,
subject to certain exceptions. For any transaction involving a penny stock,
unless exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule relating to the penny stock market. The broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Finally,
monthly statements must be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in
penny stocks. As a result, if the Common Stock is determined to be "penny
stock," an investor may find it more difficult to dispose of the Company's
Common Stock.

NO DIVIDENDS

To date, the Company has not paid any cash dividends on its Common Stock,
and does not expect to declare or pay any cash or other dividends in the
foreseeable future. In addition, the Company's credit agreement contains a
financial covenant that prohibits the payment of cash dividends. See
"Dividend Policy."

CANCELLATION OF RIGHTS OFFERING

If the conditions precedent to the sale to the underwriters set forth in
the standby underwriting agreement are not satisfied, the underwriters may
elect, on or before the sixth business day after the expiration date of the
rights (the "Closing Date"), to cancel the rights offering and the Company
and the selling stockholders will not have any obligations with respect to
the rights. Under such circumstances, the exercise price, without interest,
will be promptly returned. See "Underwriting." The Company has been advised
by the NASD that it is likely that trades in the rights and the when-issued
shares of Common Stock in the market would be canceled if the rights offering
is not consummated.

-13-

<PAGE>

THE OFFERING

WHY WE ARE SELLING SHARES THROUGH A RIGHTS OFFERING

We have agreed with Safeguard and the selling stockholders to make a
rights offering to holders of Safeguard common shares. This rights offering
represents the Company's initial public offering of its securities, although
it is different than a traditional public offering in that securities are
directed first to Safeguard shareholders and then to the general public. We
believe that this rights offering will provide several advantages over a
traditional initial public offering. This type of offering gives us the
opportunity to offer our Common Stock to investors who, as Safeguard
shareholders, already have some knowledge of our business. Our securities
will also be distributed to a broader, more stable shareholder base and
underwriting discounts and commissions will be less than if we pursued a
traditional initial public offering. In addition, Safeguard supports these
types of rights offering because it affords its shareholders the opportunity
to purchase shares before the shares are offered to the general public.

We determined the exercise price through negotiations with the selling
stockholders and the underwriters. In making this determination, we
considered such factors as our future prospects and historical financial
data, our industry in general and our position in the industry; market
valuations of the securities of companies engaged in activities similar to
ours; the quality of our management team; and, the advice of our
underwriters. We will also obtain two independent appraisals to further
support the determination of the final exercise and offering price.

YOU CAN EXERCISE OR SELL YOUR RIGHTS

Until , 1997, you may purchase one share of our Common Stock for
each right you receive, or you may sell your rights in the market. However,
you may not exercise rights for fewer than 20 shares of Common Stock in a
single account, unless you have previously exercised rights for at least 20
shares in the same account and you provide a letter to ChaseMellon stating
that you have already exercised at least 20 rights. If you hold Safeguard
common shares in multiple accounts, you must meet the minimum purchase
requirement for each account. You may, however, consolidate your rights into
one account. If you receive fewer than 20 rights, you should consider
purchasing enough additional rights to be eligible to exercise your rights or
selling your rights in the market. You should consult with your regular
investment advisor and carefully consider your alternatives.

IF THE NUMBER OF SAFEGUARD COMMON SHARES YOU OWN IS NOT DIVISIBLE BY FIVE

If the number of Safeguard common shares you own is not evenly divisible
by five, we will round up to the next highest whole number in calculating the
number of rights that you are entitled to receive. For example, if you hold
96 Safeguard common shares, you will receive 20 rights. If you are a nominee
for beneficial holders of Safeguard common shares, we will round the number
of rights that you will receive based upon the amount held by each beneficial
holder individually.

WHEN YOU CAN EXERCISE YOUR RIGHTS

You can exercise your rights at any time during the period beginning on
, 1997 and ending at 5:00 p.m., New York City time, on , 1997.
After that date, you will not be able to exercise or transfer your rights and
they will be worthless. We do not intend to honor any rights received for
exercise by ChaseMellon after , 1997, regardless of when you sent your
rights to ChaseMellon for exercise.

HOW YOU CAN TRANSFER YOUR RIGHTS

You may transfer all or a portion of your rights by endorsing and
delivering to ChaseMellon (at the addresses set forth below) your rights
certificate. You must properly endorse the certificate for transfer, your
signature must be guaranteed by a bank or securities broker and your
certificate must be accompanied by instructions to reissue the rights you
want to transfer in the name of the person purchasing the rights. ChaseMellon
will reissue certificates for the transferred rights to the purchaser, and
will reissue a certificate for the balance, if any, to you if it is able to
do so before

-14-

<PAGE>

, 1997. You will be responsible for the payment of any commissions,
fees and other expenses (including brokerage commissions and any transfer
taxes) incurred in connection with the purchase or sale of your rights. We
believe that a market for the rights may develop during the period in which
the rights may be exercised. To facilitate the market, we have applied with
the Nasdaq National Market to have the rights approved for quotation for the
period , 1997 through , 1997. We have reserved "OAOTR" as the
Nasdaq symbol under which the rights will trade. If you have any questions
regarding the transfer of rights, you should contact ChaseMellon at P.O. Box
798, Midtown Station, New York, New York 10018, Attention: Reorganization
Department, telephone number (800) 973-1028.

HOW YOU CAN EXERCISE YOUR RIGHTS

You may exercise your rights by completing and signing the election to
purchase form that appears on the back of each rights certificate. You must
send the completed and signed form, along with payment in full of the
exercise price for all shares that you wish to purchase to ChaseMellon.
ChaseMellon must receive these documents and the payment by 5:00 p.m., New
York City time, on , 1997. We do not intend to honor any exercise of
rights received by ChaseMellon after that date.

We will, however, accept your exercise if ChaseMellon has received full
payment of the exercise price for shares to be purchased through the exercise
of rights, and has received a letter or telegraphic notice from a bank, trust
company or member firm of the New York Stock Exchange or the American Stock
Exchange setting forth your name, address and taxpayer identification number,
the number of shares you wish to purchase, and guaranteeing that a properly
completed and signed election to purchase form will be delivered to
ChaseMellon by 5:00 p.m., New York City time, on , 1997. If the
properly executed documents are not received by 5:00 p.m. on , 1997, we
do not intend to accept your subscription.

We suggest, for your protection, that you deliver your rights to
ChaseMellon by overnight or express mail courier. If you mail your rights, we
suggest that you use registered mail. If you wish to exercise your rights,
you should mail or deliver your rights and payment for the exercise price to
ChaseMellon as follows:

By Mail: By Hand/Overnight:

ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, L.L.C.
Reorganization Department Reorganization Department
P.O. Box 798 120 Broadway, 13th Floor
Midtown Station New York, New York 10271
New York, New York 10018

</TABLE>

You must pay the exercise price in U.S. dollars by cash, check or money
order payable to the "Safeguard Escrow Account." Until this offering is
closed, your payment will be held in escrow by Mellon Bank N.A., who will
serve as the escrow agent of the Safeguard Escrow Account.

ChaseMellon will deliver certificates to you representing the Common
Stock purchased through the exercise of rights by , 1997. Until that
date, Mellon Bank N.A. will hold all funds received in payment of the
exercise price in escrow and will not deliver any funds to us or to the
selling stockholders until the shares of Common Stock have been issued.

If you are a broker or depository who holds Safeguard common shares for
the account of others and you receive rights certificates for the account of
more than one beneficial owner, you should provide copies of this Prospectus
to the beneficial owners. You should also carry out their intentions as to
the exercise or transfer of their rights.

Safeguard will decide all questions as to the validity, form and
eligibility (including times of receipt, beneficial ownership and compliance
with minimum exercise provisions). The acceptance of subscription forms and
the exercise

-15-

<PAGE>

price also will be determined by Safeguard. Alternative, conditional or
contingent subscriptions will not be accepted. Safeguard reserves the
absolute right to reject any subscriptions not properly submitted. In
addition, Safeguard may reject any subscription if the acceptance of the
subscription would be unlawful. Safeguard also may waive any irregularities
(or conditions) in the subscription of shares of Common Stock, and its
interpretation of the terms (and conditions) of the rights offering shall be
final and binding.

If you are given notice of a defect in your subscription, you will have
five business days after the giving of notice to correct it. You will not,
however, be allowed to cure any defect later than , 1997. We are not
obligated to give you notification of defects in your subscription. We will
not consider an exercise to be made until all defects have been cured or
waived. If your exercise is rejected, your payment of the exercise price will
be promptly returned by ChaseMellon.

HOW YOU CAN OBTAIN ADDITIONAL INFORMATION

If you wish to receive additional copies of this Prospectus or additional
information concerning this offering, you should contact Thomas D. Roberts
III, at Wheat, First Securities, Inc., telephone number 804-344-6404, or Dan
N. Pickens at Janney Montgomery Scott Inc., telephone number 215-665-4513.

EXPECTED EXERCISE OF RIGHTS BY SAFEGUARD CEO

Warren V. Musser, the Chairman and Chief Executive Officer of Safeguard
(or his assignees) is expected to exercise all rights distributed to him. As
a result, he (or his assignees) is expected to acquire approximately 560,000
shares of our Common Stock through the rights offering.

WHAT HAPPENS TO THE UNSUBSCRIBED SHARES

The first 300,000 shares of Common Stock that are not subscribed for at
the end of the rights exercise period will be offered at a price of $5.00 per
share to persons selected by us. These persons may have a relationship with
us, Safeguard or one of Safeguard's other partnership companies. We expect to
enter into agreements with these persons to purchase the unsubscribed shares
before the end of the rights exercise period. If there are less than 300,000
unsubscribed shares at the end of the rights exercise period, the number of
unsubscribed shares offered to each of these persons will be adjusted
accordingly.

To the extent that any unsubscribed shares remain unsold after the offer
to these persons, the underwriters will purchase these shares pursuant to the
standby underwriting agreement. The underwriters must purchase these shares
no later than , 1997.

In connection with this offering, the underwriters will receive a
financial advisory fee of 3% of the exercise price for each share of Common
Stock being offered in this offering, regardless of whether they purchase any
shares in this offering. In addition, if the underwriters purchase any shares
in this offering or through the exercise of certain rights that are purchased
in the open market under certain circumstances, they may purchase the shares
at the exercise price less an underwriting discount of 4% of the exercise
price, subject to certain limitations. The underwriters will offer shares of
Common Stock purchased by them to the public at prices which may vary from
the exercise price. The selling stockholders have granted to the underwriters
an option to purchase an additional 640,000 shares of Common Stock to cover
over-allotments, if any, during the 20-day period beginning on , 1997.
The underwriters will be entitled to purchase these over-allotment shares at
the exercise price less the 3% financial advisory fee and the 4% underwriting
discount. See "Underwriting." We will not receive any proceeds from the sale
of any shares of Common Stock by the selling stockholders.

-16-

<PAGE>

We intend to supplement this Prospectus after the rights exercise period
is over to set forth the results of the rights offering, the transactions by
the underwriters during the exercise period, the number of unsubscribed
shares purchased, if any, and any resale transactions.

WHAT HAPPENS IF THE RIGHTS OFFERING IS CANCELED

The underwriters have the right to cancel the rights offering if certain
conditions are not satisfied or if certain circumstances exist prior to the
closing date of this offering. If you exercise rights and the rights offering
is canceled, Mellon Bank N.A. will promptly return to you, without interest,
any payment received in respect of the exercise price and you will not
receive any shares of our Common Stock. Along with the selling stockholders,
we have established an escrow account with Mellon Bank N.A. to hold funds
received prior to the closing date of this offering. The NASD has advised us
that trades in the rights and the when-issued shares of Common Stock in the
market would be canceled if this offering is not consummated.

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the material federal income tax
consequences affecting holders of Safeguard common shares receiving rights in
this offering. In the opinion of Morgan, Lewis & Bockius LLP, the
distribution of the rights by the Company to holders of Safeguard common
shares more likely than not will constitute a taxable transaction under the
Internal Revenue Code of 1986, as amended (the "Code"), and may also be
subject to state or local income taxes. Because of the complexity of the
provisions of the Code referred to below and because tax consequences may
vary depending upon the particular facts relating to each holder of Safeguard
common shares, such holders should consult their own tax advisors concerning
their individual tax situations and the tax consequences of this offering
under the Code and under any applicable state, local or foreign tax laws.

Safeguard has been advised by Morgan, Lewis & Bockius LLP that, under
current interpretations of case law, the Code, and applicable regulations
thereunder, the federal income tax consequences applicable to holders of
Safeguard common shares receiving rights in this offering generally are as
follows:

DISTRIBUTION OF RIGHTS TO HOLDERS OF SAFEGUARD SHARES

The rights, representing the right to acquire shares of Common Stock from
the Company, can be considered as constituting "property" within the meaning
of Section 317(a) of the Code. The federal income tax consequences of a
distribution of the rights by the Company to holders of Safeguard common
shares, as determined under the Code and the regulations thereunder, are as
follows: (i) each noncorporate holder of Safeguard common shares will be
deemed to have received a distribution from Safeguard, generally taxable as
ordinary dividend income, in an amount equal to the fair market value (if
any) of the rights, as of the date of distribution, (ii) each corporate
holder of Safeguard common shares (other than foreign corporations and S
corporations) will be deemed to have received a distribution from Safeguard
(generally taxable as a dividend subject to the dividends received deduction
for corporations (generally 70%, but 80% under certain circumstances)) in an
amount equal to the fair market value (if any) of the rights, as of the date
of distribution; and (iii) the tax basis of the rights in the hands of each
holder (whether corporate or noncorporate) of Safeguard common shares will be
equal to the fair market value (if any) of the rights as of the date of
distribution. Because of the predominantly factual nature of determining the
fair market value, if any, of the rights, Morgan, Lewis & Bockius LLP has
expressed no opinion with respect to the fair market value of the rights.

Since the fair market value of the rights will determine the amount of
taxable income deemed received by the holders of Safeguard common shares, the
determination of the fair market value of each right as of the date of
distribution is critical. The exercise price was determined through
arms-length negotiations among the Company, the selling stockholders and the
underwriters. Based on these negotiations and the two independent appraisals
which have been obtained, Safeguard's Board of Directors believes that the
per share value of Common Stock represented by the

-17-

<PAGE>

rights at the date of the commencement of this offering approximates the
exercise price, and that the rights should have no value for federal income
tax purposes. However, the Internal Revenue Service is not bound by this
determination. See "The Offering--Why We Are Selling Shares Through a Rights
Offering."

EXERCISE OF RIGHTS

Holders of rights, whether corporate or noncorporate, will recognize
neither gain nor loss upon the exercise of the rights. A holder of rights who
receives shares of Common Stock upon the exercise of the rights will acquire
a tax basis in such shares equal to the sum of the exercise price paid under
this offering and the tax basis (if any) of the holder of rights in the
rights.

TRANSFER OF RIGHTS

The transferable nature of the rights will permit a holder of rights to
sell rights prior to exercise. Pursuant to Section 1234 of the Code, a rights
holder who sells rights prior to exercise will be entitled to treat the
difference between the amount received for the rights and the adjusted tax
basis (if any) of the holder of rights in the rights as a short-term capital
gain or capital loss, provided that Common Stock subject to the rights would
have been a capital asset in the hands of the holder had it been acquired by
him. The gain or loss so recognized will be short-term since the rights will
have been held for less than twelve months.

NON-EXERCISE OF RIGHTS

The income tax treatment applicable to holders of rights who fail to
exercise or transfer their rights prior to the expiration date also is set
forth in Section 1234 of the Code. Holders of rights who allow their rights
to lapse are deemed under the Code to have sold their rights on the date on
which the rights expire. Since upon such lapse no consideration will be
received by a holder of rights, and since the rights will have been held for
less than twelve months, a short-term capital loss equal to the tax basis (if
any) in the rights will be sustained by the holder on such lapse, provided
that Common Stock subject to the rights would have been a capital asset in
the hands of the holder had it been acquired by him.

-18-

<PAGE>

USE OF PROCEEDS

The minimum net proceeds to the Company from the sale of the 6,235,000
shares of Common Stock offered by the Company are estimated to be
approximately $28.0 million after deducting estimated offering expenses
allocable to and payable by the Company and assuming that none of the rights
granted in the rights offering are exercised and the sale of 5,915,000 shares
of Common Stock to the underwriters pursuant to the standby underwriting
agreement. Estimated offering expenses include the maximum applicable
non-accountable expense allowance to the underwriters, a financial advisory
fee of 3% of the exercise price and an underwriting discount of 4% of the
exercise price. In the event more of the shares of Common Stock offered
hereby are sold pursuant to the exercise of rights, the Company will not be
obligated to pay the underwriting discount with respect to such shares and
will, therefore, realize an amount of net proceeds greater than approximately
$28.0 million. See "The Offering--What Happens to the Unsubscribed Shares"
and "Underwriting."

The Company intends to use approximately $4.0 million of the net proceeds
from this offering to pay amounts due to CoreStates Bank, N.A. under its line
of credit. The amount outstanding under this line of credit bears interest,
generally at the Company's option, at the bank's prime rate or other short
term rates, and is payable on May 31, 1999. The Company also intends to use
approximately $4.0 million of the net proceeds of this offering to invest in
additional management information systems. The remainder of the net proceeds
will be used for continued international expansion, working capital, general
corporate purposes and other capital expenditures. The Company may also seek
to use a portion of the net proceeds from this offering to expand its
business through acquisitions, although the Company does not have any
acquisition commitments. Other than to repay the outstanding balance under
its credit line and to purchase additional management information systems,
the Company has not made any determination regarding the amounts or timing of
the use of any proceeds from this offering. See "Risk Factors--Broad
Discretion in Application of Proceeds; Acquisition Risks." The amounts and
the timing of any such use may vary significantly depending upon a number of
factors, including the Company's revenue growth, asset growth, cash flow and
acquisition activities. Pending such uses, the net proceeds of this offering
will be invested in short-term, investment-grade, interest-bearing
securities. The Company currently anticipates that the net proceeds received
by the Company from this offering, together with amounts available under its
existing line of credit, cash generated from operations and existing cash
balances will be sufficient to satisfy its operating cash needs through
December 31, 1998. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."

DIVIDEND POLICY

To date, the Company has not paid any cash dividends on its Common Stock.
The Company currently intends to retain future earnings for use in its
business and, therefore, does not anticipate paying any cash dividends in the
foreseeable future. The payment of future dividends, if any, will depend
among other things, on the Company's results of operations, cash flows and
financial condition and on such other factors as the Company's Board of
Directors may, in its discretion, consider relevant. In addition, the
Company's credit agreement with CoreStates Bank, N.A. contains a financial
covenant that prohibits the payment of any dividends.

-19-

<PAGE>

CAPITALIZATION

The following table sets forth the total capitalization of the Company as
of June 30, 1997, and as adjusted to reflect the sale of 6,235,000 shares of
Common Stock by the Company in this offering and the application of the
estimated minimum net proceeds of approximately $28.0 million therefrom. This
table should be read in conjunction with the Consolidated Financial
Statements of the Company and the Notes thereto and other financial
information included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-------------------------
ACTUAL AS ADJUSTED(1)
--------- --------------

(IN THOUSANDS)
<S> <C> <C>

Short term debt and current portion of long term debt(2)................................. $ 4,501 $ 501
--------- -------
--------- -------

Long term debt........................................................................... 150 150

Stockholders' equity:

Preferred Stock, par value $.01 per share; 10,000,000 shares authorized and no shares
issued and outstanding actual and as adjusted.......................................... -- --

Common Stock, par value $.01 per share;20,000,000 shares authorized, and 10,000,583
shares issued and outstanding actual and 16,235,583 shares issued and outstanding as
adjusted (3)........................................................................... 100 162

Additional paid-in capital (3)........................................................... 4,950 32,881

Retained earnings........................................................................ 2,022 2,022
--------- -------

Total stockholders' equity........................................................... 7,072 35,065
--------- -------

Total capitalization................................................................. $ 7,222 $ 35,215
--------- -------
--------- -------
</TABLE>

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

(1) Adjusted to give effect to the sale by the Company of 6,235,000 shares of
Common Stock and the receipt and application of approximately $28.0
million in net proceeds from this offering after deducting the maximum
total underwriting discount with respect to such shares of approximately
$2.2 million and estimated offering expenses of $1.0 million.

(2) Represents the outstanding amount under the Company's line of credit and
current portion of balances due under capital leases. The "as adjusted"
total indebtedness reflects the repayment of $4.0 million outstanding
under the Company's line of credit from a portion of the net proceeds
from this offering. See "Use of Proceeds" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity
and Capital Resources."

(3) Excludes as of June 30, 1997, 1,375,875 shares of Common Stock issuable
upon the exercise of options at a weighted average exercise price of
$2.70 per share (of which options to purchase 352,417 shares were
exercisable as of June 30, 1997). See "Management--Equity Compensation
Plan."

-20-

<PAGE>

DILUTION

As of June 30, 1997, the Company had a net tangible book value of
approximately $7.1 million or $0.71 per share of Common Stock. Net tangible
book value per share of Common Stock represents the amount of the Company's
tangible assets less its total liabilities, divided by the total number of
shares of Common Stock outstanding. Without taking into account any changes
in net tangible book value after June 30, 1997, other than to give effect to
the items described in Note 1 appearing immediately below the following
table, the pro forma net tangible book value of the Company as of June 30,
1997, would have been approximately $36.1 million or $2.16 per share. This
represents an immediate increase in such pro forma net tangible book value of
$1.45 per share to existing stockholders and an immediate dilution of $2.84
per share to investors purchasing Common Stock at the exercise price in this
offering. New stockholders that acquire Common Stock from the underwriters at
a price greater than the exercise price will experience greater dilution. The
following table illustrates this per share dilution in net tangible book
value:

<TABLE>
<S> <C> <C>
Exercise Price.............................................................. $5.00

Net tangible book value per share as of June 30, 1997..................... $0.71

Increase per share attributable to new stockholders (1)................... 1.45
-----
Pro forma net tangible book value per share as of June 30, 1997............. 2.16
-----
Dilution per share to new stockholders............................................... $ 2.84
-----
-----
</TABLE>

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

(1) Reflects the sale by the Company of 6,235,000 shares of Common Stock and
the receipt of approximately $28.0 million in net proceeds from this
offering.

The following table sets forth, on an adjusted basis as of June 30, 1997,
the number of shares of Common Stock issued by the Company, the total
consideration paid and the average price per share paid upon original
issuance to stockholders prior to this offering and by new investors before
deducting the underwriters' discount, financial advisory fees and estimated
offering expenses:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION(1)
------------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE(1)
------------ ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>

Existing stockholders........................ 10,000,583 61.6% $ 5,000,000 13.8% $ 0.50

New stockholders............................. 6,235,000 38.4 31,175,000 86.2% 5.00
------------ ----- ------------- ----- -----

Total.................................... 16,235,583 100.0% $ 36,175,000 100.0%
------------ ----- ------------- -----
------------ ----- ------------- -----
</TABLE>

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

(1) Reflects gross consideration from the issuance of stock, and therefore
does not reflect deductions for stock issuance costs, underwriting
discounts, financial advisory fees and offering expenses.

The foregoing tables assume no exercise of outstanding options. As of
June 30, 1997 there were outstanding options to purchase an aggregate of
1,375,875 shares of Common Stock at a weighted average exercise price of
$2.70 per share (of which options to purchase 352,417 shares were exercisable
at June 30, 1997), and the Company had an additional 1,824,125 shares of
Common Stock available for future grants and other issuances under the
Company's Amended and Restated 1996 Equity Compensation Plan. See
"Management" and Note 8 to the Notes to the Consolidated Financial Statements.

-21-

<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth below should be read
in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial
Statements of the Company and the Notes thereto included elsewhere in this
Prospectus. The statement of operations data for the years ended December 31,
1994, 1995 and 1996, and the balance sheet data as of December 31, 1994, 1995
and 1996 have been derived from consolidated financial statements of the
Company which have been audited by Deloitte & Touche LLP, independent
auditors. The statement of operations data for the year ended December 31,
1993 and the six months ended June 30, 1996 and 1997 and the balance sheet
data as of December 31, 1993 and June 30, 1997 have been derived from the
Company's unaudited consolidated financial statements which, in the opinion
of management, include all significant, normal and recurring adjustments
necessary for a fair presentation of the financial position and results of
operations for such unaudited period.

SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------------------------- ------------------------
1993 (1) 1994 1995 1996 1996 1997
---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Statement of Operations Data:

Revenues................................ $ 12,142 $ 22,472 $ 38,229 $ 57,891 $ 24,321 $ 39,338
Direct costs............................ 8,944 16,503 28,548 43,896 18,170 30,773
---------- --------- --------- --------- --------- --------
Gross profit............................ 3,198 5,969 9,681 13,995 6,151 8,565
Selling, general and administrative..... 2,612 4,743 7,338 10,824 4,874 6,315
---------- --------- --------- --------- --------- --------
Income from operations.................. 586 1,226 2,343 3,171 1,277 2,250
Interest expense........................ 49 61 115 46 30 87
---------- --------- --------- --------- --------- --------
Income before income taxes.............. 537 1,165 2,228 3,125 1,247 2,163
Provision for income taxes.............. 215 466 1,139 1,315 522 931
---------- --------- --------- --------- --------- --------
Net income.............................. $ 322 $ 699 $ 1,089 $ 1,810 $ 725 $ 1,232
---------- --------- --------- --------- --------- --------
---------- --------- --------- --------- --------- --------
Pro forma net income per
common share (2)...................... $ .17 $ .07 $ .12

Weighted average number of
common shares outstanding (2)......... 10,422 10,422 10,414

</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30, 1997
------------------------------------------ -------------------------

<S> <C> <C> <C> <C> <C> <C>
1993 1994 1995 1996 ACTUAL AS ADJUSTED(3)
--------- --------- --------- --------- --------- --------------

(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>

Balance Sheet Data:

Working capital............................................ $ (762) $ (964) $ (1,446) $ 4,718 $ 4,505 $ 32,498

Total assets............................................... 1,139 3,198 5,801 12,828 20,205 44,198

Total debt, including current portion...................... -- -- 251 476 4,651 651

Total stockholders' equity................................. 257 565 1,654 5,840 7,072 35,065
</TABLE>

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

(1) The Company's initial year of operations began in January 1993.

(2) See Note 2 to Notes to the Consolidated Financial Statements for information
concerning calculation of pro forma net income per common share.

(3) Adjusted to give effect to the sale by the Company of 6,235,000 shares of
Common Stock and the receipt and application of approximately $28.0 million
in net proceeds from this offering after deducting the maximum total
underwriting discount with respect to such shares of approximately $2.2
million and estimated offering expenses of approximately $1.0 million. In
addition, the "as adjusted" balances reflect the repayment of the $4.0
million outstanding under the Company's line of credit from a portion of the
proceeds of this offering. See "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

22
<PAGE>

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

The following should be read in conjunction with the Consolidated Financial
Statements of the Company and Notes thereto included elsewhere in this
Prospectus. The Company's fiscal year ends on December 31. This Prospectus
contains certain forward-looking statements that involve risks and
uncertainties. Future events and the Company's actual results could differ
materially from the results reflected in these forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Risk Factors."

OVERVIEW

The Company has experienced substantial growth since its inception, with
revenues increasing to $57.9 million in 1996 from $12.1 million in 1993. This
growth has continued into 1997 with revenues for the six months ended June 30,
1997 increasing to $39.3 million compared to $24.3 million for the same prior
year period. The Company's operating results, particularly its quarterly
results, can be affected by potentially lower margins on certain incremental
revenue contracts prior to the achievement of expected operating efficiencies.
Engagements which involve new services or services to new clients may result in
lower margins during the early term of the engagement. The Company has
historically experienced margin improvements over the course of its engagements.
In addition, operating results can be affected by the level of the Company's
investments in international and other business development for which the
Company incurred costs of $1.1 million and $3.1 million for the six months ended
June 30, 1997 and the year ended December 31, 1996, respectively.

The Company's relationship with its first Strategic Client, IBM, has
continued to expand in terms of revenues, the range of services provided, the
number of engagements and the number of IBM business units which have engaged
the Company's services. While the Company expects IBM to continue to
represent the majority of the Company's revenues for the foreseeable future,
revenues from IBM have been declining on a percentage basis, accounting for
88.7%, 82.2% and 76.2% of the Company's total revenues for the years ended
December 31, 1995 and 1996 and the six months ended June 30, 1997,
respectively. This revenue trend is primarily attributable to the Company's
expanding relationship with Digital, which became a Strategic Client in 1995.
The Company is currently a major delivery partner of Digital for outsourcing
engagements across Canada and its relationship with Digital has expanded into
other geographic areas. Revenues from Digital accounted for 5.4%, 11.4% and
18.8% of the Company's total revenues for the years ended December 31, 1995
and 1996 and for the six months ended June 30, 1997, respectively. The
Company has also recently expanded its business development activities to
include establishing relationships with Perot Systems and NCR.

For the years ended December 31, 1995 and 1996 and for the six months ended
June 30, 1997, approximately 92%, 74% and 62% of the Company's revenues,
respectively, were derived from fixed-price contracts. Substantially all of the
Company's Megacenter Operations engagements, which accounted for approximately
60.2% and 46.2% of revenues for the year ended December 31, 1996 and for the six
months ended June 30, 1997, respectively, are performed under multi-year,
fixed-price contracts. These contracts range from three to ten years in length
and are accounted for under the percentage of completion method. A portion of
the Company's DSM engagements are also performed under multi-year, fixed-price
contracts. For the year ended December 31, 1996 and the six months ended June
30, 1997, revenues

23
<PAGE>

from fixed-price DSM contracts accounted for 4.1% and 4.9% of
the Company's total revenues, respectively. The Company's fixed-price contracts
generally require the Company to meet certain pre-established service level
benchmarks. Profitability is generally lower during the early term of these
engagements as the Company invests in assuring a smooth start-up and in
attaining certain performance levels prior to the implementation of productivity
improvements. Upon completion of the initial performance phase, the Company
initiates activities to increase profitability through improved management
practices and the establishment of new technical and operational methodologies.

In 1995, the Company began an initiative to diversify its business by
increasing the scope of its service offerings and through geographic
expansion. In 1995, the Company entered into its first engagement to provide
DSM services, an area in which the Company had previously performed only
limited services within other engagements. The Company believes that its DSM
services represent a significant source of future potential growth. The
Company's geographic expansion into international markets began in 1995 and
has accelerated during 1996 and 1997. See Note 12 to notes to the
Consolidated Financial Statements. In particular, primarily as a result of
its relationship with Digital, the Company's revenues derived from the
Canadian market grew from $2.1 million for the year ended December 31, 1995
to $6.9 million for the year ended December 31, 1996. The Company's revenues
from the Canadian market were $7.4 million for the six months ended June 30,
1997. The Company also has been engaged to provide services in Mexico, South
America and the United Kingdom and plans to expand its business to other
international markets. In seeking to expand its international presence, the
Company intends to enter into joint ventures, partnerships or other types of
strategic alliances with organizations located in these markets.

While the IT services industry has generally experienced labor shortages and
wage inflation in excess of most other industries, the Company's engagements
have not been affected, primarily due to the Company's practice of retaining the
majority of the outsourced personnel. The Company prices its services under
these engagements on the basis of the historical cost of the outsourced
function, managerial experience and its assessment of evolving technical
factors. The Company also enters into staffing services engagements requiring
high-demand IT specialists for terms ranging up to 18 months, usually on a time
and materials basis. The Company is subject to the same general labor pressures
inherent in the IT services industry when performing these engagements, which
are primarily related to the Company's DSM and systems integration services. In
pricing its services under shorter term engagements, the Company evaluates the
existing labor market for IT specialists and the expected duration of the
engagement.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, selected
statements of operations data as a percentage of net revenues:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED
DECEMBER 31, JUNE 30,
------------------------------- --------------------

<S> <C> <C> <C> <C> <C>
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------

Revenues............................................................... 100.0% 100.0% 100.0% 100.0% 100.0%

Direct costs........................................................... 73.4 74.7 75.8 74.7 78.2
--------- --------- --------- --------- ---------

Gross profit........................................................... 26.6 25.3 24.2 25.3 21.8

Selling, general and administrative expense............................ 21.1 19.2 18.7 20.1 16.1
--------- --------- --------- --------- ---------

Income from operations................................................. 5.5 6.1 5.5 5.2 5.7

Interest expense....................................................... 0.3 0.3 0.1 0.1 0.2
--------- --------- --------- --------- ---------

Income before taxes.................................................... 5.2 5.8 5.4 5.1 5.5

Provision for income taxes............................................. 2.1 3.0 2.3 2.1 2.4
--------- --------- --------- --------- ---------

Net income............................................................. 3.1% 2.8% 3.1% 3.0% 3.1%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

24
<PAGE>

Comparison of Six Months Ended June 30, 1997 to Six Months Ended June 30,
1996

Revenues. The Company's revenues increased 61.7% to $39.3 million for the
six months ended June 30, 1997 compared to $24.3 million for the same prior year
period. This increase was generally attributable to volume increases within
existing contracts resulting from growth in the Company's ongoing business, an
expansion of the scope of services requested from the Company, increases in
international revenues and increases in revenues from newer lines of business.
International revenue, primarily from the Company's relationship with Digital in
Canada, increased to $7.4 million for the six months ended June 30, 1997
compared to $2.5 million for the same prior year period. Revenues from the
Company's Megacenter Operations increased by 16.0% to $18.1 million for the six
months ended June 30, 1997 compared to $15.6 million for the same prior year
period. Revenues from the Company's DSM services increased by 209.4% to $9.9
million for the six months ended June 30, 1997 compared to $3.2 million for the
same prior year period.

Direct Costs. The Company's direct costs increased 69.2% to $30.8 million
for the six months ended June 30, 1997 compared to $18.2 million for the same
prior year period. Direct costs consist primarily of direct labor costs and
related fringe benefit costs. As a percentage of revenue, direct costs increased
to 78.2% for the six months ended June 30, 1997 compared to 74.7% for the
comparable period in 1996. This percentage increase is primarily due to the
higher proportion of revenues from new engagements and new services for the six
months ended June 30, 1997 compared to the same period in 1996. In entering new
engagements, the Company may accept short term contracts that do not include the
economies of scale, leverage or short-term opportunities for productivity
improvements that are available in more mature or longer term engagements. The
Company believes that these initial contracts are important in penetrating new
markets and in establishing the degree of customer confidence required to secure
additional business with the potential for higher margins. The Company believes
that its margins from these engagements will improve as its costing and pricing
methodologies are refined.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 28.6% to $6.3 million in the six months
ended June 30, 1997 compared to $4.9 million for the same prior year period.
As a percentage of revenues, these expenses decreased to 16.1% from 20.1%
which the Company generally attributes to increased economies of scale from
higher revenues. The aggregate increase was primarily the result of the
continued development of additional service capabilities and other
expenditures necessary to support the Company's growth. The Company intends
to continue building its marketing, financial and administrative
infrastructure to enable it to support its growth opportunities.

Interest Expense and Provision for Income Taxes. Interest expense
increased to $87,000 in the six months ended June 30, 1997 compared to
$30,000 in the same prior year period. The Company's effective tax rate was
43.1% for the six months ended June 30, 1997 compared to 41.8% for the six
months ended June 30, 1996. This increase in tax rate was primarily due to
changes in the distribution of income among tax jurisdictions.

Comparison of Year Ended December 31, 1996 to Year Ended December 31, 1995

Revenues. The Company's revenues increased 51.6% to $57.9 million for the
year ended December 31, 1996, from $38.2 million for the year ended December 31,
1995. This increase was primarily due to volume increases within existing
contracts resulting from growth in the Company's ongoing business, an expansion
of the scope of services provided by the Company, increases in international
revenue and increases in revenues from newer lines of business. International
revenues, primarily from the Company's relationship with Digital in Canada,
increased 214% to $6.9 million for the year ended December 31, 1996 from $2.1
million for the year ended December 31, 1995. Revenues from the Company's
Megacenter Operations increased 14.4% to $34.9 million for the year ended
December 31, 1996 from $30.5 million for the year ended December 31, 1995.
Revenues from the Company's DSM services increased 325.0% to $10.2 million for
the year ended December 31, 1996 from $2.4 million for the year ended December
31, 1995.

Direct Costs. The Company's direct costs increased by 54.0% to $43.9
million for the year ended December 31, 1996 from $28.5 million for the year
ended December 31, 1995. As a percentage of revenues, direct costs increased

25
<PAGE>

to 75.8% for the year ended December 31, 1996 from 74.7% for the year ended
December 31, 1995. The Company attributes this increase to increased revenues
from DSM engagements and the attendant costs associated with its
establishment and development of this service offering.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 47.9% to $10.8 million for the year ended
December 31, 1996 from $7.3 million for the year ended December 31, 1995. As a
percentage of revenues, these expenses decreased to 18.7% for the year ended
December 31, 1996 from 19.2% for the year ended December 31, 1995 as a result of
increased economies of scale from higher revenues. The Company primarily
attributes the aggregate increase to the costs associated with the expansion of
its international infrastructure and to the costs associated with developing
contacts and marketing in its targeted international markets. Costs associated
with these initiatives were $3.1 million in 1996 compared to an insignificant
amount in 1995. In addition, selling, general and administrative expenses
increased as the result of hiring of additional management and administrative
personnel necessary to support the Company's growth.

Interest Expense and Provision for Income Taxes. Interest expense was not
material in either year as the Company satisfied its working capital needs
through cash generated from operations and in 1996 from a $5.0 million
investment by Safeguard. The effective tax rate decreased to 42.1% in 1996 from
51.1% in 1995 as a result of losses incurred in international tax jurisdictions
during 1995 for which no tax benefit was recorded.

Comparison of Year Ended December 31, 1995 to Year Ended December 31, 1994

Revenues. The Company's revenues increased 69.8% to $38.2 million for the
year ended December 31, 1995 from $22.5 million for the year ended December 31,
1994. This increase was primarily the result of diversification into new
business areas and volume increases within existing contracts. During 1995, the
Company realized revenues of $2.1 million in Canada, representing the Company's
initial international revenues. In addition, during 1995 the Company began
offering DSM services and recognized revenue of $2.4 million from these
engagements.

Direct Costs. The Company's direct costs increased by 72.7% to $28.5
million for the year ended December 31, 1995 from $16.5 million for the year
ended December 31, 1994. As a percentage of revenues, direct costs increased to
74.7% for the year ended December 31, 1995 from 73.4% for the year ended
December 31, 1994. This increase is attributable primarily to the early
financial performance of a new Megacenter Operations engagement. In these types
of engagements, the Company's business model is to improve margins as
productivity enhancements are identified and implemented. In addition, margins
decreased as a result of the commencement of international revenues in 1995 at
lower margins than the Company's other business.

Selling, General and Administrative Expenses. Selling, general, and
administrative expenses increased 55.3% to $7.3 million for the year ended
December 31, 1995 from $4.7 million for the year ended December 31, 1994. As a
percentage of revenues, these expenses decreased to 19.2% for the year ended
December 31, 1995 from 21.1% for the year ended December 31, 1994 as a result of
increased economies of scale from higher revenues. In addition, a portion of the
increase in selling, general and administrative expenses was attributable to
increased hiring of additional management and administrative personnel necessary
to support the Company's growth.

Interest Expense and Provision for Income Taxes. Interest expense was not
material in either year as the Company satisfied its working capital needs
through cash generated from operations. The effective tax rate increased to
51.1% in 1995 from 40.0% in 1994 as a result of losses incurred in international
tax jurisdictions during 1995 for which no tax benefit was realized.

UNAUDITED QUARTERLY RESULTS

Set forth below are selected unaudited financial statements of operations
data for the last ten fiscal quarters of the Company. In Management's
opinion, the results below have been prepared on the same basis as the
audited financial statements contained herein and include all material
adjustments, consisting of only normal recurring adjustments, necessary for a
fair presentation of the information for the periods when read in conjunction
with the Consolidated Financial Statements of the Company and Notes thereto
contained elsewhere in this Prospectus.

<PAGE>

(In thousands, except per share data)

Revenues.................. $ 7,619 $ 9,284 $ 11,041 $ 10,285 $ 11,498 $ 12,823 $ 15,996 $ 17,574 $ 19,161

Gross profit.............. 1,758 2,512 2,805 2,606 2,925 3,227 3,636 4,207 4,341

Income from operations.... 398 535 614 796 624 653 767 1,127 1,022

Income before income
taxes................... 374 517 579 758 601 647 760 1,117 1,017

Net income................ $ 183 $ 253 $ 283 $ 370 $ 351 $ 375 $ 440 $ 644 $ 584
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------

Pro forma net income per
share................... $ .03 $ .04 $ .04 $ .06 $ .06
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------

<CAPTION>
JUN 30
1997
---------
<S> <C>
Revenues.................. $ 20,177
Gross profit.............. 4,224
Income from operations.... 1,228
Income before income
taxes................... 1,146
Net income................ $ 648
---------
---------
Pro forma net income per
share................... $ .06
---------
---------
</TABLE>

THE COMPANY BELIEVES THAT ITS BUSINESS IS NOT SEASONAL. In addition, the
Company's quarterly operating results can be affected by the level of the
Company's investments in international and other business development and other
costs. Quarterly revenues and gross margins can be affected by the commencement
of new contracts and engagements.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $390,000 at June 30, 1997. Cash flow
generated by (used in) operations was $37,000 in 1994, $351,000 in 1995, ($3.4
million) in 1996 and ($3.2 million) in the six months ended June 30, 1997. The
Company primarily funded its uses of cash in 1996 and 1997 from proceeds
received from a $5.0 million investment by Safeguard in April 1996 and from
borrowings under the Company's credit facility. See "Certain Transactions." The
use of cash in operations in 1996 and in the six months ended June 30, 1997 was
primarily the result of increases in both billed and unbilled accounts
receivable, partially offset by income from operations and increases in accounts
payable and accrued expenses. The overall increase in accounts receivable was
primarily the result of increased revenues. Unbilled accounts receivable
increased from $157,000 at December 31, 1995 to $4.8 million at December 31,
1996 and $6.3 million at June 30, 1997. These increases were primarily the
result of increases in the amount of additional services ordered by Strategic
Clients which were beyond those contemplated by existing engagement contracts.
Since the Company receives these requests on an as-needed basis and must
immediately respond to these requests, the administrative processing to create
the applicable purchase orders often occurs after services have actually been
provided.

The Company's business is not capital intensive and capital expenditures in
any given year are ordinarily not significant. Capital expenditures amounted to
$51,000 in 1994, $580,000 in 1995, $970,000 in 1996, and $1.4 million for the
six months ended June 30, 1997. Capital expenditures in the first six months of
1997 included expenditures associated with the Company's new leased corporate
headquarters facility and costs associated with the development of new
operational, administrative and financial information system software. During
the remainder of 1997, the Company expects to incur additional capitalized costs
associated with the development of and implementation of new management
information systems.

The Company currently has a $7.5 million line of credit with CoreStates
Bank, N.A., of which $4.0 million was outstanding at July 31, 1997. Advances
under the line of credit are limited to 80.0% of certain eligible accounts
receivable of the Company. As of June 30, 1997, based on the amount of such
accounts receivable, the Company was eligible to borrow $3.2 million of the
remaining $3.5 million which was unused as of such date. The Company is
required to maintain certain financial and other covenants under that
facility. The Company intends to repay the outstanding amount under this
facility with a portion of the proceeds of this offering. See "Use of
Proceeds."

27
<PAGE>

The Company may expand its capabilities through the acquisition of other
businesses that are complementary to the Company's existing business. A portion
of the net proceeds from this offering may be used in the future for such
acquisitions. See "Risk Factors--Broad Discretion in Application of Proceeds;
Acquisition Risks" and "Use of Proceeds."

The Company currently anticipates that the net proceeds received by the
Company from this offering, together with amounts available under its existing
line of credit, cash generated from operations and existing cash balances will
be sufficient to satisfy its operating cash needs through December 31, 1998. The
Company believes that additional bank credit would be available to fund such
operating and capital requirements if the Company's cash needs expand more
rapidly than expected. In addition, the Company could consider seeking
additional public or private debt or equity financing to fund future growth
opportunities. No assurance can be given, however, that such bank credit or debt
or equity financing will be available to the Company on terms and conditions
acceptable to the Company, if at all.

RECENTLY ISSUED ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share." This statement establishes standards for computing and presenting
earnings per share and applies to entities with publicly held common stock or
potential common stock (as defined). This statement is effective for financial
statements issued for periods ending after December 15, 1997. Earlier
application is not permitted. This statement requires restatement of all
prior-period earnings per share data presented. The Company is presently
evaluating the impact, if any, the adoption of SFAS 128 will have on its
financial statements.

In February 1997, FASB issued SFAS No. 129, "Disclosure of Information about
Capital Structure." The Company is required to adopt the provisions of this
statement for the year ending December 31, 1998. This statement continues the
previous requirements to disclose certain information about an entity's capital
structure found in APB Opinions No. 10, "Omnibus Opinion-1996," No. 15,
"Earnings per Share," and FASB Statement No. 47, "Disclosure of Long-Term
Obligations," for entities that were subject to the requirements of those
standards. As the Company has been subject to the requirements of each of those
standards, adoption of SFAS No. 129 will have no impact on the Company's
financial statements.

In June 1997, FASB issued SFAS No. 130, "Reporting Comprehensive Income."
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components in the financial statements. The Company
is required to adopt the provisions of the statement for the year ending
December 31, 1998. Earlier application is permitted; however, upon adoption the
Company will be required to reclassify previously reported annual and interim
financial statements. The Company is presently evaluating the impact of this new
standard on its financial statements.

In June 1997, FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 requires the Company to
present certain information about operating segments and related information,
including geographic and major customer data, in its annual financial statements
and in condensed financial statements for the interim periods. The Company is
required to adopt the provisions of the statement for the year ending December
31, 1998. Earlier application is permitted; however, upon adoption the Company
will be required to restate previously reported annual segment and related
information in accordance with the provisions of SFAS No. 131. The Company is
presently evaluating the impact of this new standard on its financial
statements.

28
<PAGE>
BUSINESS

OVERVIEW

The Company provides a wide range of outsourced IT solutions and
professional services, including the operation of large-scale data center
complexes and networks ("Megacenter Operations"), distributed systems
management ("DSM"), staffing services and other IT services. The Company
provides these solutions and services, generally on a long-term, fixed-price
contractual basis, to its Strategic Clients which are global providers of IT
outsourcing services. The Company works with these Strategic Clients as part
of the IT outsourcing team in providing services to a wide range of corporate
Engagement Clients, accepting delivery responsibility for specific functional
roles within the outsourcing engagements. The Company's primary Strategic
Clients have been IBM and Digital. The Company is also working towards
establishing a Strategic Client relationship, with Perot Systems.
Representative Engagement Clients currently include Ameritech, Campbell Soup,
Citibank, McDonnell Douglas, PECO Energy and Ryder Systems Corp. The
Company's revenues have expanded at a compound annual growth rate of 60.5% to
$57.9 million in 1996 from $22.5 million in 1994. Revenues in the first six
months of 1997 increased by 61.7% to $39.3 million compared to $24.3 million
in the first six months of 1996. For the years ended December 31, 1995 and
1996 and for the six months ended June 30, 1997, approximately 92%, 74% and
62% of the Company's revenues, respectively, were derived from fixed-price
contracts. As of June 30, 1997, the Company had over 1,300 employees in 14
Company offices and 82 engagement locations in the United States, Canada,
Mexico, Brazil and the United Kingdom.

The Company believes that it is differentiated from other IT service
providers through its focus on relationships with Strategic Clients, its ability
to perform successfully and profitably under multi-year, fixed-price contracts
and its ability to provide services on a national and international basis. The
Company's strategy is to build long-term relationships with selected Strategic
Clients by understanding their business needs and by providing specific services
within large-scale outsourcing engagements more cost-effectively than its
Strategic Clients. The Company's services range from basic data center
management operations to help desk services, business process reengineering and
software engineering support. The Company delivers its services through customer
teams, each of which has full responsibility for the delivery of services to a
specific Strategic Client. The Company's close relationships with its Strategic
Clients, its ability to rapidly transition and integrate its management
personnel into new engagements, and its ability to effectively manage personnel
in the client environment, allow the Company to profitably price its services
under fixed-price contracts. By offering fixed-price contracts, the Company
reduces the execution and pricing risk for its Strategic Clients in their
large-scale outsourcing engagements. The Company has developed and is continuing
to expand its international service delivery capabilities in order to leverage
its Strategic Clients' increasingly global IT outsourcing efforts.

Large-scale outsourcing engagements typically involve the acquisition of
IT assets by the outsourcing provider from the engagement client. These
assets can range from fixed assets, such as entire data centers and computer
networks, to personnel, such as data center, help desk and programming staff.
The Company's role in outsourcing engagements usually involves the retention
of IT personnel from the Engagement Client. By retaining employees as part of
its new outsourcing engagements, to date the Company's growth has not been
impeded by the availability of qualified technical personnel and the Company
has avoided the significant staffing costs and expenses normally associated
with new engagements within the IT services industry. In each new outsourcing
engagement, the Company utilizes its expertise in IT staffing and operations
to evaluate and retain outsourced staff and to reengineer the operations of
the outsourced function. Through this process, the Company historically has
been able to improve the performance of, and manage on a more cost-effective
basis, the outsourced function for its clients.

INDUSTRY

29
<PAGE>

The Company believes that a number of factors have resulted in a significant
shift in the awareness and acceptance by organizations of the benefits of IT
outsourcing. Historically, most IT outsourcing arrangements were premised on the
primary goal of cost reduction and were often limited to discrete functions such
as the management of data centers. Over the past several years, however, a
number of fundamental developments have occurred which have caused organizations
to reconsider the benefits of outsourcing their IT functions. These developments
include global competition, businesses' focus on "core competencies,"
accelerating technological change and the need for enterprise-wide system
integration arising from the rapid growth in the number of software applications
and end-users throughout organizations. The principal technology-driven change
is the continuing movement by large corporations to open, distributed computer
networks using client/server architecture. The move to open standards based
computing environments continues to accelerate today as a result of improvements
in price/performance ratios for computer systems and advances in open computing
standards and enabling technologies. These technological changes are making it
increasingly difficult and expensive for businesses to maintain in-house the
necessary technical and management capabilities to handle both their current IT
needs and to effectively exploit rapidly evolving technologies.

One of the key trends occurring in the IT outsourcing industry is an
increasing use of business partnerships and alliances among outsourcing vendors
to deliver a broader range of technical skills more cost-effectively to the
Engagement Client. Factors driving this trend include the complexity and
convergence of technology required in outsourcing engagements, lack of available
technical resources, shortened delivery times, and investment costs of
internally building technical capabilities. As a result, outsourcing providers
recognize that it is not practical to internally develop and manage all of the
technical skills and critical resources necessary to perform increasingly
complex outsourcing engagements. Outsourcing engagements are typically
characterized as being long-term in nature and often involve the transfer by the
client of certain of its facilities, technologies and employees to the
outsourcer. The outsourcer's responsibilities under IT engagements may vary
widely from engagement to engagement, ranging from the provision of certain
specific IT functions to the management of a client's entire IT operation.
Within these engagements, the relationships involve the provision of employees
or consultants by the subcontracting vendor to the outsourcing vendor. The
subcontractor is normally paid on a time and materials basis and the outsourcing
vendor retains the managerial responsibility for the IT services provided by
such persons.

THE OAO ADVANTAGE

The Company's approach is to be a value-added partner of choice to a limited
number of Strategic Clients in the provision of outsourced IT solutions and
professional services. This client focus establishes a "customer intimate"
relationship in which the Company's Strategic Clients are willing to assign
performance management responsibility to the Company for its role in the
outsourcing engagements, usually on a fixed-price basis. The Company's close
relationships with its Strategic Clients, its ability to rapidly transition and
integrate its management personnel into new engagements, and its ability to
effectively manage personnel in the client environment, allow the Company to
profitably price its services under fixed-price contracts. By generally
operating under fixed-price contracts, the Company reduces the execution and
pricing risk for its Strategic Clients in their large-scale outsourcing
engagements. The Company believes that this advantage significantly increases
its ability to compete in the provision of IT solutions and professional
services.

Limited Number of Strategic Clients. The Company intends to continue
focusing on maintaining close relationships with a limited number of Strategic
Clients on a global basis. By limiting the number of these
relationships, the Company believes that it enhances its standing as a
value-added partner of choice, and limits competitive threats to its Strategic
Clients. Therefore, the Company is better positioned to obtain additional
engagements which result from the continued growth in the demand for the global
IT outsourcing solutions and services provided by the Company's Strategic
Clients.

Customer-Intimate Relationships. The Company supports its Strategic Client
relationships through a dedicated customer team for each Strategic Client which
seeks to understand the business objectives of that Strategic Client and to
identify common business opportunities. The Company also supports its Strategic
Client relationships by co-locating its offices with those of its Strategic
Clients and Engagement Clients and by supporting each engagement with employees
possessing extensive background in the services required by the Strategic

30
<PAGE>

Client. By delegating performance management responsibility to the Company, the
Strategic Client is afforded the opportunity to place greater focus on other
portions of the overall engagement.

Fixed-Price, Multi-year Contracts. The Company believes that it provides
added value by offering fixed-price, multi-year contracts to its Strategic
Clients. Within the industry, IT servicing vendors normally provide employees to
perform or support a specific IT function on a time and materials basis. In
contrast, the Company seeks to assume full performance management responsibility
for its specific IT functions within the total engagement. As a result, the
Company is able to offer its Strategic Clients greater cost certainty during the
course of the engagement and the Company is afforded the opportunity to realize
significant benefits by achieving efficiencies through improved management
practices and the establishment of new technical and operational methodologies.

Comprehensive IT Outsourcing Solutions and Professional Services. The
Company provides its Strategic Clients with a comprehensive offering of IT
outsourcing solutions and professional services, including: Megacenter
Operations; restructuring of server and PC networks for efficient centralized
operations and management; transition of customer IT environments to new
client/server structures; help desk implementation and operations; development
and sustaining support to applications systems; and system engineering services.
The Company has developed, and is expanding, the capability to provide such
services internationally in response to its Strategic Clients' increasingly
global needs. The Company currently maintains offices in the United States,
Canada, Mexico, Brazil and the United Kingdom.

Retention of Engagement Client Personnel. The Company intends to continue
its practice of selectively retaining the majority of the outsourced personnel.
The Company approaches its new employees on the basis that they, and the
capabilities that they represent, are the most critical assets of the Company.
With the Company, employees have the opportunity to participate in the rewards
of the Company's growth, manage their own areas of responsibility, and advance
in their profession. These practices have provided the Company with a large
number of dedicated and talented employees and have allowed the Company to
minimize recruiting and hiring expenses when entering into new engagements. As
the Company achieves efficiencies at many of its engagements it has generally
been able to reduce personnel requirements. This has enabled the Company to
leverage existing employees to expand its role in existing engagements and to
obtain and support new engagements, while providing these individuals with more
diverse career opportunities.

Seamless Transition. The Company has consistently provided its Strategic
Clients with the capability to transition select functions from its Engagement
Clients to the outsourcing engagement without interruption of those functions.
The customer team organizes its employees, augmented by Enablement Team
personnel, into "Transition Teams," assigning them the task of selectively
retaining a high percentage of the incumbent workforce, establishing a
contingent redundance in the workforce, and providing augmentation of key
positions with Company personnel during the transition period.

GROWTH STRATEGY

The Company's goal is to become one of the premier providers of outsourced
IT solutions and services by pursuing the following principal strategies:

Leverage Existing Relationships. By establishing and nurturing close
relationships with a limited number of Strategic Clients, the Company intends to
continue building a reputation for performance that supports the Company's
selection by its clients as a value-added partner of choice. In support of this
strategy, the employees that deliver services to Strategic Clients are organized
in customer teams, with each customer team responsible for a particular
Strategic Client. In addition to designated customer teams, the Company also
maintains engagement managers who are responsible for each Strategic Client
relationship and who seek to identify additional business opportunities within
the Strategic Client organization. As a result of these relationships, the
Company has been granted several engagements by Strategic Clients without the
requirement that the Company submit to a competitive selection process.

<PAGE>

product providers who value the Company's outsourcing approach. The Company
recently began its third engagement with the energy systems group of Perot
Systems and is working towards establishing a Strategic Client relationship with
Perot Systems. The Company is also working to establish business opportunities
with NCR also with the objective of achieving a Strategic Client relationship.
In expanding its base of Strategic Clients, the Company intends to refrain from
pursuing engagement or partnership opportunities with organizations competing
directly with its existing Strategic Clients.

Increase International Presence. The Company plans to continue to expand
its international presence to capitalize on global outsourcing opportunities
with its Strategic Clients. The Company currently maintains offices in Canada,
Mexico, Brazil and the United Kingdom, and anticipates opening additional
offices within the next 18 months in Continental Europe and the Asia-Pacific
Rim. The Company also uses joint venture relationships with local IT services
providers in order to broaden its international service capabilities. The
Company has established a joint venture relationship with Capita Managed
Services Limited, a local IT service provider in the United Kingdom, and has
executed letters of understanding regarding the establishment of joint venture
relationships with Stefanini Consultoria e Assessoria em informatica in Brazil
and with Comtex Group Limited in New Zealand.

Develop Industry-Specific Expertise. The Company intends to selectively
develop expertise in industries that may offer higher-margin opportunities for
the Company's IT solutions and professional services. The Company has invested
in developing expertise in the healthcare industry, and has recently begun an
engagement with IBM which leverages the Company's industry expertise to provide
a state-of-the-art health data network to healthcare service providers. The
Company will target other vertical markets that are undergoing regulatory,
technological or competitive changes which provide opportunities for increased
outsourcing of IT functions. The Company will likely make investments in new
technical and service capabilities to enhance its vertical market strategy.

Pursue Acquisitions and Alliances. The Company intends to pursue expansion
opportunities with other IT service providers by means of acquisitions or
alliances. The Company believes that new technical skills, additional industry
expertise, a broader client base and an expanded geographic presence may result
from these activities.

OAO'S SERVICES

Megacenter Operations Management. The Company's Megacenter Operations
management services cover the entire spectrum of the management and operation
of large scale computing equipment and all of its ancillary equipment, systems,
services and associated networks. This generally includes the performance of any
task associated with the operation or management of a traditional mainframe data
center. IBM currently engages the Company to provide management and operations
services at three of its four Megacenters in the U.S. Each Megacenter represents
the networking of IBM's data centers across a geographic region.

The Company provides services which support all aspects of data center
management such as policy formulation, planning, process and procedure creation,
service level development, staffing and directing the work force, budgeting and
controlling, relocation and consolidation, and upgrading of equipment, services
and systems. In performing these services, the Company is normally responsible
for the attainment of service level requirements and has the flexibility of
directing the personnel as it deems appropriate.

The Company also provides services which involve all elements of the
technical operations of a data center, including management and operation of
distributed networks of systems, computer room equipment scheduling and
operations, network center operation and management, tape library management,
off-site data storage, disaster planning and recovery, tape and print equipment
operations, print distribution, help desk and call center operations,
move/add/change operations for user equipment, computer and network systems
programming, computer and network systems performance measurement and tuning,
production job scheduling and control for applications systems, maintenance and
development of software applications systems, and quality assurance for
technical operations.

A typical Megacenter engagement involves supporting a Strategic Client by
selectively accepting functions within the total outsourcing engagement. The
Company's role is to assume full responsibility for managing, staffing and
delivering service level requirements for those functions. For example, in the
Company's seven-year contractual engagement to support a very large IBM

<PAGE>

Megacenter dispersed across the Northeast region of the U.S., the Company
performs the functions of console operations, network operations, output
processing operations, data storage operations, and user services functions such
as move/add/change operations. This Megacenter utilizes a network of more than
100 large mainframe computer configurations that support both the Strategic
Client's internal requirements as well as those of its Engagement Clients.
Within this engagement, the Company performs defined functions on a fixed-price
basis and also supports a wide range of additional functions pursuant to certain
staffing service provisions under the contract. These additional functions may
be performed by the Company on a short-or-long-term basis depending on the
requirements of the Strategic Client. The Company performs these functions in
the facilities of both its Strategic Clients and its Engagement Clients,
including regional, national and international locations of its Engagement
Clients.

Distributed Systems Management. The Company's primary focus in DSM services
is on the evolving market for outsourced support of the desktop-network
requirements of its Engagement Clients. The Company has also been engaged to
support mid-range system applications and operations. The Company believes that
the trend toward outsourcing the operation and management of desktop-network
requirements presents a major opportunity for growth. The services being
delivered by the Company vary by engagement and include: network operating
system architecture and implementation; evaluation and redesign of server
architecture; communications network evaluation and restructuring for improved
connectivity and efficiency; design and implementation of E-mail solutions;
rollout of the new desktop system into the user environment; transition services
to support a smooth migration to a new centrally managed desktop environment;
help desk services; deskside training services; asset management support and
control; design and implementation of automated centralized asset control; and
operation support, including activities associated with changes in technology,
the client's organizational structure or physical plant changes. The Company
currently has engagements in three major Strategic Client programs, two with IBM
and one with Digital.

As an example of the Company's DSM services, the Company has teamed with IBM
to provide support for a major electric utility. This engagement involves the
outsourcing of the Engagement Client's entire desktop-server-network
configuration. The objective of the engagement was initially to rationalize
the environment to enable centralized management and operations permitting the
Strategic Client to improve effectiveness and control costs. The initial scope
of this engagement was for development and implementation of the network
operating system into the existing server environment. The scope of this
engagement has evolved to include designing a new server structure, support to
reengineering the communications environment, implementation of a new standard
desktop configuration, and user support services to include deskside support.
This Engagement Client's environment includes over 6,000 workstations and
approximately 100 servers.

Other IT Outsourcing and Staffing Services. The Company's relationships
with its Strategic Clients, and its posture as a value-added partner of choice
working within client engagements and facilities, provide opportunities to be
highly responsive to evolving client needs. As a result, the Company is
well-positioned to gain insight into market trends and make investments required
to pursue opportunities that result from these trends. As a result, the Company
may more selectively broaden its service offerings.

System engineering services are a natural adjunct to the Company's other
services and represent a large and growing need of its Strategic Clients. The
Company has completed a number of short to medium term engagements in this area
and recently began an engagement in support of a systems integration project
with Perot Systems. Within this complex project, involving the development and
implementation of a system to support the operation of the deregulated electric
utility market, the Company is supporting the system test function and providing
networking expertise across the project. The Company believes that there is a
growing market for outsourced IT services in support of deregulation.

Staffing services are a part of the Company's service offerings to its
Strategic Clients. These services, provided on a time and materials basis,
are regularly utilized within engagements to meet short or indefinite term
requirements, to deliver personnel who augment the client's staffing or to
respond to requirements that cannot be sufficiently defined to permit fixed
prices. There are also instances where an engagement has started on a time
and materials basis and evolved to a fixed-price basis as the requirement
became sufficiently defined.

Industry specific services represent a small, but growing and important
component of the Company's business. The Company has found that it can provide
significant added value to industry-specific markets by melding its proven

<PAGE>

capabilities in IT with in-depth expertise in the targeted market. The Company
initially targeted the healthcare industry based upon the dynamics of the
industry. An evaluation of the information aspects of the industry clearly
indicated the value of shared information across the dispersed providers of
healthcare and related businesses such as employers and insurers. For example,
since 1995 the Company has collaborated with a Strategic Client to determine the
market's needs, define a delivery approach and represent the service offering to
potential engagement clients. In 1997, this Strategic Client awarded the Company
a five-year contract to operate the "hub" of the network solution, provide
industry-specific help desk expertise and provide continuing marketing
assistance and customer support services. This contract has significant growth
opportunity if this service is broadly accepted by the healthcare industry.

RELATIONSHIPS WITH STRATEGIC CLIENTS

IBM. The Company's relationship with its first Strategic Client, IBM,
has continued to expand in terms of revenues, the range of services provided,
the number of engagements and the number of IBM business units which have
engaged the Company's services. The Company won its first engagement with IBM
in January 1993, successfully competing against several existing IBM
contractors, when it was chosen to perform a number of specific functions in
a large outsourcing contract which IBM has been awarded by McDonnell-Douglas.
The initial three year term of this engagement has subsequently been extended
to a ten year term and the scope of the engagement now encompasses the
performance of functions in support of IBM's Central Megacenter. In August
1993, the Company won a similar engagement to perform a number of specific
functions in support of IBM's internal computer complex in the mid-Hudson
Valley in New York. The Company employed approximately 100 former IBM
employees at the beginning of this engagement. The initial two year term of
this engagement has subsequently been extended to a seven year term and the
scope of the engagement now encompasses the performance by more than 500
employees of various functions in support of IBM's Northeast Megacenter. In
early 1995, the Company won a three year engagement to perform specific IT
functions in support of IBM's South Megacenter. As a result of these
engagements, IBM currently engages the Company's services at three of its
four U.S. Megacenters.

IBM has also engaged the Company to perform IT services in support of other
large outsourcing contracts which it has been awarded, including engagements
with Ameritech, Amtrak, Blue Cross /Blue Shield of New Jersey and PECO Energy.
In 1995, the Company initiated a relationship with an internal IBM team that was
pursuing a new role for IBM in the rapidly evolving healthcare industry. The
objective of this activity was to apply IBM's "network-centric computing"
approach to the revolution in information needs in the healthcare industry. As a
result of these activities, the Company was awarded a five year contract to
provide industry-specific help desk support, customer support for marketing and
start-up activities, and technical operations for the Atlanta hub of IBM's new
Health Data Network service offering. The Company was chosen to support
Ameritech, IBM's Health Data Network and PECO Energy engagements without having
to submit competitive bids. In addition, IBM has selected the Company, without
competitive bid, as a partner in at least six major outsourcing engagements for
which IBM is currently in the bidding process.

Digital. Digital became a Strategic Client in January 1995 when the Company
was awarded a contract to provide services in support of an Engagement Client in
Vancouver, British Columbia. Later in 1995, the Company was awarded additional
engagements with Digital in Central and Eastern Canada. During 1996, the Company
became a delivery partner of Digital across all of Digital's Canadian
outsourcing engagements and played an important role in assisting Digital to
obtain a long-term extension of a large outsourcing contract in Canada. In 1996,
Digital was awarded an engagement to provide services in support of one of the
industry's largest desktop outsourcing engagements. This particular Engagement
Client is one of the world's largest financial institutions and presents other
global opportunities for Digital. As a result of these engagements, the
Company's relationship with Digital has begun to expand into other geographic
areas, including the U.S. and the United Kingdom.

Other Evolving Relationships. The foundation of the Company's business
strategy is to identify and build lasting relationships with certain major
participants in the IT outsourcing market. In 1995, the Company identified Perot
Systems as a high growth provider of IT outsourcing that was not a direct
competitor of its existing Strategic Clients. During 1995, the Company was
awarded a small engagement by Perot System's energy systems group. In 1996 and
1997, the Company was awarded two larger engagements with this organization. The
Company believes that the reputation being built and the client understanding
gained in these engagements provides a platform for the pursuit of a long-term
Strategic Client relationship.

<PAGE>

In 1995, the Company began to acquire insight and understanding of the
organization and business plans of NCR (then a part of AT&T). This commitment
has recently begun to yield results as the Company has been awarded a number of
small engagements with NCR in 1997. The Company believes that there is an
opportunity to develop a Strategic Client relationship with NCR.

OPERATIONS

The Company's organizational structure is composed of three parts: customer
teams, an enablement team and corporate management and staff.

Customer teams are responsible for the actual delivery of the Company's
services and provide individual, specific customer focus. Each customer team has
full accountability for the success of the Company's relationship and business
execution with a particular Strategic Client and is directly responsible
for the marketing, closing, and delivery of services to that client. Within
customer teams empowered entrepreneurial business units are responsible for a
single or group of contracts or for a geographical area with its Strategic
Client.

The Company's enablement team is responsible for assisting customer teams in
handling the significant upfront activities which occur during the beginning and
transition phases of engagements. The enablement team precedes customer teams
when entering new geographical locations and establishes the required
infrastructure to service clients at that location. When entering new
international locations, this often means identifying legal, accounting,
bookkeeping, and human resource support; organizing a new business entity; and
acquiring physical facilities. The enablement team also supports transition
efforts (new engagement start-ups) by providing experienced specialists to
provide facility, administrative and other support to the customer team.

The Company's corporate management and staff, which includes the Strategic
Programs Group, is responsible for establishing the strategic direction of the
Company, strategic marketing, investor relations, corporate finance and
accounting, human resource policy guidance, and other administrative support
services.

In structuring each outsourcing engagement, the Company works with its
Strategic Clients to identify elements within the engagement where the Company
can assume full responsibility for contract performance. The breadth of the
Company's service offerings provides meaningful flexibility to the Strategic
Client in providing a total solution to the Engagement Client's outsourcing
requirements. The Company's roles include providing services both at Strategic
Clients' and Engagement Clients' locations locally, nationally and
internationally.

In a typical engagement, the Company will retain the personnel working
within the function that is being outsourced. The Enablement Team will support
this transition, by establishing the required infrastructure to support the new
work site. In addition, this team will support the process of transitioning the
incumbent personnel, evaluating their capabilities and selectively hiring
productive outsourced personnel as Company employees. The Company strives to
cultivate strong morale and develop its culture with new employees, emphasizing
the degree to which it values these employees, who often find the opportunity to
work with the Company appealing compared to their previous positions working in
a non-core function. The customer team also focuses on "seamless transitions" by
minimizing any disruption within the outsourced function, often overstaffing new
engagements to ensure client satisfaction. Since the Company normally selects
the majority of the staff on an engagement from incumbent personnel, the
recruiting function for each new engagement is normally minimal. Therefore, the
Company's growth to date has not been impeded by the availability of qualified
technical personnel, and the Company has avoided the significant staffing costs
and expenses normally associated with new engagements within the IT services
industry. As the Company implements efficiencies at an engagement, it is able to
selectively utilize existing employees for other engagements and business
opportunities.

As each outsourcing engagement is transitioned over to the Company,
operational management is inserted into the engagement to oversee the Company's
role on an ongoing basis. Within customer teams, the operational managers and
engagement staff are formed into empowered, entrepreneurial business units,
responsible and accountable for the outcome of this engagement. During the early
stages of each engagement, the outsourced function is evaluated and reengineered
for quality of performance and efficiency, as the Company seeks to drive down
operational costs while exceeding service delivery expectations of the client.
Each customer team has full accountability for the success of the Company's
relationships and business execution with its client, and is directly

<PAGE>

responsible for delivering contracted solutions and services, and identifying,
marketing and closing additional new business opportunities within existing
engagements.

Sales and Marketing

To date, the Company has focused its marketing efforts on maintaining and
expanding its relationships with a limited number of Strategic Clients. The
Company's customer-intimate business model is the driving force of the sales
and marketing functions. Since the Company has co-located its offices with
those of its Strategic Clients, its customer teams are designed to focus on
and serve the Strategic Client in targeted market segments. Each customer
team includes two or more account executives who have the responsibility to
expand the Company's business with that Strategic Client. Since the customer
teams are closely aligned with and co-located with the Strategic Client, the
Company is in a better position to anticipate and respond to the Strategic
Client's unique needs, thereby creating a competitive advantage by ensuring
account control and growth with its Strategic Clients. After establishing its
customer team in a manner which the Company believes will exceed its
Strategic Client's expectations, the Company seeks to expand its marketing
activities from that location.

Once the customer teams can anticipate the Strategic Client's future needs,
the Company's Strategic Programs Group is responsible for positioning the
Company to meet these needs through new service offerings. Under the leadership
of the Strategic Programs Group, the Company has made and will continue to make
significant investments to position itself in key industries, technologies and
global markets.

COMPETITION

The IT services market is highly competitive and is served by numerous
firms, including systems consulting and integration firms, professional services
companies, application software firms, temporary employment agencies, the
professional service groups of computer equipment companies, facilities
management and management information systems outsourcing companies, certain
"Big Six" accounting firms, and general management consulting firms. Many
participants in the commercial IT services market have significantly greater
financial, technical and marketing resources and generate greater revenues than
the Company. The Company believes that the principal competitive factors in the
commercial IT services industry include responsiveness to client needs, the
ability to cause the transition of the outsourced services to occur on a prompt
and seamless basis, quality of service, employee relations, price, management
capability and technical expertise. The Company believes that its ability to
compete also depends on a number of competitive factors outside its control,
including the ability of its competitors to hire, retain and motivate skilled
technical and management personnel, the price at which others offer comparable
services and the extent of its competitors' responsiveness to client needs.

FACILITIES

The Company's headquarters and principal administrative, sales and marketing
functions are located in approximately 11,500 square feet of leased space in
Greenbelt, Maryland. This lease expires in December 2003. The Company leases
office space in seven U.S. cities, as well as in Vancouver, British Columbia;
Toronto, Ontario; Calgary, Alberta; Hortalandia, Brazil; and Mexico City,
Mexico. Additionally, the Company shares an office with a joint venture partner
in London, England.

The Company anticipates that additional space will be required as business
expands and believes that it will be able to obtain suitable space as needed. In
addition, the Company intends to open offices during the next 18 months in
Continental Europe and the Asia-Pacific Rim to complement its current
international offices.

EMPLOYEES

As of June 30, 1997, the Company employed over 1,300 full time persons.
Approximately 120 of these employees have managerial responsibilities, and over
1,150 have technical responsibilities. The Company typically utilizes the
services of independent contractors only in certain international engagements.
The Company believes that its relationships with its employees are good.

<PAGE>

Six of the Company's employees are represented by the Southern California
Professional Engineering Association under a collective bargaining agreement
which expires on January 10, 1999. Fourteen of the Company's employees are
represented by the International Association of Machinists and Aerospace
Workers under a collective bargaining agreement which expires on January 15,
1999. Twenty-four of the Company's employees are represented by the Office and
Professional Employees International Union (the "OPEIU") under a collective
bargaining agreement that expired on February 28, 1997 but which remains in
effect and is currently being negotiated. The Company believes that its
relationships with each union is good and it has no reason to believe that it
will not reach a satisfactory new agreement with the OPEIU.

LEGAL PROCEEDINGS

The Company believes that there are no claims or actions against the Company
the ultimate disposition of which will have a material adverse effect on the
Company's results of operations or consolidated financial position.

<PAGE>

MANAGEMENT

OFFICERS AND DIRECTORS

The names, ages and positions held by the officers and directors of the
Company are as follows:

<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Directors and Executive Officers

William R. Hill................... 51 Chief Executive Officer, President and Director
Edgar M. Fields................... 58 Chief Operating Officer
Samuel D. Horgan.................. 48 Chief Financial Officer and Treasurer
Richard M. Clyne.................. 49 Senior Vice President
Richard Eubanks................... 55 Senior Vice President
Harvard V. Hopkins, Jr............ 59 Senior Vice President
Gerry Lalonde..................... 45 Senior Vice President
Donald G. Miller.................. 60 Senior Vice President
Evelyn A. Scott................... 43 Senior Vice President
Howard G. Ulep.................... 54 Senior Vice President
Jerry L. Johnson (2).............. 49 Chairman of the Board of Directors
Cecile D. Barker (1)(2)........... 53 Vice Chairman of the Board of Directors
Thomas C. Lynch (1)............... 55 Director
Frank Foster (2).................. 63 Director

Other Company Officers

Christine M. Hazell............... 38 Vice President
Anderson O. Inniss................ 48 Vice President
Patrick H. O'Neill................ 52 Vice President
Shiraz Patel...................... 37 Vice President
Stu Schmidt....................... 40 Vice President
John T. Weisman................... 52 Vice President
</TABLE>

- ------------------------
(1) Member of the Compensation Committee of the Company's Board (of) Directors
(2) Member of the Audit Committee of the Company's Board of Directors

William R. Hill has been President and Chief Executive Officer and a
Director of the Company since March 1996. From 1992 to March 1996, Mr. Hill was
the Senior Vice President of the Commercial Systems Group of OAO Corporation
(the "Commercial Systems Group"). From 1990 to 1992, Mr. Hill was Vice President
for Planning Research Corporation ("PRC"), a systems integration company. From
1985 to 1990, Mr. Hill was Vice President of Business Development for OAO
Corporation. He previously was Director of the Legislative and Committee Systems
Division for the United States House of Representatives and a systems engineer
and national account manager for NCR. Mr. Hill has over 20 years of experience
in the information systems and services industry.

Edgar M. Fields has been Chief Operating Officer of the Company since March
1996. From March 1994 to March 1996, Mr. Fields was Group Vice President of
Operations for the Commercial Systems Group and from November 1992 to March
1994, he participated in the formation of the Commercial Systems Group. From
1987 to 1991, Mr. Fields was President of the Systems Services Group of PRC.
From 1966 to 1987, Mr. Fields held various senior management positions with PRC.
Mr. Fields has over 35 years of experience in the delivery of IT services.

-38-
<PAGE>

Samuel D. Horgan joined the Company in July 1997 as Chief Financial Officer
and Treasurer. From January 1996 until July 1997, Mr. Horgan was the Chief
Financial Officer for Worldspan, Ltd., a global computer reservation system and
systems integrator in the airline industry. Before joining Worldspan, Ltd., Mr.
Horgan was Chief Financial Officer and Treasurer of Computer Task Group, Inc., a
large publicly traded IT services provider, from 1986 to December 1995. Mr.
Horgan began his career at Computer Task Group in 1981 as a financial analyst.
Mr. Horgan has over 26 years of experience in business acquisition, management,
finance and operational reorganization.

Richard M. Clyne has been Senior Vice President of the Company since
January 1997 and has responsibility for the Company's relationship with IBM
and international opportunities with this Strategic Client. From September
1994 to January 1997, Mr. Clyne was the Director of Delivery Services in
IBM's Asia Pacific Group. From January 1993 to August 1994, Mr. Clyne was
Site Executive of IBM's largest outsourcing account in Long Beach,
California. From July 1990 to December 1992, Mr. Clyne established and
managed IBM's Partner and Vendor Relations unit. Mr. Clyne has over 26 years
of experience in the IT industry.

Richard Eubanks has been a Senior Vice President of the Company since
January 1997 and has responsibility for the Company's relationship with IBM and
for the IBM customer team. From 1967 to December 1996, Mr. Eubanks held various
technical and executive positions at IBM. In his career at IBM, Mr. Eubanks
developed the first gas panel display using scan technology which significantly
lowered the display manufacturing cost. Mr. Eubanks also managed IBM's second
largest outsourcing operation in Chicago, Illinois. Mr. Eubanks has 30 years of
experience in the IT industry.

Harvard V. Hopkins, Jr. has been a Senior Vice President of the Company
since March 1996 and has responsibility for the support of new engagement
startups and transitioning and oversight of the Company's programs on commitment
to quality. From October 1994 to March 1996, Mr. Hopkins was a Vice President in
the Commercial Systems Group. From September 1990 to October 1994, Mr. Hopkins
served as Executive Vice President of Operations for KENROB and Associates, an
IT consulting firm. From 1988 to 1990, Mr. Hopkins was Director of Eastern
Operations for OAO Corporation's Information Systems Group and Vice President of
its Space Systems Division (the "Space Systems Division"). Mr. Hopkins was a
Group Manager for OAO Corporation in 1987. In 1987, Mr. Hopkins retired from his
position as a Colonel in the United States Marine Corps, where he had held
various management, technical and training positions since 1960. Mr. Hopkins has
over 22 years of experience in the IT field.

Gerry Lalonde has been a Senior Vice President of the Company since March
1996 and has responsibility for the Company's relationship with Digital and
for international opportunities with this Strategic Client. From July 1995 to
March 1996, Mr. Lalonde was Chief Operating Officer of the Company's Canadian
subsidiary. From 1985 to July 1996, Mr Lalonde held various positions at
Digital, including Managing Director and General Manager of Digital's
outsourcing management services for Canada; Business Development Manager for
Western Canada; Chief Financial Officer for Digital's New Zealand and Fijian
subsidiaries; and Manager of Management Information Systems for Digital's
Canadian subsidiary. Mr. Lalonde has over 20 years experience in finance, IT,
business development and management.

Donald G. Miller has been a Senior Vice President of Operations for the
Company since October 1996 and is responsible for the technical execution of the
Company's engagements, development of new service offerings and international
business development. From 1990 to October 1996, Mr. Miller held various
positions at OAO Corporation, including Vice President of the Network Services
Division, Vice President of Systems Management of the Commercial Systems Group
and Vice President of the Space Systems Division. In 1990, Mr. Miller retired
from his position as a Colonel in the United States Marine Corps, where he held
various management positions in the IT field, including Head of Information
Resources Management. Mr. Miller has over 30 years of management experience in
the IT field.

Evelyn Scott has been a Senior Vice President of the Company since March
1996 and is responsible for new business development in Latin America with the
IBM customer team. From 1983 to March 1996, Ms. Scott held various positions
with OAO Corporation, including President of OAO Systems, Inc., a subsidiary
that focused on local government and regional business development, Vice
President of OAO Services, Inc., a subsidiary that offered leading

-39-
<PAGE>

edge technology to state and local governments, and Manager of the Strategic
Programs Group. Ms. Scott has over 15 years experience in the IT field.

Howard G. Ulep has been a Senior Vice President of the Company since
February 1997 and is responsible for the evaluation of acquisition
opportunities and new technologies, services and markets. In October 1988,
Mr. Ulep founded Wye Technologies, a telecommunications applications provider,
and served as Chief Executive Officer until December 1996 when it was sold to
Northern Telecom. In 1981, Mr. Ulep founded Capital Systems, Inc., a systems
integration provider, where he served as Chief Executive Officer until the
company was purchased in 1986 by SHL Systemhouse. Mr. Ulep served as Vice
President of Strategic Systems for SHL Systemhouse until 1988. Mr. Ulep has
previously held senior management positions with the United States House of
Representatives Computer Center, Computer Sciences Corporation and
Informatics, Inc. Mr. Ulep has over 20 years experience in the IT field.

Jerry L. Johnson has been the Chairman of the Board of Directors of the
Company since April 1996. Mr. Johnson has been the Senior Vice President of
Operations of Safeguard since September 1995. From 1985 to 1995, Mr. Johnson
held various senior executive positions with US West, including Group Director,
Vice President of Network and Technology Services and Vice President of
Residence Planning. From 1983 to 1985, he was President and Chief Executive
Officer of Northwestern Bell Information Technologies, a subsidiary of
Northwestern Bell Telephone Company. Mr. Johnson is a director of USDATA
Corporation, a Safeguard partnership company that is a global supplier of
real-time application development tools, distribution management software,
automatic identification equipment and related consulting and integration
services. Mr. Johnson also is a member of the International Society of Sloan
Fellows.

Cecile D. Barker has been the Vice Chairman of the Board of Directors of the
Company since April 1996. Mr. Barker is the Chairman of the Board, Chief
Executive Officer and majority owner of OAO Corporation, a company which he
founded in 1973. Mr. Barker regularly serves as an advisor to other
corporations, and he is a member of the Advisory Committee for Scientific Policy
for the National Science Foundation and the Science and Technology Advisory
Committee for the Executive Office of the President of the United States. Mr.
Barker has over 28 years of experience in the management of major scientific,
technological and commercial programs.

Thomas C. Lynch became a Director of the Company in April 1996. Mr. Lynch
has been a Senior Vice President of Operations of Safeguard since November
1995. Prior to that time, Mr. Lynch retired from the U.S. Navy as an Admiral
after 33 years of service, including service as Superintendent of the U.S.
Naval Academy from 1991 through 1994 and Director, Navy Roles and Missions
from 1994 through 1995. Admiral Lynch currently is a director of Sanchez
Computer Associates, Inc., a Safeguard partnership company, a company that
designs, develops and markets banking software. Mr. Lynch is also a director of
The Eastern Technology Council and is a member of the Cradle Liberty Council,
Boy Scouts of America and the U.S. Naval Academy Foundation.

Frank B. Foster, III became a Director of the Company in April 1996 and also
serves as Chairman of the Audit Committee. Mr. Foster retired as President and
Chief Executive Officer of Diamond Bathurst (formerly Diamond Glass) in 1986
after almost 30 years of service. Since 1986, Mr. Foster has served on the
boards of numerous companies and is currently a director of 1838 Investment
Advisors, Airgas, Inc., Contour Packaging Corporation and U.S. Precision Glass
Company.

Christine M. Hazell has been a Vice President of the Company since October
1996 and is responsible for the Company's human resources and provides
administrative support for the Company's offices. From 1993 to October 1996, Ms.
Hazell was Vice President of Human Resources and Administration for OAO
Corporation and from 1989 to 1993, Ms. Hazell was director of Human Resources
for OAO Corporation. From 1978 to 1989, Ms. Hazell coordinated and administered
corporate benefits programs for OAO Corporation. Ms. Hazell has over 15 years of
management and leadership experience in the Human Resources and Administration
fields.

Anderson O. Inniss has been a Vice President of the Company since July 1997.
From April 1996 to July 1997, Mr. Inniss was the Director of the Company's
healthcare services business. From October 1994 to April 1996, Mr. Inniss was a
Director of the Commercial Systems Group. From 1990 to September 1994, Mr.
Inniss was General Manager of Diagnostic Health Imaging Systems. From 1973 to
1988, Mr. Inniss was with the Greater Southeast

-40-
<PAGE>

Community Hospital in Washington, D.C., where he held positions including
Executive Director and President of a subsidiary. Mr. Inniss has more than 24
years experience in the organization and management of healthcare enterprises.

Patrick H. O'Neill has been a Vice President of the Company since March 1996
and is responsible for managing client engagements and quality assurance at
these engagements. From January 1993 to March 1996, Mr. O'Neill was manager of
the Company's first Megacenter Operations engagement with IBM. Mr. O'Neill has
over 30 years experience in the communications and IT technology fields. From
1987 to 1993, Mr. O'Neill was Director of Consolidated Logistics for OAO
Corporation.

Shiraz Patel has been a Vice President of the Company since March 1996
and is responsible for the customer team supporting Perot Systems. From 1991
to March 1996, Mr. Patel held various leadership positions with Digital,
including Director of Outsourcing Services. Mr. Patel led Digital's value
migration from a product based, facilities management business into network
centric outsourcing. Prior to 1991, Mr. Patel also held positions as Vice
President at Majesco Software, Inc., Manager of Networks at Crown Life
Insurance, Project Manager, of Networks at Crown Life Insurance, Project
Manager of Networks at Bank of Montreal and Network Engineer at AT&T Canada.

Stu Schmidt has been Chief Operating Officer of the Company's Canadian
subsidiary since March 1996. From 1995 to March 1996, Mr. Schmidt was a
member of the Company's international leadership team. From 1993 to 1995, Mr.
Schmidt assisted several corporations in developing new business in the
government, financial and private industry sectors. From 1977 to 1993, Mr.
Schmidt held various leadership positions at Digital, including Customer
Services Sales Manager of the National Capital District, National Account
Manager for the IT industry and the federal government and Field Service Unit
Manager. From 1976 to 1977, Mr. Schmidt was a Field Service Engineer with NCR
in Canada. Mr. Schmidt has over 22 years experience in the IT field.

John T. Weisman has been a Vice President for the Company since 1996 and is
responsible for the Company's Northeastern U.S. Megacenter Operations. From 1993
to 1996, Mr. Weisman was Program Manager for the Commercial Systems Group of OAO
Corporation's Northeast Operations. From 1967 to 1993, Mr. Weisman held various
technical and management positions with IBM. Mr. Weisman has over 31 years of
experience in IT and project management.

Director Compensation

Directors who are not currently receiving compensation as officers,
employees or consultants of the Company or Safeguard are entitled to receive an
annual retainer fee of $6,000 ($7,000 with respect to the Chairman of the Audit
Committee), plus a fee of $1,000 and reimbursement of expenses for each meeting
of the Board of Directors and each Committee meeting that they attend in person.

Compensation Committee Interlocks and Insider Participation

In 1996, the Company did not have a Compensation Committee or any other
committee of the Board of Directors performing similar functions.
Recommendations concerning the aggregate compensation of the Company's
employees were made to the Board of Directors by the Company's Chief
Executive Officer. There are currently no compensation committee interlocks
with other entities or insider participation on the Compensation Committee.

Employment Agreements

The company entered into an employment agreement with William R. Hill as
of April 1, 1996, which provides for the payment of an annual base salary of
$150,000, and incentive bonuses upon the achievement of certain objectives.
For 1997, Mr. Hill is entitled to receive a maximum bonus of $210,000. This
agreement automatically continues for successive one year terms unless
written notice is provided at least 90 days prior to the applicable
expiration date. This agreement generally restricts Mr. Hill from competing
with the Company during the term of the employment agreement and for a period
ending one year after the termination of his employment. The Company may
terminate Mr. Hill's

-41-
<PAGE>

employment without cause provided that it must continue to pay Mr. Hill his
base salary for the remaining term of the agreement and for such additional
period that he remains bound by his non-competition covenants.

Executive Compensation

The following table sets forth certain information concerning compensation
paid or accrued in fiscal 1996 with respect to the Company's Chief Executive
Officer and its other most highly compensated executive officers for the
year ended December 31, 1996 who earned total salary and bonus in excess of
$100,000 (collectively, the "Named Officers"):

Summary Compensation Table

<TABLE>
<CAPTION>
Long Term
Compensation
Awards
------------
Annual Compensation(1) Securities
Name and ---------------------- Underlying Other Annual
Principal Position Year Salary Bonus Options Compensation
- --------------------------------------------------- --------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
William R. Hill.................................... 1996 $ 152,042 $ 150,000 28,333 $ 1,440
Chief Executive Officer and President
Edgar M. Fields.................................... 1996 154,027 50,000 100,000 0
Chief Operating Officer
Harvard V. Hopkins................................. 1996 121,120 30,000 66,667 1,600
Senior Vice President
Gerry Lalonde...................................... 1996 135,000 27,500 28,333 0
Senior Vice President
</TABLE>

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

(1) The annual compensation described in this table reflects actual salary and
bonus paid to such executive officers in fiscal 1996. It does not include
medical, group life insurance or other benefits received by the Named
Officers which are available generally to all salaried employees of the
Company and certain prerequisites and other personal benefits, securities or
property received by the Named Officers which do not exceed the lesser of
$50,000 or 10% of the aggregate of any such Named Officer's salary and
bonus.

-42-
<PAGE>

The following table provides information on stock options granted by the
Company in 1996 to the Named Officers. All Company option grants depicted below
were made pursuant to the Company's Amended and Restated 1996 Equity
Compensation Plan (the "Equity Compensation Plan").

Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>

Percent of Realizable Potential Value
Number of Total at Assumed Annual Rate of
Shares Options Stock Price Appreciation
Underlying Granted to Exercise for Option Term(1)
Options Employees in Price Per Expiration --------------------------
Name Granted Fiscal Year Share Date 5% 10%
- ---- ----------- ----------------- ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C>

William R. Hill................................ 28,333 2.6% $ 2.00 4/1/2002 $19,272 $43,721
Edgar M. Fields................................ 100,000 9.1 2.00 4/1/2002 68,019 154,312
Harvard V. Hopkins............................. 66,667 6.1 2.00 4/1/2002 45,346 102,875
Gerry Lalonde.................................. 28,333 2.6 2.00 4/1/2002 19,272 43,721

</TABLE>

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

(1) The amounts shown are calculated assuming that the market value of the
Common Stock was equal to the exercise price per share as of the date of
grant of the options. This value is the approximate price per share at
which shares of the Common Stock would have been sold in private
transactions on or about the date on which the options were granted. The
dollar amounts under these columns assume a compounded annual market
price increase for the underlying shares of the Common Stock from the
date of grant to the end of the option term of 5% and 10%. This format is
prescribed by the SEC and is not intended to forecast future appreciation
of shares of the Common Stock. The actual value, if any, a Named Officer
may realize, will depend on the excess of the market price for shares of
the Common Stock on the date the option is exercised over the exercise
price. Accordingly, there is no assurance that the value realized by a
Named Officer will be at or near the value estimated above.

The following table sets forth information concerning options exercised
during 1996 and the number and the hypothetical value of certain unexercised
options of the Company held by the Named Officers as of December 31, 1996.
This table is presented solely for purposes of complying with SEC rules and
does not necessarily reflect the amounts the optionee will actually receive
upon any sale of the shares acquired upon exercise of the options.

Aggregated Option Exercises and Last Fiscal Year-End Option Values
<TABLE>
<CAPTION>

Number of Securities
Underlying Unexercised Value of Unexercised In-The-
Options at Money Options at
December 31, 1996 December 31, 1996 (1)
------------------------------ ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ------------------- ----------- ------------- --------------- ------------- -------------
William R. Hill.......... -- -- -- 28,333 $ -- $84,999
Edgar M. Fields.......... -- -- 20,000 80,000 60,000 240,000
Harvard V. Hopkins....... 167 $ 333 13,166 53,333 39,498 159,999
Gerry Lalonde............ -- -- -- 28,333 -- 54,999

</TABLE>

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

(1) Assumes, for presentation purposes only, a per share fair market value of
$5.00.

-43-

<PAGE>

Equity Compensation Plan

The Company has adopted the Equity Compensation Plan pursuant to which it
has awarded and may in the future award stock options and equity compensation
awards to its employees, officers, non-employee directors and certain
independent contractors.

The Equity Compensation Plan provides for the issuance to employees,
non-employee directors and eligible independent contractors of up to
3,200,000 shares of Common Stock pursuant to the grant of incentive stock
options ("ISOs"), non-qualified stock options ("NQSOs"), Stock Appreciation
Rights ("SARs"), restricted stock and performance units. The Equity
Compensation Plan is administered by a Committee of directors appointed by
the Board of Directors (the "Committee"). Upon the completion of this
offering, the Committee will consist of two or more "outside directors" as
defined under section 162(m) of the Code and two or more "non-employee
directors" as defined under Rule 16(b)(3) of the Exchange Act. Subject to the
provisions of the Equity Compensation Plan, the Committee has the authority
to determine to whom stock options and other equity compensation awards will
be granted and the terms of any such award, including the number of shares
subject to, and the vesting provisions of, the award. Subject to the terms of
the Equity Compensation Plan, the Committee may also amend the terms of any
outstanding award.

As of June 30, 1997, options to purchase a total of 1,375,875 shares of
Common Stock at a weighted average exercise price per share of $2.70 were
outstanding. Of these options, options to purchase 352,417 shares of Common
Stock were fully vested and exercisable as of June 30, 1997. As of June 30,
1997, the Company had an additional 1,824,125 shares of Common Stock available
for future grants under the Equity Compensation Plan.

The option price per share of Common Stock under the Equity Compensation
Plan is determined by the Committee at the time of each grant, provided,
however, that the option price per share for any ISO shall not be less than 100%
of the fair market value of the Common Stock at the time of the grant. If a
person who owns ten percent or more of the Company's Common Stock (a "10%
Stockholder") is granted an ISO, the exercise price shall not be less than 110%
of the fair market value on the date of grant. The term of each stock option may
not exceed ten years and in the case of a 10% stockholder, the term may not
exceed five years. Stock options shall be exercisable at such time or times as
shall be determined by the Committee. Payment for the exercise of an option
shall be made by cash, check or other instrument as the Committee may accept,
including, in the discretion of the Committee, unrestricted Common Stock of the
Company. The Committee may also allow an option holder to elect to cash out the
excess of the fair market value over the option price of all or a portion of a
stock option. The Committee may also grant, in its sole discretion, a "cashless
exercise" feature for the exercise of stock options.

The Board of Directors may amend the terms of the Equity Compensation
Plan are subject to the requirement to obtain shareholder approval of certain
amendments. Unless sooner terminated, the Equity Compensation Plan will
terminate in 2006.

Under Section 162(m) of the Code, the Company may be precluded from claiming
a federal income tax deduction for total remuneration in excess of $1.0 million
paid to the Chief Executive Officer or to any of the other four most highly
compensated officers in any one year. Total remuneration would include amounts
received upon the exercise of stock options granted under the Equity
Compensation Plan. An exception does exist, however, for "performance-based
compensation," including amounts received upon the exercise of stock options
pursuant to a plan approved by stockholders that meets certain requirements. The
Equity Compensation Plan is intended to meet the requirements of Treasury
Regulation section 1.162-27(f), and the options and other awards granted under
the Equity Compensation Plan are intended to meet the requirements of
"performance-based compensation."

-44-
<PAGE>

CERTAIN TRANSACTIONS

Pursuant to the terms of a stock purchase agreement dated April 8, 1996 (the
"1996 Purchase") among the Company, OAO Corporation, OAO Services, Inc. ("OAO
Services") and Safeguard, (i) Safeguard purchased from the Company 5,000,000
shares of the Company's Common Stock at a purchase price of $1.00 per share or
$5.0 million in the aggregate, (ii) Safeguard paid $5.0 million to OAO Services,
a subsidiary of OAO Corporation, in return for a grant by OAO Services to the
Company of an option (the "OAO Services Option") to purchase all of the shares
of common stock of OAO Services at an exercise price based on revenues and
earnings levels of OAO Services for the 12 months prior to the date of exercise,
and (iii) Safeguard purchased 1,000,000 shares of Common Stock from the Company
for $4.2 million and granted to Cecile D. Barker, the majority owner of OAO
Corporation and a director and significant stockholder of the Company, an
option, which was subsequently exercised by Mr. Barker, to purchase 1,000,000
shares of Common Stock held by Safeguard (the "Barker Option"). Pursuant to the
terms of the 1996 Purchase, Safeguard, William R. Hill and Cecile D. Barker were
granted certain registration rights with respect to their shares of Common Stock
in the Company. See "Shares Eligible for Future Sale--Registration Rights."

Pursuant to the terms of a Stock Purchase Agreement dated as of July 11,
1997 between Safeguard and Cecile D. Barker, Safeguard purchased 1,000,000
shares of Common Stock from Mr.Barker for $4.2 million. Contemporaneous with
the consummation of this transaction, Mr. Barker exercised the Barker Option.
In addition, pursuant to the terms of an Option Cancellation Agreement by and
among the Company, Safeguard, Cecile D. Barker, OAO Corporation and OAO
Services, the OAO Services Option was canceled in consideration of the right
to receive certain future payments in the event of any sale of OAO
Corporation or any public offering by OAO Corporation which occurs prior to
April 8, 2000. In particular, the Company and Safeguard are each to receive
one-half of (i) the greater of $1.0 million or an amount equal to the lesser
of $3.0 million or three percent of the total sales price from the sale of
both OAO Corporation and OAO Services which occurs prior to April 8, 2000,
(ii) the greater of $1.0 million or an amount equal to the lesser of $2.0
million or three percent of the total sales price from any sale of OAO
Corporation which occurs prior to April 8, 2000 and at such time that OAO
Services is not an affiliate of OAO Corporation, (iii) the greater of $1.0
million or an amount equal to the lesser of $3.0 million or three percent of
the market capitalization of OAO Corporation if OAO Corporation consummates
an initial public offering of its equity securities prior to April 8, 2000
(an "OAO Corporation IPO"), or (iv) the greater of $1.0 million or an amount
equal to the lesser of $2.0 million or two percent of the market
capitalization of OAO Corporation if OAO Services is no longer affiliated
with OAO Corporation at the time of the OAO Corporation IPO. The market
capitalization of OAO Corporation would be based on the offering price of the
equity securities in the OAO Corporation IPO.

Pursuant to the terms of an Administrative Services Agreement between the
Company and Safeguard, the Company paid Safeguard $250,000 in 1996 in
consideration of administrative support services, including management
consultation, investor relations, legal services and tax planning. The Company
expects to pay Safeguard approximately $500,000 in 1997 for such services.

Pursuant to the terms of a Transition Services and Operations Services
Agreement dated as of April 8, 1996, the Company paid OAO Corporation
$300,000 in 1996 in consideration of certain transition and operations
services provided to the Company. Cecile D. Barker is the majority owner of
OAO Corporation.

-45-
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of the date of this Prospectus and as
adjusted to reflect the sale of the shares offered hereby (i) by each selling
stockholder, (ii) by each person who is known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (iii) by
each director of the Company, (iv) by each Named Officer and (v) by all
directors and executive officers of the Company as a group. Unless otherwise
indicated below, to the knowledge of the Company, all persons listed below
have sole voting and investment power with respect to their shares of Common
Stock, except to the extent authority is shared by spouses under applicable
law.

<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to the Offering After the Offering(1)
------------------------ ------------------------
Number of
Number Shares to be
of Sold in the Number of
Name and Address Shares Percentage Offering Shares Percentage
- ------------------------------------------------------------ --------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Safeguard Scientifics, Inc. (1)............................. 5,000,000 50.0% -- 5,000,000 30.8%
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Cecile D. Barker (2)........................................ 3,997,500 40.0 359,260 3,638,240 22.4
10816 Barnwood Lane
Potomac, MD 20854
William R. Hill (3)......................................... 757,083 7.6 62,870 694,212 4.3
Hubert Reid (4)............................................. 316,667 3.1 62,870 253,797 1.6
Edgar M. Fields (5)......................................... 59,625 * -- 59,625 *
Harvard V. Hopkins (6)...................................... 34,542 * -- 34,542
Samuel D. Horgan (7)........................................ 32,958 * -- 32,958 *
Frank Foster (8)........................................... 4,167 * -- 4,167 *
Jerry L. Johnson (9)....................................... -- -- -- -- --
Thomas C. Lynch (10)........................................ -- -- -- -- --
All executive officers and directors as a group
(14 persons)(11)........................................... 5,020,333 48.9% 485,000 4,597,428 27.9%
</TABLE>

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

* Less than 1% of the outstanding Common Stock

(1) The shares are held of record by Safeguard Scientifics (Delaware), Inc., a
wholly-owned subsidiary of Safeguard. Includes 274,000 shares of Common
Stock granted by Safeguard to certain of its employees pursuant to a long
term incentive plan (the "LTIP"). Safeguard will continue to exercise
voting control of these shares until the occurrence of certain vesting
requirements. The largest shareholder of Safeguard is Warren V. Musser, the
chairman and chief executive officer of Safeguard, who is the record holder
of approximately 9.5% of the total Safeguard common shares outstanding.
Excludes 2,250,000 shares of Common Stock pledged to Safeguard to secure a
$4.5 million loan made by Safeguard to Mr. Barker.

-46-
<PAGE>

(2) Includes 2,250,000 shares of Common Stock pledged to Safeguard to secure a
$4.5 million loan made by Safeguard to Mr. Barker.

(3) Includes 7,083 shares of Common Stock issuable pursuant to presently
exercisable options. Mr. Hill's address is 7500 Greenway Center Drive,
Greenbelt, Maryland 20770.

(4) Includes 66,667 shares of Common Stock issuable pursuant to presently
exercisable options and options exercisable upon the completion of this
offering.

(5) Consists of 59,625 shares of Common Stock issuable pursuant to presently
exercisable options.

(6) Includes 34,375 shares of Common Stock issuable pursuant to presently
exercisable options and options exercisable upon the completion of this
offering.

(7) Includes 32,958 shares of Common Stock issuable pursuant to presently
exercisable options and options exercisable upon the completion of this
offering.

(8) Consists of 4,167 shares of Common Stock issuable pursuant to presently
exercisable options.

(9) Excludes shares of Common Stock owned by Safeguard, of which Mr. Johnson is
a Senior Vice President. Mr. Johnson disclaims beneficial ownership of such
shares. Excludes 30,000 shares of Common Stock allocated to Mr. Johnson
under the LTIP, of which Mr. Johnson has neither dispositive nor voting
power.

(10) Excludes shares of Common Stock owned by Safeguard, of which Mr. Lynch is a
Senior Vice President. Mr. Lynch disclaims beneficial ownership of such
shares. Excludes 30,000 shares of Common Stock allocated to Mr. Lynch under
the LTIP, of which Mr. Lynch has neither dispositive nor voting power.

(11) Includes, in the aggregate, 278,038 shares of Common Stock issuable
pursuant to presently exercisable options.

-47-
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 20,000,000 shares of
Common Stock, par value $.01 per share, and 10,000,000 shares of preferred
stock, par value $.01 per share.

Common Stock

As of June 30, 1997, there were 10,000,583 shares of Common Stock
outstanding. After giving effect to the issuance of the 6,235,000 shares of
Common Stock offered by the Company hereby, there will be 16,235,583 shares
of Common Stock outstanding.

Holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. The election of directors is determined by a plurality
of the votes cast. Accordingly, holders of a majority of the shares of Common
Stock entitled to vote in any election of directors may elect all of the
directors standing for election. See "Risk Factors--Control by Principal
Stockholders." Except as required by law, all other matters are determined by
the vote of the holders of the majority of the stock having voting power present
in person or represented by proxy at the meeting. Holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared by the
Board of Directors out of funds legally available therefor, subject to any
preferential dividend rights of outstanding preferred stock. Upon the
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to receive ratably the net assets of the Company available
after the payment of all debts and other liabilities. Holders of the Common
Stock have no preemptive, subscription, redemption or conversion rights. The
outstanding shares of Common Stock are, and the shares offered by the Company in
this offering will be, when issued and paid for, fully paid and nonassessable.
The rights, preferences and privileges of holders of Common Stock are subject
to, and may be adversely affected by, the rights of the holders of shares of any
series of preferred stock which the Company may designate and issue in the
future.

Preferred Stock

The Company, by resolution of the Board of Directors and without any further
vote or action by the stockholders, has the authority, subject to certain
limitations prescribed by law, to issue from time to time up to an aggregate of
10,000,000 shares of preferred stock in one or more classes or series and to
determine the designation and the number of shares of any class or series as
well as the voting rights, preferences, limitations and special rights, if any,
of the shares of any such class or series, including the dividend rights,
dividend rates, conversion rights and terms, voting rights, redemption rights
and terms, and liquidation preferences. The issuance of preferred stock may have
the effect of delaying, deferring or preventing a change of control of the
Company. As of the date of this Prospectus, there are no shares of preferred
stock outstanding, and the Company has no plans to issue any shares of preferred
stock.

Rights

The Company is granting on the date hereof the rights to the holders of
Safeguard common shares. The rights, subject to minimum exercise
requirements, are each exercisable for one share of Common Stock at an
exercise price of $5.00 per share. Persons may not exercise rights for fewer
than 20 shares of Common Stock. For purposes of this offering, a person that
holds Safeguard common shares in multiple accounts must meet the 20 share
minimum purchase requirement in each account. Accordingly, persons holding
fewer than 20 rights in an account should consider the advisability of
consolidating their rights in one account, selling rights, or purchasing
additional rights to comply with the minimum exercise requirements of this
offering. Rights may be transferred, in whole or in part, by endorsing and
delivering to ChaseMellon a rights certificate that has been properly
endorsed for transfer, with instructions to reissue the rights, in whole or
in part, in the name of the transferee. ChaseMellon will reissue certificates
for the transferred rights to the transferee, and will reissue a certificate
for the balance, if any, to the holder of the rights, in each case to the
extent it is able to do so prior to the expiration date of the rights. This
offering will terminate and the rights will expire at 5:00 p.m., New York
City time, on the expiration date, which is , 1997. After the
expiration date of the rights, unexercised rights will be null and void. For
more information about the rights and the offering process, reference should
be made to "The Offering" and to "Risk Factors--Cancellation of Rights
Offering."

Transfer Agent and Registrar

The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C., 85 Challenger Road, Overpeck Centre, Ridgefield
Park, New Jersey 07660.

-48-

<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 16,235,583 shares
of Common Stock outstanding, excluding 1,375,875 shares of Common Stock
subject to stock options outstanding as of June 30, 1997 and any stock
options granted by the Company after June 30, 1997. Of these shares, the
Common Stock sold in this offering, except for certain shares described
below, will be freely tradeable without restriction or further registration
under the Act. The remaining 9,515,583 shares of Common Stock (the
"Restricted Shares") were sold by the Company in reliance on exemptions from
the registration requirements of the Act and are "restricted securities" as
defined in Rule 144 and may not be sold in the absence of registration under
the Act unless an exemption is available, including an exemption afforded by
Rule 144 or Rule 701. See "Risk Factors--Shares Eligible for Future Sale."

In general, under Rule 144 as currently in effect, if two years have
elapsed since the date of acquisition of restricted securities from the
Company or any affiliate and the acquiror or subsequent holder is not deemed
to have been an affiliate of the Company for at least 90 days prior to a
proposed transaction, such person would be entitled to sell such shares under
Rule 144(k) without regard to the limitations described below. If one year
has elapsed since the date of acquisition of restricted securities from the
Company or any affiliate, the acquiror or subsequent holder thereof
(including persons who may be deemed affiliates of the Company) is entitled
to sell within any three-month period a number of shares that does not exceed
the greater of 1% of the then-outstanding shares of Common Stock or the
average weekly trading volume in the Common Stock on the Nasdaq National
Market during the four calendar weeks preceding such sale. Sales under Rule
144 are also subject to certain provisions regarding the manner of sale,
notice requirements and the availability of current public information about
the Company. Without considering the contractual restrictions described
below, approximately (i) 9,515,168 Restricted Shares will be eligible for
sale ninety days after the date of this Prospectus, subject to manner of sale
and other resale conditions imposed by Rule 144, and (ii) 415 Restricted
Shares will be eligible for future sale subject to the holding period and
other conditions imposed by Rule 144. Certain restrictions apply to any
shares of Common Stock purchased in this offering by affiliates of the
Company, which may generally only be sold in compliance with the limitations
of Rule 144, except for the holding period requirements thereunder. See "Risk
Factors--Shares Eligible for Future Sale."

Rule 144A under the Act provides a nonexclusive safe harbor exemption
from the registration requirements of the Act of specified resales of
restricted securities to certain institutional investors. In general, Rule
144A allows unregistered resales of restricted securities to a "qualified
institutional buyer," which generally includes an entity, acting for its own
account or for the account of other qualified institutional buyers, that in
the aggregate owns or invests on a discretionary basis at least $100 million
in securities of issuers that are not affiliated with the entity, as long as
these securities when issued were not of the same class as securities listed
on a national securities exchange or quoted on Nasdaq. The shares of Common
Stock outstanding as of the date of this Prospectus would be eligible for
resale under Rule 144A because such shares, when issued, were not of the same
class as any listed or quoted securities.

Stock Options

As of June 30, 1997 there were outstanding options to purchase an
aggregate of 1,375,875 shares of Common Stock (of which 352,417 were
exercisable at June 30, 1997) at a weighted average exercise price of $2.70
per share. As of June 30, 1997, the Company had an additional 1,824,125
shares of Common Stock available for future grant under the Equity
Compensation Plan. The holders of options which are presently exercisable to
purchase a total of 278,205 shares are subject to Lock-Up Agreements, which
restrict, until after the Lock-Up Expiry Date (without the prior written
consent of Wheat, First Securities, Inc.), the holders' ability to sell or
otherwise dispose of Common Stock acquired upon the exercise of such options.
See "Management--Equity Compensation Plan."

The Company issued options and underlying shares of Common Stock to
employees of the Company who were not executive officers and directors of the
Company pursuant to Rule 701. Under Rule 701, employees of the Company who
prior to this offering purchased shares upon the exercise of options grant
under the Equity Compensation Plan are entitled to sell such shares without
having to comply with the public information, holding period, volume
limitation or notice provisions of Rule 144 and they may begin making such
sales on the 90th day after the date of this Prospectus. Rule 701 also
permits the shares subject to unexercised options granted under the Equity
Compensation Plan to be sold upon exercise without having to comply with the
foregoing provisions of Rule 144. As of June 30, 1997, approximately

-49-
<PAGE>

1,458,958 shares of Common Stock and shares of Common Stock subject to
unexercised options will be eligible for sale under Rule 701 by Company
employees (subject to applicable vesting provisions).

It is anticipated that a Registration Statement on Form S-8 covering the
Common Stock that may be issued pursuant to the options granted under the
Equity Compensation Plan will be filed prior to the Lock-Up Expiry Date and
that shares of Common Stock that are so acquired and offered thereafter
pursuant to this Registration Statement generally may be resold in the public
market without restriction or limitation, except in the case of affiliates of
the Company, whom generally may only resell such shares in accordance with
each provision of Rule 144, other than the holding period requirement.

Lock-Up Agreements

The Principal Stockholders, who will beneficially own 9,330,087 shares of
Common Stock after the completion of this offering, and each other executive
officer and director of the Company have agreed with the underwriters that
they will not sell or otherwise dispose of any shares of Common Stock until
after the Lock-Up Expiry Date without the prior written consent of Wheat,
First Securities, Inc. In addition, Warren V. Musser has agreed that he
and/or his assignees will not sell or otherwise dispose of 280,000 shares of
Common Stock until after the Lock-Up Expiry Date without the prior written
consent of Wheat, First Securities, Inc.

Registration Rights

The Company has granted certain registration rights to Safeguard, Cecile
D. Barker and William R. Hill. In particular, under certain circumstances and
subject to certain limitations, Safeguard can require the Company to register
under the Act (i) such number of shares of Common Stock held by Safeguard,
Mr. Barker or Mr. Hill having a market value of at least $5.0 million,
provided that the Company is not required to effect more than one such
registration, and (ii) on Form S-3 such number of shares of Common Stock
having a market value of at least $1.0 million, provided that the Company is
not required to effect more than one such registration during any
twelve-month period. Safeguard, Mr. Barker and Mr. Hill were also granted
certain "piggy-back" registration rights whereby under certain circumstances
and subject to certain conditions, they may include shares of Common Stock in
any registration of shares of Common Stock under the Act.

-50-

<PAGE>

UNDERWRITING

The Company, the selling stockholders and the underwriters have entered
into the standby underwriting agreement on the date hereof, pursuant to which
the underwriters are required, subject to certain terms and conditions (all
of which are set forth below), to purchase the shares of Common Stock offered
in the rights offering and not purchased (the "Excess Unsubscribed Shares")
in accordance with the percentages set forth below. If all of the rights are
exercised there will be no Excess Unsubscribed Shares and the underwriters
will not be required to purchase any shares of Common Stock.

% OF UNDERWRITER
Underwriters SHARES
- ------------ -----------------

Wheat, First Securities, Inc............................ %
Janney Montgomery Scott Inc............................. %

The underwriters have agreed, severally and not jointly, subject to the
condition that the Company and the selling stockholders comply with their
obligations under the standby underwriting agreement and subject to the
underwriters' right to terminate their obligations under the standby
underwriting agreement (as specified below), to purchase all of the Excess
Unsubscribed Shares. The Company will pay the underwriters the financial
advisory fee equal to 3% of the exercise price for each share of Common Stock
included in this offering. The financial advisory fee is for services and
advice rendered in connection with the structuring of this offering,
valuation of the business of the Company, and financial advice to the Company
before and during this offering. An additional fee of 4% of the exercise
price will be paid to the underwriters (i) for each share of Common Stock
purchased by the underwriters pursuant to the standby underwriting agreement
and (ii) for each share of Common Stock purchased upon the underwriters'
exercise of rights if such rights were purchased by the underwriters at a
time when the Common Stock was trading (on a "when issued" basis) at a per
share price of less than 120% of the exercise price or if the underwriters
purchase such rights with Safeguard's prior acknowledgment that it would be
entitled to receive the underwriting discount for Common Stock purchased
pursuant to the exercise of such rights. In addition, the Company has agreed
to pay the underwriters a non-accountable expense allowance in the aggregate
amount of $200,000, provided, however, such non-accountable expense allowance
shall be reduced to $100,000 or zero if, on the expiration date of the
rights, the closing price for the Common Stock traded on a "when issued"
basis is at least $7.25 per share or greater than $8.25 per share,
respectively. The selling stockholders have granted to the underwriters a
20-day option commencing on the expiration date to purchase a maximum of
640,000 additional shares of Common Stock at a per share price equal to the
exercise price less a financial advisory fee of 3% of the exercise price and
an underwriting discount of 4% of the exercise price. The underwriters may
exercise such option in whole or in part only to cover over-allotments made
in connection with the sale of shares of Common Stock by the underwriters.

Prior to the expiration date of the rights, the underwriters may offer
shares of Common Stock on a when-issued basis, including shares to be
acquired through the purchase and exercise of rights, at prices set from time
to time by the underwriters. It is not contemplated that this offering price
set on any calendar day will be increased more than once during such day.
After the expiration date of the rights, the underwriters may offer shares of
Common Stock, whether acquired pursuant to the standby underwriting
agreement, the exercise of the rights or the purchase of Common Stock in the
market, to the public at a price or prices to be determined. The underwriters
may thus realize profits or losses independent of the underwriting discount
and the financial advisory fee. Shares of Common Stock subject to the standby
underwriting agreement will be offered by the underwriters when, as and if
sold to, and accepted by, the underwriters and will be subject to their right
to reject orders in whole or in part.

Prior to this offering, there has been no public market for the Common
Stock or the rights. Consequently, the exercise price was determined by
negotiations among the Company, the selling stockholders and the
underwriters. In determining the exercise price, the underwriters, the
selling stockholders and the Board of Directors of the Company considered
such factors as the future prospects and historical growth rate in revenues
and earnings of the Company, its industry in general and the Company's
position in its industry; revenues, earnings and certain other financial and

-51-

<PAGE>

operating information of the Company in recent periods; market valuations of
the securities of companies engaged in activities similar to those of the
Company; the management of the Company; and, with respect to the Company, the
advice of the underwriters.

The underwriters will be prohibited from engaging in any market making
activities with respect to the Company's when-issued Common Stock and Common
Stock until the underwriters have completed their participation in the
distribution of shares offered hereby. As a result, the underwriters may be
unable to provide a market for the Company's when-issued Common Stock and
Common Stock should they desire to do so, during certain periods while the
rights are exercisable.

In connection with this offering, the underwriters and certain selling
group members may engage in stabilizing, syndicate covering transactions or
other transactions that stabilize, maintain or otherwise affect the market
price of the Common Stock. A "syndicate covering transaction" is the placing
of any bid or the effecting of any purchase on behalf of the underwriters to
reduce a short position created in connection with this offering. After the
opening of quotations for the Common Stock on the Nasdaq National Market,
stabilizing bids for the purpose of preventing or retarding a decline in the
market price may be initiated by the underwriters or selling group members in
any market at a price no higher than the last independent transaction price
for the Common Stock and then maintained, reduced or raised to follow the
independent market. Such transactions may stabilize the market price of the
Common Stock at a level above that which might otherwise prevail and, if
commenced, may be discontinued at any time.

The Company and the selling stockholders have agreed to indemnify the
underwriters against certain liabilities arising out of or based upon
misstatements or omissions in this Prospectus or the Registration Statement
of which this Prospectus is a part and certain other liabilities, including
liabilities under the Act, and to contribute to certain payments that the
underwriters may be required to make.

The underwriters may terminate their obligations under the standby
underwriting agreement (i) if any calamitous domestic or international event
or act or occurrence has disrupted the general securities market in the
United States; (ii) if trading in the Common Stock (on a when-issued basis)
shall have been suspended by the SEC or Nasdaq; (iii) if trading on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum
ranges for prices for securities shall have been required on the
over-the-counter market by the NASD or by order of the SEC or any other
government authority having jurisdiction; (iv) if the United States shall
have become involved in a war or major hostilities which, in the
underwriters' opinion, will affect the general securities market in the
United States; (v) if a banking moratorium has been declared by any Maryland,
New York, Pennsylvania, Virginia or Federal authority; (vi) if a moratorium
in foreign exchange trading (with respect to a foreign exchange on which the
Company's securities are traded) has been declared; (vii) if the Company
shall have sustained a loss material to the Company by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act,
whether or not such loss shall have been insured, or from any labor dispute
or any legal or governmental proceeding; (viii) if there shall be such
material adverse market conditions (whether occurring suddenly or gradually
between the date of this Prospectus and the closing of this offering)
affecting markets generally as in the underwriters' reasonable judgment would
make it inadvisable to proceed with this offering, sale or delivery of the
shares of Common Stock offered hereby; or (ix) if there shall have been such
material adverse change, or any development involving a prospective material
adverse change, in the financial condition, net worth or results of
operations of the Company since December 31, 1996 or in the business
prospects or condition of the Company since the date of this Prospectus, or
that materially and adversely impacts the standby underwriting agreement.

The Company has agreed that, without the prior written consent of Wheat,
First Securities, Inc., it will not offer, sell, grant any option for the
sale of, or otherwise dispose of any shares of Common Stock (or securities
convertible into shares of Common Stock) (collectively, the "Securities")
acquired in this offering or held by it as of the date hereof until after the
Lock-Up Expiry Date, other than (i) Common Stock to be sold in this offering,
(ii) Company option issuances and sales of Common Stock pursuant to the
Equity Compensation Plan and (iii) Securities issued as consideration for an
acquisition if the party being issued the Securities agrees not to transfer,
sell, offer for sale, contract or otherwise dispose of such Securities until
after the Lock-Up Expiry Date. The Principal Stockholders and each other
executive

-52-
<PAGE>

officer and director of the Company, who beneficially will in the aggregate
own approximately 9,642,867 shares of Common Stock after the completion of
this offering, have agreed with the underwriters that they will not sell or
otherwise dispose of any shares of Common Stock until after the Lock-Up
Expiry Date without the prior written consent of Wheat, First Securities,
Inc. In addition, Warren V. Musser has agreed that he (and/or his assignees)
will not sell or otherwise dispose of 280,000 shares of Common Stock until
after the Lock-Up Expiry Date without the prior written consent of Wheat,
First Securities, Inc. See "Management--Equity Compensation Plan" and "Shares
Eligible for Future Sale."

LEGAL MATTERS

The validity of the rights and shares of Common Stock offered hereby will
be passed upon for the Company by Morgan, Lewis & Bockius LLP, Philadelphia,
Pennsylvania. Certain legal matters in connection with this offering are
being passed upon for the underwriters by Drinker Biddle & Reath LLP,
Philadelphia, Pennsylvania.

EXPERTS

The consolidated financial statements of the Company as of December 31,
1995 and 1996 and for the years ended December 31, 1994, 1995 and 1996
included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors as stated in their report appearing herein, and have
been so included in reliance upon the report of such firm, given upon their
authority of experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on
Form S-1 (including all amendments thereto, the "Registration Statement")
under the Act with respect to the Common Stock and rights offered hereby. As
permitted by the rules and regulations of the Commission, this Prospectus
omits certain information contained in the Registration Statement. For
further information with respect to the Company and the Common Stock and
rights offered hereby, reference is hereby made to the Registration Statement
and to the exhibits and schedules filed therewith. Statements contained in
this Prospectus regarding the contents of any agreement or other document
filed as an exhibit to the Registration Statement are not necessarily
complete, and in each instance reference is made to the copy of such
agreement filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. The Registration
Statement, including the exhibits and schedules thereto, may be inspected at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, DC 20549, and copies of all or any part thereof may
be obtained from such office upon payment of the prescribed fees. In
addition, the Commission maintains a Web site at http://www.sec.gov that
contains reports, proxy statements, information statements and other
information regarding the Company.

-53-
<PAGE>
OAO Technology Solutions, Inc.
Index to Consolidated Financial Statements

Page
----
Financial Statements:

Independent Auditors' Report........................................ F-2

Consolidated Balance Sheets at December 31, 1995 and 1996 and
June 30, 1997 (unaudited)......................................... F-3

Consolidated Statements of Income for the years ended
December 31, 1994, 1995 and 1996 and the Six Months Ended
June 30, 1996 and 1997 (unaudited)................................ F-4

Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1994, 1995 and 1996 and the six months ended June
30, 1997 (unaudited).............................................. F-5

Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996 and the six months ended
June 30, 1996 and 1997 (unaudited)................................ F-6

Notes to Consolidated Financial Statements......,................... F-7

-54-
<PAGE>

OAO TECHNOLOGY SOLUTIONS, INC.

Financial Statements for the Years Ended
December 31, 1996, 1995, and 1994, and
Independent Auditors' Report

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
OAO Technology Solutions, Inc.:

We have audited the accompanying consolidated balance sheets of OAO
Technology Solutions, Inc. and subsidiaries, as of December 31, 1995 and
1996, and the related consolidated statements of income, 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 financial statements referred to above present fairly, in
all material respects, the financial position of OAO Technology Solutions,
Inc. and subsidiaries, as of December 31, 1995 and 1996, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted
accounting principles.

Deloitte & Touche LLP
Washington, D.C.
May 5, 1997, except for Note 16, as to which the
date is July 31, 1997

F-1
<PAGE>

OAO TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Share Data)

<TABLE>
<CAPTION>
DECEMBER 31
-------------------- JUNE 30,
ASSETS 1995 1996 1997
- -------------------------------------------------------------------------------- --------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash.......................................................................... $ 9 $ 876 $ 390

Accounts receivable:
Contracts:
Billed.................................................................... 1,874 5,031 9,892
Unbilled.................................................................. 157 4,831 6,267
--------- --------- -----------
2,031 9,862 16,159
--------- --------- -----------
Deferred income taxes......................................................... 441 352 250
Other current assets.......................................................... 37 330 689
--------- --------- -----------
Total current assets................................................ 2,518 11,420 17,488

PROPERTY AND EQUIPMENT--Net..................................................... 659 1,384 2,586

DUE FROM OAO CORPORATION........................................................ 2,624 -- --

DEPOSITS AND OTHER ASSETS....................................................... -- 24 131
--------- --------- -----------
$ 5,801 $ 12,828 $ 20,205
--------- --------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Bank line of credit........................................................... $ -- $ -- $ 4,000
Accounts payable.............................................................. 533 1,759 2,081
Income taxes payable.......................................................... -- 141 541
Accrued expenses.............................................................. 2,606 3,681 4,941
Unearned revenue.............................................................. 757 931 919
Current maturities of long-term debt.......................................... 68 190 501
--------- --------- -----------
Total current liabilities........................................... 3,964 6,702 12,983

LONG-TERM DEBT.................................................................. 183 286 150

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share,
authorized, 10,000,000 shares in 1996
(20,000,000 at June 30, 1997--unaudited);
issued and outstanding, 10,000,000 shares
in 1996 (10,000,583 at June 30, 1997-- unaudited)........................... -- 100 100
Additional paid-in capital.................................................... -- 4,950 4,950
Retained earnings............................................................. 1,654 790 2,022
--------- --------- -----------
Total stockholders' equity.......................................... 1,654 5,840 7,072
--------- --------- -----------
$ 5,801 $ 12,828 $ 20,205
--------- --------- -----------
--------- --------- -----------

</TABLE>

See notes to consolidated financial statements.

F-2
<PAGE>

OAO TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1996 1997
------------ ------------ ------------ --------- ---------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES......................................... $ 22,472 $ 38,229 $ 57,891 $ 24,321 $ 39,338

DIRECT COSTS..................................... 16,503 28,548 43,896 18,170 30,773
------------ ------------ ------------ --------- ---------

GROSS PROFIT..................................... 5,969 9,681 13,995 6,151 8,565

SELLING, GENERAL AND ADMINISTRATIVE.............. 4,743 7,338 10,824 4,874 6,315

------------ ------------ ------------ --------- ---------
INCOME FROM OPERATIONS........................... 1,226 2,343 3,171 1,277 2,250

INTEREST EXPENSE................................. 61 115 46 30 87
------------ ------------ ------------ --------- ---------
INCOME BEFORE INCOME TAXES....................... 1,165 2,228 3,125 1,247 2,163

PROVISION FOR INCOME TAXES....................... 466 1,139 1,315 522 931
------------ ------------ ------------ --------- ---------
NET INCOME....................................... $ 699 $ 1,089 $ 1,810 $ 725 $ 1,232

------------ ------------ ------------ --------- ---------
------------ ------------ ------------ --------- ---------
PRO FORMA NET INCOME PER COMMON AND
COMMON SHARE EQUIVALENTS (Note 2).............. $ .17 $ .07 $ .12
------------ ---------- ---------
------------ ---------- ---------
PRO FORMA WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON SHARE EQUIVALENTS OUTSTANDING (Note 2)... 10,421,880 10,421,880 10,414,410
------------ ---------- ---------
------------ ---------- ---------
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

OAO TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 AND
SIX MONTHS ENDED JUNE 30, 1997 (Unaudited)
(Dollars and Shares in Thousands)

<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON STOCK PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
--------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994............................ $ -- $ -- $ -- $ 257 $ 257

Distribution to OAO Corporation................... -- -- -- (391) (391)

Net income........................................ -- -- -- 699 699
--------- ----- ----------- ----------- ------
BALANCE, DECEMBER 31, 1994.......................... -- -- -- 565 565

Net income........................................ -- -- -- 1,089 1,089
--------- ----- ----------- ----------- ------
BALANCE, DECEMBER 31, 1995.......................... -- -- -- 1,654 1,654

Net income........................................ -- -- -- 1,810 1,810

Sale of common stock.............................. 5,000 50 4,950 -- 5,000

Merger of subsidiary of OAO Corporation........... 5,000 50 -- (2,674) (2,624)
--------- ----- ----------- ----------- ------
BALANCE, DECEMBER 31, 1996.......................... 10,000 100 4,950 790 5,840

Exercise of stock options
(unaudited)...................................... 1 -- -- -- --

Net income (unaudited)............................ -- -- -- 1,232 1,232
--------- ----- ----------- ----------- ------

BALANCE, JUNE 30, 1997
(Unaudited)...................................... 10,001 $ 100 $ 4,950 $ 2,022 $ 7,072
--------- ----- ----------- ----------- ------
--------- ----- ----------- ----------- ------
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>
OAO TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
1994 1995 1996 1996 1997
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:............................. $ 699 1,089 $ 1,810 $ 725 $ 1,232
Net income
Adjustments to reconcile net income to cash flows (used in)
provided by operating activities:
Depreciation and amortization................................. 19 21 245 50 210
Deferred income taxes......................................... -- 14 89 441 102
Changes in assets and liabilities:
Accounts receivable........................................... (1,257) (1,198) (7,831) (4,793) (6,297)
Other current assets.......................................... (27) (37) (293) (5) (359)
Due from OAO Corporation...................................... (738) (1,982) -- -- --
Deposits and other assets..................................... (138) -- (24) -- (107)
Accounts payable.............................................. 138 393 331 (246) 322
Accrued expenses.............................................. 1,128 1,349 1,970 (97) 1,260
Unearned revenue.............................................. 213 702 174 (30) (12)
Income taxes payable.......................................... -- -- 141 -- 400
--------- --------- --------- --------- ---------
Net cash (used in) provided by operating activities..... 37 351 (3,388) (3,955) (3,249)
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment and software............ (51) (580) (970) (298) (1,412)
--------- --------- --------- --------- ---------
Net cash used in investing activities................... (51) (580) (970) (298) (1,412)
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock..................................... -- -- 5,000 5,000 --
Payments on long-term debt...................................... -- (13) (57) (46) --
Borrowings on long-term debt.................................... 13 250 282 192 175
Borrowing on line of credit..................................... -- -- -- -- 4,000
--------- --------- --------- --------- ---------
Net cash provided by financing activities............... 13 237 5,225 5,146 4,175
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH................................... (1) 8 867 893 (486)
CASH, BEGINNING OF PERIOD......................................... 2 1 9 9 876
--------- --------- --------- --------- ---------
CASH, END OF PERIOD............................................... $ 1 $ 9 $ 876 $ 902 $ 390
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
SUPPLEMENTAL INFORMATION:
Cash payments for interest...................................... $ -- $ 116 $ 45 30 87
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Cash payments for income taxes.................................. $ -- $ -- $ 1,085 -- 535
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

See notes to consolidated financial statements.
F-5

<PAGE>

OAO TECHNOLOGY SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996 AND
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (UNAUDITED)
(Dollars in Thousands, Except Share and Per Share Data)

1. DESCRIPTION OF COMPANY AND CORPORATE ORGANIZATION

OAO Technology Solutions, Inc. (the Company) through its wholly owned
subsidiaries provides a wide range of outsourced information technology
solutions and professional services, including the operation of large-scale
data center complexes and networks, distributed systems management, staffing
services and other information technology services.

In March 1996, OAO Technology Solutions, Inc. was formed and incorporated in
the state of Delaware by shareholders of OAO Corporation (OAO). As a result,
on March 26, 1996, OAO transferred 100% of the stock held in each of its
wholly owned subsidiaries, OAO Canada, Ltd., and OAO Systems, Inc., to its
wholly owned subsidiary, OAO Commercial Systems Corporation (CSG). CSG was
formed in January 1993, as an operating division of OAO and separately
incorporated in September 1995.

On March 26, 1996, OAO assigned to CSG all of its rights and interest in
certain contracts for which CSG was responsible in fulfilling the scope of
work required. CSG also assumed all of the liabilities and obligations
associated with the assigned contracts. In addition, on March 26, 1996, the
Board of Directors agreed to distribute the stock in CSG held by OAO to
shareholders of OAO. Immediately following the spin-off of CSG, the net
liabilities and operations of CSG were merged into OAO Technology Solutions,
Inc.

Subsequently, on April 8, 1996, Safeguard Scientifics, Inc., invested $5,000
in the Company in exchange for 5,000,000 shares of common stock, which
represented 50% of the common stock outstanding as of that date.

The accompanying financial statements reflect the Company's operations since
its formation as a division of OAO. Prior to the spin-off and
recapitalization as a new company on March 26, 1996, the Company's financial
statements include allocations of indirect costs of OAO, primarily rent and
administrative costs, of approximately $2,173 and $484 for the years ended
December 31, 1995 and 1996, respectively. These allocations have been based
upon significant management assumptions. In connection with the spin off and
subsequent investment by Safeguard, certain obligations to CSG from OAO as of
March 26, 1996, in the amount of $2,600 were forgiven by the Company. This
transaction has been reflected in the accompanying financial statements as a
reduction of stockholders equity at the date of the spin-off.

Subsequent to the spin-off in 1996, the Company was charged administrative
fees by OAO of approximately $600 through September 30, 1996 for
administration of the accounting function.

The Company has entered into an administrative services agreement with
Safeguard, which provides for payment of a maximum fee of 1% of gross
revenues per year, not to exceed $125 for the six months ended September 30,
1996, and $500 per year thereafter. The Company charged $250 to operations
for the year ended December 31, 1996, and $250 (unaudited) for the six months
ended June 30, 1997 in connection with this agreement.

F-6

<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation--The accompanying consolidated financial
statements include the accounts of OAO Technology Solutions, Inc. (including
CSG prior to March 26, 1996) and its wholly owned subsidiaries (the Company):
OAO Systems, Inc., OAO Canada, Ltd., Canadian Network Resources, Ltd.,
Canadian Resources Management, Ltd, OAO France, and OAO Mexico. All accounts
of the non-U.S. subsidiaries have been translated into U.S. dollars and
included in the consolidated financial statements.

All intercompany accounts and transactions have been eliminated.

Revenue Recognition--The Company provides services under contracts, primarily
to large commercial customers. Revenues under fixed-price contracts are
recognized on the basis of the estimated percentage of completion of services
rendered. Revenues under time-and-materials contracts are recorded at the
contracted rates as the labor hours and other direct costs are incurred.
Anticipated losses on all contracts are recognized as soon as they become
known. Unbilled receivables include certain costs and a portion of the fee
and expected profit, which is billable upon completion of the contracts or
the completion of certain tasks under terms of the contracts.

Cash and Cash Equivalents--The Company considers all highly liquid temporary
investments including those with an original maturity of three months or less
to be cash equivalents. Cash and cash equivalents consist primarily of
interest bearing accounts.

Depreciation and Amortization--Property and equipment is recorded at cost.
The cost of furniture and computer and office equipment is depreciated from
the date of installation using straight-line method over the estimated useful
lives of the various classes of property, which range from three to seven
years. The cost of software is amortized using the straight-line method over
three years.

Software Development Costs--Software development costs incurred for products
to be used internally are capitalized and are amortized on a straight line
basis over three years. Capitalized software costs are included in property
and equipment in the accompanying consolidated balance sheet. Amortization
of these costs will commence upon completion of the software.

Income Taxes--The provision for income taxes includes Federal and state
income taxes currently payable plus the net change during the year in the
deferred tax liability or asset. The current or deferred tax consequences of
all events that have been recognized in the financial statements are measured
based on provisions of enacted tax law to determine the amount of taxes
payable or refundable in future periods.

Net Income Per Share--Net income per common and common share equivalents at
the effective date of the Registration Statement will be computed based upon
the weighted average number of common and common share equivalents
outstanding during the period. Common share equivalents consist of stock
options calculated using the treasury stock method. Pursuant to Securities
and Exchange Commission Staff Accounting Bulletin No. 83, common stock and
options to purchase common stock issued subsequent to August 1, 1996, at
prices below the assumed initial public offering price will be included as
outstanding for all periods presented, using the treasury stock method at the
assumed initial public offering price of $5 per share.

Calculation of pro forma net income per share and weighted average number of
common and common share equivalents outstanding for the year ended December
31, 1996, and the six months ended June 30,

F-7

<PAGE>

1996, is on a pro forma basis based upon operations for the period, assuming
the incorporation and spin-out and the issuance of the common stock all took
place on January 1, 1996.

Currency Translation--The assets and liabilities of the Company's foreign
subsidiaries whose functional currency is other than the U.S. Dollar are
translated at the exchange rates in effect on the reporting date, and income
and expenses are translated at the weighted average exchange rate during the
period. The net effect of such translation gains and losses are not included
in determining net income but are accumulated if significant, as a separate
component of stockholders' equity. Foreign currency transaction gains and
losses are included in determining net income.

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

Concentration of Risk--The Company's largest customer accounted for
approximately 95%, 89%, and 82% of total revenues for the years ended
December 31, 1994, 1995, and 1996, respectively. In addition, one other
customer accounted for approximately 11% of total revenues for the year
ended December 31, 1996.

Financial instruments that potentially subject the Company to concentration
of credit risk principally consist of accounts receivable. The Company's
largest customer accounted for approximately 65% and 76% of accounts
receivable as of December 31, 1995 and 1996, respectively. In addition, other
customers with balances in excess of 10% accounted for approximately 33% and
19% of accounts receivable as of December 31, 1995 and 1996, respectively.
The Company performs ongoing credit evaluations of its customers, but
generally does not require collateral to support customer receivables. Losses
on uncollectible accounts have consistently been within management's
expectations and have historically been minimal.

Interim Financial Information--The interim financial statements and
related notes as of June 30, 1997, and for the six-month periods ended
June 30, 1996 and 1997, is unaudited. The information reflects all
adjustments, consisting only of normal recurring adjustments that, in the
opinion of management, are necessary to present fairly the financial position
and results of operations of the Company for the periods indicated. Results
of operations for the interim periods are not necessarily indicative of the
results of operations for the full year.

Stock-Based Compensation--In 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
No. 123). However, the Company has not adopted the recognition and
measurement provisions of SFAS No. 123 and therefore provides only the
applicable disclosures.

F-8

<PAGE>

3. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 1995 and 1996, consisted of:

1995 1996
------ ------

Furniture and equipment................................. $ 304 $ 820
Leasehold improvements.................................. 9 47
Leased equipment........................................ 365 578
Capitalized software.................................... 207 430
------ ------
885 1,875
Less accumulated depreciation and amortization.......... (226) (491)
------ ------
$ 659 $1,384
------ ------
------ ------

The Company leases furniture, equipment and automobiles under capital leases.
The capitalized costs and related accumulated amortization, included in the
amounts above, at December 31, 1995 and 1996, are:

1995 1996
------ ------

Furniture, equipment, and automobiles................... $ 365 $ 578
Less accumulated amortization........................... (90) (172)
------ ------
$ 275 $ 406
------ ------
------ ------

4. ACCRUED EXPENSES

Accrued expenses at December 31, 1995 and 1996, consisted of:

1995 1996
------ ------

Accrued salaries, bonuses, and other employee benefits.. $1,731 $2,222
Payroll taxes and amounts withheld from employees....... 562 746
Other................................................... 313 713
------ ------
$2,606 $3,681
------ ------
------ ------

5. UNEARNED REVENUE

Unearned revenue at December 31, 1995 and 1996, represents prepayment for
purchases of services that had not been rendered as of the respective dates.

6. CREDIT AGREEMENT (UNAUDITED)

In March 1997, the Company entered into a $5,000 revolving credit agreement
with CoreStates Bank that was increased to $7,500 (unaudited) in July 1997.
The agreement, which matures on May 31, 1999, provides for a commitment fee
of .375% on the unused portion and interest at the prime rate and/or, at the
Company's option, at the bank's overnight base rate plus 2% or LIBOR plus 2%.
Borrowings under the agreement are limited to a percentage of eligible billed
receivables not greater

F-9

<PAGE>

than 90 days old. The agreement also requires the maintenance of certain
financial covenants and prohibits the payment of dividends.

7. LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1995 and 1996:

<TABLE>
<CAPTION>
1995 1996
------ ------
<S> <C> <C>
Capitalized lease obligations bearing interest at 7.10%
to 9.50%, aggregate monthly payments averaging $17.................... $ 251 $ 476

Less current portion.................................................... 68 190
----- -----
Long-term portion....................................................... $ 183 $ 286
----- -----
</TABLE>

Maturities under the financing arrangements and long-term debt are
summarized below:

YEAR ENDING CAPITAL
DECEMBER 31, LEASES

1997 $ 202
1998 178
1999 72
2000 39
2001 25
-----
516

Less amounts representing interest (40)
-----
Total $ 476
-----
-----

8. STOCKHOLDERS' EQUITY

In 1996, the Company adopted the 1996 Equity Compensation Plan (the Plan)
under which the Company is authorized to grant stock options to employees,
officers, directors, and consultants. The Plan provides for the issuance of
up to 1,500,000 shares of common stock pursuant to the grant of incentive
stock options, nonqualified stock options, stock appreciation rights, and
restricted stock awards. Generally, these options vest ratably over a
four-year period and expire ten years after the date of the grant and are
granted at the estimated fair market value at the date of grant.

F-10

<PAGE>

Option activity under the Company's plan for the year ended December 31,
1996, is summarized as follows:

<TABLE>
<CAPTION>
EXERCISE
SHARES PRICE PER SHARE

<S> <C> <C>
Outstanding, January 1, 1996........................................ --
Options granted..................................................... 1,133,333 $2.00--$2.40
Options canceled.................................................... (16,667) $2.00
---------

Outstanding, December 31, 1996...................................... 1,116,666 $2.00--$2.40

Options granted (unaudited)......................................... 349,167 $2.40--$5.10
Options canceled (unaudited)........................................ (89,375) $2.00
Options exercised (unaudited)....................................... (583) $2.00
---------

Outstanding, June 30, 1997 (unaudited).............................. 1,375,875 $2.00--$5.10
---------
---------

Options exercisable, December 31, 1996.............................. 102,020 $2.00
---------
---------

Shares available for future grant, December 31, 1996................ 383,333
---------
---------
</TABLE>

As permitted under SFAS No. 123, the Company continues to account for its
employee stock-based compensation plans and options granted under APB No. 25.
No compensation expense has been recognized in connection with options, as
all options have been granted with an exercise price equal to the fair value
of the Company's common stock on the date of grant. Accordingly, the Company
has provided below the additional disclosures specified in SFAS No. 123 for
1996. For SFAS No. 123 purposes, the fair value of each option grant has been
estimated as of the date of grant using the Black-Scholes option pricing
model with the following weighted average assumptions: risk-free interest
rate of 5.93% to 6.26%, expected life of 6 years, and dividend rate of zero
percent. Using these assumptions, the fair value of the stock options granted
in 1996 on a per-share weighted average value was $1.02, which would be
amortized as compensation expense over the vesting period of the options. Had
compensation expense been determined consistent with SFAS No. 123 utilizing
the assumptions detailed above, the Company's net income and income per share
for the year ended December 31, 1996, would have been reduced to the
following pro forma amounts:

Net income:
As reported................................................. $ 1,810
Pro forma................................................... $ 1,647

Net income per share:
As reported................................................. $ .17
Pro forma................................................... .16

The resulting pro forma compensation cost may not be representative of that
expected in future years.

F-11

<PAGE>

9. INCOME TAXES

The Company's provision for income taxes for the years ended December 31,
1994, 1995 and 1996, consisted of the following:

1994 1995 1996
------ ------ ------

Current--Federal............................... $ 737 $ 921 $1,006
--State................................. 184 204 220
----- ------ ------
921 1,125 1,226
----- ------ ------
Deferred--Federal.............................. (372) 11 68
--State................................ (83) 3 21
----- ------ ------
(455) 14 89
----- ------ ------
$ 466 $1,139 $1,315
----- ------ ------
----- ------ ------

The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate as follows:

<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Expected statutory amount............................ 34.0% 34.0% 34.0%
Nondeductible expenses............................... 1.4 2.0 2.0
Losses of foreign subsidiaries....................... -- 10.5 --
State income taxes, net of federal benefit........... 4.6 4.6 4.6
Other................................................ -- -- 1.5
----- ----- -----
Effective Rate....................................... 40.0% 51.1% 42.1%
----- ----- -----
----- ----- -----
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and amounts used for income tax purposes.

The tax effect of significant temporary differences that comprise the
deferred tax assets and liabilities at December 31, 1995 and 1996, are as
follows:

1995 1996
------ ------

Deferred tax assets:
Accrued employee benefits...................... $ 441 $ 102
Losses of foreign subsidiaries................. 748 906
------ ------

Subtotal.................................... 1,189 1,008

Less valuation allowance....................... (748) (656)
------ ------

Total deferred tax assets................... 441 352

Deferred tax liabilities........................ -- --
------ ------

Net deferred tax assets..................... $ 441 $ 352
------ ------
------ ------

A valuation allowance has been provided to reduce the deferred tax assets to
a level that more likely than not, under the requirements of SFAS 109, will
be realized.

F-12

<PAGE>

At December 31, 1996, the Canadian subsidiaries have net operating loss
carryforwards available to offset future taxable income generated by these
subsidiaries of approximately $1,930. These carryforwards expire in 2003.

10. EMPLOYEE BENEFIT PLANS

In 1996, the Company approved the temporary adoption of the OAO Corporation
Employee Savings Plan (the 401(k) Plan) as the employee savings plan.
Effective September 30, 1996, the Company established a separate 401(k)
Plan, the OAO International Corporation Employee Savings Plan, and completed
the rollover of assets held under the OAO Corporation Employee Savings Plan
to the new plan. The 401(k) Plan covers substantially all of the Company's
U.S. employees. Participants may contribute to the Plan an amount between 1%
and 15% of their total annual compensation. The Company makes matching
contributions of 20% of each participant's contributions up to 10%. Company
matching contributions amounted to $201 in 1996.

11. COMMITMENTS

The Company has entered into long-term lease agreements for office space and
equipment. The minimum fixed rental commitments related to all noncancelable
operating leases are approximately as follows:

YEAR ENDING
DECEMBER 31, AMOUNT

1997 $ 413
1998 345
1999 290
2000 290
2001 261
Thereafter 411
------
$2,010
------
------

A number of these leases have escalation clauses for increases in real
estate taxes, operating costs, and inflation and provide various renewal
options up to five years. Rent expense for the years ended December 31,
1994, 1995, and 1996, approximated $118, $355, and $421, respectively.

F-13

<PAGE>

12. GEOGRAPHIC AREA INFORMATION

The Company generated substantially all of its revenues in the United States
and Canada during the three years ended December 31, 1996. The following
represents a summary of information by geographic area:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
<S> <C> <C> <C>
1994 1995 1996
-------- -------- --------
Net revenues:
United States....................................... $22,472 $36,147 $51,000
Canada.............................................. -- 2,082 6,891
Eliminations and other consolidated................. -- -- --
------- ------- -------
$22,472 $38,229 $57,891
------- ------- -------
------- ------- -------
Income (loss) before taxes:
United States....................................... $ 1,165 $ 2,848 $ 5,682
Canada.............................................. -- (620) 228
Eliminations and other consolidated................. -- -- (2,785)
------- ------- -------
$ 1,165 $ 2,228 $ 3,125
------- ------- -------
------- ------- -------
Identifiable assets:
United States....................................... $ 5,948 $12,733
Canada.............................................. 603 2,473
Eliminations and other consolidated................. (750) (2,378)
------- -------
$ 5,801 $12,828
------- -------
------- -------
</TABLE>

Sales between geographic areas are not material. Costs related to business
development in international locations other than Canada of approximately
$3,100 have been included in "Eliminations and other consolidated." Prior to
1996, costs incurred in this area were not significant. Identifiable assets
are those assets used in the operations in each geographic area.

13. RELATED PARTY TRANSACTIONS

The Company and OAO Services, Inc. (Services), a subsidiary of OAO, are
related parties as a common group of shareholders hold a substantial
ownership interest in both companies. During 1996, the Company entered into
several contracts with Services to serve as a subcontractor. Total revenues
recorded under these contracts amounted to $1,557 for the year ended
December 31, 1996. At December 31, 1996, the Company has $764 and $297 of
billed and unbilled receivables, respectively, which are due from Services.

At the date of its investment in the Company, April 8, 1996 (Note 1),
Safeguard paid $5,000 to Services, in return for a grant by Services to the
Company of an option to purchase at anytime through April 8, 2000, all of
the shares of common stock of Services at an exercise price based on
revenues and earnings levels of Services for the 12 months prior to the date
of exercise.

F-14

<PAGE>

14. EARNINGS PER SHARE

In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (EPS) which
simplifies the standards for computing EPS previously found in APB Opinion
No. 15 and makes them comparable to international EPS standards. The
Statement is effective for financial statements issued for periods ending
after December 15, 1997. Had the following statement been effective for the
year ended December 31, 1996 and the six months ended June 30, 1997, income
per share would have been presented as follows:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- ----------------
<S> <C> <C>
Income per common share............................ $0.23 $0.15
----- -----

Income per common share--assuming dilution......... $0.17 $0.12
----- -----
</TABLE>

15. CONTINGENCIES

The Company is involved in various litigation arising in the normal course
of business. In management's opinion, the Company's ultimate liability or
loss, if any, resulting from this litigation will not have a material
adverse effect on the accompanying financial statements.

16. SUBSEQUENT EVENTS

RECAPITALIZATION

On July 31, 1997, the Board of Directors approved an increase in the
number of authorized shares of common stock to 20 million shares, a par
value of $.01 per share, and a split of all shares of common stock at a
ratio of 1.6667 to one. All share amounts have been restated to give effect
to the July 31, 1997 stock split. In addition, the Board authorized the
issuance of 10 million shares of preferred stock; however, no shares have
been issued.

RELATED PARTY TRANSACTIONS

Pursuant to the terms of an agreement dated July 11, 1997, the Services'
option (Note 13) was canceled in consideration of the right by the
Company and Safeguard to receive certain future payments in the event of
any sale of OAO and Services or any public offering by OAO which occurs
prior to April 8, 2000. In each instance, the minimum amount to be
received by the Company would be $500 with the potential for a higher
amount based on the value of the transaction.

* * * * * *

F-15

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

No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offering made hereby, and, if given or
made, such information or representations must not be relied upon as having
been authorized by the Company or any underwriters. This 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 Prospectus, nor does it
constitute an offer or solicitation by anyone in any jurisdiction in which
such offer or solicitation is not authorized, or in which the person making
such an offer or solicitation is not qualified to do so or to any person to
whom it is unlawful to make such an offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the dates as of which information is furnished
or the date hereof.

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

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................
Risk Factors..............................................................
The Offering..............................................................
Federal Income Tax Consequences...........................................
Use of Proceeds...........................................................
Dividend Policy...........................................................
Capitalization............................................................
Dilution..................................................................
Selected Consolidated Financial Data......................................
Management's Discussion and Analysis of Financial Condition and Results of
Operations..............................................................
Business..................................................................
Description of Capital Stock..............................................
Shares Eligible for Future Sale...........................................
Underwriting..............................................................
Legal Matters.............................................................
Experts...................................................................
Additional Information....................................................
Index to Consolidated Financial Statements................................ F-1
</TABLE>

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

UNTIL , 1997 (25 DAYS AFTER THE DATE HEREOF), ALL DEALERS EFFECTING
TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING
AS UNDERWRITERS AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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

6,720,000 SHARES

(AND RIGHTS TO ACQUIRE
UP TO 6,400,000 OF SUCH SHARES)

OAO TECHNOLOGY SOLUTIONS, INC.
[LOGO]

COMMON STOCK

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

PROSPECTUS

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

Wheat First Butcher Singer

Janney Montgomery Scott Inc.

, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses (other than underwriting discounts and commissions and
underwriters' non-accountable expense allowance) payable in connection with
this offering of the rights and the sale of the Common Stock offered hereby
are as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................... $ 12,690
NASD filing fee................................................................... $ 4,180
Nasdaq filing fee................................................................. $ 50,000
Printing and engraving expenses................................................... $ 160,000
Legal fees and expenses........................................................... $ 175,000
Accounting fees and expenses...................................................... $ 175,000
Blue Sky fees and expenses (including legal fees)................................. $ 25,000
Transfer agent and rights agent and registrar fees and expenses................... $ 25,000
Miscellaneous..................................................................... $ 173,130
Total............................................................................. $ 800,000
</TABLE>

The foregoing, except for the Securities and Exchange Commission
registration fee, the NASD filing fee, and the Nasdaq filing fee, are
estimates. All of the foregoing expenses will be borne by the Registrant.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Registrant's Certificate of Incorporation permits indemnification to
the fullest extent permitted by Delaware law. The Registrant's By-laws
require the Registrant to indemnify any person who was or is an authorized
representative of the Registrant, and who was or is a party or is threatened
to be made a party to any corporate proceeding, by reason of the fact that
such person was or is an authorized representative of the Registrant, against
expenses, judgments, penalties, fines and amounts paid in settlement actually
and reasonably incurred by such person in connection with such third party
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in, or not opposed to, the best interests of the
Registrant and, with respect to any criminal third party proceeding
(including any action or investigation which could or does lead to a criminal
third party proceeding) had no reasonable cause to believe such conduct was
unlawful. The Registrant shall also indemnify any person who was or is an
authorized representative of the Registrant and who was or is a party or is
threatened to be made a party to any corporate proceeding by reason of the
fact that such person was or is an authorized representative of the
Registrant, against expenses actually and reasonably incurred by such person
in connection with the defense or settlement of such corporate action if such
person acted in good faith and in a manner reasonably believed to be in, or
not opposed to, the best interests of the Registrant, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Registrant
unless and only to the extent that the Delaware Court of Chancery or the
court in which such corporate proceeding was pending shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such authorized representative is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper. Such indemnification is
mandatory under the Registrant's By-laws as to expenses actually and
reasonably incurred to the extent that an authorized representative of the
Registrant has been successful on the merits or otherwise in defense of any
third party or corporate proceeding or in defense of any claim, issue or
matter therein. The determination of whether an individual is entitled to
indemnification may be made by a majority of disinterested directors,
independent legal counsel in a written legal opinion or the stockholders.
Delaware law also permits indemnification in connection with a proceeding
brought by or in the right of the Registrant to procure a judgment in its
favor. Insofar asindemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in that Act and is therefore
unenforceable. The Registrant expects to obtain a directors and officers
liability insurance policy prior to the effective date of this Registration
Statement.

II-1

<PAGE>

The Standby Underwriting Agreement provides that the Underwriters are
obligated, under certain circumstances, to indemnify directors, officers and
controlling persons of the Registrant against certain liabilities, including
liabilities under the Act. Reference is made to Section 8 of the form of
Standby Underwriting Agreement which will be filed by amendment as Exhibit
1.1 hereto.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In the three years preceding the filing of this registration statement,
the Registrant has issued the following securities that were not registered
under the Act:

On April 8, 1996, the Registrant sold 5,000,000 shares of Common Stock to
Safeguard Scientifics (Delaware), Inc. at a price of $1.00 per share. Since
its inception, the Registrant has sold to employees an aggregate of 1,002,783
shares of Common Stock at an average price of $.20 per share. All of such
sales were made under the exemption from registration provided under Section
4(2) of the Act.

Pursuant to the Registrant's 1996 Equity Compensation Plan, the
Registrant has granted options to purchase a total of 1,375,875 shares of
Common Stock to its employees and certain other persons during the past three
fiscal years at a weighted average exercise price of $2.70 per share. For a
more detailed description of this Plan, see "Management--Equity Compensation
Plan" in this registration statement. In granting the options and selling the
underlying securities upon exercise of the options, the Company is relying
upon exemptions from registration set forth in Section 4(2) of, and Rule 701
promulgated under, the Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- ----------------- -------------------------------------------------------------------------------------------------
<C> <S>

1.1 Form of Standby Underwriting Agreement.#

3.1 Restated Certificate of Incorporation of the Company.*

3.2 Amended and Restated By-laws of the Company.*

5.1 Opinion of Morgan, Lewis & Bockius LLP.#

8.1 Opinion of Morgan, Lewis & Bockius LLP regarding tax matters.#

10.1 Conformed form of Vendor Agreement between the Company and Integrated Systems Solutions
Corporation, as amended.*

10.2 Basic Order Agreement between Digital Equipment Corporation and OAO Canada Limited/OAO Technology
Solutions, Inc.* +

10.3 Amended and Restated OAO Technology Solutions, Inc. 1996 Equity Compensation Plan.#

10.4 Employment Agreement between William R. Hill and the Company, dated as of April 1, 1996.\*

11.1 Statement Regarding Computation of Earnings Per Share.#

21.1 Subsidiaries of the Registrant.*

23.1 Consent of Deloitte & Touche LLP.*

23.2 Consent of Morgan, Lewis & Bockius LLP (to be included in Exhibit 5.1).#

23.3 Consent of Morgan, Lewis & Bockius LLP (to be included in Exhibit 8.1).#

24.1 Power of Attorney (included on signature page).*

27.1 Financial Data Schedule.*
</TABLE>

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

* Filed herewith.
# To be filed by amendment.
+ Confidential Treatment Requested.

II-2

<PAGE>

(b) Financial Statement Schedules

All information for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission is either included in
the financial statements or is not required under the related instructions or
are inapplicable, and therefore have been omitted.

ITEM 17. UNDERTAKINGS.

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 "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; and

(iv) To reflect the results of this offering.

(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
offered 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.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to provisions described in Item 14 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

The undersigned registrant hereby undertakes (1) to provide to the
underwriters at the closing specified in the standby underwriting agreement
certificates in such denominations and registered in such names as required
by the underwriters to permit prompt delivery to each purchaser; (2) that for
purposes of determining any liability under the Act, the information omitted
from the form of prospectus filed as part of a registration statement in
reliance upon Rule 430A and contained in the form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be
deemed to be part of this registration statement as of the time it was
declared effective; and (3) that for the purpose of determining any liability
under the Act, each post-effective amendment that contains a form of
prospectus

II-3

<PAGE>

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.

The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters
during the subscription period, the amount of unsubscribed securities to be
purchased by the underwriters, and the terms of any subsequent reoffering
thereof. If any public offering by the underwriters is to be made on terms
differing from those set forth on the cover page of the prospectus, a
post-effective amendment will be filed to set forth the terms of such
offering.

II-4

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Greenbelt, Maryland
on August 19, 1997.

OAO TECHNOLOGY SOLUTIONS, INC.

BY: /S/ WILLIAM R. HILL
-----------------------------------------
William R. Hill
Chief Executive Officer and President

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William R. Hill and Samuel Horgan, or either
of them acting alone, his or her true and lawful attorney-in-fact and agent,
with full power of substitution and revocation, for him or her and in his or
her name, place and stead, in any and all capacities, to sign (i) any and all
amendments (including post-effective amendments) to this Registration
Statement and to file the same with all exhibits thereto, and other documents
in connection therewith and (ii) any registration statement and any and all
amendments thereto, relating to the offer covered hereby filed pursuant to
Rule 462(b) under the Securities Act of 1933, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, full
power and authority to do and perform each and every act and thing requisite
and necessary to be done as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

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

Signatures Title(s) Date
-------------- --------- ---------

Chief Executive Officer,
/s/ WILLIAM R. HILL President and Director August 19, 1997
- ------------------------------ (Principal Executive
William R. Hill Officer)

Chief Financial Officer and
/s/ SAMUEL HORGAN Treasurer (Principal August 19, 1997
- ------------------------------ Financial and Accounting
Samuel Horgan Officer)

/s/ JERRY JOHNSON Chairman of the Board of August 19, 1997
- ------------------------------ Directors
Jerry Johnson

/s/ CECILE D. BARKER Director August 19, 1997
- ------------------------------
Cecile D. Barker

/s/ FRANK FOSTER Director August 19, 1997
- ------------------------------
Frank Foster

/s/ THOMAS C. LYNCH Director August 19, 1997
- ------------------------------
Thomas C. Lynch

II-5

<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- ----------------- -------------------------------------------------------------------------------------------------
<C> <S>

1.1 Form of Standby Underwriting Agreement.#

3.1 Restated Certificate of Incorporation of the Company.*

3.2 Amended and Restated By-laws of the Company.*

5.1 Opinion of Morgan, Lewis & Bockius LLP.#

8.1 Opinion of Morgan, Lewis & Bockius LLP regarding tax matters.#

10.1 Conformed form of Vendor Agreement between the Company and Integrated Systems Solutions
Corporation, as amended.*

10.2 Basic Order Agreement between Digital Equipment Corporation
and OAO Canada Limited/OAO Technology Solutions, Inc.*+

10.3 Amended and Restated OAO Technology Solutions, Inc. 1996 Equity Compensation Plan.#

10.4 Employment Agreement between William R. Hill and the Company, dated as of April 1, 1996.*

11.1 Statement Regarding Computation of Earnings Per Share.#

21.1 Subsidiaries of the Registrant.*

23.1 Consent of Deloitte & Touche LLP.*

23.2 Consent of Morgan, Lewis & Bockius LLP (to be included in Exhibit 5.1).#

23.3 Consent of Morgan, Lewis & Bockius LLP (to be included in Exhibit 8.1).#

24.1 Power of Attorney (included on signature page).*

27.1 Financial Data Schedule.*
</TABLE>

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

* Filed herewith.
# To be filed by amendment.
+ Confidential Treatment Requested.

<PAGE>

RESTATED CERTIFICATE OF INCORPORATION
OF
OAO TECHNOLOGY SOLUTIONS, INC.

OAO Technology Solutions, Inc., a Delaware corporation, hereby certifies as
follows:

1. The corporation was incorporated under the name OAO International
Corporation. The date of filing of the original Certificate of Incorporation
with the Secretary of State was March 27, 1996.

2. This Restated Certificate of Incorporation amends, restates and
integrates the provisions of the Certificate of Incorporation of said
corporation and has been duly adopted in accordance with the provisions of
Section 242 and 245 of the General Corporation Law of the State of Delaware by
written consent of the holders of a majority of the outstanding stock entitled
to vote thereon in accordance with the provisions of Section 228 of the General
Corporation Law of the State of Delaware.

3. The text of the Certificate of Incorporation is hereby amended and
restated to read herein as set forth in full:

FIRST. The name of the Corporation is OAO Technology Solutions, Inc.

SECOND. The address of the Corporation's registered office is 1013 Centre
Road in the City of Wilmington, County of New Castle. The name of its
registered agent at such address is Corporation Service Company.

THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.

FOURTH. The aggregate number of shares that the corporation shall have
authority to issue is Thirty Million shares (30,000,000), of which Twenty
Million shares (20,000,000) will be Common Stock, par value One Cent ($.01) per
share and Ten Million shares (10,000,000) will be Preferred Stock, par value One
Cent ($.01) per share. The board of directors shall have the full authority
permitted by law to divide the authorized and unissued shares of Preferred Stock
into classes or series, or both, and to determine for any such class or series
its designation and the number of shares of the class or series and the voting
rights, preferences, limitations and special rights, if any, of the shares of
the class or series.

FIFTH. The Board of Directors of the Corporation is expressly authorized
to adopt, amend or repeal bylaws of the Corporation with the vote or written
consent of two-thirds of the members of the Board of Directors, subject to any
rights of holders of Preferred Stock.

SIXTH. Elections of directors need not be by written ballot except and to
the extent provided in the bylaws of the Corporation.

<PAGE>

SEVENTH. The Corporation shall, to the maximum extent permitted from time
to time under the laws of the State of Delaware, indemnify and upon request
shall advance expenses to any person who is or was a party or is threatened to
be made a party to any threatened, pending or completed action, suit, proceeding
or claim, whether civil, criminal, administrative or investigative, by reason of
the fact that he is or was or has agreed to be a director or officer of the
Corporation or while a director or officer is or was serving at the request of
the Corporation as a director, officer, employer or agent of any corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, against any and all expenses (including
attorney's fees and expenses), judgments, fines, penalties and amounts paid in
settlement or incurred in connection with the investigation, preparation to
defend or defense of such action, suit, proceeding or claim; provided, however,
that the foregoing shall not require the Corporation to indemnify or advance
expenses to any person in connection with any action, suit, proceeding, claim or
counterclaim initiated by or on behalf of such person. Such rights arising
under any by-law, agreement, vote of directors or stockholders or otherwise and
shall inure to the benefit of the heirs and legal representatives of such
person. Any repeal or modification of the foregoing provisions of this Article
Seventh shall not adversely affect any right or protection of a director or
officer of this Corporation existing at the time of such repeal or modification.

EIGHTH. A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent that such exemption from liability or
limitation thereof is not permitted under the Delaware General Corporation Law
as currently in effect or as the same may hereafter be amended. No amendment,
modification or repeal of this Article EIGHTH shall adversely affect any right
or protection of a director that exists at the time of such amendment,
modification or repeal.

NINTH. The Corporation is to have perpetual existence.

TENTH. Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide.

ELEVENTH. The books of the corporation may be kept (subject to any
provision contained in the statutes) outside the State of Delaware at such place
or places as may be designated from time to time by the board of directors or in
the bylaws of the Corporation.

TWELFTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this restated certificate of incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.

IN WITNESS WHEREOF, OAO Technology Solutions, Inc. has caused this
certificate to be signed by William R. Hill, its President, on the 31st day of
July, 1997.

OAO TECHNOLOGY SOLUTIONS, INC.

<PAGE>

Attest: By: /s/ William R. Hill
--------------------------
William R. Hill, President

<PAGE>

AMENDED AND RESTATED BYLAWS
OF
OAO TECHNOLOGY SOLUTIONS, INC.
(formerly OAO INTERNATIONAL CORPORATION)
(a Delaware corporation)

ARTICLE I
Offices and Fiscal Year

SECTION 1.01. Registered Office. The registered office of the
corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware until otherwise established by a vote of a majority of the board of
directors in office, and a statement of such change is filed in the manner
provided by statute.

SECTION 1.02. Other Offices. The corporation may also have offices
at such other places within or without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation
requires.

SECTION 1.03. Fiscal Year. The fiscal year of the corporation shall
end on the 31st of December in each year.

ARTICLE II
Meetings of Stockholders

SECTION 2.01. Place of Meeting. All meetings of the stockholders of
the corporation shall be held at the registered office of the corporation, or at
such other place within or without the State of Delaware as shall be designated
by the board of directors in the notice of such meeting.

SECTION 2.02. Annual Meeting. The board of directors may fix the
date and time of the annual meeting of the stockholders, but if no such date and
time is fixed by the board, the meeting for any calendar year shall be held on
the third Tuesday of May in such year, if not a legal holiday, and if a legal
holiday then on the next succeeding business day at 10:00 o'clock A.M., and at
said meeting the stockholders then entitled to vote shall elect directors and
shall transact such other business as may properly be brought before the
meeting.

SECTION 2.03. Special Meetings. Special meetings of the stockholders
of the corporation for any purpose or purposes for which meetings may lawfully
be called, may be called at any time by the

<PAGE>

chairman of the board, a majority of the board of directors, the chief executive
officer or the president, or at the request, in writing, of stockholders owning
individually or together ten percent or more of the entire capital stock of the
corporation issued and outstanding and entitled to vote. At any time, upon
written request of any person or persons who have duly called a special meeting,
which written request shall state the purpose or purposes of the meeting, it
shall be the duty of the secretary to fix the date of the meeting to be held at
such date and time as the secretary may fix, not less than ten nor more than
sixty days after the receipt of the request, and to give due notice thereof. If
the secretary shall neglect or refuse to fix the time and date of such meeting
and give notice thereof, the person or persons calling the meeting may do so.

SECTION 2.04. Notice of Meetings. Written notice of the place, date
and hour of every meeting of the stockholders, whether annual or special, shall
be given to each stockholder of record entitled to vote at the meeting not less
than ten nor more than sixty days before the date of the meeting. Every notice
of a special meeting shall state the purpose or purposes thereof.

SECTION 2.05. Quorum, Manner of Acting and Adjournment. The holders
of a majority of the stock issued and outstanding (not including treasury stock)
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute, by the certificate of
incorporation or by these bylaws. If, however, such quorum shall not be present
or represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At any such
adjourned meeting, at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting. When a quorum is present at any meeting, the
vote of the holders of the majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of the
applicable statute, the certificate of incorporation or these bylaws, a
different vote is required in which case such express provision shall govern and
control the decision of such question. Except upon those questions governed by
the aforesaid express provisions, the stockholders present in person or by proxy
at a duly organized meeting can continue to do business until adjournment,
notwithstanding withdrawal of enough stockholders to leave less than a quorum.

<PAGE>

SECTION 2.06. Organization. At every meeting of the stockholders,
the chairman of the board, if there be one, or in the case of a vacancy in the
office or absence of the chairman of the board, one of the following persons
present in the order stated: the vice chairman, if one has been appointed, the
chief executive officer or the president, the vice presidents in their order or
rank, a chairman designated by the board of directors or a chairman chosen by
the stockholders entitled to cast a majority of the votes which all
stockholders present in person or by proxy are entitled to cast, shall act as
chairman, and the secretary, or, in his absence, an assistant secretary, or in
the absence of the secretary and the assistant secretaries, a person appointed
by the chairman, shall act as secretary.

SECTION 2.07. Voting. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
capital stock having voting power held by such stockholder. No proxy shall be
voted or acted upon after three years from its date, unless the proxy provides
for a longer period. Every proxy shall be executed in writing by the
stockholder or by his duly authorized attorney-in-fact and filed with the
secretary of the corporation. A proxy, unless coupled with an interest, shall
be revocable at will, notwithstanding any other agreement or any provision in
the proxy to the contrary, but the revocation of a proxy shall not be effective
until notice thereof has been given to the secretary of the corporation. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. A proxy shall not be revoked by the
death or incapacity of the maker unless, before the vote is counted or the
authority is exercised, written notice of such death or incapacity is given to
the secretary of the corporation.

SECTION 2.08. Consent of Stockholders in Lieu of Meeting. Any action
required to be taken at any annual or special meeting of stockholders of the
corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty days of the
earliest dated consent delivered in the manner required above

<PAGE>

to the corporation, written consent, signed by a sufficient number of holders or
members to take action are delivered to the corporation by delivery to its
registered office in Delaware, its principal place of business, or an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to a corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.

SECTION 2.09. Voting Lists. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting. The list shall be arranged in alphabetical order showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.

SECTION 2.10. Judges of Election. All elections of directors shall
be by written ballot, unless otherwise provided in the certificate of
incorporation; the vote upon any other matter need not be by ballot. In advance
of any meeting of stockholders, the board of directors may appoint judges of
election, who need not be stockholders, to act at such meeting or any
adjournment thereof. If judges of election are not so appointed, the chairman
of any such meeting may, and upon the demand of any stockholder or his proxy at
the meeting and before voting begins shall, appoint judges of election. The
number of judges shall be either one or three, as determined, in the case of
judges appointed upon demand of a stockholder, by stockholders present entitled
to cast a majority of the votes which all stockholders present are entitled to
cast thereon. No person who is a candidate for office shall act as a judge. In
case any person appointed as judge fails to appear or fails or refuses to act,
the vacancy may be filled by appointment made by the board of directors in
advance of the convening of the meeting, or at the meeting by the chairman of
the meeting.

If judges of election are appointed as aforesaid, they shall determine
the number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes or ballots, hear and determine all
challenges and questions in any way arising in connection with the right to
vote, count and tabulate

<PAGE>

all votes, determine the result, and do such acts as may be proper to conduct
the election or vote with fairness to all stockholders. If there be three
judges of election, the decision, act or certificate of a majority shall be
effective in all respects as the decision, act or certificate of all.

On request of the chairman of the meeting or of any stockholder or his
proxy, the judges shall make a report in writing of any challenge or question or
matter determined by them, and execute a certificate of any fact found by them.

ARTICLE III
Board of Directors

SECTION 3.01. Powers. The board of directors shall have full power
to manage the business and affairs of the corporation; and all powers of the
corporation, except those specifically reserved or granted to the stockholders
by statute, the certificate of incorporation or these bylaws, are hereby granted
to and vested in the board of directors.

SECTION 3.02. Number and Term of Office. The board of directors
shall consist of one or more members as determined from time to time by
resolution of the board of directors. Each director shall serve until the next
annual meeting of the stockholders and until his successor shall have been
elected and qualified, except in the event of his death, resignation or removal.
All directors of the corporation shall be natural persons, but need not be
residents of Delaware or stockholders of the corporation.

SECTION 3.03. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. Whenever
the holders of any class or classes of stock or series thereof are entitled to
elect one or more directors by the provisions of the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected.

If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any

<PAGE>

such increase), the Court of Chancery may, upon application of any stockholder
or stockholders holding at least ten percent of the total number of the shares
at the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.

SECTION 3.04. Resignations. Any director of the corporation may
resign at any time by giving written notice to the chief executive officer or
the president or the secretary of the corporation. Such resignation shall take
effect at the date of the receipt of such notice or at any later time specified
therein and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

SECTION 3.05. Organization. At every meeting of the board of
directors, the chairman of the board, if there be one, or, in the case of a
vacancy in the office or absence of the chairman of the board, one of the
following officers present in the order stated: the vice chairman of the board,
if there be one, the chief executive officer or the president, the vice
presidents in their order of rank and seniority, or a chairman chosen by a
majority of the directors present, shall preside, and the secretary, or, in his
absence, an assistant secretary, or in the absence of the secretary and the
assistant secretaries, any person appointed by the chairman of the meeting,
shall act as secretary.

SECTION 3.06. Place of Meeting. The board of directors may hold its
meeting, both regular and special, at such place or places within or without the
State of Delaware as the board of directors may from time to time appoint, or as
may be designated in the notice calling the meeting.

SECTION 3.07. Organization Meeting. The first meeting of each newly
elected board of directors shall be held at such time and place as shall be
fixed by the vote of the stockholders at the annual meeting and no notice of
such meeting shall be necessary to the newly elected directors in order legally
to constitute the meeting, provided a quorum shall be present. In the event of
the failure of the stockholders to fix the time or place of such first meeting
of the newly elected board of directors, or in the event such meeting is not
held at the time and place so fixed by the stockholders, the meeting may be held
at such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the board of directors, or as shall be
specified in a written waiver signed by all of the directors.

SECTION 3.08. Regular Meetings. Regular meetings of the board of
directors may be held without notice at such time and place as shall be
designated from time to time by resolution of the board of directors. If the
date fixed for any such regular meeting be a legal holiday under the laws of the
State where such meeting is to be held, then the same shall be held on the next
succeeding business day, not a Saturday, or at such other time as may be
determined by resolution of the board

<PAGE>

of directors. At such meetings, the directors shall transact such business as
may properly be brought before the meeting.

SECTION 3.09. Special Meetings. Special meetings of the board of
directors shall be held whenever called by the chief executive officer or the
president or by two or more of the directors. Notice of each such meeting shall
be given to each director by telephone or in writing at least 24 hours (in the
case of notice by telephone) or 48 hours (in the case of notice by telegram) or
five days (in the case of notice by mail) before the time at which the meeting
is to be held. Each such notice shall state the time and place of the meeting
to be so held.

SECTION 3.10. Quorum, Manner of Acting and Adjournment. At all
meetings of the board a majority of the directors shall constitute a quorum for
the transaction of business and the act of a majority of the directors present
at any meeting at which there is a quorum shall be the act of the board of
directors, except as may be otherwise specifically provided by statute or by the
certificate of incorporation. If a quorum shall not be present at any meeting
of the board of directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.

Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
board of directors or of any committee thereof may be taken without a meeting,
if all members of the board consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board.

SECTION 3.11. Executive and Other Committees. The board of directors
may, by resolution adopted by a majority of the whole board, designate an
executive committee and one or more other committees, each committee to consist
of two or more directors. The board may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence of disqualification of a
member, and the alternate or alternates, if any, designated for such member, of
any committee the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another director to act at the meeting in the place of any
such absent or disqualified member.

Any such committee to the extent provided in the resolution
establishing such committee shall have and may exercise all the power and
authority of the board of directors in the management of the business and
affairs of the corporation, including the power or authority to declare a
dividend or to

<PAGE>

authorize the issuance of stock, and may authorize the seal of the corporation
to be affixed to all papers which may require it; but no such committee shall
have the power or authority in reference to amending the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151 (a) of the Delaware General
Corporation Law ("DGCL"), fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), adopting an agreement of
merger or consolidation under Section 251 or 252 of the DGCL, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
bylaws of the corporation; and, unless the resolution expressly so provides, no
such committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock or to adopt a certificate of ownership and
merger pursuant to Section 253 of the DGCL. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the board of directors. Each committee so formed shall keep regular
minutes of its meetings and report the same to the board of directors when
required.

SECTION 3.12. Compensation of Directors. Unless otherwise restricted
by the certificate of incorporation, the board of directors shall have the
authority to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the board of directors and
may be paid a fixed sum for attendance at each meeting of the board of directors
or a stated salary as director. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.

ARTICLE IV
Notice - Waivers - Meetings

SECTION 4.01. Notice, What Constitutes. Whenever, under the
provisions of the statutes of Delaware or the certificate of incorporation or of
these bylaws, notice is required to be given to any director or stockholder, it
shall not be construed to mean personal notice, but such notice may be given in
writing, by mail, addressed to such director or stockholder, at his address as
it appears on the records of the corporation, with postage thereon prepaid, and
such notice shall be deemed to be given

<PAGE>

at the time when the same shall be deposited in the United States mail. Notice
to directors may also be given in accordance with Section 3.09 of Article III
hereof.

SECTION 4.02. Waivers of Notice. Whenever any written notice is
required to be given under the provisions of the certificate of incorporation,
these bylaws, or by statute, a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Except in the
case of a special meeting of stockholders, neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the stockholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice of such meeting.

Attendance of a person, either in person or by proxy, at any meeting,
shall constitute a waiver of notice of such meeting, except where a person
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting was not lawfully called or convened.

SECTION 4.03. Conference Telephone Meetings. One or more directors
may participate in a meeting of the board, or of a committee of the board, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this section shall constitute presence in
person at such meeting.

ARTICLE V
Officers

SECTION 5.01. Number, Qualifications and Designation. The officers
of the corporation shall be chosen by the board of directors and shall be a
chief executive officer and/or a president, one or more vice presidents, if any,
a secretary, a treasurer, and such other officers as may be elected in
accordance with the provisions of Section 5.03 of this Article. One person may
hold more than one office. Officers may be, but need not be, directors or
stockholders of the corporation. The board of directors may elect from among
the members of the board a chairman of the board and a vice chairman of the
board who shall be officers of the corporation.

SECTION 5.02. Election and Term of Office. The officers of the
corporation, except those elected by delegated authority pursuant to Section
5.03 of this Article, shall be elected annually by the board of directors, and
such other officer shall hold his office until his successor shall have been

<PAGE>

elected and qualified, or until his earlier resignation or removal. Any officer
may resign at any time upon written notice to the corporation.

SECTION 5.03. Subordinate Officers, Committees and Agents. The board
of directors may from time to time elect such other officers and appoint such
committees, employees or other agents as it deems necessary, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as are provided in these bylaws, or as the board of directors may from
time to time determine. The board of directors may delegate to any officer or
committee the power to elect subordinate officers and to retain or appoint
employees or other agents, or committees thereof, and to prescribe the authority
and duties of such subordinate officers, committees, employees or other agents.

SECTION 5.04. The Chairman and Vice Chairman of the Board. The
chairman of the board or in his absence, the vice chairman of the board, shall
preside at all meetings of the stockholders and of the board of directors, and
shall perform such other duties as may from time to time be assigned to them by
the board of directors.

SECTION 5.05. The Chief Executive Officer or President. The chief
executive officer or the president shall perform such duties and shall have such
rights and responsibilities as may from time to time be assigned to him by the
board of directors.

SECTION 5.06. The Vice Presidents. The vice president or vice
presidents, if any, shall perform the duties of the chief executive officer or
the president in his absence and such other duties as may from time to time be
assigned to them by the board of directors or by the chief executive officer or
the president.

SECTION 5.07. The Secretary. The secretary, or an assistant
secretary, shall attend all meetings of the stockholders and of the board of
directors and shall record the proceedings of the stockholders and of the
directors and of committees of the board in a book or books to be kept for that
purpose; see that notices are given and records and reports properly kept and
filed by the corporation as required by law; be the custodian of the seal of the
corporation and see that it is affixed to all documents to be executed on behalf
of the corporation under its seal; and, in general, perform all duties incident
to the office of the secretary, and such other duties as may from time to time
be assigned to him by the board of directors or the chief executive officer or
the president.

SECTION 5.08. The Treasurer. The treasurer, or an assistant
treasurer, shall have or provide for the custody of the funds or other property
of the corporation and shall keep a separate book account of the same to his
credit as treasurer; collect and receive or provide for the collection and
receipt of moneys earned by or in any manner due to or received by the
corporation; deposit all funds

<PAGE>

in his custody as treasurer in such banks or other places of deposit as the
board of directors may from time to time designate; whenever so required by the
board of directors, render an account showing his transactions as treasurer and
the financial condition of the corporation; and, in general, discharge such
other duties as may from time to time be assigned to him by the board of
directors of the chief executive officer or the president.

SECTION 5.09. Officers' Bonds. No officer of the corporation need
provide a bond to guarantee the faithful discharge of his duties unless the
board of directors shall by resolution so require a bond in which event such
officer shall give the corporation a bond (which shall be renewed if and as
required) in such sum and with such surety or sureties as shall be satisfactory
to the board of directors for the faithful performance of the duties of his
office.

SECTION 5.10. Salaries. The salaries of the officers and agents of
the corporation elected by the board of directors shall be fixed from time to
time by the board of directors.

ARTICLE VI
Certificates of Stock, Transfer, Etc.

SECTION 6.01. Issuance. Each stockholder shall be entitled to a
certificate or certificate for shares of stock of the corporation owned by him
upon his request therefor. The stock certificates of the corporation shall be
numbered and registered in the stock ledger and transfer books of the
corporation as they are issued. They shall be signed by the chief executive
officer or the president or a vice president and by the secretary or an
assistant secretary or the treasurer or an assistant treasurer, and shall bear
the corporate seal, which may be a facsimile, engraved or printed. Any of or
all the signatures upon such certificate may be a facsimile, engraved or
printed. In case any officer, transfer agent or registrar who has signed, or
whose facsimile signature has been placed upon, any share certificate shall have
ceased to be such officer, transfer agent or registrar, before the certificate
is issued, it may be issued with the same effect as if he were such officer,
transfer agent or registrar at the date of its issue.

SECTION 6.02. Transfer. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. No

<PAGE>

transfer shall be made which would be inconsistent with the provisions of
Article 8, Title 6 of the Delaware Uniform Commercial Code-Investment
Securities.

SECTION 6.03. Stock Certificates. Stock certificates of the
corporation shall be in such form as provided by statute and approved by the
board of directors. The stock record books and the blank stock certificates
books shall be kept by the secretary or by any agency designated by the board of
directors for that purpose.

SECTION 6.04. Lost, Stolen, Destroyed or Mutilated Certificates. The
board of directors may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the board of directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be against the
corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.

SECTION 6.05. Record Holder of Shares. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.

SECTION 6.06. Determination of Stockholders of Record. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty or less than ten
days before the date of such meeting. If no record date is fixed by the board of
directors, the record date for determining stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of directors may
fix a new record date for the adjourned meeting.

<PAGE>

In order that the corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the board of directors
may fix a record date, which record date shall not be more than ten days after
the date upon which the resolution fixing the record date is adopted by the
board of directors. If no record has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by the DGCL, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in Delaware, its principal
place of business, or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to a corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by the DGCL, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting shall be at the
close of business on the day on which the board of directors adopts the
resolution taking such prior action.

In order that the corporation may determine the stockholders entitled to
receive payment of any dividend or other distribution or allotment of any rights
of the stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix a record date, which record date shall not
precede the date upon the resolution fixing the record date is adopted, and
which record date shall not be more than sixty days prior to such action. If no
record date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of the business on the day on which the board of
directors adopts the resolution relating thereto.

ARTICLE VII
Indemnification of Directors, Officers and
Other Authorized Representatives

SECTION 7.01. Indemnification of Authorized Representatives in Third Party
Proceedings. The corporation shall indemnify any person who was or is an
authorized representative of the corporation, and who was or is a party or is
threatened to be made a party to any corporation

<PAGE>

proceeding, by reason of the fact that such person was or is an authorized
representative of the corporation, against expenses judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such third party proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in, or not opposed
to, the best interests of the corporation and, with respect to any criminal
third party proceeding (including any action or investigation which could or
does lead to a criminal third party proceeding) had no reasonable cause to
believe such conduct was unlawful. The termination of any third party
proceeding by judgment, order, settlement, indictment, conviction or upon a plea
of nolo contendere or its equivalent, shall not of itself create a presumption
that the authorized representative did not act in good faith and in a manner
which such person reasonably believed to be in or not opposed to, the best
interests of the corporation, and, with respect to any criminal third party
proceeding, had reasonable cause to believe that such conduct was unlawful.

SECTION 7.02. Indemnification of Authorized Representatives in
Corporate Proceedings. The corporation shall indemnify any person who was or is
an authorized representative of the corporation and who was or is a party or is
threatened to be made a party to any corporate proceeding by reason of the fact
that such person was or is an authorized representative of the corporation,
against expenses actually and reasonably incurred by such person in connection
with the defense or settlement of such corporate action if such person acted in
good faith and in a manner reasonably believed to be in, or not opposed to, the
best interests of the corporation, except that no indemnification shall be made
in respect of 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 corporate proceeding was pending
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such authorized representative is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.

SECTION 7.03. Mandatory Indemnification of Authorized
Representatives. To the extent that an authorized representative of the
corporation has been successful on the merits or otherwise in defense of any
third party or corporate proceeding or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses actually and
reasonably incurred by such person in connection therewith.

SECTION 7.04. Determination of Entitlement to Indemnification. Any
indemnification under Section 7.01, 7.02 or 7.03 of this Article (unless ordered
by a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the authorized

<PAGE>

representative is proper in the circumstances because such person has either met
the applicable standard of conduct set forth in Section 7.01 or 7.02 or has been
successful on the merits or otherwise as set forth in Section 7.03 and that the
amount requested has been actually and reasonably incurred. Such determination
shall be made:

(1) By the board of directors by a majority of a quorum consisting of
directors who were not parties to such third party or corporate proceeding, or

(2) If such a quorum is not obtainable, or, even if obtainable, a
majority vote of such quorum so directs, by independent legal counsel in a
written opinion, or

(3) By the stockholders.

SECTION 7.05. Advancing Expenses. Expenses actually and reasonably
incurred in defending a third party or corporate proceeding shall be paid on
behalf of a director by the corporation in advance of the final disposition of
such third party or corporate proceeding upon receipt of an undertaking by or on
behalf of the director to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the corporation as
authorized in this Article.

Expenses actually and reasonably incurred in defending a third party
or corporate proceeding shall be paid on behalf of an authorized representative
other than a director by the corporation in advance of the final disposition of
such third party or corporate proceeding as authorized by the board of directors
upon receipt of an undertaking by or on behalf of such authorized representative
to repay if it shall ultimately be determined that such person is not entitled
to be indemnified by the corporation as authorized in this Article.

The financial ability of any authorized representative to make a
repayment contemplated by this Section shall not be a prerequisite to the making
of an advance, and shall not be considered by the board of directors in
determining whether to authorize advancement of expenses.

SECTION 7.06. Definitions. For purposes of this Article:

(1) "authorized representative" shall mean a director or officer of
the corporation, or a person serving at the request of the
corporation as a director, officer, or trustee, of another
corporation, partnership, joint venture, trust or other
enterprise;

(2) "corporation" shall include in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have

<PAGE>

had power and authority to indemnify its directors, officers,
employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this Article
with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if
its separate existence had continued.

(3) "corporate proceeding" shall mean any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor or investigative proceeding by
the corporation;

(4) "criminal third party proceedings" shall include any action or
investigation which could or does lead to a criminal third party
proceeding;

(5) "expenses" shall include attorney's fees and disbursements;

(6) "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan;

(7) "not opposed to the best interests of the corporation" shall
include such actions taken in good faith and in a manner the
authorized representative reasonably believed to be in the
interest of the participants and beneficiaries of a benefit plan;

(8) "other enterprises" shall include employee benefit plans;

(9) "party" shall include the giving of testimony or similar
involvement;

(10) "serving at the request of the corporation" shall include any
service as a director, officer or employee of the corporation
which imposes duties on, or involves service by, such director,
officer or employee with respect to an employee benefit plan, its
participants, or beneficiaries; and

(11) "third party proceeding" shall mean any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative, other than an action by or in
the right of the corporation.

SECTION 7.07. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against

<PAGE>

him and incurred by him in such a capacity, or arising out of his status as
such, whether or not the corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article.

SECTION 7.08. Scope of Article. The indemnification of authorized
representatives and advancement of expenses, as authorized by the preceding
provisions of this Article, shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any statute, agreement, vote of stockholders or disinterested directors or
otherwise, both as to the action in an official capacity and as to action in
another capacity. The indemnification and advancement of expenses provided by
or granted pursuant to this Article shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be an
authorized representative and shall inure to the benefit of the heirs, executors
and administrators of such a person.

SECTION 7.09. Reliance on Provisions. Each person who shall act as an
authorized representative of the corporation shall be deemed to be doing so in
reliance upon rights of indemnification provided by this Article.

ARTICLE VIII
General Provisions

SECTION 8.01. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock of the corporation, subject to the provisions of the
certificate of incorporation. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.

SECTION 8.02. Annual Statements. The board of directors shall
present at each annual meeting, and at any special meeting of the stockholders
when called for by vote of the stockholders, a full and clear statement of the
business and condition of the corporation.

<PAGE>

SECTION 8.03. Contracts. Except as otherwise provided in these
bylaws, the board of directors may authorize any officer or officers including
the chairman and vice chairman of the board of directors, or any agent or
agents, to enter into any contract or to execute or deliver any instrument on
behalf of the corporation and such authority may be general or confined to
specific instances.

SECTION 8.04. Checks. All checks, notes, bills of exchange or other
orders in writing shall be signed by such person or persons as the board of
directors may from time to time designate.

SECTION 8.05. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the corporation, the year of its organization and
the words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner reproduced.

SECTION 8.06. Deposits. All funds of the corporation shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies, or other depositories as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the board of directors shall from time to
time determine.

SECTION 8.07. Corporate Records. At least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of and
number of shares registered in the name of each stockholder, shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.

Every stockholder shall, upon written demand, under oath stating the
purpose thereof, have a right to examine, in person or by agent or attorney,
during the usual hours for business, for any proper purpose, the stock ledger,
books or records of account, and records of the proceedings of the stockholders
and directors, and make copies or extracts therefrom. A proper purpose shall
mean a purpose reasonably related to such person's interest as a stockholder.
In every instance where an attorney or other agent shall be the person who seeks
the right to inspection, the demand under oath shall be accompanied by a power
of attorney or such other writing which authorizes the attorney or other agent
to so act on behalf of the stockholder. The demand under oath shall be directed
to the corporation at its registered office in Delaware or at its principal
place of business. Where the stockholder seeks to inspect the books and records
of the corporation, other than its stock ledger or list of stockholders, the
stockholder shall first establish (1) compliance with the provisions of this

<PAGE>

section respecting the form and manner of making demand for inspection of such
document; and (2) that the inspection sought is for a proper purpose. Where the
stockholder seeks to inspect the stock ledger or list of stockholders of the
corporation and has complied with the provisions of this section respecting the
form and manner of making demand for inspection of such documents, the burden of
proof shall be upon the corporation to establish the inspection sought is for an
improper purpose.

Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders and its other books and records for a purpose
reasonably related to his position as a director. The Court of Chancery is
hereby vested with the exclusive jurisdiction to determine whether a director is
entitled to the inspection sought. The court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger and the stock list and to make copies or extracts therefrom. The
court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the court
may deem just and proper.

SECTION 8.08. Amendment of Bylaws. These bylaws may be altered,
amended or repealed or new bylaws may be adopted by the vote of more than fifty
percent of the stockholders or by a majority of the whole board of directors,
when such power is conferred upon the board of directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
bylaws be contained in the notice of such special meeting.

_______________
Amended and Restated by resolution of the Board of Directors on July 31, 1997.

<PAGE>

ISSC / OAO CORPORATION
Vendor Agreement

AGREEMENT NUMBER

The Vendor ("you" or "your") and Integrated Systems Solutions Corporation
("ISSC") agree that the terms and conditions of this ISSC Vendor Agreement
("Agreement") and any applicable Statement(s) of Work and/or Purchase Order(s)
will apply to the Services, Materials and/or Program Products that you provide
ISSC.

1. Definitions

a) "Acceptance" means, with respect to each Deliverable, written notification
from ISSC to you that indicates that the Deliverable has been evaluated and
satisfies the completion and acceptance criteria set forth in the Statement
of Work. Acceptance may be partial or complete, as dictated in such
notification.

b) "Customer" means ISSC's Customer identified in this Agreement or Statement
of Work or if no customer is specified, then the Customer is ISSC.

c) "Deliverable(s)" means any Services, Materials, Inventions or Program
Products procured or prepared by you under this Agreement or Statement of
Work. The Deliverable(s) also include all works subject to ISSC ownership
of license rights hereunder, if any (e.g., Materials and Inventions).

d) "Background Materials" means any materials included in the Deliverables
necessary for effective utilization thereof, in which the copyright rights
are owned by a third party or that you prepared or had prepared outside the
Statement of Work encompassed by this Agreement.

e) "Derivative Work" means a work based on Preexisting Materials including a
compilation. A Derivative Work prepared without authorization of the
copyright owner of the Preexisting Materials would be a copyright
infringement.

f) "Invention(s)" means any ideas, concepts, designs, techniques, discoveries
or improvements, whether patentable or not, that are conceived of or
reduced to practice by you or by one or more of your employees or agents in
the performance of the Services for ISSC or its Customer under this
Agreement and its Statement(s) of Work or Purchase Order.

<PAGE>

g) "Materials" means work products such as programs, program listings,
programming tools, all code (including machine readable media with
code), devices, documentation, reports, drawings and other tangible
materials which you deliver to ISSC as set forth in the Statement of Work.
Materials do not include Background Materials and/or Program Products.

h) "Program Products" means commercially available software products and
associated user documentation.

i) "Services" means those functions being delivered to ISSC or its Customer
pursuant to this Agreement and its associated Statement of Work.

j) "Statement of Work" means the document which will describe the project,
work to be performed (Services), Materials to be delivered, detailed
technical and administrative requirements, payment schedule, and any
Program Products to be provided as well as any additional terms or
modifications to this Agreement.

k) "Purchase Order" means the document which will describe the project, work
to be performed (Services), Materials to be delivered, payment terms, as
well as standard terms and conditions.

2. Statement of Work / Purchase Order

a) You will furnish Services, Materials, and Program Products to ISSC as set
forth in a Statement of Work and/or a Purchase Order issued from time to
time by ISSC and accepted by you. The following order of precedence shall
control in the event of any conflict in terms and conditions:

1) the Statement of Work,
2) this Agreement, and
3) the Purchase Order

b) This Agreement and each Statement of Work shall be signed by an authorized
representative of each party. Either party may request a change to this
Agreement or a Statement of Work; provided, however, only an amendment to
the Agreement or a written approval for a change to a Statement of Work (a
"Change Authorization") signed by the authorized representative of each
party will modify this Agreement or Statement of Work.

c) Each party shall appoint a coordinator for the work to be performed under a
Statement of Work. Your coordinator shall have the authority to represent
you. ISSC's coordinator shall represent ISSC and be responsible for
determining the adequacy and acceptability of the Services. Materials, or
any Program Products you provide.

<PAGE>

3. Payments and Records

You will be paid for goods and/or services delivered under a Statement of Work
or Purchase Order issued under this Agreement in accordance with the Statement
of Work and/or Purchase Order.

Invoices are to be sent to ISSC National Accounts Payable Center, P.O. Box 8098,
Endicott, NY 13761-8098. The Purchase Order number and/or the Service Agreement
number and the terms of payment shall be stated on the invoice(s).

The date used for calculation of terms of Payment shall be the date ISSC
receives an acceptable invoice.

You shall maintain account records, in accordance with generally accepted
accounting practices, to substantiate all invoices. Such records shall be made
available to ISSC during normal business hours and shall include payroll
records, expense accounts, attendance cards, and job summaries. You shall
maintain such records for one year from the date of final payment.

4. Ownership of Materials

a) ISSC shall own exclusively all Materials which result from the Services you
provide. Such Materials shall be deemed "Works Made for Hire." To the
extent that any of the Materials may not, by operation of law, be owned by
ISSC, you hereby assign to ISSC the ownership of copyright in such
Materials. ISSC shall have the right to obtain and hold in its own name
copyrights, registrations, and similar protection which may be available in
such Materials. You agree to assist ISSC as may be required to perfect
such rights.

b) You will identify in the applicable Statement(s) of Work all Background
Materials and their Owners. You will not include any Background Materials
in a Deliverable that have not been identified. You grant ISSC an
irrevocable, nonexclusive, worldwide, paid-up license to use, execute,
reproduce, display, perform, transfer, distribute, sublicense, and prepare
Derivative Works of, Background Materials and their Derivative Works. You
grant ISSC the right to authorize others to do any of the above. Such
license shall also apply to associated audio and visual works.

c) If a Statement of Work or Purchase Order issued under this Agreement
requires you to deliver Program Products to ISSC or ISSC's Customer wherein
such Program Products will be licensed to ISSC, the terms and conditions of
the "ISSC Software License - Outsourcing Agreement" shall apply to such
Program Products and shall be incorporated into and become part of this
Agreement.

<PAGE>

If a Statement of Work or Purchase Order issued under this Agreement
requires you to deliver Program Products that will be licensed by an ISSC
Customer, you shall allow ISSC the right to install, test and operate such
Program Products for the Customer. The Customer will be the licensee of
the Program Products. ISSC will not be a party to the license agreement
for any such Program Products nor assume any obligation for violations of
it.

d) No license or right is granted to you either expressly or by implication,
estoppel or otherwise to publish, reproduce, prepare derivative works of,
distribute copies of, publicly display or perform any of the Deliverables
except Background Materials of yours, either during or after the term of
this Agreement.

5. Invention Rights

a) With respect to any Invention, you hereby assign to ISSC, its parent,
International Business Machines Corporation (IBM) and IBM Subsidiaries and
Affiliates, any Invention together with the right to seek protection by
obtaining patent rights therein, and to claim all rights of priority
thereunder, and the same shall become and remain ISSC's property whether or
not such protection is sought. You shall, upon ISSC's request and at
ISSC's expense, cause patent applications to be filed on any Invention,
through solicitors designated by ISSC, and forthwith assign all such
applications to ISSC, its successors and assigns. You shall give ISSC and
its solicitors all reasonable assistance in connection with the preparation
and prosecution of any such patent applications and shall cause to be
executed all such assignments and other instruments and documents as ISSC
may consider necessary or appropriate to carry out the intent of this
Section.

b) To the extent that ISSC has the right to do so, ISSC hereby grants to you
an irrevocable, nonexclusive, nontransferable and fully paid-up license
throughout the world under any Invention assigned to ISSC pursuant to this
Section, and under any patents throughout the world issuing thereon,
including reissues, extensions, divisions, and continuations thereof
provided, however, that such license is not applicable to any Inventions,
patent applications, or patents related to appearance designs.

c) Nothing contained in this Agreement shall be deemed to grant either
directly or by implication, estoppel, or otherwise, any license under any
patents or patent applications arising out of any other Inventions of
either party.

6. Quality

You are expected to participate in achieving and demonstrating consistent and
sustained quality in the Deliverables you produce or supply on behalf of ISSC.
In conjunction with ISSC, you shall develop quality performance standards or
goals and your progress towards attaining these performance standards or goals
shall be identified through measurements described in applicable

<PAGE>

Statements of Work. Your quality performance on completed projects for ISSC
will be considered in planning future ISSC contracting activities.

7. Warranties

a) You warrant that all Services will be performed in a workmanlike manner in
accordance with industry standards and practices applicable to the
performance of such Services.

b) You warrant that the Services, Materials, and Program Products that you
provide shall perform as described in any documentation relating to a
Statement of Work and shall be free from defects. For Program Products and
Materials, this warranty shall extend for three months following acceptance
by ISSC. In the event of a warranty breach, you agree to replace, repair,
and/or modify the Services, Materials, and Program Products without charge
and without delay. Additionally, you agree to test programming Materials
for virus(es) and to remove any such virus(es) before use by ISSC or its
Customer.

c) You certify the originality of the Materials prepared for or submitted to
ISSC hereunder. You shall satisfactorily complete and submit to ISSC, when
required, a certificate of originality and acceptance of such certificate
by ISSC shall be a condition of final payment to you. You warrant that the
rights that you grant to ISSC for the use or distribution of Materials,
Background Materials and Program Products do not violate any intellectual
property rights of yours or any third party.

d) You warrant that no portion of the Materials or Program Products is
confidential to you or any third party.

8. Confidential Information

a) "Confidential Information" means that information:

1) disclosed to you by ISSC or its Customer in connection with and during
the term of this Agreement;

2) which relates to ISSC's or its Customer's past, present and future
research, development and business activities, including financial and
client/Customer data; or

3) which has been identified to you at the time of disclosure as
Confidential Information of ISSC or its Customers.

It shall also mean the Deliverables specified in the Statement of Work or
Purchase Order of this Agreement, including drafts and associated
materials. The term "Confidential Information" shall not mean any
information which is previously known to you without

<PAGE>

obligation of confidence, or, without breach of this Agreement. is publicly
disclosed prior to or subsequent to your receipt of such information, or
which is rightfully received by you from a third party without obligation
of confidence.

b) You agree to hold all such Confidential Information in trust and confidence
for ISSC and its Customer and not to use such Confidential Information
other than for the benefit of ISSC and its Customer. Except as may be
authorized by ISSC in writing, you agree not to disclose any such
Confidential Information, by publication or otherwise, to any person other
than those persons whose services you require who have a need to know such
Confidential Information for purposes of carrying out the terms of this
Agreement, who agree in writing to be bound by, and comply with, the
provisions of this Section, and who ISSC or its Customer has approved in
writing for receipt of such Confidential Information.

c) You may not copy any Confidential Information except as explicitly approved
in writing by ISSC or its Customer.

d) You agree to secure all writings, documents and other media that embody
Confidential Information in locked files at all times when not in use to
prevent its loss or unauthorized disclosure, and to segregate Confidential
Information at all times from the material of others.

e) Upon completion of the Services detailed in the Statement of Work or
termination or expiration of this Agreement, you will return to ISSC all
written or descriptive matter, including but not limited to drawings,
blueprints, descriptions, or other papers, documents, tapes, or any other
media which contain any such Confidential Information. In the event of a
loss of any item containing such Confidential Information, you shall
promptly notify ISSC in writing.

f) In providing Services under this Agreement, you understand that ISSC does
not wish to receive from you and you agree not to provide to ISSC directly
or through others any information which may be considered confidential
and/or proprietary to you and/or to any third party, except as otherwise
expressly set forth in this Agreement or the Statement of Work.

9. Personnel

a) Personnel provided by you will not for any purpose be considered employees
of ISSC. Your personnel shall make no commitments on behalf of ISSC for any
purpose. You assume full responsibility for their actions while performing
hereunder and shall be responsible for their supervision, daily direction
and control. You will retain full responsibility for payment of salary
(including withholding of income taxes and social security), workers
compensation, disability benefits and the like. Nothing in this

<PAGE>

Agreement grants you or any of your employee(s) any additional right under
any ISSC employee benefit plan.

b) You shall inform ISSC when you plan to assign a former ISSC or IBM employee
to perform work under this Agreement. ISSC reserves the right to
disapprove the assignment.

c) You agree to adhere to the reasonable workplace rules of conduct of the
Customer when performing work on the Customer's premises. If work is to be
performed on ISSC's and/or Customer's premises, you agree to sign and abide
by the terms and conditions of the ISSC Residency Agreement.

10. Term and Termination

a) IBM Global Services may, for reason other than cause, terminate a Statement
of Work or Purchase Order issued under this Agreement under the following
conditions:

1) If IBM Global Services' contract with its customer has been terminated
for cause, IBM Global Services may terminate any Statement of Work or
Purchase Order by giving you written notice of such termination in
accordance with the provisions of this Agreement. In the event such
termination by IBM Global Services, IBM Global Services shall not
incur any obligation to pay you a termination fee or penalty as a
consequence of such termination. IBM Global Services shall be
obligated to pay you, in addition to any other payments that may be
required under this Agreement, compensation in accordance with the
payment provisions of the terminated Statement of Work or Purchase
Order for all goods and/or Services delivered prior to the date of
termination.

2) If IBM Global Services' contract with its customer has been terminated
for convenience, IBM Global Services may terminate any Statement of
Work or Purchase Order by giving you written notice of such
termination in accordance with the provisions of this Agreement. In
the event such termination by IBM Global Services, IBM Global Services
shall pay you, in addition to any other payments that may be required
under this Agreement, both compensation in accordance with the payment
provisions of the terminated Statement of Work or Purchase Order for
all goods and/or Services delivered prior to the date of termination
and five per cent (5%) of the remaining contract value from the date
of termination."

b) In the event of a default by you, ISSC will provide you written notice
thereof. If the default is not remedied within ten days or within the
time stated in the notice, ISSC may terminate this Agreement, the Statement
Of Work or any portion thereof.

<PAGE>

c) In the event of any termination of this Agreement or Statement Of Work, you
agree to promptly provide ISSC with all Materials, Inventions, Program
Products and other items associated with the Statement Of Work and
otherwise comply with the terms and conditions of this Agreement and the
Statement Of Work with respect to intellectual property rights.

d) The rights and obligations of Sections 3, 4, 5, 6, 8, 9, 10 and 11 shall
continue after expiration or termination of this Agreement and shall bind
the parties and their legal representatives, successors, heirs, and
assigns.

11. Indemnification

a) You shall be liable for damages, expenses, claims, costs and liabilities,
including, without limitation, costs of settlement and investigation, court
costs and attorneys' fees and disbursements (collectively "Losses") which
result from the wrongful or negligent acts or omissions of your employees
or of the personnel you provide.

b) You shall indemnity, defend, and hold ISSC harmless from and against any
and all Losses arising out of or in connection with bodily injury or death
or for damage to real property or to tangible personal property arising out
of or in connection with your performance under this Agreement.

c) You shall indemnify, defend, and hold ISSC and its Customer harmless from
and against any and all Losses that may result by reason of any
infringement or claim of infringement of any intellectual property rights
associated with the use of Services, Materials, Inventions or Program
Products provided in connection with this Agreement.

12. Limitation of Liability

a) Each party's liability for actual or direct damages from any cause
whatsoever arising under this Agreement will be limited for each event to
the greater amount of $100,000 or the Statement of Work value.

b) IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS, LOST REVENUE OR SAVINGS) OR INDIRECT, PUNITIVE,
SPECIAL OR INCIDENTAL DAMAGES, EVEN IF INFORMED OF THEIR POSSIBILITY. The
foregoing limitation shall not apply to any obligations you may have under
Sections 8 and 11. Any procurement costs associated with your breach of
this Agreement or a Statement of Work shall be deemed direct damages.

<PAGE>

13. Applicable Laws

You shall at your own expense comply with all laws and regulations of federal,
state, and local government authorities relating to your obligations under this
Agreement. including without limitation, the Occupational Safety and Health Act
of 1970, Executive Order 11246 (as amended) of the President of the United
States on Equal Employment Opportunity and the Rules and Regulations issued
pursuant thereto, all environmental laws, ordinances. codes, rules, regulations,
license and permit provisions, guidelines and directives, the Immigration Reform
and Control Act of 1986, the Foreign Corrupt Practices Act. and the import and
export laws and regulations of the United States Customs Services. the United
States Department of Commerce and Department of State, and shall procure all
licenses and pay all fees and other expenses required thereby.

14. General

a) Except as expressly provided in this Agreement, Statements of Work or
Purchase Orders, you shall be entitled to no further payment, cost
reimbursement or other compensation for Services, Materials, Inventions,
Program Products or other Deliverables hereunder.

b) You shall not use ISSC's or ISM's trademark, trade name, logo, or other
designation for any reason without ISSC's prior written consent.

c) You shall at your own expense, provide and keep in full force and effect
during the term of this Agreement at least the following kinds and minimum
amounts of insurance covering services you provide in the state(s) in which
the work is to be performed:

1) Worker's Compensation Insurance including employer's liability for the
statutory amounts.

2) Commercial General Liability Insurance with combined single limits of
$1,000,000 each occurrence for bodily injury and property damage,
including personal and advertising injury with the following
extensions of coverage:

a) Premises Operations.
b) Products and Completed Operations, for at least two years
following expiration or termination of this Agreement.
c) Contractual Liability for the liability assumed by you under the
Section entitled Indemnification.

General Liability insurance requirements for sole proprietors
operating as ISSC vendors will be satisfied by procuring a Business
Owners Policy with a $1.000.000 limit of liability.

<PAGE>

3) Comprehensive Automobile Liability Insurance with limits of $250,000
per person/$500,000 per occurrence for personal injury and $200,000
per occurrence for property damage for owned, non-owned, and hired
vehicles used by you while performing Services in connection with this
Agreement.

You shall provide ISSC with a Certificate of Insurance upon request,
evidencing this insurance and providing that the insurer shall give
ISSC at least thirty days prior written notice of material change in
or cancellation of such insurance. Such Certificates of Insurance
must name ISSC as an additional insured under items 14.c.2 and 14.c.3
above.

d) Nothing in this Agreement shall be construed as prohibiting or restricting
ISSC from independently developing or acquiring and marketing materials
and/or programs which are competitive with those delivered hereunder.

e) You shall not sell, transfer, assign or subcontract any right or obligation
hereunder without the prior written consent of ISSC.

f) You represent that you are under no obligation or restriction, nor will you
assume any, which would interfere or present a conflict of interest with
the work that you perform under this agreement.

g) You represent that you are incorporated or organized as a partnership under
the laws of a state in the United States.

h) ISSC is free to determine the price charged to its Customer for the
Services, Materials and Program Products that you provide to ISSC.

i) This Agreement does not obligate ISSC to issue any Statement(s) of Work or
Purchase Order(s), nor are you obligated to accept any specific Statement
of Work or Purchase Order.

j) The laws of the State of New York shall govern this Agreement.

THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT, UNDERSTAND IT, AND
AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE THAT
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES
RELATING TO THE OBLIGATIONS DESCRIBED HEREIN CONSISTS OF 1) THIS AGREEMENT, 2)
ITS ATTACHMENT(S), 3) ITS ADDENDA, 4) ANY STATEMENT(S) OF WORK, 5) ANY CHANGE
AUTHORIZATIONS(S), AND 6) ANY OTHER AGREEMENTS REFERENCED HEREIN. THIS
STATEMENT OF THE AGREEMENT SUPERSEDES ALL PROPOSALS

<PAGE>

OR OTHER PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN
THE PARTIES RELATING TO THIS SUBJECT.

Accepted by: Accepted by:
Integrated Systems Solutions Corporation OAO Corporation

By_______________________________ By____________________________
Authorized Signature Authorized Signature

_________________________________ _______________________________
Name (Type or Print) Name (Type or Print)

_________________________________ _______________________________
Address Address

_________________________________ _______________________________
City, State and Zip Code City, State and Zip Code

<PAGE>

BASIC ORDER AGREEMENT

between

DIGITAL EQUIPMENT CORPORATION

("Buyer")

and

OAO CANADA LIMITED / OAO INTERNATIONAL CORPORATION

("Seller")

for

[xxxxxx xxxxxx] Enterprise Services

BOA Number: 23839

Contract Date: April 1, 1997

Contract Expiration Date: March 31, 2000

[Confidential Treatment requested for redacted portions of document]

<PAGE>

TABLE OF CONTENTS

Section I Scope of the Agreement

Section II Purchase Orders

Section III Purchase Period

Section IV Pricing

Section V Delivery

Section VI Payment

Section VII Warranty

Section VIII Confidential Information and Advertising

Section IX Indemnification

Section X Insurance

Section XI Intellectual Property Interests and Indemnity

Section XII Independent Contractor

Section XIII No Implied License

Section XIV Termination for Cause
Section XV Termination for Convenience

Section XVI Force Majeure

Section XVII Set-off

Section XVIII Notices

Section XIX Flow Down Clauses

Section XX Survival

Section XXI Compliance with Laws

Section XXII General

<PAGE>

Exhibit A Statement of Work/Services Provided by Seller

Exhibit B Flow Down Clauses

<PAGE>

Section I - Scope of Agreement

A. This Basic Order Agreement Is made by DIGITAL EQUIPMENT
CORPORATION ("Buyer") and OAO CANADA LIMITED and OAO INTERNATIONAL
CORPORATION ("Seller"). Buyer has entered into an Agreement with
[xxxxxx] for the provision of Services to [xxxxxx] and its affiliates
("End Users") known as the [xxxxx] Enterprise Agreement ("[xx]
Agreement"). The terms and conditions stated in this Agreement
exclusively govern the anticipated purchase of services by Buyer from
Seller, for the purpose of having Seller furnish services to Buyer or
End Users, in the event Seller is so requested by Buyer. The services
to be provided by Seller shall be those Services known as described in
the Statement of Work (SOW) attached hereto as Exhibit A. Exhibit A
may be supplemented from time to time by Statements of Work attached
to Purchase Orders for Seller's provision of the services at specific
End Users' sites. The term "Services" as used herein shall include the
services described in Exhibit A as well as the services described in
any supplemental Statements of Work attached to Purchase Orders
hereunder.

The parties hereto understand that the provision of Services may
involve the supply of goods necessary to render Services under this
Agreement, and therefore agree that, except as expressly stated
otherwise, the term "Services" shall be understood to include the
supply of any such service parts. It is further understood that the
cost of any such service parts to the Buyer shall be contained in the
fee charged by Seller for the Services provided hereunder.

THIS AGREEMENT IS NOT A REQUIREMENTS CONTRACT AND NEITHER OBLIGATES
THE BUYER TO PURCHASE NOR THE SELLER TO PROVIDE ANY SERVICES BUT ONLY
ESTABLISHES THE TERMS AND CONDITIONS FOR SUCH PURCHASES IF THEY OCCUR.

B. If any term of this Agreement conflicts with any term relating to the
purchases of Services contained in any issued purchase order, this
Agreement shall take precedence.

Section II - Purchase Orders

A. Buyer will authorize the provision of Services by releasing
telegraphic or telephonic orders or its Purchase Order Form ("Purchase
Order"). Buyer shall use reasonable efforts to send a confirming
purchase order ten (IO) days after issuing such telegraphic or
telephonic orders. Each purchase order shall reference this
Agreement by number and shall include any supplemental Statement
of Work applicable to the PO.

[Confidential Treatment requested for redacted portions of document]

<PAGE>

B. Seller shall sign and return the acknowledgment copy of each
Purchase Order within thirty (30) days after receipt. If Seller
fails to return such copy, Buyer will conclusively presume that Seller
accepts any Purchase Order which conforms to this Agreement.
Acceptance by Seller is limited to Buyer's offer as contained in this
Agreement and the Purchase Order as accepted by the Seller.

C. In the event the first month of coverage of Service is less than a
full month, the charge for that first month shall be calculated on a
pro-rata basis at the rate of one thirtieth (1/30) of the basic
monthly charge for each day of coverage.

Section III - Purchase Period

This Agreement shall commence on April 1, 1997 and shall end upon
completion of all Services covered by Purchase Orders issued and
accepted hereunder. This Agreement shall expire on March 31, 2000.

Notwithstanding any termination of this Agreement, and unless
otherwise agreed to in writing, Seller's obligations shall continue
with respect to any Purchase Orders entered into with Buyer for the
term of those Purchase Orders.

Section IV - Pricing

A. The Seller pricing for Services shall be set forth in the Purchase
Order or related Statements of Work. Prices shall remain fixed for
the period identified therein.

B. Seller expressly acknowledges and agrees that the prices and any
discounts established are lawful.

C. Prices include all taxes except sales, use and other such taxes
imposed upon the sale of Services. Any such sales, use or like
taxes required to be paid by the Buyer shall be specifically listed
in the appropriate invoices. If any purchase by Buyer is exempt from
such taxes, Buyer shall so indicate in their respective purchase order
and advise Seller of the respective tax exemption number.

Section V - Delivery

Seller shall perform all Services in time period as specified in the
Purchase Order or related Statements of Work. TIME AND RATE OF
DELIVERY OF SERVICES ARE OF THE ESSENCE OF ALL PURCHASES MADE UNDER
THIS AGREEMENT.

<PAGE>

Section VI - Payment

Buyer shall pay Seller for performance of all Services on a monthly
basis as set forth in each Purchase Order and payment shall be made
[xxxxxx xxxxx xxxx] after receipt of Seller's correct and conforming
invoice.

Section VII - Warranty

A. For a period of [xxxxx xx xxxx] from the date of the provision of any
Services, Seller hereby warrants that:

1. all Services rendered hereunder shall conform to the service
description stated in the Statements of Work and shall otherwise
be performed in a good, safe, workmanlike manner, and in
accordance with applicable manufacturers practices and procedures
at the time such Services are performed; and

2. all Services rendered hereunder shall be performed by persons who
are adequately trained and skilled such that they are capable of
rendering the Services in a good, safe, and workmanlike manner;
and

3. all such persons shall be fully equipped with the required tools,
systems, spare parts, documentation and diagnostic and test
equipment as is necessary to perform the Services unless
otherwise specified in a SOW; and

4. all service parts furnished by Seller through the provision of
Services shall be free from defects in material, workmanship and
design, and shall conform to the original manufacturer's
specifications in effect at the time of installation; and

5. all service parts furnished by Seller shall be free of all liens
and encumbrances; and

6. Seller has acquired and shall maintain in effect all licenses and
permits necessary for furnishing Services, and the provision of
Services by the Seller shall not violate any other contractual
obligations which Seller may have to any other party.

B. Seller hereby acknowledges that all of the above stated warranties run
to Buyer and to End Users.

[Confidential Treatment requested for redacted portions of document]

<PAGE>

Section VIII - Confidential Information and Advertising

A. Seller shall maintain as confidential and shall not disclose to any
person outside of its employ, or use for purposes other than
performance of its obligations pursuant to this Agreement, any
information which Seller learns by virtue of this Agreement, such as
specifications, technical information, business data, and other
confidential information. Upon termination of this Agreement, Seller
shall promptly return to Buyer all confidential information including
copies thereof Seller further agrees to maintain Buyer or End Users
information in confidence in accordance with the terms of the [xxxxx]
Enterprise Agreement.

B. Buyer shall maintain as confidential any Seller confidential
information that Buyer shall receive as a result of the work carried
out under this agreement. Upon termination of this Agreement, Buyer
shall promptly return to Seller all such confidential information
including copies thereof.

C. Without the other party's prior written consent neither party shall
in any manner advertise, or publish the existence or terms or any
transactions under this Agreement.

Section IX - Indemnification

Seller hereby agrees to release, defend, indemnify, and hold Buyer,
including its officers, directors, agents and employees, harmless from
and against any and all claims, losses, expenses (including reasonable
attorney's fees), demands, or judgments ("Claims") for personal
injury, damage to tangible personal property, or damage to real
property, which arise out of or are directly related to:

1. the acts, errors, omissions or negligence of Seller while on the
property of Buyer or End Users, regardless of whether the loss,
damage or injury resulting from same occurs after the Seller
has left such property; or

2. the presence of the equipment, tools, or goods used or supplied
by Seller in the performance of services under this Agreement on
the property of Buyer or End Users;

3. the negligent use by Seller of Buyer's equipment, tools or
facilities ("Equipment") whether or not any Claims are based
upon the condition of the Equipment or Buyer's alleged
negligence in permitting its use. Permission by Buyer to use
the Equipment shall be gratuitous.

[Confidential Treatment requested for redacted portions of document]

<PAGE>

4. any Claims brought by End Users arising out of Seller's
performance of its obligations under this Agreement.

Section X - Insurance

A. Seller agrees to carry at all times, and with companies acceptable to
Buyer, insurance of the kinds and in the amounts listed below:

1. Worker's Compensation - Statutory limits in each state or country
in which Seller is required to provide Worker's Compensation
coverage.

2. Employer's Liability - not less than $500,000 per employee.

3. Comprehensive General Liability - Including Contractual
Liability, Independent Contractor's Liability, and Personal
Injury/Property Damage Coverages in a combined single limit
of not less than $ 1,000,000.

4. Automobile Liability - For owned, non-owned, and hired vehicles
in a combined single limit of not less than $1,000,000.

5. Umbrella Liability - a combined single limit of not less than
$2,000,000.

B. Seller further agrees to furnish Buyer with Certificates of Insurance
evidencing the specified coverages and stating that:

1. the policies may not be changed or terminated without at least
ten (I 0) days' prior written notice to Buyer.

2. the policies contain waivers of the insurers subrogation rights
against Buyer.

Section XI - Intellectual Property Interests and Indemnity

Seller shall defend, at its expense, any claim against Buyer alleging
that the Services provided under this Agreement infringe any patent,
copyright, trademark, trade secret, mask work, or other intellectual
property right, and shall pay all costs and damages awarded, if Seller
is notified promptly in writing of such a claim. If a final
injunction against Buyer's use of the Services results from such a
claim (or, if Buyer reasonably believes such a claim is likely) Seller
shall, at its expense, and at Buyer requests, obtain for Buyer the
right to continue using the Services, or

<PAGE>

replace or modify the services so that they become noninfringing, but
functionally equivalent. Seller shall further indemnify, defend and
hold harmless from and against any and all damages, losses and
expenses incurred by Buyer as a result of claims brought against Buyer
by End Users or any other third party and arising out of Seller's
performance under this Agreement.

Section XII - Independent Contractor

Seller shall render all Services under this Agreement as an
independent contractor, not as an employee or agent of Buyer. Seller
shall not hold itself out as the agent or employee of Buyer in
connection with the performance of Services under this Agreement, and
Seller shall so instruct and supervise its employees, or agents to
insure that they comply with these provisions.

Section XIII - No Implied License

A. Both parties understand that Buyer owns various patents, copyrights,
trademarks, trade secrets, and other proprietary rights which may
cover, be contained in, or otherwise relate to a portion or ail of the
various computers or peripheral devices which Seller may service
pursuant to this Agreement.

B. The parties understand that neither the terms and conditions of this
Agreement nor the performance or acts of either party arising out of
this Agreement or related to Buyer's request for or use of the
services may be considered in any way as a grant of any license
whatsoever under any of Buyer's present or future patents, copyrights,
trademarks, trade secrets or other proprietary rights; nor is any such
license granted by implication, estoppel or otherwise.

C. The parties agree that both parties reserve all rights to bring suit
for infringement of its patents, copyrights, trademarks, trade
secrets, and other proprietary rights against all manufacturers,
sellers and users including Seller, which infringe their
respective proprietary rights, and that each party intends to enforce
those rights.

D. To the extent that any fiduciary or other similar duties are
established by this Agreement, it is understood and agreed that such
duties are not inconsistent with and will not prevent either party
from bringing said suits for infringement of its patents, copyrights,
trademarks, trade secrets, and other proprietary rights.

<PAGE>

Section XIV - Termination for Cause

A. The occurrence of any of the following constitutes a breach and
is cause for Buyer's termination of this Agreement and/or its
Purchase Orders:

1. Seller fails to perform Services in accordance with this
Agreement.

2. Seller fails to perform any material provision of this Agreement
or Buyer's conforming Purchase Order.

3. Seller assigns this Agreement, or any obligation or right under
it (the word "assign" to include, without limitation, a transfer
of a major interest in Seller) or merges with a third party,
not a parent or subsidiary company, without Buyer's prior
written consent, which Buyer shall not unreasonably withhold.

4. Seller becomes insolvent or makes an assignment for the benefit
of creditors, or a receiver or similar officer is appointed to
take charge of all or part of Seller's assets.

B. Seller must cure any of the above breaches and notify Buyer of such
cure within thirty (30) days from receipt of a written notice to cure
from Buyer. If Seller fails to so cure, Buyer may terminate this
Agreement and/or Purchase Orders under it by giving Seller
written notice. Buyer shall have no liability except for payment
of any balance due for conforming Services delivered before the end
of the cure. Buyer may, at its option, end Seller's ability to cure in
the event of Seller's material breach of any provision(s) of this
Agreement more than two (2) times in any twelve (12) month
period.

Section XV - Termination for Convenience

Buyer may terminate this Agreement or any Purchase Order under it for
convenience [xxxxx xxx xxx] after giving the Seller written notice unless
otherwise specified in a SOW. Buyer's [xxx] liability to Seller for such
termination shall be to pay Seller any [xxxxx xxxx xxx] for conforming
Service:

1. performed before receipt of Buyer's termination notice; and

2. ordered by Buyer and actually performed within [xxx xxx xxx]
after Seller's receipt of the termination notice.

[Confidential Treatment requested for redacted portions of document]

<PAGE>

Section XVI - Force Majeure

Neither party shall be liable for failure to perform any of its
obligations under this Agreement during any period in which such
performance is delayed by fire, flood, or other natural disaster, war,
embargo, riot, or the intervention of any government authority
provided that the party so delayed immediately notifies the other
party of such delay. If Seller's performance is delayed for these
reasons for a cumulative period of thirty (30) days, or more, from the
date of such notice, Buyer may terminate this Agreement, or any
Purchase Order issued under this Agreement by giving Seller written
notice. If Buyer terminates, its sole liability under this Agreement
will be to pay for conforming Services delivered by Seller before the
termination date.

Section XVII - Set-off

Buyer shall have the right at any time to set off any amounts owed by
Buyer to Seller pursuant to this Agreement, against any amounts owed
by Seller, or any of its affiliates, to Buyer.

Section XVIII - Notices

Any notice permitted or required to be given under this Agreement
shall be deemed given upon delivery, if delivered by hand, or upon
posting if sent by registered or certified mail, return receipt
requested, to a party at the address set forth below, or to such other
address as the respective party may designate by notice delivered
pursuant to this Section XIX. Any telegraphic notice shall be deemed
given upon receipt, provided that such notice is followed within three
(3) days by written notice given in accordance with this Section XIX.

If to Seller: G. Lalonde If to Buyer: R. Tovell

OAO Canada Limited Digital Equipment Corporation
Suite 520, 220 Laurier Ave W 715 Fifth Ave SW
Ottawa, Ontario K I P 5Z9 Calgary, Alberta T2P 2X6

With copies to: S. Schmidt With copies to: M. Smith

OAO Canada Limited Digital Equipment Corporation
Suite 520, 220 Laurier Ave W Suite 900, Two Penn Plaza
Ottawa, Ontario K I P 5Z9 New York, New York

<PAGE>

Section XIX - Flow Down Clauses

Seller agrees that in delivery of all services under this agreement
that it shall comply and be subject to with all contractual
obligations undertaken by Buyer in Agreements with End Users
("Flow-Down Clauses") which are attached hereto as Exhibit B. In the
event of a conflict between the terms and conditions of any FlowDown
Clause and any term of this Agreement, the term of the Flow-Down
Clause shall prevail.

Section XX - Survival

The following provisions of this Agreement, including any related
Exhibits, shall survive expiration or termination of this Agreement:
Warranty, Intellectual Property Interests Indemnity, Confidential
Information and Advertising, Indemnification, Insurance, Compliance
with Laws, General, Notices, and No Implied License.

Section XXI - Compliance with Laws

A. Seller shall use its best effort to insure that all Services performed
under this Agreement shall comply with all applicable United States
and foreign laws and regulations including, but not limited to,
emission and safety standards, OSHA, pricing and discounts, the
Fair Labor Standards Act of 1938 (29 USC 201-219), the
Contract Work Hours and Safety Standards Act (40 USC 327-332),
the Toxic Substance Control Act of 1976 (15 USC 2601), all laws
restraining the use of convict labor, and Workers' Compensation
Laws. Upon request, Seller agrees to certify compliance with any
applicable law or regulations. Seller's failure to comply with any
of the requirements of this Section XXI shall be considered a
material breach of this Agreement.

B. The following statutes and Executive Orders (E.O.'s) together with
regulations issued thereunder are made part of this Agreement if
applicable: E.O. 11246, Equal Employment Opportunity; E.O. 11625,
as amended, Minority Business Enterprises; E.O. 12138 Women-Owned
Business Concerns; Section 503 of the Rehabilitation Act of 1973 as
Amended, (20 USC 793); and Section 402 of the Vietnam Era
Veterans Readjustment Assistance Act of 1974, as Amended, (38 USC
2012).

C. Digital Equipment Corporation is a major defense contractor within the
meaning of ten (10) U.S.C.s.2397b and 2397c. Seller agrees not to
provide compensation to any person in the performance of this
Agreement in violation of this statute, and agrees to report directly
to the Secretary of Defense, the information required for employees,
agents or subcontractors of Seller.

<PAGE>

D. The provisions of the Clean Air Act (42 USC 7401 et seq.) and the
Clean Water Act (33 USC 1251 et seq.) are made a part of this
Agreement if applicable.

E. The provisions of any applicable state Right-to-Know laws and
regulations are made a part of this Agreement. A copy of the
applicable Material Safety Data Sheets, including updates, shall be
provided by Seller as required under such laws and regulations.

Section XXII - General

A. Only the authorized representatives of the parties may amend or waive
provisions of this Agreement. If either party fails to enforce any
term of this Agreement, failure to enforce on that occasion shall not
prevent enforcement on any other occasion, unless otherwise provided
herein.

B. All rights and remedies conferred by this Agreement, by any other
instrument, or by law are cumulative and may be exercised singularly
or concurrently. If any provision of this Agreement is held invalid
by any law or regulation of any government or by any court, such
invalidity shall not affect the enforceability of other provisions
herein. This Agreement and any Purchase Orders issued hereunder shall
be governed by and interpreted in accordance with the laws of the
Commonwealth of Massachusetts.

IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the
__________ day of __________, ______.

OAO CANADA LIMITED/ DIGITAL EQUIPMENT CORPORATION
OAO INTERNATIONAL CORPORATION

By:_____________________________ By:_____________________________
(Duly Authorized) (Duly Authorized)

G. Lalonde
_____________________________ _____________________________
(Typed Name) (Typed Name)

Senior Vice President
_____________________________ _____________________________
(Title) (Title)

<PAGE>

EMPLOYMENT AGREEMENT
(William Hill)

AGREEMENT, made as of this ______ day of April, 1996, by and between OAO
International Corporation, a Delaware corporation (the "Corporation"), and
William Hill ("Employee").

W I T N E S S E T H :

WHEREAS, the Corporation is engaged in the business of providing a full
range of outsourcing, systems reengineering and systems integration services;

WHEREAS, the Corporation desires to employ Employee as President and Chief
Executive Officer of the Corporation in connection with the conduct of the
business of the Corporation, and Employee desires to accept such employment on
the terms and conditions herein set forth;

NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending
legally to be bound, hereby agree as follows:

1. Employment. The Corporation hereby employs Employee as its
President and Chief Executive Officer, and Employee hereby accepts such
employment, upon the terms and conditions hereinafter set forth.

2. Term. Unless terminated in accordance with the provisions of
Paragraphs 5 or 6 hereof, the term of employment of Employee under this
Agreement shall commence on the date hereof, and shall continue through December
31, 1997, and shall thereafter continue for successive one year terms unless
terminated at the end of any such term by written notice given by either party
to the other at least 90 days before the end of such term.

3. Office and Duties.

<PAGE>

(a) During the term hereof, Employee shall serve as President
and Chief Executive Officer of the Corporation. Subject to the Bylaws of the
Corporation and the direction of the Board of Directors of the Corporation,
Employee shall perform such duties as are customary for a President and Chief
Executive Officer of businesses in the United States similar in kind and size to
the Corporation, and such other duties as may from time to time be assigned to
him by the Directors of the Corporation.

(b) During the term hereof, Employee shall use his best efforts
to carry out his duties and responsibilities hereunder and devote his entire
working time to the business and affairs of the Corporation and shall not, in
any advisory or other capacity, work for any other individual, firm or
corporation without first having obtained the written consent of the
Corporation; provided, however, that Employee may engage in investment
activities so long as they do not materially interfere with the performance of
his duties hereunder.

(c) During the term hereof, the principal place of employment of
Employee shall be the Corporation's headquarters in Greenbelt, Maryland, or such
other locations as may be selected for the Corporation's facilities, although it
is understood that in connection with his duties under this agreement, Employee
will be required to travel to and perform services at other locations.

(d) Employee represents and warrants to the Corporation that he
is not subject or a party to any employment agreement, non-competition covenant,
non-disclosure agreement or other agreement, covenant, understanding or
restriction which would prohibit Employee from executing this Agreement and
performing fully his duties and responsibilities hereunder, or which would in
any manner, directly or indirectly, limit or affect the duties and
responsibilities which may now or in the future be assigned to Employee by the
Corporation.

(e) Employee agrees to cooperate at the request of the
Corporation in any efforts to obtain "key-man" life insurance on Employee's
life.

4. Compensation. As compensation for the services to be rendered
hereunder by Employee, the Corporation agrees to pay or provide to Employee:

<PAGE>

(a) Salary. A basic salary for such services at the annual rate
of $150,000, payable in equal installments in accordance with the normal payroll
policies of the Corporation. This rate of compensation shall be reviewed by the
Board of Directors at least once per fiscal year and may be increased above
$150,000, but may not be reduced below it during the term hereof.

(b) Bonus. For 6 month period ended March 31, 1996, Employee
shall be entitled to an incentive bonus in a maximum amount of $80,000, which
shall be deemed earned and shall be paid in six equal installments over the
period April 1, 1996 through September 30, 1996. For the 9 month period from
April 1,1996 through December 31, 1996, Employee shall be entitled to an
incentive bonus in a maximum amount of $90,000, subject to the achievement of
certain milestones determined by the Compensation Committee of the Board of
Directors as set forth in Exhibit B-1. For 12 month period ending December 31,
1997, Employee shall be entitled to an incentive bonus in a maximum amount of
$210,000, subject to the achievement of certain milestones determined by the
Compensation Committee of the Board of Directors as set forth in Exhibit B-2.

(c) Benefits. For the term hereof, and thereafter to the extent
provided in Exhibit A, the Corporation shall provide Employee with the benefits
(the "Benefits")specified or referred to in Exhibit A.

5. Death and Disability.

(a) The term of employment of Employee shall terminate forthwith
in the event of the death of Employee, or, at the option of the Corporation, in
the event of physical or mental incapacity or disability which renders him
unable, with reasonable accommodation, to perform the services required of him
under this Agreement ("Disability") for a period of 90 consecutive days or for
one hundred eighty (180) days or more during any period of twelve (12)
consecutive months. Such Disability shall be subject to verification by a
qualified physician if requested by Employee. During any period of Disability
prior to termination, Employee shall continue to be compensated as provided
herein (less any payments due Employee under disability benefit programs paid
for by

<PAGE>

the Corporation including Social Security disability, worker's compensation and
disability or retirement benefits).

(b) In the event of the death of Employee during the term of
employment or in the event of the termination of this Agreement by the
Corporation because of the Disability of Employee, Employee shall be entitled to
receive the compensation specified in Paragraphs 4(a)and 4(b) earned by Employee
through the date of death or termination. The Corporation thereafter shall have
no further obligations under this Agreement except for its obligations to pay
any Benefits as specified in Exhibit A.

6. Termination of Employment.

(a) The Corporation may terminate this Agreement with cause
immediately upon written notice to Employee. "Termination for cause" shall mean
discharge by the Corporation on the following grounds:

(i) Employee's conviction in a court of law of any crime or
offense, which conviction makes him unfit for continuing employment, prevents
him from effective management of the Corporation or materially adversely affects
the reputation or business activities of the Corporation.

(ii) Dishonesty or willful misconduct which materially,
adversely affects the reputation or business activities of the Corporation and
which continues after written notice thereof to Employee, substance abuse for
which Employee fails to undertake and maintain treatment after 15 days after
requested by the Corporation, or misappropriation of funds.

(iii) Employee's continuing material failure or refusal
to perform his duties in accordance with the terms of this Agreement or to carry
out in all material respects the lawful directives of the Board of Directors;
provided that discharge pursuant to this subparagraph (iii) shall constitute
discharge for cause only if Employee has first received written notice from the
Board of Directors of the Corporation stating with specificity the nature of
such failure or refusal and, if requested by Employee within 10 days thereafter,
Employee is afforded a reasonable opportunity to be heard before the Board;
provided further, that if there are no other grounds for termination for cause
and there have been no previous grounds for termination for

<PAGE>

cause during the term of this Agreement, after receipt of such notice Employee
shall have a one-time opportunity to cure or remedy such failure or refusal and
if so cured or remedied termination for cause may not occur as to that
particular failure or refusal.

Upon such termination for cause, Employee shall lose all right, title and
interest in and to all payments required to be made in accordance with the
provisions of this Agreement, and the Corporation shall have no further
obligation to Employee hereunder, except for compensation pursuant to Paragraph
4(a) to which Employee is entitled through the date of termination or any
Benefits that may have accrued.

(b) The Corporation may terminate the Employee without cause at
any time. In the event of termination of Employee without cause, the
Corporation shall pay or provide to Employee (in addition to the salary, bonus,
Benefits and other compensation to which Employee shall be entitled or shall
have earned pursuant to Paragraph 4 hereof through the date of such
termination), (i) the basic salary pursuant to the provisions of Paragraph 4(a)
hereof for the remainder of the then term of this Agreement and such additional
period as the non-competition provisions of Paragraph 7(a) shall be in effect,
payable as provided herein, and (ii) the medical and health insurance coverage
which are part of the Benefits for the remainder of the then term of this
Agreement.

(c) Employee may terminate this Agreement by resignation and
giving the Corporation three (3) months' notice. The Corporation can waive this
notice and agree with Employee to an earlier termination date. Upon termination
by Employee, all obligations of the Corporation, including any obligations as to
Benefits and any bonus payments, and Employee under this Agreement will cease as
of the date of final termination, except Employee's obligations under Paragraphs
7 and 8 will survive.

7. Restrictive Covenants and Confidentiality; Injunctive Relief.

(a) Employee agrees, as a condition to the Corporation agreeing
to employ Employee and to the performance by the Corporation of its obligations
hereunder, particularly its

<PAGE>

obligations under Paragraph 4 hereof, that during the term of this Agreement and
any renewals and extensions hereof and for a period of one (1) year thereafter,
or such lesser term, but not less than 6 months, as the Board of Directors may
determine within 60 days of any such termination, Employee shall not, without
prior written approval of the Board of Directors of the Corporation, directly or
indirectly through any other person, firm or corporation, whether individually
or in conjunction with any other person, or as an employee, agent, consultant,
representative, partner or holder of any interest in any other person, firm,
corporation or other association: (i) solicit, entice or induce any Customer
(as defined below) to become a client, customer, OEM, distributor or reseller of
any other person, firm or corporation with respect to products and/or services
then sold or under development by the Corporation or to cease doing business
with the Corporation, and Employee shall not approach any such person, firm or
corporation for such purpose or authorize or knowingly approve the taking of
such actions by any other person; or (ii) solicit, entice or induce any
person who presently is or at any time during the term hereof shall be an
employee of the Corporation to become employed by any other person, firm or
corporation or to leave their employment with the Corporation, and Employee
shall not approach any such employee for such purpose or authorize or knowingly
approve the taking of such actions by any other person. For purposes of this
Paragraph 7, a Customer means any person or entity which at the time of
determination shall be, or shall have been within two years prior to such time,
a client, customer, OEM, distributor or reseller of the Corporation.

Nothing in the foregoing shall prohibit Employee from investing
in the securities of any corporation having securities listed on a national
securities exchange, provided that such investment does not exceed 5% of any
class of securities of any corporation engaged in business in competition with
the Corporation, and provided that such ownership represents a passive
investment and that neither Employee nor any group of persons including him, in
any way, either directly or indirectly, manages or exercises control of any such
corporation, guarantees any of its financial obligations, otherwise takes any
part in its business, other than exercising his rights as a shareholder, or
seeks to do any of the foregoing.

(b) Employee acknowledges that during the term of his
employment, he will have access to confidential information of

<PAGE>

the Corporation, including information about "Developments" (as defined in
Paragraph 8 below), business plans, costs, customers, profits, markets, sales,
products, key personnel, pricing policies, operational methods and other
business affairs and methods and other information not available to the public
or in the public domain (hereinafter referred to as "Confidential Information").
In recognition of the foregoing, Employee covenants and agrees that, except as
required by his duties to the Corporation, Employee will keep secret all
Confidential Information of the Corporation and will not, directly or
indirectly, either during the term of his employment hereunder or at any time
thereafter while such Confidential Information remains confidential, disclose or
disseminate to anyone or make use of, for any purpose whatsoever except for the
benefit of the Company in the course of his employment, any Confidential
Information, and upon termination of his employment, Employee will promptly
deliver to the Corporation all tangible materials and objects containing
Confidential Information (including all copies thereof, whether prepared by
Employee or others) which he may possess or have under his control. The term
"Confidential Information" shall not include any information which can be
demonstrated (i) to be generally known in the industry or to the public other
than through breach of Employee's obligations hereunder, (ii) to have been in
Employee's possession prior to his employment with the Corporation and not
assigned to the Corporation, or (iii) to have been disclosed to Employee by an
independent third party not under any obligation of confidentiality.

(c) Employee represents (i) that his experience and capabilities
are such that the restrictions contained herein will not prevent him from
obtaining employment or otherwise earning a living at the same general economic
benefit as reasonably required by him and (ii) that he has, prior to the
execution of this Agreement, reviewed this Agreement thoroughly with his legal
counsel.

(d) Employee acknowledges that the restrictions contained in
this Paragraph 7 are reasonable and necessary to protect the legitimate business
interests of the Corporation and that the Corporation would not have entered
into this Agreement in the absence of such restrictions. By reason of the
foregoing,

<PAGE>

Employee agrees that if he violates any of the provisions of this Paragraph 7,
the Corporation would sustain irreparable harm and, therefore, irrevocably and
unconditionally (i) agrees that in addition to any other remedies which the
Corporation may have under this Agreement or otherwise, all of which remedies
shall be cumulative, the Corporation shall be entitled to apply to any court of
competent jurisdiction for preliminary and permanent injunctive relief and other
equitable relief, (ii) that such relief and any other claim by the Corporation
pursuant hereto may be brought in the United States District Court for the
District of Delaware, or if such court does not have subject matter jurisdiction
or will not accept jurisdiction, in any court of general jurisdiction in
Delaware; (iii) consents to the non-exclusive jurisdiction of any such court in
any such suit, action or proceeding, and (iv) waives any objection which
Employee may have to the laying of venue of any such suit, action or proceeding
in any such court. Employee also irrevocably and unconditionally consents to
the service of any process, pleadings, notices or other papers in a manner
permitted by the notice provisions hereof. In the event that any of the
provisions of this Paragraph 7 hereof should ever be adjudicated to exceed the
time, geographic, product or service, or other limitations permitted by
applicable law in any jurisdiction, then such provisions shall be deemed
reformed in such jurisdiction to the maximum time, geographic, product or
service, or other limitations permitted by applicable law.

(e) Employee agrees that the Corporation may provide a copy of
this Paragraph 7 to any business or enterprise (i) which the Employee may
directly or indirectly own, manage, operate, finance, join, control or
participate in the ownership, management, operation, financing, or control of,
or (ii) with which he may be connected with as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise, or in
connection with which he may use or permit his name to be used; provided,
however, that this provision shall not apply as to subparagraph (a) or (b) after
expiration of the time periods set forth therein or with respect to any
activities, entities or persons excluded by the terms hereof. Employee will
provide the names and addresses of any of such persons or entities as the
Corporation may from time to time reasonably request.

(f) In the event of any breach or violation of the restriction
contained in subparagraph (a) above, the period therein specified shall abate
during the time of any violation thereof and

<PAGE>

that portion remaining at the time of commencement of any violation shall not
begin to run until such violation has been fully and finally cured.

8. Ownership of Inventions and Ideas. Employee acknowledges that
the Corporation shall be the sole owner of all the results and proceeds of
Employee's service hereunder, including but not limited to, all patents, patent
applications, patent rights, formulas, copyrights, inventions, developments,
discoveries, other improvements, data, documentation, drawings, charts, and
other written, audio and/or visual materials relating to equipment, methods,
products, processes, or programs in connection with or useful to the
Corporation's business (collectively, the "Developments") which Employee, by
himself or in conjunction with any other person, may conceive, make, acquire,
acquire knowledge of, develop or create during the term of Employee's employment
hereunder, free and clear of any claims by Employee (or any successor or
assignee of him) of any kind or character whatsoever other than Employee's right
to compensation hereunder. Employee acknowledges that all copyrightable
Developments shall be considered works made for hire under the Federal Copyright
Act. Employee hereby assigns and transfers his right, title and interest in and
to all such Developments, and agrees that he shall, at the request of the
Corporation, execute or cooperate with the Corporation in any patent
applications, execute such assignments, certificates or other instruments, and
do any and all other acts, as the Board of Directors of the Corporation from
time to time reasonably deems necessary or desirable to evidence, establish,
maintain, perfect, protect, enforce or defend the Corporation's right, title and
interest in or to any such Developments.

9. Survival. The provisions of Paragraphs 7 and 8 shall survive the
termination of this Agreement for any reason whatsoever.

10. Dispute Resolution.

(a) Good-Faith Negotiations. If any dispute arises under this
Agreement that is not settled promptly in the ordinary course of business, the
parties shall seek to resolve any such

<PAGE>

dispute between them, first, by negotiating promptly with each other in good
faith in face-to-face negotiations. If the parties are unable to resolve the
dispute between them within 20 business days (or such period as the parties
shall otherwise agree) through these face-to-face negotiations, then the
controversy or claim shall be settled by arbitration conducted on a confidential
basis, under the U.S. Arbitration Act, if applicable, and the then current
Commercial Arbitration Rules of the American Arbitration Association (the
"Association") strictly in accordance with the terms of this Agreement and the
substantive law of the State of Delaware. The arbitration shall be conducted at
the Association's regional office located closest to Employer's principal place
of business by one arbitrator experienced in employment matters. Judgment upon
the arbitrator's award may be entered and enforced in any court of competent
jurisdiction. Neither party shall institute a proceeding hereunder unless at
least 10 days prior thereto such party shall have given written notice to the
other party of its intent to do so.

(b) Notwithstanding the foregoing, the Employer shall not be
precluded hereby from securing equitable remedies in courts of any jurisdiction,
including, but not limited to, temporary restraining orders and preliminary
injunctions to protect its rights and interests but shall not be sought as a
means to avoid or stay arbitration.

11. Miscellaneous.

(a) Any notice authorized or required to be given or made by or
pursuant to this Agreement shall be made in writing and either personally
delivered or mailed by overnight express mail to the respective address of the
party to receive such notice, which address is the one designated below the name
of such party on the signature page hereof, or to such other address as a party
may specify by notice to the other parties hereto.

(b) This Agreement cancels and supersedes any and all prior
agreements and understandings between or among any or all of the parties hereto
with respect to the employment by or obligations of Employee to any thereof,
including the employment agreement, dated June 5, 1992, between Employee and OAO
Corporation. This Agreement constitutes the entire agreement among the parties
with respect to the matters herein provided, and no

<PAGE>

modification or waiver of any provision hereof shall be effective unless in
writing and signed by the parties hereto.

(c) All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, except that the duties and responsibilities of Employee
hereunder are of a personal nature and shall not be assignable or delegable in
whole or in part by Employee.

(d) Employee agrees that the obligations of the Corporation
hereunder shall be limited to the Corporation only, and Employee agrees that he
shall not bring any claim or suit against any director or shareholder of the
Corporation or any other person other than the Corporation for any breach or
default by the Corporation of its obligations hereunder.

(e) If any provision of this Agreement or application thereof to
anyone or under any circumstances is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provision or application of this Agreement which can be given effect
without the invalid or unenforceable provision or application and shall not
invalidate or render unenforceable such provision or application in any other
jurisdiction.

(f) No remedy conferred upon any party by this Agreement is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to any other remedy given hereunder
or now or hereafter existing at law or in equity. No delay or omission by any
party in exercising any right, remedy or power hereunder or existing at law or
in equity shall be construed as a waiver thereof, and any such right, remedy or
power may be exercised by the party possessing the same from time to time and as
often as may be deemed expedient or necessary by such party in its sole
discretion.

(g) This Agreement may be executed in several counterparts, each
of which is an original. It shall not be

<PAGE>

necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts.

(h) In the event of a lawsuit or arbitration by either party to
enforce any provisions of this Agreement, the prevailing party shall be entitled
to recover reasonable costs, expenses and attorney's fees from the other party.

12. Controlling Law. The validity, interpretation, construction,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Delaware.

IN WITNESS WHEREOF, Employee has hereunto set his hand and the Corporation
has caused this instrument to be duly executed as of the day and year first
above written.

Witness: Employee:

_________________________ _________________________
William Hill
7300 Greenway Center
Greenbelt, MD 20770-3585

Attest:
OAO International Corporation

_________________________ By:______________________
Secretary Title:
7300 Greenway Center
Greenbelt, MD 20770-3585

<PAGE>
Exhibit A
Benefits

1. Group Insurance. The Corporation shall provide to Employee and his family
the group life, health, dental and disability insurance coverage that the
Corporation makes available to its most senior executives from time to time.
Unless Employee resigns or is terminated for cause pursuant to Section 6(a) of
this Agreement, such coverage shall be continued by the Corporation at no
expense to Employee for a period of 180 days after the end of the term of
employment. For purposes of this Exhibit A, the term " family" shall mean the
spouse of the Employee and his dependent children who may be insured from time
to time as dependents under such policies of the Corporation.

2. Automobile. Employee shall be entitled to the use of that certain Lexus
automobile currently being used by Employee. Employee shall be responsible for
the payment of all maintenance, repairs, gasoline and other reasonable and
necessary costs incident to the operation of such automobile except for
insurance which will be paid for by the Corporation.

3. Expenses. It is contemplated that, in connection with his employment
hereunder, Employee may be required to incur reasonable business, entertainment
and travel expenses. The Corporation agrees to reimburse Employee in full for
all such reasonable and necessary business, entertainment and travel expenses
incurred or expended by him in connection with the performance of his duties
hereunder; provided Employee submits to the Corporation vouchers or expense
statements satisfactorily evidencing such expenses as may be reasonably required
by the Corporation and such expenses are in accordance with any corporate policy
with respect thereto.

4. Vacation. Employee shall be entitled to a paid vacation (taken
consecutively or in segments) of 4 weeks during each fiscal year, adjusted pro
rata for any partial fiscal year during the term hereof. Such vacation may be
taken at such times as is reasonably consistent with proper performance by
Employee of his duties and responsibilities hereunder.

<PAGE>

5. Other Benefits. Nothing contained herein shall be deemed to limit or
affect the right of Employee to receive additional bonuses or other forms of
additional compensation or to participate in any retirement, disability, profit
sharing, stock option, cash or stock bonus or other plan or arrangement, or in
any other benefits now or hereafter provided by the Corporation for its
employees or executives at the sole discretion of the Board of Directors of the
Corporation.

<PAGE>

Exhibit 21.1

Subsidiaries of Registrant

Subsidiaries Jurisdiction
- ------------ ------------
OAO Systems, Inc. Illinois
OAO Canada, Ltd. New Brunswick, Canada
Canadian Network Resources, Ltd. New Brunswick, Canada
Canadian Resource Management, Ltd. British Columbia, Canada
OAO/ICOR De Mexico, S.A. De C.V. Mexico
OAO Puerto Rico, Inc. Puerto Rico
OAO/ICOR Do Brasil S-C LTDA. Brazil
OAO/ICOR New Zealand Limited New Zealand
OAO/ICOR Australia PTY Limited Australia
OAO France France
OAO Deutschland GmbH Germany
OAO (UK) Limited United Kingdom
OAO/ICOR (UK), Ltd. United Kingdom
OAO Commercial Systems Corp. Nevada

<PAGE>

Exhibit 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of OAO Technology
Solutions, Inc. on Form S-1 of our report dated May 5, 1997, except for Note
16, as to which the date is July 31, 1997 appearing in the Prospectus, which
is part of the Registration Statement, and the references to us under the
headings "Selected Consolidated Financial Data" and "Experts" in such
Prospectus.

/s/ Deloitte & Touche LLP
- ------------------------
Deloitte & Touche LLP

Washington D.C.
August 19, 1997

<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-END> DEC-31-1996 JUN-30-1997
<CASH> 870 390
<SECURITIES> 0 0
<RECEIVABLES> 9,862 16,159
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 11,420 17,488
<PP&E> 1,384 2,586
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 12,828 20,205
<CURRENT-LIABILITIES> 6,702 12,983
<BONDS> 0 0
0 0
0 0
<COMMON> 100 100
<OTHER-SE> 5,740 6,972
<TOTAL-LIABILITY-AND-EQUITY> 12,828 20,205
<SALES> 57,891 39,338
<TOTAL-REVENUES> 57,891 39,338
<CGS> 43,896 30,773
<TOTAL-COSTS> 43,896 30,773
<OTHER-EXPENSES> 10,824 6,315
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 46 87
<INCOME-PRETAX> 3,125 2,163
<INCOME-TAX> 1,315 931
<INCOME-CONTINUING> 1,810 1,232
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,810 1,232
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0

</TABLE>