CREDENTIALS SERVICES INTERNATIONAL INC, S-1/A, 1997-11-21

CREDENTIALS SERVICES INTERNATIONAL INC
S-1/A, 1997-11-21
CONSUMER CREDIT REPORTING, COLLECTION AGENCIES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 21, 1997

REGISTRATION NO. 333-37461

================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT

NO. 1

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

CREDENTIALS SERVICES INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 7320 13-3784792
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>

333 CITY BOULEVARD WEST, 10TH FLOOR
ORANGE, CALIFORNIA 92868
(714) 704-6400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

MR. DAVID C. THOMPSON
President and Chief Executive Officer
CREDENTIALS SERVICES INTERNATIONAL, INC.
333 CITY BOULEVARD WEST, 10TH FLOOR
ORANGE, CALIFORNIA 92868
(714) 704-6400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

Copies to:

<TABLE>
<S> <C> <C>
JAMES M. MCLAUGHLIN, JR., ESQ. MELVIN KATZ, ESQ. WILLIAM H. HINMAN, JR., ESQ.
PATRICIA F. YOUNG, ESQ. MALONEY, MEHLMAN & KATZ SHEARMAN & STERLING
PILLSBURY MADISON & SUTRO LLP 405 LEXINGTON AVENUE 555 CALIFORNIA STREET
520 MADISON AVENUE, 40TH FLOOR NEW YORK, NEW YORK 10174 SAN FRANCISCO, CALIFORNIA 94104
NEW YORK, NEW YORK 10022
</TABLE>

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

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

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

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

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

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
====================================================================================================
PROPOSED MAXIMUM
AGGREGATE OFFERING AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE(2)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.01 par value............................ $101,200,000 $18,546
====================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

(2) Reflects prior payment of $12,121 in connection with the initial filing of
the Registration Statement with the Commission on October 8, 1997.

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> 2

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 OF SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED NOVEMBER 21, 1997

5,500,000 SHARES

LOGO
COMMON STOCK
------------------------

Of the 5,500,000 shares of Common Stock offered hereby, 1,050,000 shares are
being offered by Credentials Services International, Inc. (the "Company") and
4,450,000 shares are being offered by certain stockholders of the Company (the
"Selling Stockholders"). See "Principal and Selling Stockholders." The Company
will not receive any proceeds from the sale of shares by the Selling
Stockholders. After giving effect to the offering of the Common Stock hereby,
CSI Investment Partners II, L.P., one of the Selling Stockholders, will own
approximately 35.4% of the Company's outstanding Common Stock, assuming no
exercise of the Underwriter's over-allotment option described below. See "Risk
Factors -- Control by Affiliates."

Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently anticipated that the initial public offering
price per share of the Common Stock will be between $14.00 and $16.00 per share.
See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. The Company has applied for
quotation of the Common Stock on the Nasdaq National Market under the trading
symbol "CRSR."

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 5 OF THIS PROSPECTUS FOR INFORMATION THAT SHOULD BE CONSIDERED
BY PROSPECTIVE INVESTORS.
------------------------

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

<TABLE>
<CAPTION>
================================================================================================================
Underwriting Proceeds to
Price to Discounts and Proceeds to Selling
Public Commissions(1) Company(2) Stockholders
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share....................... $ $ $ $
- ----------------------------------------------------------------------------------------------------------------
Total........................... $ $ $ $
- ----------------------------------------------------------------------------------------------------------------
Total Assuming Full Exercise of
Over-Allotment Option(3)...... $ $ $ $
================================================================================================================
</TABLE>

(1) See "Underwriting."

(2) Before deducting expenses estimated at $1.3 million, which are payable by
the Company.

(3) Assuming exercise in full of the 30-day option granted by the Selling
Stockholders to the Underwriters to purchase up to 825,000 additional
shares, on the same terms, solely to cover over-allotments. See
"Underwriting."

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

The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters, and subject
to their right to reject orders in whole or in part. It is expected that
delivery of the Common Stock will be made in New York City on or about
, 1997.
------------------------

PAINEWEBBER INCORPORATED HAMBRECHT & QUIST
------------------------

THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 3
Inside front cover:

Credential Services International's
Value-Added Business Model

[Graphic depiction of Credentials Services International's Value-Added Business
Model: Membership fees flow from members to the Company; superior credit
information and monitoring programs flow from the Company to members; fee-based
revenue flows from the Company to the credit bureau; integration of information
systems flows from the credit bureau to the Company; commission revenue and
customer loyalty flow from the Company to the co-marketer; and brand name
endorsement and customer lists flow from the co-marketer to the Company.]

[Logo of Credentials Services International, Inc.]
<PAGE> 4

Credentials(R) is a trademark of Credentials Services International, Inc.
This prospectus includes trademarks and tradenames of other companies.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF THE COMMON STOCK TO STABILIZE ITS
MARKET PRICE, THE PURCHASE OF THE COMMON STOCK TO COVER SYNDICATE SHORT
POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Financial Statements and related notes appearing elsewhere in
this Prospectus. Except as set forth in the Financial Statements and notes
thereto or as otherwise specified herein, all information in this Prospectus (i)
assumes no exercise of the Underwriters' over-allotment option, and (ii)
reflects a 214.4517-for-1 split of the Common Stock to be effected prior to the
commencement of this offering. See "Description of Capital Stock" and
"Underwriting." Investors should carefully consider the information set forth
under the heading "Risk Factors."

This Prospectus contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed under the heading "Risk Factors" below, as
well as those discussed elsewhere in this Prospectus.

THE COMPANY

Credentials Services International, Inc. is a leading direct marketer of
credit information and monitoring membership programs to consumers. The Company
believes that it provides value-added programs that enable consumers to monitor
the accuracy of their personal credit data that is collected and held by credit
reporting bureaus. This information allows consumers to respond on an informed
basis to credit decisions made by providers of credit such as mortgage lenders,
consumer finance companies, auto loan providers, credit card providers, banks
and other lending institutions. Through its relationship with Experian Inc., one
of the three major credit reporting bureaus, the Company provides this
information to its members in a readily understandable, readable format and
offers members notification of significant events, such as credit inquiries and
the entry of negative credit data in the member's credit file, which might
affect their ability to obtain credit.

The Company markets its membership programs to consumers using direct
marketing techniques, consisting of direct mail and telemarketing campaigns
conducted through endorsed co-marketing relationships with major credit card
issuers that have a large customer base, such as banks, retailers and oil
companies. Through its co-marketing relationships, the Company markets its
programs to the credit card customer bases of nationally-known organizations
such as The Chase Manhattan Bank USA, N.A., Bank One, N.A. and its affiliates
(including the recently merged First USA Bank credit card customer base), PNC
National Bank, N.A., Service Merchandise and Sun Company, Inc. (Sunoco). During
the fiscal year ended September 26, 1997, the Company increased the number of
its co-marketers to 29 from 13 at September 27, 1996. During this period, the
Company's membership base increased to approximately 1.4 million members from
approximately 828,000 members. The Company entered into a new co-marketing
agreement with the credit card division of Citibank, N.A. in October 1997 and
commenced initial direct marketing activities to Citibank's credit card holders
in November 1997. See "Risk Factors -- Dependence on Co-Marketers; Co-Marketer
Concentration."

The consumer credit information and monitoring business conducted by the
Company was started in 1986 by a division of TRW, Inc. In October 1994, the
Company purchased certain assets of the business from TRW, Inc. In September
1996, TRW, Inc., sold its credit bureau and credit reporting business, and that
business was subsequently renamed Experian Inc. At the time of the Company's
asset acquisition in 1994, it entered into a ten-year contract with TRW, Inc.
pursuant to which the Company has access to Experian Inc.'s credit reports and
daily access to the national Experian Inc. credit file. The Company's
information systems are integrated with Experian Inc.'s database and systems,
enabling the Company to automatically notify a member when an inquiry is made
into the member's personal credit file. The Company believes that it is the only
company which currently offers this unique feature to consumers and that this
feature constitutes a substantial competitive advantage with respect to
developing co-marketing relationships and building its membership base.

1
<PAGE> 6

The Company seeks to become the leading provider of credit information and
monitoring programs to consumers and to continue to build its membership base
with its core programs and the introduction of new programs. The key elements of
the Company's strategy are as follows:

Expand Distribution Channels. The Company intends to expand its network of
co-marketing relationships to include additional major banks, retailers and oil
companies, as well as to aggressively develop innovative new distribution
channels. Potential co-marketing partners may include mortgage servicing
companies, insurance companies and utility companies, such as regional telephone
companies. The Company also believes the World Wide Web may become a viable
distribution channel for its membership programs and is exploring that potential
distribution opportunity.

The Company was incorporated in Delaware in 1993 and commenced operations
in October 1994. The Company's executive offices are located at 333 City
Boulevard West, 10th Floor, Orange, California 92868, and its telephone number
is (714) 704-6400. The Company also maintains a World Wide Web site on the
Internet at http://www.credentials-net.com.

2
<PAGE> 7

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the Company.......... 1,050,000 shares
Common Stock Offered by the Selling
Stockholders............................... 4,450,000 shares
Common Stock to be Outstanding after the
Offering................................... 10,666,667 shares(1)
Use of Proceeds.............................. The net proceeds to the Company from the
offering are estimated to be approximately
$13.3 million. The Company intends to apply
the net proceeds of the offering to repay
certain outstanding indebtedness in the
aggregate principal amount of approximately
$12.9 million, plus accrued interest. The
balance of the net proceeds of the offering,
if any, will be used for general corporate
purposes. The Company will not receive any
proceeds from the sale of shares by the
Selling Stockholders. See "Use of Proceeds."
Proposed Nasdaq National Market Symbol....... CRSR
</TABLE>

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

(1) Based upon the number of shares of Common Stock outstanding at November 21,
1997. See "Capitalization" and "Principal and Selling Stockholders."
Excludes 655,000 shares of Common Stock issuable upon exercise of options
that the Company intends to grant under the Company's 1997 Stock Option Plan
immediately prior to the commencement of this offering at an exercise price
equal to the initial public offering price per share of the Common Stock
being offered hereby. See "Management -- Stock Option Plan."

3
<PAGE> 8

SUMMARY FINANCIAL INFORMATION

The following summary financial information for each of the three fiscal
years in the period ended September 26, 1997 and at September 26, 1997 has been
derived from the financial statements of the Company that have been audited by
Coopers & Lybrand L.L.P., independent auditors, and included herein. The summary
financial information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and Notes included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
FISCAL YEARS
ENDED SEPTEMBER(1)
--------------------------------------
1995 1996 1997
---------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS AND NUMBER OF MEMBERS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................... $ 12,540 $ 24,556 $ 38,039
Operating income (loss).................................... (4,544) (21,262) 2,855
Interest expense........................................... 1,239 1,185 1,455
Income (loss) before provision for income taxes and
extraordinary item....................................... (5,783) (22,447) 1,400
Income (loss) before extraordinary item.................... $ (5,783) $ (22,447) $ 1,339
Income (loss) per share before extraordinary item.......... $ (0.60) $ (2.33) $ 0.14
Weighted average common and common equivalent shares
outstanding.............................................. 9,616,667 9,616,667 9,616,667

OTHER DATA:
Total members at end of period............................. 613,000 828,000 1,385,000
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 26, 1997
------------------------------
ACTUAL AS ADJUSTED(2)
----------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................................... $ 413 $ 562
Total assets....................................................... 41,412 40,608
Total liabilities.................................................. 61,194 48,168
Total stockholders' deficit........................................ (19,782) (7,560)
</TABLE>

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

(1) The Company's fiscal year ends on the last Friday of September of each year.
The Company's quarterly periods are each comprised of 13 weeks and end on
the last Friday of each quarterly period. The first month of each quarter is
comprised of five weeks, and each of the two remaining months of the quarter
is comprised of four weeks.

(2) Adjusted to reflect (i) the sale by the Company of the 1,050,000 shares of
Common Stock offered hereby at an assumed initial public offering price of
$15.00 per share; and (ii) the application of the estimated net proceeds
from the sale of the shares of Common Stock by the Company. See "Use of
Proceeds" and "Capitalization."

4
<PAGE> 9

RISK FACTORS

In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company, its current
business and its future prospects before purchasing shares of the Company's
Common Stock offered hereby.

LIMITED OPERATING HISTORY

The Company commenced operations in October 1994. It has a limited
operating history and is at an early stage of development. While the Company's
business of direct marketing credit information and monitoring programs was
started by a division of TRW, Inc. ("TRW") in 1986, the Company has operated as
an independent business organization for approximately three years and,
therefore, its future results of operations are subject to the uncertainties,
including those pertaining to continuity of management and business
relationships, customarily encountered by new businesses.

HISTORY OF OPERATING LOSSES

For the fiscal year ended September 26, 1997, the Company generated net
income of approximately $1.3 million; however, as of September 26, 1997, the
Company had an accumulated deficit of approximately $27.0 million. For fiscal
years 1996 and 1995, the Company incurred net losses of approximately $22.4
million and $5.8 million, respectively. Management believes that the net loss
for the year ended September 27, 1996 was a result primarily of failed direct
marketing and telemarketing campaigns that were conducted on an unendorsed basis
(i.e., without the benefit of co-marketer endorsements). The fiscal year 1996
losses resulted in a severe liquidity shortfall which impaired the Company's
ability to undertake new marketing programs. Management of the Company has since
taken a variety of actions, including the investment of additional capital in
the Company, the replacement of certain key executive officers and the
implementation of new operational and financial control procedures, in an effort
to remedy the problems that led to the Company's financial difficulties in
fiscal year 1996. There can be no assurance, however, that these or any other
steps taken by management in the future will be sufficient to allow the Company
to maintain profitability or avoid liquidity problems and operating losses such
as those recently experienced by the Company.

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company's quarterly revenues, expenses and operating results have
varied significantly in the past and are likely to vary significantly from
quarter to quarter in the future. Factors which may affect the Company's
financial results include: response to membership solicitations; cancellations
and renewals of memberships; market acceptance of the Company's and the
co-marketers' existing and new programs; the demand for credit monitoring
services such as those offered by the Company; the timing of the Company's
investments in program development; unanticipated customer service
interruptions; unanticipated increased costs associated with maintenance and
expansion of operations; and competitive pressures on the Company's business
generally. Many of these factors (including postage and telephone rates for
direct mail and telemarketing campaigns) are beyond the Company's control. For
example, the U.S. Postal Service has proposed a postage rate increase to become
effective in mid-1998. In addition, any delay in the offering of a new program
by the Company, its co-marketers or otherwise, or slower than anticipated
consumer acceptance of such program, could adversely affect the Company's
margins in a given period. Due to the foregoing factors, the Company believes
that its quarterly operating results are likely to vary significantly in the
future, that period-to-period comparisons of its operating results are not
necessarily meaningful and that such comparisons cannot be relied upon as
indicators of future performance. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

DEPENDENCE ON CO-MARKETERS; CO-MARKETER CONCENTRATION

The Company obtains substantially all of the information necessary for
conducting the Company's endorsed marketing efforts from customer lists supplied
by its co-marketers. Co-marketers provide the lists to the Company solely for
use in marketing specified products. As a result, the Company's ability to
market an

5
<PAGE> 10

existing program to potential new members or a new program to its existing
members is dependent on its ability to develop and maintain relationships with
co-marketers and to obtain approval for its marketing efforts from the relevant
co-marketer.

Approximately 30.4% of the Company's revenues for the fiscal year ended
September 26, 1997 were attributable to members solicited from customer lists
provided by its two largest co-marketers. The number of new members attributable
to any individual co-marketer fluctuates from period to period depending on
whether the Company has initiated a product marketing cycle for that co-marketer
during the relevant period. Accordingly, the percentage of the Company's total
revenue generated by each individual co-marketer has varied over time, although
memberships and the associated revenue derived from endorsed marketing campaigns
conducted with The Chase Manhattan Bank USA, N.A. ("Chase") and Bank One, N.A.
and its affiliates, including the recently merged First USA Bank credit card
customer base ("Bank One"), have historically constituted a significant portion
of the Company's total revenues and membership base. For the fiscal year ended
September 26, 1997, approximately 21.1% of the Company's revenues were generated
from members who were originally solicited with the co-marketer endorsement of
Bank One (the "Bank One Endorsement"), and approximately 9.3% of the Company's
revenues were generated from members who were originally solicited with the
co-marketer endorsement of Chase (the "Chase Endorsement"). At September 26,
1997, approximately 27% of the Company's members consisted of members who were
originally solicited with the Chase Endorsement and approximately 25% of the
Company's members consisted of members who were originally solicited with the
Bank One Endorsement. The Company is currently engaged in expanding the number
of its co-marketing partners which has grown to 29 at September 26, 1997 from 13
at September 27, 1996 and anticipates that, as a result, it will, over time,
become less dependent on individual co-marketers. There can be no assurance,
however, that such expansion efforts will succeed or that the Company will,
accordingly, be able to lessen its dependence on individual co-marketers. As
part of its strategy to increase the number of its co-marketing relationships,
the Company entered into a co-marketing agreement with the credit card division
of Citibank, N.A. ("Citibank") in October 1997. Pursuant to that agreement, the
Company is obligated to pay Citibank minimum compensation of $9.0 million for
the period from October 29, 1997 through December 31, 1998, based upon net
membership revenues generated from an agreed-upon number of Citibank credit card
customer leads. While management believes that the Company will generate
sufficient net membership revenues from the Citibank credit card customer base
to satisfy this $9.0 million obligation, there can be no assurance in that
regard.

Certain of these co-marketer relationships are governed by agreements which
may be terminated without cause by either party upon 60 to 90 days' notice
without penalty and upon 30 days' notice in the event of an uncorrected material
breach. Upon such termination, the Company has the right to continue its
relationship with the co-marketer's customers that have become members prior to
the termination. There can be no assurance that one or more of the Company's
significant co-marketers will not terminate its relationship with the Company or
that co-marketers will continue to provide additional customer lists to the
Company for use in future marketing of new or existing membership programs. The
loss of any significant co-marketer could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business."

DEPENDENCE ON MEMBERSHIP RENEWALS

Fees generated by renewals of memberships are a significant contributor to
the Company's net income. The initial year of a membership is less profitable to
the Company than renewal years due primarily to the marketing costs associated
with acquiring new members. In addition, during the initial year of a
membership, a member may cancel his or her membership in the program for a
complete refund of the membership fee for that year. Historically, between 45%
and 60% of new members cancel their memberships within their initial membership
term (including cancellations during the 30-day trial period). Of the remaining
40% to 55% of the new members who do not cancel during the initial membership
term, approximately 70% renew their membership for an additional membership
term. For periods subsequent to the first membership term, the Company's
membership renewal rate has remained relatively constant at approximately 70%.

6
<PAGE> 11

The profitability of the Company is substantially dependent upon its
membership renewals. Cancellation rates and renewal rates are uncertain and are
subject to several factors, many of which are beyond the Company's control,
including changing member preferences, competitive price pressures, general
economic conditions, customer satisfaction and credit card holder turnover. In
addition, due to the rapid growth of the Company's membership base during fiscal
year 1997, the membership renewal rates historically experienced by the Company
are not necessarily indicative of future renewal rates. There can be no
assurance that the Company will continue to generate sufficient membership
renewals to maintain profitability or that memberships, if renewed, will not be
cancelled. Failure of the Company to generate a high rate of membership renewals
would have a material adverse effect on the Company's business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business -- Sales and
Marketing."

COMPETITION

The Company's principal competitor is CUC International Inc. ("CUC") which
offers credit reporting membership programs with certain features similar to
those provided by the Company's programs. In addition to this direct
competition, the Company also encounters competition for co-marketer
endorsements from other direct marketing businesses. Because agreements between
co-marketers and program providers are often exclusive with respect to a
particular service, potential co-marketers may be prohibited from entering into
agreements with the Company to promote a program if the features provided by the
Company's program are similar to, or overlap with, the features offered by an
existing program of a competitor. There can be no assurance that the Company's
competitors will not increase their emphasis on programs similar to those
offered by the Company and more directly compete with the Company, that new
competitors will not enter the market, that competitors will not increase the
compensation they provide to co-marketers to induce such co-marketers to enter
into agreements, or that other businesses will not themselves introduce
competing programs. (See the description of the Company's recent agreement with
Citibank "-- Dependence on Co-Marketers; Co-Marketer Concentration" under this
caption). Such potential competitors include major credit card issuers,
including the Company's co-marketers. Potential competitors also include major
credit reporting bureaus, including Experian Inc. ("Experian"), which would have
significant competitive advantages such as access to credit data at minimal
cost. There can be no assurance that the Company's current or potential
competitors will not provide programs comparable or superior to those provided
by the Company at lower membership prices or adapt more quickly than the Company
to evolving industry trends or changing market requirements. In addition,
alliances among competitors may emerge and rapidly acquire significant market
share. Many of the Company's current and prospective competitors, including CUC,
have substantially larger customer bases and greater financial and other
resources than those available to the Company. Increased competition may result
in price reductions, increased fees payable to co-marketers, reduced
profitability and loss of market share, any of which could materially adversely
affect the Company's business, financial condition and results of operations.
There can be no assurance that the Company will be able to compete effectively
against future and current competitors. See "Business -- Competition."

Experian provides substantially all of the credit information which the
Company furnishes to its members. Although neither Experian nor the other credit
reporting bureaus provide the credit monitoring services currently offered by
the Company, Experian and the other credit bureaus currently provide a credit
report directly to any consumer at the consumer's request at the rate of
approximately $8.00 per report (except in states where local legislation
provides that consumers are entitled to a free credit report upon their written
request). See "-- Government Regulation; Adverse Publicity -- State Fair Credit
Reporting Acts." There can be no assurance that Experian or the other credit
bureaus will not begin to more aggressively market their services to consumers
by initiating price reductions or advertising campaigns targeted to consumers
and that such actions will not adversely affect the Company's business,
financial condition and results of operations or require the Company to reduce
prices for certain of its programs in order to remain competitive. On August 13,
1997, Experian launched a program to offer consumers the opportunity to receive
their credit reports directly over the Internet. Although two days later
Experian announced that it was suspending this program due to certain
operational and security problems, there can be no assurance that this, or
similar programs, will not be implemented by Experian or other credit reporting
bureaus or that competition from

7
<PAGE> 12

such programs will not adversely affect the Company's business, financial
condition and result of operations. Experian and the other credit reporting
bureaus would have significant competitive advantages over the Company in
providing such reports or services, such as access to credit data at minimal
cost. See "-- Dependence on Third Parties -- Relationship with Experian."

Providers of membership programs also compete for the limited access
provided by co-marketers to their customers against other businesses engaged in
direct marketing activities, such as telemarketing and direct mail. In recent
years, there have been significant advances in new forms of direct marketing,
such as the development of interactive shopping and data collection through
television, the Internet and other media. Many industry experts predict that
electronic interactive commerce, such as shopping and information exchange
through the World Wide Web, will proliferate significantly in the foreseeable
future. To the extent it occurs, such proliferation could materially change the
economics of acquiring members for membership service programs of the type
offered by the Company. Although the Company is exploring the potential of what
it believes are the most promising new forms of direct marketing, there can be
no assurance that the Company would be able to adapt to a material change in the
economics of its business or that such change would not have a material adverse
effect on the Company's business, financial condition or results of operations.
See "Business -- Competition."

INTRODUCTION OF NEW COMPETITIVE PROGRAMS

The introduction or announcement by current and future competitors of the
Company of new programs similar to those offered by the Company could render the
Company's existing programs uncompetitive or obsolete, or result in a delay or
decrease in orders for the Company's existing programs as co-marketers or
customers evaluate new programs or select new programs as an alternative to the
Company's existing programs. Therefore, the announcement or introduction of new
programs by competitors of the Company could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business -- Competition."

DEPENDENCE ON CREDIT CARD INDUSTRY

Programs marketed through the Company's credit card issuer co-marketers
accounted for substantially all of the Company's revenues in fiscal years 1995,
1996 and 1997. A significant downturn in the credit card industry or a trend in
that industry to reduce or eliminate its use of direct marketing programs would
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, the Company is obligated under the terms
of its agreement with credit card issuers and merchant processors under rules
promulgated by credit card associations such as Visa International and
MasterCard to maintain certain standards of commercial conduct relating
generally to the protection of credit card holders and consumers. While the
Company believes it has been in compliance with such standards to date,
violations of such standards could jeopardize the Company's ability to utilize
such associations to collect payment of membership fees, which could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Credit Card Enhancement Industry
Background" and "-- Sales and Marketing."

DEPENDENCE ON THIRD PARTIES

Relationship with Experian. The Company receives substantially all of its
credit reports and credit information from Experian. In connection with the
acquisition of the Company's business in October 1994, the Company entered into
a ten-year contract with TRW (the predecessor to Experian) pursuant to which the
Company has access to Experian's credit reports and daily access to the national
Experian credit file. The Company is dependent upon access to Experian's data
base, which enables the Company to offer the credit monitoring feature of its
programs to its members. The Company's information systems are integrated with
and dependant upon Experian's database and systems. The Company's agreement with
Experian provides that either party may request a modification of the pricing
terms after October 1999, the fifth anniversary of the agreement. In the event
such a request is made and the Company and Experian are unable to agree upon new
pricing terms within a specified period, either party may terminate the
contract. In addition, if the Company

8
<PAGE> 13

fails to comply with various regulations applicable to the Company, Experian may
terminate the contract. There can be no assurance that, in the event Experian
ceases operations, or terminates, breaches or chooses not to renew its agreement
with the Company, a replacement source for credit reports and information could
be retained on a timely basis, if at all. Any such termination, breach or
nonrenewal could have a material adverse effect on the Company's business,
financial condition and results of operations. See "-- Government Regulation;
Adverse Publicity" and "Business -- Overview" and "-- Credit Information and
Monitoring Programs."

Direct Marketing. The Company solicits substantially all of the members
for its programs through direct mail and telemarketing. The Company outsources
its direct mail and telemarketing activities to third party contractors. The
third party contractors operate pursuant to agreements with the Company that may
be terminated with limited prior notice. There can be no assurance that, in the
event any such third party contractor ceases operations, or terminates, breaches
or elects not to renew its agreement with the Company, a replacement direct
mailer or telemarketer could be retained on a timely basis, if at all. In
addition, as third party contractors, the level and quality of services provided
by direct mailers and telemarketers is beyond the control of the Company. Any
service interruptions or quality problems could result in negative publicity,
customer dissatisfaction and membership cancellations which could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Sales and Marketing."

Printing and Fulfillment Outsourcing. The Company outsources its printing
and membership fulfillment processes, and is dependent on printers and mailing
houses for prompt and accurate production of mailing inserts and initial
customer fulfillment packages. In the event that one of the printing or mailing
houses is unable or unwilling to provide materials on a timely basis or
terminates its relationship with the Company, there can be no assurance that the
Company would be able to replace such services without an interruption in its
marketing and customer service operations. Any such interruption could
materially and adversely affect the Company's business, financial condition and
results of operations. See "Business -- Fulfillment."

MANAGEMENT OF GROWTH

The Company has recently experienced a period of rapid growth that has
placed significant demands on its management and other resources. Continued
growth, if any, could continue to place significant demands on such resources.
For example, the Company's membership base increased to approximately 1.4
million members at September 26, 1997 from approximately 828,000 members at
September 27, 1996. Revenues have also increased significantly since the
inception of the Company. The Company's ability to compete effectively and to
manage future growth, if any, will depend on its ability to continue to
implement and improve operational, financial and management information systems
on a timely basis and to expand, train, motivate and manage its employees. There
can be no assurance that the Company's personnel, systems, procedures and
controls will be adequate to support the Company's operations, and the failure
to effectively support the Company's operations could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

POTENTIAL NEGATIVE IMPACT OF COMPETING DISTRIBUTION CHANNELS; RESISTANCE TO
TELEMARKETING

In recent years, there have been significant advances in new forms of
direct marketing, such as the development of interactive shopping and data
collection through television, the Internet and other media. Electronic
interactive commerce, such as shopping and information exchange via the World
Wide Web, may proliferate significantly in the foreseeable future. To the extent
it occurs, such proliferation could materially change the economics of acquiring
members for membership service programs of the type offered by the Company. Such
change could have a materially adverse effect on the Company's business,
financial condition and results of operations. Furthermore, as the telemarketing
industry continues to grow, the effectiveness of telemarketing, which is one of
the two principal means by which the Company markets its programs, as a direct
marketing method may decrease as a result of increased consumer resistance to
telemarketing in general. See "Business -- Credit Card Enhancement Industry
Background," "-- Sales and Marketing" and "-- Competition."

9
<PAGE> 14

RELIANCE ON COMMUNICATIONS AND INFORMATION SYSTEMS; TECHNOLOGY RISKS

The Company's business is highly dependent on its computer and
telecommunications systems and any temporary or permanent loss of either system,
for whatever reason, could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
technologies on which the Company is dependent to effectively compete and meet
its co-marketers' needs are rapidly evolving and in many instances are
characterized by short product life cycles or innovation. There can be no
assurance that the Company will be successful in anticipating or adapting to
technological changes or in selecting and developing new and enhanced technology
on a timely basis. See "Business -- Management Information Systems."

DEPENDENCE ON KEY PERSONNEL

The Company is highly dependent on the members of its management and
marketing staff, the loss of one or more of whom could have a material adverse
effect on the Company. In addition, the Company believes that its future success
will depend in large part upon its ability to attract and retain highly skilled
managerial and marketing personnel, particularly as the Company expands its
activities. The Company faces significant competition for such personnel, and
there can be no assurance that the Company will be successful in hiring or
retaining the personnel it requires for continued growth. The failure to hire
and retain such personnel could materially and adversely affect the Company's
business, financial condition and results of operations. See "Management" and
"Certain Transactions."

GOVERNMENT REGULATION; ADVERSE PUBLICITY

Federal Telephone Consumer Protection Act; Federal Telemarketing and
Consumer Fraud and Abuse Prevention Act. One of the principal methods the
Company uses to market its programs is telemarketing. The telemarketing industry
has become subject to an increasing amount of Federal and state regulation as
well as general public scrutiny in the past several years. The Federal Telephone
Consumer Protection Act of 1991 limits the hours during which telemarketers may
call consumers and prohibits the use of automated telephone dialing equipment to
call certain telephone numbers. The Federal Telemarketing and Consumer Fraud and
Abuse Prevention Act of 1994, and Federal Trade Commission ("FTC") regulations
promulgated thereunder, prohibit deceptive, unfair or abusive practices in
telemarketing sales. Both the FTC and state attorneys general have authority to
prevent telemarketing activities that constitute "unfair or deceptive acts or
practices." In addition, some states have enacted laws and others are
considering enacting laws targeted directly at telemarketing practices, and
there can be no assurance that any such laws, if enacted, will not adversely
affect or limit the Company's current or future telemarketing activities.
Although the Company does not control the telemarketing firms which it engages
to market the Company's programs, compliance with these regulations is generally
the responsibility of the Company, and the Company could be subject to a variety
of enforcement or private actions for any failure to comply with such
regulations. The risk of noncompliance by the Company with any rules and
regulations enforced by a Federal or state consumer protection authority may
subject the Company or its management to fines or various forms of civil or
criminal prosecution, any of which could have a material adverse effect on the
Company's business, financial condition and results of operations.

10
<PAGE> 15

the Company. The Company could also be subject to administrative enforcement
actions initiated by the FTC. Violations of the FCRA may constitute unfair or
deceptive acts or practices in commerce in violation of the Federal Trade
Commission Act and the Company could be subject to penalties thereunder. In
addition, if the Company were found to have committed a knowing violation of the
FCRA which constitutes a pattern or practice of violations, the FTC may
institute an action to recover a civil penalty of up to $2,500 per violation.
Finally, actions for injunctions or for damages may also be initiated under the
FCRA by the state attorneys general.

State Fair Credit Reporting Acts. Slightly over half of the states have
enacted statutes governing the operations of consumer credit reporting agencies,
and some of the state statutes contain provisions that are different from the
FCRA. An example of such a state statute was enacted in Colorado through the
adoption of the Colorado Fair Credit Reporting Act (the "Colorado Act") which
went into effect August 1, 1997. The Colorado Act increases the notification
requirements for credit reporting agencies and lenders upon the addition of
adverse items to, or three inquiries into, an individual's credit report. The
law provides that Colorado consumers are entitled to a free credit report upon
their written request and mandates an annual mailing from each of the national
systems and Colorado reporting agencies alerting consumers to that fact. The
Company is not in a position to know the number of Colorado consumers who will
request a free copy of their credit report, or if consumers will regard such
reports as substitutes for the Company's services. There are five other states
(Vermont, Maryland, Georgia, Massachusetts and New Jersey) that have also
enacted legislation requiring the issuance of free credit reports to consumers
upon request. The Company derives approximately 15% of its members from states
with such legislation. Other states (including California) are currently
considering the enactment of such legislation. There can be no assurance that
other states in which more of the Company's members reside will not adopt
similar legislation. In the event that other states enact legislation requiring
issuance of free credit reports, the value to consumers of the programs the
Company provides could be materially reduced. Legislation requiring free
issuance of credit reports could materially and adversely affect the Company's
business, financial condition and results of operation. See "Business --
Government Regulation."

Adverse Publicity. The media often publicizes perceived non-compliance
with consumer protection regulations and violations of notions of fair dealing
with consumers, and the membership programs industry is susceptible to widely
publicized charges by the media of regulatory noncompliance and unfair dealing.
Any such publicity is potentially damaging to the Company's reputation, its
co-marketer relationships and consumer acceptance and loyalty.

NO PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active trading market will
develop or be sustained after this offering or that the market price of the
Common Stock will not decline below the initial public offering price. The
initial public offering price will be determined by negotiations among the
Company, the Selling Stockholders and the Representatives of the Underwriters.
Factors such as fluctuations in the Company's operating results, announcements
of product or service innovations or new agreements with co-marketers by the
Company or its competitors, and market conditions for stocks of companies
similar to the Company and the condition of the capital markets generally could
have a significant impact on the market price of the Common Stock. See
"Underwriting" for information relating to the method of determining the initial
public offering price.

MANAGEMENT DISCRETION CONCERNING USE OF PROCEEDS; ABILITY TO RAISE ADDITIONAL
CAPITAL

To the extent that the net proceeds derived by the Company from this
offering are not applied to repay its indebtedness and such proceeds are
allocated to working capital for general corporate purposes, as described under
"Use of Proceeds," management of the Company will have broad discretion to use
such proceeds in whatever manner that management believes is appropriate for the
Company.

Barring unforeseen changes in the Company's business, the Company believes
that the net proceeds to be derived by the Company from this offering, funds
generated from operations and borrowings available under

11
<PAGE> 16

the Company's revolving bank line of credit will be sufficient to meet its
capital and liquidity requirements for at least the forthcoming 36-month period.
The Company intends to grant options to purchase an aggregate of 655,000 shares
of Common Stock under the Company's 1997 Stock Option Plan immediately prior to
the consummation of this offering. In the event that the Company were to seek
additional financing, its ability to raise equity capital on terms that would be
acceptable to the Company may be adversely affected by the grant of such
options.

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Sales of substantial amounts of shares of Common Stock in the public market
following this offering could adversely affect the market price of the Common
Stock. Upon closing of this offering, based upon the number of shares
outstanding at November 21, 1997 and assuming no exercise after November 21,
1997 of outstanding stock options, there will be 10,666,667 shares of Common
Stock of the Company outstanding. Of these shares, the 5,500,000 shares offered
hereby will be freely tradable without restriction or further registration under
the Securities Act of 1933, as amended (the "Securities Act"), unless purchased
by "affiliates" of the Company, as that term is defined in Rule 144 ("Rule 144")
under the Securities Act ("Affiliates"). The remaining 5,166,667 shares of
Common Stock are deemed "restricted securities" as that term is defined in Rule
144. All of the shares of Common Stock deemed "restricted securities" are
subject to certain lock-up agreements (the "Lock-Up Agreements"). See
"Underwriting." Upon expiration of the Lock-Up Agreements 180 days after the
date of this Prospectus, approximately 4,596,225 shares of Common Stock will be
available for sale in the public market, subject to the volume limitations and
other provisions of Rule 144. Of the remaining shares, 285,221 shares will be
available for sale in each of April 1999 and April 2000, upon vesting of the
restricted stock held by management (the foregoing numbers of shares do not give
effect to the sale of additional shares issuable upon exercise of options to be
granted to officers, directors and employees of the Company as described under
"Management -- Stock Option Plan"). See "Shares Eligible for Future Sale" and
"Description of Capital Stock -- Registration Rights."

CONTROL BY AFFILIATES

Upon completion of this offering, CSI Investment Partners II, L.P., a
Delaware limited partnership ("CSI Partners II"), will own approximately 35.4%
of the Company's outstanding Common Stock. CSI Partners II may, therefore, have
the ability to control the election of the Company's directors and also may have
the ability to determine the outcome of corporate actions requiring stockholder
approval. This concentration of ownership also may have the effect of delaying
or preventing a change in control of the Company. See "Management" and
"Principal and Selling Stockholders."

ANTI-TAKEOVER PROVISIONS

The Company's Amended and Restated Bylaws (the "Bylaws") provide that any
action required or permitted to be taken by stockholders of the Company must be
effected at a duly called annual or special meeting of stockholders and may not
be effected by any consent in writing, and requires reasonable advance notice by
a stockholder of a proposal or director nomination which such stockholder
desires to present at any annual or special meeting of stockholders. Special
meetings of the stockholders may be called only by the Chairman of the Board,
the Chief Executive Officer or, if none, the President of the Company or by the
Board of Directors. The Company's Amended and Restated Certificate of
Incorporation (the "Charter") provides for a classified Board of Directors. The
Board of Directors is divided into three classes, with two to three directors in
each class. The terms of the Class I directors expire in 1998, the terms of the
Class II directors expire in 1999, and the terms of the Class III directors
expire in 2000. In addition, shares of the Company's Preferred Stock may be
issued in the future without stockholder approval and upon such terms and
conditions, and having such rights, privileges and preferences, as the Board of
Directors may determine. The rights of the holders of Common Stock will be
subject to, and may be adversely affected by, the rights of any holders of
Preferred Stock that may be issued in the future. The Company has no present
plans to issue any shares of Preferred Stock.

12
<PAGE> 17

In addition, the Company is subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law which prohibit the Company
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner or meets other criteria. These provisions, and other
provisions of the Charter, may have the effect of deterring hostile takeovers or
delaying or preventing changes in control or management of the Company,
including transactions in which stockholders might otherwise receive a premium
for their shares over then current market prices. In addition, these provisions
may limit the ability of stockholders to approve transactions that they may deem
to be in their best interests. See "Description of Capital Stock -- Delaware
Anti-Takeover Law and Certain Charter and Bylaw Provisions."

DILUTION

Purchasers of shares of Common Stock in this offering will suffer an
immediate and substantial dilution in the net tangible book value per share of
the Common Stock of $18.82 from the initial public offering price. To the extent
that options to purchase shares of Common Stock granted under the Company's 1997
Stock Option Plan are exercised, there will be further dilution. See "Dilution."

LACK OF DIVIDENDS

The Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future. See "Dividend Policy."

13
<PAGE> 18

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,050,000 shares of
Common Stock being offered by the Company hereby are estimated to be $13.3
million, assuming an initial public offering price of $15.00 per share and after
deducting estimated underwriting discounts and commissions and offering
expenses. The Company intends to apply the net proceeds of the offering to be
received by the Company to: (i) repay approximately $6.9 million principal
amount of outstanding term indebtedness, which bears interest at an average rate
of 8.43%, together with interest accrued thereon, arising under a Credit
Agreement, dated January 14, 1997, between the Company and LaSalle National
Bank, and having a maturity date of September 30, 1999; (ii) repay approximately
$3.0 million principal amount of indebtedness, which bears interest at an
average interest rate of 9.31%, together with interest accrued thereon, pursuant
to a Subordinated Promissory Note due December 1999 issued by the Company, and
payable to TRW and issued in connection with the Acquisition; and (iii) repay
approximately $3.0 million principal amount of indebtedness, which bears
interest at an average interest rate of 12.00%, together with interest accrued
thereon, arising under a Subordinated Loan Agreement, dated as of March 10,
1997, as amended, between the Company and Canterbury Mezzanine Capital, L.P.
("Canterbury Capital") incurred in connection with Canterbury Capital's
investment in the Company. Canterbury Capital is a selling stockholder in the
offering being made hereby. See "Certain Transactions" and "Principal and
Selling Stockholders." The balance of the net proceeds to the Company of the
offering will be utilized for working capital and general corporate purposes.
See "Risk Factors -- Management Discretion Concerning Use of Proceeds; Ability
to Raise Additional Capital." Pending application for the foregoing uses, the
net proceeds will be invested in short-term U.S. Treasury securities,
certificates of deposit, commercial paper, investment grade, interest-bearing
securities and/or other short-term investments.

The Company will not receive any proceeds from the sale of the shares of
Common Stock by the Selling Stockholders. See "Principal and Selling
Stockholders."

DIVIDEND POLICY

The Company has never declared or paid dividends on its capital stock and
currently intends to retain all future earnings, if any, for use in the
operations of its business and does not anticipate paying any cash dividends in
the foreseeable future. The Company's future dividend policy will be determined
by its Board of Directors on the basis of various factors, including the
Company's results of operations, financial condition, capital requirements and
investment opportunities. The Company's existing senior and subordinated loan
agreements prohibit the payment of cash dividends, but, as noted under "Use of
Proceeds", except for the Company's revolving facility, all outstanding
indebtedness under such existing senior and subordinated loan agreements is to
be repaid upon consummation of this offering.

14
<PAGE> 19

CAPITALIZATION

The following table sets forth the short-term debt and capitalization of
the Company as of September 26, 1997, adjusted to reflect (i) the sale by the
Company of 1,050,000 shares of Common Stock offered hereby at an assumed initial
public offering price of $15.00 per share; (ii) the application of the estimated
net proceeds to be received by the Company from the sale of the Common Stock
offered by the Company hereby; (iii) repayment of a part of the current portion
of certain long-term debt subsequent to September 26, 1997 but prior to
consummation of this offering; and (iv) the increase in the authorized and
outstanding capital stock of the Company effected subsequent to September 26,
1997. See "Use of Proceeds."

<TABLE>
<CAPTION>
SEPTEMBER 26, 1997
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt:
LaSalle Credit Agreement -- revolving facility...................... $ 1,920 --
Current portion of long-term debt(1)................................ 2,500 --
-------- --------
Total short-term debt....................................... $ 4,420 --
======== ========
Long-term debt:
TRW Subordinated Promissory Note.................................... $ 3,000 --
Canterbury Junior Subordinated Note Payable(2)...................... 2,826 --
LaSalle Credit Agreement............................................ 4,900 --
-------- --------
Total long-term debt........................................ 10,726 --
Stockholders' deficit:
Preferred Stock, $.10 par value; 5,000,000 shares authorized, as
adjusted; no shares issued and outstanding....................... -- --
Common Stock, $.01 par value; 20,000,000 shares authorized, as
adjusted; 9,616,667 shares issued and outstanding, actual;
10,666,667 shares issued and outstanding, as adjusted(3)......... 96 107
Additional paid-in capital.......................................... 7,104 20,441
Accumulated deficit(4).............................................. (26,982) (28,108)
Total stockholders' deficit................................. (19,782) (7,560)
-------- --------
Total capitalization........................................ $ (9,056) $ (7,560)
======== ========
</TABLE>

- ---------------
(1) See Note 6 of the Notes to Financial Statements.

(2) Includes unamortized discount of $173,750.

(3) Excludes 655,000 shares of Common Stock issuable upon exercise of options
that the Company intends to grant under the Company's 1997 Stock Option Plan
immediately prior to the commencement of this offering at an exercise price
equal to the initial public offering price per share of the Common Stock
being offered hereby. See "Management -- Stock Option Plan."

(4) In connection with the repayment of long-term debt, unamortized discount
(including the unamortized discount described in note (2) above) and
unamortized debt issuance costs aggregating approximately $1.1 million at
September 26, 1997 will be written off in the quarter in which the offering
is completed as an extraordinary item -- loss on early extinguishment of
debt.

15
<PAGE> 20

DILUTION

The net tangible book value of the Company as of September 26, 1997 was
$(53,958,000), or $(5.61) per share. Net tangible book value per share
represents the amount of total tangible assets less total liabilities of the
Company, divided by the number of shares of Common Stock outstanding after
giving effect to the sale of the 1,050,000 shares of Common Stock offered by the
Company hereby (at an assumed initial public offering price of $15.00 per share
and after deduction of estimated underwriting discounts and commissions and
offering expenses payable by the Company). After giving effect to the
application of the estimated net proceeds to the Company from the initial public
offering, the pro forma net tangible book value of the Company at September 26,
1997 would have been $(40,783,000), or $(3.82) per share. This represents an
immediate increase in such net tangible book value of $1.79 per share to
existing stockholders and an immediate dilution of $18.82 per share to new
investors purchasing shares in this offering. The following table illustrates
this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $15.00
------
Net tangible book value per share before offering......... $(5.61)
Increase attributable to new investors.................... 1.79
------
Pro forma net tangible book value per share after the
offering(1)............................................... (3.82)
------
Dilution per share to new investors......................... $18.82
======
</TABLE>

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

(1) Excludes 655,000 shares of Common Stock issuable upon exercise of options
that the Company intends to grant under the Company's 1997 Stock Option Plan
immediately prior to the commencement of this offering at an exercise price
equal to the initial public offering price per share of the Common Stock
being offered hereby. See "Management -- Stock Option Plan."

The following table summarizes, on a pro forma basis as of September 26,
1997, the differences between existing stockholders and new investors with
respect to the number of shares of Common Stock purchased from the Company, the
total consideration paid to the Company, and the average consideration paid per
share (based upon an assumed initial public offering price of $15.00 per share
and before deduction of the estimated underwriting discounts and commissions and
the expenses of the offering payable by the Company).

<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION
----------------------- -------------------- AVERAGE PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ---------- ------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders............. 9,616,667 90.2% $ 7,200 31.4% $ 0.75
New investors..................... 1,050,000 9.8 15,750 68.6 $ 15.00
---------- ---------- ------- ----------
Total................... 10,666,667 100.0% $22,950 100.0%
========= ======== ======= ========
</TABLE>

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

(1) Sales by the Selling Stockholders in this offering will reduce the number of
shares of Common Stock held by existing stockholders to 5,166,667 , or
approximately 48.4% (4,341,667, or approximately 40.7%, if the Underwriters'
over-allotment option is exercised in full), of the total number of shares
of Common Stock outstanding, and will increase the number of shares of
Common Stock held by new investors to 5,500,000, or approximately 51.6%
(6,325,000, or approximately 59.3%, if the Underwriters' over-allotment
option is exercised in full), of the total number of shares of Common Stock
outstanding after this offering.

16
<PAGE> 21

SELECTED FINANCIAL DATA

The following selected financial information at September 30, 1995,
September 27, 1996 and September 26, 1997 and for each of the three fiscal years
in the period ended September 26, 1997 has been derived from the financial
statements of the Company that have been audited by Coopers & Lybrand L.L.P.,
independent auditors, included herein. The Predecessor Company revenue
information for each of the two fiscal years in the period ended December 31,
1993 and the revenue information for the six-month period ended June 30, 1994
(collectively, the "Predecessor Financial Information") was provided to the
Company by TRW at the time that the Company purchased certain of the assets of
TRW's credit reporting and monitoring business in October 1994 (the
"Acquisition"). The Predecessor Financial Information is unaudited, was not
prepared on the same basis as the post-Acquisition financial information for the
Company and, in the opinion of management, may not include all adjustments
necessary under generally accepted accounting principles ("GAAP") for a fair
presentation of the Company's operating results for the periods covered thereby.
The selected financial information set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and Notes included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
COMPANY
PREDECESSOR COMPANY ------------------------------------
----------------------------------------
FISCAL YEARS ENDED SIX-MONTH FISCAL YEARS
DECEMBER 31,(1)(2)(3) PERIOD ENDED ENDED SEPTEMBER(1)
------------------------- JUNE 30, ------------------------------------
1992 1993 1994(2)(3) 1995 1996 1997
----------- ----------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)

<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND NUMBER OF MEMBERS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues
Membership fees............... $27,759 $24,976 $ 11,022 $ 12,540 $ 24,556 $ 38,039
Operating expenses
Marketing..................... * * * 4,854 22,605 14,197
Membership servicing.......... * * * 4,128 12,999 10,852
General and administrative.... * * * 8,102 10,214 10,135
------- ------- ------- ------- ---------- ----------
Total operating
expenses............. * * * 17,084 45,818 35,184
------- ------- ------- ------- ---------- ----------
Operating income (loss)......... * * * (4,544) (21,262) 2,855
Interest expense................ * * * 1,239 1,185 1,455
------- ------- ------- ------- ---------- ----------
Income (loss) before provision
for income taxes and
extraordinary item............ * * * (5,783) (22,447) 1,400
------- ------- ------- ------- ---------- ----------
Provision for income taxes...... * * * -- -- 61
Income (loss) before
extraordinary item............ * * * (5,783) (22,447) 1,339
------- ------- ------- ------- ---------- ----------
Extraordinary item: Loss on
early extinguishment of debt,
net of income tax benefit..... * * * -- -- 91
------- ------- ------- ------- ---------- ----------
Net income (loss)............... * * * $ (5,783) $ (22,447) $ 1,248
======= ======= ======= ======= ========== ==========
Net income (loss) per share..... * * * $ (0.60) $ (2.33) $ 0.13
Weighted average common and
common equivalent shares
outstanding................... * * * 9,616,667 9,616,667 9,616,667
OTHER DATA:

Total members at end of
period........................ (4) (4) (4) 613,000 828,000 1,385,000
</TABLE>

17
<PAGE> 22

<TABLE>
<CAPTION>
PREDECESSOR COMPANY
---------------------------------------- COMPANY
---------------------------------------------
DECEMBER 31,(1)(2)(3) JUNE 30, SEPTEMBER 30, SEPTEMBER 27, SEPTEMBER 26,
1992 1993 1994(2)(3) 1995(1) 1996(1) 1997(1)
----------- ----------- ------------ ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:(2)
Cash and cash
equivalents............. * * * $ 7,970 $ 1,613 $ 413
Total assets.............. * * * 33,093 27,552 41,412
Total liabilities......... * * * 34,876 51,782 61,194
Stockholders' deficit..... * * * (1,783) (24,230) (19,782)
</TABLE>

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

(1) The Company's fiscal year ends on the last Friday of September of each year.
The Company's quarterly periods are each comprised of 13 weeks and end on
the last Friday of each fiscal quarter. The first month of each quarter is
comprised of five weeks, and each of the two remaining months of the quarter
is comprised of four weeks. In 1993 and 1994, TRW's fiscal year ended on
December 31 of each such year.

(2) In October 1994, the Company purchased certain assets of its credit
reporting and monitoring business from TRW, which had conducted the business
under the name Consumer Information Services (the "CIS Business").
Accordingly, the Company does not have its own accounting records pertaining
to the CIS Business for periods prior to October 1994. The Company does
have, and has provided, revenue data for certain periods prior to the
Acquisition as set forth in the table above under Statement of Operations
Data; however, revenue and other data for the period from June 30, 1994 to
the date of the Acquisition is unavailable to the Company. Furthermore, for
the reasons discussed below, the Company believes that the revenue data
presented above does not provide a basis for evaluating any trend material
to the Company's financial condition or results of operations, is not
comparable to the revenue data presented for the periods after the
Acquisition and may not be indicative of the Company's future financial
condition or results of operations. GAAP requires the Company to defer
revenue received from members upon their becoming members or renewing their
memberships and to recognize revenue over the term of the memberships. The
Company's understanding, based upon the information obtained by the Company
from TRW at the time of the Acquisition, is that TRW did not produce
separate balance sheets in conducting the CIS Business. For this reason, the
Company is not in a position to furnish balance sheet data reflecting the
financial condition of the CIS Business for periods prior to October 1994.
The Company believes, based upon its own experience in conducting its
business, that regular periodic analysis of balance sheet data, including
deferred revenue and cash balances, is essential to assuring that revenues
are accurately calculated in accordance with GAAP. Furthermore, since the
Company does not have deferred revenue amounts available for the beginning
and ending balance sheet dates corresponding to the periods prior to the
Acquisition, the Company is unable to assess the comparability of the
revenue data for those periods. Moreover, the Company has no information
regarding and is unable to determine the manner in which TRW treated
important revenue recognition matters such as amortization of multi-year
memberships, treatment of membership cancellation allowances and recognition
of revenue for memberships that commence mid-month. Finally, it is the
Company's understanding that, for the pre-Acquisition periods shown above,
TRW operated the business in a manner that was intended to maximize cash
flow by focusing on revenues from membership renewals, while reducing
marketing costs by not actively seeking to acquire new members. The Company
believes that, because its strategy is to increase its membership base, the
revenue data for the pre-Acquisition period is not indicative of any trend
material to its business and is not comparable to the revenue data presented
above for post-Acquisition periods.

(3) Based upon information obtained by the Company from TRW at the time of the
Acquisition, the Company believes that: the CIS Business was operated as a
relatively small part of a division of TRW; the CIS Business was not treated
as a separate accounting entity by TRW; TRW did report, for internal TRW
management purposes, data concerning direct revenues, direct expenses,
certain allocated expenses and numbers of members; however, a number of
material expenses were not charged to the CIS Business and such omitted
expenses included interest expenses, the expenses of the credit reports
provided to members, pre-screening marketing expenses, executive office
expenses, finance and accounting function

18
<PAGE> 23

expenses, bonuses, benefits administration expenses, insurance expenses and
legal expenses, and may include other omitted expenses of which the Company
is unaware; and the foregoing omitted expenses could not at the time of the
Acquisition be separately compiled. Based upon the foregoing, the Company
believes that it cannot provide data regarding pre-Acquisition income or
expenses that is meaningful to investors.

(4) The Company has no membership data for 1992. The membership data provided to
the Company by TRW at the time of the Acquisition indicated membership
levels of 968,000, 798,000 and 648,000 at January 1993, July 1993 and July
1994, respectively. In connection with the Acquisition, TRW represented to
the Company that there were no fewer than 620,000 members as of August 8,
1994. The Company is unable to determine the methodology used by TRW to
generate this data and therefore is unable to verify the accuracy of this
data. As discussed above, it is the Company's understanding that TRW
operated the business in a manner that was intended to maximize cash flow by
focusing on revenues from membership renewals while reducing marketing costs
by not actively seeking to acquire new members. The Company's strategy is to
increase its membership base and therefore the Company believes that the
membership data presented in this footnote does not reflect any trends
material to the Company's business, is not comparable to post-Acquisition
membership data and is not indicative of the Company's future financial
condition or results of operations.

19
<PAGE> 24

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

BACKGROUND

The consumer credit information and monitoring business conducted by the
Company was started in 1986 by a division of TRW. In October 1994, the Company
commenced operations when it purchased certain assets of that business from TRW.
During the course of the fiscal year ended September 30, 1995, the Company
focused its efforts on establishing the Company's infrastructure, including
rental and relocation of the Company's headquarters, the establishment of
management systems and procedures and the hiring of additional customer service
representatives and related expenditures to expand the customer service center.
During such period, the Company did not actively pursue new membership
acquisitions to the extent necessary to offset the loss of non-renewing members.
As a result, its membership base remained flat at approximately 600,000 members.
During the fiscal year ended September 27, 1996, the Company engaged in a
strategy of unendorsed marketing, which entailed soliciting new members without
the benefit of a co-marketer endorsement. Management believes this strategy was
not successful and yielded poor consumer response rates because it lacked the
benefit of a co-marketer's brand name and endorsement and the associated credit
card billing and collection mechanism.

In October 1996, the Company hired a new management team which redirected
the Company's efforts toward an endorsed marketing strategy. Implementation of
this new strategy has resulted in more effective marketing campaigns, a
significant increase in the number of the Company's co-marketing relationships
and in its membership base. At September 26, 1997, the Company had 29
co-marketers, as compared to 13 at September 27, 1996. During this same period,
the Company's membership base increased to approximately 1.4 million members
from approximately 828,000 members. As a result, during the fiscal year ended
September 26, 1997, the Company generated net income of $1.3 million as compared
to a net loss of $22.4 million generated during the fiscal year ended September
27, 1996. See "-- Results of Operations".

The low consumer response rate resulting from the unendorsed marketing
campaigns conducted by the Company during fiscal year 1996 resulted in
significant losses for the Company. Under GAAP, the direct cost of a successful
marketing program is generally amortized over the initial membership term of the
members solicited in that campaign. However, because the costs of these
unendorsed marketing campaigns exceeded the revenues generated by such
campaigns, the Company was required by GAAP to write off the excess costs during
fiscal year 1996. Further contributing to the Company's losses for that fiscal
year were increased operating expenditures incurred in anticipation that the
unendorsed marketing campaigns would increase the Company's membership base and
revenues to levels significantly higher than those actually achieved.

OVERVIEW

The Company's revenues are principally derived from the sale of new
memberships and the renewal of existing memberships. New memberships are
typically offered with a free 30-day trial period. The Company's programs are
offered at prices ranging from $29 to $99 per year, depending upon the features
offered. As of the date of this prospectus, for each program, the fee charged
for renewal of a membership is the same as the fee charged for the initial
membership. The Company receives payment of the membership fees following
expiration of the 30-day trial membership period, but only recognizes revenue
with respect to the payment ratably over the membership period beginning at the
end of the free 30-day trial period.

If the membership is not cancelled during the trial period, the member is
charged the annual membership fee. During the course of the first year of
membership, a member is free to cancel his or her membership in the program for
a complete refund of the membership fee. Subsequently, the member may cancel his
or her renewed membership at any time for a pro rata refund of the membership
fee. If members elect to cancel multi-year memberships, they receive a full
refund during the first year of their membership, a 50% refund during the second
year of their membership and no refund if they cancel during the third year of
membership. The Company provides allowances for membership cancellations and
recognizes revenue net of such allowances. The Company's allowance policies are
based on historical results and are reviewed periodically. Historically,

20
<PAGE> 25

between 45% and 60% of new members cancel their memberships within their initial
membership term (including cancellations during the 30-day trial period). Of the
remaining 40% to 55% of the new members who do not cancel during the initial
membership term, approximately 70% renew their membership for an additional
membership term. There can be no assurance that these cancellation rates will
not increase in the future. Membership fees refunded as a percentage of
membership fees collected during the year increased from 8.4% in 1995 to 21.4%
in 1996 and 35.17% in 1997 (see Note 7 to the Financial Statements). This
increase resulted from the reduction of renewal revenues as a percentage of
total revenues as the Company increased its marketing activities which resulted
in an increase in new memberships as a percentage of total memberships.
Cancellation rates with respect to renewal memberships tend to be lower than
those associated with initial memberships, and, therefore, during periods when
the Company increases its membership base, membership fees refunded as a
percentage of total membership fees collected tends to increase. Furthermore,
there was a change in the mix of the Company's new business activity, with an
increase in telemarketing sales relative to direct mail which has comparatively
lower cancellation rates.

A substantial portion of the Company's total operating expenses consist of
costs incurred in connection with the acquisition of new members. These costs,
including the cost of commissions payable to co-marketers, the costs of printing
and mailing membership solicitation materials for each program and the costs of
providing new member fulfillment kits, are amortized ratably over the program's
initial one- or three-year membership period, respectively. Accordingly, since
the majority of the Company's costs associated with a membership are generally
recognized during the initial membership period, the Company generates higher
gross margins on revenue generated by renewal memberships. The Company
calculates its membership renewal rate for any period by dividing the number of
members who renew their membership during that period (and who remain members 90
days after such renewal) by the total number of members whose memberships are
due for renewal in that period and such calculation excludes all membership
cancellations prior thereto. As discussed above, since the Company's inception
in 1994, its membership renewal rate has remained relatively constant at
approximately 70%. There can be no assurance that this renewal rate will
continue in the future.

The Company's membership base has grown significantly in the last year. At
September 26, 1997, the Company had approximately 1.4 million members, as
compared to approximately 828,000 members at September 27, 1996. The size of the
Company's membership base is a significant factor in determining anticipated
membership renewal income.

In addition to overall economic and industry factors which can affect the
Company, the profitability of the Company's business depends in large part upon
(i) the net response rate for direct mail solicitations of new memberships, (ii)
the net sales per hour for telemarketing solicitations of new memberships, (iii)
the costs associated with direct mail and telemarketing solicitations, (iv) the
costs associated with the fulfillment of new memberships, (v) the adequacy of
reserves against membership cancellations, (vi) the continued renewal rate of
memberships in accordance with historical experience, and (vii) the maintenance
of selling, general and administrative expenses at acceptable levels relative to
the Company's revenues and income.

21
<PAGE> 26

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain items on
the Company's Statement of Operations as a percentage of revenues:

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
SEPTEMBER
----------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues
Membership fees............................................... 100% 100% 100%
Operating expenses
Marketing..................................................... 39 92 37
Membership servicing.......................................... 33 53 29
General and administrative.................................... 65 42 27
--- --- ---
Total operating expenses........................................ 137 187 93
--- --- ---
Operating income (loss)......................................... (37) (87) 7
Interest expense................................................ 10 5 4
--- --- ---
Income (loss) before provision for taxes........................ (47) (92) 3
Provision for income taxes...................................... -- -- --
--- --- ---
Income (loss) before extraordinary item......................... (47)% (92)% 3 %
=== === ===
</TABLE>

FISCAL YEARS ENDED SEPTEMBER 1997 AND 1996

Revenue. Revenue increased by 55% to $38.0 million in fiscal year 1997
from $24.6 million in fiscal year 1996 due to a net increase in the Company's
membership base and, to a lesser extent, an increase in the price charged by the
Company for its Credentials program. The Company's membership base increased to
approximately 1.4 million members at September 26, 1997 from approximately
828,000 members at September 27, 1996. The increase in members resulted from an
increase in the number of solicitations made by the Company through existing
co-marketers and the addition of new co-marketers, principally Chase and PNC
National Bank, N.A. ("PNC"). Approximately 85.5% of the increase in the
Company's membership base resulted from solicitations made to credit card
holders of Chase and Bank One. During this period, the Company mailed
approximately 42.2 million pieces of mail solicitations (excluding inserts and
envelope attachments mailed along with a co-marketer's correspondence) compared
to approximately 20.2 million pieces mailed during fiscal year 1996. Revenue
derived from membership renewals increased to $24.7 million in fiscal year 1997
from $18.8 million in fiscal year 1996. As a percentage of revenues, however,
revenues derived from renewals decreased to 64.8% in fiscal year 1997 from 76%
in fiscal year 1996.

Marketing Expenses. Marketing expenses consist of membership solicitation
costs, including direct mail expenses such as printing and postage,
telemarketing expenses and commissions paid to co-marketers. Marketing expenses
decreased by 37% to $14.2 million in fiscal year 1997 from $22.6 million in
fiscal year 1996. As a percentage of revenues, marketing expenses decreased to
37% in fiscal year 1997 from 92% in fiscal year 1996. This decrease was due to
the fact that, in accordance with GAAP, certain marketing expenses associated
with unprofitable, unendorsed marketing campaigns were written off during fiscal
year 1996 rather than amortized over the initial membership term. Also written
off were expenses that could not be associated with specific marketing
campaigns. In addition, the decrease was caused by operating costs and severance
costs incurred in fiscal year 1996 related to an in-house telemarketing
department which the Company began during early fiscal year 1996 and
subsequently discontinued in late fiscal year 1996. This decrease was also due
to lower per member solicitation costs resulting from reductions achieved in per
unit mailing and printing costs and more favorable response rates.

Membership Servicing Expenses. Membership servicing expenses consist of
the costs of providing customer service, data processing costs, and the costs of
providing members with inquiry notices, newsletters,

22
<PAGE> 27

additional credit reports and new member fulfillment kits. Membership servicing
expenses decreased by 17% to $10.9 million in fiscal year 1997 from $13.0
million in fiscal year 1996. As a percentage of revenues, membership servicing
expenses decreased to 29% in fiscal year 1997 from 53% in fiscal year 1996. This
decrease was due to the fact that certain expenses associated with the provision
of new member fulfillment kits related to the unprofitable unendorsed marketing
campaigns were written off during fiscal year 1996 rather than amortized over
the initial membership term.

General and Administrative Expenses. General and administrative expenses
consist of personnel and facilities expenses associated with the Company's
executive, sales, marketing, finance, program and co-marketing account
functions, costs associated with new product development, as well as
depreciation of fixed assets and amortization of intangibles, including
memberships purchased from TRW. General and administrative expenses decreased by
1% to $10.1 million in fiscal year 1997 from $10.2 million in fiscal year 1996.
In fiscal year 1996, expenses included a one-time write off of fees related to
an aborted refinancing. The absence of a similar write off in fiscal year 1997
was offset in fiscal year 1997 by higher costs associated with new product
development, depreciation of the Company's new computer system, and hiring of
additional personnel to implement the Company's endorsed marketing strategy. As
a percentage of revenue, general and administrative expenses decreased to 27% in
fiscal year 1997 from 42% in fiscal year 1996. This decrease is largely
attributable to the increase in revenues in fiscal year 1997 relative to fiscal
year 1996.

Interest Expense. Interest expense consists of financing charges related
to notes payable, the Company's revolving bank loan facility, subordinated loan
facility and equipment leases. Interest expense increased by 23% to $1.5 million
for fiscal year 1997 from $1.2 million during fiscal year 1996. The increase
reflects higher levels of borrowing to finance increased marketing activity and
prior year operating losses.

Provision for Income Taxes. For the fiscal year ended September 26, 1997,
the Company reported a provision for income taxes of $61,000 (the amount
equivalent to the income tax benefit of the extraordinary loss on early
extinguishment of debt). No additional income tax provision was made during this
period due to the utilization of net operating loss carryforwards. The Company
did not record a provision for income taxes in fiscal year 1996 due to the
incurrence of a net loss. The Company did not record a benefit for income taxes
during this period since the Company provided a full valuation allowance on the
related deferred income tax asset.

FISCAL YEARS ENDED SEPTEMBER 1996 AND 1995

Revenue. Revenues increased by 96% to $24.6 million in fiscal year 1996
from $12.5 million in fiscal year 1995 due primarily to the effect of accounting
for the Company's purchase of the membership base from TRW. In fiscal year 1995,
the Company was not able to recognize any portion of the membership fees
collected by TRW prior to the Acquisition relating to memberships that continued
after the Acquisition. Ordinarily, the Company would have recognized the revenue
generated by those memberships over the full membership period. This increase in
the Company's revenue was also due to an increase in the Company's membership
base primarily resulting from an increase in new marketing programs. The
Company's membership base increased to approximately 828,000 members at
September 27, 1996 from approximately 613,000 members at September 30, 1995.
During fiscal year 1996, the Company mailed approximately 20.2 million pieces of
mail solicitations compared to approximately 7.0 million pieces mailed during
fiscal year 1995. Revenue derived from membership renewals increased to $18.8
million in fiscal year 1996 from $10.5 million in fiscal year 1995. As a
percentage of revenues, revenues derived from renewals decreased to 76% in
fiscal year 1996 from 84% in fiscal year 1995.

Marketing Expenses. Marketing expenses increased by 366% to $22.6 million
in fiscal year 1996 from $4.9 million in fiscal year 1995. As a percentage of
revenues, marketing expenses increased to 92% in fiscal year 1996 from 39% in
fiscal year 1995. This increase was due to the fact that, in accordance with
GAAP, certain expenses related to the unprofitable unendorsed marketing programs
were written off during fiscal year 1996 rather than amortized over the initial
membership term. The increase is also attributable to operating costs and
severance costs incurred in fiscal year 1996 related to an in-house
telemarketing department which the Company began during early fiscal year 1996
and subsequently discontinued in late fiscal year 1996. In

23
<PAGE> 28

addition, this increase was due to an increase in both costs associated with the
solicitation of new members through direct mail and telemarketing channels as
well as commissions paid to co-marketers.

Membership Servicing Expenses. Membership servicing expenses increased by
215% to $13.0 million in fiscal year 1996 from $4.1 million in fiscal year 1995.
In fiscal year 1995, these expenses did not reflect the full cost of servicing
the membership base as a result of an accounting provision related to the
purchase of the membership base from TRW. Since the Company was obligated to
service these members for the remaining portions of their respective membership
terms, a provision relating to these costs was established and $4.2 million of
related expenses were charged to this provision. As a percentage of revenues,
membership servicing expenses increased to 53% in fiscal year 1996 from 33% in
fiscal year 1995. This increase resulted from the fact that certain expenses
associated with the provision of new member fulfillment kits related to the
unendorsed marketing campaigns were written off during fiscal year 1996 rather
than amortized over the initial membership term. In addition, this increase was
due to an increase in the Company's membership base during fiscal year 1996.

General and Administrative Expenses. General and administrative expenses
increased by 26% to $10.2 million in fiscal year 1996 from $8.1 million in
fiscal year 1995. The increase was due to the write off of fees and other
expenses related to an aborted refinancing, hiring of additional personnel in
the unendorsed marketing area and consulting fees incurred during fiscal year
1996. As a percentage of revenues, general and administrative expenses decreased
to 42% in fiscal year 1996 from 65% in fiscal year 1995. This decrease was
substantially attributable to the increase in revenue in fiscal year 1996
relative to fiscal year 1995.

Interest Expense. Interest expense decreased by 4% to $1 million in fiscal
year 1996 from $1.2 million in fiscal year 1995 due to the repayment of a
portion of the outstanding principal due under the Company's term loan.

Provision for Income Taxes. The Company made no provision for income taxes
for fiscal years 1996 and 1995, respectively, due to its incurrence of net
losses in such fiscal years. The Company did not record a benefit for income
taxes in either year since it provided a full valuation allowance for the
related deferred income tax asset.

SELECTED QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited quarterly statements of
operations data for each of the eight quarters in the period ended September 26,
1997 and the percentage of the Company's revenues represented by each item in
the respective quarter. In the opinion of the Company's management, this
unaudited information has been prepared on a basis consistent with the audited
Financial Statements appearing elsewhere in the Prospectus and includes all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the information set forth therein when read in conjunction with
the Financial Statements and related Notes thereto. The operating results for
any quarter are not necessarily indicative of results for any future period.

<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------
FISCAL YEAR 1996 FISCAL YEAR 1997
------------------------------------- -------------------------------------
DEC. 29 MAR. 29 JUNE 28 SEP. 27 DEC. 27 MAR. 29 JUNE 27 SEP. 26
1995 1996 1996 1996 1996 1997 1997 1997
------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues............................. $4,630 $5,528 $6,933 $ 7,465 $8,357 $9,463 $9,774 $10,445
Operating income (loss).............. (4,353) (5,458) (4,681) (6,770) 930 1,005 187 733
Net income (loss).................... (4,653) (5,730) (5,002) (7,062) 461 627 (171) 331
</TABLE>

<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------
FISCAL YEAR 1996 FISCAL YEAR 1997
-------------------------------------- -------------------------------------
DEC. 29 MAR. 29 JUNE 28 SEP. 27 DEC. 27 MAR. 29 JUNE 27 SEP. 26
1995 1996 1996 1996 1996 1997 1997 1997
------- ------- ------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues........................... 100% 100% 100% 100% 100% 100% 100% 100%
Operating income (loss)............ (94) (99) (68) (91) 11 11 2 7
Net income (loss).................. (100) (104) (72) (95) 6 7 (2) 3
</TABLE>

24
<PAGE> 29

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities was $4.5 million and $4.4 million in
fiscal years 1997 and 1996, respectively. In fiscal year 1997, the use of cash
reflected increases in member solicitations and in receivables. In fiscal year
1996, the use of cash reflected the results of unprofitable unendorsed marketing
programs. The Company's capital expenditures in fiscal year 1997 and fiscal year
1996 were $1.7 million and $1.4 million, respectively. These expenditures, for
both periods, primarily resulted from the implementation of the Company's new
computer system. The Company has budgeted approximately $0.8 million in capital
expenditures for fiscal year 1998 to expand its telecommunications and computer
capabilities to service an expanding membership base.

The Company had cash and cash equivalents of approximately $0.4 million at
September 26, 1997. The Company is currently negotiating the terms of and an
increase in its revolving bank line of credit from $2.5 million to $10.0 million
to be effective upon completion of the offering made hereby. The existing line
of credit bears interest based upon LIBOR/prime rate and expires on September
30, 1999. At September 26, 1997, $1.9 million was outstanding under the then
existing line of credit. In October 1997, such outstanding amounts were repaid
in full. Borrowings on the Company's revolving line of credit are based upon the
level of eligible accounts receivable.

In connection with the repayment of long-term debt, unamortized discount
and unamortized debt issuance cost aggregating approximately $1.1 million at
September 26, 1997 will be written off in the quarter in which the offering is
completed as an extraordinary item -- loss on early extinguishment of debt.

The Company intends to use its existing cash balances, funds generated from
operations and borrowings available under the Company's revolving bank line of
credit to address its cash requirements, and to fund the development of new
membership programs and new marketing channels. The Company intends to use the
net proceeds to the Company from this offering to repay certain outstanding
indebtedness. The Company believes that, as the volume of revenues attributable
to renewal members increases, such increase will help to generate net cash from
operating activities, and thereby minimize its need for financing from outside
sources. The Company believes that the net proceeds to the Company from this
offering, together with its cash balances following completion of the offering,
funds generated from operations, and borrowing available under the Company's
revolving bank line of credit, will be sufficient to meet its capital and
liquidity requirements for the next 36 months, barring unforeseen changes in the
Company's business.

NET OPERATING LOSS CARRYFORWARDS

As of September 26, 1997, the Company had net operating loss carryforwards
for Federal and state purposes of approximately $23,199,312 and $21,057,969,
respectively. The net operating loss carryforwards begin to expire after the
years ended 2010 and 2003, respectively. Because of the "change in ownership"
provisions of the Tax Reform Act of 1986, the loss carryforwards will be subject
to an annual limitation regarding their utilization against future taxable
income.

25
<PAGE> 30

BUSINESS

OVERVIEW

The Company markets its membership programs to consumers using direct
marketing techniques, consisting of direct mail and telemarketing campaigns
conducted through endorsed co-marketing relationships with major credit card
issuers that have a large customer base, such as banks, retailers and oil
companies. Through its co-marketing relationships, the Company markets its
programs to the credit card customer bases of nationally-known organizations
such as The Chase Manhattan Bank USA, N.A., Bank One, N.A. and its affiliates
(including the recently merged First USA Bank credit card customer base), PNC
National Bank, N.A., Service Merchandise and Sun Company, Inc. (Sunoco). During
the fiscal year ended September 26, 1997, the Company increased the number of
its co-marketers to 29 from 13 at September 27, 1996. During this period, the
Company's membership base increased to approximately 1.4 million members from
approximately 828,000 members. In addition, the Company entered into a new
co-marketing agreement with the credit card division of Citibank, N.A. in
October 1997 and commenced initial direct marketing activities to Citibank's
credit card holders in November 1997.

The consumer credit information and monitoring business conducted by the
Company was started in 1986 by a division of TRW. In October 1994, the Company
purchased certain assets of the business from TRW. In September 1996, TRW sold
its credit bureau and credit reporting business, and that business was
subsequently renamed Experian Inc. At the time of the Acquisition in 1994, the
Company entered into a ten-year contract with TRW pursuant to which the Company
has access to Experian's credit reports and daily access to the national
Experian credit file. The Company's information systems are integrated with
Experian's database and systems, enabling the Company to automatically notify a
member when an inquiry is made into the member's personal credit file. The
Company believes that this feature constitutes a substantial competitive
advantage with respect to developing co-marketing relationships and building its
membership base.

CREDIT CARD ENHANCEMENT INDUSTRY BACKGROUND

The Company believes that membership service programs can be of substantial
value to members who purchase the programs, to credit card issuer businesses
which co-market these programs and to the vendors whose services are offered
through the program. Benefits to co-marketers include the ability to build
consumer loyalty with existing customers, as well as to generate additional,
predictable revenues such as commission and fee income. For product and service
vendors, membership service programs represent an opportunity to generate
additional revenue with minimal incremental marketing costs for products and
services.

Historically, a substantial number of the businesses which utilized
membership service programs have been issuers of credit cards. More recently,
however, other businesses, including banks, retailers, insurance companies,
mortgage servicing companies, utility companies, regional telephone companies,
cable operators and non-profit organizations have also begun to offer service
programs as a means of offering value-added products and services to their
customers. In many cases, these businesses lack the core competency to
successfully design, market and manage membership programs. As a result, these
businesses seek to outsource such functions to companies which specialize in
such membership programs and can apply advanced database

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systems to capture, process and store consumer and market information, and that
can provide effective programs.

Based upon industry statistics, the Company estimates that in the United
States in 1996 there are over 1.4 billion credit cards issued, over 147 million
credit card holders, and the Company estimates that there are approximately 88
million credit card enhancement memberships outstanding. In addition to
membership programs such as those provided by the Company, credit card
enhancement products and services include various types of insurance sold to
credit card holders, memberships in discount purchasing clubs and organizations,
credit card registration services, travel clubs, dining clubs, shopping clubs
and auto clubs. The Company also estimates, based upon its own membership data
and industry statistics, that as of the end of fiscal year 1996 there were over
3.3 million credit information and monitoring memberships, such as those offered
by the Company and its competitors. The Company believes that the size of the
credit card holder population represents a potential opportunity for continued
growth of its membership base because less than 3.0% of credit card holders have
purchased a credit information membership program. Moreover, the Company
believes that long-term growth in consumer credit potentially should cause
growth in the Company's core business in two distinct ways, first by providing
additional channels by which the Company's products may be marketed to
consumers, and second by increasing consumer demand for credit-related
information.

BUSINESS STRATEGY

Grow and Maintain Membership Base By Offering Premium Quality
Programs. The Company's objective is to build and maintain its membership base
by continuing to provide its core value-added consumer credit programs. The
Company believes that its programs are superior to the programs offered by its
competitors because it provides its members with: (i) immediate notification of
inquiries into the member's credit file; (ii) free unlimited credit reports; and
(iii) additional credit reports in a manner that avoids a credit inquiry being
reported in a consumer's credit file which may adversely affect the consumer's
creditworthiness.

Expand Distribution Channels. The Company intends to expand its network of
co-marketing relationships to include additional major banks, retailers and oil
companies, as well as to aggressively develop innovative new distribution
channels. The Company believes that its strategy of focusing its marketing
efforts on endorsed co-marketing channels enables the Company to achieve higher
rates of consumer response to its new membership solicitations by leveraging the
considerable brand equity and goodwill enjoyed by major co-marketers.
Furthermore, the Company believes that there are additional distribution
channels that offer the opportunity to expand the base of potential members
beyond the scope of consumer credit card holders. Potential co-marketing
partners may include mortgage servicing companies, insurance companies and
utility companies, such as regional telephone companies. The Company also
believes the World Wide Web may become a viable distribution channel for its
membership programs and is exploring that potential distribution opportunity. In
addition, the Company currently monitors the international expansion efforts of
its vendor partners to seek opportunities to expand its membership base
internationally.

Develop New Programs. The Company intends to continue to develop and
market new programs to current and new members. The Company has test marketed
and is continuing to develop a program targeted to small businesses which would
provide those businesses with credit information and monitoring services to
enable them to better evaluate and monitor their own credit as well as the
credit of other businesses, particularly their vendors, suppliers and customers.
This program, named Business Credentials, was tested by the Company in July and
August 1997 using in-market testing techniques targeted at certain types of
businesses selected by the Company. Preliminary response rates received and
evaluated by the Company have been favorable. The Company anticipates that it
will continue to invest in further development, refinement and preliminary
marketing of this program in fiscal year 1998. In addition, the Company is
presently test marketing a number of consumer-oriented membership programs.

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Provide Superior Levels of Customer Service. The Company is committed to
maintaining what it believes is a superior level of customer service, as
reflected by membership renewal rates and satisfaction among members and
co-marketers. The Company believes that its high level of customer satisfaction
is driven primarily by three principal factors: (i) convenience, consisting of
the timeliness and frequency of communications from the Company and
accessibility of its customer service representatives ("CSRs"); (ii) the
professionalism of its CSRs, consisting of their courtesy, expertise and
helpfulness; and (iii) report functionality, consisting of the usability of the
reports, enhanced by clean, jargon-free plain English. The Company believes that
this customer satisfaction is also evidenced by the Company's relatively high
renewal rates as compared to its competitors and that this level of customer
satisfaction reinforces its relationships with its co-marketers. The Company's
highly-trained CSRs are available to customers via toll-free telephone service
during extended business hours, and members may order additional credit reports
via an interactive voice response unit seven days a week and 24 hours a day. The
Company carefully monitors customer service benchmarks such as call response
time and length of telephone calls.

Develop and Use State-of-the-Art Technical Solutions. The Company intends
to continue developing and using advanced technological methods to solicit new
members, collect and market credit data and provide membership services.
Currently, the Company, through its membership database management system, can
model and analyze co-marketer lists to identify likely members. The Company
utilizes proprietary software which integrates the information collected from
Experian, its co-marketers and its membership data base. In addition, the
Company's strategy includes investing in state-of-the-art technology in other
key areas of its business, such as data base modeling and image processing for
the Company's membership service center.

CREDIT INFORMATION AND MONITORING PROGRAMS

The Company's program portfolio currently includes Credentials(R), Monitor,
VIP, Business Credentials and other related products. The Company's programs had
approximately 1.4 million members at September 26, 1997.

The Company's principal program, a one-year Credentials membership, is sold
for $49.00. The Company also offers certain variations of its core Credentials
program at prices ranging from $29.00 to $99.00 per membership and a three-year
Credentials membership for $98.00. For each program, the fee charged for renewal
of a membership is the same as the fee charged for the initial membership.

The Company's principal program, Credentials, provides subscribing members
with:

- personalized, easy-to-read Experian credit reports, presented in a plain
English format;

- automatic notification of credit inquiries directed to Experian;

- quarterly notice of any negative information submitted to the customer's
Experian credit file;

- a quarterly newsletter covering credit related and personal finance
issues;

- ongoing informational assistance from the Company's trained service
representatives;

- unlimited additional copies of the member's Experian credit report via
mail or facsimile; and

- upon request, a personal financial profile.

The Company believes that this information is useful to a significant
segment of the consumer population, including those who are interested in the
status of their personal creditworthiness as well as those concerned about the
accuracy of their credit reports. For example, consumers seeking a home mortgage
may want to review their credit history before applying for a mortgage loan. In
addition, the credit monitoring feature of the Credentials program is an
effective tool for detecting certain types of credit fraud.

The Company also offers certain variations to its core Credentials program.
The Monitor program offers personalized credit reports as well as the daily
automatic notification of credit inquiries, and quarterly notice of any negative
information submitted to a customer's Experian credit file. The Company
encourages the sale of Monitor memberships to spouses of current Credentials
members. The Company also offers an enhanced

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program entitled VIP for consumers interested in receiving a credit report which
includes credit data from all three of the major credit reporting bureaus.

The Company believes that its core programs are superior to the programs
offered by its competitors for the following reasons: (i) inquiry notification
service -- the integration of the Company's information systems with Experian's
systems enables the Company to automatically notify members when inquiries into
their credit file are made. The Company believes that its competitors are not
currently able to provide consumers with this feature and that this feature
represents a substantial competitive advantage to the Company; (ii) free
unlimited additional credit report requests -- unlike its competitors, the
Company does not limit the number of credit reports a member may receive; (iii)
classification of credit report requests -- the initial credit report request
and subsequent requests for additional copies of a member's credit reports are
not recorded as credit inquiries which may otherwise adversely affect a
consumer's creditworthiness. The Company believes that such requests made
through services offered by competitors of the Company are recorded in other
areas of the credit report and may be counted as credit inquiries in the
evaluation of a consumer's creditworthiness; and (iv) superior customer
service -- members have access to trained Company representatives through a
toll-free telephone service to discuss information that appears in their
personal credit file. The Company's customer service representatives have the
ability to transfer a member directly to the Experian Premier Service group for
immediate assistance, and in the event that a member suspects fraudulent
activity, the Company's customer service representatives notify Experian's fraud
group, which initiates an investigation. The Company's competitors do not have
this direct transfer capability.

Members generally subscribe for renewable one- or three-year memberships in
the Company's programs. The multi-year memberships are sold on a discounted
basis. When consumers agree to enroll in a program, in most instances they
receive a 30-day trial membership. During this time, the member may use the
program's services without obligation, as outlined in a membership brochure
received by mail along with a membership card and membership identification
number. The brochure outlines in detail the benefits which the service offers
and contains toll-free numbers which may be called to access service benefits
and information. In the event that a consumer elects not to participate in the
service, he or she can call a toll-free number during the trial period to cancel
the service without charge. If the membership is not cancelled during the trial
period, the consumer's credit card is charged the annual membership fee. During
the course of the first year of membership, a member is free to cancel a
membership in the program for a complete refund. In subsequent years, the member
may cancel his or her membership and receive a pro rata refund of his or her
annual membership fees. Multi-year members receive a full refund in year one, a
50% refund in year two and no refund if they cancel their membership in year
three.

CO-MARKETING RELATIONSHIPS

The Company's strategy is to establish and maintain long-term relationships
with co-marketers that have a large customer base. The Company seeks to
understand co-marketer business objectives and to determine how those objectives
can be addressed by the membership service programs which the Company offers.
The Company arranges with co-marketer financial institutions, retailers and
other credit card issuers to market membership programs to such co-marketers'
individual customers. Co-marketers generally receive commissions on initial and
renewal memberships. The Company's agreements with these co-marketers typically
grant the Company the right to continue providing membership services directly
to such co-marketers' individual account holders even if the co-marketer
terminates the contract, provided that the co-marketer is still entitled to
receive its commission. The Company generally may not re-solicit those members
who cancel or fail to renew their membership. At September 26, 1997, the Company
had 29 credit card issuer co-marketers, comprised of 20 banks, 6 retailers and 3
oil companies.

Approximately 30.4% of the Company's revenues for the fiscal year ended
September 26, 1997 were attributable to members solicited from the customer
lists provided by its two largest co-marketers: approximately 21.1% from
customer lists provided by Bank One (including the recently merged First USA
customer base) and approximately 9.3% from customer lists provided by Chase. No
other co-marketer represented more than 5% of the Company's revenues. At
September 26, 1997, approximately 27% of the Company's members consisted of
members who were originally solicited with the co-marketer endorsement of Chase
and approximately 25% of the Company's members consisted of members who were
originally solicited with the

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co-marketer endorsement of Bank One. For the fiscal year ended September 26,
1997, no other co-marketer with whom the Company conducted membership
solicitation campaigns accounted for more than 5% of the Company's members.
Certain of these and other co-marketer relationships are governed by agreements
which generally may be terminated without cause by either party upon 60 to 90
days' notice without penalty and upon 30 days' notice in the event of an
uncorrected material breach.

SALES AND MARKETING

The Company solicits substantially all of the members for its programs
through direct marketing methods, including direct mail and telemarketing. The
Company outsources its direct marketing and telemarketing activities to third
party vendors. During the fiscal year ended September 26, 1997, approximately
42.2 million pieces of direct mail (excluding inserts and envelope attachments
mailed along with a co-marketer's correspondence) were mailed and approximately
3.5 million telemarketing calls were completed.

The Company's membership base is predominantly comprised of members
acquired through endorsed marketing channels, such as credit card issuers. The
Company believes this marketing methodology represents the most effective way of
increasing the Company's membership base for two reasons. First, the
co-marketers' endorsement helps sell the Company's programs by leveraging the
co-marketers' brand equity with its pre-existing customers. Endorsed direct mail
solicitations are conducted using stationery that bears the co-marketer's name
and logo and include an introductory letter signed by the co-marketer offering
the product, which are mailed either with the co-marketer's billings to its
credit card holders or by separate mailings that bear the co-marketer's name and
endorsement. Endorsed telemarketing solicitations are conducted by using the
co-marketer's name to offer the program. Second, billing membership fees to a
member's credit card issued by the co-marketer is an efficient billing and
collection mechanism.

The Company obtains substantially all of the information necessary to its
marketing efforts from customer lists provided by its co-marketers. The Company
inputs these customer lists into its management system database to model,
analyze and identify likely members. Co-marketers provide the lists to the
Company for use in marketing a specific program that has been pre-approved by
the co-marketer. As a result, the Company's ability to market a new program to
an existing customer base or an existing program to a new customer base is
dependent on obtaining approval from the co-marketer.

FULFILLMENT

The Company receives consumer responses to its program solicitations from
its telemarketers and, for direct mail, from consumers. The data provided by the
consumer is entered into the Company's data systems and a membership file is
established. This data, consisting of the member's name, address, social
security number and date of birth, is used to access the member's credit file
contained in Experian's consumer database and to generate the member's credit
report. This credit report data then is converted into a readable format by
Experian and transmitted back to the Company. The Company provides its data in a
tape format to its print vendor who prints the consumer credit reports, prepares
the new member fulfillment kit and mails it to the member via first-class mail.
Typically, this process takes between four and seven business days.

MEMBER SERVICES

The Company believes that providing high quality service to its members is
an important component in encouraging membership renewals, creating goodwill
with the public sufficient to generate increased new members and strengthening
the member's affinity for the relevant co-marketer. This customer satisfaction
enhances the Company's relationship with key co-marketers. Accordingly, the
Company maintains state-of-the-art customer service systems designed to maximize
customer satisfaction through rapid and efficient provision of member services.

The Company maintains a membership service facility in Plano, Texas, with a
total of approximately 90 customer service representatives at September 26, 1997
who are available to answer members' inquiries. For the convenience of its
members, the Company maintains toll-free telephone service during extended

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business hours and provides an interactive voice response system so members may
order additional credit reports 24 hours a day, seven days a week. The Company
has implemented procedures to ensure that an inquiring member will be able to
speak with a customer service representative within approximately 20 seconds of
having made a request to do so. Furthermore, customer service representatives
have the ability to transfer a member directly to the Experian Premier Service
group for immediate assistance and, in the event that a member suspects
fraudulent activity, the Company's customer service representatives notify
Experian's fraud group, which initiates an investigation. Management believes
that the Company's competitors do not have the ability to directly transfer
their members to any of the major credit reporting bureaus. Prior to working
with members, all customer service representatives are required to complete a
classroom training course covering topics on the credit industry, related
regulation, credit reporting, the Company's programs and services and its
systems and techniques for working with members. Upon successful completion of
this classroom work, each new customer service representative begins to work
with members while an experienced customer service representative monitors his
or her performance, offering guidance and advice. The performance of customer
service representatives is regularly monitored by management.

Through its training programs, its telecommunications systems and its
software, the Company seeks to provide members with friendly, prompt and
effective answers to questions relating to its products. The Company also works
closely with the customer service staffs of its co-marketers to ensure that
their representatives are knowledgeable in matters relating to the programs
offered by the Company.

MANAGEMENT INFORMATION SYSTEMS

The Company has made substantial investments in its management information
systems to allow it to operate its business more efficiently and productively.
The Company utilizes an IBM AS/400 computer system to process and manage its
membership data. The Company has also developed proprietary software that is
designed to accept its co-marketers' customer databases for review, analysis and
modeling in order to identify potential members and implement effective
marketing programs. The Company's data processing and order fulfillment
processes, as well as its links with vendors, enables the Company to mail member
fulfillment kits to new members within seven business days of a customer
request. The system also receives confirmation of billing data from the
Company's merchant processors on a regular basis, permitting the Company to
update the status of each member.

The Company has recently installed software which has been designed to deal
with potential problems arising as a result of the Year 2000 issue. In addition,
management believes that the business organizations upon which it relies for the
rendering of its services either have resolved or will resolve the Year 2000
issue prior to or during 1999. The Company does not currently anticipate that it
will incur significant expense or business interruptions as a result of the Year
2000 issue, but there can be no assurance in that regard.

COMPETITION

The Company's principal competitor is CUC which offers credit reporting
membership programs with certain features similar to those provided by the
Company's programs. CUC is a direct marketing company primarily engaged in
providing shopping, travel, discount and related types of benefits to its
customers. Based on industry data from 1996, credit programs accounted for
approximately 3.0% of CUC's membership base. Additionally, CUC competes with
many potential co-marketers in its various business lines, such as travel-
related services.

In addition to this direct competition, the Company also encounters
competition for co-marketer endorsements from other direct marketing businesses.
Because agreements between co-marketers and program providers are often
exclusive with respect to a particular service, potential co-marketers may be
prohibited from entering into agreements with the Company to promote a program
if the features provided by the Company's program are similar to, or overlap
with, the features offered by an existing program of a competitor. There can be
no assurance that the Company's competitors will not increase their emphasis on
programs similar to those offered by the Company and more directly compete with
the Company, that new competitors will not enter the market, that competitors
will not increase the compensation they provide to co-marketers to induce such
co-marketers to enter into agreements, or that other businesses will not
themselves introduce competing programs. Such potential competitors include
major credit card issuers,

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including the Company's co-marketers. Potential competitors also include major
credit bureau reporting services, including Experian, which would have
significant competitive advantages such as access to credit data at minimal
cost. There can be no assurance that the Company's current or potential
competitors will not provide programs comparable or superior to those provided
by the Company at lower membership prices or adapt more quickly than the Company
to evolving industry trends or changing market requirements. In addition,
alliances among competitors may emerge and rapidly acquire significant market
share. Many of the Company's current and prospective competitors, including CUC,
have substantially larger customer bases and greater financial and other
resources than those available to the Company. Increased competition may result
in price reductions, increased fees payable to co-marketers, reduced
profitability and loss of market share, any of which could materially adversely
affect the Company's business, financial condition and results of operations.
There can be no assurance that the Company will be able to compete effectively
against future and current competitors.

Experian provides substantially all of the credit information which the
Company furnishes to its members. Although neither Experian nor the other credit
reporting bureaus provide the credit monitoring services currently offered by
the Company, Experian and the other credit bureaus currently provide a credit
report directly to any consumer at the consumer's request at the rate of
approximately $8.00 per report (except in states where local legislation
provides the consumers are entitled to a free credit report upon their written
request). See "-- Government Regulation; Adverse Publicity -- State Fair Credit
Reporting Acts." There can be no assurance that Experian or the other credit
bureaus will not begin to more aggressively market their services to consumers
by initiating price reductions or advertising campaigns targeted to consumers
and that such actions will not adversely affect the Company's business,
financial condition and results of operations or require the Company to reduce
prices for certain of its programs in order to remain competitive. On August 13,
1997, Experian launched a program to offer consumers the opportunity to receive
their credit reports directly over the Internet. Although two days later
Experian announced that it was suspending this program due to certain
operational and security problems, there can be no assurance that this, or
similar programs, will not be implemented by Experian or other credit reporting
bureaus or that competition from such programs will not adversely affect the
Company's business, financial condition and result of operations. Experian and
the other credit reporting bureaus would have significant competitive advantages
over the Company in providing such reports or services, such as access to credit
data at minimal cost.

Currently, management believes that the Company enjoys several competitive
advantages, including (i) the high entry costs associated with starting a
competing business; (ii) the fact that none of the Company's competitors offers
daily monitoring of a member's credit file; and (iii) the Company's unique
contractual relationship with Experian.

The Company believes that the principal competitive factors in the
membership service industry include the ability to identify, develop and offer
innovative service programs, the quality of service programs offered, price and
marketing expertise. The Company believes that its ability to compete also
depends in part on a number of competitive factors outside its control,
including the ability to hire and retain employees, the development by others of
service programs that are competitive with the Company's service programs, the
price at which such competitors offer comparable service programs and the extent
to which such competitors are responsive to customer needs. In addition, the
introduction or announcement by competitors of the Company of new programs
similar to those offered by the Company could render the Company's existing
programs uncompetitive or obsolete, or result in a delay or decrease in orders
for the Company's existing programs as co-marketers or customers evaluate new
programs or select new programs as an alternative to the Company's existing
programs. Therefore, the announcement or introduction of new programs by
competitors of the Company could have a material adverse affect on the Company's
business, financial condition and results of operations.

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exchange through the World Wide Web, will proliferate significantly in the
foreseeable future. To the extent it occurs, such proliferation could materially
change the economics of acquiring members for membership programs. Although the
Company is exploring the potential of what it believes are the most promising
forms of direct marketing, there can be no assurance that the Company would be
able to adapt to a material change in the economics of its business or that such
change would not have a material adverse effect on the Company's business,
financial condition or results of operations. See "Risk Factors -- Competition"
and "-- Reliance on Communications and Information Systems; Technology Risks."

GOVERNMENT REGULATION

Federal Fair Credit Reporting Act. The Fair Credit Reporting Act ("FCRA")
became effective in 1971. Extensive amendments to the FCRA became effective
October 1, 1997. The FCRA establishes a set of requirements that "consumer
reporting agencies" must follow in the conduct of their business. A "consumer
reporting agency" means any person who regularly engages in assembling consumer
credit information for the purpose of furnishing consumer reports to third
parties. The FCRA imposes numerous requirements on consumer reporting agencies
including restrictions on the permissible uses of consumer reports and the
contents of consumer reports, as well as requirements relating to disclosures of
reports to consumers, the form of and charges for such disclosures, and the
reinvestigation procedure that must be followed when a consumer disputes an item
contained in his or her report. While the Company is not a "consumer reporting
agency" within the meaning of the FCRA and therefore is not subject to the FCRA,
the Company is required by its contract with Experian to comply with the FCRA
and the interpretations rendered by the FTC. Should the Company become subject
to the FCRA and fail to comply with its provisions, the Company could be subject
to various civil and administrative sanctions, the imposition of which could
have a material adverse effect on the Company. The Company could also be subject
to administrative enforcement actions initiated by the FTC. Violations of the
FCRA may constitute unfair or deceptive acts or practices in commerce in
violation of the Federal Trade Commission Act and the Company could be subject
to penalties thereunder. In addition, if the Company were found to have
committed a knowing violation of the FCRA which constitutes a pattern or
practice of violations, the FTC may institute an action to recover a civil
penalty of up to $2,500 per violation. Finally, actions for injunctions or for
damages may also be initiated under the FCRA by the state attorneys general.

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the Colorado Fair Credit Reporting Act (the "Colorado Act") which went into
effect August 1, 1997. The Colorado Act increases the notification requirements
for credit reporting agencies and lenders upon the addition of adverse items to,
or three inquiries into, an individual's credit report. The law provides that
Colorado consumers are entitled to a free credit report upon their written
request and mandates an annual mailing from each of the national systems and
Colorado reporting agencies alerting consumers to that fact. The Company is not
in a position to know the number of Colorado consumers who will request a free
copy of their credit report, or if consumers will regard such reports as
substitutes for the Company's services. There are five other states (Vermont,
Maryland, Georgia, Massachusetts and New Jersey) that have also enacted
legislation requiring the issuance of free credit reports to consumers upon
request. The Company derives approximately 15% of its members from states with
such legislation. Other states (including California) are currently considering
the enactment of such legislation. There can be no assurance that other states
in which more of the Company's members reside will not adopt similar
legislation. In the event that other states enact legislation requiring issuance
of free credit reports, the value to consumers of the programs the Company
provides could be materially reduced. Legislation requiring free issuance of
credit reports could materially and adversely affect the Company's business,
financial condition and results of operation.

Credit Repair Organization Regulations. Both Federal and state laws
regulate the activities of "credit repair organizations." While the Company is
not currently a credit repair organization and has no present plans to become a
credit repair organization, it is possible that credit repair laws may be
amended at some time in the future to include organizations such as the Company.
Under the Federal Credit Repair Organizations Act (the "Credit Repair Act"), a
credit repair organization is generally defined as any person who uses any
instrumentality of interstate commerce or the mails to sell, provide, or perform
any service, in return for money for the express or implied purpose of improving
any consumer's credit record, credit history, or credit rating, or providing
advice or assistance to any consumer with regard to any such activity or
service.

The Credit Repair Act imposes certain restrictions on the activities and
contracts of credit repair organizations and requires that specific disclosures
be made to consumers. Any credit repair organization that fails to comply with
the Credit Repair Act can be subject to civil liability for both actual and
punitive damages and attorney's fees and can be subject to an enforcement action
by the FTC. Additionally, state attorneys general have the authority to bring
actions against credit repair organizations who violate the Credit Repair Act.

In addition to the Credit Repair Act, at least 36 states and the District
of Columbia have their own statutes regulating "credit services organizations."
Most of the state statutes define credit services organizations similarly. For
example, the Delaware statute, which is representative of most of the other
state statutes, generally defines a credit services organization as any person
who, with respect to the extension of credit by others and in return for the
payment of money, provides any of the services, advice or assistance with
respect to improving a buyer's credit record, history or rating or obtaining an
extension of credit for a buyer. The requirements imposed by the state statutes
generally include a prohibition against charging the buyer a service fee until
the credit services organization has performed all of the services it agreed to
perform, unless it posted a surety bond with the state; certain disclosure and
contractual requirements; and, in some states, a mandatory surety bond and
registration.

In general, a credit services organization that violates a state statute
can be subject to an injunction, civil actions for damages and civil and
criminal penalties. For example, in Delaware, a credit services organization
that violates that state's statute can be subject to an action for damages by an
injured buyer and can be prosecuted for a Class B misdemeanor. Additionally, a
buyer or the attorney general may bring an action to enjoin the credit services
organization's activities. In the District of Columbia, a "consumer credit
service organization" that violates the District's law may be fined not more
than $500 per violation and/or imprisoned for not more than a year. In addition,
civil fines, penalties and fees may be imposed. A consumer injured by a
violation may also bring an action for actual damages, including reasonable
attorney's fees and costs, against the consumer credit service organization.
Awards may also be entered for punitive damages. In addition, at least one
state, Georgia, makes merely operating a "credit repair services organization" a
misdemeanor.

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<PAGE> 39

EMPLOYEES

As of September 26, 1997, the Company employed 157 persons on a full-time
basis and six persons on a part-time basis. None of the Company's employees are
represented by a labor union. The Company believes that its employee relations
are good.

FACILITIES

The Company leases its 20,740 square foot headquarters facility in Orange,
California. The Company also leases its 15,452 square foot membership service
facility in Plano, Texas, which is primarily a call center for customer service
representatives and operations. These leases expire in December 1998 and
September 2001, respectively. The Company recently exercised an option to expand
its membership service facility in Plano, Texas, by 5,000 additional square feet
and is currently contemplating an extension of the lease for its headquarters
facility which may include an expansion of the Company's leased space, depending
upon the Company's anticipated needs after 1999. The Company believes that these
facilities will be adequate for its anticipated future business requirements.

LEGAL PROCEEDINGS

From time to time, the Company may be involved in litigation or in
settlement proceedings relating to claims arising out of its operations in the
normal course of business. The Company is not currently a party to, nor is any
of its property the subject of, any legal proceedings, the adverse outcome of
which, individually or in the aggregate, could have a material adverse effect on
the Company's business, financial condition and results of operations.

The Company is a party to a lawsuit pending in the United States District
Court for the Central District of California, Southern Division, entitled
Credentials Services International, Inc., et. al. v. John P. Ferry, et. al.,
USDC Case No. SACV 96-960 AHS (EEX) (the "Federal Action"). The lawsuit arose
out of the August 15, 1996 dismissal for cause of the Company's then President
and Chief Executive Officer, John P. Ferry, and its then Chief Financial
Officer, John N. Rees. In September 1996, Messrs. Ferry and Rees filed an
arbitration demand against the Company with the American Arbitration Association
(the "AAA") under the AAA Employment Dispute Arbitration Rules, each asserting a
breach of their respective employment agreements (the "Arbitration"). On or
about October 11, 1996, the Company filed a complaint against Messrs. Ferry and
Rees initiating the Federal Action. A first amended complaint was filed on
November 20, 1996, asserting claims for relief for breach of fiduciary duty,
constructive fraud, violation of California Corporations Code Section 309,
negligence, conversion, injunctive relief and interference with prospective
economic advantage. In February 1997, the court denied a motion by Messrs. Ferry
and Rees seeking to compel arbitration, and the Arbitration was stayed. On or
about April 7, 1997, Messrs. Ferry and Rees filed a cross-complaint in the
Federal Action alleging 22 causes of action against the Company, as well as
eight other cross-defendants. The Company subsequently filed a motion to dismiss
Messrs. Ferry and Rees' cross-complaint, and on or about July 22, 1997, the
court dismissed Messrs. Ferry and Rees' entire cross-complaint, giving them 30
days to file an amended complaint. On or about August 14, 1997, Messrs. Ferry
and Rees filed a first amended counter-complaint asserting 21 causes of action
against the Company and the other cross-defendants, including breach of
employment agreement, breach of the covenant of good faith and fair dealing,
breach of statutory obligation, fraud, constructive fraud, negligent
misrepresentation, wrongful termination in violation of public policy,
defamation, conversion, abuse of process, breach of fiduciary duty and
negligence, seeking unspecified damages, an accounting, declaratory relief and
certain injunctive relief. The causes of action arise out of alleged breaches of
the respective employment agreements of Messrs. Ferry and Rees, alleged
defamatory statements made by certain executive officers and directors of the
Company about Messrs. Ferry and Rees, an alleged breach of fiduciary duty
arising out of their status as limited partners in CIS Acquisition Partners,
L.P. and the 1996 refinancing of the Company and alleged breaches of good faith
and other duties owed to Messrs. Ferry and Rees by the Board of Directors of the
Company in connection with the termination of their employment and the conduct
of the business prior thereto. On or about August 29, 1997, the Company filed a
motion to dismiss the first amended counter-complaint. This motion is currently
pending before the Court. Discovery is continuing in the matter. The Company
believes that it has valid defenses to all

35
<PAGE> 40

of the causes of action alleged in the first amended counter-complaint of
Messrs. Ferry and Rees, and it intends to vigorously prosecute and defend this
action. On or about September 22, 1997, Mr. Ferry filed an ex parte application
for a temporary restraining order (the "Application") seeking an order
prohibiting the Company and Lincolnshire Equity Fund, L.P. ("LEF"), from
transferring, assigning, selling, pledging, encumbering, or hypothecating Mr.
Ferry's Class B limited partnership interest in CIS Acquisition Partners, L.P.
(the "Class B Interest") and from declaring that Mr. Ferry owes any payment or
is in default under the terms of the $200,000 promissory note made by Mr. Ferry
in favor of LEF. In 1994, Mr. Ferry borrowed $200,000 from LEF for the purpose
of funding his purchase of his Class B Interest, and the note evidences that
borrowing. The maturity date of the note was September 30, 1997 and, as of the
date of this Prospectus, Mr. Ferry has not made payment to LEF. The note was
secured by a pledge of Mr. Ferry's Class B Interest. On or about October 6,
1997, the Company and LEF filed their opposition to the Application. The court
has not yet ruled on the Application. The Federal Action is at an early stage of
proceedings; however, the Company presently believes that this action will not
have a material adverse effect upon the Company or its financial condition or
results of operations.

The Company, among others, is a party to a lawsuit in the Superior Court
for the State of California, County of Orange, against Steven Richards, James O.
Saloma and Joyce Richards entitled Lincolnshire Equity Fund, L.P., et. al. v.
Steven Richards, et. al., Case No. 781247 (the "State Court Action") which was
instituted by the Company, Lincolnshire Equity Fund, L.P., a privately held
Delaware limited partnership, and Lincolnshire Management, Inc. on or about July
2, 1997. The complaint in the State Court Action alleges causes of action for
libel, slander of title, trade libel, intentional interference with contract,
indemnity, breach of fiduciary duty, breach of contract and unjust enrichment.
Messrs. Richards and Saloma were employees and officers of the Company whose
employment was terminated for cause in September 1996. The complaint also
alleges that Joyce Richards, Mr. Richards' wife, was an executive search
consultant retained by the Company without disclosure of the conflict of
interest (her relationship to an officer of the Company) to the Company's Board
of Directors. On or about August 4, 1997, Messrs. Richards and Saloma filed a
cross-complaint in the State Court Action asserting causes of action for breach
of contract, breach of statutory obligations, indemnity, conversion and
declaratory relief, all directed to issues concerning their compensation by the
Company. The Company believes that it has valid defenses to all of the causes of
action alleged in the cross-complaint, and it intends to vigorously prosecute
and defend this action. The State Court Action is at an early stage of
proceedings; however, the Company presently believes that this action will not
have a material adverse effect upon the Company or its financial condition or
results of operations.

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<PAGE> 41

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

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

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Thomas J. Maloney.................... 44 Chairman and Director(1)
Charles Caudle....................... 68 Honorary Vice Chairman
David C. Thompson.................... 42 President, Chief Executive Officer and Director
John Adams........................... 52 Executive Vice President, Member Services
Michael Cossel....................... 56 Executive Vice President, Operations
M. Gerard Keehan..................... 58 Executive Vice President, Marketing and Director
Vineet Pruthi........................ 52 Executive Vice President and Chief Financial Officer
James M. Rothe....................... 55 Executive Vice President, Sales
Donald J. Shea, Jr. ................. 39 Senior Vice President, New Products
C. Kenneth Clay...................... 33 Director(2)
Nicholas Dunphy...................... 49 Director(2)
William A. Hall...................... 65 Director(1)
</TABLE>

- ---------------
(1) Member of Compensation Committee of the Board of Directors.

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

Thomas J. Maloney has served as a director of the Company since July 1995.
In August 1996, Mr. Maloney was elected Chairman, President and Chief Executive
Officer of the Company. He served as President and Chief Executive Officer of
the Company until July 1997 and continues as Chairman of the Company. Mr.
Maloney has been a Managing Director of Lincolnshire Management, Inc., since
April 1993. Mr. Maloney is a founding partner of the law firm of Maloney,
Mehlman & Katz, counsel to the Company and to CSI Partners II. See "Certain
Transactions." From October 1994 to November 1994, Mr. Maloney was Vice
President and Treasurer of Cybergenics Corporation, a Delaware corporation
("Cybergenics") engaged in the business of marketing nutritional supplements. In
November 1994, Mr. Maloney was appointed Assistant Secretary and elected to the
Board of Directors of Cybergenics. In August 1996, a petition under the Federal
bankruptcy laws was filed by Cybergenics. Mr. Maloney holds a B.A. degree from
Boston College and a J.D. from Fordham University.

Charles Caudle has been Honorary Vice Chairman of the Company since July
1997. Prior to his appointment as Honorary Vice Chairman, Mr. Caudle served as
Chief Operating Officer of the Company from August 1996 to December 1996 and as
Executive Vice President and National Sales Manager of the Company from July
1995 to August 1996. From 1994 to 1996, Mr. Caudle served as Executive Vice
President of MBNA in special sales. From 1984 to 1994, Mr. Caudle served in
various operational and marketing management capacities at Visa, USA.
Previously, he was Chief Executive Officer of Barnett Credit Services
Corporation, the revolving credit arm of Barnett Banks of Florida. Mr. Caudle
has served as a director of several industry groups. Mr. Caudle attended West
Virginia University.

David C. Thompson joined the Company in October 1996 as Chief Financial
Officer. From November 1996 to July 1997, Mr. Thompson served as the Company's
Chief Operating Officer. In July 1997, he was elected President and Chief
Executive Officer of the Company. Mr. Thompson was elected a member of the Board
of Directors in December 1996. Prior to joining the Company, Mr. Thompson served
in various senior financial management positions, most recently as Senior Vice
President and Chief Financial Officer of SafeCard Services, Inc., a subsidiary
of the Ideon Group, from 1994 to 1996. From 1992 to 1994, Mr. Thompson was Vice
President and Chief Financial Officer of the bank card division of Fidelity
Investments. From 1983 to 1992, Mr. Thompson served in various senior financial
management positions at American Express. Mr. Thompson began his career as a
C.P.A. with Price Waterhouse from 1977 to 1983.

37
<PAGE> 42

Mr. Thompson holds a B.S. degree in Accounting from Florida State University and
an M.B.A. from New York University.

John Adams joined the Company as Executive Vice President, Member Services,
in October 1996. Prior to joining the Company, Mr. Adams worked in various
senior operating positions in the credit industry, including for 16 years at TRW
where he assisted in establishing the CIS Business with responsibility for
developing systems, customer service and fulfillment capabilities, and two years
at Equifax. From 1992 to 1996, Mr. Adams founded and operated a direct mail
servicing company. Mr. Adams attended Claremont College.

Michael Cossel has been Executive Vice President, Operations, of the
Company since September 1996. Prior to joining the Company, from 1993 to 1994,
he served as a management consultant with Coopers & Lybrand's Financial Advisory
Services Group in the Washington, D.C. area. From 1988 to 1993, Mr. Cossel
served as the Chief Financial Officer and Administrative Officer of Beverage
Capital Corporation, a major Baltimore-based producer of private label and
national brand beverages. Previously, Mr. Cossel performed the dual roles of
Chief Financial Officer and Chief Operating Officer at Credit Card Services
Corporation. Mr. Cossel has a B.S. degree in Economics from Villanova University
and an M.B.A. from American University.

M. Gerard Keehan has been Executive Vice President, Marketing, of the
Company since January 1997, and a member of the Board of Directors of the
Company since July 1997. Prior to that time, Mr. Keehan was Director of
Marketing at TRW from 1985 to 1994, where he assisted in establishing the CIS
Business. Prior to joining TRW, Mr. Keehan was Senior Vice President and Chief
Administrative Officer for Transamerica Assurance in Southern California.

Vineet Pruthi joined the Company in November 1996 as Chief Financial
Officer. Prior to joining the Company, from 1991 to 1996, Mr. Pruthi was an
independent consultant in financial, due diligence and international business
matters. From 1982 to 1991, Mr. Pruthi served in various senior financial
management positions, including as Chief Financial Officer at Murjani, a
privately owned international group of companies. Mr. Pruthi is a Chartered
Accountant and has an M.B.A. from Rutgers Graduate School of Management.

James M. Rothe has been Executive Vice President, Sales, of the Company
since 1995. From 1991 to 1995, Mr. Rothe was President of Membership Development
Inc., which developed and sold the CreditWatch credit reporting service in
partnership with Trans-Union Corporation. From 1986 to 1991, Mr. Rothe was Vice
President of Sales for the CIS Business of TRW. Previously, Mr. Rothe was
Regional Manager for Dun & Bradstreet in Southern California. Mr. Rothe attended
the University of Nebraska.

Donald J. Shea, Jr., has been Senior Vice President, New Products, of the
Company since December 1996. From 1994 to 1996, Mr. Shea was Vice President,
Client Services, of Eire Partners, Inc. From 1990 to 1994, while he was an
Account Supervisor at DDB Needham Worldwide, Mr. Shea worked with many national
consumer goods companies, such as Frito-Lay and S.C. Johnson Wax, advertising a
variety of established products and services and launching new products. Mr.
Shea holds a B.A. degree from Georgetown University and an M.B.A. from
Northwestern University (Kellogg Graduate School of Management).

C. Kenneth Clay has served as a director of the Company since September
1997. Mr. Clay is a Director of Lincolnshire Management, Inc., and has been
employed at Lincolnshire since 1995. From 1992 to 1995, Mr. Clay was the Chief
Financial Officer of LINQ Industrial Fabrics, Inc., a manufacturer and marketer
of polypropylene-based industrial fabrics. Prior to that time, he was an officer
of the Bank of New York Commercial Corporation. Mr. Clay is also an officer and
director of Peripheral Computer Support, Inc., a company in which Lincolnshire
Equity Fund, L.P., is indirectly the controlling shareholder. Mr. Clay holds a
B.S. degree from Brigham Young University and an M.B.A. from The University of
Texas at Austin.

Nicholas Dunphy has served as a director of the Company since March 1997.
Mr. Dunphy is the co-founder and managing partner of Canterbury Capital, LLC,
which is the general partner of Canterbury Mezzanine Capital, L.P. Mr. Dunphy
was employed by Barclays Bank from 1980 to 1995. Prior to founding the Barclays
Mezzanine Group in 1989, Mr. Dunphy held a number of senior executive positions
in Barclays

38
<PAGE> 43

Project Finance, Utility and Leveraged Finance groups. Before joining Barclays,
Mr. Dunphy qualified as a Chartered Accountant in Canada and subsequently spent
five years with Toronto Dominion Bank. Mr. Dunphy received a B.Sc. degree from
Manchester University in England and an M.B.A. from York University in Canada.

William A. Hall has served as a director of the Company since July 1997.
Mr. Hall is the President and Chief Executive Officer of Sight & Sound
Distributing Company, an audio and video software distributor, having founded
this company in 1984. Since 1988, Mr. Hall has also been the owner of W.A.H.
Management/Consulting, consultants in strategic management to companies in the
home entertainment industry. Since April 1993, Mr. Hall has also been Vice
Chairman of, and a majority stockholder in, U.S. Animation, Inc., which provides
digital colorization and composition of animation for feature films, television,
commercials and interactive video games. Mr. Hall is a shareholder of
Lincolnshire Management, Inc. Mr. Hall is also a director of 3DO, an
international computer software company, Northward Press, a manufacturer of
music software, and Chromium Graphics, a specialty printing company.

The Company's Board of Directors currently consists of six directors. Each
of the Company's directors serve three-year terms which are staggered to provide
for the election of approximately one-third of the board members each year.

The Board of Directors is divided into three classes, with two to three
directors in each class. The Class I directors are Messrs. Clay and Hall, the
Class II directors are Messrs. Thompson and Keehan, and the Class III directors
are Messrs. Maloney and Dunphy. The terms of the Class I directors expire in
1998, the terms of the Class II directors expire in 1999, and the terms of the
Class III directors expire in 2000. Directors hold office until their terms
expire and their successors have been elected and qualified. Executive officers
of the Company are appointed by, and serve at the discretion of, the Board of
Directors. There are no family relationships among any of the directors or
executive officers of the Company.

Following completion of the offering, the Company's Board of Directors
intends to appoint at least one additional director who will not be an officer
or an employee of the Company or its affiliates and will be included among the
Class II directors.

Directors do not currently receive any fees for service on the Board of
Directors, but are reimbursed for their expenses for each meeting attended.

EXECUTIVE COMPENSATION

The following table summarizes all compensation paid to the Company's Chief
Executive Officer and to the Company's five other most highly compensated
executive officers other than the Chief Executive Officer whose total annual
salary and bonus exceeded $100,000, for services rendered in all capacities to
the Company during the fiscal year ended September 26, 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ------------
OTHER RESTRICTED
NAME AND ANNUAL STOCK ALL OTHER
PRINCIPAL POSITION SALARY BONUS COMPENSATION AWARDS COMPENSATION
- ------------------------------------------- -------- ------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
David C. Thompson.......................... $164,400 -- -- (2) $ 63,952(3)
President and Chief Executive Officer(1)
Charles Caudle............................. 250,000 -- -- (2) 33,478(3)
Honorary Vice Chairman
Thomas J. Maloney.......................... 240,000 -- -- -- 3,000(5)
Chairman(4)
Michael Cossel............................. 152,470 -- -- (2) 11,098
Executive Vice President, Operations
James M. Rothe............................. 126,540 $32,225 -- (2) 1,807
Executive Vice President, Sales
Vineet Pruthi.............................. 124,808 -- -- (2) 18,284(5)
Executive Vice President and Chief
Financial Officer
</TABLE>

39
<PAGE> 44

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

(1) Mr. Thompson served as Chief Financial Officer of the Company from October
1996 to November 1996 and as Chief Operating Officer from November 1996 to
July 1997.

(2) The officers named in the table above (other than Mr. Maloney) hold shares
of restricted stock of the Company in the following amounts: Mr. Thompson,
278,090 shares; Mr. Caudle, 8,557 shares; Mr. Cossel, 64,175 shares; Mr.
Rothe, 81,288 shares; and Mr. Pruthi, 124,071 shares. The shares are subject
to the vesting provisions of Common Stock Agreements which provide that each
of the above-named officer's shares vest in accordance with a schedule which
provides that one-third of such interest vests in April 1998, an additional
one-third vests in April 1999 and the remaining one-third vests in April
2000, contingent upon each individual's continued employment with the
Company. The Company does not believe that these shares of restricted stock
had any value in excess of the consideration payable by the named executive
officers for such shares at the date of grant in October 1996. Based upon
the assumed initial public offering price of $15.00 per share, the value of
the restricted stock held by Messrs. Thompson, Caudle, Cossel, Rothe and
Pruthi was $4,171,350, $128,355, $962,625, $1,219,320 and $1,861,065,
respectively, at September 26, 1997. See "Certain Transactions."

(3) Includes relocation expenses consisting of selling expenses relating to the
sale of their prior residences and temporary living costs for Mr. Thompson
and Mr. Caudle in the amounts of $63,410 and $25,000, respectively, paid by
the Company.

(4) Mr. Maloney served as Chief Executive Officer of the Company from August
1996 to July 1997.

(5) Includes temporary living expenses for Mr. Maloney and Mr. Pruthi in the
amounts of $3,000 and $12,000, respectively, paid by the Company.

The Company anticipates that it may increase the base salary of certain of
the above-named executives during the 1998 fiscal year; however, the Company
does not expect that in the aggregate such increases will materially increase
the Company's general and administrative expenses in fiscal year 1998. Mr.
Maloney's annual salary will be reduced to $150,000 per year following
completion of this offering.

EMPLOYMENT AGREEMENTS

The following summary descriptions of the material provisions of the
employment agreements between the Company and the named executive officers are
qualified in their entirety by reference to such agreements, a copy of each of
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.

David C. Thompson, President and Chief Executive Officer, and the Company
entered into an Employment Agreement dated as of May 9, 1997. Under this
agreement, the Company has agreed to pay Mr. Thompson an annual base salary of
$180,000, plus an annual bonus of $25,000. This agreement expires May 9, 2000.
The Company may terminate the agreement earlier for cause without penalty or,
without cause, upon payment of an amount equal to Mr. Thompson's base salary for
the lesser of twelve months or the remainder of the employment term. Mr.
Thompson has agreed not to compete with the Company during the employment term
and for 18 months thereafter.

Charles Caudle, Honorary Vice Chairman, and the Company entered into an
Employment Agreement dated as of August 15, 1996. Under this agreement, the
Company has agreed to pay Mr. Caudle an annual base salary of $250,000. This
agreement expires August 15, 1999 and is automatically renewed for a one-year
period unless either party provides the other with 60 days' written notice. The
Company may terminate the agreement earlier for cause without penalty or,
without cause, upon payment of an amount equal to Mr. Caudle's base salary for
the lesser of twelve months or the remainder of the employment term. Mr. Caudle
has agreed not to compete with the Company during the employment term and for
two years thereafter.

Michael Cossel, Executive Vice President, Operations, and the Company
entered into a Letter Agreement dated August 16, 1995. Under this agreement, the
Company has agreed to pay Mr. Cossel an annual salary of $140,000, plus an
annual bonus of up to $45,000 based on the performance of the Company. The
Company has agreed to pay to Mr. Cossel a severance package of up to one year's
salary if he is terminated without cause, which severance may be extended
another six months at the Company's discretion. Mr. Cossel has agreed not to
compete with the Company in any manner for twelve months after any payment is
made to him by the Company.

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<PAGE> 45

James M. Rothe, Executive Vice President, Sales, and the Company entered
into a Letter Agreement dated September 5, 1995 which was amended by memorandum
on January 6, 1997. Under this agreement, as amended, the Company has agreed to
pay Mr. Rothe an annual base salary of $140,000. In the event of termination
without cause, twelve months salary and benefits will be paid.

Vineet Pruthi, Executive Vice President and Chief Financial Officer, and
the Company entered into an Employment Agreement dated as of December 3, 1996.
Under this agreement, the Company has agreed to pay Mr. Pruthi an annual base
salary of $155,000, plus an annual bonus of $25,000. The agreement expires
December 2, 1999. The Company may terminate the agreement earlier for cause
without penalty or, without cause, upon payment of an amount equal to Mr.
Pruthi's base salary for the lesser of twelve months or the remainder of the
employment term. Mr. Pruthi has agreed not to compete with the Company during
the employment term and for two years thereafter.

Each of the Employment Agreements with Messrs. Thompson, Caudle, Rothe and
Pruthi contain provisions relating to bonuses in addition to those described
above. Such bonuses are payable if, in the discretion of the Board of Directors,
a bonus pool is established. The amount of the bonus pool, if any, and the
amount to which each of the above-named officers may become entitled, if any, is
to be determined annually in the sole discretion of the Board of Directors.

In making such bonus determinations the Board may consider various factors,
such as the attainment of certain financial goals by the Company, including
attainment of specified levels of operating cash flow, EBITDA, and number of
memberships and other criteria such as improvement in management and
administrative procedures and training of Company personnel that are related to
each employee's respective employment responsibilities. As of the date of this
Prospectus, no bonus pool for the Company's executive officers has been
established by the Board of Directors and by reason of that fact and the
contingencies to which these bonuses are subject, the Company cannot now
determine the possible amount of any such bonus that the Board of Directors may
award in the future.

STOCK OPTION PLAN

The Company's 1997 Stock Option Plan (the "Stock Option Plan") was adopted
by the Board of Directors and approved by the Company's stockholders in November
1997. Under the Stock Option Plan, a total of 800,000 shares of Common Stock
have been reserved for issuance upon the exercise of stock options and related
stock appreciation rights ("SARs"). The Company intends to grant options to
purchase shares of Common Stock under the Stock Option Plan to Messrs. Maloney
and Thompson (100,000 shares each), Rothe (75,000 shares), Pruthi (50,000
shares), and Caudle and Cossel (10,000 shares each) at an exercise price equal
to the initial public offering price of the shares of Common Stock offered
hereby. See "-- Executive Compensation." The following description of the
material provisions of the Stock Option Plan is qualified in its entirety by
reference to the Stock Option Plan, a copy of which is filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.

The Stock Option Plan provides that the number of shares of Common Stock
subject thereto and the number of outstanding stock options and their exercise
prices are to be appropriately adjusted in the event of a reorganization,
consolidation, reclassification, recapitalization, combination or exchange of
shares of Common Stock, stock split, reverse split, stock dividend or rights
offering. Shares of Common Stock allocated to options and/or SARs which have
expired or been terminated may be reallocated to other options and/or SARs under
such plan.

Pursuant to the Stock Option Plan, the Company may grant (i) incentive
stock options ("ISOs"), as that term is defined in the Internal Revenue Code of
1986, as amended (the "Code"), (ii) nonqualified stock options ("NSOs"), and
(iii) SARs to officers, directors and key employees of the Company. The Stock
Option Plan provides for administration by the Board of Directors of the Company
or by a Committee of the Board of Directors which selects the optionees,
authorizes the grant of options and determines the exercise price and other
terms of the options, including the vesting schedule thereof, if any, provided,
however, that the vesting schedule will be no less than three years from the
date of grant. Currently, the Stock Option Plan is administered by the Board of
Directors, but the Stock Option Plan provides that it may be administered by a

41
<PAGE> 46

Compensation Committee or another committee established in the future by the
Board of Directors for that purpose.

The per share exercise price of each ISO granted under the Stock Option
Plan must be at least 100% of the fair market value of a share of Common Stock
(and not less than 110% of the fair market value in the case of any optionee of
an ISO who beneficially owns more than 10% of the total combined voting power of
the Company) on the date such option is granted. The Stock Option Plan provides
that the per share exercise price of an NSO must be at least 85% of the fair
market value of a share of Common Stock on the date such option is granted. Each
option granted under the Stock Option Plan may be exercisable for a period
determined by the Board of Directors or the Committee administering the Stock
Option Plan, not to exceed ten years (or five years in the case of any optionee
of an ISO who beneficially owns more than 10% of the total combined voting power
of the Company) from the date of grant. Options issued under the Stock Option
Plan will be exercisable as the Committee administering such plan may determine,
but in no event shall an option be exercisable after the tenth anniversary of
the date of grant.

ISOs granted under the Stock Option Plan are non-transferable, except upon
death, by will or by operation of the laws of descent and distribution, and may
be exercised during the employee's lifetime only by the optionee. The aggregate
fair market value of the stock with respect to which ISOs are exercisable for
the first time by an employee during any calendar year (under all such plans of
the Company and any parent and subsidiary companies of the Company) may not
exceed $100,000.

Options granted under the Stock Option Plan may be exercised within twelve
months after the date of an optionee's termination of employment by reason of
his death or disability, or within 90 days after the date of termination by
reason of retirement, voluntary termination approved by the Board of Directors
or involuntary termination by the Company other than for Cause (as defined in
the Stock Option Plan), but, in any such case, not later than the expiration
date of such option and only to the extent the option was otherwise exercisable
at the date of termination. In the event an optionee's employment is terminated
by the Company for Cause or voluntarily terminated by the optionee without the
approval of the Board of Directors, such optionee's option shall terminate
immediately upon the date of such termination.

The Stock Option Plan also provides for the grant of SARs, which may be
granted on a stand-alone basis or in tandem with stock options, which may be
surrendered to the Company in exchange for cash, shares of Common Stock or a
combination thereof, as determined by the Committee administering the Stock
Option Plan, having a value equal to the dollar amount obtained by multiplying
(x) the number of shares subject to the surrendered SAR or option by (y) the
amount by which the fair market value per share of Common Stock exceeds the
exercise price per share specified in the agreement governing the surrendered
SAR or option.

The Stock Option Plan expires on November 21, 2007 unless terminated
earlier by the Board of Directors. The Stock Option Plan is subject to amendment
by the Board of Directors without stockholder approval, except that no amendment
which increases the maximum aggregate number of shares which may be issued under
the Stock Option Plan or changes the class of eligible participants in the Stock
Option Plan will be effective without the approval of the stockholders of the
Company. The Board of Directors may terminate the Stock Option Plan at any time.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company has adopted provisions in its Amended and Restated Certificate
of Incorporation that limit the liability of its directors for monetary damages
for breach of their fiduciary duty as directors, except for liability that
cannot be eliminated under the Delaware General Corporation Law ("Delaware
Law"). Delaware Law provides that directors of a company will not be personally
liable for monetary damages for breach of their fiduciary duty as directors,
except for liability (i) for any breach of their duty of loyalty to the Company
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for unlawful
payment of dividend or unlawful stock repurchase or redemption, as provided in
Section 174 of the Delaware Law, or (iv) for any transaction from which the
director derived an improper personal benefit.

42
<PAGE> 47

The Company's Amended and Restated Certificate of Incorporation and ByLaws
also provide that the Company shall indemnify its directors and officers to the
fullest extent permitted by the Delaware Law. The Company has entered into
separate indemnification agreements with its directors and officers that could
require the Company, among other things, to indemnify them against certain
liabilities that may arise by reason of their status or service as directors and
to advance their expenses incurred as a result of any proceeding against them as
to which they could be indemnified. The Company believes that the limitation of
liability provision in its Certificate of Incorporation and the indemnification
agreements will facilitate the Company's ability to continue to attract and
retain qualified individuals to serve as directors and officers of the Company.

CERTAIN TRANSACTIONS

The Company believes that all of the transactions described under this
caption were entered into or effected upon terms no less favorable to the
Company than could have been obtained from unaffiliated third parties in similar
circumstances. In addition, the Company has adopted the policy that future
transactions between the Company and its directors, officers, principal
stockholders and affiliates or entities with which they are affiliated will
require approval by a majority of the disinterested members of the Company's
Board of Directors.

In October 1994, CIS Acquisitions Partners, L.P., a Delaware limited
partnership ("CIS Acquisition Partners"), invested $4.0 million in the Company
in connection with the acquisition by the Company of its credit information and
monitoring direct marketing business from TRW. In consideration of that
investment, the Company issued 21,445 shares of Common Stock to CIS Acquisition
Partners. At the time of the Acquisition, certain former members of management
purchased minority limited partnership interests in CIS Acquisition Partners.
See "Business -- Legal Proceedings."

Pursuant to the terms of agreements reached in October 1996, a group of
eleven officers and key employees of the Company were granted indirect
contingent equity interests in the Company aggregating a 10% interest in the
Company. In November 1997, these indirect contingent equity interests were
restructured so that shares of restricted stock in the Company were granted in
exchange for the indirect equity interests previously granted. The shares remain
subject to vesting conditions of Common Stock Agreements which provide that each
of such officer's shares vest in accordance with a schedule which provides that
one-third of such shares vest in April 1998, an additional one-third vest in
April 1999, and the remaining one-third vest in April 2000, contingent upon such
individual's continued employment with the Company. Assuming full vesting of all
such shares for all of the eleven individuals, the number of restricted shares
that would be distributed would be 855,662. In addition, each of the eleven
officers and key employees will execute a recourse promissory note in
consideration of his respective equity interest. The promissory notes are
payable to CSI Partners II and aggregate $660,000 in principal amount ($214,500
for Mr. Thompson, $6,600 for Mr. Caudle, $49,500 for Mr. Cossel, $62,700 for Mr.
Rothe, and $95,700 for Mr. Pruthi). The promissory notes bear interest at 6.64%
per annum and are payable annually. The notes mature on May 1, 2000. See
"Management -- Executive Compensation."

From November 1996 through January 1997, CSI Partners II invested a total
of $3.0 million in the Company in consideration of the issuance by the Company
of 3,000 shares of Series A Cumulative Preferred Stock (the "Series A Preferred
Stock") and warrants to acquire 2,123,072 shares of its Common Stock. In March
1997, as a condition of a $3.0 million subordinated loan to the Company made by
Canterbury Mezzanine Capital, L.P., a Delaware limited partnership ("Canterbury
Capital"), CSI Partners II exchanged its 3,000 outstanding shares of Series A
Preferred Stock for 6,433,550 shares of the Company's Common Stock and exercised
its warrants (at a nominal exercise price aggregating $1,000) for 2,123,072
shares of Common Stock.

In January 1997, in connection with the refinancing of the Company's then
outstanding senior secured indebtedness, Lincolnshire Equity Fund, L.P., a
privately held Delaware limited partnership ("LEF"), agreed, subject to certain
conditions, to make available to the Company up to $4.25 million in additional
capital through the purchase of additional debt or equity securities of the
Company by not later than April 30, 1998. The Company's right to require such
additional investment by LEF was assigned by the Company to its senior secured
bank lender. By amendment in September 1997 to the agreement governing such
senior indebtedness,

43
<PAGE> 48

that lender relinquished the right to cause LEF to make that additional
investment, and the corresponding securities purchase agreement between the
Company and LEF pertaining to such investment has been cancelled. In March 1997,
as a condition to the subordinated loan made by Canterbury Capital to the
Company, LEF also agreed that, subject to certain triggering events, it would
purchase additional shares of Common Stock for up to $1.5 million. That
commitment on the part of LEF was assigned by the Company to Canterbury Capital,
but Canterbury Capital will relinquish the right to cause LEF to purchase such
additional shares upon the repayment by the Company of the outstanding
subordinated loan owing to Canterbury Capital at the time of completion of this
offering, and the corresponding agreement between the Company and LEF to
purchase these additional shares of Common Stock will thereupon be cancelled.
See "Use of Proceeds."

In connection with its $3.0 million subordinated loan to the Company in
March 1997, Canterbury Capital acquired warrants to purchase a total of
1,038,600 shares of Common Stock of the Company. The warrants were subject to
customary anti-dilution provisions and were exercisable at a nominal price. In
September 1997, Canterbury Capital exercised all of those warrants and thereby
purchased 1,038,600 shares of Common Stock, of which 527,770 shares are being
sold by Canterbury Capital in the offering being made hereby. Canterbury Capital
has agreed that Lincolnshire Management, Inc. ("LMI"), an affiliate of LEF which
renders management consulting services to business entities in which LEF
invests, including the Company, shall receive 25% of any cash proceeds exceeding
$3.0 million derived by Canterbury Capital from the sale of its shares of Common
Stock in this offering, and that it shall assign and transfer to LMI 25% of the
510,830 shares of Common Stock of the Company (or 127,708 shares) which will be
retained by Canterbury Capital after consummation of the offering made hereby
and assuming no exercise of the Underwriter's overallotment option. See
"Principal and Selling Stockholders."

Eighty-five percent of the total outstanding limited partnership interests
of CIS Acquisition Partners, and 100% of the total outstanding limited
partnership interests of CSI Partners II, are held by LEF which invests in
various business entities through investment partnerships or other entities. LEF
also indirectly holds the equity interests in the general partners of both of
these partnerships. Thomas J. Maloney, Chairman of the Board of the Company, C.
Kenneth Clay, a director of the Company, and William A. Hall, a director of the
Company, are all limited partners of LEF. Mr. Maloney is an officer and director
of (i) the corporate general partner of LEF, (ii) Credentials G.P. (which is the
corporate general partner of Credentials G.P., L.P., which is in turn the
general partner of CIS Acquisition Partners), and (iii) Credentials II G.P.,
Inc. (which is the corporate general partner of Credentials II G.P., L.P., which
is in turn the general partner of CSI Partners II), and holds direct and
indirect equity interests in each of these partnerships and corporations. Mr.
Maloney is an officer and director and a stockholder in LMI. Mr. Hall is a
stockholder in LMI, and Mr. Clay is an employee of LMI. Messrs. Hall and
Maloney's stock holdings in LMI each constitute less than 10% of the total
issued and outstanding capital stock of LMI.

Since October 1994, the Company has been a party to a consulting agreement
with LMI, an affiliate of the limited partnerships which own the outstanding
Common Stock of the Company. Pursuant to this agreement, as amended in December
1996, LMI has rendered and is rendering management and financial consulting
services to the Company. These services have included assisting the Company in
refinancing and reorganizing its operations during the past year. For its
services, the Company paid LMI annual consulting fees and expenses of $259,000
in fiscal year 1995, $368,000 in fiscal year 1996 and $300,000 in fiscal year
1997. LMI and the Company terminated the Consulting Agreement effective at the
end of the 1997 fiscal year.

During the year ended September 30, 1995, LMI was paid $1.25 million for
professional services related primarily to the negotiations of the acquisition
from TRW, the negotiation of bank debt agreements and the negotiation of the
subordinated debt agreement. In addition, in March 1997, LMI was paid $300,000
for professional services relating primarily to the negotiation of the bank debt
and subordinated loan agreements.

Mr. Maloney is a partner of the law firm of Maloney, Mehlman & Katz, which
has rendered legal services to the Company and collected fees from the Company
aggregating approximately $212,000 for legal services rendered during the 1997
fiscal year.

For information concerning indemnification of directors and officers, see
"Management -- Limitation of Liability and Indemnification Matters."

44
<PAGE> 49

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of November 21, 1997, and as adjusted
to reflect the sale by the Company and the Selling Stockholders of the shares
offered hereby (assuming no exercise of the Underwriters' over-allotment
option), by: (i) each person who is known by the Company to own beneficially
more than 5% of the Company's Common Stock, (ii) each of the Company's directors
and officers named in the Summary Compensation Table set forth under
"Management" and (iii) all directors and executive officers of the Company, as a
group.

<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO OFFERING NUMBER OF OFFERING
---------------------- SHARES ----------------------
NUMBER PERCENTAGE BEING OFFERED NUMBER PERCENTAGE
--------- ---------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C>
CSI Investment Partners II,
L.P.(1)(2)......................... 7,700,960 80.1% 3,922,230 3,778,730 35.4%
Canterbury Mezzanine Capital,
L.P.(3)............................ 1,038,600 10.8 527,770 510,830 4.8
David C. Thompson(4)................. 278,090 2.9 -- 278,090 2.6
Charles Caudle(4).................... 8,557 * -- 8,557 *
Thomas J. Maloney(2)................. 7,700,960 80.1 3,922,230 3,778,730 35.4
Michael Cossel(4).................... 64,175 * -- 64,175 *
James M. Rothe(4).................... 81,288 * -- 81,288 *
Vineet Pruthi(4)..................... 124,071 1.3 -- 124,071 1.2
All executive officers and directors
as a group (11 persons)(4)......... 855,662 8.9 -- 855,662 8.0
------ -----
</TABLE>

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

* Indicates less than one percent.

(1) Consists of 7,700,960 shares of Common Stock held by CSI Investment Partners
II, L.P. Credentials II G.P., L.P. is the managing general partner of CSI
Investment Partners II, L.P. For a description of the relationship between
CSI Investment Partners II, L.P. and the Company, see "Certain
Transactions." The sole limited partner of Credentials II G.P., L.P. is
Lincolnshire Equity Fund, L.P. ("LEF"). The general partner of Credentials
II G.P., L.P. is Credentials II G.P., Inc., a corporation which is
wholly-owned by LEF. The address for CSI Investment Partners II, L.P. is c/o
Lincolnshire Management, Inc., 780 Third Avenue, 45th Floor, New York, N.Y.
10017.

(2) By reason of the fact that Mr. Maloney is an officer and director of
Credentials II G.P., Inc., the general partner of Credentials II G.P., L.P.,
which is the general partner of CSI Investment Partners II, L.P., he may be
deemed to be a beneficial owner (by reason of having shared voting and
dispositive power) of the number of shares of Common Stock of the Company
held by CSI Investment Partners II, L.P. In addition, Mr. Maloney has
indirect limited partnership interests in CSI Investment Partners II, L.P.

(3) Includes 1,038,600 shares of Common Stock issued upon the exercise in
September 1997 of warrants held by Canterbury Mezzanine Capital, L.P.
Canterbury Capital has agreed that LMI shall receive 25% of any cash
proceeds exceeding $3.0 million derived by Canterbury Capital from the sale
of its shares of Common Stock in this offering, and that it shall assign and
transfer to LMI 25% of the 510,830 shares of Common Stock of the Company (or
127,708 shares) which will be retained by Canterbury Capital after
consummation of the offering made hereby. Canterbury Capital LLC, is the
managing general partner of Canterbury Mezzanine Capital, L.P. For a
description of the relationship between Canterbury Mezzanine Capital, L.P.
and the Company, see "Certain Transactions." The address for Canterbury
Mezzanine Capital, L.P. is 600 Fifth Avenue, 23rd Floor, New York, N.Y.
10020.

(4) The officers named in the table above (other than Mr. Maloney) hold shares
of restricted stock in the amounts reflected in the table. The shares are
subject to the vesting provisions of Restricted Stock Agreements which
provide that each of the officer's shares vest in accordance with a schedule
which provides that one-third of such shares vest in April 1998, an
additional one-third vest in April 1999, and the remaining one-third vest in
April 2000, contingent upon such individual's continued employment with the

Company. See "Certain Transactions."

45
<PAGE> 50

DESCRIPTION OF CAPITAL STOCK

Upon the closing of this offering, the authorized capital stock of the
Company will consist of 20,000,000 shares of Common Stock, $.01 par value, and
5,000,000 shares of Preferred Stock, $.10 par value. The following summary
description of the capital stock of the Company is qualified in its entirety by
reference to the Amended and Restated Certificate of Incorporation of the
Company and the Bylaws of the Company, a copy of each of which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.

COMMON STOCK

As of November 21, 1997, there were 9,616,667 shares of Common Stock
outstanding held by 14 stockholders of record.

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders, including the
election of directors, and do not have cumulative voting rights. Accordingly,
the holders of a majority of the shares of Common Stock entitled to vote in any
election of directors can elect all of the directors standing for election, if
they so choose. Subject to preferences that may be applicable to any then
outstanding Preferred Stock and applicable law, 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. See "Dividend
Policy." In the event of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of Common Stock will be
entitled to share ratably in the net assets legally available for distribution
to such stockholders after the payment or the provision for payment of all debts
and other liabilities of the Company and the preferential amounts to which the
holders of any outstanding shares of Preferred Stock shall be entitled. Holders
of Common Stock have no preemptive or conversion rights or other subscription
rights and there are no redemption or sinking fund provisions applicable to the
Common Stock. All outstanding shares of Common Stock are, and the Common Stock
to be outstanding upon completion of this offering will be, fully paid and
nonassessable.

PREFERRED STOCK

The Board of Directors has the authority, without further action by the
stockholders, to issue from time to time additional Preferred Stock in one or
more series and to fix the number of shares, designations, preferences, powers,
and relative, participating, optional or other special rights and the
qualifications or restrictions thereof. The preferences, powers, rights and
restrictions of different series of such Preferred Stock may differ with respect
to dividend rates, amounts payable on liquidation, voting rights, conversion
rights, redemption provisions, sinking fund provisions, purchase funds and other
matters. The issuance of additional Preferred Stock could decrease the amount of
earnings and assets available for distribution to holders of Common Stock or
adversely affect the rights and powers, including voting rights, of the holders
of Common Stock, and may have the effect of delaying, deferring or preventing a
change in control of the Company. The Company has no present plan to issue
additional shares of Preferred Stock.

REGISTRATION RIGHTS

The outstanding shares of Common Stock owned by CSI Partners II and
Canterbury Capital (other than the shares being offered by such parties pursuant
to this Prospectus) are not registered under the Securities Act, and,
accordingly, may not be re-offered or re-sold in the United States absent
registration under the Securities Act or an applicable exemption from the
registration requirements under the Securities Act. Under a Registration Rights
Agreement among the Company, CSI Partners II and Canterbury Capital (the
"Registration Rights Agreement"), any Holder (as defined below) of the Common
Stock has the right to request that the Company register their shares of Common
Stock and any Common Stock which may be issued or distributed in respect thereof
by way of recapitalization, reclassification, stock dividend, stock split or
other distribution ("Registrable Securities"). Any stockholder owning
Registrable Securities that have not been sold to the public has the right,
after June , 1998, to require the Company to use its best efforts to register
under the Securities Act at least shares of Registrable Securities for
resale in up to two

46
<PAGE> 51

registrations upon demand. In addition, the Company has agreed to include in
unlimited incidental ("piggyback") registrations shares of Common Stock held by
CSI Partners II and Canterbury Capital or by any transferee of the registration
rights as permitted under the Registration Rights Agreement (any of which is a
"Holder"), provided that the number of shares of Common Stock that such Holder
requests to be included is not less than . If the Company qualifies
for the use of Form S-3 as promulgated by the Securities and Exchange
Commission, then at any time after , 199 any Holder has the right to
cause the Company to use its best efforts to effect a registration of at least
shares of the Registrable Securities on behalf of such Holder and
other Holders. The registration rights are assignable by any Holder to any
transferee acquiring at least Registrable Securities. The Company will
pay all registration expenses in connection with each registration of
Registrable Securities pursuant to the Registration Rights Agreement. See "Risk
Factors -- Shares Eligible for Future Sale; Registration Rights" and "Shares
Available for Future Sale."

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS

The Company's Amended and Restated Bylaws (the "Bylaws") provide that any
action required or permitted to be taken by stockholders of the Company must be
effected at a duly called annual or special meeting of stockholders and may not
be effected by any consent in writing, and requires reasonable advance notice by
a stockholder of a proposal or director nomination which such stockholder
desires to present at any annual or special meeting of stockholders. Special
meetings of the stockholders may be called only by the Chairman of the Board,
the Chief Executive Officer or, if none, the President of the Company or by the
Board of Directors. The Company's Amended and Restated Certificate of
Incorporation (the "Charter") provides for a classified Board of Directors, and
that members of the Board of Directors may be removed only for cause upon the
affirmative vote of holders of at least two-thirds of the shares of capital
stock of the Company entitled to vote. In addition, shares of the Company's
Preferred Stock may be issued in the future without stockholder approval and
upon such terms and conditions, and having such rights, privileges and
preferences, as the Board of Directors may determine. The rights of the holders
of Common Stock will be subject to, and may be adversely affected by, the rights
of any holders of Preferred Stock that may be issued in the future. The Company
has no present plans to issue any shares of Preferred Stock.

Furthermore, the Company is subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law which prohibit the Company
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner or meets other criteria. These provisions, and other
provisions of the Charter, may have the effect of deterring hostile takeovers or
delaying or preventing changes in control or management of the Company,
including transactions in which stockholders might otherwise receive a premium
for their shares over then current market prices. In addition, these provisions
may limit the ability of stockholders to approve transactions that they may deem
to be in their best interests. See "Risk Factors -- Anti-Takeover Provisions."

TRANSFER AGENT AND REGISTRAR

The Company has appointed LaSalle National Bank, Chicago, Illinois, as the
Transfer Agent and Registrar for the Common Stock.

47
<PAGE> 52

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the Common
Stock of the Company, and no predictions can be made regarding the effect, if
any, that market sales of shares or the availability of shares for sale will
have on the market price prevailing from time to time. As described below, only
a limited number of shares will be available for sale shortly after this
offering due to certain contractual and legal restrictions on resale.
Nevertheless, sales of substantial amounts of Common Stock of the Company in the
public market after the restrictions lapse could adversely affect the prevailing
market price.

Upon completion of this offering, the Company will have outstanding
10,666,667 shares of Common Stock. The 5,500,000 shares of Common Stock being
sold hereby will be freely tradable (other than by an "affiliate" of the Company
as such term is defined in the Securities Act) without restriction or
registration under the Securities Act. All remaining shares were issued and sold
by the Company in private transactions ("Restricted Shares") and are eligible
for public sale if registered under the Securities Act or sold in accordance
with Rule 144.

The Company's directors, executive officers and certain stockholders, who
after completion of the offering made hereby (and assuming no exercise of the
Underwriters' over-allotment option) will collectively hold an aggregate of
5,166,667 shares of Common Stock, have agreed pursuant to certain agreements
that they will not sell any Common Stock owned by them without the prior written
consent of PaineWebber Incorporated for a period of 180 days from the date of
this Prospectus (the "Lock-Up Period"). Following the expiration of the Lock-Up
Period, approximately 4,596,225 shares of Common Stock will be available for
sale in the public market subject to the volume limitations and other provisions
of Rule 144. Of the remaining shares, 285,221 shares will be available for sale
in each of April 1999 and April 2000, upon vesting of the restricted stock held
by management. See "Certain Transactions" and "Underwriting."

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, an affiliate of the Company, or a holder of
Restricted Shares who beneficially owns shares that were not acquired from the
Company or an affiliate of the Company within the previous one year, would be
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
(approximately 106,667 shares immediately after this offering), or the average
weekly trading volume of the Common Stock during the four calendar weeks
preceding the date on which notice of the sale is filed with the Securities and
Exchange Commission (the "Commission"). Sales under Rule 144 are subject to
certain requirements relating to manner of sale, notice and availability of
current public information about the Company. However, a person (or persons
whose shares are aggregated) who is not deemed to have been an affiliate of the
Company at any time during the 90 days immediately preceding the sale and who
beneficially owns Restricted Shares is entitled to sell such shares under Rule
144(k) without regard to the limitations described above; provided that at least
two years have elapsed since the later of the date the shares were acquired from
the Company or from an affiliate of the Company. The foregoing is a summary of
Rule 144 and is not intended to be a complete description of it.

The Company intends to file a registration statement on Form S-8 covering
the shares underlying the options available for grant under the Company's 1997
Stock Option Plan. See "Management -- Stock Option Plan."

48
<PAGE> 53

UNDERWRITING

The Underwriters named below, acting through PaineWebber Incorporated and
Hambrecht & Quist LLC (the "Representatives"), have severally agreed, subject to
the terms and conditions set forth in the Underwriting Agreement by and among
the Company, the Selling Stockholders and the Representatives (the "Underwriting
Agreement"), to purchase from the Company and the Selling Stockholders, and the
Company and the Selling Stockholders have agreed to sell to the Underwriters
1,050,000 shares and 4,450,000 shares, respectively, of the Company's Common
Stock, which in the aggregate equals the number of shares of Common Stock set
forth opposite the names of such Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
------------------------------------------------------------------ ---------
<S> <C>
PaineWebber Incorporated..........................................
Hambrecht & Quist LLC.............................................

Total................................................... 5,500,000
=========
</TABLE>

The Underwriting Agreement provides that the obligation of the Underwriters
to purchase all of the shares of Common Stock is subject to certain conditions.
The Underwriters are committed to purchase, and the Company and the Selling
Stockholders are obligated to sell, all of the shares of Common Stock offered by
this Prospectus, if any of the shares of Common Stock being sold pursuant to the
Underwriting Agreement are purchased.

The Company and the Selling Stockholders have been advised by the
Representatives that the Underwriters propose to offer the shares of Common
Stock to the public at the public offering price set forth on the cover page of
this Prospectus, and to certain securities dealers at such price less a
concession not in excess of $ per share. The Underwriters may allow, and
such dealers may re-allow, a discount not in excess of $ per share. After
the initial public offering, the public offering price and the concessions and
discounts may be changed by the Representatives.

The Selling Stockholders have granted an option to the Underwriters,
exercisable during the 30-day period after the date of this Prospectus, to
purchase up to 825,000 additional shares of Common Stock at the public offering
price less the underwriting discount and commissions set forth on the cover page
of this Prospectus. The Underwriters may exercise such option only to cover
over-allotments in the sale of the shares that the Underwriters have agreed to
purchase. To the extent that the Underwriters exercise such option, each of the
Underwriters will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares as the percentage of
shares of Common Stock that each such Underwriter is obligated to purchase
pursuant to the Underwriting Agreement and as shown in the table set forth
above.

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

The Company, its directors and executive officers and certain stockholders
have agreed not to offer, sell, contract to sell or grant any option to purchase
or otherwise dispose of any shares of Common Stock owned by them prior to the
expiration of 180 days from the date of this Prospectus, except (i) for shares
of Common Stock offered hereby, (ii) with the prior written consent of
PaineWebber Incorporated; and (iii) in the case of the Company, for the issuance
of shares of Common Stock upon the exercise of options or the grant of options
to purchase shares of Common Stock.

Prior to the offering, there has been no established trading market for the
shares of Common Stock. The initial public offering price for the Common Stock
offered hereby has been determined by negotiation among the Company, the Selling
Stockholders and the Underwriters. Among the factors considered in making such
determination were the history of and the prospects for the industry in which
the Company competes, an assessment of the Company's management, the past and
present operations of the Company, the historical

49
<PAGE> 54

results of operations of the Company and the trend of its revenues and earnings,
the prospects for future earnings of the Company, the general condition of the
securities markets at the time of the offering, the prices of similar securities
of generally comparable companies and other relevant factors. There can be no
assurance that an active trading market will develop for the Common Stock or
that the Common Stock will trade in the public market subsequent to the
offerings at or above the initial public offering price.

In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with this offering, creating a short position in the Common Stock for
their own account. In addition, to cover overallotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares of
the Common Stock in the open market. The Underwriters may also reclaim selling
concessions allowed to an underwriter or a dealer for distributing the Common
Stock in transactions to cover their short positions, in stabilization
transactions or otherwise. Finally, the Underwriters may bid for, and purchase,
shares of the Common Stock in market making transactions and impose penalty
bids. These activities may stabilize or maintain the market price of the Common
Stock above market levels that might otherwise prevail. The Underwriters are not
required to engage in these activities, and may end any of these activities at
any time.

LEGAL MATTERS

Certain legal matters with respect to the validity of the Common Stock
offered hereby will be passed upon for the Company by Maloney, Mehlman & Katz,
New York, New York, counsel to the Company and to CSI Partners II. Certain other
legal matters will be passed upon for the Company by Pillsbury Madison & Sutro
LLP, New York, New York, special securities counsel to the Company, and for the
Underwriters by Shearman & Sterling, San Francisco, California. Thomas J.
Maloney, Chairman of the Board of the Company, is a partner of Maloney, Mehlman
& Katz, and Mr. Maloney holds indirect beneficial equity interests in the
Company's Common Stock.

EXPERTS

The financial statements of Credentials Services International, Inc. at
September 27, 1996 and September 26, 1997 and for each of the three years in the
period ended September 26, 1997 included in this Prospectus have been audited by
Coopers & Lybrand L.L.P., independent public accountants, as stated in their
report appearing herein, and have been so included in reliance upon the report
of such firm given upon its authority as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act with respect to
the Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Common Stock offered hereby, reference is hereby made to such Registration
Statement, exhibits and schedules. Statements contained in this Prospectus
regarding the contents of any contract or other document are not necessarily
complete; with respect to each such contract or document filed as an exhibit to
the Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. A copy of the Registration
Statement, including the exhibits and schedules thereto, may be inspected
without charge at the principal office of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of such material may be obtained from
such office upon payment of the fees prescribed by the Commission.

In addition, the Commission maintains a World Wide Web site on the Internet
at http://www.sec.gov that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission.

50
<PAGE> 55

CREDENTIALS SERVICES INTERNATIONAL, INC.

INDEX TO THE FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Accountants...................................................... F-2
Balance Sheets as of September 27, 1996 and September 26, 1997......................... F-3
Statements of Operations for the fiscal years ended September 30, 1995, September 27,
1996, and September 26, 1997......................................................... F-4
Statements of Stockholders' Equity for the fiscal years ended September 30, 1995,
September 27, 1996, and September 26, 1997........................................... F-5
Statements of Cash Flows for the fiscal years ended September 30, 1995, September 27,
1996 and September 26, 1997.......................................................... F-6
Notes to Financial Statements.......................................................... F-7
</TABLE>

F-1
<PAGE> 56

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
of Credentials Services International, Inc.

We have audited the accompanying balance sheets of Credentials Services
International, Inc. (the "Company") as of September 27, 1996 and September 26,
1997, and the related statements of operations, accumulated deficit, and cash
flows for the years ended September 30, 1995, September 27, 1996 and September
26, 1997. 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 these 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 Credentials Services
International, Inc. as of September 27, 1996 and September 26, 1997, and the
results of its operations and its cash flows for the years ended September 30,
1995, September 27, 1996 and September 26, 1997 in conformity with generally
accepted accounting principles.

/s/ COOPERS & LYBRAND L.L.P.

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

Los Angeles, California

November 4, 1997

(except for Note 15

as to which the date

is November 21, 1997)

F-2
<PAGE> 57

CREDENTIALS SERVICES INTERNATIONAL, INC.

BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

ASSETS

<TABLE>
<CAPTION>
SEPTEMBER 27, SEPTEMBER 26,
1996 1997
------------- -------------
<S> <C> <C>
Current assets
Cash and cash equivalents........................................... $ 1,613 $ 413
Accounts receivable, net of allowance for uncollectible accounts of
$147 (1996) and $459 (1997)...................................... 707 2,070
Current portion of deferred member solicitation costs and related
commissions...................................................... 5,826 10,512
Prepaid member solicitation costs................................... 766 5,627
Other............................................................... 184 174
------- --------
Total current assets........................................ 9,096 18,796
------- --------
Deferred member solicitation costs and related commissions, net of
current portion..................................................... 5,278
Property and equipment, net of accumulated depreciation of $381 (1996)
and $1,092 (1997)................................................... 3,265 4,579
Purchased memberships, net of accumulated amortization of $4,265
(1996) and $6,418 (1997)............................................ 7,581 5,428
Goodwill, net of accumulated amortization of $1,063 (1996) and $1,594
(1997).............................................................. 6,909 6,378
Deferred financing costs, net of accumulated amortization of $467
(1996) and $708 (1997).............................................. 701 953
------- --------
Total assets................................................ $27,552 $ 41,412
======= ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable.................................................... $ 5,671 $ 7,674
Accrued expenses.................................................... 3,295 5,805
Current portion of note payable to bank............................. 2,200 4,420
Current portion of deferred revenue................................. 21,074 22,791
Current portion of capital lease obligations........................ 222 367
------- --------
Total current liabilities................................... 32,462 41,057
------- --------
Deferred revenue, net of current portion.............................. 9,205 9,266
Capital lease obligations, net of current portion..................... 265 145
Note payable to bank, net of current portion.......................... 6,850 4,900
Subordinated notes payable............................................ 3,000 5,826
------- --------
Total liabilities........................................... 51,782 61,194
======= ========
Stockholders' deficit
Series A Cumulative Preferred Stock, par value $0.10 per share;
5,000,000 shares authorized; no shares issued or outstanding..... -- --
Common stock, par value $.01 per share; 20,000,000 (1997) shares
authorized; 21,445 (1996), 9,616,667 (1997) shares issued and
outstanding...................................................... 1 96
Additional paid-in capital.......................................... 3,999 7,104
Accumulated deficit................................................. (28,230) (26,982)
------- --------
Total stockholders' deficit................................. (24,230) (19,782)
------- --------
Total liabilities and stockholders' deficit................. $27,552 $ 41,412
======= ========
</TABLE>

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

F-3
<PAGE> 58

CREDENTIALS SERVICES INTERNATIONAL, INC.

STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-------------------------------------------------
SEPTEMBER 30, SEPTEMBER 27, SEPTEMBER 26,
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
REVENUES
Membership fees................................... $ 12,540 $ 24,556 $ 38,039
OPERATING EXPENSES
Marketing......................................... 4,854 22,605 14,197
Membership servicing.............................. 4,128 12,999 10,852
General and administrative........................ 8,102 10,214 10,135
------- -------- --------
Total operating expenses.................. 17,084 45,818 35,184
------- -------- --------
Operating income (loss)............................. (4,544) (21,262) 2,855
Interest expense.................................. 1,239 1,185 1,455
------- -------- --------
Income (loss) before provision for income taxes and
extraordinary item................................ (5,783) (22,447) 1,400
Provision for income taxes.......................... -- -- 61
------- -------- --------
Income (loss) before extraordinary item............. (5,783) (22,447) 1,339
Extraordinary item: Loss on early extinguishment of
debt, net of income tax benefit of $61............ -- -- 91
------- -------- --------
Net income (loss)................................... $ (5,783) $ (22,447) $ 1,248
======= ======== ========
Net income (loss) per common and common equivalent
share............................................. $ (0.60) $ (2.33) $ 0.13
======= ======== ========
Weighted average common and common equivalent
shares............................................ 9,616,667 9,616,667 9,616,667
======= ======== ========
</TABLE>

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

F-4
<PAGE> 59

CREDENTIALS SERVICES INTERNATIONAL, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
SERIES A COMMON
COMMON STOCK PREFERRED STOCK STOCK ADDITIONAL
------------------- --------------- PURCHASE PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT WARRANTS CAPITAL DEFICIT TOTAL
----------- ------ ------ ------ -------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the years ended September 30,
1995 and September 27, 1996:
- -------------------------------------
Issuance of common stock........... 21,445 $ 1 $ 3,999 $ 4,000
Net loss........................... $ (5,783) (5,783)
--------- -------- --------
Balances at September 30, 1995..... 21,445 1 3,999 (5,783) (1,783)
Net loss........................... (22,447) (22,447)
-------- --------
Balances at September 27, 1996..... 21,445 1 3,999 (28,230) (24,230)
--------- ------ -------- --------
For the year ended September 26,
1997:
- -------------------------------------
Issuance of preferred stock and
common stock purchase warrant.... 3,000 $ 1 $ 1 2,998 3,000
Exercise of common stock purchase
warrant.......................... 2,123,072 21 (1) (20)
Issuance of common stock in
exchange for preferred stock..... 6,433,550 64 (3,000) (1) (63)
Issuance of common stock purchase
warrant in connection with
subordinated note payable........ 200 200
Exercise of common stock purchase
warrant.......................... 1,038,600 10 (200) 190
Net income......................... 1,248 1,248
--------- --- ------ --- ----- ------ -------- --------
Balances at September 26, 1997....... 9,616,667 $ 96 -- -- $ -- $ 7,104 $ (26,982) $(19,782)
========= === ====== === ===== ====== ======== ========
</TABLE>

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

F-5
<PAGE> 60

CREDENTIALS SERVICES INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
-------------------------------------------------
SEPTEMBER 30, SEPTEMBER 27, SEPTEMBER 26,
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)................................................ $ (5,783) $ (22,447) $ 1,248
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Membership solicitation and other deferred costs............... (10,181) (22,889) (22,731)
Amortization of membership solicitation and other deferred
costs........................................................ 5,474 21,770 12,767
Deferred membership fees....................................... 18,467 11,812 1,778
Decrease in membership servicing liability..................... (4,173) --
Depreciation and amortization.................................. 3,095 3,062 4,180
Changes in assets and liabilities affecting operating cash flows:
Accounts receivable............................................ 57 (431) (1,363)
Prepaid membership materials................................... -- (766) (4,861)
Other assets................................................... (169) (15) 10
Accounts payable and accrued liabilities....................... 2,730 5,494 4,513
-------- -------- --------
Net cash provided by (used in) operating activities.............. 9,517 (4,410) (4,459)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment.......................................... (837) (1,430) (1,730)
Purchase of assets from TRW.................................... (12,822) -- --
-------- -------- --------
Net cash used in investing activities............................ (13,659) (1,430) (1,730)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable to bank............................ 11,000 1,350 12,200
Capital lease payments......................................... (69) (217) (270)
Proceeds from sale of common stock............................. 4,000 --
Proceeds from junior subordinated note payable................. -- -- 2,800
Proceeds from common stock purchase warrant.................... -- -- 200
Proceeds from sale of preferred stock.......................... -- -- 3,000
Repayment of note payable -- bank.............................. (1,650) (1,650) (11,932)
Financing costs paid........................................... (1,169) -- (1,009)
-------- -------- --------
Net cash provided by (used in) financing activities.............. 12,112 (517) 4,989
-------- -------- --------
Net increase (decrease) in cash and cash equivalents............. 7,970 (6,357) (1,200)
Cash and cash equivalents at beginning of period................. -- 7,970 1,613
-------- -------- --------
Cash and cash equivalents at end of period....................... $ 7,970 $ 1,613 $ 413
======== ======== ========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest........................................... $ 1,166 $ 1,026 $ 1,117
Leased asset additions and related obligations................... $ 656 $ 117 $ 295
Subordinated note payable to TRW................................. $ 3,000 -- --
Preferred stock exchanged for common stock....................... -- -- 3,000
</TABLE>

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

F-6
<PAGE> 61

CREDENTIALS SERVICES INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Credentials Services International, Inc. (the "Company"), is a Delaware
corporation which provides credit report monitoring services to consumers. The
services include provision of Experian credit reports to members, prompt
notification of inquiries made into a member's Experian credit record, a
quarterly newsletter about significant credit related issues, and various other
notifications to members principally related to activity within their Experian
credit record. The Company sells primarily one- and three-year memberships to
the Credentials(R) Monitoring Service which automatically renew unless canceled
by the subscriber. New members are generally provided with one month of free
service as a trial period. The Company markets its membership programs to
consumers using direct marketing techniques, primarily by direct mail and
telemarketing campaigns conducted through endorsed co-marketing relationships
with credit card issuers and other businesses that have a large customer base,
such as banks, retailers and oil companies. The Company's headquarters are
located in Orange, California and it maintains a customer service facility in
Plano, Texas.

Prior to November 1996, the Company was wholly-owned by CIS Acquisition
Partners, L.P., a Delaware limited partnership. As discussed more fully in Note
11, through a series of equity transactions in November 1996 through March 1997,
CSI Investment Partners II, L.P., a Delaware limited partnership ("CSI Partners
II"), acquired ownership of approximately 99.75% of the Company and became the
Company's parent. The general partners of CIS Acquisition Partners, L.P. and CSI
Partners II are affiliates. The principal limited partner of CIS Acquisition
Partners, L.P. is Lincolnshire Equity Fund, L.P. The sole limited partner of CSI
Partners II is Lincolnshire Equity Fund, L.P.

2. MANAGEMENT'S PLAN

The Company incurred substantial net losses for the years ended September
30, 1995 and September 27, 1996. In addition, as of September 26, 1997, the
Company had a significant stockholders' deficit and a large working capital
deficit. Management believes that the prior year losses were primarily
attributable to the startup of the Company's operations (1995) and failed
marketing programs (1996). In 1996, the losses caused a severe liquidity
shortfall, thereby affecting the Company's ability to undertake new programs and
enter into new co-marketer relationships. In August 1996, the Company's Board of
Directors appointed a new management team.

In November 1996 and January 1997, the Company received equity infusions
aggregating $3,000,000 and, in January 1997, the bank loan was refinanced to
provide additional liquidity to the Company. The Company also received a
$3,000,000 subordinated term loan in March of 1997.

The Company's marketing strategy since September 27, 1996, has been to
rebuild the Company's core distribution channel, i.e., marketing through
financial institutions followed by expansion to other card issuing organizations
(such as oil companies and retailers) and then to other membership type
organizations. Management believes that this strategy will enable the Company to
build a larger membership base that should yield consistent and high margin
renewal income.

Management believes that its existing cash balances, funds generated from
operations and borrowing available under the Company's bank revolving line of
credit are sufficient to provide for the Company's future cash needs.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year -- The Company has a 52-week fiscal year, which ends on the
last Friday of September.

Basis of Presentation and Use of Estimates -- The accompanying financial
statements have been prepared in accordance with generally accepted accounting
principles. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and

F-7
<PAGE> 62

CREDENTIALS SERVICES INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Reclassifications -- Certain reclassifications have been made in prior
period financial statements to conform to the current presentation.

Cash and Cash Equivalents -- Cash and cash equivalents include
cash-on-hand, demand deposits and short term investments with original
maturities of three months or less.

Revenue Recognition -- Initial and renewal membership fees are generally
billed to members credit cards. An allowance for cancellation is established
based on the Company's historical cancellation experience. Deferred membership
fees are recorded, net of estimated cancellations, when the free one-month trial
period has elapsed and are amortized as membership fees on a straight-line basis
over the membership period, generally 12 to 36 months. During an initial
membership period, a member may cancel his or her membership generally for a
complete refund of the membership fee. At September 27, 1996 and September 26,
1997, the Company had memberships in the amount of $2,142,000 and $23,573,382,
respectively (before consideration of cancellations and refunds which have
generally ranged from 45% to 60%), which were in their 30-day trial period.
These amounts are not reflected in the accompanying financial statements since
revenue is not recognized during the respective 30-day trial periods.

Commission Expense -- The Company has co-marketing agreements with credit
card issuers and pays commissions under the terms of these agreements based
principally on a percentage of billings. Such commissions are deferred,
consistent with the associated revenue, and amortized to expense ratably over
the subscription period of the membership.

Deferred Member Solicitation Costs -- Member solicitation costs relate
primarily to the acquisition of new members through direct response type
marketing promotions and include payments for postage, printing, the purchase of
contact lists, telemarketing, and other direct costs incurred to acquire or
obtain members. These costs are deferred and amortized to expense on a
straight-line basis over the term of the initial membership period. However,
costs to service and retain existing memberships are expensed as incurred.

Prepaid member solicitation costs include new member acquisition costs
pertaining to solicitation promotions that were in process at the end of the
fiscal year. Accordingly, no membership fees have been received or recognized.
These costs are generally accumulated over a three- to four-month promotional
period and begin to amortize when related revenues are recognized.

The Company periodically compares deferred member solicitation costs to
related membership fees (net of related estimated direct membership servicing
costs for the membership period) generated by each marketing effort and, when
necessary, records an adjustment to recognize any impairment.

Property and Equipment -- Property and equipment are stated at cost less
accumulated depreciation. Depreciation and amortization is provided using the
straight-line method over the estimated useful lives of the related assets,
which vary from four to ten years. Expenditures for major renewals and
betterment are capitalized, while minor replacements, maintenance and repairs
which do not extend the asset lives are expensed as incurred. When assets are
sold or otherwise disposed of, the cost and related accumulated depreciation or
amortization is removed from the respective accounts, and any resulting gain or
loss is recognized.

The Company capitalizes various costs of computer software developed and
obtained for internal use including external direct costs of materials and
services and certain direct, payroll and related costs.

Purchased Memberships -- Purchased memberships represents the cost of the
purchased membership base at October 1, 1994, the date the business was
purchased by the Company from TRW, Inc. The amount

F-8
<PAGE> 63

CREDENTIALS SERVICES INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
was determined based upon the discounted estimated future net cash flows to be
generated from the purchased memberships assuming renewal rates based upon
historical experience. Purchased memberships are amortized on a straight-line
basis over a period of five years. Periodically, the Company compares actual
member renewal rates to the estimated renewal rates used in establishing the
initial cost of the purchased membership base to determine if any provision for
impairment is necessary.

Goodwill -- Goodwill represents the difference between the purchase price
of the assets acquired from TRW, Inc. and the value of the net assets acquired.
Such goodwill is being amortized on a straight-line basis over 15 years.
Periodically, the Company evaluates the actual and projected future undiscounted
cash flows of the Company to determine if any provision for impairment is
necessary.

Deferred Financing Costs -- Costs associated with obtaining long-term debt
financing have been capitalized and are amortized over the repayment term of the
related debt using a method that approximates the effective interest method.

Income Taxes -- The Company uses the liability method of accounting for
income taxes, which requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method, deferred
income taxes are recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their financial
reporting amounts at each year-end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established, when necessary, to reduce
deferred tax assets to the amount expected to be realized. The provision for
income taxes represents the tax payable for the period and the change during the
year in deferred tax assets and liabilities.

Net Income (loss) Per Common Share -- Net income (loss) per share has been
computed in accordance with Securities and Exchange Commission Staff Accounting
Bulletin (SAB) No. 83. The SAB requires that common shares issued by the Company
in the twelve months immediately preceding a proposed public offering plus the
number of common equivalent shares which became issuable during the same period
pursuant to the grant of warrants and stock options (using the treasury stock
method) at prices substantially less than the initial public offering price be
included in the calculation of common stock and common stock equivalent shares
as if they were outstanding for all periods presented.

Recently Issued Accounting Pronouncements -- In February 1997, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" ("FAS 128"). FAS 128 will change the
computation, presentation and disclosure requirements for earnings per share.
FAS 128 requires presentation of "basic" and "diluted" earnings per share, as
defined, on the face of the income statement for all entities with complex
capital structures. FAS 128 is effective for financial statements issued for
periods ending after December 15, 1997 and requires restatement of all prior
period earnings per share accounts. Management does not believe that this
restatement will have a material impact on its earnings per share statements
when adopted in fiscal 1998.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards Nos. 130, "Comprehensive Income" ("FAS 130") and
131, "Disclosures About Segments of an Enterprise and Related Information" ("FAS
131"). FAS 130 establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
FAS 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers.

F-9
<PAGE> 64

CREDENTIALS SERVICES INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. ACCOUNTS RECEIVABLE

The Company's accounts receivable represent in process credit card billings
for new members that were submitted upon the expiration of the free trial
period, in process credit card billings for renewal members, and amounts owed to
the company by certain co-marketers who billed and collected membership fees on
behalf of the Company.

5. DEFERRED MEMBER SOLICITATION COSTS AND RELATED COMMISSIONS

Activity in deferred member solicitation costs and related commissions
consists of the following:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------
SEPTEMBER 27, SEPTEMBER 26,
1996 1997
------------- -------------
<S> <C> <C>
Deferred member solicitation costs at beginning of year..... $ 4,707 $ 5,826
Member solicitation costs incurred during the year.......... 22,889 22,731
Member solicitation costs amortized to expense during the
year...................................................... (14,719) (12,171)
Member solicitation costs written-off....................... (7,051) (596)
-------- --------
Deferred members solicitation costs at end of year.......... $ 5,826 $ 15,790
======== ========
</TABLE>

Member solicitation costs written-off consists of solicitation costs
incurred which the Company could not directly relate to specific members
acquired and costs which the Company determined to be impaired based on
comparing the carrying values of the unamortized member solicitation costs for
specific marketing efforts to the unamortized membership fees (net of related
estimated direct membership servicing costs) pertaining to the members acquired
through these efforts.

6. PROPERTY AND EQUIPMENT

The Company's property and equipment as of September 27, 1996 and September
26, 1997 was as follows (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 27, SEPTEMBER 26,
1996 1997
------------- -------------
<S> <C> <C>
Office furniture................................ $ 63 $ 191
Office equipment................................ 458 381
Computer equipment.............................. 1,454 1,857
Leasehold improvements.......................... 156 220
Capitalized software............................ 1,515 3,022
------ ------
Total................................. 3,646 5,671
Less, accumulated depreciation.................. (381) (1,092)
------ ------
Net property and equipment...................... $ 3,265 $ 4,579
====== ======
</TABLE>

The Company's depreciation expense for the periods ended September 30,
1995, September 27, 1996 and September 26, 1997, was $217,000, $164,000 and
$711,000, respectively.

F-10
<PAGE> 65

CREDENTIALS SERVICES INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. MEMBERSHIP FEES

An analysis of membership fees earned is summarized as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
---------------------------------------------
SEPTEMBER 30, SEPTEMBER 27, SEPTEMBER 26,
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Membership fees collected during the year............... $ 33,846 $ 46,274 $ 61,360
Membership fees refunded................................ (2,839) (9,906) (21,543)
Recognition of prior year deferred revenue earned in the
current year.......................................... -0- 12,829 21,074
Deferral of membership fees collected in the current
year to be earned in future periods................... (18,467) (24,641) (22,852)
-------- -------- --------
Membership fees recognized during the year.............. $ 12,540 $ 24,556 $ 38,039
======== ======== ========
</TABLE>

8. NOTES PAYABLE

Principal balances of notes payable at September 27, 1996 and September 26,
1997 consist of the following (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 27, SEPTEMBER 26,
1996 1997
------------- -------------
<S> <C> <C>
Term note payable to bank....................... $ 9,050 $ 7,400
Revolving line of credit........................ -- 1,920
------- -------
9,050 9,320
Less: Current maturities........................ (2,200) (4,420)
------- -------
$ 6,850 $ 4,900
======= =======
</TABLE>

The principal balance on the note payable to bank at September 27, 1996 was
$9,050,000. The loan agreement required that the Company make quarterly interest
payments at a variable interest rate based, at the Company's option, on Prime,
the Federal Funds rate, or LIBOR. The interest rate in effect at September 27,
1996 was approximately 9.75%.

Substantially all of the Company's assets and a pledge of all of the
Company's outstanding common stock collateralized the note. The note payable
agreement contained various restrictive covenants, including provisions for
minimum debt service, cash flow, and deferred revenue to deferred costs ratios.
Additionally, such provisions prohibited the incurrence of additional
indebtedness without lender approval.

In January 1997, the note payable to bank was re-financed with another bank
which provided an $11,000,000 line of credit consisting of an $8,500,000 Term
Note and a $2,500,000 maximum amount revolving line of credit. Principal on the
Term Note is payable in eleven quarterly installments commencing March 31, 1997.
Interest is payable monthly at a variable rate based, at the Company's option,
on Prime, the Federal Funds rate or LIBOR. The interest rate in effect at
September 26, 1997 was approximately 8.41%. Substantially all of the Company's
assets and a pledge of all outstanding common stock collateralize the note. The
note payable agreement contains various restrictive covenants, including
provisions for minimum EBITDA requirements, the maintenance of minimum
subscriber levels, and debt to cash flow coverage ratios. Additionally, such
provisions prohibit the incurrence of additional indebtedness without lender
approval and restrict the Company's ability to pay dividends.

Borrowings on the Company's revolving line of credit are formula-based. The
formula is based upon the level of eligible accounts receivable, as defined in
the credit agreement, with a maximum borrowing limit of $2,500,000. The balance
borrowed on the revolving line of credit is due on September 30, 1999. Interest
is payable monthly at a variable rate based, at the Company's option, on Prime,
the Federal Funds rate or

F-11
<PAGE> 66

CREDENTIALS SERVICES INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. NOTES PAYABLE (CONTINUED)

LIBOR. The interest rate in effect at September 26, 1997 was approximately
9.50%. The revolving line of credit is collateralized by current assets,
therefore the Company classifies the obligation due under the line as a current
liability.

Future minimum principal payments due on notes payable as of September 26,
1997 are as follows (in thousands):

<TABLE>
<CAPTION>
YEARS TO END SEPTEMBER
----------------------------------------------------
<S> <C>
1998.............................................. $4,420
1999.............................................. 3,150
2000.............................................. 1,750
-------
$9,320
=======
</TABLE>

In January 1997, the Company refinanced its prior note payable to a bank
and wrote-off the remaining unamortized debt issuance costs related to that note
payable ($91,054, net of related income tax benefit of $60,702) as an
extraordinary item in the accompanying statement of operations.

9. SUBORDINATED NOTES PAYABLE

Subordinated notes payable at September 27, 1996 and September 26, 1997
consist of the following (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 27, SEPTEMBER 26,
1996 1997
------------- -------------
<S> <C> <C>
Subordinated note payable to TRW, Inc............... $ 3,000 $ 3,000
Junior subordinated note payable to Canterbury, net
of unamortized discount of $173,750............... -- 2,826
------ ------
$ 3,000 $ 5,826
====== ======
</TABLE>

In conjunction with the acquisition of "TRW Credentials", the Company
entered into a subordinated debt agreement with TRW, Inc. The principal amount
of the note is $3,000,000 due in full on December 31, 1999, with interest, based
on LIBOR, payable quarterly. As of September 27, 1996 and September 26, 1997,
the interest rates that were in effect were 9.0625% and 9.16%, respectively. The
agreement includes a mandatory prepayment based on a percentage of excess cash
as defined in the agreement.

In March 1997, Canterbury Mezzanine Capital L.P. ("Canterbury") loaned to
the Company $3,000,000 represented by a junior subordinated note payable.
Principal on the note is payable in two equal installments on March 10, 2001 and
March 10, 2002. Interest is payable semi-annually in arrears at a fixed rate per
annum equal to 12% per annum. The note payable agreement contains several
restrictive covenants, including provisions for minimum debt to cash flow
coverage ratios, limitations on number of mailings and telemarketing activity
and restrictions on the incurrence of additional indebtedness, subject to the
terms of the loan agreement.

In accordance with the provisions of the note payable to Canterbury, the
Company granted a warrant to Canterbury to purchase 1,038,600 shares of the
Company's Common Stock. The warrant is exercisable at a nominal price per share
and has a term of ten years expiring in March 2007. The number of shares and
exercise price per share subject to the warrant are subject to anti-dilution
provisions. All of the warrants were exercised by Canterbury as of September 26,
1997.

The Company allocated a portion of the proceeds received from the
Canterbury subordinated note payable to the warrant and recorded the amount
($200,000) as a discount on the Canterbury note payable.

F-12
<PAGE> 67

CREDENTIALS SERVICES INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9. SUBORDINATED NOTES PAYABLE (CONTINUED)

The discount is being amortized on a straight line basis (which approximates the
effective interest method) over the term of the Canterbury note payable. The
amount allocated to the warrant was based on management's estimate of the
relative fair values of the warrants and the subordinated note payable
(exclusive of the warrant feature) at the date of issuance.

Future minimum principal payments due on subordinated notes payable as of
September 26, 1997 are as follows (in thousands):

<TABLE>
<CAPTION>
YEARS TO END SEPTEMBER
----------------------------------------------------
<S> <C>
1998.............................................. --
1999.............................................. --
2000.............................................. $ 3,000
2001.............................................. 1,500
2002.............................................. 1,500
------
$ 6,000
======
</TABLE>

10. COMMITMENTS AND CONTINGENCIES

Operating Leases -- The Company leases office space in Plano, Texas for its
customer service facility. The lease agreement requires monthly rent payments of
$16,000 that expire on September 2001. The Company also leases office facilities
in Orange, California, which house its corporate offices. The leases require
monthly payments of $2,927 and $23,334, respectively, which expire in July 14,
1997 and December 31, 1998, respectively. Rent expenses plus taxes, insurance,
maintenance and utilities for these leases was $381,000, $516,000 and $520,000
for the years ended September 30, 1995, September 27, 1996 and September 26,
1997, respectively. The Company also leases equipment under operating leases
expiring through 2001. Rent expenses, including taxes, repair and maintenance
cost associated with these leases for the years ended September 30, 1995 and
September 27, 1996 and September 26, 1997, was approximately $73,000, $85,000
and $196,000, respectively. Future minimum rent and lease payments for each of
the five succeeding years are as follows (in thousands):

<TABLE>
<CAPTION>
YEARS TO END SEPTEMBER
----------------------------------------------------
<S> <C>
1998.............................................. $ 570
1999.............................................. 318
2000.............................................. 230
2001.............................................. 227
2002.............................................. 73
</TABLE>

F-13
<PAGE> 68

CREDENTIALS SERVICES INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

10. COMMITMENTS AND CONTINGENCIES (CONTINUED)

The Company leases computer equipment under several agreements that expire
in June and November 1998. Future minimum lease payments (net of interest) under
the Company's capitalized leases on computer equipment are as follows (in
thousands):

<TABLE>
<CAPTION>
YEARS TO END SEPTEMBER
-------------------------------------------------------------
<S> <C>
1998....................................................... $ 316
1999....................................................... 255
2000....................................................... 27
2001....................................................... 0
2002....................................................... 0
-----
Total minimum payments....................................... 598
Less amount representing interest............................ (86)
-----
$ 512
Less Current Portion......................................... (367)
-----
$ 145
=====
</TABLE>

Concentration of Credit Risk -- The Company maintains its cash accounts in
commercial banks. At September 27, 1996 and September 26, 1997, cash on deposit
exceeded the federally insured limit of $100,000 by $910,000 and $426,653,
respectively.

Litigation -- Various legal proceedings have arisen in the course of the
Company's business. While it is not possible to predict the outcome of any
litigation, management believes, based in part on advice from outside legal
counsel, that the resolution of these matters will not have a material adverse
effect on the Company's financial position or results of operations.

11. 401K RETIREMENT PLAN

The Company has a 401K salary reduction plan for the benefit of its
employees. Employees are eligible to participate after 30 days of employment.
The Company will make a matching contribution equal to 50% on the first 6% that
the employee contributes to the plan. The employer's matching portions for the
years ended September 30, 1995, September 30, 1996 and September 26, 1997 were
$35,000, $88,000 and $71,000, respectively.

12. RELATED PARTY TRANSACTIONS

In October 1994, the Company entered into a consulting agreement with
Lincolnshire Management, Inc. ("LMI"), an affiliate of CSI Partners II and CIS
Acquisition Partners, L.P. Pursuant to the agreement, LMI renders management and
financial consulting services to the Company. During fiscal year 1996, these
services included assisting the Company in refinancing and reorganizing its
operations. For the services provided, the Company paid LMI annual management
and consulting fees and expenses of $259,000 in fiscal year 1995, $368,000 in
fiscal year 1996 and $390,000 in fiscal year 1997.

During the year ended September 30, 1995, Lincolnshire Management, Inc.,
was paid $1,250,000 for professional services relating primarily to the
negotiations of the acquisition from TRW, Inc., the negotiation of bank debt
agreements and the negotiation of the Subordinated Debt Agreement.

The Warrant Agreement, as discussed in Note 7, contains a provision such
that if, prior to a period of time specified in the Warrant Agreement, the note
payable and all other amounts due under the note payable agreement have been
repaid in full, and Canterbury has received in excess of $3,000,000 in cash by
reason of

F-14
<PAGE> 69

CREDENTIALS SERVICES INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

12. RELATED PARTY TRANSACTIONS (CONTINUED)
the sale or any other disposition of all or any portion of the Warrant and
Warrant shares, Canterbury is required to pay to Lincolnshire Management, Inc.,
an affiliate of CSI Partners II, an amount equal to 25% of the amount it
receives in excess of $3,000,000.

In March 1997, Lincolnshire Management, Inc., was paid $300,000 for
professional services relating primarily to the negotiation of the bank debt and
subordinated debt agreements.

13. INCOME TAXES

The provision for income taxes for the years ended September 30, 1995,
September 27, 1996 and September 26, 1997 consists of:

<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 27, SEPTEMBER 26,
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Current:
Federal............................... $ 0 $ 0 $44
State................................. 0 0 17
-- -
--- ---
$ 0 $ 0 $61
Deferred:
Federal............................... $ 0 $ 0 $ 0
State................................. 0 0 0
-- -
--- ---
$ 0 $ 0 $ 0
-- -
--- ---
Provision for income taxes............ $ 0 $ 0 $61
=== === ===
</TABLE>

The provision (benefit) for income taxes differs from the amount that would
result from applying the Federal statutory rate as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 27, SEPTEMBER 26,
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Tax provision (benefit) at the
statutory rate.................... (34.00%) (34.00%) 34.00%
Change in valuation allowance....... 33.98 34.00 (30.74%)
Other............................... 0.02 0.00 1.10%
------- ------- -------
0.00% 0.00% 4.36%
======= ======= =======
</TABLE>

The components of the deferred tax asset and (liability) as of September
27, 1996 and September 26, 1997 are as follows (in thousands):

<TABLE>
<CAPTION>
SEPTEMBER 27, SEPTEMBER 26,
1996 1997
------------- -------------
<S> <C> <C>
Allowance for doubtful accounts........... $ 64 $ 485
Property and equipment.................... (307) (205)
Purchased membership amortization......... 1,163 1,753
Capitalized marketing costs and
commissions............................. (2,505) (3,391)
Deferred revenue.......................... 3,942 8,611
Other..................................... 84 392
Goodwill.................................. (918) (1,446)
Net operating losses...................... 10,311 5,441
-------- --------
11,834 11,640
Valuation allowance....................... (11,834) (11,640)
-------- --------
Net deferred income taxes................. $ 0 $ 0
======== ========
</TABLE>

F-15
<PAGE> 70

CREDENTIALS SERVICES INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

13. INCOME TAXES (CONTINUED)

The Company has established a valuation allowance against its deferred tax
assets due to the uncertainty surrounding the realization of such assets.
Management periodically evaluates the recoverability of the deferred tax assets.
At such time as it is determined that it is more likely than not that deferred
tax assets are realizable, the valuation allowance will be reduced.

As of September 26, 1997, the Company had net operating loss carryforwards
for Federal and state purposes of approximately $23,199,312 and $21,057,969,
respectively. The net operating loss carryforwards begin expiring after the
years ending 2010 and 2003, respectively. In the event of a "Change in
Ownership" the utilization against future taxable income of the loss
carryforwards will be subject to an annual limitation pursuant to the provisions
of the Tax Reform Act of 1988.

14. STOCKHOLDERS' DEFICIT

Preferred Stock

Each share of Series A Stock entitles its holder to receive, when and as
declared by the Board of Directors, preferential dividends which accrue
cumulatively at a compound rate of 12% per annum from the date of issuance of
each share of Series A Stock. Dividends payable with respect to each share of
Series A Stock shall be payable in cash or in shares of Series A Stock of the
Company at the issue value, at the option of the Company. In the event of
liquidation, the holders of shares of Series A Stock shall be entitled to an
amount equal to the sum of $1,000 per share of Series A Stock. The Series A
Stock is redeemable at the option of the Company at a price equal to or above
the Series A Redemption Price as outlined in the Company's Certificate of
Incorporation.

In November 1996, the Company issued 2,000 shares of Series A preferred
stock and a warrant for 2,123,072 shares of common stock in exchange for a
$2,000,000 contribution by CSI Partners II to the capital of the Company. At the
date of this transaction, all of the Company's issued and outstanding common
stock was owned by CIS Acquisition Partners, L.P. ("CIS Acquisition Partners").
As discussed in Note 1, CIS Acquisition Partners and CSI Partners II are
affiliated entities whose general partners are under common control and which
have the same principal limited partner, Lincolnshire Equity Fund, LP.

The proceeds of the $2,000,000 capital contribution from CSI Partners II
were allocated as follows: $1,999,000 to the Series A preferred stock and $1,000
to the warrant. The amount allocated to the warrant was based on the exercise
price of the warrant. Management determined that the exercise price of the
warrant was generally equivalent to its fair value since the holders of the
common stock and the warrant are affiliated entities under common control and,
accordingly, the warrant did not have a substantial effect on the underlying
beneficial ownership of the Company's common stock.

In January 1997, the Company issued 1,000 shares of Series A preferred
stock in exchange for an additional $1,000,000 contribution by CSI Partners II
to the capital of the Company required in connection with the refinancing of the
Company's then outstanding senior secured debt. In March 1997, CSI Partners II
exchanged the 3,000 shares of Series A preferred stock for 6,433,550 shares of
common stock and exercised its warrant for 2,123,072 shares of common stock.

Management Equity

Under the terms of the CSI II Partnership Agreement, a group of eleven
officers and key employees of the Company hold Class B limited partnership
interests in CSI Investment Partners II, L.P. ("CSI Partners II"), a Delaware
limited partnership, representing indirect interests in the Company Common Stock
held by that partnership. The interests held by those eleven officers and key
employees aggregate a 10% interest in CSI Partners II. The foregoing interests
were granted pursuant to agreements reached with each

F-16
<PAGE> 71

CREDENTIALS SERVICES INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

14. STOCKHOLDERS' DEFICIT (CONTINUED)

such officer in October 1996. Under the terms of the CSI II Partnership
Agreement, the interests of each of the eleven individuals vest in accordance
with a schedule which provides that one-third of such interest vests in April
1998, an additional one-third vest in April 1999, and the remaining one-third
vest in April 2000, contingent upon such individual's continued employment with
the Company. Upon vesting of an individual's interest, the Company Common Stock
underlying that interest will be distributed to such individual. Based on the
capital structure of the Company at September 26, 1997, assuming full vesting of
all such restricted shares for all of the eleven individuals, the number of
restricted shares that would be distributed would be 855,662 shares. The CSI II
Partnership Agreement required that the eleven individuals make a capital
contribution to the partnership in the aggregate amount of $660,000 in the year
2000.

The Company applied APB Opinion 25 and related Interpretations in
accounting for the management equity interests. Accordingly, no compensation
cost was recognized since the amount which management is obligated to pay for
the interests ($660,000) exceeds the estimated value of the interest ($445,000)
at the date of grant, October 1996. Had compensation cost for the management
equity interests been determined based on the fair value of the interests
consistent with the method prescribed in Statement of Financial Accounting
Standards No. 123, the Company's net income and earnings per share would not
have been affected since the discounted value of the amount which management is
obligated to pay for the interests (approximately $532,000) also exceeds the
value of the interests at the date of grant.

15. SUBSEQUENT EVENTS

In November 1997, pursuant to a transaction between CSI Partners II and
certain officers and key employees of the Company, the Class B limited
partnership interests in CSI Partners II owned by those officers and key
employees (see Note 13) were exchanged for 855,662 restricted shares of the
Company's common stock. The shares are being held in trust and are subject to
the same vesting provisions that previously applied to the Class B limited
partnership interests. In addition, in lieu of the $660,000 capital contribution
due May 1, 2000 that had been required under the CSI II Partnership Agreement,
the officers and key employees executed recourse promissory notes payable to CSI
Partners II aggregating $660,000 which mature on May 1, 2000 in consideration
for the restricted shares. Since the exchange of the Class B limited partnership
interests for the 855,662 restricted shares of common stock did not alter any of
the significant terms or provisions affecting management's equity in the
Company, no compensation cost was recorded in connection with the transaction.

In October 1997, the Company entered into a comarketing agreement with a
bank. Pursuant to the agreement, contingent upon the joint execution of
agreed-upon marketing plans, the Company has guaranteed to the bank $9 million
in commissions for the period from October 29, 1997 through December 31, 1998.

The Company is in the process of filing a registration statement for an
initial public offering of shares of equity securities. The net proceeds of the
offering will be used to repay outstanding short term and long term
indebtedness, including accrued interest thereon. At the time of the proposed
repayments of existing debt, unamortized debt issuance costs and discounts will
be written off as an extraordinary charge. The Extraordinary charge is expected
to approximate $1.1 million.

On November 21, 1997, the Board of Directors authorized a 214.4517-for-1
stock split of the Company's common stock. Additionally, common stock authorized
was increased to 20,000,000 shares and preferred stock authorized was increased
to 5,000,000 shares. All share and per share amounts have been retroactively
restated to reflect these events.

In November 1997, the Company adopted a Stock Option Plan providing for the
grant, from time to time, of options to purchase up to 800,000 shares of Common
Stock to employees and officers of the Company.

F-17
<PAGE> 72
Inside back cover:

[Logo of Credentials Services International, Inc.]

Credentials(R) Credit Report Monitoring Service

[Graphic depiction of a credit report, form of inquiry notification and
quarterly recap. Benefits of the Credentials(R) Credit Report Monitoring Service
are described as: unlimited Experian credit reports at no additional charge;
plain English easy-to-read narrative summary of data; automatic notification of
inquiries to a member's credit file; and quarterly recap of any new negative
information that has been posted to a member's credit file.]
<PAGE> 73

======================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. 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 DATE HEREOF OR THAT INFORMATION CONTAINED HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
REGISTERED SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 5
Use of Proceeds....................... 14
Dividend Policy....................... 14
Capitalization........................ 15
Dilution.............................. 16
Selected Financial Data............... 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 20
Business.............................. 26
Management............................ 37
Certain Transactions.................. 43
Principal and Selling Stockholders.... 45
Description of Capital Stock.......... 46
Shares Eligible for Future Sale....... 48
Underwriting.......................... 49
Legal Matters......................... 50
Experts............................... 50
Additional Information................ 50
Index to Financial Statements......... F-1
</TABLE>

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

UNTIL , 199 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

======================================================
======================================================

5,500,000 SHARES

LOGO
COMMON STOCK
------------------------
PROSPECTUS
------------------------

PAINEWEBBER INCORPORATED

HAMBRECHT & QUIST
------------------------

, 1997

======================================================
<PAGE> 74

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses expected to be incurred
by the Registrant and the Selling Stockholders in connection with the sale and
distribution of the securities being registered hereby, other than underwriting
discounts and commissions. All amounts are estimated except the Securities and
Exchange Commission registration fee and the Nasdaq National Market filing fee.

<TABLE>
<CAPTION>
PAYABLE BY
REGISTRANT
----------
<S> <C>
SEC registration fee............................................. $ 30,667
Nasdaq National Market filing fee................................ 47,500
Blue Sky fees and expenses....................................... 7,500
Accounting fees and expenses..................................... 350,000
Legal fees and expenses.......................................... 625,000
Printing and engraving expenses.................................. 225,000
Registrar and Transfer Agent's fees.............................. 8,000
Miscellaneous fees and expenses.................................. 6,333
----------
Total.................................................. $1,300,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the "Securities Act"). Article Tenth of the
Registrant's Amended and Restated Certificate of Incorporation (Exhibit 3.1(ii)
hereto) and Article VI of the Registrant's Amended and Restated Bylaws (Exhibit
3.2 hereto) provide for indemnification of the Registrant's directors, officers,
employees and other agents to the extent and under the circumstances permitted
by the Delaware General Corporation Law. The Registrant has also entered into
agreements with its directors and officers that will require the Registrant,
among other things, to indemnify them against certain liabilities that may arise
by reason of their status or service as directors or officers to the fullest
extent not prohibited by law.

The Underwriting Agreement (Exhibit 1.1) provides for indemnification by
the Underwriters of the Registrant, its directors and officers, and by the
Registrant of the Underwriters, for certain liabilities, including liabilities
arising under the Securities Act, and affords certain rights of contribution
with respect thereto.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

(a) In October 1994, the Registrant issued 21,445 shares of its Common
Stock to CIS Acquisition Partners, L.P., for aggregate cash
consideration of $4.0 million. The Registrant relied on the exemption
provided by Section 4(2) of the Securities Act.

(b) Pursuant to the terms of agreements reached in October 1996, a group of
eleven officers and key employees of the Company were granted indirect
contingent equity interests in the Registrant aggregating a 10% equity
interest in the Registrant. In November 1997, these indirect contingent
equity interests were restructured so that shares of restricted stock
in the Registrant were granted in exchange for the indirect contingent
equity interests previously granted. The shares remain subject to
vesting conditions of Common Stock Agreements which provide that each
of such officer's shares vest in accordance with a schedule which
provides that one-third of such shares vest in April 1998, an
additional one-third vest in April 1999, and the remaining one-third
vest in April 2000, contingent upon such individual's continued
employment with the Registrant. Assuming full vesting of all such
shares for all of the eleven individuals, the number of restricted
shares that would be distributed would be 855,662 shares. In addition,
each of the eleven officers and key employees will execute a recourse
promissory note in consideration of his respective equity interest. The
promissory notes are

II-1
<PAGE> 75

payable to CSI Partners II and aggregate $660,000 in principal amount
($214,500 for Mr. Thompson, $6,600 for Mr. Caudle, $49,500 for Mr.
Cossel, $62,700 for Mr. Rothe, and $95,700 for Mr. Pruthi). The
promissory notes bear interest at 6.64% per annum, are payable annually
and mature on May 1, 2000.

(c) In November 1996, the Registrant issued 2,000 shares of Series A
Cumulative Preferred Stock (the "Series A Preferred Stock") and granted
warrants to acquire 2,123,072 shares of its Common Stock to CSI
Investment Partners II, L.P. ("CSI Partners II"), for aggregate cash
consideration of $2.0 million. In January 1997, the Registrant issued
1,000 additional shares of Series A Preferred Stock to CSI Partners II,
for aggregate cash consideration of $1.0 million. In each case, the
Registrant relied on the exemption provided by Section 4(2) of the
Securities Act. In March 1997, as a condition of a $3.0 million
subordinated loan to the Registrant made by Canterbury Mezzanine
Capital, L.P. ("Canterbury Capital"), CSI Partners II exchanged its
3,000 outstanding shares of Series A Preferred Stock for 6,433,550
shares of the Registrant's Common Stock and exercised its warrants (at
a nominal exercise price aggregating $1,000) for 2,123,072 shares of
Common Stock.

(d) In March 1997, the Registrant granted warrants to purchase a total of
1,038,600 shares of its Common Stock to Canterbury Capital in
connection with Canterbury Capital's $3.0 million subordinated loan to
the Registrant. The Registrant relied on the exemption provided by
Section 4(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES

(a) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
-------------- -------------------------------------------------------------------------
<S> <C>
**1.1 Form of Underwriting Agreement.
**3.1(i) Certificate of Incorporation of the Registrant, as amended.
3.1(ii) Amended and Restated Certificate of Incorporation of the Registrant.
**3.2 Amended and Restated Bylaws of the Registrant.
4.1 Specimen Common Stock Certificate.
4.2 Form of Registration Rights Agreement among the Registrant, CSI
Investment Partners II, L.P., and Canterbury Mezzanine Capital, L.P.
4.3 Warrant Agreement between the Registrant and Canterbury Mezzanine
Capital, L.P., dated as of March 10, 1997, as amended.
5.1 Opinion of Maloney, Mehlman & Katz.
**10.1+ Consumer Credit Subscriber Service Agreement, dated October 18, 1994,
entered into by TRW Inc., and the Registrant.
**10.2 Office Lease, dated as of June 13, 1995, by and between TGALMA Limited
and the Registrant, as amended.
**10.3 SubLease Agreement, dated as of December 6, 1994, by and between
Cal-Surance Associates and the Registrant; Office Lease dated August 23,
1988, by and between Metropolitan Tishman Tower Venture and Cal-Surance
Associates, Inc., as amended.
**10.4 Employment Agreement, dated as of May 9, 1997, by and between David C.
Thompson and the Registrant.
**10.5 Employment Agreement, dated as of August 15, 1996, by and between Chuck
Caudle and the Registrant.
**10.6 Letter Agreement, dated August 16, 1995, by and between Mike Cossel and
the Registrant.
**10.7 Letter Agreement, dated September 5, 1995, by and between James Rothe and
the Registrant.
**10.8 Employment Agreement, dated as of December, 1996, by and between Vineet
Pruthi and the Registrant.
**10.9 Letter Agreement, dated October 1, 1994, by and between Gerry Keehan and
the Registrant.
</TABLE>

II-2
<PAGE> 76

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
-------------- -------------------------------------------------------------------------
<S> <C>
**10.10 Employment Agreement, dated as of December 3, 1996, by and between Donald
J. Shea, Jr., and the Registrant.
10.11 Credentials Services International, Inc. 1997 Stock Option Plan.
**10.12(i) Credit Agreement, dated as of January 14, 1997, between the Registrant
and LaSalle National Bank.
**10.12(ii) Revolving Note, dated January 14, 1997, of the Registrant payable to
LaSalle National Bank.
**10.12(iii) Term Note, dated January 14, 1997, of the Registrant payable to LaSalle
National Bank.
**10.12(iv) Security Agreement, dated as of January 14, 1997, between the Registrant
and LaSalle National Bank.
**10.12(v) Patent, Trademark and Copyright Security Agreement, dated as of January
14, 1997, between the Registrant and LaSalle National Bank.
**10.12(vi) Collateral Assignment of Contracts, dated as of January 14, 1997, between
the Registrant and LaSalle National Bank.
**10.12(vii) Pledge Agreement, dated as of January 14, 1997, made by CSI Investment
Partners II, L.P., in favor of LaSalle National Bank.
**10.12(viii) Pledge Agreement, dated as of January 14, 1997, made by CIS Acquisition
Partners, L.P., in favor of LaSalle National Bank.
10.12(ix) First Amendment to Credit Agreement, dated March 10, 1997, between the
Registrant and LaSalle National Bank.
10.12(x) Second Amendment to Credit Agreement, dated August 13, 1997, between the
Registrant and LaSalle National Bank.
10.12(xi) Third Amendment to Credit Agreement, dated September 26, 1997, between
the Registrant and LaSalle National Bank.
10.13 Form of Director and Officer Indemnification Agreement.
10.14 Form of Common Stock Agreement among the Registrant, CSI Investment
Partners II, L.P., and the Restricted Shareholder named therein.
**10.15 Amended and Restated Agreement of Limited Partnership of CSI Investment
Partners II, L.P., dated as of October 7, 1997.
10.16 Amended and Restated Agreement of Limited Partnership of CSI Investment
Partners II, L.P., dated as of November 15, 1997.
11.1 Statement re Computation of Per Share Earnings.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Maloney, Mehlman & Katz (included in its opinion filed as
Exhibit 5.1 to this Registration Statement).
**24.1 Power of Attorney.
27.1 Financial Data Schedule.
</TABLE>

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

** Filed previously.

+ Confidential treatment has been requested with respect to certain portions of
this agreement.

(b) FINANCIAL STATEMENT SCHEDULES

Financial statement schedules other than those referred to above have been
omitted because they are not applicable or not required or because the
information is included elsewhere in the Financial Statements or the notes
thereto.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of
the Securities and

II-3
<PAGE> 77

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

The undersigned Registrant hereby undertakes that:

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

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

(3) It will provide to the underwriters at the closing(s) specified in
the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.

II-4
<PAGE> 78

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Orange,
State of California, on the 21(st) day of November, 1997.

CREDENTIALS SERVICES INTERNATIONAL, INC.

By /s/ DAVID C. THOMPSON
----------------------------------------
David C. Thompson
President and Chief Executive Officer

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

<TABLE>
<CAPTION>
NAME TITLE DATE
- --------------------------------------------- ------------------------- -------------------

<C> <S> <C>
/s/ DAVID C. THOMPSON President, Chief November 21, 1997
- --------------------------------------------- Executive Officer and
David C. Thompson Director (Principal
Executive Officer)

/s/ VINEET PRUTHI* Executive Vice President November 21, 1997
- --------------------------------------------- and Chief Financial
Vineet Pruthi Officer (Principal
Financial and Accounting
Officer)

/s/ THOMAS J. MALONEY* Chairman and Director November 21, 1997
- ---------------------------------------------
Thomas J. Maloney

/s/ C. KENNETH CLAY* Director November 21, 1997
- ---------------------------------------------
C. Kenneth Clay

/s/ NICHOLAS DUNPHY* Director November 21, 1997
- ---------------------------------------------
Nicholas Dunphy

/s/ WILLIAM A. HALL* Director November 21, 1997
- ---------------------------------------------
William A. Hall

/s/ M. GERARD KEEHAN* Director November 21, 1997
- ---------------------------------------------
M. Gerard Keehan

*By: /s/ DAVID C. THOMPSON
----------------------------------------
David C. Thompson
Attorney-in-fact
</TABLE>

II-5
<PAGE> 79

EXHIBIT INDEX

<PAGE> 80

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
-------------- -------------------------------------------------------------------------
<S> <C>
**10.12(vi) Collateral Assignment of Contracts, dated as of January 14, 1997, between
the Registrant and LaSalle National Bank.
**10.12(vii) Pledge Agreement, dated as of January 14, 1997, made by CSI Investment
Partners II, L.P., in favor of LaSalle National Bank.
**10.12(viii) Pledge Agreement, dated as of January 14, 1997, made by CIS Acquisition
Partners, L.P., in favor of LaSalle National Bank.
10.12(ix) First Amendment to Credit Agreement, dated March 10, 1997, between the
Registrant and LaSalle National Bank.
10.12(x) Second Amendment to Credit Agreement, dated August 13, 1997, between the
Registrant and LaSalle National Bank.
10.12(xi) Third Amendment to Credit Agreement, dated September 26, 1997, between
the Registrant and LaSalle National Bank.
10.13 Form of Director and Officer Indemnification Agreement.
10.14 Form of Common Stock Agreement among the Registrant, CSI Investment
Partners II, L.P., and the Restricted Shareholder named therein.
**10.15 Amended and Restated Agreement of Limited Partnership of CSI Investment
Partners II, L.P., dated as of October 7, 1997.
10.16 Amended and Restated Agreement of Limited Partnership of CSI Investment
Partners II, L.P., dated as of November 15, 1997.
11.1 Statement re Computation of Per Share Earnings.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Maloney, Mehlman & Katz (included in its opinion filed as
Exhibit 5.1 to this Registration Statement).
**24.1 Power of Attorney.
27.1 Financial Data Schedule.
</TABLE>

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

** Filed previously.

+ Confidential treatment has been requested with respect to certain portions of
this agreement.

<PAGE> 1
EXHIBIT 3.1(ii)

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

CREDENTIALS SERVICES INTERNATIONAL, INC.

Pursuant to Section 245 of the
General Corporation Law of Delaware

Credentials Services International, Inc., a corporation
organized and existing under the laws of the State of Delaware (the
"Corporation"), does hereby certify as follows:

1. The name of the Corporation is Credentials Services
International, Inc.

2. The original Certificate of Incorporation of the
Corporation was filed with the Secretary of State of the State of Delaware on
May 20, 1993. The name under which the Corporation was initially incorporated
was Lincolnshire Broadcasting, Inc.

3. The provisions of the Certificate of Incorporation of
the Corporation as heretofore amended and/or supplemented, and as herein
amended, are hereby restated and integrated into the single instrument which is
hereinafter set forth, and which is entitled Amended and Restated Certificate
of Incorporation of Credentials Services International, Inc. without any
further amendments other than the amendments herein certified and without any
discrepancy between the provisions of the Certificate of Incorporation as
heretofore amended and supplemented and the provisions of the said single
instrument hereinafter set forth.

4. This Amended and Restated Certificate of
Incorporation was duly adopted in accordance with the provisions of Sections
242 and 245 of the General Corporation Law, as amended, of the State of
Delaware (the "GCL") by the Board of Directors and by the written consent of
the stockholders of the Corporation in accordance with Section 228 of the GCL.

5. The effective time of the Amended and Restated
Certificate of Incorporation and of the amendments herein certified shall be
November 21, 1997.

6. The Certificate of Incorporation of the Corporation,
as amended and restated herein, shall at the effective time read in its
entirety as follows:

<PAGE> 2

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

CREDENTIALS SERVICES INTERNATIONAL, INC.

Pursuant to Section 245 of the
General Corporation Law of Delaware

FIRST: The name of the Corporation is Credentials Services
International, Inc. (hereinafter the "Corporation").

SECOND: The address of the Corporation's registered office in
the State of Delaware is c/o The Corporation Trust Company, 1209 Orange Street,
City of Wilmington, County of New Castle, State of Delaware 19801. The name of
the Corporation's registered agent at such address is The Corporation Trust
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, as amended, of the State of Delaware (the "GCL"), as
set forth in Title 8 of the Delaware Code.

FOURTH: The Corporation is to have perpetual existence.

FIFTH: (a) The total number of shares of capital stock which
the Corporation has authority to issue is Twenty Five Million (25,000,000)
shares, consisting of:

(1) Twenty Million (20,000,000) shares of Common Stock,
par value $.01 per share (the "Common Stock");

(2) Five Million (5,000,000) shares of Preferred Stock,
par value $.10 per share (the "Preferred Stock"); and

(b) The following is a statement of the designations,
preferences and relative, participating, optional and other special rights, and
qualifications, or restrictions thereof in respect of each class of stock of
the Corporation.

(1) Common Stock

A. Changes in Number of Shares. Each share of Common Stock of
the Corporation issued and outstanding or held in the treasury of the
Corporation immediately prior to the effective time of this Amended and
Restated Certificate of Incorporation, is changed into 214.4517 fully paid and
nonassessable shares of Common Stock, par value $.01 per share, and at the
close of business on such date, each holder of record of Common Stock shall,
without further action, be and become the holder of 213.4517 additional share(s)
of Common Stock for each share of Common Stock held of record immediately prior
thereto. At the effective time of this Amended and Restated Certificate of
Incorporation, each certificate representing shares of Common Stock outstanding
or held in the treasury of the Corporation immediately prior to such time shall
continue to represent the same number of shares of common stock and as promptly
as practicable thereafter, the Corporation shall

1
<PAGE> 3

issue and cause to be delivered to each holder of record of shares of Common
Stock at the close of business on such date one or more additional
certificate(s) representing 213.4517 additional shares of Common Stock for each
share of Common Stock held of record immediately prior thereto.

B. Voting Rights. Each share of Common Stock shall
entitle the holder thereof to one vote on each matter submitted to a vote of
the stockholders of the Corporation.

C. Dividend Rights. Subject to provisions of law and of
this Amended and Restated Certificate of Incorporation, the holders of Common
Stock shall be entitled to receive dividends at such times and in such amounts
as may be determined by the Board of Directors of the Corporation.

D. Liquidation Rights. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary
(sometimes referred to herein as a "Liquidation"), after payment or provision
for payment of the debts and other liabilities of the Corporation and the
preferential amounts to which the holders of any outstanding shares of
Preferred Stock of any series shall be entitled upon Liquidation, the holders
of Common Stock shall be entitled to share ratably in the remaining assets of
the Corporation.

(2) Preferred Stock

A. Reclassification and Change in Number of Authorized
Shares:

(i) Each authorized share of "Series A Cumulative
Preferred Stock", par value $.10 per share, is
reclassified as "Preferred Stock", par value $.10 per
share; and

(ii) the authorized number of shares of Preferred
Stock, par value $.10 per share, is increased from
2,000 shares to 5,000,000 shares.

B. Preferred Stock. Shares of Preferred Stock may be
issued from time to time in one or more series. Subject to the limitations set
forth in this Amended and Restated Certificate of Incorporation and any
limitations prescribed by the law of the State of Delaware, the Board of
Directors is expressly authorized, prior to issuance of any series of Preferred
Stock, to fix by resolution or resolutions providing for the issue of any
series, the number of shares included in such series and the designation,
relative powers, preferences and participating, optional or other special
rights, and the qualifications, limitations or restrictions of such series.
Pursuant to the foregoing general authority vested in the Board of Directors,
but (except as otherwise provided in the proviso to section (b)(2)(B)(v) of
this Article FIFTH) not in limitation of the powers conferred on the Board of
Directors thereby and by the law of the State of Delaware, the Board of
Directors is expressly authorized to determine with respect to each series of
Preferred Stock:

(i) the distinctive designation of such series and the
number of shares (which number from time to time may be decreased by
the Board of Directors, but not below the number of such shares then
outstanding, or may be increased by the Board of Directors unless
otherwise provided in creating such series) constituting such series;

2
<PAGE> 4

(ii) the rate and time at which, and the preferences and
conditions under which, dividends shall be payable on shares of such
series, the status of such dividends as cumulative, or non-cumulative,
the date or dates from which dividends, if cumulative, shall
accumulate, and the status of such shares as participating or
non-participating after the payment of dividends as to which such
shares are entitled to any preference;

(iii) the right, if any, of holders of shares of such
series to convert such shares into, or to exchange such shares for,
shares of any other class or classes or of any other series of the
same class, the prices or rates of conversion or exchange, and
adjustments thereto, and any other terms and conditions applicable to
such conversion or exchange;

(iv) the rights and preferences, if any, of the holders of
shares of such series upon the liquidation, dissolution or winding up
of the affairs of, or upon any distribution of the assets of, the
Corporation, which amount may vary depending upon whether such
liquidation, dissolution, or winding up is voluntary or involuntary,
and, if voluntary, may vary at different dates, and the status of the
shares of such series as participating or non-participating after the
satisfaction of any such rights and preferences;

(v) the voting powers, if any, of the holders of shares
of such series which may, without limiting the generality of the
foregoing, include (A) the general right to one vote (or more or less
than one vote) per share on every matter (including, without
limitation, the election of directors) voted on by the stockholders
without regard to class and (B) the limited right to vote, as a series
by itself or together with other series of Preferred Stock or together
with all series of Preferred Stock as a class, upon such matters,
under such circumstances and upon such conditions as the Board of
Directors may fix, including, without limitation, the right, voting as
a series by itself or together with other series of Preferred Stock or
together with all series of Preferred Stock as a class, to elect one
or more directors of the Corporation in the event there shall have
been a default in the payment of dividends on any one or more series
of Preferred Stock; provided, however, that notwithstanding the
provisions of the preceding subclause (B) or any other provisions of
this paragraph (b) to the contrary, the holders of Preferred Stock,
considered in the aggregate (whether voting by individual series or
together with other series of Preferred Stock or together with all
series of Preferred Stock as a class), shall not have the right to a
separate class vote for the election of one or more directors of the
Corporation except in the event there shall have been a default in the
payment of dividends on any one or more series of Preferred Stock and,
in such event, shall not have the right to a separate class vote for
more than a total of two directors;

(vi) the times, terms and conditions, if any, upon which
shares of such series shall be subject to redemption, including the
amount which the holders of shares of such series shall be entitled to
receive upon redemption (which amount may vary under different
conditions or at different redemption dates) and the amount, terms,
conditions and manner of operation of any purchase, retirement or
sinking fund to be provided for the shares of such series;

(vii) the limitations, if any, applicable while shares of
such series are outstanding on the payment of dividends or making of
distributions on, or the acquisition or redemption of, Common Stock or
any other class of shares ranking junior, either as to dividends or
upon liquidation, to the shares of such series;

3
<PAGE> 5
(viii) the conditions or restrictions, if any, upon the
issue of any additional shares (including additional shares of such
series or any other class) ranking on a parity with or prior to the
shares of such series either as to dividends or upon liquidation; and

(ix) any other relative powers, preferences and
participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of shares of such
series;

in each case, so far as not inconsistent with the provision of this
Amended and Restated Certificate of Incorporation or the GCL. Unless
otherwise provided by the Board of Directors, all shares of Preferred
Stock shall be identical and of equal rank and, unless otherwise
provided by the Board of Directors, all shares of each series of
Preferred Stock shall be identical and of equal rank except as to the
dates from which cumulative dividends, if any, thereon shall be
cumulative.

B. As used in this Amended and Restated Certificate of
Incorporation, the term "Full Voting Preferred Stock" shall mean Preferred
Stock of any one or more series the holders of which shall be entitled to vote
on every matter (including, without limitation, the election of directors)
voted on by the stockholders without regard to class.

SIXTH: In determining the number of the record holders of
outstanding shares of any class of stock of the Corporation for the purpose of
computing or determining the method of computing the vote or determining the
right to vote at any meeting of stockholders or of a class of stockholders, the
original stock ledger of the Corporation as at the close of business on the
record date fixed for such meeting or, if the stock transfer books of the
Corporation shall have been closed for a period immediately preceding the date
of such meeting, then as at the close of business on the date as of which such
stock transfer books were so closed, shall be conclusive for all purposes, and
in determining the number of the record holders of outstanding shares of any
class of stock of the Corporation for any other purpose, the original stock
ledger of the Corporation as at the close of business on the date as of which
the determination is being made, shall be conclusive for all purposes; all
notwithstanding any other provision of this Amended and Restated Certificate of
Incorporation.

SEVENTH: (a) Subject to any rights of holders of any
outstanding preferred stock to elect additional directors under specified
circumstances, the number of directors of the Corporation shall be fixed from
time to time as provided in the By-laws of the Corporation.

(b) Commencing with the annual election of directors at the
first annual meeting of stockholders held after the date hereof, the directors
shall be divided into three classes. Membership in such classes shall be as
nearly equal in number as possible, given the total number of authorized
directors. The term of office of directors of the first class elected at the
first such annual meeting of stockholders (or special meeting of stockholders
held in lieu thereof) after the date hereof shall expire at the first annual
meeting of stockholders held after their election. The term of office of
directors of the second class elected at such first annual meeting of
stockholders shall expire at the second annual meeting of stockholders held
after their election. The term of office of directors of the third class
elected at such first annual meeting of stockholders shall expire at the third
annual meeting of stockholders held after their election. At the annual
election at each annual meeting of stockholders held after such first annual
meeting of stockholders the successors to the class of

4
<PAGE> 6

directors whose terms expire in that year shall be elected to serve for terms
of three years, so that the terms of office of one class of direcors shall
expire in each year. Each director shall hold office until his or her
successor is elected and qualified or until his or her earlier resignation or
removal. All references in this paragraph (b) to annual meetings of
stockholders shall be deemed to include special meetings of stockholders held
in lieu thereof.

(c) Subject to any rights of holders of Preferred Stock
of any series, and unless the Corporation's Board of Directors otherwise
determines, any vacancy occurring in the Board of Directors caused by death,
resignation, increase in number of directors or otherwise may be filled by the
affirmative vote of a majority of the remaining members of the Board of
Directors, though less than a quorum, or by a sole remaining director. Except
as otherwise provided by law, any such vacancy may not be filled by the
stockholders of the Corporation.

EIGHTH: (a) The Board of Directors shall have power without
the assent or vote of the stockholders:

(1) To make, alter or repeal the By-laws of the
Corporation; to fix and vary the amount of shares to be
reserved for any proper purpose; to set apart out of any funds
of the Corporation available for dividends a reserve or
reserves for any proper purpose and to abolish the same in the
manner in which it was created; to fix and determine and to
vary the amount of the working capital of the Corporation; to
determine the use and disposition of the working capital and
of any surplus or net profits over and above the capital of
the Corporation determined as provided by law, and to fix the
times for the declaration and payment of dividends; to
authorize and cause to be executed mortgages and liens,
without limit as to amount, upon the real and personal
property of the Corporation; and to fix and determine the fees
and other compensation to be paid by the Corporation to its
directors;

(2) To determine from time to time whether, and to
what extent, times and places, and under what conditions and
regulations the accounts and books of the Corporation (other
than the stock ledger) or any of them, shall be open to the
inspection of the stockholders; and no stockholder shall have
any right to inspect any account, book or document of the
Corporation except as conferred by statute, unless authorized
by a resolution of the stockholders or directors; and

(3) To make donations for the public welfare or
for charitable, scientific or educational purposes; and to
cause the Corporation to cooperate with other corporations or
with natural persons, or to act alone, in the creation and
maintenance of community funds or charitable, scientific, or
educational instrumentalities, and to make donations for the
public welfare or for charitable, scientific, or educational
purposes.

(b) The directors in their discretion may submit any contract
or act for approval or ratification at any annual meeting of the stockholders
or at any other meeting of the stockholders called for the purpose of
considering any such act or contract, and any contract or act that shall be
approved or be ratified by the vote of the holders of a majority of the stock
of the Corporation which is represented in person or by proxy at such meeting
and entitled to vote thereat (provided that a

5
<PAGE> 7

lawful quorum of stockholders be there represented in person or by proxy) shall
be as valid and as binding upon the Corporation and upon all the stockholders
as though it had been approved or ratified by every stockholder of the
Corporation, whether or not the contract or act would otherwise be open to
legal attack because of directors' interest, or for any other reason.

(c) In addition to the power and authorities hereinbefore or
by statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this certificate, and to any By-laws from time to time
made by the stockholders; provided, however, that no By-laws so made shall
invalidate any prior act of the directors which would have been valid if such
By-law had not been made.

NINTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director for any act or omission; provided, however,
that the foregoing shall not eliminate or limit the liability of a director (i)
for any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the GCL, or (iv) for any transaction from which the director derived an
improper personal benefit, it being the intention of the foregoing provision to
eliminate the liability of the Corporation's directors to the Corporation or
its stockholders to the fullest extent permited by Section 102(b)(7) of the
GCL. If the GCL is hereafter amended to permit further elimination or
limitation of the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the GCL as so amended. Any repeal or modification of this
Article NINTH by the stockholders of the Corporation or otherwise shall not
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.

TENTH: (a) Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative, investigative or otherwise
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director, officer or
employee of the Corporation or is or was serving at the request of the
Corporation as a director, officer or employee of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer or employee or in
any other capacity while serving as a director, officer or employee, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the GCL, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including penalties, fines, judgments, attorney's
fees, amounts paid or to be paid in settlement and excise taxes or penalties
imposed on fiduciaries with respect to (i) employee benefit plans, (ii)
charitable organizations or (iii) similar matters) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer or employee
and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that the Corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person (other than pursuant to paragraph (b) of this

6
<PAGE> 8

Article TENTH) only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred
in this paragraph (a) of Article TENTH shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that if the GCL requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under this paragraph (a) of Article TENTH or otherwise.

(b) If a claim which the Corporation is obligated to pay
under paragraph (a) of this Article TENTH is not paid in full by the
Corporation within 60 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the GCL for
the Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standards of conduct
set forth in the GCL, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel or its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.

(c) The provisions of this Article TENTH shall cover
claims, actions, suits and proceedings, civil or criminal, whether now pending
or hereafter commenced, and shall be retroactive to cover acts or omissions or
alleged acts or omissions which heretofore have taken place. If any part of
this Article TENTH should be found to be invalid or ineffective in any
proceeding, the validity and effect of the remaining provisions shall not be
affected.

(d) The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final disposition
conferred in this Article TENTH shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, provision of this
Amended and Restated Certificate of Incorporation, By-Law, agreement, vote of
stockholders or disinterested directors or otherwise.

(e) The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the GCL.

7
<PAGE> 9
(f) The Corporation may, to the extent authorized from
time to time by the Board of Directors, grant rights to indemnification, and
rights to be paid by the Corporation the expenses incurred in defending any
proceeding in advance of its final disposition, to any agent of the Corporation
to the fullest extent of the provisions of this Article TENTH with respect to
the indemnification and advancement of expenses of directors, officers and
employees of the Corporation.

ELEVENTH: Every asserted right of action by or on behalf of
the Corporation or by or on behalf of any stockholder against any past, present
or future member of the Board of Directors, or any committee thereof, or
against any officer or employee of the Corporation or any subsidiary thereof,
arising out of or in connection with any bonus, supplemental compensation,
stock investment, stock options or other plan or plans for the benefit of any
employee, irrespective of the place where such right of action may arise or be
asserted and irrespective of the place of residence of any such director,
member, officer or employee, shall cease and be barred upon the expiration of
three years from the later of the following dates: (a) the date of any alleged
act or omission in respect of which such right of action may be asserted to
have arisen, or (b) the date upon which the Corporation shall have made
generally available to its stockholders information with respect to, as the
case may be, the aggregate amount credited for a fiscal year to a bonus or
supplemental compensation reserve, or the aggregate amount of awards in a
fiscal year of bonuses or supplemental compensation, or the aggregate amount of
stock optioned or made available for purchase during a fiscal year, or the
aggregate amount expended by the Corporation during a fiscal year in connection
with any other plan for the benefit of such employees, to all or any part of
which such asserted right of action may relate; and every asserted right of
action by or on behalf of any employee, past, present or future, or any spouse,
child, or legal representative thereof, against the Corporation or any
subsidiary thereof arising out of or in connection with any such plan,
irrespective of the place where such asserted right of action may arise or be
asserted, shall cease and be barred by the expiration of three years from the
date of the alleged act or omission in respect of which such right of action
shall be asserted to have arisen.

TWELFTH: Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in
a summary way of this Corporation or of any creditor or stockholder thereof or
on the application of any receiver or receivers appointed for this Corporation
under the provisions of Section 291 of the GCL or on the application of
trustees in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of Section 279 of the GCL order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders of this Corporation, as the case may be, and also on this
Corporation.

THIRTEENTH: The By-Laws of the Corporation may be altered,
amended or repealed at any meeting of the Board of Directors or of the
stockholders, provided that notice of such

8
<PAGE> 10

alteration, amendment or repeal be contained in the notice of such meeting of
the Board of Directors or stockholders (subject, in the case of meetings of
stockholders, to the provisions of Article II of the By-laws), as the case may
be. All such amendments must be approved by the affirmative vote of the
holders of not less than a majority of the total voting power of all classes of
outstanding capital stock, voting together as a single class (if effected by
action of the stockholders), or by the affirmative vote of directors
constituting not less than a majority of the entire Board of Directors (if
effected by action of the Board of Directors).

FOURTEENTH: The Corporation reserves the right to rescind,
amend, alter, change, or repeal any provision contained in this Amended and
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.

FIFTEENTH: Elections of directors need not be by written
ballot unless the By-Laws of the Corporation shall otherwise provide.

SIXTEENTH: Wherever a term shall be used in the singular in
this Amended and Restated Certificate of Incorporation, it shall be deemed in
all appropriate circumstances to include also the plural, and wherever a term
shall be so used in the plural, it shall similarly be deemed to include also
the singular.

IN WITNESS WHEREOF, Credentials Services International, Inc.
has caused this Amended and Restated Certificate of Incorporation to be signed
by David C. Thompson, its President and Chief Executive Officer, and attested
to by Allan D.L. Weinstein, its Secretary, this 21st day of November, 1997.

CREDENTIALS SERVICES
INTERNATIONAL, INC.

By: /s/
----------------------------
NAME: David C. Thompson
ITS: President and CEO
ATTEST:

By: /s/
----------------------------
NAME: Allan D.L. Weinstein
ITS: Secretary

<PAGE> 1
Exhibit 4.1

- ---------------- ----------------
NUMBER SHARES
[LOGO OF CREDENTIALS SERVICES
CS INTERNATIONAL, INC.]

- ---------------- ----------------
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

THIS CERTIFICATE IS TRANSFERABLE IN SEE REVERSE FOR CERTAIN
THE CITY OF CHICAGO OR THE CITY OF DEFINITIONS AND RESTRICTIONS
NEW YORK CUSIP 225307 10 7

COMMON STOCK
--------------------------------------------------------
THIS CERTIFIES THAT

IS THE RECORD HOLDER OF
--------------------------------------------------------

fully paid and non-assessable shares of Common Stock,
par value $.01 per share, of
CREDENTIALS SERVICES INTERNATIONAL, INC.

(the "Corporation"), a Delaware corporation. The shares represented by this
certificate are transferable only on the stock transfer books of the
Corporation by the holder of record hereof, or by his duly authorized attorney
or legal representative, upon the surrender of this certificate properly
endorsed. This certificate is not valid until countersigned and registered by
the Corporation's transfer agent and registrar. This security is not a deposit
or account and is not federally insured or guaranteed.

In Witness Whereof the Corporation has caused this certificate to be
executed by the facsimile signatures of its duly authorized officers and has
caused a facsimile of its corporate seal to be hereunto affixed.

DATED:

/s/ DAVID C. THOMPSON COUNTERSIGNED AND REGISTERED:
PRESIDENT AND LASALLE NATIONAL BANK
CHIEF EXECUTIVE OFFICER (CHICAGO)
TRANSFER AGENT
AND REGISTRAR

[CORPORATE SEAL OF CREDENTIALS SERVICES INTERNATIONAL, INC.]

/s/ ALLAN WEINSTEIN BY
SECRETARY AUTHORIZED SIGNATURE

<PAGE> 2
CREDENTIALS SERVICES INTERNATIONAL, INC.

A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights as established, from time to time, by the Certificate
of Incorporation of the Corporation and by any certificate of determination,
the number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon request and without charge
at the principal office of the Corporation.

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

<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - __________ Custodian ___________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of Under Uniform Gifts to Minors
survivorship and not as tenants Act ____________________________
in common (State)
UNIF TRANS MIN ACT - __________Custodian ___________
(Cust) (Minor)
under Uniform Transfers to Minors
Act_____________________________
(State)
</TABLE>

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, ___________________________ hereby sell, assign and
transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

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

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

________________________________________________________________________________

__________________________________________________________________________Shares
of Common Stock represented by the within certificate, and do hereby
irrevocably constitute and appoint

________________________________________________________________________Attorney
to transfer the said shares on the books of the within named Corporation with
full power of substitution in the premises.

Dated __________________________________

________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAMES AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.

Signature(s) Guaranteed

By________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

<PAGE> 1
EXHIBIT 4.2

FORM OF REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of December __,
1997, is made by and among CREDENTIALS SERVICES INTERNATIONAL, INC., a Delaware
corporation (the "Company"), and CANTERBURY MEZZANINE CAPITAL, L.P.
("Canterbury") and CSI INVESTMENT PARTNERS II, L.P.("CSI Partners II") (each, a
"Holder" and collectively, the "Holders");

W I T N E S S E T H :

WHEREAS, CSI Partners II holds _______ shares of the Company's Common
Stock, par value $.01 per share, and Canterbury holds _______ shares of the
Company's Common Stock, par value $.01 per share (the "Shares");

WHEREAS, CSI Partners II will sell _______ Shares pursuant to the
Company's Registration Statement on Form S-1, and Canterbury will sell _______
Shares pursuant to the Company's Registration Statement on Form S-1;

WHEREAS, after giving effect to sales of Shares pursuant to the
Company's Registration Statement on Form S-1, CSI Partners II will remain the
holder of _______ Shares and Canterbury will remain the holder of _____ Shares
(collectively such remaining Shares are sometimes referred to herein as the
"Retained Shares");

WHEREAS, the Company has agreed to provide the Holders certain demand
and incidental registration rights under the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations thereunder, or any similar successor
statute, with respect to the Retained Shares and;

NOW, THEREFORE, the Company hereby agrees, and the Holders hereby
jointly and severally agree as follows:

1. Restrictions on Transfer. (a) The Holder
represents that all Shares held are for its own account, for investment and not
with a view to any distribution or public offering within the meaning of the
Act. The Holder acknowledges that the Retained Shares have not been registered
under the Act and agrees that it will not sell or otherwise transfer any of its
Retained Shares except upon the terms and conditions specified herein.

(b)(i) Subject to the "Lock-up" provisions
restricting the sale of the Retained Shares pursuant to Section 5(n) of the
Underwriting Agreement among the Company, PaineWebber Incorporated and
Hambrecht & Quist, representatives of the underwriters (the "Representatives"),
the Holder agrees, and each subsequent transferee described in paragraph (ii)
below shall agree, that it will not transfer Retained Shares except in
accordance with this Agreement, except:

1
<PAGE> 2
(A) pursuant to Rule 144 under the Act;

(B) pursuant to Rule 144A under the Act;

(D) pursuant to any other exemption from, or
otherwise in a transaction not subject to, the registration
requirements of the Act or any applicable state securities
laws (as confirmed in an opinion of counsel to the transferor
and reasonably satisfactory to the Company to the effect that
the proposed transfer may be effected without registration
under the Act);

(E) a transfer by the Holder to any wholly owned
Subsidiary of the Holder, or

(F) pursuant to an effective registration statement
under the Act;

provided that no such transfer may be made if it will result in there being in
excess of __ registered holders of the Retained Shares.

(ii) This Certificate and each other certificate
representing the Shares issued to the Holder or to a
subsequent transferee pursuant to Sections 1(b)(i)(B), (C),
(D) (unless the legal opinion delivered in connection
therewith is to the effect that such legend is not required in
order to assure compliance with the Act and applicable state
securities laws) or (E) shall include a legend in
substantially the following form:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR TO AN EXEMPTION FROM,
OR OTHERWISE IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF SUCH ACT, WHICH TRANSACTION SHALL BE THE
SUBJECT OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY."

(c) Prior to any proposed transfer of any Retained
Shares, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, which notice shall set forth the
date of such proposed sale. Each holder wishing to effect a transfer of any
Retained Share pursuant to clause (B), (D) (unless the legal opinion delivered
in connection therewith is to the effect that delivery of such an agreement is
not required in order to assure compliance with the Act and applicable state
securities laws) or (E) of Section 1(b)(i) hereof, shall also furnish to the
Company an agreement by the transferee thereof that it is taking and holding
such Shares subject to the terms and conditions specified herein.

(d) The restrictions set forth in this Section 1
shall terminate and cease to be effective with respect to any Retained Shares
transferred pursuant to clause (A),

2
<PAGE> 3

(C), (D) (if the legal opinion delivered in connection therewith is to the
effect that such restrictions on transfer are not required to assure compliance
with the Act and applicable state securities laws) or (F) of Section 1(b)(i)
hereof. Whenever such restrictions shall so terminate, the holder of such
Shares shall be entitled to receive from the Company, without expense (other
than transfer taxes, if any), certificates evidencing Retained Shares not
bearing the legend set forth in Section 1(b) hereof, at which time the Company
will also rescind any transfer restrictions relating thereto.

(e) With a view to making available to the Holder
and subsequent holders of Retained Shares the benefits of certain rules and
regulations of the Securities and Exchange Commission (the "SEC") (including,
without limitation, Rule 144 and Rule 144A under the Act) which may permit the
sale of Retained Shares to the public without registration, the Company agrees,
commencing at such time and for so long as a public market legally exists for
the Shares, to take any and all actions as may be required of it to make
available to the Holder and such subsequent holders such benefits, including
without limitation, to:

(i) make and keep public information available as
those terms are understood and defined in Rule 144 under the
Act or any successor provision thereto;

(ii) make and keep available the information
specified in Rule 144A(d)(4) under the Act or any successor
provision thereto;

(iii) file with the SEC in a timely manner all
reports and other documents required of the Company under the
Act and the Securities Exchange Act of 1934 (the "Exchange
Act"); and

(iv) so long as the Holders or any subsequent
holders own any Retained Shares, furnish to the Holders or
such holders, as applicable, forthwith upon request a written
statement by the Company as to its compliance with the
information or reporting requirements of Rule 144 and Rule
144A, or any successor provision thereto, and of the Act and
the Exchange Act, a copy of the most recent annual or
quarterly report of the Company filed with the SEC and such
other reports and documents of the Company and other
information in the possession of, or reasonably obtainable by,
the Company as the Holders or such holders may reasonably
request in availing itself of any rule or regulation of the
SEC allowing the Holders or such holders to sell any such
securities without registration.

2. Registration Rights. As used in this Section 2,
the term "Shares" or "Registrable Shares" includes all Retained Shares and
other securities which may be issued by the Company to the Holders by means of
any conversions, stock splits, stock dividends, recapitalizations,
reclassifications or the like. As used in this Section 2, the term "Holder of
Registrable Shares" shall mean only CSI Partners II, Canterbury and their
permitted assigns pursuant to Section 4(a) of this Agreement.

3
<PAGE> 4
(a) If, at any time during the period commencing on
the date hereof and ending on December __, 2007, the common stock of the
Company is listed or admitted to trading on any national securities exchange,
Holders of Registrable Shares owning at least 50% of the Retained Shares may,
by written notice to the Company (a "Registration Notice"), request that the
Company register under the Act not less than [__%] of all Shares then owned by
such Holders of Registrable Shares in the aggregate, provided, however, that in
no event shall the Company be required to register under the Act less than ___
Shares held by such Holders, as a group, or by any single Holder. Upon receipt
by the Company of any such notice, the Company will notify all Holders of
Registrable Shares of its intention to file a registration statement in respect
of such Shares with the SEC, at least 30 days prior to the filing of any such
registration statement with the SEC. Upon the written request of any Holder of
Registrable Shares given to the Company within 15 Business Days after receipt
by such Holder of Registrable Shares of any such notice from the Company, which
request shall state the number of Shares to be included in the registration
statement or post-effective amendment to the registration statement, the
Company shall cause all such Shares to be included in such registration
statement and use its best efforts to effect promptly the registration of the
Shares under the Act. If the Company receives a Registration Notice after the
Company has agreed to enter into a consolidation or merger of the Company with
or into any other corporation or to sell, lease, convey or otherwise dispose of
all or substantially all of the properties and assets of the Company to any
other corporation, the Company may delay the registration provided for in this
Section 2(a) until the earlier of (i) the date on which such consolidation,
merger, sale, lease, conveyance or other disposition has occurred or (ii) 90
days having elapsed since the Company received the original notice from Holders
of Registrable Shares requesting registration of the Shares. The Company shall
not be obligated to file more than two registration statements at the request
of the Holders of any Registrable Shares pursuant to this Section 2(a);
provided that the restriction set forth in this sentence shall not apply to any
request following the failure to include more than 10% of the Shares requested
by Holders of Registrable Shares to be included in any registration statement
filed by the Company pursuant to Section 2(b) by reason of any of the
conditions specified in the proviso to Section 2(d) hereof, and the Company
shall not be obligated to file a registration statement more than once in any
consecutive nine-month period or in violation of any underwriting agreement to
which the Company is a party, provided, further, if the Company qualifies for
the use of Form S-3, as promulgated by the SEC, or any successor "short form"
registration form thereto ("Form S-3") then at any time after the first date
that the Company is qualified to use Form S-3, any Holder shall have the right
to cause the Company to use its best efforts to effect the registration under
the Act of at least ______ Shares of the Registrable Shares on behalf of such
Holder and other Holders on Form S-3 on one occasion during any consecutive
nine-month period.

(b) If, at any time during the period commencing on
the date hereof and ending on December __, 2007, the Company proposed to
register any of its securities under the Act, other than a registration
effected solely to implement any employee benefit plan or a transaction to
which Rule 145 promulgated under the Act is applicable, at each such time the
Company shall give written notice to all Holders of Registrable Shares of its
intention to file a registration statement in respect of such securities with
the SEC, at least 30 days prior to filing any such registration statement with
the SEC. Upon the written request of any Holder of Registrable Shares given to
the Company, which request shall state the number of Shares to be included in
the registration statement or post-effective amendment to the registration
statement,

4
<PAGE> 5

the Company shall cause all such Shares to be included in such registration
statement and use its best efforts to effect promptly the registration of the
Shares so included under the Act. If the registration with respect to which
the Company gives notice pursuant to this Section 2(b) is for a registered
public offering involving an underwriting, the Company shall so advise the
Holders of Registrable Shares of such underwriting as part of the written
notice of the proposed registration.

(c) Whenever the Company is to effect the
registration of any Shares under the Act, as provided herein, the Company
shall:

(i) cause a registration statement or post-effective
amendment to such registration statement to be filed with the
SEC on an appropriate form with respect to such Shares and use
its best efforts to cause such registration statement or post-
effective amendment to become and remain effective as provided
herein;

(ii) prepare and file with the SEC such amendments
and supplements to such registration statement or
post-effective amendment to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement or
post-effective amendment effective for a period of up to 180
days and to comply with the provisions of the Act, and
regulations of the SEC promulgated thereunder, with respect to
the sale or other disposition of all Shares covered by such
registration statement or post-effective amendment, including
such amendments and supplements as may be necessary to reflect
the intended method of disposition from time to time of the
prospective seller or sellers of such Shares;

(iii) provide the Holders of Registrable Shares or
persons designated by them such reasonable number of copies of
such prospectuses in preliminary and definitive form or
supplements thereto in conformity with the requirements of the
Act as may be reasonably required and such other documents as
such Holders of Registrable Shares may reasonably request to
facilitate the public sale or disposition of the Shares by
such Holders of Registrable Shares;

(iv) as expeditiously as possible, notify each seller
of such Shares if, at any time when a prospectus relating to
such Shares is required to be delivered under the Act, any
event shall have occurred as a result of which the prospectus
then in use with respect to such Shares would include an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading or for any other
reason it shall be necessary to amend or supplement such
prospectus in order to comply with the Act and prepare and
furnish to all sellers a reasonable number of copies of a
supplement to, or an amendment of, such prospectus which will
correct such statement or omission or effect such compliance;

(v) register or qualify the Shares covered by such
registration statement or post-effective amendment to such
registration statement under such other

5
<PAGE> 6

securities, blue sky or other applicable laws of each
jurisdiction within the United States as each of the Holders
of Registrable Shares shall reasonably request to enable each
Holder of Registrable Shares to consummate the public sale or
other disposition in such jurisdiction of such Shares by such
Holder of Registrable Shares;

(vi) use its best efforts to keep the holders of such
Shares informed of the Company's best estimate of the earliest
date on which such registration statement or any
post-effective amendment or supplement thereto will become
effective and promptly notify such holders and the managing
underwriters, if any, participating in the distribution
pursuant to such registration statement or post-effective
amendment or supplement thereto of the following: (A) when
such registration statement or a post-effective amendment or
supplement thereto becomes effective or is approved, (B) of
the issuance by any competent authority of any stop order
suspending the effectiveness or qualification of any Shares
included in such registration statement for sale in any
jurisdiction;

(vii) furnish to the sellers of such Shares, on the
date that such Shares are delivered to the underwriters for
sale in connection with a registration, if such Shares are
being sold through underwriters or, if such Shares are not
being sold through underwriters, on the date that the
registration statement with respect to such Shares becomes
effective under the Act, (A) an opinion of such independent
counsel as has represented the Company for the purposes of
such registration, dated such date, in form and substance as
is customarily given by counsel to underwriters in an
underwritten public offering and (B) a "comfort" letter dated
such date from the independent public accountants who have
certified the Company's financial statements included in the
registration statement, in form and substance as is
customarily given by independent certified public accountants
to underwriters in an underwritten public offering;

(viii) make available to its security holders, as
soon as practicable, an earnings statement covering a period
of at least twelve months which satisfies the provisions of
Section 11(a) of the Act and Rule 155 thereunder; and

(ix) cooperate with the sellers of such Shares and
the underwriters, if any, of such Shares, give each seller of
such Shares, and the underwriters, if any, of such Shares and
their respective counsel and accountants, such access to its
books and records and such opportunities to discuss the
business of the Company with its officers and independent
public accountants as shall be necessary to enable them to
conduct a reasonable investigation within the meaning of the
Act and, in the event that Shares are to be sold in an
underwritten offering, enter into an underwriting agreement
containing customary representations and warranties,
covenants, conditions and indemnification provisions.

(d) All expenses incurred in effecting any
registration of the Shares including, without limitation, all registration and
filing fees, printing expenses, expenses of compliance with blue sky laws, fees
and disbursements of counsel for the Company, the

6
<PAGE> 7

reasonable fees and expenses of one counsel for the Holders who are selling the
Shares (selected by those holding a majority of the Shares being registered)
and expenses of any audits incidental to, or required by, any such registration
(including any audits for period other than the fiscal year of the Company)
shall be borne by the Company, except underwriting discounts or commissions
attributable to the Shares; provided, however, that any rights under paragraphs
(a) through (d) of this Section 2 are expressly subject to the following
condition: if the managing underwriter of any underwritten offering
determines, and advises the Company in writing at any time, that the inclusion
in the registration of any Shares belonging to the Holders of Registrable
Shares would interfere in any way with the successful marketing of the
securities proposed to be registered by the Company or would decrease the price
at which the securities of the Company could be offered or increase the
underwriters' discount, then the Company will include in such registration only
such number of Shares which the Company is advised by the managing underwriter
can be sold in such offering and the number of Shares sought to be registered
by each seller (which term shall include each holder of Shares, including the
Company) shall be appropriately reduced (i) pro rata among the sellers in
proportion to the number of Shares sought to be registered by all such sellers
in the event the Shares included in such registration statement equal or exceed
20% of all outstanding Shares, (ii) pro rata among the Holders of Registrable
Shares and all holders of Shares (other than the Company) in proportion to the
number of Shares sought to be registered by all such sellers in the event of
any other registration pursuant to Section 2(b) or (iii) pro rata among all
sellers of Shares (other than the Holders of Registrable Shares) in proportion
to the number of Shares sought to be registered by all such sellers in the
event of any registration pursuant to Section 2(a). Any Shares withdrawn under
the preceding sentence from such underwriting shall, unless the Holder of
Registrable Shares requests otherwise, be included in such registration but
shall not be transferred in a public distribution prior to 270 days after the
effective date of the registration statement relating thereto.

3. Indemnification. (a) In the event that any
registration statement is filed with the SEC and becomes effective with respect
to Shares in accordance with Section 2, the Company agrees to indemnify and
hold harmless each Holder of Registrable Shares and each person, if any, who
controls such Holder of Registrable Shares within the meaning of Section 15 of
the Act and each and all of them from and against any and all losses, claims,
demands, damages, costs, expenses or liabilities, joint or several, to which
each or all of them may become subject under the Act, the Exchange Act or any
other statute or at common law or otherwise. Except as hereinafter provided,
the Company agrees to reimburse each of the Holders of Registrable Shares and
each such controlling person for any legal or other expenses reasonably
incurred by such Holder of Registrable Shares and each such controlling person
for any legal or other expenses reasonably incurred by such Holder of
Registrable Shares or such controlling person in connection with investigating
or defending any actions, whether or not resulting in any liability. Such
indemnification and reimbursement shall only apply insofar as such losses,
claims, demands, damages, costs, expenses, liabilities or actions arise out of,
or are based upon, any untrue statement or alleged untrue statement of a
material fact contained in such registration statement or in the prospectus
contained therein (as from time to time amended or supplemented by the Company)
or arise out of, or are based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. In addition, such indemnification and reimbursement
shall not be made if such

7
<PAGE> 8

untrue statement or alleged untrue statement or omission or alleged omission
was made in such registration statement or the prospectus contained therein in
reliance upon and in conformity with, information furnished in writing to the
Company in connection therewith by any Holder of Registrable Shares expressly
for use therein. This indemnity agreement shall be in addition to any
liability which the Company may otherwise have.

(b) Each Holder of Registrable Shares shall
indemnify and hold harmless the Company, each of its directors and officers who
shall have signed any such registration statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, from and
against any and all loses, claims, demands, damages, costs, expenses or
liabilities, joint or several, to which each or all of them may become subject
under the Act, the Exchange Act or any other statute or at common law or
otherwise. Except as hereinafter provided, each Holder of Registrable Shares
agrees to reimburse the Company and each such director, officer or controlling
person for any legal or other expenses reasonably incurred by the Company or
such director, officer or person in connection with investigating or defending
any actions, whether or not resulting in any liability. Such indemnification
and reimbursement shall only be made insofar as such losses, claims, demands,
damages, costs, expenses, liabilities or actions arise out of, or are based
upon, any untrue statement or alleged untrue statement of a material fact
contained in such registration statement or in the prospectus contained therein
(as from time to time amended or supplemented by the Company) or arise out of,
or are based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made not
misleading. In addition, such indemnification and reimbursement shall not be
made unless such untrue statement or alleged untrue statement or omission or
alleged omission was in such registration statement or the prospectus contained
therein in reliance upon, and in conformity with, information furnished in
writing to the Company in connection therewith by such Holder of Registrable
Shares expressly for use therein. This indemnity agreement shall be in
addition to any liability which such Holder of Registrable Shares may otherwise
have.

(c) Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (a) or (b) of this Section 3 of written
notice of the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party shall, if a claim
thereof is made against the indemnified party pursuant to the provisions of
paragraph (a) or (b) of this Section 3, notify the indemnifying party of the
commencement thereof, but the failure of the indemnified party to notify the
indemnifying party shall not relieve the indemnifying party from any liability
which it may have to any indemnified party otherwise than hereunder except to
the extent the indemnifying party is actually prejudiced by such failure. If a
proceeding is commenced against any indemnified party and such indemnified
party notifies the indemnifying party of the commencement thereof in writing,
the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party (who may also be
counsel to the indemnifying party, if satisfactory to the indemnified party) to
represent the indemnified party and any other persons the indemnifying party
may designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and disbursements of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party shall have failed to retain

8
<PAGE> 9

counsel for the indemnified party as aforesaid, (ii) the indemnifying party and
such indemnified party shall have mutually agreed to the retention of such
counsel or (iii) representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding or due to the availability
of different or additional legal defenses to such indemnified party. It is
understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and disbursements of more than one separate firm to act as counsel for the
indemnified party. No indemnifying party shall be liable to an indemnified
party for any settlement of any action or claims without the consent of the
indemnifying party.

4. Miscellaneous.

(a) Assignment. The right of the Holders to have the
Retained Shares registered pursuant to Section 2(a) of this Agreement shall not
be transferable or assignable, in whole or in part, to any other party or
parties except to officers, directors, controlling persons (within the meaning
of the Act) or any partners (including general and limited partners) of
Canterbury or CSI Partners II, respectively, provided, however, that any such
permitted transferree or assignee shall acquire such registration rights
subject to all of the conditions and limitations set forth in this Agreement.

(b) Notices. Any notice or other communication required
or which may be given hereunder shall be in writing and shall be delivered
personally, or telegraphed, telexed or telecopied, or sent by certified,
registered or express mail postage prepaid, and shall be given when so
delivered personally, or telegraphed, telexed or telecopied, or if mailed, two
days after mailing, as follows (or to such other address as any party may from
time to time specify in writing pursuant to the notice provisions hereof):

If to the Company:

Credentials Services International, Inc.
333 City Boulevard West, 10th Floor
Orange, California 92868
Attention: President
Telephone No.: (714) 704-6470
Telecopier No.: (714) 704-6503

With a copy to:

Maloney, Mehlman & Katz
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Attention: Melvin Katz, Esq.
Telephone No.: (212) 972-0220
Telecopier No.: (212) 972-0111

9
<PAGE> 10
and

Pillsbury Madison & Sutro, LLP
520 Madison Avenue
New York, NY 10022
Attention: James McLaughlin, Esq.
Telephone No.: (212) 328-4810
Telecopier No.: (212) 328-4824

If to Canterbury:

Canterbury Mezzanine Capital, L.P.
600 Fifth Avenue - 23rd Floor
New York, NY 10020
Attention:
Telephone No.: (212) 332-1568
Telecopier No.: (212) 332-1584

With a copy to:

Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Mayme M. Greer, Esq.
Telephone No.: (212) 474-1022
Telecopier No.: (212) 474-3700

If to CSI Partners II:

CSI Partners II, L.P.
c/o Lincolnshire Management
780 Third Avenue - 45th Floor
New York, NY 10017
Attention: T.J. Maloney, Esq.
Telephone No.: (212) 319-3633
Telecopier No.: (212) 755-5457

With a copy to:

Maloney, Mehlman & Katz
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Attention: Melvin Katz, Esq.
Telephone No.: (212) 972-0220
Telecopier No.: (212) 972-0111

10
<PAGE> 11
(c) Entire Agreement. This Agreement contains the entire
agreement between the Company and each of the Holders, in respect of the
subject matter hereof, and supersedes all prior agreements, written or oral,
with respect thereto.

(d) Binding Nature. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and, with respect to the
Holders, their respective heirs, executors, personal representatives and
successors, and with respect to the Company, its successors and assigns.

(e) Amendment. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and any term or condition hereof may
be waived, only by a written instrument executed by the Company and by both of
the Holders or, in the case of a waiver, by the party waiving compliance. No
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any right, power or privilege hereunder, nor any single or partial exercise of
any right, power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. The
rights and remedies herein provided are cumulative and are not exclusive of any
rights or remedies that any party may otherwise have at law or in equity.

(f) Governing Law. This Agreement is made in, and shall
be governed by and construed in accordance with, the internal laws of the State
of Delaware without giving effect to the provisions thereof pertaining to
conflicts and choices of law.

(g) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument; provided, however, that no counterpart
signature page shall be effective without the execution thereof by the Company.

* * * * * *

11
<PAGE> 12
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

THE COMPANY:
CREDENTIALS SERVICES
INTERNATIONAL, INC.

By:_____________________________________
Name:
Title:

THE HOLDERS:

CANTERBURY MEZZANINE CAPITAL, L.P.,

By: Canterbury Capital, LLC, its
general partner

By:_____________________________________
Name:
Title:

CSI INVESTMENT PARTNERS II, LTD.,

By: Credentials II G.P.L.P.;
its General Partner,
By: Credentials II G.P., Inc.;
its General Partner

By:_____________________________________
Name: Thomas J. Maloney
Title: Vice President

<PAGE> 1

EXHIBIT 4.3

WARRANTS TO PURCHASE

5,454.55 SHARES OF COMMON STOCK OF

CREDENTIALS SERVICES INTERNATIONAL, INC.

granted to

CANTERBURY MEZZANINE CAPITAL, L.P.

<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Method of Exercise; Payment; Issuance of New Certificate; Transfer and Exchange; Execution . . . 2

3. Stock Fully Paid; Reservation of Shares; Divisibility of Warrants . . . . . . . . . . . . . . . 3

4. Adjustment of Number of Shares and Warrant Price . . . . . . . . . . . . . . . . . . . . . . . . 3

5. Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

6. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

8. Covenants of the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

9. Option to Sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

11. Liquidity Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

12. Adoption of Management Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

13. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

14. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

15. Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

16. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

17. Benefits of Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

18. Exchange, Loss or Destruction of Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 20

19. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

20. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>

Schedule I Capital Stock

Exhibit A Exercise Form
Exhibit B Assignment
<PAGE> 3
FORM OF WARRANT AGREEMENT

WARRANTS TO PURCHASE
5,454.55 SHARES OF COMMON STOCK
CREDENTIALS SERVICES INTERNATIONAL, INC.

THE WARRANTS evidenced by this certificate (the "Certificate")
have been issued in accordance with that certain Subordinated Loan Agreement
dated as of March 10, 1997 (the "Loan Agreement"), between Credentials Services
International, Inc. (the "Issuer"), a Delaware corporation, and Canterbury
Mezzanine Capital, L.P. (the "Lender"), a Delaware limited partnership. Unless
otherwise provided herein, terms used herein that are defined in the Loan
Agreement and not defined herein shall have the meanings ascribed thereto in
the Loan Agreement. In consideration of the premises and covenants of the
Lender set forth in the Loan Agreement, the Lender or its registered assigns
(sometimes hereinafter referred to as the "Warrantholder" or collectively as
"Warrantholders") hereby is granted the right to purchase at any time during
the period commencing the date hereof and ending at 5:00 p.m., New York City
time, on March 10, 2007 (the "Expiration Date") (such period is hereinafter
referred to as the "Exercise Period"), 5,454.55 shares of common stock, par
value $.01 per share (the "Shares" or "Common Stock"), of the issuer in
accordance with the terms and conditions set forth herein.

1. Representations and Warranties. The Issuer hereby
represents and warrants to the Lender that:

(a) The Issuer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has all necessary power and authority to execute and deliver this
Certificate, to issue the Warrants (as defined below) and to perform its
obligations under this Certificate and the Warrants.

(b) The execution, delivery and performance by the Issuer
of this Certificate, the issuance of the Warrants and the issuance of the
Warrant Shares upon exercise of the Warrants (the "Warrant Shares") have been
duly authorized by all necessary corporate action and do not and will not
conflict with, or result in a breach of, or require any consent under, the
organizational documents of the Issuer or any applicable law or regulation or
any order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which the Issuer is a party or by
which it or its property is bound or to which it or its property is subject, or
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any lien under the terms of any such agreement or
instrument.

(c) This Certificate has been duly executed and delivered
by the Issuer and constitutes the legal, valid and binding obligation of the
Issuer, enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles relating
to enforceability. The Warrants constitute legal, valid, binding and
enforceable obligations of the Issuer, and the Warrant Shares, when issued upon
exercise of the Warrants in accordance with the terms hereof, will be duly
<PAGE> 4
2

authorized, validly issued, fully paid and nonassessable shares of the Shares
with no personal liability attaching to the ownership thereof.

(d) (i) The authorized capital stock of the Issuer
consists of 50,000 Shares and 2,000 shares of Series A Cumulative Preferred
Stock, par value $.10 per share (the "Series A Shares"), of which 40,000 Shares
and no Series A Shares are issued and outstanding and owned of record as set
forth on Schedule 1, and (ii) the Warrant Shares issuable to the Lender upon
exercise of the Warrants, would, if issued on the date hereof, represent 12% of
the sum of (A) 40,000 Shares, being the number of Shares outstanding as of the
date hereof, plus (B) 5,454.55 Warrant Shares. Other than the outstanding
Shares referred to in the immediately preceding sentence and the Warrants, there
are no outstanding options, warrants, conversion rights or other rights to
obtain any Shares or any other security convertible into or exchangeable for
Shares. All Shares were issued in compliance with the certificate of
incorporation and all applicable Requirements of Law (including, without
limitation, all applicable Federal and state securities laws), and filings
required to be made pursuant to such Requirements of Law in connection with the
sale of the Shares have been duly and properly made.

2. Method of Exercise; Payment; Issuance of New
Certificate; Transfer and Exchange; Execution. The Warrants evidenced by this
Certificate (the "Warrants") may be exercised by the Warrantholder at any time
and from time to time during the Exercise Period, in whole or in part, by the
surrender of this Certificate, together with the exercise form attached hereto
as Exhibit A (the "Exercise Form") duly completed and executed, at the
principal office of the Issuer, by payment to the Issuer, by certified or
cashier's check, an amount equal to the Warrant Price (as defined in the next
succeeding sentence). For the purposes of this Certificate, the term "Warrant
Price" shall mean $.10 per Share, or such other price as shall result from the
adjustments specified in Section 4. Such Shares shall be deemed to be issued
to the Warrantholder as of the close of business on the date on which the
Warrants shall have been surrendered and payment shall have been made for the
States. The Issuer will, or will direct its transfer agent to, issue, as soon
as practicable after any exercise of any Warrant, and in any event within five
business days thereafter, at the Issuer's expense (including the payment by it
of any applicable issue taxes), in the name of, and deliver to, the
Warrantholder, a certificate or certificates for the number of fully paid and
nonassessable Shares as to which such Warrant is so exercised. The
certificates for the Shares so delivered shall be in such denominations as may
be reasonably specified by the Warrantholder and shall be issued in the name of
the Warrantholder.

The Warrants shall be transferable only on the books of the
Issuer maintained at its principal office upon delivery thereof by a
Warrantholder, or by such Warrantholder's duly authorized attorney or
representative, such Warrants accompanied by proper evidence of succession,
assignment or authority to transfer, together with the form of the assignment
attached hereto as Exhibit B (the "Assignment Form"), duly completed and
executed. Transfer and assignments of the Warrants shall be recorded on the
books of the Issuer. Notwithstanding the foregoing, any attempted transfer or
assignment other than as permitted in accordance with Section 5 shall be void.

This Certificate is executed on behalf of the Issuer by the
manual signature of a duly authorized officer of the Issuer. In case any
officer of the Issuer who shall have signed this Certificate shall cease to be
such an officer of the Issuer prior to issuance or any exercise of the Warrants
represented hereby, this Certificate may nevertheless be issued and delivered
or exercised with the same force and effect as though all of the persons who
signed the same continued as such officers of the Issuer. This Certificate may
be signed on behalf of the Issuer by any person who at the date of execution of
this Certificate was an authorized officer of Issuer, whether or not at the
date of this
<PAGE> 5
3

Certificate any such person is such an officer of the Issuer. This Certificate
shall be dated as of the original issue date (whether upon initial issuance,
transfer or exchange or in lieu of a mutilated, lost, stolen or destroyed
Certificate). The Issuer shall keep or cause to be kept a register of the
Warrantholders.

3. Stock Fully Paid; Reservation of Shares; Divisibility of Warrants. The
Issuer covenants and agrees that all Shares shall, upon issuance, be fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof. The Issuer further covenants and agrees that, during the
Exercise Period, the Issuer shall, at all times, have authorized and reserved,
for the purpose of the issue upon exercise of the Warrants, at least the maximum
number of Shares as are issuable upon the exercise of the Warrants.
Furthermore, the Issuer shall, at its expense, from time to time take all action
which may be necessary to obtain and keep effective any and all permits,
consents and approvals of governmental agencies and authorities which may be or
become requisite in connection with the issuance, sale, transfer and delivery of
the Warrants and the exercise of the Warrants and the issuance, sale, transfer,
and delivery of Shares upon exercise of the Warrants, and the Issuer shall
expeditiously, upon each reservation of Shares, procure the listing thereof
(subject to issuance or notice of issuance) on all stock exchanges, if any, on
which such Shares are then listed. The Warrants represented by this Certificate
may be divided into Warrants representing one Share or multiples thereof, upon
surrender at the principal office of the Issuer on any Business Day, without
charge to any Warrantholder. Upon any such division, and in accordance with the
provisions of Section 1, the Warrants may be transferred of record to a name
other than that of the Warrantholder of record; provided, however, that the
Warrantholder shall be required to pay any and all transfer taxes with respect
thereto.

4. Adjustment of Number of Shares and Warrant Price.
From and after March 10, 1997, the number of Shares issuable upon the exercise
of each Warrant and the Warrant Price shall be subject to adjustment from time
to time as follows:

(a) If the Issuer shall (i) pay a dividend or make a
distribution in Shares, (ii) subdivide its outstanding Shares, (iii) combine
its outstanding Shares into a smaller number of Shares or (iv) issue by
reclassification of its Shares any shares or other securities of the Issuer,
then, in each such event, the number of Shares issuable upon exercise of each
Warrant immediately prior thereto shall be adjusted so that each Warrantholder
shall be entitled to receive the kind and number of Shares or other securities
of the Issuer which such Warrantholder would have owned or have been entitled
to receive after the happening of any of the events described above had such
Warrantholder exercised all the Warrants held by it immediately prior to the
happening of such event (or any record date with respect thereto). Such
adjustment shall be made whenever any of the events listed above shall occur.
An adjustment made pursuant to this Section 4(a) shall become effective
immediately after the effective date of the event retroactive to the record
date, if any, for the event.

(b) (i) In the event the Issuer shall issue or sell any
Shares (other than Shares which may be purchased under the Warrants or Shares
purchased pursuant to options or warrants outstanding as of the date of this
Certificate) without consideration or for consideration consisting solely of
cash in an amount per Share less than the Current Market Price per Share of
Shares (as defined in Section 4(k)), then, in each such event, the number of
Shares issuable upon exercise of each Warrant immediately prior thereto (an
"Initial Number") shall be adjusted so that each Warrantholder shall be
entitled to receive the number of Shares determined by multiplying such Initial
Number by a fraction, the numerator of which shall be the number of Shares
outstanding on the date of such issuance or sale
<PAGE> 6
4

plus the number of additional Shares to be issued or offered for purchase, and
the denominator of which shall be the number of Shares outstanding on the date
of such issuance or sale plus the number of Shares which the aggregate offering
price of the total number of Shares so to be issued or to be offered for
purchase would purchase at such Current Market Price.

(ii) In the event the Issuer shall issue or sell any Shares
pursuant to, or in accordance with, the Second Securities Purchase Agreement,
then, in each such event, the number of Shares issuable upon exercise of each
Warrant immediately prior thereto (an "Initial Number") shall be adjusted so
that each Warrantholder shall be entitled to receive the number of Shares
determined by multiplying such Initial Number by a fraction, the numerator of
which shall be the number of Shares outstanding on the date of such issuance or
sale immediately prior to such issuance or sale plus the number of additional
Shares to be issued or sold, and the denominator of which shall be the number
of Shares outstanding on the date of such issuance of sale immediately prior to
such issuance or sale.

(iii) In the event the Parents adopt the Management Option Plan as
set forth in Section 12, the number of Warrants shall be reduced as set forth
in Section 12.

(c) In the event that at any time hereafter the Issuer
shall in any manner grant any right to subscribe for or to purchase, or issue
or sell any option for the purchase of, Shares or any stock or other securities
convertible into, or exchangeable for, Shares (such convertible or exchangeable
stock or other securities being hereafter referred to as "Convertible
Securities"), and the minimum price per share for which Shares are issuable
pursuant to such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing (i) the total amount, if any,
received or receivable by the Issuer as consideration for the granting of such
rights or options or issuance or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration payable to the Issuer upon
the exercise of such rights or options plus, in the case of such Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable upon the conversion or exchange thereof by (ii) the total maximum
number of Shares issuable pursuant to such rights or options or upon the
conversion or exchange of all such Convertible Securities) shall be less than
the Current Market Price per Share of Shares, then the total maximum number of
Shares issuable pursuant to such rights or options or upon conversion or
exchange of all such Convertible Securities shall (as of the date of the
granting of such rights or options or issuance or sale of such Convertible
Securities) be deemed to be outstanding and to have been issued or sold for
purposes of Section 4(b) for the price per share as so determined; provided
that no further adjustment of the number of Shares issuable upon exercise of
the Warrants shall be made upon the actual issuance of Shares so deemed to have
been issued; and further provided, that, upon the expiration or termination of
any unexercised rights or options or conversion or exchange privileges for
which any adjustment was made pursuant to Section 4(b) and this Section 4(c),
the number of Shares issuable upon exercise of the Warrants shall be readjusted
and shall thereafter be such number as would have prevailed had the number of
Shares issuable upon exercise of the Warrants not been originally adjusted or
had the original adjustment not been required, as the case may be, on the basis
of (A) the Shares, if any, actually issued or sold upon the exercise of such
rights or options or conversion or exchange rights and (B) the consideration
actually received by the Issuer upon such exercise plus the consideration, if
any, actually received by the Issuer for the issuance, sale or grant of all of
such rights, options or Convertible Securities whether or not exercised;
provided, however, that no such readjustment shall have the effect of
decreasing the number of Shares issuable upon exercise of the Warrants by an
amount in excess of the amount of the adjustment initially made for the
issuance, sale or grant of such rights, options or Convertible Securities. In
the event of any increase in the minimum aggregate amount of consideration
payable to
<PAGE> 7
5

the Issuer upon the exercise of such rights or options or upon the conversion or
exchange of such Convertible Securities, or in the event of any decrease in the
total maximum number of Shares issuable pursuant to such rights or options or
upon the conversion or exchange of such Convertible Securities, the number of
Shares issuable upon exercise of the Warrants shall be readjusted to the number
of Shares for which the Warrants would have been exercisable had the rights,
options or Convertible Securities still outstanding at the time of such event
been originally issued or sold with such increased minimum aggregate
consideration or such decreased number of Shares.

(d) No adjustment in the number of Shares issuable upon
exercise of the Warrants shall be required in respect of any event described
this Section 4 unless the adjustment would require an increase or decrease of
at least 1% in the number of Shares issuable upon the exercise of each Warrant.
Any adjustments which by reason of this Section 4(d) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 4 shall be made to the nearest
one-hundredth of a Share or to the nearest cent, as the case may be.

(e) Whenever the number of Shares issuable upon the
exercise of each Warrant is adjusted, the Warrant Price per Share payable upon
exercise of each Warrant shall be adjusted by multiplying the Warrant Price
payable immediately prior to such adjustment by a fraction, the numerator of
which shall be the number of Shares issuable upon the exercise of each Warrant
immediately prior to such adjustment and the denominator of which shall be the
number of Shares issuable immediately after such adjustment.

(f) Whenever the number of Shares issuable upon the
exercise of each Warrant or the Warrant Price of such Shares is adjusted, the
Issuer shall promptly mail, by first-class mail, postage prepaid, to each
Warrantholder, a written notice of such adjustment, a brief statement of the
facts requiring such an adjustment and a certificate setting forth in
reasonable detail the manner in which such adjustment was made. Where
appropriate, such certificate may be given prior to the making of an adjustment
and included as part of the notice required to be mailed under this Section
4(f).

In the event:

(i) the Issuer shall authorize the issuance to
all holders of Shares, rights or warrants to subscribe for or
purchase capital stock of the Issuer or of any other
subscription rights or warrants; or

(ii) the Issuer shall authorize the distribution
to all holders of Shares, evidences of its indebtedness or its
assets (other than cash dividends or cash distributions
payable out of consolidated earnings or earned surplus or
dividends payable in Shares); or

(iii) of any consolidation or merger to which the
Issuer is a party and for which approval of any stockholders
of the Issuer is required, or of the conveyance or transfer of
the properties and assets of the Issuer substantially as an
entirety, or of any capital reorganization or reclassification
or change of the Shares (other than a change in par value, or
from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination); or

<PAGE> 8
6

(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Issuer; or

(v) the Issuer proposes to take any other action
which would require an adjustment of the Warrant Price
pursuant to Section 4(j);

then the Issuer shall cause to be given to each registered Warrantholder, at
least 20 calendar days (10 calendar days in any case specified in clause (i) or
(ii)) prior to the applicable record date, by first-class mail, postage
prepaid, a written notice stating (x) the date as of which the holders of
record of Shares to be entitled to receive any such rights, warrants or
distributions is to be determined or (y) the date on which the Issuer expects
any such consolidation, merger, conveyance, transfer, reorganization,
reclassification, change, dissolution, liquidation or winding up to become
effective and the date as of which the Issuer expects holders of record of
Shares shall be entitled to exchange their Shares for securities or other
property, if any, deliverable upon such consolidation, merger, conveyance,
transfer, reorganization, reclassification, change, dissolution, liquidation or
winding up. The failure to give the notice required by this Section 4(f), or
any defect therein, shall not affect the legality or validity of any right,
warrant, distribution, consolidation, merger, conveyance, transfer,
reorganization, reclassification, change, dissolution, liquidation or winding
up, or the vote upon any such action.

(g) For the purpose of this Section 4, the term "Shares"
means the shares of common stock of the Issuer authorized as of date of this
Certificate and shares of any other class into which such presently authorized
Shares may be changed and any other shares of capital stock of the Issuer which
do not have priority in the payment of dividends or upon liquidation over any
other class of capital stock. In the event that, at any time, as a result of
an adjustment made pursuant to this Section 4, any Warrantholder becomes
entitled to purchase any shares or other securities of the Issuer other than
Shares, thereafter the number of such other shares or other securities issuable
upon exercise of each Warrant and the Warrant Price of such shares or other
securities shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Shares contained in this Section 4, and the provisions of this Section 4 and
all other applicable sections of this Certificate shall apply on like terms to
any such other shares or securities.

(h) If the Issuer shall pay any dividends on the Shares
in cash, the Warrant Price per Share shall be reduced by the amount of any such
dividend paid in cash on each Share and, if, as a result of this Section 4(h),
the Warrant Price shall have been reduced to zero, any such amounts which would
otherwise be applied to reduce the Warrant Price will be paid to the
Warrantholders in cash on the date such dividends are paid on the Shares.

(i) No adjustments shall be made in connection with the
exercise of the Warrants. For purposes of this Section 4, Shares at any time
owned or held by, or for the account of, the Issuer shall not be deemed to be
outstanding.

(j) In case the Issuer shall make a distribution to all
holders of Shares (including any such distribution made in connection with a
consolidation or merger in which the Issuer is the continuing corporation) of
evidences of its indebtedness or its assets (other than cash dividends or cash
distributions payable out of consolidated earnings or earned surplus or
dividends payable in Shares), the Warrant Price per Share to be in effect after
such date of distribution shall be reduced by an amount equal to the fair market
value (as determined by an independent investment banking firm reasonably
acceptable to a majority of the Warrantholders and the holders of Warrant Shares
that have not been

<PAGE> 9
7

sold to the public and bear the legend set forth in Section 5(b) (the
"Non-Public Warrant Shares") (the cost of engagement of said investment banking
firm to be borne in a proportion of 50% by the Issuer and 5096 by the holders of
the Warrants and Non-Public Warrant Shares) of the portion of the evidences of
indebtedness or assets so to be distributed applicable to one Share, and, if as
a result of this Section 4(j), the Warrant Price shall have been reduced to
zero, any such amount which would otherwise be applied to reduce the Warrant
Price will be paid to the Warrantholders in cash on the date of such
distribution to all holders of Shares. Each adjustment made pursuant to this
Section 4(k) shall be made successively whenever a date for such distribution is
fixed (which date of distribution shall be the record date for such distribution
if a record date therefor is fixed), and, if such distribution is not so made,
the Warrant Price shall again be adjusted to the Warrant Price which would be in
effect if such date of distribution had not been fixed.

(k) For the purpose of any computation under this Section
4, the "Current Market Price per Share" of Shares on any date shall be deemed
to be the average of the daily closing prices for the 30 consecutive trading
days, commencing 45 trading days before such date, as reported on the Composite
Transactions Tape, or if the Shares are not reported on the Composite
Transactions Tape, the last sale price (regular way) of the Shares on the
principal national securities exchange on which the Shares are listed or
admitted to trading or, in case no such sale takes place on such day, the
average of the closing bid and asked prices (regular way), in either case on
such securities exchange or, if the Shares are not listed or admitted to
trading on such an exchange, the closing sales price, or, if there is no
closing sales price, the average of the closing bid and asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers' Automated Quotation System, or, if not so reported, as reported by the
National Quotation Bureau, Incorporated, or any successor thereof, or, if not
so reported, the average of the closing bid and asked prices as furnished by
any member of the National Association of Securities Dealers, Inc. selected
from time to time by the Board of Directors of the Issuer for that purpose, or,
if no such prices are furnished, the fair market value of a Share as determined
by the Board of Directors of the Issuer, or, if the holders of a majority of
the Warrants and Warrant Shares object in good faith to any such determination
by the Board of Directors within 30 days after receipt of written notice
thereof from the Issuer, by an independent investment banking firm reasonably
acceptable to the holders of a majority of the Warrants and Warrant Shares (the
cost of the engagement of said investment banking firm to be borne by the
Issuer).

(l) In case of any capital reorganization, or any
reclassification of the Shares (other than a reclassification described in
clause (iv) of Section 4(a) of the Issuer) or in case of the consolidation or
merger of the Issuer with or into any other entity or the sale, lease,
conveyance or other disposition of all or substantially all of the properties
and assets of the Issuer to any other entity, the Issuer or such successor or
purchasing entity, as the case may be, shall execute with each Warrantholder an
agreement to the effect that each Warrant shall, after such capital
reorganization, reclassification, consolidation, merger or sale, lease,
conveyance or other disposition, be exercisable into the kind and amount of
shares of stock or other securities or property (including cash) to which the
holder of the number of Shares issuable (immediately prior to the happening of
such capital reorganization, reclassification, consolidation, merger, sale,
lease, conveyance or other disposition or record date with respect thereto)
upon exercise of a Warrant would have been entitled upon the happening of such
event; and, in any case, if necessary, appropriate adjustment shall be made in
the application of the provisions set forth in this Section 4 with respect to
the rights and interests thereafter of each Warrantholder to the end that the
provisions set forth in this Section 4 shall thereafter correspondingly be made
applicable, as may be reasonable, to the securities or property thereafter
deliverable on exercise of the Warrants. Such agreement shall provide for all
appropriate adjustments,
<PAGE> 10
8

which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 4. The Issuer shall mail, by first class mail,
postage prepaid, to each Warrantholder, a written notice of any event requiring
such agreement at least 30 days prior to the effective date of such event. The
provisions of this Section 4(1) shall also apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, leases, conveyances and other
dispositions.

(m) Irrespective of any adjustments in the number or kind
of shares or other securities deliverable upon the exercise of the Warrants or
the Warrant Price, the Warrants theretofore or thereafter issued may continue to
express the same number and kind of Shares and price as are stated in the
Warrants evidenced by this Certificate.

(n) The Issuer shall not be required to issue fractional
Shares upon the exercise of any Warrant. If more than one Warrant is presented
for exercise in full at the same time by the same Warrantholder, the number of
full Shares which shall be issuable upon the exercise thereof shall be computed
on the basis of the aggregate number of Shares represented by the Warrants
presented. If any fraction of a Share would, except for the provisions of this
Section 4, be issuable on the exercise of any Warrant (or specified portion
thereof), the Issuer shall pay an amount in cash equal to the fair market value
per Share (as reasonably determined in good faith by the Board of Directors of
the Issuer) multiplied by such fraction.

(o) If any question shall at any time arise with respect
to any computation to be performed under this Section 4 or any adjustments to
the Warrant Price, such question shall be determined by the independent
auditors of the Issuer, and such determination shall be binding upon the Issuer
and the holders of the Warrant Shares.

5. Restrictions on Transfer. (a) The Lender represents
that it is acquiring the Warrants for its own account, for investment and not
with a view to any distribution or public offering within the meaning of the
Securities Act of 1933, as amended (the "Act"). The Lender acknowledges that
the Warrants and the Warrant Shares issuable upon exercise thereof have not
been registered under the Act and agrees that it will not sell or otherwise
transfer any of its Warrants or Warrant Shares except upon the terms and
conditions specified herein.

(b) (i) The Lender agrees, and each subsequent transferee
described in paragraph (ii) below shall agree, that it will not transfer the
Certificate, any Warrants evidenced hereby, or any Non-Public Warrant Shares
except in accordance with Sections 9 and 10 and except:

(A) pursuant to Rule 144 under the Act;

(B) pursuant to Rule 144A under the Act;

(D) pursuant to any other exemption from, or
otherwise in a transaction not subject to, the registration
requirements of the Act or any applicable state securities
laws (as confirmed in an opinion of counsel to the transferor
and reasonably satisfactory to the Issuer to the effect that
proposed transfer may be effected without registration under
the Act);

<PAGE> 11
9

(E) a transfer by the Lender to any wholly owned
Subsidiary of the Lender; or

(F) pursuant to an effective registration
statement under the Act;

provided that no such transfer may be made if it will result in there being in
excess of 10 registered holders of the Warrants and the Non-Public Warrant
Shares.

(ii) This Certificate and each other cerebrate
representing the Warrants and each certificate for the Warrant Shares
issued to the Lender or to a subsequent transferee pursuant to
Sections 5(b)(i)(B), (C), (D) (unless the legal opinion delivered in
connection therewith is to the effect that such legend is not required
in order to ensure compliance with the Act and applicable state laws)
or (E) shall include a legend in substantially the following form:

THE [WARRANTS AND SHARES] [SHARES] REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT. IN ADDITION,
THE [WARRANTS AND SHARES] [SHARES] MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE WARRANT
CERTIFICATE, DATED AS OF MARCH 10, 1997, BETWEEN CREDENTIALS
SERVICES INTERNATIONAL, INC. AND THE INITIAL HOLDER OF THE
WARRANTS SPECIFIED THEREIN, A COMPLETE AND CORRECT COPY OF
WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF
CREDENTIALS SERVICES INTERNATIONAL, INC. AND WILL BE FURNISHED
TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.

(c) Prior to any proposed transfer of any Warrants or any
Non-Public Warrant Shares, the holder thereof shall give written notice to the
Issuer of such holder's intention to effect such transfer, which notice shall
set forth the date of such proposed sale. Each holder wishing to effect a
transfer of any Warrant or Non-Public Warrant Share pursuant to clause (B), (D)
(unless the legal opinion delivered in connection therewith is to the effect
that delivery of such an agreement is not required in order to ensure
compliance with the Act and applicable state securities laws) or (E) of Section
5(b)(i) shall also furnish to the Issuer an agreement by the transferee thereof
that it is taking and holding such Warrants or Non-Public Warrant Shares
subject to the terms and conditions specified herein.

(d) The restrictions set forth in this Section 5 shall
terminate and cease to be effective with respect to any Warrants or Warrant
Shares registered under the Act or transferred pursuant to clause (A), (C), (D)
(if the legal opinion delivered in connection therewith is to the effect that
such restrictions on transfer are not required to ensure compliance with the
Act and applicable state securities laws) or (F) of Section 5(b)(i). Whenever
such restrictions shall so terminate, the holder of such Warrants and/or
Warrant Shares shall be entitled to receive from the Issuer, without expense
(other than transfer taxes, if any), Warrants or certificates for such Warrant
Shares not bearing the legend set forth in Section 5(b) at which time the
Issuer will rescind any transfer restrictions relating thereto.

<PAGE> 12
10

(e) With a view to making available to the Lender and
subsequent holders of the Warrant Shares the benefits of certain rules and
regulations of the Securities and Exchange Commission (the "SEC") (including,
without limitation, Rule 144 and Rule 144A under the Act) which may permit the
sale of Warrant Shares to the public without registration, the Issuer agrees,
commencing at such time and for so long as a public market legally exists for
the Shares, to take any and all actions as may be required of it to make
available to the Lender and such subsequent holders such benefits, including
without limitation, to:

(i) make and keep public information available as
those terms are understood and defined in Rule 144 under the
Act or any successor provision thereto;

(ii) make and keep available the information
specified in Rule 144A(d)(4) under the Act or any successor
provision thereto;

(iii) file with the SEC in a timely manner all
reports and other documents required of the Issuer under the
Act and the Securities Exchange Act of 1934 (the "Exchange
Act"); and

(iv) so long as the Lender or any subsequent
holder owns any Warrants or Warrant Shares, furnish to each of
the Lender or such holder, as applicable, forthwith upon
request a written statement by the Issuer as to its compliance
with the information or reporting requirements of Rule 144 and
Rule 144A, or any successor provision thereto, and of the Act
and the Exchange Act, a copy of the most recent annual or
quarterly report of the Issuer filed with the SEC and such
other reports and documents of the Issuer and other
information in the possession of, or reasonably obtainable by,
the Issuer as the Lender or such holder may reasonably request
in availing itself of any rule or regulation of the SEC
allowing the Lender or such holder to sell any such securities
without registration.

6. Registration Rights. As used in this Section 6, the
term "Warrant Shares" includes all Shares and other securities which may be
issued by the Issuer upon exercise of the Warrants and which may thereafter be
issued by the Issuer in respect of any such Shares by means of any conversions,
stock splits, stock dividends, recapitalizations or the like, as otherwise
adjusted pursuant to Section 4. As used in this Section 6, the term "Holder of
Registrable Securities" shall mean any Warrantholder and any holder of any of
the securities underlying any Warrant.

(a) If, at any time during the period commencing on the
date hereof and ending on the Expiration Date, the common stock of the Issuer
is listed or admitted to trading on any national securities exchange, Holders
of Registrable Securities owning at least 50% of the outstanding Warrants and
Non-Public Warrant Shares may, by written notice to the Issuer (a "Registration
Notice"), request that the Issuer register under the Act all Warrant Shares
owned by such Holders of Registrable Securities. Upon receipt by the Issuer of
any such notice, the Issuer will notify all Holders of Registrable Securities
of its intention to file a registration statement in respect of such Warrant
Shares with the SEC, at least 30 days prior to the filing of any such
registration statement with the SEC. Upon the written request of any Holder of
Registrable Securities given to the Issuer within 15 Business Days after
receipt by such Holder of Registrable Securities of any such notice from the
Issuer, which request shall state the number of Warrant Shares to be included
in the registration statement or post-effective amendment to the registration
statement, the Issuer shall cause all such Warrant Shares to be included in
such registration statement and use its best efforts to effect promptly the
registration of the
<PAGE> 13
11

Warrant Shares under the Act. If the Issuer receives a Registration Notice
after the Issuer has agreed to enter into a consolidation or merger of the
Issuer with or into any other corporation or to sell, lease, convey or otherwise
dispose of all or substantially all of the properties and assets of the Issuer
to any other corporation, the Issuer may delay the registration provided for in
this Section 6(a) until the earlier of (i) the date on which such consolidation,
merger, sale, lease, conveyance or other disposition has occurred or (ii) 90
days shall have elapsed since the Issuer received the original notice from
Holders of Registrable Securities requesting registration of the Warrant Shares.
The Issuer shall not be obligated to file more than two registration statements
at the Request of the Holders of any Registrable Securities pursuant to this
Section 6(a); provided that the restriction set forth in this sentence shall not
apply to any request following the failure of more than 10% of the Shares
requested by Holders of Registrable Securities to be included in any
registration pursuant to Section 6(e), and the Issuer shall not be obligated to
file a registration statement more than once in any nine-month period or in
violation of any underwriting agreement to which the issuer is a party.

(b) If, at any time during the period commencing on the
date hereof and ending on the Expiration Date, the Issuer proposes to register
any of its securities under the Act, other than a registration effected solely
to implement any employee benefit plan or a transaction to which Rule 145
promulgated under the Act is applicable, at each such time the Issuer shall
give written notice to all Holders of Registrable Securities of its intention
to file a registration statement in respect of such securities with the SEC, at
least 30 days prior to filing any such registration statement with the SEC.
Upon the written request of any Holder of Registrable Securities given to the
Issuer within 15 Business Days after receipt by such Holder of Registrable
Securities of any such notice from the Issuer, which request shall state the
number of Warrant Shares to be included in the registration statement or
post-effective amendment to the registration statement, the Issuer shall cause
all such Warrant Shares to be included in such registration statement and use
its best efforts to effect promptly the registration of the Warrant Shares so
included under the Act. If the registration with respect to which the Issuer
gives notice pursuant to this Section 6(b) is for a registered public offering
involving an underwriting, the Issuer shall so advise the Holders of
Registrable Securities of such underwriting as part of the written notice of
the proposed registration.

(c) Whenever the Issuer is to effect the registration of
any Warrant Shares under the Act, as provided herein, the Issuer shall:

(i) cause a registration statement or
post-effective amendment to such registration statement to be
filed with the SEC on an appropriate form with respect to such
Warrant Shares and use its best efforts to cause such
registration statement or post-effective amendment to become
and remain effective as provided herein;

(ii) prepare and file with the SEC such amendments
and supplements to such registration statement or
post-effective amendment to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement or
post-effective amendment effective for a period of up to 180
days and to comply with the provisions of the Act, and
regulations of the SEC promulgated thereunder, with respect to
the sale or other disposition of all Warrant Shares covered by
such registration statement or post-effective amendment,
including such amendments and supplements as may be necessary
to reflect the intended method of disposition from time to
time of the prospective seller or sellers of such Warrant
Shares;

<PAGE> 14
12

(iii) provide the Holders of Registrable Securities
or persons designated by them such reasonable number of copies
of such prospectuses in preliminary and definitive form or
supplements thereto in conformity with the requirements of the
Act as may be reasonably required and such other documents as
such Holders of Registrable Securities may reasonably request
to facilitate the public sale or disposition of the Warrant
Shares by such Holders of Registrable Securities;

(iv) as expeditiously as possible, notify each
seller of such Warrant Shares if, at any time when a
prospectus relating to such Warrant Shares is required to be
delivered under the Act, any event shall have occurred as a
result of which the prospectus then in use with respect to
such Warrant Shares would include an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading or for any other reason it shall be necessary to
amend or supplement such prospectus in order to comply with
the Act and prepare and furnish to all sellers a reasonable
number of copies of a supplement to, or an amendment of, such
prospectus which will correct such statement or omission or
effect such compliance;

(v) register or qualify the Warrant Shares
covered by such registration statement or post-effective
amendment to such registration statement under such other
securities, blue sky or other applicable laws of each
jurisdiction within the United States as each of the Holders
of Registrable Securities shall reasonably request to enable
each Holder of Registrable Securities to consummate the public
sale or other disposition in such jurisdiction of such Warrant
Shares by such Holder of Registrable Securities;

(vi) use its best efforts to keep the holders of
such Warrant Shares informed of the Issuer's best estimate of
the earliest date on which such registration statement or any
post-effective amendment or supplement thereto will become
effective and promptly notify such holders and the managing
underwriters, if any, participating in the distribution
pursuant to such registration statement or post-effective
amendment or supplement thereto of the following: (A) when
such registration statement or any post-effective amendment or
supplement thereto becomes effective or is approved, (B) of
the issuance by any competent authority of any stop order
suspending the effectiveness or qualification of such
registration statement or the prospectus then in use or the
initiation or threat of any proceeding for that purpose and
(C) of the suspension of the qualification of any Warrant
Shares included in such registration statement for sale in any
jurisdiction;

(vii) furnish to the sellers of such Warrant
Shares, on the date that such Warrant Shares are delivered to
the underwriters for sale in connection with a registration,
if such Warrant Shares are being sold through underwriters or,
if such Warrant Shares are not being sold through underwriters,
on the date that the registration statement with respect to
such Warrant Shares becomes effective under the Act, (A) an
opinion of such independent counsel as has represented the
Issuer for the purposes of such registration, dated such date,
in form and substance as is customarily given by counsel to
underwriters in an underwritten public offering and (B) a
"comfort" letter dated such date from the independent public
accountants who have certified the Issuer's financial
statements included in the registration statement, in form and
substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering;

<PAGE> 15
13

(ix) cooperate with the sellers of such Warrant
Shares and the underwriters, if any, of such Warrant Shares,
give each seller of such Warrant Shares, and the underwriters,
if any, of such Warrant Shares and their respective counsel
and accountants, such access to its books and records and such
opportunities to discuss the business of the Issuer with its
officers and independent public accountants as shall be
necessary to enable them to conduct a reasonable investigation
within the meaning of the Act and, in the event that Warrant
Shares are to be sold in an underwritten offering, enter into
an underwriting agreement containing customary representations
and warranties, covenants, conditions and indemnification
provisions.

(d) All expenses incurred in, effecting any registration
of the Warrant Shares including, without limitation, all registration and
filing fees, printing expenses, expenses of compliance with blue sky laws, fees
and disbursements of counsel for the Issuer, the reasonable fees and expenses
of one counsel for the sellers of the Warrant Shares (selected by those holding
a majority of the Shares being registered) and expenses of any audits
incidental to, or required by, any such registration (including any audits for
periods other than the fiscal year of the Issuer) shall be borne by the Issuer,
except underwriting discounts or commissions attributable to the Warrant
Shares; provided, however, that any rights under paragraphs (a) through (d) of
this Section 6 are expressly subject to the following condition: if the
managing underwriter of any underwritten offering determines, and advises the
Issuer in writing at any time, that the inclusion in the registration of any
Shares belonging to the Holders of Registrable Securities would interfere in
any way with the successful marketing of the securities proposed to be
registered by the Issuer or would decrease the price at which the securities of
the Issuer could be offered or increase the underwriters' discount, then the
Issuer will include in such registration only such number of Shares which the
Issuer is advised by the managing underwriter can be sold in such offering and
the number of Shares sought to be registered by each seller (which term shall
include each holder of Shares including, but not limited to, Warrant Shares and
the Issuer) shall be appropriately reduced (i) pro rata among the sellers in
proportion to the number of Shares sought to be registered by all such sellers
in the event the Shares included in such registration statement equal or exceed
20% of all outstanding Shares, (ii) pro rata among the Holders of Registrable
Securities and all holders of Shares (other than the Issuer) in proportion to
the number of Shares sought to be registered by all such sellers in the event
of any other registration pursuant to Section 6(b) or (iii) pro rata among all
sellers of Shares (other than the Holders of Registrable Securities) in
proportion to the number of Shares sought to be registered by all such sellers
in the event of any registration pursuant to Section 6(a). Any Warrant Shares
withdrawn under the preceding sentence from such underwriting shall, unless the
Holder of Registrable Securities requests otherwise, be included in such
registration but shall not be transferred in a public distribution prior to 270
days after the effective date of the registration statement relating thereto.

7. Indemnification. (a) In the event that any
registration statement is filed with the SEC and becomes effective with respect
to Warrant Shares in accordance with Section 6, the Issuer agrees to indemnify
and hold harmless each Holder of Registrable Securities and each person, if any,
who controls such Holder of Registrable Securities within the meaning of Section
15 of the Act and each and all of them from and against any and all losses,
claims, demands, damages, costs, expenses or liabilities, joint or several, to
which each or all of them may become subject under the Act, the

<PAGE> 16
14

Exchange Act or any other statute or at common law or otherwise. Except as
hereinafter provided, the Issuer agrees to reimburse each of the Holders of
Registrable Securities and each such controlling person for any legal or other
expenses reasonably incurred by such Holder of Registrable Securities or such
controlling person in connection with investigating or defending any actions,
whether or not resulting in any liability. Such indemnification and
reimbursement shall only apply insofar as such losses, claims, demands, damages,
costs, expenses, liabilities or actions arise out of, or are based upon, any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement or in the prospectus contained therein (as from time
to time amended or supplemented by the Issuer) or arise out of, or are based
upon, the omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. In
addition, such indemnification reimbursement shall not be made if such untrue
statement or alleged untrue statement or omission or alleged omission was made
in such registration statement or the prospectus contained therein in reliance
upon, and in conformity with, information furnished in writing to the Issuer in
connection therewith by any Holder of Registrable Securities expressly for use
therein. This indemnity agreement shall be in addition to any liability which
the Issuer may otherwise have.

(b) Each Holder of Registrable Securities shall indemnify
and hold harmless the Issuer, each of its directors and officers who have
signed any such registration statement and each person, if any, who controls
the Issuer within the meaning of Section 15 of the Act, from and against any
and all losses, claims, demands, damages, costs, expenses or liabilities, joint
or several, to which each or all of them may become subject under the Act, the
Exchange Act or any other statute or at common law or otherwise. Except as
hereinafter provided, each Holder of Registrable Securities agrees to reimburse
the Issuer and each such director, officer or controlling person for any legal
or other expenses reasonably incurred by the Issuer or such director, officer
or person in connection with investigating or defending any actions, whether or
not resulting in any liability. Such indemnification and reimbursement shall
only be made insofar as such losses, claims, demands, damages, costs, expenses,
liabilities or actions arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in such registration
statement or in the prospectus contained therein (as from time to time amended
or supplemented by the Issuer) or arise out of, or are based upon, the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. In addition, such
indemnification and reimbursement shall not be made unless such untrue
statement or alleged untrue statement or omission or alleged omission was in
such registration statement or the prospectus combined thereto in reliance
upon, and in conformity with, information furnished in writing to the Issuer in
connection therewith by such Holder of Registrable Securities expressly for use
therein. This indemnity agreement shall be in addition to any liability which
such Holder of Registrable Securities may otherwise have.

(c) Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (a) or (b) of this Section 7 of written
notice of the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party shall, if a claim
thereof is made against the indemnified party pursuant to the provisions of
paragraph (a) or (b) of this Section 7, notify the indemnifying party of the
commencement thereof, but the failure of the indemnified party to notify the
indemnifying party shall not relieve the indemnifying party from any liability
which it may have to any indemnified party otherwise than hereunder except to
the extent the indemnifying party is actually prejudiced by such failure. If a
proceeding is commenced against any indemnified party and such indemnified
party notifies the indemnifying party of the commencement
<PAGE> 17
15

thereof in writing, the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party
(who may also be counsel to the indemnifying party, if satisfactory to the
indemnified party) to represent the indemnified party and any other persons the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and disbursements of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party shall have failed to
retain counsel for the indemnified party as aforesaid, (ii) the indemnifying
party and such indemnified party shall have mutually agreed to the retention of
such counsel or (iii) representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding or due to the availability of
different or additional legal defenses to such indemnified party. It is
understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and disbursements of more than one separate firm to act as counsel for the
indemnified party. No indemnifying party shall be liable to an indemnified
party for any settlement of any action without the consent of the indemnifying
party.

8. Covenants of the Issuer. Following the repayment of
the Loan and all other amounts payable pursuant to the Loan Agreement: (a)
the Issuer shall furnish to the Holders of Registrable Securities, as soon as
available, but not later than 90 days after the end of each fiscal year, a copy
of the audited consolidated balance sheet of the Issuer and its Subsidiaries as
at the end of such year and the related consolidated statements of income,
stockholders' equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, and
accompanied by the opinion of a nationally-recognized independent public
accounting firm stating that such financial statements present fairly in all
material respects the financial position for the periods indicated and were
prepared in conformity with GAAP consistently applied and were reviewed in
accordance with Modified Accrual Accounting consistently applied. Such opinion
shall not be qualified or limited because of a restricted or limited
examination by such accountants of any material portion of the records of the
Issuer or any of the Issuer's Subsidiaries;

(b) the Issuer shall furnish to the Holders of
Registrable Securities, as soon as available, but not later than 30 days after
the end of each fiscal month of each year, a copy of the unaudited consolidated
balance sheet of the Issuer and its Subsidiaries, and the related consolidated
statements of income, stockholders' equity and cash flows as of the end of such
month and for the portion of the fiscal year then ended, all certified on
behalf of the Issuer by the Chief Financial Officer of the Issuer as being
complete and correct and fairly presenting in all material respects, in
accordance with GAAP and Modified Accrual Accounting, the financial position
and results of operations of the Issuer and each of its Subsidiaries, subject
to normal year-end adjustment and absence of footnote disclosure;

(c) the Issuer shall furnish to Holders of Registrable
Securities, as soon as available, but not later than 120 days after the end of
each fiscal year of the Fund, a copy of the audited consolidated balance sheet
of the Fund and its Subsidiaries as at the end of such year and the related
consolidated statements of income, partners' capital and cash flows for such
fiscal year, and accompanied by the opinion of a nationally-recognized
independent public accounting firm stating that such financial statements
present fairly in all material respects the financial position for the periods
indicated and were prepared in conformity with GAAP consistently applied;

<PAGE> 18
16

(d) the Issuer shall furnish the Holders of Registrable
Securities concurrently with the delivery of the financial statements referred
to in paragraph (b)of this Section 8, a management report, in reasonable
detail, signed on behalf of the Issuer by the Chief Financial Officer of the
Issuer, describing the operations and financial condition of the Issuer and its
Subsidiaries for the month and the portion of the fiscal year then ended (or,
in the case of annual financial statements, for the fiscal year then ended) and
setting forth a mailing tracking summary, a current mailing schedule and a
statement of increases or decreases in the number of Subscribers;

(e) the Issuer shall furnish the Holders of Registrable
Securities promptly after the same are sent, copies of all financial statements
and reports sent to the Issuer's stockholders and, promptly after filed, copies
of all financial statements and reports which the Issuer may make to, or file
with, the SEC or similar governmental authority;

(f) the Issuer shall furnish the Holders of Registrable
Securities promptly upon receipt thereof, copies of any reports submitted by the
Issuer's certified public accountants in connection with each annual, interim or
special audit or review of any type of the financial statements or internal
control systems of the Issuer made by such accountants, including any comment
letters submitted by such accountants to management of the Issuer in connection
with their services; and;

(g) the Issuer agrees not to issue any Series A Shares or
other series of preferred stock.

9. Option to Sell. (a) Subject to the consent of the
Senior Lender and TRW if required pursuant to the Senior Credit Agreement or
TRW Senior Subordinated Note, as applicable, at the written request of any
holder of Warrants and/or Non-Public Warrant Shares (a "Put Notice") made at
any time during any period commencing on the earlier of (i) receipt by the
holders of the Warrants and the Non-Public Warrant Shares of the financial
statements of the Issuer for the fiscal year ending September 30, 2002 and (ii)
January 31, 2003 and ending on March 10, 2007 (the "Put Period"), the Issuer
shall purchase all Warrants and Non-Public Warrant Shares held by such holder
(the "Option to Sell"). Any Put Notice shall state the number of Warrants and
the number of Non-Public Warrant Shares to be purchased. The purchase price
payable by the Issuer to all holders upon any mandatory purchase pursuant to
this Section 9(a) shall be the higher of (i) the sum of (A) (l) five times (2)
EBITDA for the most recent year for which financial statements of the Issuer
are required to be delivered pursuant to Section 8(a), minus (B) the aggregate
principal amount of all Indebtedness for borrowed money outstanding as of the
date of the Put Notice, plus (C) cash of the Issuer on the date of the Put
Notice and (ii) the Market Price (as defined in paragraph (b) of this Section
9) (such purchase price, the "Aggregate Purchase Amount"). The Aggregate
Purchase Amount shall be apportioned to each selling holder in accordance with
the aggregate number of Warrants and Non-Public Warrant Shares of such holder
being purchased. The portion of the Aggregate Purchase Amount payable to each
holder shall be reduced by an amount equal to the product of (1) the number of
Warrants of such holder being purchased and (2) the Warrant Price that would
have been payable had each such Warrant been exercised.

(b) The Market Price shall be determined as of the date
of the Put Notice. "Market Price" shall mean the fair market value of the
Warrants and/or Warrant Shares being purchased as determined in good faith by
the Board of Directors of the Issuer or, if a majority of the holders of the
Warrants and Non-Public Warrant Shares being purchased shall, in the exercise
of their sole discretion,
<PAGE> 19
17

object to such determination and shall forward written notice of such objection
to the Issuer within 30 days of their receipt of notice of such determination of
the Market Price by the Issuer's Board of Directors, by an independent
investment banking firm selected by the holders of a majority of the Warrants
and Non-Public Warrant Shares being purchased (the cost of the engagement of
said investment banking firm to be borne in a proportion of 50% by the Issuer
and 50% by the holders of the Warrants and Non-Public Warrant Shares being
purchased). Any such valuation shall be effective for six months and shall
apply to all Put Notices delivered within such six-month period.

(c) The Issuer shall purchase the Warrants and Non-Public
Warrant Shares with respect to which any holder shall have delivered a Put
Notice to the Issuer stating such holder's intent to exercise the Option to
Sell within the later of (i) 90 days after receipt of the Put Notice or (ii) 10
days after the determination of the Market Price, but in no event later than
100 days after receipt of the Put Notice, on a date designated in writing by
the Issuer to each holder; provided that interest upon any amounts in respect
of such purchase not paid to such holder within 90 days after receipt of the
Put Notice shall accrue at a rate equal to 14% per annum until paid in full.

(d) On the date designated in writing by the Issuer to
each holder of the Warrants and Non-Public Warrant Shares to be purchased by
the Issuer, each such holder shall surrender its Warrants and Warrant Shares to
the Issuer without any representation or warranty by such holder to the Issuer
(other than the representation and warranty that such holder has good and valid
title thereto, free and clear of liens, claims, encumbrances and restrictions
of any kind, and the requisite power to transfer such Warrants and Warrant
Shares), against payment therefor by (at the option of such holder) (1) wire
transfer to an account in a bank designated by such holder for such purpose or
(2) a certified or official bank check drawn on a member of the New York
Clearing House payable to the order of such holder.

(e) Notwithstanding anything to the contrary contained in
this Section 9, the Issuer shall not be required to honor its obligations with
respect to any Put Notice given at a time when the Issuer does not have
sufficient funds to make the purchase required by such Put Notice; provided,
however, that, if a financial institution which makes available financing at
rates comparable to rates at which the Senior Lender has agreed to provide
financing to the Issuer under the Senior Credit Agreement could reasonably be
expected to provide financing to the Issuer on terms similar to those in the
Senior Credit Agreement in an amount equal to the amount necessary to honor
such obligations, the Issuer shall, if requested by the Lender (or, if the
Lender is not then the holder of the majority of the Warrants and Non-Public
Warrant Shares, the holders of a majority of the Warrants and Non-Public
Warrant Shares, provided that, at the time the Lender ceased to be the holder
of the majority of the Warrants and the Non-Public Warrant Shares, the Issuer
consented to the applicability to such majority holders of this Section 9(e)),
use its reasonable best efforts until the expiration of 180 days after the
determination of the Market Price pursuant to Section 9(b) to obtain funds to
the extent of the availability of such financing in an amount sufficient to
honor its obligations with respect to such Put Notice (provided that such
financing is, in the reasonable judgment of the Issuer, not materially adverse
to the Issuer).

10. Issuer's Option to Repurchase Warrants. (a) Upon
written notice from the Issuer to each holder of the outstanding Warrants and
Non-Public Warrant Shares (a "Call Notice") made at any time during the period
commencing on the date of receipt by the holders of Warrants and Non-Public
Warrant Shares of the financial statements of the Issuer for the fiscal year
ending September 30, 2003 and ending on March 10, 2007, the Issuer may purchase
all of the Warrants and Non-Public Warrant Shares outstanding (the "Option to
Purchase"). Any Call Notice shall state the
<PAGE> 20
18

number of Warrants and the number of Non-Public Warrant Shares to be purchased
from each holder thereof, the price to be paid to such holder, the method of
determination of such price and the date of the purchase. The Aggregate
Purchase Amount payable by the Issuer to all holders upon the exercise of the
Option to Purchase shall be determined as set forth in Section 9(b); provided
that the Market Price shall be determined as of the date of the Call Notice.
The Aggregate Purchase Amount shall be apportioned to each holder in accordance
with the aggregate number of the Warrants and Non-Public Warrant Shares held by
such holder. The Aggregate Purchase Amount divided by the aggregate number of
Warrants and Non-Public Warrant Shares outstanding shall be the "Call Price."
The portion of the Aggregate Purchase Amount payable to each holder shall be
reduced by an amount equal to the product of (1) the number of Warrants of such
holder being purchased and (2) the Warrant Price that would have been payable
had each such Warrant been exercised.

(b) The Issuer shall purchase the Warrants and Warrant
Shares pursuant to a Call Notice from the holders thereof within the later of
(i) 90 days after the date of the Call Notice or (ii) 10 days after the
determination of the Market Price, but in no event later than 100 days after
the date of the Call Notice, on a date designated in writing by the Issuer to
each holder; provided that interest upon any amounts in respect of such
purchases not paid to any holder within 90 days after the date of the Call
Notice shall accrue at a rate equal to 14% per annum until paid in full. On
the date designated in writing by the Issuer to each holder of the Warrants and
Non-Public Warrant Shares, each such holder shall surrender its Warrants and
Warrant Shares to the Issuer without any representation or warranty by such
holder to the Issuer (other than the representation and warranty that such
holder has good and valid title thereto, free and clear of liens, claims,
encumbrances and restrictions of any kind, and the requisite power to transfer
such Warrants and Warrant Shares), against payment therefor by (at the option
of such holder) (1) wire transfer to an account in a bank designated by the
holder for such purpose or (2) a certified or official bank check drawn on a
member of the New York Clearing House payable to the order of such holder.

(c) If a Valuation Event (as defined below) shall occur
within 180 days after the date of the exercise of the Call Option pursuant to
Section 10(a), which Valuation Event evidences a market price per Share greater
than the Call Price determined pursuant to the related Call Notice, then the
Issuer shall pay to each person who sold Warrants or Non-Public Warrant Shares
to the Issuer in connection with such Call Notice an amount equal to the product
of (i) the number of Warrants and/or Non-Public Warrant Shares purchased from
such holder pursuant to such Call Notice times (ii) the excess of (A) the then
Current Market Price per Share evidenced by such Valuation Event over (B) the
Call Price determined pursuant to such Call Notice. "Valuation Event" shall mean
(i) a Cash-Out Event or (ii) the initial public offering of at least 20% of the
common stock of the Issuer. "Cash-Out Event" shall occur (i) upon the
occurrence of a Change of Control in violation of the Loan Agreement, (ii) if
the Issuer shall breach in any material respect any of the covenants contained
herein and such breach shall have been continuing for 45 days, as determined in
good faith by the holders of a majority of the Warrants and Non-Public Warrant
Shares, or (iii) if, at any time when the Loan has been prepaid in full with
proceeds from cash flow of the Issuer, the Issuer or any of its Subsidiaries
shall, directly or indirectly, purchase or acquire any material assets other
than those directly related to the business lines of the Issuer and its
Subsidiaries as of the date hereof.

11. Liquidity Event. If, prior to the date that is
twenty-four months following the Closing Date, (a) the Loan and all other
amounts due under the Loan Agreement shall have been repaid in full and (b) the
Lender shall have received in excess of $3,000,000 in cash by reason of the
sale or any other disposition of all or any portion of the Warrants and Warrant
Shares (such excess over
<PAGE> 21
19

$3,000,000, the "Excess Amount"), the Lender shall pay to the Issuer an amount
equal to 25% of the Excess Amount on the date of receipt thereof by the Lender.

12. Adoption of Management Option Plan. If the Parents
adopt the Management Option Plan within 60 days following the Closing Date, the
number of Warrants represented by this certificate shall automatically be
reduced to 4,843.05 Warrants on the date of such adoption, and such Warrants,
as so reduced, shall represent 10.8% of the sum of (A) 40,000 Shares, being the
number of Shares outstanding on the date of such adoption, plus (B) 4,843.05
Warrant Shares.

13. Amendments and Waivers. Any provision of this
Certificate may be amended, supplemented, waived, discharged or terminated by a
written instrument signed by the Issuer and the holders of not less than
66-2/3% of the outstanding Warrants (or, in the case of Sections 6 and 7, the
holders of 66-2/3% of all outstanding Warrants and Non-Public Warrant Shares);
provided that (i) the number of Warrant Shares issuable upon exercise of the
Warrants may not be reduced and the Warrant Price may not be increased (except
pursuant to Section 4) without the consent of each holder of Warrants, (ii) the
Expiration Date may not be changed to an earlier date without the consent of
each holder of Warrants, (iii) so long as the Lender shall be a Warrant holder,
Section 11 may not be amended except with the consent of the Lender and (iv)
this Section 12 may not be amended except with the consent of the holders of
Warrants and/or Warrant Shares.

14. Specific Performance. The holders of the Warrants
and/or Non-Public Warrant Shares shall have the right, without prejudice to any
other rights and remedies otherwise available to them, to specific performance,
without proof of actual damages, by the Issuer of the provisions of this
Certificate. The Issuer hereby irrevocably waives any defense based on the
adequacy of a remedy at law which may be asserted as a bar to the remedy of
specific performance in any action brought against the Issuer for specific
performance of this Certificate by the holders of the Warrants and/or
Non-Public Warrant Shares.

15. Gender and Number. As used herein, the use of any of
the masculine, feminine, or neuter gender and the use of the singular or plural
form shall include any or all of the other, wherever and whenever appropriate
in the context.

16. Notices. Except as otherwise provided herein, to be
effective, all notices and other communications to or upon the Issuer or any
holder of Warrants or Warrant Shares shall be in writing or by telegraph,
telecopier or telex and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered by hand or by overnight
courier, or when deposited in the mail, certified mail, return receipt
requested, postage prepaid, three days after being so deposited or, in the case
of telecopy notice, when sent, addressed to the Issuer in care of Lincolnshire
Management, Inc., 780 Third Avenue, New York, New York 10017, and to any holder
of Warrants or Warrant Shares at the address listed for such holder on the
books of the Issuer.

17. Benefits of Certificate. Nothing in this Certificate
shall be construed to give to any Person other than the Issuer, the
Warrantholders and Holders of Registrable Securities any legal or equitable
right, remedy or claim under this Certificate. This Certificate shall be for
the sole and exclusive benefit of the Issuer, and the holders of the Warrants
and the Holders of Registrable Securities.

<PAGE> 22
20

18. Exchange, Loss or Destruction of Certificate. Upon
surrender of this Certificate to the Issuer with a duly executed instrument of
assignment and funds sufficient to pay any transfer tax, the Issuer shall,
without charge, execute and deliver a new certificate of like tenor in the name
of the assignee named in such instrument of assignment and this Certificate
shall promptly be canceled. Upon receipt by the Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Certificate, and, in the case of loss, theft or destruction, of such bond or
indemnity as the Issuer may reasonably require, and, in the case of mutilation
upon surrender and cancellation of this Certificate, the Issuer will execute
and deliver a new certificate of like tenor in lieu of such lost, stolen,
destroyed or mutilated certificate.

19. Captions. The captions of the sections and
subsections of this Certificate have been inserted for convenience only all
have no substantive effect.
<PAGE> 23
20. Applicable Law. This Certificate and the Warrants
evidenced hereby shall for all purposes be construed in accordance with the
laws of the State of New York.

Dated as of March 10, 1997

CREDENTIALS SERVICES INTERNATIONAL, INC.

By /s/ Thomas J. Maloney
-------------------------------------
Name: Thomas J. Maloney
Title: Chairman

<PAGE> 24

SCHEDULE I
to the Warrant Certificate

Owner Number of Shares
----- ----------------

CSI 39,900
CIS 100

SERIES A SHARES

None

<PAGE> 25
1

First Amendment as of September 26, 1997 (the "Amendment"), to
the Warrant Agreement dated as of March 10, 1997 (as amended, the "Warrant
Agreement"), made by Credentials Services International, Inc., a Delaware
corporation (the "Issuer") in favor of Canterbury Mezzanine Capital, L.P., a
Delaware limited partnership (the "Lender").

WHEREAS the Issuer has requested that the Lender amend certain
provisions of the Warrant Agreement as set forth below; and

WHEREAS the Lender is willing, on the terms and subject to the
conditions set forth below, to effect such amendment and grant such consents;

NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto
hereby agree, on the terms and subject to the conditions set forth below, as
follows:

SECTION 1. Defined Terms. Unless otherwise defined herein,
all defined terms used in this Amendment shall have the meanings ascribed
thereto as re set forth in the Warrant Agreement, including those incorporated
into the Warrant Agreement by reference to the "Loan Agreement" (as defined in
the Warrant Agreement).

SECTION 2. "The Lender hereby exercises all of the Warrants
(evidenced by the Certificate incorporated in the Warrant Agreement) to
purchase a total of 4,843.05 Shares of the Issuer in the manner specified in
Section 2 of the Warrant Agreement, including payment by the Lender of the
Warrant Price and the delivery to the Issuer of the Lender's duly signed and
dated Exercise Form annexed hereto."

SECTION 3. Section 9 of the Warrant Agreement is hereby
deleted in its entirety effective as of March 10, 1997.

SECTION 4. Section 10 of the Warrant Agreement is hereby
deleted in its entirety effective as of March 10, 1997.

SECTION 5. Section 11 of the Warrant Agreement is hereby
amended by deleting the caption and the provisions thereof in their entirety
and by substituting in lieu thereof the following:

"11. Excess Proceeds. If, prior to 5 p.m. New York
City time, on March 10, 1999 (the "Liquidation Period"), (a)
the Loan and all other amounts due under the Loan Agreement
shall have been repaid in full and (b) the Lender shall have
received in excess of $3,000,000 in cash by reason of the sale
or any other disposition of all or any portion of the Warrants
and/or Warrant Shares (such
<PAGE> 26
2

excess above the sum of $3,000,000 being hereinafter referred
to as the "Excess Amount"), the Lender shall:

(i) pay to Lincolnshire such dollar amount as
equals twenty five percent (25%) on the Excess Amount at the
time of receipt thereof by the Lender on the Consummation Date
(as hereinafter defined) or on any other date during the
Liquidation Period; and

(ii) shall assign, transfer and deliver to
Lincolnshire all of the Lender's right, title and interest
(through delivery of stock certificates accompanied by proper
instruments of transfer) in and to twenty-five percent (25%)
of the number of the Warrant Shares to be retained by the
Lender and which are not to be sold by the Lender pursuant to
the Registration Statement at the time of receipt of such
Excess Amount by the Lender on the Consummation Date (as
hereinafter defined) or on any other date during the
Liquidation Period."

SECTION 6. On the date of the consummation of the sale of the
Shares, including a portion of the Shares issued to the Lender upon exercise of
the Warrants (the "Consummation Date"), pursuant to a Form S-1 Registration
Statement to be filed by the Issuer under the Act:

(a) the Lender, the Issuer, CIS, CSI and the Fund shall
execute and deliver an instrument terminating and cancelling the Stockholders
Agreement in its entirety without any further rights, duties, obligations or
liabilities of any of the parties arising thereunder; and

(b) the Lender, the Issuer and CSI shall enter into a
mutually agreeable "Registration Rights Agreement" which shall be in
substitution for, and in lieu of, Sections 6, 7 and 8 of the Warrant Agreement
in their entirety.

SECTION 7. Representations and Warranties. The Issuer
represents and warrants to Lender as of the date hereof that:

(a) The Issuer (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has all requisite power and
authority to own its property and assets and to carry on its business
as now conducted and as proposed to be conducted, (iii) is qualified
to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify would not result in a
Material Adverse Effect, and (iv) has the corporate power and
authority to execute, deliver and perform its obligations under each
of the Loan Documents and each other agreement or instrument
contemplated thereby to which it is or will be a party.

<PAGE> 27
3

(b) This Amendment (i) has been duly authorized by all
requisite corporate and, if required, stockholder action and (ii) will
not (A) violate (I) any provision of law, statute, rule or regulation
applicable to the Issuer, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of the
Issuer, or (II) any provision of any indenture, agreement or other
instrument to which the Issuer is a party or by which it or any of its
property is or may be bound, (B) be in conflict with, result in or a
breach of or constitute (alone or with notice or lapse of time or
both), a default under any such indenture, agreement or other
instrument or (C) result in the creation or imposition of any Lien
upon or with respect to any property or assets now owned or hereafter
acquired by the Issuer.

(c) This Amendment has been duly executed and delivered
by the Issuer and constitutes a legal, valid and binding obligation of
the Issuer, enforceable against the Issuer, in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by
general equity principles (whether enforcement is sought by
proceedings in equity or at law).

(d) No action, consent or approval of, registration or
filing with or any other action by any Governmental Authority is or
will be required in order to consummate this Amendment, except such as
have been made or obtained and are in full force and effect.

SECTION 8. Except as expressly amended by this Amendment, the
Warrant Agreement shall remain in full force and effect until the Consummation
Date, whereupon it shall automatically, and without further act of the parties,
be terminated and cancelled in its entirety and neither the lender nor the
Issuer shall, upon such termination and cancellation, have any further rights,
duties or obligations or liabilities thereunder.

SECTION 9. Effectiveness. This Amendment shall become
effective as of the date hereof when the Lender shall have received copies
hereof that, when taken together, bear the signatures of the Issuer and the
Lender.

SECTION 10. Counterparts. This Amendment may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract. Delivery of an
executed counterpart of a signature page of this Amendment by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Amendment.

SECTION 11. Headings. Section headings used herein are for
convenience of reference only, are not part of this Amendment and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Amendment.

<PAGE> 28
IN WITNESS WHEREOF, the Issuer and the lender have caused this
Amendment to be duly executed by their duly authorized officers, all as of the
date and year first above written.

CREDENTIALS SERVICES INTERNATIONAL, INC.

By: /s/David C. Thompson
-------------------------------------
Name: David C. Thompson
Title: President and CEO

CANTERBURY MEZZANINE CAPITAL, L.P.
By: Canterbury Capital, LLC, its general partner

By: /s/Nicholas B. Dunphy
-------------------------------------
Name: Nicholas B. Dunphy
Title: Member

The undersigned hereby consent and agree to be bound by the
provisions of Section 6 of the above agreement.

CSI INVESTMENT PARTNERS II, LTD.,
By: Credentials II G.P., L.P.:
-------------------------------------
General Partner

By: Credentials II G.P., Inc.:
-------------------------------------
its General Partner

By: /s/Thomas J. Maloney
-------------------------------------
Name: Thomas J. Maloney
Title: Vice President

CIS ACQUISITION PARTNERS, L.P.
By: Credentials G.P., L.P.:
-------------------------------------
General Partner

By: Credentials G.P., Inc.:
-------------------------------------
its General Partner

By: /s/Thomas J. Maloney
-------------------------------------
Name: Thomas J. Maloney
Title: Vice President

SIGNATURES CONTINUED ON FOLLOWING PAGE

4
<PAGE> 29
SIGNATURES CONTINUED FROM PREVIOUS PAGE

LINCOLNSHIRE EQUITY FUND, L.P.

By: Lincolnshire Equity Partners, L.P.:
-------------------------------------
General Partner

By: Lincolnshire Equity, Inc.:
-------------------------------------
its General Partner

By: /s/Thomas J. Maloney
-------------------------------------
Name: Thomas J. Maloney
Title: Vice President

<PAGE> 30
EXERCISE FORM
OF
WARRANTS PURSUANT
TO WARRANT AGREEMENT
DATED AS OF MARCH 10, 1997,
BETWEEN
CREDENTIALS SERVICES INTERNATIONAL, INC.
AND
CANTERBURY MEZZANINE CAPITAL, L.P.

The undersigned hereby irrevocably elects to exercise the right to
purchase 4,843.05 Shares underlying this Warrant according to the conditions
hereof and herewith makes payment of the Warrant Price of such Shares in full.

CANTERBURY MEZZANINE CAPITAL, L.P.

By: Canterbury Capital, LLC, its general partner,

By: /s/Nicholas B. Dunphy
----------------------------------------------
Name: Nicholas B. Dunphy
Title: Member

Dated: September 26, 1997

<PAGE> 1
Exhibit 5.1

[LETTERHEAD OF MALONEY, MEHLMAN & KATZ]

November 21, 1997

Board of Directors
Credentials Services International, Inc.
333 City Boulevard West, 10th Fl.
Orange, California 92868

Re: Registration Statement on Form S-1 (Reg. No. 333-37461)

Gentlemen:

We are acting as counsel for Credentials Services International, Inc.,
a Delaware corporation (the "Company"), in connection with the registration
under the Securities Act of 1933, as amended, of 6,325,000 shares of Common
Stock, par value $.01 per share (the "Common Stock"), of the Company, all of
which consist of authorized but heretofore unissued shares to be offered and
sold by the Company as well as outstanding shares of Common Stock to be offered
and sold by the Selling Stockholders named in the above-entitled registration
statement and amendments thereto (as so amended, the "Registration Statement")
(including an aggregate of 825,000 shares subject to the underwriters'
over-allotment option).

We are of the opinion that (a) the shares of Common Stock to be
offered and sold by the Company have been duly authorized and, when issued and
sold by the Company in the manner described in the Registration Statement and
in accordance with the resolutions adopted by the Board of Directors of the
Company, will be validly issued, fully paid and nonassessable, and (b) the
outstanding shares of Common Stock to be offered and sold by the Selling
Stockholders in the manner described in the Registration Statement have been
duly authorized and are validly issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.

Very truly yours,

/s/ Maloney, Mehlman & Katz

<PAGE> 1

EXHIBIT 10.11

CREDENTIALS SERVICES INTERNATIONAL, INC.

1997 STOCK OPTION PLAN

<PAGE> 2
CREDENTIALS SERVICES INTERNATIONAL, INCL
1997 STOCK OPTION PLAN

<TABLE>
<S> <C> <C>
ARTICLE I
ESTABLISHMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Agreement or Award Agreement . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.5 Board of Directors or Board . . . . . . . . . . . . . . . . . . . . . . . . 1
2.6 Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Change in Control and Change in Control Price . . . . . . . . . . . . . . . . 2
2.8 Code or Internal Revenue Code . . . . . . . . . . . . . . . . . . . . . . . 2
2.9 Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.10 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.11 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.12 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.13 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.14 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.15 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.16 Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.17 Grant Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.18 Incentive Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.19 Non-Employee Director . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.20 Nonqualified Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.21 Option Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.22 Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.23 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.24 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.25 Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.26 Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.27 Rule 16b-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.28 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.29 Stock Appreciation Right . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.30 Stock Option or Option . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.31 Termination of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE III
ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Administrator and Authority . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>

i
<PAGE> 3

<TABLE>
<S> <C>
ARTICLE IV
STOCK SUBJECT TO PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Release of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Restrictions on Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4 Stockholder Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Best Efforts To Register . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.6 Anti-Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE V
ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE VI
STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Grant and Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Option Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Exercisability . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(d) Method of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) Company Loan or Guarantee . . . . . . . . . . . . . . . . . . . . . . 11
(f) Non-transferability of Options . . . . . . . . . . . . . . . . . . . 11
6.4 Termination by Reason of Death . . . . . . . . . . . . . . . . . . . . . . . 11
6.5 Termination by Reason of Disability . . . . . . . . . . . . . . . . . . . . . 12
6.6 Other Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE VII
STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.2 Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.3 Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Period and Exercise . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Special Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) Non-transferability of Stock Appreciation Rights . . . . . . . . . . 13
(e) Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Effect on Shares Under the Plan . . . . . . . . . . . . . . . . . . . 13
(g) Incentive Stock Option . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE VIII
CHANGE IN CONTROL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.1 Impact of Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.2 Definition of Change in Control . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>

ii
<PAGE> 4

<TABLE>
<S> <C> <C>
ARTICLE IX

MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.1 Amendments and Termination . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.2 Unfunded Status of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.3 General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) No Additional Obligation . . . . . . . . . . . . . . . . . . . . . . 16
(c) Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(d) Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(f) Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(g) Limited Transfer During Offering . . . . . . . . . . . . . . . . . . 17
(h) Administrator Discretion . . . . . . . . . . . . . . . . . . . . . . 17
(i) No Company Obligation . . . . . . . . . . . . . . . . . . . . . . . . 17
(j) Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.4 Mitigation of Excise Tax . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.5 Limited Deduction for Compensation for Covered Employees . . . . . . . . . . 18
9.6 Rights with Respect to Continuation of Employment . . . . . . . . . . . . . . 18
9.7 Awards in Substitution for Awards Granted by Other Corporations . . . . . . . 19
9.8 Procedure for Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.9 Procedure for Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.10 Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.13 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>

iii
<PAGE> 5
CREDENTIALS SERVICES INTERNATIONAL, INC.

1997 STOCK OPTION PLAN

ARTICLE I

ESTABLISHMENT

1.1 Plan

The purpose of the 1997 Stock Option Plan (the "Plan") of
Credentials Services International, Inc. (the "Company") is to promote the
interests of the Company and its stockholders. The Plan permits the grant of
options to the officers, directors, and employees of the Company and its
Affiliates in order to allow them to participate in the Company's future
long-term growth and financial success and to enable the Company or an
Affiliate to attract and retain such persons by offering them proprietary
interests in the Company. The Plan is adopted effective as of the later of (i)
the Effective Date and (ii) the date on which the Plan has been approved by the
stockholders of the Company.

ARTICLE II

DEFINITIONS

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

2.1 "Administrator" shall mean the Board of Directors or
the Committee (as hereinafter defined), as the case may be, as more fully
described in Section 3.1 hereof.

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

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

2.4 "Award" means a Stock Option or Stock Appreciation
Right.

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

<PAGE> 6
2.6 "Cause" shall mean, for purposes of whether and when
a Participant has incurred a Termination of Employment for Cause, any act or
omission which permits the Company to terminate the written agreement or
arrangement between the Participant and the Company or an Affiliate for Cause as
defined in such agreement or arrangement, or in the event there is no such
agreement or arrangement or the agreement or arrangement does not define the
term "cause," then Cause shall mean (a) the conviction of the Participant for
committing a felony under Federal law or the law of the state in which such
action occurred or (b) the willful and deliberate failure on the part of the
Participant to perform the Participant's duties to the Company or an Affiliate
in any material respect.

2.7 "Change in Control" and "Change in Control Price"
have the meanings set forth in Section 8.2 and 8.3, respectively.

2.8 "Code" or "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended, and any subsequent Internal Revenue Code.

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

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

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

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

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

2
<PAGE> 7

2.14 "Effective Date" means the date the Plan is adopted
by the Board of Directors.

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

2.16 "Fair Market Value" means the value determined on the
basis of the good faith determination of the Committee, without regard to
whether the Common Stock is restricted or represents a minority interest,
pursuant to the applicable method described below:

(a) if the Common Stock is listed on a
national securities exchange or quoted on the NASDAQ National Market
("NASDAQ/NM"), the closing price of the Common Stock on the relevant date, as
reported by the principal national exchange on which such shares are traded (in
the case of an exchange) or by the NASDAQ/NM, as the case may be;

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

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

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

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

2.19 "Non-Employee Director" shall mean a Director within
the meaning set forth in Rule 16b- 3(b)(3)(i), or any successor definition
adopted by the Commission.

2.20 "Nonqualified Stock Option" means an Option to
purchase Common Stock in the Company granted under the Plan other than an
incentive stock option within the meaning of Section 422 of the Code.

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

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

2.23 "Participant" means a person who satisfies the
eligibility conditions of Article V and to whom an Award has been granted by the
Committee under the Plan, and in the event a Representative is appointed for a
Participant in accordance with this Plan, then the term "Participant" shall mean
such appointed Representative, or successor Representative appointed,

3
<PAGE> 8
as the case may be. The term shall also include a trust for the benefit of the
Participant, the Participant's parents, spouse or descendants, or a custodian
under a uniform gifts to minors act or similar statute for the benefit of the
Participant's descendants, to the extent permitted by the Committee and not
inconsistent with the Rule 16b-3. Notwithstanding the foregoing, the term
"Termination of Employment" shall mean the Termination of Employment of the
Participant.

2.24 "Plan" means the Credentials Services International,
Inc. Stock Option Plan, as herein set forth and as may be amended from time to
time.

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

2.26 "Retirement" means the Participant's Termination of
Employment from active employment with the Company or an Affiliate pursuant to
the early retirement provisions of the applicable pension plan of the Company or
an Affiliate, or on or after attaining age of 65.

2.27 "Rule 16b-3" means Rule 16b-3, as promulgated under
the Exchange Act, as amended from time to time, or any successor thereto.

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

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

2.30 "Stock Option" or "Option" means an option granted
under Article VI.

2.31 "Termination of Employment" means the occurrence of
any act or event whether pursuant to an employment agreement or otherwise that
actually or effectively causes or results in the person's ceasing, for whatever
reason, to be an officer, director or employee of the Company or of any
Affiliate, including, without limitation, death, Disability, dismissal,
severance at the election of the Participant, Retirement, or severance as a
result of the discontinuance, liquidation, sale or transfer by the Company or
its Affiliates of all businesses owned or operated by the Company or its
Affiliates. A Termination of Employment shall occur to an employee who is
employed by an Affiliate if the Affiliate shall cease to be an Affiliate and the
Participant shall not immediately thereafter become an employee of the Company
or an Affiliate.

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

4
<PAGE> 9
ARTICLE III

ADMINISTRATION

3.1 Administrator and Authority. The Plan shall be
administered and interpreted by either the Board or, if the Board so elects, by
a Committee established by the Board. The Committee shall be the Compensation
Committee of the Board or such other Committee established by the Board whose
sole purpose is the administration of this Plan. (As used herein, the term
"Administrator" shall mean the Board or such a Committee established by the
Board to administer the Plan, as the case may be).

(a) In the event that the Administrator of the
Plan is a Committee, the following rules shall obtain:

(i) A majority of the Committee shall constitute
a quorum at any meeting thereof (including any meetings held
by telephone conference) and the acts of a majority of the
members present, or acts approved in writing by a majority of
the entire Committee without a meeting, shall be the acts of
the Committee for purposes of this Plan, except the Committee
may authorize any one or more of its members or an officer of
the Company to execute and deliver documents on behalf of the
Committee;

(ii) On and after the Effective Date, the
Committee shall be comprised of two (2) or more Non-Employee
Directors;

(iii) A member of the Committee shall not exercise
any discretion respecting himself or herself under the Plan;

(iv) The Board shall have the authority to remove,
replace or fill any vacancy of any member of the Committee
upon notice to the Committee and the affected member;

(v) Any member of the Committee may resign upon
notice to the Board; and

(vi) The Committee may allocate among one or more
of its members, or may delegate to one or more of its agents,
such duties and responsibilities as it determines.

(b) Among other matters, the Administrator shall
have the authority, subject to the terms of the Plan:

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

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(ii) to determine whether and to what extent
Incentive Stock Options and Nonqualified Stock Options or any combination
thereof are to be granted hereunder;

(iii) to determine the number of shares of Common
Stock to be covered by each Award granted hereunder;

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

(vi) to adjust the terms and conditions, at any
time or from time to time, of any Award, subject to the limitations of Section
9.1;

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

(viii) to determine under what circumstances an
Award may be paid for in cash or Common Stock;

(ix) to provide for the forms of Agreement to be
utilized in connection with this Plan;

(x) to determine whether a Participant has a
Disability;

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

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

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

(xiv) to determine whether and with what effect an
individual has incurred a Termination of Employment;

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

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

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<PAGE> 11
(xvii) to determine whether an Award is to be
adjusted, modified or purchased, or is to become fully exercisable, under the
Plan or the terms of an Agreement;

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

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

The Administrator shall have the authority to adopt,
alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall, from time to time, deem advisable, to interpret the terms
and provisions of the Plan and any Award issued under the Plan (and any
Agreement) and to otherwise supervise the administration of the Plan.

Any determination made by the Administrator pursuant
to the provisions of the Plan shall be made in its sole discretion, and in the
case of any determination relating to an Award, may be made at the time of the
grant of the Award or, unless in contravention of any express term of the Plan
or an Agreement, at any time thereafter. All decisions made by the
Administrator pursuant to the provisions of the Plan shall be final and binding
on all persons, including the Company and Participants.

ARTICLE IV

STOCK SUBJECT TO PLAN

4.1 Number of Shares. Subject to the adjustment under
Section 4.6, the total number of shares of Common Stock reserved and available
for distribution pursuant to Awards under the Plan shall be eight hundred
thousand (800,000) shares of Common Stock authorized for issuance on the
Effective Date. Such shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares.

4.2 Release of Shares. Subject to Section 7.3(f), if any
shares of Common Stock that have been optioned cease to be subject to an Award,
if any shares of Common Stock that are subject to any Award are forfeited or if
any Award otherwise terminates without a payment being made to the Participant
in the form of Common Stock, such shares, in the discretion of the
Administrator, may again be available for distribution in connection with Awards
under the Plan.

4.3 Restrictions on Shares. Shares of Common Stock issued
upon exercise of an Award shall be subject to the terms and conditions specified
herein and to such other terms, conditions and restrictions as the Administrator
in its discretion may determine or provide in the Award Agreement. The Company
shall not be required to issue or deliver any certificates for shares of Common
Stock, cash or other property prior to (i) the listing of such shares on any
stock exchange (or other public market) on which the Common Stock may then be
listed (or regularly traded), (ii) the completion of any registration or
qualification of such shares under federal or state law, or any ruling or
regulation of any government body which the Administrator

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<PAGE> 12

determines to be necessary or advisable, and (iii) the satisfaction of any
applicable withholding obligation in order for the Company or an Affiliate to
obtain a deduction with respect to the exercise of an Award or as may otherwise
be required by law. The Company may cause any certificate for any share of
Common Stock to be delivered to be properly marked with a legend or other
notation reflecting the limitations on transfer of such Common Stock as
provided in this Plan or as the Administrator may otherwise require. The
Administrator may require any person exercising an Award to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares of Common Stock in
compliance with applicable law or otherwise. Fractional shares shall not be
delivered, but shall be rounded to the next lower whole number of shares.

4.4 Stockholder Rights. No person shall have any rights
of a stockholder as to shares of Common Stock subject to an Award until, after
proper exercise of the Award or other action required, such shares shall have
been recorded on the Company's official stockholder records as having been
issued or transferred. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date such shares are recorded
as issued or transferred in the Company's official stockholder records, except
as provided herein or in an Agreement.

4.5 Best Efforts To Register. The Company will register
under the Securities Act the Common Stock delivered or deliverable pursuant to
Awards on Commission Form S-8 if available to the Company for this purpose (or
any successor or alternate form that is substantially similar to that form to
the extent available to effect such registration, in accordance with the rules
and regulations governing such forms, as soon as such forms are available for
registration to the Company for this purpose). The Company will use its best
efforts to cause the registration statement to become effective as soon as
possible and will file such supplements and amendments to the registration
statement as may be necessary to keep the registration statement in effect until
the earliest of (a) one year following the expiration of the Option Period of
the last Option outstanding, (b) the date the Company is no longer a reporting
company under the Exchange Act and (c) the date all Participants have disposed
of all shares delivered pursuant to any Award. The Company may delay the
foregoing obligation if the Administrator reasonably determines that any such
registration would materially and adversely affect the Company's interests or if
there is no material benefit to Participants.

4.6 Anti-Dilution. In the event of any Company stock
dividend, stock split combination or exchange of shares, recapitalization or
other change in the capital structure of the Company, corporate separation or
division of the Company (including, but not limited to, a split-up, spin-off,
split-off or distribution to Company stockholders other than a normal cash
dividend), sale by the Company of all or a substantial portion of its assets
(measured on either a stand-alone or consolidated basis), reorganization, rights
offering, a partial or complete liquidation, or any other corporate transaction
or event involving the Company and having an effect similar to any of the
foregoing, then the Administrator shall adjust or substitute, as the case may
be, the number of shares of Common Stock available for Awards under the Plan,
the number of shares of Common Stock covered by outstanding Awards, the exercise
price per share of outstanding Awards, and any other characteristics or terms of
the Awards as the Administrator shall deem necessary or appropriate to reflect
equitably the effects of such changes to the

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<PAGE> 13

Participants; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated by rounding to the next lower whole number of
shares with appropriate payment for such fractional share as shall reasonably
be determined by the Administrator.

ARTICLE V

ELIGIBILITY

5.1 Eligibility. Except as herein provided, the persons
who shall be eligible to participate in the Plan and be granted Awards shall be
those persons who are officers, directors or employees of the Company or of any
Affiliate or consultants or professional advisors to the Company or any such
Affiliate who shall be in a position, in the opinion of the Administrator, to
make contributions to the growth, management, protection and success of the
Company and its Affiliates. Of those persons described in the preceding
sentence, the Administrator may, from time to time, select persons to be granted
Awards and shall determine the terms and conditions with respect thereto. In
making any such selection and in determining the form of the Award, the
Administrator may give consideration to the functions and responsibilities of
the person's contributions to the Company and its Affiliates, the value of the
individual's service to the Company and its Affiliates and such other factors
deemed relevant by the Administrator. The Administrator may designate in writing
that a person who would otherwise be eligible to participate in the Plan will
not be eligible to participate in the Plan.

ARTICLE VI

STOCK OPTIONS

6.1 General. The Administrator shall have authority to
grant Stock Options under the Plan at any time or from time to time. Stock
Options may be either Incentive Stock Options or Nonqualified Stock Options. A
Stock Option shall entitle the Participant to receive shares of Common Stock
upon exercise of such Stock Option, subject to the Participant's satisfaction in
full of any conditions, restrictions or limitations imposed in accordance with
the Plan or an Agreement (the terms and provisions of which may differ from
other Agreements) including without limitation, payment of the Option Price.

6.2 Grant and Exercise. The grant of a Stock Option shall
occur as of the date the Administrator determines. Each Stock Option granted
under this Plan shall be evidenced by an Agreement, in a form approved by the
Administrator, which shall embody the terms and conditions of such Option and
which shall be subject to the express terms and conditions set forth in the
Plan. Such Agreement shall become effective upon execution by the Participant.
Only a person who is a common-law employee of the Company, (including, without
limitation, an employee within the meaning of Treasury Regulation Section
31.3401(c)-1), any parent corporation of the Company or a subsidiary (as such
terms are defined in Section 424 of the Code) on the date of grant shall be
eligible to be granted an Option which is intended to be and is an Incentive
Stock Option. To the extent that any Stock Option is not designated as an
Incentive Stock Option or even if so designated does not qualify as an Incentive
Stock Option, it shall constitute

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<PAGE> 14

a Nonqualified Stock Option. Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify the Plan under Section
422 of the Code or, without the consent of the Participant affected, to
disqualify any Incentive Stock Option under such Section 422. The aggregate
Fair Market Value (determined at the time an Incentive Stock Option is granted)
of the shares of Common Stock with respect to which Incentive Stock Options are
first exercisable by a Participant during any calendar year (under this Plan
and any other plans of the Company) may not exceed $100,000.

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

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

(b) Option Price. The Option Price per share
of the Common Stock purchasable under an Option shall be determined by the
Administrator. If such Option is intended to qualify as an Incentive Stock
Option, the Option Price per share shall be not less than the Fair Market Value
per share on the date the Option is granted, or where granted to an individual
who owns or who is deemed to own stock possessing more than ten percent (10%) of
the combined voting power of all classes of stock of the Company, a corporation
which is a parent corporation of the Company or any subsidiary of the Company
(each as defined in Section 424 of the Code), not less than one hundred ten
percent (110%) of such Fair Market Value per share. The Option Price per share
of any Nonqualified Stock Options shall be determined by the Administrator but
shall not be less than eighty five percent (85%) of the Fair Market Value per
share on the date such Stock Option is granted.

(c) Exercisability. Subject to Section 8.1,
Stock Options shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Administrator. If the
Administrator provides that any Stock Option is exercisable only in
installments, the Administrator may at any time waive such installment exercise
provisions, in whole or in part.

(d) Method of Exercise. Subject to the
provisions of this Article VI, a Participant may exercise a Stock Option, in
whole or in part, at any time during the Option Period by the Participant's
giving written notice of exercise on a form provided by the Administrator (if
available) to the Company specifying the number of shares of Common Stock
subject to the Stock Option to be purchased. Such notice shall be accompanied by
payment in

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<PAGE> 15

full of the purchase price by cash or check or such other form of payment as
the Company may accept. If approved by the Administrator, payment in full or
in part may also be made (i) by delivering Common Stock already owned by the
Participant having a total Fair Market Value on the date of such delivery equal
to the Option Price; (ii) by the execution and delivery of a note or other
evidence of indebtedness (and any security agreement thereunder satisfactory to
the Administrator and permitted in accordance with Section 6.3(e)); (iii) by
authorizing the Company to retain shares of Common Stock which would otherwise
be issuable upon exercise of the Option having a total Fair Market Value on the
date of delivery equal to the Option Price; (iv) by the delivery of cash by a
broker-dealer to whom the Participant has submitted an irrevocable notice of
exercise or (v) by any combination of the foregoing. In the case of an
Incentive Stock Option, the right to make a payment in the form of already
owned shares of Common Stock of the same class as the Common Stock subject to
the Stock Option may be authorized only at the time the Stock Option is
granted. No shares of Common Stock shall be issued until full payment therefor
has been made. A Participant shall have all of the rights of a stockholder of
the Company only upon issuance of the shares by the Company pursuant to the
provisions of Section 4.4.

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

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

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

The terms and conditions of any loan or guarantee, including the term, interest
rate, and any security interest thereunder, shall be determined by the
Administrator, except that no extension of credit or guarantee shall obligate
the Company for an amount to exceed the lesser of the aggregate Fair Market
Value per share of the Common Stock on the date of exercise, less the par value
of the shares of Common Stock to be purchased upon the exercise of the Award,
or the amount permitted under applicable laws or the regulations and rules of
the Federal Reserve Board and any other governmental agency having
jurisdiction.

(f) Non-transferability of Options. Except as
provided herein, no Stock Option shall be transferable by the Participant other
than by will or by the laws of descent and distribution, and all Stock Options
shall be exercisable during the Participant's lifetime only by the Participant.
The Administrator may permit a Stock Option to be transferred pursuant to a
domestic relations order which would be a "qualified domestic relations order"
as defined in Section 414 of the Code if such section applied to the Stock
Option, but only to the extent consistent with a Stock Option's intended status
as an Incentive Stock Option.

6.4 Termination by Reason of Death. If a Participant
incurs a Termination of Employment due to death, any unexpired and unexercised
Stock Option held by such Participant shall thereafter be fully exercisable for
a period of one (1) year (or such other period as the

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<PAGE> 16

Administrator may specify) immediately following the date of such death or
until the expiration of the Option Period, whichever period is the shorter.

6.5 Termination by Reason of Disability. If a Participant
incurs a Termination of Employment due to a Disability, any unexpired and
unexercised Stock Option held by such Participant shall thereafter be fully
exercisable by the Participant for the period of one (1) year (or such other
period as the Administrator may specify) immediately following the date of such
Termination of Employment or until the expiration of the Option Period,
whichever period is shorter, and the Participant's death at any time following
such Termination of Employment due to Disability shall not affect the foregoing.
In the event of Termination of Employment by reason of Disability, if an
Incentive Stock Option is exercised after the expiration of the exercise periods
that apply for purposes of Section 422 of the Code, such Stock Option will
hereafter be treated as a Nonqualified Stock Option.

6.6 Other Termination. Unless otherwise provided in an
Agreement or determined by the Administrator, if a Participant incurs a
Termination of Employment due to Retirement, or the Termination of Employment is
involuntary on the part of the Participant (but is not due to death, Disability
or with Cause), any Stock Option held by such Participant shall thereupon
terminate, except that such Stock Option, to the extent then exercisable, may be
exercised for the lesser of the three-month period commencing with the date of
such Termination of Employment or until the expiration of the Option Period. If
the Participant incurs a Termination of Employment which is either (a) voluntary
on the part of the Participant (and is not due to Retirement) or (b) with Cause,
the Option shall terminate immediately. The death or Disability of a Participant
after a Termination of Employment otherwise provided herein shall not extend the
exercisability of the time permitted to exercise an Option.

ARTICLE VII

STOCK APPRECIATION RIGHTS

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

7.2 Grant. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan, in
which case the exercise of the Stock Appreciation Right shall require the
cancellation of a corresponding portion of the Stock Option. In the case of a
Nonqualified Stock Option, such rights may be granted either at or after the
time of grant of such Stock Option. In the case of an Incentive Stock Option,
such rights may be granted only at the time of grant of such Stock Option. A
Stock Appreciation Right may also be granted on a stand alone basis. The grant
of a Stock Appreciation Right shall occur as of the

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<PAGE> 17

date the Administrator determines. Each Stock Appreciation Right granted under
this Plan shall be evidenced by an Agreement, which shall embody the terms and
conditions of such Stock Appreciation Right and which shall be subject to the
terms and conditions set forth in the Plan.

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

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

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

(c) Special Rules. In the case of Stock
Appreciation Rights relating to Stock Options held by Participants who are
actually or potentially subject to Section 16(b) of the Exchange Act, no Stock
Appreciation right shall be exercisable during the first six months of its term,
except that this limitation shall not apply in the event of death or Disability
of the Participant prior to the expiration of the six-month period.

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

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

(f) Effect on Shares Under the Plan. Upon the
exercise of a Stock Appreciation Right, the Stock Option or part thereof to
which such Stock Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in

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Section 4.2 on the number of shares of Common Stock to be issued under the
Plan, but only to the extent of the number of shares of Common Stock covered by
the Stock Appreciation Right at the time of exercise based on the value of the
Stock Appreciation Right at such time.

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

ARTICLE VIII

CHANGE IN CONTROL PROVISIONS

8.1 Impact of Event. Notwithstanding any other provision
of the Plan to the contrary, in the event of a Change in Control (as defined in
Section 8.2):

(a) any Stock Appreciation Rights and Stock
Options outstanding as of the date such Change in Control is determined to have
occurred and not then exercisable shall become fully exercisable to the full
extent of the original grant of the Award thereof; or

(b) with respect to Awards outstanding as of
the date of such Change in Control, to substitute or assume for such Awards a
corresponding award under the plan of the acquired corporation, provided that
(a) the excess of the aggregate Fair Market Value of shares subject to the Award
immediately after the substitution or assumption over the aggregate award price
of such shares is not more than the similar excess subject to the Award
immediately before such substitution and (b) the new award does not give the
Participant additional benefits, including any extension of the exercise period,
all in accordance with Section 424(a) of the Code.

8.2 Definition of Change in Control. For purposes of the
Plan, a "Change in Control" shall mean the happening of any of the following
events:

(a) (i) An acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act (a "Person") of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of the then outstanding Shares of
Common Stock of the Company (the "Outstanding Company Common Stock") or the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities") or (ii) the approval by the stockholders of the
Company of a reorganization, merger, consolidation, complete liquidation or
dissolution of the Company, the sale or disposition of all or substantially all
of the assets of the Company or similar corporate transaction (in each case
referred to in this Section 8.2 as a "Corporate Transaction") or, if
consummation of such Corporate Transaction is subject, at the time of such
approval by stockholders, to the consent of

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<PAGE> 19

any government or governmental agency, the obtaining of such consent (either
explicitly or implicitly); provided such acquisition of beneficial ownership or
such Corporation Transaction would result in any Person (other than the
beneficial holders of Common Stock of the Company immediately prior to the
Corporate Transaction) beneficially owning (within the meaning of Rule 13d-3
promulgated under the Exchange Act) following the acquisition or Corporate
Transaction thirty percent 30% or more of the Outstanding Company Common Stock
or thirty percent 30% or more of the Outstanding Company Voting Securities;
excluding, however any acquisition by any subsidiary of the Company or by an
employee benefit plan (or related trust) sponsored or maintained by the Company
or an Affiliate; or

(b) A change in the composition of the Board
such that the individuals who constitute the Board (such Board shall be
hereinafter referred to as the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, for purposes of
this Section 8.2(b), that any individual who becomes a member of the Board
subsequent to the Effective Date of the Plan, whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a member of the Incumbent
Board; but, provided, further, that any such individual whose initial assumption
of office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board shall not be so considered as a
member of the Incumbent Board.

ARTICLE IX

MISCELLANEOUS

9.1 Amendments and Termination. The plan shall terminate
on November 21, 2007, unless terminated earlier by the Board. The Board may
amend, alter, or discontinue the Plan at any time, but no amendment, alteration
or discontinuation shall be made which would (a) impair the rights of a
without the Participant's consent, except such an amendment made to cause the
Plan to qualify for the exemption provided by Rule 16b-3 or (b) disqualify the
Plan from the exemption provided by Rule 16b-3. In addition, no such amendment
shall be made without the approval of the Company's stockholders to the extent
such approval is required by law, the Plan or agreement.

The Administrator may amend the Plan at any time
provided that (a) no amendment shall impair the rights of any Participant under
any Award theretofore granted without the Participant's consent, (b) no
amendment shall disqualify the Plan from the exemption provided by Rule 16b-3,
and (c) any amendment shall be subject to the approval or rejection of the
Board.

The Administrator may amend the terms of any Award or
other Award theretofore granted, prospectively or retroactively, but no such
amendment shall impair the rights

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<PAGE> 20
of any Participant without the Participant's consent, except such an amendment
made to cause the Plan or Award to qualify for the exemption provided by Rule
16b-3. The Administrator may also substitute new Stock Options or Stock
Appreciation Rights for previously granted Stock Options or Stock Appreciation
Rights, including previously granted Stock Options or Stock Appreciation Rights
having higher Option Prices but no such substitution shall be made which would
impair the rights of Participants under such Stock Option or Stock Appreciation
Right theretofore granted without the Participant's Consent.

Subject to the above provisions, the Board shall have
authority to amend the Plan to take into account changes in law and tax and
accounting rules, as well as other developments and to grant Awards which
qualify for beneficial treatment under such rules without shareholder approval.

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

9.3 General Provisions.

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

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

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

16
<PAGE> 21

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

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

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

(g) Limited Transfer During Offering. In the
event there is an effective registration statement under the Securities Act
pursuant to which shares of Common Stock shall be offered for sale in an
underwritten offering, a Participant shall not, during the period requested by
the underwriters managing the registered public offering, effect any public sale
or distribution of shares of Common Stockreceived directly or indirectly
pursuant to an Award.

(h) Administrator Discretion. The
Administrator may in its discretion include in any Agreement an obligation that
the Company purchase a Participant's shares of Common Stock received upon the
exercise of an Award (including the repurchase of any unexercised Options which
have not expired), or may obligate a Participant to sell shares of Common Stock
to the Company upon such terms and conditions as the may determine and set forth
in an Agreement.

(i) No Company Obligation. Neither the
Company, nor any Affiliate, shall have any duty or obligation to affirmatively
disclose to a Participant or to any other record or beneficial holder of Common
Stock or an of Option, and such Participant or other holder shall have no right
to be advised of, any material information regarding the Company or an Affiliate
at any time prior to, upon or in connection with the exercise of an Award or the
Company's purchase of Common Stock or an Award from such holder in accordance
with the terms hereof. Except as expressly provided herein, the Company shall
have no duty or obligation to register the shares of Common Stock.

(j) Transfer of Shares. A Participant may at
any time make a transfer of shares of Common Stock received pursuant to the
exercise of an Award to his parents, spouse or descendants or to any trust for
the benefit of the foregoing or to a custodian under a uniform gifts to minors
act or similar statute for the benefit of any of the Participant's descendants.
Any transfer of shares received pursuant to the exercise of an Award shall not
be permitted or valid

17
<PAGE> 22

unless and until the transferee agrees to be bound by the provisions of the
Plan, and any provision respecting Common Stock under the Agreement, provided
however, that "Termination of Employment" shall continue to refer to the
Termination of Employment of the Participant.

9.4 Mitigation of Excise Tax. If any payment or right
accruing to a Participant under this Plan (without the application of this
Section 9.4), either alone or together with other payments or rights accruing to
the Participant from the Company or an Affiliate ("Total Payments") would
constitute a "parachute payment" (as defined in Section 280G of the Code and
regulations thereunder), such payment or right shall be reduced to the largest
amount or greatest right that will result in no portion of the amount payable or
right accruing under the Plan being subject to an excise tax under Section 4999
of the Code or being disallowed as a deduction under Section 280G of the Code.
The determination of whether any reduction in the rights or payments under this
Plan is to apply shall be made by the Administrator in good faith after
consultation with the Participant, and such determination by the Administrator
shall be conclusive and binding on the Participant. The Participant shall
cooperate in good faith with the Administrator in making such determination and
providing the necessary information for this purpose. The foregoing provisions
of this Section 9.4 shall apply with respect to any person only if after
reduction for any applicable federal excise tax imposed by Section 4999 of the
Code and federal income tax imposed by the Code, the Total Payments accruing to
such person would be less than the amount of the Total Payments as reduced, if
applicable, under the foregoing provisions of the Plan and after reduction for
only federal income taxes.

9.5 Limited Deduction for Compensation for Covered
Employees. If any payment or right accruing to a Participant under this Plan
(without the application of this Section 9.5) either alone or together with
other payments or rights accruing to the Participant from the Company or an
Affiliate ("Total Compensation Payment") would result in the denial of a
deduction under Section 162(m) of the Code, such payment or right shall be
reduced to the largest amount or greatest right that will result in no portion
of the amount payable or right accruing under the Plan being non-deductible as a
result of Section 162(m) of the Code. The determination of whether any reduction
in the rights or payments under this Plan is to apply shall be made by the
Administrator in good faith after consultation with the Participant, and such
determination by the Administrator shall be conclusive and binding on the
Participant. The Participant shall cooperate in good faith with the
Administrator in making such determination and providing the necessary
information for this purpose.

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

18
<PAGE> 23
rights to terminate the Participant's employment or service as existed prior to
the individual becoming a Participant in this Plan.

9.7 Awards in Substitution for Awards Granted by Other
Corporations. Awards may be granted under the Plan from time to time in
substitution for awards held by employees, directors or service providers of
other corporations who are about to become officers, directors or employees of
the Company or of an Affiliate as the result of a merger or consolidation of the
employing corporation with the Company or an Affiliate, or the acquisition by
the Company or by an Affiliate of the assets of the employing corporation, or
the acquisition by the Company or Affiliate of the stock of the employing
corporation, as the result of which it becomes a designated employer under the
Plan. The terms and conditions of the Awards so granted may vary from the terms
and conditions set forth in this Plan at the time of such grant as the majority
of the members of the Administrator may deem appropriate to conform, in whole or
in part, to the provisions of the awards in substitution for which they are
granted.

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

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

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

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

9.12 Severability. If any provision of this Plan shall for
any reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not effect any other

19
<PAGE> 24
provision hereby, and this Plan shall be construed as if such invalid or
unenforceable provision were omitted.

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

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

<PAGE> 1
EXHIBIT 10.12(ix)

FIRST AMENDMENT
TO
CREDIT AGREEMENT

This First Amendment to Credit Agreement ("Amendment") dated March
10, 1997 is entered into between CREDENTIALS SERVICES INTERNATIONAL, INC., a
Delaware corporation ("Borrower"), and LASALLE NATIONAL BANK, a national banking
association ("Lender").

Recitals:

A. Borrower and Lender are parties to a Credit Agreement dated
January 14, 1997 (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement").

B. Borrower has requested that Lender amend the Credit Agreement in
certain respects and Lender has agreed to enter into this Amendment on the terms
and conditions set forth herein.

NOW, THEREFORE, in consideration of the agreements contained herein
and in the Credit Agreement and in consideration of any loans or extensions of
credit heretofore, now or hereafter made to or for the benefit of Borrower by
Lender, Borrower and Lender agree as follows:

1. Definitions. Capitalized terms used herein without definition
shall have the meanings set forth in the Credit Agreement.

2. Amendments to the Credit Agreement. Effective as of the date
hereof and subject to the satisfaction of the conditions precedent set forth in
Section 3 below, the Credit Agreement is hereby amended as follows:

(a) The definition of "Affiliate" in Section 1.1 of the Credit
Agreement is amended by adding the following sentence at the end thereof:

"Canterbury Mezzanine Capital, L.P. shall not be deemed
an Affiliate of Borrower or any Subsidiary of Borrower solely
by virtue of its ownership of the Warrants or the shares of
common stock of Borrower issued upon exercise of the Warrants
in accordance with the terms thereof."

(b) The definition of "Asset Disposition" in Section 1.1 of the
Credit Agreement is amended to delete clause (ii) thereof.

""Change of Control" shall mean any event of series of events
by which either (a) Pledgors and any Subsequent Pledgor shall,
collectively, cease to own and control 100% of the outstanding
capital stock of Borrower (other than the capital stock

<PAGE> 2

subject to the Warrants), (b) the Fund shall cease to own,
directly or indirectly, beneficially or of record, at least 90%
of the issued and outstanding partnership interests of each
Pledgor owned by it on the Closing Date (without giving effect
to any issuance of options or exercise thereof pursuant to
management stock option plan to be adopted by CSI), or (c) the
Fund shall cease to own, directly or through one or more
intermediaries, at least 51% of the aggregate partnership
interests in each Pledgor."

(d) The definitions of "Common Stock Pledge Agreement," "Common
Stock Pledgor," "Preferred Stock Pledge Agreement" and "Preferred Stock Pledgor"
in Section 1.1 of the Credit Agreement are deleted in their entirety.

(e) The definition of "Net Issuance Proceeds" in Section 1.1 of
the Credit Agreement is amended to read as follows:

""Net Issuance Proceeds" shall mean, in respect of any
issuance of debt or equity, cash proceeds received in
connection therewith, net of reasonable out-of-pocket costs and
expenses paid or incurred in connection therewith in favor of
any Person not an Affiliate of Borrower; provided, however,
that the term "Net Issuance Proceeds" shall not include (a) any
proceeds in respect of the issuance of the Subordinated
Indebtedness described in clause (b) of the definition of
Subordinated Indebtedness; or (b) any proceeds in respect of
the issuance of debt or equity, or both, to the Fund or its
designee pursuant to and in accordance with the Securities
Purchase Agreement; (c) any proceeds in respect of the issuance
of equity to the Fund or its designee pursuant to and in
accordance with the Second Securities Purchase Agreement (as
defined in the Subordinated Loan Agreement dated March 10, 1997
between Canterbury Mezzanine Capital, L.P. and Borrower (the
"Canterbury Loan Agreement"); and (d) the issuance of the
Warrants and the shares of common stock of Borrower issued upon
the exercise thereof."

(f) The definition of "Pledge Agreement" in Section 1.1 of the
Credit Agreement is amended to read as follows:

""Pledge Agreements" shall mean the CIS Pledge Agreement
and the CSI Pledge Agreement."

(g) The definition of "Pledgors" in Section 1.1 of the Credit
Agreement is amended to read as follows:

""Pledgors" shall mean, collectively, CSI and CIS."

(h) The definition of "Subordinated Indebtedness" in Section
1.1 of the Credit Agreement is amended to read as follows:

-2-

<PAGE> 3

"Subordinated Indebtedness" shall mean (a) the
indebtedness of Borrower evidenced by that certain Subordinated
Promissory Note of Borrower dated October 1, 1994, payable to
TRW Inc. in the original principal amount of $3,000,000, as
amended prior to the Closing Date, as amended by Amendment No.
3 to Promissory Note dated March 10, 1997 and as amended,
restated or otherwise modified as permitted by the terms of the
TRW Subordination Agreement); (b) the indebtedness of Borrower
evidenced by that certain Subordinated Note of Borrower dated
March 10, 1997 payable to Canterbury Mezzanine Capital, L.P. in
the original principal amount of $3,000,000, as amended,
restated or otherwise modified as permitted by the terms of the
Canterbury Subordination Agreement (the "Canterbury Note"); and
(c) any other Indebtedness of Borrower or any Subsidiary of
Borrower issued on terms and conditions satisfactory to Lender
and the payment of which is subordinated in writing to the
payment of the Obligations on terms satisfactory to Lender."

(i) The definition of "Subordination Agreements" in Section 1.1
of the Credit Agreement is amended to read as follows:

""Subordination Agreements" shall mean the TRW
Subordination Agreement, the Management Fee Subordination
Agreement and the Canterbury Subordination Agreement."

(j) The following new definitions are added to Section 1.1 of
the Credit Agreement and inserted in appropriate alphabetical order:

""Canterbury Subordination Agreement" shall mean that
certain Subordination Agreement dated as of March 10, 1997
among Lender, TRW Inc., and Canterbury Mezzanine Capital, L.P.,
as amended, restated or otherwise modified and in effect from
time to time."

""CIS" shall mean CIS Acquisition Partners, L.P., a
Delaware limited partnership."

""CIS Pledge Agreement" shall mean that certain Pledge
Agreement dated as of the Closing Date made by CIS in favor of
Lender, as amended, restated or otherwise modified and in
effect from time to time."

""CSI" shall mean CSI Investment Partners II, L.P., a
Delaware limited partnership."

""CSI Pledge Agreement" shall mean that certain Amended
and Restated Pledge Agreement dated March 10, 1997 made by CSI
in favor of Lender, amending and restating the

-3-

<PAGE> 4

Preferred Stock Pledge Agreement, as amended, restated or
otherwise modified and in effect from time to time."

""Pledge Agreements" shall mean the CSI Pledge Agreement
and the CIS Pledge Agreement."

""Warrants" shall mean the warrants to purchase common
stock of Borrower issued by Borrower to Canterbury Mezzanine
Capital, L.P. pursuant to that certain Warrant Agreement dated
March 10, 1997, as in effect on the date hereof."

(k) A new Section 1.03 is added to read as follows:

"1.03 Other Definitional Provisions.
References in this Agreement to "fiscal year," and "fiscal
quarter" and "fiscal month" shall refer to such fiscal period
of Borrower. References to any fiscal year ended or ending on
September 30 of any year shall mean the fiscal year ended or
ending on or about September 30 of such year; references to any
fiscal quarter ended or ending on December 31, March 31 or June
30 of any year shall mean the fiscal quarter ended or ending on
or about December 31, March 31 or June 30 of such year and
references to any fiscal month ended or ending on the last day
of such month shall mean the fiscal month ended or ending on or
about the last day of such month."

(l) Section 6.01 of the Credit Agreement is amended to delete
the date "February 15, 1997" in line 3 thereof and inserting in lieu thereof the
date "March 15, 1997."

(m) Section 6.02(b) of the Credit Agreement is amended by
adding at the end thereof the words "and the provisions of Sections 7.16 and
7.17".

(n) Section 6.09 of the Credit Agreement is amended to read as
follows:

"Performance of Obligations. Borrower shall,
and shall cause each of its Subsidiaries to, comply with the
provisions of all contracts or agreements to which it is a
party or by which it is bound where the failure to so comply
could, individually or in the aggregate with all such other
failures, reasonably be expected to have a Material Adverse
Effect, including, without limitation, using its best efforts
to maintain adequate liquidity to process and pay all refund
requests within six weeks of receipt thereof."

(o) Section 6.14 of the Credit Agreement is amended by deleting
subsection (a) thereof.

(p) Section 7.06 of the Credit Agreement is amended to read as
follows:

-4-

<PAGE> 5

"7.06 Restricted Payments. Neither Borrower
nor any of its Subsidiaries shall declare or make any dividend
payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any shares of
any class of its capital stock or on account of any warrant to
acquire such shares, or purchase, redeem or otherwise acquire
for value any shares of its capital stock or any warrants,
rights or options to acquire such shares now or hereafter
outstanding, or any payment in respect of any Subordinated
Indebtedness which is prohibited by the terms of any applicable
Subordination Agreement, except that (a) any Wholly-Owned
Subsidiary of Borrower may declare and pay dividends to
Borrower or to any other Wholly-Owned Subsidiary of Borrower,
and (b) the Warrants may be exercised in accordance with their
terms."

(q) Section 7.07 of the Credit Agreement is amended by adding
the following words immediately after the words "Management Fee Subordination
Agreement" at the end of the first sentence thereof: "and payment of the
Management Fee in excess of $250,000 in any one Year shall be subject to the
consent of TRW Inc".

(r) Article 7 of the Credit Agreement is amended by adding a
new Section 7.16 and a new Section 7.17 at the end thereof to read as follows:

"Section 7.16 Mailings and Telemarketing
Calls. Borrower shall not make or undertake, or seek to make or
undertake, more than (i) 50,000,000 mailings and 3,600,000
telemarketing calls during the fiscal year ending September 30,
1997, (ii) 70,000,000 mailings and 5,000,00 telemarketing calls
during the fiscal year ending September 30, 1998 or (iii) an
amount for each of mailings and telemarketing calls that is 20%
greater than the amount for the preceding year in the case of
each fiscal year thereafter. In addition, neither Borrower nor
any of its Subsidiaries shall, without the prior written
consent of Lender, make or undertake more than two-thirds of
the total annual mailings and telemarketing calls (as permitted
during any fiscal year pursuant to the next preceding sentence)
during the six months ending on March 31 or September 30 of
each fiscal year of Borrower.

7.17 Discount Offers. Borrower shall not, in
any fiscal year, offer any discount of the subscription price
to be paid by any Subscriber other than such discounts to
Subscribers not exceeding 25% of the aggregate number of new
Subscribers that were not Subscribers during the immediately
preceding fiscal year."

(s) Section 8.01 of the Credit Agreement is amended to read as
follows:

-5-

<PAGE> 6

"8.01 Minimum EBITDA.

(a) Borrower shall not permit EBITDA for the
twelve month period ending on the last day of any calendar
quarter set forth below to be less than the minimum amount set
forth below opposite such fiscal quarter ending date:

<TABLE>
<CAPTION>
Fiscal Quarter Ending Minimum EBITDA
--------------------- --------------
<S> <C> <C>
March 31, 1997 $2,000,000
June 30, 1997 $4,000,000
September 30, 1997 $6,500,000
December 31, 1997 and the
last day of each fiscal
quarter thereafter $7,500,000
</TABLE>

provided, however, that for the quarters ending on each of
March 31, 1997 and June 30, 1997, the computation of EBITDA
shall be calculated on a year-to-date basis commencing with
September 30, 1996.

(b) Borrower shall not permit EBITDA (i) for
any fiscal quarter of Borrower ending March 31, June 30 or
September 30 to be less than $750,000: and (ii) for any fiscal
quarter of Borrower ending December 31 to be less than
$250,000."

(t) Section 8.03 of the Credit Agreement is amended to read as
follows:

"8.03 Debt Service Ratio.

(a) Borrower shall not permit the Debt Service
Ratio as determined as of any date set forth below to be less
than the minimum ratio set forth below opposite such date:

<TABLE>
<CAPTION>
Twelve Months Ending Minimum Ratio
-------------------- -------------
<S> <C> <C>
June 30, 1997 1.10 to 1.00
September 30, 1997 1.25 to 1.00
December 31, 1997 and the 1.50 to 1.00
last day of each fiscal
quarter thereafter
</TABLE>

provided, however, that for the quarter ending on June 30,
1997, the computation of the Debt Service Ratio shall be
calculated on a year-to-date basis commencing with September
30, 1996.

-6-

<PAGE> 7

(b) Borrower shall not permit the Debt Service
Ratio as determined as of the last day of each fiscal quarter
(i) for any fiscal quarter of Borrower ending March 31, June 30
or September 30 to be less than 1.20 to 1.00, and (ii) for any
fiscal quarter of Borrower ending December 31 to be less than
1.00 to 1.00."

(u) Section 8.05 of the Credit Agreement is amended to read as
follows:

"8.05 Capital Expenditures. Borrower shall not
expend, or commit to expend, for Capital Expenditures during
any one fiscal year on a non-cumulating basis in excess of (a)
$2,100,000 for the fiscal year ending September 30, 1997; and
(b) $200,000 for each fiscal year thereafter."

(v) Schedule 5.05(b) to the Credit Agreement is amended to read
as set forth on revised Schedule 5.05(b) attached to this Amendment.

3. Consent and Waiver. Lender hereby consents to, and waives any
default under Section 7.13 of the Credit Agreement that would otherwise be
caused by, the issuance of the Warrants, the exercise of the Warrants in
accordance with their terms and Borrower's amendment to its Certificate of
Incorporation pursuant to a Certificate of Amendment and Certificate of
Retirement and Prohibition of Reissuance of Shares, each as filed in the Office
of the Secretary of State of Delaware on March 4, 1997, true and correct copies
of which have been furnished by Borrower to Lender.

4. Conditions to Effectiveness of Amendment. This Amendment shall
become effective and be deemed effective as of the date hereof, if, and only if,
Borrower shall have received the proceeds of the Canterbury Note and Lender
shall have received each of the following:

(a) this Amendment, duly executed by Borrower and Lender;

(b) the Canterbury Subordination Agreement, duly executed by
Lender, TRW Inc. and Canterbury Mezzanine Capital, L.P.;

(c) the CSI Pledge Agreement, duly executed by CSI, together
with stock certificate representing the shares pledged thereunder with stock
powers duly executed in blank;

(d) a copy of all material documents executed and delivered by
Borrower on or prior to the date of this Amendment in connection with the
transactions contemplated by the Canterbury Loan Agreement, including, without
limitation, the Canterbury Note, the Warrant Agreement, the Stockholders
Agreement, the Management Fee Subordination Agreement, the Second Securities
Purchase Agreement and the Collateral Assignment, all as referred to in the
Canterbury Loan Agreement; and

-7-

<PAGE> 8

(e) such other documents, instruments and agreements as Lender
may reasonably request.

5. Representations and Warranties.

(a) Upon the effectiveness of this Amendment, Borrower hereby
reaffirms all covenants, representations and warranties made in the Credit
Agreement to the extent the same are not amended hereby and agrees that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment (except to the extent any such
representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct in all material respects as of such earlier
dates) and that, as of the effective date of this Amendment and after giving
effect hereto, no Default has occurred and is continuing.

(b) Borrower hereby represents and warrants that this Amendment
and the Credit Agreement, as previously executed and as amended hereby,
constitute legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.

6. Reference to and Effect on Credit Agreement.

(a) Upon the effectiveness of this Amendment pursuant to
Section 4 hereof, on and after the date hereof, each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
similar import, and each reference to the Credit Agreement in any instrument or
document delivered in connection therewith, shall mean and be a reference to the
Credit Agreement as amended hereby.

(b) Except as specifically set forth herein, the Credit
Agreement, and all other documents, instruments and agreements executed or
delivered in connection therewith, shall remain in full force and effect and are
hereby ratified and confirmed.

(c) This Amendment may be executed in any number of separate
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

(d) This Amendment, together with the Credit Agreement and all
of the other Loan Documents, embodies the entire agreement and understanding of
the parties hereto and supersedes all prior agreements and understandings,
written and oral, relating to the subject matter hereof.

(e) This Amendment shall be governed by and construed in
accordance with the internal law (without regard to the conflict of laws
provisions) of the State of Illinois.

* * * * *

-8-

<PAGE> 9

IN WITNESS WHEREOF, the parties have executed this Amendment on the
date first written above.

CREDENTIALS SERVICES INTERNATIONAL, INC.

By: /s/ Thomas J. Maloney
---------------------------------
Title: Chairman
---------------------------------

LASALLE NATIONAL BANK

By: /s/ Andy [illegible]
---------------------------------
Title: Loan Officer
---------------------------------

-10-

[No page 9 in original.]

<PAGE> 1
EXHIBIT 10.12(x)

SECOND AMENDMENT
TO
CREDIT AGREEMENT

This Second Amendment to Credit Agreement ("Amendment") dated August 13,
1997 is entered into between CREDENTIALS SERVICES INTERNATIONAL, INC., a
Delaware corporation ("Borrower"), and LASALLE NATIONAL BANK, a national banking
association ("Lender").

Recitals:

A. Borrower and Lender are parties to a Credit Agreement dated January
14, 1997, as amended by First Amendment to Credit Agreement dated March 10, 1997
(as so amended, the "Credit Agreement").

B. Borrower has requested that Lender further amend the Credit
Agreement in certain respects and Lender has agreed to enter into this Amendment
on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the agreements contained herein and in
the Credit Agreement and in consideration of any loans or extensions of credit
heretofore, now or hereafter made to or for the benefit of Borrower by Lender,
Borrower and Lender agree as follows:

1. Definitions. Capitalized terms used herein without definition shall
have the meanings set forth in the Credit Agreement.

2. Amendments to the Credit Agreement. Effective on the Effective Date
(as defined in Section 3(a) below) and if, and only if, the conditions set forth
in Section 3(a) are satisfied, the Credit Agreement is amended as follows:

(a) The definition of "Base Rate" in Section 1.1 of the Credit
Agreement is amended to read as follows:

"Base Rate" shall mean, for any day, the higher of (a) the
Federal Funds Rate for such day plus 2.25% per annum or (b) the
Prime Rate for such day plus 1.25% per annum."

(b) The definition of "Eurodollar Rate" in Section 1.1 of the
Credit Agreement is amended to read as follows:

"Eurodollar Rate" shall mean, with respect to a Eurodollar
Rate Loan for the relevant Interest Period, the Eurodollar Base Rate
applicable to such Interest Period plus 3.00%. The Eurodollar Rate
shall be rounded to the next higher multiple of 1/16 of 1% if the
rate is not such a multiple."

-1-
<PAGE> 2
(c) The definition of "Collateral Assignment of Undertakings" in
Section 1.1 of the Credit Agreement is deleted.

(d) The definition of "Securities Purchase Agreement" in Section
1.1 of the Credit Agreement is deleted.

(e) Clause (b) of the definition of "Net Issuance Proceeds" in
Section 1.1 of the Credit Agreement is deleted.

(f) The definition of "Collateral Document" in Section 1.1 of the
Credit Agreement is amended to delete the reference to "Collateral Assignment of
Undertakings" therein.

(g) Section 2.16 of the Credit Agreement is deleted in its
entirety.

(h) Subsection (c) of Section 6.01 of the Credit Agreement is
deleted in its entirety.

(i) Section 7.16 of the Credit Agreement is amended to delete the
reference to "Securities Purchase Agreement" therein.

3. Effectiveness of Amendment.

(a) Subject to Section 3(c) below, this Amendment shall become
effective and be deemed effective on the date (the "Effective Date") upon which
all of the following conditions shall have been satisfied;

(i) Lender shall have received this Amendment, duly executed
by Borrower and Lender;

(ii) Lender shall have received from Borrower a fee in the
amount of $34,250;

(iii) Lender shall have received from Borrower the financial
statements required by Section 6.01(b) of the Credit Agreement as of September
30, 1997 and for the fiscal year then ended and the compliance certificate
accompanying such financial statements shall demonstrate that Borrower is in
compliance with the provisions of Article 8 of the Credit Agreement;

(iv) No Default shall have occurred and be continuing; and

(v) Lender shall have received such other documents,
instruments and agreements as Lender may reasonably request.

(b) Notification of Effective Date. Upon satisfaction of the
conditions set forth in Section 3(a) of this Amendment, Lender shall provide
written notification to Borrower, in the form attached hereto as Exhibit A,
setting forth the Effective Date.

-2-
<PAGE> 3
(c) Failure to Satisfy Conditions. If the conditions set forth in
Section 3(a) of this Amendment shall not have been satisfied on or before
October 31, 1997, then this Amendment shall be null and void and of no force and
effect.

4. Representations and Warranties.

(a) Upon the effectiveness of this Amendment, Borrower hereby
reaffirms all covenants, representations and warranties made in the Credit
Agreement to the extent the same are not amended hereby and agrees that all such
covenants, representations and warranties shall be deemed to have been remade as
of the Effective Date of this Amendment (except to the extent any such
representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct in all material respects as of such earlier
dates) and that, as of the Effective Date of this Amendment and after giving
effect hereto, no Default has occurred and is continuing.

(c) The execution and delivery of this Amendment and the
performance by Borrower of its obligations under the Credit Agreement, as
amended hereby, do not and will not conflict with any provision of law or of the
charter or by-laws of Borrower or of any agreement binding on Borrower,
including, without limitation, any document, instrument or agreement evidencing
any of the Subordinated Indebtedness.

5. Reference to and Effect on Credit Agreement.

(a) On and after the Effective Date, each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
similar import, and each reference to the Credit Agreement in any instrument or
document delivered in connection therewith, shall mean and be a reference to the
Credit Agreement as amended hereby.

(b) Except as specifically set forth herein, the Credit Agreement,
and all other documents, instruments and agreements executed or delivered in
connection therewith, shall remain in full force and effect and are hereby
ratified and confirmed.

(c) This Amendment may be executed in any number of separate
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

(d) This Amendment, together with the Credit Agreement and all of
the other Loan Documents, embodies the entire agreement and understanding of the
parties hereto and supersedes all prior agreements and understandings, written
and oral, relating to the subject matter hereof.

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<PAGE> 4
(e) This Amendment shall be governed by and construed in
accordance with the internal law (without regard to the conflict of laws
provisions) of the State of Illinois.

* * * * *

-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first written above.

CREDENTIALS SERVICES
INTERNATIONAL, INC.

By: /s/ Thomas J. Maloney
------------------------------------
Title: Chairman
----------------------------------

LASALLE NATIONAL BANK

By: /s/ Patricia M. Borkowski
-------------------------------------
Title: Vice President
----------------------------------

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<PAGE> 6
EXHIBIT A

NOTICE OF EFFECTIVE DATE

Credentials Services International, Inc.
c/o Lincolnshire Management, Inc.
780 Third Avenue
New York, NY 10017

Ladies and Gentlemen:

Reference is made to Second Amendment to Credit Agreement dated August 15,
1997 (the "Amendment") between Credential Services International, Inc. and
LaSalle National Bank ("Lender").

Pursuant to Section 3(b) of the Amendment, Lender hereby notifies you that
the Effective Date of the Amendment is _________, 1997.

Very truly yours,

LASALLE NATIONAL BANK

By:______________________________________

Title:

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<PAGE> 1
EXHIBIT 10.12(xi)

THIRD AMENDMENT
TO
CREDIT AGREEMENT

This Third Amendment to Credit Agreement ("Amendment") dated
and effective as of September 26, 1997 (the "Effective Date"), is entered into
between CREDENTIALS SERVICES INTERNATIONAL, INC., a Delaware corporation
("Borrower"), and LASALLE NATIONAL BANK, a national banking association
("Lender").

Recitals:

A. Borrower and Lender are parties to a Credit Agreement
dated January 14, 1997, as amended by First Amendment to Credit Agreement dated
March 10, 1997 and Second Amendment to Credit Agreement dated August 13, 1997,
(as so amended, the "Credit Agreement").

B. Borrower has requested that Lender further amend the
Credit Agreement in certain respects and Lender has agreed to enter into this
Amendment on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the agreements contained
herein and in the Credit Agreement and in consideration of any loans or
extensions of credit heretofore, now or hereafter made to or for the benefit of
Borrower by Lender, Borrower and Lender agree as follows:

1. Definitions. Capitalized terms used herein
without definition shall have the meanings set forth in the Credit Agreement.

2. Amendments to the Credit Agreement.
Effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 3 below, the Credit Agreement is
hereby amended as follows:

"8.01 Minimum EBITDA

(a) Borrower shall not permit EBITDA for the
twelve month period ending on the last day of any calendar quarter set
forth below to be less than the minimum amount set forth below
opposite each such fiscal quarter ending date:

<TABLE>
<CAPTION>
Fiscal Quarter Ending Minimum EBITDA
--------------------- --------------
<S> <C>
March 31, 1997 $2,000,000
June 30, 1997 $4,000,000
September 26, 1997 $5,500,000
December 26, 1997 and
the last day of each fiscal
quarter thereafter $7,500,000"
</TABLE>

3. Effectiveness of Amendment. This Amendment
shall become effective and be deemed effective as of the Effective Date hereof.

<PAGE> 2
4. Representations and Warranties.

(a) Borrower hereby reaffirms all covenants,
representations and warranties made in the Credit Agreement to the extent the
same are not amended hereby and agrees that all such covenants, representations
and warranties shall be deemed to have been remade as of the effective date of
this Amendment (except to the extent any such representations and warranties
expressly refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier dates) and that, as of the
Effective Date of this Amendment and after giving effect hereto, no Default has
occurred and is continuing.

(b) Borrower hereby represents and warrants that
this Amendment and the Credit Agreement, as previously executed and as amended
hereby, constitute legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.

5. Reference to and Effect on Credit Agreement.

(a) On and after the date hereof, each reference
in the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of similar import, and each reference to the Credit Agreement in any
instrument or document delivered in connection therewith, shall mean and be a
reference to the Credit Agreement as amended hereby.

(b) This Amendment shall render null and void the
Second Amendment to Credit Agreement, dated August 13, 1997.

(c) Except as specifically set forth herein, the
Credit Agreement, and all other documents, instruments and agreements executed
or delivered in connection therewith, shall remain in full force and effect and
are hereby ratified and confirmed.

(d) This Amendment may be executed in any number
of separate counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.

(e) This Amendment, together with the Credit
Agreement and all of the other Loan Documents, embodies the entire agreement
and understanding of parties hereto and supersedes all prior agreements and
understandings, written and oral, relating to the subject matter hereof.

(f) This Amendment shall be governed by and
construed in accordance with the internal law (without regard to the conflict
of laws provisions) of the State of Illinois.

* * * * *
<PAGE> 3

IN WITNESS WHEREOF, the parties hereto have executed this Amendment
on the date first written above.

CREDENTIALS SERVICES INTERNATIONAL, INC.

By: /s/ Allan Weinstein
--------------------------------------
Name: Allan Weinstein
Title: Secretary

LASALLE NATIONAL BANK

By: /s/ Patricia M. Borkowski
--------------------------------------
Name: Patricia M. Borkowski
Title: Vice President

<PAGE> 1
EXHIBIT 10.13

INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("Agreement") is effective as of this
_____ day of ____________, 1997, by and between Credentials Services
International, Inc., a Delaware corporation (the "Company"), and
_________________ ("Indemnitee").

WHEREAS, the Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for the Company's directors, officers,
employees, agents and fiduciaries, the significant increases in the cost of such
insurance and the general reductions in the coverage of such insurance;

WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited;

WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and the Indemnitee and other
directors, officers, employees, agents and fiduciaries of the Company may not be
willing to continue to serve in such capacities without additional protection;

WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and, in
part, in order to induce Indemnitee to continue to provide services to the
Company, wishes to provide for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by law; and

WHEREAS, in view of the considerations set forth above, the Company
desires that Indemnitee shall be indemnified by the Company as set forth herein.

NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

1. INDEMNIFICATION.

(a) Indemnification of Expenses. The Company shall indemnify Indemnitee
to the fullest extent permitted by law if Indemnitee was or is or becomes a
party to or witness or other participant in, or is threatened to be made a party
to or witness or other participant in, any threatened, pending or completed
action, suit, proceeding or alternative dispute resolution mechanism, or any
hearing, inquiry or investigation that Indemnitee in good faith believes might
lead to the institution of any such action, suit, proceeding or alternative
dispute resolution mechanism, whether civil, criminal, administrative,
investigative or other (hereinafter a "Claim") by reason of (or arising in part
out of) any event or occurrence (arising before or after the execution of this
Agreement) related to the fact that Indemnitee is or was a director, officer,
employee, agent or fiduciary of the Company or is or was

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<PAGE> 2

serving at the request of the Company, as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity (hereinafter an "Indemnifiable Event") against
any and all expenses (including attorneys' fees and all other costs, expenses
and obligations incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal), or preparing to defend, be
a witness in or participate in, any such action, suit, proceeding, alternative
dispute resolution mechanism, hearing, inquiry or investigation), judgments,
fines, penalties and amounts paid in settlement (if such settlement is approved
in advance by the Company, which approval shall not be unreasonably withheld) of
such Claim and any federal, state, local or foreign taxes imposed on the
Indemnitee as a result of the actual or deemed receipt of any payments under
this Agreement (collectively, hereinafter "Expenses"), including all interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses. Such payment of Expenses shall be made by the Company as soon
as practicable but in any event no later than five (5) days after written demand
by Indemnitee therefor is presented to the Company. Notwithstanding the
foregoing, neither the Company nor its subsidiaries will indemnify Indemnitee
for any Expenses in connection with the service by Indemnitee on the board of
directors of a Publicly Traded Company (as defined in Section 10(e) hereof)
after the first meeting of the shareholders of such a Publicly Traded Company
following the Publicly Traded Company's initial public offering of its
securities.

(b) Reviewing Party. Notwithstanding the foregoing, (i) the obligations
of the Company under Section 1(a) shall be subject to the condition that the
Reviewing Party (as defined in Section 10(f) hereof) shall not have determined
(in a written opinion, in any case in which the Independent Legal Counsel
referred to in Section 1(c) hereof is involved) that Indemnitee would not be
permitted to be indemnified under applicable law, and (ii) the obligation of the
Company to make an advance payment of Expenses to Indemnitee pursuant to Section
2(a) (an "Expense Advance") shall be subject to the condition that, if, when and
to the extent that the Reviewing Party determines that Indemnitee would not be
permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination is made
with respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). Indemnitee's obligation to reimburse the Company for any
Expense Advance shall be unsecured and no interest shall be charged thereon. If
there has not been a Change in Control (as defined in Section 10(c) hereof), the
Reviewing Party shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control which has been
approved or ratified by a majority of the Company's Board of Directors who were
directors immediately prior to such Change in Control), the Reviewing Party
shall be the Independent Legal Counsel referred to in Section 1(c) hereof. If
there has been no determination by the Reviewing Party or if the Reviewing Party
determines that Indemnitee substantively would

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<PAGE> 3

not be permitted to be indemnified in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee.

(c) Change in Control. The Company agrees that if there is a Change in
Control of the Company, other than a Change in Control which has been approved
or ratified by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control, then with respect to all matters
thereafter arising concerning the rights of Indemnitee to payments of Expenses
and Expense Advances under this Agreement or any other agreement or under the
Company's Certificate of Incorporation or Bylaws as now or hereafter in effect,
Independent Legal Counsel (as defined in Section 10(d) hereof) shall be selected
by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law and the
Company agrees to abide by such opinion. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto.

(d) Mandatory Payment of Expenses. Notwithstanding any other provision
of this Agreement other than Section 8 hereof, to the extent that Indemnitee has
been successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit,
proceeding, inquiry or investigation referred to in Section (1)(a) hereof or in
the defense of any claim, issue or matter therein, Indemnitee shall be
indemnified against all Expenses incurred by Indemnitee in connection therewith.

2. EXPENSES; INDEMNIFICATION PROCEDURE.

(a) Advancement of Expenses. The Company shall advance all Expenses
incurred by Indemnitee. The advances to be made hereunder shall be paid by the
Company to Indemnitee as soon as practicable but in any event no later than five
(5) days after written demand by Indemnitee therefor to the Company.

(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition
precedent to Indemnitee's right to be indemnified under this Agreement, give the
Company notice in writing as soon as practicable of any Claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the address shown on the signature page of this
Agreement (or such other address as the Company shall designate in writing to
Indemnitee). In addition, Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within Indemnitee's
power.

-3-

<PAGE> 4

(c) No Presumptions; Burden of Proof. For purposes of this Agreement,
the termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a determination as to
whether Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by the Reviewing Party that
Indemnitee has not met such standard of conduct or did not have such belief,
prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable
law, shall be a defense to Indemnitee's claim or create a presumption that
Indemnitee has not met any particular standard of conduct or did not have any
particular belief. In connection with any determination by the Reviewing Party
or otherwise as to whether the Indemnitee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.

(d) Notice to Insurers. If, at the time of the receipt by the Company
of a notice of a claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such action,
suit, proceeding, inquiry or investigation in accordance with the terms of such
policies.

(e) Selection of Counsel. In the event the Company shall be obligated
hereunder to pay the Expenses of any Claim, the Company, if appropriate, shall
be entitled to assume the defense of such Claim with counsel approved by
Indemnitee, upon the delivery to Indemnitee of written notice of its election so
to do. After delivery of such notice, approval of such counsel by Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same Claim; provided that, (i) Indemnitee shall
have the right to employ Indemnitee's separate counsel in any such Claim at
Indemnitee's expense and (ii) if (A) the employment of separate counsel by
Indemnitee has been previously authorized by the Company, (B) Indemnitee shall
have reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense, or (C) the Company
shall not continue to retain such separate counsel to defend such Claim, then
the fees and expenses of Indemnitee's counsel shall be at the expense of the
Company.

3. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.

(a) Scope. The Company hereby agrees to indemnify the Indemnitee to the
fullest extent permitted by law, notwithstanding that such indemnification is
not specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's Bylaws or by statute. In
the event of any change after the date

-4-

<PAGE> 5

of this Agreement in any applicable law, statute or rule which expands the right
of a Delaware corporation to indemnify a member of its board of directors or an
officer, employee, agent or fiduciary, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater benefits afforded by
such change. In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, employee, agent or fiduciary, such change, to
the extent not otherwise required by such law, statute or rule to be applied to
this Agreement, shall have no effect on this Agreement or the parties' rights
and obligations hereunder except as set forth in Section 8(a) hereof.

(b) Nonexclusivity. The indemnification provided by this Agreement
shall be in addition to any rights to which Indemnitee may be entitled under the
Company's Certificate of Incorporation, its Bylaws, any other agreement, any
vote of stockholders or disinterested directors, the General Corporation Law of
the State of Delaware, or otherwise. The indemnification provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though Indemnitee may have ceased
to serve in such capacity.

4. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Certificate of Incorporation, Bylaw or otherwise)
of the amounts otherwise indemnifiable hereunder.

5. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

6. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.

7. LIABILITY INSURANCE. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.

-5-

<PAGE> 6

8. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

(a) Excluded Action or Omissions. To indemnify Indemnitee for acts,
omissions or transactions from which Indemnitee may not be relieved of liability
under applicable law.

(b) Claims Initiated by the Indemnitee. To indemnify or advance
expenses to Indemnitee with respect to Claims initiated or brought voluntarily
by Indemnitee and not by way of defense, except (i) with respect to actions or
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other agreement or insurance policy or under the Company's
Certificate of Incorporation or Bylaws now or hereafter in effect relating to
Claims for Indemnifiable Events, (ii) in specific cases if the Board of
Directors has approved the initiation or bringing of such Claim, or (iii) as
otherwise required under Section 145 of the Delaware General Corporation Law,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be.

(c) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous.

(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.

9. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

10. CONSTRUCTION OF CERTAIN PHRASES.

(a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of

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<PAGE> 7

another corporation, partnership, joint venture, employee benefit plan, trust or
other enterprise, Indemnitee shall stand in the same position under the
provisions of this Agreement with respect to the resulting or surviving
corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

(b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee, agent or fiduciary of the Company
which imposes duties on, or involves services by, such director, officer,
employee, agent or fiduciary with respect to an employee benefit plan, its
participants or its beneficiaries; and if Indemnitee acted in good faith and in
a manner Indemnitee reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement.

(c) For purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred if (i) any "person" (as such term is used in sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company acting in such capacity, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing more than 20% of the total voting power represented by
the Company's then outstanding Voting Securities, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% of the total voting
power represented by the Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of related transactions) all or substantially all of the
Company's assets.

(d) For purposes of this Agreement, "Independent Legal Counsel" shall
mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section l(c) hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last three years (other than
with respect to matters concerning the rights of

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<PAGE> 8

Indemnitee under this Agreement, or of other indemnitees under similar indemnity
agreements).

(e) For purposes of this Agreement, "Publicly Traded Company" shall
mean a company which has sold securities pursuant to an effective registration
statement under the Securities Act of 1933, as amended.

(f) For purposes of this Agreement, a "Reviewing Party" shall mean any
appropriate person or body consisting of a member or members of the Company's
Board of Directors or any other person or body appointed by the Board of
Directors who is not a party to the particular Claim for which Indemnitee is
seeking indemnification, or Independent Legal Counsel.

(g) For purposes of this Agreement, "Voting Securities" shall mean any
securities of the Company that vote generally in the election of directors.

11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

12. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company, spouses, heirs, and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business or
assets of the Company, by written agreement in form and substance satisfactory
to Indemnitee, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
if no such succession had taken place. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as a director, officer,
employee, agent or fiduciary (as applicable) of the Company or of any other
enterprise at the Company's request.

13. ATTORNEYS' FEES. In the event that any action is instituted by
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless as a part of such action a court
of competent jurisdiction over such action determines that each of the material
assertions made by Indemnitee as a basis for such action were not made in good
faith or were frivolous. In the event of an action instituted by or in the name
of the Company under this Agreement to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee in defense of such action (including costs and expenses incurred with
respect to Indemnitee's counterclaims and cross-claims made in such action), and
shall be entitled to the advancement of Expenses with respect to such action,

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<PAGE> 9

unless as a part of such action a court having jurisdiction over such action
determines that each of Indemnitee's material defenses to such action were made
in bad faith or were frivolous.

14. NOTICE. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the signature page of this Agreement,
or as subsequently modified by written notice.

15. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.

16. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitations, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

17. CHOICE OF LAW. This Agreement shall be governed by and its
provisions construed and enforced in accordance with the laws of the State of
Delaware, as applied to contracts between Delaware residents, entered into and
to be performed entirely within the State of Delaware, without regard to the
conflict of laws principles thereof.

18. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

19. AMENDMENT AND TERMINATION. No amendment, modification,
termination or cancellation of this Agreement shall be effective unless it is in
writing signed by both the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.

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<PAGE> 10

20. INTEGRATION AND ENTIRE AGREEMENT. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.

21. NO CONSTRUCTION AS EMPLOYMENT AGREEMENT. Nothing
contained in this Agreement shall be construed as giving Indemnitee any right to
be retained in the employ of the Company or any of its subsidiaries.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

COMPANY:

By:
--------------------------------

Title:
--------------------------------
Address: 333 City Boulevard West
10th Floor
Orange, California 92868

AGREED TO AND ACCEPTED

INDEMNITEE:

- ----------------------------------------
Name
-----------------------------------
Address
---------------------------------

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<PAGE> 1
EXHIBIT 10.14

CREDENTIALS SERVICES INTERNATIONAL, INC.

FORM OF COMMON STOCK AGREEMENT

THIS AGREEMENT is dated as of _______________ among CREDENTIALS
SERVICES INTERNATIONAL, INC., a Delaware corporation (the "Corporation"), CSI
INVESTMENT PARTNERS II, L.P., ("Partnership") and _________________
("Restricted Shareholder").

W I T N E S S E T H:

WHEREAS, the Restricted Shareholder is a Class B Limited Partner in
the Partnership. By virtue of Section 4.2.1 of the Second Amended and Restated
Agreement of the Partnership as of the same date of this Agreement, the
Restricted Shareholder withdraws from the Partnership and pursuant to Section
4.2.1, is entitled to receive common stock ("Stock") of the Corporation,
subject to the terms of this Agreement:

NOW, THEREFORE, it is agreed among the parties as follows:

1. (a) In consideration for the Restricted Shareholder's withdrawal
from the Partnership and the Restricted Shareholder's execution of the
promissory note attached hereto as Exhibit D, the Partnership shall distribute
_______________________________ ____________________ hundredths (_____.__)
shares of Stock to Restricted Shareholder in satisfaction of all rights, claims
or interest Restricted Shareholder shall have as a partner in the Partnership.

2. All shares of the Stock acquired by the Restricted Shareholder
pursuant to this Agreement (the "Option Stock")
<PAGE> 2
shall be subject to the same restrictions applicable under Section 3.5.3 of the
agreement of the Partnership, now provided in the following option (the
"Forfeiture Option"):

(a) In the event the Restricted Shareholder ceases to be
continuously employed by the Corporation, or a parent or subsidiary of the
Corporation, for any reason, with or without cause, the Corporation may
exercise the Forfeiture Option. For the purposes of this Agreement, Restricted
Shareholder's "continuous employment" shall cease when Restricted Shareholder
ceases to be actively employed by, or a consultant or adviser to, the
Corporation or a parent or subsidiary of the Corporation as determined by and
in the sole discretion of the Board of Directors of the Corporation. A leave
of absence, regardless of the reason therefor, shall be deemed to constitute
the cessation of Restricted Shareholder's active employment unless such leave
is authorized by the Corporation in writing upon approval of the Corporation's
Board of Directors, and Restricted Shareholder returns within the time
specified in such authorization; provided, however, that if the Restricted
Shareholder dies or becomes totally and permanently disabled during any such
leave of absence, the Restricted Shareholder's continuous employment will be
deemed to have terminated as of the date of Restricted Shareholder's death or
the date the Board of Directors determines Restricted Shareholder to be totally
and permanently disabled.

(b) Accordingly, the Corporation shall have the right at any time
within 60 days after the later of said termination or

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<PAGE> 3
the date any approved leave terminates (if Restricted Shareholder fails to
return within the time specified) to receive from Restricted Shareholder the
number of shares equal to the number of shares of Option Stock less the product
(rounded to the nearest integer) of the number of shares of Option Stock times
the following percentage, as applicable:

<TABLE>
<S> <C>
If termination occurs: Then percentage is:
on or before April 30, 1998 0%, or if later,
but on or before April 30, 1999 33 1/3%, or if later,
but on or before April 30, 2000 66 2/3%, or
if on or after May 1, 2000 100%.
</TABLE>

(c) Nothing in this Agreement shall affect in any manner
whatsoever the right or power of the Corporation, or a parent or subsidiary of
the Corporation, to terminate Restricted Shareholder's employment, for any
reason, with or without cause.

3. The Forfeiture Option shall be exercised by written notice
signed by an officer of the Corporation and delivered or mailed as provided in
Section 16 of this Agreement and to the Escrow Agent as provided in Section 16
of the Joint Escrow Instructions attached as Exhibit A to this Agreement.

4. If the Corporation waives or fails to exercise the Forfeiture
Option as to all of the shares subject thereto, the Corporation may, in the
discretion of its Board of Directors, assign the Forfeiture Option to any other
holder or holders of preferred or common stock of the Corporation in such
proportions as such Board of Directors may determine. In the event of such an
assignment, the assignee shall pay to the Corporation in cash

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<PAGE> 4
an amount equal to the fair market value of the Forfeiture Option. The
Corporation shall promptly, upon expiration of the 60-day period referred to in
Section 2 above, notify Restricted Shareholder of the number of shares subject
to the Forfeiture Option assigned to such stockholders and shall notify both
the Restricted Shareholder and the assignees of the time, place and date for
settlement of such purchase, which must be made within 90 days from the date of
cessation of continuous employment. In the event that the Corporation and/or
such assignees do not elect to exercise the Forfeiture Option as to all or part
of the shares subject to it, the Forfeiture Option shall expire as to all
shares which the Corporation and/or such assignees have not elected to
purchase.

5. (a) As security for Restricted Shareholder's faithful performance
of the terms of this Agreement and to ensure the availability for delivery of
Restricted Shareholder's shares upon exercise of the Forfeiture Option herein
provided for, Restricted Shareholder agrees at the Closing hereunder, to
deliver to and deposit with the Escrow Agent named in the Joint Escrow
Instructions attached hereto as Exhibit A, the certificate or certificates
evidencing the Option Stock and two Assignments Separate from Certificate duly
executed (with date and number of shares in blank) in the form attached hereto
as Exhibit C. Such documents are to be held by the Escrow Agent and delivered
by the Escrow Agent pursuant to the Joint Escrow Instructions, which
instructions shall also be delivered to the Escrow Agent at the Closing
hereunder.

-4-
<PAGE> 5
(b) Within 30 days after the last day of each successive completed
calendar quarter after the Closing Date, if Restricted Shareholder so requests,
the Escrow Agent will deliver to Restricted Shareholder certificates
representing so many shares of Stock as are no longer subject to the Forfeiture
Option (less such shares as have been previously delivered). Sixty days after
cessation of Restricted Shareholder's continuous employment the Corporation
will direct the Escrow Agent to deliver to Restricted Shareholder a certificate
or certificates representing the number of shares of Option Stock not
repurchased by the Corporation or its assignees pursuant to exercise of the
Forfeiture Option (less such shares as have been previously delivered).

6. Subject to the provisions of the Certificate of Incorporation
of the Corporation, if, from time to time during the term of the Forfeiture
Option:

(a) there is any stock dividend or liquidating dividend of
cash and/or property, stock split or other change in the character or
amount of any of the outstanding securities of the Corporation, or

(b) there is any consolidation, merger or sale of all or
substantially all, of the assets of the Corporation,

then, in such event, any and all new, substituted or additional securities or
other property to which Restricted Shareholder is entitled by reason of
Restricted Shareholder's ownership of the Option Stock shall be immediately
subject to such Forfeiture

-5-
<PAGE> 6
Option and be included in the term "Option Stock" for all purposes of the
Forfeiture Option with the same force and effect as the shares of Option Stock
from time to time subject to the Forfeiture Option. While the total Option
Price shall remain the same after each such event, the Option Price per share
of Option Stock upon exercise of the Forfeiture Option shall be appropriately
and equitably adjusted as determined by the Board of Directors of the
Corporation.

7. Before any shares of Stock registered in the name of
Restricted Shareholder and not subject to the Forfeiture Option may be sold or
transferred, such shares shall first be offered to the Corporation as follows:

(a) Restricted Shareholder shall promptly deliver a notice
("Notice") to the Corporation stating (i) Restricted Shareholder's bona fide
intention to sell or transfer such shares, (ii) the number of such shares to be
sold or transferred, and the basic terms and conditions of such sale or
transfer, (iii) the price for which Restricted Shareholder proposes to sell or
transfer such shares, (iv) the name of the proposed purchaser or transferee,
and (v) proof satisfactory to the Corporation that the proposed sale or
transfer will not violate any applicable federal or state securities laws. The
Notice shall be signed by both Restricted Shareholder and the proposed
purchaser or transferee and must constitute a binding commitment subject to the
Corporation's rights of first offer as set forth herein.

-6-
<PAGE> 7
(b) Within 30 days after receipt of the Notice, the Corporation
may elect to purchase all or none of the shares to which the Notice refers, at
the price per share specified in the Notice. The Corporation may elect to
purchase some but not all of such shares if the Corporation assigns its right
to purchase the remaining shares so that all of the shares to which the Notice
refers are purchased within 30 days after receipt by the Corporation of the
Notice at the price per share specified in the Notice. An election to purchase
shall be made by written notice to Restricted Shareholder. Payment for all
shares elected to be purchased pursuant to this Section 7 shall be made within
30 days of the receipt by the Corporation of the Notice.

(c) If all of the shares to which the Notice refers are not
elected to be purchased, as provided in subparagraph 7(b) hereof, Restricted
Shareholder may sell the shares to any person named in the Notice at the price
specified in the Notice, provided that such sale or transfer is consummated
within three months of the date of said Notice to the Corporation, and
provided, further, that any such sale is made in compliance with applicable
federal and state securities laws and any other law, and with restrictions
imposed by the Corporation's underwriters, if any, and not in violation of any
other contractual restrictions to which Restricted Shareholder is bound. The
third-party purchaser shall acquire the shares of stock free and clear of the
Corporation's rights of first offer.

(d) Any proposed transfer on terms and conditions different from
those set forth in the Notice, as well as any

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<PAGE> 8
subsequent proposed transfer shall again be subject to the Corporation's rights
of first offer and shall require compliance with the procedures described in
this Section 7.

(e) Restricted Shareholder agrees to cooperate affirmatively with
the Corporation, to the extent reasonably requested by the Corporation, to
enforce rights and obligations pursuant to this Agreement.

(f) Notwithstanding the above, neither the Corporation nor any
assignee of the Corporation under this Section 7 shall have any right under
this Section 7 at any time subsequent to the closing of a public offering of
the common stock of the Corporation pursuant to a registration statement
declared effective under the Securities Act of 1933, as amended (the
"Securities Act").

(g) This Section 7 shall not apply to a transfer by will or
intestate succession, provided that the transferee shall execute a copy of the
attached Exhibit B and file the same with the Secretary of the Corporation.

8. If the Corporation makes available, at the time and place and
in the amount and form provided in this Agreement, the consideration for the
Stock to be repurchased in accordance with the provisions of Sections 2 and 7
of this Agreement, then from and after such time the person from whom such
shares are to be repurchased shall no longer have any rights as a holder of
such shares (other than the right to receive payment of such consideration in
accordance with this Agreement). Such shares shall be deemed to have been
repurchased in accordance with the

-8-
<PAGE> 9
applicable provisions hereof, whether or not the certificate(s) therefor have
been delivered as required by this Agreement.

9. Restricted Shareholder shall have the right to transfer all or
any portion of Restricted Shareholder's interest in the shares issued under
this Agreement which have been delivered to Restricted Shareholder under the
provisions of Section 5 of this Agreement, to a trust established by Restricted
Shareholder for the benefit of Restricted Shareholder, Restricted Shareholder's
spouse or Restricted Shareholder's children, without being subject to the
provisions of Section 7 hereof, provided that the trustee on behalf of the
trust shall agree in writing to be bound by the terms and conditions of this
Agreement. The transferee shall execute a copy of the attached Exhibit B and
file the same with the Secretary of the Corporation.

10. All certificates representing the Stock purchased under this
Agreement shall, where applicable, have endorsed thereon the following legends:

(a) "The shares represented by this Certificate are subject to
certain restrictions on transfer and options to purchase such shares set forth
in an agreement between CREDENTIALS SERVICES INTERNATIONAL, INC. and the
registered holder, or such holder's predecessor in interest. Such agreement
imposes certain transfer restrictions and grants certain repurchase rights and
rights of first offer to the Corporation (or its assigns) upon the sale of the
shares or upon termination of service with the Corporation. A copy of such

-9-
<PAGE> 10
agreement is on file at the principal office of the Corporation and will be
furnished upon written request to the Secretary of the Corporation by the
holder of record of the shares represented by this Certificate."

(b) "The securities represented by this Certificate have not been
registered under the Securities Act of 1933. These securities have been
acquired for investment and not with a view to distribution or resale, and may
not be transferred without an effective registration statement for such shares
under the Securities Act of 1933, or pursuant to Rule 144 under such Act or an
opinion of counsel satisfactory to the Corporation that registration is not
required under such Act."

(c) Any legend required to be placed thereon by the California
Commissioner of Corporations and any state securities law.

11. (a) This Agreement is made with Restricted Shareholder in
reliance upon Restricted Shareholder's representation to the Corporation, which
by Restricted Shareholder's acceptance hereof Restricted Shareholder confirms,
that the Stock which Restricted Shareholder will receive will be acquired with
Restricted Shareholder's own funds for investment for an indefinite period for
Restricted Shareholder's own account, not as a nominee or agent, and not with a
view to the sale or distribution of any part thereof, and that Restricted
Shareholder has no present intention of selling, granting participation in, or
otherwise distributing the same, but subject, nevertheless, to any requirement
of law that the

-10-
<PAGE> 11
disposition of Restricted Shareholder's property shall at all times be within
Restricted Shareholder's control. By executing this Agreement, Restricted
Shareholder further represents that Restricted Shareholder does not have any
contract, understanding or agreement with any person to sell, transfer, or
grant participation, to such person or to any third person, with respect to any
of the Stock.

(b) Restricted Shareholder understands that the Stock will not be
registered under the Securities Act on the ground that the sale provided for in
this Agreement is exempt from registration under the Securities Act, and that
the Corporation's reliance on such exemption is predicated on Restricted
Shareholder's representations set forth herein.

(c) Restricted Shareholder agrees that in no event will Restricted
Shareholder make a disposition of any of the Stock (including a disposition
under Section 9 of this Agreement), unless and until (i) Restricted Shareholder
shall have notified the Corporation of the proposed disposition and shall have
furnished the Corporation with a statement of the circumstances surrounding the
proposed disposition and (ii) Restricted Shareholder shall have furnished the
Corporation with an opinion of counsel satisfactory to the Corporation to the
effect that (A) such disposition will not require registration of such Stock
under the Securities Act or (B) appropriate action necessary for compliance
with the Securities Act has been taken or (iii) the Corporation shall have
waived, expressly and in writing, its rights under clauses (i) and (ii) of this
section.

-11-
<PAGE> 12
(d) In connection with the investment representations made herein,
Restricted Shareholder represents that Restricted Shareholder is able to fend
for himself or herself in the transactions contemplated by this Agreement, has
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of Restricted Shareholder's
investment, has the ability to bear the economic risks of Restricted
Shareholder's investment and has been furnished with and has had access to such
information as would be made available in the form of a registration statement
together with such additional information as is necessary to verify the
accuracy of the information supplied and to have all questions answered by the
Corporation.

(e) Restricted Shareholder understands that if the Corporation
does not register with the Securities and Exchange Commission pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or if a registration statement covering the Stock (or a filing pursuant
to the exemption from registration under Regulation A of the Securities Act)
under the Securities Act is not in effect when Restricted Shareholder desires
to sell the Stock, Restricted Shareholder may be required to hold the Stock for
an indeterminate period. Restricted Shareholder also acknowledges that
Restricted Shareholder understands that any sale of the Stock which might be
made by Restricted Shareholder in reliance upon Rule 144 under the Securities
Act may be made only in limited amounts in accordance with the terms and
conditions of that Rule.

-12-
<PAGE> 13
12. The Corporation covenants and agrees that (a) at all times
after it first becomes subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, it will use its best efforts to comply with the
current public information requirements of Rule 144(c)(1) under the Securities
Act, and that if prior to becoming subject to such reporting requirements an
over-the-counter market develops for the Stock, it will make publicly available
the information required by Rule 144(c)(2); (b) it will furnish Restricted
Shareholder, upon request, with all information required for the preparation
and filing of Form 144; and (c) it will on a timely basis use its best efforts
to file all reports required to be filed and make all disclosures, including
disclosures of materially adverse information, required to permit Restricted
Shareholder to make the required representations in Form 144.

13. The Corporation shall not be required (a) to transfer on its
books any shares of Stock of the Corporation which shall have been sold or
transferred in violation of any of the provisions set forth in this Agreement
or (b) to treat as owner of such shares or to accord the right to vote as such
owner or to pay dividends to any transferee to whom such shares shall have been
so transferred.

14. Except as otherwise provided herein, Restricted Shareholder
shall, during the term of this Agreement, exercise all rights and privileges of
a stockholder of the Corporation with respect to the Stock.

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<PAGE> 14
15. The parties agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent
of this Agreement.

16. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon the earliest of personal
delivery, receipt or the third full day following deposit in the United States
Post Office with postage and fees prepaid, addressed to the other party hereto
at the address hereinafter shown below such party's signature or at such other
address as such party may designate by 10 days' advance written notice to the
other party hereto.

17. This Agreement shall inure to the benefit of the successors
and assigns of the Corporation and, subject to the restrictions on transfer
herein set forth, be binding upon Restricted Shareholder and Restricted
Shareholder's heirs, executors, administrators, successors and assigns. The
failure of the Corporation in any instance to exercise the Forfeiture Option or
rights of first offer described herein shall not constitute a waiver of any
other Forfeiture Option or right of first offer that may subsequently arise
under the provisions of this Agreement. No waiver of any breach or condition
of this Agreement shall be deemed to be a waiver of any other or subsequent
breach or condition, whether of a like or different nature.

18. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California, except with
respect to choice of law.

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<PAGE> 15
19. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS
AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR
RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION
IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY
SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS
OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

20. No modification of this Agreement shall be valid unless made
in writing and signed by the parties hereto.

21. This Agreement constitutes the entire complete and final
agreement between the Corporation and Restricted Shareholder regarding the
Stock. Any and all prior agreements and negotiations are merged herein.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.

CREDENTIALS SERVICES
INTERNATIONAL, INC. Restricted Shareholder

By
------------------------- ----------------------------------------

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

Address: Address:

333 City Boulevard West
----------------------------------------
Orange, CA 92868
----------------------------------------

-15-
<PAGE> 16
EXHIBIT A
JOINT ESCROW INSTRUCTIONS

___________

Secretary
CREDENTIALS SERVICES INTERNATIONAL, INC.
333 City Boulevard West
Orange, CA 92868

Dear Sir:

As Escrow Agent for both CREDENTIALS SERVICES INTERNATIONAL, INC., a
Delaware corporation (the "Corporation"), and __________________ ("Restricted
Shareholder"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Common Stock Purchase
Agreement (the "Agreement") of even date herewith, to which a copy of these
Joint Escrow Instructions is attached as Exhibit A, in accordance with the
following instructions:

1. In the event the Corporation shall elect to exercise the
Forfeiture Option set forth in the Agreement, the Corporation shall give to
Restricted Shareholder and you a written notice as provided in the Agreement.
Restricted Shareholder and the Corporation hereby irrevocably authorize and
direct you to close the transaction contemplated by such notice, including
prompt delivery of stock certificates.

2. At the closing, you are directed (a) to date the stock
assignment form or forms necessary for the transfer in question, (b) to fill in
the number of shares being transferred, and (c) to deliver same, together with
the certificate or certificates evidencing the shares to be transferred, to the

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<PAGE> 17
Corporation against the simultaneous delivery to you of the purchase price (by
certified or bank cashier's check) for the number of shares being purchased
pursuant to the exercise of the Forfeiture Option.

3. Restricted Shareholder irrevocably authorizes the Corporation
to deposit with you any certificates evidencing shares to be held by you
hereunder and any additions and substitutions to said shares as defined in the
Agreement. Restricted Shareholder does hereby irrevocably constitute and
appoint you as Restricted Shareholder's attorney-in-fact and agent for the term
of this escrow to execute with respect to such securities all documents
necessary or appropriate to make such securities negotiable and to complete any
transaction herein contemplated. Subject to the provisions of this Section 3,
Restricted Shareholder shall exercise all rights and privileges, including but
not limited to, the right to vote and to receive dividends (if any), of a
stockholder of the Corporation while the shares are held by you.

4. In accordance with the terms of Section 5 of the Agreement,
you may from time to time deliver to Restricted Shareholder a certificate or
certificates representing so many shares as are no longer subject to the
Forfeiture Option.

5. This escrow shall terminate upon the release of all shares
held under the terms and provisions hereof.

6. If at the time of termination of this escrow you should have
in your possession any documents, securities or other property belonging to
Restricted Shareholder, you shall

-2-
<PAGE> 18
deliver all of same to Restricted Shareholder and shall be discharged from all
further obligations hereunder.

7. Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.

8. You shall be obligated only for the performance of such duties
as are specifically set forth herein and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed by you
to be genuine and to have been signed or presented by the proper party or
parties. You shall not be personally liable for any act you may do or omit to
do hereunder as Escrow Agent or as attorney-in-fact of Restricted Shareholder
while acting in good faith and in the exercise of your own good judgment, and
any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.

9. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case you obey or comply with any such order, judgment or decree
of any court, you shall not be liable to any of the parties hereto or to any
other person, firm or corporation by reason of such compliance, notwithstanding
any such order, judgment or decree being subsequently reversed, modified,
annulled, set

-3-
<PAGE> 19
aside, vacated or found to have been entered without jurisdiction.

10. You shall not be liable in any respect on account of the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.

11. You shall not be liable for the outlawing of any rights under
any statute of limitations with respect to these Joint Escrow Instructions or
any documents deposited with you.

12. You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with
your obligations hereunder and may rely upon the advice of such counsel.

13. Your responsibilities as Escrow Agent hereunder shall
terminate if you shall cease to be Secretary of the Corporation or if you shall
resign by written notice of each party. In the event of any such termination,
the Corporation shall appoint any officer of the Corporation as successor
Escrow Agent.

14. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

15. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until

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<PAGE> 20
such dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or
defend any such proceedings.

16. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by 10 days' advance written notice to each of the other parties
hereto.

Corporation: CREDENTIALS SERVICES
INTERNATIONAL, INC.
333 City Boulevard West
Orange, CA 92868

Restricted Shareholder: Notices to Restricted Shareholder
shall be sent to the address set
forth below Restricted Shareholder's
signature on the Agreement.

Escrow Agent: Secretary
CREDENTIALS SERVICES
INTERNATIONAL, INC.
333 City Boulevard West
Orange CA, 92868

17. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not
become a party to the Agreement.

-5-
<PAGE> 21
18. This instrument shall be governed by and construed in
accordance with the laws of the State of California, except with respect to
choice of law.

19. This instrument shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.

Very truly yours,

CREDENTIALS SERVICES
INTERNATIONAL, INC.

By
------------------------------------

ESCROW AGENT: Restricted Shareholder:

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

- -----------------------------------
Secretary
Address:

CREDENTIALS SERVICES
INTERNATIONAL, INC.
333 City Boulevard West
Orange, CA 92868

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<PAGE> 22
EXHIBIT B

ACKNOWLEDGMENT OF AND AGREEMENT TO BE BOUND
BY THE COMMON STOCK PURCHASE AGREEMENT OF
CREDENTIALS SERVICES INTERNATIONAL, INC.
A DELAWARE CORPORATION

The undersigned, as transferee of shares of CREDENTIALS SERVICES
INTERNATIONAL, INC., hereby acknowledges that he or she has read and reviewed
the terms of the Common Stock Purchase Agreement of CREDENTIALS SERVICES
INTERNATIONAL, INC. and hereby agrees to be bound by the terms and conditions
thereof, as if the undersigned had executed said Agreement as an original party
thereto.

Dated: ____________________, 199_.

By _____________________________

<PAGE> 23
EXHIBIT C
ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED _________________________________ hereby sells, assigns
and transfers unto _________________________ ________________________
(________) shares of the Common Stock of CREDENTIALS SERVICES INTERNATIONAL,
INC., a Delaware corporation (the "Corporation"), standing in __________ name
on the books of the Corporation represented by Certificate No. ___________
herewith and hereby irrevocably constitutes and appoints ________________
Attorney to transfer said stock on the books of the Corporation with full power
of substitution in the premises.

Dated: ____________________, 199_.

____________________________________

__________________________

<PAGE> 24
EXHIBIT D

PROMISSORY NOTE

$_______.__ Orange, California
Dated November __, 1997

FOR VALUE RECEIVED, ____________________, an Individual ("Maker"),
promises to pay CSI Investment Partners II, L.P., a Delaware limited
partnership ("Holder"), at Orange, California the principal sum of
__________________________________________ DOLLARS U.S. ($_______.__) plus
interest thereon on the terms set forth below. This note is being given in
connection with the Restricted Stock Agreement among the Maker, Holder and
Credentials Services International, Inc.

Maturity Date. The unpaid balance of this Note and all accrued but
unpaid interest shall be due and payable on May 1, 2000.

Interest. The unpaid balance outstanding under this Note shall bear
monthly compounded interest at the rate of six and sixty-four one- hundredths
percent (6.64%) per annum.

Payment. Payment of principal and interest by Maker under this Note
shall be due and payable as follows:

(i) All payments shall be made in United States dollars;

(ii) On each December 31, while any unpaid balance remains
outstanding on this Note, all accrued but unpaid interest shall be due
and payable; and

(iii) On May 1, 2000 all unpaid principal and all accrued but unpaid
interest shall be due and payable.

Prepayment. Maker reserves the right to prepay the unpaid principal
balance and any accrued interest, or any portion thereof, at any time without
penalty. Each such prepayment shall be credited first to interest then accrued
and the remainder to principal, and the charge of interest shall thereupon
cease upon the principal so credited.

Default. This Note shall be in default upon any of the following:

(a) Failure of Maker to pay any principal, interest or other
amount due under this Note when due should such default not be
cured within thirty (30) days after written notice thereof is
delivered to Maker at its last known address;

<PAGE> 25
(b) Failure of Maker to perform or observe any other term,
covenant or agreement to be performed or observed by it
pursuant to this Note should such failure not be cured within
thirty (30) days after written notice thereof is delivered to
Maker at its last known address;

(c) (i) A court having jurisdiction in the premises shall
enter a decree or order for relief in respect of Maker in an
involuntary case under Title 7 or 13 of the United States Code
entitled "Bankruptcy" (as now or hereafter in effect, or any
successor thereto, the "Bankruptcy Code") or any applicable
bankruptcy, insolvency or other similar law now or hereafter
in effect, which decree or order is not stayed; or any other
similar relief shall be granted under any applicable federal
or state law; or (ii) an involuntary case shall be commenced
against Maker under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect; or a decree or
order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Maker or
over all or a substantial part of Maker's property shall have
been entered; or the involuntary appointment of an interim
receiver, trustee or other custodian of Maker for all or a
substantial part of Maker's property shall have occurred; or a
warrant of attachment, execution or similar process shall have
been issued against any substantial part of the property of
Maker, and, in the case of any event described in this clause
(ii), such event shall have continued for 60 days unless
dismissed, bonded or discharged; or

(d) An order for relief shall be entered with respect to
Maker, or Maker shall commence a voluntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or shall consent
to the entry of an order for relief in an involuntary case, or
to the conversion of an involuntary case to a voluntary case,
under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian
for all or a substantial part of Maker's property; or Maker
shall make an assignment for the benefit of creditors; or
Maker shall be unable or fail, or shall admit in writing
Maker's inability, to pay Maker's debts as such debts become
due; or the Board of Directors of Maker (or any committee
thereof) shall adopt any resolution or otherwise authorize
action to approve any of the foregoing.

At such time as this Note becomes in default, the then unpaid
principal and interest shall, at the election of Holder, be immediately due and
payable, all without demand, presentment or

<PAGE> 26
notice, each of which is hereby waived by Maker, and Holder shall have all
other rights accorded under this Note. All sums remaining unpaid on an
accelerated maturity date shall bear interest at the rate specified above.

Non-Assignability. Neither Maker nor Holder may assign any of its
obligations without the prior written consent of the other (which consent may
be withheld in such other party's sole discretion).

No Waiver. No failure or delay on the part of Holder to exercise any
right, power or privilege under this Note and no course of dealing between
Maker and Holder shall impair such right, power or privilege or operate as a
waiver of any default or an acquiescence therein, nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.

Attorneys' Fees. Maker agrees to indemnify Holder against any losses,
claims, damages and liabilities and related expenses, including reasonable
counsel fees and expenses, incurred by Holder arising out of or in connection
with the transactions contemplated by this Note. In particular, Maker promises
to pay all costs and expenses, including reasonable attorneys' fees, incurred
in connection with the collection and enforcement of this Note.

Limit on Interest Rate. This Note is hereby limited so that in no
event shall the amount of interest paid or agreed to be paid by Maker exceed
the maximum amount permissible under applicable law. If, for any reason, any
interest in excess of the maximum amount permitted by law is paid, such amount
shall be applied to the reduction of the principal amount owing under this
Note.

Governing Law. This Note shall be governed by, and construed in
accordance with, the laws of the State of California.

Severability. In the event that any provision of this Note shall be
declared to be void or unenforceable by any arbitrator or court of competent
jurisdiction, the remainder of this Note shall continue to be in full force and
effect.

MAKER:

___________________________________

DO NOT DESTROY THIS ORIGINAL NOTE: WHEN PAID, SAID ORIGINAL NOTE SHOULD BE
SURRENDERED TO MAKER FOR CANCELLATION AND RETENTION.

<PAGE> 1
EXHIBIT 10.16

CSI INVESTMENT PARTNERS II, L.P.

AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
<PAGE> 2
CSI INVESTMENT PARTNERS II, L.P.
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP

AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated November 15,
1997, among Credentials II G.P. L.P., a Delaware limited partnership (the
"General Partner"), and LINCOLNSHIRE EQUITY FUND, L.P., a Delaware limited
partnership ("Fund") and the parties named in Schedule B annexed to this
Agreement.

W I T N E S S E T H:

WHEREAS, the undersigned are executing this Amended and Restated Agreement
of Limited Partnership, as reformed (the "Agreement") for the purpose of
amending the provisions of a certain agreement of limited partnership,
originally dated as of November 6, 1996 (the "Original Agreement"), with respect
to a Delaware limited partnership formed under the name CSI Investment Partners
II, L.P., pursuant to the Original Agreement and a Certificate of Limited
Partnership filed with the Delaware Secretary of State on November 4, 1996 (as
amended, supplemented or restated from time to time, the "Certificate"), in
accordance with the provisions of the Delaware Revised Uniform Limited
Partnership Act as subsequently amended as described below; and

WHEREAS, the Original Agreement was amended and restated as of May 9, 1997
and that amendment included the addition of a new class of limited partners
denominated as Class B Limited Partners (now hereinafter defined as Withdrawing
Class B Limited Partners) and set forth relative rights of the Limited Partners
and Class B Partners with respect to the Partnership; and

WHEREAS, in June 1997, the parties to the Original Agreement, as amended
and restated, executed Amendment No. 1 to that agreement and the provisions of
that amendment are now set forth herein; and

WHEREAS, the parties to this Agreement executed an Amended and Restated
Agreement of Limited Partnership, dated October 7, 1997 in order to effectuate
their desire to reform this Agreement to reflect their true intentions and
agreement and their desire that this Agreement, as reformed and revised, not be
interpreted or deemed to constitute, a new contract or agreement or an amendment
of the contract existing prior to the date of the October 7, 1997 amendment and
restatement, but rather a reformation of the then existing agreement effected to
express the true intentions and agreements of the parties to this Agreement; and

WHEREAS, the parties to this Agreement now desire to amend the Agreement
to provide for the distribution to the Withdrawing Class B Limited Partners of
certain shares of Company Stock, the
<PAGE> 3
withdrawal of such Withdrawing Class B Limited Partners from the
Partnership and the other matters set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein made, and intending to be legally bound, the parties hereby agree as
follows:

ARTICLE I
DEFINITIONS

The defined terms used in this Agreement, unless the context otherwise
requires, shall have the meanings specified in this Article I and in the
Preambles to this Agreement.

"Accountants" shall mean such firm of independent public accountants as
the General Partner may appoint, from time to time, as provided in Section
5.1.1(f).

"Act" shall mean the Delaware Revised Uniform Limited Partnership Act, as
the same may be amended from time to time, and any successor to such Act.

"Affiliate" shall have the meaning ascribed thereto by Rule 12b-2 under
the Securities Exchange Act of 1934, as amended, as in effect on the date
hereof.

"Agreement" shall mean this Amended and Resatated Agreement
of Limited Partnership.

"Capital Account" when used in respect to any Partner shall mean any
Capital Contribution or Contributions actually made by such Partner to the
Partnership, increased by the amount of all income and gains credited to the
Capital Account of such Partner pursuant to Section 4.4. hereof and decreased by
the sum of (a) all amounts of cash and assets distributed by the Partnership to
such Partner pursuant to Sections 4.1 and 4.2 and (b) the amount of all losses
charged to the Capital Account of such Partner pursuant to Section 4.3. This
provision and the other provisions of this Agreement relating to the maintenance
of Capital Accounts are intended to comply with Treasury Regulation Section
1.704-1(b) and shall be interpreted and applied in a manner consistent with such
Regulations. Therefore, notwithstanding anything contained herein to the
contrary and in further defining the method in which the Capital Accounts of the
Partners shall, in all respects, be maintained in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv), and any optional charges, credits or
adjustments to such Capital Accounts by the Partners which are provided for in
such Regulations, and are otherwise proper under state law and this Agreement,
and which are made by the Partnership and shall be made with any and all
correlative adjustments to the Capital Accounts of the Partners required by
Treasury Regulation Section 1.704-1(b)(2)(iv).

- 2 -
<PAGE> 4
"Capital Contributions" shall mean the capital contributions made in cash
to the Partnership pursuant to Article III by the Partners or, as the context
requires, by the General Partner and the Limited Partners or, when such term is
used in the singular, by any one Partner (or, in all cases, by the predecessor
holders of the Interests of such Partner or Partners), as set forth in Schedule
A hereto.

"Cash Flow" for a Fiscal Year shall mean the aggregate cash receipts of
the Partnership for such Fiscal Year from all sources (including sales of
assets, refinancing of debt and amounts released from reserves no longer deemed
necessary by the General Partner for the operation of the Partnership), other
than receipts in respect of Capital Contributions, reduced by (i) appropriations
for reserves which the General Partner may deem reasonably necessary for the
discharge of the liabilities and obligations of the Partnership and (ii)
repayment of the principal amount of Partnership debt.

"Certificate" shall mean the Certificate of Limited Partnership of the
Partnership, filed with the Delaware Secretary of State, as such Certificate may
be amended or restated from time to time.

"Code" shall mean the Internal Revenue Code of 1986 and any amendments or
additions thereto, and any predecessor or successor statute.

"Company" shall mean Credentials Services International, Inc., a Delaware
corporation, and its successors and assigns.

"Company Stock" shall mean the issued and outstanding common Stock, $.01
par value per share, of the Company.

"Consent" shall mean the consent of a Person, given as provided in Section
10.1 to do the act or thing for which the consent is solicited, or the act of
granting such consent, as the context may require. Reference to the Consent or
other action of a majority or specified percentage in Interest of the Limited
Partners shall mean, respectively, the Consent or other action of the Limited
Partners whose aggregate Profit Percentages in the Partnership as of the time
such Consent is given or required represent more than fifty percent (50%), or
not less than the specified percentage, as the case may be, of the aggregate
Profit Percentages of all Limited Partners.

"Corporate Fund G.P." shall mean Credentials G.P., L.P., a separate
limited partnership organized under Delaware law which is the general partner of
CIS Acquisition Partners, L.P.

"Designated Class A Stock" shall mean the aggregate of 35,910 shares of
common stock of the Company evidenced by stock certificate number 3 which is
issued to the Partnership.

- 3 -
<PAGE> 5
"Designated Withdrawing Class B Management Stock" shall mean the aggregate
of 3,990 shares of common stock of the Company.

"Fair Market Value" shall mean the value of Partnership assets, including
the Company Stock, as determined in good faith by the General Partner after
consultation with the Accountants.

"Fiscal Year" shall mean the fiscal year commencing on January 1 of each
year and ending on December 31 of the same year or, in the case of the first and
last fiscal years, the fraction thereof which commences on the date on which the
Partnership is formed under the Act (in the case of the first fiscal year) or
which ends on the date on which the winding up of the Partnership is completed
(in the case of the last fiscal year).

"Fund" shall have the meaning given to such term in the preamble of this
Agreement.

"Fund G.P." shall mean Lincolnshire Equity Partners, L.P., a Delaware
limited partnership, the general partner of Fund.

"Gain From Sale" shall mean any income or gain of the Partnership for
federal income tax purposes resulting from the sale of Company Stock or any
other transaction the proceeds of which, in accordance with generally accepted
accounting principles, are considered capital in nature, except that if the
value of the Company Stock or other asset as carried on the books of the
Partnership differs from its adjusted basis for federal income tax purposes at
the time of such transaction, such income or gain will be calculated with
reference to such value. In the event the value of any asset of the Partnership
as carried on the books of the Partnership is adjusted (except in the case of an
adjustment pursuant to section 734(b) or section 743(b) of the Code) to Fair
Market Value, the amount of such adjustment shall be taken into account at the
time of such adjustment as gain or loss from the disposition of such asset for
purposes of computing Gains from Sale or Losses from Sale.

"General Partner" shall mean Credentials II G.P. L.P., a Delaware limited
partnership, its successors or any other Person that becomes the successor
General Partner of the Partnership as provided herein, in all cases in such
Person's capacity as the General Partner of the Partnership.

"Incapacity" or "Incapacitated" shall mean, as to any Person, the
adjudication of bankruptcy, incompetence or insanity, or the death, dissolution
or termination (other than by merger or consolidation), as the case may be, of
such Person.

"Interest" shall mean the entire interest of a Partner in the Partnership
at any particular time, including the right of such Partner to any and all
benefits to which such Partner may be entitled as provided in this Agreement,
together with the

- 4 -
<PAGE> 6
obligations of such Partner to comply with all of the terms and provisions of
this Agreement.

"Limited Partners" shall mean, collectively, the Limited Partners (which,
as of this date, consists solely of the Fund) and the Withdrawing Class B
Partners (until their withdrawal from the Partnership in accordance with the
terms of this Agreement) and any other Person admitted to the Partnership as a
Limited Partner as provided in this Agreement, and any Substituted Limited
Partner, with respect to each such Person, in such Person's capacity as a
limited partner of the Partnership and provided such Person has not withdrawn or
been removed as a Limited Partner.

"Limited Partner" shall mean one of the Limited Partners.

"Liquidation Trustee" shall mean a Person selected by a majority in
Interest of the Limited Partners to act as a liquidating trustee as provided in
Section 7.5.1.

"LMI" shall mean Lincolnshire Management, Inc., a Delaware corporation,
and its successors and assigns.

"LMI Management Consulting Agreement" shall mean that certain Management
Agreement, dated September 30, 1994, as heretofore or hereafter amended, between
the Company and LMI.

"Losses From Sale" shall mean any net loss of the Partnership for federal
income tax purposes resulting from the sale of Company Stock or any other
transaction the proceeds of which, in accordance with generally accepted
accounting principles, are considered capital in nature, except that if the
value of the Company Stock or other asset as carried on the books of the
Partnership differs from its adjusted basis for federal income tax purposes at
the time of such transaction, such loss shall be calculated with reference to
such value. In the event the value of any asset of the Partnership as carried on
the books of the Partnership is adjusted (except in the case of an adjustment
pursuant to section 734(b) or section 743(b) of the Code) to Fair Market Value,
the amount of such adjustment shall be taken into account at the time of such
adjustment as gain or loss from the disposition of such asset for purposes of
computing Gains from Sale or Losses from Sale.

"Net Cash Flow" for any period shall be an amount equal to Cash Flow
reduced by Partnership Expenses.

"Net Gain From Sale" means, for each Fiscal Year or other period, the
excess of the sum of the Gains from Sale over the sum of the Losses from Sale
recognized by the Partnership during such period.

"Net Income or Net Loss" means for each fiscal year or other period, an
amount equal to the Partnership's taxable income or

- 5 -
<PAGE> 7
loss for such year or period, determined in accordance with Section 703(a) of
the Code with the following adjustments: (i) any income of the Partnership that
is exempt from Federal income tax and is not otherwise taken into account in
computing Net Income or Net Loss pursuant to this definition shall be added to
such taxable income or loss; and (ii) any expenditures of the Partnership
described in Section 705(a)(2)(B) of the Code or treated as Code Section
705(a)(2)(B) expenditures pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Net
Income or Net Loss pursuant to this definition shall be subtracted from such
taxable income or loss.

"Net Loss From Sale" means, for each fiscal year or other period, the
excess of the sum of the Losses From Sale over the sum of the Gains From Sale
recognized by the Partnership during such period.

"Net Sales Proceeds" shall mean the net proceeds from the sale or other
disposition of Partnership assets by the Partnership, after deduction for (i)
any expenses incurred with respect to such sale or other disposition and (ii)
reserves which the General Partner may deem reasonably necessary for the
discharge of the liabilities and obligations of the Partnership.

"Partner" shall mean one of the Partners.

"Partners" shall mean the General Partner and the Limited Partners,
collectively, unless otherwise indicated, until the withdrawal from the
Partnership of the Withdrawing Class B. Limited Partners whereupon the Partners
shall be the General Partner and the Limited Partners.

"Partnership" shall mean the limited partnership created by the Original
Agreement and the Certificate, as such limited Partnership may be constituted
from time to time hereafter.

"Partnership Expenses" shall mean the expenses of the Partnership
described in Section 5.6.

"Person" shall mean any individual, partnership, corporation,
unincorporated organization or association, trust or other entity.

"Regulations" shall mean the regulations issued by the United States
Internal Revenue Service under the Code.

"Restricted Stock Agreement" shall mean the agreement between and among
the Company, the Withdrawing Class B Limited Partner and the Company which
provides for the vesting of Company shares in accordance with the vesting
provisions provided for in this Agreement prior to its amendment and restatement
in November __, 1997. The Restricted Stock Agreement shall provide for the
escrow of shares prior to vesting and shall require the

- 6 -
<PAGE> 8
Withdrawing Class B Limited Partners to exercise recourse promissory notes
payable to the Partnership in consideration for the capital contribution
requirements for Withdrawing Class B Limited Partners under this Agreement.

"Sale of the Company" shall mean the sale, assignment or transfer of all
of the then outstanding capital stock of the Company, by way of merger,
consolidation or sale or exchange of shares of capital stock, or the sale or
exchange of all or substantially all of the assets and business of the Company,
for cash, securities or other property (or any combination thereof), to any one
or more parties who are not Affiliates of the Company or of the Partnership in
one or more series of related transactions.

"Securities Act" shall mean the Securities Act of 1933, as
amended.

"Substituted Limited Partner" shall mean any Person admitted to the
Partnership as a Limited Partner pursuant to the provisions of Section 7.3.

"Transfer" shall mean any sale, exchange, transfer, pledge, mortgage,
hypothecation, grant of a security interest in, assignment or other disposition
by a Limited Partner of all or any fraction of its Interest in the Partnership
as permitted pursuant to the terms of Article VII.

"Unrecovered Capital" shall mean, with respect to each Limited Partner and
the General Partner, the excess of the Capital Contributions made with respect
to each such Partner's Interest over the aggregate distributions of Net Cash
Flow and Net Sales Proceeds pursuant to Sections 4.1(a) to such Partner on
account of such Partner's Interest.

"Withdrawing Class B Limited Partners" or "Withdrawing Class B Partners"
shall mean the Limited Partners who became Limited Partners pursuant to the May
9, 1997 amendment to this Agreement and who are withdrawing as Partners of the
Partnership and whose names are set forth on Schedule B hereto.

- 7 -
<PAGE> 9
ARTICLE II
REFORMATION OF AGREEMENT; ORGANIZATION

2.1 Reformation of Agreement. This Agreement was reformed so that
amendments made May 9, 1997 ("May 9 Writing") would give effect to agreements
reached on or about October 18, 1996 between the Company and certain of its
executive officers and key employees who are the persons named as Withdrawing
Class B Limited Partners herein. Each of the parties hereto hereby agrees and
confirms that as a result of a mutual mistake made by each of the parties to the
May 9 Writing, the provisions included in the May 9 Writing relating to the
Preferred Return set forth in Section 4.2 of the May 9 Writing did not correctly
reflect the mutual intention and agreement of the parties hereto. The parties
hereto hereby agree and confirm that because the above-mentioned provision in
the May 9 Writing did not reflect their mutual intentions and agreement that it
is not, and never was, part of the contract created among them. The parties
hereto have therefore reformed this Agreement to reflect their true intentions
and agreement and this Agreement, as reformed and revised, is not, and shall not
be interpreted or deemed to constitute, a new contract or agreement or an
amendment of the contract existing prior to the date of reformation, but rather
a reformation of the existing agreement effected to express the true intentions
and agreements of the parties hereto.

2.2 Continuation. The Partnership was formed pursuant to the Original
Agreement and the Certificate filed under the Act and the Partners desire to
continue the Partnership pursuant to the provisions of the Act. The rights and
liabilities of the Partners shall be as provided in the Act, except as herein
otherwise expressly provided to the extent permitted by the Act.

2.3 Name. The name of the Partnership is and shall continue to be "CSI
Investment Partners II, L.P." or such other name as the General Partner shall
determine on notice to the Partners.

2.4 Place of Business and Office; Registered Agent. The Partnership shall
maintain its principal place of business at c/o Lincolnshire Management, Inc.,
780 Third Avenue, New York, New York 10017, or such other place as the General
Partner shall determine. The registered agent of the Partnership is National
Registered Agents, Inc. Notice of any change of such principal office or
registered agent shall be given to all Partners on or before the date of any
such change.

2.5 Purpose. The principal purpose of the Partnership is to acquire, hold
and dispose of Company Stock to purchase Company Stock and any other form of
security, investment or instrument of the Company or any of its subsidiaries
selected by the General Partner, and to do every over thing incidental or
related to such activities or intended to enhance the value of the Partnership's

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assets as the General Partner may deem appropriate, subject to
the provisions of this Agreement.

2.6 Term. The term of the Partnership commenced on the filing of the
certificate with the Delaware Secretary of State in accordance with the Act and
shall continue in full force and effect until the earlier of (a) December 31,
2026, or (b) dissolution prior thereto pursuant to the provisions hereof.

2.7 Qualification in Other Jurisdictions. The General Partner shall cause
the Partnership to be qualified, formed, reformed or registered under foreign
limited partnership statutes or similar laws in any jurisdiction in which the
Partnership owns property or transacts business if such qualification,
formation, reformation or registration is required in order to protect the
limited liability of the Limited Partners or to permit the Partnership lawfully
to own property or transact business in such jurisdiction, and shall cause the
Partnership not to transact business in any such jurisdiction until it is so
qualified, formed, reformed or registered. The General Partner shall execute,
file and publish all such certificates, notices, statements or other instruments
necessary to permit the Partnership to conduct business as a limited partnership
in all jurisdictions where the Partnership elects to do business and to maintain
the limited liability of the Limited Partners.

ARTICLE III
PARTNERS AND CAPITAL

3.1 General Partner.

3.1.1 The General Partner is, and shall continue to be, Credentials
II G.P. L.P., a Delaware limited partnership, and/or any other Person who
becomes the successor General Partner as provided herein. The address and
Capital Contribution of the General Partner are set forth on Schedule A hereto.

3.1.2 The General Partner shall not be required to lend any funds or
to make Capital Contributions to the Partnership in addition to that set forth
on said Schedule A; provided, however, that if the General Partner or any
Affiliate of the General Partner lends funds to the Partnership, the terms of
such lending (i) must be as favorable to the Partnership as the terms that could
have been obtained at the time of such lending from a Person that was not the
General Partner or its Affiliate and (ii) may provide for (a) the grant of a
security interest in favor of the General Partner or such Affiliate in any or
all of the assets of the Partnership and (b) the repayment of such loans to the
General Partner or any such Affiliate prior to the satisfaction of any of the
Partnership's other obligations upon the dissolution, liquidation or winding up
of the Partnership.

3.2 Limited Partners.

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3.2.1 The names, addresses and Capital Contributions of the Limited
Partners are set forth on Schedule A hereto and all such Limited Partners are
admitted to the Partnership as limited partners. The Capital Contributions of
the Limited Partners have been received by the Partnership on or before the date
of this Agreement.

3.2.2 Other than the Capital Contributions received by the
Partnership from the Limited Partners on or before the date of this Agreement,
no Limited Partner shall be required to make any Capital Contributions or lend
any funds to the Partnership; provided, however, that if any Limited Partner or
any Affiliate of any Limited Partner lends funds to the Partnership, the terms
of such lending must be as favorable to the Partnership as the terms that could
have been obtained at the time of such lending from a Person that was not such
Limited Partner or an Affiliate of such Limited Partner; provided, however, that
any loan by any Limited Partner or Affiliate may be made on such terms and
subject to such security as are applicable to loans made by the General Partner
under Section 3.1.2 hereof.

3.3 Partnership Capital and Loans.

3.3.1 The General Partner's Contributions to the Partnership's
capital shall equal its Capital Contributions as set forth on Schedule A. Each
Limited Partner has contributed to the Partnership in cash one hundred percent
(100%) of the Capital Contribution to the Partnership's capital required to be
made by such Limited Partner as set forth on Schedule A.

3.3.2 No Partner shall be paid interest by the Partnership or by the
General Partner on, or in respect of, any Capital Contribution to the
Partnership or on such Limited Partner's Capital Account.

3.3.3 No Limited Partner shall have any right to demand the return
of its Capital Contribution other than upon dissolution of the Partnership
pursuant to Article VIII. The General Partner shall have no personal liability
to the Limited Partners for the return of their Capital Contributions or
repayment of any loans they may make to the Partnership, and shall be under no
obligation to distribute any amount to the Partners, unless, prior thereto, all
liabilities of the Partnership to Persons other than Partners shall have been
paid or, in the good faith determination of the General Partner, there shall
remain in the Partnership, following the distribution, property sufficient to
pay such liabilities.

3.4 Liability of Partners. Except as specifically set forth herein, no
Limited Partner shall have any personal liability whatever in his or its
capacity as a Limited Partner, whether to the Partnership, to any of the
Partners or to the creditors of the Partnership, for the debts, liabilities,
contracts or any other obligations of the Partnership or for any

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losses of the Partnership. Subject to the provisions of the Act, a Limited
Partner shall be liable only to make its Capital Contribution and shall not be
required to lend any other funds to the Partnership, or after its Capital
Contribution shall have been paid in full, to make any further Capital
Contribution to the Partnership or to repay to the Partnership, any Partner or
any creditor of the Partnership all or any fraction of any negative amount of
such Limited Partner's Capital Account.

3.5 Withdrawing Class B Limited Partners.

3.5.1 The names, addresses and contingent Common Stock ownership of
each of the Withdrawing Class B Limited Partners are set forth on Schedule B
hereto.

3.5.2 Capital Contributions. None of the Withdrawing Class B Limited
Partners has made any Capital Contributions to the Partnership and each
Withdrawing Class B Limited Partner's initial Capital Account in the Partnership
shall be zero.

3.6 Status of Limited Partners.

3.6.1 The Limited Partners shall not participate or take part in the
control of the Partnership business and shall have no right or authority to act
for, or bind, the Partnership.

3.6.2 Unless named in this Agreement, or unless admitted to the
Partnership as the General Partner, a Limited Partner or a Substituted Limited
Partner, as provided in this Agreement, no Person shall be considered a Partner.
The Partnership and the General Partner need deal only with Persons so named or
admitted as Partners. Neither the General Partner nor the Partnership shall be
required to deal with any other Person merely because of an assignment or
transfer of a Partnership Interest to such Person as a result of an assignment
thereof or a transfer thereof by reason of the Incapacity of a Partner. Any
distribution by the Partnership to the Person shown on the Partnership's books
and records as a Partner or to its legal representatives, or the permitted
assignee of the right to receive Partnership distributions as provided herein,
shall acquit the Partnership and the General Partner of any liability to any
other Person who may be interested in such distribution by reason of any other
assignment by the Partner or by reason of his Incapacity, or for any other
reason.

3.6.3 The General Partner also may be a Limited Partner of the
Partnership, upon acquiring the Interest of a Limited Partner. The General
Partner shall, in its capacity as a Limited Partner, be entitled to participate
in any Consent of the Limited Partners, and the Interest of the General Partner
as a Limited Partner shall be counted in any computations required in any such
Consent.

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ARTICLE IV
DISTRIBUTIONS; ALLOCATIONS

4.1 Distributions Prior to Termination and Dissolution of
the Partnership.

(a) Net Cash Flow and Net Sales Proceeds shall be distributed to the
Partners, 99% to the Limited Partners and 1% to the General Partner.

(b) All distributions of Net Cash Flow and Net Sales Proceeds made
within any Fiscal Year shall be subject to adjustment by reference to the
Partnership's financial statements for such Fiscal Year. If any additional
amount is to be distributed or paid by reason of such financial statements, such
additional amount shall be deemed distributed for such Fiscal Year; and if any
excess amount was distributed for such Fiscal Year as reflected by such
financial statements, the excess amount shall be taken into account in
determining subsequent distributions or payments.

4.2 Withdrawals of and Distributions to Withdrawing Class B Limited
Partners.

4.2.1 Effective upon execution of a Restricted Stock Agreement by
the Withdrawing Class B Limited Partner, each of the Withdrawing Class B Limited
Partners hereby withdraws as a limited partner in the Partnership. Subject to
the Restricted Stock Agreement, the Partnership hereby distributes the
Withdrawing Class B Management Stock on behalf of the Withdrawing Class B
Limited Partners in the amounts and in the manner set forth on Schedule B. The
remaining Company Stock held by the Partnership (consisting of 35,910 shares of
Company Stock) shall continue to be owned and held by the Partnership for the
benefit of the General Partner and the Limited Partner. None of the Withdrawing
Class B Limited Partners shall have any direct, indirect, vested or contingent
right in the Partnership or its property, including without limitation, the
Company Stock held by the Partnership.

4.3 Allocation of Net Income and Net Loss.

(a) Net Income and Net Gain From Sale. Net Income and Net Gain From
Sale for any Fiscal Year shall be allocated in such manner as equitably reflects
amounts of cash distributed (or, in the case of unrealized income, amounts to be
distributed) to the Limited Partners and the General Partner pursuant to Section
4.1(a).

(b) Net Loss and Net Loss From Sale. Net Loss and Net Loss From Sale
for any fiscal year shall be allocated, to the extent of prior allocations of
Net Income and/or Net Gain From Sale, in the reverse order and priority that Net
Income and/or Net Gain From Sale have been allocated pursuant to

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Section 4.3(a). Net Loss and Net Loss From Sale in excess of any Net Income
and/or Net Gain From Sale shall be allocated among the General Partner and
Limited Partners pro rata in accordance with the positive balances in their
Capital Accounts.

(c) Deficits in Capital Accounts. The Net Loss and Net Loss From
Sale allocated pursuant to Section 4.3(b) hereof shall not exceed the maximum
amount of losses that can be so allocated without causing any Limited Partner to
have a deficit in his Capital Account at the end of any Fiscal Year. In the
event that some but not all of the Limited Partners would have a deficit in his
Capital Account as a consequence of an allocated Net Loss or Net Loss From Sale
pursuant to Section 4.3(b), the limitation set forth in this Section 4.3(c)
shall be applied on a Limited Partner by Limited Partner basis so as to allocate
the maximum permissible losses to each Limited Partner under Section
1.704-1(b)(2)(ii)(d) of the Regulations. All Net Loss and/or Net Loss From Sale
in excess of the limitation set forth in this Section 4.3(c), shall be allocated
among the Partners in accordance with their interests in the Partnership as
determined under the Regulations. Offsetting allocations of Net Income and Net
Gain From Sale shall be made in subsequent Fiscal Years so as to achieve as
nearly as possible the results that would have been achieved had this Section
4.3(c) not been included in this Agreement.

(d) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations, or distributions described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4) or Regulations Section 1.704-1(b)(2)(ii)(d)(6),
or otherwise, which results in such Partner having a Capital Account deficit,
items of Partnership income and gain shall be specially allocated to each such
Partner in an amount and manner sufficient to eliminate, to the extent required
by the Regulations, the Capital Account deficit of such Partner as quickly as
possible, provided that an allocation pursuant to this Section 4.3(d) shall be
made if and only to the extent that such Partner would have an Adjusted Capital
Account Deficit after all other allocations provided for in this Article IV have
been tentatively made as if this Section 4.3(d) were not in the Agreement.

(e) Tax Allocations on Gross-Up. In accordance with Code Section
704(c) and the Treasury Regulations thereunder, income, gain, loss and deduction
with respect to any property (other than cash) contributed to the capital of the
Partnership shall be allocated among the Partners so as to take account of any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and its initial fair market value as determined by
the General Partner for entry on the books of the Partnership. In the event the
value of any Partnership asset on the books of the Partnership is adjusted
(except in the case of an adjustment pursuant to Section 734(b) or Section
743(b) of the Code) to its Fair Market Value,

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subsequent allocations of income, gain, loss and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and such value in the same manner as under
Section 704(c) of the Code and the Treasury regulations thereunder. Any
elections or other decisions relating to such allocations shall be made by the
General Partner in any manner that reasonably reflects the purposes and
intention of this Agreement. Allocations pursuant to this Section 4.3(c) are
solely for the purposes of federal, state and local taxes and shall not affect,
or in any way be taken into account in computing, any Partner's Capital Account
or share of Net Income, Net Gain From Sale, Net Loss, Net Loss From Sale or
other items, or distributions pursuant to any provision of this Agreement.

In any event the value of any Partnership asset is adjusted pursuant
to Regulations Section 1.704-1(b)(2)(iv)(f), subsequent allocations of income,
gain, loss, and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for Federal income tax
purposes and its value in the same manner as under Code Section 704(c) and the
Regulations thereunder. [It is understood that the admission of the Withdrawing
Class B Limited Partners is an event described in Regulation Section
1.704-1(b)(2)(iv)(f), and the assets of the Partnership as of the date hereof
shall be revalued and any income or loss resulting therefrom shall be allocated
among the Limited Partners and the General Partner pursuant to such Regulation.

4.4 Determination of Distributions and Allocations Among Limited Partners.
Unless the context requires otherwise, all Net Cash Flow, Net Sale Proceeds, Net
Income and Net Gain From Sale distributed or allocated to the Limited Partners
generally shall be distributed or allocated to each such Limited Partner
entitled to such distribution or allocation in proportion to the Interests of
each such Limited Partner as set forth on Schedule A. Net Loss and Net Loss From
Sale allocable to the Partners or to the Limited Partners shall be allocated in
proportion to the Capital Contributions made by such Limited Partners.

4.5 Distribution and Payments In-Kind. The General Partner, in its sole
discretion, may distribute Partnership assets in kind to the General Partner
and/or the Limited Partners at such times and in such amounts as cash could be
distributed to such Partners. Any unrealized gain or unrealized loss with
respect to any asset distributed in kind shall be reflected in such Partners'
Capital Accounts as if such asset had been sold for its Fair Market Value on the
date of distribution, the proceeds derived therefrom had been distributed to the
Partner receiving the asset, and the amount of gain or loss with respect thereto
had been allocated to such Partners pursuant to Section 4.3.

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4.6 The Partnership shall not be responsible for, and shall not be
required to pay or to reimburse, any of the Limited Partners for all or any
portion of federal, state or other tax liabilities arising out of their
acquisition of Interests in the Partnership or by reason of any Net Income
allocations to, or distributions of, Net Cash Flow and/or Net Gain From Sale to
any of the Limited Partners.

ARTICLE V
RIGHTS AND DUTIES OF THE GENERAL PARTNER

5.1 Management and Administration.

5.1.1 Except as otherwise expressly provided herein or by law, the
General Partner is hereby vested with the full, exclusive and complete right,
power and discretion to operate, manage and control the affairs of the
Partnership and to make all decisions affecting Partnership affairs, as deemed
proper, necessary or advisable by the General Partner to carry on the business
of the Partnership as described in Section 2.5 and the General Partner shall
have all of the rights, powers and obligations of a general partner of a general
or limited partnership under the Act and otherwise as provided by law.

Without limiting the generality of the foregoing, all of the
Partners hereby specifically agree and consent that the General Partner may, on
behalf of the Partnership, at any time, from time to time and without further
notice to or Consent from any other Partner, do the following, directly or
indirectly through a subsidiary:

(a) purchase of Company Stock or any other
class of capital stock of the Company now or hereafter authorized or debt
instruments issued by the Company or options, warrants or other rights to
purchase any of the foregoing for the Partnership as contemplated by Section 2.5
hereof;

(b) sell all or any part of the Partnership's
assets (including all or part of the Company Stock) whether for cash or
securities and on such reasonable terms as the General Partner shall determine
to be appropriate;

(c) pledge, hypothecate and/or grant or assign
a security interest in all or any portion of the Company Stock owned of record
and/or beneficially by the Partnership to any one or more Persons as a condition
or in consideration of, in connection with or in order to secure or
collateralize any loans or advances made by any of such Persons to the Company
and/or the Partnership;

(d) vote the Company Stock owned by the
Partnership, enter into, and perform under, any stockholders agreement, voting
trust, proxy or other agreement governing the Company Stock and act as a
stockholder of the Company with

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whatever power the Partnership has by virtue of its percentage ownership of the
Company Stock, by contract or otherwise;

(e) incur all expenditures permitted by this Agreement,
and, to the extent that funds of the Partnership are available, pay all
expenses, debts and obligations of the Partnership;

(f) engage, compensate and discharge any agent,
attorney, employee, accountant, consultant or other person, including anyone
who, in addition to acting in such capacity, may also be a General Partner,
Affiliate, or Limited Partner hereunder (or officer, director or equity owner
thereof), at such compensation and upon such terms and conditions as the General
Partner may deem appropriate;

(g) maintain such bank accounts on behalf of the
Partnership and make such signature arrangements with respect thereto, as the
General Partner shall determine to be appropriate;

(h) enter into agreements with any and all persons,
entities and governmental agencies with respect to the financing and operating
of the Partnership business upon such terms as the General Partner deems
appropriate;

(i) compromise, submit to arbitration, sue on or defend
all claims in favor of or against the Partnership;

(j) do all acts it deems necessary or appropriate to
further the Partnership business or for the protection and preservation of the
Partnership assets;

(k) determine the appropriate accounting method or
methods to be used by the Partnership;

(l) amend this Agreement to reflect the substitution or
addition of a Limited Partner or a General Partner or the reduction of Capital
Accounts upon the return of capital to the Partners;

(m) cause the Partnership to enter into transactions in
which the General Partner or Affiliates have an interest including, but not
limited to, transactions which involve the purchase or sale of any property or
securities to or from the Partnership, and transactions in which (i) services
will be rendered for or by the Partnership, or (ii) fees or commissions will be
received by the General Partner or Affiliates from the Partnership (or officer,
director or equity owner thereof);

(n) enter into, execute, amend, supplement, acknowledge
and deliver any and all contracts, agreements or

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other instruments as the General Partner shall determine to be appropriate in
furtherance of the purposes of the Partnership;

(o) pending cash distributions to the Partners, invest in
short-term investments;

(p) admit an assignee of all or any fraction of a Limited
Partner's Interest or the General Partner's Interest to be a Substituted Limited
Partner or a substituted General Partner in the Partnership pursuant to and
subject to the terms of Section 7.3 or 6.1, respectively;

(q) be responsible for providing those administrative
services to the Partnership deemed necessary by the General Partner, including,
without limitation, making any filings necessary on behalf of the Partnership in
Delaware and such other jurisdictions in which the Partnership owns property or
transacts business;

(r) act as "tax matters partner" of the Partnership for
tax purposes;

(s) cause the Partnership and/or the Company or its
subsidiaries to borrow money for Partnership or Company purposes, respectively,
from such lenders, in such amounts, at such times and on such terms as the
General Partner determines appropriate to repay, refinance and/or renegotiate
such borrowings, and to grant security for such borrowings to the lender or
lenders thereof, including pledging the Company Stock.

5.1.2 Third parties dealing with the Partnership may rely
conclusively upon any certificate of the General Partner to the effect that it
is acting on behalf of the Partnership. The signature of the General Partner
shall be sufficient to bind the Partnership, in every manner, to any agreement
or on any document including, but nor limited to, documents drawn or agreements
made in connection with the acquisition or disposition of any assets or
properties in furtherance of the purposes of the Partnership.

5.2 Restrictions on the Authority of the General Partner. Without
the Consent of more than fifty percent (50%) in Interest of the Limited
Partners, the General Partner shall not have the authority (i) to admit a Person
as a Partner, except as provided in this Agreement or (ii) to elect to dissolve
the Partnership, except that no Consent of the Limited Partners shall be
required and the General Partner shall have the authority to elect to dissolve
the Partnership as provided in Section 8.1. Without the Consent of more than
fifty percent (50%) in Interest of the Limited Partners, the General Partner
shall not have the authority to offer and sell limited partnership Interests in
the Partnership and admit such persons as additional Limited Partners.

5.3 Duties and Obligations of the General Partner.

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5.3.1 The General Partner shall take all action which may be
necessary or appropriate for the continuation of the Partnership's valid
existence as a limited partnership under the laws of Delaware and of each other
jurisdiction in which such existence is necessary to protect the limited
liability of the Limited Partners or to enable the Partnership to conduct the
business in which it is engaged.

5.3.2 The General Partner shall at all times conduct its affairs and
the affairs of the Partnership in such a manner that no Limited Partner, in its
capacity as a limited partner, shall have any personal liability with respect to
any Partnership liability or obligation, except as expressly assumed by any
Limited Partner.

5.3.3 The General Partner shall prepare or cause to be prepared, and
shall file on or before the due date (or any extension thereof), any tax returns
required to be filed by the Partnership. The General Partner shall cause the
Partnership to pay any taxes payable by the Partnership (it being understood
that the expenses of preparation and filing of such tax returns, and the amounts
of such taxes, are expenses of the Partnership and not of the General Partner);
provided, however, that the General Partner shall not be required to cause the
Partnership to pay any tax so long as either the General Partner or the
Partnership is in good faith and by appropriate legal proceedings, contesting
the validity, applicability or amount thereof, and such contest does not
materially endanger any right or interest of the Partnership.

5.4 Other Business of Partners.

5.4.1 The General Partner shall devote to the Partnership such time
and effort as the General Partner determines shall be necessary to conduct the
Partnership's business and affairs in an appropriate manner. Subject to the
foregoing, any Partner and any Affiliate of any Partner may engage in or possess
any interest in other business ventures of any kind, nature or description,
independently or with another, whether such ventures are competitive with the
Partnership, or otherwise.

5.4.2 Except as otherwise provided in this Section 5.4, neither the
Partnership nor any Partner shall have any rights or obligations by virtue of
this Agreement or the Partnership relation created hereby in or to any such
independent ventures or in or to the income or profits or losses derived
therefrom.

5.4.3 The Limited Partners recognize and Consent that the General
Partner or Affiliates of the General Partner (including LMI and its respective
officers, directors, shareholders, partners and other Affiliates) may engage in
other activities and may receive other fees and/or annual retainers

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from the Company and the Company's subsidiaries, including, but not limited to,
the LMI Management Consulting Agreement and, except as specifically provided
herein, neither the Partnership nor any Partner shall have any interest therein
by virtue of this Agreement or the Partnership relation created hereby.

5.4.4 Subject to the provisions of Section 5.2, the Limited Partners
hereby further Consent that the General Partner may offer to any Limited Partner
or Affiliate thereof or any other Person or Persons, in any capacity, the
opportunity to invest in, or to make loans to, the Partnership, the Company or
the Company's subsidiaries and no other Partner shall have any right to
participate or any interest therein by virtue of this Agreement or the
partnership relation created hereby.

5.5 Compensation of General Partner.

5.5.1 The General Partner shall not receive any salary, fees,
profits, distributions or compensation from the Partnership, except as provided
in Article IV and this Article V.

5.6 Allocation of Expenses.

5.6.1 The Partnership shall bear or pay from its own resources all
expenses incurred in connection with the General Partner's rent and general
office overhead, including clerical, bookkeeping and administrative costs,
salaries of personnel, payroll taxes and employee costs related to such
salaries, telephone charges, office supplies and office equipment expenses and
other like expenses related to the Partnership. All Partnership Expenses (as
defined below) shall be paid out of Cash Flow arising from short term
investments, to the extent funds arising therefrom are available, and thereafter
from other amounts of Cash Flow or, in the event of any insufficiency of Cash
Flow in any Fiscal Year, shall be paid out of any other cash funds of the
Partnership. To the extent the General Partner incurs any Partnership Expenses
on behalf of the Partnership, the Partnership shall promptly reimburse the
General Partner for such Partnership Expenses. Partnership Expenses shall
include the following:

(a) all filing fees or other similar fees payable from time to time
in respect of this Agreement or the Partnership;

(b) all taxes or governmental charges, all brokerage fees,
commissions, bank charges, transfer fees, filing fees, lawyers' and accountants'
costs, agents', consultants', experts, and other professional fees and any other
duties, charges or fees, whether in connection with the constitution of, or
increase in, Partnership assets or, the sale or purchase of, or proposed sale or
purchase of, Partnership assets and which may have become or may be payable in
respect of, or prior to, or upon the occasion of, the transaction or dealing, or
attempted or proposed transaction or dealing;

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<PAGE> 21
(c) all expenses incurred in relation to the registration of
Partnership assets in the name of the General Partner or its nominee, or the
custody of the documents of title thereto;

(d) all taxes payable in respect of the acquisition of, holding of,
or dealing with investments or other assets of the Partnership;

(e) the remuneration and expenses of the Accountants and other costs
incurred in connection with the preparation of the financial statements referred
to in Section 12.2 hereof;

(f) the costs of maintaining records and books of account in
relation to the business of the Partnership referred to in Section 12.1;

(g) any interest on, and other costs and expenses with respect to,
borrowings effected pursuant to Article IX hereof;

(h) all costs and expenses incurred in relation to convening and
holding meetings of the Limited Partners pursuant to Article IX hereof;

(i) all costs and expenses of, or incidental to, the preparation of
amendments to this Agreement as referred to in Article VIII;

(j) all costs and expenses of and incidental to the preparation and
dispatch to Partners of all checks, warrants, reports, circulars, forms and
notices and any other documents necessary or desirable in connection with the
business and administration of the Partnership;

(k) all costs and expenses incurred as a result of the
termination of the Partnership and the realization of the
Partnership assets;

(l) the remuneration and expenses of legal counsel to the
Partnership and any costs and expenses of any litigation involving the
Partnership and the amount of any judgment or settlement paid in connection
therewith, excluding, however the costs and expenses of any litigation, judgment
or settlement in which the conduct of the General Partner is found to have
violated the standard of conduct set forth in Section 5.7;

(m) any other costs in connection with the organization or
administration of the Partnership or otherwise that may be authorized by this
Agreement or approved by the Consent of more than fifty percent (50%) in
Interest of the Limited Partners; and

(n) all expenses incurred in the collection of Cash Flow.

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5.7 Exculpation; Indemnification of the General Partner by the
Partnership. Neither the General Partner nor any of its Affiliates (including,
but not limited to, LMI) nor its or their officers, directors, shareholders,
partners, members, employees or agents (individually, an "Indemnitee" and
collectively, "Indemnitees") shall be liable, responsible or accountable in
damages or otherwise to the Partnership or any Limited Partner for any loss,
damage or tax liability incurred by reason of any act or omission performed or
omitted by the Indemnitee on behalf of the Partnership, or in furtherance of the
interests of the Partnership, provided that the Indemnitee committed no act of
gross negligence or willful misconduct with respect to such acts or omissions.
The Partnership, out of its assets and not out of the separate assets of the
General Partner or any Limited Partner, shall indemnify and hold harmless, to
the fullest extent permitted by law, the Indemnitee who was or is a party to or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or investigative
(including any action by or in the right of the Partnership), by reason of any
acts or omissions or alleged acts or omissions arising out of such Person's
activities as General Partner, Affiliate, officer, director, shareholder,
partner, member, employee or agent thereof, if such activities were performed
either on behalf of the Partnership or in furtherance of the interests of the
Partnership, against losses, damages and expenses for which such Person has not
otherwise been reimbursed (including attorneys' fees and charges, judgments,
fines and amounts paid in settlement) actually incurred by such Person in
connection with such action, suit or proceeding, so long as such Person
committed no act of gross negligence or willful misconduct with respect to such
acts or omissions and, with respect to any criminal action or proceeding, had no
reasonable cause to believe and did not believe his conduct was unlawful, and
provided that the satisfaction of any indemnification and any holding harmless
shall be from and limited to Partnership Assets and no Limited Partner shall
have any personal liability on account thereof. The indemnification for
attorneys' fees and charges contained herein shall include the legal costs
incurred by a party to enforce its rights under this Agreement. The General
Partner and LMI may consult with the Accountants and counsel to the Partnership
in respect of Partnership affairs and shall be fully protected and justified in
any action or inaction which is taken or omitted in good faith, in reliance upon
and in accordance with the opinion or advice of such counsel or Accountants. In
determining whether an Indemnitee acted with the requisite degree of care, the
Indemnitee shall be entitled to rely on reports and written statements of the
directors, officers and employees of the Company unless the Indemnitee to be
exculpated hereby had reason to believe that such reports or statements were not
true and complete. For the purposes of this Section 5.7, the directors, officers
and employees of the Company and its subsidiary corporations, if any, solely by
reason of such positions, shall not be deemed to be Affiliates of the General
Partner.

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<PAGE> 23
ARTICLE VI
TRANSFERABILITY OF THE GENERAL PARTNER'S INTEREST

6.1 Assignment of the General Partner's Interest. Without the prior
Consent of more than fifty percent (50%) in Interest of the Limited Partners,
the General Partner shall not after the date hereof enter into any agreement as
a result of which any Person (other than Fund G.P., LMI, Corporate Fund G.P., a
Person which is a partnership of which the General Partner, Fund G.P., Corporate
Fund G.P., LMI or the general partner of the General Partner is the general
partner, or which succeeds to the business, substantially as an entirety of the
General Partner, Fund G.P., Corporate Fund G.P., LMI or the general partner of
the General Partner or which is wholly-owned, directly or indirectly, by the
General Partner, Fund G.P., Corporate Fund G.P., LMI or the general partner of
the General Partner or which is another Affiliate of the General Partner, Fund
or LMI) shall have all or any part of the general partnership interest in the
Partnership. In connection with any assignment of all or any part of the General
Partner's general partnership interest in the Partnership, an appropriate
amendment to the Certificate shall be timely filed in accordance with the Act
and the Partnership shall not be dissolved. The Limited Partners consent to the
continuation of the business of the Partnership following any assignment of the
General Partner's Interest to a person described in the parenthetical clause of
the first sentence of this Section 6.1 and to the appointment of such Person as
a substitute General Partner of the Partnership.

6.2 Resignation or Withdrawal of the General Partner. Except in connection
with an assignment permitted by Section 6.1, without the prior Consent of more
than fifty percent (50%) in Interest of the Limited Partners, the General
Partner may not resign or withdraw from the Partnership. Except as required by
the Act no event shall be deemed to be an "event of withdrawal" pursuant to
Section 17-402 of the Act that is not expressly referred to in this Article VI.

6.3 Removal of the General Partner. The General Partner may be removed
only for Cause on not less than nine (9) months' notice from the Limited
Partners, or their representative duly appointed for the purpose of giving such
notice, with the Consent of at least ninety percent (90%) in Interest of the
Limited Partners. "Cause" means the General Partner committed an act of gross
negligence or willful misconduct.

6.4 Incapacity of the General Partner. In the event of the Incapacity of
the General Partner, the Partnership shall be dissolved, subject to the
provisions of Section 6.5.

6.5 Continuation of the Partnership.

6.5.1 In the event of the Incapacity, removal,
withdrawal or resignation of the General Partner, the Partnership

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<PAGE> 24
shall be dissolved, unless the Limited Partners shall, within ninety (90) days
after the occurrence of any such event, elect, by the Consent of all the Limited
Partners, to continue the Partnership upon the same terms and conditions as are
set forth in this Agreement, except as required by the last sentence of this
Section 6.5.1. In the event the election described in the first sentence of this
Section 6.5.1 is made, the Limited Partners unanimously shall elect a new
General Partner to serve as the General Partner of the Partnership, and such
election shall be deemed to have occurred immediately prior to the occurrence of
an event described in the first sentence of this Section 6.5.1. The newly
appointed General Partner, if it so desires to serve, shall be required to
purchase the interest of the prior General Partner for an amount equal to the
greater of the Fair Market Value, or the liquidation value, thereof, determined
by the Accountants.

6.5.2 Upon the General Partner ceasing to be the General Partner of
the Partnership as provided in this Agreement, other than in connection with an
assignment permitted by Section 6.1 above, its liability as the General Partner
shall cease as provided in Section 6.6, and the Partnership shall promptly file
an amendment to the Partnership's Certificate and otherwise take all steps
reasonably necessary under the Act to cause such cessation of liability.

6.5.3 Upon the General Partner ceasing to be the General Partner of
the Partnership as provided in this Agreement other than in connection with an
assignment permitted by Section 6.1 above, the designees of the General Partner
and its Affiliates shall tender their resignations from all directorships and
officerships held by them in the Company and its subsidiaries, if any.

6.6 Liability of a Withdrawn or Removed General Partner. Subject to the
provisions concerning exculpation and indemnification contained in Section 5.7,
a General Partner which shall become Incapacitated, withdraw, be removed or
resign from the Partnership, shall remain liable for obligations and liabilities
incurred by it as General Partner prior to the time such Incapacity, withdrawal,
removal or resignation shall have become effective, but it shall be free of any
obligation or liability incurred on account of the activities of the Partnership
from and after the time such Incapacity, withdrawal, removal or resignation
shall have become effective.

ARTICLE VII
TRANSFERABILITY OF A LIMITED PARTNER'S INTEREST

7.1 Restrictions on Transfer of Interests.

7.1.1 Notwithstanding any other provisions of this Section 7.1, no
Transfer of all or any fraction of a Limited Partner's Interest may be made
without (a) the prior written

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<PAGE> 25
Consent of the General Partner, which Consent may be withheld for any reason in
the General Partner's sole and absolute discretion, and (b) the receipt by the
General Partner not less than ten (10) days prior to the date of any proposed
transfer of a written opinion of responsible counsel (who may be counsel for the
Partnership), satisfactory in form and substance to the General Partner to the
effect that such Transfer would not result in any adverse legal or regulatory
consequences to the Partnership or any Partner thereof, including but not
limited to:

(i) a violation of the Securities Act of 1933, as
amended, or any "Blue Sky" laws or other securities or other laws or regulations
of the United States or any state of the United States or any over jurisdiction
applicable to the Partnership or the Interest to be transferred;

(ii) the loss by the Partnership of its status as a
partnership for tax purposes; or

(iii) the termination of the Partnership pursuant to
Section 708(b)(1)(B) of the Code; provided, however, that: clause (i) of the
foregoing provisions of this Section 7.1.1 shall not apply to a Transfer by a
Limited Partner to a Person which succeeds to its business substantially as an
entirety, or which, directly or indirectly, owns all the outstanding equity
securities of such Limited Partner or is a wholly-owned subsidiary of such
Limited Partner (or of the Person of which such Limited Partner, directly or
indirectly, is a wholly-owned subsidiary); provided further, however, that the
General Partner may not consent to the transfer of Interests of a Limited
Partner who has a relationship with the General Partner as described in Section
3.03(9) of Revenue Procedure 89-12 as modified, supplemented or superseded in
relevant part (a "Related Limited Partner") so as to reduce the aggregate
Interest of such Related Limited Partner (after taking into account the proposed
transfer) to less than 66% the original Interests of such Related Limited
Partner. The General Partner agrees to cooperate with any Limited Partner making
a Transfer by providing promptly such records and other factual information as
may be reasonably requested with respect to any proposed Transfer. Each Limited
Partner hereby severally agrees that it will not transfer all or any fraction of
its Interest in the Partnership except as permitted by this Agreement.

7.1.2 In no event shall all or any part of an Interest be
transferred to a minor or an incompetent except in trust or by will or intestate
succession.

7.1.3 The transferring Limited Partner agrees that it will pay all
reasonable expenses, including attorneys' fees, incurred by the Partnership in
connection with such Transfer.

7.1.4 Any Person which acquires all or any fraction of the Interest
of a Limited Partner shall be obligated to pay to

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<PAGE> 26
the Partnership the appropriate portion of any amounts thereafter becoming due
in respect of the unpaid Capital Contributions committed to be made by its
predecessor in interest and shall succeed to the appropriate part of the Capital
Account of its predecessor in interest. Each Limited Partner agrees that,
notwithstanding the Transfer of all or any fraction of its Interest, as between
it and the Partnership, it will remain liable for the unpaid Capital
Contributions as required to be made with respect to its interest prior to the
time, if any, when the purchaser, assignee or transferee of such Interest, or
fraction thereof, is admitted as a Substituted Limited Partner.

7.1.5 Notwithstanding anything herein to the contrary, in no event
may an Interest of a Limited Partner be transferred, unless such Interest
represents either original aggregate Capital Contributions to the Partnership of
at least $10,000 or such Limited Partner's entire Interest.

7.2 Assignees.

7.2.1 The Partnership shall not recognize for any purpose any
purported Transfer of all or any fraction of the Interest of a Limited Partner,
unless the provisions of Section 7.1 shall have been complied with and there
shall have been filed with the Partnership a dated notice of such Transfer, in
form satisfactory to the General Partner, executed and acknowledged by both the
seller, assignor or transferor and the purchaser, assignee or transferee, and
such notice (i) contains the agreement of the purchaser, assignee or transferee,
satisfactory to the General Partner, to be bound by all the applicable terms and
provision of this Agreement and (ii) represents that such Transfer was made in
accordance with all applicable laws and regulations.

7.2.2 Unless and until an assignee of an Interest becomes a
Substituted Limited Partner, such assignee shall not be entitled to give
Consents with respect to such Interest.

7.2.3 Subject to Section 7.1.4 any Limited Partner which shall
transfer all of its Interest shall cease to be a Limited Partner, except that,
unless and until a Substituted Limited Partner is admitted in its stead, such
assigning Limited Partner shall retain the statutory rights of the assignor of a
limited partner's interest under the Act.

7.2.4 Anything herein to the contrary notwithstanding, both the
Partnership and the General Partner shall be entitled to treat the assignor of
an Interest as the absolute owner thereof in all respects, and shall incur no
liability for distributions made in good faith to it, until such time as a
written assignment that conforms to the requirements of this Article VII has
been received by the Partnership and accepted by the General Partner.

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<PAGE> 27
7.2.5 A Person who is the assignee of all or any fraction of the
Interest of a Limited Partner as permitted hereby but does not become a
Substituted Limited Partner and who desires to make a further Transfer of such
Interest, shall be bound by all of the provisions of this Article VII to the
same extent and in the same manner as any Limited Partner desiring to make a
Transfer of its Interest.

7.3 Substituted Limited Partners.

7.3.1 No Limited Partner shall have the right to substitute a
purchaser, assignee, transferee, donee, heir, legatee, distributee or other
recipient of all or any fraction of such Limited Partner's Interest as a Limited
Partner in its place. Any such purchaser, assignee, transferee, donee, heir,
legatee, distributee or other recipient of an Interest (whether pursuant to a
voluntary or involuntary Transfer) shall be admitted to the Partnership as a
Substituted Limited Partner only (i) with the written Consent of the General
Partner which Consent may be withheld for any reason in the General Partner's
sole discretion, (ii) by satisfying the requirements of Sections 7.1 and 7.2,
(iii) upon the receipt of all necessary governmental consents, and (iv) upon an
amendment to this Agreement and the Certificate, if required, and the recording
of all amendments and other documents required to be recorded in the proper
records of each jurisdiction in which such recordation is necessary to qualify
the Partnership to conduct business or to preserve the limited liability of the
Limited Partners.

7.3.2 Each Substituted Limited Partner, as a condition to its
admission as a Limited Partner, shall execute and acknowledge such other
instruments, in form and substance satisfactory to the General Partner, as the
General Partner reasonably deems necessary or desirable to effectuate such
admission and to confirm the agreement of the Substituted Limited Partner to be
bound by all the terms and provisions of this Agreement with respect to the
Interest acquired. All reasonable expenses, including attorneys' fees, incurred
by the Partnership in this connection shall be borne by such Substituted Limited
Partner.

7.3.3 Until an assignee shall have been admitted to the Partnership
as a Substituted Limited Partner pursuant to Section 7.3.1, such assignee shall
be entitled to all of the rights of an assignee of a limited partnership
interest under the Act.

7.4 Incapacity of a Limited Partner. In the event of the Incapacity of a
Limited Partner, the Partnership shall not terminate, and the Limited Partner's
trustee in bankruptcy or other legal representative shall have only the rights
of a transferee of the right to receive Partnership distributions applicable to
the Interest of such Incapacitated Limited Partner as provided herein. Any
Transfer from such trustee in bankruptcy

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<PAGE> 28
or legal representative shall be subject to the provisions of this Agreement.

7.5 Transfers During a Fiscal Year. In the event of the Transfer of a
Partner's Interest at any time other than the end of a Fiscal Year, the
distributive share of the various items of Partnership profit, income, gain,
deduction, loss, credit and allowance computed for tax purposes shall be
allocated between the transferor and the transferee in the ratio of the number
of days in the Fiscal Year before and after the Transfer or in such other manner
as the General Partner determines to be fair under the circumstances, including,
without limitation, a closing of the books of the Partnership.

7.6 Restrictions Upon Transfer of Withdrawing Class B Partners' Interests.
Any Company Stock distributed to the Withdrawing Class B Limited Partners in
connection with the withdrawal from the Partnership by such persons shall be
deposited into escrow with the Company's secretary acting as escrow agent. The
escrow agreement shall provide that the shares held in escrow may not be sold,
assigned, pledged or otherwise encumbered or transfer prior to the time the
shares are released from escrow. The shares shall be released from escrow in
accordance with the terms of the Restricted Stock Agreement.

ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE PARTNERSHIP

8.1 Dissolution. The Partnership shall be dissolved, upon
the happening of any of the following events:

(i) the expiration of its term;

(ii) the failure of the Limited Partners to elect to continue the
Partnership as provided, and upon the occurrence of an event specified in
Section 6.5.1;

(iii) at least three (3) months prior written notice to the
Limited Partners of the election to dissolve the Partnership by the
General Partner if at any time the Fair Market Value of the Partnership
assets, less the face amount of the liabilities of the Partnership, shall
be less than ten percent (10%) of the original Capital Contributions;

(iv) the sale of or other disposition by the Partnership of all
or substantially all of the Company Stock, and any other assets of the
Partnership, unless the General Partner determines that the continued
existence of the Partnership is necessary or desirable;

(v) termination required by operation of law; or

(vi) the Consent of the General Partner and fifty percent (50%)
in Interest of the Limited Partners.

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<PAGE> 29
Dissolution of the Partnership shall be effective on the day on which the event
occurs giving rise to the dissolution, but the Partnership shall not terminate
until the Certificate has been canceled and the assets of the Partnership have
been distributed as provided in Section 8.2.

8.2 Liquidation.

8.2.1 Upon dissolution of the Partnership, the General Partner or,
if there is none, a Person selected by a majority in interest of the Limited
Partners to act as a liquidating trustee (the "Liquidating Trustee") shall wind
up the affairs of the Partnership and proceed within a reasonable period of time
to sell or otherwise liquidate the assets of the Partnership and, after paying
or making due provision by the setting up of reserves for all liabilities to
creditors of the Partnership, to distribute the assets among the Partners in
accordance with the provisions for the making of distributions set forth in
Section 8.2.2 of this Agreement. Notwithstanding the foregoing, in the event
that the General Partner or the Liquidating Trustee shall, in its absolute
discretion, determine that a sale or other disposition of part or all of the
Partnership's investments would cause undue loss to the Partners or otherwise be
impractical or imprudent, the General Partner or the Liquidating Trustee may
either defer liquidation of, and withhold from distribution for a reasonable
time, any investments or distribute part or all of such investments to the
Partners, or to a liquidating trust for their benefit, in kind as provided in
Sections 8.2.2 and 4.6 hereof.

8.2.2 If the Fair Market Value of Partnership assets to be
distributed in kind exceeds ("unrealized gain") or is less than ("unrealized
loss") the Partnership basis in such assets, to the extent not otherwise
recognized to the Partnership, such unrealized gain or unrealized loss shall be
taken into account in computing income, losses and gains for such Fiscal Year
for all purposes of crediting or charging the Capital Accounts of the Partners
pursuant to Section 4.3 and this Section as if such assets had been sold for
their Fair Market Value on the date of distribution. Thereupon, all of the
assets of the Partnership, or the proceeds therefrom, shall be distributed or
used as follows and in the following order of priority:

(i) for the payment of the debts and liabilities of the
Partnership, including, without limitation, any amounts due to the General
Partner pursuant to Section 5.6, and the expenses of liquidation;

(ii) to the setting up of any reserves which the General Partner
or the Liquidating Trustee may deem reasonably necessary for any
contingent or unforeseen liabilities or obligations of the Partnership;
and

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<PAGE> 30
(iii) to the Limited Partners and the General Partner in an amount
equal to the positive balances in their respective Capital Accounts as
determined after taking into account all Capital Account adjustments for
all of the Partnership's taxable years including the Partnership's taxable
year during which such liquidation occurs. The amount of such distribution
in kind for such purposes of this Section 8.2.2(iii) shall be equal to the
Fair Market Value of the assets so distributed.

8.2.3 When the General Partner or the Liquidating Trustee has
complied with the foregoing liquidation plan, the Partners shall execute,
acknowledge and cause to be filed, in accordance with the Act and the laws of
such jurisdictions in which the Partnership is qualified to transact business,
an instrument or instruments evidencing the cancellation of the Certificate and
termination of the Partnership.

ARTICLE IX
AMENDMENTS

9.1 Adoption of Amendments; Limitations Thereon.

9.1.1 By their execution of this Agreement, the Limited Partners
have thereby signified their approval of all Amendments to the Original
Agreement set forth in this Agreement.

9.1.2 This Agreement is subject to amendment only with the written
Consent of the General Partner and more than fifty percent (50%) in Interest of
the Limited Partners; provided, however, that no amendment to this Agreement
may:

(a) increase the Capital Contributions required to be made by any
Partner or require any Partner to make a loan to the Partnership; convert
a Limited Partner's Interest into a General Partner's Interest; modify the
limited liability of a Limited Partner; or increase the liabilities or
responsibilities of, or diminish the protections of, any Partner under
this Agreement; in each case, without the Consent of each such affected
Partner; and provided, further, that no amendment which would increase the
Capital Contributions required to be made by any Partner may be adopted
unless all of the Partners are offered the opportunity to increase their
Capital Contributions on a pro rata basis;

(b) alter the Interest of any Partner in income, gains, losses or
distributions of the Partnership or amend or modify any portion of Article
IV without the Consent of each Partner adversely affected by such
amendment or modification; provided, however, that the admission of
additional Limited Partners and General Partners shall constitute such an
alteration, amendment or modification;

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<PAGE> 31
(c) amend or modify any provision of Article VII in a manner that
would further restrict the transferability of a Limited Partner's Interest
without the Consent of all of the Limited Partners;

(d) amend any provisions hereof which require the Consent, action
or approval of a specified percentage in Interest of the Limited Partners
without the Consent of such specified percentage in Interest of the
Limited Partners;

(e) cause the Partnership to lose its status as a partnership for
federal income tax purposes; or

(f) amend this Section 9.1.1 without the Consent of all of the
Limited Partners.

9.1.3 Notwithstanding any provision hereof and in addition to any
amendments otherwise authorized hereby, this Agreement may be amended from time
to time by the General Partner (i) to add to the representations, duties or
obligations of the General Partner or surrender any right or power granted to
the General Partner herein; (ii) to cure any ambiguity or correct or supplement
any provision hereof which may be inconsistent with any other provision hereof,
or correct any printing, stenographic or clerical errors or omissions; (iii) to
withdraw one or more Limited Partners, in accordance with the terms of this
Agreement; (iv) to amend Schedule A hereto to provide any necessary information
regarding any Partner; and (v) to reflect any change in the amount of the
Capital Contribution of any Partner in accordance with the terms of this
Agreement; provided, however, that no amendment shall be adopted pursuant to
this Section 9.1.2 if (a) such amendment would alter the Interest of a Partner
in income, gains or losses or distributions or is adverse to the Interests of
the Limited Partners, or (b) such amendment would, in the opinion of counsel for
the Partnership, alter or result in the alteration of the limited liability of
the Limited Partners or the status of the Partnership as a partnership for
federal income tax purposes. The General Partner shall send each Limited Partner
a copy of any amendment adopted pursuant to this Section 9.1.2.

9.1.4 Upon the adoption of any amendment to this Agreement, the
amendment shall be executed by the General Partner and all of the Limited
Partners and shall be duly filed in the proper records of each jurisdiction in
which filing is necessary for the Partnership to conduct business or to preserve
the limited liability of the Limited Partners. Any such amendment may be
executed by the General Partner on behalf of the Limited Partners pursuant to
the power of attorney granted in Article X.

9.2 Amendment of Certificate. In the event this Agreement shall be amended
pursuant to this Article IX, the General Partner shall amend the Certificate to
reflect such change if the General Partner deems such amendment to be necessary
and shall make any

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<PAGE> 32
other filings or publications required or desirable to reflect such amendment,
including any required filing for recordation of the Certificate or other
similar document.

ARTICLE X
CONSENTS, VOTING AND MEETINGS

10.1 Method of Giving Consent. Any Consent required by
this Agreement may be given as follows:

(a) by a written Consent given by the consenting Partner at or
prior to the doing of the act or thing for which the Consent is solicited,
provided that such Consent shall not have been nullified by either (i)
notice to the General Partner by the Consenting Partner at or prior to the
time of, or the negative vote by such Consenting Partner at, any meeting
held to consider the doing of such act or thing, or (ii) notice to the
General Partner by the Consenting Partner prior to the doing of any act or
thing, the doing of which has not been made the subject of an approval at
such a meeting; or

(b) by the affirmative vote by the Consenting Partner to the
doing of the act or thing for which the Consent is solicited at any
meeting called and held to consider the doing of such act or thing.

10.2 Meetings. Any matter (regardless of whether such matter requires the
Consent of all or any of the Limited Partners pursuant to this Agreement) may be
considered at a meeting of the Limited Partners held not less than twenty-eight
(28) days after notice thereof shall have been given by the General Partner to
all Limited Partners. Such notice (i) may be given by the General Partner, in
its discretion, at any time, and (ii) shall be given by the General Partner
within thirty (30) days after receipt by the General Partner of a request for
such a meeting made by at least fifty percent (50%) in Interest of the Limited
Partners. Any such notice shall state briefly the purposes, time and place of
the meeting. All such meetings shall be held at the principal office of the
Partnership or at such other reasonable place as the General Partner shall
designate and during normal business hours.

10.3 Record Dates. The General Partner may set in advance a date for
determining the Limited Partners entitled to notice of and to vote at any
meeting. No record date shall be more than sixty (60) days nor less than ten
(10) days prior to the date of the meeting to which such record date relates.

10.4 Submissions to Limited Partners. The General Partner shall give all
of the Limited Partners entitled to vote thereon notice of any proposal or other
matter required by any provision of this Agreement or by law to be submitted for
the consideration and approval of the Limited Partners or any class thereof.
Such

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notice shall include any information required by the relevant provisions of this
Agreement or by law. Neither the General Partner nor the Partnership shall
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Certificate or any
Consent by the Limited Partners unless each Limited Partner entitled to vote
thereon shall be informed thereof by the General Partner or the Partnership, as
the case may be, and shall be afforded the opportunity of considering the same
and shall be supplied with sufficient information to enable such Limited Partner
to make an informed decision with respect thereto. Neither the General Partner
nor the Partnership shall, directly or indirectly, pay or cause to be paid any
remuneration, fee or other consideration to any Limited Partner for or as an
inducement to the entering into by such Limited Partner of any waiver or
amendment of any of the terms and provisions of this Agreement or the
Certificate or the giving of any Consent, unless such remuneration is
concurrently paid on the same terms, in proportion to their respective Limited
Partner Interests, to all the then Limited Partners entitled to vote thereon.

ARTICLE XI
POWER OF ATTORNEY

Each Partner, by its execution hereof, hereby irrevocably makes,
constitutes and appoints the General Partner as its true and lawful agent and
attorney-in-fact, with full power of substitution and full power and authority
in its name, place and stead, to make, execute, sign, acknowledge, swear to,
record, publish and file in such Partner's or such Partner's assignee's name,
place and stead: (i) any and all counterparts of this Agreement and any and all
amendments hereto to which such Partner is a signatory; (ii) the original
certificate of limited partnership of the Partnership and all amendments thereto
required or permitted by law or the provisions of this Agreement; (iii) all
certificates and other instruments deemed advisable by the General Partner to
carry out the provisions of this Agreement and any applicable law or to permit
the Partnership to become or to continue as a limited partnership or partnership
wherein the limited partners have limited liability in each jurisdiction where
the Partnership may be doing business; (iv) all instruments that the General
Partner deems appropriate to reflect a change or modification of this Agreement
including, without limitation, the admission of additional Limited Partners, the
substitution of any assignee as a Substituted Limited Partner or substituted
General Partner, and the forfeiture by Limited Partners of their interests,
pursuant to the provisions of this Agreement; (v) all conveyances and other
instruments or documents deemed advisable by the General Partner, including
without limitation, those to effect the dissolution and termination of the
Partnership; (vi) all fictitious or assumed name certificates required or
permitted to be filed on behalf of the Partnership; (vii) any changes in this
Agreement as are required or are desirable in the judgment of the General
Partner in order to comply with the laws

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<PAGE> 34
of Delaware or the Code; (viii) all insertions and/or corrections to any
documents executed by such Partner in connection with such Partner's admission
as a Limited Partner of the Partnership, including, without limitation, filling
in blank addresses, dollar amounts, schedules of Capital Contributions and
subscription agreements, if any, executed by such Partner; and (ix) all other
instruments which may be required or permitted by law to be filed, recorded or
published on behalf of the Partnership. Any person dealing with the Partnership
may presume conclusively and rely upon the fact that any instrument referred to
above is authorized, valid and binding, without further inquiry.

The foregoing power of attorney:

(a) is coupled with an interest, shall be irrevocable and shall
survive the Incapacity of the Partner in respect of which such power of
attorney may be exercised;

(b) may be exercised by the General Partner, or the officers and
directors of the general partner of the General Partner either by signing
separately as attorney-in-fact for each Partner or, after listing all of
the Partners executing an instrument, by a single signature of the General
Partner, any such officer or director acting as attorney-in-fact for all
of them; and

(c) shall survive the delivery of an assignment by a Partner of
the whole or any fraction of its Interest, except that, where the assignee
of the whole of such Partner's Interest has been approved by the General
Partner for admission to the Partnership as a Substituted Limited Partner,
the power of attorney of the assignor shall survive the delivery of such
assignment for the sole purpose of enabling the General Partner or the
officers and directors of the general partner of the General Partner to
execute, swear to, acknowledge and file any instrument necessary or
appropriate to effect such substitution.

Each Partner shall execute and deliver to the General Partner within
fifteen (15) days after receipt of the General Partner's request therefor such
further designations, powers-of-attorney and other instruments as the General
Partner reasonably deems necessary to carry out the terms of this Agreement.

ARTICLE XII
RECORDS AND ACCOUNTING; REPORTS; FISCAL AFFAIRS

12.1 Records and Accounting.

12.1.1 Proper and complete records and books of account of the
business of the Partnership, including a list of the names, addresses and
Interests of all Limited Partners, shall be maintained at the Partnership's
principal place of business. Any Partner, or its duly authorized representative,
shall be

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entitled to a copy of the list of names, addresses and Interests of the Limited
Partners, provided such information shall be used only for Partnership purposes.
Each Partner and its duly authorized representatives may visit and inspect any
of the properties of the Partnership or the offices of the General Partner,
examine their books of account, records, reports and other papers (to the extent
the same pertain to the Partnership) which are not legally required to be kept
confidential or secret, make copies and extracts therefrom, and discuss the
affairs, finances and accounts of the Partnership with the General Partner, all
at such reasonable times and as often as may be reasonably requested.

12.1.2 The books and records of the Partnership shall be kept in
accordance with the accrual basis method of accounting and in such a way as
shall permit the preparation of the financial statements referred to in Section
11.2.1. The accrual basis method of accounting shall be followed by the
Partnership for tax purposes, and the taxable year of the Partnership shall be
its Fiscal Year.

12.2 Annual Reports.

12.2.1 Within one hundred twenty (120) days after the end of each
Fiscal Year, the General Partner shall cause to be delivered to each Limited
Partner an annual report containing the following:

(a) financial statements of the Partnership, including, without
limitation, a balance sheet as of the end of the Fiscal Year and
statements of income, Partners' equity and cash flows for such Fiscal
Year; and

(b) a statement, in reasonable detail, showing the Capital
Account of such Limited Partner and computing the distributions to such
Limited Partner during such Fiscal Year.

12.2.2 No value shall ever be attributed to the firm name of the
Partnership, or the right of its use, or to the goodwill appertaining to the
Partnership or its business, either during the continuation of the Partnership
or in the event of its dissolution or termination. Liabilities shall be
determined in accordance with the method of accounting employed by the
Partnership and may include reserves for estimated accrued expenses and reserves
for unknown or untaxed liabilities or contingencies.

12.3 Tax Information. Within ninety (90) days after the end of each Fiscal
Year, the General Partner will cause to be delivered to each Person who was a
Partner at any time during such Fiscal Year a Form K-l and such other
information, if any, with respect to the Partnership as may be necessary for the
preparation of such Partner's income tax returns, including a

- 34 -
<PAGE> 36
statement showing such Partner's shares of income, gain or loss and credits for
such Fiscal Year for income tax purposes.

12.4 Partnership Funds. The funds of the Partnership may be deposited in
the name of the Partnership in one or more bank accounts in one or more banks.
Withdrawals therefrom shall be made upon such signature(s) as the General
Partner may designate. No funds of the Partnership shall be kept in any account
other than a Partnership account; funds shall not be commingled with the funds
of any other Person; and the General Partner shall not employ, or permit any
other Person to employ, such funds in any manner except for the benefit of the
Partnership.

12.5 Elections. The determination of the General Partner with respect to
the treatment of any item or its allocation for federal, state or local tax
purposes shall be binding upon all of the Partners so long as such determination
shall not be inconsistent with any express term hereof and provided that the
Accountants shall not disagree therewith.

12.6 Other Information. With reasonable promptness, the General Partner
will deliver, to the extent it may lawfully be disclosed, such other information
available to the General Partner, including financial statements and
computations, relating to the Partnership as any Limited Partner may from time
to time reasonably request.

ARTICLE XIII
REPRESENTATIONS AND WARRANTIES OF THE LIMITED PARTNERS

Each Limited Partner is fully aware that the Partnership and the General
Partner are relying upon the truth and accuracy of the following representations
by each of the Limited Partners. Each of the Limited Partners hereby represents
and warrants that:

(a) Such Limited Partner (i) if an individual, has full power
and is legally competent to enter into the Agreement, (ii) if an entity is
duly organized, validly existing and in good standing under the laws of
its state or country of organization, has full power and authority to
enter into this Agreement, and (iii) the execution of this Agreement and
the consummation of the transactions contemplated hereby will not
constitute a violation of, or a default under, or conflict with, any
conduct, commitment, agreement, understanding, arrangement or restriction
of any kind to which such Limited Partner is a party or by which such
Limited Partner is bound.

(b) The Partnership has made available to such Limited Partner
its advisors and designated representatives, if any, for a reasonable time
prior to the execution hereof the opportunity to ask questions and receive
answers concerning the terms and conditions of an investment in the
Partnership and to obtain such information and documents which the

- 35 -
<PAGE> 37
Partnership possesses or can acquire without unreasonable effort or
expense. Such Limited Partner, its advisors and designated
representatives, if any, have received all such additional information
requested. Such Limited Partner is not relying on the Partnership or the
General Partner for guidance with respect to tax and other applicable laws
of any jurisdiction or any other economic considerations.

(c) Such Limited Partner is acquiring its Interest for its own
account, for investment and not with a view to, or for resale in
connection with, the distribution thereof or with any present intention of
distributing or reselling any portion thereof.

(d) This Agreement is the valid and binding obligation of such
Limited Partner, enforceable against such Limited Partner in accordance
with its terms.

ARTICLE XIV
MISCELLANEOUS

14.1 Notices.

14.1.1 Any notice to any Limited Partner shall be given at the
address of such Partner set forth in Schedule A hereto or at such other mailing
address of which such Limited Partner shall advise the General Partner in
writing. Any notice to the Partnership or the General Partner shall be given at
the principal office of the Partnership as set forth in Section 2.4. The General
Partner may at any time change the location of such office. Notice of any such
change shall be given to the Partners on or before the date of any such change.

14.1.2 Unless otherwise provided herein, all notices required under
the terms and provisions hereof shall be in writing, either delivered by hand,
by first class mail, by overnight courier or by telex, telecopier or telegram,
including by facsimile transmission, and any such notice shall be effective when
actually given in person, if by hand, when transmitted, upon receipt of a
legible facsimile transmission, if given by telecopier, when transmitted, upon
receipt of a legible transmission, if given by telex or telegram, on the first
business day after delivery when delivered by overnight courier, or on the third
business day after the day when deposited with the United States mail, postage
prepaid.

14.2 Governing Law; Severability of Provisions. It is the intention of the
parties that the internal laws of Delaware and, in particular, the provisions of
the Act shall govern the validity of this Agreement, the construction of its
terms and interpretation of the rights and duties of the Partners. If any
portion of this Agreement shall be held to be invalid, the remainder of this
Agreement shall not be affected thereby.

- 36 -
<PAGE> 38
14.3 Entire Agreement. This Agreement constitutes the entire agreement
among the Partners; it supersedes any prior agreement or understanding among
them, oral or written other than each Limited Partner's Subscription Agreement
with respect to such Partner's Interest, which is hereby incorporated herein by
reference. There are no representations, agreements, arrangements or
understandings, oral or written between or among the Partners relating solely to
the subject matter of this Agreement which are not fully expressed herein other
than each Limited Partner's Subscription Agreement. This Agreement may not be
modified or amended other than pursuant to Article IX.

14.4 Headings, etc. The headings in this Agreement are inserted for
convenience of reference only and shall not affect the interpretation of this
Agreement. Wherever from the context it appears appropriate, each term stated in
either the singular or the plural shall include the singular and the plural, and
pronouns stated in either the masculine or the neuter gender shall include the
masculine, the feminine and the neuter.

14.5 Binding Provisions. The covenants and agreements contained herein
shall be binding upon and inure to the benefit of the heirs, executors,
administrators, personal or legal representatives, permitted successors and
assigns of the respective parties hereto.

14.6 No Waiver. The failure of any Partner to seek redress for violation,
or to insist on strict performance, of any covenant or condition of this
Agreement shall not prevent a subsequent act which would have constituted a
violation from having the effect of an original violation.

14.7 Confidentiality. Each Limited Partner will maintain the
confidentiality of non-public information regarding the Partnership, the
Company, the General Partner and any Affiliate of any of them received by such
Limited Partner pursuant to this Agreement in accordance with such procedure, as
it applies generally to information of this kind.

14.8 No Right to Partition. Except as otherwise expressly provided in this
Agreement, the Partners, on behalf of themselves and their shareholders,
partners, heirs, executors, administrators, personal or legal representatives,
successors and assigns, if any, hereby specifically renounce, waive and forfeit
all rights, whether arising under contract or statute or by operation of law, to
seek, bring or maintain any action in any court of law or equity for partition
of the Partnership or any asset of the Partnership, or any interest which is
considered to be Partnership property, regardless of the manner in which title
to any such property may be held.

14.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument,

- 37 -
<PAGE> 39
provided that each such counterpart shall be executed by the General Partner.

14.10 No Third Party Beneficiary. Nothing contained in this Agreement
shall be deemed to create any third party beneficiary status or grant any rights
to any Capital Contributions to any party who is not a Partner.

[INTENTIONALLY LEFT BLANK]

- 38 -
<PAGE> 40
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Agreement as of the date first above written.

GENERAL PARTNER:

By: Credentials II G.P., Inc.
Its General Partner

By:/s/ Thomas J. Maloney
---------------------
Name: Thomas J. Maloney
Title: President

WITHDRAWING CLASS
B LIMITED PARTNERS LIMITED PARTNER

/s/ David C. Thompson LINCOLNSHIRE EQUITY FUND, L.P.
- -----------------------
David C. Thompson
By: Lincolnshire Equity
/s/ Charles C. Caudle Partners, L.P.
- -----------------------
Charles C. Caudle Its General Partner

/s/ Vineet Pruthi By: Lincolnshire Equity,
- ----------------------- Inc.
Vineet Pruthi Its General Partner

/s/ M. Gerard Keehan
- -----------------------
M. Gerard Keehan By:/s/ Thomas J. Maloney
---------------------
Name: Thomas J. Maloney
/s/ James M. Rothe Title: Vice President
- -----------------------
James M. Rothe

/s/ Donald J. Shea, Jr.
- -----------------------
Donald J. Shea, Jr.

/s/ Michael L. Cossel
- -----------------------
Michael L. Cossel

/s/ Tonya L. Carmichael
- -------------------------
Tonya L. Carmichael

/s/ Robert E. Richardson
- --------------------------
Robert E. Richardson

/s/ Marilyn Schwartz
- --------------------------
Marilyn Schwartz

/s/ John J. Adams
- --------------------------
John J. Adams

- 39 -
<PAGE> 41
Schedule A

CAPITAL CONTRIBUTIONS AND PROFIT PERCENTAGES
OF
CSI INVESTMENT PARTNERS II, L.P.

<TABLE>
<CAPTION>
Aggregate Capital Profit
Name and Address of Partner Contribution(s) Percentage
- --------------------------- ----------------- ----------

<S> <C> <C>
Credentials II G.P. L.P. 20,000.00 1%
c/o Lincolnshire Management, Inc. (11/07/96)
780 Third Avenue
New York, NY 10017 10,000.00
(04/14/97)

Limited Partner

Lincolnshire Equity Fund, L.P. 1,980,000.00 99%
c/o Lincolnshire Management, Inc. (11/07/96)
780 Third Avenue
New York, NY 10017 990,000.00
(01/14/97)
</TABLE>

- 40 -
<PAGE> 42
Schedule B

Withdrawing Class B LIMITED PARTNERS
<TABLE>
<CAPTION>

Name Number of Shares
-------------------- ----------------

<S> <C>
David C. Thompson 1,296.75
Charles C. Caudle 39.90
Vineet Pruthi 578.55
M. Gerard Keehan 598.50
James M. Rothe 379.05
Donald J. Shea, Jr. 458.85
Michael L. Cossell 299.25
Tonya L. Carmichael 39.90
Robert E. Richardson 99.75
Marilyn Schwartz 99.75
John J. Adams 99.75
-----
TOTAL 3,990.00
</TABLE>

- 41 -

<PAGE> 1
EXHIBIT 11.1

Credentials Services International, Inc.
Computation of Earnings Per Share

<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
September 30, 1995 September 27, 1996 September 26, 1997
------------------ ------------------ ------------------
<S> <C> <C> <C>
Net (loss) income (5,783,000) (22,447,000) 1,248,000

Common shares issued(2) 21,445 21,445 21,445

Effect of exercise of common stock warrants 2,123,072 2,123,072 2,123,072

Effect of exercise of common stock warrants - Canterbury 1,038,600 1,038,600 1,038,600

Exchange of preferred shares for common stock 6,433,550 6,433,550 6,433,550

Total common shares outstanding 9,616,667 9,616,667 9,616,667
========= ========= =========

Net (loss) income per common share(1) (0.60) (2.33) 0.13
===== ===== ====
</TABLE>

(1) Net income (loss) per share has been computed in accordance with Securities
and Exchange Commission Staff Accounting Bulletin (SAB) No. 83. The SAB
requires that common shares issued by the Company in the twelve months
immediately preceding a proposed public offering plus the number of common
equivalent shares which became issuable during the same period pursuant to
the grant of warrants and stock options (using the treasury stock method)
at prices substantially less than the initial public offering price will be
included in the calculation of common stock and common stock equivalent
shares as if they were outstanding for all periods presented.

(2) All share amounts have been retroactively restated to reflect the
214.4517-for-1 stock split effective November 21, 1997.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Amendment No. 1 to Registration
Statement on Form S-1 (File No. 333-37461) of our report dated November 4, 1997
(except for Note 15 as to which the date is November 21, 1997), on our audits of
the financial statements of Credentials Services International, Inc. We also
consent to the reference to our firm under the captions "Experts," "Selected
Financial Data," and "Summary Financial Information."

/s/ COOPERS & LYBRAND L.L.P.

COOPERS & LYBRAND L.L.P.

Los Angeles, CA

November 21, 1997

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> SEP-27-1996 SEP-26-1997
<PERIOD-START> OCT-01-1995 SEP-28-1996
<PERIOD-END> SEP-27-1996 SEP-26-1997
<CASH> 1,613 413
<SECURITIES> 0 0
<RECEIVABLES> 854 2,529
<ALLOWANCES> 147 459
<INVENTORY> 0 0
<CURRENT-ASSETS> 9,096 18,796
<PP&E> 3,646 5,671
<DEPRECIATION> 381 1,092
<TOTAL-ASSETS> 27,552 41,412
<CURRENT-LIABILITIES> 32,462 41,057
<BONDS> 0 0
0 0
0 0
<COMMON> 1 96
<OTHER-SE> 3,999 7,104
<TOTAL-LIABILITY-AND-EQUITY> 27,552 41,412
<SALES> 0 0
<TOTAL-REVENUES> 24,556 38,039
<CGS> 0 0
<TOTAL-COSTS> 12,999 10,852
<OTHER-EXPENSES> 32,819 24,332
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,818 1,455
<INCOME-PRETAX> (22,447) 1,400
<INCOME-TAX> 0 61
<INCOME-CONTINUING> (22,447) 1,339
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 91
<CHANGES> 0 0
<NET-INCOME> (2.33) 1,248
<EPS-PRIMARY> (500.57) .13
<EPS-DILUTED> 0 0

</TABLE>