IMAGEMAX INC, S-1/A, 1997-11-28

IMAGEMAX INC
S-1/A, 1997-11-28
BUSINESS SERVICES, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 28, 1997

REGISTRATION NO. 333-35567
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 2 TO

FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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IMAGEMAX, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
PENNSYLVANIA 7389 23-2865585
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

TWO BALA PLAZA, SUITE 300
BALA CYNWYD, PENNSYLVANIA 19004
(610) 660-7754
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

------------------------
BRUCE M. GILLIS
CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD
IMAGEMAX, INC.
TWO BALA PLAZA, SUITE 300
BALA CYNWYD, PENNSYLVANIA 19004
(610) 660-7754
(Name, address, including zip code, and telephone
number, including area code, of agent for service)

------------------------
COPIES TO:

BARRY M. ABELSON, ESQUIRE MICHAEL M. FROY, ESQUIRE
MICHAEL P. GALLAGHER, ESQUIRE MARK L. DOSIER, ESQUIRE
PAUL T. PORRINI, ESQUIRE SONNENSCHEIN NATH & ROSENTHAL
PEPPER, HAMILTON & SCHEETZ LLP 8000 SEARS TOWER
3000 TWO LOGAN SQUARE CHICAGO, IL 60606
EIGHTEENTH AND ARCH STREETS (312) 876-8000
PHILADELPHIA, PA 19103-2799
(215) 981-4000

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 of 1933, 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 of 1933, 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. / /

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

SUBJECT TO COMPLETION, DATED NOVEMBER 28, 1997

PROSPECTUS

3,100,000 SHARES

[IMAGEMAX LOGO]

COMMON STOCK

All of the shares of Common Stock offered hereby are being sold by
ImageMax, Inc. Prior to the Offering, there has been no public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $12.00 and $14.00 per share. See "Underwriting"
for information relating to the determination of the initial public offering
price. The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "IMAG."

SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OF COMMON
STOCK OFFERED HEREBY.

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

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.

(2) Before deducting expenses payable by the Company estimated at $3,000,000.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional 465,000 shares of Common Stock solely to cover
over-allotments, if any. See "Underwriting." If all such shares are
purchased, the total Price to Public, Underwriting Discount and Proceeds to
Company will be $ , $ and $ , respectively.

The shares of Common Stock are offered by the several Underwriters, when,
as and if delivered to and accepted by them and subject to their right to reject
orders in whole or in part. It is expected that delivery of certificates for the
shares of Common Stock will be made on or about , 1997.

WILLIAM BLAIR & COMPANY JANNEY MONTGOMERY SCOTT INC.

THE DATE OF THIS PROSPECTUS IS , 1997

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

<PAGE>

[Map With Location of Company's Headquarters and Principal Branch Offices]

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

The Company intends to furnish its shareholders with annual reports
containing audited financial statements and to make available quarterly reports
containing unaudited financial statements for the first three quarters of each
year.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING STABILIZING, OVER-ALLOTMENT AND SYNDICATE COVERING TRANSACTIONS AND
THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

<PAGE>

PROSPECTUS SUMMARY

Simultaneously with and as a condition to the closing of the Offering made
by this Prospectus, the Company will acquire 14 document management service
companies or substantially all of their assets (collectively, the "Founding
Companies"), representing 11 ownership groups, in separate transactions (the
"Acquisitions") in exchange for shares of its Common Stock, the assumption of
certain indebtedness and cash. Unless otherwise indicated, all references to
"ImageMax" shall mean ImageMax, Inc. prior to the effectiveness of the
Acquisitions and references herein to the "Company" shall include the Founding
Companies.

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. Unless
otherwise indicated, all share, per share and financial information set forth
herein: (i) gives effect to a .846154-for-one split of the outstanding shares of
Common Stock prior to the consummation of the Offering; (ii) gives effect to the
Acquisitions and the conversion of all outstanding shares of Series A
Convertible Preferred Stock ("Series A Preferred Stock") into Common Stock
simultaneously with the closing of the Offering; and (iii) assumes no exercise
of the Underwriters' over-allotment option. See "The Company" and
"Underwriting."

THE COMPANY

ImageMax was founded in November 1996 to become a leading national,
single-source provider of integrated document management solutions. Prior to the
Offering, ImageMax has not conducted any operations. ImageMax has entered into
agreements to acquire the Founding Companies simultaneously with and as a
condition to the consummation of the Offering. The Founding Companies, which
have been in business an average of over 20 years, have operations in 13 states,
employ over 950 people and provided services and products to over 5,000 clients
in the last year from 18 locations. The Company's pro forma combined revenues
for the twelve-month period ended December 31, 1996 were $43.3 million. Combined
operating loss and combined net loss for the twelve-month period ended December
31, 1996 were $353,000 and $500,000, respectively, on a pro forma, as adjusted
basis. Pro forma combined revenues for the nine months ended September 30, 1997
were $36.5 million, an increase of 12.6% over the comparable 1996 period.
Including a non-recurring, non-cash special compensation charge of $2.5 million,
combined operating loss and combined net loss for the nine months ended
September 30, 1997 were $176,000 and $1.3 million, respectively, on a pro forma,
as adjusted basis.

The Company has initially targeted a broad variety of services and
products, as well as technical and vertical market expertise, in order to create
a platform from which it can become a leading national, single-source provider
for clients with intensive document management needs. The Company's services
include document management consulting and systems integration, media conversion
(consisting of digital imaging and micrographics), data indexing and offshore
data entry, information storage and retrieval, and document management systems
maintenance. The Company's products include proprietary, open-architecture
digital imaging and indexing software as well as document management systems and
supplies. The Company provides these services and products individually or in
combination to provide solutions to a wide range of clients' document management
needs. The Company's service and product offering mix is designed to take
advantage of the Company's substantial technical and systems experience in the
area of digital document management as well as product and vertical market
knowledge of the Founding Companies' managers, who have an average of 14 years
industry experience.

The Company's diversified client base operates primarily in
document-intensive industries such as health care, financial services and
engineering. Key clients include Abbott Laboratories, Novartis AG, First Union
National Bank, Nordstrom Credit, Inc., The Boeing Company, General Electric
Company, Avis Rent a Car, Inc. and Waste Management, Inc.

Based on information made publicly available by the Association for
Information and Image Management International ("AIIM"), the Company believes
that the U.S. market for document

<PAGE>

management services and products was over $6.5 billion in 1996. The Company
believes that this market has been growing at an annual rate of approximately
11% since 1994. The Company further believes that there is a substantial
unvended component of the service market not accounted for in the AIIM data
because most document management services for large organizations are currently
performed in-house. The document management industry is also highly fragmented.
The Company estimates that there are over 2,000 companies engaged in a wide
variety of business-to-business document management services and product sales
and that a substantial majority of these companies are small businesses selling
to a single geographic market, offering a limited range of services or selling
to a limited number of client market segments. The Company believes that it will
continue to benefit from key factors driving the growth of the document
management industry, including: (i) continued advances in digital technology
which have dramatically reduced the cost of imaging, storing, indexing, and
retrieving documents electronically while improving users' ability to manage
documents more efficiently; (ii) growth in document management needs of
organizations desiring to better manage information in order to improve
productivity, competitiveness and client service; and (iii) the increasing
willingness of organizations to outsource their document management services in
order to allow them to focus on their core competencies and revenue generating
activities, reduce fixed costs, benefit from the expertise and economies of
scale of outside providers and gain access to new technologies without the risk
and expense of near-term obsolescence.

The Company intends to implement its business strategy focused on the
following key elements:

o Become a single source provider of in-house or outsourced document
management solutions by further developing consultative relationships
with clients to assess their document management needs and to recommend
and provide cost-effective combinations of services and products. The
Company will customize packages of services and products for specific
vertical markets and will expand national account coverage to service
clients who seek to benefit from working with a single vendor.

o Capitalize on business integration by creating a single nation-wide brand
name, integrating the Company's information and communications systems
and consolidating the Company's planning, acquisition support and
administration under the direction of its experienced executive
management team to enable business unit management to devote increased
resources to business generation and client service. The Company intends
to establish company-wide technology centers that will focus on software
product development, enhancement of systems integration expertise and new
product development such as data warehousing services and inter/intranet
document management solutions.

o Increase sales and marketing efforts, including hiring additional
salespeople at the Founding Companies, expanding a national account sales
force, emphasizing sales training in digital document management
applications, cross-selling additional services and products,
capitalizing on the Company's present vertical market expertise and
extending successful existing marketing programs that utilize direct
marketing, telemarketing, seminar selling and internet marketing.

o Aggressively pursue acquisitions to enhance its position as a provider of
complete document management solutions by expanding geographic coverage
and market share, expanding service and product capabilities, obtaining
key human resources and technical expertise and generating critical mass
and economies of scale nationally and in regional markets. The Company
will position itself to be a preferred acquirer of other companies in the
highly fragmented document management industry as a result of the
Company's capabilities, management personnel, solutions orientation and
integration strategy. Additionally, the Company's relationships with over
100 independent document management service providers through its
software licensing and data entry service activities provide the Company
with a valuable source of potential future acquisitions.

4
<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the Company........... 3,100,000 shares

Common Stock to be Outstanding after the 5,438,727 shares(1)
Offering....................................

Use of Proceeds............................... To fund the Acquisitions and for general cor-
porate purposes, including future acquisi-
tions. See "Use of Proceeds" and "Certain
Transactions."

Nasdaq National Market Symbol................. IMAG
</TABLE>

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(1) Includes 1,184,468 shares of Common Stock to be issued in connection with
the Acquisitions (based on an assumed initial public offering price of
$13.00 per share). Excludes (i) 367,500 shares of Common Stock which will be
issuable upon the exercise of stock options to be granted in connection with
the Offering at an exercise price per share equal to the initial public
offering price, (ii) 232,500 shares of Common Stock available for future
grants under the Company's 1997 Incentive Plan and (iii) 250,000 shares
available for future issuances under the Company's Employee Stock Purchase
Plan. See "Management - Stock Incentive Plans."

See "Risk Factors" for a discussion of certain factors that should be
considered by prospective purchasers of the shares of Common Stock offered
hereby.

<PAGE>

SUMMARY PRO FORMA COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

ImageMax will acquire the Founding Companies simultaneously with and as a
condition to consummation of the Offering. For financial statement presentation
purposes, ImageMax has been identified as the "accounting acquirer." The
following table presents certain summary unaudited combined historical financial
data of ImageMax and the Founding Companies, adjusted to give effect to (i) the
consummation of the Acquisitions, (ii) certain pro forma adjustments to the
historical financial statements described below and (iii) the consummation of
the Offering and the application of the estimated net proceeds therefrom. See
"Selected Financial Data," the Unaudited Pro Forma Combined Financial
Statements, including the notes thereto, and the historical financial statements
for ImageMax and the Founding Companies, including the notes thereto, appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PRO FORMA COMBINED, AS ADJUSTED
-------------------------------------------
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -------------------------
1996 1996 1997
------------ --------- ----------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:(1)
Revenues.................................................. $ 43,256 $ 32,402 $ 36,473
Gross profit(2)........................................... 12,613 9,506 12,194
Selling, general and administrative expenses(3)........... 11,198 8,326 8,218
Executive compensation(4)................................. 610 458 458
Special compensation charge(5)............................ -- -- 2,494
Founding Companies' transaction costs(6).................. -- -- 332
Amortization of intangible assets(7)...................... 1,158 868 868
Operating loss............................................ (353) (146) (176)
Interest income (expense), net(8)......................... 37 10 (5)
Loss before income taxes.................................. (316) (136) (181)
Net loss(8)(9)............................................ $ (500) $ (314) $ (1,321)
Net loss per share........................................ $ (.10) $ (.06) $ (.26)
Shares used in computing pro forma net loss per
share(10)............................................... 4,985,956 4,985,956 4,985,956
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
---------------------------------
PRO FORMA
PRO FORMA COMBINED,
COMBINED(11) AS ADJUSTED(12)
------------ ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 2,881 $ 5,783
Working capital (deficit)................................. (26,322)(13) 8,546
Total assets.............................................. 50,924 51,839
Long-term debt, less current portion...................... 1,098 --
Shareholders' equity...................................... 10,530 44,509
</TABLE>

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(1) The pro forma combined, as adjusted, statement of operations data assume
that the Acquisitions and the Offering were consummated on January 1, 1996
and are not necessarily indicative of the results the Company would have
obtained had these events actually then occurred or of the Company's future
results.

(2) Includes a pro forma adjustment to increase cost of revenues to reflect the
Company's new operating leases on facilities at certain Founding Companies
(the "Rent Differential"). See Unaudited Pro Forma Combined Financial
Statements.
(3) Reflects a pro forma reduction in compensation to the owners of the
Founding Companies to which they have agreed prospectively (the
"Compensation Differential"). Selling, general and administrative expenses
include compensation costs associated with positions eliminated or which
will be eliminated in connection with the Acquisitions, including the
retirement of four senior Founding Companies' executives and other
identified head-count reductions totalling approximately $650,000, $500,000
and $300,000 for the year ended December 31, 1996 and the nine months ended
September 30, 1996 and 1997, respectively.

(4) Includes compensation of $610,000 annually based upon employment agreements
with the Company's executive management (see "Management - Employment
Agreements").

(5) Represents a non-recurring, non-cash special compensation charge equivalent
to $0.50 per share recorded in the nine months ended September 30, 1997.
See Note 3 to ImageMax Financial Statements.

(6) Reflects non-recurring transaction costs incurred by the Founding Companies
in connection with the Acquisitions.

(7) Represents amortization of $30.4 million of goodwill to be recorded as a
result of the Acquisitions over an estimated life of principally 30 years
and amortization of acquired developed technology of $0.8 million over an
estimated life of seven years. Excludes a charge of $4.0 million for
acquired in-process research and development and a $0.5 million
non-recurring charge related to a fee payable in the fourth quarter upon
the closing of the Offering. See "Certain Transactions" and Unaudited Pro
Forma Combined Financial Statements.

(8) Includes a pro forma adjustment to reflect the elimination of interest
expense resulting from the repayment of debt paid from the net proceeds of
the Offering. See "Use of Proceeds." If the effect of the Offering were
excluded, pro forma interest expense, net would be $866,000, $643,000 and
$611,000 for the year ended December 31, 1996 and the nine months ended
September 30, 1996 and 1997, respectively. Pro forma net loss would be
$1,049,000, $711,000 and $1,689,000 and the pro forma net loss per share
would be $0.24, $0.16 and $0.39, respectively, for the above periods. See
"Pro Forma Combined Financial Statements."

(9) Reflects an estimated corporate income tax rate of 39.3% before considering
the non-deductibility of approximately $790,000 of annual amortization of
intangible assets and the $2.5 million special compensation charge.

(10) Represents (i) 710,770 shares of Common Stock issued and outstanding at
September 30, 1997, (ii) 1,184,468 shares to be issued in the Acquisitions
(based on an assumed initial public offering price of $13.00 per share),
(iii) 443,489 shares to be issued upon the conversion of all shares of
Series A Preferred Stock outstanding at September 30, 1997 upon the
consummation of the Offering, and (iv) 2,647,229 of the 3,100,000 shares
being sold in the Offering (at an assumed initial public offering price of
$13.00 per share) necessary to pay the cash portion of the consideration
for the Acquisitions, Founding Companies' indebtedness as described in "Use
of Proceeds" and expenses of the Acquisitions and the Offering.

(11) The pro forma combined balance sheet data assume that the Acquisitions were
consummated on September 30, 1997.

(12) Adjusted for the sale of the 3,100,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $13.00 per share and
the application of the estimated net proceeds therefrom. See "Use of
Proceeds."

(13) Includes $25.4 million payable to the owners of the Founding Companies,
representing the cash portion of the consideration for the Acquisitions,
which is to be paid from the net proceeds of the Offering.

<PAGE>

SUMMARY FINANCIAL DATA FOR INDIVIDUAL FOUNDING COMPANIES
(IN THOUSANDS)

The following table presents summary statement of operations data for the
Founding Companies (see "The Company" for complete names of each Founding
Company) for the year ended December 31, 1996 and for the nine months ended
September 30, 1996 and 1997. Operating income (loss) has not been adjusted for
any pro forma adjustments or to take into account increased costs associated
with being a public company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Introduction." Adjusted pro
forma operating income (loss) includes operating income adjusted for the
Compensation Differential and the Rent Differential and excludes pro forma and
historical amortization of intangible assets, costs associated with being a
public company and the Company's executive management compensation. Adjusted pro
forma operating income (loss) includes compensation costs eliminated or which
will be eliminated in connection with the Acquisitions and non-recurring
transaction costs incurred by the Founding Companies in connection with the
Acquisitions (see Notes (3) and (5) to Summary Pro Forma Combined Financial
Data). See Unaudited Pro Forma Combined Financial Statements.

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED
ENDED SEPTEMBER 30,(2)
DECEMBER 31, ---------------------
1996(1) 1996 1997
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<S> <C> <C> <C>
AMMCORP:
Revenues.................................................. $5,573 $4,081 $4,079
Gross profit.............................................. 1,746 1,153 1,340
Operating income.......................................... 119 18 60
Adjusted pro forma operating income....................... 528 287 330
CodaLex Group:
Revenues.................................................. $4,057 $2,984 $3,756
Gross profit.............................................. 962 793 1,078
Operating income (loss)................................... (122) 99 346
Adjusted pro forma operating income (loss)................ (159) 68 342
DataLink:
Revenues.................................................. $3,151 $2,506 $2,564
Gross profit.............................................. 567 517 647
Operating income.......................................... 100 190 242
Adjusted pro forma operating income....................... 103 180 274
DocuTech:
Revenues.................................................. $2,322 $1,774 $2,169
Gross profit.............................................. 1,206 910 1,302
Operating income.......................................... 459 345 643
Adjusted pro forma operating income....................... 420 329 562
I(2) Solutions:
Revenues.................................................. $3,959 $3,137 $3,330
Gross profit.............................................. 1,550 1,272 1,471
Operating income (loss)................................... (123) 187 267
Adjusted pro forma operating income....................... 263 260 315
IMS:
Revenues.................................................. $2,292 $1,768 $1,996
Gross profit.............................................. 386 299 835
Operating income (loss)................................... (218) (196) 399
Adjusted pro forma operating income (loss)................ (227) (204) 391
IDS:
Revenues.................................................. $1,431 $ 941 $2,340
Gross profit.............................................. 399 233 874
Operating income (loss)................................... (119) (93) 212
Adjusted pro forma operating income (loss)................ (41) (27) 640
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED
ENDED SEPTEMBER 30,(2)
DECEMBER 31, ------------------
1996(1) 1996 1997
------------ ------ ------
<S> <C> <C> <C>
OMI:
Revenues.................................................. $3,666 $2,784 $3,111
Gross profit.............................................. 815 752 869
Operating income.......................................... 140 234 248
Adjusted pro forma operating income....................... 178 220 247

Spaulding:
Revenues.................................................. $8,693 $6,526 $6,705
Gross profit.............................................. 2,876 2,123 2,140
Operating income (loss)................................... (141) (270) 165
Adjusted pro forma operating income (loss)................ (322) (414) 124

TIMCO:
Revenues.................................................. $4,991 $3,609 $3,318
Gross profit.............................................. 1,639 1,165 1,159
Operating income.......................................... 416 251 315
Adjusted pro forma operating income....................... 521 338 466

TPS:
Revenues.................................................. $3,215 $2,363 $3,203
Gross profit.............................................. 846 574 776
Operating income.......................................... 94 88 116
Adjusted pro forma operating income....................... 174 143 183
</TABLE>

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(1) Consists of operating results for the year ended December 31, 1996, except
that I(2) Solutions' operating results are for the year ended October 31,
1996.
(2) Consists of operating results for the nine months ended September 30, 1996
and 1997, except that I(2) Solutions' operating results are for the nine
months ended July 31, 1996 and 1997.

<PAGE>

FOUNDING COMPANIES COMBINED RESULTS OF OPERATIONS

The combined results of operations of the Founding Companies for the
periods presented as fiscal years 1992, 1993, 1994, 1995, and 1996 and the nine
months ended September 30, 1996 and 1997 do not represent combined results of
operations presented in accordance with generally accepted accounting
principles, but are only a summation of the total revenues, cost of revenues,
and SG&A expenses (including historical intangible amortization) of the
individual Founding Companies on an historical basis. The combined results also
exclude the effect of pro forma adjustments and, therefore, may not be
indicative of the Company's post-combination results of operations for a number
of reasons, including the following: (i) the Founding Companies were not under
common control or management during the periods presented; (ii) the Founding
Companies had different fiscal year ends for the periods presented; (iii) the
Founding Companies used different tax structures ("S Corporations" or "C
Corporations") during the periods presented; (iv) the Company will incur
incremental costs related to its new corporate management and the costs of being
a public company; (v) the Company will use the purchase method of accounting to
record the Acquisitions, resulting in the recording and amortization of
goodwill; and (vi) the combined data do not reflect the Compensation
Differential, the Rent Differential or the potential benefits and cost savings
the Company expects to realize once ImageMax and the Founding Companies begin
operating as a combined entity.

The following table sets forth the combined results of operations of the
Founding Companies on an historical basis:

NINE
MONTHS ENDED
FISCAL YEAR(1) SEPTEMBER 30,(2)
----------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.............................. $34,874 $37,978 $41,037 $39,482 $46,501 $32,402 $36,473
Cost of Revenues...................... 23,203 25,197 29,574 27,647 32,167 22,611 23,982
------- ------- ------- ------- ------- ------- -------
Gross profit........................ 11,671 12,781 11,463 11,835 14,334 9,791 12,491
Selling, general and administrative
expenses............................ 10,204 11,597 11,181 11,346 12,797 8,938 9,508
------- ------- ------- ------- ------- ------- -------
Operating income.................... 1,467 1,184 282 489 1,537 853 2,983
Interest expense...................... 605 423 729 862 1,039 708 725
------- ------- ------- ------- ------- ------- -------
Income (loss) before taxes............ 862 761 (447) (373) 498 145 2,258
Pro forma provision (benefit) for
income taxes (3).................... 339 299 (176) (147) 196 57 887
------- ------- ------- ------- ------- ------- -------
Pro forma net income (loss)........... $ 523 $ 462 $ (271) $ (226) $ 302 $ 88 $ 1,371
======= ======= ======= ======= ======= ======= =======
</TABLE>

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(1) The years presented are as follows: AMMCORP -- fiscal years ended July 31,
1993, 1994, 1995, 1996 and 1997; IDS -- fiscal years ended August 31, 1993,
1994, 1995, 1996 and 1997; Laser Graphics, I2 Solutions and OMI -- fiscal
years ended October 31, 1992, 1993, 1994, 1995 and 1996; IMS -- fiscal
years ended November 30, 1992, 1993, 1994, 1995 and 1996; TIMCO, DataLink
and DocuTech -- fiscal years ended December 31, 1992, 1993, 1994, 1995 and
1996; TPS -- fiscal years ended March 31, 1993, 1994, 1995, 1996 and 1997;
CodaLex and Spaulding -- fiscal years ended June 30, 1993, 1994, 1995, 1996
and 1997.

(2) Except for I2 Solutions for which the periods presented are for the nine
months ended July 31, 1996 and 1997.

(3) Several of the Founding Companies operated as "S corporations." This
adjustment reflects a pro forma adjustment for income taxes which would have
been recorded if all of the Founding Companies were "C corporations" for the
periods presented.

ImageMax was incorporated in Pennsylvania in November 1996. The Company's
executive offices are located at Two Bala Plaza, Suite 300, Bala Cynwyd,
Pennsylvania 19004-1573, and its telephone number is (610) 660-7754.

<PAGE>

RISK FACTORS

This Prospectus contains certain forward-looking statements that involve
substantial risks and uncertainties. When used in this Prospectus, the words
"anticipate," "believe," "estimate," "expect" and similar expressions, as they
relate to the Company or its management, are intended to identify such
forward-looking statements. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Factors that could cause or contribute to
such differences include those discussed below. Prospective investors should
carefully consider such factors as well as the other information set forth in
this Prospectus in evaluating an investment in the shares of Common Stock
offered by this Prospectus.

ABSENCE OF COMBINED OPERATING HISTORY; RISKS OF INTEGRATION; MANAGEMENT OF
GROWTH

ImageMax was founded in November 1996 and has conducted no operations to
date. ImageMax has entered into agreements to acquire the Founding Companies
simultaneously with and as a condition to the closing of the Offering. Prior to
the consummation of the Offering, the Founding Companies will have been
operating as separate independent entities. Currently, the Company has no
centralized financial reporting system and will initially rely on the existing
reporting systems of the Founding Companies, which the Company intends to
integrate and enhance. The success of the Company will depend, in part, on the
Company's ability to integrate the operations of the Founding Companies,
including developing programs and processes that will promote cooperation and
the sharing of opportunities and resources among the Founding Companies.
ImageMax's executive management group has been assembled only recently and has
no previous experience in the document management services industry. There can
be no assurance that the executive management group will effectively be able to
oversee the combined entity and implement the Company's operating or growth
strategies. Further, to the extent that the Company is able to implement its
acquisition strategy, the resulting growth of the Company will place significant
demands on executive and senior management and on the Company's internal systems
and controls. There can be no assurance that the newly assembled management
group will be able to effectively manage the Company through a period of
significant growth. In addition, no assurance can be given that the Company's
current systems will be adequate for its future needs, that the Company will be
successful in implementing new systems or that the cost of any such new systems
will not be material. See "Business - Business Strategy" and "Management."

A number of the Founding Companies offer different services, utilize
different capabilities and technologies and target different geographic markets
and industries. These differences increase the risk inherent in successfully
completing such integration. Further, there can be no assurance that the
Company's strategy to become a national, single-source provider for integrated
document management solutions will be successful, or that the Company's target
industries will accept the Company as a provider of such services. In addition,
there can be no assurance that the operating results of the Company will match
or exceed the combined individual operating results achieved by the Founding
Companies prior to the Offering. Pro forma combined, as adjusted, net loss for
the twelve-month period ended December 31, 1996 was $0.5 million. Pro forma
combined, as adjusted, net loss for the nine months ended September 30, 1997 was
$1.3 million, compared to a pro forma combined, as adjusted, net loss of $0.3
million in the comparable 1996 period. The net loss in the nine months ended
September 30, 1997 includes a $2.5 million non-recurring, non-cash special
compensation charge.

RISKS OF ACQUISITIONS

The Company intends to aggressively pursue the acquisition of additional
document management services businesses in new geographic regions and in the
regions where the Company currently operates as part of its growth strategy. Due
to consolidation in the document management services industry, there is
significant competition in acquiring such businesses, and the prices for
attractive acquisition candidates may be bid up to higher levels, particularly
in cases where competitors with greater financial and other resources than the
Company compete for the same acquisition targets. The success of any completed
acquisition, including the Acquisitions, will depend in large measure on the
Company's ability to effectively integrate the operations, management and
information systems of the

<PAGE>

acquired business. The process of integrating acquired businesses often involves
unforeseen liabilities, risk exposure and difficulties and may require a
disproportionate amount of the Company's financial and other resources.
Acquisitions may involve a number of additional risks, such as adverse
short-term effects on the Company's reported operating results, diversion of
management's attention, the ability of the Company to retain key personnel and
clients, unanticipated problems or legal liabilities, and amortization of
acquired intangible assets, some or all of which could have a material adverse
effect on the Company's business, financial condition and results of operations.
There can be no assurance that the Company will be successful in identifying or
consummating favorable acquisition opportunities, or in integrating future
acquisitions, or that acquired businesses will achieve sales and profitability
that justify the Company's investment therein. Further, to the extent that the
agreements relating to acquisitions by the Company provide for indemnification
of the Company with respect to contingent and other liabilities of the acquired
entity, such indemnification obligations may be, and are in the case of the
Acquisitions, for a limited duration and subject to negotiated limitations. If
any claims or liabilities of the Company relating to the Founding Companies or
future acquisitions are determined to not be subject to any indemnification
obligations, or if the amount of such claims or liabilities exceed such
limitations or the ability of the sellers of the acquired entities to satisfy
their indemnification obligations, the Company's business, financial condition
and results of operations could be materially and adversely effected. See
"Business - Business Strategy."

NEED FOR ADDITIONAL FINANCING TO IMPLEMENT ACQUISITION STRATEGY

The Company intends to finance future acquisitions by using cash from
operations, by issuing shares of Common Stock and through borrowings under the
Company's then-existing credit facilities. The Company believes that its cash
position after the Offering, its cash flow from operations, the 2,000,000 shares
of Common Stock to be registered pursuant to a shelf registration statement and
its contemplated credit facility will be sufficient to fund acquisition activity
for at least 12 months following the Offering. However, no assurance can be
given that such financing sources will be adequate to fund such acquisition
activity, or that the Company will not need additional debt or equity financing
to successfully implement its acquisition strategy. There can be no assurance
that the Company will be able to obtain such financing if and when it is needed
or that, if available, such financing will be available on terms the Company
deems acceptable. If the Company does not have sufficient cash resources or
availability under its then existing credit facilities, or if the Common Stock
does not maintain sufficient value or potential acquisition candidates are
unwilling to accept Common Stock as part of the consideration for the sale of
their businesses, the Company will be unable to successfully implement its
acquisition strategy.

Promptly following consummation of the Offering, the Company intends to
enter into a credit facility (the "Credit Facility") to assist in the funding of
future acquisitions and operating activities. There can be no assurance as to
the terms, timing or ability of the Company to obtain such a credit facility.
The Company may substantially increase its level of indebtedness in the future
to finance its acquisition program. The degree to which the Company is
financially leveraged following such borrowings and the terms of the Company's
indebtedness could have important consequences to shareholders, including that
(i) the Company's ability to obtain additional financing in the future for
working capital and general corporate purposes, to make acquisitions, fund
capital expenditures and pay dividends may be impaired, (ii) a substantial
portion of the Company's cash flow from operations may have to be dedicated to
the payment of the principal of and interest on its indebtedness, (iii) certain
of the Company's borrowings may be at variable rates of interest, which will
expose the Company to the risk of increased interest rates, (iv) the Credit
Facility will contain certain financial and restrictive covenants which could
limit the ability of the Company to effect future debt or equity financings and
may otherwise restrict corporate activities, and (v) the Company may be more
highly leveraged than many of its competitors, which may place the Company at a
competitive disadvantage. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Pro Forma Combined Liquidity and Capital
Resources" and "Business - Business Strategy."

<PAGE>

SIGNIFICANT INTANGIBLE ASSETS

Approximately $31.2 million, or 60.3%, of the Company's pro forma combined
total assets as of September 30, 1997 represent intangible assets arising from
the Acquisitions, of which approximately $30.4 million is goodwill which will be
amortized using an estimated life of principally 30 years and approximately $0.8
million is acquired developed technology which will be amortized over a period
of seven years. Goodwill is an intangible asset that represents the difference
between the total purchase price of the Acquisitions and the amount of such
purchase price allocated to the fair value of the net assets acquired. Goodwill
and other intangibles are amortized over a period of time, with the amount
amortized in a particular period constituting a non-cash expense that reduces
the Company's net income in that period. A reduction in net income resulting
from the amortization of goodwill and other intangibles may have an adverse
impact upon the market price of the Company's Common Stock. In addition, in the
event of a sale or liquidation of the Company or its assets, there can be no
assurance that the value of such intangible assets would be recovered.

IMPORTANCE OF DEVELOPMENT OF NEW SERVICES AND MAINTENANCE OF TECHNOLOGICAL
CAPABILITIES

The announcement or introduction of competing services or products
incorporating new technologies or the emergence of new technical standards could
render some or all of the Company's services or products unmarketable. The
Company believes that its future success depends on its ability to enhance its
current services or products and develop new services or products that address
the increasingly sophisticated needs of its clients. The failure of the Company
to develop and introduce enhancements and new services in a timely and
cost-effective manner in response to changing technologies or client
requirements could have a material adverse effect on the Company's business,
financial condition or results of operations. Further, many of the Company's
current services and products are non-proprietary in nature and there can be no
assurance that the Company will be able to obtain the rights to use any such
technologies, that it will be able to effectively implement such technologies on
a cost-effective basis or that such technologies will not ultimately render
obsolete the Company's role as a third party provider of document management
services and products.

COMPETITION

The Company operates in a competitive environment. The document management
services industry is highly fragmented and has relatively low barriers to entry.
A significant source of competition is the in-house document handling capability
of businesses within the Company's target markets, the so-called "unvended" part
of the market. There can be no assurance that these businesses will outsource
more of their document management needs or that other businesses will not bring
in-house services that they currently outsource. In addition, certain of the
Company's competitors are larger businesses, many of which have greater
financial and other resources than the Company. Certain of these competitors
operate in broader geographic areas than the Company, and others may choose to
enter the Company's areas of operation in the future. In addition, there may be
no assurance that other companies with greater resources than the Company will
not enter the document management services industry in the future. Further, the
Company intends to enter new geographic areas and expects to encounter
significant competition from established competitors in each of such new areas.
As a result of this competitive environment, the Company may lose clients or
have difficulty in acquiring new clients, and its business, financial condition
and results of operations may be adversely affected. See "Business -
Competition."

RELIANCE ON MANAGEMENT AND PERSONNEL

The Company's operations and future prospects are dependent on the
performance of its executive management team, including Bruce M. Gillis, S.
David Model, James D. Brown and Andrew R. Bacas. The Company will also be
dependent on senior management of the Founding Companies and on the senior
management of businesses acquired in the future. If any of these people are
unable or unwilling to continue in their present roles, or if the Company is
unable to attract and retain other skilled employees, the Company's business,
financial condition and results of operations could be materially and adversely
affected. See "Management."

<PAGE>

The Company's future success and plans for growth also depend on its
ability to attract, train and retain personnel in all areas of its business.
There is strong competition for qualified personnel in the document management
services industry and in many of the geographic markets in which the Company
competes. As of September 1, 1997, the federal minimum wage increased to $5.15
an hour and there can be no assurance that such rate will not be substantially
increased in the future. In addition, California and other states have increased
or may increase their minimum wage above the federal minimum. Increases in the
minimum wage may cause the Company to increase wages to remain competitive.
Accordingly, the Company's business, financial condition and results of
operations may be adversely affected.

POTENTIAL LIABILITY FOR BREACH OF CONFIDENTIALITY

A substantial portion of the Company's business involves the handling of
documents containing confidential and other sensitive information. There can be
no assurance that unauthorized disclosures of such information will not result
in liability to the Company. It is possible that such liabilities could have a
material adverse effect on the Company's business, financial condition and
results of operations.

DEPENDENCE ON CERTAIN MARKETS

The Company derives its revenues primarily from its target markets,
including the health care, financial services and engineering industries.
Fundamental changes in the business practices of any of these markets, whether
due to regulatory, technological or other developments, could cause a material
reduction in demand by such clients for the services offered by the Company. Any
such reduction in demand may have a material adverse effect on the business,
financial condition and results of operations of the Company. See "Business -
Clients and Key Markets."

ENVIRONMENTAL RISKS RELATED TO CERTAIN OPERATIONS OF THE COMPANY

Certain of the Company's operations utilize chemical products which are
regulated under federal, state and local laws as hazardous substances, and
produce wastes which are regulated under these laws. The Company is not
currently aware of any environmental conditions relating to present or past
waste generation at or from these facilities that would be likely to have a
material adverse effect on the business, financial condition or results of
operations of the Company. However, there can be no assurances that
environmental liabilities will not have a material adverse effect on the
business, financial condition and results of operations of the Company. See
"Business - Environmental Matters."

EFFECT OF POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS

The Company's results of operations are subject to variations in any given
year, and from quarter to quarter. Factors that may cause material fluctuations
in quarterly results of operations include the timing and structure of
acquisitions, the timing and magnitude of costs related to such acquisitions,
the gain or loss of significant clients, increases or reductions in the scope of
services performed for significant clients, the timing or completion of
significant projects, the relative mix of higher and lower margin projects,
changes in pricing strategies, capital expenditures and other costs relating to
the expansion of operations, the hiring or loss of personnel, and other factors
that may be outside of the Company's control. In addition, because the
anticipated financial benefits of the combination of the Founding Companies may
not be generated immediately, the Company's initial results as a combined
company may reflect corporate overhead that exceeds the realized benefits. As a
result of the foregoing and other factors, the Company may experience material
fluctuations in its results of operations on a quarterly basis, which may
contribute to volatility in the price of the Common Stock. Given the possibility
of such fluctuations, the Company believes that quarterly comparisons of the
results of its operations during any fiscal year may not be meaningful and that
results for any one fiscal quarter may not be indicative of future performance.
The Company will incur non-recurring charges related to the closing of the
Acquisitions and the Offering of approximately $4.5 million in the fourth
quarter of 1997, including an estimated charge of approximately $4.0 million for
acquired in-process research

<PAGE>

and development and a $0.5 million charge related to a fee payable in the fourth
quarter upon the closing of the Offering. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

CASUALTY; RISK OF BUSINESS INTERRUPTIONS

Certain types of casualty losses that may be experienced by the Company may
not be fully insurable on a cost-effective basis. In the future, should
uninsured losses or damages occur, the Company could lose both its investment in
and anticipated profits from the affected property and may continue to be
obligated on any leasehold obligations, mortgage indebtedness or other
obligations related to such property. Any significant damage to the Company's
facilities or other event that causes significant interruptions in the Company's
operations may not be covered by insurance and could have a material adverse
effect on the Company's business, financial condition or results of operations.
See "Business - Facilities."

PUBLIC SECTOR MARKET AND CONTRACTING RISKS

Though a modest portion of the Company's present business involves public
sector contracts, the Company anticipates a growing portion of its business
coming from local, state and federal government agencies. Public sector
contracts are subject to detailed regulatory requirements and public policies,
as well as to funding priorities. Contracts with public sector customers may be
conditioned upon the continuing availability of public funds, which in turn
depends upon lengthy and complex budgetary procedures, and may be subject to
certain pricing constraints. Moreover, public sector contracts may generally be
terminated for a variety of factors, including when it is in the best interests
of the respective government. There can be no assurance that these factors or
others unique to contracts with governmental entities will not have a material
adverse effect on the Company's future business, financial condition and results
of operations.

SUBSTANTIAL INFLUENCE OF MANAGEMENT AND EXISTING SHAREHOLDERS

Based on an assumed initial public offering price of $13.00 per share, the
existing shareholders of ImageMax, the former shareholders of the Founding
Companies and the directors and other executive officers of the Company, and
entities affiliated with them, will beneficially own approximately 43% of the
then outstanding shares of Common Stock following the completion of the Offering
(39.6% if the Underwriters' over-allotment option is exercised in full) and are
likely to continue to exercise substantial control over the Company's affairs.
These shareholders acting together would likely be able to elect a sufficient
number of directors to control the Board of Directors and to approve or
disapprove most matters submitted to a vote of shareholders. See "Principal
Shareholders."

ABSENCE OF PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Common
Stock. Although application has been made to have the Common Stock approved for
quotation on the Nasdaq National Market, there can be no assurance that an
active trading market will develop upon completion of the Offering or, if it
does develop, that such market will be sustained. Accordingly, purchasers of the
Common Stock may experience difficulty selling or otherwise disposing of their
shares. The initial public offering price of the Common Stock will be determined
by negotiation among the Company and the representatives of the Underwriters and
may not be indicative of the market price of the Common Stock after the
Offering. See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. The market price for the Common
Stock following the Offering may be highly volatile. Prices for the Common Stock
will be determined by the marketplace and may be influenced by many factors,
including the depth and liquidity of the trading market, investor perception of
the Company and general economic and market conditions and trends. In addition,
factors such as the Company's financial results, quarterly variations in the
Company's financial results, changes in earnings estimates by analysts, reported
earnings that vary from such estimates, press releases by the Company or others,
and developments affecting the Company or its industry generally may have a
significant impact on the market price of the Common Stock. The stock

<PAGE>

market has, on occasion, experienced extreme price and volume fluctuations which
have often been unrelated to the operating performance of the affected
companies.

IMMEDIATE AND SUBSTANTIAL DILUTION

The purchasers of the shares of Common Stock offered hereby will experience
immediate dilution of $10.56 per share in the pro forma net tangible book value
per share of Common Stock (based upon an assumed initial public offering price
of $13.00 per share) as of September 30, 1997. See "Dilution." In the event the
Company issues additional Common Stock in the future, including shares which may
be issued in connection with future acquisitions, purchasers of Common Stock in
the Offering may experience further dilution in the net tangible book value per
share of the Common Stock of the Company. See "Shares Eligible for Future Sale."

POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON PRICE OF COMMON STOCK

Sales, or the possibility of sales, of Common Stock by the Company's
existing shareholders could adversely affect the market price of the Company's
Common Stock following the Offering. Upon consummation of the Offering (based on
an assumed initial public offering price of $13.00 per share), the Company will
have outstanding an aggregate of 5,438,727 shares of Common Stock. Of these
shares, all of the shares sold in the Offering will be freely tradeable without
restriction or further registration under the Securities Act, unless such shares
are purchased by "affiliates" of the Company as that term is defined in Rule 144
under the Securities Act of 1933, as amended (the "Securities Act").

Simultaneously with the closing of the Offering (based on an assumed
initial public offering price of $13.00 per share), the Company will issue in
the Acquisitions, in the aggregate, 1,184,468 shares of Common Stock as a
portion of the consideration for the Founding Companies. Such shares and the
1,154,259 shares of Common Stock held by existing shareholders are "restricted
securities" as that term is defined in Rule 144 under the Securities Act
("Restricted Shares"). Restricted Shares may be sold in the public market only
if registered or if they qualify for an exemption from registration under the
Securities Act. As a result of the contractual restrictions described below and
certain exemptions under the Securities Act, the Restricted Shares will be
eligible for sale in the public market as follows: (i) 765,769 shares will be
eligible for sale upon expiration of the lock-up agreements at least 180 days
after the date of this Prospectus; (ii) 388,490 shares will become eligible for
sale at various times between six months and one year from the consummation of
the Offering; and (iii) 1,184,468 shares will be eligible for sale pursuant to
the provisions of Rule 144 one year from the consummation of the Offering.
Additionally, 367,500 shares of Common Stock may be acquired upon the exercise
of outstanding stock options to be granted upon completion of the Offering to
certain directors and officers of the Company which vest over a period of three
years. The Company has reserved for future issuances an additional 232,500
shares of Common Stock under its 1997 Incentive Plan and 250,000 shares for
future issuances under its Employee Stock Purchase Plan. The Company intends to
register the shares issuable upon exercise of options granted under such plan,
and upon such registration, such shares will be eligible for resale in the
public market. Further, the Company intends to register 2,000,000 shares of
Common Stock on a shelf registration to be utilized as consideration for future
acquisitions, if any. Upon issuance, such shares generally will be eligible for
resale in the public market. The Company, the Company's directors and officers,
and certain shareholders of the Company have agreed not to offer, sell or
otherwise dispose of any shares of Common Stock or any securities exercisable
for or convertible into Common Stock for a period of 180 days after the date of
this Prospectus without the prior written consent of William Blair & Company,
L.L.C., except for the sale by the Company of shares of Common Stock in the
Offering, in the Acquisitions and in other acquisition transactions (so long as
the persons receiving such Common Stock agree to be similarly restricted for the
remainder of the 180 day lock-up period). The shareholders of Founding Companies
receiving shares of Common Stock pursuant to the Acquisitions have agreed not to
offer, sell or otherwise dispose of such shares until one year after the closing
of the Acquisitions, except for transfers to immediate family members who agree
to be bound by such restrictions. Notwithstanding the preceding, shareholders of
the Founding Companies receiving shares of Common Stock pursuant to the
Acquisitions and all current shareholders have been granted certain "piggyback"
registration rights

<PAGE>

permitting them to include their shares in certain future registration
statements filed by the Company. See "Shares Eligible for Future Sale."

POSSIBLE ANTI-TAKEOVER EFFECT OF CERTAIN ARTICLES, BYLAW AND STATUTORY
PROVISIONS

Certain provisions of the Company's Amended and Restated Articles of
Incorporation (the "Articles") and Amended and Restated Bylaws (the "Bylaws")
could delay or frustrate the removal of incumbent directors, discourage
potential acquisition proposals and proxy contests and delay, defer or prevent a
change in control of the Company, even if such events could be beneficial, in
the short term, to the interests of the shareholders. For example, the Articles
allow the Company to issue preferred stock with rights senior to those of the
Common Stock without shareholder action and provide that the Company's
shareholders may call a special meeting of shareholders only upon a request of
shareholders owning at least 50% of the Company's capital stock. The Bylaws
provide for the Board of Directors to be divided into three classes of directors
serving three-year staggered terms and that directors may be removed only for
cause. See "Description of Capital Stock."

The Articles authorize the issuance of up to 40,000,000 shares of Common
Stock and 10,000,000 shares of Preferred Stock, no par value per share (the
"Preferred Stock"). The Board of Directors will have the power to determine the
price and terms under which any such Preferred Stock may be issued and to fix
the terms thereof. The ability of the Board of Directors to issue one or more
series of Preferred Stock without shareholder approval, as well as certain
applicable statutory provisions under the Pennsylvania Business Corporation Law,
could deter or delay unsolicited changes in control of the Company by
discouraging open market purchases of the Common Stock or a non-negotiated
tender or exchange offer for such stock, which may be disadvantageous to the
Company's shareholders who may otherwise desire to participate in such
transaction and receive a premium for their shares.

The Pennsylvania Business Corporation Law of 1988, as amended (the "BCL")
contains a number of statutory "anti-takeover" provisions applicable to the
Company. One such BCL provision prohibits, subject to certain exceptions, a
"business combination" with a shareholder or group of shareholders (and certain
affiliates and associates of such shareholders) beneficially owning more than
20% of the voting power of a public corporation (an "interested shareholder")
for a five-year period following the date on which the holder became an
interested shareholder. This provision may discourage open market purchases of a
corporation's stock or a non-negotiated tender or exchange offer for such stock
and, accordingly, may be considered disadvantageous by a shareholder who would
desire to participate in any such transaction. The BCL also provides that
directors may, in discharging their duties, consider the interests of a number
of different constituencies, including shareholders, employees, suppliers,
customers, creditors and the community in which it is located. Directors are not
required to consider the interests of shareholders to a greater degree than
other constituencies' interests. The BCL expressly provides that directors do
not violate their fiduciary duties solely by relying on poison pills or the
anti-takeover provisions of the BCL.

ABSENCE OF DIVIDENDS

The Company has never declared or paid cash dividends on its Common Stock
and currently intends to retain all available funds for use in the operation and
expansion of its business. The Company does not anticipate that any cash
dividends on the Common Stock will be declared or paid in the foreseeable
future. See "Dividend Policy."

<PAGE>

THE COMPANY

The Founding Companies consist of: Utz Medical Enterprises, Inc., the
parent of American Micro-Med Corporation ("AMMCORP"); CodaLex Microfilming
Corporation ("CMC"), Imaging Information Industries, Inc. ("I(3)" and,
collectively with CMC, "CodaLex"); Laser Graphics Systems and Services, Inc.
("Laser Graphics" and, collectively with CodaLex, the "CodaLex Group"); DataLink
Corporation ("DataLink"); DocuTech, Inc. ("DTI") and DocuTech Data Systems, Inc.
("DDS") (collectively, "DocuTech"); Image & Information Solutions ("I(2)
Solutions"); Image Memory Systems, Inc. ("IMS"); International Data Services of
New York, Inc. ("IDS"); Oregon Micro-Imaging, Inc. ("OMI"); Semco Industries,
Inc. ("Spaulding"); Total Information Management Corporation ("TIMCO"); and TPS
Micrographics, Inc. ("TPS").

Upon consummation of the Acquisitions, the Company will employ over 950
people, have operations in 13 states and will have provided services to over
5,000 clients in the last year from 18 business locations. For the year ended
December 31, 1996 and the nine months ended September 30, 1997, the Company had
pro forma combined revenues of $43.3 million and $36.5 million respectively.
Combined operating loss and combined net loss for the twelve-month period ended
December 31, 1996 were $353,000 and $500,000, respectively, on a pro forma, as
adjusted basis. Including a non-recurring, non-cash special compensation charge
of $2.5 million, combined operating loss and combined net loss for the nine
months ended September 30, 1997 were $176,000 and $1.3 million, respectively, on
a pro forma, as adjusted basis.

Certain information regarding each of the Founding Companies is summarized
below:

AMMCORP (Chesterton, Indiana, near Chicago) is a provider of microfilm,
scanning and record storage and retrieval services primarily to health care
providers in the Chicago metropolitan area, northern Indiana, southern Michigan
and western Ohio. As a medical records specialist, AMMCORP offers 24-hour,
365-day physically staffed retrieval. David C. Utz, Jr. has been the Chairman
and Chief Executive Officer of AMMCORP since August 1988. Mr. Utz has served as
a Director of ImageMax since its inception in November 1996 and will enter into
a three-year employment agreement with the Company upon consummation of the
Offering.

THE CODALEX GROUP is comprised of three micrographic and digital imaging
service businesses under common control, CMC (Cayce, South Carolina near
Columbia), Laser Graphics (Cleveland, Tennessee, near Chattanooga) and I(3)
(Marietta, Georgia, near Atlanta). The CodaLex Group primarily serves the health
care and financial services markets in the southeastern U.S. and is a Kodak
imaging equipment broker-dealer in all three locations. I(3) was started in 1995
to focus on digital imaging and is a Canon dealer. David C. Yezbak has served as
President of CMC, Laser Graphics and I(3) since 1995 and as Vice President of
CodaLex from 1992 to 1995. Mr. Yezbak will enter into a three-year employment
agreement with the Company upon consummation of the Offering. Theodore J.
Solomon has served as Chairman of the Board of CMC, Laser Graphics and I(3)
since 1992. Mr. Solomon will enter into a part-time consulting agreement with
the Company upon consummation of the Offering, with an initial term of six
months.

DATALINK (Tempe, Arizona) was formed in 1984 as a
computer-output-to-microfiche ("COM") specialist serving the Phoenix
metropolitan area. DataLink has broadened its offerings to include micrographic
and digital imaging services and systems. Judith K. DeMott has been the
President of DataLink since its formation. Ms. DeMott will enter into a one-year
consulting agreement with the Company upon consummation of the Offering.

<PAGE>

DOCUTECH (Lincoln, Nebraska) includes the businesses of DTI, a micrographic
and digital imaging service business, and DDS, a provider of open-architecture
document scanning software products. DTI primarily serves the health care and
financial services markets in Nebraska. DDS markets its DocuROM(Trademark),
FileTRAX(Trademark), ScanTRAX(Trademark) and other scanning and digital image
management software nationally to both end-users and other document management
businesses including six of the Founding Companies. DDS has more than 70 other
document management businesses acting as value-added resellers of its software
products. DTI is a Canon dealer in Nebraska. Rex Lamb founded DTI in 1991 and
has served as its President since inception. Mr. Lamb co-founded DDS in 1994 and
has served as its President since inception. Upon consummation of the Offering,
Mr. Lamb will enter into a three-year employment agreement with the Company and
is expected to join the Company's Board of Directors. Mark Creglow co-founded
DDS in 1994 and has served as its Vice President since inception. Prior to
founding DDS, Mr. Creglow was Regional Sales Manager for Distribution Management
Systems, Inc. Upon consummation of the Offering, Mr. Creglow will enter into a
three-year employment agreement with the Company.

I(2) SOLUTIONS (Monroe, Louisiana) is a provider of micrographic, digital
imaging, digital data storage and graphic design services primarily to
hospitals, state and local government agencies, engineering and general
commercial clients from its Monroe facilities. I(2) Solutions also operates a
retail store at its Monroe location, which produces litigation exhibits and
architectural and engineering prints and sells engineering, drafting and related
supplies. I(2) Solutions is a Kodak dealer in Louisiana, Texas and Mississippi,
a Minolta dealer in Louisiana, Texas and Arkansas and an OCE dealer in Louisiana
and Texas and provides service and repair support to its equipment customers.
Gary D. Blackwelder joined I(2) Solutions in 1976, and became President in 1986.
Mr. Blackwelder will enter into a five-year employment agreement with the
Company upon consummation of the Offering.

IMS (Dayton, Ohio) provides micrographic and digital imaging services
specializing in large-format documents (primarily engineering drawings) to a
national client base of manufacturing businesses. IMS is a Photomatrix dealer.
Ovidio Pugnale joined IMS's predecessor in 1980 as General Manager and became
IMS's President in 1986. Mr. Pugnale will enter into a three-year employment
agreement with the Company following consummation of the Offering.

IDS (Millwood, New York, near New York City) is a provider of offshore data
entry services supporting forms processing as well as the indexing of both
microfilmed and digitally-imaged records. IDS also performs litigation support.
IDS serves end-users and document management companies nationally. Mitchell J.
Taube and Ellen Rothschild-Taube co-founded IDS in 1989, since which time Mr.
Taube has served as President and Ms. Rothschild-Taube has served as Vice
President. Mr. Taube and Ms. Rothschild-Taube (on a part-time basis) will enter
into three-year employment agreements with the Company upon consummation of the
Offering.

OMI (Eugene, Oregon) provides micrographics and digital imaging products
and services primarily to health care providers, financial institutions and
government agencies in Oregon and Washington from its Eugene facility and a
branch office in Portland, Oregon. OMI is a certified dealer of Canon
micrographic and digital imaging equipment in Oregon, and provides service and
repair support to its equipment customers. John E. Semasko acquired OMI in 1975
and has served as its President since inception. Mary Jane Semasko has served as
Vice President since OMI's inception. Mr. and Mrs. Semasko will enter into
three-year employment agreements with the Company and Mr. Semasko is expected to
join the Board of Directors upon consummation of the Offering.

SPAULDING (Stoughton, Massachusetts, near Boston) provides both
small-format and large-format document filming and digital imaging services and
equipment sales and related maintenance service to a variety of commercial,
non-profit and government clients in the New England region. Spaulding has a
branch office in Worcester, Massachusetts. Spaulding is a Minolta dealer for
micrographics and hybrid micrographic systems equipment in Maine, Massachusetts,
New Hampshire and Vermont, a Xerox dealer for large-format scanners, plotters,
and digital imaging equipment in New England and eastern New York and a Fujitsu
scanning equipment systems dealer throughout the Northeast.

<PAGE>

Spaulding also acts as a nationwide value added reseller of specialized software
and hardware for Adobe Systems Incorporated, Computervision Corporation, CDP
Communications, Inc., Cadnet Corporation and Westbrook Technologies, Inc. Carmen
DiMatteo, Spaulding's President, has been with Spaulding for 37 years and will
enter into a consulting agreement with the Company upon consummation of the
Offering for an initial term of six months.

TIMCO (Emeryville, California, near San Francisco) provides micrographics,
digital imaging and record storage and retrieval services primarily to financial
services and government clients in northern California. TIMCO maintains a branch
office in Sacramento, California. James E. Bunker co-founded TIMCO in 1980 and
has served as its Chairman since the founding. Mr. Bunker will enter into a
two-year employment agreement with the Company upon consummation of the
Offering. Jeffry P. Kalmon joined TIMCO in 1984 as a sales representative and
has served as its President since 1996. Mr. Kalmon will enter into a three-year
employment agreement with the Company upon consummation of the Offering.

TPS (Forest, Virginia, near Lynchburg) provides micrographic and digital
imaging services to general commercial, health care, financial institutions and
government entities in Virginia. TPS also sells and services Canon micrographic
and digital imaging equipment. TPS maintains a branch office in Richmond,
Virginia. Having joined TPS in 1978, David L. Crowder has served as its
President since 1990. Mr. Crowder will enter into a three-year employment
agreement with the Company upon consummation of the Offering.

The following table indicates the date each Founding Company was
established and sets forth the Founding Companies' revenues for the periods
indicated (in thousands):

<TABLE>
<CAPTION>
REVENUES
REVENUES NINE MONTHS ENDED
TWELVE MONTHS SEPTEMBER 30,
YEAR ENDED -----------------
ESTABLISHED DECEMBER 31, 1996 1996 1997
----------- ----------------- ------- -------
<S> <C> <C> <C> <C>
AMMCORP................................................ 1976 $ 5,573 $ 4,081 $ 4,079
The CodaLex Group...................................... 1972 4,057 2,984 3,756
DataLink............................................... 1984 3,151 2,506 2,564
DocuTech............................................... 1991 2,322 1,774 2,169
I(2) Solutions......................................... 1974 3,959(1) 3,137(1) 3,330(1)
IMS.................................................... 1961 2,292 1,768 1,996
IDS.................................................... 1989 1,431 941 2,340
OMI.................................................... 1975 3,666 2,784 3,111
Spaulding.............................................. 1886 8,693 6,526 6,705
TIMCO.................................................. 1980 4,991 3,609 3,318
TPS.................................................... 1975 3,215 2,363 3,203
------- ------- -------
Total combined revenues.............................. 43,350 32,473 36,571
Elimination of inter-company revenues(2)........... (94) (71) (98)
------- ------- -------
Total pro forma combined revenues.................. $43,256 $32,402 $36,473
======= ======= =======
</TABLE>

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

(1) Represents results for the twelve months ended October 31, 1996 and nine
months ended July 31, 1996 and 1997.

(2) Represents DocuTech and IDS revenues from other Founding Companies.

The aggregate consideration (excluding transaction costs) that will be paid
by the Company to acquire the Founding Companies consists of approximately $25.4
million in cash and 1,184,468 shares of Common Stock based on an assumed initial
public offering price of $13.00 per share. In addition, the Company will repay
approximately $5.5 million of indebtedness (based upon the September 30, 1997
relevant account balances) assumed by the Company in the Acquisitions,
substantially all of which is guaranteed by the respective shareholders of the
Founding Companies. See "Use of Proceeds."

<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,100,000 shares of
Common Stock offered hereby, after deducting underwriting discounts and
estimated offering expenses, are estimated to be approximately $34.5 million
($40.2 million if the Underwriters' over-allotment option is exercised in full),
assuming an initial public offering price of $13.00 per share. Of this amount,
approximately $31.4 million will be used to fund the Acquisitions, including:
(i) the $25.4 million cash portion of the purchase price for the Founding
Companies; (ii) $5.5 million of indebtedness (based upon the September 30, 1997
relevant account balances) to be assumed from the Founding Companies and repaid
by the Company; and (iii) $0.5 million to pay the transaction fees associated
with the Acquisitions.

The remaining net proceeds will be used for general corporate purposes,
which are expected to include future acquisitions. Pending such uses, the net
proceeds will be invested in short-term, interest-bearing investment grade
securities. The Company intends to enter into the Credit Facility to assist in
the funding of future acquisitions and operating activities. The Company also
may utilize Common Stock to fund future acquisitions. There can be no assurance
that the Credit Facility or the Common Stock will be sufficient to fund the
Company's needs. As of the date of this Prospectus, the Company has no
commitments or agreements with respect to any acquisitions other than of the
Founding Companies. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Pro Forma Combined Liquidity and Capital
Resources."

Of the cash portion of the purchase price, approximately $7.3 million
represents the purchase price to be paid for certain Founding Companies which
are affiliated with persons who are or will become officers, directors or 5%
shareholders of the Company. Of the indebtedness to be repaid (which was used
for working capital, equipment purchases and general corporate purposes),
approximately $3.1 million (as of September 30, 1997) is an obligation of a
Founding Company whose shareholder is a Director of the Company and
approximately $77,000 (as of September 30, 1997) is comprised of obligations of
two Founding Companies, certain shareholders of which are to be elected as
Directors of the Company upon consummation of the Offering. See "The Company"
and "Certain Transactions." The indebtedness to be repaid from the proceeds of
the Offering bears effective interest rates ranging from approximately 4% to
12%. Such indebtedness would otherwise mature at various dates through 2010. The
consideration to be paid for the Founding Companies was determined through arm's
length negotiations among ImageMax and representatives of the Founding
Companies. See "Certain Transactions."

DIVIDEND POLICY

The Company intends to retain its earnings, if any, to finance the
expansion of its business and for general corporate purposes and therefore does
not anticipate paying any cash dividends on its Common Stock in the foreseeable
future. Any payment of future dividends will be at the discretion of the Board
of Directors and will depend upon, among other things, the Company's earnings,
financial condition, capital requirements, level of indebtedness, contractual
restrictions with respect to the payment of dividends and other factors that the
Company's Board of Directors deems relevant.

<PAGE>

CAPITALIZATION

The following table sets forth the short-term debt and current maturities
of long-term obligations and capitalization at September 30, 1997 (i) of
ImageMax, (ii) on a combined basis for the Founding Companies, (iii) on a pro
forma combined basis giving effect to the conversion of all outstanding shares
of Series A Preferred Stock into an aggregate of 443,489 shares of Common Stock
and the consummation of the Acquisitions and the issuance of 1,184,468 shares of
Common Stock in connection therewith (based on an assumed initial public
offering price of $13.00 per share), and (iv) as further adjusted to reflect the
issuance and sale of the 3,100,000 shares of Common Stock offered hereby and the
application of the estimated net proceeds therefrom, based on an assumed initial
public offering price of $13.00 per share. See "Use of Proceeds." This table
should be read in conjunction with the Unaudited Pro Forma Combined Financial
Statements of the Company, including the Notes thereto, appearing elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
---------------------------------------------------------
COMBINED PRO FORMA
IMAGEMAX FOUNDING PRO FORMA COMBINED,
HISTORICAL COMPANIES COMBINED AS ADJUSTED
---------- --------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Short-term debt and current maturities of long-term $ -- $4,564 $ 4,281 $ --
obligations......................................
Pro forma cash due Founding Companies.............. -- -- 25,430 --
------ ------ ------- -------
$ -- $4,564 $29,711 $ --
====== ====== ======= =======

Long-term obligations, less current maturities..... $ -- $2,318 $ 1,098 $ --
------ ------ ------- -------
Shareholders' equity:
Preferred Stock, no par value, 10,000,000 shares
authorized; 524,125 shares issued and
outstanding, ImageMax historical; no shares
issued or outstanding, pro forma combined and
pro forma combined, as adjusted................ 2,719 60 -- --
Common Stock, no par value, 40,000,000 shares
authorized; 710,770 shares issued and
outstanding, ImageMax historical; 2,338,727
shares issued and outstanding pro forma
combined (1); and 5,438,727 shares issued and
outstanding, pro forma combined, as adjusted
(1)............................................ 1,567 1,095 17,374 51,853
Additional paid-in-capital....................... -- 1,293 -- --
Retained earnings (deficit)...................... (2,844) 3,390 (6,844) (7,344)
Treasury stock................................... -- (3,057) -- --
------ ------ ------- -------
Total shareholders' equity..................... 1,442 2,781 10,530 44,509
------ ------ ------- -------
Total capitalization......................... $1,442 $5,099 $11,628 $44,509
====== ====== ======= =======
</TABLE>

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

(1) Includes 1,184,468 shares of Common Stock to be issued in connection with
the Acquisitions (based on an assumed initial public offering price of
$13.00 per share). Excludes (i) 367,500 shares of Common Stock which will be
issuable upon the exercise of stock options to be granted in connection with
the Offering at an exercise price per share equal to the initial public
offering price, (ii) 232,500 shares of Common Stock available for future
grants under the Company's 1997 Incentive Plan, and (iii) 250,000 shares
available for future issuances under the Company's Employee Stock Purchase
Plan. See "Management - Stock Incentive Plans."

<PAGE>

DILUTION

The deficit in pro forma combined net tangible book value of the Company at
September 30, 1997 was $20.7 million or $8.86 per share of Common Stock. The
deficit in pro forma combined net tangible book value per share represents the
amount by which the Company's pro forma combined total liabilities exceeds the
Company's pro forma combined tangible assets, divided by the number of shares of
Common Stock to be outstanding after giving effect to the Acquisitions. After
giving effect to the sale of 3,100,000 shares of Common Stock in the Offering
and the deduction of the underwriting discounts and commissions and estimated
expenses associated with the Offering, the pro forma combined net tangible book
value of the Company at September 30, 1997 would have been approximately $13.3
million or $2.44 per share. This represents an immediate increase in pro forma
combined net tangible book value of $11.30 per share to existing shareholders
and an immediate dilution of $10.56 per share to purchasers of Common Stock in
the Offering. The following table illustrates this pro forma dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $13.00
Pro forma combined deficit in net tangible book value
per share before the Offering........................ $ (8.86)
Increase in pro forma combined net tangible book value
per share attributable to new investors.............. 11.30
-------
Pro forma combined net tangible book value per share after
the Offering.............................................. 2.44
------
Dilution per share to new investors......................... $10.56
======
</TABLE>

The following table sets forth, on a pro forma combined basis to give
effect to the Acquisitions, the number of shares of Common Stock purchased from
the Company, the total consideration paid and the average price per share paid
by existing and Founding Companies' shareholders and the new investors
purchasing shares of Common Stock from the Company in the Offering, before
deducting underwriting discounts and commissions and estimated expenses
associated with the Offering and the Acquisitions:

<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION AVERAGE
------------------------ ------------------------ PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders...................... 1,154,259 21.2% $ 1,791,500 3.3% $ 1.55
Founding Companies' shareholders(1)........ 1,184,468 21.8 13,088,371 23.7 11.05
----------- ----- ----------- ------
2,338,727 43.0 14,879,871 27.0 6.36
New investors.............................. 3,100,000 57.0 40,300,000 73.0 13.00
----------- ----- ----------- ------
Total.................................. 5,438,727 100.0% $55,179,871 100.0% 10.15
=========== ===== =========== ======
</TABLE>

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

(1) Represents the number of shares of Common Stock and the related fair value
of such shares to be issued in connection with the Acquisitions (based on an
assumed initial public offering price of $13.00 per share).

<PAGE>

SELECTED FINANCIAL DATA

IMAGEMAX HISTORICAL AND PRO FORMA COMBINED

ImageMax will acquire the Founding Companies simultaneously with and as a
condition to the consummation of the Offering. For financial statement
presentation purposes, ImageMax has been identified as the "accounting
acquiror." ImageMax was formed in November 1996 and its operating activity
through September 30, 1997 has been limited principally to negotiating the
agreements to acquire the Founding Companies. ImageMax's historical statement of
operations data include a net loss of $23,134 and $2.8 million for the period
from inception (November 1996) to December 31, 1996 and for the nine months
ended September 30, 1997, respectively. The loss for the nine months ended
September 30, 1997 consists of a $2.5 million non-recurring, non-cash
compensation charge and general and administrative expenses. ImageMax's
statement of operations data discussed above and the historical September 30,
1997 balance sheet data presented below have been derived from the financial
statements of ImageMax appearing elsewhere in this Prospectus. The selected
unaudited pro forma combined financial data present data for the Company,
adjusted for (i) the effect of the Acquisitions, (ii) the effects of certain pro
forma adjustments to the historical financial statements described below and
(iii) the consummation of the Offering and the application of the net proceeds
therefrom. See the Unaudited Pro Forma Combined Financial Statements, including
the Notes thereto, and the historical Financial Statements of ImageMax and the
Founding Companies, including the Notes thereto, appearing elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
PRO FORMA COMBINED(1) PRO FORMA COMBINED, AS ADJUSTED(1)
------------------------------------ ------------------------------------
YEAR NINE MONTHS ENDED YEAR NINE MONTHS ENDED
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
DECEMBER 31, --------------------- DECEMBER 31, ---------------------
1996 1996 1997 1996 1996 1997
------------ --------- --------- ------------ --------- ---------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:(1)
Revenues:
Services............................... $ 31,553 $ 22,938 $ 27,172 $ 31,553 $ 22,938 $ 27,172
Products............................... 11,703 9,464 9,301 11,703 9,464 9,301
--------- --------- --------- --------- --------- ---------
43,256 32,402 36,473 43,256 32,402 36,473
--------- --------- --------- --------- --------- ---------
Cost of revenues:(2)
Services............................... 20,267 14,946 17,090 20,267 14,946 17,090
Products............................... 8,968 6,889 6,160 8,968 6,889 6,160
Depreciation........................... 1,408 1,061 1,029 1,408 1,061 1,029
--------- --------- --------- --------- --------- ---------
30,643 22,896 24,279 30,643 22,896 24,279
--------- --------- --------- --------- --------- ---------
Gross profit......................... 12,613 9,506 12,194 12,613 9,506 12,194
Selling, general, and administrative
expenses(3)............................ 11,198 8,326 8,218 11,198 8,326 8,218
Executive compensation(4)................ 610 458 458 610 458 458
Special compensation charge(5)........... -- -- 2,494 -- -- 2,494
Founding Companies' transaction
costs(6)............................... -- -- 332 -- -- 332
Amortization of intangible assets(7)..... 1,158 868 868 1,158 868 868
--------- --------- --------- --------- --------- ---------
Operating loss......................... (353) (146) (176) (353) (146) (176)
Interest income (expense), net(8)........ (866) (643) (611) 37 10 (5)
--------- --------- --------- --------- --------- ---------
Loss before income taxes............... (1,219) (789) (787) (316) (136) (181)
Income tax provision (benefit)(9)........ (170) (78) 902 184 178 1,140
--------- --------- --------- --------- --------- ---------
Net loss(8).............................. $ (1,049) $ (711) $ (1,689) $ (500) $ (314) $ (1,321)
========= ========= ========= ========= ========= =========
Pro forma net loss per share............. $ (.24) $ (.16) $ (.39) $ (.10) $ (.06) $ (.26)
========= ========= ========= ========= ========= =========
Shares used in computing pro forma net
loss per share(10)..................... 4,333,342 4,333,342 4,333,342 4,985,956 4,985,956 4,985,956
========= ========= ========= ========= ========= =========
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-------------------------------------------------
PRO FORMA
IMAGEMAX PRO FORMA COMBINED,
HISTORICAL COMBINED(11) AS ADJUSTED(12)
---------- ------------ ---------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $1,362 $ 2,881 $ 5,783
Working capital (deficit)................................. (550) (26,322)(13) 8,546
Total assets.............................................. 3,354 50,924 51,839
Long-term debt, less current portion...................... -- 1,098 --
Shareholders' equity...................................... 1,442 10,530 44,509
</TABLE>

<PAGE>

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

(1) The pro forma combined statement of operations data assume that the
Acquisitions were consummated on January 1, 1996. The pro forma combined,
as adjusted, statements of operations assume that the Acquisitions and the
Offering were consummated on January 1, 1996. Such data are not necessarily
indicative of the results the Company would have obtained had these events
actually then occurred or of the Company's future results.

(2) Includes the Rent Differential. See Unaudited Pro Forma Combined Financial
Statements.

(3) Includes the Compensation Differential. Selling, general and administrative
expenses include compensation costs associated with positions eliminated or
which will be eliminated in connection with the Acquisitions, including the
retirement of four senior Founding Companies' executives and other
identified head-count reductions totalling approximately $650,000, $500,000
and $300,000 for the year ended December 31, 1996 and the nine months ended
September 30, 1996 and 1997, respectively.

(4) Includes compensation of $610,000 annually based upon employment agreements
with the Company's executive management (see "Management - Employment
Agreements").

(5) Represents a non-recurring, non-cash special compensation charge equivalent
to $0.50 per share recorded in the nine months ended September 30, 1997.
See Note 3 to ImageMax Financial Statements.

(6) Reflects non-recurring transaction costs incurred by the Founding Companies
in connection with the Acquisitions.

(7) Represents amortization of $30.4 million of goodwill to be recorded as a
result of the Acquisitions over an estimated life of principally 30 years
and amortization of acquired developed technology of $0.8 million over an
estimated life of seven years. Excludes a charge of $4.0 million for
acquired in-process research and development and a $0.5 million charge
related to a fee payable in the fourth quarter upon the closing of the
Offering. See "Certain Transactions" and Unaudited Pro Forma Combined
Financial Statements.

(8) Pro forma combined, as adjusted, operating results include adjustments to
reflect the elimination of interest expense resulting from the repayment of
debt paid from the net proceeds of the Offering. See "Use of Proceeds."

(10) Represents (i) 710,770 shares of Common Stock issued and outstanding at
September 30, 1997, (ii) 1,184,468 shares to be issued in the Acquisitions
(based on an assumed initial public offering price of $13.00 per share),
(iii) 443,489 shares to be issued upon the conversion of all outstanding
shares of Series A Preferred Stock outstanding at September 30, 1997 upon
the consummation of the Offering, and (iv) 2,647,229 of the 3,100,000
shares being sold in the Offering (at an assumed initial public offering
price of $13.00 per share) necessary to pay the cash portion of the
consideration for the Acquisitions, Founding Companies' indebtedness as
described in "Use of Proceeds" and expenses of the Acquisitions and the
Offering.

(11) The pro forma combined balance sheet data assume that the Acquisitions were
consummated on September 30, 1997.

<PAGE>

FOUNDING COMPANIES COMBINED

The following table sets forth the combined results of operations of the
Founding Companies on an historical basis:

<TABLE>
<CAPTION>
NINE
MONTHS ENDED
FISCAL YEAR(1) SEPTEMBER 30,(2)
----------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.............................. $34,874 $37,978 $41,037 $39,482 $46,501 $32,402 $36,473
Cost of revenues...................... 23,203 25,197 29,574 27,647 32,167 22,611 23,982
------- ------- ------- ------- ------- ------- -------
Gross profit........................ 11,671 12,781 11,463 11,835 14,334 9,791 12,491
Selling, general and administrative
expenses............................ 10,204 11,597 11,181 11,346 12,797 8,938 9,508
------- ------- ------- ------- ------- ------- -------
Operating income.................... 1,467 1,184 282 489 1,537 853 2,983
Interest expense, net................. 605 423 729 862 1,039 708 725
------- ------- ------- ------- ------- ------- -------
Income (loss) before taxes............ 862 761 (447) (373) 498 145 2,258
Pro forma provision (benefit) for
income taxes (3).................... 339 299 (176) (147) 196 57 887
------- ------- ------- ------- ------- ------- -------
Pro forma net income (loss)........... $ 523 $ 462 $ (271) $ (226) $ 302 $ 88 $ 1,371
======= ======= ======= ======= ======= ======= =======
</TABLE>

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

(1) The years presented are as follows: AMMCORP -- fiscal years ended July 31,
1993, 1994, 1995, 1996 and 1997; IDS -- fiscal years ended August 31, 1993,
1994, 1995, 1996 and 1997; Laser Graphics, I2 Solutions and OMI -- fiscal
years ended October 31, 1992, 1993, 1994, 1995 and 1996; IMS -- fiscal years
ended November 30, 1992, 1993, 1994, 1995 and 1996; TIMCO, DataLink and
DocuTech -- fiscal years ended December 31, 1992, 1993, 1994, 1995 and 1996;
TPS -- fiscal years ended March 31, 1993, 1994, 1995, 1996 and 1997; CodaLex
and Spaulding -- fiscal years ended June 30, 1993, 1994, 1995, 1996 and
1997.

(2) Except for I2 Solutions for which the periods presented are for the nine
months ended July 31, 1996 and 1997.

(3) As discussed above, several of the Founding Companies operated as "S
Corporations". This adjustment reflects a pro forma adjustment for income
taxes which would have been recorded if all of the Founding Companies were
"C Corporations" for the periods presented.

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with "Selected
Financial Data" and the financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. This and other sections of this
Prospectus contain certain forward-looking statements that involve substantial
risks and uncertainties. When used, the words "anticipate," "believe,"
"estimate," "expect," and similar expressions as they relate to the Company or
its management are intended to identify such forward-looking statements. The
Company's actual results, performance or achievements could differ materially
from the results expressed in, or implied by, these forward-looking statements.
Factors that could cause or contribute to such differences include those
discussed in "Risk Factors."

INTRODUCTION

ImageMax was founded in November 1996 to become a leading, national
single-source provider of integrated document management solutions. Prior to the
Offering, ImageMax has not conducted any operations. ImageMax has entered into
agreements to acquire the Founding Companies, simultaneously with and as a
condition to consummation of the Offering. The Founding Companies have been in
business an average of over 20 years, have operations in 13 states, employ over
950 people and in the last year provided services to over 5,000 clients from 18
locations. The Company's net revenues will be derived from a broad range of
media conversion, storage and retrieval services, the sale of proprietary,
open-architecture software products which support digital imaging and indexing
services and the sale and service of a variety of document management equipment.

The Founding Companies have been managed throughout the periods presented
as independent private companies, and their results of operations reflect
different tax structures (S corporations and C corporations) which have
influenced, among other things, their historical levels of owners' compensation.
In connection with the organization of the Company, these owners and certain key
employees have agreed to certain reductions in their compensation commencing on
the consummation of the Offering.

ImageMax, which has conducted no operations to date other than in
connection with the Acquisitions and the financing activities related thereto,
including the Offering, intends to integrate the Founding Companies and their
operations and administrative functions over a period of time. This integration
process may present opportunities to reduce costs through the elimination of
duplicative functions and through economies of scale, but will also necessitate
additional costs and expenditures for corporate management and administration
(including costs related to the hiring of additional management personnel),
corporate expenses related to being a public company, systems integration and
facilities expansion. These various costs and possible cost-savings may make
comparison of historical operating results not comparable to, or indicative of,
future performance.

The Company's revenues consist of service revenues which are generally
recognized as the related services are rendered, and product revenues which are
recognized when the products are shipped to clients. Service revenues are
primarily derived from media conversion, storage and retrieval, imaging and
indexing of documents, and the service of products sold. Product revenues are
derived from equipment sales and software sales and support. Cost of revenues
consists principally of the costs of products sold and wages and related
benefits, supplies, facilities and equipment expenses associated with providing
the Company's services. Selling, general and administrative ("SG&A") expenses
include salaries and related benefits associated with the Company's executive
and senior management, marketing and selling activities (principally salaries
and related costs), and financial and other administrative expenses. The pro
forma combined statement of operations data reflect the Compensation
Differential and the Rent Differential. Operating expenses in the pro forma
combined statement of operations include compensation costs and other costs at
the Founding Companies which have been eliminated or which will be eliminated in
connection with the Acquisitions, including the retirement of four senior
Founding Company executives and other identified head-count reductions totalling
approximately $0.5 million and $0.3 million for the nine months ended September
30, 1996

26
<PAGE>

and 1997, respectively. The pro forma combined statement of operations for the
nine months ended September 30, 1997 also includes $0.3 million of non-recurring
transaction costs incurred by the Founding Companies. In addition, the pro forma
combined statements of operations include compensation of $610,000 annually
based upon employment agreements with the Company's executive management (see
"Management - Employment Agreements"). The pro forma results include the
non-recurring, non-cash compensation charge of $2.5 million in the nine months
ended September 30, 1997. See Unaudited Pro Forma Combined Financial Statements.

In July 1996, the Securities and Exchange Commission (the "Commission")
issued Staff Accounting Bulletin No. 97 ("SAB 97") relating to business
combinations immediately prior to an initial public offering. SAB 97 requires
that these combinations be accounted for using the purchase method of
acquisition accounting. Under the purchase method, one of the companies must be
designated as the accounting acquirer. In this transaction, ImageMax has been
identified as the accounting acquirer. Accordingly, the sum of $30.4 million
will be recorded as "goodwill" on the Company's balance sheet. Goodwill will be
amortized as a non-cash charge to the income statement principally over a
30-year period. The annual pro forma impact of this amortization expense is $1.2
million, of which $0.8 million is non-deductible for tax purposes. Accordingly,
the Company will have an effective tax rate higher than the statutory rate.
Prior to the issuance of SAB 97, goodwill and related amortization expense were
not required to be recorded for most business combinations similar to the
Acquisitions. See "Certain Transactions - Acquisition Transactions."

Upon consummation of the Acquisitions, the Company will incur a one-time
charge in the fourth quarter of 1997 against income of $4.5 million, consisting
of a $4.0 million charge for acquired in-process research and development
relating to certain software products acquired from DDS and a $0.5 million
non-recurring charge related to a fee payable in the fourth quarter. See
"Certain Transactions - Acquisitions Transactions."

IMAGEMAX RESULTS OF OPERATIONS

Nine Months Ended September 30, 1997

Selling, General and Administrative Expenses. SG&A expenses amounted to
approximately 0.3 million for the nine months ended September 30, 1997. These
expenses consist primarily of management fees paid to GBL Capital Corporation
("GBL") pursuant to a management agreement and administrative expenses.

Special Compensation Charge. In 1997, the Company sold a total of 314,135
shares of Common Stock (including Common Stock issuable upon conversion of
Series A Preferred Stock sold) to officers and directors of ImageMax and to
certain management of the Founding Companies, at prices of $1.18, $2.36 and
$4.73 per share. As a result, the Company recorded a non-recurring, non-cash
compensation charge of approximately $2.5 million, representing the difference
between the amount paid for the shares and the estimated deemed value for
accounting purposes (based on an assumed initial public offering price of $13.00
per share).

From Inception to December 31, 1996

Selling, General and Administrative Expenses. SG&A expenses amounted to
$23,000 in the period from inception of ImageMax (November 12, 1996) to December
31, 1996. These expenses consist primarily of management fees paid to GBL and
administrative expenses.

ImageMax Liquidity and Capital Resources

From November 12, 1996 through September 30, 1997, ImageMax had negative
operating cash flows amounting to $88,000. Cash provided from financing
activities amounted to $1.7 million raised from private equity financings. At
September 30, 1997, ImageMax had a working capital deficit of $0.5 million and
cash and cash equivalents of $1.4 million. See "Use of Proceeds."

27
<PAGE>

PRO FORMA COMBINED, AS ADJUSTED RESULTS

Nine Months Ended September 30, 1997 Compared to the Nine Months Ended September
30, 1996

The following table sets forth the pro forma combined, as adjusted results
of operations for the nine months ended September 30, 1996 and September 30,
1997 and such results as a percentage of total revenues (dollars in thousands):

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------
1996 1997
------------------- -------------------
<S> <C> <C> <C> <C>
Revenues
Services.................................................. $22,938 70.8% $27,172 74.5%
Products.................................................. 9,464 29.2 9,301 25.5
------- ----- ------- -----
32,402 100.0 36,473 100.0
------- ----- ------- -----
Cost of revenues
Services.................................................. 14,946 46.2 17,090 46.9
Products.................................................. 6,889 21.3 6,160 16.9
Depreciation.............................................. 1,061 3.2 1,029 2.8
------- ----- ------- -----
22,896 70.7 24,279 66.6
------- ----- ------- -----
Gross profit.............................................. 9,506 29.3 12,194 33.4

Selling, general and administrative expenses................ 8,326 25.7 8,218 22.5
Executive compensation...................................... 458 1.4 458 1.3
Special compensation charge................................. -- -- 2,494 6.9
Founding Companies' transaction costs....................... -- -- 332 0.9
Amortization of intangibles................................. 868 2.7 868 2.3
------- ----- ------- -----
Operating loss............................................ (146) (0.5) (176) (0.5)
Interest expense............................................ 64 0.1 75 0.2
Interest income............................................. (74) (0.2) (70) (0.2)
------- ----- ------- -----
Loss before income taxes.................................. (136) (0.4) (181) (0.5)
Income tax provision........................................ 178 0.6 1,140 3.1
------- ----- ------- -----
Net loss.................................................... $ (314) (1.0)% $(1,321) (3.6)%
======= ===== ======= =====
</TABLE>

Revenues

Total Revenues. Total revenues increased approximately $4.1 million or
12.6% from approximately $32.4 million in the nine months ended September 30,
1996 to approximately $36.5 million in the nine months ended September 30, 1997.
Service revenues increased 18.5% and comprised 74.5% of total revenues in the
nine months ended September 30, 1997. Product revenues decreased 1.7% and
comprised 25.5% of total revenues in the nine months ended September 30, 1997.

Service Revenues. Service revenues increased approximately $4.2 million
from approximately $22.9 million in the nine months ended September 30, 1996 to
approximately $27.2 million in the nine months ended September 30, 1997. This
increase was largely due to: (i) an increase in the CodaLex Group revenues of
approximately $1.2 million primarily attributable to utilization of increased
conversion service capacity in the CodaLex facility in Columbia, South Carolina;
(ii) an increase in IDS revenues of approximately $1.4 million attributable to
additions made to the sales force and to new major offshore data entry projects;
(iii) an increase in TPS revenues of $0.8 million primarily attributable to the
addition of several major recurring micrographics and digital accounts; and (iv)
an increase in IMS revenues of approximately $0.4 million from a variety of
projects reflecting the development of an in-house sales function established in
1996.

Product Revenues. Product revenues decreased approximately $0.2 million
from approximately $9.5 million in the nine months ended September 30, 1996 to
$9.3 million in the nine months ended September 30, 1997. This decrease was
primarily due to: (i) a decrease in product revenues of $0.2 million at IMS and
$0.4 million at the CodaLex Group which, in each case, reflects a shift in sales

28
<PAGE>

emphasis to service revenues; and (ii) a decrease in product revenues of
approximately $0.2 million at Spaulding. Such decrease was partially offset by
an increase in OMI product revenues of approximately $0.3 million and an
increase in DocuTech revenues of approximately $0.4 million attributable to
higher digital imaging software sales to other document management companies and
end-users. In each such case, fluctuations in product revenues were primarily a
result of fluctuations in unit volumes. The software sales increase at DocuTech
represents a 63.4% gain over its revenues from software sales in the nine months
ended September 30, 1996.

Cost of Revenues

Cost of Services. Cost of services increased approximately $2.1 million or
14.3% from approximately $14.9 million in the nine months ended September 30,
1996 to approximately $17.1 million in the nine months ended September 30, 1997.
Cost of services as a percentage of service revenues was 65.2% in the nine
months ended September 30, 1996 and 62.9% in the nine months ended September 30,
1997. Cost of services decreased as a percentage of service revenues primarily
because: (i) IMS's percentage declined from 83.5% to 56.1% due to economies of
scale and improved conversion methods; (ii) IDS's percentage declined from 78.2%
to 63.1% due to higher revenues and largely fixed project management costs; and
(iii) DataLink's percentage declined from 69.0% to 66.1% due to greater
conversion efficiencies obtained in a new facility and an increased sales mix to
higher margin digital imaging services. The percentage declines were partially
offset by an increased cost of services as a percentage of service revenues at
Spaulding from 62.1% to 66.6% due to an unfavorable shift in mix. Included in
the nine month periods ended September 30, 1996 and 1997 are approximately
$84,000 and $62,000, respectively, of compensation costs associated with
positions at Spaulding that will be eliminated in connection with that
Acquisition.

Cost of Products. Cost of products decreased approximately $0.7 million,
from approximately $6.9 million in the nine months ended September 30, 1996, to
approximately $6.2 million in the nine months ended September 30, 1997. Cost of
products as a percentage of product revenues was 72.8% in the nine months ended
September 30, 1996 and 66.2% in the nine months ended September 30, 1997. Cost
of products decreased as a percentage of product revenues primarily because: (i)
Spaulding's percentage decreased from 71.8% to 67.5% as a result of higher
product sales; and (ii) DocuTech's percentage decreased from 50.7% to 34.2%
primarily due to a favorable shift in mix within software sales and to the low
incremental cost of additional software sales spread over an increased revenue
base.

Depreciation. Depreciation was approximately $1.1 million in the nine
months ended September 30, 1996 and $1.0 million in the nine months ended
September 30, 1997.

Gross Profit

As a result of the higher revenues and declining service and product cost
as a percentage of revenues described above, gross profit increased
approximately $2.7 million, or 28.3%, from approximately $9.5 million in the
nine months ended September 30, 1996 to approximately $12.2 million in the nine
months ended September 30, 1997. As a percentage of revenues, gross profit
increased from 29.3% in the nine months ended September 30, 1996 to 33.4% in the
nine months ended September 30, 1997. Gross profit reflects pro forma
adjustments which increased cost of revenues by $0.2 million for the nine month
periods ended September 30, 1996 and September 30, 1997. These pro forma
adjustments relate principally to the Rent Differential.

Selling, General and Administrative Expenses, Executive Compensation and
Founding Companies' Transaction Costs

SG&A expenses, executive compensation and Founding Companies' transaction
costs increased approximately $0.2 million, or 2.6%, from approximately $8.8
million in the nine months ended September 30, 1996 to approximately $9.0
million in the nine months ended September 30, 1997. As a percentage of total
revenues, SG&A expenses, executive compensation and Founding Companies'

29
<PAGE>

transaction costs declined from 27.1% to 24.7%, largely as a result of cost
reductions at Spaulding and the proportion of SG&A expenses that remained
relatively fixed as revenues increased. The Founding Companies incurred
approximately $0.3 million of transaction costs in connection with the
Acquisitions in the nine months ended September 30, 1997, which primarily
consist of outside accounting and legal fees. Excluding these transaction costs,
SG&A expenses and executive compensation amounted to 23.8% of revenues in the
nine months ended September 30, 1997. At Spaulding, SG&A expenses declined
approximately $0.5 million, or 21.7%, from approximately $2.4 million in the
nine months ended September 30, 1996 to approximately $1.9 million in the nine
months ended September 30, 1997. The decrease reflects $0.2 million in
non-recurring severance costs in the nine months ended September 30, 1996 as
well as payroll, benefits and other cost reduction measures implemented by
management to improve profitability. In the nine months ended September 30,
1996, Spaulding's SG&A expenses included approximately $0.3 million in
compensation costs associated with positions that will be eliminated in
connection with the Acquisitions, including the retiring Chairman of the Board
and positions associated with a recently-closed office. In the nine months ended
September 30, 1997, these costs at Spaulding amounted to $129,000. At the other
Founding Companies, SG&A expenses for the nine months ended September 30, 1996
and 1997 included approximately $0.2 million and $146,000, respectively, of
costs that will be eliminated as a result of the Acquisitions, including an
administrative position, a consulting agreement with a relative of a Founder,
and certain pay reductions. The Company incurred additional SG&A expenses of
$0.3 million for the Company's corporate function in the nine months ended
September 30, 1997 as compared to no expenses in the prior period. Other net
increases in SG&A expenses amounting to approximately $0.2 million relate
primarily to additional commission expense and incremental administrative
payroll.

SG&A expenses reflect pro forma adjustments which reduced SG&A expenses as
reported by approximately $0.4 million for the nine months ended September 30,
1996 and approximately $1.1 million in the nine months ended September 30, 1997.
Pro forma adjustments for the Compensation Differential, which decreased SG&A
expenses, were approximately $0.4 million in the nine months ended September 30,
1996 and approximately $0.9 million in the nine months ended September 30, 1997.
The pro forma results include the non-recurring, non-cash compensation charge of
$2.5 million in the nine months ended September 30, 1997.

Special Compensation Charge

In 1997, ImageMax sold a total of 314,135 shares of Common Stock (including
Common Stock issuable upon conversion of Series A Preferred Stock sold) to
officers and directors of ImageMax and to certain management of the Founding
Companies, at prices of $1.18, $2.36 and $4.73 per share. As a result, ImageMax
recorded a non-recurring, non-cash special compensation charge of approximately
$2.5 million, representing the difference between the amount paid for the shares
and the estimated deemed value for accounting purposes (based on an assumed
initial public offering price of $13.00 per share).

Amortization of Intangible Assets

Amortization of approximately $0.9 million in the nine months ended
September 30, 1996 and 1997 consists primarily of the estimated amortization of
intangible assets related to the Acquisitions as though they had taken place on
January 1, 1996.

Operating Loss

Operating loss was $176,000 for the nine months ended September 30, 1997
compared to an operating loss of $146,000 for the nine months ended September
30, 1996. Excluding the $2.5 million special compensation charge, operating
income increased approximately $2.5 million from an operating loss of $146,000
in the nine months ended September 30, 1996 to approximately $2.3 million, or
6.4% of total revenues, in the nine months ended September 30, 1997.

30
<PAGE>

Interest Income (Expense)

Interest income net of interest expense was income of $10,000 in the nine
months ended September 30, 1996 and expense of $5,000 in the nine months ended
September 30, 1997.

Income Tax Provision

The income tax provision increased approximately $1.0 million from $0.2
million in the nine months ended September 30, 1996 to approximately $1.1
million in the nine months ended September 30, 1997. Excluding the $2.5 million
special compensation charge, the effective tax rate for the nine months ended
September 30, 1997 was 49.3%. In each period, the effective tax rate exceeds the
statutory rate primarily due to non-deductible amortization of intangibles. As
income before income taxes increases, the impact of non-deductible amortization
of intangibles on the effective tax rate will tend to diminish. The Founding
Companies were operated as separate entities for tax purposes for all periods
presented.

Net Loss

Net loss was $1.3 million for the nine months ended September 30, 1997
compared to net loss of $0.3 million for the nine months ended September 30,
1996. Excluding the $2.5 million special compensation charge, net income
increased approximately $1.5 million from a loss of approximately $0.3 million
in the nine months ended September 30, 1996 to income of approximately $1.2
million, or 3.2% of total revenues, in the nine months ending September 30,
1997.

PRO FORMA COMBINED LIQUIDITY AND CAPITAL RESOURCES

The Company's primary capital requirements relate to the implementation of
its acquisition strategy and, to a lesser extent, working capital and capital
expenditures. The Company intends to fund these capital requirements primarily
through: (i) the net proceeds of the Offering; (ii) cash flow from operations;
(iii) borrowing under the Company's proposed Credit Facility; and (iv) the
issuance of Common Stock to the sellers of acquired businesses.

At September 30, 1997, on a pro forma combined basis, the Company would
have a cash balance of $5.8 million, working capital of $8.5 million and no
long-term debt outstanding. Cash balances of the Company will be invested in
short-term, interest-bearing investment grade securities.

Promptly following consummation of the Offering, the Company intends to
enter into the proposed Credit Facility, which is anticipated to provide up to
$30 million of available credit. There can be no assurance that such Credit
Facility will be obtained or that, if obtained, will be on terms that are
favorable to the Company or sufficient for the Company's needs. Additionally,
the Company intends to file a shelf Registration Statement for 2,000,000 shares
of Common Stock after consummation of the Offering for issuance to sellers of
acquired companies in connection with future acquisitions. The amount of capital
available for future acquisitions will depend in part on the willingness of
sellers to accept Common Stock as partial consideration.

The Company anticipates that it will make approximately $1.1 million of
capital expenditures for the Founding Companies during fiscal year ended
December 31, 1998, in addition to its anticipated acquisition and working
capital requirements. The Company believes that the capital sources described
above will be sufficient to meet the Company's liquidity requirements for its
operations and acquisition program for at least 12 months following the
Offering.

RESULTS OF OPERATIONS -- COMBINED

The combined results of operations of the Founding Companies for the
periods presented as fiscal years 1994, 1995, and 1996 do not represent combined
results of operations presented in accordance with generally accepted accounting
principles, but are only a summation of the total revenues, cost of revenues,
and SG&A expenses (including historical intangible amortization) of the
individual Founding Companies on a historical basis. The combined results also
exclude the effect of pro forma

31
<PAGE>

adjustments and, therefore, may not be indicative of the Company's
post-combination results of operations for a number of reasons, including the
following: (i) the Founding Companies were not under common control or
management during the periods presented; (ii) the Founding Companies had
different fiscal year ends for the periods presented; (iii) the Founding
Companies used different tax structures ("S Corporations" or "C Corporations")
during the periods presented; (iv) the Company will incur incremental costs
related to its new corporate management and the costs of being a public company;
(v) the Company will use the purchase method of accounting to record the
Acquisitions, resulting in the recording and amortization of goodwill; and (vi)
the combined data do not reflect the Compensation Differential, the Rent
Differential or the potential benefits and cost savings the Company expects to
realize once ImageMax and the Founding Companies begin operating as a combined
entity.

The following table sets forth the combined results of operations of the
Founding Companies on a historical basis and such results as a percentage of
total revenues (dollars in thousands):

<TABLE>
<CAPTION>
YEAR ENDED (1)
-----------------------------------------------------------
1994 1995 1996
--------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Services...................................... $31,187 75.9% $29,171 73.9% $33,563 72.2%
Product....................................... 9,929 24.1 10,311 26.1 12,938 27.8
------- ----- ------- ----- ------- -----
41,116 100.0 39,482 100.0 46,501 100.0
------- ----- ------- ----- ------- -----
Cost of Revenues
Services...................................... 20,863 50.7 19,089 48.3 21,558 46.4
Product....................................... 7,425 18.1 7,145 18.1 9,166 19.7
Depreciation.................................. 1,375 3.3 1,413 3.6 1,443 3.1
------- ----- ------- ----- ------- -----
29,663 72.1 27,647 70.0 32,167 69.2
------- ----- ------- ----- ------- -----
Gross profit.................................... 11,453 27.9 11,835 30.0 14,334 30.8

Selling, general and administrative expenses
(including intangible asset amortization)..... 11,193 27.3 11,347 28.8 12,738 27.4
------- ----- ------- ----- ------- -----
Operating income................................ $ 260 0.6% $ 488 1.2% $ 1,596 3.4%
======= ===== ======= ===== ======= =====
</TABLE>

- ------------------
(1) The years presented are as follows: AMMCORP - fiscal years ended July 31,
1995, 1996 and 1997; IDS - fiscal years ended August 31, 1995, 1996 and
1997; I(2)Solutions - fiscal years ended October 31, 1994, 1995 and 1996;
OMI - fiscal years ended October 31, 1994, 1995 and 1996; IMS - fiscal years
ended November 30, 1994, 1995 and 1996; TIMCO, DataLink and DocuTech -
fiscal years ended December 31, 1994, 1995 and 1996; TPS - fiscal years
ended March 31, 1995, 1996 and 1997; Spaulding - fiscal years ended June 30,
1995, 1996 and 1997. The CodaLex Group includes two accounting groups: (i)
CodaLex - fiscal years ended June 30, 1995, 1996 and 1997; and (ii) Laser
Graphics - fiscal years ended October 31, 1994, 1995 and 1996.

Fiscal Year 1996 Compared to Fiscal Year 1995

Revenues

Total Revenues. Revenues increased approximately $7.0 million, or 17.8%,
from approximately $39.5 million for fiscal year 1995 to approximately $46.5
million for fiscal year 1996. Service revenues increased 15.1% and represented
72.2% of combined revenues in fiscal year 1996. Product revenues increased 25.5%
and represented 27.8% of combined revenues in fiscal year 1996.

Service Revenues. Service revenues increased approximately $4.4 million
from approximately $29.2 million for fiscal year 1995 to approximately $33.6
million for fiscal year 1996. This increase was largely due to: (i) an increase
in IDS revenues of approximately $1.4 million primarily attributable to
additions to the sales force and the addition of two large data entry projects
from a new and an existing customer; (ii) an increase in the CodaLex Group
revenues of approximately $0.8 million primarily attributable to the opening of
a new office in Atlanta and increased digital imaging services sales at Laser
Graphics; (iii) an increase in TPS revenues of approximately $0.6 million
primarily attributable to the addition of new client accounts; (iv) an increase
in TIMCO revenues of

32
<PAGE>

approximately $0.6 million primarily attributable to increases in sales volume
generated by three newly-hired sales representatives; (v) an increase in OMI
revenues of approximately $0.5 million primarily attributable to growth in both
digital imaging and micrographic services; and (vi) an increase in DocuTech
revenues of approximately $0.4 million primarily attributable to growth in
digital imaging services. There was an offsetting decrease in revenues at IMS of
approximately $0.6 million due primarily to the termination of an outside sales
agent.

Product Revenues. Product revenues increased approximately $2.6 million
from approximately $10.3 million for fiscal year 1995 to approximately $12.9
million for fiscal year 1996. This increase was largely due to: (i) an increase
in DocuTech revenues of approximately $0.9 million primarily attributable to
increases in software and related hardware product sales; (ii) an increase in
the CodaLex Group revenues of approximately $1.5 million primarily attributable
to increases in equipment sales through the new Atlanta office; (iii) an
increase in DataLink revenues of approximately $0.3 million primarily
attributable to increased sales of film and disk media; (iv) an increase in OMI
revenues of approximately $0.3 million primarily attributable to growth in
product sales; and (v) offsetting decreases in revenues at IMS and Spaulding of
$146,000 and $142,000, respectively as a result of sales force reductions at IMS
and reduced supplies demand by customers of Spaulding. In each case,
fluctuations in product revenues are primarily a result of fluctuating unit
volume.

Cost of Revenues

Cost of Services. Cost of services increased approximately $2.5 million or
12.9% from approximately $19.1 million for fiscal year 1995 and approximately
$21.6 million for fiscal year 1996. Cost of services as a percentage of service
revenues was 65.4% for fiscal year 1995 and 64.2% for fiscal year 1996. Cost of
services as a percentage of service revenues decreased primarily because: (i)
DocuTech's percentage declined from 56.1% to 40.1% due to higher revenues; (ii)
TPS's percentage declined from 68.1% to 62.6% due to increases in margins on
higher volume; (iii) TIMCO's percentage declined from 70.4% to 65.6% due to
increased employee productivity and reduced costs; (iv) Spaulding's percentage
declined from 65.4% to 62.9% due to cost reduction programs; and (v) DataLink's
percentage declined from 71.7% to 69.7% due to operating efficiencies obtained
when DataLink moved to a new facility. As offsets to these declines: (i) IMS's
percentage increased from 72.2% to 84.3% due to lower sales volume; (ii) OMI's
percentage increased from 82.8% to 86.6% due to higher compensation expense; and
(iii) I(2)'s percentage increased from 39.8% to 42.9% due to higher training and
supply costs.

Cost of Products. Cost of products increased approximately $2.0 million or
28.3% from approximately $7.1 million for fiscal year 1995 to approximately $9.2
million for fiscal year 1996. Cost of products as a percentage of product
revenues was 69.3% for fiscal year 1995 and 70.8% for fiscal year 1996. Cost of
products as a percentage of product revenue increased because: (i) DocuTech's
percentage increased from 33.8% to 54.4% primarily due to higher software
production and support costs; (ii) TPS's percentage increased from 82.9% to
91.3% primarily due to product mix; and (iii) the CodaLex Group's percentage
increased from 66.9% to 74.9% primarily due to decreases in product margins at
Laser Graphics. As an offset to these increases, IMS's percentage decreased from
78.2% to 59.5% primarily due to lower volume offset by higher software
production costs.

Depreciation. Depreciation remained constant at approximately $1.4 million
for fiscal 1995 and 1996.

Gross Profit

As a result of a 17.8% increase in revenues and a 16.3% increase in cost of
revenues resulting from a more favorable mix of higher margin products, combined
gross profit increased approximately $2.5 million or 21.1% from approximately
$11.8 million for fiscal year 1995 to approximately $14.3 million for fiscal
year 1996. Gross profit as a percentage of revenues increased from 30.0% for
fiscal year 1995 to 30.8% for fiscal year 1996.

33
<PAGE>

Selling General and Administrative Expenses.

SG&A expenses were approximately $11.3 million in fiscal year 1995 and
approximately $12.7 million in fiscal year 1996. As a percentage of combined
revenues, SG&A expenses decreased from 28.8% in fiscal year 1995 to 27.3% in
fiscal year 1996. SG&A administrative expenses increased $97,000 at OMI
primarily due to increases in owner's compensation and increases in selling
costs related to higher sales volume. SG&A costs increased approximately $0.5
million at IDS primarily due to owners' compensation expense. SG&A expenses
increased approximately $0.4 million at I(2) primarily due to owners'
compensation expense. SG&A expenses increased approximately $0.3 million at
DocuTech primarily due to increases in personnel, marketing, and software
development costs. SG&A costs increased approximately $0.2 million at the
CodaLex Group primarily due to adding staff personnel at the Atlanta location
and higher sales commission expenses. Overall, nine of the Founding Companies
reported increases in SG&A expenses from fiscal year 1995 to fiscal year 1996,
offset by a similar amount of decreases at the remaining three companies.

Fiscal Year 1995 Compared to Fiscal Year 1994

Revenues

Total Revenues. Revenues decreased approximately $1.6 million, or 4.0%,
from approximately $41.1 million for fiscal year 1994 to approximately $39.5
million for fiscal year 1995. Service revenues decreased approximately 6.5% and
represented 73.9% of combined revenues in fiscal year 1995. Product revenues
increased 3.8% and represented 26.1% of combined revenues in fiscal year 1995.

Service Revenues. Service revenues decreased approximately $2.0 million
from approximately $31.2 million for fiscal year 1994 to approximately $29.2
million for fiscal year 1995. This decrease was largely due to: (i) a decrease
at IDS of approximately $0.6 million due primarily to the completion of two
large projects in fiscal year 1995; (ii) a decrease in revenues at the CodaLex
Group of approximately $1.0 million due primarily to a shift in the mix to lower
margin product sales and diversion of management attention required by the
establishment of the Atlanta facility; and (iii) a decrease in revenues at
DataLink of approximately $0.3 million due primarily to the loss of three
significant COM customers. As offsets to these decreases: (i) AMMCORP's revenues
increased approximately $0.7 million, primarily attributable to the acquisition
of a document management business in Anderson, Indiana; (ii) TPS' revenues
increased approximately $0.3 million, primarily attributable to the addition of
several large service accounts from health care, financial and government
clients; (iii) TIMCO's revenues increased approximately $0.3 million, primarily
attributable to the acquisition of a document management company in northern
California in the middle of fiscal year 1994; and (iv) DocuTech's revenues
increased approximately $0.3 million, primarily due to increases in scanning
service revenues.

Product Revenues. Product revenues increased approximately $0.4 million
from approximately $9.9 million for fiscal year 1994 to approximately $10.3
million for fiscal year 1995. This increase was largely due to: (i) an increase
in IMS revenues of approximately $0.5 million primarily attributable to
increases in sales of large document scanning hardware; (ii) an increase in I(2)
Solutions' revenues of approximately $0.4 million primarily attributable to a
large equipment order; and (iii) an offsetting decrease in revenues at Spaulding
of approximately $0.6 million as a result of reduced regional demand for
equipment. In each case, fluctuations in product revenues are primarily a result
of fluctuating unit volume.

Cost of Revenues

Cost of Services. Cost of services decreased approximately $1.8 million or
8.5% from approximately $20.9 million for fiscal year 1994 to approximately
$19.1 million for fiscal year 1995. Cost of services as a percentage of service
revenues was 66.9% for fiscal year 1994 and 65.4% for fiscal year 1995. The
dollar decrease was primarily due to: (i) a decrease in the Codalex Group cost
of

34
<PAGE>

services of approximately $0.7 million, with cost of services as a percentage of
service revenues increasing from 64.2% in fiscal year 1994 to 67.3% in fiscal
year 1995, primarily attributable to a decrease in sales volume without a
similar decrease in overhead costs; (ii) a decrease in IDS cost of services of
approximately $0.2 million, with cost of services as a percentage of service
revenues increasing from 56.2% in fiscal year 1994 to 67.2% in fiscal year 1995,
primarily attributable to decreases in margin on higher volume; and (iii) a
decrease in Datalink cost of services of approximately $0.3 million, with cost
of services as a percentage of service revenues decreasing from 61.6% in fiscal
year 1994 to 57.3% in fiscal year 1995, primarily attributable to reductions in
labor costs and production overhead.

Cost of Products. Cost of products decreased approximately $0.3 million or
3.8% from approximately $7.4 million for fiscal year 1994 to approximately $7.1
million for fiscal year 1995. Cost of products as a percentage of product
revenues was 74.8% for fiscal year 1994 and 69.3% for fiscal year 1995. The
major fluctuations in cost of products included (i) a decrease in Spaulding's
cost of products of approximately $0.6 million, with cost of products as a
percentage of product revenues decreasing from 67.8% in fiscal year 1994 to
63.8% in fiscal year 1995 primarily attributable to lower sales volume, (ii) an
increase in IMS cost of products of approximately $0.4 million, with cost of
products decreasing as a percentage of product revenues from 88.9% in fiscal
year 1994 to 78.2% in fiscal year 1995 primarily attributable to increases in
sales volume, (iii) an increase in I(2) Solutions cost of products of
approximately $0.2 million, with cost of product as a percentage of product
revenues decreasing from 83.9% in fiscal year 1994 to 76.1% in fiscal year 1995,
primarily attributable to higher volume of product sold and some pricing
improvement.

Depreciation. Depreciation was approximately $1.4 million for fiscal year
1994 and 1995.

Gross Profit

As a result of higher margins earned on product sales, combined gross
profit increased approximately $0.4 million or 3.3% from approximately $11.5
million for fiscal year 1994 to approximately $11.8 million for fiscal year
1995. Gross profit as a percentage of revenues increased from 27.9% for fiscal
year 1994 to 30.0% for fiscal year 1995.

Selling, General and Administrative Expenses

SG&A expenses increased approximately $0.2 million or 1.4% from
approximately $11.2 million in fiscal year 1994 to approximately $11.3 million
in fiscal year 1995. SG&A expenses increased approximately $0.5 million at TIMCO
primarily due to increases in one time expenses related to the retirement of the
former co-founder. Seven of the Founding Companies reported increases in SG&A
expenses from fiscal year 1994 to fiscal year 1995, offset by a decline in SG&A
expenses at OMI, I(2) Solutions, AMMCORP, IDS, and the CodaLex Group.

FOUNDING COMPANIES -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF HISTORICAL
FINANCIAL CONDITION AND RESULTS OF HISTORICAL OPERATIONS

The following discussion should be read in conjunction with the Founding
Companies' financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. The information presented below is based upon the
respective fiscal periods for each Founding Company and excludes all pro forma
adjustments. SG&A expenses include, where applicable, intangible asset
amortization.

35
<PAGE>

AMMCORP RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data and
such data as a percentage of revenues for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
FISCAL YEAR ENDED JULY 31,
---------------------------------------------------
1995 1996 1997
-------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Services............................................. $6,276 100.0% $5,550 100.0% $5,677 100.0%
------ ----- ------ ----- ------ -----
6,276 100.0 5,550 100.0 5,677 100.0
------ ----- ------ ----- ------ -----
Cost of revenues
Services............................................. 4,652 74.1 3,318 59.8 3,297 58.1
Depreciation......................................... 381 6.1 412 7.4 390 6.8
------ ----- ------ ----- ------ -----
5,033 80.2 3,730 67.2 3,687 64.9
------ ----- ------ ----- ------ -----
Gross profit........................................... 1,243 19.8 1,820 32.8 1,990 35.1
Selling, general and administrative expenses........... 1,835 29.2 1,593 28.7 1,818 32.0
------ ----- ------ ----- ------ -----
Operating income (loss)................................ (592) (9.4) 227 4.1 172 3.1
Interest expense (income).............................. 323 5.2 352 6.4 359 6.4
------ ----- ------ ----- ------ -----
Income (loss) before taxes............................. $ (915) (14.6)% $ (125) (2.3)% $ (187) 3.3%
====== ===== ====== ===== ====== =====
</TABLE>

Fiscal Year Ended July 31, 1997 Compared to Fiscal Year Ended July 31, 1996

Revenues. Revenues increased $127,000 or 2.3% from approximately $5.6
million for fiscal year ended July 31, 1996 to approximately $5.7 million for
fiscal year ended July 31, 1997. This increase was primarily due to higher box
storage fees.

Cost of Revenues. Cost of revenues remained unchanged at approximately
$3.7 million during the comparable periods. Gross profit as a percentage of
revenues was approximately 32.8% for the fiscal year ended July 31, 1996 and
35.1% for fiscal year ended July 31, 1997, as a result of residual costs of the
closing of a document management facility located in Anderson, Indiana in August
1995 and increasing efficiencies achieved in AMMCORP's main facility over the
course of fiscal year 1996. The Anderson facility had been acquired from a third
party in March 1994.

Selling, General and Administrative Expenses. SG&A expenses increased $0.2
million or 14.1% from approximately $1.6 million for fiscal year ended July 31,
1996 to approximately $1.8 million for fiscal year ended July 31, 1997, and, as
a percentage of revenues, from 28.7% to 32.0% primarily due to the addition of
additional sales and digital imaging personnel.

Fiscal Year Ended July 31, 1996 Compared to Fiscal Year Ended July 31, 1995

Revenues. Revenues decreased approximately $0.7 million or 11.6% from
approximately $6.3 million for fiscal year ended July 31, 1995 to approximately
$5.6 million for fiscal year ended July 31, 1996. This decrease was primarily
due to the loss of customer accounts that occurred when AMMCORP closed the
Anderson, Indiana document management facility in August 1995.

Cost of Revenues. Cost of revenues decreased approximately $1.3 million,
or 25.9%, from approximately $5.0 million for the fiscal year ended July 31,
1995 to approximately $3.7 million for the fiscal year ended July 31, 1996. This
decrease was primarily due to lower production costs and the elimination of
overhead resulting from the closing of the Anderson facility. Gross profit as a
percentage of revenues was approximately 19.8% for the fiscal year ended July
31, 1995 and 32.8% for fiscal year ended July 31, 1996, as a result of the cost
savings related to closing the Anderson facility in August 1995.

Selling, General and Administrative Expenses. SG&A expenses decreased $0.2
million or 13.2% from approximately $1.8 million for fiscal year ended July 31,
1995 to approximately $1.6 million for fiscal year ended July 31, 1996, and, as
a percentage of revenues, from 29.2% to 28.7% as a result of cost savings
realized through closing the Anderson facility.

36
<PAGE>

AMMCORP Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of AMMCORP (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR ENDED JULY 31,
--------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Net cash flow provided by operating activities.............. $152 $703 $553
Net cash flow (used in) investing activities................ (266) (162) (157)
Net cash provided by (used in) financing activities......... 106 (541) (373)
---- ---- ----
Increase (decrease) in cash and cash equivalents............ $ (8) $ -- $ 23
==== ==== ====
</TABLE>

From August 1, 1994 through July 31, 1997 AMMCORP generated approximately
$1.4 million in net cash from operating activities. Cash used in investing
activities was primarily for purchases of digital imaging and micrographics
processing equipment including equipment purchased as part of the Anderson
facility. Cash used in financing activities consisted primarily of payments on
long-term debt and non-compete contracts associated with the acquisition of
AMMCORP in 1988 by a company controlled by David C. Utz, Jr. As of July 31,
1997, the Company had a working capital deficit of $3.0 million. The Company
intends to pay down AMMCORP's debt simultaneous with the Acquisitions and,
therefore, AMMCORP believes that its acquisition will improve its working
capital position.

CODALEX RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data for
CodaLex and such data as a percentage of revenues for the periods indicated
(dollars in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED JUNE 30, SEPTEMBER 30,
------------------------------------------------------ ------------------------------
1995 1996 1997 1996 1997
-------------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Services..................... $1,836 78.5% $ 755 54.8% $1,507 52.6% $341 52.6% $530 68.9%
Products..................... 504 21.5 622 45.2 1,358 47.4 307 47.4 239 31.1
------ ----- ------ ----- ------ ----- ---- ----- ---- -----
2,340 100.0 1,377 100.0 2,865 100.0 648 100.0 769 100.0
------ ----- ------ ----- ------ ----- ---- ----- ---- -----
Cost of revenues
Services..................... 1,178 50.3 508 36.9 1,012 35.3 228 35.1 400 52.0
Products..................... 329 14.1 416 30.2 1,016 35.5 252 38.9 169 22.0
Depreciation................. 44 1.9 47 3.4 64 2.2 12 1.9 10 1.3
------ ----- ------ ----- ------ ----- ---- ----- ---- -----
1,551 66.3 971 70.5 2,092 73.0 492 75.9 579 75.3
------ ----- ------ ----- ------ ----- ---- ----- ---- -----
Gross profit................... 789 33.7 406 29.5 773 27.0 156 24.1 190 24.7
Selling, general and
administrative expenses...... 748 31.9 551 40.0 761 26.6 100 15.5 198 25.7
------ ----- ------ ----- ------ ----- ---- ----- ---- -----
Operating income (loss)........ 41 1.8 (145) (10.5) 12 0.4 56 8.6 (8) (1.0)
Interest expense (income)...... 29 1.3 60 4.4 (7) (0.3) 3 0.4 11 1.4
------ ----- ------ ----- ------ ----- ---- ----- ---- -----
Income (loss) before taxes..... $ 12 0.5% $ (205) (14.9)% $ 19 0.7% $ 53 8.2% $(19) (2.4)%
====== ===== ====== ===== ====== ===== ==== ===== ==== =====
</TABLE>

Three Months Ended September 30, 1997 Compared to Three Months Ended September
30, 1996

Revenues. Revenues increased $121,000 or 18.7% from approximately $0.6
million for the three months ended September 30, 1996 to approximately $0.8
million for the three months ended September 30, 1997. This increase was
primarily due to increased service revenues offset by lower product sales,
primarily as a result of reduced product unit volume.

Cost of Revenues. Cost of revenues increased $87,000 or 17.7% from
approximately $0.5 million for the three months ended September 30, 1996 to
approximately $0.6 million for the three months ended September 30, 1997. This
increase was primarily due to higher sales volume primarily of services. Gross
profit as a percentage of revenues was 24.1% for the three months ended
September 30, 1996 and 24.7% for the three months ended September 30, 1997.

37
<PAGE>

Selling, General and Administrative Expenses. SG&A expenses increased
$98,000 or 98.0% from $100,000 for the three months ended September 30, 1996 to
approximately $0.2 million for the three months ended September 30, 1997. This
increase was primarily due to professional fees incurred in connection with the
Acquisition and to an increase in sales commissions. As a percentage of
revenues, SG&A expenses increased from 15.5% to 25.7%.

Fiscal Year Ended June 30, 1997 Compared to Fiscal Year Ended June 30, 1996

Revenues. Revenues increased approximately $1.5 million or 108.1% from
approximately $1.4 million for fiscal year ended June 30, 1996 to approximately
$2.9 million for fiscal year ended June 30, 1997. Both service and product
revenues increased due to a full fiscal year's contribution to revenues from a
new facility in Atlanta as well as increased product unit sales.

Cost of Revenues. Cost of revenues increased approximately $1.1 million or
115.4% from approximately $1.0 million for the fiscal year ended June 30, 1996
to approximately $2.1 million for fiscal year ended June 30, 1997. This increase
was primarily due to higher sales volume in both services and products. Gross
profit as a percentage of revenues was 29.5% for fiscal year ended June 30, 1996
and 27.0% for the fiscal year ended June 30, 1997 primarily due to a shift in
the mix to lower margin product sales.

Selling, General and Administrative Expenses. SG&A expenses increased
approximately $0.2 million or 38.1% from approximately $0.6 million for fiscal
year ended June 30, 1996 to approximately $0.8 million for fiscal year ended
June 30, 1997. This increase was primarily due to adding personnel at the
Atlanta location and an increase in sales commissions. However, as a percentage
of revenues, SG&A expenses decreased from 40.0% to 26.6%.

Fiscal Year Ended June 30, 1996 Compared to Fiscal Year Ended June 30, 1995

Revenues. Revenues decreased approximately $0.9 million or 41.2% from
approximately $2.3 million for fiscal year ended June 30, 1995 to approximately
$1.4 million for fiscal year ended June 30, 1996, primarily as a result of
reduced service revenues. This decrease was primarily due to a de-emphasis on
conversion service sales and the attention of management required in connection
with the establishment of operations in Atlanta in February 1995, partially
offset by increased product unit volumes.

Cost of Revenues. Cost of revenues decreased approximately $0.6 million or
37.4% from approximately $1.6 million for fiscal year ended June 30, 1995 to
approximately $1.0 million for fiscal year ended June 30, 1996. This decrease
was primarily due to decreases in sales volume in both services and products.
Gross profit as a percentage of revenues was 33.7% for fiscal year ended June
30, 1995 and 29.5% for fiscal year ended June 30, 1996 primarily due to the
decline in sales.

Selling, General and Administrative Expenses. SG&A expenses decreased
approximately $0.2 million or 26.3% from $0.7 million for fiscal year ended June
30, 1995 to $0.6 million for fiscal year ended June 30, 1996. This decrease was
primarily due to a reduction in sales force and other overhead. However, as a
percentage of revenues, SG&A expenses increased from 31.9% to 40.0% due to the
decline in sales.

38
<PAGE>

CodaLex Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of CodaLex (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED ENDED
JUNE 30, SEPTEMBER 30,
-------------------- ---------------
1995 1996 1997 1996 1997
---- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C>
Net cash flow provided by (used in) operating activities.... $54 $(195) $ 47 $ 111 $ 92
Net cash flow (used in) investing activities................ (39) (30) (130) (107) (5)
Net cash provided by financing activities................... 7 218 83 29 (26)
--- ----- ----- ----- ----
Increase (decrease) in cash and cash equivalents............ $22 $ (7) $ -- $ 33 $ 61
=== ===== ===== ===== ====
</TABLE>

From July 1, 1994 through the three months ended September 30, 1997 CodaLex
used $2,000 in cash for operating activities. Cash used in investing activities
was primarily for purchases of digital imaging and micrographics processing
equipment relating to the establishment of operations in Atlanta. Cash used in
financing activities consisted primarily of proceeds from long-term debt. At
September 30, 1997, CodaLex had a working capital deficit of $0.4 million.
CodaLex will not pay stockholder and other related-party notes that are
currently due as long as cash flows from operations are not sufficient to fund
its obligations as they become due. The Company intends to pay down CodaLex's
related-party and other debt simultaneous with the Acquisitions and, therefore,
CodaLex believes that its acquisition will improve its working capital position.

LASER GRAPHICS RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data and
such data as a percentage of revenues for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
FISCAL YEAR ENDED OCTOBER 31, NINE MONTHS ENDED JULY 31,
------------------------------- -------------------------------
1995 1996 1996 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Services........................................ $1,056 64.1% $1,132 46.3% $ 799 41.6% $ 985 75.0%
Products........................................ 592 35.9 1,315 53.7 1,122 58.4 329 25.0
------ ----- ------ ----- ------ ----- ------ -----
1,648 100.0 2,447 100.0 1,921 100.0 1,314 100.0
------ ----- ------ ----- ------ ----- ------ -----
Cost of revenues
Services........................................ 763 46.3 811 33.1 573 29.8 639 48.6
Products........................................ 440 26.7 986 40.3 843 43.9 243 18.6
Depreciation.................................... 28 1.7 34 1.4 21 1.1 28 2.1
------ ----- ------ ----- ------ ----- ------ -----
1,231 74.7 1,831 74.8 1,437 74.8 910 69.3
------ ----- ------ ----- ------ ----- ------ -----
Gross profit...................................... 417 25.3 616 25.2 484 25.2 404 30.7
Selling, general and administrative expenses...... 396 24.0 500 20.5 327 17.0 386 29.4
------ ----- ------ ----- ------ ----- ------ -----
Operating income.................................. 21 1.3 116 4.7 157 8.2 18 1.3
Interest expense (income)......................... 30 1.8 20 0.8 17 0.9 21 1.5
------ ----- ------ ----- ------ ----- ------ -----
Income (loss) before taxes........................ $ (9) (0.5)% $ 96 3.9% $ 140 7.3% $ (3) (0.2)%
====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

Nine Months Ended July 31, 1997 Compared to Nine Months Ended July 31, 1996

Revenues. Revenues decreased approximately $0.6 million or 31.6% from
approximately $1.9 million for nine months ended July 31, 1996 to approximately
$1.3 million for nine months ended July 31, 1997. This decrease was primarily
due to a decrease in product unit volume and revenues of approximately $0.8
million related to the loss of the general manager and key sales people in
November 1996 partially offset by an increase in service revenues.

39
<PAGE>

Cost of Revenues. Cost of revenues decreased approximately $0.5 million or
36.6% from approximately $1.4 million for nine months ended July 31, 1996 to
approximately $0.9 million for nine months ended July 31, 1997. This decrease
was primarily due to a decrease in sales volume, improved margins associated
with service revenues and, to a lesser extent, higher margins on products sold.
Gross profit as a percentage of revenues was 25.2% for nine months ended July
31, 1996 and 30.7% for nine months ended July 31, 1997.

Selling, General and Administrative Expenses. SG&A expenses increased
$59,000 or 18.0% from approximately $0.3 million for nine months ended July 31,
1996 to approximately $0.4 million for nine months ended July 31, 1997. As a
percentage of revenues, SG&A expenses increased from 17.0% to 29.4%. This
increase was primarily due to severance and other one time costs related to the
departure of the former general manager.

Fiscal Year Ended October 31, 1996 Compared to Fiscal Year Ended October 31,
1995

Revenues. Revenues increased approximately $0.8 million or 48.5% from
approximately $1.7 million for fiscal year ended October 31, 1995 to
approximately $2.4 million for fiscal year ended October 31, 1996. This result
was primarily due to increased product volume.

Cost of Revenues. Cost of revenues increased approximately $0.6 million or
48.7% from approximately $1.2 million for fiscal year ended October 31, 1995 to
approximately $1.8 million for fiscal year ended October 31, 1996. This increase
was primarily due to higher service volume. Gross profit as a percentage of
revenues was 25.3% for fiscal year ended October 31, 1995 and 25.2% for fiscal
year ended October 31, 1996.

Selling, General and Administrative Expenses. SG&A expenses increased $0.1
million or 26.3% from approximately $0.4 million for fiscal year ended October
31, 1995 to approximately $0.5 million for fiscal year ended October 31, 1996.
This increase was primarily due to higher commission expense. However, as a
percentage of revenues, SG&A expenses decreased from 24.0% to 20.5%.

Laser Graphics Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of Laser Graphics (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR NINE MONTHS
ENDED ENDED
OCTOBER 31, JULY 31,
---------------- ----------------
1995 1996 1996 1997
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net cash flow provided by (used in) operating activities.... $ 67 $ 92 $ 47 $ (16)
Net cash flow (used in) investing activities................ (14) (53) (51) (31)
Net cash provided by (used in) financing activities......... (40) (46) (11) 35
----- ----- ----- -----
Increase (decrease) in cash and cash equivalents............ $ 13 $ (7) $ (15) $ (12)
===== ===== ===== =====
</TABLE>

From November 1, 1994 through July 31, 1997 Laser Graphics generated
$143,000 in net cash from operating activities. Cash used in investing
activities was primarily for purchases of property, plant and equipment. Cash
used in financing activities consisted primarily of payments on bank debt and
capital leases. The Company intends to pay down Laser Graphics' debt
simultaneous with the Acquisitions, and therefore Laser Graphics believes that
its acquisition will improve its working capital position.

40
<PAGE>

DATALINK RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data and
such data as a percentage of revenues for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ -------------------------------
1994 1995 1996 1996 1997
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Services........................ $2,466 81.4% $2,152 79.9% $2,286 72.5% $1,761 70.3% $1,972 76.9%
Products........................ 562 18.6 540 20.1 865 27.5 744 29.7 592 23.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
3,028 100.0 2,692 100.0 3,151 100.0 2,505 100.0 2,564 100.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Cost of revenues
Services........................ 1,864 61.6 1,542 57.3 1,593 50.6 1,180 47.1 1,268 49.5
Products........................ 605 20.0 479 17.8 773 24.5 647 25.8 492 19.2
Depreciation.................... 191 6.2 205 7.6 218 6.9 161 6.5 157 6.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
2,660 87.8 2,226 82.7 2,584 82.0 1,988 79.4 1,917 74.8
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Gross profit...................... 368 12.2 466 17.3 567 18.0 517 20.6 647 25.2
Selling, general and
administrative expenses......... 331 10.9 339 12.6 467 14.8 327 13.0 405 15.8
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating income.................. 37 1.3 127 4.7 100 3.2 190 7.6 242 9.4
Interest expense (income)......... 46 1.6 52 1.9 105 3.4 74 3.0 90 3.5
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Income (loss) before taxes........ $ (9) (0.3)% $ 75 2.8% $ (5) (0.2)% $ 116 4.6% $ 152 5.9%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996

Revenues. Revenues increased $58,000 or 2.3% from approximately $2.5
million for nine months ended September 30, 1996 to approximately $2.6 million
for nine months ended September 30, 1997. This increase was primarily due to
increased scanning service revenues, offset partially by decreases in product
unit volume.

Cost of Revenues. Cost of revenues decreased $72,000 or 3.5% from
approximately $2.0 million for nine months ended September 30, 1996 to
approximately $1.9 million for nine months ended September 30, 1997. This
decrease was primarily due to increased operating efficiencies obtained when
DataLink moved to a new facility in the spring of 1996. Gross profit as a
percentage of revenues was 20.6% for nine months ended September 30, 1996 and
25.2% for nine months ended September 30, 1997. This increase was primarily due
to a more favorable product and service mix and increased operating
efficiencies.

Selling, General and Administrative Expenses. SG&A expenses increased
$78,000 or 23.5% from approximately $0.3 million for the nine months ended
September 30, 1996 to approximately $0.4 million for the nine months ended
September 30, 1997. The increase is primarily due to professional fees incurred
in connection with the Acquisition. As a percentage of revenues, SG&A expenses
increased from 13.1% to 15.8%.

Fiscal Year Ended December 31, 1996 Compared to Fiscal Year Ended December 31,
1995

Revenues. Revenues increased approximately $0.5 million or 17.0% from
approximately $2.7 million for fiscal year ended December 31, 1995 to
approximately $3.2 million for fiscal year ended December 31, 1996. This
increase was primarily due to increases in digital imaging service and media
sales.

Cost of Revenues. Cost of revenues increased approximately $0.4 million or
16.1% from approximately $2.2 million for fiscal year ended December 31, 1995 to
approximately $2.6 million for fiscal year ended December 31, 1996. This
increase was primarily due to higher sales volume. Gross profit as a percentage
of revenues was 17.3% for fiscal year ended December 31, 1995 and 18.0% for
fiscal year ended December 31, 1996.

41
<PAGE>

Selling, General and Administrative Expenses. SG&A expenses increased
$128,000 or 37.8% from $0.3 million for fiscal year ended December 31, 1995 to
$0.5 million for fiscal year ended December 31, 1996. As a percentage of
revenues, SG&A expenses increased from 12.6% to 14.8%. This increase was due to
increases in owners' compensation and the one-time costs associated with moving
to a new facility in the spring of 1996.

Fiscal Year Ended December 31, 1995 Compared to Fiscal Year Ended December 31,
1994

Revenues. Revenues decreased approximately $0.3 million or 11.1% from
approximately $3.0 million for fiscal year ended December 31, 1994 to
approximately $2.7 million for fiscal year ended December 31, 1995. This
decrease was primarily due to the loss of three service accounts.

Cost of Revenues. Cost of revenues decreased approximately $0.5 million or
16.3% from approximately $2.7 million for fiscal year ended December 31, 1994 to
approximately $2.2 million for fiscal year ended December 31, 1995. This
decrease was primarily due to decreases in labor costs and production overhead.
Gross profit as a percentage of revenues was 12.2% for fiscal year ended
December 31, 1994 and 17.3% for fiscal year ended December 31, 1995. This
increase was primarily due to increases in product gross margin.

Selling, General and Administrative Expenses. SG&A expenses were
approximately $0.3 million for both fiscal years ended December 31, 1994 and
December 31, 1995. However as a percentage of revenues, SG&A expenses increased
from 10.9% to 12.6%.

DataLink Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of DataLink (in thousands):

<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
-------------------- --------------
1994 1995 1996 1996 1997
----- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net cash flow provided by operating activities.............. $ 107 $ 217 $310 $296 $309
Net cash flow (used in) investing activities................ (238) (39) (99) (92) (36)
Net cash provided by (used in) financing activities......... 120 (135) (213) (94) (118)
----- ----- ---- ---- ----
Increase (decrease) in cash and cash equivalents............ $ (11) $ 43 $ (2) $110 $155
===== ===== ==== ==== ====
</TABLE>

From January 1, 1994 through the nine months ended September 30, 1997
DataLink generated approximately $0.9 million in net cash from operating
activities. Cash used in investing activities was primarily for purchases of
digital imaging and micrographics processing equipment. Cash used in financing
activities consisted primarily of payments on or proceeds from long term debt
and distributions to stockholders. DataLink believes it has adequate cash flow
and financing alternatives available to it to fund its operations and capital
requirements for the foreseeable future.

42
<PAGE>

DOCUTECH RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data and
such data as a percentage of revenues for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ -------------------------------
1994 1995 1996 1996 1997
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Services........................ $ 600 100.0% $ 854 79.6% $1,249 53.8% $ 866 48.8% $ 869 40.1%
Products........................ -- -- 219 20.4 1,073 46.2 908 51.2 1,300 59.9
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
600 100.0 1,073 100.0 2,322 100.0 1,774 100.0 2,169 100.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Cost of revenues
Services........................ 377 62.8 479 44.6 501 21.6 340 19.2 405 18.7
Products........................ -- -- 74 6.9 584 25.2 500 28.2 434 20.0
Depreciation.................... 12 2.0 24 2.3 31 1.3 24 1.3 28 1.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
389 64.8 577 53.8 1,116 48.1 864 48.7 867 40.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Gross profit...................... 211 35.2 496 46.2 1,206 51.9 910 51.3 1,302 60.0
Selling, general and
administrative expenses......... 198 33.0 402 37.5 747 32.2 565 31.8 659 30.4
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating income.................. 13 2.2 94 8.7 459 19.7 345 19.5 643 29.6
Interest expense (income)......... 5 0.8 13 1.2 13 0.5 13 0.8 4 0.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Income (loss) before taxes........ $ 8 1.4% $ 81 7.5% $ 446 19.2% $ 332 18.7% $ 639 29.5%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996

Revenues. Revenues increased approximately $0.4 million or 22.3% from
approximately $1.8 million for the nine months ended September 30, 1996 to
approximately $2.2 million for the nine months ended September 30, 1997. This
increase was primarily due to an increase in higher margin software product
sales.

Cost of Revenues. Cost of revenues were approximately $0.9 million for
both the nine months ended September 30, 1996 and September 30, 1997. Gross
profit as a percentage of revenues was 51.3% for the nine months ended September
30, 1996 and 60.0% for the nine months ended September 30, 1997. This increase
was primarily due to an increase in higher margin software product sales.

Selling, General and Administrative Expenses. SG&A expenses increased
$94,000 or 16.6% from approximately $0.6 million for the nine months ended
September 30, 1996 to approximately $0.7 million for the nine months ended
September 30, 1997. However, as a percentage of revenues, SG&A expenses
decreased from 31.9% to 30.4% primarily due to increased revenues.

Fiscal Year Ended December 31, 1996 Compared to Fiscal Year Ended December 31,
1995

Revenues. Revenues increased approximately $1.2 million or 116.4% from
approximately $1.1 million for fiscal year ended December 31, 1995 to
approximately $2.3 million for fiscal year ended December 31, 1996. This
increase was primarily due to increased unit volumes and sales of software and
related scanning hardware and increases in scanning services revenues.

Cost of Revenues. Cost of revenues increased approximately $0.5 million or
93.4% from approximately $0.6 million for fiscal year ended December 31, 1995 to
approximately $1.1 million for fiscal year ended December 31, 1996. This was
primarily due to increases in software costs attributable to higher software
product sales and consists primarily of support personnel, maintenance costs and
third party royalties and costs of equipment attributable to increased equipment
sales volume. Gross profit as a percentage of revenues was 46.2% for fiscal year
ended December 31, 1995 and 51.9% for fiscal year ended December 31, 1996. This
increase was primarily due to an increase in higher margin software products
sales.

43
<PAGE>

Selling, General and Administrative Expenses. SG&A expenses increased
approximately $0.3 million or 85.8% from approximately $0.4 million for fiscal
year ended December 31, 1995 to $0.7 million for fiscal year ended December 31,
1996. This increase was primarily due to increased investment in personnel and
marketing and development of new software products. However, as a percentage of
revenues, SG&A expenses decreased from 37.5% to 32.2%.

Fiscal Year Ended December 31, 1995 Compared to Fiscal Year Ended December 31,
1994

Revenues. Revenues increased approximately $0.5 million or 78.8% from
approximately $0.6 million for fiscal year ended December 31, 1994 to
approximately $1.1 million for fiscal year ended December 31, 1995. This
increase was primarily due to increases in scanning services revenue and the
initial commercial release of the DocuROM software product in 1995.

Cost of Revenues. Cost of revenues increased approximately $0.2 million or
48.3% from approximately $0.4 million for fiscal year ended December 31, 1994 to
approximately $0.6 million for fiscal year ended December 31, 1995. This
increase was primarily due to higher service volume and software product costs.
Gross profit as a percentage of revenues was 35.2% for fiscal year ended
December 31, 1994 and 46.2% for fiscal year ended December 31, 1995. This
increase was primarily due to higher margins generated from the release of the
DocuROM scanning software.

Selling, General and Administrative Expenses. SG&A expenses increased
approximately $0.2 million or 103.0% from approximately $0.2 million for fiscal
year ended December 31, 1994 to approximately $0.4 million for fiscal year ended
December 31, 1995. As a percentage of revenues, SG&A expenses increased from
33.0% to 37.5%. This increase was primarily due to increased investment in
personnel and marketing of new software products.

DocuTech Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of DocuTech (in thousands):

<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------ --------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net cash flow provided by operating activities.............. $ 14 $113 $384 $282 $499
Net cash flow (used in) investing activities................ (22) (17) (31) (30) (25)
Net cash provided by (used in) financing activities......... 4 (88) (186) (83) (391)
---- ---- ---- ---- ----
Increase (decrease) in cash and cash equivalents............ $ (4) $ 8 $167 $169 $ 83
==== ==== ==== ==== ====
</TABLE>

From January 1, 1994 through the nine months ended September 30, 1997
DocuTech generated approximately $1.0 million in net cash from operating
activities. Cash used in investing activities was primarily for purchases of
property and equipment. Cash used in financing activities consisted primarily of
payments of dividends to stockholders and payments on long term debt. DocuTech
believes it has adequate cash flow and financing alternatives available to it to
fund its operations and capital requirements for the foreseeable future.

44
<PAGE>

I(2) SOLUTIONS RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data and
such data as a percentage of revenues for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
FISCAL YEAR ENDED OCTOBER 31, NINE MONTHS ENDED JULY 31,
------------------------------------------------ -------------------------------
1994 1995 1996 1996 1997
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Services........................ $2,293 63.0% $2,303 57.4% $2,384 60.2% $1,839 58.6% $2,014 60.5%
Products........................ 1,345 37.0 1,710 42.6 1,575 39.8 1,298 41.4 1,316 39.5
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
3,638 100.0 4,013 100.0 3,959 100.0 3,137 100.0 3,330 100.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Cost of revenues
Services........................ 724 19.9 917 22.9 1,023 25.8 721 23.0 767 23.0
Products........................ 1,129 31.0 1,302 32.4 1,229 31.0 1,024 32.6 966 29.0
Depreciation.................... 159 4.4 155 3.9 157 4.0 120 3.8 126 3.8
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
2,012 55.3 2,374 59.2 2,409 60.8 1,865 59.4 1,859 55.8
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Gross profit...................... 1,626 44.7 1,639 40.8 1,550 39.2 1,272 40.5 1,471 44.2
Selling, general and
administrative expenses......... 1,328 36.5 1,264 31.5 1,673 42.3 1,085 34.6 1,234 37.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating income (loss)........... 298 8.2 375 9.3 (123) (3.1) 187 6.0 237 7.1
Interest expense (income)......... 45 1.2 (8) (0.2) 1 -- 7 0.2 15 0.4
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Income (loss) before taxes........ $ 253 7.0% $ 383 9.5% $ (124) (3.1)% $ 180 5.7% $ 222 6.7%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

Nine Months Ended July 31, 1997 Compared to Nine Months Ended July 31, 1996

Revenues. Revenues increased $193,000 or 6.2% from approximately $3.1
million for the nine months ended July 31, 1996 to approximately $3.3 million
for the nine months ended July 31, 1997. This increase was primarily due to
higher service revenues achieved through increased capacity associated with the
opening of a new facility.

Cost of Revenues. Cost of revenues remained the same at approximately $1.9
million for the nine months ended July 31, 1996 and the nine months ended July
31, 1997. Gross profit as a percentage of revenues was 40.5% for the nine months
ended July 31, 1996 and 44.2% for the nine months ended July 31, 1997.

Selling, General and Administrative Expenses. SG&A expenses increased from
approximately $1.1 million for the nine months ended July 31, 1996 to
approximately $1.2 million for the nine months ended July 31, 1997. As a
percentage of revenues, SG&A expenses increased from 34.6% for the nine months
ended July 31, 1996 to 37.1% for the nine months ended July 31, 1997. This
increase is primarily due to higher owner compensation expenses.

Fiscal Year Ended October 31, 1996 Compared to Fiscal Year Ended October 31,
1995

Revenues. Revenues were approximately $4.0 million for both fiscal years
ended October 31, 1995 and October 31, 1996 as a result of a slight increase in
service revenue offset by a slight decrease in product revenue.

Cost of Revenues. Cost of revenues were approximately $2.4 million for
both fiscal years ended October 31, 1995 and October 31, 1996. Gross profit as a
percentage of revenues was 40.8% for fiscal year ended October 31, 1995 and
39.2% for fiscal year ended October 31, 1996, primarily due to higher spending
for retraining of employees for scanning service operations and supply cost
increases.

Selling, General and Administrative Expenses. SG&A expenses increased
approximately $0.4 million or 32.3% from approximately $1.3 million for fiscal
year ended October 31, 1995 to approximately $1.7 million for fiscal year ended
October 31, 1996. As a percentage of revenues, SG&A expenses increased from
31.5% to 42.3%. This increase was primarily due to a $0.4 million increase in
owner's compensation.

45
<PAGE>

Fiscal Year Ended October 31, 1995 Compared to Fiscal Year Ended October 31,
1994

Revenues. Revenues increased approximately $0.4 million or 10.3% from
approximately $3.6 million for fiscal year ended October 31, 1994 to
approximately $4.0 million for fiscal year ended October 31, 1995. This increase
was primarily due to higher product sales connected to unit volumes.

Cost of Revenues. Cost of revenues increased approximately $0.4 million or
18.0% from approximately $2.0 million for fiscal year ended October 31, 1994 to
approximately $2.4 million for fiscal year ended October 31, 1995. Gross profit
as a percentage of revenues was 44.7% for fiscal year ended October 31, 1994 and
40.8% for fiscal year ended October 31, 1995. This decrease was primarily due to
lower margins earned on service revenues.

Selling, General and Administrative Expenses. SG&A expenses were
approximately $1.3 million for fiscal year ended October 31, 1994 and for fiscal
year ended October 31, 1995. However, as a percentage of revenues, SG&A expenses
decreased from 36.5% to 31.5%.

I(2) Solutions Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of I(2) Solutions (in thousands):

<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED ENDED
OCTOBER 31, JULY 31,
------------------- -----------
1994 1995 1996 1996 1997
---- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C>
Net cash flow provided by operating activities.............. $718 $426 $ 1 $283 $130
Net cash flow (used in) investing activities................ (193) (229) (179) (110) (140)
Net cash (used in) financing activities..................... (194) (33) (31) (12) (59)
---- ---- ----- ---- ----
Increase (decrease) in cash and cash equivalents............ $331 $164 $(209) $161 $(69)
==== ==== ===== ==== ====
</TABLE>

From November 1, 1993 through the nine months ended July 31, 1997, I(2)
Solutions generated approximately $1.3 million in net cash from operating
activities. Cash used in investing activities was primarily for purchases of
property, plant and equipment. Cash used in financing activities consisted
primarily of payments on long term debt. I(2) Solutions believes it has adequate
cash flow and financing alternatives available to it to fund its operations and
capital requirements for the foreseeable future.

IMS RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data and
such data as a percentage of revenues for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30, NINE MONTHS ENDED AUGUST 31,
------------------------------------------------ -------------------------------
1994 1995 1996 1996 1997
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Services........................ $2,353 96.7% $2,532 82.1% $1,969 82.9% $1,489 80.1% $1,808 94.4%
Products........................ 81 3.3 551 17.9 405 17.1 369 19.9 107 5.6
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
2,434 100.0 3,083 100.0 2,374 100.0 1,858 100.0 1,915 100.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Cost of revenues
Services........................ 1,564 64.3 1,827 59.3 1,659 69.9 1,232 66.3 1,069 55.8
Products........................ 72 3.0 431 14.0 241 10.2 238 12.8 66 3.4
Depreciation.................... 141 5.8 112 3.6 96 4.0 65 3.5 53 2.8
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
1,777 73.0 2,370 76.9 1,996 84.1 1,535 82.6 1,188 62.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Gross profit...................... 657 27.0 713 23.1 378 15.9 323 17.4 727 38.0
Selling, general and
administrative expenses......... 616 25.3 708 23.0 580 24.4 479 25.8 405 21.2
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating income (loss)........... 41 1.7 5 0.1 (202) (8.5) (156) (8.4) 322 16.8
Interest expense (income)......... 32 1.3 29 0.9 35 1.5 26 1.4 25 1.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Income (loss) before taxes........ $ 9 0.4% $ (24) (0.8)% $ (237) (10.0)% $ (182) (9.8)% $ 297 15.5%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

<PAGE>

Nine Months Ended August 31, 1997 Compared to Nine Months Ended August 31, 1996

Revenues. Revenues were approximately $1.9 million for both the nine
months ended August 31, 1996 and the nine months ended August 31, 1997. For the
nine months ended August 31, 1997 a $0.3 million increase in service revenues
was offset by a $0.3 million decline in product revenues primarily resulting
from lower unit volumes.

Cost of Revenues. Cost of revenues decreased approximately $0.3 million or
22.6% from approximately $1.5 million for the nine months ended August 31, 1996,
to approximately $1.2 million for the nine months ended August 31, 1997. This
decrease was primarily due to a decrease in equipment service contract costs and
lower conversion services employment levels. Gross profit as a percentage of
revenues was approximately 17.4% for the nine months ended August 31, 1996 and
38.0% for the nine months ended August 31, 1997. This increase was primarily due
to the foregoing cost reductions and the increased mix of higher margin scanning
services.

Selling, General and Administrative Expenses. SG&A expenses decreased
approximately $74,000 or 15.4% from approximately $0.5 million for the nine
months ended August 31, 1996 to approximately $0.4 million for the nine months
ended August 31, 1997. As a percentage of revenues, selling, general and
administrative expenses decreased from 25.8% to 21.2%.

Fiscal Year Ended November 30, 1996 Compared to Fiscal Year Ended November 30,
1995

Revenues. Revenues decreased approximately $0.7 million or 23.0% from
approximately $3.1 million for fiscal year ended November 30, 1995 to
approximately $2.4 million for fiscal year ended November 30, 1996. This
decrease was primarily due to the termination of an outside sales agent and
lower service volume.

Cost of Revenues. Cost of revenues decreased approximately $0.4 million or
15.8% from approximately $2.4 million for fiscal year ended November 30, 1995 to
approximately $2.0 million for fiscal year ended November 30, 1996. This
decrease was primarily due to lower sales volume offset by increased software
development costs related to the ImageMAX software product. Gross profit as a
percentage of revenues was approximately 23.1% for fiscal year ended November
30, 1995 and 15.9% for fiscal year ended November 30, 1996. This decrease was
primarily due to a decline in gross margin from services attributable to the
decrease in sales volume.

Selling, General and Administrative Expenses. SG&A expenses decreased
approximately $128,000 or 18.1% from approximately $0.7 million for fiscal year
ended November 30, 1995 to approximately $0.6 million for fiscal year ended
November 30, 1996. This decrease was primarily due to decreases in sales
commissions and lower contributions to the IMS profit-sharing plan. However, as
a percentage of revenues, SG&A expenses increased from 23.0% to 24.4%.

Fiscal Year Ended November 30, 1995 Compared to Fiscal Year Ended November 30,
1994

Revenues. Revenues increased approximately $0.6 million or 26.7% from
approximately $2.4 million for fiscal year ended November 30, 1994 to
approximately $3.1 million for fiscal year ended November 30, 1995. This
increase was primarily due to the addition of a large aperture card conversion
project and an increase in equipment sales.

Cost of Revenues. Cost of revenues increased approximately $0.6 million or
33.4% from approximately $1.8 million for fiscal year ended November 30, 1994 to
approximately $2.4 million in fiscal year ended November 30, 1995. This increase
was primarily due to increases in service labor costs. Gross profit as a
percentage of revenues was approximately 27.0% for fiscal year ended November
30, 1994 and 23.1% for fiscal year ended November 30, 1995. This decrease was
primarily due to a decline in service gross margin.

Selling, General and Administrative Expenses. SG&A expenses increased
approximately $92,000 or 14.9% from approximately $0.6 million for fiscal year
ended November 30, 1994 to approximately $0.7 million for fiscal year ended
November 30, 1995. This increase was primarily due

<PAGE>

to increases in sales commissions and an increased contribution to the IMS
profit-sharing plan. However, as a percentage of revenues, SG&A expenses
decreased from 25.3% to 23.0%.

IMS Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of IMS (in thousands):

<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED ENDED
NOVEMBER 30, AUGUST 31,
------------------------- --------------
1994 1995 1996 1996 1997
----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net cash flow provided by (used in) operating activities.... $ (12) $68 $67 $ 57 $239
Net cash flow provided by (used in) investing activities.... (125) (85) (13) (10) 11
Net cash provided by (used in) financing activities......... 137 17 (54) (35) (208)
----- --- --- ---- ----
Increase in cash and cash equivalents....................... $ -- $-- $-- $ 12 $ 42
===== === === ==== ====
</TABLE>

From December 1, 1993 through the nine months ended August 31, 1997 IMS
generated approximately $0.4 million in net cash from operating activities. Cash
generated from operating activities for the nine months ended August 31, 1997
increased as compared to the nine months ended August 31, 1996 due to an
increase in net income. Cash used in investing activities was primarily for
purchases of property, plant and equipment. Cash used in financing activities
consisted primarily of payments on long term debt. IMS believes it has adequate
cash flow and financing alternatives available to it to fund its operations and
capital requirements for the foreseeable future.

IDS RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data and
such data as a percentage of revenues for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
FISCAL YEAR ENDED AUGUST 31,
------------------------------------------------
1995 1996 1997
-------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Services.............................................. $1,776 100.0% $1,203 100.0% $2,652 100.0%
------ ----- ------ ----- ------ -----
1,776 100.0 1,203 100.0 2,652 100.0
------ ----- ------ ----- ------ -----
Cost of revenues
Services.............................................. 998 56.2 809 67.2 1,745 65.8
Depreciation.......................................... 11 0.6 14 1.2 17 0.7
------ ----- ------ ----- ------ -----
1,009 56.8 823 68.4 1,762 66.5
------ ----- ------ ----- ------ -----
Gross profit............................................ 767 43.2 380 31.6 890 33.5
Selling, general and administrative expenses............ 733 41.3 435 36.2 910 34.3
------ ----- ------ ----- ------ -----
Operating income (loss)................................. 34 1.9 (55) (4.6) (20) (0.8)
Interest expense (income)............................... 8 0.5 12 1.0 2 --
------ ----- ------ ----- ------ -----
Income (loss) before taxes.............................. $ 26 1.4% $ (67) (5.6)% $ (22) (0.8)%
====== ===== ====== ===== ====== =====
</TABLE>

Fiscal Year Ended August 31, 1997 Compared to Fiscal Year Ended August 31, 1996

Revenues. Service revenues increased approximately $1.4 million or 120.4%
from approximately $1.2 million for fiscal year ended August 31, 1996 to
approximately $2.7 million for fiscal year ended August 31, 1997. This increase
was primarily due to additions to the sales force and the addition of two large
data entry projects from a new and an existing client.

Cost of Revenues. Cost of revenues increased approximately $0.9 million or
114.1% from approximately $0.8 million for fiscal year ended August 31, 1996 to
approximately $1.8 million for fiscal year ended August 31, 1997. This increase
was primarily due to higher contract labor costs

<PAGE>

associated with higher volume. Gross profit as a percentage of revenues was
31.6% for fiscal year ended August 31, 1996 and 33.5% for fiscal year ended
August 31, 1997.

Selling, General and Administrative Expenses. SG&A expenses increased
approximately $0.5 million or 109.0% from approximately $0.4 million for fiscal
year ended August 31, 1996 to approximately $0.9 million for fiscal year ended
August 31, 1997. This increase was primarily due to increased owners'
compensation expense. As a percentage of revenues, SG&A expenses remained
relatively constant.

Fiscal Year Ended August 31, 1996 Compared to Fiscal Year Ended August 31, 1995

Revenues. Service revenues decreased approximately $0.6 million or 32.3%
from approximately $1.8 million for fiscal year ended August 31, 1995 to
approximately $1.2 million for fiscal year ended August 31, 1996. This decrease
was primarily due to the completion of two large projects in fiscal year ended
August 31, 1995.

Cost of Revenues. Cost of revenues decreased approximately $0.2 million or
18.4% from approximately $1.0 million for fiscal year ended August 31, 1995 to
approximately $0.8 million for fiscal year ended August 31, 1996. This decrease
was primarily due to lower contract labor costs associated with lower sales
volume. Gross profit as a percentage of revenues was 43.2% for fiscal year ended
August 31, 1995 and 31.6% for fiscal year ended August 31, 1996. This decline is
primarily due to the hiring of an additional project manager during fiscal year
ended August 31, 1996 in anticipation of future revenue growth and the
completion of two higher margin projects in fiscal year ended August 31, 1995.

Selling, General and Administrative Expenses. SG&A expenses decreased
approximately $0.3 million or 40.7% from approximately $0.7 million for fiscal
year ended August 31, 1995 to approximately $0.4 million for fiscal year ended
August 31, 1996. This decrease was primarily due to decreased owners'
compensation expense. As a percentage of revenues, SG&A expenses decreased from
41.3% to 36.2%.

IDS Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of IDS (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR ENDED AUGUST 31,
------------------------------
1995 1996 1997
----- ------ -----
<S> <C> <C> <C>
Net cash flow provided by operating activities before owners
compensation.............................................. $750 $ 342 $629
==== ===== ====
Net cash flow provided by (used in) operating activities.... $199 $(185) $421
Net cash flow (used in) investing activities................ (18) (13) (23)
Net cash provided by (used in) financing activities......... (28) 57 (57)
---- ----- ----
Increase (decrease) in cash and cash equivalents............ $153 $(141) $341
==== ===== ====
</TABLE>

From September 1, 1994 through August 31, 1997, IDS generated approximately
$1.7 million in net cash from operating activities before owners' compensation.
Cash used in investing activities was for purchases of property and equipment.
Cash used in financing activities consisted primarily of net borrowings and
repayments of amounts due to stockholders and on the line of credit. IDS
believes it has adequate cash flow and financing alternatives available to fund
its operations and capital requirements for the foreseeable future.

49
<PAGE>

OMI RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data and
such data as a percentage of revenues for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
FISCAL YEAR ENDED OCTOBER 31, NINE MONTHS ENDED JULY 31,
------------------------------- -------------------------------
1995 1996 1996 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Services........................................ $1,779 59.9% $2,269 60.6% $1,689 57.5% $1,788 56.8%
Products........................................ 1,193 40.1 1,477 39.4 1,248 42.5 1,358 43.2
------ ----- ------ ----- ------ ----- ------ -----
2,972 100.0 3,746 100.0 2,937 100.0 3,146 100.0
------ ----- ------ ----- ------ ----- ------ -----
Cost of revenues
Services........................................ 1,473 49.5 1,964 52.4 1,423 48.5 1,458 46.3
Products........................................ 709 23.9 837 22.3 699 23.8 772 24.5
Depreciation.................................... 60 2.0 84 2.3 50 1.6 74 2.4
------ ----- ------ ----- ------ ----- ------ -----
2,242 75.4 2,885 77.0 2,172 73.9 2,304 73.2
------ ----- ------ ----- ------ ----- ------ -----
Gross profit...................................... 730 24.6 861 23.0 765 26.1 842 26.8
Selling, general and administrative expenses...... 591 19.9 688 18.4 508 17.3 528 16.8
------ ----- ------ ----- ------ ----- ------ -----
Operating income.................................. 139 4.7 173 4.6 257 8.8 314 10.0
Interest expense (income)......................... 49 1.7 18 0.5 16 0.6 15 0.5
------ ----- ------ ----- ------ ----- ------ -----
Income (loss) before taxes........................ $ 90 3.0% $ 155 4.1% $ 241 8.2% $ 299 9.5%
====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

Nine Months Ended July 31, 1997 Compared to Nine Months Ended July 31, 1996

Revenues. Revenues increased approximately $0.2 million or 7.1% from
approximately $2.9 million for the nine months ended July 31, 1996, to
approximately $3.1 million for the nine months ended July 31, 1997. This
increase was primarily due to increased service and equipment sales and related
service contract and supply revenue.

Cost of Revenues. Cost of revenues increased $132,000 or 6.1% from
approximately $2.2 million for the nine months ended July 31, 1996 to
approximately $2.3 million for the nine months ended July 31, 1997. This
increase was due to higher sales volume. Gross profit as a percentage of
revenues was 26.1% for the nine months ended July 31, 1996 and 26.8% for the
nine months ended July 31, 1997.

Selling, General and Administrative Expenses. SG&A expenses were
approximately $0.5 million for both the nine months ended July 31, 1996 and
1997. As a percentage of revenues, SG&A expenses decreased from 17.3% to 16.8%.

Fiscal Year Ended October 31, 1996 Compared to Fiscal Year Ended October 31,
1995

Revenues. Revenues increased approximately $0.7 million or 26.0% from
approximately $3.0 million for fiscal year ended October 31, 1995 to
approximately $3.7 million for fiscal year ended October 31, 1996. This increase
was primarily due to increased unit sales of Canon micrographics and imaging
system sales, micrographic service sales increases and the growth of the
scanning operation.

Cost of Revenues. Cost of revenues increased approximately $0.6 million or
28.7% from approximately $2.2 million for fiscal year ended October 31, 1995 to
approximately $2.9 million for fiscal year ended October 31, 1996. This increase
was primarily due to higher cost or increased volume of equipment sales. Gross
profit as a percentage of revenues was 24.6% for fiscal year ended October 31,
1995 and 23.0% for fiscal year ended October 31, 1996.

Selling, General and Administrative Expenses. SG&A expenses increased
approximately $97,000 or 16.4% from approximately $0.6 million for fiscal year
ended October 31, 1995 to approximately $0.7 million for fiscal year ended
October 31, 1996. As a percentage of revenues, SG&A expenses decreased from
19.9% to 18.4%. This dollar increase was primarily due to increases in owners'
compensation expense.

50
<PAGE>

OMI Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of OMI (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR NINE MONTHS
ENDED ENDED
OCTOBER 31, JULY 31,
-------------- ----------------
1995 1996 1996 1997
---- ---- ----- -----
<S> <C> <C> <C> <C>
Net cash flow provided by operating activities.............. $197 $212 $ 94 $ 195
Net cash flow (used in) investing activities................ (117) (239) (104) (109)
Net cash provided by (used in) financing activities......... (80) 34 11 (93)
---- ---- ----- -----
Increase (decrease) in cash and cash equivalents............ $ -- $ 7 $ 1 $ (7)
==== ==== ===== =====
</TABLE>

From November 1, 1994 through the nine months ended July 31, 1997 OMI
generated $0.6 million in net cash from operating activities. Cash used in
investing activities was primarily for purchases of property, plant and
equipment. Cash used or provided by financing activities consisted primarily of
payments or draws on current lines of credit. OMI believes it has adequate cash
flow and financing alternatives available to it to fund its operations and
capital requirements for the foreseeable future.

SPAULDING RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data and
such data as a percentage of revenues for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED JUNE 30, SEPTEMBER 30,
------------------------------------------------ -------------------------------
1995 1996 1997 1996 1997
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Services........................ $4,949 51.9% $4,748 54.5% $5,019 56.8% $1,251 57.1% $1,446 64.9%
Products........................ 4,590 48.1 3,956 45.5 3,814 43.2 938 42.9 782 35.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
9,539 100.0 8,704 100.0 8,833 100.0 2,189 100.0 2,228 100.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Cost of revenues
Services........................ 3,175 33.3 3,104 35.7 3,158 35.8 744 34.0 960 43.1
Products........................ 3,114 32.6 2,525 29.0 2,537 28.7 647 29.6 526 23.6
Depreciation.................... 182 1.9 192 2.2 179 2.0 40 1.8 51 2.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
6,471 67.8 5,821 66.9 5,874 66.5 1,431 65.4 1,537 69.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Gross profit...................... 3,068 32.2 2,883 33.1 2,959 33.5 758 34.6 691 31.0
Selling, general and
administrative expenses......... 2,826 29.7 3,018 34.7 2,631 29.8 637 29.1 604 27.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating income (loss)........... 242 2.5 (135) (1.6) 328 3.7 121 5.5 87 3.9
Interest expense (income)......... 144 1.5 147 1.6 207 2.3 47 2.1 47 2.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Income (loss) before taxes........ $ 98 1.0% $ (282) (3.2)% $ 121 1.4% $ 74 3.4% $ 40 1.8%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

Three Months Ended September 30, 1997 Compared to Three Months Ended September
30, 1996

Revenues. Revenues remained unchanged at approximately $2.2 million during
the comparable periods with an increase in service revenues during the three
months ended September 30, 1997 offset by a decrease in product revenues.

Cost of Revenues. Cost of revenues increased $106,000 or 7.4% from
approximately $1.4 million in the three months ended September 30, 1996 to $1.5
million in the three months ended September 30, 1997. Gross profit as a
percentage of revenues was 34.6% for the three months ended September 30, 1996
and 31.0% for the three months ended September 30, 1997. This decrease is
primarily due to lower margins earned in the three months ended September 30,
1997 on a large service project.

51
<PAGE>

Selling, General and Administrative Expenses. SG&A expenses remained
unchanged at approximately $0.6 million during the comparable periods. During
the three months ended September 30, 1997, Spaulding incurred $73,000 of
professional fees in connection with the Acquisition which was more than offset
by lower compensation expenses. As a percentage of revenues, SG&A expenses
decreased 29.1% to 27.1%.

Fiscal Year Ended June 30, 1997 Compared to Fiscal Year Ended June 30, 1996

Revenues. Revenues increased $129,000 or 1.5% from approximately $8.7
million for fiscal year ended June 30, 1996 to approximately $8.8 million for
fiscal year ended June 30, 1997. This increase was due to higher service sales
partially offset by a decrease in product sales.

Cost of Revenues. Cost of revenues was approximately $5.8 million for
fiscal year ended June 30, 1996 and $5.9 million for fiscal year ended June 30,
1997. Gross profit as a percentage of revenues was approximately 33.1% for
fiscal year ended June 30, 1996 and 33.5% for fiscal year ended June 30, 1997.

Selling, General and Administrative Expenses. SG&A expenses decreased
$387,000 or 12.8% from approximately $3.0 million for fiscal year ended June 30,
1996 to approximately $2.6 million for fiscal year ended June 30, 1997. As a
percentage of revenues, SG&A expenses decreased from 34.7% to 29.8%. This
decrease was primarily due to lower medical claims experience and lower
employment levels.

Fiscal Year Ended June 30, 1996 Compared to Fiscal Year Ended June 30, 1995

Revenues. Revenues decreased $0.8 million or 8.8% from approximately $9.5
million for fiscal year ended June 30, 1995 to approximately $8.7 million for
fiscal year ended June 30, 1996. This decrease was primarily due to a $0.6
million decrease in micrographic equipment sales and service, a result of a
significant supplier withdrawing its equipment from the market.

Cost of Revenues. Cost of revenues decreased $0.6 million or 10.0% from
approximately $6.5 million for fiscal year ended June 30, 1995 to approximately
$5.8 million for fiscal year ended June 30, 1996. This decrease was primarily
due to decreased sales volume. Gross profit as a percentage of revenues was
32.2% for fiscal year ended June 30, 1995 and 33.1% for fiscal year ended June
30, 1996.

Selling, General and Administrative Expenses. SG&A expenses increased
$192,000 or 6.8% from approximately $2.8 million for fiscal year ended June 30,
1995 to approximately $3.0 million for fiscal year ended June 30, 1996. As a
percentage of revenues, SG&A expenses increased from 29.7% to 34.7%. This
increase was primarily due to severance costs and higher medical insurance
claims experience offset by lower employment levels.

Spaulding Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of Spaulding (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED ENDED
JUNE 30, SEPTEMBER 30,
------------------------- ---------------
1995 1996 1997 1996 1997
---- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C>
Net cash flow provided by operating activities.............. $337 $459 $ 273 $135 $ 393
Net cash flow (used in) investing activities................ (27) (131) (141) (20) (25)
Net cash (used in) financing activities..................... (238) (268) (188) (18) (171)
---- ---- ----- ---- -----
Increase (decrease) in cash and cash equivalents............ $ 72 $ 60 $ (56) $ 97 $ 197
==== ==== ===== ==== =====
</TABLE>

52
<PAGE>

From July 1, 1994 through the three months ended September 30, 1997
Spaulding generated approximately $1.5 million in net cash from operating
activities. Cash generated from operations decreased for fiscal year ended June
30, 1997 as compared to fiscal year ended June 30, 1996 due to increased working
capital requirements. Cash used in investing activities was primarily for
purchases of property, plant and equipment. Cash used in financing activities
consisted primarily of purchases of treasury stock and repayments of long-term
debt. At June 30, 1997, Spaulding had failed to meet certain financial covenants
relating to a mortgage note payable and therefore the note was due on demand. In
September 1997 the mortgage note was repaid. Spaulding believes it has adequate
cash flow and financing alternatives available to it to fund its operations and
capital requirements for the foreseeable future.

TIMCO RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data and
such data as a percentage of revenues for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ -------------------------------
1994 1995 1996 1996 1997
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Services........................ $4,132 100.0% $4,420 100.0% $4,991 100.0% $3,609 100.0% $3,318 100.0%
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
4,132 100.0 4,420 100.0 4,991 100.0 3,609 100.0 3,318 100.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Cost of revenues
Services........................ 3,025 73.2 3,110 70.3 3,276 65.6 2,376 65.8 2,096 63.2
Depreciation.................... 74 1.8 96 2.2 76 1.6 68 1.9 63 1.9
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
3,099 75.0 3,206 72.5 3,352 67.2 2,444 67.7 2,159 65.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Gross profit...................... 1,033 25.0 1,214 27.5 1,639 32.8 1,165 32.3 1,159 34.9
Selling, general and
administrative expenses......... 973 23.6 1,445 32.7 1,223 24.5 914 25.3 844 25.4
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating income (loss)........... 60 1.4 (231) (5.2) 416 8.3 251 7.0 315 9.5
Net interest (income) expense..... 47 1.1 57 1.3 99 2.0 76 2.1 43 1.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Income (loss) before taxes........ $ 13 0.3% $ (288) (6.5)% $ 317 6.4% $ 175 4.9% $ 272 8.2%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996

Revenues. Service revenues decreased approximately $0.3 million or 8.1%
from approximately $3.6 million for the nine months ended September 30, 1996 to
approximately $3.3 million for the nine months ended September 30, 1997. This
decrease was primarily due to the loss of a major customer that was acquired by
a third-party buyer, partially offset by increased sales to other customers.

Cost of Revenues. Cost of service revenues decreased approximately $0.3
million or 11.7% from approximately $2.5 million for the nine months ended
September 30, 1996, to approximately $2.2 million for the nine months ended
September 30, 1997. Gross profit as a percentage of revenues was 32.3% for the
nine months ended September 30, 1996 and 34.9% for the nine months ended
September 30, 1997. This increase was primarily due to increased employee
productivity as well as reduced costs.

Selling, General and Administrative Expenses. SG&A expenses decreased
$70,000 or 7.7% from approximately $0.8 million for the nine months ended
September 30, 1996 to approximately $0.7 million for the nine months ended
September 30, 1997. However, as a percentage of revenues, SG&A expenses
increased from 25.4% to 22.4%. Lower legal costs related to the retirement of
TIMCO's co-founder were partially offset by professional fees incurred in
connection with the Acquisition.

53
<PAGE>

Fiscal Year Ended December 31, 1996 Compared to Fiscal Year Ended December 31,
1995

Revenues. Service revenues increased approximately $0.6 million or 12.9%
from approximately $4.4 million for fiscal year ended December 31, 1995 to
approximately $5.0 million for fiscal year ended December 31, 1996. This
increase was primarily due to increases in sales volume generated by three newly
hired sales representatives and selective price increases.

Cost of Revenues. Cost of service revenues increased approximately
$146,000 or 4.6% from approximately $3.2 million for fiscal year ended December
31, 1995 to approximately $3.4 million for fiscal year ended December 31, 1996.
This increase was primarily due to increases in employee costs associated with
higher sales volume. Gross profit as a percentage of revenues was 27.5% for
fiscal year ended December 31, 1995 and approximately 32.8% for fiscal year
ended December 31, 1996. This increase was primarily due to improved employee
productivity.

Selling, General and Administrative Expenses. SG&A expenses decreased $0.2
million or 15.4% from approximately $1.4 million for fiscal year ended December
31, 1995 to approximately $1.2 million for fiscal year ended December 31, 1996.
As a percentage of revenues, SG&A expenses decreased from 32.7% to 24.5%. This
decrease was primarily due to the expenses related to the retirement of TIMCO's
co-founder which occurred in fiscal year ended December 31, 1995. This was
partially offset by increased sales commissions in fiscal year ended December
31, 1996.

Fiscal Year Ended December 31, 1995 Compared to Fiscal Year Ended December 31,
1994

Revenues. Service revenues increased approximately $0.3 million or 7.0%
from approximately $4.1 million for fiscal year ended December 31, 1994 to
approximately $4.4 million for fiscal year ended December 31, 1995. This
increase was primarily due to the acquisition of a document management company
in northern California in May 1994.

Cost of Revenues. Cost of service revenues increased approximately
$107,000 or 3.5% from approximately $3.1 million for fiscal year ended December
31, 1994 to approximately $3.2 million for fiscal year ended December 31, 1995.
This increase was primarily due to increases in employee costs associated with
higher sales volume. Gross profit as a percentage of revenues was 25.0% for
fiscal year ended December 31, 1994 and 27.5% for fiscal year ended December 31,
1995.

Selling, General and Administrative Expenses. SG&A expenses increased
approximately $0.5 million or 48.5% from approximately $1.0 million for fiscal
year ended December 31, 1994 to approximately $1.4 million for fiscal year ended
December 31, 1995. As a percentage of revenues, SG&A expenses increased from
23.5% to 32.7%. This increase was primarily due to the one-time expenses related
to the retirement of the co-founder of the business and the costs associated
with the hiring of three additional sales people.

TIMCO Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of TIMCO (in thousands):

<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------ --------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net cash flow provided by operating activities.............. $ 24 $ 90 $305 $268 $463
Net cash flow (used in) investing activities................ (323) (100) (120) (119) (58)
Net cash provided by (used in) financing activities......... 305 45 (219) (173) (387)
---- ---- ---- ---- ----
Increase (decrease) in cash and cash equivalents............ $ 6 $ 35 $(34) $(24) $ 18
==== ==== ==== ==== ====
</TABLE>

From January 1, 1994 through the nine months ended September 30, 1997 TIMCO
generated approximately $0.9 million in net cash from operating activities.
Increases in cash generated by operating activities for the nine months ended
September 30, 1997 as compared to the nine months

54
<PAGE>

ended September 30, 1996 were due primarily to decreased working capital. Cash
used in investing activities was primarily for purchases of property, plant and
equipment. Cash used in financing activities consisted primarily of draw downs
or payments on current lines of credit and a distribution to shareholders for
the nine months ended September 30, 1997. TIMCO believes it has adequate cash
flow and financing alternatives available to it to fund its operations and
capital requirements for the foreseeable future.

TPS RESULTS OF OPERATIONS

The following table sets forth selected statement of operations data and
such data as a percentage of revenues for the periods indicated (dollars in
thousands):

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEAR ENDED MARCH 31, SEPTEMBER 30,
------------------------------------------------ -------------------------------
1995 1996 1997 1996 1997
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Services........................ $1,539 69.0% $1,819 66.2% $2,428 69.7% $1,052 62.3% $1,568 69.4%
Products........................ 693 31.0% 928 33.8 1,056 30.3 637 37.7 692 30.6
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
2,232 100.0 2,747 100.0 3,484 100.0 1,689 100.0 2,260 100.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Cost of revenues
Services........................ 1,013 45.4 1,239 45.1 1,519 43.6 733 43.4 1,055 46.7
Products........................ 643 28.8 769 28.0 964 27.7 531 31.5 587 26.0
Depreciation.................... 47 2.1 68 2.5 96 2.7 34 2.0 54 2.3
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
1,703 76.3 2,076 75.6 2,579 74.0 1,298 76.9 1,696 75.0
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Gross profit...................... 529 23.7 671 24.4 905 26.0 391 23.1 564 25.0
Selling, general and
administrative expenses......... 531 23.8 604 22.0 799 23.0 310 18.4 454 20.1
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating income (loss)........... (2) (0.1) 67 2.4 106 3.0 81 4.7 110 4.9
Net interest (income) expense..... 5 0.2 69 2.5 87 2.5 43 2.5 54 2.4
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Income (loss) before taxes........ $ (7) (0.3)% $ (2) (0.1)% $ 19 0.5% $ 38 2.2% $ 56 2.5%
====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>

Six Months Ended September 30, 1997 Compared to Six Months Ended September 30,
1996

Revenues. Revenues increased approximately $0.6 million or 33.9% from
approximately $1.7 million for the six months ended September 30, 1996 to
approximately $2.3 million for the six months ended September 30, 1997. This
increase was primarily due to the addition of two large service accounts and a
slight increase in product sales.

Cost of Revenues. Cost of revenues increased approximately $0.4 million or
30.7% from approximately $1.3 million for the six months ended September 30,
1996, to approximately $1.7 million for the six months ended September 30, 1997.
This increase was primarily due to increases in service revenues. Gross profit
as a percentage of revenues was 23.1% for the six months ended September 30,
1996 and 25.0% for the six months ended September 30, 1997.

Selling, General and Administrative Expenses. SG&A expenses increased
$144,000 or 46.3% from approximately $0.3 million for the six months ended
September 30, 1996 to $0.5 million for the six months ended September 30, 1997
primarily due to sales, technical and administrative staff increases. As a
percentage of revenues, SG&A expenses increased from 18.4% to 20.1%.

Fiscal Year Ended March 31, 1997 Compared to Fiscal Year Ended March 31, 1996

Revenues. Revenues increased approximately $0.7 million or 26.8% from
approximately $2.7 million for fiscal year ended March 31, 1996 to approximately
$3.5 million for fiscal year ended March 31, 1997. This increase was primarily
due to the addition of new service client accounts.

Cost of Revenues. Cost of revenues increased approximately $0.5 million or
24.2% from approximately $2.1 million for fiscal year ended March 31, 1996 to
approximately $2.6 million for fiscal year ended March 31, 1997. This increase
was primarily due to increases in service revenues.

55
<PAGE>

Gross profit as a percentage of revenues was 24.4% for fiscal year ended March
31, 1996 and 26.0% for the fiscal year ended March 31, 1997.

Selling, General and Administrative Expenses. SG&A expenses increased
approximately $0.2 million or 32.3% from approximately $0.6 million for fiscal
year ended March 31, 1996 to approximately $0.8 million for fiscal year ended
March 31, 1997. As a percentage of revenues, SG&A expenses increased from 22.0%
to 23.0%. This increase was primarily due to one-time expenses related to the
start-up of the Richmond office and higher employment levels.

Fiscal Year Ended March 31, 1996 Compared to Fiscal Year Ended March 31, 1995

Revenues. Revenues increased approximately $0.5 million or 23.0% from
approximately $2.2 million for fiscal year ended March 31, 1995 to approximately
$2.8 million for fiscal year ended March 31, 1996. This increase was primarily
due to the addition of several large service accounts and higher product
revenue.

Cost of Revenues. Cost of revenues increased approximately $0.4 million or
21.8% from approximately $1.7 million for fiscal year ended March 31, 1995 to
approximately $2.1 million for fiscal year ended March 31, 1996. This increase
was primarily due to increases in service and product revenues. Gross profit as
a percentage of revenues was 23.7% for fiscal year ended March 31, 1995 and
24.4% for fiscal year ended March 31, 1996.

Selling, General and Administrative Expenses. SG&A expenses increased
approximately $73,000 or 13.8% from approximately $0.5 million for fiscal year
ended March 31, 1995 to approximately $0.6 million for fiscal year ended March
31, 1996. This increase was primarily due to increased sales commission expenses
and promotion expenses related to new imaging services and systems. However, as
a percentage of revenues, SG&A expenses decreased from 23.8% to 22.0%.

TPS Liquidity and Capital Resources

The following table sets forth selected information from the statement of
cash flows of TPS (in thousands):

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED ENDED
MARCH 31, SEPTEMBER 30,
------------------------- ---------------
1995 1996 1997 1996 1997
---- ----- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Net cash flow provided by (used in) operating activities.... $ 56 $(174) $104 $ 14 $ (99)
Net cash flow (used in) investing activities................ (58) (121) (139) (54) (13)
Net cash provided by financing activities................... 2 295 35 40 112
---- ----- ---- ---- -----
Increase (decrease) in cash and cash equivalents............ $ -- $ -- $ -- $ -- $ --
==== ===== ==== ==== =====
</TABLE>

From April 1, 1994 through the six months ended September 30, 1997 TPS used
$113,000 in net cash from operating activities. The growth experienced for
fiscal year ended March 31, 1997 required large increases in working capital.
Cash used in investing activities was primarily for purchases of property, plant
and equipment. Cash used in financing activities consisted primarily of
refunding of long term debt. TPS believes it has adequate cash flow and
financing alternatives available to it to fund its operations and capital
requirements for the foreseeable future.

56
<PAGE>

BUSINESS

ImageMax was founded in November 1996 to become a leading national,
single-source provider of integrated document management solutions. Prior to the
Offering, ImageMax has not conducted any operations. ImageMax has entered into
agreements to acquire the Founding Companies, simultaneously with and as a
condition to the consummation of the Offering. The Founding Companies, which
have been in business an average of over 20 years, have operations in 13 states,
employ over 950 people and provided services and products to over 5,000 clients
in the last year from 18 locations. The Company's pro forma combined revenues
for the twelve-month period ended December 31, 1996 were $43.3 million. Pro
forma combined revenues for the nine months ended September 30, 1997 were $36.5
million, an increase of 12.6% over the comparable 1996 period. Pro forma
combined, as adjusted, net loss, for the twelve-month period ended December 31,
1996 was $0.5 million. Pro forma combined, as adjusted, net loss for the nine
months ended September 30, 1997 was $1.3 million, compared to a pro forma
combined, as adjusted, net loss of $0.3 million in the comparable 1996 period.
The net loss in the nine months ended September 30, 1997 includes a $2.5 million
non-recurring, non-cash special compensation charge.

The Company's strategy is to work with clients to develop the best solution
to their document management needs, including solutions involving both
outsourced and in-house document capture, conversion, storage and retrieval. The
majority of current document management industry revenue is derived from the
management of film and paper media. However, advances in digital and other
technologies continue to provide organizations with increasing document
management options. As a result, the Company believes the most successful
service providers will be those that can offer a complete spectrum of document
management services and products encompassing solution design and expertise in
the management of digital, film and paper media. Accordingly, the Company has
initially targeted a broad variety of services and products, as well as
technical and vertical market expertise, in order to create a platform from
which it can become a leading national, single-source option for clients with
intensive document management needs. The Company's services include document
management consulting and systems integration, media conversion (consisting of
electronic imaging and micrographics), data indexing and offshore data entry,
information storage and retrieval, and document management system maintenance.
The Company's products include proprietary, open-architecture digital imaging
and indexing software, as well as document management systems and supplies.

MARKET AND INDUSTRY OVERVIEW

Document management businesses provide services and products to capture,
convert, index, store and retrieve documents, whether such documents exist on
paper, microfilm or digital media. Based on information made publicly available
by AIIM, the Company believes the U.S. market for document management services
and products exceeded $6.5 billion in 1996. The Company believes that this
market has been growing at an annual rate of approximately 11% since 1994. The
Company believes that there is a large unvended component of the service market
not contained in the AIIM data because most document management service for
large organizations are still performed in-house. The document management
services industry is highly fragmented. The Company estimates that there are
over 2,000 companies engaged in a wide variety of business-to-business services
and product sales and that a substantial majority of these companies are small
businesses, selling to a single geographic market, offering a limited range of
services or serving a limited number of client market segments.

The Company believes that the following principal factors will drive the
continued growth of the document management industry:

Technological Change. The improvement of digital technology (i.e.,
CD-ROM, personal computers and computer networking) has dramatically
reduced the cost of imaging, storing, indexing and retrieving documents
while improving users' ability to manage documents more efficiently. This
has resulted in many organizations developing new applications for these
documents. Often these applications entail enterprise-wide access to
documents that previously had been too costly or inconvenient to access
rapidly in multiple locations. Evolving technology

57
<PAGE>

has also resulted in a greater need by end users for specialized expertise
in both new and traditional document management systems and in integrating
such systems.

Growth in Document Management Needs. Many organizations, especially
those in document-intensive industries such as health care, financial
service and engineering, have focused attention on their document
management processes and systems as part of a wider effort to manage their
information more efficiently in order to improve productivity,
competitiveness and client service. In addition, organizations must manage
the ever increasing volume of information facilitated by
document-generating technologies such as facsimile, high-speed printing,
the internet and computer networking.

Outsourcing. The Company believes that, while a majority of document
management services are currently being performed by large organizations
in-house, these organizations will increasingly outsource such services.
Outsourcing provides an organization with a means to improve the management
of its documents while allowing the organization to: (i) focus on its core
competencies and revenue generating activities; (ii) reduce fixed costs,
including labor and equipment; (iii) benefit from the expertise and
economies of scale of outside providers; and (iv) gain access to new
technologies without the risk and expense of near-term obsolescence. The
Company believes that, as businesses strive to improve competitiveness
through rapid access to information, service demands for outsourced
document management functions will outstrip the capabilities and geographic
coverage of smaller, capital constrained document management service
providers.

The Company believes the document management service industry is highly
fragmented. The Company believes there are over 2,000 companies serving the
document management needs of industry and government, with a majority of these
companies generating annual revenues less than $10 million. The Company believes
that many of the small businesses with which it competes are candidates for
consolidation because they presently lack the capital for expansion, cannot keep
abreast of rapidly changing technologies, are unable to effectively manage large
complex projects, have not developed marketing and sales programs, do not have
the volume buying power needed to negotiate favorable supply contracts, and are
unable to meet the needs of large, geographically dispersed customers. In
addition, increasing consolidation within two of the largest document-intensive
industries, financial services and health care, has provided an additional
impetus for document management companies to consolidate in order to grow with
their clients. The continuing migration from paper and film to digital media has
broken down many geographic barriers to the provision of document management
services and has increased client demands for integrated operations across the
nation. As a result, the Company believes that many owners of competing service
providers will be receptive to being acquired by a document management company
with a national presence, a solutions orientation and an integration strategy in
order to remain competitive and as a means of providing the owners of such firms
with liquidity.

COMPANY STRENGTHS

The Company believes that its acquisition and integration of the Founding
Companies create the following strengths:

Broad Service and Product Offerings. The Company provides clients
with a wide range of in-house and outsourced document management services
and products. Services include imaging, micrographics, data indexing,
electronic and film and paper storage and retrieval. Products include
software for scanning, indexing and retrieval applications as well as
systems and other equipment from leading document management hardware
manufacturers. The Company's core media conversion services are
complemented by its cost-effective offshore data entry capabilities. The
Company provides these services individually or in combination to provide
solutions to a wide range of clients' document management needs.

Technical Expertise. The Company has developed substantial technical
and systems expertise in the area of digital document management, and has
developed commercial software

58
<PAGE>

products for digital scanning and retrieval applications which the Company
licenses to other service providers and to end users. The Company intends
to capitalize on this base of knowledge by establishing company-wide
technology centers that will focus on software product development,
enhancement of systems integration expertise and new product development
such as data warehousing services and inter/intranet document management
solutions.

Diversified Client Base; Broad Geographic Coverage. The Company has
over 5,000 active clients in a range of vertical markets, including health
care, financial services and engineering. None of the Company's clients
accounted for more than 5% of its pro forma combined revenues for either
the year ended December 31, 1996 or the nine months ended September 30,
1997. With operations in the metropolitan markets of Atlanta, Boston,
Chicago, New York and San Francisco as well as several large regional
markets, the Company has an extensive service and product distribution
network in place and the ability to provide selected services and products
on a national basis.

Management Expertise. Senior management of the Founding Companies
includes well-known industry professionals with an average of 14 years of
experience in the industry. A program to share the best management
practices of the Founding Companies throughout the Company is currently
being established. Senior managements' substantial industry relationships
will also serve as a means of generating future acquisition candidates.
Acquisition execution and integration, operating and financial oversight
and strategic planning will be handled by the experienced executive
management team.

BUSINESS STRATEGY

The Company's goal is to become a leading national, single-source provider
of integrated document management solutions. The Company intends to implement a
business strategy focused on the following key elements:

Become a Leading Single-Source Provider. The Company intends to
become an industry leading single-source provider of integrated document
management solutions. Building upon the expertise of the Founding Companies
in a variety of digital, film and paper-based document management services
and products, the Company will seek to further develop consultative
relationships with clients to assess their document management needs and to
recommend and provide cost-effective combinations of services and products.
In many cases the Company will customize packages of services and products
for specific vertical markets such as health care, financial services and
engineering. As it broadens its geographic network, the Company will expand
national account coverage to service clients who wish to work with a single
vendor.

Capitalize on Business Integration. The Company will seek to achieve
internal revenue and margin growth by efficiently integrating the
operations of the Founding Companies and will seek additional growth by
effectively integrating future acquisitions. Strategic, operational and
financial planning will be directed by executive management in order to
articulate clear and common objectives, implement strategy and measure
performance. Key marketing activities will be conducted under the corporate
name in order to build a national brand. The centralization of
administration and acquisition support, and the integration of internal
financial, administrative, information and communications systems, are
intended to enable business unit management to devote increased resources
to business generation and client service.

Increase Sales and Marketing Efforts. The Company intends to hire
additional salespersons at the Founding Companies promptly after the
Offering and to expand a national account sales force at the corporate
level. Training of current and new salespersons will emphasize digital
imaging applications, and the Company intends to institute profit-based
sales compensation plans. The Company intends to leverage existing client
relationships by cross-selling additional services and products and by
coordinating and making available throughout the Company vertical market
expertise already developed within the organization. In addition, the
Company will seek to extend

59
<PAGE>

throughout its operations the marketing programs used by certain of the
Founding Companies, utilizing direct marketing, telemarketing, seminar
selling and internet marketing programs.

Make Selective Acquisitions. The document management industry is
highly fragmented. The Company estimates that there are over 2,000 document
management companies, a substantial majority of which generate annual
revenues of $10 million or less and provide limited service offerings and
sell to a single geographic market. An important element of the Company's
growth strategy is to make selected acquisitions to consolidate its
position as a provider of complete document management solutions.
Accordingly, the Company will continue its aggressive acquisition program
promptly following the Offering in order to increase geographic coverage
and market share, expand service and product capabilities, obtain key human
resources and technical expertise, and generate critical mass and economies
of scale nationally and in regional markets.

The Company believes that it will be a preferred acquiror of other
companies in the highly-fragmented document management industry as a result of
the Company's technical capabilities, the industry reputation of the Founding
Companies' management personnel, its solutions orientation and integration
strategy, the benefits expected to flow from the Company's integration strategy,
and the Company's financial capabilities and visibility as a public company.
Moreover, the Company believes that the relationships developed through its
licensing of software products and provision of offshore data entry services to
over 100 independent document management service providers yield a valuable
source of potential future acquisitions for the Company.

Based on its acquisition activities and contacts since its inception in
November 1996, the Company believes it is well positioned to continue its
acquisition program promptly following the Offering, under the direction of
Andrew R. Bacas, its Senior Vice President - Corporate Development and Bruce M.
Gillis, its Chief Executive Officer. As of the date of this Prospectus, the
Company has no commitments or agreements with respect to any acquisitions other
than of the Founding Companies.

As consideration for future acquisitions, the Company intends to use
various combinations of Common Stock, cash and notes, and to emphasize Common
Stock when continuing management is a key factor in the acquisition decision.
The Company plans to register initially an additional 2,000,000 shares of its
Common Stock with the Commission under the Securities Act promptly after
completion of the Offering for use in future acquisitions.

SERVICES AND PRODUCTS

The Company generates revenues from the sale of services and products.
Services accounted for approximately 74% of pro forma combined revenues for the
nine months ended September 30, 1997 and approximately 73% for the twelve months
ended December 31, 1996, with products accounting for the remainder.

Services

The Company offers a broad range of document management services across a
variety of media types and formats. This broad range of services, together with
the Company's technical capabilities and experience in selected vertical
markets, enables the Company to tailor document management solutions for its
clients based on their specific needs. The current document management services
that are currently provided in certain geographic locations through one or more
of the Founding Companies include:

Media Conversion Services

Digital Imaging. The Company's digital imaging services involve the
conversion of paper or microfilm documents into digital format through the
use of optical scanners and the conversion of computer output to digital
images typically stored on optical media or to microfilm. Once converted,
digital images can be returned for client use on a CD-ROM or optical disk
or stored by the Company in a data warehouse for subsequent retrieval and
distribution. The Company

60
<PAGE>

believes that digital images are becoming the preferred format of storage
due to benefits such as high speed retrieval, multiple indexing
capabilities and the ability to support and distribute digital, film or
paper output to multiple locations.

Micrographics. The Company performs micrographic services, including
the conversion of paper documents into microfilm images, indexing of film
for computer-aided retrieval systems and COM. Micrographic media are
selected as an alternative to paper or digital media for one or more of the
following reasons: (i) film archives are more accessible, longer-lived and
cheaper to store than paper; (ii) film is eye-readable and not subject to
technological obsolescence; (iii) converting paper to film is currently
more cost-effective than scanning paper for most documents where ease of
accessibility is not needed; and (iv) there is a large base of
organizations with existing film archives and reader-printer equipment.

Data Entry and Indexing. The creation of index files for the rapid
retrieval of images is a critical part of most value-added document
management solutions. The Company provides specialized indexing services to
a variety of clients for both film and digital-format documents. These
labor-intensive services are often contracted for outside the U.S. as a
means to utilize qualified personnel at generally lower cost than is
available domestically.

Storage and Retrieval Services

Digital Storage and Retrieval. Digital storage of documents enables
customers to retrieve large volumes of documents immediately, which would
not be possible using conventional filing systems. Digital storage on
CD-ROM, optical disk, magnetic disk or tape also allows for the rapid
distribution of archival information to multiple destinations and removes
the logistical burden and cost of storing paper documents. These storage
systems may reside in one or more locations, either within a client's
organization or at a Company-maintained data warehouse. Users may access
images via a client-server network, a modem or an intra/internet. Because
digitally-stored documents can be indexed according to several criteria, a
client can use simple but exacting computer search techniques to rapidly
access individual documents or groups of documents. The Company currently
provides a variety of services and proprietary software products that
support clients' digital storage and retrieval needs. See "- Products -
Software" below.

Film and Paper Storage and Retrieval. The Company manages the
archiving of client documents, including processing (i.e., indexing and
formatting), storage, retrieval, delivery and return to storage of
documents within a rapid time frame. Typical archival documents include
medical and legal case files, business records and financial transaction
documents. Service fees generally include billing for storage space, plus
activity charges for retrieval, delivery and return to storage, and
ultimately for document destruction. The Company currently maintains three
storage facilities in the Chicago area, the San Francisco Bay area, and in
Monroe, Louisiana. The Company may seek to enter a relationship with one or
more national providers of paper storage services in order to provide wider
geographic coverage.

The Company believes that client demand in the areas of document management
solution integration, data warehousing and facilities management is growing
rapidly, and the Company intends to expand its current capabilities in these
areas.

Products

The Company develops proprietary, open-architecture software products which
support electronic imaging and indexing services. In addition, the Company
offers a wide range of digital imaging, scanning and viewing hardware,
micrographic reader-printers, micrographic film and supplies and other
equipment.

Software. The Company develops, markets and supports a suite of
proprietary open-architecture software products that support and enhance
the scanning, indexing and retrieval of digital images for its own use and
for sale to other document management companies and end-

61
<PAGE>

users. Versions of these software products can be run on Microsoft
Windows-equipped networks or personal computers, and simplify the process
of scanning, indexing and retrieving electronic images of documents. The
DocuROM product was initially developed for use by document management
companies in their digital conversion operations. The ScanTRAX and FileTRAX
products were developed for marketing to end-users. These software products
are marketed by the Company through a network of approximately 70 other
document management companies acting as value-added resellers and also
directly through the Company's own sales force to end-users including, in
some cases, other document management companies.

The Company has also developed and markets ImageMAX software, a
high-end scanning and viewing software package for the aperture card
market. This product is utilized by both service companies and end-users to
convert and index micrographic images of large format documents (in the
form of 35 millimeter aperture cards) into digital images.

Hardware and Other Equipment. The Company maintains broker or dealer
relationships with a number of document management equipment suppliers,
including Bell & Howell, Canon, Kodak, Minolta, Photomatrix, 3M and Xerox.
These relationships allow the Company to provide clients with the latest
micrographic and digital image viewing, printing and conversion equipment.
Several of the Founding Companies provide extensive field maintenance and
repair services for the equipment they sell. Technical hardware expertise
is expected to be shared across the Company's operations following the
Offering. The Company expects that it will be able to achieve certain
purchasing efficiencies with equipment manufacturers and that it will be an
attractive dealer to equipment manufacturers seeking to achieve broad
geographic coverage with a single company. The Company also provides its
clients a wide range of micrographic film products, digital media and other
graphic supplies.

CLIENTS AND KEY MARKETS

The Company had a broad base of over 5,000 clients in the last year, none
of which accounted for more than 5% of pro forma combined revenues for either
the year ended December 31, 1996 or the nine months ended September 30, 1997.
The Company's clients are primarily in the health care, financial services and
engineering industries, as well as certain other vertical markets.

The major markets for document management services providers are
transaction-intensive industries in which the core business processes involve
documents or industries for which there are legal or regulatory considerations
requiring the processing and storage of documents in a controlled manner. While
maintaining its diversified client base, the Company intends to increase its
expertise in certain core vertical markets. An overview of the Company's major
target markets follows:

The Health Care Market: consists of health care providers, health care
insurers and pharmaceutical companies.

The Financial Services Market: consists of commercial banks, mortgage
banking companies, insurance companies, brokerage companies and credit card and
loan processing companies.

The Engineering Market: consists of manufacturers, architectural and
engineering consultants, utilities and telecommunications companies.

Other Vertical Markets: include the retail and transportation markets,
government entities and litigation support.

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<PAGE>

<TABLE>
<CAPTION>
REPRESENTATIVE CLIENTS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTH CARE FINANCIAL SERVICES ENGINEERING OTHER VERTICAL MARKETS
- ---------------------------- ------------------------- -------------------------- ----------------------
Abbott Laboratories CIT Group The Boeing Company Avis Rent a Car, Inc.
Novartis AG First Union National Bank General Electric Company DHL International Ltd.
University of Nebraska Nordstrom Credit, Inc. General Motors Corporation Waste Management, Inc.
Medical Center Honeywell, Inc. State of California
Virginia Department of State of Louisiana
Health State of Mississippi
</TABLE>

The Founding Companies have historically provided services to most of these
markets, as well as to governmental entities, universities and litigation
support clients. The Company believes that it will enjoy a national reputation
as a leading service provider for the engineering market, which utilizes
large-format drawings and aperture cards. In addition, the Company provides
document management services for a variety of non-industry-specific functions
including accounts receivable and payable processing, shipping, human resources
and management information systems reporting.

SALES AND MARKETING

Historically, the Company's sales efforts have been implemented separately
by each Founding Company. Sales efforts will initially be conducted by the
Company's 30-person sales force supplemented by the sales activities of the
Founding Companies' senior management. The Company plans to hire ten or more
additional local territory salespersons promptly after the Offering and to hire
a Vice President of Sales and Marketing as part of its national sales effort.
The Company will seek to attract customers away from smaller industry providers
through its ability to offer a broader range of solutions and products for
clients' document management needs. The Company will also leverage existing
client relationships by cross-selling its services, products and expertise
throughout each client's organization.

The Founding Companies have succeeded in expanding their client base by
pro-actively selling the benefits of outsourcing document management functions
to clients which, at the time, were in-house operators. The Company believes
that its proactive, solution-based approach can be broadly effective with
potential clients and will enable the Company to increase its market position.
In contrast to other market participants who traditionally have been reactive in
their approach to selling, the Company intends to pursue unvended accounts
actively in addition to competing for existing outsourced business. Methods such
as seminar selling, telemarketing and internet marketing that are utilized at
certain of the Founding Companies will be implemented at the Company.

The Company believes that its ability to attract and retain additional
clients will depend on its ability to offer the broad range of services and
products necessary to satisfy such clients' document management needs and
maintain a high level of customer satisfaction.

COMPETITION

The document management services industry is competitive. A significant
source of competition is the in-house document management capability of the
Company's target client base. Additionally, the Company competes with
single-market, independent document management companies. The Company's larger
competitors include Dataplex Corp. (a subsidiary of Affiliated Computer
Services, Inc.), F.Y.I. Incorporated, IKON Office Solutions and Lason, Inc. Many
of these competitors are presently larger than the Company and have greater
financial and other resources and operate in broader geographic areas than the
Company. Due to consolidation in the document management services industry,
there is significant competition in acquiring such businesses, and the prices
for attractive acquisition candidates may be bid up to higher levels,
particularly in cases where competitors with greater financial and other
resources than the Company compete for the same acquisition targets.
Additionally, other potential competitors may choose to enter the Company's
areas of operation in the future. Moreover, because the Company intends to enter
new geographic areas, the Company expects to encounter significant competition
from established competitors in each of such new areas. As a

63
<PAGE>

result of this competitive environment, the Company may lose clients or have
difficulty in acquiring new clients and its revenues and margins may be
adversely affected.

The Company believes that the principal competitive factors in document
management services include the breadth, accuracy, speed, reliability and
security of service, technical expertise, industry specific knowledge and price.
The Company competes primarily on the basis of the breadth and quality of
service, technical expertise and industry specific knowledge, and believes that
it competes favorably with respect to these factors.

INTELLECTUAL PROPERTY

The Company regards certain of the software products, information and
know-how of DDS as proprietary and relies primarily on a combination of
trademarks, copyrights, trade secrets and confidentiality agreements to protect
its proprietary rights. The Company's business is not materially dependent on
any patents and it does not believe that any of its other proprietary rights are
of any material value. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to obtain and use information that the
Company regards as proprietary, and policing unauthorized use of the Company's
proprietary information may be difficult. Litigation may be necessary for the
Company to protect its proprietary information and could result in substantial
cost to, and diversion of efforts by, the Company.

The Company does not believe that any of its proprietary rights infringe
the proprietary rights of third parties. Any infringement claims, whether with
or without merit, can be time consuming and expensive to defend or may require
the Company to enter into royalty or licensing agreements or cease the allegedly
infringing activities. The failure to obtain such royalty agreements, if
required, and the Company's involvement in such litigation could have a material
adverse effect on the Company's business, financial condition and results of
operations.

FACILITIES AND EQUIPMENT

The Company's headquarters offices are in Bala Cynwyd, Pennsylvania which
it maintains under a lease expiring in December 1997. The Company is presently
seeking a new site for its headquarters offices. In addition, the Company
conducts operations through one owned and 22 other leased facilities in 13
states containing, in the aggregate, approximately 341,000 square feet. The
Company's principal facilities are summarized in the following table:

<TABLE>
<CAPTION>
APPROXIMATE
LOCATION SQUARE FOOTAGE PRINCIPAL USE(S)
- -------- -------------- ----------------
<S> <C> <C>
Tempe, AZ 8,800 Document management operations, offices
Emeryville, CA 24,000 Document management operations, offices
Emeryville, CA 16,000 Warehouse
Sacramento, CA 6,000 Document management operations
Marietta, GA 3,200 Document management operations, offices
Chesterton, IN* 41,000 Offices, document management operations
Chesterton, IN 11,000 Warehouse
Monroe, LA 65,000 Retail, document management operations, offices
Shreveport, LA 4,000 Offices
Stoughton, MA 47,000 Document management operations, offices
Worcester, MA 4,800 Document management operations, offices
Lincoln, NE 4,300 Document management operations, offices
Lincoln, NE 6,900 Warehouse, offices
Millwood, NY 1,000 Offices
Dayton, OH 12,500 Document management operations, offices
Eugene, OR 11,400 Document management operations, offices
Eugene, OR 2,300 Warehouse
Portland, OR 13,500 Document management operations, offices
Portland, OR 2,200 Document management operations, offices
Cayce, SC 20,000 Document management operations, offices
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
APPROXIMATE
LOCATION SQUARE FOOTAGE PRINCIPAL USE(S)
- -------- -------------- ----------------
<S> <C> <C>
Cleveland, TN 12,000 Document management operations, offices
Forest, VA 21,500 Document management operations, offices
Richmond, VA 1,300 Offices
</TABLE>

- ------------------
* owned facility

The Company believes that its properties are generally well maintained, in
good condition and adequate for its present needs, and that suitable additional
or replacement space will be available when needed. The Company owns or leases
under both operating and capital leases substantial computer, scanning and
imaging equipment which it believes to be adequate for its current needs.

ENVIRONMENTAL MATTERS

The Company is subject to federal, state and local laws, regulations and
ordinances that: (i) govern activities or operations that may have adverse
environmental effects, such as discharges to air and water, as well as handling
and disposal practices for hazardous substances and solid and liquid wastes; and
(ii) impose liability for the costs of cleaning up, and certain damages
resulting from, sites of past spills, disposal or other releases of solid and
liquid wastes.

The Company is not currently aware of any environmental conditions relating
to present or past waste generation at or from these facilities that would be
likely to have a material adverse effect on the business, financial condition or
results of operations of the Company. However, there can be no assurances that
environmental liabilities will not have a material adverse effect on the
business, financial condition or results of operations of the Company.

EMPLOYEES

On a pro forma combined basis, as of September 30, 1997, the Company had
approximately 950 employees, approximately 160 of whom were employed primarily
in management and administration. The Company considers its relations with its
employees to be good.

LEGAL PROCEEDINGS

The Company is from time to time a party to litigation arising in the
ordinary course of its business. The Company is not subject to any pending
material litigation.

<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The Company's executive officers and Directors and their respective ages
and positions are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Bruce M. Gillis................... 40 Chief Executive Officer and Chairman of the
Board of Directors
S. David Model.................... 40 President and Chief Operating Officer
James D. Brown.................... 39 Senior Vice President - Finance, Chief Financial
Officer and Treasurer
Andrew R. Bacas................... 39 Senior Vice President - Corporate Development,
Secretary and Director
David C. Utz, Jr.................. 41 Director
Rex Lamb.......................... 39 Director*
John E. Semasko................... 52 Director*
Lennox K. Black................... 67 Director*
David C. Carney................... 60 Director*
Lewis E. Hatch, Jr................ 71 Director*
Steven N. Kaplan.................. 37 Director*
</TABLE>

- ------------------
* To be appointed by the Board of Directors to fill vacancies created by
enlarging the Board of Directors upon completion of the Offering.

Bruce M. Gillis is a founder of the Company and has been the Company's
Chief Executive Officer and Chairman of the Board since inception. From
September 1996 through the present, Mr. Gillis has been President of GBL, an
investment concern which has a management agreement with the Company. See
"Certain Transactions." Mr. Gillis has served as a director since 1989 of
Liebhardt Mills, Inc., a national bedding manufacturer, for which he has also
served as Vice President - Finance from 1989 to 1994. From 1994 to 1996, Mr.
Gillis was President of Villanova Investment Corp., a strategy consulting and
investment management company. From 1980 to 1983 and 1985 to 1988, Mr. Gillis
served as a consultant with McKinsey & Co., Inc., a global strategy consulting
firm. Mr. Gillis has an undergraduate degree in economics from Yale and an MBA
from Stanford University.

S. David Model has been the Company's President and Chief Operating Officer
since he joined the Company in August 1997. From 1987 to August 1997, Mr. Model
was employed by Teleflex Incorporated, a diversified manufacturer of automotive,
marine, industrial, aerospace and medical products, and has held several
management positions in various subsidiaries of Teleflex Incorporated's
Aerospace Group, from Sales and Engineering Manager of the Airfoil Management
Division to Executive Vice President, Airfoil Technologies International, LLC.
Mr. Model has an undergraduate degree in engineering from Yale University and an
MBA from the Wharton School of the University of Pennsylvania.

James D. Brown has been the Chief Financial Officer of the Company since he
joined the Company in August 1997. From March 1996 to August 1997, Mr. Brown was
the Chief Financial Officer of LMR Holdings, Inc., a textile component
manufacturer. In 1995, Mr. Brown was a consultant specializing in accounting
controls and financing. From 1990 to 1994, Mr. Brown was a controller and chief
financial officer of various operating companies of Joseph Littlejohn & Levy, a
merchant bank. Mr. Brown has an undergraduate degree in economics from Hamilton
College and a masters degree in accounting from New York University. Mr. Brown
is a certified public accountant.

Andrew R. Bacas is a founder of the Company and has been a Director since
inception. Mr. Bacas joined GBL in May 1997 and will serve as the Company's
Senior Vice President - Corporate

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<PAGE>

Development after the Offering. From 1992 to May 1997, Mr. Bacas was an
Associate and later a Vice President - Corporate Finance of Simmons & Company
International, an investment bank to the international oil service and equipment
industry. From 1991 to 1992 Mr. Bacas was a Financial Analyst for the Upstream
Business Unit at Exxon Company, USA. From 1984 to 1991 Mr. Bacas was a Naval
Flight Officer in the United States Navy. Mr. Bacas has an undergraduate degree
in engineering from Yale University and an MBA from the Wharton School of the
University of Pennsylvania.

David C. Utz, Jr. has served as a member of the Board of Directors of the
Company since its inception in November 1996. Mr. Utz has been the Chairman of
the Board and Chief Executive Officer of AMMCORP since August 1988. Mr. Utz
previously worked in administrative and financial capacities for Fairview Health
System, a multi-hospital holding company, located in Minneapolis, Minnesota. Mr.
Utz has an undergraduate degree in Business Administration from the University
of Minnesota.

Rex Lamb founded DTI in 1991 and has served as its President since
inception. Mr. Lamb co-founded DDS in 1994 and has served as its President since
inception. Mr. Lamb has an undergraduate degree in Education from the University
of Nebraska. Following the Offering, Mr. Lamb will become a Director of the
Company.

John E. Semasko acquired OMI in 1975 and has served as its President since
its acquisition. Mr. Semasko has an undergraduate degree in Forestry from
Rutgers University. Following the Offering, Mr. Semasko will become a Director
of the Company.

Lennox K. Black has been the Chairman of Teleflex Incorporated since 1982
and served as Teleflex's Chief Executive Officer from 1982 to 1995. Mr. Black
currently serves as a director of Quaker Chemical Corporation, Pep Boys and the
Penn Virginia Corporation. Mr. Black has an undergraduate degree in Economics
from McGill University. Following the Offering, Mr. Black will become a Director
of the Company.

David C. Carney has been an Executive Vice President of Jefferson Health
System, a health care organization since 1996. From 1991 to 1995, Mr. Carney
served as the Chief Financial Officer of CoreStates Financial Corporation. From
1980 to 1991 he served as an area managing partner of Ernst & Young. Mr. Carney
currently serves as a director of CMAC Investment Corporation, AAA Mid-Atlantic
& Keystone Insurance Companies and the World Affairs Council. Mr. Carney has an
undergraduate degree from Temple University and is a graduate of the Advanced
Management Program at the Harvard Business School. Following the Offering, Mr.
Carney will become a Director of the Company.

Lewis E. Hatch, Jr. is the retired former Chairman and Chief Operating
Officer of Rusch International, an international medical device manufacturer.
Mr. Hatch is a director of Teleflex Incorporated and Park-Ohio Industries, Inc.
Mr. Hatch has an undergraduate degree from Ursinus College. Following the
Offering, Mr. Hatch will become a Director of the Company.

Steven N. Kaplan is the Leon Carroll Marshall Professor of Finance at the
University of Chicago Graduate School of Business. Dr. Kaplan joined the faculty
of the University of Chicago originally in 1988 as an Assistant Professor.
Previously, Dr. Kaplan was an associate at Booz Allen Hamilton, Inc. and an
analyst with Kidder Peabody & Company. Dr. Kaplan holds an A.B. degree in
Applied Mathematics, an A.M. and a Ph.D. in Business Economics from Harvard
University. Following the Offering, Dr. Kaplan will become a Director of the
Company.

FOUNDING COMPANY MANAGEMENT

The key executives of the Founding Companies are as follows:

Gary D. Blackwelder, age 41, has been President of I(2) Solutions
since 1989.

James E. Bunker, age 58, co-founded TIMCO in 1980 and has served as
its Chairman since that time.

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<PAGE>

Mark Creglow, age 39, co-founded DDS in 1994 and has served as its
Vice President since inception. Prior to founding DDS, Mr. Creglow was
Regional Sales Manager for Distribution Management Systems, Inc.

David L. Crowder, age 41, has served as President of TPS since 1990
and has been with TPS for 19 years.

Judith K. DeMott, age 58, co-founded DataLink in 1984, and has served
as President since its inception.

Carmen DiMatteo, age 62, joined Spaulding in 1960 and has served as
its President since 1996.

Jeffry P. Kalmon, age 48, has served as President of TIMCO since 1996.
He joined TIMCO in 1984 as a sales representative.

Ovidio Pugnale, age 63, joined IMS's predecessor originally in 1980 as
General Manager and became IMS's President in 1986. Prior to joining IMS,
Mr. Pugnale served 26 years as an officer in the United States Air Force.

Ellen Rothschild-Taube, age 40, co-founded IDS in 1989 and has served
as IDS's Vice President since its inception.

Mary Jane Semasko, age 50, has served as Vice President of OMI since
its acquisition in 1975.

Theodore J. Solomon, age 73, has served as Chairman of the Board and
Chief Executive Officer of CMC, Laser Graphics and I(3) since 1992, 1994
and 1995, respectively.

Mitchell J. Taube, age 40, co-founded IDS in 1989 and has served as
IDS's President since its inception. Mr. Taube currently serves on the AIIM
Service Company Executive Committee.

David C. Yezbak, age 31, has served as President of CodaLex, Laser
Graphics and I(3) since 1995. Previously, he served as Vice President of
CodaLex from 1992 to 1995.

The Company's executive officers are appointed annually by, and serve at
the discretion of, the Board of Directors. The Board of Directors currently
consists of three members. The Company expects to appoint Messrs. Lamb, Semasko,
Black, Hatch and Carney and Dr. Kaplan to its Board of Directors following the
consummation of the Offering and, at that time, the Board of Directors will
include nine Directors divided into three classes as follows: Class I Directors
(Messrs. Gillis, Utz and Carney); Class II Directors (Messrs. Bacas, Semasko and
Hatch); and Class III Directors (Messrs. Lamb and Black and Dr. Kaplan). At each
annual meeting of shareholders, the appropriate number of Directors will be
elected for a three-year term to succeed the Directors of the same class whose
terms are then expiring. The initial terms of the Class I Directors, Class II
Directors and Class III Directors will be one, two and three years, respectively
and will expire upon the election and qualification of successor Directors at
the annual meetings of shareholders held in calendar years 1998, 1999 and 2000,
respectively. There is no family relationship between any Director or executive
officer of the Company.

BOARD COMMITTEES

Upon completion of the Offering, the Company intends to establish Audit and
Compensation Committees of the Board of Directors comprised of independent
directors. The Audit Committee will review the qualifications of the Company's
independent auditors, make recommendations to the Board of Directors regarding
the selection of independent auditors, review the scope, fees and results of any
audit and review non-audit services and related fees provided by the independent
auditors.

The Compensation Committee will be responsible for the administration of
all salary and incentive compensation plans, including the Stock Incentive Plans
and bonuses, for the executive officers and Directors who are or will become
employees of the Company.

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DIRECTOR COMPENSATION

Directors who are not employees of the Company are paid a fee of $500 for
each board and committee meeting attended in person and all directors are
reimbursed for travel expenses as incurred. It is anticipated that each of the
four Director nominees who are not employees of the Company will be appointed to
the Board of Directors and granted nonqualified stock options to purchase 20,000
shares of Common Stock upon completion of the Offering. It is anticipated that
such options will have a per share exercise price equal to the initial public
offering price and will vest in equal annual installments over three years.

EXECUTIVE COMPENSATION

The Company was incorporated in 1996 and neither conducted operations nor
paid any compensation in that year. The Company has utilized its initial
capitalization in 1997 to pay start-up expenses, primarily associated with
identifying and negotiating the Acquisitions. The Company anticipates that, for
1997, its most highly compensated executive officers and their annualized base
salaries will be: Mr. Gillis ($200,000); Mr. Model ($150,000); Mr. Brown
($130,000); and Mr. Bacas ($130,000) (collectively, the "Named Executive
Officers"). Each Named Executive Officer has entered into an employment
agreement with the Company commencing in August 1997. See "-Employment
Agreements."

EMPLOYMENT AGREEMENTS

The Company entered into employment agreements with the Named Executive
Officers in August 1997, the initial terms of which expire on December 31, 2000,
except for Mr. Gillis' agreement which expires on December 31, 2002. Mr. Gillis
will serve as Chief Executive Officer at a base annual salary of $200,000. Mr.
Model will serve as Chief Operating Officer at a base annual salary of $150,000.
Mr. Brown will serve as Chief Financial Officer at a base annual salary of
$130,000. Mr. Bacas will serve as Senior Vice President - Corporate Development
at a base annual salary of $130,000. The base annual salary of each of the Named
Executive Officers is subject to increases periodically at the discretion of the
Board, and each Named Executive Officer may receive an annual bonus as
determined by the Board. Each of the employment agreements provides for
customary benefits including life, health and disability insurance, 401(k) plan
participation and a car allowance. Each of the employment agreements futher
provides that if the employee is terminated without cause he is entitled to
severance pay of between six months' and one year's base salary and benefits. In
the event he is terminated in connection with a change of control (as defined
therein), he is entitled to receive 18 months' base salary and benefits.

STOCK INCENTIVE PLANS

1997 INCENTIVE PLAN

The Company's 1997 Incentive Plan (the "Incentive Plan") provides for the
award of up to 600,000 shares of its Common Stock (or options and other awards
with respect to 600,000 shares) to its employees, Directors, consultants and
other individuals who perform services for the Company.

The Board of Directors may appoint a committee ("Compensation Committee")
to administer the Incentive Plan. Under the terms of the Incentive Plan, the
Compensation Committee is required to be composed of two or more Directors. The
Compensation Committee has the authority to interpret the Incentive Plan and to
determine and designate the persons to whom options or awards shall be made and
the terms, conditions and restrictions applicable to each option or award
(including, but not limited to, the price, any restriction or limitation, any
vesting schedule or acceleration thereof, and any forfeiture restrictions).

The Incentive Plan contains provisions for granting various stock-based
awards, including incentive stock options, as defined in Section 422 of the
Code, nonqualified stock options (options that are not incentive stock options),
restricted stock, performance shares and performance units (as further described
below). The term of the Incentive Plan is ten years, subject to earlier
termination or amendment, but options and other rights may remain exercisable
after the Incentive Plan expires or is terminated.

The Compensation Committee has the power to select award recipients and
their allotments and to determine the price, term and vesting schedule for
awards granted. There are no predetermined

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performance formulas or measures or other specific criteria used to determine
recipients of awards under the Incentive Plan. The Company anticipates that
awards will be based generally upon the grantee's position and responsibilities,
the nature of services provided and accomplishments, the value of the services
to the Company, the present and potential contribution of the grantee to the
success of the Company, the anticipated number of years of service remaining and
other factors the Board and the Compensation Committee may deem relevant.

Pursuant to the Incentive Plan, upon the completion of the Offering,
nonqualified options to purchase an aggregate of 287,500 shares of Common Stock
at the initial public offering price set forth on the cover page of this
Prospectus will be granted to the Named Executive Officers as follows: Mr.
Gillis (100,000), Mr. Model (62,500), Mr. Brown (62,500) and Mr. Bacas (62,500).
Additionally, each of Messrs. Black, Hatch and Carney and Dr. Kaplan will
receive nonqualified options to purchase 20,000 shares of Common Stock at the
initial public offering price in his capacity as an outside Director. The grants
will vest in equal annual installments over three years.

Stock Options. The Incentive Plan provides for the grant of incentive
stock options to employees of the Company. The Incentive Plan also provides for
the grant of nonqualified stock options to employees of the Company, directors
of the Company, and consultants and other individuals who perform services for
the Company but are not employed by the Company. The exercise price of any
incentive stock option granted under the Incentive Plan may not be less than
100% of the fair market value of the Company's Common Stock on the date of grant
(110% of fair market value in the case of an option holder who is a 10% owner).
Options granted under the Incentive Plan may be exercised for cash or, in the
Compensation Committee's discretion, in exchange for shares of Common Stock
owned by the option holder having a fair market value on the date of exercise
equal to the option exercise price. The aggregate fair market value, determined
on the date of grant, of the shares with respect to which incentive stock
options are exercisable for the first time by an employee during any calendar
year may not exceed $100,000. Any option that does not meet the requirements or
limits applicable to incentive stock options is treated as a nonqualified stock
option.

Under the Incentive Plan, each option is exercisable for the full amount of
the shares subject to option or for any part thereof at such intervals or in
such installments as the Compensation Committee shall determine at the time it
grants the option. However, no option shall be exercisable with respect to any
shares of Common Stock later than ten years after the date of the grant of such
option (five years in the case of an incentive stock option granted to a 10%
owner). All options are nontransferable, except upon death, by the optionee. The
shares subject to expired options or terminated options which remain unexercised
become available for future grants.

If an optionee ceases to be employed by, or to render services to, the
Company for any reason other than death, disability or termination for cause,
any option exercisable on the date of such termination generally may be
exercised for a period of 90 days from the date of such termination or until the
expiration of the stated term of the option, whichever period is shorter. In the
event of termination of employment or service by reason of death or disability,
any option exercisable at the date of such termination generally may be
exercised for a period of one year from the date of termination or until the
expiration of the stated term of the option, whichever period is shorter. If a
participant's employment or service is terminated for cause, any option not
exercised prior to the date of such termination shall be immediately canceled.
In the event of a change of control (as defined in the Incentive Plan) of the
Company, the Incentive Plan provides that all outstanding options may, at the
Board of Director's election, become immediately exercisable. The Incentive Plan
allows the Compensation Committee to vary the foregoing exercisability and
cancellation terms in its discretion.

Restricted Stock. "Restricted Stock" represents shares of the Company's
Common Stock granted to an employee for no cash consideration, which will be
forfeited to the Company if the grantee ceases to be an employee of the Company
during a restriction period specified by the Compensation Committee at the time
it grants the Restricted Stock. In the event of death or disability, the
restrictions will lapse with respect to that percentage of Restricted Stock held
by the grantee that is equal to the percentage of the restriction period that
had elapsed as of the date of death or commencement of disability. The Board of
Directors may provide that, in the event of a change of control of the Company,
all restrictions on shares of Restricted Stock will lapse. Shares of Restricted
Stock that are forfeited become available for future grants.

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Performance Shares. A "Performance Share" is an award of the right to
receive stock at the end of a specified period upon the attainment of
performance goals specified by the Compensation Committee at the time of grant.
Performance Shares generally will be forfeited if the grantee ceases to be an
employee of the Company during the performance period for any reason other than
death, disability or retirement. In the event of death, disability or
retirement, the participant or his or her estate will be entitled to receive, at
the expiration of the performance period, a percentage of his or her Performance
Shares equal to the percentage of the performance period that had elapsed at the
time of death or commencement of disability, provided that the Compensation
Committee determines that the applicable performance goals have been met. In the
event of a change of control of the Company, the Board of Directors may provide
that all conditions applicable to each Performance Share award will terminate,
and the full number of shares of Common Stock subject to the Performance Share
award will be issued to the grantee. Performance Shares that are forfeited or
not delivered to the grantee become available for future grants.

Performance Units. A "Performance Unit" is an award of the right to
receive cash at the end of a specified period upon the attainment of performance
goals specified by the Compensation Committee at the time of the grant. The
amount payable under a Performance Unit is equal to the increase in value of a
Unit from the date of award to the date of attainment of the performance goals.
Performance Units generally will be forfeited if the grantee ceases to be an
employee of the Company during the performance period for any reason other than
death, disability or retirement. In the event of death, disability or
retirement, the grantee or his or her estate will be entitled to receive, at the
expiration of the performance period, a cash payment for a percentage of his or
her Performance Units equal to the percentage of the performance period that
elapsed at the time of death or commencement of disability, provided that the
Compensation Committee determines that the applicable performance goals have
been met. In the event of a change of control of the Company, the Board of
Directors may provide that all conditions applicable to the Performance Units
will terminate and a cash payment for the full amount of the Performance Units
will be made to the grantee.

EMPLOYEE STOCK PURCHASE PLAN

The Company has adopted an Employee Stock Purchase Plan (the "Purchase
Plan"), which will allow all full-time employees of the Company, other than 5%
shareholders, temporary employees, and employees having less than six months'
service with the Company, to purchase shares of the Company's Common Stock at a
discount from the prevailing market price at the time of purchase. Such shares
may either be issued by the Company from its authorized and unissued Common
Stock or purchased by the Company on the open market. A maximum of 250,000
shares of the Company's Common Stock will be available for purchase under the
Purchase Plan.

An eligible employee will be able to specify, before the commencement of
each quarterly period, an amount to be withheld from his or her paycheck and
credited to an account established for him or her (the "Participation Account").
Amounts in the Participation Account will be applied to the purchase of shares
of the Company's Common Stock on the last day of each quarterly period. The
price of such shares will be equal to 90% of the lower of the value of such
shares on the first and last days of the quarterly period. For this purpose, the
value shall be the closing price per share of the Company's Common Stock on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if not listed or traded on any such exchange, on the
Nasdaq National Market or, if not listed or traded, the fair market value
determined by the Board of Directors. Only whole shares of Common Stock may be
purchased. Amounts withheld from an employee's paycheck and not applied to the
purchase of whole shares of Common Stock will, at the election of the employee,
either remain credited to the employee's Participation Account or be returned to
the employee.

Upon termination of an employee's employment for any reason, or upon a
leave of absence beyond 90 days, all amounts credited to such employee's
Participation Account shall be returned to him or her.

The Purchase Plan will be administered by the Board of Directors, which may
delegate responsibility to a committee of the Board. The Board of Directors may
amend or terminate the Purchase Plan. The Purchase Plan is intended to comply
with the requirements of Section 423 of the Code.

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<PAGE>

CERTAIN TRANSACTIONS

ORGANIZATION OF THE COMPANY

Since inception and prior to the Offering, the Company issued Common Stock
and Series A Preferred Stock (1,154,259 shares of Common Stock on an
as-converted basis) for an aggregate purchase price of approximately $1.8
million, including 727,340 shares of Common Stock (on an as-converted basis)
issued to persons who are officers or Director nominees of the Company as
follows: Bruce M. Gillis, Chief Executive Officer and Chairman of the Board,
purchased an aggregate of 295,448 shares (including 31,025 shares of Common
Stock underlying Series A Preferred Stock) for an aggregate purchase price of
$81,041; David Model, President and Chief Operating Officer, purchased an
aggregate of 68,750 shares (including 26,442 shares of Common Stock underlying
Series A Preferred Stock) for an aggregate purchase price of $225,000; James D.
Brown, Senior Vice President - Finance, Chief Financial Officer and Treasurer,
purchased an aggregate of 33,846 shares (including 8,461 shares of Common Stock
underlying Series A Preferred Stock) for an aggregate purchase price of
$100,000; Andrew R. Bacas, Senior Vice President - Corporate Development,
Secretary and Director, purchased an aggregate of 223,526 shares (including
35,257 shares of Common Stock underlying Series A Preferred Stock) for an
aggregate purchase price of $70,292; David C. Utz, Jr., a Director, purchased an
aggregate of 84,616 shares (including 42,308 shares of Common Stock underlying
Series A Preferred Stock), for an aggregate purchase price of $25,000; and John
E. Semasko, a Director nominee, purchased an aggregate of 21,154 shares of
Common Stock underlying Series A Preferred Stock for an aggregate purchase price
of $100,000. In addition, each of Messrs. Black and Hatch, Director nominees,
has indicated his intent to purchase 7,692 shares of Common Stock (based on an
assumed initial public offering price of $13.00 per share) for an aggregate
purchase price of $100,000 each. As members of the initial executive management
group involved in founding and organizing the Company, Messrs. Gillis, Model,
Brown and Bacas are promoters of the Company. See "Management."

ACQUISITION TRANSACTIONS

The consideration to be paid for the Founding Companies was determined
through arm's-length negotiations among ImageMax and representatives of the
Founding Companies. The factors considered by the parties in determining the
consideration to be paid include, among others, the historical operating
results, the levels of indebtedness and the future prospects of the Founding
Companies.

The general terms of each of the Acquisitions (assuming (i) an initial
public offering price of $13.00 per share and (ii) purchase price adjustments
based on the net book value of assets, working capital and levels of
indebtedness, as applicable, existing as of September 30, 1997) are set forth
below. Any change in the initial public offering price(1) will cause the number
of shares of Common Stock to be issued in connection with the Acquisitions to
vary and any change in such purchase price adjustments as of the closing date of
the Acquisitions will cause the cash portion of the consideration to vary.

AMMCORP. ImageMax will acquire the parent of AMMCORP by merger for
approximately $4.7 million, consisting of $0.5 million in cash, 71,923
shares of Common Stock (aggregate value: $934,999), and purchase price
adjustments of $0.3 million plus the assumption of approximately $3.0
million of outstanding debt. David C. Utz, Jr., a Director of the Company,
owns the parent of AMMCORP. In addition, ImageMax will assume $50,000 of
additional liabilities which will be repaid by the Company at the closing
of the Acquisition.

THE CODALEX GROUP. ImageMax will acquire the assets and assume
certain liabilities of I(3) and will acquire Laser Graphics and CMC by
merger for approximately $3.3 million, consisting

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

(1) A 10% change in the initial public offering price, for example, would
increase or decrease the number of shares of Common Stock issued to the
Founding Companies by approximately 107,000 and 132,000 shares,
respectively. There would be no effect on the total purchase price, goodwill
or net income and the effect on pro forma earnings per share would be
immaterial.

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<PAGE>

of $1.4 million in cash, the assumption of approximately $0.9 million
of indebtedness and 78,412 shares of Common Stock (aggregate value:
$1,019,356). In addition, the Company will enter into five-year leases for
two facilities with affiliates of CodaLex, David C. Yezbak and Theodore J.
Solomon or their affiliates.

DATALINK. ImageMax will acquire the assets of DataLink and assume
certain of its liabilities for approximately $3.8 million, consisting of
$3.3 million in cash and 38,462 shares of Common Stock (aggregate value:
$500,006). In addition, ImageMax will assume approximately $0.2 million of
additional liabilities which will be repaid by the Company at the closing
of the Acquisition. In addition, the Company will enter into a five-year
lease for a facility with affiliates of DataLink, Judith K. DeMott and Geri
Davidson or their affiliates.

DOCUTECH. ImageMax will acquire the assets of DTI and assume certain
of its liabilities for approximately $2.7 million in cash. ImageMax will
acquire DDS by merger for approximately $6.5 million, consisting of $2.7
million in cash and 288,750 shares of Common Stock (aggregate value:
$3,753,750). Rex Lamb beneficially owns 100% of DTI and 51% of DDS. It is
contemplated that Mr. Lamb will be appointed to serve as a Director upon
completion of the Offering.

I(2) SOLUTIONS. ImageMax will acquire I(2) Solutions by merger for
approximately $5.4 million, consisting of $1.3 million in cash, purchase
price adjustments of $0.7 million and 261,538 shares of Common Stock
(aggregate value: $3,399,994). Included on I(2) Solutions closing balance
sheet will be approximately $0.8 million in cash. In addition, the Company
will enter into five-year leases for two facilities with an affiliate of
I(2) Solutions, Gary Blackwelder.

IMS. ImageMax will purchase all of the issued and outstanding stock
of IMS for approximately $3.1 million, consisting of approximately $2.1
million in cash, the assumption of approximately $0.2 million of
outstanding debt and 61,538 shares of Common Stock (aggregate value:
$799,994). In addition, the Company will enter into a five year lease for a
facility with an affiliate of IMS, Ovidio Pugnale.

IDS. ImageMax will acquire IDS by merger for approximately $3.9
million, consisting of $1.5 million in cash, purchase price adjustments of
$0.2 million and 165,000 shares of Common Stock (aggregate value:
$2,145,000).

OMI. ImageMax will acquire OMI by merger for approximately $3.0
million, consisting of approximately $1.4 million in cash, the assumption
of approximately $65,000 of outstanding debt and 117,692 shares of Common
Stock (aggregate value: $1,529,996). In addition, the Company will enter
into a five-year lease for a facility with John E. and Mary Jane Semasko or
their affiliates. John E. Semasko is the owner of OMI. It is contemplated
that Mr. Semasko will be appointed to serve as a Director upon completion
of the Offering. In addition, ImageMax will assume $115,000 of additional
liabilities which will be repaid by the Company at the closing of the
Acquisition.

SPAULDING. ImageMax will acquire the assets and assume certain
liabilities of Spaulding for $4.3 million in cash and purchase price
adjustments of $0.2 million.

TIMCO. ImageMax will acquire the assets and assume certain
liabilities of TIMCO for approximately $3.5 million, consisting of $2.7
million in cash and 59,615 shares of Common Stock (aggregate value:
$774,995).

TPS. ImageMax will purchase all of the issued and outstanding stock
of TPS for approximately $3.0 million, consisting of $1.6 million in cash,
the assumption of approximately $0.9 million of outstanding debt and 41,538
shares of Common Stock (aggregate value: $539,994). In addition, ImageMax
will assume $200,000 of additional liabilities which will be repaid by the
Company at the closing of the Acquisition.

The aggregate value of the Common Stock portion of the consideration for
each of the Acquisitions, and the portion of the consideration to be paid in
shares of Common Stock, is fixed.

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<PAGE>

Accordingly, an increase or decrease in the initial public offering price will
cause the amount of shares of Common Stock paid for each Acquisition to
correspondingly decrease or increase, respectively. The Company has agreed to
repay approximately $5.5 million of indebtedness of the Founding Companies, of
which approximately $3.0 million is indebtedness of AMMCORP, whose shareholder,
David C. Utz, Jr., is a Director of the Company and approximately $0.1 million
is indebtedness of OMI, whose shareholder, John E. Semasko, is expected to
become a Director of the Company upon completion of the Offering.

The consummation of each Acquisition is subject to customary closing
conditions. These conditions include, among others, the continuing accuracy of
the representations and warranties of the Founding Companies, the principal
shareholders thereof and ImageMax on the closing date of the Acquisitions, the
performance by each of them of all covenants included in the agreements relating
to the Acquisitions and the non-existence of a material adverse change in the
results of operations, financial condition or business of each Founding Company.
There can be no assurance that the conditions to the closing of the Acquisitions
will be satisfied or waived or that the Acquisition agreements will not be
terminated prior to consummation.

MANAGEMENT CONTRACT

The Company entered into a management contract with GBL Capital Corporation
in November 1996 whereby GBL managed the operations of the Company for an
initial payment of $5,000 and a monthly fee ranging from $10,000 to $25,000
(aggregating $121,500 through July 31, 1997), plus expenses. The monthly fee
payments pursuant to the management contract were terminated on July 31, 1997.
The management contract requires the payment of $500,000 to GBL upon completion
of the Offering. Messrs. Gillis and Bacas are both owners and controlling
persons of GBL and are considered promoters of the Company. See Note 6 to
ImageMax Financial Statements.

FUTURE TRANSACTIONS

The Company has adopted a policy that it will not enter into any material
transaction in which a Company director or officer has a direct or indirect
financial interest, unless the transaction is determined by the Company's Board
of Directors to be fair as to the Company or is approved by a majority of the
Company's disinterested directors or by the Company's shareholders, as provided
for under Pennsylvania law.

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PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of November 28, 1997 giving pro forma effect to the
Acquisitions (based on an assumed initial public offering price of $13.00 per
share) by: (i) each executive officer and Director and persons who will become a
Director upon consummation of the Offering; (ii) each person known by the
Company to beneficially own more than 5% of the Common Stock; and (iii) all
Directors and executive officers as a group. Each person named below has an
address in care of the Company's principal executive offices.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
------------------------------------------------
PERCENT
--------------------------------
NAME NUMBER BEFORE OFFERING AFTER OFFERING
- ---- --------- --------------- --------------
<S> <C> <C> <C>
Bruce M. Gillis(2).............................. 295,448 12.6% 5.4%
Andrew R. Bacas(3).............................. 223,526 9.5 4.1
S. David Model(3)............................... 60,288 2.6 1.1
James D. Brown(3)............................... 33,846 1.4 *
Rex Lamb(4)..................................... 191,250 8.1 3.5
David C. Utz, Jr................................ 156,539 6.7 2.9
John E. Semasko(4).............................. 138,846 5.9 2.6
Lennox K. Black(4)(5)........................... -- * *
David C. Carney(4)(6)........................... -- * *
Lewis E. Hatch, Jr.(4)(5)....................... -- * *
Steven N. Kaplan(4)(6).......................... 12,692 * *
Gary D. Blackwelder............................. 261,538 11.1 4.8
Mitchell J. Taube(7)............................ 186,154 7.9 3.4
All executive officers and Directors as a group
(11 persons).................................. 1,112,435 47.6 20.5
</TABLE>

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

* Represents less than 1.0% of the outstanding shares of Common Stock.
(1) As used in this table, "beneficial ownership" means the sole or shared power
to vote or direct the voting of a security, or the sole or shared investment
power with respect to a security (i.e., the power to dispose, or direct the
disposition, of a security). A person is deemed as of any date to have
beneficial ownership of any security that such person has the right to
acquire within 60 days after such date. Percentage ownership before the
Offering is based upon 2,338,727 shares of Common Stock outstanding (giving
effect to the Acquisitions) immediately prior to the Offering. Percentage
ownership after the Offering is based upon 5,438,727 shares of Common Stock
to be outstanding upon completion of the Offering.

(2) Excludes 100,000 shares issuable upon the exercise of stock options to be
granted on the date of this Prospectus which are not exercisable within 60
days of the date hereof.
(3) Excludes 62,500 shares issuable upon the exercise of stock options to be
granted on the date of this Prospectus which are not exercisable within 60
days of the date hereof.
(4) To be appointed as a Director to fill vacancies created by enlarging the
Board of Directors upon completion of the Offering.
(5) Excludes 20,000 shares issuable upon the exercise of stock options to be
granted on the date of this Prospectus which are not exercisable within 60
days of the date hereof. Excludes 7,692 shares (at an assumed initial public
offering price of $13.00 per share) that Messrs. Black and Hatch each has
indicated their intent to purchase in the Offering. Such shares, on an
individual basis, will represent less than 1.0% of the outstanding shares of
Common Stock after the Offering.
(6) Excludes 20,000 shares issuable upon the exercise of stock options to be
granted on the date of this Prospectus which are not exercisable within 60
days of the date hereof.

(7) Includes 62,700 shares owned directly by Mr. Taube, 32,027 shares owned by
the Mitchell Taube 1997 Trust of which Mr. Taube is the Trustee, 59,400
shares owned directly by Ellen Rothschild-Taube, Mr. Taube's spouse, and
32,027 shares owned by the Ellen Rothschild-Taube 1997 Trust of which Mrs.
Rothschild-Taube is the Trustee.

75
<PAGE>

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 40,000,000 shares
of Common Stock, no par value per share, and 10,000,000 shares of Preferred
Stock, no par value per share, of which 524,125 are shares of Series A Preferred
Stock convertible into 443,489 shares of Common Stock upon completion of the
Offering. Immediately prior to the consummation of the Offering, the Company
will have outstanding 2,338,727 shares of Common Stock, including 1,184,468
shares to be issued in connection with the Acquisition (based on an assumed
initial public offering price of $13.00 per share). Upon completion of the
Offering and assuming the issuance of 3,100,000 shares of Common Stock pursuant
to the Acquisitions, the Company will have outstanding 5,438,727 shares of
Common Stock (5,903,727 shares if the over-allotment option is exercised in
full), based on an assumed initial public offering price of $13.00 per share. As
of November 28, 1997, there were 25 record holders of Common Stock.

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of shareholders and do not have cumulative voting
rights. Subject to applicable provisions of the BCL, shareholders holding a
majority of the shares of Common Stock constitute a quorum for the purposes of
convening a shareholders' meeting. Accordingly, a majority of the quorum may
elect all the directors standing for election. Holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared on the
Common Stock by the Board of Directors out of funds legally available therefor.
Upon the liquidation, dissolution or winding up of the Company, holders of
Common Stock are entitled to receive ratably the net assets of the Company
available for distribution after the payment of all debts and other liabilities
of the Company, subject to prior and superior rights of holders of Preferred
Stock. Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Common Stock are, and the shares
offered hereby, when issued and paid for, will be, fully paid and nonassessable.

PREFERRED STOCK

After completion of the Offering, the Company may issue up to 9,475,875
shares of Preferred Stock in one or more series and fix and determine the
relative rights, preferences and limitations of each class or series so
authorized without any further vote or action by the shareholders. The Board of
Directors may issue Preferred Stock with voting and conversion rights which
could adversely affect the voting power of the holders of Common Stock and have
the effect of delaying or preventing a change in the control of the Company. As
of the date of this Prospectus, no shares of Preferred Stock are outstanding.
The Company has no current intention to issue any shares of Preferred Stock.

ANTITAKEOVER EFFECTS OF PROVISIONS OF THE ARTICLES, BYLAWS AND PENNSYLVANIA LAW

Articles of Incorporation and Bylaws. The Bylaws provide that the Board of
Directors will be divided into three classes of Directors, each class
constituting approximately one-third of the total number of Directors and with
the classes serving staggered three year terms, and that Directors may be
removed only for cause. The Articles provide that the Company's shareholders may
call a special meeting of shareholders only upon a request of shareholders
owning at least 50% of the Company's capital stock. These provisions of the
Articles and Bylaws could discourage potential acquisition proposals and could
delay, defer or prevent a change in control of the Company. These provisions are
intended to enhance the likelihood of continuity and stability in the
composition of the Board of Directors and in the policies formulated by the
Board of Directors and to discourage certain types of transactions that may
involve an actual or threatened change of control of the Company. These
provisions are designed to reduce the vulnerability of the Company to an
unsolicited acquisition proposal. The provisions also are intended to discourage
certain tactics that may be used in proxy fights. However, such provisions could
have the effect of discouraging others from making tender

76
<PAGE>

offers for the Company's shares and, as a consequence, they also may inhibit
fluctuations in the market price of the Company's shares that could result from
actual or rumored takeover attempts. Such provisions also may have the effect of
preventing changes in the management of the Company.

Pennsylvania Anti-Takeover Laws. The BCL contains a number of statutory
"anti-takeover" provisions applicable to the Company. One of these BCL
provisions prohibits, subject to certain exceptions, a "business combination"
with a shareholder or group of shareholders (and certain affiliates and
associates of such shareholders) beneficially owning more than 20% of the voting
power of a public corporation (an "interested shareholder") for a five-year
period following the date on which the holder became an interested shareholder.
This provision may discourage open market purchases of a corporation's stock or
a non-negotiated tender or exchange offer for such stock and, accordingly, may
be considered disadvantageous by a shareholder who would desire to participate
in any such transaction. The BCL also provides that directors may, in
discharging their duties, consider the interests of a number of different
constituencies, including shareholders, employees, suppliers, customers,
creditors and the community in which it is located. Directors are not required
to consider the interests of shareholders to a greater degree than other
constituencies' interests. The BCL expressly provides that directors do not
violate their fiduciary duties solely by relying on poison pills or the anti-
takeover provisions of the BCL.

LIMITATION OF LIABILITY OF DIRECTORS AND INDEMNIFICATION OF DIRECTORS AND
OFFICERS

The Bylaws provide that a director shall not be liable to the Company for
monetary damages as such for any action taken or omitted unless the director
breaches or fails to perform a duty of his office and that breach or failure to
perform constitutes self-dealing, willful misconduct or recklessness. This
limitation does not apply to criminal liability or liability for the payment of
taxes. The Company believes that this provision will assist it in securing and
maintaining the services of directors who are not employees of the Company. The
Bylaws also provide for indemnification of the Company's Directors and officers
to the fullest extent permitted by law for expenses (including attorneys' fees)
incurred as a result of the officer's or Director's status as an officer or
Director of the Company.

The Company intends to purchase insurance to afford officers and directors
coverage for losses arising from claims based on breaches of duty, negligence,
error and other wrongful acts.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is StockTrans, Inc.,
Ardmore, Pennsylvania.

77
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have 5,438,727 shares of
Common Stock outstanding. Of these shares, the 3,100,000 shares sold in the
Offering will be freely tradable without restriction or further registration
under the Securities Act, except that any shares purchased by "affiliates" of
the Company, as that term is defined under the Securities Act ("Affiliates"),
may generally only be sold in compliance with the limitations of Rule 144
described below.

The remaining 2,338,727 shares of Common Stock are deemed "restricted
shares" under Rule 144. The number of shares of Common Stock available for sale
in the public market is limited by restrictions under the Securities Act,
contractual restrictions for one year after consummation of the Offering with
respect to shares issued in connection with the Acquisitions (except for
transfers to immediate family bound by such restrictions), and lock-up
agreements under which the holders of all shares issued prior to completion of
the Offering have agreed not to sell or otherwise dispose of any of their shares
publicly for a period of 180 days after the effective date of the Offering
without the prior written consent of William Blair & Company, L.L.C. Because of
these restrictions, on the date of this Prospectus, no shares other than the
3,100,000 shares offered hereby will be eligible for sale. Notwithstanding the
preceding, recipients of shares of Common Stock pursuant to the Acquisitions and
all current shareholders have been granted certain "piggyback" registration
rights permitting them to include their shares in certain future registration
statements filed by the Company.

In general, under Rule 144 of the Securities Act as currently in effect,
beginning 90 days after the Offering, a person (or persons whose shares are
aggregated) who has beneficially owned restricted shares for at least one year,
including a person who may be deemed an Affiliate of the Company, is entitled to
sell within any three-month period a number of shares of Common Stock that does
not exceed the greater of 1% of the then-outstanding shares of Common Stock
(approximately 54,387 shares after giving effect to the Offering) or the average
weekly trading volume of the Common Stock as reported through the Nasdaq
National Market during the four calendar weeks preceding such sale. Sales under
Rule 144 of the Securities Act are subject to certain restrictions relating to
manner of sale, notice and the availability of current public information about
the Company. In addition, under Rule 144(k) of the Securities Act, a person who
is not an Affiliate of the Company at any time 90 days preceding a sale, and who
has beneficially owned shares for at least two years, would be entitled to sell
such shares immediately following the Offering without regard to the volume
limitations, manner of sale provisions or notice or other requirements of Rule
144 of the Securities Act.

After consummation of the Offering, the Company intends to register on a
registration statement on Form S-8 a total of 850,000 shares of Common Stock
reserved for issuance under the Stock Incentive Plans and to register on a
registration statement a total of 2,000,000 shares of Common Stock for use as
consideration in future acquisitions. Such shares when issued and registered
will be eligible for resale in the public market.

78
<PAGE>

UNDERWRITING

The several Underwriters named below (the "Underwriters"), for whom William
Blair & Company, L.L.C. and Janney Montgomery Scott Inc. are acting as
representatives (the "Representatives"), have severally agreed, subject to the
terms and conditions set forth in the underwriting agreement by and among the
Company and the Representatives (the "Underwriting Agreement"), to purchase from
the Company, and the Company has agreed to sell to the Underwriters, the
respective number of shares of Common Stock (excluding the over-allotment
shares) set forth opposite each Underwriter's name below:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
<S> <C>
William Blair & Company, L.L.C..............................
Janney Montgomery Scott Inc.................................

---------
Total............................................ 3,100,000
=========
</TABLE>

The nature of the Underwriters' obligations under the Underwriting
Agreement is such that all shares of Common Stock being offered, excluding
shares covered by the over-allotment option granted to the Underwriters, must be
purchased if any are purchased. In the event of a default by any Underwriter,
the Underwriting Agreement provides that, in certain circumstances, purchase
commitments of the nondefaulting Underwriters pertaining to the Underwriting
Agreement may be increased or such Underwriting Agreement may be terminated.

The Representatives have advised the Company that they propose to offer the
Common Stock to the public initially at the public offering price set forth on
the cover page of this Prospectus and to selected dealers at such price less a
concession of not more than $ per share. Additionally, the Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share to certain other dealers. After the initial public offering of the Common
Stock, the public offering price and other selling terms may be changed by the
Representatives.

The Company has granted the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional 465,000
shares of Common Stock at the same price per share to be paid by the
Underwriters for the other shares offered hereby. If the Underwriters purchase
any of such additional shares pursuant to this option, each Underwriter will be
committed to purchase such additional shares in approximately the same
proportion as set forth in the table above. The Underwriters may exercise the
option only for the purpose of covering over-allotments, if any, made in
connection with the distribution of the shares of Common Stock offered hereby.

The Company, the Company's directors and officers, and the existing
shareholders of the Company have agreed not to offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock or any securities exercisable
for or convertible into Common Stock for a period of 180 days after

79
<PAGE>

the effective date of the Registration Statement of which this Prospectus is a
part without the written consent of William Blair & Company, L.L.C., except for
the sale by the Company of shares of Common Stock in the Offering, in the
Acquisitions and in other acquisition transactions (so long as the persons
receiving such Common Stock agree to be similarly restricted for the remainder
of the 180 day lock-up period). The recipients of shares of Common Stock
pursuant to the Acquisitions have agreed not to offer, sell or otherwise dispose
of such shares until one year after the closing of the Acquisitions. See "Shares
Eligible for Future Sale."

There has been no public market for the shares of Common Stock prior to the
Offering. The initial public offering price for the Common Stock will be
determined by negotiations among the Company and the Representatives. Among the
factors to be considered in determining the initial public offering price are
prevailing market and economic conditions, revenues and earnings of the Company,
estimates of the Company's business potential and prospects, the present state
of the business operations of the Founding Companies, an assessment of the
Company's management and the consideration of the above factors in relation to
the market valuations of companies in related businesses.

The Company has agreed to indemnify the Underwriters and their controlling
persons against certain liabilities, including liabilities under the Securities
Act, or to contribute to payments the Underwriters may be required to make in
respect thereof.

The Representatives have informed the Company that the Underwriters will
not confirm, without customer authorization, sales to their customer accounts as
to which they have discretionary authority.

Certain persons associated with an Underwriter purchased an aggregate of
63,462 shares of Common Stock for an aggregate purchase price of $300,000 in
connection with the September Financing. Under applicable National Association
of Securities Dealers, Inc. rules governing compensation to underwriters (the
"NASD Rules"), the difference between the price paid for such shares of Common
Stock and the initial public offering price may be deemed to be compensation to
the Underwriters. Pursuant to the NASD Rules, these unregistered securities
generally may not be sold, assigned, pledged or otherwise transferred for a
period of one year following the Offering.

In connection with the Offering, the Underwriters may purchase and sell
Common Stock in the open market. These transactions may include stabilizing and
over-allotment transactions and purchases to cover short positions created by
the Underwriters in connection with the Offering. Stabilizing transactions
consist of certain bids for, or the purchase of Common Stock on behalf of the
Underwriters for the purpose of stabilizing or retarding a decline in the market
price of the Common Stock. The Underwriters may over-allot or otherwise create a
short position in the Common Stock by selling a greater number of shares of
Common Stock than they are required to purchase from the Company pursuant to the
Underwriting Agreement. Syndicate covering transactions consist of certain bids
for, or the purchase of, Common Stock on behalf of the Underwriters to reduce a
short position incurred by the Underwriters in connection with the Offering. The
Underwriters also may impose a penalty bid, whereby selling concessions allowed
to broker-dealers in respect of the securities sold in the Offering may be
reclaimed by the Underwriters if such shares of Common Stock are repurchased by
the Underwriters in stabilizing or syndicate covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Common Stock, which may be higher than the price that might otherwise prevail in
the open market; and these activities, if commenced, may be discontinued at any
time. These transactions may be effected on the Nasdaq National Market or
otherwise.

80
<PAGE>

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby is being passed
upon for the Company by Pepper, Hamilton & Scheetz LLP. Certain legal matters
will be passed upon for the Underwriters by Sonnenschein Nath & Rosenthal,
Chicago, Illinois.

EXPERTS

The audited financial statements included in this Prospectus and elsewhere
in the registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.

ADDITIONAL INFORMATION

The Company is not currently subject to the information requirements of the
Securities and Exchange Act (the "Exchange Act"). As a result of the Offering,
the Company will be required to file reports and other information with the
Commission pursuant to the informational requirements of the Exchange Act. In
addition, the Company intends to furnish its shareholders with annual reports
containing audited financial statements examined by an independent public
accounting firm.

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act, with respect to the Common Stock offered hereby.
As permitted by the rules and regulations of the Commission, this Prospectus,
which is part of the Registration Statement, omits certain information,
exhibits, schedules and undertakings set forth in the Registration Statement.
For further information pertaining to the Company and the Common Stock,
reference is made to such Registration Statement and the exhibits and schedules
thereto. Statements contained in this Prospectus as to the contents or
provisions of any documents referred to herein are not necessarily complete, and
in each instance, reference is made to the copy of the document filed as an
exhibit to the Registration Statement. The Registration Statement may be
inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of the Registration Statement may be
obtained from the Commission at prescribed rates from the Public Reference
Section of the Commission at such address, and at the Commission's regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10048,
and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. In addition, registration statements and certain other filings
made with the Commission through its Electronic Data Gathering, Analysis and
Retrieval ("EDGAR") system are publicly available through the Commission's site
on the Internet's World Wide Web, located at http://www.sec.gov. The
Registration Statement, including all exhibits thereto and amendments thereof,
has been filed with the Commission through EDGAR.

81
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
PAGE
-----
IMAGEMAX, INC. AND FOUNDING COMPANIES UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS:
Basis of Presentation.................................. F-3
Unaudited Pro Forma Combined Balance Sheet............. F-4
Unaudited Pro Forma Combined Statements of
Operations........................................... F-5
Notes to Unaudited Pro Forma Combined Financial
Statements........................................... F-8
IMAGEMAX, INC. (IMAGEMAX):
Report of Independent Public Accountants............... F-18
Balance Sheets......................................... F-19
Statements of Operations............................... F-20
Statements of Shareholders' Equity..................... F-21
Statements of Cash Flows............................... F-22
Notes to Financial Statements.......................... F-23
FOUNDING COMPANIES:
UTZ MEDICAL ENTERPRISES, INC. (AMMCORP):
Report of Independent Public Accountants............... F-27
Consolidated Balance Sheets............................ F-28
Consolidated Statements of Operations.................. F-29
Consolidated Statements of Stockholders' Deficit....... F-30
Consolidated Statements of Cash Flows.................. F-31
Notes to Consolidated Financial Statements............. F-32
CODALEX MICROFILMING CORPORATION (CMC) AND IMAGING
INFORMATION INDUSTRIES, INC. (I(3)) (TOGETHER,
CODALEX):
Report of Independent Public Accountants............... F-38
Combined Balance Sheets................................ F-39
Combined Statements of Operations...................... F-40
Combined Statements of Stockholders' Equity
(Deficit)............................................ F-41
Combined Statements of Cash Flows...................... F-42
Notes to Combined Financial Statements................. F-43
LASER GRAPHICS SYSTEMS & SERVICES, INC. (LASER GRAPHICS),
AN AFFILIATE OF CODALEX:
Report of Independent Public Accountants............... F-47
Balance Sheets......................................... F-48
Statements of Operations............................... F-49
Statements of Stockholders' Equity (Deficit)........... F-50
Statements of Cash Flows............................... F-51
Notes to Financial Statements.......................... F-52
DATALINK CORPORATION (DATALINK):
Report of Independent Public Accountants............... F-56
Balance Sheets......................................... F-57
Statements of Operations............................... F-58
Statements of Stockholders' Equity..................... F-59
Statements of Cash Flows............................... F-60
Notes to Financial Statements.......................... F-61
DOCUTECH, INC. AND DOCUTECH DATA SYSTEMS, INC. (DOCUTECH)
Report of Independent Public Accountants............... F-66
Combined Balance Sheets................................ F-67
Combined Statements of Operations...................... F-68
Combined Statements of Stockholders' Equity............ F-69
Combined Statements of Cash Flows...................... F-70
Notes to Combined Financial Statements................. F-71
</TABLE>

F-1
<PAGE>

<TABLE>
<S> <C>
PAGE
-----
IMAGE & INFORMATION SOLUTIONS, INC. (I(2) Solutions):
Report of Independent Public Accountants............... F-77
Consolidated Balance Sheets............................ F-78
Consolidated Statements of Operations.................. F-79
Consolidated Statements of Stockholders' Equity........ F-80
Consolidated Statements of Cash Flows.................. F-81
Notes to Consolidated Financial Statements............. F-82
IMAGE MEMORY SYSTEMS, INC. (IMS):
Report of Independent Public Accountants............... F-87
Balance Sheets......................................... F-88
Statements of Operations............................... F-89
Statements of Shareholders' Equity..................... F-90
Statements of Cash Flows............................... F-91
Notes to Financial Statements.......................... F-92
INTERNATIONAL DATA SERVICES OF NEW YORK, INC. (IDS):
Report of Independent Public Accountants............... F-97
Balance Sheets......................................... F-98
Statements of Operations............................... F-99
Statements of Shareholders' Equity..................... F-100
Statements of Cash Flows............................... F-101
Notes to Financial Statements.......................... F-102
OREGON MICRO-IMAGING, INC. (OMI):
Report of Independent Public Accountants............... F-106
Balance Sheets......................................... F-107
Statements of Operations............................... F-108
Statements of Stockholders' Equity..................... F-109
Statements of Cash Flows............................... F-110
Notes of Financial Statements.......................... F-111
SEMCO INDUSTRIES, INC. (SPAULDING):
Report of Independent Public Accountants............... F-116
Consolidated Balance Sheets............................ F-117
Consolidated Statements of Operations.................. F-118
Consolidated Statements of Stockholders' Deficit....... F-119
Consolidated Statements of Cash Flows.................. F-120
Notes to Consolidated Financial Statements............. F-121
TOTAL INFORMATION MANAGEMENT CORPORATION (TIMCO):
Report of Independent Public Accountants............... F-126
Balance Sheets......................................... F-127
Statements of Operations............................... F-128
Statements of Stockholders' Equity..................... F-129
Statements of Cash Flows............................... F-130
Notes to Financial Statements.......................... F-131
TPS MICROGRAPHICS, INC. (TPS):
Report of Independent Public Accountants............... F-135
Balance Sheets......................................... F-136
Statements of Operations............................... F-137
Statements of Stockholder's Deficit.................... F-138
Statements of Cash Flows............................... F-139
Notes to Financial Statements.......................... F-140
</TABLE>

F-2
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

The following unaudited pro forma combined financial statements give effect
to the acquisitions by ImageMax, Inc. ("ImageMax") of Utz Medical Enterprises,
Inc., the parent of AMMCORP, by merger, CMC by merger, Laser Graphics by merger,
I(3) by net asset acquisition, DDS by merger, DTI by net asset acquisition, I(2)
Solutions by merger, IMS by stock acquisition, IDS by merger, OMI by merger, TPS
by stock acquisition, DataLink by net asset acquisition, Spaulding (a
wholly-owned subsidiary of SEMCO Industries, Inc.) by net asset acquisition, and
TIMCO by net asset acquisition, (together, the "Founding Companies"). These
acquisitions (the "Acquisitions") will occur simultaneously with and as a
condition to the closing of ImageMax's initial public offering (the "Offering")
and will be accounted for using the purchase method of accounting. ImageMax has
been identified as the accounting acquirer for financial statement presentation
purposes.

The unaudited pro forma combined balance sheet as of September 30, 1997
gives effect to the Acquisitions and the Offering as if they had occurred on
September 30, 1997. The unaudited pro forma combined statements of operations
give effect to these transactions as if they had occurred on January 1, 1996.

ImageMax has preliminarily analyzed the savings that it expects to realize
from reductions in salaries and certain benefits to the owners of the Founding
Companies. To the extent the owners have agreed prospectively to reductions in
salary, bonuses and benefits, these reductions have been reflected in the pro
forma combined statements of operations (the "Compensation Differential"). With
respect to other potential cost savings, the statements include the compensation
costs associated with positions eliminated or which will be eliminated in
connection with the Acquisitions, including the retirement of former Senior
Founding Company executives and other identified head-count reductions totalling
approximately $650,000, $500,000 and $300,000 for the year ended December 31,
1996 and for the nine months ended September 30, 1996 and 1997, respectively.
The statements include compensation of $610,000 annually based upon employment
agreements with ImageMax's executive management, but exclude other costs
associated with being a public company. While not quantified, it is expected
that such other costs will be offset by the potential cost savings from
consolidating certain general and administrative functions at the Founding
Companies and the interest earned on the remaining proceeds of the Offering.

The pro forma adjustments are based on estimates, available information and
certain assumptions and may be revised as additional information becomes
available. The pro forma financial data do not purport to represent what
ImageMax's financial position or results of operations would actually have been
if such transactions in fact had occurred on those dates and is not necessarily
representative of ImageMax's financial position or results of operations for any
future period. Since the Founding Companies were not under common control or
management, historical combined results may not be comparable to, or indicative
of, future performance. The unaudited pro forma combined financial statements
should be read in conjunction with the other financial statements and notes
thereto included elsewhere in this Prospectus. See "Risk Factors" included
elsewhere herein.

F-3
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

SEPTEMBER 30, 1997

(IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............... $1,362 $ 2 $ 102 $ 294 $264 $1,383
Accounts receivable..................... -- 897 835 386 524 468
Inventories............................. -- 94 226 42 6 453
Prepaid expenses and other.............. -- 53 21 10 10 --
------ ------ ------ ------ ---- ------
Total current assets.................. 1,362 1,046 1,184 732 804 2,304
PROPERTY AND EQUIPMENT, net.............. 5 1,740 437 943 115 720
INTANGIBLES, primarily goodwill.......... -- 269 4 -- -- --
OTHER.................................... 1,987 86 -- 22 -- 139
------ ------ ------ ------ ---- ------
Total assets.......................... $3,354 $3,141 $1,625 $1,697 $919 $3,163
====== ====== ====== ====== ==== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt and current portion of
long-term debt........................ $ -- $2,856 $ 704 $ 81 $ 8 $ 81
Accounts payable........................ -- 368 547 141 79 130
Accrued expenses........................ 1,912 641 176 147 95 901
Deferred revenue........................ -- 190 20 -- 109 --
Pro forma cash due Founding Companies... -- -- -- -- -- --
Other current liabilities............... -- -- 105 -- -- --
------ ------ ------ ------ ---- ------
Total current liabilities............. 1,912 4,055 1,552 369 291 1,112
------ ------ ------ ------ ---- ------
DEFERRED INCOME TAXES.................... -- -- -- -- -- 3
LONG-TERM DEBT........................... -- 228 85 813 4 363
OTHER LONG-TERM LIABILITIES.............. -- -- -- -- -- --
------ ------ ------ ------ ---- ------
Total liabilities..................... 1,912 4,283 1,637 1,182 295 1,478
------ ------ ------ ------ ---- ------
SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock......................... 2,719 -- -- -- -- --
Common stock............................ 1,567 1 150 40 10 31
Additional paid-in-capital.............. -- 98 -- -- -- --
Retained earnings (deficit)............. (2,844) (1,241) (162) 475 614 1,723
Treasury stock.......................... -- -- -- -- -- (69)
------ ------ ------ ------ ---- ------
Total shareholders' equity
(deficit)........................... 1,442 (1,142) (12) 515 624 1,685
------ ------ ------ ------ ---- ------
Total liabilities and shareholders'
equity (deficit).................... $3,354 $3,141 $1,625 $1,697 $919 $3,163
====== ====== ====== ====== ==== ======

<CAPTION>
HISTORICAL FINANCIAL STATEMENTS (NOTES 1 AND 2)
--------------------------------------------------
PRO FORMA PRO FORMA
IMS IDS OMI SPAULDING TIMCO TPS ADJUSTMENTS COMBINED
---- ---- ------ --------- ------ ------ ----------- ---------
(NOTE 3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............... $ 47 $ 45 $ 1 $ 367 $ 31 $ -- $(1,017) $ 2,881
Accounts receivable..................... 484 521 340 1,273 900 809 -- 7,437
Inventories............................. 13 -- 400 514 60 139 -- 1,947
Prepaid expenses and other.............. 90 226 45 94 -- 61 -- 610
---- ---- ------ ------ ------ ------ ------- -------
Total current assets.................. 634 792 786 2,248 991 1,009 (1,017) 12,875
PROPERTY AND EQUIPMENT, net.............. 124 61 377 1,075 267 324 (1,628) 4,560
INTANGIBLES, primarily goodwill.......... -- -- -- -- 110 20 30,842 31,245
OTHER.................................... 67 -- -- 16 14 67 (154) 2,244
---- ---- ------ ------ ------ ------ ------- -------
Total assets.......................... $825 $853 $1,163 $3,339 $1,382 $1,420 $28,043 $50,924
==== ==== ====== ====== ====== ====== ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt and current portion of
long-term debt........................ $ 78 $ -- $ 29 $ -- $ 218 $ 509 $ (283) $ 4,281
Accounts payable........................ 103 291 124 384 51 340 -- 2,558
Accrued expenses........................ 286 362 179 2,683 339 159 (2,191) 5,689
Deferred revenue........................ -- -- 178 605 -- 32 -- 1,134
Pro forma cash due Founding Companies... -- -- -- -- -- -- 25,430 25,430
Other current liabilities............... -- -- -- -- -- -- -- 105
---- ---- ------ ------ ------ ------ ------- -------
Total current liabilities............. 467 653 510 3,672 608 1,040 22,956 39,197
---- ---- ------ ------ ------ ------ ------- -------
DEFERRED INCOME TAXES.................... -- 14 28 -- -- 13 -- 58
LONG-TERM DEBT........................... 111 -- 36 -- 144 534 (1,220) 1,098
OTHER LONG-TERM LIABILITIES.............. -- -- -- 41 -- -- -- 41
---- ---- ------ ------ ------ ------ ------- -------
Total liabilities..................... 578 667 574 3,713 752 1,587 21,736 40,394
---- ---- ------ ------ ------ ------ ------- -------
SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock......................... -- -- -- 60 -- -- (2,779) --
Common stock............................ 100 10 10 696 46 1 14,712 17,374
Additional paid-in-capital.............. -- -- -- 847 123 225 (1,293) --
Retained earnings (deficit)............. 430 176 579 178 461 157 (7,390) (6,844)
Treasury stock.......................... (283) -- -- (2,155) -- (550) 3,057 --
---- ---- ------ ------ ------ ------ ------- -------
Total shareholders' equity
(deficit)........................... 247 186 589 (374) 630 (167) 6,307 10,530
---- ---- ------ ------ ------ ------ ------- -------
Total liabilities and shareholders'
equity (deficit).................... $825 $853 $1,163 $3,339 $1,382 $1,420 $28,043 $50,924
==== ==== ====== ====== ====== ====== ======= =======

<CAPTION>
PRO FORMA
COMBINED,
POST MERGER AS
ADJUSTMENTS ADJUSTED
----------- ---------
(NOTE 4)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............... $ 2,902 $ 5,783
Accounts receivable..................... -- 7,437
Inventories............................. -- 1,947
Prepaid expenses and other.............. -- 610
------- -------
Total current assets.................. 2,902 15,777
PROPERTY AND EQUIPMENT, net.............. -- 4,560
INTANGIBLES, primarily goodwill.......... -- 31,245
OTHER.................................... (1,987) 257
------- -------
Total assets.......................... $ 915 $51,839
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt and current portion of
long-term debt........................ $(4,281) $ --
Accounts payable........................ -- 2,558
Accrued expenses........................ (2,150) 3,539
Deferred revenue........................ -- 1,134
Pro forma cash due Founding Companies... (25,430) --
Other current liabilities............... (105) --
------- -------
Total current liabilities............. (31,966) 7,231
------- -------
DEFERRED INCOME TAXES.................... -- 58
LONG-TERM DEBT........................... (1,098) --
OTHER LONG-TERM LIABILITIES.............. -- 41
------- -------
Total liabilities..................... (33,064) 7,330
------- -------
SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock......................... -- --
Common stock............................ 34,479 51,853
Additional paid-in-capital.............. -- --
Retained earnings (deficit)............. (500) (7,344)
Treasury stock.......................... -- --
------- -------
Total shareholders' equity
(deficit)........................... 33,979 44,509
------- -------
Total liabilities and shareholders'
equity (deficit).................... $ 915 $51,839
======= =======
</TABLE>

The accompanying notes are an integral part of this statement.

F-4
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1997

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
HISTORICAL FINANCIAL STATEMENTS (NOTES 1 AND 2)
----------------------------------------------------------------------------------
CODALEX I(2)
IMAGEMAX AMMCORP GROUP DATALINK DOCUTECH SOLUTIONS IMS IDS
---------- ------- ------- -------- -------- --------- ------ ------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Services................................. $ -- $4,079 $2,709 $1,972 $ 869 $2,014 $1,860 $2,340
Products................................. -- -- 1,047 592 1,300 1,316 136 --
---------- ------ ------ ------ ------ ------ ------ ------
-- 4,079 3,756 2,564 2,169 3,330 1,996 2,340
---------- ------ ------ ------ ------ ------ ------ ------
COST OF REVENUES:
Services................................. -- 2,486 1,835 1,268 405 767 1,044 1,452
Products................................. -- -- 773 492 435 966 65 --
Depreciation............................. -- 253 70 157 27 126 52 14
---------- ------ ------ ------ ------ ------ ------ ------
-- 2,739 2,678 1,917 867 1,859 1,161 1,466
---------- ------ ------ ------ ------ ------ ------ ------
Gross profit........................... -- 1,340 1,078 647 1,302 1,471 835 874
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES................................. 331 1,068 687 380 602 1,234 424 635
EXECUTIVE MANAGEMENT COMPENSATION......... -- -- -- -- -- -- -- --
SPECIAL COMPENSATION CHARGE............... 2,494 -- -- -- -- -- -- --
FOUNDING COMPANIES TRANSACTION COSTS...... -- 35 45 25 57 -- 12 27
AMORTIZATION OF INTANGIBLE ASSETS......... -- 177 -- -- -- -- -- --
---------- ------ ------ ------ ------ ------ ------ ------
Operating income (loss)................ (2,825) 60 346 242 643 237 399 212
INTEREST EXPENSE.......................... -- 243 60 91 4 75 25 --
INTEREST INCOME........................... (4) -- -- (1) -- (60) (1) (2)
---------- ------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes...... (2,821) (183) 286 152 639 222 375 214
INCOME TAX PROVISION (BENEFIT)............ -- 63 -- -- -- 96 -- 48
---------- ------ ------ ------ ------ ------ ------ ------
NET INCOME (LOSS)......................... $ (2,821) $ (246) $ 286 $ 152 $ 639 $ 126 $ 375 $ 166
========== ====== ====== ====== ====== ====== ====== ======
PRO FORMA NET LOSS PER SHARE
(Note 8)................................. $ (2.44)
==========
SHARES USED IN COMPUTING PRO FORMA NET
LOSS PER SHARE (Note 8).................. 1,154,259
==========
SUPPLEMENTAL PRO FORMA DATA (NOTE 9):
Operating income (loss), as reported..... $ (2,825) $ 60 $ 346 $ 242 $ 643 $ 237 $ 399 $ 212
Pro forma operating adjustments (Note
9)..................................... (357) 270 (4) 32 (81) 78 (8) 428
---------- ------ ------ ------ ------ ------ ------ ------
(3,182) 330 342 274 562 315 391 640
Pro forma amortization of intangibles.... -- 67 58 80 191 79 65 78
---------- ------ ------ ------ ------ ------ ------ ------
Pro forma operating income (loss)........ (3,182) 263 284 194 371 236 326 562
Pro forma net interest expense
(income)............................... (4) -- -- (1) -- (8) (1) (2)
---------- ------ ------ ------ ------ ------ ------ ------
Pro forma income (loss) before taxes..... (3,178) 263 284 195 371 244 327 564
Pro forma income tax provision
(benefit).............................. (285) 122 117 81 200 130 160 264
---------- ------ ------ ------ ------ ------ ------ ------
Pro forma net income (loss).............. $ (2,893) $ 141 $ 167 $ 114 $ 171 $ 114 $ 167 $ 300
========== ====== ====== ====== ====== ====== ====== ======

<CAPTION>
HISTORICAL FINANCIAL STATEMENTS (NOTES 1 AND 2)
---------------------------------------------------------------
PRO FORMA PRO FORMA POST MERGER
OMI SPAULDING TIMCO TPS ADJUSTMENTS COMBINED ADJUSTMENTS
------ --------- ------ ------ ----------- ---------- -----------
(NOTE 5) (NOTE 5)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Services................................. $1,806 $3,960 $3,318 $2,314 $ (69) $ 27,172 $ --
Products................................. 1,305 2,745 -- 889 (29) 9,301 --
------ ------ ------ ------ ------- ---------- ------
3,111 6,705 3,318 3,203 (98) 36,473
------ ------ ------ ------ ------- ---------- ------
COST OF REVENUES:
Services................................. 1,464 2,637 2,096 1,525 111 17,090 --
Products................................. 702 1,780 -- 796 151 6,160 --
Depreciation............................. 76 148 63 106 (63) 1,029 --
------ ------ ------ ------ ------- ---------- ------
2,242 4,565 2,159 2,427 199 24,279 --
------ ------ ------ ------ ------- ---------- ------
Gross profit........................... 869 2,140 1,159 776 (297) 12,194 --
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES................................. 588 1,902 798 660 (1,091) 8,218 --
EXECUTIVE MANAGEMENT COMPENSATION......... -- -- -- -- 458 458 --
SPECIAL COMPENSATION CHARGE............... -- -- -- -- -- 2,494 --
FOUNDING COMPANIES TRANSACTION COSTS...... 33 73 25 -- -- 332 --
AMORTIZATION OF INTANGIBLE ASSETS......... -- -- 21 -- 670 868 --
------ ------ ------ ------ ------- ---------- ------
Operating income (loss)................ 248 165 315 116 (334) (176) --
INTEREST EXPENSE.......................... 14 160 42 77 (110) 681 (606)
INTEREST INCOME........................... -- (2) -- -- -- (70) --
------ ------ ------ ------ ------- ---------- ------
Income (loss) before income taxes...... 234 7 273 39 (224) (787) 606
INCOME TAX PROVISION (BENEFIT)............ 97 -- 1 -- 597 902 238
------ ------ ------ ------ ------- ---------- ------
NET INCOME (LOSS)......................... $ 137 $ 7 $ 272 $ 39 $ (821) $ (1,689) $ 368
====== ====== ====== ====== ======= ========== ======
PRO FORMA NET LOSS PER SHARE
(Note 8)................................. $ (0.39)
==========
SHARES USED IN COMPUTING PRO FORMA NET
LOSS PER SHARE (Note 8).................. 4,333,342
==========
SUPPLEMENTAL PRO FORMA DATA (NOTE 9):
Operating income (loss), as reported..... $ 248 $ 165 $ 315 $ 116 $ -- $ 158 $ --
Pro forma operating adjustments (Note
9)..................................... (1) (41) 151 67 -- 534 --
------ ------ ------ ------ ------- ---------- ------
247 124 466 183 -- 692 --
Pro forma amortization of intangibles.... 54 81 59 56 -- 868 --
------ ------ ------ ------ ------- ---------- ------
Pro forma operating income (loss)........ 193 43 407 127 -- (176) --
Pro forma net interest expense
(income)............................... -- (2) -- 23 -- 5 --
------ ------ ------ ------ ------- ---------- ------
Pro forma income (loss) before taxes..... 193 45 407 104 -- (181) --
Pro forma income tax provision
(benefit).............................. 97 21 170 63 -- 1,140 --
------ ------ ------ ------ ------- ---------- ------
Pro forma net income (loss).............. $ 96 $ 24 $ 237 $ 41 $ -- $ (1,321) $ --
====== ====== ====== ====== ======= ========== ======

PRO FORMA
COMBINED,
AS ADJUSTED
------------

<S> <C>
REVENUES:
Services................................. $ 27,172
Products................................. 9,301
----------
36,473
----------
COST OF REVENUES:
Services................................. 17,090
Products................................. 6,160
Depreciation............................. 1,029
----------
24,279
----------
Gross profit........................... 12,194
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES................................. 8,218
EXECUTIVE MANAGEMENT COMPENSATION......... 458
SPECIAL COMPENSATION CHARGE............... 2,494
FOUNDING COMPANIES TRANSACTION COSTS...... 332
AMORTIZATION OF INTANGIBLE ASSETS......... 868
----------
Operating income (loss)................ (176)
INTEREST EXPENSE.......................... 75
INTEREST INCOME........................... (70)
----------
Income (loss) before income taxes...... (181)
INCOME TAX PROVISION (BENEFIT)............ 1,140
----------
NET INCOME (LOSS)......................... $ (1,321)
==========
PRO FORMA NET LOSS PER SHARE
(Note 8)................................. $ (0.26)
==========
SHARES USED IN COMPUTING PRO FORMA NET
LOSS PER SHARE (Note 8).................. 4,985,956
==========
SUPPLEMENTAL PRO FORMA DATA (NOTE 9):
Operating income (loss), as reported..... $ 158
Pro forma operating adjustments (Note
9)..................................... 534
----------
692
Pro forma amortization of intangibles.... 868
----------
Pro forma operating income (loss)........ (176)
Pro forma net interest expense
(income)............................... 5
----------
Pro forma income (loss) before taxes..... (181)
Pro forma income tax provision
(benefit).............................. 1,140
----------
Pro forma net income (loss).............. $ (1,321)
==========
</TABLE>

The accompanying notes are an integral part of this statement.

F-5
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1996

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
HISTORICAL FINANCIAL STATEMENTS (NOTES 1 AND 2)
----------------------------------------------------------------
CODALEX I(2)
IMAGEMAX AMMCORP GROUP DATALINK DOCUTECH SOLUTIONS
---------- ------- ------- -------- -------- ---------

<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Services........................................ $ -- $4,081 $1,526 $1,762 $ 866 $1,839
Products........................................ -- -- 1,458 744 908 1,298
---------- ------ ------ ------ ------ ------
-- 4,081 2,984 2,506 1,774 3,137
---------- ------ ------ ------ ------ ------
COST OF REVENUES:
Services........................................ -- 2,599 983 1,180 380 721
Products........................................ -- -- 1,151 648 460 1,024
Depreciation.................................... -- 329 57 161 24 120
---------- ------ ------ ------ ------ ------
-- 2,928 2,191 1,989 864 1,865
---------- ------ ------ ------ ------ ------
Gross profit.................................. -- 1,153 793 517 910 1,272
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES........................................ -- 973 693 327 565 1,085
EXECUTIVE MANAGEMENT COMPENSATION................ -- -- -- -- -- --
AMORTIZATION OF INTANGIBLE ASSETS................ -- 162 1 -- -- --
---------- ------ ------ ------ ------ ------
Operating income (loss)....................... -- 18 99 190 345 187
INTEREST EXPENSE................................. -- 250 54 75 13 72
INTEREST INCOME.................................. -- -- -- (1) -- (65)
---------- ------ ------ ------ ------ ------
Income (loss) before income taxes............. -- (232) 45 116 332 180
INCOME TAX PROVISION (BENEFIT)................... -- 146 -- -- -- 68
---------- ------ ------ ------ ------ ------
NET INCOME (LOSS)................................ $ -- $ (378) $ 45 $ 116 $ 332 $ 112
========== ====== ====== ====== ====== ======
PRO FORMA NET LOSS PER SHARE (NOTE 8)............ $ --
==========
SHARES USED IN COMPUTING PRO FORMA NET LOSS PER
SHARE (NOTE 8).................................. 1,154,259
==========
SUPPLEMENTAL PRO FORMA DATA (NOTE 9):
Operating income (loss), as reported............ $ -- $ 18 $ 99 $ 190 $ 345 $ 187
Pro forma operating adjustments (Note 9)........ (458) 269 (31) (10) (16) 73
---------- ------ ------ ------ ------ ------
(458) 287 68 180 329 260
Pro forma amortization of intangibles........... -- 67 58 80 191 79
---------- ------ ------ ------ ------ ------
Pro forma operating income (loss)............... (458) 220 10 100 138 181
Pro forma net interest expense (income)......... -- -- -- (1) -- (19)
---------- ------ ------ ------ ------ ------
Pro forma income (loss) before taxes............ (458) 220 10 101 138 200
Pro forma income tax provision (benefit)........ (215) 121 15 48 122 126
---------- ------ ------ ------ ------ ------
Pro forma net income (loss)..................... $ (243) $ 99 $ (5) $ 53 $ 16 $ 74
========== ====== ====== ====== ====== ======

<CAPTION>
HISTORICAL FINANCIAL STATEMENTS (NOTES 1 AND 2)
-----------------------------------------------------
PRO FORMA PRO FORMA
IMS IDS OMI SPAULDING TIMCO TPS ADJUSTMENTS COMBINED
------ ----- ------ --------- ------ ------ ----------- ---------
(NOTE 6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Services........................................ $1,473 $ 941 $1,798 $3,608 $3,609 $1,506 $ (71) $ 22,938
Products........................................ 295 -- 986 2,918 -- 857 -- 9,464
------ ----- ------ ------ ------ ------ ----- ---------
1,768 941 2,784 6,526 3,609 2,363 (71) 32,402
------ ----- ------ ------ ------ ------ ----- ---------
COST OF REVENUES:
Services........................................ 1,230 698 1,434 2,239 2,376 1,004 102 14,946
Products........................................ 174 -- 525 2,016 -- 718 173 6,889
Depreciation.................................... 65 10 73 148 68 67 (61) 1,061
------ ----- ------ ------ ------ ------ ----- ---------
1,469 708 2,032 4,403 2,444 1,789 214 22,896
------ ----- ------ ------ ------ ------ ----- ---------
Gross profit.................................. 299 233 752 2,123 1,165 574 (285) 9,506
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES........................................ 495 326 518 2,393 880 486 (415) 8,326
EXECUTIVE MANAGEMENT COMPENSATION................ -- -- -- -- -- -- 458 458
AMORTIZATION OF INTANGIBLE ASSETS................ -- -- -- -- 34 -- 671 868
------ ----- ------ ------ ------ ------ ----- ---------
Operating income (loss)....................... (196) (93) 234 (270) 251 88 (999) (146)
INTEREST EXPENSE................................. 28 12 12 155 75 62 (91) 717
INTEREST INCOME.................................. (1) (2) -- (31) -- -- 26 (74)
------ ----- ------ ------ ------ ------ ----- ---------
Income (loss) before income taxes............. (223) (103) 222 (394) 176 26 (934) (789)
INCOME TAX PROVISION (BENEFIT)................... (47) -- 83 -- 1 -- (329) (78)
------ ----- ------ ------ ------ ------ ----- ---------
NET INCOME (LOSS)................................ $ (176) $(103) $ 139 $ (394) $ 175 $ 26 $(605) $ (711)
====== ===== ====== ====== ====== ====== ===== =========
PRO FORMA NET LOSS PER SHARE (NOTE 8)............ $ (.16)
=========
SHARES USED IN COMPUTING PRO FORMA NET LOSS PER
SHARE (NOTE 8).................................. 4,333,342
=========
SUPPLEMENTAL PRO FORMA DATA (NOTE 9):
Operating income (loss), as reported............ $ (196) $ (93) $ 234 $ (270) $ 251 $ 88 $ -- $ 853
Pro forma operating adjustments (Note 9)........ (8) 66 (14) (144) 87 55 -- (131)
------ ----- ------ ------ ------ ------ ----- ---------
(204) (27) 220 (414) 338 143 -- 722
Pro forma amortization of intangibles........... 65 78 54 81 59 56 -- 868
------ ----- ------ ------ ------ ------ ----- ---------
Pro forma operating income (loss)............... (269) (105) 166 (495) 279 87 -- (146)
Pro forma net interest expense (income)......... (1) (2) -- (5) (1) 19 -- (10)
------ ----- ------ ------ ------ ------ ----- ---------
Pro forma income (loss) before taxes............ (268) (103) 166 (490) 280 68 -- (136)
Pro forma income tax provision (benefit)........ (92) (9) 99 (225) 132 56 -- 178
------ ----- ------ ------ ------ ------ ----- ---------
Pro forma net income (loss)..................... $ (176) $ (94) $ 67 $ (265) $ 148 $ 12 $ -- $ (314)
====== ===== ====== ====== ====== ====== ===== =========

PRO FORMA
POST MERGER COMBINED,
ADJUSTMENTS AS ADJUSTED
----------- -----------
(NOTE 6)
<S> <C> <C>
REVENUES:
Services........................................ $ -- $ 22,938
Products........................................ -- 9,464
----- ---------
-- 32,402
----- ---------
COST OF REVENUES:
Services........................................ -- 14,946
Products........................................ -- 6,889
Depreciation.................................... -- 1,061
----- ---------
-- 22,896
----- ---------
Gross profit.................................. -- 9,506
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES........................................ -- 8,326
EXECUTIVE MANAGEMENT COMPENSATION................ -- 458
AMORTIZATION OF INTANGIBLE ASSETS................ -- 868
----- ---------
Operating income (loss)....................... -- (146)
INTEREST EXPENSE................................. (653) 64
INTEREST INCOME.................................. -- (74)
----- ---------
Income (loss) before income taxes............. 653 (136)
INCOME TAX PROVISION (BENEFIT)................... 256 178
----- ---------
NET INCOME (LOSS)................................ $ 397 $ (314)
===== =========
PRO FORMA NET LOSS PER SHARE (NOTE 8)............ $ (.06)
=========
SHARES USED IN COMPUTING PRO FORMA NET LOSS PER
SHARE (NOTE 8).................................. 4,985,956
=========
SUPPLEMENTAL PRO FORMA DATA (NOTE 9):
Operating income (loss), as reported............ $ -- $ 853
Pro forma operating adjustments (Note 9)........ -- (131)
----- ---------
-- 722
Pro forma amortization of intangibles........... -- 868
----- ---------
Pro forma operating income (loss)............... -- (146)
Pro forma net interest expense (income)......... -- (10)
----- ---------
Pro forma income (loss) before taxes............ -- (136)
Pro forma income tax provision (benefit)........ -- 178
----- ---------
Pro forma net income (loss)..................... $ -- $ (314)
===== =========
</TABLE>

The accompanying notes are an integral part of this statement.

F-6
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1996

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
HISTORICAL FINANCIAL STATEMENTS (NOTES 1 AND 2)
---------------------------------------------------------------
CODALEX I(2)
IMAGEMAX AMMCORP GROUP DATALINK DOCUTECH SOLUTIONS
--------- ------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Services........................................ $ -- $5,573 $2,404 $2,286 $1,249 $2,384
Products........................................ -- -- 1,653 865 1,073 1,575
--------- ------ ------ ------ ------ ------
-- 5,573 4,057 3,151 2,322 3,959
--------- ------ ------ ------ ------ ------
COST OF REVENUES:
Services........................................ -- 3,381 1,814 1,593 501 1,023
Products........................................ -- -- 1,193 773 584 1,229
Depreciation.................................... -- 446 88 218 31 157
--------- ------ ------ ------ ------ ------
-- 3,827 3,095 2,584 1,116 2,409
--------- ------ ------ ------ ------ ------
Gross profit.................................. -- 1,746 962 567 1,206 1,550
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES........................................ 23 1,419 1,082 467 747 1,673
EXECUTIVE MANAGEMENT COMPENSATION................ -- -- -- -- -- --
AMORTIZATION OF INTANGIBLE ASSETS................ -- 208 2 -- -- --
--------- ------ ------ ------ ------ ------
Operating income (loss)....................... (23) 119 (122) 100 459 (123)
INTEREST EXPENSE................................. -- 344 76 107 16 95
INTEREST INCOME/OTHER............................ -- -- -- (2) (3) (94)
--------- ------ ------ ------ ------ ------
Income (loss) before income taxes............. (23) (225) (198) (5) 446 (124)
INCOME TAX PROVISION (BENEFIT)................... -- 44 45 -- -- (59)
--------- ------ ------ ------ ------ ------
NET INCOME (LOSS)................................ $ (23) $ (269) $ (243) $ (5) $ 446 $ (65)
========= ====== ====== ====== ====== ======
PRO FORMA NET LOSS PER SHARE (NOTE 8)............ $ (.02)
=========
SHARES USED IN COMPUTING PRO FORMA NET LOSS PER
SHARE (NOTE 8).................................. 1,154,259
=========
SUPPLEMENTAL PRO FORMA DATA (NOTE 9):
Operating income (loss), as reported............ $ (23) $ 119 $ (122) $ 100 $ 459 $ (123)
Pro forma operating adjustments (Note 9)........ (610) 409 (37) 3 (39) 386
--------- ------ ------ ------ ------ ------
(633) 528 (159) 103 420 263
Pro forma amortization of intangibles........... -- 89 77 106 255 105
--------- ------ ------ ------ ------ ------
Pro forma operating income (loss)............... (633) 439 (236) (3) 165 158
Pro forma net interest expense (income)......... -- -- -- (2) (3) (33)
--------- ------ ------ ------ ------ ------
Pro forma income (loss) before taxes............ (633) 439 (236) (1) 168 191
Pro forma income tax provision (benefit)........ (312) 232 (94) 1 161 142
--------- ------ ------ ------ ------ ------
Pro forma net income (loss)..................... $ (321) $ 207 $ (142) $ (2) $ 7 $ 49
========= ====== ====== ====== ====== ======

<CAPTION>
HISTORICAL FINANCIAL STATEMENTS (NOTES 1 AND 2)
------------------------------------------------------
PRO FORMA PRO FORMA
IMS IDS OMI SPAULDING TIMCO TPS ADJUSTMENTS COMBINED
------ ------ ------ --------- ------ ------ ----------- ---------
(NOTE 7)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Services........................................ $1,935 $1,431 $2,385 $4,862 $4,991 $2,137 $ (84) $ 31,553
Products........................................ 357 -- 1,281 3,831 -- 1,078 (10) 11,703
------ ------ ------ ------ ------ ------ ----- ---------
2,292 1,431 3,666 8,693 4,991 3,215 (94) 43,256
------ ------ ------ ------ ------ ------ ----- ---------
COST OF REVENUES:
Services........................................ 1,564 1,017 1,996 2,583 3,276 1,371 148 20,267
Products........................................ 258 -- 748 3,044 -- 921 218 8,968
Depreciation.................................... 84 15 107 190 76 77 (81) 1,408
------ ------ ------ ------ ------ ------ ----- ---------
1,906 1,032 2,851 5,817 3,352 2,369 285 30,643
------ ------ ------ ------ ------ ------ ----- ---------
Gross profit.................................. 386 399 815 2,876 1,639 846 (379) 12,613
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES........................................ 604 518 675 3,017 1,181 752 (960) 11,198
EXECUTIVE MANAGEMENT COMPENSATION................ -- -- -- -- -- -- 610 610
AMORTIZATION OF INTANGIBLE ASSETS................ -- -- -- -- 42 -- 906 1,158
------ ------ ------ ------ ------ ------ ----- ---------
Operating income (loss)....................... (218) (119) 140 (141) 416 94 (935) (353)
INTEREST EXPENSE................................. 37 14 16 205 99 84 (129) 964
INTEREST INCOME/OTHER............................ (2) (2) 11 (32) -- -- 26 (98)
------ ------ ------ ------ ------ ------ ----- ---------
Income (loss) before income taxes............. (253) (131) 113 (314) 317 10 (832) (1,219)
INCOME TAX PROVISION (BENEFIT)................... (53) 5 37 -- -- -- (189) (170)
------ ------ ------ ------ ------ ------ ----- ---------
NET INCOME (LOSS)................................ $ (200) $ (136) $ 76 $ (314) $ 317 $ 10 $(643) $ (1,049)
====== ====== ====== ====== ====== ====== ===== =========
PRO FORMA NET LOSS PER SHARE (NOTE 8)............ $ (0.24)
=========
SHARES USED IN COMPUTING PRO FORMA NET LOSS PER
SHARE (NOTE 8).................................. 4,333,342
=========
SUPPLEMENTAL PRO FORMA DATA (NOTE 9):
Operating income (loss), as reported............ $ (218) $ (119) $ 140 $ (141) $ 416 $ 94 $ -- $ 582
Pro forma operating adjustments (Note 9)........ (9) 78 38 (181) 105 80 -- 223
------ ------ ------ ------ ----- ------ ----- --------
(227) (41) 178 (322) 521 174 -- 805
Pro forma amortization of intangibles........... 86 107 71 108 79 75 -- 1,158
------ ------ ------ ------ ----- ------ ----- --------
Pro forma operating income (loss)............... (313) (148) 107 (430) 442 99 -- (353)
Pro forma net interest expense (income)......... (2) (2) 11 (6) -- -- -- (37)
------ ------ ------ ------ ----- ------ ----- --------
Pro forma income (loss) before taxes............ (311) (146) 96 (424) 442 99 -- (316)
Pro forma income tax provision (benefit)........ (106) (17) 78 (203) 219 83 -- 184
------ ------ ------ ------ ----- ------ ----- --------
Pro forma net income (loss)..................... $ (205) $ (129) $ 18 $ (221) $ 223 $ 16 $ -- $ (500)
====== ====== ====== ====== ===== ====== ===== ========

PRO FORMA
POST MERGER COMBINED,
ADJUSTMENTS AS ADJUSTED
----------- -----------
(NOTE 7)
<S> <C> <C>
REVENUES:
Services........................................ $ -- $ 31,553
Products........................................ -- 11,703
----- ---------
-- 43,256
----- ---------
COST OF REVENUES:
Services........................................ -- 20,267
Products........................................ -- 8,968
Depreciation.................................... -- 1,408
----- ---------
-- 30,643
----- ---------
Gross profit.................................. -- 12,613
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES........................................ -- 11,198
EXECUTIVE MANAGEMENT COMPENSATION................ -- 610
AMORTIZATION OF INTANGIBLE ASSETS................ -- 1,158
----- ---------
Operating income (loss)....................... -- (353)
INTEREST EXPENSE................................. (903) 61
INTEREST INCOME/OTHER............................ -- (98)
----- ---------
Income (loss) before income taxes............. 903 (316)
INCOME TAX PROVISION (BENEFIT)................... 354 184
----- ---------
NET INCOME (LOSS)................................ $ 549 $ (500)
===== =========
PRO FORMA NET LOSS PER SHARE (NOTE 8)............ $ (.10)
=========
SHARES USED IN COMPUTING PRO FORMA NET LOSS PER
SHARE (NOTE 8).................................. 4,985,956
=========
SUPPLEMENTAL PRO FORMA DATA (NOTE 9):
Operating income (loss), as reported............ $ -- $ 582
Pro forma operating adjustments (Note 9)........ -- 223
----- ---------
-- 805
Pro forma amortization of intangibles........... -- 1,158
----- ---------
Pro forma operating income (loss)............... -- (353)
Pro forma net interest expense (income)......... -- (37)
----- ---------
Pro forma income (loss) before taxes............ -- (316)
Pro forma income tax provision (benefit)........ -- 184
----- ---------
Pro forma net income (loss)..................... $ -- $ (500)
===== =========
</TABLE>

The accompanying notes are an integral part of this statement.

F-7
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

1. GENERAL:

ImageMax was founded in November 1996 to become a leading national,
single-source provider of integrated document management solutions. ImageMax has
conducted no operations to date and will acquire the Founding Companies
concurrently with and as a condition of the closing of this Offering.

The historical financial statements reflect the financial position and
results of operations of the Founding Companies and were derived from the
respective Founding Companies' financial statements. The financial data for the
Founding Companies (excluding I(2) Solutions) included in the pro forma combined
balance sheet are as of September 30, 1997 and in the pro forma combined
statements of operations are for the year ended December 31, 1996 and for the
nine months ended September 30, 1996 and 1997. The financial data for I(2)
Solutions are as of July 31, 1997 and for the year ended October 31, 1996 and
the nine months ended July 31, 1996 and 1997. The historical financial data
included in the pro forma financial statements for DataLink, DocuTech and TIMCO
as of December 31, 1996 and for the year ended December 31, 1996 are derived
from audited financial statements appearing elsewhere in this Prospectus. The
historical financial data included in the pro forma combined financial
statements for I(2) Solutions as of October 31, 1996 and for the year ended
October 31, 1996 are also derived from audited financial statements appearing
elsewhere in this Prospectus. The additional historical financial data included
in the pro forma combined financial statements for DataLink, Docutech, TIMCO,
I(2) Solutions and the other Founding Companies have been derived from unaudited
financial statements. The audited historical financial statements included
elsewhere herein have been included in accordance with Securities and Exchange
Commission ("SEC") Regulation S-X, Rule 3-05.

2. ACQUISITION OF FOUNDING COMPANIES:

Concurrently with and as a condition to the closing of this Offering,
ImageMax will acquire by merger or purchase all of the outstanding capital stock
or substantially all of the net assets of the Founding Companies. The
acquisitions will be accounted for using the purchase method of accounting, with
ImageMax treated as the accounting acquirer.

The following table sets forth the consideration to be paid (assuming the
Acquisitions occurred on September 30, 1997) in (a) cash and (b) shares of
Common Stock to each of the Founding Companies or their shareholders. For
purposes of computing the estimated purchase price for accounting purposes, the
value of the shares is determined using an estimated fair value of $11.05 per
share (or $13.1 million), which represents a discount of 15% from the assumed
initial public offering price of $13.00 per share, due to the one-year
contractual restriction on the sale and transferability of the shares issued. In
addition, the shares have not been registered under the Securities Act of 1933,
the holders have no demand registration rights and sales will be subject to the
volume and other limitations of Rule 144 under the Securities Act of 1933. If a
10% discount were used, annual pro forma goodwill amortization would increase by
approximately $25,000. The total estimated purchase price of $39.0 million for
the Acquisitions includes $0.5 million of transaction costs and is based upon
preliminary estimates, subject to certain purchase price adjustments at and
following closing. Based on the estimated purchase price of $39.0 million,
approximately $4.0 million will be allocated to acquired in-process research and
development and will be charged to expense upon the consummation of the
Acquisitions (see Note 2 of ImageMax Financial Statements). The remaining amount
of intangible assets of approximately $31.2 million includes approximately $30.4
million of goodwill and $0.8 million of developed technology. Approximately
$18.2 million of the intangibles, net, is not deductible for tax purposes and
therefore no tax benefit will be recorded for financial reporting purposes.
Accordingly, no deferred taxes will be recorded in purchase accounting.

F-8
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

2. ACQUISITION OF FOUNDING COMPANIES: -- (CONTINUED)

<TABLE>
<CAPTION>
TOTAL
ESTIMATED
ESTIMATED PURCHASE PRICE
SHARES OF FAIR VALUE FOR ACCOUNTING
CASH COMMON STOCK OF SHARES PURPOSES(1)
------- ------------ ---------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AMMCORP.................... $ 454 71,923 $ 795 $ 1,249
CodaLex Group.............. 1,387 78,412 866 2,253
DataLink................... 3,250 38,462 425 3,675
DocuTech................... 5,446 288,750 3,191 8,637
I(2) Solutions............. 1,264 261,538 2,890 4,154
IMS........................ 2,112 61,538 680 2,792
IDS........................ 1,520 165,000 1,823 3,343
OMI........................ 1,398 117,692 1,300 2,698
Spaulding.................. 4,295 -- -- 4,295
Timco...................... 2,721 59,615 659 3,380
TPS........................ 1,583 41,538 459 2,042
------- --------- -------- -------
$25,430 1,184,468 $ 13,088 $38,518
======= ========= ======== =======
</TABLE>

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

(1) Excludes $0.5 million of transaction costs.

F-9
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

3. UNAUDITED PRO FORMA MERGER ADJUSTMENTS TO THE SEPTEMBER 30, 1997 BALANCE
SHEET:

The following table summarizes the unaudited pro forma merger combined
adjustments to the September 30, 1997 balance sheet (in thousands):

<TABLE>
<CAPTION>
PRO FORMA MERGER ADJUSTMENTS
----------------------------------------------------------
(A) (B) (C) (D) (E) TOTAL
ASSETS ------- ----- ------- ------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents........................... $ -- $ -- $ (367) $ (650) $ -- $(1,017)
Property and equipment, net......................... -- (663) (965) -- -- (1,628)
Intangibles, net.................................... -- (91) (1,954) 32,887 -- 30,842
Other............................................... -- -- (154) -- -- (154)
------- ----- ------- ------- ------ -------
Total assets.................................. $ -- $(754) $(3,440) $32,237 $ -- $28,043
======= ===== ======= ======= ====== =======
LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT)
Current portion of long-term debt................... $ -- $ -- $ (283) $ -- $ -- $ (283)
Accounts payable and accrued expenses............... -- (34) (2,657) 500 -- (2,191)
Pro forma cash due Founding Companies............... 25,430 -- -- -- -- 25,430
------- ----- ------- ------- ------ -------
Total current liabilities..................... 25,430 (34) (2,940) 500 -- 22,956
Long-term debt, net of current maturities........... -- (720) (500) -- -- (1,220)
------- ----- ------- ------- ------ -------
Total liabilities............................. 25,430 (754) (3,440) 500 -- 21,736
------- ----- ------- ------- ------ -------
Shareholders' equity (deficit):
Preferred stock................................... -- -- -- (60) (2,719) (2,779)
Common stock...................................... -- -- -- 11,993 2,719 14,712
Additional paid-in capital........................ (25,430) -- -- 24,137 -- (1,293)
Retained earnings (deficit)....................... -- -- -- (7,390) -- (7,390)
Treasury stock.................................... -- -- -- 3,057 -- 3,057
------- ----- ------- ------- ------ -------
Total shareholders' equity (deficit).......... (25,430) -- -- 31,737 -- 6,307
------- ----- ------- ------- ------ -------
Total liabilities and shareholders' equity
(deficit).................................. $ -- $(754) $(3,440) $32,237 $ -- $28,043
======= ===== ======= ======= ====== =======
</TABLE>

- ------------------
(a) Reflects the liability for the cash portion of the consideration to be paid
to the Founding Companies or their shareholders in connection with the
Acquisitions, including estimated purchase price adjustments based primarily
on required amounts of shareholders' equity and working capital.

(b) Reflects the elimination of a previously capitalized lease, which will
become an operating lease upon the closing of one of the Acquisitions.

(c) Reflects assets and liabilities (i.e. net liabilities) excluded from net
assets acquired in certain acquisitions such as facilities and their related
debt, liabilities related to deferred and other compensation, other assets,
and specific cash balances. The net liabilities excluded of $1,954,000
results in a reduction of intangibles, net, otherwise recorded in (d) below.

(d) Reflects the Acquisitions and the allocation of the purchase price using the
purchase method of accounting. The purchase price is estimated at $39.0
million, consisting of (i) $25.4 million in cash, (ii) 1,184,468 shares of
Common Stock valued at $11.05 per share (or $13.1 million) and (iii)
estimated transaction costs of $0.5 million (see Note 2). Also reflects non-
cash charges to retained earnings of $4.0 million for acquired in-process
research and development (see Note 2 to ImageMax Financial Statements) and a
$0.5 million non-recurring charge related to a fee payable in the fourth
quarter upon closing of the Offering. The $0.6 million credit to cash
reflects a purchase price adjustment based upon minimum required cash levels
under the agreements for the Acquisitions. The $0.5 million credit to
accounts payable relates to the fee payable discussed above. The entries to
shareholders' equity (deficit) reflect the elimination of the Founding
Companies' (deficit) equity balances (preferred stock, Common Stock,
retained earnings (deficit) and treasury stock) and the issuance of common
stock in connection with the Acquisitions. The retained earnings (deficit)
adjustment also includes the $4.0 million acquired in-process research and
development charge and the $0.5 million non-recurring charge discussed
above. The credit to intangibles reflects the application of purchase
accounting, taking into consideration the fair value of net assets acquired.

(e) Reflects the conversion of Series A Preferred Stock into 443,489 shares
of Common Stock.

F-10
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4. UNAUDITED PRO FORMA POST MERGER ADJUSTMENTS TO THE SEPTEMBER 30, 1997 BALANCE
SHEET:

The following table summarizes the unaudited pro forma post merger
adjustments (which reflects the Offering activity) to the balance sheet as of
September 30, 1997 (in thousands).

<TABLE>
<CAPTION>
PRO FORMA POST MERGER ADJUSTMENTS
------------------------------------------
(A) (B) (C) TOTAL
ASSETS ------- -------- ------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents................................... $34,316 $(25,930) $(5,484) $ 2,902
Other....................................................... (1,987) -- -- (1,987)
------- -------- ------- -------
Total assets.......................................... $32,329 $(25,930) $(5,484) $ 915
======= ======== ======= =======
LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT)
Current portion of long-term debt........................... $ -- $ -- $(4,281) $(4,281)
Accrued expenses............................................ (1,650) (500) -- (2,150)
Pro forma cash due Founding Companies....................... -- (25,430) -- (25,430)
Payable to shareholder/affiliate............................ -- -- (105) (105)
------- -------- ------- -------
Total current liabilities............................. (1,650) (25,930) (4,386) (31,966)
Long-term debt, net of current maturities................... -- -- (1,098) (1,098)
------- -------- ------- -------
Total liabilities..................................... (1,650) (25,930) (5,484) (33,064)
------- -------- ------- -------
Shareholders' equity (deficit):
Preferred stock........................................... -- -- -- --
Common stock.............................................. 34,479 -- -- 34,479
Retained earnings (deficit)............................... (500) -- -- (500)
Treasury stock............................................ -- -- -- --
------- -------- ------- -------
Total shareholders' equity (deficit).................. 33,979 -- -- 33,979
------- -------- ------- -------
Total liabilities and shareholders' equity
(deficit).......................................... $32,329 $(25,930) $(5,484) $ 915
======= ======== ======= =======
</TABLE>

- ------------------
(a) Reflects the net cash of $34.3 million from the sale of 3,100,000 shares of
Common Stock, primarily net of estimated offering costs of $3.0 million (net
of cash previously paid of $0.3 million, based on an assumed initial public
offering price of $13.00 per share). Offering costs primarily consist of
underwriting discounts and commissions, accounting fees, legal fees and
printing expenses and a $0.5 million fee paid to an entity owned by two
ImageMax officers to be paid upon completion of the Offering. Such fee will
be charged to the statement of operations upon the consummation of the
Offering.

(b) Reflects the payment of the cash consideration for the Acquisitions,
including estimated transaction costs.

F-11
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

5. UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS -- NINE
MONTHS ENDED SEPTEMBER 30, 1997:

The following table summarizes the unaudited pro forma combined statements
of operations adjustments for the nine months ended September 30, 1997 (in
thousands):

<TABLE>
<CAPTION>
POST MERGER
PRO FORMA ADJUSTMENTS TOTAL ADJUSTMENTS TOTAL POST
------------------------------------- PRO FORMA ------------ MERGER
(A) (B) (C) (D) (E) ADJUSTMENTS (F) (G) ADJUSTMENTS
---- ------ ----- ----- ----- ----------- ---- ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........................ $(98) $ -- $ -- $ -- $ -- $ (98) $ -- $ -- $ --
Cost of revenues................ (98) -- 297 -- -- 199 -- -- --
Selling, general and
administrative expense........ -- (1,044) (17) -- -- (1,091) -- -- --
Executive compensation.......... -- 458 -- -- -- 458 -- -- --
Amortization.................... -- -- -- 670 -- 670 -- -- --
---- ------ ----- ----- ----- ------ ---- ----- ----
Operating income (loss)... -- 586 (280) (670) -- (334) -- -- --
Interest income................. -- -- -- -- -- -- -- -- --
Interest expense................ -- -- (110) -- -- (110) (606) -- (606)
---- ------ ----- ----- ----- ------ ---- ----- ----
Income (loss) before
income taxes........... -- 586 (170) (670) -- (224) 606 -- 606
Income tax provision............ -- -- -- -- 597 597 -- 238 238
---- ------ ----- ----- ----- ------ ---- ----- ----
Net income (loss)......... $ -- $ 586 $(170) $(670) $(597) $ (821) $606 $(238) $368
==== ====== ===== ===== ===== ====== ==== ===== ====
</TABLE>

- ------------------
(a) Reflects the elimination of intercompany activity among the Founding
Companies.

(b) Reflects the reduction in salaries, bonuses and benefits to the owners of
the Founding Companies and ImageMax's executive management from an aggregate
total of $2.1 million to $1.1 million to which they have contractually
agreed, partially offset by compensation of $457,500 based upon employment
agreements with ImageMax's executive management. The pro forma reductions
vary in each pro forma period as the Founding Companies owners' actual
compensation expenses are different in each pro forma period presented.
These reductions in salaries, bonuses and benefits are in accordance with
the terms of employment agreements to be entered into pursuant to the
Acquisitions. Such employment agreements are primarily for three years,
contain restrictions related to competition and provide severance upon
termination in certain circumstances.

(c) Reflects the reduction in depreciation at two of the Founding Companies'
facilities, the elimination of interest expense on a capital lease and an
increase in rent expense (Rent Differential), as a result of certain
facilities excluded from the purchase transactions and new operating leases
to be entered into upon the closing of the Acquisitions.

(d) Reflects the amortization of goodwill to be recorded as a result of the
Acquisitions, using an estimated life of principally 30 years, and the
amortization of acquired developed technology over a seven-year estimated
life. Included in goodwill is $820,000 which will be amortized over 15
years. Excludes a charge for acquired in-process research and development of
$4.0 million (see Note 2).

(e) Reflects the incremental provision for federal and state income taxes based
on the effective tax rate that would have resulted on a C Corporation basis.

(f) Reflects the elimination of interest expense resulting from the reduction of
debt utilizing the net proceeds of the Offering (see Note 4, Adjustment
(c)). All interest expense is eliminated because all debt will be repaid
upon the closing of the Offering.

(g) Reflects the incremental provision for federal and state income taxes based
on the effective tax rate that would have resulted on a C Corporation basis.

F-12
<PAGE>
IMAGEMAX, INC. AND FOUNDING COMPANIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6. UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS -- NINE
MONTHS ENDED SEPTEMBER 30, 1996:

The following table summarizes the unaudited pro forma combined statements
of operations adjustments for the nine months ended September 30, 1996 (in
thousands):

<TABLE>
<CAPTION>
POST MERGER
PRO FORMA ADJUSTMENTS TOTAL ADJUSTMENTS TOTAL POST
----------------------------------- PRO FORMA ------------ MERGER
(A) (B) (C) (D) (E) ADJUSTMENTS (F) (G) ADJUSTMENTS
---- ----- ----- ----- ---- ----------- ---- ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.................... $(71) $ -- $ -- $ -- $ -- $ (71) $ -- $ -- $ --
Cost of revenues............ (71) -- 285 -- -- 214 -- -- --
Selling, general and
administrative expense.... -- (398) (17) -- -- (415) -- -- --
Executive officer
compensation.............. -- 458 -- -- -- 458 -- -- --
Amortization................ -- -- -- 671 -- 671 -- -- --
---- ----- ----- ----- ---- ------ ---- ----- ----
Operating income...... -- (60) (268) (671) -- (999) -- -- --
Interest income............. -- 26 -- -- -- 26 -- -- --
Interest expense............ -- -- (91) -- -- (91) (653) -- (653)
---- ----- ----- ----- ---- ------ ---- ----- ----
Income (loss) before
income taxes....... -- (86) (177) (671) -- (934) 653 -- 653
Income tax provision
(benefit)................. -- -- -- -- (329) (329) -- 256 256
---- ----- ----- ----- ---- ------ ---- ----- ----
Net income (loss)..... $ -- $ (86) $(177) $(671) $329 $ (605) $653 $(256) $397
==== ===== ===== ===== ==== ====== ==== ===== ====
</TABLE>

- ------------------
(a) Reflects the elimination of intercompany activity among the Founding
Companies.

(b) Reflects the reduction in salaries, bonuses and benefits to the owners of
the Founding Companies from an aggregate total of $1.5 million to $1.1
million to which they have contractually agreed, partially offset by
compensation of $457,500 based upon the employment agreements with
ImageMax's executive management. These reductions in salaries, bonuses and
benefits are in accordance with the terms of employment agreements to be
entered into pursuant to the Acquisitions. Such employment agreements are
primarily for three years, contain restrictions related to competition and
provide severance upon termination in certain circumstances. The adjustment
also reflects a reduction in interest income due to the elimination of the
Spaulding employee stock ownership plan benefit upon the Acquisition.

(c) Reflects the reduction in depreciation at two of the Founding Companies'
facilities, the elimination of interest expense on a capital lease and the
Rent Differential as a result of certain facilities excluded from the
purchase transaction and new operating leases to be entered into upon the
closing of the Acquisitions.

(e) Reflects the incremental provision for federal and state income taxes based
on the effective tax rate that would have resulted on a C Corporation basis.

(f) Reflects the elimination of interest expense resulting from the reduction of
debt from the net proceeds of the Offering (see Note 4, Adjustment (c)). All
interest expense is eliminated because all debt will be repaid upon the
closing of the Offering.

(g) Reflects the incremental provision for federal and state income taxes based
on the effective tax rate that would have resulted on a C Corporation basis.

F-13
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS -- YEAR
ENDED DECEMBER 31, 1996:

The following table summarizes the unaudited pro forma combined statements
of operations adjustments for the year ended December 31, 1996 (in thousands):

<TABLE>
<CAPTION>
POST MERGER
PRO FORMA ADJUSTMENTS TOTAL ADJUSTMENTS TOTAL POST
---------------------------------- PRO FORMA ------------ MERGER
(A) (B) (C) (D) (E) ADJUSTMENTS (F) (G) ADJUSTMENTS
---- ---- ----- ----- ---- ----------- ---- ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues..................... $(94) $ -- $ -- $ -- $ -- $ (94) $ -- $ -- $ --
Cost of revenues............. (94) -- 379 -- -- 285 -- -- --
Selling, general and
administrative expenses.... -- (920) (40) -- -- (960) -- -- --
Executive compensation....... -- 610 -- -- -- 610 -- -- --
Amortization................. -- -- -- 906 -- 906 -- -- --
---- ---- ----- ----- ---- ----- ---- ----- ----
Operating income
(loss).............. -- 310 (339) (906) -- (935) -- -- --
Interest income.............. -- 26 -- -- -- 26 -- -- --
Interest expense............. -- -- (129) -- -- (129) (903) -- (903)
---- ---- ----- ----- ---- ----- ---- ----- ----
Income (loss) before
income taxes........ -- 284 (210) (906) -- (832) 903 -- 903
Income tax provisions
(benefit).................. -- -- -- -- (189) (189) -- 354 354
---- ---- ----- ----- ---- ----- ---- ----- ----
Net income (loss)...... $ -- $284 $(210) $(906) $189 $(643) $903 $(354) $549
==== ==== ===== ===== ==== ===== ==== ===== ====
</TABLE>

- ------------------
(a) Reflects the elimination of intercompany activity among the Founding
Companies.

(b) Reflects the reduction in salaries, bonuses and benefits to the owners of
the Founding Companies from an aggregate total of $2.3 million to $1.4
million to which they have contractually agreed, partially offset by
compensation of $610,000 based upon employment agreements with ImageMax's
executive management. These reductions in salaries, bonuses and benefits are
in accordance with the terms of employment agreements to be entered into
pursuant to the Acquisitions. Such employment agreements are primarily for
three years, contain restrictions related to competition and provide
severance upon termination in certain circumstances. The adjustment also
reflects the reduction in interest income due to the elimination of the
Spaulding employee stock ownership benefit plan upon the Acquisition.

(c) Reflects the reduction in depreciation at two of the Founding Companies'
facilities, the elimination of interest expense on capital leases and the
Rent Differential, as a result of certain facilities excluded from the
transactions and new operating leases to be entered into upon the closing of
the Acquisitions.

(e) Reflects the incremental provision for federal and state income taxes based
on the effective tax rate that would have resulted on a C Corporation basis.
Exclude any income tax penalties (see Note 6 of the Financial Statements of
I(2) Solutions).

(g) Reflects the incremental provision for federal and state income taxes based
on the effective tax rate that would have resulted on a C Corporation basis.

F-14
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

8. PRO FORMA NET INCOME (LOSS) PER SHARE

The shares used in computing pro forma net income (loss) per share includes
the following:

<TABLE>
<S> <C>
Outstanding shares of ImageMax Common Stock.............. 710,770
Common shares to be issued upon conversion of ImageMax
Series A Preferred Stock............................... 443,489
Shares issued to owners of the Founding Companies........ 1,184,468
Shares issued in the Offering necessary to pay the cash
portion of the Acquisitions' consideration (including
expenses).............................................. 1,994,615
---------
Pro Forma combined shares.............................. 4,333,342
Shares issued in the Offering, necessary to pay the
Founding Companies' indebtedness and expenses of the
Offering............................................... 652,614
---------
Pro Forma combined as adjusted shares.................. 4,985,956
=========
</TABLE>

The remaining shares to be sold in the Offering have been excluded.
Outstanding options have been excluded since all such options are exercisable at
the Offering price. See Note 8 of ImageMax, Inc. financial statements for number
of shares used in the calculation of pro forma net loss per share for ImageMax,
Inc.

F-15

<PAGE>
IMAGEMAX, INC. AND FOUNDING COMPANIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

9. PRO FORMA OPERATING ADJUSTMENTS

Included in the pro forma statements of operations is supplemental pro
forma data which allocates each pro forma adjustment to each Founding Company.
The following pro forma operating adjustments are presented to provide
additional information to better understand the pro forma adjustments
components:

<TABLE>
<CAPTION>
CODALEX I(2)
PRO FORMA OPERATING ADJUSTMENTS DESCRIPTION IMAGEMAX AMMCORP GROUP DATALINK DOCUTECH SOLUTIONS IMS IDS OMI
- ------------------------------------------- --------- ------- ------- -------- -------- --------- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 1997
1. Elimination of Intercompany Activity
(Note 5, adjustment (a))............. $ -- $ 28 $ -- $ 7 $(60) $ -- $-- $(38) $--
2. Compensation Differential (Note 5,
adjustment (b))...................... (357) 65 (3) 68 (21) 137 (8) 463 10
3. Rent Differential (Note 5, adjustment
(c))................................. -- -- (1) (43) -- (59) -- 3 (11)
4. Elimination of Intangible Amortization
(Note 5, adjustment (d))............. -- 177 -- -- -- -- -- -- --
------- ---- ---- ---- ---- ---- --- ---- ----
$ (357) $270 (4) $ 32 $(81) $ 78 $(8) $428 $(1)
======= ==== ==== ==== ==== ==== === ==== ====

NINE MONTHS ENDED SEPTEMBER 30, 1996
1. Elimination of Intercompany Activity
(Note 6, adjustment (a))............. $ -- $ -- $ -- $ -- $(23) $ -- $-- $(48) $--
2. Compensation Differential (Note 6,
adjustment (b))...................... (458) 107 (18) 39 7 127 (8) 111 --
3. Rent Differential (Note 6, adjustment
(c))................................. -- -- (14) (49) -- (54) -- 3 (14)
4. Elimination of Intangible Amortization
(Note 6, adjustment (d))............. -- 162 1 -- -- -- -- -- --
------- ---- ---- ---- ---- ---- --- ---- ----
$ (458) $269 $(31) $(10) $(16) $ 73 $(8) $ 66 $(14)
======= ==== ==== ==== ==== ==== === ==== ====

YEAR ENDED DECEMBER 31, 1996
1. Elimination of Intercompany Activity
(Note 7, adjustment (a))............. $ -- $ -- $ -- $ -- $(33) $ -- $-- $(61) $--
2. Compensation Differential (Note 7,
adjustment (b))...................... (610) 201 (22) 66 (6) 442 (9) 135 57
3. Rent Differential (Note 7, adjustment
(c))................................. -- -- (17) (63) -- (56) -- 4 (19)
4. Elimination of Intangible Amortization
(Note 7, adjustment (d))............. -- 208 2 -- -- -- -- -- --
------- ---- ---- ---- ---- ---- --- ---- ----
$ (610) $409 $(37) $ 3 $(39) $386 (9) $ 78 $38
======= ==== ==== ==== ==== ==== === ==== ====

PRO FORMA OPERATING ADJUSTMENTS DESCRIPTION SPAULDING TIMCO TPS TOTAL
- ------------------------------------------- --------- ----- ---- -------
<S> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 1997
1. Elimination of Intercompany Activity
(Note 5, adjustment (a))............. $ -- $ 3 $60 $ --
2. Compensation Differential (Note 5,
adjustment (b))...................... 98 127 7 586
3. Rent Differential (Note 5, adjustment
(c))................................. (139) -- -- (250)
4. Elimination of Intangible Amortization
(Note 5, adjustment (d))............. -- 21 -- 198
----- ---- --- -------
(41) $151 $67 $ 534
===== ==== === =======
NINE MONTHS ENDED SEPTEMBER 30, 1996
1. Elimination of Intercompany Activity
(Note 6, adjustment (a))............. $ -- $ 23 $48 $ --
2. Compensation Differential (Note 6,
adjustment (b))...................... (4) 30 7 (60)
3. Rent Differential (Note 6, adjustment
(c))................................. (140) -- -- (268)
4. Elimination of Intangible Amortization
(Note 6, adjustment (d))............. -- 34 -- 197
----- ---- --- -------
$(144) $ 87 $55 $ (131)
===== ==== === =======
YEAR ENDED DECEMBER 31, 1996
1. Elimination of Intercompany Activity
(Note 7, adjustment (a))............. $ -- $ 23 $71 $ --
2. Compensation Differential (Note 7,
adjustment (b))...................... 7 40 9 310
3. Rent Differential (Note 7, adjustment
(c))................................. (188) -- -- (339)
4. Elimination of Intangible Amortization
(Note 7, adjustment (d))............. -- 42 -- 252
----- ---- --- -------
$(181) $105 $80 $ 223
===== ==== === =======
</TABLE>

F-16
<PAGE>

IMAGEMAX, INC. AND FOUNDING COMPANIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

9. PRO FORMA OPERATING ADJUSTMENTS -- (CONTINUED)

A reconciliation of the gross compensation to contractual compensation
which results in the above Compensation Differential is as follows:

<TABLE>
<CAPTION>
CODALEX I(2)
PRO FORMA COMPENSATION ADJUSTMENTS DESCRIPTION IMAGEMAX AMMCORP GROUP DATALINK DOCUTECH SOLUTIONS IMS IDS
- ---------------------------------------------- --------- ------- ------- -------- -------- --------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 1997
Gross Compensation.................... $101 $140 $ 72 $ 96 $174 $231 $ 78 $583
Compensation Differential............. 357 (65) 3 (68) 21 (137) 8 (463)
---- ---- ---- ---- ---- ---- ---- ----
Contractual Compensation.............. $458 $ 75 $ 75 $ 28 $195 $ 94 $ 86 $120
==== ==== ==== ==== ==== ==== ==== ====

NINE MONTHS ENDED SEPTEMBER 30, 1996
Gross Compensation.................... $ -- $182 $ 57 $ 67 $202 $221 $ 78 $231
Compensation Differential............. 458 (107) 18 (39) (7) (127) 8 (111)
---- ---- ---- ---- ---- ---- ---- ----
Contractual Compensation.............. $458 $ 75 $ 75 $ 28 $195 $ 94 $ 86 $120
==== ==== ==== ==== ==== ==== ==== ====

YEAR ENDED DECEMBER 31, 1996
Gross Compensation.................... $ -- $301 $ 78 $104 $254 $567 $106 $295
Compensation Differential............. 610 (201) 22 (66) 6 (442) 9 (135)
---- ---- ---- ---- ---- ---- ---- ----
Contractual Compensation.............. $610 $100 $100 $ 38 $260 $125 $115 $160
==== ==== ==== ==== ==== ==== ==== ====

PRO FORMA COMPENSATION ADJUSTMENTS DESCRIPTION OMI SPAULDING TIMCO TPS TOTAL
- ---------------------------------------------- ---- --------- ----- ---- ------
<S> <C> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 1997
Gross Compensation.................... $111 $173 $277 $61 $2,097
Compensation Differential............. (10) (98) (127) (7) (586)
---- ---- ---- --- ------
Contractual Compensation.............. $101 $ 75 $150 $54 $1,511
==== ==== ==== === ======
NINE MONTHS ENDED SEPTEMBER 30, 1996
Gross Compensation.................... $101 $ 71 $180 $62 $1,452
Compensation Differential............. -- 4 (30) (7) 60
---- ---- ---- --- ------
Contractual Compensation.............. $101 $ 75 $150 $55 $1,512
==== ==== ==== === ======
YEAR ENDED DECEMBER 31, 1996
Gross Compensation.................... $192 $107 $240 $89 $2,333
Compensation Differential............. (57) (7) (40) (9) (310)
---- ---- ---- --- ------
Contractual Compensation.............. $135 $100 $200 $80 $2,023
==== ==== ==== === ======
</TABLE>

F-17
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To ImageMax, Inc.:

We have audited the accompanying balance sheets of ImageMax, Inc. (a
Pennsylvania Corporation) as of December 31, 1996 and June 30, 1997 and the
related statements of operations, shareholders' equity and cash flows for the
period from inception (November 12, 1996) to December 31, 1996 and the six
months ended June 30, 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 the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ImageMax, Inc. as of
December 31, 1996 and June 30, 1997 and the results of its operations and its
cash flows for the period from inception (November 12, 1996) to December 31,
1996 and the six months ended June 30, 1997 in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
September 11, 1997 (except with
respect to the matter discussed
in Note 8 as to which the

date is November 26, 1997)

F-18
<PAGE>
IMAGEMAX, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 JUNE 30, 1997 1997
------------ ------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS

CASH AND CASH EQUIVALENTS......................... $61,647 $ 14,973 $1,361,682

STOCK SUBSCRIPTION RECEIVABLE..................... -- 230,000 --

PROPERTY AND EQUIPMENT............................ -- -- 4,707

DEFERRED OFFERING COSTS........................... -- 24,802 1,986,816
------- ---------- ----------
$61,647 $ 269,775 $3,353,205
======= ========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

ACCRUED EXPENSES.................................. $ 4,781 $ 45,066 $1,911,721
------- ---------- ----------

SHAREHOLDERS' EQUITY:
Series A Preferred Stock, no par value,
10,000,000 shares authorized, 150,000,
255,000 and 524,185 shares issued and
outstanding at December 31, 1996, June 30,
1997 and September 30, 1997.................. 73,500 578,500 2,719,000
Common Stock, no par value, 40,000,000 shares
authorized, 550,000, 647,308 and 710,770
shares issued and outstanding at December 31,
1996, June 30, 1997 and September 30, 1997... 6,500 1,271,500 1,566,500
Accumulated deficit............................. (23,134) (1,625,291) (2,844,016)
------- ---------- ----------
Total shareholders' equity................ 56,866 224,709 1,441,484
------- ---------- ----------
$61,647 $ 269,775 $3,353,205
======= ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-19
<PAGE>
IMAGEMAX, INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FROM
INCEPTION
(NOVEMBER 12, SIX MONTHS NINE MONTHS
1996) TO ENDED ENDED
DECEMBER 31, JUNE 30, SEPTEMBER 30,
1996 1997 1997
------------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.... $ 23,274 $ 167,597 $ 330,916

SPECIAL COMPENSATION CHARGE..................... -- 1,435,000 2,494,000

INTEREST INCOME................................. (140) (440) (4,034)
---------- ----------- -----------

NET LOSS........................................ $ (23,134) $(1,602,157) $(2,820,882)
========== =========== ===========

PRO FORMA NET LOSS PER SHARE (Note 8)
(unaudited)................................... $ (.02) $ (1.39) $ (2.44)
========== =========== ===========

SHARES USED IN COMPUTING PRO FORMA NET LOSS PER
SHARE (Note 8) (unaudited).................... 1,154,259 1,154,259 1,154,259
========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-20
<PAGE>
IMAGEMAX, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
SERIES A
PREFERRED STOCK COMMON STOCK TOTAL
--------------------- --------------------- ACCUMULATED SHAREHOLDERS'
SHARES AMOUNT SHARES AMOUNT DEFICIT EQUITY
-------- ---------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 12, 1996
(date of inception)........... -- $ -- -- $ -- $ -- $ --
Sales of Preferred and Common
Stock....................... 150,000 73,500 550,000 6,500 -- 80,000
Net loss...................... -- -- -- -- (23,134) (23,134)
-------- ---------- -------- ---------- ----------- ----------

BALANCE, DECEMBER 31, 1996...... 150,000 73,500 550,000 6,500 (23,134) 56,866
Sales of Preferred and Common
Stock....................... 105,000 505,000 97,308 1,265,000 -- 1,770,000
Net loss...................... -- -- -- -- (1,602,157) (1,602,157)
-------- ---------- -------- ---------- ----------- ----------

BALANCE, JUNE 30, 1997.......... 255,000 578,500 647,308 1,271,500 (1,625,291) 224,709
Sales of Preferred and Common
Stock (unaudited)........... 269,125 2,140,500 63,462 295,000 -- 2,435,500
Net loss (unaudited).......... -- -- -- -- (1,218,725) (1,218,725)
-------- ---------- -------- ---------- ----------- ----------

BALANCE, SEPTEMBER 30, 1997
(UNAUDITED)................... 524,125 $2,719,000 710,770 $1,566,500 $(2,844,016) $1,441,484
======== ========== ======== ========== =========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-21
<PAGE>
IMAGEMAX, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FROM INCEPTION
(NOVEMBER 12,
1996) TO SIX MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, 1996 JUNE 30, 1997 SEPTEMBER 30, 1997
----------------- ---------------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss.............................. $(23,134) $(1,602,157) $(2,820,882)

Special compensation charge........... -- 1,435,000 2,494,000

Change in accrued expenses............ 4,781 40,285 256,940
-------- ----------- -----------

Net cash used in operating
activities...................... (18,353) (126,872) (69,942)
-------- ----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment... -- -- (4,707)

Increase in deferred acquisition
costs.............................. -- (24,802) (336,816)
-------- ----------- -----------

Net cash used in operating
activities...................... -- (24,802) (341,523)
-------- ----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from sales of Common and
Preferred Stock.................... 80,000 105,000 1,711,500
-------- ----------- -----------

NET INCREASE (DECREASED) IN CASH........ 61,647 (46,674) 1,300,035

CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD................................ -- 61,647 61,647
-------- ----------- -----------

CASH AND CASH EQUIVALENTS, END OF
PERIOD................................ $ 61,647 $ 14,973 $ 1,361,682
======== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-22
<PAGE>
IMAGEMAX, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997 IS UNAUDITED)

1. BACKGROUND:

ImageMax Inc. ("ImageMax") was incorporated in Pennsylvania on November 12,
1996. ImageMax was formed to become a leading national, single-source provider
of integrated document management solutions (see Note 2).

ImageMax has conducted no operations to date and has entered into
agreements to acquire certain businesses discussed in Note 2. These businesses
have been operating independently, and ImageMax may not be able to successfully
integrate these businesses and their operations, employees and management. Given
the nature of ImageMax, it is and will be subject to many risks, including but
not limited to, (i) an absence of combined operating history, (ii) the potential
inability to manage growth, (iii) risks generally associated with acquisitions
including the implementation of other acquisitions, (iv) possible fluctuations
in quarterly results, (v) reliance on certain markets, and (vi) reliance on key
personnel.

2. ACQUISITIONS AND PUBLIC OFFERING:

In September 1997, ImageMax entered into agreements to acquire Utz Medical
Enterprises, Inc., the parent of AMMCORP, by merger, CMC by merger, Laser
Graphics by merger, I(3) by net asset acquisition, DDS by merger, DTI by net
asset acquisition, I(2) Solutions by merger, IMS by stock acquisition, IDS by
merger, OMI by merger, TPS by stock acquisition, DataLink by net asset
acquisition, Spaulding (a wholly-owned subsidiary of SEMCO Industries, Inc.) by
net asset acquisition, and TIMCO by net asset acquisition (together, the
"Founding Companies"). These acquisitions (the "Acquisitions") will occur
simultaneously with the closing of ImageMax's initial public offering (the
"Offering") and will be accounted for using the purchase method of accounting.
ImageMax has been identified as the accounting acquirer for financial statement
presentation purposes. The estimated total purchase price of the Founding
Companies is $39.0 million, which consists of: (i) $25.4 million in cash to be
paid to the Founding Companies or their shareholders (the "Sellers") upon the
consummation of the Offering; (ii) the $13.1 million estimated fair value of
1,184,468 shares of Common Stock to be issued to the Sellers; and (iii)
estimated transaction costs of $0.5 million. For purposes of computing the
estimated purchase price for accounting purposes, the value of the shares is
determined using an estimated fair value of $11.05 per share (or $13.1 million),
which represents a discount of 15% from the assumed initial public offering
price of $13.00, due to the one-year restrictions on the sale and
transferability of the shares issued. In addition, the shares have not been
registered under the Securities Act of 1933, the holders have no demand
registration rights and sales will be subject to the volume and other
limitations of Rule 144 under the Securities Act of 1933. If a 10% discount were
used, annual pro forma goodwill amortization would increase by $25,000. The
total estimated purchase price of $39.0 million for the Acquisitions is based
upon preliminary estimates and is subject to certain purchase price adjustments
at and following closing. Based on the estimated purchase price of $39.0
million, approximately $4.0 million will be allocated to acquired in-process
research and development and will be charged to expense upon the consummation of
the Acquisitions. The remaining amount of intangible assets of approximately
$31.2 million includes approximately $30.4 million of goodwill and $800,000 of
developed technology.

Acquired in-process research and development reflects the value of DDS's
development projects underway at the time of the acquisition. In connection with
the DDS transaction, all identifiable assets acquired, including intangible
assets, were assigned a portion of the cost of the acquired company based on an
independent valuation.

F-23
<PAGE>
IMAGEMAX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997 IS UNAUDITED)

2. ACQUISITIONS AND PUBLIC OFFERING: -- (CONTINUED)

As of the acquisition date, DDS had a number of development efforts
underway. The allocation included the evaluation of each development project to
determine if technological feasibility had been achieved and if there were any
alternative future uses. Based on this analysis, it has been determined that
technological feasibility has not been achieved and that alternative uses of
this developmental technology do not exist. The technology acquired will require
substantial additional development by ImageMax.

3. SHAREHOLDERS' EQUITY:

In November 1996, ImageMax issued 423,077 shares of Common Stock to its
founding shareholders for $5,000. In November 1996, ImageMax sold 150,000 shares
of Series A Convertible Preferred Stock (Series A Preferred Stock) and 126,923
shares of common stock to certain of its founders and to David C. Utz Jr., a
director of ImageMax, for $75,000. Each share of Series A Preferred Stock is
convertible into 0.846154 shares of Common Stock. All shares of Series A
Preferred Stock are required to convert to Common Stock upon the closing of the
Offering.

In April 1997, ImageMax sold 105,000 shares of Series A Preferred Stock to
certain of its founders and two additional accredited investors for $105,000.

In June 1997, ImageMax sold 97,308 shares of Common Stock to certain of its
founders and its President and Chief Operating Officer and Senior Vice
President--Finance, Chief Financial Officer, and Treasurer for $230,000. The
related stock subscription receivables were paid in full in July 1997.

In September 1997, ImageMax sold 269,125 shares of Series A Preferred Stock
and 63,462 shares of Common Stock for total consideration of $1,081,500 and
$300,000, respectively, to certain of its founders and other accredited
investors.

In 1997, ImageMax sold a total of 314,135 shares of Common Stock (including
shares of Common Stock to be issued upon conversion of the Preferred Stock) at
prices of $1.18, $2.36 and $4.73 per share to officers, directors and certain
management of the Founding Companies. As a result, ImageMax recorded a
non-recurring non-cash compensation charge of $2,494,000, representing the
difference between the amount paid for the shares and an estimated deemed value
for accounting purposes of $13.00 per share (based on the assumed initial public
offering price).

4. 1997 INCENTIVE PLAN:

ImageMax's 1997 Incentive Plan (the Plan) provides for the award of up to
600,000 shares of its Common Stock to its employees, directors, consultants and
other individuals who perform services for ImageMax. The Plan provides for
granting of various stock based awards, including incentive and non-qualified
stock options, restricted stock and performance shares and units. Upon
completion of the Offering, non-qualified options to purchase an aggregate of
367,500 shares of Common Stock at the Offering price will be granted to
ImageMax's four executive officers and four outside directors. These grants will
vest in equal installments over three years.

5. EMPLOYMENT AGREEMENTS:

ImageMax has entered into employment agreements with its Chief Executive
Officer, President and Chief Operating Officer, Senior Vice President-- Finance,
Chief Financial Officer and Treasurer, and Senior Vice President--Corporate
Development that provide for a minimum annual compensation of $610,000 plus
bonuses. In addition, in connection with the Closing of the Acquisitions,
ImageMax will enter into employment agreements with several management members
of the Founding Companies that provide for minimum annual compensation of $1.4
million plus bonuses.

F-24
<PAGE>
IMAGEMAX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997 IS UNAUDITED)

6. RELATED-PARTY MANAGEMENT CONTRACT:

In November 1996, ImageMax entered into a management contract with GBL
Capital Corp. ("GBL"), an entity whose shareholders are also shareholders of
ImageMax. Two of GBL shareholders are officers of ImageMax. GBL was engaged to
manage the daily business operations of ImageMax. ImageMax paid GBL $5,000 upon
entering into the agreement and is required to pay monthly fees ranging from
$10,000 to $25,000. The monthly fee payments were terminated on July 31, 1997
when the two officers of ImageMax began to be paid directly by ImageMax. GBL
services were ceased at the date. Upon the closing of an initial public
offering, ImageMax is required to pay GBL a fee of $500,000. Such fees are, in
effect, compensation to the officers of ImageMax. The $500,000 will be charged
to the statement of operations upon the consummation of the Offering.

7. ACCRUED EXPENSES:

Accrued expenses principally consist of professional fees related to the
Offering and Acquisitions.

8. SIGNIFICANT ACCOUNTING POLICIES:

Use of Estimates

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

Reverse Stock Split

ImageMax effected a 0.846154 for 1 reverse stock split on November 26,
1997. All references in the accompanying financial statements to the number of
shares and per-share amounts have been retroactively restated to reflect the
reverse stock split.

Cash and Cash Equivalents

ImageMax considers highly liquid investments with original maturities of
three months or less to be cash equivalents. Cash equivalents are carried at
cost, which approximates market value. At December 31, 1996 and June 30, 1997
and September 30, 1997, cash equivalents primarily consisted of funds in a money
market account.

Deferred Offering Costs

ImageMax has deferred all costs of raising capital. These costs will be
offset against capital generated by the Offering.

Income Taxes

ImageMax follows the liability method of accounting for income taxes in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 109.
Under this method, deferred income taxes are recorded based upon differences
betweeen the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
underlying assets or liabilities are received or settled.

ImageMax has recorded a full valuation allowance against all deferred tax
assets due to the uncertainty of ultimate realizability. Accordingly, no income
tax benefits have been recorded for current year losses.

F-25
<PAGE>
IMAGEMAX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997 IS UNAUDITED)

8. SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)

Long-Lived Assets

ImageMax follows SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of." Accordingly, in the event
that facts and circumstances indicate that property and equipment, and
intangible or other assets, may be impaired, an evaluation of recoverability
would be performed. If an evaluation is required, the estimated future cash
flows associated with the asset is compared to the assets' carrying amount to
determine if a write-down to market value or discounted cash flow value is
necessary.

Accounting for Stock-Based Compensation

ImageMax follows SFAS No. 123, "Accounting for Stock-Based Compensation,"
which permits, but does not require, a fair value-based method of accounting for
employee stock option plans which results in compensation expense recognition
when stock options are granted. As permitted by SFAS No. 123, ImageMax will
provide pro forma disclosure of net income and earnings per share, as
applicable, in the notes to future financial statements.

Earnings per Share

In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share". This statement supersedes APB Option No. 15,
"Earnings per Share" and simplifies the computation of earnings per share
("EPS"). Primary EPS is replaced with a presentation of basic EPS. Basic EPS
includes no dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Fully diluted EPS is replaced with diluted EPS. Diluted EPS reflects the
potential dilution if certain securities are converted. SFAS No. 128 requires
dual presentation of basic and diluted EPS by entities that issue any securities
other than ordinary common stock. SFAS No. 128 will be effective for financial
statements for both interim and annual periods ending after December 15, 1997,
and requires retroactive restatement of all EPS data presented. ImageMax plans
to adopt the statement on December 31, 1997. ImageMax does not expect the effect
of adopting SFAS No. 128 to have a material impact on its EPS calculations, and,
if adopted currently, SFAS No. 128 would not have a material impact on
ImageMax's reported EPS.

Pro Forma Net Loss Per Share

The shares used in computing pro forma net loss per share include 710,770
outstanding shares of Common Stock and 443,489 shares (effected for the 0.846154
for 1 reverse stock split) to be issued upon conversion of the 524,125
outstanding shares of Series A Preferred Stock. Pursuant to the requirements of
the Securities and Exchange Commission, these shares represent those common
stock equivalents issued by the Company during the 12 months immediately
preceding the Offering. Pro forma net loss per share was calculated by dividing
historical net loss by the as converted outstanding shares of Common Stock.

F-26
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Utz Medical Enterprises, Inc.:

We have audited the accompanying consolidated balance sheets of Utz Medical
Enterprises, Inc. (a Minnesota corporation) and subsidiary as of July 31, 1996
and 1997 and the related consolidated statements of operations, stockholder's
deficit and cash flows for each of the three years in the period ended July 31,
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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Utz Medical Enterprises,
Inc. and subsidiary as of July 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
July 31, 1997 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
October 24, 1997

F-27
<PAGE>
UTZ MEDICAL ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JULY 31,
-----------------------
1996 1997
ASSETS ---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash...................................................... $ 2,038 $ 25,596
Accounts receivable, net of reserves of $59,279 and
$73,987................................................ 884,125 886,945
Income tax receivable..................................... 178,823 --
Inventories............................................... 78,790 112,532
Prepaid expenses and other................................ 25,773 34,437
Deferred income taxes..................................... 22,111 35,057
---------- ----------
Total current assets................................... 1,191,660 1,094,567
PROPERTY AND EQUIPMENT, net................................. 1,990,040 1,785,257
DEFERRED INCOME TAXES....................................... 66,386 86,123
INTANGIBLE ASSETS........................................... 505,239 297,424
---------- ----------
$3,753,325 $3,263,371
========== ==========
LIABILITIES AND
STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
Revolving promissory note................................. $ 928,000 $ 982,000
Current portion of long-term debt......................... 552,986 509,162
Bank overdrafts........................................... 17,409 --
Accounts payable.......................................... 407,945 340,365
Accrued expenses.......................................... 628,937 760,007
Deferred revenue.......................................... 103,580 126,471
---------- ----------
Total current liabilities.............................. 2,638,857 2,718,005
---------- ----------
LONG-TERM DEBT.............................................. 1,948,540 1,615,809
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDER'S DEFICIT:
Common stock, par value of $.01 per share; 10,000,000
shares authorized, 90,000 shares issued and
outstanding............................................ 900 900
Additional paid in capital................................ 98,100 98,100
Accumulated deficit....................................... (933,072) (1,169,443)
---------- ----------
Total stockholder's deficit............................ (834,072) (1,070,443)
---------- ----------
$3,753,325 $3,263,371
========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-28
<PAGE>
UTZ MEDICAL ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
SERVICE REVENUES.................................. $6,275,993 $5,550,268 $5,676,945
---------- ---------- ----------
COST OF SERVICE REVENUES.......................... 4,652,182 3,318,172 3,297,139
DEPRECIATION...................................... 380,324 412,565 389,379
---------- ---------- ----------
5,032,506 3,730,737 3,686,518
---------- ---------- ----------
Gross profit................................. 1,243,487 1,819,531 1,990,427
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES......................... 1,652,163 1,383,387 1,575,991
IMAGEMAX TRANSACTION COSTS........................ -- -- 35,000
AMORTIZATION OF INTANGIBLE ASSETS................. 183,487 209,312 207,815
---------- ---------- ----------
Operating income (loss)...................... (592,163) 226,832 171,621
INTEREST EXPENSE.................................. 328,477 362,948 358,789
INTEREST INCOME................................... (5,485) (11,090) (125)
---------- ---------- ----------
Loss before income taxes..................... (915,155) (125,026) (187,043)
INCOME TAX EXPENSE (BENEFIT)...................... (222,640) 78,664 49,328
---------- ---------- ----------
NET LOSS.......................................... $ (692,515) $ (203,690) $ (236,371)
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-29
<PAGE>
UTZ MEDICAL ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT

<TABLE>
<CAPTION>
COMMON STOCK RETAINED
----------------- ADDITIONAL EARNINGS
SHARES AMOUNT PAID IN CAPITAL (DEFICIT) TOTAL
------ -------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
BALANCE, JULY 31, 1994..................... 90,000 900 98,100 8,133 107,133

Dividends................................ -- -- -- (45,000) (45,000)

Net loss................................. -- -- -- (692,515) (692,515)
------ -------- ------- ------------ -----------

BALANCE, JULY 31, 1995..................... 90,000 900 98,100 (729,382) (630,382)

Net loss................................. -- -- -- (203,690) (203,690)
------ -------- ------- ------------ -----------

BALANCE, JULY 31, 1996..................... 90,000 900 98,100 (933,072) (834,072)

Net loss................................. -- -- -- (236,371) (236,371)
------ -------- ------- ------------ -----------

BALANCE, JULY 31, 1997..................... 90,000 $ 900 $98,100 $ (1,169,443) $(1,070,443)
====== ======== ======= ============ ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-30
<PAGE>
UTZ MEDICAL ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.......................................... $(692,515) $(203,690) $(236,371)
Adjustments to reconcile net loss to net cash
provided by operating activities-
Depreciation and amortization............... 563,811 621,877 597,194
Loss on sale of property and equipment...... 3,054 30,499 5,347
Provision for loss on accounts receivable... 33,569 (10,151) 34,708
Deferred income tax benefit................. (60,855) (42,319) (32,683)
Change in operating assets and liabilities-
Accounts receivable...................... (106,840) 160,989 (37,528)
Income tax receivable.................... (178,823) -- 178,823
Inventories.............................. 68,455 61,095 (33,742)
Prepaid expenses and other............... 51,429 2,322 (8,663)
Accounts payable......................... 348,320 (88,110) (67,580)
Accrued expenses......................... 107,269 195,939 131,070
Deferred revenue......................... 15,440 (25,412) 22,891
--------- --------- ---------
Net cash provided by operating
activities.......................... 152,314 703,039 553,466
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............... (291,721) (179,246) (163,021)
Proceeds on sale of property and equipment........ 25,200 17,344 6,400
--------- --------- ---------
Net cash used in investing
activities.......................... (266,521) (161,902) (156,621)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds on revolving promissory note......... 110,000 128,499 54,000
Proceeds from long-term debt...................... 319,479 115,591 53,419
Payments on long-term debt........................ (545,761) (501,387) (463,297)
Increase (decrease) in bank overdrafts............ 267,165 (283,807) (17,409)
Dividends to stockholders......................... (45,000) -- --
--------- --------- ---------
Net cash provided by (used in)
financing activities................ 105,883 (541,104) (373,287)
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH..................... (8,324) 33 23,558
CASH, BEGINNING OF PERIOD........................... 10,329 2,005 2,038
--------- --------- ---------
CASH, END OF PERIOD................................. $ 2,005 $ 2,038 $ 25,596
========= ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-31
<PAGE>
UTZ MEDICAL ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION:

Utz Medical Enterprises, Inc. and its wholly owned subsidiary, American
Micro-Med Corporation, operate under the trade name of AMMCORP Records
Management ("AMMCORP"). AMMCORP is located in Chesterton, Indiana and offers
document conversion and management solutions to customers predominantly in the
healthcare industry through various methods of document imaging technologies.
AMMCORP also provides offsite storage and retrieval services.

AMMCORP has a working capital and stockholder'sdeficit as of July 31, 1997.
In the last three years, AMMCORP has generated net cash provided by operations
of approximately $1.4 million and repaid debt, net of proceeds of $0.7 million.
In October 1997, AMMCORP entered into forbearance agreements with its principal
outside debt holders (see Note 5) which cures its covenant defaults through
August 1, 1998. AMMCORP believes its fiscal 1998 operating results will provide
sufficient cash to satisfy its obligations when they become due.

In September 1997, AMMCORP and its stockholder entered into a merger
agreement with ImageMax, Inc. ("ImageMax") which would close upon the
consummation of the initial public offering of the common stock of ImageMax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include the accounts of Utz Medical
Enterprises, Inc. and its wholly owned Subsidiary. The financial statements
reflect the elimination of all significant intercompany accounts and
transactions.

Inventories

Inventories represent materials used in the filming and scanning process
and are stated at the lower of cost (first-in, first-out) or market.

Property and Equipment

Property and equipment are recorded at cost. Additions and improvements are
capitalized and repairs and maintenance are charged to expense as incurred.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets. Leasehold improvements and capital leases are
depreciated over the lesser of their useful life or the lease term.

Intangible Assets

Intangible assets primarily consist of capitalized non-compete obligations
which are being amortized over five and ten-year periods. Related accumulated
amortization as of July 31, 1996 and 1997 was $1,158,947 and $1,366,762,
respectively.

Revenue Recognition

Revenue is recognized when the related services are rendered. Deferred
revenue represents services billed in advance of performance.

F-32
<PAGE>
UTZ MEDICAL ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)

Income Taxes

AMMCORP accounts for income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Under SFAS
No. 109, deferred income tax assets and liabilities are determined based on
differences between the financial reporting and income tax basis of assets and
liabilities measured using enacted income tax rates and laws that are expected
to be in effect when the differences reverse.

Supplemental Cash Flow Information

AMMCORP paid cash for interest for the years ended July 31, 1995, 1996and
1997 of $329,346, $265,448 and $262,776, respectively. AMMCORP financed
equipment purchases with capital leases in the amount of $236,180 and $33,322
for the years ended July 31, 1996 and 1997, respectively.There were no cash
payments made for income taxes in the periods presented.

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

Cash, accounts receivable, accounts payable and accrued expenses are
reflected in the financial statements at fair value due to their short-term
nature. The carrying amount of long-term debt and capital lease obligations
approximates fair value on the balance sheet dates.

Long-Lived Assets

AMMCORP follows SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of." Accordingly, in the event
that facts and circumstances indicate that property and equipment, and
intangible or other assets, may be impaired, an evaluation of recoverability
would be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the assets is compared to the assets'
carrying amount to determine if a write-down to market value or discounted cash
flow value is necessary.

3. PROPERTY, PLANT AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED JULY 31,
USEFUL LIVES -----------------------
YEARS 1996 1997
------------ ---------- ----------
<S> <C> <C> <C>
Filming and scanning equipment..................... 3-5 $1,707,405 $1,791,302
Furniture and office equipment..................... 5 366,465 420,534
Vehicles........................................... 5 221,440 257,829
Building and building improvements................. 8-40 1,599,829 1,599,829
Land and land improvements......................... 15 88,693 88,693
---------- ----------
3,983,832 4,158,187
Less-Accumulated depreciation and amortization..... (1,993,792) (2,372,930)
---------- ----------
$1,990,040 $1,785,257
========== ==========
</TABLE>

As of July 31, 1996 and 1997, AMMCORP had $221,088 and $209,898, in
equipment, net of accumulated amortization financed under capital leases. In
March 1994, AMMCORP commenced

F-33
<PAGE>
UTZ MEDICAL ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY, PLANT AND EQUIPMENT: -- (CONTINUED)

operations in Anderson, Indiana through the acquisition of $525,000 in filming
equipment and $50,000 in filming related inventory. AMMCORP paid an additional
$100,000 in connection with a non-compete agreement with the seller. In October
1995, the Anderson Facility was closed and the related non-compete asset was
charged to expense. The filming equipment was relocated to the AMMCORP
Chesterton, Indiana facility and was fully depreciated as of March 1997.

4. ACCRUED EXPENSES:

<TABLE>
<CAPTION>
JULY 31,
--------------------
1996 1997
-------- ---------
<S> <C> <C>
Accrued compensation.................................... $232,540 $265,098
Accrued interest........................................ 110,748 206,761
Accrued income taxes.................................... 155,784 216,180
Other................................................... 129,865 71,968
-------- --------
$628,937 $760,007
======== ========
</TABLE>

5. DEBT:

Revolving Promissory Note

On February 1, 1996, AMMCORP renewed its revolving promissory note (the
"Note") with the bank. AMMCORP can borrow up to $1,000,000 under the Note and
interest is due monthly at prime plus 2.5%. The outstanding principal balance
and all unpaid interest are due on March 31, 1998.

The highest amount outstanding under the Note was $1,000,000 for the years
ended July 31, 1996and 1997, and average borrowings under the Note were $900,347
and $959,154, respectively. The weighted average interest rates on the Note were
10.54% and 11.02% for the years ended July 31, 1996 and 1997 respectively.

F-34
<PAGE>
UTZ MEDICAL ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. DEBT: -- (CONTINUED)
Long-Term Debt

<TABLE>
<CAPTION>
JULY 31,
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
Term note payable to bank in monthly installments of $9,197
including interest at 7.75% until September 15, 1998, at
which time the monthly installments will be adjusted to
reflect an interest rate of 3% plus the monthly average
yield on five-year U.S. Treasury securities, payments are
due through September, 2003............................... $ 605,278 $ 540,179
Term note payable to bank in monthly installments of
$14,450, including interest at prime plus 1.50%, through
March, 1998............................................... 300,102 149,833
Term note payable to bank in monthly installments of $6,700,
including interest at prime plus 1.25%, through December,
1997...................................................... 81,591 28,199
Term note payable to bank in monthly installments of $7,230,
including interest at prime plus 1.50%, through December,
1998...................................................... 187,067 115,736
Term note payable to bank in monthly installments of $4,666,
including interest at prime plus 1.50%, through January,
1997...................................................... 32,430 --
Note payable to former stockholder in monthly installments
of $18,558, including interest at 10%, through August,
1998...................................................... 601,730 601,730
Note payable to former stockholder in bi-weekly installments
of $3,185, including interest at 10%, through October,
1999...................................................... 291,469 291,469
Vehicle loans payable in monthly installments ranging from
$340 to $1,140, with interest ranging from 7.99% to
10.50%, through November, 2000............................ 85,089 108,726
Capital lease obligations................................... 217,620 213,038
Other....................................................... 99,150 76,061
---------- ----------
552,986 2,124,971
Less-Current portion........................................ (2,205,696) (509,162)
---------- ----------
$1,948,540 $1,615,809
========== ==========
</TABLE>

As of July 31, 1997, stated maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
YEAR ENDING JULY 31,
- --------------------
<S> <C>
1998.................................. $ 509,162
1999.................................. 1,083,732
2000.................................. 164,854
2001.................................. 134,325
2002.................................. 106,747
Thereafter............................ 126,151
----------
$2,124,971
==========
</TABLE>

The term notes and revolving promissory note payable to the bank are under
a master loan agreement. Under this agreement, AMMCORP is subject to various
financial and non-financial covenants. In addition, the two notes payable to
former stockholders also contain various covenants. In October 1997, AMMCORP and
the bank entered into a forbearance agreement which cured the financial covenant
defaults through August 1, 1998. In addition, in October 1997, AMMCORP and the
former stockholders entered into forbearance agreements which waived the
covenant defaults through August 1, 1998 and waived substantially all of the
principal payments through that date.

F-35
<PAGE>
UTZ MEDICAL ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. DEBT: -- (CONTINUED)

The term notes, revolving promissory note, and notes payable to former
stockholders are personally guaranteed by the stockholder of AMMCORP.

6. COMMITMENTS AND CONTINGENCIES:

AMMCORP leases a warehouse under a noncancelable operating lease. Rent
expense for all operating leases for the year ended July 31, 1997 was $31,000.
Future minimum lease payments under noncancelable operating leases are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING JULY 31,
- --------------------
<S> <C>
1998.................................... $ 33,400
1999.................................... 35,800
2000.................................... 38,200
2001.................................... 3,200
--------
$110,600
========
</TABLE>

AMMCORP is party to various claims and other matters arising in the normal
course of business. In the opinion of management, the outcome of these matters
will not have a material adverse effect on AMMCORP'S financial position or
results of operations.

7. INCOME TAXES:

The components of the provision (benefit) for income taxes are as follows:

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------
1995 1996 1997
--------- -------- --------
<S> <C> <C> <C>
Current:
Federal..................................... $(139,899) $104,765 $ 85,908
State....................................... (21,656) 16,218 13,298
--------- -------- --------
Total.................................... (161,555) 120,983 99,206
--------- -------- --------
Deferred:
Federal..................................... (52,698) (36,646) (43,192)
State....................................... (8,387) (5,673) (6,686)
--------- -------- --------
Total.................................... (61,085) (42,319) (49,878)
--------- -------- --------
$(222,640) $ 78,664 $ 49,328
========= ======== ========
</TABLE>

The reconciliation of the statutory federal income tax rate to AMMCORP'S
effective income tax rate is as follows:

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Statutory federal income tax rate.................. (34.0)% (34.0)% (34.0)%
State income taxes, net of federal tax benefit..... (3.3) (3.3) (3.3)
Nondeductible expenses............................. 13.0 100.2 63.7
----- ----- -----
(24.3)% 62.9 % 26.4 %
===== ===== =====
</TABLE>

The tax effect of temporary differences as established in accordance with
SFAS No. 109 that give rise to deferred income taxes are as follows:

F-36
<PAGE>
UTZ MEDICAL ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES: -- (CONTINUED)

<TABLE>
<CAPTION>
JULY 31,
------------------
1996 1997
------- --------
<S> <C> <C>
Gross deferred tax assets:
Depreciation and amortization.................. $66,386 $ 86,123
Accruals and reserves not currently
deductible.................................. 22,111 35,057
------- --------
$88,497 $121,180
======= ========
</TABLE>

AMMCORP did not have any valuation allowances against deferred income tax
assets at July 31, 1996 and 1997, as it believes it is more likely than not that
the deferred tax assets will be realized.

8. EMPLOYEE BENEFIT PLAN:

AMMCORP sponsors a defined contribution plan, the "AMMCORP 401(k)
Profit-Sharing Plan" (the "Plan") which covers substantially all of AMMCORP'S
employees subject to certain eligibility requirements, as defined. The Plan
provides for discretionary profit sharing and employer matching contributions
based on a percentage of employee salary deferrals. AMMCORP made matching
contributions of $2,400 in the year ended July 31, 1995. There have been no
profit sharing contributions to the Plan.

F-37
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Codalex Microfilming Corporation and
Imaging Information Industries, Inc.:

We have audited the accompanying combined balance sheets of Codalex
Microfilming Corporation (a South Carolina corporation) and Imaging Information
Industries, Inc. (a South Carolina Corporation) as of June 30, 1996 and 1997,
and the related combined statements of operations, stockholders' equity
(deficit) and cash flows for each of the three years in the period ended June
30, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Codalex
Microfilming Corporation and Imaging Information Industries, Inc. as of June 30,
1996 and 1997, and the combined results of their operations and their cash flows
for each of the three years in the period ended June 30, 1997, in conformity
with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Columbia, South Carolina,
August 29, 1997

F-38
<PAGE>
CODALEX MICROFILMING CORPORATION AND
IMAGING INFORMATION INDUSTRIES, INC.

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
--------------------- SEPTEMBER 30,
1996 1997 1997
-------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................ $ 41,057 $ 40,902 $ 101,756
Accounts receivable, net of allowance for
doubtful accounts of $32,200, $37,000 and
$25,750....................................... 219,208 559,111 326,817
Due from affiliates.............................. 31,781 112,756 168,406
Inventories...................................... 132,497 160,867 167,568
Prepaid expenses and other....................... 9,149 5,807 5,607
-------- ---------- ----------
Total current assets.......................... 433,692 879,443 770,154
PROPERTY AND EQUIPMENT, net........................ 185,731 260,332 255,490
-------- ---------- ----------
$619,423 $1,139,775 $1,025,644
======== ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Line of credit................................... $121,158 $ 142,721 $ 142,721
Current portion of long term debt................ 322,142 393,811 371,318
Accounts payable................................. 152,436 306,304 323,371
Due to affiliates................................ 11,185 129,869 105,316
Accrued expenses................................. 102,421 186,723 138,252
Deferred revenue................................. -- 33,248 20,000
-------- ---------- ----------
Total current liabilities..................... 709,342 1,192,676 1,100,978
-------- ---------- ----------
LONG-TERM DEBT..................................... 11,335 29,634 26,412
-------- ---------- ----------
COMMITMENTS AND CONTINGENCIES (NOTE 6)
STOCKHOLDERS' EQUITY (DEFICIT):
CMC common stock, $1 par value, 100,000 shares
authorized, 10,000 shares issued and
outstanding................................... 10,000 10,000 10,000
I(3) common stock, no par value, 200,000 shares
authorized, 90,510 shares issued and
outstanding................................... 138,750 138,750 138,750
Accumulated deficit.............................. (250,004) (231,285) (250,496)
-------- ---------- ----------
Total stockholders' equity (deficit).......... (101,254) (82,535) (101,746)
-------- ---------- ----------
$619,423 $1,139,775 $1,025,644
======== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-39
<PAGE>
CODALEX MICROFILMING CORPORATION AND
IMAGING INFORMATION INDUSTRIES, INC.

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED JUNE 30, ENDED SEPTEMBER 30,
------------------------------------ --------------------
1995 1996 1997 1996 1997
---------- ---------- ---------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Services.................................... $1,836,118 $ 755,085 $1,507,270 $341,016 $ 530,204
Products.................................... 503,609 622,181 1,357,845 307,383 239,080
---------- ---------- ---------- -------- ---------
2,339,727 1,377,266 2,865,115 648,399 769,284
---------- ---------- ---------- -------- ---------
COST OF REVENUES:
Services.................................... 1,177,764 507,561 1,011,894 228,233 399,981
Products.................................... 329,149 416,104 1,016,164 252,011 169,155
Depreciation................................ 43,698 47,211 64,338 12,000 10,203
---------- ---------- ---------- -------- ---------
1,550,611 970,876 2,092,396 492,244 579,339
---------- ---------- ---------- -------- ---------
Gross profit.............................. 789,116 406,390 772,719 156,155 189,945
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES.................................... 730,356 549,435 758,900 99,951 152,301
IMAGEMAX TRANSACTION COSTS.................... -- -- -- -- 45,317
AMORTIZATION.................................. 18,029 1,877 1,730 144 200
---------- ---------- ---------- -------- ---------
Operating income (loss)................... 40,731 (144,922) 12,089 56,060 (7,873)
OTHER (INCOME) EXPENSE:
Interest expense............................ 29,082 60,472 53,370 3,135 11,338
Management fee.............................. -- -- (60,000) -- --
---------- ---------- ---------- -------- ---------
Income (loss) before income taxes......... 11,649 (205,394) 18,719 52,925 (19,211)
INCOME TAXES.................................. -- -- -- -- --
---------- ---------- ---------- -------- ---------
NET INCOME (LOSS)............................. $ 11,649 $ (205,394) $ 18,719 $ 52,925 $ (19,211)
========== ========== ========== ======== =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-40
<PAGE>
CODALEX MICROFILMING CORPORATION AND
IMAGING INFORMATION INDUSTRIES, INC.

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
COMMON STOCK
------------------------------------ TOTAL
CMC I(3) STOCKHOLDERS'
---------------- ----------------- ACCUMULATED EQUITY
SHARES AMOUNT SHARES AMOUNT DEFICIT (DEFICIT)
------ ------- ------ -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1994.................. 10,000 $10,000 -- $ 20,000 $ (56,259) $ (26,259)

Issuance of common stock.............. -- -- 90,510 45,000 -- 45,000

Net income............................ -- -- -- -- 11,649 11,649
------ ------- ------ -------- --------- ---------

BALANCE, JUNE 30, 1995.................. 10,000 10,000 90,510 65,000 (44,610) 30,390

Paid-in capital for previously issued
stock............................... -- -- -- 73,750 -- 73,750

Net loss.............................. -- -- -- -- (205,394) (205,394)
------ ------- ------ -------- --------- ---------

BALANCE, JUNE 30, 1996.................. 10,000 10,000 90,510 138,750 (250,004) (101,254)

Net income............................ -- -- -- -- 18,719 18,719
------ ------- ------ -------- --------- ---------

BALANCE, JUNE 30, 1997.................. 10,000 10,000 90,510 138,750 (231,285) (82,535)

Net loss (unaudited).................. -- -- -- -- (19,211) (19,211)
------ ------- ------ -------- --------- ---------

BALANCE, SEPTEMBER 30, 1997
(UNAUDITED)........................... 10,000 $10,000 90,510 $138,750 $(250,496) $(101,746)
====== ======= ====== ======== ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-41
<PAGE>
CODALEX MICROFILMING CORPORATION AND
IMAGING INFORMATION INDUSTRIES, INC.

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
-------------------------------- ---------------------
1995 1996 1997 1996 1997
-------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................. $ 11,649 $(205,394) $ 18,719 $ 52,925 $ (19,211)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities-
Depreciation and amortization............. 61,727 49,088 66,068 12,144 10,403
(Gain) loss on sale of equipment.......... -- (4,832) 19,273 -- --
Change in operating assets and
liabilities:
Accounts receivable.................... (60,523) 97,597 (339,903) (122,505) 232,294
Inventories............................ (11,166) (98,126) (28,370) 23,177 (6,701)
Prepaid expenses and other assets...... (4,802) (3,385) 1,612 -- --
Net due to/from affiliates............. (52,039) 31,443 37,709 (11,629) (80,203)
Accounts payable and accrued
expenses............................. 109,648 (60,976) 238,170 156,441 (31,404)
Deferred revenue....................... -- -- 33,248 -- (13,248)
-------- --------- --------- --------- ---------
Net cash provided by (used in)
operating activities............... 54,494 (194,585) 46,526 110,553 91,930
-------- --------- --------- --------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property and equipment........... (38,926) (30,260) (130,017) (106,575) (5,361)
-------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt............................ -- 153,932 121,980 48,646 --
Principal payments on debt.................... (38,207) (10,141) (38,644) (20,040) (25,715)
Capital contributions......................... 45,000 73,750 -- -- --
-------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities............... 6,793 217,541 83,336 28,606 (25,715)
-------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................... 22,361 (7,304) (155) 32,584 60,854
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD........................................ 26,000 48,361 41,057 41,057 40,902
-------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD........ $ 48,361 $ 41,057 $ 40,902 $ 73,641 $ 101,756
======== ========= ========= ========= =========
SUPPLEMENTAL DATA:
Cash paid for interest...................... $ 8,000 $ 56,000 $ 24,000 $ -- $ 4,600
======== ========= ========= ========= =========
NONCASH FINANCING TRANSACTION:
Equipment financed through capital leases... $ -- $ -- $ 28,195 $ -- $ 28,195
======== ========= ========= ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-42

<PAGE>
CODALEX MICROFILMING CORPORATION AND
IMAGING INFORMATION INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION AS OF SEPTEMBER 30 AND FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

1. BACKGROUND:

Codalex Microfilming Corporation ("CMC") and Imaging Information
Industries, Inc. ("I(3)") (collectively, "Codalex") provide micrographic and
electronic imaging services and sell certain imaging and scanning equipment to
businesses primarily in South Carolina and Georgia. Codalex's customer base
includes hospitals, commercial enterprises and a limited number of government
institutions. CMC is located in Columbia, South Carolina, and was purchased in
July 1992. Imaging is located in Atlanta, Georgia, and was founded in February
1995.

The combined companies had net income of approximately $19,000 in 1997,
resulting in a stockholders' deficit of approximately $83,000 at June 30, 1997.
The working capital deficit at June 30, 1997 was approximately $313,000. In
management's opinion, the cash flow requirements for fiscal 1998 will be funded
through improvement in operations. Codalex will not pay the stockholder and
other related-party notes that are currently due if cash flows from operations
are not sufficient to fund its obligations as they become due.

CMC and its stockholders intend to enter into a merger agreement with
ImageMax, Inc. (ImageMax) and I(3) and its stockholders intend to enter a net
asset acquisition agreement with ImageMax both of which would close upon the
consummation of the initial public offering of the common stock of ImageMax (see
Note 8).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Statements

The financial statements as of September 30, 1997 and for the three months
ended September 30, 1996 and 1997 are unaudited and, in the opinion of the
management of Codalex, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the results for
those interim periods. The results of operations for the three months ended
September 30, 1997 are not necessarily indicative of the results to be expected
for the full year.

Basis of Presentation

Codalex is controlled and managed through common ownership. Accordingly,
the financial statements have been combined and reflect the elimination of all
significant intercompany accounts and transactions.

Cash and Cash Equivalents

Codalex considers highly liquid investments with original maturities of
three months or less to be cash equivalents. Cash equivalents are carried at
cost, which approximates market value.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories only represent microfiche viewing and imaging equipment, and
production and related supplies.

Property and Equipment

F-43
<PAGE>

CODALEX MICROFILMING CORPORATION AND
IMAGING INFORMATION INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30 AND FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
Revenue Recognition

Service and product revenues are recognized when the services are rendered
or products are shipped to Codalex's customers. Deferred revenue represents
payments for services that are billed in advance of performance. No single
customer exceeded 10% of revenues for any year presented.

Income Taxes

Imaging has elected to be taxed under Subchapter S of the Internal Revenue
Code. Accordingly, all taxable income or loss of Imaging is included in the
stockholders' individual income tax returns.

CMC is a C corporation and income tax expense is provided in Codalex's
financial statements. Deferred income tax liabilities and assets are determined
based on the difference between the financial statement and income tax bases of
assets and liabilities that will result in taxable or deductible amounts in the
future using enacted income tax rates in effect for the year in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred income tax assets to the amount
expected to be realized. Deferred tax assets resulting from nondeductible
reserves and net operating losses have offset deferred tax liabilities related
to accelerated depreciation for tax reporting in the accompanying financial
statements. Income tax expense on fiscal 1997 earnings was offset by the
remaining net operating loss carryforwards.

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

Long-Lived Assets

Codalex follows Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed of." Accordingly, in the event that facts and circumstances indicate
that property and equipment, and intangible or other assets, may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the assets is
compared to the assets' carrying amount to determine if a write-down to market
value or discounted cash flow value is necessary.

F-44
<PAGE>

CODALEX MICROFILMING CORPORATION AND
IMAGING INFORMATION INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30 AND FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED JUNE 30,
USEFUL LIVES ------------------- SEPTEMBER 30,
YEARS 1996 1997 1997
------------ -------- -------- -------------
<S> <C> <C> <C> <C>
Scanning and imaging equipment..... 7 $236,188 $365,329 $366,340
Furniture and office equipment..... 7 15,443 22,098 26,332
Automobiles........................ 5 74,749 35,772 35,773
-------- -------- --------
326,380 423,199 428,445
Less--Accumulated depreciation..... (140,649) (162,867) (172,955)
-------- -------- --------
$185,731 $260,332 $255,490
======== ======== ========
</TABLE>

As of June 30, 1997, Codalex had approximately $28,000 in equipment, net of
accumulated depreciation, financed under capital leases with a related party.

4. DEBT:

At June 30, 1997, Codalex had a line of credit agreement with a bank which
provides for borrowings of up to $175,000, based on eligible accounts
receivable. The line bears interest at the bank prime rate plus 0.75% and
expires on May 15, 1998. The line of credit is secured by substantially all of
Codalex's assets and a personal guarantee by Codalex's stockholders.

Other long term debt is as follows:

<TABLE>
<CAPTION>
JUNE 30,
------------------- SEPTEMBER 30,
1996 1997 1997
-------- -------- -------------
<S> <C> <C> <C>
Unsecured demand notes payable to
related parties accruing interest
at 12% annually.................... $251,426 $285,839 $284,907
Commercial term note bearing interest
at 9.5%, collateralized by a
security agreement with Imaging;
payments in monthly installments of
$2,869 through January 1999........ 62,500 50,503 40,918
Other various notes payable to
banks.............................. 19,551 58,908 48,547
Obligations under capital leases with
related parties.................... -- 28,195 23,358
-------- -------- --------
333,477 423,445 397,730
Less--Current portion................ (322,142) (393,811) (371,318)
-------- -------- --------
$ 11,335 $ 29,634 $ 26,412
======== ======== ========
</TABLE>

Future maturities of debt at June 30, 1997, are $536,532 in 1998 and
$29,634 in 1999. Codalex is in compliance with all covenants related to their
debt as of June 30, 1997.

F-45
<PAGE>

CODALEX MICROFILMING CORPORATION AND
IMAGING INFORMATION INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30 AND FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

5. ACCRUED EXPENSES:

Accrued expenses are as follows:

<TABLE>
<CAPTION>
JUNE 30,
------------------- SEPTEMBER 30,
1996 1997 1997
-------- -------- -------------
<S> <C> <C> <C>
Interest............................. $ 61,518 $ 90,628 $ 96,628
Payroll and related taxes............ 33,328 84,814 20,819
Other................................ 7,575 11,281 20,805
-------- -------- --------
$102,421 $186,723 $138,252
======== ======== ========
</TABLE>

6. COMMITMENTS AND CONTINGENCIES:

Codalex leases office space under two noncancelable operating leases. One
of these leases expires July 31, 1998, and requires future minimum lease
payments of approximately $16,000 in 1998. The other lease expires November 1,
2008, subject to rent negotiations at October 31, 1998. The future minimum lease
payments through 2008 are $89,000 per year. The lessor of both leases is the
majority stockholder of Codalex. Rent expense for all operating leases for the
years ended June 30, 1995, 1996 and 1997 was $86,000, $92,000 and $94,000,
respectively.

Codalex is party to various claims and other matters arising in the normal
course of business. In the opinion of management, the outcome of these matters
will not have a material adverse effect on the Company's financial position or
results of operations.

7. OTHER RELATED-PARTY TRANSACTIONS:

Codalex is controlled through common ownership, as previously stated. The
same ownership has controlling interest in two similar electronic storage
companies, Laser Graphics Systems & Services ("Laser Graphics") and Microfilm
World. Laser Graphics is located in Cleveland, Tennessee, and Microfilm World is
in Charlotte, North Carolina. All four companies have some overlapping resources
and services. Generally, their geographic regions divide the sales territories.
CMC, I(3) and Laser Graphics are to be included in the purchase transaction
described in Note 1. Revenues included in the accompanying financial statements
from Microfilm World and Laser Graphics for the year ended June 30, 1995, 1996
and 1997 and the three months ended September 30, 1996 and 1997, are
approximately $33,000 and $0, $0 and $8,000, $50,000, $48,000, $14,000 and
$15,000, $55,000 and $18,275 respectively. The pricing for these services is
established at prevailing market rates at the time of performance. For the year
ended June 30, 1997, Codalex charged Laser Graphics a $60,000 management fee for
reimbursement of certain shared services which began in fiscal 1997.

8. SALE OF THE BUSINESS (UNAUDITED):

In September 1997, CMC and I(3) and its stockholders entered into the
agreements discussed in Note 1 with ImageMax.

F-46
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Laser Graphics Systems & Services, Inc.:

We have audited the accompanying balance sheets of Laser Graphics Systems &
Services, Inc. (a Tennessee corporation) as of October 31, 1995 and 1996 and
July 31, 1997, and the related statements of operations, stockholders' equity
(deficit) and cash flows for each of the two years in the period ended October
31, 1996 and the nine-month period ended July 31, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Laser Graphics Systems &
Services, Inc. as of October 31, 1995 and 1996 and July 31, 1997, and the
results of its operations and its cash flows for each of the two years in the
period ended October 31, 1996 and the nine-month period ended July 31, 1997, in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Columbia, South Carolina,
August 19, 1997

F-47
<PAGE>

LASER GRAPHICS SYSTEMS & SERVICES, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
OCTOBER 31,
------------------- JULY 31,
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................... $ 18,946 $ 12,172 $ 305
Accounts receivable, net of allowance for doubtful
accounts of $6,000............................... 173,564 203,377 209,585
Inventories......................................... 50,179 50,385 58,388
Due from affiliates................................. 5,915 61,842 98,301
Prepaid expenses and other.......................... 7,495 12,365 11,920
-------- -------- --------
Total current assets.......................... 256,099 340,141 378,499
PROPERTY AND EQUIPMENT, net........................... 163,940 182,676 185,354
OTHER ASSETS.......................................... 6,308 4,731 4,455
-------- -------- --------
$426,347 $527,548 $568,308
======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Line of credit...................................... $ 82,518 $ 54,243 $122,834
Current maturities of long-term debt................ 62,443 74,818 61,686
Book overdrafts..................................... -- 30,265 53,104
Accounts payable.................................... 147,110 107,608 138,730
Due to affiliates................................... 5,682 74,662 71,482
Accrued expenses and other.......................... 25,993 69,334 49,824
-------- -------- --------
Total current liabilities..................... 323,746 410,930 497,660
-------- -------- --------
LONG-TERM DEBT........................................ 111,937 76,336 33,140
-------- -------- --------
COMMITMENTS AND CONTINGENCIES (NOTE 5)
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, no par value, 2,000 shares authorized
1,000, 670, and 670 shares issued and outstanding
for 1995, 1996 and 1997,respectively, net of loan
from stockholders................................ -- -- --
Retained earnings (accumulated deficit)............. (9,336) 40,282 37,508
-------- -------- --------
Total stockholders' equity (deficit)................ (9,336) 40,282 37,508
-------- -------- --------
$426,347 $527,548 $568,308
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-48
<PAGE>

LASER GRAPHICS SYSTEMS & SERVICES, INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED OCTOBER 31, JULY 31,
----------------------- -------------------------
1995 1996 1996 1997
---------- ---------- ------------ ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES:
Services............................ $1,055,815 $1,131,629 $ 799,295 $ 984,908
Products............................ 592,555 1,315,050 1,121,430 328,652
---------- ---------- ---------- ----------
1,648,370 2,446,679 1,920,725 1,313,560
---------- ---------- ---------- ----------

COST OF REVENUES:
Services............................ 763,038 810,657 573,090 638,639
Products............................ 440,416 986,288 843,073 243,489
Depreciation........................ 27,984 33,957 20,925 28,263
---------- ---------- ---------- ----------
1,231,438 1,830,902 1,437,088 910,391
---------- ---------- ---------- ----------
Gross profit..................... 416,932 615,777 483,637 403,169

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES............................ 396,366 499,839 327,330 385,367
---------- ---------- ---------- ----------
Operating income.................... 20,566 115,938 156,307 17,802

INTEREST EXPENSE, net................. 29,902 19,995 16,730 20,576
---------- ---------- ---------- ----------
Income (loss) before income
taxes......................... (9,336) 95,943 139,577 (2,774)

INCOME TAXES.......................... -- 21,655 29,311 --
---------- ---------- ---------- ----------
NET INCOME (LOSS)..................... $ (9,336) $ 74,288 $ 110,266 $ (2,774)
========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-49
<PAGE>

LASER GRAPHICS SYSTEMS & SERVICES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
RETAINED TOTAL
COMMON STOCK EARNINGS STOCKHOLDERS'
--------------- (ACCUMULATED EQUITY
SHARES AMOUNT DEFICIT) (DEFICIT)
------ ------ ------------ -------------
<S> <C> <C> <C> <C>
BALANCE, OCTOBER 31, 1994...................... -- $ -- $ -- $ --
Issuance of 1,000 shares common stock........ 1,000 1,000 -- 1,000
Loan to stockholders......................... -- (1,000) -- (1,000)
Net loss..................................... -- -- (9,336) (9,336)
----- ------ ------- -------

BALANCE, OCTOBER 31, 1995...................... 1,000 -- (9,336) (9,336)
Purchase of 330 shares of common stock....... (330) (330) (24,670) (25,000)
Writeoff of loan to stockholder related to
purchase.................................. -- 330 -- 330
Net income................................... -- -- 74,288 74,288
----- ------ ------- -------

BALANCE, OCTOBER 31, 1996...................... 670 -- 40,282 40,282
Net loss..................................... -- -- (2,774) (2,774)
----- ------ ------- -------

BALANCE, JULY 31, 1997......................... 670 $ -- $37,508 $37,508
===== ====== ======= =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-50
<PAGE>

LASER GRAPHICS SYSTEMS & SERVICES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
OCTOBER 31, ENDED JULY 31,
----------------- ---------------------
<S> <C> <C> <C> <C>
1995 1996 1996 1997
------- ------- -------- -------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $(9,336) $74,288 $110,266 $(2,774)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities-
Depreciation and amortization......................... 29,561 35,534 26,650 29,446
Change in operating assets and liabilities-
Accounts receivable................................ 46,475 (29,813) (61,238) (6,208)
Inventories........................................ (9,806) (206) (4,535) (8,003)
Due to/from affiliates, net........................ (233) 13,053 233 (39,639)
Prepaid expenses and other assets.................. (4,195) (4,870) (30,910) (462)
Accounts payable and accrued expenses and other.... 14,899 3,839 6,720 11,612
------- ------- -------- -------
Net cash provided by (used in) operating
activities..................................... 67,365 91,825 47,186 (16,028)
------- ------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Organizational costs paid................................. (7,885) -- -- --
Purchases of property and equipment....................... (5,685) (52,693) (51,040) (30,941)
------- ------- -------- -------
Net cash used in investing activities............ (13,570) (52,693) (51,040) (30,941)
------- ------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of stock......................................... -- (24,670) (24,670) --
Net borrowings (payments) on line of credit............... (12,864) (28,275) (43,779) 68,591
Bank overdraft............................................ -- 30,265 62,413 22,839
Proceeds from long-term debt.............................. -- 45,395 45,395 4,796
Principal payments on capital lease obligations........... (24,234) (26,852) (21,894) (21,711)
Principal payments on long-term debt...................... (3,364) (41,769) (28,091) (39,413)
------- ------- -------- -------
Net cash (used in) provided by financing
activities..................................... (40,462) (45,906) (10,626) 35,102
------- ------- -------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................................... 13,333 (6,774) (14,480) (11,867)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 5,613 18,946 18,946 12,172
------- ------- -------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $18,946 $12,172 $ 4,466 $ 305
======= ======= ======== =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-51
<PAGE>

LASER GRAPHICS SYSTEMS & SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS

(INFORMATION FOR THE NINE MONTHS ENDED JULY 31, 1996 IS UNAUDITED.)

1. BACKGROUND:

Laser Graphics Systems & Services, Inc., ("Laser Graphics"), provides
document imaging and storage services and distributes document imaging supplies
and equipment to businesses primarily in Tennessee, Northwest Georgia, and
Southwest Virginia. Laser Graphics' customers include commercial enterprises, a
limited number of governmental institutions and hospitals.

Laser Graphics and its stockholders intend to enter into a merger agreement
with ImageMax, Inc. ("ImageMax") which would close upon the consummation of the
initial public offering of the common stock of ImageMAX (see Note 7).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Statements

The financial statements for the nine months ended July 31, 1996 are
unaudited and, in the opinion of management of Laser Graphics, include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results for that interim period. The results of
operations for the nine months ended July 31, 1996 and 1997 are not necessarily
indicative of the results to be expected for the full year.

Cash and Cash Equivalents

Laser Graphics considers highly liquid investments with original maturities
of three months or less to be cash equivalents. Cash equivalents are carried at
cost, which approximates market value.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories only represent microfiche viewing and imaging equipment,
production and related supplies.

Property and Equipment

Property and equipment are recorded at cost. Additions and improvements are
capitalized and repairs and maintenance are charged to expense as incurred.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets. Leasehold improvements are depreciated over the
lesser of their useful life or the term of the lease.

Revenue Recognition

Revenue is recognized when services are rendered or when products are
shipped to customers. Laser Graphics had three customers with revenues of 18%,
17% and 10% of its total revenues, for the year ended October 31, 1996. Accounts
receivable as of October 31, 1996, for these customers were approximately $0,
$17,000 and $35,000. No other customer exceeded 10% for any of the other periods
presented.

Income Taxes

Laser Graphics is a C corporation. Deferred income tax liabilities and
assets are determined based on the difference between the financial statement
and income tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future using enacted income tax rates in effect for
the year in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred income
tax assets to the amount expected to be realized. Laser Graphics has a net
deferred tax liability of approximately $6,000 at July 31, 1997, as a result of
accelerated depreciation for tax reporting purposes in excess of net deferred
tax assets due to the nondeductible allowance for doubtful accounts.

F-52
<PAGE>

LASER GRAPHICS SYSTEMS & SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED JULY 31, 1996 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
Supplemental Cash Flow Information

For the years ended October 31, 1995, 1996 and for the nine months ended
July 31, 1996 and 1997, Laser Graphics paid interest of approximately $32,000,
$24,000 $17,000, and $12,000, respectively. For the nine months ended July 31,
1997, Laser Graphics paid income taxes of $12,000.

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

Long-Lived Assets

Laser Graphics follows Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed of." Accordingly, in the event that facts and circumstances indicate
that property and equipment, and intangible or other assets, may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the assets is
compared to the assets' carrying amount to determine if a write-down to market
value or discounted cash flow value is necessary.

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED OCTOBER 31,
USEFUL LIVES ------------------- JULY 31,
(IN YEARS) 1995 1996 1997
------------ -------- -------- --------
<S> <C> <C> <C> <C>
Equipment........................... 5-7 $159,143 $200,602 $214,636
Office furniture and fixtures....... 7 20,124 26,874 29,111
Vehicles............................ 5 12,656 17,140 15,607
Leasehold improvements.............. 15 -- -- 12,921
-------- -------- --------
191,923 244,616 272,275
Less--Accumulated depreciation and
amortization........................ (27,983) (61,940) (86,921)
-------- -------- --------
$163,940 $182,676 $185,354
======== ======== ========
</TABLE>

As of October 31, 1995 and 1996 and July 31, 1997, Laser Graphics had
approximately $67,000, $55,000 and $47,000, respectively, in equipment, net of
accumulated depreciation, financed under capital leases.

4. LONG-TERM DEBT:

Laser Graphics has a line of credit with a bank. The line of credit
provides for a maximum borrowing of 70% of the Company's current accounts
receivable which is computed at the end of each

F-53
<PAGE>

LASER GRAPHICS SYSTEMS & SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED JULY 31, 1996 IS UNAUDITED.)

4. LONG-TERM DEBT: -- (CONTINUED)
calendar quarter. The line of credit bears interest at 9.25% per year and
expires in December 1997. The line is secured by all of Laser Graphics' assets
and is personally guaranteed by the majority stockholder.

Other long-term debt is as follows:

<TABLE>
<CAPTION>
OCTOBER 31,
------------------- JULY 31,
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Note payable to a related-party partnership in
monthly installments of $2,965 including
interest at 12%, through June 1998,
unsecured................................... $ 80,863 $ 53,511 $ 30,743
Term loan payable to a bank in monthly
installments of $616, plus interest at 8.5%,
through February 2001, collateralized by
accounts receivable, inventory, and
equipment................................... -- 27,983 24,319
Term loan payable to a bank in monthly
installments of $218, plus interest at 8.5%,
through February 1999, collateralized by a
vehicle..................................... -- -- 3,862
Other term loans.............................. 9,053 12,048 --
Obligations under capitalized leases.......... 84,464 57,612 35,902
-------- -------- --------
174,380 151,154 94,826
Less--Current portion......................... (62,443) (74,818) (61,686)
-------- -------- --------
$111,937 $ 76,336 $ 33,140
======== ======== ========
</TABLE>

As of July 31, 1997, maturities of long-term debt, including capital
leases, are as follows:

Laser Graphics was in compliance with all debt covenants or had obtained
waivers as of July 31, 1997.

5. COMMITMENTS AND CONTINGENCIES:

Laser Graphics leases office space under noncancellable operating leases
from a related party partnership. Rent expense for all operating leases for the
years ended October 31, 1995 and 1996 and the nine months ended July 31, 1996
and 1997 was approximately $42,000, $42,000, $33,000, and $44,000, respectively.
Future minimum lease payments under noncancellable operating leases are
approximately $61,000 in fiscal 1998.

Laser Graphics is party to various claims and other matters arising in the
normal course of business. In the opinion of management, the outcome of these
matters will not have a material adverse effect on the Company's financial
position or results of operations.

F-54
<PAGE>

LASER GRAPHICS SYSTEMS & SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED JULY 31, 1996 IS UNAUDITED.)

6. RELATED-PARTY TRANSACTIONS:

For the year ended October 31, 1996, and the nine-month period ended July
31, 1997, Laser Graphics had sales to related parties of approximately $76,000,
and $90,000, respectively, and had purchases from related parties for the same
periods of $130,000, and $9,000, respectively. The pricing for these services is
established at prevailing market rates at the time of performance. Additionally,
Codalex charged Laser Graphics a $60,000 management fee for reimbursement of
certain shared services for the year ended October 31, 1996.

The stockholders of the Company also have controlling interest in three
similar document storage companies: Codalex in Columbia, SC, Microfilm World in
Charlotte, NC, and Imaging Information Industries in Atlanta, GA. All four
companies have some overlapping resources and services. Generally, their
geographic regions divide the sales territories. Codalex, Imaging and Laser
Graphics are to be included in the purchase transaction described in Note 1.

7. SALE OF THE BUSINESS (UNAUDITED):

In September 1997, Laser Graphics and its stockholders entered into a
definitive merger agreement with ImageMax (see Note 1).

F-55
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To DataLink Corporation:

We have audited the accompanying balance sheets of DataLink Corporation (an
Arizona corporation) as of December 31, 1995 and 1996 and June 30, 1997 and the
related statements of operations, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1996 and the six month
period ended June 30, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of DataLink Corporation as of
December 31, 1995 and 1996 and June 30, 1997, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1996 and the six month period ended June 30, 1997, in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.,

October 3, 1997

F-56
<PAGE>

DATALINK CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30, SEPTEMBER 30,
1995 1996 1997 1997
---------- ---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............ $ 140,607 $ 138,547 $ 268,042 $ 293,551
Accounts receivable.................. 367,402 320,514 358,247 386,623
Notes receivable from stockholders... -- 20,000 10,000 10,000
Inventories.......................... 36,455 26,805 37,161 41,554
Prepaid expenses and other........... 4,924 194 900 47
---------- ---------- ---------- ----------
Total current assets........ 549,388 506,060 674,350 731,775
PROPERTY AND EQUIPMENT, net............ 469,219 1,063,357 979,391 943,202
OTHER ASSETS........................... 4,903 16,417 30,615 22,631
---------- ---------- ---------- ----------
$1,023,510 $1,585,834 $1,684,356 $1,697,608
========== ========== ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Lines of credit...................... $ -- $ 20,000 $ -- $ --
Current portion of long-term debt.... 135,272 121,764 83,954 80,671
Accounts payable..................... 80,648 119,635 113,062 141,420
Accrued expenses..................... 70,252 91,637 128,627 147,179
---------- ---------- ---------- ----------
Total current liabilities... 286,172 353,036 325,643 369,270
---------- ---------- ---------- ----------
LONG-TERM DEBT......................... 268,588 149,490 113,121 92,880
---------- ---------- ---------- ----------
CAPITALIZED LEASE OBLIGATION TO
RELATED-PARTY (Note 9)............... -- 720,000 720,000 720,000
---------- ---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $100 par
value, 50,000 shares authorized,
none issued and outstanding....... -- -- -- --
Common stock, $1 par value, 100,000
shares authorized, 40,000 shares
issued and outstanding............ 40,000 40,000 40,000 40,000
Retained earnings.................... 428,750 323,308 485,592 475,458
---------- ---------- ---------- ----------
Total stockholders'
equity.................... 468,750 363,308 525,592 515,458
---------- ---------- ---------- ----------
$1,023,510 $1,585,834 $1,684,356 $1,697,608
========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-57
<PAGE>

DATALINK CORPORATION

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS
ENDED NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, SEPTEMBER 30,
------------------------------------ ---------- -----------------------
1994 1995 1996 1997 1996 1997
---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Services..................... $2,465,387 $2,151,498 $2,286,122 $1,284,596 $1,761,461 $1,971,885
Products..................... 562,313 540,117 865,183 427,432 744,136 592,338
---------- ---------- ---------- ---------- ---------- ----------
3,027,700 2,691,615 3,151,305 1,712,028 2,505,597 2,564,223
---------- ---------- ---------- ---------- ---------- ----------
COST OF REVENUES:
Services..................... 1,864,429 1,541,790 1,592,764 795,957 1,179,793 1,268,486
Products..................... 604,431 479,249 773,632 356,570 647,396 492,487
Depreciation................. 190,647 204,348 217,967 103,847 161,026 156,680
---------- ---------- ---------- ---------- ---------- ----------
2,659,507 2,225,387 2,584,363 1,256,374 1,988,215 1,917,653
---------- ---------- ---------- ---------- ---------- ----------
Gross profit.......... 368,193 466,228 566,942 455,654 517,382 646,570
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES...... 331,657 339,246 466,772 232,037 327,785 379,859
IMAGEMAX TRANSACTION COSTS..... -- -- -- -- -- 25,000
---------- ---------- ---------- ---------- ---------- ----------
Operating income...... 36,536 126,982 100,170 223,617 189,597 241,711
INTEREST EXPENSE............... 46,416 52,226 107,058 62,199 74,516 91,299
INTEREST INCOME................ (1,366) (166) (1,446) (866) (1,019) (1,738)
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS).............. $ (8,514) $ 74,922 $ (5,442) $ 162,284 $ 116,100 $ 152,150
========== ========== ========== ========== ========== ==========
PRO FORMA DATA (UNAUDITED):
Historical net income
(loss)..................... $ (8,514) $ 74,922 $ (5,442) $ 162,284 $ 116,100 $ 152,150
Pro forma income tax expense
(benefit).................. (1,955) 32,454 2,392 65,817 48,691 61,955
---------- ---------- ---------- ---------- ---------- ----------
Pro forma net income
(loss)..................... $ (6,559) $ 42,468 $ (7,834) $ 96,467 $ 67,409 $ 90,195
========== ========== ========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-58
<PAGE>

DATALINK CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
---------------- RETAINED EQUITY
SHARES AMOUNT EARNINGS TOTAL
------ ------- --------- --------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993...................... 40,000 $40,000 $362,342 $402,342
Net loss...................................... -- -- (8,514) (8,514)
------ ------- -------- --------
BALANCE, DECEMBER 31, 1994...................... 40,000 40,000 353,828 393,828
Net income.................................... -- -- 74,922 74,922
------ ------- -------- --------
BALANCE, DECEMBER 31, 1995...................... 40,000 40,000 428,750 468,750
Distributions to stockholders................. -- -- (100,000) (100,000)
Net loss...................................... -- -- (5,442) (5,442)
------ ------- -------- --------
BALANCE, DECEMBER 31, 1996 40,000 40,000 323,308 363,308
Net income.................................... -- -- 162,284 162,284
------ ------- -------- --------
BALANCE, JUNE 30, 1997.......................... 40,000 40,000 485,592 525,592
Net loss (unaudited).......................... -- -- (10,134) (10,134)
------ ------- -------- --------
BALANCE, SEPTEMBER 30, 1997
(UNAUDITED)................................... 40,000 $40,000 $475,458 $515,458
====== ======= ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-59
<PAGE>

DATALINK CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS
ENDED NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, SEPTEMBER 30,
------------------------------------ ---------- ---------------------
1994 1995 1996 1997 1996 1997
---------- ---------- ---------- ---------- ---------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................. $ (8,514) $ 74,922 $ (5,442) $ 162,284 $ 116,100 152,150
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities-
Depreciation and
amortization................ 190,647 204,348 217,967 103,847 161,026 156,680
Loss (gain) on sale of fixed
assets...................... -- (2,455) 7,304 -- (1,017) --
Changes in operating assets and
liabilities-
Accounts receivable......... (74,019) 21,090 46,888 (37,733) 12,289 (66,109)
Inventories................. (4,607) (7,130) 9,650 (10,356) (13,987) (14,749)
Prepaid expenses and
other..................... (3,875) (2,126) (26,784) (4,905) (19,513) 3,933
Accounts payable............ 45,529 (76,365) 38,987 (6,573) 16,437 21,785
Accrued expenses............ (38,264) 4,566 21,385 36,990 25,088 55,542
---------- ---------- ---------- ---------- ---------- --------
Net cash provided by
operating activities.... 106,897 216,850 309,955 243,554 296,423 309,232
---------- ---------- ---------- ---------- ---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and
equipment........................ (237,532) (47,613) (119,790) (19,880) (97,172) (36,525)
Proceeds from disposition of
equipment........................ -- 8,965 20,381 -- 5,268 --
---------- ---------- ---------- ---------- ---------- --------
Net cash used in investing
activities.............. (237,532) (38,648) (99,409) (19,880) (91,904) (36,525)
---------- ---------- ---------- ---------- ---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) on
lines of credit.................. 90,000 (90,000) 20,000 (20,000) -- (20,000)
Proceeds from long-term debt....... 126,180 250,000 15,109 -- 15,109 --
Repayment of long-term debt........ (95,796) (295,047) (147,715) (74,179) (109,549) (97,703)
Distributions to stockholders...... -- -- (100,000) -- -- --
---------- ---------- ---------- ---------- ---------- --------
Net cash provided by (used
in) financing
activities.............. 120,384 (135,047) (212,606) (94,179) (94,440) (117,703)
---------- ---------- ---------- ---------- ---------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS................... (10,251) 43,155 (2,060) 129,495 110,079 155,004
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD.......................... 107,703 97,452 140,607 138,547 140,607 138,547
---------- ---------- ---------- ---------- ---------- --------
CASH AND CASH EQUIVALENTS, END OF
PERIOD............................. $ 97,452 $ 140,607 $ 138,547 $ 268,042 $ 250,686 $293,551
========== ========== ========== ========== ========== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-60
<PAGE>

<PAGE>
DATALINK CORPORATION
NOTES TO FINANCIAL STATEMENTS

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

1. BACKGROUND:

DataLink Corporation ("DataLink") is an Arizona corporation with
administrative offices located in Tempe, Arizona. DataLink's product line
includes computer output microfilm, source document microfilming, imaging
systems, data entry services, customized data processing services and customer
programming services.

In September 1997, DataLink entered into a net asset acquisition agreement
with ImageMax, Inc. ("ImageMax") which would close upon the consummation of the
initial public offering of the common stock of ImageMax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

September 30, 1996 and 1997 Financial Statements

The financial statements as of September 30, 1997 and for the nine months
ended September 30, 1996 and 1997 are unaudited and, in the opinion of
management of DataLink, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the results for
those interim periods. The results of operations for the nine months ended
September 30, 1997 are not necessarily indicative of the results to be expected
for the full year.

Cash and Cash Equivalents

DataLink considers highly liquid investments with original maturities of
three months or less to be cash equivalents. At the balance sheet dates, cash
equivalents were composed primarily of money market funds. Cash equivalents are
carried at cost, which approximates market value. DataLink maintains cash
accounts, which, at times may exceed federally insured limits. DataLink believes
that they are not exposed to any significant risks on their cash accounts.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories are primarily comprised of microfilm, microfiche and related
supplies.

Property and Equipment

Property and equipment are recorded at cost. Additions and improvements are
capitalized and repairs and maintenance are charged to expense as incurred.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets. Leasehold improvements and capital lease assets are
depreciated over the lesser of their useful life or the term of the lease.

Revenue Recognition

Revenue is recognized when the services are rendered or the products are
shipped to customers.

Income Taxes

DataLink has elected to be taxed under Subchapter S of the Internal Revenue
Code, and, accordingly, the taxable income or loss of DataLink is included in
the stockholders' individual tax returns.

F-61
<PAGE>

DATALINK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)

DataLink reports certain income and expense items for income tax purposes
on a different basis than that reflected in the accompanying financial
statements. The primary differences are due to depreciation and the accounting
treatment of a capitalized related party lease. The cumulative amount of these
differences at December 31, 1996 was approximately $75,000. If the S Corporation
status were terminated, a deferred income tax liability related to these
cumulative differences would need to be recorded.

For informational purposes, the accompanying statements of operations
include an unaudited pro forma adjustment for income taxes which would have been
recorded if DataLink had not been an S Corporation, based on the tax laws in
effect during the respective periods. The differences between the federal
statutory income tax rate and the pro forma income tax rate primarily relate to
state income taxes and expenses not deductible for tax purposes.

Supplemental Cash Flow Information

For the years ended December 31, 1994, 1995 and 1996, the six month period
ended June 30, 1997, and the nine month periods ended September 30, 1996 and
1997, DataLink paid interest of $46,416, $52,226, $78,223, $58,823, $55,310 and
$80,940, respectively. Capital lease obligations of $720,000 were incurred on a
related-party facility lease entered into in the year ended December 31, 1996,
the six month period ended June 30, 1996 and the nine month period ended
September 30, 1997.

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

Long-Lived Assets

DataLink follows Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed of." Accordingly, in the event that facts and circumstances indicate
that property and equipment, and intangible or other assets, may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the assets is
compared to the assets' carrying amount to determine if a write-down to market
value or discounted cash flow value is necessary.

F-62
<PAGE>

DATALINK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED DECEMBER 31,
USEFUL LIVES ------------------------ JUNE 30, SEPTEMBER 30,
(YEARS) 1995 1996 1997 1997
------------ ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Building (related-party capital
lease)............................... 20 $ -- $ 720,000 $ 720,000 $ 720,000
Scanning and filming equipment......... 5-7 925,649 853,817 857,475 867,373
Furniture and office equipment......... 5-7 208,827 208,370 218,073 224,338
Leasehold improvements................. 5-20 9,715 29,402 29,402 29,402
Purchased software..................... 5 48,829 51,100 57,620 58,101
---------- ---------- ---------- -----------
1,193,020 1,862,689 1,882,570 1,899,214
Less-Accumulated depreciation and
amortization......................... (723,801) (799,332) (903,179) (956,012)
---------- ---------- ---------- -----------
$ 469,219 $1,063,357 $ 979,391 $ 943,202
========== ========== ========== ===========
</TABLE>

Depreciation expense for the years ended December 31, 1994, 1995 and 1996,
the six months ended June 30, 1997 and the nine month periods ended September
30, 1996 and 1997 was $190,647, $204,348, $217,967, $103,847, $161,026 and
$156,680, respectively. As of December 31, 1995 and 1996, June 30, 1997 and
September 30, 1997, DataLink had $88,487, $737,647, $672,000, and $663,000 in
capital lease property, net of accumulated amortization.

4. ACCRUED EXPENSES:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30, SEPTEMBER 30,
1995 1996 1997 1997
------- ------- --------- -------------
<S> <C> <C> <C> <C>
Accrued payroll and commissions.................... $39,306 $35,086 $ 48,188 $ 21,173
Accrued vacation................................... 10,189 16,618 18,000 33,036
Accrued sales tax.................................. 13,473 10,771 21,851 17,929
Accrued interest................................... -- 28,835 37,211 39,194
Other.............................................. 7,284 327 3,377 35,847
------- ------- --------- ---------
$70,252 $91,637 $ 128,627 $ 147,179
======= ======= ========= =========
</TABLE>

5. LINES OF CREDIT:

DataLink has a credit facility with a bank providing for a $250,000
revolving line of credit ("Revolver"), a $50,000 equipment line of credit
("Equipment Line"), and two term loans (see Note 6). The borrowings under the
Revolver are secured by substantially all of the assets of DataLink. Advances
under the line bear interest at prime plus 1% (9.5% at September 30, 1997). The
availability under the Revolver is restricted by the borrowing base, as defined.
The Revolver expires on June 30, 1998. The highest amount outstanding under the
Revolver for the year ended December 31, 1996 and the six months ended June 30,
1997 was $20,000 and the average amount outstanding was $14,167 and $20,000,
respectively. The weighted average interest rate on the Revolver for the year
ended December 31, 1996, and the six months ended June 30, 1997 was 9.27% and
9.38%, respectively. There were no amounts outstanding under the Revolver in
1995 or during the three months ended September 30, 1997.

The Equipment Line is used to finance the purchase of equipment by
DataLink. Borrowings are secured by the assets purchased and availability under
the line is limited by the borrowing base, as defined. Advances under the line
bear interest at prime plus 1.5% (10% at September 30, 1997). For

F-63
<PAGE>

DATALINK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

5. LINES OF CREDIT: -- (CONTINUED)
the years ended December 31, 1994, 1995 and 1996, the six months ended June 30,
1997 and the nine months ended September 30, 1996 and 1997, there were no
amounts outstanding under the line. The line matures on June 30, 1998. The
credit facility requires, among other things, DataLink to meet specified
financial ratios and imposes restrictions on the sales of property.

6. LONG-TERM DEBT (EXCLUDING CAPITALIZED LEASE OBLIGATION TO RELATED PARTY (SEE
NOTE 9)):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30, SEPTEMBER 30,
1995 1996 1997 1997
-------- -------- --------- -------------
<S> <C> <C> <C> <C>
Bank loan, monthly principal and interest payments of
$5,498, interest at prime plus 1.5% (10% at September
30, 1997), matures on March 31, 2000.................. $218,516 $172,174 $ 147,265 $ 134,103
Bank loan, monthly principal payments of $3,283, plus
interest at prime plus 2% (10.5% at September 30,
1997), matures on June 1, 1998........................ 98,491 59,095 39,070 29,548
Other................................................... -- 12,326 10,740 9,900
Capitalized lease, monthly principal and interest
payments of $5,333, final payment of $23,340 due on
February 25, 1997..................................... 86,853 27,659 -- --
-------- -------- --------- ---------
403,860 271,254 197,075 173,551
Less-Current portion.................................... (135,272) (121,764) (83,954) (80,671)
-------- -------- --------- ---------
$268,588 $149,490 $ 113,121 $ 92,880
======== ======== ========= =========
</TABLE>

As of December 31, 1996, maturities of long-term debt are as follows:

7. COMMITMENTS AND CONTINGENCIES:

DataLink leases vehicles and office equipment under noncancelable operating
leases. Rent expense under operating leases for the years ended December 31,
1994, 1995 and 1996, the six month period ended June 30, 1997 and the nine month
periods ended September 30, 1996 and 1997 was $109,519, $119,626, $80,555,
$14,982 $68,420 and $18,899, respectively. Future minimum lease payments under
noncancelable operating leases as of December 31, 1996, are as follows:

DataLink is party to various claims and other matters arising in the normal
course of business. In the opinion of management, the outcome of these matters
will not have a material adverse effect on DataLink's financial position or
results of operations.

F-64
<PAGE>

DATALINK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

8. MAJOR CUSTOMERS:

For the years ended December 31, 1994, 1995 and 1996 and the nine months
ended September 30, 1997, one customer accounted for 10%, 11%, 10% and 10% of
total revenues, respectively. For the year ended December 31, 1994 and the nine
month periods ended September 30, 1996 and 1997, DataLink had another customer
which accounted for 11%, 9% and 14%, respectively, of total revenues. The loss
of one or more of these major clients could have a materially adverse effect on
DataLink's business.

9. RELATED-PARTY TRANSACTIONS:

Leasing Transactions

In March 1996, DataLink entered into a lease on its office facility with an
entity whose stockholders are also the stockholders of DataLink. The lease is
accounted for as a capital lease and has a term of 20 years. The implicit
interest rate of the lease is 13.6%. A security deposit on the building of
$15,000 is recorded in other assets as of December 31, 1996, June 30, 1997 and
September 30, 1997.

At December 31, 1996, the future minimum lease payments under the capital
lease are as follows:

<TABLE>
<S> <C>
1997................................................... $ 85,578
1998................................................... 89,988
1999................................................... 92,613
2000................................................... 97,239
2001................................................... 100,940
2002 and thereafter.................................... 1,840,202
-------------
Total minimum lease payments........................... 2,306,560
Less- Amounts representing interest.................... (1,586,560)
-------------
Net minimum principal payments......................... $ 720,000
=============
</TABLE>

Due to the payment timing and the implicit interest rate, no principal
payments will be made for several years. As a result, the entire related party
capital lease is classified as long-term. DataLink expects to enter into a new
lease in connection with the sale of the business (see Notes 1 and 10). This
lease is expected to have a term of five years and will be accounted for as an
operating lease.

Notes Receivable

On June 30, 1997, DataLink issued a $10,000 note to an entity whose
stockholders are also the stockholders of DataLink. The note matures December
31, 1997, with interest due monthly at an annual rate of 9.5%. On April 15,
1996, DataLink issued a $20,000 note to the same entity. The note matured on
June 30, 1997, with interest due monthly at a rate equivalent to the rate under
the Revolver (see Note 5).

F-65

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To DocuTech, Inc. and DocuTech Data Systems, Inc.:

We have audited the accompanying combined balance sheets of DocuTech, Inc.
and DocuTech Data Systems, Inc. (Nebraska corporations) as of December 31, 1995
and 1996 and June 30, 1997 and the related combined statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996 and the six months ended June 30, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of DocuTech, Inc. and DocuTech
Data Systems, Inc. as of December 31, 1995 and 1996 and June 30, 1997 and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996 and the six months ended June 30, 1997 in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.,

October 13, 1997

F-66
<PAGE>

DOCUTECH, INC. AND DOCUTECH DATA SYSTEMS, INC.
COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30, SEPTEMBER 30,
1995 1996 1997 1997
-------- -------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash..................................... $ 13,585 $181,065 $152,427 $264,246
Accounts receivable, net of reserves of
$16,200 and $30,000 on June 30, and
September 30, 1997, respectively...... 93,171 235,474 520,315 523,534
Inventories.............................. -- 23,470 5,678 5,678
Prepaid expenses and other............... 5,336 8,331 14,301 9,582
Advances to stockholder.................. 30,609 -- -- --
-------- -------- -------- --------
Total current assets............... 142,701 448,340 692,721 803,040
PROPERTY AND EQUIPMENT, net................ 101,462 118,295 113,849 115,113
-------- -------- -------- --------
$244,163 $566,635 $806,570 $918,153
======== ======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit........................... $ 37,000 $ -- $ -- $ --
Current portion of long-term debt........ 69,758 25,015 10,184 8,487
Accounts payable......................... 14,759 67,366 59,112 77,731
Accrued expenses......................... 37,722 52,979 104,323 94,993
Deferred revenue......................... 50,522 58,214 108,716 109,370
-------- -------- -------- --------
Total current liabilities.......... 209,761 203,574 282,335 290,581
-------- -------- -------- --------
LONG-TERM DEBT............................. 20,225 9,103 5,041 3,543
-------- -------- -------- --------
COMMITMENTS (Note 7)
STOCKHOLDERS' EQUITY:
Common stock (DocuTech, Inc.), $1 par
value, 300 shares authorized, issued
and outstanding....................... 300 300 300 300
Common stock (DocuTech Data Systems,
Inc.), $1 par value, 10,000 shares
authorized, issued and outstanding.... 10,000 10,000 10,000 10,000
Retained earnings........................ 3,877 343,658 508,894 613,729
-------- -------- -------- --------
Total stockholders' equity......... 14,177 353,958 519,194 624,029
-------- -------- -------- --------
$244,163 $566,635 $806,570 $918,153
======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-67
<PAGE>

DOCUTECH, INC. AND DOCUTECH DATA SYSTEMS, INC.
COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
---------------------------------- JUNE 30, -----------------------
1994 1995 1996 1997 1996 1997
-------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Services.................. $599,793 $ 853,786 $1,248,631 $ 580,248 $ 866,016 $ 868,685
Products.................. -- 60,087 317,544 202,716 278,520 271,279
Software.................. -- 159,111 756,308 623,731 629,688 1,029,219
-------- ---------- ---------- ---------- ---------- ----------
Total revenues....... 599,793 1,072,984 2,322,483 1,406,695 1,774,224 2,169,183
-------- ---------- ---------- ---------- ---------- ----------
COST OF REVENUES:
Cost of services.......... 376,573 479,029 500,711 267,429 340,137 405,012
Cost of products.......... -- 52,250 276,125 176,275 242,110 233,165
Cost of software.......... -- 21,744 308,614 97,010 257,844 201,890
Depreciation.............. 11,806 24,430 31,474 17,570 23,728 27,596
-------- ---------- ---------- ---------- ---------- ----------
388,379 577,453 1,116,924 558,284 863,819 867,663
-------- ---------- ---------- ---------- ---------- ----------
Gross profit......... 211,414 495,531 1,205,559 848,411 910,405 1,301,520
PRODUCT DEVELOPMENT
EXPENSES.................. -- 127,032 161,414 94,874 136,522 124,590
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES... 198,807 274,262 585,564 284,381 428,727 477,435
IMAGEMAX TRANSACTION
COSTS..................... -- -- -- -- -- 56,864
-------- ---------- ---------- ---------- ---------- ----------
Operating income..... 12,607 94,237 458,581 469,156 345,156 642,631
INTEREST EXPENSE............ 4,178 13,126 15,848 2,539 13,464 3,267
INTEREST INCOME............. -- -- (3,248) -- -- --
-------- ---------- ---------- ---------- ---------- ----------
NET INCOME.................. $ 8,429 $ 81,111 $ 445,981 $ 466,617 $ 331,692 $ 639,364
======== ========== ========== ========== ========== ==========
PRO FORMA DATA (UNAUDITED)
Historical net income..... $ 8,429 $ 81,111 $ 445,981 $ 466,617 $ 331,692 $ 639,364
Pro forma income taxes.... 3,372 32,444 178,392 186,647 132,677 255,746
-------- ---------- ---------- ---------- ---------- ----------
PRO FORMA NET INCOME........ $ 5,057 $ 48,667 $ 267,589 $ 279,970 $ 199,015 $ 383,618
======== ========== ========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-68
<PAGE>

DOCUTECH, INC. AND DOCUTECH DATA SYSTEMS, INC.
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
DOCUTECH DATA
DOCUTECH, INC. SYSTEMS, INC.
--------------- ----------------
COMMON STOCK COMMON STOCK
--------------- ---------------- RETAINED
SHARES AMOUNT SHARES AMOUNT EARNINGS TOTAL
------ ------ ------ ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994............. 300 $300 -- $ -- $(19,063) $(18,763)
Net income...................... -- -- -- -- 8,429 8,429
--- ---- ------ ------- -------- --------

BALANCE, DECEMBER 31, 1994........... 300 300 -- -- (10,634) (10,334)
Dividends to stockholders....... -- -- -- -- (66,600) (66,600)
Issuance of common stock........ -- -- 10,000 10,000 -- 10,000
Net income...................... -- -- -- -- 81,111 81,111
--- ---- ------ ------- -------- --------

BALANCE, DECEMBER 31, 1995........... 300 300 10,000 10,000 3,877 14,177
Dividends to stockholders....... -- -- -- -- (106,200) (106,200)
Net income...................... -- -- -- -- 445,981 445,981
--- ---- ------ ------- -------- --------

BALANCE, DECEMBER 31, 1996........... 300 300 10,000 10,000 343,658 353,958
Dividends to stockholders....... -- -- -- -- (301,381) (301,381)
Net income...................... -- -- -- -- 466,617 466,617
--- ---- ------ ------- -------- --------

BALANCE, JUNE 30, 1997............... 300 300 10,000 10,000 508,894 519,194
Dividends to stockholders
(unaudited).................. -- -- -- -- (67,912) (67,912)
Net income (unaudited).......... -- -- -- -- 172,747 172,747
--- ---- ------ ------- -------- --------
BALANCE SEPTEMBER 30, 1997
(UNAUDITED)........................ 300 $300 10,000 $10,000 $613,729 $624,029
=== ==== ====== ======= ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-69
<PAGE>

DOCUTECH, INC. AND DOCUTECH DATA SYSTEMS, INC.
COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------- JUNE 30, -------------------
1994 1995 1996 1997 1996 1997
-------- ------- -------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................... $ 8,429 $81,111 $445,981 $466,617 $331,692 $639,364
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation................................ 11,806 24,430 31,474 17,570 23,728 27,596
Loss on disposal of equipment -- -- 418 -- 418 --
Change in operating assets and liabilities-
Accounts receivable...................... (12,546) (58,858) (142,303) (284,841) (180,109) (288,060)
Inventories.............................. -- -- (23,470) 17,792 -- 17,792
Prepaid expenses and other............... 4,267 4,266 (2,995) (5,970) 2,836 (1,251)
Accounts payable......................... 16,077 (11,419) 52,607 (8,254) 33,253 10,365
Accrued expenses......................... (14,280) 23,028 15,257 51,344 73,959 42,014
Deferred revenue......................... -- 50,522 7,692 50,502 (3,394) 51,156
-------- ------- -------- -------- -------- --------
Net cash provided by operating
activities........................... 13,753 113,080 384,661 304,760 282,383 498,976
-------- ------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............. (22,317) (16,897) (31,025) (13,124) (29,826) (24,414)
-------- ------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) on line of credit... 39,000 (2,000) (37,000) -- (37,000) --
Proceeds from long-term debt.................... 36,569 30,000 -- -- -- --
Repayments of long-term debt.................... (63,405) (29,203) (73,565) (18,893) (42,271) (22,088)
Advances to stockholders........................ -- (30,609) (3,953) -- (3,953) --
Repayment of officer loans...................... (7,684) -- -- -- -- --
Issuance of common stock........................ -- 10,000 -- -- -- --
Dividends to stockholders....................... -- (66,600) (71,638) (301,381) -- (369,293)
-------- ------- -------- -------- -------- --------
Net cash provided by (used in)
financing activities................. 4,480 (88,412) (186,156) (320,274) (83,224) (391,381)
-------- ------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH................... (4,084) 7,771 167,480 (28,638) 169,333 83,181
CASH, BEGINNING OF PERIOD......................... 9,898 5,814 13,585 181,065 13,585 181,065
-------- ------- -------- -------- -------- --------
CASH, END OF PERIOD............................... $ 5,814 $13,585 $181,065 $152,427 $182,918 $264,246
======== ======= ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-70
<PAGE>

DOCUTECH, INC. AND DOCUTECH DATA SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

1. BACKGROUND:

DocuTech, Inc. ("DTI"), a service bureau, and DocuTech Data Systems, Inc.
("DDS"), a provider of open-architecture document scanning software products,
operate jointly as DocuTech ("DocuTech") in Lincoln, Nebraska. DTI provides
document microfilming and imaging services. DDS markets its DocuROM, FileTRAX
and other scanning and electronic image management software nationally to both
end users and service bureaus. DDS presently has more than 70 service bureaus
acting as value-added resellers ("VARs") for its software products.

In September 1997, DDS and its stockholders entered into a merger agreement
with ImageMax, Inc. (ImageMax) and DTI and its stockholders entered into a net
asset acquisition agreement with ImageMax which would both close upon the
consummation of the initial public offering of the common stock of ImageMax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Statements

The combined financial statements as of September 30, 1997 and for the nine
months ended September 30, 1996 and 1997 are unaudited and, in the opinion of
the management of DocuTech, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the financial
position and results of operations for those interim periods. The results of
operations for the nine months ended September 30, 1997 are not necessarily
indicative of the results to be expected for any other interim period or the
entire year.

Basis of Presentation

The combined financial statements include the accounts of DTI and DDS, both
of which are controlled by the same majority stockholder. The financial
statements reflect the elimination of all significant intercompany accounts and
transactions.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories at December 31, 1996 consist of scanning equipment which was
sold to a customer in March 1997.

Property and Equipment

Property and equipment are recorded at cost. Additions and improvements are
capitalized and repairs and maintenance are charged to expenses as incurred.
Property and equipment capitalized under capital leases are recorded at the
lesser of the present value of the minimum lease payments or the fair market
value of the property. Depreciation is provided using the straight-line method
over the estimated useful lives of the related assets or the lease term,
whichever is shorter.

Software Development Costs

In accordance with Statement of Financial Accounting Standards (SFAS) No.
86, "Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed," DocuTech capitalizes certain costs incurred to internally
develop software which is licensed to customers. Capitalization of such software
development costs begins upon the establishment of technological feasibility
(typically

F-71
<PAGE>

DOCUTECH, INC. AND DOCUTECH DATA SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
determined to be upon completion of a working model) and concludes when the
product is available for general release. For the years ended December 31, 1995
and 1996, and the nine months ended September 30, 1997, such costs were
immaterial. Costs incurred prior to the establishment of technological
feasibility are charged to product development expense as incurred.

Revenue Recognition

Service revenue includes document microfilming and imaging services.
Service revenue is recognized as the services are performed. Product revenue is
recognized when the products are shipped to customers.

Software revenue includes software licensing fees, consulting,
implementation, training and maintenance. Depending on contract terms and
conditions, software license fees are recognized upon delivery of the product if
no significant vendor obligations remain and collection of the resulting
receivable is deemed probable. DocuTech's software licensing agreements provide
for customer support (typically 90 days) as an accommodation to purchasers of
its products. The portion of the license fee associated with customer support is
unbundled from the license fee and is recognized ratably over the warranty
period as maintenance revenue.

Consulting, implementation and training revenues are recognized as the
services are performed. Maintenance revenues are recognized ratably over the
terms of the maintenance agreements. Deferred revenue represents billed software
maintenance for future periods.

Income Taxes

DocuTech has elected to be taxed under Subchapter S of the Internal Revenue
Code, and, accordingly, the taxable income of the Company is included in the
stockholders' individual tax returns.

DocuTech reports certain income and expense items for income tax purposes
on a different basis than that reflected in the accompanying combined financial
statements. The primary timing differences are due to revenue and accruals not
currently reflected as income or deductible for tax purposes, respectively. The
cumulative amount of these differences at June 30, 1997 was approximately
$97,000. If the S Corporation status were terminated, then a deferred income tax
asset related to these cumulative differences would need to be recorded.

For informational purposes, given the pending sale of the business, the
accompanying combined statements of operations include an unaudited pro forma
adjustment for income taxes which would have been recorded if DocuTech had not
been an S Corporation, based on the tax laws in effect during the respective
periods. The differences between the federal statutory income tax rate and the
pro forma income tax rate primarily relates to state income taxes and expenses
not deductible for tax purposes.

Supplemental Cash Flow Information

For the years ended December 31, 1994, 1995 and 1996, for the six months
ended June 30, 1997 and for the nine months ended September 30, 1996 and 1997,
DocuTech paid interest of $4,013, $12,525, $15,085, $2,694, $13,358, and $3,267
respectively. Capital lease obligations of $36,000, $25,022, $17,700, $0,
$17,700 and $0 were incurred on equipment leases entered into in 1994, 1995,
1996, the six months ended June 30, 1997 and the nine months ended September 30,
1996 and 1997, respectively.

F-72
<PAGE>

DOCUTECH, INC. AND DOCUTECH DATA SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

Cash, accounts receivable, accounts payable and accrued expenses are
reflected in the combined financial statements at fair value due to their
short-term nature. The carrying amount of long-term debt approximates fair value
on the balance sheet dates.

Long-Lived Assets

DocuTech follows SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of." Accordingly, in the event
that facts and circumstances indicate that property and equipment, and
intangible or other assets, may be impaired, an evaluation of recoverability
would be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the assets is compared to the assets'
carrying amount to determine if a write-down to market value or discounted cash
flow value is necessary.

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED DECEMBER 31,
USEFUL LIVES ------------------- JUNE 30, SEPTEMBER 30,
(YEARS) 1995 1996 1997 1997
------------ -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Scanning and filming
equipment............. 5-7 $121,820 $152,606 $159,614 $159,614
Furniture and office
equipment............. 7 964 6,713 6,713 6,713
Computers and related
equipment............. 5 30,689 42,879 48,995 55,485
Vehicles................. 5 3,000 -- -- 4,800
-------- -------- -------- --------
156,473 202,198 215,322 226,612
Less- Accumulated
depreciation.......... (55,011) (83,903) (101,473) (111,499)
-------- -------- -------- --------
$101,462 $118,295 $113,849 $115,113
======== ======== ======== ========
</TABLE>

Depreciation expense for the years ended December 31, 1994, 1995 and 1996,
for the six months ended June 30, 1997 and for the nine months ended September
30, 1996 and 1997, was $11,806, $24,430, $31,474, $17,570, $23,728 and $27,596,
respectively. As of December 31, 1995 and 1996, June 30, 1997 and September 30,
1997, DocuTech had $31,844, $22,573, $15,251 and $11,590, respectively, in
property, net of accumulated amortization, financed under capital leases.

F-73
<PAGE>

DOCUTECH, INC. AND DOCUTECH DATA SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

4. ACCRUED EXPENSES:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30, SEPTEMBER 30,
1995 1996 1997 1997
------- ------- -------- -------------
<S> <C> <C> <C> <C>
Accrued payroll and commissions...... $22,128 $24,573 $ 71,555 $ 34,848
Accrued professional fees............ 6,000 12,000 15,000 15,000
Accrued severance.................... -- -- -- 33,388
Other................................ 9,594 16,406 17,768 11,757
------- ------- -------- --------
$37,722 $52,979 $104,323 $ 94,993
======= ======= ======== ========
</TABLE>

5. LINE OF CREDIT:

DocuTech has a line of credit with a bank. The line of credit provides for
a maximum borrowing of 70% the Company's accounts receivable which is computed
at the end of each calendar quarter. The line of credit bears interest at 9.25%
per year. The line is secured by all of DocuTech's assets and is personally
guaranteed by the majority stockholder. The highest outstanding balance was
$40,000 and $37,000 during 1995 and 1996, respectively. The average outstanding
balance was $38,000 and $13,750 during 1995 and 1996, respectively. The line was
not used during the nine months ended September 30, 1997.

6. LONG-TERM DEBT:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30, SEPTEMBER 30,
1995 1996 1997 1997
------- ------- -------- -------------
<S> <C> <C> <C> <C>
Term loan payable to a bank in monthly
installments of $801 including
interest at 9.5%, through May
1997............................... $16,708 $ 7,806 $ -- $ --
Term loan payable to a bank in two
semi-annual installments of
$15,000, plus interest at 9.5%,
through October 1996............... 30,000 -- -- --
Obligations under capital leases (see
Note 7)............................ 43,275 26,312 15,225 12,030
------- ------- ------- -------
89,983 34,118 15,225 12,030
Less- Current portion................. (69,758) (25,015) (10,184) (8,487)
------- ------- ------- -------
$20,225 $ 9,103 $ 5,041 $ 3,543
======= ======= ======= =======
</TABLE>

7. COMMITMENTS:

DocuTech leases vehicles and office space under noncancelable operating
leases. Rent expense for all operating leases for the years ended December 31,
1994, 1995 and 1996, for the six months ended June 30, 1997 and for the nine
months ended September 30, 1996 and 1997 was $50,472, $72,869, $75,177, $65,076,
$65,680 and $91,739, respectively. DocuTech also finances equipment purchases
through capital leases.

F-74
<PAGE>

DOCUTECH, INC. AND DOCUTECH DATA SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

7. COMMITMENTS: -- (CONTINUED)

Future minimum lease payments under DocuTech's leases as of June 30, 1997
are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1997................................................. $ 7,241 $ 43,849
1998................................................. 9,079 26,732
1999................................................. 1,548 --
------- --------
17,868 $ 70,581
========
Less-Amount representing interest.................... (2,643)
-------
Present value of future minimum principal lease
payments........................................... 15,225
Less-Current portion................................. (10,184)
-------
$ 5,041
=======
</TABLE>

8. RELATED-PARTY TRANSACTIONS:

During the year ended December 31, 1995 and the nine months ended September
30, 1996, DocuTech advanced $30,609 and $3,953, respectively to the sole
stockholder of DTI and his wife. These advances totalling $34,562 were declared
a dividend in December 1996.

In July 1997, DocuTech agreed to a severance arrangement with an employee
who is also a 10% stockholder of DDS. DocuTech agreed to a severance payment of
approximately $40,000, payable in five equal monthly installments, beginning on
August 30, 1997. DocuTech recognized the $40,000 as an expense in third quarter
of 1997. The unpaid portion is included in accrued expenses in the accompanying
September 30, 1997 combined balance sheet.

F-75
<PAGE>

DOCUTECH, INC. AND DOCUTECH DATA SYSTEMS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

9. SEGMENT DATA:

DocuTech operates in two business segments. The following table presents
information about DocuTech's operations by segment:

<TABLE>
<CAPTION>
SIX
MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------------- JUNE 30,
1994 1995 1996 1997
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Service Bureau....................................... $599,793 $ 853,786 $1,248,631 $ 580,248
Software Products.................................... -- 219,198 1,073,852 826,447
-------- ---------- ---------- ----------
$599,793 $1,072,984 $2,322,483 $1,406,695
======== ========== ========== ==========
Net Income (Loss):
Service Bureau....................................... $ 8,429 $ 86,184 $ 415,709 $ 206,781
Software Products.................................... -- (5,073) 30,272 259,836
-------- ---------- ---------- ----------
$ 8,429 $ 81,111 $ 445,981 $ 466,617
======== ========== ========== ==========
Identifiable Assets:
Service Bureau....................................... $ -- $ 220,511 $ 354,779 $ 282,978
Software Products.................................... -- 23,652 211,856 523,592
-------- ---------- ---------- ----------
$ -- $ 244,163 $ 566,635 $ 806,570
======== ========== ========== ==========
Property and Equipment Additions (including capital lease
additions):
Service Bureau....................................... $ 58,317 $ 39,033 $ 37,224 $ 5,978
Software Products.................................... -- 2,886 11,501 7,146
-------- ---------- ---------- ----------
$ 58,317 $ 41,919 $ 48,725 $ 13,124
======== ========== ========== ==========
Depreciation Expense:
Service Bureau....................................... $ 11,806 $ 24,142 $ 29,966 $ 15,994
Software Products.................................... -- 288 1,508 1,576
-------- ---------- ---------- ----------
$ 11,806 $ 24,430 $ 31,474 $ 17,570
======== ========== ========== ==========
</TABLE>

F-76

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Image & Information Solutions, Inc.:

We have audited the accompanying consolidated balance sheets of Image &
Information Solutions, Inc. (a Louisiana corporation) as of October 31, 1995 and
1996 and July 31, 1997 and the related consolidated statements of operations,
stockholder's equity and cash flows for each of the three years in the period
ended October 31, 1996 and for the nine months ended July 31, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Image & Information
Solutions, Inc. as of October 31, 1995 and 1996 and July 31, 1997 and the
results of their operations and their cash flows for each of the three years in
the period ended October 31, 1996 and for the nine months ended July 31, 1997 in
conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Jackson, Mississippi,
October 10, 1997.

F-77

<PAGE>

IMAGE & INFORMATION SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
OCTOBER 31,
----------------------- JULY 31,
1995 1996 1997
ASSETS ---------- ---------- ----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents....................... $1,530,159 $1,320,832 $1,252,026
Certificates of deposit......................... 119,557 127,352 131,073
Accounts receivable............................. 368,442 337,243 468,043
Inventory....................................... 436,208 399,708 453,338
---------- ---------- ----------
Total current assets...................... 2,454,366 2,185,135 2,304,480
---------- ---------- ----------
PROPERTY AND EQUIPMENT, net....................... 733,436 725,860 719,256
RECEIVABLE FROM STOCKHOLDER....................... 89,080 119,080 139,330
---------- ---------- ----------
$3,276,882 $3,030,075 $3,163,066
========== ========== ==========
LIABILITIES AND
STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt............... $ 60,286 $ 77,105 $ 81,446
Accounts payable................................ 258,338 190,950 129,514
Accrued expenses................................ 216,040 155,290 191,675
Taxes payable................................... 667,844 648,176 708,847
---------- ---------- ----------
Total current liabilities................. 1,202,508 1,071,521 1,111,482
---------- ---------- ----------
LONG-TERM DEBT, net of current portion............ 474,329 426,582 363,211
---------- ---------- ----------
DEFERRED TAXES PAYABLE............................ 6,176 2,761 2,761
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES
(Notes 5 and 6)
STOCKHOLDER'S EQUITY:
Common stock, no par value, stated value $3.33
per share, 25,000 shares authorized, 300
shares issued................................ 1,000 1,000 31,000
Treasury stock, 200 shares, at cost............. (68,682) (68,682) (68,682)
Retained earnings............................... 1,661,551 1,596,893 1,723,294
---------- ---------- ----------
Total stockholders' equity................ 1,593,869 1,529,211 1,685,612
---------- ---------- ----------
$3,276,882 $3,030,075 $3,163,066
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-78

<PAGE>

IMAGE & INFORMATION SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED OCTOBER 31, JULY 31,
------------------------------------ ------------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Services................ $2,292,478 $2,302,910 $2,383,522 $1,839,345 $2,014,104
Products................ 1,345,227 1,710,397 1,575,118 1,298,135 1,316,370
---------- ---------- ---------- ---------- ----------
3,637,705 4,013,307 3,958,640 3,137,480 3,330,474
---------- ---------- ---------- ---------- ----------
COST OF REVENUES:
Services................ 724,157 917,331 1,022,868 721,310 767,154
Products................ 1,129,297 1,302,406 1,228,915 1,024,455 965,719
Depreciation............ 158,693 154,715 156,675 120,124 126,585
---------- ---------- ---------- ---------- ----------
2,012,147 2,374,452 2,408,458 1,865,889 1,859,458
---------- ---------- ---------- ---------- ----------
Gross profit......... 1,625,558 1,638,855 1,550,182 1,271,591 1,471,016
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES................ 1,327,397 1,264,394 1,672,745 1,084,511 1,233,961
---------- ---------- ---------- ---------- ----------
Operating income
(loss)............ 298,161 374,461 (122,563) 187,080 237,055
INTEREST EXPENSE.......... 97,326 88,815 95,101 72,305 75,126
INTEREST INCOME........... (52,184) (97,611) (93,221) (65,716) (60,333)
---------- ---------- ---------- ---------- ----------
Income (loss) before
income taxes...... 253,019 383,257 (124,443) 180,491 222,262
INCOME TAXES.............. 101,667 143,725 (59,785) 68,587 95,861
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS)......... $ 151,352 $ 239,532 $ (64,658) $ 111,904 $ 126,401
========== ========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-79

<PAGE>

IMAGE & INFORMATION SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
COMMON STOCK TOTAL
---------------- RETAINED TREASURY STOCKHOLDER'S
SHARES AMOUNT EARNINGS STOCK EQUITY
------ ------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 1, 1993........... 300 $ 1,000 $1,270,667 $(68,682) $1,202,985

Net income........................ -- -- 151,352 -- 151,352
----- ------- ---------- -------- ----------

BALANCE, OCTOBER 31, 1994........... 300 1,000 1,422,019 (68,682) 1,354,337

Net income........................ -- -- 239,532 -- 239,532
----- ------- ---------- -------- ----------

BALANCE, OCTOBER 31, 1995........... 300 1,000 1,661,551 (68,682) 1,593,869

Net loss.......................... -- -- (64,658) -- (64,658)
----- ------- ---------- -------- ----------

BALANCE, OCTOBER 31, 1996........... 300 1,000 1,596,893 (68,682) 1,529,211

Rent expense capital contribution
(Note 8)....................... -- 30,000 -- -- 30,000

Net income........................ -- -- 126,401 -- 126,401
----- ------- ---------- -------- ----------

BALANCE, JULY 31, 1997.............. 300 $31,000 $1,723,294 $(68,682) $1,685,612
===== ======= ========== ======== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-80

<PAGE>

IMAGE & INFORMATION SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED OCTOBER 31, JULY 31,
------------------------------------ ------------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................ $ 151,352 $ 239,532 $ (64,658) $ 111,904 $ 126,401
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities-
Depreciation......................... 158,693 154,715 156,675 120,124 126,585
Provision for loss on accounts
receivable........................ 71,191 59,798 105,491 79,118 25,000
Provision for deferred income
taxes............................. (38,754) (3,959) (3,415) -- --
Rent expense capital contribution.... -- -- -- -- 30,000
Change in operating assets and
liabilities-
Accounts receivable............... (44,520) (110,645) (74,292) (116,727) (155,800)
Inventories....................... 15,081 (56,826) 36,500 167,174 (52,485)
Accounts payable.................. 129,479 (22,537) (67,388) (118,885) (61,436)
Accrued expenses.................. 112,822 (1,234) (60,750) (46,532) 36,385
Taxes payable..................... 162,688 173,333 (19,668) 92,055 60,671
Net changes in other assets and
liabilities..................... -- (6,351) (7,795) (5,160) (4,866)
---------- ---------- ---------- ---------- ----------
Net cash provided by operating
activities.................... 718,032 425,826 700 283,071 130,455
---------- ---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increases in receivables from
stockholder............................ (30,298) (29,399) (30,000) (22,500) (20,250)
Purchases of property and equipment...... (162,501) (199,170) (149,099) (87,478) (119,981)
---------- ---------- ---------- ---------- ----------
Net cash used in investing
activities.................... (192,799) (228,569) (179,099) (109,978) (140,231)
---------- ---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt............. 566,169 14,311 36,376 36,376 --
Principal payments on long-term debt..... (760,584) (47,576) (67,304) (48,408) (59,030)
---------- ---------- ---------- ---------- ----------
Net cash used in financing
activities.................... (194,415) (33,265) (30,928) (12,032) (59,030)
---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.............................. 330,818 163,992 (209,327) 161,061 (68,806)
CASH AND CASH EQUIVALENTS, beginning of
period................................... 1,035,349 1,366,167 1,530,159 1,530,159 1,320,832
---------- ---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period... $1,366,167 $1,530,159 $1,320,832 $1,691,220 $1,252,026
========== ========== ========== ========== ==========
SUPPLEMENTAL DATA:
Cash paid for-
Income taxes........................... $ 9,133 $ 18,924 $ 17,456 $ 12,986 $ 75,199
========== ========== ========== ========== ==========
Interest............................... $ 54,536 $ 39,650 $ 36,545 $ 28,655 $ 24,653
========== ========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-81

<PAGE>

IMAGE & INFORMATION SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION FOR THE NINE MONTHS ENDED JULY 31, 1996 IS UNAUDITED.)

1. BACKGROUND:

Image & Information Solutions, Inc. (formerly Microfilm Supply, Inc.)
("I(2) Solutions") was incorporated in Louisiana on October 8, 1974. I(2)
Solutions provides data and information conversion services ranging from optical
disk scanning/imaging to microfilm processing. I(2) Solutions is also an
authorized Minolta and Kodak dealer, selling various microfilm and microfiche
readers as well as other related equipment.

During September 1997, I(2) Solutions and its stockholder entered into a
merger agreement with ImageMax, Inc. ("ImageMax") which will close upon the
consummation of the initial public offering of the common stock of ImageMax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Consolidated Financial Statements

The consolidated financial statements for the nine months ended July 31,
1996 are unaudited and, in the opinion of management of I(2) Solutions, include
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of the results for those interim periods. The results of
operations for the nine months ended July 31, 1997 are not necessarily
indicative of the results to be expected for the full year.

Principles of Consolidation

The consolidated financial statements include the results of I(2) Solutions
and its subsidiary. All intercompany transactions have been eliminated from the
accompanying consolidated financial statements.

Cash and Cash Equivalents

I(2) Solutions considers highly liquid investments with original maturities
of three months or less to be cash equivalents. Cash equivalents are carried at
cost, which approximates market value.

Accounts Receivable

Accounts receivable are stated net of an allowance for uncollectible
accounts of $25,000 at July 31, 1997.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories primarily represent microfiche viewing and imaging equipment
and production and related supplies.

Property and Equipment

Property and equipment are recorded at cost. Additions and improvements are
capitalized and repairs and maintenance are charged to expenses as incurred.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. Leasehold improvements are depreciated over the
lesser of their useful life or the term of the lease.

F-82

<PAGE>

IMAGE & INFORMATION SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED JULY 31, 1996 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)

Revenue Recognition

Revenue is recognized when the services are rendered or the products
shipped to customers.

Income Taxes

I(2) Solutions accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax basis of assets and
liabilities and are measured using enacted tax rates that are expected to be in
effect when the differences reverse. See Note 6.

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

Cash, accounts receivable, accounts payable and accrued expenses are
reflected in the consolidated financial statements at fair value due to the
short-term nature of those instruments. The carrying amount of long-term debt
approximates fair value on the balance sheet dates.

Long-Lived Assets

I(2) Solutions follows SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed of." Accordingly, in
the event that facts and circumstances indicate that property and equipment, and
intangible or other assets, may be impaired, an evaluation of recoverability
would be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the assets is compared to the assets'
carrying amount to determine if a write-down to market value or discounted cash
flow value is necessary.

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED OCTOBER 31,
USEFUL LIVES ----------------------- JULY 31,
YEARS 1995 1996 1997
------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Scanning and filming equipment.......... 5-7 $1,159,060 $1,270,910 $1,388,074
Furniture and office equipment.......... 5-7 81,116 81,116 82,434
Autos................................... 5 163,590 177,981 159,041
Building and building improvements...... 30 644,847 661,061 661,061
Land.................................... 124,809 124,809 126,809
---------- ---------- ----------
2,173,422 2,315,877 2,417,419
Less- Accumulated depreciation.......... (1,439,986) (1,590,017) (1,698,163)
---------- ---------- ----------
$ 733,436 $ 725,860 $ 719,256
========== ========== ==========
</TABLE>

F-83

<PAGE>

IMAGE & INFORMATION SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED JULY 31, 1996 IS UNAUDITED.)

4. LONG-TERM DEBT:

OCTOBER 31,
------------------- JULY 31,
1995 1996 1997
-------- -------- --------
Term loan payable to a bank in monthly
installments of $7,515 including interest at
7.97%, through April 2002, secured by real
estate...................................... $457,282 $402,157 $357,661
Term loan payable to a bank in monthly
installments of $490 including interest at
7.75% through February 1999, secured by
automobiles................................. -- 12,111 8,303
Term loan payable to a bank in monthly
installments of $645 including interest at
7.75% through February 1999, secured by
automobiles................................. -- 15,948 10,935
Term loan payable to a bank in monthly
installments of $455 including interest at
8.9% through July 1998, secured by
automobiles................................. 12,907 8,427 4,793
Note payable to former stockholder in varying
monthly installments of $417 to $883 through
March 2009 without interest, interest
imputed on present value at 8%.............. 64,426 65,044 62,965
-------- -------- --------
534,615 503,687 444,657
Less- Current portion......................... (60,286) (77,105) (81,446)
-------- -------- --------
$474,329 $426,582 $363,211
======== ======== ========

As of October 31, 1996, maturities of long-term debt are as follows:

YEAR ENDING OCTOBER 31,
- -----------------------
1997.................................... $ 77,105
1998.................................... 86,736
1999.................................... 80,784
2000.................................... 83,126
2001.................................... 90,000
Thereafter.............................. 85,936
--------
$503,687
========

5. COMMITMENTS AND CONTINGENCIES:

I(2) Solutions leases certain office space (See Note 8) and certain
equipment under noncancelable operating leases. Rent expense for the years ended
October 31, 1994, 1995 and 1996, was $90,245, $74,054 and $59,943, respectively.
Future minimum lease payments as of July 31, 1997 are as follows:

1997..................................... $13,081
1998..................................... 17,324
1999..................................... 3,872
-------
$34,277
=======

F-84

<PAGE>

IMAGE & INFORMATION SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED JULY 31, 1996 IS UNAUDITED.)

5. COMMITMENTS AND CONTINGENCIES: -- (CONTINUED)

I(2) Solutions is party to various claims and other matters arising in the
normal course of business. In the opinion of management, the outcome of these
matters will not have a material adverse effect on I(2) Solutions' financial
position or results of operations. See Note 6 regarding Income Taxes.

6. INCOME TAXES:

The components of the provision (benefit) for income taxes are as follows:

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------ JULY 31,
1994 1995 1996 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Current Provision (Benefit):
Federal............................. $123,207 $123,559 $(54,188) $81,482
State............................... 17,214 24,125 (2,182) 14,379
Deferred Provision (Benefit):
Federal............................. (32,941) (3,365) (2,903) --
State............................... (5,813) (594) (512) --
-------- -------- -------- -------
$101,667 $143,725 $(59,785) $95,861
======== ======== ======== =======
</TABLE>

The reconciliation of the statutory Federal income tax rate to I(2)
Solutions' effective income tax rate is as follows:

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------ JULY 31,
1994 1995 1996 1997
---- ---- ---- --------
<S> <C> <C> <C> <C>
Income tax rate................................... 34% 34% 34% 34%
State income taxes, net of federal tax benefit.... 4 4 4 4
Non deductible expense............................ 2 -- 10 5
-- -- -- --
40% 38% 48% 43%
== == == ==
</TABLE>

The tax effect of temporary differences as established in accordance with
SFAS No. 109 that give rise to deferred taxes are as follows:

OCTOBER 31,
------------------- JULY 31,
1995 1996 1997
-------- -------- --------
Gross deferred tax assets:
Accruals and reserves not currently
deductible............................... $ 51,905 $ 67,790 $ 67,790
Gross deferred tax liability:
Book/tax difference of accounts
receivable............................... (58,081) (70,551) (70,551)
-------- -------- --------
Net deferred tax liability:................. $ 6,176 $ 2,761 $ 2,761
======== ======== ========

I(2) Solutions did not have any valuation allowances against deferred tax
assets at July 31, 1997, as it believes it is more likely than not that the
deferred tax assets will be realized.

During 1997 I(2) Solutions filed amended Federal and state tax returns
which resulted in the payment of additional income taxes and interest
attributable to the year ended October 31, 1996 and certain prior years. The
accompanying consolidated financial statements reflect the income tax expense
and related interest attributable to the respective periods. As of October 31,
1995 and 1996 and July 31, 1997, income taxes payable included interest payable
of $87,000, $140,000, and $187,000, respectively. The accompanying consolidated
financial statements do not reflect any provision for

F-85

<PAGE>

IMAGE & INFORMATION SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED JULY 31, 1996 IS UNAUDITED.)

6. INCOME TAXES: -- (CONTINUED)

penalties or related interest that may be incurred as a result of these
additional tax payments. These taxes, interest and penalties could range from $0
to approximately $600,000.

7. EMPLOYEE INCENTIVE PLANS:

I(2) Solutions maintains a 401(k) Plan for benefit of its employees. Under
provisions of the Plan, I(2) Solutions matches 100% of employees' total
contributions to the Plan, subject to Internal Revenue Service limitations.
Total expense recorded by I(2) Solutions related to the Plan was $42,000,
$39,000 and $49,000 for the years ended October 31, 1994, 1995 and 1996.

During the fiscal year ended October 31, 1996 and the nine month period
ended July 31, 1997, I(2) Solutions paid discretionary bonuses to the
stockholder totaling approximately $419,000 in 1996 and $162,000 in 1997. These
bonuses were paid throughout 1996 and 1997, with the majority of payments
occurring in the fourth quarter of fiscal 1996 and the first quarter of fiscal
1997.

8. RELATED-PARTY TRANSACTIONS:

I(2) Solutions rents office space in Bossier City, Louisiana, from an
educational trust fund benefiting the stockholder's children. Rent payments to
the trust fund totaled $74,000, $71,000 and $42,000 for the years ended October
31, 1994, 1995 and 1996. I(2) Solutions also rents certain other space from the
stockholder's parents; rental payments pursuant to this agreement totaled
$12,000 for each of the years ended October 31, 1994, 1995 and 1996.

In February 1997 I(2) Solutions moved the documents imaging portion of its
operations to a newly constructed building adjacent to its then existing Monroe,
Louisiana facility. The newly constructed building is owned by the I(2)
Solutions stockholder. Through July 31, 1997 the stockholder has not charged
I(2) Solutions any rent. The fair value of the building rent of $30,000 was
recorded as an expense and a corresponding deemed capital contribution.

In 1993 I(2) Solutions entered into a split-dollar life insurance agreement
with the stockholder. Under the terms of agreement, I(2) Solutions paid premiums
on life insurance policies covering the stockholder and his father. These
premiums paid have been recorded as a receivable and are included in Receivable
from Stockholder in the accompanying consolidated financial statements. I(2)
Solutions maintains an assignment of the cash surrender value of the policies as
collateral for the premiums paid.

F-86

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Image Memory Systems, Inc.:

We have audited the accompanying balance sheets of Image Memory Systems,
Inc. (an Ohio corporation) as of November 30, 1995 and 1996 and August 31, 1997
and the related statements of operations, shareholder's equity and cash flows
for each of the three years in the period ended November 30, 1996 and the nine
months ended August 31, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Image Memory Systems, Inc.
as of November 30, 1995 and 1996 and August 31, 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
November 30, 1996 and the nine months ended August 31, 1997, in conformity with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
October 15, 1997

F-87

<PAGE>

IMAGE MEMORY SYSTEMS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
NOVEMBER 30,
------------------- AUGUST 31,
1995 1996 1997
ASSETS -------- -------- ----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash................................................ $ 656 $ 134 $ 41,881
Accounts receivable, net of reserves of $18,175,
$4,700 and $4,700................................ 549,189 322,960 392,384
Inventories......................................... 77,704 10,775 9,748
Deferred tax asset.................................. 2,170 21,394 21,394
Prepaid expenses and other.......................... 16,122 47,288 32,255
-------- -------- --------
Total current assets.......................... 645,841 402,551 497,662
PROPERTY AND EQUIPMENT, net........................... 233,849 167,287 123,142
OTHER ASSETS.......................................... 74,856 75,185 73,295
-------- -------- --------
$954,546 $645,023 $694,099
======== ======== ========
LIABILITIES AND
SHAREHOLDER'S EQUITY
CURRENT LIABILITIES:
Line of credit...................................... $ 40,000 $137,000 $ --
Current portion of long-term debt................... 331,233 107,290 89,289
Accounts payable.................................... 140,689 103,766 61,111
Distributions payable............................... -- -- 106,383
Accrued expenses and other.......................... 145,151 98,085 101,587
-------- -------- --------
Total current liabilities..................... 657,073 446,141 358,370
-------- -------- --------
LONG-TERM DEBT........................................ 72,381 161,042 107,738
-------- -------- --------
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDER'S EQUITY:
Common stock, no par value, 750 shares authorized,
100 shares issued and 33.5 shares outstanding.... 100,000 100,000 100,000
Retained earnings................................... 408,496 221,244 411,395
Treasury stock...................................... (283,404) (283,404) (283,404)
-------- -------- --------
Total shareholder's equity.................... 225,092 37,840 227,991
-------- -------- --------
$954,546 $645,023 $694,099
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-88

<PAGE>

IMAGE MEMORY SYSTEMS, INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED NOVEMBER 30, AUGUST 31,
------------------------------------ ------------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Services.................... $2,352,885 $2,532,476 $1,968,908 $1,488,953 $1,807,550
Products.................... 80,998 550,778 405,029 368,933 107,382
---------- ---------- ---------- ---------- ----------
2,433,883 3,083,254 2,373,937 1,857,886 1,914,932
---------- ---------- ---------- ---------- ----------
COST OF REVENUES:
Services.................... 1,563,701 1,826,755 1,659,297 1,231,501 1,069,123
Products.................... 72,264 431,319 240,863 238,496 66,444
Depreciation................ 140,639 112,406 95,349 64,566 52,428
---------- ---------- ---------- ---------- ----------
1,776,604 2,370,480 1,995,509 1,534,563 1,187,995
---------- ---------- ---------- ---------- ----------
Gross profit................ 657,279 712,774 378,428 323,323 726,937
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES..... 616,507 707,928 580,731 479,308 393,588
IMAGEMAX TRANSACTION COSTS.... -- -- -- -- 11,585
---------- ---------- ---------- ---------- ----------
Operating income (loss)..... 40,772 4,846 (202,303) (155,985) 321,764
INTEREST EXPENSE.............. 31,635 30,942 35,983 26,035 26,300
INTEREST INCOME............... (267) (1,871) (1,598) (404) (1,070)
---------- ---------- ---------- ---------- ----------
Income (loss) before income
taxes.................... 9,404 (24,225) (236,688) (181,616) 296,534
INCOME TAXES (BENEFIT)........ 2,424 (5,341) (49,436) (37,958) --
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS)............. $ 6,980 $ (18,884) $ (187,252) $ (143,658) $ 296,534
========== ========== ========== ========== ==========
PRO FORMA DATA
(UNAUDITED):
Historical net income....... $ 296,534
Pro forma income tax
expense.................. 115,506
----------
PRO FORMA NET INCOME........ $ 181,028
==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-89

<PAGE>

IMAGE MEMORY SYSTEMS, INC.
STATEMENTS OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
----------------- RETAINED TREASURY
SHARES AMOUNT EARNINGS STOCK TOTAL
------ -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 30, 1993........... 100 $100,000 $421,405 $(283,404) $ 238,001
Net income......................... -- -- 6,980 -- 6,980
--- -------- -------- --------- ---------
BALANCE, NOVEMBER 30, 1994........... 100 100,000 428,385 (283,404) 244,981
Net loss........................... -- -- (18,884) -- (18,884)
Dividends.......................... -- -- (1,005) -- (1,005)
--- -------- -------- --------- ---------
BALANCE, NOVEMBER 30, 1995........... 100 100,000 408,496 (283,404) 225,092
Net loss........................... -- -- (187,252) -- (187,252)
--- -------- -------- --------- ---------
BALANCE, NOVEMBER 30, 1996........... 100 100,000 221,244 (283,404) 37,840
Net income......................... -- -- 296,534 -- 296,534
Shareholder distribution........... -- -- (106,383) -- (106,383)
--- -------- -------- --------- ---------
BALANCE, AUGUST 31, 1997............. 100 $100,000 $411,395 $(283,404) $ 227,991
=== ======== ======== ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-90

<PAGE>

IMAGE MEMORY SYSTEMS, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED NOVEMBER 30, AUGUST 31,
------------------------------- ----------------------
1994 1995 1996 1996 1997
-------- -------- --------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).............................. $ 6,980 $(18,884) $(187,252) $(143,658) $296,534
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities-
Depreciation and amortization.............. 144,790 118,428 101,722 67,753 57,208
Deferred tax benefit....................... (16,448) (2,980) (21,502) (52,300) --
Gain on sale of assets..................... -- -- -- -- (18,895)
Changes in operating assets and
liabilities-
Accounts receivable..................... (162,099) (65,733) 226,229 170,967 (69,424)
Inventories............................. (10,504) (50,887) 66,929 64,227 1,027
Prepaid expenses and other.............. (38,382) (5,058) (37,868) (48,686) 12,143
Accounts payable........................ 58,636 33,574 (36,923) 16,424 (42,655)
Accrued expenses........................ 4,966 59,113 (44,788) (17,314) 3,502
-------- -------- --------- --------- --------
Net cash provided by (used in)
operating activities................ (12,061) 67,573 66,547 57,413 239,440
-------- -------- --------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............ (144,754) (84,648) (13,376) (10,124) (14,688)
Sale of property and equipment................. 19,250 -- -- -- 25,300
-------- -------- --------- --------- --------
Net cash provided by (used in)
investing activities................ (125,504) (84,648) (13,376) (10,124) 10,612
-------- -------- --------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from bank facilities.............. 137,293 17,840 -- -- --
Net payments on bank facilities................ -- -- (53,693) (35,490) (208,305)
Dividends to shareholder....................... -- (1,005) -- -- --
-------- -------- --------- --------- --------
Net cash provided by (used in)
financing activities................ 137,293 16,835 (53,693) (35,490) (208,305)
-------- -------- --------- --------- --------
NET INCREASE (DECREASE) IN CASH.................. (272) (240) (522) 11,799 41,747
CASH, BEGINNING OF PERIOD........................ 1,168 896 656 656 134
-------- -------- --------- --------- --------
CASH, END OF PERIOD.............................. $ 896 $ 656 $ 134 $ 12,455 $ 41,881
======== ======== ========= ========= ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-91

<PAGE>

IMAGE MEMORY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 1996 IS UNAUDITED.)

1. BACKGROUND:

Image Memory Systems, Inc. (IMS) is an Ohio corporation located in Dayton,
Ohio. IMS offers total conversion and document management solutions and services
through various methods of document imaging technology.

IMS and its shareholder intend to enter into a stock acquisition agreement
with ImageMax, Inc. ("ImageMax") which would close upon the consummation of the
initial public offering of the common stock of ImageMax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Information

The financial statements for the nine months ended August 31, 1996 are
unaudited and, in the opinion of management, include all adjustments (consisting
only of normal recurring adjustments) necessary for the fair presentation of the
results for those interim periods. The results of operations for the nine months
ended August 31, 1997 are not necessarily indicative of the results to be
expected for the full fiscal year.

Inventories

Inventories represent materials used in the filming and scanning process
and are stated at the lower of cost (first-in, first-out) or market.

Property and Equipment

Property and equipment are recorded at cost. Additions and improvements are
capitalized and repairs and maintenance are charged to expense as incurred.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets. Leasehold improvements are depreciated over the
lesser of their useful life or the term of the lease.

Revenue Recognition

Revenue is recognized when the related services are rendered or the
products are shipped to IMS's customers. For the nine months ended August 31,
1997, IMS had one customer that accounted for approximately 11% of revenues.

Income Taxes

IMS accounts for income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Under SFAS
No. 109, deferred income tax assets and liabilities are determined based on
differences between the financial reporting and income tax basis of assets and
liabilities measured using enacted income tax rates and laws that are expected
to be in effect when the differences reverse.

Effective December 1, 1996, IMS elected to be taxed under Subchapter S of
the Internal Revenue Code. On August 22, 1997 IMS elected to reverse the
Subchapter S election and be taxed as a C Corporation as of that date.
Accordingly, the taxable income and loss of IMS will be included in the
shareholder's individual tax return for the period from December 1, 1996 to
August 22, 1997. Income tax expense for the period from August 23, 1997 to
August 31, 1997 was immaterial.

F-92

<PAGE>

IMAGE MEMORY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 1996 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)

Supplemental Cash Flow Information

IMS paid cash for interest for the years ended November 30, 1994, 1995 and
1996, and the nine months ended August 31, 1996 and 1997, of $31,263, $30,266,
$37,482, $26,035 and $26,300, respectively. IMS paid cash for income taxes for
the years ended November 30, 1994, 1995 and 1996, and the nine months ended
August 31, 1996 and 1997, of $3,663, $5,325, $2,596, $2,596 and $1,715,
respectively. For the years ended November 30, 1994, 1995 and 1996, and the nine
months ended August 31, 1996 and 1997, IMS financed equipment purchases with
capital leases in the amount of $0, $6,850, $15,411, $15,411 and $0,
respectively. During the nine months ended August 31, 1997, IMS made a
distribution to the shareholder of $106,383 for taxes (See Note 6).

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

Long-Lived Assets

IMS follows SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of." Accordingly, in the event
that facts and circumstances indicate that property and equipment, and
intangible or other assets, may be impaired, an evaluation of recoverability
would be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the assets is compared to the assets'
carrying amount to determine if a write-down to market value or discounted cash
flow value is necessary.

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED NOVEMBER 30,
USEFUL LIVES --------------------- AUGUST 31,
(YEARS) 1995 1996 1997
------------ --------- --------- ----------
<S> <C> <C> <C> <C>
Scanning and filming equipment............. 5-7 $ 774,608 $ 798,189 $785,079
Furniture and office equipment............. 5-7 74,623 79,829 79,829
Leasehold improvements..................... 15 42,713 42,713 42,713
Vehicles................................... 5 17,972 17,972 5,300
--------- --------- --------
909,916 938,703 912,921
Less- Accumulated depreciation............. (676,067) (771,416) 789,779
--------- --------- --------
$ 233,849 $ 167,287 $123,142
========= ========= ========
</TABLE>

As of November 30, 1995 and 1996, and August 31, 1997, IMS had property net
of accumulated depreciation in the amount of $6,850, $17,810 and $14,402,
respectively, financed under capital leases.

F-93

<PAGE>

IMAGE MEMORY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 1996 IS UNAUDITED.)

4. DEBT:

Line of Credit

IMS had a line of credit in fiscal 1995 and 1996 which provided for maximum
borrowings of $150,000 and $200,000, respectively, at the bank's prime rate plus
.75%. In February 1997, IMS entered into a new line of credit agreement which
provides for maximum borrowings of $250,000 through May 1998 at the bank's prime
rate plus .75%. The highest outstanding balance was $150,000, $200,000 and
$205,000 during fiscal 1995 and 1996 and the nine months ended August 31, 1997,
respectively. Average borrowings under the line were $76,000, $116,000 and
$143,000 during fiscal 1995 and 1996 and the nine months ended August 31, 1997,
respectively. The weighted average interest rate on the line of credit was 9.02%
during fiscal 1995 and 1996 and 9.25% for the nine months ended August 31, 1997.

Long-Term Debt

<TABLE>
<CAPTION>
NOVEMBER 30,
------------------- AUGUST 31,
1995 1996 1997
-------- -------- ----------
<S> <C> <C> <C>
Note payable to bank, payable in monthly installments
of $8,000 plus interest at the bank's prime rate
plus 1% (9.75% and 9.25% at November 30, 1995 and
1996, respectively), note was refinanced in February
1997 (see below).................................... 136,645 210,459 --
Note payable to bank, payable in monthly installments
of $1,250 including interest at the bank's prime
rate plus 1% (9.75% at November 30, 1995) through
June 1996........................................... 7,500 -- --
Note payable to bank, payable in full plus interest at
the bank's prime rate plus 1% (9.75% at November 30,
1995) in January 1996............................... 200,000 -- --
Term note payable to bank, payable in monthly
installments of $5,333 plus interest at the bank's
prime rate plus .75% (9.25% at August 31, 1997)
through February 2000............................... -- -- 165,334
Note payable to lender, payable in monthly
installments of $1,355 including interest at 4%
through June 1998................................... 39,838 24,902 13,304
Other................................................. 19,631 32,971 18,389
-------- -------- --------
403,614 268,332 197,027
Less- Current portion................................. (331,233) (107,290) (89,289)
-------- -------- --------
$ 72,381 $161,042 $107,738
======== ======== ========
</TABLE>

In February 1997, IMS entered into a $192,000 term note due to a new bank.
Proceeds from the increased line and the term note were used to refinance the
existing notes payable with the remainder to be used for working capital
purposes.

Based on the terms of the new note payable, maturities on long term debt as
of November 30, 1996, are $107,290, $78,074, $67,766 and $15,202 in fiscal 1997,
1998, 1999 and 2000, respectively.

F-94

<PAGE>

IMAGE MEMORY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 1996 IS UNAUDITED.)

5. COMMITMENTS AND CONTINGENCIES:

IMS leases office space from its sole shareholder under a noncancelable
operating lease. Rent expense for all operating leases for the years ended
November 30, 1994, 1995 and 1996, and the nine months ended August 31, 1997 was
$86,400, $86,400, $86,400 and $66,430, respectively. Future minimum lease
payments under noncancelable operating leases are as follows:

1997...................................... $ 89,008
1998...................................... 90,312
1999...................................... 87,704
2000...................................... 86,400
2001...................................... 86,400
--------
$439,824
========

IMS is party to various claims and other matters arising in the normal
course of business. In the opinion of management, the outcome of these matters
will not have a material adverse effect on IMS's financial position or results
of operations.

6. INCOME TAXES:

The components of the provision (benefit) for income taxes are as follows:

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------
1994 1995 1996
------- ------- --------
<S> <C> <C> <C>
Current:
Federal........................................ $ 3,850 $(1,510) $(29,561)
State.......................................... 2,171 (852) (16,672)
------- ------- --------
Total....................................... 6,021 (2,362) (46,233)
------- ------- --------

Deferred:
Federal........................................ (2,300) (1,905) (2,048)
State.......................................... (1,297) (1,074) (1,155)
------- ------- --------
Total....................................... (3,597) (2,979) (3,203)
------- ------- --------
$ 2,424 $(5,341) $(49,436)
======= ======= ========
</TABLE>

The reconciliation of the statutory federal income tax rate to IMS's
effective income tax rate is as follows:

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
---------------------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Income tax rate..................................... 34.0% (34.0)% (34.0)%
Reduction due to graduated federal tax rates........ (19.0) 19.0 19.0
State income taxes, net of federal tax benefit...... 6.6 (6.6) (6.6)
Nondeductible expenses.............................. 4.2 (0.4) 0.7
----- ----- -----
25.8% (22.0)% (20.9)%
===== ===== =====
</TABLE>

F-95

<PAGE>

IMAGE MEMORY SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED AUGUST 31, 1996 IS UNAUDITED.)

6. INCOME TAXES: -- (CONTINUED)
The tax effect of temporary differences as established in accordance with
SFAS No. 109 that give rise to deferred taxes are as follows:

NOVEMBER 30,
-------------------- AUGUST 31,
1995 1996 1997
------- ------- ----------
Gross deferred tax assets:
Accruals and reserves not currently
deductible....................... $ 2,170 $ 3,094 $ 3,094
Net operating loss carryforwards.... -- 18,300 18,300
------- ------- -------
2,170 21,394 21,394
Gross deferred tax liability:
Other............................... (3,142) (864) (864)
------- ------- -------
$ (972) $20,530 $20,530
======= ======= =======

IMS did not have any valuation allowances against deferred tax assets at
November 30, 1995 and 1996 and August 31, 1997, as it believes it is more likely
than not that the deferred tax assets will be realized.

7. PROFIT SHARING AND EMPLOYEE BENEFIT PLAN:

IMS has a profit sharing plan that covers all qualified employees and
provides for discretionary profit sharing contributions by IMS. Contributions
for the years ended November 30, 1994, 1995 and 1996, and the nine months ended
August 31, 1996 and 1997, were $7,500, $20,000, $0, $0 and $15,000,
respectively.

In addition, IMS sponsors a 401(k) plan that covers all eligible full-time
employees. In fiscal 1994 and 1995, IMS made matching contributions of 30% of
participant pre-tax contributions, up to a maximum of $300. During the first
eight months of fiscal year 1996, IMS made matching contributions of 50% of
participants' pre-tax contributions up to a maximum of $500. Subsequent to July
1996, IMS discontinued matching contributions to the plan. IMS's matching
contributions for the years ended November 30, 1994, 1995 and 1996, and the nine
months ended August 31, 1996 and 1997, were $7,342, $8,110, $12,281, $12,281 and
$0, respectively.

8. RELATED-PARTY TRANSACTIONS:

The sole shareholder of IMS periodically makes advances to IMS in the form
of interest bearing notes. Included in the accompanying balance sheets are notes
payable to the shareholder in the amount of $930, $11,847 and $3,032 at November
30, 1995 and 1996, and August 31, 1997, respectively.

9. SALE OF BUSINESS (UNAUDITED):

In September 1997, IMS and its shareholder entered into a definitive stock
acquisition agreement with ImageMax (see Note 1).

F-96

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To International Data Services of New York, Inc.:

We have audited the accompanying balance sheets of International Data Services
of New York, Inc. (a New York corporation) as of August 31, 1996 and 1997 and
the related statements of operations, shareholders' equity and cash flows for
each of the three years in the period ended August 31, 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.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of International Data Services of
New York, Inc. as of August 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
August 31, 1997 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
October 8, 1997

F-97

<PAGE>

INTERNATIONAL DATA SERVICES OF NEW YORK, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
AUGUST 31,
---------------------
1996 1997
-------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 36,079 $ 377,638
Accounts receivable, net of reserves of $18,337 and
$54,661................................................ 315,419 567,432
Deferred income taxes..................................... 5,295 223,641
Prepaid income taxes...................................... 7,080 --
-------- ----------
Total current assets................................... 363,873 1,168,711
PROPERTY AND EQUIPMENT, net............................... 58,326 63,777
OTHER ASSETS.............................................. 2,110 2,110
-------- ----------
$424,309 $1,234,598
======== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit............................................ $ 25,000 $ --
Accounts payable.......................................... 155,444 266,120
Accrued expenses.......................................... 29,978 30,000
Accrued compensation...................................... 55,175 622,070
Due to shareholders....................................... 31,641 --
Income taxes payable...................................... -- 195,554
-------- ----------
Total current liabilities.............................. 297,238 1,113,744
-------- ----------
DEFERRED INCOME TAXES....................................... 10,814 13,721
-------- ----------
COMMITMENTS (Note 5)
SHAREHOLDERS' EQUITY:
Common stock, no par value, 200 shares authorized, 100
shares issued and outstanding.......................... 10,000 10,000
Retained earnings......................................... 106,257 97,133
-------- ----------
Total shareholders' equity................................ 116,257 107,133
-------- ----------
$424,309 $1,234,598
======== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-98

<PAGE>

INTERNATIONAL DATA SERVICES OF NEW YORK, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED
AUGUST 31,
------------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES.......................................... $1,775,549 $1,203,083 $2,651,988
---------- ---------- ----------
COST OF REVENUES:
Cost of services................................ 997,874 809,424 1,745,119
Depreciation.................................... 11,044 13,847 17,831
---------- ---------- ----------
Total cost of revenues....................... 1,008,918 823,271 1,762,950
---------- ---------- ----------
Gross profit.............................. 766,631 379,812 889,038
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES...... 732,560 435,238 882,834
IMAGEMAX TRANSACTION COSTS........................ -- -- 27,000
---------- ---------- ----------
Operating income (loss)................... 34,071 (55,426) (20,796)
INTEREST EXPENSE.................................. 12,177 15,724 3,793
INTEREST INCOME................................... (3,756) (3,796) (2,660)
---------- ---------- ----------
Income (loss) before income taxes......... 25,650 (67,354) (21,929)
INCOME TAX PROVISION (BENEFIT).................... 6,027 -- (12,805)
---------- ---------- ----------
NET INCOME (LOSS)................................. $ 19,623 $ (67,354) $ (9,124)
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-99

<PAGE>

INTERNATIONAL DATA SERVICES OF NEW YORK, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
---------------- RETAINED TOTAL
SHARES AMOUNT EARNINGS EQUITY
------ ------- -------- --------
<S> <C> <C> <C> <C>
BALANCE, AUGUST 31, 1994......................... 100 $10,000 $153,988 $163,988

Net income..................................... -- -- 19,623 19,623
--- ------- -------- --------

BALANCE, AUGUST 31, 1995......................... 100 10,000 173,611 183,611

Net loss....................................... -- -- (67,354) (67,354)
--- ------- -------- --------

BALANCE, AUGUST 31, 1996......................... 100 10,000 106,257 116,257

Net loss....................................... -- -- (9,124) (9,124)
--- ------- -------- --------

BALANCE, AUGUST 31, 1997......................... 100 $10,000 $ 97,133 $107,133
=== ======= ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-100

<PAGE>

INTERNATIONAL DATA SERVICES OF NEW YORK, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED
AUGUST 31,
------------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ 19,623 $(67,354) $ (9,124)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities-
Depreciation........................................... 11,044 13,847 17,831
Provision for loss on accounts receivable.............. -- 18,439 37,810
Deferred income taxes.................................. (12,375) 54,035 (215,439)
Change in operating assets and liabilities-
Accounts receivable.................................. 103,231 56,762 (289,823)
Prepaid income taxes................................. -- (7,080) 7,080
Prepaid expenses and other........................... 13,459 3,633 --
Other assets......................................... 13,035 -- --
Accounts payable..................................... (51,235) 33,437 110,676
Accrued expenses..................................... 11,875 10,565 22
Accrued compensation................................. 81,424 (244,146) 566,895
Income taxes payable................................. 8,684 (57,348) 195,554
-------- -------- --------
Net cash provided by (used in) operating activities....... 198,765 (185,210) 421,482
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment....................... (17,752) (13,252) (23,282)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayments on) line of credit.............. -- 25,000 (25,000)
Net borrowings (repayments) of amounts due to
shareholders........................................... (28,000) 31,641 (31,641)
-------- -------- --------
Net cash provided by (used in) financing activities.... (28,000) 56,641 (56,641)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 153,013 (141,821) 341,559
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 24,887 177,900 36,079
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $177,900 $ 36,079 $377,638
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-101

<PAGE>

INTERNATIONAL DATA SERVICES OF NEW YORK, INC.
NOTES TO FINANCIAL STATEMENTS

1. BACKGROUND:

International Data Services of New York, Inc. ("IDS"), a New York
corporation, is a provider of offshore data entry services for the indexing of
microfilm and scanned documents, litigation support and other traditional data
entry services including addresses and full text. IDS maintains no production
facilities in the United States. The production work is subcontracted
principally to foreign companies located in Jamaica, India, Zimbabwe and the
Philippines. All IDS transactions are denominated in United States Dollars.

In September, 1997, IDS and its shareholders entered into a merger
agreement with ImageMax, Inc. ("ImageMax") which would close upon consummation
of the initial public offering of the common stock of ImageMax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Cash and Cash Equivalents

IDS considers highly liquid investments with original maturities of three
months or less to be cash equivalents. Cash equivalents are carried at cost,
which approximates market value. At August 31, 1996 and 1997, IDS had $36,520
and $147,280 invested in a money market account.

Property and Equipment

Property and equipment are recorded at cost. Additions and improvements are
capitalized and repairs and maintenance are charged to expenses as incurred.
Depreciation is provided using the straight-line method over the estimated
useful lives of the related assets.

Revenue Recognition

Service revenue is recognized as the services are performed.

Concentration Risks

For the year ended August 31, 1995, IDS had two customers that accounted
for 20% and 31% of revenues, respectively. For the year ended August 31,1996,
IDS had two customers that accounted for 13% and 11% of revenues, respectively.
For the year ended August 31, 1997, IDS had three customers that each accounted
for 14%, 14% and 14% of revenues, respectively. For the years ended August 31,
1995, 1996 and 1997, IDS had three service providers which accounted for 92%,
98% and 98%, respectively of sub-contracted production work.

Income Taxes

IDS accounts for income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Under SFAS
No. 109, deferred income tax assets and liabilities are determined based on
differences between the financial reporting and income tax basis of assets and
liabilities measured using enacted income tax rates and laws that are expected
to be in effect when the differences reverse.

F-102

<PAGE>

INTERNATIONAL DATA SERVICES OF NEW YORK, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)

Supplemental Cash Flow Information

For the years ended August 31, 1995, 1996 and 1997, IDS paid interest of
$302, $724, and $668 and income taxes of $9,718, $10,393, and $0, respectively.

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

Cash, accounts receivable, accounts payable and accrued expenses are
reflected in the financial statements at fair value due to the short-term nature
of those instruments.

Long-Lived Assets

IDS follows SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of." Accordingly, in the event
that facts and circumstances indicate that property and equipment, and
intangible or other assets, may be impaired, an evaluation of recoverability
would be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the assets is compared to the assets'
carrying amount to determine if a write-down to market value or discounted cash
flow value is necessary.

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED AUGUST 31,
USEFUL LIVES -----------------
YEARS 1996 1997
------------ ------- -------
<S> <C> <C> <C>
Computer equipment.............................. 5 $40,129 $60,450
Furniture and office equipment.................. 7 32,904 35,865
Leasehold improvements.......................... 10 26,027 26,027
------- -------
99,060 122,342
Less--Accumulated depreciation.................. (40,734) (58,565)
------- -------
$58,326 $63,777
======= =======
</TABLE>

Depreciation expense for the years ended August 31, 1995, 1996 and 1997 was
$11,044, $13,847 and $17,831, respectively.

4. LINE OF CREDIT:

IDS maintains a line of credit with a maximum borrowing available
thereunder of $50,000. The line of credit bears interest at 1% over the bank's
base (9.25% at August 31, 1996 and 1997). Borrowings under the line are secured
by all of IDS's assets. The highest and average outstanding balance was $0,
$25,000 and $25,000 during fiscal 1995, 1996 and 1997, respectively.

F-103

<PAGE>

INTERNATIONAL DATA SERVICES OF NEW YORK, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. COMMITMENTS:

IDS leases office space under noncancelable operating leases. Rent expense
for all operating leases for the years ended August 31, 1995, 1996 and 1997 was
$16,320 each year. Future minimum lease payments under noncancelable operating
leases as of August 31, 1997 are as follows:

1998....................................... $16,320
1999....................................... 5,520
-------
$21,840
=======

6. INCOME TAXES:

The provision (benefit) for income taxes is as follows:

YEAR ENDED AUGUST 31,
--------------------------------
1995 1996 1997
-------- -------- ----------
Current:
Federal.................................... $ 11,089 $(41,682) $ 154,927
State...................................... 7,312 (27,483) 47,707
-------- -------- ----------
18,401 (69,165) 202,634
-------- -------- ----------
Deferred:
Federal.................................... (7,457) 41,682 (165,967)
State...................................... (4,917) 27,483 (49,472)
-------- -------- ----------
Total...................................... (12,374) 69,165 (215,439)
-------- -------- ----------
$ 6,027 $ -- $ (12,805)
======== ======== ==========

The reconciliation of the statutory federal income tax rate to IDS's
effective income tax rate is as follows:

YEAR ENDED AUGUST 31,
---------------------
1995 1996 1997
----- ----- -----
Statutory federal income tax rate....................... 34.0% 34.0% 34.0%
Effect of graduated federal income tax rates............ (19.0) (19.0) (18.7)
State income taxes, net of federal tax benefit.......... 7.7 7.7 7.7
Nondeductible expenses and interest..................... 0.8 -- (6.0)
Losses benefited (not benefited)........................ -- (22.7) 41.4
----- ----- -----
23.5% --% 58.4%
===== ===== =====

F-104

<PAGE>

INTERNATIONAL DATA SERVICES OF NEW YORK, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES: -- (CONTINUED)

Deferred taxes are determined based upon the estimated future tax effects
of differences between the financial statements and income tax basis of assets
and liabilities given the provisions of the enacted tax laws. The tax effect of
temporary differences as established in accordance with SFAS No. 109 that gives
rise to deferred taxes are as follows:

AUGUST 31,
------------------
1996 1997
------- --------
Current deferred tax assets:
Accruals and reserves not currently deductible......... $ 5,295 $223,641
Operating loss carryforwards........................... 15,131 --
Valuation reserve...................................... (15,131) --
------- --------
5,295 223,641
Non-current deferred tax liability:
Differences in book/tax depreciation................... (10,814) (13,721)
------- --------
Net deferred tax asset (liability)..................... $(5,519) $209,920
======= ========

7. EMPLOYEE BENEFIT PLAN:

IDS maintains a simplified employee pension. IDS contributed to the
shareholders and its employees $50,000, $44,000 and $59,200 for the years ended
August 31, 1995, 1996 and 1997.

8. RELATED-PARTY TRANSACTIONS:

Leasing Transactions

The shareholders receive $300 monthly to rent office space attached to
their home. Included in property and equipment at August 31, 1997 is $26,027 of
leasehold improvements on this office space.

F-105

<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Oregon Micro-Imaging, Inc.:

We have audited the accompanying balance sheets of Oregon Micro-Imaging,
Inc. (an Oregon Corporation) as of October 31, 1995 and 1996 and July 31, 1997,
and the related statements of operations, stockholders' equity and cash flows
for each of the two years in the period ended October 31, 1996 and for the nine
months ended July 31, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Oregon Micro-Imaging, Inc.
as of October 31, 1995 and 1996 and July 31, 1997, and the results of its
operations and its cash flows for each of the two years in the period ended
October 31, 1996 and the nine months ended July 31, 1997, in conformity with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Portland, Oregon,
August 15, 1997

F-106
<PAGE>

OREGON MICRO-IMAGING, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
OCTOBER 31,
------------------- JULY 31,
1995 1996 1997
ASSETS -------- -------- ----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.......................... $ 268 $ 7,751 $ 711
Accounts receivable................................ 238,866 200,143 349,959
Inventories........................................ 258,996 266,507 407,062
Prepaid expenses................................... -- 1,988 --
Deferred income taxes.............................. 51,963 51,963 44,794
-------- -------- ----------
Total current assets............................ 550,093 528,352 802,526
PROPERTY AND EQUIPMENT, net.......................... 181,473 335,229 370,624
-------- -------- ----------
$731,566 $863,581 $1,173,150
======== ======== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit..................................... $ 87,000 $ 83,000 $ --
Bank overdraft..................................... 57,715 -- 58,936
Current portion of long-term debt.................. 18,701 24,026 28,978
Accounts payable................................... 48,205 59,331 106,081
Accrued expenses................................... 9,949 2,649 27,846
Accrued profit sharing............................. 33,829 58,168 63,181
Deferred revenue................................... 178,000 178,000 178,000
Income taxes payable............................... 15,412 34,288 108,421
-------- -------- ----------
Total current liabilities....................... 448,811 439,462 571,443
-------- -------- ----------
LONG-TERM DEBT....................................... 23,254 56,641 42,046
-------- -------- ----------
DEFERRED INCOME TAXES................................ 14,541 19,347 25,129
-------- -------- ----------
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDERS' EQUITY:
Common stock, no par value, 500 shares authorized,
405 shares issued and outstanding............... 10,125 10,125 10,125
Retained earnings.................................. 234,835 338,006 524,407
-------- -------- ----------
Total stockholders' equity...................... 244,960 348,131 534,532
-------- -------- ----------
$731,566 $863,581 $1,173,150
======== ======== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-107
<PAGE>

OREGON MICRO-IMAGING, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED OCTOBER 31, JULY 31,
----------------------- ------------------------
1995 1996 1996 1997
---------- ---------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES:
Services............................ $1,779,085 $2,269,098 $1,688,506 $1,787,633
Products............................ 1,193,089 1,476,537 1,248,022 1,358,424
---------- ---------- ---------- ----------
2,972,174 3,745,635 2,936,528 3,146,057
---------- ---------- ---------- ----------
COST OF REVENUES:
Services............................ 1,473,136 1,963,539 1,422,611 1,457,614
Products............................ 709,669 836,852 698,583 772,471
Depreciation........................ 59,502 84,012 50,071 74,147
---------- ---------- ---------- ----------
2,242,307 2,884,403 2,171,265 2,304,232
---------- ---------- ---------- ----------
Gross profit..................... 729,867 861,232 765,263 841,825
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES............................ 591,300 688,083 508,675 495,306
IMAGEMAX TRANSACTION COSTS............ -- -- -- 32,706
---------- ---------- ---------- ----------
Operating income................. 138,567 173,149 256,588 313,813
INTEREST EXPENSE...................... 21,468 17,020 13,785 14,513
LOSS ON SALE OF EQUIPMENT............. 27,427 1,620 1,620 --
---------- ---------- ---------- ----------
Income before income taxes....... 89,672 154,509 241,183 299,300
INCOME TAXES.......................... 24,192 51,338 79,258 112,899
---------- ---------- ---------- ----------
NET INCOME............................ $ 65,480 $ 103,171 $ 161,925 $ 186,401
========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-108
<PAGE>

OREGON MICRO-IMAGING, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK TOTAL
---------------- RETAINED STOCKHOLDERS'
SHARES AMOUNT EARNINGS EQUITY
------ ------- -------- -------------
<S> <C> <C> <C> <C>
BALANCE, OCTOBER 31, 1994........................ 405 $10,125 $169,355 $179,480

Net income..................................... -- -- 65,480 65,480
--- ------- -------- --------

BALANCE, OCTOBER 31, 1995........................ 405 10,125 234,835 244,960

Net income..................................... -- -- 103,171 103,171
--- ------- -------- --------

BALANCE, OCTOBER 31, 1996........................ 405 10,125 338,006 348,131

Net income..................................... -- -- 186,401 186,401
--- ------- -------- --------

BALANCE, JULY 31, 1997........................... 405 $10,125 $524,407 $534,532
=== ======= ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-109
<PAGE>

OREGON MICRO-IMAGING, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
OCTOBER 31, JULY 31,
------------------- ----------------------
1995 1996 1996 1997
-------- -------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 65,480 $103,171 $161,925 $186,401
Adjustments to reconcile net income to net cash provided
by operating activities-
Depreciation.......................................... 59,502 84,012 50,071 74,147
Losses from property and equipment disposals.......... 27,427 1,620 1,620 --
Deferred income taxes................................. -- 4,806 4,806 12,951
Change in operating assets and liabilities-
Accounts receivable................................ 5,621 38,723 (95,582) (149,816)
Inventories........................................ 14,180 (7,511) (140,788) (140,555)
Prepaid expenses................................... -- (1,988) -- 1,988
Bank overdraft..................................... 4,885 (57,715) 164 58,936
Accounts payable................................... (25,206) 11,126 (8,223) 46,750
Accrued expenses................................... 4,682 (7,300) 61,102 5,012
Accrued profit sharing............................. 33,829 24,339 9,432 25,198
Income taxes payable............................... 6,650 18,876 49,611 74,133
-------- -------- -------- --------
Net cash provided by operating activities........ 197,050 212,159 94,138 195,145
-------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment....................... (117,490) (239,388) (103,658) (109,542)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt.............................. -- 38,712 26,915 --
Principal payments on long-term debt...................... (2,612) -- -- (9,643)
Principal payments on line of credit...................... (77,000) (4,000) (16,000) (83,000)
-------- -------- -------- --------
Net cash provided by (used in) financing
activities..................................... (79,612) 34,712 10,915 (92,643)
-------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (52) 7,483 1,395 (7,040)
CASH AND CASH EQUIVALENTS,
Beginning of Period....................................... 320 268 268 7,751
-------- -------- -------- --------
CASH AND CASH EQUIVALENTS,
End of Period............................................. $ 268 $ 7,751 $ 1,663 $ 711
======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-110
<PAGE>

OREGON MICRO-IMAGING, INC.
NOTES TO FINANCIAL STATEMENTS

(INFORMATION FOR THE NINE MONTHS ENDED
JULY 31, 1996 IS UNAUDITED.)

1. BACKGROUND:

Oregon Micro-Imaging, Inc. ("OMI") was incorporated on December 9, 1980.
OMI provides microfilming and scanning services, microfilm processing, and sales
and servicing of micrographic and optical imaging equipment and supplies. The
principal markets for OMI's products and services are the Eugene and Portland,
Oregon metropolitan areas. Canon and Fuji are major suppliers of the equipment
sold and used by OMI.

OMI and its stockholders intend to enter into a merger agreement with
ImageMax, Inc. ("ImageMax") which would close upon the consummation of the
initial public offering of the common stock of ImageMax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Statements

The financial statements for the nine months ended July 31, 1996 are
unaudited and, in the opinion of management of OMI, include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the results for that interim period. The results of operations
for the nine months ended July 31, 1996 and 1997 are not necessarily indicative
of the results to be expected for the full year.

Cash and Cash Equivalents

OMI considers highly liquid investments with original maturities of three
months or less to be cash equivalents. Cash equivalents are carried at cost,
which approximates market value.

Inventories

Inventories are stated at the lower of cost or market value, determined on
a first-in, first-out basis.

Property and Equipment

Property and equipment are recorded at cost. Additions and improvements are
capitalized and repairs and maintenance are charged to expense as incurred.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. Leasehold improvements are depreciated over the
lesser of their useful life or the term of the lease.

Revenue Recognition

Revenue is recognized when the services are rendered or products are
shipped to customers. Deferred revenue represents billings in advance of
providing services to OMI's monthly service customers.

Income Taxes

OMI accounts for income taxes in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." Under SFAS
No. 109, deferred income tax assets and liabilities are determined based on
differences between the financial reporting and income

F-111
<PAGE>

OREGON MICRO-IMAGING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
JULY 31, 1996 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
tax basis of assets and liabilities measured using enacted income tax rates and
laws that are expected to be in effect when the differences reverse.

Supplemental Cash Flow Information

For the years ended October 31, 1995, 1996 and for the nine months ended
July 31, 1996 and 1997, OMI paid interest of $21,468, $17,020, $13,785 and
$14,513, respectively. For the years ended October 31, 1995 and 1996 and the
nine months ended July 31, 1996 and 1997, OMI paid income taxes of $17,542,
$32,462, $29,647 and $38,766, respectively.

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

Cash, accounts receivable and accounts payable are reflected in the
financial statements at fair value due to their short-term nature. The carrying
amount of long-term debt approximates fair value on the balance sheet dates.

Long-Lived Assets

OMI follows SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of." Accordingly, in the event
that facts and circumstances indicate that property and equipment, and
intangible or other assets, may be impaired, an evaluation of recoverability
would be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the assets is compared to the assets'
carrying amount to determine if a write-down to market value or discounted cash
flow value is necessary.

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED OCTOBER 31,
USEFUL LIVES ------------------- JULY 31,
YEARS 1995 1996 1997
------------ -------- -------- --------
<S> <C> <C> <C> <C>
Scanning and filming equipment.............. 5-7 $182,973 $329,988 $377,578
Furniture and office equipment.............. 5-7 324,760 156,283 207,363
Leasehold improvements...................... 5-10 36,043 39,481 39,481
Vehicles.................................... 5 91,524 152,017 162,888
-------- -------- --------
635,300 677,769 787,310
Less-Accumulated depreciation and
amortization.............................. (453,827) (342,540) (416,686)
-------- -------- --------
$181,473 $335,229 $370,624
======== ======== ========
</TABLE>

F-112
<PAGE>

OREGON MICRO-IMAGING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
JULY 31, 1996 IS UNAUDITED.)

4. LONG-TERM DEBT:

<TABLE>
<CAPTION>
OCTOBER 31,
----------------- JULY 31,
1995 1996 1997
------- ------- --------
<S> <C> <C> <C>
Promissory note with interest at 9.25%, due
$292.54 monthly including interest until June
1999, secured by all Key Bank accounts and a
lien on equipment.............................. $ -- $ 8,249 $ 6,130
Promissory note with interest at 8.5%, due
$576.78 monthly including interest until
January 2002, secured by related vehicle....... -- 25,823 19,523
Promissory note with variable interest at 10.50%,
due $416.67 monthly, plus interest until
January 15, 1999, collateralized by accounts
receivable, inventory and equipment............ 16,250 11,250 7,917
Promissory note with 9.75% interest, due $375.38
monthly including interest until October 13,
2001, secured by related vehicle............... -- 17,699 13,199
Promissory note with 9.25% interest, due $239.87
monthly including interest until December 1,
1998, secured by related vehicle............... -- 5,618 3,797
Promissory note with variable interest at 9.5%,
due $306.38 monthly, including interest until
June 1998, collateralized by related
vehicle........................................ 7,408 4,313 1,787
Promissory note with variable interest at 9.25%,
due $230.36 monthly, including interest until
January 15, 1999, collateralized by accounts
receivable, inventory and equipment............ 9,654 7,715 5,718
Lease payable with institution, payable in
monthly installments of $505, including
interest, maturing June 30, 2000, secured by
related equipment.............................. -- -- 12,953
Note payable to bank, repaid in 1996............. 4,476 -- --
Note payable to bank, repaid in 1996............. 4,167 -- --
------- ------- -------
41,955 80,667 71,024
Less-Current portion............................. (18,701) (24,026) (28,978)
------- ------- -------
$23,254 $56,641 $42,046
======= ======= =======
</TABLE>

As of July 31, 1997, maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD ENDING OCTOBER 31,
- ---------------------------------
<S> <C>
1997..................................... $ 7,934
1998..................................... 28,351
1999..................................... 20,870
2000..................................... 10,065
2001..................................... 3,804
-------
$71,024
=======
</TABLE>

F-113
<PAGE>

OREGON MICRO-IMAGING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
JULY 31, 1996 IS UNAUDITED.)

OMI has a $250,000 line of credit line with a bank. The line bears interest
at 10% as of July 31, 1997. This line of credit is secured by a security
interest in all accounts receivable, inventories and equipment. Average
borrowings were $133,458, $116,458 and $84,667 and the maximum borrowings
outstanding were $226,000, $173,000 and $206,000 during the years ended October
31, 1995 and 1996 and the nine months ended July 31, 1997, respectively.

5. COMMITMENTS AND CONTINGENCIES:

OMI leases office space from OMI's stockholders under noncancelable
operating leases. Rent expense for all operating leases for the years ended
October 31, 1995 and 1996 and the nine month periods ended July 31, 1996 and
1997 was $194,142, $211,805, $152,427 and $177,515, respectively. Future minimum
lease payments at July 31, 1997 under noncancelable operating leases are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING OCTOBER 31,
-----------------------
<S> <C>
1997.................................. $ 204,232
1998.................................. 212,343
1999.................................. 220,429
2000.................................. 224,224
2001.................................. 157,935
Thereafter............................ 96,000
----------
$1,115,163
==========
</TABLE>

OMI is party to various claims and other matters arising in the normal
course of business. In the opinion of management, the outcome of these matters
will not have a material adverse effect on OMI's financial position or results
of operations.

6. INCOME TAXES:

The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
OCTOBER 31, ENDED
----------------- JULY 31,
1995 1996 1997
------- ------- -----------
<S> <C> <C> <C>
Current provision:
Federal....................................... $19,584 $39,885 $ 89,427
State......................................... 4,608 6,647 10,521
------- ------- --------
24,192 46,532 99,948
Deferred provision.............................. -- 4,806 12,951
------- ------- --------
$24,192 $51,338 $112,899
======= ======= ========
</TABLE>

F-114
<PAGE>

OREGON MICRO-IMAGING, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
JULY 31, 1996 IS UNAUDITED.)

6. INCOME TAXES: -- (CONTINUED)

The reconciliation of the statutory federal income tax rate to OMI's
effective income tax rate is as follows:

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
OCTOBER 31, ENDED
----------- JULY 31,
1995 1996 1997
---- ---- -----------
<S> <C> <C> <C>
Income tax rate....................................... 34% 34% 34%
Reduction due to graduated federal tax rates.......... (12) (6) --
State income taxes, net of federal tax benefit........ 4 4 4
Nondeductible expenses, principally meals and
entertainment....................................... 1 1 --
--- --- ---
27% 33% 38%
=== === ===
</TABLE>

The tax effect of temporary differences as established in accordance with
SFAS No. 109 that give rise to deferred taxes are as follows:

<TABLE>
<CAPTION>
OCTOBER 31,
----------------- JULY 31,
1995 1996 1997
------- ------- --------
<S> <C> <C> <C>
Gross deferred tax asset:
Deferred revenue............................... $67,640 $67,640 $67,640
======= ======= =======
Gross deferred tax liabilities:
Inventory capitalization....................... $15,677 $15,677 $22,846
Property, plant and equipment.................. 14,541 19,347 25,129
------- ------- -------
$30,218 $35,024 $47,975
======= ======= =======
</TABLE>

OMI did not have any valuation allowances against deferred tax assets at
July 31, 1997, as it believes it is more likely than not that the deferred tax
asset will be realized.

7. EMPLOYEE BENEFIT PLAN:

OMI sponsors a profit sharing 401(k) plan covering all eligible employees,
as defined. OMI may make a discretionary matching contribution equal to a
percentage of each employee's contribution. In addition a discretionary amount
determined by OMI is contributed. Contributions to this plan totaled $41,800,
$63,438 and $50,304 for the years ending October 31, 1995 and 1996 and for the
nine months ending July 31, 1997, respectively.

8. RELATED-PARTY TRANSACTIONS:

Leasing Transactions

OMI leases office and production space and computer equipment from its sole
stockholders and officers under operating leases which expire August 2003 and
May 2001 (see Note 5). Total rent expense was $176,266, $189,126, $134,147 and
$152,058 for the years ended October 31, 1995 and 1996 and for the nine months
ended July 31, 1996 and 1997, respectively.

9. SALE OF THE BUSINESS (UNAUDITED):

In September, 1997, OMI and its stockholders entered a merger agreement
with ImageMax (see Note 1).

F-115
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Semco Industries, Inc.:

We have audited the accompanying consolidated balance sheets of Semco
Industries, Inc. (a Massachusetts corporation) and Subsidiary as of June 30,
1996 and 1997, and the related consolidated statements of operations,
stockholders' deficit and cash flows for each of the three years in the period
ended June 30, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Semco Industries, Inc. and
Subsidiary as of June 30, 1996 and 1997, and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 1997
in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
August 20, 1997

F-116
<PAGE>

SEMCO INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
----------------------- SEPTEMBER 30,
1996 1997 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents....................... $ 225,206 $ 169,645 $ 366,942
Accounts receivable, net of reserves of $34,790,
$25,000 and $25,000.......................... 1,423,406 1,544,468 1,273,617
Inventories..................................... 568,881 580,291 513,693
Prepaid expenses and other...................... 157,945 98,635 94,027
---------- ---------- ----------
Total current assets......................... 2,375,438 2,393,039 2,248,279
PROPERTY, PLANT AND EQUIPMENT, net................ 1,151,463 1,100,562 1,074,966
OTHER............................................. 150,090 136,109 16,061
---------- ---------- ----------
$3,676,991 $3,629,710 $3,339,306
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Note payable.................................... $ 243,333 $ 171,333 $ --
Accounts payable................................ 428,536 512,687 384,280
Accrued expenses................................ 420,476 399,195 412,489
Deferred revenue................................ 671,131 624,149 604,857
---------- ---------- ----------
Total current liabilities.................... 1,763,476 1,707,364 1,401,626
---------- ---------- ----------
DEFERRED REVENUE.................................. 45,889 42,678 41,358
---------- ---------- ----------
DEFERRED COMPENSATION............................. 2,287,795 2,294,614 2,271,243
---------- ---------- ----------
COMMITMENTS (Note 6)
STOCKHOLDERS' DEFICIT:
Preferred stock, $100 par value, 620 shares
authorized, 596 shares issued and 360 shares
outstanding.................................. 59,600 59,600 59,600
Common stock, $10 par value, 100,000 shares
authorized, 69,649 shares issued and 47,937
shares, 46,653 shares and 46,653 shares
outstanding.................................. 696,490 696,490 696,490
Additional paid-in capital...................... 846,846 846,846 846,846
Retained earnings............................... 68,088 137,510 177,535
Less--Treasury stock, 21,948 shares, 23,232
shares and 23,232 shares at cost............. (2,091,193) (2,155,392) (2,155,392)
---------- ---------- ----------
Total stockholders' deficit.................. (420,169) (414,946) (374,921)
---------- ---------- ----------
$3,676,991 $3,629,710 $3,339,306
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-117
<PAGE>

SEMCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
------------------------------------ -----------------------
1995 1996 1997 1996 1997
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:

Services................. $4,949,198 $4,748,049 $5,019,595 $1,250,629 $1,446,052
Products................. 4,590,194 3,956,036 3,813,793 938,588 781,799
---------- ---------- ---------- ---------- ----------

9,539,392 8,704,085 8,833,388 2,189,217 2,227,851
---------- ---------- ---------- ---------- ----------

COST OF REVENUES:

Services................. 3,175,226 3,103,278 3,158,482 744,459 959,794
Products................. 3,114,221 2,524,975 2,536,380 646,939 526,473
Depreciation and
amortization.......... 181,689 192,370 178,945 40,001 50,573
---------- ---------- ---------- ---------- ----------

6,471,136 5,820,623 5,873,807 1,431,399 1,536,840
---------- ---------- ---------- ---------- ----------

Gross profit.......... 3,068,256 2,883,462 2,959,581 757,818 691,011

SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES................. 2,826,643 3,018,421 2,631,676 636,907 530,725

IMAGEMAX TRANSACTION
COSTS.................... -- -- -- -- 73,000
---------- ---------- ---------- ---------- ----------

Operating income
(loss)............. 241,613 (134,959) 327,905 120,911 87,286

INTEREST EXPENSE........... 205,467 209,933 212,207 48,517 47,261

INTEREST INCOME............ (61,647) (63,365) (5,262) (1,717) --
---------- ---------- ---------- ---------- ----------

NET INCOME (LOSS).......... $ 97,793 $ (281,527) $ 120,960 $ 74,111 $ 40,025
========== ========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-118
<PAGE>

SEMCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
NOTE
PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE
---------------- ----------------- PAID-IN RETAINED FROM TREASURY
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS ESOP STOCK
------ ------- ------ -------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1994........... 596 $59,600 69,649 $696,490 $846,846 $404,869 $(947,562) $(1,029,631)

Dividends...................... -- -- -- -- -- (91,108) -- --

Purchase of treasury stock..... -- -- -- -- -- -- -- (4,545)

Receipt of principal payment on
note receivable.............. -- -- -- -- -- -- 24,779 --

Net income..................... -- -- -- -- -- 97,793 -- --
--- ------- ------ -------- -------- -------- --------- -----------

BALANCE, JUNE 30, 1995........... 596 59,600 69,649 696,490 846,846 411,554 (922,783) (1,034,176)

Dividends...................... -- -- -- -- -- (61,939) -- --

Purchase of treasury stock..... -- -- -- -- -- -- -- (1,057,017)

Receipt of principal payment on
note receivable.............. -- -- -- -- -- -- 922,783 --

Net loss....................... -- -- -- -- -- (281,527) -- --
--- ------- ------ -------- -------- -------- --------- -----------

BALANCE, JUNE 30, 1996........... 596 59,600 69,649 696,490 846,846 68,088 -- (2,091,193)

Dividends...................... -- -- -- -- -- (51,538) -- --

Purchase of treasury stock..... -- -- -- -- -- -- -- (64,199)

Net income..................... -- -- -- -- -- 120,960 -- --
--- ------- ------ -------- -------- -------- --------- -----------

BALANCE, JUNE 30, 1997........... 596 59,600 69,649 696,490 846,846 137,510 -- (2,155,392)

Net income (unaudited)......... -- -- -- -- -- 40,025 -- --
--- ------- ------ -------- -------- -------- --------- -----------

BALANCE, SEPTEMBER 30, 1997
(UNAUDITED).................... 596 $59,600 69,649 $696,490 $846,846 $177,535 $ -- $(2,155,392)
=== ======= ====== ======== ======== ======== ========= ===========

TOTAL
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
BALANCE, JUNE 30, 1994........... $ 30,612
Dividends...................... (91,108)
Purchase of treasury stock..... (4,545)
Receipt of principal payment on
note receivable.............. 24,779
Net income..................... 97,793
----------
BALANCE, JUNE 30, 1995........... 57,531
Dividends...................... (61,939)
Purchase of treasury stock..... (1,057,017)
Receipt of principal payment on
note receivable.............. 922,783
Net loss....................... (281,527)
----------
BALANCE, JUNE 30, 1996........... (420,169)
Dividends...................... (51,538)
Purchase of treasury stock..... (64,199)
Net income..................... 120,960
----------
BALANCE, JUNE 30, 1997........... (414,946)
Net income (unaudited)......... 40,025
----------
BALANCE, SEPTEMBER 30, 1997
(UNAUDITED).................... $ (374,921)
==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-119
<PAGE>

SEMCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
-------------------------------- ---------------------
1995 1996 1997 1996 1997
-------- ---------- -------- ---------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................. $ 97,793 $ (281,527) $120,960 $ 74,111 $ 40,025
Adjustments to reconcile net income (loss) to
net cash provided by operating activities-
Depreciation and amortization............. 181,689 192,370 178,945 40,001 50,573
(Gain) loss on sale or retirement of
property and equipment................. (80,897) (13,834) 13,182 2,680 --
Changes in operating assets and
liabilities-
Accounts receivable.................... 188,845 70,119 (121,062) 225,305 270,851
Inventories............................ 88,329 201,090 (11,410) (121,069) 66,598
Prepaid expenses and other............. (4,592) 114,753 59,310 32,252 4,608
Other assets........................... (24,731) 62,484 13,981 13,981 120,048
Accounts payable and accrued
expenses............................. 6,410 135,697 62,870 (89,040) (115,113)
Deferred revenue....................... (107,640) (28,616) (50,193) (44,770) (20,612)
Deferred compensation.................. (7,882) 6,327 6,819 1,476 (23,371)
-------- ---------- -------- ---------- --------
Net cash provided by operating
activities......................... 337,324 458,863 273,402 134,927 393,607
-------- ---------- -------- ---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment........... (142,054) (130,568) (141,226) (19,470) (24,977)
Proceeds from disposals of property and
equipment................................... 115,500 -- -- -- --
-------- ---------- -------- ---------- --------
Net cash used in investing
activities......................... (26,554) (130,568) (141,226) (19,470) (24,977)
-------- ---------- -------- ---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock................... (4,545) (1,057,017) (64,199) -- --
Payments on note payable...................... (168,000) (72,000) (72,000) (18,000) (171,333)
Dividends paid................................ (91,108) (61,939) (51,538) -- --
Payments on note receivable from ESOP......... 24,779 922,783 -- -- --
-------- ---------- -------- ---------- --------
Net cash used in financing
activities......................... (238,874) (268,173) (187,737) (18,000) (171,333)
-------- ---------- -------- ---------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................... 71,896 60,122 (55,561) 97,457 197,297
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD........................................ 93,188 165,084 225,206 225,206 169,645
-------- ---------- -------- ---------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD........ $165,084 $ 225,206 $169,645 $ 322,663 $366,942
======== ========== ======== ========== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-120
<PAGE>

SEMCO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

1. BACKGROUND:

Semco Industries, Inc., which does business through its wholly owned
subsidiary Spaulding Company (together "Spaulding"), is incorporated in
Massachusetts and provides data and information conversion services ranging from
CD-ROM scanning/imaging to microfilm processing. Spaulding is also an equipment
dealer, selling various microfilm/microfiche readers and other related
equipment.

Semco Industries, Inc. intends to enter into a net asset acquisition
agreement with ImageMax, Inc. ("ImageMax") which would close upon the
consummation of the initial public offering.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Statements

The financial statements as of September 30, 1997 and for the three months
ended September 30, 1996 and 1997 are unaudited and, in the opinion of the
management of Spaulding, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the of the results
for those interim periods. The results of operations for the three months ended
September 30, 1997 are not necessarily indicative of the results to be expected
for the full year.

Principles of Consolidation

The consolidated financial statements include the accounts of Semco
Industries, Inc. and Spaulding Company, its wholly owned subsidiary. All
material intercompany balances and transactions have been eliminated.

Cash and Cash Equivalents

Spaulding considers highly liquid investments with original maturities of
three months or less to be cash equivalents. Cash equivalents are carried at
cost, which approximates market value. At September 30, 1997, Spaulding had
$150,000 invested in a certificate of deposit account.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories primarily represent microfiche viewing and imaging
equipment, service parts and related supplies.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Additions and
improvements are capitalized and repairs and maintenance are charged to expense
as incurred. Depreciation is provided using the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are amortized over
the lesser of their useful life or the term of the lease.

Other Assets

Other assets consist of the net cash surrender value of life insurance
policies on current and former executives of Spaulding. The face value of the
policies at June 30, 1997 and September 30, 1997 is $1,043,000.

F-121
<PAGE>

SEMCO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)

Revenue Recognition

Revenue is recognized when services are rendered or as products are shipped
to customers. Deferred revenue represents payments from customers with service
contracts. Service contract revenues are recognized ratably over the term of the
contract.

Income Taxes

Spaulding accounts for income taxes in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets and
liabilities and are measured using enacted tax rates that are expected to be in
effect when the differences reverse.

Supplemental Cash Flow Information

For the years ended June 30, 1995, 1996 and 1997 and for the three months
ended September 30, 1996 and 1997, Spaulding paid interest of $205,467, $209,933
$212,207, $48,517 and $47,261, respectively. For the years ended June 30, 1995,
1996 and 1997 and for the three months ended September 30, 1996 and 1997,
Spaulding paid income taxes of $3,520, $1,350, $5,256, $4,300, and $3,700,
respectively.

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

For certain of Spaulding's financial instruments including accounts
receivable, accounts payable and accrued expenses, management believes that the
carrying amounts approximate fair value due to their short-term maturities. The
carrying amount of the note payable approximates fair value on the balance sheet
dates.

Concentration Risks

Spaulding purchases materials and equipment from various suppliers. For the
years ended June 30, 1995, 1996 and 1997 and for the three months ended
September 30, 1996 and 1997, Spaulding had three suppliers which accounted for
67%, 64%, 65%, 68%, and 54%, respectively, of total purchases. For the three
months ended September 30, 1997, Spaulding had one customer that accounted for
14% of revenues.

Long-Lived Assets

Spaulding follows SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed of." Accordingly, in
the event that facts and circumstances indicate that property and equipment, and
intangible or other assets, may be impaired, an evaluation of recoverability
would be performed. If an evaluation is required, the estimated future
undiscounted cash

F-122
<PAGE>

SEMCO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)

flows associated with the assets is compared to the assets' carrying amount to
determine if a write-down to market value or discounted cash flow value is
necessary.

3. PROPERTY, PLANT AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED JUNE 30,
USEFUL LIVES ----------------------- SEPTEMBER 30,
YEARS 1996 1997 1997
------------ ---------- ---------- -------------
<S> <C> <C> <C> <C>
Land.................................... -- $ 166,059 $ 166,059 $ 166,059
Building and improvements............... 15-40 927,169 927,169 927,168
Computer and computer production
equipment............................. 5 1,232,433 1,308,561 1,317,418
Furniture and office equipment.......... 5-7 394,250 448,402 448,949
Leasehold improvements.................. 3-5 185,458 192,339 189,934
---------- ---------- ----------
2,905,369 3,042,530 3,049,528
Less--Accumulated depreciation (1,753,906) (1,941,968) (1,974,562)
---------- ---------- ----------
$1,151,463 $1,100,562 $1,074,966
========== ========== ==========
</TABLE>

4. NOTE PAYABLE:

At June 30, 1997, Spaulding had a mortgage note payable to a bank with
interest at 9.5%. Spaulding had failed to meet certain financial covenants as
specified in the note, therefore, the Note was due on demand. In September 1997,
the mortgage was repaid.

5. ACCRUED EXPENSES:

<TABLE>
<CAPTION>
JUNE 30,
------------------- SEPTEMBER 30,
1996 1997 1997
-------- -------- -------------
<S> <C> <C> <C>
Accrued payroll.............................. $ 49,965 $116,588 $ 62,109
Accrued vacation............................. 116,552 121,640 112,217
Accrued severance............................ 169,676 127,411 107,990
Accrued professional fees.................... 3,811 24,486 100,727
Other........................................ 80,472 9,070 29,446
-------- -------- --------
$420,476 $399,195 $412,489
======== ======== ========
</TABLE>

F-123
<PAGE>

SEMCO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

6. COMMITMENTS:

Spaulding leases office space and certain equipment under noncancelable
operating leases. Rent expense for all operating leases for the years ended June
30, 1995, 1996 and 1997 and the three months ended September 30, 1996 and 1997,
was $33,600, $41,992, $57,810, $10,498 and $12,632, respectively. Future minimum
lease payments under noncancelable operating leases are as follows:

<TABLE>
<CAPTION>
YEAR ENDING JUNE 30,
--------------------
<S> <C>
1998..................................... $39,577
1999..................................... 27,168
2000..................................... 27,168
2001..................................... 4,528
-------
$98,441
=======
</TABLE>

Spaulding has arrangements with several of its former executives whereby
upon the individual's retirement, Spaulding makes monthly payments to the
executive or his designated beneficiary. Deferred compensation represents the
present value of these estimated future payments to be made under such
arrangements. Payments are currently $265,000 per year and are subject to
adjustment in the event of death of the recipient.

Spaulding has entered into agreements with one of its officers and a
consultant which provide for an aggregate bonus of $200,000 to be paid in the
event of a sale of substantially all of Spaulding's net assets.

7. INCOME TAXES:

The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Current Provision:
Federal..................................... $ 40,516 $ -- $ 41,648
State....................................... 12,509 -- 12,858
-------- -------- --------
53,025 -- 54,506
Utilization of net operating loss
carryforwards............................ (53,025) -- (54,506)
-------- -------- --------
-- -- --
-------- -------- --------
Deferred Provision (Benefit):
Federal..................................... (2,733) (78,933) 3,264
State....................................... (854) (24,370) 1,008
-------- -------- --------
(3,587) (103,303) 4,272
Less--Valuation allowance................... 3,587 103,303 (4,272)
-------- -------- --------
-- -- --
-------- -------- --------
$ -- $ -- $ --
======== ======== ========
</TABLE>

There is no current income tax provision for the years ended June 30, 1995,
1996 and 1997 as taxable income, if any, was offset by net operating loss
carryforwards. In addition, there is no deferred income tax provision as the net
deferred tax asset has been fully reserved for all periods presented as
realization is uncertain.

F-124
<PAGE>

SEMCO INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

7. INCOME TAXES: -- (CONTINUED)

The tax effect of temporary differences as established in accordance with
SFAS No. 109 that give rise to deferred taxes are as follows:

<TABLE>
<CAPTION>
JUNE 30,
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
Gross deferred tax assets:
Net operating loss carryforwards................... $1,702,000 $1,654,000
Deferred compensation.............................. 921,000 924,000
Accruals and reserves not currently deductible..... 201,000 202,000
---------- ----------
2,824,000 2,780,000
========== ==========
Gross deferred tax liability:
Depreciation....................................... (39,000) (37,000)
Other.............................................. (4,000) (4,000)
---------- ----------
(43,000) (41,000)
Less--Valuation allowance.......................... (2,781,000) (2,739,000)
---------- ----------
Net deferred tax asset.......................... $ -- $ --
========== ==========
</TABLE>

At June 30, 1997, the Company has a net operating loss carryforward
available for income tax purposes of approximately $1,400,000, which begins to
expire in 2006.

8. RETIREMENT PLANS:

Spaulding maintains a trusted profit sharing plan (Section 401(k)) to
provide retirement benefits for qualified employees. Employer contributions are
made at the discretion of Spaulding. No Spaulding contributions were made during
the years ended June 30, 1995, 1996 and 1997.

In fiscal 1988, Spaulding established an employee stock ownership plan
("ESOP") for qualified employees. Spaulding guaranteed the debt of the ESOP,
which has been fully repaid. Contributions are made by Spaulding on a
discretionary basis and were $42,522, $42,522 and $0 for the years ended June
30, 1995, 1996 and 1997, respectively.

9. SALE OF THE BUSINESS (UNAUDITED):

In September 1997, Semco Industries, Inc. entered into an agreement with
ImageMax providing for the sale of certain net assets of Spaulding Company to
ImageMax (see Note 1).

F-125
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Total Information Management Corporation:

We have audited the accompanying balance sheets of Total Information
Management Corporation (a California corporation) as of December 31, 1995 and
1996 and June 30, 1997, and the related statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1996 and the six months ended June 30, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Total Information Management
Corporation as of December 31, 1995 and 1996 and June 30, 1997, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1996 and the six months ended June 30, 1997, in conformity
with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Portland, Oregon,

September 26, 1997

F-126
<PAGE>

TOTAL INFORMATION MANAGEMENT CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30, SEPTEMBER 30,
1995 1996 1997 1997
ASSETS ---------- ---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............ $ 47,098 $ 13,009 $ 34,927 $ 30,602
Accounts receivable.................. 692,036 911,650 748,655 899,653
Prepaid expenses and other........... 61,676 60,000 60,185 60,460
---------- ---------- ---------- ----------
Total current assets.............. 800,810 984,659 843,767 990,715
PROPERTY AND EQUIPMENT, net............ 422,902 271,630 270,138 266,568
INTANGIBLE ASSETS...................... 110,395 147,158 130,453 124,768
---------- ---------- ---------- ----------
$1,334,107 $1,403,447 $1,244,358 $1,382,051
========== ========== ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit....................... $ 366,792 $ 230,793 $ 10,793 $ 140,000
Current portion of long-term debt.... 63,776 95,150 81,949 78,329
Accounts payable..................... 84,328 66,303 91,671 72,784
Accrued payroll...................... 97,015 96,825 89,003 94,512
Other accrued expenses............... 24,223 35,672 38,290 143,109
Current portion of deferred
compensation...................... 45,550 197,271 185,434 179,516
---------- ---------- ---------- ----------
Total current liabilities......... 681,684 722,014 497,140 708,250
---------- ---------- ---------- ----------
LONG-TERM DEBT......................... 340,067 225,475 190,704 144,094
---------- ---------- ---------- ----------
DEFERRED COMPENSATION.................. 173,775 -- -- --
---------- ---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS' EQUITY:
Common stock, $4.17 par value, 20,000
shares authorized, 11,000 shares
issued and outstanding............ 45,870 45,870 45,870 45,870
Additional paid-in capital........... 123,130 123,130 123,130 123,130
Retained earnings (deficit).......... (30,419) 286,958 387,514 360,707
---------- ---------- ---------- ----------
Total stockholders' equity........ 138,581 455,958 556,514 529,707
---------- ---------- ---------- ----------
$1,334,107 $1,403,447 $1,244,358 $1,382,051
========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-127
<PAGE>

TOTAL INFORMATION MANAGEMENT CORPORATION

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS
ENDED NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, SEPTEMBER 30,
------------------------------------ ---------- -----------------------
1994 1995 1996 1997 1996 1997
---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Services and storage.......... $4,131,740 $4,420,111 $4,991,198 $2,159,688 $3,609,337 $3,318,242
---------- ---------- ---------- ---------- ---------- ----------
COST OF REVENUES:
Cost of services and
storage..................... 3,024,956 3,110,439 3,275,708 1,393,709 2,376,021 2,095,845
Depreciation.................. 73,659 95,690 76,104 41,897 68,266 63,403
---------- ---------- ---------- ---------- ---------- ----------
3,098,615 3,206,129 3,351,812 1,435,606 2,444,287 2,159,248
---------- ---------- ---------- ---------- ---------- ----------
Gross profit................ 1,033,125 1,213,982 1,639,386 724,082 1,165,050 1,158,994
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES....... 941,720 1,369,953 1,180,651 480,794 880,852 798,542
IMAGEMAX TRANSACTION COSTS...... -- -- -- -- -- 25,000
AMORTIZATION.................... 31,708 75,325 42,620 16,703 33,681 20,891
---------- ---------- ---------- ---------- ---------- ----------
Operating income
(loss).................... 59,697 (231,296) 416,115 226,585 250,517 314,561
INTEREST EXPENSE................ 46,726 56,755 98,738 28,029 75,599 42,812
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS)............... $ 12,971 $ (288,051) $ 317,377 $ 198,556 $ 174,918 $ 271,749
========== ========== ========== ========== ========== ==========
PRO FORMA DATA (UNAUDITED):
Historical net income
(loss).................... $ 12,971 $ (288,051) $ 317,377 $ 198,556 $ 174,918 $ 271,749
Pro forma income tax expense
(benefit)................. 5,206 (115,618) 127,389 79,696 70,209 109,736
---------- ---------- ---------- ---------- ---------- ----------
Pro forma net income
(loss).................... $ 7,765 $ (172,433) $ 189,988 $ 118,860 $ 104,709 $ 162,013
========== ========== ========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-128
<PAGE>

TOTAL INFORMATION MANAGEMENT CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED TOTAL
---------------- PAID-IN EARNINGS STOCKHOLDERS'
SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
------ ------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993.......... 11,400 $47,537 $137,463 $261,761 $446,761
Net income........................ -- -- -- 12,971 12,971
Distributions..................... -- -- -- (17,100) (17,100)
Repurchase of common stock........ (400) (1,667) (14,333) -- (16,000)
------ ------- -------- -------- --------
BALANCE, DECEMBER 31, 1994.......... 11,000 45,870 123,130 257,632 426,632
Net loss.......................... -- -- -- (288,051) (288,051)
------ ------- -------- -------- --------
BALANCE, DECEMBER 31, 1995.......... 11,000 45,870 123,130 (30,419) 138,581
Net income........................ -- -- -- 317,377 317,377
------ ------- -------- -------- --------
BALANCE, DECEMBER 31, 1996.......... 11,000 45,870 123,130 286,958 455,958
Net income........................ -- -- -- 198,556 198,556
Distributions..................... -- -- -- (98,000) (98,000)
------ ------- -------- -------- --------
BALANCE, JUNE 30, 1997.............. 11,000 45,870 123,130 387,514 556,514
------ ------- -------- -------- --------
Net income (Unaudited)............ -- -- -- 73,193 73,193
Distributions (Unaudited)......... -- -- -- (100,000) (100,000)
------ ------- -------- -------- --------
BALANCE, SEPTEMBER 30, 1997
(Unaudited)....................... 11,000 $45,870 $123,130 $360,707 $529,707
====== ======= ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-129
<PAGE>

TOTAL INFORMATION MANAGEMENT CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS
ENDED NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30, SEPTEMBER 30,
------------------------------- ---------- -------------------
1994 1995 1996 1997 1996 1997
-------- --------- -------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................... $ 12,971 $(288,051) $317,377 $198,556 $174,918 $271,749
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities-
Depreciation and amortization... 105,367 171,015 118,724 58,600 101,947 84,294
Loss (gain) on sale of property
and equipment................ (5,847) (1,428) 115,457 -- 115,457 --
Change in operating assets and
liabilities-
Accounts receivable.......... (199,599) 25,601 (219,614) 162,995 (142,709) 11,997
Prepaid expenses and other... 5,802 (1,676) 1,676 (185) (21,423) 1,039
Accounts payable............. 70,042 (13,321) (18,025) 25,368 30,807 6,481
Accrued payroll-related
liabilities................ 28,015 (21,008) (190) (7,822) 8,468 (2,313)
Other accrued expenses....... 7,556 (166) 11,449 2,618 17,174 107,437
Deferred compensation........ -- 219,325 (22,054) (11,837) (16,540) (17,755)
-------- --------- -------- -------- -------- --------
Net cash provided by
operating activities..... 24,307 90,291 304,800 428,293 268,099 462,929
-------- --------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and
equipment......................... (328,536) (15,221) (52,699) (40,403) (39,698) (58,341)
Proceeds from sales of property and
equipment......................... 5,847 10,313 12,410 -- -- --
Payment for other assets............ -- (95,009) (79,383) -- (79,383) --
-------- --------- -------- -------- -------- --------
Net cash used in investing
activities............... (322,689) (99,917) (119,672) (40,403) (119,081) (58,341)
-------- --------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on long-term debt........ 180,140 113,000 40,000 -- -- --
Principal payments on long-term
debt.............................. (96,687) (50,677) (123,218) (47,972) (95,370) (98,202)
Distributions....................... (17,100) -- -- (98,000) -- (198,000)
Proceeds from line of credit........ 254,380 -- -- -- -- --
Repurchase of common stock.......... (16,000) -- -- -- -- --
Payments under line of credit,
net............................... -- (17,588) (135,999) (220,000) (77,999) (90,793)
-------- --------- -------- -------- -------- --------
Net cash provided by (used
in) financing
activities............... 304,733 44,735 (219,217) (365,972) (173,369) (386,995)
-------- --------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS.................... 6,351 35,109 (34,089) 21,918 (24,351) 17,593
CASH AND CASH EQUIVALENTS, beginning
of period........................... 5,638 11,989 47,098 13,009 47,098 13,009
-------- --------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS, end of
period.............................. $ 11,989 $ 47,098 $ 13,009 $ 34,927 $ 22,747 $ 30,602
======== ========= ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-130
<PAGE>

TOTAL INFORMATION MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

1. BACKGROUND:

Total Information Management Corporation ("TIMCO") was incorporated on
December 22, 1980. TIMCO provides document management services to customers in
the San Francisco Bay Area, Sacramento, and San Jose including document and data
conversion services, records management services; namely active storage and
maintenance of documents and files and archival storage of inactive documents.

In September 1997, TIMCO and its stockholders entered into a net asset
agreement with ImageMax, Inc. ("ImageMax") which would close the consummation of
the initial public offering of the common stock of ImageMax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Statements

The financial statements as of September 30, 1997 and for the nine months
ended September 30, 1996 and 1997 are unaudited and, in the opinion of
management of TIMCO, include all adjustments (consisting only of normal
recurring adjustments) necessary for fair presentation of the results for those
interim periods. The results of operations for the nine months ended September
30, 1996 and 1997 are not necessarily indicative of the results to be expected
for the full year.

Cash and Cash Equivalents

TIMCO considers highly liquid investments with original maturities of three
months or less to be cash equivalents. Cash equivalents are carried at cost,
which approximates market value.

Property and Equipment

Intangible Assets

Intangible assets consist of goodwill and noncompete agreements and are
amortized on a straight-line basis over fifteen and three years, respectively.

Revenue Recognition

Revenue is recognized when the services are rendered, or products are
shipped.

Income Taxes

TIMCO has elected to be taxed under Subchapter S of the Internal Revenue
Code, and accordingly, all taxable income and loss of TIMCO is included in the
stockholders' individual tax returns.

F-131
<PAGE>
TOTAL INFORMATION MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)

TIMCO reports certain income and expense items for income tax purposes on a
different basis rather than that reflected in the accompanying financial
statements. The primary differences are due to revenue recognition and accruals
not currently deductible for tax purposes. The cumulative amount of these
differences at September 30, 1997 was approximately $287,000. If the S
Corporation status is terminated, then a deferred income tax liability related
to these cumulative differences would need to be reflected in the accompanying
financial statements.

For informational purposes, the accompanying statements of operations
include an unaudited pro forma adjustment for income taxes which would have been
recorded if TIMCO had not been an S Corporation, based on the tax laws in effect
during the respective periods. The differences between the federal statutory
income tax rate and the pro forma income tax rate primarily relates to state
income taxes and expenses not deductible for tax purposes.

Supplemental Cash Flow Information

For the years ended December 31, 1994, 1995 and 1996, the six months ended
June 30, 1997, and the nine months ended September 30, 1996 and 1997. TIMCO paid
interest of $46,726, $56,755, $98,738, $28,029, $75,599 and $42,812,
respectively. During 1994, TIMCO issued a note payable totaling $100,000 in
exchange for the purchase of fixed assets.

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

Concentration of Business Risk

TIMCO lost a major client during 1996 which accounted for 10% of TIMCO's
sales in 1996. Management plans to replace the lost client's work with new
customers.

Long-Lived Assets

TIMCO follows Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed of." Accordingly, in the event that facts and circumstances indicate
that property and equipment, and intangible or other assets, may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the assets is
compared to the assets' carrying amount to determine if a write-down to market
value or discounted cash flow value is necessary.

F-132
<PAGE>
TOTAL INFORMATION MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED DECEMBER 31,
USEFUL LIVES ------------------- JUNE 30, SEPTEMBER 30,
(YEARS) 1995 1996 1997 1997
------------ -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Production equipment................. 5-7 $658,379 $507,000 $543,731 $561,668
Furniture and fixtures............... 5-12 8,543 8,543 8,543 8,543
Leasehold improvements............... 5-10 150,930 182,587 184,739 184,739
Vehicles............................. 3-5 100,446 100,446 99,446 99,446
Machinery and equipment.............. 5-7 37,820 42,416 44,226 44,226
-------- -------- -------- --------
956,118 840,992 880,685 898,622
Less-Accumulated depreciation........ (533,216) (569,362) (610,547) (632,054)
-------- -------- -------- --------
$422,902 $271,630 $270,138 $266,568
======== ======== ======== ========
</TABLE>

4. LINE OF CREDIT:

TIMCO has a $400,000 line of credit with a bank expiring June 23, 1998,
subject to renewal. Borrowings under the line of credit bear interest at the
bank's prime rate plus 2.5% and are collateralized by all accounts and general
intangibles. The line of credit agreement requires TIMCO to maintain certain
financial ratios. At September 30, 1997 TIMCO was in compliance with all of the
financial ratios. The line of credit is classified as a current liability in the
accompanying financial statements. Average borrowings were $364,272, $341,708,
$47,172 and $55,535 and the maximum borrowings outstanding were $400,000,
$398,793, $230,793 and $230,793 during the years ended December 31, 1995 and
1996, the six months ended June 30, 1997, and the nine months ended September
30, 1997, respectively.

5. LONG-TERM DEBT:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30, SEPTEMBER 30,
1995 1996 1997 1997
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
Note payable-Small Business Administration; due
December 1, 2001, interest at prime plus 2.5%,
monthly payments of principal and interest of
$3,346, secured by accounts receivable and
equipment....................................... $180,408 $155,767 $145,136 $139,539
Note payable-bank; due October 17, 1999, interest
at prime plus 2.5%, monthly principal payments
of $1,112, secured by accounts receivable and
equipment....................................... -- 37,776 31,104 --
Note payable; due April 1999, monthly principal
and interest payments of $1,942, secured by
autos........................................... 66,435 49,605 40,477 35,722
Note payable-related party, no expiration date,
interest at 8%, unsecured....................... 20,000 -- -- --
Note payable-Kalmon; a related party; no
expiration date, interest at 8% per annum,
unsecured....................................... 40,000 7,027 -- --
Note payable-Roger Blue; a related party; due
February 1, 1999, interest at 10% per annum,
principal and interest payments of $1,710 per
month, secured by assets of the Company......... 53,000 38,450 29,936 24,162
Note Payable; due August 1, 1999 at $1,000 per
month, without interest, unsecured.............. 44,000 32,000 26,000 23,000
-------- -------- -------- --------
403,843 320,625 272,653 222,423
Less-Current portion.............................. (63,776) (95,150) (81,949) (78,329)
-------- -------- -------- --------
$340,067 $225,475 $190,704 $144,094
======== ======== ======== ========
</TABLE>

F-133
<PAGE>
TOTAL INFORMATION MANAGEMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

5. LONG-TERM DEBT: -- (CONTINUED)
As of December 31, 1996, the aggregate amounts of annual principal
maturities of long-term debt are as follows:

6. COMMITMENTS AND CONTINGENCIES:

TIMCO leases its office building, storage buildings and certain office and
production equipment under operating leases. While all of the agreements provide
for minimum lease payments, some provide for additional costs for utilities and
maintenance of the properties. Future minimum lease payments required under
operating leases as of December 31, 1996 are as follows:

TIMCO is party to various claims and other legal matters arising in the
normal course of business. In the opinion of management, the outcome of these
matters will not have a material adverse effect on TIMCO's financial position or
results of operations.

7. RELATED-PARTY TRANSACTIONS:

During late 1995, TIMCO entered into a severance agreement with TIMCO's
former President. The terms of the severance agreement provide for payments of
$4,187 per month for the first thirty-two months, $3,687 per month for the next
sixteen months and $5,250 per month for the last twelve months. TIMCO recorded a
compensation charge of $219,326 in the year ended December 31, 1995,
representing the present value of these severance payments.

As part of the severance agreement, if at any time prior to January 1,
1998, TIMCO sells 100% of its operating assets and the sales price is in excess
of $1.5 million, TIMCO shall pay $100,000 as a deferred bonus to the former
President and all remaining payments under the severance agreement will be
accelerated and due within thirty days from the date of sale. As a result of
entering into the asset purchase agreement with ImageMax (see Note 8), TIMCO
recorded a $100,000 compensation charge in September 1997.

On January 2, 1996, TIMCO's President purchased 2,400 shares of TIMCO's
stock from TIMCO's former President for the total consideration of $108,000
including a promissory note of $75,027, payable in forty-eight monthly payments
of $1,563 commencing February 1, 1996. The balance of the note on December 31,
1996 was $57,834. TIMCO has guaranteed full performance of this note.

F-134
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To TPS Micrographics, Inc.:

We have audited the accompanying balance sheets of TPS Micrographics, Inc.
(a Virginia corporation) as of March 31, 1996 and 1997, and the related
statements of operations, stockholder's deficit and cash flows for each of the
three years in the period ended March 31, 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of TPS Micrographics, Inc. as
of March 31, 1996 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended March 31, 1997 in conformity
with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
August 13, 1997

F-135
<PAGE>
TPS MICROGRAPHICS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31,
--------------------- SEPTEMBER 30,
1996 1997 1997
ASSETS -------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Accounts receivable, net of reserves of $37,193,
$31,499 and $30,711........................... $457,081 $ 711,142 $ 808,850
Inventories...................................... 173,276 151,374 138,897
Prepaid expenses and other....................... 11,165 18,813 44,787
Deferred income taxes............................ 10,474 16,041 16,041
-------- ---------- ----------
Total current assets....................... 651,996 897,370 1,008,575
PROPERTY AND EQUIPMENT, net........................ 204,206 362,378 324,375
RECEIVABLE FROM STOCKHOLDER........................ 34,750 43,263 66,536
OTHER.............................................. 28,548 22,448 19,399
-------- ---------- ----------
$919,500 $1,325,459 $1,418,885
======== ========== ==========
LIABILITIES AND
STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
Bank overdraft................................... $ 41,569 $ 11,836 $ 90,544
Line of credit................................... 250,000 236,000 350,000
Current portion of long-term debt................ 52,502 178,517 125,972
Current portion of capitalized lease
obligations................................... 10,575 32,890 32,977
Accounts payable................................. 130,737 232,279 248,695
Accrued expenses................................. 68,688 135,040 158,793
Deferred revenue................................. 52,269 124,994 32,257
-------- ---------- ----------
Total current liabilities.................. 606,340 951,556 1,039,238
-------- ---------- ----------
LONG-TERM DEBT..................................... 512,170 489,856 478,303
-------- ---------- ----------
CAPITALIZED LEASE OBLIGATIONS...................... 10,702 72,453 55,691
-------- ---------- ----------
DEFERRED INCOME TAXES.............................. 2,326 12,608 12,608
-------- ---------- ----------
COMMITMENTS (NOTE 6)
STOCKHOLDER'S DEFICIT:
Common stock, $10 par value, 200 shares
authorized, 100 shares issued and 25 shares
outstanding................................... 1,000 1,000 1,000
Additional paid-in capital....................... 225,464 225,464 225,464
Retained earnings................................ 111,498 122,522 156,581
Less--Treasury stock, 75 shares at cost.......... (550,000) (550,000) (550,000)
-------- ---------- ----------
Total stockholder's deficit................ (212,038) (201,014) (166,955)
-------- ---------- ----------
$919,500 $1,325,459 $1,418,885
======== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-136
<PAGE>
TPS MICROGRAPHICS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MARCH 31, SEPTEMBER 30,
------------------------------------ -----------------------
1995 1996 1997 1996 1997
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Services................. $1,538,699 $1,819,451 $2,428,121 $1,052,051 $1,568,578
Products................. 693,677 927,648 1,055,714 637,237 691,917
---------- ---------- ---------- ---------- ----------
2,232,376 2,747,099 3,483,835 1,689,288 2,260,495
---------- ---------- ---------- ---------- ----------
COST OF REVENUES:
Services................. 1,013,204 1,239,229 1,519,645 732,698 1,055,100
Products................. 642,934 768,917 963,854 531,326 587,324
Depreciation and
amortization.......... 47,356 67,626 95,687 33,779 53,772
---------- ---------- ---------- ---------- ----------
1,703,494 2,075,772 2,579,186 1,297,803 1,696,196
---------- ---------- ---------- ---------- ----------
Gross profit.......... 528,882 671,327 904,649 391,485 564,299
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES................. 530,917 604,548 798,642 310,620 454,678
---------- ---------- ---------- ---------- ----------
Operating income
(loss)............. (2,035) 66,779 106,007 80,865 109,621
INTEREST EXPENSE........... 4,788 68,855 87,274 42,573 53,920
---------- ---------- ---------- ---------- ----------
Income (loss) before
income taxes....... (6,823) (2,076) 18,733 38,292 55,701
INCOME TAXES (BENEFIT)..... (3,509) (405) 7,709 15,757 21,642
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS).......... $ (3,314) $ (1,671) $ 11,024 $ 22,535 $ 34,059
========== ========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-137
<PAGE>
TPS MICROGRAPHICS, INC.

STATEMENTS OF STOCKHOLDER'S DEFICIT

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
--------------- PAID-IN RETAINED TREASURY STOCKHOLDER'S
SHARES AMOUNT CAPITAL EARNINGS STOCK DEFICIT
------ ------ ---------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31,
1994....................... 100 $1,000 $225,464 $116,483 $ -- $ 342,947
Purchase of treasury
stock................ -- -- -- -- (550,000) (550,000)
Net loss................ -- -- -- (3,314) -- (3,314)
--- ------ -------- -------- --------- ---------
BALANCE, MARCH 31,
1995....................... 100 1,000 225,464 113,169 (550,000) (210,367)
Net loss................ -- -- -- (1,671) -- (1,671)
--- ------ -------- -------- --------- ---------
BALANCE, MARCH 31,
1996....................... 100 1,000 225,464 111,498 (550,000) (212,038)
Net income.............. -- -- -- 11,024 -- 11,024
--- ------ -------- -------- --------- ---------
BALANCE, MARCH 31,
1997....................... 100 1,000 225,464 122,522 (550,000) (201,014)
Net income
(unaudited).......... -- -- -- 34,059 -- 34,059
--- ------ -------- -------- --------- ---------
BALANCE, SEPTEMBER 30, 1997
(UNAUDITED)................ 100 $1,000 $225,464 $156,581 $(550,000) $(166,955)
=== ====== ======== ======== ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-138
<PAGE>
TPS MICROGRAPHICS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED MARCH 31, SEPTEMBER 30,
------------------------------ -------------------
1995 1996 1997 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................. $ (3,314) $ (1,671) $ 11,024 $ 22,535 $ 34,059
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities-
Depreciation and amortization.................. 47,356 67,626 95,687 33,779 53,772
Deferred income taxes (benefit)................ (5,300) (2,848) 4,715 -- --
Changes in operating assets and liabilities-
Accounts receivable......................... 216,492 (66,946) (254,061) (90,864) (97,708)
Inventories................................. (42,314) (86,861) 21,902 43,207 12,477
Prepaid expenses and other.................. (11,520) (9,645) (16,161) (10,717) (49,247)
Accounts payable and accrued expenses....... (164,458) (106,648) 167,894 41,062 40,169
Deferred revenue............................ 19,288 32,981 72,725 (25,277) (92,737)
-------- -------- -------- -------- --------
Net cash provided by (used in) operating
activities.............................. 56,230 (174,012) 103,725 13,725 (99,215)
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net........... (58,054) (89,950) (139,205) (54,137) (12,720)
Acquisition of customer list....................... -- (30,500) -- -- --
-------- -------- -------- -------- --------
Net cash used in investing activities..... (58,054) (120,450) (139,205) (54,137) (12,720)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under line of credit... -- 250,000 (14,000) -- 114,000
Bank overdraft..................................... 5,142 36,427 (29,733) 34,991 78,708
Proceeds from long-term debt....................... -- 32,000 137,000 37,000 --
Payments on long-term debt and capitalized lease
obligations...................................... (3,318) (23,965) (57,787) (31,579) (80,773)
-------- -------- -------- -------- --------
Net cash provided by financing
activities.............................. 1,824 294,462 35,480 40,412 111,935
-------- -------- -------- -------- --------
NET INCREASE IN CASH................................. -- -- -- -- --
CASH, BEGINNING OF PERIOD............................ -- -- -- -- --
-------- -------- -------- -------- --------
CASH, END OF PERIOD.................................. $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-139
<PAGE>
TPS MICROGRAPHICS, INC.
NOTES TO FINANCIAL STATEMENTS

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

1. BACKGROUND:

TPS Micrographics, Inc. ("TPS") was incorporated in Virginia on August 24,
1990. TPS provides data and information conversion services ranging from CD-ROM
scanning/imaging to microfilm processing. TPS is also an authorized Canon
dealer, selling various microfilm/microfiche readers and other related
equipment.

TPS and its stockholder intend to enter into a stock acquisition agreement
with ImageMax, Inc. ("ImageMax") which would close upon the consummation of the
initial public offering of the common stock of ImageMax.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Statements

The financial statements as of September 30, 1997 and for the six months
ended September 30, 1996 and 1997 are unaudited and, in the opinion of the
management of TPS, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results for those interim
periods. The results of operations for the six months ended September 30, 1997
are not necessarily indicative of the results to be expected for the full year.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories primarily represent microfiche viewing and imaging
equipment, production and related supplies.

Property and Equipment

Property and equipment are recorded at cost. Additions and improvements are
capitalized and repairs and maintenance are charged to expense as incurred.
Depreciation is provided using the straight-line method over the estimated
useful lives of the assets. Leasehold improvements are amortized over the lesser
of their useful life or the term of the lease.

Other Assets

Other assets consist of an acquired customer list which is being amortized
on a straight-line basis over five years. Amortization expense was $1,952 and
$6,100 for the years ended March 31, 1996 and 1997, respectively, and
accumulated amortization was $8,052 at March 31, 1997.

Revenue Recognition

Revenue is recognized when the services are rendered or products are
shipped to customers. Deferred revenue represents payments for customer storage
and certain services which are billed in advance of performance.

Income Taxes

TPS accounts for income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Under SFAS
No. 109, deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets

F-140
<PAGE>
TPS MICROGRAPHICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)

and liabilities and are measured using enacted tax rates that are expected to be
in effect when the differences reverse.

Supplemental Cash Flow Information

For the years ended March 31, 1995, 1996 and 1997, TPS paid interest of
$4,788, $68,855 and $87,274, respectively. For the years ended March 31, 1995,
1996 and 1997, TPS paid income taxes of $1,791, $2,443 and $2,994, respectively.
Capital lease obligations of $16,542, $14,690 and $108,554 were incurred on
equipment leases entered into in 1995, 1996 and 1997, respectively. In fiscal
1995, TPS purchased 75 shares of its common stock for $550,000 through the
issuance of debt (see Note 4).

Use of Estimates in Financial Statements

Fair Value of Financial Instruments

For certain of TPS' financial instruments including accounts receivable,
accounts payable and accrued expenses, management believes that the carrying
amounts approximate fair value due to their short-term maturities. The carrying
amount of long-term debt approximates fair value on the balance sheet dates.

Long-Lived Assets

TPS follows SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of." Accordingly, in the event
that facts and circumstances indicate that property and equipment, and
intangible or other assets, may be impaired, an evaluation of recoverability
would be performed. If an evaluation is required, the estimated future
undiscounted cash flows associated with the assets is compared to the assets'
carrying amount to determine if a write-down to market value or discounted cash
flow value is necessary.

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
ESTIMATED MARCH 31,
USEFUL LIVES ------------------- SEPTEMBER 30,
YEARS 1996 1997 1997
------------ -------- -------- -------------
<S> <C> <C> <C> <C>
Scanning and filming equipment..... 5-7 $311,487 $490,406 $514,100
Furniture and office equipment..... 5-7 39,905 61,913 63,374
Delivery equipment................. 5 76,786 123,618 111,183
-------- -------- --------
428,178 675,937 688,657
Less- Accumulated depreciation..... (223,972) (313,559) (364,282)
-------- -------- --------
$204,206 $362,378 $324,375
======== ======== ========
</TABLE>

F-141
<PAGE>
TPS MICROGRAPHICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

3. PROPERTY AND EQUIPMENT: -- (CONTINUED)

Depreciation expense for the years ended March 31, 1995, 1996 and 1997 was
$47,356, $65,674, $89,587, respectively. As of March 31, 1997, TPS had $126,958
in property and equipment, net of accumulated amortization, financed under
capital leases.

4. DEBT FINANCING:

<TABLE>
<CAPTION>
MARCH 31,
------------------- SEPTEMBER 30,
1996 1997 1997
-------- -------- -------------
<S> <C> <C> <C>
Note payable, interest at 8.5%, due in monthly
installments of principal and interest of $5,416
through April 2010................................. $532,672 $512,170 $501,249
Notes payable to bank, interest at prime plus 1%, due
in monthly installments of principal and interest
of $6,667.......................................... -- 100,000 79,997
Notes payable, interest at 8%, due in monthly
installments of principal and interest of $5,828
through March 1998................................. 32,000 56,203 23,029
-------- -------- --------
564,672 668,373 604,275
Less- Current portion................................ (52,502) (178,517) (125,972)
-------- -------- --------
$512,170 $489,856 $478,303
======== ======== ========
</TABLE>

At March 31, 1997, TPS has a line of credit agreement with a bank which
provides for borrowings of up to $450,000. The line bears interest at the prime
rate plus 1% and is made available at the bank's discretion. The line of credit
is secured by substantially all of TPS' assets and the personal guarantee of the
stockholder.

The note payable with an outstanding principal of $512,170 at March 31,
1997 is collateralized by the outstanding common stock of TPS. The other notes
payable are secured by accounts receivable, equipment and the personal guarantee
of the stockholder.

As of March 31, 1997, maturities of long-term debt are as follows:

<TABLE>
<S> <C>
1998...................................... $178,517
1999...................................... 24,286
2000...................................... 26,432
2001...................................... 28,770
2002...................................... 31,315
Thereafter................................ 379,053
--------
$668,373
========
</TABLE>

F-142
<PAGE>
TPS MICROGRAPHICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

5. CAPITALIZED LEASE OBLIGATIONS:

TPS leases certain property and equipment under capitalized leases with
interest ranging from 7% to 18%. Future minimum lease payments as of March 31,
1997 are as follows:
<TABLE>
<S> <C>

1998...................................... $ 43,323
1999...................................... 40,560
2000...................................... 27,154
2001...................................... 13,706
--------
Total minimum lease payments.............. 124,743
Less- Amount representing interest........ (19,400)
--------
Present value of minimum lease payments... 105,343
Less- Current portion..................... (32,890)
--------
$ 72,453
========
</TABLE>

6. COMMITMENTS:

TPS leases office space and certain equipment under noncancelable operating
leases. Rent expense for the years ended March 31, 1995, 1996 and 1997 was
$63,222, $83,298 and $90,564, respectively. Future minimum lease payments are as
follows:
<TABLE>
<S> <C>

1998...................................... $115,709
1999...................................... 105,431
2000...................................... 17,721
--------
$238,861
========
</TABLE>

7. INCOME TAXES:

The components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Current Provision:
Federal......................................... $ 1,155 $ 1,745 $ 2,153
State........................................... 636 698 841
------- ------- -------
1,791 2,443 2,994
------- ------- -------
Deferred Provision:
Federal......................................... (4,505) (2,421) 4,008
State........................................... (795) (427) 707
------- ------- -------
(5,300) (2,848) 4,715
------- ------- -------
$(3,509) $ (405) $ 7,709
======= ======= =======
</TABLE>

F-143
<PAGE>
TPS MICROGRAPHICS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED.)

7. INCOME TAXES: -- (CONTINUED)

The tax effect of temporary differences as established in accordance with
SFAS No. 109 that give rise to deferred taxes are as follows:

<TABLE>
<CAPTION>
MARCH 31,
-------------------
1996 1997
-------- --------
<S> <C> <C>
Gross deferred tax assets for accruals and reserves not
currently deductible.................................... $10,474 $16,041
Gross deferred tax liability for differences in basis of
property and equipment.................................. (2,326) (12,608)
------- -------
$ 8,148 $ 3,433
======= =======
</TABLE>

TPS did not have any valuation allowances against deferred tax assets at
March 31, 1997, as it believes it is more likely than not that the deferred tax
assets will be realized.

8. PROFIT SHARING PLAN:

Effective November 30, 1996, TPS terminated its trusteed profit sharing
plan for qualified employees. Upon termination, participants in the plan became
fully vested in TPS' contributions and all plan assets were distributed to the
plan participants. TPS did not make any contributions to the plan for the years
ended March 31, 1995, 1996 and 1997.

9. STOCKHOLDER RECEIVABLE:

At March 31, 1996 and 1997, TPS had a receivable due from its sole
stockholder of $34,750 and $43,263, respectively. The receivable has no fixed
repayment schedule and bears interest at 5%.

10. SALE OF THE BUSINESS (UNAUDITED):

In September 1997, TPS and its stockholder entered into a stock purchase
agreement with ImageMax (see Note 1).

F-144
<PAGE>

[PHOTOGRAPHS DEPICTING VARIOUS OPERATIONS OF CERTAIN OF THE FOUNDING COMPANIES.]

<PAGE>

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................... 3
Risk Factors............................ 10
The Company............................. 17
Use of Proceeds......................... 20
Dividend Policy......................... 20
Capitalization.......................... 21
Dilution................................ 22
Selected Financial Data................. 23
Management's Discussion and Analysis
of Financial Condition and Results of
Operations............................ 26
Business................................ 57
Management.............................. 66
Certain Transactions.................... 72
Principal Shareholders.................. 75
Description of Capital Stock............ 76
Shares Eligible for Future Sale......... 78
Underwriting............................ 79
Legal Matters........................... 81
Experts................................. 81
Additional Information.................. 81
Index to Financial Statements........... F-1
</TABLE>

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

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

3,100,000 SHARES

[IMAGEMAX LOGO]

COMMON STOCK

------------------------
PROSPECTUS
, 1997
------------------------

WILLIAM BLAIR & COMPANY

JANNEY MONTGOMERY SCOTT INC.

<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth an itemized statement of all estimated
expenses, all of which will be paid by the Company, in connection with the
issuance and distribution of the securities being registered:

<TABLE>
<CAPTION>
NATURE OF EXPENSE AMOUNT
----------------- ----------
<S> <C>
SEC Registration Fee........................................ $ 15,124
Nasdaq National Market Listing Fee.......................... 31,097
NASD Filing Fee............................................. 5,491
Printing and engraving fees................................. 300,000
Registrant's counsel fees and expenses...................... 700,000
Accounting fees and expenses................................ 1,800,000
Blue Sky filing fees and expenses and counsel fees.......... 5,000
Transfer agent and registrar fees........................... 10,000
Director and officer insurance policy premiums.............. 80,000
Miscellaneous............................................... 53,288
----------
TOTAL..................................................... $3,000,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Pursuant to Sections 1741-1747 of the BCL, Article XIV of the Company's
Bylaws provides that the Company shall, in the case of directors and officers,
and may, in the case of employees and agents, indemnify any such person who is
or was a party (other than a party acting on his or her own behalf) or who is
threatened to be made such a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including actions brought by or in the right of the Company where
certain standards of conduct have been met), by reason of the fact that such
person is or was a director or officer of the Company, or is or was serving at
the request of the Company on behalf of another enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action if
he or she met certain requisite standards of conduct. In all such cases, the
Company shall indemnify any such person against all such expenses actually and
reasonably incurred by him or her in connection with any such action to the
extent that such person has been successful on the merits or in defense of any
such action. The indemnification provisions of the Bylaws are non-exclusive.

Pursuant to Section 1713 of the BCL, Article IV, Section 4.16 of the
Company's Bylaws provides that a director shall not be liable to the Company for
monetary damages as such for any action taken or omitted unless the director
breaches or fails to perform a duty of his office and that breach or failure to
perform constitutes self-dealing, willful misconduct or recklessness. This
limitation does not apply to criminal liability or liability for the payment of
taxes. The Company believes that the provisions will assist it in securing and
maintaining the services of directors who are not employees of the Company.

The Company intends to procure insurance, which would afford officers and
directors insurance coverage for losses arising from claims based on breaches of
duty, negligence, error and other wrongful acts, including liabilities under the
Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In November 1996 the Company sold 423,077 shares of Common Stock to its
founding shareholders for an aggregate consideration of $5,000. Following
initial funding in November 1996, the Company sold 150,000 shares of convertible
preferred stock convertible into 126,923 shares of Common Stock upon completion
of the Offering and 126,923 shares of common stock to certain of its founding
shareholders, to David C. Utz, Jr., a director, and to Brian K. Bergeron, an
accredited investor, for an aggregate consideration of $75,000.

II-1
<PAGE>

In April 1997 the Company sold 105,000 shares of convertible preferred
stock convertible into 88,845 shares of Common Stock upon completion of the
Offering to certain of its founding shareholders and two additional accredited
investors for an aggregate consideration of $105,000.

In June 1997 the Company sold 97,308 shares of Common Stock to certain of
its founding shareholders and its Chief Operating and Chief Financial Officers
for an aggregate consideration of $230,000.

On September 11, 1997 the Company sold 63,462 shares of Common Stock to an
accredited investor for an aggregate consideration of $300,000 and 269,125
shares of convertible preferred stock convertible into 227,721 shares of Common
Stock upon completion of the Offering to 17 accredited investors for an
aggregate consideration of $1,076,500.

On September 9 and September 11, 1997, the Company entered into 14
acquisition agreements pursuant to which it agreed to issue an aggregate of
1,184,468 shares of Common Stock for an aggregate purchase price of $15,397,746
(based on an assumed initial public offering price of $13.00 per share) as
partial consideration for the Founding Companies.

The foregoing described issuances of securities did not involve
underwriters and were exempt from registration under the Securities Act by
virtue of the exemption provided by Section 4(2) thereof for transactions not
involving any public offering.

ITEM 16. EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES.

(A) EXHIBITS:

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C> <C>
1 -- Form of Underwriting Agreement by and between the Company
and the Underwriters.*
2.1 -- Agreement and Plan of Reorganization dated September 9,
1997, by and among the Company, DocuTech Data Systems, Inc.,
and Rex Lamb and Mark Creglow (including escrow agreement).*
2.2 -- Asset Purchase Agreement dated September 9, 1997 by and
among the Company Rex Lamb and Vicki Lamb (including escrow
agreement).*
2.3 -- Agreement and Plan of Reorganization dated September 9,
1997, by and among the Company, Utz Medical Enterprises,
Inc., and David C. Utz, Jr. (including escrow agreement).
2.4 -- Agreement and Plan of Reorganization dated September 9, 1997
by and among Jane Semasko and John Semasko, Oregon
Micro-Imaging, Inc. and the Company (including escrow
agreement).*
2.5 -- Asset Purchase Agreement dated September 9, 1997 by and
among Spaulding Company, Inc., Semco Industries, Inc., and
the Company (including escrow agreement).*
2.6 -- Asset Purchase Agreement dated September 9, 1997 by and
among Total Information Management Corporation and the
Company (including escrow agreement).*
2.7 -- Stock Purchase Agreement dated September 9, 1997 by and
among Ovidio Pugnale, Image Memory Systems, Inc. and the
Company (including escrow agreement).*
2.8 -- Agreement and Plan of Reorganization dated September 9,
1997, by and among the Company, International Data Services
of New York, Inc., and Mitchell J. Taube and Ellen F.
Rothschild-Taube (including escrow agreement).*
2.9 -- Stock Purchase Agreement dated September 9, 1997 by and
among David Crowder, TPS Micrographics, Inc. and the Company
(including escrow agreement).*
2.10 -- Agreement and Plan of Reorganization dated September 11,
1997 by and among the Company, Image and Information
Solutions, Inc. and Gary Blackwelder (including escrow
agreement).
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C> <C>
2.11 -- Agreement and Plan of Reorganization dated September 9, 1997
by and among Madeline Solomon, David C. Yezbak, CodaLex
Microfilming Corporation and the Company (including escrow
agreement).*
2.12 -- Asset Purchase Agreement dated September 9, 1997 by and
among Imaging Information Industries, Inc., Gerald P.
Gorman, Theodore J. Solomon, Jr., Charles P. Yezbak, III,
David C. Yezbak and the Company (including escrow
agreement).*
2.13 -- Agreement and Plan of Reorganization dated September 9, 1997
by and among Gerald P. Gorman, Theodore J. Solomon, Theodore
J. Solomon, Jr., Charles P. Yezbak, III, David C. Yezbak,
Laser Graphics Systems & Services, Inc. and the Company
(including escrow agreement).*
2.14 -- Asset Purchase Agreement dated September 9, 1997 by and
among DataLink Corporation, Judith E. DeMott, Geri E.
Davidson and the Company (including escrow agreement).*
3.1 -- Amended and Restated Articles of Incorporation of the
Company.
3.2 -- Amended and Restated Bylaws of the Company.
4.1 -- Specimen Stock Certificate.
4.2 -- Shareholders Agreement between the Company and certain of
its shareholders dated November 19, 1996.
4.3 -- Amendment No. 1 to Shareholders Agreement dated November 19,
1996.
4.4 -- Form of Joinder to Shareholders Agreement executed by Bruce
M. Gillis, Sands Point Partners I, Wilblairco Associates,
Osage Venture Partners, Steven N. Kaplan, Brian K. Bergeron,
James M. Liebhardt, G. Stuart Livingston, III, Richard D.
Moseley, David C. Utz, Jr., Bruce M. Gillis, Custodian for
Claire Solomon Gillis, Bruce M. Gillis, Custodian for
Katherine Tessa Solomon Gillis, S. David Model, Andrew R.
Bacas, David C. Yezbak, Theodore J. Solomon, Walter F.
Gilbert, Carmen DiMatteo, Patrick M. D'Agostino, David L.
Crowder, James D. Brown and Mary M. Brown, JTWROS, Mitchell
S. Taube and Ellen F. Rothschild-Taube, JTWROS, John Semasko
and Jane Semasko, JTWROS, Wolfe F. Model and Renate H.
Model.
5.1 -- Opinion of Pepper, Hamilton & Scheetz LLP.
10.1 -- 1997 Incentive Plan.
10.2 -- 1997 Employee Stock Purchase Plan.
10.3 -- Management Agreement between GBL Capital Corporation and the
Company dated November 27, 1996.
10.4 -- Employment Agreement between the Company and Bruce M. Gillis
dated as of August 1, 1997.
10.5 -- Employment Agreement between the Company and James D. Brown
dated as of August 18, 1997.
10.6 -- Employment Agreement between the Company and S. David Model
dated as of August 18, 1997.
10.7 -- Employment Agreement between the Company and Andrew R. Bacas
dated as of August 1, 1997.
10.8 -- Form of Employment Agreement between the Company and John E.
Semasko.*
10.9 -- Form of Employment Agreement between the Company and Rex
Lamb.*
10.10 -- Lease Agreement dated March 26, 1996 by and between Marlyn
D. Schwarz and Rex Lamb d/b/a DocuTech.*
10.11 -- Lease Agreement dated February 24, 1992 by and between
Marlyn Schwarz d/b/a Old Cheney Plaza and Rex Lamb d/b/a
DocuTech.*
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C> <C>
10.12 -- Lease Agreement dated September 1, 1994 by and between
Jonstar Realty Corporation and Spaulding Company, Inc.
(renewed May 27, 1997).*
10.13 -- [Intentionally left blank]
10.14 -- Lease dated September 1, 1995 by and between Robert S. Greer
and Elvera A. Greer and American Micro-Med Corporation.*
10.15 -- Lease dated February 8, 1994 and Lease Rider dated as of
February 1, 1994 by and between Oporto Development Corp. and
International Data Services of New York, Inc.*
10.16 -- Amendment of Lease dated June 6, 1996 between East Cobb Land
Development and Investment Co., L.P. and Imaging Information
Industries/David Yezbak, extended by letter dated July 16,
1997.*
10.17 -- [Intentionally left blank]
10.18 -- Lease dated January 10, 1996 by and between Financial
Enterprises III and TPS Imaging Solutions, Inc.*
10.19 -- Lease Agreement dated March 31, 1995 by and between
Technical Publications Service, Inc. and TPS Micrographics,
Inc.*
10.20 -- Standard Industrial Commercial MultiTenant Lease-Gross dated
June 20, 1994 by and between Northgate Assembly of God,
North Sacramento, d/b/a Arena Christian Center and Total
Information Management Corporation.*
10.21 -- Lease dated January 26, 1981 and Extension of Lease dated
October, 1992 by and between Trader Vic's Food Products and
Total Information Management Corporation.*
10.22 -- Standard Industrial Lease dated September 24, 1991 by and
between Charles F. Coss, Viola B. Coss, Tracey C. Quinn,
John Coss, Peter B. Coss, Elizabeth Coss, Tracey C. Quinn as
Trustee for Geoffrey C. Quinn and Elizabeth Coss, as Trustee
for Caitlin N. Shay and Total Information Management
Corporation extended by letter dated October 18, 1996 from
James Bunker to Peter Coss.*
10.23 -- Lease dated January 1, 1993 between CSX Transportation, Inc.
and American Micro-Med Corporation.*
10.24 -- Lease and Service Agreement dated September 4, 1997 and two
Addendums dated October 15, 1997 between American Executive
Centers, Inc. and the Company.*
21 -- Subsidiaries.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Pepper, Hamilton & Scheetz LLP (included in
Exhibit 5.1).
23.3 -- Consent of Rex Lamb.*
23.4 -- Consent of John E. Semasko.*
23.5 -- Consent of Steven N. Kaplan.*
23.6 -- Consent of Lennox K. Black.*
23.7 -- Consent of Lewis E. Hatch, Jr.*
23.8 -- Consent of David C. Carney.*
24 -- Powers of Attorney.*
27 -- Financial Data Schedule (in electronic format only).*
</TABLE>

- ------------------
* Previously filed.

II-4
<PAGE>
(B) CONSOLIDATED FINANCIAL STATEMENT SCHEDULES:

None.

ITEM 17. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes to provide to the
Underwriters at the Closing specified in the underwriting agreement,
certificates in such denomination and registered in such names or required by
the Underwriters to permit prompt delivery to each purchaser.

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

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

II-5
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Philadelphia, Commonwealth of Pennsylvania, on the 28th day of November, 1997.

IMAGEMAX, INC.

By: /s / BRUCE M. GILLIS
------------------------------------
Bruce M. Gillis
Chief Executive Officer and
Chairman of the Board

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

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s / BRUCE M. GILLIS Chief Executive Officer; Director November 28, 1997
- --------------------------------- (principal executive officer)
Bruce M. Gillis

/s / JAMES D. BROWN Chief Financial Officer November 28, 1997
- --------------------------------- (principal financial officer and
James D. Brown principal accounting officer)

* Director November 28, 1997
- ---------------------------------
Andrew R. Bacas

* Director November 28, 1997
- ---------------------------------
David C. Utz, Jr.

*By /s / BRUCE M. GILLIS
- ---------------------------------
Bruce M. Gillis, attorney-in-fact
pursuant to power of attorney
previously filed with this
registration statement
November 28, 1997
</TABLE>

II-6
<PAGE>
EXHIBIT INDEX

<TABLE>
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EXHIBIT
NO. DESCRIPTION
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2.3 -- Agreement and Plan of Reorganization dated September 9,
1997, by and among the Company, Utz Medical Enterprises,
Inc., and David C. Utz, Jr. (including escrow agreement).

2.10 -- Agreement and Plan of Reorganization dated September 11,
1997 by and among the Company, Image and Information
Solutions, Inc. and Gary Blackwelder (including escrow
agreement).

3.1 -- Amended and Restated Articles of Incorporation of the
Company.

3.2 -- Amended and Restated Bylaws of the Company.

4.1 -- Specimen Stock Certificate.

4.2 -- Shareholders Agreement between the Company and certain of
its shareholders dated November 19, 1996.

4.3 -- Amendment No. 1 to Shareholders Agreement dated November 19,
1996.

4.4 -- Form of Joinder to Shareholders Agreement executed by Bruce
M. Gillis, Sands Point Partners I, Wilblairco Associates,
Osage Venture Partners, Steven N. Kaplan, Brian K. Bergeron,
James M. Liebhardt, G. Stuart Livingston, III, Richard D.
Moseley, David C. Utz, Jr., Bruce M. Gillis, Custodian for
Claire Solomon Gillis, Bruce M. Gillis, Custodian for
Katherine Tessa Solomon Gillis, David S. Model, Andrew R.
Bacas, David C. Yezbak, Theodore J. Solomon, Walter F.
Gilbert, Carmen DiMatteo, Patrick M. D'Agostino, David L.
Crowder, James D. Brown and Mary M. Brown, JTWROS, Mitchell
S. Taube and Ellen F. Rothschild-Taube, JTWROS, John Semasko
and Jane Semasko, JTWROS, Wolfe F. Model and Renate H.
Model.

5.1 -- Opinion of Pepper, Hamilton & Scheetz LLP.

10.1 -- 1997 Incentive Plan.

10.2 -- 1997 Employee Stock Purchase Plan.

10.3 -- Management Agreement between GBL Capital Corporation and the
Company dated November 27, 1996.

10.4 -- Employment Agreement between the Company and Bruce M. Gillis
dated as of August 1, 1997.

10.5 -- Employment Agreement between the Company and James D. Brown
dated as of August 18, 1997.

10.6 -- Employment Agreement between the Company and S. David Model
dated as of August 18, 1997.

10.7 -- Employment Agreement between the Company and Andrew R. Bacas
dated as of August 1, 1997.

21 -- Subsidiaries.

23.1 -- Consent of Arthur Andersen LLP.
</TABLE>

PEPPER, HAMILTON & SCHEETZ DRAFT
EXECUTION

AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG

UTZ MEDICAL ENTERPRISES, INC.

DOCUNET INC.

AND

AMMCORP ACQUISITION CORP.

Dated September 9, 1997

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TABLE OF CONTENTS
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ARTICLE 1 - CERTAIN DEFINITIONS...................................................................................2

ARTICLE 2 - THE MERGER...........................................................................................10
2.1. Delivery and Filing of Articles of Merger.........................................................10
2.2. Effective Time of the Merger......................................................................10
2.3. Certificate of Incorporation, By-laws and Board of Directors of Surviving
Corporation....................................................................................10
2.4. Certain Information with Respect to the Capital Stock of the Company, Purchaser
and Newco......................................................................................11
2.5. Effect of Merger..................................................................................11
2.6. Manner of Conversion..............................................................................12
2.7. Delivery of Shares................................................................................13
2.8. Merger Consideration..............................................................................13
2.9. Delivery of Merger Consideration..................................................................17

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF THE SELLER.........................................................18
3.1. Organization; Qualification; Good Standing........................................................18
3.2. Authorization for Agreement.......................................................................19
3.3. Capitalization; Subsidiaries and Affiliates.......................................................19
3.4. Enforceability....................................................................................20
3.5. Matters Affecting Shares; Title to Shares.........................................................20
3.6. Predecessor Status; etc...........................................................................20
3.7. Spin-off by the Company...........................................................................21
3.8. Legal Proceedings.................................................................................21
3.9. Compliance with Laws..............................................................................21
3.10. Labor Matters.....................................................................................22
3.11. Employee Benefit Plans............................................................................23
3.12. Financial Statements..............................................................................25
3.13. Distributions.....................................................................................25
3.14. Absence of Undisclosed Liabilities................................................................26
3.15. Real Property.....................................................................................26
3.16. Tangible Personal Property........................................................................28
3.17. Contracts.........................................................................................29
3.18. Insurance.........................................................................................31
3.19. Proprietary Rights................................................................................31
3.20. Environmental Matters.............................................................................32
3.21. Permits...........................................................................................33
3.22. Regulatory Filings................................................................................33
3.23. Taxes and Tax Returns.............................................................................33
3.24. Investment Portfolio..............................................................................35
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3.25. Affiliate Transactions............................................................................36
3.26. Accounts, Power of Attorney.......................................................................36
3.27. Receivables.......................................................................................36
3.28. Officers and Directors............................................................................36
3.29. Corporate Records.................................................................................37
3.30. Brokers or Finders................................................................................37
3.31. Customers.........................................................................................38
3.32. Investment Company................................................................................38
3.33. Absence of Changes................................................................................38
3.34. Accuracy and Completeness of Information..........................................................39

ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND NEWCO...............................................................................................40
4.1. Organization......................................................................................40
4.2. Authorization for Agreement.......................................................................40
4.3. Enforceability....................................................................................40
4.4. Litigation........................................................................................40
4.5. Registration Statement............................................................................40
4.6. Brokers or Finders................................................................................41

ARTICLE 5 - COVENANTS............................................................................................41
5.1. Good Faith........................................................................................41
5.2. Approvals.........................................................................................41
5.3. Cooperation; Access to Books and Records..........................................................41
5.4. Duty to Supplement................................................................................43
5.5. Information Required For Purchaser Financing Transactions.........................................43
5.6. Performance of Conditions.........................................................................44
5.7. Conduct of Business...............................................................................44
5.8. Negative Covenants................................................................................45
5.9. Exclusive Negotiation.............................................................................47
5.10. Public Announcements..............................................................................48
5.11. Amendment of Schedules............................................................................48
5.12. Cooperation in Preparation of Registration Statement..............................................48
5.13. Examination of Final Financial Statement..........................................................49
5.13. A Audit...........................................................................................50
5.14. Lock-Up Agreements................................................................................50
5.15. Compliance with the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "Hart-Scott Act").....................................................................50
5.16. Reorganization Status.............................................................................50
5.17. Tax Returns and Forms 5500........................................................................51
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ARTICLE 6 - CONDITIONS PRECEDENT TO CLOSING......................................................................51
6.1. Conditions Precedent to the Purchaser and Newco's Obligations.....................................51
6.2. Conditions Precedent to Company's and Seller's Obligations........................................54

ARTICLE 7 - CLOSING..............................................................................................55

ARTICLE 8 - CONFIDENTIALITY AND COVENANT NOT TO COMPETE..........................................................56
8.1. Confidentiality...................................................................................56
8.2. Covenant Not To Compete...........................................................................57
8.3. Specific Enforcement; Extension of Period.........................................................58
8.4. Disclosure........................................................................................58
8.5. Interpretation....................................................................................58
8.6. Seller's Acknowledgment...........................................................................59

ARTICLE 9 - SURVIVAL.............................................................................................59
9.1. Survival of Representations, Warranties, Covenants and Agreements.................................59
9.2. Intentionally Omitted.............................................................................60
9.3. Underwriter's Benefit.............................................................................60

ARTICLE 10 - INDEMNIFICATION.....................................................................................60
10.1. Sellers' Indemnification..........................................................................60
10.2. Purchaser's Indemnification.......................................................................61
10.3. Payment; Procedure for Indemnification............................................................62
10.4. Equitable Contribution Under the Securities Act...................................................64
10.5. Exclusiveness of Indemnification..................................................................64
10.6. Limitations on Indemnification....................................................................65
10.7. Value of DocuNet Common Stock.....................................................................65

ARTICLE 11 - TERMINATION AND REMEDIES............................................................................65
11.1. Termination.......................................................................................65
11.2. Effect of Termination.............................................................................66

ARTICLE 12 - POST-CLOSING COVENANTS..............................................................................67
12.1. Maintenance and Access to Records.................................................................67
12.2. Disclosure........................................................................................67
12.3. Accounts Receivable...............................................................................67

ARTICLE 13 - TRANSFER RESTRICTIONS...............................................................................67
13.1. Transfer Restrictions.............................................................................67
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ARTICLE 14 - SECURITIES LAWS REPRESENTATIONS.....................................................................68
14.1. Compliance with Law..............................................................................68
14.2. Economic Risk; Sophistication....................................................................69

ARTICLE 15 - REGISTRATION RIGHTS.................................................................................69
15.1. Piggyback Registration Rights....................................................................69
15.2. Registration Procedures..........................................................................70
15.3. Underwriting Agreement...........................................................................70
15.4. Availability of Rule 144.........................................................................70
15.5. Survival.........................................................................................71

ARTICLE 16 - MISCELLANEOUS.......................................................................................71
16.1. Notices..........................................................................................71
16.2. No Third Party Beneficiaries.....................................................................72
16.3. Schedules........................................................................................72
16.4. Expenses.........................................................................................72
16.5. Further Assurances...............................................................................72
16.6. Entire Agreement; Amendment......................................................................73
16.7. Section and Paragraph Titles.....................................................................73
16.8. Binding Effect...................................................................................73
16.9. Counterparts.....................................................................................73
16.10. Severability.....................................................................................73
16.11. Governing Law....................................................................................73
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<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
the 9th day of September, 1997, by and among DOCUNET INC., a Pennsylvania
corporation ("Purchaser"), AMMCORP ACQUISITION CORP., a Pennsylvania corporation
("Newco"), UTZ MEDICAL ENTERPRISES, INC., a Minnesota (the "Company") and David
C. Utz, Jr. ("Utz" or the "Seller"). Utz is the only stockholder of the Company.

WHEREAS, Newco is a corporation duly organized and existing under the
laws of the Commonwealth of Pennsylvania, having been incorporated solely
for the purpose of completing the transactions set forth herein, and is a
wholly-owned subsidiary of Purchaser, a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania;

WHEREAS, the respective Boards of Directors of Newco and the Company
(which together are hereinafter collectively referred to as "Constituent
Corporations") deem it advisable and in the best interests of the
Constituent Corporations and their respective stockholders that the Company
merge with and into Newco pursuant to this Agreement and the applicable
provisions of the laws of the Commonwealth of Pennsylvania and the State of
Minnesota;

WHEREAS, Purchaser is entering into other separate agreements
substantially similar to this Agreement (the "Other Agreements"), with each
of the other Founding Companies (as defined herein) and their respective
stockholders in order to acquire additional document management and related
services companies;

WHEREAS, this Agreement, the Other Agreements and the Initial Public
Offering of DocuNet Common Stock (as defined herein) constitute the
"DocuNet Plan of Reorganization;"

WHEREAS, in consideration of the agreements of the Potential Founding
Companies (as defined herein) pursuant to the Other Agreements, the Board
of Directors of the Company has approved this Agreement as part of the
DocuNet Plan of Reorganization in order to transfer the capital stock of
the Company to Purchaser;

WHEREAS, the parties hereto intend for the merger transaction
contemplated herein to qualify as a reorganization under Section
368(a)(1)(A) and Section 368(a)(2)(D) of the Code.

<PAGE>

IN CONSIDERATION of the foregoing and the mutual promises, covenants and
agreements contained in this Agreement, the parties, intending to be legally
bound, hereby agree as follows:

ARTICLE 1
CERTAIN DEFINITIONS

As used in this Agreement, the following terms shall have the meanings
herein specified, unless the context otherwise requires:

1.1. Accounts shall have the meaning set forth in Section 3.26.

1.2. Adverse Claims shall mean, with respect to any asset, any security
interests, liens, encumbrances, pledges, trusts, charges, proxies, conditional
sales, title retention agreements, rights under any Contracts, liabilities and
any other burdens of any nature whatsoever attached to or adversely affecting
such asset.

1.2A. Adjusted Current Liabilities shall have the meaning set forth in
Section 2.8(b).

1.3. Affiliate shall mean: (i) any Person that directly or indirectly
through one or more intermediaries controls, is controlled by or under common
control with the Person specified; (ii) any director, officer, or Subsidiary of
the Person specified; and (iii) the spouse, parents, children, siblings,
mothers-in-law, fathers-in law, sons-in-law, daughters-in-law, bothers-in-law,
and sisters-in-law of the Person specified. For purposes of this definition and
without limitation to the previous sentence, (x) "control" of a Person means the
power, direct or indirect, to direct or cause the direction of management and
policies of such Person, whether through ownership of voting securities, by
contract or otherwise, and (y) any Person owning more than ten percent (10%) or
more of the voting securities or similar interests of another Person shall be
deemed to be an Affiliate of that Person.

1.4. Accountants' CAWCA Report shall have the meaning set forth in Section
2.8.

1.5. Affiliate Transaction shall have the meaning set forth in Section
3.25.

1.6. Articles of Merger shall mean those Articles or Certificates of Merger
with respect to the Merger substantially in the forms attached as Annex I hereto
or with such other changes therein as may be required by applicable state laws.

1.7. Balance Sheet Date shall mean July 31, 1997.

1.7A. Base Purchase Price shall have the meaning set forth in Section 2.8.

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1.8. Business shall mean the business of the Company or any of its
Subsidiaries as conducted as of the date hereof.

1.9. Capitalization Table shall mean the capitalization table set forth in
Section 2.7.

1.10. Cash Purchase Price shall have the meaning set forth in Section 2.9.

1.11. Claim Notice shall have the meaning set forth in Section 10.3(c).

1.12. Closing shall have the meaning set forth in Article 7.

1.13. [Intentionally omitted.]

1.14. Closing Date shall mean the date on which the Closing actually takes
place.

1.15. Closing Balance Sheet shall mean the balance sheet delivered by the
Company to the Purchaser as of the date immediately prior to the Closing Date in
accordance with Section 3.12(d).

1.16. [Intentionally omitted.]

1.17. Code shall mean the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, as amended and supplemented from time to
time, or any successors thereto.

1.18. Common Stock shall mean the common stock, $.01 value per share, of
the Company.

1.19. Confidential Information shall mean (i) with respect to any party to
this Agreement or any Affiliate of such party or any Potential Founding Company,
all financial, technical, commercial or other information, including but not
limited to information, materials, documents, financial reports, business plans
and marketing data that relate to the business, strategies or operations of the
parties hereto or a Potential Founding Company, disclosed or otherwise made
available by such party, such Affiliate or Potential Founding Company (the
"Discloser") to another party, affiliate or Potential Founding Company (the
"Recipient") in connection with the transactions contemplated by this Agreement
and (ii) each of the terms, conditions and other provisions contained in this
Agreement and in the agreements or documents to be delivered pursuant to this
Agreement. Notwithstanding the preceding sentence, the definition of
Confidential Information shall not include any information that (i) is in the
public domain at the time of disclosure to the Recipient or becomes part of the
public domain after such disclosure through no fault of the Recipient, (ii) is
possessed in writing by the Recipient at the time of disclosure to such
Recipient, (iii) is contained in the Registration Statement on Form S-1 to be
filed by Purchaser in connection with the Initial Public Offering or (iv) is
disclosed to a party

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or Potential Founding Company by any Person other than a party to this Agreement
or a Potential Founding Company; provided, that the party to whom such
disclosure has been made does not have actual knowledge that such Person is
prohibited from disclosing such information (either by reason of contractual, or
legal or fiduciary duty or obligation). For the purposes hereof, public domain
shall not include disclosure of information to a Potential Founding Company or
(except as otherwise provided herein) to any other person in connection with the
transactions contemplated hereby.

1.20. Consents shall mean any consents, waivers, approvals, authorizations,
certifications or exemptions from any Person or under any Contract or
Requirement of Law, as applicable.

1.21. Constituent Corporations has the meaning set forth in the second
recital of this Agreement.

1.22. Contracts shall mean, with respect to any Person, any indentures,
indebtedness, contracts, leases, agreements, instruments, licenses, undertakings
and other commitments, whether written or oral, to which such Person is, or such
Person's properties are, bound.

1.23. Credit Acts shall mean (i) the Fair Debt Collection Practices Act, 16
U.S.C. ss.1692, et. seq., the Fair Credit Reporting Act, 16 U.S.C. ss.1681 et.
seq., and any other provision of the Consumer Credit Protection Act, in each
case, together with the rules and regulations promulgated thereunder, (ii) the
Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994, 15 U.S.C.
ss.6101 et. seq., together with the rules and regulations promulgated
thereunder, (iii) the Telephone Consumer Protection Act of 1991, together with
the rules and regulations promulgated thereunder, and (iv) any Requirement of
Law of any jurisdiction relating to the subject matter covered by any of the
foregoing, all as amended and supplemented from time to time, or any successors
thereto.

1.23A. Debt shall have the meaning set forth in Section 2.8(b).

1.24. DocuNet Common Stock shall mean the common stock, no par value per
share, of Purchaser.

1.25. Effective Time of the Merger shall mean the time as of which the
Merger becomes effective, which shall, in any case, occur on the Closing Date.

1.26. Employee Benefit Plan shall mean any deferred compensation, pension,
profit sharing, stock option, stock purchase, savings, group insurance or
retirement plan, and all vacation pay, severance pay, incentive compensation,
consulting, bonus and other employee benefit or fringe benefit plans or
arrangements maintained by the Company or any ERISA Affiliate (including,
without limitation, health insurance, life insurance and other benefit plans
maintained for retirees) within the previous six plan years or with respect to
which contributions are or were

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(within such six year period) made or required to be made by the Company or any
ERISA Affiliate or with respect to which the Company has any liability.

1.27. Environmental Laws shall mean all Requirements of Law relating to
pollution or protection of the environment (including, without limitation,
ambient air, surface water, groundwater, land, or surface or subsurface strata)
including, without limitation, Requirements of Law relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment and Requirements of Law relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any of
the foregoing including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et. seq.
("CERCLA"), the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et.
seq., and the rules and regulations promulgated thereunder, all as amended and
supplemented from time to time, and together with any successors thereto. As
used in this Agreement, the term "hazardous substances" shall have the meaning
assigned to that term in CERCLA, and the rules and regulations promulgated
thereunder, as amended and supplemented from time to time, or any successors
thereto.

1.28. Escrow Agent shall mean the individual or entity named as the Escrow
Agent in the Escrow Agreement.

1.29. Escrow Agreement shall mean the Escrow Agreement between the Seller,
the Purchaser and the Escrow Agent to hold the Escrow Amount pursuant to the
terms and conditions therein as referred to in Section 2.9, substantially in the
form attached hereto as Exhibit A.

1.30. Escrow Amount shall have the meaning set forth in Section 2.4(c).

1.31. ERISA shall mean the Employment Retirement Income Security Act of
1974 and the rules and regulations promulgated thereunder, as amended and
supplemented from time to time, or any successors thereto.

1.32. ERISA Affiliate shall mean any Person that is included with the
Company in a controlled group or affiliated service group under Sections 414(b),
(c), (m) or (o) of the Code.

1.33. [Intentionally omitted.]

1.34. Financial Statements shall have the meaning set forth in Section
3.12(a).

1.35. Founding Companies shall mean those Potential Founding Companies that
enter into definitive acquisition or merger agreements or asset purchase
agreements with the Purchaser in anticipation of a simultaneous acquisition by
Purchaser and Initial Public Offering.

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1.36. GAAP shall mean generally accepted accounting principles in the
United States set forth in the Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and in statements by the
Financial Accounting Standards Board or in such other statement by such other
entity as may be generally recognized as the successors for the aforementioned;
and shall also mean that the accounting principles observed in a current period
are comparable in all material respects to those applied in a preceding period
unless specific exemption is noted in the financial statements where a change of
accounting method, principle or presentation has occurred.

1.37. Governmental or Regulatory Authority shall mean any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the government of the United States or of any foreign country, any state or any
political subdivision of any such government (whether state, provincial, county,
city, municipal or otherwise).

1.38. Indemnifiable Losses shall mean all liabilities, obligations, claims,
demands, damages, penalties, settlements, causes of action, costs and expenses.
Indemnifiable Losses shall include, without limitation, the actual costs paid in
connection with an Indemnified Party's investigation and evaluation of any claim
or right asserted against such Indemnified Party and all reasonable attorneys',
experts' and accountants' fees, expenses and disbursements and court costs,
including, without limitation, those incurred in connection with the Indemnified
Party's enforcement of this Agreement and the indemnification provisions of
Article 10 of this Agreement.

1.39. Indemnified Party shall have the meaning set forth in Section
10.3(a).

1.40. Indemnifying Party shall have the meaning set forth in Section
10.3(a).

1.41. Indemnity Notice shall have the meaning set forth in Section 10.3(a).

1.42. Initial Public Offering shall mean the Purchaser's initial public
offering of the Purchaser's common stock registered under the Securities Act.

1.43. Initial Public Offering Price shall mean the price to the public of
the DocuNet Common Stock sold in the Initial Public Offering.

1.44. Intellectual Property shall mean all patents, patent rights, patent
applications, registered trademarks and service marks, trademark rights,
trademark applications, service mark rights, service mark applications, trade
names, registered copyrights, copyright rights and all intellectual, industrial
or proprietary rights and trade secrets, technology and know-how relating to the
Business, in each case together with any amendments, modifications and
supplements thereto.

1.45. Interim Financial Statements shall have the meaning set forth in
Section 3.12(b).

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1.46. Inventory shall mean all inventory incremental or relating to, or
used in connection with the Business including, without limitation, all
supplies, work in process and finished goods.

1.47. IRS means the Internal Revenue Service or any successor organization
thereto.

1.48. Knowledge shall mean with respect to any representation, warranty or
statement of any party in this Agreement that is qualified by such party's
"knowledge," the actual knowledge of such party or of any officer or director of
such party, or (i) in the case of any such officer or director, that knowledge
that a reasonably prudent officer or director should have if such person duly
performed his or her duties as an officer or director of such party or any of
such party's Subsidiaries, or made reasonable and diligent inquiry and exercised
due diligence with respect thereto, of the matter to which such qualification
applies, and (ii) in the case of the Seller, that knowledge that Seller should
have if the Seller made reasonable and diligent inquiry and exercised due
diligence with respect thereto.

1.49. Legal Proceeding shall mean any action, suit, arbitration, claim or
investigation by or before any Governmental or Regulatory Authority, any
arbitration or alternative dispute resolution panel, or any other legal,
administrative or other proceeding.

1.50. Material Adverse Effect shall mean an effect which is or would be
materially adverse to the Business and Properties (including Intellectual
Property), the prospects for the Business, or the condition (financial or
otherwise) or results of operation, of the Company.

1.51. Merger means the merger of the Company with and into Newco pursuant
to this Agreement and the applicable provisions of the laws of the Commonwealth
of Pennsylvania and other applicable state laws.

1.52. [Intentionally omitted.]

1.53. Newco Stock shall mean the common stock, $.01 par value per share, of
Newco.

1.54. Order shall mean any judgment, order, writ, decree, injunction or
other determination whatsoever of any Governmental or Regulatory Authority or
any other entity or body whose finding, ruling or holding is legally binding or
is enforceable as a matter of right (in any case, whether preliminary or final).

1.55. PBGC means the Pension Benefit Guaranty Corporation or any successor
organization thereto.

1.56. Permits shall mean all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises, rights, orders,
qualifications and similar rights

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or approvals granted or issued by any Governmental or Regulatory Authority
relating to the Business of the Company or any of its Subsidiaries.

1.57. Person shall mean any natural person, corporation, general
partnership, limited partnership, limited liability company, proprietorship,
joint venture, trust, association, union, entity, or other form of business
organization or any Governmental or Regulatory Authority whatsoever.

1.58. Potential Founding Company shall mean any person or entity entering
into a letter of intent with the Purchaser, or its Affiliates, to participate in
the simultaneous acquisition by Purchaser and Initial Public Offering.

1.59. Pricing shall mean the determination by Purchaser and the
Underwriters of the public offering price of the shares of DocuNet Common Stock
in the Initial Public Offering.

1.59A. Pricing Date shall mean the date on which the Pricing takes place.

1.60. Property shall mean the Real Property, Intellectual Property and
Tangible Personal Property of the Company.

1.61. Purchaser Financing Transaction shall mean the Initial Public
Offering, any other offering by the Purchaser or any of its Subsidiaries of any
securities, whether debt or equity, or any other financing or credit arrangement
sought by the Purchaser or any of its Subsidiaries.

1.62. Purchaser's CAWCA Response Notice shall have the meaning set forth in
Section 2.8.

1.63. Real Property shall mean all real property owned by or leased to the
Company or any of its Subsidiaries.

1.64. Receivables shall have the meaning set forth in Section 3.27.

1.65. Regulatory Approvals shall mean all Consents from all Governmental or
Regulatory Authorities.

1.66. Related Companies shall have the meaning set forth in Section 8.2(a).

1.67. Requirement of Law shall mean, with respect to any Person, such
Person's articles or certificate of incorporation, by-laws or other governing or
constitutive documents, if any, and any provision of law, statute, treaty, rule,
regulation, ordinance or pronouncement having the effect of law, or any Order,
to which, in each case, such Person or any of such Person's properties,
operations, business or assets is bound or subject.

1.68. Restricted Area shall have the meaning set forth in Section 8.2(a).

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1.69. Restricted Business shall have the meaning set forth in Section
8.2(a).

1.70. Restricted Period shall mean, with respect to each Seller, the period
commencing on the Closing Date and ending on the later of (i) the first
anniversary of the date on which the Seller's employment with the Purchaser, if
any, expires, is not renewed, or is otherwise terminated, and (ii) the fifth
anniversary of the Closing Date, as such period may be extended pursuant to
Section 8.3(b); provided that the reference to "fifth anniversary" in this
clause (ii) shall be automatically changed to "fourth anniversary" if the
average closing price of the DocuNet Common Stock during any 20-trading day
period within the 60-day period prior to or following the date on which such
Seller's employment with the Purchaser terminates is less than 50% of the
Initial Public Offering Price (as adjusted proportionately for any stock splits,
stock dividends or reverse stock splits).

1.71. Securities Act shall mean the Securities Act of 1933 and the rules
and regulations promulgated thereunder, as amended and supplemented from time to
time, or any successors thereto.

1.72. Intentionally Omitted.

1.73. [Intentionally omitted].

1.74. Shares shall mean shares of Common Stock of the Company.

1.75. Stock Purchase Price shall have the meaning set forth in Section 2.9.

1.76. Surviving Corporation shall mean Newco as the surviving party in the
Merger.

1.77. Subsidiary shall mean, with respect to any Person, any Person of
which securities or other ownership interests having ordinary voting power to
select a majority of the board of directors or other persons serving similar
functions are at the time directly or indirectly owned by such Person.

1.78. Tangible Personal Property shall have the meaning set forth in
Section 3.16.

1.79. Taxes shall mean (i) any tax, charge, fee, levy or other assessment
including, without limitation, any net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, payroll, employment,
social security, unemployment, excise, estimated, stamp, occupancy, occupation,
property or other similar taxes, including any interest or penalties thereon,
and additions to tax or additional amounts imposed by any federal, state, local
or foreign governmental authority, domestic or foreign (a "Taxing Authority") or
(ii) any liability for the payment of any taxes, interest, penalty, addition to
tax or like additional amount resulting from the application of Treasury
Regulation ss.1.1502-6 or comparable Requirement of Law.

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1.80. Tax Returns shall mean any declaration, return, report, estimate,
information return, schedule, statements or other document filed or required to
be filed with, or when none is required to be filed with a Taxing Authority, the
statement or other document issued by, a Taxing Authority.

1.81. Trade Accounts Receivable shall mean, as of the applicable date, the
Company's trade accounts receivable associated with the Business.

1.82. Underwriter shall have the meaning set forth for that term in Section
2(a)(11) of the Securities Act.

1.83. Unliquidated Indemnity Notice shall have the meaning set forth in
Section 10.3(b).

1.84. [Intentionally omitted.]

1.84A. Value shall have the meaning set forth in Section 2.8.

ARTICLE 2
THE MERGER

2.1. Delivery and Filing of Articles of Merger. The Constituent
Corporations will cause the Articles of Merger to be signed, verified and filed
with the Secretary of State of the Commonwealth of Pennsylvania and the
Secretary of State of the State of Minnesota and stamped receipt copies of each
such filing to be delivered to Purchaser on or before the Closing Date.

2.2. Effective Time of the Merger. At the Effective Time of the Merger, the
Company shall be merged with and into Newco in accordance with the Articles of
Merger, the separate existence of the Company shall cease, Newco shall be the
surviving party in the Merger and Newco is sometimes hereinafter referred to as
the Surviving Corporation. The Merger will be effected in a single transaction.

2.3. Certificate of Incorporation, By-laws and Board of Directors of
Surviving Corporation. At the Effective Time of the Merger:

(i) the Certificate of Incorporation of Newco then in effect shall be
the Certificate of Incorporation of the Surviving Corporation until changed
as provided by law;

(ii) the By-laws of Newco then in effect shall become the By-laws of
the Surviving Corporation; and subsequent to the Effective Time of the
Merger, such By-laws shall be the By-laws of the Surviving Corporation
until they shall thereafter be duly amended;

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(iii) the Board of Directors of the Surviving Corporation shall
consist of the following persons: Bruce Gillis, Andy Bacas and David C.
Utz, Jr. The Board of Directors of the Surviving Corporation shall hold
office subject to the provisions of the laws of the Commonwealth of
Pennsylvania and of the Certificate of Incorporation and By-laws of the
Surviving Corporation; and

(iv) the officers of the Surviving Corporation shall be the persons
set forth on Schedule 2.3 hereto, each of such officers to serve, subject
to the provisions of the Certificate of Incorporation and By-laws of the
Surviving Corporation, until his or her successor is duly elected and
qualified.

2.4. Certain Information with Respect to the Capital Stock of the Company,
Purchaser and Newco. The respective designations and numbers of outstanding
shares and voting rights of each class of outstanding capital stock of the
Company, Purchaser and Newco as of the date of this Agreement are as follows:

(i) as of the date of this Agreement, the authorized and outstanding
capital stock of the Company is as set forth on Schedule 2.4 hereto;

(ii) immediately prior to the Closing Date, the authorized capital
stock of Purchaser will consist of 40 million shares of DocuNet Common
Stock, of which the number of issued and outstanding shares will be set
forth in the Registration Statement, and 10 million shares of preferred
stock, $.01 par value, of which no shares will be issued and outstanding;

(iii) as of the date of this Agreement, the authorized capital stock
of Newco consists of 1,000 shares of Newco Stock, of which one hundred
(100) shares are issued and outstanding.

2.5. Effect of Merger. At the Effective Time of the Merger, the effect
of the Merger shall be as provided in the applicable provisions of the
Pennsylvania Business Corporation Law and the law of the State of Minnesota.
Except as herein specifically set forth, the identity, existence,
purposes, powers, objects, franchises, privileges, rights and immunities of the
Company shall continue unaffected and unimpaired by the Merger and the corporate
franchises, existence and rights of the Company shall be merged with and into
the Newco, and Newco, as the Surviving Corporation, shall be fully vested
therewith. At the Effective Time of the Merger, the separate existence of the
Company shall cease and, in accordance with the terms of this Agreement, the
Surviving Corporation shall possess all the rights, privileges, immunities and
franchises, of a public, as well as of a private, nature, and all property,
real, personal and mixed, and all debts due on whatever account, including
subscriptions to shares, and all taxes, including those due and owing and those
accrued, and all other choses in action, and all and every other interest of or
belonging to or due to the Company and Newco shall be taken and deemed to be
transferred to, and vested in, the Surviving Corporation without further act or
deed; and all property, rights and privileges, powers and franchises and all and
every other interest shall be thereafter as effectually the property of the
Surviving Corporation as they were of the Company and Newco; and the title

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to any real estate, or interest therein, whether by deed or otherwise, under the
laws of the state of incorporation vested in the Company and Newco, shall not
revert or be in any way impaired by reason of the Merger. Except as otherwise
provided herein, the Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of the Company and Newco and any
claim existing, or action or proceeding pending, by or against the Company or
Newco may be prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in their place. Neither the rights of creditors
nor any liens upon the property of the Company or Newco shall be impaired by the
Merger, and all debts, liabilities and duties of the Company and Newco shall
attach to the Surviving Corporation, and may be enforced against the Surviving
Corporation to the same extent as if said debts, liabilities and duties had been
incurred or contracted by such Surviving Corporation.

2.6. Manner of Conversion. The manner of converting the shares of (i)
outstanding capital stock of the Company ("Company Stock") and (ii) Newco Stock,
issued and outstanding immediately prior to the Effective Time of the Merger,
respectively, into shares of (x) DocuNet Common Stock and (y) common stock of
the Surviving Corporation, respectively, shall be as follows:

As of the Effective Time of the Merger:

(i) all of the shares of Company Stock issued and outstanding
immediately prior to the Effective Time of the Merger, by virtue of the
Merger and without any action on the part of the holder thereof,
automatically shall be deemed to represent (1) the right to receive the
number of shares of DocuNet Common Stock provided in Section 2.9 hereof
with respect to such holder and (2) the right to receive the amount of cash
provided in Section 2.9 hereof with respect to such holder (collectively,
the "Merger Consideration");

(ii) all shares of Company Stock that are held by the Company as
treasury stock shall be canceled and retired and no shares of DocuNet
Common Stock or other consideration shall be delivered or paid in exchange
therefor; and

(iii) each share of Newco Stock issued and outstanding immediately
prior to the Effective Time of the Merger, shall, by virtue of the Merger
and without any action on the part of Purchaser, automatically be converted
into one fully paid and non-assessable share of common stock of the
Surviving Corporation which shall constitute all of the issued and
outstanding shares of common stock of the Surviving Corporation immediately
after the Effective Time of the Merger.

All DocuNet Common Stock received by the Seller pursuant to this Agreement
shall, except for restrictions on resale or transfer described in Sections 13
and 14 hereof, have the same rights as all the other shares of outstanding
DocuNet Common Stock. All voting rights of such DocuNet Common Stock received by
the Seller shall be fully exercisable by the Seller and the Seller shall not be
deprived nor restricted in exercising those rights.

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2.7. Delivery of Shares. The Seller shall deliver to Purchaser at the
Closing the certificates representing all of the issued and outstanding shares
of the Company Stock, duly endorsed in blank by the Seller, or accompanied by
blank stock powers, and with all necessary transfer tax and other revenue
stamps, acquired at the Seller's expense, affixed and canceled. The Seller
agrees promptly to cure any deficiencies with respect to the endorsement of the
stock certificates or other documents of conveyance with respect to such Company
Stock or with respect to the stock powers accompanying any Company Stock.

2.8. Merger Consideration. As full consideration for the Merger and the
Common Stock, the Purchaser shall pay and deliver or cause to be paid and
delivered to the Seller, in the manner set forth in this Section 2, the Merger
Consideration consisting of the Base Purchase Price (as hereinafter defined),
less the Debt Adjustment (as hereinafter defined), the Working Capital
Adjustment (as hereinafter defined) and, subject to Section 2.8(e) below, the
Net Book Value of Assets and Liabilities Adjustment (as hereinafter defined), on
the terms and conditions set forth below:

(a) Base Purchase Price. Subject to Section 2.9(c), the Base Purchase
Price shall be Four Million Seven Hundred Fifty Thousand dollars
($4,750,000), subject to adjustments as set forth herein (the "Base
Purchase Price").

(b) Debt Adjustment. The Base Purchase Price shall be reduced, at
Closing, by $1.00 for each $1.00 of Debt reflected on the Company's Closing
Balance Sheet (the "Closing Debt Amount"). Notwithstanding the foregoing,
there shall be no reduction for up to $50,000 of such Debt that relates to
capital expenditures made subsequent to July 31, 1997 (the "Capital
Expenditure Allowance"). The Company's Debt shall mean all of the Company's
liabilities, contingent or otherwise, except Adjusted Current Liabilities,
in accordance with GAAP. The Company's Adjusted Current Liabilities shall
mean all of the Company's liabilities which would be classified as current
liabilities in accordance with GAAP, except current amounts of principal,
interest or penalties due and owing: (i) under promissory notes or lines of
credit to lending institutions; (ii) to an employee or an Affiliate of the
Company, or the Seller; (iii) to a lessor under a capital lease; or (iv) on
account of Taxes or earned insurance premiums. Promptly following the
Closing and in order to verify the accuracy of the adjustment made at
Closing, the Purchaser agrees to cause the internal accounting staff and
the independent certified public accountant of the Purchaser (the
"Accountants") to verify the Closing Debt Amount. The Accountants shall
issue a report as to their determination of the Closing Debt Amount (the
"Accountants' CDA Report") promptly after their determination of such
amount and the Purchaser shall deliver the Accountants' CDA Report to the
Seller not later than sixty (60) days following the Closing Date. The
determination of the Closing Debt Amount by the Accountants shall be
conclusive and binding upon the parties hereto unless the Seller shall
object to the Accountants' CDA Report within fifteen (15) days following
their receipt of the Accountants' CDA Report. The Seller's objection, if
any, to the Accountants' CDA Report (the "Seller's CDA Objection") shall
set forth in reasonable detail the Seller's objection(s) to the
Accountants' CDA Report and the Seller's calculation of the Closing

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Debt Amount. Within ten (10) days after receipt of the Seller's CDA
Objection, the Purchaser will notify the Seller whether it accepts or
disputes the Seller's adjustments, if any, which notification shall set
forth in reasonable detail the adjustments made by the Seller which the
Purchaser continues to dispute (the "Purchaser's CDA Response Notice"). If
the Seller does not object to the Accountants' CDA Report, or if the
Purchaser agrees to accept the Seller's adjustments to the Accountants' CDA
Report, then the adjustment based on the then final Closing Debt Amount
(the "Final Debt Amount"), if any, shall be paid by the Seller to the
Purchaser in immediately available funds within five (5) business days of
such acceptance. If such amount is not received by Purchaser within such
time period, such amounts shall be paid from the Escrow Amount pursuant to
the Escrow Agreement and Seller shall be obligated to replenish the Escrow
Amount by depositing with the Escrow Agent upon such payment either or a
number of shares of DocuNet Common Stock having an aggregate Value (as
defined below) equal to such amount. The term "Value" in respect of a share
of DocuNet Common Stock shall mean the lower of the Initial Public Offering
Price and the average closing price of the DocuNet Common Stock during the
20 trading-day period ending immediately prior to the applicable payment
date. If the Seller objects to the Accountants' CDA Report as set forth
above and the Purchaser does not accept the Seller's proposed adjustments,
then an independent accounting firm mutually satisfactory to the Seller and
the Purchaser shall be engaged to determine the amount of the Closing Debt
Amount and the Final Debt Amount, based upon the calculations of the
independent accountants, and any adjustments of Base Purchase Price based
on the amount determined as provided above shall be paid to the Purchaser
in immediately available funds within five (5) business days of the
determination of such amount by such accounting firm. If such amount is not
received by Purchaser within such time period, such amounts shall be paid
from the Escrow Amount pursuant to the Escrow Agreement and Seller shall be
obligated to replenish the Escrow Amount by depositing cash in a like
amount with the Escrow Agent upon such payment either cash in a like amount
or a number of shares of DocuNet Common Stock having an aggregate Value
equal to such amount. The parties hereto agree to cooperate fully with such
independent accountants at their own cost and expense, including, but not
limited to, providing such independent accountants with access to, and
copies of, all books and records that they shall reasonably request. The
Purchaser and the Seller shall each bear one-half of all of the costs and
expenses of such independent accounting firm, and if the parties hereto are
unable to agree upon an independent accounting firm, the Seller and the
Purchaser will request that one be designated by the President of the
Philadelphia office of the American Arbitration Association.

(c) Working Capital Adjustment. The Base Purchase Price shall be
further reduced, at Closing, by $1.00 for each $1.00 that the Company's
Adjusted Working Capital (as hereinafter defined) is less than $150,000 on
the Closing Date (the "Closing Adjusted Working Capital Amount"). The
Company's Adjusted Working Capital shall mean the Company's current assets,
less: (i) the portion of trade receivables that are more than 100 days past
the original invoice date; (ii) an aggregate amount of Inventory exceeding
$125,000; (iii) promissory notes or other amounts due from employees or

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Affiliates of the Company; and (iv) the Adjusted Current Liabilities,
calculated pursuant to GAAP. Promptly following the Closing and in order to
verify the accuracy of the adjustment made at the Closing, the Purchaser
agrees to cause the Accountants to verify the amount of the Closing
Adjusted Working Capital Amount. The Accountants shall issue a report as to
their determination of the Closing Adjusted Working Capital Amount (the
"Accountants' CAWCA Report") promptly after their determination of such
amount and the Purchaser shall deliver the Accountants' CAWCA Report to the
Seller no later than sixty (60) days following the Closing Date. The
determination of the Closing Adjusted Working Capital Amount by the
Accountants shall be conclusive and binding upon the parties hereto unless
the Seller shall object to the Accountants' CAWCA Report within fifteen
(15) days following their receipt of the Accountants' CAWCA Report. The
Seller's objection, if any, to the Accountants' CAWCA Report (the "Seller's
CAWCA Objection") shall set forth in reasonable detail the Seller's
objection(s) to the Accountants' CAWCA Report and the Seller's calculation
of the Closing Adjusted Working Capital Amount. Within ten (10) days after
receipt of the Seller's CAWCA Objection, the Purchaser will notify the
Seller whether it accepts or disputes the Seller's adjustments, if any,
which notification shall set forth in reasonable detail the adjustments
made by the Seller which the Purchaser continues to dispute (the
"Purchaser's CAWCA Response Notice"). If the Seller does not object to the
Accountants' CAWCA Report, or if the Purchaser agrees to accept the
Seller's adjustments to the Accountants' CAWCA Report, then the adjustment
based on the then final Closing Adjusted Working Capital Amount (the "Final
Adjusted Working Capital Amount"), if any, shall be paid by Seller to the
Purchaser in immediately available funds within five (5) business days of
such acceptance. If such amount is not received by Purchaser within such
time period, such amount shall be paid from the Escrow Amount pursuant to
the Escrow Agreement and Seller shall be obligated to replenish the Escrow
Amount by depositing with the Escrow Agent upon such payment either cash in
a like amount or a number of shares of DocuNet Common Stock having an
aggregate Value (as defined below) equal to such amount. If the Seller
objects to the Accountants' CAWCA Report as set forth above and the
Purchaser does not accept the Seller's proposed adjustments, then an
independent accounting firm mutually satisfactory to the Seller and the
Purchaser shall be engaged to determine the amount of the Closing Adjusted
Working Capital Amount and the Final Adjusted Working Capital Amount, based
upon the calculations of the independent accountants, and any adjustments
of Base Purchase Price based on the amount determined as provided above
shall be paid to the Purchaser in immediately available funds within five
(5) business days of the determination of such amount by such accounting
firm. If such amount is not received by Purchaser within such time period,
such amount shall be paid from the Escrow Amount pursuant to the Escrow
Agreement and Seller shall be obligated to replenish the Escrow Amount by
depositing with the Escrow Agent upon such payment either cash in a like
amount or a number of shares of DocuNet Common Stock having an aggregate
Value equal to such amount. The parties hereto agree to cooperate fully
with such independent accountants at their own cost and expense, including,
but not limited to, providing such independent accountants with access to,
and copies of, all books and records that they shall reasonably request.
The Purchaser and the Seller shall each bear one-half of all of the

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costs and expenses of such independent accounting firm, and if the parties
hereto are unable to agree upon an independent accounting firm, the Seller
and Purchaser will request that one be designated by the President of the
Philadelphia office of the American Arbitration Association.

(d) Net Book Value of Assets and Liabilities Adjustment. The Base
Purchase Price shall be further reduced, at Closing, by $1.00 for each
$1.00 that the Net Book Value of the Company's Acquired Assets and
Liabilities, as reflected on the Closing Balance Sheet, is less than
$2,000,000 on the Closing Date (the "Closing Net Book Value Amount"). The
Net Book Value of the Company's Acquired Assets and Liabilities shall mean
the tangible assets of the Company, less Adjusted Current Liabilities,
calculated pursuant to GAAP. Promptly following the Closing, and in order
to verify the accuracy of the adjustment made at the Closing, the Purchaser
agrees to cause the Accountants to verify the amount of the Closing Net
Book Value Amount. The Accountants shall issue a report as to their
determination of the Closing Net Book Value Amount (the "Accountants' CNBVA
Report") promptly after their determination of such amount and the
Purchaser shall deliver the Accountants' CNBVA Report to the Seller not
later than sixty (60) days following the Closing Date. The determination of
the Closing Net Book Value Amount by the Accountants shall be conclusive
and binding upon the parties hereto unless the Seller shall object to the
Accountants' CNBVA Report within fifteen (15) days following their receipt
of the Accountants' CNBVA Report. The Seller's objection, if any, to the
Accountants' CNBVA Report (the "Seller's CNBVA Objection") shall set forth
in reasonable detail the Seller's objection(s) to the Accountants' CNBVA
Report and the Seller's calculation of the Closing Net Book Value Amount.
Within ten (10) days after receipt of the Seller's CNBVA Objection, the
Purchaser will notify the Seller whether it accepts or disputes the
Seller's adjustments, if any, which notification shall set forth in
reasonable detail the adjustments made by the Seller which the Purchaser
continues to dispute (the "Purchaser's CNBVA Response Notice"). If the
Seller does not object to the Accountants' CNBVA Report, or if the
Purchaser agrees to accept the Seller's adjustments to the Accountants'
CNBVA Report, then the adjustment based on the then final Closing Net Book
Value Amount (the "Final Net Book Value Amount"), if any, shall be paid by
Seller to the Purchaser in immediately available funds within five (5)
business days of such acceptance. If such amount is not received by
Purchaser within such time period, such amount shall be paid from the
Escrow Amount pursuant to the Escrow Agreement and Seller shall be
obligated to replenish the Escrow Amount by depositing with the Escrow
Agent upon such payment either cash in a like amount or a number of shares
of DocuNet Common Stock having an aggregate Value (as defined below) equal
to such amount. If the Seller objects to the Accountants' CNBVA Report as
set forth above and the Purchaser does not accept the Seller's proposed
adjustments, then an independent accounting firm mutually satisfactory to
the Seller and the Purchaser shall be engaged to determine the amount of
the Closing Net Book Value Amount and the Final Net Book Value Amount,
based upon the calculations of the independent accountants, and any
adjustments of Base Purchase Price based on the amount determined as
provided above shall be paid to the Purchaser in immediately available
funds within five (5) business days

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of the determination of such amount by such accounting firm. If such amount
is not received by Purchaser within such time period, such amount shall be
paid from the Escrow Amount pursuant to the Escrow Agreement and Seller
shall be obligated to replenish the Escrow Amount by depositing with the
Escrow Agent upon such payment either cash in a like amount or a number of
shares of DocuNet Common Stock having an aggregate Value equal to such
amount. The parties hereto agree to cooperate fully with such independent
accountants at their own cost and expense, including, but not limited to,
providing such independent accountants with access to, and copies of, all
books and records that they shall reasonably request. The Purchaser and the
Seller shall each bear one-half of all of the costs and expenses of such
independent accounting firm, and if the parties hereto are unable to agree
upon an independent accounting firm, the Seller and Purchaser will request
that one be designated by the President of the Philadelphia office of the
American Arbitration Association.

(e) Multiple Adjustments. Notwithstanding anything herein to the
contrary, if a payment is due from Seller to Purchaser on account of the
Working Capital Adjustment and the Net Book Value of Assets and Liabilities
Adjustment, Seller shall only be obligated to pay the greater of the two
adjustment amounts to Purchaser.

2.9. Delivery of Merger Consideration. On the Closing Date, the Seller who
is the holder of all outstanding certificates representing shares of Company
Stock, shall, upon surrender of such certificates, receive the Merger
Consideration payable as follows:

(a) Stock Purchase Price. A number of shares of DocuNet Common Stock
equal to (i) $935,000 divided (the "Stock Purchase Price") by (ii) the
Initial Public Offering Price, shall be issued at Closing to Seller.

(b) Cash Purchase Price. In addition, subject to Section 2.9(c), an
aggregate amount equal to the Base Purchase Price less (i) the Stock
Purchase Price and (ii) the reductions, if any, to be made at Closing
pursuant to Sections 2.8(b), 2.8(c), 2.8(d) and 2.8(e), shall be payable at
the Closing in cash to the Seller ("Cash Purchase Price"). The specific
amount of the Cash Purchase Price shall be payable to the Seller by a wire
transfer to accounts to be designated by the Seller in writing not less
than three (3) business days prior to the Closing, in the individual amount
for the Seller and, to repay certain indebtedness set forth in Section 6.1,
as further indicated in the Disclosure Schedule.

(c) Delivery into Escrow. Notwithstanding the foregoing, an amount of
cash equal to $237,500 shall be delivered at Closing to the Escrow Agent
pursuant to the Escrow Agreement (the "Escrow Amount"). The Escrow Amount
shall be available to fund (but shall not be the sole source of funding)
any obligations of Seller under this Agreement pursuant to the terms of the
Escrow Agreement; provided, however, if the amount of cash plus the value
of the shares of DocuNet Common Stock in the Escrow Amount falls below
$237,500 (the "Threshold Value") due to payment from the Escrow Amount
pursuant to

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Section 2.8 hereof, the Seller shall contribute additional cash or shares
of DocuNet Common Stock (valued at the Initial Public Offering Price) to
the Escrow Amount in an amount necessary so that the amount of cash plus
the value of the shares of Common Stock (valued at the Initial Public
Offering Price) in the Escrow Amount would equal the Threshold Value.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER

Except as set forth on the Disclosure Schedule delivered by the Company and
Seller to the Purchaser on the date hereof (the "Disclosure Schedule"), the
section numbers of which are numbered to correspond to the section numbers of
this Agreement to which they refer, the Company and the Seller hereby, jointly
and severally, represent and warrant to the Purchaser and Newco as follows:

3.1. Organization; Qualification; Good Standing.

(a) The Company and each of its Subsidiaries (i) are corporations duly
incorporated, validly existing and in good standing under the laws of the state
of their respective incorporation or organization, (ii) have the power and
authority to own and operate their respective properties and assets and to
transact their respective Businesses and (iii) are duly qualified and authorized
to do business and are in good standing in all jurisdictions where the failure
to be duly qualified, authorized and in good standing would have a Material
Adverse Effect upon their respective Businesses, prospects, operations, results
of operations, assets, liabilities or condition (financial or otherwise). Listed
in the Disclosure Schedule is a true and complete list of all jurisdictions in
which the Company or any of its Subsidiaries is qualified to do business.

(b) There is no Legal Proceeding or Order pending or, to the knowledge of
the Company or the Seller, threatened against or affecting the Company or any of
its Subsidiaries revoking, limiting or curtailing, or seeking to revoke, limit
or curtail the Company's or any of its Subsidiaries' power, authority or
qualification to own, lease or operate their respective properties or assets or
to transact their respective Businesses.

(c) True and complete copies of the Company's and each of its Subsidiaries'
articles or certificate of incorporation, bylaws and other constitutive
documents are attached as part of the Disclosure Schedule. Except as set forth
in the Disclosure Schedule, the minute books of the Company and each of its
Subsidiaries, as heretofore made available to the Purchaser and Newco, are
correct and complete in all material respects.

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3.2. Authorization for Agreement.

(a) The Company. The Company's execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by the
Company: (i) are within the Company's corporate powers and duly authorized by
all necessary corporate and shareholder action on the part of the Company and
(ii) do not (A) require any action by or in respect of, or filing with, any
Governmental or Regulatory Authority, (B) contravene, violate or constitute,
with or without the passage of time or the giving of notice or both, a breach or
default under, any Requirement of Law applicable to the Company or any of its
properties or any Contract to which the Company or any of its properties is
bound or subject or (C) result in the creation of any Adverse Claim on any of
the Shares.

(b) The Seller. The Seller's execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby by the
Seller (i) are within the powers and authority of the Seller and (ii) do not (A)
require any action by or in respect of, or filing with, any Governmental or
Regulatory Authority, (B) except as set forth in the Disclosure Schedule,
contravene, violate or constitute, with or without the passage of time or the
giving of notice or both, a breach or default under, any Requirement of Law
applicable any of them or any of their respective properties or any Contract to
which any of them or any of their respective properties is bound or subject or
(C), except as set forth in the Disclosure Schedule, result in the creation of
any Adverse Claim on any of the Shares.

3.3. Capitalization; Subsidiaries and Affiliates.

(a) The Company. The authorized capital stock of the Company consists of 10
million shares of a single class of common stock, having no par value per share,
of which 90,000 are issued and outstanding. The Company does not have any other
authorized class or classes of securities of any kind, whether debt or equity.
Seller owns all issued and outstanding shares of capital stock of the Company.
All of the Shares are validly issued, fully paid and non-assessable and have not
been issued in violation of applicable securities laws or of any preemptive
rights or other rights to subscribe for, purchase or otherwise acquire
securities. The Company holds 10,000 shares of its capital stock in its treasury
and no shares of the Company's capital stock are reserved by the Company for
issuance.

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<PAGE>

and nonassessable except as set forth on the Disclosure Schedule, is free of any
Adverse Claims, and has not been issued in violation of applicable securities
laws or of any preemptive rights or other rights to subscribe for, purchase or
otherwise acquire securities. No Subsidiary holds any shares of its capital
stock in its treasury or otherwise, and no shares of any Subsidiary's capital
stock are reserved by such Subsidiary for issuance. Except as set forth in the
Disclosure Schedule, neither the Company nor any Subsidiary owns or controls,
directly or indirectly, any debt, equity or other financial or ownership
interest in any other Person.

(c) Affiliates. Included in the Disclosure Schedule is a complete and
accurate list of all Persons (other than the Seller or any of the Persons
described in the first sentence of Section 1.3, subpart (iii)) that are
Affiliates of the Company, detailing the nature of the relationship between the
Company and each such Person that causes such Person to be an Affiliate of the
Company.

(d) No Acquisitions. Since the Balance Sheet Date, neither the Company nor
any of its Subsidiaries has acquired, or agreed to acquire, whether by merger or
consolidation, by purchase of equity interests or assets, or otherwise, any
business or any other Person, or otherwise acquired, or agreed to acquire, any
assets that are material, either individually or in the aggregate, to the
Company and its Subsidiaries taken as a whole.

(e) No Other Securities. There are (i) no outstanding subscriptions,
warrants, options, rights, agreements, convertible securities or other
commitments or instruments pursuant to which the Company or any of its
Subsidiaries is or may become obligated to issue, sell, repurchase or redeem any
shares of capital stock or other securities, whether debt or equity, of the
Company or any of its Subsidiaries and (ii) no preemptive, contractual or
similar rights to purchase or otherwise acquire shares of capital stock of the
Company or of any of its Subsidiaries pursuant to any Requirement of Law
applicable to the Company or any such Subsidiary, as applicable, or any Contract
to which the Company or any such Subsidiary is a party or may otherwise be bound
or subject.

3.4. Enforceability. This Agreement has been duly executed and delivered by
the Company and the Seller and constitutes the legal, valid and binding
obligation of the Company and the Seller, enforceable against each of them in
accordance with its terms.

3.5. Matters Affecting Shares; Title to Shares. Except as set forth on the
Disclosure Schedule, Seller has full legal and beneficial title to his or her
Shares and has full power, right and authority to sell and deliver such Shares
in accordance with this Agreement, free of any Adverse Claims. There are no
existing agreements, subscriptions, options, warrants, calls, commitments,
conversion rights or other rights of any character to purchase or otherwise
acquire from the Seller at any time, or upon the happening of any event, any of
the Shares.

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<PAGE>

course of business. Except as disclosed in the Disclosure Schedule, the Company
has not been a subsidiary or division of another corporation or a part of an
acquisition which was later rescinded.

3.7. Spin-off by the Company. Except as set forth in the Disclosure
Schedule, there has not been any sale, spin-off or split-up of material assets
or subsidiaries of the Company or any other Affiliate, other than in the
ordinary course of business, within the preceding two years.

3.8. Legal Proceedings.

(a) The Seller. Except as set forth in the Disclosure Schedule, there is no
Legal Proceeding or Order pending against, or to the knowledge of the Seller,
threatened against or affecting, the Seller or any of his properties or
otherwise, that could adversely affect or restrict the ability of the Seller to
consummate fully the transactions contemplated by this Agreement or that in any
manner could draw into question the validity of this Agreement. Except as set
forth in the Disclosure Schedule, the Seller does not have knowledge of any
fact, event, condition or circumstance that could reasonably be expected to give
rise to the commencement of any Legal Proceeding or the entering of any Order
against the Seller that could adversely affect or restrict the ability of the
Seller to consummate fully the transactions contemplated by this Agreement or
that in any manner could draw into question the validity of this Agreement.

(b) The Company and Subsidiaries. The Disclosure Schedule completely and
accurately lists and fully describes all Orders outstanding against the Company
or any of its Subsidiaries. In addition, the Disclosure Schedule completely and
accurately lists and fully describes each pending, and, to the Company's or the
Seller's knowledge, each threatened, Legal Proceeding that has been commenced,
brought or asserted by (i) the Company or any of its Subsidiaries, as the case
may be, against any Person or (ii) any Person against the Company or any of its
Subsidiaries, as the case may be. Neither the Company nor the Seller has
knowledge of the existence of any fact, event, condition or circumstance that
could reasonably be expected to give rise to the commencement of any Legal
Proceeding or the entering of any Order against either the Company or any of its
Subsidiaries by any Person.

3.9. Compliance with Laws. Each of the Company and its Subsidiaries is
operating in compliance with all Requirements of Law applicable to it or any of
its respective properties or to which the Company or any of its Subsidiaries or
any of their respective properties is bound or subject including, without
limitation, the Credit Acts. Except as set forth in the Disclosure Schedule,
since January 1, 1992, neither the Company or any of its Subsidiaries nor the
Seller has received any notice from any Person concerning alleged violations of,
or the occurrence of any events or conditions resulting in alleged noncompliance
with, any Requirement of Law applicable to the Company or any of its
Subsidiaries or any of their respective properties or to which the Company or
any of its Subsidiaries or any of their respective properties is bound or
subject including, without limitation, any of the Credit Acts. None of the
Company, the Seller, any of their respective Affiliates (other than a Person who
is an Affiliate solely by virtue of clause (iii) of the definition thereof), or
any of such Affiliates' respective Affiliates (other than a Person

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<PAGE>

who is an Affiliate solely by virtue of clause (iii) of the definition thereof)
has made any illegal kickback, bribe, gift or political contribution to or on
behalf of any customer, or to any officer, director, employee of any customer,
or to any other Person.

3.10. Labor Matters.

(a) Included in the Disclosure Schedule is a complete and accurate list of
all consulting or similar Contracts to which the Company or any of its
Subsidiaries is a party or may otherwise be bound or subject, and the
compensation to which each consultant is entitled under its respective Contract.
The Company and the Seller have delivered or caused to be delivered to the
Purchaser and Newco true and complete copies of all such Contracts, each of
which is included in the Disclosure Schedule. Since the Balance Sheet Date,
neither the Company nor any of its Subsidiaries has increased the compensation
payable to its consultants or the rate of compensation payable to its
consultants. To the knowledge of the Company and the Seller, no individuals
retained by the Company or any of its Subsidiaries as an independent contractor
or consultant would be reclassified by the IRS, the U.S. Department of Labor or
any other Governmental or Regulatory Authority as an employee of the Company or
of any of its Subsidiaries for any purpose whatsoever.

(b) Included in the Disclosure Schedule is a complete and accurate list of
the name of each employee of the Company and of each of its Subsidiaries,
together with such employee's position or function, the rate of hourly, monthly
or annual compensation (as the case may be) paid or to be paid to such employee
in 1995, 1996 and, to the extent known, 1997, any accrued sick leave or pay or
vacation and any incentive or bonus arrangement with respect to any such
employee. Except as is set forth in the Disclosure Schedule, since the Balance
Sheet Date, neither the Company nor any of its Subsidiaries has increased the
compensation payable to its employees or the rate of compensation payable to its
employees. The Disclosure Schedule also identifies those employees with whom the
Company or any of its Subsidiaries has entered into an employment Contract or a
Contract obligating the Company or any such Subsidiary to pay severance or
similar payments to any employee. The Company and the Seller have delivered or
caused to be delivered to the Purchaser and Newco true and complete copies of
such Contracts, all of which are attached to the Disclosure Schedule.

(c) To the knowledge of the Company or the Seller, there are no threatened
or contemplated attempts to organize for collective bargaining purposes any of
the employees of the Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries is a party to or bound by any collective bargaining
agreement and no collective bargaining agreement covering any of such employees
is currently being negotiated.

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<PAGE>

and hours, is outstanding or, to either of the Company or the Seller's
knowledge, is threatened. There is no claim or petition pending before, and at
no time since January 1, 1992 has there been, any claim or petition made to, any
Governmental or Regulatory Authority including, without limitation, the National
Labor Relations Board or the Equal Employment Opportunity Commission against the
Company or any of its Subsidiaries with respect to any labor or employment
matter.

3.11. Employee Benefit Plans.

(a) The Disclosure Schedule sets forth a complete and accurate list and
description of each Employee Benefit Plan. Except as set forth in the Disclosure
Schedule, with respect to each Employee Benefit Plan, the Company and the
Seller's have delivered or caused to be delivered to the Purchaser and Newco
true and complete copies of (i) the plan document, trust agreement and any other
document governing such Employee Benefit Plan, (ii) the summary plan
description, (iii) all Form 5500 annual reports and attachments, and (iv) the
most recent IRS determination letter, if any, for such plan.

(b) Except as set forth in the Disclosure Schedule, each of the Employee
Benefit Plans has been operated and administered in compliance with their
respective terms and all applicable Requirements of Law including, without
limitation, ERISA and the Code. The Company has not incurred any "accumulated
funding deficiency" within the meaning of ERISA or incurred any liability to the
PBGC in connection with any Employee Benefit Plan (or other class of benefits
that the PBGC has elected to insure).

(c) Each Employee Benefit Plan that is intended to be tax qualified under
the Code is identified as such on the Disclosure Schedule attached to this
Agreement. Each such Employee Benefit Plan has received, or the Company has
applied for or will in a timely manner apply for, a favorable determination
letter from the IRS stating that such Employee Benefit Plan meets the
requirements of the Code and that any trust or trusts associated therewith are
tax exempt under the Code.

(d) The Company does not maintain any "defined benefit plan" covering
employees of the Company or any of its Subsidiaries within the meaning of
Section 3(35) of ERISA subject to Title IV of ERISA or any "Multiemployer Plan"
within the meaning of Section 401(a)(3) of ERISA.

(e) All contributions and payments of insurance premiums required to be
made with respect to the Employee Benefit Plans including, without limitation,
the payment of the applicable premiums on any insurance Contract funding an
Employee Benefit Plan, have been fully paid in such a manner as not to cause any
interest, penalties or other amounts that have not been satisfied or discharged
to be assessed against the Company or any of its Subsidiaries with respect
thereto.

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<PAGE>

(f) The Company has complied with the reporting and disclosure requirements
of ERISA applicable to the Employee Benefit Plans and the continuation coverage
requirements of the Code and ERISA applicable to any of the Employee Benefit
Plans.

(g) There has been no "prohibited transaction" or "reportable event" within
the meaning of the Code or ERISA within the last sixty (60) months, or breach of
fiduciary duty with respect to any of the Employee Benefit Plans that could
subject the Purchaser, the Surviving Corporation, the Company or any of their
respective Subsidiaries to any tax, penalty or other liability under the Code or
ERISA.

(h) No Employee Benefit Plan has been terminated within the past sixty (60)
months. There are no Legal Proceedings or claims with respect to any of the
Employee Benefit Plans (other than routine claims for benefits from eligible
participants or beneficiaries in the normal and ordinary course of business)
pending or, to the knowledge of the Company or the Seller threatened, and to the
knowledge of the Company or the Seller, there are no facts, events, conditions
or circumstances that could give rise to any such Legal Proceeding or claim
(other than routine claims for benefits from eligible participants or
beneficiaries in the normal and ordinary course).

(i) Neither the Company or any ERISA Affiliate has ever sponsored,
maintained or contributed to, or been obligated to contribute to, any employee
benefit plan subject to Title IV of ERISA or the minimum funding requirements of
Code Section 412.

(j) No Employee Benefit Plan provides post retirement medical benefits,
post retirement death benefits or any post retirement welfare benefits of any
fund whatsoever.

(k) There are no current or former employees of the Company or any of its
Subsidiaries who are on leave of absence under either of the Uniformed Services
Employment or Reemployment Rights Act or the Family Medical Leave Act.

(l) None of the Company, any of its Subsidiaries, or any of their
respective officers, directors or significant employees (as such term is defined
in Regulation S-K of the Securities Act), or any other Person has made any
statement or communication or provided any materials to any employee or former
employee of the Company of any of its Subsidiaries that provides for or could be
construed as a contract, agreement or commitment by the Purchaser or any of its
Affiliates to provide for any pension, welfare, or other employee benefit or
fringe benefit plan or arrangement to any such employee or former employee,
whether before or after retirement or separation or otherwise.

(m) The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement will not result in any increase
in or acceleration of any obligation or liability under any Employee Benefit
Plan or to any employee or former employee of the Company or any of its
Subsidiaries.

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<PAGE>

3.12. Financial Statements.

(a) The Company and the Seller have delivered or caused to be delivered to
the Purchaser and Newco a copy of the Company's consolidated balance sheets as
of July 31, 1995 and 1996 and April 30, 1997 and the related statements of
operations, shareholders' equity and cash flows for the years then ended,
together with all proper exhibits, schedules and notes thereto, (collectively,
the "Financial Statements"). A true and complete copy of the Financial
Statements is attached to the Disclosure Schedule. The Financial Statements have
been prepared in accordance with GAAP consistently applied throughout the
periods involved (except for changes required or permitted by GAAP and noted
thereon) and fairly represent the financial position of the Company and its
Subsidiaries as of the date of such Financial Statements and the results of
operations and changes in shareholders' equity and cash flows for the periods
covered thereby.

(b) The Books and Records accurately and fairly reflect, in reasonable
scope and detail and in accordance with good business practice, the transactions
and assets and liabilities of the Seller and such other information as is
contained therein.

(c) Since the Balance Sheet Date, (i) the Company and each of its
Subsidiaries have operated, and the Seller has caused the Company and each of
its Subsidiaries to operate, their respective Businesses in the normal and
ordinary course in a manner consistent with past practices, (ii) there has been
no development, event, condition, or circumstance that has had, or could
reasonably be expected to have, a Material Adverse Effect upon Company or any of
its Subsidiaries, except as disclosed on the Disclosure Schedule, (iv) neither
the Company nor any of its Subsidiaries has made or committed to make any
capital expenditure or capital addition or betterments in excess of an aggregate
of $50,000; and (v) neither the Company nor any of its Subsidiaries has made any
gift or contribution (charitable or otherwise) to any Person (other than gifts
made since the Balance Sheet Date which, in the aggregate, do not exceed
$5,000).

(d) On the Closing Date, the Company and the Seller will also deliver or
caused to be delivered to the Purchaser and Newco a true and complete copy of
the Closing Balance Sheet. The Closing Balance Sheet will be in accordance with
the books and records of the Company and its Subsidiaries, all of which have
been maintained in accordance with good business practice and in the normal and
ordinary course of business, and will be prepared in accordance with GAAP
applied on a consistent basis (except for the absence of notes and subject to
normal year-end audit adjustments).

3.13. Distributions. The Disclosure Schedule completely and accurately
lists and fully describes (i) all dividends, distributions, redemptions or
payments declared, accrued, accumulated or made in respect to any of the
Company's or any of its Subsidiaries' securities, whether debt or equity
(including, without limitation, the Shares), since January 1, 1992, (ii) any
other amounts paid or distributed since January 1, 1992 or required to be paid
or distributed to any Person in respect of any ownership, indebtedness or other
economic interest in the Company

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<PAGE>

or any of its Subsidiaries, and (iii) any other amounts to which any Person is
entitled to receive pursuant to any dividend or distribution right in respect of
any such interest.

3.14. Absence of Undisclosed Liabilities. Except as and to the extent
reflected on, or fully reserved against in, the balance sheet of the Company and
its Subsidiaries at April 30, 1997 including, without limitation, all notes
thereto, prepared in accordance with GAAP (the "Company Balance Sheet"), neither
the Company nor any of its Subsidiaries has any liabilities or obligations,
whether direct or indirect, matured or unmatured, contingent or otherwise,
except for liabilities or obligations that were incurred consistently with past
business practice in or as a result of the normal and ordinary course of
business since April 30, 1997.

3.15. Real Property.

(a) The Disclosure Schedule contains a complete and accurate list of all
the locations of all Real Property owned or leased by the Company or any of the
Subsidiaries and the name and address of the lessor and, if a Person different
than such lessor, the manager thereof. The Company and the Seller have delivered
or caused to be delivered to the Purchaser and Newco true and complete copies of
all Contracts related to Real Property (including, without limitation, all
leases and all management, service, supply, security, maintenance and similar
Contracts, and all attornment Contracts, subordination Contracts or similar
Contracts, and all other Contracts affecting or relating to the use and quiet
and peaceful enjoyment of the Real Property) to which the Company or any of its
Subsidiaries is a party or is otherwise bound or subject, and, in each case, all
amendments thereof, which relate to or affect any of the Real Property. Except
for the leases pertaining to the Real Property identified in and attached to the
Disclosure Schedule, the Seller, the Company or any of its Subsidiaries is a
party to any Contract that commits or purports to commit the Company or any of
its Subsidiaries to purchase or otherwise acquire or lease any real property
including, without limitation, the Real Property.

(b) Each Contract relating to or affecting the Real Property (i) is in full
force and effect, (ii) affords the Company or such Subsidiary, as the case may
be, peaceful, undisturbed and exclusive possession of the applicable Real
Property, (iii) is free of all Adverse Claims, and (iv) constitutes a valid and
binding obligation of, and is enforceable in accordance with its terms against,
the respective parties thereto.

(c) The Company and each of its Subsidiaries has performed the obligations
required to be performed by it to date under all Contracts relating to or
affecting the Real Property and is not in default or breach thereof. In
addition, no party to any such Contract (i) has provided any notice to the
Company or any of its Subsidiaries of its intent to terminate or not renew any
such Contract, (ii) to the knowledge of the Company and the Seller, has
threatened to terminate or not renew any such Contract or (iii) is, to the
knowledge of the Company and the Seller, in breach or default under any
provision thereof, and, to the knowledge of the Company and the Seller, no event
or condition has occurred, whether with or without the passage of time or the
giving of notice, or both, that would constitute such a breach or default.

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(d) The Real Property is (i) except as set forth in the Disclosure
Schedule, in good condition and repair and there has been no damage, destruction
or loss to any of the Real Property that remains unremedied to date (ordinary
wear and tear excepted) and (ii) suitable to carry out each of the Company's and
its Subsidiaries' respective Business as conducted thereon.

(e) There are no condemnation, appropriation or other proceedings involving
any taking of the Real Property pending, or to the knowledge of the Company or
the Seller, threatened, against any of the Real Property.

(f) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) result in or
give to any Person any right of termination, non-renewal, cancellation,
withdrawal, acceleration or modification in or with respect to any Contract
relating to or affecting the Real Property, (ii) result in or give to any Person
any additional rights or entitlement to increased, additional, accelerated or
guaranteed rent or payments under any such Contract or (iii) result in the
creation or imposition of any Adverse Claim upon the Company or any of its
Subsidiaries or any of their respective assets under the terms of any such
Contract.

(g) The Disclosure Schedule indicates a summary description of all plans or
projects involving the opening of new operations, expansion of any existing
operations or the acquisition of any Real Property, the lease of Real Property
or acquisition of new businesses, with respect to which the Company or any
Subsidiary has made any expenditure in the two-years prior to the date of this
Agreement in excess of $10,000, or which if pursued by the Company would require
additional expenditures of capital in excess of $10,000.

(h) The Company and each Subsidiary has good, valid and marketable title to
all Real Property, subject to no liens, mortgages, security interests, pledges,
encumbrances, or charges of any kind except: (i) liens for taxes or assessments
or other government charges or levies not yet due and payable; (ii) liens
imposed by law, such as mechanic's, materialmen's, warehousemen's and carrier's
liens, and other similar liens, securing obligations incurred in the ordinary
course of business which are not past due for more than 30 days; (iii) liens
under workmen's compensation, unemployment insurance, social security or similar
legislation securing obligations which are not past due; and (iv) the liens
securing other indebtedness not past due of the Company or its Subsidiaries set
forth in the Disclosure Schedule (the "Permitted Real Property Liens").

(i) No eminent domain, condemnation, incorporation, annexation or
moratorium or similar proceeding has been commenced or, to the best of the
Company's knowledge, threatened by an authority having the power of eminent
domain to condemn any part of the Real Property owned by the Company and its
Subsidiaries. To the best of the Company's knowledge, there are no pending or
threatened governmental rules, regulations, plans, studies or efforts, or court
orders or decisions, which do or could adversely affect the use or value of such
properties for their present use.

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(j) The improvements of all Real Property owned by the Company and its
Subsidiaries are in good condition and repair, ordinary wear and tear excepted,
and have not suffered any casualty or other material damage which has not been
repaired in all material respects. To the best of the Company's knowledge, there
is no material latent or patent structural, mechanical or other significant
defect, soil condition or deficiency in the improvements included in such
properties.

(k) The Real Property owned by the Company and its Subsidiaries has been
fully assessed and is not subject to abatement. To the best of the Company's
knowledge, there are no proposed reassessments of any of such properties by any
taxing authority and there are no threatened or pending special assessments or
other actions or proceedings (other than county-wide reassessments and/or the
usual increases in millage rates that may be under consideration by the taxing
authorities in the jurisdictions where such properties are located) that could
give rise to a material increase in real property taxes or assessments against
any of such properties.

3.16. Tangible Personal Property.

(a) The Company and each of its Subsidiaries owns or leases all such
properties as are presently used in the conduct of their respective Businesses
and operations. The Company and the Seller have delivered or caused to be
delivered to the Purchaser and Newco true and complete copies of all material
Contracts (including, without limitation, leases and service, supply,
maintenance and similar Contracts) to which the Company and any of its
Subsidiaries is a party or is otherwise bound or subject, and all amendments
thereto, which relate to or affect any of the tangible personal property owned,
possessed or used by the Company or any of its Subsidiaries (the "Tangible
Personal Property"). A complete and accurate list of all such Contracts is set
forth in, and true and complete copies of such Contracts are attached to, the
Disclosure Schedule. Except (i) for those assets disposed of in the normal and
ordinary course of business since the Balance Sheet Date, (ii) with respect to
Tangible Personal Property that is leased or rented by the Company or any of its
Subsidiaries, and (iii) as otherwise set forth on the Disclosure Schedule, the
Company and each such Subsidiary, as the case may be, has good and valid title
to all of its Tangible Personal Property, including all items of Tangible
Personal Property reflected on the Company Balance Sheet, free of all Adverse
Claims.

(b) Since the Balance Sheet Date, neither the Company nor any of its
Subsidiaries has incurred or suffered any material physical damage, destruction,
theft or loss of their respective tangible items of material personal property,
whether owned or leased. All material Tangible Personal Property including,
without limitation, all computer hardware and software (including all operating
and application systems), is in good working order, condition and repair and
suitable to carry out each of the Company's and its Subsidiaries' respective
Businesses as conducted therewith.

(c) Each Contract relating to or affecting the Tangible Personal Property
(i) is in full force and effect, (ii) affords the Company or such Subsidiary, as
the case

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may be, peaceful, undisturbed and exclusive possession of the applicable
Tangible Personal Property, (iii) is free of all Adverse Claims and (iv)
constitutes a valid and binding obligation of, and is enforceable in accordance
with its terms against, the respective parties thereto.

(d) The Company and each of its Subsidiaries has performed the obligations
required to be performed by it to date under all Contracts relating to or
affecting the Tangible Personal Property and, except as set forth on the
Disclosure Schedule, is not in default or breach thereof. In addition, no party
to any such Contract (i) has provided any notice to the Company or any of its
Subsidiaries of its intent to terminate or not renew any such Contract, (ii) to
the knowledge of the Company and the Seller, has threatened to terminate or not
renew any such Contract or (iii) except as set forth on the Disclosure Schedule
is, to the knowledge of the Company and the Seller, in breach or default under
any provision thereof, and, to the knowledge of the Company and the Seller, no
event or condition has occurred, whether with or without the passage of time or
the giving of notice, or both, that would constitute such a breach or default.

(e) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) result in or
give to any Person any right of termination, non-renewal, cancellation,
withdrawal, acceleration or modification in or with respect to any Contract
relating to or affecting the Tangible Personal Property, (ii) result in or give
to any Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed rent or payments under any such Contract or (iii)
except as set forth on the Disclosure Schedule, result in the creation or
imposition of any Adverse Claim upon the Company or any of its Subsidiaries or
any of their respective assets under the terms of any such Contract.

3.17. Contracts.

(a) Attached to the Disclosure Schedule is a complete and accurate list of
each Contract described below to which either the Company or any of its
Subsidiaries or any of their respective properties is party or is otherwise
bound or subject:

(i) each Contract with the Company's or any of its Subsidiaries', as
applicable, customers (but only if such customers are among the Company's
twenty-five highest, in terms of dollar value of purchases, for the
twelve-month period ending on the Balance Sheet Date), dealers, brokers,
value added resellers or vendors (but only if such vendors are among the
Company's twenty-five highest, in terms of dollar value of sales, for the
twelve-month period ending on the Balance Sheet Date);

(ii) any Contract that creates a partnership or a joint venture or
arrangement that involves a sharing of profits (whether through equity
ownership, Contract or otherwise) with any other Person;

(iii) any Contract that purports to or has the effect of limiting
either the Company's or any such Subsidiaries' right to engage in, or
compete with any Person in, any business;

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(iv) any Contract involving a pledge or encumbering of either
Company's or any of its Subsidiaries' assets or the incurrence by either
Company or any of its Subsidiaries of liabilities (other than liabilities
to render services to customers in the ordinary course of business) in any
one transaction or series of related transactions in excess of $10,000, or
that extend beyond one year from the date of this Agreement;

(v) any material Contract pursuant to which either the Company or any
of its Subsidiaries has created, incurred, assumed or guaranteed any
indebtedness other than for trade indebtedness incurred in the normal and
ordinary course of the Business;

(vi) any Contract not made in the normal and ordinary course of the
applicable Company's or Subsidiary's Business; and

(vii) any Contract that either (y) does not fit within one of the
foregoing categories described in (i) through (vi) above or (z) is not
otherwise identified in the Disclosure Schedule and that would be required
by Item 601(b)(10) of Regulation S-K promulgated under the Securities Act
to be attached as an exhibit to any registration statement on Form S-1
filed by either the Company or any of its Subsidiaries under the Act if the
Company were to file such a registration statement under the Act on the
date on which this representation and warranty is made.

(b) Each material Contract to which the Company or any of its Subsidiaries
or any of their respective properties is a party or is otherwise bound or
subject (i) is valid and binding on each of the parties thereto in accordance
with its terms, (ii) was made in the normal and ordinary course of the Business
and (iii) contains no provision or covenant prohibiting or limiting the ability
of the Company or any Subsidiary to operate their respective Businesses.

(c) No party to any material Contract to which the Company or any of its
Subsidiaries or any of their respective properties is a party or is otherwise
bound or subject (i) has provided any notice to the Company or any of its
Subsidiaries of its intent to terminate or withdraw its participation in any
such Contract, (ii) has, to the knowledge of the Company and the Seller,
threatened to terminate or withdraw from participation in any such Contract or
(iii) is, to the knowledge of the Company and the Seller, in breach or default
under any provision thereof, and, to the knowledge of the Company and the
Seller, no event or condition has occurred, whether with or without the passage
of time or the giving of notice, or both, that would constitute such a breach or
default.

(d) Except as set forth in the Disclosure Schedule, no Consent of any party
to any material Contract to which the Company or any of its Subsidiaries or any
of their respective properties is a party or is otherwise bound or subject is
required in connection with the transactions contemplated by this Agreement.

(e) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) result in or
give to any Person

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any right of termination, non-renewal, cancellation, withdrawal, acceleration or
modification in or with respect to any material Contract to which the Company or
any of its Subsidiaries or any of their respective properties is a party or is
otherwise bound or subject, (ii) result in or give to any Person any additional
rights or entitlement to increased, additional, accelerated or guaranteed
payments under any such Contract or (iii) result in the creation or imposition
of any Adverse Claim upon the Company or any of its Subsidiaries or any of their
respective assets under the terms of any such Contract.

3.18. Insurance. Attached to the Disclosure Schedule is a complete and
accurate list of all insurance policies held by the Company and by each of its
Subsidiaries identifying all of the following for each such policy: (i) the type
of insurance; (ii) the insurer; (iii) the policy number; (iv) the applicable
policy limits, (v) the applicable periodic premium; and (vi) the expiration
date. Each such insurance policy is valid and binding and is and has been in
effect since the date of its issuance. All premiums due thereunder have been
paid, and neither the Company nor any of its Subsidiaries has received any
notice of any increase in premiums or of any cancellation, non-renewal or
termination in respect of any such policy. To the knowledge of the Company, or
any of its Subsidiaries are in default under any such policy in any respect. To
the knowledge of the Company or the Seller, no such insurer is the subject of
insolvency proceedings. Neither the Company nor the Person to whom any such
insurance policy has been issued has received notice that any insurer under any
policy referred to in the Disclosure Schedule is denying liability with respect
to a claim thereunder or defending under a reservation of rights clause. Each of
the Company and its Subsidiaries has notified its insurance carriers of all
litigation and claims and facts which could reasonably be expected to give rise
to a claim, all of which are disclosed in the Disclosure Schedule (including
worker's compensation claims). The liability insurance maintained by the Company
is and has at all times prior to the date of this Agreement been on an
"occurrence" basis.

3.19. Proprietary Rights.

(a) Attached to the Disclosure Schedule is a complete and accurate list and
full description of each item of the Company's and each of its Subsidiaries
Intellectual Property together with, in the case of registered Intellectual
Property: the (i) applicable registration number; (ii) filing, registration,
issue or application date; (iii) record owner; (iv) country; (v) title or
description; and (vi) remaining life. In addition, the Disclosure Schedule
identifies whether each item of Intellectual Property is owned by the Company or
any of its Subsidiaries or possessed and used by the Company or such Subsidiary
under any Contract. The Intellectual Property constitutes valid and enforceable
rights and does not infringe or conflict with the rights of any other Person;
provided that to the extent the foregoing relates to Intellectual Property used
but not owned by the Company, such representation and warranty is given solely
to the knowledge of the Company and the Seller.

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Intellectual Property, and neither the Company nor any such Subsidiary has
received any notice of infringement upon or conflict with any asserted right of
others nor, to the Company's and the Seller's knowledge, is there a basis for
such a notice. To the Company's and the Seller's knowledge, no Person, is
infringing the Company's or any of its Subsidiaries rights to the Intellectual
Property.

(c) Except as otherwise provided in the Disclosure Schedule, neither the
Company nor any of its Subsidiaries has any obligation to compensate others for
the use of any Intellectual Property. In addition, except as otherwise provided
on the Disclosure Schedule, neither the Company nor any of its Subsidiaries has
granted any license or other right to use, in any manner, any of the
Intellectual Property, whether or not requiring the payment of royalties.

(d) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) result in or
give to any Person any right of termination, non-renewal, cancellation,
withdrawal, acceleration or modification in or with respect to any Contract
relating to or affecting the Intellectual Property, (ii) result in or give to
any Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under any such Contract or (iii) result in
the creation or imposition of any Adverse Claim upon the Company or any of its
Subsidiaries or any of their respective assets under the terms of any such
Contract.

3.20. Environmental Matters.

(a) The Company and each of its Subsidiaries, and the operation of each of
their respective Businesses is and has been in compliance with all applicable
Environmental Laws.

(b) There have occurred no and there are no events, conditions,
circumstances, activities, practices, incidents, or actions on the part of, or
caused by, the Company (or, to the knowledge of the Company and the Sellers,
caused by a third party) that may give rise to any common law or statutory
liability, or otherwise form the basis of any Legal Proceeding, Order or action
involving or relating to the Company or any of its Subsidiaries, based upon or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substance or wastes.

(c) To the knowledge of the Company and the Seller, there is no asbestos
contained in or forming a part of any building, structure or improvement
comprising a part of any of the Real Property. To the knowledge of the Company
and the Seller, there are no polychlorinated biphenyls (PCBs) present, in use or
stored on any of the Real Property. To the knowledge of the Company and the
Seller, no radon gas or the presence of radioactive decay products of radon are
present on, or underground at any of the Real Property at levels beyond the
minimum safe levels for such gas or products prescribed by applicable
Environmental Laws.

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3.21. Permits.

(a) The Company, each of its Subsidiaries, and each of their respective
employees, independent contractors and agents has obtained and holds in full
force, and the Disclosure Schedule sets forth a complete and accurate list of,
all Permits that are necessary or advisable for the operation of their
respective Businesses. Neither the Company, any of its Subsidiaries nor any such
employee, independent contractor or agent is in noncompliance with the terms of
any such Permit.

(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) result in or
give to any Person any right of termination, non-renewal, cancellation,
acceleration or modification in or with respect to any such Permit, (ii) result
in or give to any Person any additional rights or entitlement to increased,
additional, accelerated or guaranteed payments under any such Permit or (iii)
result in the creation or imposition of any Adverse Claim upon the Company or
any of its Subsidiaries or any of their respective assets under the terms of any
Permit.

(c) Except as set forth in the Disclosure Schedule, there is no Order
outstanding against the Company or any of its Subsidiaries, nor is there now
pending, or to the Company's or the Sellers' knowledge, threatened, any Legal
Proceeding, which could adversely affect any Permit required to be obtained and
maintained by the Company or any of its Subsidiaries.

3.22. Regulatory Filings. Except as set forth in the Disclosure Schedule,
the Company and each of its Subsidiaries has filed all registrations, filings,
reports, or submissions that are required by any Requirement of Law. All such
filings were made in compliance with applicable Requirements of Law when filed
and no deficiencies have been asserted by any Governmental or Regulatory
Authority with respect to such filings and submissions that have not been
finally resolved.

3.23. Taxes and Tax Returns.

(a) Except as set forth in the Disclosure Schedule, the Company and each of
its Subsidiaries has duly and timely filed all Tax Returns. Each such Tax Return
is true, accurate and complete. The Company and each of its Subsidiaries has
paid in full all Taxes for the period covered by such Tax Return. All Taxes not
yet due and payable have been withheld or reserved for or, to the extent that
they relate to periods on or prior to the date of the Company Balance Sheet, are
reflected as a liability thereon.

(b) The Company and each of its Subsidiaries has complied with all
applicable Requirements of Law relating to the payment and withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Section 1441
and 1442 of the Code, or similar provisions under any foreign Requirements of
Law) and have, within the time and in the manner prescribed by applicable
Requirements of Law, withheld from employee wages and paid

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over, in a timely manner, to the proper Taxing Authorities all amounts required
to be so withheld and paid over under applicable law.

(c) No deficiency for any Taxes has been asserted or assessed against the
Company or any of its Subsidiaries that has not been resolved and paid in full
or fully reserved for and identified on the Company Balance Sheet and, to the
knowledge of the Company and the Seller, no deficiency for any Taxes has been
proposed that has not been fully reserved for and identified on the Company
Balance Sheet. Neither the Company nor any of its Subsidiaries has received any
outstanding and unresolved notices from the IRS or any other Taxing Authority of
any proposed examination or of any proposed change in reported information
relating to the Company or any such Subsidiary. Except as set forth in the
Disclosure Schedule (which sets forth the nature of the proceeding, the type of
Tax Return, the deficiencies proposed or assessed and the amount thereof, and
the taxable year in question), no Legal Proceeding or audit or similar foreign
proceedings is pending with regard to any of the Company's or any of its
Subsidiaries' Taxes or Tax Returns.

(d) No waiver or comparable consent given by the Company or any of its
Subsidiaries regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns is outstanding, nor, to the knowledge of the
Company and the Seller, is any request for any such waiver or consent pending.

(e) There are no liens or encumbrances of any kind for Taxes upon any
assets or properties of the Company or any of its Subsidiaries other than for
Taxes not yet due and payable.

(f) Except as set forth in the Disclosure Schedule, neither the Company nor
any of its Subsidiaries has requested any extension of time within which to file
any Tax Return, which Tax Return has not since been filed.

(g) Neither the Company nor any of its Subsidiaries is a party to any
Contract providing for the allocation or sharing of Taxes. Neither of the
Company nor any of its Subsidiaries has made any election under Section 341(f)
of the Code.

(h) Neither the Company nor any of its Subsidiaries has agreed to make, nor
is any of them required to make, any adjustment under Section 481(a) of the Code
for any period ending after the Closing Date by reason of a change in accounting
method or otherwise and neither the Company nor any of its Subsidiaries has any
knowledge that the IRS has proposed such adjustment or change in accounting
method.

(i) None of the assets of the Company or any of its Subsidiaries is
required to be treated as owned by any other person pursuant to the "safe harbor
lease" provisions of former Section 168(f)(8) of the Code.

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(j) Neither the Company nor any of its Subsidiaries is a party to any
venture, partnership, Contract or arrangement under which it could be treated as
a partner for federal income tax purposes.

(k) Neither the Company nor any of its Subsidiaries has a permanent
establishment located in any tax jurisdiction other than the United States, nor
are any of them liable for the payment of Taxes levied by any jurisdiction
located outside the United States.

(l) Other than in respect of a period for which a Tax is not yet due, no
state of facts exists or has existed that would constitute grounds for the
assessment of any Tax liability with respect to a period that has not been
audited by the IRS or any other Taxing Authority.

(m) No power of attorney has been granted by the Company or any of its
Subsidiaries with respect to any matter relating to Taxes that is currently in
force.

(n) Neither the Company nor any of its Subsidiaries is or has been a United
States real property holding company (as defined in Section 897(c)(2) of the
Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.

(o) Neither the Company nor any of its Subsidiaries is a party to any
Contract or arrangement that would result in the payment of any "excess
parachute payment" within the meaning of Section 280G of the Code.

(p) All transactions that could give rise to an understatement of federal
income tax (within the meaning of Section 6662 of the Code or any predecessor
provision thereof) have been adequately disclosed on the Tax Returns required in
accordance with Section 6662(d)(2)(B) of the Code or any predecessor provision
thereto.

(q) No election under Code ss.338 (or any predecessory provisions) has been
made by or with respect to the Company or any of its Subsidiaries or any of
their respective assets or properties.

(r) No indebtedness of the Company or any of its Subsidiaries is "corporate
acquisition indebtedness" within the meaning of Code ss.279(b).

3.24. Investment Portfolio. Except as set forth in the Disclosure Schedule
attached to this Agreement, the Company's and each of its Subsidiaries
investment portfolio consists solely of investments in one or more of the
following: (i) interest bearing deposit accounts (including certificates of
deposit) that are insured by the Federal Deposit Insurance Corporation, (ii)
direct obligations of the United States of America with a maturity not greater
than one year, (iii) short term money market funds or (iv) commercial paper of
any corporation organized under the laws of any State of the United States or
any bank organized or licensed to conduct a banking business under the laws of
the United States or any State thereof having the

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highest short-term rating given by Moody's Investor's Services, Inc. and
Standard and Poor's Corporation.

3.25. Affiliate Transactions. The Disclosure Schedule lists and fully
describes each Contract, transaction or series of transactions, whether written
or oral (other than for the compensation arrangements described in the
Disclosure Schedule under Section numbers 3.10, 3.11 and 3.28, pursuant to which
the Company or any of its Subsidiaries is, or, at any time during the previous
five (5) years has been, a party or otherwise bound with any Affiliate of the
Seller, the Company, any Subsidiary of the Company (an "Affiliate Transaction").
Each Affiliate Transaction has been entered into the normal and ordinary course
of the Business.

3.26. Accounts, Power of Attorney. The Disclosure Schedule completely and
accurately states the names and addresses of each bank, financial institution,
fund, investment or money manager, brokerage house and similar institution in
which the Company or any of its Subsidiaries maintains any account (whether
checking, savings, investment, trust or otherwise), lock box or safe deposit box
(collectively, the "Accounts"), and the account numbers and name of the Persons
having authority to affect transactions with respect thereto or other access
thereto. The Disclosure Schedule also sets forth the name of each person,
corporation, firm or other entity holding a general or special power of attorney
from the Company or any Subsidiary and a description of the terms of such power.

3.27. Receivables. Except as set forth in the Disclosure Schedule, since
the Balance Sheet Date, neither the Company nor any of its Subsidiaries has
written-off, nor under GAAP is it appropriate to write off, any accounts
receivable, notes receivable or other miscellaneous receivables owing to the
Company or any of its Subsidiaries (the "Receivables"). All Receivables
currently owing to the Company or any of its Subsidiaries are completely and
accurately listed and aged in the Disclosure Schedule attached to this
Agreement. The Receivables arose from bona fide transactions in the normal and
ordinary course of business and reflect credit terms consistent with past
practice. The Company and each of its Subsidiaries has good and valid title to
their respective Receivables, free of all Adverse Claims. Except as set forth in
the Disclosure Schedule, neither the Company nor any of its Subsidiaries has
sold, factored, securitized, or consummated any similar transaction with respect
to any of its Receivables. Subject to proper reserves taken into account in
accordance with GAAP as reflected on the Disclosure Schedule, each Receivable is
fully collectable in the normal and ordinary course of business (i.e. without
resort to litigation or assignment to a collection agency), and are not subject
to any dispute, counterclaim, defense, set-off or Adverse Claim.

3.28. Officers and Directors.

(a) The Disclosure Schedule accurately and completely lists the names of
the Company's and each of its Subsidiaries' respective directors, executive
officers, and any of their respective significant employees (as such term is
defined in Regulation S-K under the Securities Act) and the compensation payable
to each of them to serve as such.

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(b) Except as set forth on the Disclosure Schedule attached to this
Agreement, none of the Seller or any of the current directors, current executive
officers or current significant employees (as such term is defined in Section
3.28(a)) of either the Company or any of its Subsidiaries has, within the past
five (5) years:

(i) (x) filed or had filed against him or her a petition under the
Federal bankruptcy laws or any state insolvency or similar law, or (y) had
a receiver, conservator, fiscal agent or similar officer appointed by a
court for the business, property or assets of such individual, or any
partnership in which he or she was a general partner or any other Person of
which he or she was a director or an executive officer or had a position
having similar powers and authority at or within two (2) years of the date
of such filing;

(ii) been convicted of, or pled guilty or no contest to, any crime
(other than traffic offenses and other minor offenses);

(iii) been named as a subject of any criminal Legal Proceeding (other
than for traffic offenses and other minor offenses);

(iv) been the subject of any Order or sanction relating to an alleged
violation of, or otherwise found by any Governmental or Regulatory
Authority to have violated: (x) any Requirement of Law relating to
securities or commodities, (y) any Requirement of Law respecting financial
institutions, insurance companies, or fiduciary duties owed to any Person,
(z) any Requirement of Law prohibiting fraud (including, without
limitation, mail fraud or wire fraud);

(v) been the subject of any Order enjoining or otherwise prohibiting
him or her from engaging in any type of business activity; or

(vi) been the subject of any Order or sanction by (x) a self-
regulatory organization (as defined in Section 3(a)(26) of the Exchange
Act), (y) a contract market designated pursuant to Section 5 of the
Commodity Exchange Act, as amended, or (z) any substantially equivalent
foreign authority or organization.

3.29. Corporate Records. The Company's and each of its Subsidiaries'
corporate books and records, minutes of the meetings of the stockholders or
directors, stock books, corporate seal (if any) and any other similar books and
records are complete and accurate.

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the foregoing, the Company, its Subsidiaries and the Seller are solely
responsible for the payment of the commissions, fees and other compensation
payable to the Person having any such right, interest or claim on account of any
action on the part of the Company, its Subsidiaries or the Sellers, including,
without limitation, the Persons identified on the Disclosure Schedule.

3.31. Customers. The Disclosure Schedule accurately and completely lists
the names of the twenty-five largest customers (in terms of dollar value of
purchases) of the Company and each of its Subsidiaries and details the Company's
and each such Subsidiary's total revenue attributable to each such customer for
the 1995, 1996 and 1997 fiscal years and the current fiscal year to date. Except
as set forth in the Disclosure Schedule, there has been no adverse change in the
Company's or any of its Subsidiaries' business relationship with any such
customer that, in the aggregate, would have a Material Adverse Effect upon the
Company or any such Subsidiary.

3.32. Investment Company. Neither the Company nor any of its Subsidiaries
is an "investment company" within the meaning of the Investment Company Act of
1940 and the rules and regulations promulgated thereunder, as amended from time
to time, or any successors thereto.

3.33. Absence of Changes. Since the Balance Sheet Date, except as set forth
on the Disclosure Schedule there has not been with respect to the Company and
any Subsidiary:

(i) any event or circumstance (either singly or in the aggregate)
which would constitute a Material Adverse Effect;

(ii) any change in its authorized capital, or securities outstanding,
or ownership interests or any grant of any options, warrants, calls,
conversion rights or commitments;

(iii) any declaration or payment of any dividend or distribution in
respect of its capital stock or any direct or indirect redemption, purchase
or other acquisition of any of its capital stock, except any declaration of
dividends payable by any Subsidiary to the Company;

(iv) any increase in the compensation, bonus, sales commissions or fee
arrangement payable or to become payable by it to any of its respective
officers, directors, stockholders, employees, consultants or agents, except
for ordinary and customary bonuses and salary increases for employees in
accordance with past practice;

(v) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character that would have a Material
Adverse Effect;

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(vi) any distribution, sale or transfer, or any agreement to sell or
transfer, any material assets, property or rights of any of its respective
business to any person, including, without limitation, the Seller and their
affiliates, other than distributions, sales or transfers in the ordinary
course of business to persons other than the Seller and their affiliates;

(vii) any cancellation, or agreement to cancel, any material
indebtedness or other material obligation owing to it, including without
limitation any indebtedness or obligation of the Seller or any affiliate
thereof, other than the negotiation and adjustment of bills in the course
of good faith disputes with customers in a manner consistent with past
practice;

(viii) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets, property
or rights or requiring consent of any party to the transfer and assignment
of any such assets, property or rights;

(ix) any purchase or acquisition of, or agreement, plan or arrangement
to purchase or acquire, any property, rights or assets outside of the
ordinary course of business;

(x) any waiver of any of its material rights or claims;

(xi) any transaction by them outside the ordinary course of their
respective businesses; or

(xii) any cancellation or termination of a material Contract.

3.34. Accuracy and Completeness of Information. To the knowledge of the
Company and the Seller, all information furnished, to be furnished or caused to
be furnished to the Purchaser and Newco by the Company or the Seller with
respect to the Seller, the Company or any of its Subsidiaries for the purposes
of or in connection with this Agreement, or any transaction contemplated by this
Agreement is or, if furnished after the date of this Agreement, shall be true
and complete in all material respects and does not, and, if furnished after the
date of this Agreement, shall not, contain any untrue statement of material fact
or fail to state any material fact necessary to make such information not
misleading.

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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND NEWCO

The Purchaser and Newco hereby, jointly and severally, represent and
warrant to the Seller and the Company as follows:

4.1. Organization. The Purchaser and Newco each is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation, (ii) has the power and authority to own and operate its
properties and assets and to transact its business as currently conducted and
(iii) is duly qualified and authorized to do business and is in good standing in
all jurisdictions where the failure to be duly qualified, authorized and in good
standing would have a material adverse effect upon the Purchaser's or Newco's,
as the case may be, businesses, prospects, operations, results of operations,
assets, liabilities or condition (financial or otherwise).

4.2. Authorization for Agreement. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
by the Purchaser and Newco (i) are within the Purchaser's and Newco's corporate
powers and duly authorized by all necessary corporate action on the part of the
Purchaser and Newco and (ii) do not (A) require any action by or in respect of,
or filing with, any governmental body, agency or official, except as set forth
in this Agreement or (B) contravene, violate or constitute, whether with or
without the passage of time or the giving of notice or both, a breach or a
default under, any Requirement of Law applicable to the Purchaser, Newco or any
of their properties or any Contract to which they or any of their properties are
bound, except filings and approvals in connection with the Initial Public
Offering.

4.3. Enforceability. This Agreement has been duly executed and delivered by
the Newco and Purchaser and constitutes the legal, valid and binding obligation
of the Purchaser and Newco, enforceable against the Purchaser and Newco in
accordance with its terms.

4.4. Litigation. There is no Legal Proceeding or Order pending against or,
to the knowledge of the Purchaser or Newco, threatened against or affecting, the
Purchaser, Newco or any of their properties or otherwise that could adversely
affect or restrict the ability of the Purchaser or Newco to consummate fully the
transactions contemplated by this Agreement or that in any manner draws into
question the validity of this Agreement.

4.5. Registration Statement. The Registration Statement on Form S-1 and any
amendment thereto which is filed with the Securities and Exchange Commission in
connection with the Initial Public Offering will have been prepared in all
material respects in compliance with the requirements of the Securities Act and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein; provided, however, that insofar as
the foregoing relates to information in the Registration Statement that relates
to the Company, the

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Seller or any of the other Founding Companies, such representation and warranty
shall be deemed made based on the knowledge of the Purchaser.

4.6. Brokers or Finders. The Purchaser has not engaged the services of any
broker or finder with respect to the transactions contemplated by this
Agreement, and no Person has or will have, as a result of the consummation of
the transaction contemplated by this Agreement, any right, interest or valid
claim against or upon the Seller for any commission, fee or other compensation
as a finder or broker thereof on account of any action on the part of the
Purchaser. Without degradation to any of the foregoing, the Purchaser is solely
responsible for the payment of the commissions, fees and other compensation
payable to any Person having any such right, interest or claim on account of any
action on the part of the Purchaser.

ARTICLE 5
COVENANTS

5.1. Good Faith. Each of the Company, the Sellers, Newco and the Purchaser
shall perform each and every of their respective obligations under this
Agreement and shall perform the transactions contemplated by this Agreement in
good faith and in a commercially reasonable manner.

5.2. Approvals. Each of the Company, the Sellers, Newco and the Purchaser
shall use their respective commercially reasonable best efforts to obtain all
Regulatory Approvals and Consents from such other third parties including,
without limitation, Consents required under any Contract or any Requirement of
Law, that are necessary or advisable in connection with the consummation of the
transactions contemplated by this Agreement. The Seller shall use his or its
commercially reasonable best efforts to cause the Company and all of its
Subsidiaries to cooperate with the Purchaser to the fullest extent practicable
in seeking to obtain all such Regulatory Approvals and Consents, and shall
provide, and shall cause the Company and all Subsidiaries to provide, such
information and communications to all Governmental or Regulatory Authorities as
they or the Purchaser may request from time to time in connection therewith.
Nothing contained herein shall require either of the Company, Newco or the
Purchaser to amend the provisions of this Agreement, to pay or cause any of
their respective Affiliates to pay any money, or to provide or cause any of
their respective Affiliates to provide any guaranty to obtain any such
Regulatory Approvals or Consents.

5.3. Cooperation; Access to Books and Records.

(a) The Company will, and the Seller will and will cause the Company and
each of its Subsidiaries to, cooperate with the Newco and the Purchaser in
connection with the transactions contemplated by this Agreement and any
Purchaser Financing Transaction, including, without limitation, cooperating in
the determination of which Regulatory Approvals and Consents are required or
advisable to be obtained prior to the Closing Date. Until the Closing Date, the
Company will, and the Seller will and will cause the Company and each of its

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Subsidiaries to, afford to the Purchaser, Newco and their agents, legal
advisors, accountants, auditors, commercial and investment banking advisors and
other authorized representatives, agents and advisors reasonable access to all
of the properties and books and records of the Company or any of its
Subsidiaries (including those in the possession or control or their accountants,
attorneys and any other third party), as the case may be, for the purpose of
permitting the Purchaser and Newco to make such investigation and examination of
the business and properties of the Company and any of its Subsidiaries as the
Purchaser or Newco, in its discretion, shall deem necessary, appropriate or
desirable. Any such investigation, access and examination shall be conducted
upon reasonable prior notice under the circumstances. The Company will, and the
Seller will cause the Company and each of its Subsidiaries to, cause each of
their respective directors, officers, employees and representatives, including,
without limitation, their respective counsel and accountants, to cooperate fully
with the Purchaser and Newco, in connection with such investigation, access and
examination. The results of such investigation and examination is for the
Purchaser and Newco's sole benefit, and shall not (i) impair or reduce any
representation or warranty made by the Company or the Seller in this Agreement,
(ii) relieve the Company or the Seller from his obligations with respect to such
representations and warranties (including, without limitation, the Seller's
obligations under Article 10), or (iii) mitigate the Company's and the Seller's
obligations to otherwise disclose all material facts to the Purchaser and Newco
with respect to the Company, each of its Subsidiaries and their respective
Businesses.

(b) The Purchaser will cooperate with the Company and the Seller in
connection with the transactions contemplated by this Agreement and any
Purchaser Financing Transaction, including, without limitation, cooperating in
the determination of which Regulatory Approvals and Consents are required or
advisable to be obtained prior to the Closing Date. Until the Closing Date, the
Purchaser will afford to the Company, the Seller and their agents, legal
advisors and accountants reasonable access to all of the properties and books
and records of the Purchaser (including those in the possession or control or
their accountants, attorneys and any other third party), as the case may be, for
the purpose of permitting the Company and the Seller to make such investigation
and examination of the business and properties of the Purchaser and any of its
Subsidiaries as the Company and the Seller, in its discretion, shall deem
necessary, appropriate, or desirable. Any such investigation, access and
examination shall be conducted upon reasonable prior notice under the
circumstances. Purchaser will cause each of its directors, officers, employees
and representatives, including, without limitation, its counsel and accountants,
to cooperate fully with the Company and the Seller, in connection with such
investigation, access and examination. The results of such investigation and
examination is for the Company's and Seller's sole benefit, and shall not (i)
impair or reduce any representation or warranty made by the Purchaser in this
Agreement, (ii) relieve the Purchaser from its obligations with respect to such
representations and warranties (including, without limitation, the Purchaser's
obligations under Article 10), or (iii) mitigate the Purchaser's obligations to
otherwise disclose all material facts to the Company and the Seller with respect
to the Purchaser.

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5.4. Duty to Supplement.

(a) Promptly upon the Company's or the Seller's discovery of the occurrence
of any development, event, circumstance or condition that, individually or in
the aggregate, may have a Material Adverse Effect upon the Shares, or the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of the Company or any of its Subsidiaries,
the Seller shall, and shall cause the Company or the applicable Subsidiary to,
as the case may be, notify the Purchaser and Newco of such development, event,
circumstance or condition. In the event that the Purchaser or Newco receives
such notice or otherwise discovers the fact of any such development, event,
circumstance or condition, the Purchaser or Newco shall be entitled, in its sole
discretion, to terminate this Agreement within ten (10) days after so
discovering without further obligation or liability upon the delivery of written
notice to the Seller to that effect; provided, however, that before Purchaser or
Newco may exercise its termination right, it must afford the Company and the
Seller the opportunity to cure the matter giving rise to the termination right
(but for no longer than five days following the date Purchaser notifies the
Company or the Seller of its intent to terminate) unless, in the judgement of
the managing underwriter of the Initial Public Offering, any such cure period
might adversely affect the Initial Public Offering.

(b) Promptly upon the Company's or the Seller's discovery of any fact,
event, condition or circumstance that causes any representation or warranty made
by the Company or the Seller to the Purchaser and Newco in this Agreement to
become untrue or inaccurate at any time after the date of this Agreement, the
Seller shall, and shall cause the Company and its Subsidiaries to, notify the
Purchaser of such fact, event, condition or circumstance.

5.5. Information Required For Purchaser Financing Transactions. The Company
shall and shall cause its Subsidiaries to, and the Seller shall and shall cause
the Company and its respective Subsidiaries to, furnish the Purchaser and Newco
with the following information:

(a) the Company's audited consolidated balance sheet as of April 30,
1997 and the related statements of operations, shareholders' equity and
cash flows for the year then ended, together with all proper exhibits,
schedules and notes thereto, audited by Arthur Andersen LLP, all of which
shall be prepared in accordance with GAAP consistently applied with prior
periods and shall present fairly the financial position of the Company and
its Subsidiaries for the year then ended and the results of operations and
changes in shareholders' equity and cash flows for the period covered
thereby;

(b) any unaudited interim financial statements requested by the
Purchaser, Newco or any Underwriter to be included in any registration
statement, prospectus, document or other item, or any amendment or
supplement thereof, relating to any Purchaser Financing Transaction, all of
which shall (i) be in accordance with the books and records of the Company
maintained in accordance with good business practice and in the normal and
ordinary

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course of business, (ii) be prepared in accordance with GAAP applied on a
consistent basis (except for the absence of notes and subject to normal
year-end audit adjustments), (iii) present fairly the financial position of
the Company and its Subsidiaries as of the date thereof and the results of
operations and changes in shareholders' equity and cash flows for the
periods covered thereby, and (iv) include comparable interim financial
statements for the prior year period; and

(c) such other written information with respect to themselves as the
Purchaser, Newco or any Underwriter may reasonably deem necessary,
desirable or appropriate in connection with any Purchaser Financing
Transaction or the preparation of any registration statement, prospectus,
document or other item relating thereto.

5.6. Performance of Conditions. The Company, the Seller, Newco and the
Purchaser shall, and the Seller shall cause the Company and each of its
Subsidiaries to, take all reasonable steps necessary or appropriate and use all
commercially reasonable efforts to effect as promptly as practicable the
fulfillment of the conditions required to be obtained that are necessary or
advisable for the Seller, Newco and the Purchaser to consummate the transactions
contemplated by this Agreement including, without limitation, all conditions
precedent set forth in Article 6.

5.7. Conduct of Business. During the period of time from and after the date
of this Agreement to the Closing Date, the Company shall, and Seller shall cause
the Company and each of its Subsidiaries to, operate their respective Businesses
in the normal and ordinary course in a manner consistent with past practice
including, without limitation, to do the following:

(a) to carry on the Company's and each such Subsidiary's Business in
substantially the same manner as it has heretofore and not introduce any
material new method of management, operation or accounting;

(b) to maintain the Company's and each such Subsidiary's corporate
existence and all Permits, bonds, franchises and qualifications to do
business;

(d) to use its commercially reasonable best efforts to preserve intact
the Company's and each such Subsidiary's business relationships with its
agents, customers, employees, creditors and others with whom the Company or
each such Subsidiary has a business relationship;

(e) to preserve the Company's and each such Subsidiary's assets,
properties and rights (including, without limitation, those held under
leases, the Intellectual Property and Accounts) necessary or advisable to
the profitable conduct of their respective Businesses;

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(f) to pay when due all Taxes lawfully levied or assessed against the
Company or any such Subsidiary, as the case may be, before any penalty or
interest accrues on any unpaid portion thereof and to file all Tax Returns
when due (including after applicable extensions); provided that no such
payment shall be required which is being contested in good faith and by
proper proceedings and for which appropriate reserves as may be required by
GAAP have been established;

(g) to maintain in full force and effect all policies of insurance
adequate (both in terms of coverage and amount of coverage) to insure
against risks as are customarily and prudently insured against by companies
of established repute engaged in the same or a similar business;

(h) to perform all material obligations under all Contracts to which
the Company or any such Subsidiary is a party or by which it or its
properties are bound or subject;

(i) to maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments over Ten Thousand Dollars
($10,000) except in connection with the Capital Expenditure Allowance,
without the knowledge and consent of the Purchaser, which consent shall not
be unreasonably withheld; and

(j) to collect accounts receivable in a manner consistent with past
practices.

5.8. Negative Covenants. Except as set forth in the Disclosure Schedule,
during the period from and after the date of this Agreement until the Closing
Date, the Company shall not, and the Seller shall not cause the Company or any
of its Subsidiaries to do, and shall not permit the Company or any such
Subsidiary to do, directly or indirectly, any of the following without the
express prior written consent of the Purchaser, which consent shall not be
unreasonably withheld.

(a) make or adopt any changes to or otherwise alter the Company's or any
such Subsidiary's certificate or articles of incorporation, by-laws or any other
governing or constitutive documents;

(b) purchase or enter into any Contract or commitment to purchase or lease
any real property;

(c) except as set forth on the Disclosure Schedule, grant any salary
increase or permit any advance to any director, officer or employee or enter
into any new, or amend or otherwise alter, any Employee Benefit Plan, or any
employment or consulting Contract, or any Contract providing for the payment of
severance;

(d) other than in the ordinary course of business, make any borrowings or
otherwise create, incur, assume or guaranty any indebtedness (except for the
endorsement of

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<PAGE>

negotiable instruments for deposit or collection or similar transactions in the
normal and ordinary course of the Business), issue any commercial paper or
refinance any existing borrowings or indebtedness; provided that no borrowings
may be made without Purchaser's consent which include prepayment penalties or
restrictions on prepayment;

(e) enter into any Permit other than in the normal and ordinary course of
business;

(f) enter into any Contract, other than in the ordinary course of the
Business or in connection with Capital Expenditure Allowance; provided that any
Contract permitted to be entered into pursuant to this Section 5.8(f) shall not
(i) involve a pledge of or encumbrance on any of the Company's or any of its
Subsidiaries' assets or the incurrence by the Company or any of its Subsidiaries
of liabilities (other than in the performance of services for customers in the
ordinary course of business) in any one transaction or series of related
transactions in excess of Ten Thousand Dollars ($10,000) and cause the aggregate
commitment under all such new Contracts to exceed One Hundred Thousand Dollars
($100,000), or (ii) involve a term of more than one (1) year;

(g) make, or enter into any commitment to make, any contribution
(charitable or otherwise) to any Person;

(h) form any subsidiary or issue, grant, sell, redeem, subdivide, combine,
change or purchase any of the Company's or any of its Subsidiary's shares, notes
or other securities, whether debt or equity, or make any Contract or commitments
to do so;

(i) enter into any transaction with any Affiliate of the Seller, the
Company or any of its Subsidiaries including, without limitation the purchase,
sale or exchange of property with, the rendering of any service to, or the
making of any loans to, any such Affiliate;

(j) (i) declare or pay any dividend, distribution or payment in respect of,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any of the Company's or obligations of the Company or any of its
Subsidiaries, or (ii) pay any royalty or management fee, except management fees
to Utz Medical Development Inc. of up to $10,000 on the 1st and 15th day of each
calender month;

(k) grant or issue any subscription, warrant, option or other right to
acquire any of the Company's or any of its Subsidiaries' securities, whether
debt or equity, and whether by conversion or otherwise, or make any commitment
to do so;

(l) merge or consolidate, or agree to merge or consolidate, with or into
any other Person or acquire or agree to acquire or be acquired by any Person;

(m) sell, lease, exchange, mortgage, pledge, hypothecate, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
hypothecate, transfer or

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<PAGE>

otherwise dispose of, any of the Company's or any of such Subsidiaries assets
having an aggregate fair market value in excess of $10,000 or more, except for
the disposition of obsolete or worn-out assets in the normal and ordinary course
of business;

(n) (i) materially change any of its methods of accounting in effect as at
the Balance Sheet Date, or (ii) make or rescind any express or deemed election
relating to Taxes, or change any of its methods of reporting income or
deductions for income tax purposes from those employed in the preparation of
income Tax Returns for the taxable year ended July 31, 1997, except, in either
case, as may be required by any applicable Requirement of Law, the IRS or GAAP;

(o) enter into any Contract or make any commitment to make any capital
expenditures or capital additions or betterments in excess of an aggregate of
$10,000 except in connection with the Capital Expenditure Allowance;

(p) cause or permit the Company or any such Subsidiary to (i) terminate any
Employee Benefit Plan, (ii) permit any "prohibited transaction" involving any
Employee Benefit Plan, (iii) fail to pay to any Employee Benefit Plan any
contribution which it is obligated to pay under the terms of such Employee
Benefit Plan, whether or not such failure to pay would result in an "accumulated
funding deficiency" or (iv) allow or suffer to exist any occurrence of a
"reportable event" or any other event or condition, which presents a material
risk of termination by the PBGC of any Employee Benefit Plan. As used in this
Agreement, the terms "accumulated funding deficiency" and "reportable event"
shall have the respective meanings assigned to them in ERISA, and the term
"prohibited transaction" shall have the meaning assigned to it in the Code and
ERISA;

(q) enter into any transaction or conduct any operations not in the normal
and ordinary course of business;

(r) enter into any Contract or make any commitment to do any of the
foregoing; or

(s) waive any material rights or claims of the Company.

5.9. Exclusive Negotiation. Neither the Company nor the Seller shall: (i)
provide any information about the Company or any of its Subsidiaries or any of
their respective Businesses to any Person (other than the Purchaser, Newco, a
Potential Founding Company or their representatives) with a view to sell,
exchange or dispose or solicit an offer for the acquisition of any of the Shares
or any material interest in the Company, any of its Subsidiaries or their
respective Businesses; (ii) solicit or accept any other offers for the sale,
exchange or other disposition of the Shares or any material interest in the
Company, its Subsidiaries or their respective Businesses; (iii) negotiate or
discuss with any Person (other than the Purchaser or any of its representatives)
the possible sale, exchange or other disposition of the Shares or any material
interest in the Company, any of its Subsidiaries or their respective Businesses;
or (iv) sell,

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exchange or otherwise dispose of any of the Shares or any material
interest in the Company, any of its Subsidiaries or any of their respective
Businesses, in any of the foregoing cases, whether by equity sale, merger,
consolidation, equity exchange, sale of assets or otherwise. The Company shall,
and the Seller shall and shall cause the Company and each of its Subsidiaries
to, advise the Purchaser or Newco promptly of their or its receipt of any
written offer or written proposal concerning the Shares, the Company, any of its
Subsidiaries, any part of their respective Businesses or any material interest
therein, and the terms thereof.

5.10. Public Announcements. Prior to the Closing, neither the Company nor
the Seller shall issue any public report, statement, press release or similar
item or make any other public disclosure with respect to the execution or
substance of this Agreement prior to the consultation with and approval of the
Purchaser. In addition, prior to Closing, before Purchaser issues a public
statement that refers to the Company or the Seller (other than in the
Registration Statement) Purchaser will endeavor to consult with Seller to the
extent time permits. Nothing contained herein shall restrict the ability of the
Company or the Seller from contacting a third party in order to obtain a Consent
to the transactions contemplated hereby.

5.11. Amendment of Schedules. Each party hereto agrees that, with respect
to the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the Closing to supplement
or amend promptly the Disclosure Schedule or any other Schedules hereto with
respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement, would have been required to be set forth or
described in the Disclosure Schedule, provided that no amendment or supplement
to the Disclosure Schedule prepared by the Company that constitutes or reflects
an event or occurrence that would have a Material Adverse Effect shall be
effective unless the Purchaser consents to such amendment or supplement. For all
purposes of this Agreement, including without limitation for purposes of
determining whether the conditions set forth in Sections 6 and 7 have been
fulfilled, the Schedules hereto shall be deemed to be the Schedules as amended
or supplemented pursuant to this Section 5.11. Except as otherwise provided
herein, no amendment of or supplement to a Schedule shall be made later than 24
hours prior to the anticipated effectiveness of the Registration Statement in
connection with the Initial Public Offering (the "Registration Statement").

5.12. Cooperation in Preparation of Registration Statement.

(a) The Company and the Seller shall furnish or cause to be furnished to
the Purchaser, Newco and the underwriters of the Initial Public Offering (the
"Underwriters") all of the information concerning the Company or the Seller
reasonably requested by the Purchaser, Newco and the Underwriters, and will
cooperate with the Purchaser, Newco and the Underwriters in the preparation of,
any registration statement (or similar document) relating to the Purchaser
Financing Transaction and the prospectus (or similar document) included therein
(including audited financial statements, prepared in accordance with generally
accepted accounting principles). The Company and the Seller agree promptly to
advise the Purchaser if at any time during the period in which a prospectus
relating to the Purchaser Financing Transaction

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<PAGE>

is required to be delivered under the Securities Act, any information contained
in the prospectus concerning the Company or the Seller becomes incorrect or
incomplete in any material respect, and to provide the information needed to
correct such inaccuracy. The Purchaser agrees to use its commercially reasonable
best efforts to prepare and file the Registration Statement as promptly as
practicable, to furnish the Company with a copy thereof and each amendment
thereto in substantially the form in which it is to be filed as promptly as
reasonably practicable prior to such filing (it being understood that neither
the Company nor the Sellers has any obligation to review the same other than
with respect to information regarding the Company or the Seller) and diligently
seek to cause the Registration Statement to be declared effective and the
Initial Public Offering to be completed. The Purchaser agrees that neither the
Seller nor the Company shall have any responsibility for pro forma adjustments
that may be made to the Financial Statements.

(b) The Company and the Seller acknowledge and agree (i) that, prior to the
execution and delivery of a definitive underwriting agreement, the Underwriters
have made no firm commitment, binding agreement, or promise or other assurance
of any kind, whether express or implied, oral or written, that the Registration
Statement will become effective or that the Initial Public Offering pursuant
thereto will occur at a particular price or within a particular range of prices
or occur at all, (ii) that none of the prospective Underwriters of the
Purchaser's common stock, in the Initial Public Offering nor any officers,
directors, agents or representatives of such Underwriters shall have any
liability to the Seller, the Company or any other person affiliated or
associated with the Company for any failure of the Registration Statement to
become effective, the Initial Public Offering to occur at a particular price or
within a particular range of prices or occur at all, and (iii) the decision of
the Seller to enter into this Agreement and, if applicable, to vote in favor of
or consent to the transactions contemplated hereby, has been or will be made
independent of, and without reliance upon, any statements, opinions or other
communications of, or due diligence investigation which have been or will be
made or performed by any prospective Underwriter, relative to the Purchaser or
the prospective Initial Public Offering. The Seller acknowledges that shares of
DocuNet Common Stock received as a part of the Purchase Price, if any, will not
be issued pursuant to the Registration Statement; and, therefore, the
Underwriters shall have no obligation to the Seller with respect to any
disclosure contained in the Registration Statement and the Seller may not assert
any claim against the Underwriters relating to the Registration Statement on
account thereof.

5.13. Examination of Final Financial Statement. The Company shall provide
to Purchaser prior to the Closing Date unaudited consolidated balance sheets of
the Company for each month and fiscal quarter end between the date of this
Agreement and the Closing Date, and unaudited consolidated statements of income,
cash flows and retained earnings of the Company for such subsequent months and
fiscal quarters. In addition, the Company shall prepare and deliver to Purchaser
at Closing the Closing Balance Sheet. Such financial statements, which shall be
deemed to be Financial Statements (as defined herein), shall have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated (except for the absence of
notes and subject to normal year end adjustments). Such financial statements
shall present fairly the results of operations of the Subsidiaries for the
periods indicated thereon.

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5.13.A Audit Opinion. The parties acknowledge that the Financial Statements
identified in Section 3.12(a) have been reviewed by Arthur Andersen LLP in
anticipation of rendering its going concern opinion thereon prior to
consummation of the Initial Public Offering.

5.14. Lock-Up Agreements. In connection with the Initial Public Offering,
for good and valuable consideration, the Company and the Seller hereby
irrevocably agree that for a period of 180 days after the date of the
effectiveness (the "Effective Date") of the Registration Statement, as the same
may be amended, not to (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or dispose of
(except pursuant to the Escrow Agreement), directly or indirectly, any shares of
DocuNet Common Stock or any securities convertible into or exercisable or
exchangeable for shares of DocuNet Common Stock, or (ii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the DocuNet Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of DocuNet Common Stock or such other securities, in cash or otherwise without
the prior written consent of the Underwriters. Neither the Company nor the
Seller, without the prior written consent of the Underwriters, shall exercise
any demand, mandatory, piggyback, optional or any other registration rights, if
any such rights exist, for a period of 180 days from the Effective Date. The
Company and the Seller agree that the foregoing shall be binding upon their
transferees, successors, assigns, heirs and personal representatives and shall
benefit and be enforceable by the underwriters in the Initial Public Offering.
In furtherance of the foregoing, the Purchaser and its transfer agent, are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Section 5.14.

5.15. Compliance with the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "Hart-Scott Act"). All parties to this Agreement hereby recognize that
one or more filings under the Hart-Scott Act may be required in connection with
the transactions contemplated herein. If it is determined by the parties to this
Agreement that filings under the Hart-Scott Act are required, then: (i) each of
the parties hereto agrees to cooperate and use its best efforts to comply with
the Hart-Scott Act; (ii) such compliance by the Seller and the Company shall be
deemed a condition precedent in addition to the conditions precedent set forth
in Article 6 of this Agreement, and such compliance by Purchaser and Newco shall
be deemed a condition precedent in addition to the conditions precedent set
forth in Article 6 of this Agreement; and (iii) the parties agree to cooperate
and use their best efforts to cause all filings required under the Hart-Scott
Act to be made. If filings under the Hart-Scott Act are required, the costs and
expenses thereof (including filing fees) shall be borne by Purchaser or Newco.
The obligation of each party to consummate the transactions contemplated by this
Agreement is subject to the expiration or termination of the waiting period
under the Hart-Scott Act, if applicable.

5.16. Reorganization Status. No party to this Agreement shall undertake any
actions not contemplated by this Agreement that would cause the merger to fail
to qualify as a reorganization as defined under Section 368(a)(1)(A) and Section
368(a)(2)(D) of the Code.

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5.17. Tax Returns and Forms 5500. Within ten (10) days after the date of
this Agreement, the Company shall file all Tax Returns and Forms 5500 that are
then due.

ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING

6.1. Conditions Precedent to the Purchaser and Newco's Obligations. The
Purchaser and Newco's obligation to consummate the transactions contemplated by
this Agreement is subject to the satisfaction of, or waiver in writing by the
Purchaser or Newco of, prior to or at the Closing, each and every of the
following conditions precedent:

(a) Representations and Warranties. Each of the representations and
warranties of the Company and the Seller contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date
with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date, except for those
representations and warranties which by their terms relate to an earlier
date, which representations and warranties shall be true and correct in all
material respects with regard to such earlier date. The Company and the
Seller shall deliver to the Purchaser and Newco a certificate dated the
Closing Date, certifying that all of the Company's and the Seller's
representations and warranties contained in this Agreement are true and
correct on and as of the Closing Date as though such representations and
warranties had been made on and as of the Closing Date.

(b) Compliance with Covenants and Conditions. The Company and the
Seller's shall have performed and complied in all material respects with
each and every covenant, agreement and condition required by this Agreement
to be performed or satisfied by the Company and the Seller, as the case may
be, at or prior to the Closing Date. The Company and the Seller shall
deliver to the Purchaser and Newco a certificate, dated the Closing Date,
certifying that the Company and the Seller have fully performed and
complied in all material respects with all the duties, obligations and
conditions required by this Agreement to be performed and complied with by
them at or prior to the Closing Date.

(c) Delivery of Documents. The Company and the Seller shall have
delivered to the Purchaser and Newco all documents, certificates,
instruments and items (including, without limitation, certificates
representing the Shares) required to be delivered by him, her or it at or
prior to the Closing Date pursuant to this Agreement.

(d) Consents. All proceedings, if any, to have been taken and all
Consents including, without limitation, all Regulatory Approvals, necessary
or advisable in connection with the transactions contemplated by this
Agreement shall have been taken or obtained.

(e) Financing. The Registration Statement on Form S-1 relating to the
Initial Public Offering shall have been declared effective by the
Securities and Exchange

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Commission and the closing of the sale of DocuNet Common Stock to the
Underwriters in the Initial Public Offering shall have occurred
simultaneously with the Closing Date hereunder.

(f) Satisfaction of Liabilities. The Company and each of its
Subsidiaries shall have satisfied and discharged all of their Debt except
for: (i) Debt for which an adjustment to the Base Purchase Price has been
made under Section 2.8(b) and (ii) Debt which constitutes an Adjusted
Current Liability.

(g) Closing Balance Sheet. The Company shall have delivered to the
Purchaser a true and complete copy of the Closing Balance Sheet, together
with a certificate dated the Closing Date, signed by the Company's chief
financial officer that the Closing Balance Sheet is in accordance with the
Books and Records and with GAAP applied on a consistent basis (except for
the absence of notes and subject to normal year-end audit adjustments) and
presents fairly the financial position of the Company as of the Closing
Date.

(h) No Material Adverse Change. From and after the date of this
Agreement, there shall not have occurred or be threatened any development,
event, circumstance or condition that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect upon
the Shares, or the business, prospects, operations, results of operations,
assets, liabilities or condition (financial or otherwise) of the Company or
any of its Subsidiaries.

(i) No Legal Proceeding Affecting Closing. There shall not have been
instituted and there shall not be pending or threatened any Legal
Proceeding, and no Order shall have been entered (i) imposing or seeking to
impose limitations on the ability of the Purchaser to acquire or hold or to
exercise full rights of ownership of any shares or of any securities of the
Company or any of the Company's subsidiaries; (ii) imposing or seeking to
impose limitations on the ability of the Purchaser to combine and operate
the business, operations and assets of the Company or any of the Company's
Subsidiaries with the Purchaser and Newco's business, operations and
assets; (iii) imposing or seeking to impose other sanctions, damages or
liabilities arising out of the transactions contemplated by this Agreement
on the Purchaser, Newco or any of the Purchaser or Newco's directors,
officers or employees; (iv) requiring or seeking to require divestiture by
the Newco or Purchaser of all or any material portion of the business,
assets or property of the Company or any of its Subsidiaries; or (v)
restraining, enjoining or prohibiting or seeking to restrain, enjoin or
prohibit the consummation of transactions contemplated by this Agreement.

(j) Secretary's Certificate. The Company shall have delivered to the
Purchaser a certificate or certificates dated as of the Closing Date and
signed on its behalf by its Secretary to the effect that (i)(A) the copy of
the Company's articles or certificate of incorporation attached to the
certificate is true, correct and complete, (B) no amendment to such
articles or certificate of incorporation has occurred since the date of the
last amendment annexed (such date to be specified), (C) a true and correct
copy of the Company's bylaws as in effect on the date thereof and at all
times since the adoption of the resolution referred to in (D) is annexed

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to such certificate, (D) the resolutions by the Company's board of
directors authorizing the actions taken in connection with the Merger,
including as applicable, without limitation, the execution, delivery and
performance of this Agreement were duly adopted and continue in force and
effect (a copy of such resolutions to be annexed to such certificate); (ii)
setting forth the Company's incumbent officers and including specimen
signatures on such certificate or certificates as their genuine signatures;
and (iii) the Company is in good standing in all jurisdictions where the
ownership or lease of property or the conduct of its business requires it
to qualify to do business, except for those jurisdictions where the failure
to be duly qualified, authorized and in good standing would not have a
material adverse effect upon the business, prospects, operations, results
of operations, assets, liabilities or condition (financial or otherwise) on
the Company. The certification referred to above in (iii) shall attach
certificates of good standing certified by the Secretaries of State or
other appropriate officials of such states, dated as of a date not more
than five (5) days prior to the Closing Date.

(k) Opinion of Counsel of Seller. Rothberg & Logan, counsel for the
Company and the Seller, shall have delivered to the Purchaser and Newco
their favorable opinion, dated the Closing Date, as to the matters covered
in Schedule 6.1(k). In rendering such opinion, counsel may rely to the
extent recited therein on certificates of public officials and of officers
of Seller as to matters of fact, and as to any matter which involves other
than federal or Minnesota law, such counsel may rely upon the opinion of
local counsel reasonably satisfactory to the Purchaser and its counsel.

(l) Termination of Related Party Agreements. All existing agreements
between the Company and the Seller, Affiliates of the Company or the
Seller, other than those, if any, set forth on Schedule 6.1(l), shall have
been canceled.

(m) Employment Agreements. Each of the persons listed on Schedule
6.1(m) shall have entered into an employment agreement (collectively, the
"Employment Agreements") with the Company substantially in the form of
Exhibit C attached hereto.

(n) Repayment of Indebtedness. Prior to the Closing Date, the Seller
shall have repaid the Company (including the Subsidiaries) in full all
amounts owing by the Seller or employees of the Company to the Company
(including the Subsidiaries), such repayment to be effected by the
retention of $225,000 of the Cash Purchase Price by Purchaser as full
satisfaction of all such debt of Seller and his Affiliates.

(o) FIRPTA Certificate. The Seller shall have delivered to the
Purchaser a certificate to the effect that he or she is not a foreign
person pursuant to Section 1.1445-2(b) of the Treasury regulations.

(p) Insurance. The Purchaser and Newco shall be named as an additional
named insured on all of the Company's insurance policies as of the Closing
Date.

(q) Escrow Agreement. The Seller and the Company shall have executed
the Escrow Agreement substantially in the form of Exhibit A attached
hereto.

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6.2. Conditions Precedent to Company's and Seller's Obligations. The
Company's and Seller's obligations to consummate the transactions contemplated
by this Agreement are subject to the satisfaction of, or waiver in writing by
the Seller of, prior to or at the Closing, each and every of the following
conditions precedent:

(a) Representations and Warranties. Each of the representations and
warranties of the Purchaser and Newco contained in this Agreement shall be
true and correct in all material respects on and as of the date of the
Closing Date, with the same force as though such representations and
warranties had been made on and as of the Closing Date except for those
representations and warranties that by their terms relate to an earlier
date, which representations and warranties shall be true and correct in all
material respects with regard to such earlier date. The Purchaser and Newco
shall each deliver to the Seller a certificate, executed by a duly
authorized officer of the Purchaser and Newco, respectively, dated as of
the Closing Date, certifying that all of its representations and warranties
contained in this Agreement are true and correct on and as of the Closing
Date as though such representations and warranties had been made on and as
of the Closing Date.

(b) Compliance with Covenants and Conditions. The Purchaser and Newco
shall each have performed and complied in all material respects with each
and every covenant, agreement and condition required by this Agreement to
be performed or satisfied by them at or prior to the Closing Date. The
Purchaser and Newco shall each deliver to the Seller a certificate, dated
the Closing Date, certifying that each of them has fully performed and
complied in all material respects with all the duties, obligations and
conditions required by this Agreement to be performed and complied with by
it at or prior to the Closing Date.

(c) Delivery of Documents. The Purchaser and Newco shall have
delivered to the Seller all documents, certificates, instruments and items
required to be delivered by them at or prior to the Closing.

(d) No Legal Proceeding Affecting Closing. There shall not have been
instituted and there shall not be pending or threatened any Legal
Proceeding, and no Order shall have been entered (i) imposing or seeking to
impose limitations on the ability of the Seller to consummate the Merger;
(ii) imposing or seeking to impose other sanctions, damages or liabilities
arising out of the transactions contemplated by this Agreement on the
Company or any of its Subsidiaries or any of their respective directors,
officers or employees or on any of the Seller; or (iii) restraining,
enjoining or prohibiting or seeking to restrain, enjoin or prohibit the
consummation of transactions contemplated by this Agreement.

(e) Escrow Agreement. The Purchaser and Newco shall have executed the
Escrow Agreement substantially in the form of Exhibit A attached hereto.

(f) Employment Agreements. The Purchaser shall have entered into the
Employment Agreements with each of the persons listed on Schedule 6.1(m).

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(g) Secretary's Certificate. The Purchaser and Newco shall each have
delivered to the Seller a certificate or certificates dated as of the
Closing Date and signed on its behalf by its Secretary to the effect that
(i)(A) the copy of the Purchaser's or Newco's, as the case may be, articles
or certificate of incorporation attached to the certificate is true,
correct and complete, (B) no amendment to such articles or certificate of
incorporation has occurred since the date of the last amendment annexed
(such date to be specified), (C) a true and correct copy of the such
entity's bylaws as in effect on the date thereof and at all times since the
adoption of the resolution referred to in (D) is annexed to such
certificate, (D) the resolutions by the entity's board of directors
authorizing the actions taken in connection with the Merger, including as
applicable, without limitation, the execution, delivery and performance of
this Agreement were duly adopted and continue in force and effect (a copy
of such resolutions to be annexed to such certificate) and (ii) setting
forth the incumbent officers of the entity and including specimen
signatures on such certificate or certificates of such officers executing
this Agreement on behalf of such entity as their genuine signatures.

(h) Financing. The registration statement on Form S-1 relating to the
Initial Public Offering shall have been declared effective by the
Securities and Exchange Commission and the closing of the sale of DocuNet
Common Stock to the Underwriters in the Initial Public Offering shall have
occurred simultaneously with the Closing Date hereunder.

(i) Opinion of Counsel of Purchaser. Pepper, Hamilton & Scheetz LLP,
counsel for Purchaser, shall have delivered to the Company and the Seller
their favorable opinion, dated the Closing Date, as to the matters covered
in Schedule 6.2(i). In rendering such opinion, counsel may rely to the
extent recited therein on certificates of public officials and of officers
of Purchaser as to matters of fact, and such opinion may be limited to
federal laws and the laws of the Commonwealth of Pennsylvania.

ARTICLE 7
CLOSING

At or prior to the Pricing, the parties shall take all administrative
actions necessary to prepare to (i) effect the Merger (including, if permitted
by applicable state law, the filing with the appropriate state authorities of
the Articles of Merger which shall become effective at the Effective Time of the
Merger) and (ii) effect the conversion and delivery of Shares referred to in
Section 2.9 hereof and payment of consideration for the Shares; provided, that
such actions shall not include the actual completion of the Merger or the
conversion and delivery of the shares and certified check(s) referred to in
Section 2 hereof, each of which actions shall only be taken upon the Closing
Date as herein provided. In the event that there is no Closing Date and this
Agreement terminates, Purchaser hereby covenants and agrees to do all things
required by Pennsylvania law and all things which counsel for the Company advise
Purchaser are required by applicable laws of the State of Minnesota in order to
rescind the merger effected by the filing of the Articles of Merger as described
in this Section. The taking of the actions described in clauses (i) and (ii)
above shall take place on the Pricing Date at the offices of Pepper, Hamilton &
Scheetz

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LLP, 3000 Two Logan Square, 18th and Arch Streets, Philadelphia, PA
19103. On the Closing Date (x) the Articles of Merger shall be or shall have
been filed with the appropriate state authorities so that they shall be or, as
of 8:00 a.m. EASTERN STANDARD TIME on the Closing Date, shall become effective
and the Merger shall thereby be effected, (y) all transactions contemplated by
this Agreement, including the conversion and delivery of shares, the delivery of
a certified check or checks in an amount equal to the cash portion of the
consideration which the Seller shall be entitled to receive pursuant to the
Merger referred to in Section 2 hereof and (z) the closing with respect to the
Initial Public Offering shall occur and be deemed to be completed. The date on
which the actions described in the preceding clauses (x), (y) and (z) occurs
shall be referred to as the "Closing Date." Except as otherwise provided in
Section 11 hereof, during the period from the Pricing Date to the Closing Date,
this Agreement may only be terminated by the parties if the underwriting
agreement in respect of the Initial Public Offering is terminated pursuant to
the terms thereof.

ARTICLE 8
CONFIDENTIALITY AND COVENANT NOT TO COMPETE

8.1. Confidentiality.

(a) Each party to this Agreement shall use Confidential Information only in
connection with the transactions contemplated hereby (including the Initial
Public Offering) and shall not disclose any Confidential Information about any
other party to any Person unless the party desiring to disclose such
Confidential Information receives the prior written consent of the party about
whom such Confidential Information pertains, except (i) to any party's
directors, officers, employees, agents, advisors and representatives who have a
need to know such Confidential Information for the performance of their duties
as employees, agents or representatives, (ii) to the extent strictly necessary
to obtain any Consents including, without limitation, any Regulatory Approvals,
that may be required or advisable to consummate the transactions contemplated by
this Agreement, (iii) to enforce such party's rights and remedies under this
Agreement, (iv) with respect to disclosures that are compelled by any
Requirement of Law or pursuant to any Legal Proceeding; provided, that the party
compelled to disclose Confidential Information pertaining to any other party
shall notify such other party thereof and use his or its commercially reasonable
efforts to cooperate with such other party to obtain a protective order or other
similar determination with respect to such Confidential Information; (v) made to
any party's legal counsel, independent auditors, investment bankers or financial
advisors under an obligation of confidentiality; (vi) to other Founding
Companies or Potential Founding Companies; or (vii) as otherwise permitted by
Section 5.10 of this Agreement.

(b) In the event that the transactions contemplated by this Agreement are
not consummated in accordance with the terms of this Agreement, each party
shall, upon the request of the other party, return to the other party or destroy
all Confidential Information and any copies thereof previously delivered by such
requesting party, except to the extent that such

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party deems such Confidential Information necessary or desirable to enforce his
or its rights under this Agreement.

(d) The parties hereto acknowledge and agree that they may become aware of
potential acquisition targets of the Purchaser, including but not limited to the
Potential Founding Companies (collectively, the "Purchaser Targets"), in the
course of discussions with the Purchaser or a Potential Founding Company.
Accordingly, the parties hereto each agree not to directly or indirectly seek to
acquire or merge with, or pursue or respond to, with an intent to acquire or
merge with, any Purchaser Targets until the later of 300 days after the date of
this Agreement or 180 days after termination of this Agreement.

(e) The Purchaser will cause each of the Founding Companies other than the
Company to enter into a provision similar to this Section 8.1 requiring each
such Founding Company to keep confidential any information obtained by such
Founding Company.

8.2. Covenant Not To Compete. As a material inducement to the Purchaser and
Newco's consummation of the Merger, the Seller shall not, during the Restricted
Period, do any of the following, directly or indirectly, without the prior
written consent of the Purchaser in its sole discretion:

(a) compete, directly or indirectly, with the Purchaser, the Surviving
Corporation or the Company or any of their respective Affiliates or
Subsidiaries, or any of their respective successors or assigns, whether now
existing or hereafter created or acquired (collectively, the "Related
Companies"), or otherwise engage or participate, directly or indirectly, in
any business conducted by Purchaser or a Subsidiary (the "Restricted
Business") within any geographic area located within the United States of
America, its possessions or territories (the "Restricted Area");

(b) become interested (whether as owner, stockholder, lender, partner,
co-venturer, director, officer, employee, agent, consultant or otherwise),
directly or indirectly, in any Person that engages in the Restricted
Business within the Restricted Area; provided, that nothing contained in
this Section 8.2(b) shall prohibit the Seller from owing, as a passive
investor, not more than five percent (5%) of the outstanding securities of
any class of any publicly-traded securities of any publicly held Company
listed on a well-recognized national securities exchange or on an
interdealer quotation system of the National Association of Securities
Dealers, Inc; or

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prospective suppliers or vendors (wherever located) to supply materials,
resources or services to be used in connection with goods or services that
are competitive with those of the Purchaser, the Surviving Corporation, the
Company or any of their respective Related Companies, (C) distributors,
consultants, agents, or independent contractors to terminate or modify any
contract, arrangement or relationship with the Purchaser, the Surviving
Corporation, the Company or any of their respective Related Companies or
(D) employees (other than family members) to leave the employ of the
Purchaser, the Surviving Corporation, the Company or any of their
respective Related Companies.

8.3. Specific Enforcement; Extension of Period.

(a) The Seller acknowledges that any breach or threatened breach by him or
her of any provision of Sections 8.1 or 8.2 will cause continuing and
irreparable injury to the Purchaser, the Surviving Corporation, the Company and
their respective Related Companies for which monetary damages would not be an
adequate remedy. Accordingly, the Purchaser, the Surviving Corporation, the
Company and any of their respective Related Companies shall be entitled to
injunctive relief from a court of competent jurisdiction, including specific
performance, with respect to any such breach or threatened breach. In connection
therewith, the Seller shall, in any action or proceeding to so enforce any
provision of this Article 8, assert the claim or defense that an adequate remedy
at law exists or that injunctive relief is not appropriate under the
circumstances. The rights and remedies of the Purchaser, the Surviving
Corporation, the Company and any of their respective Related Companies set forth
in this Section 8.3 are in addition to any other rights or remedies to which the
Purchaser, the Surviving Corporation, the Company or any of their respective
Related Companies may be entitled, whether existing under this Agreement, at law
or in equity, all of which shall be cumulative.

(b) The periods of time set forth in this Article 8 shall not include, and
shall be deemed extended by, any time required for litigation to enforce the
relevant covenant periods. The term "time required for litigation" as used in
this Section 8.3(b) shall mean the period of time from the earlier of the
Seller's first breach of the provisions of Sections 8.1 or 8.2 or service of
process upon the Seller through the expiration of all appeals related to such
litigation.

8.4. Disclosure. The Seller acknowledges that the Purchaser, Newco, the
Company or any of their respective Related Companies may provide a copy of this
Agreement or any portion of this Agreement to any Person with, through or on
behalf of which the Seller may, directly or indirectly, breach or threaten to
breach any of the provisions of Section 8.2.

8.5. Interpretation. It is the desire and intent of the Purchaser, Newco
and the Seller that the provisions of this Article 8 shall be enforceable to the
fullest extent permissible under applicable law and public policy. Accordingly,
if any provision of this Article 8 shall be determined to be invalid,
unenforceable or illegal for any reason, then the validity and enforceability of
all of the remaining provisions of this Article 8 shall not be affected thereby.
If any particular provision of this Article 8 shall be adjudicated to be invalid
or unenforceable, then

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such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such amendment to apply only to the
operation of such provision in the particular jurisdiction in which such
adjudication is made; provided that, if any provision contained in this Article
8 shall be adjudicated to be invalid or unenforceable because such provision is
held to be excessively broad as to duration, geographic scope, activity or
subject, then such provision shall be deemed amended by limiting and reducing it
so as to be valid and enforceable to the maximum extent compatible with the
applicable laws and public policy of such jurisdiction, such amendment only to
apply with respect to the operation of such provision in the applicable
jurisdiction in which the adjudication is made.

8.6. Seller's Acknowledgment. The Seller acknowledges that he or she has
carefully read and considered the provisions of this Article 8. The Seller
acknowledges and understands that the restrictions contained in this Article 8
may limit his ability to earn a livelihood in a business similar to that of the
Purchaser, Newco, the Company or any of their respective Related Companies, but
he nevertheless believes that he has received and will receive sufficient
consideration and other benefits to justify such restrictions. The Seller also
acknowledges and understands that these restrictions are reasonably necessary to
protect the Purchaser's, the Surviving Corporation's, the Company's and their
respective Related Companies' interests, and the Seller does not believe that
such restrictions will prevent him from earning a living in businesses that are
not competitive with those of the Purchaser, the Surviving Corporation, the
Company or any of their respective Related Companies during the term of such
restrictions in the Restricted Area.

ARTICLE 9
SURVIVAL

9.1. Survival of Representations, Warranties, Covenants and Agreements.
Subject to the last three (3) sentences of this Section 9.1, the representations
and warranties of the Seller, the Company, Newco and the Purchaser contained in
this Agreement shall survive until the second anniversary of the Closing Date,
except that the representations and warranties set forth in each of Section
3.11, Section 3.20 and Section 3.23 shall survive until the expiration of the
statute of limitations applicable to the subject matter addressed thereunder.
The covenants and agreements of the Seller, the Company, Newco and of the
Purchaser contained in this Agreement will survive the Closing until, by their
own respective terms, they have been fully performed. Any breach of a
representation, warranty, covenant or agreement that would otherwise terminate
in accordance with this Article 9 will continue to survive if an Indemnity
Notice, an Unliquidated Indemnity Notice or a Claim Notice (as applicable) shall
have been given in good faith based on facts reasonably expected to establish a
valid claim under Article 10 on or prior to the date on which such
representation, warranty, covenant or agreement would have otherwise terminated,
until the related claim for indemnification has been satisfied or otherwise
resolved as provided in Article 10. Any representation or warranty contained in
this Agreement made by any party or any written information furnished by any
party that was made by such party fraudulently or with intent to defraud or
mislead or with gross negligence shall indefinitely survive the Closing. Any

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representation or warranty made by the Seller or the Company in this Agreement
or any written information furnished or caused to be furnished by the Seller or
the Company to the Purchaser that is incorporated in, or is the basis for
omitting information from, the Registration Statement, prospectus or other
document, or any amendment or supplement thereof in connection with any
Purchaser Financing Transaction shall survive until the expiration of all
applicable statutes of limitations regarding claims brought by investors in such
Purchaser Financing Transaction alleging material misstatements or omissions in
such documents.

9.2. Intentionally Omitted.

9.3. Underwriter's Benefit. The Seller's and the Company's representations
and warranties and covenants contained in this Agreement or any document,
instrument, certificate or other item furnished or to be furnished to the
Purchaser pursuant hereto or thereto or in connection with the transactions
contemplated by this Agreement shall run to the benefit of any Underwriter of
the Purchaser's common stock subject to the Initial Public Offering in addition
to the benefit of the Purchaser. Accordingly, any such Underwriter, and each
person, if any, who controls any such Underwriter within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission thereunder shall be (i) an intended
beneficiary of this Agreement and (ii) deemed to be an Indemnified Party for the
purposes of the indemnification provided for in Article 10.

ARTICLE 10
INDEMNIFICATION

10.1. Sellers' Indemnification. From and after the Closing Date, the Seller
shall, jointly and severally, indemnify and hold harmless the Purchaser, Newco,
the Surviving Corporation and the Company and any of their respective
Subsidiaries, and each Person who controls (within the meaning of the Securities
Act) the Purchaser, Newco, the Surviving Corporation or, after the Closing Date,
the Company or any of its Subsidiaries, and each of their respective directors,
officers, employees, agents, successors and assigns and legal representatives,
from and against all Indemnifiable Losses that may be imposed upon, incurred by
or asserted against any of them resulting from, related to, or arising out of
(i) any misrepresentation, breach of any warranty or non-fulfillment of any
covenant to be performed by the Company or the Seller under this Agreement or
any document, instrument, certificate or other item required to be furnished to
the Purchaser or Newco pursuant hereto or thereto or in connection with the
transactions contemplated by this Agreement; (ii) any untrue statement of any
material fact contained in any registration statement, prospectus, document or
other item, or any amendment or supplement thereof, prepared, filed, distributed
or executed in connection with any Purchaser Financing Transaction, or any
omission to state in any such registration statement, prospectus, document,
item, amendment or supplement a material fact required to be stated therein or
necessary to make the statements therein not misleading, that is based upon any
misrepresentation or breach of any warranty made by the Company or the Seller
pursuant to this Agreement or upon any untrue statement or omission contained in
any information furnished or caused to be furnished

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by the Seller to the Purchaser or Newco (provided that the Seller hereby
acknowledges that the information concerning the Seller and the Company in the
Registration Statement shall be deemed to be provided to the Purchaser and Newco
for the purposes hereof); (iii) any liability or obligation of the Seller, the
Company or any of its Subsidiaries other than Debt for which an adjustment to
the Base Purchase Price has been made under Section 2.8(b) and Debt which does
not constitute an Adjusted Current Liability; (iv) without regard to any
knowledge acquired by Purchaser, any liability for payment of Taxes that accrued
or relate to the period of time prior to the Closing Date or any liability in
connection with the statutory dissolution and reinstatement of UTZ Medical
Enterprises, Inc. (regardless of disclosure in this Agreement, including in the
Disclosure Schedule); (v) any non-compliance with applicable Requirements of Law
relating to bulk sales, bulk transfers and the like or to fraudulent
conveyances, fraudulent transfers, preferential transfers and the like; (vi) any
action, claim or demand by any holder of the Company's securities, whether debt
or equity, in such holder's capacity as such, whether now existing or hereafter
arising or incurred; (vii) any non-compliance with the Worker Adjustment and
Retraining Act, 29 U.S.C. ss.2101, et. seq., as amended, and the rules and
regulations promulgated thereunder and any similar Requirement of Law; and
(viii) any Legal Proceeding or Order arising out of any of the foregoing even
though such Legal Proceeding or Order may not be filed, become final, or come to
light until after the Closing Date.

10.1.A. No Indemnification of Projected Information. Notwithstanding any
possible interpretation of Paragraph 10.1 or any other provision of this
Agreement, the failure of the Purchaser, Surviving Corporation or any successor
to achieve after the Closing Date any projected financial information,
including, without limitation, sales of software and costs of software
development, in and of itself shall not result in an Indemnifiable Loss to
Purchaser, Newco or the Surviving Corporation.

10.2. Purchaser's Indemnification. From and after the Closing Date, the
Purchaser, Newco and the Surviving Corporation shall indemnify and hold harmless
the Seller and each of its respective legal representatives, successors and
assigns from and against all Indemnifiable Losses imposed upon, incurred by or
asserted against, the Seller resulting from, related to, or arising out of: (i)
any misrepresentation, breach of any warranty or non-fulfillment of any covenant
to be performed by the Purchaser or Newco under this Agreement or any document,
instrument, certificate or other item furnished or to be furnished to the Seller
pursuant hereto or thereto or in connection with the transactions contemplated
by this Agreement; (ii) any Debt for which an adjustment to the Base Purchase
Price has been made under Section 2.8(b) and any Adjusted Current Liabilities;
(iii) any untrue statement of any material fact contained in any registration
statement, prospectus, document or other item, or any amendment or supplement
thereof, prepared, filed, distributed or executed in connection with any
Purchaser Financing Transaction, or any omission to state in any such
registration statement, prospectus, document, item, amendment or supplement a
material fact required to be stated therein or necessary to make the statements
therein not misleading, that is based upon any misrepresentation or breach of
any warranty made by the Purchaser or Newco pursuant to this Agreement or upon
any untrue statement or omission contained in any information furnished or
caused to be furnished by the Purchaser or Newco; and (iv) any Legal Proceeding
or Order arising out of any of the foregoing

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even though such Legal Proceeding or Order may not be filed, become final, or
come to light until after the Closing Date.

10.3. Payment; Procedure for Indemnification.

(a) In the event that the Person seeking indemnification under this Article
10 (the "Indemnified Party") shall suffer an Indemnifiable Loss, he, she or it
shall, within fourteen (14) days after obtaining Knowledge of the incurrence of
any such Indemnifiable Loss, give written notice to the party from whom
indemnification under this Article 10 is sought (the "Indemnifying Party") of
the amount of the Indemnifiable Loss, together with reasonably sufficient
information to enable the Indemnifying Party to determine the accuracy and
nature of the claimed Indemnifiable Loss (the "Indemnity Notice"). The failure
of any Indemnified Party to give the Indemnifying Party the Indemnity Notice
shall not release the Indemnifying Party of liability under this Article 10;
provided, however that the Indemnifying Party shall not be liable for
Indemnifiable Losses incurred by the Indemnified Party that would not have been
incurred but for the delay in the delivery of, or the failure to deliver, the
Indemnity Notice. Within thirty (30) days after the receipt by the Indemnifying
Party of the Indemnity Notice, the Indemnifying Party shall either (i) pay to
the Indemnified Party an amount equal to the Indemnifiable Loss or (ii) object
to such claim, in which case the Indemnifying Party shall give written notice to
the Indemnified Party of such objection together with the reasons therefor, it
being understood that the failure of the Indemnifying Party to so object shall
preclude the Indemnifying Party from asserting any claim, defense or
counterclaim relating to the Indemnifying Party's failure to pay any
Indemnifiable Loss. The Indemnifying Party's objection shall not, in and of
itself, relieve the Indemnifying Party from its obligations under this Article
10. In the event that the parties are unable to resolve the subject of the
Indemnity Notice, the issue shall be submitted for determination to a neutral
third party designated by the President of the Philadelphia office of the
American Arbitration Association.

(b) In the event that any Indemnified Party shall have reasonable grounds
to believe that an Indemnifiable Loss may be incurred, such Indemnified Party
shall, within sixty (60) days after obtaining sufficient information to
articulate such grounds, give written notice to the applicable Indemnifying
Party thereof, together with such information as is reasonably sufficient to
describe the potential or contingent claim to the extent then feasible (an
"Unliquidated Indemnity Notice"). The failure of an Indemnified Party to give
the Indemnifying Party the Unliquidated Indemnity Notice shall not release the
Indemnifying Party of liability under this Article 10; provided, however that
the Indemnifying Party shall not be liable for Indemnifiable Losses incurred by
the Indemnified Party that would not have been incurred but for the delay in the
delivery of, or the failure to deliver, the Unliquidated Indemnity Notice.
Within sixty (60) days after the amount of such claim shall be finalized,
resolved, or liquidated, the Indemnified Party shall give the Indemnifying Party
an Indemnity Notice, and the Indemnifying Party's obligations under this Article
10 with respect to such Indemnity Notice shall apply.

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days after receiving notice of the filing of a lawsuit or sixty (60) days after
receiving notice of the existence of a claim or demand giving rise to the claim
for indemnification (which shall include a notice from any Governmental
Authority of an intent to audit with respect to Taxes), shall send written
notice of such claim to the Indemnifying Party (the "Claim Notice"). The failure
of the Indemnified Party to give the Indemnifying Party the Claim Notice shall
not release the Indemnifying Party of liability under this Article 10; provided,
however, that the Indemnifying Party shall not be liable for Indemnifiable
Losses incurred by the Indemnified Party that would not have been incurred but
for the delay in the delivery of, or the failure to deliver, the Claim Notice.
Subject to the provision contained in the third sentence immediately following
this sentence, and except for claims resulting from, relating to or arising out
of any Purchaser Financing Transaction or the provisions of Section 3.23, the
Indemnifying Party shall be entitled to defend such claim in the name of the
Indemnified Party at its own expense and through counsel of its own choosing;
provided, that if the applicable claim or demand is against, or if the
defendants in any such Legal Proceeding shall include, both the Indemnified
Party and the Indemnifying Party and the Indemnified Party reasonably concludes
that there are defenses available to it that are different or additional to
those available to the Indemnifying Party or if the interests of the Indemnified
Party may be reasonably deemed to conflict with those of the Indemnifying Party,
then the Indemnified Party shall have the right to select separate counsel and
to assume the Indemnified Party's defense of such claim, demand or Legal
Proceeding, with the reasonable fees, expenses and disbursements of such counsel
to be reimbursed by the Indemnifying Party as incurred. The Indemnifying Party
shall give the Indemnified Party notice in writing within ten (10) days after
receiving the Claim Notice from the Indemnified Party in the event of
litigation, or otherwise within thirty (30) days, of its intent to do so. In the
case of any claim resulting from, relating to or arising out of any Purchaser
Financing Transaction or the provisions of Section 3.23, the Purchaser shall
have right to control the defense thereof at the Indemnifying Party's expense.
Whenever the Indemnifying Party is entitled to defend any claim hereunder, the
Indemnified Party may elect, by notice in writing to the Indemnifying Party, to
continue to participate through its own counsel, at its expense, but the
Indemnifying Party shall have the right to control the defense of the claim or
the litigation; provided, that the Indemnifying Party retains counsel reasonably
satisfactory to the Indemnified Party and pursuant to an arrangement
satisfactory to the Indemnified Party; otherwise, the Indemnified Party shall
have the right to control the defense of the claim or the litigation.
Notwithstanding any other provision contained in this Agreement, the party
controlling the defense of the claim or the litigation shall not settle any such
claim or litigation without the written consent of the other party; provided,
that if the Indemnified Party is controlling the defense of the claim or the
litigation and shall have, in good faith, negotiated a settlement thereof, which
proposed settlement contains terms that are reasonable under the circumstances,
then the Indemnifying Party shall not withhold or delay the giving of such
consent (and in the event the Indemnifying Party and Indemnified Party are
unable to agree as to whether the proposed settlement terms are reasonable, the
Indemnifying Party and Indemnified Party will request that the disagreement be
resolved by a neutral third party designated by the President of the
Philadelphia office of the American Arbitration Association). In the event that
the Indemnifying Party is controlling the defense of the claim or the litigation
and shall have negotiated a settlement thereof, which proposed settlement is
substantively final and unconditional as to the parties thereto (other than the
consent of the Indemnified Party required under this Section 10.3(c)) and

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contains an unconditional release of the Indemnified Party and does not include
the taking of any actions by, or the imposition of any restrictions on the part
of, the Indemnified Party and the Indemnified Party shall refuse to consent to
such settlement, the liability of the Indemnifying Party under this Article 10,
upon the ultimate disposition of such litigation or claim, shall be limited to
the amount of the proposed settlement; provided, however, that in the event the
proposed settlement shall require that the Indemnified Party make an admission
of liability, a confession of judgment, or shall contain any other non-financial
obligation which, in the reasonable judgment of the Indemnified Party, renders
such settlement unacceptable, then the Indemnified Party's failure to consent
shall not give rise to the limitation of Indemnifying Party's liability as
provided for in this Section 10.3(c), and the Indemnifying Party shall continue
to be liable to the full extent of such litigation or claim and provided
further, that notwithstanding any provision to the contrary, no Indemnifiable
Losses with respect to Taxes shall be settled without the prior written consent
of the Purchaser, which shall not be unreasonably withheld.

10.4. Equitable Contribution Under the Securities Act. To provide for just
and equitable contribution to joint liability under the Securities Act in any
case in which the Purchaser, Newco, the Surviving Corporation, the Company, or
any controlling Person of the Purchaser or the Company (within the meaning of
the Securities Act) makes a claim for indemnification pursuant to Section
10.1(ii) but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that Section 10.1(ii) provides
for indemnification in such case, then, the Purchaser, Newco, the Surviving
Corporation, the Company, each controlling Person and the Seller will contribute
to the aggregate Indemnifiable Losses to which the Purchaser, Newco, the
Surviving Corporation, the Company or any such controlling Person may be subject
(after contribution from others) as is appropriate to reflect the relative fault
of the Purchaser, Newco, the Surviving Corporation, the Company, such
controlling Person and the Seller in connection with the statements or omissions
which resulted in such Indemnifiable Losses, as well as the relative benefit
received by the Purchaser, Newco, the Surviving Corporation, the Company, such
controlling Person and the Seller as a result of the issuance of the securities
to which such Indemnifiable Losses relate, it being understood that the parties
acknowledge that the overriding equitable consideration to be given effect in
connection with this provision is the ability of one party or the other to
correct the statement or omission which resulted in such Indemnifiable Losses,
and that it would not be just and equitable if contribution pursuant hereto were
to be determined by pro rata allocation or by any other method of allocation
which does not take into consideration the foregoing equitable considerations;
provided, however, that, in any such case, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

10.5. Exclusiveness of Indemnification. The indemnification rights of the
parties under this Article 10 are exclusive of other rights and remedies that
the parties may have under this Agreement (but for this provision), at law or in
equity or otherwise.

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10.6. Limitations on Indemnification. Purchaser, the Company, Newco, the
Surviving Corporation and the other Persons or entities indemnified pursuant to
Section 10.1 shall not assert any claim for indemnification hereunder against
the Seller until such time as, the aggregate of all claims (exclusive of fees
and expenses) which such persons may have against the Seller shall exceed
$47,500 (the "Indemnification Threshold"), whereupon such claims shall be
indemnified in full. The Seller shall not assert any claim for indemnification
hereunder against Purchaser, the Company, Newco or the Surviving Corporation
until such time as, the aggregate of all claims which the Seller may have
against Purchaser, the Company, Newco or the Surviving Corporation shall exceed
$47,500, whereupon such claims shall be indemnified in full. The limitation or
assertion of claims for indemnifications contained in this paragraph shall apply
only to claims based upon inaccuracies in, or breaches of, representations and
warranties contained in this Agreement or any document, instrument, certificate
or other item required to be furnished pursuant to this Agreement or in
connection with the transaction contemplated by this Agreement.

No person shall be entitled to indemnification under this Article 10 if and
to the extent that such person's claim for indemnification is directly or
indirectly related to a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement.

Notwithstanding any other term of this Agreement, the Seller shall not be
liable under this Article 10 or otherwise for an amount which exceeds the amount
of proceeds received by the Seller in connection with the transactions
contemplated herein. For purposes of the foregoing limitation, the DocuNet
Common Stock shall be valued at the Initial Public Offering Price.

No claim under this Article 10 shall be made unless an Indemnity Notice, an
Unliquidated Indemnity Notice or a Claim Notice (as applicable) has been given
prior to the applicable survival period, if applicable.

10.7. Value of DocuNet Common Stock. Any shares of DocuNet Common Stock
used to satisfy an Indemnity Claim shall be valued at the lower of the Initial
Public Offering Price and the Value as of the date such shares are so used.

ARTICLE 11
TERMINATION AND REMEDIES

11.1. Termination. This Agreement may be terminated, and the transactions
contemplated by this Agreement may be abandoned:

(a) at any time before the Closing, by the mutual written agreement
among the Company, the Seller, Newco and the Purchaser;

(b) at any time before the Closing, by the Purchaser pursuant to
Section 5.4(a), or if any of the Company's or the Seller's representations
or warranties contained in this Agreement were materially incorrect when
made or become materially incorrect;

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(c) at any time before the Closing, by the Seller holding a majority
of the Shares if any of the Purchaser's or Newco's representations or
warranties contained in this Agreement were materially incorrect when made
or become materially incorrect;

(d) at any time before the Closing, by the Seller holding a majority
of the Shares, on the one hand, or by the Purchaser, on the other hand,
upon any material breach by such other party's covenants or agreements
contained in this Agreement and the failure of such other party to cure
such breach, if curable, within ten (10) days after written notice thereof
is given by the non-breaching party to the breaching party; or

(e) at any time after the date which is 270 days after the date of
this Agreement, by the Seller holding a majority of the Shares, on the one
hand, or by the Purchaser on the other hand, upon notification to the
non-terminating party by the terminating party if the Closing shall not
have occurred on or before such date and such failure to consummate is not
caused by a breach of this Agreement by the terminating party.

11.2. Effect of Termination.

(a) Subject to Section 11.2(b) of this Agreement, if this Agreement is
validly terminated pursuant to Section 11.1, then this Agreement shall forthwith
become void, and, subject to such Section 11.2(b), there shall be no liability
under this Agreement on the part of the Company, the Seller, Newco or the
Purchaser and all rights and obligations of each party to this Agreement shall
cease; provided, that (i) the provisions with respect to expenses in Section
16.4 shall indefinitely survive any such termination, (ii) the provisions with
respect to confidentiality of Section 8.1 shall survive any such termination
until it, by its own terms, is no longer operative; (iii) the provisions with
respect to exclusivity of negotiations of Section 5.9 shall survive for 180 days
after such termination, but only if the termination is made by Purchaser
pursuant to Section 11.1(b) or Section 11.1(d); and (iv) this Section 11.2 shall
indefinitely survive such termination.

(b) If this Agreement is validly terminated as a result of a
misrepresentation or a breach of any warranty made by any party to this
Agreement or as a result of a material breach by a party of any of such party's
covenants or agreements contained in this Agreement, or, if all conditions to
the obligations of a party at Closing contained in Article 6 of this Agreement
have been satisfied (or waived by the party entitled to waive such conditions)
and such party does not proceed with the Closing, then any and all rights and
remedies available to the non-breaching parties, whether under this Agreement,
at law or in equity or otherwise shall be preserved and shall survive the
termination of this Agreement.

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ARTICLE 12
POST-CLOSING COVENANTS

12.1. Maintenance and Access to Records. For a period of three (3) years
after the Closing Date, the Purchaser shall, or shall cause the Surviving
Corporation and each of its Subsidiaries to, maintain all books and records
maintained by the Company or any such Subsidiary on or prior to the Closing Date
and shall permit the Seller or their respective representatives and agents
access to all such books and records, and to the Surviving Corporation's and its
Subsidiaries' employees and auditors for the purpose of obtaining information
relating to periods on or prior to the Closing Date, upon reasonable notice by
the Seller and on terms not disruptive to the business, operation or employees
of the Purchaser, the Surviving Corporation, the Company or any of their
respective Subsidiaries, to assist the Seller in (i) completing any tax or
regulatory filings or financial statements required or appropriate to be made by
the Seller after the Closing Date or in completing any other reasonable and
customary business objective, (ii) prosecuting or defending on behalf of the
Seller, the Company or any of its Subsidiaries any litigation controlled by the
Seller or (iii) complying with requests made of the Seller by any Taxing
Authority or any Governmental or Regulatory Authority conducting an audit,
investigation or inquiry relating to the Company's or any of its Subsidiaries'
activities during periods prior to the Closing Date. The Seller will hold all
information provided to them pursuant to this Section 12.1 (and any information
derived therefrom) in confidence to the same extent as required by Section 8.1
of this Agreement with respect to Confidential Information.

12.2. Disclosure. If, subsequent to the effective date of the registration
statement relating to the Initial Public Offering and prior to the 25th day
after the date of the final prospectus of Purchaser utilized in connection with
the Initial Public Offering, the Company or the Seller become aware of any fact
or circumstance which would change (or, if after the Closing Date, would have
changed) a representation or warranty of Company or the Seller in this Agreement
or would affect any document delivered pursuant hereto in any material respect,
the Company and the Seller shall promptly give notice of such fact or
circumstance to Purchaser.

12.3. Accounts Receivable. In the event that the Company or the Seller
makes a payment after the Closing Date to Purchaser in full satisfaction of an
uncollected Receivable, Purchaser will assign its rights to such Receivable to
the Company or the Seller, as applicable.

ARTICLE 13
TRANSFER RESTRICTIONS

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without limitation, an option to buy or sell) in any such shares of DocuNet
Common Stock, in whole or in part, and no such attempted transfer shall be
treated as effective for any purpose; or (ii) engage in any transaction, whether
or not with respect to any shares of DocuNet Common Stock or any interest
therein, the intent or effect of which is to reduce the risk of owning the
shares of DocuNet Common Stock acquired pursuant to this Agreement (including,
by way of example and not limitation, engaging in put, call, short-sale,
straddle or similar market transactions). The certificates evidencing the
DocuNet Common Stock delivered to the Seller pursuant to Section 2 of this
Agreement will bear a legend substantially in the form set forth below and
containing such other information as the Purchaser may deem necessary or
appropriate:

THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE SOLD, ASSIGNED, EXCHANGED, TRANSFERRED,
ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR
OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE
REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE,
PLEDGE, DISTRIBUTION, APPOINTMENT OR OTHER
DISPOSITION PRIOR TO FIRST ANNIVERSARY OF CLOSING
DATE. UPON THE WRITTEN REQUEST OF THE HOLDER OF
THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS
RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH
THE TRANSFER AGENT) AFTER THE DATE SPECIFIED
ABOVE.

ARTICLE 14
SECURITIES LAWS REPRESENTATIONS

The Seller acknowledges that the shares of DocuNet Common Stock to be
delivered to the Seller pursuant to this Agreement have not been and will not be
registered under the Securities Act or any other state securities laws, and
therefore may not be resold without compliance with the Securities Act. The
DocuNet Common Stock to be acquired by the Seller pursuant to this Agreement is
being acquired solely for their own respective accounts, for investment purposes
only, and with no present intention of distributing, selling or otherwise
disposing of it in connection with a distribution.

14.1. Compliance with Law. The Seller covenants, warrants and represents
that none of the shares of DocuNet Common Stock issued to the Seller will be
offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the Securities Act, the rules and regulations of the Securities and Exchange
Commission and applicable state securities laws. All the DocuNet Common Stock
shall bear the following legend in addition to any other legends required under
this Agreement:

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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT") OR ANY STATE SECURITIES OR
BLUE SKY LAWS. SUCH SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE 1933
ACT AND ANY STATE SECURITIES OR BLUE SKY LAWS, UNLESS,
IN THE OPINION (WHICH SHALL BE IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION) OF COUNSEL
SATISFACTORY TO THE CORPORATION, SUCH REGISTRATION IS
NOT REQUIRED.

14.2. Economic Risk; Sophistication. The Seller is able to bear the
economic risk of an investment in the DocuNet Common Stock acquired pursuant to
this Agreement and can afford to sustain a total loss of such investment and
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the proposed investment in the
DocuNet Common Stock. The Seller party hereto or their respective purchaser
representatives have had an adequate opportunity to ask questions and receive
answers from the officers of the Purchaser concerning any and all matters
relating to the transactions described herein including, without limitation, the
background and experience of the current and proposed officers and directors of
the Purchaser, the plans for the operations of the business of the Purchaser,
the business, operations and financial condition of the Founding Companies, and
any plans for additional acquisitions and the like. The Company and the Seller
acknowledge receipt and review of the draft Registration Statement attached
hereto as Schedule 15.2 for informational purposes and subject to the
limitations of Section 5.12(b). The Seller and the Company acknowledge that such
draft is subject to completion and subject to change, and Seller and the Company
acknowledge that it or their respective purchaser representatives have had an
adequate opportunity to ask questions and receive answers from the officers of
the Purchaser pertaining thereto.

ARTICLE 15
REGISTRATION RIGHTS

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Stock which any the Seller requests. However, if the Purchaser is advised in
writing in good faith by any managing underwriter of an underwritten offering of
the securities being offered pursuant to any registration statement under this
Section 15.1 that the number of shares to be sold by persons other than the
Purchaser is greater than the number of such shares which can be offered without
adversely affecting the offering, the Purchaser may reduce pro rata the number
of shares offered for the accounts of such persons (based upon the number of
shares held by such persons) to a number deemed satisfactory by such managing
underwriter or such managing underwriter can eliminate the participation of all
such persons in the offering, provided that, for each such offering made by the
Purchaser after the Initial Public Offering, a reduction shall be made first by
reducing the number of shares to be sold by persons other than the Purchaser,
the Seller, the Founding Companies, the stockholders of the Founding Companies
and other stockholders (the "Other Stockholders") of the Company immediately
prior to the Initial Public Offering, and thereafter, if a further reduction is
required, by reducing the number of shares to be sold by the Sellers, the
Founding Companies, the stockholders of the Founding Companies and the Other
Stockholders, pro rata based upon the number of shares held by such persons.

15.2. Registration Procedures. All expenses incurred in connection with the
registrations under this Article 15 (including all registration, filing,
qualification, legal, printer and accounting fees, but excluding underwriting
commissions and discounts and fees, if any, of separate counsel engaged by the
Seller.) shall be borne by the Purchaser. In connection with registrations under
Section 15.1, the Purchaser shall (i) prepare and file with the Securities and
Exchange Commission as soon as reasonably practicable, a registration statement
with respect to the DocuNet Common Stock and use its best efforts to cause such
registration to promptly become and remain effective for a period of at least 90
days (or such shorter period during which holders shall have sold all DocuNet
Common Stock which they requested to be registered); (ii) use its best efforts
to register and qualify the DocuNet Common Stock covered by such registration
statement under applicable state securities laws as the holders shall reasonably
request for the distribution for the DocuNet Common Stock; and (iii) take such
other actions as are reasonable and necessary to comply with the requirements of
the Securities Act and the regulations thereunder.

15.3. Underwriting Agreement. In connection with each registration pursuant
to Section 15.1 covering an underwritten registration public offering, the
Purchaser and each participating holder agree to enter into a written agreement
with the managing underwriters in such form and containing such provisions as
are customary in the securities business for such an arrangement between such
managing underwriters and companies of the Purchaser's size and investment
stature, including indemnification and the prohibition of sales or transfers of
such holders' common stock for an applicable lock-up period.

15.4. Availability of Rule 144. The Purchaser shall not be obligated to
register shares of DocuNet Common Stock held by the Seller at any time when the
resale provisions of Rule 144(k) (or any similar or successor Seller provision)
promulgated under the Securities Act are available to the Seller.

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15.5. Survival. The provisions of this Article 15 shall survive the Closing
until December 31, 1999.

ARTICLE 16
MISCELLANEOUS

16.1. Notices. All notices required to be given to any of the parties of
this Agreement shall be in writing and shall be deemed to have been sufficiently
given, subject to the further provisions of this Section 16.1, for all purposes
when presented personally to such party or sent by certified or registered mail,
return receipt requested, with proper postage prepaid, or any national overnight
delivery service, with proper charges prepaid, to such party at its address set
forth below:

(a) If to the Company (prior to the Closing Date):

UTZ Medical Enterprises, Inc.
1040 Wabash Avenue
Chesterton, IN 46304

with a copy to:

David Smelko
Rothbert & Logan
P.O. Box 11647
Fort Wayne, IN 46859-1647

(b) If to the Seller:

David C. Utz, Jr.
c/o UTZ Medical Enterprises, Inc.
1040 Wabash Avenue
Chesterton, IN 46304

with a copy to:

David Smelko
Rothberg & Logan
P.O. Box 11647
Fort Wayne, IN 46859-1647

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DocuNet Inc.
715 Matson's Ford Road
Villanova, PA 19085

with a copy to:

Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103
Attention: Barry M. Abelson, Esquire

Such notice shall be deemed to be received when delivered if delivered
personally, the next business day after the date sent if sent by a national
overnight delivery service, or three (3) business days after the date mailed if
mailed by certified or registered mail. Any notice of any change in such address
shall also be given in the manner set forth above. Whenever the giving of notice
is required, the giving of such notice may be waived in writing by the party
entitled to receive such notice.

16.2. No Third Party Beneficiaries. Except as is otherwise provided herein,
this Agreement is not intended to, and does not, create any rights in or confer
any benefits upon anyone other than the parties hereto.

16.3. Schedules. All schedules attached to this Agreement are incorporated
by reference into this Agreement for all purposes.

16.4. Expenses. The parties to this Agreement shall pay their own expenses
incident to the preparation, negotiation and execution of this Agreement
including, without limitation, all fees and costs and expenses of their
respective accountants and legal counsel. The parties acknowledge that all fees
and expenses of Arthur Andersen LLP incurred in auditing the Company's financial
statements in connection with the transactions contemplated hereby shall be the
responsibility of Purchaser, provided that, notwithstanding the foregoing, the
Seller shall be responsible to pay $10,000 of such fees and expenses.

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executed and delivered such other documents, certificates or instruments, and
(iii) take or cause to be taken such actions, in each of the foregoing cases, as
the Purchaser, the Surviving Corporation, any Underwriter or any auditor
reasonably deems necessary or desirable to complete any audit of either
Company's financial statements or in connection with any Purchaser Financing
Transaction; provided, that the Seller shall not be required to execute any
guaranty of any indebtedness obtained by the Purchaser or any of its
Subsidiaries.

16.6. Entire Agreement; Amendment. This Agreement and any other documents,
instruments or other writings delivered or to be delivered pursuant to this
Agreement constitute the entire agreement among the parties with respect to the
subject matter of this Agreement and supersede all prior agreements,
understandings, and negotiations, whether written or oral, with respect to the
subject matter of this Agreement. None of the terms and provisions contained in
this Agreement can be changed without a writing signed by all parties hereto.

16.7. Section and Paragraph Titles. The section and paragraph titles used
in this Agreement are for convenience only and are not intended to define or
limit the contents or substance of any such section or paragraph.

16.8. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of each of the parties to this Agreement and their respective heirs,
personal representatives, and successors and permitted assigns. Neither the
Company, the Seller nor the Purchaser shall have the right to assign this
Agreement without the prior written consent of the others, except that Purchaser
or Newco may assign its rights and obligations under this Agreement prior to the
Closing to any wholly-owned Subsidiary of the Purchaser or Newco; provided that
the DocuNet Common Stock to be issued in payment of a portion of the purchase
price shall be registered under Section 12 of the Securities Exchange Act of
1934 at the time it is issued.

16.9. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one and the same
instrument.

16.10. Severability. Any provision of this Agreement (other than those
contained in Article 8 of this Agreement, in which case, Section 8.5 of this
Agreement shall govern with respect to the invalidity, unenforceability, or
illegality of any such provision) that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such provision, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

16.11. Governing Law. This Agreement shall be governed and construed as to
its validity, interpretation and effect by the laws of the Commonwealth of
Pennsylvania notwithstanding the choice of law rules of Pennsylvania or any
other jurisdiction.

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[Signature Page Follows]

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IN WITNESS WHEREOF, the Seller, the Purchaser, Newco and the Company have
caused this Agreement to be duly executed as of the date first written above.

DOCUNET INC.

By: /s/ Bruce M. Gillis
----------------------------------
Bruce M. Gillis
Chairman of the Board of Directors
and Chief Executive Officer

AMMCORP ACQUISITION CORP.

By: /s/ S. David Model
----------------------------------
Name: S. David Model
Title: President

UTZ MEDICAL ENTERPRISES, INC.

By: /s/ David C. Utz
----------------------------------
David C. Utz, Jr.
President

Witness: /s/ David C. Utz
------------------------- --------------------------------------
David C. Utz, Jr. Individually

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Schedule 2.3

Officers of Surviving Corporation
---------------------------------
AMMCORP Acquisition Corp.

S. David Model President

Andrew R. Bacas Secretary

James Brown Treasurer

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Schedule 2.4

Capitalization
--------------

800 shares of Common Stock, no per value per share, owned by David C. Utz, Jr.

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Schedule 2.9

Distribution of Merger Consideration
------------------------------------

The Purchase Price shall consist of the number of shares of DocuNet Common
Stock equal to $_____________ divided by the Initial Public Offering Price. Of
such amount, __________ shares will be issued to David C. Utz, Jr. at Closing
and the remaining shares shall be paid to the Escrow Agent on Account of the
Escrow Amount. At Closing, Mr. Utz shall also receive an amount of cash equal to
$___________, less any adjustments included in Section 3.8 of this Agreement,
including the Debt Adjustment.

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Schedule 6.1(k)

___________ __, 1997

DocuNet Inc.
715 Matson's Ford Road
Villanova, PA 19085

Ladies and Gentlemen:

We have acted as counsel to __________________, a ________________
corporation (the "Company"), in connection with the transactions contemplated by
that certain [Purchase Agreement] dated as of ____________ , 1997 (the "Purchase
Agreement"), among the Company, DocuNet Inc., a Pennsylvania corporation (the
"Purchaser"), and ("Stockholders"). This opinion is furnished to you pursuant to
Section ______________ of the Purchase Agreement.

In connection with rendering this opinion, we have examined the Purchase
Agreement and the Escrow Agreement (collectively the "Transaction Documents").
We have also examine the [Certificate] [Articles] of Incorporation and Bylaws of
the Company. We have also made such examinations of laws, certificates of public
officials, instruments, documents, and corporate records and have made such
other investigations as we have deemed necessary in connection with the opinions
hereinafter set forth. In such examination we have assumed (i) the genuineness
of all signatures on certificates and documents other than those signed by the
Company and the Stockholders, (ii) the accuracy, completeness and authenticity
of all records and documents submitted to us as originals, (iii) the conformity
to the original of all documents submitted to us as certified, conformed or
photostatic copies, and (iv) the legal capacity of all natural persons who are
parties to the Transaction Documents.

Capitalized terms used herein and not otherwise defined herein have the
meanings set forth in the Purchase Agreement.

Our opinion is lifted to the laws of the State of ______________ and the
federal laws of the United States and we do not purport to express any opinion
herein with respect to the laws of any other state or jurisdiction.

-79-

<PAGE>

We note that the Transaction Documents contain clauses selecting
Pennsylvania law as governing law. For purposes of this opinion, we have
assumed, with your permission, that such clauses selected __ law, without regard
for principles of choice of law, and that such documents are being executed and
delivered and will be performed in, and that the applicable property is and will
be held in, the State of ______________ .

Based on the foregoing and subject to the qualifications set forth herein,
it is our opinion that:

1. The Company is a corporation duly organized validly existing and in good
standing under the laws of the State of _________ and has all necessary
corporate power and authority to enter into the Transaction Documents and to
consummate the transactions contemplated thereby. The Seller owns the Shares of
the Company free and clear of any claims, liens and encumbrances and the Shares
of the Company are validly issued, fully paid and nonassessable, and were issued
in compliance with the laws of the State of Minnesota

2. The execution, delivery and performance of the Transaction Documents
have been duly authorized by all requisite corporate action on the part of the
Company.

3. The Transaction Documents have been duly and validly executed by the
Company and the Stockholders and constitute the legal, valid and binding
obligations of the Company and the Stockholders, respectively, and are
enforceable against them in accordance with their respective terms.

4. Neither the execution and the delivery of the Transaction Documents, nor
the consummation of the transactions contemplated thereby, violate the
[Certificates] [Articles] of Incorporation or Bylaws of the Company.

All of the opinions set forth in this letter are further subject to: (i)
the effect of any applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other laws affecting or relating to creditors' rights,
(ii) as to any covenants not to compete, the unenforceability of, or limitation
on, certain provisions when such provisions are found unreasonable in scope,
(iii) the requirement that, to the extent that provisions of the Transaction
Documents and any other documents delivered in connection therewith permit the
parties to make certain determinations, such determinations may be subject to a
requirement that they be made on a reasonable basis and in good faith, (iv) to
effect of general] principles of equity, equitable defenses and the discretion
of the Court regarding the enforcement Of remedies (regardless of whether
considered in a proceeding in equity or at law), and (v) the unenforceability of
or limitation on the enforceability of certain provisions, including without
limitation indemnification provisions, when such provisions are found to be
contrary to public policy.

This opinion is rendered as of the date hereof and we assume no obligation
to modify, update or supplement this opinion to reflect any facts or
circumstances which may hereafter come to our attention, or any changes in laws
which may hereafter occur.

-80-

<PAGE>

Schedule 6.1(1)

Related Party Agreements
------------------------

None.

-82-

EXHIBIT A

ESCROW AGREEMENT

This Escrow Agreement ("Agreement") dated as of this ____ day of
______, 1997, by and among David C. Utz, Jr. ("Seller"), DocuNet Inc., a
Pennsylvania corporation ("Purchaser") and ______ (the "Escrow Agent"). The
Purchaser, the Seller and the Escrow Agent are sometimes collectively referred
to herein as the "Parties" and individually as a "Party."

W I T N E S S E T H :

WHEREAS, pursuant to the Purchase Agreement (as hereinafter defined),
it is a condition to the consummation of the transactions contemplated thereby
that at the Closing, this Escrow Agreement be entered into by the Parties.

NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, and of other good and valuable
consideration, the Parties, intending to be legally bound, hereby agree as
follows:

1. Definitions. All defined or capitalized terms used in this Agreement
will have the meanings set forth in the Purchase Agreement unless such terms are
defined herein or unless the context clearly indicates to the contrary.

(a) Common Stock shall mean the common stock, $ ____ par value, of
the Purchaser.

(b) Market Price shall mean the average closing price of Common
Stock during the twenty (20) day trading period immediately preceding the Price
Determination Date.

(c) Price Determination Date shall mean any date on which (i)
payment of an Indemnity Amount (as hereinafter defined) is made, (ii) payment of
a Covered Amount (as hereinafter defined) is made or (iii) an additional deposit
of Common Stock to restore the Combined Value (as hereinafter defined) to the
Threshold Value is made.

(d) Purchase Agreement shall mean that certain Stock Purchase
Agreement, Asset Purchase Agreement or Agreement and Plan of Reorganization, as
the case may be, between the Seller and the Purchaser.

(e) Purchase Price shall mean the amount payable by the Purchaser
pursuant to Article 2 of the Purchase Agreement.

(f) Share Value shall mean the lesser of (i) the Initial Public
Offering Price or (ii) the Market Price.

2. Appointment of Escrow Agent. The Purchaser and the Seller hereby
appoint the Escrow Agent as the escrow agent for the purposes set forth herein
and the Escrow Agent hereby accepts such appointment on the terms herein
provided. The Escrow Agent hereby acknowledges receipt from the other Parties of
an executed copy of the Purchase Agreement.

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<PAGE>

3. Deposit of Escrow Account. Pursuant to Article 2 of the Purchase
Agreement, there is being deposited into an account (the "Escrow Account")
maintained by the Escrow Agent either (i) a number of shares of Common Stock
valued at the Initial Public Offering Price, (ii) cash or (iii) a combination of
Common Stock and cash comprising part of the Purchase Price equal to $_______,
(the "Threshold Value"). The Escrow Account will be held, invested, reinvested
and disbursed by Escrow Agent in accordance with the terms hereof.

4. Additional Deposits. In the event that the combined (i) value of any
shares of Common Stock (valued at the Initial Public Offering Price) which may
be on deposit in the Escrow Account and (ii) the amount of cash which may be on
deposit in the Escrow Account ("Cash Value") (collectively, the "Combined
Value") falls below the Threshold Value, due to payment from the Escrow Account
pursuant to a Purchase Price adjustment pursuant to Article 2 of the Purchase
Agreement, the Seller shall, within one (1) business day, deposit additional
shares of Common Stock or cash, as the case may be, to the Escrow Account in an
amount such that the Combined Value in the Escrow Account equals the Threshold
Value.

5. Pledge of Common Stock; Restriction on Transferability.

(a) In the event that the Escrow Account includes shares of Common
Stock, each Seller hereby pledges for the benefit of the Purchaser, and grants
the Purchaser a security interest in, such deposited Common Stock. In addition,
each Seller depositing Common Stock in the Escrow Account has also delivered to
the Escrow Agent stock powers endorsed in blank with respect to the deposited
Common Stock registered in the name of such Seller. The Escrow Agent shall hold
all such deposited Common Stock, not as an agent of Seller, but rather as a
pledgeholder.

If blank stock powers with respect to any Common Stock deposited
into the Escrow Account and registered to the Seller are delivered by the Escrow
Agent to the Purchaser, Seller shall promptly deliver to the Escrow Agent stock
powers endorsed in blank with respect to the remaining Common Stock on deposit
in the Escrow Account (together with stock powers with respect thereto endorsed
in blank), pledged to the Purchaser.

(b) In the event that the Escrow Account includes shares of Common
Stock, each such certificate representing Common Stock on deposit therein shall
have the following legend noted conspicuously thereon:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A LIEN IN FAVOR OF THE ISSUER PURSUANT TO THAT CERTAIN ESCROW
AGREEMENT DATED ________ ___, 1997 BY AND AMONG THE PURCHASER,
CERTAIN PERSONS, AND ___________ AS ESCROW AGENT. THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS ON TRANSFER UNTIL
RELEASED FROM SUCH RESTRICTIONS IN ACCORDANCE WITH THE TERMS
OF SUCH ESCROW AGREEMENT.

(c) Up until any disbursement of any shares of Common Stock
deposited into the Escrow Account, Seller shall be entitled to vote said shares
in any meeting of shareholders and shall be entitled to all dividends paid
thereon.

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<PAGE>

6. Purpose of the Escrow Account.

(a) Adjustments to Purchase Price. To the extent provided in Article
2 of the Purchase Agreement, the Parties have specified a mechanism for the
final determination of the Purchase Price of the Company (the "Purchase Price
Provision"). The amounts that may be payable by the Seller to the Purchaser
under the Purchase Price Provision are herein called the "Covered Amounts." One
purpose of the Escrow Account is, to the extent herein provided, to provide a
source of funds for the payment of the Covered Amounts.

(b) Indemnification. The Escrow Account further serves to secure the
indemnification obligations of the Seller under Article 10 of the Purchase
Agreement (the "Indemnification Provision"). The amounts that may be payable to
the Purchaser under the Indemnification Provision are herein called the
"Indemnity Amounts."

7. Application of Escrow Account. The Escrow Account will be retained
by the Escrow Agent and shall be distributed as follows:

(a) Adjustments to Purchase Price. Upon the final determination of
the Purchase Price pursuant to Article 2 of the Purchase Agreement, the Seller
and the Purchaser shall give a joint written notice to the Escrow Agent
indicating whether and to what extent the Escrow Account is to be disbursed to
the Purchaser and on receipt of such joint instructions, the Escrow Agent shall
disburse the Escrow Account in accordance with such instructions. The Seller and
the Purchaser agree to cause the Escrow Account to be disbursed so as to give
effect to the final determination of the Purchase Price pursuant to Article 2 of
the Purchase Agreement.

(b) Indemnification. In the event the Purchaser suffers an
Indemnifiable Loss and is entitled to payment of an Indemnity Amount, the Seller
and Purchaser shall give a joint written notice to the Escrow Agent directing
that a combination of cash and Common Stock (valued at the Share Value) equal to
the Indemnity Amount be disbursed from the Escrow Account and on receipt of such
joint instructions, the Escrow Agent shall so disburse such Indemnity Amount.

8. Investment of Escrow Account. As soon as possible after its receipt
of the Escrow Account, the Escrow Agent shall invest any cash deposited in the
Escrow Account (the "Cash Investment") as set forth on Exhibit "A" attached
hereto, or as otherwise directed in writing from time to time by the Seller. All
income earned on the Cash Investment will be owned by the Seller and shall be
distributed at least once every 365 days. The Escrow Agent will not be liable or
responsible for any loss resulting from any investment or reinvestment made as
provided in this Agreement at the written direction of the Seller.

9. Liability of the Escrow Agent. The duties of the Escrow Agent
hereunder will be limited to the observance of the express provisions of this
Agreement. The Escrow Agent will not make any payment or disbursement from or
out of the Escrow Account except as provided by this Agreement. The Escrow Agent
may rely upon and act upon any instrument received by it pursuant to the
provisions of this Agreement which it reasonably believes to be in conformity
with the requirements of this Agreement. The Escrow Agent agrees to use the same
degree of care and skill as is customary for an escrow agent in similar
circumstances. The Escrow Agent will not be liable for any action taken or not
taken by it under the terms hereof in the absence of breach of its obligations
hereunder or gross negligence or willful misconduct on its part.

-3-

<PAGE>

In receiving the amounts deposited into the Escrow Account, the Escrow
Agent acts only as a depository for the Purchaser and the Seller and assumes no
responsibility except pursuant to the provisions of this Agreement. No
withdrawals shall be permitted from the Escrow Account except as provided herein
or as required by law or court order.

All of the terms and conditions in connection with the Escrow Agent's
duties and responsibilities, and the rights of the Purchaser and the Seller or
anyone else, with respect to the Escrow Account, are contained solely in this
Agreement and in any signature card required by the Escrow Agent pertaining to
the Escrow Account, and the Escrow Agent is not expected or required to be
familiar with the provisions of any other agreement, and shall not be charged
with any responsibility or liability in connection with the observance of the
provisions of any such other agreement.

The Escrow Agent may act or refrain from acting in respect of any
matter referred to herein in full reliance upon and by and with the advice of
counsel which may be selected by it, and shall be fully protected in so acting
or in refraining from acting upon the advice of such counsel.

Except as herein expressly provided, none of the provisions of this
Agreement shall require the Escrow Agent to expend or risk its own funds or
otherwise incur financial liability or expense in the performance of any of its
duties hereunder.

The Escrow Agent is hereby authorized to comply with and obey all
orders, judgements, decrees or writs entered or issued by any court, and in the
event the Escrow Agent obeys or complies with any such order, judgment, decree
or writ of any court, in whole or in part, it shall not be liable to any of the
Parties hereto, nor to any other person or entity, by reason of such compliance,
notwithstanding that it shall be determined that any such order, judgment,
decree or writ be entered without jurisdiction or be invalid for any reason or
be subsequently reversed, modified, annulled or vacated.

Should any controversy arise between the Purchaser and the Seller or
between the Seller, the Purchaser and any other person or entity with respect to
this Agreement, or with respect to the ownership of or the right to receive any
sums from the Escrow Account, the Escrow Agent shall have the right to institute
a bill of interpleader in any court of competent jurisdiction to determine the
rights of the Parties.

The Purchaser and the Seller agree that the Escrow Agent is acting
solely as an escrow agent hereunder and not as a trustee, and that the Escrow
Agent has no fiduciary duties, obligations or liabilities under this Agreement.

10. Indemnification of the Escrow Agent. The Seller and the Purchaser
will indemnify and hold the Escrow Agent harmless from and against any and all
losses, costs, damages or expenses (including reasonable attorneys' fees) the
Escrow Agent may sustain by reason of its service as escrow agent hereunder,
except to the extent such loss, cost, damage or expense (including reasonable
attorneys' fees) was incurred solely by reason of such acts or omissions for
which the Escrow Agent is liable or responsible under Section 9 hereunder.

11. Fees of Escrow Agent. All fees, if any, of the Escrow Agent for
service as escrow agent hereunder shall be paid by the Purchaser.

-4-

<PAGE>

12. Designations. The Seller and the Purchaser may each, by notice to
the Escrow Agent, designate one or more persons who will execute notices and
from whom the Escrow Agent may take instructions hereunder or to whom the Escrow
Agent may give notices. Such designations may be changed from time to time upon
notice to Escrow Agent from the respective parties. The Escrow Agent will be
entitled to rely conclusively on any action taken by such persons or their
respective successor designees.

13. Resignation of the Escrow Agent. The Escrow Agent may resign as
escrow agent by giving each of the Parties not less than thirty (30) days' prior
written notice of the effective date of such resignation. If on or prior to the
effective date of such resignation the Escrow Agent has not received joint
written instructions from the parties hereto, it will thereupon deposit the
Escrow Account into the registry of a court of competent jurisdiction. The
Parties intend that a substitute escrow agent will be appointed to fulfill the
duties of the Escrow Agent hereunder for the remaining term of this Agreement in
the event of the Escrow Agent's resignation, and if the Purchaser and the Seller
cannot agree on a substitute escrow agent, they will use their best efforts to
derive a procedure to appoint a substitute escrow agent.

14. Notices. All notices, requests, instructions and demands which may
be given by any party hereto to any other party in the course of the
transactions herein contemplated will be given to each party hereto, will be in
writing, will be delivered by posting in the United States mail, certified mail,
return receipt requested, addressed to the respective parties as set forth
below, and will be deemed given when actually received.

A. If to Purchaser:

DocuNet Inc.
715 Matson's Ford Road
Villanova, PA 19085

With a copy to:

Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103
Attention: Barry M. Abelson, Esquire

B. If to Seller:

David C. Utz

With a copy to:

Rothberg & Logan
P.O. Box 11647
Fort Wayne, IN 46859-1647
Attention: David Snelko, Esquire

C. If to the Escrow Agent:

-5-

<PAGE>

With a copy to:

Copies of any notices sent by the Escrow Agent shall be sent to all
other parties hereto.

15. Binding Effect. This Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective representatives,
successors and assigns.

16. Amendment and Termination. This Agreement may be amended or
canceled by and upon written notice to the Escrow Agent at any time given
jointly by the Purchaser and the Seller, but the duties and responsibilities of
the Escrow Agent may not be increased without its consent.

17. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.

18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

19. Captions and Paragraph Headings. Captions and paragraph headings
used herein are for convenience only and are not part of this Agreement and will
not be used in construing it.

20. Term. The escrow established by this Agreement shall continue until
one hundred eighty (180) days following the Closing whereupon all amounts and
shares of Common Stock then on deposit in the Escrow Account shall be paid and
delivered to the Seller; provided, however, that in the event there is an
asserted but unresolved claim ("Claim") pursuant to Article 2 or Article 10 of
the Purchase Agreement on such 180th day, then any combination of cash and
Common Stock (valued at the Share Value) equal, in combination, to the amount of
any and all such Claims shall remain in the Escrow Account. Such cash and/or
Common Stock so remaining in the Escrow Account shall remain subject to this
Agreement until the final resolution of the applicable Claim(s) that required
the retention of such cash and/or Common Stock; provided, however, that in all
events all Common Stock held in the Escrow Account shall be distributed to the
Seller within five (5) years from the Closing and, to the extent such Common
Stock is distributed, Seller shall replenish the Escrow Account with cash in a
like amount, valued at the Share Value.

-6-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be executed by their respective officers hereunto duly authorized,
as of the day and year first above written.

DOCUNET INC.

By:_____________________________________
Name:
Title:

----------------------------------------
David C. Utz, Jr.

[ESCROW AGENT]

By:_____________________________________
Name:
Title:

-7-

EXECUTION

AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG

IMAGE AND INFORMATION SOLUTIONS, INC.
AND

DOCUNET INC.

Dated September 9, 1997
<PAGE>

TABLE OF CONTENTS

Page
----

ARTICLE 1 - CERTAIN DEFINITIONS..............................................3

ARTICLE 2 - THE MERGER......................................................11
2.1. Delivery and Filing of Articles of Merger.......................11
2.2. Effective Time of the Merger....................................11
2.3. Certificate of Incorporation, By-laws and Board of Directors
of Surviving Corporation......................................12
2.4. Certain Information with Respect to the Capital Stock of the
Company and Purchaser.........................................12
2.5. Effect of Merger................................................12
2.6. Manner of Conversion............................................13
2.7. Delivery of Shares..............................................13
2.8. Merger Consideration............................................14
2.9. Delivery of Merger Consideration................................19

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF THE SELLER....................20
3.1. Organization; Qualification; Good Standing......................20
3.2. Authorization for Agreement.....................................21
3.3. Capitalization; Subsidiaries and Affiliates.....................21
3.4. Enforceability..................................................22
3.5. Matters Affecting Shares; Title to Shares.......................22
3.6. Predecessor Status; etc.........................................22
3.7. Spin-off by the Company.........................................23
3.8. Legal Proceedings...............................................23
3.9. Compliance with Laws............................................23
3.10. Labor Matters..................................................24
3.11. Employee Benefit Plans.........................................25
3.12. Financial Statements...........................................27
3.13. Distributions..................................................27
3.14. Absence of Undisclosed Liabilities.............................28
3.15. Real Property..................................................28
3.16. Tangible Personal Property.....................................29
3.17. Contracts......................................................30
3.18. Insurance......................................................32
3.19. Proprietary Rights.............................................32
3.20. Environmental Matters..........................................33
3.21. Permits........................................................34
3.22. Regulatory Filings.............................................34
3.23. Taxes and Tax Returns..........................................35
3.24. Investment Portfolio...........................................37

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<PAGE>

Page
----

3.25. Affiliate Transactions.........................................37
3.26. Accounts, Power of Attorney....................................37
3.27. Receivables....................................................37
3.28. Officers and Directors.........................................38
3.29. Corporate Records..............................................39
3.30. Brokers or Finders.............................................39
3.31. Customers......................................................39
3.32. Investment Company.............................................39
3.33. Absence of Changes.............................................39
3.34. Accuracy and Completeness of Information.......................41

ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................41
4.1. Organization....................................................41
4.2. Authorization for Agreement.....................................41
4.3. Enforceability..................................................41
4.4. Litigation......................................................41
4.5. Registration Statement..........................................42
4.6. Brokers or Finders..............................................42

ARTICLE 5 - COVENANTS.......................................................42
5.1. Good Faith......................................................42
5.2. Approvals.......................................................42
5.3. Cooperation; Access to Books and Records........................42
5.4. Duty to Supplement..............................................44
5.5. Information Required For Purchase Financing Transactions........44
5.6. Performance of Conditions.......................................45
5.7. Conduct of Business.............................................45
5.8. Negative Covenants..............................................46
5.9. Exclusive Negotiation...........................................48
5.10. Public Announcements...........................................49
5.11. Amendment of Schedules.........................................49
5.12. Cooperation in Preparation of Registration Statement...........49
5.13. Examination of Final Financial Statement.......................50
5.13.A Audit..........................................................50
5.14. Lock-Up Agreements..............................................51
5.15. Compliance with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "Hart-Scott Act".............................51
5.16. Reorganization Status..........................................51
5.17. Leases.........................................................51

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<PAGE>

Page
----

5.18. Real Property Distribution.....................................52
5.19. Subsidiary.....................................................52
5.20. ...............................................................52

ARTICLE 6 - CONDITIONS PRECEDENT TO CLOSING.................................52
6.1. Conditions Precedent to the Purchaser's Obligations.............52
6.2. Conditions Precedent to Company's and Seller's Obligations......55

ARTICLE 7 - CLOSING.........................................................57

ARTICLE 8 - CONFIDENTIALITY AND COVENANT NOT TO COMPETE.....................58
8.1. Confidentiality.................................................58
8.2. Covenant Not To Compete.........................................59
8.3. Specific Enforcement; Extension of Period.......................59
8.4. Disclosure......................................................60
8.5. Interpretation..................................................60
8.6. Seller's Acknowledgment.........................................60

ARTICLE 9 - SURVIVAL........................................................61
9.1. Survival of Representations, Warranties, Covenants and
Agreements....................................................61
9.2. Intentionally Omitted...........................................61
9.3. Underwriter's Benefit...........................................61

ARTICLE 10 - INDEMNIFICATION................................................62
10.1. Seller's Indemnification.......................................62
10.1.A. No Indemnification of Projected Information......63
10.2. Purchaser's Indemnification....................................63
10.3. Payment; Procedure for Indemnification.........................63
10.4. Equitable Contribution Under the Securities Act................65
10.5. Exclusiveness of Indemnification...............................66
10.6. Limitations on Indemnification.................................66
10.7. Value of DocuNet Common Stock..................................67

ARTICLE 11 - TERMINATION AND REMEDIES.......................................67
11.1. Termination....................................................67
11.2. Effect of Termination..........................................68

ARTICLE 12 - POST-CLOSING COVENANTS.........................................68
12.1. Maintenance and Access to Records..............................68

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<PAGE>

12.2. Disclosure.....................................................69
12.3. Accounts Receivable............................................69

ARTICLE 13 - TRANSFER RESTRICTIONS..........................................69
13.1. Transfer Restrictions..........................................69

ARTICLE 14 - SECURITIES LAWS REPRESENTATIONS................................70
14.1. Compliance with Law............................................70
14.2. Economic Risk; Sophistication..................................70

ARTICLE 15 - REGISTRATION RIGHTS............................................71
15.1. Piggyback Registration Rights..................................71
15.2. Registration Procedures........................................71
15.3. Underwriting Agreement.........................................72
15.4. Availability of Rule 144.......................................72
15.5. Survival.......................................................72

ARTICLE 16 - MISCELLANEOUS..................................................72
16.1. Notices........................................................72
16.2. No Third Party Beneficiaries...................................73
16.3. Schedules......................................................73
16.4. Expenses.......................................................73
16.5. Further Assurances.............................................74
16.6. Entire Agreement; Amendment....................................74
16.7. Section and Paragraph Titles...................................74
16.8. Binding Effect.................................................74
16.9. Counterparts...................................................74
16.10. Severability..................................................74
16.11. Governing Law.................................................75
<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
as of the 9th day of September, 1997, by and among DOCUNET INC., a Pennsylvania
corporation ("Purchaser"), IMAGE AND INFORMATION SOLUTIONS, INC., a Louisiana
corporation (the "Company") and GARY D. BLACKWELDER (the "Seller"). The Seller
is the only stockholder of the Company.

WHEREAS, the respective Boards of Directors of Purchaser and
the Company (which together are hereinafter collectively referred to
as "Constituent Corporations") deem it advisable and in the best
interests of the Constituent Corporations and their respective
stockholders that the Company merge with and into Purchaser pursuant
to this Agreement and the applicable provisions of the laws of the
Commonwealth of Pennsylvania and the State of Louisiana;

WHEREAS, Purchaser is entering into other separate agreements
substantially similar to this Agreement (the "Other Agreements"),
with each of the other Founding Companies (as defined herein) and
their respective stockholders in order to acquire additional
document management and related services companies;

WHEREAS, this Agreement, the Other Agreements and the Initial
Public Offering of DocuNet Common Stock (as defined herein)
constitute the "DocuNet Plan of Reorganization;"

WHEREAS, in consideration of the agreements of the Potential
Founding Companies (as defined herein) pursuant to the Other
Agreements, the Board of Directors of the Company has approved this
Agreement as part of the DocuNet Plan of Reorganization in order to
transfer the capital stock of the Company to Purchaser;

WHEREAS, the parties hereto intend for the merger transaction
contemplated herein to qualify as a reorganization under Section
368(a)(1)(A) of the Code.

IN CONSIDERATION of the foregoing and the mutual promises, covenants
and agreements contained in this Agreement, the parties, intending to be legally
bound, hereby agree as follows:

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<PAGE>

ARTICLE 1
CERTAIN DEFINITIONS

As used in this Agreement, the following terms shall have the
meanings herein specified, unless the context otherwise requires:

1.1. Accounts shall have the meaning set forth in Section 3.26.

1.2. Adverse Claims shall mean, with respect to any asset, any
security interests, liens, encumbrances, pledges, trusts, charges, proxies,
conditional sales, title retention agreements, rights under any Contracts,
liabilities and any other burdens of any nature whatsoever attached to or
adversely affecting such asset.

1.3. Affiliate shall mean: (i) any Person that directly or
indirectly through one or more intermediaries controls, is controlled by or
under common control with the Person specified; (ii) any director, officer, or
Subsidiary of the Person specified; and (iii) the spouse, parents, children,
siblings, mothers-in-law, fathers-in law, sons-in-law, daughters-in-law,
bothers-in-law, and sisters-in-law of the Person specified. For purposes of this
definition and without limitation to the previous sentence, (x) "control" of a
Person means the power, direct or indirect, to direct or cause the direction of
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise, and (y) any Person owning more than ten
percent (10%) or more of the voting securities or similar interests of another
Person shall be deemed to be an Affiliate of that Person.

1.4. Accountants' CAWCA Report shall have the meaning set forth in
Section 2.8.

1.5. Affiliate Transaction shall have the meaning set forth in
Section 3.25.

1.6. Articles of Merger shall mean those Articles or Certificates of
Merger with respect to the Merger substantially in the forms attached as Annex I
hereto or with such other changes therein as may be required by applicable state
laws.

1.7. Balance Sheet Date shall mean July 31, 1997.

1.7A. Base Purchase Price shall have the meaning set forth in
Section 2.8.

1.8. Business shall mean the business of the Company or any of its
Subsidiaries as conducted as of the date hereof.

1.9. [Intentionally omitted.]

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1.10. Cash Purchase Price shall have the meaning set forth in
Section 2.9.

1.11. Claim Notice shall have the meaning set forth in Section
10.3(c).

1.12. Closing shall have the meaning set forth in Article 7.

1.13. [Intentionally omitted.]

1.14. Closing Date shall mean the date on which the Closing actually
takes place.

1.15. Closing Balance Sheet shall mean the balance sheet delivered
by the Company to the Purchaser as of the date immediately prior to the Closing
Date in accordance with Section 3.12(d).

1.16. Closing Debt Amount shall have the meaning set forth in
Section 2.8(b).

1.17. Code shall mean the Internal Revenue Code of 1986 and the
rules and regulations promulgated thereunder, as amended and supplemented from
time to time, or any successors thereto.

1.18. Common Stock shall mean the common stock, no par value per
share, of the Company.

1.19. Confidential Information shall mean (i) with respect to any
party to this Agreement or any Affiliate of such party or any Potential Founding
Company, all financial, technical, commercial or other information, including
but not limited to information, materials, documents, financial reports,
business plans and marketing data that relate to the business, strategies or
operations of the parties hereto or a Potential Founding Company, disclosed or
otherwise made available by such party, such Affiliate or Potential Founding
Company (the "Discloser") to another party, affiliate or Potential Founding
Company (the "Recipient") in connection with the transactions contemplated by
this Agreement and (ii) each of the terms, conditions and other provisions
contained in this Agreement and in the agreements or documents to be delivered
pursuant to this Agreement. Notwithstanding the preceding sentence, the
definition of Confidential Information shall not include any information that
(i) is in the public domain at the time of disclosure to the Recipient or
becomes part of the public domain after such disclosure through no fault of the
Recipient, (ii) is possessed in writing by the Recipient at the time of
disclosure to such Recipient, (iii) is contained in the Registration Statement
on Form S-1 to be filed by Purchaser in connection with the Initial Public
Offering or (iv) is disclosed to a party or Potential Founding Company by any
Person other than a party to this Agreement or a Potential Founding Company;
provided, that the party to whom such disclosure has been made does not have
actual knowledge that such Person is prohibited from disclosing such information
(either by reason of contractual, or legal or fiduciary duty or obligation). For
the purposes hereof, public domain shall not include disclosure of information
to a Potential Founding Company or

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(except as otherwise provided herein) to any other person in connection with the
transactions contemplated hereby.

1.20. Consents shall mean any consents, waivers, approvals,
authorizations, certifications or exemptions from any Person or under any
Contract or Requirement of Law, as applicable.

1.21. Constituent Corporations has the meaning set forth in the
second recital of this Agreement.

1.22. Contracts shall mean, with respect to any Person, any
indentures, indebtedness, contracts, leases, agreements, instruments, licenses,
undertakings and other commitments, whether written or oral, to which such
Person is, or such Person's properties are, bound.

1.23. Credit Acts shall mean (i) the Fair Debt Collection Practices
Act, 16 U.S.C. ss.1692, et. seq., the Fair Credit Reporting Act, 16 U.S.C.
ss.1681 et. seq., and any other provision of the Consumer Credit Protection Act,
in each case, together with the rules and regulations promulgated thereunder,
(ii) the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994, 15
U.S.C. ss.6101 et. seq., together with the rules and regulations promulgated
thereunder, (iii) the Telephone Consumer Protection Act of 1991, together with
the rules and regulations promulgated thereunder, and (iv) any Requirement of
Law of any jurisdiction relating to the subject matter covered by any of the
foregoing, all as amended and supplemented from time to time, or any successors
thereto.

1.23A. Debt shall have the meaning set forth in Section 2.8(b).

1.24. DocuNet Common Stock shall mean the common stock, no par value
per share, of Purchaser.

1.25. Effective Time of the Merger shall mean the time as of which
the Merger becomes effective, which shall, in any case, occur on the Closing
Date.

1.26. Employee Benefit Plan shall mean any deferred compensation,
pension, profit sharing, stock option, stock purchase, savings, group insurance
or retirement plan, and all vacation pay, severance pay, incentive compensation,
consulting, bonus and other employee benefit or fringe benefit plans or
arrangements maintained by the Company or any ERISA Affiliate (including,
without limitation, health insurance, life insurance and other benefit plans
maintained for retirees) within the previous six plan years or with respect to
which contributions are or were (within such six year period) made or required
to be made by the Company or any ERISA Affiliate or with respect to which the
Company has any liability.

1.27. Environmental Laws shall mean all Requirements of Law relating
to pollution or protection of the environment (including, without limitation,
ambient air, surface

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water, groundwater, land, or surface or subsurface strata) including, without
limitation, Requirements of Law relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment and Requirements of Law
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of any of the foregoing including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 et. seq. ("CERCLA"), the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6901 et. seq., and the rules and regulations
promulgated thereunder, all as amended and supplemented from time to time, and
together with any successors thereto. As used in this Agreement, the term
"hazardous substances" shall have the meaning assigned to that term in CERCLA,
and the rules and regulations promulgated thereunder, as amended and
supplemented from time to time, or any successors thereto.

1.28. Escrow Agent shall mean the individual or entity named as the
Escrow Agent in the Escrow Agreement.

1.29. Escrow Agreement shall mean the Escrow Agreement between the
Seller, the Purchaser and the Escrow Agent to hold the Escrow Amount pursuant to
the terms and conditions therein as referred to in Section 2.9, substantially in
the form attached hereto as Exhibit A.

1.30. Escrow Amount shall mean the amount of cash and/or the Value
of the DocuNet Common Stock deposited pursuant to the Escrow Agreement.

1.31. ERISA shall mean the Employment Retirement Income Security Act
of 1974 and the rules and regulations promulgated thereunder, as amended and
supplemented from time to time, or any successors thereto.

1.32. ERISA Affiliate shall mean any Person that is included with
the Company in a controlled group or affiliated service group under Sections
414(b), (c), (m) or (o) of the Code.

1.33. [Intentionally omitted.]

1.34. Financial Statements shall have the meaning set forth in
Section 3.12(a).

1.35. Founding Companies shall mean those Potential Founding
Companies that enter into definitive acquisition or merger agreements or asset
purchase agreements with the Purchaser in anticipation of a simultaneous
acquisition by Purchaser and Initial Public Offering.

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the aforementioned; and shall also mean that the accounting principles observed
in a current period are comparable in all material respects to those applied in
a preceding period unless specific exemption is noted in the financial
statements where a change of accounting method, principle or presentation has
occurred.

1.37. Governmental or Regulatory Authority shall mean any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the government of the United States or of any foreign
country, any state or any political subdivision of any such government (whether
state, provincial, county, city, municipal or otherwise).

1.38. Indemnifiable Losses shall mean all liabilities, obligations,
claims, demands, damages, penalties, settlements, causes of action, costs and
expenses. Indemnifiable Losses shall include, without limitation, the actual
costs paid in connection with an Indemnified Party's investigation and
evaluation of any claim or right asserted against such Indemnified Party and all
reasonable attorneys', experts' and accountants' fees, expenses and
disbursements and court costs, including, without limitation, those incurred in
connection with the Indemnified Party's enforcement of this Agreement and the
indemnification provisions of Article 10 of this Agreement.

1.39. Indemnified Party shall have the meaning set forth in Section
10.3(a).

1.40. Indemnifying Party shall have the meaning set forth in Section
10.3(a).

1.41. Indemnity Notice shall have the meaning set forth in Section
10.3(a).

1.42. Initial Public Offering shall mean the Purchaser's initial
public offering of the Purchaser's common stock registered under the Securities
Act.

1.43. Initial Public Offering Price shall mean the price to the
public of the DocuNet Common Stock sold in the Initial Public Offering.

1.44. Intellectual Property shall mean all patents, patent rights,
patent applications, registered trademarks and service marks, trademark rights,
trademark applications, service mark rights, service mark applications, trade
names, registered copyrights, copyright rights and all intellectual, industrial
or proprietary rights and trade secrets, technology and know-how relating to the
Business, in each case together with any amendments, modifications and
supplements thereto.

1.45. Interim Financial Statements shall have the meaning set forth
in Section 3.12(b).

1.46. Inventory shall mean all inventory incremental or relating to,
or used in connection with the Business including, without limitation, all
supplies, work in process and finished goods.

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1.47. IRS means the Internal Revenue Service or any successor
organization thereto.

1.48. Knowledge shall mean with respect to any representation,
warranty or statement of any party in this Agreement that is qualified by such
party's "knowledge," the actual knowledge of such party or of any officer or
director of such party, or (i) in the case of any such officer or director, that
knowledge that a reasonably prudent officer or director should have if such
person duly performed his or her duties as an officer or director of such party
or any of such party's Subsidiaries, or made reasonable and diligent inquiry and
exercised due diligence with respect thereto, of the matter to which such
qualification applies, and (ii) in the case of the Seller, that knowledge that
Seller should have if the Seller made reasonable and diligent inquiry and
exercised due diligence with respect thereto.

1.49. Leases shall mean the leases for Real Property with the
material terms set forth on Exhibit D attached hereto.

1.50. Legal Proceeding shall mean any action, suit, arbitration,
claim or investigation by or before any Governmental or Regulatory Authority,
any arbitration or alternative dispute resolution panel, or any other legal,
administrative or other proceeding.

1.51. Material Adverse Effect shall mean an effect which is or would
be materially adverse to the Business and Properties (including Intellectual
Property), the prospects for the Business, or the condition (financial or
otherwise) or results of operation, of the Company.

1.52. Merger means the merger of the Company with and into Purchaser
pursuant to this Agreement and the applicable provisions of the laws of the
Commonwealth of Pennsylvania and other applicable state laws.

1.53. [Intentionally omitted.]

1.54. [Intentionally omitted.]

1.55. Order shall mean any judgment, order, writ, decree, injunction
or other determination whatsoever of any Governmental or Regulatory Authority or
any other entity or body whose finding, ruling or holding is legally binding or
is enforceable as a matter of right (in any case, whether preliminary or final).

1.56. PBGC means the Pension Benefit Guaranty Corporation or any
successor organization thereto.

1.57. Permits shall mean all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises, rights, orders,
qualifications and similar rights

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<PAGE>

or approvals granted or issued by any Governmental or Regulatory Authority
relating to the Business of the Company or any of its Subsidiaries.

1.58. Person shall mean any natural person, corporation, general
partnership, limited partnership, limited liability company, proprietorship,
joint venture, trust, association, union, entity, or other form of business
organization or any Governmental or Regulatory Authority whatsoever.

1.59. Potential Founding Company shall mean any person or entity
entering into a letter of intent with the Purchaser, or its Affiliates, to
participate in the simultaneous acquisition by Purchaser and Initial Public
Offering.

1.60. Pricing shall mean the determination by Purchaser and the
Underwriters of the public offering price of the shares of DocuNet Common Stock
in the Initial Public Offering.

1.59A. Pricing Date shall mean the date on which the Pricing takes
place.

1.61. Property shall mean the Real Property, Intellectual Property
and Tangible Personal Property of the Company.

1.62. Purchaser Financing Transaction shall mean the Initial Public
Offering, any other offering by the Purchaser or any of its Subsidiaries of any
securities, whether debt or equity, or any other financing or credit arrangement
sought by the Purchaser or any of its Subsidiaries.

1.63. Purchaser's CAWCA Response Notice shall have the meaning set
forth in Section 2.8.

1.63A.Purchaser's CDA Response Notice shall have the meaning set
forth in Section 2.8(b).

1.64. Real Property shall mean all real property owned or leased to
the Company or any of its Subsidiaries.

1.65. Receivables shall have the meaning set forth in Section 3.27.

1.66. Regulatory Approvals shall mean all Consents from all
Governmental or Regulatory Authorities.

1.67. Related Companies shall have the meaning set forth in Section
8.2(a).

1.68. Requirement of Law shall mean, with respect to any Person,
such Person's articles or certificate of incorporation, by-laws or other
governing or constitutive documents, if any, and any provision of law, statute,
treaty, rule, regulation, ordinance or pronouncement

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<PAGE>

having the effect of law, or any Order, to which, in each case, such Person or
any of such Person's properties, operations, business or assets is bound or
subject.

1.69. Restricted Area shall have the meaning set forth in Section
8.2(a).

1.70. Restricted Business shall have the meaning set forth in
Section 8.2(a).

1.71. Restricted Period shall mean, with respect to the Seller, the
period commencing on the Closing Date and ending on the later of (i) the first
anniversary of the date on which the Seller's employment with the Purchaser, if
any, expires, is not renewed, or is otherwise terminated, and (ii) the fifth
anniversary of the Closing Date, as such period may be extended pursuant to
Section 8.3(b); provided that the reference to "fifth anniversary" in this
clause (ii) shall be automatically changed to "fourth anniversary" if the
average closing price of the DocuNet Common Stock during any 20-trading day
period within the 60-day period prior to or following the date on which such
Seller's employment with the Purchaser terminates is less than 50% of the
Initial Public Offering Price (as adjusted proportionately for any stock splits,
stock dividends or reverse stock splits).

1.72. Securities Act shall mean the Securities Act of 1933 and the
rules and regulations promulgated thereunder, as amended and supplemented from
time to time, or any successors thereto.

1.73. Sellers' CDA Objection shall have the meaning set forth in
Section 2.8(b).

1.74. [Intentionally omitted].

1.75. Shares shall mean shares of Common Stock of the Company.

1.76. Stock Purchase Price shall have the meaning set forth in
Section 2.9.

1.77. Surviving Corporation shall mean Purchaser as the surviving
party in the Merger.

1.78. Subsidiary shall mean, with respect to any Person, any Person
of which securities or other ownership interests having ordinary voting power to
select a majority of the board of directors or other persons serving similar
functions are at the time directly or indirectly owned by such Person.

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1.79. Tangible Personal Property shall have the meaning set forth in
Section 3.16.

1.80. Taxes shall mean (i) any tax, charge, fee, levy or other
assessment including, without limitation, any net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, payroll,
employment, social security, unemployment, excise, estimated, stamp, occupancy,
occupation, property or other similar taxes, including any interest or penalties
thereon, and additions to tax or additional amounts imposed by any federal,
state, local or foreign governmental authority, domestic or foreign (a "Taxing
Authority") or (ii) any liability for the payment of any taxes, interest,
penalty, addition to tax or like additional amount resulting from the
application of Treasury Regulation ss.1.1502-6 or comparable Requirement of Law.

1.81. Tax Returns shall mean any declaration, return, report,
estimate, information return, schedule, statements or other document filed or
required to be filed with, or when none is required to be filed with a Taxing
Authority, the statement or other document issued by, a Taxing Authority since
October 31, 1994, together with any amendments thereto.

1.82. Trade Accounts Receivable shall mean, as of the applicable
date, the Company's trade accounts receivable associated with the Business.

1.83. Underwriter shall have the meaning set forth for that term in
Section 2(a)(11) of the Securities Act.

1.84. Unliquidated Indemnity Notice shall have the meaning set forth
in Section 10.3(b).

1.85. [Intentionally omitted.]

1.84A. Value shall have the meaning set forth in Section 2.8.

ARTICLE 2
THE MERGER

2.1. Delivery and Filing of Articles of Merger. The Constituent
Corporations will cause the Articles of Merger to be signed, verified and filed
with the Secretary of State of the Commonwealth of Pennsylvania and the
Secretary of State of the State of Louisiana and stamped receipt copies of each
such filing to be delivered to Purchaser on or before the Closing Date.

2.2. Effective Time of the Merger. At the Effective Time of the Merger,
the Company shall be merged with and into Purchaser in accordance with the
Articles of Merger, the separate existence of the Company shall cease, Purchaser
shall be the surviving party in the Merger and Purchaser is sometimes
hereinafter referred to as the Surviving Corporation. The Merger will be
effected in a single transaction.

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2.3. Certificate of Incorporation, By-laws and Board of Directors of
Surviving Corporation. At the Effective Time of the Merger:

(i) the Certificate of Incorporation of Purchaser then in effect
shall be the Certificate of Incorporation of the Surviving Corporation until
changed as provided by law;

(ii) the By-laws of Purchaser then in effect shall become the
By-laws of the Surviving Corporation; and subsequent to the Effective Time of
the Merger, such By-laws shall be the By-laws of the Surviving Corporation until
they shall thereafter be duly amended;

(iii) the Board of Directors of the Surviving Corporation shall
consist of the then existing Board of Directors of Purchaser at the Effective
Time of the Merger. The Board of Directors of the Surviving Corporation shall
hold office subject to the provisions of the laws of the Commonwealth of
Pennsylvania and of the Certificate of Incorporation and By-laws of the
Surviving Corporation; and

(iv) the officers of the Surviving Corporation shall be the then
existing officers of Purchaser at the Effective Time of the Merger, each of such
officers to serve, subject to the provisions of the Certificate of Incorporation
and By-laws of the Surviving Corporation, until his or her successor is duly
elected and qualified.

2.4. Certain Information with Respect to the Capital Stock of the Company
and Purchaser. The respective designations and numbers of outstanding shares and
voting rights of each class of outstanding capital stock of the Company and
Purchaser as of the date of this Agreement are as follows:

(i) as of the date of this Agreement, the authorized and outstanding
capital stock of the Company is as set forth on Schedule 2.4 hereto; and

(ii) immediately prior to the Closing Date, the authorized capital
stock of Purchaser will consist of 40 million shares of DocuNet Common Stock, of
which the number of issued and outstanding shares will be set forth in the
Registration Statement, and 10 million shares of preferred stock, $.01 par
value, of which no shares will be issued and outstanding.

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<PAGE>

and all debts due on whatever account, including subscriptions to shares, and
all taxes, including those due and owing and those accrued, and all other choses
in action, and all and every other interest of or belonging to or due to the
Company and Purchaser shall be taken and deemed to be transferred to, and vested
in, the Surviving Corporation without further act or deed; and all property,
rights and privileges, powers and franchises and all and every other interest
shall be thereafter as effectually the property of the Surviving Corporation as
they were of the Company and Purchaser; and the title to any real estate, or
interest therein, whether by deed or otherwise, under the laws of the state of
incorporation vested in the Company and Purchaser, shall not revert or be in any
way impaired by reason of the Merger. Except as otherwise provided herein, the
Surviving Corporation shall thenceforth be responsible and liable for all the
liabilities and obligations of the Company and Purchaser and any claim existing,
or action or proceeding pending, by or against the Company or Purchaser may be
prosecuted as if the Merger had not taken place, or the Surviving Corporation
may be substituted in their place. Neither the rights of creditors nor any liens
upon the property of the Company or Purchaser shall be impaired by the Merger,
and all debts, liabilities and duties of the Company and Purchaser shall attach
to the Surviving Corporation, and may be enforced against the Surviving
Corporation to the same extent as if said debts, liabilities and duties had been
incurred or contracted by such Surviving Corporation.

2.6. Manner of Conversion. The manner of converting the shares of
outstanding capital stock of the Company ("Company Stock") into shares of
DocuNet Common Stock shall be as follows:

As of the Effective Time of the Merger:

(i) all of the shares of Company Stock issued and outstanding
immediately prior to the Effective Time of the Merger, by virtue of the Merger
and without any action on the part of the holder thereof, automatically shall be
deemed to represent (1) the right to receive the number of shares of DocuNet
Common Stock provided in Section 2.9 hereof with respect to such holder and (2)
the right to receive the amount of cash provided in Section 2.9 hereof with
respect to such holder (collectively, the "Merger Consideration"); and

(ii) all shares of Company Stock that are held by the Company as
treasury stock shall be canceled and retired and no shares of DocuNet Common
Stock or other consideration shall be delivered or paid in exchange therefor.

2.7. Delivery of Shares. The Seller shall deliver to Purchaser at the
Closing the certificates representing all of the issued and outstanding shares
of the Company Stock, duly

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<PAGE>

endorsed in blank by the Seller, or accompanied by blank stock powers, and with
all necessary transfer tax and other revenue stamps, acquired at the Seller's
expense, affixed and canceled. The Seller agrees promptly to cure any
deficiencies with respect to the endorsement of the stock certificates or other
documents of conveyance with respect to such Company Stock or with respect to
the stock powers accompanying any Company Stock.

2.8. Merger Consideration. As full consideration for the Merger and the
Common Stock, the Purchaser shall pay and deliver or cause to be paid and
delivered to the Seller, in the manner set forth in this Section 2, the Merger
Consideration consisting of the Base Purchase Price (as hereinafter defined),
less the Debt Adjustment (as hereinafter defined), the Working Capital
Adjustment (as hereinafter defined), the Cash Adjustment (as hereinafter
defined), and, subject to Section 2.8(f) below, the Net Book Value of Assets and
Liabilities Adjustment (as hereinafter defined), on the terms and conditions set
forth below:

(a) Base Purchase Price. Subject to Section 2.9(c), the Base
Purchase Price shall be Five Million Four Hundred Thousand dollars
($5,400,000), subject to adjustments as set forth herein (the "Base
Purchase Price").

(b) Debt Adjustment. The Base Purchase Price shall be reduced, at
Closing, by $1.00 for each $1.00 of Debt reflected on the Company's
Closing Balance Sheet (the "Closing Debt Amount"). The Company's Debt
shall mean all of the Company's liabilities, including contingent
liabilities, except the loans listed on Schedule 2.8(b) attached hereto
and Adjusted Current Liabilities, in accordance with GAAP. The Company's
Adjusted Current Liabilities shall mean all of the Company's liabilities
which would be classified as current liabilities in accordance with GAAP,
except current amounts of principal, interest or penalties due and owing:
(i) under promissory notes or lines of credit to lending institutions;
(ii) to an employee or an Affiliate of the Company, or the Seller,
provided, however, that Adjusted Current Liabilities shall include accrued
employee bonuses payable and accrued matching contributions payable under
the Company's 401(k) plan, (iii) to a lessor under a capital lease; or
(iv) on account of Taxes (except for income taxes for fiscal year 1997) or
earned insurance premiums. Promptly following the Closing and in order to
verify the accuracy of the adjustment made at Closing, the Purchaser
agrees to cause the internal accounting staff and the independent
certified public accountant of the Purchaser (the "Accountants") to verify
the Closing Debt Amount. The Accountants shall issue a report as to their
determination of the Closing Debt Amount (the "Accountants' CDA Report")
promptly after their determination of such amount and the Purchaser shall
deliver the Accountants' CDA Report to the Seller not later than sixty
(60) days following the Closing Date. The determination of the Closing
Debt Amount by the Accountants shall be conclusive and binding upon the
parties hereto unless the Seller shall object to the Accountants' CDA
Report within fifteen (15) days following their receipt of the
Accountants' CDA Report. The Seller's objection, if any, to the
Accountants' CDA Report (the "Seller's CDA Objection") shall set forth in
reasonable detail the Seller's objection(s) to the Accountants' CDA Report
and the Seller's calculation of the Closing Debt Amount. Within ten (10)
days after receipt of the Seller's CDA Objection, the

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Purchaser will notify the Seller whether it accepts or disputes the
Seller's adjustments, if any, which notification shall set forth in
reasonable detail the adjustments made by the Seller which the Purchaser
continues to dispute (the "Purchaser's CDA Response Notice"). If the
Seller does not object to the Accountants' CDA Report, or if the Purchaser
agrees to accept the Seller's adjustments to the Accountants' CDA Report,
then the adjustment based on the then final Closing Debt Amount (the
"Final Debt Amount"), if any, shall be paid by the Seller to the Purchaser
in immediately available funds within five (5) business days of such
acceptance. If such amount is not received by Purchaser within such time
period, such amount shall be paid from the Escrow Amount pursuant to the
Escrow Agreement and Seller shall be obligated to replenish the Escrow
Amount by depositing with the Escrow Agent upon such payment either cash
in a like amount or a number of shares of DocuNet Common Stock having an
aggregate Value (as defined below) equal to such amount. The term "Value"
in respect of a share of DocuNet Common Stock shall mean the lower of the
Initial Public Offering Price and the average closing price of the DocuNet
Common Stock during the 20 trading-day period ending immediately prior to
the applicable payment date. If the Seller objects to the Accountants' CDA
Report as set forth above and the Purchaser does not accept the Seller's
proposed adjustments, then an independent accounting firm mutually
satisfactory to the Seller and the Purchaser shall be engaged to determine
the amount of the Closing Debt Amount and the Final Debt Amount, based
upon the calculations of the independent accountants, and any adjustments
of Base Purchase Price based on the amount determined as provided above
shall be paid to the Purchaser in immediately available funds within five
(5) business days of the determination of such amount by such accounting
firm. If such amount is not received by Purchaser within such time period,
such amount shall be paid from the Escrow Amount pursuant to the Escrow
Agreement and Seller shall be obligated to replenish the Escrow Amount by
depositing cash in a like amount with the Escrow Agent upon such payment
either cash in a like amount or a number of shares of DocuNet Common Stock
having an aggregate Value equal to such amount. The parties hereto agree
to cooperate fully with such independent accountants at their own cost and
expense, including, but not limited to, providing such independent
accountants with access to, and copies of, all books and records that they
shall reasonably request. The Purchaser and the Seller shall each bear
one-half of all of the costs and expenses of such independent accounting
firm, and if the parties hereto are unable to agree upon an independent
accounting firm, the Seller and the Purchaser will request that one be
designated by the President of the Philadelphia office of the American
Arbitration Association.

(c) Working Capital Adjustment. The Base Purchase Price shall be
further reduced, at Closing, by $1.00 for each $1.00 that the Company's
Adjusted Working Capital (as hereinafter defined) is less than $1,000,000
on the Closing Date (the "Closing Adjusted Working Capital Amount"). The
Company's Adjusted Working Capital shall mean the Company's current
assets, less: (i) the portion of trade receivables that are more than 100
days past the original invoice date; (ii) an aggregate amount of Inventory
exceeding $475,000; (iii) promissory notes or other amounts due from
employees or Affiliates of the Company; and (iv) the Adjusted Current
Liabilities, calculated pursuant

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<PAGE>

to GAAP. Promptly following the Closing and in order to verify the
accuracy of the adjustment made at the Closing, the Purchaser agrees to
cause the Accountants to verify the amount of the Closing Adjusted Working
Capital Amount. The Accountants shall issue a report as to their
determination of the Closing Adjusted Working Capital Amount (the
"Accountants' CAWCA Report") promptly after their determination of such
amount and the Purchaser shall deliver the Accountants' CAWCA Report to
the Seller no later than sixty (60) days following the Closing Date. The
determination of the Closing Adjusted Working Capital Amount by the
Accountants shall be conclusive and binding upon the parties hereto unless
the Seller shall object to the Accountants' CAWCA Report within fifteen
(15) days following their receipt of the Accountants' CAWCA Report. The
Seller's objection, if any, to the Accountants' CAWCA Report (the
"Seller's CAWCA Objection") shall set forth in reasonable detail the
Seller's objection(s) to the Accountants' CAWCA Report and the Seller's
calculation of the Closing Adjusted Working Capital Amount. Within ten
(10) days after receipt of the Seller's CAWCA Objection, the Purchaser
will notify the Seller whether it accepts or disputes the Seller's
adjustments, if any, which notification shall set forth in reasonable
detail the adjustments made by the Seller which the Purchaser continues to
dispute (the "Purchaser's CAWCA Response Notice"). If the Seller does not
object to the Accountants' CAWCA Report, or if the Purchaser agrees to
accept the Seller's adjustments to the Accountants' CAWCA Report, then the
adjustment based on the then final Closing Adjusted Working Capital Amount
(the "Final Adjusted Working Capital Amount"), if any, shall be paid by
Seller to the Purchaser in immediately available funds within five (5)
business days of such acceptance. If such amount is not received by
Purchaser within such time period, such amount shall be paid from the
Escrow Amount pursuant to the Escrow Agreement and Seller shall be
obligated to replenish the Escrow Amount by depositing with the Escrow
Agent upon such payment either cash in a like amount or a number of shares
of DocuNet Common Stock having an aggregate Value equal to such amount. If
the Seller objects to the Accountants' CAWCA Report as set forth above and
the Purchaser does not accept the Seller's proposed adjustments, then an
independent accounting firm mutually satisfactory to the Seller and the
Purchaser shall be engaged to determine the amount of the Closing Adjusted
Working Capital Amount and the Final Adjusted Working Capital Amount,
based upon the calculations of the independent accountants, and any
adjustments of Base Purchase Price based on the amount determined as
provided above shall be paid to the Purchaser in immediately available
funds within five (5) business days of the determination of such amount by
such accounting firm. If such amount is not received by Purchaser within
such time period, such amount shall be paid from the Escrow Amount
pursuant to the Escrow Agreement and Seller shall be obligated to
replenish the Escrow Amount by depositing with the Escrow Agent upon such
payment either cash in a like amount or a number of shares of DocuNet
Common Stock having an aggregate Value equal to such amount. The parties
hereto agree to cooperate fully with such independent accountants at their
own cost and expense, including, but not limited to, providing such
independent accountants with access to, and copies of, all books and
records that they shall reasonably request. The Purchaser and the Seller
shall each bear one-half of all of the costs and expenses of such
independent accounting firm, and if the

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<PAGE>

parties hereto are unable to agree upon an independent accounting firm,
the Seller and Purchaser will request that one be designated by the
President of the Philadelphia office of the American Arbitration
Association.

(d) Net Book Value of Assets and Liabilities Adjustment. The Base
Purchase Price shall be further reduced, at Closing, by $1.00 for each
$1.00 that the Net Book Value of the Company's Acquired Assets and
Liabilities, as reflected on the Closing Balance Sheet, is less than
$1,275,000 on the Closing Date (the "Closing Net Book Value Amount"). The
Net Book Value of the Company's Acquired Assets and Liabilities shall mean
the tangible Assets of the Company, less Adjusted Current Liabilities,
calculated pursuant to GAAP. Promptly following the Closing, and in order
to verify the accuracy of the adjustment made at the Closing, the
Purchaser agrees to cause the Accountants to verify the amount of the
Closing Net Book Value Amount. The Accountants shall issue a report as to
their determination of the Closing Net Book Value Amount (the
"Accountants' CNBVA Report") promptly after their determination of such
amount and the Purchaser shall deliver the Accountants' CNBVA Report to
the Seller not later than sixty (60) days following the Closing Date. The
determination of the Closing Net Book Value Amount by the Accountants
shall be conclusive and binding upon the parties hereto unless the Seller
shall object to the Accountants' CNBVA Report within fifteen (15) days
following their receipt of the Accountants' CNBVA Report. The Seller's
objection, if any, to the Accountants' CNBVA Report (the "Seller's CNBVA
Objection") shall set forth in reasonable detail the Seller's objection(s)
to the Accountants' CNBVA Report and the Seller's calculation of the
Closing Net Book Value Amount. Within ten (10) days after receipt of the
Seller's CNBVA Objection, the Purchaser will notify the Seller whether it
accepts or disputes the Seller's adjustments, if any, which notification
shall set forth in reasonable detail the adjustments made by the Seller
which the Purchaser continues to dispute (the "Purchaser's CNBVA Response
Notice"). If the Seller does not object to the Accountants' CNBVA Report,
or if the Purchaser agrees to accept the Seller's adjustments to the
Accountants' CNBVA Report, then the adjustment based on the then final
Closing Net Book Value Amount (the "Final Net Book Value Amount"), if any,
shall be paid by Seller to the Purchaser in immediately available funds
within five (5) business days of such acceptance. If such amount is not
received by Purchaser within such time period, such amount shall be paid
from the Escrow Amount pursuant to the Escrow Agreement and Seller shall
be obligated to replenish the Escrow Amount by depositing with the Escrow
Agent upon such payment either cash in a like amount or a number of shares
of DocuNet Common Stock having an aggregate Value equal to such amount. If
the Seller objects to the Accountants' CNBVA Report as set forth above and
the Purchaser does not accept the Seller's proposed adjustments, then an
independent accounting firm mutually satisfactory to the Seller and the
Purchaser shall be engaged to determine the amount of the Closing Net Book
Value Amount and the Final Net Book Value Amount, based upon the
calculations of the independent accountants, and any adjustments of Base
Purchase Price based on the amount determined as provided above shall be
paid to the Purchaser in immediately available funds within five (5)
business days of the determination of such amount by such accounting firm.
If such amount is not

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<PAGE>

received by Purchaser within such time period, such amount shall be paid
from the Escrow Amount pursuant to the Escrow Agreement and Seller shall
be obligated to replenish the Escrow Amount by depositing with the Escrow
Agent upon such payment either cash in a like amount or a number of shares
of DocuNet Common Stock having an aggregate Value equal to such amount.
The parties hereto agree to cooperate fully with such independent
accountants at their own cost and expense, including, but not limited to,
providing such independent accountants with access to, and copies of, all
books and records that they shall reasonably request. The Purchaser and
the Seller shall each bear one-half of all of the costs and expenses of
such independent accounting firm, and if the parties hereto are unable to
agree upon an independent accounting firm, the Seller and Purchaser will
request that one be designated by the President of the Philadelphia office
of the American Arbitration Association.

(e) Multiple Adjustments. Notwithstanding anything herein to the
contrary, if a payment is due from Seller to Purchaser on account of any
two or more of the Working Capital Adjustment, and the Net Book Value of
Assets and Liabilities Adjustment, Seller shall only be obligated to pay
the greatest of the applicable adjustment amounts to Purchaser.

(a) Stock Purchase Price. Subject to Section 2.9(c), a number of
shares of DocuNet Common Stock equal to (i) $3.4 million ("Stock Purchase
Price"), divided by (ii) the Initial Public Offering Price, shall be
issued at Closing to Seller.

(b) Cash Purchase Price. In addition, an aggregate amount equal to
the Base Purchase Price less (i) the Stock Purchase Price and (ii) the
reductions, if any, to be made at Closing pursuant to Sections 2.8(b),
2.8(c), 2.8(d), and 2.8(e)) shall be payable at the Closing in cash to the
Seller ("Cash Purchase Price"). The specific amount of the Cash Purchase
Price shall be payable to the Seller by a wire transfer to accounts to be
designated by the Seller on Schedule 2.9(b).

(c) Delivery into Escrow. Notwithstanding the foregoing, a number of
shares of DocuNet Common Stock equal to (i) $270,000 divided by (ii) the
Initial Offering Price shall be delivered at Closing to the Escrow Agent
pursuant to the Escrow Agreement (the "Escrow Amount"). The Escrow Amount
shall be available to fund (but shall not be the sole source of funding)
any obligations of Seller under this Agreement pursuant to the terms of
the Escrow Agreement; provided, however, if the amount of cash plus the
Value of the shares of DocuNet Common Stock (valued at the Initial Public
Offering Price) in the Escrow Amount falls below $270,000 (the "Threshold
Value") due to payment from the Escrow Amount pursuant to Section 2.8
hereof, the Seller shall contribute additional cash or shares of DocuNet
Common Stock to the Escrow Amount in an amount necessary

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<PAGE>

so that the amount of cash plus the Value of the shares of Common Stock
(valued at the Initial Public Offering Price) in the Escrow Amount would
equal the Threshold Value.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER

Except as set forth on the Disclosure Schedule delivered by the
Company and Seller to the Purchaser on the date hereof (the "Disclosure
Schedule"), the section numbers of which are numbered to correspond to the
section numbers of this Agreement to which they refer, the Company and the
Seller hereby, jointly and severally, represent and warrant to the Purchaser as
follows:

3.1. Organization; Qualification; Good Standing.

(a) The Company and each of its Subsidiaries (i) are
corporations duly incorporated, validly existing and in good standing under the
laws of the state of their respective incorporation or organization, (ii) have
the power and authority to own and operate their respective properties and
assets and to transact their respective Businesses and (iii) are duly qualified
and authorized to do business and are in good standing in all jurisdictions
where the failure to be duly qualified, authorized and in good standing would
have a Material Adverse Effect upon their respective Businesses, prospects,
operations, results of operations, assets, liabilities or condition (financial
or otherwise). Listed in the Disclosure Schedule is a true and complete list of
all jurisdictions in which the Company or any of its Subsidiaries is qualified
to do business.

(b) There is no Legal Proceeding or Order pending or, to the
knowledge of the Company or the Seller, threatened against or affecting the
Company or any of its Subsidiaries revoking, limiting or curtailing, or seeking
to revoke, limit or curtail the Company's or any of its Subsidiaries' power,
authority or qualification to own, lease or operate their respective properties
or assets or to transact their respective Businesses.

(c) True and complete copies of the Company's and each of its
Subsidiaries' articles or certificate of incorporation, bylaws and other
constitutive documents are attached as part of the Disclosure Schedule. Except
as set forth in the Disclosure Schedule, the minute books of the Company and
each of its Subsidiaries, as heretofore made available to the Purchaser, are
correct and complete in all material respects.

3.2. Authorization for Agreement.

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<PAGE>

contravene, violate or constitute, with or without the passage of time or the
giving of notice or both, a breach or default under, any Requirement of Law
applicable to the Company or any of its properties or any Contract to which the
Company or any of its properties is bound or subject or (C) result in the
creation of any Adverse Claim on any of the Shares.

(b) The Seller. The Seller's execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by the Seller (i) are within the powers and authority of the
Seller and (ii) do not (A) require any action by or in respect of, or filing
with, any Governmental or Regulatory Authority, (B) contravene, violate or
constitute, with or without the passage of time or the giving of notice or both,
a breach or default under, any Requirement of Law applicable any of them or any
of their respective properties or any Contract to which any of them or any of
their respective properties is bound or subject or (C) result in the creation of
any Adverse Claim on any of the Shares.

3.3. Capitalization; Subsidiaries and Affiliates.

(a) The Company. The authorized capital stock of the Company
consists of 25,000 shares of a single class of common stock, having no par value
per share, of which 100 are issued and outstanding. All of the Shares are owned
by Seller. The Company does not have any other authorized class or classes of
securities of any kind, whether debt or equity. All of the Shares are validly
issued, fully paid and non-assessable and have not been issued in violation of
applicable securities laws or of any preemptive rights or other rights to
subscribe for, purchase or otherwise acquire securities. Except for 200 shares
held in treasury, the Company does not hold any shares of its capital stock in
its treasury or otherwise, and no shares of the Company's capital stock are
reserved by the Company for issuance.

(b) Subsidiaries. Attached as part of the Disclosure Schedule
is a complete and accurate list of all the Company's Subsidiaries, showing the
percentage of Company's ownership or control of, as well as the identity of any
other owners and the percentage of each such other owner's ownership of, the
outstanding capital stock of, or other ownership interest in, each Subsidiary.
The authorized capital stock of each Subsidiary currently consists of a single
class of common stock, the number of authorized shares and par value of which
are set forth opposite each such Subsidiary's name in the Disclosure Schedule.
No Subsidiary has any other authorized class or classes of securities of any
kind, whether debt or equity. All of the outstanding capital stock of each
Subsidiary has been validly issued, is fully paid and nonassessable is free of
any Adverse Claims, and has not been issued in violation of applicable
securities laws or of any preemptive rights or other rights to subscribe for,
purchase or otherwise acquire securities. No Subsidiary holds any shares of its
capital stock in its treasury or otherwise, and no shares of any Subsidiary's
capital stock are reserved by such Subsidiary for issuance. Except as set forth
in the Disclosure Schedule, neither the Company nor any Subsidiary owns or
controls, directly or indirectly, any debt, equity or other financial or
ownership interest in any other Person.

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<PAGE>

(c) Affiliates. Included in the Disclosure Schedule is a
complete and accurate list of all Persons (other than the Seller or any of the
Persons described in the first sentence of Section 1.3, subpart (iii)) that are
Affiliates of the Company, detailing the nature of the relationship between the
Company and each such Person that causes such Person to be an Affiliate of the
Company.

(d) No Acquisitions. Since the Balance Sheet Date, neither the
Company nor any of its Subsidiaries has acquired, or agreed to acquire, whether
by merger or consolidation, by purchase of equity interests or assets, or
otherwise, any business or any other Person, or otherwise acquired, or agreed to
acquire, any assets that are material, either individually or in the aggregate,
to the Company and its Subsidiaries taken as a whole.

(e) No Other Securities. There are (i) no outstanding
subscriptions, warrants, options, rights, agreements, convertible securities or
other commitments or instruments pursuant to which the Company or any of its
Subsidiaries is or may become obligated to issue, sell, repurchase or redeem any
shares of capital stock or other securities, whether debt or equity, of the
Company or any of its Subsidiaries and (ii) no preemptive, contractual or
similar rights to purchase or otherwise acquire shares of capital stock of the
Company or of any of its Subsidiaries pursuant to any Requirement of Law
applicable to the Company or any such Subsidiary, as applicable, or any Contract
to which the Company or any such Subsidiary is a party or may otherwise be bound
or subject.

3.4. Enforceability. This Agreement has been duly executed and
delivered by the Company and the Seller and constitutes the legal, valid and
binding obligation of the Company and the Seller, enforceable against each of
them in accordance with its terms.

3.5. Matters Affecting Shares; Title to Shares. Each Seller has full
legal and beneficial title to his Shares and has full power, right and authority
to sell and deliver such Shares in accordance with this Agreement, free of any
Adverse Claims. There are no existing agreements, subscriptions, options,
warrants, calls, commitments, conversion rights or other rights of any character
to purchase or otherwise acquire from the Seller at any time, or upon the
happening of any event, any of the Shares.

3.6. Predecessor Status; etc. Included in the Disclosure Schedule is
a listing of all names of all predecessor companies for the past five years of
the Company, including the names of any entities from whom the Company
previously acquired material assets outside the ordinary course of business.
Except as disclosed in the Disclosure Schedule, the Company has not been a
subsidiary or division of another corporation or a part of an acquisition which
was later rescinded.

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<PAGE>

3.8. Legal Proceedings.

(a) The Seller. There is no Legal Proceeding or Order pending
against, or to the knowledge of the Seller, threatened against or affecting, the
Seller or any of his properties or otherwise, that could adversely affect or
restrict the ability of the Seller to consummate fully the transactions
contemplated by this Agreement or that in any manner could draw into question
the validity of this Agreement. The Seller does not have knowledge of any fact,
event, condition or circumstance that could reasonably be expected to give rise
to the commencement of any Legal Proceeding or the entering of any Order against
the Seller that could adversely affect or restrict the ability of the Seller to
consummate fully the transactions contemplated by this Agreement or that in any
manner could draw into question the validity of this Agreement.

(b) The Company and Subsidiaries. The Disclosure Schedule
completely and accurately lists and fully describes all Orders outstanding
against the Company or any of its Subsidiaries. In addition, the Disclosure
Schedule completely and accurately lists and fully describes each pending, and,
to the Company's or the Seller's knowledge, each threatened, Legal Proceeding
that has been commenced, brought or asserted by (i) the Company or any of its
Subsidiaries, as the case may be, against any Person or (ii) any Person against
the Company or any of its Subsidiaries, as the case may be. Neither the Company
nor the Seller has knowledge of the existence of any fact, event, condition or
circumstance that could reasonably be expected to give rise to the commencement
of any Legal Proceeding or the entering of any Order against either the Company
or any of its Subsidiaries by any Person.

3.9. Compliance with Laws. Each of the Company and its Subsidiaries
is operating in compliance with all Requirements of Law applicable to it or any
of its respective properties or to which the Company or any of its Subsidiaries
or any of their respective properties is bound or subject including, without
limitation, the Credit Acts. Except as set forth in the Disclosure Schedule,
since January 1, 1992, neither the Company or any of its Subsidiaries nor the
Seller has received any notice from any Person concerning alleged violations of,
or the occurrence of any events or conditions resulting in alleged noncompliance
with, any Requirement of Law applicable to the Company or any of its
Subsidiaries or any of their respective properties or to which the Company or
any of its Subsidiaries or any of their respective properties is bound or
subject including, without limitation, any of the Credit Acts. None of the
Company, the Seller, any of their respective Affiliates (other than a Person who
is an Affiliate solely by virtue of clause (iii) of the definition thereof), or
any of such Affiliates' respective Affiliates (other than a Person who is an
Affiliate solely by virtue of clause (iii) of the definition thereof) has made
any illegal kickback, bribe, illegal gift or illegal political contribution to
or on behalf of any customer, or to any officer, director, employee of any
customer, or to any other Person.

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<PAGE>

3.10. Labor Matters.

(a) Included in the Disclosure Schedule is a complete and
accurate list of all consulting or similar Contracts to which the Company or any
of its Subsidiaries is a party or may otherwise be bound or subject, and the
compensation to which each consultant is entitled under its respective Contract.
The Company and the Seller have delivered or caused to be delivered to the
Purchaser true and complete copies of all such Contracts, each of which is
included in the Disclosure Schedule. Since the Balance Sheet Date, neither the
Company nor any of its Subsidiaries has increased the compensation payable to
its consultants or the rate of compensation payable to its consultants. To the
knowledge of the Company and the Seller, no individuals retained by the Company
or any of its Subsidiaries as an independent contractor or consultant would be
reclassified by the IRS, the U.S. Department of Labor or any other Governmental
or Regulatory Authority as an employee of the Company or of any of its
Subsidiaries for any purpose whatsoever.

(b) Included in the Disclosure Schedule is a complete and
accurate list of the name of each employee of the Company and of each of its
Subsidiaries, together with such employee's position or function, the rate of
hourly, monthly or annual compensation (as the case may be) paid or to be paid
to such employee in 1995, 1996 and, to the extent known, 1997, any accrued sick
leave or pay or vacation and any incentive or bonus arrangement with respect to
any such employee. Except as is set forth in the Disclosure Schedule, since the
Balance Sheet Date, neither the Company nor any of its Subsidiaries has
increased the compensation payable to its employees or the rate of compensation
payable to its employees. The Disclosure Schedule also identifies those
employees with whom the Company or any of its Subsidiaries has entered into an
employment Contract or a Contract obligating the Company or any such Subsidiary
to pay severance or similar payments to any employee. The Company and the Seller
have delivered or caused to be delivered to the Purchaser true and complete
copies of such Contracts, all of which are attached to the Disclosure Schedule.

(c) To the knowledge of the Company or the Seller, there are
no threatened or contemplated attempts to organize for collective bargaining
purposes any of the employees of the Company or any of its Subsidiaries. Neither
the Company nor any of its Subsidiaries is a party to or bound by any collective
bargaining agreement and no collective bargaining agreement covering any of such
employees is currently being negotiated.

(d) There is no, and since January 1, 1992 there has been no,
work stoppage, strike, slowdown, picketing or other labor disturbance or
controversy by or with respect to any of the employees of the Company or any of
its Subsidiaries. In addition, no dispute with or claim against the Company
relating to any labor or employment matter including, without limitation
employment practices, discrimination, terms and conditions of employment, or
wages and hours, is outstanding or, to either of the Company or the Seller's
knowledge, is threatened. There is no claim or petition pending before, and at
no time since January 1, 1992 has there been, any claim or petition made to, any
Governmental or Regulatory Authority including, without limitation, the National
Labor Relations Board or the Equal Employment

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<PAGE>

Opportunity Commission against the Company or any of its Subsidiaries with
respect to any labor or employment matter.

3.11. Employee Benefit Plans.

(a) The Disclosure Schedule sets forth a complete and accurate
list and description of each Employee Benefit Plan. With respect to each
Employee Benefit Plan, the Company and the Seller have delivered or caused to be
delivered to the Purchaser true and complete copies of (i) the plan document,
trust agreement and any other document governing such Employee Benefit Plan,
(ii) the summary plan description, (iii) all Form 5500 annual reports and
attachments, and (iv) the most recent IRS determination letter, if any, for such
plan.

(b) Each of the Employee Benefit Plans has been operated and
administered in compliance with their respective terms and all applicable
Requirements of Law including, without limitation, ERISA and the Code. The
Company has not incurred any "accumulated funding deficiency" within the meaning
of ERISA or incurred any liability to the PBGC in connection with any Employee
Benefit Plan (or other class of benefits that the PBGC has elected to insure).

(c) Each Employee Benefit Plan that is intended to be tax
qualified under the Code is identified as such on the Disclosure Schedule
attached to this Agreement. Each such Employee Benefit Plan has received, or the
Company has applied for or will in a timely manner apply for, a favorable
determination letter from the IRS stating that such Employee Benefit Plan meets
the requirements of the Code and that any trust or trusts associated therewith
are tax exempt under the Code.

(d) The Company does not maintain any "defined benefit plan"
covering employees of the Company or any of its Subsidiaries within the meaning
of Section 3(35) of ERISA subject to Title IV of ERISA or any "Multiemployer
Plan" within the meaning of Section 401(a)(3) of ERISA.

(e) All contributions and payments of insurance premiums
required to be made with respect to the Employee Benefit Plans including,
without limitation, the payment of the applicable premiums on any insurance
Contract funding an Employee Benefit Plan, have been fully paid in such a manner
as not to cause any interest, penalties or other amounts that have not been
satisfied or discharged to be assessed against the Company or any of its
Subsidiaries with respect thereto.

(f) The Company has complied with the reporting and disclosure
requirements of ERISA applicable to the Employee Benefit Plans and the
continuation coverage requirements of the Code and ERISA applicable to any of
the Employee Benefit Plans.

(g) There has been no "prohibited transaction" or "reportable
event" within the meaning of the Code or ERISA within the last sixty (60)
months, or breach of

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<PAGE>

fiduciary duty with respect to any of the Employee Benefit Plans that could
subject the Purchaser, the Surviving Corporation, the Company or any of their
respective Subsidiaries to any tax, penalty or other liability under the Code or
ERISA.

(h) No Employee Benefit Plan has been terminated within the
past sixty (60) months. There are no Legal Proceedings or claims with respect to
any of the Employee Benefit Plans (other than routine claims for benefits from
eligible participants or beneficiaries in the normal and ordinary course of
business) pending or, to the knowledge of the Company or the Seller threatened,
and to the knowledge of the Company or the Seller, there are no facts, events,
conditions or circumstances that could give rise to any such Legal Proceeding or
claim (other than routine claims for benefits from eligible participants or
beneficiaries in the normal and ordinary course).

(i) Neither the Company or any ERISA Affiliate has ever
sponsored, maintained or contributed to, or been obligated to contribute to, any
employee benefit plan subject to Title IV of ERISA or the minimum funding
requirements of Code Section 412.

(j) No Employee Benefit Plan provides post retirement medical
benefits, post retirement death benefits or any post retirement welfare benefits
of any fund whatsoever.

(k) There are no current or former employees of the Company or
any of its Subsidiaries who are on leave of absence under either of the
Uniformed Services Employment or Reemployment Rights Act or the Family Medical
Leave Act.

(l) None of the Company, any of its Subsidiaries, or any of
their respective officers, directors or significant employees (as such term is
defined in Regulation S-K of the Securities Act), or any other Person has made
any statement or communication or provided any materials to any employee or
former employee of the Company of any of its Subsidiaries that provides for or
could be construed as a contract, agreement or commitment by the Purchaser or
any of its Affiliates to provide for any pension, welfare, or other employee
benefit or fringe benefit plan or arrangement to any such employee or former
employee, whether before or after retirement or separation or otherwise.

(m) The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement will not result
in any increase in or acceleration of any obligation or liability under any
Employee Benefit Plan or to any employee or former employee of the Company or
any of its Subsidiaries.

3.12. Financial Statements.

(a) The Company and the Seller have delivered or caused to be
delivered to the Purchaser a copy of the Company's consolidated balance sheets
as of October 31, 1995 and 1996 and July 31, 1997 and the related statements of
operations, shareholders'

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<PAGE>

equity and cash flows for the years then ended, together with all proper
exhibits, schedules and notes thereto, (collectively, the "Financial
Statements"). A true and complete copy of the Financial Statements is attached
to the Disclosure Schedule. The Financial Statements have been prepared in
accordance with GAAP consistently applied throughout the periods involved
(except for changes required or permitted by GAAP and noted thereon) and fairly
represent the financial position of the Company and its Subsidiaries as of the
date of such Financial Statements and the results of operations and changes in
shareholders' equity and cash flows for the periods covered thereby.

(b) The books and records of the Company accurately and fairly
reflect, in reasonable scope and detail and in accordance with good business
practice, the transactions and assets and liabilities of the Company and such
other information as is contained therein.

(c) Since the Balance Sheet Date, (i) the Company and each of
its Subsidiaries have operated, and the Seller has caused the Company and each
of its Subsidiaries to operate, their respective Businesses in the normal and
ordinary course in a manner consistent with past practices, (ii) there has been
no development, event, condition, or circumstance that has had, or could
reasonably be expected to have, a Material Adverse Effect upon Company or any of
its Subsidiaries, except as disclosed on the Disclosure Schedule, (iv) neither
the Company nor any of its Subsidiaries has made or committed to make any
capital expenditure or capital addition or betterments in excess of an aggregate
of $10,000; and (v) neither the Company nor any of its Subsidiaries has made any
gift or contribution (charitable or otherwise) to any Person (other than gifts
made since the Balance Sheet Date which, in the aggregate, do not exceed
$5,000).

(d) On the Closing Date, the Company and the Seller will also
deliver or caused to be delivered to the Purchaser a true and complete copy of
the Closing Balance Sheet. The Closing Balance Sheet will be in accordance with
the books and records of the Company and its Subsidiaries, except as set forth
in the Disclosure Schedule, all of which have been maintained in accordance with
good business practice and in the normal and ordinary course of business, and
will be prepared in accordance with GAAP applied on a consistent basis (except
for the absence of notes and subject to normal year-end audit adjustments).

3.13. Distributions. The Disclosure Schedule completely and
accurately lists and fully describes (i) all dividends, distributions,
redemptions or payments declared, accrued, accumulated or made in respect to any
of the Company's or any of its Subsidiaries' securities, whether debt or equity
(including, without limitation, the Shares), since January 1, 1992, (ii) any
other amounts paid or distributed since January 1, 1992 or required to be paid
or distributed to any Person in respect of any ownership, indebtedness or other
economic interest in the Company or any of its Subsidiaries, and (iii) any other
amounts to which any Person is entitled to receive pursuant to any dividend or
distribution right in respect of any such interest.

3.14. Absence of Undisclosed Liabilities. Except as and to the
extent reflected on, or fully reserved against in, the balance sheet of the
Company and its Subsidiaries at July 31,

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1997 including, without limitation, all notes thereto, prepared in accordance
with GAAP (the "Company Balance Sheet"), neither the Company nor any of its
Subsidiaries has any liabilities or obligations, whether direct or indirect,
matured or unmatured, contingent or otherwise, except for liabilities or
obligations that were incurred consistently with past business practice in or as
a result of the normal and ordinary course of business since July 31, 1997.

3.15. Real Property.

(a) The Disclosure Schedule contains a complete and accurate
list of all the locations of all Real Property owned or leased by the Company or
any of the Subsidiaries and the name and address of the lessor and, if a Person
different than such lessor, the manager thereof. The Company and the Seller have
delivered or caused to be delivered to the Purchaser true and complete copies of
all Contracts related to Real Property (including, without limitation, all
leases and all management, service, supply, security, maintenance and similar
Contracts, and all attornment Contracts, subordination Contracts or similar
Contracts, and all other Contracts affecting or relating to the use and quiet
and peaceful enjoyment of the Real Property) to which the Company or any of its
Subsidiaries is a party or is otherwise bound or subject, and, in each case, all
amendments thereof, which relate to or affect any of the Real Property. Except
for the leases pertaining to the Real Property identified in and attached to the
Disclosure Schedule, the Seller, the Company or any of its Subsidiaries is a
party to any Contract that commits or purports to commit the Company or any of
its Subsidiaries to purchase or otherwise acquire or lease any real property
including, without limitation, the Real Property.

(b) Each Contract relating to or affecting the Real Property
(i) is in full force and effect, (ii) affords the Company or such Subsidiary, as
the case may be, peaceful, undisturbed and exclusive possession of the
applicable Real Property, (iii) is free of all Adverse Claims, and (iv)
constitutes a valid and binding obligation of, and is enforceable in accordance
with its terms against, the respective parties thereto.

(c) The Company and each of its Subsidiaries has performed the
obligations required to be performed by it to date under all Contracts relating
to or affecting the Real Property and is not in default or breach thereof. In
addition, no party to any such Contract (i) has provided any notice to the
Company or any of its Subsidiaries of its intent to terminate or not renew any
such Contract, (ii) to the knowledge of the Company and the Seller, has
threatened to terminate or not renew any such Contract or (iii) is, to the
knowledge of the Company and the Seller, in breach or default under any
provision thereof, and, to the knowledge of the Company and the Seller, no event
or condition has occurred, whether with or without the passage of time or the
giving of notice, or both, that would constitute such a breach or default.

(d) The Real Property is (i) in good condition and repair and
there has been no damage, destruction or loss to any of the Real Property that
remains unremedied to date (ordinary wear and tear excepted) and (ii) suitable
to carry out each of the Company's and its Subsidiaries' respective Business as
conducted thereon.

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(e) There are no condemnation, appropriation or other
proceedings involving any taking of the Real Property pending, or to the
knowledge of the Company or the Seller, threatened, against any of the Real
Property.

(f) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not (i) result
in or give to any Person any right of termination, non-renewal, cancellation,
withdrawal, acceleration or modification in or with respect to any Contract
relating to or affecting the Real Property, (ii) result in or give to any Person
any additional rights or entitlement to increased, additional, accelerated or
guaranteed rent or payments under any such Contract or (iii) result in the
creation or imposition of any Adverse Claim upon the Company or any of its
Subsidiaries or any of their respective assets under the terms of any such
Contract.

(g) The Disclosure Schedule indicates a summary description of
all plans or projects involving the opening of new operations, expansion of any
existing operations or the acquisition of any Real Property, the lease of Real
Property or acquisition of new businesses, with respect to which the Company or
any Subsidiary has made any expenditure in the two-years prior to the date of
this Agreement in excess of $10,000, or which if pursued by the Company would
require additional expenditures of capital in excess of $10,000.

3.16. Tangible Personal Property.

(a) The Company and each of its Subsidiaries owns or leases
all such properties as are presently used in the conduct of their respective
Businesses and operations. The Company and the Seller have delivered or caused
to be delivered to the Purchaser true and complete copies of all material
Contracts (including, without limitation, leases and service, supply,
maintenance and similar Contracts) to which the Company and any of its
Subsidiaries is a party or is otherwise bound or subject, and all amendments
thereto, which relate to or affect any of the tangible personal property owned,
possessed or used by the Company or any of its Subsidiaries (the "Tangible
Personal Property"). A complete and accurate list of all such Contracts is set
forth in, and true and complete copies of such Contracts are attached to, the
Disclosure Schedule. Except (i) for those assets disposed of in the normal and
ordinary course of business since the Balance Sheet Date, (ii) with respect to
Tangible Personal Property that is leased or rented by the Company or any of its
Subsidiaries, and (iii) as otherwise set forth on the Disclosure Schedule, the
Company and each such Subsidiary, as the case may be, has good and valid title
to all of its Tangible Personal Property, including all items of Tangible
Personal Property reflected on the Company Balance Sheet, free of all Adverse
Claims.

(b) Since the Balance Sheet Date, neither the Company nor any
of its Subsidiaries has incurred or suffered any material physical damage,
destruction, theft or loss of their respective tangible items of material
personal property, whether owned or leased. All material Tangible Personal
Property including, without limitation, all computer hardware and software
(including all operating and application systems), is in good working order,
condition

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and repair and suitable to carry out each of the Company's and its Subsidiaries'
respective Businesses as conducted therewith.

(c) Each Contract relating to or affecting the Tangible
Personal Property (i) is in full force and effect, (ii) affords the Company or
such Subsidiary, as the case may be, peaceful, undisturbed and exclusive
possession of the applicable Tangible Personal Property, (iii) is free of all
Adverse Claims and (iv) constitutes a valid and binding obligation of, and is
enforceable in accordance with its terms against, the respective parties
thereto.

(d) The Company and each of its Subsidiaries has performed the
obligations required to be performed by it to date under all Contracts relating
to or affecting the Tangible Personal Property and is not in default or breach
thereof. In addition, no party to any such Contract (i) has provided any notice
to the Company or any of its Subsidiaries of its intent to terminate or not
renew any such Contract, (ii) to the knowledge of the Company and the Seller,
has threatened to terminate or not renew any such Contract or (iii) to the
knowledge of the Company and the Seller, in breach or default under any
provision thereof, and, to the knowledge of the Company and the Seller, no event
or condition has occurred, whether with or without the passage of time or the
giving of notice, or both, that would constitute such a breach or default.

(e) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not (i) result
in or give to any Person any right of termination, non-renewal, cancellation,
withdrawal, acceleration or modification in or with respect to any Contract
relating to or affecting the Tangible Personal Property, (ii) result in or give
to any Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed rent or payments under any such Contract or (iii)
result in the creation or imposition of any Adverse Claim upon the Company or
any of its Subsidiaries or any of their respective assets under the terms of any
such Contract.

3.17. Contracts.

(a) Attached to the Disclosure Schedule is a complete and
accurate list of each Contract described below to which either the Company or
any of its Subsidiaries or any of their respective properties is party or is
otherwise bound or subject:

(i) each Contract with the Company's or any of its
Subsidiaries', as applicable, customers (but only if such customers are among
the Company's twenty-five highest, in terms of dollar value of purchases, for
the twelve-month period ending on the Balance Sheet Date), dealers, brokers,
value added resellers or vendors (but only if such vendors are among the
Company's twenty-five highest, in terms of dollar value of sales, for the
twelve-month period ending on the Balance Sheet Date);

(ii) any Contract that creates a partnership or a joint
venture or arrangement that involves a sharing of profits (whether through
equity ownership, Contract or otherwise) with any other Person;

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(iii) any Contract that purports to or has the effect of
limiting either the Company's or any such Subsidiaries' right to engage in, or
compete with any Person in, any business;

(iv) any Contract involving a pledge or encumbering of
either Company's or any of its Subsidiaries' assets or the incurrence by either
Company or any of its Subsidiaries of liabilities (other than liabilities to
render services to customers in the ordinary course of business) in any one
transaction or series of related transactions in excess of $10,000, or that
extend beyond one year from the date of this Agreement;

(v) any material Contract pursuant to which either the
Company or any of its Subsidiaries has created, incurred, assumed or guaranteed
any indebtedness other than for trade indebtedness incurred in the normal and
ordinary course of the Business;

(vi) any Contract not made in the normal and ordinary
course of the applicable Company's or Subsidiary's Business; and

(vii) any Contract that either (y) does not fit within
one of the foregoing categories described in (i) through (vi) above or (z) is
not otherwise identified in the Disclosure Schedule and that would be required
by Item 601(b)(10) of Regulation S-K promulgated under the Securities Act to be
attached as an exhibit to any registration statement on Form S-1 filed by either
the Company or any of its Subsidiaries under the Act if the Company were to file
such a registration statement under the Act on the date on which this
representation and warranty is made.

(b) Each material Contract to which the Company or any of its
Subsidiaries or any of their respective properties is a party or is otherwise
bound or subject (i) is valid and binding on each of the parties thereto in
accordance with its terms, (ii) was made in the normal and ordinary course of
the Business and (iii) contains no provision or covenant prohibiting or limiting
the ability of the Company or any Subsidiary to operate their respective
Businesses.

(c) No party to any material Contract to which the Company or
any of its Subsidiaries or any of their respective properties is a party or is
otherwise bound or subject (i) has provided any notice to the Company or any of
its Subsidiaries of its intent to terminate or withdraw its participation in any
such Contract, (ii) has, to the knowledge of the Company and the Seller,
threatened to terminate or withdraw from participation in any such Contract or
(iii) is, to the knowledge of the Company and the Seller, in breach or default
under any provision thereof, and, to the knowledge of the Company and the
Seller, no event or condition has occurred, whether with or without the passage
of time or the giving of notice, or both, that would constitute such a breach or
default.

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<PAGE>

(d) Except as set forth in the Disclosure Schedule, no Consent
of any party to any material Contract to which the Company or any of its
Subsidiaries or any of their respective properties is a party or is otherwise
bound or subject is required in connection with the transactions contemplated by
this Agreement.

(e) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not (i) result
in or give to any Person any right of termination, non-renewal, cancellation,
withdrawal, acceleration or modification in or with respect to any material
Contract to which the Company or any of its Subsidiaries or any of their
respective properties is a party or is otherwise bound or subject, (ii) result
in or give to any Person any additional rights or entitlement to increased,
additional, accelerated or guaranteed payments under any such Contract or (iii)
result in the creation or imposition of any Adverse Claim upon the Company or
any of its Subsidiaries or any of their respective assets under the terms of any
such Contract.

3.18. Insurance. Attached to the Disclosure Schedule is a complete
and accurate list of all insurance policies held by the Company and by each of
its Subsidiaries identifying all of the following for each such policy: (i) the
type of insurance; (ii) the insurer; (iii) the policy number; (iv) the
applicable policy limits, (v) the applicable periodic premium; and (vi) the
expiration date. Each such insurance policy is valid and binding and is and has
been in effect since the date of its issuance. All premiums due thereunder have
been paid, and neither the Company nor any of its Subsidiaries has received any
notice of any increase in premiums or of any cancellation, non-renewal or
termination in respect of any such policy. None of the Company or any of its
Subsidiaries are in default under any such policy in any respect. To the
knowledge of the Company or the Seller, no such insurer is the subject of
insolvency proceedings. Neither the Company nor the Person to whom any such
insurance policy has been issued has received notice that any insurer under any
policy referred to in the Disclosure Schedule is denying liability with respect
to a claim thereunder or defending under a reservation of rights clause. Each of
the Company and its Subsidiaries has notified its insurance carriers of all
litigation and claims and facts which could reasonably be expected to give rise
to a claim, all of which are disclosed in the Disclosure Schedule (including
worker's compensation claims). The liability insurance maintained by the Company
is and has at all times prior to the date of this Agreement been on an
"occurrence" basis.

3.19. Proprietary Rights.

(a) Attached to the Disclosure Schedule is a complete and
accurate list and full description of each item of the Company's and each of its
Subsidiaries Intellectual Property together with, in the case of registered
Intellectual Property: the (i) applicable registration number; (ii) filing,
registration, issue or application date; (iii) record owner; (iv) country; (v)
title or description; and (vi) remaining life. In addition, the Disclosure
Schedule identifies whether each item of Intellectual Property is owned by the
Company or any of its Subsidiaries or possessed and used by the Company or such
Subsidiary under any Contract. The Intellectual Property constitutes valid and
enforceable rights and does not infringe or conflict

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<PAGE>

with the rights of any other Person; provided that to the extent the foregoing
relates to Intellectual Property used but not owned by the Company, such
representation and warranty is given solely to the knowledge of the Company and
the Seller.

(b) There is neither pending, nor to the Company's or the
Seller's knowledge, threatened, any Legal Proceeding against the Company or any
of its Subsidiaries contesting the validity or right of the Company or any such
Subsidiary to use any of the Intellectual Property, and neither the Company nor
any such Subsidiary has received any notice of infringement upon or conflict
with any asserted right of others nor, to the Company's and the Seller's
knowledge, is there a basis for such a notice. To the Company's and the Seller's
knowledge, no Person, is infringing the Company's or any of its Subsidiaries
rights to the Intellectual Property.

(c) Except as otherwise provided in the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has any obligation to compensate
others for the use of any Intellectual Property. In addition, except as
otherwise provided on the Disclosure Schedule, neither the Company nor any of
its Subsidiaries has granted any license or other right to use, in any manner,
any of the Intellectual Property, whether or not requiring the payment of
royalties.

(d) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not (i) result
in or give to any Person any right of termination, non-renewal, cancellation,
withdrawal, acceleration or modification in or with respect to any Contract
relating to or affecting the Intellectual Property, (ii) result in or give to
any Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under any such Contract or (iii) result in
the creation or imposition of any Adverse Claim upon the Company or any of its
Subsidiaries or any of their respective assets under the terms of any such
Contract.

3.20. Environmental Matters.

(a) The Company and each of its Subsidiaries, and the
operation of each of their respective Businesses is and has been in compliance
with all applicable Environmental Laws.

(b) There have occurred no and there are no events,
conditions, circumstances, activities, practices, incidents, or actions on the
part of, or caused by, the Company (or, to the knowledge of the Company and the
Seller, caused by a third party) that may give rise to any common law or
statutory liability, or otherwise form the basis of any Legal Proceeding, Order
or action involving or relating to the Company or any of its Subsidiaries, based
upon or related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substance or wastes.

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<PAGE>

(c) To the knowledge of the Company and the Seller, there is
no asbestos contained in or forming a part of any building, structure or
improvement comprising a part of any of the Real Property. To the knowledge of
the Company and the Seller, there are no polychlorinated biphenyls (PCBs)
present, in use or stored on any of the Real Property. To the knowledge of the
Company and the Seller, no radon gas or the presence of radioactive decay
products of radon are present on, or underground at any of the Real Property at
levels beyond the minimum safe levels for such gas or products prescribed by
applicable Environmental Laws.

3.21. Permits.

(a) The Company, each of its Subsidiaries, and each of their
respective employees, independent contractors and agents has obtained and holds
in full force, and the Disclosure Schedule sets forth a complete and accurate
list of, all Permits that are necessary or advisable for the operation of their
respective Businesses. Neither the Company, any of its Subsidiaries nor any such
employee, independent contractor or agent is in noncompliance with the terms of
any such Permit.

(b) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not (i) result
in or give to any Person any right of termination, non-renewal, cancellation,
acceleration or modification in or with respect to any such Permit, (ii) result
in or give to any Person any additional rights or entitlement to increased,
additional, accelerated or guaranteed payments under any such Permit or (iii)
result in the creation or imposition of any Adverse Claim upon the Company or
any of its Subsidiaries or any of their respective assets under the terms of any
Permit.

(c) Except as set forth in the Disclosure Schedule, there is
no Order outstanding against the Company or any of its Subsidiaries, nor is
there now pending, or to the Company's or the Seller's knowledge, threatened,
any Legal Proceeding, which could adversely affect any Permit required to be
obtained and maintained by the Company or any of its Subsidiaries.

3.22. Regulatory Filings. The Company and each of its Subsidiaries
has filed all registrations, filings, reports, or submissions that are required
by any Requirement of Law. All such filings were made in compliance with
applicable Requirements of Law when filed and no deficiencies have been asserted
by any Governmental or Regulatory Authority with respect to such filings and
submissions that have not been finally resolved.

3.23. Taxes and Tax Returns.

(a) The Company and each of its Subsidiaries has duly and
timely filed all Tax Returns. Each such Tax Return as amended, (if amended) is
true, accurate and complete. The Company and each of its Subsidiaries has paid
in full all Taxes for the period covered by such Tax Return. All Taxes not yet
due and payable have been withheld or reserved for or, to the

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extent that they relate to periods on or prior to the date of the Company
Balance Sheet, are reflected as a liability thereon.

(b) The Company and each of its Subsidiaries has complied with
all applicable Requirements of Law relating to the payment and withholding of
Taxes (including, without limitation, withholding of Taxes pursuant to Section
1441 and 1442 of the Code, or similar provisions under any foreign Requirements
of Law) and have, within the time and in the manner prescribed by applicable
Requirements of Law, withheld from employee wages and paid over, in a timely
manner, to the proper Taxing Authorities all amounts required to be so withheld
and paid over under applicable law.

(c) No deficiency for any Taxes has been asserted or assessed
against the Company or any of its Subsidiaries that has not been resolved and
paid in full or fully reserved for and identified on the Company Balance Sheet
and, to the knowledge of the Company and the Seller, no deficiency for any Taxes
has been proposed that has not been fully reserved for and identified on the
Company Balance Sheet. Neither the Company nor any of its Subsidiaries has
received any outstanding and unresolved notices from the IRS or any other Taxing
Authority of any proposed examination or of any proposed change in reported
information relating to the Company or any such Subsidiary. Except as set forth
in the Disclosure Schedule (which sets forth the nature of the proceeding, the
type of Tax Return, the deficiencies proposed or assessed and the amount
thereof, and the taxable year in question), no Legal Proceeding or audit or
similar foreign proceedings is pending with regard to any of the Company's or
any of its Subsidiaries' Taxes or Tax Returns.

(d) No waiver or comparable consent given by the Company or
any of its Subsidiaries regarding the application of the statute of limitations
with respect to any Taxes or Tax Returns is outstanding, nor, to the knowledge
of the Company and the Seller, is any request for any such waiver or consent
pending.

(e) There are no liens or encumbrances of any kind for Taxes
upon any assets or properties of the Company or any of its Subsidiaries other
than for Taxes not yet due and payable.

(f) Neither the Company nor any of its Subsidiaries has
requested any extension of time within which to file any Tax Return, which Tax
Return has not since been filed.

(g) Neither the Company nor any of its Subsidiaries is a party
to any Contract providing for the allocation or sharing of Taxes. Neither of the
Company nor any of its Subsidiaries has made any election under Section 341(f)
of the Code.

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<PAGE>

otherwise and neither the Company nor any of its Subsidiaries has any knowledge
that the IRS has proposed such adjustment or change in accounting method.

(i) None of the assets of the Company or any of its
Subsidiaries is required to be treated as owned by any other person pursuant to
the "safe harbor lease" provisions of former Section 168(f)(8) of the Code.

(j) Neither the Company nor any of its Subsidiaries is a party
to any venture, partnership, Contract or arrangement under which it could be
treated as a partner for federal income tax purposes other than Inter Linx
Global Information Exchange LLC.

(k) Neither the Company nor any of its Subsidiaries has a
permanent establishment located in any tax jurisdiction other than the United
States, nor are any of them liable for the payment of Taxes levied by any
jurisdiction located outside the United States.

(l) Except as provided in the Disclosure Schedule, other than
in respect of a period for which a Tax is not yet due, no state of facts exists
or has existed that would constitute grounds for the assessment of any Tax
liability with respect to a period that has not been audited by the IRS or any
other Taxing Authority.

(m) Except as provided in the Disclosure Schedule, no power of
attorney has been granted by the Company or any of its Subsidiaries with respect
to any matter relating to Taxes that is currently in force.

(n) Neither the Company nor any of its Subsidiaries is or has
been a United States real property holding company (as defined in Section
897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.

(o) Neither the Company nor any of its Subsidiaries is a party
to any Contract or arrangement that would result in the payment of any "excess
parachute payment" within the meaning of Section 280G of the Code.

(p) All transactions that could give rise to an understatement
of federal income tax (within the meaning of Section 6662 of the Code or any
predecessor provision thereof) have been adequately disclosed on the Tax Returns
required in accordance with Section 6662(d)(2)(B) of the Code or any predecessor
provision thereto.

(q) No election under Code ss.338 (or any predecessory
provisions) has been made by or with respect to the Company or any of its
Subsidiaries or any of their respective assets or properties.

(r) No indebtedness of the Company or any of its Subsidiaries
is "corporate acquisition indebtedness" within the meaning of Code ss.279(b).

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3.24. Investment Portfolio. Except as set forth in the Disclosure
Schedule attached to this Agreement, the Company's and each of its Subsidiaries'
investment portfolio consists solely of investments in one or more of the
following: (i) interest bearing deposit accounts (including certificates of
deposit) that are insured by the Federal Deposit Insurance Corporation, (ii)
direct obligations of the United States of America with a maturity not greater
than one year, (iii) short term money market funds or (iv) commercial paper of
any corporation organized under the laws of any State of the United States or
any bank organized or licensed to conduct a banking business under the laws of
the United States or any State thereof having the highest short-term rating
given by Moody's Investor's Services, Inc. and Standard and Poor's Corporation.

3.25. Affiliate Transactions. The Disclosure Schedule lists and
fully describes each Contract, transaction or series of transactions, whether
written or oral (other than for the compensation arrangements described in the
Disclosure Schedule under Section numbers 3.10, 3.11 and 3.28, pursuant to which
the Company or any of its Subsidiaries is, or, at any time during the previous
five (5) years has been, a party or otherwise bound with any Affiliate of the
Seller, the Company, any Subsidiary of the Company (an "Affiliate Transaction").
Each Affiliate Transaction has been entered into the normal and ordinary course
of the Business.

3.26. Accounts, Power of Attorney. The Disclosure Schedule
completely and accurately states the names and addresses of each bank, financial
institution, fund, investment or money manager, brokerage house and similar
institution in which the Company or any of its Subsidiaries maintains any
account (whether checking, savings, investment, trust or otherwise), lock box or
safe deposit box (collectively, the "Accounts"), and the account numbers and
name of the Persons having authority to affect transactions with respect thereto
or other access thereto. The Disclosure Schedule also sets forth the name of
each person, corporation, firm or other entity holding a general or special
power of attorney from the Company or any Subsidiary and a description of the
terms of such power.

3.27. Receivables. Except as set forth in the Disclosure Schedule,
since the Balance Sheet Date, neither the Company nor any of its Subsidiaries
has written-off, nor under GAAP is it appropriate to write off, any accounts
receivable, notes receivable or other miscellaneous receivables owing to the
Company or any of its Subsidiaries (the "Receivables"). All Receivables
currently owing to the Company or any of its Subsidiaries are completely and
accurately listed and aged in the Disclosure Schedule attached to this
Agreement. The Receivables arose from bona fide transactions in the normal and
ordinary course of business and reflect credit terms consistent with past
practice. The Company and each of its Subsidiaries has good and valid title to
their respective Receivables, free of all Adverse Claims. Neither the Company
nor any of its Subsidiaries has sold, factored, securitized, or consummated any
similar transaction with respect to any of its Receivables. Subject to proper
reserves taken into account in accordance with GAAP as reflected on the
Disclosure Schedule, each Receivable is fully collectable in the normal and
ordinary course of business (i.e. without resort to litigation or assignment to
a collection agency), and are not subject to any dispute, counterclaim, defense,
set-off or Adverse Claim.

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3.28. Officers and Directors.

(a) The Disclosure Schedule accurately and completely lists
the names of the Company's and each of its Subsidiaries' respective directors,
executive officers, and any of their respective significant employees (as such
term is defined in Regulation S-K under the Securities Act) and the compensation
payable to each of them to serve as such.

(b) Except as set forth on the Disclosure Schedule attached to
this Agreement, none of the Seller or any of the current directors, current
executive officers or current significant employees (as such term is defined in
Section 3.28(a)) of either the Company or any of its Subsidiaries has, within
the past five (5) years:

(i) (x) filed or had filed against him or her a petition
under the Federal bankruptcy laws or any state insolvency or similar law, or (y)
had a receiver, conservator, fiscal agent or similar officer appointed by a
court for the business, property or assets of such individual, or any
partnership in which he or she was a general partner or any other Person of
which he or she was a director or an executive officer or had a position having
similar powers and authority at or within two (2) years of the date of such
filing;

(ii) been convicted of, or pled guilty or no contest to,
any crime (other than traffic offenses and other minor offenses);

(iii) been named as a subject of any criminal Legal
Proceeding (other than for traffic offenses and other minor offenses);

(iv) been the subject of any Order or sanction relating
to an alleged violation of, or otherwise found by any Governmental or Regulatory
Authority to have violated: (x) any Requirement of Law relating to securities or
commodities, (y) any Requirement of Law respecting financial institutions,
insurance companies, or fiduciary duties owed to any Person, (z) any Requirement
of Law prohibiting fraud (including, without limitation, mail fraud or wire
fraud);

(v) been the subject of any Order enjoining or otherwise
prohibiting him or her from engaging in any type of business activity; or

(vi) been the subject of any Order or sanction by (x) a
self- regulatory organization (as defined in Section 3(a)(26) of the Exchange
Act), (y) a contract market designated pursuant to Section 5 of the Commodity
Exchange Act, as amended, or (z) any substantially equivalent foreign authority
or organization.

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3.30. Brokers or Finders. Except as set forth in the Disclosure
Schedule, neither the Company, any of its Subsidiaries nor the Seller has
engaged the services of any broker or finder with respect to the transactions
contemplated by this Agreement, and no Person has or will have, as a result of
the consummation of the transaction contemplated by this Agreement, any right,
interest or valid claim against or upon the Purchaser or the Surviving
Corporation for any commission, fee or other compensation as a finder or broker
thereof on account of any action on the part of the Company, its Subsidiaries or
the Seller. Without degradation to any of the foregoing, the Company, its
Subsidiaries and the Seller are solely responsible for the payment of the
commissions, fees and other compensation payable to the Person having any such
right, interest or claim on account of any action on the part of the Company,
its Subsidiaries or the Seller, including, without limitation, the Persons
identified on the Disclosure Schedule.

3.31. Customers. The Disclosure Schedule accurately and completely
lists the names of the twenty-five largest customers (in terms of dollar value
of purchases) of the Company and each of its Subsidiaries and details the
Company's and each such Subsidiary's total revenue attributable to each such
customer for the 1995, 1996 and 1997 fiscal years and the current fiscal year to
date. Except as set forth in the Disclosure Schedule, there has been no adverse
change in the Company's or any of its Subsidiaries' business relationship with
any such customer that, in the aggregate, would have a Material Adverse Effect
upon the Company or any such Subsidiary.

3.32. Investment Company. Neither the Company nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940 and the rules and regulations promulgated thereunder, as
amended from time to time, or any successors thereto.

3.33. Absence of Changes. Since the Balance Sheet Date, except as
set forth on the Disclosure Schedule there has not been with respect to the
Company and any Subsidiary:

(i) any event or circumstance (either singly or in the
aggregate) which would constitute a Material Adverse Effect;

(ii) any change in its authorized capital, or securities
outstanding, or ownership interests or any grant of any
options, warrants, calls, conversion rights or commitments;

(iii) any declaration or payment of any dividend or
distribution in respect of its capital stock or any direct or
indirect redemption, purchase or other acquisition of any of
its capital stock, except any declaration of dividends payable
by any Subsidiary to the Company;

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agents, except for ordinary and customary bonuses and salary
increases for employees in accordance with past practice;

(v) any work interruptions, labor grievances or claims
filed, or any similar event or condition of any character that
would have a Material Adverse Effect;

(vi) any distribution, sale or transfer, or any
agreement to sell or transfer, any material assets, property
or rights of any of its respective business to any person,
including, without limitation, the Seller and their
affiliates, other than distributions, sales or transfers in
the ordinary course of business to persons other than the
Seller and their affiliates;

(vii) any cancellation, or agreement to cancel, any
material indebtedness or other material obligation owing to
it, including without limitation any indebtedness or
obligation of the Seller or any affiliate thereof, other than
the negotiation and adjustment of bills in the course of good
faith disputes with customers in a manner consistent with past
practice;

(viii) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any
of its assets, property or rights or requiring consent of any
party to the transfer and assignment of any such assets,
property or rights;

(ix) any purchase or acquisition of, or agreement, plan
or arrangement to purchase or acquire, any property, rights or
assets outside of the ordinary course of business;

(x) any waiver of any of its material rights or claims;

(xi) any transaction by them outside the ordinary course
of their respective businesses; or

(xii) any cancellation or termination of a material
Contract.

3.34. Accuracy and Completeness of Information. To the knowledge of
the Company and the Seller, all information furnished, to be furnished or caused
to be furnished to the Purchaser by the Company or the Seller with respect to
the Seller, the Company or any of its Subsidiaries for the purposes of or in
connection with this Agreement, or any transaction contemplated by this
Agreement is or, if furnished after the date of this Agreement, shall be true
and complete in all material respects and does not, and, if furnished after the
date of this Agreement, shall not, contain any untrue statement of material fact
or fail to state any material fact necessary to make such information not
misleading.

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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser hereby, represents and warrants to the Seller and the
Company as follows:

4.1. Organization.

(a) The Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its incorporation,
(ii) has the power and authority to own and operate its properties and assets
and to transact its business as currently conducted and (iii) is duly qualified
and authorized to do business and is in good standing in all jurisdictions where
the failure to be duly qualified, authorized and in good standing would have a
material adverse effect upon the Purchaser's businesses, prospects, operations,
results of operations, assets, liabilities or condition (financial or
otherwise).

(b) True and complete copies of the Purchaser's articles of
incorporation and bylaws are attached hereto as Schedule 4.1(b). Such articles
and bylaws shall be amended prior to the Closing as further set forth and
described in the Registration Statement attached hereto as Schedule 14.2.

4.2. Authorization for Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by the Purchaser (i) are within the Purchaser's corporate
powers and duly authorized by all necessary corporate action on the part of the
Purchaser and (ii) do not (A) require any action by or in respect of, or filing
with, any governmental body, agency or official, except as set forth in this
Agreement or (B) contravene, violate or constitute, whether with or without the
passage of time or the giving of notice or both, a breach or a default under,
any Requirement of Law applicable to the Purchaser or any of its properties or
any Contract to which it or any of its properties are bound, except filings and
approvals in connection with the Initial Public Offering.

4.3. Enforceability. This Agreement has been duly executed and
delivered by the Purchaser and constitutes the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms.

4.4. Litigation. There is no Legal Proceeding or Order pending
against or, to the knowledge of the Purchaser, threatened against or affecting,
the Purchaser or any of its properties or otherwise that could adversely affect
or restrict the ability of the Purchaser to consummate fully the transactions
contemplated by this Agreement or that in any manner draws into question the
validity of this Agreement.

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with the requirements of the Securities Act and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein; provided, however, that insofar as the foregoing relates to
information in the Registration Statement that relates to the Company, the
Seller or any of the other Founding Companies, such representation and warranty
shall be deemed based on the knowledge of the Purchaser.

4.6. Brokers or Finders. The Purchaser has not engaged the services
of any broker or finder with respect to the transactions contemplated by this
Agreement, and no Person has or will have, as a result of the consummation of
the transaction contemplated by this Agreement, any right, interest or valid
claim against or upon the Seller for any commission, fee or other compensation
as a finder or broker thereof on account of any action on the part of the
Purchaser. Without degradation to any of the foregoing, the Purchaser is solely
responsible for the payment of the commissions, fees and other compensation
payable to any Person having any such right, interest or claim on account of any
action on the part of the Purchaser.

4.7. Capitalization. The total outstanding capital authorized of the
Purchaser is 40 million shares of DocuNet Common Stock and 10 million shares of
preferred stock, no par value per share.

ARTICLE 5
COVENANTS
.
5.1. Good Faith. Each of the Company, the Seller and the Purchaser
shall perform each and every of their respective obligations under this
Agreement and shall perform the transactions contemplated by this Agreement in
good faith and in a commercially reasonable manner.

5.2. Approvals. Each of the Company, the Seller and the Purchaser
shall use their respective commercially reasonable best efforts to obtain all
Regulatory Approvals and Consents from such other third parties including,
without limitation, Consents required under any Contract or any Requirement of
Law, that are necessary or advisable in connection with the consummation of the
transactions contemplated by this Agreement. The Seller shall use his or its
commercially reasonable best efforts to cause the Company and all of its
Subsidiaries to cooperate with the Purchaser to the fullest extent practicable
in seeking to obtain all such Regulatory Approvals and Consents, and shall
provide, and shall cause the Company and all Subsidiaries to provide, such
information and communications to all Governmental or Regulatory Authorities as
they or the Purchaser may request from time to time in connection therewith.
Nothing contained herein shall require either of the Company or the Purchaser to
amend the provisions of this Agreement, to pay or cause any of their respective
Affiliates to pay any money, or to provide or cause any of their respective
Affiliates to provide any guaranty to obtain any such Regulatory Approvals or
Consents.

5.3. Cooperation; Access to Books and Records.

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(a) The Company will, and the Seller will and will cause the
Company and each of its Subsidiaries to, cooperate with the Purchaser in
connection with the transactions contemplated by this Agreement and any
Purchaser Financing Transaction, including, without limitation, cooperating in
the determination of which Regulatory Approvals and Consents are required or
advisable to be obtained prior to the Closing Date. Until the Closing Date, the
Company will, and the Seller will and will cause the Company and each of its
Subsidiaries to, afford to the Purchaser and its agents, legal advisors,
accountants, auditors, commercial and investment banking advisors and other
authorized representatives, agents and advisors reasonable access to all of the
properties and books and records of the Company or any of its Subsidiaries
(including those in the possession or control or their accountants, attorneys
and any other third party), as the case may be, for the purpose of permitting
the Purchaser to make such investigation and examination of the business and
properties of the Company and any of its Subsidiaries as the Purchaser, in its
discretion, shall deem necessary, appropriate or desirable. Any such
investigation, access and examination shall be conducted upon reasonable prior
notice under the circumstances. The Company will, and the Seller will cause the
Company and each of its Subsidiaries to, cause each of their respective
directors, officers, employees and representatives, including, without
limitation, their respective counsel and accountants, to cooperate fully with
the Purchaser, in connection with such investigation, access and examination.
The results of such investigation and examination is for the Purchaser's sole
benefit, and shall not (i) impair or reduce any representation or warranty made
by the Company or the Seller in this Agreement, (ii) relieve the Company or the
Seller from his obligations with respect to such representations and warranties
(including, without limitation, the Seller's obligations under Article 10), or
(iii) mitigate the Company's and the Seller's obligations to otherwise disclose
all material facts to the Purchaser with respect to the Company, each of its
Subsidiaries and their respective Businesses.

(b) The Purchaser will cooperate with the Company and the
Seller in connection with the transactions contemplated by this Agreement and
any Purchaser Financing Transaction, including, without limitation, cooperating
in the determination of which Regulatory Approvals and Consents are required or
advisable to be obtained prior to the Closing Date. Until the Closing Date, the
Purchaser will afford to the Company, the Seller and their agents, legal
advisors and accountants reasonable access to all of the properties and books
and records of the Purchaser (including those in the possession or control or
its accountants, attorneys and any other third party), as the case may be, for
the purpose of permitting the Company and the Seller to make such investigation
and examination of the business and properties of the Purchaser and any of its
Subsidiaries as the Company and the Seller, in its discretion, shall deem
necessary, appropriate, or desirable. Any such investigation, access and
examination shall be conducted upon reasonable prior notice under the
circumstances. Purchaser will cause each of its directors, officers, employees
and representatives, including, without limitation, its counsel and accountants,
to cooperate fully with the Company and the Seller, in connection with such
investigation, access and examination. The results of such investigation and
examination is for the Company's and Seller's sole benefit, and shall not (i)
impair or reduce any representation or warranty made by the Purchaser in this
Agreement, (ii) relieve the Purchaser from its obligations with respect to such
representations and warranties (including, without limitation, the

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Purchaser's obligations under Article 10), or (iii) mitigate the Purchaser's
obligations to otherwise disclose all material facts to the Company and the
Seller with respect to the Purchaser.

5.4. Duty to Supplement.

(a) Promptly upon the Company's or the Seller's discovery of
the occurrence of any development, event, circumstance or condition that,
individually or in the aggregate, may have a Material Adverse Effect upon the
Shares, or the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of the Company or any of its
Subsidiaries, the Seller shall, and shall cause the Company or the applicable
Subsidiary to, as the case may be, notify the Purchaser of such development,
event, circumstance or condition. In the event that the Purchaser receives such
notice or otherwise discovers the fact of any such development, event,
circumstance or condition, the Purchaser shall be entitled, in its sole
discretion, to terminate this Agreement within ten (10) days after so
discovering without further obligation or liability upon the delivery of written
notice to the Seller to that effect; provided, however, that before Purchaser
may exercise its termination right, it must afford the Company and the Seller
the opportunity to cure the matter giving rise to the termination right (but for
no longer than five days following the date Purchaser notifies the Company or
the Seller of its intent to terminate) unless, in the judgement of the managing
underwriter of the Initial Public Offering, any such cure period might adversely
affect the Initial Public Offering.

(b) Promptly upon the Company's or the Seller's discovery of
any fact, event, condition or circumstance that causes any representation or
warranty made by the Company or the Seller inaccurate at any time after the date
of this Agreement, the Seller shall, and shall cause the Company and its
Subsidiaries to, notify the Purchaser of such fact, event, condition or
circumstance.

5.5. Information Required For Purchase Financing Transactions. The
Company shall and shall cause its Subsidiaries to, and the Seller shall and
shall cause the Company and its respective Subsidiaries to, furnish the
Purchaser with the following information:

(a) the Company's audited consolidated balance sheet as of
July 31, 1997 and the related statements of operations, shareholders' equity and
cash flows for the year then ended, together with all proper exhibits, schedules
and notes thereto, audited by Arthur Andersen LLP, all of which shall be
prepared in accordance with GAAP consistently applied with prior periods and
shall present fairly the financial position of the Company and its Subsidiaries
for the year then ended and the results of operations and changes in
shareholders' equity and cash flows for the period covered thereby;

(b) any unaudited interim financial statements requested by
the Purchaser or any Underwriter to be included in any registration statement,
prospectus, document or other item, or any amendment or supplement thereof,
relating to any Purchaser Financing Transaction, all of which shall (i) be in
accordance with the books and records of the Company

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maintained in accordance with good business practice and in the normal and
ordinary course of business, (ii) be prepared in accordance with GAAP applied on
a consistent basis (except for the absence of notes and subject to normal
year-end audit adjustments), (iii) present fairly the financial position of the
Company and its Subsidiaries as of the date thereof and the results of
operations and changes in shareholders' equity and cash flows for the periods
covered thereby, and (iv) include comparable interim financial statements for
the prior year period; and

(c) such other written information with respect to themselves
as the Purchaser or any Underwriter may reasonably deem necessary, desirable or
appropriate in connection with any Purchaser Financing Transaction or the
preparation of any registration statement, prospectus, document or other item
relating thereto.

5.6. Performance of Conditions. The Company, the Seller and the
Purchaser shall, and the Seller shall cause the Company and each of its
Subsidiaries to, take all reasonable steps necessary or appropriate and use all
commercially reasonable efforts to effect as promptly as practicable the
fulfillment of the conditions required to be obtained that are necessary or
advisable for the Seller and the Purchaser to consummate the transactions
contemplated by this Agreement including, without limitation, all conditions
precedent set forth in Article 6.

5.7. Conduct of Business. During the period of time from and after
the date of this Agreement to the Closing Date, the Company shall, and Seller
shall cause the Company and each of its Subsidiaries to, operate their
respective Businesses in the normal and ordinary course in a manner consistent
with past practice including, without limitation, to do the following:

(a) to carry on the Company's and each such Subsidiary's
Business in substantially the same manner as it has heretofore and not introduce
any material new method of management, operation or accounting;

(b) to maintain the Company's and each such Subsidiary's
corporate existence and all Permits, bonds, franchises and qualifications to do
business;

(d) to use its commercially reasonable best efforts to
preserve intact the Company's and each such Subsidiary's business relationships
with its agents, customers, employees, creditors and others with whom the
Company or each such Subsidiary has a business relationship;

(e) to preserve the Company's and each such Subsidiary's
assets, properties and rights (including, without limitation, those held under
leases, the Intellectual Property and Accounts) necessary or advisable to the
profitable conduct of their respective Businesses;

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(f) to pay when due all Taxes lawfully levied or assessed
against the Company or any such Subsidiary, as the case may be, before any
penalty or interest accrues on any unpaid portion thereof and to file all Tax
Returns when due (including after applicable extensions); provided that no such
payment shall be required which is being contested in good faith and by proper
proceedings and for which appropriate reserves as may be required by GAAP have
been established;

(g) to maintain in full force and effect all policies of
insurance adequate (both in terms of coverage and amount of coverage) to insure
against risks as are customarily and prudently insured against by companies of
established repute engaged in the same or a similar business;

(h) to perform all material obligations under all Contracts to
which the Company or any such Subsidiary is a party or by which it or its
properties are bound or subject;

(i) to maintain present debt and lease instruments and not
enter into new or amended debt or lease instruments over Ten Thousand Dollars
($10,000), without the knowledge and consent of the Purchaser, which consent
shall not be unreasonably withheld; and

(j) to collect accounts receivable in a manner consistent with
past practices.

5.8. Negative Covenants. Except as set forth in the Disclosure
Schedule, during the period from and after the date of this Agreement until the
Closing Date, the Company shall not, and the Seller shall not cause the Company
or any of its Subsidiaries to do, and shall not permit the Company or any such
Subsidiary to do, directly or indirectly, any of the following without the
express prior written consent of the Purchaser, which consent shall not be
unreasonably withheld.

(a) make or adopt any changes to or otherwise alter the
Company's or any such Subsidiary's certificate or articles of incorporation,
by-laws or any other governing or constitutive documents;

(b) purchase or enter into any Contract or commitment to
purchase or lease any real property;

(c) grant any salary increase or permit any advance to any
director, officer or employee or enter into any new, or amend or otherwise
alter, any Employee Benefit Plan, or any employment or consulting Contract, or
any Contract providing for the payment of severance;

(d) other than in the ordinary course of business, make any
borrowings or otherwise create, incur, assume or guaranty any indebtedness
(except for the endorsement of negotiable instruments for deposit or collection
or similar transactions in the normal and ordinary

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course of the Business), issue any commercial paper, or refinance or prepay any
existing borrowings or indebtedness; provided that no borrowings may be made
without Purchaser's consent which include prepayment penalties or restrictions
on prepayment;

(e) enter into any Permit other than in the normal and
ordinary course of business;

(f) enter into any Contract, other than in the ordinary course
of the Business; provided that any Contract permitted to be entered into
pursuant to this Section 5.8(f) shall not (i) involve a pledge of or encumbrance
on any of the Company's or any of its Subsidiaries' assets or the incurrence by
the Company or any of its Subsidiaries of liabilities (other than in the
performance of services for customers in the ordinary course of business) in any
one transaction or series of related transactions in excess of Ten Thousand
Dollars ($10,000) and cause the aggregate commitment under all such new
Contracts to exceed One Hundred Thousand Dollars ($100,000), or (ii) involve a
term of more than one (1) year;

(g) make, or enter into any commitment to make, any
contribution (charitable or otherwise) to any Person;

(h) form any subsidiary or issue, grant, sell, redeem,
subdivide, combine, change or purchase any of the Company's or any of its
Subsidiary's shares, notes or other securities, whether debt or equity, or make
any Contract or commitments to do so;

(i) enter into any transaction with any Affiliate of the
Seller, the Company or any of its Subsidiaries including, without limitation the
purchase, sale or exchange of property with, the rendering of any service to, or
the making of any loans to, any such Affiliate (provided that the foregoing will
not restrict the Company's ability to pay dividends on its Common Stock);

(j) pay any royalty or management fee;

(k) grant or issue any subscription, warrant, option or other
right to acquire any of the Company's or any of its Subsidiaries' securities,
whether debt or equity, and whether by conversion or otherwise, or make any
commitment to do so;

(l) merge or consolidate, or agree to merge or consolidate,
with or into any other Person or acquire or agree to acquire or be acquired by
any Person;

(m) sell, lease, exchange, mortgage, pledge, hypothecate,
transfer or otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, hypothecate, transfer or otherwise dispose of, any of the Company's or
any of such Subsidiaries assets having an aggregate fair market value in excess
of $10,000 or more, except for the disposition of obsolete or worn-out assets in
the normal and ordinary course of business;

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(n) (i) change any of its methods of accounting in effect as
at the Balance Sheet Date, or (ii) make or rescind any express or deemed
election relating to Taxes, or change any of its methods of reporting income or
deductions for income tax purposes from those employed in the preparation of
income Tax Returns for the taxable year ended July 31, 1997, except, in either
case, as may be required by any applicable Requirement of Law, the IRS or GAAP;

(o) from July 31, 1997 until Closing, enter into any Contract
or make any commitment to make any capital expenditures or capital additions or
betterments in excess of an aggregate of $75,000;

(p) cause or permit the Company or any such Subsidiary to (i)
terminate any Employee Benefit Plan, (ii) permit any "prohibited transaction"
involving any Employee Benefit Plan, (iii) fail to pay to any Employee Benefit
Plan any contribution which it is obligated to pay under the terms of such
Employee Benefit Plan, whether or not such failure to pay would result in an
"accumulated funding deficiency" or (iv) allow or suffer to exist any occurrence
of a "reportable event" or any other event or condition, which presents a
material risk of termination by the PBGC of any Employee Benefit Plan. As used
in this Agreement, the terms "accumulated funding deficiency" and "reportable
event" shall have the respective meanings assigned to them in ERISA, and the
term "prohibited transaction" shall have the meaning assigned to it in the Code
and ERISA;

(q) enter into any transaction or conduct any operations not
in the normal and ordinary course of business;

(r) enter into any Contract or make any commitment to do any
of the foregoing; or

(s) waive any material rights or claims of the Company.

5.9. Exclusive Negotiation. Neither the Company nor the Seller
shall: (i) provide any information about the Company or any of its Subsidiaries
or any of their respective Businesses to any Person (other than the Purchaser, a
Potential Founding Company or their representatives) with a view to sell,
exchange or dispose or solicit an offer for the acquisition of any of the Shares
or any material interest in the Company, any of its Subsidiaries or their
respective Businesses; (ii) solicit or accept any other offers for the sale,
exchange or other disposition of the Shares or any material interest in the
Company, its Subsidiaries or their respective Businesses; (iii) negotiate or
discuss with any Person (other than the Purchaser or any of its representatives)
the possible sale, exchange or other disposition of the Shares or any material
interest in the Company, any of its Subsidiaries or their respective Businesses;
or (iv) sell, exchange or otherwise dispose of any of the Shares or any material
interest in the Company, any of its Subsidiaries or any of their respective
Businesses, in any of the foregoing cases, whether by equity sale, merger,
consolidation, equity exchange, sale of assets or otherwise. The Company shall,
and the Seller shall and shall cause the Company and each of its Subsidiaries
to,

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advise the Purchaser promptly of their or its receipt of any written offer or
written proposal concerning the Shares, the Company, any of its Subsidiaries,
any part of their respective Businesses or any material interest therein, and
the terms thereof.

5.10. Public Announcements. Prior to the Closing, neither the
Company nor the Seller shall issue any public report, statement, press release
or similar item or make any other public disclosure with respect to the
execution or substance of this Agreement prior to the consultation with and
approval of the Purchaser. In addition, prior to Closing, before Purchaser
issues a public statement that refers to the Company or the Seller (other than
in the Registration Statement) Purchaser will endeavor to consult with Seller to
the extent time permits. Nothing contained herein shall restrict the ability of
the Company or the Seller from contacting a third party in order to obtain a
Consent to the transactions contemplated hereby.

5.11. Amendment of Schedules. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until the Closing to
supplement or amend promptly the Disclosure Schedule or any other Schedules
hereto with respect to any matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in the Disclosure Schedule, provided that no amendment or
supplement to the Disclosure Schedule prepared by the Company that constitutes
or reflects an event or occurrence that would have a Material Adverse Effect
shall be effective unless the Purchaser consents to such amendment or
supplement. For all purposes of this Agreement, including without limitation for
purposes of determining whether the conditions set forth in Sections 6 and 7
have been fulfilled, the Schedules hereto shall be deemed to be the Schedules as
amended or supplemented pursuant to this Section 5.11. Except as otherwise
provided herein, no amendment of or supplement to a Schedule shall be made later
than 24 hours prior to the anticipated effectiveness of the Registration
Statement in connection with the Initial Public Offering (the "Registration
Statement").

5.12. Cooperation in Preparation of Registration Statement.

(a) The Company and the Seller shall furnish or cause to be
furnished to the Purchaser and the underwriters of the Initial Public Offering
(the "Underwriters") all of the information concerning the Company or the Seller
reasonably requested by the Purchaser and the Underwriters, and will cooperate
with the Purchaser and the Underwriters in the preparation of, any registration
statement (or similar document) relating to the Purchaser Financing Transaction
and the prospectus (or similar document) included therein (including audited
financial statements, prepared in accordance with generally accepted accounting
principles). The Company and the Seller agree promptly to advise the Purchaser
if at any time during the period in which a prospectus relating to the Purchaser
Financing Transaction is required to be delivered under the Securities Act, any
information contained in the prospectus concerning the Company or the Seller
becomes incorrect or incomplete in any material respect, and to provide the
information needed to correct such inaccuracy. The Purchaser agrees to use its
commercially reasonable best efforts to prepare and file the Registration
Statement as promptly as practicable,

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to furnish the Company with a copy thereof and each amendment thereto in
substantially the form in which it is to be filed as promptly as reasonably
practicable prior to such filing (it being understood that neither the Company
nor the Seller have any obligation to review the same other than with respect to
information regarding the Company or the Sellers) and diligently seek to cause
the Registration Statement to be declared effective and the Initial Public
Offering to be completed. The Purchaser agrees that neither the Seller nor the
Company shall have any responsibility for pro forma adjustments that may be made
to the Financial Statements.

(b) The Company and the Seller acknowledge and agree (i) that,
prior to the execution and delivery of a definitive underwriting agreement, the
Underwriters have made no firm commitment, binding agreement, or promise or
other assurance of any kind, whether express or implied, oral or written, that
the Registration Statement will become effective or that the Initial Public
Offering pursuant thereto will occur at a particular price or within a
particular range of prices or occur at all, (ii) that none of the prospective
Underwriters of the Purchaser's common stock, in the Initial Public Offering nor
any officers, directors, agents or representatives of such Underwriters shall
have any liability to the Seller, the Company or any other person affiliated or
associated with the Company for any failure of the Registration Statement to
become effective, the Initial Public Offering to occur at a particular price or
within a particular range of prices or occur at all, and (iii) the decision of
the Seller to enter into this Agreement and, if applicable, to vote in favor of
or consent to the transactions contemplated hereby, has been or will be made
independent of, and without reliance upon, any statements, opinions or other
communications of, or due diligence investigation which have been or will be
made or performed by any prospective Underwriter, relative to the Purchaser or
the prospective Initial Public Offering. The Seller acknowledges that shares of
DocuNet Common Stock received as a part of the Purchase Price, if any, will not
be issued pursuant to the Registration Statement; and, therefore, the
Underwriters shall have no obligation to the Seller with respect to any
disclosure contained in the Registration Statement and no Seller may assert any
claim against the Underwriters relating to the Registration Statement on account
thereof.

5.13. Examination of Final Financial Statement. The Company shall
provide to Purchaser prior to the Closing Date unaudited consolidated balance
sheets of the Company for each month and fiscal quarter end between the date of
this Agreement and the Closing Date, and unaudited consolidated statements of
income, cash flows and retained earnings of the Company for such subsequent
months and fiscal quarters. In addition, the Company shall prepare and deliver
to Purchaser at Closing the Closing Balance Sheet. Such financial statements,
which shall be deemed to be Financial Statements (as defined herein), shall have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except for the
absence of notes and subject to normal year end adjustments). Such financial
statements shall present fairly the results of operations of the Subsidiaries
for the periods indicated thereon.

5.13.AAudit Opinion. The parties acknowledge that the Financial
Statements identified in Section 3.12(a) have been reviewed by Arthur Andersen
LLP in anticipation of rendering its unqualified opinion thereon prior to
consummation of the Initial Public Offering.

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5.14. Lock-Up Agreements. In connection with the Initial Public
Offering, for good and valuable consideration, the Company and the Seller hereby
irrevocably agree that for a period of 180 days after the date of the
effectiveness (the "Effective Date") of the Registration Statement, as the same
may be amended, not to (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or dispose of
(except pursuant to the Escrow Agreement), directly or indirectly, any shares of
DocuNet Common Stock or any securities convertible into or exercisable or
exchangeable for shares of DocuNet Common Stock, or (ii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the DocuNet Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of DocuNet Common Stock or such other securities, in cash or otherwise without
the prior written consent of the Underwriters. Neither the Company nor the
Seller, without the prior written consent of the Underwriters, shall exercise
any demand, mandatory, piggyback, optional or any other registration rights, if
any such rights exist, for a period of 180 days from the Effective Date. The
Company and the Seller agree that the foregoing shall be binding upon their
transferees, successors, assigns, heirs and personal representatives and shall
benefit and be enforceable by the underwriters in the Initial Public Offering.
In furtherance of the foregoing, the Purchaser and its transfer agent, are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Section 5.14.

5.15. Compliance with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "Hart-Scott Act"). All parties to this Agreement hereby
recognize that one or more filings under the Hart-Scott Act may be required in
connection with the transactions contemplated herein. If it is determined by the
parties to this Agreement that filings under the Hart-Scott Act are required,
then: (i) each of the parties hereto agrees to cooperate and use its best
efforts to comply with the Hart-Scott Act; (ii) such compliance by the Seller
and the Company shall be deemed a condition precedent in addition to the
conditions precedent set forth in Article 6 of this Agreement, and such
compliance by Purchaser shall be deemed a condition precedent in addition to the
conditions precedent set forth in Article 6 of this Agreement; and (iii) the
parties agree to cooperate and use their best efforts to cause all filings
required under the Hart-Scott Act to be made. If filings under the Hart-Scott
Act are required, the costs and expenses thereof (including filing fees) shall
be borne by Purchaser. The obligation of each party to consummate the
transactions contemplated by this Agreement is subject to the expiration or
termination of the waiting period under the Hart-Scott Act, if applicable.

5.16. Reorganization Status. No party to this Agreement shall
undertake any actions not contemplated by this Agreement that would cause the
merger to fail to qualify as a reorganization as defined under Section
368(a)(1)(A) of the Code.

5.17. Leases. DocuNet and the owners of the Real Property subject to
the Leases shall execute the Leases prior to, or at, the Closing.

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5.18. Real Property Distribution. Prior to the Closing, the
buildings owned by the Company on 3000 and 3002 DeSoto Street, Monroe,
Louisiana, will be distributed to the Seller or an entity of the Seller's
choosing, together with all obligations under the mortgage outstanding on such
buildings.

5.19. Subsidiary. Prior to the Closing, Inter Linx Global
Information Exchange, L.L.C., a Subsidiary of the Company, shall merge with and
into the Company.

5.20. Debt Distribution. Prior to Closing, all liabilities of the
Company to Ray Blackwelder, together with all amounts outstanding thereunder
(including principal and unpaid interest), shall be assumed by Seller and the
Company's obligations thereunder satisfied and discharged; provided, however,
that the Company shall not in any way, whether by direct payment, prepayment or
financing, provide funds to satisfy and discharge such obligations.

5.21. Account Receivable Distribution. Prior to Closing, the
Receivable From Stockholder reflected on the Company Balance Sheet shall be
distributed to the Seller, the Seller shall assume all liabilities and
obligations, if any, under the split-dollar life insurance policies on the
Seller and Ray Blackwelder and the Company shall relinquish any rights to
reimbursement of provisions paid thereunder.

5.22. Right of First Refusal. Purchaser agrees that it shall not
sell or transfer to an unrelated third party ("Transfer") or close or
permanently discontinue ("Closure") any of the operations and assets of the
Company's current retail business, which includes art and engineering supplies,
blueprint reprographics and offset printing (the "Retail Business") without
first giving written notice to the Seller of an intention effect such Transfer
or Closure (the "Notice"). The Notice shall consist of (i) a statement of
Purchaser's bona fide intention to transfer and the identity and address of the
prospective transferee, if any; (ii) in the event of a proposed Transfer, the
terms of the proposed Transfer, including without limitation, any financing
arrangements known to the Purchaser (the "Transfer Terms"); and (iii) an offer
to sell the Retail Business to the Seller at the Transfer Terms, in the event of
a Transfer, or at the Closing Pricing (as defined below), in the event of a
Closure (the "Offer"). Seller shall have thirty (30) days from the date the
Notice is sent (the "Offering Period") to either accept or reject the Offer. In
the event that Seller accepts the Offer, Seller shall purchase the Retail
Business within fifteen (15) days of such acceptance. If Seller fails to respond
to the Offer prior to expiration of the Offering Period or rejects the Offer,
Purchaser shall be free to effect the Transfer or the Closure. The Closing Price
shall mean the price determined by a Certified Valuation Appraiser ("CVA")
mutually agreeable to both the Purchaser and the Seller, the costs of which
shall be jointly paid by the Purchaser and Seller (the "First Appraisal"). If
either Purchaser or Seller disagrees with the valuation, it may obtain a second
appraisal, at its own cost, by a CVA (the "Second Appraisal"). If the Second
Appraisal differs from the First Appraisal by more than 20%, then the CVAs
providing the First and Second Appraisals shall select a third CVA, the costs
and expenses of which shall be paid equally by the Purchaser and Seller, to
evaluate the methods of the first two appraisals (but not to conduct a third
appraisal). The third CVA will be directed to select between the First and
Second Appraisal, which shall become the

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Closing Price. Any taxes, fees or other costs to effect the foregoing transfer
or arising out of the sale will be paid equally by the Purchaser and Seller.
Seller's ownership (but not active involvement) shall not be subject to Section
8.2 of this Agreement.

5.23. Foreign Qualification. The Company shall qualify to do
business as a foreign corporation in the State of Mississippi prior to Closing.

ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING

6.1. Conditions Precedent to the Purchaser's Obligations. The
Purchaser's obligation to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of, or waiver in writing by the
Purchaser of, prior to or at the Closing, each and every of the following
conditions precedent:

(a) Representations and Warranties. Each of the
representations and warranties of the Company and the Seller contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date, except for those
representations and warranties which by their terms relate to an earlier date,
which representations and warranties shall be true and correct in all material
respects with regard to such earlier date. The Company and the Seller shall
deliver to the Purchaser a certificate dated the Closing Date, certifying that
all of the Company's and the Seller's representations and warranties contained
in this Agreement are true and correct on and as of the Closing Date as though
such representations and warranties had been made on and as of the Closing Date.

(b) Compliance with Covenants and Conditions. The Company and
the Seller shall have performed and complied in all material respects with each
and every covenant, agreement and condition required by this Agreement to be
performed or satisfied by the Company and the Seller, as the case may be, at or
prior to the Closing Date. The Company and the Seller shall deliver to the
Purchaser a certificate, dated the Closing Date, certifying that the Company and
the Seller have fully performed and complied in all material respects with all
the duties, obligations and conditions required by this Agreement to be
performed and complied with by them at or prior to the Closing Date.

(c) Delivery of Documents. The Company and the Seller shall
have delivered to the Purchaser all documents, certificates, instruments and
items (including, without limitation, certificates representing the Shares)
required to be delivered by him, her or it at or prior to the Closing Date
pursuant to this Agreement.

(d) Consents. All proceedings, if any, to have been taken and
all Consents including, without limitation, all Regulatory Approvals, necessary
or advisable in connection with the transactions contemplated by this Agreement
shall have been taken or obtained.

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(e) Financing. The Registration Statement on Form S-1 relating
to the Initial Public Offering shall have been declared effective by the
Securities and Exchange Commission and the closing of the sale of DocuNet Common
Stock to the Underwriters in the Initial Public Offering shall have occurred
simultaneously with the Closing Date hereunder.

(f) Satisfaction of Liabilities. The Company and each of its
Subsidiaries shall have satisfied and discharged all of their Debt except for:
(i) Debt for which an adjustment to the Base Purchase Price has been made under
Section 2.2(b) and (ii) Debt which constitutes an Adjusted Current Liability.

(g) Closing Balance Sheet The Company shall have delivered to
the Purchaser a true and complete copy of the Closing Balance Sheet, together
with a certificate dated the Closing Date, signed by the Company's chief
financial officer that the Closing Balance Sheet is in accordance with the Books
and Records and with GAAP applied on a consistent basis (except for the absence
of notes and subject to normal year-end audit adjustments) and presents fairly
the financial position of the Company as of the Closing Date.

(h) No Material Adverse Change. From and after the date of
this Agreement, there shall not have occurred or be threatened any development,
event, circumstance or condition that could reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect upon the Shares, or the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of the Company or any of its Subsidiaries.

(i) No Legal Proceeding Affecting Closing. There shall not
have been instituted and there shall not be pending or threatened any Legal
Proceeding, and no Order shall have been entered (i) imposing or seeking to
impose limitations on the ability of the Purchaser to acquire or hold or to
exercise full rights of ownership of any shares or of any securities of the
Company or any of the Company's subsidiaries; (ii) imposing or seeking to impose
limitations on the ability of the Purchaser to combine and operate the business,
operations and assets of the Company or any of the Company's Subsidiaries with
the Purchaser's business, operations and assets; (iii) imposing or seeking to
impose other sanctions, damages or liabilities arising out of the transactions
contemplated by this Agreement on the Purchaser or any of the Purchaser's
directors, officers or employees; (iv) requiring or seeking to require
divestiture by the Purchaser of all or any material portion of the business,
assets or property of the Company or any of its Subsidiaries; or (v)
restraining, enjoining or prohibiting or seeking to restrain, enjoin or prohibit
the consummation of transactions contemplated by this Agreement.

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(such date to be specified), (C) a true and correct copy of the Company's bylaws
as in effect on the date thereof and at all times since the adoption of the
resolution referred to in (D) is annexed to such certificate, (D) the
resolutions by the Company's board of directors authorizing the actions taken in
connection with the Merger, including as applicable, without limitation, the
execution, delivery and performance of this Agreement were duly adopted and
continue in force and effect (a copy of such resolutions to be annexed to such
certificate); (ii) setting forth the Company's incumbent officers and including
specimen signatures on such certificate or certificates as their genuine
signatures; and (iii) the Company is in good standing in all jurisdictions where
the ownership or lease of property or the conduct of its business requires it to
qualify to do business, except for those jurisdictions where the failure to be
duly qualified, authorized and in good standing would not have a material
adverse effect upon the business, prospects, operations, results of operations,
assets, liabilities or condition (financial or otherwise) on the Company. The
certification referred to above in (iii) shall attach certificates of good
standing certified by the Secretaries of State or other appropriate officials of
such states, dated as of a date not more than a five (5) days prior to the
Closing Date.

(k) Opinion of Counsel of Seller. Phelps, Dunbar, L.L.P.,
counsel for the Company and the Seller, shall have delivered to the Purchaser
their favorable opinion, dated the Closing Date, as to the matters covered in
Schedule 6.1(k). In rendering such opinion, counsel may rely to the extent
recited therein on certificates of public officials and of officers of Seller as
to matters of fact, and as to any matter which involves other than federal or
Louisiana law, such counsel may rely upon the opinion of local counsel
reasonably satisfactory to the Purchaser and its counsel.

(l) Termination of Related Party Agreements. All existing
agreements between the Company and the Seller, Affiliates of the Company or the
Seller, other than those, if any, set forth on Schedule 6.1(l), shall have been
canceled.

(m) Employment Agreements. Each of the persons listed on
Schedule 6.1(m) shall have entered into an employment agreement (collectively,
the "Employment Agreements") with the Company substantially in the form of
Exhibit C attached hereto.

(n) FIRPTA Certificate. The Seller shall have delivered to the
Purchaser a certificate to the effect that he or she is not a foreign person
pursuant to Section 1.1445-2(b) of the Treasury regulations.

(o) Insurance. The Purchaser shall be named as an additional
named insured on all of the Company's insurance policies as of the Closing Date.

(p) Escrow Agreement. The Seller and the Company shall have
executed the Escrow Agreement substantially in the form of Exhibit A attached
hereto.

6.2. Conditions Precedent to Company's and Seller's Obligations. The
Company's and Seller's obligations to consummate the transactions contemplated
by this

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Agreement are subject to the satisfaction of, or waiver in writing by the Seller
of, prior to or at the Closing, each and every of the following conditions
precedent:

(a) Representations and Warranties. Each of the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects on and as of the date of the
Closing Date, with the same force as though such representations and warranties
had been made on and as of the Closing Date except for those representations and
warranties that by their terms relate to an earlier date, which representations
and warranties shall be true and correct in all material respects with regard to
such earlier date. The Purchaser shall deliver to the Seller a certificate,
executed by a duly authorized officer of the Purchaser, dated as of the Closing
Date, certifying that all of its representations and warranties contained in
this Agreement are true and correct on and as of the Closing Date as though such
representations and warranties had been made on and as of the Closing Date.

(b) Compliance with Covenants and Conditions. The Purchaser
shall have performed and complied in all material respects with each and every
covenant, agreement and condition required by this Agreement to be performed or
satisfied by them at or prior to the Closing Date. The Purchaser shall deliver
to the Seller a certificate, dated the Closing Date, certifying that each of
them has fully performed and complied in all material respects with all the
duties, obligations and conditions required by this Agreement to be performed
and complied with by it at or prior to the Closing Date.

(c) Delivery of Documents. The Purchaser shall have delivered
to the Seller all documents, certificates, instruments and items required to be
delivered by them at or prior to the Closing.

(d) No Legal Proceeding Affecting Closing. There shall not
have been instituted and there shall not be pending or threatened any Legal
Proceeding, and no Order shall have been entered (i) imposing or seeking to
impose limitations on the ability of the Seller to consummate the Merger; (ii)
imposing or seeking to impose other sanctions, damages or liabilities arising
out of the transactions contemplated by this Agreement on the Company or any of
its Subsidiaries or any of their respective directors, officers or employees or
on any of the Seller; or (iii) restraining, enjoining or prohibiting or seeking
to restrain, enjoin or prohibit the consummation of transactions contemplated by
this Agreement.

(e) Escrow Agreement. The Purchaser shall have executed the
Escrow Agreement substantially in the form of Exhibit A attached hereto.

(f) Employment Agreements. The Purchaser shall have entered
into the Employment Agreements with each of the persons listed on Schedule
6.1(m).

(g) Secretary's Certificate. The Purchaser shall have
delivered to the Seller a certificate or certificates dated as of the Closing
Date and signed on its behalf by its Secretary to the effect that (i)(A) the
copy of the Purchaser's articles or certificate of

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incorporation attached to the certificate is true, correct and complete, (B) no
amendment to such articles or certificate of incorporation has occurred since
the date of the last amendment annexed (such date to be specified), (C) a true
and correct copy of the such entity's bylaws as in effect on the date thereof
and at all times since the adoption of the resolution referred to in (D) is
annexed to such certificate, (D) the resolutions by the entity's board of
directors authorizing the actions taken in connection with the Merger, including
as applicable, without limitation, the execution, delivery and performance of
this Agreement were duly adopted and continue in force and effect (a copy of
such resolutions to be annexed to such certificate) and (ii) setting forth the
incumbent officers of the entity and including specimen signatures on such
certificate or certificates of such officers executing this Agreement on behalf
of such entity as their genuine signatures.

(h) Financing. The registration statement on Form S-1 relating
to the Initial Public Offering shall have been declared effective by the
Securities and Exchange Commission and the closing of the sale of DocuNet Common
Stock to the Underwriters in the Initial Public Offering shall have occurred
simultaneously with the Closing Date hereunder.

(i) Opinion of Counsel of Purchaser. Pepper, Hamilton &
Scheetz LLP, counsel for Purchaser, shall have delivered to the Company and the
Seller their favorable opinion, dated the Closing Date, as to the matters
covered in Schedule 6.2(i). In rendering such opinion, counsel may rely to the
extent recited therein on certificates of public officials and of officers of
Purchaser as to matters of fact, and such opinion may be limited to federal laws
and the laws of the Commonwealth of Pennsylvania.

ARTICLE 7
CLOSING

At or prior to the Pricing, the parties shall take all
administrative actions necessary to prepare to (i) effect the Merger (including,
if permitted by applicable state law, the filing with the appropriate state
authorities of the Articles of Merger which shall become effective at the
Effective Time of the Merger) and (ii) effect the conversion and delivery of
Shares referred to in Section 2.9 hereof and payment of consideration for the
Shares; provided, that such actions shall not include the actual completion of
the Merger or the conversion and delivery of the shares and certified check(s)
referred to in Section 2 hereof, each of which actions shall only be taken upon
the Closing Date as herein provided. In the event that there is no Closing Date
and this Agreement terminates, Purchaser hereby covenants and agrees to do all
things required by Pennsylvania law and all things which counsel for the Company
advise Purchaser are required by applicable laws of the State of Louisiana in
order to rescind the merger effected by the filing of the Articles of Merger as
described in this Section. The taking of the actions described in clauses (i)
and (ii) above shall take place on the Pricing Date at the offices of Pepper,
Hamilton & Scheetz LLP, 3000 Two Logan Square, 18th and Arch Streets,
Philadelphia, PA 19103. On the Closing Date (x) the Articles of Merger shall be
or shall have been filed with the appropriate state authorities so that they
shall be or, as of 8:00 a.m. EASTERN STANDARD TIME on the Closing Date, shall
become effective and the Merger shall thereby be effected, (y) all transactions

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contemplated by this Agreement, including the conversion and delivery of shares,
the delivery of a certified check or checks in an amount equal to the cash
portion of the consideration which the Seller shall be entitled to receive
pursuant to the Merger referred to in Section 2 hereof and (z) the closing with
respect to the Initial Public Offering shall occur and be deemed to be
completed. The date on which the actions described in the preceding clauses (x),
(y) and (z) occurs shall be referred to as the "Closing Date." Except as
otherwise provided in Section 11 hereof, during the period from the Pricing Date
to the Closing Date, this Agreement may only be terminated by the parties if the
underwriting agreement in respect of the Initial Public Offering is terminated
pursuant to the terms thereof.

ARTICLE 8
CONFIDENTIALITY AND COVENANT NOT TO COMPETE

8.1. Confidentiality.

(a) Each party to this Agreement shall use Confidential
Information only in connection with the transactions contemplated hereby
(including the Initial Public Offering) and shall not disclose any Confidential
Information about any other party to any Person unless the party desiring to
disclose such Confidential Information receives the prior written consent of the
party about whom such Confidential Information pertains, except (i) to any
party's directors, officers, employees, agents, advisors and representatives who
have a need to know such Confidential Information for the performance of their
duties as employees, agents or representatives, (ii) to the extent strictly
necessary to obtain any Consents including, without limitation, any Regulatory
Approvals, that may be required or advisable to consummate the transactions
contemplated by this Agreement, (iii) to enforce such party's rights and
remedies under this Agreement, (iv) with respect to disclosures that are
compelled by any Requirement of Law or pursuant to any Legal Proceeding;
provided, that the party compelled to disclose Confidential Information
pertaining to any other party shall notify such other party thereof and use his
or its commercially reasonable efforts to cooperate with such other party to
obtain a protective order or other similar determination with respect to such
Confidential Information; (v) made to any party's legal counsel, independent
auditors, investment bankers or financial advisors under an obligation of
confidentiality; (vi) to other Founding Companies or Potential Founding
Companies; or (vii) as otherwise permitted by Section 5.10 of this Agreement.

(b) In the event that the transactions contemplated by this
Agreement are not consummated in accordance with the terms of this Agreement,
each party shall, upon the request of the other party, return to the other party
or destroy all Confidential Information and any copies thereof previously
delivered by such requesting party, except to the extent that such party deems
such Confidential Information necessary or desirable to enforce his or its
rights under this Agreement.

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(d) The parties hereto acknowledge and agree that they may
become aware of potential acquisition targets of the Purchaser, including but
not limited to the Potential Founding Companies (collectively, the "Purchaser
Targets"), in the course of discussions with the Purchaser or a Potential
Founding Company. Accordingly, the parties hereto each agree not to directly or
indirectly seek to acquire or merge with, or pursue or respond to, with an
intent to acquire or merge with, any Purchaser Targets until the later of 300
days after the date of this Agreement or 180 days after termination of this
Agreement.

(e) The Purchaser will cause each of the Founding Companies
other than the Company to enter into a provision similar to this Section 8.1
requiring each such Founding Company to keep confidential any information
obtained by such Founding Company.

8.2. Covenant Not To Compete. As a material inducement to the
Purchaser's consummation of the Merger, the Seller shall not, during the
Restricted Period, do any of the following, directly or indirectly, without the
prior written consent of the Purchaser in its sole discretion:

(a) compete, directly or indirectly, with the Purchaser, the
Surviving Corporation or the Company or any of their respective Affiliates or
Subsidiaries, or any of their respective successors or assigns, whether now
existing or hereafter created or acquired (collectively, the "Related
Companies"), or otherwise engage or participate, directly or indirectly, in any
business conducted by Purchaser or a Subsidiary (the "Restricted Business")
within any geographic area located within the United States of America, its
possessions or territories (the "Restricted Area");

(b) become interested (whether as owner, stockholder, lender,
partner, co-venturer, director, officer, employee, agent, consultant or
otherwise), directly or indirectly, in any Person that engages in the Restricted
Business within the Restricted Area; provided, that nothing contained in this
Section 8.2(b) shall prohibit the Seller from owing, as a passive investor, not
more than five percent (5%) of the outstanding securities of any class of any
publicly-traded securities of any publicly held Company listed on a
well-recognized national securities exchange or on an interdealer quotation
system of the National Association of Securities Dealers, Inc; or

(c) solicit, call on, divert, take away, influence, induce or
attempt to do any of the foregoing, in each case within the Restricted Area,
with respect to the Purchaser's, the Surviving Corporation's, the Company's or
any of their respective Related Companies' (A) customers or distributors or
prospective customers or distributors (wherever located) with respect to goods
or services that are competitive with those of the Purchaser, the Surviving
Corporation, the Company, or any of their respective Related Companies, (B)
suppliers or vendors or prospective suppliers or vendors (wherever located) to
supply materials, resources or services to be used in connection with goods or
services that are competitive with those of the Purchaser, the Surviving
Corporation, the Company or any of their respective Related Companies, (C)
distributors, consultants, agents, or independent contractors to terminate or
modify any contract,

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arrangement or relationship with the Purchaser, the Surviving Corporation, the
Company or any of their respective Related Companies or (D) employees to leave
the employ of the Purchaser, the Surviving Corporation, the Company or any of
their respective Related Companies.

8.3. Specific Enforcement; Extension of Period.

(a) The Seller acknowledges that any breach or threatened
breach by him or her of any provision of Sections 8.1 or 8.2 will cause
continuing and irreparable injury to the Purchaser, the Surviving Corporation,
the Company and their respective Related Companies for which monetary damages
would not be an adequate remedy. Accordingly, the Purchaser, the Surviving
Corporation, the Company and any of their respective Related Companies shall be
entitled to injunctive relief from a court of competent jurisdiction, including
specific performance, with respect to any such breach or threatened breach. In
connection therewith, the Seller shall not, in any action or proceeding to so
enforce any provision of this Article 8, assert the claim or defense that an
adequate remedy at law exists or that injunctive relief is not appropriate under
the circumstances. The rights and remedies of the Purchaser, the Surviving
Corporation, the Company and any of their respective Related Companies set forth
in this Section 8.3 are in addition to any other rights or remedies to which the
Purchaser, the Surviving Corporation, the Company or any of their respective
Related Companies may be entitled, whether existing under this Agreement, at law
or in equity, all of which shall be cumulative.

(b) The periods of time set forth in this Article 8 shall not
include, and shall be deemed extended by, any time required for litigation to
enforce the relevant covenant periods. The term "time required for litigation"
as used in this Section 8.3(b) shall mean the period of time from the earlier of
the Seller's first breach of the provisions of Sections 8.1 or 8.2 or service of
process upon the Seller through the expiration of all appeals related to such
litigation.

8.4. Disclosure. The Seller acknowledges that the Purchaser, the
Company or any of their respective Related Companies may provide a copy of this
Agreement or any portion of this Agreement to any Person with, through or on
behalf of which the Seller may, directly or indirectly, breach or threaten to
breach any of the provisions of Section 8.2.

8.5. Interpretation. It is the desire and intent of the Purchaser
and the Seller that the provisions of this Article 8 shall be enforceable to the
fullest extent permissible under applicable law and public policy. Accordingly,
if any provision of this Article 8 shall be determined to be invalid,
unenforceable or illegal for any reason, then the validity and enforceability of
all of the remaining provisions of this Article 8 shall not be affected thereby.
If any particular provision of this Article 8 shall be adjudicated to be invalid
or unenforceable, then such provision shall be deemed amended to delete
therefrom the portion thus adjudicated to be invalid or unenforceable, such
amendment to apply only to the operation of such provision in the particular
jurisdiction in which such adjudication is made; provided that, if any provision
contained in this Article 8 shall be adjudicated to be invalid or unenforceable
because such provision is held to be excessively broad as to duration,
geographic scope, activity or subject,

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then such provision shall be deemed amended by limiting and reducing it so as to
be valid and enforceable to the maximum extent compatible with the applicable
laws and public policy of such jurisdiction, such amendment only to apply with
respect to the operation of such provision in the applicable jurisdiction in
which the adjudication is made.

8.6. Seller's Acknowledgment. The Seller acknowledges that he or she
has carefully read and considered the provisions of this Article 8. The Seller
acknowledges and understands that the restrictions contained in this Article 8
may limit his ability to earn a livelihood in a business similar to that of the
Purchaser, the Company or any of their respective Related Companies, but he
nevertheless believes that he has received and will receive sufficient
consideration and other benefits to justify such restrictions. The Seller also
acknowledges and understands that these restrictions are reasonably necessary to
protect the Purchaser's, the Surviving Corporation's, the Company's and their
respective Related Companies' interests, and the Seller does not believe that
such restrictions will prevent him from earning a living in businesses that are
not competitive with those of the Purchaser, the Surviving Corporation, the
Company or any of their respective Related Companies during the term of such
restrictions in the Restricted Area.

ARTICLE 9
SURVIVAL

9.1. Survival of Representations, Warranties, Covenants and
Agreements. Subject to the last three (3) sentences of this Section 9.1, the
representations and warranties of the Seller, the Company and the Purchaser
contained in this Agreement shall survive until the second anniversary of the
Closing Date, except that the representations and warranties set forth in each
of Section 3.11, Section 3.20 and Section 3.23 shall survive until the
expiration of the statute of limitations applicable to the subject matter
addressed thereunder. The covenants and agreements of the Seller, the Company
and of the Purchaser contained in this Agreement will survive the Closing until,
by their own respective terms, they have been fully performed. Any breach of a
representation, warranty, covenant or agreement that would otherwise terminate
in accordance with this Article 9 will continue to survive if an Indemnity
Notice, an Unliquidated Indemnity Notice or a Claim Notice (as applicable) shall
have been given in good faith based on facts reasonably expected to establish a
valid claim under Article 10 on or prior to the date on which such
representation, warranty, covenant or agreement would have otherwise terminated,
until the related claim for indemnification has been satisfied or otherwise
resolved as provided in Article 10. Any representation or warranty contained in
this Agreement made by any party or any written information furnished by any
party that was made by such party fraudulently or with intent to defraud or
mislead or with gross negligence shall indefinitely survive the Closing. Any
representation or warranty made by the Seller or the Company in this Agreement
or any written information furnished or caused to be furnished by the Seller or
the Company to the Purchaser that is incorporated in, or is the basis for
omitting information from, the Registration Statement, prospectus or other
document, or any amendment or supplement thereof in connection with any
Purchaser Financing Transaction shall survive until the expiration of all
applicable statutes of

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limitations regarding claims brought by investors in such Purchaser Financing
Transaction alleging material misstatements or omissions in such documents.

9.2. Intentionally Omitted.

9.3. Underwriter's Benefit. The Seller's and the Company's
representations and warranties and covenants contained in this Agreement or any
document, instrument, certificate or other item furnished or to be furnished to
the Purchaser pursuant hereto or thereto or in connection with the transactions
contemplated by this Agreement shall run to the benefit of any Underwriter of
the Purchaser's common stock subject to the Initial Public Offering in addition
to the benefit of the Purchaser. Accordingly, any such Underwriter, and each
person, if any, who controls any such Underwriter within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission thereunder shall be (i) an intended
beneficiary of this Agreement and (ii) deemed to be an Indemnified Party for the
purposes of the indemnification provided for in Article 10.

ARTICLE 10
INDEMNIFICATION

10.1. Seller's Indemnification. From and after the Closing Date, the
Seller shall, jointly and severally, indemnify and hold harmless the Purchaser,
the Surviving Corporation and the Company and any of their respective
Subsidiaries, and each Person who controls (within the meaning of the Securities
Act) the Purchaser, the Surviving Corporation or, after the Closing Date, the
Company or any of its Subsidiaries, and each of their respective directors,
officers, employees, agents, successors and assigns and legal representatives,
from and against all Indemnifiable Losses that may be imposed upon, incurred by
or asserted against any of them resulting from, related to, or arising out of
(i) any misrepresentation, breach of any warranty or non-fulfillment of any
covenant to be performed by the Company or the Seller under this Agreement or
any document, instrument, certificate or other item required or to be furnished
to the Purchaser pursuant hereto or thereto or in connection with the
transactions contemplated by this Agreement; (ii) any untrue statement of any
material fact contained in any registration statement, prospectus, document or
other item, or any amendment or supplement thereof, prepared, filed, distributed
or executed in connection with any Purchaser Financing Transaction, or any
omission to state in any such registration statement, prospectus, document,
item, amendment or supplement a material fact required to be stated therein or
necessary to make the statements therein not misleading, that is based upon any
misrepresentation or breach of any warranty made by the Company or the Seller
pursuant to this Agreement or upon any untrue statement or omission contained in
any written information furnished or caused to be furnished by the Seller to the
Purchaser (provided that the Seller hereby acknowledges that the information
concerning the Seller and the Company in the Registration Statement shall be
deemed to be provided to the Purchaser for the purposes hereof); (iii) any
liability or obligation of the Seller, the Company or any of its Subsidiaries
other than liabilities reflected in the determination of the Net Book Value of
the Combined Assets and Liabilities made under Section 2.8(c); (iv) any

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liability or claim for Taxes that accrued or relates to a period of time ending
on or prior to the Closing Date (without regard to any information provided on
the Disclosure Statement or otherwise disclosed to or known by any Indemnified
Party); (v) any non-compliance with applicable Requirements of Law relating to
bulk sales, bulk transfers and the like or to fraudulent conveyances, fraudulent
transfers, preferential transfers and the like; (vi) any action, claim or demand
by any holder of the Company's securities, whether debt or equity, in such
holder's capacity as such, whether now existing or hereafter arising or
incurred; (vii) any non-compliance with the Worker Adjustment and Retraining
Act, 29 U.S.C. ss.2101, et. seq., as amended, and the rules and regulations
promulgated thereunder and any similar Requirement of Law; and (viii) any Legal
Proceeding or Order arising out of any of the foregoing even though such Legal
Proceeding or Order may not be filed, become final, or come to light until after
the Closing Date.

10.1.A. No Indemnification of Projected Information. Notwithstanding
any possible interpretation of Paragraph 10.1 or any other provision of this
Agreement, the failure of the Surviving Company or any successor to achieve
after the Closing Date any projected financial information, including, without
limitation, sales of software and costs of software development, in and of
itself shall not result in an Indemnifiable Loss to Purchaser or the Surviving
Company.

10.2. Purchaser's Indemnification. From and after the Closing Date,
the Purchaser and the Surviving Corporation shall indemnify and hold harmless
the Seller and each of its respective legal representatives, successors and
assigns from and against all Indemnifiable Losses imposed upon, incurred by or
asserted against, the Seller resulting from, related to, or arising out of: (i)
any misrepresentation, breach of any warranty or non-fulfillment of any covenant
to be performed by the Purchaser under this Agreement or any document,
instrument, certificate or other item furnished or to be furnished to the Seller
pursuant hereto or thereto or in connection with the transactions contemplated
by this Agreement; (ii) any liabilities reflected in the determination of the
Net Book Value of the Combined Acquired Assets and Liabilities made under
Section 2.8(c); (iii) any untrue statement of any material fact contained in any
registration statement, prospectus, document or other item, or any amendment or
supplement thereof, prepared, filed, distributed or executed in connection with
any Purchaser Financing Transaction, or any omission to state in any such
registration statement, prospectus, document, item, amendment or supplement a
material fact required to be stated therein or necessary to make the statements
therein not misleading, that is based upon any misrepresentation or breach of
any warranty made by the Purchaser pursuant to this Agreement or upon any untrue
statement or omission contained in any information furnished or caused to be
furnished by the Purchaser; and (iv) any Legal Proceeding or Order arising out
of any of the foregoing even though such Legal Proceeding or Order may not be
filed, become final, or come to light until after the Closing Date.

10.3. Payment; Procedure for Indemnification.

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give written notice to the party from whom indemnification under this Article 10
is sought (the "Indemnifying Party") of the amount of the Indemnifiable Loss,
together with reasonably sufficient information to enable the Indemnifying Party
to determine the accuracy and nature of the claimed Indemnifiable Loss (the
"Indemnity Notice"). The failure of any Indemnified Party to give the
Indemnifying Party the Indemnity Notice shall not release the Indemnifying Party
of liability under this Article 10; provided, however that the Indemnifying
Party shall not be liable for Indemnifiable Losses incurred by the Indemnified
Party that would not have been incurred but for the delay in the delivery of, or
the failure to deliver, the Indemnity Notice. Within thirty (30) days after the
receipt by the Indemnifying Party of the Indemnity Notice, the Indemnifying
Party shall either (i) pay to the Indemnified Party an amount equal to the
Indemnifiable Loss or (ii) object to such claim, in which case the Indemnifying
Party shall give written notice to the Indemnified Party of such objection
together with the reasons therefor, it being understood that the failure of the
Indemnifying Party to so object shall preclude the Indemnifying Party from
asserting any claim, defense or counterclaim relating to the Indemnifying
Party's failure to pay any Indemnifiable Loss. The Indemnifying Party's
objection shall not, in and of itself, relieve the Indemnifying Party from its
obligations under this Article 10. In the event that the parties are unable to
resolve the subject of the Indemnity Notice, the issue shall be submitted for
determination to a neutral third party designated by the President of the
Philadelphia office of the American Arbitration Association.

(b) In the event that any Indemnified Party shall have
reasonable grounds to believe that an Indemnifiable Loss may be incurred, such
Indemnified Party shall, within fourteen (14) days after obtaining sufficient
information to articulate such grounds, give written notice to the applicable
Indemnifying Party thereof, together with such information as is reasonably
sufficient to describe the potential or contingent claim to the extent then
feasible (an "Unliquidated Indemnity Notice"). The failure of an Indemnified
Party to give the Indemnifying Party the Unliquidated Indemnity Notice shall not
release the Indemnifying Party of liability under this Article 10; provided,
however that the Indemnifying Party shall not be liable for Indemnifiable Losses
incurred by the Indemnified Party that would not have been incurred but for the
delay in the delivery of, or the failure to deliver, the Unliquidated Indemnity
Notice. Within sixty (60) days after the amount of such claim shall be
finalized, resolved, or liquidated, the Indemnified Party shall give the
Indemnifying Party an Indemnity Notice, and the Indemnifying Party's obligations
under this Article 10 with respect to such Indemnity Notice shall apply.

(c) In the event the facts giving rise to the claim for
indemnification under this Article 10 shall involve any action or threatened
claim or demand by any third party against the Indemnified Party, the
Indemnified Party, within the earlier of, as applicable, ten (10) days after
receiving notice of the filing of a lawsuit or sixty (60) days after receiving
notice of the existence of a claim or demand giving rise to the claim for
indemnification (which shall include a notice from any Governmental Authority of
an intent to audit with respect to Taxes), shall send written notice of such
claim to the Indemnifying Party (the "Claim Notice"). The failure of the
Indemnified Party to give the Indemnifying Party the Claim Notice shall not
release the Indemnifying Party of liability under this Article 10; provided,
however, that the Indemnifying

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Party shall not be liable for Indemnifiable Losses incurred by the Indemnified
Party that would not have been incurred but for the delay in the delivery of, or
the failure to deliver, the Claim Notice. Subject to the provision contained in
the third sentence immediately following this sentence, and except for claims
resulting from, relating to or arising out of any Purchaser Financing
Transaction or the provisions of Section 3.23, the Indemnifying Party shall be
entitled to defend such claim in the name of the Indemnified Party at its own
expense and through counsel of its own choosing, but which is reasonably
satisfactory to the Indemnified Party; provided, that if the applicable claim or
demand is against, or if the defendants in any such Legal Proceeding shall
include, both the Indemnified Party and the Indemnifying Party and the
Indemnified Party reasonably concludes that there are defenses available to it
that are different or additional to those available to the Indemnifying Party or
if the interests of the Indemnified Party may be reasonably deemed to conflict
with those of the Indemnifying Party, then the Indemnified Party shall have the
right to select separate counsel and to assume the Indemnified Party's defense
of such claim, demand or Legal Proceeding, with the reasonable fees, expenses
and disbursements of such counsel to be reimbursed by the Indemnifying Party as
incurred. The Indemnifying Party shall give the Indemnified Party notice in
writing within ten (10) days after receiving the Claim Notice from the
Indemnified Party in the event of litigation, or otherwise within thirty (30)
days, of its intent to do so. In the case of any claim resulting from, relating
to or arising out of any Purchaser Financing Transaction or the provisions of
Section 3.23, the Purchaser shall have the right to control the defense thereof
at the Indemnifying Party's expense. Whenever the Indemnifying Party is entitled
to defend any claim hereunder, the Indemnified Party may elect, by notice in
writing to the Indemnifying Party, to continue to participate through its own
counsel, at its expense, but the Indemnifying Party shall have the right to
control the defense of the claim or the litigation; provided, that the
Indemnifying Party (i) retains counsel reasonably satisfactory to the
Indemnified Party and pursuant to an arrangement satisfactory to the Indemnified
Party; otherwise, the Indemnified Party shall have the right to control the
defense of the claim or the litigation. Notwithstanding any other provision
contained in this Agreement, the party controlling the defense of the claim or
the litigation shall not settle any such claim or litigation without the written
consent of the other party; provided, that if the Indemnified Party is
controlling the defense of the claim or the litigation and shall have, in good
faith, negotiated a settlement thereof, which proposed settlement contains terms
that are reasonable under the circumstances, then the Indemnifying Party shall
not withhold or delay the giving of such consent (and in the event the
Indemnifying Party and Indemnified Party are unable to agree as to whether the
proposed settlement terms are reasonable, the Indemnifying Party and Indemnified
Party will request that the disagreement be resolved by a neutral third party
designated by the President of the Philadelphia office of the American
Arbitration Association). In the event that the Indemnifying Party is
controlling the defense of the claim or the litigation and shall have negotiated
a settlement thereof, which proposed settlement is substantively final and
unconditional as to the parties thereto (other than the consent of the
Indemnified Party required under this Section 10.3(c)) and contains an
unconditional release of the Indemnified Party and does not include the taking
of any actions by, or the imposition of any restrictions on the part of, the
Indemnified Party and the Indemnified Party shall refuse to consent to such
settlement, the liability of the Indemnifying Party under this Article 10, upon
the ultimate disposition of such litigation or claim, shall be limited to the
amount of the proposed settlement; provided, however,

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that in the event the proposed settlement shall require that the Indemnified
Party make an admission of liability, a confession of judgment, or shall contain
any other non-financial obligation which, in the reasonable judgment of the
Indemnified Party, renders such settlement unacceptable, then the Indemnified
Party's failure to consent shall not give rise to the limitation of Indemnifying
Party's liability as provided for in this Section 10.3(c), and the Indemnifying
Party shall continue to be liable to the full extent of such litigation or claim
and provided further, that notwithstanding any provision to the contrary, no
Indemnifiable Losses with respect to Taxes shall be settled without the prior
written consent of the Purchaser, which shall not be unreasonably withheld.

10.4. Equitable Contribution Under the Securities Act. To provide
for just and equitable contribution to joint liability under the Securities Act
in any case in which the Purchaser, the Surviving Corporation, the Company, or
any controlling Person of the Purchaser or the Company (within the meaning of
the Securities Act) makes a claim for indemnification pursuant to Section
10.1(ii) but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that Section 10.1(ii) provides
for indemnification in such case, then, the Purchaser, the Surviving
Corporation, the Company, each controlling Person and the Seller will contribute
to the aggregate Indemnifiable Losses to which the Purchaser, the Surviving
Corporation, the Company or any such controlling Person may be subject (after
contribution from others) as is appropriate to reflect the relative fault of the
Purchaser, the Surviving Corporation, the Company, such controlling Person and
the Seller in connection with the statements or omissions which resulted in such
Indemnifiable Losses, as well as the relative benefit received by the Purchaser,
the Surviving Corporation, the Company, such controlling Person and the Seller
as a result of the issuance of the securities to which such Indemnifiable Losses
relate, it being understood that the parties acknowledge that the overriding
equitable consideration to be given effect in connection with this provision is
the ability of one party or the other to correct the statement or omission which
resulted in such Indemnifiable Losses, and that it would not be just and
equitable if contribution pursuant hereto were to be determined by pro rata
allocation or by any other method of allocation which does not take into
consideration the foregoing equitable considerations; provided, however, that,
in any such case, no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation.

10.5. Exclusiveness of Indemnification. The indemnification rights
of the parties under this Article 10 are exclusive of other rights and remedies
that the parties may have under this Agreement (but for this provision), at law
or in equity or otherwise.

10.6. Limitations on Indemnification. Purchaser, the Company, the
Surviving Corporation and the other Persons or entities indemnified pursuant to
Section 10.1 shall not assert any claim for indemnification hereunder against
the Seller until such time as, the aggregate of all claims which such persons
may have against the Seller shall exceed $54,000 (the "Indemnification
Threshold"), whereupon such claims shall be indemnified in full. The Seller

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shall not assert any claim for indemnification hereunder against Purchaser, the
Company or the Surviving Corporation until such time as, the aggregate of all
claims which the Seller may have against Purchaser, the Company or the Surviving
Corporation shall exceed $54,000, whereupon such claims shall be indemnified in
full. The limitation or assertion of claims for indemnifications contained in
this paragraph shall apply only to claims based upon inaccuracies in, or
breaches of, representations and warranties contained in this Agreement or any
document, instrument, certificate or other item required to be furnished
pursuant to this Agreement or in connection with the transaction contemplated by
this Agreement.

No person shall be entitled to indemnification under this Article 10 if
and to the extent that such person's claim for indemnification is directly or
indirectly related to a breach by such person of any representation, warranty,
covenant or other agreement set forth in this Agreement.

Notwithstanding any other term of this Agreement, except for Indemnifiable
Losses described in Section 10.1(iv), the Seller shall not be liable under this
Article 10 or otherwise for an amount which exceeds the amount of proceeds
received by the Seller in connection with the transactions contemplated herein.
For purposes of the foregoing limitation, the DocuNet Common Stock shall be
valued at the Initial Public Offering Price.

No claim under this Article 10 shall be made unless an Indemnity Notice,
an Unliquidated Indemnity Notice or a Claim Notice (as applicable) has been
given prior to the applicable survival period.

10.7. Value of DocuNet Common Stock. Any shares of DocuNet Common
Stock used to satisfy an Indemnity Claim shall be valued at the lower of the
Initial Public Offering Price and the Value as of the date such shares are so
used.

ARTICLE 11
TERMINATION AND REMEDIES

11.1. Termination. This Agreement may be terminated, and the
transactions contemplated by this Agreement may be abandoned:

(a) at any time before the Closing, by the mutual written
agreement among the Company, the Seller and the Purchaser;

(b) at any time before the Closing, by the Purchaser pursuant
to Section 5.4(a), or if any of the Company's or the Seller's representations or
warranties contained in this Agreement were materially incorrect when made or
become materially incorrect;

(c) at any time before the Closing, by the Seller if any of
the Purchaser's representations or warranties contained in this Agreement were
materially incorrect when made or become materially incorrect;

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(d) at any time before the Closing, by the Seller, on the one
hand, or by the Purchaser, on the other hand, upon any material breach by such
other party's covenants or agreements contained in this Agreement and the
failure of such other party to cure such breach, if curable, within ten (10)
days after written notice thereof is given by the non-breaching party to the
breaching party; or

(e) at any time after the date which is 270 days after the
date of this Agreement, by the Seller, on the one hand, or by the Purchaser on
the other hand, upon notification to the non-terminating party by the
terminating party if the Closing shall not have occurred on or before such date
and such failure to consummate is not caused by a breach of this Agreement by
the terminating party.

11.2. Effect of Termination.

(a) Subject to Section 11.2(b) of this Agreement, if this
Agreement is validly terminated pursuant to Section 11.1, then this Agreement
shall forthwith become void, and, subject to such Section 11.2(b), there shall
be no liability under this Agreement on the part of the Company, the Seller or
the Purchaser and all rights and obligations of each party to this Agreement
shall cease; provided, that (i) the provisions with respect to expenses in
Section 16.4 shall indefinitely survive any such termination, (ii) the
provisions with respect to confidentiality of Section 8.1 shall survive any such
termination until it, by its own terms, is no longer operative; (iii) the
provisions with respect to exclusivity of negotiations of Section 5.9 shall
survive for 180 days after such termination, but only if the termination is made
by Purchaser pursuant to Section 11.1(b) or Section 11.1(d); and (iv) this
Section 11.2 shall indefinitely survive such termination.

ARTICLE 12
POST-CLOSING COVENANTS

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information relating to periods on or prior to the Closing Date, upon reasonable
notice by the Seller and on terms not disruptive to the business, operation or
employees of the Purchaser, the Surviving Corporation, the Company or any of
their respective Subsidiaries, to assist the Seller in (i) completing any tax or
regulatory filings or financial statements required or appropriate to be made by
the Seller after the Closing Date or in completing any other reasonable and
customary business objective, (ii) prosecuting or defending on behalf of the
Seller, the Company or any of its Subsidiaries any litigation controlled by the
Seller or (iii) complying with requests made of the Seller by any Taxing
Authority or any Governmental or Regulatory Authority conducting an audit,
investigation or inquiry relating to the Company's or any of its Subsidiaries'
activities during periods prior to the Closing Date. The Seller will hold all
information provided to them pursuant to this Section 12.1 (and any information
derived therefrom) in confidence to the same extent as required by Section 8.1
of this Agreement with respect to Confidential Information.

12.2. Disclosure. If, subsequent to the effective date of the
registration statement relating to the Initial Public Offering and prior to the
25th day after the date of the final prospectus of Purchaser utilized in
connection with the Initial Public Offering, the Company or the Seller become
aware of any fact or circumstance which would change (or, if after the Closing
Date, would have changed) a representation or warranty of Company or the Seller
in this Agreement or would affect any document delivered pursuant hereto in any
material respect, the Company and the Seller shall promptly give notice of such
fact or circumstance to Purchaser.

12.3. Accounts Receivable. In the event that the Company or the
Seller makes a payment after the Closing Date to Purchaser in full satisfaction
of an uncollected Receivable, Purchaser will assign its rights to such
Receivable to the Company or the Seller, as applicable.

ARTICLE 13
TRANSFER RESTRICTIONS

13.1. Transfer Restrictions. Except for transfers to immediate
family members who agree to be bound by the restrictions set forth in this
Section 13.1 (or trusts for the benefit of the Seller or family members, the
trustees of which so agree), for a period of one year from the Closing, except
pursuant to Section 15 hereof, the Seller shall (i) sell, assign, exchange,
transfer, encumber, pledge, distribute, appoint, or otherwise dispose of (a) any
shares of DocuNet Common Stock received by the Seller pursuant to this
Agreement, or (b) any interest (including, without limitation, an option to buy
or sell) in any such shares of DocuNet Common Stock, in whole or in part, and no
such attempted transfer shall be treated as effective for any purpose; or (ii)
engage in any transaction, whether or not with respect to any shares of DocuNet
Common Stock or any interest therein, the intent or effect of which is to reduce
the risk of owning the shares of DocuNet Common Stock acquired pursuant to this
Agreement (including, by way of example and not limitation, engaging in put,
call, short-sale, straddle or similar market transactions). The certificates
evidencing the DocuNet Common Stock delivered to the Seller pursuant to Section
2 of this Agreement will bear a legend substantially in the form set forth below
and containing such other information as the Purchaser may deem necessary or
appropriate:

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THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED,
APPOINTED OR OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE
REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE, ASSIGNMENT, EXCHANGE,
TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION, APPOINTMENT OR OTHER
DISPOSITION PRIOR TO THE FIRST ANNIVERSARY OF CLOSING DATE. UPON THE
WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES
TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH
THE TRANSFER AGENT) AFTER THE DATE SPECIFIED ABOVE.

ARTICLE 14
SECURITIES LAWS REPRESENTATIONS

The Seller acknowledges that the shares of DocuNet Common Stock to
be delivered to the Seller pursuant to this Agreement have not been and will not
be registered under the Securities Act or any other state securities laws, and
therefore may not be resold without compliance with the Securities Act. The
DocuNet Common Stock to be acquired by the Seller pursuant to this Agreement is
being acquired solely for their own respective accounts, for investment purposes
only, and with no present intention of distributing, selling or otherwise
disposing of it in connection with a distribution.

14.1. Compliance with Law. The Seller covenants, warrants and
represents that none of the shares of DocuNet Common Stock issued to the Seller
will be offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the Securities Act, the rules and regulations of the Securities and Exchange
Commission and applicable state securities laws. All the DocuNet Common Stock
shall bear the following legend in addition to any other legends required under
this Agreement:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") OR ANY
STATE SECURITIES OR BLUE SKY LAWS. SUCH SHARES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH SHARES UNDER THE 1933 ACT AND ANY STATE SECURITIES OR BLUE
SKY LAWS, UNLESS, IN THE OPINION (WHICH SHALL BE IN FORM AND
SUBSTANCE SATISFACTORY TO THE

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CORPORATION) OF COUNSEL SATISFACTORY TO THE
CORPORATION, SUCH REGISTRATION IS NOT REQUIRED.

14.2. Economic Risk; Sophistication. The Seller is able to bear the
economic risk of an investment in the DocuNet Common Stock acquired pursuant to
this Agreement and can afford to sustain a total loss of such investment and
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the proposed investment in the
DocuNet Common Stock. The Seller or its respective purchaser representatives
have had an adequate opportunity to ask questions and receive answers from the
officers of the Purchaser concerning any and all matters relating to the
transactions described herein including, without limitation, the background and
experience of the current and proposed officers and directors of the Purchaser,
the plans for the operations of the business of the Purchaser, the business,
operations and financial condition of the Founding Companies, and any plans for
additional acquisitions and the like. The Seller acknowledges receipt and review
of the draft Registration Statement attached hereto as Schedule 14.2 for
informational purposes and subject to the limitations of Section 5.12(b). The
Seller acknowledges that such draft is subject to completion and subject to
change, and Seller acknowledges that his purchaser representatives have had an
adequate opportunity to ask questions and receive answers from the officers of
the Purchaser pertaining thereto.

ARTICLE 15
REGISTRATION RIGHTS

15.1. Piggyback Registration Rights. Subject to Sections 5.14 and
15.5, at any time following the Closing, whenever the Purchaser proposes to
register any DocuNet Common Stock for its own or others' account under the
Securities Act for a public offering, other than (i) any shelf registration of
DocuNet Common Stock; (ii) registrations of shares to be used solely as
consideration for acquisitions of additional businesses by the Purchaser; and
(iii) registrations relating to employee benefit plans, the Purchaser shall give
the Seller prompt written notice of its intent to do so. Upon the written
request of the Seller given within 30 days after receipt of such notice,
Purchaser shall cause to be included in such registration all of the DocuNet
Common Stock which the Seller requests. However, if the Purchaser is advised in
writing in good faith by any managing underwriter of an underwritten offering of
the securities being offered pursuant to any registration statement under this
Section 15.1 that the number of shares to be sold by persons other than the
Purchaser is greater than the number of such shares which can be offered without
adversely affecting the offering, the Purchaser may reduce pro rata the number
of shares offered for the accounts of such persons (based upon the number of
shares held by such persons) to a number deemed satisfactory by such managing
underwriter or such managing underwriter can eliminate the participation of all
such persons in the offering, provided that, for each such offering made by the
Purchaser after the Initial Public Offering, a reduction shall be made first by
reducing the number of shares to be sold by persons other than the Purchaser,
the Seller, the Founding Companies, the stockholders of the Founding Companies
and other stockholders (the "Other Stockholders") of the Company immediately
prior to the Initial Public Offering, and

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<PAGE>

thereafter, if a further reduction is required, by reducing the number of shares
to be sold by the Seller, the Founding Companies, the stockholders of the
Founding Companies, and the Other Stockholders, pro rata based upon the number
of shares held by such persons.

15.2. Registration Procedures. All expenses incurred in connection
with the registrations under this Article 15 (including all registration,
filing, qualification, legal, printer and accounting fees, but excluding
underwriting commissions and discounts and fees, if any, of separate counsel
engaged by the Seller) shall be borne by the Purchaser. In connection with
registrations under Section 15.1, the Purchaser shall (i) prepare and file with
the Securities and Exchange Commission as soon as reasonably practicable, a
registration statement with respect to the DocuNet Common Stock and use its best
efforts to cause such registration to promptly become and remain effective for a
period of at least 90 days (or such shorter period during which holders shall
have sold all DocuNet Common Stock which they requested to be registered); (ii)
use its best efforts to register and qualify the DocuNet Common Stock covered by
such registration statement under applicable state securities laws as the
holders shall reasonably request for the distribution for the DocuNet Common
Stock; and (iii) take such other actions as are reasonable and necessary to
comply with the requirements of the Securities Act and the regulations
thereunder.

15.3. Underwriting Agreement. In connection with each registration
pursuant to Section 15.1 covering an underwritten registration public offering,
the Purchaser and each participating holder agree to enter into a written
agreement with the managing underwriters in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such managing underwriters and companies of the Purchaser's size and
investment stature, including indemnification and the prohibition of sales or
transfers of such holders' common stock for an applicable lock-up period.

15.4. Availability of Rule 144. The Purchaser shall not be obligated
to register shares of DocuNet Common Stock held by the Seller at any time when
the resale provisions of Rule 144(k) (or any similar or successor Seller
provision) promulgated under the Securities Act are available to the Seller.

15.5. Survival. The provisions of this Article 15 shall survive the
Closing until December 31, 1999.

ARTICLE 16
MISCELLANEOUS

16.1. Notices. All notices required to be given to any of the
parties of this Agreement shall be in writing and shall be deemed to have been
sufficiently given, subject to the further provisions of this Section 16.1, for
all purposes when presented personally to such party or sent by certified or
registered mail, return receipt requested, with proper postage prepaid, or any
national overnight delivery service, with proper charges prepaid, to such party
at its address set forth below:

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<PAGE>

(a) If to the Company (prior to the Closing Date):

with a copy to:

C. Delbert Hosemann, Jr.
Phelps Dunbar, L.L.P.
200 S. Lamar Street
Jackson, Mississippi 39225-3066

(b) If to the Seller:

Gary Blackwelder

with a copy to:

C. Delbert Hosemann, Jr.
Phelps Dunbar, L.L.P.
200 S. Lamar Street
Jackson, Mississippi 39225-3066

DocuNet Inc.
715 Matson's Ford Road
Villanova, PA 19085

with a copy to:

Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103
Attention: Barry M. Abelson, Esquire

-71-
<PAGE>

notice is required, the giving of such notice may be waived in writing by the
party entitled to receive such notice.

16.2. No Third Party Beneficiaries. Except as is otherwise provided
herein, this Agreement is not intended to, and does not, create any rights in or
confer any benefits upon anyone other than the parties hereto.

16.3. Schedules. All schedules attached to this Agreement are
incorporated by reference into this Agreement for all purposes.

16.4. Expenses. The parties to this Agreement shall pay their own
expenses incident to the preparation, negotiation and execution of this
Agreement including, without limitation, all fees and costs and expenses of
their respective accountants and legal counsel. The parties acknowledge that all
fees and expenses of Arthur Andersen LLP incurred in auditing the Company's
financial statements in connection with the transactions contemplated hereby
shall be the responsibility of Purchaser, provided that, notwithstanding the
foregoing, the Seller shall be responsible to pay $10,000 of such fees and
expenses.

16.5. Further Assurances. The Seller, the Surviving Corporation and
the Purchaser shall, at his or its own expense, from time to time upon the
request of the other, execute and deliver, or cause to be executed and
delivered, at such times as may reasonably be requested by the Purchaser, the
Surviving Corporation or the Seller, such other documents, certificates and
instruments and take such actions as the Purchaser, the Surviving Corporation or
the Seller deem reasonably necessary to consummate more fully the transactions
contemplated by this Agreement. In addition, the Seller shall (i) provide or
cause to be provided such written information with respect to themselves or the
Company, (ii) execute and deliver or cause to be executed and delivered such
other documents, certificates or instruments, and (iii) take or cause to be
taken such actions, in each of the foregoing cases, as the Purchaser, the
Surviving Corporation, any Underwriter or any auditor reasonably deems necessary
or desirable to complete any audit of either Company's financial statements or
in connection with any Purchaser Financing Transaction; provided, that the
Seller shall not be required to execute any guaranty of any indebtedness
obtained by the Purchaser or any of its Subsidiaries.

16.6. Entire Agreement; Amendment. This Agreement and any other
documents, instruments or other writings delivered or to be delivered pursuant
to this Agreement constitute the entire agreement among the parties with respect
to the subject matter of this Agreement and supersede all prior agreements,
understandings, and negotiations, whether written or oral, with respect to the
subject matter of this Agreement. None of the terms and provisions contained in
this Agreement can be changed without a writing signed by all parties hereto.

16.7. Section and Paragraph Titles. The section and paragraph titles
used in this Agreement are for convenience only and are not intended to define
or limit the contents or substance of any such section or paragraph.

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<PAGE>

16.8. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of each of the parties to this Agreement and their respective
heirs, personal representatives, and successors and permitted assigns. Neither
the Company, the Seller nor the Purchaser shall have the right to assign this
Agreement without the prior written consent of the others, except that Purchaser
may assign its rights and obligations under this Agreement prior to the Closing
to any wholly-owned Subsidiary of the Purchaser; provided that the DocuNet
Common Stock to be issued in payment of a portion of the purchase price shall be
registered under Section 12 of the Securities Exchange Act of 1934 at the time
it is issued.

16.10. Severability. Any provision of this Agreement (other than
those contained in Article 8 of this Agreement, in which case, Section 8.5 of
this Agreement shall govern with respect to the invalidity, unenforceability, or
illegality of any such provision) that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such provision, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

16.11. Governing Law. This Agreement shall be governed and construed
as to its validity, interpretation and effect by the laws of the Commonwealth of
Pennsylvania notwithstanding the choice of law rules of Pennsylvania or any
other jurisdiction.

IN WITNESS WHEREOF, the Seller, the Purchaser and the Company have
each caused this Agreement to be duly executed as of the date first written
above.

DOCUNET INC.

By: /s/ Bruce M. Gillis
--------------------------------------
Bruce M. Gillis
Chairman of the Board of Directors
and Chief Executive Officer

IMAGE AND INFORMATION
SOLUTIONS, INC.

By: /s/ Gary D. Blackwelder
--------------------------------------
Gary D. Blackwelder
President

Witness: /s/ Donna McKoun /s/ Gary D. Blackwelder
------------------------ ------------------------------------------
Gary D. Blackwelder, Individually

-73-
<PAGE>

Schedule 2.4
Capitalization

Gary D. Blackwelder 100 shares

-74-
<PAGE>

Schedule 2.8(b)
Exclusions From Debt

1. Term loan payable to a bank in monthly installments of $490 including
interest at 7.75% through February 1999 listed on the notes to the Company's
Financial Statements.

2. Term loan payable to a bank in monthly installments of $645 including
interest at 7.75% through February 1999 listed on the notes to the Company's
Financial Statements.

3. Term loan payable to a bank in monthly installments of $455 including
interest at 8.9% through July 1998 listed on the notes to the Company's
Financial Statements.

4. Up to an aggregate of $75,000 principal amount promissory notes to be entered
into by the Company from August 20, 1997 until Closing the primary purpose for
which will be capital expenditures.

-75-
<PAGE>

Schedule 2.9
Distribution of Merger Consideration

- --------------------------------------------------------------------------------
Aggregate Cash Stock
Purchase Price Aggregate Stock Escrow
Shareho1der (Paid at Closing) Purchase Price Amount
- --------------------------------------------------------------------------------
Gary Blackwelder Base Purchase Price $3,400,000 $270,000
less (i) Stock
Purchase Price and
(ii) adjustments
pursuant to Section
2.8(b), (c), (d) and
(e).
- --------------------------------------------------------------------------------

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<PAGE>

Schedule 2.9(b)

Phelps Dunbar, L.L.P.
Escrow Account: 5000362102
AB Routing No. 065305436
Bank: Deposit Guaranty National Bank; Attention Brian Rippee.

-77-
<PAGE>

Schedule 4.1(b)
Articles and Bylaws of Purchaser

-78-
<PAGE>

Schedule 6.1(k)
Form of Opinion of Seller's Counsel

__________, 1997

DocuNet Inc.
715 Matson's Ford Road
Villanova, PA 19085

Ladies and Gentlemen:

We have acted as counsel to ___________________, a ______________
corporation (the "Company"), in connection with the transactions contemplated by
that certain [Purchase Agreement] dated as of ___________, 1997 (the "Purchase
Agreement"), among the Company, DocuNet Inc., a Pennsylvania corporation (the
"Purchaser"), and ("Stockholders"). This opinion is furnished to you pursuant to
Section ______ of the Purchase Agreement.

In connection with rendering this opinion, we have examined the
Purchase Agreement and the Escrow Agreement (collectively the "Transaction
Documents"). We have also examined the [Certificate] [Articles] of Incorporation
and Bylaws of the Company. We have also made such examinations of laws,
certificates of public officials, instruments, documents, and corporate records
and have made such other investigations as we have deemed necessary in
connection with the opinions hereinafter set forth. In such examination we have
assumed (i) the genuineness of all signatures on certificates and documents
other than those signed by the Company and the Stockholders, (ii) the accuracy,
completeness and authenticity of all records and documents submitted to us as
originals, (iii) the conformity to the original of all documents submitted to us
as certified, conformed or photostatic copies, and (iv) the legal capacity of
all natural persons who are parties to the Transaction Documents.

Capitalized terms used herein and not otherwise defined herein have
the meanings set forth in the Purchase Agreement.

Our opinion is limited to the laws of the State of_________ and the
federal laws of the United States and we do not purport to express any opinion
herein with respect to the laws of any other state or jurisdiction.

We note that the Transaction Documents contain clauses selecting
Pennsylvania law as governing law. For purposes of this opinion, we have
assumed, with your permission, that such clauses selected ________ law, without
regard for principles of choice of law, and that such documents are being
executed and delivered and will be performed in, and that the applicable
property is and will be held in, the State of__________.

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<PAGE>

Based on the foregoing and subject to the qualifications set forth
herein, it is our opinion that:

1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of_____________ and has all
necessary corporate power and authority to enter into the Transaction Documents
and to consummate the transactions contemplated thereby.

2. The execution, delivery and performance of the Transaction
Documents have been duly authorized by all requisite corporate action on the
part of the Company.

3. The Transaction Documents have been duly and validly executed by
the Company and the Stockholders and constitute the legal, valid and binding
obligations of the Company and the Stockholders, respectively, and are
enforceable against them in accordance with their respective terms.

4. Neither the execution and the delivery of the Transaction
Documents, nor the consummation of the transactions contemplated thereby,
violate the (Certificates) [Articles] of Incorporation or Bylaws of the Company.

All of the opinions set forth in this letter are further subject to:
(i) the effect of any applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other laws affecting or relating to
creditors' rights, (ii) as to any covenants not to compete, the unenforceability
of, or limitation on, certain provisions when such provisions are found
unreasonable in scope, (iii) the requirement that, to the extent that provisions
of the Transaction Documents and any other documents delivered in connection
therewith permit the parties to make certain determinations, such determinations
may be subject to a requirement that they be made on a reasonable basis and in
good faith, (iv) the effect of general principles of equity, equitable defenses
and the discretion of the court regarding the enforcement of remedies
(regardless of whether considered in a proceeding in equity or at law), and (v)
the unenforceability of or limitation on the enforceability of certain
provisions, including without limitation indemnification provisions, when such
provisions are found to be contrary to public policy.

This opinion is rendered as of the date hereof and we assume no
obligation to modify, update or supplement this opinion to reflect any facts or
circumstances which may hereafter come to our attention, or any changes in laws
winch may hereafter occur.

Our opinion, as expressed herein, is solely for the benefit of the
addressees, their successors and assigns and unless we give our prior written
consent, neither our opinion nor this opinion letter may be quoted in whole or
in part or be relied upon by any other person.

-80-
<PAGE>

Schedule 6.1(l)
Related Party Agreements

None.

-81-
<PAGE>

Schedule 6.1(m)
Employment Agreements

Gary Blackwelder

-82-
<PAGE>

Schedule 6.2(i)
Form of Opinion of Purchaser's Counsel

[_______] __, 1997

[NAME AND ADDRESS]

Ladies and Gentlemen:

We have acted as counsel to DocuNet Inc., a Pennsylvania corporation
(the "Purchaser"), in connection with the transactions contemplated by that
certain [Purchase Agreement] dated as of _________, 1997 (the "Purchase
Agreement"), among the Purchaser, __________, a _________ corporation (the
"Seller"), and ____________________ ("Stockholders"). This opinion is furnished
to you pursuant to Section _____ of the Purchase Agreement.

In connection with rendering this opinion, we have examined the
Purchase Agreement and the Escrow Agreement (collectively the "Transaction
Documents"). We have also examined the Articles of Incorporation and Bylaws of
the Purchaser. We have also made such examinations of laws, certificates of
public officials, instruments, documents, and corporate records and have made
such other investigations as we have deemed necessary in connection with the
opinions hereinafter set forth. In such examination we have assumed (i) the
genuineness of all signatures on certificates and documents other than those
signed by the Purchaser, (ii) the accuracy, completeness and authenticity of all
records and documents submitted to us as originals, (iii) the conformity to the
original of all documents submitted to us as certified, conformed or photostatic
copies, and (iv) the legal capacity of all natural persons who are parties to
the Transaction Documents.

Capitalized terms used herein and not otherwise defined herein have
the meanings set forth in the Purchase Agreement.

Our opinion is limited to the laws of the Commonwealth of
Pennsylvania and the federal laws of the United States and we do not purport to
express any opinion herein with respect to the laws of any other state or
jurisdiction.

Based on the foregoing and subject to the assumptions and
qualifications set forth herein, it is our opinion that:

1. The Purchaser is a corporation duly organized, validly existing
and presently subsisting under the laws of the Commonwealth of Pennsylvania and
has all necessary

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<PAGE>

corporate power and authority to enter into the Transaction Documents and to
consummate the transactions contemplated thereby.

2. The execution, delivery and performance of the Transaction
Documents have been duly authorized by all requisite corporate action on the
part of the Purchaser.

3. The Transaction Documents have been duly and validly executed by
the Purchaser and constitute the legal, valid and binding obligations of the
Purchaser enforceable against it in accordance with their respective terms.

4. Neither the execution and the delivery of the Transaction
Documents, nor the consummation of the transactions contemplated thereby,
violate the Articles of Incorporation or Bylaws of the Purchaser.

All of the opinions set forth in this letter are further subject to:
(i) the effect of any applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other laws affecting or relating to
creditors' rights, (ii) as to any covenants not to compete, the unenforceability
of, or limitation on, certain provisions when such provisions are found
unreasonable in scope, (iii) the requirement that, to the extent that provisions
of the Transaction Documents and any other documents delivered in connection
therewith permit the parties to make certain determinations, such determinations
may be subject to a requirement that they be made on a reasonable basis and in
good faith, (iv) the effect of general principles of equity, equitable defenses
and the discretion of the court regarding the enforcement of remedies
(regardless of whether considered in a proceeding in equity or at law), and (v)
the unenforceability of or limitation on the enforceability of certain
provisions, including without limitation indemnification provisions, when such
provisions are found to be contrary to public policy.

This opinion is rendered as of the date hereof and we assume no
obligation to modify, update or supplement this opinion to reflect any facts or
circumstances which may hereafter come to our attention, or any changes in laws
which may hereafter occur.

Our opinion, as expressed herein, is solely for the benefit of the
addressees, their successors and assigns, and unless we give our prior written
consent, neither our opinion nor this opinion letter may be quoted in whole or
in part or be relied upon by any other person.

PEPPER, HAMILTON & SCHEETZ LLP

------------------------------
A Partner

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<PAGE>

Schedule 14.2
Draft Registration Statement

To be provided.

-85-
<PAGE>

Disclosure Schedule Section 5.8

1. Payments to the Company's 401(k) plan in the ordinary course of business and
consistent with past practices.

2. Bonuses in an aggregate amount of $50,000 already accrued on the Financial
Statements at July 31, 1997.

3. Additional bonuses to employees of the Company in an aggregate amount not to
exceed $50,000 prior to Closing in connection with the transactions contemplated
herein.

4. Bonus to Seller in an amount up to aggregate of $325,000 from July 31, 1997
to the Closing Date.

5. Increase in annual salary of Gary D. Blackwelder to $125,000 on November 15,
1997 if the Closing has not yet occurred.

-86-

EXHIBIT A

ESCROW AGREEMENT

This Escrow Agreement ("Agreement") dated as of this ____ day of ______,
1997, by and among Gary Blackwelder ("Seller"), DocuNet Inc., a Pennsylvania
corporation ("Purchaser") and ______ (the "Escrow Agent"). The Purchaser, the
Seller and the Escrow Agent are sometimes collectively referred to herein as the
"Parties" and individually as a "Party."

W I T N E S S E T H :

WHEREAS, pursuant to the Purchase Agreement (as hereinafter defined), it is
a condition to the consummation of the transactions contemplated thereby that at
the Closing, this Escrow Agreement be entered into by the Parties.

(a) Common Stock shall mean the common stock, $ ____ par value, of
the Purchaser.

(b) Market Price shall mean the average closing price of Common
Stock during the twenty (20) day trading period immediately preceding the Price
Determination Date.

(d) Purchase Agreement shall mean that certain Stock Purchase
Agreement, Asset Purchase Agreement or Agreement and Plan of Reorganization, as
the case may be, between the Seller and the Purchaser.

(e) Purchase Price shall mean the amount payable by the Purchaser
pursuant to Article 2 of the Purchase Agreement.

(f) Share Value shall mean the lesser of (i) the Initial Public
Offering Price or (ii) the Market Price.

-1-

<PAGE>

5. Pledge of Common Stock; Restriction on Transferability.

(c) Up until any disbursement of any shares of Common Stock
deposited into the Escrow Account, Seller shall be entitled to vote said shares
in any meeting of shareholders, and shall be entitled to all dividends paid
thereon.

-2-

<PAGE>

6. Purpose of the Escrow Account.

(a) Adjustments to Purchase Price. To the extent provided in
Article 2 of the Purchase Agreement, the Parties have specified a mechanism for
the final determination of the Purchase Price of the Company (the "Purchase
Price Provision"). The amounts that may be payable by the Seller to the
Purchaser under the Purchase Price Provision are herein called the "Covered
Amounts." One purpose of the Escrow Account is, to the extent herein provided,
to provide a source of funds for the payment of the Covered Amounts.

(b) Indemnification. The Escrow Account further serves to secure
the indemnification obligations of the Seller under Article 10 of the Purchase
Agreement (the "Indemnification Provision"). The amounts that may be payable to
the Purchaser under the Indemnification Provision are herein called the
"Indemnity Amounts."

7. Application of Escrow Account. The Escrow Account will be retained
by the Escrow Agent and shall be distributed as follows:

-3-

<PAGE>

The Escrow Agent may act or refrain from acting in respect of any matter
referred to herein in full reliance upon and by and with the advice of counsel
which may be selected by it, and shall be fully protected in so acting or in
refraining from acting upon the advice of such counsel.

The Escrow Agent is hereby authorized to comply with and obey all orders,
judgements, decrees or writs entered or issued by any court, and in the event
the Escrow Agent obeys or complies with any such order, judgment, decree or writ
of any court, in whole or in part, it shall not be liable to any of the Parties
hereto, nor to any other person or entity, by reason of such compliance,
notwithstanding that it shall be determined that any such order, judgment,
decree or writ be entered without jurisdiction or be invalid for any reason or
be subsequently reversed, modified, annulled or vacated.

The Purchaser and the Seller agree that the Escrow Agent is acting solely
as an escrow agent hereunder and not as a trustee, and that the Escrow Agent has
no fiduciary duties, obligations or liabilities under this Agreement.

11. Fees of Escrow Agent. All fees, if any, of the Escrow Agent for
service as escrow agent hereunder shall be paid by the Purchaser.

-4-

<PAGE>

A. If to Purchaser:

DocuNet Inc.
715 Matson's Ford Road
Villanova, PA 19085

With a copy to:

Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103
Attention: Barry M. Abelson, Esquire

B. If to Seller:

Gary Blackwelder

With a copy to:

Attention: , Esquire

C. If to the Escrow Agent:

With a copy to:

-5-

<PAGE>

Copies of any notices sent by the Escrow Agent shall be sent to all other
parties hereto.

15. Binding Effect. This Agreement will be binding upon and inure to
the benefit of the parties hereto and their respective representatives,
successors and assigns.

17. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.

18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

19. Captions and Paragraph Headings. Captions and paragraph headings
used herein are for convenience only and are not part of this Agreement and will
not be used in construing it.

20. Term. The escrow established by this Agreement shall continue until
the earlier of (i) the mutual agreement of the Parties or (ii) one hundred
eighty (180) days following the Closing whereupon all amounts and shares of
Common Stock then on deposit in the Escrow Account shall be paid and delivered
to the Seller; provided, however, that in the event there is an asserted but
unresolved claim ("Claim") pursuant to Article 2 or Article 10 of the Purchase
Agreement on such 180th day, then any combination of cash and Common Stock
(valued at the Share Value) equal, in combination, to the amount of any and all
such Claims shall remain in the Escrow Account. Such cash and/or Common Stock so
remaining in the Escrow Account shall remain subject to this Agreement until the
final resolution of the applicable Claim(s) that required the retention of such
cash and/or Common Stock; provided, however, that in all events all Common Stock
held in the Escrow Account shall be distributed to the Seller within five (5)
years from the Closing and, to the extent such Common Stock is distributed,
Seller shall replenish the Escrow Account with cash in a like amount, valued at
the Share Value.

-6-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have hereunto caused this Agreement
to be executed by their respective officers hereunto duly authorized, as of the
day and year first above written.

DOCUNET INC.

By:
-------------------------------
Name:
Title:

-----------------------------------
Gary Blackwelder

[ESCROW AGENT]

By:
-------------------------------
Name:
Title:

-7-

<PAGE>

AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
IMAGEMAX, INC.

IMAGEMAX, INC., a corporation organized and existing under and by
virtue of the provisions of the Business Corporation Law of 1988 of the
Commonwealth of Pennsylvania (the "Corporation"), hereby states as follows:

FIRST: These Amended and Restated Articles of Incorporation were duly
adopted by the Corporation's board of directors (the "Board") and shareholders
in accordance with the provisions of Section 1912(a) and Section 1914(a) of the
Business Corporations Law of 1988 of the Commonwealth of Pennsylvania, as
amended (the "BCL"), respectively, by the unanimous written consent of the Board
in accordance with Section 1727(b) and by the unanimous written consent of the
shareholders in accordance with Section 1766(a).

SECOND: The text of the Corporation's original Articles of
Incorporation filed on November 15, 1996, and all amendments thereto, is hereby
superseded and restated in its entirety to read as follows:

ARTICLE I
NAME; STATUTE OF INCORPORATION

The name of the Corporation is ImageMax, Inc. The Corporation is
incorporated under the provisions of Business Corporation Law of 1988.

ARTICLE II
REGISTERED OFFICE

The Corporation's registered office in this Commonwealth is Two Bala Plaza,
Suite 300, Bala Cynwyd, Pennsylvania 19004, Montgomery County.

ARTICLE III
CAPITAL STOCK

The aggregate number of shares authorized is:

(a) Forty Million (40,000,000) shares of Common Stock, no par value
per share; and

(b) Ten Million (10,000,000) shares of Preferred Stock, no par value
per share, of which Six Hundred Fifty-Five Thousand (655,000)
shares (and such additional shares as may be determined by the
Corporation's Board of Directors) shall be designated as Series A
Convertible Preferred Stock with

<PAGE>

the designations, preferences and rights as set forth on Exhibit
A attached hereto.

The Board of Directors of the Corporation shall have the full and complete
authority, by resolution from time to time, to establish one or more series
and to issue shares of Preferred Stock and to fix, determine and vary the
voting rights, designations, preferences, qualifications, privileges,
limitations, options, conversion rights and other special rights of each
series of Preferred Stock, including, but not limited to, dividend rates
and manner of payment, preferential amounts payable upon voluntary or
involuntary liquidation, voting rights, conversion rights, redemption
prices, terms and conditions and sinking fund and stock purchase prices,
terms and conditions.

ARTICLE IV
LIMITATION OF LIABILITY

No person who is or was a director of the Corporation shall be personally
liable as such for monetary damages for any action taken or any failure to take
any action unless (a) such director has breached or failed to perform the duties
of his or her office under the BCL, and (b) such breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness. The foregoing
limitation of liability shall not apply to (i) the responsibility or liability
of a director pursuant to any criminal statute, or (ii) the liability of a
director for the payment of taxes pursuant to federal, state or local law. No
amendment to or repeal of this Article, and no adoption of any provision in the
Corporation's Articles of Incorporation inconsistent with this Article, shall
apply to or affect in any respect the liability or alleged liability of any
director of the Corporation for or with respect to any act or failure to act on
the part of such director occurring prior to such amendment, repeal or adoption.

ARTICLE V
INDEMNIFICATION

Section 5.1. Officers and Directors - Direct Actions. The Corporation
shall indemnify any director or officer of the Corporation (as used in this
Article, the phrase "director or officer of the Corporation" shall mean any
person who is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director or officer of another
domestic or foreign corporation for profit or not-for-profit, partnership, joint
venture, trust or other enterprise), who was or is a party (other than a party
plaintiff suing on his or her own behalf), or who is threatened to be made such
a party, to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Corporation) arising out of, or in connection with,
any actual or alleged act or omission or by reason of the fact that he or she is
or was a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director or officer

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of another domestic or foreign corporation for profit or not-for-profit,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she met the standard of conduct of (a) acting in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the Corporation and (b) with respect to any
criminal proceeding, having no reasonable cause to believe his or her conduct
was unlawful. The termination of any action or proceeding by judgment, order,
settlement or conviction or upon a plea of nolo contendere or its equivalent
shall not of itself create a presumption that the person (i) did not act in good
faith and in a manner that he or she reasonably believed to be in, or not
opposed to, the best interests of the Corporation and (ii) with respect to any
criminal proceeding, had reasonable cause to believe that his or her conduct was
unlawful.

Section 5.2. Officers and Directors - Derivative Actions. The
Corporation shall indemnify any director or officer of the Corporation who was
or is a party (other than a party suing in the right of the Corporation), or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding by or in the right of the Corporation to procure a judgment
in the Corporation's favor by reason of the fact that he or she is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director or officer of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of the action, suit or proceeding if he or she met the standard of conduct of
acting in good faith and in a manner he or she reasonably believed to be in, or
not opposed to, the best interests of the Corporation. Indemnification shall not
be made under this Section in respect of any claim, issue or matter as to which
the director or officer of the Corporation has been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Common Pleas of the
judicial district embracing the county in which the registered office of the
Corporation is located or the court in which the action, suit or proceeding was
brought determines upon application that, despite the adjudication of liability,
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for the expenses that the Court of Common Pleas
or other court deems proper.

Section 5.3. Employees and Agents. The Corporation may, to the extent
permitted by the BCL, indemnify any employee or agent of the Corporation (as
used in this Article, the phrase "employee or agent of the Corporation" shall
mean any person who is or was an employee or agent of the Corporation, other
than a director or officer of the Corporation, or is or was serving at the
request of the Corporation as such an employee or agent of another domestic or
foreign corporation for profit or not-for-profit, partnership, joint venture,
trust or other enterprise) who was or is a party (other than a party plaintiff
suing on his or her own behalf), or who is threatened to be made such a party,
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, against expenses (including
attorneys' fees),

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judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or her in connection with such action, suit or proceeding by reason of
the fact that he or she is or was an employee or agent of the Corporation;
provided that he or she has met the applicable standard of conduct set forth in
Sections 5.1 and 5.2, subject to the limitations set forth in Section 5.2 in the
case of an action, suit or proceeding by or in the right of the Corporation to
procure a judgment in the Corporation's favor.

Section 5.4. Mandatory Indemnification. To the extent that a director
or officer of the Corporation or any employee or agent of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 5.1, 5.2 or 5.3, or in defense of any claim,
issue or matter therein, he or she shall be indemnified by the Corporation
against expenses (including attorneys' fees) actually and reasonably incurred by
him or her in connection therewith.

Section 5.5. Advancing Expenses. Expenses (including attorneys' fees)
incurred by a director or officer of the Corporation or an employee or agent of
the Corporation in defending any action, suit or proceeding referred to in
Sections 5.1, 5.2 or 5.3 may be paid by the Corporation in advance of the final
disposition of the action, suit or proceeding upon receipt of an undertaking by
or on behalf of such person to repay such amount if it is ultimately determined
that he or she is not entitled to be indemnified by the Corporation as
authorized in this Article V.

Section 5.6. Procedure.

(a) Unless ordered by a court, any indemnification under Section
5.1, 5.2 or 5.3 or advancement of expenses under Section 5.5 shall be made by
the Corporation only as authorized in a specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in Section 5.1, 5.2 or 5.3.

(b) All determinations under this Section 5.6 shall be made:

(1) With respect to indemnification under Section 5.3 and
advancement of expenses to an employee or agent of the Corporation, by the Board
by a majority vote.

(2) With respect to indemnification under Section 5.1 or 5.2 and
advancement of expenses to a director or officer of the Corporation,

(A) By the Board by a majority vote of a quorum consisting
of directors who were not parties to such action or proceeding, or

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

Section 5.7. Nonexclusivity of Indemnification.

(a) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article V shall not be deemed exclusive of any other
rights to which a person seeking indemnification or advancement of expenses may
be entitled under any Bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to actions in his or her official capacity and
as to actions in another capacity while holding that office. Section 1728
(relating to interested directors; quorum) of the BCL, or any successor section,
shall be applicable to any Bylaw, contract or transaction authorized by the
directors under this Section 5.7. The Corporation may create a fund of any
nature, which may, but need not be, under the control of a trustee, or otherwise
secure or insure in any manner its indemnification obligations, whether arising
under or pursuant to this Article V or otherwise.

(b) Indemnification pursuant to Section 5.7(a) hereof shall not be
made in any case where the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness.

(c) Indemnification pursuant to Section 5.7(a), under any Bylaw,
agreement, vote of shareholders or directors or otherwise, may be granted for
any action taken or any failure to take any action, and may be made whether or
not the Corporation would have the power to indemnify the person under any other
provision of law, except as provided in this Section 5.7, and whether or not the
indemnified liability arises or arose from any threatened or pending or
completed action by or in the right of the Corporation.

Section 5.8. Insurance. The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was a director or
officer of the Corporation or an employee or agent of the Corporation, against
any liability asserted against such person and incurred by him or her in any
such capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against that liability
under the provisions of this Article V or otherwise.

Section 5.9. Past Officers and Directors. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article V
shall unless otherwise provided when authorized or ratified continue as to a
person who has ceased to be a director or officer of the Corporation or an
employee or agent of the Corporation and shall inure to the benefit of the heirs
and personal representatives of that person.

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Section 5.10. Surviving or New Corporations. References to "the
Corporation" in this Article V include all constituent corporations absorbed in
a consolidation, merger or division, as well as the surviving or new corporation
resulting therefrom, so that any director, officer, employee or agent of the
constituent, surviving or new corporation shall stand in the same position under
the provisions of this Article V with respect to the surviving or new
corporation as he or she would if he or she had served the surviving or new
corporation in the same capacity.

Section 5.11. Application to Employee Benefit Plans. For purposes of
this Article V:

(a) References to "other enterprises" shall include employee benefit
plans and references to "serving at the request of the Corporation" shall
include any service as a director, officer, employee or agent of the Corporation
that imposes duties on, or involves services by, the person with respect to an
employee benefit plan, its participants or beneficiaries.

(b) Excise taxes assessed on a person with respect to an employee
benefit plan pursuant to applicable law shall be deemed "fines."

(c) Action with respect to an employee benefit plan taken or omitted
in good faith by a director, officer, employee or agent of the Corporation in a
manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of the plan shall be deemed to be action in a manner that is
not opposed to the best interests of the Corporation.

No amendment to or repeal of this Article, and no adoption of any provision in
the Corporation's Articles of Incorporation inconsistent with this Article,
shall apply to or affect in any respect the liability or alleged liability of
any director of the Corporation for or with respect the indemnification of any
director or officer of the Corporation or of any employee or agent of the
Corporation with respect to any act or failure to act occurring prior to such
amendment, repeal or adoption.

ARTICLE VI
MISCELLANEOUS

Section 6.1 Opt-Out Provisions. Subchapters E - Control Transactions,
G - Control Share Acquisitions and H - Disgorgement of Certain Controlling
Shareholders Following Attempts to Acquire control of Chapter 25 of Title 15 of
the Pennsylvania Consolidated Statutes, as existing on November 26, 1997 or as
may thereafter be amended, shall not apply to the Corporation.

Section 6.2 Special Meeting of Shareholders: Requirements. Special
meetings of the shareholders, for any purpose or purposes, may be called at any
time by the

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President of the Corporation, by shareholders entitled to cast at least 50% of
the votes that all shareholders are entitled to cast at the particular meeting,
or by the Board, upon written request delivered to the Secretary of the
Corporation. In addition, an "interested shareholder" (as defined in section
2553 of the BCL) may, upon written request delivered to the Secretary of the
Corporation, call a special meeting for the purpose of approving a business
combination under either subsection (3) or (4) of section 2553 of the BCL. Any
request for a special meeting of shareholders shall state the purpose or
purposes of the proposed meeting. Upon receipt of any such request, it shall be
the duty of the Secretary of the Corporation to give notice, in a manner
consistent with Section 2.6 of these Bylaws, of a special meeting of the
shareholders to be held at such time as the Secretary of the Corporation may
fix, which time may not be, if the meeting is called pursuant to a statutory
right, more than sixty (60) days after receipt of the request. If the Secretary
of the Corporation shall neglect or refuse to fix the date of the meeting and
give notice thereof, the person or persons calling the meeting may do so.

Section 6.3 Cumulative Voting. The Shareholders of the Corporation
shall not be entitled to cumulate their votes for the election of directors.

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EXHIBIT A

DESIGNATION, PREFERENCES AND RIGHTS OF
THE SERIES A CONVERTIBLE PREFERRED
STOCK OF DOCUNET INC.

1. Voting.

(a) General. Except as may be otherwise provided in these terms of the
DocuNet Inc. (the "Corporation") Series A Convertible Preferred Stock (the
"Series A Preferred Stock") or by law, the holders of the Series A Preferred
Stock shall vote together with the holders of the Corporation's Common Stock (as
defined in paragraph 5(l) below) as a single class on all matters presented to
such holders. Each share of Series A Preferred Stock shall entitle the holder
thereof to such number of votes per share on each such action as shall equal the
number of shares of Class A Common Stock (including fractions of a share) into
which each share of Series A Preferred Stock is then convertible.

(b) Board Seats. The holders of the Series A Preferred Stock shall not
be entitled to vote separately as a class with respect to the election of any
directors of the Corporation.

2. Dividends. The holders of Series A Preferred Stock shall not be
entitled to receive dividends or other distributions, except such dividends or
other distributions as the Corporation's Board of Directors may, in its
discretion, declare. The term "distribution" as used in this paragraph 2 shall
include the transfer of cash or property without consideration, whether by way
of dividend or otherwise (except a dividend in shares of Common Stock), or the
purchase or redemption of shares of the Corporation, for cash or property,
including such transfer, purchase or redemption by a subsidiary of the
Corporation.

3. Liquidation, Dissolution or Winding Up.

(a) Upon any liquidation, dissolution or winding up of the corporation,
whether voluntary or involuntary, the holders of the shares of Series A
Preferred Stock then outstanding shall be entitled, before any distribution or
payment is made upon any stock ranking on liquidation junior to the Series A
Preferred Stock, to be paid an amount equal to such share's Liquidation
Preference Payment (as defined below). The "Liquidation Preference Payment"
shall, for any share of Series A Preferred Stock, equal the amount paid for such
share to the Corporation by the initial purchaser of such share of Series A
Preferred Stock as set forth in the purchase/subscription agreement between such
purchaser and the Corporation, or in the absence of such purchase/subscription
agreement, the purchase price identified in the records of the Corporation
maintained to identify such purchase prices. If, upon such liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the assets available for distribution to the holders of Series A Preferred Stock
shall be insufficient to permit payment in full to the holders of Series A
Preferred Stock all of the Liquidation Preference Payments, then the entire
assets of the Corporation to be so distributed shall be distributed ratably
among the

<PAGE>

holders of Series A Preferred Stock based upon the respective ratio that the
aggregate Liquidation Preference Payments payable to each such holder bears to
the aggregate Liquidation Preference Payments of all then outstanding shares of
Series A Preferred Stock. Upon any such liquidation, dissolution or winding up
of the Corporation, immediately after the holders of Series A Preferred Stock
shall have been paid in full all of the Liquidation Preference Payments, the
remaining net assets of the Corporation available for distribution shall be
distributed ratably among the holders of Series A Preferred Stock (with each
share of Series A Preferred Stock being deemed, for such purpose, to be equal to
the number of shares of Common Stock (including fractions of a share) into which
such share of Series A Preferred Stock is convertible immediately prior to the
close of business or the business day fixed for such distribution) and Common
Stock. Written notice of such liquidation, dissolution or winding up, stating a
payment date and the place where said payments shall be made, shall be given by
mail, postage prepaid, or by telex or facsimile to non-U.S. residents, not less
than 20 days prior to the payment date stated therein, to the holders of record
of Series A Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.

(b) The consolidation or merger of the Corporation into or with any
other entity or entities, and the sale or transfer by the Corporation of all or
substantially all of its assets, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of the
provisions of this paragraph 3, unless the shareholders of the Corporation
immediately prior thereto shall, immediately thereafter, hold as a group the
right to cast at least a majority of the votes of all holders of voting
securities of the surviving or resulting corporation or entity on any matter on
which any such holders of voting securities shall be entitled to vote.

(c) For purposes of this paragraph 3, upon liquidation, dissolution or
winding up of the Corporation, the Common Stock shall rank junior to the Series
A Preferred Stock with respect to the payment of the Liquidation Preference
Payments for all shares of the Series A Preferred Stock.

4. Restrictions. At any time when shares of Series A Preferred Stock
are outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Articles of Incorporation, and in addition to any other vote required by law or
the Articles of Incorporation, without the approval of the holders of at least a
majority of the then outstanding shares of Series A Preferred Stock, given in
writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a class, the Corporation will not:

(a) (i) Create or authorize the creation of any additional class or
series of shares of stock unless the same ranks junior to the Series A Preferred
Stock as to dividends and to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, (ii) increase the authorized
amount of the Series A Preferred Stock or increase the authorized amount of any
additional class or series of stock unless the same ranks junior to the Series A
Preferred Stock as to dividends and to the distribution of assets on the
liquidation, dissolution or winding up of the corporation, or (iii) create or
authorize any obligation or security

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convertible into shares of Series A Preferred Stock or into shares of any other
class or series of stock unless the same ranks junior to the Series A Preferred
Stock as to dividends and to the distribution of assets on the liquidation,
dissolution or winding up of the corporation, in each case whether any such
creation, authorization or increase shall be by means of amendment to the
Certificate of Incorporation or by merger, consolidation or otherwise;

(b) Amend, alter or repeal the provisions of its Articles of
Incorporation concerning these terms of the Series A Preferred Stock;

(c) Purchase or set aside any sums for the purchase of, or pay any
dividend or make any distribution on, any shares of stock other than the Series
A Preferred Stock, except for (a) dividends or other distributions payable on
the Common Stock solely in the form of additional shares of Common Stock or paid
in accordance with the provisions of paragraph 2 hereof, and (b) the purchase of
shares of Common Stock from former employees or consultants of the Corporation
who acquired such shares directly from the Corporation, if each such purchase is
made, pursuant to contractual rights held by the Corporation relating to the
termination of employment of such former employee or the engagement of such
former consultant and the purchase price does not exceed the original issue
price paid by such former employee or consultant to the Corporation for such
shares, provided, however, that no such consent or vote shall be required for
purchases of Common Stock from former employees or consultants at other than the
original issue price or from other persons if such transaction has been approved
in writing by a majority of the Board of Directors of the Corporation elected by
the holders of Common Stock; or

(d) Redeem or otherwise acquire any shares of Series A Preferred Stock
except pursuant to a purchase offer made pro rata to all holders of the shares
of Series A Preferred Stock on the basis of the aggregate number of outstanding
shares of Series A Preferred Stock then held by each such holder.

5. Conversions. The holders of shares of Series A Preferred Stock shall
have the following conversion rights:

(a) Right to Convert. Subject to the terms and conditions of this
paragraph 5, the holder of any share or shares of Series A Preferred Stock shall
have the right, at its option and at any time, to convert any such shares of
Series A Preferred Stock (except that upon any liquidation of the Corporation
the right of conversion shall terminate at the close of business on the business
day fixed for payment of the amount distributable on the Series A Preferred
Stock) into such number of fully paid and nonassessable shares of Common Stock
as is obtained by (i) multiplying the number of shares of Series A Preferred
Stock so to be converted by $0.49 and (ii) dividing the result by the conversion
price of $0.49 per share or, in case an adjustment of such price has taken place
pursuant to the further provisions of this paragraph 5, then by the conversion
price as last adjusted and in effect at the date any share or shares of Series A
Preferred Stock are surrendered for conversion (such price, or such price as
last adjusted, being referred to as the "Conversion Price"). Such rights of
conversion shall be exercised by the holder

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thereof by giving written notice that the holder elects to convert a stated
number of shares of Series A Preferred Stock into Common Stock and by surrender
of a certificate or certificates for the shares so to be converted to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the holders
of the Series A Preferred Stock) at any time during its usual business hours on
the date set forth in such notice, together with a statement of the name or
names (with address) in which the certificate or certificates for shares of
Common Stock shall be issued.

(b) Issuance of Certificates; Time Conversion Effected. Promptly after
the receipt of the written notice referred to in subparagraph 5(a) and surrender
of the certificate or certificates for the share or shares of Series A Preferred
Stock to be converted, the Corporation shall issue and deliver, or cause to be
issued and delivered, to the holder, registered in such name or names as such
holder may direct, a certificate or certificates for the number of whole shares
of Common Stock issuable upon the conversion of such share or shares of Series A
Preferred Stock. To the extent permitted by law, such conversion shall be deemed
to have been effected and the Conversion Price shall be determined as of the
close of business on the date on which such written notice shall have been
received by the Corporation and the certificate or certificates for such share
or shares shall have been surrendered as aforesaid, and at such time the rights
of the holder of such share or shares of Series A Preferred Stock shall cease,
and the person or persons in whose name or names any certificate or certificates
for shares of Common Stock shall be issuable upon such conversion shall be
deemed to have become the holder or holders of record of the shares represented
thereby.

(c) Fractional Shares; Dividends; Partial Conversion. No fractional
shares shall be issued upon conversion of Series A Preferred Stock into Common
Stock and no payment or adjustment shall be made upon any conversion on account
of any cash dividends on the Common Stock issued upon such conversion. At the
time of each conversion, the Corporation shall pay in cash an amount equal to
all dividends declared and unpaid on the shares of Series A Preferred Stock
surrendered for conversion to the date upon which such conversion is deemed to
take place as provided in subparagraph 5(b). In case the number of shares of
Series A Preferred Stock represented by the certificate or certificates
surrendered pursuant to subparagraph 5(a) exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series A Preferred Stock represented by the
certificates or certificates surrendered which are not to be converted. If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this subparagraph 5(c), be delivered upon such conversion, the
Corporation, in lieu of delivering such fractional share, shall pay to the
holder surrendering the Series A Preferred Stock for conversion an amount in
cash equal to the current market price of such fractional share as determined in
good faith by the Board of Directors of the Corporation.

(d) Subdivision or Combination of Common Stock. In case the Corporation
shall at any time subdivide (by any stock split, stock dividend or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in

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effect immediately prior to such subdivision shall be proportionately reduced,
and conversely, in case the outstanding shares of Common Stock shall be combined
into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination shall be proportionately increased.

(e) Reorganization or Reclassification. If any capital reorganization,
or any reclassification of the stock of the Corporation (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 stock dividend or subdivision, split up or combination of
shares), or the consolidation or merger of the Corporation with or into another
person (other than a consolidation or merger in which the Corporation is the
continuing corporation and which does not result in any change in the Common
Stock) or the sale or other disposition of all or substantially all the
properties and assets of the Corporation as an entity to any other person shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger, sale or disposition, lawful and adequate provisions shall
be made whereby each holder of a share or shares of Series A Preferred Stock
shall thereupon have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore receivable upon the conversion of such share or shares
of Series A Preferred Stock, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such Common Stock
immediately theretofore receivable upon such conversion had such reorganization,
reclassification, consolidation, merger, sale or disposition not taken place,
and in any such case appropriate provisions shall be made with respect to the
rights and interests of such holder to the end that the provisions hereof
(including without limitation provisions for adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as may be, in relation to any
shares of stock, as securities or assets thereafter deliverable upon the
exercise of such conversion rights. The provisions of this paragraph 5(e) shall
similarly apply to successive reorganizations, reclassification, consolidations,
mergers, sales and other dispositions.

(f) Notice of Adjustment. Notice of adjustment under this paragraph 5
shall be sent by first class mail, postage prepaid to U.S. residents, or by
telex or facsimile transmission to non U.S. residents, addressed to each holder
of shares of Series A Preferred Stock at the address of such holder as shown on
the books of the Corporation, which notice shall state the Conversion Price
resulting from such adjustment, setting forth in reasonable detail the method
upon which such calculation is based.

(g) Other Notices. In case at any time:

(i) the Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the holders of its
Common Stock;

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(ii) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;

(iii) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, or a change in ownership as specified in
paragraph 3, or a consolidation or merger of the Corporation with or into, or a
sale of all or substantially all its assets to, another entity or entities; or

(iv) there shall be voluntary or involuntary dissolution, liquidation
or winding up of the Corporation;

then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid to U.S. residents, or by telex or facsimile
transmission to non-U.S. residents, addressed to each holder of any shares of
Series A Preferred stock at the address of such holder as shown on the books of
the Corporation, (a) at least 20 days' prior written notice of the date on which
the books of the Corporation shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights to vote
in respect of any such reorganization, reclassification, consolidation, merger,
sale, change in ownership, dissolution, liquidation or winding up and (b) in the
case of any such reorganization, reclassification, consolidation, merger, sale,
change in ownership, dissolution, liquidation or winding up, at least 20 days'
prior written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause (a) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on which the
holders of common Stock shall be entitled thereto and such notice in accordance
with the foregoing clause (b) shall also specify the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as the case
may be.

(h) Stock to be Reserved. The Corporation will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series A Preferred Stock as herein provided,
such number of shares of Common Stock as shall then be issuable upon the
conversion of all outstanding shares of Series A Preferred Stock. The
Corporation covenants that all shares of Common Stock which shall be so issued
shall be duly and validly issued and fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof, and, without
limiting the generality of the foregoing, the Corporation covenants that it will
from time to time take all such action as may be required to assure that the par
value per share of the Common Stock is at all times equal to or less than the
Conversion Price in effect at the time. The Corporation will not take any action
which results in any adjustment of the Conversion Price if the total number of
shares of Common Stock issued and issuable after such action upon conversion of
the Series A Preferred Stock would exceed the total number of shares of Common
Stock then authorized by the Articles of Incorporation.

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<PAGE>

(i) No Reissuance of Series A Preferred Stock. Shares of Series A
Preferred Stock which are converted into shares of Common Stock as provided
herein shall not be reissued.

(j) Issue Tax. The issuance of certificates for shares of Common Stock
upon conversion of Series A Preferred Stock shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Series A Preferred Stock which is
being converted.

(k) Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Series A Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Series A Preferred Stock in any manner which interferes with the timely
conversion of such Series A Preferred Stock, except as may otherwise be required
to comply with applicable securities laws.

(l) Definition of Common Stock. As used in this paragraph 5, term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
no par value as constituted on the date of filing of these terms of the Series A
Preferred Stock, and shall also include any capital stock of any class of the
Corporation thereafter authorized which shall neither be limited to a fixed sum
or percentage of par value in respect of the rights of the holders thereof to
participate in dividends nor entitled to a preference in the distribution of
assets upon the voluntary or involuntary liquidation, dissolution or winding up
of the corporation; provided that the shares of Common Stock receivable upon
conversion of shares of Series A Preferred Stock shall include only shares
designated as Common Stock of the Corporation on the date of filing of this
instrument, or in case of any reorganization or reclassification of the
outstanding shares thereof, the stock, securities or assets provided for in
subparagraph 5(e).

(m) Mandatory Conversion. If at any time the Corporation shall
undertake a firm commitment underwritten public offering of shares of Common
Stock, then effective upon the effective date of the registration statement
filed with the Securities and Exchange Commission in connection with such firm
commitment underwritten public offering, all outstanding shares of Series A
Preferred Stock shall automatically convert into shares of Common Stock.

6. Amendments. No provision of these terms of the Series A Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of at least a majority of the then outstanding
shares of Series A Preferred Stock.

[END OF CERTIFICATE OF DESIGNATION]

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Exhibit 3.2

ImageMax, Inc.

AMENDED AND RESTATED BYLAWS

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

ARTICLE I

OFFICES

Section 1.1. Registered Office. The registered office of
ImageMax, Inc. (the "Corporation") in the Commonwealth of Pennsylvania shall be
as specified in the Articles of Incorporation of the Corporation as they may
from time to time be amended (the "Articles") or at such other place as the
Board of Directors of the Corporation (the "Board") may specify in a statement
of change of registered office filed with the Department of State of the
Commonwealth of Pennsylvania.

Section 1.2. Other Offices. The Corporation may also have an
office or offices at such other place or places either within or without the
Commonwealth of Pennsylvania as the Board may from time to time determine or the
business of the Corporation requires.

ARTICLE II

MEETINGS OF THE SHAREHOLDERS

Section 2.1. Place. All meetings of the shareholders shall be
held at such places, within or without the Commonwealth of Pennsylvania, as the
Board may from time to time determine.

Section 2.2. Annual Meeting. A meeting of the shareholders for
the election of directors and the transaction of such other business as may
properly be brought before the meeting shall be held once each calendar year on
such date as the Board shall determine. If the annual meeting is not called and
held within six (6) months after the designated time for such meeting, any
shareholder may call the meeting at any time after the expiration of such
six-month period.

<PAGE>

Section 2.3. Written Ballot. Unless required by a vote of the
shareholders before the voting begins, elections of directors need not be by
written ballot.

Section 2.4. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, may be called at any time by the
President of the Corporation, by shareholders entitled to cast at least 50% of
the votes that all shareholders are entitled to cast at the particular meeting,
or by the Board, upon written request delivered to the Secretary of the
Corporation. In addition, an "interested shareholder" (as defined in section
2553 of the Pennsylvania Business Corporation Law of 1988, as it may from time
to time be amended (the "1988 BCL")) may, upon written request delivered to the
Secretary of the Corporation, call a special meeting for the purpose of
approving a business combination under either subsection (3) or (4) of section
2553 of the 1988 BCL. Any request for a special meeting of shareholders shall
state the purpose or purposes of the proposed meeting. Upon receipt of any such
request, it shall be the duty of the Secretary of the Corporation to give
notice, in a manner consistent with Section 2.6 of these Bylaws, of a special
meeting of the shareholders to be held at such time as the Secretary of the
Corporation may fix, which time may not be, if the meeting is called pursuant to
a statutory right, more than sixty (60) days after receipt of the request. If
the Secretary of the Corporation shall neglect or refuse to fix the date of the
meeting and give notice thereof, the person or persons calling the meeting may
do so.

Section 2.5. Scope of Special Meetings. Business transacted at
any special meeting shall be confined to the business stated in the notice.

Section 2.6. Notice. Written notice of every meeting of the
shareholders, stating the place, the date and hour thereof and, in the case of a
special meeting of the shareholders, the

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general nature of the business to be transacted thereat, shall be given in a
manner consistent with the provisions of Section 12.4 of these Bylaws at the
direction of the Secretary of the Corporation or, in the absence of the
Secretary of the Corporation, any Assistant Secretary of the Corporation, at
least ten (10) days prior to the day named for a meeting called to consider a
fundamental change under Chapter 19 of the 1988 BCL, or five (5) days prior to
the day named for the meeting in any other case (except as provided in Section
1707 of the 1988 BCL), to each shareholder entitled to vote thereat on the date
fixed as a record date in accordance with Section 8.1 of these Bylaws or, if no
record date be fixed, then of record at the close of business on the tenth
(10th) day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the day immediately preceding the day of the
meeting, at such address (or telex, TWX, facsimile or telephone number), as
appears on the transfer books of the Corporation. Any notice of any meeting of
shareholders shall state that, for purposes of any meeting that has been
previously adjourned for one or more periods aggregating at least fifteen (15)
days because of an absence of a quorum, the shareholders entitled to vote who
attend such a meeting, although less than a quorum pursuant to Section 2.7 of
these Bylaws, shall nevertheless constitute a quorum for the purpose of acting
upon any matter set forth in the original notice of the meeting that was so
adjourned.
Section 2.7. Quorum. The shareholders present in person or by
proxy, entitled to cast at least a majority of the votes that all shareholders
are entitled to cast on any particular matter to be acted upon at the meeting,
shall constitute a quorum for the purposes of consideration of, and action on,
such matter. The shareholders present in person or by proxy at a duly organized
meeting can continue to do business until the adjournment thereof

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<PAGE>

notwithstanding the withdrawal of enough shareholders to leave less than a
quorum. If a meeting cannot be organized because a quorum has not attended, the
shareholders present in person or by proxy may, except as otherwise provided by
the 1988 BCL and subject to the provisions of Section 2.8 of these Bylaws,
adjourn the meeting to such time and place as they may determine.

Section 2.8. Adjournment. Any meeting of the shareholders,
including one at which directors are to be elected, may be adjourned for such
period as the shareholders present in person or by proxy and entitled to vote
shall direct. Other than as provided in the last sentence of Section 2.6 of
these Bylaws, notice of the adjourned meeting or the business to be transacted
thereat need not be given, other than announcement at the meeting at which
adjournment is taken, unless the Board fixes a new record date for the adjourned
meeting or the 1988 BCL requires notice of the business to be transacted and
such notice has not previously been given. At any adjourned meeting at which a
quorum is present, any business may be transacted that might have been
transacted at the meeting as originally noticed.

Those shareholders entitled to vote present in person or by
proxy, although less than a quorum pursuant to Section 2.7 of these Bylaws,
shall nevertheless constitute a quorum for the purpose of (a) electing directors
at a meeting called for the election of directors that has been previously
adjourned for lack of a quorum and (b) acting, at a meeting that has been
adjourned for one or more periods aggregating fifteen (15) days because of an
absence of a quorum, upon any matter set forth in the original notice of such
adjourned meeting, provided that such original notice shall have complied with
the last sentence of Section 2.6 of these Bylaws.

Section 2.9. Majority Voting. Any matter brought before a duly
organized meeting for a vote of the shareholders shall be decided by a majority
of the votes cast at such

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<PAGE>

meeting by the shareholders present in person or by proxy and entitled to vote
thereon, unless the matter is one for which a different vote is required by
express provision of the 1988 BCL, the Articles or a bylaw adopted by the
shareholders, in any of which case(s) such express provision shall govern and
control the decision on such matter.

Section 2.10. Voting Rights. Except as otherwise provided in
the Articles, at every meeting of the shareholders, every shareholder entitled
to vote shall have the right to one vote for each share having voting power
standing in his or her name on the books of the Corporation. Shares of the
Corporation owned by it, directly or indirectly, and controlled by the Board,
directly or indirectly, shall not be voted.

Section 2.11. Proxies. Every shareholder entitled to vote at a
meeting of the shareholders or to express consent or dissent to corporate action
in writing may authorize another person to act for him or her by proxy. The
presence of, or vote or other action at a meeting of shareholders, or the
expression of consent or dissent to corporate action in writing, by a proxy of a
shareholder, shall constitute the presence of, or vote or action by, or written
consent or dissent of the shareholder. Every proxy shall be executed in writing
by the shareholder or by the shareholder's duly authorized attorney in fact and
filed with the Secretary of the Corporation. A proxy, unless coupled with an
interest (as defined in Section 1759(d) of the 1988 BCL), shall be revocable at
will, notwithstanding any other agreement or any provision in the proxy to the
contrary, but the revocation of a proxy shall not be effective until written
notice of revocation has been given to the Secretary of the Corporation. No
unrevoked proxy shall be valid after three (3) years from the date of its
execution, unless a longer time is expressly provided therein. A proxy shall not
be revoked by the death or incapacity of the maker unless, before the vote is
counted or

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<PAGE>

the authority is exercised, written notice of such death or incapacity is given
to the Secretary of the Corporation.

Section 2.12. Voting Lists. The officer or agent having charge
of the transfer books for securities of the Corporation shall make a complete
list of the shareholders entitled to vote at a meeting of the shareholders,
arranged in alphabetical order, with the address of and the number of shares
held by each shareholder, which list shall be produced and kept open at the time
and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting. If the Corporation has five
thousand (5,000) or more shareholders, it may make such information available at
the meeting by any other means.

Section 2.13. Judges of Election. In advance of any meeting of
the shareholders, the Board may appoint judges of election, who need not be
shareholders and who will have such duties as provided in Section 1765(a)(3) of
the 1988 BCL, to act at such meeting or any adjournment thereof. If judges of
election are not so appointed, the presiding officer of any such meeting may,
and on the request of any shareholder shall, appoint judges of election at the
meeting. The number of judges shall be one (1) or three (3), as determined by
the Board to be appropriate under the circumstances. No person who is a
candidate for office to be filled at the meeting shall act as a judge at the
meeting. The judges of election shall do all such acts as may be proper to
conduct the election or vote with fairness to all shareholders, and shall make a
written report of any matter determined by them and execute a certificate of any
fact found by them, if requested by the presiding officer of the meeting or any
shareholder or the proxy of any shareholder. If there are three (3) judges of
election, the decision, act or certificate of a majority shall be effective in
all respects as the decision, act or certificate of all.

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<PAGE>

Section 2.14. Participation by Conference Telephone. The right
of any shareholder to participate in any shareholders' meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting may hear each other, in which event all
shareholders so participating shall be deemed present at such meeting, shall be
granted solely in the discretion of the Board.

Section 2.15. Business at Meetings of Shareholders. Except as
otherwise provided by law or in these Bylaws, or except as permitted by the
presiding officer of the meeting in the exercise of such officer's sole
discretion in any specific instance, the business which shall be conducted at
any meeting of the shareholders shall be appropriate for consideration at a
meeting of shareholders and shall (a) have been specified in the written notice
of the meeting (or any supplement thereto) given by the Corporation, or (b) be
brought before the meeting at the direction of the Board or the presiding
officer of the meeting, or (c) have been specified in a written notice (a
"Shareholder Meeting Notice") given to the Corporation, in accordance with all
of the following requirements, by or on behalf of any shareholder who shall have
been a shareholder of record on the record date for such meeting and who shall
continue to be entitled to vote thereat. Each Shareholder Meeting Notice must be
delivered personally to, or be mailed to and received by, the Corporation,
addressed to the attention of the Chief Executive Officer at the principal
executive offices of the Corporation in accordance with the time periods set
forth in Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or any successor provisions thereto. Each Shareholder Meeting
Notice shall set forth a general description of each item of business proposed
to be brought before the meeting, the name and address of the shareholder
proposing to bring such item of business before the meeting and a

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<PAGE>

representation that the shareholder intends to appear in person or by proxy at
the meeting. The presiding officer of the meeting may refuse to consider any
business that shall be brought before any meeting of shareholders of the
Corporation otherwise than as provision in this Section 2.15. Notwithstanding
anything to the contrary herein, the business set forth in a Shareholder Meeting
Notice may be precluded from consideration at a meeting of shareholders pursuant
to Rule 14a-8 under the Exchange Act.

ARTICLE III

SHAREHOLDER ACTION BY WRITTEN CONSENT

Section 3.1. Unanimous Written Consent. Any action required or
permitted to be taken at a meeting of the shareholders or of a class of
shareholders may be taken without a meeting if, prior or subsequent to the
action, a consent or consents thereto in writing, setting forth the action so
taken, shall be signed by all of the shareholders who would be entitled to vote
at a meeting for such purpose and filed with the Secretary of the Corporation.

Section 3.2. Partial Written Consent. Any action required or
permitted to be taken at a meeting of the shareholders or of a class of
shareholders may be taken without a meeting upon the written consent of
shareholders who would have been entitled to cast the minimum number of votes
that would be necessary to authorize the action at a meeting at which all
shareholders entitled to vote thereon were present and voting. An action taken
pursuant to this Section may become effective immediately upon its
authorization, but prompt notice of the action shall be given to those
shareholders entitled to vote thereon who have not consented. The consents shall
be filed with the Secretary of the Corporation.

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<PAGE>

Section 3.3. Record Date - Consents. Except as otherwise
provided in Section 8.1 of these Bylaws, the record date for determining
shareholders entitled to (a) express consent or dissent to action in writing
without a meeting, when prior action by the Board is not necessary, (b) call a
special meeting of the shareholders, or (c) propose an amendment of the
Articles, shall be at the close of business on the day on which the first
written consent or dissent, request for a special meeting or petition proposing
an amendment of the Articles is filed with the Secretary of the Corporation. If
prior action by the Board is necessary, the record date for determining such
shareholders shall be at the close of business on the day on which the Board
adopts the resolution relating to such action.

ARTICLE IV

DIRECTORS

Section 4.1. Number and Qualifications. The Board shall
consist of one or more directors as determined from time to time by the Board.
Except as provided in Section 4.4 of these Bylaws in the case of vacancies,
directors shall be elected by the shareholders. Directors shall be natural
persons of full age and need not be residents of the Commonwealth of
Pennsylvania or shareholders of the Corporation.

Section 4.2. Term. The Directors shall be classified, in
respect of the time for which they shall severally hold office, into three (3)
classes which shall be as nearly equal in number as possible and shall consist
of:

(i) Class I directors who thereafter shall serve until the
1998 annual meeting of shareholders and until their successors are duly elected
and qualified and thereafter shall be elected to a three-year term;

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(ii) Class II directors who shall serve until the 1999
annual meeting of shareholders and until their successors are duly elected and
qualified and thereafter shall be elected to a three-year term; and

(iii) Class III directors who shall serve until the 2000
annual meeting of shareholders and until their successors are duly elected and
qualified and thereafter shall be elected to a three-year term.

Section 4.3. Nominations of Directors. Nominees for election
to the Board shall be selected by the Board or a committee of the Board to which
the Board has delegated the authority to make such selections pursuant to
Section 4.11 of these Bylaws. However, any shareholder entitled to vote in the
election of directors generally may nominate one (1) or more persons for
election as a director at a meeting only if written notice of such shareholder's
intention to make such nomination or nominations has been delivered personally
to, or been mailed to and received by the Corporation at, the principal
executive offices of the Corporation addressed to the attention of the Chief
Executive Officer in accordance with the time periods set forth in Rule 14a-8
under the Exchange Act or any successor provisions thereto. Each such notice
shall set forth: (a) the name and address of the shareholder intending to make
the nomination and of the person or persons to be nominated; (b) a
representation that the shareholder intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice; (c) the
address and principal occupation for the past five (5) years of each nominee;
and (d) the written consent for each nominee to serve as a director of the
Corporation if so elected. The presiding officer of the meeting may declare
invalid any nomination not made in compliance with the foregoing procedure. Only
persons duly nominated

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for election to the Board in accordance with this Section 4.3 shall be eligible
for election to the Board.

Section 4.4. Vacancies. Vacancies in the Board, including
vacancies resulting from an increase in the number of directors, shall be filled
by a majority vote of the remaining members of the Board, even though less than
a quorum, or by a sole remaining director, and each person so elected shall
serve as a director until the next selection of the class for which such
director has been chosen and until his or her successor has been selected and
qualified. If one or more directors resign from the Board effective at a future
date, then the directors then in office, including those who have resigned,
shall have the power to fill the vacancies by a majority vote, the vote thereon
to take effect when the resignations become effective.

Section 4.5. Powers. The business and affairs of the
Corporation shall be managed under the direction of its Board, which may
exercise all powers of the Corporation and do all such lawful acts and things as
are not by statute or by the Articles or these Bylaws directed or required to be
exercised and done by the shareholders.

Section 4.6. Place of Board Meetings. Meetings of the Board
may be held at such place within or without the Commonwealth of Pennsylvania as
the Board may from time to time appoint or as may be designated in the notice of
the meeting.

Section 4.7. First Meeting of Newly Elected Board. The first
meeting of each newly elected Board may be held at the same place and
immediately after the meeting at which such directors were elected and no notice
shall be required other than announcement at such meeting. If such first meeting
of the newly elected Board is not so held, notice of such meeting

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shall be given in the same manner as set forth in Section 4.9 of these Bylaws
with respect to notice of regular meetings of the Board.

Section 4.8. Regular Board Meetings; Notice. Regular meetings
of the Board may be held at such times and places as shall be determined from
time to time by resolution of at least a majority of the whole Board at a duly
convened meeting, or by unanimous written consent. The Secretary may, but need
not, provide notice of each regular meeting of the Board, specifying the date,
place and hour of the meeting in a manner consistent with Section 12.4 of these
Bylaws at least 24 hours before the meeting if given personally or by telephone,
telex, TWX (with answerback received) or by telecopier, at least 48 hours before
the meeting if given by telegram (with messenger service specified), express
mail (with postage prepaid) or courier service (charges prepaid), and at least
five (5) days before the meeting if given by first class mail (with postage
prepaid).

Section 4.9. Special Board Meetings; Notice. Special meetings
of the Board may be called by the Chairman of the Board of Directors or the
President of the Corporation on notice to each director, specifying the purpose,
date, place and hour of the meeting and given within the same time and in the
same manner provided for notice of regular meetings in Section 4.8 of these
Bylaws. Special meetings shall be called by the Secretary of the Corporation in
like manner and on like notice on the written request of two directors.

Section 4.10. Quorum of the Board. At all meetings of the
Board, the presence of a majority of the directors in office shall constitute a
quorum for the transaction of business, and the acts of a majority of the
directors present and voting at a meeting at which a quorum is present shall be
the acts of the Board. If a quorum shall not be present at any meeting of

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directors, then the directors present thereat shall adjourn the meeting. It
shall not be necessary to give any notice of the adjourned meeting or of the
business to be transacted thereat other than by announcement at the meeting at
which such adjournment is taken.

Section 4.11. Committees of Directors. The Board may, by
resolution adopted by a majority of the directors in office, establish one or
more committees, each committee to consist of one or more of the directors, and
may designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee or
for the purposes of any written action by the committee. Any such committee, to
the extent provided in such resolution of the Board or in these Bylaws, shall
have and may exercise all of the powers and authority of the Board; provided,
however, that no such committee shall have any power or authority to (a) submit
to the shareholders any action requiring approval of the shareholders under the
1988 BCL, (b) create or fill vacancies on the Board, (c) amend or repeal these
Bylaws or adopt new bylaws, (d) amend or repeal any resolution of the Board that
by its terms is amendable or repealable only by the Board, (e) act on any matter
committed by these Bylaws or by resolution of the Board to another committee of
the Board, (f) amend the Articles, or (g) adopt a plan or an agreement of merger
or consolidation, share exchange, asset sale or division. In the absence or
disqualification of a member or alternate member or members of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not a quorum is present, may unanimously appoint another
director to act at the meeting in the place of any absent or disqualified
member. Minutes of all meetings of any committee of the Board shall be kept by
the person designated by such committee to keep such minutes. Copies of such
minutes and any writing setting forth an action taken by written consent

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<PAGE>

without a meeting shall be distributed to each member of the Board promptly
after such meeting is held or such action is taken. Each committee of the Board
shall serve at the pleasure of the Board.

Section 4.12. Participation in Board Meetings by Conference
Telephone. One or more directors may participate in a meeting of the Board or of
a committee of the Board by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and all directors so participating shall be deemed
present at the meeting.

Section 4.13. Action by Consent of Directors. Any action
required or permitted to be taken at a meeting of the Board or of a committee of
the Board may be taken without a meeting if, prior or subsequent to the action,
a consent or consents in writing setting forth the action so taken shall be
signed by all of the directors in office or the members of the committee, as the
case may be, and filed with the Secretary of the Corporation.

Section 4.14. Compensation of Directors. The Board may, by
resolution, fix the compensation of directors for their services as directors. A
director may also serve the Corporation in any other capacity and receive
compensation therefor.

Section 4.15. Directors' Liability. No person who is or was a
director of the Corporation shall be personally liable for monetary damages for
any action taken, or any failure to take any action, unless (a) such director
has breached or failed to perform the duties of his or her office under the 1988
BCL and (b) the breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness, or unless such liability is imposed pursuant to a
criminal statute or for the payment of taxes pursuant to local, state or federal
law.

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<PAGE>

Section 4.16. Removal of Directors. One or more or all the
directors may be removed only for cause by the shareholders by the affirmative
vote of the majority of votes cast by the holders of shares entitled to vote for
the election of directors.

ARTICLE V

OFFICERS

Section 5.1. Principal Officers. The officers of the
Corporation shall be chosen by the Board, and shall include a President, one or
more Vice Presidents, a Secretary and a Treasurer (collectively, the "Principal
Officers"). The President, all Vice-Presidents and the Secretary shall be
natural persons of full age. The Treasurer may be a corporation, but if a
natural person, shall be of full age. Any number of offices may be held by the
same person.

Section 5.2. Electing Principal Officers. The Board,
immediately after each annual meeting of the shareholders, shall elect the
Principal Officers of the Corporation, none of whom need be members of the
Board.

Section 5.3. Other Officers. The Corporation may have such
other officers, assistant officers, agents and employees as the Board may deem
necessary, each of whom shall hold office for such period, have such authority
and perform such duties as the Board may from time to time determine. The Board
may delegate to any Principal Officer the power to appoint or remove, and set
the compensation of, any such other officers and any such agents or employees.

Section 5.4. Compensation. Except as provided in Section 5.3
of these Bylaws, the salaries of all officers of the Corporation shall be fixed
by the Board.

Section 5.5. Term of Office; Removal. Each officer of the
Corporation shall hold office until his or her successor has been chosen and
qualified or until his or her earlier death,

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resignation or removal. Vacancies of any office shall be filled by the Board.
Any officer or agent may be removed by the Board with or without cause, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed. The election or appointment of an officer or agent shall not of
itself create any contract rights.

Section 5.6. The President. The President shall have general
supervision over the business and operations of the Corporation, subject,
however, to the control of the Chief Executive Officer and the Board. The
President shall, in general, perform all duties incident to the office of
President, and such other duties as from time to time may be assigned by the
Chief Executive Officer and the Board and, if the Chairman of the Board is the
Chief Executive Officer, the Chairman of the Board.

Section 5.6A. The Chief Executive Officer. The Chief Executive
Officer shall have general supervision over the business and operations of the
Corporation, subject, however, to the control of the Board. The Chief Executive
Officer shall, in general, perform all duties incident to the office of Chief
Executive Officer, and such other duties from time to time may be assigned by
the Board and, if the Chairman of the Board is the Chief Executive Officer, the
Chairman of the Board.

Section 5.6B. The Chief Operating Officer. The Chief Operating
Officer shall perform the duties of the President in the absence of the
President and such other duties as may from time to time be assigned to him or
her by the Board or by the President.

Section 5.7. The Vice-Presidents. The Vice-President or
Vice-Presidents, in the order designated by the Board, shall, in the absence or
disability of the President, perform the

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duties and exercise the powers of the President, and shall perform such other
duties as the Board may prescribe or the President may delegate to them.

Section 5.8. The Secretary. The Secretary shall attend all
sessions of the Board and all meetings of the shareholders and record all the
votes of the Corporation and the minutes of all the transactions in a book to be
kept for that purpose, and shall perform like duties for the committees of the
Board when required. The Secretary shall give, or cause to be given, notice of
all meetings of the shareholders and of the Board, and shall perform such other
duties as may be prescribed by the Board or the President, under whose
supervision the Secretary shall be. He or she shall keep in safe custody the
corporate seal, if any, of the Corporation.

Section 5.9. The Treasurer.

(a) The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation, and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as shall be designated by the Board.

(b) The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the President and directors, at the regular
meetings of the Board, or whenever they may require it, an account of all his or
her transactions as Treasurer.

Section 5.10. Bonds. If required by the Board, any officer
shall give the Corporation a bond in such sum, and with such surety or sureties
as may be satisfactory to the Board, for the faithful discharge of the duties of
his or her office and for the restoration to the Corporation, in the case of his
or her death, resignation, retirement or removal from office, of all

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<PAGE>

books, papers, vouchers, money and other property of whatever kind in his or her
possession or under his or her control belonging to the Corporation.

ARTICLE VI

CERTIFICATES FOR SHARES

Section 6.1. Share Certificates. The certificates representing
shares of the Corporation shall be numbered and registered in a share register
as they are issued. The share register shall exhibit the names and addresses of
all registered holders and the number and class of shares and the series, if
any, held by each.

The certificate shall state that the Corporation is
incorporated under the laws of the Commonwealth of Pennsylvania, the name of the
registered holder and the number and class of shares and the series, if any,
represented thereby. If, under its Articles, the Corporation is authorized to
issue shares of more than one class or series, each certificate shall set forth,
or shall contain a statement that the Corporation will furnish to any
shareholder upon request and without charge, a full or summary statement of the
designations, voting rights, preferences, limitations and special rights of the
shares of each class or series authorized to be issued so far as they have been
fixed and determined and the authority of the Board to fix and determine such
rights.

Section 6.2. Execution of Certificates. Every share
certificate shall be executed, by facsimile or otherwise, by or on behalf of the
Corporation, by the President, by the Chief Executive Officer, by the Chief
Operating Officer, by any Vice-President, or by the Secretary. In case any
officer who has signed or whose facsimile signature has been placed upon any
share certificate shall have ceased to be such officer, because of death,
resignation or otherwise, before

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<PAGE>

the certificate is issued, it may be issued by the Corporation with the same
effect as if the officer had not ceased to be such at the time of issue.

ARTICLE VII

TRANSFER OF SHARES

Section 7.1. Transfer; Duty of Inquiry. Upon presentment to
the Corporation or its transfer agent of a share certificate endorsed by the
appropriate person or accompanied by proper evidence of succession, assignment
or authority to transfer, a new certificate shall be issued to the person
entitled thereto and the old certificate canceled and the transfer registered
upon the books of the Corporation, unless either (a) the Corporation or its
transfer agent has received a demand from an appropriate person to make an
endorsement on such certificate that the Corporation or its transfer agent not
register transfer; or (b) the Corporation or its transfer agent has been served
with a restraining order, injunction or other process from a court of competent
jurisdiction enjoining it from registering the transfer. Any demand to the
Corporation or its transfer agent not to register transfer shall identify the
registered owner and the issue of which the share or shares are a part and
provide an address for communications directed to the person making the demand.
No demand described in section 7.1(a) above shall be effective unless it is
received by the Corporation or its transfer agent at a time and in a manner
affording the Corporation or its transfer agent a reasonable opportunity to act
on it.

Section 7.2. Request to Register Transfer After Demand. If a
share certificate is presented to the Corporation or its transfer agent with a
request to register transfer after a demand that the Corporation or its transfer
agent not register transfer of such certificate has become effective pursuant to
Section 7.1 of these Bylaws, then the Corporation or its transfer agent shall

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<PAGE>

promptly communicate to each of the person who initiated the demand and the
person who presented the certificate for registration of transfer a notification
stating that: (a) the certificate has been presented for registration of
transfer; (b) a demand that the Corporation or its transfer agent not register
transfer of such certificate had previously been received; and (c) the
Corporation or its transfer agent will withhold registration of transfer of such
certificate for a period of thirty (30) days (or such shorter period of time as
stated in the notification that is not manifestly unreasonable) from the date of
the notification in order to provide the person who initiated the demand an
opportunity to obtain legal process or an indemnity bond.

Section 7.3. Limitation of Liability. Neither the Corporation
nor its transfer agent shall be liable to a person who initiated a demand that
the Corporation or its transfer agent not register transfer for any loss the
person suffers as a result of registration of transfer if the person who
initiated demand does not, within the time stated in the notification described
in Section 7.2 of these Bylaws, either (a) obtain an appropriate restraining
order, injunction or other process from a court of competent jurisdiction
enjoining the Corporation or its transfer agent from registering the transfer,
or (b) file with the Corporation or its transfer agent an indemnity bond,
sufficient in the Corporation's judgment to protect the Corporation and any
transfer agent, registrar or other agent of the Corporation involved from any
loss which it or they may suffer by refusing to register the transfer.

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<PAGE>

ARTICLE VIII

RECORD DATE; IDENTITY OF SHAREHOLDERS

Section 8.1. Record Date. The Board may fix a time, prior to
the date of any meeting of the shareholders, as a record date for the
determination of the shareholders entitled to notice of, or to vote at the
meeting, which time, except in the case of an adjourned meeting, shall not be
more than ninety (90) days prior to the date of the meeting. Except as otherwise
provided in Section 8.2 of these Bylaws, only the shareholders of record at the
close of business on the date so fixed shall be entitled to notice of, or to
vote at, such meeting, notwithstanding any transfer of securities on the books
of the Corporation after any record date so fixed. The Board may similarly fix a
record date for the determination of shareholders for any other purpose. When a
determination of shareholders of record has been made as herein provided for
purposes of a meeting, the determination shall apply to any adjournment thereof
unless the Board fixes a new record date for the adjourned meeting.

Section 8.2. Certification of Nominee. The Board may adopt a
procedure whereby a shareholder may certify in writing to the Secretary of the
Corporation that all or a portion of the shares registered in the name of the
shareholder are held for the account of a specified person or persons. The
Board, in adopting such procedure, may specify (a) the classification of
shareholder who may certify, (b) the purpose or purposes for which the
certification may be made, (c) the form of certification and the information to
be contained therein, (d) as to certifications with respect to a record date,
the date after the record date by which the certification must be received by
the Secretary of the Corporation, and (e) such other provisions with respect to
the procedure as the Board deems necessary or desirable. Upon receipt

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<PAGE>

by the Secretary of the Corporation of a certification complying with the
procedure, the persons specified in the certification shall be deemed, for the
purpose or purposes set forth in the certification, to be the holders of record
of the number of shares specified instead of the persons making the
certification.

ARTICLE IX

REGISTERED SHAREHOLDERS

Section 9.1. Before due presentment for transfer of any
shares, the Corporation shall treat the registered owner thereof as the person
exclusively entitled to vote, to receive notifications and otherwise to exercise
all the rights and powers of an owner, and shall not be bound to recognize any
equitable or other claim or interest in such securities, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of the Commonwealth of Pennsylvania or Section 8.2 of these Bylaws.

ARTICLE X

LOST CERTIFICATES

Section 10.1. If the owner of a share certificate claims that
it has been lost, destroyed, or wrongfully taken, the Corporation shall issue a
new certificate in place of the original certificate if the owner so requests
before the Corporation has notice that the certificate has been acquired by a
bona fide purchaser, and if the owner has filed with the Corporation an
indemnity bond and an affidavit of the facts satisfactory to the Board or its
designated agent, and has complied with such other reasonable requirements, if
any, as the Board may deem appropriate.

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<PAGE>

ARTICLE XI

DISTRIBUTIONS

Section 11.1. Distributions. Distributions upon the shares of
the Corporation, whether by dividend, purchase or redemption or other
acquisition of its shares subject to any provisions of the Articles related
thereto, may be authorized by the Board at any regular or special meeting of the
Board and may be paid directly or indirectly in cash, in property or by the
incurrence of indebtedness by the Corporation.

Section 11.2. Reserves. Before the making of any
distributions, there may be set aside out of any funds of the Corporation
available for distributions such sum or sums as the Board from time to time, in
its absolute discretion, deems proper as a reserve fund to meet contingencies,
or for equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board shall deem conducive to the
interests of the Corporation, and the Board may abolish any such reserve in the
manner in which it was created.

Section 11.3. Stock Dividends/Splits. Stock dividends or
splits upon the shares of the Corporation, subject to any provisions of the
Articles related thereto, may be authorized by the Board at any regular or
special meeting of the Board.

ARTICLE XII

GENERAL PROVISIONS

Section 12.1. Checks and Notes. All checks or demands for
money and notes of the Corporation shall be signed by such officer or officers
as the Board may from time to time designate.

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<PAGE>

Section 12.2. Fiscal Year. The fiscal year of the Corporation
shall be the calendar year, unless otherwise determined by the Board of
Directors.

Section 12.3. Seal. The corporate seal, if any, shall have
inscribed thereon the name of the Corporation, the year of its organization and
the words "Corporate Seal, Pennsylvania." Such seal may be used by causing it or
a facsimile thereof to be impressed or affixed or in any manner reproduced. The
affixation of the corporate seal shall not be necessary to the valid execution,
assignment or endorsement of any instrument or other document by the
Corporation.

Section 12.4. Notices. Whenever, under the provisions of the
1988 BCL or of the Articles or of these Bylaws or otherwise, written notice is
required to be given to any person, it may be given to such person either
personally or by sending a copy thereof by first class or express mail, postage
prepaid, telegram (with messenger service specified), telex, TWX (with
answerback received), courier service (with charges prepaid) or facsimile
transmission, to his or her address, (or to his or her telex, TWX or facsimile
number), appearing on the books of the Corporation or, in the case of directors,
supplied by the director to the Corporation for the purpose of notice. If the
notice is sent by mail, telegraph or courier service, it shall be deemed to have
been given to the person entitled thereto when deposited in the United States
mail or with a telegraph office or courier service for delivery to that person.
A notice given by telex or TWX shall be deemed to have been given when
dispatched.

If mailed at least twenty (20) days prior to the meeting or
corporate action to be taken, then notice may be sent by any class of post paid
mail (including bulk mail).

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<PAGE>

Section 12.5. Waiver of Notice. Whenever any notice is
required to be given by the 1988 BCL or by the Articles or these Bylaws, a
waiver thereof in writing, signed by the person or persons entitled to the
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted
at nor the purpose of a meeting need be specified in the waiver of notice of the
meeting. Attendance of a person at any meeting shall constitute a waiver of
notice of the meeting, except where any person attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting was
not lawfully called or convened, and the person so objects at the beginning of
the meeting.

ARTICLE XIII

AMENDMENTS

Section 13.1. Amendments. The Bylaws may be adopted, amended
or repealed by a majority vote of the shareholders entitled to vote thereon at
any regular or special meeting duly convened or, except for a bylaw on a subject
expressly committed to the shareholders by the 1988 BCL, by a majority vote of
the members of the Board at any regular or special meeting duly convened,
subject always to the power of the shareholders to change such action by the
directors; however, when the Bylaws require for the taking of any action by the
shareholders or a class of shareholders a specific number of percentage of
votes, the provision of the Bylaws setting forth that requirement shall not be
amended or repealed by any lesser number or percentage of votes of the
shareholders or of the class of shareholders. In the case of a meeting of
shareholders, written notice shall be given to each shareholder that the
purpose, or one of the purposes, of the meeting is to consider the adoption,
amendment or repeal of the Bylaws. There shall be included in, or

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<PAGE>

enclosed with the notice, a copy of the proposed amendment or a summary of the
changes to be effected thereby. Any change in the Bylaws shall take effect when
adopted unless otherwise provided in the resolution effecting the change.

ARTICLE XIV

INDEMNIFICATION

Section 14.1. Officers and Directors - Direct Actions. The
Corporation shall indemnify any director or officer of the Corporation who was
or is a party (other than a party plaintiff suing on his or her own behalf), or
who is threatened to be made such a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation)
arising out of, or in connection with, any actual or alleged act or omission or
by reason of the fact that he or she is or was a director or officer of the
Corporation (as used herein, the phrase "director or officer of the Corporation"
shall mean any person who is or was a director or officer of the Corporation, or
is or was serving at the request of the Corporation as a director or officer of
another domestic or foreign corporation for profit or not-for-profit,
partnership, joint venture, trust or other enterprise), against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she met the standard of conduct of (a) acting in
good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the Corporation and (b) with respect to any
criminal proceeding, having no reasonable cause to believe his or her conduct
was unlawful. The termination of any action or proceeding by judgment, order,
settlement or conviction or upon a plea of nolo contendere or its equivalent

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<PAGE>

shall not of itself create a presumption that the person did not act in good
faith and in a manner that he or she reasonably believed to be in, or not
opposed to, the best interests of the Corporation and, with respect to any
criminal proceeding, had reasonable cause to believe that his or her conduct was
unlawful.

Section 14.2. Officers and Directors - Derivative Actions. The
Corporation shall indemnify any director or officer of the Corporation who was
or is a party (other than a party suing in the right of the Corporation), or is
threatened to be made a party, to any threatened, pending or completed action,
suit or proceeding by or in the right of the Corporation to procure a judgment
in its favor by reason of the fact that he or she is or was a director or
officer of the Corporation, against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection with the defense or
settlement of the action, suit or proceeding if he or she met the standard of
conduct of acting in good faith and in a manner he or she reasonably believed to
be in, or not opposed to, the best interests of the Corporation. Indemnification
shall not be made under this Section in respect of any claim, issue or matter as
to which the director or officer of the Corporation has been adjudged to be
liable to the Corporation unless and only to the extent that the Court of Common
Pleas of the judicial district embracing the county in which the registered
office of the Corporation is located or the court in which the action, suit or
proceeding was brought determines upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for the expenses that the
Court of Common Pleas or other court deems proper.

Section 14.3. Employees and Agents. The Corporation may, to
the extent permitted by the 1988 BCL, indemnify any employee or agent of the
Corporation (as used in this

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<PAGE>

Article, the phrase "employee or agent of the Corporation" shall mean any person
who is or was an employee or agent of the Corporation, other than a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as such an employee or agent of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint venture, trust or
other enterprise) who was or is a party (other than a party plaintiff suing on
his or her own behalf), or who is threatened to be made such a party, to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such action, suit or
proceeding by reason of the fact that he or she is or was an employee or agent
of the Corporation; provided that he or she has met the applicable standard of
conduct set forth in Sections 14.1 and 14.2, subject to the limitations set
forth in Section 14.2 in the case of an action, suit or proceeding by or in the
right of the Corporation to procure a judgment in the Corporation's favor.

Section 14.4. Mandatory Indemnification. To the extent that a
director or officer of the Corporation or any employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 14.1, 14.2 or 14.3 of this
Article XIV, or in defense of any claim, issue or matter therein, he or she
shall be indemnified by the Corporation against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.

Section 14.5. Advancing Expenses. Expenses (including
attorneys' fees) incurred by an officer or director of the Corporation or an
employee or agent of the Corporation in defending any action, suit or proceeding
referred to in this Article XIV may be paid by the

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Corporation in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it is ultimately determined that he or she is not entitled
to be indemnified by the Corporation as authorized in this Article XIV.

Section 14.6. Procedure.

(a) Unless ordered by a court, any indemnification under
Section 14.1, 14.2 or 14.3 of this Article XIV or advancement of expenses under
Section 14.5 shall be made by the Corporation only as authorized in a specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Section 14.1, 14.2 or 14.3.

(b) Expenses shall be advanced by the Corporation to a
director or officer upon a determination that such person has met the applicable
standard of conduct set forth in Section 14.1 or 14.2 of this Article and has
satisfied the terms set forth in Section 14.5 of this Article.

(c) Expenses may be advanced to an employee or agent of
the Corporation upon a determination that such employee or agent has satisfied
the terms of Section 14.3 and 14.5 of this Article and, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
advancement of expenses.

(d) All determinations under this Section 14.6 shall be
made:

(1) With respect to indemnification under Section 14.3 and
advancement of expenses under Section 14.6(c), by the Board by a majority vote.

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(2) With respect to indemnification under Section 14.1 or 14.2
and advancement of expenses under Section 14.6(b),

(A) By the Board by a majority vote of a quorum consisting
of directors who were not parties to such action or proceeding, or

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

Section 14.7. Nonexclusivity of Indemnification.

(a) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article XIV shall not be deemed
exclusive of any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under any Bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to actions in his
or her official capacity and as to actions in another capacity while holding
that office. Section 1728 (relating to interested directors; quorum) of the 1988
BCL shall be applicable to any Bylaw, contract or transaction authorized by the
directors under this Section 14.7. The Corporation may create a fund of any
nature, which may, but need not be, under the control of a trustee, or otherwise
secure or insure in any manner its indemnification obligations, whether arising
under or pursuant to this Article XIV or otherwise.

(b) Indemnification pursuant to Section 14.7(a) shall not
be made in any case where the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness.

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<PAGE>

(c) Indemnification pursuant to Section 14.7(a) under any
Bylaw, agreement, vote of shareholders or directors or otherwise, may be granted
for any action taken or any failure to take any action and may be made whether
or not the Corporation would have the power to indemnify the person under any
other provision of law except as provided in this Section 14.7 and whether or
not the indemnified liability arises or arose from any threatened or pending or
completed action by or in the right of the Corporation.

Section 14.8. Insurance. The Corporation shall have power to
purchase and maintain insurance on behalf of any person who is or was a director
or officer of the Corporation, employee or agent of the Corporation, against any
liability asserted against such person and incurred by him or her in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against that liability
under the provisions of this Article XIV or otherwise.

Section 14.9. Past Officers and Directors. The indemnification
and advancement of expenses provided by, or granted pursuant to, this Article
XIV shall, unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a director, officer, employee or agent of the
Corporation and shall inure to the benefit of the heirs and personal
representatives of that person.

Section 14.10. Surviving or New Corporations. References to
"the Corporation" in this Article XIV include all constituent corporations
absorbed in a consolidation, merger or division, as well as the surviving or new
corporation resulting therefrom, so that any director, officer, employee or
agent of the constituent, surviving or new corporation shall stand in the same
position under the provisions of this Article XIV with respect to the surviving
or new

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corporation as he or she would if he or she had served the surviving or new
corporation in the same capacity.

Section 14.11. Employee Benefit Plans.

(a) References in this Article XIV to "other enterprises"
shall include employee benefit plans and references to "serving at the request
of the Corporation" shall include any service as a director; officer, employee
or agent of the Corporation that imposes duties on, or involves services by, the
person with respect to an employee benefit plan, its participants or
beneficiaries.

(b) Excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be deemed "fines."

(c) Action with respect to an employee benefit plan taken
or omitted in good faith by a director, officer, employee or agent of the
Corporation in a manner he or she reasonably believed to be in the interest of
the participants and beneficiaries of the plan shall be deemed to be action in a
manner that is not opposed to the best interests of the Corporation.

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<PAGE>

Number Shares
IM

COMMON STOCK COMMON STOCK

[LOGO]
ImageMax, Inc.

INCORPORATED UNDER THE LAWS
OF THE COMMONWEALTH OF PENNSYLVANIA CUSIP 45245V 10 1

SEE REVERSE FOR
CERTAIN DEFINITIONS

This certifies that

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF

ImageMax, Inc.

transferable on the books of the Corporation by the owner in person or by duly
authorized attorney upon surrender of this certificate properly endorsed. This
certificate and the shares represented hereby are issued and shall be held
subject to all the provisions of the Restated Certificate of Incorporation of
the Corporation and all amendments thereto (copies of which are on file with the
Transfer Agent), to all of which the holder, by acceptance hereof, assents.
This certificate is not valid unless countersigned by the Transfer Agent and
registered by the Registrar.

In Witness Whereof, the Corporation has caused this certificate to be signed by
its duly authorized officers and its corporate seal to be hereunto affixed.

Dated:

/s/ Bruce M. Gillis
- ---------------------------
Chief Executive Officer and [SEAL] COUNTERSIGNED AND REGISTERED
Chairman of the Board StockTrans, Inc.
7 E. Lancaster Avenue
Ardmore, PA 19003

TRANSFER AGENT AND REGISTRAR

/s/ Andrew R. Bacas
- -------------------------------------------
Senior Vice President-Corporate Development BY
and Secretary AUTHORIZED SIGNATURE

<PAGE>

ImageMax, Inc.

The Corporation will furnish without charge to each stockholder who so
requests the designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof of the
Corporation, and the qualifications, limitations, or restrictions of such
preferences and/or rights. Such request may be made to the Corporation or the
transfer agent.

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.

TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT TEN -as joint tenants with right
of survivorship and not as tenants
in common
TOD -transfer on death direction in event of owner's death
to person named on face

UNIF GIFT MIN ACT-_________as Custodian for_________
(Cust) (Minor)
under Uniform Gifts to Minors
Act____________
(State)

UNIF TRANS MIN ACT-_________as Custodian for_________
(Cust) (Minor)
under Uniform Transfers to Minors
Act____________
(State)

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 the capital stock represented by the within certificate, and do hereby
accordingly constitute and appoint
________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated______________________

X_____________________________________
NOTICE; THE SIGNATURE(S) TO THIS
ASSIGNMENT MUST CORRESPOND WITH
THE NAME(S) AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT ALTER-
ATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER. X_____________________________________

ALL GUARANTEES MUST BE MADE BY A
FINANCIAL INSTITUTION (SUCH AS A BANK
OR BROKER) WHICH IS A PARTICIPANT IN
THE SECURITIES TRANSFER AGENTS
MEDALLION PROGRAM ("STAMP"). THE
NEW YORK STOCK EXCHANGE, INC.
MEDALLION SIGNATURE PROGRAM ("MSP"),
OR THE STOCK EXCHANGE MEDALLION
PROGRAM ("SEMP") AND MUST NOT BE
DATED. GUARANTEES BY A NOTARY PUBLIC
ARE NOT ACCEPTABLE.

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR
DESTROYED THE CORPORATION MAY REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE
ISSUANCE OF A REPLACEMENT CERTIFICATE.

SHAREHOLDERS AGREEMENT

AGREEMENT made as of this 19th day of November, 1996, by and among DocuNet
Inc., a Pennsylvania corporation (hereafter called "DocuNet" or the "Company"),
Bruce M. Gillis, Andrew R. Bacas, G. Stuart Livingston, III (the "GBL
Shareholders") and David C. Utz, Jr., and Brian K. Bergeron together with any
other person or entity which hereafter may become a shareholder of DocuNet, so
long as they are shareholders of DocuNet, are sometimes hereinafter collectively
called the "Shareholders" or individually called "Shareholder."

WITNESSETH:

DocuNet is a corporation with a principal place of business at 715 Matson's
Ford Road, Villanova, PA 19085. The Shareholders presently own 650,000 shares of
common stock, no par value (The "Common Stock"), and 150,000 shares of Series A
Convertible Preferred Stock, no par value ("Series A Preferred Stock", together
with the Common Stock, the "Shares").

The Shareholders of DocuNet desire to agree to certain provisions as
hereinafter set forth relating to the rights of the Shareholders, and those of
such other persons who may hereafter become shareholders of DocuNet, to
purchase, transfer, encumber or otherwise acquire or dispose of the Shares which
they may own or may hereafter acquire, and the rights of DocuNet to permit the
transfer of Shares.

NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, conditions and agreements herein contained, the parties hereto, each
intending to be legally bound hereby, agree as follows:

1. Representations and Warranties. Each Shareholder hereby makes with
respect to himself the following representations and warranties to DocuNet and
to one another:

<PAGE>

(a) Authority; Binding Agreement. Each Shareholder has full power and
authority to execute and deliver this Agreement and has taken all necessary
action to authorize its execution and delivery and the transactions contemplated
hereby. This Agreement constitutes a valid and legally binding obligation of
such Shareholder, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or other
similar laws affecting creditors' rights generally. The execution and delivery
of this Agreement will not violate or conflict with any law or regulation, or
conflict with or constitute a breach of, or a default under, any agreement or
instrument to which he is a party or which is binding on his assets.

(b) Investment Purpose. Each Shareholder is acquiring Shares for his own
account, for investment purposes and not with a view to any resale, distribution
or other disposition thereof. He understands that the Shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), by reason
of a specific exemption from the registration provisions thereof which depends
upon, among other things, the bona fide nature of such Shareholder's investment
intent as expressed herein, and that the Shares will bear the legend and be
subject to the restrictions on transfer set forth in Paragraph 10 hereof.

2. Redemption of Shareholders' Shares.

(a) Death or Disability. Upon the death or disability (as hereinafter
defined) of a Shareholder (who in the case of disability, at the time of such
disability is an employee of DocuNet), the GBL Shareholders shall have the
option, for thirty (30) days from the date of such death or disability, to
repurchase, on a pro rata basis based on ownership of the Company's outstanding
securities on a fully-diluted basis, the Shares held by such deceased or
disabled Shareholder for the Fair Market Value (as hereinafter defined) thereof.
If the GBL Shareholders

-2-

<PAGE>

decline to purchase all of such shares (or the thirty (30) day period expires),
the Company shall then have the right to repurchase the remaining shares (those
not purchased by the GBL Shareholders) for the Fair Market Value thereof.

(b) Fair Market Value. The Fair Market Value of the Shares shall be
determined from time to time, but no less than once per year within 90 days
after the end of DocuNet's fiscal year, by the Board of Directors of DocuNet
according to either (1) a valuation determined by an independent professional
firm that generally provides company valuations, including the Company's
auditors, or (2) the most recent sale price of Common Stock and Preferred Stock
by the Company (if prior to the Company's underwritten initial public offering
of Common Stock (an "IPO")).

3. Restrictions on Transfer and Issuance.

(a) Restrictions on Shareholders. No Shareholder shall sell, assign,
transfer, give, bequeath, devise, donate or otherwise dispose of, or pledge,
deposit or otherwise encumber, in any way or manner whatsoever, whether
voluntary or involuntary any of the Shares now or hereafter owned beneficially
by such Shareholder except as expressly provided for in this Agreement and in
accordance with its terms and conditions. Notwithstanding the foregoing
sentence, provided that each transferee hereunder shall execute the appropriate
documentation as set forth in Paragraph 11 of this Agreement, the following
transfers are permitted:

(i) transfers of Shares from one Shareholder to another if approved
by the Board of Directors;

(ii) gifts or bequeaths to spouses, parents, children or
grandchildren or trusts for the benefit of any one or more of the foregoing; or

-3-

<PAGE>

(iii) transfers from an estate to any spouse or lineal descendent of
the decedent or any trust or trusts defined in the preceding subparagraph for
the benefit of any one or more of the foregoing.

(b) Restrictions on DocuNet. DocuNet shall not, except in accordance
with the terms and conditions of this Agreement, cause or permit the transfer of
any Shares to be made on its books.

4. Shareholder's Limited Right to Dispose of Shares During His Lifetime.

(a) Bona Fide Offer to Purchase Shares. If any Shareholder shall desire
to sell all or a portion of his Shares, such Shareholder (hereinafter sometimes
called the "Selling Shareholder") shall first obtain a bona fide written offer
which he desires to accept (hereinafter called the "Offer") to purchase all or a
portion of his Shares for a fixed cash price (which may be payable over time)
(the "Offered Shares"). The Offer shall set forth its date, the proposed price
per Share, and the other terms and conditions upon which the purchase is
proposed to be made, as well as the name and address of the prospective
purchaser. In order to be considered a valid offer hereunder, such offer may not
contain any contingencies, except that the offer may contain an expiration date
which is no less than sixty-eight (68) days after the date of the offer.
"Prospective Purchaser" as used herein shall mean the prospective record owner
or owners of the Shares subject of the Offer and all other persons and entities
proposed to have a beneficial interest in such Shares. The Selling Shareholder
shall transmit copies of the Offer to DocuNet and to the other Shareholders
within seven (7) days after his receipt of the Offer.

(b) Option of DocuNet. Transmittal of the Offer to DocuNet by the
Selling Shareholder shall constitute an offer by the Selling Shareholder to sell
all of the Offered Shares to DocuNet at the price and upon the terms set forth
in the Offer. For a period of thirty

-4-

<PAGE>

(30) days after the submission of the Offer to DocuNet, DocuNet shall have the
option, exercisable by written notice to the Selling Shareholder with a copy to
each of the other Shareholders, to accept the Selling Shareholder's offer as to
all or any of the Offered Shares.

(c) Options of Offeree Shareholders. In the event that DocuNet does not
exercise its option with respect to all of the Offered Shares, the Selling
Shareholder shall, upon notice from DocuNet of DocuNet's decision not to accept
the Selling Shareholder's Offer as to all of the Offered Shares (or upon
expiration of the thirty-day option period referred to in the preceding
subparagraph if DocuNet fails to give notice as aforesaid), offer in writing to
sell the remaining Offered Shares (those not to be sold to DocuNet) to the other
Shareholders ("Offeree Shareholders") at the price and upon the terms set forth
in the Offer (the "Purchase Option"). The Offeree Shareholders shall have a
period of thirty (30) days from the receipt of such offer from the Selling
Shareholder to exercise the Purchase Option by providing written notice to the
Selling Shareholder with a copy to DocuNet and to each of the other offeree
Shareholders stating the maximum number of Shares he or she is willing to
Purchase. However, the maximum must not be less than that proportionate part of
the Offered Shares which the number of Shares owned by such Offeree Shareholder
bears to the total number of Shares owned by all Offeree Shareholders. If the
total of the Offered Shares specified in the elections pursuant to this
subparagraph exceeds the number of Offered Shares, each electing Offeree
Shareholder shall have priority as to such proportion of the Offered Shares as
the number of the Company's Shares that he holds bears to the total of the
Company's Shares held by all electing Remaining Shareholders.

(d) Acceptance of the Bona Fide Offer. If, at the end of the option
periods described in subparagraphs 4(b) and 4(c) options have not been exercised
by the

-5-

<PAGE>

Company and/or the Offeree Shareholders to purchase all of the Offered Shares,
then the Selling Shareholder shall be free for a period of ninety (90) days
thereafter to sell any Offered Shares not purchased by DocuNet or Offeree
Shareholders to the Prospective Purchaser at the price and upon the terms and
conditions set forth in the Offer. If such Shares are not so sold within the
aforesaid ninety (90) day period, the Selling Shareholder shall not be permitted
to sell such Shares without again complying with this Paragraph 4.

(e) Consolidation or Merger; Sale of Assets. In accordance with its
stated intent, DocuNet may merge into another entity or sell all or
substantially all of its assets if such is authorized by the Board of Directors
and the Shareholders in accordance with state law.

5. Legal Proceedings Against Shareholders. The parties agree that the
interests of DocuNet and its Shareholders would be seriously affected by any
sale or disposition of any Shareholder's Shares or by any legal or equitable
proceedings against such Shareholder. Accordingly, it is hereby covenanted and
agreed that in the event that (a) any Shareholder shall be adjudicated a
bankrupt or make an assignment for the benefit of creditors, or (b) bankruptcy,
insolvency, reorganization, arrangement, debt adjustment, liquidation or
receivership proceedings in which any Shareholder is alleged to be insolvent or
unable to pay his debts as they mature are instituted by or against such
Shareholder and, if instituted against such Shareholder, such Shareholder shall
consent thereto or admit in writing the material allegations of the petitions
filed in said proceedings or said proceedings shall remain undismissed for sixty
(60) days, or (c) there is an entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of any Shareholder in an
involuntary case under the federal bankruptcy laws against any Shareholder or
any Shareholder commences a voluntary case under such laws, or (d) any of the
Shares of any Shareholder are attached, or (e) any judgment is obtained in any
legal or equitable

-6-

<PAGE>

proceedings against any Shareholder and the sale of any of his Shares is
contemplated or threatened under legal process as a result of such judgment, or
(f) any execution process is issued against any Shareholder or against any of
his Shares, or (g) there is instituted by or against any Shareholder any other
form of legal proceeding or process by which the sale or transfer of any of the
Shares of such Shareholder becomes imminent (i.e., such Shares may be sold or
transferred either voluntarily or involuntarily within sixty (60) days), then
and in any such event DocuNet and the other Shareholders shall have the option
to purchase all of such Shareholder's Shares in accordance with the provisions
of Paragraph 4 in the same manner as if DocuNet and the other Shareholders had
received notice of an Offer under subparagraph 4(a) on the date that DocuNet
receives notice of an event described above. The price per share shall be the
Fair Market Value.

6. Settlement.

(a) Settlement for the purchase of Shares by DocuNet or by a Shareholder
pursuant to subparagraph 2(a) or subparagraphs 4(b), or 4(c), or Paragraph 5
shall be made within sixty (60) days following the date of exercise of the last
option exercised or the occurrence of the event giving rise to the purchase.

(b) All settlements for the purchase and sale of Shares shall, unless
otherwise agreed to by all of the purchasers and sellers, be held at the
principal executive offices of DocuNet during regular business hours. The
precise date and hour of settlement shall be fixed by the purchaser or
purchasers (within the time limits allowed by the provisions of this Agreement)
by notice in writing to the seller given at least five (5) days in advance of
the settlement date specified. In the event that more than one purchase is
involved in a settlement and the purchasers cannot agree on a precise time of
settlement, the precise time of settlement

-7-

<PAGE>

shall be fixed by the Chairman of the Board of DocuNet by five (5) or more days'
written notice to the purchasers and seller.

(c) At settlement, the stock certificate or certificates representing
the Shares being sold shall be delivered by the seller to the purchaser or
purchasers, duly endorsed for transfer or with executed stock powers attached,
with any necessary documentary and transfer tax stamps affixed by the seller.
The seller, if a personal representative of a Shareholder, shall, upon request
of a purchaser, provide prior to the date of settlement evidence reasonably
satisfactory to the purchaser of the seller's legal status as personal
representative of such Shareholder.

7. Future Private Placement. If the Company proposes to sell securities of
the Company to third party investors pursuant to an exemption from registration
under the Act (a "Private Financing"), it will give written notice to the
Shareholders of its intention to do so as soon as practicable, and in any event
at last 20 days prior to the anticipated sale. Upon written request given within
10 days after the Company gives such notice, the Shareholders shall have the
right to purchase not less than 25% of the aggregate amount of such securities
to be sold (the "Existing Shareholder Amount"). The Existing Shareholder Amount
will be made available to the Shareholders on an equal basis, not based on the
pro rata share of the then outstanding securities of the Company, and on the
same terms and conditions as offered to third party investors.

8. Copy of Agreement to be Kept on File. DocuNet shall keep on file at its
principal executive offices, and will exhibit to any Shareholder or his duly
authorized representative at any and all reasonable times, an executed copy of
this Agreement and all amendments thereto.

-8-

<PAGE>

9. Stock Certificates to be Marked With Legend. All certificates
representing Shares now outstanding or hereafter issued by DocuNet shall be
marked with the following legend:

"The Shares represented by this certificate have not been
registered pursuant to the Securities Act of 1933 as amended, or
under state securities or blue sky laws. Such shares may not be
sold, transferred, or otherwise disposed of unless the same are
registered under the Securities Act of 1933, as amended, and any
applicable state securities or blue sky laws or exempt therefrom
in the opinion of counsel. This certificate and the shares
represented hereby are held subject to the terms, covenants and
conditions of an agreement dated __________, 1996 by and among
this Company and its then shareholders, as it may be amended from
time to time, and may not be transferred or disposed of except in
accordance with the terms and provisions thereof. A copy of said
agreement and all amendments thereto is on file and may be
inspected at the principal executive offices of the Company."

DocuNet shall issue replacement stock certificates without the foregoing
legend to any Shareholder upon request following termination of this Agreement.

10. Term of Agreement.

Unless terminated sooner by unanimous agreement in writing of DocuNet and
its then Shareholders, this Agreement shall terminate on the earlier of the
following dates: (i) upon the death of the last but one of the then Shareholders
(but Paragraph 4 shall apply to the death of such Shareholder), (ii) upon the
successful completion of the Company's firm commitment initial public offering
of its Common Stock in which the Company receives at least $10 million in net
proceeds, or (iii) the agreement of Shareholders owning at least seventy percent
of the Shares to terminate this Agreement.

11. Rights, Obligations and Remedies. The rights and obligations under, and
the remedies to enforce, this Agreement are joint and several as to DocuNet and
each of its

-9-

<PAGE>

Shareholders with each being completely free to enforce any or all of the rights
or obligations under this Agreement against any of the others with or without
the concurrence or joinder of any of the others. The Shares are unique, and
recognizing that the remedy at law for any breach or threatened breach by a
party hereto of the covenants and agreements set forth in this Agreement would
be inadequate and that any such breach or threatened breach would cause such
immediate and permanent damage as would be irreparable and the exact amount of
which would be impossible to ascertain, the parties hereto agree that in the
event of any breach or threatened breach of any such covenant or agreement, in
addition to any and all other legal and equitable remedies which may be
available, any party hereto may specifically enforce the terms of this Agreement
and may obtain temporary and/or permanent injunctive relief without the
necessity of proving actual damage by reason of any breach or threatened breach
hereof and, to the extent permissible under the applicable statutes and rules of
procedure, a temporary injunction may be granted immediately upon the
commencement of any such suit and without notice.

12. Subsequent Shareholders to Become Bound. Any person or entity not an
original signatory hereto who becomes a Shareholder shall be bound by all of the
terms and provisions of this Agreement. Before any person or entity not a party
to this Agreement, including any person or entity to whom transfers of Shares
may be made hereunder, shall be entitled to be a shareholder of DocuNet, such
person or entity shall be required first to execute and deliver to DocuNet an
agreement pursuant to which such person or entity agrees to be bound by all of
the terms and conditions of this Agreement, and the failure of any person or
entity so to do shall preclude such person or entity from becoming a shareholder
of DocuNet.

13. Entire Agreement; Amendment, Modification and Termination. This
Agreement contains the entire understanding among the parties hereto with
respect to the subject

-10-

<PAGE>

matter hereof, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may be amended, modified or terminated at any time
or times by the agreement in writing of Shareholders owning at least seventy
percent (70%) of the Shares. No such amendment, modification or termination
shall affect the right of any person or entity to receive, or the obligation of
any person or entity to pay, on the terms and conditions of this Agreement, the
purchase price for Shares sold pursuant to this Agreement to such amendment,
modification or termination, or the right or obligation of any person or entity
to sell or purchase Shares, on the terms and conditions of this Agreement, if
the event giving rise to such right or obligation to sell or purchase Shares has
in fact taken place prior to such amendment, modification or termination.

14. Miscellaneous.

(a) Indulgences, Etc. Neither the failure nor any delay on the part of
any party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence.

(b) Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania
(notwithstanding any conflict-of-law doctrines of

-11-

<PAGE>

either state or other jurisdiction to the contrary), and without the aid of any
canon, custom or rule of law requiring construction against the draftsman.

(c) Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received when deposited with an
overnight courier service such as Federal Express, for delivery to the intended
addressee or two (2) days following the day when deposited in the United States
mails, first class postage prepaid. All such notices shall be mailed to the
intended addressee at the address which such addressee has provided to DocuNet,
and which DocuNet shall maintain and make available to all of the parties
hereto, at DocuNet's principal place of business.

Any party may alter the address to which communications or copies are to be
sent by giving written notice to DocuNet of such change of address.

(d) Binding Nature of Agreement; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns, except that no party
may assign or transfer its rights or obligations under this Agreement, without
the prior written consent of the other parties hereto.

(e) Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one (1) or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories. Any photographic copy of this Agreement, with all signatures
reproduced on one (1)

-12-

<PAGE>

or more sets of signature pages, shall be considered for all purposes as if it
were an executed counterpart of this Agreement.

(f) Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.

(g) Paragraph Headings. The paragraph headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.

(h) Gender, Etc. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context indicates is appropriate.

(i) Number of Days. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and holidays;
provided, however, that if the final day of any time period falls on a Saturday,
Sunday or holiday on which Federal banks are or may elect to be closed, then the
final day shall be deemed to be the next day which is not a Saturday, Sunday or
such holiday.

-13-

<PAGE>

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the date first above written.

DOCUNET INC.

By: /s/ Bruce M. Gillis
------------------------------

/s/ Bruce M. Gillis
----------------------------------
Bruce M. Gillis

/s/ Andrew R. Bacas
----------------------------------
Andrew R. Bacas

/s/ G. Stuart Livingston, III
----------------------------------
G. Stuart Livingston, III

/s/ David C. Utz, Jr.
----------------------------------
David C. Utz, Jr.

/s/ Brian K. Bergeron
----------------------------------
Brian K. Bergeron

-14-

Exhibit 4.3

AMENDMENT NO. 1
TO
SHAREHOLDERS AGREEMENT

THIS AMENDMENT NO. 1 TO SHAREHOLDERS AGREEMENT dated November
19, 1996 (the "Agreement") made as of this 5th day of September, 1997 (the
"Amendment"), by and among DocuNet Inc., a Pennsylvania corporation (hereafter
called "DocuNet" or the "Company"), Bruce M. Gillis, Andrew R. Bacas, G. Stuart
Livingston, III (the "GBL Shareholders"), David C. Utz, Brian K. Bergeron, James
Brown, S. David Model, Richard Mosely, James M. Liebhardt, Bruce M. Gillis as
Trustee for Claire Solomon Gillis, UGMA and Bruce M. Gillis as Trustee for
Katherine Tessa Solomon Gillis, UGMA, (such persons together with any other
person or entity which hereafter may become a shareholder of DocuNet, so long as
they are shareholders of DocuNet, are sometimes hereinafter collectively called
the "Shareholders" or individually called "Shareholder").

NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, conditions and agreements herein contained, the parties
hereto, each intending to be legally bound hereby, agree as follows:

1. A new Section 15 is added as follows:

"15. Piggyback Registration Rights.

(a) Whenever the Company proposes to register any Common
Stock for its own or others' account under the Securities Act for a public
offering, other than (i) the initial public offering of its Common Stock; (ii)
any shelf registration of the Common Stock; (iii) registrations of shares to be
used solely as consideration for acquisitions of additional businesses by the
Company and (iv) registrations relating to employee benefit plans, the Company
shall give the Shareholder prompt written notice of its intent to do so. Upon
the written request of the Shareholder given within 30 days after receipt of
such notice, Company shall cause to be included in such registration all of the
Common Stock which the Shareholder requests. However, if the Company is advised
in writing in good faith by any managing underwriter of an underwritten offering
of the securities being offered pursuant to any registration statement under
this Section 15(a) that the number of shares to be sold by persons other than
the Company is greater than the number of such shares which can be offered
without adversely affecting the offering, the Company may reduce pro rata the
number of shares offered for the accounts of such persons (based upon the number
of shares held by such persons) to a number deemed satisfactory by such managing
underwriter or such managing underwriter can eliminate the participation of all
such persons in the offering, provided that, for each such

-1-

<PAGE>

offering made by the Company after its initial public offering of Common Stock,
a reduction shall be made first by reducing the number of shares to be sold by
persons other than the Company, the Shareholder, and all of the other
stockholders of the Company immediately prior to, or who become stockholders
simultaneously with, the closing of the initial public offering (the "Other
Stockholders"), and thereafter, if a further reduction is required, by reducing
the number of shares to be sold by the Shareholder and the Other Stockholders,
pro rata based upon the number of shares held by such persons.

(b) Registration Procedures. All expenses incurred in
connection with the registrations under this Section 15 (including all
registration, filing, qualification, legal, printer and accounting fees, but
excluding underwriting commissions and discounts and fees, if any, of separate
counsel engaged by the Shareholder) shall be borne by the Company. In connection
with registrations under Section 15(a), the Company shall (i) prepare and file
with the Securities and Exchange Commission as soon as reasonably practicable, a
registration statement with respect to the Common Stock and use its best efforts
to cause such registration to promptly become and remain effective for a period
of at least 90 days (or such shorter period during which holders shall have sold
all Common Stock which they requested to be registered); (ii) use its best
efforts to register and qualify the Common Stock covered by such registration
statement under applicable state securities laws as the holders shall reasonably
request for the distribution for the Common Stock; and (iii) take such other
actions as are reasonable and necessary to comply with the requirements of the
Securities Act and the regulations thereunder.

(c) Underwriting Agreement. In connection with each
registration pursuant to Section 15(a) covering an underwritten public offering,
the Company and each participating holder agree to enter into a written
agreement with the managing underwriters in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such managing underwriters and companies of the Company's size and
investment stature, including indemnification and the prohibition of sales or
transfers of such holders' common stock for an applicable lock-up period.

(d) Availability of Rule 144. The Company shall not be
obligated to register shares of Common Stock held by the Shareholder at any time
when the resale provisions of Rule 144(k) (or any similar or successor
provision) promulgated under the Securities Act are available to the
Shareholder.

(e) Survival. The provisions of this Section 15 shall
survive any earlier termination of this Agreement pursuant to Section 10 until
December 31, 1999."

2. Except as amended by this Amendment all other provisions of
the Agreement shall remain in full force and effect, and the Agreement and this
Amendment shall be taken and read as the same instrument. In the event of any
conflict between the provisions of the Agreement and the Amendment, the
provisions of the Amendment shall prevail.

-2-

<PAGE>

IN WITNESS WHEREOF, the parties have executed and delivered
this Amendment on the date first above written.

DOCUNET INC.

By: /s/ Bruce M. Gillis
---------------------------
Bruce M. Gillis

/s/ Bruce M. Gillis
---------------------------
Bruce M. Gillis

/s/ Andrew R. Bacas
---------------------------
Andrew R. Bacas

/s/ James Brown
---------------------------
James Brown

/s/ David C. Utz, Jr.
---------------------------
David C. Utz, Jr.

/s/ G. Stuart Livingston, III
---------------------------
G. Stuart Livingston, III

/s/ Richard Mosely
---------------------------
Richard Mosely

/s/ James M. Liebhardt
---------------------------
James M. Liebhardt

/s/ Brian K. Bergeron
---------------------------
Brian K. Bergeron

Claire Solomon Gillis under UGMA

By: /s/ Bruce M. Gillis
---------------------------
Bruce M. Gillis, Trustee

Katherine Tessa Solomon Gillis under UGMA

By: /s/ Bruce M. Gillis
---------------------------
Bruce M. Gillis, Trustee

/s/ S. David Model
---------------------------
S. David Model

-3-

JOINDER

THIS INSTRUMENT forms part of the Shareholders Agreement made as of the
19th day of November, 1996, among DocuNet, Inc. (the "Company") and its
shareholders, from time to time, as amended (the "Agreement"). The undersigned
hereby acknowledges having received a copy of the said Agreement (which is
annexed hereto as Schedule I) and having read the said Agreement in its
entirety, and for good and valuable consideration, receipt and sufficiency of
which is hereby acknowledged, hereby agrees that the terms and conditions of the
said Agreement shall be binding upon the undersigned as a Shareholder of the
Company (as the term "Shareholder" is defined in the said Agreement) and such
terms and conditions shall inure to the benefit of and be binding upon the
undersigned and its successors and permitted assigns.

IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the 9th day of September, 1997.

/s/ Bruce M. Gillis
----------------------------------
Bruce M. Gillis

Exhibit 5.1

[PEPPER, HAMILTON & SCHEETZ LLP]

November 28, 1997

ImageMax, Inc.
Two Bala Plaza, Suite 300
Bala Cynwyd, Pennsylvania 19004

Re: Registration Statement on Form S-1
(Registration No. 333-35567)

Ladies and Gentlemen:

We have acted as counsel to ImageMax, Inc., a Pennsylvania corporation
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended (the "Act"), of a public offering (the "Offering") of up to
3,100,000 shares (the "Primary Shares") of the Company's Common Stock, no par
value (the "Common Stock"), and up to an additional 465,000 shares of Common
Stock (the "Additional Shares" and, together with the Primary Shares, the
"Shares").

The opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Act.

We have examined originals or copies, certified or otherwise identified
to our satisfaction, of (i) the Registration Statement on Form S-1 originally
filed under the Act with the Securities and Exchange Commission (the
"Commission") on September 12, 1997, Amendment No. 1 thereto filed on November
4, 1997 and Amendment No. 2 thereto filed on November 28, 1997 (as so amended
the "Registration Statement"); (ii) the form of underwriting agreement, filed as
Exhibit 1 to Amendment No. 1 to the Registration Statement (the "Underwriting
Agreement"), to be entered into by and among the Company and William Blair &
Company LLC and Janney Montgomery Scott Inc., as representatives of the
underwriters; (iii) the Company's Articles of Incorporation and Bylaws, as in
effect on the date hereof; (iv) the form of the Company's Amended and Restated
Articles of Incorporation and Amended and Restated Bylaws, to become effective
prior to the Registration Statement being declared effective by the Commission;
(v) certain resolutions of the Board of Directors of the Company relating to,
among other things, the issuance of the Shares; (vi) a specimen certificate
representing the shares of Common Stock; and (vii) such other documents relating
to the Company and the proposed issuance of the Primary Shares and the
Additional Shares as we have deemed necessary or appropriate as a basis for the
opinions set forth below.

<PAGE>

ImageMax, Inc.
November 28, 1997
Page 2

In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such latter documents. As to any facts material to the opinions
expressed herein which were not independently established or verified, we have
relied upon statements and representations of officers and other representatives
of the Company and others. In addition, we have assumed the conformity of the
certificates representing the Shares to the form of the specimen thereof
examined by us and the due execution and delivery of such certificates.

Members of our firm are admitted to the Bar of the Commonwealth of
Pennsylvania, and we express no opinion as to the laws of any other jurisdiction
other than the Federal laws of the United States of America.

Based upon and subject to the foregoing, we are of the opinion that,
when issued and delivered against payment therefor in accordance with the terms
of the Underwriting Agreement, the Shares will be duly authorized, legally
issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus filed as part of the Registration Statement.

This opinion is furnished by us, as your counsel, in connection with
the filing of the Registration Statement and, except as provided in the
immediately preceding paragraph, is not to be used, circulated, quoted or
otherwise referred to for any other purpose without our express written
permission or relied upon by any other person.

Very truly yours,

/s/ PEPPER, HAMILTON & SCHEETZ LLP
----------------------------------

IMAGEMAX, INC.
1997 INCENTIVE PLAN

SECTION 1. Purpose; Definitions. The purpose of the ImageMax,
Inc. 1997 Incentive Plan (the "Plan") is to offer to certain employees,
Associates and Directors of ImageMax, Inc. (the "Company"), a Pennsylvania
corporation and its subsidiaries, equity interests in the Company, options to
acquire equity interests in the Company, and other performance-based incentive
awards, thereby attracting, retaining and motivating such persons, and
strengthening the mutuality of interests between such persons and the Company's
shareholders.

For purposes of the Plan, the following initially capitalized
words and phrases shall be defined as set forth below, unless the context
clearly requires a different meaning:

a. "Affiliate" means, with respect to a person or entity, a
person that directly or indirectly controls, or is controlled by, or is under
common control with such person or entity.

b. "Associate" means a consultant, contractor or other
provider of services to the Company.

c. "Board" means the Board of Directors of the Company, as
constituted from time to time.

d. "Cause" occurs when the Participant, as determined by the
Board:

(i) has engaged in any type of disloyalty to the Company,
including without limitation, fraud, embezzlement,
theft, or dishonesty in the course of his employment
or engagement, or has otherwise breached any
fiduciary duty owed to the Company;

(ii) has been convicted of a felony;

(iii) has disclosed trade secrets or confidential
information of the Company; or

(iv) has breached any agreement with or duty to the
Company in respect of confidentiality,
non-disclosure, non-competition or otherwise.

e. "Change of Control" means:

(i) the acquisition in one or more transactions by any
"Person" (as the term person is used for purposes of
Sections 13(d) or 14(d) of the Exchange Act) of
"Beneficial ownership" (within the meaning of

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Rule 13d-3 promulgated under the Exchange Act) of
twenty-five percent (25%) or more of the combined
voting power of the Company's then outstanding voting
securities (the "Voting Securities"), provided that
for purposes of this clause (i) Voting Securities
acquired directly from the Company by any Person
shall be excluded from the determination of such
Person's Beneficial ownership of Voting Securities
(but such Voting Securities shall be included in the
calculation of the total number of Voting Securities
then outstanding); or

(ii) approval by shareholders of the Company of:

(A) a merger, reorganization or consolidation
involving the Company if the shareholders of the
Company immediately before such merger,
reorganization or consolidation do not or will
not own directly or indirectly immediately
following such merger, reorganization or
consolidation, more than fifty percent (50%) of
the combined voting power of the outstanding
voting securities of the company resulting from
or surviving such merger, reorganization or
consolidation in substantially the same
proportion as their ownership of the Voting
Securities outstanding immediately before such
merger, reorganization or consolidation; or

(B) a complete liquidation or dissolution of the
Company;

(iii) acceptance by shareholders of the Company of shares
in a share exchange if the shareholders of the
Company immediately before such share exchange do not
or will not own directly or indirectly immediately
following such share exchange more than fifty percent
(50%) of the combined voting power of the outstanding
voting securities of the entity resulting from or
surviving such share exchange in substantially the
same proportion as their ownership of the Voting
Securities outstanding immediately before such share
exchange.

f. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.

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<PAGE>

g. "Committee" shall mean the Committee appointed by the Board
in accordance with Section 2 of the Plan, if one is appointed, in which event in
connection with this Plan, the Committee shall possess all of the power and
authority of, and shall be authorized to take any and all actions required to be
taken hereunder by, and make any and all determinations required to be taken
hereunder by, the Board.

h. "Director" means a member of the Board.

i. "Disability" shall mean a disability of an employee or a
Director which renders such employee or Director unable to perform the full
extent of his duties and responsibilities by reason of his illness or incapacity
which would entitle that employee or Director to receive Social Security
Disability Income under the Social Security Act, as amended, and the regulations
promulgated thereunder. "Disabled" shall mean having a Disability. The
determination of whether a Participant is Disabled shall be made by the Board,
whose determination shall be conclusive; provided that,

(i) if a Participant is bound by the terms of an
employment agreement between the Participant and the
Company, whether the Participant is "Disabled" for
purposes of the Plan shall be determined in
accordance with the procedures set forth in said
employment agreement, if such procedures are therein
provided; and

(ii) a Participant bound by such an employment agreement
shall not be determined to be Disabled under the Plan
any earlier than he would be determined to be
disabled under his employment agreement.

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

k. "Fair Market Value" means, as of any date: (i) the closing
price of the Shares as reported on the principal nationally recognized stock
exchange on which the Shares are traded on such date, or if no Share prices are
reported on such date, the closing price of the Shares on the next preceding
date on which there were reported Share prices; or (ii) if the Shares are not
listed or admitted to unlisted trading privileges on a nationally recognized
stock exchange, the closing price of the Shares as reported by The NASDAQ Stock
Market on such date, or if no Share prices are reported on such date, the
closing price of the Shares on the next preceding date on which there were
reported Share prices; or (3) if the Shares are not listed or admitted to
unlisted trading privileges on a nationally recognized stock exchange or traded
on The NASDAQ Stock Market, then the Fair Market Value shall be determined by
the Board acting in its discretion, which determination shall be conclusive.

l. "Incentive Stock Option" means any Option intended to be
and designated as an "Incentive Stock Option" within the meaning of Section 422
of the Code.

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<PAGE>

m. "Long-Term Performance Award" or "Long-Term Award" means an
award made pursuant to Section 8 hereof that is payable in cash and/or Shares
(including Restricted Stock, Performance Shares and Performance Units) in
accordance with the terms of the grant, based on Company, business unit and/or
individual performance, in each case as determined by the Committee and as set
forth in the grant letter.

n. "Non-Employee Director" shall have the meaning set forth in
Rule 16b-3(b)(3)promulgated by the Securities and Exchange Commission under the
Exchange Act, or any successor definition adopted by the Securities and Exchange
Commission; provided, however, that the Board or the Committee may, in its sole
discretion, substitute the definition of "outside director" provided in the
regulations under Section 162(m) of the Code in place of the definition of
Non-Employee Director contained in the Exchange Act.

o. "Non-Qualified Stock Option" means any Option that is not
an Incentive Stock Option.

p. "Participant" means an employee, Director, or Associate of
the Company or a Subsidiary to whom an award is granted pursuant to the Plan.

q. "Performance Share" means an award made pursuant to Section
9 hereof of the right to receive Shares at the end of a specified performance
period.

r. "Performance Unit" means an award made pursuant to Section
10 hereof of the right to receive cash at the end of a specified performance
period.

s. "Restricted Stock" means an award of Shares that is subject
to restrictions pursuant to Section 7 hereof.

t. "Retirement" means termination of the employment of a
Participant with the Company, an Affiliate (including parent) or a Subsidiary
other than (i) a termination effected at the direction of the Company or parent
(whether or not the Company effects such termination for Cause), (ii)
termination on account of Disability, or (iii) termination on account of death.
With respect to a Director who is not also an employee of the Company,
Retirement shall occur at such time as the individual ceases to be a Director.

u. "Rules" means Section 16 of the Exchange Act and the
regulations promulgated thereunder.

v. "SAR" means a share appreciation right granted under the
Plan and described in Section 6 hereof.

w. "Securities Broker" means a registered securities broker
acceptable to the Company who agrees to effect the cashless exercise of an
Option pursuant to Section 5(l) hereof.

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<PAGE>

x. "Share" means a share of stock of the Company, subject to
substitution or adjustment as provided in Section 3(c) hereof.

y. "Stock Option" or "Option" means any option to purchase
Shares (including Restricted Stock, if the Committee so determines) granted
pursuant to Section 5 hereof.

z. "Subsidiary" means, in respect of the Company or parent, a
subsidiary company, whether now or hereafter existing, as defined in Sections
424(f) and (g) of the Code.

SECTION 2. Administration. The Plan shall be administered by
the Board. The Board may at any time by a unanimous vote, with each member
voting, appoint a Committee consisting of not less than two Directors to
administer the Plan on behalf of the Board, subject to such terms and conditions
as the Board may prescribe. Members of the Committee shall serve for such period
of time as the Board may determine. Members of the Board or the Committee who
are eligible for awards or have been granted awards may vote on any matters
affecting the administration of the Plan or any awards pursuant to the Plan,
except that no such member shall act upon an award to himself or herself, but
any such member may be counted in determining the existence of a quorum at any
meeting of the Board or Committee during which action is taken with respect to
an award to himself or herself.

If a Committee is appointed, all references to actions to be
taken by the Board in the administration of the Plan shall be construed as
references to the Committee.

From time to time the Board may increase the size of the
Committee and appoint additional members thereto (provided such new members are
Non-Employee Directors), remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies however caused, or remove all
members of the Committee and thereafter directly administer the Plan.

The Board shall have full authority to grant to eligible
persons under Section 4: (i) Options, (ii) SARs, (iii) Restricted Stock, (iv)
Long-Term Performance Awards, (v) Performance Shares and/or (vi) Performance
Units. In particular, the Board shall have the authority:

a. to select the persons to whom Options, SARs, Restricted
Stock, Long-Term Performance Awards, Performance Shares and Performance Units
may from time to time be granted hereunder;

b. to determine whether and to what extent Incentive Stock
Options, Non-Qualified Stock Options, SARs, Restricted Stock, Long-Term
Performance Awards, Performance Shares and Performance Units, or any combination
thereof, are to be granted hereunder;

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<PAGE>

c. to determine the number of Shares, if any, to be covered by
each such award granted hereunder;

d. to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder, including, but not
limited to, the Share price and any restriction or limitation, any vesting
provisions, or any vesting acceleration or forfeiture waiver regarding any
Option or other award and/or the Shares relating thereto, or the length of the
period following termination of employment of any Participant during which any
Option or SAR may be exercised (which, in the case of an Incentive Stock Option,
shall be no longer than one year in the case of the termination of employment of
a Participant by reason of death or Disability, or three months in the case of
the termination of employment of a Participant for any reason other than death
or Disability), based on such factors as the Board shall determine, in its sole
discretion;

e. to determine whether and under what circumstances an Option
may be exercised without a payment of cash under Section 5(l); and

f. to determine whether, to what extent and under what
circumstances Shares and other amounts payable with respect to an award under
the Plan may be deferred either automatically or at the election of the
Participant.

The Board 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 agreements relating
thereto); to amend the terms of any agreement relating to any award issued under
the Plan, provided that the Participant consents to such amendment; and to
otherwise supervise the administration of the Plan. The Board may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in any
award granted in the manner and to the extent it shall deem necessary to carry
out the intent of the Plan.

All decisions made by the Board pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
Participants. No member of the Board shall be liable for any good faith
determination, act or failure to act in connection with the Plan or any award
made under the Plan.

SECTION 3. Shares Subject to the Plan.

a. Shares Subject to the Plan. The Shares to be subject or
related to awards under the Plan shall be authorized and unissued Shares of the
Company, whether or not previously issued and subsequently acquired by the
Company. The maximum number of Shares that may be the subject of awards under
the Plan is 600,000, or such lesser amount as the Board shall determine, and the
Company shall reserve for the purposes of the Plan, out of its authorized and
unissued Shares, such number of Shares. Notwithstanding the foregoing, no
individual shall

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<PAGE>

receive, over the term of the Plan, awards for more than an aggregate of 150,000
Shares, or SARs with respect to such Shares, authorized for grant under the
Plan.

b. Effect of the Expiration or Termination of Awards. If and
to the extent that an award made under the Plan expires, terminates or is
canceled or forfeited for any reason without having been exercised in full, the
Shares associated with the expired, terminated, canceled or forfeited portion of
the award shall again become available for award under the Plan.

c. Other Adjustment. In the event of any merger,
reorganization, consolidation, recapitalization, Share distribution or dividend,
Share split or combination, or other change in entity structure affecting the
Shares, such substitution or adjustment shall be made in the aggregate number,
type and issuer of the securities reserved for issuance under the Plan, in the
number and Option price of securities subject to outstanding Options granted
under the Plan and in the number and price of securities subject to other awards
made under the Plan, as may be determined to be appropriate by the Board in its
sole discretion, provided that the number of securities subject to any award
shall always be a whole number. The Board, in its sole discretion, shall make
appropriate equitable anti-dilution adjustments to the number of
then-outstanding SARs, and to the Fair Market Value upon which the value of such
SARs is based.

SECTION 4. Eligibility. Employees, Directors and Associates of
the Company or its Subsidiaries are eligible to be granted awards under the
Plan. Directors who are not employees of the Company or a Subsidiary are
eligible to be granted awards under the Plan, but are not eligible to be granted
Incentive Stock Options.

SECTION 5. Options. Options granted under the Plan may be of
two types: (i) Incentive Stock Options or (ii) Non-Qualified Stock Options.
Options may be granted alone, in addition to or in tandem with other awards
granted under the Plan. Any Option granted under the Plan shall be in such form
as the Board may from time to time approve.

The Board shall have the authority to grant any Participant
eligible under Section 4 Incentive Stock Options, Non-Qualified Stock Options,
or both types of Options (in each case with or without SARs). To the extent that
any Option does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option.

Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Board shall deem
appropriate; provided, however, that the provisions of Option awards need to be
the same with respect to each Participant:

a. Option Price. The exercise price per Share purchasable
under a Non-Qualified Stock Option shall be determined by the Board. The
exercise price per Share purchasable under an Incentive Stock Option shall be
100% of the Fair Market Value of the Share on the date of the grant. However,
any Incentive Stock Option granted to any Participant

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<PAGE>

who, at the time the Option is granted, owns more than 10% of the voting power
of all classes of shares of the Company or of a Subsidiary shall have an
exercise price per Share of not less than 110% of Fair Market Value per Share on
the date of the grant.

b. Option Term. The term of each Option shall be fixed by the
Board, but no Option shall be exercisable more than ten years after the date the
Option is granted. However, any Incentive Stock Option granted to any
Participant who, at the time such Option is granted, owns more than 10% of the
voting power of all classes of shares of the Company or of a Subsidiary may not
have a term of more than five years. No Option may be exercised by any person
after expiration of the term of the Option.

c. Exercisability. Options shall vest and be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Board at the time of grant. If the Board provides, in its
discretion, that any Option is exercisable only in installments, the Board may
waive such installment exercise provisions at any time at or after grant, in
whole or in part, based on such factors as the Board shall determine, in its
sole discretion.

d. Method of Exercise. Subject to the exercise provisions
under Section 5(c) and the termination provisions set forth in Sections 5(f)
through (i), Options may be exercised in whole or in part at any time and from
time to time during the term of the Option, by giving written notice of exercise
to the Company specifying the number of Shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, either by
certified or bank check, or such other instrument as the Board may accept. As
determined by the Board, in its sole discretion, at or after grant, payment in
full or in part of the exercise price of an Option may be made in the form of
unrestricted Stock based on the Fair Market Value of the Shares on the date the
Option is exercised; provided, however, that, in the case of an Incentive Stock
Option, the right to make a payment in the form of already owned Shares may be
authorized only at the time the Option is granted.

No Shares shall be issued upon exercise of an Option until
full payment therefor has been made. A Participant shall not have the right to
distributions or dividends or any other rights of a shareholder with respect to
Shares subject to the Option until the Participant has given written notice of
exercise, has paid in full for such Shares, and, if requested, has given the
representation described in Section 13(a) hereof.

e. Non-transferability of Options. No Option shall be
transferable by the Participant otherwise than by will or by the laws of descent
and distribution, and all Options shall be exercisable, during the Participant's
lifetime, only by the Participant or, in the event of his Disability, by his
personal representative.

f. Termination by Reason of Death. Subject to Section 5(i), if
a Participant's service with the Company or any Subsidiary terminates by reason
of death, any Option held by such Participant may thereafter be exercised, to
the extent then exercisable or on such accelerated

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<PAGE>

basis as the Board may determine at or after grant, by the legal representative
of the estate or by the legatee of the Participant under the will of the
Participant, for a period expiring (i) at such time as may be specified by the
Board at or after the time of grant, or (ii) if not specified by the Board, then
one year from the date of death, or (iii) if sooner than the applicable period
specified under (i) or (ii) above, then upon the expiration of the stated term
of such Option.

g. Termination by Reason of Disability. Subject to Section
5(i), if an Participant's service with the Company or any Subsidiary terminates
by reason of Disability, any Option held by such Participant may thereafter be
exercised by the Participant or his personal representative, to the extent it
was exercisable at the time of termination, or on such accelerated basis as the
Board may determine at or after grant, for a period expiring (i) at such time as
may be specified by the Board at or after the time of grant, or (ii) if not
specified by the Board, then one year from the date of termination of service,
or (iii) if sooner than the applicable period specified under (i) or (ii) above,
then upon the expiration of the stated term of such Option.

h. Termination for Cause. If the Participant's employment is
terminated for Cause, any Option held by such Participant shall immediately
expire.

i. Other Termination. Subject to Section 5(i), if a
Participant's service with the Company or any Subsidiary terminates for any
reason other than death or Disability, any Option held by such Participant may
thereafter be exercised by the Participant, to the extent it was exercisable at
the time of such termination or on such accelerated basis as the Board may
determine at or after the time of grant, for a period expiring (i) at such time
as may be specified by the Board at or after the time of grant, or (ii) if not
specified by the Board, then ninety (90) days from the date of termination of
service, or (iii) if sooner than the applicable period specified under (i) or
(ii) above, then upon the expiration of the stated term of such Option.

j. Change of Control. In the event of a Change of Control, the
Board may, in its sole discretion, cause all outstanding Options to immediately
become fully exercisable.

k. Incentive Stock Option Limitations. To the extent required
for "incentive stock option" status under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by
the Participant during any calendar year under the Plan and/or any other plan of
the Company or any Subsidiary shall not exceed $100,000. For purposes of
applying the foregoing limitation, Incentive Stock Options shall be taken into
account in the order granted.

l. Cashless Exercise. The Company may, in the sole discretion
of the Board, cooperate in a "cashless exercise" of an Option. The cashless
exercise shall be effected by the Participant delivering to the Securities
Broker instructions to sell a sufficient number of Shares to cover the costs and
expenses associated therewith.

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SECTION 6. Share Appreciation Rights.

a. Grant. SARs may be granted alone ("Stand-Alone SARs") or in
conjunction with all or part of any Option granted under the Plan ("Tandem
SARs"). In the case of a Non-Qualified Stock Option, a Tandem SAR may be granted
either at or after the time of the grant of such Option. In the case of an
Incentive Stock Option, a Tandem SAR may be granted only at the time of the
grant of such Option.

b. Exercise.

(i) Tandem SARs. A Tandem SAR or applicable portion
thereof shall terminate and no longer be exercisable
upon the termination or exercise of the related
Option or portion thereof, except that, unless
otherwise determined by the Board, in its sole
discretion at the time of grant, a Tandem SAR granted
with respect to less than the full number of Shares
covered by a related Option shall be reduced only
after such related Option is exercised or otherwise
terminated with respect to the number of Shares not
covered by the Tandem SAR.

A Tandem SAR may be exercised by a Participant by surrendering
the applicable portion of the related Option, only at such time or times and to
the extent that the Option to which such Tandem SAR relates shall be exercisable
in accordance with the provisions of Section 5 and this Section 6. Options which
have been so surrendered, in whole or in part, shall no longer be exercisable to
the extent the related Tandem SARs have been exercised.

Upon the exercise of a Tandem SAR, a Participant shall be
entitled to receive, upon surrender to the Company of all (or a portion) of an
Option in exchange for cash and/or Shares, an amount equal to the excess of (A)
the Fair Market Value, as of the date such Option (or such portion thereof) is
surrendered, of the Shares covered by such Option (or such portion thereof) over
(B) the aggregate exercise price of such Option (or such portion thereof).

Upon the exercise of a Tandem SAR, the Option or part thereof
to which such Tandem SAR is related, shall be deemed to have been exercised for
the purpose of the limitation set forth in Section 3 of the Plan on the number
of Shares to be issued under the Plan, but only to the extent of the number of
Shares issued under the Tandem SAR at the time of exercise based on the value of
the Tandem SAR at such time.

A Tandem SAR may be exercised only if and when the Fair Market
Value of the Shares subject to the Option exceeds the exercise price of such
Option.

(ii) Stand-Alone SARs. A Stand-Alone SAR may be exercised
by a Participant giving notice of intent to exercise
to the Company, provided that all or a portion of
such Stand-Alone SAR shall have become vested and
exercisable as of the date of exercise.

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<PAGE>

Upon the exercise of a Stand-Alone SAR, a Participant shall be
entitled to receive, in either cash and/or Shares, an amount equal to the
excess, if any, of (A) the Fair Market Value, as of the date such SAR (or
portion of such SAR) is exercised, of the Shares covered by such SAR (or portion
of such SAR) over (B) the Fair Market Value of the Shares covered by such SAR
(or a portion of such SAR) as of the date such SAR (or a portion of such SAR)
was granted.

c. Terms and Conditions. SARs shall be subject to such terms
and conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Board, in its sole discretion; provided,
however, that the provisions of SAR awards need not be the same with respect to
each Participant. Such terms and conditions include the following:

(i) Non-Transferability. No SAR shall be transferable by
the Participant otherwise than by will or by the laws
of descent and distribution and all SARs shall be
exercisable, during the Participant's lifetime, only
by the Participant or, in the event of his
Disability, by his personal representative.

(ii) Term of SAR. The term of each SAR shall be fixed by
the Board, provided that the term of a Tandem SAR
shall be determined by the terms of the applicable
Option, and provided further that the term of a
Stand-Alone SAR shall be ten (10) years, unless
another term is specified by the Board.

(iii) Exercisability. SARs shall vest and be exercisable at
such time or times and subject to such terms and
conditions as shall be determined by the Board at the
time of grant, provided that the term of a Tandem SAR
shall be determined by the terms of the applicable
Option. A Participant shall not have any rights as a
shareholder with respect to any SAR.

(iv) Termination of Employment. Unless otherwise specified
in the terms of an award, SARs shall be subject to
the terms of Sections 5(f)-(i) with respect to
exercise upon termination of employment.

(v) Change of Control. In the event of a Change of
Control, the Board may, in its sole discretion, cause
all outstanding SARs to immediately become fully
exercisable.

SECTION 7. Restricted Stock.

a. Administration. Restricted Stock may be issued either alone
or in addition to other awards granted under the Plan. The Board shall determine
the persons to whom, and the

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time or times at which, grants of Restricted Stock will be made, the number of
Shares to be awarded, the price (if any) to be paid by the recipient of
Restricted Stock, the time or times within which such awards may be subject to
forfeiture, and all other conditions of the awards.

The Board may condition the vesting of Restricted Stock upon
the attainment of specified performance goals or such other factors as the Board
may determine, in its sole discretion, at the time of the award.

The provisions of Restricted Stock awards need not be the same
with respect to each Participant.

b. Awards and Certificates. The prospective recipient of a
Restricted Stock award shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the applicable terms and conditions of such award. The
purchase price for Restricted Stock may be zero.

Each Participant receiving a Restricted Stock award shall be
issued a share certificate in respect of such Restricted Stock. Such certificate
shall be registered in the name of such Participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such award, substantially in the following form:

"The transferability of this certificate and the shares represented hereby
are subject to the terms and conditions (including forfeiture) of the
ImageMax, Inc. 1997 Incentive Plan and an Agreement entered into between
the registered owner and ImageMax, Inc. Copies of such Plan and Agreement
are on file in the principal offices of ImageMax, Inc. and will be made
available to any Shareholder without charge upon request to the Secretary
of the Company."

The Board shall require that the share certificates evidencing
Restricted Stock be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
award, the Participant shall have delivered to the Company a share power,
endorsed in blank, relating to the Shares covered by such award.

c. Restrictions and Conditions. The Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:

(i) During a period set by the Board commencing with the
date of such award (the "Restriction Period"), the
Participant shall not be permitted to sell, transfer,
pledge, assign or otherwise encumber Restricted Stock
awarded under the Plan. The Board, in its sole
discretion, may provide for the lapse of such
restrictions in installments and may accelerate or
waive such restrictions in whole or in part, based on
service, performance and/or such other factors or
criteria as the Board may determine, in its sole
discretion.

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<PAGE>

(ii) Except as provided in this paragraph (ii) and Section
7(c)(i), once the Participant has been issued a
certificate or certificates for Restricted Stock, the
Participant shall have, with respect to the
Restricted Stock, all of the rights of a shareholder
of the Company, including the right to vote the
Shares, and the right to receive any cash
distributions or dividends. The Board, in its sole
discretion, as determined at the time of award, may
permit or require the payment of cash distributions
or dividends to be deferred and, if the Board so
determines, reinvested in additional Restricted Stock
to the extent Shares are available under Section 3 of
the Plan.

(iii) Subject to the applicable provisions of the award
agreement and this Section 7, upon termination of a
Participant's service with the Company for reasons
other than death or Disability during the Restriction
Period, all Restricted Stock still subject to
restriction shall be forfeited by the Participant.
Subject to the provisions of the Plan, the Board, in
its sole discretion, may provide for the lapse of
such restrictions in installments and may waive such
restrictions, in whole or in part, at any time, based
on such factors as the Board shall deem appropriate
in its sole discretion. Upon the death or Disability
of a Participant during the Restriction Period,
restrictions will lapse with respect to a percentage
of the Restricted Stock award granted to the
Participant that is equal to the percentage of the
Restriction Period that has elapsed as of the date of
death or the date on which such Disability commenced
(as determined by the Board in its sole discretion),
and a share certificate or share certificates
representing such Shares, without bearing the
restrictive legend described in Section 7(b), shall
be delivered by the Company to the Participant or the
Participant's estate, as the case may be, in exchange
for the share certificate or share certificates that
contain such restrictive legend.

(iv) In the event of hardship or other special
circumstances of a Participant whose service with the
Company is involuntarily terminated (other than for
Cause), the Board may, in its sole discretion, waive
in whole or in part any or all remaining restrictions
with respect to such Participant's Restricted Stock,
based on such factors as the Board may deem
appropriate.

(v) If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock subject to
such Restriction Period, the certificates for such
Shares, without bearing the restrictive legend
described in Section 7(b), shall be promptly
delivered by the Company to the Participant, in
exchange for the share certificate or share
certificates that contain such restrictive legend.

(vi) In the event of a Change of Control, the Board, in
its sole discretion, may cause all Restricted Stock
remaining subject to forfeiture to immediately cease
to be subject to forfeiture and a share certificate
or shares certificates representing such Shares,
without bearing the restrictive legend described in
Section 7(b), shall be issued by the Company and
delivered to the Participant, in exchange for the
share certificate or share certificates that contain
such restrictive legend.

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<PAGE>

SECTION 8. Long-Term Performance Awards.

a. Awards and Administration. Long-Term Performance Awards may
be awarded either alone or in addition to other awards granted under the Plan.
Prior to award of a Long-Term Performance Award, the Board shall determine the
nature, length and starting date of the performance period (the "performance
period") for each Long-Term Performance Award. Performance periods may overlap
and Participants may participate simultaneously with respect to Long-Term
Performance Awards that are subject to different performance periods and/or
different performance factors and criteria. Prior to award of a Long-Term
Performance Award, the Board shall determine the performance objectives to be
used in awarding Long-Term Performance Awards and determine the extent to which
such Long-Term Performance Awards have been earned. Performance objectives may
vary from Participant to Participant and between groups of Participants and
shall be based upon such Company, business unit and/or individual performance
factors and criteria as the Board may deem appropriate, including, but not
limited to, earnings per Share or return on equity.

At the beginning of each performance period, the Board shall
determine for each Long-Term Performance Award subject to such performance
period the range of dollar values or number of Shares to be awarded to the
Participant at the end of the performance period if and to the extent that the
relevant measure(s) of performance for such Long-Term Performance Award is (are)
met. Such dollar values or number of Shares may be fixed or may vary in
accordance with such performance and/or other criteria as may be specified by
the Board, in its sole discretion.

b. Adjustment of Awards. In the event of special or unusual
events or circumstances affecting the application of one or more performance
objectives to a Long-Term Performance Award, the Board may revise the
performance objectives and/or underlying factors and criteria applicable to the
Long-Term Performance Awards affected, to the extent deemed appropriate by the
Board, in its sole discretion, to avoid unintended windfalls or hardship.

c. Termination of Service. Unless otherwise provided in the
applicable award agreements, if a Participant terminates service with the
Company during a performance period because of death, Disability or Retirement,
such Participant (or his estate) shall be entitled to a payment with respect to
each outstanding Long-Term Performance Award at the end of the applicable
performance period:

(i) based, to the extent relevant under the terms of the
award, upon the Participant's performance for the
portion of such performance period ending on the date
of termination and the performance of the applicable
business unit(s) for the entire performance period,
and

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<PAGE>

(ii) pro-rated, where deemed appropriate by the Board, for
the portion of the performance period during which
the Participant was employed by or served on the
Board of the Company, all as determined by the Board,
in its sole discretion.

However, the Board may provide for an earlier payment in
settlement of such award in such amount and under such terms and conditions as
the Board deems appropriate, in its sole discretion.

Except as otherwise determined by the Board, if a Participant
terminates service with the Company during a performance period for any other
reason, then such Participant shall not be entitled to any payment with respect
to the Long-Term Performance Awards subject to such performance period, unless
the Board shall otherwise determine, in its sole discretion.

In the event of a Change of Control, the Board may, in its
sole discretion, cause all conditions applicable to a Long-Term Performance
Award to immediately terminate and a share certificate or share certificates
representing Shares subject to such award, or cash, as the case may be, to be
issued and/or delivered to the Participant.

d. Form of Payment. The earned portion of a Long-Term
Performance Award may be paid currently or on a deferred basis, together with
such interest or earnings equivalent as may be determined by the Board, in its
sole discretion. Payment shall be made in the form of cash or whole Shares,
including Restricted Stock, either in a lump sum payment or in annual
installments commencing as soon as practicable after the end of the relevant
performance period, all as the Board shall determine at or after grant. If and
to the extent a Long-Term Performance Award is payable in Shares and the full
amount of such value is not paid in Shares, then the Shares representing the
portion of the value of the Long-Term Performance Award not paid in Shares shall
again become available for award under the Plan, subject to Section 3(b). A
Participant whose Long-Term Performance Award is payable in Shares or Restricted
Stock shall not have any rights as a shareholder until such share certificate or
share certificates have been issued to such Participant, and, if requested, the
Participant has given the representation described in Section 13(a) hereof.
Prior to any payment, the Board shall certify that all of the performance goals
or other material terms of the award have been met.

SECTION 9. Performance Shares.

a. Awards and Administration. The Board shall determine the
persons to whom and the time or times at which Performance Shares shall be
awarded, the number of Performance Shares to be awarded to any such person, the
duration of the period (the "performance period") during which, and the
conditions under which, receipt of the Shares will be deferred, and the other
terms and conditions of the award in addition to those set forth below.

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<PAGE>

The Board may condition the receipt of Shares pursuant to a
Performance Share award upon the attainment of specified performance goals or
such other factors or criteria as the Board shall determine, in its sole
discretion.

The provisions of Performance Share awards need not be the
same with respect to each Participant, and such awards to individual
Participants need not be the same in subsequent years.

b. Terms and Conditions. Performance Shares awarded pursuant
to this Section 9 shall be subject to the following terms and conditions and
such other terms and conditions, not inconsistent with the terms of this Plan,
as the Board shall deem desirable:

(i) Conditions. The Board, in its sole discretion, shall
specify the performance period during which, and the
conditions under which, the receipt of Shares covered
by the Performance Share award will be deferred.

(ii) Share Certificate. At the expiration of the
performance period, if the Board, in its sole
discretion, determines that the conditions specified
in the Performance Share agreement have been
satisfied, a share certificate or share certificates
evidencing the number of Shares covered by the
Performance Share award shall be issued and delivered
to the Participant. A Participant shall not be deemed
to be the holder of Shares, or to have the rights of
a holder of Shares, with respect to the Performance
Shares unless and until a share certificate or share
certificates evidencing such Shares are issued to
such Participant.

(iii) Death, Disability or Retirement. Subject to the
provisions of the Plan, if a Participant terminates
service with the Company during a performance period
because of death, Disability or Retirement, such
Participant (or his estate) shall be entitled to
receive, at the expiration of the performance period,
a percentage of Performance Shares that is equal to
the percentage of the performance period that had
elapsed as of the date of termination, provided that
the Board, in its sole discretion, determines that
the conditions specified in the Performance Share
agreement have been satisfied. In such event, a share
certificate or share certificates evidencing such
Shares shall be issued and delivered to the
Participant or the Participant's estate, as the case
may be.

(iv) Termination of Service. Unless otherwise determined
by the Board at the time of grant, the Performance
Shares will be forfeited upon a termination of
service during the performance period for any reason
other than death, Disability or Retirement.

(v) Change of Control. In the event of a Change of
Control, the Board may, in its sole discretion, cause
all conditions applicable to the Performance Shares
to immediately terminate and a share certificate or
share certificates evidencing Shares subject to the
Share award to be issued and delivered to the
Participant.

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<PAGE>

SECTION 10. Performance Units.

a. Awards and Administration. The Board shall determine the
persons to whom and the time or times at which Performance Units shall be
awarded, the number of Performance Units to be awarded to any such person, the
duration of the period (the "performance period") during which, and the
conditions under which, a Participant's right to Performance Units will be
vested, the ability of Participants to defer the receipt of payment of such
Performance Units, and the other terms and conditions of the award in addition
to those set forth below.

A Performance Unit shall have a dollar value, which shall be
set from time to time by the Board.

The Board may condition the vesting of Performance Units upon
the attainment of specified performance goals or such other factors or criteria
as the Board shall determine, in its sole discretion.

The provisions of Performance Unit awards need not be the same
with respect to each Participant, and such awards to individual Participants
need not be the same in subsequent years.

b. Terms and Conditions. Performance Units awarded pursuant to
this Section 10 shall be subject to the following terms and conditions and such
other terms and conditions, not inconsistent with the terms of this Plan, as the
Board shall deem desirable:

(i) Conditions. The Board, in its sole discretion, shall
specify the performance period during which, and the
conditions under which, the Participant's right to
Performance Units will be vested.

(ii) Vesting. At the expiration of the performance period,
the Board, in its sole discretion, shall determine
the extent to which the performance goals have been
achieved, and the percentage of the Performance Units
of each Participant that have vested.

(iii) Death, Disability or Retirement. Subject to the
provisions of this Plan, if a Participant terminates
service with the Company during a performance period
because of death, Disability or Retirement, such
Participant (or the Participant's estate) shall be
entitled to receive, at the expiration of the
performance period, a cash distribution equal to the
value of a percentage of Performance Units that is
equal to the percentage of the performance period
that had elapsed as of the date of termination,
provided that the Board, in its sole discretion,
determines that the conditions specified in the
Performance Unit agreement have been satisfied, and
payment thereof shall be made to the Participant or
the Participant's estate, as the case may be.

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<PAGE>

(iv) Termination of Service. Unless otherwise determined
by the Board at the time of grant, the Performance
Units will be forfeited upon a termination of service
during the performance period for any reason other
than death, Disability or Retirement.

(v) Change of Control. In the event of a Change of
Control, the Board may, in its sole discretion, cause
all conditions applicable to Performance Units to
immediately terminate and cash representing the full
amount of such award to be paid to the Participant.

SECTION 11. Amendments and Termination. The Board may amend,
alter or discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would impair the rights of a Participant
with respect to an Option, SAR, Restricted Stock, Long-Term Performance Award,
Performance Share or Performance Unit which has been granted under the Plan,
without the Participant's consent, or which, without the approval of such
amendment within one year (365 days) of its adoption by the Board, by a majority
of the votes cast at a duly held shareholder meeting at which a quorum
representing a majority of the Company's outstanding voting shares is present
(either in person or by proxy), would:

a. except as expressly provided in the Plan, increase the
total number of Shares reserved for the purposes of the Plan;

b. change the persons or class of persons eligible to
participate in the Plan; or

c. extend the maximum Option term under Section 5(b) of the
Plan.

The Board may substitute new Options for previously granted
Options, including previously granted Options having higher exercise prices.

Subject to the above provisions, the Board shall have broad
authority to amend the Plan to take into account changes in applicable tax laws
and accounting rules, as well as other developments.

SECTION 12. Unfunded Status of Plan. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant by the Company, nothing
contained herein shall give any such Participant any rights that are greater
than those of a general creditor of the Company. In its sole discretion, the
Board may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Shares or payments in lieu of
Shares or with respect to awards hereunder.

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<PAGE>

SECTION 13. General Provisions.

a. The Board may require each person acquiring Shares or a
Share-based award under the Plan to represent to and agree with the Company in
writing that the Participant is acquiring the Shares or Share-based award for
investment purposes and without a view to distribution thereof and as to such
other matters as the Board believes are appropriate to ensure compliance with
applicable Federal and state securities laws. The certificate evidencing such
award and any securities issued pursuant thereto may include any legend which
the Board deems appropriate to reflect any restrictions on transfer and
compliance with securities laws.

All certificates for Shares or other securities delivered
under the Plan shall be subject to such share-transfer orders and other
restrictions as the Board may deem advisable under the rules, regulations, and
other requirements of the Securities Act of 1933, as amended, the Exchange Act,
any stock exchange upon which the Shares are then listed, and any other
applicable Federal or state securities laws, and the Board may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.

b. Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.

c. The adoption of the Plan shall not confer upon any employee
of the Company or a Subsidiary any right to continued employment with the
Company or such Subsidiary, nor shall it interfere in any way with the right of
the Company or such Subsidiary to terminate the employment of any of its
employees at any time.

d. 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 under the Plan, the Participant shall pay to
the Company, or make arrangements satisfactory to the Board regarding the
payment, of any Federal, state or local taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the Board,
the minimum required withholding obligations may be settled with Shares,
including Shares that are part of the award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements and the Company shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the Participant.

e. At the time of grant of an award under the Plan, the Board
may provide that the Shares received as a result of such grant shall be subject
to a right of first refusal, pursuant to which the Participant shall be required
to offer to the Company any Shares that the Participant wishes to sell, with the
price being the then Fair Market Value of the Shares, subject to such other
terms and conditions as the Board may specify at the time of grant.

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<PAGE>

f. The reinvestment of distributions or dividends in
additional Restricted Stock (or in other types of Plan awards) at the time of
any distribution or dividend payment shall only be permissible if sufficient
Shares are available under Section 3 of the Plan for such reinvestment (taking
into account then outstanding Options and other Plan awards).

g. The Board shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any amounts
payable in the event of the Participant's death are to be paid.

h. The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.

SECTION 14. Effective Date of Plan. This Plan shall become
effective on the date that it is adopted by the Board; provided, however, that
it shall not be an Incentive Stock Option Plan if it is not approved, within one
year (365 days) of its adoption by the Board, by a majority of the votes cast at
a duly held shareholder meeting at which a quorum representing a majority of
Company's outstanding voting shares is present, either in person or by proxy.
The Board may make awards hereunder prior to approval of the Plan; provided,
however, that any and all Incentive Stock Options so awarded automatically shall
be converted into Non-Qualified Stock Options if the Plan is not approved by
shareholders within 365 days of its adoption.

SECTION 15. Term of Plan. No Option, SAR, Restricted Stock,
Long-Term Performance Award, Performance Share or Performance Unit shall be
granted pursuant to the Plan on or after the tenth (10th) anniversary of the
date of shareholder approval of the Plan, but awards granted prior to such tenth
(10th) anniversary may extend beyond that date.

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IMAGEMAX, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN

1. Purpose.

The ImageMax, Inc. 1997 Employee Stock Purchase Plan (the
"Plan") is intended to encourage and facilitate the purchase of Shares of the
Common Stock of ImageMax, Inc. (the "Company"), by employees of the Company and
any Participating Companies, thereby providing employees with a personal stake
in the Company and a long range inducement to remain in the employ of the
Company and Participating Companies. It is the intention of the Company that the
Plan qualify as an "employee stock purchase plan" within the meaning of Section
423 of the Code.

2. Definitions.

(a) "Account" means a bookkeeping account established by the Committee
on behalf of a Participant to hold Payroll Deductions.

(b) "Approved Leave of Absence" means a leave of absence that has been
approved by the applicable Participating Company in such a manner as the Board
may determine from time to time.

(d) "Code" means the Internal Revenue Code of 1986, as amended.

(e) "Committee" means the Committee appointed pursuant to section 14 of
the Plan.

(f) "Company" means ImageMax, Inc.

(g) "Compensation" means an Employee's cash compensation payable for
services to a Participating Company.

(h) "Election Form" means the form acceptable to the Committee which an
Employee shall use to make an election to purchase Shares through Payroll
Deductions pursuant to the Plan.

(i) "Eligible Employee" means an Employee who meets the requirements
for eligibility under section 3 of the Plan.

(j) "Employee" means a person who is an employee of a Participating
Company.

(k) "Fair Market Value" means the closing price per Share on the
principal national securities exchange on which the shares are listed or
admitted to trading or, if not listed or traded on any such exchange, on the
National Market System of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or if not listed or traded on any such

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<PAGE>

exchange or system, the fair market value as reasonably determined by the Board,
which determination shall be conclusive.

(l) "Five Percent Owner" means an Employee who, with respect to a
Participating Company, is described in section 423(b) of the Code.

(m) "Offering" means an offering of Shares to Eligible Employees
pursuant to the Plan.

(n) "Offering Commencement Date" means the first day of each January 1,
April 1, July 1 and October 1 beginning on or after adoption of the Plan by the
Board, until the Plan Termination Date, provided that the first Offering
Commencement Date may be delayed until the first day of the second month after
adoption of the Plan, if necessary to permit Participants to make elections in
accordance with section 3(e) of the Plan.

(o) "Offering Period" means the period extending from an Offering
Commencement Date through the following Offering Termination Date.

(p) "Offering Termination Date" means the last day of each March, June,
September and December following an Offering Commencement Date.

(q) "Option Price" means 90 percent of the lesser of: (1) the Fair
Market Value per Share on the Offering Commencement Date, or if such date is not
a trading day, then on the next trading day thereafter or (2) the Fair Market
Value per Share on the Offering Termination Date, or if such date is not a
trading day, then on the next trading day thereafter.

(r) "Participant" means an Employee who meets the requirements for
eligibility under section 3 of the Plan and who has timely delivered an Election
Form to the Committee.

(s) "Participating Company" means, as provided in Schedule A, the
Company and subsidiaries of the Company, within the meaning of section 424(f) of
the Code, if any, that are approved by the Board from time to time and whose
employees are designated as Employees by the Board.

(t) "Payroll Deductions" means amounts withheld from a Participant's
Compensation pursuant to the Plan, as described in section 5 of the Plan.

(u) "Plan" means ImageMax, Inc. 1997 Employee Stock Purchase Plan, as
set forth in this document, and as may be amended from time to time.

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<PAGE>

(v) "Plan Termination Date" means the earlier of:

(1) The Offering Termination Date for the Offering in which
the maximum number of Shares specified in section 5 of the Plan
have been issued pursuant to the Plan; or

(2) The date as of which the Board chooses to terminate the Plan as
provided in section 15 of the Plan.

(w) "Shares" means shares of Common Stock of the Company.

(x) "Successor-in-Interest" means the Participant's executor or
administrator, or such other person or entity to whom the Participant's rights
under the Plan shall have passed by will or the laws of descent and
distribution.

(y) "Termination Form" means the form acceptable to the Committee which
an Employee shall use to withdraw from an Offering pursuant to section 8 of the
Plan.

3. Eligibility and Participation.

(a) Initial Eligibility. Except as provided in section 3(b) of the
Plan, each Employee shall be eligible to participate in the Plan.

(b) Ineligibility. An Employee shall not be eligible to participate in
the Plan if such Employee:

(1) Is a Five Percent Owner;

(2) Is a temporary Employee;

(3) Has been employed by a Participating Company on a full-time
basis for less than a 6-consecutive-month period ending on the last day of the
month immediately preceding the effective date of an election to purchase Shares
pursuant to the Plan;

(4) Has not customarily worked more than 20 hours per week during a
24-consecutive-month period ending on the last day of the month immediately
preceding the effective date of an election to purchase Shares pursuant to the
Plan; or

(5) Is restricted from participating under section 3(d) of the
Plan.

(c) Leave of Absence. For purposes of participation in the Plan, an
Employee on an Approved Leave of Absence shall be deemed to be an Employee for
the first 90 days of such Approved Leave of Absence and such Employee's
employment shall be deemed to have

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<PAGE>

terminated for purposes of participation under the Plan at the close of business
on the 90th day of such Approved Leave of Absence unless such Employee shall
have returned to regular non-temporary employment before the close of business
on such 90th day. Termination by the Participating Company of an Employee's
Approved Leave of Absence, other than termination or return to non-temporary
employment, shall terminate an Employee's employment for all purposes of the
Plan and shall terminate such Employee's participation in the Plan and the right
to exercise any option. An Approved Leave of Absence shall be considered active
employment for purposes of sections 3(b)(3) and 3(b)(4) of the Plan.

(d) Restrictions on Participation. Notwithstanding any provisions of
the Plan to the contrary, no Employee shall be granted an option to participate
in the Plan if:

(1) Immediately after the grant, such Employee would be a Five
Percent Owner; or

(2) Such option would permit such Employee's rights to purchase
stock under all employee stock purchase plans of the Participating Companies
which meet the requirements of section 423(b) of the Code to accrue at a rate
which exceeds $25,000 in fair market value (as determined pursuant to section
423(b)(8) of the Code) for each calendar year in which such option is
outstanding.

(e) Commencement of Participation. An Employee who meets the
eligibility requirements of sections 3(a) and 3(b) of the Plan and whose
participation is not restricted under section 3(d) of the Plan shall become a
Participant by completing an Election Form and filing it with the Committee on
or before the 15th day of month immediately preceding the Offering Commencement
Date for the first Offering to which such Election Form applies. Payroll
Deductions for a Participant shall commence on the applicable Offering
Commencement Date when his or her authorization for Payroll Deductions becomes
effective, and shall end on the Plan Termination Date, unless sooner terminated
by the Participant pursuant to section 8 of the Plan.

4. Shares Per Offering.

The Plan shall be implemented by a series of Offerings that shall
terminate on the Plan Termination Date. Offerings shall be made with respect to
Compensation payable for each calendar month of the Company's fiscal year for
the period commencing with the first day of the month first occurring on or
after adoption of the Plan by the Board and ending with the Plan Termination
Date. Shares available for any Offering shall be the difference between the
maximum number of Shares that may be issued under the Plan, as determined
pursuant to section 10(a) of the Plan, for all of the Offerings, less the actual
number of Shares purchased by Participants pursuant to prior Offerings. If the
total number of Shares for which options are exercised on any Offering
Termination Date exceeds the maximum number of Shares available, the Committee
shall make a pro rata allocation of Shares available for delivery and
distribution in

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<PAGE>

as nearly a uniform manner as practicable, and as it shall determine to be fair
and equitable, and the unapplied Account balances shall be returned to
Participants as soon as practicable following the Offering Termination Date.

5. Payroll Deductions.

(a) Amount of Payroll Deductions. An Eligible Employee who wishes to
participate in the Plan shall file an Election Form with the Committee at least
15 days before the Offering Commencement Date for the first Offering for which
such Election Form is effective on which he or she may elect to have Payroll
Deductions of such amounts designated by the Committee on the Election Form from
time to time made from his or her Compensation on each regular payday during the
time he or she is a Participant in the Plan, provided that the rules established
by the Committee shall be consistent with section 423(b)(5) of the Code.

(b) Participants' Accounts. All Payroll Deductions with respect to a
Participant pursuant to section 5(a) of the Plan shall be credited to the
Participant's Account under the Plan.

(c) Changes in Payroll Deductions. A Participant may discontinue his
participation in the Plan as provided in section 8(a) of the Plan, but no other
change can be made during an Offering, including, but not limited to, changes in
the amount of Payroll Deductions for such Offering. A Participant may change the
amount of Payroll Deductions for subsequent Offerings by giving written notice
of such change to the Committee on or before the 15th day of the month
immediately preceding the Offering Commencement Date for the Offering for which
such change is effective.

(d) Leave of Absence. A Participant who goes on an Approved Leave of
Absence before the Offering Termination Date after having filed an Election Form
with respect to such Offering may:

(1) Withdraw the balance credited to his or her Account pursuant to
section 8(b) of the Plan;

(2) Discontinue contributions to the Plan but remain a Participant
in the Plan through the Offering Termination Date;

(3) Remain a Participant in the Plan during such Approved Leave of
Absence through the Offering Termination Date and continue the authorization for
the Participating Company to make Payroll Deductions for each payroll period out
of continuing payments to such Participant, if any.

-5-

<PAGE>

6. Granting of Options.

On each Offering Termination Date, each Participant shall be deemed to
have been granted an option to purchase a minimum of one (1) Share and a maximum
number of Shares that shall be a number of whole Shares equal to the quotient
obtained by dividing the balance credited to the Participant's Account as of the
Offering Termination Date, by the Option Price.

7. Exercise of Options.

(a) Automatic Exercise. With respect to each Offering, a Participant's
option for the purchase of Shares granted pursuant to section 6 of the Plan
shall be deemed to have been exercised automatically on the Offering Termination
Date applicable to such Offering.

(b) Fractional Shares and Minimum Number of Shares. Fractional Shares
shall not be issued under the Plan. Amounts credited to an Account remaining
after the application of such Account to the exercise of options for a minimum
of one (1) full Share shall be credited to the Participant's Account for the
next succeeding Offering, or, at the Participant's election, returned to the
Participant as soon as practicable following the Offering Termination Date,
without interest.

(c) Transferability of Option. No option granted to a Participant
pursuant to the Plan shall be transferable other than by will or by the laws of
descent and distribution, and no such option shall be exercisable during the
Participant's lifetime other than by the Participant.

(d) Delivery of Certificates for Shares. The Company shall deliver
certificates for Shares acquired on the exercise of options during an Offering
Period as soon as practicable following the Offering Termination Date.

8. Withdrawals.

(a) Withdrawal of Account. A Participant may elect to withdraw the
balance credited to the Participant's Account by providing a Termination Form to
the Committee at any time before the Offering Termination Date applicable to any
Offering.

(b) Amount of Withdrawal. A Participant may withdraw all, but not less
than all, of the amounts credited to the Participant's Account by giving a
Termination Form to the Committee. All amounts credited to such Participant's
Account shall be paid as soon as practicable following the Committee's receipt
of the Participant's Termination Form, and no further Payroll Deductions will be
made with respect to the Participant.

(c) Effect of Withdrawal on Subsequent Participation. A Participant who
elects to withdraw from an Offering pursuant to section 8(a) of the Plan shall
be deemed to have elected

-6-

<PAGE>

not to participate in each of the four succeeding Offerings following the date
on which the Participant gives a Termination Form to the Committee.

(d) Termination of Employment. Upon termination of a Participant's
employment for any reason other than death, including termination due to
disability or continuation of a leave of absence beyond 90 days, all amounts
credited to such Participant's Account shall be returned to the Participant. In
the event of a Participant's (1) termination of employment due to death or (2)
death after termination of employment but before the Participant's Account has
been returned, all amounts credited to such Participant's Account shall be
returned to the Participant's Successor-in-Interest.

(e) Leave of Absence. A Participant who is on an Approved Leave of
Absence shall, subject to the Participant's election pursuant to section 5(d) of
the Plan, continue to be a Participant in the Plan until the end of the first
Offering ending after commencement of such Approved Leave of Absence. A
Participant who has been on an Approved Leave of Absence for more than 90 days
shall not be eligible to participate in any Offering that begins on or after the
commencement of such Approved Leave of Absence so long as such leave of absence
continues.

9. Interest.

No interest shall be paid or allowed with respect to amounts paid into
the Plan or credited to any Participant's Account.

10. Shares.

(a) Maximum Number of Shares. No more than [____________] Shares may be
issued under the Plan. Such Shares may be unissued shares or treasury shares of
the Company. The number of Shares available for any Offering and all Offerings
shall be adjusted if the number of outstanding Shares of the Company is
increased or reduced by split-up, reclassification, stock dividend or the like.
All Shares issued pursuant to the Plan shall be validly issued, fully paid and
nonassessable.

(b) Participant's Interest in Shares. A Participant shall have no
interest in Shares subject to an option until such option has been exercised.

(c) Registration of Shares. Shares to be delivered to a Participant
under the Plan shall be registered in the name of the Participant.

(d) Restrictions on Exercise. The Board may, in its discretion, require
as conditions to the exercise of any option such conditions as it may deem
necessary to assure that the exercise of options is in compliance with
applicable securities laws.

-7-

<PAGE>

11. Expenses.

The Participating Companies shall pay all fees and expenses incurred
(excluding individual Federal, state, local or other taxes) in connection with
the Plan. No charge or deduction for any such expenses will be made to a
Participant upon the termination of his or her participation under the Plan or
upon the distribution of certificates representing Shares purchased with his or
her contributions.

12. Taxes.

The Participating Companies shall have the right to withhold from each
Participant's Compensation an amount equal to all Federal, state, city or other
taxes as the Participating Companies shall determine are required to be withheld
by them. In connection with such withholding, the Participating Companies may
make any such arrangements as are consistent with the Plan as it may deem
appropriate, including the right to withhold from Compensation paid to a
Participant other than in connection with the Plan.

13. Plan and Contributions Not to Affect Employment.

The Plan shall not confer upon any Eligible Employee any right to
continue in the employ of the Participating Companies.

14. Administration.

The Plan shall be administered by the Board, which may delegate
responsibility for such administration to a committee of the Board (the
"Committee"). If the Board fails to appoint the Committee, any references in the
Plan to the Committee shall be treated as references to the Board. The Board, or
the Committee, shall have authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to it, and to make all other
determinations deemed necessary or advisable in administering the Plan, with or
without the advice of counsel. The determinations of the Board or the Committee
on the matters referred to in this paragraph shall be conclusive and binding
upon all persons in interest.

15. Amendment and Termination.

The Board may terminate the Plan at any time and may amend the Plan
from time to time in any respect; provided, however, that upon any termination
of the Plan, all Shares or Payroll Deductions (to the extent not yet applied to
the purchase of Shares) under the Plan shall be distributed to the Participants,
provided further, that no amendment to the Plan shall affect the right of a
Participant to receive his or her proportionate interest in the Shares or his or
her Payroll Deductions (to the extent not yet applied to the purchase of Shares)
under the Plan, and provided further that the Company may seek shareholder
approval of an amendment to the Plan if such approval is determined to be
required by or advisable under the regulations of the Securities or

-8-

<PAGE>

Exchange Commission or the Internal Revenue Service, the rules of any stock
exchange or system on which the Shares are listed or other applicable law or
regulation.

16. Effective Date.

The Plan shall be effective on the date it is adopted by the Board,
subject to approval by the Company's shareholders within one year of the
adoption of the Plan by the Board. Any option granted before the approval of the
Plan by the Company's shareholders shall be expressly conditioned upon such
approval, and no Share certificates shall be issued until such approval. If
shareholder approval is not received within 12 months before or after the date
of the initial adoption of the Plan by the Board, no Share certificates shall be
issued with respect to any automatic exercises which may have occurred pursuant
to section 7 of the Plan, and all amounts credited to Participants' Accounts
with respect to such Shares shall be returned to Participants as soon as
administratively practicable.

17. Government and Other Regulations.

(a) In General. The purchase of Shares under the Plan shall be subject
to all applicable laws, rules and regulations, and to such approvals by any
governmental agencies as may be required.

(b) Securities Law. The Committee shall have the power to make each
grant under the Plan subject to such conditions as it deems necessary or
appropriate to comply with the then-existing requirements of the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended,
including Rule 16b-3 (or any similar rule) of the Securities and Exchange
Commission.

18. Non-Alienation.

No Participant shall be permitted to assign, alienate, sell, transfer,
pledge or otherwise encumber his interest under the Plan prior to the
distribution to him of Share certificates. Any attempt at assignment,
alienation, sale, transfer, pledge or other encumbrance shall be void and of no
effect.

19. Notices.

Any notice required or permitted hereunder shall be sufficiently given
only if delivered personally, telecopied, or sent by first class mail, postage
prepaid, and addressed:

-9-

<PAGE>

If to the Company:

Secretary
ImageMax, Inc.
715 Matson's Ford Road
Villanova, PA 19085

Or any other address provided pursuant to written notice.

If to the Participant:

At the address on file with the Company from time to time, or to such
other address as either party may hereafter designate in writing by
notice similarly given by one party to the other.

20. Successors.

The Plan shall be binding upon and inure to the benefit of any
successor, successors or assigns of the Company.

21. Severability.

If any part of this Plan shall be determined to be invalid or void in
any respect, such determination shall not affect, impair, invalidate or nullify
the remaining provisions of this Plan which shall continue in full force and
effect.

22. Acceptance.

The election by any Eligible Employee to participate in this Plan
constitutes his or her acceptance of the terms of the Plan and his or her
agreement to be bound hereby.

23. Applicable Law.

This Plan shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania, to the extent not preempted by applicable Federal
law.

-10-

<PAGE>

SCHEDULE A

Participating Companies

ImageMax, Inc., OMI Acquisition Corp., DataLink Acquisition Corp., TIMCO
Acquisition Corp., IDS of New York Acquisition Corp., Docutech Acquisition
Corp., Amcorp Acquisition Corp., American Micro-Med Incorporated (subsequent to
its acquisition by the Company), Codalex Acquisition Corp., Laser Acquisition
Corp., Image Memory Systems, Inc. (subsequent to its acquisition by the Company)
and TPS Micrographics, Inc. (subsequent to its acquisition by the Company).

-11-

MANAGEMENT AGREEMENT
--------------------

This Agreement is entered into as of this 27th day of November, 1996,
by and among DOCUNET INC., a Pennsylvania corporation ("DocuNet") and GBL
CAPITAL CORP., a Pennsylvania corporation ("Manager").

W I T N E S S E T H:
-------------------

WHEREAS, DocuNet is currently evaluating several transactions with
entities in the Document Management industry (each a "Founding Entity") whereby
DocuNet would acquire such entities, the purchase price of which would be
financed by an initial public offering (the "IPO") of DocuNet's common stock
(the "Project").

WHEREAS, DocuNet wishes to obtain the benefits of Manager's expertise
in the field of business management by contracting with Manager for certain
duties in the management of DocuNet, subject to the terms and provisions of this
Agreement, and Manager agrees to provide such management services to DocuNet in
consideration of the fees and other compensation herein set forth.

NOW, THEREFORE, in consideration of the mutual covenants herein
contained and of other good and valuable consideration, and intending to be
legally bound hereby, the parties hereto agree as follows:

ARTICLE 1

APPOINTMENT AND ACCEPTANCE; SERVICES; AUTHORITY
-----------------------------------------------

1.1. Appointment and Acceptance. DocuNet hereby engages Manager to
manage the daily business operations of DocuNet in accordance with this
Agreement, including but not limited to, providing the services further
described in this Article 1, and Manager hereby accepts such engagement on the
terms and conditions herein contained.

1.2. Services. Manager shall be responsible for all decisions and
actions of DocuNet not specifically reserved for the Board of Directors of
DocuNet (the "Board") in DocuNet's bylaws. The decisions and actions for which
Manager shall be responsible shall include, without limitation:

(a) Leading efforts to recruit Founding Entities in the Project.

(b) Negotiate and execute any and all transactions in connection
with the Project, including preparing the acquisition
agreements with the Founding Entities and the registration
statement in connection with a proposed IPO.

-1-

<PAGE>

(c) Perform and manage due diligence activities in connection
with the Project and make recommendations to the Board
concerning whether or not DocuNet should consummate a
particular transaction with a prospective founder.

(d) Select a financing partner in connection with the Project
and secure a commitment letter for a line of credit with
such financing partner.

(e) Manage all searches for executive personnel or outside
directors of DocuNet, except for a Chief Executive Officer
search which will be conducted by the Board, if necessary.

(f) Manage the IPO.

(g) Manage the budget and the financial books of DocuNet.

(h) Perform all other day-to-day management activities of
DocuNet.

The decisions and actions reserved for the Board are more specifically
set forth in DocuNet's By-Laws, as existing on the date hereof and as may be
amended hereinafter. Manager shall use its reasonable efforts to act in
DocuNet's interest at all times.

1.3. Actions Reserved for Board. Notwithstanding the forgoing Section
1.2, the Board shall retain control of each transaction with a prospective
Founding Entity by: (1) retaining authority to approve each Founding Entity's
participation in the Project; (2) setting guidelines for the maximum total
consideration which may be paid to a Founding Entity or an affiliate thereof in
connection with the Project; (3) approving or rejecting Manager's recommendation
for which auditors, counsel, and underwriters shall be used in the IPO; and (4)
determining where DocuNet's corporate headquarters will be located.

1.4. Authority. Except as expressly limited hereby, Manager shall have
all powers and authorities as may be necessary or convenient in connection with
the discharge of Manager's duties and obligations hereunder. Such powers and
authorities may be amended in writing from time to time by DocuNet, as mutually
agreed to and accepted by Manager in writing.

ARTICLE 2

TERM
----

Subject to Article 9 of this Agreement, the term of this Agreement
shall commence on the date hereof and shall continue thereafter until March 31,
1997 (the "Initial Term"). Thereafter, this Agreement shall automatically be
extended and continue for a period of

-2-

<PAGE>

one (1) year terminating on March 31, 1998 (the "Option Term"), unless written
notice of cancellation is given by either party to the other by no later than
February 28, 1997.

ARTICLE 3

COMPENSATION; EXPENSES
----------------------

3.1. Management Fee. In addition to the amount DocuNet is specifically
obligated to pay or reimburse to Manager related to approved costs and
expenditures as described below, commencing as of November 16, 1996, DocuNet
shall pay to Manager the sum of Five Thousand Dollars ($5,000) and thereafter
until this Agreement is terminated the sum of Ten Thousand Dollars ($10,000) on
the first day of each month until Andrew Bacas, a principal of Manager, begins
full-time (at least 35 hours per week) employment by DocuNet (estimated for the
purposes hereof to be after March 1, 1997), at which time such monthly fee shall
be increased to the sum of Twenty-five Thousand Dollars ($25,000).

3.2. Success Fee. Subject to Article 5 of this Agreement, upon the
closing of an IPO, DocuNet shall pay to Manager the sum of Five Hundred Thousand
Dollars ($500,000) (the "Success Fee").

3.3. Expenses. All out-of-pocket expenses incurred by Manager in
connection with its performance under this Agreement, including, without
limitation, expenses for travel, meetings, communications, legal fees in
connection with preparation of this Agreement, office services and supplies,
shall be reimbursed by DocuNet within one week after DocuNet is notified of such
expenses.

ARTICLE 4

BOARD COMPENSATION
------------------

In the event this Agreement is terminated and either Mr. Bruce M.
Gillis or Mr. Andrew R. Bacas is a member of the Board but is not an employee of
DocuNet (such person referred to as a "Non-Employee Director"), such
Non-Employee Director shall be compensated for his service as a member of the
Board in a similar manner as any other non-employee director of DocuNet.

-3-

<PAGE>

ARTICLE 5

TITLES
------

5.1. Bruce M. Gillis. Upon the execution of this Agreement, Mr. Gillis
shall be appointed the Chairman and Chief Executive Officer of DocuNet until
such time as he may be replaced in either capacity by the Board.

5.2. Andrew R. Bacas. Upon becoming employed full-time (at least 35
hours per week) by DocuNet, Mr. Bacas shall be appointed the Senior Vice
President - Business Development for DocuNet until such time as he may be
replaced in such capacity by the Board.

ARTICLE 6

TERMINATION
-----------

6.1. Termination Upon Default. If either party defaults in the
observance or performance of any material obligation provided in this Agreement
and such default continues for thirty (30) days after written notice thereof
from the aggrieved party, the aggrieved party may at its option terminate this
Agreement by written notice to the other party. If Manager is the party in
default and DocuNet terminates this Agreement in accord with the immediately
preceding sentence, Manager shall have the right to sell and DocuNet shall
purchase, if demanded by Manager, the number of shares of capital stock of
DocuNet owned by Manager and its affiliates (the "Manager's Shares") at the fair
market value of Manager's Shares on the date of termination, such value to be
determined by independent appraisal or such other method as is mutually
agreeable.

6.2. Other Termination. In the event that either party desires to
terminate this Agreement but the other party is not in material default
hereunder, the following provisions shall apply:

(a) During the Initial Term, neither party shall have the
right to terminate this Agreement.

(b) During the Option Term, upon thirty (30) days written
notice, Manager shall have the right to terminate this Agreement and upon
termination (i) Manager shall forfeit its right to the Success Fee (as defined
in Article 3 herein) and the Severance Fee (as defined in Article 6.2(c) herein)
and (ii) DocuNet shall have the right to purchase and Manager shall, if demanded
by DocuNet, sell all of Manager's Shares on the date of termination at the price
per share equal to the fair market value of Manager's Shares on the date of
termination, such value to be determined by independent appraisal or such other
method as is mutually agreeable.

-4-

<PAGE>

(c) During the Option Term, DocuNet shall have the right
to immediately terminate this Agreement and upon termination DocuNet shall pay
Manager the sum of One Hundred Thousand Dollars ($100,000) in severance fees
(the "Severance Fee"). In addition, Article 3 of this Agreement pertaining to
the Success Fee shall survive upon such termination.

6.3. All Terminations. Upon termination of this Agreement for any
reason, Manager shall deliver to DocuNet the following, all of which shall be
delivered to DocuNet promptly upon termination hereof or as soon thereafter as
is reasonably practicable:

(a) A final accounting, reflecting receipts and
disbursements in connection with the management of DocuNet.

(b) All records, contracts, leases, unpaid bills and
other papers or documents which pertain to DocuNet, including, but not limited
to, all original documents.

ARTICLE 7

INSURANCE; INDEMNIFICATION
--------------------------

7.1. DocuNet's Indemnity. DocuNet agrees to indemnify and save Manager
harmless in respect of any action, cause of action, suit, debt, claim, or demand
whatsoever (including, but not limited to attorneys' fees, charges, costs and
expenses) brought or asserted by any third person whomsoever, at law or in
equity, in connection with the performance by Manager of any and all of its
obligations under this Agreement, which indemnity shall continue notwithstanding
the termination of this Agreement with respect to any act or occurrence
preceding such termination. Should any claims, demands, suits or other legal
proceedings be made or instituted by any person against DocuNet which arise out
of any of the matters relating to this Agreement, Manager shall give DocuNet all
pertinent information and reasonable assistance in the defense or other
disposition thereof.

7.2. Insurance. DocuNet agrees to provide director and officer
liability insurance for all of Manager's affiliates which are elected to
DocuNet's Board of Directors or appointed as an officer of DocuNet subsequent to
the closing of the IPO.

ARTICLE 8

MANAGER'S LIABILITY
-------------------

8.1. Manager shall not, in the performance of this Agreement, except as
provided herein, be liable to DocuNet for any act, omission, or negligence of
any agent or employee of DocuNet, except if such agent or employee is under the
supervision of Manager.

-5-

<PAGE>

8.2. Notwithstanding any other provisions of this Agreement, in no
event shall DocuNet make any claim against Manager, or its affiliates or
subsidiaries, on account of any alleged errors in judgment made in good faith
and in accordance with a good faith interpretation of this Agreement.

ARTICLE 9

RELATIONSHIP
------------

Manager shall at all times be an independent contractor and not the
employee of DocuNet. Manager, however, shall have the right and power to
contract with third parties for, on behalf of, or in the name of DocuNet or
otherwise to bind DocuNet. Except as expressly provided herein to the contrary,
DocuNet agrees to be responsible and shall reimburse Manager for all costs,
expenses, and disbursements properly incurred by Manager in providing services
to DocuNet.

ARTICLE 10

ASSIGNABILITY
-------------

Neither party shall assign this Agreement or any rights or
duties hereunder without the prior written consent of the other party. Manager
may delegate certain of its duties to its employees, agents and contractors as
contemplated by this Agreement.

ARTICLE 11

NOTICES
-------

Any notice provided in or permitted under this Agreement shall be made
in writing and may be given or served by (i) delivering the same in person to
the party to be notified, (ii) depositing the same in the mail, postage prepaid,
registered or certified with return receipt requested, and addressed to the
party to be notified at the address herein specified. If notice is deposited in
the mail pursuant to (ii) of this Article 11, it shall be deemed received on the
third business day after it is so deposited. Notice given in any other manner
shall be deemed received only if and when actually received by the party to be
notified. For the purpose of notice, the address of the parties shall be, until
changed as hereinafter provided for, as follows:

-6-

<PAGE>

If to Manager:

GBL Capital Corp.
715 Matson's Ford Road
Villanova, PA 19085

If to DocuNet:

DocuNet Inc.
715 Matson's Ford Road
Villanova, PA 19085

with a copy to:

Pepper, Hamilton & Scheetz
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
Attn: Brian M. Katz, Esquire

The parties shall have the right from time to time and at any time to change
their respective addresses and each shall have the right to specify as its
address any other address by at least fifteen (15) days' prior written notice to
the other party.

ARTICLE 12

MISCELLANEOUS
-------------

12.1. Except as otherwise herein provided, no amendments, additions or
deletions of this Agreement shall be effective unless approved by the parties in
writing.

12.2. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, and all of which together shall be deemed
to be one and the same instrument.

12.3. The waiver of the breach of any term or provision of this
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement. To be effective, any waiver must be in
writing executed by the party intended to be bound thereby.

-7-

<PAGE>

12.4. In case any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
the validity of any other provision of this Agreement, and such provision(s)
shall be deemed modified to the extent necessary to make it enforceable.

12.5. Notwithstanding anything to the contrary herein, this Agreement
shall be binding upon and inure to the benefit of DocuNet, its successors and/or
assigns, and shall be binding upon and inure to the benefit of Manager and its
successors and/or assigns.

12.6. This Agreement shall be construed, interpreted and applied in
accordance with, and shall be governed by, the laws of the Commonwealth of
Pennsylvania.

IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.

DOCUNET INC.

By: /s/ Bruce M. Gillis
----------------------------------
Name: Bruce M. Gillis
Title: Chairman and Chief Executive
Officer

GBL CAPITAL CORP.

By: /s/ Bruce M. Gillis
----------------------------------
Name: Bruce M. Gillis
Title: President

-8-

Exhibit 10.4

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made as of the 1st day of August,
1997 by and between Bruce M. Gillis, a resident of Pennsylvania (the
"Employee"), and DocuNet Inc., a corporation organized and existing under the
laws of the Commonwealth of Pennsylvania (the "Company").

WHEREAS, the Company desires to employ Employee and Employee
desires to be employed by the Company for a period of time in the future upon
the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, and intending to be legally bound, the parties,
subject to the terms and conditions set forth herein, agree as follows:

1. Employment and Term. The Company hereby employs Employee and
Employee hereby accepts employment with the Company, as Chief Executive Officer
(such position, Employee's "Position") for a period commencing on the date
hereof and continuing until December 31, 2002, subject to the provisions of
Section 9 hereof (as may be extended from time to time by mutual consent of
Employer and Employee, the "Term").

2. Duties. During the Term, Employee shall serve the Company
faithfully and to the best of his ability and shall devote his full time,
attention, skill and efforts to the performance of the duties required by or
appropriate for his Position. Employee agrees to assume such duties and
responsibilities as may be customarily incident to such position, and as may be
reasonably assigned to Employee from time to time by the Board of Directors of
the Company and Employee shall report, throughout the Term, to the Board of
Directors of the Company.

3. Other Business Activities. During the Term, Employee will
not, without the prior written consent of the Company, directly or indirectly
engage in any other business activities or pursuits whatsoever, except
activities in connection with any charitable or civic activities, personal
investments and serving as an executor, trustee or in other similar fiduciary
capacity; provided, however, that such activities do not interfere with his
performance of his responsibilities and obligations pursuant to this Agreement.

4. Compensation. The Company shall pay Employee, and Employee
hereby agrees to accept, as compensation for all services rendered hereunder and
for Employee's covenant not to compete as provided for in Section 8 hereof, an
initial base salary at the annual rate of Two Hundred Thousand Dollars
($200,000) (as the same may hereafter be increased, the "Base Salary"). The Base
Salary shall be inclusive of all applicable income, social security and other
taxes and charges which are required by law to be withheld by the Company or
which are requested to be withheld by Employee, and which shall be withheld and
paid in accordance with the Company's normal payroll practice for its similarly
situated employees from time to time in effect. Increases in the Base Salary may
be granted from time to time at the sole discretion of the Company. In addition
to the Base Salary, commencing with fiscal year 1998, the Company shall pay
Employee, within 30 days after receipt of the final audit for each fiscal year,
such bonus (the "Bonus") as the Board of Directors of the Company shall
determine in its absolute discretion. Such Bonus shall be based on the
guidelines established in advance of each fiscal year, in the absolute
discretion of the Board of Directors, including, but not limited to, the results
of the Company's operations, achievement of business unit targets, if
applicable, individual performance as compared to specific management objectives
set prior to each fiscal year, and the Company's Board of Director's subjective
assessment of Employee's performance. Accrual of any Bonus on the financial
books and records of the Company for Employee shall in no way obligate the
Company to pay a Bonus if Employee is terminated hereunder for any reason.
Payment of Bonus upon termination of Employee is at the sole discretion of the
Company.

<PAGE>

5. Benefits and Expenses. In addition to those benefits
provided to similarly situated employees of the Company, Employee shall be
entitled to those employee benefits (including expense reimbursement) as set
forth on Schedule A hereto ("Benefits").

6. Confidentiality. Employee recognizes and acknowledges that
the Proprietary Information (as hereinafter defined) is a valuable, special and
unique asset of the Business of the Company. As a result, both during the Term
and thereafter, Employee shall not, without the prior written consent of the
Company, for any reason, either directly or indirectly, divulge to any
third-party or use for his own benefit, or for any purpose other than the
exclusive benefit of the Company, any confidential, proprietary, business and
technical information or trade secrets of the Company or of any subsidiary or
affiliate of the Company ("Proprietary Information") revealed, obtained or
developed in the course of his employment with the Company. Nothing herein
contained shall restrict Employee's ability to make such disclosures as may be
necessary or appropriate to the effective and efficient discharge of the duties
required by or appropriate for his Position or as such disclosures may be
required by law; and further provided, that nothing herein contained shall
restrict Employee from divulging or using for his own benefit or for any other
purpose any Proprietary Information that is readily available to the general
public so long as such information did not become available to the general
public as a direct or indirect result of Employee's breach of this Section 6.
Failure by the Company to mark any of the Proprietary Information as
confidential or proprietary shall not affect its status as Proprietary
Information under the terms of this Agreement.

7. Property.

(a) All right, title and interest in and to Proprietary
Information shall be and remain the sole and exclusive property of the Company.
During the Term, Employee shall not remove from the Company's offices or
premises any documents, records, notebooks, files, correspondence, reports,
memoranda or similar materials of or containing Proprietary Information, or
other materials or property of any kind belonging to the Company unless
necessary or appropriate in accordance with the duties and responsibilities
required by or appropriate for his Position and, in the event that such
materials or property are removed, all of the foregoing shall be returned to
their proper files or places of safekeeping as promptly as possible after the
removal shall serve its specific purpose. Employee shall not make, retain,
remove and/or distribute any copies of any of the foregoing for any reason
whatsoever except as may be necessary in the discharge of his assigned duties
and shall not divulge to any third person the nature of and/or contents of any
of the foregoing or of any other oral or written information to which he may
have access or with which for any reason he may become familiar, except as
disclosure shall be necessary in the performance of his duties or as otherwise
permitted pursuant to Section 6 hereof; and upon the termination of his
employment with the Company, he shall leave with or return to the Company all
originals and copies of the foregoing then in his possession, whether prepared
by Employee or by others.

(b) (i) Employee agrees that all right, title and interest
in and to any innovations, designs, systems, analyses, ideas for marketing
programs, and all copyrights, patents, trademarks and trade names, or similar
intangible personal property which have been or are developed or created in
whole or in part by Employee (1) at any time and at any place while the Employee
is employed by Company and which, in the case of any or all of the foregoing,
are related to and used in connection with the Business of the Company, (2) as a
result of tasks assigned to Employee by the Company, or (3) from the use of
premises or personal property (whether tangible or intangible) owned, leased or
contracted for by the Company (collectively, the "Intellectual Property"), shall
be and remain forever the sole and exclusive property of the Company. The
Employee shall promptly disclose to the Company all Intellectual Property, and
the Employee shall have no claim for additional compensation for the
Intellectual Property.

-2-

<PAGE>

(ii) The Employee acknowledges that all the Intellectual
Property that is copyrightable shall be considered a work made for hire under
United States Copyright Law. To the extent that any copyrightable Intellectual
Property may not be considered a work made for hire under the applicable
provisions of the United States Copyright Law, or to the extent that,
notwithstanding the foregoing provisions, the Employee may retain an interest in
any Intellectual Property that is not copyrightable, the Employee hereby
irrevocably assigns and transfers to the Company any and all right, title, or
interest that the Employee may have in the Intellectual Property under
copyright, patent, trade secret and trademark law, in perpetuity or for the
longest period otherwise permitted by law, without the necessity of further
consideration. The Company shall be entitled to obtain and hold in its own name
all copyrights, patents, trade secrets, and trademarks with respect thereto.

(iii) Employee further agrees to reveal promptly all
information relating to the same to an appropriate officer of the Company and to
cooperate with the Company and execute such documents as may be necessary or
appropriate (1) in the event that the Company desires to seek copyright, patent
or trademark protection, or other analogous protection, thereafter relating to
the Intellectual Property, and when such protection is obtained, to renew and
restore the same, or (2) to defend any opposition proceedings in respect of
obtaining and maintaining such copyright, patent or trademark protection, or
other analogous protection.

(iv) In the event the Company is unable after reasonable
effort to secure Employee's signature on any of the documents referenced in
Section 7(b)(iii) hereof, whether because of Employee's physical or mental
incapacity or for any other reason whatsoever, Employee hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as Employee's agent and attorney-in-fact, to act for and in his behalf and stead
to execute and file any such documents and to do all other lawfully permitted
acts to further the prosecution and issuance of any such copyright, patent or
trademark protection, or other analogous protection, with the same legal force
and effect as if executed by Employee.

8. Covenant not to Compete. The Employee shall not, during the
Term, including any extensions of the Term, and for a period of one (1) year
thereafter (the "Restricted Period"), do any of the following directly or
indirectly without the prior written consent of the Company:

(a) compete, directly or indirectly, with the Company or any
of its respective affiliates or subsidiaries, or any of their respective
successors or assigns, whether now existing or hereafter created or acquired
(collectively, the "Related Companies"), or otherwise engage or participate,
directly or indirectly, in any document management business conducted or
contemplated to be conducted by a Related Company, as the same are conducted or
contemplated to be conducted (as has been determined by the Board) during the
Term with respect to any period during the Term or any other business conducted
by the Company in which the Employee is or has been actively engaged (the
"Restricted Business") within any geographic area located within the United
States of America, its possessions or territories (the "Restricted Area");

(b) become interested (whether as owner, stockholder,
lender, partner, co-venturer, director, officer, employee, agent, consultant or
otherwise), directly or indirectly, in any person, firm, corporation,
association or other entity that engages in the Restricted Business within the
Restricted Area; provided, that nothing contained in this Section 8(b) shall
prohibit Employee from owing, as a passive investor, not more than five percent
(5%) of the outstanding securities of any class of any publicly-traded
securities of any publicly held company listed on a well-recognized national
securities exchange or on an interdealer quotation system of the National
Association of Securities Dealers, Inc;

(c) solicit, call on, divert, take away, influence, induce
or attempt to do any of the foregoing, in each case within the Restricted Area,
with respect to the Company's or any of its Related

-3-

<PAGE>

Companies' (A) customers or distributors or prospective customers or
distributors (wherever located) with respect to goods or services that are
competitive with those of the Company or any of its Related Companies, (B)
suppliers or vendors or prospective suppliers or vendors (wherever located) to
supply materials, resources or services to be used in connection with goods or
services that are competitive with those of the Company or any of its Related
Companies, (C) distributors, consultants, agents, or independent contractors to
terminate or modify any contract, arrangement or relationship with the Company
or any of its Related Companies or (D) employees (other than family members) to
leave the employ of the Company or any of its Related Companies.

(d) influence or attempt to influence any supplier, customer
or potential customer of the Company or any of the Related Companies to
terminate or modify any written or oral agreement or course of dealing with the
Company or the Related Companies; or

(e) influence or attempt to influence any person (other than
a family member) to either (i) terminate or modify his employment, consulting,
agency, distributorship or other arrangement with the Company or any of the
Related Companies, or (ii) employ or retain, or arrange to have any other person
or entity employ or retain, any person who has been employed or retained by the
Company or any of the Related Companies as an employee, consultant, agent or
distributor of the Company or the Related Companies at any time during the one
year period immediately preceding the termination of Employee's employment
hereunder.

9. Termination. Employee's employment hereunder may be
terminated during the Term upon the occurrence of any one of the events
described in this Section 9. Upon termination, Employee shall be entitled only
to such compensation and benefits as described in this Section 9.

9.1. Termination for Disability.

(a) In the event of the disability of the Employee such that
Employee is unable to perform his duties and responsibilities hereunder to the
full extent required by this Agreement by reasons of illness, injury or
incapacity for a period of more than ninety (90) consecutive days or more than
one hundred twenty (120) days, in the aggregate, during any seven hundred thirty
(730) day period ("Disability"), Employee's employment hereunder may be
terminated by the Company by notice to Employee pursuant to a determination by
the Board of Directors.

(b) In the event of a termination of Employee's employment
hereunder pursuant to Section 9.1(a), Employee will be entitled to receive all
accrued and unpaid (as of the date of such termination) Base Salary and Benefits
and other forms of compensation and benefits payable or provided in accordance
with the terms of any then existing compensation or benefit plan or arrangement
("Other Compensation"), including payment prescribed under any disability or
life insurance plan or arrangement in which he is a participant or to which he
is a party as an employee of the Company. Except as specifically set forth in
this Section 9.1(b), the Company shall have no liability or obligation to
Employee for compensation or benefits hereunder by reason of such termination.

(c) For purposes of this Section 9.1, except as hereinafter
provided, the determination as to whether Employee is Disabled shall be made by
a licensed physician selected by Employee and shall be based upon a full
physical examination and good faith opinion by such physician. In the event that
the Board of Directors disagrees with such physician's conclusion, the Board of
Directors may require that Employee submit to a full physical examination by
another licensed physician selected by Employee and approved by the Company. If
the two opinions shall be inconsistent, a third opinion shall be obtained after
full physical examination by a third licensed physician selected by Employee and
approved by the Company. The majority of the three opinions shall be conclusive.

-4-

<PAGE>

9.2. Termination by Death. In the event that Employee dies
during the Term, Employee's employment hereunder shall be terminated thereby and
the Company shall pay to Employee's executors, legal representatives or
administrators an amount equal to the accrued and unpaid portion of his Base
Salary, Benefits and Other Compensation through the end of the month in which he
dies. Except as specifically set forth in this Section 9.2, the Company shall
have no liability or obligation hereunder to Employee's executors, legal
representatives, administrators, heirs or assigns or any other person claiming
under or through him by reason of Employee's death, except that Employee's
executors, legal representatives or administrators will be entitled to receive
the payment prescribed under any death or disability benefits plan in which he
is a participant as an employee of the Company, and to exercise any rights
afforded under any compensation or benefit plan then in effect.

9.3. Termination By Company for Cause.

(a) The Company may terminate Employee's employment
hereunder at any time for "cause" upon written notice to Employee based upon a
good faith determination by the Board of Directors. The good-faith nature of the
determination shall not in and of itself mean that "cause" exists. For purposes
of this Agreement, "cause" shall mean: (i) any breach by Employee of any of his
obligations under Sections 6, 7 or 8 of this Agreement; (ii) gross incompetence
in the performance by Employee of the duties required by or appropriate for his
Position; (iii) a material violation of the Company's employee policies, as may
be amended from time to time, or (iv) other conduct of Employee involving any
type of disloyalty to the Company or willful misconduct with respect to the
Company, including without limitation fraud, embezzlement, theft or proven
dishonesty in the course of his employment or conviction of a felony.

(b) In the event of a termination of Employee's employment
hereunder pursuant to Section 9.3(a), Employee shall be entitled to receive all
accrued but unpaid (as of the effective date of such termination) Base Salary,
Benefits and Other Compensation. All Base Salary and Benefits shall cease at the
time of such termination, subject to the terms of any benefit or compensation
plan then in force and applicable to Employee. Except as specifically set forth
in this Section 9.3, the Company shall have no liability or obligation hereunder
by reason of such termination.

9.4. Termination By Company Without Cause.

(a) The Company may terminate Employee's employment
hereunder at any time, for any reason, with or without cause, effective upon the
date designated by the Company upon written notice to Employee.

(b) In the event of a termination of Employee's employment
hereunder pursuant to Section 9.4(a), Employee shall be entitled to receive all
accrued but unpaid (as of the effective date of such termination) Base Salary,
Benefits and Other Compensation, plus either (i) if such termination is prior to
the last twelve months of the Term, continuation of the current Base Salary plus
Benefits (including vesting of options and other Benefits) for one year, or (ii)
if such termination is in the last twelve-month period of the Term, continuation
of the Base Salary plus continuation of Benefits (including vesting of options
and other Benefits) for the greater of (x) the remaining portion of the Term, or
(y) six months. Except as specifically set forth in this Section 9.4, the
Company shall have no liability or obligation hereunder by reason of such
termination.

9.5. Termination By Employee

(a) Employee may terminate Employee's employment hereunder
at any time effective upon the date designated by Employee in written notice of
the termination of his employment hereunder pursuant to this Section 9.5(a) (the
"Request Date"); provided that, such date shall be at least sixty (60) days
after the date of such notice. Notwithstanding the foregoing, upon receipt by
the Company of such written notice of termination, the Company in its sole
discretion, may deem such

-5-

<PAGE>

termination effective immediately (the "Accelerated Termination Date"). In the
event the parties mutually agree to an alternative date of termination, that
date shall be considered the Request Date.

(b) In the event of a termination of Employee's employment
hereunder pursuant to Section 9.5(a) hereof, Employee shall be entitled to
receive all accrued but unpaid (as of the earlier of the Request Date or the
Accelerated Termination Date), Base Salary and Benefits. If the Company does not
terminate the Employee immediately upon receipt of the termination notice and
Employee performs his duties in a satisfactory manner, as determined in the sole
discretion of the Company, until the Request Date, Employee shall also be
entitled to an amount equal to one month's Base Salary (in effect at such time).
In addition, in the event of a termination of Employee's employment pursuant to
Section 9.5(a) at the end of the Term upon sixty (60) prior written notice and
upon the satisfactory completion, in the sole discretion of the Company, of
Employee's duties during the 60-day period after receipt of such termination
notice, Employee shall be entitled to receive an amount equal to one month's
Base Salary (in effect at such time) multiplied by the number of the complete
12-month periods of service completed prior to giving notice of termination.
Except as specifically set forth in this Section 9.5(b), all Base Salary,
Benefits and Bonuses shall cease at the time of such termination, subject to the
terms of any benefit or compensation plan then in force and applicable to
Employee. Except as specifically set forth in this Section 9.5, the Company
shall have no liability or obligation hereunder by reason of such termination.

9.6. Sale of Company/Change of Control.

(a) If there is a Sale of the Company or a Change of Control
during the Term, then the Company or the successor to all or substantially all
of the Company's assets, capital stock or business (the "Successor Entity"), as
the case may be, must offer Employee employment pursuant to a written contract
offer (the "Offer") within five (5) days of such Sale of the Company or Change
of Control. Employee shall, within fifteen (15) days after receipt of such
Offer, either (i) accept the terms of the Offer, such acceptance indicated by
return of a copy of the Offer duly executed, (ii) elect in writing, provided to
the Company or the Successor Entity, as the case may be, to remain employed
under this Agreement for the remainder of the Term, or (iii) elect to terminate
Employee's employment hereunder upon sixty (60) days prior notice, such
termination to be effective at the expiration of said sixty (60) day period, or
sooner, if desired by the Company or the Successor Entity.

(b) For purposes of this Section 9.7, (i) a "Change of
Control" means the sale, transfer, assignment or other disposition (including by
merger or consolidation) by stockholders of the Company, in one transaction or a
series of related transactions, of more than fifty percent (50%) of the voting
power represented by the then outstanding stock of the Company to one or more
Persons, other than (i) any such sales, transfers, assignments or other
dispositions by such stockholders to their respective Affiliates, (ii) any such
transaction effected primarily to reincorporate the Company in another
jurisdiction or (iii) any transaction in connection with the simultaneous
acquisition of document management companies and the initial public offering of
the common stock of the Company or its affiliate; (ii) "Affiliate" means, with
respect to any stockholder of the Company, (w) any Person directly or indirectly
controlling, controlled by or under common control with such stockholder, (x)
any Person owning or controlling ten percent (10%) or more of the outstanding
voting securities of such stockholder, (y) any officer, director or general
partner of such stockholder, or (z) any Person who is an officer, director,
general partner, trustee or holder of ten percent (10%) or more of the
outstanding voting securities of any Person described in clauses (w) through (y)
of this sentence; and (iii) "Person" means an individual, partnership,
corporation, joint venture, association, trust, unincorporated association,
other entity or association.

-6-
<PAGE>

(c) For purposes of this Section 9.7, a "Sale of the
Company" means a sale, transfer, assignment or other disposition (including by
merger or consolidation), of all of the outstanding stock of the Company, or of
all or substantially all of the assets of the Company, a liquidation or
dissolution of the Company. A "Sale of the Company" shall not include the
consummation of a public offering of Common Stock of the Company or its
affiliate pursuant to a registration statement or any transaction effected
primarily to reincorporate the Company in another jurisdiction.

(d) In the event of termination of Employee's employment
hereunder pursuant to clause (iii) in Section 9.7(a) above, Employee shall be
entitled to receive all accrued but unpaid (as of the effective date of such
termination) Base Salary and Benefits. In addition, in such case Employee shall
be entitled to receive Base Salary and Benefits for the eighteen (18) months
following the effective date of such termination (the "Additional Amount").
Employee, at his sole option, may receive the Additional Amount paid either (i)
monthly for eighteen (18) months, or (ii) in one payment on the effective date
of such termination, in which case the value of the Benefits otherwise payable
will be monetized, and such payment of the Additional Amount will be discounted
at the then current Federal Short Term Rate as defined in the Internal Revenue
Code of 1986, as amended.

(e) In the event Employee chooses to continue employment
hereunder pursuant to clause (ii) in Section 9.7(a) above and Employee's
employment is thereafter terminated prior to the expiration of the Term for any
reason other than Death, Disability or termination pursuant to Section
9.3(a)(iv), Employee shall be entitled to receive all the benefits and
compensation referred to in Section 9.7(d) above. In the event Employee chooses
to continue employment hereunder pursuant to clause (ii) in Section 9.7(a)
above, at the expiration of the Term, Employee shall be entitled to receive an
amount equal to one month's Base Salary (in effect at such time) multiplied by
the number of complete 12-month periods of service completed prior to such
termination.

(f) If this Agreement is assumed by any Successor Entity,
any payments set forth herein shall be the obligation of such Successor Entity.
Except as specifically set forth in this Section 9.7, (i) all Base Salary,
Benefits and Bonuses shall cease at the time of such termination, subject to the
terms of any benefit or compensation plans then in force and applicable to
Employee, and (ii) the Company shall have no liability or obligation hereunder
by reason of such termination.

(g) If the Successor Entity fails to make the Offer,
Employee shall be entitled to receive all of the benefits and compensation
referred to in Section 9.7(d) above.

10. Other Agreements. Employee represents and warrants to the
Company that:

(a) There are no restrictions, agreements or understandings
whatsoever to which Employee is a party which would prevent or make unlawful
Employee's execution of this Agreement or Employee's employment hereunder, or
which is or would be inconsistent or in conflict with this Agreement or
Employee's employment hereunder, or would prevent, limit or impair in any way
the performance by Employee of his obligations hereunder,

(b) That Employee's execution of this Agreement and
Employee's employment hereunder shall not constitute a breach of any contract,
agreement or understanding, oral or written, to which Employee is a party or by
which Employee is bound, and

(c) That Employee is free to execute this Agreement and to
enter into the employ of the Company pursuant to the provisions set forth
herein.

(d) In the event that they are still in effect, that
Employee shall disclose the existence and terms of the restrictive covenants set
forth in this Agreement to any employer that the Employee may work for during
the term of this Agreement (which employment is not hereby authorized) or after
the termination of the Employee's employment at the Company.

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<PAGE>

11. Survival of Provisions. The provisions of this Agreement
set forth in Sections 6, 7, 8 and 20 hereof shall survive the termination of
Employee's employment hereunder.

12. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Company and Employee and their respective
successors, executors, administrators, heirs and/or permitted assigns; provided,
however, that neither Employee nor the Company may make any assignments of this
Agreement or any interest herein, by operation of law or otherwise, without the
prior written consent of the other parties hereto, except that, without such
consent, the Company may assign this Agreement to an Affiliate or any successor
to all or substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise, provided
that such successor assumes in writing all of the obligations of the Company
under this Agreement, subject, however, to Employee's rights as to termination
as provided in Section 9.5 hereof.

13. Notice. Any notice or communication required or permitted
under this Agreement shall be made in writing and sent by certified or
registered mail, return receipt requested, addressed as follows:

If to Employee:

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

With a copy to:

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

If to Company:

S. David Model
DocuNet Inc.
715 Matson's Ford Road
Villanova, PA 19085

with a copy to:

Barry M. Abelson
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103

or to such other address as either party may from time to time duly specify by
notice given to the other party in the manner specified above.

14. Entire Agreement; Amendments. This Agreement contains the
entire agreement and understanding of the parties hereto relating to the subject
matter hereof, and merges and supersedes all prior and contemporaneous
discussions, agreements and understandings of every nature between the parties
hereto relating to the employment of Employee with the Company. This Agreement
may not be changed or modified, except by an Agreement in writing signed by each
of the parties hereto.

15. Waiver. The waiver of the breach of any term or provision
of this Agreement shall not operate as or be construed to be a waiver of any
other or subsequent breach of this Agreement.

16. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania.

17. Invalidity. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the validity of any other provision of this
Agreement, and such provision(s) shall be deemed modified to the extent
necessary to make it enforceable.

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<PAGE>

18. Section Headings. The section headings in this Agreement
are for convenience only; they form no part of this Agreement and shall not
affect its interpretation.

19. Number of Days. In computing the number of days for
purposes of this Agreement, all days shall be counted, including Saturdays,
Sundays and legal holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or day which is a holiday in Philadelphia,
Pennsylvania, then such final day shall be deemed to be the next day which is
not a Saturday, Sunday or legal holiday.

20. Specific Enforcement; Extension of Period.

(a) Employee acknowledges that the restrictions contained in
Sections 6, 7, and 8 hereof are reasonable and necessary to protect the
legitimate interests of the Company and its affiliates and that the Company
would not have entered into this Agreement in the absence of such restrictions.
Employee also acknowledges that any breach by him of Sections 6, 7, or 8 hereof
will cause continuing and irreparable injury to the Company for which monetary
damages would not be an adequate remedy. The Employee shall not, in any action
or proceeding to enforce any of the provisions of this Agreement, assert the
claim or defense that an adequate remedy at law exists. In the event of such
breach by Employee, the Company shall have the right to enforce the provisions
of Sections 6, 7, and 8 of this Agreement by seeking injunctive or other relief
in any court, and this Agreement shall not in any way limit remedies of law or
in equity otherwise available to the Company. If an action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover, in addition to any other relief, reasonable
attorneys' fees, costs and disbursements. In the event that the provisions of
Sections 6, 7, or 8 hereof should ever be adjudicated to exceed the time,
geographic, or other limitations permitted by applicable law in any applicable
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, or other limitations permitted by applicable
law.

(b) In the event that Employee shall be in breach of any of
the restrictions contained in Section 8 hereof, then the Restricted Period shall
be extended for a period of time equal to the period of time that Employee is in
breach of such restriction.

21. Arbitration. In the event that the parties are unable to
resolve any disputes arising hereunder, such dispute shall be submitted for a
binding determination by a neutral third party designated by the President of
the Philadelphia office of the American Arbitration Association.

22. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.

IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed the day and year first written above.

ATTEST: DOCUNET INC.

By: By: /s/ Andrew R. Bacas
------------------- ---------------------------------
Title: Title: Senior Vice President --
Corporate Development

[CORPORATE SEAL]

/s/ Bruce M. Gillis
_______________________________
[EMPLOYEE]

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<PAGE>

SCHEDULE A

EMPLOYEE BENEFITS OF BRUCE M. GILLIS

1. Automobile: Automobile allowance comparable to other executive management
of the Company ("Executive Management").

2. Vacation: 20 business days of vacation per year.

3. Major medical and hospitalization insurance: Major medical and
hospitalization insurance and other benefits available through Company's
cafeteria plan effected by the Company's contribution on behalf of Employee
to Company's cafeteria plan in an amount equal to $ per year.

4. Life Insurance: Policy with death benefit to Employee equal to three times
initial Base Salary.

5. Expense Reimbursement: The Company will reimburse Employee for business
trade and entertainment expenses normally reimbursed under the Company's
general expense reimbursement policy, as may be in effect from time to
time.

6. Other Benefits: Participation in 401(k) Plan, Supplemental Retirement Plan
and Short-Term disability policy, and any other benefit plan which may be
generally available to the class of employees of which Employee is
employed.

A-1

Exhibit 10.5

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made as of the 18th day of August,
1997 by and between James D. Brown, a resident of Pennsylvania (the "Employee"),
and DocuNet Inc., a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania (the "Company").

WHEREAS, the Company desires to employ Employee and Employee
desires to be employed by the Company for a period of time in the future upon
the terms and conditions hereinafter set forth.

1. Employment and Term. The Company hereby employs Employee
and Employee hereby accepts employment with the Company, as Senior Vice
President- Finance and Chief Financial Officer (such position, Employee's
"Position") for a period commencing on the date hereof and continuing until
December 31, 2000, subject to the provisions of Section 9 hereof (as may be
extended from time to time by mutual consent of Employer and Employee, the
"Term").

2. Duties. During the Term, Employee shall serve the Company
faithfully and to the best of his ability and shall devote his full time,
attention, skill and efforts to the performance of the duties required by or
appropriate for his Position. Employee agrees to assume such duties and
responsibilities as may be customarily incident to such position, and as may be
reasonably assigned to Employee from time to time by the Chief Executive Officer
of the Company and Employee shall report, throughout the Term, to the Chief
Executive Officer of the Company.

4. Compensation. The Company shall pay Employee, and Employee
hereby agrees to accept, as compensation for all services rendered hereunder and
for Employee's covenant not to compete as provided for in Section 8 hereof, an
initial base salary at the annual rate of One Hundred Thirty Thousand Dollars
($130,000) (as the same may hereafter be increased, the "Base Salary"). The Base
Salary shall be inclusive of all applicable income, social security and other
taxes and charges which are required by law to be withheld by the Company or
which are requested to be withheld by Employee, and which shall be withheld and
paid in accordance with the Company's normal payroll practice for its similarly
situated employees from time to time in effect. Increases in the Base Salary may
be granted from time to time at the sole discretion of the Company. In addition
to the Base Salary, commencing with fiscal year 1998, the Company shall pay
Employee, within 30 days after receipt of the final audit for each fiscal year,
such bonus (the "Bonus") as the Board of Directors of the Company shall
determine in its absolute discretion. Such Bonus shall be based on the
guidelines established in advance of each fiscal year, in the absolute
discretion of the Board of Directors, including, but not limited to, the results
of the Company's operations, achievement of business unit targets, if
applicable, individual performance as compared to specific management objectives
set prior to each fiscal year, and the Company's Chief Executive Officer's
subjective assessment of Employee's performance. Accrual of any Bonus on the
financial books and records of the Company for Employee shall in no way obligate
the Company to pay a Bonus if Employee is terminated hereunder for any reason.
Payment of Bonus upon termination of Employee is at the sole discretion of the
Company.

<PAGE>

7. Property.

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<PAGE>

as possible after the removal shall serve its specific purpose. Employee shall
not make, retain, remove and/or distribute any copies of any of the foregoing
for any reason whatsoever except as may be necessary in the discharge of his
assigned duties and shall not divulge to any third person the nature of and/or
contents of any of the foregoing or of any other oral or written information to
which he may have access or with which for any reason he may become familiar,
except as disclosure shall be necessary in the performance of his duties or as
otherwise permitted pursuant to Section 6 hereof; and upon the termination of
his employment with the Company, he shall leave with or return to the Company
all originals and copies of the foregoing then in his possession, whether
prepared by Employee or by others.

(ii) The Employee acknowledges that all the
Intellectual Property that is copyrightable shall be considered a work made for
hire under United States Copyright Law. To the extent that any copyrightable
Intellectual Property may not be considered a work made for hire under the
applicable provisions of the United States Copyright Law, or to the extent that,
notwithstanding the foregoing provisions, the Employee may retain an interest in
any Intellectual Property that is not copyrightable, the Employee hereby
irrevocably assigns and transfers to the Company any and all right, title, or
interest that the Employee may have in the Intellectual Property under
copyright, patent, trade secret and trademark law, in perpetuity or for the
longest period otherwise permitted by law, without the necessity of further
consideration. The Company shall be entitled to obtain and hold in its own name
all copyrights, patents, trade secrets, and trademarks with respect thereto.

(iv) In the event the Company is unable after
reasonable effort to secure Employee's signature on any of the documents
referenced in Section 7(b)(iii) hereof, whether because of Employee's physical
or mental incapacity or for any other reason whatsoever, Employee hereby
irrevocably designates and appoints the Company and its duly authorized officers
and agents as Employee's agent and attorney-in-fact, to act for and in his
behalf and stead to execute and file any such documents and to do all other
lawfully permitted acts to further the prosecution and issuance of any such
copyright, patent or trademark protection, or other analogous protection, with
the same legal force and effect as if executed by Employee.

(a) compete, directly or indirectly, with the Company or
any of its respective affiliates or subsidiaries, or any of their respective
successors or assigns, whether now existing or hereafter

-3-
<PAGE>

created or acquired (collectively, the "Related Companies"), or otherwise engage
or participate, directly or indirectly, in any document management business
conducted or contemplated to be conducted by a Related Company, as the same are
conducted or contemplated to be conducted (as has been determined by the Board)
during the Term with respect to any period during the Term or any other business
conducted by the Company in which the Employee is or has been actively engaged
(the "Restricted Business") within any geo area located within the United
States of America, its possessions or territories (the "Restricted Area");

(b) become interested (whether as owner, stockholder,
lender, partner, co-venturer, director, officer, employee, agent, consultant or
otherwise), directly or indirectly, in any person, firm, corporation,
association or other entity that engages in the Restricted Business within the
Restricted Area; provided, that nothing contained in this Section 8(b) shall
prohibit Employee from owing, as a passive investor, not more than five percent
(5%) of the outstanding securities of any class of any publicly-traded
securities of any publicly held company listed on a well-recognized national
securities exchange or on an interdealer quotation system of the National
Association of Securities Dealers, Inc;

(c) solicit, call on, divert, take away, influence, induce
or attempt to do any of the foregoing, in each case within the Restricted Area,
with respect to the Company's or any of its Related Companies' (A) customers or
distributors or prospective customers or distributors (wherever located) with
respect to goods or services that are competitive with those of the Company or
any of its Related Companies, (B) suppliers or vendors or prospective suppliers
or vendors (wherever located) to supply materials, resources or services to be
used in connection with goods or services that are competitive with those of the
Company or any of its Related Companies, (C) distributors, consultants, agents,
or independent contractors to terminate or modify any contract, arrangement or
relationship with the Company or any of its Related Companies or (D) employees
(other than family members) to leave the employ of the Company or any of its
Related Companies.

(d) influence or attempt to influence any supplier,
customer or potential customer of the Company or any of the Related Companies to
terminate or modify any written or oral agreement or course of dealing with the
Company or the Related Companies; or

(e) influence or attempt to influence any person (other
than a family member) to either (i) terminate or modify his employment,
consulting, agency, distributorship or other arrangement with the Company or any
of the Related Companies, or (ii) employ or retain, or arrange to have any other
person or entity employ or retain, any person who has been employed or retained
by the Company or any of the Related Companies as an employee, consultant, agent
or distributor of the Company or the Related Companies at any time during the
one year period immediately preceding the termination of Employee's employment
hereunder.

9.1. Termination for Disability.

(a) In the event of the disability of the Employee such
that Employee is unable to perform his duties and responsibilities hereunder to
the full extent required by this Agreement by reasons of illness, injury or
incapacity for a period of more than ninety (90) consecutive days or more than
one hundred twenty (120) days, in the aggregate, during any seven hundred thirty
(730) day period ("Disability"), Employee's employment hereunder may be
terminated by the Company by notice to Employee pursuant to a determination by
the Board of Directors.

-4-

<PAGE>

("Other Compensation"), including payment prescribed under any disability or
life insurance plan or arrangement in which he is a participant or to which he
is a party as an employee of the Company. Except as specifically set forth in
this Section 9.1(b), the Company shall have no liability or obligation to
Employee for compensation or benefits hereunder by reason of such termination.

9.3. Termination By Company for Cause.

(a) The Company may terminate Employee's employment
hereunder at any time for "cause" upon written notice to Employee based upon a
good faith determination by the Board of Directors. The good-faith nature of the
determination shall not in and of itself mean that "cause" exists. For purposes
of this Agreement, "cause" shall mean: (i) any breach by Employee of any of his
obligations under Sections 6, 7 or 8 of this Agreement, (ii) gross incompetence
in the performance by Employee of the duties required by or appropriate for his
Position; (iii) a material violation of the Company's employee policies, as may
be amended from time to time, or (iv) other conduct of Employee involving any
type of disloyalty to the Company or willful misconduct with respect to the
Company, including without limitation fraud, embezzlement, theft or proven
dishonesty in the course of his employment or conviction of a felony.

9.4. Termination By Company Without Cause.

(a) The Company may terminate Employee's employment
hereunder at any time, for any reason, with or without cause, effective upon the
date designated by the Company upon written notice to Employee.

-5-

<PAGE>

9.5. Termination By Employee

9.6. Sale of Company/Change of Control.

(a) If there is a Sale of the Company or a Change of
Control during the Term, then the Company or the successor to all or
substantially all of the Company's assets, capital stock or business (the
"Successor Entity"), as the case may be, must offer Employee employment pursuant
to a written contract offer (the "Offer") within five (5) days of such Sale of
the Company or Change of Control. Employee shall, within fifteen (15) days after
receipt of such Offer, either (i) accept the terms of the Offer, such acceptance
indicated by return of a copy of the Offer duly executed, (ii) elect in writing,
provided to the Company or the Successor Entity, as the case may be, to remain
employed under this Agreement for the remainder of the Term, or (iii) elect to
terminate Employee's employment hereunder upon sixty (60) days prior notice,
such termination to be effective at the expiration of said sixty (60) day
period, or sooner, if desired by the Company or the Successor Entity.

-6-

<PAGE>

(i) any such sales, transfers, assignments or other dispositions by such
stockholders to their respective Affiliates, (ii) any such transaction effected
primarily to reincorporate the Company in another jurisdiction or (iii) any
transaction in connection with the simultaneous acquisition of document
management companies and the initial public offering of the common stock of the
Company or its affiliate; (ii) "Affiliate" means, with respect to any
stockholder of the Company, (w) any Person directly or indirectly controlling,
controlled by or under common control with such stockholder, (x) any Person
owning or controlling ten percent (10%) or more of the outstanding voting
securities of such stockholder, (y) any officer, director or general partner of
such stockholder, or (z) any Person who is an officer, director, general
partner, trustee or holder of ten percent (10%) or more of the outstanding
voting securities of any Person described in clauses (w) through (y) of this
sentence; and (iii) "Person" means an individual, partnership, corporation,
joint venture, association, trust, unincorporated association, other entity or
association.

(g) If the Successor Entity fails to make the Offer,
Employee shall be entitled to receive all of the benefits and compensation
referred to in Section 9.7(d) above.

10. Other Agreements. Employee represents and warrants to the
Company that:

-7-

<PAGE>

(c) That Employee is free to execute this Agreement and to
enter into the employ of the Company pursuant to the provisions set forth
herein.

11. Survival of Provisions. The provisions of this Agreement
set forth in Sections 6, 7, 8 and 20 hereof shall survive the termination of
Employee's employment hereunder.

13. Notice. Any notice or communication required or permitted
under this Agreement shall be made in writing and sent by certified or
registered mail, return receipt requested, addressed as follows:

13. If to Employee:

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

With a copy to:

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

If to Company:

Bruce Gillis
DocuNet Inc.
715 Matson's Ford Road
Villanova, PA 19085

with a copy to:

Barry M. Abelson
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103

or to such other address as either party may from time to time duly specify by
notice given to the other party in the manner specified above.

15. Waiver. The waiver of the breach of any term or provision
of this Agreement shall not operate as or be construed to be a waiver of any
other or subsequent breach of this Agreement.

-8-

<PAGE>

16. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania.

18. Section Headings. The section headings in this Agreement
are for convenience only; they form no part of this Agreement and shall not
affect its interpretation.

20. Specific Enforcement; Extension of Period.

(a) Employee acknowledges that the restrictions contained
in Sections 6, 7, and 8 hereof are reasonable and necessary to protect the
legitimate interests of the Company and its affiliates and that the Company
would not have entered into this Agreement in the absence of such restrictions.
Employee also acknowledges that any breach by him of Sections 6, 7, or 8 hereof
will cause continuing and irreparable injury to the Company for which monetary
damages would not be an adequate remedy. The Employee shall not, in any action
or proceeding to enforce any of the provisions of this Agreement, assert the
claim or defense that an adequate remedy at law exists. In the event of such
breach by Employee, the Company shall have the right to enforce the provisions
of Sections 6, 7, and 8 of this Agreement by seeking injunctive or other relief
in any court, and this Agreement shall not in any way limit remedies of law or
in equity otherwise available to the Company. If an action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover, in addition to any other relief, reasonable
attorneys' fees, costs and disbursements. In the event that the provisions of
Sections 6, 7, or 8 hereof should ever be adjudicated to exceed the time,
geographic, or other limitations permitted by applicable law in any applicable
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, or other limitations permitted by applicable
law.

22. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.

IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed the day and year first written above.

ATTEST: DOCUNET INC.

By: By: /s/ Bruce M. Gillis
------------------- -----------------------------------
Title: Title: Chairman and Chief Executive
Officer

[CORPORATE SEAL]

/s/ James D. Brown
_________________________________
[EMPLOYEE]

-9-

<PAGE>

SCHEDULE A

EMPLOYEE BENEFITS OF JAMES D. BROWN

1. Automobile: Automobile allowance comparable to other executive management
of the Company ("Executive Management").

2. Vacation: 20 business days of vacation per year.

4. Life Insurance: Policy with death benefit to Employee equal to three times
initial Base Salary.

A-1

Exhibit 10.6

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made as of the 18th day of
August, 1997 by and between S. David Model, a resident of Connecticut (the
"Employee"), and DocuNet Inc., a corporation organized and existing under the
laws of the Commonwealth of Pennsylvania (the "Company").

WHEREAS, the Company desires to employ Employee and Employee
desires to be employed by the Company for a period of time in the future upon
the terms and conditions hereinafter set forth.

1. Employment and Term. The Company hereby employs Employee
and Employee hereby accepts employment with the Company, as Chief Operating
Officer (such position, Employee's "Position") for a period commencing on the
date hereof and continuing until December 31, 2000, subject to the provisions of
Section 9 hereof (as may be extended from time to time by mutual consent of
Employer and Employee, the "Term").

2. Duties. During the Term, Employee shall serve the Company
faithfully and to the best of his ability and shall devote his full time,
attention, skill and efforts to the performance of the duties required by or
appropriate for his Position. Employee agrees to assume such duties and
responsibilities as may be customarily incident to such position, and as may be
reasonably assigned to Employee from time to time by the Chief Executive Officer
of the Company and Employee shall report, throughout the Term, to the Chief
Executive Officer of the Company.

4. Compensation. The Company shall pay Employee, and Employee
hereby agrees to accept, as compensation for all services rendered hereunder and
for Employee's covenant not to compete as provided for in Section 8 hereof, an
initial base salary at the annual rate of One Hundred Fifty Thousand Dollars
($150,000) (as the same may hereafter be increased, the "Base Salary"). The Base
Salary shall be inclusive of all applicable income, social security and other
taxes and charges which are required by law to be withheld by the Company or
which are requested to be withheld by Employee, and which shall be withheld and
paid in accordance with the Company's normal payroll practice for its similarly
situated employees from time to time in effect. Increases in the Base Salary may
be granted from time to time at the sole discretion of the Company in accordance
with customary procedures in effect for similarly situated employees of the
Company. In addition to the Base Salary, commencing with fiscal year 1998, the
Company shall pay Employee, within 30 days after receipt of the final audit for
each fiscal year, such bonus (the "Bonus") as the Board of Directors of the
Company shall determine in accordance with the Company's customary procedures in
effect for similarly situated employees. Such Bonus shall be based on the
guidelines established in advance of each fiscal year, including, but not
limited to, the results of the Company's operations, achievement of business
unit targets, if applicable, individual performance as compared to specific
management objectives set prior to each fiscal year, and the Company's Chief
Executive Officer's subjective assessment of Employee's performance. Accrual of
any Bonus on the financial books and records of the Company for Employee shall
in no way obligate the Company to pay a Bonus if Employee is terminated
hereunder for any reason. Payment of Bonus upon termination of Employee is at
the sole discretion of the Company.

<PAGE>

7. Property.

-2-

<PAGE>

applicable provisions of the United States Copyright Law, or to the extent that,
notwithstanding the foregoing provisions, the Employee may retain an interest in
any Intellectual Property that is not copyrightable, the Employee hereby
irrevocably assigns and transfers to the Company any and all right, title, or
interest that the Employee may have in the Intellectual Property under
copyright, patent, trade secret and trademark law, in perpetuity or for the
longest period otherwise permitted by law, without the necessity of further
consideration. The Company shall be entitled to obtain and hold in its own name
all copyrights, patents, trade secrets, and trademarks with respect thereto.

(iv) In the event the Company is unable after
reasonable effort to secure Employee's signature on any of the documents
referenced in Section 7(b)(iii) hereof, whether because of Employee's physical
or mental incapacity or for any other reason whatsoever, Employee hereby
irrevocably designates and appoints the Company and its duly authorized officers
and agents as Employee's agent and attorney-in-fact, to act for and in his
behalf and stead to execute and file any such documents and to do all other
lawfully permitted acts to further the prosecution and issuance of any such
copyright, patent or trademark protection, or other analogous protection, with
the same legal force and effect as if executed by Employee.

(a) compete, directly or indirectly, with the Company or
any of its respective affiliates or subsidiaries, or any of their respective
successors or assigns, whether now existing or hereafter created or acquired
(collectively, the "Related Companies"), or otherwise engage or participate,
directly or indirectly, in any document management business conducted or
contemplated to be conducted by a Related Company, as the same are conducted or
contemplated to be conducted (as has been determined by the Board) during the
Term with respect to any period during the Term or any other business conducted
by the Company in which the Employee is or has been actively engaged (the
"Restricted Business") within any geographic area located within the United
States of America, its possessions or territories (the "Restricted Area");

(b) become interested (whether as owner, stockholder,
lender, partner, co-venturer, director, officer, employee, agent, consultant or
otherwise), directly or indirectly, in any person, firm, corporation,
association or other entity that engages in the Restricted Business within the
Restricted Area; provided, that nothing contained in this Section 8(b) shall
prohibit Employee from owing, as a passive investor, not more than five percent
(5%) of the outstanding securities of any class of any publicly-traded
securities of any publicly held company listed on a well-recognized national
securities exchange or on an interdealer quotation system of the National
Association of Securities Dealers, Inc;

-3-

<PAGE>

materials, resources or services to be used in connection with goods or services
that are competitive with those of the Company or any of its Related Companies,
(C) distributors, consultants, agents, or independent contractors to terminate
or modify any contract, arrangement or relationship with the Company or any of
its Related Companies or (D) employees (other than family members) to leave the
employ of the Company or any of its Related Companies.

(d) influence or attempt to influence any supplier,
customer or potential customer of the Company or any of the Related Companies to
terminate or modify any written or oral agreement or course of dealing with the
Company or the Related Companies; or

(e) influence or attempt to influence any person (other
than a family member) to either (i) terminate or modify his employment,
consulting, agency, distributorship or other arrangement with the Company or any
of the Related Companies, or (ii) employ or retain, or arrange to have any other
person or entity employ or retain, any person who has been employed or retained
by the Company or any of the Related Companies as an employee, consultant, agent
or distributor of the Company or the Related Companies at any time during the
one year period immediately preceding the termination of Employee's employment
hereunder.

9.1. Termination for Disability.

(a) In the event of the disability of the Employee such
that Employee is unable to perform his duties and responsibilities hereunder to
the full extent required by this Agreement by reasons of illness, injury or
incapacity for a period of more than ninety (90) consecutive days or more than
one hundred twenty (120) days, in the aggregate, during any seven hundred thirty
(730) day period ("Disability"), Employee's employment hereunder may be
terminated by the Company by notice to Employee pursuant to a determination by
the Board of Directors.

-4-

<PAGE>

under or through him by reason of Employee's death, except that Employee's
executors, legal representatives or administrators will be entitled to receive
the payment prescribed under any death or disability benefits plan in which he
is a participant as an employee of the Company, and to exercise any rights
afforded under any compensation or benefit plan then in effect.

9.3. Termination By Company for Cause.

(a) The Company may terminate Employee's employment
hereunder at any time for "cause" upon written notice to Employee based upon a
good faith determination by the Board of Directors. The good-faith nature of the
determination shall not in and of itself mean that "cause" exists. For purposes
of this Agreement, "cause" shall mean: (i) any breach by Employee of any of his
obligations under Sections 6, 7 or 8 of this Agreement, (ii) gross incompetence
in the performance by Employee of the duties required by or appropriate for his
Position, (iii) a material violation of the Company's employee policies, as may
be amended from time to time, or (iv) other conduct of Employee involving any
type of disloyalty to the Company or willful misconduct with respect to the
Company, including without limitation fraud, embezzlement, theft or proven
dishonesty in the course of his employment or conviction of a felony.

(b) In the event of a termination of Employee's employment
hereunder pursuant to Section 9.3(a), Employee shall be entitled to receive all
accrued but unpaid (as of the effective date of such termination) Base Salary,
Benefits and other Compensation. All Base Salary and Benefits shall cease at the
time of such termination, subject to the terms of any benefit or compensation
plan then in force and applicable to Employee. Except as specifically set forth
in this Section 9.3, the Company shall have no liability or obligation hereunder
by reason of such termination.

9.4. Termination By Company Without Cause.

(a) The Company may terminate Employee's employment
hereunder at any time, for any reason, with or without cause, effective upon the
date designated by the Company upon written notice to Employee.

(b) In the event of a termination of Employee's employment
hereunder pursuant to Section 9.4(a), Employee shall be entitled to receive all
accrued but unpaid (as of the effective date of such termination) Base Salary,
Benefits and other Compensation, plus either (i) if such termination is prior to
the last twelve months of the Term, continuation of the current Base Salary plus
Benefits (including vesting of options and other Benefits) for one year, or (ii)
if such termination is in the last twelve-month period of the Term, continuation
of the Base Salary plus continuation of Benefits (including vesting of options
and other Benefits) for the greater of (x) the remaining portion of the Term, or
(y) six months. Except as specifically set forth in this Section 9.4, the
Company shall have no liability or obligation hereunder by reason of such
termination.

9.5. Termination By Employee

(b) In the event of a termination of Employee's employment
hereunder pursuant to Section 9.5(a) hereof, Employee shall be entitled to
receive all accrued but unpaid

-5-

<PAGE>

(as of the earlier of the Request Date or the Accelerated Termination Date),
Base Salary and Benefits. If the Company does not terminate the Employee
immediately upon receipt of the termination notice and Employee performs his
duties in a satisfactory manner, as determined in the sole discretion of the
Company, until the Request Date, Employee shall also be entitled to an amount
equal to one month's Base Salary (in effect at such time). In addition, in the
event of a termination of Employee's employment pursuant to Section 9.5(a) at
the end of the Term upon sixty (60) prior written notice and upon the
satisfactory completion, in the sole discretion of the Company, of Employee's
duties during the 60-day period after receipt of such termination notice,
Employee shall be entitled to receive an amount equal to one month's Base Salary
(in effect at such time) multiplied by the number of the complete 12-month
periods of service completed prior to giving notice of termination. Except as
specifically set forth in this Section 9.5(b), all Base Salary, Benefits and
Bonuses shall cease at the time of such termination, subject to the terms of any
benefit or compensation plan then in force and applicable to Employee. Except as
specifically set forth in this Section 9.5, the Company shall have no liability
or obligation hereunder by reason of such termination.

9.6. Sale of Company/Change of Control.

(a) If there is a Sale of the Company or a Change of
Control during the Term, then the Company or the successor to all or
substantially all of the Company's assets, capital stock or business (the
"Successor Entity"), as the case may be, must offer Employee employment pursuant
to a written contract offer (the "Offer") within five (5) days of such Sale of
the Company or Change of Control. Employee shall, within fifteen (15) days after
receipt of such Offer, either (i) accept the terms of the Offer, such acceptance
indicated by return of a copy of the Offer duly executed, (ii) elect in writing,
provided to the Company or the Successor Entity, as the case may be, to remain
employed under this Agreement for the remainder of the Term, or (iii) elect to
terminate Employee's employment hereunder upon sixty (60) days prior notice,
such termination to be effective at the expiration of said sixty (60) day
period, or sooner, if desired by the Company or the Successor Entity.

-6-

<PAGE>

(g) If the Successor Entity fails to make the Offer,
Employee shall be entitled to receive all of the benefits and compensation
referred to in Section 9.7(d) above.

10. Other Agreements. Employee represents and warrants to the
Company that:

(c) That Employee is free to execute this Agreement and to
enter into the employ of the Company pursuant to the provisions set forth
herein.

11. Survival of Provisions. The provisions of this Agreement
set forth in Sections 6, 7, 8, 9 and 20 hereof shall survive the termination of
Employee's employment hereunder.

12. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Company and Employee and their respective
successors, executors, administrators, heirs and/or permitted assigns; provided,
however, that neither Employee nor the Company may make any assignments of this
Agreement or any interest herein, by operation of law or otherwise, without the
prior written consent of the other party hereto, except that, without such
consent, the Company may assign this Agreement to an Affiliate or any successor
to all or substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or otherwise, provided
that such

-7-

<PAGE>

successor assumes in writing all of the obligations of the Company under this
Agreement, subject, however, to Employee's rights as to termination as provided
in Section 9.5 hereof.

13. Notice. Any notice or communication required or permitted
under this Agreement shall be made in writing and sent by certified or
registered mail, return receipt requested, addressed as follows:

If to Employee:

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

With a copy to:

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

If to Company:

Bruce Gillis
DocuNet Inc.
715 Matson's Ford Road
Villanova, PA 19085

with a copy to:

Barry M. Abelson
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103

or to such other address as either party may from time to time duly specify by
notice given to the other party in the manner specified above.

15. Waiver. The waiver of the breach of any term or provision
of this Agreement shall not operate as or be construed to be a waiver of any
other or subsequent breach of this Agreement.

16. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania.

18. Section Headings. The section headings in this Agreement
are for convenience only; they form no part of this Agreement and shall not
affect its interpretation.

-8-

<PAGE>

20. Specific Enforcement; Extension of Period.

(a) Employee acknowledges that the restrictions contained
in Sections 6, 7, and 8 hereof are reasonable and necessary to protect the
legitimate interests of the Company and its affiliates and that the Company
would not have entered into this Agreement in the absence of such restrictions.
Employee also acknowledges that any breach by him of Sections 6, 7, or 8 hereof
will cause continuing and irreparable injury to the Company for which monetary
damages would not be an adequate remedy. The Employee shall not, in any action
or proceeding to enforce any of the provisions of this Agreement, assert the
claim or defense that an adequate remedy at law exists. In the event of such
breach by Employee, the Company shall have the right to enforce the provisions
of Sections 6, 7, and 8 of this Agreement by seeking injunctive or other relief
in any court, and this Agreement shall not in any way limit remedies of law or
in equity otherwise available to the Company. If an action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover, in addition to any other relief, reasonable
attorneys' fees, costs and disbursements. In the event that the provisions of
Sections 6, 7, or 8 hereof should ever be adjudicated to exceed the time,
geographic, or other limitations permitted by applicable law in any applicable
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, or other limitations permitted by applicable
law.

22. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.

IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed the day and year first written above.

ATTEST: DOCUNET INC.

By: By: /s/ Bruce M. Gillis
------------------------------- ---------------------------------
Title: Title: Chairman and Chief
Executive Officer

[CORPORATE SEAL]

/s/ S. David Model
------------------------------
[EMPLOYEE]

-9-

<PAGE>

SCHEDULE A

EMPLOYEE BENEFITS OF S. DAVID MODEL

1. Automobile: Automobile allowance comparable to other executive management
of the Company ("Executive Management").

2. Vacation: 20 business days of vacation per year.

4. Life Insurance: Policy with death benefit to Employee equal to three times
initial Base Salary.

A-1

Exhibit 10.7

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made as of the 1st day of August,
1997 by and between Andrew R. Bacas, a resident of Virginia (the "Employee"),
and DocuNet Inc., a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania (the "Company").

WHEREAS, the Company desires to employ Employee and Employee
desires to be employed by the Company for a period of time in the future upon
the terms and conditions hereinafter set forth.

1. Employment and Term. The Company hereby employs Employee
and Employee hereby accepts employment with the Company, as Senior Vice
President, Corporate Development (such position, Employee's "Position") for a
period commencing on the date hereof and continuing until December 31, 2000,
subject to the provisions of Section 9 hereof (as may be extended from time to
time by mutual consent of Employer and Employee, the "Term").

2. Duties. During the Term, Employee shall serve the Company
faithfully and to the best of his ability and shall devote his full time,
attention, skill and efforts to the performance of the duties required by or
appropriate for his Position. Employee agrees to assume such duties and
responsibilities as may be customarily incident to such position, and as may be
reasonably assigned to Employee from time to time by the Chief Executive Officer
of the Company and Employee shall report, throughout the Term, to the Chief
Executive Officer of the Company.

4. Compensation. The Company shall pay Employee, and Employee
hereby agrees to accept, as compensation for all services rendered hereunder and
for Employee's covenant not to compete as provided for in Section 8 hereof, an
initial base salary at the annual rate of One Hundred Thirty Thousand Dollars
($130,000) (as the same may hereafter be increased, the "Base Salary"). The Base
Salary shall be inclusive of all applicable income, social security and other
taxes and charges which are required by law to be withheld by the Company or
which are requested to be withheld by Employee, and which shall be withheld and
paid in accordance with the Company's normal payroll practice for its similarly
situated employees from time to time in effect. Increases in the Base Salary may
be granted from time to time at the sole discretion of the Company. In addition
to the Base Salary, commencing with fiscal year 1998, the Company shall pay
Employee, within 30 days after receipt of the final audit for each fiscal year,
such bonus (the "Bonus") as the Board of Directors of the Company shall
determine in its absolute discretion. Such Bonus shall be based on the
guidelines established in advance of each fiscal year, in the absolute
discretion of the Board of Directors, including, but not limited to, the results
of the Company's operations, achievement of business unit targets, if
applicable, individual performance as compared to specific management objectives
set prior to each fiscal year, and the Company's Chief Executive Officer's
subjective assessment of Employee's performance. Accrual of any Bonus on the
financial books and records of the Company for Employee shall in no way obligate
the Company to pay a Bonus if Employee is terminated hereunder for any reason.
Payment of Bonus upon termination of Employee is at the sole discretion of the
Company.

<PAGE>

7. Property.

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<PAGE>

title, or interest that the Employee may have in the Intellectual Property under
copyright, patent, trade secret and trademark law, in perpetuity or for the
longest period otherwise permitted by law, without the necessity of further
consideration. The Company shall be entitled to obtain and hold in its own name
all copyrights, patents, trade secrets, and trademarks with respect thereto.

(iv) In the event the Company is unable after
reasonable effort to secure Employee's signature on any of the documents
referenced in Section 7(b)(iii) hereof, whether because of Employee's physical
or mental incapacity or for any other reason whatsoever, Employee hereby
irrevocably designates and appoints the Company and its duly authorized officers
and agents as Employee's agent and attorney-in-fact, to act for and in his
behalf and stead to execute and file any such documents and to do all other
lawfully permitted acts to further the prosecution and issuance of any such
copyright, patent or trademark protection, or other analogous protection, with
the same legal force and effect as if executed by Employee.

(a) compete, directly or indirectly, with the Company or
any of its respective affiliates or subsidiaries, or any of their respective
successors or assigns, whether now existing or hereafter created or acquired
(collectively, the "Related Companies"), or otherwise engage or participate,
directly or indirectly, in any document management business conducted or
contemplated to be conducted by a Related Company, as the same are conducted or
contemplated to be conducted (as has been determined by the Board) during the
Term with respect to any period during the Term or any other business conducted
by the Company in which the Employee is or has been actively engaged (the
"Restricted Business") within any geographic area located within the United
States of America, its possessions or territories (the "Restricted Area");

(b) become interested (whether as owner, stockholder,
lender, partner, co-venturer, director, officer, employee, agent, consultant or
otherwise), directly or indirectly, in any person, firm, corporation,
association or other entity that engages in the Restricted Business within the
Restricted Area; provided, that nothing contained in this Section 8(b) shall
prohibit Employee from owing, as a passive investor, not more than five percent
(5%) of the outstanding securities of any class of any publicly-traded
securities of any publicly held company listed on a well-recognized national
securities exchange or on an interdealer quotation system of the National
Association of Securities Dealers, Inc;

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<PAGE>

(d) influence or attempt to influence any supplier,
customer or potential customer of the Company or any of the Related Companies to
terminate or modify any written or oral agreement or course of dealing with the
Company or the Related Companies; or

(e) influence or attempt to influence any person (other
than a family member) to either (i) terminate or modify his employment,
consulting, agency, distributorship or other arrangement with the Company or any
of the Related Companies, or (ii) employ or retain, or arrange to have any other
person or entity employ or retain, any person who has been employed or retained
by the Company or any of the Related Companies as an employee, consultant, agent
or distributor of the Company or the Related Companies at any time during the
one year period immediately preceding the termination of Employee's employment
hereunder.

9.1. Termination for Disability.

(a) In the event of the disability of the Employee such
that Employee is unable to perform his duties and responsibilities hereunder to
the full extent required by this Agreement by reasons of illness, injury or
incapacity for a period of more than ninety (90) consecutive days or more than
one hundred twenty (120) days, in the aggregate, during any seven hundred thirty
(730) day period ("Disability"), Employee's employment hereunder may be
terminated by the Company by notice to Employee pursuant to a determination by
the Board of Directors.

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<PAGE>

9.3. Termination By Company for Cause.

(a) The Company may terminate Employee's employment
hereunder at any time for "cause" upon written notice to Employee based upon a
good faith determination by the Board of Directors. The good-faith nature of the
determination shall not in and of itself mean that "cause" exists. For purposes
of this Agreement, "cause" shall mean: (i) any breach by Employee of any of his
obligations under Sections 6, 7 or 8 of this Agreement, (ii) gross incompetence
in the performance by Employee of the duties required by or appropriate for his
Position; (iii) a material violation of the Company's employee policies, as may
be amended from time to time, or (iv) other conduct of Employee involving any
type of disloyalty to the Company or willful misconduct with respect to the
Company, including without limitation fraud, embezzlement, theft or proven
dishonesty in the course of his employment or conviction of a felony.

9.4. Termination By Company Without Cause.

(a) The Company may terminate Employee's employment
hereunder at any time, for any reason, with or without cause, effective upon the
date designated by the Company upon written notice to Employee.

9.5. Termination By Employee

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<PAGE>

pursuant to Section 9.5(a) at the end of the Term upon sixty (60) prior written
notice and upon the satisfactory completion, in the sole discretion of the
Company, of Employee's duties during the 60-day period after receipt of such
termination notice, Employee shall be entitled to receive an amount equal to one
month's Base Salary (in effect at such time) multiplied by the number of the
complete 12-month periods of service completed prior to giving notice of
termination. Except as specifically set forth in this Section 9.5(b), all Base
Salary, Benefits and Bonuses shall cease at the time of such termination,
subject to the terms of any benefit or compensation plan then in force and
applicable to Employee. Except as specifically set forth in this Section 9.5,
the Company shall have no liability or obligation hereunder by reason of such
termination.

9.6. Sale of Company/Change of Control.

(a) If there is a Sale of the Company or a Change of
Control during the Term, then the Company or the successor to all or
substantially all of the Company's assets, capital stock or business (the
"Successor Entity"), as the case may be, must offer Employee employment pursuant
to a written contract offer (the "Offer") within five (5) days of such Sale of
the Company or Change of Control. Employee shall, within fifteen (15) days after
receipt of such Offer, either (i) accept the terms of the Offer, such acceptance
indicated by return of a copy of the Offer duly executed, (ii) elect in writing,
provided to the Company or the Successor Entity, as the case may be, to remain
employed under this Agreement for the remainder of the Term, or (iii) elect to
terminate Employee's employment hereunder upon sixty (60) days prior notice,
such termination to be effective at the expiration of said sixty (60) day
period, or sooner, if desired by the Company or the Successor Entity.

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<PAGE>

date of such termination, in which case the value of the Benefits otherwise
payable will be monetized, and such payment of the Additional Amount will be
discounted at the then current Federal Short Term Rate as defined in the
Internal Revenue Code of 1986, as amended.

(g) If the Successor Entity fails to make the Offer,
Employee shall be entitled to receive all of the benefits and compensation
referred to in Section 9.7(d) above.

10. Other Agreements. Employee represents and warrants to the
Company that:

(c) That Employee is free to execute this Agreement and to
enter into the employ of the Company pursuant to the provisions set forth
herein.

11. Survival of Provisions. The provisions of this Agreement
set forth in Sections 6, 7, 8 and 20 hereof shall survive the termination of
Employee's employment hereunder.

13. Notice. Any notice or communication required or permitted
under this Agreement shall be made in writing and sent by certified or
registered mail, return receipt requested, addressed as follows:

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<PAGE>
13. If to Employee:

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

With a copy to:

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

If to Company:

Bruce Gillis
DocuNet Inc.
715 Matson's Ford Road
Villanova, PA 19085

with a copy to:

Barry M. Abelson
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103

or to such other address as either party may from time to time duly specify by
notice given to the other party in the manner specified above.

15. Waiver. The waiver of the breach of any term or provision
of this Agreement shall not operate as or be construed to be a waiver of any
other or subsequent breach of this Agreement.

16. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania.

18. Section Headings. The section headings in this Agreement
are for convenience only; they form no part of this Agreement and shall not
affect its interpretation.

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<PAGE>

20. Specific Enforcement; Extension of Period.

(a) Employee acknowledges that the restrictions contained
in Sections 6, 7, and 8 hereof are reasonable and necessary to protect the
legitimate interests of the Company and its affiliates and that the Company
would not have entered into this Agreement in the absence of such restrictions.
Employee also acknowledges that any breach by him of Sections 6, 7, or 8 hereof
will cause continuing and irreparable injury to the Company for which monetary
damages would not be an adequate remedy. The Employee shall not, in any action
or proceeding to enforce any of the provisions of this Agreement, assert the
claim or defense that an adequate remedy at law exists. In the event of such
breach by Employee, the Company shall have the right to enforce the provisions
of Sections 6, 7, and 8 of this Agreement by seeking injunctive or other relief
in any court, and this Agreement shall not in any way limit remedies of law or
in equity otherwise available to the Company. If an action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover, in addition to any other relief, reasonable
attorneys' fees, costs and disbursements. In the event that the provisions of
Sections 6, 7, or 8 hereof should ever be adjudicated to exceed the time,
geographic, or other limitations permitted by applicable law in any applicable
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, or other limitations permitted by applicable
law.

22. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.

IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed the day and year first written above.

ATTEST: DOCUNET INC.

By: By: /s/ Bruce M. Gillis
------------------------------ -----------------------------------
Title: Title: Chairman and Chief Executive
Officer

[CORPORATE SEAL]

/s/ Andrew R. Bacas
--------------------------------
[EMPLOYEE]

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<PAGE>

SCHEDULE A

EMPLOYEE BENEFITS OF ANDREW R. BACAS

1. Automobile: Automobile allowance comparable to other executive management
of the Company ("Executive Management").

2. Vacation: 20 business days of vacation per year.

4. Life Insurance: Policy with death benefit to Employee equal to three times
initial Base Salary.

A-1

EXHIBIT 21

SUBSIDIARIES

CodaLex Acquisition Corp.

OMI Acquisition Corp.

Laser Acquisition Corp.

AMMCorp Acquisition Corp.

Datalink Acquisition Corp.

TIMCO Acquisition Corp.

Docutech Acquisition Corp.

IDS of New York Acquisition Corp.

ImageMax of Delaware, Inc.

All subsidiaries named above, except IDS of New York Acquisition Corp.,
and ImageMax of Delaware, Inc. are Pennsylvania corporations. IDS of New York
Acquisition Corp. is a New York corporation. ImageMax of Delaware, Inc. is a
Delaware corporation.

Exhibit 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our reports
and to all references to our Firm included in or made a part of this S-1
Registration Statement.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.
November 28, 1997