SCS COMPUTE INC, SC 14D1, 1995-12-27

SCS COMPUTE INC
SC 14D1, 1995-12-27
COMPUTER PROCESSING & DATA PREPARATION

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<PAGE> 1

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

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

SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934

SCS/COMPUTE, INC.
(NAME OF SUBJECT COMPANY)

SCS SUBSIDIARY, INC.,
THOMSON U.S. HOLDINGS INC.
AND
THE THOMSON CORPORATION
(BIDDERS)

COMMON STOCK, $.10 PAR VALUE
(TITLE OF CLASS OF SECURITIES)

784030 10 8
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------

MICHAEL S. HARRIS, ESQ.
THE THOMSON CORPORATION
METRO CENTER AT ONE STATION PLACE
STAMFORD, CONNECTICUT 06902
(NAME, ADDRESS AND TELEPHONE NUMBER OF
PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF BIDDERS)

COPY TO:
DAVID W. HELENIAK, ESQ.
SHEARMAN & STERLING
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 848-4000

December 27, 1995
--------------------------------------------------------------
CALCULATION OF FILING FEE
Transaction Valuation* Amount of Filing Fee

$18,238,344.00 $3,647.67
--------------------------------------------------------------

/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.

Amount Previously Paid: ______________________________________________________
Form or Registration No.: ____________________________________________________
Filing Party: ________________________________________________________________
Date Filed: __________________________________________________________________
- ---------------
* Calculated by multiplying $6.75, the per share tender offer price, by
2,701,977, the sum of (i) the 2,571,977 shares of Common Stock outstanding
and (ii) the 130,000 shares of Common Stock subject to options outstanding.
================================================================================
<PAGE> 2

CUSIP No. 784030 10 8

<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Person

SCS SUBSIDIARY, INC.
- ---------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of Group
(a) / /
(b) / /
- ---------------------------------------------------------------------------------------------
3. SEC Use only
- ---------------------------------------------------------------------------------------------
4. Sources of Funds
WC
- ---------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(f)
/ /
- ---------------------------------------------------------------------------------------------
6. Citizen or Place of Organization
Delaware
- ---------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,082,570 Shares which may be deemed beneficially owned pursuant to the Stock
Purchase Agreement described herein.
- ---------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount if Row (7) Excludes Certain Shares / /
- ---------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
40.1%
- ---------------------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- ---------------------------------------------------------------------------------------------
</TABLE>

2
<PAGE> 3

CUSIP No. 784030 10 8

<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Person
THOMSON U.S. HOLDINGS INC.
- ---------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of Group
(a) / /
(b) / /
- ---------------------------------------------------------------------------------------------
3. SEC Use Only
- ---------------------------------------------------------------------------------------------
4. Sources of Funds
WC
- ---------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to item 2(e) or 2(f) / /
- ---------------------------------------------------------------------------------------------
6. Citizen or Place of Organization
Delaware
- ---------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,082,570 Shares which may be deemed beneficially owned pursuant to the Stock Purchase
Agreement described herein.
- ---------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount if Row (7) excludes Certain Shares / /
- ---------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
40.1%
- ---------------------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- ---------------------------------------------------------------------------------------------
</TABLE>

3
<PAGE> 4

CUSIP No. 784030 10 8

<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
1. Name of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Person
THE THOMSON CORPORATION
- ---------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of Group
(a) / /
(b) / /
- ---------------------------------------------------------------------------------------------
3. SEC Use only
- ---------------------------------------------------------------------------------------------
4. Sources of Funds
WC
- ---------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(f) / /
- ---------------------------------------------------------------------------------------------
6. Citizen or Place of Organization
Ontario, Canada
- ---------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,082,570 Shares which may be deemed beneficially owned pursuant to the Stock
Purchase Agreement described herein.
- ---------------------------------------------------------------------------------------------
8. Check if the Aggregate Amount if Row (7) Excludes Certain Shares / /
- ---------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
40.1%
- ---------------------------------------------------------------------------------------------
10. Type of Reporting Person
CO
- ---------------------------------------------------------------------------------------------
</TABLE>

4
<PAGE> 5

This Tender Offer Statement on Schedule 14D-1 and Schedule 13D (the
"Statement") relates to the offer by SCS Subsidiary, Inc., a Delaware
corporation ("Purchaser") and a direct wholly owned subsidiary of Thomson U.S.
Holdings Inc., a Delaware corporation ("Parent") and an indirect wholly owned
subsidiary of The Thomson Corporation, a corporation organized under the laws of
Ontario, Canada ("TTC"), to purchase all outstanding shares of Common Stock, par
value $.10 per share (the "Shares"), of SCS/Compute, Inc., a Delaware
corporation (the "Company"), at a price of $6.75 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in Purchaser's
Offer to Purchase dated December 27, 1995 (the "Offer to Purchase") and in the
related Letter of Transmittal (which together constitute the "Offer"), copies of
which are attached hereto as Exhibits (a)(1) and (a)(2), respectively.

ITEM 1. SECURITY AND SUBJECT COMPANY.

(a) The name of the subject company is SCS/Compute, Inc., a Delaware
corporation (the "Company"), which has its principal executive offices at 2252
Welsch Industrial Court, St. Louis, Missouri 63146.

(b) The class of equity securities being sought is all the outstanding
shares of Common Stock, par value $.10 per share, of the Company. The
information set forth in the "Introduction" and Section 1 ("Terms of the Offer;
Expiration Date") of the Offer to Purchase is incorporated herein by reference.

(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer
to Purchase is incorporated herein by reference.

ITEM 2. IDENTITY AND BACKGROUND.

(a)-(d) and (g) This Statement is filed by Purchaser, Parent and TTC. The
information concerning the name, state or other place of organization, principal
business and address of the principal office of each of Purchaser, Parent and
TTC and the information concerning the name, business address, present principal
occupation or employment and the name, principal business and address of any
corporation or other organization in which such employment or occupation is
conducted, material occupations, positions, offices or employments during the
last five years and citizenship of each of the executive officers and directors
of Purchaser, Parent and TTC are set forth in the "Introduction", Section 8
("Certain Information Concerning Purchaser, Parent and TTC") and Schedule I of
the Offer to Purchase and are incorporated herein by reference.

(e) and (f) During the last five years, neither Purchaser, Parent nor TTC,
and, to the best knowledge of Purchaser, Parent and TTC none of the persons
listed in Schedule I of the Offer to Purchase has been (i) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.

ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.

(a) The information set forth under Section 8 ("Certain Information
Concerning Purchaser, Parent and TTC") and Section 10 ("Background of the Offer;
Contacts with the Company; the Merger Agreement; the Stock Purchase Agreement
and Related Agreements") of the Offer to Purchase is incorporated herein by
reference.

(b) The information set forth under "Introduction", Section 7 ("Certain
Information Concerning the Company"), Section 8 ("Certain Information Concerning
Purchaser, Parent and TTC") and Section 10 ("Background of the Offer; Contacts
with the Company; the Merger Agreement; the Stock Purchase Agreement and Related
Agreements") of the Offer to Purchase is incorporated herein by reference.

5
<PAGE> 6

ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

(a)-(c) The information set forth under Section 9 ("Financing of the Offer
and the Merger") of the Offer to Purchase is incorporated herein by reference.

ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.

(a)-(e) The information set forth under "Introduction", Section 10
("Background of the Offer; Contacts with the Company; the Merger Agreement; the
Stock Purchase Agreement and Related Agreements") and Section 11 ("Purpose of
the Offer; Plans for the Company After the Offer and the Merger") of the Offer
to Purchase is incorporated herein by reference.

(f) and (g) The information set forth under Section 11 ("Purpose of the
Offer; Plans for the Company After the Offer and the Merger") and Section 13
("Effect of the Offer on the Market for Shares; NASDAQ Quotation and Exchange
Act Registration") of the Offer to Purchase is incorporated herein by reference.

ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

(a) and (b) The information set forth under Section 8 ("Certain Information
Concerning Purchaser, Parent and TTC") of the Offer to Purchase is incorporated
herein by reference.

ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.

The information set forth under "Introduction", Section 8 ("Certain
Information Concerning Purchaser, Parent and TTC"), Section 10 ("Background of
the Offer; Contacts with the Company; the Merger Agreement; the Stock Purchase
Agreement and Related Agreements") of the Offer to Purchase is incorporated
herein by reference.

ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.

The information set forth under "Introduction" and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.

ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.

The information set forth under Section 8 ("Certain Information Concerning
Purchaser, Parent and TTC") of the Offer to Purchase is incorporated herein by
reference. The financial statements of TTC are attached herein as Exhibit
(a)(8).

ITEM 10. ADDITIONAL INFORMATION.

(a) Not applicable.

(b) and (c) The information set forth under Section 15 ("Certain Legal
Matters and Regulatory Approvals") of the Offer to Purchase is incorporated
herein by reference.

(d) The information set forth under Section 13 ("Effect of the Offer on the
Market for the Shares, NASDAQ Quotation and Exchange Act Registration") of the
Offer to Purchase is incorporated herein by reference.

(e) Not applicable.

(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger, dated as of December 19, 1995,
among Parent, Purchaser and the Company, and the Stock Purchase Agreement, dated
as of December 19, 1995, between Parent, Purchaser and Robert W. Nolan, Sr.,
copies of which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and
(c)(2), respectively, is incorporated herein by reference.

6
<PAGE> 7

ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.

<TABLE>
<S> <C>
(a)(1) Form of Offer to Purchase dated December 27, 1995.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter from Purchaser to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Nominees
to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street Journal on December 27, 1995.
(a)(8) Press Release issued by the Company on December 20, 1995.
(a)(9) Consolidated Financial Statements of TTC as set forth in TTC's 1994 Annual Report to
Shareholders.
(c)(1) Agreement and Plan of Merger, dated as of December 19, 1995, among Parent, Purchaser
and the Company.
(c)(2) Stock Purchase Agreement, dated as of December 19, 1995, among Parent, Purchaser and
Robert W. Nolan, Sr.
(c)(3) Form of Employment Agreement between the Company and Robert W. Nolan, Sr.,
including, as an exhibit thereto, the form of Consulting Agreement between the
Company and Robert W. Nolan, Sr.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>

7
<PAGE> 8

After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.

SCS SUBSIDIARY, INC.

Dated: December 27, 1995

By /s/ NIGEL R. HARRISON

------------------------------------
Name: Nigel R. Harrison
Title: Treasurer

8
<PAGE> 9

After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.

THOMSON U.S. HOLDINGS INC.

Dated: December 27, 1995

By /s/ NIGEL R. HARRISON

------------------------------------
Name: Nigel R. Harrison
Title: Executive Vice President

9
<PAGE> 10

After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.

THE THOMSON CORPORATION

Dated: December 27, 1995

By /s/ NIGEL R. HARRISON

------------------------------------
Name: Nigel R. Harrison
Title: Executive Vice President

10
<PAGE> 11

EXHIBIT INDEX

<TABLE>
<CAPTION>
PAGE IN
SEQUENTIAL
EXHIBIT NO. NUMBERING SYSTEM
- ----------- ----------------
<C> <S> <C>
(a)(1) Form of Offer to Purchase dated December 27, 1995.................
(a)(2) Form of Letter of Transmittal.....................................
(a)(3) Form of Notice of Guaranteed Delivery.............................
(a)(4) Form of Letter from Purchaser to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.........................
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees to Clients.................................
(a)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.....................................
(a)(7) Summary Advertisement as published in The Wall Street Journal on
December 27, 1995.................................................
(a)(8) Press Release issued by the Company on December 20, 1995..........
(a)(9) Consolidated Financial Statements of TTC as set forth in TTC's
1994 Annual Report to Shareholders................................
(c)(1) Agreement and Plan of Merger, dated as of December 19, 1995, among
Parent, Purchaser and the Company.................................
(c)(2) Stock Purchase Agreement, dated as of December 19, 1995, among
Parent, Purchaser and Robert W. Nolan, Sr. .......................
(c)(3) Form of Employment Agreement between the Company and Robert W.
Nolan, Sr., including, as an exhibit thereto, the form of
Consulting Agreement between the Company and Robert W. Nolan,
Sr. ..............................................................
</TABLE>

<PAGE> 1

OFFER TO PURCHASE FOR CASH

ALL OUTSTANDING SHARES OF COMMON STOCK
OF

SCS/COMPUTE, INC.
AT

$6.75 NET PER SHARE
BY

SCS SUBSIDIARY, INC.,
A DIRECT WHOLLY OWNED SUBSIDIARY OF

THOMSON U.S. HOLDINGS INC.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF

THE THOMSON CORPORATION

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 25, 1996
UNLESS THE OFFER IS EXTENDED.

THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THE
NUMBER OF SHARES THAT WHEN ADDED TO THE NUMBER OF SHARES TO BE PURCHASED BY
PURCHASER PURSUANT TO THE STOCK PURCHASE AGREEMENT SHALL CONSTITUTE A MAJORITY
OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS. THE OFFER IS ALSO
CONDITIONED UPON, AMONG OTHER THINGS, THE EXPIRATION OR TERMINATION OF THE
APPLICABLE ANTITRUST WAITING PERIOD.
------------------------
THE BOARD OF DIRECTORS OF SCS/COMPUTE, INC. (THE "COMPANY") HAS DETERMINED
THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF,
THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
------------------------
IMPORTANT

Any stockholder desiring to tender all or any portion of his or her shares
of Common Stock, par value $.10 per share, of the Company (the "Shares") should
either (1) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal and mail or
deliver it together with the certificate(s) evidencing tendered Shares, and any
other required documents, to the Depositary or tender such Shares pursuant to
the procedure for book-entry transfer set forth in Section 3 or (2) request his
or her broker, dealer, commercial bank, trust company or other nominee to effect
the transaction for him or her. Any stockholder whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if he or she desires to tender such Shares.

A stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedure for book-entry transfer on a timely basis, may tender such Shares
by following the procedure for guaranteed delivery set forth in Section 3.

Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from the
Information Agent or from brokers, dealers, commercial banks or trust companies.
------------------------
December 27, 1995
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
INTRODUCTION PAGE
- ------------ ----
<S> <C> <C>
1. Terms of the Offer; Expiration Date.......................... 2
2. Acceptance for Payment and Payment for Shares................ 3
3. Procedures for Accepting the Offer and Tendering Shares...... 5
4. Withdrawal Rights............................................ 7
5. Certain Federal Income Tax Consequences...................... 7
6. Price Range of Shares; Dividends............................. 8
7. Certain Information Concerning the Company................... 8
8. Certain Information Concerning Purchaser, Parent and TTC..... 10
9. Financing of the Offer and the Merger........................ 11
10. Background of the Offer; Contacts with the Company; the
Merger Agreement; the Stock Purchase Agreement and Related
Agreements................................................. 11
11. Purpose of the Offer; Plans for the Company After the Offer
and the Merger............................................. 21
12. Dividends and Distributions.................................. 22
13. Effect of the Offer on the Market for the Shares, NASDAQ
Quotation and Exchange Act Registration.................... 23
14. Certain Conditions of the Offer.............................. 23
15. Certain Legal Matters and Regulatory Approvals............... 25
16. Fees and Expenses............................................ 27
17. Miscellaneous................................................ 27
Schedule I. Directors and Executive Officers of Parent, Purchaser and
TTC........................................................ I-1
</TABLE>
<PAGE> 3

To the Holders of Common Stock of
SCS/COMPUTE, INC.

INTRODUCTION

SCS SUBSIDIARY, INC., a Delaware corporation ("Purchaser") and a direct
wholly owned subsidiary of THOMSON U.S. HOLDINGS INC., a Delaware corporation
("Parent") and an indirect wholly owned subsidiary of THE THOMSON CORPORATION, a
corporation organized under the laws of Ontario, Canada ("TTC"), hereby offers
to purchase all outstanding shares of common stock, par value $.10 per share
(the "Shares"), of SCS/COMPUTE, INC., a Delaware corporation (the "Company"), at
a price of $6.75 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which together constitute the "Offer").

Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses of
Chemical Mellon Shareholder Services, L.L.C. (the "Depositary") and Georgeson &
Company Inc. (the "Information Agent") incurred in connection with the Offer.
See Section 16.

THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS DETERMINED THAT
EACH OF THE OFFER AND THE MERGER (AS DEFINED BELOW) IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, AND RECOMMENDS THAT STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.

Fister & Associates, Inc. ("Fister"), the Company's financial advisor, has
delivered to the Board its written opinion to the effect that, as of the date of
such opinion, the Offer and the Merger were fair, from a financial point of
view, to the stockholders of the Company. A copy of the opinion of Fister, which
sets forth the assumptions made, matters considered and limitations on the
review undertaken by Fister, is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to stockholders herewith.

The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of December 19, 1995 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware ("Delaware Law"), Purchaser will be merged with and into the
Company (the "Merger"). Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and will
become a direct wholly owned subsidiary of Parent. At the effective time of the
Merger (the "Effective Time"), each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of the
Company or owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent, and other than Shares held by stockholders who shall have
demanded and perfected appraisal rights, if any, under Delaware Law) will be
cancelled and converted automatically into the right to receive $6.75 in cash,
or any
<PAGE> 4

higher price that may be paid per Share in the Offer, without interest (the
"Merger Consideration"). The Merger Agreement is more fully described in Section
10.

Simultaneously with entering into the Merger Agreement, Purchaser, Parent
and Robert W. Nolan, Sr., President and Chief Executive Officer of the Company
(the "Stockholder"), entered into a Stock Purchase Agreement, dated as of
December 19, 1995 (the "Stock Purchase Agreement"), pursuant to which, upon the
terms and conditions set forth therein, the Stockholder agreed to sell to
Purchaser all Shares owned by the Stockholder for a purchase price per Share
equal to the price per Share payable in the Offer. On December 19, 1995, the
Stockholder owned (either beneficially or of record) 1,082,570 Shares
constituting approximately 40.1% of the outstanding Shares on a fully diluted
basis. The Stock Purchase Agreement is more fully described in Section 10.

The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer and from time to time thereafter, Purchaser
shall be entitled to designate up to such number of directors, rounded up to the
next whole number, on the Board as will give Purchaser representation on the
Board equal to the product of the total number of directors on the Board
multiplied by the percentage that the aggregate number of Shares then
beneficially owned by Purchaser and its affiliates following such purchase bears
to the total number of Shares then outstanding. In the Merger Agreement, the
Company has agreed to take all actions necessary to cause Purchaser's designees
to be elected as directors of the Company, including increasing the size of the
Board or securing the resignations of incumbent directors or both.

The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
by the requisite vote of the stockholders of the Company. See Section 11. Under
the Company's Certificate of Incorporation and Delaware Law, the affirmative
vote of the holders of a majority of the outstanding Shares is required to
approve and adopt the Merger Agreement and the Merger. Consequently, if
Purchaser acquires (pursuant to the Offer or otherwise) at least a majority of
the outstanding Shares, Purchaser will have sufficient voting power to approve
and adopt the Merger Agreement and the Merger without the vote of any other
stockholder.

Under Delaware Law, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, Purchaser will be able
to approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger, without a vote of the Company's stockholders. In
such event, all necessary and appropriate action will be taken to cause the
Merger to become effective as soon as reasonably practicable after such
acquisition, without a meeting of the Company's stockholders. If, however,
Purchaser does not acquire at least 90% of the then outstanding Shares pursuant
to the Offer or otherwise and a vote of the Company's stockholders is required
under Delaware Law, a significantly longer period of time will be required to
effect the Merger. See Section 11.

The Company has advised Purchaser that as of December 19, 1995, 2,571,977
Shares were issued and outstanding, 130,000 Shares were reserved for future
issuance pursuant to outstanding stock options ("Options") and 130,000 Shares
were subject to outstanding Options. As a result, as of such date, the Minimum
Condition would be satisfied if Purchaser acquired 1,350,989 Shares.

THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.

1. Terms of the Offer; Expiration Date. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser will accept for
payment and pay for all Shares validly tendered prior to the Expiration Date (as
hereinafter defined) and not withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on Thursday, January
25, 1996, unless and until Purchaser, in its sole discretion, shall have
extended the period during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire.

Purchaser expressly reserves the right, in its sole discretion, at any time
and from time to time, to extend for any reason the period of time during which
the Offer is open, including the occurrence of any of the

2
<PAGE> 5

conditions specified in Section 14, by giving oral or written notice of such
extension to the Depositary. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
rights of a tendering stockholder to withdraw his or her Shares. See Section 4.

Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), Purchaser also expressly reserves the right, in
its sole discretion (but subject to the terms and conditions of the Merger
Agreement), at any time and from time to time, (i) to delay acceptance for
payment of, or, regardless of whether such Shares were theretofore accepted for
payment, payment for, any Shares pending receipt of any regulatory approval
specified in Section 15, (ii) to terminate the Offer and not accept for payment
any Shares upon the occurrence of any of the conditions specified in Section 14
and (iii) to waive any condition or otherwise amend the Offer in any respect, by
giving oral or written notice of such delay, termination, waiver or amendment to
the Depositary and by making a public announcement thereof. The Merger Agreement
provides, however, that Purchaser will not (i) decrease the price per Share
payable pursuant to the Offer, (ii) reduce the maximum number of Shares to be
purchased in the Offer or (iii) impose conditions to the Offer in addition to
those set forth in Section 14. Purchaser acknowledges that (i) Rule 14e-1(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires Purchaser to pay the consideration offered or return the Shares
tendered promptly after the termination or withdrawal of the Offer and (ii)
Purchaser may not delay acceptance for payment of, or payment for (except as
provided in clause (i) of the first sentence of this paragraph), any Shares upon
the occurrence of any of the conditions specified in Section 14 without
extending the period of time during which the Offer is open.

Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c) and
14d-6(d) under the Exchange Act, which require that material changes be promptly
disseminated to stockholders in a manner reasonably designed to inform them of
such changes) and without limiting the manner in which Purchaser may choose to
make any public announcement, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Jones News Service.

If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-4(c)
and 14d-6(d) under the Exchange Act.

Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to increase the consideration being offered in the
Offer, such increase in the consideration being offered will be applicable to
all stockholders whose Shares are accepted for payment pursuant to the Offer
and, if at the time notice of any such increase in the consideration being
offered is first published, sent or given to holders of such Shares, the Offer
is scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that such notice is first so published,
sent or given, the Offer will be extended at least until the expiration of such
ten business day period. For purposes of the Offer, a "business day" means any
day other than a Saturday, Sunday or federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.

The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished, for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing.

2. Acceptance for Payment and Payment for Shares. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), Purchaser
will accept for payment, and will pay for, all Shares validly tendered prior to
the Expiration Date and not properly withdrawn promptly after the later to occur
of (i) the Expiration Date,

3
<PAGE> 6

(ii) the expiration or termination of any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and (iii) the satisfaction or waiver of the conditions to the Offer set
forth in Section 14. Subject to applicable rules of the Commission, Purchaser
expressly reserves the right to delay acceptance for payment of, or payment for,
Shares pending receipt of any regulatory approvals specified in Section 15 or in
order to comply in whole or in part with any other applicable law.

In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company, the
Midwest Securities Trust Company or the Philadelphia Depository Trust Company
(each, a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry
Transfer Facilities") pursuant to the procedures set forth in Section 3, (ii)
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined below) in connection with a book-entry transfer, and (iii) any other
documents required under the Letter of Transmittal.

The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.

On or about December 27, 1995, Parent filed with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") a Premerger Notification and Report Form under the
HSR Act in connection with the purchase of Shares pursuant to the Offer and the
Stock Purchase Agreement. Accordingly, it is anticipated that the waiting period
under the HSR Act applicable to the Offer will expire at 12:00 midnight, New
York City time, on or about Thursday, January 11, 1996. Prior to the expiration
or termination of such waiting period, the FTC or the Antitrust Division may
extend such waiting period by requesting additional information or documentary
material from Parent. If such a request is made with respect to the purchase of
Shares in the Offer, the waiting period will expire at 12:00 midnight, New York
City time, on the tenth calendar day after substantial compliance by Parent with
such request. Thereafter, the waiting period may only be extended by court
order. The waiting period under the HSR Act may be terminated prior to its
expiration by the FTC and the Antitrust Division. Parent has requested early
termination of the waiting period, although there can be no assurance that this
request will be granted. See Section 15 for additional information regarding the
HSR Act.

For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase price
for Shares be paid, regardless of any delay in making such payment.

If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in Section 3, such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.

4
<PAGE> 7

Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.

3. Procedures for Accepting the Offer and Tendering Shares. In order for
a holder of Shares validly to tender Shares pursuant to the Offer, the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message in
connection with a book-entry delivery of Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase and
either (i) the Share Certificates evidencing tendered Shares must be received by
the Depositary at such address or such Shares must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the Expiration Date,
or (ii) the tendering stockholder must comply with the guaranteed delivery
procedures described below.

THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.

Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer Facilities for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of any Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at a Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other required documents,
must, in any case, be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.

Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Medallion Signature Guarantee
Program, or by any other "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended
(each of the foregoing being referred to as an "Eligible Institution"), except
in cases where Shares are tendered (i) by a registered holder of Shares who has
not completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii)
for the account of an Eligible Institution. If a Share Certificate is registered
in the name of a person other than the person who or which signs of the Letter
of Transmittal, or if payment is to be made, or a Share Certificate not accepted
for payment or not tendered is to be returned to a person other than the
registered holder(s), then the Share Certificate must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear on the Share Certificate, with the signature(s) on
such Share Certificate or stock powers guaranteed by an Eligible Institution.
See Instructions 1 and 5 of the Letter of Transmittal.

Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:

5
<PAGE> 8

(i) such tender is made by or through an Eligible Institution;

(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and

(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal are received by the Depositary within
three National Association of Securities Dealers Automated Quotation
("NASDAQ") Small Cap Market trading days after the date of execution of
such Notice of Guaranteed Delivery.

The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram, telex or facsimile transmission to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in the
form of Notice of Guaranteed Delivery made available by Purchaser.

In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any other
documents required by the Letter of Transmittal.

Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition of the Offer or any defect or irregularity in the tender of any Shares
of any particular stockholder, whether or not similar defects or irregularities
are waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects and irregularities have been cured
or waived. None of Purchaser, Parent, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.

Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Purchaser (and with respect to any and all other Shares or other
securities issued or issuable in respect of such Shares on or after December 19,
1995). All such proxies shall be considered coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior proxies given by such stockholder with respect to such Shares
(and such other Shares and securities) will be revoked without further action,
and no subsequent proxies may be given nor any subsequent written consent
executed by such stockholder (and, if given or executed, will not be deemed to
be effective) with respect thereto. The designees of Purchaser will, with
respect to the Shares (and such other Shares and securities for which the
appointment is effective) be empowered to exercise all voting and other rights
of such stockholder as such designees, in their sole discretion, may deem proper
at any annual or special meeting of the Company's stockholders or any
adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon Purchaser's payment for
such Shares, Purchaser must be able to exercise full voting rights with respect
to such Shares (and such other Shares and securities).

6
<PAGE> 9

The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.

UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY WILL BE REQUIRED TO
WITHHOLD 31 PERCENT OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN STOCKHOLDERS
PURSUANT TO THE OFFER. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH
RESPECT TO PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES
PURCHASED PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE
DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND
CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL.
SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.

4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer are
irrevocable except that tendered Shares may be withdrawn by the tendering
stockholder at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn
by such stockholder at any time after February 24, 1996. If Purchaser extends
the Offer, is delayed in its acceptance for payment of Shares or is unable to
accept Shares for payment pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent that tendering stockholders are
entitled to withdrawal rights as described in this Section 4. Any such delay
will be by an extension of the Offer to the extent required by law.

For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover page of this
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If Share Certificates
evidencing Shares to be withdrawn have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such Share Certificates,
the serial numbers shown on such Share Certificates must be submitted to the
Depositary and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution, unless such Shares have been tendered for the
account of an Eligible Institution. If Shares have been tendered pursuant to the
procedure for book-entry transfer as set forth in Section 3, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares, in which case a
notice of withdrawal will be effective if delivered to the Depositary by any
method of delivery described in the first sentence of this paragraph

All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
Parent, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.

Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.

5. Certain Federal Income Tax Consequences. The receipt of cash for
Shares pursuant to the Offer or in the Merger will be a taxable transaction for
federal income tax purposes and may also be a taxable transaction under
applicable state, local or foreign tax laws. In general, a stockholder will
recognize gain or loss for federal income tax purposes equal to the difference
between the amount of cash received in exchange for the Shares sold and such
stockholder's adjusted tax basis in such Shares. Assuming the Shares constitute
capital assets in the hands of the stockholder, such gain or loss will be
capital gain or loss. There are significant limitations on a stockholder's
ability to deduct capital losses.

In recent months, various legislative proposals have been introduced in
Congress, which would reduce the rate of federal income taxation of certain
capital gains. Such legislation, if enacted, might apply only to gain

7
<PAGE> 10

realized on sales occurring after a date specified in the legislation. It cannot
be predicted whether any such legislation ultimately will be enacted and, if
enacted, what its effective date will be.

THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS WHO
ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES AND FOREIGN CORPORATIONS.

THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS.

6. Price Range of Shares; Dividends. The Shares are listed and
principally traded on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") Small Cap Market. The following table sets forth,
for the quarters indicated, the high and low sales prices per Share on the
NASDAQ Small Cap Market as reported by the Dow Jones News Service.

<TABLE>
<CAPTION>
HIGH LOW
---- ----
<S> <C> <C>
1993:
First Quarter.......................................................... $6 1/4 $4 1/4
Second Quarter......................................................... 5 2 1/2
Third Quarter.......................................................... 3 1/2 2 3/4
Fourth Quarter......................................................... 3 1/4 2 5/8
1994:
First Quarter.......................................................... $3 1/4 $1 1/2
Second Quarter......................................................... 2 1/8 1 1/2
Third Quarter.......................................................... 3 3/8 1 1/2
Fourth Quarter......................................................... 3 1/8 1 3/4
1995:
First Quarter.......................................................... $3 $1 3/4
Second Quarter......................................................... 2 5/8 1 3/4
Third Quarter.......................................................... 3 2
Fourth Quarter (through 12/26/95)...................................... 6 5/8 2
</TABLE>

The Company historically does not declare dividends.

On December 19, 1995, the last full trading day prior to the announcement
of the execution of the Merger Agreement and of Purchaser's intention to
commence the Offer, the closing price per Share as reported on the NASDAQ Small
Cap Market was $2 7/8. On December 26, 1995, the last full trading day prior to
the commencement of the Offer, the closing price per Share as reported on the
NASDAQ Small Cap Market was $6 9/16.

STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.

7. Certain Information Concerning the Company. Except as otherwise set
forth herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Neither Purchaser nor Parent
assumes any responsibility for the accuracy or completeness of the information
concerning the Company furnished by the Company or contained in such documents
and records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to Purchaser or Parent.

General. The Company is a Delaware corporation with its principal
executive offices located at 2252 Welsch Industrial Court, St. Louis, Missouri
63146. The Company provides integrated software solutions that focus on the core
services provided by the Company's customers, approximately 10,000 firms of
accountants

8
<PAGE> 11

and tax professionals. The Company's tax software packages increase the accuracy
of tax computations, improve productivity of staff and management, and generate
a high quality professionally printed tax return for filing with the Internal
Revenue Service and state taxing authorities. The accounting software packages
are integrated modular applications sold to both public accounting firms and
small businesses. They offer efficiencies in integrating transaction processing
and ready-made financial reporting formats with graphic and design capabilities
to create advanced management reports.

In 1995 the Company acquired certain assets of RAM Software, Inc. and saLT
Solutions, Inc.

Financial Information. Set forth below is certain selected consolidated
financial information relating to the Company which has been excerpted or
derived from the audited financial statements contained in the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1995 (the "Form 10-K")
and the unaudited financial statements contained in the Company's Quarterly
Report on Form 10-Q for the quarter ended October 31, 1995 (the "Form 10-Q").
More comprehensive financial information is included in the Form 10-K, the Form
10-Q and other documents filed by the Company with the Commission. The financial
information that follows is qualified in its entirety by reference to such
reports and other documents, including the financial statements and related
notes contained therein. Such reports and other documents may be examined and
copies may be obtained from the offices of the Commission in the manner set
forth below.

SCS/COMPUTE, INC.

Selected Consolidated Financial Information

(In thousands, except per share data)

<TABLE>
<CAPTION>
9 MONTHS FISCAL YEAR
ENDED OCTOBER 31, ENDED JANUARY 31,
------------------- ---------------------
1995 1994 1995 1994
------ ------ ------- -------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues.............................. $3,042 $2,916 $18,209 $19,856
Total cost of revenues...................... 1,354 1,452 4,129 5,382
Gross income................................ 1,688 1,464 14,080 14,474
Total operating expenses.................... 9,326 8,896 12,572 16,048
Operating income (loss)..................... (7,638) (7,432) 1,508 (1,574)
Net interest expenses....................... 656 931 1,165 1,701
Pretax income (loss)........................ (8,294) (8,363) 343 (3,275)
Tax provision (credit)...................... (3,235) (3,261) (197) 207
Net income (loss)........................... (5,059) (5,102) 540 (3,482)
Income (loss) per share..................... $(2.04) $(2.03) $ 0.14 $ (1.36)
</TABLE>

<TABLE>
<CAPTION>
AT OCTOBER 31 AT JANUARY 31
--------------------- ---------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Current Assets...................... $ 8,755 $ 8,724 $ 4,283 $ 3,089
Total Assets.............................. 23,279 22,975 17,712 18,468
Total Current Liabilities................. 16,714 15,649 4,744 4,629
Long-Term Liabilities..................... 7,680 8,750 8,750 13,500
Shareholders' Equity...................... $(1,115) $(1,424) $ 4,217 $ 340
</TABLE>

In connection with Parent's review of the Company and in the course of the
negotiations between the Company and Parent described in Section 10, the Company
provided Parent with certain business and

9
<PAGE> 12

financial information which Parent and Purchaser believe is not publicly
available, including the following forecasts:

<TABLE>
<CAPTION>
TWELVE MONTHS ENDING JANUARY 31,
-----------------------------------------------------------------------
1997 1998 1999 2000 2001
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue.................. $22,270 $24,569 $26,990 $29,653 $32,582
Operating Income......... $ 3,275 $ 4,158 $ 4,998 $ 5,909 $ 7,008
</TABLE>

These projections do not give effect to the Offer or the Merger.

PROJECTED INFORMATION OF THIS TYPE IS BASED ON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY
OF WHICH ARE BEYOND THE COMPANY'S CONTROL. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE PROJECTED RESULTS WOULD BE REALIZED OR THAT ACTUAL RESULTS
WOULD NOT BE SIGNIFICANTLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE. IN
ADDITION, THESE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE
OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY
BECAUSE SUCH INFORMATION WAS MADE AVAILABLE TO PARENT BY THE COMPANY. NONE OF
PARENT, PURCHASER, THE COMPANY OR ANY OTHER PARTY ASSUMES ANY RESPONSIBILITY FOR
THE ACCURACY OR VALIDITY OF THE FOREGOING PROJECTIONS.

The Shares are registered under the Exchange Act. Accordingly, the Company
is subject to the informational filing requirements of the Exchange Act and, in
accordance therewith, is required to file periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required to be
disclosed in proxy statements distributed to the Company's stockholders and
filed with the Commission. Such reports, proxy statements and other information
should be available for inspection at the public reference facilities maintained
by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and also should be available for inspection at the
Commission's regional offices located at 75 Park Place, 14th Floor, New York,
New York 10007 and the Klucyzinski Federal Building, 230 South Dearborn Street,
Room 3190, Chicago, Illinois 60604. Copies of such materials may also be
obtained by mail, upon payment of the Commission's customary fees, by writing to
its principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. The information should also be available for inspection at the
National Association of Securities Dealers, Inc., 1735 K Street N.W.,
Washington, D.C. 20006.

8. Certain Information Concerning Purchaser, Parent and TTC. Purchaser is
a newly incorporated Delaware corporation organized in connection with the Offer
and the Merger and has not carried on any activities other than in connection
with the Offer and the Merger. The principal offices of Purchaser are located at
Metro Center at One Station Place, Stamford, Connecticut 06902. Purchaser is an
indirect wholly owned subsidiary of TTC and a direct wholly owned subsidiary of
Parent.

Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.

Parent is a Delaware corporation with its principal offices located at
Metro Center at One Station Place, Stamford, Connecticut 06902. Parent is a
holding company and an indirect wholly owned subsidiary of TTC. TTC operates
primarily in North America and the United Kingdom. TTC currently comprises four
business groups known as Thomson Financial & Professional Publishing Group
("TF&PPG"), International Thomson Publishing ("ITP"), Thomson Newspapers ("TN")
and Thomson Travel Group ("TTG"). TF&PPG is a leading worldwide specialized
information and publishing company serving particular information needs in

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<PAGE> 13

professional, business and financial services areas. ITP is a leading worldwide
publisher of educational and related materials. The primary business of TN is
the publication of newspapers serving small to medium sized communities in North
America. TTG's main business activity is the organization of all-inclusive
holiday tours by air from the United Kingdom.

The name, citizenship, business address, principal occupation or
employment, and five-year employment history for each of the directors and
executive officers of TTC, Purchaser and Parent and certain other information
are set forth in Schedule I hereto.

Based upon the consolidated financial statements of TTC for the fiscal year
ended December 31, 1994, contained in the Parent's 1994 Annual Report (the
"Parent Financial Statements"), TTC had (i) at December 31, 1994, consolidated
total assets of U.S.$9.358 billion, consolidated total liabilities of U.S.$6.106
billion and consolidated shareholders' equity of U.S.$3.252 billion and (ii) for
the fiscal year ended December 31, 1994, consolidated sales of U.S.$6.354
billion and net earnings of U.S.$427 million. More comprehensive financial
information is included in the TTC Financial Statements. The summary of such
financial information included above is qualified in its entirety by reference
to the TTC Financial Statements, a copy of which has been filed as an exhibit to
the Tender Offer Statement on Schedule 14D-1/13D (the "Schedule 14D-1") filed by
Purchaser and Parent with the Commission in connection with the Offer.

Except as described in this Offer to Purchase, (i) none of Purchaser,
Parent, TTC nor, to the best knowledge of Purchaser, Parent and TTC, any of the
persons listed in Schedule I to this Offer to Purchase or any associate or
majority-owned subsidiary of Purchaser, Parent, TTC or any of the persons so
listed beneficially owns or has any right to acquire, directly or indirectly,
any Shares and (ii) none of Purchaser, Parent, TTC nor, to the best knowledge of
Purchaser, Parent and TTC, any of the persons or entities referred to above nor
any director, executive officer or subsidiary of any of the foregoing has
effected any transaction in the Shares during the past 60 days.

Except as provided in the Merger Agreement and the Stock Purchase Agreement
and as otherwise described in this Offer to Purchase, none of Purchaser, Parent,
TTC nor, to the best knowledge of Purchaser, Parent and TTC, any of the persons
listed in Schedule I to this Offer to Purchase, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, since January 31, 1992,
neither Purchaser, Parent nor TTC nor, to the best knowledge of Purchaser,
Parent and TTC, any of the persons listed on Schedule I hereto, has had any
business relationship or transaction with the Company or any of its executive
officers, directors or affiliates that is required to be reported under the
rules and regulations of the Commission applicable to the Offer. Except as set
forth in this Offer to Purchase, since January 31, 1992, there have been no
contacts, negotiations or transactions between any of Purchaser, Parent, TTC, or
any of their respective subsidiaries or, to the best knowledge of Purchaser,
Parent and TTC, any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.

9. Financing of the Offer and the Merger. The total amount of funds
required by Purchaser to purchase all of the outstanding Shares pursuant to the
Offer, the Stock Purchase Agreement and the Merger, and to pay certain fees and
expenses is estimated to be approximately $18.4 million. Purchaser will obtain
all of such funds from Parent or its affiliates. Parent and its affiliates
currently intend to provide such funds from existing resources.

10. Background of the Offer; Contacts with the Company; the Merger
Agreement; the Stock Purchase Agreement and Related Agreements. In April of
1995, Robert W. Nolan Sr., President and Chief Executive Officer of the Company,
Theodore Schroeder, Vice President, Sales and Marketing for the Company and Euan
Menzies, the then President and Chief Executive Officer of Research Institute of
America Inc. ("RIA Inc."), an indirect wholly owned subsidiary of Parent, had a
brief telephone conversation regarding the market for tax and accounting
software and the positioning of their respective companies in such market. On
May 1,

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<PAGE> 14

Stephen Wahrlich, Vice President of Business Development for RIA Inc., met with
Mr. Nolan and engaged in a general discussion of the marketplace, including
various competitive factors and general market direction.

On October 3, Messrs. Wahrlich, Ronald Aylward, Chairman of Aylward and
Associates, a business consultant to the Company, Nolan and David Shea, Senior
Vice President of Business Development for the Research Institute of America
Group ("RIAG"), one of several businesses comprising TF&PPG, met at the main
offices of RIA Inc. in New York City. At this meeting, further discussion about
the market for tax and accounting software, the Company's vision and
philosophies and potential joint working relationships between the Company and
RIAG took place. In anticipation of further discussions, the Company and RIA
Inc. entered into a Mutual Nondisclosure Agreement dated as of October 10, 1995
(the "Nondisclosure Agreement") regarding any confidential information
concerning the operations of their respective businesses that might be
discussed.

On October 20, Messrs. Menzies (now President and Chief Executive Officer
of RIAG), Shea, Wahrlich, Nolan Sr., Aylward, Robert Nolan, Jr., Vice President
Operations and Product Development, Schroeder and Charles Wilson, Executive Vice
President, Treasurer and Secretary of the Company met at the main offices of the
Company in St. Louis, Missouri. At the meeting, executives of the Company
presented their vision for future growth of the market for tax and accounting
software and plans for the Company's future. The group discussed whether those
plans were consistent with the vision of RIAG and whether the pursuit of a
possible business relationship between the companies would be fruitful. At the
conclusion of this meeting, Messrs. Menzies, Nolan Sr., Shea, Wahrlich and
Aylward met separately to discuss further the possibilities of a closer working
relationship between the Company and RIAG.

On October 25, Mr. Menzies telephoned Mr. Nolan Sr. to indicate that RIAG
was interested in entering into exploratory discussions with the Company
regarding the acquisition of the Company and to discuss the potential range of
purchase prices that RIAG might be willing to offer to acquire the Company.

On October 26, Messrs. Menzies and Shea initiated a conference call with
Messrs. Nolan Sr. and Wilson to further discuss a possible acquisition of the
Company and a potential range of values for the Company.

On November 10, Messrs. Nolan Sr. and Aylward for the Company and Messrs.
Shea and Menzies of RIAG met to discuss a potential acquisition price. Numerous
meetings were held during the day and the parties agreed to perform further work
and analysis regarding the operations of the Company.

On November 12, Mr. Shea met with Messrs. Nolan Sr. and Wilson at the main
offices of the Company in St. Louis, Missouri and discussed the operations of
the Company, past and current financial performance and projections for
operations for the current year.

On November 15, Messrs. Menzies and Nolan Sr. met at the offices of the
Company and continued their discussions concerning the operations of the Company
and a possible acquisition of the Company by RIAG.

On November 28, Messrs. Menzies, Shea, Nolan Sr., Wilson, Aylward and
representatives from Peper, Martin, Jensen, Maichel and Hetlage ("Peper") and
Price Waterhouse, legal counsel and auditors, respectively, for the Company, met
at the offices of Price Waterhouse in St. Louis, Missouri to discuss the process
and schedule for pursuing a possible merger between RIAG and the Company.

On December 1, 4 and 5 various representatives of the parties met in St.
Louis, Missouri and Seattle, Washington to discuss further the operations of the
Company.

On December 7, Messrs. Menzies, Shea, Nolan Sr., Wilson, Schroeder, Nolan,
Jr., Aylward, and representatives of Peper and legal and human resources
advisers for RIAG met at the offices of Peper in St. Louis, Missouri to discuss
the operations of the business and steps necessary to pursue a merger between
RIAG and the Company, including a possible tender offer for substantially all
the outstanding Shares of the Company.

Subsequent to the December 7 meeting, drafts of agreements with respect to
the proposed transaction were prepared by Shearman & Sterling, outside counsel
for the Purchaser.

Subsequent to the receipt of these drafts agreements between December 8 and
December 15, numerous meetings were held in person and by telephone between
Messrs. Menzies, Shea, Nolan Sr., Wilson, and representatives of Peper regarding
the terms of a possible merger and the form and content of the draft agreements.

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<PAGE> 15

On December 14, 1995, a special committee of the Board of Directors (the
"Special Committee") of the Company was formed, consisting of Messrs. Robert C.
Chlebowski and Irwin M. Jarett, Ph.D., the non-employee directors of the
Company. At a meeting held on December 14, 1995, the Special Committee discussed
the proposed merger and voted unanimously to recommend to the Board that the
Board approve the merger of the Company and Purchaser, subject to resolution of
the remaining business and legal issues in the draft Merger Agreement.

On December 14, the members of the Board of Directors of the Company met at
the offices of Peper in St. Louis, Missouri to discuss the proposed merger. Late
in the afternoon at this meeting, the Board unanimously (with Mr. Nolan, Sr. not
participating solely because of his interest in the transaction) voted to
approve the merger of the Company and Purchaser, subject to resolution of the
remaining business and legal issues in the draft Merger Agreement.

From December 14 through December 19, representatives of the parties and
their respective counsels continued to work to finalize the terms of the Merger
Agreement and the Stock Purchase Agreement.

Late in the evening on December 19, the Merger Agreement and the Stock
Purchase Agreement were executed. On the morning of December 20, the Company
issued a press release to announce publicly the transaction.

Reference is made to the Company's Statement on Schedule 14D-9 for a
description of the matters considered by the Board in connection with its
actions.

THE MERGER AGREEMENT

The following is a summary of the Merger Agreement, a copy of which is
filed as an Exhibit to the Schedule 14D-1. Such summary is qualified in its
entirety by reference to the Merger Agreement.

The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than five business
days after the initial public announcement of Purchaser's intention to commence
the Offer. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
and certain other conditions that are described in Section 14 hereof. Purchaser
and Parent have agreed that no change in the Offer may be made which decreases
the price per Share payable in the Offer, which reduces the maximum number of
Shares to be purchased in the Offer or which imposes conditions to the Offer in
addition to those set forth in Section 14 hereof.

The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Delaware Law, at the Effective
Time, Purchaser shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of Purchaser will cease and the Company
will continue as the Surviving Corporation and will become a direct, wholly
owned subsidiary of Parent. Upon consummation of the Merger, each issued and
then outstanding Share (other than any Shares owned by Purchaser, Parent or any
direct or indirect wholly owned subsidiary of Parent or of the Company
immediately prior to the Effective Time and any Shares which are held by
stockholders who have not voted in favor of the Merger or consented thereto in
writing and who shall have demanded properly in writing appraisal for such
Shares in accordance with Delaware Law) shall be cancelled or converted
automatically into the right to receive an amount equal to $6.75 per Share or
any greater amount per Share paid pursuant to the Offer (such amount, the "Per
Share Amount") in cash.

The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. The
Merger Agreement provides that, at the Effective Time, unless otherwise
determined by Parent prior to the Effective Time, the Certificate of
Incorporation of Purchaser will be the Certificate of Incorporation of the
Surviving Corporation; provided, however, that, at the Effective Time, Article I
of the Certificate of Incorporation of the Surviving Corporation will be amended
to read as follows: "The name of the corporation is SCS/Compute, Inc." The
Merger Agreement also provides that the By-laws of Purchaser, as in effect
immediately prior to the Effective Time, will be the By-laws of the Surviving
Corporation.

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<PAGE> 16

Agreements of Parent, Purchaser and the Company. Pursuant to the Merger
Agreement, the Company shall, in accordance with applicable law and the
Company's Certificate of Incorporation and By-laws, duly call, give notice of,
convene and hold a special meeting of its stockholders as soon as practicable
following consummation of the Offer for the purpose of considering and taking
action on the Merger Agreement and the transactions contemplated thereby (the
"Stockholders' Meeting"). If Purchaser acquires at least a majority of the
outstanding Shares, Purchaser will have sufficient voting power to approve the
Merger, even if no other stockholder votes in favor of the Merger.

The Merger Agreement provides that the Company shall, as soon as
practicable following consummation of the Offer, file with the Commission under
the Exchange Act, and use its best efforts to have cleared by the Commission, a
proxy statement and related proxy materials (the "Proxy Statement") with respect
to the Stockholders' Meeting and shall cause the Proxy Statement to be mailed to
stockholders of the Company at the earliest practicable time. The Company has
agreed, subject to its fiduciary duties under applicable law as advised by
counsel, to include in the Proxy Statement the recommendation of the Board that
the stockholders of the Company approve and adopt the Merger Agreement and the
transactions contemplated thereby and to use its best efforts to obtain such
approval and adoption. Parent and Purchaser have agreed to cause all Shares then
owned by them and their subsidiaries to be voted in favor of approval and
adoption of the Merger Agreement and the transactions contemplated thereby.

The Merger Agreement provides that, in the event that Purchaser shall
acquire at least 90 percent of the then outstanding Shares, all necessary and
appropriate action shall be taken to cause the Merger to become effective as
soon as reasonably practicable after such acquisition, without a meeting of the
Company's stockholders, in accordance with Delaware Law.

Pursuant to the Merger Agreement, the Company has covenanted and agreed
that, between the date of the Merger Agreement and the Effective Time, unless
Parent shall otherwise agree in writing, the business of the Company shall be
conducted only in, and the Company shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice; and
the Company shall use its best efforts to preserve substantially intact the
business organization of the Company, to keep available the services of the
current officers, employees and consultants of the Company and to preserve the
current relationships of the Company with customers, suppliers and other persons
with which the Company has significant business relations. The Merger Agreement
provides that by way of amplification and not limitation, and except as
contemplated therein, the Company shall not between the date of the Merger
Agreement and the Effective Time, directly or indirectly do, or propose to do,
any of the following, without the prior written consent of Parent: (a) amend or
otherwise change its Certificate of Incorporation or By-laws; (b) issue, sell,
pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge,
disposition, grant or encumbrance of (i) any shares of capital stock of any
class of the Company, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any other
ownership interest (including, without limitation, any phantom interest), of the
Company (except for the issuance of a maximum of 130,000 Shares issuable
pursuant to Options outstanding on the date of the Merger Agreement) or (ii) any
assets of the Company, except for sales in the ordinary course of business and
in a manner consistent with past practice; (c) declare, set aside, make or pay
any dividend or other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock; (d) reclassify, combine,
split, subdivide or redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock; (e) (i) acquire (including, without
limitation, by merger, consolidation, or acquisition of stock or assets) any
corporation, partnership, other business organization or any division thereof or
any material amount of assets, (ii) incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or make any
loans or advances, except in the ordinary course of business and consistent with
past practice, (iii) enter into any contract or agreement other than in the
ordinary course of business, consistent with past practice, (iv) authorize any
single capital commitment which is in excess of $50,000 or capital expenditures
which are, in the aggregate, in excess of $100,000 for the Company, or (v) enter
into or amend any contract, agreement, commitment or arrangement with respect to
any of the foregoing matters; (f) increase the compensation payable or to become
payable to its officers or employees, except for increases in accordance with
past practices in salaries or wages of

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<PAGE> 17

employees of the Company who are not officers of the Company, or grant any
severance or termination pay to, or enter into any employment or severance
agreement with any director, officer or other employee of the Company, or
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee; (g) take any action, other than reasonable and
usual actions in the ordinary course of business and consistent with past
practice, with respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivable); (h) make any tax election or settle or
compromise any material federal, state, local or foreign income tax liability;
(i) settle or compromise any pending or threatened suit, action or claim which
is material or which relates to the transactions contemplated by the Merger
Agreement; (j) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against in
the balance sheet of the Company as at January 31, 1995 or subsequently incurred
in the ordinary course of business and consistent with past practice; (k) sell,
assign, transfer, license, sublicense, pledge or otherwise encumber any of the
Company's Intellectual Property (as defined in the Merger Agreement); or (l)
announce an intention, commit or agree to do any of the foregoing.

The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer, and from time to time thereafter, Purchaser
shall be entitled to designate up to such number of directors, rounded up to the
next whole number, on the Board as shall give Purchaser representation on the
Board equal to the product of the total number of directors on the Board (giving
effect to the directors elected pursuant to this sentence), multiplied by the
percentage that the aggregate number of Shares beneficially owned by Purchaser
or any affiliate of Purchaser following such purchase bears to the total number
of Shares then outstanding, and the Company shall, at such time, promptly take
all actions necessary to cause Purchaser's designees to be elected as directors
of the Company, including increasing the size of the Board or securing the
resignations of incumbent directors, or both. The Merger Agreement also provides
that, at such times, the Company shall use its best efforts to cause persons
designated by Purchaser to constitute the same percentage as persons designated
by Purchaser shall constitute of the Board of each committee of the Board, in
each case only to the extent permitted by applicable law. Until the earlier of
(i) the time Purchaser acquires a majority of the then outstanding Shares on a
fully diluted basis and (ii) the Effective Time, the Company has agreed to use
its best efforts to ensure that all the members of the Board and each committee
of the Board as of the date of the Merger Agreement who are not employees of the
Company shall remain members of the Board and of such committees.

The Merger Agreement provides that following the election or appointment of
Purchaser's designees in accordance with the immediately preceding paragraph and
prior to the Effective Time, any amendment of the Merger Agreement or the
Certificate of Incorporation or By-laws of the Company, any termination of the
Merger Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Parent or Purchaser
or waiver of any of the Company's rights thereunder, will require the
concurrence of a majority of those directors of the Company then in office who
were neither designated by Purchaser nor are employees of the Company.

Pursuant to the Merger Agreement, until the Effective Time, the Company
shall, and shall cause the officers, directors, employees, auditors and agents
of the Company to, afford the officers, employees and agents of Parent and
Purchaser complete access at all reasonable times to the officers, employees,
agents, properties, offices, plants and other facilities, books and records of
the Company, and shall furnish Parent and Purchaser with all financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request and Parent and Purchaser
have agreed to keep such information confidential in accordance with the
Confidentiality Agreement.

The Merger Agreement provides that the Company shall not, directly or
indirectly, through any officer, director, agent or otherwise, solicit, initiate
or encourage the submission of any proposal or offer from any person relating to
any acquisition or purchase of all or (other than in the ordinary course of
business) any portion of the assets of, or any equity interest in, the Company
or any business combination with the Company

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<PAGE> 18

or participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing; provided, however, that nothing
contained in this paragraph shall prohibit the Board from responding to any
unsolicited proposal made in writing to acquire the Company pursuant to a
merger, consolidation, share exchange, business combination or other similar
transaction or to acquire all or substantially all of the assets of the Company,
to the extent the Board, after consultation with independent counsel, determines
in good faith that such action is required for the Board to comply with its
fiduciary duty to stockholders imposed by Delaware Law. The Merger Agreement
requires the Company immediately to cease and cause to be terminated all
existing discussions or negotiations with any parties conducted prior to the
date of the Merger Agreement with respect to any of the foregoing. The Company
has also agreed to notify Parent promptly if any such proposal or offer, or any
inquiry or contact with any person with respect thereto, is made and, in any
such notice to Parent, to indicate in reasonable detail the identity of the
person making such proposal, offer, inquiry or contact and the terms and
conditions of such proposal, offer, inquiry or contact. The Company has also
agreed not to release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a party.

Pursuant to the Merger Agreement, Parent intends that, for a period of one
year immediately following the Effective Time, it shall, or shall cause the
Surviving Corporation to, continue to maintain employee benefit and welfare
plans, programs, contracts, agreements, policies and executive incentives and
perquisites, other than equity-based plans, for the benefit of active and
retired employees of the Company or the Surviving Corporation which in the
aggregate provide benefits that are no less favorable to employees than the
benefits provided to such active and retired employees on the date of the Merger
Agreement.

The Merger Agreement further provides that the By-laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification, advancement of expenses and related matters than are set forth
in Article VII of the By-laws of the Company as in affect on the date of the
Merger Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of three years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at the Effective
Time were directors, officers, employees, fiduciaries or agents of the Company,
unless such modification shall be required by law.

The Merger Agreement also provides that the Company shall, to the fullest
extent permitted under applicable law and regardless of whether the Merger
becomes effective, indemnify and hold harmless, and after the Effective Time,
the Surviving Corporation shall, to the fullest extent permitted under
applicable law, indemnify and hold harmless, each present and former director,
officer, employee, fiduciary and agent of the Company (collectively, the
"Indemnified Parties") against all costs and expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and settlement
amounts paid in connection with any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission in his or her capacity as an officer, director,
employee, fiduciary or agent of the Company, whether occurring before or after
the Effective Time, for a period of three years after the date of the Merger
Agreement. In the event of any such claim, action, suit, proceeding or
investigation, the Merger Agreement provides that (i) the Company or the
Surviving Corporation, as the case may be, shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to the Company or the Surviving Corporation, promptly
after statements therefor are received and (ii) the Company and the Surviving
Corporation shall cooperate in the defense of any such matter; provided,
however, that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its written consent (which consent may not
be unreasonably withheld); and provided, further, that neither the Company nor
the Surviving Corporation shall be obligated to pay the fees and expenses of
more than one counsel for all Indemnified Parties in any single action except to
the extent that two or more of such Indemnified Parties shall have conflicting
interests in the outcome of such action; and provided, further, that, in the
event that any claim for indemnification is asserted or made within such
three-year period, all rights to indemnification in respect of such claim shall
continue until the disposition of such claim.

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<PAGE> 19

Parent, Purchaser and the Company have also agreed that in the event the
Company or the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in each such case, proper provision shall be made so
that the successors and assigns of the Company or the Surviving Corporation, as
the case may be, or at Parent's option, Parent, shall assume the foregoing
indemnity obligations.

The Merger Agreement provides that, subject to its terms and conditions,
each of the parties thereto shall (i) make promptly its respective filings, and
thereafter make any other required submissions, under the HSR Act with respect
to the transactions contemplated by the Merger Agreement and (ii) use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by the Merger Agreement, including, without
limitation, using its reasonable best efforts to obtain all licenses, permits
(including, without limitation, environmental permits), consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company as are necessary for the consummation of
such transactions and to fulfill the conditions to the Offer and the Merger.

In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of the Merger Agreement, the
proper officers and directors of each party to the Merger Agreement are required
to use their reasonable best efforts to take all such action.

Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to the absence of certain changes or events
concerning the Company's business, compliance with law, litigation, employee
benefit plans, labor matters, trademarks, patents and copyrights, environmental
matters, material contracts, brokers, opinions from financial advisors and
taxes.

Conditions to the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions: (a) the Merger
Agreement and the transactions contemplated thereby shall have been approved and
adopted by the affirmative vote of the stockholders of the Company to the extent
required by Delaware Law and the Company's Certificate of Incorporation; (b) any
waiting period (and any extension thereof) applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated; (c) no foreign,
United States or state court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any law, rule, regulation, executive
order, decree, injunction or other order (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making the acquisition
of Shares by Parent or Purchaser or any affiliate of either of them illegal or
otherwise restricting, preventing or prohibiting consummation of the
transactions contemplated by the Merger Agreement; and (d) Purchaser or its
permitted assignee shall have purchased all Shares validly tendered and not
withdrawn pursuant to the Offer; provided, however, that this condition shall
not be applicable to the obligations of Parent or Purchaser if, in breach of the
Merger Agreement or the terms of the Offer, Purchaser fails to purchase any
Shares validly tendered and not withdrawn pursuant to the Offer.

Termination; Fees and Expenses. The Merger Agreement provides that it may
be terminated and the Merger and the other Transactions may be abandoned at any
time prior to the Effective Time, notwithstanding any requisite approval and
adoption of the Merger Agreement and such transactions by the stockholders of
the Company: (a) by mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company; (b) by either Parent, Purchaser
or the Company if (i) the Effective Time shall not have occurred on or before
March 31, 1996; provided, however, that the right to terminate the Merger
Agreement shall not be available to any party whose failure to fulfill any
obligation under the Merger Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date or (ii) any court
of competent jurisdiction in the United States or other United States
governmental authority shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Merger

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<PAGE> 20

and such order, decree, ruling or other action shall have become final and
nonappealable; (c) by Parent if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Section 14
hereof, Purchaser shall have (A) failed to commence the Offer within 30 days
following the date of the Merger Agreement, (B) terminated the Offer without
having accepted any Shares for payment thereunder, or (C) failed to pay for
Shares pursuant to the Offer within 60 days following the commencement of the
Offer, unless such failure to pay for Shares shall have been caused by or
resulted from the failure of Parent or Purchaser to perform in any material
respect any material covenant or agreement of either of them contained in the
Merger Agreement or the material breach by Parent or Purchaser of any material
representation or warranty of either of them contained in the Merger Agreement
or (ii) prior to the purchase of Shares pursuant to the Offer, the Board or any
committee thereof shall have withdrawn or modified in a manner adverse to
Purchaser or Parent its approval or recommendation of the Offer, the Merger
Agreement, the Merger or any other Transaction or shall have recommended another
merger, consolidation, business combination with, or acquisition of, the Company
or its assets or another tender offer for Shares, or shall have resolved to do
any of the foregoing; or (d) by the Company, upon approval of the Board, if (i)
Purchaser shall have (A) failed to commence the Offer within 30 days following
the date of the Merger Agreement, (B) terminated the Offer without having
accepted any Shares for payment thereunder or (C) failed to pay for Shares
pursuant to the Offer within 60 days following the commencement of the Offer,
unless such failure to pay for Shares shall have been caused by or resulted from
the failure of the Company to perform in any material respect any material
covenant or agreement of it contained in the Merger Agreement or the material
breach by the Company of any material representation or warranty of it contained
in the Merger Agreement or (ii) prior to the purchase of Shares pursuant to the
Offer, the Board shall have withdrawn or modified in a manner adverse to
Purchaser or Parent its approval or recommendation of the Offer, the Merger
Agreement or the Merger in order to approve the execution by the Company of a
definitive agreement providing for the acquisition of the Company or its assets
or a merger or other business combination or in order to approve a tender offer
or exchange offer for Shares by a third party, in either case, as determined by
the Board in the exercise of its good faith judgment and after consultation with
its legal counsel and financial advisors, on terms more favorable to the
Company's stockholders than the Offer and the Merger taken together; provided,
however, that such termination shall not be effective until the Company has made
payment to Parent of the Fee (as hereinafter defined) required to be paid
pursuant to the Merger Agreement and has deposited with a mutually acceptable
escrow agent $500,000 for reimbursement to Parent and Purchaser of Expenses (as
hereinafter defined).

In the event of the termination of the Merger Agreement, the Merger
Agreement provides that it shall forthwith become void and there shall be no
liability thereunder on the part of any party thereto except under the
provisions of the Merger Agreement related to fees and expenses described below
and under certain other provisions of the Merger Agreement which survive
termination.

The Merger Agreement provides that in the event that (a) any person shall
have commenced a tender or exchange offer for 10% or more (or which, assuming
the maximum amount of securities which could be purchased, would result in any
person beneficially owning 10% or more) of the then outstanding Shares or
otherwise for the direct or indirect acquisition of the Company or all or
substantially all of its assets for per Share consideration having a value
greater than the Per Share Amount (a "Competing Proposal") and (i) the Board
does not recommend against the Competing Proposal, (ii) the Offer shall have
remained open for at least 20 business days, (iii) the Minimum Condition shall
not have been satisfied, and (iv) this Agreement shall have been terminated
pursuant to the provisions described above; or (b) the Merger Agreement is
terminated (i) pursuant to the provisions described in clause (c)(ii) or clause
(d)(ii) of the second preceding paragraph; then, in any such event, the Company
shall pay Parent promptly (but in no event later than one business day after the
first of such events shall have occurred) a fee of $1,000,000 (the "Fee"), which
amount shall be payable in immediately available funds, plus all Expenses up to
$500,000 in the aggregate. The term "Expenses" shall mean all out-of-pocket
expenses and fees of each of Parent, Purchaser and their respective shareholders
and affiliates (including, without limitation, fees and expenses payable to all
banks, investment banking firms, other financial institutions and other persons
and their respective agents and counsel for arranging, committing to provide or
providing any financing for the Transactions or structuring the Transactions and
all fees of counsel, accountants, experts and consultants to Parent and
Purchaser, and all

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<PAGE> 21

printing and advertising expenses and all costs and expenses incurred by or on
behalf of Parent and Purchaser in connection with the collection under and
enforcement of the preceding paragraph) actually incurred or accrued by either
of them or on their behalf in connection with such transactions, including,
without limitation, the financing thereof, and actually incurred or accrued by
banks, investment banking firms, other financial institutions and other persons
and assumed by Parent or Purchaser in connection with the negotiation,
preparation, execution and performance of the Merger Agreement, the structuring
and financing of such transactions, and any financing commitments or agreements
relating thereto. Except as set forth in this paragraph, all costs and expenses
incurred in connection with the Merger Agreement and such transactions shall be
paid by the party incurring such expenses, whether or not such transactions are
consummated.

THE STOCK PURCHASE AGREEMENT

The following is a summary of the Stock Purchase Agreement, a copy of which
is filed as an Exhibit to the Schedule 14D-1. Such summary is qualified in its
entirety by reference to the Stock Purchase Agreement.

Parent, Purchaser and the Stockholder have entered into the Stock Purchase
Agreement pursuant to which the Stockholder has agreed to sell to the Purchaser
1,082,570 Shares at a per Share price equal to the per Share price payable in
the Offer. In addition, the Stockholder has appointed Purchaser, or any nominee
of Purchaser, during the term of the Stock Purchase Agreement as his attorney
and proxy to vote each of the Shares subject to such agreement (i) in favor of
the Merger Agreement and the transactions contemplated thereby, (ii) against any
other proposal for the acquisition of the Company or its assets or a merger or
other business combination of the Company with any third party, and (iii)
against any other proposal that would, or is reasonably likely to, result in any
of the conditions to Purchaser's obligations under the Merger Agreement not
being fulfilled.

In addition, the Stockholder has agreed not to (i) take any action or omit
to take any action that is inconsistent with compliance by the Company with the
terms of the Merger Agreement and (ii) without the prior written consent of
Purchaser, (x) sell, tender pursuant to the Offer or any other tender offer,
pledge, encumber, assign, transfer, exchange or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
the sale, tender, pledge, encumbrance, assignment, transfer, exchange or
disposition of, any of his Shares; (y) acquire any additional shares of Company
Common Stock or warrants, options or other rights to purchase any Shares; or (z)
grant any proxies (other than pursuant to the Stock Purchase Agreement) with
respect to his Shares, deposit any of his Shares into a voting trust or enter
into a voting agreement with respect to any of his Shares.

The obligations of the Stockholder and Purchaser to consummate the purchase
and sale contemplated by the Stock Purchase Agreement are subject to (i) any
waiting periods under the HSR Act applicable to the purchase of the Shares
having been expired or terminated, (ii) there being no preliminary or permanent
injunction or other order by any court of competent jurisdiction prohibiting or
otherwise restraining such purchase and sale, (iii) the Stockholder having
continued to be employed as Chief Executive Officer of the Company with duties
and responsibilities comparable to the duties and responsibilities he has
performed in the past and having entered into an employment agreement (described
below) with the Company substantially in the form attached as an exhibit to the
Stock Purchase Agreement (iv) no event or events shall have occurred or be
reasonably likely to occur which have, or could reasonably be expected to have,
a Material Adverse Effect (as defined in the Stock Purchase Agreement) on the
Company, and (v) all conditions to Purchaser's obligations to accept for payment
the Shares tendered pursuant to the Offer having been satisfied.

The Stock Purchase Agreement contains various customary representations and
warranties of the parties thereto, including a representation by the Stockholder
that all of the representations and warranties of the Company in the Merger
Agreement are true, complete and correct.

The Stock Purchase Agreement provides that the Stockholder shall indemnify
Parent and any subsidiary or affiliate of Parent, and any director, officer or
employee of the foregoing, against and hold each of them harmless from all
losses arising out of the breach of any representation or warranty or of any
covenant or agreement of the Stockholder contained in the Stock Purchase
Agreement. The Stock Purchase Agreement also provides that Parent and Purchaser,
jointly and severally, shall indemnify the Stockholder against and

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<PAGE> 22

hold the Stockholder harmless from all losses arising out of the breach of
certain representations and warranties and of any covenant or agreement of
Parent or Purchaser contained in the Stock Purchase Agreement. The maximum
amount of loss which may be recovered by Parent from the Stockholder is an
amount equal to the aggregate price paid to the Stockholder for his Shares,
except that for a breach of his representation that the Company's
representations and warranties contained in the Merger Agreement are true,
complete and correct the maximum amount is $2,000,000. The maximum amount of
loss which may be recovered by the Stockholder from Parent and Purchaser is an
amount equal to the aggregate purchase price paid to the Stockholder for his
Shares.

THE EMPLOYMENT AGREEMENT AND THE CONSULTING AGREEMENT

The following is a summary of the form of Employment Agreement to be
entered into by the Company and Robert W. Nolan, Sr., President and Chief
Executive Officer of the Company, a copy of which is filed as an exhibit to the
Schedule 14D-1 and of the form of Consulting Agreement which is attached to the
Employment Agreement as an exhibit. Such summary is qualified in its entirety by
reference to the Employment Agreement and the Consulting Agreement.

As of the Effective Time of the Merger Agreement, the Company will enter
into an Employment Agreement and a Consulting Agreement with Mr. Nolan. The
Employment Agreement has a term of five years, subject to earlier termination
and the Consulting Agreement has a term of three years to commence upon the
earlier of expiration of the term of the Employment Agreement or termination of
Mr. Nolan's employment thereunder. Under the Employment Agreement, Mr. Nolan
will receive an initial annual salary of $260,000 which will be increased each
year to reflect any increase in the consumer price index for all urban consumers
in the St. Louis, Missouri area for the prior calendar year. Mr. Nolan will be
eligible for two types of incentive compensation, the amounts of which will be
based on Company performance: (i) an annual bonus payable each year during the
term of the Employment Agreement, and (ii) a long-term incentive payment
("LTIP") payable in the third, fourth and fifth years of the Employment
Agreement. Neither incentive payment will be payable unless certain levels of
Company performance are reached. Eligibility for further incentive payments
ceases upon termination of the Employment Agreement, except as provided below.
The Employment Agreement may be terminated by either party for any reason at any
time prior to its expiration. If Mr. Nolan resigns during the first two years of
the term or is terminated at any time for cause, he will receive no severance
payments. If he resigns during the third, fourth or fifth years of the term, Mr.
Nolan will be entitled to continue to receive, as severance, his then base
salary for one year following the date of resignation. If the Employment
Agreement is terminated by reason of Mr. Nolan's death or disability or if the
Company terminates his employment either without cause or for failure of the
Company to meet minimum financial performance standards, he will be entitled to
continue to receive, as severance, his then base salary for two years from the
date of termination. In addition, if termination is by reason of death or
disability or is without cause, Mr. Nolan shall be entitled to receive the
annual bonus amount he would have received for the year in which the termination
occurs based on the approved budget for such year. Further, if such termination
by reason of death or disability or without cause occurs in the second or third
year of the term, he will be entitled to receive a pro-rated portion of any LTIP
he would have been entitled to receive in the third year based on the approved
budget for the third year and if the termination occurs in the fourth or fifth
year of the term, he will be entitled to the full LTIP he would have been
entitled to receive in the year of termination based on the approved budget for
such year. The Consulting Agreement, the term of which follows that of the
Employment Agreement, provides for a total fee of $1,050,000, payable monthly
over the three year term at an initial annual rate of $400,000 which will
decrease to $250,000 in the final year of the term. For two years from the
termination date of the Employment Agreement, Mr. Nolan has agreed not to
compete with the Company and for three years from the termination of the
Employment Agreement Mr. Nolan has agreed not to solicit or hire any of its
employees (excluding Robert W. Nolan, Jr.) and consultants. Mr. Nolan has also
agreed to protect the status of all confidential information relating to the
Company.

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11. Purpose of the Offer; Plans for the Company After the Offer and the
Merger.

Purpose of the Offer. The purpose of the Offer and the Merger is for
Parent to acquire control of, and the entire equity interest in, the Company.
The purpose of the Merger is for Parent to acquire all Shares not purchased
pursuant to the Offer. Upon consummation of the Merger, the Company will become
a direct wholly owned subsidiary of Parent. The Offer is being made pursuant to
the Merger Agreement.

Under Delaware Law, the approval of the Board and the affirmative vote of
the holders of a majority of the outstanding Shares is required to approve and
adopt the Merger Agreement and the transactions contemplated thereby, including
the Merger. The Board of Directors of the Company has approved and adopted the
Merger Agreement and the transactions contemplated thereby, and, unless the
Merger is consummated pursuant to the short-form merger provisions under
Delaware Law described below, the only remaining required corporate action of
the Company is the approval and adoption of the Merger Agreement and the
transactions contemplated thereby by the affirmative vote of the holders of a
majority of the Shares.
Accordingly, if the Minimum Condition is satisfied, Purchaser will have
sufficient voting power to cause the approval and adoption of the Merger
Agreement and the transactions contemplated thereby without the affirmative vote
of any other stockholder of the Company.

In the Merger Agreement, the Company has agreed to take all action
necessary to convene the Stockholders Meeting as soon as practicable after the
consummation of the Offer, if such action is required by Delaware Law in order
to consummate the Merger. Parent and Purchaser have agreed that all Shares owned
by them and their subsidiaries will be voted in favor of the Merger Agreement
and the transactions contemplated thereby.

If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement
provides that Purchaser will be entitled to designate representatives to serve
on the Board in proportion to Purchaser's ownership of Shares following such
purchase. See Section 10. Purchaser expects that such representation would
permit Purchaser to exert substantial influence over the Company's conduct of
its business and operations.

Under Delaware Law, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the outstanding Shares, Purchaser will be able to
approve the Merger without a vote of the Company's stockholders. If, however,
Purchaser does not acquire at least 90% of the outstanding Shares pursuant to
the Offer or otherwise and a vote of the Company's stockholders is required
under Delaware Law, a significantly longer period of time would be required to
effect the Merger.

Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders will have certain
rights under Delaware Law to dissent and demand appraisal of, and to receive
payment in cash of the fair value of, their Shares. Such rights to dissent, if
the statutory procedures are complied with, could lead to a judicial
determination of the fair value of the Shares, as of the Effective Time
(excluding any element of value arising from the accomplishment or expectation
of the Merger), required to be paid in cash to such dissenting holders for their
Shares. In addition, such dissenting stockholders would be entitled to receive
payment of a fair rate of interest from the date of consummation of the Merger
on the amount determined to be the fair value of their Shares. In determining
the fair value of the Shares, the court is required to take into account all
relevant factors. Accordingly, such determination could be based upon
considerations other than, or in addition to, the market value of the Shares,
including, among other things, asset values and earning capacity. In Weinberger
v. UOP, Inc., the Delaware Supreme Court stated, among other things, that "proof
of value by any techniques or methods which are generally considered acceptable
in the financial community and otherwise admissible in court" should be
considered in an appraisal proceeding. Therefore, the value so determined in any
appraisal proceeding could be the same, more or less than the purchase price per
Share in the Offer or the Merger Consideration.

In addition, several decisions by Delaware courts have held that, in
certain circumstances, a controlling stockholder of a company involved in a
merger has a fiduciary duty to other stockholders which requires that the merger
be fair to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme

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<PAGE> 24

Court stated in Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the
remedy ordinarily available to minority stockholders in a cash-out merger is the
right to appraisal described above. However, a damages remedy or injunctive
relief may be available if a merger is found to be the product of procedural
unfairness, including fraud, misrepresentation or other misconduct.

The Commission has adopted Rule 13e-3 under the Exchange Act which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Purchaser seeks
to acquire the remaining Shares not held by it. Purchaser believes, however,
that Rule 13e-3 will not be applicable to the Merger. Rule 13e-3 requires, among
other things, that certain financial information concerning the Company and
certain information relating to the fairness of the proposed transaction and the
consideration offered to minority stockholders in such transaction, be filed
with the Commission and disclosed to stockholders prior to consummation of the
transaction.

Plans for the Company. It is expected that, initially following the
Merger, the business and operations of the Company will, except as set forth in
this Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it deems
appropriate under the circumstances then existing. Parent intends to seek
additional information about the Company during this period. Thereafter, Parent
intends to review such information as part of a comprehensive review of the
Company's business, operations, capitalization and management with a view to
optimizing the Company's potential in conjunction with Parent's businesses.

Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company, a sale or transfer of a material amount of assets of the
Company or any material change in the Company's capitalization or dividend
policy or any other material changes in the Company's corporate structure or
business, or the composition of the Board or the Company's management.

12. Dividends and Distributions. The Merger Agreement provides that the
Company shall not, between the date of the Merger Agreement and the Effective
Time, without the prior written consent of Parent, (a) issue, sell, pledge,
dispose of, grant, encumber, or authorize the issuance, sale, pledge,
disposition, grant or encumbrance of any shares of capital stock of any class of
the Company or any options, warrants, convertible securities or other rights of
any kind to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of the Company
(except for the issuance of a maximum of 130,000 Shares issuable pursuant to
options outstanding on the date of the Merger Agreement) or (b) reclassify,
combine, split, subdivide or redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock. See Section 10. If, however, the Company
should, during the pendency of the Offer, (i) split, combine or otherwise change
the Shares or its capitalization, (ii) acquire or otherwise cause a reduction in
the number of outstanding Shares or (iii) issue or sell any additional Shares,
shares of any other class or series of capital stock, other voting securities or
any securities convertible into, or options, rights, or warrants, conditional or
otherwise, to acquire, any of the foregoing, then, without prejudice to
Purchaser's rights under Section 14, Purchaser may (subject to the provisions of
the Merger Agreement) make such adjustments to the purchase price and other
terms of the Offer (including the number and type of securities to be purchased)
as it deems appropriate to reflect such split, combination or other change.

If, on or after December 19, 1995, the Company should declare or pay any
dividend on the Shares or make any other distribution (including the issuance of
additional shares of capital stock pursuant to a stock dividend or stock split,
the issuance of other securities or the issuance of rights for the purchase of
any securities) with respect to the Shares that is payable or distributable to
stockholders of record on a date prior to the transfer to the name of Purchaser
or its nominee or transferee on the Company's stock transfer records of the
Shares purchased pursuant to the Offer, then, without prejudice to Purchaser's
rights under Section 14, (i) the purchase price per Share payable by Purchaser
pursuant to the Offer will be reduced (subject to the Merger Agreement) to the
extent any such dividend or distribution is payable in cash and (ii) any
non-cash dividend, distribution or right shall be received and held by the
tendering stockholder for the account of

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<PAGE> 25

Purchaser and will be required to be promptly remitted and transferred by each
tendering stockholder to the Depositary for the account of Purchaser,
accompanied by appropriate documentation of transfer. Pending such remittance
and subject to applicable law, Purchaser will be entitled to all the rights and
privileges as owner of any such non-cash dividend, distribution or right and may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by Purchaser in its sole discretion.

13. Effect of the Offer on the Market for the Shares, NASDAQ Quotation and
Exchange Act Registration. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.

Parent intends to cause the delisting of the Shares by the NASDAQ Small Cap
Market following consummation of the Offer.

Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued inclusion in the NASDAQ
Small Cap Market. According to the NASDAQ Small Cap Market's published
guidelines, the Shares would not be eligible to be included for listing if,
among other things, the number of record holders of Shares falls below 300, the
number of publicly held Shares falls below 100,000 or the aggregate market value
of publicly held Shares falls below $200,000. Furthermore, if such standards are
not met, quotations may not continue to be published in the over-the-counter
"additional list" or in one of the "local lists." Shares held directly or
indirectly by an officer or director of the Company or by any beneficial owner
of more than 10% of the Shares will ordinarily not be considered as being
publicly held for this purpose. In the event the Shares were no longer eligible
for NASDAQ quotation, quotations might still be available from other sources.
The extent of the public market for the Shares and the availability of such
quotations would, however, depend upon the number of holders of such Shares
remaining at such time, the interest in maintaining a market in such Shares on
the part of securities firms, the possible termination of registration of such
Shares under the Exchange Act as described below and other factors.

The Shares are currently "margin securities," as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of such securities. Depending upon factors
similar to those described above regarding listing and market quotations,
following the Offer it is possible that the Shares might no longer constitute
"margin securities" for purposes of the margin regulations of the Federal
Reserve Board, in which event such Shares could no longer be used as collateral
for loans made by brokers.

The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if the Shares are not listed on a national securities exchange and there are
fewer than 300 record holders. The termination of the registration of the Shares
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of Shares and to the Commission and would
make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement in connection with stockholders' meetings and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Shares. In addition, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be "margin securities"
or be eligible for NASDAQ reporting. Purchaser currently intends to seek to
cause the Company to terminate the registration of the Shares under the Exchange
Act as soon after consummation of the Offer as the requirements for termination
of registration are met.

14. Certain Conditions of the Offer. Notwithstanding any other provision
of the Offer, Purchaser shall not be required to accept for payment or pay for
any Shares tendered pursuant to the Offer, and may terminate or amend the Offer
and may postpone the acceptance for payment of and payment for, Shares tendered,
if (i) the Minimum Condition shall not have been satisfied, (ii) any applicable
waiting period under the HSR Act shall not have expired or been terminated prior
to the expiration of the Offer or (iii) at any time on or

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<PAGE> 26

after the date of the Merger Agreement, and prior to the acceptance for payment
of Shares, any of the following conditions shall exist:

(a) there shall have been instituted or be pending any action or
proceeding before any court or governmental, administrative or regulatory
authority or agency, domestic or foreign, (i) challenging or seeking to
make illegal, materially delay or otherwise directly or indirectly restrain
or prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Parent, Purchaser
or any other affiliate of Parent or the consummation of any other
transaction contemplated by the Merger Agreement, or seeking to obtain
material damages in connection with any transaction contemplated by the
Merger Agreement; (ii) seeking to prohibit or limit materially the
ownership or operation by the Company, Parent or any of its subsidiaries of
all or any material portion of the business or assets of the Company,
Parent or any of its subsidiaries, or to compel the Company, Parent or any
of its subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of the Company, Parent or any of its
subsidiaries, as a result of the transactions contemplated by the Merger
Agreement; (iii) seeking to impose limitations on the ability of Parent,
Purchaser or any other affiliate of Parent to exercise effectively full
rights of ownership of any Shares, including, without limitation, the right
to vote any Shares acquired by Purchaser pursuant to the Offer, the Stock
Purchase Agreement or otherwise on all matters properly presented to the
Company's stockholders, including, without limitation, the approval and
adoption of the Merger Agreement and the transactions contemplated thereby;
(iv) seeking to require divestiture by Parent, Purchaser or any other
affiliate of Parent of any Shares; or (v) which otherwise has a Materially
Adverse Effect (as defined in the Merger Agreement) or which is reasonably
likely to materially adversely affect the business, operations, properties,
condition (financial or otherwise), assets or liabilities (including,
without limitation, contingent liabilities) or prospects of Parent;

(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any subsidiary or affiliate of
Parent or the Company or (ii) any transaction contemplated by the Merger
Agreement, by any legislative body, court, government or governmental,
administrative or regulatory authority or agency, domestic or foreign,
other than the routine application of the waiting period provisions of the
HSR Act to the Offer, the Stock Purchase Agreement or the Merger, which is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;

(c) there shall have occurred any change, condition, event or
development that, when taken together with all such other changes,
conditions, events and developments, has a Material Adverse Effect;

(d) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 25% or more of the then outstanding Shares has been acquired by any
person, other than Parent or any of its affiliates or Mr. Robert W. Nolan,
Sr. or (ii) (A) the Board or any committee thereof shall have withdrawn or
modified in a manner adverse to Parent or Purchaser the approval or
recommendation of the Offer, the Merger, the Merger Agreement, or approved
or recommended any takeover proposal or any other acquisition of Shares
other than the Offer and the Merger or (B) the Board or any committee
thereof shall have resolved to do any of the foregoing;

(e) any representation or warranty of the Company in the Merger
Agreement which is qualified as to materiality shall not be true and
correct or any such representation or warranty that is not so qualified
shall not be true and correct in any material respect, in each case as if
such representation or warranty was made as of such time on or after the
date of the Merger Agreement;

(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;

(g) the Merger Agreement shall have been terminated in accordance with
its terms; or

24
<PAGE> 27

(h) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance of or payment for Shares
thereunder;

which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.

The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser or Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.

15. Certain Legal Matters and Regulatory Approvals.

General. Based upon its examination of publicly available information with
respect to the Company, the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company (see
Section 10), neither Purchaser nor Parent is aware of any license or other
regulatory permit that appears to be material to the business of the Company,
which might be adversely affected by the acquisition of Shares by Purchaser
pursuant to the Offer or the Stock Purchase Agreement or, except as set forth
below, of any approval or other action by any domestic (federal or state) or
foreign governmental, administrative or regulatory authority or agency which
would be required prior to the acquisition of Shares by Purchaser pursuant to
the Offer or the Stock Purchase Agreement. Should any such approval or other
action be required, it is Purchaser's present intention to seek such approval or
action. Purchaser does not currently intend, however, to delay the purchase of
Shares tendered pursuant to the Offer pending the outcome of any such action or
the receipt of any such approval (subject to Purchaser's right to decline to
purchase Shares if any of the conditions in Section 14 shall have occurred).
There can be no assurance that any such approval or other action, if needed,
would be obtained without substantial conditions or that adverse consequences
might not result to the business of the Company, Purchaser or Parent or that
certain parts of the businesses of the Company, Purchaser or Parent might not
have to be disposed of or held separate or other substantial conditions complied
with in order to obtain such approval or other action or in the event that such
approval was not obtained or such other action was not taken. Purchaser's
obligation under the Offer to accept for payment and pay for Shares is subject
to certain conditions, including conditions relating to the legal matters
discussed in this Section 15. See Section 14.

State Takeover Laws. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of Delaware Law prevents an
"interested stockholder" (generally a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock, or an affiliate
or associate thereof) from engaging in a "business combination" (defined to
include mergers and certain other transactions) with a Delaware corporation for
a period of three years following the date such person became an interested
stockholder unless, among other things, prior to such date the board of
directors of the corporation approved either the business combination or the
transaction in which the interested stockholder became an interested
stockholder. On December 14, 1995, prior to the execution of the Merger
Agreement, the Board of Directors of the Company, by vote of all directors
present at a meeting held on such date (other than Mr. Robert W. Nolan, Sr., who
abstained), approved the Merger Agreement and determined that each of the Offer
and the Merger is fair to, and in the best interest of, the stockholders of the
Company. Accordingly, Section 203 is inapplicable to the Offer and the Merger.

A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of

25
<PAGE> 28

corporations meeting certain requirements more difficult. However, in 1987 in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.

The Company conducts business in a number of states throughout the United
States, some of which have enacted takeover laws. Purchaser does not know
whether any of these laws will, by their terms, apply to the Offer or the Merger
and has not complied with any such laws. Should any person seek to apply any
state takeover law, Purchaser will take such action as then appears desirable,
which may include challenging the validity or applicability of any such statute
in appropriate court proceedings. In the event it is asserted that one or more
state takeover laws is applicable to the Offer or the Merger, and an appropriate
court does not determine that it is inapplicable or invalid as applied to the
Offer, Purchaser might be required to file certain information with, or receive
approvals from, the relevant state authorities. In addition, if enjoined,
Purchaser might be unable to accept for payment any Shares tendered pursuant to
the Offer, or be delayed in continuing or consummating the Offer, and the
Merger. In such case, Purchaser may not be obligated to accept for payment any
Shares tendered. See Section 14.

Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by Purchaser pursuant to the Offer and the Stock Purchase Agreement is
subject to such requirements. See Section 2.

Pursuant to the HSR Act, on or about December 27, 1995, Parent filed a
Premerger Notification and Report Form in connection with the purchase of Shares
pursuant to the Offer and the Stock Purchase Agreement with the Antitrust
Division and the FTC. Under the provisions of the HSR Act applicable to the
Offer, the purchase of Shares pursuant to the Offer may not be consummated until
the expiration of a 15-calendar day waiting period following the filing by
Parent. Accordingly, the waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer will expire at 12:00 Midnight, New York
City time, on or about Thursday, January 11, 1996, unless such waiting period is
earlier terminated by the FTC and the Antitrust Division or extended by a
request from the FTC or the Antitrust Division for additional information or
documentary material prior to the expiration of the waiting period. Pursuant to
the HSR Act, Parent has requested early termination of the waiting period
applicable to the Offer. There can be no assurance, however, that the 15-day HSR
Act waiting period will be terminated early. If either the FTC or the Antitrust
Division were to request additional information or documentary material from
Parent with respect to the Offer, the waiting period with respect to the Offer
would expire at 12:00 Midnight, New York City time, on the tenth calendar day
after the date of substantial compliance by Parent with such request.
Thereafter, the waiting period could be extended only by court order. If the
acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer may, but need not, be extended and, in any event, the
purchase of and payment for Shares will be deferred until 10 days after the
request is substantially complied with, unless the extended period expires on or
before the date when the initial 15-day period would otherwise have expired, or
unless the waiting period is sooner terminated by the FTC and the Antitrust
Division. Only one extension of such waiting period pursuant to a request for
additional information is authorized by the HSR Act and the rules promulgated
thereunder, except by court order. Any such extension of the waiting period will
not give rise to any withdrawal rights not otherwise provided for by applicable
law. See Section 4. It is a condition to the Offer that the waiting period
applicable under the HSR Act to the Offer expire or be terminated. See Section 2
and Section 14.

The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including

26
<PAGE> 29

seeking to enjoin the purchase of Shares pursuant to the Offer or seeking the
divestiture of Shares purchased by Purchaser or the divestiture of substantial
assets of the Company, Parent or any of its subsidiaries. Private parties and
state attorneys general may also bring legal action under federal or state
antitrust laws under certain circumstances. Based upon an examination of
information available to Parent relating to the businesses in which the Company,
Parent or any of its subsidiaries are engaged, Parent and Purchaser believe that
the Offer will not violate the antitrust laws. Nevertheless, there can be no
assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, what the result would be. See Section 14 for
certain conditions to the Offer, including conditions with respect to
litigation.

16. Fees and Expenses. Except as set forth below, Purchaser will not pay
any fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer.

Purchaser and Parent have retained Georgeson & Company Inc., as the
Information Agent, and Chemical Bank, as the Depositary, in connection with the
Offer. The Information Agent may contact holders of Shares by mail, telephone,
telex, telecopy, telegraph and personal interview and may request banks,
brokers, dealers and other nominee stockholders to forward materials relating to
the Offer to beneficial owners.

As compensation for acting as Information Agent in connection with the
Offer, Georgeson & Company Inc. will be paid a fee of $6,000 and will also be
reimbursed for certain out-of-pocket expenses and may be indemnified against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws. Purchaser will pay the Depositary
reasonable and customary compensation for its services in connection with the
Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including under federal securities laws. Brokers, dealers, commercial banks and
trust companies will be reimbursed by Purchaser for customary handling and
mailing expenses incurred by them in forwarding material to their customers.

17. Miscellaneous. The Offer is being made solely by this Offer to
Purchase and the related Letter of Transmittal and is being made to all holders
of Shares. Purchaser is not aware of any jurisdiction where the making of the
Offer is prohibited by any administrative or judicial action pursuant to any
valid state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good faith effort to comply with any such state
statute. If, after such good faith effort, Purchaser cannot comply with any such
state statute, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares in such state. In any jurisdiction where
the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, PARENT OR THE COMPANY NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.

Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 (except that they will not be
available at the regional offices of the Commission).

SCS SUBSIDIARY, INC.
December 27, 1995

27
<PAGE> 30

SCHEDULE I

DIRECTORS AND EXECUTIVE OFFICERS OF

PARENT AND PURCHASER

1. Directors and Executive Officers of TTC. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of TTC. Except for W. Michael Brown, who is a
citizen of both Great Britain and the United States, Alan M. Lewis, who is a
citizen of Canada, Great Britain, and South Africa, Paul Brett, Nigel R.
Harrison, David J. Hulland, Martin B. Jones, Andrew G. Mills and J. Gordon Paul
who are citizens of Great Britain and Richard J. Harrington who is a citizen of
the United States, each such person is a citizen of Canada. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with TTC.

<TABLE>
<CAPTION>
Present Principal Occupation or
Employment; Material Positions Held
Name, Age and During the Past Five Years and
Current Business Address Business Addresses Thereof
- --------------------------------------- ----------------------------------------------------
<S> <C>
Kenneth R. Thomson, 72................. Chairman of TTC since July 1978. Director of TTC
The Woodbridge Company Limited since July 1976. Chairman of the Woodbridge Company
65 Queen Street West Limited, 65 Queen Street West, Toronto, Ontario,
Toronto, Ontario M5H 2M8, Canada, since March 1979. Director of the
M5H 2M8 Woodbridge Company Limited since August 1956. See
Canada Parent, below.
John A. Tory, 65....................... Deputy Chairman of TTC since February 1978. Director
The Woodbridge Company Limited of TTC since February 1978. Director of
65 Queen Street West Abitibi-Price, Inc., 207 Queens Quay West,
Toronto, Ontario Toronto, Ontario, M5J 2P5, Canada, since September
M5H 2M8 1965. Director of Rogers Communications Inc., 40
Canada King Street West, Toronto, Ontario, M5H 3Y2,
Canada, since December 1979. Director, Sun Life
Insurance Company of Canada, 150 King Street West,
Toronto, Ontario, M5H 1J9, Canada, from December
1971 to 1994. Director and President of the
Woodbridge Company Limited, 65 Queen Street West,
Toronto, Ontario, M5H 2M8, Canada, since October
1967 and March 1979, respectively. Director of
Hudson's Bay Company, 401 Bay Street, Toronto,
Ontario M5H 2Y4, Canada, since May 1979. Deputy
Chairman and Director of Markborough Properties
Inc., One Dundas Street West, Suite 2800, Toronto,
Ontario M5G 2J2, since September 1989. Director of
The Thomson Corporation PLC, First Floor, the
Quandrangle, 180 Wardour Street, W1A 4YG, England,
since December 1977. Director of the Royal Bank of
Canada, 200 King Street West, Toronto, Ontario,
M5H 1CA, Canada, since March 1971. See Parent,
below.
W. Michael Brown, 60................... Director of TTC since July 1978. President of TTC
The Thomson Corporation since December 1984. Director of Hudson's Bay
Metro Center Company, 401 Bay Street, Toronto, Ontario, M5H
One Station Place 2Y4, Canada since 1985. Director of Southwestern
Stamford, Connecticut 06902 Area Commerce and Industry Association, One
Landmark Square, Stamford, Connecticut 06901,
since November 1994. Director of Markborough
Properties Inc., One Dundas Street West, Suite
2800, Toronto, Ontario, M5H 2Y4, Canada, since
April 1990. See Parent and Purchaser, below.
</TABLE>

A-1
<PAGE> 31

<TABLE>
<CAPTION>
Present Principal Occupation or
Employment; Material Positions Held
Name, Age and During the Past Five Years and
Current Business Address Business Addresses Thereof
- --------------------------------------- ----------------------------------------------------
<S> <C>
Ronald D. Barbaro, 64.................. Director of TTC since May 1993. Chairman of
Waldorf Astoria Hotel Prudential of America Life Insurance Company of
301 Park Avenue Canada, c/o Prudential of America Insurance Co.
Suite 13R (Canada), 200 Consilium Place, Scarborough,
New York, New York 10022 Ontario, M1H 3E6, Canada, since 1992. President of
Prudential Insurance Company of America, Inc., 260
Madison Avenue, Second Floor, New York, New York
10116, from 1990 to 1993. President of Worldwide
Operations Prudential Insurance Company of
America-Canada, from 1985 to 1990.
Paul Brett, 51......................... Director of TTC since June 1989. Executive Vice
Thomson Travel Group President of TTC since June 1989. Chairman and Chief
Britannia House Executive Officer of Thomson Travel Group,
Airport Approach Road Britannia House, Airport Approach Road, London
London Luton Airport Luton Airport, Luton, Bedfordshire, LU2 9ND,
Luton, Bedfordshire England, since March 1989.
LU2 9ND
England
William J. DesLauries, 67.............. Director of TTC since July 1978. Partner in Tory,
Tory, Tory, DesLauries & Binnington Tory, DesLauries & Binnington, Suite 3000, Aetna
Suite 3000 Tower, P.O. Box 270, Toronto-Dominion Centre,
Aetna Tower Toronto, Ontario M5K 1N2, since July 1963.
P.O. Box 270
Toronto-Dominion Centre
Toronto, Ontario
M5K 1N2
Canada
John F. Fraser, 65..................... Director of TTC since June 1989. Vice Chairman of
Russel Metals, Inc. Russel Metals, Inc., Suite 600, One Lombard Place,
Suite 600 Winnipeg, Manitoba, R3B OX3, Canada, since May
One Lombard Place 1995. Chairman of Russel Metals, Inc., from May
Winnipeg, Manitoba 1992 to May 1995. Chairman and Chief Executive
R3B OX3 Officer of Russel Metals, Inc. from May 1991 to
Canada May 1992. President and Chief Executive Officer of
Russel Metals, Inc., from May 1978 to May 1991.
Richard J. Harrington, 48.............. Director of TTC since September 1993. Executive
Thomson Newspapers Corporation Vice- President of TTC since September 1993.
Metro Center President and Chief Executive Officer, Thomson
One Station Place Newspapers Group, Metro Center, One Station Place,
Stamford, Connecticut 06902 Stamford, Connecticut 06902, since July 1993.
President and Chief Executive Officer, Thomson
Professional Publishing, Metro Center, One Station
Place, Stamford, Connecticut 06902, from June 1989
to July 1993.
Nigel R. Harrison, 46.................. Director of TTC since June 1989. Chief Financial
The Thomson Corporation Officer of TTC since July 1984. Executive
Metro Center Vice-President of TTC since June 1989. See Parent
One Station Place and Purchaser, below.
Stamford, Connecticut 06902
</TABLE>

A-2
<PAGE> 32

<TABLE>
<CAPTION>
Present Principal Occupation or
Employment; Material Positions Held
Name, Age and During the Past Five Years and
Current Business Address Business Addresses Thereof
- --------------------------------------- ----------------------------------------------------
<S> <C>
Mark D. Knight, 52..................... Director of TTC since June 1989. Senior
The Thomson Corporation PLC Vice-President of TTC since July 1984. Secretary of
First Floor TTC since July 1978.
The Quadrangle
180 Wardour Street
London
W1A 4YG
England
C. Edward Medland, 67.................. Director of TTC since July 1978. Director of The
Beauwood Investments, Inc. Seagram Company, 1430 Peel Street, Montreal, Quebec,
121 King Street West H3A 1S9, Canada, since May 1973. Director of
Suite 2525 Abitibi-Price, Inc., 207 Queens Quay West,
Toronto, Ontario Toronto, Ontario, M5J 2P5, Canada, since April
M5H 3T9 1978. Director of Canadian Tire Corporation, 2180
Canada Young Street, Toronto, Ontario, M3S 2B9, Canada,
since May 1988. Director of C.T. Financial
Services, Inc., Canada Trust Tower, 161 Bay
Street, Toronto, Ontario, M5J 2S1, Canada, since
March 1989. Director of Teleglobe, Inc., 1000 De
La Gauchetiere Street Ouest, Suite 1500, Montreal,
Quebec, H3B 4X5, since May 1992. Director of
Quorum Growth, Inc., Sun Life Tower, 150 King
Street West, Toronto, Ontario, M5H 1J9, since
October 1992. Director of Ontario Teacher's
Pension Plan Board, 5650 Young Street, Toronto,
Ontario M2M 4H5, Canada, since January 1990.
Andrew G. Mills, 43.................... Director and Executive Vice President of TTC since
Thomson Financial & Professional January 1995. President and Chief Executive Officer
Publishing Group of Thomson Financial & Professional Publishing
22 Pittsburgh Street Group since May 1994. Chairman of Massachusetts
Boston, Massachusetts 02210 Technology Development Corporation, 148 State
Street, Boston, Massachusetts 02109, since 1990.
See Purchaser, below.
J. Gordon Paul, 48..................... Director and Executive Vice President of TTC since
Thomson Corporation Publishing January 1995. President and Chief Executive Officer
International of Thomson Corporation Publishing International
One Station Place since May 1994. President since March 1990 and
Stamford, Connecticut 06902 Chief Executive Officer since May 1994 of Thomson
Regional Newspapers Ltd., 100 Avenue Road, Swiss
Cottage, London NWS 3HF, England.
David C.H. Stanley, 68................. Director of TTC since June 1989. Director of Wajax
453 Russell Hill Road Limited, 770 Sherbrook Street West, Suite 1750,
Toronto, Ontario Montreal, H5A 1G1, Canada, from May 1971 to March
M5P 2S6 1991. Director of Comshare, Incorporated, 3001
Canada South State Street, Ann Arbor, Michigan 48108,
from 1979 to 1992.
David K.R. Thomson, 38................. Director of TTC since April 1988. Deputy Chairman of
The Woodbridge Company Limited the Woodbridge Company Limited, 65 Queen Street
65 Queen Street West West, Toronto, Ontario, M5H 2M8, Canada, since
Toronto, Ontario June 1990.
M5H 2M8
Canada
</TABLE>

A-3
<PAGE> 33

2. Directors and Executive Officers of Parent. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of Parent. Unless otherwise indicated, the
current business address of each person is c/o The Thomson

A-4
<PAGE> 34

Corporation. Except for W. Michael Brown, who is a citizen of both Great Britain
and the United States, Paul Brett and Nigel R. Harrison who are citizens of
Great Britain and Richard J. Harrington who is a citizen of the United States,
each such person is a citizen of Canada. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to employment with
Parent.

<TABLE>
<S> <C>
W. Michael Brown....................... Director of Parent since July 1978. President of
The Thomson Corporation Parent since December 1984. See TTC, above and
Metro Center Purchaser, below.
One Station Place
Stamford, Connecticut 06902
Nigel R. Harrison...................... Director of Parent since June 1989. Chief Financial
The Thomson Corporation Officer of Parent since July 1984. Executive
Metro Center Vice-President of Parent since June 1989. See TTC,
One Station Place above and Purchaser, below.
Stamford, Connecticut 06902
David J. Hulland....................... Vice President of Parent since May 1993. Group
The Thomson Corporation Controller of Parent since December 1984. See TTC,
Metro Center above.
One Station Place
Stamford, Connecticut 06902
Kenneth R. Thomson..................... Chairman of Parent since July 1978. Director of
The Woodbridge Company Limited Parent since July 1976. See TTC, above.
65 Queen Street West
Toronto, Ontario
M5H 2M8
Canada
John A. Tory........................... Deputy Chairman of Parent since February 1978.
The Woodbridge Company Limited February 1978. See TTC, above.
65 Queen Street West
Toronto, Ontario
M5H 2M8
Canada
</TABLE>

3. Directors and Executive Officers of Purchaser. The following table
sets forth the name, age, current business address, citizenship and present
principal occupation or employment, and material occupations, positions, offices
or employments and business addresses thereof for the past five years of each
director and executive officer of Purchaser. Unless otherwise indicated, the
current business address of each person is SCS Subsidiary, Inc., Metro Center,
One Station Place, Stamford, Connecticut 06902. Except for W. Michael Brown, who
is a citizen of both Great Britain and the United States, each such person is a
citizen of Great Britain. Each occupation set forth opposite an individual's
name, refers to employment with Purchaser.

A-5
<PAGE> 35

Facsimiles of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates evidencing
Shares and any other required documents should be sent or delivered by each
stockholder or his or her broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.

The Depositary for the Offer is:

<TABLE>
<CAPTION>
By Mail: By Hand: By Overnight:
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Chemical Mellon Shareholder Chemical Mellon Shareholder Chemical Mellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Reorganization Department Reorganization Department Reorganization Department
PO Box 817 120 Broadway 85 Challenger Road
Midtown Station 13th Floor Ridgefield Park, New Jersey
New York, New York 10018 New York, New York 10271 07660
</TABLE>

By Facsimile Transmission:
(201) 296-4293

Confirm by Telephone:
(212) 296-4209

Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A stockholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.

The Information Agent for the Offer is:

[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800

Call Toll Free: 1-800-223-2064

<PAGE> 1

LETTER OF TRANSMITTAL

TO TENDER SHARES OF COMMON STOCK

SCS/COMPUTE, INC.

PURSUANT TO THE OFFER TO PURCHASE
DATED DECEMBER 27, 1995

SCS SUBSIDIARY, INC.,

A DIRECT WHOLLY OWNED SUBSIDIARY OF

THOMSON U.S. HOLDINGS INC.

AN INDIRECT WHOLLY OWNED SUBSIDIARY OF

THE THOMSON CORPORATION

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY,
JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED.

The Depositary for the Offer is:

CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C.

<TABLE>
<S> <C>
By Mail: By Hand:
Chemical Mellon Shareholder Services, L.L.C. Chemical Mellon Shareholder Services, L.L.C.
Reorganization Department Reorganization Department
PO Box 817 120 Broadway
Midtown Station 13th Floor
New York, New York 10018 New York, New York 10271

By Overnight: By Facsimile Transmission:
Chemical Mellon Shareholder Services, L.L.C. (201) 296-4293
Reorganization Department Confirm by Telephone:
85 Challenger Road (212) 296-4209
Ridgefield Park, New Jersey 07660
</TABLE>

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2

This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized,
if delivery of Shares is to be made by book-entry transfer to the Depositary's
account at The Depository Trust Company ("DTC"), the Midwest Securities Trust
Company ("MSTC") or the Philadelphia Depository Trust Company ("PDTC") (each a
"Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer
Facilities") pursuant to the book-entry transfer procedure described in "THE
TENDER OFFER -- Section 3. Procedures for Accepting the Offer and Tendering
Shares" in the Offer to Purchase (as defined below). DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.

Stockholders whose certificates evidencing Shares ("Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in "THE TENDER OFFER -- Section 1. Terms of the Offer;
Expiration date" in the Offer to Purchase) or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis and who wish to tender
their Shares must do so pursuant to the guaranteed delivery procedure described
in "THE TENDER OFFER -- Section 3. Procedures for Accepting the Offer and
Tendering Shares" in the Offer to Purchase. See Instruction 2.

/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:

Name of Tendering Institution
- -----------------------------------------------------------------------------

Check box of Applicable Book-Entry Transfer Facility:

/ / The Depository Trust Company / / Midwest Securities Trust
Company

/ / Philadelphia Depository Trust Company
Account Number____________________________________________________________
Transaction Code Number___________________________________________________

/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)_____________________________________________
Window Ticket No. (if any)__________________________________________________
Date of Execution of Notice of Guaranteed Delivery__________________________
Name of Institution which Guaranteed Delivery_______________________________
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED

<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE EVIDENCED NUMBER
CERTIFICATE BY SHARE OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total Shares
------------------------------------------------------------------------------------------------------------------
</TABLE>

* Need not be completed by stockholders delivering Shares by book-entry
transfer.

** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3

NOTE: SIGNATURES MUST BE PROVIDED BELOW

PLEASE READ THE ACCOMPANYING INSTRUCTIONS
IN THIS LETTER OF TRANSMITTAL CAREFULLY.

LADIES AND GENTLEMEN:

The undersigned hereby tenders to SCS Subsidiary, Inc., a Delaware
corporation ("Purchaser") and a direct wholly owned subsidiary of Thomson U.S.
Holdings Inc., a Delaware corporation and an indirect wholly owned subsidiary of
The Thomson Corporation, a corporation organized under the laws of Ontario,
Canada, the above-described shares of Common Stock, par value $.10 per share, of
SCS/Compute, Inc., a Delaware corporation (the "Company") (all shares of such
Common Stock from time to time outstanding being, collectively, the "Shares")
pursuant to Purchaser's offer to purchase all Shares, at $6.75 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated December 27, 1995 (the "Offer to Purchase"),
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which, together with the Offer to Purchase, constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or assign,
in whole or from time to time in part, to one or more of its affiliates, the
right to purchase all or any portion of the Shares tendered pursuant to the
Offer.

Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby and all dividends, distributions (including, without
limitation, distributions of additional Shares) and rights declared, paid or
distributed in respect of such Shares on or after December 19, 1995
(collectively, "Distributions") and irrevocably appoints the Depositary the true
and lawful agent and attorney-in-fact of the undersigned with respect to such
Shares and all Distributions, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver Share Certificates evidencing such Shares and all Distributions, or
transfer ownership of such Shares and all Distributions on the account books
maintained by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.

The undersigned hereby irrevocably appoints W. Michael Brown, Nigel R.
Harrison and Andrew G. Mills and each of them, as the attorneys and proxies of
the undersigned, each with full power of substitution, to vote in such manner as
each such attorney and proxy or his substitute shall, in his sole discretion,
deem proper and otherwise act (by written consent or otherwise) with respect to
all the Shares tendered hereby which have been accepted for payment by Purchaser
prior to the time of such vote or other action and all Shares and other
securities issued in Distributions in respect of such Shares, which the
undersigned is entitled to vote at any meeting of stockholders of the Company
(whether annual or special and whether or not an adjourned or postponed meeting)
or consent in lieu of any such meeting or otherwise. This proxy and power of
attorney is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by Purchaser in accordance with the terms
of the Offer. Such acceptance for payment shall revoke all other proxies and
powers of attorney granted by the undersigned at any time with respect to such
Shares (and all Shares and other securities issued in Distributions in respect
of such Shares), and no subsequent proxy or power of attorney shall be given or
written consent executed (and if given or executed, shall not be effective) by
the undersigned with respect thereto. The undersigned understands that, in order
for Shares to be deemed validly tendered, immediately upon Purchaser's
acceptance of such Shares for payment, Purchaser must be able to exercise full
voting and other rights with respect to such Shares, including, without
limitation, voting at any meeting of the Company's stockholders then scheduled.

The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that when such Shares are accepted for
payment by Purchaser, Purchaser will acquire good, marketable and unencumbered
title thereto
<PAGE> 4

and to all Distributions, free and clear of all liens, restrictions, charges and
encumbrances, and that none of such Shares and Distributions will be subject to
any adverse claim. The undersigned, upon request, shall execute and deliver all
additional documents deemed by the Depositary or Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby and all Distributions. In addition, the undersigned shall remit and
transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase
price, the amount or value of such Distribution as determined by Purchaser in
its sole discretion.

No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.

The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in "THE TENDER OFFER -- Section 3. Procedures for
Accepting the Offer and Tendering Shares" in the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.

Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions," please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not purchase any of the Shares tendered hereby.
<PAGE> 5

- ------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not
purchased are to be issued in the name of someone other than the undersigned,
or if Shares tendered hereby and delivered by book-entry transfer which are
not purchased are to be returned by credit to an account at one of the
Book-Entry Transfer Facilities other than that designated above.

Issue / / check / / Share Certificate(s) to:
Name
---------------------------------------------
PLEASE PRINT
Address
-------------------------------------------
-----------------------------------------------------
(ZIP CODE)
-----------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)

/ / Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below:

Check appropriate box:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company

Account Number:
---------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not
purchased are to be mailed to someone other than the undersigned, or the
undersigned at an address other than that shown under "Description of Shares
Tendered."

Mail / / check / / Share Certificate(s) to:

Name
---------------------------------------------
Address
--------------------------------------------
-----------------------------------------------------
(ZIP CODE)

-----------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)

- ------------------------------------------------------
<PAGE> 6

IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)

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

- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: , 199

(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing by a person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 5).
NAME(S): _______________________________________________________________________
PLEASE PRINT
CAPACITY (FULL TITLE) __________________________________________________________
ADDRESS: _______________________________________________________________________
________________________________________________________________________________
INCLUDE ZIP CODE
AREA CODE AND TELEPHONE NO: ____________________________________________________
Taxpayer Identification or Social Security No.: ________________________________
(SEE SUBSTITUTE FORM W-9 ON
REVERSE SIDE)

GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)

FOR USE BY FINANCIAL INSTITUTIONS ONLY.
FINANCIAL INSTITUTIONS: PLACE MEDALLION
GUARANTEE IN SPACE BELOW.
<PAGE> 7

INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER

1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a member of the Medallion Signature Guarantee Program, or
by any other "eligible institution," as such term is defined in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (each of the foregoing
being referred to as an "Eligible Institution") unless (i) this Letter of
Transmittal is signed by the registered holder(s) of the Shares (which term, for
purposes of this document, shall include any participant in a Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of Shares) tendered hereby and such holder(s) has (have) completed neither the
box entitled "Special Payment Instructions" nor the box entitled "Special
Delivery Instructions" on the reverse hereof or (ii) such Shares are tendered
for the account of an Eligible Institution. See Instruction 5.

2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in "THE
TENDER OFFER -- Section 3. Procedures for Accepting the Offer and Tendering
Shares" in the Offer to Purchase. Share Certificates evidencing all physically
tendered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer as well as a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees,
or an Agent's Message in the case of a book-entry delivery, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the reverse hereof prior to the
Expiration Date (as defined in "THE TENDER OFFER" -- Section 1. Terms of the
Offer; Expiration Date" in the Offer to Purchase). If Share Certificates are
forwarded to the Depositary in multiple deliveries, a properly completed and
duly executed Letter of Transmittal must accompany each such delivery.
Stockholders whose Share Certificates are not immediately available, who cannot
deliver their Share Certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in "THE TENDER
OFFER -- Section 3. Procedures for Accepting the Offer and Tendering Shares" in
the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made
by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made available
by Purchaser, must be received by the Depositary prior to the Expiration Date;
and (iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message), and any other documents required by this Letter of
Transmittal, must be received by the Depositary within five National Association
of Securities Dealers Automated Quotation -- Small Cap Market trading days after
the date of execution of such Notice of Guaranteed Delivery, all as described in
"THE TENDER OFFER -- Section 3. Procedures for Accepting the Offer and Tendering
Shares" in the Offer to Purchase.

The method of delivery of this Letter of Transmittal, Share Certificates
and all other required documents, including delivery through any Book-Entry
Transfer Facility, is at the option and risk of the tendering stockholder, and
the delivery will be deemed made only when actually received by the Depositary.
If delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.

No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.

3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
<PAGE> 8

4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.

5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.

If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.

If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.

If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.

If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.

If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.

6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.

7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that
<PAGE> 9

shown in the box entitled "Description of Shares Tendered" on the reverse
hereof, the appropriate boxes on the reverse of this Letter of Transmittal must
be completed. Stockholders delivering Shares tendered hereby by book-entry
transfer may request that Shares not purchased be credited to such account
maintained at a Book-Entry Transfer Facility as such stockholder may designate
in the box entitled "Special Payment Instructions" on the reverse hereof. If no
such instructions are given, all such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated on the
reverse hereof as the account from which such Shares were delivered.

8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent at its
address or telephone number set forth below. Additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.

9. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such stockholder. If the tendering stockholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such stockholder until a TIN is provided to
the Depositary.

IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND SHARE CERTIFICATES
OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED UNDER "THE
TENDER OFFER -- SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE" IN OFFER TO
PURCHASE).

IMPORTANT TAX INFORMATION

Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject to a $500 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31% (as
described below).

Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
<PAGE> 10

If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.

PURPOSE OF SUBSTITUTE FORM W-9

To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying that the TIN provided on Substitute Form
W-9 is correct (or that such stockholder is awaiting a TIN), and that (i) such
stockholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of a failure to report all interest or
dividends or (ii) the Internal Revenue Service has notified such stockholder
that such stockholder is no longer subject to backup withholding.

WHAT NUMBER TO GIVE THE DEPOSITARY

The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and dated the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
<PAGE> 11

<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C.
- --------------------------------------------------------------------------------------------------------

SUBSTITUTE PART I -- For all accounts, enter -------------------------------
FORM W-9 your TIN in the box at right. (For Social Security Number
most individuals, this is your social OR
security number. If you do not have a -------------------------------
TIN, see How to Obtain a TIN in the Employer Identification Number
enclosed Guidelines.) Certify by (If awaiting TIN write
signing and dating below. Note: If "Applied For")
the account is in more than one name,
see the chart in the enclosed
Guidelines to determine which number
to give the payer.
- --------------------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART II -- For Payees Exempt From Backup Withholding, see the enclosed
IDENTIFICATION NUMBER (TIN) Guidelines and complete as instructed therein.
- --------------------------------------------------------------------------------------------------------
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) the number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a
number to be issued to me), and
(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding or,
(b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS
that you are subject to backup withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to backup withholding, do not
cross out item (2). (Also see instructions in the enclosed Guidelines.)
- --------------------------------------------------------------------------------------------------------
SIGNATURE DATE , 199
- --------------------------------------------------------------------------------------------------------
</TABLE>

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

The Information Agent for the Offer is:

(Georgeson & Company Inc. Logo)
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800

Call Toll Free: 1-800-223-2064

<PAGE> 1

NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF

SCS/COMPUTE, INC.

This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing shares of Common Stock, par value $.10 per
share (the "Shares"), of SCS/Compute, Inc., a Delaware corporation (the
"Company"), are not immediately available, (ii) if Share Certificates and all
other required documents cannot be delivered to Chemical Mellon Shareholder
Services, L.L.C., as Depositary (the "Depositary"), prior to the Expiration Date
(as defined in "THE TENDER OFFER -- Section 1. Terms of the Offer; Expiration
date" in the Offer to Purchase (as defined below)) or (iii) if the procedure for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by
telegram or facsimile transmission to the Depositary. See "THE TENDER OFFER --
Section 3. Procedures for Accepting the Offer and Tendering Shares" in the Offer
to Purchase.
The Depositary for the Offer is:
CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C.

By Overnight: By Facsimile Transmission:
Chemical Mellon Shareholder Services, L.L.C. (201) 296-4293
Reorganization Department
85 Challenger Road Confirm by Telephone:
Ridgefield Park, New Jersey 07660 (212) 296-4209

</TABLE>
<PAGE> 2

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.

This form is not to be used to guarantee signatures. If a letter of
Transmittal is required to be guaranteed by an "Eligible Institution" under the
instructions thereto, such signature guarantee must appear in the applicable
space provided in the signature box on the Letter of Transmittal.

Ladies and Gentlemen:

The undersigned hereby tender(s) to SCS Subsidiary, Inc., a Delaware
corporation and a direct wholly owned subsidiary of Thomson U.S. Holdings Inc.,
a Delaware corporation and an indirect wholly owned subsidiary of The Thomson
Corporation, a corporation organized under the laws of Ontario, Canada, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
December 27, 1995 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, together with the Offer to Purchase, constitute the
"Offer"), receipt of each of which is hereby acknowledged, the number of Shares
specified below pursuant to the guaranteed delivery procedure described in "THE
TENDER OFFER -- Section 3. Procedures for Accepting the Offer and Tendering
Shares" in the Offer to Purchase.

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

Number of Shares: ____________________________________

Certificate Nos. (If Available):

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

Check one box if Shares will be
delivered by book-entry transfer:

/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company

Account No. __________________________________________

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

SIGNATURE(S) OF HOLDER(S)

Dated: ___________ __, 199_

Name(s) of Holders:

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

- ------------------------------------------------------
PLEASE TYPE OR PRINT

- ------------------------------------------------------
ADDRESS

- ------------------------------------------------------
ZIP CODE

- ------------------------------------------------------
AREA CODE AND TELEPHONE NO.

- ------------------------------------------------------
<PAGE> 3

GUARANTEE

(NOT TO BE USED FOR SIGNATURE GUARANTEE)

The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or which is a commercial bank or trust company having an office or correspondent
in the United States, guarantees to deliver to the Depositary, at one of its
addresses set forth above, Share Certificates evidencing the Shares tendered
hereby, in proper form for transfer, or confirmation of book-entry transfer of
such Shares into the Depositary's account at the Depository Trust Company, the
Midwest Securities Trust Company or the Philadelphia Depository Trust Company,
in each case with delivery of a Letter of Transmittal (or facsimile thereof)
properly completed and duly executed, and any other required documents, all
within three National Association of Securities Dealers Automated
Quotation -- Small Cap Market trading days of the date hereof.

<TABLE>
<S> <C>
Name of Firm Title
- -------------------------------------- ---------------------------------------------
Authorized Signature Address
- --------------------------------------------- ---------------------------------------------
Zip Code
Name
- --------------------------------------------- Area Code and Telephone No.
Please Type or Print
---------------------------------------------
Dated: ------------------------------- , 199
</TABLE>

DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

<PAGE> 1

SCS SUBSIDIARY, INC.

OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF

SCS/COMPUTE, INC.
AT

$6.75 NET PER SHARE
BY

SCS SUBSIDIARY, INC.,

A DIRECT WHOLLY OWNED SUBSIDIARY OF

THOMSON U.S. HOLDINGS INC.,

AN INDIRECT WHOLLY OWNED SUBSIDIARY OF

THE THOMSON CORPORATION

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, JANUARY 25, 1996
UNLESS THE OFFER IS EXTENDED.

December 27, 1995

To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:

SCS Subsidiary, Inc., a Delaware corporation ("Purchaser") and a direct
wholly owned subsidiary of Thomson U.S. Holdings Inc., a Delaware corporation
("Parent"), and an indirect wholly owned subsidiary of The Thomson Corporation,
a corporation organized under the laws of Ontario, Canada, has offered to
purchase all outstanding shares of common stock, par value $.10 per share (the
"Shares"), of SCS/Compute, Inc., a Delaware corporation (the "Company"), at a
price of $6.75 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in Purchaser's Offer to Purchase, dated December 27,
1995 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") enclosed herewith. Please furnish copies of the
enclosed materials to those of your clients for whose accounts you hold Shares
registered in your name or in the name of your nominee.

Enclosed for your information and use are copies of the following
documents:

1. Offer to Purchase, dated December 27, 1995;

2. Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares;

3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or
cannot be delivered to Chemical Mellon Shareholder
<PAGE> 2

Services, L.L.C. (the "Depositary") by the Expiration Date (as defined in
the Offer to Purchase) or if the procedure for book-entry transfer cannot
be completed by the Expiration Date;

4. A letter to stockholders of the Company from Robert W. Nolan, Sr.,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;

5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;

6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and

7. Return envelope addressed to the Depositary.

WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED.

In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), a Letter of Transmittal (or
facsimile thereof) properly completed and duly executed and any other required
documents.

If holders of Shares wish to tender, but cannot deliver such holder's
certificates, or cannot comply with the procedure for book-entry transfer, prior
to the expiration of the Offer, a tender of Shares may be effected by following
the guaranteed delivery procedure described under "THE TENDER OFFER -- Section
3. Procedures for Accepting the Offer and Tendering Shares" in the Offer to
Purchase.

Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Depositary and the Information Agent as described
in the Offer) in connection with the solicitation of tenders of Shares pursuant
to the Offer. However, Purchaser will reimburse you for customary mailing and
handling expenses incurred by you in forwarding any of the enclosed materials to
your clients. Purchaser will pay or cause to be paid any stock transfer taxes
payable with respect to the transfer of Shares to it, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.

Any inquiries you may have with respect to the Offer should be addressed to
Georgeson & Company Inc. (the "Information Agent") at its address and telephone
number set forth on the back cover page of the Offer to Purchase.

Additional copies of the enclosed material may be obtained from the
Information Agent, at the addresses and telephone numbers set forth on the back
cover page of the Offer to Purchase.

Very truly yours,

SCS Subsidiary, Inc.

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF PURCHASER, PARENT, THE COMPANY, THE INFORMATION
AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY
OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.

<PAGE> 1

OFFER TO PURCHASE FOR CASH
ALL SHARES OF COMMON STOCK

SCS/COMPUTE, INC.
AT
$6.75 NET PER SHARE
BY

SCS SUBSIDIARY, INC.,
A DIRECT WHOLLY OWNED SUBSIDIARY OF

THOMSON U.S. HOLDINGS INC.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF

THE THOMSON CORPORATION

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, JANUARY 25, 1996,
UNLESS THE OFFER IS EXTENDED.

To Our Clients:

Enclosed for your consideration are an Offer to Purchase, dated December
27, 1995 (the "Offer to Purchase"), and a related Letter of Transmittal in
connection with the offer by SCS Subsidiary, Inc., a Delaware corporation
("Purchaser") and a direct wholly owned subsidiary of Thomson U.S. Holdings
Inc., a Delaware corporation ("Parent") and an indirect wholly owned subsidiary
of The Thomson Corporation, a corporation organized under the laws of Ontario,
Canada, to purchase all outstanding shares of Common Stock, par value $.10 per
share (the "Shares"), of SCS/Compute, Inc., a Delaware corporation (the
"Company"), at a price of $6.75 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase and in
the related Letter of Transmittal (which, together with the Offer to Purchase,
constitute the "Offer").

We (or our nominee) are the holder of record of Shares held by us for your
account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD
AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU
FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US
FOR YOUR ACCOUNT.

We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.

Your attention is invited to the following:

1. The tender price is $6.75 per Share, net to the seller in cash.

2. The Offer is being made for all of the issued and outstanding Shares.

3. The Board of Directors of the Company has determined that each of the
Offer and the Merger (as defined in the Offer to Purchase) is fair to, and in
the best interests of, the stockholders of the Company, and recommends that
stockholders accept the Offer and tender their Shares pursuant to the Offer.
<PAGE> 2

4. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Thursday, January 25, 1996, unless the Offer is extended.

5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer at least the
number of Shares that when added to the number of Shares to be purchased by
Purchaser pursuant to the Stock Purchase Agreement shall constitute a majority
of the Shares outstanding on a fully diluted basis. The Offer is also
conditioned upon, among other things, the expiration or termination of the
applicable antitrust waiting period.

6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer.

If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.

The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes aware
of any valid state statute prohibiting the making of the Offer or the acceptance
of Shares pursuant thereto, Purchaser will make a good faith effort to comply
with such state statute. If, after such good faith effort, Purchaser cannot
comply with such state statute, the Offer will not be made to (nor will tenders
be accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
<PAGE> 3

INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK OF
SCS/COMPUTE, INC. BY SCS SUBSIDIARY, INC.

The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated December 27, 1995, and the related Letter of
Transmittal (which together constitute the "Offer") in connection with the offer
by SCS Subsidiary, Inc., a Delaware corporation and a wholly owned subsidiary of
Thomson U.S. Holdings Inc., a Delaware corporation and an indirect wholly owned
subsidiary of The Thomson Corporation, a corporation organized under the laws of
Ontario, Canada, to purchase all outstanding shares of Common Stock, par value
$.10 per share (the "Shares"), of SCS/Compute Inc., a Delaware corporation.

This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.

<TABLE>
<CAPTION>
<S> <C>
- -----------------------------------
NUMBER OF SHARES TO BE TENDERED: SIGN HERE
_______________ SHARES*
- ----------------------------------- -------------------------------------------------
Dated: , 199
-------------------------------------------------

Signature(s)

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

Please type or print name(s)

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

Please type or print address

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

Area Code and Telephone Number

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

-------------------------------------------------
Taxpayer Identification or
Social Security Number
</TABLE>

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

* Unless otherwise indicated, it will be assumed that all of your Shares are to
be tendered.

<PAGE> 1

GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9

IRS INSTRUCTIONS
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.)

PURPOSE OF FORM. -- A person who is required to file an information return
with the Internal Revenue Service (the IRS) must obtain your correct taxpayer
identification number (TIN) to report income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an individual retirement account
(IRA). Use Form W-9 to furnish your correct TIN to the requester (the person
asking you to furnish your TIN), and, when applicable, (1) to certify that the
TIN you are furnishing is correct (or that you are waiting for a number to be
issued), (2) to certify that you are not subject to backup withholding, and (3)
to claim exemption from backup withholding if you are an exempt payee.
Furnishing your correct TIN and making the appropriate certifications will
prevent certain payments from being subject to backup withholding.

NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN A W-9 TO REQUEST YOUR TIN,
YOU MUST USE THE REQUESTER'S FORM.

HOW TO OBTAIN A TIN. -- If you do not have a TIN, apply for one immediately.
To apply, get FORM SS-5, Application for a Social Security Card (SSN) (for
individuals), from your local office of the Social Security Administration, or
FORM SS-4, Application for Employer Identification Number (EIN) (for businesses
and all other entities), from your local IRS office.

To complete Form W-9, if you do not have a TIN, and have applied for one or
intend to apply for one in the near future, write "Applied For" in the space
provided in Part I of the Substitute W-9, sign and date the form, and give it to
the requestor. Generally, you will then have 60 days to obtain a TIN and furnish
it to the requester. If the requester does not receive your TIN within 60 days,
backup withholding, if applicable, will begin and continue until you furnish
your TIN to the requester. For reportable interest or dividend payments, the
payer must exercise one of the following options concerning backup withholding
during this 60-day period. Under option (1), a payer must backup withhold on any
withdrawals you make from your account after 7 business days after the requester
receives this form back from you. Under option (2), the payer must backup
withhold on any reportable interest or dividend payments made to your account,
regardless of whether you make any withdrawals. The backup withholding under
option (2) must begin no later than 7 business days after the requester receives
this form back. Under option (2), the payer is required to refund the amounts
withheld if your certified TIN is received within the 60-day period and you were
not subject to backup withholding during the period.

As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date this form, and give it to the requester.

WHAT IS BACKUP WITHHOLDING? -- Persons making certain payments to you after
1992 are required to withhold and pay to the IRS 31% of such payments under
certain conditions. This is called "backup withholding." Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, nonemployee compensation, and certain
payments from fishing boat operators, but do not include real estate
transactions.

If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:

(1) You do not furnish your TIN to the requester, or

(2) The IRS notifies the requester that you furnished an incorrect TIN, or

(3) You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax return
(for reportable interest and dividends only), or

(4) You fail to certify to the requester that you are not subject to backup
withholding under (3) above (for reportable interest and dividend accounts
opened after 1983 only), or

(5) You fail to certify your TIN. This applies only to reportable interest,
dividend, broker or barter exchange accounts opened after 1983, or broker
accounts considered inactive in 1983.

Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies. Certain payees and payments
are exempt from backup withholding and information reporting. See PAYEES AND
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING, below, and EXEMPT PAYEES AND PAYMENTS
under SPECIFIC INSTRUCTIONS, on page 2, if you are an exempt payee.

PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. -- The following is a
list of payees exempt from backup withholding and for which no information
reporting is required. For interest and dividends, all listed payees are exempt
except item (9). For broker transactions, payees listed in (1) through (13) and
a person registered under the Investment Advisers Act of 1940 who regularly acts
as a broker are exempt. Payments subject to reporting under sections 6041 and
6041A are generally exempt from backup withholding only if made to payees
described in items (1) through (7), except that a corporation that provides
medical and health care services or bills and collects payments for such
services is not exempt from backup withholding or information reporting. Only
payees described in items (2) through (6) are exempt from backup withholding for
barter exchange transactions, patronage dividends, and payments by certain
fishing boat operators.

(1) A corporation.

(2) An organization exempt from tax under Section 501(a), or an IRA, or a
custodial account under section 403(b)(7).

(3) The United States or any of its agencies or instrumentalities.
<PAGE> 2

(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.

(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.

(6) An international organization or any of its agencies or
instrumentalities.

(7) A foreign central bank of issue.

(8) A dealer in securities or commodities required to register in the U.S.
or a possession of the U.S.

(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.

(10) A real estate investment trust.

(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.

(12) A common trust fund operated by a bank under section 584(a).

(13) A financial institution.

(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporation Secretaries,
Inc., Nominee List.

(15) A trust exempt from tax under section 664 or described in section 4947.

Payments of dividends and patronage dividends generally not subject to
backup withholding also include the following:

- Payments to nonresident aliens subject to withholding under section 1441.

- Payments to partnerships not engaged in trade or business in the U.S. and
that have at least one nonresident partner.

- Payments of patronage dividends not paid in money.

- Payments made by certain foreign organizations.

Payments of interest generally not subject to backup withholding include the
following:

- Payments of interest on obligations issued by individuals.

NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR
MORE AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE NOT
PROVIDED YOUR CORRECT TIN TO THE PAYER.

- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).

- Payments described in section 6049(b)(5) to nonresident aliens.

- Payments on tax-free covenant bonds under section 1451.

- Payments made by certain foreign organizations.

- Mortgage interest paid by you.

Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and their regulations.

PENALTIES

FAILURE TO FURNISH TIN. -- If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.

Civil Penalty for False Information With Respect to Withholding. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.

Criminal Penalty for Falsifying Information. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.

MISUSE OF TINS. -- If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.

SPECIFIC INSTRUCTIONS

NAME. -- If you are an individual, you must generally provide the name shown
on your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
social security card and your new last name.

If you are a sole proprietor, you must furnish your individual name and
either your SSN or EIN. You may also enter your business name. Enter your
name(s) as shown on your social security card and/or as it was used to apply for
your EIN on Form SS-4.

SIGNING THE CERTIFICATION. --

(1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND
BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. -- You are required to furnish
your correct TIN, but you are not required to sign the certification.

(2) INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED AFTER
1983 AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. -- You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item (2) in the certification before signing the form.

(3) REAL ESTATE TRANSACTIONS. -- You must sign the certification. You may
cross out item (2) of the certification.

(4) OTHER PAYMENTS. -- You are required to furnish your correct TIN, but you
are not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
<PAGE> 3

(5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY, OR IRA CONTRIBUTIONS. -- You are requested to furnish your correct
TIN, but you are not required to sign the certification.

(6) EXEMPT PAYEES AND PAYMENTS. -- If you are exempt from backup
withholding, you should complete this form to avoid possible erroneous backup
withholding. Enter your correct TIN in Part 1, write "EXEMPT" in the space in
Part II, and sign and date the form. If you are a nonresident alien or foreign
entity not subject to backup withholding, give the requester a completed Form
W-8, Certificate of Foreign Status.

(7) "AWAITING TIN". -- Follow the instructions under HOW TO OBTAIN A TIN, on
page 1, write "Applied For" in the space provided for the TIN in Part I of the
Substitute Form W-9 and sign and date the form.

SIGNATURE. -- For a joint account, only the person whose TIN is shown in
Part 1 should sign the form.

PRIVACY ACT NOTICE. -- Section 6109 requires you to furnish your correct TIN
to persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your TIN whether or not you are required to file a tax return. Payers must
generally withhold 31% of taxable interest, dividends, and certain other
payments to a payee who does not furnish a TIN to a payer. Certain penalties may
also apply.

WHAT NAME AND NUMBER TO GIVE THE REQUESTER

- ------------------------------------------------------------------
GIVE THE SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- ------------------------------------------------------------------
<S> <C> <C>
1. Individual The individual
2. Two or more individuals (joint The actual owner of the ac-
account) count or, if combined funds,
the first individual on the
account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-trustee(1)
trust (grantor is also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under state law
5. Sole proprietorship The owner(3)
6. Sole proprietorship The owner(3)
- ------------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF --
- ------------------------------------------------------------------
7. A valid trust, estate or pension Legal entity(4)
trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or
other tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state
or local government, school
district, or prison) that
receives agricultural program
payments
</TABLE>

- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the individual's name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)

NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER
WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.

<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer is made solely by the Offer to
Purchase (as defined below) and the related Letter of Transmittal, and is being
made to all holders of Shares. Purchaser (as defined below) is not aware of any
state where the making of the Offer is prohibited by administrative or judicial
action pursuant to any valid state statute. If Purchaser becomes aware of any
valid state statute prohibiting the making of the Offer or the acceptance of
Shares pursuant thereto, Purchaser will make a good faith effort to comply with
such state statute. If, after such good faith effort, Purchaser cannot comply
with such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by one or more registered brokers or dealers licensed under
the laws of such jurisdiction.

Notice of Offer to Purchase for Cash

All Outstanding Shares of Common Stock

SCS/Compute, Inc.

$6.75 Net Per Share

SCS Subsidiary, Inc.

a direct wholly owned subsidiary of

Thomson U.S. Holdings Inc.,

an indirect wholly owned subsidiary of

The Thomson Corporation

SCS Subsidiary, Inc., a Delaware corporation ("Purchaser") and a direct
wholly owned subsidiary of Thomson U.S. Holdings Inc., a Delaware corporation
("Parent") and an indirect wholly owned subsidiary of The Thomson Corporation,
a corporation organized under the laws of Ontario, Canada, is offering to
purchase all outstanding shares of Common Stock, par value $.10 per share (the
"Shares"), of SCS/Compute, Inc., a Delaware corporation (the "Company"), at a
price of $6.75 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated December 27, 1995
(the "Offer to Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer"). Following the Offer, Purchaser intends to
effect the Merger described below.

- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------

The Offer is conditioned upon, among other things, there being
validity tendered and not withdrawn prior to the expiration of the Offer at
least the number of Shares that when added to the number of Shares to be
purchased by Purchaser pursuant to the Stock Purchase Agreement (as described
below) shall constitute a majority of the Shares outstanding on a fully
diluted basis. The Offer is also conditioned upon, among other things, the
expiration or termination of the applicable antitrust waiting period.

The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of December 19, 1995 (the "Merger Agreement"), among Parent,
Purchaser and the Company. The Merger Agreement provides that, among other
things, as soon as practicable after the purchase of Shares pursuant to the
Offer and the satisfaction of the other conditions set forth in the Merger
Agreement and in accordance with relevant provisions of the General Corporation
Law of the State of Delaware ("Delaware Law"), Purchaser will be merged with
and into the Company (the "Merger"). Following consummation of the Merger, the
Company will continue as the surviving corporation (the "Surviving
Corporation") and will become a wholly owned subsidiary of Parent. At the
effective time of the Merger (the "Effective Time"), each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held in
the treasury of the Company, or owned by Purchaser, Parent or any direct or
indirect wholly owned subsidiary of Parent, and other than Shares held by
stockholders who shall have demanded and perfected appraisal rights, if any,
under Delaware Law) will be cancelled and converted automatically into the
right to receive $6.75 in cash, or any higher price that may be paid per Share
in the Offer, without interest.

THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT EACH OF THE
OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.

Simultaneously with entering into the Merger Agreement, Parent,
Purchaser and Robert W. Nolan, Sr., President and Chief Executive Officer of
the Company, entered into a Stock Purchase Agreement dated as of December 19,
1995 (the "Stock Purchase Agreement"), pursuant to which Mr. Nolan has agreed
to sell 1,082,570 Shares, representing approximately 40.1% of the outstanding
Shares, to Purchaser for a purchase price per Share equal to the price per
Share payable in the Offer.
<PAGE> 2
For purposes of the Offer, Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to Chemical
Mellon Shareholder Services, L.L.C. (the "Depositary") of Purchaser's
acceptance for payment of such Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payments from Purchaser and transmitting such payments to
tendering stockholders whose Shares have been accepted for payment. Under no
circumstances will interest on the purchase price for Shares be paid,
regardless of any delay in making such payment. In all cases, payment for
Shares tendered and accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) the certificates evidencing
such Shares (the "Share Certificates") or timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities (as defined in "THE TENDER OFFER -- Section 2. Acceptance
for Payment and Payment for Shares" of the Offer to Purchase) pursuant to the
procedure set forth in "THE TENDER OFFER -- Section 3. Procedures for Accepting
the Offer and Tendering Shares" of the Offer to Purchase, (ii) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees and (iii) any other documents required
under the Letter of Transmittal.

Purchaser expressly reserves the right, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), at any time and
from time to time, to extend for any reason the period of time during which the
Offer is open, including the occurrence of any condition specified in "THE
TENDER OFFER -- Section 14. Certain Conditions of the Offer" of the Offer to
Purchase, by giving oral or written notice of such extension to the Depositary.
Any such extension will be followed as promptly as practicable by public
announcement thereof, such announcement to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date of the Offer. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
rights of tendering stockholders to withdraw their Shares.

Tenders of Shares made pursuant to the Offer are irrevocable except
that such Shares may be withdrawn at any time prior to 12:00 Midnight, New York
City time, on Thursday, January 25, 1996 (or the latest time and date at which
the Offer, if extended by Purchaser, shall expire) and, unless theretofore
accepted for payment by Purchaser pursuant to the Offer, may also be
withdrawn at any time after February 24, 1996. For the withdrawal to be
effective, a written, telegraphic, telex or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover page of the Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of such Shares, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such Share Certificates, the serial numbers shown on such
Share Certificates must be submitted to the Depositary, and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution (as
defined in "THE TENDER OFFER -- Section 3. Procedures for Accepting the Offer
and Tendering Shares" of the Offer to Purchase), unless such Shares have been
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in "THE
TENDER OFFER -- Section 3. Procedures for Accepting the Offer and Tendering
Shares" of the Offer to Purchase, any notice of withdrawal must specify the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. All questions as to the form and validity
(including the time of receipt) of any notice of withdrawal will be determined
by Purchaser, in its sole discretion, whose determination will be final and
binding.

The information required to be disclosed by Rule 14d-6(e)(1)(vii) of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.

The Company has provided Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.

THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.

Questions and requests for assistance or for additional copies of the
Offer to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at Purchaser's expense. No fees or
commissions will be paid to brokers, dealers or other persons (other than the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.

The Information Agent for the Offer is:

[GEORGESON & COMPANY INC. LOGO]

Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
CALL TOLL FREE: 1-800-223-2064

December 27, 1995

<PAGE> 1
[SCS/COMPUTE(R) LETTERHEAD]

NEWS RELEASE

Contact at The Thomson Corporation: Nigel R. Harrison
Executive Vice President
203/328-9422

Contact at SCS/Compute: Charles G. Wilson
Executive Vice President
314/432-7323

FOR IMMEDIATE RELEASE

THE THOMSON CORPORATION AND SCS/COMPUTE, INC.
APPROVE MERGER AGREEMENT

ST. LOUIS, December 20, 1995 -- SCS/Compute, Inc. (SCS), a leading
software supplier to tax and accounting professionals, announced today that it
has entered into a definitive agreement and plan of merger with Thomson U.S.
Holdings, Inc., a division of The Thomson Corporation (Thomson) of Toronto,
Canada. The principal activities of Thomson are specialized information and
publishing, and leisure travel. With annual sales of U.S. $6.5 billion, and
45,000 employees, Thomson operates primarily in North America and the United
Kingdom and has expanding interests internationally.
Robert W. Nolan, Sr., chairman, president and chief executive officer
of SCS, has entered into a definitive agreement with Thomson to sell his
1,082,570 shares of common stock at a price of $6.75 per share. Under the terms
of the merger agreement, Thomson will begin a $6.75 per share cash tender offer
no later than Wednesday, December 27, 1995 for the remaining 1,489,407 shares
of SCS's outstanding common stock. SCS is listed on the NASDAQ Small-Cap Stock
market under the symbol SCOMC.
<PAGE> 2
Add one

The Board of Directors of SCS has approved the merger agreement and has
determined that the proposed transaction is fair to, and in the best interests
of, the SCS stockholders. In reaching this conclusion, the Board of Directors
relied in part upon the fairness opinion from Fister & Associates, Inc., the
financial advisor to SCS.

The acquisition is subject to more than 50 percent of the shares
outstanding being tendered, including Nolan's stock. The completion of the
merger is also subject to other customary conditions. Following the completion
of the transaction, SCS will operate as a separate company within Thomson's
Research Institute of America (RIA) Group. RIA Group, formed earlier this year,
is comprised of RIA, Warren Gorham & Lamont, and Practitioners Publishing
Company. Together these professional publishers are one of the leading
information providers to the tax and accounting markets in the United States.

###

<PAGE> 1
FIVE YEAR SUMMARY
(millions of US dollars except per common share amounts)

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SALES
Thomson Corporation Publishing
International(1) 1,885 1,709 1,758 1,607 1,586
Thomson Financial & Professional
Publishing 1,132 992 893 783 729
-------------------------------------
Total Information/Publishing 3,017 2,701 2,651 2,390 2,315
Thomson Newspapers 1,110 1,108 1,125 1,142 1,158
Thomson Travel 2,227 2,040 2,204 2,057 1,891
- -----------------------------------------------------------------------------
6,354 5,849 5,980 5,589 5,364
- -----------------------------------------------------------------------------
OPERATING PROFIT BEFORE AMORTIZATION,
CORPORATE AND UNUSUAL CHARGES
Thomson Corporation Publishing
International(1) 313 291 255 235 244
Thomson Financial & Professional
Publishing 175 149 135 128 128
-------------------------------------
Total Information/Publishing 488 440 390 363 372
Thomson Newspapers 191 174 191 228 282
Thomson Travel 140 117 107 101 72
- -----------------------------------------------------------------------------
819 731 688 692 726
- -----------------------------------------------------------------------------
OPERATING CASH FLOW(2)
Thomson Corporation Publishing
International(1) 411 375 331 308 306
Thomson Financial & Professional
Publishing 235 198 171 156 155
-------------------------------------
Total Information/Publishing 646 573 502 464 461
Thomson Newspapers 247 227 242 270 317
Thomson Travel 208 181 178 164 127
- -----------------------------------------------------------------------------
1,101 981 922 898 905
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
EARNINGS 427 277 166 292 385
EARNINGS PER COMMON SHARE $0.74 $0.48 $0.30 $0.53 $0.70
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION(3)
Earnings excluding unusual
charges 427 352 336 292 323
Earnings per common share excluding
unusual charges $0.74 $0.62 $0.60 $0.53 $0.59
- -----------------------------------------------------------------------------
</TABLE>
(1) Thomson Corporation Publishing International includes the operations of
Thomson Regional Newspapers in the UK.
(2) Operating cash flow is operating profit (before amortization, corporate and
unusual charges) after adding back depreciation.
(3) For comparability with prior years, supplemental earnings and earnings per
common share are shown after adjusting for:
a) The reduction of 1990 earnings for amortization of publishing rights
and circulation of $62 million ($0.11 per common share). The accounting
standard requiring the amortization of publishing rights and
circulation was adopted prospectively in 1991 and prior years were not
restated.
b) The add back of unusual charges of $75 million ($0.14 per common
share), net of tax, in 1993 and $170 million ($0.30 per common share),
net of tax, in 1992.

<PAGE> 2
MANAGEMENT REPORT

The management of The Thomson Corporation is responsible for the accompanying
consolidated financial statements and other information included in the annual
report. The financial statements have been prepared in conformity with
Canadian generally accepted accounting principles using the best estimates and
judgments of management, where appropriate. Information presented elsewhere in
this annual report is consistent with that in the financial statements.

Management is also responsible for a system of internal control which
is designed to provide reasonable assurance that assets are safeguarded,
liabilities are recognized and that the accounting systems provide timely and
accurate financial reports.

The Board of Directors is responsible for ensuring that management
fulfils its responsibilities in respect of financial reporting and internal
control. The Audit Committee of the Board of Directors meets periodically with
management and the Corporation's independent auditors to discuss auditing
matters and financial reporting issues. In addition, the Audit Committee
reviews the annual consolidated financial statements and annually recommends to
the Board of Directors the appointment of the independent auditors.

/s/ MICHAEL BROWN /s/ NIGEL R. HARRISON
- ---------------------------- ----------------------------
Michael Brown Nigel R. Harrison
President Executive Vice-President and
Chief Financial Officer

March 15, 1995

AUDITOR'S REPORT

To the shareholders of The Thomson Corporation

We have audited the accompanying consolidated balance sheets of The Thomson
Corporation as at December 31, 1994 and 1993 and the consolidated statements of
earnings and retained earnings and of changes in cash position for the years
then ended. These financial statements are the responsibility of the
Corporation'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 an audit to obtain
reasonable assurance as to 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.

In our opinion, these consolidated financial statements present fairly,
in all material respects, the financial position of the Corporation as at
December 31, 1994 and 1993 and the results of its operations and the changes in
its cash position for the years then ended in accordance with generally
accepted accounting principles.

PRICE WATERHOUSE
- -------------------------
Price Waterhouse
Chartered Accountants
Toronto, Canada

March 15, 1995
<PAGE> 3
CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS

(millions of US dollars except per common share amounts)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
YEAR ENDED DECEMBER 31 1994 1993
- ----------------------------------------------------------------------
<S> <C> <C>
Sales 6,354 5,849
Cost of sales, selling, marketing, general
and administrative expenses (5,253) (4,868)
Depreciation (282) (250)
- ----------------------------------------------------------------------
Operating profit before amortization,
corporate and unusual charges 819 731
Amortization (notes 9 and 10) (118) (115)
Corporate and other (note 2) (15) (14)
Unusual charges (note 3) -- (100)
- ----------------------------------------------------------------------
Operating profit after amortization,
corporate and unusual charges 686 502
Net interest expense and other financing
costs (note 4) (169) (175)
Income taxes (note 5) (90) (50)
- ----------------------------------------------------------------------
Earnings 427 277
Retained earnings at beginning of year 2,599 2,580
Dividends declared on common shares
(note 14) (269) (258)
- ----------------------------------------------------------------------
Retained earnings at end of year 2,757 2,599
- ----------------------------------------------------------------------
Earnings per common share (note 6) $0.74 $0.48
- ----------------------------------------------------------------------
</TABLE>
<PAGE> 4
CONSOLIDATED BALANCE SHEET
(millions of US dollars)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
December 31 1994 1993
- ----------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and short-term investments, at cost
which approximates market 514 496
Accounts receivable 821 671
Inventories 292 272
Prepaid expenses and other current assets 318 331
- ---------------------------------------------------------------------
1,945 1,770
Property and equipment (note 7) 1,467 1,378
Aircraft and spares (note 8) 748 681
Publishing rights and circulation (note 9) 3,184 2,611
Goodwill (note 10) 1,665 1,412
Other assets 349 361
- ---------------------------------------------------------------------
9,358 8,213
- ---------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term indebtedness 204 178
Accounts payable 1,112 914
Deferred revenue 662 552
Current portion of long-term debt and
finance leases (notes 11 and 12) 28 15
- ---------------------------------------------------------------------
2,006 1,659
Long-term debt (note 11) 2,998 2,612
Finance leases (note 12) 378 381
Other liabilities 411 300
Deferred income taxes 313 269
- ---------------------------------------------------------------------
6,106 5,221
- ---------------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Share capital (notes 13 and 14) 830 728
Cumulative translation adjustment (335) (335)
Retained earnings 2,757 2,599
- ---------------------------------------------------------------------
3,252 2,992
- ---------------------------------------------------------------------
9,358 8,213
- ----------------------------------------------------------------------
</TABLE>

Approved by the Board

/s/ K.R. THOMSON
- ----------------------------
Kenneth R. Thomson, Director

/s/ MICHAEL BROWN
- ----------------------------
Michael Brown, Director
<PAGE> 5
CONSOLIDATED STATEMENT OF CHANGES IN CASH POSITION
(millions of US dollars except per common share amounts)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Year ended December 31 1994 1993
- ----------------------------------------------------------------------
<S> <C> <C>
CASH PROVIDED BY (USED FOR):
OPERATIONS
Earnings 427 277
Add (deduct) items not involving cash:
Depreciation 282 250
Amortization 118 115
Unusual charges -- 91
Deferred taxes 22 (11)
Other 25 30
- ----------------------------------------------------------------------
874 752
Changes in working capital and other items 87 5
- ----------------------------------------------------------------------
961 757
- ----------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisitions of businesses, less cash
therein of $28 million (1993--$1 million) (876) (90)
Proceeds from disposals of businesses 62 71
Additions to property and equipment, less
proceeds from disposals of $14 million
(1993--$30 million) (308) (313)
Additions to aircraft and spares, less
proceeds from disposals of $10 million
(1993--$93 million) (66) (123)
- ----------------------------------------------------------------------
(1,188) (455)
- ----------------------------------------------------------------------
FINANCING ACTIVITIES
Net change in long-term debt and finance
leases 370 (7)
Redemption of preference shares -- (113)
Dividends paid on common shares (note 14) (167) (142)
- ----------------------------------------------------------------------
203 (262)
- ----------------------------------------------------------------------
(24) 40
Translation adjustments 16 (8)
- ----------------------------------------------------------------------
(Decrease)/increase in cash (8) 32
Cash at beginning of year 318 286
- ----------------------------------------------------------------------
Cash at end of year(1) 310 318
- ----------------------------------------------------------------------
Cash flow per common share provided by
operations, before changes in working
capital and other items (note 6) $1.51 $1.32
- ----------------------------------------------------------------------
</TABLE>
(1) Cash comprises cash and short-term investments of $514 million (1993--$496
million) less short-term indebtedness of $204 million (1993--$178 million).
<PAGE> 6

SEGMENTED INFORMATION
(millions of US dollars)

The principal activities of The Thomson Corporation (TTC) are specialized
information and publishing, newspaper publishing, and leisure travel. TTC
operates mainly in the United States, the United Kingdom and Canada.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
TOTAL
INFORMATION/
BUSINESS SEGMENTS -- 1994 TCPI(1) TFPPG PUBLISHING TN TTG CORPORATE TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

Sales 1,885 1,132 3,017 1,110 2,227 -- 6,354

Cost of sales, selling, marketing, general
and administrative expenses (1,474) (897) (2,371) (863) (2,019) -- (5,253)
- -------------------------------------------------------------------------------------------------------------------------
Operating cash flow 411 235 646 247 208 -- 1,101

Depreciation (98) (60) (158) (56) (68) -- (282)
- -------------------------------------------------------------------------------------------------------------------------
Operating profit before amortization
and corporate(2) 313 175 488 191 140 -- 819

Amortization (44) (42) (86) (29) (3) -- (118)

Corporate and other -- -- -- -- -- (15) (15)
- --------------------------------------------------------------------------------------------------------------------------
Operating profit after amortization
and corporate 269 133 402 162 137 (15) 686
- --------------------------------------------------------------------------------------------------------------------------
Acquisitions of businesses 847 12 859 -- 45 -- 904
- --------------------------------------------------------------------------------------------------------------------------
Additions to fixed assets(3) 136 102 238 34 102 -- 374
- --------------------------------------------------------------------------------------------------------------------------
Assets(4) 3,588 2,073 5,661 1,916 1,691 90 9,358
- --------------------------------------------------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
TOTAL
INFORMATION/
BUSINESS SEGMENTS -- 1993 TCPI(1) TFPPG PUBLISHING TN TTG CORPORATE TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

Sales 1,709 992 2,701 1,108 2,040 -- 5,849

Cost of sales, selling, marketing, general
and administrative expenses (1,334) (794) (2,128) (881) (1,859) -- (4,868)
- -------------------------------------------------------------------------------------------------------------------------
Operating cash flow 375 198 573 227 181 -- 981

Depreciation (84) (49) (133) (53) (64) -- (250)
- -------------------------------------------------------------------------------------------------------------------------
Operating profit before amortization,
corporate and unusual charges(2) 291 149 440 174 117 -- 731

Amortization (43) (39) (82) (31) (2) -- (115)

Corporate and other -- -- -- -- -- (14) (14)

Unusual charges -- -- -- (100) -- -- (100)
- --------------------------------------------------------------------------------------------------------------------------
Operating profit after amortization,
corporate and unusual charges 248 110 358 43 115 (14) 502
- --------------------------------------------------------------------------------------------------------------------------
Acquisitions of businesses 81 10 91 -- -- -- 91
- --------------------------------------------------------------------------------------------------------------------------
Additions to fixed assets(3) 124 88 212 55 169 -- 436
- --------------------------------------------------------------------------------------------------------------------------
Assets(4) 2,545 2,010 4,555 1,999 1,560 99 8,213
- --------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1) Thomson Corporation Publishing International includes the operations of
Thomson Regional Newspapers in the UK.
(2) Thomson Travel's operating profit excludes $20 million (1993 -- $11 million)
of net interest income. There were no aircraft disposal profits in 1994
(1993 -- profits of $5 million).
(3) Additions to fixed assets which comprise property and equipment, and
aircraft and spares, are shown net of proceeds from disposals of $24
million (1993 -- $123 million).
(4) Corporate assets principally comprise cash.

<PAGE> 7
SEGMENTED INFORMATION
(millions of US dollars)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
GEOGRAPHIC SEGMENTS--1994 UNITED UNITED OTHER
STATES KINGDOM CANADA COUNTRIES CORPORATE TOTAL
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 2,708 2,953 485 208 -- 6,354

Operating profit before
amortization and corporate 486 244 66 23 -- 819

Amortization (97) (15) (1) (5) -- (118)

Corporate and other -- -- -- -- (15) (15)
- ---------------------------------------------------------------------------------------------------------------------
Operating profit after
amortization and corporate 389 229 65 18 (15) 686
- ---------------------------------------------------------------------------------------------------------------------
Assets 6,026 2,513 413 316 90 9,358
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
UNITED UNITED OTHER
GEOGRAPHIC SEGMENTS--1993 STATES KINGDOM CANADA COUNTRIES CORPORATE TOTAL
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 2,468 2,734 490 157 -- 5,849

Operating profit before
amortization, corporate
and unusual charges 435 216 59 21 -- 731

Amortization (95) (16) (2) (2) -- (115)

Corporate and other -- -- -- -- (14) (14)

Unusual charges (72) -- (28) -- -- (100)
- ---------------------------------------------------------------------------------------------------------------------
Operating profit after
amortization, corporate
and unusual charges 268 200 29 19 (14) 502
- ---------------------------------------------------------------------------------------------------------------------
Assets 5,032 2,333 446 303 99 8,213
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unless otherwise stated, all figures are in millions of US dollars)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements of TTC include all effectively controlled
companies and are prepared in accordance with accounting principles generally
accepted in Canada.

FOREIGN CURRENCY

Assets and liabilities of subsidiaries denominated in currencies other than US
dollars are translated at December 31 rates of exchange and the results of
their operations are translated at average rates of exchange for the year. The
resulting translation adjustments are accumulated in a separate component of
shareholders' equity. Other currency gains or losses are included in earnings.

The rates of exchange used to translate amounts expressed in the
significant currencies other than US dollars are as follows:

<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Pound sterling (US $/pound sterling 1)
- ------------------------------------------------------------------------------
Average for the year $1.53 $1.50

AT DECEMBER 31 $1.56 $1.48
- ------------------------------------------------------------------------------
CANADIAN DOLLAR (US $/CDN $1)
- ------------------------------------------------------------------------------
AVERAGE FOR THE YEAR $0.73 $0.78

AT DECEMBER 31 $0.71 $0.76
- ------------------------------------------------------------------------------
</TABLE>

INVENTORIES

Inventories comprise principally finished goods and are valued at the lower of
cost and net realizable value. Cost is determined principally on a first-in,
first-out basis.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and depreciated on a straight line
basis over their estimated useful lives. Buildings and building improvements
are depreciated over lives ranging from 10 to 40 years. Newspaper presses and
other equipment are depreciated over lives ranging from 3 to 25 years.

AIRCRAFT AND SPARES

Aircraft and spares are depreciated on a straight line basis over their
estimated useful lives, ranging from 14 to 20 years.

PUBLISHING RIGHTS AND CIRCULATION

Publishing rights and circulation are recorded at acquisition cost and are
amortized over periods not exceeding 40 years. Any permanent impairment in the
value of publishing rights and circulation is written off against earnings.

GOODWILL

Goodwill represents the excess of the cost of the investment in acquired
businesses over values attributed to underlying net tangible assets, publishing
rights and circulation and is amortized over periods not exceeding 40 years.
Any permanent impairment in the value of goodwill is written off against
earnings.
<PAGE> 9
DEFERRED REVENUE

Inclusive tour revenue is included in deferred revenue until the date of tour
departure.

Subscription revenue received in advance of the delivery of services or
publications is included in deferred revenue and as services are rendered or
publications sent to subscribers the proportionate share is recognized as
revenue.

DEFERRED INCOME TAXES

The tax allocation method is followed in providing for income taxes whereby
earnings are charged with income taxes relating to reported profits.
Differences between such taxes and taxes currently payable, which result from
timing differences between the recognition of income and expenses for
accounting and tax purposes, are reflected as deferred income taxes.

2. CORPORATE AND OTHER

Corporate and other comprises unallocated central costs, and gains and losses
arising on the disposal of businesses, including in 1994 the gain on the sale
of TTC's 50% interest in Thomson Directories.

3. UNUSUAL CHARGES

In 1993, a charge of $100 million was recorded for the costs to complete a
restructuring program at Thomson Newspapers designed to improve the long-term
competitive positioning of its newspapers in both the US and Canada and their
future profitability. The restructuring program included technology and
production improvements, the contracting out of certain activities, the
write-off of non-productive assets, the write-down of certain intangible
assets, and related severance costs.

4. NET INTEREST EXPENSE AND OTHER FINANCING COSTS

<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Interest income 47 31

Interest on short-term indebtedness (31) (18)

Interest on long-term debt and
finance leases (175) (171)

Dividends declared on preference
shares (10) (17)
- --------------------------------------------------------------
(169) (175)
- --------------------------------------------------------------
</TABLE>

5. INCOME TAXES

Income taxes of $90 million (1993 -- $50 million) as a percentage of pre-tax
earnings are 17.4% (1993 -- $15.3%). This effective tax rate differs from the
Canadian corporate tax rate of approximately 44% (1993 -- 44%) due principally
to the effect of lower tax rates in other countries and the use of tax losses.

TTC and its subsidiaries have certain loss carryforwards, the benefits
of which have not been recorded in these consolidated financial statements.
These tax loss carryforwards approximate $400 million and expire between 1996
and 2009. The ability to realize these benefits is dependent upon a number of
factors including future profitable operations in the jurisdictions in which
the tax losses arose.

<PAGE> 10
6. EARNINGS AND CASH FLOW PER COMMON SHARE

The weighted average number of common shares outstanding in 1994 was
580,342,513 (1993--571,329,994).

7. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
1994 1993

Land and buildings 590 594

Newspaper presses and other equipment 1,885 1,629

Newspaper presses and other equipment held under finance leases 127 155
- --------------------------------------------------------------------------------------------------------
2,602 2,378

Accumulated depreciation (1,135) (1,000)
- --------------------------------------------------------------------------------------------------------
1,467 1,378
- --------------------------------------------------------------------------------------------------------
</TABLE>

8. AIRCRAFT AND SPARES

<TABLE>
<CAPTION>
1994 1993

Aircraft and spares 275 252

Aircraft held under finance leases 662 581
- --------------------------------------------------------------------------------------------------------
937 833

Accumulated depreciation (189) (152)
- --------------------------------------------------------------------------------------------------------
748 681
- --------------------------------------------------------------------------------------------------------
</TABLE>

9. PUBLISHING RIGHTS AND CIRCULATION

<TABLE>
<CAPTION>
1994 1993

Publishing rights and circulation 3,528 2,891

Accumulated amortization (344) (280)
- --------------------------------------------------------------------------------------------------------
3,184 2,611
- --------------------------------------------------------------------------------------------------------
The amortization charge in 1994 was $78 million (1993--$74 million).
</TABLE>

10. GOODWILL

<TABLE>
<CAPTION>
1994 1993

Goodwill 1,987 1,707

Accumulated amortization (322) (295)
- --------------------------------------------------------------------------------------------------------
1,665 1,412
- --------------------------------------------------------------------------------------------------------
The amortization charge in 1994 was $40 million (1993--$41 million).
</TABLE>

<PAGE> 11

11. LONG-TERM DEBT

<TABLE>
<CAPTION>
1994 1993

Bank -- unsecured 1995-1999 807 1,126

Eurobonds -- unsecured 1994 -- 105

Debentures -- unsecured 1996-2004 1,151 969

US private placements -- unsecured 1995-2004 625 415

Loan notes -- unsecured 1995(1) 426 --
- -------------------------------------------------------------------------------
3,009 2,615

Portion included in current liabilities(2) (11) (3)
- -------------------------------------------------------------------------------
2,998 2,612
- -------------------------------------------------------------------------------
</TABLE>

(1) These loan notes were issued in connection with the acquisition of
Information Access Company in December 1994.
(2) Excluded from the current portion of long-term debt at December 31, 1994 are
amounts maturing in 1995 of $824 million which TTC intends to refinance with
committed revolver bank facilities. At December 31, 1994, TTC had undrawn
revolver bank facilities of $1,021 million which expire in the period
1996-1999.

After taking account of hedging arrangements, long-term debt is denominated in
the following currencies:

<TABLE>
<CAPTION>
1994 1993

US dollar 2,939 2,605

Other currencies 70 10
- ------------------------------------------------------------------------------
3,009 2,615
- ------------------------------------------------------------------------------
</TABLE>

The average effective cost of borrowing at December 31, 1994 was 6.9% (1993 --
5.5%) after adjusting for hedging arrangements.

After taking account of the debt to be refinanced in 1995, maturities
in each of the next five years and thereafter are: $11 million in 1995, $387
million in 1996, $343 million in 1997, $566 million in 1998, $522 million in
1999, and $1,180 million in 2000 and thereafter.

12. FINANCE LEASES

Finance lease obligations, principally in respect of aircraft and newspaper
presses, are as follows:

<TABLE>
<CAPTION>
1994 1993

Total future minimum lease payments 612 658

Imputed interest (217) (265)
- -------------------------------------------------------------------------------
395 393

Portion included in current liabilities (17) (12)
- -------------------------------------------------------------------------------
378 381
- -------------------------------------------------------------------------------
Aircraft 266 264

Newspaper presses and other equipment 129 129
- -------------------------------------------------------------------------------
395 393
- -------------------------------------------------------------------------------
</TABLE>

Future minimum lease payments are $37 million in 1995, $38 million in 1996, $40
million in 1997, $42 million in 1998, $46 million in 1999, and $409 million in
2000 and thereafter.

<PAGE> 12
The outstanding finance lease obligations, net of imputed interest, are
denominated in the following currencies:

<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Pound sterling 356 300

US dollar 39 93
- -----------------------------------------------------------------------
395 393
- -----------------------------------------------------------------------
</TABLE>

The average imputed interest rate at December 31, 1994 was 5.9% (1993--4.4%)
after adjusting for hedging arrangements.

13. PREFERENCE SHARE CAPITAL

<TABLE>
<CAPTION>
1994 1993
Number of Stated Number of Stated
Shares Capital Shares Capital
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series II 6,000,000 110 6,000,000 110
- -----------------------------------------------------------------------------
</TABLE>

The authorized preference share capital of TTC is an unlimited number of
preference shares without par value. The directors are authorized to issue
preference shares without par value in one or more series, and to determine the
number of shares in and terms attaching to each such series. During 1993, TTC
redeemed 6,066,768 shares, which represented all of the outstanding Series I,
III and IV preference shares, for the combined stated capital amount of $113
million.

SERIES II, CUMULATIVE REDEEMABLE FLOATING RATE PREFERENCE SHARES

The Series II preference shares are non-voting and are redeemable at the option
of TTC for Cdn $25.00 per share, together with accrued dividends. Dividends are
payable quarterly thereon at an annual rate of 70% of the Canadian bank prime
rate applied to the stated capital of such shares. The total number of
authorized Series II preference shares is 6,000,000.

14. COMMON SHARE CAPITAL AND DIVIDENDS

TTC COMMON SHARES

1994 1993
Number of Stated Number of Stated
Shares Capital Shares Capital
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at beginning of year 576,929,319 618 567,250,412 502

Issued 8,558,411 102 9,678,907 116
- -----------------------------------------------------------------------------
Balance at end of year 585,487,730 720 567,929,319 618
- -----------------------------------------------------------------------------
</TABLE>
<PAGE> 13
The common shares are voting shares. The authorized common share capital of
TTC is an unlimited number of shares.

Holders of the common shares may participate in the dividend
reinvestment plan under which cash dividends are automatically reinvested in
new common shares having a value equal to the cash dividend. Such shares are
valued at the weighted average price at which the common shares were traded on
The Toronto Stock Exchange during the five trading days immediately preceding
the record date for such dividend. All of the share issues made in 1994 and
1993 were in connection with the dividend reinvestment plan.

TTCPLC COMMON SHARES

Linked to 236,668,564 of the common shares of TTC (1993 -- 238,046,690) are the
same number of related common shares of The Thomson Corporation PLC (TTCPLC) of
1 sterling penny each. Included in the stated capital of TTC is $4 million
(1993 -- $4 million) in respect of these shares.

The authorized common share capital of TTCPLC is 300,000,000 shares of
1 sterling penny each. The TTCPLC common shares are non-voting and may be
redeemed by TTCPLC at any time at their par value on not less than one month's
prior notice. All of the voting ordinary shares of TTCPLC are held indirectly
by TTC.
Dividends will be paid on the TTCPLC common shares in pounds sterling
unless the shareholder has elected to receive dividends on the related TTC
common shares. Dividends on the TTCPLC common shares are payable in priority to
dividends on the TTCPLC voting ordinary shares.

Holders of the TTCPLC common shares may also participate in the
dividend reinvestment plan and during 1994, 502,966 (1993 -- 474,277) of such
shares were issued under the plan.

If at any time, any TTCPLC common shares are both registered on the
Canadian branch register of TTCPLC and held by shareholders who have elected to
receive dividends on their common shares of TTC rather than on the related
TTCPLC common shares, such TTCPLC common shares will be redeemed by TTCPLC at
par. During 1994, 1,881,092 (1993 -- 810,460) TTCPLC common shares were
redeemed in this way.

DIVIDENDS

Dividends on the TTC common shares are declared and payable in US dollars.
Dividends declared per common share in 1994 were 46.4 cents (1993 -- 45.2
cents). Equivalent dividends of 30.2505 pence (1993 -- 30.1048 pence) were paid
per related common share of TTCPLC. Shareholders have the option of receiving
dividends on the TTC common shares in equivalent Canadian funds.

In the consolidated statement of changes in cash position, dividends
paid on common shares are shown net of $73 million (1993 -- $85 million)
reinvested in common shares issued under the dividend reinvestment plan and $29
million (1993 -- $31 million) by way of private placements of common shares to
TTC's major shareholders. These private placements discharged, in part, the
commitment of TTC's major shareholders to participate in the plan to the extent
of at least 50% of the dividends received on the TTC common shares directly and
indirectly owned by them. TTC's major shareholders acquired these common shares
on the same terms and conditions under which TTC issues common shares to
shareholders participating in the plan.

<PAGE> 14
15. PENSION PLANS

TTC maintains pension plans which cover most of its employees. TTC uses the
accrued benefit actuarial method and best estimate assumptions to determine
pension costs, liabilities and other pension information for defined benefit
plans.

AGGREGATE DEFINED BENEFIT PLAN DETAILS: 1994 1993

Pension expense for the year 11 15

Present value of accumulated benefit
obligation as at December 31 565 471

Market value of plan assets as at
December 31 724 722
- ----------------------------------------------------------------------
Pension expense for the year in respect of defined contribution plans was $32
million (1993 -- $28 million). Other post-employment benefit arrangements vary
by business and geographic segment and, where they do exist, the costs of these
are expensed as incurred.

16. CONTINGENCIES AND COMMITMENTS

OPERATING LEASES

Operating lease payments in 1994 were $151 million (1993 -- $139 million). The
future minimum operating lease payments are $163 million in 1995, $145 million
in 1996, $127 million in 1997, $123 million in 1998, $96 million in 1999, and
$636 million in 2000 and thereafter.

CAPITAL COMMITMENTS

Capital expenditures contracted for but for which no related liability had been
incurred at December 31, 1994 amounted to $287 million ($65 million in 1993),
principally in respect of orders for one aircraft to be delivered in 1995 and
four to be delivered in 1996. It is management's present intention that the
1995 aircraft will be finance leased and that the aircraft to be delivered in
1996 will be operating leased.

17. ACQUISITIONS AND DISPOSALS OF BUSINESSES

On December 7, 1994, TTC acquired Information Access Company (IAC) for $465
million, satisfied by a combination of cash and notes. The notes, which
totalled $426 million, were repaid on March 1, 1995. IAC is a leading provider
of reference and database services to public and academic libraries.

On December 20, 1994, TTC acquired The Medstat Group, a provider of
healthcare information databases and decision support software, for a cash
consideration of $339 million.

On August 8, 1994, TTC acquired Country Holidays (CH) for a cash
consideration of $45 million. CH is the UK's largest holiday cottage letting
agency.

Other businesses were acquired during the year for an aggregate cash
consideration of $55 million (1993 -- $91 million). All acquisitions have been
accounted for on the purchase basis and the results of acquired businesses are
included in the consolidated financial statements from the dates of
acquisition.
<PAGE> 15
Details of net assets acquired are as follows:

<TABLE>
<CAPTION>
OTHER COUNTRY 1994 1993
IAC MEDSTAT PUBLISHING HOLIDAYS TOTAL TOTAL
<S> <C> <C> <C> <C> <C> <C>
Working capital including
cash of $28 million
(1993 -- $1 million) (42) 33 (5) (10) (24) 2

Property and equipment 18 7 1 2 28 2

Publishing rights and
circulation 374 231 25 -- 630 57

Goodwill 117 68 37 54 276 34

Long-term debt and other
liabilities (2) -- (3) (1) (6) (4)
- ---------------------------------------------------------------------------------------------------------------------
465 339 55 45 904 91
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Allocations related to certain acquisitions may be subject to adjustment
pending final valuation.

Certain businesses, principally the 50% interest in Thomson
Directories, were sold in 1994 for a total cash consideration of $62 million
(1993 -- $71 million).

18. FINANCIAL INSTRUMENTS

TTC enters into hedging arrangements through the forward currency exchange and
swap markets to reduce its exposure to currency and interest rate fluctuations.
While the hedging instruments are subject to the risk of loss from changes in
interest and exchange rates, these losses would generally be offset by gains on
the exposures being hedged.

During 1994, TTC entered into various forward exchange contracts to
hedge substantially all of its investments in non-US dollar net assets. Gains
and losses on contracts that hedge net investments in foreign subsidiaries are
recognized in the cumulative translation adjustment account in shareholders'
equity.

19. RELATED PARTY TRANSACTION

In June 1993, TTC acquired certain land development assets in the US from an
affiliate of The Woodbridge Company Limited which had previously acquired such
assets from Markborough Properties. Through Woodbridge and its affiliates, the
Thomson family owns approximately 72% of the common shares of TTC and
approximately 64% of the common shares of Markborough. The transaction was
reviewed by a committee of independent directors of TTC and determined to be
fair and reasonable to its minority shareholders.

The purchase price was $30 million and additional amounts may be
payable in 1998. The additional amounts payable shall be a portion of the cash
generated to June 1998 from the properties acquired, plus the independently
determined values of properties unsold at that date. At December 31, 1994,
based on cash generated to that date, an additional purchase price payable of
$71 million (1993 -- $25 million) has been recorded. The extent to which TTC
will benefit from tax losses relating to such properties will depend on the
total amount generated by the properties acquired.

20. SEGMENTED INFORMATION

See pages 52 and 53.

21. COMPARATIVE FIGURES

The comparative figures have been reclassified where necessary to conform with
the current year's presentation.

<PAGE> 1
AGREEMENT AND PLAN OF MERGER

Among

THOMSON U.S. HOLDINGS INC.,

SCS SUBSIDIARY, INC.

and

SCS/COMPUTE, INC.

Dated as of December 19, 1995
<PAGE> 2
Glossary of Defined Terms

<TABLE>
<CAPTION>
Defined Term Location of Definition
<S> <C>
affiliate ................................................ Section 9.03(a)
Agreement ................................................ Preamble
beneficial owner ......................................... Section 9.03(b)
Blue Sky Laws ............................................ Section 3.05(b)
Board .................................................... Recitals
business day ............................................. Section 9.03(c)
Certificate of Merger .................................... Section 2.02
Certificates ............................................. Section 2.09(b)
Code ..................................................... Section 3.10(a)
Company .................................................. Preamble
Competing Proposal ....................................... Section 8.03(a)
Confidentiality Agreement ................................ Section 6.04(b)
control .................................................. Section 9.03(d)
Delaware Law ............................................. Recitals
Disclosure Schedule ...................................... Section 3.03
Dissenting Shares ........................................ Section 2.08(a)
Effective Time ........................................... Section 2.02
Environmental Claims ..................................... Section 3.16(a)
Environmental Law ........................................ Section 3.16(a)
Environmental Permit ..................................... Section 3.16(a)
ERISA .................................................... Section 3.10(a)
Exchange Act ............................................. Section 1.02(b)
Expenses ................................................. Section 8.03(a)
Fee ...................................................... Section 8.03(a)
Governmental Authority ................................... Section 3.16(a)
Hazardous Materials ...................................... Section 3.16(a)
HSR Act .................................................. Section 3.05(b)
Indemnified Parties ...................................... Section 6.07(b)
Intellectual Property .................................... Section 3.14(a)
IRS ...................................................... Section 3.10(a)
leased property .......................................... Section 3.16(a)
Licensed Intellectual Property ........................... Section 3.14(a)
Liens .................................................... Section 3.13(b)
Material Adverse Effect .................................. Section 3.01
Material Contract ........................................ Section 3.17
Merger ................................................... Recitals
Merger Consideration ..................................... Section 2.06(a)
Minimum Condition ........................................ Section 1.01(a)
Multiemployer Plan ....................................... Section 3.10(b)
Multiple Employer Plan ................................... Section 3.10(b)
1994 Balance Sheet ....................................... Section 3.07(c)
Offer .................................................... Recitals
Offer Documents .......................................... Section 1.01(b)
Offer to Purchase ........................................ Section 1.01(b)
Option ................................................... Section 2.07
Owned Intellectual Property .............................. Section 3.14(a)
Parent ................................................... Preamble
Paying Agent ............................................. Section 2.09(a)
Permitted Liens .......................................... Section 3.13(b)
Per Share Amount ......................................... Recitals
person ................................................... Section 9.03(e)
Plans .................................................... Section 3.10(a)
Proxy Statement .......................................... Section 3.12
Purchaser ................................................ Preamble
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Schedule 14D-9 .......................................... Section 1.02(b)
Schedule 14D-1 .......................................... Section 1.01(b)
SEC ...................................................... Section 1.01(b)
SEC Reports .............................................. Section 3.07(a)
Securities Act ........................................... Section 3.07(a)
Shares ................................................... Recitals
Stockholders' Meeting .................................... Section 6.01(a)
subsidiary ............................................... Section 9.03(f)
Surviving Corporation .................................... Section 2.01
Transactions ............................................. Section 3.04
WARN ..................................................... Section 3.10(f)
</TABLE>
<PAGE> 4
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I

THE OFFER

SECTION 1.01. The Offer............................................. 2
SECTION 1.02. Company Action........................................ 3

ARTICLE II

THE MERGER

SECTION 2.01. The Merger............................................ 4
SECTION 2.02. Effective Time; Closing............................... 4
SECTION 2.03. Effect of the Merger.................................. 5
SECTION 2.04. Certificate of Incorporation; By-laws................. 5
SECTION 2.05. Directors and Officers................................ 5
SECTION 2.06. Conversion of Securities.............................. 5
SECTION 2.07. Stock Options......................................... 6
SECTION 2.08. Dissenting Shares..................................... 6
SECTION 2.09. Surrender of Shares; Stock Transfer Books............. 7

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

SECTION 3.01. Organization and Qualification........................ 8
SECTION 3.02. Certificate of Incorporation and By-laws.............. 9
SECTION 3.03. Capitalization........................................ 9
SECTION 3.04. Authority Relative to this Agreement.................. 9
SECTION 3.05. No Conflict; Required Filings and Consents............ 10
SECTION 3.06. Compliance............................................ 10
SECTION 3.07. SEC Filings; Financial Statements..................... 11
SECTION 3.08. Absence of Certain Changes or Events.................. 12
SECTION 3.09. Absence of Litigation................................. 12
SECTION 3.10. Employee Benefit Plans................................ 13
SECTION 3.11. Labor Matters......................................... 15
SECTION 3.12. Offer Documents; Schedule 14D-9; Proxy Statement...... 15
SECTION 3.13. Real Property and Leases.............................. 16
SECTION 3.14. Trademarks, Patents and Copyrights.................... 16
SECTION 3.15. Taxes................................................. 19
SECTION 3.16. Environmental Matters................................. 19
SECTION 3.17. Material Contracts.................................... 21
SECTION 3.18. Brokers............................................... 21
SECTION 3.19. Opinion of Financial Advisor.......................... 22
SECTION 3.20. Related Party Transactions............................. 22

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER

SECTION 4.01. Corporate Organization................................ 22
SECTION 4.02. Authority Relative to this Agreement.................. 22
SECTION 4.03. No Conflict; Required Filings and Consents............ 23
SECTION 4.04. Financing............................................. 23
SECTION 4.05. Offer Documents; Proxy Statement...................... 23
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 4.06. Brokers............................................... 24

ARTICLE V

CONDUCT OF BUSINESS PENDING THE MERGER

SECTION 5.01. Conduct of Business by the Company Pending the Merger.. 24

ARTICLE VI

ADDITIONAL AGREEMENTS

SECTION 6.01. Stockholders' Meeting.................................. 26
SECTION 6.02. Proxy Statement........................................ 27
SECTION 6.03. Company Board Representation; Section 14(f)............ 27
SECTION 6.04. Access to Information; Confidentiality................. 28
SECTION 6.05. No Solicitation of Transactions........................ 28
SECTION 6.06. Employee Benefits Matters.............................. 29
SECTION 6.07. Directors' and Officers' Indemnification............... 29
SECTION 6.08. Notification of Certain Matters........................ 30
SECTION 6.09. Further Action; Reasonable Best Efforts................ 31
SECTION 6.10. Public Announcements................................... 31
SECTION 6.11. Confidentiality Agreement.............................. 31

ARTICLE VII

CONDITIONS TO THE MERGER

SECTION 7.01. Conditions to the Merger............................... 31

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

SECTION 8.01. Termination............................................ 32
SECTION 8.02. Effect of Termination.................................. 33
SECTION 8.03. Fees and Expenses...................................... 34
SECTION 8.04. Amendment.............................................. 35
SECTION 8.05. Extension; Waiver...................................... 35

ARTICLE IX

GENERAL PROVISIONS

SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements............................................. 35
SECTION 9.02. Notices................................................ 35
SECTION 9.03. Certain Definitions.................................... 36
SECTION 9.04. Severability........................................... 37
SECTION 9.05. Entire Agreement; Assignment........................... 37
SECTION 9.06. Parties in Interest.................................... 38
SECTION 9.07. Specific Performance................................... 38
SECTION 9.08. Governing Law.......................................... 38
SECTION 9.09. Headings............................................... 38
SECTION 9.10. Counterparts........................................... 38

ANNEX A Conditions to the Offer
</TABLE>
<PAGE> 6
AGREEMENT AND PLAN OF MERGER, dated as of December 19, 1995 (this
"Agreement", which term shall include all Annexes and Exhibits hereto), among
THOMSON U.S. HOLDINGS INC., a Delaware corporation ("Parent"), SCS SUBSIDIARY,
INC., a Delaware corporation and a wholly owned subsidiary of Parent
("Purchaser"), and SCS/COMPUTE, INC., a Delaware corporation (the "Company").

WHEREAS, the respective Boards of Directors of Parent, Purchaser and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement;

WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire all of the
issued and outstanding shares (other than shares subject to the Stock Purchase
Agreement referred to below) of common stock, par value $.10 per share, of the
Company (the "Shares"), at a price of $ 6.75 per Share (such amount, or any
greater amount per Share pursuant to the Offer, being hereinafter referred to as
the "Per Share Amount") net to the seller in cash, upon the terms and subject to
the conditions of this Agreement and the Offer;

WHEREAS, the Board of Directors of the Company (the "Board") has
approved the making of the Offer and resolved and agreed to recommend that
holders of Shares tender their Shares pursuant to the Offer;

WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved the merger
(the "Merger") of Purchaser with and into the Company in accordance with the
General Corporation Law of the State of Delaware ("Delaware Law") following the
consummation of the Offer and upon the terms and subject to the conditions set
forth herein; and

WHEREAS, Parent, Purchaser and Robert W. Nolan, Sr. have entered into
a Stock Purchase Agreement, dated as of the date hereof (the "Stock Purchase
Agreement"), pursuant to which Mr. Nolan has agreed to sell 1,082,570 Shares to
Purchaser for a purchase price per Share equal to the Per Share Amount;

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Parent, Purchaser and the Company hereby
agree as follows:

ARTICLE I

THE OFFER

SECTION 1.01. The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.01 and none of the events set
forth in Annex A hereto shall have occurred or be existing, Purchaser shall
commence the Offer as promptly as reasonably practicable after the date hereof,
but in no event later than five business days after the initial public
announcement of Purchaser's intention to commence the Offer. The obligation of
Purchaser to accept for payment and pay for Shares tendered pursuant to the
Offer shall be subject to the condition (the "Minimum Condition") that at least
the number of Shares that when added to the Shares already owned by Parent and
the number of Shares to be purchased by Purchaser pursuant to the Stock Purchase
Agreement shall constitute more than 50% of the then outstanding Shares on a
fully diluted basis (including, without limitation, all Shares issuable upon the
conversion of any convertible securities or upon the exercise of any options,
warrants or rights) shall have been validly tendered and not withdrawn prior to
the expiration of the Offer and also shall be subject to the satisfaction of the
other conditions set forth in Annex A hereto. Purchaser expressly reserves the
right to waive any such condition, to increase the Per Share Amount, and to make
any other changes in the terms and conditions of the Offer; provided, however,
that no change may be made
<PAGE> 7
without the consent of the Company which decreases the Per Share Amount or which
reduces the maximum number of Shares to be purchased in the Offer or which
imposes conditions to the Offer in addition to those set forth in Annex A
hereto. The Per Share Amount shall, subject to applicable withholding of taxes,
be net to the seller in cash, upon the terms and subject to the conditions of
the Offer. Subject to the terms and conditions of the Offer, Purchaser shall
pay, as promptly as practicable after expiration of the Offer, for all Shares
validly tendered and not withdrawn.

(b) As soon as reasonably practicable on the date of commencement of
the Offer, Purchaser shall file with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments
and supplements thereto, the "Schedule 14D-1") with respect to the Offer. The
Schedule 14D-1 shall contain or shall incorporate by reference an offer to
purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule 14D-1, the Offer
to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Parent, Purchaser and the Company agree to correct promptly any
information provided by any of them for use in the Offer Documents which shall
have become false or misleading, and Parent and Purchaser further agree to take
all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with
the SEC and the other Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. In the event that the Offer is terminated or withdrawn
by Purchaser, Parent and Purchaser shall cause all tendered Shares to be
returned pursuant to the instructions set forth in the letter of transmittal.

SECTION 1.02. Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that (i) the Board, at a meeting duly
called and held on December 14, 1995, has unanimously (except for abstentions of
interested directors) (A) determined that this Agreement and the transactions
contemplated hereby, including each of the Offer and the Merger, are fair to and
in the best interests of the holders of Shares, (B) approved and adopted this
Agreement and the transactions contemplated hereby and (C) resolved to recommend
that the stockholders of the Company accept the Offer and approve and adopt this
Agreement and the transactions contemplated hereby, and (ii) Fister & Associates
have delivered to the Board a written opinion that the consideration to be
received by the holders of Shares pursuant to each of the Offer and the Merger
is fair to the holders of Shares from a financial point of view. Subject only to
the fiduciary duties of the Board under applicable law as advised in writing by
independent counsel, the Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Board described in the immediately
preceding sentence. The Company has been advised by each of its directors and
executive officers (other than Robert W. Nolan, Sr. with respect to the Shares
to be sold pursuant to the Stock Purchase Agreement) that they intend either to
tender all Shares beneficially owned by them to Purchaser pursuant to the Offer
or to vote such Shares in favor of the approval and adoption by the stockholders
of the Company of this Agreement and the transactions contemplated hereby.

(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing the recommendation of the Board
described in Section 1.02(a) and shall disseminate the Schedule 14D-9 to the
extent required by Rule 14d-9 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and any other applicable federal
securities laws. The Company, Parent and Purchaser agree to correct promptly any
information provided by any of them for use in the Schedule 14D-9 which shall
have become false or misleading, and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Purchaser and its counsel shall
be given an opportunity to review and comment on the Schedule 14D-9 and any
amendments thereto prior to the filing thereof with the SEC. The Company shall
provide Purchaser and its counsel with a copy of any written comments or
telephonic notification of any verbal comments the Company may receive from the
SEC or
<PAGE> 8
its staff with respect to the Schedule 14D-9 promptly after the receipt thereof
and shall provide Purchaser and its counsel with a copy of any written responses
and telephonic notification of any verbal responses of the Company or its
counsel.

(c) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish Purchaser with such
additional information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position listings,
and such other assistance as Parent, Purchaser or their agents may reasonably
request. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Purchaser
shall hold in confidence the information contained in such labels, listings and
files, shall use such information only in connection with the Offer and the
Merger, and, if this Agreement shall be terminated in accordance with Section
8.01, shall deliver to the Company all copies of such information then in their
possession.

ARTICLE II

THE MERGER

SECTION 2.01. The Merger. Upon the terms and subject to the conditions
set forth in Article VII, and in accordance with Delaware Law, at the Effective
Time (as hereinafter defined) Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation"). Notwithstanding
anything to the contrary contained in this Section 2.01, Parent may elect
instead, at any time prior to the fifth business day immediately preceding the
date on which the Proxy Statement (as hereinafter defined) is mailed initially
to the Company's stockholders, to merge the Company into Purchaser or another
direct or indirect wholly owned subsidiary of Parent. In such event, the parties
agree to execute an appropriate amendment to this Agreement in order to reflect
the foregoing and to provide, as the case may be, that Purchaser or such other
wholly owned subsidiary of Parent shall be the Surviving Corporation.

SECTION 2.02. Effective Time; Closing. As promptly as practicable
after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of merger or certificate of ownership and
merger (in either case, the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in
accordance with the relevant provisions of, Delaware Law (the date and time of
such filing being the "Effective Time"). Prior to such filing, a closing shall
be held at the offices of Shearman & Sterling, 599 Lexington Avenue, New York,
New York 10022, or such other place as the parties shall agree, for the purpose
of confirming the satisfaction or waiver, as the case may be, of the conditions
set forth in Article VII.

SECTION 2.03. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.

SECTION 2.04. Certificate of Incorporation; By-laws. (a) Unless
otherwise determined by Parent prior to the Effective Time, at the Effective
Time the Certificate of Incorporation of Purchaser, as in effect immediately
prior to the Effective Time, shall be the
<PAGE> 9
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation; provided,
however, that, at the Effective Time, Article I of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read as follows:
"The name of the corporation is SCS/Compute, Inc."

(b) Unless otherwise determined by Parent prior to the Effective Time,
the By-laws of Purchaser, as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, the Certificate of Incorporation of the Surviving Corporation
and such By-laws.

SECTION 2.05. Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.

SECTION 2.06. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:

(a) Each of the Shares issued and outstanding immediately prior
to the Effective Time (other than any Shares to be cancelled pursuant to
Section 2.06(b) and any Dissenting Shares) (as hereinafter defined) shall
be cancelled and shall be converted automatically into the right to receive
an amount equal to the Per Share Amount, in cash (the "Merger
Consideration") payable, without interest, to the holder of such Share,
upon surrender, in the manner provided in Section 2.08, of the certificate
that formerly evidenced such Share;

(b) Each Share held in the treasury of the Company and each Share
owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the Effective
Time shall be cancelled without any conversion thereof and no payment or
distribution shall be made with respect thereto; and

(c) Each share of Common Stock, par value $.10 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of Common Stock, par value $.10 per share, of the
Surviving Corporation.

SECTION 2.07. Stock Options. Immediately prior to the Effective Time,
each outstanding option to purchase Shares (each, an "Option"), whether or not
then exercisable, shall be cancelled by the Company, and each holder of a
cancelled Option shall be entitled to receive from Purchaser at the same time as
payment for Shares is made by Purchaser in connection with the Merger, in
consideration for the cancellation of such Option, an amount in cash equal to
the product of (i) the number of Shares previously subject to such Option and
(ii) the excess, if any, of the Per Share Amount over the exercise price per
Share previously subject to such Option.

SECTION 2.08. Dissenting Shares. (a) Notwithstanding any provision of
this Agreement to the contrary, Shares that are outstanding immediately prior to
the Effective Time and which are held by stockholders who shall not have voted
in favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing appraisal for such Shares in accordance with
Section 262 of Delaware Law (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the Merger Consideration. Such
stockholders shall be entitled to receive payment of the appraised value of such
Shares held by them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such Shares under such Section 262 shall thereupon be deemed to
have been converted into and to have become
<PAGE> 10
exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, upon surrender, in the manner
provided in Section 2.09, of the certificate or certificates that formerly
evidenced such Shares.

(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to Delaware Law and received by the Company and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under Delaware Law. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.

SECTION 2.09. Surrender of Shares; Stock Transfer Books. (a) Prior to
the Effective Time, Purchaser shall designate a bank or trust company to act as
agent (the "Paying Agent") for the holders of Shares in connection with the
Merger to receive the funds to which holders of Shares shall become entitled
pursuant to Section 2.06(a). Such funds shall be invested by the Paying Agent as
directed by the Surviving Corporation, provided that such investments shall be
in obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of America,
in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors
Services, Inc. or Standard & Poor's Corporation, respectively, or in deposit
accounts, certificates of deposit or banker's acceptances of, repurchase or
reverse repurchase agreements with, or Eurodollar time deposits purchased from,
commercial banks with capital, surplus and undivided profits aggregating in
excess of $500 million (based on the most recent financial statements of such
bank which are then publicly available at the SEC or otherwise); provided,
however, that no loss on any investment made pursuant to this Section 2.09 shall
relieve the Surviving Corporation of its obligation to pay the Per Share Amount
for each Share outstanding immediately prior to the Effective Time (other than
Shares cancelled pursuant to Section 2.06(b) and any Dissenting Shares). The
Surviving Corporation and Parent shall be responsible for the fees and expenses
of or incurred by the Paying Agent.

(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder of
record of Shares entitled to receive the Merger Consideration pursuant to
Section 2.06(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each Share formerly
evidenced by such Certificate, and such Certificate shall then be cancelled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such Certificate.
If payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered on the stock
transfer books of the Company, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such taxes either have been paid or are not applicable.

(c) At any time following the sixth month after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it), and thereafter such holders shall be entitled to look
<PAGE> 11
to the Surviving Corporation (subject to abandoned property, escheat and other
similar laws) only as general creditors thereof with respect to any Merger
Consideration that may be payable upon due surrender of the Certificates held by
them. Notwithstanding the foregoing, neither the Surviving Corporation nor the
Paying Agent shall be liable to any holder of a Share for any Merger
Consideration delivered in respect of such Share to a public official pursuant
to any abandoned property, escheat or other similar law.

(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Purchaser
that:

SECTION 3.01. Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Material Adverse Effect (as defined below). The Company is
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not, individually or in the aggregate, have a
Material Adverse Effect. "Material Adverse Effect", when used in connection with
the Company, means any change or effect that when taken together with all other
adverse changes and effects that are within the scope of the representations and
warranties made by the Company in this Agreement is or is reasonably likely to
be materially adverse to the business, operations, properties, condition
(financial or otherwise), assets or liabilities (including, without limitation,
contingent liabilities) or prospects of the Company. The Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.

SECTION 3.02. Certificate of Incorporation and By-laws. The Company
has heretofore furnished to Parent a complete and correct copy of the
Certificate of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company. Such Certificate of
Incorporation and By-laws are in full force and effect. The Company is not in
violation of any provision of its Certificate of Incorporation or By-laws.

SECTION 3.03. Capitalization. The authorized capital stock of the
Company consists of 15,000,000 Shares and 2,000,000 shares of Series A Preferred
Stock. As of the date hereof, (i) 2,571,977 Shares are issued and outstanding,
all of which are validly issued, fully paid and nonassessable, (ii) 514,300
Shares are held in the treasury of the Company and (iii) 300,000 Shares are
reserved for future issuance pursuant to Options. Except as set forth in this
Section 3.03, and except as set forth in Section 3.03 of the Disclosure Schedule
previously delivered by the Company to Parent (the "Disclosure Schedule"), which
sets forth the holder of each Option, the date of grant and the applicable
exercise price, there are no options, warrants or other rights (including those
commonly referred to as "shareholder rights" or "poison pill" rights),
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or obligating the Company to issue or
sell any shares of capital stock of, or other equity interests in, the Company.
As of
<PAGE> 12
the date hereof, 100,000 shares of Series A Preferred Stock are issued and
outstanding. All Shares subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.

SECTION 3.04. Authority Relative to this Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby (the "Transactions"). The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the Transactions have been duly and validly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the then
outstanding Shares if and to the extent required by applicable law, and the
filing and recordation of appropriate merger documents as required by Delaware
Law). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Purchaser, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally (including,
without limitation, the effect of statutory and other law regarding fraudulent
conveyances, fraudulent transfers and preferential transfers) and as may be
limited by the exercise of judicial discretion and the application of principles
of equity including, without limitation, requirements of good faith, fair
dealing, conscionability and materiality (regardless of whether considered in a
proceeding in equity or at law). The Company has taken all appropriate actions
so that the restrictions on business combinations contained in Section 203 of
Delaware Law will not apply with respect to or as a result of the Transactions
or the Stock Purchase Agreement or the transactions contemplated thereby.

SECTION 3.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws of the Company, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or by which any property or asset of the Company is
bound or affected or (iii) except as set forth in Section 3.05(a) of the
Disclosure Schedule, result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Company pursuant to, any Material Contract, note, bond,
mortgage, indenture, contract, agreement, lease, license, permit or franchise or
other instrument or obligation to which the Company is a party or by which the
Company or any property or asset of the Company is bound or affected.

(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Exchange Act, state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws, the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act") and
filing and recordation of appropriate merger documents as required by Delaware
Law and (ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Offer or the Merger, or otherwise prevent the Company from
performing its obligations under this Agreement, and would not, individually or
in the aggregate, have a Material Adverse Effect.

SECTION 3.06. Compliance. The Company is not in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or by which any property or asset of the
Company is bound or affected, or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit,
<PAGE> 13
franchise or other instrument or obligation to which the Company is a party or
by which the Company or any property or asset of the Company is bound or
affected, except for any such conflicts, defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect.

SECTION 3.07. SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since January 31, 1993, and has heretofore made available to Parent, in the form
filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years
ended January 31, 1993, 1994 and 1995, respectively, (ii) its Quarterly Reports
on Form 10-Q for the periods ended April 30, 1995, July 31, 1995 and October 31,
1995 and (iii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since January 31, 1993, and (iv)
all other forms, reports and other registration statements (other than Quarterly
Reports on Form 10-Q not referred to in clause (ii) above) filed by the Company
with the SEC since January 31, 1993 (the forms, reports and other documents
referred to in clauses (i), (ii), (iii) and (iv) above being referred to herein,
collectively, as the "SEC Reports"). The SEC Reports (i) were prepared in
accordance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, as the case may be, and the rules and
regulations thereunder and (ii) did not at the time they were filed (or at the
effective date thereof in the case of registration statements) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.

(b) Each of the financial statements (including, in each case, any
notes thereto) contained in the SEC Reports was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presented the financial position, results of operations
and changes in financial position of the Company as at the respective dates
thereof and for the respective periods indicated therein (subject, in the case
of unaudited statements, to normal and recurring year-end adjustments which were
not and are not expected, individually or in the aggregate, to have a Material
Adverse Effect).

(c) Except as and to the extent set forth on the balance sheet of the
Company as at January 31, 1995, including the notes thereto (the "1994 Balance
Sheet") or disclosed in any SEC Report filed by the Company after January 31,
1995, the Company has no liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to be reflected on a
balance sheet, or in the notes thereto, prepared in accordance with generally
accepted accounting principles, except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since January
31, 1995 which would not, individually or in the aggregate, have a Material
Adverse Effect.

(d) The Company has heretofore furnished to Parent complete and
correct copies of all amendments and modifications (if any) listed in Section
3.07(d) of the Disclosure Schedule that have not been filed by the Company with
the SEC to all agreements, documents and other instruments that previously had
been filed by the Company with the SEC and are currently in effect.

SECTION 3.08. Absence of Certain Changes or Events. Since January 31,
1995, except as contemplated by this Agreement or disclosed in any SEC Report
filed since January 31, 1995 and prior to the date of this Agreement, the
Company has conducted its business only in the ordinary course and in a manner
consistent with past practice and, since January 31, 1995, there has not been
(i) any change in the business, operations, properties, condition (financial or
otherwise), assets or liabilities (including, without limitation, contingent
liabilities) or prospects of the Company having, individually or in the
aggregate, a Material Adverse Effect, (ii) any damage, destruction or loss
(whether or not covered by insurance) with respect to any property or asset of
the Company and having, individually or in the aggregate, a Material Adverse
Effect, (iii) any change by the Company in its accounting methods, principles or
practices, (iv) any revaluation by the Company of any
<PAGE> 14
asset (including, without limitation, any writing down of the value of inventory
or writing off of notes or accounts receivable), other than in the ordinary
course of business consistent with past practice, (v) any entry by the Company
into any commitment or transaction material to the Company, (vi) except as set
forth in Section 3.08 of the Disclosure Schedule, any declaration, setting aside
or payment of any dividend or distribution in respect of any capital stock of
the Company or any redemption, purchase or other acquisition of any of its
securities, (vii) prior to the date of this Agreement, no breach of any of the
contracts referred to in Section 3.17, and, to the best knowledge of the
Company, no threat of any such breach, or (viii) except as set forth in Section
3.08 of the Disclosure Schedule, any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any officers or key employees
of the Company, except in the ordinary course of business consistent with past
practice.

SECTION 3.09. Absence of Litigation. Except as disclosed in the SEC
Reports filed prior to the date of this Agreement, there is no claim, action,
proceeding or investigation pending or, to the best knowledge of the Company,
threatened against the Company or any property or asset of the Company before
any court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign. As of the date hereof, neither the Company nor any
property or asset of the Company is subject to any order, writ, judgment,
injunction, decree, determination or award having, or that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

SECTION 3.10. Employee Benefit Plans. (a) Section 3.10 of the
Disclosure Schedule contains a true and complete list of (i) all employee
benefit plans (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other benefit
plans, programs or arrangements, and all employment, termination, severance or
other contracts or agreements to which the Company is a party, with respect to
which the Company has any obligation or which are maintained, contributed to or
sponsored by the Company for the benefit of any current or former employee,
officer or director of the Company and (ii) each employee benefit plan for which
the Company could incur liability under Section 4069 of ERISA, in the event such
plan were terminated, or under Section 4212(c) of ERISA, or in respect of which
the Company remains secondarily liable under Section 4204 of ERISA
(collectively, the "Plans"). Each Plan is in writing and the Company has
previously furnished to Parent a true and complete copy of each Plan and a true
and complete copy of each material document prepared in connection with each
such Plan, including, without limitation, (i) a copy of each trust or other
funding arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed Internal Revenue Service ("IRS")
Form 5500, (iv) the most recently received IRS determination letter for each
such Plan and (v) the most recently prepared actuarial report and financial
statement in connection with each such Plan. The Company has no express or
implied commitment (i) to create, incur liability with respect to or cause to
exist any other employee benefit plan, program or arrangement, (ii) to enter
into any contract or agreement to provide compensation or benefits to any
individual or (iii) to modify, change or terminate any Plan, other than with
respect to a modification, change or termination required by ERISA or the
Internal Revenue Code of 1986, as amended (the "Code").

(b) Other than as specifically disclosed in Section 3.10 of the
Disclosure Schedule, none of the Plans is a multiemployer plan, within the
meaning of Section 3(37) or 4001(a)(3) of ERISA (a "Multiemployer Plan"), or a
single employer pension plan, within the meaning of Section 4001(a)(15) of
ERISA, for which the Company or any Subsidiary could incur liability under
Section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). None of the Plans
(i) provides for the payment of separation, severance, termination or
similar-type benefits to any person, (ii) obligates the Company or any
Subsidiary to pay separation, severance, termination or other benefits as a
result of any Transaction or (iii) obligates the Company or any Subsidiary to
make any payment or provide any benefit
<PAGE> 15
that could be subject to a tax under Section 4999 of the Code. None of the Plans
provides for or promises retiree medical, disability or life insurance benefits
to any current or former employee, officer or director of the Company. With
respect to each Multiemployer Plan and Multiple Employer Plan, Section 3.10(b)
of the Disclosure Schedule sets forth an accurate statement of the total amount
of withdrawal liability that the Company would incur in the event of a complete
withdrawal, within the meaning of Title IV of ERISA, from each such Plan.

(c) Each Plan which is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the IRS that such
Plan is so qualified, and each trust established in connection with any Plan
which is intended to be exempt from federal income taxation under Section 501(a)
of the Code has received a determination letter from the IRS that such trust is
so exempt. No fact or event has occurred since the date of any such
determination letter from the IRS that could adversely affect the qualified
status of any such Plan or the exempt status of any such trust. Each trust
maintained or contributed to by the Company or any Subsidiary which is intended
to be qualified as a voluntary employees' beneficiary association exempt from
federal income taxation under Sections 501(a) and 501(c)(9) of the Code has
received a favorable determination letter from the IRS that it is so qualified
and so exempt, and no fact or event has occurred since the date of such
determination by the IRS that could adversely affect such qualified or exempt
status.

(d) There has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan not
exempt pursuant to Section 408 of ERISA or Section 4975 of the Code. Neither the
company nor any Subsidiary is currently liable or has previously incurred any
liability for any tax or penalty arising under Section 4971, 4972, 4979, 4980 or
4980B of the Code or Section 502(c) of ERISA, and no fact or event exists which
could give rise to any such liability. Neither the Company nor any Subsidiary
has incurred any liability under, arising out of or by operation of Title IV of
ERISA (other than liability for premiums to the Pension Benefit Guaranty
Corporation arising in the ordinary course), including, without limitation, any
liability in connection with (i) the termination or reorganization of any
employee pension benefit plan subject to Title IV of ERISA or (ii) the
withdrawal from any Multiemployer Plan or Multiple Employer Plan, and no fact or
event exists which could give rise to any such liability. No complete or partial
termination has occurred within the five years preceding the date hereof with
respect to any Plan. No reportable event (within the meaning of Section 4043 of
ERISA) has occurred or is expected to occur with respect to any Plan subject to
Title IV of ERISA. No asset of the Company is the subject of any lien arising
under Section 302(f) of ERISA or Section 412(n) of the Code; the Company has not
been required to post any security under Section 307 of ERISA or Section
401(a)(29) of the Code; and no fact or event exists which could give rise to any
such lien or requirement to post any such security.

(e) Each Plan is now and has been operated in all material respects in
accordance with the requirements of all applicable laws, including, without
limitation, ERISA and the Code, and the Company has performed all obligations
required to be performed by it under, is not in any respect in default under or
in violation of, and has no knowledge of any default or violation by any party
to, any Plan. No Plan has incurred an "accumulated funding deficiency" (within
the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived. All contributions, premiums or payments required to be made with respect
to any Plan are fully deductible for income tax purposes and no such deduction
previously claimed has been challenged by any government entity. The 1994
Balance Sheet reflects an accrual of all amounts of employer contributions and
premiums accrued but unpaid with respect to the Plans. With respect to each Plan
subject to Title IV of ERISA, the accumulated benefit obligations of such Plan
(determined as of the date of the most recent actuarial valuation prepared for
such Plan) does not exceed the fair market value of the assets of such Plan
(determined as of the date of such valuation) attributable to such obligations.

(f) The Company has not incurred any liability under, and has complied
in
<PAGE> 16
all respects with, the Worker Adjustment Retraining Notification Act and the
regulations promulgated thereunder ("WARN") and does not reasonably expect to
incur any such liability as a result of actions taken or not taken prior to the
Effective Time. Section 3.10(f) of the Disclosure Schedule lists (i) all the
employees terminated or laid off by the Company during the 90 days prior to the
date hereof and (ii) all the employees of the Company who have experienced a
reduction in hours of work of more than 50% during any month during the 90 days
prior to the date hereof and describes all notices given by the Company in
connection with WARN. The Company will, by written notice to Parent and
Purchaser, update Section 3.10(f) of the Disclosure Schedule to include any such
terminations, layoffs and reductions in hours from the date hereof through the
Effective Time and will provide Parent and Purchaser with any related
information which they may reasonably request.

SECTION 3.11. Labor Matters. (i) There are no controversies pending
or, to the best knowledge of the Company, threatened between the Company and any
of its employees, which controversies have or could have a Material Adverse
Effect; (ii) the Company is not a party to any collective bargaining agreement
or other labor union contract applicable to persons employed by the Company,
nor, to the best knowledge of the Company, are there any activities or
proceedings of any labor union to organize any such employees; (iii) there are
no unfair labor practice complaints pending against the Company before the
National Labor Relations Board or any current union representation questions
involving employees of the Company; and (iv) there is no strike, slowdown, work
stoppage or lockout existing, or, to the best knowledge of the Company,
threatened, by or with respect to any employees of the Company.

SECTION 3.12. Offer Documents; Schedule 14D-9; Proxy Statement.
Neither the Schedule 14D-9 nor any information supplied by the Company for
inclusion in the Offer Documents shall, at the respective times the Schedule
14D-9, the Offer Documents or any amendments or supplements thereto are filed
with the SEC or are first published, sent or given to stockholders of the
Company, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. Neither the proxy statement to be
sent to the stockholders of the Company in connection with the Stockholders'
Meeting or the information statement to be sent to such stockholders, as
appropriate (such proxy statement or information statement, as amended or
supplemented, being referred to herein as the "Proxy Statement"), shall, at the
date the Proxy Statement (or any amendment or supplement thereto) is first
mailed to stockholders of the Company, at the time of the Stockholders' Meeting
(as hereinafter defined) and at the Effective Time, be false or misleading with
respect to any material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. The Schedule 14D-9 and the Proxy Statement shall
comply in all material respects as to form with the requirements of the Exchange
Act and the rules and regulations thereunder.

SECTION 3.13. Real Property and Leases. (a) The Company has sufficient
title to all its properties and assets to conduct its business as currently
conducted or as contemplated to be conducted.

(b) Each parcel of real property owned or leased by the Company (i)
except as set forth in Section 3.13 of the Disclosure Schedule, is owned or
leased free and clear of all mortgages, pledges, liens, security interests,
conditional and installment sale agreements, encumbrances, charges or other
claims of third parties of any kind (collectively, "Liens"), other than (A)
Liens for current taxes and assessments not yet past due, (B) inchoate
mechanics' and materialmen's Liens for construction in progress, (C) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company consistent with past practice, and (D) all matters of
record, Liens and other imperfections of title and encumbrances which,
individually or in the aggregate, would not have a Material Adverse Effect
(collectively, "Permitted Liens"), and
<PAGE> 17
(ii) is neither subject to any governmental decree or order to be sold nor is
being condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the best knowledge of the
Company, has any such condemnation, expropriation or taking been proposed.

(c) All leases of real property leased for the use or benefit of the
Company to which the Company is a party and all amendments and modifications
thereto are in full force and effect and have not been modified or amended, and
there exists no default under any such lease by the Company, nor any event which
with notice or lapse of time or both would constitute a default thereunder by
the Company.

SECTION 3.14. Trademarks, Patents and Copyrights. (a) Section
3.14(a)(i) of the Disclosure Schedule sets forth a true and complete list and a
brief description of all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, copyrights and service marks ("Intellectual
Property", which term shall also include all trade secrets, know-how and other
proprietary rights and information) to which the Company holds, or has a right
to hold, right, title and interest ("Owned Intellectual Property"), including a
complete identification of each patent, registration or application for such
patent and trademark registration, and Section 3.14(a)(ii) of the Disclosure
Schedule sets forth a true and complete list of all Intellectual Property
licensed or sublicensed to the Company (other than mass distributed software
licenses on a shrink-wrap basis) ("Licensed Intellectual Property"), including a
list of any license or sublicense thereof. Except as otherwise described in
Section 3.14(a)(i) of the Disclosure Schedule, in each case where a registration
or patent or application for registration or patent listed in Section 3.14(a)(i)
of the Disclosure Schedule is held by assignment, the assignment has been duly
recorded with the U.S. Patent and Trademark Office or other appropriate
government agency. Except as disclosed in Section 3.14(a)(iii) of the Disclosure
Schedule, the Company has not received any written notice or claim that the
rights of the Company in or to such Intellectual Property conflict with or
infringe on the rights of any other Person.

(b) (i) Except as set forth in Section 3.14(b) of the Disclosure
Schedule, the Company's interest in all the Owned Intellectual Property is owned
by the Company free and clear of any security interest, pledge, mortgage, lien,
charge, encumbrance, existing adverse claim or preferential arrangement and (ii)
no claim, action, suit, arbitration, inquiry, proceeding or investigation by or
before any Governmental Authority (other than ex parte patent office
proceedings) has been made or asserted or is pending (nor, to the best knowledge
of the Company, has any such claim, action, suit, arbitration, inquiry,
proceeding or investigation been threatened) against the Company either (A)
based upon or challenging or seeking to deny or restrict the use by the Company
of any of the Owned Intellectual Property or (B) alleging that any services
provided, or products manufactured or sold by the Company are being provided,
manufactured or sold in violation of any patents or trademarks, or any other
rights of any person. To the best knowledge of the Company, no person is using
any trademarks, service marks or trade names that are confusingly similar to
trademarks, service marks or trade names included in the Owned Intellectual
Property. To the best knowledge of the Company, no person is using any patents,
copyrights, trade secrets or similar property which infringe granted patents or
copyrights included in the Owned Intellectual Property. The Company has not
granted any license or other right to any other person with respect to the
Company's interest in the Owned Intellectual Property. The consummation of the
Transactions will not result in the termination or impairment of the Company's
interest in any of the Owned Intellectual Property.

(c) The Company has, or has caused to be, made available to Parent
correct and complete copies of all the licenses and sublicenses for Licensed
Intellectual Property listed in Section 3.14(a)(ii) of the Disclosure Schedule
and any and all ancillary documents pertaining thereto (including, but not
limited to, all amendments, consents and evidence of commencement dates and
expiration dates). With respect to each of such licenses and sublicenses:

(i) such license or sublicense, together with all ancillary documents
delivered pursuant to the first sentence of this Section 3.14(c), is valid
and binding
<PAGE> 18
obligation of the Company and in full force and effect and represents the
entire agreement between the respective licensor and licensee with respect
to the subject matter of such license or sublicense;

(ii) such license or sublicense will not cease to be valid and
binding obligation of the Company and in full force and effect on terms
identical to those currently in effect as a result of the consummation of
the transactions contemplated by this Agreement, nor will the consummation
of the transactions contemplated by this Agreement constitute a breach or
default under such license or sublicense or otherwise give the licensor or
sublicensor a right to terminate such license or sublicense;

(iii) with respect to each such license or sublicense: (A) the Company
has not received any notice of termination or cancellation under such
license or sublicense and no licensor or sublicensor has any right of
termination or cancellation under such license or sublicense except in
connection with the default of the Company thereunder, (B) the Company has
not received any notice of a breach or default under such license or
sublicense, which breach or default has not been cured and (C) the Company
has not granted to any other person any rights, adverse or otherwise, under
such license or sublicense;

(iv) neither the Company nor, to the best knowledge of the Company,
any other party to such license or sublicense is in breach or default in
any material respect which breach has not been waived or cured, and, to the
best knowledge of the Company, no event has occurred that, with notice or
lapse of time or both would constitute such a breach or default or permit
termination, modification or acceleration under such license or sublicense;

(v) no claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority (other than ex parte
patent office proceedings) has been made or asserted or is pending (nor, to
the best knowledge of the Company, has any such claim, action, suit,
arbitration, inquiry, proceeding or investigation been threatened) against
the Company either (A) based upon or challenging or seeking to deny or
restrict the use by the Company of any of the Licensed Intellectual
Property or (B) alleging that any Licensed Intellectual Property is being
licensed, sublicensed or used in violation of any patents or trademarks, or
any other rights of any person; and

(vi) to the best knowledge of the Company, no person is infringing
any granted patents, copyrights, trademarks, service marks or trade names,
or has misappropriated trade secrets or similar property, included in the
Licensed Intellectual Property.

(d) The Company has taken reasonable measures to assure and maintain
the confidentiality of the processes and formulae, research and development
results and other know-how of the Company, the value of which is contingent upon
maintenance of the confidentiality thereof and, to the best knowledge of the
Company, there have not been any material breaches of any confidentiality
obligations owing to the Company.

SECTION 3.15. Taxes. The Company has timely filed all federal, state,
local and foreign tax returns and reports required to be filed by it, all such
returns are true, correct and complete and it has timely paid and discharged all
taxes shown as due thereon and has paid all applicable ad valorem taxes as are
due. Neither the IRS nor any other taxing authority or agency, domestic or
foreign, is now asserting or, to the best knowledge of the Company, threatening
to assert against the Company any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith. The Company has not
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any federal, state, county,
municipal or foreign income tax. The accruals and reserves for taxes reflected
in the 1994 Balance Sheet are adequate to cover all taxes accruable through such
date (including interest and penalties, if any, thereon) in accordance with
generally accepted accounting principles. The Company has not made an
<PAGE> 19
election under Section 341(f) of the Code. There are no tax liens on any assets
of the Company. The Company is not a party to any agreement or arrangement what
would result in the payment of any "excess parachute payments" within the
meaning of section 280G of the Internal Revenue Code. No acceleration of the
vesting schedule for any property that is substantially unvested, within the
meaning of the regulations under section 83 of the Internal Revenue Code, will
occur in connection with the Merger. The Company has not been includible in a
consolidated return for any taxable period for which the statute of limitations
has not expired. The Company is not subject to any accumulated earnings tax
penalty or personal holding company tax.

SECTION 3.16. Environmental Matters. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i)
"Environmental Claims" means any and all actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or violation, notices of
liability or potential liability, proceedings, consent orders or consent
agreements relating in any way to any Environmental Law, any Environmental
Permit or any Hazardous Materials; (ii) "Environmental Law" means any statute,
law, rule, ordinance or code, in effect now or any time prior to the Closing,
and any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, relating to
pollution or protection of the environment, health, safety or natural resources,
including without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials; (iii) "Environmental Permit" means any permit, approval,
identification number, license or other authorization required under any
applicable Environmental Law; (iv) "Governmental Authority" means any United
States federal, state or local or any foreign government, governmental,
regulatory or administrative authority, agency or commission or any court,
tribunal, or judicial or arbitral body; (v) "Hazardous Materials" means (A)
petroleum and petroleum products, by products or breakdown products, radioactive
materials, asbestos-containing materials and polychlorinated biphenyls, and (B)
any other chemicals, materials or substances defined or regulated as toxic or
hazardous or as a pollutant or contaminant or as a waste under any applicable
Environmental Law; and (vi) "leased property" and "leased properties" means the
real property which the Company has the right to control pursuant to its lease
and not any property which the Company does not have the right to control.

(b) Except as described in Section 3.16 of the Disclosure Schedule:
(i) the Company is and has been in material compliance with all applicable
Environmental Laws; (ii) the Company has obtained all necessary Environmental
Permits and is and has been in material compliance with their requirements;
(iii) to the best knowledge of the Company, there are no underground or
aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps
or lagoons in which Hazardous Materials are being or have been treated, stored
or disposed of on any of the owned or leased properties or, with respect to the
period of the Company's ownership, tenancy or operation of such property, on any
real property formerly owned, leased or occupied by the Company; (iv) to the
best knowledge of the Company, no owned or leased properties or any property
adjoining any owned or leased properties is listed or proposed for listing on
the National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended through the date hereof, or
on the Comprehensive Environmental Response, Compensation and Liability
Information System, as updated through the date hereof, or any analogous state
list of sites requiring investigation or cleanup; (v) to the best knowledge of
the Company, there is no asbestos or asbestos-containing material on any of the
owned or leased properties; (vi) the Company has not released, discharged or
disposed of Hazardous Materials on any of the owned or leased properties or on
any real property formerly owned, leased or occupied by the Company in any
manner or quantity that can give rise to a Material Adverse Effect; (vii) the
Company is not undertaking, has not completed, and, to the best knowledge of the
Company, is not required to conduct, any investigation or assessment or remedial
or response action relating to any release, discharge or disposal of or
contamination with Hazardous Materials at any site, location or operation,
either voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law; and (viii) there are no past, pending or,
to the best knowledge of the Company, threatened Environmental Claims against
the Company or any of its properties,
<PAGE> 20
and, to the best knowledge of the Company, there are no facts which can form the
basis of any such Environmental Claim, including without limitation with respect
to any off-site disposal location presently or formerly used by the Company or
any of its predecessors.

(c) The Company has made available to Parent copies of any
environmental audit reports, studies or analyses in its possession or under its
control relating to the owned or leased properties or the operations of the
Company.

SECTION 3.17. Material Contracts. Section 3.17 of the Disclosure
Schedule lists each contract or agreement to which the Company is a party (i)
that is required to be filed pursuant to Item 601(b)(10) of Regulation S-K under
the Securities Act (each of which has been so filed as an Exhibit to the SEC
Reports), (ii) that grants to a third party any commercial rights to exploit any
of the Intellectual Property or (iii) the absence of which would have a Material
Adverse Effect (each, a "Material Contract"). Each Material Contract is in full
force and effect and is enforceable against the parties thereto (other than the
Company) in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally (including, without limitation, the effect of statutory and other law
regarding fraudulent conveyances, fraudulent transfers and preferential
transfers) and as may be limited by the exercise of judicial discretion and the
application of principles of equity, including, without limitation, requirements
of good faith, fair dealing, conscionability and materiality (regardless of
whether considered in a proceeding in equity or at law), and no condition or
state of facts exists that, with notice or the passage of time, or both, would
constitute a material default by the Company or, to the best knowledge of the
Company, any third party under any Material Contract. The Company has duly
complied in all material respects with the provision of each Material Contract
to which it is a party.

SECTION 3.18. Brokers. No broker, finder or investment banker (other
than Aylward and Associates) is entitled to any brokerage, finder's or other fee
or commission in connection with the Transactions based upon arrangements made
by or on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Aylward and
Associates

SECTION 3.19. Opinion of Financial Advisor. The Board of Directors of
the Company has received the written opinion of Fister & Associates, dated the
date of this Agreement, to the effect that the cash consideration to be received
in the Offer and the Merger by the Company's public stockholders is fair to the
Company's public stockholders from a financial point of view, a copy of such
opinion has been delivered to Parent and such opinion has not been withdrawn or
modified.

SECTION 3.20. Related Party Transactions. Except as disclosed in the
SEC Reports, there are no material agreements, arrangements or understandings
between the Company, on the one hand, and any affiliate of the Company, on the
other hand.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER

Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:

SECTION 4.01. Corporate Organization. Each of Parent and Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization.

SECTION 4.02. Authority Relative to this Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by
<PAGE> 21
Parent and Purchaser of the Transactions have been duly and validly authorized
by all necessary corporate action on the part of Parent and Purchaser and no
other corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by Delaware Law). This Agreement has been duly and validly
executed and delivered by Parent and Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Purchaser enforceable against each
of Parent and Purchaser in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors' rights generally (including, without limitation, the
effect of statutory and other law regarding fraudulent conveyances, fraudulent
transfers and preferential transfers) and as may be limited by the exercise of
judicial discretion and the application of principles of equity including,
without limitation, requirements of good faith, fair dealing, conscionability
and materiality (regardless of whether considered in a proceeding in equity or
at law).

SECTION 4.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of Incorporation or By-laws of either Parent or
Purchaser, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or Purchaser or by which any property or
asset of either of them is bound or affected, or (iii) result in any breach of
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Parent or Purchaser pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Purchaser
is a party or by which Parent or Purchaser or any property or asset of either of
them is bound or affected, except for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
prevent Parent or Purchaser from performing their respective obligations under
this Agreement and consummating the Transactions.

(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority to be obtained
or made by Parent or Purchaser, domestic or foreign, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
laws, the HSR Act and filing and recordation of appropriate merger documents as
required by Delaware Law and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Offer or the Merger, or otherwise
prevent Parent or Purchaser from performing their respective obligations under
this Agreement.

SECTION 4.04. Financing. Parent has, or will have available to it at
the time Purchaser is required to pay for Shares under the terms of the Offer,
and will make available to Purchaser, sufficient funds to permit Purchaser to
acquire all of the outstanding Shares in the Offer and the Merger.

SECTION 4.05. Offer Documents; Proxy Statement. The Offer Documents
will not, at the time the Offer Documents are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading. The information supplied by Parent for inclusion in the Proxy
Statement will not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company, at the time
of the Stockholders' Meeting or at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material
<PAGE> 22
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, Parent and Purchaser
make no representation or warranty with respect to any information supplied by
the Company or any of its representatives which is contained in any of the
foregoing documents or the Offer Documents. The Offer Documents shall comply in
all material respects as to form with the requirements of the Exchange Act and
the rules and regulations thereunder.

SECTION 4.06. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.

ARTICLE V

CONDUCT OF BUSINESS PENDING THE MERGER

SECTION 5.01. Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees that, between the date of this Agreement and
the Effective Time, unless Parent shall otherwise agree in writing, the business
of the Company shall be conducted only in, and the Company shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice; and the Company shall use its best efforts to preserve
substantially intact the business organization of the Company, to keep available
the services of the current officers, employees and consultants of the Company
and to preserve the current relationships of the Company with customers,
suppliers and other persons with which the Company has significant business
relations. By way of amplification and not limitation, except as contemplated by
this Agreement, the Company shall not, between the date of this Agreement and
the Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Parent:

(a) amend or otherwise change its Certificate of Incorporation or
By-laws;

(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance of,
(i) any shares of capital stock of any class of the Company, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of the Company
(except for the issuance of a maximum of 130,000 Shares issuable pursuant
to Options outstanding on the date hereof) or (ii) any assets of the
Company except for sales in the ordinary course of business and in a manner
consistent with past practice;

(c) except as set forth in Section 5.01 of the Disclosure
Schedule, declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock;

(d) except as set forth in Section 5.01 of the Disclosure
Schedule, reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;

(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof or any
material amount of assets; (ii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any person,
or make any loans or advances, except in the ordinary course of business
and consistent with past practice; (iii) enter into any
<PAGE> 23
contract or agreement other than in the ordinary course of business,
consistent with past practice; (iv) authorize any single capital commitment
which is in excess of $50,000 or capital expenditures which are, in the
aggregate, in excess of $100,000 for the Company; or (v) enter into or
amend any contract, agreement, commitment or arrangement with respect to
any matter set forth in this Section 5.01(e);

(f) except as set forth in Section 5.01 of the Disclosure
Schedule, increase the compensation payable or to become payable to its
officers or employees, except for increases in accordance with past
practices in salaries or wages of employees of the Company who are not
officers of the Company, or grant any severance or termination pay to, or
enter into any employment or severance agreement with any director, officer
or other employee of the Company, or establish, adopt, enter into or amend
any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer or employee;

(g) take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice, with
respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivables);

(h) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;

(i) settle or compromise any pending or threatened suit, action
or claim which is material or which relates to any of the Transactions;

(j) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or
reserved against in the 1994 Balance Sheet or subsequently incurred in the
ordinary course of business and consistent with past practice;

(k) sell, assign, transfer, license, sublicense, pledge or
otherwise encumber any of the Intellectual Property; or

(l) announce an intention, commit or agree to do any of the
foregoing.

ARTICLE VI

ADDITIONAL AGREEMENTS

SECTION 6.01. Stockholders' Meeting. (a) If required by applicable law
in order to consummate the Merger, the Company, acting through the Board, shall,
in accordance with applicable law and the Company's Certificate of Incorporation
and By-laws, (i) duly call, give notice of, convene and hold an annual or
special meeting of its stockholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
this Agreement and the transactions contemplated hereby (the "Stockholders'
Meeting") and (ii) subject to its fiduciary duties under applicable law as
advised in writing by independent counsel, (A) include in the Proxy Statement
the unanimous recommendation of the Board that the stockholders of the Company
approve and adopt this Agreement and the transactions contemplated hereby and
(B) use its best efforts to obtain such approval and adoption. At the
Stockholders' Meeting, Parent and Purchaser shall cause all Shares then owned by
them to be voted in favor of the approval and adoption of this Agreement and the
transactions contemplated hereby.
<PAGE> 24
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90 percent of the then outstanding Shares, the parties hereto
agree, at the request of Purchaser, subject to Article VII, to take all
necessary and appropriate action to cause the Merger to become effective, in
accordance with Section 253 of Delaware Law, as soon as reasonably practicable
after such acquisition, without a meeting of the stockholders of the Company.

SECTION 6.02. Proxy Statement. If required by applicable law, as soon
as practicable following consummation of the Offer, the Company shall file the
Proxy Statement with the SEC under the Exchange Act, and shall use its best
efforts to have the Proxy Statement cleared as promptly as practicable by the
SEC. Parent, Purchaser and the Company shall cooperate with each other in the
preparation of the Proxy Statement, and the Company shall notify Parent of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the Company and the
SEC. The Company shall give Parent and its counsel the opportunity to review the
Proxy Statement prior to its being filed with the SEC and shall give Parent and
its counsel the opportunity to review all amendments and supplements to the
Proxy Statement and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the SEC. Each
of the Company, Parent and Purchaser agrees to use its reasonable best efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC and to cause the Proxy Statement and
all required amendments and supplements thereto to be mailed to the holders of
Shares entitled to vote at the Stockholders' Meeting at the earliest practicable
time.

SECTION 6.03. Company Board Representation; Section 14(f). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and
from time to time thereafter, Purchaser shall be entitled to designate up to
such number of directors, rounded up to the next whole number, on the Board as
shall give Purchaser representation on the Board equal to the product of the
total number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser and affiliates of Purchaser
following such purchase bears to the total number of Shares then outstanding,
and the Company shall, at such time, promptly take all actions necessary to
cause Purchaser's designees to be elected as directors of the Company, including
increasing the size of the Board or securing the resignations of incumbent
directors or both. At such times, the Company shall use its best efforts to
cause persons designated by Purchaser to constitute the same percentage as
persons designated by Purchaser shall constitute of the Board of each committee
of the Board, in each case only to the extent permitted by applicable law.
Notwithstanding the foregoing, until the earlier of (i) the time Purchaser
acquires a majority of the then outstanding Shares on a fully diluted basis and
(ii) the Effective Time, the Company shall use its best efforts to ensure that
all the members of the Board and each committee of the Board as of the date
hereof who are not employees of the Company shall remain members of the Board
and of such committees.

(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Parent or Purchaser shall supply to the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.

(c) Following the election of designees of Purchaser pursuant to this
Section 6.03, prior to the Effective Time, any amendment of this Agreement or
the Certificate of Incorporation or By-laws of the Company, any termination of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser or
waiver of any of the Company's rights
<PAGE> 25
hereunder shall require the concurrence of a majority of the directors of the
Company then in office who are neither (i) designees of Purchaser nor (ii)
employees of the Company.

SECTION 6.04. Access to Information; Confidentiality. (a) From the
date hereof to the Effective Time, the Company shall, and shall cause the
officers, directors, employees, auditors and agents of the Company to, afford
the officers, employees and agents of Parent and Purchaser and persons providing
or committing to provide Parent or Purchaser with financing for the Transactions
complete access at all reasonable times to the officers, employees, agents,
properties, offices, plants and other facilities, books and records of the
Company, and shall furnish Parent and Purchaser and persons providing or
committing to provide Parent or Purchaser with financing for the Transactions
with all financial, operating and other data and information as Parent or
Purchaser, through its officers, employees or agents, may reasonably request.

(b) All information obtained by Parent or Purchaser pursuant to this
Section 6.04 shall be kept confidential in accordance with the confidentiality
agreement, dated October 10, 1995 (the "Confidentiality Agreement"), between
Parent and the Company.

(c) No investigation pursuant to this Section 6.04 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.

SECTION 6.05. No Solicitation of Transactions. Unless this Agreement
shall have been terminated pursuant to Section 8.01, the Company shall not,
directly or indirectly, through any officer, director, agent or otherwise,
solicit, initiate or encourage the submission of any proposal or offer from any
person relating to any acquisition or purchase of all or (other than in the
ordinary course of business) any portion of the assets of, or any equity
interest in, the Company or any business combination with the Company or
participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing; provided, however, that nothing
contained in this Section 6.05 shall prohibit the Board from responding to any
unsolicited proposal made in writing to acquire the Company pursuant to a
merger, consolidation, share exchange, business combination or other similar
transaction or to acquire all or substantially all of the assets of the Company,
to the extent the Board, after consultation with independent legal counsel,
determines in good faith that such action is required for the Board to comply
with its fiduciary duty to stockholders imposed by Delaware Law. The Company
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. The Company shall notify Parent promptly if any such proposal or
offer, or any inquiry or contact with any person with respect thereto, is made
and shall, in any such notice to Parent, indicate in reasonable detail the
identity of the person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or contact. The Company
agrees not to release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a party.

SECTION 6.06. Employee Benefits Matters. Parent intends that, for a
period of one year immediately following the Effective Time, it shall, or shall
cause the Surviving Corporation to, continue to maintain employee benefit and
welfare plans, programs, contracts, agreements policies and executive incentives
and perquisites, other than equity- based plans, for the benefit of active and
retired employees of the Company or the Surviving Corporation which in the
aggregate provide benefits that are no less favorable to employees than the
benefits provided to such active and retired employees on the date hereof.

SECTION 6.07. Directors' and Officers' Indemnification. (a) The
By-laws of the Surviving Corporation shall contain provisions no less favorable
with respect to indemnification, advancement of expenses and related matters
than are set forth in Article VII of the By-laws of the Company as in effect on
the date hereof, which provisions shall not be amended, repealed or otherwise
modified for a period of three years from the
<PAGE> 26
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who at the Effective Time were directors, officers, employees,
fiduciaries or agents of the Company, unless such modification shall be required
by law.

(b) The Company shall, to the fullest extent permitted under
applicable law and regardless of whether the Merger becomes effective, indemnify
and hold harmless, and, after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer, employee, fiduciary and
agent of the Company (collectively, the "Indemnified Parties") against all costs
and expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, criminal, administrative or investigative,
arising out of or pertaining to any action or omission in their capacity as an
officer, director, employee, fiduciary or agent, whether occurring before, at or
after the Effective Time, whether asserted or claimed prior to, at or after the
Effective Time, for a period of three years after the date hereof. In the event
of any such claim, action, suit, proceeding or investigation, (i) the Company or
the Surviving Corporation, as the case may be, shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to the Company or the Surviving Corporation, promptly
after statements therefor are received and (ii) the Company and the Surviving
Corporation shall cooperate in the defense of any such matter; provided,
however, that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld); and provided, further, that neither the Company nor
the Surviving Corporation shall be obligated pursuant to this Section 6.07(b) to
pay the fees and expenses of more than one counsel for all Indemnified Parties
in any single action except to the extent that two or more of such Indemnified
Parties shall have conflicting interests in the outcome of such action; and
provided, further, that, in the event that any claim for indemnification is
asserted or made within such three-year period, all rights to indemnification in
respect of such claim shall continue until the disposition of such claim.

(c) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Parent's option, Parent, shall
assume the obligations set forth in this Section 6.07.

SECTION 6.08. Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause any representation or warranty
of the Company contained in this Agreement to be untrue or inaccurate and (ii)
any failure of the Company, Parent or Purchaser, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.08 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.

SECTION 6.09. Further Action; Reasonable Best Efforts. Upon the terms
and subject to the conditions hereof, each of the parties hereto shall (i) make
promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the Transactions and (ii) use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
Transactions, including, without limitation, using its reasonable best efforts
to obtain all licenses, permits (including, without limitation, Environmental
Permits), consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company as are
necessary for the consummation of the Transactions and to fulfill the conditions
to the Offer and the Merger. In case at any time after the Effective Time any
<PAGE> 27
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their reasonable best efforts to take all such action.

SECTION 6.10. Public Announcements. Parent, Purchaser and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or any Transaction
and shall not issue any such press release or make any such public statement
without the consent of the other parties, except as may be required by law or
the Company's listing agreement with the Nasdaq National Market.

SECTION 6.11. Confidentiality Agreement. The Company hereby waives the
provisions of the Confidentiality Agreement as and to the extent necessary to
permit the consummation of each Transaction as contemplated by this Agreement.
Upon the acceptance for payment of Shares pursuant to the Offer, the
Confidentiality Agreement shall be deemed to have terminated without further
action by the parties thereto.

ARTICLE VII

CONDITIONS TO THE MERGER

SECTION 7.01. Conditions to the Merger. The respective obligations of
each party to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time of the following conditions:

(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the affirmative
vote of the stockholders of the Company to the extent required by Delaware
Law and the Certificate of Incorporation of the Company;

(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated;

(c) No Order. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making the acquisition of
Shares by Parent or Purchaser or any affiliate of either of them illegal or
otherwise restricting, preventing or prohibiting consummation of the
Transactions; and

(d) Offer. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer; provided, however, that this condition shall not be applicable to
the obligations of Parent or Purchaser if, in breach of this Agreement or
the terms of the Offer, Purchaser fails to purchase any Shares validly
tendered and not withdrawn pursuant to the Offer.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

SECTION 8.01. Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company:
<PAGE> 28
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company; or

(b) By either Parent, Purchaser or the Company if (i) the
Effective Time shall not have occurred on or before March 31, 1996;
provided, however, that the right to terminate this Agreement under this
Section 8.01(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date; or (ii) any court of competent jurisdiction in the United States or
other United States governmental authority shall have issued an order,
decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; or

(c) By Parent if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Annex A
hereto, Purchaser shall have (A) failed to commence the Offer within 30
days following the date of this Agreement, (B) terminated the Offer without
having accepted any Shares for payment thereunder or (C) failed to pay for
Shares pursuant to the Offer within 60 days following the commencement of
the Offer, unless such failure to pay for Shares shall have been caused by
or resulted from the failure of Parent or Purchaser to perform in any
material respect any material covenant or agreement of either of them
contained in this Agreement or the material breach by Parent or Purchaser
of any material representation or warranty of either of them contained in
this Agreement or (ii) prior to the purchase of Shares pursuant to the
Offer, the Board or any committee thereof shall have withdrawn or modified
in a manner adverse to Purchaser or Parent its approval or recommendation
of the Offer, this Agreement, the Merger or any other Transaction or shall
have recommended another merger, consolidation, business combination with,
or acquisition of, the Company or its assets or another tender offer for
Shares, or shall have resolved to do any of the foregoing; or

(d) By the Company, upon approval of the Board, if (i) Purchaser
shall have (A) failed to commence the Offer within 30 days following the
date of this Agreement, (B) terminated the Offer without having accepted
any Shares for payment thereunder or (C) failed to pay for Shares pursuant
to the Offer within 60 days following the commencement of the Offer, unless
such failure to pay for Shares shall have been caused by or resulted from
the failure of the Company to perform in any material respect any material
covenant or agreement of the Company contained in this Agreement or the
material breach by the Company of any material representation or warranty
of the Company contained in this Agreement or (ii) prior to the purchase of
Shares pursuant to the Offer the Board shall have withdrawn or modified in
a manner adverse to Purchaser or Parent its approval or recommendation of
the Offer, this Agreement or the Merger in order to approve the execution
by the Company of a definitive agreement providing for the acquisition of
the Company or its assets or a merger or other business combination or in
order to approve a tender offer or exchange offer for Shares by a third
party, in either case, as determined by the Board in the exercise of its
good faith judgment and after consultation with its legal counsel and
financial advisors, on terms more favorable to the Company's stockholders
than the Offer and the Merger taken together; provided, however, that such
termination under this clause (ii) shall not be effective until the Company
has made payment to Parent of the Fee (as hereinafter defined) required to
be paid pursuant to Section 8.03(a) and has deposited with a mutually
acceptable escrow agent $500,000 for reimbursement to Parent and Purchaser
of Expenses (as hereinafter defined).

SECTION 8.02. Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void, and there shall be no liability on the part of any party hereto,
except (i) as set forth in Sections 8.03 and 9.01 and (ii) nothing herein shall
relieve any party from liability for any breach hereof.

SECTION 8.03. Fees and Expenses. (a) In the event that
<PAGE> 29
(i) any person shall have commenced a tender or exchange offer for
10% or more (or which, assuming the maximum amount of securities which
could be purchased, would result in any person beneficially owning 10% or
more) of the then outstanding Shares or otherwise for the direct or
indirect acquisition of the Company or all or substantially all of its
assets for per Share consideration having a value greater than the Per
Share Amount (a "Competing Proposal") and (w) the Board does not recommend
against the Competing Proposal, (x) the Offer shall have remained open for
at least 20 business days, (y) the Minimum Condition shall not have been
satisfied and (z) this Agreement shall have been terminated pursuant to
Section 8.01; or

(ii) this Agreement is terminated (x) pursuant to Section 8.01(c)(ii)
or (y) pursuant to Section 8.01(d)(ii);

then, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of U.S.$1,000,000 (the "Fee"), which amount shall be payable in
immediately available funds, plus all Expenses up to $500,000 in the aggregate.
For purposes of this Section 8.03, the term "Expenses" shall mean all
out-of-pocket expenses and fees of each of Parent, Purchaser and their
respective shareholders and affiliates (including, without limitation, fees and
expenses payable to all banks, investment banking firms, other financial
institutions and other persons and their respective agents and counsel for
arranging, committing to provide or providing any financing for the Transactions
or structuring the Transactions and all fees of counsel, accountants, experts
and consultants to Parent and Purchaser, and all printing and advertising
expenses and all costs and expenses incurred by or on behalf of Parent and
Purchaser in connection with the collection under and enforcement of this
Section 8.03) actually incurred or accrued by any of them or on their behalf in
connection with the Transactions, including, without limitation, the financing
thereof, and actually incurred or accrued by banks, investment banking firms,
other financial institutions and other persons and assumed by Parent and
Purchaser in connection with the negotiation, preparation, execution and
performance of this Agreement, the structuring and financing of the Transactions
and any financing commitments or agreements relating thereto.

(b) Except as set forth in this Section 8.03, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.

SECTION 8.04. Amendment. Subject to Section 6.03(c), this Agreement
may be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the approval and adoption of this Agreement and
the transactions contemplated hereby by the stockholders of the Company, no
amendment may be made which would reduce the amount or change the type of
consideration into which each Share shall be converted upon consummation of the
Merger. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.

SECTION 8.05. Extension; Waiver. At any time prior to the Effective
Time, any party hereto may (i) extend the time for the performance of any
obligation or other act of any other party hereto, (ii) waive any inaccuracy in
the representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party or parties to be bound thereby.

ARTICLE IX

GENERAL PROVISIONS
<PAGE> 30
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Articles II and Sections 6.06 and 6.07 shall survive the Effective Time
indefinitely and those set forth in Sections 6.04(b) and 8.03 shall survive
termination indefinitely. This Section 9.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time of the Merger.

SECTION 9.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 9.02):

if to Parent or Purchaser:

Thomson U.S. Holdings Inc.
c/o The Thomson Corporation
Metro Center at One Station Place
Stamford, Connecticut 06902
Telecopier No. : (203) 348-5718
Attention: General Counsel

with a copy (which shall not by itself constitute notice) to:

Research Institute of America
90 Fifth Avenue
New York, New York 10011
Telecopier No.: (212) 337-4197
Attention: Euan C. Menzies

and a copy to:

Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopier No.: (212) 848-7179
Attention: David W. Heleniak, Esq.

if to the Company:

SCS/Compute, Inc.
2252 Welsch Industrial Court
St. Louis, Missouri 63146
Telecopier No.: (314) 432-7308
Attention: Chief Executive Officer

with a copy (which shall not by itself constitute notice) to:

Peper, Martin, Jensen, Maichel and Hetlage
720 Olive Street, 24th floor
St. Louis, Missouri 63101
Telecopier No: (314) 621-4834
Attention: John R. Short, Esq.

SECTION 9.03. Certain Definitions. For purposes of this Agreement,
the term:
<PAGE> 31
(a) "affiliate" of a specified person means a person who directly
or indirectly through one or more intermediaries controls, is controlled
by, or is under common control with, such specified person;

(b) "beneficial owner" with respect to any Shares means a person
who shall be deemed to be the beneficial owner of such Shares (i) which
such person or any of its affiliates or associates (as such term is defined
in Rule 12b-2 promulgated under the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any Shares;

(c) "business day" means any day on which the principal offices
of the SEC in Washington, D.C. are open to accept filings, or, in the case
of determining a date when any payment is due, any day on which banks are
not required or authorized to close in the City of New York;

(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;

(e) "person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person
(including, without limitation, a "person" as defined in Section 13(d)(3)
of the Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government; and

(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled by
such person, directly or indirectly, through one or more intermediaries.

SECTION 9.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.

SECTION 9.05. Entire Agreement; Assignment. Except as set forth in
Sections 6.04 and 6.11, this Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of law or otherwise, except that Parent and Purchaser may
assign all or any of their rights and obligations hereunder to any affiliate of
Parent provided that no such assignment shall relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
<PAGE> 32
SECTION 9.06. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their respective
successors and assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement, other than
Section 6.07 (which is intended to be for the benefit of the persons covered
thereby and may be enforced by such persons).

SECTION 9.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.

SECTION 9.08. Governing Law. Except to the extent that Delaware Law
applies to the Transactions, this Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York applicable to contracts
executed in and to be performed entirely within that State.

SECTION 9.09. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.

SECTION 9.10. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.

IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.

THOMSON U.S. HOLDINGS INC.

By /s/ Nigel R. Harrison
Name: Nigel R. Harrison
Title: Executive Vice President

SCS SUBSIDIARY, INC.

By /s/ Nigel R. Harrison
Name: Nigel R. Harrison
Title: Treasurer

SCS/COMPUTE, INC.

By /s/ Robert W. Nolan, Sr.
Name: Robert W. Nolan, Sr.
Title: President
<PAGE> 33
ANNEX A

Conditions to the Offer

Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied, (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer,
or (iii) at any time on or after the date of this Agreement, and prior to the
acceptance for payment of Shares, any of the following conditions shall exist:

(a) there shall have been instituted or be pending any action or
proceeding before any court or governmental, administrative or regulatory
authority or agency, domestic or foreign, (i) challenging or seeking to
make illegal, materially delay or otherwise directly or indirectly restrain
or prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Parent, Purchaser
or any other affiliate of Parent or the consummation of any other
Transaction, or seeking to obtain material damages in connection with any
Transaction; (ii) seeking to prohibit or limit materially the ownership or
operation by the Company, Parent or any of its subsidiaries of all or any
material portion of the business or assets of the Company, Parent or any of
its subsidiaries, or to compel the Company, Parent or any of its
subsidiaries to dispose of or hold separate all or any material portion of
the business or assets of the Company, Parent or any of its subsidiaries,
as a result of the Transactions; (iii) seeking to impose limitations on the
ability of Parent, Purchaser or any other affiliate of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to
the Offer, the Stock Purchase Agreement or otherwise on all matters
properly presented to the Company's stockholders, including, without
limitation, the approval and adoption of this Agreement and the
transactions contemplated hereby; (iv) seeking to require divestiture by
Parent, Purchaser or any other affiliate of Parent of any Shares; or (v)
which otherwise has a Material Adverse Effect or which is reasonably likely
to materially adversely affect the business, operations, properties,
condition (financial or otherwise), assets or liabilities (including,
without limitation, contingent liabilities) or prospects of Parent.

(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any subsidiary or affiliate of
Parent or the Company or (ii) any Transaction, by any legislative body,
court, government or governmental, administrative or regulatory authority
or agency, domestic or foreign, other than the routine application of the
waiting period provisions of the HSR Act to the Offer, the Stock Purchase
Agreement or the Merger, which is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above;

(c) there shall have occurred any change, condition, event or
development that, when taken together with all such other changes,
conditions, events and developments, has a Material Adverse Effect with
respect to the Company;

(d) (i) it shall have been publicly disclosed or Purchaser shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the then outstanding Shares has been
acquired by any person, other than
<PAGE> 34
Parent or any of its affiliates or Mr. Robert W. Nolan, Sr. or (ii) (A) the
Board or any committee thereof shall have withdrawn or modified in a manner
adverse to Parent or Purchaser the approval or recommendation of the Offer,
the Merger, this Agreement, or approved or recommended any takeover
proposal or any other acquisition of Shares other than the Offer and the
Merger or (B) the Board or any committee thereof shall have resolved to do
any of the foregoing;

(e) any representation or warranty of the Company in this
Agreement which is qualified as to materiality shall not be true and
correct or any such representation or warranty that is not so qualified
shall not be true and correct in any material respect, in each case as if
such representation or warranty was made as of such time on or after the
date of this Agreement;

(f) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by it
under this Agreement;

(g) this Agreement shall have been terminated in accordance with
its terms; or

(h) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of or
payment for Shares thereunder;

The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.

<PAGE> 1
STOCK PURCHASE AGREEMENT

among

THOMSON U.S. HOLDINGS INC.

SCS SUBSIDIARY, INC.

and

ROBERT W. NOLAN, SR.

Dated as of December 19, 1995
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
ARTICLE I
DEFINITIONS

1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . 1
1.02 Adjustments upon Changes in Capitalization. . . . . . . . . . 3

ARTICLE II
PURCHASE AND SALE

2.01 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . 4
2.02 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.03 Closing Deliveries by Seller. . . . . . . . . . . . . . . . . 4
2.04 Closing Deliveries by the Purchaser . . . . . . . . . . . . . 5

ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF SELLER AS TO THE COMPANY

3.01 Title to Stock. . . . . . . . . . . . . . . . . . . . . . . . 5
3.02 Authority Relative to this Agreement. . . . . . . . . . . . . 5
3.03 No Conflict; Required Filings and Consents. . . . . . . . . . 6
3.04 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.05 Absence of Litigation . . . . . . . . . . . . . . . . . . . . 6
3.06 No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.07 Merger Agreement. . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER

4.01 Corporate Organization. . . . . . . . . . . . . . . . . . . . 7
4.02 Authority Relative to this Agreement. . . . . . . . . . . . . 7
4.03 No Conflict; Required Filings and Consents. . . . . . . . . . 7
4.04 Investment Intent . . . . . . . . . . . . . . . . . . . . . . 8
4.05 Absence of Litigation . . . . . . . . . . . . . . . . . . . . 8
4.06 No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>

<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE V
COVENANTS

5.01 Irrevocable Proxy . . . . . . . . . . . . . . . . . . . . . . 9
5.02 Merger Agreement. . . . . . . . . . . . . . . . . . . . . . . 9
5.03 Standstill, Etc.. . . . . . . . . . . . . . . . . . . . . . . 9
5.04 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . 9
5.05 Filings; Consents . . . . . . . . . . . . . . . . . . . . . . 10
5.06 Public Announcements. . . . . . . . . . . . . . . . . . . . . 10
5.07 Sales and Transfer Taxes. . . . . . . . . . . . . . . . . . . 10
5.08 Guaranty by Parent. . . . . . . . . . . . . . . . . . . . . . 11
5.09 Waiver of Appraisal Rights. . . . . . . . . . . . . . . . . . 11
5.10 Further Assurances. . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE VI
CONDITIONS TO CLOSING

6.01 Conditions to the Obligations of Seller . . . . . . . . . . . 11
6.02 Conditions to Obligations of Parent and the Purchaser . . . . 12

ARTICLE VII
INDEMNIFICATION

7.01 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.02 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 13
7.03 Limitations on Indemnification. . . . . . . . . . . . . . . . 15

ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER

8.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.02 Effect of Termination . . . . . . . . . . . . . . . . . . . . 16
8.03 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.04 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE IX
MISCELLANEOUS

9.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.02 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.03 Entire Agreement; Headings. . . . . . . . . . . . . . . . . . 18
9.04 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 18
9.05 Equitable Relief; Preservation of Remedies. . . . . . . . . . 19
9.06 No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . 19
9.07 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 19
9.08 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 19
9.09 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . 19
9.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>

<PAGE> 4
STOCK PURCHASE AGREEMENT (the "Agreement") dated as of December 19,
1995, among ROBERT W. NOLAN, SR. ("Seller"), THOMSON U.S. HOLDINGS INC.
("Parent"), a Delaware corporation, and SCS SUBSIDIARY, INC., a Delaware
corporation (the "Purchaser").

WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and SCS/Compute, Inc., a Delaware corporation
(the "Company") are entering into an Agreement and Plan of Merger (the "Merger
Agreement") which provides, upon the terms and subject to the conditions
thereof, for the acquisition of the Company by Parent through a cash tender
offer by Purchaser (the "Offer") for all outstanding shares of Common Stock, par
value $.10 per share (the "Common Stock") at a price of $ 6.75 per share net to
the seller in cash, and, subsequent to consummation of the Offer and the
transactions contemplated by this Agreement, the merger of Purchaser with and
into the Company (the "Merger"), pursuant to which each issued and outstanding
share of Company Common Stock not owned directly or indirectly by Parent,
Purchaser or the Company will be converted into the right to receive the price
per share paid in the Offer (the "Offer Price") in cash; and

WHEREAS, the Seller acknowledges and agrees that he has executed and
delivered this Agreement in order to induce Parent and Purchaser to enter into
the Merger Agreement;

WHEREAS, Seller is the beneficial and of record owner of 1,082,570
shares of Common Stock (the "Shares"); and

WHEREAS, Stockholder desires to sell to the Purchaser and the Purchaser
desires to purchase from Seller, the Shares;

NOW, THEREFORE, in consideration of the premises and the covenants,
agreements, representations and warranties herein contained, the parties agree
as follows:

ARTICLE I
DEFINITIONS

SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:

(a) "Agreement" has the meaning set forth in the preamble.

(b) "Claims Notice" has the meaning set forth in Section 7.02(c).

(d) "Closing Date" has the meaning set forth in Section 2.02.

(e) "Common Stock" has the meaning set forth in the recitals.

(f) "Company" has the meaning set forth in the recitals.

(g) "Department of Justice" means the Antitrust Division of the United
States Department of Justice.

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

(i) "FTC" means the Federal Trade Commission.
<PAGE> 5
(j) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.

(k) "Indemnified Person" has the meaning set forth in Section 7.02(c).

(l) "Indemnifying Party" has the meaning set forth in Section 7.02(c).

(m) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.

(n) "Lien" means any security interest, lien (including tax lien),
pledge, claim (other than a pending lawsuit), charge, escrow, encumbrance,
option, forfeiture, penalty, restriction, right of first refusal, action in
law or equity, community property right or other marital right, mortgage,
security agreement, voting trust, transfer restriction under any
shareholder agreement or similar agreement, arrangement, contract,
commitment, understanding or obligation, whether or not relating in any way
to credit or the borrowing of money.

(o) "Loss" means any expense (including reasonable attorneys' fees and
disbursements), fine, penalty, loss, claim, damage, liability, suit,
deficiency, judgment or amount paid in settlement, including, without
limitation, any thereof in connection with any threatened, pending or
completed claim, dispute, suit, proceeding or investigation (whether civil,
criminal, administrative, investigative or otherwise).

(p) "Material Adverse Effect", when used in connection with any party
to this Agreement, means any change or effect that, when taken together
with all other adverse changes and effects that are within the scope of the
representations and warranties made by such party in this Agreement is, or
is reasonably likely to be materially adverse to the business, operations,
properties, condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) or prospects of
that party.

(q) "Merger Agreement" has the meaning set forth in the recitals.

(r) "Offer" has the meaning set forth in the preamble.

(s) "Parent" has the meaning set forth in the preamble.

(t) "Person" means any corporation, partnership, person or other entity
or group.

(u) "Purchaser" has the meaning set forth in the preamble.

(v) "SEC" means the Securities and Exchange Commission.

(w) "Seller" has the meaning set forth in the preamble.

(x) "Shares" has the meaning set forth in the recitals.

(y) "Tax" or "Taxes" means all income, gross receipts, sales, ad
valorem, use, employment, franchise, profits, environmental, recording,
property, excise, gains or other taxes, fees, stamp taxes and duties,
assessments or charges of any kind whatsoever (whether payable directly or
by withholding), together with any interest and any penalties, additions to
tax or additional amounts imposed by any taxing authority with respect
thereto.

(z) "1934 Act" means the Securities Exchange Act of 1934, as amended.
<PAGE> 6
(aa) "1933 Act" means the Securities Act of 1933, as amended.

(bb) "Transactions" means all of the transactions provided for under
this Agreement.

SECTION 1.02 Adjustments upon Changes in Capitalization. For all
purposes of this Agreement, "the Shares" shall mean and include a share of
Common Stock in the form existing on the date hereof and all securities or
property (excluding regular quarterly cash dividends) issued or exchanged with
respect thereto from and after the date of this Agreement upon any
reorganization, recapitalization, reclassification, merger, consolidation,
spin-off, partial or complete liquidation, stock dividend, split-up, sale of
assets, distribution to stockholders or combination of the Company's capital
stock or any other similar change in its capital structure. In the event of any
such change in the number of shares of Common Shares, the number and kind of
Shares shall be appropriately adjusted to restore to the Purchaser its rights
and privileges hereunder. The rights of Purchaser under this Section 1.02 shall
be in addition to, and shall in no way limit, its rights against the Company for
breach by the Company of the Merger Agreement.

ARTICLE II
PURCHASE AND SALE

SECTION 2.01 Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, Seller agrees to sell and deliver to the
Purchaser, and the Purchaser agrees to purchase from Seller, the Shares. The
purchase price for each of the Shares shall be equal to $ 6.75 (or, if higher,
the highest price paid for any share of Company Common Stock by Parent or any of
its Affiliates pursuant to the Offer).

SECTION 2.02 Closing. Subject to the terms and conditions of this
Agreement, the sales and purchases of the Shares contemplated hereby will take
place at a closing (the "Closing") at the offices of Shearman & Sterling, 599
Lexington Avenue, New York, New York 10022 at 10:00 A.M., New York City time, on
January 31, 1996, or at such other time or on such other date as to which the
parties may agree. The time and date upon which the Closing occurs are herein
called the "Closing Date". The parties hereto agree that in the event that the
Purchaser shall purchase Common Stock pursuant to the Offer, the Closing shall
take place, subject to the terms and conditions hereof, immediately after the
expiration of the Offer.

SECTION 2.03 Closing Deliveries by Seller. At the Closing, Seller will
deliver or cause to be delivered to the Purchaser:

(a) stock certificates evidencing the Shares, duly endorsed in blank or
accompanied by stock powers duly executed in blank, in form satisfactory to
the Purchaser and with all required stock transfer tax stamps affixed; and

(b) a certificate signed by Seller stating that, (i) the
representations and warranties of Seller contained in this Agreement are
true and correct in all material respects as of the Closing, with the same
force and effect as if made as of the Closing and (ii) the covenants and
agreements contained in this Agreement to be complied with by Seller at or
prior to the Closing shall have been complied with.

SECTION 2.04 Closing Deliveries by the Purchaser. At the Closing, the
Purchaser will deliver or cause to be delivered to Seller:

(a) the aggregate purchase price payable pursuant to Section 2.01, by
check or wire transfer, in immediately available funds; and

(b) a certificate of the Purchaser signed by a duly authorized officer
of the Purchaser stating that (i) the representations and warranties of the
Purchaser contained
<PAGE> 7
in this Agreement shall be true and correct in all material respects as of the
Closing, with the same force and effect as if made as of the Closing except
where the failure to be so true and correct would not have a material adverse
effect of the ability of the Purchaser to consummate the transactions
contemplated by this Agreement (the "Transactions"), and (ii) the covenants and
agreements contained in this Agreement to be complied with by the Purchaser at
or prior to the Closing shall have been complied with in all material respects
except where the failure to so comply would not have a material adverse effect
on the ability of the Purchaser to consummate the Transactions.

ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF SELLER AS TO THE COMPANY

Seller represents and warrants to Parent and the Purchaser as follows:

SECTION 3.01 Title to Stock. Except as set forth on Schedule 3.01,
Seller is the lawful owner (both beneficially and of record) of the Shares and
Seller has good and valid title to such Shares. At the Closing, Seller will be
the lawful owner (both beneficially and of record) of the Shares and will have
good and valid title to such Shares and will have the right, power and capacity
to sell, assign, transfer and deliver the same to the Purchaser pursuant to this
Agreement, free and clear of all Liens. Upon delivery of the Shares to the
Purchaser as provided in Article II, the Purchaser will have good and valid
title to and ownership of the Shares, free and clear of all Liens, and such
capital stock will be fully paid and nonassessable.

SECTION 3.02 Authority Relative to this Agreement. Seller has the full
right, capacity and power to execute and deliver this Agreement, to perform his
obligations hereunder and to consummate the Transactions. This Agreement has
been duly and validly executed and delivered by Seller and, assuming the due
authorization, execution and delivery by Parent and the Purchaser, constitutes a
legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally (including, without limitation, the effect of
statutory and other law regarding fraudulent conveyances, fraudulent transfers
and preferential transfers), as may be limited by the exercise of judicial
discretion and the application of principles of equity including, without
limitation, requirements of good faith, fair dealing, conscionability and
materiality (regardless of whether considered in a proceeding in equity or at
law) and that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the discretion
of the Court before which any proceeding therefor may be brought.

SECTION 3.03 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Seller do not, and the performance
of this Agreement by Seller will not, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Seller.

(b) The execution and delivery of the Agreement by Seller do not, and
the performance of this Agreement by Seller will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except for (i) filing
the pre-merger notification and report forms with respect to the transactions
contemplated by this Agreement under the HSR Act, (ii) filings required to be
made with the SEC pursuant to the rules and regulations of the 1934 Act and
applicable state takeover laws, or (iii) filings with the Nasdaq Small Cap
Market or the National Association of Securities Dealers, Inc.

SECTION 3.04 Compliance. Seller is not in default or violation of, any
law, rule, regulation, order, judgment or decree applicable to Seller that would
materially impair the ability or obligation of Seller to perform fully on a
timely basis his obligations under this

<PAGE> 8
Agreement.

SECTION 3.05 Absence of Litigation. There is no claim, action,
proceeding or investigation pending or, to the best knowledge of Seller,
threatened against, relating to or affecting Seller, the Company, or any of
their respective properties or rights, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign that, if determined adversely to Seller or the Company, would materially
impair the ability or obligation of Seller to perform fully on a timely basis
his obligations under this Agreement.

SECTION 3.06 No Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based on arrangements made
by and on behalf of Seller.

SECTION 3.07 Merger Agreement. All the representations and warranties
set forth in Article III of the Merger Agreement are true, complete and correct.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER

Parent and the Purchaser, jointly and severally, represent and warrant
to Seller as follows:

SECTION 4.01 Corporate Organization. Each of Parent and the Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization.

SECTION 4.02 Authority Relative to this Agreement. Each of Parent and
the Purchaser has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution and delivery of this Agreement by Parent and the
Purchaser and the consummation by Parent and the Purchaser of the Transactions
have been duly and validly authorized by all necessary corporate action on the
part of Parent and the Purchaser and no other corporate proceedings on the part
of Parent or the Purchaser are necessary to authorize this Agreement or to
consummate the Transactions. This Agreement has been duly and validly executed
and delivered by Parent and the Purchaser and, assuming the due authorization,
execution and delivery by Seller, constitutes a legal, valid and binding
obligation of each of Parent and the Purchaser enforceable against each of
Parent and the Purchaser in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors' rights generally (including, without limitation, the
effect of statutory and other law regarding fraudulent conveyances, fraudulent
transfers and preferential transfers), as may be limited by the exercise of
judicial discretion and the application of principles of equity including,
without limitation, requirements of good faith, fair dealing, conscionability
and materiality (regardless of whether considered in a proceeding in equity or
at law) and that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought.

SECTION 4.03 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and the Purchaser do not, and
the performance of this Agreement by Parent and the Purchaser will not, at the
time of closing, (i) conflict with or violate the Certificate of Incorporation
or By-laws of either Parent or the Purchaser, (ii) conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Parent or the
Purchaser or by which any property or asset of either of them is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Parent or the Purchaser pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
<PAGE> 9
or other instrument or obligation to which Parent or the Purchaser is
a party or by which Parent or the Purchaser or any property or asset of either
of them is bound or affected, except for any such conflicts, violations,
breaches, defaults or other occurrences which would not, individually or in the
aggregate, prevent Parent or the Purchaser from performing their respective
obligations under this Agreement.

(b) The execution and delivery of this Agreement by Parent and the
Purchaser do not and the performance of this Agreement by Parent and the
Purchaser will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority to
be obtained or made by Parent or the Purchaser, domestic or foreign, except (i)
for applicable requirements, if any, of the Exchange Act, Blue Sky Laws and
state takeover laws and the HSR Act (ii) filings with the Nasdaq Small Cap
Market and the NASD filings required under the laws of foreign jurisdictions and
(iii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Transactions, or otherwise prevent Parent or the Purchaser
from performing their respective obligations under this Agreement.

SECTION 4.04 Investment Intent. The Purchaser will acquire the Shares
for investment purposes only and not with a view to any resale or distribution
thereof and will not sell any Shares purchased pursuant to this Agreement except
in compliance with applicable federal and state securities laws.

SECTION 4.05 Absence of Litigation. There is no claim, action,
proceeding or investigation pending or, to the best knowledge of the Parent or
the Purchaser, threatened against the Parent or the Purchaser or any property or
asset of the Parent or the Purchaser before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign that, if determined adversely to Parent or the Purchaser, would
materially impair the ability of Parent or the Purchaser to perform fully on a
timely basis their respective obligations under this Agreement. As of the date
hereof, neither the Parent nor the Purchaser is subject to any order, writ,
judgment, injunction, decree, determination or award that if determined
adversely to Parent or the Purchaser, would materially impair the ability of
Parent or the Purchaser to perform fully on a timely basis their respective
obligations under this Agreement.

SECTION 4.06 No Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement and the Merger Agreement
based on arrangements made by and on behalf of the Purchaser.

ARTICLE V
COVENANTS

SECTION 5.01 Irrevocable Proxy. Seller hereby irrevocably appoints
Purchaser, with full power of substitution and resubstitution, as Seller's
agent, attorney and proxy, during the term of this Agreement, to vote, or give
consents with respect to, all of the Shares owned by Seller in favor of the
Merger Agreement and the transactions contemplated thereby and against (a) any
other proposal for the acquisition of the Company or its assets or a merger or
other business combination of the Company with any third party or (b) any other
proposal that would, or is reasonably likely to, result in any of the conditions
to Purchaser's obligations under this Agreement not being fulfilled. Seller
intends this proxy to be irrevocable and coupled with an interest. Seller hereby
revokes any proxy previously granted with respect to Seller's Shares. Seller's
proxy granted pursuant to this Section 5.01 shall terminate and be revoked upon
any termination of this Agreement in accordance with its terms.

SECTION 5.02 Merger Agreement. Seller shall not, in his capacity as
stockholder of the Company, take any action or omit to take any action that is
inconsistent with compliance by the Company with the terms of the Merger
Agreement in all respects.
<PAGE> 10
From the date hereof through the Closing Date, Seller shall use his reasonable
best efforts to cause (i) the Company to fulfill all of its obligations under
the Merger Agreement and (ii) the representations and warranties contained in
Article III of the Merger Agreement to continue to be true and correct in all
material respects on and as of the Closing Date as if made on and as of the
Closing Date. Seller shall promptly notify, or cause to be notified, the
Purchaser of any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of this
Agreement or of the Merger Agreement.

SECTION 5.03 Standstill, Etc. From the date hereof to the Closing Date,
Seller covenants and agrees that, without the prior written consent of the
Purchaser, he will not (i) sell, tender pursuant to the Offer or any other
tender offer, pledge, encumber, assign, transfer, exchange or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to the sale, tender, pledge, encumbrance, assignment, transfer,
exchange or disposition of, any of the Shares; (ii) acquire any additional
shares of Company Common Stock or warrants, options or other rights to purchase
any shares of Company Common Stock; or (iii) grant any proxies (other than
pursuant to Section 5.01) with respect to the Shares, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares.

SECTION 5.04 No Solicitation. From the date hereof to the Closing Date,
Seller shall not, directly or indirectly, solicit, initiate or encourage any
discussions of, or submission of proposals or offers from any person, relating
to any acquisition or purchase of all or (other than in the ordinary course of
business) a portion of the assets of, or any equity interest in, the Company or
any of its subsidiaries or any business combination with the Company or any of
its subsidiaries, or participate in any negotiations regarding, or furnish to
any other Person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing. Seller shall
immediately cease and cause to be terminated any existing discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing and shall promptly notify the Purchaser if any such proposal or offer,
or any inquiry or contact with any Person with respect thereto, is made and
shall, in any such notice to the Purchaser, indicate in reasonable detail the
identity of the offeror and the terms and conditions of any proposal.

SECTION 5.05 Filings; Consents. (a) Seller, Parent and the Purchaser
will promptly file, or cause to be filed, with the FTC and the Department of
Justice, pursuant to the HSR Act, all requisite documents and notifications in
connection with the sale of the Shares pursuant to this Agreement. Each of
Parent and the Purchaser will make or cause to be made all such other filings
and submissions, if any, under laws and regulations applicable to Parent and the
Purchaser as may be required of each of them for the consummation of the
purchase of the Shares pursuant to this Agreement. Seller will make or cause to
be made all such other filings and submissions under laws and regulations
applicable to Seller, if any, as may be required of Seller for the consummation
of the sale of the Shares pursuant to this Agreement. Each of the parties hereto
agrees that it will coordinate and cooperate with the other parties hereto in
exchanging such information and providing such reasonable assistance as may be
requested in connection with all of the foregoing.

(b) Parent, the Purchaser and Seller will use their respective
reasonable best efforts to obtain, prior to the Closing, all consents and
approvals which are necessary to the consummation of the Transactions.

SECTION 5.06 Public Announcements. Seller, Parent and the Purchaser
will consult with each other before issuing any press releases or otherwise
making any public statements with respect to this Agreement and the Merger
Agreement and the transactions contemplated hereby and thereby, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange.

SECTION 5.07 Sales and Transfer Taxes. Seller shall pay any stock
transfer
<PAGE> 11
taxes and any real property gains and transfer taxes relating to the sale,
acquisition, conveyance, transfer and delivery of the Shares that are sold to
the Purchaser hereunder. The Purchaser and Seller shall cooperate with respect
to the filing of any returns, reports or other filings due in connection with
such Taxes.

SECTION 5.08 Guaranty by Parent. In consideration of the covenants,
agreements and undertakings of Seller contained in this Agreement, Parent hereby
guarantees to Seller, and his successors and assigns, the full, prompt and
complete payment and performance by the Purchaser of all of the covenants,
conditions and agreements of the Purchaser contained in this Agreement. Parent
hereby waives all notice of default by the Purchaser or notice of acceptance of
this Agreement by Seller, and consents to any extension that may be given by
Seller to the Purchaser of time of payment or performance. This guarantee shall
be construed as a continuing absolute and unconditional guarantee of payment and
performance and not as a guarantee of collection.

SECTION 5.09 Waiver of Appraisal Rights. Seller hereby waives any right
he may have to demand appraisal pursuant to Section 262 of the Delaware General
Corporation Law in connection with the Merger.

SECTION 5.10 Further Assurances. At any time and from time to time for
a reasonable period of time after the Closing, at the Purchaser's reasonable
request, Seller will duly execute, acknowledge and deliver all such further and
other assurances and documents, and will take such other action consistent with
the terms of this Agreement, at Seller's expense, for the purpose of better
assigning, transferring and conveying to the Purchaser, or reducing to the
Purchaser's possession, any or all of the Shares.

ARTICLE VI
CONDITIONS TO CLOSING

SECTION 6.01 Conditions to the Obligations of Seller. The obligations
of Seller to consummate the purchase and sale contemplated by this Agreement
shall be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions, any one or more of which may be waived by Seller:

(a) Representations and Warranties; Covenants. All representations and
warranties of Parent and the Purchaser contained in this Agreement shall be
true and correct on and as of the Closing Date (except for those
representations and warranties made as of a certain date, in which case, as
of that date), with the same force and effect as if made on and as of the
Closing Date (except for those representations and warranties made as of a
certain date, in which case, as of that date), except where the failure of
any representations or warranties to be true and correct would not, either
individually or in the aggregate, materially impair the ability or
obligation of Parent and Purchaser to perform fully on a timely basis their
respective obligations under this Agreement, and all material covenants
contained in this Agreement to be complied with by Parent and the Purchaser
on or before the Closing Date shall have been complied with in all material
respects.

(b) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the purchase of the Shares contemplated hereby shall
have expired or been terminated.

(c) No Order. No United States, state or foreign governmental authority
or other agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and has the effect
of making the acquisition of the Shares illegal or otherwise prohibiting
consummation of the Transactions.

(d) The Merger Agreement. The Merger Agreement shall not have been
<PAGE> 12
terminated, prior to the acceptance for payment by Purchaser of any shares
of Company Common Stock pursuant to the Offer, by the Company as a result
of a material breach by Parent or Purchaser of its respective obligations
under the Merger Agreement.

SECTION 6.02 Conditions to Obligations of Parent and the Purchaser. The
obligations of Parent and the Purchaser to consummate the purchases and sales
contemplated by this Agreement shall be subject to the fulfillment, at or prior
to the Closing, of each of the following conditions, any one or more of which
may be waived by them:

(a) Representations and Warranties; Covenants. All representations and
warranties of Seller contained in this Agreement shall be true and correct
in all respects as of the Closing Date (except for those representations
and warranties made as of a certain date, in which case, as of that date),
with the same force and effect as if made as of the Closing Date (except
for those representations and warranties made as of a certain date, in
which case, as of that date), except where the failure of any
representations or warranties to be true and correct would not, either
individually or in the aggregate, have a Material Adverse Effect on the
Company and all material covenants contained in this Agreement to be
complied with by Seller on or before the Closing Date shall have been
complied with in all material respects.

(b) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the purchase of the Shares contemplated hereby shall
have expired or been terminated.

(c) No Order. No United States, state or foreign governmental authority
or other agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and has the effect
of making the acquisition of Shares illegal or otherwise prohibiting
consummation of the Transactions.

(d) No Material Adverse Effect. No event or events shall have occurred,
or be reasonably likely to occur, which, individually or in the aggregate,
have, or could reasonably be expected to have, a Material Adverse Effect on
the Company.

(e) Key Employee; Employment Agreement. Seller shall have continued to
be employed as Chief Executive Officer of the Company with duties and
responsibilities comparable to the duties and responsibilities he has
performed in the past and shall have executed and delivered to the Company
the Employment Agreement substantially in the form attached hereto as
Exhibit A.

(f) Conditions to Offer. All conditions to Purchaser's obligation to
accept for payment shares of Company Common Stock tendered pursuant to the
Offer shall have been satisfied.

ARTICLE VII
INDEMNIFICATION

SECTION 7.01 Survival. Subject to the limitations and other provisions
of this Agreement, the representations and warranties of the parties hereto
contained herein shall survive the Closing and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of the
parties hereto, for a period of two years after the Closing Date, except for the
representations and warranties contained in Sections 3.01 and 3.02, which shall
survive the Closing Date without limitation. Neither the period of survival nor
the liability of Seller with respect to Seller's representations and warranties
shall be reduced by any investigation made at any time by or on behalf of the
Purchaser or Parent. If written notice of a claim has been given prior to the
expiration of the applicable representations and
<PAGE> 13
warranties by the Purchaser or Parent to Seller, then the relevant
representations and warranties shall survive as to such claim, until such claim
has been finally resolved. The covenants and agreements of the parties hereto
shall survive the Closing and shall remain in full force and effect, regardless
of any investigation of any of the parties hereto.

SECTION 7.02 Indemnification. (a) Subject to the other terms and
conditions of this Agreement and as an adjustment to purchase price, Seller
agrees to indemnify Parent and any subsidiary or affiliate thereof, whether now
or thereafter such a subsidiary or affiliate, and any director, officer or
employee of any thereof against and hold each of them harmless from all Losses
arising out of the breach of any representation or warranty of Seller, or any
covenant or agreement of Seller herein. Anything in Section 7.01 to the contrary
notwithstanding, no claim may be asserted nor may any action be commenced
against Seller for breach of any representation or warranty, unless notice of
such claim or action is received by Seller describing in reasonable detail the
facts and circumstances with respect to the subject matter of such claim or
action on or prior to the date on which the statute of limitations with respect
to such representation or warranty expires.

(b) Subject to the other terms and conditions of this Agreement, Parent
and the Purchaser agree, jointly and severally, to indemnify Seller against and
hold Seller harmless from all Losses arising out of the breach of any
representation or warranty in Section 4.04 or 4.06 or any covenant or agreement
of Parent and the Purchaser herein. Anything in Section 7.01 to the contrary
notwithstanding, no claim may be asserted nor may any action be commenced
against Parent or the Purchaser for breach of any representation or warranty
unless notice of such claim or action is received by Parent or the Purchaser
describing the facts and circumstances with respect to the subject matter of
such claim or action on or prior to the date on which the statute of limitations
with respect to such representation or warranty expires.

(c) Promptly after receipt by any party hereto (the "Indemnified
Person") of notice of any demand, claim or circumstances which, with lapse of
time, would or might give rise to a claim or the commencement (or threatened
commencement) of any action, proceeding or investigation that may result in a
Loss, the Indemnified Person shall give notice thereof (the "Claims Notice") to
any party or parties obligated to provide indemnification pursuant to this
Section 7.02 (the "Indemnifying Party"). The Claims Notice shall describe such
threatened claim or demand in reasonable detail, and shall indicate the amount
(estimated, if necessary) of the Loss that has been or may be suffered by the
Indemnified Person. The Indemnifying Party shall have the right to direct,
through counsel of its own choosing, the defense or settlement of any such claim
or proceeding at its own expense. If the Indemnifying Party elects to assume the
defense of any such claim, the Indemnified Person may participate in such
defense, but in such case the expenses of the Indemnified Person shall be paid
by the Indemnified Person; provided, however, that if there exists or is
reasonably likely to exist a conflict of interest that would make it
inappropriate in the judgment of the Indemnified Person, in its sole and
absolute discretion, for the same counsel to represent both the Indemnified
Person and the Indemnitor, then the Indemnified Person shall be entitled to
retain its own counsel, in each jurisdiction for which the Indemnified Person
determines counsel is required, at the expense of the Indemnitor. Such
Indemnified Person shall cooperate with the Indemnifying Party in the defense or
settlement thereof, and shall make available to the Indemnifying Party any
documents or other papers within its control that are necessary or appropriate
for such defense, and the Indemnifying Party shall reimburse the Indemnified
Person for all its reasonable out-of-pocket expenses in connection therewith. If
the Indemnifying Party elects to direct the defense of any such claim, the
Indemnified Person shall not pay, or permit to be paid, any part of any claim
arising from such asserted liability unless the Indemnifying Party consents in
writing to such payment or unless the Indemnifying Party, subject to the last
sentence of this Section 7.02(c), withdraws from the defense of such asserted
liability or unless a final judgment from which no appeal may be taken by or on
behalf of the Indemnifying Party is entered against the Indemnified Person for
such liability. If the Indemnifying Party shall fail to defend, or if after
commencing or undertaking any such defense fails to prosecute or withdraws from
such defense, the Indemnified Person shall have the right to undertake the
defense or settlement thereof, at the Indemnifying Party's expense. If the
Indemnified Person assumes the defense of any such claim or proceeding pursuant
to this Section 7.02(c) and proposes to settle such
<PAGE> 14
claim or proceeding prior to a final judgment thereon or to forego appeal with
respect thereto, then the Indemnified Person shall give the Indemnifying Party
prompt notice thereof and the Indemnifying Party shall have the right to
participate in the settlement or assume or reassume the defense of such claim or
proceeding.

(d) Without limiting any other remedy available to any Indemnified
Person, each Indemnified Person that shall have suffered a Loss as to which it
shall be entitled to indemnification, shall be entitled to satisfy, either in
whole or in part, such right to indemnification by setting off or recouping the
amount of such Loss, or any portion thereof, against any obligation that any
Indemnified Person or any affiliate thereof shall have to pay money to Seller,
including, without limitation, any amounts owed by Parent or the Purchaser to
Seller pursuant to any employment contract of Seller.

SECTION 7.03 Limitations on Indemnification. (a) Notwithstanding any
provision to the contrary contained in this Agreement, the indemnifications in
favor of the Purchaser and Parent contained in Section 7.02(a) herein shall not
be effective until the aggregate dollar amount of all Losses indemnified against
under such section exceeds $100,000; provided, however, that the maximum amount
of indemnifiable Losses which may be recovered from Seller arising out of or
resulting from the causes enumerated in this Article VII shall be an amount
equal to $2,000,000 with respect to any Losses in connection with a breach of
the representation and warranty set forth in Section 3.07 and the aggregate
purchase price paid to Seller pursuant to Section 2.01 with respect to all other
Losses.

(b) Notwithstanding any provision to the contrary contained in this
Agreement, the indemnifications in favor of the Seller contained in Section
7.02(b) herein shall not be effective until the aggregate dollar amount of all
Losses indemnified against under such section exceeds $100,000; provided,
however, that the maximum amount of indemnifiable Losses which may be recovered
from the Purchaser and Parent arising out of or resulting from the causes
enumerated in this Article VII shall be an amount equal to the aggregate
purchase price paid to Seller pursuant to Section 2.01 with respect to all
Losses.

(c) To the extent that an indemnification obligation pursuant to one of
the provisions of Section 7.02 herein overlaps with an indemnification
obligation pursuant to any

<PAGE> 15
other provision of Section 7.02 herein or any other provision of this Agreement,
the party seeking such indemnification shall be entitled to only one of such
indemnification payments.

ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER

SECTION 8.01 Termination. This Agreement may be terminated at any time
prior to the Closing:

(a) By the mutual written consent of Seller and the Purchaser;

(b) By either party, if the Closing shall not have occurred by March
31, 1996; provided, however, that the right to terminate this Agreement
under this Section 8.01(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the
cause of, or shall have resulted in, the failure of the Closing to occur on
or prior to such date;

(c) By the Purchaser if, between the date hereof and the time scheduled
for the Closing: (i) an event or condition occurs that has resulted in or
that may be expected to result in a Material Adverse Effect on the Company,
(ii) any material representation or warranty of Seller contained in this
Agreement shall not have been true and correct when made or deemed made,
(iii) Seller shall not have complied with any material covenant or
agreement to be complied with by it and contained in this Agreement; or
(iv) Seller, the Company or any Subsidiary makes a general assignment for
the benefit of creditors, or any proceeding shall be instituted by or
against Seller, the Company or any Subsidiary seeking to adjudicate any of
them a bankrupt or insolvent, or seeking liquidation, winding up or
reorganization, arrangement, adjustment, protection, relief or composition
of its debts under any Law relating to bankruptcy, insolvency or
reorganization;

(d) by Seller if, prior to the acceptance for purchase by Purchaser of
any shares of Company Common Stock pursuant to the Offer, the Company shall
terminate the Merger Agreement as a result of a material breach by Parent
or Purchaser of its respective obligations thereunder; or

(e) by Parent and Purchaser upon termination of the Offer or the Merger
Agreement in accordance with the terms thereof for any reason other than a
material breach by Parent or Purchaser of their respective obligations
thereunder.

SECTION 8.02 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto, except (a)
as set forth in Section 9.04 and (b) nothing herein shall relieve either party
from liability for any breach hereof.

SECTION 8.03 Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by Seller, Parent and the Purchaser.

SECTION 8.04 Waiver. At any time prior to the Closing, any party hereto
may (a) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered pursuant hereto and
(b) waive compliance by the other party with any of the agreements or conditions
contained herein. Any such waiver shall be valid if set forth in an instrument
in writing signed by the party to be bound thereby.

ARTICLE IX
MISCELLANEOUS

SECTION 9.01 Notices. Any notice or other communication required or
permitted hereunder shall be in writing, and shall be delivered personally,
telegraphed,
<PAGE> 16
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed to have been
given when so telegraphed, telexed or, if sent by facsimile transmission,
answerback received, or if mailed, two days after deposit in the United States
mails, or if personally delivered, addressed to the parties as follows:

Parent or the Purchaser:

Thomson U.S. Holdings Inc.
c/o The Thomson Corporation
Metro Center at One Station Place
Stamford, Connecticut 06902
Attention: General Counsel
Telecopier: (203) 348-5718

With a copy to:

Research Institute of America
90 Fifth Avenue
New York, New York 10011
Attention: Euan C. Menzies
Telecopier: (212) 377-4277

And a copy to:

Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: David W. Heleniak, Esq.
Telecopier: (212) 848-7179

Seller:

Robert W. Nolan, Sr.
2252 Welsch Industrial Court
St. Louis, Missouri 63146
Telecopier: (314) 432-7308

With a copy to:

Peper, Martin, Jensen, Maichel and Hetlage
720 Olive Street, 24th Floor
St. Louis, Missouri 63101
Telecopier: (314) 621-4834
Attention: John R. Short, Esq.

Any party may change its above address and attorney for notices upon written
notice to the other parties in accordance with this Section 9.01.

SECTION 9.02 Assignment. All terms of this Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective legal
representatives, successors, heirs and assigns. This Agreement, however, may not
be assigned by any party without the prior written consent of the other parties.

SECTION 9.03 Entire Agreement; Headings. This Agreement and the Merger
Agreement constitute the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and shall supersede and cancel
all prior and contemporaneous agreements, whether written or oral, between such
parties dealing with the subject matter hereof. Section and paragraph headings
are not to be considered part of this Agreement and are included solely for
convenience and are not intended to be full or accurate descriptions of the
contents
<PAGE> 17
thereof.

SECTION 9.04 Fees and Expenses. All costs and expenses incurred in
connection with this Agreement (i) by Parent and the Purchaser shall be paid by
Parent and the Purchaser and (ii) by Seller shall be paid by the Company,
whether or not the transactions contemplated hereby are consummated.

SECTION 9.05 Equitable Relief; Preservation of Remedies. If either
Seller on the one hand, or the Purchaser on the other hand, commits a breach, or
threatens to commit a breach, of its obligations to consummate the transactions
provided for herein, the other party shall have the right and remedy to have the
provisions of this Agreement specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to Seller on the one hand, and
the Purchaser on the other, and that money damages will not provide an adequate
remedy to the other party.

SECTION 9.06 No Third-Party Beneficiaries. Nothing in this Agreement
shall confer any rights upon any person who or entity which is not a party or an
assignee of a party to this Agreement.

SECTION 9.07 Counterparts. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures to each counterpart
were upon a single instrument, and all such counterparts together shall be
deemed an original of this Agreement.

SECTION 9.08 Severability. If any provision of this Agreement, or the
application of any such provision to any person or circumstance, shall be held
invalid by a court of competent jurisdiction, the remainder of this Agreement,
or the application of such provision to persons or circumstances other than
those as to which it is held invalid, shall not be affected thereby.

SECTION 9.09 Consent to Jurisdiction. Seller, Parent and the Purchaser
each hereby irrevocably and unconditionally:

(a) Submits itself in any legal action or proceeding relating to this
Agreement, or for recognition and enforcement of any judgment in respect
hereof, to the non- exclusive jurisdiction of the courts of the State of
New York located in the City of New York and the courts of the United
States of America for the Southern District of New York, and Appellate
courts from any thereof, and consents and agrees to such action or
proceeding being brought in such courts;

(b) Confirms that its obligations hereunder are wholly commercial in
nature, waives and agrees not to assert, by way of motion, as a defense, or
otherwise, in any suit, action or proceeding relating to this Agreement or
any claim that it is not personally subject to the jurisdiction of the
courts named in paragraph (a) above;

(c) Waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;

SECTION 9.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed wholly within such State.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

THOMSON U.S. HOLDINGS INC.
<PAGE> 18
By: /s/ Nigel R. Harrison
Name: Nigel R. Harrison
Title: Executive Vice President

SCS SUBSIDIARY, INC.

By: /s/ Nigel R. Harrison
Name: Nigel R. Harrison
Title: Treasurer

/s/ Robert W. Nolan, Sr.
Robert W. Nolan, Sr.
<PAGE> 19
Consent of Spouse

The undersigned, as the spouse of Robert W. Nolan, Sr., who is a
signatory of the foregoing Stock Purchase Agreement, hereby consents to,
confirms and ratifies any sale by her spouse of any Shares contemplated by the
foregoing Stock Purchase Agreement, and for purposes of any community property
laws and all other laws, conveys all her right, title and interest in and to
such Shares to the purchaser of such Shares.

/s/ Lou Ann Nolan

<PAGE> 1
Exhibit A

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (the "Agreement"), dated January __, 1996 between
SCS/Compute, Inc. (the "Company") and Robert W. Nolan, Sr. (the "Executive").

The Executive has served as a key executive of the Company and in
recognition thereof it is the desire of the Company and the Executive to enter
into this Agreement in order to provide the Executive with the opportunity to
share in the long-term growth of the Company, and to reward him for his future
contributions to the success of the Company on the terms and subject to the
conditions hereinafter set forth.

Accordingly, the parties agree as follows:

1. Employment, Duties and Acceptance.

1.1 Employment by the Company. The Company agrees to employ the
Executive for the Term (as defined in Section 2) as President and Chief
Executive Officer to perform such duties as the Executive shall reasonably be
directed to perform by the Chief Executive Officer of Research Institute of
America Group (the "CEO of RIAG"). Such duties shall initially include the
current duties performed by the Executive for the Company and such duties shall
at all times include such other and further duties as shall be reasonably
assigned to the Executive by the CEO of RIAG consistent with Executive's
experience. Notwithstanding any provision of this Section 1 to the contrary, the
Executive shall have no authority to do any of the following on behalf of the
Company other than with the express approval of the CEO of RIAG:

(a) Promulgate annual business plans for the Company, including, without
limitation, budgets, operating plans and strategic plans;

(b) Make any business or product acquisition;

(d) Make any sale or divestiture of any asset;

(e) Enter into any real estate lease; and

(f) Enter into any other contract, including, without limitation, software
license and consulting agreements, in excess of $50,000;

provided, however, that in the event, and to the extent that, the aforementioned
limitations are modified with respect to executives at other operating entities
of Thomson U.S. Holdings Inc. and its affiliates ("Thomson") such limitations
will also be altered with respect to the Executive.

1.2 Acceptance of Employment by the Executive. The Executive accepts
such employment and shall render the services described above.

1.3 Place of Employment. The Executive's principal place of employment
shall be in the St. Louis, Missouri area, subject to such reasonable travel as
the rendering of the services hereunder may require and subject to the
Executive's consent to be transferred elsewhere.

2. Term of Employment. This Agreement shall take effect, and the term of
the Executive's employment under this Agreement shall commence, as of the
Effective Time (as defined in the merger agreement (the "Merger Agreement")
dated December 20, 1995 among Thomson U.S. Holdings Inc., SCS Subsidiary Inc.
and SCS/Compute, Inc. (the "Effective Date") and shall end on December 31, 2000
subject to the terms set forth in Section 4.1 hereof (the "Term").

3. Compensation.

3.1 Salary. As compensation for all services to be rendered pursuant to
this Agreement, during the Term the Company shall pay the Executive a salary at
the annual rate of $260,000 payable in accordance with the payroll policies of
the Company as from time to time in effect, less such deductions as shall be
required to be withheld by applicable law and regulations. The Executive's
salary shall be increased on each December 31st during the Term in an amount
determined with reference to the increase in the consumer price index for all
urban consumers in the St. Louis, Missouri area for the prior calendar year.

3.2 Employee Benefits, Vacation and Expenses. The Executive shall be
entitled (i) to participate in the employee benefit plans of the Company,
subject to the terms of such plans, (ii) to receive four weeks of paid vacation
during each year of the Term,
<PAGE> 2
subject to appropriate scheduling thereof, and (iii) to be reimbursed for
expenses actually incurred or paid by the Executive during the Term in the
performance of the Executive's services under this Agreement to the extent that,
and upon the same terms as, the Company may, in its discretion, provide such
benefit plans, vacation days and expense reimbursement to other key executives
of the Company.

3.3 Incentive Payments. In addition to the salary referred to in
Section 3.1 above and subject to the terms of this Section 3.3, Section 3.5
below and Schedules 1 and 2 attached to this Agreement, the Executive shall also
be eligible to receive from the Company:

(a) an annual incentive payment (the "Annual Bonus") in respect of each
calendar year of the Term (for purposes of this Section 3.3 the period from
the Effective Date through December 31, 1996 shall be deemed the first
calendar year of the Term) with such Annual Bonus to be calculated and
payable in accordance with the provisions of Schedule 1 attached hereto,
which Schedule 1 may be amended during the Term by agreement of the
Executive and the CEO of RIAG or his designee, subject to approval by
Thomson; and

(b) a long-term incentive payment ("LTIP") in respect of each of the
three years during the Term ending December 31, 1998, 1999 and 2000, with
each such LTIP payment to be calculated and payable in accordance with the
provisions of Schedule 2 attached hereto, which Schedule 2 may be amended
during the Term by agreement of the Executive and the CEO of RIAG, subject
to approval by Thomson.

3.4 No Distortion. The Executive agrees that he has a fiduciary
responsibility not to jeopardize the ongoing success of the Company in any one
year and hereby agrees to maintain expenses sufficient to manage the business of
the Company in which he is engaged for both the present and future during the
Term.

3.5 Effect of Termination on the Bonuses. Except as specified below, in
the event of a termination of employment by the Executive or by the Company in
accordance with the terms of this Agreement, the Company shall not be obligated
to pay to the Executive any further Annual Bonus or LTIP (or any outstanding
portion thereof). In the event of the termination of this Agreement prior to its
expiration by the Company under clause (a), (b) or (h) of Section 4.1, the
Company shall pay the Executive or the Executive's representative, as
appropriate, promptly following termination any Annual Bonus the Executive would
have received under Section 3.3(a) for the year in which the termination took
place based on the Approved Budget (as defined below) for such year and, if such
termination occurs in the second or third year of the Term, a prorated portion
(on a per diem basis) of any LTIP the Executive would have received under
Section 3.3(a) in the third year of the Term based on the Approved Budget for
such year, or, if such termination occurs in the fourth or fifth year of the
Term, any LTIP the Executive would have received under Section 3.3(a) for the
year in which the termination took place based on the Approved Budget for such
year. "Approved Budget" shall mean the detailed financial forecast of revenues,
operating income and management cash of the Company as approved by the CEO of
RIAG. The Approved Budget shall be prepared on or about January 1 of each year
during the Term and shall be adjusted during each such year to reflect changes
in underlying business conditions.

4. Termination.

4.1 Events of Termination. The Company may terminate this Agreement
prior to the expiration of the Term upon the occurrence of any of the following
events:

a) the death of the Executive;
b) the Disability (as hereinafter defined) of the Executive;
c) the conviction of the Executive of any felony;
d) the gross neglect or willful misconduct of the Executive in
connection with the performance of his duties hereunder, or a
willful failure to follow a reasonable directive of the CEO
of RIAG not inconsistent with the other provisions of this
Agreement;

e) a material breach by the Executive of any of the provisions of
this Agreement;

f) the commission by the Executive of any act or acts of
dishonesty reasonably determined by the CEO of RIAG to
render the Executive unfit for continued employment with the
Company; or

g) the failure of the Company to meet minimum financial
<PAGE> 3
performance criteria as indicated on Schedule 3 attached
hereto, which Schedule 3 may be amended during the Term by
agreement of the Executive and the CEO of RIAG, subject to
approval by Thomson; and

h) for any other reason;

provided that termination of this Agreement under clauses (b) through (h) shall
be made upon written notice to the Executive by the Company. The Executive may
terminate this Agreement at any time for any reason upon written notice to the
Company. The term "Disability" shall mean, with respect to the Executive, that
the Company determines reasonably that due to physical or mental disability,
whether total or partial, the Executive is or will be substantially unable to
perform his services hereunder for (i) a period of 180 consecutive days, or (ii)
shorter periods aggregating 180 days during any continuous one year period.

4.2 Effect of Termination. If the Company or the Executive terminates
this Agreement pursuant to Section 4.1 hereof, this Agreement shall become null
and void and have no further force or effect, except as otherwise provided
herein, and except that Sections 5, 6 and 7 shall survive any such termination
of this Agreement. If this Agreement is terminated by the Company pursuant to
clause (c), (d), (e) or (f) of Section 4.1 or by the Executive for any reason on
or before December 31, 1997, the Executive shall be entitled only to payment of
his then current base salary pursuant to Section 3.1 through the date of
termination. If this Agreement is terminated by the Company pursuant to clause
(a), (b), (g), or (h) of Section 4.1, the Executive shall be entitled to payment
of his base salary pursuant to Section 3.1 for two years following the date of
such termination and the amounts, if any, payable under Section 3.5. If the
Agreement is terminated by the Executive for any reason following December 31,
1997 and prior to expiration of the Term, the Executive shall be entitled to
payment of his base salary pursuant to Section 3.1 for one year following the
date of such termination.

4.3 Consulting Services Beyond the Term. The Company and the Executive
agree that the Executive and Thomson Information Services, Inc. shall enter into
a consulting agreement which shall be executed in substantially the form
attached hereto as Attachment A and shall be effective upon the earlier of
expiration of the Term hereunder or termination of Executive's employment prior
to expiration of the Term pursuant to Section 4.1.

5. Certain Covenants of the Executive.

5.1 Covenants. The Executive acknowledges that (i) the Company is
engaged and in the future will be engaged in the business of developing,
designing, publishing and selling compliance and other information products and
services for tax and accounting professionals as well as products and services
for third parties that integrate with products and services used by tax and
accounting professionals (all of the foregoing shall include, without
limitation, software, databases and consulting services of the type provided by
the Company) (the foregoing, together with any other businesses related to tax
and accounting professionals that the Company or its affiliates may engage in
from the date hereof to the date of the termination of this Agreement for which
the Executive has management responsibility under this Agreement, being
hereinafter referred to as the "Company Business"); (ii) his services to the
Company will be special and unique; (iii) his work for the Company will give him
access to trade secrets of and confidential information concerning the Company;
(iv) the Company Business is national in scope; (v) the Company would not have
entered into this Agreement but for the agreements and covenants contained in
this Section 5; and (vi) the agreements and covenants contained in this Section
5 are essential to protect the business and goodwill of the Company. In order to
induce the Company to enter into this Agreement, the Executive covenants and
agrees that:

5.1.1 Restrictive Covenants. In consideration for the payments to
the Executive contemplated hereunder, during the Term hereof and for a period
equal to three years after the termination or expiration of the Executive's
employment with the Company (the "Restricted Period"), the Executive shall not,
other than as specifically provided in this Agreement, directly or indirectly,
(i) engage in the Company Business or a business competitive with the Company
Business; (ii) assist any person in conducting a business competitive with the
Company Business, provided, however, that this is not intended to restrict the
Executive's ownership of up to 5% of the securities of a publicly traded company
that engages in the Company Business; (iii) interfere with business
relationships (whether
<PAGE> 4
formed heretofore or hereafter) between the Company and customers of or
suppliers to the Company Business; and provided further that the obligations of
the Executive pursuant to this Section 5.1.1 shall terminate after the second
year of the Restricted Period. The Executive agrees that, in the event of a
breach or threatened breach by the Executive of this section, the Company shall
be entitled to injunctive relief restraining the Executive from engaging in any
of the aforesaid prohibited activities. Nothing hereunder, however, shall be
construed as prohibiting the Company from pursuing any other remedies available
to it in law or in equity.

5.1.2 Confidential Information; Personal Relationships. During and
after the Restricted Period, the Executive shall keep secret and retain in
strictest confidence, and shall not use for the benefit of himself or others,
except in connection with the business and affairs of the Company and its
affiliates, all confidential information relating to the Company Business or to
the Company or to the business of any of the Company's affiliates, including,
but not limited to, "know-how," trade secrets, customer lists, subscription
lists, details of consultant contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans, business
acquisition plans, technical processes, new personnel acquisition plans,
processes, designs and design projects, inventions, software, source codes,
object codes, system documentation and research projects and other business
affairs relating to the Company Business or to any affiliate of the Company
learned by the Executive heretofore or hereafter, and shall not disclose them to
anyone outside of the Company and its affiliates, either during or after
employment by the Company or any of its affiliates, except (i) as required in
the course of performing his duties hereunder, or (ii) with the Company's
express written consent, or (iii) pursuant to legal process. Notwithstanding the
foregoing, the obligations of the Executive pursuant to this Section 5.1.2 shall
not apply to confidential information:

(a) which at the date hereof or thereafter becomes a matter of public
knowledge without breach by the Executive of this Agreement; or

(b) which is obtained by the Executive from a person other than the
Company or an affiliate of the Company who is under no obligation
of confidentiality to the Company.

5.1.3 Employees and Consultants of the Company. During the
Restricted Period, the Executive shall not, directly or indirectly, (a) hire,
solicit or encourage any employee to leave the employment of the Company or any
of its affiliates, (b) hire or enter into a consulting relationship with any
such employee who has left the employment of the Company or any of its
affiliates within three months of the termination of such employee's employment
with the Company or any of its affiliates, (c) solicit or encourage any
consultant to terminate a consulting relationship with the Company or any of its
affiliates or (d) hire or enter into a consulting relationship with any such
consultant who has terminated a consulting relationship related to the Company
Business with the Company or any of its affiliates within three months of the
termination of such consultant's relationship with the Company or any of its
affiliates; provided, however, that no provision of this Section 5.1.3 shall
prohibit any action the Executive may take with respect to Robert W. Nolan, Jr..

5.1.4 Consequence of Termination. Upon termination of the
Executive's employment with the Company, all documents, records, notebooks, and
similar repositories of or containing trade secrets or intellectual property
then in the Executive's possession, including copies thereof, whether prepared
by the Executive or others, will be promptly returned to or left with the
Company.

5.2 Rights and Remedies upon Breach. If the Executive breaches, or
threatens to commit a breach of, any of the provisions of Section 5.1 (the
"Restrictive Covenants"), the Company shall have the right and remedy to have
the Restrictive Covenants specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide adequate remedy to the Company. Such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.

5.3 Severability of Covenants. The Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in geographical and
temporal scope and in all other respects. If any court determines that any of
the Restrictive Covenants or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall
<PAGE> 5
not thereby be affected and shall be given full effect, without regard to the
invalid portions.

5.4 Blue-Pencilling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographic scope of such provision, such court shall have the power
to reduce the duration or scope of such provision, as the case may be, and, in
its reduced form, such provision shall then be enforceable and shall be
enforced.

6. Intellectual Property. The Company shall be the sole owner of all the
products and proceeds of the Executive's services hereunder, including, but not
limited to, all materials, ideas, concepts, formats, suggestions, developments,
arrangements, packages, programs and other intellectual properties that the
Executive may acquire, obtain, develop or create in connection with and during
the term of the Executive's employment hereunder, free and clear of any claims
by the Executive (or anyone claiming under the Executive) of any kind or
character whatsoever. The Executive shall, at the request of the Company,
execute such assignments, certificates or other instruments as the Company may
from time to time deem necessary or desirable to evidence, establish, maintain,
perfect, protect, enforce or defend its right, title and/or interest in or to
any such properties.

7. Other Provisions.

7.1 Consent to Jurisdiction and Service of Process. Any legal action,
suit or proceeding in equity or in law arising out of or relating to this
Agreement and the transactions contemplated hereby or thereby shall be
instituted solely in any state or federal court in the state of Missouri and
each party agrees not to assert, by way of motion, as a defense, or otherwise,
in any such action, suit or proceeding, any claim that such party is not subject
personally to the jurisdiction of such court, that its property is exempt or
immune from attachment, that the action, suit or proceeding is brought in an
inconvenient forum, that the venue of the action, suit or proceeding is
improper, or that this Agreement may not be enforced in or by such court. Each
party further irrevocably submits to the jurisdiction of any such court in any
such action, suit or proceeding. Nothing herein contained shall be deemed to
affect the right of any party to serve process in any manner permitted by law.

7.2 Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or overnight courier, or
sent by certified, registered or express mail, postage prepaid, and shall be
deemed given when so delivered personally, telegraphed, telexed or sent by
facsimile transmission or overnight courier, or, if mailed, four days after the
date of mailing, as follows:

(i) if to the Company, to:
Euan Menzies
Chief Executive Officer
RESEARCH INSTITUTE OF AMERICA
90 Fifth Avenue
New York, NY 10011

with a copy to:

THE THOMSON CORPORATION

Metro Center at One Station Place
Stamford at One Station Place
Stamford, CT 06902
Attn: General Counsel

(ii) if to the Executive, to:

Robert W. Nolan, Sr.
14584 Whittington Court
Chesterfield, MO 63017

Any party may by notice given in accordance with this Section to the other
parties designate another address for receipt of notices hereunder.

7.3 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and, upon the
Effective Date, supersedes all prior agreements with respect thereto, written or
oral, including, without
<PAGE> 6
limitation, the Long Term Compensation Plan - Chief Executive Officer, effective
February 1, 1995 and the FY '95 Executive Incentive Compensation Plan; provided,
however, that to the extent not paid to the Executive prior to the Effective
Date, the Company shall pay to the Executive an amount equal to that to which
the Executive would have been entitled under the FY '95 Executive Incentive
Compensation Plan.

7.4 Waivers and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties and by
Thomson, or, in the case of a waiver, by the party waiving compliance and, in
the case of the Company, by Thomson. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial exercise of any right, power or
privilege hereunder, preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.

7.5 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Missouri applicable to agreements made
and to be performed entirely within such State.

7.6 Assignment. This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by the Executive. The Company may,
without the Executive's consent, assign its rights, together with its
obligations, under this Agreement in connection with any sale, transfer or other
disposition of all or substantially all of its assets or business, whether by
merger, consolidation or otherwise. This Agreement shall be binding on any
successor to the Company.

7.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

7.8 Headings. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.

SCS/COMPUTE, INC.

By:
--------------------

Robert W. Nolan, Sr.

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

Accepted and Agreed to:

THOMSON INFORMATION
SERVICES, INC.

By:
-----------------------

<PAGE> 7
SCHEDULE 1

Annual Bonus

A. Calculations: Revenue, Operating Income and Management Cash shall each be
as determined in accordance with generally acceptable accounting principles
consistently applied, calculated and certified by the chief financial officer of
the Company and approved by the CEO of RIAG. The CEO of RIAG will deliver a
certificate of determination of Revenue, Operating Income and Management Cash to
the Executive no later than ninety days after the end of each respective
calendar year during the Term.

The financial targets included herein have been developed using the
financial accounting policies adopted by the Company at the time of the Merger
Agreement, utilizing a January 31 fiscal year end. The effect on the targets of
any adjustments to these policies and a change to a calendar year end will be
quantified and will adjust the targets as agreed between the CEO of RIAG and the
Executive.

Any payments of Annual Bonus amounts are funded out of the operating
results of the Company and are included in the calculation of Operating Income
to arrive at the Annual Bonus amount.

The Annual Bonus amount will be calculated by applying the percentage bonus
earned (using the financial targets in B. below and the pro forma bonus schedule
in C. below) to the salary of the Executive in effect during the relevant
calendar year.

The Executive will not be eligible for any payments unless the "Floor"
targets for both Revenue and Operating Income for the relevant year as
identified in B. below are met or exceeded.

B. Financial Targets

The financial targets for each fiscal year under the Agreement are as follow
(note: 1996 relates to the fiscal year ending January 31, 1997, et seq.):

<TABLE>
<CAPTION>
1996 1997 1998 1999 2000
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue
- -------
"Target" Revenue $22,300, $24,530, $26,983, $29,681, $32,649,
Growth 12.6% 10.0% 10.0% 10.0% 10.0%

"Floor" Revenue $21,185, $23,304, $25,634, $28,197, $31,017,
"Ceiling" Revenue $25,000, $27,500, $30,250, $33,275, $36,600,

Operating Income
- ----------------
"Target" OI $4,400, $5,550, $6,604, $7,420, $8,162,
Growth 67.3% 26.1% 19.0% 12.4% 10.0%
Margin 19.7% 22.6% 24.5% 25.0% 25.0%

"Floor" OI $4,180, $5,273, $6,274, $7,049, $7,754,
"Ceiling" OI $6,000, $6,875, $7,563, $8,319, $9,150,

Management Cash
- ---------------
"Target" Mgmt. Cash $3,960, $4,995, $6,604, $7,420, $8,162,
Growth 36.6% 26.1% 32.2% 12.4% 10.0%
Conversion 90.0% 90.0% 100.0% 100.0% 100.0%

"Floor" Cash n/a n/a n/a n/a n/a
"Ceiling" Cash $5,400, $6,188, $7,563, $8,319, $9,150,
</TABLE>
- ---------------
Note: All dollar amounts are in thousands of U.S. dollars.
<PAGE> 8
C. Pro Forma Percentage Bonus Schedule

(i) Percentage Bonus Schedule for 1996:

PLAN % BONUS EARNED

<TABLE>
<CAPTION>
% Net Sales Operating Mgmt Net Sales Operating Mgmt
Achieved Revenue Income Cash Revenue Income Cash Total
- -------- --------- --------- ---- --------- --------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
FLOOR 95 $21,185, $4,180, n/a
96 $21,408, $4,224, $3,802, 3.0 6.0 1.0 10.0
97 $21,631, $4,268, $3,841, 6.0 12.0 2.0 20.0
98 $21,854, $4,312, $3,881, 9.0 18.0 3.0 30.0
99 $22,077, $4,358, $3,920, 12.0 24.0 4.0 40.0

TARGET $22,300, $4,400, $3,960, 15.0 30.0 5.0 50.0

CEILING $25,000, $6,000, $5,400, 30.0 60.0 10.0 100.0
</TABLE>

In no event shall the percentage bonus earned exceed 100% of salary.

(ii) Percentage Bonus Schedule for years 1997 through 2000 will be prepared on a
consistent basis with the Percentage Bonus Schedule for 1996 using the
relevant financial targets for each of those years.

D. Treatment of Acquisitions: Acquisitions with revenues of up to $1.0 million
will be included in the results of the ongoing operations at the Company and the
targets used herein will not be adjusted. The targets used herein will be
adjusted to include the Revenue, Operating Income and Management Cash included
in the approved Thomson Board Papers for each acquisition with revenues in
excess of $1.0 million.

E. Treatment of Changes in Operations: The targets used herein are based on
the existing operations of the Company, as such may change in the ordinary
course of business. The targets may be adjusted for any extraordinary changes
including, but not limited to, product transfers to/from the Company and
significant new investment in product development funded by Thomson.

F. Payment: Payment of the Annual Bonus pursuant to Section 3.3(a) and this
Schedule 1 shall be made as soon as practicable after the determination of
Revenue, Operating Income and Management Cash for the relevant period as
provided above (but in no event later than ninety days after year end) and shall
be subject to required withholdings.
<PAGE> 9
SCHEDULE 2

LTIP

A. Calculations: Revenue and Operating Income shall each be as determined in
accordance with generally acceptable accounting principles consistently applied,
calculated and certified by the chief financial officer of the Company and
approved by the CEO of RIAG. The CEO of RIAG will deliver a certificate of
determination of Revenue and Operating Income to the Executive no later than
ninety days after the end of each respective calendar year during the Term.

Any payments of LTIP amounts are funded out of the operating results of the
Company and are included in the calculation of Operating Income to arrive at the
LTIP amount.

The LTIP amount will be calculated as provided below. The Executive will
not be eligible for any payments unless the "Floor" targets as identified in B.
below for the relevant year are met or exceeded.

B. LTIP Formula: Executive will be eligible to begin receiving payments of the
LTIP if the minimum ("Floor") Revenue and Operating Income targets are achieved
as outlined below. All dollar amounts are in thousands of U.S. dollars.

<TABLE>
<CAPTION>
(i) Targets (Floor) for Fiscal Year:

1998 1999 2000
<S> <C> <C> <C>
Revenue $30,000, $35,000, $40,000,
Operating Income $ 7,500, $ 8,750, $10,000,
Bonus for Achieving Target $ 250, $ 250, $ 250,
</TABLE>

(ii) An incremental bonus of 20% of Operating Income in excess of Floor will
also be payable.

Example: In fiscal year 1996, if Revenue is $30,000 and Operating
Income is $9,000, then the bonus equals:

<TABLE>
<S> <C>
Bonus for achieving target: $250,
Incremental bonus at 20% of OI
amount over $7,500, $300,
Total Bonus $550,
</TABLE>

(iii) Treatment of Acquisitions:

Revenues up to $1.0 Million: Financial results will be added to the
ongoing operations of the Company.
Targets will not be adjusted.

Revenues greater than $1.0 Million: Operating Income targets for each year
of the Agreement will be increased by
12% of the purchase price of the
acquisition. Revenue targets will not
be adjusted.

(iv) Treatment of Changes in Operations: The targets used herein are based on
the existing operations of the Company, as such may change in the ordinary
course of business. The targets may be adjusted for any extraordinary changes
including, but not limited to, product transfers to/from the Company and
significant new investment in product development funded by Thomson.
<PAGE> 10
C. Payment: Payment of LTIP pursuant to Section 3.3(a) and this Schedule 2
shall be made as soon as practicable after the determination of Revenue and
Operating Income for the relevant period as provided above (but in no event
later than ninety days after year end) and shall be subject to required
withholdings.
<PAGE> 11
SCHEDULE 3

Minimum Company Financial Performance Criteria:

The Company's minimum financial performance criteria require that Revenue and
Operating Income for each calendar year during the Term must exceed the previous
year's Revenue and Operating Income by at least 5% and 10% respectively. The
calculation for 1996 will be based on the Company's fiscal year 1995 results,
except that in no event will the minimum Revenue and Operating Income
requirements for 1996 be less than $20 million and $3.75 million respectively.
Notwithstanding the foregoing, if the minimum growth rates are not met but the
Company's overall performance exceeds the financial targets included in Schedule
1 (Section B.), then the Company's financial performance will be considered
acceptable for purposes of this Schedule.
<PAGE> 12
Attachment A

CONSULTING AGREEMENT

CONSULTING AGREEMENT (the "Agreement"), dated January __, 1996 between
Thomson Information Services, Inc. (the "Company") and Robert W. Nolan, Sr. (the
"Consultant").

The Consultant has served as a key executive of SCS/Compute, Inc., an
affiliate of the Company, and in recognition thereof it is the desire of the
Company and the Consultant to enter into this Agreement in order to ensure that
the services and advice of the Consultant will be available to the Company for
the term of the Agreement and to reward the Consultant for his continuing
contributions to the success of the Company on the terms and subject to the
conditions hereinafter set forth.

Accordingly, the parties agree as follows:

1. Consulting Engagement. The Company hereby engages the Consultant for the
Consulting Period (as defined in Section 2) to perform such consulting, advisory
and other services as the Consultant shall reasonably be requested to perform by
the Chief Executive Officer of Research Institute of America Group. The
Consultant hereby accepts such engagement and shall render the services
described above.

2. Consulting Period. This Agreement shall take effect, and the term of the
Consultant's engagement under this Agreement shall commence, as of the earlier
of the date of termination of Consultant's employment pursuant to Section 4.1 of
the Employment Agreement between the Consultant and the Company dated January
__, 1996 (the "Employment Agreement") and expiration of the Term of the
Employment Agreement (as such term is defined in Section 2 of the Employment
Agreement) (the "Effective Date") and shall end on the third anniversary of the
Effective Date (the "Consulting Period").

3. Compensation.

3.1 Fee. As compensation for all services to be rendered during the
Consulting Period pursuant to this Agreement, the Company shall pay the
Consultant a total fee of $1,050,000. Such fee shall be payable in the following
amounts at the following times: (i) during the period commencing on the
Effective Date and ending on the second anniversary of the Effective Date, an
annual amount of $400,000 payable monthly in arrears; and (ii) during the period
commencing on the date immediately following the second anniversary of the
Effective Date and ending on the third anniversary of the Effective Date, an
annual amount of $250,000 payable monthly in arrears.

3.2 Expenses. The Consultant shall be entitled to be reimbursed for
reasonable expenses actually incurred or paid by the Consultant in the
performance of the Consultant's services during the Consulting Period under this
Agreement.

4. Independent Contractor. The Consultant acknowledges that he is being
retained by the Company as an independent contractor and not as an employee. The
Company shall not exercise direction or control over the Consultant in his
performance of services hereunder. Accordingly, the Consultant hereby
acknowledges: (i) the Consultant shall be solely responsible for and shall file,
on a timely basis, tax returns and payments required to be filed with or made to
any relevant tax authorities with respect to his performance of services
hereunder; (ii) the Company will not withhold any taxes from compensation paid
by the Company to the Consultant during the Consulting Period unless legally
required to do so; (iii) the Consultant will be responsible for providing his
own office space; and (iv) the Company will not provide the Consultant during
the Consulting Period with (a) life insurance, (b) health insurance, (c)
long-term disability insurance or (d) any other employee benefits, rights or
entitlements under any plans of the Company or of SCS/Compute, Inc.. The
Company's only obligations under this Agreement are to pay the Consultant the
compensation and expenses described in Section 3 hereof.

5. No Agency. Nothing contained in this Agreement shall be construed as
creating an agency relationship between the Company and the Consultant and,
without the Company's prior written consent, the Consultant shall have no
authority hereunder to bind the Company or make any commitments on the Company's
behalf. The Consultant shall not take any action in connection with his
rendering of services hereunder which he reasonably believes would cause any
third party to assume that he has such authority.

6. Certain Covenants of the Consultant. The Consultant acknowledges that his
<PAGE> 13
obligations pursuant to Sections 5, 6 and 7.1 of the Employment Agreement are
ongoing; provided, however, that any breach by the Executive of such Sections 5,
6 and 7.1 of the Employment Agreement shall not, without more, be deemed a
breach of this Agreement.

Upon termination of the Consultant's engagement hereunder, all
documents, records, notebooks, and similar repositories of or containing trade
secrets or intellectual property then in the Consultant's possession, including
copies thereof, whether prepared by the Consultant or others, will be promptly
returned to or left with the Company.

The Company shall be the sole owner of all the products and proceeds of
the Consultant's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Consultant may
acquire, obtain, develop or create in connection with and during the term of the
Consultant's engagement hereunder, free and clear of any claims by the
Consultant (or anyone claiming under the Consultant) of any kind or character
whatsoever. The Consultant shall, at the request of the Company, execute such
assignments, certificates or other instruments as the Company may from time to
time deem necessary or desirable to evidence, establish, maintain, perfect,
protect, enforce or defend its right, title and/or interest in or to any such
properties.

7. Rights and Remedies upon Breach. If the Consultant breaches, or threatens
to commit a breach of, any of the provisions of Section 5 or 6 of this
Agreement, the Company shall have the right and remedy to have the Consultant's
obligations pursuant to such Sections specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide adequate remedy to the Company. Such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.

8. Other Provisions.

8.1 Consent to Jurisdiction and Service of Process. Any legal action,
suit or proceeding in equity or in law arising out of or relating to this
Agreement and the transactions contemplated hereby or thereby shall be
instituted solely in any state or federal court in the state of Missouri and
each party agrees not to assert, by way of motion, as a defense, or otherwise,
in any such action, suit or proceeding, any claim that such party is not subject
personally to the jurisdiction of such court, that its property is exempt or
immune from attachment, that the action, suit or proceeding is brought in an
inconvenient forum, that the venue of the action, suit or proceeding is
improper, or that this Agreement may not be enforced in or by such court. Each
party further irrevocably submits to the jurisdiction of any such court in any
such action, suit or proceeding. Nothing herein contained shall be deemed to
affect the right of any party to serve process in any manner permitted by law.

8.2 Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or overnight courier, or
sent by certified, registered or express mail, postage prepaid, and shall be
deemed given when so delivered personally, telegraphed, telexed or sent by
facsimile transmission or overnight courier, or, if mailed, four days after the
date of mailing, as follows:

(i) if to the Company, to:

Euan Menzies
Chief Executive Officer
RESEARCH INSTITUTE OF AMERICA
90 Fifth Avenue
New York, NY 10011

with a copy to:

THE THOMSON CORPORATION

Metro Center at One Station Place
Stamford at One Station Place
Stamford, CT 06902
Attn: General Counsel

(ii) if to the Consultant, to:
<PAGE> 14
Robert W. Nolan, Sr.
14584 Whittington Court
Chesterfield, MO 63017

Any party may by notice given in accordance with this Section to the other
parties designate another address for receipt of notices hereunder.

8.3 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and, upon the
Effective Date, supersedes all prior agreements with respect thereto, written or
oral, except as specifically provided in Section 6 of this Agreement.

8.4 Waivers and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties, or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.

8.5 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Missouri applicable to agreements made
and to be performed entirely within such State.

8.6 Assignment. This Agreement, and the Consultant's rights and
obligations hereunder, may not be assigned by the Consultant other than by
devise, inheritance or operation of intestacy. The Company may, without the
Consultant's consent, assign its rights, together with its obligations, under
this Agreement in connection with any sale, transfer or other disposition of all
or substantially all of its assets or business, whether by merger, consolidation
or otherwise. This Agreement shall be binding on any successor to the Company.

8.7 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.

8.8 Headings. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.

THOMSON INFORMATION

SERVICES, INC.

By:
--------------------

Robert W. Nolan, Sr.

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