HA LO INDUSTRIES INC, S-4, 1996-08-20

HA LO INDUSTRIES INC
S-4, 1996-08-20
MISC DURABLE GOODS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 20, 1996

REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
HA-LO INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
ILLINOIS 5199 36-3573412
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>

5980 WEST TOUHY AVENUE, NILES, ILLINOIS 60714, (847) 647-2300
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)

LOU WEISBACH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
HA-LO INDUSTRIES, INC.
5980 West Touhy Avenue, Niles, Illinois 60714, (847) 647-2300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------

With copies to:

BARRY J. SHKOLNIK, ESQ.
NEAL, GERBER & EISENBERG
TWO NORTH LASALLE STREET
CHICAGO, ILLINOIS 60602
(312) 269-8000
------------------------

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

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM
OF PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING PRICE REGISTRATION FEE
REGISTERED REGISTERED PER SHARE (1) (1) (2)
<S> <C> <C> <C> <C>
Common Stock, no par
value.............. 2,550,000 Shares $24.75 $63,112,500 $9,433.75
</TABLE>

(1) The proposed maximum aggregate offering price has been calculated pursuant
to Rule 457(f) under the Securities Act of 1933 as follows: (a) $24.75 (the
average of the high and low prices per share of common stock, no par value
("HA-LO Common Stock") of HA-LO Industries, Inc. ("HA-LO") on August 15,
1996, as reported on The Nasdaq National Market) multiplied by (b) the
number of shares of HA-LO Common Stock to be registered.

(2) Based upon the proposed maximum aggregate offering price of $63,112,500, the
aggregate fee is calculated to be $21,763. Under Rule O-11(a)(2) promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
such fee has been reduced by the fee of $12,329.25 paid by HA-LO under Rule
O-11(c)(1) of the Exchange Act upon filing of the preliminary Proxy
Statement/Prospectus contained in this Registration Statement.
------------------------

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

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- --------------------------------------------------------------------------------
<PAGE>
HA-LO INDUSTRIES, INC.

5980 West Touhy Avenue
Niles, Illinois 60714
(847) 647-2300
August 23, 1996

Dear Shareholder:

A Special Meeting of Shareholders of HA-LO Industries, Inc. ("HA-LO") will
be held at the principal executive offices of HA-LO located at 5980 West Touhy
Avenue, Niles, Illinois 60714, on September 25, 1996, at 10:00 A.M., local time.

At the Special Meeting, you will be asked to consider and vote on a proposal
to approve and adopt an Agreement and Plan of Merger and Amalgamation (the "Plan
of Merger and Amalgamation") pursuant to which (i) a wholly-owned subsidiary of
HA-LO will be merged with and into Market USA, Inc. ("Market USA"), (ii) a
wholly-owned subsidiary of HA-LO will be amalgamated with Marusa Marketing Inc.
("Marusa"); and (iii) a Canadian-organized affiliate of HA-LO will purchase all
of the assets and properties of each of Marusa Financial Services Ltd. ("Marusa
Financial") and Nerok Verifications Inc. ("Nerok") (collectively, the "Merger
Transactions"). The terms of the Plan of Merger and Amalgamation provide that
(i) each outstanding share of Market USA Common Stock will be converted into the
right to receive 19,125 shares of HA-LO Common Stock (a total of 1,912,500
shares of HA-LO Common Stock); (ii) each outstanding share of Marusa Common
Stock will be converted into 318,700 shares of HA-LO Common Stock (a total of
637,400 shares of HA-LO Common Stock); and (iii) HA-LO will issue 50 shares of
HA-LO Common Stock to each of Marusa Financial and Nerok (a total of 100 shares
of HA-LO Common Stock). HA-LO has reserved the right to consummate the
acquisition of the assets of each of Marusa Financial and Nerok upon the terms
described in the Plan of Merger and Amalgamation or effect an alternate
transaction acceptable to HA-LO having a substantially similar purpose and total
consideration which does not exceed 100 shares of HA-LO Common Stock.

After careful consideration, the Board of Directors of HA-LO has determined
that the proposed Merger Transactions are in the best interests of HA-LO and its
shareholders. Accordingly, the Board of Directors has approved the Plan of
Merger and Amalgamation and recommends that all shareholders vote for its
approval. William Blair & Company, L.L.C., an investment banking firm retained
by HA-LO, has rendered its opinion to the Board of Directors of HA-LO that, as
of August 23, 1996, the proposed consideration to be paid by HA-LO pursuant to
the Merger Transactions was fair to HA-LO from a financial point of view. The
written opinion of William Blair & Company, L.L.C. is attached as Appendix B to
the accompanying Proxy Statement/Prospectus and should be read carefully by
HA-LO's shareholders.

All shareholders are invited to attend the Special Meeting in person. The
affirmative vote of the holders of not less than two-thirds of the outstanding
shares of HA-LO Common Stock will be necessary for approval and adoption of the
Plan of Merger and Amalgamation.

IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE SPECIAL MEETING, YOU ARE
URGED TO PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING. If you
attend the Special Meeting in person you may, if you wish, vote personally on
all matters brought before the Special Meeting even if you have previously
returned your Proxy.

Sincerely,

Lou Weisbach
Chairman of the Board,
President and Chief Executive Officer

YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY
<PAGE>
HA-LO INDUSTRIES, INC.

5980 West Touhy Avenue
Niles, Illinois 60714
(847) 647-2300

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON SEPTEMBER 25, 1996

Notice is hereby given that a Special Meeting of Shareholders of HA-LO
Industries, Inc. ("HA-LO") will be held on September 25, 1996, at 10:00 A.M.,
local time, at the principal executive offices of HA-LO at 5980 West Touhy
Avenue, Niles, Illinois 60714 for the following purposes:

(1) to consider and vote on a proposal to approve and adopt an
Agreement and Plan of Merger and Amalgamation dated as of June 14, 1996
(the "Plan of Merger and Amalgamation") among HA-LO, HA-LO Acquisition
Corporation, Inc. ("HA-LO Sub-1"), HA-LO Acquisition Corporation of
Canada Ltd. ("HA-LO Sub-2"), Market USA, Inc. ("Market USA"), Marusa
Marketing Inc. ("Marusa"), Marusa Financial Services Ltd. ("Marusa
Financial"), Nerok Verifications Inc. ("Nerok") and the shareholders of
Market USA and Marusa, pursuant to which, among other things, (a) HA-LO
Sub-1 will be merged with and into Market USA, HA-LO Sub-2 will be
amalgamated with Marusa and a Canadian-organized affiliate of HA-LO will
purchase all of the assets and properties of each of Marusa Financial
and Nerok (collectively, the "Merger Transactions"), and (b) each
outstanding share of Market USA Common Stock will be converted into the
right to receive 19,125 shares of HA-LO Common Stock (a total of
1,912,500 shares of HA-LO Common Stock), each outstanding share of
Marusa Common Stock will be converted into 318,700 shares of HA-LO
Common Stock (a total of 637,400 shares of HA-LO Common Stock), and
HA-LO will issue 50 shares of HA-LO Common Stock to each of Marusa
Financial and Nerok (a total of 100 shares of HA-LO Common Stock), in
each case as described in the accompanying Proxy Statement/Prospectus;
and

(2) to transact such other business as may properly come before the
Special Meeting or at any postponement(s) or adjournment(s) thereof.

Notwithstanding shareholder approval of the foregoing Proposal (1), HA-LO
reserves the right to abandon the Merger Transactions at any time prior to the
consummation of the Merger Transactions.

The Board of Directors of HA-LO has fixed the close of business on August
26, 1996, as the record date for the determination of shareholders entitled to
notice of and to vote at the Special Meeting, and only shareholders of record at
such time will be entitled to notice of and to vote at the Special Meeting. A
list of HA-LO shareholders entitled to vote at the Special Meeting will be
available for examination, during ordinary business hours, at the principal
offices of HA-LO at 5980 West Touhy Avenue, Niles, Illinois 60714, for ten days
prior to the Special Meeting.

A form of Proxy Statement/Prospectus containing more detailed information
with respect to the matters to be considered at the Special Meeting accompany
this notice.

If the Plan of Merger and Amalgamation proposed for approval and adoption
herein is approved by the shareholders of HA-LO at the Special Meeting and the
transactions described in Proposal (1) above are consummated, any shareholder of
HA-LO as of the record date for the Special Meeting who (i) delivers to HA-LO,
before the vote is taken at the Special Meeting, a written demand for payment of
his or her shares of HA-LO Common Stock if the transactions described in
Proposal (1) above are consummated; (ii) does not vote in favor of the approval
and adoption of the Plan of Merger and Amalgamation; and (iii) otherwise
complies with Sections 11.65 and 11.70 of the Illinois Business Corporation Act
of 1983, as amended (the "IBCA"), has or may have the right to require HA-LO to
pay such shareholder the fair value of such shareholder's shares of HA-LO Common
Stock. HA-LO and such shareholder shall in such case have all of the rights and
duties and shall follow the
<PAGE>
procedures set forth in Sections 11.65 and 11.70 of the IBCA. You are cordially
invited and urged to attend the Special Meeting in person, but if you are unable
to do so, please complete, sign, date and promptly return the enclosed Proxy in
the enclosed, self-addressed, stamped envelope. If you attend the Special
Meeting and desire to revoke your Proxy and vote in person, you may do so. In
any event, a Proxy may be revoked at any time before it is voted.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE APPROVAL AND
ADOPTION OF THE PLAN OF MERGER AND AMALGAMATION.

IN ORDER TO ASSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY, WHICH IS BEING
SOLICITED BY THE BOARD OF DIRECTORS, WHETHER OR NOT YOU PLAN TO ATTEND THE
SPECIAL MEETING. AN ADDRESSED RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE.

By Order of the Board of Directors,

Lou Weisbach
Chairman of the Board,
President and Chief Executive Officer
Niles, Illinois
August 23, 1996
<PAGE>
HA-LO INDUSTRIES, INC.
----------------

PROXY STATEMENT/PROSPECTUS
------------------

HA-LO INDUSTRIES, INC.

SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 25, 1996

GENERAL INFORMATION

This Proxy Statement/Prospectus (the "Proxy Statement/Prospectus") is
furnished in connection with the solicitation of proxies by the Board of
Directors of HA-LO Industries, Inc., an Illinois corporation ("HA-LO"), for use
in connection with a Special Meeting of Shareholders of HA-LO (the "Special
Meeting") to be held on September 25, 1996, or any postponement(s) or
adjournment(s) thereof. At the Special Meeting, the shareholders of HA-LO will
be asked to consider and vote upon a proposal to approve and adopt an Agreement
and Plan of Merger and Amalgamation dated as of June 14, 1996 (the "Plan of
Merger and Amalgamation") among HA-LO, HA-LO Acquisition Corporation, Inc., an
Illinois corporation and wholly-owned subsidiary of HA-LO ("HA-LO Sub-1"), HA-LO
Acquisition Corporation of Canada Ltd., a Canadian federal corporation and
wholly-owned subsidiary of HA-LO ("HA-LO Sub-2"), Market USA, Inc., an Illinois
corporation ("Market USA"), Marusa Marketing Inc., a Canadian federal
corporation ("Marusa"), Marusa Financial Services Ltd., a Canadian federal
corporation ("Marusa Financial"), Nerok Verifications Inc., a Canadian federal
corporation ("Nerok," and together with Market USA, Marusa and Marusa Financial,
the "Target Companies") and the shareholders of each of Market USA and Marusa
(the "Target Shareholders"), pursuant to which, among other things, (i) HA-LO
Sub-1 will be merged with and into Market USA; (ii) HA-LO Sub-2 will be
amalgamated with Marusa; and (iii) a Canadian-organized affiliate of HA-LO
having the appropriate licenses will purchase all of the assets and properties
of each of Marusa Financial and Nerok (collectively, the "Merger Transactions").
As a result of the Merger Transactions, (i) each outstanding share of common
stock, no par value, of Market USA ("Market USA Common Stock") will be converted
into the right to receive 19,125 shares of common stock, no par value, of HA-LO
("HA-LO Common Stock") (a total of 1,912,500 shares of HA-LO Common Stock); (ii)
each outstanding share of Class A common stock of Marusa ("Marusa Common Stock")
will be converted into 318,700 shares of HA-LO Common Stock (a total of 637,400
shares of HA-LO Common Stock); and (iii) HA-LO will issue 50 shares of HA-LO
Common Stock to each of Marusa Financial and Nerok (a total of 100 shares of
HA-LO Common Stock). HA-LO has reserved the right to consummate the acquisition
of the assets of each of Marusa Financial and Nerok upon the terms described in
the Plan of Merger and Amalgamation or effect an alternate transaction
acceptable to HA-LO having a substantially similar purpose and total
consideration which does not exceed 100 shares of HA-LO Common Stock.

The shareholders of HA-LO also will consider and vote upon such other
business as may properly come before the Special Meeting or any adjournment(s)
or postponement(s) thereof.

This Proxy Statement/Prospectus also constitutes the prospectus of HA-LO
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the shares of HA-LO Common Stock to be issued pursuant to the Merger
Transactions.

FOR CERTAIN FACTORS WHICH SHOULD BE CONSIDERED IN EVALUATING THE MERGER
TRANSACTIONS, SEE "RISK FACTORS" ON PAGES 1-6.
<PAGE>
This Proxy Statement/Prospectus is first being mailed to the shareholders of
HA-LO on or about August 26, 1996.

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

THE HA-LO COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE MERGER
TRANSACTIONS HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION AND NEITHER THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

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

The date of this Proxy Statement/Prospectus is August 23, 1996.

ii
<PAGE>
AVAILABLE INFORMATION

This Proxy Statement/Prospectus constitutes a prospectus delivered in
compliance with the Securities Act. A Registration Statement on Form S-4 under
the Securities Act has been filed with the Securities and Exchange Commission
(the "Commission") with respect to the shares of HA-LO Common Stock to be issued
in connection with the Merger Transactions. In addition, HA-LO is subject to the
information reporting requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Commission. Such Registration
Statement, including exhibits, and such reports, proxy statements and other
information may be inspected without charge at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and at the following regional offices of the
Commission: Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago Illinois 60661 and 7 World Trade Center, New York, New York 10048.
Copies of such material can be obtained from those offices upon payment of
certain fees prescribed by the Commission. HA-LO is quoted and traded on The
Nasdaq National Market. Reports and other information concerning HA-LO may also
be inspected at the National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington, D.C. 20006.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
UPON REQUEST FROM LOU WEISBACH, CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, HA-LO INDUSTRIES, INC., 5980 WEST TOUHY AVENUE, NILES,
ILLINOIS 60714, TELEPHONE NUMBER (847) 647-2300. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY SEPTEMBER 18, 1996.

HA-LO UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A PROXY STATEMENT/PROSPECTUS IS DELIVERED A COPY OF
ANY AND ALL INFORMATION THAT HAS BEEN INCORPORATED BY REFERENCE IN THE PROXY
STATEMENT/PROSPECTUS (EXCLUDING EXHIBITS UNLESS SPECIFICALLY INCORPORATED
THEREIN).

The following documents, which have been filed by HA-LO with the Commission
pursuant to the Exchange Act, are hereby incorporated by reference in this Proxy
Statement/Prospectus: (i) HA-LO's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, including the portions of HA-LO's Proxy Statement for
the Annual Meeting of Shareholders held on June 10, 1996 and the portions of
HA-LO's 1995 Annual Report to Shareholders for the fiscal year ended December
31, 1995 that have been incorporated by reference therein; (ii) HA-LO's Current
Report on Form 8-K dated January 16, 1996; (iii) HA-LO's Current Report on Form
8-K/A dated March 13, 1996; (iv) HA-LO's Current Report on Form 8-K/A dated May
28, 1996; (v) HA-LO's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1996; (vi) HA-LO's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1996; and (vii) the description of HA-LO's
Common Stock contained in the Registration Statement dated October 20, 1992
filed pursuant to Section 12 of the Exchange Act and any amendment or report
filed for the purpose of updating such description.

All documents filed by HA-LO pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date hereof and before the Special Meeting shall
be deemed to be incorporated herein by reference and to be a part hereof from
the date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for the purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein or in
another document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement/Prospectus.

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES OF HA-LO TO BE ISSUED
IN CONNECTION WITH THE MERGER TRANSACTIONS, OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROXY STATEMENT/PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF HA-LO OR THE TARGET COMPANIES SINCE SUCH DATE.

iv
<PAGE>
TABLE OF CONTENTS

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PAGE
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SUMMARY.................................................................................................... viii
General................................................................................................ viii
Principal Parties to the Proposed Merger Transactions.................................................. viii
HA-LO Special Meeting of Shareholders.................................................................. ix
Vote Required.......................................................................................... ix
The Merger Transactions................................................................................ ix
Risk Factors........................................................................................... xiii
HA-LO Industries, Inc. Selected Historical Financial Data.............................................. xiv
Target Companies Selected Historical Financial Data.................................................... xv
Summary Unaudited Pro Forma Financial Information...................................................... xvi
Comparative Per Share Data............................................................................. xvii
RISK FACTORS............................................................................................... 1
Risks Factors Relating to the Merger Transactions...................................................... 1
Risk Factors Relating to the Target Companies.......................................................... 1
Risk Factors Relating to HA-LO and HA-LO Common Stock.................................................. 5
THE SPECIAL MEETING........................................................................................ 7
Matters to Be Considered at the Special Meeting........................................................ 7
Vote Required.......................................................................................... 7
Voting of Proxies...................................................................................... 8
Revocability of Proxies................................................................................ 8
Record Date; Shares Entitled to Vote................................................................... 8
Solicitation of Proxies................................................................................ 8
Dissenters' Rights..................................................................................... 8
THE MERGER TRANSACTIONS.................................................................................... 11
General................................................................................................ 11
Background of the Merger Transactions.................................................................. 11
Reasons for the Merger Transactions; Recommendation of Board of Directors.............................. 12
Opinion of Financial Advisor to HA-LO.................................................................. 13
Accounting Treatment................................................................................... 16
Certain United States Federal Income Tax Considerations................................................ 17
Certain Canadian Federal Income Tax Considerations..................................................... 18
Regulatory Approval.................................................................................... 19
Interests of Certain Persons in the Merger Transactions................................................ 19
Resale Restrictions.................................................................................... 21
THE PLAN OF MERGER AND AMALGAMATION........................................................................ 22
The Merger Transactions................................................................................ 22
Exchange Procedures.................................................................................... 23
Representations and Warranties......................................................................... 23
Certain Covenants...................................................................................... 24
No Solicitation of Competing Transactions.............................................................. 25
Governance............................................................................................. 26
Indemnification........................................................................................ 26
Conditions............................................................................................. 27
Termination............................................................................................ 28
Expenses; Termination Fees............................................................................. 28
Amendment and Waiver................................................................................... 29
STOCK PRICE AND DIVIDEND INFORMATION....................................................................... 29
HA-LO.................................................................................................. 29
</TABLE>

v
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<TABLE>
<S> <C>
The Target Companies................................................................................... 30
HA-LO AND TARGET COMPANIES PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS............................... 31
TARGET COMPANIES SELECTED FINANCIAL INFORMATION............................................................ 35
TARGET COMPANIES' MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.... 36
General................................................................................................ 36
Six Months Ended June 30, 1996 as Compared to Six Months Ended June 30, 1995........................... 37
Fiscal Year Ended December 31, 1995 as Compared to Fiscal Year Ended December 31, 1994................. 37
Fiscal Year Ended December 31, 1994 as Compared to Fiscal Year Ended December 31, 1993................. 38
Liquidity and Capital Resources........................................................................ 38
Inflation.............................................................................................. 39
Quarterly Results...................................................................................... 39
BUSINESS OF THE TARGET COMPANIES........................................................................... 39
General................................................................................................ 39
Industry Overview...................................................................................... 39
Growth Strategy........................................................................................ 40
Business Strategy...................................................................................... 40
Operations Overview.................................................................................... 41
Competition............................................................................................ 42
Government Regulation.................................................................................. 42
Facilities............................................................................................. 44
Legal Proceedings...................................................................................... 45
MANAGEMENT OF THE TARGET COMPANIES......................................................................... 46
Directors and Executive Officers....................................................................... 46
Executive Compensation................................................................................. 46
Employment Agreements.................................................................................. 47
CERTAIN TRANSACTIONS RELATING TO THE TARGET COMPANIES...................................................... 48
PRINCIPAL SHAREHOLDERS OF THE TARGET COMPANIES............................................................. 49
Principal Shareholders of Market USA................................................................... 49
Principal Shareholders of Marusa....................................................................... 49
Principal Shareholders of Marusa Financial............................................................. 50
Principal Shareholders of Nerok........................................................................ 50
COMPARISON OF RIGHTS OF HOLDERS OF HA-LO COMMON STOCK AND TARGET COMPANY COMMON STOCK...................... 51
Common Stock........................................................................................... 51
Dividends.............................................................................................. 51
Voting Rights.......................................................................................... 51
Indemnification........................................................................................ 51
Preemptive Rights...................................................................................... 53
Assessments............................................................................................ 53
Liquidation Rights..................................................................................... 53
Quorum................................................................................................. 53
</TABLE>

vi
<PAGE>
<TABLE>
<S> <C>
Amendment of Articles and Bylaws....................................................................... 53
LEGAL MATTERS.............................................................................................. 54
EXPERTS.................................................................................................... 54
SHAREHOLDER PROPOSALS...................................................................................... 54
INDEX TO FINANCIAL STATEMENTS.............................................................................. F-1
APPENDICES
A -- Agreement and Plan of Merger and Amalgamation................................................... A-1
B -- Opinion of William Blair & Company, L.L.C....................................................... B-1
C -- Sections 11.65 and 11.70 of the Illinois Business Corporation Act of 1983....................... C-1
</TABLE>

vii
<PAGE>
SUMMARY

THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED, OR
INCORPORATED BY REFERENCE, ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS. THIS
SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE MORE DETAILED INFORMATION APPEARING, OR INCORPORATED BY
REFERENCE, ELSEWHERE HEREIN. SHAREHOLDERS OF HA-LO INDUSTRIES, INC. ARE URGED TO
REVIEW THE ENTIRE PROXY STATEMENT/PROSPECTUS, THE APPENDICES HERETO AND THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE. EXCEPT AS OTHERWISE INDICATED, ALL
INFORMATION IN THIS PROXY STATEMENT/PROSPECTUS HAS BEEN ADJUSTED TO REFLECT A
3-FOR-2 SPLIT OF THE OUTSTANDING HA-LO INDUSTRIES, INC. COMMON STOCK, EFFECTED
IN THE FORM OF A 50% COMMON STOCK DIVIDEND, TO SHAREHOLDERS OF RECORD ON MAY 17,
1996 EFFECTIVE JUNE 3, 1996.

GENERAL

This Proxy Statement/Prospectus is being provided to the shareholders of
HA-LO Industries, Inc., an Illinois corporation ("HA-LO"), in connection with
the proposed transactions contemplated by the Agreement and Plan of Merger and
Amalgamation dated as of June 14, 1996 (the "Plan of Merger and Amalgamation"),
by and among HA-LO, HA-LO Acquisition Corporation, Inc., an Illinois corporation
and wholly-owned subsidiary of HA-LO ("HA-LO Sub-1"), HA-LO Acquisition
Corporation of Canada Ltd., a Canadian federal corporation and wholly-owned
subsidiary of HA-LO ("HA-LO Sub-2"), Market USA, Inc., an Illinois corporation
("Market USA"), Marusa Marketing Inc., a Canadian federal corporation
("Marusa"), Marusa Financial Services Ltd., a Canadian federal corporation
("Marusa Financial"), Nerok Verifications Inc., a Canadian federal corporation
("Nerok"), and the shareholders of Market USA and Marusa (individually, a
"Target Shareholder" and collectively, the "Target Shareholders").

Pursuant to the Plan of Merger and Amalgamation, (i) HA-LO Sub-1 will be
merged with and into Market USA (the "U.S. Merger"); (ii) HA-LO Sub-2 will be
amalgamated with Marusa (the "Canada Amalgamation"); and (iii) each of Marusa
Financial and Nerok will sell, and a Canadian-organized affiliate of HA-LO ("New
Canadian Service Entity") having the appropriate licenses will purchase, subject
to discharge or performance of related liabilities, all of the assets and
properties of each of Marusa Financial and Nerok (the "Ancillary Asset
Acquisition"). The U.S. Merger, the Canada Amalgamation and the Ancillary Asset
Acquisition are collectively referred to as the "Merger Transactions," and
Market USA, Marusa, Marusa Financial and Nerok are individually referred to as a
"Target Company" and collectively referred to as the "Target Companies." The
Ancillary Asset Acquisition is designed to enable HA-LO to acquire all of the
assets utilized in the business operations conducted by Marusa Financial and
Nerok and is not anticipated to be material to the Merger Transactions, taken as
a whole. HA-LO has reserved the right to consummate the Ancillary Asset
Acquisition upon the terms described in the Plan of Merger and Amalgamation or
effect an alternate transaction acceptable to HA-LO having a substantially
similar purpose and total consideration which does not exceed 100 shares of
HA-LO Common Stock.

PRINCIPAL PARTIES TO THE PROPOSED MERGER TRANSACTIONS

HA-LO INDUSTRIES, INC. HA-LO is one of the nation's leading marketers and
distributors of advertising specialty products to customers with significant
advertising and promotional requirements. HA-LO's national marketing strategy
includes a system of 13 showrooms throughout the United States in which it
displays products provided by its network of over 2,500 vendors and marketed by
approximately 600 sales representatives. HA-LO and its sales representatives
assist customers by developing innovative advertising specialty programs which
are tailored to customers' specific needs. HA-LO's customers utilize these
products, which generally are articles of merchandise imprinted or otherwise
customized with a customer's name, logo or message, for marketing, employee
incentives and customer gifts and giveaways. These products include (i) apparel
items such as jackets, sweaters, hats and golf shirts, (ii) business accessories
such as clocks, portfolios, briefcases, blotters and pen and pencil sets, (iii)
recognition awards such as trophies and plaques and (iv) other miscellaneous
advertising items such as etched crystalware, calendars, golf accessories, key
chains, watches

viii
<PAGE>
and mugs. HA-LO's customers include manufacturing, financial service,
broadcasting, consumer product and communications companies as well as
professional sports teams. Selected customers of the Company include Motorola,
Inc., The Quaker Oats Company, Time Warner, Inc., Ameritech Corporation, Turner
Broadcasting System, Inc., Abbott Laboratories, Andersen Consulting, the Chicago
Bulls and Sony Signatures. HA-LO's principal executive offices are located at
5980 West Touhy Avenue, Niles, Illinois 60714, and its telephone number at that
address is (847) 647-2300.

THE TARGET COMPANIES. The Target Companies are a rapidly growing provider
of outsourced telephone-based sales and marketing services. The Target
Companies' client base is comprised of large companies with growing needs for
cost-effective means of contacting and servicing current and prospective
customers. The Target Companies operate over 900 workstations in 17 telephone
call centers located in the United States and Canada. The call centers are
centrally managed through the application of extensive telecommunications and
computer technology to promote the consistent delivery of quality services. The
Target Companies' primary business involves the provision of telephone-based
sales to consumers, database analysis and management, script development,
consultation and program development as well as customer lead generation,
acquisition and retention. The industries in which the Target Companies'
specialize include the insurance industry and the financial services industry.
The Target Companies' most significant clients in these industries are Allstate
Insurance and Maryland Bank of North America.

The principal executive offices of the Target Companies are located at 701
Lee Street, Des Plaines, Illinois 60016 and their telephone number at that
address is (847) 803-1900.

HA-LO SPECIAL MEETING OF SHAREHOLDERS

This Proxy Statement/Prospectus relates to a Special Meeting of Shareholders
of HA-LO (the "Special Meeting"). At the Special Meeting, the shareholders of
HA-LO will consider and vote upon a proposal to approve and adopt the Plan of
Merger and Amalgamation. A copy of the Plan of Merger and Amalgamation is
attached to this Proxy Statement/Prospectus as Appendix A. Approval and adoption
of the Plan of Merger and Amalgamation shall also constitute approval of the
issuance of shares of common stock, no par value, of HA-LO ("HA-LO Common
Stock") in connection with the Merger Transactions.

The Special Meeting will be held on Wednesday, September 25, 1996, 10:00
A.M., local time at the offices of HA-LO, 5980 West Touhy Avenue, Niles,
Illinois 60714. The record date for shareholders of HA-LO entitled to notice of
and to vote at the Special Meeting is as of the close of business on August 26,
1996. Voting rights for HA-LO are vested in holders of HA-LO Common Stock; with
each share of HA-LO Common Stock entitled to one vote on each matter coming
before the shareholders. As of July 31, 1996, there were approximately
10,509,055 shares of HA-LO Common Stock outstanding and approximately 525
holders of record.

VOTE REQUIRED

The favorable vote of the holders of at least two-thirds of the outstanding
shares of HA-LO Common Stock present, in person or by proxy, at the Special
Meeting will be necessary for approval and adoption of the Plan of Merger and
Amalgamation. As of July 31, 1996, directors and executive officers of HA-LO
were beneficial owners of approximately 23.79% of the outstanding shares of
HA-LO Common Stock (excluding 475,743 shares which may be acquired upon exercise
of options or other rights which are exercisable within 60 days of July 31,
1996). The directors and officers of HA-LO have indicated that they intend to
vote their shares FOR the approval and adoption of the Plan of Merger and
Amalgamation.

THE MERGER TRANSACTIONS

General; Conversion of Securities. Pursuant to the Plan of Merger and
Amalgamation, (i) HA-LO Sub-1 will be merged with and into Market USA; (ii)
HA-LO Sub-2 will be amalgamated with Marusa; and (iii) the New Canadian Service
Entity will purchase, subject to discharge or performance of related
liabilities, all of the assets and properties of each of Marusa Financial and
Nerok. As a result of

ix
<PAGE>
the U.S. Merger, Market USA will become a wholly-owned subsidiary of HA-LO and
each outstanding share of common stock, no par value, of Market USA ("Market USA
Common Stock") will be converted into the right to receive 19,125 shares of
HA-LO Common Stock (a total of 1,912,500 shares of HA-LO Common Stock). As a
result of the Canada Amalgamation, the corporation resulting therefrom will
become a wholly-owned subsidiary of HA-LO and each outstanding share of Class A
common stock of Marusa ("Marusa Common Stock") will be converted into 318,700
shares of HA-LO Common Stock (a total of 637,400 shares of HA-LO Common Stock).
As a result of the Ancillary Asset Acquisition, the New Canadian Service Entity
will purchase, subject to discharge or performance of related liabilities, all
of the assets and properties of each of Marusa Financial and Nerok in
consideration of HA-LO's issuance to each of Marusa Financial and Nerok of 50
shares of HA-LO Common Stock (a total of 100 shares of HA-LO Common Stock). The
Ancillary Asset Acquisition is designed to enable HA-LO to acquire all of the
assets utilized in the business operations conducted by Marusa Financial and
Nerok and is not anticipated to be material to the Merger Transactions, taken as
a whole. HA-LO has reserved the right to consummate the Ancillary Asset
Acquisition upon the terms described in the Plan of Merger and Amalgamation or
effect an alternate transaction acceptable to HA-LO having a substantially
similar purpose and total consideration which does not exceed 100 shares of
HA-LO Common Stock. As a result of the Merger Transactions, HA-LO will issue an
aggregate of 2,550,000 shares of HA-LO Common Stock (approximately 19.5% of the
outstanding HA-LO Common Stock as of July 31, 1996, after giving effect to the
Merger Transactions).

RECOMMENDATIONS OF THE BOARD OF DIRECTORS. The Board of Directors of HA-LO
has approved the Plan of Merger and Amalgamation and recommends a vote FOR
approval and adoption of the Plan of Merger and Amalgamation by the shareholders
of HA-LO. The Board of Directors of HA-LO believes that the terms of the Plan of
Merger and Amalgamation are fair to and in the best interests of HA-LO and its
shareholders. For a discussion of the factors considered by the Board of
Directors of HA-LO in reaching its decisions, see "The Merger Transactions
Reasons for the Merger Transactions; Recommendations of the Board of Directors."

EFFECTIVE TIME OF THE MERGER TRANSACTIONS. The Merger Transactions will
become effective at the time and on the date that (i) articles of merger
relating to the U.S. Merger are filed with Illinois Secretary of State; (ii)
articles of amalgamation and an amalgamation agreement relating to the Canada
Amalgamation are filed with the Canadian Department of Industry and a
certificate of amalgamation is issued thereby; and (iii) all documents and
instruments required to effectuate the Ancillary Asset Acquisition, or any
applicable alternate transaction, are filed with the appropriate governmental
authority (the time at which the last of the U.S. Merger, the Canada
Amalgamation and the Ancillary Asset Acquisition becomes effective is referred
to as the "Effective Time"). It is presently contemplated that the Effective
Time will occur as soon as practicable after the conditions specified in the
Plan of Merger and Amalgamation are satisfied or waived. See "The Plan of Merger
and Amalgamation -- Conditions."

EXCHANGE OF SHARES. Exchange of certificates evidencing Market USA Common
Stock and Marusa Common Stock (collectively, "Target Company Common Stock") for
certificates evidencing HA-LO Common Stock will be made at the Effective Time
upon surrender of certificates evidencing Target Company Common Stock to HA-LO.

OPINION OF FINANCIAL ADVISOR. On August 23, 1996, William Blair & Company,
L.L.C. ("Blair") delivered its opinion to HA-LO's Board of Directors to the
effect that, based upon and subject to the matters presented to HA-LO's Board of
Directors and as set forth in its opinion, as of such date, the proposed
consideration to be paid by HA-LO pursuant to the Merger Transactions was fair
to HA-LO from a financial point of view. A copy of the full text of the written
opinion of Blair, dated August 23, 1996, which sets forth the assumptions made,
procedures followed, matters considered and limits of its review, is attached to
this Proxy Statement/Prospectus as Appendix B, and should be read carefully in
its entirety. See "The Merger Transactions -- Opinion of Financial Advisor."

x
<PAGE>
MANAGEMENT OF HA-LO AFTER THE MERGER TRANSACTIONS. At the Effective Time,
HA-LO will take such action as is necessary to elect one Target Shareholder to
the Board of Directors of HA-LO. It is currently anticipated that Seymour N.
Okner, the principal Target Shareholder, will be nominated and appointed to the
Board of Directors as of the date following the Effective Time. See "The Merger
Transactions -- Interest of Certain Persons in the Merger." It also is
anticipated that after the consummation of the Merger Transactions Lou Weisbach,
the Chairman of the Board, President and Chief Executive Officer of HA-LO, will
continue to serve in such capacities.

CONDITIONS TO THE MERGER TRANSACTIONS. The obligations of HA-LO and the
Target Companies to consummate the Merger Transactions are subject to the
satisfaction of certain conditions, including, among others (i) obtaining the
requisite HA-LO shareholder approval, (ii) the expiration or termination of the
waiting period applicable to the consummation of the Merger Transactions under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (iii) obtaining from the Target Shareholders a certificate under Section
116 of the Income Tax Act (Canada) (the "ITA") indicating that any gain realized
on the Canada Amalgamation is tax-free by virtue of the Canada-United States
Income Tax Convention (the "Treaty"), (iv) the absence of any injunction
prohibiting consummation of the Merger Transactions, (v) the receipt of certain
legal opinions with respect to various aspects of the Merger Transactions and
(vi) the receipt of accountants' letters with respect to "cold comfort" matters.
See "The Merger Transactions -- Certain Income Tax Considerations," "The Merger
Transactions -- Accounting Treatment" and "The Plan of Merger and Amalgamation
- -- Conditions."

TERMINATION. The Plan of Merger and Amalgamation may be terminated and the
Merger Transactions may be abandoned at any time prior to the Effective Time,
before or after the approval by the shareholders of HA-LO, in a number of
circumstances, which include, among others, (i) by the mutual consent of HA-LO
and the Target Companies (or the Target Shareholders acting on their behalf);
(ii) by HA-LO if there has been a breach by a Target Company or a Target
Shareholder of any of its or his respective covenants or agreements in the Plan
of Merger and Amalgamation or if any of the representations and warranties of
the Target Companies or Target Shareholders shall have become untrue such that a
condition to the consummation of the Merger Transactions shall not have been
satisfied and such breach or condition has not been cured within 30 days after
receipt of written notice; (iii) by the Target Companies (or the Target
Shareholders acting on their behalf) if there has been a breach by HA-LO of any
of its respective covenants or agreements in the Plan of Merger and Amalgamation
or if any of the representations and warranties of HA-LO shall have become
untrue such that a condition to the consummation of the Merger Transactions
shall not have been satisfied and such breach or condition has not been cured
within 30 days after receipt of written notice; (iv) by HA-LO or the Target
Companies (or the Target Shareholders acting on their behalf) if any decree,
permanent injunction, judgment, order or other action by any court of competent
jurisdiction or governmental entity preventing or prohibiting consummation of
the Merger Transactions shall have become final and nonappealable; (v) by HA-LO
or the Target Companies if the Merger Transactions have not been consummated by
October 31, 1996; (vi) by HA-LO, if the Board of Directors of a Target Company
shall have recommended to the shareholders of such Target Company any Competing
Transaction (hereinafter defined); or (vii) by the Target Companies (or the
Target Shareholders acting on their behalf) if HA-LO has entered into a written
agreement relating to a HA-LO Change in Control (hereinafter defined). See "The
Plan of Merger and Amalgamation -- No Solicitation of Competing Transactions"
and "The Plan of Merger and Amalgamation -- Termination."

TERMINATION FEES. If the Plan of Merger and Amalgamation is terminated by
HA-LO, on the one hand, or the Target Companies (or the Target Shareholders
acting on their behalf), on the other hand, pursuant to clause (ii) or (iii) of
the preceding paragraph due to an intentional breach by the non-terminating
party, and without fault of the terminating party, the non-terminating party is
required to pay the terminating party an amount equal to all of the
non-terminating party's out-of-pocket expenses incurred in connection with the
Plan of Merger and Amalgamation. If HA-LO terminates the Plan of Merger and
Amalgamation and at the time of such termination a Competing Transaction

xi
<PAGE>
exists, the Target Companies are required to pay HA-LO a $15 million termination
fee and HA-LO's out-of-pocket expenses incurred in connection with the Plan of
Merger and Amalgamation. If the Target Companies (or the Target Shareholders
acting on their behalf) terminate the Plan of Merger and Amalgamation and at the
time of such termination there shall exist a written agreement with respect to a
HA-LO Change in Control, HA-LO is required to pay the Target Companies a $15
million termination fee and the Target Companies' out-of-pocket expenses
incurred in connection with the Plan of Merger and Amalgamation. In addition, if
the Target Companies (or the Target Shareholders acting on their behalf)
terminate the Plan of Merger and Amalgamation, HA-LO is required to pay the
Target Companies an additional termination fee equal to the discount (if any)
applicable to accounts receivable sold by Market USA to a bank at the request of
HA-LO. See "The Plan of Merger and Amalgamation -- Expenses; Termination Fees"
and "The Plan of Merger and Amalgamation -- Certain Covenants."

AVAILABILITY OF DISSENTERS' RIGHTS. Shareholders of the Target Companies
are not entitled to dissenters' rights in connection with the Merger
Transactions. All shareholders of HA-LO at the record date for the Special
Meeting will be entitled to exercise dissenters' rights in accordance with the
Illinois Business Corporation Act of 1983, as amended (the "IBCA"). A
shareholder of HA-LO desiring to exercise dissenters' rights must (i) deliver to
HA-LO, before the vote is taken at the Special Meeting, a written demand for
payment of his or her shares of HA-LO Common Stock if the Merger Transactions
are consummated; (ii) not vote in favor of the approval and adoption of the Plan
of Merger and Amalgamation; and (iii) otherwise comply with Sections 11.65 and
11.70 of the IBCA. See "The Special Meeting -- Dissenters' Rights."

RESALE RESTRICTIONS. Of the 2,550,000 shares of HA-LO Common Stock to be
issued in connection with the Merger Transactions, 26 shares of HA-LO Common
Stock will be freely transferable and the remaining 2,549,974 shares of HA-LO
Common Stock may be resold by the recipients thereof only in limited
circumstances because such latter shares of HA-LO Common Stock will be received
by persons who may be deemed to be "affiliates" (as such term is defined in the
Securities Act) of the Target Companies at the Effective Time. Pursuant to the
Plan of Merger and Amalgamation, HA-LO has agreed to file and cause to be
declared effective under the Securities Act, at specified dates, a registration
statement to permit resales of shares of HA-LO Common Stock received by such
affiliates as part of the Merger Transactions. See "The Merger Transactions --
Resale Restrictions."

ANTITRUST MATTERS. The Merger Transactions are subject to the requirements
of the HSR Act and the rules and regulations promulgated thereunder, which
provide that certain acquisition transactions (including the U.S. Merger) may
not be consummated until certain information has been furnished to the Antitrust
Division of the Department of Justice and the Federal Trade Commission and
unless certain waiting period requirements are met. On August 5, 1996, the
Notification and Report Forms for the Merger Transactions required pursuant to
the HSR Act were filed by both HA-LO and the Target Companies. On August 16,
1996, the FTC informed HA-LO that HA-LO's request for early termination of the
applicable waiting period had been granted. See "The Merger Transactions --
Regulatory Approval."

CANADIAN REGULATORY MATTERS. Neither the Canada Amalgamation nor the
Ancillary Asset Acquisition requires governmental approval under the Competition
Act (Canada) (the "Competition Act") or the Investment Canada Act prior to the
consummation of the Merger Transactions. See "The Merger Transactions --
Regulatory Approval."

CERTAIN INCOME TAX CONSIDERATIONS. Consummation of the Merger Transactions
is conditioned upon receipt by HA-LO and the Target Companies of opinions from
their respective legal counsel that the U.S. Merger will qualify as a
reorganization for United States federal income tax purposes under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"). In
addition, HA-LO believes that (i) the Canada Amalgamation will qualify as a
reorganization under Section 368(a) of the Code (provided that certain
shareholders of Marusa will be required to include an amount in gross income as
a "toll charge" subject to tax) and (ii) the Ancillary Asset Acquisition will be
taxable to both

xii
<PAGE>
Nerok and Market Financial, unless both of such corporations adopt plans of
liquidation in connection with such exchanges (in which case certain
shareholders of each of Marusa Financial and Nerok will be required to include
an amount in gross income as a "toll charge" subject to tax). See "The Merger
Transactions -- Certain United States Federal Income Tax Considerations" and
"The Plan of Merger and Amalgamation -- Conditions."

Any gains realized as a result of the Canada Amalgamation by a Target
Shareholder who is a resident of the United States for purposes of the Treaty
should be exempt from Canadian federal income tax by virtue of the Treaty. The
Canada Amalgamation will also not give rise to any Canadian federal income tax
payable by Marusa or HA-LO Sub-2. Any income or gains realized by Marusa
Financial and Nerok as a result of the Ancillary Asset Acquisition will be
subject to Canadian federal income tax. Any gain realized by HA-LO on the
conversion of the shares of HA-LO Sub-2 in the Canada Amalgamation will be
exempt from federal income tax pursuant to the provisions of the Treaty. See
"The Merger Transactions -- Certain Canadian Federal Income Tax Considerations."

ACCOUNTING TREATMENT. The Merger Transactions are expected to be accounted
for as a pooling of interests in accordance with the provisions of Accounting
Principles Board Opinion No. 16 on business combinations. HA-LO has received the
written opinion of Arthur Andersen LLP, independent public accountants, to the
effect that, based upon certain material facts and certain representations and
warranties provided by HA-LO and the Target Companies described in such opinion,
the business combination to be effected by the Merger Transactions would be
properly accounted for as a pooling of interests in accordance with generally
accepted accounting principles. See "The Merger Transactions -- Accounting
Treatment."

LISTING ON THE NASDAQ NATIONAL MARKET. The HA-LO Common Stock is quoted on
The Nasdaq National Market under the symbol "HALO." The obligations of HA-LO to
consummate the Merger Transactions are subject to the condition that the HA-LO
Common Stock to be issued in connection with the Merger Transactions shall have
been approved for quotation on The Nasdaq National Market.

MARKET PRICE DATA. On June 14, 1996, the last trading day immediately prior
to the date on which HA-LO and the Target Companies first publicly announced
their intent to undertake the Merger Transactions, the closing sale price of
HA-LO Common Stock as reported by The Nasdaq National Market was $26.75 per
share. On August 22, 1996, the last trading day for which quotations were
available at the time of printing this Proxy Statement/Prospectus, the last
reported sale price for HA-LO Common Stock on The Nasdaq National Market, was
$ per share. Neither the Market USA Common Stock nor the Marusa
Common Stock is traded on any established public trading market or the
over-the-counter market. See "Stock Price and Dividend Information."

RISK FACTORS

The information set forth under "Risk Factors" on pages 1-6 should be
reviewed and carefully considered in evaluating the Merger Transactions and the
issuance of HA-LO Common Stock in connection with the Merger Transactions.

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<PAGE>
HA-LO INDUSTRIES, INC.
SELECTED HISTORICAL FINANCIAL DATA

The following tables set forth selected historical financial data and other
operating information for HA-LO for each of the fiscal years in the three-year
period ended December 31, 1995 and for the six months ended June 30, 1996 and
1995. The selected financial information for each of the three-year periods has
been derived from the Consolidated Financial Statements of HA-LO, which have
been audited by Arthur Andersen LLP, independent auditors to HA-LO, and from the
underlying accounting records of HA-LO. The selected financial information for
the six-month periods has been derived from unaudited consolidated financial
statements of HA-LO and reflects all adjustments (consisting of normal recurring
adjustments) that, in the opinion of the management of HA-LO, are necessary for
a fair presentation of such information. Operating results for the six months
ended June 30, 1996 are not necessarily indicative of the results that may be
expected for fiscal 1996.

All information contained in the following tables should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Pro Forma Financial Information" and with the
Consolidated Financial Statements and related notes of HA-LO included or
incorporated by reference herein.

HA-LO INDUSTRIES, INC.
SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales..................................................... $ 80,463 $ 110,396 $ 172,866 $ 66,314 $ 85,973
Cost of service............................................... 59,262 76,319 122,982 45,634 60,703
--------- --------- --------- --------- ---------
Gross profit.................................................. 21,201 34,077 49,884 20,680 25,270
Selling expenses.............................................. 11,328 18,213 24,600 10,699 13,026
General and administrative expenses........................... 8,876 12,663 19,045 8,293 9,928
--------- --------- --------- --------- ---------
Income from operations........................................ 997 3,201 6,239 1,688 2,316
Other income (expense)........................................ (53) (836) (1,260) (665) 248
--------- --------- --------- --------- ---------
Income before taxes........................................... 944 2,365 4,979 1,023 2,564
Provision for income taxes.................................... 198 859 1,991 409 1,026
--------- --------- --------- --------- ---------
Net income for the period..................................... $ 746 $ 1,506 $ 2,988 $ 614 $ 1,538
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Pro forma net income for the period(1)........................ $ 566 $ 1,419 N/A N/A N/A
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
PER SHARE DATA(2):
Net income (pro forma for 1993 and 1994)(1)................... 0.08 0.20 0.34 0.08 0.14
Shares used in computation assuming full dilution............. 7,074 7,200 8,722 7,955 11,263

BALANCE SHEET DATA (END OF PERIOD):
Total assets.................................................. $ 31,306 $ 44,667 $ 68,848 $ 48,742 $ 63,093
Working capital............................................... 8,757 14,556 27,586 27,344 29,425
Long-term debt, net of current portion........................ 6,071 12,512 -- 15,226 --
Shareholders' equity.......................................... 8,721 9,911 39,572 12,216 42,124
</TABLE>

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

(1) In December, 1995 HA-LO acquired an entity that had elected to be treated as
an S corporation for federal income tax purposes. The acquisition was
accounted for as a pooling-of-interests. Accordingly, pro forma net income
and income per share amounts include an unaudited pro forma tax provision
for the years ended December 31, 1993 and 1994 at an effective rate of 40%.

(2) All per share amounts have been adjusted to reflect the June 3, 1996 3-for-2
split of the outstanding HA-LO Common Stock, effected in the form of a 50%
common stock dividend, to shareholders of record on May 17, 1996.

xiv
<PAGE>
TARGET COMPANIES
SELECTED HISTORICAL FINANCIAL DATA

The following tables set forth selected historical combined financial data
and other operating information for the Target Companies for each of the fiscal
years in the three-year period ended December 31, 1995 and for the six months
ended June 30, 1996 and 1995. The selected financial information for each of the
three-year periods has been derived from the Combined Financial Statements of
the Target Companies, which have been audited by Arthur Andersen LLP,
independent auditors to the Target Companies, and from the underlying accounting
records of the Target Companies. The selected combined financial information for
the six-month periods has been derived from unaudited consolidated financial
statements of the Target Companies and reflects all adjustments (consisting of
normal recurring adjustments) that, in the opinion of the management of the
Target Companies, are necessary for a fair presentation of such information.
Operating results for the six months ended June 30, 1996 are not necessarily
indicative of the results that may be expected for fiscal 1996.

All information contained in the following tables should be read in
conjunction with "Target Companies' Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Pro Forma Financial
Information" and with the Combined Financial Statements and related notes of the
Target Companies included herein. Certain amounts from the combined statements
of income of the Target Companies have been reclassified to conform with the
presentation below.

TARGET COMPANIES
SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales....................................................... $ 24,491 $ 35,425 $ 38,399 $ 17,746 $ 24,733
Cost of service................................................. 16,392 23,170 25,495 13,173 18,350
--------- --------- --------- --------- ---------
Gross profit.................................................... 8,099 12,255 12,904 4,573 6,383
--------- --------- --------- --------- ---------
Selling expenses................................................ 459 911 959 435 548
General and administrative expenses............................. 5,487 7,205 9,062 3,013 3,469
--------- --------- --------- --------- ---------
Income from operations.......................................... 2,153 4,139 2,883 1,125 2,366
Other income.................................................... 14 36 46 23 13
--------- --------- --------- --------- ---------
Income before taxes............................................. 2,167 4,175 2,929 1,148 2,379
Provision for income taxes...................................... 209 337 508 47 167
--------- --------- --------- --------- ---------
Net income for the period....................................... $ 1,958 $ 3,838 $ 2,421 $ 1,101 $ 2,212
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Pro forma net income for the period(1).......................... $ 1,300 $ 2,505 $ 1,757 $ 689 $ 1,427
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
PER SHARE DATA(2):
Dividends....................................................... .14 .26 1.84 0.17 0.49
Pro forma net income(1)......................................... 0.51 0.98 0.69 0.27 0.56
Shares used in computation...................................... 2,550 2,550 2,550 2,550 2,550
BALANCE SHEET DATA (END OF PERIOD):
Total assets.................................................... $ 7,945 $ 11,271 $ 10,492 $ 12,472 $ 13,308
Working capital................................................. 2,130 4,900 2,368 5,819 2,562
Long-term debt, net of current portion.......................... 87 79 81 78 78
Shareholders' equity............................................ 4,311 7,478 5,338 8,156 6,292
</TABLE>

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

(1) Market USA has elected to be treated as an S corporation for federal income
tax purposes. Pro forma net income and pro forma net income per share
amounts include an unaudited pro forma income tax provision for all periods
at an effective rate of 40%.

(2) All per share data is based on the number of shares of HA-LO Common Stock to
be issued by HA-LO in connection with the Merger Transactions.

xv
<PAGE>
SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following table presents summary pro forma financial information derived
from the Unaudited Pro Forma Combined Condensed Financial Statements included
elsewhere in this Proxy Statement/Prospectus and has been presented assuming the
Merger Transactions will be accounted for as a pooling of interests. The
Unaudited Pro Forma Condensed Combined Financial Statements do not purport to
present the financial position or results of operations of HA-LO had the
transactions and events assumed therein occurred on the dates specified, nor are
they necessarily indicative of the results of operations that may be achieved in
the future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in HA-LO's Annual Report to Securityholders on
Form 10-K, which is incorporated by reference herein, and "Target Companies'
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "HA-LO and Target Companies Pro Forma Combined Condensed
Financial Statements" included elsewhere in this Proxy Statement/Prospectus.

HA-LO AND TARGET COMPANIES
SUMMARY PRO FORMA FINANCIAL INFORMATION

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

(1) A corporation which was acquired by HA-LO in December, 1995 in a transaction
accounted for as a pooling-of-interests, had elected to be treated as an S
corporation for federal income tax purposes. Pro forma net income and income
per share amounts include an unaudited provision for federal and state
income taxes at an effective rate of 40% for 1993 and 1994.

(2) All per share information has been adjusted to reflect a 3-for-2 stock
split, effected by HA-LO as a 50% common stock dividend, to shareholders of
record on May 17, 1996.

(3) Market USA has elected to be treated as an S corporation for federal income
tax purposes. Pro forma net income and pro forma net income per share
amounts include an unaudited provision for federal and state income taxes
for all periods at an effective rate of 40%.

(4) All per share data is based on the number of shares of HA-LO Common Stock to
be issued by HA-LO to complete the Merger Transactions.

xvi
<PAGE>
COMPARATIVE PER SHARE DATA

The following table sets forth certain historical per share data of HA-LO
and the Target Companies and combined per share data on an unaudited pro forma
basis, based on the assumption that the Merger Transactions occurred at the
beginning of the earliest period presented and were accounted for as a pooling
of interests. The pro forma comparative per share data has been adjusted to give
effect to (i) the issuance of 1,912,500 shares of HA-LO Common Stock in
connection with the U.S. Merger; (ii) the issuance of 637,400 shares of HA-LO
Common Stock in connection with the Canada Amalgamation; and (iii) the issuance
of 100 shares of Common Stock in connection with the Ancillary Asset
Acquisition. The pro forma comparative per share data does not purport to
represent what HA-LO's financial position or results of operation would actually
have been had the Merger Transactions occurred at the beginning of the earliest
period presented or to project HA-LO's financial position or results of
operation for any future date or period. This data should be read in conjunction
with the pro forma combined condensed financial statements and the separate
historical financial statements and notes thereto of HA-LO included or
incorporated by reference herein and of the Target Companies included elsewhere
herein.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCOME FROM CONTINUING OPERATIONS PER SHARE
Historical HA-LO................................................... $ 0.08 $ 0.20 $ 0.34 $ 0.08 $ 0.14
Historical Target Companies........................................ $ 0.51 $ 0.98 $ 0.69 $ 0.43 $ 0.87
Pro forma combined................................................. $ 0.19 $ 0.40 $ 0.42 $ 0.12 $ 0.21
BOOK VALUE PER SHARE
Historical HA-LO................................................... $ 4.54 $ 3.74
Historical Target Companies........................................ $ 2.09 $ 2.94
Pro forma combined................................................. $ 3.98 $ 3.30
CASH DIVIDENDS PER SHARE
Historical HA-LO(1)................................................ -- -- -- -- --
Historical Target Companies........................................ $ 0.14 $ 0.26 $ 1.84 $ 0.17 $ 0.49
Pro forma combined................................................. $ 0.04 $ 0.07 $ 0.42 $ 0.04 $ 0.09
</TABLE>

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

(1) Excludes dividends of $299,000, $610,000 and $555,000 paid by an acquired
company to its shareholders in 1993, 1994 and 1995, respectively, prior to
its acquisition by HA-LO. The acquisition, which occurred in December 1995,
was accounted for as a pooling of interests. No dividends were paid by the
acquired company during the six months ended June 30, 1995 or June 30, 1996.

xvii
<PAGE>
RISK FACTORS

The following are certain factors that should be considered by the
shareholders of HA-LO in evaluating the Merger Transactions as well as the
proposal to be considered and voted upon at the HA-LO Special Meeting and by
shareholders of each of the Target Companies in evaluating an investment in
HA-LO Common Stock. Unless otherwise specified, references herein to the Target
Companies after the Merger Transactions refer to the surviving corporation of
the U.S. Merger, the corporation resulting from the Canada Amalgamation and the
business operated by the New Canadian Service Entity.

RISKS FACTORS RELATING TO THE MERGER TRANSACTIONS

INTEGRATION OF THE BUSINESSES. The Merger Transactions involve the
integration of two business organizations that have previously operated
independently. There can be no assurance that HA-LO will not encounter
difficulties in integrating the operations of the Target Companies with those of
HA-LO or that the benefits expected from such integration will be realized. Any
delays or unexpected costs incurred in connection with such integration could
have a material adverse effect on the combined company's business, operating
results or financial condition. Furthermore, there can be no assurance that the
operations, managements and personnel of the two business organizations will be
compatible or that HA-LO or the Target Companies will not experience the loss of
key personnel. Among the factors considered by the Board of Directors of HA-LO
in connection with its approval of the Plan of Merger and Amalgamation were the
opportunities to provide additional marketing services to HA-LO's existing
clients. There can be no assurance that any of HA-LO's existing clients will
become clients of the Target Companies after the Merger Transactions.

DILUTION OF PERCENTAGE OWNERSHIP INTEREST. Following the Merger
Transactions, the current shareholders of HA-LO will own approximately 80.5% of
the then outstanding HA-LO Common Stock. This represents substantial dilution of
the percentage ownership interest in HA-LO by HA-LO's current shareholders. The
shareholders of the Target Companies will own approximately 19.5% of the HA-LO
Common Stock. In addition, the policies and day-to-day operations of the
combined companies will be controlled by the Board of Directors and management
of HA-LO.

RISK FACTORS RELATING TO THE TARGET COMPANIES

RELIANCE ON MAJOR CLIENTS AND KEY INDUSTRIES. Because a substantial portion
of the Target Companies' revenue is generated from relatively few clients, the
loss of a significant client or clients could have a materially adverse effect
on the Target Companies. The Target Companies' ten largest clients collectively
accounted for approximately 89.3% and 77.2%, respectively, of the Target
Companies' combined net revenues in 1994 and 1995. The Target Companies' largest
client in 1994 was JC Penney Life Insurance Company, which accounted for
approximately 25.4% of the Target Companies' combined net revenues. The Target
Companies' largest client in 1995 was Allstate Insurance, which accounted for
approximately 19.5% of the Target Companies' combined net revenues. Many of the
Target Companies' clients are concentrated in the insurance and financial
services industries. A trend in either of these industries not to use, or to
reduce their use of, telephone-based sales, marketing or customer management
services, could have a materially adverse effect on the Target Companies. The
Target Companies generally operate under contracts which may be terminated on
short notice, some of which do not have minimum volume requirements. See
"Business of the Target Companies."

FACTORS AFFECTING ABILITY TO MANAGE AND SUSTAIN GROWTH. The Target
Companies have experienced rapid growth over the past several years and
anticipate continued growth to be driven primarily by industry trends toward
outsourcing of telephone-based sales, marketing and customer service operations
and increased penetration by the Target Companies of new and existing clients
and markets. Future growth will depend on a number of factors, including the
effective and timely initiation and development of client relationships, opening
of new call centers, and recruitment,

1
<PAGE>
motivation and retention of qualified personnel. Sustaining growth will also
require the implementation of enhanced operational and financial systems and
will require additional management, operational and financial resources. There
can be no assurance that the Target Companies will be able to manage their
expanding operations effectively or that they will be able to maintain or
accelerate their growth. See "Target Companies Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business of the
Target Companies."

COMPETITIVE AND FRAGMENTED INDUSTRY; POTENTIAL FUTURE COMPETING TECHNOLOGIES
AND TRENDS. The industry in which the Target Companies compete is very
competitive and highly fragmented. The Target Companies' competitors range in
size from very small firms offering special applications or short term projects
to large, publicly traded companies. A number of competitors have capabilities
and resources equal to, or greater than, the Target Companies. Some of the
Target Companies' services also compete with direct mail, television, radio and
other advertising media. There can be no assurance that, as the Target
Companies' industry continues to evolve, additional competitors with greater
resources than the Target Companies will not enter the industry (or particular
segments of the industry) or that the Target Companies' clients will not choose
to conduct more of their telephone-based sales, marketing or customer service
activities internally. See "Business of the Target Companies -- Competition."

The development of new forms of direct sales and marketing techniques, such
as interactive home shopping through television, computer networks and other
media, could have an adverse effect on the demand for the Target Companies'
services. In addition, the effectiveness of marketing by telephone could also
decrease as a result of consumer saturation and increased consumer resistance to
this direct marketing tool. Although the Target Companies' attempt to monitor
industry trends and respond accordingly, there can be no assurance that the
Target Companies will be able to anticipate and successfully respond to such
trends in a timely manner. See "Business of the Target Companies."

ORGANIZATION OF MARUSA. The Canada Business Corporations Act (the "CBCA")
requires that a majority of the directors of a corporation organized under the
CBCA be residents of Canada. At the time of its incorporation under the CBCA,
the sole directors of Marusa were Seymour N. Okner and Samuel P. Okner, each a
resident of the United States. HA-LO's Canadian counsel has informed HA-LO that,
because of such failure to comply with the CBCA, (i) Messrs. Okner, in their
capacity as the sole directors of Marusa, had no authority to transact business
on behalf of Marusa and (ii) all actions so taken by Messrs. Okner on behalf of
Marusa were without effect, including, without limitation, the issuance of
shares of Marusa Common Stock. As a result, neither Marusa nor the shareholders
of Marusa can confirm the identity of either the shareholders or directors of
Marusa since its initial incorporation. Although, Marusa has commenced
proceedings to obtain a declaratory judgment of a court of competent
jurisdiction to confirm the identity of the shareholders and directors of
Marusa, there can be no assurance that a court will grant such a declaratory
judgment, that such a declaratory judgment will be granted prior to the
Effective Time or that Marusa will be able to consummate the Canada Amalgamation
in the absence of such a judgment. If such declaratory judgment is not granted
prior to the Effective Time and HA-LO is otherwise able to consummate the Canada
Amalgamation, HA-LO will bear the risk that persons, other than those set forth
in this Proxy Statement/Prospectus, may claim ownership to the Marusa Common
Stock. The Target Companies have informed HA-LO that they believe they have
meritorious defenses to any such claims. Although HA-LO will vigorously defend
any such claims, there can be no assurance that HA-LO would be meritorious in
such defense and that any such claimants would not be judicially declared to be
the owners of all or a portion of the Marusa Common Stock.

LICENSING REQUIREMENTS. Certain United States and Canadian jurisdictions in
which the Target Companies operate have laws and regulations which require that
persons selling insurance products obtain state, provincial or territorial
licenses before engaging in such activities. In particular, each Canadian
province and territory requires that Marusa Financial and its representatives
selling insurance products, among others, obtain such a license. Marusa
Financial has been unable to demonstrate

2
<PAGE>
that it is in compliance with such licensing requirements in several Canadian
provinces and territories. In the absence of a valid license, the provincial or
territorial government has the authority to require Marusa Financial to cease
and desist from conducting telemarketing activities relating to insurance
products in such province or territory until such license is applied for and
obtained, a process which could require several months to complete. There can be
no assurance that any such license will be obtained. In addition, on May 21,
1996, governmental authorities in the Province of British Columbia issued a
cease and desist order with respect to Marusa Financial's activities in such
Province requiring each employee of Marusa Financial to cease conducting
telemarketing activities on behalf of Marusa Financial until such employees
obtain the required Province of British Columbia licenses. On May 24, 1996,
Marusa Financial appealed such cease and desist order and applied for and
obtained a stay of the British Columbia cease and desist order, which stay is
effective until the court renders a decision on the Target Companies' appeal.
The hearing relating to the Target Companies' appeal is scheduled for October
1996. The failure of Marusa Financial to obtain, and maintain in effect, all
required licenses to conduct telemarketing activities with respect to insurance
products would have a material adverse effect on the results of operations of
the Target Companies taken as a whole. See "Business of the Target Companies --
Legal Proceedings."

RELIANCE ON TECHNOLOGY. The Target Companies have invested significantly in
sophisticated and specialized telecommunications and computer technology, and
have focused on the application of this technology to provide customized
solutions to meet their clients' needs. The Target Companies anticipate that it
will be necessary to continue to select, invest in and develop new and enhanced
technology on a timely basis in the future in order to maintain their
competitiveness. The Target Companies' future success will also depend in part
on their ability to continue to develop information technology solutions which
keep pace with evolving industry standards and changing client demands. In
addition, the Target Companies' business is highly dependent on its computer and
telephone equipment and software systems, and the temporary or permanent loss of
such equipment or systems, through casualty or operating malfunctions, could
have a materially adverse effect on the Target Companies' business. See
"Business of the Target Companies -- Business Strategy."

DEPENDENCE ON KEY PERSONNEL. The success of the Target Companies depends in
large part upon the abilities and continued service of their executive officers
and other key employees. There can be no assurance that the Target Companies
will be able to retain the services of such officers and employees. Seymour N.
Okner, the principal Target Shareholder, is 69 years of age and, although Mr.
Okner will serve as Chairman and Chief Executive Officer of each of Market USA
and Marusa and enter into an Employment Agreement with HA-LO for an initial term
of three years, there can be no assurance that Mr. Okner or any other executive
officer or key employee will continue to be able to devote the same efforts to
the success of the Target Companies as has historically been the case. The loss
of key personnel, including Mr. Okner, could have a materially adverse effect on
the Target Companies. The Target Companies have non-competition agreements with
certain of their existing key personnel. However, courts are at times reluctant
to enforce such agreements. In order to support their growth, the Target
Companies will be required to effectively recruit, develop and retain additional
qualified management personnel. See "The Merger Transactions -- Interests of
Certain Persons in the Merger Transactions" and "Management of the Target
Companies."

DEPENDENCE ON LABOR FORCE. The Target Companies' industry is very labor
intensive and has experienced high personnel turnover. Many of the Target
Companies' employees receive modest hourly wages. A higher turnover rate among
the Target Companies' employees would increase the Target Companies' recruiting
and training costs and decrease operating efficiencies and productivity. Some of
the Target Companies' operations, particularly insurance product sales, require
specially trained and licensed employees. Growth in the Target Companies'
business will require them to recruit and train qualified personnel at an
accelerated rate from time to time. There can be no assurance that the Target
Companies will be able to continue to hire, train and retain a sufficient labor
force of qualified employees. A significant portion of the Target Companies'
costs consists of

3
<PAGE>
wages to hourly workers. An increase in hourly wages, costs of employee benefits
or employment taxes could materially adversely effect the Target Companies. See
"Business of the Target Companies -- Personnel and Training."

DEPENDENCE ON TELEPHONE SERVICE. The Target Companies' business is
materially dependent on service provided by various local and long distance
telephone companies. A significant increase in the cost of telephone services
that is not recoverable through an increase in the price of the Target
Companies' services, or any significant interruption in telephone services,
could have a materially adverse impact on the Target Companies.

GOVERNMENT REGULATION. The Target Companies' business is subject to various
federal and state laws and regulations. The Target Companies' industry has
become subject to an increasing amount of federal and state regulation in the
past five years. The rules of the Federal Communications Commission (the "FCC")
under the Federal Telephone Consumer Protection Act of 1991 limit the hours
during which telemarketers may call consumers and prohibit the use of automated
telephone dialing equipment to call certain telephone numbers. The Federal
Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 (the "TCFAPA")
broadly authorizes the Federal Trade Commission (the "FTC") to issue regulations
prohibiting misrepresentation in telephone sales. In August 1995, the FTC issued
regulations under the TCFAPA which, among other things, require telemarketers to
make certain disclosures when soliciting sales. The Target Companies' operating
procedures comply with the telephone solicitation rules of the FCC and FTC.
However, there can be no assurance that additional federal or state legislation,
or changes in regulatory implementation, would not limit the activities of the
Target Companies or their clients in the future or significantly increase the
cost of regulatory compliance. See "Business of the Target Companies --
Government Regulation -- United States Government Regulation."

The Target Companies' business is also subject to various federal and
provincial laws and regulations, including, but not limited to, certain fraud
provisions of the Canadian Criminal Code and certain misleading advertising
provisions of the Competition Act. In addition, certain provinces and
territories have enacted legislation applicable to telemarketing practices.
Moreover, the Canadian Radio-television and Telecommunications Commission has
issued several decisions relating to the use of automatic dialing-announced
devices in connection with certain telemarketing practices. In June 1995, the
Director under the Competition Act proposed that certain amendments be made to
the Competition Act to, among other things, (i) establish deceptive
telemarketing practices as a specific strict liability criminal offense; (ii)
permit legal proceedings in respect to deceptive telemarketing practices by way
of summary conviction in less serious matters or by way of indictment in more
serious matters; and (iii) increase the maximum fine relating to summary
convictions from Cdn. $25,000 to Cdn. $200,000. The Target Companies believe
that draft legislation relating to the foregoing will be introduced into the
House of Commons in the fall of 1996. The Target Companies also believe that,
except as described in this Proxy Statement/Prospectus, they are currently in
compliance with all existing Canadian laws; however, there can be no assurance
(i) that additional federal or provincial legislation, or changes in regulatory
implementation would not limit the activities of the Target Companies or their
clients in the future or significantly increase the cost of regulatory
compliance or (ii) as to the impact, if any, that any such legislation, if
enacted, would have upon the business and operations of the Target Companies in
Canada. See "Business of the Target Companies -- Government Regulation --
Canadian Government Regulation."

Several of the industries in which the Target Companies' clients operate are
subject to varying degrees of government regulations, particularly the insurance
and financial services industries. Generally, compliance with these regulations
is a responsibility shared between the Target Companies and their clients.
However, the Target Companies could be subject to a variety of enforcement or
private actions for their failure or the failure of their clients to comply with
such regulations. The Target Companies' telephone representatives who sell
insurance products are required, among other things, to be licensed by various
state and provincial insurance commissions and participate in regular continuing
education programs, thus requiring the Target Companies to comply with the
extensive

4
<PAGE>
regulations of these state and provincial commissions. As a result, changes in
these regulations or their implementation could materially increase the Target
Companies' operating costs. See "Business of the Target Companies -- Government
Regulation -- Other Regulation."

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. The Target Companies
could experience quarterly variations in net revenues and operating income as a
result of many factors, including, among others, the timing of clients'
marketing campaigns, the timing of additional selling, general and
administrative expenses to acquire and support such new business and changes in
the Target Companies' revenue mix among its various service offerings. In
addition, the Target Companies must plan their operating expenditures based on
revenue forecasts, and revenue shortfall below such forecast in any quarter
would likely adversely affect the Target Companies' operating results for that
quarter. However, the Target Companies' business tends to be slower in the first
quarter due to client marketing programs which are typically slower in the first
part of the year. See "Target Companies' Management's Discussion and Analysis of
Financial Condition and Results of Operations."

RISK FACTORS RELATING TO HA-LO AND HA-LO COMMON STOCK

GROWTH THROUGH ACQUISITIONS. Acquiring businesses which can be integrated
into HA-LO's operations has been and continues to be an important element of
HA-LO's strategy for achieving profitable growth. Since January 1, 1993, HA-LO
has acquired ten advertising specialty businesses. However, there can be no
assurance that suitable acquisition candidates will continue to be available at
prices deemed reasonable by HA-LO, that HA-LO will be able to successfully
integrate future acquisitions, if any, into its existing business, that the
sales representatives previously associated with an acquired business will
remain with HA-LO after the acquisition or that HA-LO's recent growth rate will
continue in the future. In addition, there is significant competition for
attractive acquisition candidates.

RISKS RELATED TO RAPID GROWTH. Since January 1, 1993, HA-LO's net sales and
net income have increased as a result of both its acquisitions of advertising
specialty businesses and its internal growth. As part of its business strategy,
HA-LO intends to continue to pursue additional acquisitions, open showrooms and
attract and retain additional sales representatives. The failure to effectively
control and manage growth could have a material adverse effect on HA-LO's
financial condition and results of operations. There can be no assurance that
HA-LO's recent growth rate will continue in the future.

CONCENTRATION OF SALES WITH MONTGOMERY WARD; LOWER GROSS MARGINS WITH
MONTGOMERY WARD BUSINESS. During the six months ended June 30, 1996, sales to
Montgomery Ward & Co. Incorporated ("Montgomery Ward") accounted for
approximately 15.0% of HA-LO's net sales. HA-LO's exclusive agreement with
Montgomery Ward expires on December 31, 2004, subject to earlier termination (i)
at HA-LO's election in the event that Montgomery Ward fails to purchase
specified minimum amounts of HA-LO products annually under the agreement and
(ii) at Montgomery Ward's election on December 31 of any year, commencing in
1998, upon no less than six-months' notice. In connection with the agreement, a
fund in which Montgomery Ward is the principal investor, acquired shares of
HA-LO Common Stock and warrants to purchase additional shares of HA-LO Common
Stock. Certain of the warrants are subject to forfeiture upon early termination
of the agreement. Subsequently, the fund distributed its shares of HA-LO Common
Stock and warrants to its partners (including Montgomery Ward) PRO RATA in
accordance with their respective partnership interests. The agreement provides
for limitations on HA-LO's gross margins relating to sales thereunder, resulting
in lower gross margins on this business than on HA-LO's other business. This is
offset, however, by lower selling expenses incurred on the sales to Montgomery
Ward. Although HA-LO believes that it has established an excellent relationship
with Montgomery Ward, the loss of all or a significant portion of this account
would have a material adverse effect on HA-LO's business and results of
operations.

CONCENTRATION OF SALES AND EARNINGS IN FOURTH QUARTER; QUARTERLY
FLUCTUATIONS IN SALES AND EARNINGS. Some customers tend to utilize a greater
portion of their advertising and promotion

5
<PAGE>
budgets in the latter part of the calendar year, which has historically resulted
in and may continue to result in a disproportionately large share of HA-LO's net
sales and net income being recognized in the fourth quarter. In addition, the
timing of, and method of accounting used in connection with, an acquisition may
cause substantial fluctuations in operating results from quarter to quarter.

EMPLOYMENT TAX AUDIT. The Internal Revenue Service (the "IRS") has
commenced and is currently engaged in a field audit examination of HA-LO's
federal employment tax returns for the years ended December 31, 1993, 1994 and
1995 which includes a review of the facts, circumstances and legal authority
supporting HA-LO's position that its independent sales representatives have
properly been treated as independent contractors for federal employment tax
purposes. The audit is continuing, and no adjustments to HA-LO's federal
withholding, federal unemployment or social security tax liabilities have been
proposed to date, although management believes that the IRS will propose such
adjustments in the near future. Although management believes that HA-LO's
characterization of its independent sales representatives as independent
contractors rather than employees is proper, the IRS could assert otherwise and
seek to require HA-LO to reclassify its independent sales representatives as
employees and/or pay substantial additional employment taxes and penalties,
which amount could be material. If the IRS proposes such a reclassification or
adjustment, HA-LO would have several options available to it, including an
appeal of any such determination within the IRS and to the Federal District
Court, if necessary. This process could take several years to resolve as the
ultimate determination will be based upon a factual analysis of the relationship
between HA-LO and its independent sales representatives. If the IRS were to
prevail and require HA-LO to treat all or any portion of its independent sales
representatives as employees, such change in status could adversely effect
HA-LO's business.

DEPENDENCE UPON INDEPENDENT SALES REPRESENTATIVES. The success of HA-LO is
largely attributable to its ability to attract and retain experienced sales
representatives. HA-LO's sales force currently consists of approximately 600
sales representatives, most of whom are independent representatives. During the
six months ended June 30, 1996, no single sales representative was responsible
for more than 0.3% of HA-LO's sales. HA-LO's independent sales representatives
generally have the right to represent other companies, including competitors of
HA-LO. HA-LO believes that the decision of a sales representative to terminate
his or her relationship with HA-LO could result in HA-LO losing that
representative's customers. Historically, HA-LO has not had significant turnover
among its sales representatives; however, there can be no assurance that HA-LO
will not experience higher turnover among its sales representatives in the
future.

COMPETITION. The advertising specialty industry is highly fragmented and
competitive, and the cost of entry is low. Although HA-LO believes its
value-added services provide it with a competitive advantage, these capabilities
may result in higher administrative costs than those incurred by certain of its
smaller competitors. Existing or new competitors may have substantially greater
financial and other resources than HA-LO. HA-LO also competes for advertising
dollars with other sources, such as television, radio, newspapers, magazines and
billboards. There can be no assurance that HA-LO will be able to continue to
compete successfully against current and future competitors or that competitive
pressures faced by HA-LO will not materially adversely affect its business,
operating results and financial condition in the future.

CONTROL BY MANAGEMENT. After giving effect to the issuance of HA-LO Common
Stock in connection with the consummation of the Merger Transactions, HA-LO's
executive officers and directors (including Seymour N. Okner and his
affiliates), and investors currently represented on its Board of Directors,
will, in the aggregate, beneficially own approximately 37.1% of the outstanding
HA-LO Common Stock. Although no voting agreements or similar arrangements among
such shareholders currently exist or are contemplated, if such shareholders were
to act in concert in the future, they likely would be able to elect all of
HA-LO's directors, determine the outcome of most corporate actions requiring
shareholder approval and otherwise control the business affairs of HA-LO.
Similarly, such persons, acting together, would be in a position to prevent a
take-over of HA-LO by one or more third parties.

6
<PAGE>
CERTAIN ANTI-TAKEOVER PROVISIONS; PREFERRED STOCK. Certain provisions of
HA-LO's Restated Articles of Incorporation, as amended, and HA-LO's Amended and
Restated By-laws, as well as provisions of the IBCA, could have an anti-takeover
effect. HA-LO's Board of Directors has the authority to issue up to 10,000,000
shares of Preferred Stock and to determine the price, voting, liquidation,
dividend and other rights, preferences and privileges of such shares without any
further vote or action by HA-LO's shareholders. The rights of the holders of
HA-LO Common Stock will be subject to, and may be adversely affected by, the
rights of the holders of any Preferred Stock that may be issued in the future.
The issuance of Preferred Stock, while providing flexibility in connection with
possible acquisitions and other corporate transactions, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of HA-LO or to otherwise effect a change of control.
HA-LO has no present plan to issue shares of Preferred Stock. Additionally, the
IBCA places restrictions on business combinations with persons deemed
"interested shareholders." These provisions could have the effect of deterring
hostile takeovers or delaying or preventing changes in control or management of
HA-LO.

DIVIDENDS. HA-LO has not paid any dividends on the HA-LO Common Stock since
its initial public offering in November 1992 and does not anticipate paying any
such dividends in the foreseeable future. However, an entity acquired by HA-LO
in December 1995 in a transaction accounted for as a pooling of interests paid
cash dividends of $555,000, $610,000 and $299,000 in 1995, 1994 and 1993,
respectively.

SHARES ELIGIBLE FOR FUTURE SALE. As of July 31, 1996, 10,509,055 shares of
HA-LO Common Stock were outstanding, and 2,485,067 shares of HA-LO Common Stock
were reserved for issuance in connection with the exercise of outstanding
options, warrants and conversion rights. In addition to the 2,550,000 shares of
HA-LO Common Stock proposed to be issued in the Merger Transactions, HA-LO may
issue shares of HA-LO Common Stock and preferred stock in the future in
connection with acquisitions, corporate combinations, financing activities or
employee compensation plans. Sales of substantial amounts of HA-LO Common Stock
in the open market or the availability of such shares for sale could have an
adverse short-term effect on the market price for HA-LO Common Stock. See "The
Merger Transactions -- Resale Restrictions."

THE SPECIAL MEETING

MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING

At the Special Meeting, holders of HA-LO Common Stock will consider and vote
upon a proposal to approve and adopt the Plan of Merger and Amalgamation and the
transactions contemplated thereby. Approval and adoption of the Plan of Merger
and Amalgamation shall also constitute approval of the issuance of shares of
HA-LO Common Stock in connection with the Merger Transactions. HA-LO
shareholders will also consider and vote upon such other matters as may properly
be brought before the Special Meeting or any adjournment(s) or postponement(s)
thereof.

THE HA-LO BOARD OF DIRECTORS HAS APPROVED THE PLAN OF MERGER AND
AMALGAMATION AND RECOMMENDS THAT HA-LO STOCKHOLDERS VOTE FOR THE APPROVAL AND
ADOPTION OF THE PLAN OF MERGER AND AMALGAMATION (WHICH APPROVAL AND ADOPTION
SHALL CONSTITUTE, AMONG OTHER THINGS, APPROVAL OF THE ISSUANCE OF SHARES OF
HA-LO COMMON STOCK IN CONNECTION WITH THE MERGER TRANSACTIONS.)

The HA-LO Special Meeting will be held at HA-LO's principal executive
offices located at 5980 West Touhy Avenue, Niles, Illinois 60714, on Wednesday,
September 25, 1996, at 10:00 A.M., local time.

VOTE REQUIRED

The affirmative vote of at least two-thirds of the outstanding shares of
HA-LO Common Stock will be necessary for approval and adoption of the Plan of
Merger and Amalgamation. Each share of HA-LO Common Stock is entitled to one
vote.

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On July 31, 1996, HA-LO's directors and executive officers may be deemed to
be beneficial owners of 2,500,027 shares of HA-LO Common Stock (excluding
475,743 shares which may be acquired upon exercise of options and other rights
which are exercisable within 60 days of July 31, 1996), or approximately 23.79%
of the then outstanding shares of HA-LO Common Stock. The directors and
executive officers of HA-LO have indicated that they intend to vote their shares
FOR the approval and adoption of the Plan of Merger and Amalgamation.

VOTING OF PROXIES

Shares of HA-LO Common Stock represented by properly executed proxies
received at or prior to the Special Meeting, will be voted at the Special
Meeting in the manner specified by the holders of such shares. Properly executed
proxies which do not contain voting instructions will be voted FOR the approval
and adoption of the Plan of Merger and Amalgamation. Abstention from voting on
the Plan of Merger and Amalgamation will have the practical effect of voting
against such matters. Broker non-votes on the Plan of Merger and Amalgamation
will have the effect of a vote against the approval and adoption of the Plan of
Merger and Amalgmation

If any other matters are properly presented at the Special Meeting for
consideration, the person or persons named in the form of proxy enclosed
herewith and acting thereunder will have discretion to vote on such matters in
accordance with their best judgment, unless the proxy indicates otherwise. HA-LO
does not have any knowledge of any matters to be presented at the Special
Meeting other than those matters referred to and described herein.

REVOCABILITY OF PROXIES

The grant of a proxy on the HA-LO form of proxy does not preclude a
shareholder from voting in person or otherwise revoking a proxy. Attendance at
the Special Meeting will not in and of itself constitute revocation of a proxy.
A shareholder may revoke a proxy at any time prior to its exercise by delivering
to Lou Weisbach, Chairman of the Board, President and Chief Executive Officer of
HA-LO, 5980 West Touhy Avenue, Niles, Illinois 60714, a duly executed revocation
or a proxy bearing a later date or by voting in person at the Special Meeting.

RECORD DATE; SHARES ENTITLED TO VOTE

Only holders of record of HA-LO Common Stock at the close of business on
August 26, 1996 will be entitled to receive notice of and to vote at the Special
Meeting. As of July 31, 1996, HA-LO had outstanding approximately 10,509,055
shares of HA-LO Common Stock.

SOLICITATION OF PROXIES

HA-LO will bear the cost of the solicitation of proxies from its
shareholders. In addition to solicitation by mail, the directors, officers and
employees of HA-LO and its subsidiaries may solicit proxies from shareholders of
HA-LO by telephone or telegram or in person. Such persons will not be
additionally compensated, but will be reimbursed for reasonable out-of-pocket
expenses incurred in connection with such solicitation. Arrangements will also
be made with brokerage firms, nominees, fiduciaries and other custodians for the
forwarding of solicitation materials to the beneficial owners of shares held of
record by such persons, and HA-LO will reimburse such persons for their
reasonable out-of-pocket expenses in connection therewith.

DISSENTERS' RIGHTS

TARGET COMPANY SHAREHOLDERS. No statutory right of dissent or appraisal is
available to holders of Target Company Common Stock, under the IBCA or CBCA,
because all of such shareholders voted their shares in favor of the U.S. Merger,
the Canada Amalgamation and the Ancillary Asset Acquisition, as the case may be.

HA-LO SHAREHOLDERS. The rights of shareholders of HA-LO who dissent in
connection with the Merger Transactions are governed by specific legal
provisions contained in Sections 11.65 and 11.70 of

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the IBCA. The description of dissenter's rights contained in this Proxy
Statement/Prospectus is qualified in its entirety by reference to Sections 11.65
and 11.70 of the IBCA, a copy of which is attached to this Proxy
Statement/Prospectus as Appendix C.

If the Merger Transactions are consummated, shareholders of HA-LO who have
fully complied with all applicable provisions of the IBCA may have the right to
require HA-LO to purchase their shares of HA-LO Common Stock for cash at the
fair value of such shares, plus any accrued interest, as of the consummation of
the Merger Transactions. Persons who are beneficial owners of shares of HA-LO
Common Stock but whose shares are held by another person, such as a trustee,
broker or nominee should instruct the record holder to follow the procedures
outlined below if such persons wish to dissent with respect to any or all of
their shares. Under the IBCA, no shareholder who is entitled to exercise
dissenter's rights has any right at law or in equity to challenge the validity
of the Merger Transactions or to have the Merger Transactions set aside or
rescinded, except in an action to determine whether the Merger Transactions are
fraudulent with respect to the shareholder or the corporation or constitutes a
breach of a fiduciary duty owed to the shareholder.

Shares of HA-LO Common Stock must be purchased by HA-LO upon demand from a
dissenting shareholder if such shareholder has complied with all applicable
requirements of the IBCA. The procedures to be followed under the IBCA include
the following requirements:

(i) The shareholder of record must not vote all of his or its shares for
the approval and adoption of the Plan of Merger and Amalgamation. The
shareholder may vote part of its shares for the Merger Transaction without
losing the right to have HA-LO purchase those shares which were not voted in
favor of the approval and adoption of the Plan of Merger and Amalgamation;

(ii) A beneficial owner of shares who is not the record owner may assert
dissenter's rights as to shares held on such person's behalf only if the
beneficial owner submits to HA-LO the record owner's written consent to the
dissent before or at the same time the beneficial owner asserts dissenter's
rights; and

(iii) The notice of meeting to the shareholders of HA-LO relating to the
proposal to approve and adopt the Plan of Merger and Amalgamation must
inform the shareholders of their right to dissent and the procedure to
dissent. If, prior to the Special Meeting, HA-LO furnishes to its
shareholders material information with respect to the Merger Transactions
that will objectively enable its shareholders to vote thereon and to
determine whether or not to exercise dissenter's rights, a shareholder may
assert dissenter's rights only if the shareholder does not vote in favor of
the approval and adoption of the Plan of Merger and Amalgamation and the
shareholder delivers to HA-LO, before the vote is taken at the Special
Meeting, a written demand for purchase of his or its shares if the Merger
Transactions are consummated.

Within 10 days after the date on which the Merger Transactions become
effective or 30 days after the shareholder delivers to HA-LO the written demand
for payment, whichever is later, HA-LO shall send each shareholder who has
delivered a written demand for payment, the following items: (i) a statement
setting forth HA-LO's opinion as to the estimated fair value of the shares, (ii)
HA-LO's latest balance sheet as of the end of a fiscal year ending not earlier
than 16 months before the delivery of the statement, together with the statement
of income for that year and the latest available interim financial statements,
and (iii) either a commitment to pay for the shares of the dissenting
shareholder at the estimated fair value thereof upon transmittal to the
corporation of the certificate or certificates, or other evidence of ownership
with respect to the shares, or instructions to the dissenting shareholder to
sell his or its shares within 10 days after delivery of HA-LO's statement to the
shareholder. HA-LO may instruct the shareholder to sell only if there is a
public market for the shares at which the shares may be readily sold. If the
shareholder does not sell within that 10-day period after being so instructed by
HA-LO, for purposes of this provision of the IBCA, the shareholder shall be
deemed to have sold his or its shares at the average closing price of the
shares, if listed on a national exchange, or the average of the bid and asked
price with respect to the shares quoted by a principal market maker, if not
listed on a national exchange, during that 10-day period.

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A HA-LO shareholder who makes written demand for payment under the IBCA
retains all other rights of a shareholder until those rights are cancelled by
the Merger Transactions. Upon consummation of the Merger Transactions, HA-LO, if
it has not properly instructed the dissenting shareholder to sell his or its
shares, shall pay to each dissenter who transmits to HA-LO the certificate or
other evidence of ownership of the shares the amount HA-LO estimates to be the
fair value of the shares, plus accrued interest, accompanied by a written
explanation of how the interest was calculated. As used in the IBCA, "fair
value" means the value of the shares immediately before the consummation of the
Merger Transactions excluding any appreciation or depreciation in anticipation
of the corporate action, unless such exclusion would be inequitable. "Interest,"
as defined in the IBCA, means interest from the effective date of the Merger
Transactions until the date of payment, at the average rate currently paid by
HA-LO on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.

If the shareholder does not agree with the opinion of HA-LO as to the
estimated fair value of the shares or the amount of interest due, the
shareholder, within 30 days from the delivery of HA-LO's statement of fair
value, shall notify HA-LO in writing of the shareholder's estimated fair value
and amount of interest due and demand payment for the difference between the
shareholder's estimate of fair value and interest due and the amount of the
payment by the corporation or the proceeds of sale by the shareholder, whichever
is applicable.

If, within 60 days from delivery to HA-LO of the shareholder's notification
of estimate of fair value of the shares and interest due, HA-LO and the
dissenting shareholder have not agreed in writing upon the fair value of the
shares and interest due, HA-LO shall either pay the difference in value demanded
by the shareholder, with interest, or file a petition in the circuit court of
the county in which either the registered office or the principal office of
HA-LO is located, requesting the court to determine the fair value of the shares
and interest due. HA-LO shall make all dissenters, whether or not residents of
Illinois, whose demands remain unsettled, parties to the proceeding as an action
against their shares and all parties shall be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law. Failure of HA-LO to commence an action pursuant
to this provision of the IBCA shall not limit or affect the right of the
dissenting shareholders to otherwise commence an action as permitted by law.

The jurisdiction of the court in which the proceeding is commenced to
determine the fair value of the shares of HA-LO is plenary and exclusive. The
court may appoint one or more persons as appraisers to receive evidence and
recommend a decision of the question of fair value. The appraisers have the
power described in the order appointing them, or in any amendment to it. Each
dissenter made a party to the proceeding is entitled to judgment for the amount,
if any, by which the court finds that the fair value of his or her shares, plus
interest, exceeds the amount paid by HA-LO or the proceeds of sale by the
shareholder, whichever amount is applicable.

The court, in a proceeding commenced under the IBCA, shall determine all
costs of the proceeding, including the reasonable compensation and expenses of
the appraisers, if any, appointed by the court, but shall exclude the fees and
expenses of counsel and experts for the respective parties. If the fair value of
the shares of HA-LO Common Stock as determined by the court materially exceeds
the amount which HA-LO estimated to be the fair value of the shares, then all or
any part of the costs may be assessed against HA-LO. If the amount which any
dissenter estimated to be the fair market value of the shares materially exceeds
the fair value of the shares as determined by the court, then all or any part of
the costs may be assessed against that dissenter. The court may also assess the
fees and expenses of counsel and experts for the respective parties, in amounts
the court finds equitable (i) against HA-LO and in favor of any or all
dissenters if the court finds that HA-LO did not substantially comply with the
requirements of the IBCA, or (ii) against either HA-LO or a dissenter and in
favor of any other party if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by the IBCA.

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THE MERGER TRANSACTIONS

The detailed terms of, and conditions to, the Merger Transactions and
certain related transactions are contained in the Plan of Merger and
Amalgamation, a copy of which is attached hereto as Appendix A. The statements
made in this Proxy Statement/Prospectus with respect to the terms and conditions
of the Merger Transactions and the transactions related thereto are qualified in
their entirety by reference to the more complete information set forth in the
Plan of Merger and Amalgamation and the exhibits thereto.

GENERAL

The Plan of Merger and Amalgamation provides for a business combination
between HA-LO and the Target Companies in which (i) a wholly-owned subsidiary of
HA-LO will merge with and into Market USA; (ii) a wholly-owned subsidiary of
HA-LO will amalgamate with Marusa; and (iii) the New Canadian Service Entity
will purchase, subject to discharge or performance of related liabilities, all
of the assets of each of Marusa Financial and Nerok, and the holders of Market
USA Common Stock and Marusa Common Stock and each of Marusa Financial and Nerok
will be issued shares of HA-LO Common Stock. HA-LO has reserved the right to
consummate the Ancillary Asset Acquisition upon the terms described in the Plan
of Merger and Amalgamation or effect an alternate transaction acceptable to
HA-LO having a substantially similar purpose and total consideration which does
not exceed 100 shares of HA-LO Common Stock. As a result of the Merger
Transactions, HA-LO will issue an aggregate of 2,550,000 shares of HA-LO Common
Stock (approximately 19.5% of the outstanding HA-LO Common Stock after giving
effect to the Merger Transactions). The Merger Transactions are intended to
qualify as a pooling of interests for accounting purposes and as a tax-free
reorganization for United States federal income tax purposes.

BACKGROUND OF THE MERGER TRANSACTIONS

HA-LO has had an active acquisition program for several years. One of the
goals of that program has been the development of a nationally-cohesive strategy
for servicing the advertising specialty and premium product needs of an
expanding base of high-volume corporate customers operating from multiple
locations throughout the U.S. and Canada. HA-LO has focused on the growing needs
of its national clientele by establishing (internally and by acquisition)
offices in key locations from which to better serve its larger customers and
offer a more diverse mix of products and services than would be generally
available from one source. Examples of HA-LO's goal of providing a full range of
products and services to its corporate clientele include the establishment of a
full service ad agency, a sports marketing subsidiary, an event planning
division and the acquisition of over 10 unique advertising specialty companies
in key geographic regions.

In January 1995, HA-LO signed a multi-year agreement to be the exclusive
provider of premium products to Montgomery Ward, an agreement that was extended
to 10 years in December 1995. Through its relationship with Montgomery Ward,
HA-LO has become a supplier of premium products to The Signature Group
("Signature"), a subsidiary of Montgomery Ward, and one of the nation's largest
captive telemarketing operations. By virtue of its agreements with HA-LO,
Montgomery Ward was entitled to nominate an individual to serve as a member of
HA-LO's Board of Directors. In June 1995, Dominic M. Mangone, a partner of
Merchant Partners, L.P., a limited partnership in which Montgomery Ward is a
substantial partner ("Merchant Partners"), upon HA-LO's recommendation to its
shareholders, was elected to HA-LO's Board of Directors. Under its agreement
with HA-LO, Merchant Partners acquired the right to purchase up to 900,000
shares of HA-LO Common Stock through the exercise of warrants vesting at the
earlier of nine years or upon satisfaction of certain annual volume purchase
requirements through HA-LO.

In March 1996, Seymour N. Okner, the principal Target Shareholder,
approached Mr. Weisbach and Marshall J. Katz, a Director of HA-LO (and
compensated consultant to HA-LO on acquisition matters), regarding the terms of
a possible business combination between HA-LO and the Target Companies. In
preliminary discussions among HA-LO's Board of Directors, Mr. Mangone indicated
that Merchant Partners held options to purchase between 20%-25% of the equity
interest in each of

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Market USA and Marusa for a purchase price equal to $4 million. To avoid any
appearance of a conflict in this regard, Mr. Mangone resigned from the HA-LO
Board and did not participate in discussions regarding a possible acquisition of
the Target Companies.

Based upon both internal analyses and those presented by certain of HA-LO's
outside advisors, the Board of Directors authorized HA-LO's management to pursue
acquisition discussions with Mr. Okner and his advisors. During April 1996, a
Confidentiality Letter Agreement was executed among the parties, and thereafter,
representatives of HA-LO, Market USA and Marusa met to discuss and negotiate the
issues related to the possible business combination.

In early April 1996, HA-LO met with certain of its outside advisors in
anticipation of conducting a preliminary due diligence review of the Target
Companies' operations and discussing issues involving the possible terms and
structure of a transaction, evaluation and consideration of the proposed
transaction by HA-LO's Board of Directors and the timing of events in a possible
business combination. In May 1996, HA-LO's Board of Directors authorized the
retention of Blair to provide a fairness opinion in connection with the business
combination (with the understanding that Blair would not commence its activities
until after the execution of the Plan of Merger and Amalgamation) and consulted
with Arthur Andersen LLP, HA-LO's independent public accountants, regarding the
structure of the potential business combination and the applicability of
pooling-of-interests accounting. In addition, HA-LO's Board authorized the
retention of the law firm of Neal, Gerber & Eisenberg as counsel to HA-LO for
the transaction, since among the primary terms discussed was the issuance of
authorized shares of HA-LO Common Stock in exchange for the outstanding capital
stock of Market USA and Marusa.

On May 20, 1996, a special meeting of HA-LO's Board of Directors was
convened to review the proposed terms of a business combination with the Target
Companies. At such meeting, Mr. Weisbach reviewed the material terms and
conditions of the business combination, including the number of shares of HA-LO
Common Stock to be exchanged for full ownership of the Target Companies, the
terms under which the shareholders of the Target Companies would be eligible to
sell HA-LO shares in the open market, the liquidated damages amounts payable if
Market USA or Marusa breached their agreement to consummate the business
combination, the terms and conditions under which Mr. Okner and his son, Samuel
P. Okner, would be provided Employment Agreements with the Target Companies and
HA-LO, and other material issues.

HA-LO's Board of Directors then deliberated on the issues presented and the
terms proposed, and after considering various factors, determined the Merger
Transactions to be fair and in the best interests of HA-LO's shareholders and
approved the Merger Transactions, including the Employment Agreements of Messrs.
Okner. The Plan of Merger and Amalgamation was executed as of the evening of
June 14, 1996, and the Merger Transactions were publicly announced prior to the
opening of business on Monday, June 17, 1996.

REASONS FOR THE MERGER TRANSACTIONS; RECOMMENDATION OF BOARD OF DIRECTORS

The HA-LO Board of Directors believes that the terms of the Plan of Merger
and Amalgamation are fair to and in the best interests of HA-LO and its
shareholders. Accordingly, HA-LO's Board has approved the Plan of Merger and
Amalgamation and recommends approval thereof by the shareholders of HA-LO. In
reaching its determination, the HA-LO Board of Directors consulted with HA-LO
management, as well as its advisors, and considered a number of factors,
including, without limitation, the following:

(i) the Merger Transactions provide HA-LO with the opportunity to
provide integrated marketing services and solutions to its existing and
prospective customers;

(ii) the market capitalization of the combined company will be larger
than HA-LO's current market capitalization, providing HA-LO shareholders
with enhanced liquidity;

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(iii) the business, operations, prospects and strategic alliances of
each of HA-LO and the Target Companies;

(iv) the Merger Transactions will better position HA-LO to further
capitalize on the trend toward the outsourcing of telemarketing services
present in many industries;

(v) the increased ability of HA-LO to enhance and/or expand the scope of
the corporate fulfillment sales programs by offering telemarketing services
to corporate fulfillment customers as part of such programs;

(vi) the terms of the Plan of Merger and Amalgamation;

(vii) the opinion of Arthur Andersen LLP that the Merger Transactions
will be accounted for under the pooling of interests method of accounting;
and

(vii) the conditions to the Plan of Merger and Amalgamation that the
U.S. Merger will be a tax-free reorganization for federal income tax
purposes.

In view of the wide variety of factors considered in connection with its
evaluation of the Merger Transactions, the HA-LO Board of Directors did not find
it practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the specific factors considered in reaching its determination.

THE BOARD OF DIRECTORS OF HA-LO RECOMMENDS THAT HA-LO SHAREHOLDERS VOTE FOR
THE APPROVAL AND ADOPTION OF THE PLAN OF MERGER AND AMALGAMATION.

OPINION OF FINANCIAL ADVISOR TO HA-LO

HA-LO engaged Blair to render an opinion regarding the fairness, from a
financial point of view, to HA-LO, of the consideration to be paid by HA-LO in
the Merger Transactions. Blair delivered its written opinion, dated August 23,
1996, to the HA-LO Board of Directors which provides that, based upon and
subject to the factors and assumptions set forth in such opinion, the
consideration to be paid by HA-LO in the Merger Transactions is fair to HA-LO
from a financial point of view. The amount of such consideration was determined
pursuant to negotiations between HA-LO and the Target Companies and not pursuant
to recommendations of Blair. No limitations were imposed by HA-LO with respect
to the investigations made or the procedures followed by Blair in rendering its
opinion. A copy of the full text of the written opinion of Blair, dated August
23, 1996, which sets forth the assumptions made, procedures followed, matters
considered and limits of its review is attached to this Proxy
Statement/Prospectus as Appendix B, and should be read carefully in its
entirety. The summary of Blair's opinion set forth in this Proxy
Statement/Prospectus is qualified in its entirety by reference to this opinion.

In arriving at its fairness opinion, Blair reviewed the financial terms and
conditions of the Plan of Merger and Amalgamation, including but not limited to,
the number and fair market value of shares of HA-LO Common Stock to be issued in
connection with the Merger Transactions. Blair also reviewed certain other
information, including market information regarding HA-LO, audited and unaudited
financial statements of the Target Companies, internal financial analyses and
forecasts of the Target Companies prepared by the management of the Target
Companies and HA-LO, audited and unaudited financial statements of HA-LO and
forecasts of HA-LO prepared by the management of HA-LO. Blair also had
discussions with the members of the senior management of the Target Companies
and HA-LO to discuss the Merger Transactions and has considered other matters
which Blair deemed relevant to its inquiry. This opinion is necessarily based on
economic, market and other conditions in effect on, and the information made
available to Blair as of, the date of the analyses.

In connection with its review, Blair assumed and relied upon the accuracy
and completeness of the foregoing information and did not assume any
responsibility for independent verification of such information. With respect to
financial forecasts, Blair assumed that the forecasts had been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the management

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of HA-LO and the Target Companies, as the case may be, as to their respective
future financial performance and that they provided a reasonable basis upon
which Blair could form an opinion. Blair also assumed that there had been no
material changes to either HA-LO or the Target Companies since the respective
dates of their latest financial statements made available to Blair and that no
material adverse change will subsequently occur to HA-LO or the Target
Companies. In addition, Blair also assumed that the Merger Transactions would be
consummated in accordance with the terms set forth in the Plan of Merger and
Amalgamation and that the Merger Transactions will be accounted for as a pooling
of interests for accounting purposes. Blair did not assume responsibility for
making an independent evaluation, appraisal or physical inspection of the assets
or properties of HA-LO or the Target Companies, nor was Blair furnished with any
such appraisals.

SUMMARY OF VALUATION ANALYSES. In connection with its opinion, Blair
performed three valuation analyses: (i) a comparison of the Target Companies
with certain publicly traded comparable companies; (ii) an analysis of prices
and terms of certain recent comparable acquisitions, and (iii) a discounted cash
flow analysis of the Target Companies. The basis for valuation assumed HA-LO's
stock price to be $24.00 per share, which was the closing bid on August 16,
1996. In addition, Blair analyzed the estimated effects of the Merger
Transactions on HA-LO's projected future financial performance.

COMPARABLE COMPANIES. Blair analyzed the relative performance and outlook
for the Target Companies by comparing certain financial and market information
for the Target Companies with the corresponding publicly available data and
statistics of four publicly traded companies -- APAC Corporation, ATC
Communications, ICT Group and Sitel Corp. While no company in the comparable
group is identical to the Target Companies, they were chosen principally because
they all generate the majority of their revenue from the provision of
telemarketing services. Among the information considered were revenue, operating
income, earnings before interest, taxes, depreciation and amortization
("EBITDA"), net income and growth in revenues and net income. It was noted that
multiples of total enterprise value (defined as the market value of common
equity, plus total debt less cash and equivalents) to net revenues, operating
income and EBITDA for the latest 12 months implied that the consideration paid
by HA-LO compared favorably, from HA-LO's perspective, to the median of
corresponding multiples of comparable companies. Further, multiples of equity
value to net income of the Target Companies implied by the consideration paid by
HA-LO, both for the latest 12 months and estimated for calendar 1996 and
calendar 1997, revealed favorable comparisons. Blair's report indicated that the
price paid for the Target Companies implied the following multiples: total
enterprise value of 1.3 times the latest 12 months' revenue (compared to a
median multiple of 3.7 and a range of 2.5 to 14.0); total enterprise value of
14.5 times the latest 12 months' operating income (compared to a median multiple
of 50.8 and a range of 32.9 to 101.7); total enterprise value of 11.9 times the
latest 12 months' EBITDA (compared to a median multiple of 28.8 and a range of
22.9 to 78.6); equity value of 24.5 times the latest 12 months' net income
(compared to a median multiple of 106.3 and a range of 69.9 to 172.3); equity
value of 19.3 times estimated net income for calendar 1996 (compared to a median
multiple of 63.4 and a range of 52.6 to 68.0); and equity value of 15.9 times
estimated net income for calendar 1997 (compared to a median multiple of 40.6
and a range of 28.2 to 47.2). It was also noted that, in making these
comparisons with the comparable group of publicly traded companies, no premium
for control was applied to the prevailing market values of comparable companies.
Application of such a control premium to the equity values of the comparable
companies would cause a more favorable comparison, from HA-LO's perspective,
with the multiples for the Target Companies implied by the Merger Transactions.

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DISCOUNTED CASH FLOW. Using a discounted cash flow ("DCF") analysis, Blair
estimated the net present value of the unleveraged free cash flows that the
Target Companies could produce on a stand-alone basis over a five-year period
from January 1, 1996 through December 31, 2000 if the Target Companies performed
in accordance with the forecasts of the Target Companies for 1996 and 1997 and
with certain assumptions made by Blair and the management of the Target
Companies for subsequent periods. In calculating the "terminal value," Blair
assumed multiples of total enterprise value to earnings before interest and
taxes ("EBIT") ranging from 7.0 to 9.0 times, which multiples Blair believed to
be appropriate for such an analysis. The annual and terminal free cash flows
were discounted to determine a net present value of the unleveraged equity value
of the Target Companies. Discount rates in a range of 12.0% to 16.0% were chosen
based on an analysis of the weighted average cost of capital of a comparable
group of companies. The DCF analysis indicated a valuation of the equity of the
Target Companies in a range of $65.6 million to $90.8 million. Based upon a
$24.00 HA-LO stock price, Blair believes that the value of the equity of the
Target Companies compares favorably, from HA-LO's perspective, to the values
indicated by the discounted cash flow analysis.

COMPARABLE ACQUISITIONS. Blair examined 26 selected acquisitions involving
certain companies involved in business services and advertising services. There
was no public company data available related to acquisitions of telemarketing
services companies. These transactions occurred during the period from January
1, 1995 through June 21, 1996. It was noted that the multiples of the latest 12
months' revenue implied by the consideration to be paid by HA-LO compared
favorably to the median of the corresponding multiples of the comparable
acquisitions. It was also noted that the multiples of the latest 12 months
operating income, EBITDA and net income and the multiples of estimated net
income for 1996 and 1997 implied by the consideration to be paid by HA-LO were
higher than the respective median multiples of the comparable acquisitions. Such
analysis indicated that the price paid for the Target Companies implied the
following multiples: total enterprise value of 1.3 times the latest 12 months'
revenue (compared to a median multiple implied by comparable transactions of
1.6); total enterprise value of 14.5 times the latest 12 months' operating
income (compared to a median multiple implied by comparable transactions of
13.9); total enterprise value of 11.9 times the latest 12 months' EBITDA
(compared to a median multiple implied by comparable transactions of 9.1); and
equity value of 24.5 times the latest 12 months' pro forma net income (compared
to a median multiple implied by comparable transactions of 18.4).

OTHER ANALYSES. In the course of its assignment, Blair also reviewed
HA-LO's historical stock price performance. This analysis involved the
examination of the historical prices and trading volumes of HA-LO Common Stock
and was used primarily to confirm the reasonableness of using the August 16,
1996 market price of the shares in calculating the indicated value of the total
consideration to be paid for the Target Companies.

The companies and transactions used in the foregoing analyses as a
comparison are not necessarily substantially comparable to HA-LO or the Target
Companies or the Merger. Accordingly, an analysis of the foregoing involves
complex considerations and judgments concerning differences in financial and
operating characteristics of the companies and other factors that could affect
the public trading value of companies to which the Target Companies and the
Merger are being compared.

PRO FORMA MERGER AND CONTRIBUTION ANALYSIS. In addition to performing the
valuation methodologies described above, Blair reviewed and analyzed the
estimated effects of the Merger Transactions on HA-LO's projected earnings per
share and the capitalization of the combined companies. Based on such analyses,
Blair observed that, based on the terms of the Merger Transactions and assuming
that the Merger Transactions were treated as a pooling of interests for
accounting purposes, the Merger would result in an increase in HA-LO's earnings
per share in fiscal years 1996 and 1997. Blair analyzed the relative
contributions of HA-LO and the Target Companies to the proposed combined entity,
based on net sales, operating income and net income. Based on the terms of the
Merger Transactions and various assumptions, the Target Companies' shareholders
would own approximately 19.5% of the outstanding HA-LO Common Stock immediately
following the Merger Transactions and would contribute in excess of 20% of the
combined companies' net income in fiscal 1996

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without giving effect to any transaction costs. The actual results achieved by
HA-LO, the Target Companies and the combined companies may vary from projected
results and any such variations may be material.

While the foregoing summary describes all analyses and examinations that
Blair deems material to its opinion, it is not a comprehensive description of
all analysis and examinations actually conducted by Blair. The preparation of a
fairness opinion necessarily is not susceptible to partial analysis or summary
description. Blair believes that such analysis and the summary set forth above
must be considered as a whole and that selecting portions of such analysis and
of the factors considered without considering all such analyses and factors
would create an incomplete view of the process underlying the analyses set forth
in its report to the HA-LO Board of Directors. In addition, Blair may have given
various analysis more or less weight than other analyses, and may have deemed
various assumptions more or less probable than other assumptions, so that the
ranges of valuations resulting from any particular analysis described above
should not be taken to be Blair's view of the actual value of the Target
Companies.

In performing its analyses, Blair made numerous assumptions with respect to
industry performance and general business and economic conditions, such as
industry growth, inflation and interest rates, many of which are beyond the
control of HA-LO and the Target Companies. The analyses performed by Blair are
not necessarily indicative of actual values or actual future results, which may
be significantly more or less favorable than those suggested by such analyses.
Such analyses were prepared solely as part of Blair's analysis of the fairness
to HA-LO of the consideration to be paid in the Merger Transactions, from a
financial point of view, and were provided to HA-LO in connection with the
delivery of Blair's opinion. The analyses do not purport to be appraisals or to
reflect the prices at which a company might actually be sold or the prices at
which any securities may trade at any time in the future. Blair used in its
analyses various projections of future performance prepared by the managements
of HA-LO and the Target Companies. The projections are based on numerous
variables and assumptions which are inherently unpredictable and must be
considered not certain of occurrence as projected. Accordingly, actual results
could vary significantly from those set forth in such projections.

Blair is a nationally recognized investment banking firm regularly engaged
in the valuation of investment securities in connection with public offerings,
private placements, business combinations, estate and tax valuations and similar
transactions. Blair was selected by HA-LO as its financial advisor because of
its extensive prior experience, reputation and expertise in corporate finance
and in providing such opinions in prior transactions with other companies.

In connection with Blair's engagement as financial advisor, if the Merger
Transactions are consummated, HA-LO will pay Blair a fee of $75,000 and will
reimburse Blair for all reasonable out-of-pocket expenses incurred in connection
with the services provided by Blair, and will indemnify and hold harmless Blair
and certain related parties to the full extent lawful from and against certain
liabilities, including certain liabilities under the federal securities laws, in
connection with its engagement. From time to time, Blair provides other services
to HA-LO for which it is compensated.

ACCOUNTING TREATMENT

HA-LO and the Target Companies believe that the Merger Transactions will
qualify as a pooling of interests for accounting and financial reporting
purposes, and have been so advised by Arthur Andersen LLP, HA-LO's independent
public accountant. Under this method of accounting, the assets and liabilities
of HA-LO and the Target Companies will be combined based on the respective
carrying values of the accounts in the historical financial statements of each
entity. Results of operations of the combined company will include income of
HA-LO and the Target Companies for the entire fiscal period in which the
combination occurs and the historical results of operations of the separate
companies for fiscal years prior to the Merger Transactions will be combined and
reported as the results of operations of the combined company. Certain events,
including certain transactions with respect to Market USA Common Stock or Marusa
Common Stock or HA-LO Common Stock by

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affiliates of the Target Companies or HA-LO, respectively, may occur that could
prevent the Merger Transactions from qualifying as a pooling of interests for
accounting and financial reporting purposes. See "-- Resale Restrictions."

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

GENERAL. The respective obligations of HA-LO and the Target Companies to
consummate the U.S. Merger are conditioned on the receipt of opinions of their
respective counsel, Marc S. Roth Associates, Ltd. and Altheimer & Gray, to the
effect that the U.S. Merger will be treated substantially in the manner
described herein. See "The Plan of Merger and Amalgamation -- Conditions."

The following discussion is intended only as a summary of selected income
tax consequences of the Merger Transactions under current law and does not
purport to be a complete analysis or description of all potential tax effects of
the Merger Transactions. The summary does not address all of the tax
consequences that may be important to shareholders of the Target Companies
subject to special tax treatment, such as insurance companies, corporations
subject to the alternative minimum tax, banks, dealers in securities, tax-exempt
organizations or foreign persons, or to shareholders who acquired their shares
of Target Company Common Stock as compensation. With the exception of certain
tax laws of Canada described herein, no information is provided herein with
respect to the tax consequences, if any, of the Merger Transactions under
applicable foreign, state, local and other tax laws. The summary is based on the
current provisions of the Code and other applicable law, final and proposed
Treasury regulations thereunder and current administrative rulings and court
decisions. All of the foregoing are subject to change and any such change could
effect the accuracy of this discussion. Shareholders of the Target Companies are
urged to consult their own tax advisors as to the specific tax consequences to
them of the Merger Transactions.

THE U.S. MERGER. If the U.S. Merger is treated as a tax-free reorganization
under Section 368(a) of the Code, no gain or loss will be recognized to the
shareholders of Market USA upon receipt of HA-LO Common Stock in exchange for
Market USA Common Stock. Shareholders of Market USA will have a tax basis for
the shares of HA-LO Common Stock received in the U.S. Merger equal to the tax
basis for the shares of Market USA Common Stock surrendered in exchange
therefor. If the shares of Market USA Common Stock are held as capital assets,
the holding period of the shares of HA-LO Common Stock received will include the
period during which such shares of Market USA Common Stock were held.

THE CANADA AMALGAMATION. If the Canada Amalgamation is treated as a
tax-free reorganization under Section 368(a) of the Code, the United States
shareholders (within the meaning of Treasury regulations issued under Section
367 of the Code) of Marusa must include in gross income, as a toll charge, an
amount which will be treated as a dividend. Such amount, referred to as the
"Section 1248 amount," is generally equal to the company's post-1962 earnings
and profits attributable to the Marusa Common Stock exchanged, to the extent
that the fair market value of such Marusa Common Stock exceeds its adjusted
basis. The United States shareholders of Marusa will receive no increase in
basis for the HA-LO Common Stock received, notwithstanding that income is
recognized. In addition, notice of the transaction must be filed with the
Internal Revenue Service in order for the transaction to qualify as tax-free (to
the extent possible).

THE ANCILLARY ASSET ACQUISITION. Generally, the transfer of substantially
all of the assets of a company in exchange for stock of an acquiring company
constitutes a taxable transaction. As such, each of Marusa Financial and Nerok
will recognize gain or loss equal to the difference between the value of the
shares of HA-LO Common Stock received and the basis of the assets surrendered.
However, if Marusa Financial or Nerok is liquidated in connection with the
Ancillary Asset Acquisition, the Ancillary Asset Acquisition will be eligible to
qualify as a tax-free reorganization under Section 368(a) of the Code, subject
to the toll charge and notice provisions described in the immediately preceding
paragraph. Any transaction which may be consummated in lieu of the Ancillary
Asset Acquisition may have different United States federal income tax
consequences to the parties thereto.

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TAX CONSEQUENCES TO HA-LO. If any of the Merger Transactions is treated as
a tax-free reorganization under Section 368(a) of the Code, such Merger
Transaction will result in no gain or loss to HA-LO in connection with the
issuance of HA-LO Common Stock in exchange for Target Company Common Stock or
Target Company assets, as applicable. If any of the Merger Transactions is not
treated as tax-free reorganizations under Section 368(a) of the Code, then it is
possible, but not certain, that HA-LO may recognize gain in an amount equal to
the value of the shares of HA-LO Common Stock issued in connection with any such
taxable Merger Transaction.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The following general summary describes the principal Canadian federal
income tax consequences of the Canada Amalgamation and the Ancillary Asset
Acquisition to Target Shareholders, HA-LO Sub-2, Marusa, Nerok, Marusa Financial
and HA-LO. The summary is based upon the current provisions of the ITA and the
regulations thereunder, in force on the date hereof, an understanding of the
current administrative and assessing policies of Revenue Canada, Customs, Excise
and Taxation ("Revenue Canada") and all specific proposals to amend the ITA and
the regulations announced by the Minister of Finance (Canada) prior to the date
hereof. This summary is not exhaustive of all possible Canadian federal income
tax consequences and, except as noted, does not take into account or anticipate
any changes in law, whether by legislative, governmental or judicial action or
any changes in the administrative practices of Revenue Canada, nor does it take
into account provincial tax considerations which may differ from those discussed
herein. This summary is of a general nature only and it is not intended to be,
nor should it be construed to be, legal or tax advice to any Target Shareholder
and no representation with respect to the income tax consequences to any such
shareholder is made. Accordingly, the Target Shareholders are urged to consult
their own tax advisors for advice with respect to the Canadian federal income
tax consequences to them of the Canada Amalgamation and the Ancillary Asset
Acquisition.

THE CANADA AMALGAMATION. The Canada Amalgamation will not qualify as an
amalgamation pursuant to section 87 of the ITA. As a result, the shareholders of
Marusa will be considered to have disposed of their shares of Marusa Common
Stock for proceeds of disposition equal to the fair market value of the shares
of HA-LO Common Stock received in exchange therefor. However, because the shares
of Marusa Common Stock do not derive their value principally from real property
situated in Canada, any gain realized from such disposition by a shareholder of
Marusa who is a resident of the United States for purposes of the Treaty will be
exempt from Canadian federal income tax by virtue of the Treaty. Although the
Canada Amalgamation does not comply with the provisions of section 87 of the
ITA, Revenue Canada has stated in a number of technical interpretations that
corporations amalgamating pursuant to such non-qualifying amalgamations will not
be considered to have disposed of their assets if the corporate law governing
the amalgamation provides that the amalgamating corporations continue as one
corporation following the amalgamation. The Canada Amalgamation will be governed
by the provisions of the CBCA which provides that the amalgamating corporations
continue as one corporation. As a result, the Canada Amalgamation should not
result in any disposition of assets by Marusa or HA-LO Sub-2 and, accordingly,
no Canadian federal income tax will be payable by Marusa or HA-LO Sub-2 as a
result of the Canada Amalgamation.

THE ANCILLARY ASSET ACQUISITION. The transfer of assets by Marusa Financial
and Nerok to the New Canadian Service Entity in exchange for shares of HA-LO
Common Stock will be considered to be a disposition of such assets for
consideration equal to the fair market value of the shares of HA-LO Common Stock
received in exchange therefor. Any income or gains realized as a result of such
disposition will be subject to Canadian federal income tax. Any transaction
which may be consummated in lieu of the Ancillary Asset Acquisition may have
different Canadian federal income tax consequences to the parties thereto.

TAX CONSEQUENCES TO HA-LO. The conversion of the shares of HA-LO Sub-2 into
shares of the amalgamated corporation of the Canada Amalgamation will be
regarded as a disposition of such shares by HA-LO for Canadian federal income
tax purposes. Since the value of the shares of HA-LO

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Sub-2 is not derived principally from real property situated in Canada, any gain
realized by HA-LO in respect of the conversion of the shares of HA-LO Sub-2 on
the Canada Amalgamation will be exempt from Canadian federal income tax pursuant
to the provisions of the Treaty.

REGULATORY APPROVAL

HSR ACT. Under the HSR Act, and the rules promulgated thereunder by the
FTC, the Merger Transactions cannot be consummated until notifications have been
given and certain information has been furnished to the FTC and the Antitrust
Division of the Department of Justice (the "Antitrust Division") and specified
waiting period requirements have been satisfied. HA-LO and the Target Companies
each filed notification and report forms under the HSR Act with the FTC and the
Antitrust Division on August 5, 1996. On August 16, 1996, the FTC informed HA-LO
that HA-LO's request for early termination of the applicable waiting period had
been granted.

CANADIAN COMPETITION ACT. The Merger Transactions are not subject to the
pre-notification provisions of the Competition Act. These provisions stipulate
that where specified size of parties and size of transaction thresholds are
exceeded, merger transactions may not be substantially completed until an
advance ruling certificate has been issued by the Director of Investigation and
Research (the "Director"), or specified information has been furnished to the
Director and waiting periods stipulated in the Competition Act have expired
without an order having been issued by the Canadian Competition Tribunal (the
"Tribunal") in respect of the merger transactions. The parties to the Merger
Transactions, together with their affiliates, do not have sufficient assets in
Canada or gross revenues from sales in, from or into Canada to trigger the
pre-notification provisions of the Competition Act. Even though the Merger
Transactions do not require pre-notification under the Competition Act, the
Tribunal may, among other things, on the application of the Director, issue an
order dissolving the mergers resulting from the Merger Transactions or
prohibiting the Merger Transactions from proceeding if such transactions prevent
or lessen competition substantially, or are likely to do so.

INVESTMENT CANADA ACT. Certain of the Merger Transactions are subject to
the Investment Canada Act. That statute requires either notification or, in
certain instances, review and approval by the Minister of Industry, Government
of Canada of a transaction where a non-Canadian proposes to acquire control of a
Canadian business. None of the Merger Transactions are subject to review and
approval under the Investment Canada Act because the asset value of the Canadian
businesses that are to be acquired pursuant to such transactions is below the
threshold for review and approval. However, notification to the Investment
Review Division of the Department of Industry, Government of Canada must be
provided in respect of the Canada Amalgamation and the Ancillary Asset
Acquisition, either prior to the completion of such transactions or within
thirty days thereafter.

CANADIAN INCOME TAX ACT. A non-resident of Canada who disposes of "taxable
Canadian property" is required to obtain a certificate pursuant to section 116
of the ITA in respect of the disposition. The shares of Marusa are taxable
Canadian property for these purposes. Accordingly, the obligations of HA-LO to
consummate the Merger Transactions are subject to the condition that the Target
Shareholders shall deliver to HA-LO a certificate issued under section 116 of
the ITA.

INTERESTS OF CERTAIN PERSONS IN THE MERGER TRANSACTIONS

At the Effective Time, HA-LO will take such action as is necessary to elect
one Target Shareholder to the Board of Directors of HA-LO. It is currently
anticipated that Seymour N. Okner, the principal Target Shareholder, will be
nominated and appointed to the Board of Directors. HA-LO's obligation to
recommend to its shareholders the election of a Target Shareholder to HA-LO's
Board of Directors will terminate upon the earlier to occur of (i) June 14,
2001; (ii) the last to occur of the death of Seymour N. Okner or Samuel P.
Okner, a principal Target Shareholder and the son of Seymour N. Okner; or (iii)
the date upon which the Target Shareholders have sold or disposed of more than
50% of the shares of HA-LO Common Stock received by them in the Merger
Transactions.

In addition, at the Effective Time, HA-LO will enter into an Employment
Agreement with each of Seymour N. Okner, Samuel P. Okner and certain other
employees of the Target Companies. Pursuant

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to Seymour N. Okner's Employment Agreement, Mr. Okner will become the Chairman
and Chief Executive Officer of each of Market USA and the corporation resulting
from the Canada Amalgamation. The Employment Agreement (i) specifies, among
other things, Mr. Okner's annual salary (not less than $150,000), benefits,
rights to performance based bonuses and other compensation and rights to
participate in HA-LO's Stock Option Plan and (ii) contains customary provisions
governing competition with HA-LO during the term of the Employment Agreement and
for 12 months thereafter, solicitation of HA-LO's employees, ownership of
inventions, confidentiality, non-disparagement and certain other matters. Mr.
Okner's Employment Agreement will terminate upon the earlier to occur of (i) the
last day of the month during which the third anniversary of the Effective Time
occurs; (ii) the mutual agreement of HA-LO and Mr. Okner; (iii) the death or
disability of Mr. Okner; (iv) HA-LO's election to terminate Mr. Okner's
Employment Agreement for Cause (as defined therein); and (v) Mr. Okner's
election to terminate his Employment Agreement for Good Reason (as defined
therein). A form of Mr. Okner's Employment Agreement is attached as an exhibit
to the Plan of Merger and Amalgamation which is attached hereto as Appendix A.

Pursuant to Samuel P. Okner's Employment Agreement, Mr. Okner will become
the President and Chief Operating Officer of each of Market USA and the
corporation resulting from the Canada Amalgamation. The Employment Agreement (i)
specifies, among other things, Mr. Okner's annual salary (not less than
$200,000), benefits, rights to performance based bonuses and other compensation
and rights to participate in HA-LO's Stock Option Plan and (ii) contains
customary provisions governing competition with HA-LO during the term of the
Employment Agreement and for 12 months thereafter, solicitation of HA-LO's
employees, ownership of inventions, confidentiality, non-disparagement and
certain other matters. Mr. Okner's Employment Agreement will terminate upon the
earlier to occur of (i) the last day of the month during which the fifth
anniversary of the Effective Time occurs; (ii) the mutual agreement of HA-LO and
Mr. Okner; (iii) the death or disability of Mr. Okner; (iv) HA-LO's election to
terminate Mr. Okner's Employment Agreement for Cause (as defined therein); and
(v) Mr. Okner's election to terminate his Employment Agreement for Good Reason
(as defined therein). A form of Mr. Okner's Employment Agreement is attached as
an exhibit to the Plan of Merger and Amalgamation which is attached hereto as
Appendix A.

In addition to their respective Employment Agreements, each of Messrs. Okner
is required to enter into an Agreement and Covenant Against Unfair Competition
and a General Release of Claims for the benefit of HA-LO and the Target
Companies. The Agreement and Covenant Against Unfair Competition, among other
things, prohibits each of Messrs. Okner from engaging, within the continental
United States and Canada, in a telemarketing business which competes with the
business of the Target Companies for five years after the Effective Time.
Pursuant to the General Release of Claims, each of Messrs. Okner will release
HA-LO and its subsidiaries, the Target Companies and certain other persons from
any and all claims which either of the Okner's had, have or may have against any
of such parties in connection with any matter prior to, and including, the
Effective Time.

Pursuant to an Employment Agreement with Patricia E. Richert, Ms. Richert
will continue to serve as the Vice President -- Operations of each of Market USA
and the corporation resulting from the Canada Amalgamation. The Employment
Agreement specifies that Ms. Richert will be paid an annual base salary of
$100,000 in 1996, $120,000 in 1997 and $145,000 in 1998. In addition, Ms.
Richert will receive an annual bonus of up to $100,000 if specified financial
criteria are satisfied. In addition, if the Target Companies' 1996 earnings
equal or exceed certain thresholds, HA-LO is required to grant Ms. Richert
options to purchase up to 5,000 shares of HA-LO Common Stock pursuant to HA-LO's
Stock Option Plan. In connection with the execution of her Employment Agreement,
Ms. Richert will be granted options to purchase 15,000 shares of HA-LO Common
Stock pursuant to HA-LO's Stock Option Plan (25% of such options will vest at
the Effective Time and an additional 25% of such options will vest on the first,
second and third anniversary of the Effective Time). Ms. Richert's Employment
Agreement will terminate upon the earlier to occur of (i) the third anniversary
of the Effective Time; (ii) the mutual agreement of HA-LO and Ms. Richert; (iii)
the death

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or disability of Ms. Richert; and (iv) HA-LO's election to terminate the
Employment Agreement for Cause (as defined therein). A form of Ms. Richert's
Employment Agreement is attached as an exhibit to the Plan of Merger and
Amalgamation which is attached hereto as Appendix A.

RESALE RESTRICTIONS

Of the shares of HA-LO Common Stock issued in connection with the Merger
Transactions, shares of HA-LO Common Stock received by "affiliates" (as such
term is defined in the Securities Act) of the Target Companies at the Effective
Time may be resold by such persons only in transactions permitted by the resale
provisions of Rule 145 promulgated under the Securities Act (or Rule 144 in the
case of persons who become affiliates of HA-LO). All other shares of HA-LO
Common Stock issued in connection with the Merger Transactions will be freely
transferable. Persons who may be deemed to be affiliates of the Target Companies
or HA-LO generally include individuals or entities that control, are controlled
by or are under common control with, such party and may include officers and
directors of such party as well as principal shareholders of such party.

Of the 2,550,000 shares of HA-LO Common Stock to be issued in connection
with the Merger Transactions, 26 shares of HA-LO Common Stock will be freely
transferable and the remaining 2,549,974 shares of HA-LO Common Stock will be
received by persons who are deemed to be affiliates of the Target Companies at
the Effective Time. The Plan of Merger and Amalgamation requires, as a condition
to HA-LO's obligation to consummate the Merger Transactions, that each Target
Shareholder, every other holder of shares of Target Company Common Stock and any
other person who may be deemed to have become a shareholder or an affiliate of a
Target Company prior to the Effective Time to execute a written agreement
("Affiliate Agreement") to the effect that such person will not offer to sell,
transfer or otherwise dispose of any of the shares of HA-LO Common Stock,
acquired in or pursuant to the Merger Transactions, unless (i) such sale,
transfer or disposition has been effectively registered under the Securities
Act, (ii) such sale, transfer or other disposition is made in conformity with
the volume and other limitations under Rule 145 or (iii) in the opinion of
counsel reasonably acceptable to HA-LO, such sale, transfer or other disposition
is exempt from registration under the Securities Act. The Affiliate Agreement
also provides that each affiliate executing such agreement for the benefit of
HA-LO may not (i) during the 30 days prior to the Effective Time, sell, transfer
or otherwise dispose of any shares of HA-LO Common Stock or (ii) sell, transfer
or otherwise dispose of any shares of HA-LO Common Stock during the period (the
"Pooling Period") from and after the Effective Time until after such time as
HA-LO publishes results covering at least 30 days of combined operations of
HA-LO and the Target Companies. A form of the Affiliate Agreement is attached as
an exhibit to the Plan of Merger and Amalgamation which is attached hereto as
Appendix A.

In satisfaction of a condition to each Affiliate Agreement, prior to the
Effective Time HA-LO will enter into a Registration Rights Agreement
("Registration Rights Agreement") with each person executing an Affiliate
Agreement for the benefit of HA-LO. The Registration Rights Agreement provides
for registration ("Shelf Registration") under the Securities Act, at HA-LO's
expense, of the shares of HA-LO Common Stock that such holders will receive in
the Merger Transactions, which will permit such holders to collectively sell an
aggregate number of such shares of HA-LO Common Stock having a specified dollar
value at the following times: (i) immediately after completion of the Pooling
Period, a number of shares of HA-LO Common Stock having a market value of $15
million; (ii) immediately after the first anniversary of the Effective Time, a
number of shares of HA-LO Common Stock equal to 50% of the shares of HA-LO
Common Stock then held by such persons which were acquired pursuant to the Plan
of Merger and Amalgamation; and (iii) immediately after the second anniversary
of the Effective Time, the remaining shares of HA-LO Common Stock held by such
persons which were acquired pursuant to the Plan of Merger and Amalgamation
which have not previously been sold or otherwise disposed of. The Registration
Rights Agreement also provides that if at any time prior to HA-LO's satisfaction
of its obligations to effect each Shelf Registration, Lou Weisbach is no longer
the Chairman of the Board of HA-LO, the parties to the Registration Rights
Agreement may require HA-LO to register their shares of HA-LO Common Stock in
connection with a firm commitment underwritten offering thereof; provided,
however, that such persons may not

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require HA-LO to register under the Securities Act a number of shares of HA-LO
Common Stock held by such persons in excess of the number of such shares of
HA-LO Common Stock for which HA-LO is then required to file a Shelf
Registration. Each party to the Registration Rights Agreement, other than HA-LO,
has agreed not to effect a public sale or distribution of any of HA-LO's equity
securities under certain circumstances, including during the 10-day period prior
to, and during the 90-day period beginning on, the closing date of an
underwritten offering of HA-LO's securities if so requested by the underwriter.
Subject to certain exceptions, HA-LO has agreed not to effect the public sale or
distribution of any of its equity securities (and certain derivatives thereof)
during the 15 days prior to, and for a period of 90 days beginning on, the
effective date of any underwritten offering of HA-LO Common Stock for which
registration was required by the parties to the Registration Rights Agreement. A
form of the Registration Rights Agreement is attached as an exhibit to the form
of Affiliate Agreement which is attached as an exhibit to the Plan of Merger and
Amalgamation which is attached hereto as Appendix A.

THE PLAN OF MERGER AND AMALGAMATION

The following is a brief summary of certain provisions of the Plan of Merger
and Amalgamation, a copy of which is attached as Appendix A to this Proxy
Statement/Prospectus and is incorporated herein by reference. This summary is
qualified in its entirety by reference to the full text of the Plan of Merger
and Amalgamation and the exhibits thereto.

THE MERGER TRANSACTIONS

Pursuant to the Plan of Merger and Amalgamation, subject to the terms and
conditions thereof, at the Effective Time, (i) HA-LO Sub-1 will be merged with
and into Market USA; (ii) HA-LO Sub-2 will be amalgamated with Marusa; and (iii)
the New Canadian Service Entity will purchase, subject to discharge or
performance of related liabilities, all of the assets and properties of each of
Marusa Financial and Nerok. The U.S. Merger will have the effects specified in
the IBCA, and the Canada Amalgamation will have the effects specified in the
CBCA.

Upon the satisfaction or waiver of all conditions to the Merger
Transactions, and provided that the Plan of Merger and Amalgamation has not been
terminated or abandoned, HA-LO and the Target Companies will cause (i) Articles
of Merger with respect to the U.S. Merger to be executed, acknowledged and filed
with the Secretary of State of Illinois, (ii) Articles of Amalgamation and an
amalgamation agreement with respect to the Canada Amalgamation to be executed
and filed with the Canadian Department of Industry (and a certificate of
amalgamation will be issued thereby) and (iii) all documents and instruments
required to effectuate the Ancillary Asset Acquisition, or any applicable
alternate transaction, to be filed with the appropriate governmental authority.
The time at which the last of the U.S. Merger, the Canada Amalgamation and the
Ancillary Asset Acquisition becomes effective is referred to as the Effective
Time.

As a result of the U.S. Merger and without any action on the part of the
holders thereof, each share of Market USA Common Stock issued and outstanding
immediately prior to the Effective Time will be converted into the right to
receive 19,125 shares of HA-LO Common Stock (a total of 1,912,500 shares of
HA-LO Common Stock) and will cease to be outstanding and will be cancelled and
retired without payment of any consideration therefor. Each holder of a
certificate representing any such shares of Market USA Common Stock will
thereafter cease to have any rights with respect to such shares of Market USA
Common Stock, except the right to receive, without interest, shares of HA-LO
Common Stock upon surrender of such certificate. As a result of the Canada
Amalgamation and without any action on the part of the holders thereof, each
share of Marusa Common Stock issued and outstanding immediately prior to the
Effective Time will be converted into 318,700 shares of HA-LO Common Stock (a
total of 637,400 shares of HA-LO Common Stock) and will cease to be outstanding.
Each holder of a certificate representing any such shares of Marusa Common Stock
will thereafter cease to have any rights with respect to such shares of Marusa
Common Stock. In the Ancillary Asset Acquisition, the New Canadian Service
Entity will purchase all of the assets and properties of each of

22
<PAGE>
Marusa Financial and Nerok, subject to discharge or performance of related
liabilities, in consideration of HA-LO's issuance to each of Marusa and Nerok of
50 shares of HA-LO Common Stock (a total of 100 shares of HA-LO Common Stock).
As a result of the Merger Transactions, HA-LO will issue an aggregate of
2,550,000 shares of HA-LO Common Stock (approximately 19.5% of the outstanding
HA-LO Common Stock after giving effect to the Merger Transactions).

The Ancillary Asset Acquisition is designed to enable HA-LO to acquire all
of the assets utilized in the business operations conducted by Marusa Financial
and Nerok and is not anticipated to be material to the Merger Transactions,
taken as a whole. HA-LO has reserved the right to consummate the Ancillary Asset
Acquisition upon the terms described in the Plan of Merger and Amalgamation or
effect an alternate transaction acceptable to HA-LO having a substantially
similar purpose and total consideration which does not exceed 100 shares of
HA-LO Common Stock. No fractional shares of HA-LO Common Stock will be issued as
part of the Merger Transactions; the number of shares of HA-LO Common Stock
otherwise issuable pursuant to the Plan of Merger and Amalgamation will be
rounded upward or downward to the nearest whole number of shares of HA-LO Common
Stock.

At the Effective Time, each outstanding equity security of each of Market
USA and Marusa, together with any and all options, warrants or other rights,
agreements, arrangements or commitments to sell or purchase and such equity
securities, whether written, oral, authorized, issued, unissued, outstanding,
vested or unvested (collectively, "Other Target Company Securities"), will be
cancelled and terminated and be of no further force and effect. In the Plan of
Merger and Amalgamation, the Target Companies and the Target Shareholders
represented that, except for options granted by certain Target Shareholders to
Merchant Partners (see "Certain Transactions Relating to the Target Companies"),
no Other Target Company Securities exist and have agreed not to issue or permit
to exist any Other Target Company Securities prior to the Effective Time.

EXCHANGE PROCEDURES

EXCHANGE OF CERTIFICATES. At the Effective Time, each shareholder of Market
USA and Marusa is required to present to HA-LO one or more stock certificates
evidencing such shareholder's shares of Market USA Common Stock or Marusa Common
Stock. See "-- Conditions." As soon as practicable after the Effective Time,
HA-LO will cause its stock transfer agent to issue a stock certificate
evidencing the appropriate number of shares of HA-LO Common Stock to each of the
shareholders of Market USA and Marusa as well as to Marusa Financial and Nerok.

FRACTIONAL SHARES. No fractional shares of HA-LO Common Stock will be
issued in connection with the Merger Transaction and any fractional shares
otherwise issuable will be rounded upward or downward to the nearest whole
number of shares of HA-LO Common Stock.

REPRESENTATIONS AND WARRANTIES

The Plan of Merger and Amalgamation contains various customary
representations and warranties made by the Target Companies and the Target
Company Shareholders relating to, among other things, (i) the due organization,
power and standing of each of the Target Companies and similar corporate
matters; (ii) the capital structure of each of the Target Companies and the
ownership of the capital stock of each of the Target Companies; (iii) the
authorization, execution, delivery and enforceability of the Plan of Merger and
Amalgamation; (iv) the absence of conflicts under articles of incorporation or
by-laws and violations of any instruments or law, and required consents or
approvals; (v) the possession of all licenses and permits necessary to operate
the business of each Target Company and the compliance with applicable laws by
each Target Company; (vi) the filing of all required materials with all
applicable governmental authorities; (vii) the combined financial statements of
the Target Companies; (viii) absence of undisclosed liabilities; (ix) certain
specified material changes or events; (x) litigation; (xi) contracts and
agreements to which a Target Company is party; (xii) employee benefits and
matters relating to the Employee Retirement Income Security Act of 1974, as
amended; (xiii) taxes; (xiv) patents, trademarks, copyrights, licenses,
franchises and other proprietary rights; (xv) absence of certain business
practices; (xvi) insurance; (xvii) qualification for "pooling of interests"
accounting treatment and tax-free reorganization treatment; (xviii) title to
certain

23
<PAGE>
properties and assets; (xix) unanimous shareholder approval of the Merger
Transactions; (xx) the hiring of brokers and finders with respect to the Merger
Transactions; (xxi) affiliated party transactions; (xxii) bank accounts,
officers and directors and powers of attorney; (xxiii) customers of the Target
Companies; (xxiv) proprietary software utilized by the Target Companies; (xxv)
Target Company accounts receivable; (xxvi) Target Company sales commission and
bonus policies; (xxvii) certain suppliers to the Target Companies; and (xxviii)
the accuracy of certain information supplied to HA-LO by the Target Companies
and the Target Shareholders.

The Plan of Merger contains various customary representations and warranties
made by HA-LO relating to, among other things, (i) the due organization, power
and standing of HA-LO and its subsidiaries; (ii) the capital structure of HA-LO,
HA-LO Sub-1 and HA-LO Sub-2; (iii) the authorization, execution, delivery and
enforceability of the Plan of Merger and Amalgamation; (iv) the absence of
conflicts under articles of incorporation or by-laws and violations of any
instruments or law, and required consents or approvals; (v) the possession of
all licenses and permits necessary to operate the business of HA-LO and its
subsidiaries; (vi) documents filed by HA-LO with the Commission and the accuracy
of the information contained therein; (vii) the consolidated financial
statements of HA-LO; (viii) absence of undisclosed liabilities; (ix) certain
specified material changes or events; (x) litigation; (xi) qualification for
"pooling of interests" accounting treatment and tax-free reorganization
treatment; (xii) title to certain properties and assets; (xiii) the hiring of
brokers and finders with respect to the Merger Transactions; (xiv) the ownership
of HA-LO Sub-1 and HA-LO Sub-2 and the activities thereof; and (xv) the accuracy
of certain information supplied by HA-LO to the Target Companies and the Target
Shareholders.

CERTAIN COVENANTS

Each of the Target Companies has agreed, among other things, prior to the
Effective Time, unless HA-LO agrees in writing or as otherwise required or
permitted by the Plan of Merger, (i) to operate its business only in the usual
and ordinary course, consistent with reasonable past practices; (ii) to use its
reasonable best efforts to preserve intact its business organization and
goodwill and retain the services of its officers, key employees and managers;
(iii) to use its reasonable best efforts to keep in full force and effect all
liability insurance and bonds in comparable amount and scope of coverage to that
previously maintained; (iv) to confer with HA-LO from time to time to report on
all operational matters and to the general status of the ongoing operations of
the business of such Target Company; (v) to prepare and deliver combined interim
quarterly financial statements as at and for the periods ended March 31, 1996,
June 30, 1996 and, if prior to the Effective Time, September 30, 1996; (vi) to
file all required U.S. and Canadian federal, state, provincial and local tax
returns; and (vii) with respect to Market USA only, immediately prior to the
Effective Time, at the request of HA-LO, to sell all or such portion of its
accounts receivable to a bank or factor designated by HA-LO for a discount from
the face value of such accounts receivable reasonably acceptable to HA-LO. In
addition, each of the Target Companies has agreed that, among other things,
prior to the Effective Time, unless HA-LO agrees in writing or as otherwise
required or permitted by the Plan of Merger, it will not (i) increase
compensation payable to any director, officer, manager or employee, grant any
severance or termination pay, enter into any employment agreement or establish,
adopt or amend any employee benefit plan; (ii) declare or pay any dividend or
other distribution in respect of its common stock (except for amounts necessary
to enable the relevant Target Shareholders to pay all applicable income taxes
relating to the taxable income of Market USA through the Effective Time) (see
"Stock Price and Divided Information"); (iii) incur indebtedness payable to
another Target Company; (iv) redeem, purchase, or otherwise acquire any shares
of its capital stock, effect any reorganization or recapitalization or split,
combine or reclassify any of its capital stock; (v) issue any shares of its
capital stock or any securities which are exercisable or exchangeable for or
convertible into its capital stock; (vi) purchase or otherwise acquire or agree
to acquire any business, entity or assets (other than the purchase of assets
from suppliers in the ordinary course of business); (vii) sell, mortgage, pledge
or otherwise dispose or agree to dispose, of any assets (other than the
retirement of assets in the ordinary course of business); (viii) adopt any
amendments to its articles of incorporation or bylaws; (ix) change

24
<PAGE>
any methods of accounting in effect at December 31, 1995 or make or rescind any
express or deemed election relating to taxes, settle or compromise any claim,
action or suit relating to taxes; (x) incur any obligation for borrowed money
(other than borrowings not exceeding $10,000 in the ordinary course of
business); or (xi) without first consulting HA-LO, perform any act which would
prevent or excuse the performance of the Plan of Merger and Amalgamation by
HA-LO or which would result in the breach of any representation or warranty made
by the Target Companies or fail to perform any act which would prevent or excuse
the performance of the Plan of Merger and Amalgamation by HA-LO or which would
result in the breach of any representation or warranty made by the Target
Companies.

HA-LO has agreed, among other things, prior to the Effective Time, unless
the Target Companies agree in writing or as otherwise required or permitted by
the Plan of Merger and Amalgamation, that HA-LO will, and will cause each of its
subsidiaries, to (i) operate its business only in the usual and ordinary course,
consistent with past practices; (ii) use its reasonable best efforts to preserve
intact its business organization and goodwill and retain the services of its
officers, key employees and managers; (iii) use its reasonable best efforts to
keep in full force and effect all liability insurance and bonds in comparable
amount and scope of coverage to that previously maintained. In addition, HA-LO
has agreed that, among other things, prior to the Effective Time, unless the
Target Companies agree in writing or as otherwise required or permitted by the
Plan of Merger and Amalgamation, HA-LO will not, and will not permit any of its
subsidiaries to, (i) amend any of the material terms of HA-LO's securities or
(ii) without first consulting the Target Companies, perform any act which would
prevent or excuse the performance of the Plan of Merger and Amalgamation by the
Target Companies or which would result in the breach of any representation or
warranty made by HA-LO or fail to perform any act which would prevent or excuse
the performance of the Plan of Merger and Amalgamation by the Target Companies
or which would result in the breach of any representation or warranty made by
HA-LO.

NO SOLICITATION OF COMPETING TRANSACTIONS

Each of the Target Companies and each of the Target Shareholders has agreed
that they will not, and will use their best efforts to cause its directors,
officers, managers, employees, affiliates, agents and representatives not to,
initiate, solicit or encourage any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing Transaction
(hereinafter defined), enter into discussions or negotiate with any person or
entity in furtherance of such inquiries or obtain a Competing Transaction, agree
to endorse any Competing Transaction or authorize any officer, manager,
director, or affiliate of such Target Company to take any such action. Each
Target Company has agreed to promptly notify HA-LO if any such inquiries or
proposals are received by a Target Company or any of their respective directors,
officers, managers, employees, affiliates, agents and representatives. In
addition, each Target Company is required to keep HA-LO informed, on a current
basis, of the nature of, and provide HA-LO with true and complete copies of, any
such inquiries, and such Target Company's response thereto. As used in this
Proxy Statement/Prospectus the term "Competing Transaction" means any of the
following involving a Target Company or any subsidiary (other than the
transactions contemplated by this Agreement): (i) any merger, consolidation,
share exchange, business combination, or other similar transaction; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of five
percent (5%) or more of the assets of a Target Company or a subsidiary thereof,
in a single transaction; (iii) any public or private tender offer or exchange
offer for any outstanding shares of capital stock of a Target Company or any
subsidiary thereof, or the filing of a registration statement under the
Securities Act in connection therewith; (iv) any solicitation of proxies in
opposition to approval by a Target Company's shareholders of such Target
Company's participation in the Merger Transactions; (v) any person other than
the current beneficial owners of the Target Companies shall have acquired
beneficial ownership or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under Section 13(d) of the Securities Exchange
Act of 1934, as amended) shall have been formed which beneficially owns or has

25
<PAGE>
the right to acquire beneficial ownership of, any of the then outstanding shares
of capital stock of a Target Company; or (vi) any agreement to, or public
announcement by a Target Company of a proposal, plan or intention, to do any of
the foregoing.

GOVERNANCE

HA-LO will take such action as is necessary to increase the size of the
Board of Directors of HA-LO from seven to eight, and it is currently anticipated
that Seymour N. Okner, a principal Target Shareholder, will be nominated and
appointed as of the date following the Effective Time to fill the vacancy
created by such increase in the size of the Board of Directors of HA-LO. It also
is anticipated that after the consummation of the Merger Transactions, Lou
Weisbach, the Chairman of the Board, President and Chief Executive Officer of
HA-LO, will continue to serve in such capacities.

INDEMNIFICATION

HA-LO has agreed to cause (i) Market USA to indemnify, defend and hold
harmless the present and former officers and directors of Market USA and (ii)
the corporation resulting from the Canada Amalgamation to indemnify, defend and
hold harmless the present and former officers and directors of Marusa, in each
case against all losses, expenses, claims, damages or liabilities arising out of
actions or omissions occurring at or prior to the Effective Time to the fullest
extent permitted under the IBCA and the CBCA (and to advance expenses as
incurred to the fullest extent permitted by applicable law). The foregoing
rights to indemnification will survive the Merger Transactions. In addition,
HA-LO has agreed that, in the event a Target Company is unable to obtain
extended coverage under any existing Target Company policies of directors' and
officers' liability insurance, HA-LO is required to use its reasonable efforts
to cause to be maintained in effect for not less than three years after the
Effective Time the existing policies of directors' and officers' liability and
fiduciary liability insurance maintained by such Target Company with respect to
matters occurring prior to the Effective Time.

In the event HA-LO terminates the Plan of Merger and Amalgamation prior to
consummation of the Merger Transactions as a result of the breach by the Target
Companies of the Plan of Merger and Amalgamation or the recommendation by the
board of directors of a Target Company of a Competing Transaction, then, unless
HA-LO shall have elected for the Target Companies to pay HA-LO the $15 million
termination fee described herein plus the amount of expenses incurred by HA-LO
in connection with the Plan of Merger and Amalgamation, the Target Companies
shall be obligated to indemnify and hold HA-LO harmless from and against the
full amount of its damages incurred or suffered by HA-LO and proximately
resulting from or attributable to such termination of the Plan of Merger and
Amalgamation. See "-- Expenses; Termination Fees."

In the event that the Merger Transactions are consummated, the Target
Shareholders have agreed to indemnify and hold harmless HA-LO from and against
any and all damages incurred proximately resulting from or attributable to,
among other things, (i) the breach by the Target Companies of their
representations or warranties in the Plan of Merger and Amalgamation, (ii) the
failure of the Target Companies to comply with any of the covenants and
agreements to be performed by them under the Agreement and Plan of Merger of
Amalgamation, (iii) U.S. federal, state, provincial and local taxes attributable
to, assessed against or levied on Market USA with respect to all periods ending
on or before the Effective Time (but only to the extent that (A) such taxes
would not have been payable by or assessable against Market USA if a valid S
corporation election had been in effect with respect to such tax periods, and
(B) Market USA, during such tax periods, would have been subject to Subchapter S
of the Code, and (iv) any failure to withhold employee health taxes in Canada.
HA-LO has agreed that any and all claims to indemnification pursuant to clauses
(i) and (ii) of the preceding sentence shall be enforceable only against the
shares of HA-LO Common Stock to be issued pursuant to the Merger Transactions.
HA-LO's right to indemnification is subject to certain exceptions and
limitations, including, among other things, (i) HA-LO's right to indemnification
is generally limited to shares of HA-LO Common Stock having an aggregate value
not exceeding 10% of the average value, determined for the 10 trading days prior
to the Effective Time, of all shares of HA-LO Common Stock issued pursuant to
the Merger Transactions and (ii) HA-LO is generally not entitled to recover any

26
<PAGE>
amounts from the Target Shareholders unless and until the aggregate damages
which HA-LO is entitled to recover in respect of all such claims exceed
$500,000, and only to the extent that HA-LO's aggregate damages exceed such
amount.

HA-LO has agreed to indemnify and hold harmless the Target Companies and the
Target Shareholders from and against any and all damages incurred proximately
resulting from or attributable to (i) the breach by HA-LO of its representations
or warranties in the Plan of Merger and Amalgamation and (ii) the failure of
HA-LO to comply with any of the covenants and agreements to be performed by it
under the Agreement Plan of Merger and Amalgamation. The Target Companies and
the Target Shareholders are not entitled to recover any amount from HA-LO
pursuant to the foregoing sentence unless and until the aggregate damages which
the Target Companies are entitled to recover in respect of all such claims
exceed $500,000, and only to the extent that the Target Companies' aggregate
damages exceed such amount.

CONDITIONS

The respective obligations of each of HA-LO and the Target Companies to
consummate the Merger Transactions are subject to the fulfillment of each of the
following conditions, among others: (i) this Proxy Statement/Prospectus shall
have been declared effective by the Commission and HA-LO shall have received all
other Canadian and U.S. securities permits and other authorizations necessary to
issue the HA-LO Common Stock in connection with the Merger Transactions; (ii)
the Merger Transactions and the issuance of HA-LO Common Stock in connection
therewith shall have been approved by the requisite vote of HA-LO's
shareholders; (iii) there shall not have been instituted and there shall not be
pending any action or proceeding by a governmental authority (A) imposing or
seeking to impose limitations on the ability of HA-LO to acquire or hold any
securities of Market USA or Marusa, (B) imposing or seeking to impose
limitations on the ability of HA-LO to combine and operate the business and
assets of any Target Company with any of HA-LO's subsidiaries, (C) imposing or
seeking to impose other sanctions, damages or liabilities arising out of the
Merger Transactions on any party to the Plan of Merger and Amalgamation, (D)
requiring or seeking to require divestiture by HA-LO of all or any significant
portion of the business, assets or properties of any Target Company, or (E)
restraining, enjoining or prohibiting or seeking to restrain, enjoin or prohibit
any of the Merger Transactions; (iv) the applicable waiting period under the HSR
Act shall have expired or been terminated; (v) if deemed reasonably necessary,
the Director under the Competition Act shall have informed the parties in
writing that no approval, consent or application for an order is required under
the Competition Act (or if required, such approval shall have been obtained);
and (vi) the Target Shareholders shall have delivered to HA-LO a certificate
issued under Section 116 of the ITA.

The obligations of HA-LO to consummate the Merger Transactions are subject
to the fulfillment of each of the following additional conditions, among others:
(i) each of the representations and warranties of the Target Companies and the
Target Shareholders shall be true and correct in all material respects as of the
Effective Time, as though made on and as of the Effective Time; (ii) each Target
Company and Target Shareholder shall have performed or complied in all material
respects with all agreements and covenants required to be performed or complied
with by such party on or prior to the Effective Time; (iii) HA-LO shall have
received all material third party consents necessary or advisable to consummate
the Merger Transactions; (iv) each Target Shareholder and every other holder of
shares of Market USA Common Stock and Marusa Common Stock shall have fully
tendered such shares to HA-LO, and HA-LO shall have received from the Target
Shareholders and every other holder of shares of Market USA Common Stock and
Marusa Common Stock a duly executed Affiliate Agreement and a duly executed
Registration Rights Agreement; (v) HA-LO shall have received from Seymour N.
Okner, Samuel P. Okner and certain other Target Company employees, executed
Employment Agreements in the forms attached as exhibits to the Plan of Merger
and Amalgamation (and HA-LO shall have received from each of Messrs. Okner an
executed Agreement and Covenant Against Unfair Competition and General Release
of Claims, in each case in the forms attached as exhibits to the Plan of Merger
and Amalgamation); (vi) HA-LO shall have received the updated opinion of

27
<PAGE>
William Blair, dated the date of the Proxy Statement/Prospectus, to the effect
that the Merger Transactions are, from a financial standpoint, fair to HA-LO;
and (vii) HA-LO shall have received the opinion of Altheimer & Gray, legal
counsel for the Target Companies, dated as of the Effective Time, with respect
to various matters, including the federal income tax treatment of the U.S.
Merger.

The obligations of the Target Companies and the Target Shareholders to
consummate the Merger Transactions are subject to the fulfillment of each of the
following additional conditions, among others: (i) each of the representations
and warranties of HA-LO shall be true and correct in all material respects as of
the Effective Time, as though made on and as of the Effective Time; (ii) HA-LO
shall have performed or complied in all material respects with all agreements
and covenants required to be performed or complied with by such party on or
prior to the Effective Time; (iii) HA-LO shall have received all material third
party consents necessary or advisable to consummate the Merger Transactions;
(iv) each person entering into an Affiliate Agreement shall have received from
HA-LO a duly executed Affiliate Agreement and a duly executed Registration
Rights Agreement; (v) each person entering into an employment agreement shall
have received from HA-LO a duly executed Employment Agreement; and (vi) the
Target Companies and the Target Shareholders shall have received the opinions of
each of Marc S. Roth & Associates, Ltd. and Neal, Gerber & Eisenberg, legal
counsel for the Target Companies, dated as of the Effective Time, with respect
to various matters, including, in the case of Marc S. Roth & Associates, Ltd.,
the federal income tax treatment of the U.S. Merger.

TERMINATION

The Plan of Merger and Amalgamation may be terminated and the Merger
Transactions may be abandoned at any time prior to the Effective Time, before or
after the approval by the shareholders of HA-LO, in a number of circumstances,
which include, among others, (i) by the mutual consent of HA-LO and the Target
Companies (or the Target Shareholders acting on their behalf); (ii) by HA-LO if
there has been a breach by a Target Company or a Target Shareholder of any of
its or his respective covenants or agreements in the Plan of Merger and
Amalgamation or if any of the representations and warranties of the Target
Companies or Target Shareholders shall have become untrue such that a condition
to the consummation of the Merger Transactions shall not have been satisfied and
such breach or condition has not been cured within 30 days after receipt of
written notice; (iii) by the Target Companies (or the Target Shareholders acting
on their behalf) if there has been a breach by HA-LO of any of its respective
covenants or agreements in the Plan of Merger and Amalgamation or if any of the
representations and warranties of HA-LO shall have become untrue such that a
condition to the consummation of the Merger Transactions shall not have been
satisfied and such breach or condition has not been cured within 30 days after
receipt of written notice; (iv) by HA-LO or the Target Companies (or the Target
Shareholders acting on their behalf) if any decree, permanent injunction,
judgment, order or other action by any court of competent jurisdiction or
governmental entity preventing or prohibiting consummation of the Merger
Transactions shall have become final and nonappealable; (v) by HA-LO or the
Target Companies if the Merger Transactions have not been consummated by October
31, 1996; (vi) by HA-LO, if the Board of Directors of a Target Company shall
have recommended to the shareholders of such Target Company any Competing
Transaction; or (vii) by the Target Companies (or the Target Shareholders acting
on their behalf) if HA-LO has entered into a written agreement under which HA-LO
will be acquired by or merge with another entity, where, after such transaction,
persons who were directors of HA-LO prior to such transaction will not
constitute a majority of the board of directors of the acquiring or surviving
corporation (a "HA-LO Change in Control").

EXPENSES; TERMINATION FEES

Except as provided in the following paragraph, each party to the Plan of
Merger and Amalgamation is responsible for all costs and expenses paid or
incurred by it in connection with the Merger Transactions.

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<PAGE>
If the Plan of Merger and Amalgamation is terminated by HA-LO, on the one
hand, or the Target Companies (or the Target Shareholders acting on their
behalf), on the other, pursuant to clause (ii) or (iii) of the paragraph under
"-- Termination" due to an intentional breach by the terminating party, and
without fault of the terminating party, the non-terminating party is required to
pay the terminating party an amount equal to all of the terminating party's
out-of-pocket expenses incurred in connection with the Agreement and Plan of
Merger of Amalgamation. If HA-LO terminates the Plan of Merger and Amalgamation
and at the time of such termination a Competing Transaction exists, the Target
Companies are required to pay HA-LO a $15 million termination fee and HA-LO's
out-of-pocket expenses incurred in connection with the Plan of Merger and
Amalgamation. If the Target Companies (or the Target Shareholders acting on
their behalf) terminate the Plan of Merger and Amalgamation and at the time of
such termination there shall exist a written agreement with respect to a HA-LO
Change in Control, HA-LO is required to pay the Target Companies a $15 million
termination fee and the Target Companies' out-of-pocket expenses incurred in
connection with the Plan of Merger and Amalgamation. In addition, if the Target
Companies (or the Target Shareholders acting on their behalf) terminate the Plan
of Merger and Amalgamation, HA-LO is required to pay the Target Companies an
additional termination fee equal to the discount (if any) applicable to accounts
receivable sold by Market USA to a bank at HA-LO's request. See "The Merger
Transactions -- Certain Covenants."

AMENDMENT AND WAIVER

The parties to the Plan of Merger and Amalgamation may modify or amend the
Plan of Merger and Amalgamation by written agreement at any time prior to the
Effective Time, to the extent permitted by applicable law. The conditions to
each party's obligations to consummate the Merger Transactions may be waived by
such party in whole or in part to the extent permitted by applicable law.

29
<PAGE>
STOCK PRICE AND DIVIDEND INFORMATION

HA-LO

HA-LO Common Stock is traded in the over-the-counter market on The Nasdaq
National Market under the symbol "HALO." The following table sets forth the
range of high and low bid quotations for the quarterly periods indicated and
reflects inter-dealer prices, without retail mark-up, mark-down or commission
and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1996
First Quarter..................................... $19 1/4 $13 1/2
Second Quarter.................................... 29 3/4 18
Third Quarter.....................................
(through August 22, 1996)
1995
First Quarter..................................... 7 4
Second Quarter.................................... 7 1/4 6
Third Quarter..................................... 12 1/4 6 3/4
Fourth Quarter.................................... 20 1/2 9 3/4
1994
First Quarter..................................... 5 1/4 3 1/4
Second Quarter.................................... 4 3/4 3 3/4
Third Quarter..................................... 4 1/2 3 3/4
Fourth Quarter.................................... 4 1/4 3 3/4
</TABLE>

On June 3, 1996, HA-LO effected a 3-for-2 stock split in the form of a 50%
common stock dividend to shareholders of record on May 17, 1996. All information
included in this Proxy Statement/Prospectus, including the information presented
in the foregoing table, has been adjusted to give effect to such stock split. On
June 14, 1996, the last trading day immediately prior to the date on which HA-LO
and the Target Companies first publicly announced their intent to undertake the
Merger Transaction, the closing price of HA-LO Common Stock as reported by The
Nasdaq National Market was $26.75 per share. On August 22, 1996, the last
trading day for which quotations were available at the time of printing this
Proxy Statement/Prospectus, the closing price of HA-LO Common Stock as reported
by the Nasdaq National Market was $ per share.

No cash dividends have been paid on shares of HA-LO Common Stock. However, a
corporation acquired by HA-LO in December 1995 in a transaction accounted for as
a pooling-of-interests paid cash dividends of $555,000, $610,000 and $299,000 in
1995, 1994 and 1993, respectively.

As of July 31, 1996, HA-LO had 10,509,055 shares of HA-LO Common Stock
outstanding and approximately 525 holders of record.

THE TARGET COMPANIES

MARKET USA. Market USA Common Stock is not traded on any established public
trading market or the over-the-counter market and trading activity is
nonexistent.

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<PAGE>
During 1994 and 1995, and for the six months ended June 30, 1996, Market USA
paid cash dividends to its shareholders of $666,000, $4,682,000 and $1,256,0000,
respectively. In addition, it is anticipated that Market USA will make a
distribution to its shareholders of approximately $2,166,000 immediately prior
to the Effective Time. Such distribution will be designed to be equal to Market
USA's estimate of the amount of federal and state income taxes which will be
imposed upon its shareholders with respect to Market USA's activities for the
period prior to the Effective Time.

As of the date of this Proxy Statement/Prospectus, Market USA had 100 shares
of Market USA Common Stock outstanding and 4 holders of record.

MARUSA. Marusa Common Stock is not traded on any established public trading
market or the over-the-counter market and trading activity is nonexistent.

No cash dividends have been paid with respect to the Marusa Common Stock
since Marusa's organization in 1992.

As of the date of this Proxy Statement/Prospectus, Marusa had two shares of
Marusa Common Stock outstanding and two holders of record.

31
<PAGE>
HA-LO AND TARGET COMPANIES PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS

The following unaudited Pro Forma Combined Condensed Balance Sheet as of
June 30, 1996 and the unaudited Pro Forma Combined Condensed Income Statements
for each of the three years ended December 31, 1993, 1994 and 1995, and the six
months ended June 30, 1995 and 1996 give effect to the Merger Transactions as if
they had occurred at the beginning of the earliest period presented. The pro
forma information gives effect to the Merger Transactions under the pooling of
interests method of accounting and to the assumptions and adjustments described
in the accompanying notes to the pro forma combined condensed financial
statements.

The pro forma combined condensed financial statements are based on the
historical financial statements of HA-LO and the related notes thereto
incorporated herein by reference and the historical financial statements of the
Target Companies and the related notes thereto included elsewhere herein. These
pro forma statements are presented for informational purposes only and may not
necessarily be indicative of the results that actually would have occurred had
the Merger Transactions been consummated at the dates indicated, nor are they
necessarily indicative of future operating results or financial position.

31
<PAGE>
HA-LO AND TARGET COMPANIES
PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)

ASSETS

<TABLE>
<CAPTION>
TARGET PRO FORMA
HA-LO COMPANIES ADJUSTMENTS COMBINED
--------- ----------- ----------- ---------
(IN THOUSANDS)

<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents..................................... $ 1,343 $ 2,027 -- $ 3,370
Short-term investments........................................ 4,477 -- -- 4,477
Receivables................................................... 31,975 6,584 -- 38,559
Inventories................................................... 7,428 -- -- 7,428
Prepaid expenses and deposits................................. 3,405 591 -- 3,996
--------- ----------- ----------- ---------
Total current assets...................................... 48,628 9,202 -- 57,830
--------- ----------- ----------- ---------
PROPERTY AND EQUIPMENT, NET:.................................... 5,146 4,070 -- 9,216
--------- ----------- ----------- ---------
OTHER ASSETS:
Intangible assets relating acquired businesses, net........... 7,333 -- -- 7,333
Samples....................................................... 1,160 -- -- 1,160
Other......................................................... 825 37 -- 862
--------- ----------- ----------- ---------
Total other assets........................................ 9,318 37 -- 9,355
--------- ----------- ----------- ---------
$ 63,092 $ 13,309 $ -- $ 76,401
--------- ----------- ----------- ---------
--------- ----------- ----------- ---------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Notes payable................................................. $ -- $ 592 $ -- $ 592
Book overdraft................................................ 666 -- -- 666
Accounts payable.............................................. 11,351 912 -- 12,263
Accrued expenses.............................................. 6,406 4,973 718 12,097
Dividend payable.............................................. -- -- 2,166 2,166
Deferred taxes -- current..................................... 780 162 -- 942
--------- ----------- ----------- ---------
Total current liabilities..................................... 19,203 6,639 2,884 28,726
--------- ----------- ----------- ---------
LONG-TERM DEBT.................................................. -- 78 -- 78
--------- ----------- ----------- ---------
DEFERRED LIABILITIES:........................................... 1,765 300 -- 2,065
--------- ----------- ----------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, no par value................................... -- -- -- --
Common stock, no par value.................................... 38,443 2 4,103 42,548
Unearned compensation -- restricted stock..................... (880) -- -- (880)
Deferred marketing costs...................................... (1,448) -- -- (1,448)
Cumulative translation adjustment............................. -- 21 -- 21
Retained earnings............................................. 6,009 6,269 (6,987) 5,291
--------- ----------- ----------- ---------
Total shareholders' equity................................ 42,124 6,292 (2,884) 45,532
--------- ----------- ----------- ---------
$ 63,092 $ 13,309 $ -- $ 76,401
--------- ----------- ----------- ---------
--------- ----------- ----------- ---------
</TABLE>

(See Notes to Pro Forma Combined Condensed Financial Statements)

32
<PAGE>
HA-LO AND TARGET COMPANIES
PRO FORMA COMBINED CONDENSED INCOME STATEMENTS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEARS ENDED DECEMBER 31, 30,
------------------------------------- ----------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net sales......................................... $ 104,954 $ 145,821 $ 211,265 $ 84,060 $ 110,706
Cost of sales/service............................. 75,654 99,489 148,477 58,807 79,053
----------- ----------- ----------- --------- -----------
Gross profit.................................... 29,300 46,333 62,788 25,253 31,653
Selling expenses.................................. 11,787 19,124 25,559 11,134 13,575
General and administrative expenses............... 14,363 19,868 28,107 11,306 13,397
----------- ----------- ----------- --------- -----------
Income from operations.......................... 3,150 7,340 9,122 2,813 4,681
Other income (expense), net....................... (39) (800) (1,214) (642) 260
----------- ----------- ----------- --------- -----------
Income before taxes............................. 3,110 6,540 7,908 2,171 4,941
Provision for income taxes........................ 1,245 2,616 3,163 868 1,976
----------- ----------- ----------- --------- -----------
Pro forma net income for the period............... $ 1,866 $ 3,924 $ 4,745 $ 1,303 $ 2,965
----------- ----------- ----------- --------- -----------
----------- ----------- ----------- --------- -----------
Pro forma net income per share assuming full
dilution......................................... $ 0.19 $ 0.40 $ 0.42 $ 0.12 $ 0.21
----------- ----------- ----------- --------- -----------
----------- ----------- ----------- --------- -----------
Weighted average shares outstanding assuming full
dilution......................................... 9,624 9,750 11,272 10,505 13,813
----------- ----------- ----------- --------- -----------
----------- ----------- ----------- --------- -----------
REVENUES:
HA-LO........................................... $ 80,463 $ 110,396 $ 172,866 $ 66,314 $ 85,973
Target Companies................................ 24,491 35,425 38,399 17,746 24,733
----------- ----------- ----------- --------- -----------
Combined...................................... $ 104,954 $ 145,821 $ 211,265 $ 84,060 $ 110,706
----------- ----------- ----------- --------- -----------
----------- ----------- ----------- --------- -----------
PRO FORMA NET INCOME:
HA-LO........................................... $ 566 $ 1,419 $ 2,988 $ 614 $ 1,538
Target Companies................................ 1,300 2,505 1,757 689 1,427
----------- ----------- ----------- --------- -----------
Combined...................................... $ 1,866 $ 3,924 $ 4,745 $ 1,303 $ 2,965
----------- ----------- ----------- --------- -----------
----------- ----------- ----------- --------- -----------
</TABLE>

(See Notes to Pro Forma Combined Condensed Financial Statements)

33
<PAGE>
HA-LO AND TARGET COMPANIES
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

1. The pro forma combined condensed balance sheet reflects the issuance of
2,550,000 shares of HA-LO Common Stock in connection with the Merger
Transactions. The Merger Transactions are intended to be accounted for as a
pooling-of-interests. Therefore, all undistributed earnings of Market USA,
an S corporation for federal income tax purposes prior to the Merger
Transactions, have been transferred to HA-LO's Common Stock account.

2. Market USA had elected to be treated as an S corporation for federal income
taxes prior to the consummation of the U.S. Merger. The accompanying pro
forma combined condensed financial statements include an unaudited pro forma
income tax provision for all periods at an effective rate of 40%.

3. Earnings per share for all periods is based on the weighted average number
of shares of HA-LO Common Stock outstanding, including common stock
equivalents, plus the 2,550,000 shares to be issued in connection with the
Merger Transactions.

4. The pro forma combined condensed balance sheet reflects an anticipated
$2,166,000 dividend which will be paid to the shareholders of Market USA
immediately prior to the consummation of the Merger Transactions. This
distribution is intended to reflect Market USA's estimate of federal and
state income taxes to be imposed on its shareholders resulting from its
operations for the period from January 1, 1996 through the Effective Time.

5. On June 3, 1996, HA-LO completed a 3-for-2 split of the outstanding HA-LO
Common Stock pursuant to the payment of a 50% common stock dividend to
shareholders of record on May 17, 1996. All information in the accompanying
pro forma combined condensed financial statements has been adjusted to
reflect the foregoing common stock dividend.

6. The pro forma combined condensed financial statements of HA-LO and the
Target Companies exclude any non recurring costs and expenses associated
with consummating the Merger Transactions and combining the operations of
the companies. Such costs are expected to result in a one time, material
charge to HA-LO's earnings of approximately $950,000 after tax. Of the
expected charge, approximately $639,000 relates to transaction costs,
$200,000 relates to the recognition of deferred tax liabilities and the
remainder relates to combining the operations of the companies. HA-LO's
management expects the charge to occur in the third quarter of 1996, the
quarter in which the Merger Transactions are expected to be consummated.

34
<PAGE>
TARGET COMPANIES
SELECTED FINANCIAL INFORMATION

The following tables set forth selected historical financial data and other
operating information for the Target Companies for each of the fiscal years in
the five-year period ended December 31, 1995 and for the six months ended June
30, 1995 and 1996. The selected financial information for each of the three
years ended December 31, 1993, 1994 and 1995 has been derived from the Combined
Financial Statements of the Target Companies, which have been audited by Arthur
Andersen LLP, independent auditors to the Target Companies, and from the
underlying accounting records of the Target Companies. The selected financial
information for the two years ended December 31, 1991 and 1992 and the six-month
periods has been derived from unaudited combined financial statements of the
Target Companies and reflects all adjustments (consisting of normal recurring
adjustments) that, in the opinion of the management of the Target Companies, are
necessary for a fair presentation of such information. Operating results for the
six months ended June 30, 1996 are not necessarily indicative of the results
that may be expected for fiscal 1996.

TARGET COMPANIES
SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................... $ 11,445 $ 14,049 $ 24,491 $ 35,425 $ 38,399 $ 17,746 $ 24,733
Cost of service............................. 7,795 9,625 16,392 23,170 25,495 13,173 18,350
--------- --------- --------- --------- --------- --------- ---------
Gross profit................................ 3,650 4,424 8,099 12,255 12,904 4,573 6,383
--------- --------- --------- --------- --------- --------- ---------
Selling expenses............................ 153 448 459 911 959 435 548
General and administrative expenses......... 1,779 2,412 5,487 7,205 9,062 3,013 3,469
Income from operations...................... 1,718 1,564 2,153 4,139 2,883 1,125 2,366
Other income (expense), net................. 38 (378) 14 36 46 23 13
--------- --------- --------- --------- --------- --------- ---------
Income before taxes......................... 1,756 1,186 2,167 4,175 2,929 1,148 2,379
Provision for income taxes.................. 26 3 209 337 508 47 167
--------- --------- --------- --------- --------- --------- ---------
Net income for the period................... $ 1,730 $ 1,183 $ 1,958 $ 3,838 $ 2,421 $ 1,101 $ 2,212
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Pro forma net income for the period(1)...... $ 1,054 $ 712 $ 1,300 $ 2,505 $ 1,757 $ 689 $ 1,427
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
PER SHARE DATA(2):
Pro forma net income(1)................... 0.41 0.28 0.51 0.98 0.69 0.27 0.56
Dividends................................. 0.25 0.28 0.14 0.26 1.84 0.17 0.49
Shares used in computation................ 2,550 2,550 2,550 2,550 2,550 2,550 2,550
BALANCE SHEET DATA (END OF PERIOD):
Total assets................................ $ 3,282 $ 4,774 $ 7,945 $ 11,271 $ 10,492 $ 12,472 $ 13,308
Working capital............................. 1,796 839 2,130 4,900 2,368 5,819 2,562
Long-term debt, net ofcurrent portion....... 99 95 87 79 81 78 78
Shareholders' equity........................ 2,390 2,703 4,311 7,478 5,338 8,156 6,292
</TABLE>

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

(2) All per share data is based on the number of shares of HA-LO Common Stock to
be issued by HA-LO in connection with the Merger Transactions.

35
<PAGE>
TARGET COMPANIES' MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the statements of condition and
results of operations should be read in conjunction with the related financial
statements and notes thereto which are included elsewhere herein.

GENERAL

The Target Companies provide outbound telemarketing services to large
corporations primarily engaged in the insurance and financial services
industries. Calling programs are typically conducted pursuant to short-term
contracts and for payment of a specified rate per calling hour. Revenues are
based upon the total hours required to complete the program and the specified
contract rate per calling hour. Cost of service includes direct labor, telephone
charges, insurance agent license fees, depreciation and direct costs required to
operate the call center. Selling expenses consist of commissions and are earned
based on the difference between actual contract rates and targeted minimum
billing rates. General and administrative expenses relate to corporate overhead
and other call center expenses.

Since its organization, Market USA elected to be taxable as an S corporation
and, accordingly, was not subject to income taxes. The Target Companies' pro
forma net income includes an unaudited pro forma provision for income taxes as
if Market USA had been treated as a C corporation during the relevant periods.

The following table sets forth for the periods indicated the percent of net
sales represented by each line item from the Target Companies' Combined
Statements of Operations:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales........................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of service..................................... 66.9 65.4 66.4 74.2 74.2
--------- --------- --------- --------- ---------
Gross profit........................................ 33.1 34.6 33.6 25.8 25.8
Selling expenses.................................... 1.9 2.6 2.5 2.5 2.2
General and administrative expenses................. 22.4 20.3 23.6 17.0 14.0
--------- --------- --------- --------- ---------
Income from operations.............................. 8.8 11.7 7.5 6.3 9.6
Other income, net................................... 0.1 0.1 0.1 0.1 --
--------- --------- --------- --------- ---------
Income before taxes................................. 8.9 11.8 7.6 6.4 9.6
Provision for income taxes.......................... 0.9 1.0 1.3 0.2 0.7
--------- --------- --------- --------- ---------
Net income.......................................... 8.0% 10.8% 6.3% 6.2% 8.9%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

SIX MONTHS ENDED JUNE 30, 1996 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1995

RESULTS OF OPERATIONS. Net sales for the six months ended June 30, 1996
increased 39.4% to $24.7 million compared to $17.7 million in the same period in
1995. The increase is primarily attributable to additional programs and clients
and the addition of four main call centers and three satellite locations which
were not open during the six months ended June 30, 1995.

Gross profit as a percentage of sales for the six months ended June 30, 1996
was 25.8% ($6.4 million), unchanged for the same period a year earlier ($4.6
million).

Selling expenses as a percentage of sales for the six months ended June 30,
1996 decreased to 2.2% ($548,000) from 2.5% ($435,000) compared to the same
period a year earlier. The decrease is primarily attributable to a change in
sales mix toward non-commissionable sales.

36
<PAGE>
General and administrative expenses as a percentage of sales for the six
months ended June 30, 1996 decreased to 14.0% ($3.5 million) from 17.0% ($3.0
million) for the same period in 1995. This decrease is primarily a function of
increased revenues without significant incremental overhead costs.

Other income for the six months ended June 30, 1996 relates primarily to
interest income and remained constant as a percentage of sales compared with the
same period from 1995.

The Target Companies' effective income tax rate for the six months ended
June 30, 1996 increased to 7.0% ($167,000) from 4.1% ($47,000) for the same
period in 1995. The increase reflects the greater contribution of Marusa's
operations to the combined operations for the six months ended June 30, 1996.

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

RESULTS OF OPERATIONS. Net sales increased 8.4% to $38.4 million in 1995
from $35.4 million in 1994. The increase is primarily attributable to both
volume and rate increases, which were offset by a decrease in revenue from
programs subcontracted to other service bureaus. During 1995, the Target
Companies increased their capacity by approximately 12%, resulting in an
increase in billed hours of 3.7%. At the same time, the Target Companies'
average rate per hour billed increased by approximately 3.5%.

During 1995 and 1994, approximately 71% and 80%, respectively, of the Target
Companies' net sales were concentrated in the insurance industry. The decrease
in 1995 reflects the Target Companies' efforts to diversify their service
offerings to other industries. During 1995, the Target Companies' largest
customer accounted for approximately 19.5% of net sales, while three others
accounted for 14.8%, 12.6% and 10.0%, respectively. During 1994, the Target
Companies' largest customer accounted for 25.4% of net sales, while the next
three largest accounted for 22.1%, 13.2% and 13.1% of net sales, respectively.
The reduction in comparative customer concentration is also a reflection of the
Target Companies' efforts to diversify.

Gross profit as a percentage of sales in 1995 decreased to 33.6% ($12.9
million) from 34.6% ($12.3 million) in 1994. The decrease is primarily
attributable to increased capacity without a corresponding increase in billed
hours because new call centers are not immediately as efficient as existing
ones. As such, associated fixed costs are not absorbed by incremental revenue.

Selling expenses as a percentage of net sales remained relatively constant
at 2.5% ($959,000) for 1995 compared to 2.6% ($911,000) in 1994. General and
administrative expenses as a percentage of sales increased to 23.6% ($9.1
million) in 1995 from 20.3% ($7.2 million) in 1994. The increase is primarily
attributable to overhead costs added to enhance the Target Companies'
infrastructure and to support the capacity growth discussed above.

Other income, which consists primarily of interest, remained constant at .1%
of net sales for both 1995 and 1994.

The Target Companies' effective income tax rate increased to 17.3% in 1995
from 8.1% in 1994. The increase is a result of increases in Marusa's net income
between 1995 and 1994. While Market USA is an S corporation for federal income
tax purposes, and does not pay corporate income taxes, Marusa pays Canadian
income taxes on its corporate earnings. Marusa's effective tax rate for 1995 and
1994 was 23.5% and 18.3%, respectively.

FISCAL YEAR ENDED DECEMBER 31, 1994 AS COMPARED TO FISCAL YEAR ENDED DECEMBER
31, 1993

RESULTS OF OPERATIONS. Net sales increased 44.6% in 1994 to $35.4 million
compared to $24.5 million in 1993. The increase is primarily attributable to the
addition of one new call center which increased capacity approximately 12% and
an increase in billed hours from existing call centers. During 1994 and 1993,
approximately 80% and 78%, respectively, of the Target Companies' net sales were
derived from the insurance industry. Further, during 1994, the Target Companies'
largest customer accounted for approximately 25.4% of net sales, while the next
three largest accounted for

37
<PAGE>
22.1%, 13.2% and 13.1% of net sales, respectively. During 1993, the Target
Companies' largest customer accounted for approximately 41.4% of net sales,
while two others accounted for 14.9% and 10.2% of net sales, respectively. No
other customer in either year accounted for more than 10% of net sales. The
comparative decrease in concentration reflects the Target Companies' efforts to
diversify their customer base to minimize their reliance on any one customer.

Gross profit as a percentage of sales for 1994 increased to 34.6% ($12.3
million) from 33.1% ($8.1 million) in 1993. The increase is primarily
attributable to the more efficient utilization of call centers in 1994 versus
1993.

Selling expenses, which consist of commissions, increased as a percentage of
revenue to 2.6% ($911,000) in 1994 from 1.9% ($459,000) in 1993. The increase
reflects an increase in the amount of commissionable programs performed during
1994.

General and administrative expenses as a percentage of net sales decreased
to 20.3% ($7.2 million) in 1994 from 22.4% ($5.5 million) in 1993. The decrease
is the result of an increase in net sales without an incremental increase in
overhead costs.

Other income, which consists primarily of interest, remained constant as a
percentage of net sales at .1% for 1994 and 1993.

The Target Companies' effective income tax rate decreased in 1994 to 8.1%
from 9.6% in 1993. The decrease reflects a decline of Marusa's proportionate
contribution to combined pretax income in 1994. While Market USA is an S
corporation for federal income tax purposes, and does not pay corporate income
taxes, Marusa pays Canadian income taxes on its corporate earnings. For 1994 and
1993, Marusa's effective tax rate was 18.3% and 13.7%, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Target Companies have funded their operations and capital
expenditures primarily through cash flow from operations. The Target Companies
have a credit facility with Harris Bank Glencoe-Northbrook, N.A. ("Harris") that
provides for the borrowings of up to $1,000,000. Borrowings under the credit
facility are unsecured and bear interest at the prime rate announced by Harris
from time to time. The credit facility terminates in September 1996, but is in
the process of being extended. As of June 30, 1996, $91,700 was outstanding
under the credit facility. The Target Companies also borrowed $500,000 from a
bank during the six months ended June 30, 1996. The loan was secured by
certificates of deposit and was repaid in full in July 1996.

Net cash provided by operating activities was $3.3 million for the six
months ended June 30, 1996, $4.0 million in 1995 and $2.2 million in 1994.

Net cash used in investing activities was $1.4 million for the six months
ended June 30, 1996, $388,000 in 1995 and $1.4 million in 1994. Such activities
primarily consist of capital expenditures relating to acquiring and outfitting
new call centers and upgrading existing call centers with state-of-the-art
technology.

Net cash used in financing activities was $667,000 for the six months ended
June 30, 1996, $4.8 million in 1995 and $960,000 in 1994. The foregoing amounts
include dividends paid of $1.3 million for the six months ended June 30, 1996,
$4.7 million in 1995 and $666,000 in 1994. The remainder relates to the
repayment of indebtedness. In addition, the Target Companies borrowed $591,700
during the six months ended June 30, 1996 primarily for working capital needs,
$500,000 of which was repaid in July 1996.

The Target Companies believe that cash from operations, together with
existing cash and available borrowings under its credit facility, will be
sufficient to finance the Target Companies' current operations, planned capital
expenditures and anticipated growth at least through 1997. However, if the
Target Companies were unable to make any significant acquisitions for cash, it
may be necessary for the Company to obtain additional debt or equity financing.

38
<PAGE>
INFLATION

Inflation has not had a material impact upon operating results, and the
Target Companies do not expect inflation to have such an impact in the future.
To date, in those instances where the Target Companies have experienced cost
increases, they have been able to increase their rates to offset the increased
costs. There can be no assurance, however, that the Target Companies' business
will not be so affected by inflation or that they can continue to increase their
rates and remain competitive.

QUARTERLY RESULTS

The Target Companies could experience quarterly variations in net revenues
and operating income as a result of many factors, including the timing of
clients' marketing campaigns and customer service programs, the timing of
additional selling, general and administrative expenses to acquire and support
such new business and changes in the Target Companies' revenue mix among its
various service offerings. In addition, the Target Companies must plan their
operating expenditures based on revenue forecasts, and a revenue shortfall below
such forecast in any quarter would likely adversely affect the Target Companies'
operating results for that quarter. While the effects of seasonality on the
Target Companies' business have historically been obscured by their growing net
revenues, the Target Companies' business tends to be slower in the first quarter
of their fiscal year due to client marketing programs which are typically slower
in the early part of the year.

BUSINESS OF THE TARGET COMPANIES

GENERAL

The Target Companies create, manage and conduct large scale telephone based
marketing programs for large corporate clients throughout the United States and
Canada. Through a network of more than 1,400 telephone service representatives
("TSRs") and 550 licensed insurance agents, the Target Companies provide script
development, telephone-based direct sales, database analysis and management,
consultation and program design as well as customer lead acquisition services to
clients, primarily in the insurance and financial services industries. The
Target Companies make extensive use of technology, including predictive dialers
and digital switches to initiate outbound calls, electronically transmit
applicable program scripts and customer information to their TSR workstations
and record and report the customer and transaction data captured during each
call. The Target Companies currently operate over 900 workstations in 17 call
centers located primarily throughout the Midwestern United States and Canada.

INDUSTRY OVERVIEW

The telephone based marketing industry is highly fragmented and includes
both captive and independent companies. In 1994, industry sources estimated that
$77 billion was spent on telephone based direct marketing approximately twice
the amount spent a decade earlier. This significant industry growth has prompted
the need for technologically advanced high volume call centers dedicated to
providing telephone-based marketing services for clients on an outsourced basis.
In addition, many large companies are continuing to focus on their core
competencies and outsourcing non-core functions. The advantages of telephone
based marketing, which include high response rates, low cost per transaction,
direct interaction with customers and the ability to immediately respond to
customer inquiries, make it an attractive alternative to other forms of direct
marketing.

GROWTH STRATEGY

In light of increasing direct marketing expenditures by large corporations,
greater emphasis on telemarketing programs and the trend toward outsourcing of
telemarketing activities, the Target Companies believe there are significant
opportunities to expand their business. The Target Companies' growth strategy
includes the following components:

INCREASE REVENUES FROM EXISTING CLIENTS. The Target Companies believe
there is a significant opportunity to increase revenues from existing
clients. Specifically, the Target Companies are targeting opportunities to
capture an increasing share of their clients' direct sales activities

39
<PAGE>
and to cross-sell their other telemarketing services. For example, the
Target Companies recently worked closely with Allstate Insurance to create a
lead acquisition program for Allstate's insurance agents. Prior to this
program, the Target Companies provided strictly insurance sales calls for
Allstate.

OBTAIN NEW CLIENTS WITHIN EXISTING INDUSTRY SPECIALIZATIONS. The
insurance and financial services industries include many large corporations
which rely on telemarketing for a substantial portion of their direct sales
needs. The Target Companies believe there is significant opportunity to grow
by targeting new clients in these industries that are seeking to outsource
their existing or new telemarketing programs. The Target Companies believe
they have a competitive advantage in competing for these new clients because
of their expertise and reputation for quality service with clients in these
industries. For example, the Target Companies currently have approximately
550 licensed insurance agents in the United States and Canada, more than any
of their direct competitors.

ADD NEW INDUSTRY SPECIALIZATIONS. The Target Companies are evaluating
several industries which are expected to substantially increase expenditures
on direct sales and customer service telemarketing applications, including
the telecommunications and natural gas industries, both of which are, or may
become, even more competitive due to ongoing or potential deregulation
efforts.

CREATE NEW VALUE ADDED TELEMARKETING APPLICATIONS. The Target Companies
regularly seek to create new value-added services which have not
historically been offered by independent telemarketers. Creating additional
value-added services should both increase the average account size and, more
importantly, strengthen the long-term relationships between the Target
Companies and their clients.

EXPLORE STRATEGIC ACQUISITIONS. The Target Companies intend to take
advantage of the fragmented nature of the telemarketing industry by making
strategic acquisitions. Through selected strategic acquisitions, the Target
Companies seek to serve new industries or complement their client base in
one of their current industry specializations. The Target Companies will
evaluate acquisitions using numerous criteria including management strength,
service quality, industry focus, diversification of client base and
operating characteristics.

BUSINESS STRATEGY

The following are key components of the Target Companies' business strategy:

FOCUS ON LARGE CORPORATE CLIENTS: The Target Companies seek clients
with large customer bases which can generate revenues because of their
ongoing telemarketing service needs. Establishing such relationships creates
additional business opportunities and can help improve the predictability of
facility and labor requirements, both of which enhance profitability and
service levels. The Target Companies believe revenues from major clients is
an indication of their ability to provide quality client service on a
long-term basis. In 1993, 1994 and 1995 the same 10 customers, including JC
Penney Life Insurance Co., Allstate Insurance, Sears and Union Fidelity Life
Insurance Co., have accounted for 88.0%, 89.3% and 77.2%, respectively, of
the Target Companies' revenues. During that time, no significant customer
losses have occurred.

COMMITMENT OF QUALITY SERVICE: The Target Companies stress quality
service throughout their organization and believe their philosophy is
central to their ability to add and retain desirable clients. Employees at
all levels have compensation incentives tied to quality measures. Further,
during 1995, the Target Companies invested heavily in infrastructure
enhancements designed to bolster their employee selection, training and
management process and strengthen their information systems department. Such
investments have positioned the Target Companies for growth and, in
combination with existing call and data management technology, have
increased their ability to provide quality client service.

40
<PAGE>
SOPHISTICATED AND FLEXIBLE CALL AND DATA MANAGEMENT TECHNOLOGY: The
Target Companies make extensive use of call and data management technology,
including predictive dialers and digital switches to provide superior client
service and perform large scale telemarketing programs.

OPERATIONS OVERVIEW

The Target Companies provide outbound telemarketing for clients primarily in
the insurance and financial service industries.

CALLING: Outbound telemarketing refers to direct sales, research and
service activities that commence when the Target Companies place calls to
parties targeted by their client to offer products or services. In most
instances, the Target Companies receive customer data electronically from
their clients. These files have been selected to match the demographic
profile of the targeted customer for the product or service being offered
and contain each targeted customer's name, address, phone number and other
relevant data. The Target Companies' data management systems sort the
records and electronically assign them to one of their call centers.
Telephone calls are controlled by computerized call management systems that
utilize predictive dialers to automatically dial the numbers in the files,
determine if a live connection is made and present connected calls to a TSR
who has been trained for the client's program. When a call is presented, the
customer's name, other information about the customer and the program script
simultaneously appear on the TSR's computer screen. The TSR then uses the
script to solicit an order for the product or service or to request
information that will be added to the client's database.

QUALITY ASSURANCE: During the course of each telemarketing program, the
Target Companies carefully monitor their representatives to insure strict
compliance with the script and to maintain quality and efficiency. Sales
confirmations are recorded with the customer's consent to insure accuracy
and provide a record in the event a customer later questions or challenges
the accuracy of a transaction. The Target Companies also have extensive call
monitoring programs to facilitate TSR evaluation and provide clients the
ability to obtain program feedback on a real time basis. The Target
Companies' information systems enable them to provide their clients with
hourly reports, if necessary, on the status of an outgoing telemarketing
campaign and can transmit summary data and captured information
electronically to clients, if desired. Access to this data enables the
Target Companies' clients to modify or enhance an ongoing program to improve
their effectiveness.

SALES: Historically, the Target Companies have acquired new clients and
marketed their services primarily through personal contacts, referrals from
existing customers and by attending trade shows, advertising in industry
publications and responding to requests for proposals. Although the Target
Companies will continue to utilize these sources to identify potential
clients, the Target Companies are developing a more targeted approach to
identifying new clients and the potential additional needs of existing
clients. The Target Companies believe their services compliment those of
HA-LO and believe the opportunities to cross-sell their services to HA-LO's
current customers are significant.

PERSONNEL AND TRAINING: The Target Companies believe a key component of
their success is the quality of their employees. Therefore, the Target
Companies are continually refining their approach to hiring, training and
managing qualified personnel. The Target Companies' call centers are
strategically located in an effort to attract a high quality, dedicated work
force and lower their operating costs. The Target Companies believe that
their relatively high proportion of full-time employees provides a more
stable work force and reduces their recruiting and training expenditures. At
each call center, the Target Companies utilize a management structure
designed to insure that their telephone representatives are properly
supervised, managed and developed.

41
<PAGE>
The Target Companies currently employ over 1,400 TSRs and 550 insurance
agents. None of the Target Companies' employees are subject to a collective
bargaining agreement. The Target Companies consider their relations with
their employees to be good.

COMPETITION

The industry in which the Target Companies operate is very competitive and
highly fragmented. The Target Companies' competitors range in size from very
small firms offering specialized applications or short term projects, to large
independent firms and the in-house operations of many clients and potential
clients. A number of competitors have capabilities and resources equal to, or
greater than, the Target Companies'. The market includes non-captive
telemarketing and customer service operations such as APAC Teleservices, MATRIXX
Marketing, Inc., SITEL Corporation, ITI Marketing Services, Inc., West
Telemarketing, and TeleService Resources, as well as in-house telemarketing and
customer service organizations throughout the United States. In-house
telemarketing and customer services organizations comprise by far the largest
segment of the industry. In addition, some of the Target Companies' services
also compete with other forms of direct marketing such as mail, television and
radio. The Target Companies believe the principle competitive factors in the
telephone-based marketing industry are reputation for quality, sales and
marketing results, price, technological expertise, and the ability to promptly
provide clients with customized solutions to their sales and marketing needs.

GOVERNMENT REGULATION

United States Government Regulation. Telephone sales practices are regulated
at both the federal and state level. The Federal Communications Commission's
(the "FCC") rules under the Federal Telephone Consumer Protection Act of 1991
(the "TCPA") prohibit the initiation of telephone solicitations to residential
telephone subscribers before 8:00 A.M. or after 9:00 P.M., local time, and
prohibit the use of automated telephone dialing equipment to call certain
telephone numbers. In addition, the FCC rules require the maintenance of a list
of residential consumers who have stated that they do not wish to receive
telephone solicitations and avoidance of making calls to such consumers'
telephone numbers.

The Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of
1996 (the "TCFAPA") broadly authorizes the FTC to issue regulations prohibiting
misrepresentation in telephone sales. In August 1995, the FTC issued rules under
the TCFAPA which generally prohibit abusive telephone solicitation practices and
impose disclosure and record keeping requirements.

The Target Companies believe that they are in compliance with the TCPA and
the FCC rules thereunder and with the FTC rules under the TCFAPA. The Target
Companies train their telephone service representatives to comply with the FTC
and FCC rules and programs their call management system to avoid telephone calls
during restricted hours or to individuals maintained on the Target Companies'
"do-not-call" list.

A number of states have enacted or are considering legislation to regulate
telephone solicitations. At least one state also prohibits telemarketers from
requiring credit card payment and several other states require certain
telemarketers to obtain licenses and post bonds. From time to time bills are
introduced in Congress which, if enacted, would regulate the use of credit
information. The Target Companies cannot predict whether this legislation will
be enacted and what effect, if any, it would have on the Target Companies or
their industry.

CANADIAN GOVERNMENT REGULATION. Telemarketing in Canada is governed by both
federal and provincial legislation. At the federal level, telemarketing
practices may be dealt with under the fraud provisions of the Criminal Code
(Canada) or under the misleading advertising provisions of the Competition Act.
A telemarketer can be found guilty of fraud under the Criminal Code if, by
deceit, falsehood or other fraudulent means, the telemarketer defrauds the
public or any person of any property, money or valuable security. A telemarketer
found guilty of fraud is subject to fines and/or imprisonment. Pursuant to the
misleading advertising provisions of the Competition Act, no person,

42
<PAGE>
for the purposes of promoting, directly or indirectly, the supply or use of a
product or any business interest, by any means whatever, may make a
representation to the public that is false or misleading in a material respect.
Telemarketers convicted under the misleading advertising provisions of the
Competition Act are subject to fines and/or imprisonment. In addition, pursuant
to the civil remedy provisions of the Competition Act, those who have suffered
loss or damage as a result of such misleading advertising may sue for and
recover from the person who engaged in the conduct an amount equal to such loss
or damages, together with an additional amount not exceeding the full cost of
any investigation in connection with the matter and of proceedings under the
civil remedy provisions.

In June 1995, the Director under the Competition Act circulated for public
comment a Discussion Paper on possible amendments to the Competition Act which,
among other things, address telemarketing practices directly. The Director then
established a Consultative Panel to review and provide advice in respect of the
comments from the public and the proposals in the Discussion Paper. The report
of the Consultative Panel (the "Report") was issued on March 6, 1996 and notes
the need for federal legislation in order to deal effectively with deceptive
telemarketing practices due to their multi-jurisdictional nature. For purposes
of discussion, the Report includes, among other things, proposals prepared by
the Director to amend the Competition Act to (i) establish deceptive
telemarketing as a specific strict liability criminal offense; (ii) allow
proceedings in respect of deceptive telemarketing by way of summary conviction
in less serious matters, or on indictment in more serious matters; and (iii)
increase the maximum fine available upon summary conviction from Cdn. $25,000 to
Cdn. $200,000. The Report is expected to result in draft legislation proposing
amendments to the Competition Act being introduced to the House of Commons in
the fall of 1996.

Provinces and Territories in Canada have legislation dealing with consumer
protection and/or business practices. Some of such legislation also governs
telemarketing practices. In certain instances, telephone solicitations are
excluded from the application of the legislation; however, in other instances,
the legislation requires registration and bonds to be posted by telemarketers
and cooling off periods are prescribed. Such legislation may provide for both
private remedies, including rescission, damages, and injunctive or declaratory
relief, and public remedies, including cease and desist orders and criminal
penalties.

Aspects of telemarketing in Canada are also regulated by the Canadian
Radio-television and Telecommunications Commission (the "Commission"), which has
authority under the Telecommunications Act, to prohibit or regulate certain uses
of telecommunications facilities for the provision of unsolicited
telecommunications. The Commission has exercised its authority in relation to
the use of automatic dialing-announcing devices ("ADADs"). Currently, the use of
ADADs to make unsolicited calls for the purpose of solicitation (defined as the
selling or promoting of a product or a service, or the soliciting of money,
whether directly or indirectly) is prohibited (charities excluded). For
unsolicited calls for purposes other than solicitation (e.g., market research),
new tariff provisions are to be adopted which, among other things, limit calling
hours during which telephone solicitation can occur, require that each permitted
unsolicited ADAD call begin and, in certain cases, repeat a message identifying
the person on behalf of whom the call is being made, and, subject to limited
exceptions, display the calling party's originating calling number. While there
is a prohibition on sequential dialing, random dialing for permitted unsolicited
ADAD calls can occur if the parties ensure that no calls are made to emergency
lines and healthcare facilities. Callers using ADADs must make all reasonable
efforts to ensure that their dialing equipment disconnects within 10 seconds of
the called party hanging up their telephone. Additional restrictions on the use
of live voice operators or facsimile equipment to make unsolicited telephone
calls for the purpose of solicitation exist for territories served by Bell
Canada (i.e., Ontario and Quebec).

OTHER REGULATION. The industries served by the Target Companies are also
subject to varying degrees of government regulation. The Target Companies have
never been held responsible for regulatory noncompliance by a client. The Target
Companies' employees who complete the sale of

43
<PAGE>
insurance products are required to be licensed by various state and provincial
insurance commissions and participate in regular continuing education programs,
access to which are currently provided in-house by the Target Companies. See "--
Legal Proceedings."

FACILITIES

The Target Companies' corporate headquarters are located in Des Plaines,
Illinois in leased facilities consisting of approximately 11,000 square feet of
office space. The term of this lease expires in November, 1996. In addition, a
portion of the office space is being acquired by the City of Des Plaines through
eminent domain proceedings. The Target Companies are currently in the process of
selecting an alternative site for their corporate office and believe suitable
space at commercially reasonable terms will be found.

The Target Companies also lease the facilities listed below:

<TABLE>
<CAPTION>
CURRENT NO.
LOCATION OPENED OF WORKSTATIONS
- ---------------------------------------------------- ----------- -----------------
<S> <C> <C>
Des Plaines, IL 1988 16
Beloit, WI 1989 48
Hollywood, FL 1989 64
Oak Lawn, IL 1991 47
Fairborn, OH 1991 58
Montreal, Quebec 1992 100
Toronto, Ontario 1992 116
Ottawa, IL 1993 80
Houston, TX 1994 70
Loves Park, IL 1995 32
Springfield, OH 1995 48
Worth, IL 1995 16
Hollywood, FL (2) 1995 16
Welland, Ontario 1995 32
Winnipeg, Manitoba 1995 80
Chicago, IL 1996 62
Morris, IL 1996 32
</TABLE>

The leases of these facilities generally expire between 1996 and 2000, and
most contain renewal options. The Target Companies believe their current
facilities are adequate for their current operations, but additional facilities
will be required to support growth. The Target Companies believe that suitable
or alternative spaces will be available as needed at commercially reasonable
terms. In addition, the Target Companies intend to open a call station
containing 48 workstations in Middletown, Ohio prior to September 30, 1996.

LEGAL PROCEEDINGS

On May 21, 1996, governmental authorities in the Province of British
Columbia issued a cease and desist order with respect to Marusa's activities in
such Province requiring each employee of Marusa to cease conducting
telemarketing activities on behalf of Marusa until such employees obtain the
required Province of British Columbia licenses. On May 24, 1996, Marusa appealed
such cease and desist order and applied for and obtained a stay of the British
Columbia cease and desist order, which stay is effective until the court renders
a decision on the Target Companies' appeal. The hearing relating to the Target
Companies' appeal is scheduled for October 1996. The failure of Marusa to
obtain, and maintain in effect, all required licenses to conduct telemarketing
activities with respect to insurance products would have a material adverse
effect on the results of operations of the Target Companies taken as a whole.
See "Risk Factors -- Licensing Requirements."

44
<PAGE>
From time to time, the Target Companies are involved in litigation
incidental to their business. In the opinion of the Target Companies, no
litigation to which the Target Companies are currently a party is likely to have
a materially adverse effect on the Target Companies' results of operations or
financial condition.

45
<PAGE>
MANAGEMENT OF THE TARGET COMPANIES

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of each Target Company who will serve
as a director or executive officer of HA-LO are set forth below. All Target
Company directors hold office until the annual meeting of such Target Company
following their election or until their successors are duly elected and
qualified. Officers of a Target Company are appointed by such Target Company's
board of directors and serve at the discretion thereof.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------- --- ------------------------------------------------------------------------------
<S> <C> <C>
69 President, Secretary, Treasurer and a Director of Market USA; President and
Seymour N. Okner Secretary of Marusa; and President and Secretary of Marusa Financial
44 Vice President and Assistant Secretary of Market USA; Vice President and
Assistant Secretary of Marusa; and Vice President and Assistant Secretary of
Samuel P. Okner Marusa Financial
42 Vice President Operations of Market USA; Vice President -- Operations of
Patricia E. Richert Marusa
</TABLE>

Seymour N. Okner has served as (i) the President, Secretary, Treasurer and a
Director of Market USA since Market USA's inception in November 1988; (ii) the
President and Secretary of Marusa since April 1992; and (iii) the President and
Secretary of Marusa Financial since April 1993. From November 1985 until October
1987, Mr. Okner served as the President of Montgomery Ward Life Insurance
Company, Montgomery Ward Insurance Company and Forum Insurance Company, all
affiliates of Montgomery Ward. From September 1986 until October 1987, Mr. Okner
served as the President of Signature Life Insurance Company of America, also an
affiliate of Montgomery Ward. In 1985, Mr. Okner was named "Insurance Direct
Marketer of the Year" by and received the "Telemarketing Pioneer Award" from the
Direct Marketing Association. Mr. Okner is the father of Samuel P. Okner. At the
Effective Time, Mr. Okner will be appointed to the Board of Directors of HA-LO.
See "The Merger Transactions -- Interests of Certain Persons in the Merger
Transactions."

Samuel P. Okner has served as (i) the Vice President and Assistant Secretary
of Market USA since November 1991; (ii) the Vice President and Assistant
Secretary of Marusa since April 1992; and (iii) the Vice President and Assistant
Secretary of Marusa Financial since April 1993. Mr. Okner is a founding board
member and director of the Canadian Telemarketing Association and a
representative on the Chicago Direct Marketing Association's telemarketing
council. Mr. Okner is the son of Seymour N. Okner.

Patricia E. Richert has served as (i) the Vice President -- Operations of
Market USA since November 1988 and (ii) the Vice President -- Operations of
Marusa since April 1996. From October 1981 until November 1987, Ms. Richert
served as the Director of Telemarketing of Signature Life Insurance Company of
America, an affiliate of Montgomery Ward.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to all compensation
paid or earned for services rendered to the Target Companies in 1995 by each of
the directors and executive officers of the Target Companies who will serve as a
director or executive officer of HA-LO. The Company does not have a pension plan
or a long-term incentive plan, has not issued any restricted stock awards and
did not grant any stock options during its most recent fiscal year.

46
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
1995 ANNUAL COMPENSATION
-------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION
- -------------------------------------------------------- ----------- ------------- -------------
<S> <C> <C> <C>
Seymour N. Okner
President, Secretary, Treasurer and a Director of
Market USA; President and Secretary of Marusa; and
President and Secretary of Marusa Financial............ $ 84,000 $ 1,000,000 $ 0
Samuel N. Okner
Vice President and Assistant Secretary of Market USA;
Vice President and Assistant Secretary of Marusa; and
Vice President and Assistant Secretary of Marusa
Financial.............................................. $ 200,000 $ 188,300 $ 0
Patricia E. Richert
Vice President -- Operations of Market USA; Vice
President -- Operations of Marusa...................... $ 100,000 $ 81,250 $ 0
</TABLE>

EMPLOYMENT AGREEMENTS

At the Effective Time, each of Seymour N. Okner and Samuel P. Okner will
enter into an Employment Agreement with HA-LO, and an Agreement and Covenant
Against Unfair Competition and a General Release of Claims for the benefit of,
among other parties, HA-LO and its subsidiaries and each of the Target
Companies. In addition, at the Effective Time Patricia E. Richert will enter
into an Employment Agreement with HA-LO. See "The Merger Transactions --
Interests of Certain Persons in the Merger Transactions."

47
<PAGE>
CERTAIN TRANSACTIONS RELATING TO THE TARGET COMPANIES

Seymour N. Okner and Samuel P. Okner own a shopping center in Beloit,
Wisconsin known as Northgate Plaza. Market USA is a tenant of such shopping
center under a Lease dated March 1, 1990, as amended. Market USA paid aggregate
triple-net lease payments to Messrs. Okner of $52,000 in 1995.

Pursuant to an Agreement dated November 9, 1995 memorializing an oral
understanding reached in October 1993 (the "Option Agreement"), among Seymour N.
Okner, Samuel P. Okner and Merchant Partners, in consideration of $1,000 paid by
Merchant Partners, Messrs. Okner together granted Merchant Partners the right
and option to purchase, at any time prior to November 10, 2000, up to 25% of the
number of outstanding shares of each class of capital stock of each of Market
USA and Marusa. The actual percentage of the outstanding capital stock of each
of Market USA and Marusa which may be acquired by Merchant Partners pursuant to
the Option Agreement is reduced by 0.25% for each $1,000,000 by which the
combined enterprise value of Market USA and Marusa exceeds $20.0 million. As a
result of the execution of the Plan of Merger and Amalgamation, Merchant
Partners has the right to acquire 20% of the outstanding capital stock of each
of Market USA and Marusa. See "Principal Shareholders of the Target Companies."
The exercise price payable by Merchant Partners pursuant to the Option Agreement
is $4.0 million. Merchant Partners has indicated to Messrs. Okner that it
intends to exercise its rights under the Option Agreement in full, and deliver
the full exercise price to Messrs. Okner, immediately prior to the Effective
Time. As a condition to HA-LO's obligations to consummate the Merger
Transactions, Merchant Partners, as an owner of Market USA Common Stock and
Marusa Common Stock, will be required to execute and deliver to HA-LO an
Affiliate Agreement and a Registration Rights Agreement. See "The Merger
Transactions -- Resale Restrictions."

The shareholders of each of Marusa and Marusa Financial have entered into a
unanimous shareholder agreement pursuant to Section 146(2) of the CBCA pursuant
to which (i) all of the powers of the directors of each such corporation to
manage or supervise the management of the business and affairs of each such
corporation is restricted to the fullest extent permitted by the CBCA and (ii)
the shareholders of each such corporation have retained for themselves all of
the rights, powers, duties and liabilities to manage the business and affairs of
each such corporation.

Market USA made distributions to its shareholders of $666,000, $4.7 million
and $1.3 million in fiscal 1994 and 1995 and for the first six months of 1996,
respectively.

Market USA and its shareholders have elected to be taxable as an S
corporation under the Code. Consequently, Market USA is not generally subject to
federal and certain state income taxes; rather, its shareholders are required to
include in their separate income tax returns their pro rata portion of Market
USA's taxable income. As a result, Market USA intends to make a distribution of
approximately $2,166,000 to its shareholders immediately prior to the Effective
Time. Such distribution will be equal to Market USA's estimate of the amount of
federal and state income taxes which will be imposed upon its shareholders with
respect to Market USA's activities for such period.

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<PAGE>
PRINCIPAL SHAREHOLDERS OF THE TARGET COMPANIES

The following tables set forth certain information regarding the beneficial
ownership of the common stock of each of the Target Companies as of the date of
this Proxy Statement/Prospectus (i) by each person who is known to the Target
Companies to beneficially own more than 5% of any class of a Target Company's
outstanding common stock; (ii) each director of the Target Companies; (iii) each
executive officer of the Target Company; and (iv) by all of a Target Company's
directors and officers as a group.

PRINCIPAL SHAREHOLDERS OF MARKET USA

<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME SHARES (1) OWNERSHIP
- -------------------------------------------------------------------------- --------------- -----------
<S> <C> <C>
Seymour N. Okner ......................................................... 23 23.0%
701 Lee Street
Des Plaines, Illinois 60016
Ellyn Robbins Family Trust (2) ........................................... 17 17.0%
701 Lee Street
Des Plaines, Illinois 60016
Joel C. Okner Family Trust (3) ........................................... 19 19.0%
701 Lee Street
Des Plaines, Illinois 60016
Samuel P. Okner Family Trust (4) ......................................... 21 21.0%
701 Lee Street
Des Plaines, Illinois 60016
Merchant Partners, Limited Partnership (5) ............................... 20 20.0%
9690 Deereco Road
Timonium, Maryland 21093
Samuel P. Okner........................................................... -- --
Patricia E. Richert....................................................... -- --
All Directors and Executive Officers as a group (3 persons) (6)........... 80 80.0%
</TABLE>

PRINCIPAL SHAREHOLDERS OF MARUSA

<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME SHARES (1) OWNERSHIP
- -------------------------------------------------------------------------- ------------- -----------
<S> <C> <C>
Seymour N. Okner ......................................................... 0.80 40.0%
701 Lee Street
Des Plaines, Illinois 60016
Samuel P. Okner .......................................................... 0.80 40.0%
701 Lee Street
Des Plaines, Illinois 60016
Merchant Partners, Limited Partnership (5) ............................... 0.40 20.0%
9690 Deereco Road
Timonium, Maryland 21093
Stephane Deland........................................................... -- --
Patricia E. Richert....................................................... -- --
All Directors and Executive Officers as a group (4 persons) (6)........... 1.60 80.0%
</TABLE>

49
<PAGE>
PRINCIPAL SHAREHOLDERS OF MARUSA FINANCIAL

<TABLE>
<CAPTION>
NUMBER OF CLASS NUMBER OF CLASS
A PERCENTAGE B PERCENTAGE OF
NAME COMMON STOCK OF CLASS COMMON STOCK CLASS
- --------------------------------------------------------- --------------- ----------- --------------- -------------
<S> <C> <C> <C> <C>
Seymour N. Okner ........................................ 1 50% 49 49%
701 Lee Street
Des Plaines, Illinois 60016
Samuel P. Okner ......................................... 1 50% -- --
701 Lee Street
Des Plaines, Illinois 60016
Ernest E. Gershon (7) ................................... -- -- 51 51%
360 Bloor Street East
Suite 1601
Toronto, Ontario
Canada M4W 3M3
Stephane Deland.......................................... -- -- -- --
All Directors and Executive Officers as a group (3
persons) (6)............................................ 2 100% 49 49%
</TABLE>

PRINCIPAL SHAREHOLDERS OF NEROK

<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME SHARES OWNERSHIP
- -------------------------------------------------------------------------- ------------- -----------
<S> <C> <C>
Anne Okner ............................................................... 50 50.0%
701 Lee Street
Des Plaines, Illinois 60016
Debra Okner .............................................................. 50 50.0%
701 Lee Street
Des Plaines, Illinois 60016
Stephane Deland........................................................... -- --
All Directors and Executive Officers as a group (3 persons) (6)........... 100 100.0%
</TABLE>

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

* Less than 1%.

(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Target Company Common Stock which
such person has the right to acquire within 60 days after the date of this
Proxy Statement/ Prospectus.

(2) The Ellyn Robbins Family Trust is a trust primarily for the benefit of Ellyn
Robbins with Ellyn Robbins and Anne Okner as Co-Trustees.

(3) The Joel C. Okner Family Trust is a trust primarily for the benefit of Joel
C. Okner with Joel C. Okner and Anne Okner as Co-Trustees.

(4) The Samuel P. Okner Family Trust is a trust primarily for the benefit of
Samuel P. Okner with Samuel P. Okner and Anne Okner as Co-Trustees.

(5) Represents shares subject to the Option Agreement. See "Certain Transactions
Relating to the Target Companies." Merchant Partners, Limited Partnership is
a Delaware limited partnership, the general partner of which is Merchant
Advisors, Limited Partnership, a Delaware limited partnership. The general
partner of Merchant Advisors, Limited Partnership is Merchant Development
Corp., a Delaware corporation.

(6) Includes shares of Target Company Common Stock owned by Seymour N. Okner,
Samuel P. Okner, Anne Okner and Debra Okner.

(7) Pursuant to a Memorandum of Agreement dated April 19, 1993 between Ernest E.
Gershon, Seymour N. Okner and Marusa Financial, the 51 shares of Class B
Common Stock of Marusa Financial owned by Ernest E. Gershon are subject to a
voting trust which grants to Seymour N. Okner the exclusive right, power and
discretion pertaining to such shares, including the right to vote such
shares.

50
<PAGE>
COMPARISON OF RIGHTS OF HOLDERS OF HA-LO COMMON STOCK
AND TARGET COMPANY COMMON STOCK

HA-LO is an Illinois corporation and is governed by the IBCA, its Restated
Articles of Incorporation (the "HA-LO Articles") and its Amended and Restated
Bylaws (the "HA-LO Bylaws"). Market USA is also an Illinois corporation and is
governed by the IBCA, its Articles of Incorporation (the "Market USA Articles")
and its Bylaws (the "Market USA Bylaws"). Marusa is a Canadian federal
corporation and is governed by the CBCA, its Articles of Incorporation (the
"Marusa Articles") and its Bylaws (the "Marusa Bylaws").

Upon consummation of the Merger Transactions, the shareholders of Market USA
and Marusa will become shareholders of HA-LO. The rights of HA-LO shareholders
and Market USA shareholders are substantially similar because there are few
differences between the HA-LO Articles and HA-LO Bylaws and the Market USA
Articles and Market USA Bylaws. The rights of HA-LO shareholders differ from the
rights of Marusa shareholders because of differences between the IBCA and the
CBCA and because the HA-LO Articles and HA-LO Bylaws differ in certain respects
from the Marusa Articles and Marusa Bylaws. The following is a brief summary of
the principal similarities and differences in the rights of shareholders of
HA-LO, Market USA and Marusa.

COMMON STOCK

Pursuant to the HA-LO Articles, HA-LO is authorized to issue 25,000,000
shares of HA-LO Common Stock. As of July 31, 1996, 10,509,055 shares of HA-LO
Common Stock were issued and outstanding. Shares of HA-LO Common Stock are
quoted and traded on The Nasdaq National Market under the symbol "HALO."

Pursuant to the Market USA Articles, Market USA is authorized to issue 1,000
shares of Market USA Common Stock. As of the date of this Proxy
Statement/Prospectus, Market USA had 100 shares of Market USA Common Stock
issued and outstanding. Market USA Common Stock is not traded on any established
public trading market or the over-the-counter market and trading is nonexistent.

Pursuant to the Marusa Articles, Marusa is authorized to issue an unlimited
number of shares of Marusa Common Stock and an unlimited number of shares of
Class B common stock, Class A preferred stock, Class B preferred stock, Class C
preferred stock and Class D preferred stock. As of the date of this Proxy
Statement/Prospectus, Marusa had two shares of Marusa Common Stock issued and
outstanding. Marusa Common Stock is not traded on any established public trading
market or the over-the-counter market and trading is non-existent.

DIVIDENDS

Generally, shareholders of HA-LO, Market USA and Marusa are entitled to
receive dividends when and as declared by their respective Boards of Directors,
out of funds legally available therefor.

VOTING RIGHTS

Holders of HA-LO Common Stock, Market USA Common Stock and Marusa Common
Stock are entitled to one vote for each share of common stock held of record on
all matters submitted to a vote of shareholders, except with respect to the
election of directors, each holder of Market USA Common Stock has cumulative
voting rights.

INDEMNIFICATION

Section 8.75 of the IBCA expressly grants to Illinois corporations, such as
HA-LO and Market USA, the power to indemnify directors, officers, employees and
agents against certain liabilities and expenses incurred in the performance of
their duties. Indemnification may not be made, however with respect to liability
incurred in connection with actions involving gross negligence, willful
misconduct and criminal acts.

With respect to all proceedings other than shareholders derivative actions,
Section 8.75 of the IBCA permits an Illinois corporation to indemnify any of its
directors, officers, employees or agents

51
<PAGE>
only if such person acted in good faith and in a manner which such person
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, in the case of a criminal proceeding, had no reason to believe
his or her conduct was unlawful. In the case of derivative actions, an Illinois
corporation may indemnify any party if such person acted in good faith and in a
manner he or she believes to be in the best interests of the corporation.
Furthermore, in derivative actions, no indemnification is permitted with respect
to any matter in which the person to be indemnified has been held liable to the
corporation unless such indemnification is approved by the court. To the extent
that a director, officer, employee or agent of a corporation has been successful
on the merits in defense of any proceeding for which indemnification is
permitted by Section 8.75 of the IBCA, a corporation is obligated to indemnify
such person against expenses actually and reasonably incurred by such person in
connection with the proceeding.

The HA-LO Articles require HA-LO to indemnify any current or former director
or officer to the fullest extent permitted by IBCA. HA-LO maintains officers'
and directors' liability insurance which insures against liabilities that
officers and directors of HA-LO may incur in such capacities. HA-LO has also
entered into indemnity agreements with each of its directors and officers
pursuant to which it has agreed to indemnify such persons against any and all
losses and expenses to the fullest extent permitted under the HA-LO Articles and
HA-LO Bylaws and the IBCA and to advance to such persons any and all expenses
arising in connection therewith.

The Market USA Bylaws provide for indemnification consistent with Section
8.75 of the IBCA. The Market USA Bylaws also permit Market USA to purchase and
maintain officers' and directors' liability insurance to insure against
liabilities that officers and directors of Market USA may incur in such
capacities.

Section 124 of the CBCA provides that, except in respect of an action by or
on behalf of the corporation or body corporate to procure a judgment in its
favor, a corporation may indemnify a current or former director or officer of
the corporation, or a person who acts or acted at a corporation's request as a
director or officer of a corporation of which the corporation is or was a
shareholder or creditor, against all costs, charges and expenses, including an
amount paid to settle an action or satisfy a judgment, reasonably incurred by
him in respect of any civil, criminal or administrative action or proceeding to
which he is made a party by reason of being or having been a director or officer
of such corporation, if (a) he acted honestly and in good faith with a view to
the best interests of the corporation, and (b) in the case of a criminal or
administrative action or proceeding that is enforced by a monetary penalty, he
had reasonable grounds for believing that his conduct was lawful. Court approval
is required by the corporation for indemnification of individuals or
corporations in derivative actions, although such persons are entitled to
indemnity from the corporation if the person seeking the indemnity was
substantially successful on the merits in his defense of the action or
proceeding and was in good faith or had reasonable grounds for believing that
his conduct was lawful. Section 124 of the CBCA also provides that a corporation
may purchase and maintain insurance for the benefit of any officer or director
of the corporation against any liability incurred by him in his capacity as a
director or officer of the corporation, except where the liability relates to
his failure to act honestly and in good faith with a view to the best interests
of the corporation, or in his capacity as a director or officer of another body
corporate where he acts or acted in that capacity at the corporation's request,
except where the liability relates to his failure to act honestly and in good
faith with a view to the best interests of the body corporate. Section 124 also
provides that a corporation or an individual may apply to a court for an order
approving an indemnity under this section and the court may make any further
order that it thinks fit.

The Marusa Bylaws provide for indemnification of directors, officers, or
persons acting at the corporation's request as a director or officer of a body
corporate of which the corporation is or was a shareholder or creditor, and his
heirs or legal representatives, in accordance with the provisions of Section 124
of the CBCA. The Marusa Bylaws also provide that no director or officer shall be
liable for the acts, neglects or defaults of any other person including any
director or officer or employee, or for any loss, damage or expense happening to
the corporation through the insufficiency or deficiency of

52
<PAGE>
title to any property acquired by or on behalf of the corporation, or for the
insufficiency or deficiency of any security in or upon which any of the moneys
of the corporation shall be invested, or for any loss or damage arising from the
bankruptcy, insolvency, delictual, quasi-delictual or tortious acts of any
person with whom any of the moneys, securities or other property of the
corporation shall be deposited or for any loss occasioned by an error of
judgment or oversight on his part, or for any other loss, damage or misfortune
whatever which may arise out of the execution of the duties of his office or in
relation thereto, unless the same are occasioned by his own wilful neglect or
default.

PREEMPTIVE RIGHTS

Holders of HA-LO Common Stock, Market USA Common Stock and Marusa Common
Stock do not have any preemptive or preferential rights to subscribe to (i) any
additional shares or (ii) any obligations convertible into stock.

ASSESSMENTS

The outstanding shares of capital stock of HA-LO, Market USA and Marusa are
fully paid and are not subject to assessment.

LIQUIDATION RIGHTS

Holders of capital stock of HA-LO, Market USA and Marusa are entitled to
receive their pro rata portion of any assets distributable to shareholders upon
a liquidation.

QUORUM

Pursuant to the bylaws of each of HA-LO, Market USA and Marusa, a majority
of the outstanding shares of the corporation, represented in person or by proxy,
shall constitute a quorum at any meeting of shareholders; PROVIDED, HOWEVER,
with respect to the HA-LO Bylaws, a quorum shall not consist of less than
one-third of the outstanding shares entitled to vote. If a quorum is present at
any meeting, the affirmative vote of the holders of a majority of the shares
represented at such meeting shall be the act of the shareholders, unless the
vote of a greater number is required by applicable law.

BOARD OF DIRECTORS

Pursuant to the HA-LO Bylaws, the Board of Directors of HA-LO shall consist
of not less than five nor more than eleven and shall be fixed from time to time,
within such minimum and maximum, by the shareholders. At present, the HA-LO
Board of Directors consists of seven directors. It is currently anticipated that
Seymour N. Okner, the principal Target Shareholder, will be nominated and
appointed as of the date following the Effective Time the Board of Directors of
HA-LO. See "The Plan of Merger and Amalgamation -- Governance."

Pursuant to the Market USA Bylaws, the number of directors of Market USA
shall not be less than one nor more than five. At present, the Market USA Board
of Directors consists of one director.

Pursuant to the Marusa Bylaws, the number of directors of Marusa shall not
be less than one nor more than ten. At present, the Marusa Board of Directors
consists of one director.

AMENDMENT OF ARTICLES AND BYLAWS

Pursuant to Article 10 of the IBCA, the HA-LO Articles and Market USA
Articles may be amended by the affirmative vote of the holders of at least
two-thirds of the outstanding shares entitled to vote on such amendment. The
HA-LO Bylaws and Market USA Bylaws may be amended by the affirmative vote of the
holders of a majority of the outstanding shares of the corporation or by the
action of the Board of Directors.

Pursuant to Section 103 of the CBCA, unless the articles, bylaws, or
unanimous shareholder agreement otherwise provide, the directors may, by
resolution, make, amend or repeal any bylaws that regulate the business or
affairs of the corporation. The directors shall submit such bylaw, or an
amendment, or a repeal of a bylaw, to the shareholders at the next meeting of
shareholders, and the shareholders may, by ordinary resolution (i.e., a
resolution passed by a majority of the votes cast by the shareholders who voted
in respect of that resolution) confirm, reject or amend the bylaw, amendment

53
<PAGE>
or repeal. Pursuant to Section 173 of the CBCA, the articles of a corporation
may be amended by special resolution (i.e., a resolution passed by a majority of
not less than two-thirds of the votes cast by the shareholders who voted in
respect of that resolution or signed by all the shareholders entitled to vote on
that resolution).

LEGAL MATTERS

The validity of the issuance of the HA-LO Common Stock being offered hereby
and certain other legal matters relating to the Merger Transactions will be
passed upon for HA-LO by Neal, Gerber & Eisenberg, Chicago, Illinois. The
federal income tax consequences in connection with the U.S. Merger will be
passed upon for HA-LO by Marc S. Roth & Associates, Ltd., Glencoe, Illinois, and
for the Target Companies by Altheimer & Gray, Chicago, Illinois.

EXPERTS

The consolidated financial statements of HA-LO incorporated by reference in
this Proxy Statement/Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto. Such financial statements have been incorporated herein by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.

The combined financial statements of the Target Companies as of December 31,
1995 and 1994 and for each of the three fiscal years ended December 31, 1995
included in this Proxy Statement/ Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto. Such financial statements have been included herein in reliance
upon such reports given upon the authority of such firm as experts in accounting
and auditing.

SHAREHOLDER PROPOSALS

As described in HA-LO's proxy statement relating to its 1996 Annual Meeting
of Shareholders, any proposals that shareholders of HA-LO desire to have
presented at the 1997 Annual Meeting of Shareholders must have been received by
HA-LO at its principal executive offices not less than 60 days nor more than 90
days prior to the scheduled date of the meeting (or, if less than 70 days'
notice or prior public disclosure of the date of the meeting is given, the 10th
day following the earlier of (i) the day such notice was mailed or (ii) the day
such public disclosure was made), for inclusion in HA-LO's 1997 proxy materials.
The 1997 Annual Meeting of Stockholders is scheduled to be held on June 2, 1997.

54
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
TARGET COMPANIES AUDITED FINANCIAL STATEMENTS:
Report of Independent Public Accountants........................................... F-2
Combined Balance Sheets as of December 31, 1994 and 1995........................... F-3
Combined Statements of Operations for the three years ended December 31, 1993, 1994
and 1995.......................................................................... F-4
Combined Statements of Shareholders' Equity for the years ended December 31, 1993,
1994 and 1995..................................................................... F-5
Combined Statements of Cash Flows for the years ended December 31, 1993, 1994 and
1995.............................................................................. F-6
Notes to Combined Financial Statements............................................. F-7

TARGET COMPANIES UNAUDITED FINANCIAL INFORMATION:
Combined Condensed Balance Sheets at June 30, 1996................................. F-14
Combined Condensed Statements of Operations for the three months ended and six
months ended June 30, 1995 and 1996............................................... F-15
Combined Condensed Statements of Cash Flows for the six months ended June 30, 1995
and 1996.......................................................................... F-16
Notes to Combined Condensed Interim Financial Statements........................... F-17
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholder of Market USA and Shareholders of MARUSA Marketing Inc.:

We have audited the accompanying combined balance sheets of Market USA,
MARUSA Marketing Inc. and subsidiary (the Company) as of December 31, 1994 and
1995, and the related combined statements of operations, shareholders' equity
and cash flows for each of the three years ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Market USA, MARUSA
Marketing Inc. and subsidiary as of December 31, 1994 and 1995, and the combined
results of their operations and their cash flows for each of the three years
ended December 31, 1995, in conformity with generally accepted accounting
principles.

/s/ ARTHUR ANDERSEN LLP

Boston, Massachusetts
February 2, 1996

F-2
<PAGE>
MARKET USA, MARUSA MARKETING INC.
AND SUBSIDIARY
COMBINED BALANCE SHEETS -- DECEMBER 31, 1994 AND 1995

ASSETS

<TABLE>
<CAPTION>
1994 1995
-------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents...................................................... $ 1,898,275 $ 739,149
Accounts receivable --
Trade, less allowance for doubtful accounts of $128,619 and $155,859 in 1994
and 1995, respectively...................................................... 6,123,205 5,955,975
Other receivables.............................................................. 56,858 13,953
Prepaid expenses............................................................... 269,948 431,993
-------------- --------------
Total current assets....................................................... 8,348,286 7,141,070
PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION.......................... 2,910,655 3,320,002
OTHER ASSETS..................................................................... 12,158 31,214
-------------- --------------
Total assets............................................................... $ 11,271,099 $ 10,492,286
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt............................................. $ 117,400 $ --
Accounts payable................................................................. 17,650 923,294
Accrued expenses--...............................................................
Payroll, bonuses and related items............................................... 1,517,644 760,847
Accrued telephone and other accrued expenses..................................... 1,569,482 2,355,838
Foreign and state income taxes payable........................................... 88,295 571,443
Deferred income taxes............................................................ 137,772 161,780
-------------- --------------
Total current liabilities........................................................ 3,448,243 4,773,202
-------------- --------------
LONG-TERM DEBT, LESS CURRENT MATURITIES.......................................... 78,769 81,336
-------------- --------------
OTHER LONG-TERM LIABILITIES...................................................... 266,000 300,000
-------------- --------------
COMMITMENTS AND CONTINGENCIES (Notes 6 and 7)
SHAREHOLDERS' EQUITY:
Common Shares, $1.00 par value--
Authorized -- 1,795 shares
Issued and outstanding -- 1,795 shares........................................... 1,795 1,795
Cumulative translation adjustment................................................ (254) 22,681
Retained earnings................................................................ 7,476,546 5,313,272
-------------- --------------
Total shareholders' equity....................................................... 7,478,087 5,337,748
-------------- --------------
Total liabilities and shareholders' equity....................................... $ 11,271,099 $ 10,492,286
-------------- --------------
-------------- --------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE COMBINED FINANCIAL
STATEMENTS.

F-3
<PAGE>
MARKET USA, MARUSA MARKETING INC.
AND SUBSIDIARY
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

<TABLE>
<CAPTION>
1993 1994 1995
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUES......................................................... $ 24,491,477 $ 35,424,712 $ 38,399,421
-------------- -------------- --------------
OPERATING EXPENSES:
Cost of services............................................... 16,850,808 24,080,572 26,453,720
Selling, general and administrative expenses................... 5,487,200 7,205,357 9,062,416
-------------- -------------- --------------
Total operating expenses..................................... 22,338,008 31,285,929 35,516,136
-------------- -------------- --------------
Income from operations....................................... 2,153,469 4,138,783 2,883,285
-------------- -------------- --------------
OTHER INCOME (EXPENSES):
Interest income................................................ 21,671 57,614 53,825
Interest expense............................................... (9,418) (21,585) (7,766)
Other income................................................... 1,245 -- --
-------------- -------------- --------------
Other income, net............................................ 13,498 36,029 46,059
-------------- -------------- --------------
Income before provision for income taxes..................... 2,166,967 4,174,812 2,929,344
PROVISION FOR INCOME TAXES....................................... 208,739 336,912 508,241
-------------- -------------- --------------
Net income................................................... $ 1,958,228 $ 3,837,900 $ 2,421,103
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE COMBINED FINANCIAL
STATEMENTS.

F-4
<PAGE>
MARKET USA, MARUSA MARKETING INC.
AND SUBSIDIARY
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

<TABLE>
<CAPTION>
COMMON SHARES
-------------------- CUMULATIVE TOTAL
SHARES RETAINED TRANSLATION SHAREHOLDERS'
ISSUED AMOUNT EARNINGS ADJUSTMENTS EQUITY
--------- --------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992....................... 1,795 $ 1,795 $ 2,698,449 $ 2,900 $ 2,703,144
Net income..................................... -- -- 1,958,228 -- 1,958,228
Translation adjustment......................... -- -- -- 2,298 2,298
Cash dividends paid............................ -- -- (351,902) -- (351,902)
--------- --------- -------------- ----------- --------------
BALANCE, DECEMBER 31, 1993....................... 1,795 1,795 4,304,775 5,198 4,311,768
Net income..................................... -- -- 3,837,900 -- 3,837,900
Translation adjustment......................... -- -- -- (5,452) (5,452)
Cash dividends paid............................ -- -- (666,129) -- (666,129)
--------- --------- -------------- ----------- --------------
BALANCE, DECEMBER 31, 1994....................... 1,795 1,795 7,476,546 (254) 7,478,087
Net income..................................... -- -- 2,421,103 -- 2,421,103
Cash dividends paid............................ -- -- (4,682,154) -- (4,682,154)
Translation adjustment......................... -- -- -- 22,935 22,935
MARUSA Marketing Inc.'s net loss for the three
months ended March 31, 1995................... -- -- 97,777 -- 97,777
--------- --------- -------------- ----------- --------------
BALANCE, DECEMBER 31, 1995....................... 1,795 $ 1,795 $ 5,313,272 $ 22,681 $ 5,337,748
--------- --------- -------------- ----------- --------------
--------- --------- -------------- ----------- --------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE COMBINED FINANCIAL
STATEMENTS.

F-5
<PAGE>
MARKET USA, MARUSA MARKETING INC.
AND SUBSIDIARY
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

<TABLE>
<CAPTION>
1993 1994 1995
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...................................................... $ 1,958,228 $ 3,837,900 $ 2,421,103
Adjustments to reconcile net income to net cash provided by
operating activities-
MARUSA Marketing Inc.'s net loss for the three months ended
March 31, 1995............................................... -- -- 97,777
Depreciation and amortization................................. 522,487 743,192 852,760
Deferred taxes................................................ 48,909 80,916 24,008
Change in assets and liabilities-
Accounts receivables........................................ (1,394,435) (2,702,916) 167,230
Other receivables............................................. (24,025) (10,798) 42,905
Prepaid expenses and deposits............................... (60,359) (127,519) (181,290)
Accounts payable............................................ (826,812) -- 32,055
Accrued expenses............................................ 1,780,499 276,071 512,683
Other long-term liabilities................................. 132,000 134,000 34,000
-------------- -------------- --------------
Net cash provided by operating activities................. 2,136,492 2,230,846 4,003,231
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used for purchases of property and equipment............... (824,879) (1,396,360) (388,305)
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable..................................... 500,000 550,000 --
Payments on long-term debt...................................... (6,270) (6,967) (4,833)
Payments of notes payable....................................... (100,000) (840,000) (110,000)
Dividends paid.................................................. (351,902) (666,129) (4,682,154)
-------------- -------------- --------------
Net cash provided by (used in) financing activities....... 41,828 (963,096) (4,796,987)
-------------- -------------- --------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS...... 2,298 (5,452) 22,935
-------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............. 1,335,739 (134,062) (1,159,126)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR...................... 676,598 2,032,337 1,898,275
-------------- -------------- --------------
CASH AND CASH EQUIVALENTS, END OF YEAR............................ $ 2,032,337 $ 1,898,275 $ 739,149
-------------- -------------- --------------
-------------- -------------- --------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest.......................... $ 9,418 $ 21,585 $ 7,766
-------------- -------------- --------------
-------------- -------------- --------------
Cash paid during the year for income taxes...................... $ 4,182 $ 24,052 $ 122,672
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE COMBINED FINANCIAL
STATEMENTS.

F-6
<PAGE>
MARKET USA, MARUSA MARKETING INC.
AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 1995

(1) BUSINESS AND ORGANIZATION
The accompanying combined financial statements include the accounts of
Market USA (an Illinois company) and MARUSA Marketing Inc. (a Canadian company)
(MARUSA) (collectively, the Company). Market USA was founded in 1987 and MARUSA
was founded in 1992 as a provider of telemarketing services.

The Company provides high-volume, telephone-based sales; marketing; and
customer management solutions for corporate clients operating in the financial,
insurance, telecommunications, and business and consumer industries throughout
the United States and Canada. The nature of the industry is such that the
Company is dependent on several large clients for a significant portion of its
annual revenues. The Company had four clients which each accounted for more than
10% of the Company's net revenues for each of the three years ended December 31,
1995. The loss of one or more of these major clients could have a materially
adverse effect on the Company's business.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed in
the preparation of these combined financial statements.

(A) USE OF ESTIMATES

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

(B) PRINCIPLES OF COMBINATION

The accompanying combined financial statements include accounts of
Market USA and MARUSA. Market USA is owned by a single shareholder and
MARUSA is owned by the Market USA shareholder and his son. All
significant intercompany accounts and transactions have been eliminated.

The Company considers all highly liquid investments with original
maturities of three months or less to be cash and cash equivalents.

(D) PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated
depreciation. Leasehold improvements are capitalized and charged to
expense through depreciation. Upon sale or retirement, the related cost
and accumulated depreciation are removed from the accounts, and any gain
or loss is recorded in the combined statement of operations. Depreciation
is

F-7
<PAGE>
MARKET USA, MARUSA MARKETING INC.
AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
determined using the straight-line method for financial reporting
purposes and accelerated methods for income tax reporting purposes over
the estimated useful lives of the respective assets. Estimated useful
lives are as follows:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL
ASSET CLASSIFICATION LIFE
- -------------------------------------------------- ----------
<S> <C>
Telecommunications equipment 5 Years
Office furniture and equipment 7 Years
Leasehold improvements 15 Years
Automobiles 5 Years
Building 15 Years
</TABLE>

The Company's depreciation method and useful lives were retroactively
revised in connection with these combined financial statements in order to more
fairly allocate the cost of the assets over the period of actual service.
Previously, the Company had used accelerated tax depreciation methods and lives
for financial reporting.

Repairs and maintenance are charged to expense as incurred. General and
administrative costs associated with the opening of new Company call centers are
expensed as incurred.

(E) REVENUE RECOGNITION

The Company recognizes revenues on programs as services are performed
for its clients, generally based on hours incurred.

(F) CONCENTRATION OF CREDIT RISK

Concentration of credit risk is limited to trade accounts receivable
and is subject to the financial conditions of certain major clients
described in Note 1. The Company does not require collateral or other
security to support clients' receivables. The Company conducts periodic
reviews of its clients' financial conditions and vendor payment practices
to minimize collection risks on trade accounts receivable.

(G) TRAINING COSTS

The Company maintains ongoing training programs for its employees.
The cost of this training is expensed when incurred. In addition, certain
contracts require clients to reimburse the Company for specific training.
These costs are billed to clients and expensed as incurred.

(H) FISCAL YEAR-END

Market USA's fiscal year-end is December 31 and MARUSA's fiscal
year-end is March 31. The accompanying combined statements of operations
for the years ended December 31, 1993 and 1994 include MARUSA's
statements of operations for the 12 months ended March 31, 1994 and 1995,
respectively. The accompanying combined statement of operations for the
year ended December 31, 1995 includes MARUSA's statement of operations
for the 12 months ended December 31, 1995. MARUSA's statement of
operations for the three months ended March 31, 1995, which is included
in the accompanying combined statements of operations for the years ended
December 31, 1994 and 1995, had revenues, expenses and net loss of
$1,794,255, $1,962,836 and $97,777, respectively. The accompanying
combined balance sheets as of December 31, 1994 and 1995 include MARUSA's
balance sheets as of March 31, 1995 and December 31, 1995, respectively.

F-8
<PAGE>
MARKET USA, MARUSA MARKETING INC.
AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(I) FOREIGN CURRENCY TRANSLATION

All assets and liabilities of MARUSA are translated at year-end
exchange rates while revenues and expenses are translated at the average
exchange rate for the year. The gains or losses, net of applicable
deferred income taxes, resulting from such translation are included in
shareholders' equity.

(J) FAIR MARKET VALUE OF FINANCIAL INSTRUMENTS

The fair market value of the Company's financial instruments (cash
equivalents, accounts receivable, accounts payable and long-term debt)
approximates its financial statement carrying value.

(3) INCOME TAXES
Market USA elected to include its income and expenses with those of its
shareholder for federal and state income tax purposes (an S corporation
election). Accordingly, the accompanying combined statements of operations for
the three years ended December 31, 1995, do not include a provision for federal
income taxes. MARUSA's income is taxed in accordance with the corporate tax
requirements of Canada and the accompanying combined statements of operations
for the three years ended December 31, 1995 include a provision for MARUSA's
income pursuant to Canadian corporate income tax requirements.

The Company adopted Statement of Financial Accounting Standards (SFAS) No.
109, ACCOUNTING FOR INCOME TAXES, for the year ended December 31, 1993, which
required a change from the deferred method to the asset and liability method of
accounting for income taxes. Under the asset and liability method, deferred
income taxes are recognized for the tax consequences of TEMPORARY DIFFERENCES by
applying enacted statutory rates applicable to future years to differences
between the financial statement carrying amounts and the tax basis of existing
assets and liabilities. Under SFAS No. 109, the effect on deferred taxes of a
change in tax rates is recognized as income in the period that includes the
enactment date.

The adoption of SFAS No. 109 did not impact the Company's combined statement
of operations for the year ended December 31, 1993, and there was no cumulative
effect as of the date of adoption.

The provision for income taxes consists of the following at December 31,
1993, 1994 and 1995:

<TABLE>
<CAPTION>
1993 1994 1995
--------- ----------- -----------
<S> <C> <C> <C>
Current--
State........................................................... $ 6,947 $ 15,047 $ 47,738
Canadian........................................................ 17,559 107,207 400,595
--------- ----------- -----------
24,506 122,254 448,333
--------- ----------- -----------
Deferred--
State........................................................... 15,816 38,490 (19,686)
Canadian........................................................ 36,417 42,168 45,594
--------- ----------- -----------
52,233 80,658 25,908
--------- ----------- -----------
$ 76,739 $ 202,912 $ 474,241
--------- ----------- -----------
--------- ----------- -----------
</TABLE>

F-9
<PAGE>
MARKET USA, MARUSA MARKETING INC.
AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

(3) INCOME TAXES (Continued)
A reconciliation between the provision for income taxes computed at the
statutory rates and the amount reflected in the accompanying combined statements
of operations for the three years ended December 31, 1995 is as follows:

<TABLE>
<CAPTION>
1993 1994 1995
----------- -------------- -------------
<S> <C> <C> <C>
Computed expected federal tax provision for the three years ended
December 31, 1995.................................................... $ 759,889 $ 1,441,876 $ 1,065,308
Increase (decrease) in taxes resulting from -- Impact of S corporation
not taxable.......................................................... (722,545) (1,516,875) (794,818)
Incremental tax rate for foreign taxes................................ 20,886 28,612 83,865
State income taxes.................................................... 18,509 53,537 28,052
Other................................................................. -- 195,762 91,834
----------- -------------- -------------
Provision for income taxes............................................ $ 76,739 $ 202,912 $ 474,241
----------- -------------- -------------
----------- -------------- -------------
</TABLE>

Deferred tax (assets) liabilities consist of the following at December 31,
1994 and 1995:

<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Tax assets--
Accruals.......................................................... $ (50,802) $ (24,403)
Other............................................................. (3,068) (5,352)
----------- -----------
(53,870) (29,755)
----------- -----------
Tax liabilities--
Receivables....................................................... 57,860 50,533
Prepaid Canadian Provincial taxes................................. 100,102 115,629
Other............................................................. 33,680 25,373
----------- -----------
191,642 191,535
----------- -----------
Net deferred tax liability.......................................... $ 137,772 $ 161,780
----------- -----------
----------- -----------
</TABLE>

(4) PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1994 and
1995:

<TABLE>
<CAPTION>
1994 1995
------------- -------------
<S> <C> <C>
Leasehold improvements............................................... $ 23,726 $ 24,330
Telecommunications equipment......................................... 3,371,867 4,401,081
Furniture and office equipment....................................... 906,643 1,088,571
Automobiles.......................................................... 46,305 54,477
Building and land.................................................... 175,285 212,912
------------- -------------
Total property and equipment......................................... 4,523,826 5,781,371
Less -- Accumulated depreciation..................................... 1,613,171 2,461,369
------------- -------------
Property and equipment, net.......................................... $ 2,910,655 $ 3,320,002
------------- -------------
------------- -------------
</TABLE>

F-10
<PAGE>
MARKET USA, MARUSA MARKETING INC.
AND SUBSIDIARY

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1995

(5) DEBT
The Company has a term loan with Harris Bank and Trust, personally
guaranteed by a shareholder and expiring in September 1999. At December 31,
1995, $81,336 was outstanding under the term loan.

(6) LEASE COMMITMENTS
The Company leases administrative offices and telephone call centers at
several locations through January 4, 2001. Rent expense for the fiscal years
ended December 31, 1993, 1994 and 1995 was $484,880, $621,785 and $743,827,
respectively. Minimum future rental payments at December 31, 1995 are as
follows:

<TABLE>
<CAPTION>
OPERATING LEASES
----------------
<S> <C>
1996................................................................... $ 489,177
1997................................................................... 336,327
1998................................................................... 292,397
1999................................................................... 208,772
2000................................................................... 94,903
----------------
$ 1,421,576
----------------
----------------
</TABLE>

One of the telephone call centers leased by the Company is owned by a
shareholder of the Company. The annualized rent for this lease is $52,272.
Management believes that the rent is equivalent to the amount that would be
charged by an unrelated party.

(7) COMMITMENTS AND CONTINGENCIES
Various lawsuits have arisen in the ordinary course of the Company's
business. The Company believes that its defenses are meritorious and that the
eventual outcome of those lawsuits will not have a material effect on the
Company's financial position or results of operations.

F-11
<PAGE>
TARGET COMPANIES
UNAUDITED COMBINED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
1995
-------------- JUNE 30,
1996
--------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................................................... $ 739,149 $ 2,025,549
Receivables.................................................................... 5,955,975 6,583,540
Prepaid expenses and deposits.................................................. 445,946 591,340
-------------- --------------
Total current assets......................................................... 7,141,070 9,200,429
-------------- --------------
PROPERTY AND EQUIPMENT, NET...................................................... 3,320,002 4,070,252
-------------- --------------
OTHER ASSETS:.................................................................... 31,214 37,312
-------------- --------------
$ 10,492,286 $ 13,307,993
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable............................................................... $ 923,294 $ 911,584
Notes payable.................................................................. -- 591,700
Accrued expenses............................................................... 3,116,685 4,083,247
Income taxes payable........................................................... 571,443 889,702
Deferred taxes -- current...................................................... 161,780 161,780
-------------- --------------
Total current liabilities...................................................... 4,773,202 6,638,013
-------------- --------------
LONG-TERM DEBT,
less maturities shown above.................................................... 81,336 78,095
-------------- --------------
DEFERRED LIABILITIES:............................................................ 300,000 300,000
-------------- --------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, no par value.................................................. -- --
Common stock, no par value..................................................... 1,795 1,795
Cumulative translation adjustment.............................................. 22,681 20,641
Retained earnings.............................................................. 5,313,272 6,269,449
-------------- --------------
Total shareholders' equity................................................... 5,337,748 6,291,885
-------------- --------------
$ 10,492,286 $ 13,307,993
-------------- --------------
-------------- --------------
</TABLE>

SEE NOTES TO UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION

F-12
<PAGE>
TARGET COMPANIES
UNAUDITED COMBINED CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- ------------------------------
1995 1996 1995 1996
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales........................................ $ 9,665,217 $ 13,280,474 $ 17,745,971 $ 24,733,149
Cost of service.................................. 7,223,556 9,877,132 13,172,817 18,349,570
------------- -------------- -------------- --------------
Gross Profit................................... 2,441,661 3,403,342 4,573,154 6,383,579
------------- -------------- -------------- --------------
Selling expenses................................. 233,401 315,279 435,099 548,508
General and administrative expenses.............. 1,470,593 1,901,524 3,012,611 3,469,028
------------- -------------- -------------- --------------
Income from operations......................... 737,667 1,186,539 1,125,444 2,366,043
Other income (expense)........................... 14,442 (5,016) 22,641 13,369
------------- -------------- -------------- --------------
Income before taxes............................ 752,109 1,181,523 1,148,085 2,379,412
Provision for income taxes....................... 49,896 167,333 46,641 167,333
------------- -------------- -------------- --------------
Net income for the period........................ $ 702,213 $ 1,014,190 $ 1,101,444 $ 2,212,079
------------- -------------- -------------- --------------
------------- -------------- -------------- --------------
</TABLE>

SEE NOTES TO UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION

F-13
<PAGE>
TARGET COMPANIES
UNAUDITED COMBINED CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------------
1995 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net Income...................................................................... $ 1,101,444 $ 2,212,079
Adjustments to reconcile income to operating cash
Depreciation and amortization................................................. 443,728 601,296
Change in assets and liabilities:
Receivables................................................................... 1,195,200 (613,612)
Prepaid expenses and deposits................................................. (457,300) (165,445)
Accounts payable.............................................................. 64,817 (11,710)
Accrued expenses.............................................................. 549,913 966,562
Foreign and state taxes payable............................................... 25,154 318,259
------------- -------------
Net cash provided by operations............................................. 2,922,956 3,307,429
------------- -------------
Cash flows used for investing activities:
Purchases of property and equipment............................................. (201,773) (1,351,546)
------------- -------------
Cash flows from financing activities:
Proceeds from notes payable..................................................... -- 591,700
Repayments of debt.............................................................. (117,847) (3,241)
Payment of dividends............................................................ (423,549) (1,255,902)
------------- -------------
Net cash used for financing activities........................................ (541,396) (667,443)
------------- -------------
Effect of exchange rate changes on cash and cash equivalents...................... -- (2,040)
------------- -------------
Net increase in cash and equivalents.............................................. 2,179,787 1,286,400
Cash and equivalents, beginning of period......................................... 1,898,275 739,149
------------- -------------
Cash and equivalents, end of period............................................... $ 4,078,062 $ 2,025,549
------------- -------------
------------- -------------
</TABLE>

SEE NOTES TO UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION

F-14
<PAGE>
TARGET COMPANIES
NOTES TO UNAUDITED COMBINED CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996

1. BASIS OF PRESENTATION

The accompanying financial statements have been prepared by the Company,
without audit, in accordance with generally accepted accounting principles for
interim information and in conjunction with the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring matters) considered necessary for a fair
presentation have been included.

The results of operations for the six-month period ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the full
year. These financial statements should be read in conjunction with the
Company's audited financial statements and footnotes located elsewhere in this
registration statement.

2. SIGNIFICANT CUSTOMERS

For the six months ended June 30, 1996, 70.6% of the Company's revenue was
derived from its top five customers. Specifically, Allstate Insurance accounted
for 22.7% of revenue for the six-month period, Maryland Bank of North America
12.8%, Liberty Life Insurance 12.5%, Sears, Roebuck & Co. 11.4% and JC Penney
Life Insurance Co. 11.2%.

For the six months ended June 30, 1995, 74.9% of the Company's revenue was
derived from its top five customers. Specifically, Allstate Insurance accounted
for 26.8% of revenue for the six-month period, Union Fidelity Life Insurance Co.
19.9%, JC Penney Life Insurance Co. 13.2%, Liberty Life Insurance 8.8% and
Sears, Roebuck & Co. 6.2%.

F-15

<PAGE>

APPENDIX A

AGREEMENT AND PLAN OF MERGER AND AMALGAMATION

BY AND AMONG

HA-LO INDUSTRIES, INC.,

HA-LO ACQUISITION CORPORATION, INC.,

HA-LO ACQUISITION CORPORATION OF CANADA LTD.,

MARKET USA, INC.,

MARUSA MARKETING INC.,

MARUSA FINANCIAL SERVICES LTD.,

NEROK VERIFICATIONS INC.,

AND

THE STOCKHOLDERS OF
MARKET USA, INC. AND MARUSA MARKETING INC.

<PAGE>

TABLE OF CONTENTS
-----------------

PAGE
----

ARTICLE I THE UNITARY TRANSACTION . . . . . . . . . . . . . . . . A-3
SECTION 1.01. The U.S. Merger . . . . . . . . . . . . . . . . . . . . A-3
SECTION 1.02. The Canada Amalgamation . . . . . . . . . . . . . . . . A-3
SECTION 1.03. The Ancillary Asset Acquisition . . . . . . . . . . . . A-3
SECTION 1.04. Effective Time . . . . . . . . . . . . . . . . . . . . A-4
SECTION 1.05. Effect of the Unitary Transaction . . . . . . . . . . . A-4
SECTION 1.06. Articles of Incorporation; By-Laws . . . . . . . . . . A-5
SECTION 1.07. Directors and Officers . . . . . . . . . . . . . . . . A-5
SECTION 1.08. Taking Necessary Action; Further Action . . . . . . . . A-5
SECTION 1.09. The Closing . . . . . . . . . . . . . . . . . . . . . . A-6

ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES . . A-6
SECTION 2.01. Conversion of Securities; Consideration . . . . . . . . A-6
SECTION 2.02. Exchange of Certificates; No Cash Payments in Lieu of
Fractional Shares . . . . . . . . . . . . . . . . . . . A-8
SECTION 2.03. Stock Transfer Books . . . . . . . . . . . . . . . . . A-9
SECTION 2.04. Other Securities and Options . . . . . . . . . . . . . A-9

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE TARGET COMPANIES A-10
SECTION 3.01. Organization and Qualification; Subsidiaries . . . . . A-11
SECTION 3.02. Articles of Incorporation; By-Laws . . . . . . . . . . A-12
SECTION 3.03. Capitalization of the Target Companies and the Canadian
Ancillary Service Entities . . . . . . . . . . . . . . A-12
SECTION 3.04. Authority . . . . . . . . . . . . . . . . . . . . . . . A-16
SECTION 3.05. No Conflicts; Required Filings and Consents . . . . . . A-16
SECTION 3.06. Permits; Compliance . . . . . . . . . . . . . . . . . . A-18
SECTION 3.07. Governmental Reports; Financial Statements . . . . . . A-19
SECTION 3.08. Absence of Certain Changes or Events . . . . . . . . . A-20
SECTION 3.09. Absence of Litigation . . . . . . . . . . . . . . . . . A-20
SECTION 3.10. Contracts; No Default . . . . . . . . . . . . . . . . . A-21
SECTION 3.11. Employee Benefit Plans; Labor Matters . . . . . . . . . A-23
SECTION 3.12. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . A-29
SECTION 3.13. Intellectual Property Rights . . . . . . . . . . . . . A-33
SECTION 3.14. Certain Business Practices and Regulations . . . . . . A-34
SECTION 3.15. Insurance . . . . . . . . . . . . . . . . . . . . . . . A-35
SECTION 3.16. Accounting and Tax Matters . . . . . . . . . . . . . . A-35
SECTION 3.17. Real Property . . . . . . . . . . . . . . . . . . . . . A-35
SECTION 3.18. Shareholder . . . . . . . . . . . . . . . . . . . . . A-36
SECTION 3.19. Brokers . . . . . . . . . . . . . . . . . . . . . . . . A-36
SECTION 3.20. Title to Assets . . . . . . . . . . . . . . . . . . . . A-36

<PAGE>

SECTION 3.21. Related Party Transactions . . . . . . . . . . . . . . A-37
SECTION 3.22. Bank Accounts. . . . . . . . . . . . . . . . . . . . . A-37
SECTION 3.23. Officers and Directors. . . . . . . . . . . . . . . . . A-37
SECTION 3.24. Powers of Attorney. . . . . . . . . . . . . . . . . . . A-37
SECTION 3.25. Guarantees . . . . . . . . . . . . . . . . . . . . . . A-37
SECTION 3.26. Customers . . . . . . . . . . . . . . . . . . . . . . . A-38
SECTION 3.27. Proprietary Software Used in the Business . . . . . . . A-38
SECTION 3.28. Receivables and Advances . . . . . . . . . . . . . . . A-39
SECTION 3.29. Commission Policies . . . . . . . . . . . . . . . . . . A-39
SECTION 3.30. Sole Source Suppliers . . . . . . . . . . . . . . . . . A-39
SECTION 3.31. Disclosure . . . . . . . . . . . . . . . . . . . . . . A-39

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACQUIROR . . . . . . A-40
SECTION 4.01. Organization and Qualification; Subsidiaries . . . . . A-40
SECTION 4.02. Articles of Incorporation; By-Laws . . . . . . . . . . A-40
SECTION 4.03. Capitalization of Acquiror . . . . . . . . . . . . . . A-40
SECTION 4.04. Capitalization of Acquiror Sub-1 and Sub-2 . . . . . . A-41
SECTION 4.05. Authority . . . . . . . . . . . . . . . . . . . . . . . A-42
SECTION 4.06. No Conflict; Required Filings and Consents . . . . . . A-43
SECTION 4.07. Permits; Compliance . . . . . . . . . . . . . . . . . . A-44
SECTION 4.08. Securities Reports; Financial Statements . . . . . . . A-44
SECTION 4.09. Absence of Certain Changes or Events. . . . . . . . . . A-45
SECTION 4.10. Absence of Litigation. . . . . . . . . . . . . . . . . A-45
SECTION 4.11. Title to Assets . . . . . . . . . . . . . . . . . . . . A-46
SECTION 4.12. Accounting and Tax Matters . . . . . . . . . . . . . . A-46
SECTION 4.13. Ownership of Acquiror Subs; Prior Activities . . . . . A-46
SECTION 4.14. Brokers . . . . . . . . . . . . . . . . . . . . . . . . A-47
SECTION 4.15. Disclosure . . . . . . . . . . . . . . . . . . . . . . A-47

ARTICLE V COVENANTS RELATING TO THE CONDUCT OF BUSINESS . . . . . A-47
SECTION 5.01. Affirmative Covenants of the Target Companies . . . . . A-47
SECTION 5.02. Negative Covenants of the Target Companies . . . . . . A-48
SECTION 5.03. Affirmative Covenants of Acquiror . . . . . . . . . . . A-52
SECTION 5.04. Negative Covenants of Acquiror . . . . . . . . . . . . A-52
SECTION 5.05. Access and Information . . . . . . . . . . . . . . . . A-53
SECTION 5.06. New Target Company Shareholders . . . . . . . . . . . . A-54

ARTICLE VI ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . A-54
SECTION 6.01. Registration Statement; Proxy Statement . . . . . . . . A-54
SECTION 6.02. Meeting of Acquiror Stockholders . . . . . . . . . . . A-56

<PAGE>

SECTION 6.03. Ratification of Target Shareholder Approval . . . . . . A-57
SECTION 6.04. Appropriate Action; Consents; Filings . . . . . . . . . A-57
SECTION 6.05. Letters of Accountants . . . . . . . . . . . . . . . . A-59
SECTION 6.06. Update Disclosure; Breaches . . . . . . . . . . . . . . A-59
SECTION 6.07. Target Company Affiliates; Accounting and Tax
Treatment . . . . . . . . . . . . . . . . . . . . . . . A-60
SECTION 6.08. Public Announcements . . . . . . . . . . . . . . . . . A-60
SECTION 6.09. NASDAQ Listing of Acquiror Common Stock . . . . . . . . A-60
SECTION 6.10. Indemnification of Directors and Officers . . . . . . . A-61
SECTION 6.11. Election of Target Shareholder to Acquiror and Other
Sub Boards . . . . . . . . . . . . . . . . . . . . . . A-62
SECTION 6.12. Obligations of Acquiror Subs . . . . . . . . . . . . . A-63
SECTION 6.13. Obligations of the Target Companies . . . . . . . . . . A-63
SECTION 6.14. Obligations of Target Shareholders . . . . . . . . . . A-63

ARTICLE VII CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . A-63
SECTION 7.01. Conditions to Obligations of Each Party Under this
Agreement . . . . . . . . . . . . . . . . . . . . . . . A-63
SECTION 7.02. Additional Conditions to Obligations of Acquiror . . . A-65
SECTION 7.03. Conditions to Obligations of the Target Companies and
Target Shareholders . . . . . . . . . . . . . . . . . . A-67

ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . A-69
SECTION 8.01. Termination . . . . . . . . . . . . . . . . . . . . . . A-69
SECTION 8.02. Effect of Termination . . . . . . . . . . . . . . . . . A-70
SECTION 8.03. Fees and Expenses . . . . . . . . . . . . . . . . . . . A-70

ARTICLE IX INDEMNIFICATION MATTERS . . . . . . . . . . . . . . . . A-72
SECTION 9.01. Survival of Representations, Warranties and Agreements;
Indemnification . . . . . . . . . . . . . . . . . . . . A-72
SECTION 9.02. Indemnification by the Target Companies and the Target
Shareholders . . . . . . . . . . . . . . . . . . . . . A-72
SECTION 9.03. Acquiror's Indemnification . . . . . . . . . . . . . . A-76
SECTION 9.04. Indemnification Procedures . . . . . . . . . . . . . . A-76

ARTICLE X GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . A-78
SECTION 10.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . A-78
SECTION 10.02. Amendment . . . . . . . . . . . . . . . . . . . . . . . A-79
SECTION 10.03. Waiver . . . . . . . . . . . . . . . . . . . . . . . . A-79
SECTION 10.04. Headings . . . . . . . . . . . . . . . . . . . . . . . A-79
SECTION 10.05. Severability . . . . . . . . . . . . . . . . . . . . . A-79
SECTION 10.06. Entire Agreement . . . . . . . . . . . . . . . . . . . A-79
SECTION 10.07. Assignment . . . . . . . . . . . . . . . . . . . . . . A-80
SECTION 10.08. Parties in Interest . . . . . . . . . . . . . . . . . . A-80
SECTION 10.09 Governing Law . . . . . . . . . . . . . . . . . . . . . A-80
SECTION 10.10. Counterparts . . . . . . . . . . . . . . . . . . . . . A-80
SECTION 10.11. Power of Attorney . . . . . . . . . . . . . . . . . . . A-80

<PAGE>

THIS AGREEMENT AND PLAN OF MERGER AND AMALGAMATION, dated as of June 14,
1996 (this "Agreement"), is by and among HA-LO Industries, Inc., an Illinois
corporation ("Acquiror"), HA-LO Acquisition Corporation, Inc., an Illinois
corporation ("Acquiror Sub-1"), HA-LO Acquisition Corporation of Canada Ltd., a
Canadian federal corporation ("Acquiror Sub-2"), Market USA, Inc., an Illinois
corporation (the "U.S. Company"), Marusa Marketing Inc., a Canadian federal
corporation (the "Canada Company"), Marusa Financial Services Ltd., a Canadian
federal corporation ("Marusa Financial"), Nerok Verifications Inc., a Canadian
federal corporation ("Nerok"), and the stockholders of the U.S. Company and the
Canada Company who are identified on Schedule 1 to this Agreement (such
stockholders, together with every other person who acquires shares of the
authorized capital stock of the U.S. Company or the Canada Company prior to the
"Effective Time" [as hereafter defined], are hereafter collectively the "Target
Shareholders", and each individually is a "Target Shareholder").

WITNESSETH:

WHEREAS, the U.S. Company and the Canada Company are each engaged in the
conduct of a telemarketing business on behalf of their respective clients and
customers;

WHEREAS, the U.S. Company and the Canada Company are "affiliates" through
common ownership within the meaning of (i) paragraphs (c) and (d) of Rule 145 of
the rules and regulations of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"), and (ii) Accounting
Series, Releases 130 and 135, as amended, of the Commission (the U.S. Company
and the Canada Company are hereafter collectively the "Target Companies", and
each individually is a "Target Company");

WHEREAS, the Target Shareholders identified on Schedule 1 to this Agreement
are currently the sole stockholders of the Target Companies;

WHEREAS, the Canada Company engages in its telemarketing business alone and
through Marusa Financial, and conducts telemarketing verification services
through Nerok (Marusa Financial and Nerok are hereafter collectively the
"Canadian Ancillary Service Entities", and each individually is a "Canadian
Ancillary Service Entity");

WHEREAS, Acquiror Sub-1, a wholly-owned first tier subsidiary of Acquiror,
upon the terms and subject to the conditions of this Agreement and in accordance
with the Business Corporation Act of the State of Illinois, as amended
("Illinois Law"), will merge with and into the U.S. Company (the "U.S. Merger");

A-1

<PAGE>

WHEREAS, Acquiror Sub-2, a wholly-owned first tier subsidiary of Acquiror,
upon the terms and subject to the conditions of this Agreement and in accordance
with the Canada Business Corporations Act, as amended ("Canada Law"), will
amalgamate with the Canada Company (the "Canada Amalgamation");

WHEREAS, at the Effective Time, Acquiror, upon the terms and subject to the
conditions of this Agreement, will cause a designee organized under Canada Law
to acquire all of the right, title and interest of the Canada Ancillary Service
Entities in all of their licenses, rights, properties and other assets, in
exchange for such designee's (the "New Canadian Ancillary Service Entity")
transfer to the Canadian Ancillary Service Entities of one hundred (100) shares
in aggregate of Acquiror's common voting stock, no par value, together with its
assumption, without recourse of any nature to Acquiror, of all debts,
obligations, liabilities and "Taxes" (as hereafter defined) of the Canadian
Ancillary Service Entities (such transaction is hereafter the "Ancillary Asset
Acquisition") (the U.S. Merger, the Canada Amalgamation and the Ancillary Asset
Acquisition are hereafter sometimes collectively referred to as the "Unitary
Transaction");

WHEREAS, the Board of Directors and shareholders of the U.S. Company have
determined that the U.S. Merger and Unitary Transaction are in the best
interests of the U.S. Company, and have unanimously approved and adopted this
Agreement and consented to the transactions contemplated hereby;

WHEREAS, the Board of Directors and shareholders of the Canada Company have
determined that the Canada Amalgamation and Unitary Transaction are in the best
interests of the Canada Company, and have unanimously approved and adopted this
Agreement and consented to the transactions contemplated hereby;

WHEREAS, the Board of Directors and shareholders of the Canadian Ancillary
Service Entities have determined that the Ancillary Asset Acquisition and
Unitary Transaction are in the best interests of each Canadian Ancillary Service
Entity, and have unanimously approved and adopted this Agreement and consented
to the transactions contemplated hereby;

WHEREAS, the Board of Directors of Acquiror has determined that the Unitary
Transaction is in the best interests of Acquiror and its stockholders, and has
approved and adopted this Agreement and the transactions contemplated hereby;

WHEREAS, for U.S. federal income tax purposes, it is intended that the U.S.
Merger and the Canada Amalgamation shall qualify as a reorganization under the
provisions of Sections 368(a) of the United States Internal Revenue Code of
1986, as amended (the "Code");

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WHEREAS, for Canada tax purposes, it is intended that the Canada
Amalgamation shall qualify as a transaction exempt from taxation under the
Canada/U.S. Income Tax Convention, as amended (the "Tax Convention"); and

WHEREAS, for accounting purposes, it is intended that the Unitary
Transaction shall be accounted for as a "pooling of interests";

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties agree as follows:

ARTICLE I
---------

THE UNITARY TRANSACTION
-----------------------

SECTION 1.01. THE U.S. MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Illinois Law, at
the Effective Time, Acquiror Sub-1 shall be merged with and into the U.S.
Company. As a result of the U.S. Merger, the separate corporate existence of
Acquiror Sub-1 shall cease and the U.S. Company shall continue as the surviving
corporation of the Merger (the "U.S. Surviving Corporation").

SECTION 1.02. THE CANADA AMALGAMATION. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Canada Law, at
the Effective Time, Acquiror Sub-2 shall be amalgamated with the Canada Company.
As a result of the Canada Amalgamation, the separate corporate existences of
Acquiror Sub-2 and the Canada Company shall cease and the amalgamating
corporations shall continue in existence as one amalgamated corporation under
Canada Law (hereafter, the "Amalgamated Canada Corporation"), using such name,
and having such features and characteristics, as are described in Schedule 2 to
this Agreement.

SECTION 1.03. THE ANCILLARY ASSET ACQUISITION. Upon the terms and subject
to the conditions set forth in this Agreement and in the Asset Purchase
Agreement in the form attached to this Agreement as Exhibit "A" and by this
reference incorporated in and made a part hereof (the "Ancillary Asset Purchase
Agreement"), and in accordance with Ontario (Canada) Law, at the Effective Time,
the Canadian Ancillary Service Entities shall sell, convey, transfer and assign
to the New Canadian Ancillary Service Entity, and the New Canadian Ancillary
Service Entity shall purchase from the Canadian Ancillary Service Entities, free
and clear of any liability, lien, claim, restriction or encumbrance whatsoever,
except those created under the Ancillary Asset Purchase Agreement, all of their
respective right, title and interest in and to all assets, properties, rights
and privileges of every kind and nature whatsoever, tangible and intangible,
wherever located, and whether

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or not used in or related to the conduct of a business (the "Ancillary Assets");
provided, however, the New Canadian Ancillary Service Entity, Marusa Financial
and the Canada Company may, in their sole discretion, endeavor to cause the
clients and customers of Marusa Financial to renew and/or renegotiate any
contracts expiring prior to the Effective Time with the New Canadian Ancillary
Service Entity.

SECTION 1.04. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or, if permissible, waiver, of the conditions set forth in Article
VII, the parties shall cause the Unitary Transaction to be consummated by
filing, as promptly as practicable without regard to priority of task, (i) a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Illinois in such form as required by, and executed in accordance
with, the relevant provisions of Illinois Law, (ii) the Articles of Amalgamation
in the form attached to this Agreement as Exhibit "B" (the "Articles of
Amalgamation") with the Department of Industry Canada, together with such other
forms required by, and executed in accordance with, the relevant provisions of
Canada Law, and (iii) all filings required (if any) to effectuate the purposes
of the Ancillary Asset Purchase Agreement (the date and time at which the last
of such filings shall become effective, and the Unitary Transaction deemed close
for all purposes under this Agreement is hereafter the "Effective Time").

SECTION 1.05. EFFECT OF THE UNITARY TRANSACTION. At the Effective Time,
the effect of the U.S. Merger shall be as provided in the applicable provisions
of Illinois Law, and the effect of the Canada Amalgamation shall be as provided
in the applicable provisions of Canada Law. Without limiting the generality of
those laws, and subject to their provisions, at the Effective Time, except as
otherwise provided in this Agreement, (i) all the properties, rights,
privileges, powers and franchises of Acquiror Sub-1 and the U.S. Company shall
vest in the U.S. Surviving Corporation, (ii) all the properties, rights,
privileges, powers and franchises of Acquiror Sub-2 and the Canada Company shall
continue to be properties, rights, privileges, powers and franchises of the
Amalgamated Canada Corporation, (iii) all debts, liabilities and duties of
Acquiror Sub-1 and the U.S. Company shall become the debts, liabilities and
duties of the U.S. Surviving Corporation, (iv) all debts, liabilities and duties
of Acquiror Sub-2 and the Canada Company shall be the debts, liabilities and
duties of the Amalgamated Canada Corporation, and (v) the New Canadian Ancillary
Service Entity shall purchase the Ancillary Assets from the Canadian Ancillary
Service Entities (subject to its assumption of all debts, obligations,
liabilities and Taxes of same), for the purpose, among others, of continuing the
businesses previously conducted by the Canadian Ancillary Service Entities.

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<PAGE>

SECTION 1.06. ARTICLES OF INCORPORATION; BY-LAWS. At the Effective Time,
(i) the Articles of Incorporation and the By-Laws of the U.S. Company shall be
the Articles of Incorporation and the By-Laws of the U.S. Surviving Corporation,
(ii) the Articles of Amalgamation shall be the Articles of the Amalgamated
Canada Corporation, and (iii) the By-Laws of the Amalgamated Canada Corporation
shall be in the form attached to this Agreement as Exhibit "C".

SECTION 1.07. DIRECTORS AND OFFICERS. Except as may be provided in the
Employment Agreements attached as Exhibits "D" and "E" to this Agreement, the
directors of Acquiror Sub-1 immediately preceding the Effective Time shall be
the initial directors of the U.S. Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and the By-Laws of the U.S.
Surviving Corporation, and the officers of Acquiror Sub-1 immediately preceding
the Effective Time shall be the initial officers of the U.S. Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified. The directors of Acquiror Sub-2 immediately preceding
the Effective Time shall be the initial directors of the Amalgamated Canada
Corporation, and the officers of Acquiror Sub-2 immediately preceding the
Effective Time shall be the initial officers of the Amalgamated Canada
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.

SECTION 1.08. TAKING NECESSARY ACTION; FURTHER ACTION. The parties shall
each use reasonable efforts to take all action as may be necessary or
appropriate to effectuate the Unitary Transaction at the time specified in
Section 1.04 hereof. If, at any time following or prior to the Effective Time,
any further action is necessary or desirable to carry out the purposes of this
Agreement or (i) to vest the U.S. Surviving Corporation and the Amalgamated
Canada Corporation with full right, title and possession to all properties,
rights, privileges, immunities, powers and franchises of its constituent
corporations, the officers of such Surviving or Amalgamated Corporation are
fully authorized, in the name of each constituent corporation or otherwise, to
take, and shall take, all such lawful and necessary action, to carry out the
purposes of this Agreement, and (ii) the Ancillary Asset Purchase Agreement,
and/or to vest the New Canadian Ancillary Service Entity with the Canadian
Ancillary Service Entities' respective right, title and possession to all
Ancillary Assets, the officers of the Canadian Ancillary Service Entities and
the New Canadian Ancillary Service Entity are fully authorized to take, and
shall take, all such lawful and necessary action desirable to carry out the
purposes of this Agreement and the Ancillary Asset Purchase Agreement. Without
limiting the generality of the forgoing, each such party shall take all steps
necessary (if any) to conform their respective boards of directors to applicable
Laws, and obtain and/or renew all licenses

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and other permits required to conduct their businesses under applicable Laws.

SECTION 1.09. THE CLOSING. The closing of the transactions contemplated
by this Agreement will take place at the offices of Neal Gerber & Eisenberg,
Chicago, Illinois, and will be effective at the Effective Time.

ARTICLE II
----------

CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
--------------------------------------------------

SECTION 2.01. CONVERSION OF SECURITIES; CONSIDERATION. At the Effective
Time, by virtue of the Unitary Transaction and without any further action on the
part of Acquiror, Acquiror Sub-1, Acquiror Sub-2, the U.S. Company, the Canada
Company, the Canadian Ancillary Service Entities or the holders of any of the
following securities:

(a) CONVERSION APPLICABLE TO SHARES OF THE U.S. COMPANY. Each share
of common stock, no par value per share, of the U.S. Company ("U.S. Company
Common Stock"), issued and outstanding immediately preceding the Effective
Time shall be converted into and become nineteen thousand one hundred
twenty-five (19,125) shares (the "U.S. Exchange Ratio") of common voting
stock, no par value, of the Acquiror ("Acquiror Common Stock"). All such
shares of U.S. Company Common Stock so converted shall no longer be
outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each certificate previously representing any such
shares shall thereafter represent the shares of Acquiror Common Stock into
which such U.S. Company Common Stock was converted in the U.S. Merger.
Certificates previously representing shares of U.S. Company Common Stock
shall be exchanged for certificates representing whole shares of Acquiror
Common Stock issued in consideration therefor upon the surrender of such
certificates in accordance with the provisions of Section 2.02, without
interest; and

(b) CONVERSION APPLICABLE TO SHARES OF THE CANADA COMPANY. Each share
of Class A Common Stock of the Canada Company ("Canada Company Common
Stock"), issued and outstanding immediately preceding the Effective Time
shall be converted into and become three hundred eighteen thousand seven
hundred (318,700) shares of Acquiror Common Stock (the "Canada Exchange
Ratio"). Certificates previously representing shares of Canada Company
Common Stock shall be exchanged for certificates representing whole shares
of Acquiror Common Stock issued in consideration therefor upon the
surrender of such certificates in accordance with the provisions of Section
2.02, without interest.

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<PAGE>

(c) CONSIDERATION PAYABLE TO THE CANADIAN ANCILLARY SERVICE ENTITIES.
At the Effective Time, the New Canadian Ancillary Service Entity shall
transfer (or cause Acquiror to issue) (i) fifty (50) shares of Acquiror
Common Stock to Marusa Financial against delivery of Marusa Financial's
Ancillary Assets, and (ii) fifty (50) shares of Acquiror Common Stock to
Nerok against delivery of Nerok's Ancillary Assets, representing one
hundred (100) shares of Acquiror Common Stock in aggregate issuable to
Marusa Financial and Nerok. Simultaneously therewith, the New Canadian
Ancillary Service Entity shall assume and agree to pay and discharge the
debts, obligations, liabilities and Taxes arising from the conduct of each
Canadian Ancillary Service Entity's businesses preceding the Effective
Time, in each case whether matured or unmatured, accrued or contingent, and
whether now known or later discovered. As soon as practicable after the
Effective Time, each of Marusa Financial and Nerok shall completely
liquidate and dissolve under Canada Law, and each shall distribute to its
stockholders in cancellation of all their outstanding shares of capital
stock, all right, title and interest in and to the Acquiror Common Stock
received in the exchange for the Ancillary Assets and debt assumptions
under the Ancillary Asset Purchase Agreement.

(d) EFFECT OF RECAPITALIZATION, ETC. If between the date of this
Agreement and the Effective Time the outstanding shares of Acquiror Common
Stock, U.S. Company Common Stock or Canada Company Common Stock shall have
been changed into a different number of shares or a different class, by
reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the U.S.
Exchange Ratio and/or Canada Exchange Ratio, and the aggregate number of
Acquiror Common Stock to be issued to Marusa Financial and Nerok under the
Ancillary Asset Purchase Agreement, as the case may be, shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares. Subject to the provisions of this subsection (d), at the Effective
Time, after giving effect to all issuances by Acquiror of its voting common
stock under this Section 2.01, an aggregate amount not exceeding two
million five hundred fifty thousand (2,550,000) shares of Acquiror Common
Stock shall be transferred at the Effective Time to the Target
Shareholders, Marusa Financial and Nerok.

(e) NO FRACTIONAL SHARES. Anything in this Agreement to the contrary
notwithstanding, any fractional shares of Acquiror Common Stock otherwise
issuable in the Unitary Transaction shall be rounded upward or downward to
the nearest whole number of shares of Acquiror Common Stock.

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<PAGE>

(f) TREASURY AND OTHER SHARES. Each share of U.S. Company Common
Stock held in the treasury of the U.S. Company and each share of U.S.
Company Common Stock owned by Acquiror or any direct or indirect subsidiary
of Acquiror, the U.S. Company, the Canada Company or the Canadian Ancillary
Service Entities immediately preceding the Effective Time shall be
cancelled and extinguished without any conversion of such shares and no
payment shall be made with respect to such shares.

(g) CONVERSION OF ACQUIROR SUB SHARES. Each share of common stock,
no par value, of Acquiror Sub-1 issued and outstanding immediately
preceding the Effective Time shall be converted into and exchanged for one
(1) newly and validly issued, fully paid and nonassessable share of common
stock of the U.S. Surviving Corporation, and each share of common stock, no
par value, of Acquiror Sub-2 issued and outstanding immediately preceding
the Effective Time shall be converted into and exchanged for one (1) newly
and validly issued, fully paid and nonassessable share of Common Voting
Stock of the Amalgamated Canada Corporation.

SECTION 2.02. EXCHANGE OF CERTIFICATES; NO CASH PAYMENTS IN LIEU OF
FRACTIONAL SHARES.

(a) EXCHANGE OF CERTIFICATES. At the Effective Time, each holder of
record of a certificate or certificates which immediately preceding the
Effective Time represented outstanding shares of U.S. Company Common Stock
or Canada Company Common Stock, as the case may be (the "Target
Certificates"), shall forthwith deliver to Acquiror the Target Certificates
in exchange for and against certificates representing the shares of
Acquiror Common Stock issuable pursuant to Section 2.01 hereof (such
certificates for shares of Acquiror Common Stock are hereafter the
"Acquiror Certificates"). Upon the transfer of a Target Certificate to
Acquiror, together with such duly executed documents and other instruments
of transfer as may reasonably be required by Acquiror, the holder of such
Target Certificate shall receive in exchange therefor an Acquiror
Certificate or Certificates representing, in aggregate, that number of
whole shares of Acquiror Common Stock which such holder has received in
respect of the shares of U.S. Company Common Stock or Canada Company Common
Stock, as the case may be, formerly represented by such Target Certificate
(after taking into account all shares of such U.S. Company Common Stock or
Canada Company Common Stock, as the case may be, then held by such holder
and the Exchange Ratio applicable thereto).

(b) NO FURTHER RIGHTS IN COMPANY COMMON STOCK. All shares of
Acquiror Common Stock issued upon conversion of the

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<PAGE>

shares of U.S. Company Common Stock in accordance with the terms of this
Agreement shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of U.S. Company Common Stock. All shares
of Acquiror Common Stock issued upon conversion of the shares of Canada
Company Common Stock in accordance with the terms of this Agreement shall
be deemed to have been issued in full satisfaction of all rights pertaining
to such shares of Canada Company Common Stock.

SECTION 2.03. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Target Companies shall, with respect to the Unitary
Transaction, be closed and solely with respect to the Unitary Transaction, there
shall be no further registration of transfers of shares of (i) U.S. Company
Common Stock thereafter on the records of the U.S. Company, or (ii) Canada
Company Common Stock thereafter on the records of the Canada Company. From and
after the Effective Time, (i) the holders of Target Certificates representing
shares of U.S. Company Common Stock outstanding immediately preceding the
Effective Time shall cease to have any rights with respect to such shares of
U.S. Company Common Stock following the U.S. Merger except as otherwise provided
in this Agreement or by "Law" (as hereafter defined), and (ii) the holders of
Target Certificates representing shares of Canada Company Common Stock
outstanding immediately preceding the Effective Time shall cease to have any
rights with respect to such shares of Canada Company Common Stock following the
Canada Amalgamation except as otherwise provided in this Agreement or by Law.
For the purposes of this Agreement, the term "Law" shall mean any Canada or U.S.
federal, state, provincial, local or municipal law, statute, ordinance, rule,
regulation, order, judgment or decree.

SECTION 2.04. OTHER SECURITIES AND OPTIONS. At and as of the Effective
Time:

(a) each outstanding share of common and preferred capital stock of
the U.S. Company other than U.S. Company Common Stock ("Other U.S. Company
Securities"), together with all options, warrants or other rights,
agreements, arrangements or commitments (collectively, the "U.S. Company
Options") to sell or purchase shares of U.S. Company Common Stock or Other
U.S. Company Securities, whether written, oral, authorized, outstanding,
issued, unissued, vested or unvested, shall, to the extent not prohibited
by Law, be cancelled and terminated, and of no further force or effect.
Prior to the Effective Time, the U.S. Company and the Target Shareholders
shall take all corporate action necessary to effectuate the cancellation
and termination of all Other U.S. Company Securities and U.S. Company
Options; and

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<PAGE>

(b) each outstanding share of common and preferred capital stock of
the Canada Company other than Canada Company Common Stock ("Other Canada
Company Securities"), together with all options, warrants or other rights,
agreements, arrangements or commitments (collectively, the "Canada Company
Options") to sell or purchase shares of Canada Company Common Stock or
Other Canada Company Securities, whether written, oral, authorized,
outstanding, issued, unissued, vested or unvested, shall, to the extent not
prohibited by Law, be cancelled and terminated, and of no further force or
effect. Prior to the Effective Time, the Canada Company and the Target
Shareholders shall take all corporate action necessary to effectuate the
cancellation and termination of all Other Canada Company Securities and
Canada Company Options.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE TARGET COMPANIES

The term "Target Company Adverse Effect", as used in this Agreement, shall
mean any change or effect that, individually or when taken together with all
other such changes or effects, would reasonably be considered to be materially
adverse to the financial condition, business or results of operations of the
U.S. Company, the Canada Company and their respective "subsidiaries" (if any),
taken as a whole; provided, however, except to the extent set forth in Article
IX hereof, the occurrence of any of the changes or events described in any
Section of the "Target Company Disclosure Schedule" (as hereafter defined),
shall not, individually or in the aggregate, constitute a breach of, or
misstatement or inaccuracy in a representation or warranty of a Target Company
hereunder, nor shall it constitute a Target Company Adverse Effect.

The term "subsidiary" (or its plural) as used in this Agreement with
respect to the U.S. Company, the Canada Company, Acquiror, the U.S. Surviving
Corporation, the Amalgamated Canada Corporation, Marusa Financial, Nerok, or any
other person, shall mean any corporation, partnership, joint venture or other
legal entity of which the U.S. Company, the Canada Company, Acquiror, the U.S.
Surviving Corporation, the Amalgamated Canada Corporation, Marusa Financial,
Nerok or such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, five percent
(5%) or more of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.

For purposes of this Article III, and Sections 6.04 and 7.01 hereof, the
term "knowledge" means the actual knowledge of the following individuals
(collectively, the "Target Knowledge Persons"): (1) the current Target
Shareholders, (2) each person

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who, in accordance with Section 7.02(e)(iii) hereof, has executed an Employment
Agreement as of the date of this Agreement, and (3) to the extent not previously
described, the directors, officers and shareholders of the Target Companies and
the Canadian Ancillary Service Entities who were in or acquired such director,
officer or shareholder status at any time within the six (6) month period
immediately preceding the date of this Agreement and ending at the Effective
Time.

Acquiror hereby agrees that to the extent any representation or warranty of
a Target Company made hereunder is, to the actual knowledge of any person listed
on Schedule 3 to this Agreement (the "Acquiror Knowledge Persons"), acquired
prior to the Effective Time, untrue or incorrect in any material respect, and
Acquiror does not elect to terminate this Agreement in accordance with the
provisions of Section 8.01(b) hereof, then such representation or warranty shall
be deemed to be amended as of the Effective Time to the extent necessary to
render it consistent with the actual knowledge of such Acquiror Knowledge
Person. The Target Companies agree they shall have the sole burden of proof to
demonstrate the actual knowledge of an Acquiror Knowledge Person, and further
agree that such burden shall include a showing that such actual knowledge was
derived prior to the Effective Time from any one or more of the documents
provided to Acquiror listed on Schedule 4 to this Agreement, which Schedule 4
is, by this reference, incorporated herein and made a part hereof.

Except to the extent provided in the preceding paragraph, and except as set
forth in the Target Company Disclosure Schedule attached to this Agreement and
by this reference made a part hereof (the "Target Company Disclosure Schedule"),
which Target Company Disclosure Schedule shall identify exceptions to the Target
Companies' representations and warranties by specific Section references, the
Target Companies hereby represent and warrant, jointly and severally, to
Acquiror that:

SECTION 3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each Target
Company and its subsidiaries (if any), and each Canadian Licensed Entity and its
subsidiaries (if any), is a corporation validly existing and in good standing
under the Laws of the jurisdiction of its incorporation or organization. Except
to the extent described in Section 3.01 of the Target Company Disclosure
Schedule, each Target Company, each Canadian Ancillary Service Entity and, to
the Target Companies' knowledge, each of their respective employees, separately
possesses all requisite corporate or other power and authority to own, lease and
operate its properties and/or to carry on their business as it is now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by such person or the
ownership or leasing of its properties makes such qualification necessary, other
than where the

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failure to do so would not have a Target Company Adverse Effect. A true and
complete list of each Target Company's and Canadian Licensed Entity's directly
and indirectly owned subsidiaries, together with the jurisdiction of
incorporation or organization of each such subsidiary and the percentage of each
subsidiary's outstanding capital stock or other equity interests owned by such
Target Company, Canadian Licensed Entity or another subsidiary thereof, is set
forth in Section 3.01 of the Target Company Disclosure Schedule.

SECTION 3.02. ARTICLES OF INCORPORATION; BY-LAWS. The U.S. Company has
furnished to Acquiror complete and correct copies of its Articles of
Incorporation and By-Laws, as amended or restated, together with those of each
of its subsidiaries. The Canada Company, Marusa Financial and Nerok have each
furnished to Acquiror complete and correct copies of their respective Articles
of Incorporation and By-Laws, as amended or restated, together with those of
each of their respective subsidiaries. Except as set forth in Section 3.02 of
the Target Company Disclosure Schedule, neither Target Company nor any
subsidiary thereof, nor any Canadian Ancillary Service Entity nor any subsidiary
thereof, is in violation of any provision of its Articles of Incorporation or
By-Laws.

SECTION 3.03. CAPITALIZATION OF THE TARGET COMPANIES AND THE CANADIAN
ANCILLARY SERVICE ENTITIES.

(a) As of the date of this Agreement, the authorized capital stock of
the U.S. Company consists solely of one thousand (1,000) shares of U.S.
Company Common Stock, no par value, of which one hundred (100) shares are
issued and outstanding, and as of the date hereof there are not, and at the
Effective Time there shall not be, any Other U.S. Company Securities
authorized by the U.S. Company.

(b) As of the date of this Agreement, the authorized capital stock of
the Canada Company consists solely of (i) an unlimited number of shares of
(A) Class A Voting Shares, of which two (2) Class A Voting Shares are
issued and outstanding, (B) Class B Non-Voting Shares, and (C) Classes A
through D, inclusive, of Preferred Stock, and (ii) as of the date hereof
there are not, and at the Effective Time there will not be, any other
Canada Company Securities authorized by the Canada Company.

(c) As of the date of this Agreement, the authorized capital stock of
Marusa Financial consists solely of (i) an unlimited number of Class A
Common Non-Voting Shares, of which two (2) Class A Common Non-Voting Shares
are issued and outstanding, (ii) an unlimited number of Class B Common
Voting Shares, of which one hundred (100) Class B Common Voting

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Shares are issued and outstanding, and (iii) the other securities set forth
in Section 3.03(c) of the Target Company Disclosure Schedule.

(d) As of the date of this Agreement, the authorized capital stock of
Nerok consists solely of (i) an unlimited number of shares of (A) Class A
Voting Shares, of which one hundred (100) Class A Voting Shares are issued
and outstanding, (B) Class B Non-Voting Shares, and (C) Classes A through
D, inclusive, of Preferred Stock, and (ii) as of the date hereof there are
not, and at the Effective Time they will not be, any other Canada Company
Securities authorized by Nerok.

(e) Except as described in Section 3.03(e) of the Target Company
Disclosure Schedule no shares of U.S. Company Common Stock or Canada
Company Common Stock are held in treasury or are reserved for any other
purpose.

(f) All outstanding shares of U.S. Company Common Stock and Canada
Company Common Stock are duly authorized, validly issued, fully paid and
non-assessable, and not subject to preemptive rights created by statute, a
Target Company's Articles of Incorporation or By-Laws, or any agreement as
to which any Target Company is a party or by which it is bound. Each of
the outstanding shares of capital stock of, or other equity interests in,
each Target Company's subsidiaries is duly authorized, validly issued,
fully paid and non-assessable, and such shares or other equity interests
are owned by such Target Company, free and clear of all security interests,
liens, claims, pledges, agreements, limitations on such Target Company's
voting rights, charges or other encumbrances of any nature whatsoever,
except for an option in favor of Merchant Partners, Limited Partnership, a
Delaware limited partnership ("MPLP"), pursuant to the terms and conditions
of an October, 1993 agreement between certain Target Shareholders and MPLP,
which was re-memorialized in a letter agreement dated November 9, 1995 (a
true and correct copy of which is attached to this Agreement as Exhibit "F"
and by this reference made a part hereof; hereafter, the "MPLP Option").
From October, 1993, through and including the date of this Agreement, the
MPLP Option was, and at all times hereafter, through and including the
period expiring at the Effective Time, the MPLP Option shall be, valid and
binding on MPLP and the Target Shareholders who are signatory thereto, and
there is no default (or event which, with the giving of notice or lapse of
time, or both, would be a default) by any party thereto in the timely
performance of any obligation to be performed or paid thereunder. The MPLP
Option provides MPLP with no rights, and MPLP does not otherwise possess
any

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right or claim, to acquire any shares of capital stock or assets of Marusa
Financial or Nerok.

(g) Except as disclosed in Section 3.03(g) of the Target Company
Disclosure Schedule, there are no U.S. Company Options to which the U.S.
Company or any of its subsidiaries is a party of any character relating to
the issued or unissued capital stock of, or other equity interests in, the
U.S. Company or any of its subsidiaries or obligating the U.S. Company or
any of its subsidiaries to grant, issue, sell or register for sale any
shares of the capital stock of, or other equity interests in, the U.S.
Company or any subsidiaries thereof, whether by sale, lease, license or
otherwise. As of the date of this Agreement there are no, and as of the
Effective Time there will be no, obligations, contingent or otherwise, of
the U.S. Company or any of its subsidiaries to (x) repurchase, redeem or
otherwise acquire any shares of U.S. Company Common Stock or the capital
stock of, or other equity interests in, any subsidiary of the U.S. Company,
or (y) except for (i) guarantees of obligations of subsidiaries in the
ordinary course of business, and (ii) advances and loans to providers in
the ordinary course of business and in amounts not exceeding five thousand
dollars ($5,000) in the aggregate to any one such provider, provide funds
to, or make any investment in (in the form of a loan, capital contribution
or otherwise), or provide any guarantee with respect to the obligations of,
any subsidiary of the U.S. Company, or any other person.

(h) Except as disclosed in Section 3.03(h) of the Target Company
Disclosure Schedule, there are no Canada Company Options to which the
Canada Company or any of its subsidiaries is a party of any character
relating to the issued or unissued capital stock of, or other equity
interests in, the Canada Company or any of its subsidiaries or obligating
the Canada Company or any of its subsidiaries to grant, issue, sell or
register for sale any shares of the capital stock of, or other equity
interests in, the Canada Company or any subsidiaries thereof, whether by
sale, lease, license or otherwise. As of the date of this Agreement there
are no, and as of the Effective Time there will be no, obligations,
contingent or otherwise, of the Canada Company or any of its subsidiaries
to (x) repurchase, redeem or otherwise acquire any shares of Canada Company
Common Stock or the capital stock of, or other equity interests in, any
subsidiary of the Canada Company, or (y) except for (i) guarantees of
obligations of subsidiaries in the ordinary course of business, and (ii)
advances and loans to providers in the ordinary course of business and in
amounts not exceeding five thousand dollars ($5,000) in the aggregate to
any one provider at any one time, provide funds to, or make any investment
in (in the form of a loan, capital

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contribution or otherwise), or provide any guarantee with respect to the
obligations of, any subsidiary of the Canada Company, or any other person.

(i) The Target Shareholders hold of record and own the entire
beneficial interest in all of the outstanding U.S. Company Common Stock and
Canada Company Common Stock. Each Target Shareholder's legal and
beneficial stockholdings (by number of shares and percentage) in the Target
Companies is listed opposite each such person's name and address on
Schedule 1 attached to this Agreement.

(j) The shareholders of Marusa Financial and Nerok (the "MFN
Shareholders") are listed on Schedule 1(a) to this Agreement. Each such
MFN Shareholder's legal and beneficial stockholdings (by number of shares
and percentage) in the Canadian Ancillary Service Entities is listed
opposite each such person's name and address on said Schedule 1(a).

(k) With the exception of the MPLP Option, each Target Shareholder
owns his shares of Target Company Common Stock, and such Target Company
Common Stock is, on the date of this Agreement, and will be, at the
Effective Time, free and clear of all liabilities, liens, charges, security
interests, adverse claims, pledges, restrictions, encumbrances and demands
whatsoever. No other person has any right, title or interest in or to such
shares of Target Company Common Stock, whether by reason of any purchase
agreement, Law, statute, rule, option, assignment, contract (written or
oral) or otherwise. No Target Shareholder is a party to any voting trust,
proxy or other agreement or understanding with respect to the voting of
such shares of Target Company Common Stock. The shares of Target Company
Common Stock recited herein as being owned by the Target Shareholders
constitute all of the issued and outstanding shares of capital stock of the
Target Companies. Except for the MPLP Option, no Target Shareholder has
entered into, issued or given, or agreed to enter into, issue or give, any
person other than Acquiror or its subsidiaries an option, warrant, right,
put, call, commitment or agreement relating to, or any security convertible
into, any shares of capital stock of the Target Companies or any such
convertible security and, except as set forth in Section 3.03(k) to the
Target Company Disclosure Schedule, no Target Shareholder is a party to any
agreement (written or oral) respecting the issue, purchase, sale or
transfer of any of the same.

(l) Each MFN Shareholder owns his shares of capital stock in Marusa
Financial or Nerok, as the case may be, and such shares of stock are, on
the date of this Agreement, and will be, at the Effective Time, free and
clear of all

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liabilities, liens, charges, security interests, adverse claims, pledges,
restrictions, encumbrances and demands whatsoever. No other person has any
right, title or interest in or to shares of capital stock of Marusa
Financial or Nerok, whether by reason of any purchase agreement, Law,
statute, rule, option, assignment, contract (written or oral) or otherwise.
No MFN Shareholder is a party to any voting trust, proxy or other agreement
or understanding with respect to the voting of such shares of Marusa
Financial and/or Nerok capital stock. The shares of Marusa Financial and
Nerok capital stock recited herein as being owned by the MFN Shareholders
constitute all of the issued and outstanding shares of capital stock of the
Canadian Ancillary Service Entities. No MFN Shareholder has entered into,
issued or given, or agreed to enter into, issue or give, any person other
than Acquiror or its subsidiaries an option, warrant, right, put, call,
commitment or agreement relating to, or any security convertible into, any
shares of capital stock or assets of the Canadian Ancillary Service
Entities and, except as set forth in Section 3.03(l) to the Target Company
Disclosure Schedule, no MFN Shareholder is a party to any agreement
(written or oral) respecting the issue, purchase, sale or transfer of any
of the same.

(m) As used in this Agreement, the term "person" means any
individual, corporation, partnership, association, trust, unincorporated
organization, other entity or group.

SECTION 3.04. AUTHORITY. The Target Companies and the Canadian Ancillary
Service Entities have the requisite corporate power and authority to execute and
deliver this Agreement, to perform their obligations under this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by each Target Company and Canadian Ancillary Service
Entity and the consummation by such Target Company or Canadian Ancillary Service
Entity of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of any Target Company or Canadian Ancillary Service Entity are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly executed and
delivered by the Target Companies, the Target Shareholders and the Canadian
Ancillary Service Entities, and assuming the due authorization, execution and
delivery by Acquiror, Acquiror Sub-1 and Acquiror Sub-2, constitutes the legal,
valid and binding obligation of each Target Company, Target Shareholder and
Canadian Ancillary Service Entity.

SECTION 3.05. NO CONFLICTS; REQUIRED FILINGS AND CONSENTS.

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(a) The execution and delivery of this Agreement by the U.S. Company
does not, and the performance of this Agreement by the U.S. Company shall
not (i) conflict with or violate its Articles of Incorporation or By-Laws
or equivalent organizational documents, or those of any of its
subsidiaries, (ii) subject to (x) obtaining the consents, authorizations,
approvals and permits of, and making filings with or notifications to, any
governmental or regulatory authority, domestic or foreign (collectively,
"Governmental Entities"), pursuant to the applicable requirements of U.S.
and Canadian federal, state, provincial and local rules, Laws and
regulations, including but not limited to the Securities Act, the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), state securities or blue sky laws and the
rules and regulations thereunder ("Blue Sky Laws"), the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act"), and the filing and recordation of
appropriate merger documents as required by Illinois Law, and (y) obtaining
the consents, approvals, authorizations or permits described in Section
3.05(a) of the Target Company Disclosure Schedule, conflict with or violate
any Laws applicable to the U.S. Company or any of its subsidiaries or by
which any of their respective properties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that 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 encumbrance on any of the
properties or assets of the U.S. Company or any of its subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to
which the U.S. Company or any of its subsidiaries is a party or by which
the U.S. Company or any of its subsidiaries or any of their respective
properties is bound or affected, except for any such conflicts or
violations described in clause (ii), or breaches or defaults described in
clause (iii) that would not have a Target Company Adverse Effect.

(b) The execution and delivery of this Agreement by the Canada
Company, Marusa Financial and Nerok does not, and the performance of this
Agreement by the Canada Company, Marusa Financial and Nerok shall not (i)
conflict with or violate their respective Articles or By-Laws or equivalent
organizational documents, or those of any of their subsidiaries, (ii)
subject to (x) obtaining the consents, authorizations, approvals and
permits of, and making filings with or notifications to, any Governmental
Entities pursuant to the applicable requirements of U.S. and Canadian
federal, state, provincial and local rules, Laws and regulations,

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including but not limited to the HSR Act, the Competition Act (Canada), and
the rules and regulations thereunder (the "Competition Act"), the
Investment Canada Act, and the rules and regulations thereunder (the
"Investment Act"), the Income Tax Act (Canada), as amended, and the rules
and regulations thereunder (the "ITA"), and the filing and recordation of
appropriate amalgamation documents (with respect to the Canada Company) as
required by applicable Law, and (y) obtaining the consents, approvals,
authorizations or permits described in Section 3.05(a) of the Target
Company Disclosure Schedule, conflict with or violate any Laws applicable
to the Canada Company, Marusa Financial, Nerok or any of their subsidiaries
or by which any of their respective properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that
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 encumbrance on any
of the properties or assets of the Canada Company, Marusa Financial, Nerok
or any of their subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Canada Company, Marusa Financial,
Nerok or any of their subsidiaries is a party or by which the Canada
Company, Marusa Financial, Nerok or any of their subsidiaries or any of
their respective properties is bound or affected, except for any such
conflicts or violations described in clause (ii), or breaches or defaults
described in clause (iii) that would not have a Target Company Adverse
Effect.

(c) The execution and delivery of this Agreement by the Target
Companies and the Canadian Ancillary Service Entities does not, and the
performance of this Agreement by the Target Companies and the Canadian
Ancillary Service Entities shall not, individually or collectively, require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entities or other persons, except for
applicable requirements, if any, of the Securities Act, Exchange Act, Blue
Sky Laws, the HSR Act, the Competition Act, the Investment Act, the ITA,
the consents, approvals, authorizations or permits described in Section
3.05(a) of the Target Company Disclosure Schedule, and the filing and
recordation of appropriate merger or amalgamation documents as required by
Illinois Law and Canada Law, as applicable.

SECTION 3.06. PERMITS; COMPLIANCE. Each Target Company and its
subsidiaries, and each Canadian Ancillary Service Entity and its subsidiaries,
is in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary for such Target Company, Canadian Ancillary Service Entity and

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<PAGE>

their subsidiaries to own, lease and operate their respective properties or to
carry on their respective businesses as they are now being conducted (each, a
"Company Permit"), other than where the failure to so possess a Company Permit
would not have a Target Company Adverse Effect, and no suspension, revocation or
cancellation of any such Company Permit is pending or, to the knowledge of any
Target Company, threatened. No Target Company, Canadian Ancillary Service
Entity or any subsidiary of any of the foregoing is operating in conflict with,
or is in default or violation of (i) any Canadian or U.S. federal, state,
provincial or local rule, Law or regulation applicable to such person or by
which its properties are bound or affected, including without limitation, the
Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994, as amended,
and the rules and regulations thereunder (the "Telemarketing Act"), other
Canadian and U.S. federal, state, provincial and local telemarketing rules, Laws
and regulations ("Other Telemarketing Laws"), and rules, Laws and regulations
governing the sale of insurance or other financial products, or the performance
of insurance agency or other financial services ("Financial Laws"), or (ii) any
Company Permit, except for any such conflicts, defaults or violations which
would not have a Target Company Adverse Effect. Each Company Permit material to
the operations of a Target Company or Canadian Ancillary Service Entity is
listed in Section 3.06 to the Target Company Disclosure Schedule.

SECTION 3.07. GOVERNMENTAL REPORTS; FINANCIAL STATEMENTS.

(a) Since December 31, 1992, the Target Companies, the Canadian
Ancillary Service Entities and their respective subsidiaries have filed all
forms, reports, statements and other documents required to be filed with
any applicable Governmental Entities, except where failure to file any such
forms, reports, statements and other documents would not have a Target
Company Adverse Effect (all such forms, reports, statements and other
documents referred to in this Subsection (a) are, collectively, "Company
Reports"). The Company Reports, including all Company Reports filed after
the date of this Agreement and prior to the Effective Time (i) were or will
be prepared in all material respects in accordance with the requirements of
applicable Laws, and (ii) did not, at the times they were filed, or will
not at the time they are filed, 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 therein, in light of the
circumstances under which they were made, not materially misleading.

(b) Except as disclosed in Section 3.07(b) of the Target Company
Disclosure Schedule, the audited combined income statements of the Target
Companies as at and for the periods

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ended December 31, 1993, 1994 and 1995, and the audited combined balance
sheets of the Target Companies for the years ended December 31, 1994 and
1995 (including, in each case, related notes) (collectively, the "Target
Company Financial Statements") delivered to Acquiror prior to the date of
this Agreement (i) have been prepared from, and are in agreement in all
material respects with, the books, records and accounts (including
consolidating workpapers and supporting entries), of the Target Companies
and their subsidiaries, (ii) have been prepared in all material respects in
substantial accordance with the published rules and regulations of the
Financial Accounting Standards Board and United States generally accepted
accounting principles and standards ("GAAP") applied on a consistent basis
throughout the periods involved, (iii) fairly present in all material
respects the financial position of the Target Companies and their
subsidiaries on a combined basis as of the dates thereof, and (iv) fairly
present, in all material respects, the combined results of operations of
the Target Companies for the periods indicated. All assets, properties,
liabilities, debts, results of operations and cash flows of the Canadian
Ancillary Service Entities have previously been, and shall continue to be,
fully reported in the Target Company Financial Statements.

(c) Except as and to the extent set forth on the Target Company
Financial Statements, including all notes thereto, the Target Companies,
the Canadian Ancillary Service Entities and their respective subsidiaries
have no liabilities or obligations of any nature whatsoever (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on, or reserved against in, a balance sheet of such Target
Company (or in the notes thereto), prepared in accordance with GAAP applied
on a consistent basis, except for liabilities or obligations described in
Section 3.07(c) of the Target Company Disclosure Schedule, or incurred in
the ordinary course of business since December 31, 1995, that would not
have a Target Company Adverse Effect.

SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in Section 3.08 of the Target Company Disclosure Schedule, (i) since December
31, 1995, there has not been, and the Target Companies have no knowledge of any
facts that are reasonably likely to result in, any event or events causing a
Target Company Adverse Effect, and (ii) from December 31, 1995, to the date of
this Agreement, there has not been any change by a Target Company, Canadian
Ancillary Service Entity or any subsidiary in its accounting methods, principles
or practices, except any such change after the date of this Agreement mandated
by a change in GAAP.

SECTION 3.09. ABSENCE OF LITIGATION.

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(a) Section 3.09(a) of the Target Company Disclosure Schedule lists
and briefly describes all claims, actions, suits, litigations, proceedings,
arbitrations or investigations of any kind affecting each Target Company,
Canadian Ancillary Service Entity and their respective subsidiaries, at law
or in equity (including actions or proceedings seeking injunctive relief),
which are pending or, to the knowledge of the Target Companies, threatened.
Except as noted in Section 3.09(a) of the Target Company Disclosure
Schedule, none of the matters listed therein may reasonably be expected to
have a Target Company Adverse Effect. There is no action pending seeking
to enjoin or restrain the Unitary Transaction or any of the transactions
contemplated by this Agreement.

(b) Except as set forth in Section 3.09(b) of the Target Company
Disclosure Schedule, neither Target Company, Canadian Ancillary Service
Entity nor any of their respective subsidiaries is subject to any
continuing order of, consent decree, settlement agreement or other similar
written agreement with, or, to the knowledge of such Target Company,
continuing investigation by, any Governmental Entity, or any judgment,
order, writ, injunction, decree or award of any Governmental Entity or
arbitrator, including, without limitation, cease-and-desist or other
orders.

SECTION 3.10. CONTRACTS; NO DEFAULT.

(a) Section 3.10(a) of the Target Company Disclosure Schedule sets
forth as of the date of this Agreement a listing of each contract or
agreement of each Target Company, Canadian Ancillary Service Entity or
their respective subsidiaries in effect as of the date of this Agreement
and:

(i) concerning a partnership, joint venture or other business venture
involving the sharing of profits with another person;

(ii) relating to the employment or compensation of any employee,
officer, director or agent, with respect to which there is or may be an
obligation by a Target Company or Canadian Ancillary Service Entity to
provide current or deferred compensation in excess of U.S. fifty thousand
dollars (U.S. $50,000) per year for such person, and which is not
terminable by such Target Company or Canadian Ancillary Service Entity
without premium or penalty on less than twenty (20) days prior notice;

(iii) under which such Target Company's, Canadian Ancillary Service
Entity's or subsidiary's unfulfilled

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obligations exceed U.S. fifty thousand dollars (U.S.$50,000) in value;

(iv) under which any Target Company, Canadian Ancillary Service Entity
or subsidiary has obtained access to or through local or long-distance
telephone carriers or other Canada and U.S. federally-regulated entities;

(v) relating to any customer of a Target Company listed on Section
3.26 to the Target Company Disclosure Schedule;

(vi) relating to telephone or telemarketing equipment or other
personal property purchases involving an expenditure (or series thereof) of
U.S. fifty thousand dollars (U.S.$50,000) or greater, or to the development
of computer software programs or applications involving expenditures of
U.S. twenty-five thousand dollars (U.S.$25,000) or greater (but excluding
annual maintenance expenses arising after the first twelve (12) months
following acceptance thereof);

(vii) relating to bonus and incentive plans or similar plans and
arrangements providing for the payment of bonuses, commissions, incentive
compensation or similar result-based salary or other remuneration to
employees and other service providers to the Target Companies;

(viii) relating to borrowed money, guarantees or undertakings to
answer for the debts of another, or otherwise encumbering title to any
asset, excepting purchase money obligations relating to personal property
which do not exceed U.S. fifty thousand dollars (U.S.$50,000) in any one
case;

(ix) concerning a conditional sales contract or lease of personal
property involving an annual expenditure (or series thereof) of U.S.
twenty-five thousand (U.S.$25,000) or greater;

(x) concerning a lease or agreement relating in any manner to real
estate; and

(xi) relating to royalty or licensing contracts, or contracts
requiring similar payments (including software license agreements)
involving or which may reasonably in the future involve an amount in excess
of U.S. ten thousand dollars (U.S.$10,000) annually.

(b) Section 3.10(b) of the Target Company Disclosure Schedule lists
each contract or agreement to which any Target Company, Canadian Ancillary
Service Entity or any of their respective subsidiaries, directors,
affiliates, shareholders, employees or officers is a party limiting the
right of such

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Target Company, Canadian Ancillary Service Entity or any such person to
engage in, or to compete with any person in, any business, including each
contract or agreement containing exclusivity provisions restricting the
geographical area in which, or the method by which, any business may be
conducted by such Target Company, Canadian Ancillary Service Entity or any
such person prior to or after the Effective Time, or by the Acquiror or any
of its subsidiaries or affiliates after the Effective Time. For the
purpose of this Agreement, the term (i) "affiliate", in addition to the
meaning given by the Commission, means any person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person, (ii) "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 or policies of a
person, whether through the ownership of stock or as trustee or executor,
by contract or credit arrangement or otherwise, and (iii) "Company
Contracts" means the contracts and agreements listed in Sections 3.10(a)
and 3.10(b) of the Target Company Disclosure Schedule.

(c) Each Company Contract, each other contract or agreement which
would have been required to be disclosed in Section 3.10(a) of the Target
Company Disclosure Schedule had such contract or agreement been entered
into prior to the date of this Agreement, and each contract or agreement
listed in Section 3.10(b) of the Target Company Disclosure Schedule is, on
the date hereof, and shall be at the Effective Time, in full force and
effect and valid and binding as to the contracting Target Company or
Canadian Ancillary Service Entity and, to the knowledge of the Target
Companies, the other party or parties signatory thereto. With respect to
each such Company Contract, there is no default (or any event known to a
Target Company which, with the giving of notice or lapse of time or both,
would be a default) by a Target Company or Canadian Ancillary Service
Entity or, to the knowledge of the Target Companies, any other party or
parties thereto, in the timely performance of any obligation to be
performed or amount to be paid thereunder, which default would have a
Target Company Adverse Effect.

SECTION 3.11. EMPLOYEE BENEFIT PLANS; LABOR MATTERS.

(a) Section 3.11(a) of the Target Company Disclosure Schedule sets
forth all pension, retirement, savings, disability, medical, dental,
health, life (including any individual life insurance policy as to which a
Target Company is owner, beneficiary or both of such policy), death
benefit, group insurance, profit sharing, deferred compensation, stock

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option, bonus, incentive, vacation pay, severance pay, "cafeteria" or
"flexible benefit" plans, or other employee benefit plans, trusts,
arrangements, contracts, agreements, policies or commitments (including
without limitation, any employee pension benefit plan as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), any pension plan as defined in Section 1 of the Pension Benefits
Act (Quebec), as amended ("QBA"), and any employee welfare benefit plan as
defined in Section 3(1) of ERISA), under which current or former employees
of a Target Company, Canadian Ancillary Service Entity or their respective
subsidiaries or "Plan Affiliates" (as defined in Section 3.11(b) below) are
entitled to participate by reason of their employment with such Target
Company, Canadian Ancillary Service Entity, subsidiary or its Plan
Affiliates, whether or not any of the foregoing is funded, and whether
insured or self-funded, (i) to which a Target Company, Canadian Ancillary
Service Entity, subsidiary or Plan Affiliate is a party or a sponsor or a
fiduciary thereof or by which such Target Company, Canadian Ancillary
Service Entity, subsidiary or Plan Affiliate (or any of their rights,
properties or assets) is bound, or (ii) with respect to which such Target
Company, Canadian Ancillary Service Entity, subsidiary or Plan Affiliate
has made any payments, contributions or commitments, or may otherwise have
any liability (whether or not such plan, trust, arrangement, contract,
agreement, policy or commitment is still in effect or frozen as to benefits
or assets) (collectively, the "Employee Benefit Plans").

(b) For purposes of this Agreement, the term "Plan Affiliate" shall
mean any trade or business (whether or not incorporated) that is part of
the same controlled group, or under common control with, or part of an
affiliated service group that includes, a Target Company or Canadian
Ancillary Service Entity within the meaning of Section 414(b), (c), (m) or
(o) of the Code, or within the intendment of the QBA.

(c) As used in this Agreement, "Pension Plan" means any Employee
Benefit Plan which is an employee pension benefit plan as defined in ERISA
or the QBA, or is otherwise a pension, savings or retirement plan or a plan
of deferred compensation, and the term "Welfare Plan" means any Employee
Benefit Plan which is not a Pension Plan.

(d) With respect to the Employee Benefit Plans:

(i) There are no Employee Benefit Plans which are multiemployer plans
as defined in Section 3(37) of ERISA or Section 1 of the QBA, and neither
the Target Companies, the Canadian Ancillary Service Entities nor any of
their respective subsidiaries or ERISA Affiliates has incurred or

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may reasonably be expected to incur, any direct or indirect liability under
or by operation of Title IV of ERISA or the QBA (including, without
limitation, Sections 22, 75(1)(b), 86, 87, 88, 109 or 110 of the QBA).

(ii) There are no Employee Benefit Plans which promise or provide
health or life benefits to retirees or former employees of a Target
Company, Canadian Ancillary Service Entity, subsidiary or Plan Affiliate
other than as required by Title I of ERISA or Section 4980 of the Code, or
otherwise as identified in Section 3.11(d) of the Target Company Disclosure
Schedule.

(iii) Except as disclosed in Section 3.11(d) of the Target Company
Disclosure Schedule, each Employee Benefit Plan has at all times been
operated and administered in material compliance with the applicable
requirements of ERISA, the Code, the QBA, the ITA and any other applicable
law (including regulations and rulings thereunder), and its terms.

(iv) Each Pension Plan identified in Section 3.11(a) of the Target
Company Disclosure Schedule has (i) received a favorable determination
letter from the Internal Revenue Service ("IRS") stating that such Plan
meets all the requirements of the Code and that any trust or trusts
associated with the plan are tax exempt under Section 501(a) of the Code,
or (ii) been accepted for registration under the ITA. Any trust or trusts
associated with such Pension Plans are tax exempt under Section 501(a) of
the Code or the relevant provisions of the ITA. To the knowledge of the
Target Companies, there is no reason why the tax-qualified or registered
status of any such Pension Plan should be revoked, whether retroactively or
prospectively, by any Governmental Entity pursuant to applicable rules,
Laws or regulations. All amendments to the Pension Plans which were
required to be made through the date hereof and the Effective Time under
Section 401(a) of the Code or the applicable provisions of the ITA
subsequent to the issuance of each such Plan's determination letter or
registration have been made, including all amendments required to be made
by each respective date by the Tax Reform Act of 1986, the ITA, the
Canadian federal budget announced in March, 1996, and any other rules, Laws
or regulations legislation affecting such Employee Benefit Plans. Except
as set forth in Section 3.11(d) of the Target Company Disclosure Schedule,
there are no amendments which are required to be made to such Pension Plans
which adversely affect, or may result in the discontinuance of, the
continuing tax-qualification or registered status of such Pension Plans
under the Code or the ITA.

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(v) To the knowledge of the Target Companies, no actual or threatened
disputes, lawsuits, claims (other than routine claims for benefits),
investigations, audits or complaints to, or by, any person or Governmental
Entity have been filed or are pending with respect to any Employee Benefit
Plan or its sponsor, or such sponsor's subsidiaries or Plan Affiliates, in
connection with any Employee Benefit Plan, or the fiduciaries responsible
for such Employee Benefit Plan, and to the knowledge of the Target
Companies, no state of facts or conditions exist which reasonably could be
expected to subject such Target Company, Canadian Ancillary Service Entity,
subsidiary or Plan Affiliate to any material liability (other than routine
claims for benefits) in accordance with the terms of such Employee Pension
Plan or pursuant to applicable rules, Laws or regulations.

(vi) Except as disclosed in Section 3.11(d) of the Target Company
Disclosure Schedule, the following clauses are true with respect to each
Employee Benefit Plan:

(A) All material filings required by ERISA, the Code or the ITA,
or any other applicable rules, Laws or regulations, have been timely
filed and all material notices and disclosures to Plan participants
required by same have been timely provided.

(B) The Target Companies, the Canadian Ancillary Service
Entities and their respective subsidiaries and Plan Affiliates have
not made, nor have they committed to make, whether in writing or
orally, any representation, payment, contribution or award to or under
any Employee Benefit Plan (other than as required by its terms, the
Code, ERISA, the ITA or the QBA).

(C) All contributions and payments made or accrued with respect
to each Employee Benefit Plan required to be disclosed in Section
3.11(a) of the Target Company Disclosure Schedule are deductible in
full under the Code or the ITA, as applicable. All contributions,
premiums or payments required to be made with respect to each such
Employee Benefit Plan have been or will hereafter be made on or before
their due date(s).

(D) Except as disclosed in Section 3.11(e) of the Target Company
Disclosure Schedule, with respect to each Employee Benefit Plan, the
Target Companies have delivered to Acquiror true and complete copies
of the following documents to the extent in each case that such
documents exist or are required to be preserved under applicable
domestic or foreign Laws:

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(1) plan documents, subsequent plan amendments, and any and
all other documents that establish or describe the existence of
the plan, trust, arrangement, contract, policy or commitment;

(2) summary plan descriptions and summaries of material
amendments and modifications;

(3) the most recent tax-qualified determination letters
received from, or applications pending with, the IRS with respect
to Pension Plans;

(4) the most recent letters received from the Department of
National Revenue and the Pension Commission of Quebec relating to
the status of the Pension Plans adopted by the Canada Company,
and a copy of the most recent letter of confirmation of
registration for such Plans pursuant to the ITA and the QBA;

(5) the three most recent annual information returns,
including related schedules and audited financial statements and
opinions of independent certified public accountants, for each
Employee Benefit Plan filed (i) on IRS Form 5500 for Employee
Benefit Plans adopted by the U.S. Company, and (ii) on such forms
prescribed under the QBA for Employee Benefit Plans adopted by
the Canada Company; and

(6) all related trust agreements, insurance contracts or
other funding agreements that imple-ment each such Employee
Benefit Plan.

(vii) At no time have the Target Companies adopted any Pension Plan
which is or could become subject to Title IV of ERISA, the funding
standards of Section 402 of the Code, or which contain defined benefit
provisions within the meaning of Section 147.1(1) of the ITA. The Target
Companies have not, and no subsidiaries or Plan Affiliates thereof have,
incurred any liability to, or adopted any Employee Benefit Plan or other
arrangement which may expose it to liability of any nature whatsoever, to
(i) the Pension Benefit Guarantee Corporation under Title IV or Section 502
of ERISA, (ii) the IRS under Chapter 43 of the Code, or (iii) the
Department of National Revenue or the Pension Commission of Quebec under
the ITA or other Canadian Laws;

(viii) With respect to each Employee Benefit Plan, there has not
occurred, and no person or entity is contractually

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bound to enter into, any nonexempt "prohibited transaction" within the
meaning of Section 4975 of the Code or Section 406 of ERISA, or any other
transaction contrary to the provisions of the ITA, the QBA or the terms of
such Employee Benefit Plan.

(e) The Target Companies have complied in all material respects
with the provisions of ERISA, the Code and the ITA, as applicable, with
respect to each Pension Plan and Welfare Plan heretofore adopted or
currently in effect for the benefit of its employees, together with
employees of their respective subsidiaries and Plan Affiliates. Each
Employee Benefit Plan described in Section 3.11(a) of the Target Company
Disclosure Schedule may, by its express terms, be amended or terminated, in
whole or in part, without penalty, premium or unscheduled contributions or
payments.

(f) No payment that is owed or may become due to any director,
officer, employee or agent of a Target Company is subject to, and none
shall result in the imposition of, tax under Section 280(G) or 4999 of the
Code, nor is any Target Company obligated, orally or in writing, to "gross
up" or otherwise compensate any such person due to the imposition of an
excise or similar tax on payments made to such person by the Target
Company.

(g) The consummation of the transactions contemplated by this
Agreement will not accelerate or terminate, nor does there exist any basis
for the acceleration or termination of, (i) benefits payable to employees
of or other compensated personnel at the Target Companies under any
Employee Benefit Plan, Welfare Plan, or other plan, arrangement, contract
or agreement, written or oral, (ii) a participant's vesting credits or
years of service under any Pension Plan or Welfare Plan, or (iii) accruals
with respect to any other benefits or amounts reserved under any such plan
or arrangement.

(h) Section 3.11(e) of the Target Company Disclosure Schedule lists,
as of the date of this Agreement, all collective bargaining or other labor
union contracts to which either Target Company or any of its subsidiaries
is a party and which is applicable to persons employed by such Target
Company or subsidiary. There is no pending or, to the knowledge of the
Target Companies, threatened, labor dispute, strike or work stoppage
against a Target Company or any of its subsidiaries which may materially
interfere with the business activities of such Target Company, its
revenues, profits, cash flows, or other results of operations, or those of
its subsidiaries. The Target Companies have no knowledge of the commission
of any unfair labor practices in connection with the operation of their
respective businesses or the businesses

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of their respective subsidiaries, and there is not now pending or, to the
knowledge of the Target Companies, threatened, any charge, complaint or
other proceeding against any Target Company or its subsidiaries by the
National Labor Relations Board, or comparable Governmental Entities, both
Canadian and U.S., state and provincial, and local.

(i) Section 3.11 (i) of the Target Company Disclosure Schedule sets
forth all written employment agreements, employment contracts or
understandings relating to employment to which each Target Company or any
of its subsidiaries is a party, other than (i) the general employment of
employees pursuant to an at-will understanding, and (ii) agreements,
contracts or understandings which may be terminated without penalty or
premium on no more than twenty (20) days' prior notice to the employed
person. To the knowledge of the Target Companies, no employee of a Target
Company or any of its subsidiaries holding the position of manager or
higher is subject to any secrecy or noncompetition agreement or any
agreement or restriction of any kind with any third party that in any
material way would impede the ability of such employee to carry out fully
all activities of such employee in furtherance of the business of such
Target Company or any of its subsidiaries.

SECTION 3.12. TAXES.

(a) (i) Except as disclosed in Section 3.12(a) of the Target Company
Disclosure Schedule, all material Returns (as defined below) in respect of
"Taxes" (as defined below) required to be filed with respect to each Target
Company, Canadian Ancillary Service Entity and each of their subsidiaries
(including any Canada or U.S. federal, state, provincial and local income
tax returns and returns which would include a Target Company, Canadian
Ancillary Service Entity or any subsidiary on a consolidated, combined or
unitary basis, returns required to be filed under the ITA and under Part IX
of the Excise Tax Act (Canada) (the "GST"), and reports and returns
applicable to the S Corporation Election under Section 1361 ET. SEQ. of the
Code filed by the U.S. Company and its stockholders (the "S Corporation
Election") have been timely filed (including extensions), and no extension
of time within which to file any such Return has been requested, which
Return has not since been filed;

(ii) Except as disclosed in Section 3.12(b) of the Target Company
Disclosure Schedule, all Taxes shown on such Returns or otherwise known by
a Target Company to be due or payable (whether by such Target Company, a
Canadian Ancillary Service Entity or, in the case of the S Corporation
Election, by a Target Shareholder, "Subchapter S Returns") have been

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timely paid by the party to whom chargeable and all payments of estimated
Taxes required to be made with respect to a Target Company, Canadian
Ancillary Service Entity or any of their respective subsidiaries,
affiliates or shareholders under the Code, the ITA, the GST, or any
comparable provision of Canada or U.S. federal, state, provincial, local or
foreign law have been made on the basis of such Target Company's good faith
estimate of the required installments;

(iii) Except as disclosed in Section 3.12 of the Target Company
Disclosure Schedule, all such Returns (or, in cases where amended Returns
have been filed, such Returns as amended) are believed by the Target
Companies to be true, correct and complete in all material respects;

(iv) No material adjustment relating to any of such Returns has
been proposed in writing by any Tax authority, except proposed adjustments
that have been resolved prior to the date hereof;

(v) There are no outstanding subpoenas or requests for
information with respect to any Canada or U.S. federal, state or provincial
income tax Returns of a Target Company, Canadian Ancillary Service Entity
or subsidiary, or the Taxes reflected on such Returns, or with respect to
Subchapter S Returns;

(vi) No Target Company or Canadian Ancillary Service Entity has,
in any taxable period for which the statute of limitations on assessment
remains open, acquired, either directly or through any subsidiary, any
corporation that filed a consolidated federal income tax return with any
other corporation that was not also acquired, either directly or through
any subsidiary, by such Target Company or Canadian Ancillary Service
Entity, and no subsidiary or corporation that was included in the filing of
a Return with a Target Company or Canadian Ancillary Service Entity on a
consolidated, combined, or unitary basis has left such corporation's
consolidated, combined or unitary group in a taxable year for which the
statute of limitations on assessment remains open;

(vii) No consent under Section 341(f) of the Code has been filed
with respect to a Target Company, Canadian Ancillary Service Entity or
their subsidiaries;

(viii) There are no Tax liens on any assets of a Target Company,
Canadian Ancillary Service Entity or their subsidiaries other than liens
for Taxes not yet due or payable or being contested in good faith;

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(ix) No Target Company, Canadian Ancillary Service Entity or any
of their subsidiaries has been at any time a member of any partnership or
joint venture or the holder of a beneficial interest in any trust for any
period for which the statute of limitations for any Tax potentially
applicable as a result of such membership or holding has not expired;

(x) No Target Company, Canadian Ancillary Service Entity or any
of their subsidiaries owes any material amount pursuant to any Tax sharing
agreement or arrangement, and no such corporation will have any liability
after the date hereof in respect of any Tax sharing agreement or
arrangement executed or agreed to prior to the date hereof with respect to
any company that has been sold or disposed prior to the date of this
Agreement or the Effective Time, whether any such agreement or arrangement
is written or unwritten;

(xi) All material Taxes required to be withheld, collected or
deposited by each Target Company, Canadian Ancillary Service Entity and
their respective subsidiaries during any taxable period for which the
statue of limitations on an assessment remains open have been timely
withheld, collected or deposited and, to the extent required, have been
paid to the relevant Tax authority; without limiting the generality of the
foregoing, the Canada Company and each Canadian Ancillary Service Entity
has withheld at source and remitted to the relevant Government Entity all
material amounts required to be withheld under the ITA, and has accounted
for and remitted all Tax that has been collected and is remittable under
the GST;

(xii) Neither Target Company nor any of its subsidiaries was
acquired in a qualified stock purchase under Section 338(d)(3) of the Code
and no elections under Section 338(g) of the Code, protective carryover
basis elections, offset prohibition elections or other deemed or actual
elections are applicable to such Target Company or any of its subsidiaries;

(xiii) Neither Target Company nor any of its subsidiaries is or has
been subject to the provisions of Section 1503(d) of the Code related to
"dual consolidated loss" rules;

(xiv) Neither Target Company nor any of its subsidiaries is a
party to any agreement, contract, or arrangement that would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code by reason of the
Unitary Transaction; and

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(xv) No property of any Target Company or any of its subsidiaries
is property that is or will be required to be treated as being owned by
another person under the provisions of section 168(f)(8) of the Code (as in
effect prior to amendment by the Tax Reform Act of 1986); or is "tax-exempt
use property" within the meaning of Section 168 of the Code.

(b) (i) There are no outstanding waivers or agreements
extending the statute of limitations for any period with respect to any
Tax, other than real or personal property Taxes to which a Target Company,
Canadian Ancillary Service Entity or their subsidiaries may be subject;

(ii) No Target Company, Canadian Ancillary Service Entity or any
of their subsidiaries is, as of the date of this Agreement, under audit
with respect to any taxable period for any federal, state, provincial,
local or foreign Tax (including income and franchise Taxes but not
including real or personal property Taxes) by the Internal Revenue Service,
Revenue Canada or the applicable Tax authority in each such other country,
state, local, or foreign jurisdiction.

(c) (i) Except as expressly provided in this subdivision (i),
no Target Company, Canadian Ancillary Service Entity or any of their
subsidiaries has any --

(A) Material income reportable for a period ending after
the Effective Time but attributable to an installment sale
occurring in or a change in accounting method made for a period
ending at or prior to the Effective Time which resulted in a
deferred reporting of income from such transaction or from such
change in accounting method (other than a deferred intercompany
transaction), or

(B) Material deferred gain or loss arising out of any
deferred intercompany transaction.

(ii) No written Tax sharing or allocation agreement exists
involving a Target Company or Canadian Ancillary Service Entity.

(iii) Neither Target Company nor any of its subsidiaries has any
unused net operating loss, unused net capital loss, unused credit, unused
foreign tax credit, or excess charitable contribution for federal or Canada
income tax purposes as of the Effective Time.

(d) For purposes of this Agreement, "Tax" or "Taxes" shall mean
any and all taxes, charges, fees, levies, and other governmental
assessments and impositions of any

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kind, payable to any Canada or U.S. federal, state, provincial, local or
foreign governmental entity or taxing authority or agency, including,
without limitation,

(i) income, franchise, net worth, profits, gross receipts,
minimum, alternative minimum, estimated, ad valorem, value added, sales,
use, goods and services, real or personal property, capital stock, license,
payroll, withholding, disability, employment, social security, Medicare,
workers compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, withholding taxes pursuant
to the Tax Convention, windfall profits, transfer and gains taxes;

(ii) customs duties, imposts, charges, levies or other similar
assessments of any kind; and

(iii) interest, penalties and additions to tax imposed with
respect thereto.

As used herein, the term "Returns" shall mean any and all returns, reports,
information returns and information statements with respect to Taxes required to
be filed with the IRS, Revenue Canada or any U.S. State or Canada provincial
equivalent, or any other Governmental Entity or tax authority or agency, whether
domestic or foreign, including, without limitation, consolidated, combined,
unitary and Subchapter S Returns. For the purposes of this Section 3.12,
references to a Target Company or Canadian Ancillary Service Entity and each of
its subsidiaries shall include former subsidiaries of such Target Company or
Canadian Ancillary Service Entity for periods during which any such corporations
were owned, directly or indirectly, by such corporation.

SECTION 3.13. INTELLECTUAL PROPERTY RIGHTS. Except as set forth in
Section 3.13 to the Target Company Disclosure Schedule, each Target Company and
its subsidiaries owns or possesses the right or license to use all material
patents, trademarks, servicemarks, trade names, slogans, registered copyrights,
industrial designs, and all trade secrets (including scientific and technical
information, design processes, procedures, formulae, data processing techniques,
computer programs and improvements, the specialized information and technology
embodied in communications program materials, software documentation and other
program and system designs), it currently uses, without any known conflict or
alleged conflict with, or infringement of, the rights of others. Section 3.13
of the Target Company Disclosure Schedule identifies in all material respects
(i) the intellectual property (including, without limitation, issued domestic
and foreign patents, patent applications pending, patent applications in
process, industrial designs, industrial design applications and registrations,
trademarks, trademark registrations, trademark registration

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applications, copyright registrations, copyright registration applications,
service marks, service mark registrations, service mark registration
applications, know-how agreements, licenses (other than of computer software
which is generally commercially available), rights acquired through litigation,
logos, trade names and trade secrets material to the conduct of the business of
the Target Companies (collectively, the "Owned Intellectual Property"), and
(ii) intellectual property currently licensed to such Target Company ("Licensed
Intellectual Property") (together with the "Owned Intellectual Property", the
"Intellectual Property"). To the knowledge of the Target Companies, (i) the
agreements and/or arrangements for Licensed Intellectual Property (including
computer software) are in full force and effect; (ii) the rights of each Target
Company thereunder are free and clear of all adverse claims, options, liens,
charges, security interests and encumbrances; and (iii) no material defaults
exist thereunder. There are no interference, opposition or cancellation
proceedings or infringement suits pending, or, to the knowledge of the Target
Companies threatened, with respect to any Owned Intellectual Property. Within
the last six (6) years, no Target Company or subsidiary has been charged with
infringing any patent or trademark right of any person. The Intellectual
Property comprises all of the intellectual property rights and licenses
pertaining thereto necessary for the Target Companies to conduct their
respective businesses as now operated, and such Intellectual Property is
sufficient for the purposes of operating the communications hardware and other
equipment utilized by the Target Companies in the provision of telemarketing
services generally. No Target Company has knowingly taken or knowingly allowed
there to be taken any action to cause any of the material Owned Intellectual
Property relating to its business or operations to enter the public domain, or
knowingly failed to take such action necessary to prevent such Owned
Intellectual Property from so entering the public domain.

SECTION 3.14. CERTAIN BUSINESS PRACTICES AND REGULATIONS. Neither Target
Company nor any of its subsidiaries, nor any of their respective executive
officers, directors, or managerial employees has, to the knowledge of such
Target Company, (i) made or agreed to make any contribution, payment or gift to
any customer, supplier, governmental official, employee or agent where either
the contribution, payment or gift or the purpose thereof was illegal under any
Law, (ii) established or maintained any unrecorded fund or asset for any purpose
or made any false entries on its books and records for any reason, (iii) made or
agreed to make any contribution, or reimbursed any political gift or
contribution made by any other person, to any candidate for foreign, federal,
state, provincial or local public office in violation under any Law, or (iv)
engaged in any activity constituting fraud or abuse under the Laws relating to
telemarketing or insurance.

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SECTION 3.15. INSURANCE. All policies and binders of insurance for
professional liability, directors and officers, fire, liability, worker's
compensation and other customary matters held by or on behalf of each Target
Company or its subsidiaries ("Insurance Policies") have been made available to
Acquiror. The Insurance Policies (which term shall include any insurance policy
entered into after the date of this Agreement in replacement of an Insurance
Policy; provided, that such replacement policy shall insure against risks and
liabilities, and in amounts and under terms and conditions, substantially the
same as those provided in such replaced policy or binder) are in full force and
effect and neither Target Company nor any of their subsidiaries is in default
with respect to any material provision contained in any Insurance Policy nor, to
the knowledge of such Target Company, has such Target Company or its
subsidiaries failed to give any notice of any claim under any Insurance Policy
in due and timely fashion, nor, to the knowledge of such Target Company, has any
coverage for current claims been denied, except where such default or failure
individually or in the aggregate would not reasonably be expected to have a
Target Company Adverse Effect.

SECTION 3.16. ACCOUNTING AND TAX MATTERS. No Target Company, Canadian
Ancillary Service Entity, nor, to the knowledge of the Target Companies, any of
their subsidiaries or affiliates, has taken or agreed to take any action that
would prevent either the U.S. Merger or the Canadian Amalgamation from being
effected as a pooling of interests under GAAP or the rules and regulations
promulgated by the Commission, or would prevent the U.S. Merger or the Canadian
Amalgamation from constituting a transaction qualifying as a reorganization
under Section 368(a) of the Code.

SECTION 3.17. REAL PROPERTY. Neither Target Company nor any of its
subsidiaries owns or has the option or right to acquire any real property.
Section 3.17 of the Target Company Disclosure Schedule sets forth a true and
complete list of all real property leases to which a Target Company is a party
(all such real estate is hereafter collectively, the "Real Property"). Each
Target Company has heretofore furnished to Acquiror true and complete copies of
the most recent lease with respect to any leased Real Property.

(a) Except as set forth in Section 3.17(a) of the Target Company
Disclosure Schedule, no Target Company has any interest in, or any right or
obligation to acquire any material interest in, any other real property.

(b) To the knowledge of the Target Companies, there are no
pending or threatened requests, applications or proceedings to alter or
materially restrict the zoning or other use restrictions applicable to any
Real Property.

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(c) Each Target Company is in material compliance with, and to
the knowledge of the Target Companies the Real Property has not been used
by any other person in violation of, any Environmental Laws. For purposes
of this Agreement, the term "Environmental Laws" shall mean all Canadian
and U.S. federal, state, provincial and local statutes, Laws, ordinances,
codes, rules, regulations, orders, decrees, directives, permits, licenses
and guidelines relating to protection of the environment, or to protection
of the public health from releases into the environment of hazardous
substances, pollutants or contaminants, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Environmental Quality Act, R.S.Q.C., Q-2, and Canadian and
U.S. state and provincial tort laws and common Laws.

(d) With respect to the leases described in Section 3.17(d) of
the Target Company Disclosure Schedule (i) the rental set forth in each
such lease is the actual rental being paid, and there are no separate
agreements or understandings with respect to the same not set forth
therein, (ii) the lessee under each such lease has, as of the date hereof,
the full right to exercise any renewal option contained therein, (iii)
there are no written or oral contracts between a Target Company and any
person relating to any claim by such person of any right to all or any part
of the interest of such Target Company in any leasehold estate; and (iv)
all security deposits required by such leases have been made and no
material forfeiture with respect thereto has been claimed by any of the
lessors.

(e) No Target Company is the subject of any remedial order
entered with respect to real property of which it was previously or is
currently in possession.

SECTION 3.18. SHAREHOLDER APPROVAL OBTAINED. The Target Shareholders and
the MFN Shareholders have unanimously approved and consented to the Unitary
Transaction.

SECTION 3.19. 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 upon arrangements made by or
on behalf of any Target Company, Canadian Ancillary Service Entity or their
subsidiaries or affiliates.

SECTION 3.20. TITLE TO ASSETS. Each Target Company, or its applicable
subsidiary, is the owner of and has good and valid title to, or in the case of
leased property has a valid leasehold interest in, all of its material
properties and assets (except

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statutory liens for taxes, materialmen, warehousemen and landlords incurred in
the ordinary course of business and not yet due), including those assets and
properties reflected in the 1995 Target Company Financial Statements.

SECTION 3.21. RELATED PARTY TRANSACTIONS. Neither Target Company, nor to
the knowledge of the Target Companies, any director, employee, shareholder,
officer or agent of a Target Company, have any direct or indirect interest in
any competitor, supplier or customer of a Target Company or in any person from
whom or to whom a Target Company leases any property, or in any other person,
firm or entity with whom a Target Company transacts business of any nature.
Section 3.21 to the Target Company Disclosure Schedule identifies and describes
all material contracts or other arrangements (oral or written), including, but
not limited to, intercompany loans, advances, transfers of goods or services, or
other transactions (whether or not for consideration), to which either Target
Company is a party and to which the other, or any of their subsidiaries or
affiliates, or their respective officers, directors, employees, shareholders,
officers or agents, is directly or indirectly also a party.

SECTION 3.22. BANK ACCOUNTS. Section 3.22 to the Target Company
Disclosure Schedule sets forth all banks and other institutions or agents in
which either Target Company or any of its subsidiaries has or maintains an
account, installment obligation, mortgage, deposit, escrow, lockbox or safe
deposit box, the names of all persons authorized to draw thereon or to have
access thereto, the number of signatures required to be given for any
transaction, deposit or withdrawal, and a description of the type of
relationship maintained by such entity with such bank, institution or agent.

SECTION 3.23. OFFICERS AND DIRECTORS. Section 3.23 to the Target Company
Disclosure Schedule sets forth a list of the names, addresses and years of
service of all officers and directors of the Target Companies, the Canadian
Ancillary Service Entities and their respective subsidiaries as of the date
hereof.

SECTION 3.24. POWERS OF ATTORNEY. No Target Company or Canadian Ancillary
Service Entity has given any powers of attorney (irrevocable or otherwise) to
any person or entity for any purpose whatsoever.

SECTION 3.25. GUARANTEES. No Target Company or Canadian Ancillary Service
Entity is a guarantor of, or indemnitor, co-maker or otherwise liable for, any
indebtedness of any person, except as an endorser of checks received by it and
deposited in the ordinary course of business.

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SECTION 3.26. CUSTOMERS. Section 3.26 to the Target Company Disclosure
Schedule sets forth a true, complete and accurate listing of (i) the names,
addresses and telephone numbers of the ten (10) largest customers (measured by
revenue) to whom the Target Companies and the Canadian Ancillary Service
Entities, as a whole, have provided services during each of calendar years 1994
and 1995, (ii) the revenues attributable to each such customer for the same
periods, and (iii) the approximate gross profits attributable to each such
customer for such periods. The business of the Target Companies will, as of the
Effective Time, include the services provided on behalf of those customers
listed on Section 3.26 to the Target Company Disclosure Schedule. Except as
specifically noted on such Disclosure Schedule, the Target Companies have no
knowledge that the customers listed therein will not continue as customers of
the U.S. Surviving Corporation and Amalgamated Canada Corporation on and after
the Effective Time. Except for billings with respect to customer deposits, the
Target Companies have made no billings whatsoever to their customers for
services to be provided after the Effective Time. All customer deposits held by
a Target Company arose from written agreements between such Target Company and
the remitting customer, are correct as to amount, and no such customer has
notified the Target Company of its intention to seek a refund of its deposit.
All such customer deposits were received by the Target Companies in cash, in the
ordinary course of their business. The Target Companies have previously
delivered to Acquiror true and complete copies of all contracts and agreements
(and written descriptions of any oral arrangements) between all such customers
and the applicable Target Company. As of the date of this Agreement, no party
to any such contract has defaulted in any of its material obligations
thereunder, and no customer is in default of its payment obligations on invoices
for services previously rendered by such Target Company.

SECTION 3.27. PROPRIETARY SOFTWARE USED IN THE BUSINESS. Section 3.27 to
the Target Company Disclosure Schedule contains a description of all material
non-licensed computer software products and software programs (collectively,
"Software Programs"), both generally available in a Target Company's business
and under development (in all stages of development), that are used or intended
for use in the business and operations of each Target Company. To the extent
any Software Program has been developed by a third party for the benefit of, or
in accordance with specifications provided by, a Target Company, the Target
Company Disclosure Schedule sets forth the form and placement of the proprietary
legends and/or copyright notices displayed in or on the Software Programs. To
the Target Companies' knowledge, in no instance has the eligibility of any such
Software Program for protection under applicable copyright law been forfeited to
the public domain by omission of any required notice or any other action or
inaction by a Target Company unless such forfeiture would not have a Target
Company Material Effect. Except as provided in

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Section 3.27 of the Target Company Disclosure Schedule, the source code for such
Software Programs has at all times been maintained in strict confidence and the
only individuals or entities who have access to such source code are parties to
written nondisclosure agreements with the Target Company. Section 3.27 to the
Target Company Disclosure Schedule also sets forth all individuals and entities,
including employees, agents, consultants and contractors, who have contributed
to or participated in the conception and development of such Software Programs.
All individuals so listed in such Schedule have either (i) been party to a
"work-for-hire" arrangement or agreement with a Target Company, in accordance
with applicable national and state law, or (ii) have executed appropriate
instruments of assignment in favor of such Target Company as assignee, conveying
to such Target Company full, effective and exclusive ownership of all tangible
and intangible property rights thereunder arising.

SECTION 3.28. RECEIVABLES AND ADVANCES. All accounts receivable and
advances of the Target Companies have arisen in the ordinary course of business,
for full and adequate consideration, and, to the knowledge of the Target
Companies, are subject to no claims, charges or defenses (either by a Target
Company or by any other person). No person has asserted a right of set-off (or
similar right) against any such receivable or advance.

SECTION 3.29. COMMISSION POLICIES. Each Target Company's commission and
bonus policies with respect to employees and independent contractors entitled to
receive commissions and/or bonus in excess of U.S. ten thousand dollars
(U.S.$10,000) per year are described on Section 3.29 to the Target Company
Disclosure Schedule.

SECTION 3.30. SOLE SOURCE SUPPLIERS. Section 3.30 to the Target Company
Disclosure Schedule sets forth the names and addresses of, and volume of
purchases from, any suppliers of significant goods, equipment or services to
each Target Company (other than public utilities) with respect to which
practical alternative sources of supply are not available.

SECTION 3.31. DISCLOSURE. No representations or warranties made by either
Target Company under this Agreement or in any certificate, Schedule, Exhibit or
other document furnished or to be furnished to Acquiror, Acquiror Sub-1,
Acquiror Sub-2 or their respective counsel pursuant hereto contains or will
contain any untrue statement of any material fact, or omits or will omit to
state a material fact necessary to make the statements of fact contained therein
not misleading.

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ARTICLE IV
----------

REPRESENTATIONS AND WARRANTIES OF ACQUIROR
------------------------------------------

The term "Acquiror Adverse Effect" as used in this Agreement shall mean any
change or effect that, individually or when taken together with all such other
changes or effects, is or is reasonably likely to be materially adverse to the
financial condition, business or results of operations of Acquiror and its
subsidiaries, taken as a whole; provided, however, that the occurrence of any or
all of the changes or events described in the Acquiror Disclosure Schedule shall
not, individually or in the aggregate, constitute an Acquiror Adverse Effect.
Except as set forth in the Acquiror Disclosure Schedule attached to this
Agreement and by this reference made a part hereof (the "Acquiror Company
Disclosure Schedule"), which Acquiror Company Disclosure Schedule shall identify
exceptions to the Acquiror's representations and warranties by specific Section
references, Acquiror hereby represents and warrants to the Target Companies
that:

SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of
Acquiror and Acquiror's subsidiaries is a corporation, duly incorporated,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, has all requisite corporate or other power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted and each of Acquiror and its subsidiaries is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of the business conducted by it or the ownership or leasing of its
properties makes such qualification necessary, other than where the failure to
do so would not have an Acquiror Adverse Effect. A true and complete list of
all of Acquiror's directly or indirectly owned subsidiaries, together with the
jurisdiction of incorporation or organization of each subsidiary and the
percentage of each subsidiary's outstanding capital stock or other equity
interests owned by the Acquiror or another subsidiary of Acquiror, is set forth
in Section 4.01 of the Acquiror Disclosure Schedule.

SECTION 4.02. ARTICLES OF INCORPORATION; BY-LAWS. Acquiror has furnished
to the Target Companies a complete and correct copy of the Articles of
Incorporation and the By-Laws, as amended or restated, of each of Acquiror,
Acquiror Sub-1 and Acquiror Sub-2. Neither Acquiror, Acquiror Sub-1 nor
Acquiror Sub-2 is in violation of any of the provisions of its Articles of
Incorporation or By-Laws.

SECTION 4.03. CAPITALIZATION OF ACQUIROR.

(a) The authorized capital stock of Acquiror consists of (i)
25,000,000 shares of Acquiror Common Stock,

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and (ii) 10,000,000 shares of preferred stock, no par value per share. As
of the date of this Agreement, (i) 10,479,219 shares of Acquiror Common
Stock are issued and outstanding, and are duly authorized, validly issued,
fully-paid and non-assessable and not subject to preemptive rights created
by statute, Law, Acquiror's Articles of Incorporation or By-Laws or any
agreement to which Acquiror is a party or is bound, (ii) approximately
3,111,905 shares of Acquiror Common Stock were reserved for future issuance
pursuant to stock options, warrants and awards issued to certain officers,
employees, consultants, directors and affiliates of Acquiror, and (iii)
approximately 510,426 shares of Acquiror Common Stock were issued and
outstanding pursuant to the terms and conditions of those certain
agreements described in Section 4.03(a) of the Acquiror Disclosure
Schedule, a significant portion of which are subject to set-off or
cancellation in accordance with the terms and provisions of such
agreements, and therefore may not be fully-paid and non-assessable. As of
the date of this Agreement, no shares of Acquiror preferred stock were
outstanding.

(b) As of the date of this Agreement, except as set forth in
Section 4.03(b) to the Acquiror Disclosure Schedule, there are no
obligations, contingent or otherwise, of Acquiror or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of
Acquiror Common Stock or the capital stock of, or other equity interests
in, any subsidiary of Acquiror.

(c) Subject in all respects to the terms and conditions of this
Agreement, the shares of Acquiror Common Stock to be issued pursuant to the
Unitary Transaction (i) will be duly authorized, validly issued, fully paid
and non-assessable and not subject to preemptive rights created by statute,
or by Acquiror's Articles of Incorporation or By-Laws or any agreement to
which Acquiror is a party or is bound, (ii) will, when issued, be
registered under the Exchange Act and the Securities Act (but without
representation as to effectiveness) and registered or exempt from
registration under applicable Blue Sky Laws, and (iii) will, when issued,
be listed on the NASDAQ.

SECTION 4.04. CAPITALIZATION OF ACQUIROR SUB-1 AND SUB-2.

(a) The authorized capital stock of Acquiror Sub-1 consists of
100,000 shares of Acquiror Sub-1 Common Stock of which, as of the date of
this Agreement, 10,000 shares are issued and outstanding. On the date of
this Agreement, all issued and outstanding shares of Acquiror Sub-1 Common
Stock are, and at the Effective Time all issued and outstanding shares of
Acquiror Sub-1 Common Stock will be, duly

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authorized, validly issued, fully paid and non-assessable. Acquiror is the
record holder of all issued and outstanding shares of Acquiror Sub-1 Common
Stock, and such shares are owned by Acquiror free and clear of any and all
security interests, liens, claims, pledges, agreements, limitations on
Acquiror's voting rights, charges or other encumbrances of any nature
whatsoever.

(b) The authorized capital stock of Acquiror Sub-2 consists of an
unlimited shares of Acquiror Sub-2 Common Stock of which, as of the date of
this Agreement, one (1) shares is issued and outstanding. On the date of
this Agreement, all issued and outstanding shares of Acquiror Sub-2 Common
Stock are, and at the Effective Time, all issued and outstanding shares of
Acquiror Sub-2 Common Stock will be, duly authorized, validly issued, fully
paid and non-assessable. Acquiror is the record holder of all issued and
outstanding shares of Acquiror Sub-2 Common Stock, and such shares are
owned by Acquiror free and clear of any and all security interests, liens,
claims, pledges, agreements, limitations on Acquiror's voting rights,
charges or other encumbrances of any nature whatsoever.

(c) Except as disclosed in Section 4.04(c) to the Acquiror
Disclosure Schedule, as of the date of this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments
to which Acquiror or either of Acquiror Sub-1 or Acquiror Sub-2 is a party
of any character relating to the issued or unissued capital stock of, or
other equity interests in, Acquiror Sub-1 or Acquiror Sub-2, or obligating
Acquiror or Acquiror Sub-1 or Acquiror Sub-2 to grant, issue, sell or
register for sale any shares of the capital stock of, or other equity
interests in, either of Acquiror Sub-1 or Acquiror Sub-2 by sale, lease,
license or otherwise.

SECTION 4.05. AUTHORITY. Each of Acquiror, Acquiror Sub-1 and Acquiror
Sub-2 has the requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder, and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Acquiror and such Acquiror Subs, and the consummation by Acquiror and such
Acquiror Subs of the transactions contemplated hereby, have been duly authorized
by all necessary corporate action and no other corporate proceedings on the part
of Acquiror or such Acquiror Subs are necessary to authorize this Agreement or
to consummate the transactions contemplated by this Agreement. This Agreement
has been duly executed and delivered by Acquiror, Acquiror Sub-1 and Acquiror
Sub-2 and, assuming the due authorization, execution and delivery by the Target
Companies, the Canadian Ancillary Service Entities, the Target Shareholders and
the stockholders of Acquiror,

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constitutes the legal, valid and binding obligation of Acquiror, Acquiror Sub-1
and Acquiror Sub-2.

SECTION 4.06. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.

(a) The execution and delivery of this Agreement by Acquiror,
Acquiror Sub-1 and Acquiror Sub-2 do not, and the performance of this
Agreement by Acquiror and such Acquiror Subs shall not (i) conflict with or
violate the Articles, By-Laws or equivalent organizational documents of
Acquiror, Acquiror Sub-1, Acquiror Sub-2 or any of Acquiror's subsidiaries,
(ii) subject to (x) obtaining the consents, approvals, authorizations and
permits of, and making filings or notifications to, any Governmental
Entities pursuant to the applicable requirements, if any, of the Securities
Act, the Exchange Act, Blue Sky Laws, the NASDAQ, the HSR Act, the
Competition Act, the Investment Act, the ITA and the filing and recordation
of appropriate merger and amalgamation documents as required by Illinois
Law and Canada Law, and (y) obtaining the consents, approvals,
authorizations or permits described in Section 4.06(b) of the Acquiror
Disclosure Schedule, conflict with or violate any Laws applicable to
Acquiror, Acquiror Sub-1, Acquiror Sub-2 or any of Acquiror's other
subsidiaries or by which any of their respective properties is bound or
affected, or (iii) result in any breach of or constitute a default (or an
event that 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 encumbrance on
any of the properties or assets of Acquiror, Acquiror Sub-1, Acquiror Sub-2
or any of Acquiror's other subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Acquiror, Acquiror Sub-1,
Acquiror Sub-2 or any of Acquiror's other subsidiaries is a party or by
which Acquiror, such Acquiror Subs or other Acquiror subsidiaries or any of
their respective properties is bound or affected, except for any such
conflicts or violations described in clause (ii), or breaches or defaults
described in clause (iii) that would not have an Acquiror Adverse Effect.

(b) The execution and delivery of this Agreement by Acquiror,
Acquiror Sub-1 and Acquiror Sub-2 do not, and the performance of this
Agreement by Acquiror, Acquiror Sub-1 and Acquiror Sub-2 shall not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entities or other persons, except for (i)
applicable requirements, if any, of the Securities Act, the Exchange Act,
Blue Sky Laws, the NASDAQ, the HSR Act, the Competition Act, the Investment
Act, the ITA, the Telemarketing Act, Other Telemarketing Laws and Insurance

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Laws, (ii) the consents, approvals, authorizations or permits described in
Section 4.06(b) of the Acquiror Disclosure Schedule, and (iii) the filing
and recordation of appropriate merger and amalgamation documents as
required by Illinois Law and Canada Law.

SECTION 4.07. PERMITS; COMPLIANCE. Each of Acquiror and its subsidiaries
is in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary for Acquiror or any of its subsidiaries to own, lease and operate its
properties or to carry on its business as it is now being conducted (the
"Acquiror Permits") and no suspension, revocation or cancellation of any of the
Acquiror Permits is pending or, to the knowledge of Acquiror, threatened, except
where the failure to have, or the suspension, revocation or cancellation of, any
of the Acquiror Permits would not have an Acquiror Adverse Effect. Neither
Acquiror nor any of its subsidiaries is in conflict with, or in default or
violation of (i) any Law applicable to Acquiror or any of its subsidiaries or by
which any of their respective properties is bound or affected, or (ii) any of
the Acquiror Permits, except for any such conflicts, defaults or violations
which would not have an Acquiror Adverse Effect.

SECTION 4.08. SECURITIES REPORTS; FINANCIAL STATEMENTS.

(a) Since December 31, 1993, Acquiror and its subsidiaries have
filed (x) all forms, reports, statements and other documents required to be
filed (or filed by reference) with (i) the Commission, including without
limitation, (A) all Annual Reports on Form 10-K, (B) all Quarterly Reports
on Form 10-Q, (C) all Proxy Statements relating to meetings of
shareholders, (D) all required current reports on Form 8-K, (E) all other
reports and registration statements, and (F) all amendments and supplements
to all such reports and registration statements (collectively, the
"Acquiror SEC Documents"), and (ii) any applicable state securities
authorities, and (y) all forms, reports, statements and other documents
required to be filed with any other applicable federal or state regulatory
authorities, except where failure to file any such forms, reports,
statements and other documents under this clause (y) would not have an
Acquiror Adverse Effect (all such forms, reports, statements and other
documents referred to in this Subsection (a) are, collectively, "Acquiror
Reports"). The Acquiror Reports, including all Acquiror Reports filed
after the date of this Agreement and prior to the Effective Time (i) were
or will be prepared in all material respects in accordance with the
requirements of applicable Law, and (ii) did not, at the times they were
filed, or will not at the time they are filed, contain any untrue statement
of a material fact or omit to

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<PAGE>

state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading.

(b) Except as disclosed in Section 4.08(b) of the Acquiror
Disclosure Schedule, and except for changes required under GAAP or by the
Commission, each of Acquiror's financial statements (including any notes to
such financial statements) included within the Acquiror Reports (i) has
been or will be prepared in all material respects in accordance with the
published rules and regulations of the Financial Accounting Standards Board
and GAAP and the Commission applied on a consistent basis throughout the
periods involved, and (ii) fairly present, or will fairly present, in all
material respects, the consolidated financial position of the Acquiror as
of the respective dates thereof and the consolidated results of operations
and cash flows for the periods indicated; provided, however, the interim
financial statements of Acquiror may (x) be subject to normal or recurring
adjustments at Acquiror's fiscal year-end, (y) not necessarily be
indicative of results for a full-fiscal year, and (z) contain pro-forma
financial information which is not necessarily indicative of Acquiror's
consolidated financial position.

(c) Except as and to the extent disclosed in Section 4.08(c) of
the Acquiror Disclosure Schedule, neither Acquiror nor any of its
subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on, or reserved against in, a balance sheet of Acquiror, prepared
in accordance with GAAP, except (i) as otherwise disclosed in Section
4.08(c) of the Acquiror Disclosure Schedule, or (ii) for liabilities or
obligations incurred in the ordinary course of business since March 31,
1996, that would not have an Acquiror Adverse Effect.

SECTION 4.09. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in Section 4.09 of the Acquiror Disclosure Schedule, or as contemplated in this
Agreement, (i) since March 31, 1996, there has not been, and Acquiror has no
knowledge of any facts that are reasonably likely to result in, an Acquiror
Adverse Effect, and (ii) from December 31, 1996, to the date of this Agreement,
there has not been any change by Acquiror or its subsidiaries in their
accounting methods, principles or practices, except any such change after the
date of this Agreement required by GAAP or the Commission.

SECTION 4.10. ABSENCE OF LITIGATION.

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(a) There is no claim, action, suit, litigation, proceeding,
arbitration, or, to the knowledge of Acquiror, investigation of any kind
affecting Acquiror or any of its subsidiaries, at law or in equity
(including actions or proceedings seeking injunctive relief), pending or,
to the knowledge of Acquiror, threatened, except for claims, actions,
suits, litigations, proceedings, arbitrations or investigations which
cannot reasonably be expected to have an Acquiror Adverse Effect.

(b) Neither Acquiror nor any of its subsidiaries is subject to
any continuing order of, consent decree, settlement agreement or other
similar written agreement with, or, to the knowledge of Acquiror,
continuing investigation by, any Governmental Entity, or any judgment,
order, writ, injunction, decree or award of any Governmental Entity or
arbitrator, including, without limitation, cease-and-desist or other
orders, except for such matters which cannot reasonably be expected to have
an Acquiror Adverse Effect.

SECTION 4.11. TITLE TO ASSETS. Acquiror, or its applicable subsidiary, is
the owner of and has good and valid title to, or in the case of leased property
has a valid leasehold interest in, all of its material properties and assets
(except statutory liens for taxes, materialmen, warehousemen and landlords
incurred in the ordinary course of business and not yet due), including those
assets and properties reflected in the Acquiror's consolidated financial
statements.

SECTION 4.12. ACCOUNTING AND TAX MATTERS. Neither Acquiror nor, to the
knowledge of Acquiror, any of its subsidiaries or affiliates, has taken or
agreed to take any action that would prevent either the U.S. Merger or the
Canadian Amalgamation from being effected as a pooling of interests under GAAP
or the rules and regulations promulgated by the Commission, or would prevent the
U.S. Merger or the Canadian Amalgamation from constituting a transaction
qualifying as a reorganization under Section 368(a) of the Code.

SECTION 4.13. OWNERSHIP OF ACQUIROR SUBS; PRIOR ACTIVITIES.
(a) Acquiror Sub-1 and Acquiror Sub-2 were formed for the
purpose of engaging in the transactions contemplated by this Agreement and
have no material debts or liabilities.

(b) As of the Effective Time, all the outstanding capital stock
of each of Acquiror Sub-1 and Acquiror Sub-2 will be owned directly by
Acquiror. As of the Effective Time, there will be no options, warrants or
other rights (including registration rights), agreements, arrangements or
commitments to which either Acquiror Sub is a party of any character

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relating to the issued or unissued capital stock of, or other equity
interests in, such Acquiror Sub or obligating such Acquiror Sub to grant,
issue or sell any shares of the capital stock of, or other equity interests
in, such Acquiror Sub, by sale, lease, license or otherwise. There are no
obligations, contingent or otherwise, of any Acquiror Sub to repurchase,
redeem or otherwise acquire any shares of the capital stock of such
Acquiror Sub.

SECTION 4.14. BROKERS. Except as disclosed in Section 4.14 of the
Acquiror Disclosure Schedule, 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 upon arrangements made by or
on behalf of Acquiror.

SECTION 4.15. DISCLOSURE. No representations or warranties made by
Acquiror under this Agreement or in any certificate, Schedule, Exhibit or other
document furnished or to be furnished to the Target Companies, Target
Shareholders or their respective counsel pursuant hereto contains or will
contain any untrue statement of any material fact, or omits or will omit to
state a material fact necessary to make the statements of fact contained therein
not misleading.

ARTICLE V
---------

COVENANTS RELATING TO THE CONDUCT OF BUSINESS
---------------------------------------------

SECTION 5.01. AFFIRMATIVE COVENANTS OF THE TARGET COMPANIES. The Target
Companies and Canadian Ancillary Service Entities hereby covenant and agree with
Acquiror and its subsidiaries that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing by
Acquiror, each Target Company and Canadian Ancillary Service Entity shall, and
shall cause its subsidiaries to:

(a) operate its business only in the usual and ordinary course,
consistent with reasonable past practices;

(b) use reasonable best efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain the
services of its officers, key employees and managers, and maintain existing
good relationships with its customers, clients, vendors and suppliers;

(c) use reasonable best efforts to keep in full force and effect
all liability insurance and bonds comparable in amount and scope of
coverage to that currently maintained; and

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(d) confer with Acquiror from time-to-time at Acquiror's request
to report on all manner of operational matters, and to provide, orally or
in writing, as Acquiror shall request, the general status of the ongoing
operations of the business of such Target Company or Canadian Ancillary
Service Entity;

(e) prepare and cause its independent accountants to deliver to
Acquiror combined interim quarterly financial statements (including a
balance sheet and statement of results of operations and cash flows) as at
and for the periods ended March 31, 1996, June 30, 1996, and if prior to
the Effective Time, September 30, 1996 (the "Target Company Interim
Financials"). Such Target Company Interim Financials shall be prepared in
accordance with GAAP, applied on a consistent basis for the periods
involved, and shall present fairly, in all material respects, the combined
financial position of the Target Companies as of the dates indicated
therein the combined results of operations and cash flows of the Target
Companies for the periods then ended, except that the Target Companies
Interim Financials (i) shall be subject to normal recurring year-end
adjustments, and (ii) may omit footnote disclosures required by GAAP in
audited annual financial statements;

(f) file their Canada and U.S. federal income tax returns, and
all required provincial, state and local income and franchise tax returns,
and Subchapter S Returns, that include a Target Company, Canadian Ancillary
Service Entity or any of their subsidiaries, for the fiscal tax year 1995
on or before the due date for filing such returns (including extensions),
and if such returns, or any of them, are filed prior to the Effective Time,
such corporation shall afford to Acquiror reasonable opportunity for review
of such returns prior to filing; and

(g) immediately prior to the Effective Time, the U.S. Company
shall, upon the written instructions of Acquiror, sell all or such portion
of its accounts receivable to a bank or factor designated by Acquiror, for
a discount from face value reasonably acceptable to Acquiror.

SECTION 5.02. NEGATIVE COVENANTS OF THE TARGET COMPANIES. Except as
expressly contemplated by this Agreement, set forth in Section 5.02 of the
Target Company Disclosure Schedule or other-wise consented to in writing by
Acquiror, from the date of this Agreement until the Effective Time, the Target
Companies and the Canadian Ancillary Service Entities shall not, and the Target
Shareholders shall not cause a Target Company to, individually or collectively,
nor shall the Target Companies or Canadian Ancillary

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Service Entities permit any of their respective subsidiaries to, do any of the
following:

(a) (i) increase the compensation payable or to become payable
to any director, officer, manager or employee, except for increases in
salary or wages payable or to become payable in the ordinary course of
business and consistent with past practice to employees who are not
directors, officers or managers, (ii) grant any severance or termination
pay (other than pursuant to normal severance policy to, or enter into any
severance agreement with, any director, officer, manager or employee, (iii)
enter into any employment agreement of any nature whatsoever with any
director, officer, manager or employee that would extend beyond the
Effective Time, except on an at-will basis, or (iv) establish, adopt, enter
into or amend any employee benefit plan or arrangement, except as may be
required to comply with applicable Law;

(b) except as expressly set forth in Section 5.02(b) of the
Target Company Disclosure Schedule with respect to income reportable on the
U.S. Company's final Subchapter S Return, declare or pay, or agree to
declare or pay, in any manner whatsoever, any dividend on, or make any
other distribution in respect of, outstanding shares of U.S. Company Common
Stock, Canada Company Common Stock, Other U.S. Company Securities, Other
Canada Company Securities, U.S. Company Options or Canada Company Options;

(c) accrue or pay, or agree to accrue or pay, in any manner
whatsoever, any amount, whether in cash or in kind, from one Target
Company, Canadian Ancillary Service Entity (or their respective
subsidiaries) to or in respect of another Target Company, Canadian
Ancillary Service Entity (or their respective subsidiaries), and whether
for products or services provided or to be provided, or for any other
reason;

(d) (i) redeem, purchase or otherwise acquire any shares of its
or any of its subsidiaries' capital stock or any securities or obligations
convertible into or exchangeable for any shares of its or its subsidiaries'
capital stock, or any options, warrants or conversion or other rights to
acquire any shares of its or its subsidiaries' capital stock or any such
securities or obligations, (ii) effect any reorganization or
recapitalization, or (iii) split, combine or reclassify any of its or its
respective subsidiaries' capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its or its subsidiaries' capital stock;

(e) issue, deliver, award, grant or sell, or authorize the
issuance, delivery, award, grant or sale of

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(including the grant of any security interests, liens, claims, pledges,
limitations in voting rights, charges or other encumbrances), any shares of
any class of its or its subsidiaries' capital stock (including shares held
in treasury), any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to
acquire any such shares, or amend or otherwise modify the terms of any such
rights, warrants or options, the effect of which shall be to make such
terms more favorable to the holders thereof;

(f) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets of, or
by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets of any other person (other
than the purchase of assets from suppliers or vendors in the ordinary
course of business and consistent with reasonable past practices);

(g) except to the extent required under Section 5.01(g) of this
Agreement, sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer
or otherwise dispose of, any amount of any of its or its subsidiaries'
operating assets, except for retirements of operating assets in the
ordinary course of business and consistent with reasonable past practices;

(h) initiate, solicit or encourage (including by way of
furnishing any information or assistance in connection with) any inquiries
or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any "Competing Transaction" (as such term is defined
below), enter into discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain a Competing Transaction, or
agree to or endorse any Competing Transaction, or authorize any officer,
manager, director or affiliate of such Target Company, or of any of
subsidiary thereof, to take any such action; and each Target Company,
together with its Target Shareholder(s) shall use its reasonable best
efforts to cause the directors, officers, managers, employees, affiliates,
agents and representatives of such Target Company and its subsidiaries
(including, without limitation, any investment banker, financial advisor,
attorney or accountant retained by such Target Company or any of its
subsidiaries) not to take any such action. Each Target Company shall
promptly notify Acquiror if any such inquiries or proposals are received by
a Target Company or any of its subsidiaries, or by any of their respective
officers, managers, directors,

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affiliates, investment bankers, financial advisors, attorneys, accountants
or other representatives. Each Target Company shall keep Acquiror
informed, on a current basis, of the nature of, and provide Acquiror with
true and complete copies of, any such inquiries, and such Target Company's
responses thereto. For purposes of this Agreement, the term "Competing
Transaction" shall mean any of the following involving a Target Company or
any subsidiary (other than the transactions contemplated by this
Agreement): (i) any merger, consolidation, share exchange, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of five percent (5%) or
more of the assets of a Target Company or a subsidiary thereof, in a single
transaction; (iii) any public or private tender offer or exchange offer for
any outstanding shares of capital stock of a Target Company or any
subsidiary thereof, or the filing of a registration statement under the
Securities Act in connection therewith; (iv) any solicitation of proxies in
opposition to approval by a Target Company's shareholders of such Target
Company's Merger or of the Unitary Transaction; (v) any person other than
the Target Shareholders or MPLP shall have acquired beneficial ownership or
the right to acquire beneficial ownership of, or any "group" (as such term
is defined under Section 13(d) of the Exchange Act) shall have been formed
which beneficially owns or has the right to acquire beneficial ownership
of, any of the then outstanding shares of capital stock of a Target
Company; or (vi) any agreement to, or public announcement by a Target
Company of a proposal, plan or intention, to do any of the foregoing;

(i) adopt any amendments to their Articles or By-Laws;

(j) change any methods of accounting in effect at December 31,
1995, or make or rescind any express or deemed election relating to taxes
(including an election to file a Subchapter S Return), settle or compromise
any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes, or change any method
of reporting income, gain, expense, loss or deduction for federal or Canada
income tax purposes from those employed in the preparation of income tax
returns for taxable years ending on or prior to November 30, 1994, except
in either case as may be required by Law; provided, however, that the
Canada Company may settle an existing dispute with Revenue Canada to the
extent and on the terms set forth in Section 3.12 of the Target Company
Disclosure Schedule;

(k) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except for

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borrowings made with the prior written consent of Acquiror or borrowings
not exceeding $10,000 in the aggregate made in the ordinary course of a
Target Company's business and consistent with reasonable past practice;

(l) agree in writing or otherwise to do any of the foregoing; or

(m) without first consulting with Acquiror, (i) perform any act
which, if performed, would prevent or excuse the performance of this
Agreement by Acquiror or which would result in any representation or
warranty herein contained of the Target Companies to be untrue in any
material respect as if originally made on and as of the Effective Time, or
(ii) fail to perform any act which, if omitted to be performed, would
prevent or excuse the performance of this Agreement by Acquiror or which
would result in any representation or warranty herein contained of the
Target Companies to be untrue in any material respect as if originally made
on and as of the Effective Time.

SECTION 5.03. AFFIRMATIVE COVENANTS OF ACQUIROR. Acquiror hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by the
Target Companies, Acquiror will, and will cause each of its subsidiaries to:

(a) operate its business in the usual and ordinary course;

(b) use reasonable efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain the
services of its respective officers and key employees and maintain the
relationships with its respective customers and suppliers; and

(c) use reasonable efforts to keep in full force and effect
liability insurance and bonds comparable in amount and scope of coverage to
that currently maintained.

SECTION 5.04. NEGATIVE COVENANTS OF ACQUIROR. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by the
Target Companies, from the date of this Agreement to the Effective Time,
Acquiror shall not, and shall not permit any of its subsidiaries to (i) amend
any of the material terms or provisions of Acquiror's securities, except for any
such amendments which affect equally all shares of Acquiror Common Stock, (ii)
agree in writing or otherwise to do the foregoing, or (iii) without first
consulting with the Target Companies, (x) perform any act which, if performed,
would prevent or excuse the performance of this Agreement by the Target
Companies or which would result in any

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representation or warranty herein contained of the Acquiror to be untrue in any
material respect as if originally made on and as of the Effective Time, or (y)
fail to perform any act which, if omitted to be performed, would prevent or
excuse the performance of this Agreement by the Target Companies or which would
result in any representation or warranty herein contained of Acquiror to be
untrue in any material respect as if originally made on and as of the Effective
Time.

SECTION 5.05. ACCESS AND INFORMATION.

(a) Upon reasonable prior notice from Acquiror, the Target
Companies and the Canadian Ancillary Service Entities shall (and shall
cause their subsidiaries to) afford to Acquiror and its officers,
employees, accountants, consultants, legal counsel and other
representatives, reasonable access during business hours to (i) the
properties and locations at which the Target Companies, the Canadian
Ancillary Service Entities and their subsidiaries are conducting business
activities, (ii) the directors, officers and management personnel of the
Target Companies and the Canadian Ancillary Service Entities at all such
locations, and (iii) all information (including, if available, original
documents and Returns) concerning the business, properties, contracts,
records and personnel of the Target Companies, the Canadian Ancillary
Service Entities and their subsidiaries. The Target Companies and the
Canadian Ancillary Service Entities shall permit Acquiror to make copies of
such books, records and other documents as Acquiror reasonably considers
necessary or appropriate for the purpose of familiarizing itself with the
business, properties, contracts, records and personnel of such
corporations, and/or for obtaining any approvals, consents, licenses or
permits for the transactions contemplated by this Agreement.

(b) Acquiror shall (and shall cause its subsidiaries to) afford
to the Target Companies and their respective officers, employees,
accountants, consultants, legal counsel and other representatives,
reasonable access upon reasonable notice to all information concerning the
business, properties, contracts, records and personnel of Acquiror or its
subsidiaries as the Target Companies may reasonably request, and as may be
lawfully disclosed by Acquiror.

(c) The parties and their respective officers, employees,
accountants, consultants, legal counsel and other representatives shall
comply with all of their respective obligations under that certain
Confidentiality Letter Agreement dated as of April 30, 1996, among
Acquiror, the U.S. Company and the Canada Company.

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SECTION 5.06. NEW TARGET COMPANY SHAREHOLDERS. The Target Companies shall
cause each person becoming a Target Shareholder after the date of this Agreement
(including MPLP, upon the exercise of the MPLP Option) to be bound by this
Agreement, by executing a counterpart hereof or such other document in form and
substance reasonably satisfactory to Acquiror which causes this Agreement, and
the duties and obligations of the Target Shareholders hereunder, to become valid
and binding on such new Target Shareholder; provided, however, no person may
become a Target Shareholder if, in the reasonable judgment of Acquiror, the
effect of such acquisition of Target Company Common Stock shall be to (i)
disqualify the Unitary Transaction for "pooling of interests" accounting
treatment, or (ii) cause the representation of the Target Companies in Section
3.16 of this Agreement to become untrue in any respect whatsoever.

ARTICLE VI
----------

ADDITIONAL AGREEMENTS
---------------------

SECTION 6.01. REGISTRATION STATEMENT; PROXY STATEMENT.

(a) As promptly as practicable after the date of this Agreement,
Acquiror shall prepare and file with the Commission a registration
statement on Form S-4 (together with any amendments thereto, the
"Registration Statement"), containing a proxy statement/prospectus
(together with any amendments thereto, the "Proxy Statement"), in
connection with (i) the registration under the Securities Act of the
Acquiror Common Stock to be issued in the Unitary Transaction, (ii) the
vote of Acquiror's stockholders with respect to the Unitary Transaction,
and (iii) the other transactions contemplated by this Agreement. Each of
Acquiror, the Target Companies and the Canadian Ancillary Service Entities
will use reasonable best efforts to have or cause the Registration
Statement to become effective as promptly as practicable, and shall take
any action required to be taken under any applicable Canadian and U.S.
federal, state, provincial or local securities Laws in connection with the
issuance of shares of Acquiror Common Stock in the Unitary Transaction.
Each of Acquiror, the Target Companies and the Canadian Ancillary Service
Entities shall furnish all information concerning it and the holders of its
capital stock as the other may reasonably request in connection with such
actions. As promptly as practicable after the Registration Statement shall
have become effective, Acquiror shall mail the Proxy Statement to its
stockholders. The Proxy Statement shall include the recommendation of
Acquiror's Board of Directors in favor of the Unitary Transaction, unless
otherwise required by the fiduciary duties of the directors of Acquiror, as
determined by such directors

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in good faith after consultation with and receipt of written advice from
outside legal counsel.

(b) The information supplied by the Target Companies, Target
Shareholders or the Canadian Ancillary Service Entities for inclusion in
the Registration Statement shall not, at the time the Registration
Statement is declared effective, 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 therein, in light of the
circumstances under which they are made, not misleading. The information
supplied by the Target Companies, the Target Shareholders or the Canadian
Ancillary Service Entities for inclusion in the Proxy Statement to be sent
to the stockholders of Acquiror in connection with the meeting of
Acquiror's stockholders to consider the Unitary Transaction (the
"Stockholders' Meeting") shall not, at the time the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to Acquiror
stockholders, at the time of the Stockholders' Meeting or at the Effective
Time, 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 therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event
or circumstance relating to the Target Companies, the Canadian Ancillary
Service Entities or any of their respective subsidiaries, or their
respective affiliates, officers or directors, should be discovered by the
Target Companies or Target Shareholders which should be set forth in an
amendment to the Registration Statement, the Target Companies (or Target
Shareholders, as the case may be) shall promptly so inform Acquiror. All
documents that any Target Company, Canadian Ancillary Service Entity or
Target Shareholder is responsible for providing in connection with the
transactions contemplated herein will comply as to form and substance in
all material respects with the applicable requirements of the Securities
Act and the rules and regulations thereunder, and the Exchange Act and the
rules and regulations thereunder.

(c) The information supplied by Acquiror for inclusion in the
Registration Statement shall not, at the time the Registration Statement is
declared effective, 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 therein, in light of the circumstances under
which they are made, not misleading. The information supplied by Acquiror
for inclusion in the Proxy Statement to be sent to the stockholders of
Acquiror in connection with the Stockholders' Meeting shall not, at the
time the Proxy Statement (or any amendment thereof or

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supplement thereto) is first mailed to Acquiror stockholders, at the time
of the Stockholders' Meeting or at the Effective Time, 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 therein, in
light of the circumstances under which they are made, not misleading. If
at any time prior to the Effective Time any event or circumstance relating
to Acquiror or any of its subsidiaries, or their respective affiliates,
officers or directors, should be discovered by Acquiror which should be set
forth in an amendment to the Registration Statement, Acquiror shall
promptly so inform the Target Companies and the Target Shareholders. All
documents that Acquiror is responsible for providing in connection with the
transactions contemplated herein will comply as to form and substance in
all material respects with the applicable requirements of the Securities
Act and the rules and regulations thereunder, and the Exchange Act and the
rules and regulations thereunder.

(d) The Target Companies, the Target Shareholders, the Canadian
Ancillary Service Entities and Acquiror each hereby (i) consent to the use
of their names and, on behalf of their subsidiaries and affiliates, the
names of such subsidiaries and affiliates, and to the inclusion of
financial statements and business information relating to such party and
its subsidiaries and affiliates, in any registration statement or proxy
statement prepared by Acquiror, (ii) agree to use their reasonable efforts
to obtain the written consent of any person or entity retained by it which
may be required to be named (as an expert or otherwise) in such
registration statement or proxy statement, and (iii) agree to cooperate,
with any legal counsel, investment banker, accountant or other agent or
representative retained by any of the parties specified in clause (i) in
connection with the preparation of any and all information required, as
determined after consultation with each party's counsel by applicable
securities Laws to be disclosed in any such registration statement or proxy
statement.

SECTION 6.02. MEETING OF ACQUIROR STOCKHOLDERS. Acquiror shall, promptly
after the date of this Agreement, take all action necessary, in accordance with
Illinois Law and its Articles of Incorporation and By-Laws, to convene the
Stockholders' Meeting. Acquiror shall use its reasonable efforts to solicit
from the stockholders of Acquiror proxies in favor of the Unitary Transaction
and shall take all other actions necessary or advisable to secure the vote or
consent of stockholders required by Illinois Law to approve the Unitary
Transaction, unless otherwise required by the applicable fiduciary duties of
directors of Acquiror, as determined by such directors in good faith after
consultation with and receipt of written advice from outside legal counsel.

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SECTION 6.03. RATIFICATION OF TARGET SHAREHOLDER APPROVAL. At any time or
times prior to the Effective Time as Acquiror shall reasonably request, the
Target Shareholders shall provide Acquiror with documents, in such form and
substance as reasonably requested by Acquiror, executed by each such Target
Shareholder, and affirming and ratifying their unanimous approval of and consent
to the Unitary Transaction and the other transactions contemplated hereunder.

SECTION 6.04. APPROPRIATE ACTION; CONSENTS; FILINGS.

(a) The Target Companies, the Canadian Ancillary Service
Entities, the Target Shareholders and Acquiror shall use all reasonable
efforts to (i) take, or cause to be taken, all appropriate action, and do,
or cause to be done, all things necessary, proper or advisable under
applicable Laws or otherwise to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable,
(ii) obtain from any Governmental Entities any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or
made by the Target Companies, Canadian Ancillary Service Entities, Target
Shareholders or Acquiror or any of their respective subsidiaries in
connection with the authorization, execution and delivery of this Agreement
and the consummation of the transactions contemplated herein, including,
without limitation, the Unitary Transaction, and (iii) make all necessary
filings, and thereafter make any other required submissions, with respect
to this Agreement and the Unitary Transaction required under (A) the
Securities Act and the Exchange Act, and any other applicable Canadian,
federal or state securities Laws, (B) the HSR Act, (C) the Competition Act,
and (D) any other applicable Law; provided, however, that the Target
Companies. Canadian Ancillary Service Entities and Acquiror shall cooperate
with each other in connection with the making of all such filings,
including providing copies of all such documents to the non-filing party
and its advisors prior to filing and, if requested, to accept all
reasonable additions, deletions or changes suggested in connection
therewith. The Target Companies, Canadian Ancillary Service Entities,
Target Shareholders and Acquiror shall furnish to each other all
information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable Law (including all
information required to be included in the Registration Statement and the
Proxy Statement) in connection with the transactions contemplated by this
Agreement.

(b) (i) The Target Companies, Canadian Ancillary Service Entities,
Target Shareholders and Acquiror shall give (or shall cause their
respective subsidiaries or affiliates to

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give) any notices to third parties, and use, and cause their respective
subsidiaries to use, all reasonable efforts to obtain any third party
consents, (A) necessary or advisable to consummate the transactions
contemplated in this Agreement, or (B) required to prevent a Target Company
Adverse Effect from occurring prior to or after the Effective Time or an
Acquiror Adverse Effect from occurring after the Effective Time
(collectively, "Material Consents").

(ii) In the event that any party shall fail to obtain a third
party consent described in subsection (b)(i), above, such party shall use
best reasonable efforts, and shall take any such actions reasonably
requested by the other party hereto, to minimize any adverse effect upon
the Target Companies, the Canadian Ancillary Service Entities and Acquiror,
their respective subsidiaries, and their respective businesses resulting,
or which could reasonably be expected to result after the Effective Time,
from the failure to obtain such consent.

(c) From the date of this Agreement until the Effective Time,
the Target Companies, Canadian Ancillary Service Entities and Target
Shareholders shall promptly notify Acquiror in writing of any pending or,
to the knowledge of any Target Company, threatened action, proceeding or
investigation by any Governmental Entity or any other person (i)
challenging or seeking damages in connection with the U.S. Merger, the
Canada Amalgamation, the Ancillary Asset Acquisition, the Unitary
Transaction, the conversion of U.S. Company Common Stock into Acquiror
Common Stock pursuant to the U.S. Merger, the conversion of Canada Company
Common Stock into Acquiror Common Stock pursuant to the Canada
Amalgamation, the conversion of Acquiror Sub-1 capital stock into capital
stock of the U.S. Surviving Corporation, and/or the conversion of Acquiror
Sub-2 capital stock into capital stock of the Amalgamated Canada
Corporation, or (ii) seeking to restrain or prohibit the consummation of
the Unitary Transaction, the other transactions contemplated under this
Agreement, or otherwise limit the right of Acquiror or its subsidiaries to
own or operate all or any portion of the businesses or assets of the Target
Companies, the Canadian Ancillary Service Entities or their subsidiaries,
which in either case is reasonably likely to have a Target Company Adverse
Effect prior to or after the Effective Time, or an Acquiror Adverse Effect
after the Effective Time.

(d) From the date of this Agreement until the Effective Time,
Acquiror shall promptly notify the Target Companies and Target Shareholders
in writing of any pending or, to the knowledge of Acquiror, threatened
action, proceeding or investigation by any Governmental Entity or any

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other person (i) challenging or seeking damages in connection with the U.S.
Merger, the Canada Amalgamation, the Ancillary Asset Acquisition, the
Unitary Transaction, the conversion of U.S. Company Common Stock into
Acquiror Common Stock pursuant to the U.S. Merger, the conversion of Canada
Company Common Stock into Acquiror Common Stock pursuant to the Canada
Amalgamation, the conversion of Acquiror Sub-1 capital stock into capital
stock of the U.S. Surviving Corporation, and/or the conversion of Acquiror
Sub-2 capital stock into capital stock of the Amalgamated Canada
Corporation, or (ii) seeking to restrain or prohibit the consummation of
the Unitary Transaction or the other transactions contemplated under this
Agreement, or in either case reasonably likely to have an Acquiror Adverse
Effect prior to the Effective Time.

SECTION 6.05. LETTERS OF ACCOUNTANTS. The Target Companies and Acquiror
shall use their reasonable efforts, respectively, to cause to be delivered "cold
comfort" letters of Arthur Andersen, L.L.P., independent public accountants for
each of the Target Companies and Acquiror, dated the date on which the
Registration Statement shall become effective and as of the Effective Time, and
addressed to the Target Companies and Acquiror, respectively, in form and
substance reasonably satisfactory to the Target Companies and Acquiror, and
reasonably customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement and transactions such as those contemplated by this
Agreement.

SECTION 6.06. UPDATE DISCLOSURE; BREACHES. From and after the date of
this Agreement until the Effective Time, the Target Companies and the Canadian
Ancillary Service Entities, on the one hand, and Acquiror, on the other hand,
shall promptly notify the other by written update to its Disclosure Schedule of
(i) the occurrence or non-occurrence of any event the occurrence or non-
occurrence of which would be likely to cause any condition to the obligations of
any party to effect the Unitary Transaction and the other transactions
contemplated by this Agreement not to be satisfied, or (ii) the failure of any
Target Company, Canadian Ancillary Service Entity or Acquiror, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it pursuant to this Agreement which would be
likely to result in any condition to the obligations of any party to effect the
Merger and the other transactions contemplated by this Agreement not to be
satisfied; provided, however, that the delivery of any notice pursuant to this
Section 6.06 shall not be deemed to cure any breach of any representation or
warranty requiring disclosure of such matter prior to the date of this
Agreement, or otherwise limit or affect the remedies available hereunder to the
party receiving such notice.

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SECTION 6.07. TARGET COMPANY AFFILIATES; ACCOUNTING AND TAX TREATMENT.
Section 6.07 of the Target Company Disclosure Schedule sets forth all persons
who, as of the date of this Agreement, may be deemed to be affiliates of the
Target Companies under applicable accounting releases with respect to pooling-
of-interests accounting treatment. As promptly as practicable after the date of
this Agreement, the Target Companies shall advise such persons of the resale
restrictions imposed by applicable securities Laws required to cause the U.S.
Merger, the Canada Amalgamation, the Ancillary Asset Acquisition and the Unitary
Transaction to qualify for pooling-of-interests accounting treatment. Prior to
the Effective Time, the Target Companies shall obtain from each person listed in
Section 6.07 of the Target Company Disclosure Schedule and any person who may be
deemed to have become an affiliate of a Target Company after the date of this
Agreement and on or prior to the Effective Time, or affiliate of Acquiror on and
after the Effective Time, a written agreement substantially in the form of
Exhibit "G" hereto (each, an "Affiliate Agreement"); provided, however, the
Target Companies shall provide Acquiror with Affiliate Agreements executed by
Seymour Okner ("Sy Okner") and Sam Okner ("Sam Okner") prior to the filing by
Acquiror of the Registration Statement; and provided, further, the Target
Companies shall use reasonable efforts to obtain executed Affiliate Agreements
from each other such person as soon as practicable after the date of this
Agreement or the date on which such person attains such status, as the case may
be. Each party shall use reasonable efforts to cause the U.S. Merger, the
Canada Amalgamation, the Ancillary Asset Acquisition and the Unitary Transaction
to qualify, and shall not take any actions which could prevent any such Merger
from qualifying, for pooling-of-interests accounting treatment and as a
reorganization qualifying under the provisions of Section 368(a) of the Code;
provided, however, that the incurrence of tax by stockholders of the Canada
Company upon consummation of the Canada Amalgamation by virtue of its status as
a "controlled foreign corporation" under the Code shall not, in itself, be
deemed a disqualification from reorganization treatment under the provisions of
Section 368(a) of the Code.

SECTION 6.08. PUBLIC ANNOUNCEMENTS. Acquiror shall consult with the
Target Companies and Target Shareholders before issuing any press release with
respect to the Unitary Transaction or this Agreement, 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 the requirements of the NASDAQ. The Target
Companies and Target Shareholders acknowledge and agree that any such press
release or other public announcement respecting the Unitary Transaction or this
Agreement may be disseminated only through the agents of Acquiror.

SECTION 6.09. NASDAQ LISTING OF ACQUIROR COMMON STOCK. Acquiror shall
cause the shares of Acquiror Common Stock to be

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issued in the Unitary Transaction to be listed on the NASDAQ subject only to
official notice of issuance thereof.

SECTION 6.10. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

(a) From and after the Effective Time, Acquiror shall, and shall
cause (x) the U.S. Surviving Corporation to, indemnify, defend and hold
harmless the present and former officers and directors of the U.S. Company,
and (y) the Amalgamated Canada Corporation to, indemnify, defend and hold
harmless the present and former officers and directors of the Canada
Company (such U.S. Company and Canada Company present and former officers
and directors are collectively, the "Indemnified Parties") against all
losses, expenses, claims, damages or liabilities arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement, but
specifically excluding damages or liabilities attributable to an inaccuracy
in or breach or violation of the representations, warranties, covenants and
agreements of the Target Companies made under or pursuant to the Agreement)
to the full extent permitted or required under Illinois Law and Canada Law
(and shall also advance expenses as incurred to the fullest extent
permitted under Illinois Law and Canada Law, provided that the person to
whom expenses are advanced provides the undertaking to repay such advances
contemplated by Illinois Law and Canada Law). Acquiror, Acquiror Sub-1 and
Acquiror Sub-2 agree that all rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any
claim, action, suit, proceeding or investigation (a "Claim") existing in
favor of the Indemnified Parties as provided in each Target Company's
Articles of Incorporation or By-Laws, as in effect as of the date hereof,
with respect to matters occurring through the Effective Time, shall
(subject to the exclusions provided for damages and liabilities
attributable to inaccuracies, breaches and violations, as provided above)
survive the Unitary Transaction and continue in full force and effect, as
provided by Law.

(b) Without limiting the generality of the foregoing, in the
event any Claim is brought against any Indemnified Party (whether arising
before or after the Effective Time) after the Effective Time, (i) the
Indemnified Parties may retain counsel satisfactory to them and the
applicable Surviving Corporation, (ii) the applicable Surviving Corporation
shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received, and (iii)
the applicable Surviving Corporation will use all reasonable efforts to
assist in the defense of any such matter; provided, however, the applicable
Surviving Corporation shall not be liable for

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the settlement of any Claim effected without its written consent, which
consent, however, shall not be unreasonably withheld. Any Indemnified
Party wishing to claim indemnification under this Section 6.10, upon
learning of any such Claim, shall promptly notify Acquiror and the
applicable Surviving Corporation. The Indemnified Parties as a group may
retain only one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct, a
conflict on any significant issue between the positions of any two or more
Indemnified Parties.

(c) In the event a Target Company (the U.S. Survivor Corporation
or the Canada Amalgamated Corporation) is unable to obtain extended
coverage under any existing policies of directors' and officers' liability
insurance, Acquiror shall use reasonable efforts to cause to be maintained
in effect for not less than three (3) years after the Effective Time the
current policies of directors' and officers' liability insurance and
fiduciary liability insurance maintained by such Target Company with
respect to matters occurring prior to the Effective Time; provided,
however, that Acquiror may cause to be substituted therefor policies of
substantially the same coverage containing terms and conditions which are
substantially the same for the Indemnified Parties to the extent reasonably
available.

(d) This Section 6.10 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of Acquiror,
Acquiror Sub-1, Acquiror Sub-2, the U.S. Company, the Canada Company, the
U.S. Surviving Corporation and the Amalgamated Canada Corporation.

SECTION 6.11. ELECTION OF TARGET SHAREHOLDER TO ACQUIROR AND OTHER SUB
BOARDS. At the Effective Time, Acquiror shall amend its By-Laws to increase the
number of its Directors by one (1), and shall elect one (1) Target Shareholder
reasonably satisfactory to Acquiror and Sy Okner to fill the directorship
thereby created. Acquiror agrees that, in the absence of materially adverse
information discovered or coming to light after the date of this Agreement, Sy
Okner and Sam Okner are each deemed reasonably satisfactory to Acquiror for
purposes of this Section 6.11. From and after the Effective Time, prior to each
annual meeting of the stockholders of Acquiror, Acquiror shall, and shall cause
the U.S. Surviving Corporation and the Amalgamated Canada Corporation to,
nominate one (1) Target Shareholder reasonably satisfactory to Acquiror and
selected by Sy Okner (or, in his absence, Sam Okner) for election to the
respective Boards of Directors of Acquiror, the U.S. Surviving Corporation and
the Amalgamated Canada Corporation, and once so nominated, Acquiror shall not,
except to the extent of the fiduciary requirements under Illinois Law, withdraw
its recommendation of or support for such Target Shareholder to

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Acquiror's stockholders generally; provided, however, that election of such
Target Shareholder to the Board of Directors of any such corporation shall be
determined by vote of Acquiror's stockholders (or the Board of Directors elected
by them); and provided, further, upon the earlier to occur of (i) five (5) years
from the date of this Agreement, (ii) the last to occur of the death of Sy or
Sam Okner, or (iii) the sale or other disposition by Target Shareholders of more
than one-half of the shares of Acquiror Common Stock received by them in the
Unitary Transaction, Acquiror shall be under no obligation to nominate or cause
there to be nominated any such Target Shareholder to the Boards of Directors of
Acquiror, the Surviving U.S. Corporation or the Amalgamated Canada Corporation.

SECTION 6.12. OBLIGATIONS OF ACQUIROR SUBS. Acquiror shall take all
action necessary to cause each of Acquiror Sub-1 and Sub-2 to perform its
obligations under this Agreement and to consummate the Unitary Transaction on
the terms and conditions set forth in this Agreement.

SECTION 6.13. OBLIGATIONS OF THE TARGET COMPANIES. Each Target Company
shall take all action necessary to cause the other to perform its obligations
under this Agreement and to consummate the Unitary Transaction on the terms and
conditions set forth in this Agreement.

SECTION 6.14. OBLIGATIONS OF TARGET SHAREHOLDERS. The Target Shareholders
shall take all action necessary to cause the Target Companies to perform their
respective obligations under this Agreement and to consummate the Unitary
Transaction on the terms and conditions set forth in this Agreement.

ARTICLE VII
-----------

CLOSING CONDITIONS
------------------

SECTION 7.01. CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS
AGREEMENT. The respective obligations of each party to effect the Unitary
Transaction and the other transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable Law:

(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The
Registration Statement shall have been declared effective by the Commission
under the Securities Act. No stop order suspending the effectiveness of
the Registration Statement shall have been issued by the Commission and no
proceedings for that purpose shall have been initiated and be continuing
or, to the knowledge of Acquiror or any Target Company,

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threatened by the Commission. Acquiror shall have received all other
Canadian and U.S. federal, state or provincial securities permits and other
authorizations necessary to issue Acquiror Common Stock in exchange for the
U.S. Company Common Stock and Canada Company Common Stock, and to
consummate the U.S. Merger, the Canada Amalgamation, the Ancillary Asset
Acquisition and the Unitary Transaction, and the shares of Acquiror Common
Stock so deliverable pursuant to this Agreement shall have been delivered
as a portion of the registered distribution covered by the Registration
Statement.
(b) STOCKHOLDER APPROVAL. This Agreement and the Unitary
Transaction shall have been approved and adopted by the requisite vote of
the stockholders of Acquiror.

(c) NO ACTION OR PROCEEDING. There shall not have been
instituted and there shall not be pending any action or proceeding by a
Governmental Entity, and no such action or proceeding shall have been
specifically threatened in a written communication from a representative of
a Governmental Entity with authority to institute such an action or
proceeding, before any court of competent jurisdiction or governmental
agency or regulatory or administrative body, and no order or decree shall
have been entered in any action or proceeding before such court, agency or
body (i) imposing or seeking to impose limitations on the ability of
Acquiror to acquire or hold or to exercise full rights of ownership of any
securities of the U.S. Surviving Corporation, the Amalgamated Canada
Corporation or any of their respective subsidiaries, (ii) imposing or
seeking to impose limitations on the ability of Acquiror to combine and
operate the business and assets of any Target Company with any of
Acquiror's subsidiaries or other operations, (iii) imposing or seeking to
impose other sanctions, damages or liabilities arising out of the Unitary
Transaction on Acquiror, Acquiror Sub-1, Acquiror Sub-2, the U.S. Company,
the Canada Company, Marusa Financial, Nerok or any of their respective
officers or directors, (iv) requiring or seeking to require divestiture by
Acquiror of all or any significant portion of the business, assets or
properties of any Target Company or any of its subsidiaries, or (v)
restraining, enjoining or prohibiting or seeking to restrain, enjoin or
prohibit the consummation of the U.S. Merger, the Canada Amalgamation, or
both; provided, however, the condition described in this clause (v) may not
be invoked with respect to threatened proceedings with respect to which no
action or proceeding is commenced within days (10) days following receipt
of written notice of the threatened proceeding.

(d) HSR ACT. The applicable waiting period, together with any
extensions thereof, under the HSR Act shall have expired or been
terminated.

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(e) COMPETITION ACT. If deemed reasonably necessary, the
Director under the Competition Act shall have informed the parties in
writing that no approval, consent or application for an order is required
under the Competition Act; provided, if approval is required thereunder,
then such approval, consent or order shall have been received.

(f) SECTION 116 CERTIFICATE. The Target Shareholders shall have
delivered to Acquiror a certificate issued under Section 116 of the ITA
indicating a certificate limit or proceeds of disposition equal to or
greater than the value of Acquiror's Common Stock, in order to constitute
the Canada Amalgamation a tax-free transaction under the ITA.

SECTION 7.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACQUIROR. The
obligations of Acquiror to effect the Unitary Transaction and the other
transactions contemplated in this Agreement are also subject to the following
conditions:

(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the Target Companies and Target Shareholders contained in
this Agreement shall be true and correct in all material respects as of the
Effective Time, as though made on and as of the Effective Time, and
Acquiror shall have received a certificate of the Chief Executive Officer
(acting in such capacity) of each Target Company to that effect; provided,
however, that (i) those representations and warranties which address
matters only as of a particular date shall remain true and correct in all
material respects as of such date, and (ii) for purposes of determining
satisfaction of this condition, Acquiror shall not give effect to an
individually insignificant breach of a representation and warranty of a
Target Company herein. For purposes of this Agreement, an "individually
insignificant breach of a representation or warranty" shall mean a
misstatement in, or breach of, any representation or warranty set forth in
Article III or Article IV of this Agreement, and which misstatement or
breach, absent discovery by the non-breaching party prior to the Effective
Time, may reasonably have resulted in "Damages" (hereafter defined) not
exceeding U.S. five thousand dollars $5,000 in a single instance, or U.S.
one hundred thousand dollars $100,000 in the aggregate from all such
breaches.

(b) AGREEMENTS AND COVENANTS. Each Target Company. Canadian
Ancillary Service Entity and Target Shareholder shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it or him on
or prior to the Effective Time, and Acquiror shall have received a
certificate of the Chief Executive Officer (acting in such capacity) of
each Target Company to that effect.

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(d) AFFILIATE AGREEMENTS. Each Target Shareholder and every
other holder of shares of U.S. Company Common Stock and Canada Company
Common Stock shall have fully tendered such shares to Acquiror in
accordance with the provisions of Section 2.01 of this Agreement, and
Acquiror shall have received from the Target Shareholders and each other
person listed in Section 6.07 of the Target Company Disclosure Schedule and
any other person who may be deemed to have become an affiliate or
stockholder of a Target Company after the date of this Agreement and on or
prior to the Effective Time (or affiliate of Acquiror after the Effective
Time), a duly executed Affiliate Agreement in the form of Exhibit "G".

(e) EMPLOYMENT AND OTHER AGREEMENTS. Acquiror, on behalf of the
Surviving Corporations, shall have received from (i) Sy Okner, an executed
Employment Agreement in the form of Exhibit "D" hereto, (ii) Sam Okner, an
executed Employment Agreement in the form of Exhibit "E" hereto, and (iii)
the persons identified in Section 7.02(e) of the Target Company Disclosure
Schedule, shall have executed, on the date of this Agreement, Employment
Agreements in the form of Exhibit "H" hereto, and all such Employment
Agreements shall be in full force and effect at and as of the Effective
Time. In addition, Acquiror shall have received from each of Sy Okner and
Sam Okner an executed (i) Agreement and Covenant Against Unfair
Competition, in the form of Exhibit "I" hereto, and (ii) General Release of
Claims, in the form of Exhibit "J" hereto.

(f) THE ANCILLARY ASSET ACQUISITION. The New Canadian Ancillary
Service Entity and the Canadian Ancillary Service Entities shall have
closed the transactions under the Ancillary Asset Purchase Agreement.

(g) FAIRNESS OPINION. Acquiror shall have received the updated
opinion of William Blair & Company, L.L.C., dated the date of the Proxy
Statement, to the effect that the U.S. Exchange Ratio and the Canada
Exchange Ratio are, from a financial standpoint, fair to Acquiror.

(h) CASH ACCOUNTS. Acquiror shall have received, if it so
requests, terminations of authority, effective as of the Effective Time, by
each employee or agent of a Target Company having signatory or other
authority over such Target Company's cash, checking, lock box, safe deposit
and other depositary arrangements, and for each institution described in
Section 3.22 to the Target Company Disclosure Schedule.

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(i) OPINION OF COUNSEL. Acquiror shall have received the
opinion of Altheimer & Gray, legal counsel for the Target Companies, dated
as of the Effective Time, with respect to those matters set forth in
Exhibit "K" hereto, and in a form reasonably acceptable to Acquiror.

(j) COMPLETE FINANCIAL INFORMATION. Acquiror shall have
received true and complete financial information from the Target Companies
and Target Shareholders in the form required, in the reasonable opinion of
Arthur Andersen, L.L.P., certified public accountants for Acquiror, to be
included in any and all of Acquiror's filings with the Commission prior to
the Effective Time.

(k) DIRECTOR RESOLUTIONS. Acquiror shall have received
resolutions of each Target Company's Board of Directors, dated after the
date hereof and immediately prior to the Effective Time, and certified by
such Target Company's Secretary, unanimously approving, ratifying and
confirming (1) all matters and things done by the officers and directors of
such Target Company at any time in the conduct its business or otherwise
during the course of operations, and (2) the consummation of the Unitary
Transactions and other transactions contemplated by this Agreement.

(l) SHAREHOLDER RESOLUTIONS. Acquiror shall have received
resolutions of each Target Company's stockholders, dated after the date
hereof and immediately prior to the Effective Time, and certified by such
Target Company's Secretary, unanimously approving, ratifying and confirming
(1) all matters and things done by the officers and directors of such
Target Company at any time in the conduct its business or otherwise during
the course of operations, and (2) the consummation of the Unitary
Transactions and other transactions contemplated by this Agreement.

(m) OTHER DOCUMENTS AND INSTRUMENTS. Acquiror shall have
received, upon its written request given at least two (2) days prior to the
Effective Time, such other certificates, instruments and other documents
reasonably required to effectuate the transactions contemplated hereby, or
to confirm to Acquiror the effectiveness thereof.

(n) SATISFACTION OF DEBTS. All Target Shareholders and other
stockholders of the Target Companies, together with their spouses, blood
relations and affiliates, shall have paid in full, with interest if
applicable, all of their outstanding indebtedness to each Target Company,
whether or not then due.

SECTION 7.03. CONDITIONS TO OBLIGATIONS OF THE TARGET COMPANIES AND TARGET
SHAREHOLDERS. The obligations of the Target

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Companies and Target Shareholders to effect the Unitary Transaction and the
other transactions contemplated in this Agreement are also subject to the
following conditions:

(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of Acquiror contained in this Agreement shall be true and
correct in all material respects as of the Effective Time, as though made
on and as of the Effective Time, and the Target Companies and Target Share-
holders shall have received a certificate of the Chief Operating Officer or
Chief Financial Officer of Acquiror to that effect; provided, however, that
(i) those representations and warranties which address matters only as of a
particular date shall remain true and correct in all material respects as
of such date, and (ii) for purposes of determining satisfaction of this
condition, the Target Companies shall not give effect to an individually
insignificant breach of a representation and warranty of Acquiror herein.

(b) AGREEMENTS AND COVENANTS. Acquiror and its subsidiaries
shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by them on or prior to the Effective Time, and the Target
Companies and Target Shareholders shall have received a certificate of the
Chief Operating Officer or Chief Financial Officer of Acquiror to that
effect.

(c) CONSENTS UNDER AGREEMENTS. Acquiror shall have obtained the
consent or approval of each person whose consent or approval shall be
required in connection with the Unitary Transaction under all loan or
credit agreements, notes, mortgages, indentures, leases or other agreements
or instruments to which it or any of its subsidiaries is a party, except
those agreements or instruments for which failure to obtain such consents
and approvals would, in the Target Companies' reasonable estimation, not
have a Target Company Adverse Effect prior to or after the Effective Time,
or an Acquiror Adverse Effect after the Effective Time.

(d) AFFILIATE AGREEMENTS. Each person entering into an
Affiliate Agreement shall have received an executed counterpart thereof
from Acquiror.

(e) EMPLOYMENT AGREEMENTS. Each person entering into an
Employment Agreement with a Surviving Corporation shall have received an
executed counterpart thereof from Acquiror and such Surviving Corporation.

(f) OPINION OF COUNSEL. The Target Companies and Target
Shareholders shall have received the opinion of Neal

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Gerber & Eisenberg, counsel for Acquiror, dated as of the Effective Time,
with respect to those matters set forth in Exhibit "L" hereto, and in a
form reasonably acceptable to the Target Companies.

(g) OTHER DOCUMENTS AND INSTRUMENTS. The Target Companies and
Target Shareholders shall have received, upon their written request given
at least two (2) days prior to the Effective Time, such other certificates,
instruments and other documents reasonably required to effectuate the
transactions contemplated hereby, or to confirm to the Target Companies and
Target Shareholders the effectiveness thereof.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

SECTION 8.01. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement
and the Unitary Transaction by the stockholders of Acquiror:

(a) by mutual consent of Acquiror and the Target Companies (or
Target Shareholders acting on their behalf);

(b) by Acquiror, if there has been a breach by a Target Company
or Target Shareholder of any of its or his covenants or agreements
contained in this Agreement or if any of the representations and warranties
of the Target Companies or Target Shareholders shall have become untrue, in
any such case such that Section 7.02(a) or Section 7.02(b) will not be
satisfied, and such breach or condition has not been cured within thirty
(30) days following receipt by either Target Company of written notice of
such breach;

(c) by the Target Companies (or Target Shareholders acting on
their behalf), if there has been a breach by Acquiror of any of its
covenants or agreements contained in this Agreement or if any of the
representations and warranties of Acquiror shall have become untrue, in any
such case such that Section 7.03(a) or Section 7.03(b) will not be
satisfied, and such breach or condition has not been cured within thirty
(30) days following receipt by Acquiror of written notice of such breach;

(d) by Acquiror or the Target Companies (or the Target
Shareholders acting on their behalf), if any decree, permanent injunction,
judgment, order or other action by any court of competent jurisdiction or
any Governmental Entity preventing or prohibiting consummation of the
Unitary Transaction shall have become final and nonappealable;

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(e) by Acquiror or the U.S. Company, if the U.S. Merger and
Canada Amalgamation shall not have been consummated prior to August 31,
1996; provided, however, that this Agreement may be extended not more than
sixty (60) days by either Acquiror or the U.S. Company by written notice to
the other if the U.S. Merger and Canada Amalgamation shall not have been
consummated as a result of any party's having failed to receive all
regulatory approvals or consents required to be obtained by that party with
respect to the U.S. Merger or Canada Amalgamation;

(f) by Acquiror, if the Board of Directors of a Target Company
shall have recommended to the stockholders of such Target Company any
Competing Transaction, or resolved to do so; provided, however, subject to
Section 8.03(c), and notwithstanding the existence of a Competing
Transaction, termination by Acquiror under this subsection (g) shall not be
exclusive of, or preclude, Acquiror's right to terminate this Agreement
under any other provision of this Section 8.01; or

(g) by the Target Companies (or the Target Shareholders, acting
on their behalf), if Acquiror has entered into a written agreement under
which Acquiror will be acquired by or merge with another entity where,
after such transaction, persons who were directors of Acquiror prior to
such transaction will not constitute a majority of the board of directors
of the acquiring or surviving corporation.

SECTION 8.02. EFFECT OF TERMINATION. Except as provided in Sections 9.01
and 9.02, and subject to the remedies of the parties set forth in Sections
8.03(c), (d), (e) and (f), in the event of the termination of this Agreement
pursuant to Section 8.01, this Agreement shall forthwith become void, there
shall be no liability under this Agreement on the part of Acquiror, Acquiror
Sub-1, Acquiror Sub-2, the U.S. Company, the Canada Company, the Canadian
Ancillary Service Entities, the Target Shareholders, or any of their respective
officers or directors, and all rights and obligations of any party shall cease.

SECTION 8.03. FEES AND EXPENSES.

(a) Except as provided in Sections 8.03(d) and (e), all
"Expenses" (hereafter defined) incurred by the parties hereto shall be
borne solely and entirely by the party which has incurred the same;
provided, however, that advice of tax counsel received by the Target
Shareholders in connection with the structure and general tax consequences
of the U.S. Merger and Canada Amalgamation shall be deemed to have been
incurred by the Target Companies.

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(b) As used in this Agreement, the term "Expenses" shall include
all reasonable out-of-pocket expenses and disbursements (including, without
limitation, all fees and expenses of counsel, accountants, experts and
consultants to a party hereto and its affiliates) incurred by a party or on
its behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the preparation
of the Registration Statement and Proxy Statement, the solicitation of
stockholder approvals and all other matters related to the closing of the
transactions contemplated herein.

(c) (i) The Target Companies agree that if Acquiror shall
terminate this Agreement pursuant to Section 8.01(b) due to an intentional
breach, and without fault of its own, the Target Companies shall, on the
"Payment Date" (as hereafter defined), jointly and severally pay to
Acquiror an amount equal to the sum of its Expenses incurred in connection
with this Agreement.

(ii) Acquiror agrees that if the Target Companies shall terminate
this Agreement pursuant to Section 8.01(c) due to an intentional breach,
and without fault of their own, Acquiror shall, on the Payment Date, pay to
the Target Companies an amount equal to the sum of their Expenses incurred
in connection with this Agreement.

(d) The Target Companies agree that if Acquiror shall terminate
this Agreement pursuant to Section 8.01 without fault of its own, and at
the time of such termination there shall exist a Competing Transaction as
defined in Section 5.02(h), then at the written election of Acquiror, on
the Payment Date, the Target Companies shall jointly and severally pay to
Acquiror an amount equal to the sum of its Expenses incurred in connection
with this Agreement and fifteen million dollars ($15,000,000). For
purposes of this Section 8.03 (d), the "Payment Date" shall be the date ten
(10) days following the termination of this Agreement pursuant to Section
8.01(f) hereof. Acquiror agrees that its election to accept the payments
provided for under this Section 8.03(d) shall constitute its exclusive
remedy under this Agreement, regardless of the circumstances (including
wilful or deliberate conduct) giving rise to such termination or
surrounding the breach of this Agreement by a Target Company.

(e) Acquiror agrees that if the Target Companies shall terminate
this Agreement pursuant to Section 8.01(g) without fault of the Target
Companies, and at the time of such termination there shall exist a written
agreement of the nature described in Section 8.01(g), then at the written
election of the Target Companies, on the Payment Date,

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Acquiror shall pay to the Target Companies, in such proportions as they
shall determine, an amount equal to the sum of their Expenses incurred in
connection with this Agreement and fifteen million dollars ($15,000,000).
The Target Companies agree that their election to accept the payments
provided for under this Section 8.03(e) shall constitute their sole and
exclusive remedy arising upon termination of this Agreement, regardless of
the circumstances (including wilful or deliberate conduct) giving rise to
such termination or surrounding the breach of this Agreement by Acquiror.

(f) Acquiror agrees that if the Target Companies shall terminate
this Agreement pursuant to Section 8.01(c) or (d) without fault of the
Target Companies, then at the written election of the U.S. Company, on the
Payment Date, Acquiror shall pay to the U.S. Company an amount equal to the
discount (if any) applicable to accounts receivable sold by the U.S.
Company pursuant to the provisions of Section 5.01(g) hereof.

(g) Any payment required to be made to Acquiror or the Target
Companies pursuant to Section 8.03(b), (c), (d) or (e) shall be made not
later than two (2) business days after delivery by one party to the other
of demand for payment and an itemization setting forth in reasonable detail
all Expenses of such party for which it is entitled to reimbursement (which
itemization may be supplemented and updated from time to time by such party
until the 60th day after delivery of such notice of demand for payment),
and shall be made by wire transfer of immediately available funds to an
account designated by the party so entitled to receive payment in the
notice of demand delivered pursuant to Section 8.03(b), (c), (d) or (e), as
the case may be.

ARTICLE IX

INDEMNIFICATION MATTERS

SECTION 9.01. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS;
INDEMNIFICATION. Except as provided in Sections 8.03(b), (c), (d), (e) and (f),
the representations, warranties and agreements of Acquiror, the Target Companies
and the Target Shareholders in this Agreement shall survive termination of this
Agreement or the Effective Time.

SECTION 9.02. INDEMNIFICATION BY THE TARGET COMPANIES AND THE TARGET
SHAREHOLDERS.

(a) In the event Acquiror terminates this Agreement pursuant to
Section 8.01(b) or (f) prior to consummation of the Unitary Transaction,
then, unless Acquiror shall have

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elected the remedy provided under Section 8.03(d), the Target Companies
shall be obligated, jointly and severally, to indemnify and hold Acquiror
harmless from and against the full amount of its costs, Expenses, losses,
damages and liabilities (including reasonable legal fees and costs of
investigation) (collectively, "Damages") incurred or suffered directly or
indirectly by Acquiror and proximately resulting from or attributable to
such termination, not later than two (2) business days after Acquiror's
delivery of written demand for payment pursuant to this Section 9.02, and
an itemization setting forth in reasonable detail the Damages as to which
it shall be entitled to indemnification hereunder. Such payment shall be
made in the manner provided in the last sentence of Section 8.03(g) hereof.

(b) Provided the Unitary Transaction shall have been
consummated, the Target Shareholders, jointly and severally, covenant and
agree to indemnify and save harmless Acquiror from and against any and all
Damages incurred or suffered directly or indirectly by Acquiror and
proximately resulting from or attributable to (i) the breach of, or
misstatement in, any one or more of the representations or warranties of
the Target Companies made in this Agreement, or (ii) the failure of any
Target Company or Target Shareholder to comply with, or the breach by any
Target Company of, any of the covenants or agreements in this Agreement to
be performed by such Target Company or Target Shareholder.

(c) Provided the Unitary Transaction shall have been
consummated, the Target Shareholders, jointly and severally, covenant and
agree to indemnify and save harmless Acquiror from and against any and all
Damages incurred or suffered directly or indirectly by Acquiror and
proximately resulting from or attributable to, (x) federal, state,
provincial and local Taxes attributable to, assessed against or levied on
the U.S. Company with respect to all Tax periods ending on or before the
Effective Time, but only to the extent (i) such Taxes would not have been
payable by or assessable against the U.S. Company if a valid S Corporation
Election had been in effect with respect to the U.S. Company during such
Tax periods, and (ii) the U.S. Company, during such Tax periods, would have
been subject to the provisions of Sections 1361 ET. SEQ. of the Code, and
(y) any failure to withhold Employee Health Tax in Canada.

(d) Following the Effective Time, any and all claims for Damages
pursuant to Section 9.02(b), above, shall be enforceable, if at all, only
against the shares of Acquiror Common Stock issued in the Unitary
Transaction, and limited as follows:

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(i) Each Target Shareholder acknowledges and agrees with
Acquiror that all shares of Acquiror Common Stock which are not then
eligible for registration and sale shall, during such period of
ineligibility, be and remain subject to Acquiror's right of indemnification
through set-off against and cancellation of such shares. Such shares shall
constitute the sole source for satisfaction of Acquiror's indemnification
claims, and Acquiror hereby agrees that it shall not seek payment or
satisfaction of any such claim from any other source, it being acknowledged
by Acquiror that the rules set forth in this Section 9.02(d) shall
exclusively govern Acquiror's claims for indemnification asserted after the
Effective Time. Subject to the provisions of this Section 9.02(d), any
such set-off shall be treated as a reduction of the consideration received
by the Target Shareholders in the Unitary Transaction.

(ii) Acquiror's right of set-off against shares of Acquiror
Common Stock held by any Target Shareholder shall be limited to the product
of the maximum amount for which indemnification shall be available and the
indemnifying Target Shareholder's percentage interest in all shares of
Acquiror Common Stock issued in the Unitary Transaction.

(iii) Acquiror shall not be entitled to any recovery unless a
claim for indemnification is made in accordance with Section 9.02 and
within the twelve (12) month period immediately following the Effective
Time.

(iv) Acquiror shall not be entitled to any recovery for Damages
(or portion thereof) which are attributable to matters for which Acquiror
has (x) received (or is indirectly entitled to receive) proceeds of
insurance under a policy which was in effect at the Effective Time with
respect to the matter for which indemnification is otherwise available
hereunder, (y) separately accrued, for the period during which such claim
for Damages actually arises, a charge against its reportable earnings for
Tax expense directly attributable to such Damages, but only to the extent
such Tax expense would not be treated or reflected as a timing difference
under GAAP, and only to the extent of fifty percent (50%) of the Tax
expense actually accrued by Acquiror, or (z) reserved against assets or
reflected as liabilities in the Target Company Financial Statements, but
only to the extent specific provision is made therefor.

(v) In valuing a Target Shareholder's shares of Acquiror Common
Stock for purposes of Acquiror's set-off and indemnification rights under
this Section 9.02(d), such shares shall in all events be valued at the
average closing sale price of a share of Acquiror Common Stock as reported
by the

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NASDAQ National Market or other securities exchange ("NASDAQ") on which the
Acquiror Common Stock is traded for the ten (10) trading days prior to the
Effective Time (the "Average Value").

(vi) Acquiror's right of indemnification under this Section 9.02
shall in each and every instance be limited to the set-off against and
cancellation of shares with an aggregate value not exceeding ten percent
(10%) of (x) the total number of shares of Acquiror Common Stock received
by the indemnifying Target Shareholder under Article II of this Agreement
(and/or through liquidation of the Canada Ancillary Service Entities),
multiplied by (y) the Average Value.

(vii) Acquiror shall not be entitled to recover any amount for
indemnification claims under this Section 9.02(d) unless and until the
aggregate Damages which Acquiror is entitled to recover in respect of all
such claims exceeds U.S. five hundred thousand dollars ($500,000) (the
"Basket"), and only to the extent such Acquiror's aggregate Damages exceed
the Basket; provided, however, the amount of any Damage incurred or
suffered, directly or indirectly, by Acquiror and proximately resulting
from or attributable to the breach of, or misstatement in, any one or more
of the representations or warranties of the Target Companies made in this
Agreement shall, notwithstanding the failure of such breach,
misrepresentation or inaccuracy to constitute a Target Company Adverse
Effect, and notwithstanding the materiality (monetarily or otherwise) of
such Damage, be specifically applied against and reduce the Basket
available for purposes of this Section 9.02(vii).

(e) As used in this Agreement, the term "Damages" shall not
include punitive or exemplary damages awarded by a court or other trier of
fact, Damages arising from the breach of a representation or warranty which
has been disclosed in the Target Company Disclosure Schedule or Acquiror
Disclosure Schedule or otherwise actually known to an Acquiror Knowledge
Person as of the Effective Date, or Damages arising solely from the failure
to obtain a Material Consent (provided the person required to have obtained
such consent shall have used reasonable best efforts to obtain same);
provided, however, notwithstanding disclosure in the Target Company
Disclosure Schedule or the actual knowledge of an Acquiror Knowledge
Person, but subject to the provisions of Section 9.02(d)(vii) hereof, the
Target Companies shall be obligated, jointly and severally, to indemnify
and hold Acquiror harmless from and against the full amount of any Damages
incurred or suffered, directly or indirectly, by Acquiror and proximately
resulting from or attributable to the following specific matters prior to
the Effective Time:

A-75

<PAGE>

(i) The U.S. Company's failure to register (if required) under
and comply with AN ACT RELATING TO THE REGULATION OF TELEPHONE
SOLICITATION; PROVIDING CIVIL AND CRIMINAL PENALTIES. Acts 1993, 73rd Leg.,
ch. 569, of the Texas Civ. St. Art. 5069-18.01, as amended;

(ii) The U.S. Company's failure to register (if required) and
comply with, and the failure of its employees to register (if required) and
comply with, Title XXXIII, Regulation of Trade, Commerce, Investments and
Solicitations, Chapter 501, Consumer Protection, Part IV, the FLORIDA
TELEMARKETING ACT, Fla. Stat. Section 501.601, ET.SEQ.;

(iii) Marusa Financial's failure (if any) to maintain in full
force and effect any required permits and licenses under applicable
Canadian Laws; and

(iv) Marusa Financial's and/or the Canada Company's failure (if
any) to remit Taxes actually collected under the GST, but only to the
extent any such Taxes not so remitted exceed the amounts reserved therefor
in the Target Companies' Financial Statements.

SECTION 9.03. ACQUIROR'S INDEMNIFICATION. Acquiror covenants and agrees
to indemnify and save harmless the Target Companies and the Target Shareholders
from and against any and all Damages incurred or suffered directly or indirectly
by them and proximately resulting from or attributable to (i) the breach of, or
misstatement in, any one or more of the representations or warranties of
Acquiror made in this Agreement, and (ii) the failure of Acquiror to comply
with, or the breach by Acquiror of, any of the covenants or agreements in this
Agreement to be performed by Acquiror. The Target Companies and Target
Shareholders shall not be entitled to recover any amount for indemnification
claims under this Section 9.03 unless and until the aggregate Damages which the
Target Companies are entitled to recover in respect of all such claims exceed
the Basket, and only to the extent the Target Companies' aggregate Damages
exceed the Basket.

SECTION 9.04. INDEMNIFICATION PROCEDURES.

(a) In the event that any party hereto shall sustain or incur
any Damages in respect of which indemnification may be sought by such party
pursuant to this Agreement, the party to be indemnified hereunder (the
"Indemnitee") shall assert a claim for indemnification by serving written
notice on the party providing indemnification (the "Indemnitor"), stating
the nature and basis of such claim.

A-76

<PAGE>

(b) The Indemnitee shall provide the Indemnitor, on request, all
information and documentation reasonably necessary to support and verify
any Damages which the Indemnitee believes give rise to a claim for
indemnification hereunder, and shall give the Indemnitor reasonable access
to all books, records and personnel in the possession or under the control
of the Indemnitee which would have bearing on such claim.

(c) In case either party has received actual notice of any claim
asserted or any action or administrative or other proceeding in respect of
which claim, action or proceeding such party believes indemnity properly
may be sought against the other party pursuant to this Agreement, the
Indemnitee shall, within thirty (30) days of receiving such notice, give
notice thereof in writing to the Indemnitor, but failure to give such
notice within such time period shall relieve the Indemnitor of its
indemnification obligation only to the extent of actual prejudice resulting
therefrom. Within fifteen (15) days after receipt of notice of such claim,
action or proceeding, the Indemnitor may give the Indemnitee written notice
of its election to conduct the defense of such claim, action or proceeding;
provided, however, that the Indemnitee shall have the right to participate
in the defense thereof, but such participation shall be solely at the
expense of the Indemnitee, without a right of further reimbursement. Until
the Indemnitee has received notice of the Indemnitor's election whether to
defend any claim, action or proceeding, the Indemnitee shall take
reasonable steps to defend (but may not settle) such claim, action or
proceeding. If the Indemnitor has not so notified the Indemnitee in
writing within the time hereinabove provided of its election to conduct the
defense of such claim, action or proceeding, the Indemnitee shall conduct
the defense of any such claim, action or proceeding; provided that the
Indemnitee shall not at any time settle, compromise or satisfy any such
claim, action or proceeding without the written consent of the Indemnitor,
which shall not unreasonably be withheld. Any such settlement, compromise
or satisfaction made by the Indemnitee with the Indemnitor's consent of, or
any such final judgment or decree entered in, any claim, action or
proceeding defended only by the Indemnitee shall be binding upon the
Indemnitor. The failure of the Indemnitor to assume the defense of any
claim, action or proceeding shall not be deemed a concession that it is
required to indemnify the Indemnitee for the subject matter thereof. If
the Indemnitor has elected under this Section to conduct the defense of any
claim, action or proceeding, then the Indemnitor shall be obligated to pay
the amount of any adverse final judgment or decree rendered with respect to
such claim, action or proceeding.

A-77

<PAGE>

ARTICLE X
---------

GENERAL PROVISIONS
------------------

SECTION 10.01. NOTICES. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission to the telecopier
number specified below:

If to Acquiror, Acquiror Sub-1 or Acquiror Sub-2:

HA-LO Industries, Inc.
5980 West Touhy Avenue
Niles, IL 60714
Attention: Mr. Richard A. Magid, CFO
Facsimile number: 847.647.4970

with copies to:

Marc S. Roth, Esq.
Marc S. Roth & Associates, Ltd.
261 Walden Drive
Glencoe, IL 60022
Facsimile number: 847.835.3418

-and-

Barry J. Shkolnik
Neal Gerber & Eisenberg
Two North LaSalle Street
Suite 2200
Chicago, IL 60602
Facsimile number: 312.269.1747

(a) If to the Target Companies:

Market USA, Inc.
701 Lee Street
Des Plaines, IL 60610
Attention: Mr. Seymour Okner, CEO
Facsimile No.: 847.803.1825

with a copy to:

A-78

<PAGE>

David W. Schoenberg, Esq.
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, IL 60606
Facsimile No.: 312.715.4800

SECTION 10.02. AMENDMENT. This Agreement may be amended by the parties 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 approval of the
Merger by the stockholders of Acquiror, no amendment may be made which would
increase the amount or change the type of consideration into which each share of
Target Company Common Stock shall be converted pursuant to this Agreement upon
consummation of the Unitary Transaction. This Agreement may not be amended
except by an instrument in writing signed by the parties.

SECTION 10.03. WAIVER. At any time prior to the Effective Time, any party
may (i) extend the time for the performance of any of the obligations or other
acts of the other party, (ii) waive in writing any inaccuracies in the
representations and warranties of the other party contained in this Agreement or
in any document delivered pursuant to this Agreement, and (iii) waive compliance
by the other party with any of the agreements or conditions contained in this
Agreement. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.

SECTION 10.04. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

SECTION 10.05. 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 contemplated hereby 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 shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.

SECTION 10.06. ENTIRE AGREEMENT. This Agreement (together with the
Exhibits, and the Target Company and Acquiror Disclosure Schedules and the other
documents delivered pursuant hereto), constitutes the entire agreement of the
parties and supersede all

A-79

<PAGE>

prior agreements and undertakings, both written and oral, between the parties,
or any of them, with respect to the subject matter hereof and, except as
otherwise expressly provided herein, are not intended to confer upon any other
person any rights or remedies hereunder. Any matter which is disclosed in any
portion of the Target Company or Acquiror Disclosure Schedule shall be deemed to
have been disclosed for the purposes of all relevant provisions of this
Agreement. The inclusion of any item in any such Disclosure Schedule shall not
be deemed evidence of the materiality of such item for purposes of this
Agreement. The parties make no representations or warranties to each other,
except as contained in this Agreement, and any and all prior representations and
warranties made by any party or its representatives, whether orally or in
writing, shall be deemed to have been merged into this Agreement, it being
intended that no such prior representations or warranties shall survive the
execution and delivery of this Agreement.

SECTION 10.07. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise.

SECTION 10.08. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party, and nothing in this Agreement,
express or implied, other than the right to receive the consideration payable in
the Unitary Transaction pursuant to Article II, 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.

SECTION 10.09 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Illinois, regardless of
the Laws that might other vise govern under applicable principles of conflicts
of law.

SECTION 10.10. COUNTERPARTS. This Agreement may be executed in 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. Each person owning shares
of U.S. Company or Canada Company Common Stock on the date of this Agreement
shall execute this Agreement on the date hereof as a Target Shareholder, and
every other person so acquiring shares of U.S. Company or Canada Company Common
Stock after the date of this Agreement and prior to the Effective Time shall
execute a separate undertaking or counterpart hereof, agreeing to be bound by
all the representations, warranties, covenants and agreements of a Target
Shareholder herein.

SECTION 10.11. POWER OF ATTORNEY. Each of the Target Shareholders hereby
appoints Sy Okner, with full power of

A-80

<PAGE>

substitution, as his attorney in fact, with full power and authority:

(a) to execute and deliver, on behalf of such Target Shareholder,
and to accept delivery of, on behalf of such Target Shareholder, such
documents as may be deemed by the Sy Okner, in his sole discretion, to be
appropriate to consummate this Agreement;

(b) to deliver on behalf of such Target Shareholder,
certificates representing the U.S. Company Common Common Stock or Canada
Company Common Stock to be converted in the Unitary Merger Transaction;

(c) to receive, on behalf of such Target Shareholder, the shares
of Acquiror Common Stock to be issued to such Target Shareholder in the
Unitary Merger Transaction;

(d) to (x) dispute or refrain from disputing, on behalf of such
Target Shareholder, any claim made by Acquiror under this Agreement; (y)
negotiate and compromise, on behalf of such Target Shareholder, any dispute
that may arise under, and to exercise or refrain from exercising any
remedies available under, this Agreement, and (z) execute, on behalf of
such Target Shareholder, any settlement agreement, release or other
document with respect to such dispute or remedy;

(e) to waive, on behalf of such Target Shareholder, any closing
condition contained in Article VII of this Agreement and to give or agree
to, on behalf of such Target Shareholder, any and all consents, waivers,
amendments or modifications, deemed by Sy Okner, in his sole discretion, to
be necessary or appropriate, under this Agreement, and, in each case, to
execute and deliver any documents that may be necessary or appropriate in
connection therewith;

(f) to enforce, on behalf of such Target Shareholder, any claim
against Acquiror arising under this Agreement;

(g) to engage attorneys, accountants and agents at the expense
of the Target Shareholders;

(h) to amend this Agreement (other than this Section 10.11) or
any of the instruments to be delivered to Acquiror by such Target
Shareholder pursuant to this Agreement; and

(i) to give such instructions and to take such action or refrain
from taking such action, on behalf of such Target Shareholder, as Sy Okner
deems, in his sole discretion,

A-81

<PAGE>

necessary or appropriate to carry out the provisions of this Agreement.

Each Target Shareholder shall severally indemnify Sy Okner against any
Damages (except such as result from his gross negligence or willful misconduct)
that Sy Okner may suffer or incur in connection with any action or omission by
him. Each Target Shareholder shall bear its pro-rata portion of such Damages.
Sy Okner shall have no liability to any Target Shareholder with respect to any
action or omission taken or omitted to be taken by him pursuant to this Section
10.11, except for Sy Okner's gross negligence or willful misconduct. The power
of attorney granted to Sy Okner pursuant to this Section 10.11 is coupled with
an interest and is irrevocable.

A-82

<PAGE>

IN WITNESS WHEREOF, Acquiror, Acquiror Sub-1, Acquiror Sub-2, the U.S.
Company, the Canada Company, Marusa Financial, Nerok and the Target Shareholders
have caused this Agreement to be executed as of the date first written above by
their respective officers duly authorized.

HA-LO INDUSTRIES, INC.

By: /s/ Lou Weisbach
--------------------------------
Its: Chief Executive Officer
--------------------------

HA-LO ACQUISITION CORPORATION, INC.,

By: /s/ Lou Weisbach
--------------------------------
Its: Chief Executive Officer
--------------------------

HA-LO ACQUISITION CORPORATION OF CANADA,
LTD.,

By: /s/ Lou Weisbach
--------------------------------
Its: Chief Executive Officer
--------------------------

MARKET USA, INC.,

By: /s/ Seymour N. Okner
--------------------------------
Its: President
--------------------------

MARUSA MARKETING INC.

By: /s/ Seymour N. Okner
--------------------------------
Its: President
--------------------------

MARUSA FINANCIAL SERVICES LTD.

By: /s/ Seymour N. Okner
--------------------------------
Its: President
--------------------------

A-83

<PAGE>

NEROK VERIFICATIONS INC.

By: /s/ Anne Okner
--------------------------------
Its: President
--------------------------

TARGET SHAREHOLDERS:

/s/ Seymour N. Okner
---------------------------------------
Seymour N. Okner

/s/ Samuel P. Okner
---------------------------------------
Samuel P. Okner

ELLYN ROBBINS FAMILY TRUST UNDER
AGREEMENT DATED MAY 14, 1996

/s/ Anne Okner
---------------------------------------
Anne Okner

/s/ Ellyn Robbins
---------------------------------------
Ellyn Robbins, Co-Trustee

JOEL C. OKNER, FAMILY TRUST UNDER
AGREEMENT DATED MAY 14, 1996

/s/ Anne Okner
---------------------------------------
Anne Okner, Co-Trustee

/s/ Joel C. Okner
---------------------------------------
Joel C. Okner, Co-Trustee

SAMUEL P. OKNER, FAMILY TRUST UNDER
AGREEMENT DATED MAY 14, 1996

/s/ Anne Okner
---------------------------------------
Anne Okner, Co-Trustee

/s/ Samuel P. Okner
---------------------------------------
Samuel P. Okner, Co-Trustee

A-84
<PAGE>

EXHIBIT A

ASSET PURCHASE AGREEMENT
------------------------

KNOW ALL MEN BY THESE PRESENTS that MARUSA FINANCIAL SERVICES LTD., a
Canadian federal corporation ("Marusa"), and NEROK VERIFICATIONS INC., a
Canadian federal corporation ("Nerok") (Marusa and Nerok are collectively,
"Sellers"), for good and valuable consideration, consisting of one hundred (100)
shares of the common capital voting stock of HA-LO Industries, Inc., an Illinois
(U.S.) corporation ("HA-LO"), in hand paid (the receipt and sufficiency of which
are hereby acknowledged), and pursuant to an Agreement and Plan of Merger and
Amalgamation dated as of June 14, 1996 (hereafter, the "Master Agreement"),
among HA-LO, Sellers, Market USA, Inc., Marusa Marketing Inc., the stockholders
of Market USA, Inc., and Marusa Marketing Inc., and certain wholly-owned
subsidiaries of HA-LO,

DO HEREBY BY THESE PRESENTS, sell, convey, assign, transfer and deliver
unto _________________, a Canadian federal corporation ("Buyer"), its successors
and assigns, free and clear of any liability, lien, claim, restriction or
encumbrance whatsoever, all right, title and interest in and to all of their
respective assets, properties, rights and privileges of every kind and nature
whatsoever, tangible and intangible, real, personal and mixed, wherever located,
and whether or not used in or related to the business or businesses currently
conducted by them or on their behalf (collectively, the "Purchased Assets");

WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, Purchased Assets shall
include the following assets of Sellers (to the extent extant):

I. All rights to the names "Marusa Financial Services" and "Nerok
Verifications" (and any variations or derivations thereof), in the United
States, Canada and in such other locations in which Sellers are conducting or
have conducted operations;

1. All cash, cash equivalents, accounts receivable, advances and
prepaid items;

2. The customers of Sellers and all prospective customers to whom,
or upon whose behalf, any Seller, or any employee, contractor, consultant,
agent or affiliate of any Seller, has at any time delivered or proposed to
deliver products or render services;

3. All rights and interests arising under or in connection with
contracts, agreements, commitments, proposals, work orders, quotations,
engagements, understandings and arrangements, whether written or oral, with
vendors, personnel and others, and the books, records, data, files,
databases, workpapers, scripts, manuals, tangible know-how, information,

A-A-1

<PAGE>

lists, work product and other intellectual property, in any medium,
pertaining to Sellers;

4. All accounts receivable and advances, and non-trade accounts and
notes;

5. All rights and interests arising under or in connection with
contracts, agreements, commitments, proposals, engagements, understandings
and arrangements, whether written or oral, for the use, rental or lease of
real property and equipment, furniture, fixtures and other items of
personal property, including all security deposits and renewal options
under real estate leases and equipment leases;

6. All rights and interests (including associated good will) in
patents, industrial designs, trademarks, trade names, brand names, logos,
service marks and copyrights, whether registered or unregistered, and the
applications for registration thereof, and in trade secrets, technical
information, reports, recommendations, strategic plans, models,
questionnaires, interview responses, computer software, programs and
routines (including, but not limited to, unique, novel or original
applications, source code, object code, documentation, "look and feel",
screen displays, structure, sequence and organization), know how and other
methods, processes, devices and technologies, and all documentation and
copies of such properties, in every form and medium, discovered, made,
invented, conceived, designed or used at any time in the business of a
Seller, or on a Seller's time or at its expense;

7. All furniture, fixtures, leasehold improvements, equipment,
office equipment, computer hardware and peripherals, and other personal
property of every type owned or leased by a Seller;

8. All licenses, consents, permits, qualifications, approvals,
certificates of occupancy or other regulatory authorizations, or waivers
thereof, and all rights for reapplication, reinstatement and
recertification thereto, whether to the extent necessary pursuant to any
law, rule, regulation, decree, order or administrative or industry practice
for the operation of a trade or business by a Seller, or otherwise, and
whether such licenses, consents, permits, qualifications, approvals,
certificates of occupancy or other regulatory authorizations, or waivers
thereof, are issued by or granted under authority of the jurisdiction in
which such Seller maintains its registered office, or issued by or granted
under authority of any other jurisdiction, province, venue, city,
municipality or other locality;

A-A-2

<PAGE>

9. All rights, interests, claims and causes of action against
customers, vendors, personnel and other third parties arising under or in
connection with receivables, advances, prepaid items, contracts, real
estate leases, equipment leases, warranties, rights to indemnity and other
actions, matters and events, of any nature whatsoever, accruing to the
benefit of a Seller, or arising in the conduct of a Seller's business;

10. All sales and purchase data, product and service cost data,
books, records, files, databases, workpapers, scripts, documents, manuals,
tangible know-how, information, lists and other work product, in any medium
whatsoever, used by or useful to a Seller;

11. All rights and interests in the telephone numbers, toll-free
numbers, service numbers, telecopy numbers, e-mail addresses, mailing
addresses, service addresses, post office boxes and other identifying
details or depositaries used by a Seller, or relating to a Seller's
business; and

12. All goodwill and other intangible assets of the Sellers.

THE PURCHASED ASSETS SHALL BE DELIVERED INTO THE PHYSICAL POSSESSION OF THE
BUYER ON THE DATE HEREOF. Buyer shall pay the documentary, stamp, sales, excise
and transfer taxes (if any) payable with respect to such Purchased Assets in
connection with the transactions contemplated hereby and agrees it shall hold
each Seller harmless from and against same;

TO HAVE AND TO HOLD the Purchased Assets unto Buyer, its successors, and
assigns, FOREVER;

SELLERS HEREBY REPRESENT, WARRANT, COVENANT AND AGREE to and with Buyer
that they will arrange and defend the sale of the Purchased Assets against each
and every person or persons whomsoever claiming or asserting any claim against
any or all of the same arising prior to the date hereof, and that they are the
sole owners of the Purchased Assets conveyed under this Asset Purchase
Agreement;

SELLERS HEREBY COVENANT AND AGREE to and with Buyer that they will from
time to time at their sole expense make, execute and deliver, or cause to be
made, executed and delivered, such instruments, acts, consents and assurances as
Buyer may reasonably request to more effectively sell, convey, transfer to and
vest in Buyer all of the Purchased Assets being sold, conveyed, assigned,
transferred and delivered hereunder and to put Buyer in possession of any such
property or assets being sold, conveyed, assigned, transferred and delivered
hereunder;

A-A-3

<PAGE>

SELLERS HEREBY REPRESENT AND WARRANT to and with Buyer that Schedule 1 to
this Asset Purchase Agreement sets forth each and every agreement, contract,
arrangement, understanding and commitment (each, a "Contract") under which there
remain any unfulfilled obligations on either party's part to be performed or
paid, that each such Contract is, as of the date hereof, in full force and
effect, and valid and binding as to the contracting Seller and, to the knowledge
of each Seller, the other party signatory thereto, and there is no default (or
any event known to either Seller which, with the giving of notice or lapse of
time or both, would constitute a default) by a Seller with respect to such
Contract nor, to the knowledge of each Seller, by any other party signatory
thereto;

SELLERS HEREBY COVENANT TO AND AGREE WITH BUYER that, to their knowledge,
except to the extent of (i) amounts payable and obligations performable under or
with respect to each Contract (whether past or present), (ii) unpaid operating
expenses incurred in the ordinary course of each Seller's business, and (iii)
liabilities with respect to the GST and QST (as those terms are defined in the
Master Agreement), they have no debts, obligations, liabilities, expenses or
taxes, in each case whether matured or unmatured, accrued or contingent;

BUYER HEREBY COVENANTS AND AGREES to and with each Seller to accept the
foregoing sale, conveyance, assignment, transfer and delivery of the Purchased
Assets and irrevocably covenants and agrees to (i) assume and timely pay and
discharge those liabilities and obligations of the Sellers under each Contract,
(ii) assume, observe and timely perform each and every term, covenant and
condition on the part of either Seller arising under each Contract, and (iii)
assume and timely pay and discharge all other debts, obligations, liabilities,
expenses and taxes of the Sellers; provided, however, such assumption by Buyer
shall not relieve the Target Shareholders of their obligation to indemnify HA-LO
for any Damages arising from a misstatement in or breach of the representations,
warranties, covenants or agreements of the Target Companies or the Target
Shareholders set forth in the Master Agreement;

SELLERS, ON THE ONE HAND, AND BUYER, ON THE OTHER HAND, HEREBY REPRESENT
AND WARRANT, EACH TO THE OTHER(S), as follows:

A. Each is a corporation duly organized, validly existing and in good
standing under the laws of Canada, and is duly qualified to do business as a
foreign corporation in all other provinces and jurisdictions where its present
activities require it to be so qualified, with full corporate power and
authority to own its properties and carry on its business under the laws of
Canada and such other provinces and jurisdictions, and under its Articles and
By-Laws.

A-A-4

<PAGE>

B. The execution, delivery and performance of this Asset Purchase
Agreement has been duly authorized by all necessary corporate action on the part
of such corporation, and neither the execution, delivery nor performance of this
Asset Purchase Agreement, nor the observance or compliance with the terms and
conditions hereof, will violate the Articles or By-Laws of such corporation, or
any judgment, order, writ, injunction, or decree of any court or other
governmental agency, any law, statute, regulation or rule, or any indenture,
agreement or other instrument to which such corporation is a party or by which
any such corporation is bound or by which any of its assets or properties is
bound.

C. Assuming full execution and delivery of this Asset Purchase Agreement
by the other parties signatory hereto, this Asset Purchase Agreement constitutes
the valid and binding obligation of each Seller or Buyer, as the case may be,
enforceable in accordance with its terms.

EACH PARTY TO THIS ASSET PURCHASE AGREEMENT COVENANTS TO AND AGREES WITH
THE OTHER(S) that this Asset Purchase Agreement shall inure to the benefit of
and be binding on the successors and assigns of each party hereto; all
representations, warranties, covenants and agreements of Sellers hereunder shall
be and are joint and several, and enforceable against either Seller or both, as
Buyer shall in its sole discretion elect;

REFERENCE is hereby made to the Master Agreement. This Asset Purchase
Agreement is the "Ancillary Asset Purchase Agreement" referred to as Exhibit "A"
in the Master Agreement. Unless otherwise provided in this Asset Purchase
Agreement, all capitalized terms herein shall have the meanings ascribed to them
in the Master Agreement. In the event of any inconsistency between the terms
and conditions of this Asset Purchase Agreement and those contained in the
Master Agreement, the terms and conditions of the Master Agreement shall, in
each and every event, prevail.

IN WITNESS WHEREOF, this Asset Purchase Agreement has been duly executed
and delivered by the duly authorized officers of Marusa, Nerok and Buyer as of
this _____ day of August, 1996.

MARUSA FINANCIAL SERVICES LTD.

By:
----------------------------------------
Its: President

A-A-5

<PAGE>

NEROK VERIFICATIONS INC.

By:
----------------------------------------
Its: President

ACCEPTED:

BUYER:

By:
-------------------------------
Its: President

A-A-6
<PAGE>

EXHIBIT B

FORM 9 FORMULE 9
ARTICLES OF AMALGAMATION STATUTS DE FUSION
(SECTION 185) (ARTICLE 185)

Industry Canada Industrie Canada
Canada Business Loi regissant les societes
Corporations Act par actions de regime federal

- --------------------------------------------------------------------------------
1 - Name of amalgamated corporation Denomination de la societe issue de la
fusion
MARUSA MARKETING INC.

- --------------------------------------------------------------------------------
2 - The place in Canada where the Lieu au Canada ou doit etre situe le
registered office is to siege social
be situated

Municipality of Metropolitan Toronto

- --------------------------------------------------------------------------------
3 - The classes and any maximum Categories et tout nombre maximal
number of shares that the d'actions que la societe est
corporation is authorized to autorisee a emettre
issue

The annexed Schedule 2 is incorporated in this form.
- --------------------------------------------------------------------------------
4 - Restrictions, if any, on share Restrictions sur le transfer des
transfers actions, s'il y a lieu

The annexed Schedule 2 is incorporated in this form.
- --------------------------------------------------------------------------------
5 - Number (or minimum and maximum Nombre (ou nombre minimal et maximal)
number) of directors d'administrateurs

A minimum of 3 and a maximum of 11 directors.
- --------------------------------------------------------------------------------
6 - Restrictions, if any, on Limites imposees a l'activite
business the corporation may commerciale de la societe,
carry on s'il y a lieu

There are no restrictions on the business the Corporation may carry on or on
the powers the Corporation may exercise.
- --------------------------------------------------------------------------------
7 - Other provisions, if any Autre dispositions, s'il y a lieu

The annexed Schedule 3 is incorporated in this form.
- --------------------------------------------------------------------------------
8 - The amalgamation has been approved 8 - La fusion a ete approuvee en accord
pursuant to that action or avec l'article ou le paragraphe
subsection of the Act which is de la loi indique ci-apres.
indicated as follows:

[X] 183
[ ] 183(1)
[ ] 183(2)
- --------------------------------------------------------------------------------
9 - Name of the amalgamating Corporation No. Signature Date Title
corporations No de la societe Titre
Denomination des societes
fusionnantes
- --------------------------------------------------------------------------------

HA-LO Acquisition Corporation 326919-1
of Canada Ltd.
Corporation Acquisition HA-LO
du Canada Ltee
- --------------------------------------------------------------------------------
Marusa Marketing Inc. 284201-7
- --------------------------------------------------------------------------------

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

- --------------------------------------------------------------------------------
FOR DEPARTMENTAL USE ONLY - A L'USAGE DU MINISTERE SEULEMENT Filed - Deposee
Corporation No. - No de la societe

A-B-1

<PAGE>

SCHEDULE 1 TO THE
ARTICLES OF AMALGAMATION OF
MARUSA MARKETING INC.

The Corporation is authorized to issue an unlimited number of shares of one
class designated as Class A common shares and an unlimited number of shares of a
second class designated as Class B common shares.

A The Class A common shares shall have attached thereto, as a class, the
following rights, privileges, restrictions and conditions:

(1) The holders of the Class A common shares shall be entitled to 1 vote
per Class A common share at all meetings of shareholders of the
Corporation, other than meetings of holders of a class of shares other
than the Class A common shares.

(2) The Class A common shares and the Class B common shares shall
participate equally with respect to the payment of dividends so that
all dividends shall be declared and paid in equal amounts per share on
the Class A common shares and Class B common shares at the time
outstanding without preference or distinctions.

(3) In the event of any distribution of assets of the Corporation among
its shareholders for the purpose of winding up its affairs the holders
of the Class A common shares and the holders of the Class B common
shares shall be entitled to share all remaining property and assets
share for share without preference or distinction.

B The Class B common shares shall have attached thereto, as a class, the
following rights, privileges, restrictions and conditions:

(1) Subject to applicable law, the holders of the Class B common shares
shall not be entitled to receive notice of, nor to attend or vote at
any meetings of the shareholders of the Corporation.

(2) The Class B common shares and the Class A common shares shall
participate equally with respect to the payment of dividends so that
all dividends shall be declared and paid in equal amounts per share on
the Class B common shares and Class A common shares at the time
outstanding without preference or distinction.

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<PAGE>

(3) In the event of any distribution of assets of the Corporation among
its shareholders for the purpose of winding up its affairs the holders
of the Class B common shares and the holders of the Class A common
shares shall be entitled to share all remaining property and assets
share for share without preference or distinction.

A-B-3

<PAGE>

SCHEDULE 2 TO THE
ARTICLES OF AMALGAMATION OF
MARUSA MARKETING INC.

RESTRICTIONS OF SHARE TRANSFER

The right to transfer shares of the Corporation shall be restricted in that no
shares shall be transferred without either:

(a) the consent of the directors of the Corporation, expressed by a
resolution passed by the directors or by an instrument or instruments
in writing signed by a majority of the directors, which consent may be
given either prior or subsequent to the time of transfer of such
shares; or

(b) the consent of the holder or holders of shares of the Corporation to
which are attached at least a majority of the votes attached to all
shares of the Corporation for the time being outstanding carrying a
voting right either under all circumstances or under circumstances
that have occurred and are continuing, expressed by a resolution
passed by such holder or holders or by an instrument or instruments in
writing signed by such holder or holders, which consent may be given
either prior or subsequent to the time of transfer of such shares.

A-B-4

<PAGE>

SCHEDULE 3 TO THE
ARTICLES OF AMALGAMATION OF
MARUSA MARKETING INC.

OTHER PROVISIONS

(a) that the number of shareholders of the Corporation, exclusive of
persons who are in the employment of the Corporation and exclusive of
persons who, having been formerly in the employment of the
Corporation, were, while in that employment, and have continued after
the termination of that employment to be, shareholders of the
Corporation, is limited to not more than 50, 2 or more persons who are
the joint registered owners of 1 or more shares being counted as 1
shareholder;

(b) that any invitation to the public to subscribe for any securities of
the Corporation is hereby prohibited; and

A-B-5

<PAGE>

EXHIBIT C

BY-LAW NUMBER 1

A BY-LAW RELATING TO THE BUSINESS AND AFFAIRS OF

HA-LO Acquisition Corporation of Canada Ltd.
Corporation Acquisition HA-LO du Canada Ltee

ARTICLE 1

INTERPRETATION

1.01 DEFINITIONS

In this by-law:

"Act" means the CANADA BUSINESS CORPORATIONS ACT and the regulations
thereunder, and any statute or regulations that may be substituted for
them, as amended from time to time;

"articles" means the articles, as that term is defined in the Act, of
the Corporation;

"auditor" means the auditor of the Corporation;

"board" means the board of directors of the Corporation;

"by-law" means a by-law of the Corporation;

"Corporation" means the corporation incorporated on June 13, 1996
under the name HA-LO Acquisition Corporation of Canada Ltd.
Corporation Acquisition HA-LO du Canada Ltee;

"director" means a director of the Corporation;

"officer" means an officer of the Corporation, and reference to any
specific officer is to the person holding that office of the
Corporation;

"person" means an individual, body corporate, partnership, joint
venture, trust, unincorporated organization, association, the Crown or
any agency or instrumentality thereof, or any other entity recognized
by law;

"proxyholder" means a person holding a valid proxy for a shareholder;

A-C-1

<PAGE>

"resident Canadian" has the meaning ascribed to that phrase in the
Act;

"shareholder means a shareholder of the Corporation; and

"voting person" means, in respect of a meeting of shareholders, an
individual who is either a shareholder entitled to vote at that
meeting, a duly authorized representative of a shareholder entitled to
vote at the meeting or a proxyholder entitled to vote at the meeting.

1.02 NUMBER AND GENDER

In this by-law, works in the singular include the plural and
vice-versa and words in one gender include all genders. The insertion of
headings in this by-law and its division into articles, sections and other
subdivisions are for convenience of reference only, and shall not affect the
interpretation of this by-law.

1.03 BY-LAW SUBORDINATE TO OTHER DOCUMENT

This by-law is subordinate to, and should be read in
conjunction with, the Act, the article and any unanimous shareholder
agreement of the Corporation.

1.04 COMPUTATION OF TIME

The computation of time and any period of days shall be
determined in accordance with the Act and the provisions of the INTERPRETATION
ACT (Canada) and any statute that may be substituted for it, as amended from
time to time.

ARTICLE 2

DIRECTORS

2.01 NOTICE OF MEETING

Any director or the president may call a meeting of the
board by giving notice stating the time and place of the meeting to each of the
directors other than the director giving that notice. Notices sent by delivery
or electronic means shall be sent no less than 48 hours before the time of the
meeting. Notices sent by mail shall be sent no less than 5 days before the day
of the meeting.

The board may appoint, by resolution, dates, time and places for
meetings of the board. A copy of any such resolution shall be sent to each
director forthwith after being passed, but no other notice is required for any
such meeting

A-C-2

<PAGE>

except where the Act requires the purpose of or the business to be transacted at
a meeting to be specified.

2.02 MEETINGS WITHOUT NOTICE

A meeting of the board may be held without notice
immediately following the first or any annual meeting of the shareholders.

2.03 PLACE OF MEETING

A meeting of the board may be held at any place within or
outside Ontario, and no such meeting need be held at a place within Canada.

2.04 NO NOTICE TO NEWLY APPOINTED DIRECTOR

A person need not be given notice of the meeting at which
that person is appointed by the other directors to fill a vacancy on the board
if present at that meeting.

2.05 QUORUM FOR DIRECTORS' MEETINGS

If there are 1 or 2 directors, all of the directors
constitute a quorum at a meeting of the board. If there are 3, 4 or 5
directors, a majority of the directors constitute a quorum at a meeting of the
board. Otherwise, such a quorum consists of the next whole number larger than
2/5ths of the number of directors. In this section, the "number of directors"
is either:

(a) the number of directors specified in the articles; or

(b) if a minimum and maximum number of directors is provided for in the
articles, the number elected at the last annual meeting of the
shareholders or the number determined by resolution of the
shareholders, or if no such annual meeting has been held or
determination made in accordance with this subsection, then the number
of directors named in the notice of directors filed with the articles.

2.06 CHAIRMAN OF DIRECTORS' MEETINGS

The chairman of a meeting of the board must be a director
present at the meeting who consents to preside as chairman. The first-mentioned
of the chairman of the board, the managing director or the president who so
qualifies shall preside as chairman of the meeting. If none of them is so
qualified, the directors present at the meeting shall choose a director to
preside as chairman of the meeting.

A-C-3

<PAGE>

2.07 VOTES AT DIRECTORS' MEETINGS

Each director present at a meeting of the board shall have 1
vote on each motion arising. Motions arising at meetings of the board shall be
decided by a majority vote. The chairman of the meeting shall have a second or
casting vote.

ARTICLE 3

OFFICERS

Each officer shall hold office during the pleasure of the board. Any
officer may, however, resign at any time by giving notice to the
Corporation.

ARTICLE 4

MEETINGS OF SHAREHOLDERS

4.01 NOTICE OF SHAREHOLDERS' MEETINGS

The board may call a meeting of shareholders by causing
notice of the time and place of the meeting to be sent to each shareholder
entitled to vote at the meeting, each director and the auditor. Such notice
shall be sent no less than 21 days and no more than 50 days before the meeting.

4.02 QUORUM AT MEETINGS OF SHAREHOLDERS

If the Corporation has only 1 shareholder entitled to vote
at a meeting of shareholders, that shareholder constitutes a quorum. Otherwise,
any 2 voting persons present shall constitute a quorum, but only to appoint a
chairman and adjourn the meeting. For all other purposes, a quorum consists of
at least 2 voting persons present and authorized to cast in the aggregate not
less than 25% of the total number of votes attaching to all shares carrying the
right to vote at that meeting.

4.03 CHAIRMAN'S VOTE

The chairman of any meeting of shareholders shall not have a
second or casting vote.

4.04 VOTING

A-C-4

<PAGE>

Unless the chairman of a meeting of shareholders directs a
ballot, or a voting person demands one, each motion shall be voted upon by a
show of hands. Each voting person has 1 vote in a vote by show of hands. A
ballot may be directed or demanded either before or after a vote by show of
hands. If a ballot is taken, a prior vote by show of hands has no effect.

4.05 SCRUTINEERS

The chairman of a meeting of shareholders may appoint for
that meeting 1 or more scrutineers, who need not be voting persons.

4.06 WHO MAY ATTEND SHAREHOLDERS' MEETING

The only persons entitled to attend a meeting of
shareholders are voting persons, the president, the directors, the auditor and
others permitted by the chairman of the meeting.

ARTICLE 5

SECURITY CERTIFICATES

Security certificates shall be in such form as the board may
approve or the Corporation adopt. The president or the board may order the
cancellation of any security certificate that has become defaced and the
issuance of a replacement certificate for it when the defaced certificate is
delivered to the Corporation or to a transfer agent or branch transfer agent
of the Corporation.

ARTICLE 6

PAYMENTS

6.01 CHEQUES

Any amount payable in cash to shareholders (including
dividends payable in cash) may be paid by cheque drawn on any of the
Corporation's bankers to the order of each registered holder of shares of the
class or series in respect of which such amount is to be paid. Cheques may be
sent by delivery or first class mail to such registered holder at that holder's
address appearing on the register of shareholders, unless that holder otherwise
directs in writing. By sending a cheque, as provided in this by-law, in the
amount of the dividend less any tax that the Corporation is required to
withhold, the Corporation discharges its liability to pay the

A-C-5

<PAGE>

amount of that dividend, unless the cheque is not paid on due presentation.

6.02 CHEQUES TO JOINT HOLDERS

Cheques payable to joint holders shall be made payable to
the order of all such joint holders unless such joint holders direct otherwise.
Such cheques may be sent to the holders at the address appearing on the register
of shareholders in respect of that joint holding, to the first address so
appearing if there is more than one, or to such other address as those joint
holders direct in writing.

6.03 NON-RECEIPT OF CHEQUES

The Corporation shall issue a replacement cheque in the same
amount to any person who does not receive a cheque sent as provided in this by-
law, if that person has satisfied the conditions regarding indemnity, evidence
of non-receipt and title set by the board from time to time, either generally or
for that particular case.

6.04 CURRENCY OF DIVIDENDS

Dividends or other distributions payable in cash may be paid
to some shareholders in Canadian currency and to other shareholders in
equivalent amounts of a currency or currencies other than Canadian currency.
The board may declare dividends or other distributions in any currency or in
alternative currencies and make such provisions as it deems advisable for the
payment of such dividends or other distributions.

ARTICLE 7

EXECUTION OF DOCUMENTS

7.01 SIGNATORIES

The following are the only persons authorized to sign any
document on behalf of the Corporation, other than in the usual and ordinary
course of the Corporation's business:

(a) any person appointed by resolution of the board to sign a specific
document, that type of document or generally on behalf of the
Corporation, or

(b) any director or any officer appointed to office by the board.

A-C-6

<PAGE>

Any document so signed may, but need not, have the corporate
seal applied, if there is one.

7.02 FACSIMILIE SIGNATURES

The signature of any person authorized to sign on behalf of
the Corporation may, if specifically authorized by resolution of the board, be
written, printed, stamped, engraved, lithographed or otherwise mechanically
reproduced. Anything so signed shall be as valid as if it had been signed
manually, even if that person has ceased to hold office when anything so signed
is issued or delivered, until revoked by resolution of the board.

ARTICLE 8

INFORMATION PROVIDED TO SHAREHOLDERS

Except as required by the Act or authorized by the board, no shareholder is
entitled by virtue of being a shareholder to disclosure of any information or
records respecting the Corporation or its business.

ARTICLE 9

PROTECTION AND INDEMNITY

9.01 TRANSACTIONS WITH THE CORPORATION

No director or officer shall be disqualified, by virtue of being a
director, or by holding any other office of, or place of profit under, the
Corporation or any body corporate in which the Corporation is a shareholder or
is otherwise interested, from entering into, or from being concerned or
interested in any manner in, any contract, transaction or arrangement made, or
proposed to be made, with the Corporation or any body corporate in which the
Corporation is interested and no such contract, transaction or arrangement
shall be void or voidable for any such reason. No director or officer shall
be liable to account to the Corporation for any profit arising from any such
office or place of profit or realized in respect of any such contract,
transaction or arrangement. Except as required by the Act, no director or
officer must make any declaration or disclosure of interest or, in the case
of a director, refrain from voting in respect of any such contract,
transaction or arrangement.

A-C-7

<PAGE>

9.02 LIMITATION OF LIABILITY

Subject to the Act, no director or officer shall be liable
for:

(a) the acts, receipts, neglects or defaults of any other person;

(b) joining in any receipt or act for conformity;

(c) any loss, damage or expense to the Corporation arising from the
insufficiency or deficiency of title to any property acquired by or on
behalf of the Corporation;

(d) the insufficiency or deficiency of any security in or upon which any
moneys of the Corporation are invested;

(e) any loss, damage or expense arising from the bankruptcy, insolvency,
act or omission of any person with whom any monies, securities or
other property of the Corporation are lodged or deposited;

(f) any loss, damage or expense occasioned by any error of judgment or
oversight;

(g) any other loss, damage or expense related to the performance or non-
performance of the duties of that person's office.

9.03 CONTRACTS ON BEHALF OF THE CORPORATION

Subject to the Act, any contract entered into, or action
taken or omitted, by or on behalf of the Corporation shall, if duly approved by
a resolution of the shareholders, be deemed for all purposes to have had the
prior authorization of the shareholders.

9.04 INDEMNITY OF DIRECTORS AND OFFICERS

As required or permitted by the Act, the Corporation shall indemnify
each Indemnified Person against all costs, charges, and expenses, including an
amount paid to settle an action or satisfy a judgment, that that Indemnified
Person reasonably incurs in respect of any civil, criminal or administrative
action or proceeding to which that Indemnified Person is made a party by reason
of being or having been a director or officer of the Corporation or of a body
corporate of which the Corporation is or was a shareholder or creditor if:

(a) that Indemnified Person acted honestly and in good faith with a view
to

A-C-8

<PAGE>

the best interests of the Corporation; and

(b) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, that Indemnified Person had
reasonable grounds for believing that the conduct was lawful.

"Indemnified Person" means

(a) each director and former director of the Corporation,

(b) each officer and former officer of the Corporation,

(c) each person who acts or acted at the Corporation's request as a
director or officer of a body corporate of which the Corporation is or
was a shareholder or creditor, and

(d) the respective heirs and legal representatives of each of the persons
designated in paragraphs (a) through (c).

9.05 INDEMNITIES NOT LIMITING

The provisions of this Article 9 shall be in addition to and
not in substitution for any rights, immunities and protections to which an
Indemnified Person is otherwise entitled.

ARTICLE 10

NOTICES

10.01 PROCEDURES FOR SENDING NOTICES

Notice shall be deemed to have been sufficiently sent if
sent in writing to the address of the addressee on the books of the Corporation
and delivered in person, sent by prepaid first class mail or sent by any
electronic means of sending messages, including telex or facsimile transmission,
which produces a paper record. Notice shall not be sent by mail if there is any
general interruption of postal services in the municipality in which or to which
it is mailed. Each notice so sent shall be deemed to have been received on the
day it was delivered or sent by electronic means or on the fifth day after it
was mailed.

10.02 NOTICES TO SUCCESSORS IN TITLE

Notice to a shareholder is sufficient notice to each

A-C-9

<PAGE>

successor in title to that shareholder until the name and address of that
successor have been entered on the Corporation's share register.

10.03 NOTICE TO JOINT SHAREHOLDERS

Notice to one joint shareholder is sufficient notice to all
of them. Such notice shall be addressed to all such joint holders and sent to
the address for them on the Corporation's register of shareholders or to the
first such address if there is more than one.

10.04 FACSIMILIE SIGNATURES ON NOTICES

The signature on any notice or other communication or
document to be sent by the Corporation may be written, printed, stamped,
engraved, lithographed or otherwise mechanically reproduced.

10.05 OMISSION OF NOTICE DOES NOT INVALIDATE ACTIONS

All actions taken at a meeting in respect of which a notice
has been sent shall be valid even if:

(a) by accident, notice was not sent to any person,

(b) notice was not received by any person, or

10.06 WAIVER OF NOTICE

Any person entitled to notice under the Act, the articles or
the by-laws may waive that notice. Waiver, either before or after the event
referred to in the notice, shall cure any default in sending that notice.

ARTICLE 11

REPEAL OF FORMER BY-LAWS

11.01 FORMER BY-LAWS MAY BE REPEALED

The directors may repeal one or more by-laws by passing a
by-law that contains provisions to that effect.

A-C-10

<PAGE>

11.02 EFFECT OF REPEAL OF BY-LAWS

The repeal of any by-law in whole or part shall not in any
way affect the validity of any act done or right, privilege, obligation or
liability acquired or incurred thereunder prior to such repeal. All directors,
officers and other persons acting under any by-law repealed in whole or part
shall continue to act as if elected or appointed under the provisions of this
by-law.

MADE by the board on the day of June, 1996.
----------

/s/ Lou Weisbach /s/ Richard A. Magid
- ------------------ ----------------------
PRESIDENT SECRETARY

A-C-11
<PAGE>

EXHIBIT D

EMPLOYMENT AGREEMENT
--------------------

THIS EMPLOYMENT AGREEMENT ("Employment Agreement") is made and entered into as
of this ____ day of ________, 1996, by and among MARKET USA, INC., an Illinois
corporation (the "Employer"), HA-LO INDUSTRIES, INC., an Illinois corporation
("HA-LO"), and SEYMOUR N. OKNER, a resident of the State of Illinois (hereafter
"Executive").

WHEREAS, Market USA and its affiliate, Marusa Marketing, Ltd., a Canadian
corporation ("Marusa", and collectively with the Employer, the "Companies") are
engaged in the business of providing outbound telemarketing sales and services,
including telemarketing training and service consulting;

WHEREAS, the Companies provide services to a wide range of customers
engaged in various business endeavors throughout the continental United States
and Canada, and during the course of such services, to Companies have
established customer bases, customer lists and ongoing relationships with their
customers;

WHEREAS, as of the date hereof (the "Effective Date"), HA-LO has acquired,
by and through a unitary transaction, all of the outstanding shares of capital
stock of the Companies pursuant to and in accordance with the terms and
conditions of that certain Agreement and Plan of Merger and Amalgamation dated
as of June 14, 1996 (the "Plan of Merger");

WHEREAS, Executive is a director, executive employee and past stockholder
of each of of Employer and Marusa;

WHEREAS, Executive's agreement to enter into this Employment Agreement was
a material inducement to HA-LO to enter into the Plan of Merger and consummate
the transactions thereunder;

WHEREAS, Executive has had and will continue to be granted direct and
substantial exposure to the customers and prospective customers of the
Companies, and during the term of this Employment Agreement, Executive may have
direct and substantial exposure to the customers and prospective customers of
HA-LO, HA-LO's wholly and partially-owned subsidiaries and affiliates, and other
entities owned or controlled, in whole or in part, by HA-LO (such entities are
hereafter collectively "Related Entities");

NOW, THEREFORE, in consideration of the foregoing premises, HA-LO's
consummation of the transactions under the Plan of Merger, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
mutually acknowledged, Executive, Employer and HA-LO, intending to be legally
bound, hereby agree as follows:

A-D-1

<PAGE>

(a) RECITALS. Each of the above recitals is incorporated in this
Employment Agreement and shall be binding upon the parties hereof. Reference is
hereby made to the Plan of Merger. This Employment Agreement constitutes the
Employment Agreement referred to in Section 7.02(e)(ii) of the Plan of Merger,
and supersedes any and all previous agreements, understandings and commitments
relating to Executive's continued employment with the Employer on and after the
Effective Date, including, without limiting the generality of the foregoing, any
and all agreements providing Executive with current or deferred compensation,
benefits, reimbursements, allowances, options, other rights to purchase or sell
property, or other amounts payable to Executive. Executive understands and
agrees that each such agreement, understanding and commitment relating to his
continued employment with the Companies after the Effective Date is revoked and
cancelled as of the Effective Date, with no further rights or obligations on the
part of either party thereto, except as such rights and obligations pertain to
either Company's claim(s) against Executive for the breach or violation of any
obligation to be performed by Executive prior to the Effective Date and rights
to compensation and benefits accrued to the date hereof and to reimbursement for
expenses incurred prior to the date hereof. Unless otherwise provided in this
Employment Agreement, the capitalized terms used herein shall have the same
meanings ascribed to them in the Plan of Merger.

1. EMPLOYMENT; DUTIES. The Company hereby agree to employ Executive, and
Executive hereby accepts such employment, as the Chairman and Chief Executive
Officer of the Companies, on the terms and subject to the conditions set forth
herein. During the "Term" (as hereafter defined), Executive shall devote a
reasonable amount of his business time and best efforts to the performance of
all duties pertaining to the Companies as shall be assigned to him from time-to-
time by HA-LO, and shall not engage in any other business activity nor be
gainfully employed other than pursuant to this Agreement. The amount of time
which Executive shall devote to his duties hereunder shall be mutually agreed as
between Executive and the Chief Executive Officer of HA-LO, taking into account
Executive's age and other relevant factors. Executive's duties shall be of an
executive nature and consistent in scope and responsibility with the title of
Chairman and Chief Executive Officer. The performance of Executive's duties
hereunder shall be subject to the supervision, advice and direction of the Board
of Directors and the Chief Executive Officer or Chief Operating Officer of HA-
LO, or, if HA-LO shall hire a senior executive to be responsible for expanding
HA-LO s activities in the field of telemarketing, said executive. Executive
shall, subject to reasonable travel requirements in satisfaction of his
responsibilities to the Employer hereunder (including, as deemed necessary by
HA-LO, travel to Marusa's business and customer locations within Canada),
maintain his permanent office at 701 Lee

A-D-2

<PAGE>

Street, Des Plaines, Illinois or at any successor office thereto within the
Chicago, Illinois metropolitan area designated by HA-LO. If requested by HA-LO,
Executive will cooperate with HA-LO in obtaining key man insurance on
Executive s life, including taking any necessary physical examinations.

2. COMPENSATION. As full consideration for Executive's services
hereunder, the Employer shall pay to Executive (i) an aggregate annual base
salary of not less than U.S. One Hundred Fifty Thousand Dollars (U.S. $150,000)
(less applicable U.S. withholdings) ("Salary"), in equal semi-monthly
installments, (ii) performance bonuses, payable in cash by the Employer in such
amounts, and subject to such criteria, as HA-LO's Board may from time-to-time
determine in its sole and exclusive discretion, and (iii) performance bonuses,
payable in shares of HA-LO Securities, or in options or other rights to purchase
HA-LO Securities, and subject to such criteria, as HA-LO's Board may from time-
to-time determine in its sole and exclusive discretion. HA-LO agrees that,
subject to satisfaction of performance criteria made applicable to him, the
Employer shall cause HA-LO to offer Executive the right to participate in the
HA-LO Industries, Inc. Stock Plan (the "Stock Plan", a true and correct copy of
which has been furnished to the Executive and by this reference expressly
incorporated herein and made a part hereof), and such other stock and stock
appreciation rights plans established by HA-LO for its management employees, as
a group. Executive's salary shall be reviewed annually by HA-LO's Board and
shall be subject to increase (but not decrease) by HA-LO s Board in its
discretion. Bonus compensation shall be payable to Executive under the
provisions of clauses (ii) and (iii), above, if and to the extent Executive
satisfies the performance expectations and goals established on behalf of the
Companies. Such performance expectations and goals shall be based on such
reasonable financial and other criteria as HA-LO's Board may determine from
time-to-time, in its exclusive discretion after consultation with the Executive.
Such performance expectations and goals may be subject to annual or semi-annual
revision in light of the Companies' actual results of operations, and structured
in a manner which is (i) specific to Executive's designated responsibilities,
(ii) conditioned upon the operating results of one or both of the Companies, or
which pertain to certain key customers of one or both of the Companies, or (iii)
contingent upon the satisfaction by one or both of the Companies of financial
goals established through periodic budgets or projections.

3. FRINGE BENEFITS. Subject to applicable law, and the rules and
policies adopted by HA-LO's Board from time-to-time, Employer shall provide
Executive with such non-performance related fringe benefits (including, but not
limited to, group health and dental coverage, group life and disability
insurance, and the right to participate in qualified pension and welfare benefit
plans), as are provided generally to the senior employees of Employer, as a
group. Such fringe benefits shall, in the aggregate, be

A-D-3

<PAGE>

substantially comparable to the benefits provided by HA-LO to its senior
executive employees generally.

(a) VACATION AND SICK LEAVE. For each calendar year during the Term,
Executive shall be entitled to receive from the Employers the same number
of paid vacation and sick leave days as are provided by HA-LO to its senior
management personnel pursuant to HA-LO's vacation and sick leave policies
as currently in effect, or as the same may be amended from time-to-time.

(b) MODIFICATION OF FRINGE BENEFITS. Executive acknowledges and
agrees that, subject to federal and state laws and regulations and to the
foregoing provisions of this paragraph 4, Employer, in its sole discretion,
terminate, substitute, amend and/or modify any and all of the benefits,
insurance programs and qualified plans now in effect or at any time
hereafter adopted by Employer for the benefit of its full-time employees.

4. EXPENSE REIMBURSEMENT AND PROMOTIONS. Subject to the rules, policies
and regulations of the Employer in effect from time to time and applicable to
its employees, Executive shall be entitled to reimbursement by the Employer for
all reasonable and customary travel, business entertainment and other business-
related expenses incurred by him in carrying out his duties under this
Employment Agreement. Without limiting the generality of the foregoing,
Executive shall be reimbursed for all reasonable travel and related expenses
incurred in performing his duties while on assignment for Marusa within Canada.
Each year during the Term, Executive and Employer shall establish a promotional
budget from which Employer shall pay or reimburse Executive's expenses of
promoting the services provided by the Companies, entertaining current or
prospective customers of the Companies, and establishing good working
relationships with the employees of the Companies.

5. TERMINATION.

(a) TERMINATION. The term of this Employment Agreement (the "Term")
and Executive's employment hereunder shall commence as of the Effective
Date and terminate at the earlier of (i) the last day of the month during
which occurs the third (3rd) anniversary of the Effective Date, or (ii) the
first to occur of any of the following events: (1) the mutual agreement of
HA-LO and Executive to so terminate this Employment Agreement, (2) the
death or "disability" (as hereafter defined) of Executive, (3) HA-LO's
written election to cause the Employer to terminate this Employment
Agreement and Executive's employment hereunder "for Cause" (as hereafter
defined), or (4) Executive's written election to terminate this Employment
Agreement and his employment hereunder, but only in the event the Employer
shall have defaulted in a

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material respect in its obligations to Executive under Sections 2, 3, 4 or
5 of this Agreement, and shall have failed to cure such default within the
thirty (30) day period following its receipt of written notification of
such default from Executive ("Resignation for Good Reason").

(b) DISABILITY DEFINED. As used in this Employment Agreement, the
term "disability" shall mean any mental, physical or emotional disability
or condition which is reasonably expected to last for a continuous period
ofone hundred twenty (120) days or more, and which may reasonably be
expected to prevent Executive from fully performing his duties hereunder.
A disability shall be determined by a physician selected by Executive from
Chicago area physicians specializing in internal medicine and possessing
(and having possessed for a period of at least three (3) years) admission
privileges at one or more of the following hospitals: Northwestern Memorial
Hospital, the Loyola University Medical Center or Rush-Presbyterian St.
Lukes Hospital. Executive consents to a physical examination and all
reasonable testing prescribed by the physician so selected (or, if
Executive fails to select a physician, or lacks the requisite capacity to
so select, by a physician satisfying the foregoing criteria selected by
Executive's personal representative), and Executive hereby waives the right
to contest such physician's determination that a disability so exists.

(c) TERMINATION AFTER INITIAL TERM. Notwithstanding the other
provisions of this Section 6, in the event Executive remains employed by
the Employer subsequent to the fifth anniversary of this Employment
Agreement, then for all purposes hereunder, and unless this Employment
Agreement is amended in writing by the parties, the Term shall be deemed
extended from year to year unless and until (i) terminated pursuant to
subclauses (1), (2), (3) or (4) of Section 6(a), above, or (ii) by either
party upon written notice given not later than ninety (90) days prior to
the expiration of the Term (or, if the Term has been extended, not later
than ninety (90) days prior to the expiration of the Term, as extended).

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comply with the lawful directives rules or policies of HA-LO's Board, (6)
an indictment or information against HA-LO or one of the Companies has been
issued, alleging criminal liability due to actions taken or failed to be
taken by Executive without the consent of HA-LO's Board, which indictment
or information is not dismissed with prejudice within one hundred twenty
(120) days thereafter, or (7) upon Executive's breach of any material
representation or material covenant set forth in this Employment Agreement
and failure to substantially cure same (or, in the event such breach is
incapable of prompt cure, failure to promptly undertake those actions
necessary to curing same) within thirty (30) days following written notice
by Employer or HA-LO.

(e) EFFECT UPON TERMINATION. In the event the Term of this
Employment Agreement is terminated by reason of death, disability,
termination for Cause or resignation without Good Reason, all rights,
duties and obligations of the parties pursuant to this Employment Agreement
shall terminate, except to the extent of Executive's Salary and bonuses (if
any) accrued through the date of termination, and Executive's accrued and
vested benefits (after giving effect to the cause of such termination)
under the Stock Plan and any other plan or arrangement in which Executive
is participating, or under which Executive is entitled to and/or deriving
benefits. In the event of termination of Executive's employment by
Employer without Cause or by reason of Executive's resignation for Good
Reason, Executive shall be entitled to receive the compensation and
benefits described in the preceding sentence, and all compensation and
benefits to which be would be entitled for the balance of the Term. In the
event Executive's employment shall terminate by reason of the expiration of
the Term or its subsequent termination pursuant to subparagraph 6(c),
Executive shall not be entitled to severance pay notwithstanding any
contrary policies and practices of HA-LO or Employer.

(f) SURVIVAL OF COVENANTS. Upon termination of the Term of this
Employment Agreement for any reason whatsoever, the provisions of this
Section 6, and the terms and conditions of Sections 7 through 15 of this
Employment Agreement, shall remain in full force and effect, and shall be
binding on and enforceable against Executive, Employer and HA-LO as though
such termination had not occurred. Executive hereby acknowledges that his
agreement to the survival of the terms and conditions of Sections 7 through
15 of this Employment Agreement constitute a material inducement to HA-LO
to enter into this Employment Agreement.

6. EXECUTIVE'S REPRESENTATIONS. Executive hereby represents and warrants
to and with Employer and HA-LO that Executive is not bound by or subject to, and
that he has not entered into, any

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covenants, agreements or restrictions which would be breached or violated by
Executive's execution of this Employment Agreement or by Executive's performance
of his duties hereunder. Without limiting the generality of the foregoing,
Executive is not subject or party to any continuing covenants, agreements or
restrictions, whether or not limited in time or geographical scope, arising out
of any prior work engagement involving Executive and another party. Executive
further represents and warrants to and with Employer and HA-LO that, as of the
date hereof, he has not breached or violated any representation, warranty,
covenant or agreement set forth in this Employment Agreement, and as of the date
hereof there does not exist any breach or violation of any representation,
warranty, covenant or agreement set forth in this Employment Agreement.

7. CONFIDENTIALITY. Executive acknowledges that by virtue of the
corporate offices he previously maintained with the Companies, the corporate
offices he maintains pursuant to the terms of this Employment Agreement, and the
right (together with others) to representation on HA-LO's Board, he has been and
will continue to be granted access to, and has learned and may continue to learn
of, information regarding the Companies and HA-LO which is of a confidential,
private or sensitive nature (including, without limitation, results of
operations and other financial data, technological advancements, telephone and
computer hardware and their configurations, computer software programs and their
applications, accounting methodologies, tax data, business strategies and goals,
financial projections and objectives, advertising campaigns and strategies,
graphic designs and other materials, telemarketing programs and techniques,
telephone calling lists, hiring and screening techniques, training and quality
assurance programs, telephone supervisory methods and know-how, use and
utilization of tradenames, trademarks, patents, copyrights and other registrable
properties, pricing systems, product and service costs, product and service
designs, product and service margins, customer lists and records, customer
information, purchaser lists and records, purchaser information, mark-ups and
margins, marketing techniques, marketing scripts, systems and networks of
distribution, supplier and vendor information, product content, Inventions (as
hereafter defined) and, generally, such other confidential information, trade
secrets and proprietary information) which give, or may give, the Companies or
HA-LO an advantage in the marketplace against competitors (all of the foregoing,
together with such other data and information intended by its holder to
constitute an asset or property the rights in or to which are protectable as
against third parties, are hereafter collectively referred to as "Proprietary
Information"). Notwithstanding the foregoing, the term "Proprietary
Information" shall not include information which (w) has been publicly disclosed
by either of the Companies or HA-LO, (x) is independently developed by a party
other than Employer, HA-LO or Executive, (y) is generally known within the
industries or lines of business engaged in by Employer or HA-LO, or (z)
constitutes Executive's general business knowledge.

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(a) PRIOR AND FUTURE DISCLOSURES. Executive hereby acknowledges that
certain Proprietary Information has been disclosed to Executive by the
Employers (or otherwise learned by Executive) prior to the date of this
Employment Agreement, and that certain Proprietary Information will be
disclosed to or learned by him in the course of his employment during the
Term of this Employment Agreement. Executive acknowledges that all such
Proprietary Information is intended by the Employer and HA-LO to constitute
their exclusive assets and properties and represents that, to the best of
his knowledge, no third party has asserted, or has the right to assert, any
claim of ownership in any such Proprietary Information.

(b) WAIVER OF EXECUTIVE CLAIMS. Executive agrees that he shall not,
at any time during the Term or during the ten (10) years immediately
following the expiration of this Employment Agreement, directly or
indirectly, (i) file any claim or assert any interest in or to, (ii) assist
others in filing any claim or asserting any interest in or to, (iii)
knowingly use or assist others in using to the detriment of the Companies,
HA-LO or Related Entities, or (iv) knowingly use or assist others in using
in contravention of any law or rule, any facts, data, information or other
properties and assets of the Employers, HA-LO or Related Entities which are
known by him to constitute Proprietary Information.

(c) COVENANT NOT TO USE PROPRIETARY INFORMATION TO PERSONAL
ADVANTAGE. Executive agrees that during the Term and for a continuous
period of ten (10) years thereafter, for any reason whatsoever, Executive
shall hold and keep secret all Proprietary Information previously known to
him or at any time hereafter disclosed to or learned by him, and Executive
shall not directly or indirectly disclose such Proprietary Information to
any person, firm, court, governmental agency or corporation, or in any
manner use the same, except in connection with the business and affairs of
the Companies and HA-LO; PROVIDED, HOWEVER, that Executive may disclose
Proprietary Information (i) to his attorney in connection with the
prosecution or defense of any claim brought by or against Employer or HA-LO
to which Executive is a party or a witness, or (ii) which Executive is
required to disclose pursuant to any court order, subpoena, civil
investigative demand or other legal process.

8. NON-COMPETITION COVENANTS. Executive covenants that during the
Restricted Period (hereafter defined), for any reason whatsoever, Executive
shall not, directly or indirectly, in the continental United States, or in any
province or other political jurisdiction within Canada, for his own account, or
as an employee, consultant, agent, partner, joint venturer, owner or officer of
any other person, firm, partnership, corporation or other entity, or in any
other capacity, in any way conduct or engage (i) in a

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telemarketing business which competes with the telemarketing businesses engaged
in the Companies and/or HA-LO at the time of termination of Executive's
employment, or (ii) in which Executive, directly or indirectly, uses or
discloses Proprietary Information; provided, however, that without implication
that Executive would be prohibited from doing so but for this proviso, Executive
shall not, following such termination, be precluded from accepting employment
with an entity engaging in telemarketing activities for its sole and exclusive
account (and not as a service organization on behalf of others), so long as (x)
the telemarketing services are ancillary to the primary business of such entity,
and do not represent a source of more than ten percent (10%) of such entity's
total gross revenues in any one year period, and (y) such entity has not been a
customer or Prospective Customer (as hereafter defined) of one of the Companies
during the six (6) month period preceding termination of this Employment
Agreement. For purposes of this Employment Agreement, the term "Restricted
Period" shall mean the period beginning on the date hereof and ending on the
last day of the twelfth (12th) full calendar month following the date upon which
this Employment Agreement terminates; PROVIDED, HOWEVER, that in the event the
Executive's employment hereunder shall be terminated by the Employer without
Cause or the Executive shall resign for Good Reason, the Restricted Period shall
end on the date of termination of Executive's employment with the Employer.

9. NON-SOLICITATION. Executive hereby covenants and agrees that during
the Restricted Period, for any reason whatsoever, he shall not, directly or
indirectly, for his own account, or as an employee, consultant, agent, partner,
joint venturer, owner or officer of any other person, firm, partnership,
corporation or other entity, or in any other capacity, in any way call upon or
solicit, any person or entity which then is, or at any time prior thereto was, a
customer or Prospective Customer of one of the Companies or HA-LO to render
telemarketing services; provided, however, the foregoing covenant and agreement
shall not apply to any customer or Prospective Customer of HA-LO, so long as (i)
either (A) HA-LO's gross revenues attributable to such customer (or any
subsidiary or affiliate thereof) for any fiscal year did not exceed the sum of
Fifteen Thousand Dollars ($15,000), or (B) Executive, in his capacity as an
officer of the Companies, had no direct contact with, or direct or indirect
responsibility for, such customer or Prospective Customer, and (ii) Executive is
not in possession of, has not had direct access to, and has never been informed,
orally or in writing, of any Proprietary Information respecting or concerning
such customer or Prospective Customer. For purposes of this Employment
Agreement, the term "Prospective Customer" shall mean any person, firm,
partnership, corporation or other entity to which one of the Companies or HA-LO
has made a written presentation or proposal, or presented written materials at a
meeting, within the six (6) month period immediately prior to the date upon
which this Employment Agreement terminates.

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10. NON-DISTURBANCE; NON-DISPARAGEMENT. Executive hereby covenants and
agrees that during the Restricted Period, for any reason whatsoever, he shall
not, directly or indirectly, for his own account, or as an employee, consultant,
agent, partner, joint venturer, owner or officer of any other person, firm,
partnership, corporation or other entity, or in any other capacity (i) solicit
any officer or management employee of one of the Companies or HA-LO to terminate
his employment with one of the Companies or HA-LO, (ii) knowingly and wilfully
disparage, denounce, make material misrepresentations with respect to, or
otherwise circulate or encourage the circulation of false or misleading
information concerning, the Companies, HA-LO, or any of their respective
officers, directors, shareholders, employees, agents, customers or
representatives, or otherwise treat any such person in a manner intended to
portray, or which places such person in a position of ridicule or derision, or
(iii) knowingly or willfully disparage, denounce, make material
misrepresentations with respect to, or otherwise knowingly or willfully
circulate or encourage the circulation of false or misleading information
concerning, the Companies or HA-LO, or their respective employees, owners,
stockholders, directors, officers, affiliates, parents, subsidiaries, agents and
representatives, or their respective products, services, products and services
under development, work product or other assets.

11. RETURN OF MATERIALS. Executive will, at any time upon the request of
the Employer or HA-LO (and as a condition precedent to further or future
payments of Salary or benefits provided under this Employment Agreement), and in
any event upon the termination of his employment hereunder, for whatever reason,
immediately return, surrender and deliver to HA-LO, or at its direction, at
Executive's sole expense, (i) originals and all copies of all Proprietary
Information, and all other papers, properties, notes, financial statements,
spread sheets, projections, employee data, supplies, software, computer hardware
and peripherals, data and other assets, in his possession or under his custody,
and whether or not obtained or created by Executive as a result of, during the
course of or in connection with his employment under this Employment Agreement,
and (ii) a written statement, dated after such delivery, signed by Executive and
notarized by a licensed Notary Public, in which Executive expressly states that
he is not in possession, custody or control, directly or indirectly, of any
assets or properties owned by or belonging to the Companies, HA-LO or a Related
Person or Entity, and that he has not granted any other person any such
possession, custody or control.

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which result from any work performed by Executive hereunder or otherwise for
either of the Companies, shall belong to and be the sole property of the
Companies. Executive further agrees, without further consideration, to promptly
disclose each such Invention to the Companies, and to such other individuals as
HA-LO may direct. Executive further agrees to execute and to join others in
executing such applications, assignments and other documents as may be necessary
or convenient to vest in the Companies full title to each such Invention and as
may be necessary or convenient to obtain United States and foreign patents and
copyrights thereon to the extent the Companies may so choose. Executive further
agrees to testify in any legal proceeding relative to such Invention whenever
requested to do so by HA-LO, at HA-LO's expense. Executive further agrees that
he will not at any time, except as authorized by HA-LO, publish or disclose any
information or knowledge concerning any Inventions.

(a) PRESUMPTION OF WORK-FOR-HIRE. For purposes of this Employment
Agreement, an Invention shall be deemed to have been made during the period
of the Executive's employment if during such period, the Invention was
conceived, in part or in whole, or first actually reduced to practice, and
the Executive agrees that any patent application filed within one (1) year
after termination of his employment hereunder shall be presumed to be
related to an Invention made during the term of his employment unless
Executive can provide evidence as to the contrary.

(b) EXCEPTIONS. This Section shall not apply to an invention for
which no equipment, supplies, facilities, Proprietary Information or other
materials of the Companies were used and which was designed and constructed
entirely on Executive's own time, unless (x) such Invention relates to the
telemarketing business or a Company's actual or demonstrably anticipated
research or development, or (y) the invention results from any specific
work assignment performed by Executive for a Company pr HA-LO.

13. REMEDIES.

Executive acknowledges that compliance with the restrictive covenants set
forth in Sections 7 through 13 herein is necessary to protect the business,
goodwill and Proprietary Information of each Company, HA-LO and certain Related
Entities, and that a breach of these restrictions may irreparably and
continually damage such entity, for which monetary damages may not be adequate.
Consequently, Executive agrees that, in the event that he violates or breaches
any of these covenants, the Employer and/or HA-LO shall be entitled to both (1)
a temporary, preliminary or permanent injunction in order to prevent the
continuation of such harm, and (2) monetary damages insofar as they can be
determined. Nothing in this Employment Agreement, however, shall be construed
to prohibit

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an aggrieved entity from also pursuing any other remedy, the parties having
agreed that all remedies are to be cumulative. The parties expressly agree that
the Employer or HA-LO may, in their sole discretion, choose to enforce the
restrictive covenants in Sections 7 through 13 hereof, in part, or to enforce
any of said restrictive covenants to a lesser extent than that set forth herein.

14. REVISION. In the event that any of the provisions, covenants,
warranties or agreements in Sections 7-14, inclusive, of Employment Agreement
are held to be in any respect an unreasonable restriction upon or are otherwise
invalid, for whatsoever cause, then the court so holding shall reduce and is so
authorized to reduce, the territory to which it pertains and/or the period of
time in which it operates, or the scope of activity to which it pertains or
effect any other change to the extent necessary to render any of the
restrictions of this Employment Agreement enforceable.

15. GENERAL PROVISIONS.

(a) SEVERABILITY. Each of the terms and provisions of this
Employment Agreement is to be deemed severable in whole or in part and, if
any term or provision of the application thereof in any circumstances
should be invalid, illegal or unenforceable, the remaining terms and
provisions or the application thereof to circumstances other than those as
to which it is held invalid, illegal or unenforceable, shall not be
affected thereby and shall remain in full force and effect.

(b) BINDING AGREEMENT. This Employment Agreement shall be binding
upon the parties, their heirs, successors, personal representatives and
assigns. The Employer or HA-LO may assign this Agreement to their
successors in interest to the business, or part thereof, of the Employer or
HA-LO, provided that the assignee assumes all of the liabilities of the
assignor hereunder. Executive may not assign any of his obligations or
duties hereunder.

(c) CONTROLLING LAW AND JURISDICTION. This Employment Agreement
shall be governed by and interpreted and construed according to the laws of
the State of Illinois. Executive, Employer and HA-LO all hereby consent to
the sole and exclusive jurisdiction of the state and federal courts in the
County of Cook, Illinois, in the event that any disputes arise under this
Employment Agreement.

(d) ENTIRE AGREEMENT. This instrument contains the entire agreement
of the parties with regard to the subject matter hereof, and may not be
changed orally, but only by an agreement in writing signed by the parties
hereto.

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(e) FAILURE TO ENFORCE. The failure to enforce any of the provisions
of this Employment Agreement shall not be construed as a waiver of such
provisions. Further, any express waiver by any party with respect to any
breach of any provision hereunder by any other party shall not constitute a
waiver of such party's right to thereafter fully enforce each and every
provision of the Employment Agreement.

(f) HEADINGS. All numbers and Section headings are for reference
only and are not intended to qualify, limit or otherwise affect the meaning
or interpretation of any such Section.

(g) NOTICES. All notices which are required, permitted or
contemplated hereunder to be given or made shall be given or made in
writing by certified mail (return receipt requested) to HA-LO at 5980 West
Touhy Avenue, Niles, Illinois, 60174, Attention: Chief Executive Officer,
and to Executive at the last address shown in Executive's personnel file.

(h) GENDER. The masculine, feminine or neuter pronouns used herein
shall be interpreted without regard to gender, and the use of the singular
or plural shall be deemed to include the other whenever the context so
requires.

16. GUARANTY. HA-LO hereby guarantees the full and prompt payment and
performance of all obligations of Employer under this Agreement. The foregoing
is a guaranty of performance and not of collection, and Executive shall not be
required to resort to Employer in the event of non-payment or non-performance by
Employer. HA-LO hereby waives all suretyship defenses to the foregoing
guaranty, whether presently existing or hereafter arising.

WHEREFORE, the parties have executed this Agreement on the date and year
first above written.

MARKET USA, INC.

By: _______________________

HA-LO INDUSTRIES, INC.

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By: _______________________ ______________________________
SEYMOUR N. OKNER

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EXHIBIT E

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Employment Agreement") is made and entered into as
of this ____ day of ________, 1996, by and among MARKET USA, INC., an Illinois
corporation (the "Employer"), HA-LO INDUSTRIES, INC., an Illinois corporation
("HA-LO"), and SAMUEL OKNER, a resident of the State of Illinois (hereafter
"Executive").

WHEREAS, Executive is a director and executive employee of Employer; and a
director, executive employee and past stockholder of Marusa;

WHEREAS, Executive's agreement to enter into this Employment Agreement was
a material inducement to HA-LO to enter into the Plan of Merger and consummate
the transactions thereunder;

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1. RECITALS. Each of the above recitals is incorporated in this
Employment Agreement and shall be binding upon the parties hereof. Reference is
hereby made to the Plan of Merger. This Employment Agreement constitutes the
Employment Agreement referred to in Section 7.02(e)(ii) of the Plan of Merger,
and supersedes any and all previous agreements, understandings and commitments
relating to Executive's continued employment with the Employer on and after the
Effective Date, including, without limiting the generality of the foregoing, any
and all agreements providing Executive with current or deferred compensation,
benefits, reimbursements, allowances, options, other rights to purchase or sell
property, or other amounts payable to Executive. Executive understands and
agrees that each such agreement, understanding and commitment relating to his
continued employment with the Companies after the Effective Date is revoked and
cancelled as of the Effective Date, with no further rights or obligations on the
part of either party thereto, except as such rights and obligations pertain to
either Company's claim(s) against Executive for the breach or violation of any
obligation to be performed by Executive prior to the Effective Date and rights
to compensation and benefits accrued to the date hereof and to reimbursement for
expenses incurred prior to the date hereof. Unless otherwise provided in this
Employment Agreement, the capitalized terms used herein shall have the same
meanings ascribed to them in the Plan of Merger.

2. EMPLOYMENT; DUTIES. The Company hereby agree to employ Executive,
and Executive hereby accepts such employment, as the President and Chief
Operating Officer of the Companies, on the terms and subject to the conditions
set forth herein. During the "Term" (as hereafter defined), Executive shall
devote his full business time and best efforts to the performance of all duties
pertaining to the Companies as shall be assigned to him from time-to-time by HA-
LO, and shall not engage in any other business activity nor be gainfully
employed other than pursuant to this Agreement. Such duties shall be of an
executive nature and consistent in scope and responsibility with the title of
President and Chief Operating Officer. The performance of Executive's duties
hereunder shall be subject to the supervision, advice and direction of the Board
of Directors and the Chief Executive Officer of Employer. Executive shall,
subject to reasonable travel requirements in satisfaction of his
responsibilities to the Employer hereunder (including, as deemed necessary by
HA-LO, travel to Marusa's business and customer locations within Canada),
maintain his permanent office at 701 Lee Street, Des Plaines, Illinois or at any
successor office thereto within the Chicago, Illinois metropolitan area
designated by HA-LO. If requested by HA-LO, Executive will cooperate with HA-LO
in obtaining, for HA-LO's benefit, key-man insurance with respect to Executive,
including submitting to any necessary physical examinations.

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3. COMPENSATION. As full consideration for Executive's services
hereunder, the Employer shall pay to Executive (i) an aggregate annual base
salary of not less than U.S. Two Hundred Thousand Dollars (U.S. $200,000) (less
applicable U.S. withholdings) ("Salary"), in equal semi-monthly installments,
(ii) performance bonuses, payable in cash by the Employer in such amounts, and
subject to such criteria, as HA-LO's Board may from time-to-time determine in
its sole and exclusive discretion, and (iii) performance bonuses, payable in
shares of HA-LO Securities, or in options or other rights to purchase HA-LO
Securities, and subject to such criteria, as HA-LO's Board may from time-to-time
determine in its sole and exclusive discretion. HA-LO agrees that, subject to
satisfaction of performance criteria made applicable to him, the Employer shall
cause HA-LO to offer Executive the right to participate in the HA-LO Industries,
Inc. Stock Plan (the "Stock Plan", a true and correct copy of which has been
furnished to the Executive and by this reference expressly incorporated herein
and made a part hereof), and such other stock and stock appreciation rights
plans established by HA-LO for its management employees, as a group.
Executive's salary shall be reviewed annually by HA-LO's Board and shall be
subject to increase (but not decrease) by HA-LO s Board in its discretion.
Bonus compensation shall be payable to Executive under the provisions of clauses
(ii) and (iii), above, if and to the extent Executive satisfies the performance
expectations and goals established on behalf of the Companies. Such performance
expectations and goals shall be based on such reasonable financial and other
criteria as HA-LO's Board may determine from time-to-time, in its exclusive
discretion after consultation with the Executive. Such performance expectations
and goals may be subject to annual or semi-annual revision in light of the
Companies' actual results of operations, and structured in a manner which is (i)
specific to Executive's designated responsibilities, (ii) conditioned upon the
operating results of one or both of the Companies, or which pertain to certain
key customers of one or both of the Companies, or (iii) contingent upon the
satisfaction by one or both of the Companies of financial goals established
through periodic budgets or projections.

4. FRINGE BENEFITS. Subject to applicable law, and the rules and
policies adopted by HA-LO's Board from time-to-time, Employer shall provide
Executive with such non-performance related fringe benefits (including, but not
limited to, group health and dental coverage, group life and disability
insurance, and the right to participate in qualified pension and welfare benefit
plans), as are provided generally to the senior employees of Employer, as a
group. Such fringe benefits shall, in the aggregate, be substantially
comparable to the benefits provided by HA-LO to its senior executive employees
generally.

(a) VACATION AND SICK LEAVE. For each calendar year during the Term,
Executive shall be entitled to receive from the Employers the

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same number of paid vacation and sick leave days as are provided by HA-LO
to its senior management personnel pursuant to HA-LO's vacation and sick
leave policies as currently in effect, or as the same may be amended from
time-to-time.

(b) MODIFICATION OF FRINGE BENEFITS. Executive acknowledges and
agrees that, subject to federal and state laws and regulations and to the
foregoing provisions of this Section 4, Employer, in its sole discretion,
terminate, substitute, amend and/or modify any and all of the benefits,
insurance programs and qualified plans now in effect or at any time
hereafter adopted by Employer for the benefit of its full-time employees.

5. EXPENSE REIMBURSEMENT AND PROMOTIONS. Subject to the rules, policies
and regulations of the Employer in effect from time to time and applicable to
its employees, Executive shall be entitled to reimbursement by the Employer for
all reasonable and customary travel, business entertainment and other business-
related expenses incurred by him in carrying out his duties under this
Employment Agreement. Without limiting the generality of the foregoing,
Executive shall be reimbursed for all reasonable travel and related expenses
incurred in performing his duties while on assignment for Marusa within Canada.
Each year during the Term, Executive and Employer shall establish a promotional
budget from which Employer shall pay or reimburse Executive's expenses of
promoting the services provided by the Companies, entertaining current or
prospective customers of the Companies, and establishing good working
relationships with the employees of the Companies.

6. TERMINATION.

(a) TERMINATION. The term of this Employment Agreement (the "Term")
and Executive's employment hereunder shall commence as of the Effective
Date and terminate at the earlier of (i) the last day of the month during
which occurs the fifth (5th) anniversary of the Effective Date, or (ii) the
first to occur of any of the following events: (1) the mutual agreement of
HA-LO and Executive to so terminate this Employment Agreement, (2) the
death or "disability" (as hereafter defined) of Executive, (3) HA-LO's
written election to cause the Employer to terminate this Employment
Agreement and Executive's employment hereunder "for Cause" (as hereafter
defined), or (4) Executive's written election to terminate this Employment
Agreement and his employment hereunder, but only in the event the Employer
shall have defaulted in a material respect in its obligations to Executive
under Sections 2, 3, 4 or 5 of this Agreement, and shall have failed to
cure such default within the thirty (30) day period following its receipt
of written notification of such default from Executive ("Resignation for
Good Reason").

A-E-4

<PAGE>

(b) DISABILITY DEFINED. As used in this Employment Agreemenat, the
term "disability" shall mean any mental, physical or emotional disability
or condition which is reasonably expected to last for a continuous period
of one hundred twenty (120) days or more, and which may reasonably be
expected to prevent Executive from fully performing his duties hereunder.
A disability shall be determined by a physician selected by Executive who
shall be a specialist in internal medicine selected by Executive and
possessing full admission privileges for at least three (3) years at one or
more of the following hospitals: Northwestern Memorial Hospital, the Loyola
University Medical Center or Rush-Presbyterian St. Lukes Hospital.
Executive consents to a physical examination and all reasonable testing
prescribed by the physician so selected (or, if Executive fails to select a
physician, or lacks the requisite capacity to so select, by a physician
satisfying the foregoing criteria selected by Executives personal
representative and Executive hereby waives the right to contest such
physician's determination that a disability so exists.

(d) "FOR CAUSE" DEFINED. As used in this Employment Agreement, the
term "for Cause" shall mean any one or more of the following: (1)
Executive's theft, embezzlement, fraud or misappropriation of funds, or
conspiracy with others to cause same, (2) any breach of fiduciary duty,
abuse of trust or other material act of dishonesty by Executive, or
Executive's violation of any other material law or ethical rule relating to
his employment, (3) Executive's commission of or participation in a felony
or other crime involving moral turpitude, (4) five (5) or more unexplained
absences from work occurring within a three (3) month period after written
notice and warning from Employer or HA-LO, (5) Executive's refusal to
comply with the lawful directives rules or policies of HA-LO's Board, (6)
an indictment or information is issued against HA-LO or one of the
Companies alleging criminal liability due to actions taken or failed to be
taken by Executive without the consent of HA-LO's Board, which indictment
or information is not dismissed with prejudice within one hundred twenty
(120) days thereafter, or (7) upon Executive's breach of any

A-E-5

<PAGE>

material representation or material covenant set forth in this Employment
Agreement and failure to substantially cure same (or, in the event such
breach is incapable of prompt cure, failure to promptly undertake those
actions necessary to curing same) within thirty (30) days following written
notice by Employer or HA-LO.

(e) EFFECT UPON TERMINATION. In the event the Term of this
Employment Agreement is terminated by reason of death, disability,
termination for Cause or resignation without Good Reason, all rights,
duties and obligations of the parties pursuant to this Employment Agreement
shall terminate, except to the extent of Executive's Salary and bonuses (if
any) accrued through the date of termination, and Executive's accrued and
vested benefits (after giving effect to the cause of such termination)
under the Stock Plan and any other plan or arrangement in which Executive
is participating, or under which Executive is entitled to and/or deriving
benefits. In the event of termination of Executive's employment by
Employer without Cause or by reason of Executive's resignation for Good
Reason, Executive shall be entitled to receive the compensation and
benefits described in the preceding sentence, and all compensation and
benefits to which be would be entitled for the balance of the Term. In the
event of Executive s death during the Term, Employer shall pay, within
ninety (90) days following Executive s death, a death benefit in the amount
of one (1) year s Salary. Such death benefit shall be payable to
Executive s designee, and in the absence of such designation, to his
personal representative. In the event Executive's employment shall
terminate by reason of the expiration of the Term or its subsequent
termination pursuant to subparagraph 6(c), Executive shall not be entitled
to severance pay notwithstanding any contrary policies and practices of HA-
LO or Employer.

6. EXECUTIVE'S REPRESENTATIONS. Executive hereby represents and warrants
to and with Employer and HA-LO that Executive is not bound by or subject to, and
that he has not entered into, any covenants, agreements or restrictions which
would be breached or violated by Executive's execution of this Employment
Agreement or

A-E-6

<PAGE>

by Executive's performance of his duties hereunder. Without limiting the
generality of the foregoing, Executive is not subject or party to any continuing
covenants, agreements or restrictions, whether or not limited in time or
geographical scope, arising out of any prior work engagement involving Executive
and another party. Executive further represents and warrants to and with
Employer and HA-LO that, as of the date hereof, he has not breached or violated
any representation, warranty, covenant or agreement set forth in this Employment
Agreement, and as of the date hereof there does not exist any breach or
violation of any representation, warranty, covenant or agreement set forth in
this Employment Agreement.

(a) PRIOR AND FUTURE DISCLOSURES. Executive hereby acknowledges that
certain Proprietary Information has been

A-E-7

<PAGE>

disclosed to Executive by the Employers (or otherwise learned by Executive)
prior to the date of this Employment Agreement, and that certain
Proprietary Information will be disclosed to or learned by him in the
course of his employment during the Term of this Employment Agreement.
Executive acknowledges that all such Proprietary Information is intended by
the Employer and HA-LO to constitute their exclusive assets and properties
and represents that, to the best of his knowledge, no third party has
asserted, or has the right to assert, any claim of ownership in any such
Proprietary Information.

A-E-8

<PAGE>

directly or indirectly, uses or discloses Proprietary Information; provided,
however, that without implication that Executive would be prohibited from doing
so but for this proviso, Executive shall not, following such termination, be
precluded from accepting employment with an entity engaging in telemarketing
activities for its sole and exclusive account (and not as a service organization
on behalf of others), so long as (x) the telemarketing services are ancillary to
the primary business of such entity, and do not represent a source of more than
ten percent (10%) of such entity's total gross revenues in any one year period,
and (y) such entity has not been a customer or Prospective Customer (as
hereafter defined) of one of the Companies during the six (6) month period
preceding termination of this Employment Agreement. For purposes of this
Employment Agreement, the term "Restricted Period" shall mean the period
beginning on the date hereof and ending on the last day of the twelfth (12th)
full calendar month following the date upon which this Employment Agreement
terminates; PROVIDED, HOWEVER, that in the event the Executive's employment
hereunder shall be terminated by the Employer without Cause or the Executive
shall resign for Good Reason, the Restricted Period shall end on the date of
termination of Executive's employment with the Employer.

A-E-9

<PAGE>

venturer, owner or officer of any other person, firm, partnership, corporation
or other entity, or in any other capacity (i) solicit any officer or management
employee of one of the Companies or HA-LO to terminate his employment with one
of the Companies or HA-LO, (ii) knowingly and wilfully disparage, denounce, make
material misrepresentations with respect to, or otherwise circulate or encourage
the circulation of false or misleading information concerning, the Companies,
HA-LO, or any of their respective officers, directors, shareholders, employees,
agents, customers or representatives, or otherwise treat any such person in a
manner intended to portray, or which places such person in a position of
ridicule or derision, or (iii) knowingly or willfully disparage, denounce, make
material misrepresentations with respect to, or otherwise knowingly or willfully
circulate or encourage the circulation of false or misleading information
concerning, the Companies or HA-LO, or their respective employees, owners,
stockholders, directors, officers, affiliates, parents, subsidiaries, agents and
representatives, or their respective products, services, products and services
under development, work product or other assets.

12. INVENTIONS AND OTHER MATTERS. Executive agrees that all ideas,
inventions, discoveries or improvements (collectively, "Inventions") which
Executive, individually or with others, may originate or develop while employed
at any time with Employer, relating to the business or products of the Companies
or their actual or demonstrably anticipated research or development, or which
result from any work performed by Executive hereunder or otherwise for either of
the Companies, shall belong to and be the sole property of the Companies.
Executive further agrees, without further consideration, to promptly disclose
each such Invention to the Companies, and to such other individuals as HA-LO may
direct.

A-E-10

<PAGE>

Executive further agrees to execute and to join others in executing such
applications, assignments and other documents as may be necessary or convenient
to vest in the Companies full title to each such Invention and as may be
necessary or convenient to obtain United States and foreign patents and
copyrights thereon to the extent the Companies may so choose. Executive further
agrees to testify in any legal proceeding relative to such Invention whenever
requested to do so by HA-LO, at HA-LO's expense. Executive further agrees that
he will not at any time, except as authorized by HA-LO, publish or disclose any
information or knowledge concerning any Inventions.

13. REMEDIES.

A-E-11

<PAGE>

restrictive covenants to a lesser extent than that set forth herein.

15. GENERAL PROVISIONS.

A-E-12

<PAGE>

waiver of such party's right to thereafter fully enforce each and every
provision of the Employment Agreement.

(f) HEADINGS. All numbers and Section headings are for reference
only and are not intended to qualify, limit or otherwise affect the meaning
or interpretation of any such Section.

17. GUARANTY. HA-LO hereby guarantees the full and prompt payment and
performance of all obligations of Employer under this Agreement. The foregoing
is a guaranty of performance and not of collection, and Executive shall not be
required to resort to Employer in the event of non-payment or non-performance by
Employer. HA-LO hereby waives all suretyship defenses to the foregoing
guaranty, whether presently existing or hereafter arising.

WHEREFORE, the parties have executed this Agreement on the date and year
first above written.

MARKET USA, INC.

By: _______________________
Its:__________________

HA-LO INDUSTRIES, INC.

By: _______________________ ______________________________
Its:__________________ SAMUEL OKNER

A-E-13

<PAGE>

EXHIBIT F

November 9, 1995

Merchant Partners, Limited Partnership
9690 Deereco Road
Timonium, Maryland 21093

Gentlemen:

This letter memorializes a verbal understanding among the parties hereto
which was reached in October, 1993. The undersigned, Sy N. Okner and Samuel
Okner (collectively, the "Okners"), are the owners of all of the outstanding
shares of Market USA Inc. and Marusa, Inc. (the "Companies"). In consideration
of the sum of $1,000, which you, Merchant Partners, Limited Partnership
("Merchant Partners") have paid to the Okners, the receipt of which is hereby
acknowledged, the Okners agree as follows:

1. The Okners hereby grant to Merchant Partners the irrevocable option
(the "Option") to purchase a number of shares of capital stock of the
Companies equal to 25% of the outstanding capital stock of all classes
of each of the Companies at the time of exercise of the Option,
computed on a fully diluted basis. The aggregate exercise price with
respect to the Option (the "Exercise Price") shall be $4,000,000.
Notwithstanding the foregoing, in the event the enterprise value (as
herein defined) of the Companies, at the time of exercise of the
Option, shall exceed $20,000,000, the percentage of the outstanding
capital stock of the Companies which shall be subject to the Option
shall be computed in accordance with the attached table, but shall in
no event be less than 20%. For the purposes of the preceding
sentence, "enterprise value" shall mean the going concerning value of
the Companies, taken as a whole. Enterprise value shall be as
reasonably agreed by the Okners and Merchant Partners, and in the
absence of such an agreement, by an independent appraiser jointly
selected by the Okners and Merchant Partners. The fees of any such
appraiser shall be paid by Merchant Partners.

2. The Option may be exercised, in whole only, by written notice given to
the Okners not later than five years next following the date hereof,
accompanied by payment of the Exercise Price. Notwithstanding the
foregoing, the exercise of the Option shall be ineffective if, within
10

A-F-1

<PAGE>

Merchant Partners, Limited Partnership
Page 2

days after such exercise, the Okners shall notify Merchant Partners in
writing that (x) the Companies then have a substantial business
relationship with Sears, Roebuck & Co., and (Y) in the Okners'
reasonable opinion, Merchant Partners' ownership of shares of the
Companies would have a material adverse effect on that relationship.
If the Okners shall so notify Merchant Partners, its exercise of the
Option shall be null and void, as if the Option had never been
exercised.

3. The Okners shall cause all certificates representing shares of the
Companies owned by them to be legended to reflect the fact that they
are subject to the Option. In the event either of them shall transfer
any of these shares, they shall cause the certificates issued to the
transferee to bear this legend. Merchant Partners may transfer the
Option with the consent of the Okners, which shall not unreasonably be
withheld or delayed.

Please indicate your agreement with the foregoing by signing the enclosed
copy of this letter in the space provided and returning it to us.

Very truly yours,

/s/ Seymour N. Okner
Seymour N. Okner

/s/ Samuel P. Okner
Samuel P. Okner

AGREED:

MERCHANT PARTNERS, LIMITED PARTNERSHIP

By: Merchant Advisors, Limited Partnership,
general partner

By: Merchant Development Corp.,
general partner

By: /s/ Raymond L. Bank
------------------------------
Raymond L. Bank, President

A-F-2

<PAGE>

Merchant Partners, Limited Partnership
Page 3

SCENARIO OF AN OPTION BASED ON OWNERSHIP % AND COMPANY VALUE
- ------------------------------------------------------------

ASSUMPTION:

ASSUME AN OPTION TO BUY X% OF A COMPANY, DEPENDENT UPON ENTERPRISE
VALUE. THE EXERCISE OF THE OPTION IS A CONSTANT $4,000,000. THE
INITIAL $4,000,000 IS EQUAL TO 25% OF THE COMPANY. FOR EACH
$1,000,000 THE ENTERPRISE VALUE INCREASES, THE OWNERSHIP % DECREASES
BY 0.25%. ONCE A $40,000,000 OR HIGHER ENTERPRISE VALUE HAS BEEN
ACHIEVED, THE OWNERSHIP PERCENTAGE REMAINS FIXED.

Enterprise Imputed Value
Exercise Cost Own % Value Upon Exercise
------------- ----- ----- -------------
<S> <C> <C> <C>
$ 4,000,000 25.00% $ 20,000,000 $ 5,000,000
$ 4,000,000 24.75% $ 21,000,000 $ 5,197,500
$ 4,000,000 24.50% $ 22,000,000 $ 5,390,000
$ 4,000,000 24.25% $ 23,000,000 $ 5,577,500
$ 4,000,000 24.00% $ 24,000,000 $ 5,760,000
$ 4,000,000 23.75% $ 25,000,000 $ 5,937,500
$ 4,000,000 23.50% $ 26,000,000 $ 6,110,000
$ 4,000,000 23.25% $ 27,000,000 $ 6,277,500
$ 4,000,000 23.00% $ 28,000,000 $ 6,440,000
$ 4,000,000 22.75% $ 29,000,000 $ 6,597,500
$ 4,000,000 22.50% $ 30,000,000 $ 6,750,000
$ 4,000,000 22.25% $ 31,000,000 $ 6,897,500
$ 4,000,000 22.00% $ 32,000,000 $ 7,040,000
$ 4,000,000 21.75% $ 33,000,000 $ 7,177,500
$ 4,000,000 21.50% $ 34,000,000 $ 7,310,000
$ 4,000,000 21.25% $ 35,000,000 $ 7,437,500
$ 4,000,000 21.00% $ 36,000,000 $ 7,560,000
$ 4,000,000 20.75% $ 37,000,000 $ 7,677,500
$ 4,000,000 20.50% $ 38,000,000 $ 7,790,000
$ 4,000,000 20.25% $ 39,000,000 $ 7,897,500
$ 4,000,000 20.00% $ 40,000,000 $ 8,000,000
and up

</TABLE>

MERCHANT PARTNERS, LIMITED PARTNERSHIP

By: Merchant Advisors, Limited Partnership,
general partner

By: Merchant Development Corp.,
general partner

By: /s/ Raymond L. Bank
--------------------
Raymond L. Bank, President

A-F-3

<PAGE>

EXHIBIT G

AFFILIATE AGREEMENT
-------------------

THIS AFFILIATE AGREEMENT ("Affiliate Agreement") is made and entered into
as of this ____ day of __________, 1996, by and between the undersigned
[individual or trust] ("Shareholder"), and HA-LO INDUSTRIES, INC., an Illinois
corporation ("HA-LO").

The background of this Affiliate Agreement is as follows:

As of the date of this Affiliate Agreement, Shareholder is [an executive
officer, director or shareholder of Market USA, Inc., an Illinois corporation
("Market USA"),] [and/or executive officer, director and shareholder of Marusa
Marketing Inc., a Canadian federal corporation ("Marusa")]. Pursuant to an
Agreement and Plan of Merger and Amalgamation dated as of June 14, 1996 (the
"Plan of Merger"), among Shareholder, the other shareholders of Market USA and
Marusa, HA-LO, Market USA, Marusa, and others, it was agreed that, upon
satisfaction of certain conditions, HA-LO's wholly-owned Illinois and Canadian
subsidiaries would merge into and amalgamate with Market USA and Marusa,
respectively, in a unitary transaction intended to qualify simultaneously as (i)
a reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended, (ii) an amalgamation exempt from taxation under the
Canada/U.S. Income Tax Convention, and (iii) a "pooling of interests" under
generally accepted accounting principles ("GAAP"), the published statements of
the Financial Accounting Standards Board ("FASB"), and the rules and regulations
("Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). The aforesaid tax and accounting treatments (hereafter
collectively referred to as the "Merger Benefits") were a material inducement to
the parties to enter into the Plan of Merger. Shareholder's agreements
hereunder constituted an inducement to HA-LO to enter into the Plan of Merger,
and HA-LO's obligation to consummate the transactions contemplated under the
Plan of Merger are expressly conditioned upon Shareholder's execution and
delivery of this Affiliate Agreement prior to the effectiveness of said
transactions (as defined in Section 1.04 of the Plan of Merger, the "Effective
Time"). Unless otherwise provided in this Affiliate Agreement, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan of
Merger.

Pursuant to the Plan of Merger, Market USA and Marusa (in their merged
and/or amalgamated composition) would become wholly-owned subsidiaries of HA-LO,
and Shareholder would receive shares of HA-LO's common capital voting stock, no
par value (the "Acquiror Securities"), in exchange for Shareholder s total
shareholdings in Market USA and/or Marusa (the "Target Securities"). It is the

A-G-1

<PAGE>

parties' good faith belief and understanding that Shareholder is an "affiliate"
of Market USA and/or Marusa prior to the Effective Time, and may be an
"affiliate" of HA-LO on and after the Effective Time. As used herein,
"affiliate" shall have the same meaning given to such term for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations of the
Commission under the Securities Act, and/or as used in and for purposes of
Accounting Series, Releases 130 and 135, as amended, of the Commission.

By and through this Affiliate Agreement, Shareholder is (i) acknowledging
that certain requirements of the Code, the Canada Tax Act, GAAP, Financial
Accounting Statements of FASB ("FAS") and the Securities Act (among other laws
and rules) may govern or limit the applicability and/or availability of the
Merger Benefits in the event of a sale, transfer or other disposition by
Shareholder of his Target Securities and Acquiror Securities, (ii) representing
and warranting to and for the benefit of HA-LO that Shareholder will not take
any action which could jeopardize the treatment of the merger of Market USA and
the amalgamation of Marusa as a pooling of interests for accounting purposes,
(iii) covenanting and agreeing to be bound by certain additional restrictions
governing his holding and/or disposition of Acquiror Securities prior to the
second anniversary of the Effective Time under the Plan of Merger, and (iv)
acknowledging and agreeing that HA-LO shall have no obligation or responsibility
to facilitate the sale, transfer or other disposition of Acquiror Securities
received by Shareholder under the Plan of Merger except to the extent set forth
in the Registration Rights Agreement attached hereto as Annex "1" (the
"Registration Agreement"), which shall be executed concurrently herewith by HA-
LO, Shareholder and the other shareholders of Market USA and/or Marusa, or
paragraph 7 hereof.

NOW, THEREFORE, in consideration of the premises, the agreement of the
parties to enter into and consummate the transactions contemplated under the
Plan of Merger, and other good and valuable consideration, the receipt and
sufficiency of which is hereby mutually acknowledged, Shareholder and HA-LO,
intending to be legally bound, covenant to and agree, each with the other, as
follows:

1. In the event Shareholder receives any Acquiror Securities under,
pursuant to or as a result of the Plan of Merger, Shareholder shall not make any
sale, transfer or other disposition of such Acquiror Securities in violation of
the Securities Act or Rules and Regulations of the Commission.

2. Shareholder acknowledges and represents that Shareholder has carefully
read the Plan of Merger and this Affiliate Agreement, and to the extent
Shareholder deemed it necessary, Shareholder has discussed the requirements of
these documents, and other applicable limitations on Shareholder s ability to
sell, transfer or otherwise

A-G-2

<PAGE>

dispose of Acquiror Securities, with legal counsel of Shareholder s selection.

3. Shareholder understands the transactions contemplated under the Plan
of Merger must be submitted for a vote of the stockholders of HA-LO pursuant to
a Proxy Statement containing, in part, material information concerning, and
provided by or on behalf of, Market USA, Marusa and Shareholder. In connection
with such solicitation, and otherwise for the purpose of consummating the
transactions contemplated under the Plan of Merger, the Proxy Statement and
other written materials prepared by or on behalf of HA-LO may deem Shareholder
to be an "affiliate" of Market USA and Marusa prior to the Effective Time, and
an "affiliate" of HA-LO on and after the Effective Time. Shareholder hereby
agrees that, whether or not such classification is correct, Shareholder shall
not take objection to, and Shareholder shall not cause or suffer others to take
objection to, such classification, if such objection could result in, or effect,
any modification, alteration, amendment, restatement or nullification of any
term or provision set forth in this Affiliate Agreement or otherwise intended to
be binding on Shareholder and Shareholder's successors and assigns.

4. Shareholder hereby agrees that, from the Effective Time through the
second anniversary of the Effective Time, Shareholder shall not sell, transfer
or otherwise dispose of Acquiror Securities, howsoever acquired, unless such
sale is pursuant to and in compliance with the terms and conditions of this
Affiliate Agreement. In addition, Shareholder agrees he shall not sell,
transfer or otherwise dispose of Acquiror Securities issued to him under the
Plan of Merger unless (x) such sale, transfer or disposition has been
effectively registered under the Securities Act, including pursuant to the
Registration Agreement for as long as he shall remain an "affiliate" of HA-LO,
(y) such sale, transfer or disposition is made in conformity with the volume and
other limitations of Rule 145 promulgated by the Commission under the Securities
Act, or (z) in the opinion of counsel reasonably acceptable to HA-LO, such sale,
transfer or disposition is exempt from registration under the Securities Act.

5. Anything in this Affiliate Agreement to the contrary notwithstanding,
Shareholder covenants and agrees with HA-LO that Shareholder shall not, directly
or indirectly, (i) during the thirty (30) days prior to the Effective Time,
sell, transfer or otherwise dispose of any shares of Target Securities, or (ii)
sell, transfer or otherwise dispose of any shares of Acquiror Securities,
whether or not received by Shareholder under the Plan of Merger, during the
period from the Effective Time until after such time as results covering at
least thirty (30) days of combined operations of Market USA, Marusa and HA-LO
have been published by HA-LO in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a report to the
Commission on Form 10-K, 10-Q or 8-K, or any other public filing or announcement

A-G-3

<PAGE>

which includes such combined results of operations for Market USA, Marusa and
HA-LO. For purposes of this Affiliate Agreement, the separate periods during
which Shareholder shall be prohibited from selling, transferring or otherwise
disposing of Target Securities or Acquiror Securities pursuant to this Section 5
are hereafter collectively, the "Pooling Periods".

6. Shareholder understands and agrees it is intended the transactions
under the Plan of Merger will be treated as a "pooling of interests" in
accordance with GAAP, FAS and Rules and Regulations promulgated by the
Commission under the Securities Act. Shareholder agrees that Shareholder's
forbearance from selling, transferring or otherwise disposing of Target
Securities and Acquiror Securities during a Pooling Period is required to
preserve the Merger Benefits.

7. Following expiration of the Pooling Periods:

(a) Shareholder and the other shareholders of Market USA and/or
Marusa shall not collectively sell Acquiror Securities in aggregate quantities
in excess of the amounts specified in Section 2(a) of the Registration Agreement
applicable for each period set forth therein; and

(b) for so long as shall be necessary in order to permit Shareholder
to sell Acquiror Securities issued to him under the Plan of Merger pursuant to
Rule 145 under the Securities Act, and to the extent applicable, Rule 144 under
the Securities Act, HA-LO shall file those reports required to be filed by it
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, in
order to permit Shareholder to sell Acquiror Securities pursuant to the terms
and conditions of Rule 145 and the applicable provisions of Rule 144.

Shareholder understands that, except as set forth in the Registration
Agreement on this Agreement, HA-LO shall be under no obligation to register the
sale, transfer or other disposition of any Acquiror Securities by or on behalf
of Shareholder or to take any other action necessary in order to make compliance
with an exemption from registration available.

8. Nothing set forth in this Affiliate Agreement shall be deemed to
evidence a present intention on the part of Shareholder to dispose of any
Acquiror Securities, and Shareholder expressly disclaims any such intention.
This Agreement merely establishes parameters for the disposition by Shareholder
of Acquiror Securities should Shareholder elect in the future to do so.

9. Shareholder agrees that stop transfer instructions shall be given to
HA-LO's transfer agent with respect to the shares of Acquiror Securities issued
to Shareholder under the Plan of Merger (other than those shares which are
eligible for registration and

A-G-4

<PAGE>

sale from time to time under the Registration Agreement following the expiration
of the Pooling Periods) and that there will be placed on the certificates for
such shares, or on any substitutions therefor, a legend stating in substance:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED ___________ BETWEEN THE REGISTERED HOLDER HEREOF
AND HA-LO INDUSTRIES, INC., A COPY OF WHICH AGREEMENT IS ON FILE
AT THE PRINCIPAL OFFICES OF HA-LO INDUSTRIES, INC."

The foregoing "stop transfer" instructions shall be terminated with respect
to said Acquiror Securities at the times at which they become eligible for
registration and sale pursuant to the Registration Agreement.

10. Shareholder hereby represents and warrants to HA-LO that he possesses
the full power, right and authority to execute and deliver this Agreement, and
to make the representations, warranties, covenants and agreements herein
contained, and to perform all of his obligations hereunder. This Affiliate
Agreement shall inure to the benefit of HA-LO and its successors and assigns,
and shall be binding upon, and obligate, Shareholder and Shareholder s
successors and assigns. This Affiliate Agreement shall be specifically
enforceable by HA-LO, with or without proof of monetary damages. This Affiliate
Agreement may be amended only in a writing signed by the parties, and shall be
construed in accordance with, and governed by, the internal laws of the State of
Illinois. In the event of any dispute under this Affiliate Agreement, the
matter shall be settled by resort to the federal or state courts with venue in
the County of Cook, State of Illinois, and in no other location.

IN WITNESS WHEREOF, the parties have executed this Affiliate Agreement as
of the day and year first above written.

-----------------------------------
Shareholder

HA-LO INDUSTRIES, INC.

By:
------------------------------
Its:
-------------------------

A-G-5

<PAGE>

ANNEX 1 TO AFFILIATE AGREEMENT

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of __________ __, 1996, by and among HA-LO INDUSTRIES, INC., an Illinois
corporation (together with its permitted successors and assigns, the "Company"),
and the persons whose signatures appear on the execution pages of this Agreement
(the "Shareholders").

This Agreement is made pursuant to the Agreement and Plan of Merger dated
as of June __, 1996 (the "Merger Agreement") by and among the Company, HA-LO
Acquisition Corporation, Inc., HA-LO Acquisition Corporation of Canada, Ltd.,
Market USA, Inc., MARUSA Marketing Inc., and the Shareholders, pursuant to which
the Shareholders will receive shares of Common Stock (as defined below) of the
Company.

The parties hereto, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be bound hereby, agree
as follows:

SECTION 1. DEFINITIONS.

As used in this Agreement, the following terms shall have the following
meanings:

ADVICE: See Section 6 hereof.

AFFILIATE means, with respect to any specified person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

BUSINESS DAY means any day that is not a Saturday, a Sunday or a legal
holiday on which banking institutions in the State of Illinois are not required
to be open.

CLAIMS: See Section 8(a) hereof.

CLOSING DATE means the date upon which the transactions contemplated by the
Merger Agreement are consummated.

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<PAGE>

COMMON STOCK means the Common Stock, no par value, of the Company, or any
other shares of capital stock of the Company into which such stock shall be
reclassified or changed (by operation of law or otherwise). If the Common Stock
has been so reclassified or changed, or if the Company pays a dividend or makes
a distribution on its Common Stock in shares of capital stock, or subdivides (or
combines) its outstanding shares of Common Stock into a greater (or smaller)
number of shares of Common Stock, a share of Common Stock shall be deemed to be
such number of shares of capital stock and amount of other securities to which a
holder of a share of Common Stock outstanding immediately prior to such
reclassification, exchange, dividend, distribution, subdivision or combination
would be entitled.

CUTBACK REGISTRATION means any registration in which the managing
underwriter advises the Company that marketing factors require a limitation of
the number of Registrable Shares to be underwritten in such registration.

DELAY PERIOD: See Section 2(b) hereof.

DELAY NOTICE: See Section 2(b) hereof.

DELAYING NOTICE: See Section 3(d) hereof.

DEMAND EFFECTIVENESS PERIOD: See Section 3(b) hereof.

DEMAND REQUEST: See Section 3(a) hereof.

EFFECTIVENESS PERIOD: See Section 2(b) hereof.

EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.

MERCHANT AGREEMENT means that certain Registration Rights Agreement dated
as of January 11, 1995, as amended, between the Company and Merchant Partners,
L.P.

NOTICE OF DEMAND REQUEST: See Section 3(a) hereof.

PERSON means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

POOLING PERIOD means the period of time beginning on the Closing Date and
ending on the date that the date Company publishes an earnings release meeting
the requirements of APB Opinion No. 16.

PROSPECTUS means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as

A-G-7

<PAGE>

part of an effective Registration Statement in reliance upon Rule 430A), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Shares covered by such
Registration Statement and all other amendments and supplements to the
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

REGISTRABLE SHARES means the shares of Common Stock issued to the
Shareholders pursuant to the Merger Agreement, until in the case of any such
share (i) it has been effectively registered under Section 5 of the Securities
Act and disposed of pursuant to an effective Registration Statement under the
Securities Act or (ii) it has been transferred other than pursuant to Rule
"4(1-1/2)" (or any similar private transfer exemption) under the Securities Act.
Where specified herein, "Registrable Shares" may also refer to the shares of
Common Stock held by any other person.

REGISTRATION DOCUMENTS: See Section 8(a) hereof.

REGISTRATION STATEMENT means any registration statement of the Company that
covers any of the Registrable Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.

REQUESTED REGISTRATION means a registration demanded pursuant to Section 3
for which the Registration Statement relating thereto has been declared
effective by the SEC and for which no stop-order suspending the effectiveness of
such registration statement has been issued by the SEC within the Demand
Effectiveness Period which prevents the Shareholders from completing the
distribution of their Registrable Shares described included in such Registration
Statement.

SEC means the Securities and Exchange Commission.

SECURITIES ACT means the Securities Act of 1933, as amended.

SHELF REGISTRATION: See Section 2(a) hereof.

SHAREHOLDERS: See the introductory clauses hereof.

UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING means a registration in
which securities of the Company are sold to or through one or more underwriters,
on a firm commitment basis, for reoffering or sale to the public.

WEISBACH: See Section 3(a) hereof.

A-G-8

<PAGE>

SECTION 2. REQUIRED SHELF REGISTRATION.

(a) The Company shall file with, and shall cause to be declared
effective by, the SEC prior to times set forth below, a Registration Statement
under the Securities Act relating to the following number of Registrable Shares,
which Registration Statement shall provide for the sale by the holders thereof
of the Registrable Shares included therein from time to time on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act, but need not
provide for an underwritten registration (each, a "Shelf Registration"):

(i) prior to the completion of the Pooling Period, a whole
number of shares of Common Stock equal to (x) the quotient of $11 million
divided by the average per share price of Common Stock for the ten trading
days prior to the Closing Date if the Closing Date occurs on or before
August 31, 1996 or (y) the quotient of $15 million divided by the average
per share price of Common Stock for the ten trading days prior to the
Closing Date if the Closing Date occurs after August 31, 1996 (it being
understood, however, that the Company shall not be required to request
acceleration of the effective date of such Registration Statement until the
completion of the Pooling Period);

(ii) prior to the first anniversary of the Closing Date, a whole
number of shares of Common Stock equal to the product of (x) the number of
shares of Common Stock then held by the Shareholders which were acquired
pursuant to the Merger Agreement multiplied by (y) 50%; and

(iii) prior to the second anniversary of the Closing Date, the
remaining number of shares of Common Stock acquired by the Shareholders
pursuant to the Merger Agreement which have not previously been sold or
otherwise disposed of.

(b) The Company agrees to use its best efforts to keep each
Registration Statement filed pursuant to this Section 2 continuously effective
and usable for the resale of Registrable Shares for a period ending on the
earlier of (i) two years from the date upon which such Registration Statement
was declared effective and (ii) the first date on which all the Registrable
Shares covered by such Shelf Registration have been sold pursuant to such
Registration Statement.

(c) Notwithstanding anything to the contrary contained in this
Agreement, the Company shall not be required to file a Registration Statement or
cause it to be declared effective at a time (x) after completion of a fiscal
year end, but prior to the availability of the year end audited financial
statements, (y) when the Company, in the good faith judgement of its board of
directors shall determine that any offering of Registrable Shares would

A-G-9

<PAGE>

impede, delay or otherwise interfere with any pending or contemplated
acquisition involving the Company or (z) when the Company is in possession of
material information which, in the good faith judgment of the Company's board of
directors, if disclosed in a Registration Statement, would be materially harmful
to the interests of the Company and its shareholders (any such period in clauses
(y) or (z) is referred to as a "Delay Period"). A Delay Period shall commence
on and include the date that the Company gives written notice (such notice
referred to herein as the "Delay Notice") to the Shareholders that it is not
required to file a Registration Statement or cause it to be declared effective
pursuant to the provisions of this Section 2(c) and shall end on the date when
the Shareholders are advised in writing by the Company that the current Delay
Period is over (it being understood that the Company shall give such notice to
all Shareholders promptly upon making the determination that the Delay Period is
over); PROVIDED; HOWEVER, that the Company shall not be entitled to Delay
Periods having durations that exceed 90 days in the aggregate during any
calendar year. Each Shareholder shall cease all disposition efforts with
respect to Registrable Shares held by them immediately upon receipt of a Delay
Notice.

(d) The two year time period for which the Company is required to
maintain the effectiveness of any Registration Statement shall be extended by
the aggregate number of days of all Delay Periods and such two year period or
the extension thereof required by the preceding sentence is hereafter referred
to as the "Effectiveness Period."

(e) The Company may, in its sole discretion, include other securities
in such Shelf Registration (whether for the account of the Company or otherwise,
including without limitation any securities of the Company held by security
holders, if any, who have piggyback registration rights with respect thereto) or
otherwise combine the offering of the Registrable Shares with any offering of
other securities of the Company (whether for the account of the Company or
otherwise).

SECTION 3. REQUESTED REGISTRATION.

(a) If at any time prior to the satisfaction of the Company's
obligations to file and keep effective the Shelf Registrations pursuant to
Section 2(a) hereof, Lou Weisbach ("Weisbach") is no longer the Chairman of the
Board of the Company, Shareholders owning a majority of the Registrable Shares,
shall have the right to require the Company, by written request (the "Demand
Request"), to effect an underwritten registration with respect to the
Registrable Shares owned by such Shareholders and their respective Affiliates.
The Company will give prompt written notice (the "Notice of Demand Request") of
such demand for an underwritten registration to all Shareholders and thereupon
the Company shall, as expeditiously as reasonably practicable, file a

A-G-10

<PAGE>

Registration Statement relating to the registration under the Securities Act of
(i) first, the Registrable Shares which the Company has been so requested to
register by the demanding Shareholders and (ii) second, all other Registrable
Shares as to which Shareholders (other than the demanding Shareholders) shall
have made a written request to the Company for registration thereof within 30
days after the Notice of Demand Request, all to the extent necessary to permit
the sale or other disposition in an underwritten offering by such Shareholders
of the Registrable Shares to be so registered; PROVIDED; HOWEVER, that (i) if
such registration is a Cutback Registration, the Company shall register in such
registration (A) first, the Registrable Shares proposed to be sold by
Shareholders and (B) second, the Registrable Shares proposed to be sold by each
of Weisbach, his relatives and/or trust(s) for the benefit thereof, and Merchant
Partners, L.P. and its partners holding Registrable Shares included in such
Registration Statement pursuant to the Merchant Agreement; and (ii) that the
Company shall not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this Section 4(a) (A) of a
number of Registrable Shares in excess of the number of Registrable Shares for
which the Company is then required to effect Shelf Registrations pursuant to
Section 2(a); (B) within 90 days (or such other date as may be agreed between
the Company, the Shareholders, and the managing underwriter of an underwritten
offering of Registrable Shares) immediately following the effective date of any
Registration Statement pertaining to such an underwritten offering; (C) if the
Shareholders have, within the past 270 days, caused a Requested Registration; or
(D) if the demanding Shareholders have requested the registration of Registrable
Shares in an aggregate price to public of less than $7,500,000.

(b) The Company agrees to keep each Registration Statement filed
pursuant to this Section 3 continuously effective and usable for the resale of
Registrable Shares for a period of up to 90 days or until all Registrable Shares
included in such Registration Statement have completed the distribution
described in the Registration Statement relating thereto, whichever first occurs
(the "Demand Effectiveness Period"), PROVIDED, HOWEVER, that during such 90-day
period the Company may give notice to all such Shareholders that the
Registration Statement or the prospectus included therein is no longer usable
for offers and sales of Registrable Shares, in which case the 90-day period will
be tolled until such time as each such Shareholder and the managing underwriter
of such underwritten offering either receives copies of a supplemented or
amended prospectus or is advised in writing by the Company that use of the
prospectus may be resumed (it being understood that in such case the Company
shall promptly comply with its obligations under Section 6(a)).

A-G-11

<PAGE>

to be registered on Form S-2 or S-3 or any similar short-form registration under
the Securities Act as soon as reasonably practicable after the receipt of the
Demand Request; PROVIDED, HOWEVER, that if the managing underwriter of such
underwritten offering shall advise the Company in writing that, in its opinion,
the use of another form of Registration Statement is of material importance to
the success of such proposed underwritten offering, then such underwritten
registration shall be effected on such other form.

(d) The Shareholders shall be entitled to three Requested
Registrations. Notwithstanding anything contained in this Section 4, if (x) the
SEC has issued a stop-order as a result of actions taken by the demanding
Shareholders or (y) the demanding Shareholders give notice (the "Delaying
Notice"), at any time prior to the time the Registration Statement is declared
effective or prior to the last day of Demand Effectiveness Period, that the
demanding Shareholders desire the Company to either withdraw the Registration
Statement with the SEC, if the Registration Statement has been filed with the
SEC, or postpone filing the Registration Statement, if the Registration
Statement has not been filed with the SEC and the Company is immediately able to
file the Registration Statement, then, in the case of clause (x) herein, the
issuance of the stop-order, or, in the case of clause (y) herein, the Delaying
Notice, shall reduce by one the number of Requested Registrations to which the
Shareholders are entitled.

(e) A underwritten registration requested pursuant to this Section 3
shall not be deemed to have been effected unless the Registration Statement
relating thereto and any post-effective amendment required to commence the
underwritten offering contemplated thereby has been declared effective by the
SEC and maintained continuously effective for the Demand Effectiveness Period.

(f) The demanding Shareholders shall enter into an underwriting
agreement relating to a firm commitment underwriting in a form which is
reasonably satisfactory to the demanding Shareholders with the underwriter or
underwriters selected for such underwriting by the demanding Shareholders and
which are reasonably satisfactory to the Company. The Company shall enter an
underwriting agreement with a managing underwriter or underwriters of an
underwritten offering containing representations, warranties, indemnities and
agreements customarily included (but not inconsistent with the agreements
contained herein) by an issuer of common stock in underwriting agreements with
respect to offerings of common stock for the account of, or on behalf of,
selling shareholders. The Company may include securities for its own account or
the account of any other person in such registration if the managing underwriter
so agrees and if so doing would not make such registration a Cutback
Registration.

A-G-12

<PAGE>

SECTION 4. PIGGYBACK REGISTRATION.

(a) If, at any time prior to the Company's satisfaction of its
obligations to file and keep effective the Shelf Registrations pursuant to
Section 2(a) or a Requested Registration pursuant to Section 3(a) hereof, the
Company proposes to register under the Securities Act any shares of Common Stock
for its account or for the account of any other person (other than a
registration relating solely to employee stock option or employee stock purchase
plans or pursuant to Form S-4 (or successor form) under the Securities Act), the
Company shall:

(i) promptly give to each Shareholder written notice thereof
(which written notice shall include a list of jurisdictions in which the
Company intends to attempt to qualify such securities under or otherwise
comply with the applicable blue sky or other state securities laws); and

(ii) include in such registration (and any related qualification
under or other compliance with blue sky or other state securities laws),
and in any underwriting involved therein, all the Registrable Shares
specified in a written request, made within 15 days from such written
notice from the Company, by any Shareholder; PROVIDED that if such
registration is a Cutback Registration, then (x) if such registration is a
primary registration on behalf of the Company, the Company shall register
in such registration (A) first, the Company securities which the Company
proposes to sell in such registration, (B) second, the Registrable Shares
proposed to be sold by each of Weisbach, his relatives and/or trust(s) for
the benefit thereof, and Merchant Partners, L.P. and it partners holding
Registrable Shares included in such Registration Statement pursuant to the
Merchant Agreement and (C) third, Registrable Shares held by each
Shareholder, on a PRO RATA basis, based upon the number of Registrable
Shares the Shareholders originally sought to include in such registration;
and (y) if such registration is a secondary registration on behalf of a
holder of Company securities, the Company shall register in such
registration (A) first, the Registrable Shares proposed to be sold by the
holder thereof requesting such registration, and (B) second, the
Registrable Shares proposed to be sold by each of Weisbach, his relatives
and/or trust(s) for the benefit thereof, and Merchant Partners, L.P. and it
partners holding Registrable Shares included in such Registration Statement
pursuant to the Merchant Agreement and (C) third, Registrable Shares held
by each Shareholder, on a PRO RATA basis, based upon the number of
Registrable Shares the Shareholders originally sought to include in such
registration.

A-G-13

<PAGE>

(b) If the registration of which the Company gives notice is pursuant
to an effective Registration Statement under the Securities Act, involving an
underwriting, the Company shall so advise the Shareholders as part of the
written notice given pursuant to subclause (a)(i) above. In such event, the
right of any Shareholder to registration pursuant to this Section shall be
conditioned upon the inclusion of the Registrable Shares held by the Shareholder
in the underwriting and the Shareholder entering into an underwriting agreement,
in a form reasonably acceptable to the Company, with the underwriter or
underwriters selected for such underwriting by the Company.

SECTION 5. HOLD-BACK AGREEMENTS.

(a) Each holder of Registrable Shares agrees, if such holder is
reasonably requested by an underwriter in an underwritten offering for the
Company (whether for the account of the Company or otherwise), not to effect any
public sale or distribution of any of the Company's equity securities, including
a sale pursuant to Rule 144 (except as part of such underwritten registration),
during the 10-day period prior to, and during the 90-day period beginning on,
the closing date of such underwritten offering.

(b) Subject to the satisfaction of its obligations under the Merchant
Agreement, the Company agrees, to the extent not inconsistent with applicable
law, and if and to the extent requested by the managing underwriter of an
underwritten registration of Registrable Shares pursuant to Section 3 hereof,
not to effect any public sale or distribution of any of its equity securities or
of any security convertible into or exchangeable or exercisable for any equity
security of the Company (other than any such sale or distribution for such
securities on Form S-4 or in connection with an employee stock option or other
benefit plan) during the 15 days prior to, and for a period of 90 days (or such
longer period as the underwriters of such underwritten offering may reasonably
request) beginning on, the effective date of such Registration Statement (except
as part of such registration).

SECTION 6. REGISTRATION PROCEDURES.

In connection with the registration obligations of the Company pursuant to
and in accordance with Sections 2, 3 and 4 hereof (and subject to the Company's
rights under Sections 2, 3 and 4), the Company will use its best efforts to
effect such registration to permit the sale of such Registrable Shares in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company shall as expeditiously as possible:

(a) prepare and file with the SEC such amendments (including post-
effective amendments) to any Registration Statement, and such supplements to any
Prospectus, as may be required by the rules, regulations or instructions
applicable to

A-G-14

<PAGE>

the Securities Act or the rules and regulations thereunder during the applicable
period in accordance with the intended methods of disposition by the sellers
thereof (other than pursuant to any underwritten registration or underwritten
offering, except in accordance with Section 4) and cause any Prospectus as so
supplemented to be filed pursuant to Rule 424 under the Securities Act;

(b) before filing with the SEC any such Registration Statement or
prospectus or any amendments or supplements thereto, the Company shall furnish
to counsel selected by the holders of a majority of the Registrable Shares
covered by such Registration Statement and counsel for the underwriter, if any,
in connection therewith, drafts of all such documents proposed to be filed and
provide such counsel with a reasonable opportunity for review thereof and
comment thereon, such review to be conducted and such comments to be delivered
with reasonable promptness;

(c) notify the selling holders of Registrable Shares promptly and (if
requested by any such person) confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the SEC
for amendments or supplements to a Registration Statement or related Prospectus
or for additional information regarding such holder, (iii) of the issuance by
the SEC of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose, and (v) of the happening of any event that requires the making
of any changes in such Registration Statement, Prospectus or documents so that
they will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading;

(d) use its best reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the lifting
of any suspension of the qualification or exemption from qualification of any of
the Registrable Shares for sale in any jurisdiction in the United States;

(e) if requested by the selling holders, furnish to counsel for the
selling holders of Registrable Shares, without charge, one conformed copy of
each Registration Statement as declared effective by the SEC and of each post
effective amendment thereto, in each case including financial statements and
schedules and all exhibits and reports incorporated or deemed to be

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<PAGE>

incorporated therein by reference; and such number of copies of the preliminary
prospectus, each amended preliminary prospectus, each final Prospectus and each
post effective amendment or supplement thereto, as the selling holders may
reasonably request in order to facilitate the disposition of the Registrable
Shares covered by each Registration Statement in conformity with the
requirements of the Securities Act;

(f) prior to any public offering of Registrable Shares register or
qualify such Registrable Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions in the United States as any selling holder shall
reasonably request in writing; and do any and all other reasonable acts or
things necessary or advisable to enable such holders to consummate the
disposition in such jurisdictions of such Registrable Shares covered by the
Registration Statement; provided, however, that the Company shall in no event be
required to qualify generally to do business as a foreign corporation or as a
dealer in any jurisdiction where it is not at the time so qualified or to
execute or file a general consent to service of process in any such jurisdiction
where it has not theretofore done so or to take any action that would subject it
to general service of process or taxation in any such jurisdiction where it is
not then subject;

(g) except during any Delay Period, upon the occurrence of any event
contemplated by paragraph 6(b)(ii) or 6(b)(v) above, prepare a supplement or
post-effective amendment to each Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Shares being sold thereunder, such Prospectus will
not contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;

(h) cause all Registrable Shares covered by the Registration
Statement to be listed on each securities exchange and included in the over-the-
counter market, if any, on which similar securities issued by the Company are
then listed or traded;

(i) if requested by the managing underwriter or underwriters of any
registration or by the holders of a majority of the Registrable Shares included
in any Registration Statement, subject to approval of counsel to the Company in
its reasonable judgement, promptly incorporate in a prospectus, supplement or
post-effective amendment to the Registration Statement such information
concerning underwriters and the plan of distribution of the Registrable Shares
as such managing underwriter or underwriters or such holders reasonably shall
furnish to the Company in writing and request be included therein, including,
without limitation, with respect to the number of Registrable Shares being sold
by such

A-G-16

<PAGE>

holders to such underwriter or underwriters, the purchase price being paid
therefor by such underwriter or underwriters and with respect to any other terms
of the underwritten offering of the Registrable Shares to be sold in such
offering; and make all required filings of such prospectus, supplement or post-
effective amendment as soon as reasonably possible after being notified of the
matters to be incorporated in such prospectus, supplement or post-effective
amendment;

(j) make available for inspection by any seller of Registrable
Shares, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other agent retained by
any such seller or underwriter (in each case in a manner which minimizes
disruption of the Company's business), all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors, employees, attorneys and independent accountants
to supply all information in each case reasonably requested by any such sellers,
underwriters, attorneys, accountants or agents in connection with such
Registration Statement, subject to right of the Company to limit access to any
such information (i) to the extent that the Company is restricted from providing
such information pursuant to any bona fide confidentiality agreement to which
the Company or any of its subsidiaries or Affiliates is a party and (ii) the
Company shall have delivered to each seller of the Registrable Shares a
certificate duly executed by the chief executive officer of the Company stating
that such information does not contain any material information that has not
been publicly disclosed and which would be required to be disclosed in, or which
would materially affect any information required to be disclosed in, such
Registration Statement;

(k) use its best efforts to comply with all applicable laws related
to such Registration Statement and offering and sale of securities and all
applicable rules and regulations of governmental authorities in connection
therewith (including, without limitation, the Securities Act and the Exchange
Act, and the rules and regulations promulgated by the SEC) and make generally
available to its security holders as soon as practicable (but in any event not
later than fifteen (15) months after the effectiveness of such Registration
Statement) an earnings statement of the Company and its subsidiaries complying
with Section 11(a) of the Securities Act;

(l) deliver promptly to each Shareholder participating in a
registration copies of all correspondence between the SEC and the Company, its
counsel or auditors and all memoranda relating to discussions with the SEC or
its staff with respect to the Registration Statement;

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<PAGE>

(m) provide a transfer agent and registrar for all such Registrable
Shares covered by such Registration Statement not later than the effective date
of such Registration Statement;

(n) with respect to an underwritten registration only, obtain an
opinion from the Company's counsel and "cold comfort" letters from the Company's
independent public accountants (including one letter when such Registration
Statement goes effective and one at the closing) in customary form and covering
such matters of the type customarily covered by such opinions and "cold comfort"
letters;

(o) make any necessary arrangements with The Depository Trust
Company;

(p) cause unlegended stock certificates for the Registrable Shares to
be prepared and printed;

(q) make any necessary filings with the National Association of
Securities Dealers, Inc., or with respect to an underwritten registration only,
assist the underwriters to make any necessary filings.

The Company may require each seller of Registrable Shares as to which
any registration is being effected to furnish such information regarding the
distribution of such Registrable Shares and as to such seller as it may from
time to time reasonably request. If any such information with respect to any
seller is not furnished prior to the filing of the Registration Statement, the
Company may exclude such seller's Registrable Shares from such Registration
Statement.

Each holder of Registrable Shares agrees by acquisition of such
Registrable Shares that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 6(b)(ii), 6(b)(iii),
6(b)(iv) or 6(b)(v) hereof or upon notice of the commencement of any Delay
Period, such holder shall forthwith discontinue disposition of such Registrable
Shares covered by such Registration Statement or Prospectus until such holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 6(f) hereof, or until it is advised in writing (the "Advice") by the
Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amended or supplemented Prospectus or any additional or
supplemental filings which are incorporated, or deemed to be incorporated, by
reference in such Prospectus and, if requested by the Company, such holder shall
deliver to the Company (at the expense of the Company) all copies, other than
permanent file copies then in such holder's possession, of the Prospectus
covering such Registrable Shares at the time of receipt of such request. Each
holder of Registrable Shares further agrees not to utilize any

A-G-18

<PAGE>

material other than the applicable current Prospectus in connection with the
offering of Registrable Shares pursuant to this Agreement.

SECTION 7. REGISTRATION EXPENSES.

Whether or not any Registration Statement becomes effective, the Company
shall pay all costs, fees and expenses incident to the Company's performance of
or compliance with this Agreement including, without limitation, (i) all
registration and filing fees, (ii) fees and expenses of compliance with
securities or Blue Sky laws, (iii) printing expenses (including, without
limitation, expenses of printing of prospectuses if the printing of prospectuses
is requested by the holders of a majority of the Registrable Shares included in
any Registration Statement), (iv) fees and disbursements of counsel for the
Company, (v) fees and disbursements of all independent certified public
accountants of the Company and all other persons retained by the Company in
connection with the Registration Statement, (vi) to the extent an underwritten
registration is involved in accordance with the terms of this Agreement, to the
extent provided in the underwriting agreement, all fees and expenses of
underwriters in connection therewith (excluding discounts and commissions) and
(vii) the reasonable fees and expenses, not to exceed $1,500, of no more than
one counsel for the holders (as a group) of the Registrable Shares included in
such registration. Notwithstanding the foregoing, any discounts, commissions,
underwriting or advisory fees, brokers' fees or fees of similar securities
industry professional (including any "qualified independent underwriter"
retained for the purpose of Section 3 of Schedule E of the By-laws of the
National Association of Securities Dealers, Inc.) relating to the distribution
of the Registrable Shares will be payable by such holder and the Company will
have no obligation to pay any such amounts.

SECTION 8. INDEMNIFICATION.

(a) In connection with any Registration Statement effected or to be
effected pursuant to this Agreement, the Company shall indemnify each holder of
Registrable Shares included in such Registration Statement and each person who
controls (within the meaning of Section 15 of the Securities Act) such holder of
Registrable Shares from and against all losses, claims, damages, liabilities or
expenses, joint or several, or actions in respect thereof ("Claims") to which
each such indemnified party may become subject, under the Securities Act or
otherwise, insofar as such Claims (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or prospectus or any
preliminary prospectus or summary or final prospectus or any amendment or
supplement thereto or any document filed under a state securities or blue sky
law (collectively, "Registration Documents") or insofar as such Claims arise out
of or are based upon the omission or alleged omission to state in any
Registration Document

A-G-19

<PAGE>

a material fact required to be stated therein or necessary to make the
statements made therein not misleading; PROVIDED that the Company shall not be
liable in any such case to the extent such Claim arises out of or is based upon
an untrue statement or alleged untrue statement of a material fact or omission
or alleged omission of a material fact made in any Registration Document in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such indemnified party specifically for use in the
preparation of such Registration Document.

(b) In connection with any Registration Statement effected or to be
effected pursuant to this Agreement, each holder of Registrable Shares included
in such Registration Statement shall indemnify the Company, its directors,
officers, employees or agents, and each person who controls (within the meaning
of Section 15 of the Securities Act) the Company from and against all Claims to
which each such indemnified party may become subject under the Securities Act or
otherwise, insofar as such Claims (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Document, or insofar as such Claims
arise out of or are based upon the omission or alleged omission to state in any
Registration Document a material fact required to be stated therein or necessary
to make the statements made therein not misleading; PROVIDED, HOWEVER, that such
indemnification or reimbursement shall be payable only if, and to the extent
that, any such Claim arises out of or is based upon an untrue statement or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact made in any Registration Document in reliance upon and in
conformity with written information furnished to the Company by such holder of
Registrable Shares specifically for use in the preparation of such Registration
Document; PROVIDED FURTHER, HOWEVER, that no holder of Registrable Shares shall
be liable under this Section 7(b) for any amounts in excess of the dollar amount
of the gross proceeds to be received by such Holder from the sale of its
Registrable Shares pursuant to such registration.

(c) Any person entitled to indemnification under Section 8(a) or 8(b)
above shall notify promptly the indemnifying party in writing of the
commencement of any Claim if a claim for indemnification in respect thereof is
to be made against an indemnifying party pursuant to this Section 8, but the
omission of such notice shall not relieve the indemnifying party from any
liability which it may have to any indemnified party, except to the extent that
the indemnifying party has been materially prejudiced by such failure to provide
such notice. In case any action is brought against the indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel satisfactory

A-G-20

<PAGE>

to the indemnified party; and, after notice from the indemnifying party to the
indemnified party that it so chooses, the indemnifying party shall not be liable
for any legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof other than reasonable costs of
investigation; PROVIDED, HOWEVER, that (i) if the indemnifying party fails to
take reasonable steps necessary to defend diligently the Claim within twenty
(20) days after receiving notice from the indemnified party that the indemnified
party believes it has failed to do so; or (ii) if the indemnified party who is a
defendant in any action or proceeding which is also brought against the
indemnifying party reasonably shall have concluded that there may be legal
defenses available to the indemnified party which are not available to the
indemnifying party; or (iii) if representation of both parties by the same
counsel is otherwise inappropriate under applicable standards of professional
conduct, the indemnified party shall have the right to assume or continue its
own defense as set forth above (but with no more than one firm of counsel for
all indemnified parties in each jurisdiction, except to the extent any party or
parties reasonably shall have concluded that there may be legal defenses
available to such party or parties which are not available to the other
indemnified parties or to the extent representation of all indemnified parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct) and the indemnifying party shall be liable for any
reasonable expenses therefor; PROVIDED, that no indemnifying party shall be
subject to any liability for any settlement of a Claim made without its consent
(which may not be unreasonably withheld). If the indemnifying party assumes the
defense of any Claim hereunder, such indemnifying party shall not enter into any
settlement without the consent of the indemnified party if such settlement
attributes liability to the indemnified party (which consent may not be
unreasonably withheld).

(d) If for any reason the foregoing indemnity is unavailable, or is
insufficient to hold harmless, an indemnified party, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of any Claim in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and the indemnified party as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among-other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this Section 8(d) were determined by PRO RATA allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this Section.

A-G-21

<PAGE>

SECTION 9. MISCELLANEOUS.

9.1 TERMINATION. This Agreement and the obligations of the Company
hereunder shall terminate on the earliest of (i) the first date on which no
Registrable Shares remain outstanding, and (ii) the close of business on the
last day of the last Effectiveness Period.

9.2 RULE 144. The Company hereby covenants that the Company will file in
a timely manner all reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the SEC thereunder
(or, if the Company is not required to file such reports, it will, upon the
request of any holder of Registrable Shares, make publicly available other
information so long as necessary to permit sales under Rule 144 under the
Securities Act), and it will take such further action as any holder of
Registrable Shares may reasonably request, all to the extent required from time
to time to enable such holder to sell Registrable Shares without registration
under the Securities Act within the limitation of the exemptions provided by (i)
Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (ii) any similar rule or regulation hereafter adopted by the SEC.

9.3 AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of holders
representing a majority of the Registrable Shares. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter which relates exclusively to the rights of holders of Registrable
Shares whose securities are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect the rights of a holder whose
securities are not being sold pursuant to such Registration Statement may be
given by holders of a majority of the Registrable Shares being sold by such
holders; provided, however, that the provision of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of
the immediately preceding sentence.

9.4 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed given:
when delivered personally; one Business Day after being deposited with a next-
day air courier; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back if telexed and when receipt is
acknowledged, if telecopied, in each case to the parties at the address
specified for such party in the Merger Agreement (or at such other address for a
party as shall be specified by like notice: provided that notices of a change of
address shall be effective only upon receipt thereof).

A-G-22

<PAGE>

9.5 SUCCESSORS AND ASSIGNS. This Agreement, other than the provisions of
Section 3, shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties.

9.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

9.7 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

9.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING
EFFECT TO THE PROVISIONS THEREOF GOVERNING CONFLICT OF LAWS PRINCIPLES.

9.9 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

9.10 ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect to
the registration rights granted by the Company with respect to the Registrable
Shares issued pursuant to the Merger Agreement. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.

9.11 CALCULATION OF TIME PERIODS. Except as otherwise indicated, all
periods of time referred to herein shall include all Saturdays, Sundays and
holidays; provided, that if the date to perform the act or give any notice with
respect to this Agreement shall fall on a day other than a Business Day, such
act or notice may be timely performed or given if performed or given on the next
succeeding Business Day.

A-G-23

<PAGE>

9.12 EXISTING REGISTRATION RIGHTS; NO INCONSISTENT AGREEMENTS. The Company
represents and warrants that there are not existing agreements with respect to
its securities which are inconsistent with the rights granted to the holders of
Registrable Shares in this Agreement or otherwise conflict with the provisions
hereof and agrees that it will not enter into any agreements which are
inconsistent with or limit or impair the rights granted to the holders of
Registrable Shares prior to the termination of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

THE COMPANY:

HA-LO INDUSTRIES, INC., an Illinois corporation

By:________________________________
Name:
Title:

SHAREHOLDER:

___________________________________
Name:

Number of Shares:

A-G-24

<PAGE>

EXHIBIT H

EMPLOYMENT AGREEMENT
--------------------

This Agreement dated as of June 14, 1996 by and between HA-LO
INDUSTRIES, INC., an Illinois corporation (hereinafter the "Company"), and
Timothy Casey, (hereinafter referred to as the "Executive").

WHEREAS, the Company and the Executive desire to enter into this Agreement,
whereby the Company will be assured of the right to the Executive's services for
the period and on the terms hereinafter set forth, and the Executive will be
assured of employment on such terms and conditions.

1. EMPLOYMENT. Subject to the terms hereinafter set forth, the Company
hereby employs the Executive as Vice President - Client Services, of
Market USA/MARUSA/MARUSA and the Executive hereby accepts such
employment. The Executive shall devote all of his business time and
efforts to the business of the Company and, the Executive will not
engage in the active operation of any other business without the
Company's written permission, which shall not be unreasonably
withheld.

The Executive shall have the following responsibilities: Manage
Account Managers (every active account has an assigned manager); acts
as account manager for developing accounts; manages licensing and
report departments; Member of the Executive Committee; or in such
other capacities as the President of the Company may, from time to
time, designate.

TERM. Subject to the provisions of Section 4 of this Agreement, the term of
the employment pursuant to this Agreement (the "Term") shall be for a
period of three (3) years, commencing on the Effective Date of the
Plan of Merger between the Company and Market USA/MARUSA/MARUSA
(Closing Date). If the Merger is not consummated on or before January
1, 1997, the Company may terminate this Agreement without recourse.

COMPENSATION. In consideration of the services to be rendered by the
Executive the Company agrees to pay the following:

a. A base salary of $80,000 (eighty thousand dollars) per annum,
payable during the Term in accordance with the normal payroll
practices of the Company. Such base salary shall be reviewed
annually.

b. Upon execution of this agreement, the Executive shall receive as
a signing bonus options ("Options") to purchase 15,000 (fifteen
thousand) shares of the Company's common stock. The Options shall
be issued pursuant to the HA-LO Industries, Inc. Stock Plan and
shall be exercisable at a purchase price equal to the Fair Market
Value at the date of grant (as defined in the Stock Plan). The
Options shall vest and be exercisable 25% on the Closing Date and
25% at the end of each of the next three (3) twelve (12) month
periods. If the Merger is not consummated, the Options will be
terminated immediately.

c. An annual bonus as indicated on Schedule 1.

4. TERMINATION. The Term of this Agreement and the Executive's employment
hereunder shall terminate early upon the first to occur of the
following events: (1) the mutual agreement of the Company and the
Executive to so terminate this Agreement, (2) the death or disability
(as hereinafter defined) of the Executive, or (3) the Company's
election to terminate this Agreement and the Executive's employment
hereunder "For Cause" (as hereinafter defined). The term "Disability"
shall mean any mental, physical or emotional disability or condition
which lasts for one hundred twenty days (120) days or more, and which
prevents the Executive from performing substantially all of his duties
hereunder. Disability shall be determined by a physician selected by
the Company with reasonable approval of Executive, which approval
shall not be unreasonably withheld.

Upon the termination of the Term, for any reason, the Executive's
rights to receive compensation

A-H(1)-1

<PAGE>

(including, but not limited to, base salary, bonus or fringe benefits)
shall immediately terminate; notwithstanding the foregoing, in the
event the Term terminates by reason of the death or disability of the
Executive, the Executive's (or Executive's estate or personal
representative) right to receive bonuses pursuant to Section 1 hereof
shall continue for a period of six (6) months following the
termination of the Term.

The term "For Cause" shall mean any of the following: A) the
commission by the Executive of a breach of any material covenant,
provision, term or condition set forth in this Agreement, following
fifteen (15) days prior notice by Company (with Executive's ability to
cure during such period); or B) the commission by the Executive of a
felony; or C) the commission by the Executive of an act of personal
dishonesty or fraud involving personal profit, including, without
limitation, theft, embezzlement, fraud or other misappropriation of
funds.

5. CONFIDENTIALITY. Executive acknowledges that by virtue of his
employment with Company or its predecessors, he has been and/or will
be exposed to or has had or will have access to trade secrets as
defined in the "Illinois Trade Secrets Act" regarding Company's
business. Executive agrees that during the term of his employment and
thereafter, Executive shall hold and keep secret as defined in the
"Illinois Trade Secrets Act", except in connection with the business
and affairs of Company. Nothing in this paragraph shall prevent
Executive from using information which becomes public through no fault
of the parties.

6. NON-DISTURBANCE OF EMPLOYEES AND CUSTOMERS; NON-DISPARAGEMENT. The
Executive covenants that during the Term and for a period of two (2)
years after the termination thereof, the Executive shall not, directly
or indirectly solicit any employee, agent , customer or sales
representative of the company for the sale of telemarketing services.
The Executive covenants for a period of two (2) years after the
termination thereof, the Executive shall not, directly or indirectly
make, whether in writing or orally, disparaging statements or
inferences with respect to the Company, its respective business,
officers or shareholders.

7. GENERAL PROVISIONS. Each of the provisions of this Agreement is to be
deemed severable in whole or in part, if any provision should be
invalid or unenforceable, the remaining provisions other than those
was to which it is held invalid or unenforceable, shall not be
affected thereby and shall remain in full force and effect. in the
event that any of the provisions in this Agreement are held to be an
unreasonable restriction upon or are otherwise invalid, then the court
so holding shall effect any change to the extent necessary to render
any of the restrictions of this Agreement enforceable. The Company
may assign this Agreement to any successor in interest to the
business, or part thereof, of the Company. Subject to the provisions
hereof, the obligations contained in this Agreement shall survive the
termination, for any reason whatsoever, for cause or otherwise, of the
Executive's employment with the Company.

WHEREFORE, the parties have executed this Agreement on the date and year
first above written.

HA-LO INDUSTRIES, INC. EXECUTIVE:

By: /s/ Lou Weisbach /s/ Timothy Casey
--------------------- ----------------------
Timothy Casey
Its: Chief Executive Officer
-------------------------

A-H(1)-2

<PAGE>

SCHEDULE 1
----------

With regard to calendar year 1996, Executive shall receive a bonus equal to
$40,000 in the event the Company's earnings (before income taxes but net of
all employee bonuses) , equals or exceeds $6,000,000. If such earnings
equal or exceed $6,500,000, the Company shall grant to Executive pursuant
to the Stock Plan) 2,500 options; if earnings equal or exceed $7,000,000,
the Company shall grant to Executive (pursuant to the Stock Plan) an
additional 2,500 options.

With regard to calendar years 1997 and 1998, the Executive shall earn bonus
based upon the attainment of targeted budget projections.

Bonus shall be payable only if the Executive is employed with the Company
on the last day of the applicable calendar year. Bonus shall be payable
after forty five (45) days following the end of prior calendar year; option
shall be granted with a date of grant of February 15 of the year following
the applicable calendar year.

A-H(1)-3

<PAGE>

EMPLOYMENT AGREEMENT
--------------------

This Agreement dated as of June 14, 1996 by and between HA-LO
INDUSTRIES, INC., an Illinois corporation (hereinafter the "Company"), and
Patricia Richert, (hereinafter referred to as the "Executive").

1. EMPLOYMENT. Subject to the terms hereinafter set forth, the Company
hereby employs the Executive as Vice President - Operations, of Market
USA/MARUSA and the Executive hereby accepts such employment. The
Executive shall devote all of his business time and efforts to the
business of the Company and, the Executive will not engage in the
active operation of any other business without the Company's written
permission, which shall not be unreasonably withheld.

The Executive shall have the following responsibilities: Directs the
operations of Call Centers; Human Resources Department; Quality
Assurance and Training Departments; Member of Executive Committee; or
in such other capacities as the President of the Company may, from
time to time, designate.

TERM. Subject to the provisions of Section 4 of this Agreement, the term of
the employment pursuant to this Agreement (the "Term") shall be for a
period of three (3) years, commencing on the Effective Date of the
Plan of Merger between the Company and Market USA/MARUSA (Closing
Date). If the Merger is not consummated on or before January 1, 1997,
the Company may terminate this Agreement without recourse.

COMPENSATION. In consideration of the services to be rendered by the
Executive the Company agrees to pay the following:

a. A base salary of $100,000 (one hundred thousand dollars) per
annum, payable during the Term in accordance with the normal
payroll practices of the Company. Such base salary shall be
reviewed annually.

c. An annual bonus as indicated on Schedule 1.

Upon the termination of the Term, for any reason, the Executive's
rights to receive compensation

A-H(2)-1

<PAGE>

6. NON-DISTURBANCE OF EMPLOYEES AND CUSTOMERS; NON-DISPARAGEMENT. The
Executive covenants that during the Term and for a period of two (2)
years after the termination thereof, the Executive shall not, directly
or indirectly solicit any employee, agent , customer or sales
representative of the company for the sale of telemarketing services.
The Executive covenants that for a period of two (2) years after the
termination thereof, the Executive shall not, directly or indirectly
make, whether in writing or orally, disparaging statements or
inferences with respect to the Company, its respective business,
officers or shareholders.

WHEREFORE, the parties have executed this Agreement on the date and year
first above written.

HA-LO INDUSTRIES, INC. EXECUTIVE:

By: /s/ Lou Weisbach /s/ Patricia Richert
--------------------- ----------------------
Patricia Richert
Its: Chief Executive Officer
-------------------------

SCHEDULE 1
----------

A-H(2)-2

<PAGE>

With regard to calendar year 1996, Executive shall receive a bonus equal to
$100,000 in the event the Company's earnings (before income taxes but net
of all employee bonuses), equals or exceeds $6,000,000. If such earnings
equal or exceed $6,500,000, the Company shall grant to Executive pursuant
to the Stock Plan) 2,500 options; if earnings equal or exceed $7,000,000,
the Company shall grant to Executive (pursuant to the Stock Plan) an
additional 2,500 options.

Notwithstanding paragraph 3(a) of the Employment Agreement, with regard to
calendar year 1997, the Executive shall receive a base salary of $120,000,
and shall also receive a minimum bonus of $30,000. Executive shall receive,
in addition, a bonus equal to not less than $70,000 based on the attainment
of targeted projections (before income taxes and net of all employee
bonuses). With regard to calendar year 1998, Executive shall receive a base
salary of $145,000, and shall also receive a minimum bonus of $5,000.
Executive shall receive, in addition, a bonus equal to not less than
$95,000 based on the attainment of targeted projections (before income
taxes and net of all employee bonuses).

In no event shall the Executive's goals exceed the targeted projections for
any other employee of the Company.

Bonus shall not be payable if the Executive voluntarily departs from her
employment before the last day of the applicable calendar year. Bonus
shall be payable after forty five (45) days following the end of prior
calendar year; option shall be granted with a date of grant of February 15
of the year following the applicable calendar year.

A-H(2)-3

<PAGE>

EMPLOYMENT AGREEMENT
--------------------

This Agreement dated as of June 14, 1996 by and between HA-LO
INDUSTRIES, INC., an Illinois corporation (hereinafter the "Company"), and
Barton Zeller, (hereinafter referred to as the "Executive").

1. EMPLOYMENT. Subject to the terms hereinafter set forth, the Company
hereby employs the Executive as Vice President - Sales and Marketing,
of Market USA/MARUSA and the Executive hereby accepts such employment.
The Executive shall devote all of his business time and efforts to the
business of the Company and, the Executive will not engage in the
active operation of any other business without the Company's written
permission, which shall not be unreasonably withheld.

The Executive shall have the following responsibilities: Develops and
serves clients; conduct consulting activities; direct Canadian
Salesmen; serve as a Member of Executive Committee; or in such other
capacities as the President of the Company may, from time to time,
designate.

TERM. Subject to the provisions of Section 4 of this Agreement, the term of
the employment pursuant to this Agreement (the "Term") shall be for a
period of three (3) years, commencing on the Effective Date of the
Plan of Merger between the Company and Market USA/MARUSA (Closing
Date). If the Merger is not consummated on or before January 1, 1997,
the Company may terminate this Agreement without recourse.

COMPENSATION. In consideration of the services to be rendered by the
Executive the Company agrees to pay the following:

a. A draw of $11,000 (eleven thousand dollars) per month, payable
during the Term in accordance with the normal payroll practices
of the Company. Such draw shall be reviewed annually.

b. Upon execution of this agreement, the Executive shall receive as
a signing bonus options ("Options") to purchase 37,500 (thirty
seven thousand-five hundred) shares of the Company's common
stock. The Options shall be issued pursuant to the HA-LO
Industries, Inc. Stock Plan and shall be exercisable at a
purchase price equal to the Fair Market Value at the date of
grant (as defined in the Stock Plan). The Options shall vest and
be exercisable 25% on the Closing Date and 25% at the end of each
of the next three (3) twelve (12) month periods. If the Merger
is not consummated, the Options will be terminated immediately.

c. Commissions as indicated on Schedule 1.

Upon the termination of the Term, for any reason, the Executive's
rights to receive compensation

A-H(3)-1

<PAGE>

(including, but not limited to, commission or fringe benefits) shall
immediately terminate; notwithstanding the foregoing, in the event the
Term terminates by reason of the death or disability of the Executive,
the Executive's (or Executive's estate or personal representative)
right to receive commissions pursuant to Section 1 hereof shall
continue for a period of six (6) months following the termination of
the Term.

WHEREFORE, the parties have executed this Agreement on the date and year
first above written.

HA-LO INDUSTRIES, INC. EXECUTIVE:

By: /s/ Lou Weisbach /s/ Barton Zeller
--------------------- ----------------------
Barton Zeller
Its: Chief Executive Officer
-------------------------

A-H(3)-2

<PAGE>

COMMISSION STRUCTURE FOR NEW BUSINESS
-------------------------------------

Billing Rate % Commission Commission
$25 1.0% .25
$26 1.15% .30
$27 1.29% .35
$28 1.48% .40
$29 1.72% .50
$30 2.5% .75
$31 4.0% 1.25
$32 5.46% 1.75

The following accounts (existing prior) will remain under a schedule which pays
60% of excess of $28.00 per hour:

Liberty Lite
Chartered benefits Services, Inc.
Union Fidelity Insurance Company
Advanta
MBNA - Credit (Card Acquisition)
Furniture Max
Air Liquide

Note: Commission Schedules may be revised by mutual agreement between the
parties.

A-H(3)-3

<PAGE>

EXHIBIT I

AGREEMENT AND COVENENT AGAINST UNFAIR COMPETITION
-------------------------------------------------

This Agreement and Covenant Against Unfair Competition Agreement
("Agreement") made this ___ day of ____________, 1996, by and among HA-LO
INDUSTRIES, INC., an Illinois corporation ("HA-LO"), MARKET USA, INC., an
Illinois corporation ("Market"), MARUSA MARKETING INC., a Canadian federal
corporation ("MUSA") ("MUSA and Market are hereafter sometimes collectively
the "Target Companies" and each is a "Target Company", and HA-LO and the
Target Companies are hereafter collectively the "Protected Parties"), and
________ OKNER, a resident of Illinois ("Shareholder").

WITNESSETH:

WHEREAS, HA-LO is engaged in the business of creating, developing,
marketing and distributing specialty advertising, promotion and premium
products;

WHEREAS, Shareholder is a shareholder of Market and/or MUSA, each of which
is engaged in the business of telemarketing (the "Business");

WHEREAS, HA-LO, certain subsidiaries of HA-LO, the Target Companies, Marusa
Financial Services, Ltd., Nerok Verifications, Inc., Shareholder and the other
shareholders of the Target Companies have entered into an Agreement of Merger
and Amalgamation dated as of June 14, 1996 (the "Merger Agreement"), pursuant to
which Shareholder will receive shares of HA-LO voting common stock in exchange
for his shares of either or both of the Target Companies;

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WHEREAS, Shareholder possesses specialized knowledge and skill pertaining
to the Business;

WHEREAS, in consideration of the consummation by HA-LO of the transactions
contemplated under the Merger Agreement, including the issuance of 2,549,900
shares of HA-LO's common voting stock to the former shareholders of the Target
Companies, and other good and valuable consideration, Shareholder agrees to
execute and be bound by this Agreement.

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

1. RECITALS. Each of the above recitals is incorporated in this
Agreement and shall be binding upon the parties hereof. Reference is hereby
made to the Merger Agreement. This Agreement is the "Agreement and Covenant
Against Unfair Competition" referred to in Section 7.02(e) of the Merger
Agreement. Unless otherwise provided in this Agreement, all capitalized terms
herein shall have the meanings ascribed to them in the Merger Agreement.

2. NON-COMPETITION COVENANTS. Shareholder covenants that during the
Restricted Period (hereafter defined), for any reason whatsoever, Shareholder
shall not, directly or indirectly, in the continental United States, or in any
province or other political jurisdiction within Canada, for his own account, or
as an employee, consultant, agent, partner, joint venturer, owner or officer of
any other person, firm, partnership, corporation or other entity, or in

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any other capacity, in any way conduct or engage (i) in a telemarketing business
which competes with the Business as engaged in by the Target Companies as of
the date hereof, or (ii) in which Shareholder, directly or indirectly, uses or
discloses Proprietary Information (as herein defined). For purposes of this
Agreement, (i) the term "Restricted Period" shall mean the period beginning on
the date hereof and ending on the fifth anniversary of the date hereof, (ii)
the term "Proprietary Information" shall mean information regarding either of
the Target Companies which is of a confidential, private or sensitive nature
(including, without limitation, results of operations and other financial data,
technological advancements, telephone and computer hardware and their
configurations, computer software programs and their applications, accounting
methodologies, tax data, business strategies and goals, financial projections
and objectives, advertising campaigns and strategies, graphic designs and other
materials, telemarketing programs and techniques, telephone calling lists,
hiring and screening techniques, training and quality assurance programs,
telephone supervisory methods and know-how, use and utilization of tradenames,
trademarks, patents, industrial designs, copyrights and other registrable
properties, pricing systems, product and service costs, product and service
designs, product and service margins, customer lists and records, customer
information, purchaser lists and records, purchaser information, mark-ups and
margins, marketing techniques, marketing scripts, systems and networks of
distribution, supplier and vendor

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information, product content, Inventions (as hereafter defined) and, generally,
such other confidential information, trade secrets and proprietary information)
which give, or may give, any of the Protected Parties an advantage in the
marketplace against competitors, and (iii) the term "Inventions" shall mean all
ideas, inventions, discoveries or improvements which Shareholder, individually
or with others, shall have originated or developed while heretofore employed at
any time with either of the Target Companies, relating to the business or
products of either of the Target Companies or their actual or demonstrably
anticipated research or development, or which result from any work performed by
Shareholder for either of the Target Companies. Notwithstanding the foregoing,
the term "Proprietary Information" shall not include information which (w) has
been publicly disclosed by any of the Protected Parties, (x) is independently
developed by a party other than the Protected Parties or Shareholder other than
on the Target Companies' behalf, (y) is generally known without breach of an
agreement with one of the Target Companies within the industries or lines of
business engaged in by the Target Companies, or (z) constitutes Shareholder's
general business knowledge.

3. NON-SOLICITATION. Shareholder hereby covenants and agrees that during
the Restricted Period, for any reason whatsoever, he shall not, directly or
indirectly, for his own account, or as an employee, consultant, agent, partner,
joint venturer, owner or officer of any other person, firm, partnership,
corporation or

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<PAGE>

other entity, or in any other capacity, in any way call upon or solicit, any
person or entity which then is, or at any time prior to the date hereof was, a
customer or Prospective Customer of either of the Target Companies to render
telemarketing services which competes with the Business. For purposes of this
Agreement, the term "Prospective Customer" shall mean any person, firm,
partnership, corporation or other entity to which either of the Target Companies
has made a written presentation or proposal, or presented written materials at a
meeting, within the six (6) month period immediately prior to the date hereof.

4. REMEDIES.

(a) Shareholder further acknowledges that he will be able to earn a
livelihood without violating the foregoing restrictions and that his ability to
earn a livelihood without violating such restrictions is a material condition to
HA-LO's purchase of the Business.

(b) Shareholder acknowledges that compliance with the restrictive
covenants set forth in Paragraphs 2 and 3 herein are necessary to protect the
business, goodwill and Proprietary Information of the Protected Parties and that
a breach of these restrictions will irreparably and continually damage the
Protected Parties for which money damages may not be adequate. Consequently,
Shareholder agrees that, in the event that he breaches or threatens to breach
any of these covenants, the Protected Parties shall be entitled to both (1) a
temporary, preliminary or permanent injunction in order to prevent the
continuation of such harm, and

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<PAGE>

(2) money damages insofar as they can be determined. Nothing in this Agreement,
however, shall be construed to prohibit HA-LO from also pursuing any other
remedy, the parties having agreed that all remedies are to be cumulative. The
parties expressly agree that the HA-LO may, in its sole discretion, choose to
enforce the restrictive covenants in Paragraphs 2 and 3 hereof, in part, or to
enforce any of said restrictive covenants to a lesser extent than that set forth
herein.

5. SCOPE. The covenants contained in this Agreement shall be construed
to extend to each Province of Canada, and to each State of the United States of
America. To the extent that any such covenant shall be illegal and/or
unenforceable with respect to any one of said Provinces or States, said
covenants shall not be affected thereby with respect to each other Province and
State, such covenants with respect to each such State being construed as
severable and independent.

6. TOLLING. In the event of a final court adjudication that Shareholder
has violated any legally enforceable provision of this Agreement as to which
there is a specific time period during which Shareholder is prohibited from
taking certain actions or from engaging in certain activities, as set forth in
this Agreement, then, in such event, such violation shall toll the running of
such time period from the date of such violation until such violation shall
cease, if and to the extent the court so determines.

7. REVISION. In the event that any of the provisions, covenants,
warranties or agreements in this Agreement are held to

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<PAGE>

be in any respect an unreasonable restriction upon or are otherwise invalid, for
whatsoever cause, then the court so holding shall reduce and is so authorized to
reduce, the territory to which it pertains and/or the period of time in which it
operates, or the scope of activity to which it pertains or effect any other
change to the extent necessary to render any of the restrictions of this
Agreement enforceable.

8. SEVERABILITY. Each of the terms and provisions of this Agreement is
to be deemed severable in whole or in part and, if any term or provision of the
application thereof in any circumstances should be invalid, illegal or
unenforceable, the remaining terms and provisions or the application thereof to
circumstances other than those as to which it is held invalid, illegal or
unenforceable, shall not be affected thereby and shall remain in full force and
effect.

9. BINDING AGREEMENT. This Agreement shall be binding upon the parties,
their heirs, successors, personal representatives and assigns. HA-LO may assign
this Agreement to any successor in interest to the business, or part thereof, of
HA-LO. Shareholder may not assign any of his obligations or duties hereunder.

10. CONTROLLING LAW AND JURISDICTION. This Agreement shall be governed by
and interpreted and construed according to the laws of the State of Illinois.
Shareholder hereby consents to the jurisdiction of the state and federal courts
in Illinois in the event that any disputes arise under this Agreement.

11. VENUE. THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONAL

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<PAGE>

LY CONSENT TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
ILLINOIS AND OF THE UNITED STATES OF AMERICA LOCATED IN THE CITY OF CHICAGO,
ILLINOIS, FOR ANY ACTIONS, SUITS OR PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS CONFIDENTIALITY AGREEMENT AND FURTHER AGREE THAT SERVICE OF ANY PROCESS,
SUMMONS, NOTICE OR DOCUMENT BY U.S. CERTIFIED OR REGISTERED MAIL TO THEIR
RESPECTIVE ADDRESSES SET FORTH IN PARAGRAPH 15 SHALL BE EFFECTIVE SERVICE OF
PROCESS FOR ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST THEM IN ANY SUCH
COURT. THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION
TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS
ESCROW AGREEMENT IN THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
OF AMERICA LOCATED IN THE CITY OF CHICAGO, ILLINOIS, AND HEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

12. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties with regard to the subject matter hereof, may not be changed orally,
but only by an agreement in writing signed by the parties hereto.

13. FAILURE TO ENFORCE. The failure to enforce any of the provisions of
this Agreement shall not be construed as a waiver of such provisions. Further,
any express waiver by any party with respect to any breach of any provision
hereunder by any other party shall not constitute a waiver of such party's right
to thereafter

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<PAGE>

fully enforce each and every provision of the Agreement.

14. HEADINGS. All numbers and heading of paragraphs are for reference
only and are not intended to qualify, limit or otherwise affect the meaning or
interpretation of any paragraph.

15. NOTICES. All notices which are required, permitted or contemplated
hereunder to be given or made shall be given or made in writing by certified
mail (return receipt requested) to HA-LO at 5980 West Touhy Avenue, Niles,
Illinois 60714, Attention: President, and to the Shareholder at
________________________.

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<PAGE>

WHEREFORE, the parties have executed this Agreement on the date and year
first above written.

HA-LO: Shareholder:

By: HA-LO INDUSTRIES, INC.

By:
---------------------------- ------------------------------

Its:
----------------------

MARKET: MUSA:

By: MARKET USA, INC. By: MARUSA MARKETING, INC.

By:___________________________ By:________________________

Its: ____________________ Its:__________________

A-I-10

<PAGE>

EXHIBIT J

GENERAL RELEASE OF CLAIMS

The undersigned, ___________________, a resident of the County of Cook,
State of Illinois ("Releasor"), for and in consideration of the closing of the
transactions under that certain Agreement and Plan of Merger and Amalgamation
dated as of June 14, 1996, among HA-LO Industries, Inc., HA-LO Acquisition
Corporation, Inc., HA-LO Acquisition Corporation of Canada Ltd., Market USA,
Inc., Marusa Marketing Inc., Marusa Financial Services Ltd., Nerok Verifications
Inc., and the current and future Stockholders of Market USA, Inc. and Marusa
Marketing Inc., (the "Master Agreement"), and the terms and provisions thereof,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, hereby remises, releases and forever discharges, and by
these presents does for his representatives, agents, affiliates, partners,
shareholders, officers, directors, trustees, employees, successors, assigns,
beneficiaries, heirs, legatees, executors and administrators (Releasor and such
persons are collectively, the "Releasing Parties") remise, release and forever
discharge, MARKET USA, INC., an Illinois (U.S.) corporation (the "U.S.
Company"), and MARUSA MARKETING INC., a Canadian federal corporation (the
"Canada Company"), and the respective agents, directors, representatives,
affiliates, partners, shareholders, officers, trustees, employees, successors
and assigns of the U.S. Company and the Canada Company (collectively, the
"Released Parties"), of and from any and all manner of actions, proceedings,
causes of action, suits, debts,

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<PAGE>

sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
controversies, contracts, leases, agreements, promises, variances, trespasses,
damages, judgments, executions, claims and demands, of any nature whatsoever,
and of every kind and description, choate and inchoate, at law or in equity
(collectively, the "Claims"), which the Releasing Parties, or any of them, now
have or ever had, or hereafter can, shall or may have, for, upon or by reason of
any matter, cause or thing whatsoever, against the Released Parties, and each of
them, from the beginning of time to the date hereof; with the exception that
this General Release SHALL NOT apply to (i) any claims that may arise from any
breach by the Released Parties of, or the failure to properly perform any
obligation or duty arising on the part of the Released Parties under, the Master
Agreement (including the Exhibits thereto), (ii) claims (if any) against the
U.S. Company for the remaining installment of base salary for services rendered
by Releasor from the date of the last such installment through the date of this
General Release, (iii) claims (if any) against the U.S. Company for accrued
unpaid fringe benefits calculated through the date of this General Release and
payable to or on Releasor's behalf in accordance with the customary fringe
benefit policies of the U.S. Company (but excluding for this purpose, any
severance, vacation days or sick days payable in installments or a lump sum by
reason of law or contract and proximately resulting from the transactions
contemplated under the Master Agreement), and (iv) claims (if any) for
reimbursement of out-of-pocket business

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expenses advanced by Releasor on behalf of the U.S. Company in the normal course
and reimburseable in accordance with the usual and customary expense
reimbursement policies of the U.S. Company. Any reserved claims under clauses
(ii) through (iv) shall, if legally permissible, be subject to set-off by the
U.S. Company against amounts payable by Releasor to the U.S. Company in
accordance with Section 7.02(n) of the Master Agreement.

Releasor represents and warrants that there has been, and there will be, no
assignment or other transfer of any right or interest in any Claims which he may
have against the Released Parties, and Releasor hereby agrees to indemnify and
hold each Released Party harmless from any Claims, costs, expenses and
attorney's fees directly or indirectly incurred by any of the Released Parties
as a result of any person asserting any right or interest pursuant to his
assignment or transfer of any such Claims. It is the intention of Releasor that
this indemnity does not require payment as a condition precedent to recovery by
any of the Released Parties against Releasor.

Releasor agrees that if he hereafter commences, joins in, or in any manner
seeks release through any suit arising out of, based upon, or relating to any of
the Claims released hereunder, or in any manner asserts against any Released
Party any of the Claims released hereunder, then Releasor will pay to such
Released Party, in addition to any other damages, direct or indirect, all
attorney's fees incurred in defending or otherwise responding to such suit or
Claims.

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<PAGE>

Releasor acknowledges that (i) he has received the advice of legal counsel
in connection with this General Release, (ii) he has read and understands that
this is a General Release, and (iii) he intends to be legally bound by the same.

IN WITNESS WHEREOF, Releasor has executed and delivered this General
Release of Claims as of the day and year set forth below.

Dated: August , 1996
---

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

STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )

I, __________________________, a Notary Public in and for said State and
County, do hereby certify that _____________________ who is personally known to
me as the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person and acknowledged that he signed and
delivered the said instrument as his own free and voluntary act, for the uses
and purposes therein set forth. Given under my hand and notarial seal this
_____ day of August, 1996.

______________________________
Notary Public

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<PAGE>

EXHIBIT K

OPINIONS TO BE RENDERED AT THE EFFECTIVE TIME
---------------------------------------------
BY COUNSEL TO THE TARGET COMPANIES
----------------------------------

1. Those matters set forth in the first sentence of Section 3.01 of the
Agreement.

2. Those matters set forth in the second sentence of Section 3.01 of the
Agreement (knowledge only).

3. Those matters set forth in Section 3.03, subsections (a) through (d),
inclusive, of the Agreement.

4. Those matters set forth in Section 3.03, subsections (f) (first two
sentences only), and the first sentence of each of (g) and (h) of the Agreement
(knowledge only).

5. Those matters set forth in the first sentence of Section 3.03(i) of
the Agreement (knowledge only as to beneficial ownership).

6. Those matters set forth in the penultimate sentence of Section 3.03
(f) of the Agreement (knowledge only).

7. Those matters set forth in Section 3.04 of the Agreement.

8. Those matters set forth in Section 3.05, subsections (a) and (b), of
the Agreement (knowledge only as to those matters other clause (i) of each
subsection).

9. No knowledge of any litigation matters not disclosed in Sections
3.09(a) and (b) of the Target Companies' Disclosure Schedule.

10. Those matters set forth in Section 3.18 of the Agreement.

11. Opinions customarily rendered by counsel for target companies in tax
free reorganization transactions.

A-K-1

<PAGE>

EXHIBIT L

OPINIONS TO BE RENDERED AT THE EFFECTIVE TIME
---------------------------------------------
BY COUNSEL TO ACQUIROR
----------------------

1. Those matters set forth in the first sentence of Section 4.01 of the
Agreement.

2. Those matters set forth in Sections 4.03, subsections (a), (b) and
(c), inclusive, of the Agreement (knowledge qualifications as appropriate).

3. Those matters set forth in Sections 4.04, subsections (a), (b) and
(c), inclusive of the Agreement (knowledge qualifications as appropriate).

4. Those matters set forth in Section 4.05 of the Agreement. In
addition, the shareholders of Acquiror have adopted the Agreement.

5. Those matters set forth in Section 4.06 (a) of the Agreement
(knowledge only as to those matters other clause (i) of said subsection).

6. No knowledge of any litigation matters not disclosed in Sections
4.10(a) and (b) of the Acquiror's Disclosure Schedule.

7. Opinions customarily rendered by counsel for acquirors in tax free
reorganization transactions.

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<PAGE>

APPENDIX B

OPINION OF WILLIAM BLAIR &
COMPANY, L.L.C.

<PAGE>

William Blair & Company
Limited Liability Company

August __, 1996

CONFIDENTIAL

Board of Directors
HA-LO Industries, Inc.
5980 West Touhy Avenue
Niles, IL 60714

Members of the Board of Directors:

You have requested our opinion as to the fairness, from a financial point of
view, to HA-LO Industries, Inc. ("HA-LO") of the Consideration (as defined
below) to be paid by HA-LO in connection with the proposed merger of HA-LO
Acquisition Corporation, Inc., a wholly-owned first tier subsidiary of HA-LO,
with Market USA, Inc., the proposed amalgamation of HA-LO Acquisition
Corporation of Canada Ltd., a wholly-owned first tier subsidiary of HA-LO,
with Marusa Marketing Inc. and the proposed acquisition of certain assets of
Marusa Financial Services Ltd. and Nerok Verifications Inc. by a HA-LO
designee (the "Merger Transactions"). The terms of the proposed merger are
set forth in an Agreement and Plan of Merger and Amalgamation by and among
HA-LO Industries, Inc., HA-LO Acquisition Corporation, Inc., HA-LO
Acquisition Corporation of Canada Ltd., Market USA, Inc., Marusa Marketing
Inc., Marusa Financial Services Ltd., Nerok Verifications Inc. (Market USA,
Inc., Marusa Marketing Inc., Marusa Financial Services Ltd. and Nerok
Verifications Inc. are hereinafter referred to as the "Target Companies") and
the stockholders of Market USA, Inc. and Marusa Marketing Inc. (the
"Agreement") dated June 14, 1996 and contemplate the HA-LO will issue
consideration (the "Consideration") of 2,550,000 shares of HA-LO common stock.

We have acted as financial advisor to HA-LO in connection with the Merger
Transactions. In our review of the Merger Transactions and the preparation of
our opinion herein, we have examined: (a) the financial terms of the Agreement
furnished to us by HA-LO; (b) the audited financial statements of the Target
Companies for each of the fiscal years in the three-year period ended December
31, 1995; (c) the audited financial statements of HA-LO for each of the fiscal
years in the three-year period ended December 31, 1995; (d) the unaudited
financial statement for the Target Companies for the six month period ended
June 30, 1996; (e) the unaudited financial statement of HA-LO for the six
month period ended June 30, 1996; (f) certain internal financial analyses and
forecasts for the Target Companies prepared by the managements of the Target
Companies and HA-LO; and (g) certain internal financial information and
forecasts of HA-LO prepared by the management of HA-LO. We have also held
discussions with members of the senior managements of the Target Companies and
HA-LO regarding the foregoing and have considered other matters which we have
deemed relevant to our inquiry.

Although we have no reason to believe that any of the financial or other
information upon which we have relied is not accurate or compete, we have
assumed the accuracy and completeness of all such information and have not
attempted to verify independently any of such information, nor have we made or
obtained an independent appraisal of the assets of the Target Companies or HA-
LO. With respect to financial forecasts, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the managements of the Target Companies and HA-LO, as the case
may be, as to their respective future financial performance and that they
provide a reasonable basis upon which we can form an opinion. We are not
expressing any opinion as to the price at which HA-LO's common stock will trade
subsequent to the Merger Transactions. Our opinion herein is based upon
circumstances existing and disclosed to us and which can be evaluated as of the
date

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hereof, and further assumes that there has not been any material change to
either the Target Companies or HA-LO since the respective dates of the last
financial statements made available to us, and no material adverse change will
subsequently occur to either the Target Companies or HA-LO.

In conducting our investigation and analysis and in arriving at our opinion
expressed herein, we have taken into account such accepted financial and
investment banking procedures and considerations as we have deemed relevant,
including(a) historical revenues, operating income, net income and
capitalization, as the Target Companies, HA-LO and certain other publicly held
companies in businesses we believe to be comparable to the Target Companies and
HA-LO; (b) the current financial position and results of operations of the
Target Companies and HA-LO; (c) the historical market prices and trading volume
of the Common Stock of HA-LO; (d) financial information concerning selected
business combinations which we believe to be relevant; (e) the pro forma
financial statements of the Target Companies and HA-LO combined, including the
respective contributions in terms of revenues, operating income and net income
of the Target Companies and HA-LO; and (f) the general conditions of the
securities markets.

We have further assumed, with your consent, that the Merger Transactions will be
consummated in accordance with the terms set forth in the Agreement and that the
Merger Transactions will be accounted for as a pooling of interests for
accounting purposes.

William Blair & Company, L.L.C. has been engaged in the investment banking
business since 1935. We undertake the valuation of investment securities in
connection with public offerings, private placements, business combinations,
estate and gift tax valuations and similar Merger Transactions. For our
services, including the rendering of this opinion, HA-LO will pay us a fee and
indemnify us against certain liabilities.

Our opinion expressed herein is provided solely for the use of the Board of
Directors of HA-LO in its evaluation of the Merger Transactions, and our opinion
is not intended to be and does not constitute a recommendation to any
stockholder as to how such stockholder should vote on the Merger Transactions.
Our opinion may not be published or otherwise used or referred to, nor shall any
public references to William Blair & Company, L.L.C. be made, without our prior
written consent.

Based upon and subject to the foregoing, it is our opinion as investment bankers
that, as of the date hereof, the Consideration is fair, from a financial point
of view, to HA-LO.

Very truly yours,

/s/WILLIAM BLAIR & COMPANY, L.L.C.

WILLIAM BLAIR & COMPANY, L.L.C.

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<PAGE>

APPENDIX C

ILLINOIS BUSINESS CORPORATION ACT
OF 1983
SECTIONS REGARDING DISSENTERS' RIGHTS

<PAGE>

SECTION 11.65. RIGHT TO DISSENT

(a) A shareholder of a corporation is entitled to dissent from, and obtain
payment for his or her shares in the event of any of the following corporate
actions:

(1) consummation of a plan of merger or consolidation or a plan of
share exchange to which the corporation is a party if

(i) shareholder authorization is required for the merger or
consolidation or the share exchange by Section 11.20 or the articles of
incorporation or

(ii) the corporation is a subsidiary that is merged with its
parent or another subsidiary under Section 11.30;

(2) consummation of sale, lease or exchange of all, or substantially
all, of the property and assets of the corporation other than in the usual and
regular course of business;

(3) an amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:

(i) alters or abolishes a preferential right of such shares;

(ii) alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of such shares;

(iii) in the case of a corporation incorporated prior to January
1, 1982, limits or eliminates cumulative voting rights with respect to such
shares; or

(4) any other corporate action taken pursuant to a shareholder vote
if the articles of incorporation, by-laws, or a resolution of the board of
directors provide that shareholders are entitled to dissent and obtain payment
for their shares in accordance with the procedures set forth in Section 11.70 or
as may be otherwise provided in the articles, by-laws or resolution.

(b) A shareholder entitled to dissent and obtain payment for his or her
shares under this Section may not challenge the corporate action creating his or
her entitlement unless the action is fraudulent with respect to the shareholder
or the corporation or constitutes a breach of a fiduciary duty owed to the
shareholder.

(c) A record owner of shares may assert dissenters' rights as to fewer
than all the shares recorded in such person's name only if such person dissents
with respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
the record owner asserts dissenters' rights. The rights of a partial dissenter
are determined as if the shares as to which dissent is made and the other shares
were recorded in the names of different shareholders. A beneficial owner of
shares who is not the record owner may assert dissenters' rights as to shares
held on such persons's behalf only if the beneficial owner submits to the
corporation the record owner's written consent to the dissent before or at the
same time the beneficial owner asserts dissenters' rights. Amended by P.A.
85-1269, eff. Jan. 1, 1989.

SECTION 11.70. PROCEDURE TO DISSENT

(a) If the corporate action giving rise to the right to dissent is to be
approved at a meeting of shareholders, the notice of meeting shall inform the
shareholders of their right to dissent and the procedure to dissent. If, prior
to the meeting, the corporation furnishes to the shareholders material
information with respect to the transaction that will objectively enable a
shareholder to vote on the transaction and to determine whether or not to
exercise dissenters' rights, a shareholder may assert dissenters' rights only if
the shareholder delivers to the

C-1

<PAGE>

corporation before the vote is taken a written demand for payment for his or her
shares if the proposed action is consummated, and the shareholder does not vote
in favor of the proposed action.

(b) If the corporate action giving rise to the right to dissent is not to
be approved at a meeting of shareholders, the notice to shareholders describing
the action taken under Section 11.30 or Section 7.10 shall inform the
shareholders of their right to dissent and the procedure to dissent. If, prior
to or concurrently with the notice, the corporation furnishes to the
shareholders material information with respect to the transaction that will
objectively enable a shareholder to determine whether or not to exercise
dissenters' rights, a shareholder may assert dissenter's rights only if he or
she delivers to the corporation within 30 days from the date of mailing the
notice a written demand for payment for his or her shares.

(c) Within 10 days after the date on which the corporate action giving
rise to the right to dissent is effective or 30 days after the shareholder
delivers to the corporation the written demand for payment, whichever is later,
the corporation shall send each shareholder who has delivered a written demand
for payment a statement setting forth the opinion of the corporation as to the
estimated fair value of the shares, the corporation's latest balance sheet as of
the end of a fiscal year ending not earlier than 16 months before the delivery
of the statement, together with the statement of income for that year and the
latest available interim financial statements, and either a commitment to pay
for the shares of the dissenting shareholder at the estimated fair value thereof
upon transmittal to the corporation of the certificate or certificates, or other
evidence of ownership, with respect to the shares, or instructions to the
dissenting shareholder to sell his or her shares within 10 days after delivery
of the corporation's statement to the shareholder. The corporation may instruct
the shareholder to sell only if there is a public market for the shares at which
the shares may be readily sold. If the shareholder does not sell within that 10
day period after being so instructed by the corporation, for purposes of this
Section the shareholder shall be deemed to have sold his or her shares at the
average closing price of the shares, if listed on a national exchange, or the
average of the bid and asked price with respect to the shares quoted by a
principal market maker, if not listed on a national exchange, during that 10 day
period.

(d) A shareholder who makes written demand for payment under this Section
retains all other rights of a shareholder until those rights are canceled or
modified by the consummation of the proposed corporate action. Upon consummation
of that action, the corporation shall pay to each dissenter who transmits to the
corporation the certificate or other evidence of ownership of the shares the
amount the corporation estimates to be the fair value of the shares, plus
accrued interest, accompanied by a written explanation of how the interest was
calculated.

(e) If the shareholder does not agree with the opinion of the corporation
as to the estimated fair value of the shares and interest due, the
shareholder, within 30 days from the delivery of the corporation's statement
of value, shall notify the corporation in writing of the shareholder's
estimated fair value and amount of interest due and demand payment for the
difference between the shareholder's estimate of fair value and amount of
interest due and demand payment for the difference between the shareholder's
estimate of fair value and interest due and the amount of the payment by the
corporation or the proceeds of sale by the shareholder, whichever is
applicable because of the procedure for which the corporation opted pursuant
to subsection (c)

(f) If, within 60 days from delivery to the corporation of the
shareholder notification of estimate of fair value of the shares and interst
due, the corporation and the dissenting shareholder have not agreed in
writing upon the fair value of the shares and interest due, the corporation
shall either pay the difference in value demanded by the shareholder, with
interest or file a petition in the circuit court of the country in which
either the registered office or the principle office of the corporation is
located, requesting the court to determine the fair value of the shares and
interest due. The corporation shall make all dissenters, whether or not
residents of this State, whose demands remain unsettled parties to the
proceeding as an action against their shares and all parties shall be served
with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law. Failure of the
corporation to commence an action pursuant to this Section shall not limit or
affect the right of the dissenting shareholders to otherwise commence an
action as permitted by law.

(g) The jurisdiction of the court in which the proceeding is commenced
under subsection (f) by a corporation is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence

C-2

<PAGE>

and recommend decision of the question of fair value. The appraisers have the
power described in the order appointing them, or in any amendment to it.

(h) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds that the fair value or his or
her shares, plus interest, exceeds the amount paid by the corporation or the
proceeds of sale by the shareholder, whichever amount is applicable.

(i) The court, in a proceeding commenced under subsection (f), shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of the appraisers, if any, appointed by the court under subsection (g),
but shall exclude the fees and expenses of counsel and experts for the
respective parties. If the fair value of the shares as determined by the court
materially exceeds the amount which the corporation estimated to be the fair
value of the shares or if no estimate was made in accordance with subsection
(c), then all or any part of the costs may be assessed against the corporation.
If the amount which any dissenter estimated to be the fair value of the shares
materially exceeds the fair value of the shares as determined by the court, then
all or any part of the costs may be assessed against that dissenter. The court
may also assess the fees and expenses of counsel and experts for the respective
parties, in amounts the court finds equitable, as follows:

(1) Against the corporation and in favor of any or all dissenters if
the court finds that the corporation did not substantially comply with the
requirements of subsections (a), (b), (c), (d), or (f).

(2) Against either the corporation or a dissenter and in favor of any
other party if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously, or not in good faith with respect
to the rights provided by this Section.

If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and that the fees for
those services should not be assessed against the corporation, the court may
award to that counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who are benefited. Except as otherwise provided in this Section,
the practice, procedure, judgment and costs shall be governed by the Code of
Civil Procedure.

(j) As used in this Section:

(1) "Fair value", with respect to a dissenter's shares, means the
value of the shares immediately before the consummation of the corporate action
to which the dissenter objects excluding any appreciation or depreciation in
anticipation of the corporate action, unless exclusion would be inequitable.

(2) "Interest" means interest from the effective date of the
corporate action until the date of payment, at the average rate currently paid
by the corporation on its principal bank loans or, if none, at a rate that is
fair and equitable under all the circumstances Amended by P.A. 84-1308, eff.
Aug. 25, 1986. P.A. 86-1156, eff, Aug. 10, 1990.

C-3

<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The IBCA provides for indemnification by HA-LO of its directors and
officers. In addition, HA-LO's Restated Articles of Incorporation require HA-LO
to indemnify any current or former director or officer to the fullest extent
permitted by IBCA. HA-LO maintains officers' and directors' liability insurance
which insures against liabilities that officers and directors of HA-LO may incur
in such capacities. HA-LO has also entered into indemnity agreements with each
of its directors and officers pursuant to which it has agreed to indemnify such
persons against any and all losses and expenses to the fullest extent permitted
under HA-LO's Articles and By-laws and the IBCA and to advance to such persons
any and all expenses arising in connection therewith.

Reference is made to Section 6.10 of the Agreement and Plan of Merger and
Amalgamation (filed as Exhibit 2.1 to this Registration Statement) for
provisions respecting indemnification of officers and directors of the Target
Companies against certain liabilities.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger and Amalgamation dated as of June 14, 1996 among HA-LO, HA-LO
Acquisition Corporation, Inc., HA-LO Acquisition Corporation of Canada Ltd., Market USA, Inc., Marusa
Marketing Inc., Marusa Financial Services Ltd., Nerok Verifications, Inc. and the shareholders of
Market USA, Inc. and Marusa Marketing Inc. (included as Appendix A to the Proxy Statement/Prospectus
included in Part I of this Registration Statement).
3.1 Restated Articles of Incorporation of HA-LO.(1)
3.2 Amended and Restated Bylaws of HA-LO.(1)
3.3 Articles of Amendment to the Articles of Incorporation of HA-LO, dated August 29, 1994.(4)
3.4 Amendment to the Bylaws of HA-LO effective January 12, 1995.(4)
4. Specimen of Stock Certificate for Common Stock.(1)
5.1 Opinion of Neal, Gerber & Eisenberg.*
10.1 Employment Agreement, dated as of January 1, 1992, between HA-LO and Lou Weisbach.(1,5)
10.2 Third Amendment to Loan and Security Agreement by and between American National Bank and HA-LO.(4)
10.3 Amended and Restated Second Term Promissory Note, dated January 3, 1995, from HA-LO to American
National Bank of Chicago.(4)
10.4 Third Amended and Restated Revolving Promissory Note, dated January 3, 1995, between American
National Bank and HA-LO.(4)
10.5 Agreement, dated October 15, 1991, between HA-LO and RMI, Inc.(1,5)
10.6 Agreement, dated March 15, 1994, by and between HA-LO and Marshall J. Katz.(4,5)
10.7 HA-LO Industries, Inc. Stock Plan.(1,5)
10.8 HA-LO Industries, Inc. Key Employee Incentive Plan.(1,5)
10.9 Exclusive Premium Purchasing Agreement, dated January 11, 1995, between Montgomery Ward & Co.,
Incorporated and HA-LO.(4)
</TABLE>

II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.10 Stock Purchase Agreement, dated January 11, 1995, between HA-LO and Merchant Partners, L.P.(4)
10.11 Warrant agreement between HA-LO and Merchant Partners, L.P., dated January 11, 1995.(4)
10.12 Form of Indemnity Agreement between HA-LO and each of its directors and officers.(1,5)
10.13 Agreement between David C. Robbins and HA-LO dated October 25, 1994.(4)
10.14 Agreement between David C. Robbins and HA-LO dated February 1, 1995.(4)
10.15 Building Lease, dated December 30, 1992, between HA-LO and LaSalle National Trust N.A. No. 115722.(2)
10.18 Asset Purchase Agreement, dated December 20, 1993, between HA-LO and Lee Wayne Company, Inc.(3)
10.19 Amendment to Loan and Security Agreement, dated December 30, 1993, from HA-LO to American National
Bank of Chicago.(3)
10.20 Second Amendment to Loan and Security Agreement, dated September 20, 1994, between American National
Bank and Trust Company of Chicago, and HA-LO.(4)
10.21 Term Promissory Note, dated December 30, 1993, from HA-LO to American National Bank of Chicago.(3)
10.22 Negotiable Promissory Note, dated August 16, 1993 from HA-LO to Facility Capital Corporation and
Notice and Acknowledgment of Assignment to Assignment to Comerica Bank Illinois.(3)
10.23 HA-LO Industries, Inc. Stock Plan (as amended and restated)(4)
10.24 Sales Representative Agreement, dated July 21, 1993, between HA-LO and Neil Ramo.(3,5)
10.25 Second Amendment to the HA-LO Industries, Inc. Stock Plan (as amended and restated), adopted October
28, 1995.(6)
10.26 Third Amendment to the HA-LO Industries, Inc. Stock Plan (as amended and restated), adopted on
February 26, 1996.(6)
10.27 First Amendment to Exclusive Premium Purchasing Agreement, dated December 27, 1995, between
Montgomery Ward & Co., Incorporated and HA-LO.(6)
10.28 First Amendment to Warrant, dated December 27, 1995, between HA-LO and Merchant Partners, L.P.
(relative to January 11, 1995 Warrant).(6)
10.29 Warrant, dated December 27, 1995, from HA-LO to Merchant Partners, L.P.
10.30 Employment Agreement, dated as of March 15, 1995, between HA-LO and Richard A. Magid.(5)
10.31 Fourth Amendment to Loan and Security Agreement, dated July 1, 1995, between American National Bank
and Trust Company of Chicago, and HA-LO.(6)
10.32 Fourth Amended and Restated Revolving Promissory Note, dated July 1, 1995, between American National
Bank and HA-LO.(6)
10.33 Fifth Amendment to Loan and Security Agreement, dated September 29, 1995, between American National
Bank and Trust Company of Chicago, and HA-LO.(6)
10.34 Fifth Amended and Restated Revolving Promissory Note, dated September 29, 1995, between American
National Bank and HA-LO.(6)
10.35 Sixth Amendment to Loan and Security Agreement, dated November 1, 1995, between American National
Bank and Trust Company of Chicago, and HA-LO.(6)
</TABLE>

II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.36 Sixth Amended and Restated Revolving Promissory Note, dated November 1, 1995, between American
National Bank and HA-LO.(6)
10.37 Asset Purchase Agreement and Plan of Merger, dated December 22, 1995, between HA-LO, one of its
subsidiaries, Fletcher Barnhardt & White, Inc., and its shareholders.(6)
10.38 First Amendment to Asset Purchase Agreement and Plan of Merger, dated December 29, 1995, between
HA-LO, one of its subsidiaries, Fletcher Barnhardt & White, Inc., and its shareholders.(6)
13. Annual Report to Shareholders for 1995 of registrant (for the information of the Securities and
Exchange Commission and not to be deemed "filed" with the Commission, except for the portions
expressly incorporated by reference in this report)
23.1 Consent of Arthur Andersen LLP*
23.2 Consent of Neal, Gerber & Eisenberg (included in Exhibit 5.1)*
23.3 Consent of Seymour N. Okner*
24.1 Powers of Attorney of certain officers and directors of HA-LO*
99.1 Form of Proxy for HA-LO's Special Meeting*
</TABLE>

- ------------------------
* Filed herewith.

(1) Incorporated by reference to the correspondingly numbered exhibit to the
Registration Statement (no. 33-51698) on Form S-1, as amended, filed by
HA-LO under the Securities Act of 1933, as amended.

(2) Incorporated by reference to the correspondingly numbered exhibit to HA-LO's
Annual Report on Form 10-K for the year ended December 31, 1992.

(3) Incorporated by reference to the correspondingly numbered exhibit to HA-LO's
Annual Report on Form 10-K for the year ended December 31, 1993.

(4) Incorporated by reference to the correspondingly numbered exhibit to HA-LO's
Annual Report on Form 10-K for the year ended December 31, 1994.

(5) Management contract or compensatory plan or arrangement.

(6) Incorporated by reference to the correspondingly numbered exhibit to HA-LO's
Annual report on Form 10-K for the year ended December 31, 1995.

(b) Financial Statement Schedules
None.

ITEM 22. UNDERTAKINGS

The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.

The registrant undertakes that every prospectus (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering o securities subject to Rule 415, will be filed as a part Of an
amendment to the registration statement and will not be used until such
amendment is effective. and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-

II-3
<PAGE>
effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein. and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject to and
included in the registration statement when it became effective.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on August 20, 1996.

HA-LO INDUSTRIES, INC.
(Registrant)

By: /s/ LOU WEISBACH

-----------------------------------
Lou Weisbach
PRESIDENT AND CHIEF EXECUTIVE
OFFICER

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------ -------------------

/s/ LOU WEISBACH Director, Chairman, President and
------------------------------------------- Chief Executive Officer (Principal August 20, 1996
Lou Weisbach Executive Officer)

/s/ GREGORY J. KILREA Chief Financial Officer (Principal
------------------------------------------- Financial Officer and Principal August 20, 1996
Gregory J. Kilrea Accounting Officer)

THOMAS HERSKOVITS*
------------------------------------------- Director August 20, 1996
Thomas Herskovits

JORDON R. KATZ*
------------------------------------------- Director August 20, 1996
Jordon R. Katz

MARSHALL J. KATZ*
------------------------------------------- Director August 20, 1996
Marshall J. Katz

RICHARD A. MAGID*
------------------------------------------- Director, Treasurer and Chief August 20, 1996
Richard A. Magid Operating Officer

NEIL RAMO*
------------------------------------------- Director August 20, 1996
Neil Ramo

DAVID C. ROBBINS*
------------------------------------------- Director, Executive Vice President August 20, 1996
David C. Robbins

*By: /s/ GREGORY J. KILREA
------------------------------------
Gregory J. Kilrea, as
Attorney-in-Fact
</TABLE>

II-5

<PAGE>

EXHIBIT 5.1

Neal, Gerber & Eisenberg
Two North LaSalle Street
Chicago, Illinois 60602
(312) 269-8000

August 19, 1996

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: HA-LO Industries, Inc.
REGISTRATION STATEMENT ON FORM S-4

Gentlemen:

We are counsel to HA-LO Industries, Inc., an Illinois corporation (the
"Company"), and in such capacity we have assisted in the preparation and filing
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, of the Company's Registration Statement on Form S-4 (the "Registration
Statement") and the Proxy Statement/Prospectus contained therein (the
"Prospectus") relating to the proposed offering by the Company of 2,550,000
shares (the "Shares") of the Company's Common Stock, no par value (the "Common
Stock"), in connection with the transactions (the "Merger Transactions")
contemplated by that certain Agreement and Plan of Merger and Amalgamation dated
as of June 14, 1996 among the Company, HA-LO Acquisition Corporation, Inc.,
Marusa Financial Services Ltd., Nerok Verifications Inc. and the shareholders of
Market USA, Inc. and Marusa Marketing Inc.

As such counsel, we have examined such corporate records, certificates and
other documents and have made such other factual and legal investigations as we
have deemed relevant and necessary as the basis for the opinions hereafter
expressed. In such examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity to original documents of all documents submitted to us as
conformed or photostatic copies.

Based on the foregoing, we are of the opinion that:

1. The issuance by the Company of the Shares in connection with the
Merger Transactions has been duly authorized by all necessary corporate action
on the part of the Company.

2. When issued following consummation of the Merger Transactions as
described in the Proxy Statement/ Prospectus, the Shares will be duly and
validly issued and outstanding, fully paid and non-assessable shares of Common
Stock.

<PAGE>

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Proxy Statement/Prospectus.

Please be advised that certain partners of, attorneys associated with
and/or of counsel to our firm, beneficially own shares of Common Stock.

Very truly yours,

/s/ Neal, Gerber & Eisenberg

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation in
this Form S-4 of HA-LO Industries, Inc. of our report dated February 2, 1996 for
Market USA, Marusa Marketing, Inc. and Subsidiary and to the use of our firm as
experts. It should be noted that we have not audited any financial statements
of Market USA, Marusa Marketing Inc. and Subsidiary subsequent to December 31,
1995 or performed any audit procedures subsequent to the date of our report.

/s/ ARTHUR ANDERSEN LLP

Boston, Massachusetts
August 19, 1996

<PAGE>
EXHIBIT 23.3

CONSENT TO BE NAMED AS A
FUTURE DIRECTOR

Pursuant to Rule 438 promulgated pursuant to the Securities Act of 1933, as
amended, the undersigned hereby consents to be named in a Registration Statement
on Form S-4 to be filed by HA-LO Industries, Inc. as a person who will be a
director of HA-LO Industries,Inc. upon consummation of the transactions
contemplated by the Agreement and Plan of Merger and Amalgamation included as
Appendix A to the Proxy Statement/Prospectus included in Part I of such
Registration Statement on Form S-4.

/s/ Seymour N. Okner
-----------------------------------
Seymour N. Okner

August 19, 1996

<PAGE>

EXHIBIT 24.1

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned Director of HA-LO
Industries, Inc., a corporation organized under the laws of the State of
Illinois (the "Company"), hereby constitutes and appoints Lou Weisbach, Richard
A. Magid and Gregory J. Kilrea and each of them (with full power to each of them
to act alone), his true and lawful attorneys-in-fact and agents for him and on
his behalf and in his name, place and stead, in any and all capacities, to sign
the Registration Statement on Form S-4 to be filed by the Company with the
Securities and Exchange Commission with respect to the contemplated public
offering of Common Stock, no par value of the Company, and any and all
amendments thereto, and any other documents in connection therewith, granting
unto said attorneys-in-fact and agents, each of them full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises in order to effectuate the same as fully to all
intents and purposes as he himself might or could do if personally present,
hereby ratifying and confirming all that said attorneys-in-fact and lawfully do
or cause to be done by virtue hereof.

/s/ LOU WEISBACH
------------------------------------
Lou Weisbach

Dated: August 19, 1996

<PAGE>

EXHIBIT 24.1

POWER OF ATTORNEY

/s/ RICHARD A. MAGID
---------------------------------------
Richard A. Magid

Dated: August 19, 1996

<PAGE>

EXHIBIT 24.1

POWER OF ATTORNEY

/s/ MARSHALL J. KATZ
---------------------------------------
Marshall J. Katz

Dated: August 19, 1996

<PAGE>

EXHIBIT 24.1

POWER OF ATTORNEY

/s/ NEIL A. RAMO
---------------------------------
Neil A. Ramo

Dated: August 19, 1996

<PAGE>

EXHIBIT 24.1

POWER OF ATTORNEY

/s/ JORDAN R. KATZ
---------------------------------
Jordan R. Katz

Dated: August 19, 1996

<PAGE>

EXHIBIT 24.1

POWER OF ATTORNEY

/s/ DAVID C. ROBBINS
-----------------------------------
David C. Robbins

Dated: August 19, 1996

<PAGE>

EXHIBIT 24.1

POWER OF ATTORNEY

/s/ THOMAS HERSKOVITS
---------------------------------------
Thomas Herskovits

Dated: August 19, 1996

<PAGE>

HA-LO INDUSTRIES, INC.
SPECIAL MEETING OF THE SHAREHOLDERS -- SEPTEMBER 25, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY

The undersigned shareholder of HA-LO INDUSTRIES, INC., an Illinois
corporation (HA-LO), hereby appoints Lou Weisbach and Richard A. Magid, and
each of them, proxies and attorneys-in-fact of the undersigned, each with
full power of substitution, to attend and act for the undersigned at the
Special Meeting of Shareholders to be held on September 25, 1996 at 10:00
A.M., local time at the Company's offices located at 5980 West Touhy Avenue,
Niles, Illinois 60714 and at any adjournments or postponements thereof, and
in connection therewith to vote and represent all of the shares of Common
Stock of HA-LO which the undersigned would be entitled to vote.

Said proxies and attorneys, and each of them, shall have the powers which
the undersigned would have if acting in person. The undersigned hereby
revokes any other proxy to vote at such meeting and hereby ratifies and
confirms all that said proxies and attorneys, and each of them, may lawfully
do by virtue hereof. Said proxies, without hereby limiting their general
authority, are authorized to vote in accordance with their best judgment with
respect to all matters incident to the conduct of the Special Meeting and all
matters presented at the meeting but which are not known to the Board of
Directors at the time of the solicitation of this proxy.

Each of the above-named proxies at said meeting, either in person or by
substitute, shall have and exercise all the powers of said proxies hereunder.
This proxy will be voted in accordance with the choices specified by the
undersigned on this proxy. In their discretion, each of the above-named
proxies is authorized to vote upon such other business incident to the
conduct of the Special Meeting as may properly come before the meeting or any
postponements or adjournments thereof. IF NO INSTRUCTIONS ARE INDICATED
HEREIN, THIS PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR THE
PROPOSAL AND ANY OTHER MATTERS TO BE VOTED UPON AT THE SPECIAL MEETING OR AT
ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF.

(CONTINUED ON OTHER SIDE)

<PAGE>

PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY //

<TABLE>
<C> <S> <C> <C> <C>
FOR AGAINST ABSTAIN
1. PROPOSAL TO APPROVE AND ADOPT AN AGREEMENT AND PLAN OF MERGER AND AMALGAMATION DATED AS OF JUNE 14, 1996,
AMONG HA-LO, HA-LO ACQUISITION CORPORATION, INC., HA-LO ACQUISITION CORPORATION OF CANADA LTD., MARKET
USA, INC., MARUSA FINANCIAL SERVICES LTD., NEROK VERIFICATIONS INC. AND THE SHAREHOLDERS OF MARKET USA
AND MARUSA MARKETING INC.

The undersigned acknowledges receipt of the copy of the Notice of
Special Meeting and Proxy Statement/Prospectus relating to the Special
Meeting.

Dated _____________________________________________________________ , 1996

_____________________________________________________________
Signature
_____________________________________________________________
Signature

(This proxy should be dated, signed by the shareholders(s) exactly as
his or her name(s) appears hereon, and returned promptly in the
enclosed envelope. Persons signing in a fiduciary capacity should so
indicate. If shares are held by joint tenants or as community
property, both shareholders should sign.)

PLEASE VOTE, SIGN, DATE AND
PROMPTLY RETURN THIS CARD
</TABLE>