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                                                                   EXHIBIT 10.47












                            QUESTRON TECHNOLOGY, INC.
                        QUESTRON OPERATING COMPANY, INC.




                          SECURITIES PURCHASE AGREEMENT





                          DATED AS OF NOVEMBER 9, 2000



   $17,500,000 14.50% SERIES B SENIOR SUBORDINATED NOTES DUE JUNE 30, 2005 OF
                        QUESTRON OPERATING COMPANY, INC.

           750,000 SHARES OF COMMON STOCK OF QUESTRON TECHNOLOGY, INC.


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                             TABLE OF CONTENTS                              PAGE

1.       PURCHASE AND SALE OF SECURITIES.......................................1
         1.1      Issue of Securities..........................................1
         1.2      The Closing..................................................1
         1.3      Original Issue Discount......................................2
2.       WARRANTIES AND REPRESENTATIONS OF THE ISSUERS.........................3
         2.1      Nature of Business...........................................3
         2.2      Financial Statements; Debt; Material Adverse Change..........3
         2.3      Subsidiaries and Affiliates..................................4
         2.4      Title to Properties..........................................5
         2.5      Taxes........................................................5
         2.6      Pending Litigation...........................................6
         2.7      Corporate Organization and Authority.........................6
         2.8      Charter Instruments, Other Agreements........................7
         2.9      Restrictions on the Company..................................7
         2.10     Compliance with Law..........................................8
         2.11     Pension Plans................................................8
         2.12     Environmental Compliance.....................................9
         2.13     Due Authorization; Enforceability...........................10
         2.14     Governmental Consent to Sale of Purchased Securities........11
         2.15     Hart-Scott-Rodino Compliance................................12
         2.16     No Defaults.................................................12
         2.17     Private Offering of Purchased Securities....................12
         2.19     Use of Proceeds.............................................13
         2.19     Capitalization..............................................13
         2.20     Senior Credit Documents.....................................15
         2.21     Solvency....................................................15
         2.22     Full Disclosure.............................................15
3.       REPRESENTATIONS OF THE PURCHASERS....................................16
         3.1      Purchase for Investment.....................................16
         3.2      ERISA.......................................................17
4.       CLOSING CONDITIONS...................................................18
         4.1      Opinions of Counsel.........................................19
         4.2      Warranties and Representations True; Compliance.............19
         4.3      Officers' Certificates......................................19
         4.4      Organic Documents...........................................20
         4.5      Legality....................................................20
         4.6      Financing Documents.........................................20
         4.7      Certain Consents and Agreements.............................21
         4.8      Senior Debt.................................................21
         4.9      Use of Proceeds; Prepayment of Senior Debt..................22
         4.10     Offeree Letter..............................................22
         4.11     Private Placement Numbers...................................22
         4.12     Fees and Expenses...........................................22
         4.13     Transaction Fee.............................................22
         4.14     Other Purchasers............................................22
         4.15     Proceedings Satisfactory....................................23
         4.16     Side Letter.................................................23

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5.       INTERPRETATION OF THIS AGREEMENT.....................................23
         5.1      Terms Defined...............................................23
         5.2      Other Definitions...........................................25
         5.3      Directly or Indirectly......................................25
         5.4      Section Headings and Table of Contents and Construction.....26
         5.5      Governing Law...............................................26
6.       MISCELLANEOUS........................................................26
         6.1      Communications..............................................26
         6.2      Reproduction of Documents...................................27
         6.3      Survival; Entire Agreement..................................27
         6.4      Successors and Assigns......................................27
         6.5      Amendment and Waiver........................................27
         6.6      Expenses....................................................28
         6.7      Waiver of Jury Trial; Consent to Jurisdiction; Etc..........28
         6.8      Indemnification of Each Purchaser...........................29
         6.9      Execution in Counterpart....................................31



Annex 1   --    Information as to Purchasers
Annex 2   --    Payment Instructions at Closing; Address of Company for Notices
Annex 3   --    Information as to Company


Exhibit 1.1(a)--       Form of Note Agreement
Exhibit 1.1(b)--       Form of Charter
Exhibit 4.1(a)--       Form of Opinion of Company Counsel
Exhibit 4.1(b)--       Form of Opinion of Purchasers' Counsel
Exhibit 4.3(a)--       Form of Officers' Certificate - Company
Exhibit 4.3(b)--       Form of Officers' Certificate - Parent
Exhibit 4.3(c)--       Form of Secretary's Certificate - Company
Exhibit 4.3(d)--       Form of Secretary's Certificate - Parent
Exhibit 4.3(e)--       Form of Secretary's Certificate - Subsidiary Affiliate
                       Guarantor
Exhibit 4.6(c)--       Form of Affiliate Guaranty
Exhibit 4.6(d)--       Form of Investors' Rights Agreement

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                            QUESTRON TECHNOLOGY, INC.
                        QUESTRON OPERATING COMPANY, INC.

                          SECURITIES PURCHASE AGREEMENT

    17,500,000 14.50% SERIES B SENIOR SUBORDINATED NOTES DUE JUNE 30, 2005 OF
                        QUESTRON OPERATING COMPANY, INC.

           750,000 SHARES OF COMMON STOCK OF QUESTRON TECHNOLOGY, INC.

                                                    Dated as of November 9, 2000

         QUESTRON TECHNOLOGY, INC. (together with any successors and assigns who
become such in accordance herewith, the "PARENT"), a Delaware corporation, and
QUESTRON OPERATING COMPANY, INC. (together with any successors and assigns who
become such in accordance herewith, the "COMPANY;" and, together with the
Parent, the "ISSUERS"), a Delaware corporation, hereby agree with ALBION
ALLIANCE MEZZANINE FUND II, L.P., IBJ WHITEHALL BANK & TRUST COMPANY and EXETER
CAPITAL PARTNERS IV, L.P. (collectively, the "PURCHASERS") as set forth below.

1.       PURCHASE AND SALE OF SECURITIES.

         1.1      ISSUE OF SECURITIES.

                  (a) ISSUE OF NOTES. The Company will authorize the issue of
         Seventeen Million Five Hundred Thousand Dollars ($17,500,000) in
         aggregate principal amount of its fourteen and fifty one-hundredths
         percent (14.50%) Series B Senior Subordinated Notes due June 30, 2005
         (all such notes, whether initially issued, or issued in exchange or
         substitution for any such note, in each case in accordance with the
         Note Agreement, collectively, the "NOTES"). The Notes shall be issued
         pursuant to a Note Agreement (as may be amended, restated or otherwise
         modified from time to time, the "NOTE Agreement") in the form of
         Exhibit 1.1(a). The Notes shall be in the form of Attachment A to the
         Note Agreement, and shall have the terms as provided in the Note
         Agreement and in the Notes.

                  (b) ISSUE OF COMMON SHARES. The Parent will authorize the
         issuance of an aggregate of seven hundred fifty thousand (750,000)
         shares (the "COMMON SHARES") of its Common Stock. The rights and
         obligations of holders of Common Stock shall be governed by the
         Charter, which is in the form of Exhibit 1.1(b), and by applicable law.

         1.2      THE CLOSING.

                  (a) PURCHASE AND SALE OF PURCHASED SECURITIES. The Company
         hereby agrees to sell to each Purchaser, and each Purchaser, by its
         execution and delivery of this Agreement, hereby agrees, severally and
         not jointly, to purchase from the Company, in accordance with the
         provisions hereof, the aggregate principal

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         amount of Notes set forth below such Purchaser's name on Annex 1 at the
         purchase price for such Notes, equal to 93.57142% of the principal
         amount of Notes to be purchased, set forth on Annex 1 hereto.

                  The Parent hereby agrees to sell to each Purchaser, and each
         Purchaser, by its execution and delivery of this Agreement, hereby
         agrees, severally and not jointly, to purchase from the Parent, in
         accordance with the provisions hereof, the aggregate number of Common
         Shares set forth below such Purchaser's name on Annex 1, at a purchase
         price for Common Shares, equal to $1.50 per share, set forth on Annex 1
         hereto.

                  (b) THE CLOSING. The closing (the "CLOSING") of the sale of
         the Purchased Securities will be held at 10:00 a.m., local time, on
         November 9, 2000, or such other time and date as the Purchasers, the
         Parent and the Company shall agree (the "CLOSING DATE"), at the office
         of Bingham Dana LLP, One State Street, 22nd Floor, Hartford,
         Connecticut 06103. At the Closing:

                           (i) the Company will deliver to each Purchaser one or
                  more Notes (as set forth below such Purchaser's name on Annex
                  1), in the denominations indicated on Annex 1, in the
                  aggregate principal amount of its purchase, dated the Closing
                  Date and registered in the name of the holder indicated on
                  Annex 1; and

                           (ii) the Parent will deliver to each Purchaser one or
                  more certificates (as set forth below such Purchaser's name on
                  Annex 1), representing the number of Common Shares indicated
                  below its name on Annex 1 and registered in the name of the
                  holder indicated on Annex 1;

         against payment by federal funds wire transfer in immediately available
         funds of the purchase price therefor, as directed by the Company on
         Annex 2, which shall be an account at a bank located in the United
         States of America. The Parent hereby agrees to deliver the Common
         Shares in consideration of the Purchasers' execution and delivery of
         the Note Agreement and their purchase of the Notes, in respect of which
         the Parent shall receive a direct financial benefit.

                  (c) PURCHASES AND OTHER OBLIGATIONS SEVERAL. The sales of the
         Purchased Securities to each Purchaser are separate and several sales.
         All obligations of any Purchaser under this Agreement extend only to
         that Purchaser and to no other Purchaser, and all such obligations are
         several and not joint.

         1.3      ORIGINAL ISSUE DISCOUNT.

         The Parent and the Company and the Purchasers agree that, for all
United States federal, state and local income tax purposes with respect to the
transactions contemplated by the Financing Documents, the original issue
discount attributable to the Notes issued by the Company in accordance with the
terms and conditions of the Securities Purchase Agreement is equal to One
Million One Hundred Twenty-Five Thousand Dollars ($1,125,000.00). The Parent,
the Company and each Purchaser agree to use the foregoing in preparing all
United States federal, state and local income tax returns and for all other

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income tax purposes with respect to the transactions contemplated by the
Financing Documents.

2.       WARRANTIES AND REPRESENTATIONS OF THE ISSUERS

         To induce each Purchaser to enter into this Agreement and to purchase
and pay for the Purchased Securities to be delivered to such Purchaser at the
Closing, the Issuers jointly and severally warrant and represent, as of the
Closing Date, and after giving effect to the transactions contemplated by the
Financing Documents and the use of the proceeds thereof, as follows:

         2.1      NATURE OF BUSINESS.

         The management presentations to investors (the "OFFERING MEMORANDUM")
describes correctly in all material respects the general nature of the business
and principal Properties and assets of the Issuers and the Subsidiaries.

         2.2      FINANCIAL STATEMENTS; DEBT; MATERIAL ADVERSE CHANGE.

                  (a) FINANCIAL STATEMENTS. The Parent has provided each
         Purchaser with the consolidated financial statements of the Parent and
         the Subsidiaries listed on PART 2.2(A)(I) OF ANNEX 3. Such financial
         statements present fairly in all material respects the consolidated
         financial position of the Parent and the Subsidiaries as of the
         respective dates specified therein and the results of their
         consolidated operations and cash flows for the respective periods so
         specified in conformity with GAAP applied on a consistent basis
         throughout the periods involved.

                  (b) DEBT. PART 2.2(B) OF ANNEX 3 lists all Debt of the Issuers
         and the Subsidiaries as of the Closing Date, both before and after
         giving effect to the transactions contemplated by the Financing
         Documents and the use of the proceeds thereof, and provides the
         following information with respect to each item of such Debt: the
         obligor, each guarantor thereof and each other Person similarly liable
         in respect thereof, the holder thereof (to the knowledge of the
         Issuers), the outstanding amount, the current portion of the
         outstanding amount, the final maturity, required sinking fund payments,
         and a description of the collateral securing such Debt.

                  (c) LIENS. PART 2.2(C) OF ANNEX 3 lists all Liens securing
         Debt of the Issuers and the Subsidiaries in existence as of the Closing
         Date, both before and after giving effect to the transactions
         contemplated by the Financing Documents and the use of the proceeds
         thereof, and provides the following information with respect to each
         Lien: the holder thereof, the outstanding amount secured, the nature of
         the Debt and a description of the collateral.

                  (d) CONTINGENT OBLIGATIONS. There are no Guaranties or other
         contingent obligations in respect of which disclosure is required, or
         for which provisions are required to be made, in the Company's
         consolidated financial

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         statements in accordance with GAAP, other than those so disclosed, and
         for which such provision has been made, in the financial statements
         referred to in Section 2.2(a) and which are described on PART 2.2(A) OF
         ANNEX 3.

                  (e) MATERIAL ADVERSE CHANGE. Since December 31, 1999, there
         has been no change in the business, operations, profits, financial
         condition, Properties or business prospects of the Issuer and the
         Subsidiaries or of the Company and its Subsidiaries except changes
         that, in the aggregate, could not reasonably be expected to have a
         Material Adverse Effect.

                  (f) PROJECTIONS. The Parent has delivered to each Purchaser
         projected financial statements of the Issuers contained in the Offering
         Memorandum and those specified in PART 2.2(F) OF ANNEX 3 (the
         "PROJECTIONS"). The assumptions used in preparation of the Projections
         were reasonable when made and continue to be reasonable. Such
         Projections have been prepared by the executive or financial personnel
         of the Company or the Parent in the light of the business of the
         Issuers and the Subsidiaries. Such Projections have been prepared in
         good faith, have a reasonable basis and represent the good faith
         opinion of the Issuers as to the projected results of the operations of
         the Issuers and the Subsidiaries. No material facts have occurred since
         the preparation of the Projections that would cause the Projections,
         taken as a whole, not to be reasonably attainable, and the Issuers do
         not have, on the Closing Date, any material obligations (whether
         accrued, matured, absolute, actual, contingent or otherwise) that are
         not reflected in the Projections.

                  (g) INVESTMENTS. PART 2.2(G) OF ANNEX 3 lists all Investments
         of the Company outstanding on the Closing Date which, but for clause
         (g) of the definition of Restricted Investments, would be classified as
         Restricted Investments in accordance with the provisions of the Note
         Agreement.

         2.3      SUBSIDIARIES AND AFFILIATES.

                  (a) OWNERSHIP OF SUBSIDIARIES. PART 2.3(A) OF ANNEX 3 sets
         forth for each Subsidiary:

                           (i) its full legal name;

                           (ii) its jurisdiction of incorporation or
                  organization; and

                           (iii) the percentage of the Voting Stock which is
                  held by the Parent and each other Subsidiary.

         All of the Capital Stock of each Subsidiary is owned, directly or
         indirectly through another Subsidiary, by the Parent.

                  (b) AFFILIATES. PART 2.3(B) OF ANNEX 3 sets forth the name of
         each Affiliate (other than members of the families of officers and
         directors of the Company) and the nature of the affiliation of such
         Affiliate.

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         2.4      TITLE TO PROPERTIES.

                  (a) GENERAL. The Issuers and the Subsidiaries have good and
         marketable title to all of the Property reflected in the most recent
         consolidated balance sheet referred to in Section 2.2 (except as sold
         or otherwise disposed of in the ordinary course of business), free from
         Liens not permitted by the provisions of the Note Agreement. Each of
         the Issuers and the Subsidiaries have maintained and kept, or caused to
         be maintained and kept, its respective Properties in good repair,
         working order and condition (ordinary wear and tear excepted).

                  (b) LEASES. All leases necessary for the conduct of the
         business of the Issuers and the Subsidiaries are valid and subsisting
         and are in full force and effect, except for such failures to be valid
         and subsisting that, in the aggregate for all such failures, could not
         reasonably be expected to have a Material Adverse Effect. Each lease of
         real Property grants to an Issuer or Subsidiary party thereto the right
         to the quiet enjoyment of the premises leased thereunder during the
         term thereof, except where the absence of such grants, in the
         aggregate, could not reasonably be expected to have a Material Adverse
         Effect.

                  (c) INTELLECTUAL PROPERTY. Except as disclosed in PART 2.4(C)
         OF ANNEX 3:

                           (i) each of the Issuers and the Subsidiaries owns or
                  possesses all licenses, permits, franchises, authorizations,
                  patents, copyrights, service marks, trademarks and trade
                  names, or rights thereto, that individually or in the
                  aggregate are Material, without known conflict with the rights
                  of others;

                           (ii) no product or practice of an Issuer or any
                  Subsidiary infringes in any Material respect any license,
                  permit, franchise, authorization, patent, copyright, service
                  mark, trademark, trade name or other right owned by any other
                  Person;

                           (iii) there is no Material violation by any Person of
                  any right of any Issuer or any Subsidiary with respect to any
                  patent, copyright, service mark, trademark, trade name or
                  other right owned or used by an Issuer or any Subsidiary; and

                           (iv) all Material filings in federal and state
                  offices (including, without limitation, the United States
                  Patent and Trademark Office) in respect of all such patents,
                  pending patents, copyrights, service marks, trademarks and
                  tradenames, and licenses with respect thereto, necessary to
                  protect the rights therein of the Issuers and the Subsidiaries
                  against third parties, have been made.

         2.5      TAXES.

                  (a) RETURNS FILED; TAXES PAID. All tax returns required to be
         filed by the Issuers and the Subsidiaries and each other Person with
         which any Issuer or Subsidiary files or has filed a consolidated return
         in any jurisdiction have in fact

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         been filed on a timely basis. All taxes, assessments, fees and other
         governmental charges upon the Issuers, the Subsidiaries and any such
         Person, and upon any of their respective Properties, income or
         franchises, that are due and payable have been paid, except for such
         failures to pay that, in the aggregate for all such Persons, could not
         reasonably be expected to have a Material Adverse Effect. The Issuers
         know of no proposed additional tax assessment against either of them or
         any such Person that could reasonably be expected to have a Material
         Adverse Effect.

                  (b) BOOK PROVISIONS ADEQUATE. The amount of the liability for
         taxes reflected in each of the balance sheets referred to in Section
         2.2(a) is in each case an adequate provision for taxes as of the date
         of such balance sheet (including, without limitation, any payment due
         pursuant to any tax sharing agreement) as are or may become payable by
         any one or more of the Issuers, the Subsidiaries and the other Persons
         consolidated with any of them in such financial statements in respect
         of all tax periods ending on or prior to such dates.

         2.6      PENDING LITIGATION.

                  (a) PENDING LITIGATION. There are no proceedings, actions or
         investigations pending against or, to the knowledge of either Issuer,
         threatened against or affecting, any Issuer or Subsidiary in any court
         or before any Governmental Authority or arbitration board or tribunal
         that, in the aggregate for all such proceedings, actions and
         investigations, could reasonably be expected to have a Material Adverse
         Effect.

                  (b) NO VIOLATIONS. Neither the Company nor any Subsidiary is
         in violation of any judgment, order, writ, injunction or decree of any
         court, Governmental Authority, arbitration board or tribunal that, in
         the aggregate for all such violations, could reasonably be expected to
         have a Material Adverse Effect.

         2.7      CORPORATE ORGANIZATION AND AUTHORITY.

         Each of the Issuers and each Subsidiary:

                  (a) is a corporation duly incorporated, validly existing and
         in good standing under the laws of its state of incorporation;

                  (b) has all corporate power and authority necessary to own and
         operate its Properties and to carry on its business as now conducted
         and as presently proposed to be conducted;

                  (c) has all licenses, certificates, permits, franchises and
         other governmental authorizations necessary to own and operate its
         Properties and to carry on its business as now conducted and as
         presently proposed to be conducted, except where the failure to have
         such licenses, certificates, permits, franchises and other governmental
         authorizations, in the aggregate for all such failures, could not
         reasonably be expected to have a Material Adverse Effect; and

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                  (d) has duly qualified or has been duly licensed, and is
         authorized to do business and is in good standing, as a foreign
         corporation, in each state in the United States of America and in each
         other jurisdiction where it is required to do so, except where the
         failure to be so qualified or licensed and authorized and in good
         standing, in the aggregate for all such failures, could not reasonably
         be expected to have a Material Adverse Effect.

         2.8      CHARTER INSTRUMENTS, OTHER AGREEMENTS.

         Neither Issuer nor any Subsidiary is in violation in any respect of:

                  (a) any term of any charter instrument (including, without
         limitation, the Charter) or bylaw; or

                  (b) any term in any agreement or other instrument to which it
         is a party or by which it or any of its Property may be bound, except
         for such violations that, in the aggregate for all such violations,
         could not reasonably be expected to have a Material Adverse Effect.

         2.9      RESTRICTIONS ON THE COMPANY.

         Neither Issuer and no Subsidiary:

                  (a) is a party to any contract or agreement, or subject to any
         charter or other corporate restriction that, in the aggregate for all
         such contracts, agreements, and charter and corporate restrictions, is
         reasonably likely to have a Material Adverse Effect;

                  (b) is a party to any contract or agreement that restricts its
         right or ability to incur Debt, to make guarantees or to issue Common
         Stock of the Company, as the case may be, other than the Financing
         Documents and the agreements listed on PART 2.9(B) OF ANNEX 3, none of
         which restricts the issuance and sale of the Purchased Securities or
         the execution and delivery of or the compliance with this Agreement or
         the other Financing Documents by the Issuers and the Affiliate
         Guarantors;

                  (c) has agreed or consented to cause or permit in the future
         (upon the happening of a contingency or otherwise) any of its Property,
         whether now owned or hereafter acquired, to be subject to a Lien not
         permitted by the provisions of the Note Agreement; or

                  (d) is (other than as identified on PART 2.9(D) OF ANNEX 3)
         subject to any encumbrance, restriction, limitation or prohibition on
         the ability of any Subsidiary, whether by agreement, amendment or
         modification of any existing agreement or otherwise, to:

                           (i) pay dividends or make any other distributions on
                  the Capital Stock of such Subsidiary or any other interest or
                  participation measured by its profits;

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                           (ii) pay any Debt or other indebtedness or obligation
                  owed to the Company or any other Subsidiary owning Capital
                  Stock of such Subsidiary;

                           (iii) make loans or advances to the Company;

                           (iv) transfer any of its Property to the Company; or

                           (v) enter into or become obligated in respect of the
                  Affiliate Guaranty;

         in each case, except for such encumbrances, restrictions, limitations
         or prohibitions existing under or by reason of applicable law.

True, correct and complete copies of each of the agreements, if any, listed on
PART 2.9(B) OF ANNEX 3 and PART 2.9(D) OF ANNEX 3 have been provided to each
Purchaser and the Purchasers' special counsel.

         2.10     COMPLIANCE WITH LAW.

         Neither Issuer and no Subsidiary is in violation of any law, ordinance,
governmental rule or regulation to which it is subject, except for such
violations that, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

         2.11     PENSION PLANS.

                  (a) OPERATION OF PLANS; LIABILITIES. The Issuers and each
         ERISA Affiliate have operated and administered each Plan in compliance
         with all applicable laws except for such instances of noncompliance as
         have not resulted in and could not reasonably be expected to result in
         a Material Adverse Effect. Neither Issuer and no ERISA Affiliate has
         incurred any liability pursuant to Title I or IV of ERISA or the
         penalty or excise tax provisions of the IRC relating to any Plan and no
         event, transaction or condition has occurred or exists that could
         reasonably be expected to result in the incurrence of any such
         liability by an Issuer or any ERISA Affiliate, or in the imposition of
         any Lien on any of the rights, Properties or assets of an Issuer or any
         ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or
         to such penalty or excise tax provisions or to section 401(a)(29) or
         412 of the IRC, other than such liabilities or Liens as individually or
         in the aggregate would not have a Material Adverse Effect.

                  (b) RELATIONSHIP OF BENEFIT LIABILITIES TO PLAN ASSETS. The
         present value of the aggregate benefit liabilities under each of the
         Plans (other than Multiemployer Plans), determined as of the end of
         such Plan's most recently ended plan year on the basis of the actuarial
         assumptions specified for funding purposes in such Plan's most recent
         actuarial valuation report, did not exceed the aggregate current value
         of the assets of such Plan allocable to such benefit liabilities. The
         term "BENEFIT LIABILITIES" has the meaning specified in section 4001 of
         ERISA and the terms "CURRENT VALUE" and "PRESENT VALUE" have the
         meaning specified in section 3 of ERISA.

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                  (c) WITHDRAWAL LIABILITIES. The Issuers and their ERISA
         Affiliates have not incurred withdrawal liabilities (and are not
         subject to contingent withdrawal liabilities) under section 4201 or
         4204 of ERISA in respect of Multiemployer Plans, other than such
         liabilities as individually or in the aggregate would not have a
         Material Adverse Effect.

                  (d) POSTRETIREMENT BENEFIT OBLIGATIONS. The expected
         postretirement benefit obligation (determined as of the last day of the
         Parent's most recently ended fiscal year in accordance with Financial
         Accounting Standards Board Statement No. 106, without regard to
         liabilities attributable to continuation coverage mandated by section
         4980B of the IRC) of the Issuers and the Subsidiaries will not have a
         Material Adverse Effect.

                  (e) PROHIBITED TRANSACTIONS. The execution and delivery of the
         Financing Documents and the issuance and sale of the Purchased
         Securities hereunder will not involve any transaction that is subject
         to the prohibitions of section 406 of ERISA or in connection with which
         a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
         IRC. The representation by the Issuers in the foregoing sentence is
         made in reliance upon and subject to the accuracy of the
         representations of each Purchaser and that of its respective
         transferees in Section 3.2 as to the Sources of the funds used to pay
         the purchase price of the Purchased Securities to be purchased by such
         Purchaser and, in the event that such Purchaser's representation is
         made pursuant to Section 3.2(a) hereof, assuming that PTCE 95-60
         applies to exempt such Purchaser's purchase and holding of the
         Purchased Securities.

                  (f) FOREIGN PENSION PLANS. Neither Issuer nor any Subsidiary
         has, maintains or is required to contribute to, any Foreign Pension
         Plan.

         2.12     ENVIRONMENTAL COMPLIANCE.

                  (a) COMPLIANCE - Except as disclosed on PART 2.12(A) OF ANNEX
         3, each of the Issuers and the Subsidiaries is in compliance with all
         Environmental Protection Laws in effect in each jurisdiction where it
         is presently doing business or is located, other than any
         non-compliance which could not reasonably be expected to have a
         Material Adverse Effect.

                  (b) LIABILITY - Except as disclosed on PART 2.12(B) OF ANNEX
         3, neither Issuer and no Subsidiary is subject to any liability under
         any Environmental Protection Law that, individually or in the
         aggregate, could reasonably be expected to have a Material Adverse
         Effect.

                  (c) NOTICES - Except as disclosed on PART 2.12(C) OF ANNEX 3,
         neither Issuer and no Subsidiary has received any:

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                           (i) written notice from any Governmental Authority by
                  which any of its present or previously-owned or leased real
                  Properties has been designated, listed, or identified in any
                  manner by any Governmental Authority charged with
                  administering or enforcing any Environmental Protection Law as
                  a hazardous substance disposal or removal site, "Superfund"
                  clean-up site, or candidate for remediation or closure
                  pursuant to any Environmental Protection Law;

                           (ii) written notice of any Lien arising under or in
                  connection with any Environmental Protection Law that has
                  attached to any revenues of, or to, any of its owned or leased
                  real Properties; or

                           (iii) summons, citation, notice, directive, letter,
                  or other written communication from any Governmental Authority
                  concerning any releasing, spilling, leaking, pumping, pouring,
                  emitting, emptying, dumping, or disposing of any hazardous
                  substance into the environment in violation of any
                  Environmental Protection Law;

         which, in any such case, relates to or makes reference to an event or
         condition which could reasonably be expected to have a Material Adverse
         Effect.

         2.13     DUE AUTHORIZATION; ENFORCEABILITY.

                  (a) SALE OF PURCHASED SECURITIES IS LEGAL AND AUTHORIZED. The
         issuance, sale and delivery of the Purchased Securities, the execution
         and delivery by each Obligor of each of the Financing Documents to
         which it is a party and compliance by each Obligor with all of the
         provisions of such Financing Documents:

                           (i) is within the corporate powers of such Obligor;
                  and

                           (ii) is legal and does not conflict with, result in
                  any breach of any of the provisions of, constitute a default
                  under, or result in the creation of any Lien (other than Liens
                  permitted by the provisions of the Note Agreement) upon any
                  Property of such Obligor under the provisions of:

                                    (A) any agreement, charter instrument, bylaw
                           or other instrument to which such Obligor is a party
                           or by which such Obligor is or may be bound;

                                    (B) any order, judgment, decree, or ruling
                           of any court, arbitrator or Governmental Authority
                           applicable to such Obligor or any of its Property; or

                                    (C) any statute or other rule or regulation
                           of any Governmental Authority applicable to such
                           Obligor or any of its Property.

                                       10

<PAGE>   14

                  (b) OBLIGATIONS ARE ENFORCEABLE. Each Obligor has duly
         authorized by all necessary action on its part each of the Financing
         Documents to which it is a party. Each such Financing Document has been
         executed and delivered by one or more duly authorized officers of each
         Obligor which is or purports to be a party thereto, and constitutes a
         legal, valid and binding obligation of each such Obligor enforceable in
         accordance with its terms, except that:

                           (i) the enforceability thereof may be limited by
                  applicable bankruptcy, reorganization, arrangement,
                  insolvency, moratorium, or other similar laws affecting the
                  enforceability of creditors' rights generally and subject to
                  the availability of equitable remedies; and

                           (ii) rights to indemnity and contribution contained
                  therein may be limited by applicable law or public policy.

         2.14     GOVERNMENTAL CONSENT TO SALE OF PURCHASED SECURITIES.

                  (a) Neither the nature of the Obligors nor of any of their
         businesses or Properties, nor any relationship between any Obligor and
         any other Person, nor any circumstance in connection with the offer,
         issuance, sale or delivery of the Purchased Securities and the
         Affiliate Guarantees and the execution and delivery of any Financing
         Document, nor the performance of the obligations of any Obligor
         hereunder or thereunder, is such as to require a consent, approval or
         authorization of, or pre-filing, registration or qualification with,
         any Governmental Authority on the part of any Obligor as a condition
         thereto, except for:

                           (i) such consents, approvals, authorizations,
                  pre-filings, registrations and qualifications described on
                  PART 2.14(A) OF ANNEX 3, all of which have been obtained on or
                  prior to the Closing Date; and

                           (ii) such consents, approvals, authorizations,
                  pre-filings, registrations and qualifications which, if not
                  obtained, could not, in the aggregate, reasonably be expected
                  to have a Material Adverse Effect.

                  (b) Neither the issuance and sale of the Purchased Securities
         and the Affiliate Guarantees, nor the incurrence of the Debt and the
         other obligations represented thereby, nor the execution and delivery
         of the Financing Documents and the performance of the obligations of
         the Obligors hereunder and thereunder:

                           (i) is subject to regulation under the Investment
                  Company Act of 1940, as amended, the Public Utility Holding
                  Company Act of 1935, as amended, the Transportation Acts of
                  the United States of America (49 U.S.C.), as amended, or the
                  Federal Power Act, as amended; and

                           (ii) violates any provision of any statute or other
                  rule or regulation of any Governmental Authority applicable to
                  any Obligor.

                                       11

<PAGE>   15

         2.15     HART-SCOTT-RODINO COMPLIANCE.

         As a result of the purchase of the Common Shares and the consummation
of the other transactions contemplated by or in the Financing Documents (and
assuming that no Purchaser (together with its affiliates), will be the
beneficial owner of any Capital Stock or Rights of the Parent other than the
Common Shares) no Purchaser, together with its affiliates, will hold (as such
term is defined in 16 C.F.R. ss.801.1(c)) either:

                  (a) fifteen percent (15%) or more of the total number of
         shares of the outstanding Common Stock of the Company; or

                  (b) Common Stock having a Fair Market Value of Fifteen Million
         Dollars ($15,000,000) or more.

Based upon the foregoing, neither the Company nor any Purchaser is required to
file a Notification and Report Form thereunder with the Federal Trade Commission
or the Antitrust Division with respect to the purchase and sale of the Common
Shares.

         2.16     NO DEFAULTS.

         No event has occurred and no condition exists that, upon the execution
and delivery of the Financing Documents and the issuance and sale of the
Purchased Securities, would constitute a Default or an Event of Default or a
breach, default or event of default under any Financing Document or Senior
Credit Document.

         2.17     PRIVATE OFFERING OF PURCHASED SECURITIES.

                  (a) NUMBER OF OFFEREES. Neither any Obligor, CIBC Oppenheimer
         (the only agent, broker or dealer retained by any Obligor in connection
         with the sale of the Purchased Securities) nor any other Person acting
         on behalf of any Obligor has offered any of the Purchased Securities or
         any Security of any Obligor similar to either the Notes, the Common
         Shares or the Affiliate Guarantees for sale to, or solicited offers to
         buy any thereof from, or otherwise approached or negotiated with
         respect thereto with, any prospective purchaser, other than the
         Purchasers and the other institutional investors listed on PART
         2.15(B)(II)(A) OF ANNEX 3, each of whom was offered all or a portion of
         the Purchased Securities at private sale for investment.

                  (b) CONDUCT OF SALE. Assuming the accuracy of

                           (i) each Purchaser's representations and warranties
                  contained in this Agreement; and

                           (ii) the information contained in the offeree letter
                  referred to in Section 4.11,

         the sale hereunder of Notes and Common Shares is exempt from the
         registration and prospectus delivery requirements of the Securities Act
         and it is not necessary in connection with the sale of the Notes and
         Common Shares to any Purchaser in

                                       12

<PAGE>   16

         accordance herewith to qualify the Notes under the Trust Indenture Act
         of 1939, as amended. In the case of each offer or sale to the
         Purchasers of the Notes and Common Shares, no form of general
         solicitation or general advertising was used by the Issuers or the
         officers, directors or employees of either of them, or, to the Issuers'
         knowledge, by CIBC Oppenheimer or its officers, directors or employees,
         including advertisements, articles, notices or other communications
         published in any newspaper, magazine or similar medium or broadcast
         over television or radio, and any seminar or meeting whose attendees
         were invited by any general solicitation or general advertising.

         2.18     USE OF PROCEEDS.

                  (a) USE OF PROCEEDS. The Company shall have applied the
         proceeds received in connection with the transactions contemplated by
         the Financing Documents to reduce the outstanding balance under its
         Revolving Credit Facility and to pay transaction expenses associated
         with the transactions contemplated by this Agreement.

                  (b) MARGIN REGULATIONS. None of the transactions contemplated
         in any of the Financing Documents (including, without limitation, the
         use of the proceeds from the sale of the Purchased Securities)
         violates, will violate or will result in a violation of section 7 of
         the Exchange Act, or any regulation issued pursuant thereto, including,
         without limitation, Regulation T, Regulation U or Regulation X of the
         Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter
         II.

                  (c) ABSENCE OF FOREIGN OR ENEMY STATUS. Neither the sale of
         the Purchased Securities nor the use of proceeds from the sale thereof
         will result in a violation of any of the foreign assets control
         regulations of the United States Treasury Department (31 CFR, Subtitle
         B, Chapter V, as amended), or any ruling issued thereunder or any
         enabling legislation or Presidential Executive Order in connection
         therewith.

         2.19     CAPITALIZATION.

                  (a) CAPITALIZATION OF THE COMPANY. PART 2.19(A) OF ANNEX 3
         correctly sets forth, after giving effect to the issuance of the
         Purchased Securities, use of proceeds thereof and the consummation of
         all other transactions contemplated by this Agreement on the Closing
         Date:

                           (i) the authorized and outstanding shares of the
                  Capital Stock and other Securities of the Company (specifying
                  the type, class or series of all such Capital Stock and other
                  Securities and whether such Capital Stock and other Securities
                  are voting or non-voting);

                           (ii) for each legal and beneficial holder of the
                  Company's Capital Stock, the identity of such holder, the
                  number of shares of each class of Capital Stock held by such
                  holder and the percentage of the shares of each class so held;

                                       13

<PAGE>   17

                           (iii) all Rights of the Company, together with
                  descriptions of the terms thereof; and

                           (iv) all obligations (contingent or otherwise) of the
                  Company to repurchase or otherwise acquire or retire any
                  shares of Capital Stock or Rights of the Company.

         All such outstanding shares of Capital Stock have been duly authorized
         and validly issued and are fully paid, non-assessable and free and
         clear of any Lien (other than as specified on PART 2.15(C) OF Annex 3).
         Except as specified on Part 2.20(a) of Annex 3, there are no preemptive
         rights, subscription rights, or other contractual rights granted by the
         Company similar in nature to preemptive rights with respect to any
         Capital Stock of the Company.

                  (b) CAPITALIZATION OF THE PARENT. PART 2.15(B) OF ANNEX 3
         correctly sets forth, after giving effect to the issuance of the
         Purchased Securities and the consummation of all other transactions
         contemplated by this Agreement on the Closing Date:

                           (i) the authorized and outstanding shares of the
                  Capital Stock and other Securities of the Parent (specifying
                  the type, class or series of all such Capital Stock and other
                  Securities and whether such Capital Stock and other Securities
                  are voting or non-voting);

                           (ii) for each beneficial owner of more than five
                  percent (5%) of the Parent's Capital Stock, the identity of
                  such owner, the number of shares of each class of Capital
                  Stock held by such holder and the percentage of the shares of
                  each class so held (it being understood that, except with
                  respect to officers or directors of the Parent and other
                  Affiliates, the Issuers are making this representation solely
                  in reliance upon Schedules 13D and 13G under the Exchange Act
                  and Forms 3, 4 and 5 under the Exchange Act delivered to the
                  Parent);

                           (iii) all Rights of the Parent, together with
                  descriptions of the terms thereof; and

                           (iv) all obligations (contingent or otherwise) of the
                  Parent to repurchase or otherwise acquire or retire any shares
                  of Capital Stock or Rights of the Parent.

         All such outstanding shares of Capital Stock have been duly authorized
         and validly issued, are fully paid and non-assessable, and are free and
         clear of any Lien created by the Issuers, and with respect to the
         Common Shares only, are free and clear of any Lien known to the
         Issuers. (other than as specified on PART 2.19(B) OF ANNEX 3). Except
         as specified on PART 2.19(B) OF ANNEX 3, there are no preemptive
         rights, subscription rights, or other contractual rights granted by the
         Company similar in nature to preemptive rights with respect to any
         Capital Stock of the Parent.

                                       14

<PAGE>   18

                  (c) STOCKHOLDERS AGREEMENTS. Other than as specified on PART
         2.19(C) OF ANNEX 3, there is no agreement or understanding between or
         among the holders of the Capital Stock or Rights of the Parent or the
         Company regarding the Capital Stock of the Company. The Company has
         provided each Purchaser and the Purchasers' special counsel with true,
         accurate and complete copies of all agreements referred to in PART
         2.19(C) OF ANNEX 3.

         2.20     SENIOR CREDIT DOCUMENTS.

         The Issuers have provided to each Purchaser and the Purchasers' special
counsel true, correct and complete copies of the Senior Credit Documents, and
there is no agreement or understanding between or among any Obligor or
Subsidiary, the Senior Agent or any of the Senior Lenders except as set forth in
the Senior Credit Documents.

         2.21     SOLVENCY.

                  (a) ASSETS GREATER THAN LIABILITIES. The fair value of the
         business and assets of the Company (and of the Company and its
         Subsidiaries, on a consolidated basis) exceeds, as of and after giving
         effect to the transactions contemplated by the Financing Documents and
         consummated on the Closing Date and the use of proceeds thereof, the
         liabilities of the Company (including, without limitation, the Notes
         and all other Debt of the Company (and, as the case may be, of the
         Company and the Subsidiaries, on a consolidated basis)) as of such
         time.

                  (b) MEETING LIABILITIES. After giving effect to the
         transactions contemplated by the Financing Documents and all existing
         Debt and other obligations of the Company, the Company (and the Company
         and its Subsidiaries, on a consolidated basis):

                           (i) will not be engaged in any business or
                  transaction, or about to engage in any business or
                  transaction, for which the Company (or, as the case may be,
                  the Company and its Subsidiaries, on a consolidated basis) has
                  unreasonably small assets or capital (within the meaning of
                  the Uniform Fraudulent Transfer Act, the Uniform Fraudulent
                  Conveyance Act and section 548 of the Federal Bankruptcy
                  Code); and

                           (ii) will be able to pay its debts as they mature.

                  (c) INTENT. Each Obligor is entering into the Financing
         Documents with no intent to hinder, delay, or defraud either current
         creditors or future creditors of any Obligor.

         2.22     FULL DISCLOSURE.

         Neither the statements made in this Agreement, the Offering Memorandum,
the financial statements referred to in Section 2.2, nor any other written
statement furnished by or on behalf of any Obligor to any Purchaser in
connection with the negotiation or the closing of the sale of the Purchased
Securities, taken as a whole, contain any untrue statement of a material fact or
omit a material fact necessary to make the statements

                                       15

<PAGE>   19

contained therein and herein, taken as a whole, not misleading. There is no fact
that the Issuers have not disclosed to each Purchaser in writing that has had
or, so far as the Issuers can now reasonably foresee, could reasonably be
expected to have, a Material Adverse Effect.

3.       REPRESENTATIONS OF THE PURCHASERS

         3.1      PURCHASE FOR INVESTMENT.

         Each Purchaser, as to itself only, acknowledges that the Notes and
Common Shares sold hereunder are "restricted securities" as that term is defined
in Rule 144 under the Securities Act. Each Purchaser represents, as to itself
only, to the Issuers that such Purchaser and any account maintained by such
Purchaser for whose account it is purchasing the Notes and Common Shares is a
financially sophisticated institutional investor, is an "accredited investor" as
the term is defined in Rule 501(a) of Regulation D under the Securities Act, has
such knowledge and experience in business and financial matters as to be capable
of evaluating the merits and risks of an investment in the Notes and Common
Shares and has the capacity to protect its interest in connection with the
acquisition hereunder of the Notes and Common Shares. Each Purchaser further
represents to the Issuers that it is purchasing the Purchased Securities listed
on Annex 1 below its name for such Purchaser's own account, or for the account
of one or more separate accounts maintained by such Purchaser, for investment
purposes only and with no present intention of, or view to, distributing such
Purchased Securities or any part thereof except in compliance with the
Securities Act, but without prejudice to the right of such Purchaser or account
at all times to:

                  (a) sell or otherwise dispose of all or any part of the
         Purchased Securities under a registration statement filed under the
         Securities Act, or in a transaction exempt from the registration
         requirements of such Act, including a transaction complying with and
         pursuant to Rule 144A; and

                  (b) have control over the disposition of all of the assets of
         such Purchaser or account to the fullest extent required by any
         applicable law; provided that such disposition complies with applicable
         law.

         Each Purchaser acknowledges receipt of the Offering Memorandum and
further acknowledges that such Purchaser has been afforded the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Issuers concerning the terms and conditions of the
offering of the Purchased Securities and the merits and risks of investing in
the Purchased Securities and to obtain such additional information which the
Issuers possess or can acquire that is necessary to verify the accuracy and
completeness of the information contained in the Offering Memorandum.

         It is understood that, in making the representations set out in Section
2.13(a), Section 2.14 and Section 2.17, the Company is relying, to the extent
applicable, upon the representation as aforesaid.

                                       16

<PAGE>   20


         3.2      ERISA.

         Each Purchaser, as to itself only, represents that at least one of the
following statements is an accurate representation as to each source of funds (a
"SOURCE") to be used by such Purchaser to pay the purchase price of the
Purchased Securities:

                  (a) GENERAL ACCOUNT - such Purchaser is an insurance company
         and the Source is an "insurance company general account," as such term
         is defined in DOL Prohibited Transaction Class Exemption 95-60 (issued
         July 12, 1995) ("PTCE 95-60"), and there is no "employee benefit plan"
         (as defined in section 3(3) of ERISA and section 4975(e)(1) of the
         IRC), treating as a single plan all plans maintained by the same
         employer (and affiliates thereof as defined in section V(a)(1) of PTCE
         95-60) or by the same employee organization, with respect to which the
         amount of the general account reserves and liabilities for all
         contracts held by or on behalf of such plan, exceeds 10% of the total
         reserves and liabilities of such general account as determined under
         PTCE 95-60 (exclusive of separate account liabilities) plus surplus, as
         set forth in the National Association of Insurance Commissioners Annual
         Statement filed with the state of domicile of such Purchaser and that
         such acquisition is eligible for and satisfies the other requirements
         of such exemption; or

                  (b) SEPARATE ACCOUNT - the Source is a separate account:

                           (I) 10% POOLED SEPARATE ACCOUNT - that is an
                  insurance company pooled separate account, within the meaning
                  of DOL Prohibited Transaction Class Exemption 90-1 (issued
                  January 29, 1990), and to the extent that there is any
                  employee benefit plan, or group of plans maintained by the
                  same employer or employer organization, whose assets in such
                  separate account exceed ten percent (10%) of the assets of
                  such separate account, such Purchaser has disclosed the names
                  of such plans to the Issuer in writing; or

                           (II) IDENTIFIED PLAN ASSETS - that is comprised of
                  employee benefit plans identified by such Purchaser in writing
                  and with respect to which the Issuers hereby warrant and
                  represent that, as of the Closing Date, neither the Issuers
                  nor any ERISA Affiliate is a "party in interest" (as defined
                  in section 3 of ERISA) or a "disqualified person" (as defined
                  in section 4975 of the Code) with respect to any plan so
                  identified; or

                           (III) GUARANTIED SEPARATE ACCOUNT - that is
                  maintained solely in connection with fixed contractual
                  obligations of an insurance company, under which any amounts
                  payable, or credited, to any employee benefit plan having an
                  interest in such account and to any participant or beneficiary
                  of such plan (including an annuitant) are not affected in any
                  manner by the investment performance of the separate account
                  (as provided by 29 CFR ss.2510.3-101(h)(1)(iii)); or

                                       17

<PAGE>   21

                  (c) QPAM - the Source constitutes assets of an "investment
         fund" (within the meaning of Part V of the QPAM Exemption) managed by a
         "qualified professional asset manager" or "QPAM" (within the meaning of
         Part V of the QPAM Exemption), no employee benefit plan's assets that
         are included in such investment fund, when combined with the assets of
         all other employee benefit plans established or maintained by the same
         employer or by an affiliate (within the meaning of section V(c)(1) of
         the QPAM Exemption) of such employer or by the same employee
         organization and managed by such QPAM, exceed twenty percent (20%) of
         the total client assets managed by such QPAM, the conditions of Part
         I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor
         a person controlling or controlled by the QPAM (applying the definition
         of "control" in section V(e) of the QPAM Exemption) owns a five percent
         (5%) or more interest in the Company and:

                           (i) the identity of such QPAM; and

                           (ii) the names of all employee benefit plans whose
                  assets are included in such investment fund;

          have been disclosed to the Issuers in writing; or

                  (d) GOVERNMENTAL PLANS - the Source is a governmental plan or
         a church plan; or

                  (e) IDENTIFIED PLANS - the Source is one or more employee
         benefit plans, or a separate account or trust fund comprised of one or
         more employee benefit plans, each of which has been identified to the
         Issuers in writing; or

                  (f) EXEMPT PLANS - the Source does not include assets of any
         employee benefit plan, other than a plan exempt from the coverage of
         ERISA, or

As used in this Section 3.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN" "CHURCH PLAN" and "SEPARATE ACCOUNT" shall have the respective meanings
assigned to such terms in section 3 of ERISA.

         It is understood that, in making the representations set out in Section
2.13(a), Section 2.14 and Section 2.11(e), the Company is relying, to the extent
applicable, upon the aforesaid representation.

4.       CLOSING CONDITIONS

         The obligations of each Purchaser under this Agreement, including,
without limitation, the obligation to purchase and pay for the Purchased
Securities, are subject to the following conditions precedent, and the failure
by the Issuers to satisfy all such conditions shall relieve each Purchaser, at
its own election, of all such obligations.

                                       18

<PAGE>   22

         4.1      OPINIONS OF COUNSEL.

         Each Purchaser shall have received from:

                  (a) Arent Fox Kintner Plotkin & Kahn, PLLC, special counsel
         for the Obligors; and

                  (b) Bingham Dana LLP, the Purchasers' special counsel;

closing opinions, each dated as of the Closing Date, and substantially in the
respective forms set forth in Exhibit 4.1(a) and Exhibit 4.1(b) and as to such
other matters as any Purchaser may reasonably request. This Section 4.1 shall
constitute direction by the Issuers to such counsel named in Section 4.1(a) to
deliver such closing opinion to each Purchaser.

         4.2      WARRANTIES AND REPRESENTATIONS TRUE; COMPLIANCE.

                  (a) WARRANTIES AND REPRESENTATIONS TRUE. The warranties and
         representations contained in Section 2 shall be true on the Closing
         Date with the same effect as though made on and as of that date.

                  (b) COMPLIANCE WITH THIS AGREEMENT AND FINANCING DOCUMENTS.
         The Obligors shall have performed and complied with all agreements and
         conditions contained herein and in the other Financing Documents that
         are required to be performed or complied with by the Obligors on or
         prior to the Closing Date, and such performance and compliance shall
         remain in effect on the Closing Date.

         4.3      OFFICERS' CERTIFICATES.

         Each Purchaser shall have received:

                  (a) COMPANY OFFICERS' CERTIFICATE - a certificate dated the
         Closing Date and signed (on behalf of the Company) by two (2) Senior
         Officers of the Company, substantially in the form of Exhibit 4.3(a);

                  (b) PARENT OFFICERS' CERTIFICATE - a certificate dated the
         Closing Date and signed (on behalf of the Parent) by two (2) Senior
         Officers of the Parent, substantially in the form of Exhibit 4.3(b);

                  (c) COMPANY SECRETARY'S CERTIFICATE - a certificate dated the
         Closing Date and signed (on behalf of the Company) by the Secretary or
         an Assistant Secretary of the Company, substantially in the form of
         Exhibit 4.3(c);

                  (d) PARENT SECRETARY'S CERTIFICATE - a certificate dated the
         Closing Date and signed (on behalf of the Parent) by the Secretary or
         an Assistant Secretary of the Parent, substantially in the form of
         Exhibit 4.3(d); and

                                       19

<PAGE>   23

                  (e) SUBSIDIARY AFFILIATE GUARANTOR SECRETARY'S CERTIFICATES -
         a certificate from each Subsidiary which is an Affiliate Guarantor,
         dated the Closing Date and signed (on behalf of such Affiliate
         Guarantor) by the Secretary or an Assistant Secretary of such Affiliate
         Guarantor, substantially in the form of Exhibit 4.3(e).

         4.4      ORGANIC DOCUMENTS.

         Each Purchaser shall have received:

                  (a) GOOD STANDING CERTIFICATES -- For each Obligor, a
         long-form certificate of good standing or equivalent certificate or
         certificates of the Secretary of State of its state or other
         jurisdiction of incorporation, certifying its due incorporation, good
         standing and satisfactory tax status and listing all charter documents
         with respect to such Obligor on file with such Secretary of State; and

                  (b) CHARTER DOCUMENTS - with respect to each Obligor, copies
         of all charter documents on file with the Secretary of State of its
         state or other jurisdiction of incorporation, certified by the such
         Secretary of State to be true, correct and complete.

         4.5      LEGALITY.

         The Purchased Securities shall on the Closing Date qualify as a legal
investment for insurance companies under applicable insurance law (without
regard to any "basket" or "leeway" provisions), and the acquisition thereof
shall not subject any Purchaser to any penalty or other onerous condition
pursuant to any such law or regulation, and each Purchaser shall have received
such evidence as it may reasonably request to establish compliance with this
condition.

         4.6      FINANCING DOCUMENTS.

                  (a) NOTE AGREEMENT; NOTES. The Company shall have executed and
         delivered to each Purchaser the Note Agreement. The Company shall have
         issued to each such Purchaser Notes in the respective principal amounts
         set forth below such Purchaser's name on Annex 1.

                  (b) CHARTER; COMMON SHARE CERTIFICATES. The Charter shall be
         in the form of Exhibit 1.1(b). The Parent shall have executed and
         delivered to each Purchaser certificates representing the Common Shares
         in the respective numbers of Common Shares set forth below such
         Purchaser's name on Annex 1.

                  (c) AFFILIATE GUARANTY. Each of the Affiliate Guarantors shall
         have executed and delivered to each Purchaser the Affiliate Guaranty
         (as may be amended, restated or otherwise modified from time to time in
         accordance with the terms thereof, the "AFFILIATE GUARANTY") in the
         form of Exhibit 4.6(c).

                                       20

<PAGE>   24

                  (d) INVESTORS RIGHTS AGREEMENT. The Parent shall have executed
         and delivered to each Purchaser an Investors Rights Agreement (as may
         be amended, restated or otherwise modified from time to time in
         accordance with the terms thereof, the "INVESTORS RIGHTS AGREEMENT") in
         the form of Exhibit 4.6(d).

         4.7      CERTAIN CONSENTS AND AGREEMENTS.

         (a) Each holder of Debt, Capital Stock or Rights of any Obligor,
and each other Person, the consent of which is, in the reasonable judgment of
the Purchasers and the Purchasers' special counsel, necessary or desirable to
permit any Obligor to enter into the transactions contemplated by this Agreement
and to perform its respective obligations in respect of the Financing Documents,
shall have executed and delivered to each Purchaser a consent, in form and
substance acceptable to each Purchaser and the Purchasers' special counsel, to
the transactions contemplated by the Financing Documents:

                  (i) permitting the Company to enter into, and to incur and
         have outstanding the indebtedness and all other obligations in respect
         of, this Agreement, the Note Agreement and the Notes and to issue and
         sell the Notes;

                  (ii) permitting the Parent to enter into, and to have
         outstanding its obligations in respect of, this Agreement and the
         Investors Rights Agreement, and to issue and sell the Common Shares;

                  (iii) permitting each Affiliate Guarantor to enter into and
         have outstanding its obligations in respect, of the Affiliate Guaranty;
         and

                  (iv) waiving any default or event of default which might have
         occurred by virtue of the execution and delivery of this Agreement and
         the other Financing Documents.

         (b) OMNIBUS AMENDMENT. An Omnibus Amendment in form and substance
satisfactory to the Purchasers shall have been executed and delivered to each
Purchaser.

         4.8      SENIOR DEBT.

                  (a) SENIOR CREDIT DOCUMENTS. The Company shall deliver to each
         of the Purchasers and the Purchasers' special counsel a copy of the
         Senior Credit Documents, together with all amendments thereto through
         and including the Closing Date, certified as true and correct by an
         officer of the Company. Pursuant to the Senior Credit Documents, after
         giving effect to the application of the proceeds of the sale of the
         Purchased Securities to prepayment of outstanding Senior Debt, the
         Company shall have the ability to borrow under a commitment of not less
         than Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000.00)
         under a revolving credit facility, the borrowing base conditions to
         which shall have been satisfied.

                  (b) NO DEFAULTS; SATISFACTION OF CONDITIONS PRECEDENT. No
         event shall have occurred and no condition shall exist that shall
         prohibit the Company from borrowing under the Senior Credit Documents.

                                       21

<PAGE>   25

                  (c) CONSENTS FROM SENIOR LENDERS. The Purchasers shall have
         received a satisfactory consent from the Senior Lenders and the holders
         of the June 1999 Notes.

         4.9      USE OF PROCEEDS; PREPAYMENT OF SENIOR DEBT.

         The Company shall have applied the proceeds received in connection with
the transactions contemplated by the Financing Documents to reduce the
outstanding balance under its Revolving Credit Facility and to pay transaction
expenses associated with the transactions contemplated by this Agreement.

         4.10     OFFEREE LETTER.

         The Company shall have caused CIBC Oppenheimer to deliver to the
Issuers, their special counsel and the Purchasers' special counsel an offeree
letter, in form and substance reasonably satisfactory to each of the Purchasers
and the Purchasers' special counsel, confirming the manner of the offering of
the Purchased Securities by CIBC Oppenheimer.

         4.11     PRIVATE PLACEMENT NUMBERS.

         The Company shall have obtained or caused to be obtained a private
placement number for the Notes and a CUSIP number for the Common Shares from the
CUSIP Service Bureau of Standard & Poor's, a division of McGraw-Hill, Inc. and
each of the Purchasers and the Purchasers' special counsel shall have been
informed of such private placement and CUSIP numbers.

         4.12     FEES AND EXPENSES.

         All fees and disbursements required to be paid pursuant to Section 6.6
shall have been paid in full.

         4.13     TRANSACTION FEE.

         The Company shall have paid to each Purchaser (or, if another Person is
designated on Annex 1 to receive the transaction fee on behalf of any Purchaser,
to such other Person on such Purchaser's behalf) the transaction fee set forth
on Annex 1, the aggregate amount of which shall be Three Hundred Fifty Thousand
Dollars ($350,000).

         4.14     OTHER PURCHASERS.

         With respect to each Purchaser, no other Purchaser shall have failed to
execute and deliver the Note Agreement, the Investors Rights Agreement or any
other Financing Document to be executed and delivered by it, or to accept
delivery of or make payment for the Purchased Securities.

                                       22

<PAGE>   26

         4.15     PROCEEDINGS SATISFACTORY.

         All proceedings taken in connection with the issuance and sale of the
Purchased Securities and all documents and papers relating thereto shall be
satisfactory to each Purchaser and the Purchasers' special counsel. Each
Purchaser and the Purchasers' special counsel shall have received copies of such
documents and papers as they may reasonably request in connection therewith or
in connection with the Purchasers' special counsel's closing opinion, all in
form and substance satisfactory to the Purchasers and the Purchasers' special
counsel.

         4.16     SIDE LETTER.

         The Company shall have reached an agreement with certain Purchasers
relating to SBIC matters.

5.       INTERPRETATION OF THIS AGREEMENT

         5.1      TERMS DEFINED.

         As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

         AFFILIATE GUARANTOR - means the Parent, Finance and each Subsidiary on
the Closing Date (other than any Insignificant Subsidiary)..

         AFFILIATE GUARANTY - Section 4.6(c).

         AGREEMENT, THIS - means this Securities Purchase Agreement, as it may
be amended, restated or otherwise modified from time to time.

         CHARTER - means the Certificate of Incorporation of the Parent, as
amended through the date hereof, in the form of Exhibit 1.1(b).

         CLOSING - Section 1.2(b).

         CLOSING DATE - Section 1.2(b).

         COMMON SHARES - Section 1.1(b).

         COMMON STOCK - means the Common Stock, par value $.001 per share, of
the Parent, together with the associated Share Purchase Rights attached thereto.

         COMPANY - has the meaning specified in the introductory sentence.

                                       23

<PAGE>   27

         FINANCING DOCUMENTS - means and includes this Agreement, the Note
Agreement, the Notes, the Affiliate Guaranty, the certificates representing the
Common Shares, the Investors Rights Agreement and the other agreements,
certificates and instruments to be executed pursuant to the terms of each of the
foregoing, as each may be amended, restated or otherwise modified from time to
time.

         INDEMNIFIED PARTY - Section 6.8.

         INVESTORS RIGHTS AGREEMENT - Section 4.6(d).

         ISSUERS - has the meaning specified in the introductory sentence.

         MATERIAL -- means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Issuers
and the Subsidiaries, taken as a whole, or having any effect upon the legality,
validity or enforceability of the Financing Documents.

         NOTE AGREEMENT - Section 1.1(a).

         NOTES - Section 1.1(a).

         OBLIGORS - means and includes the Company and each Affiliate Guarantor.

         OFFERING MEMORANDUM - Section 2.1.

         PARENT - has the meaning specified in the introductory sentence.

         PROCEEDING - Section 6.8.

         PROJECTIONS - Section 2.2(f).

         PTCE 95-60 -- Section 3.2(a).

         PURCHASED SECURITIES - means the Notes and the Common Shares to be
purchased by the Purchasers pursuant to Section 1.2 of this Agreement.

         PURCHASERS - the introductory paragraph.

         QPAM EXEMPTION - means Prohibited Transaction Class Exemption 84-14
issued by the DOL.

         RULE 144A - means Rule 144A promulgated under the Securities Act, 17
C.F.R. ss.230.144A, as such rule may be amended from time to time.

         SENIOR CREDIT DOCUMENTS - means the Senior Credit Agreement and each
other agreement, document or instrument executed in connection therewith or
Guaranteeing or securing the obligations of any obligor in respect thereof.

                                       24

<PAGE>   28

         SHARE PURCHASE RIGHTS - means the preferred share purchase rights
issued pursuant to the Share Purchase Rights Agreement.

         SHARE PURCHASE RIGHTS AGREEMENT - means the Rights Agreement, dated as
of October 23, 1998, between the Parent and American Stock Transfer & Trust
Company, as Rights Agent, as amended and modified from time to time in
accordance with its terms.

         SOURCE - Section 3.2.

         SUBSIDIARY - means, at any time, with respect to any Person, any other
Person that would be treated as a subsidiary of such Person in accordance with
GAAP at such time. The term "SUBSIDIARY," as used herein without regard to any
particular Person, means a Subsidiary of the Parent and includes, without
limitation, the Company.

         5.2      OTHER DEFINITIONS.

         The following terms shall have the respective meanings ascribed to such
terms in the Note Agreement:

     Affiliate                                   Insignificant Subsidiary
     Capital Stock                               Investment
     Debt                                        IRC
     Default                                     Lien
     DOL                                         Material Adverse Effect
     Environmental Protection Law                Multiemployer Plan
     ERISA                                       Person
     ERISA Affiliate                             Plan
     Event of Default                            Property
     Exchange Act                                Restricted Investment
     Fair Market Value                           Right
     Finance                                     Securities Act
     Foreign Pension Plan                        Security
     GAAP                                        Senior Agent
     Governmental Authority                      Senior Credit Agreement
     Guaranties                                  Senior Lender
     Hazardous Materials                         Senior Officer
                                                 Voting Stock

         5.3      DIRECTLY OR INDIRECTLY.

         Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person,
including actions taken by or on behalf of any partnership in which such Person
is a general partner.

                                       25

<PAGE>   29

         5.4      SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.

                  (a) SECTION HEADINGS AND TABLE OF CONTENTS, ETC. The titles of
         the Sections of this Agreement and the Table of Contents of this
         Agreement appear as a matter of convenience only, do not constitute a
         part hereof and shall not affect the construction hereof. The words
         "herein," "hereof," "hereunder" and "hereto" refer to this Agreement as
         a whole and not to any particular Section or other subdivision.
         References to Sections are, unless otherwise specified, references to
         Sections of this Agreement. References to Annexes and Exhibits are,
         unless otherwise specified, references to Annexes and Exhibits attached
         to this Agreement.

                  (b) CONSTRUCTION. Each covenant contained herein shall be
         construed (absent an express contrary provision herein) as being
         independent of each other covenant contained herein, and compliance
         with any one covenant shall not (absent such an express contrary
         provision) be deemed to excuse compliance with one or more other
         covenants.

         5.5      GOVERNING LAW.

         THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ANY CONFLICTS OF LAW RULES WHICH WOULD REQUIRE THE APPLICATION OF THE
LAW OF ANY OTHER JURISDICTION.

6.       MISCELLANEOUS

         6.1      COMMUNICATIONS.

                  (a) METHOD; ADDRESS. All communications hereunder shall be in
         writing and shall be delivered either by hand or by nationwide
         overnight courier, or by facsimile transmission followed by delivery by
         hand or by nationwide overnight courier sent on the day of the sending
         of such facsimile transmission. Communications to either Issuer shall
         be addressed as set forth on Annex 2, or at such other address of which
         the Company or the Parent shall have notified each Purchaser.
         Communications to the Purchasers shall be addressed as set forth on
         Annex 1.

                  (b) WHEN GIVEN. Any communication addressed and delivered as
         herein provided shall be deemed to be received when actually delivered
         to the address of the addressee (whether or not delivery is accepted)
         or received by the telecopy machine of the recipient. Any communication
         not so addressed and delivered shall be ineffective.

                  (c) SERVICE OF PROCESS. Notwithstanding the foregoing
         provisions of this Section 6.1, service of process in any suit, action
         or proceeding arising out of or relating to this Agreement or any
         document, agreement or transaction contemplated hereby shall be
         delivered in the manner provided in Section 6.7(c).

                                       26

<PAGE>   30

         6.2      REPRODUCTION OF DOCUMENTS.

         This Agreement and all documents relating hereto, including, without
limitation, consents, waivers and modifications that may hereafter be executed,
documents received by any Purchaser at the closing of the purchase of the
Purchased Securities (except the Purchased Securities themselves), and financial
statements, certificates and other information previously or hereafter furnished
to any Purchaser, may be reproduced by the Issuers or any Purchaser by any
photographic, photostatic, microfilm, micro-card, miniature photographic,
digital or other similar process and each Purchaser may destroy any original
document so reproduced. Any such reproduction shall be admissible in evidence as
the original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made by an
Issuer or such Purchaser in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence. Nothing in this Section 6.2 shall prohibit an Issuer or
any Purchaser from contesting the accuracy or validity of any such reproduction.

         6.3      SURVIVAL; ENTIRE AGREEMENT.

         All warranties, representations, certifications and covenants made by
the Issuers herein or in any certificate or other instrument delivered by or on
behalf of any Obligor hereunder shall be considered to have been relied upon by
each of the Purchasers and shall survive the delivery to the Purchasers of the
Purchased Securities regardless of any investigation made by the Purchasers or
on behalf of any of them. All statements in any certificate or other instrument
delivered by or on behalf of any Obligor pursuant to the terms hereof shall
constitute warranties and representations by the Issuers hereunder. All
obligations hereunder ( including, without limitation, reimbursement obligations
in respect of costs, expenses and fees) shall survive the termination hereof.
Subject to the preceding sentence, this Agreement and the other Financing
Documents embody the entire agreement and understanding among the Issuers and
the Purchasers, and supersede all prior agreements and understandings, relating
to the subject matter hereof.

         6.4      SUCCESSORS AND ASSIGNS.

         This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof are
intended to be for the benefit of the Purchasers and their successors and
assigns, and shall be enforceable by any Purchaser, successor or assignee
whether or not an express assignment of rights hereunder shall have been made by
any Purchaser or its successors or assigns. Anything contained in this Section
6.4 notwithstanding, the Issuers may not assign any of their respective rights,
duties or obligations hereunder without the prior written consent of all
Purchasers.

         6.5      AMENDMENT AND WAIVER.

         This Agreement may be amended, and the observance of any term hereof
may be waived, with (and only with) the written consent of the Issuers and each
Purchaser.

                                       27

<PAGE>   31

         6.6      EXPENSES.

         Whether or not the Purchased Securities are sold, the Issuers, jointly
and severally, shall pay, at the Closing (if the Purchased Securities are sold,
and otherwise upon receipt of any statement or invoice therefor), all reasonable
fees, expenses and costs incurred by any of the Purchasers relating hereto,
including, without limitation, all reasonable fees and disbursements of the
Purchasers' special counsel, and all reasonable expenses incurred by or on
behalf of any Purchaser or any Obligor in complying with each of the conditions
to the Closing set forth in Section 4. Without limiting the generality of the
foregoing, the Issuers agree to pay:

                  (a) contemporaneously with the Closing, the invoice presented
         by the Purchasers' special counsel at least one Business Day prior to
         the Closing Date, which invoice will include all accrued fees and
         disbursements of such special counsel, together with an estimate for
         the additional fees and disbursements of such counsel necessary to
         complete the Closing and all post-Closing matters relating thereto
         (including, without limitation, preparation of Closing files); and

                  (b) within thirty (30) days of receipt of a final statement
         presented following the Closing and completion of all post-Closing
         work, reconciling the actual amount due with the amount paid pursuant
         to the estimated invoice referred to in Section 6.6(a), any balance due
         the Purchasers' special counsel pursuant to such invoice and statement
         (and, in the event that a balance is due the Issuers pursuant to such
         invoice and statement, such special counsel shall remit that balance to
         the Company); and

                  (c) any additional statement for reasonable fees and
         disbursements (promptly upon receipt thereof) of the Purchasers'
         special counsel rendered after the Closing in connection with the
         issuance of the Purchased Securities.

         6.7      WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; ETC.

                  (a) WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
         APPLICABLE LAW, THE PARTIES HERETO VOLUNTARILY AND INTENTIONALLY WAIVE
         ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
         LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
         OR ANY OF THE DOCUMENTS, AGREEMENTS OR TRANSACTIONS CONTEMPLATED
         HEREBY.

                  (b) CONSENT TO JURISDICTION. ANY SUIT, ACTION OR PROCEEDING
         ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OF THE DOCUMENTS,
         AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION OR
         PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF
         ANY BREACH UNDER THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT
         CONTEMPLATED HEREBY MAY BE BROUGHT BY SUCH PARTY IN ANY FEDERAL
         DISTRICT COURT LOCATED IN NEW YORK CITY, NEW YORK OR ANY NEW YORK STATE
         COURT OF COMPETENT

                                       28

<PAGE>   32

         JURISDICTION LOCATED IN NEW YORK CITY, NEW YORK AS SUCH PARTY MAY IN
         ITS SOLE DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY OF THIS
         AGREEMENT, THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO
         THE NON-EXCLUSIVE IN PERSONAM JURISDICTION OF EACH SUCH COURT, AND EACH
         OF THE PARTIES HERETO IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT IN
         ANY PROCEEDING BEFORE ANY TRIBUNAL, BY WAY OF MOTION, AS A DEFENSE OR
         OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT TO THE IN PERSONAM
         JURISDICTION OF ANY SUCH COURT. IN ADDITION, EACH OF THE PARTIES HERETO
         IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
         OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN
         ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
         AGREEMENT OR ANY DOCUMENT, AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY
         BROUGHT IN ANY SUCH COURT, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT
         ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
         BROUGHT IN AN INCONVENIENT FORUM.

                  (c) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY AGREES
         THAT PROCESS PERSONALLY SERVED OR SERVED BY U.S. REGISTERED MAIL AT THE
         ADDRESSES PROVIDED HEREIN FOR NOTICES SHALL CONSTITUTE, TO THE EXTENT
         PERMITTED BY LAW, ADEQUATE SERVICE OF PROCESS IN ANY SUIT, ACTION OR
         PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
         DOCUMENT, AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY, OR ANY ACTION
         OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT
         OF ANY BREACH HEREUNDER OR UNDER ANY DOCUMENT OR AGREEMENT CONTEMPLATED
         HEREBY. RECEIPT OF PROCESS SO SERVED SHALL BE CONCLUSIVELY PRESUMED AS
         EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED STATES POSTAL
         SERVICE OR ANY COMMERCIAL DELIVERY SERVICE.

                  (d) OTHER FORUMS. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO
         LIMIT THE ABILITY OF ANY PURCHASER TO SERVE ANY WRITS, PROCESS OR
         SUMMONSES IN ANY MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN
         JURISDICTION OVER THE COMPANY IN SUCH OTHER JURISDICTION, AND IN SUCH
         OTHER MANNER, AS MAY BE PERMITTED BY APPLICABLE LAW.

         6.8      INDEMNIFICATION OF EACH PURCHASER.

         From and at all times after the date of this Agreement, and in addition
to all of the other rights and remedies against the Issuers, the Issuers,
jointly and severally, agree to indemnify and hold harmless each Purchaser and
each of its directors, officers, partners, trustees, employees, agents,
investment advisors and affiliates (collectively, the "INDEMNIFIED PARTIES")
against any and all claims (whether valid or not), losses, damages,

                                       29

<PAGE>   33

liabilities, costs and expenses of any kind or nature whatsoever (including,
without limitation, reasonable attorneys' fees, costs and expenses), incurred by
or asserted against any Indemnified Party, from and after the date hereof,
whether direct, indirect or consequential, as a result of or arising from or in
any way relating to any suit, action or proceeding (including any inquiry or
investigation) by any Person, whether threatened or initiated, asserting a claim
for any legal or equitable remedy against any Person under any statute or
regulation, including, but not limited to, any federal or state securities laws,
or under any common law or equitable cause or otherwise, arising from or in
connection with the negotiation, preparation, execution, performance or
enforcement of this Agreement or the other Financing Documents or any
transactions contemplated herein or therein, or any of the transactions
contemplated hereunder (collectively, the "Proceedings"), whether or not such
Indemnified Party is a party to any such Proceeding; provided, however, that no
Indemnified Party shall have the right to be indemnified hereunder for any
liability resulting from the willful misconduct or gross negligence of such
Indemnified Party or breach by such Indemnified Party of its own obligations
under this Agreement. All of the foregoing losses, damages, costs and expenses
shall be payable as and when incurred upon demand of any Indemnified Party.
Without limiting the generality of the foregoing, each such indemnified Persons
shall be entitled to collect, and, subject to the following paragraph, the
Issuers shall be obligated to advance to each such Person, to the fullest extent
permitted by applicable law, all expenses (including, without limitation,
reasonable fees and disbursements of counsel) attendant to defending against any
such claims (whether valid or not), losses, damages, liabilities, costs and
expenses when and as incurred, regardless of whether any judicial determination
of entitlement to such indemnity has been made, until or unless a final judicial
determination that such Indemnified Party is not entitled to such indemnity, in
which case, such Indemnified Party shall promptly repay to the Issuers, with
interest at the applicable statutory rate applicable to judgments in the
relevant jurisdiction, all amounts so advanced by either Issuer. The obligations
of the Issuers and the Purchaser's rights under this Section 6.8 shall survive
the termination of this Agreement.

         If any Proceeding shall be brought or asserted or threatened to be
brought or asserted against an Indemnified Party in respect of which indemnity
may be sought from the Issuers hereunder, such Indemnified Party shall promptly
notify the Issuers in writing, and the Issuers may, in their sole discretion,
promptly upon receipt of such notice, assume the defense thereof, including the
employment of counsel (who may be counsel for either of the Issuers) reasonably
satisfactory to such Indemnified Party and the payment of all expenses therefor.
If the Issuers elect to assume the defense of any such Proceeding, the
Indemnified Party shall have the right, in its sole discretion, to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnified Party unless;

                  (a) either of the Issuers has agreed to pay such fees and
         expenses;

                  (b) each of the Issuers shall have elected not to assume the
         defense of such Proceeding or shall have failed to promptly assume the
         defense of such Proceeding or shall have failed to employ counsel
         reasonably satisfactory to such Indemnified Party in any such
         Proceeding; or

                                       30

<PAGE>   34

                  (c) the named parties to any such Proceeding (including any
         impleaded parties) include both such Indemnified Party and either of
         the Issuers, and such Indemnified Party shall have been advised by
         counsel that there may be one or more legal defenses available to such
         Indemnified Party that are different from or additional to those
         available to that Issuer (in which case, if such Indemnified Party
         notifies the Issuers in writing that it elects to employ separate
         counsel at the expense of the Issuers, the Issuers shall not have the
         right to assume the defense of such Proceeding on behalf of such
         Indemnified Party, it being understood, however, that the Issuers shall
         not, in connection with any one such Proceeding or separate but
         substantially similar or related Proceedings in the same jurisdiction
         arising out of the same general allegations or circumstances, be liable
         for the reasonable fees and expenses or more than one separate firm of
         attorneys at any time for such Indemnified Party and any other
         Indemnified Parties, which firm shall be designated in writing by such
         Indemnified Parties).

The Issuers shall not be liable for any settlement of any Proceeding by an
Indemnified Party effected without the Issuers' written consent (which consent
shall not be unreasonably withheld). In addition, the Indemnified Party shall
cooperate with the Issuers and their representatives in connection with the
defense or investigation of any claim or other matter for which indemnification
is sought, as reasonably requested by the Issuers.

         6.9      EXECUTION IN COUNTERPART.

         This Agreement may be executed in one or more counterparts and shall be
effective when at least one counterpart shall have been executed by each party
hereto, and each set of counterparts that, collectively, show execution by each
party hereto shall constitute one duplicate original.

      [REMAINDER OF PAGE INTENTIONALLY BLANK. NEXT PAGE IS SIGNATURE PAGE.]

                                       31

<PAGE>   35

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf as of the date first above written.


                                     QUESTRON TECHNOLOGY, INC.
                                     QUESTRON OPERATING COMPANY, INC.



                                     By:________________________________
                                     Name:
                                     Title:



ALBION ALLIANCE MEZZANINE FUND II, L.P.
By:  AA MEZZ II GP, LLC, its General Partner
By:  Albion Alliance LLC , its Sole Member



By:________________________________
Name:
Title:


IBJ WHITEHALL BANK & TRUST COMPANY



By:________________________________
Name:
Title:


EXETER CAPITAL PARTNERS IV, L.P.
By:  Exeter IV Advisors, L.P.
By:  Exeter IV Advisors, Inc.



By:________________________________
Name:
Title

               [Signature Page to Securities Purchase Agreement]

<PAGE>   36

                                     ANNEX 1

                          INFORMATION AS TO PURCHASERS

<TABLE>
<CAPTION>
====================================================================================================================
PURCHASER NAME                         ALBION ALLIANCE MEZZANINE FUND II, L.P.
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>
Name in Which Note is Registered       ALBION ALLIANCE MEZZANINE FUND II, L.P.
--------------------------------------------------------------------------------------------------------------------
Note Registration Number; Principal    S-1; $10,000,000
Amount of Note
--------------------------------------------------------------------------------------------------------------------
Purchase Price of Notes                $9,357,143.50
--------------------------------------------------------------------------------------------------------------------
Number of Common Shares                428,571
--------------------------------------------------------------------------------------------------------------------
Purchase Price of Shares               $642,856.50
--------------------------------------------------------------------------------------------------------------------
Payments on Account of Note
         Method                        Federal Funds Wire Transfer
         Account Information           for transaction fees:

                                       Albion Alliance LLC
                                       IBJ Schroder Bank & Trust Co.
                                       ABA # 026-007-825
                                       A/C 01098103

                                       for interest and principal payments:

                                       Albion Alliance Mezzanine Fund II, L.P.
                                       Chase Manhattan Bank
                                       1221 Avenue of the Americas
                                       New York, NY
                                       ABA # 021-000-021
                                       Acct. # 323-216528
                                       Re:  (See "Accompanying Information" below)
--------------------------------------------------------------------------------------------------------------------
Accompanying Information               Name of Company:           Questron Operating Company, Inc.

                                       Description of
                                       Security:                  14.5% Series B Senior Subordinated Notes
                                                                  due June 30, 2005

                                       PPN:                       74837# AB 6

                                       Due Date and Application (as among
                                       principal, Make-Whole Amount and
                                       interest) of the payment being made:
--------------------------------------------------------------------------------------------------------------------
Address for Notices Related to         Alliance Capital Management LP
Payments                               500 Plaza Drive
                                       Secaucus, New Jersey 07094
                                       Attn: Ms. Laura Milin, 6th Floor
--------------------------------------------------------------------------------------------------------------------
Address for All Other Notices          Albion Alliance LLC
                                       1345 Avenue of Americas
                                       New York, New York 10105
                                       Attn:    Mr. James R. Wilson
====================================================================================================================
</TABLE>

                                   Annex 1-1

<PAGE>   37

<TABLE>
<CAPTION>
====================================================================================================================
PURCHASER NAME                         ALBION ALLIANCE MEZZANINE FUND II, L.P.
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>
Other Instructions                     ALBION ALLIANCE MEZZANINE FUND II, L.P.
                                       By:  AA MEZZ II GP, LLC, its General Partner
                                       By: Albion Alliance LLC , its Sole Member

                                       By:________________________________
                                       Name:
                                       Title:
--------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Note       Equitable Life Assurance Society of the U.S.
                                       1290 Avenue of the Americas
                                       12th Floor
                                       New York, New York  10104
                                       Attn:    Ms. Lynda Scales
--------------------------------------------------------------------------------------------------------------------
Tax Identification Number              06-1556321
====================================================================================================================
</TABLE>

                                   Annex 1-2

<PAGE>   38

<TABLE>
<CAPTION>
====================================================================================================================
PURCHASER NAME                         IBJ WHITEHALL BANK & TRUST COMPANY
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>
Name in Which Note is Registered       IBJ WHITEHALL BANK & TRUST COMPANY
--------------------------------------------------------------------------------------------------------------------
Name in Which Common Shares are        IBJ WHITEHALL CAPITAL CORPORATION
Registered
--------------------------------------------------------------------------------------------------------------------
Note Registration Number; Principal    S-2; $4,000,000
Amount of Note
--------------------------------------------------------------------------------------------------------------------
Purchase Price of Notes                $3,742,856.50
--------------------------------------------------------------------------------------------------------------------
Number of Common Shares                171,429
--------------------------------------------------------------------------------------------------------------------
Purchase Price of Shares               $257,143.50
--------------------------------------------------------------------------------------------------------------------
Payments on Account of Note

         Method                        Federal Funds Wire Transfer

         Account Information           IBJ Whitehall Bank & Trust Company
                                       ABA No. 026-007-825
                                       Attn: Commercial Loan Department
                                             William Reyes
--------------------------------------------------------------------------------------------------------------------
Accompanying Information               Name of Company:           Questron Operating Company, Inc.

                                       Description of
                                       Security:                  14.5% Series B Senior Subordinated Notes
                                                                  due June 30, 2005

                                       PPN:                       74837# AB 6

                                       Due Date and Application (as among
                                       principal, Make-Whole Amount and
                                       interest) of the payment being made:
--------------------------------------------------------------------------------------------------------------------
Address for Notices Related to         IBJ Whitehall Bank & Trust Company
Payments                               One State Street, 8th Floor
                                       New York, NY 10004
                                       Attn: Frank Delillo
                                       Tel:     212-858-2768
--------------------------------------------------------------------------------------------------------------------
Address for All Other Notices          IBJ Whitehall Bank & Trust Company
                                       One State Street, 8th Floor
                                       New York, NY 10004
                                       Attn:    Jean-Louis Pernin
                                       Tel:     212-858-2844

                                       Attn:    Andrew Kripke
                                       Tel:     212-858-2217
--------------------------------------------------------------------------------------------------------------------
Other Instructions:                    IBJ WHITEHALL BANK & TRUST COMPANY

                                       By:__________________________
                                       Name:
                                       Title:
====================================================================================================================
</TABLE>

                                   Annex 1-3

<PAGE>   39

<TABLE>
<CAPTION>
====================================================================================================================
PURCHASER NAME                         IBJ WHITEHALL BANK & TRUST COMPANY
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>
Instructions re Delivery of            IBJ Whitehall Bank & Trust Company
Securities                             One State Street, 8th Floor
                                       New York, NY 10004
                                       Attn:    Jean-Louis Pernin
                                       Tel:     212-858-2844
                                       Attn:    Andrew Kripke
                                       Tel:     212-858-2217
--------------------------------------------------------------------------------------------------------------------
Tax Identification Number              135375195
====================================================================================================================
</TABLE>

                                   Annex 1-4

<PAGE>   40

<TABLE>
<CAPTION>
====================================================================================================================
PURCHASER NAME                         EXETER CAPITAL PARTNERS IV, L.P.
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>
Name in Which Note is Registered       Exeter Capital Partners IV, L.P.
--------------------------------------------------------------------------------------------------------------------
Note Registration Number; Principal    S-3; $3,500,000
Amount of Note
--------------------------------------------------------------------------------------------------------------------
Purchase Price of Notes                $3,275,000.00
--------------------------------------------------------------------------------------------------------------------
Number of Common Shares                150,000
--------------------------------------------------------------------------------------------------------------------
Purchase Price of Shares               $225,000.00
--------------------------------------------------------------------------------------------------------------------
Payments on Account of Note

         Method                        Federal Funds Wire Transfer

         Account Information           for transaction fees:

                                       Chase Manhattan Bank 60 E. 42nd Street
                                       New York, NY 10165 ABA # 021-000-021
                                       Acct. # 6645-000-54065
                                       Acct. Name: Exeter Venture Management Corporation

                                       for interest and principal payments:

                                       Chase Manhattan Bank
                                       401 Madison Avenue
                                       New York, NY  10017
                                       ABA # 021-000-021
                                       Acct. # 13-409-0025-865
                                       Acct. Name: Exeter Capital Partners IV, L.P.
--------------------------------------------------------------------------------------------------------------------
Accompanying Information               Name of Company:           Questron Operating Company, Inc.

                                       Description of
                                       Security:                  14.5% Series B Senior Subordinated Notes
                                                                  due June 30, 2005

                                       PPN:                       74837# AB 6

                                       Due Date and Application (as among
                                       principal, Make-Whole Amount and
                                       interest) of the payment being made:
--------------------------------------------------------------------------------------------------------------------
Address for All Other Notices          Exeter Capital Partners IV, LP
                                       10 E. 53rd St.
                                       New York, NY  10022
                                       Attn: Mr. Keith Fox
--------------------------------------------------------------------------------------------------------------------
Other Instructions:                    Exeter Capital Partners IV, L.P.
                                       By:  Exeter IV Advisors, L.P.
                                       By:  Exeter IV Advisors, Inc.

                                       By:__________________________
                                       Name:  Keith R. Fox
                                       Title:     President
====================================================================================================================
</TABLE>

                                   Annex 1-5

<PAGE>   41

<TABLE>
<CAPTION>
====================================================================================================================
PURCHASER NAME                         EXETER CAPITAL PARTNERS IV, L.P.
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>
Instructions re Delivery of            Exeter Capital Partners IV, LP
Securities                             10 E. 53rd St.
                                       New York, NY  10022
                                       Attn: Mr. Keith Fox
--------------------------------------------------------------------------------------------------------------------
Tax Identification Number              13-3967549
====================================================================================================================
</TABLE>

                                   Annex 1-6

<PAGE>   42

                                     ANNEX 2

                        PAYMENT INSTRUCTIONS AT CLOSING;
                         ADDRESS OF COMPANY FOR NOTICES


PAYMENTS FROM THE PURCHASERS WILL HEREBY BE MADE AS FOLLOWS:


ALBION ALLIANCE MEZZANINE FUND II, L.P.

Wire to Company....................................................$9,791,428.57
Wire to Bingham Dana LLP in respect of
Company's obligation to pay legal fees pursuant to
Section 6.6 of the Securities Purchase Agreement.......................28,571.43
Wire Transaction Fee from Albion Alliance Mezzanine Fund II,
L.P. to Albion Alliance LLC in respect of the Company's
Obligation to pay the Transaction Fee to Albion Alliance
Mezzanine Fund II, L.P.
(less $20,000 already paid)...........................................180,000.00
                                                                      ----------
                                                                   10,000,000.00


IBJ WHITEHALL BANK & TRUST COMPANY

Wire to Company....................................................$3,908,571.43
Wire to Bingham Dana LLP in respect of
Company's obligation to pay legal fees pursuant to
Section 6.6 of the Securities Purchase Agreement.......................11,428.57
Retain in Respect of Transaction Fee...................................80,000.00
                                                                       ---------
                                                                    4,000,000.00


EXETER CAPITAL PARTNERS IV,  L.P.

Wire to Company....................................................$3,420,000.00
Wire to Bingham Dana LLP in respect of
Company's obligation to pay legal fees pursuant to
Section 6.6 of the Securities Purchase Agreement.......................10,000.00
Retain in Respect of Transaction Fee...................................70,000.00
                                                                       ---------
                                                                    3,500,000.00

                                    Annex 2-1

<PAGE>   43

WIRING INSTRUCTIONS:


COMPANY
Congress Financial Corporation Florida
Chase Manhattan Bank
ABA # 021-000-021
Account # 322-020-565
Reference Questron Technology

BINGHAM DANA LLP
Sovereign Bank New England
Hartford, CT
ABA # 011-075-150
Account # 502-000-13097
Reference 718418/108394 GSH

ALBION ALLIANCE LLC
IBJ Schroeder Bank & Trust Co.
ABA # 026-007-825
Account # 01098103



ADDRESS OF COMPANY FOR NOTICES:


Questron Operating Company, Inc.
6400 Congress Ave., Suite 2000
Boca Raton, Florida 33487

Telephone:  561-241-5251
Facsimile:  561-241-2866

Attn:    Dominic Polimeni
         Chairman & CEO

Attn:    Robert Gubitosi
         President & CFO

                                    Annex 2-2

<PAGE>   44

WIRING INSTRUCTIONS:


COMPANY
Congress Financial Corporation Florida
Chase Manhattan Bank
ABA # 02100000021
Account # 322-020-565
Reference Questron Technology

BINGHAM DANA LLP
Sovereign Bank New England
Hartford, CT
ABA # 011-075-150
Account # 502-000-13097
Reference 718418/108394 GSH

ALBION ALLIANCE LLC
IBJ Schroeder Bank & Trust Co.
ABA # 026-007-825
Account # 01098103



ADDRESS OF COMPANY FOR NOTICES:


Questron Operating Company, Inc
6400 Congress Ave., Suite 2000
Boca Raton, Florida  33487

Telephone:  561-241-5251
Facsimile:   561-241-2866

Attn:    Dominic Polimeni
         Chairman & CEO

         Robert Gubitosi
         President & CFO

                                   Annex 2-3

<PAGE>   45

                                     ANNEX 3

                                   PART 2.2(A)
         QUESTRON TECHNOLOGY, INC. AND SUBSIDIARIES FINANCIAL STATEMENTS




Three months ended June 30, 2000

Consolidated Balance Sheet at June 30, 2000 (unaudited) and December 31, 1999
Consolidated Statement of Income (unaudited) for the Three Months and Six Months
     Ended June 30, 2000 and 1999
Consolidated Statement of Cash Flows (unaudited) for the Six Months Ended
     June 30, 2000 and 1999
Notes to Consolidated Financial Statements (unaudited)



Year ended December 31, 1999

Report of Independent Auditors
Consolidated Balance Sheet at December 31, 1999
Consolidated Statement of Income for the Years Ended December 31, 1999 and 1998
Consolidated Statement of Cash Flows for the Years Ended December 31, 1999
     and 1998
Notes to Financial Statements

                                    Annex 3-1

<PAGE>   46

                                     ANNEX 3

                                   PART 2.2(B)
                      DEBT OF THE ISSUERS AND SUBSIDIARIES


BEFORE GIVING EFFECT TO THE TRANSACTIONS:

<TABLE>
<CAPTION>
==========================================================================================================================
OBLIGOR            GUARANTORS     HOLDER            OUT-STANDING CURRENT        FINAL       REQUIRED       COLLATERAL
                   AND OTHERS                       AMOUNT       PORTION OF     MATURITY    SINKING
                   SIMILARLY                                     OUTSTANDING                FUND
                   LIABLE                                        AMOUNT                     PAYMENTS
==========================================================================================================================
<S>                <C>            <C>                 <C>        <C>             <C>            <C>       <C>
The Parent         Subsidiaries   Lenders for         $75.75     $2.5 million    09/24/03       N/A       Substantially
                   of Parent      whom Congress       million                                             all property
                                  Financial Corp                                                          of Parent and
                                  is agent under                                                          its
                                  6/29/99 Loan                                                            subsidiaries
                                  and Security
                                  Agreement, as
                                  amended
--------------------------------------------------------------------------------------------------------------------------
The Company        Parent;        Albion Alliance      $7.2              $0      06/30/05       N/A       None
                   indirect       Mezzanine Fund      million
                   Subsidiaries   LP
                   of Parent
--------------------------------------------------------------------------------------------------------------------------
The Company        Parent;        Alliance             $5.1              $0      06/30/05       N/A       None
                   indirect       Investment          million
                   Subsidiaries   Opportunity Fund
                   of Parent
--------------------------------------------------------------------------------------------------------------------------
The Company        Parent;        The Equitable        $5.1              $0      06/30/05       N/A       None
                   indirect       Life Assurance      million
                   Subsidiaries   Society of the
                   of Parent      United States
--------------------------------------------------------------------------------------------------------------------------
The Company        Parent;        IBJ Whitehall        $3.1              $0      06/30/05       N/A       None
                   indirect       Bank & Trust Co.    million
                   Subsidiaries
                   of Parent
--------------------------------------------------------------------------------------------------------------------------
Questron           None           Note payable         $132,668  $75,000         03/2002        N/A       None
Distribution                      w/r/t Webb
Logistics, Inc.                   Acquisition (Al
                                  Dinicola)
--------------------------------------------------------------------------------------------------------------------------
The Parent         None           GE Capital           $188,980  $72,131         12/2003        N/A       Computer
                                  (lease)                                                                 equipment
--------------------------------------------------------------------------------------------------------------------------
California         None           Wells Fargo           $15,751  $12,000         06/2002        N/A       Computer
Fasteners, Inc.                   (lease)                                                                 equipment and
                                                                                                          trucks
--------------------------------------------------------------------------------------------------------------------------
Comp Ware, Inc.    None           Siemens (lease)        $6,892  $5,000          10/2001        N/A       Phone system
--------------------------------------------------------------------------------------------------------------------------
The Parent         None           Amplicon             $345,270  $127,890        09/2003        N/A       Furniture &
                                  Financial                                                               equipment
==========================================================================================================================
</TABLE>

                                    Annex 3-2

<PAGE>   47

AFTER GIVING EFFECT TO THE TRANSACTIONS:

<TABLE>
<CAPTION>
==========================================================================================================================
OBLIGOR            GUARANTORS     HOLDER            OUT-STANDING CURRENT        FINAL       REQUIRED       COLLATERAL
                   AND OTHERS                       AMOUNT       PORTION OF     MATURITY    SINKING
                   SIMILARLY                                     OUTSTANDING                FUND
                   LIABLE                                        AMOUNT                     PAYMENTS
==========================================================================================================================
<S>                <C>            <C>               <C>          <C>             <C>            <C>       <C>
The Company        Guarantor      the Purchasers    $17.5                $0      6/30/05        N/A       None
                   Subsidiaries                     million
--------------------------------------------------------------------------------------------------------------------------
The Parent         Subsidiaries   Lenders for       $59.25       $2.5 million    09/24/03       N/A       Substantially
                   of Parent      whom Congress     million                                               all property
                                  Financial Corp                                                          of Parent and
                                  is agent under                                                          its
                                  6/29/99 Loan                                                            subsidiaries
                                  and Security
                                  Agreement, as
                                  amended
--------------------------------------------------------------------------------------------------------------------------
The Company        Parent;        Albion Alliance   $7.2                 $0      06/30/05       N/A       None
                   indirect       Mezzanine Fund    million
                   Subsidiaries   LP
                   of Parent
--------------------------------------------------------------------------------------------------------------------------
The Company        Parent;        Alliance          $5.1                 $0      06/30/05       N/A       None
                   indirect       Investment        million
                   Subsidiaries   Opportunity Fund
                   of Parent
--------------------------------------------------------------------------------------------------------------------------
The Company        Parent;        The Equitable     $5.1                 $0      06/30/05       N/A       None
                   indirect       Life Assurance    million
                   Subsidiaries   Society of the
                   of Parent      United States
--------------------------------------------------------------------------------------------------------------------------
The Company        Parent;        IBJ Whitehall     $3.1                 $0      06/30/05       N/A       None
                   indirect       Bank & Trust Co.  million
                   Subsidiaries
                   of Parent
--------------------------------------------------------------------------------------------------------------------------
Questron           None           Note payable      $132,668     $75,000         03/2002        N/A       None
Distribution                      w/r/t Webb
Logistics, Inc.                   Acquisition (Al
                                  Dinicola)
--------------------------------------------------------------------------------------------------------------------------
The Parent         None           GE Capital        $188,980     $72,131         12/2003        N/A       Computer
                                  (lease)                                                                 equipment
--------------------------------------------------------------------------------------------------------------------------
California         None           Wells Fargo       $15,751      $12,000         06/2002        N/A       Computer
Fasteners, Inc.                   (lease)                                                                 equipment and
                                                                                                          trucks
--------------------------------------------------------------------------------------------------------------------------
Comp Ware, Inc.    None           Siemens (lease)   $6,892       $5,000          10/2001        N/A       Phone system
--------------------------------------------------------------------------------------------------------------------------
The Parent         None           Amplicon          $345,270     $127,890        09/2003        N/A       Furniture &
                                  Financial                                                               equipment
==========================================================================================================================
</TABLE>

                                    Annex 3-3

<PAGE>   48

                                     ANNEX 3

                                   PART 2.2(C)
                      LIENS OF THE ISSUES AND SUBSIDIARIES


BEFORE GIVING EFFECT TO THE TRANSACTIONS:

<TABLE>
<CAPTION>
====================================================================================================================
HOLDER                         OUTSTANDING AMOUNT SECURED   NATURE OF THE DEBT          DESCRIPTION OF COLLATERAL
====================================================================================================================
<S>                            <C>                          <C>                         <C>
Lenders for whom Congress      $75.75 million               senior credit facility      Substantially all property
Financial Corp is agent                                                                 of Parent and its
under 6/29/99 Loan and                                                                  subsidiaries
Security Agreement, as
amended
--------------------------------------------------------------------------------------------------------------------
GE Capital (the Parent)        $188,980                     computer lease              computer equipment
--------------------------------------------------------------------------------------------------------------------
Wells Fargo (California        $  15,751                    computer and truck lease    computer equipment and
Fasteners, Inc.)                                                                        trucks
--------------------------------------------------------------------------------------------------------------------
Siemens (Webb Distribution)    $   6,892                    telephone system lease      telephone system
--------------------------------------------------------------------------------------------------------------------
Amplicon Financial (Questron   $ 345,270                    furniture and equipment     furniture and equipment
Technology, Inc.)                                           lease
====================================================================================================================
</TABLE>


AFTER GIVING EFFECT TO THE TRANSACTIONS:

<TABLE>
<CAPTION>
====================================================================================================================
HOLDER                         OUTSTANDING AMOUNT SECURED   NATURE OF THE DEBT          DESCRIPTION OF COLLATERAL
====================================================================================================================
<S>                            <C>                          <C>                         <C>
Lenders for whom Congress      $56.5 million                senior credit facility      Substantially all property
Financial Corp is agent                                                                 of Parent and its
under 6/29/99 Loan and                                                                  subsidiaries
Security Agreement, as
amended
--------------------------------------------------------------------------------------------------------------------
Lenders for whom Congress      $2.75 million ($22.5         revolving credit facility   Substantially all property
Financial Corp is agent        million undrawn)             (forming part of the        of Parent and its
under 6/29/99 Loan and                                      senior credit facility),    subsidiaries
Security Agreement, as                                      including a sub-facility
amended                                                     of up to $2.5 million for
                                                            letters of credit
--------------------------------------------------------------------------------------------------------------------
GE Capital (the Parent)        $188,980                     computer lease              computer equipment
--------------------------------------------------------------------------------------------------------------------
Wells Fargo (California        $  15,751                    computer and truck lease    computer equipment and
Fasteners, Inc.)                                                                        trucks
--------------------------------------------------------------------------------------------------------------------
Siemens (Webb Distribution)    $   6,892                    telephone system lease      telephone system
--------------------------------------------------------------------------------------------------------------------
Amplicon Financial (Questron   $ 345,270                    furniture and equipment     furniture and equipment
Technology, Inc.)                                           lease
====================================================================================================================
</TABLE>

                                    Annex 3-4

<PAGE>   49

                                     ANNEX 3

                                   PART 2.2(G)
                                   INVESTMENTS

None.

                                    Annex 3-5

<PAGE>   50

                                     ANNEX 3

                                   PART 2.3(A)
                            OWNERSHIP OF SUBSIDIARIES


<TABLE>
<CAPTION>
====================================================================================================================
FULL LEGAL NAME                                    JURISDICTION OF             PERCENTAGE OF VOTING STOCK
                                                   INCORPORATION OR            HELD BY PARENT AND EACH
                                                   ORGANIZATION                OTHER SUBSIDIARY
====================================================================================================================
<S>                                                <C>                         <C>
Questron Finance Corp.                             Delaware                    100% by Parent
--------------------------------------------------------------------------------------------------------------------
Questron Operating Company, Inc.                   Delaware                    100% by Questron Finance Corp.
--------------------------------------------------------------------------------------------------------------------
Questron Distribution Logistics, Inc.              Delaware                    100% by Questron Operating Company,
                                                                               Inc.
--------------------------------------------------------------------------------------------------------------------
Fortune Industries, Inc.                           Texas                       100% by Questron Distribution
                                                                               Logistics, Inc.
--------------------------------------------------------------------------------------------------------------------
Fas-Tronics, Inc.                                  Texas                       100% by Questron Distribution
                                                                               Logistics, Inc.
--------------------------------------------------------------------------------------------------------------------
California Fasteners, Inc.                         California                  100% by Questron Distribution
                                                                               Logistics, Inc.
--------------------------------------------------------------------------------------------------------------------
Comp Ware, Inc. (d/b/a Webb Distribution)          Delaware                    100% by Questron Distribution
                                                                               Logistics, Inc.
--------------------------------------------------------------------------------------------------------------------
Action Threaded Products, Inc.                     Illinois                    100% by Questron Distribution
                                                                               Logistics, Inc.
--------------------------------------------------------------------------------------------------------------------
Capital Fasteners, Inc.                            North Carolina              100% by Questron Distribution
                                                                               Logistics, Inc.
--------------------------------------------------------------------------------------------------------------------
R.S.D. Sales Co. Inc.                              New York                    100% by Questron Distribution
                                                                               Logistics, Inc.
--------------------------------------------------------------------------------------------------------------------
B & G Supply Company, Inc.                         Texas                       100% by Questron Distribution
                                                                               Logistics, Inc.
--------------------------------------------------------------------------------------------------------------------
Integrated Material Systems, Inc.                  Arizona                     100% by Questron Operating Company,
                                                                               Inc.
--------------------------------------------------------------------------------------------------------------------
Power Components, Inc.                             Pennsylvania                100% by Questron Operating Company,
                                                                               Inc.
--------------------------------------------------------------------------------------------------------------------
Action Threaded Products of Georgia, Inc.          Georgia                     100% by Action Threaded Products,
                                                                               Inc.
--------------------------------------------------------------------------------------------------------------------
Action Threaded Products of Minnesota, Inc.        Minnesota                   100% by Action Threaded Products,
                                                                               Inc.
====================================================================================================================
</TABLE>

In addition, the Parent owns, directly or indirectly, 100% of the voting stock
of two inactive subsidiaries: Power II, Inc. and Questnet Components, Inc.
Neither of those two corporations has any material assets.

                                    Annex 3-6

<PAGE>   51

                                     ANNEX 3

                                   PART 2.3(B)
                                   AFFILIATES


<TABLE>
<CAPTION>
=====================================================================================================================
NAME                            NATURE OF AFFILIATION
=====================================================================================================================
<S>                             <C>
Questron Technology, Inc.       Indirect owner (through Questron Finance Corp.) of 100% of the voting stock of
                                Questron Operating Company, Inc.
---------------------------------------------------------------------------------------------------------------------
Questron Finance Corp.          Direct owner of 100% of the voting stock of Questron Operating Company, Inc.
---------------------------------------------------------------------------------------------------------------------
Questron Operating Company,     Direct owner of 100% of the voting stock of Questron Distribution Logistics, Inc.
Inc.
---------------------------------------------------------------------------------------------------------------------
Dominic A. Polimeni             Chairman, Chief Executive Officer, and Director of:
                                         Questron Technology, Inc.
                                         Questron Finance Corp.
                                         Questron Operating Company, Inc.
                                         Questron Distribution Logistics, Inc.
                                         Comp Ware, Inc.
                                         Integrated Material Systems, Inc.
                                         Power Components, Inc.
                                         California Fasteners, Inc.
                                         Fas-Tronics, Inc.
                                         Fortune Industries, Inc.
                                         Capital Fasteners, Inc.
                                         R.S.D. Sales Co. Inc.
                                         B & G Supply Company, Inc.
                                         Action Threaded Products, Inc.
                                         Action Threaded Products of Georgia, Inc.
                                         Action Threaded Products of Minnesota, Inc.
=====================================================================================================================
</TABLE>

                                    Annex 3-7

<PAGE>   52

<TABLE>
<CAPTION>
=====================================================================================================================
NAME                            NATURE OF AFFILIATION
=====================================================================================================================
<S>                             <C>
Robert V. Gubitosi              President, Chief Financial Officer, Treasurer and Director of:
                                         Questron Technology, Inc.
                                         Questron Finance Corp.
                                         Questron Operating Company, Inc.

                                Chief Financial Officer, Treasurer and Director of:
                                         Questron Distribution Logistics, Inc.
                                         Comp Ware, Inc.
                                         Integrated Material Systems, Inc.
                                         Power Components, Inc.
                                         California Fasteners, Inc.
                                         Fas-Tronics, Inc.
                                         Fortune Industries, Inc.
                                         Capital Fasteners, Inc.
                                         R.S.D. Sales Co. Inc.
                                         B & G Supply Company, Inc.
                                         Action Threaded Products, Inc.
                                         Action Threaded Products of Georgia, Inc.
                                         Action Threaded Products of Minnesota, Inc.
---------------------------------------------------------------------------------------------------------------------
Frederick W. London             Director of Questron Technology, Inc.
---------------------------------------------------------------------------------------------------------------------
William J. McSherry, Jr.        Director of Questron Technology, Inc.
---------------------------------------------------------------------------------------------------------------------
Douglas D. Zadow                Vice President of Questron Technology, Inc.
                                Director of:
                                         Questron Technology, Inc.
                                         Questron Finance Corp.
                                         Questron Operating Company, Inc.
                                         Questron Distribution Logistics, Inc.
                                         Comp Ware, Inc.
                                         Integrated Material Systems, Inc.
                                         Power Components, Inc.
                                         California Fasteners, Inc.
                                         Fas-Tronics, Inc.
                                         Fortune Industries, Inc.
                                         Capital Fasteners, Inc.
                                         R.S.D. Sales Co. Inc.
                                         B & G Supply Company, Inc.
                                         Action Threaded Products, Inc.
                                         Action Threaded Products of Georgia, Inc.
                                         Action Threaded Products of Minnesota, Inc.
=====================================================================================================================
</TABLE>

                                    Annex 3-8

<PAGE>   53

<TABLE>
<CAPTION>
=====================================================================================================================
NAME                            NATURE OF AFFILIATION
=====================================================================================================================
<S>                             <C>
Ann Bastis                      Secretary of:
                                         Questron Technology, Inc.
                                         Questron Finance Corp.
                                         Questron Operating Company, Inc.
                                         Questron Distribution Logistics, Inc.
                                         Comp Ware, Inc.
                                         Integrated Material Systems, Inc.
                                         Power Components, Inc.
                                         California Fasteners, Inc.
                                         Fas-Tronics, Inc.
                                         Fortune Industries, Inc.
                                         Capital Fasteners, Inc.
                                         R.S.D. Sales Co. Inc.
                                         B & G Supply Company, Inc.
                                         Action Threaded Products, Inc.
                                         Action Threaded Products of Georgia, Inc.
                                         Action Threaded Products of Minnesota, Inc.
---------------------------------------------------------------------------------------------------------------------
Milton M. Adler                 Director of Questron Technology, Inc.
---------------------------------------------------------------------------------------------------------------------
Phillip D. Schwiebert           Vice President of Questron Technology, Inc.
                                Western Regional Vice President of Questron Distribution Logistics, Inc.
---------------------------------------------------------------------------------------------------------------------
James W. Taylor                 Vice President of Questron Technology, Inc.
                                President and Director of Integrated Material Systems, Inc.
---------------------------------------------------------------------------------------------------------------------
Christopher V. Polimeni         Controller of:
                                         Questron Technology, Inc.
                                         Questron Finance Corp.
                                         Questron Operating Company, Inc.
                                         Questron Distribution Logistics, Inc.
                                         Comp Ware, Inc.
                                         Integrated Material Systems, Inc.
                                         Power Components, Inc.
                                         California Fasteners, Inc.
                                         Fas-Tronics, Inc.
                                         Fortune Industries, Inc.
                                         Capital Fasteners, Inc.
                                         R.S.D. Sales Co. Inc.
                                         B & G Supply Company, Inc.
                                         Action Threaded Products, Inc.
                                         Action Threaded Products of Georgia, Inc.
                                         Action Threaded Products of Minnesota, Inc.
---------------------------------------------------------------------------------------------------------------------
Douglas J. Dinicola             President of Comp Ware, Inc.
---------------------------------------------------------------------------------------------------------------------
Frank E. Hutchinson             President of Power Components, Inc.
---------------------------------------------------------------------------------------------------------------------
Gregory Fitzgerald              President of Fas-Tronics, Inc.
=====================================================================================================================
</TABLE>

                                    Annex 3-9

<PAGE>   54

<TABLE>
<CAPTION>
=====================================================================================================================
NAME                            NATURE OF AFFILIATION
=====================================================================================================================
<S>                             <C>
Malcolm Tallmon                 Vice President of Questron Technology, Inc.
                                President of Fortune Industries, Inc.
---------------------------------------------------------------------------------------------------------------------
James R. Gilchrist              President of Capital Fasteners, Inc.
---------------------------------------------------------------------------------------------------------------------
Raul H. Torres                  President of:
                                         Action Threaded Products, Inc.
                                         Action Threaded Products of Georgia, Inc.
                                         Action Threaded Products of Minnesota, Inc.
=====================================================================================================================
</TABLE>

                                   Annex 3-10

<PAGE>   55

                                     ANNEX 3

                                   PART 2.4(C)
                              INTELLECTUAL PROPERTY


None.

                                   Annex 3-11

<PAGE>   56

                                     ANNEX 3

                                   PART 2.9(B)
                 AGREEMENTS RESTRICTING THE RIGHT TO INCUR DEBT


         1.       The Senior Credit Documents.

         2.       $20 million Senior Subordinated Debt.

                                   Annex 3-12

<PAGE>   57

                                     ANNEX 3

                                   PART 2.9(D)
              RESTRICTIONS ON DIVIDENDS AND THE INCURRENCE OF DEBT


         1.       The Senior Credit Documents.

         2.       $20 million Senior Subordinated Debt.

                                   Annex 3-13

<PAGE>   58

                                     ANNEX 3

                            ENVIRONMENTAL COMPLIANCE
                                  PART 2.12(A)


None.




                                  PART 2.12(B)


None.




                                  PART 2.12(C)


None.

                                   Annex 3-14

<PAGE>   59

                                     ANNEX 3

                                  PART 2.14(A)
                              GOVERNMENTAL CONSENTS


None.

                                   Annex 3-15

<PAGE>   60

                                     ANNEX 3

                                  PART 2.17(A)
                        OFFEREES OF PURCHASED SECURITIES


         Albion Alliance Mezzanine Fund, L.P.

         IBJ Whitehall Bank & Trust Company

         Exeter Capital Partners IV, L.P.

                                   Annex 3-16

<PAGE>   61

                                     ANNEX 3

                                  PART 2.19(A)
               CAPITALIZATION OF QUESTRON OPERATING COMPANY, INC.


(i)      The authorized Capital Stock and other securities of the Company
         consists of 1000 shares of voting Common Stock.

         The outstanding Capital Stock and other securities of the Company
         consists of 1000 shares of voting Common Stock.

(ii)     100% of the Common Stock of the Company is owned by Questron Finance
         Corp. which, in turn, is wholly owned by the Parent.

(iii)    None.

(iv)     None.

                                   Annex 3-17

<PAGE>   62

                                     ANNEX 3

                                  PART 2.19(B)
                   CAPITALIZATION OF QUESTRON TECHNOLOGY, INC.


(i)      The authorized and outstanding shares of Capital Stock and other
         Securities of the Parent is:

<TABLE>
<CAPTION>
======================================================================================================================
CLASS                             NUMBER OF SHARES ISSUED    VOTING OR            NUMBER OF SHARES AUTHORIZED BUT
                                  AND OUTSTANDING            NON-VOTING           UNISSUED
======================================================================================================================
<S>                               <C>                        <C>                  <C>
common stock, par value $0.001    8,493,404                  Voting               11,506,596
per share
----------------------------------------------------------------------------------------------------------------------
preferred stock                   0                                               10,000,000
======================================================================================================================
</TABLE>


(ii)     Beneficial holders of more than 5% of Parent's Common Stock
         (percentages do not give effect to Closing Date transactions):

<TABLE>
<CAPTION>
======================================================================================================================
NAME                             SHARES           WARRANTS         OPTIONS                    TOTAL  OWNERSHIP
======================================================================================================================
<S>                              <C>              <C>              <C>                    <C>        <C>
Dominic Polimeni                 144,821          500,000          576,265                1,221,086  7.9%
----------------------------------------------------------------------------------------------------------------------
The Gubitosi Family              130,137          500,000          576,265                1,206,402  7.8%
----------------------------------------------------------------------------------------------------------------------
Phil Schwiebert                  113,339          250,000          560,000                  923,339  6.0%
----------------------------------------------------------------------------------------------------------------------
Doug Zadow                       563,037          0                324,621                  887,658  5.7%
======================================================================================================================
</TABLE>


(iii)    The Rights of the Parent are as follows:

         A.       Series IV Warrants to issue 3,998,000 shares of common stock
                  at $5.75 exercisable currently through March 4, 2002;
         B.       2,065,000 Performance Options are held by affiliates and
                  employees. The strike prices of the Options are as follows:
                  (i) 166,667 options at $7.75 and (ii) 1,898,333 at $4.50;
         C.       Approximately 120,000 unissued shares of restricted Common
                  Stock have been reserved by Parent in connection with the
                  acquisitions of Action Threaded Products, Inc. and Olympic
                  Fasteners and Electronic Hardware;
         E.       264,000 Stock Options are held by affiliates. The strike
                  prices of the Options are as follows: (i) 30,000 at $3.75;
                  (ii) 90,000 at $6.00; (iii) 50,000 at $4.50; (iv) 10,000 at
                  $4.89; (v) 30,000 at $4.00; and (vi) 54,000 at prices between
                  $3.875 and $8.250;
         F.       1,003,033 Employee Stock Options are held by employees. The
                  strike prices of the Options are as follows: (i) 30,000 at
                  $6.00; (ii) 10,300 at $4.80; (iii) 74,000 at $6.625; (iv)
                  355,551 at $3.56; and (v) 533,182 unissued options under the
                  1996 Employee Stock Option Plan; and

                                   Annex 3-18

<PAGE>   63

         G.       A Shareholders' Rights Plan, by and between Questron
                  Technology, Inc. and American Stock Transfer & Trust Company,
                  as rights agent, was approved by Questron Technology, Inc.'s
                  Board of Directors on September 22, 1998.

(iv)     There are no obligations of the Parent to repurchase or otherwise
         acquire or retire any shares of Capital Stock or Rights of the Parent,
         other than the put agreement in place with the former shareholders of
         California Fasteners, Inc. and R.S.D. Sales Co. Inc. as disclosed in
         the consolidated financial statements included in the Parent's Annual
         Report on Form 10-K for 1999.

The Issuers have not imposed any Liens on the outstanding shares of Capital
Stock of the Parent.

There are no preemptive rights, subscription rights, or other contractual rights
similar in nature to preemptive rights with respect to any Capital Stock of the
Parent.

                                   Annex 3-19

<PAGE>   64

                                     ANNEX 3

                                  PART 2.20(C)
                             STOCKHOLDERS AGREEMENTS


None.

                                   Annex 3-20