SHARE PURCHASE AGREEMENT AND PLAN OF MERGER

                                  BY AND AMONG

                           OUTSOURCING SOLUTIONS INC.

                        SHERMAN ACQUISITION CORPORATION

                                      AND

                             THE UNION CORPORATION

                           Dated as of December 22, 1997
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                               TABLE OF CONTENTS

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ARTICLE I--THE TENDER OFFER................................................................................           2
  SECTION 1.1.        The Offer............................................................................           2
  SECTION 1.3.        Composition of the Board of Directors................................................           5
  SECTION 1.4.        Stock Options and Other Plans........................................................           5

ARTICLE II--THE MERGER AND RELATED MATTERS.................................................................           6
  SECTION 2.1.        The Merger...........................................................................           6
  SECTION 2.2.        Conversion of Stock..................................................................           7
  SECTION 2.3.        Dissenting Stock.....................................................................           7
  SECTION 2.4.        Surrender of Certificates............................................................           8
  SECTION 2.5.        Payment..............................................................................           9
  SECTION 2.6.        No Further Rights of Transfers.......................................................          10
  SECTION 2.7.        Certificate of Incorporation of the Surviving Corporation............................          10
  SECTION 2.9.        Directors and Officers of the Surviving Corporation..................................          10
  SECTION 2.10.       Closing..............................................................................          11
  SECTION 2.11.       Proxy Statement, Schedule 14D-9 and Schedule 14D-1...................................          11

ARTICLE III--REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.............................................          12
  SECTION 3.1.        Corporate Existence and Power........................................................          12
  SECTION 3.2.        Corporate Authorization..............................................................          12
  SECTION 3.3.        Consents and Approvals; No Violations................................................          13
  SECTION 3.4.        Compliance with Laws.................................................................          13
  SECTION 3.5.        Capitalization.......................................................................          14
  SECTION 3.6.        Subsidiaries.........................................................................          14
  SECTION 3.7.        SEC Filings..........................................................................          15
  SECTION 3.8.        Financial Statements.................................................................          16
  SECTION 3.9.        No Undisclosed Liabilities...........................................................          16
  SECTION 3.10.       Absence of Certain Changes...........................................................          16
  SECTION 3.11.       Title to Properties; Encumbrances....................................................          17
  SECTION 3.12.       Litigation...........................................................................          18
  SECTION 3.13.       Taxes................................................................................          18
  SECTION 3.14.       Employee Benefit Plans...............................................................          20
  SECTION 3.15.       Brokers..............................................................................          22
  SECTION 3.16.       Environmental Matters................................................................          22
  SECTION 3.17.       Proprietary Rights...................................................................          24
  SECTION 3.18.       Material Contracts and Leases........................................................          25
  SECTION 3.19.       Insurance............................................................................          26
  SECTION 3.20.       Labor Relations......................................................................          26
  SECTION 3.21.       Voting Requirements..................................................................          27
  SECTION 3.22.       Rights Agreement.....................................................................          27
  SECTION 3.23.       Customers Relations..................................................................          27

ARTICLE IV--REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB...............................................          28
  SECTION 4.1.        Corporate Existence and Power........................................................          28
  SECTION 4.2.        Corporate Authorization..............................................................          28
  SECTION 4.3.        Consents and Approvals...............................................................          28
  SECTION 4.4.        No Violation.........................................................................          29
  SECTION 4.5.        Financial Statements.................................................................          29
  SECTION 4.6.        Financing............................................................................          29
  SECTION 4.7.        Offer Documents; Other Information...................................................          30
  SECTION 4.8.        Litigation...........................................................................          30

ARTICLE V--CONDUCT OF BUSINESS BY THE CORPORATION PENDING THE
             CLOSING.......................................................................................          30
  SECTION 5.1.        Regular Course of Business...........................................................          30
  SECTION 5.2.        Charter Documents and Capital Changes................................................          32
  SECTION 5.3.        Organization and Good Will...........................................................          33
  SECTION 5.4.        Insurance............................................................................          33
  SECTION 5.5.        Compliance With Laws.................................................................          33
  SECTION 5.6.        SEC Reports..........................................................................          33
  SECTION 5.7.        Proxy Statement......................................................................          33
  SECTION 5.8.        Shareholder Approval.................................................................          33
  SECTION 5.9.        No Solicitation of Other Offers......................................................          34
  SECTION 5.10.       Notification of Certain Matters......................................................          36
  SECTION 5.11.       Rights Agreement.....................................................................          36
  SECTION 5.12.       Properties; Material Contracts.......................................................          37
  SECTION 5.13.       Dividends, Etc.......................................................................          37
  SECTION 5.14.       Full Access..........................................................................          37
ARTICLE VI--COVENANTS OF PARTIES...........................................................................          38
  SECTION 6.1.        Confidentiality......................................................................          38
  SECTION 6.2.        Cooperation..........................................................................          39
  SECTION 6.3.        Filings; Consents; Removal of Objections.............................................          40
  SECTION 6.4.        Public Announcements.................................................................          40
  SECTION 6.5.        Employee Benefits....................................................................          40
  SECTION 6.6.        Indemnification and Insurance........................................................          41
  SECTION 6.7.        Resignation of Directors.............................................................          42
  SECTION 6.8.        Confidentiality Agreement............................................................          42
  SECTION 6.9.        Certain Actions of Parent and Sub....................................................          42

ARTICLE VII--CONDITIONS TO CONSUMMATION OF THE MERGER......................................................          43
  SECTION 7.1.        Conditions Precedent to Obligations of Parent, Sub and the Corporation...............          43

ARTICLE VIII--TERMINATION AND ABANDONMENT..................................................................          44
  SECTION 8.1.        Termination..........................................................................          44
  SECTION 8.2.        Effect of Termination................................................................          45

ARTICLE IX--MISCELLANEOUS..................................................................................          46
  SECTION 9.1.        Fees and Expenses....................................................................          46
  SECTION 9.2.        Notices..............................................................................          47
  SECTION 9.3.        Termination of Representations and Warranties........................................          48
  SECTION 9.4.        Amendments...........................................................................          48
  SECTION 9.5.        Waivers..............................................................................          48
  SECTION 9.6.        Successors and Assigns...............................................................          48
  SECTION 9.7.        Governing Law and Forum..............................................................          49
  SECTION 9.8.        Counterparts; Effectiveness..........................................................          49
  SECTION 9.9.        Entire Agreement; Schedules and Exhibits.............................................          49
  SECTION 9.10.       Headings and Table of Contents.......................................................          49

ARTICLE X--DEFINITIONS.....................................................................................          50

ANNEX I to Share Purchase Agreement and Plan of Merger
  Conditions to the Share Purchase.........................................................................         A-I
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                  SHARE PURCHASE AGREEMENT AND PLAN OF MERGER

    This Share Purchase Agreement and Plan of Merger (this "Agreement") dated as
of  December  22,  1997 is made by and  among  Outsourcing  Solutions,  Inc.,  a
Delaware corporation  ("Parent"),  Sherman Acquisition  Corporation,  a Delaware
corporation  and a direct  wholly-owned  subsidiary of Parent  ("Sub"),  and The
Union Corporation, a Delaware corporation (the "Corporation"). Capitalized terms
used herein and not  otherwise  defined in the Preamble or in Articles I through
IX of this Agreement shall have the respective  meanings  ascribed to such terms
in Article X hereto.

                                    PREAMBLE

    WHEREAS,  the Boards of Directors of Parent,  Sub and the  Corporation  have
each  determined  that  it  is  in  the  best  interests  of  their   respective
stockholders  for Parent to  acquire  up to all of the  issued  and  outstanding
Common Stock,  par value $.50 per share,  of the Corporation  (the  "Corporation
Stock")  (all  issued  and  outstanding   shares  of  Corporation   Stock  being
hereinafter collectively referred to as the "Shares") upon the terms and subject
to the conditions set forth herein; and

    WHEREAS,  in furtherance  thereof, it is proposed that Sub shall make a cash
tender offer (the "Offer") to acquire all of the issued and  outstanding  Shares
for $31.50 per share (such amount, or any greater amount per Share paid pursuant
to the Offer, being hereinafter  referred to as the "Per Share Amount"),  net to
the seller in cash,  in  accordance  with the terms  provided  herein and in the
Offer; and

    WHEREAS, to complete such acquisition, the respective Boards of Directors of
Parent,  Sub and the  Corporation  have approved the merger of Sub with and into
the  Corporation  (the  "Merger"),  pursuant  to and  subject  to the  terms and
conditions of this Agreement;  and h) 0*0*0*-Registered  Trademark-  -Registered
Trademark- Section(5) WHEREAS, the Directors of the Corporation have unanimously
determined  that each of the Offer and the  Merger  are fair to, and in the best
interests of, the holders of Common Stock, approved the Offer and the Merger and
recommended  the  acceptance  of the Offer and  approval  and  adoption  of this
Agreement by the shareholders of the Corporation; and

    NOW,  THEREFORE,  in consideration of the mutual covenants,  representations
and warranties  herein set forth, and the mode of carrying the same into effect,
the parties hereto hereby agree as follows:

                          ARTICLE I--THE TENDER OFFER

     SECTION 1.1. THE OFFER.  (a) Provided  that this  Agreement  shall not have
been  terminated in  accordance  with Article VIII hereof and so long as none of
the events set forth in Annex I hereto (the  "Tender  Offer  Conditions")  shall
have occurred and be continuing and shall not have been waived by Parent, Parent
shall  cause  Sub to  commence  (within  the  meaning  of Rule  14d-2  under the
Securities  Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations  thereunder) the Offer for all issued and outstanding  Shares as
promptly as reasonably  practicable after the date hereof, but in no event later
than five (5) business  days after the date of this  Agreement.  The Offer shall
remain  open for a period  of not less  than  twenty  (20)  business  days.  The
obligation of Sub to accept for payment  Shares  tendered  pursuant to the Offer
shall be subject to the satisfaction of the Tender Offer Conditions.  Parent and
Sub expressly reserve the right to waive any such condition, to increase the Per
Share Amount payable in the Offer, and to make any other change in the terms and
conditions of the Offer; provided, however, that, without the written consent of
the Corporation,  no change may be made which (A) decreases the Per Share Amount
payable in the Offer,  (B) reduces the number of Shares to be  purchased  in the
Offer,  (C) imposes  conditions  to the Offer in  addition  to the Tender  Offer
Conditions,  (D) amends or changes the terms and  conditions of the Offer in any
manner  materially  adverse to the holders of Shares  (other than Parent and Sub
and its  subsidiaries),  (E) changes the  consideration  payable in the Offer to
anything other than all cash, (F) reduces the time period during which the Offer
shall  remain open or (G) except as provided in the next  sentence,  extends the
time  period  during  which the Offer shall  remain  open.  Notwithstanding  the
foregoing,  Parent and Sub may,  without  the  consent of the  Corporation,  (i)
extend  the  Offer  beyond  the  scheduled  expiration  date and any  subsequent
scheduled expiration date (but not beyond the date referred to in Section 8.1(c)
hereof),  if at such  date  any of the  Tender  Offer  Conditions  shall  not be
satisfied or waived, until such time as such conditions are satisfied or waived,
and (ii)  extend  the Offer for any  period  required  by any rule,  regulation,
interpretation  or position  of the SEC (but not beyond the date  referred to in
Section 8.1(c) hereof). The Per Share Amount shall be net to the seller in cash,
upon the terms  and  subject  to the  Tender  Offer  Conditions.  Following  the
satisfaction  or waiver of the Tender  Offer  Conditions,  Sub shall  accept for
payment  and pay for  (hereinafter  referred  to as the  "Share  Purchase"),  in
accordance with the terms of the Offer, all Shares validly tendered  pursuant to
the Offer and not withdrawn, as soon as it is permitted to do so pursuant to the
Exchange Act or other applicable law or regulation, whichever is later.

    (b) As soon as  practicable  on the date of the  commencement  of the Offer,
Parent  and Sub shall  file  with the  United  States  Securities  and  Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 (together with
all amendments and supplements  thereto,  the "Schedule  14D-1") with respect to
the Offer.  The Schedule  14D-1 will contain an offer to purchase (the "Offer to
Purchase")  and  form of the  related  letter  of  transmittal  and any  summary
advertisement  (which  Schedule  14D-1,  Offer to Purchase and other  documents,
together  with any  supplements  or amendments  thereto,  are referred to herein
collectively as the "Offer Documents"). The Corporation and its counsel shall be
given the  opportunity to review and comment upon the Offer  Documents  prior to
their filing with the SEC.  Parent,  Sub and the  Corporation  agree promptly to
correct any  information  provided by any of them for use in the Offer Documents
that shall have become false or misleading in any material  respect,  and Parent
and Sub further agree to take all steps necessary to cause the Schedule 14D-1 as
so  corrected  to be filed  with the SEC and the  other  Offer  Documents  as so
corrected to be  disseminated  to holders of Shares,  in each case as and to the
extent required by applicable federal securities laws. Parent and Sub each agree
to provide the  Corporation and its counsel with any comments either of them, or
their  counsel,  may receive from the SEC or its staff with respect to the Offer
Documents  promptly  after the receipt of such  comments  and shall  provide the
Corporation and its counsel an opportunity to  participate,  including by way of
discussions with the SEC or its staff, in their response to such comments.

    SECTION 1.2.  CORPORATE  ACTION,CFN.  (a) The Corporation hereby approves of
and  consents to the Offer and the Merger and  represents  that (i) its Board of
Directors,  at a meeting duly called,  has  unanimously (A) determined that this
Agreement and the transactions  contemplated  hereby are fair to and in the best
interests of the holders of Shares,  (B) approved and adopted this Agreement and
the transactions contemplated hereby and recommends that the stockholders of the
Corporation  accept  the  Offer,  and (C)  taken  all  other  applicable  action
necessary to render,  so long as this Agreement  remains in effect,  (x) Section
203 of the General  Corporation  Law of the State of Delaware  (the  "DGCL") and
other  state  takeover   statutes;   (y)  Article  FIFTH  of  the  Corporation's
Certificate  of  Incorporation  (except for the  requirement  that the Merger be
approved by the holders of not less than two-thirds of the outstanding  Shares),
and (z) the Rights Agreement dated as of March 14, 1988, as amended (the "Rights
Agreement"), inapplicable to the Offer and the Merger; and (ii) CIBC Oppenheimer
Corp.  has  delivered to the Board of Directors of the  Corporation  its written
opinion that the  consideration to be received by the holders of Shares pursuant
to the Offer and the Merger is fair to the  holders of Shares  from a  financial
point of view and Corporation has delivered to Parent a copy of said opinion.

     (b) The  Corporation  shall file with the SEC as soon as practicable on the
date of the commencement of the Offer a Solicitation/Recommendation Statement on
schedule  14D-9  (together  with all amendments  and  supplements  thereto,  the
"Schedule  14D-9")  containing,  subject  to the  terms of this  Agreement,  the
recommendation  of the  Corporation's  Board of  Directors  described in Section
1.2(a)  and shall  disseminate  the  Schedule  14D-9 as  required  by Rule 14d-9
promulgated  under the Exchange  Act.  Parent and Sub and their counsel shall be
given the opportunity to review and comment upon the Schedule 14D-9 prior to its
filing  with the SEC.  The  Corporation,  Parent and Sub each agree  promptly to
correct any  information  provided by any of them for use in the Schedule  14D-9
that shall have become  false or  misleading  in any material  respect,  and the
Corporation  further  agrees to take all steps  necessary  to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to holders
of Shares,  in each case as and to the extent  required  by  applicable  federal
securities  laws. The Corporation  agrees to provide Parent and its counsel with
any  comments  the  Corporation  or its counsel may receive  from the SEC or its
staff with  respect to the  Schedule  14D-9  promptly  after the receipt of such
comments and shall provide Parent and its counsel an opportunity to participate,
including by way of  discussions  with the SEC or its staff,  in the response of
the Corporation to such comments.

    (c) The  Corporation  has  furnished  Parent with mailing  labels and a list
containing  the names and  addresses  of all record  holders of Shares and will,
upon request, furnish Parent with all other available listings or computer files
containing names, addresses and security position listings of any record holders
or beneficial owners of Shares,  each as of a recent date. The Corporation shall
furnish Parent with such  additional  information,  including  updated lists and
files of stockholders  and security  position  listings,  and such other related
assistance  Parent  or its  agents  may  reasonably  request  to  carry  out the
transactions contemplated hereby. Subject to the requirements of applicable law,
and except for such steps as are necessary to  disseminate  the Offer  Documents
and any other documents necessary to consummate the Share Purchase, Parent shall
hold in  confidence  the  information  contained in any of such lists and files,
shall use such  information  only in connection  with the Offer (and the Merger)
and, if this Agreement shall be terminated, shall deliver to the Corporation all
copies of such  information  then in its  possession.  The  Corporation has been
advised that each of its directors and the executive  officers intends to tender
pursuant  to  the  Offer  all  shares  of  Common  Stock  owned  of  record  and
beneficially by him or her.

    SECTION 1.3. COMPOSITION OF THE BOARD OF DIRECTORS.  Promptly upon the Share
Purchase,  Sub shall be entitled to  designate  such number of  directors on the
Board of Directors of the Corporation,  rounded up to the next whole number,  as
will give Sub,  subject to  compliance  with Section  14(f) of the Exchange Act,
representation  on such  Board of  Directors  equal to at least  that  number of
directors which equals the product of the total number of directors on the Board
of Directors  (giving effect to the directors elected pursuant to this sentence)
multiplied  by a fraction,  the numerator of which shall be the number of shares
of Common Stock so accepted  for payment and paid for or  otherwise  acquired or
owned by Sub or  Parent  and the  denominator  of which  shall be the  number of
shares of Common Stock then  outstanding,  and the  Corporation and its Board of
Directors  shall,  at such time,  take any and all such  action  needed to cause
Sub's  designees  to be  appointed  to  the  Corporation's  Board  of  Directors
(including  to cause  directors to resign).  Promptly  upon the Share  Purchase,
Corporation  and its Board of Directors shall take such further action as may be
requested by Sub to cause Sub's  designees to  constitute at least a majority of
the Board of Directors of each direct or indirect  Subsidiary of the Corporation
(other than Allied Bond & Collection Agency,  Inc.).  Subject to applicable law,
the  Corporation  shall take all action  requested by Parent which is reasonably
necessary to effect any such election,  including mailing to its shareholders an
Information  Statement  containing the information  required by Section 14(f) of
the  Exchange Act and Rule 14f-1  promulgated  thereunder,  and the  Corporation
agrees to make such mailing  with the mailing of the  Schedule  14D-9 so long as
Sub shall have  provided to the  Corporation  on a timely basis all  information
required to be  included in such  Information  Statement  with  respect to Sub's
designees. In furtherance thereof, the Corporation will increase the size of the
Corporation's  Board of Directors,  or use its reasonable  efforts to secure the
resignation of directors,  or both, as is necessary to permit Sub's designees to
be elected to the Corporation's Board of Directors.  Upon the Share Purchase (as
defined in Section 1.1  hereof) all  directors  of the  Corporation,  other than
Sub's designees and two directors of Corporation,  and, unless otherwise agreed,
all officers of the Corporation shall resign.

     SECTION  1.4.  STOCK  OPTIONS AND OTHER PLANS.  (a) As soon as  practicable
following the date hereof, the Board of Directors of the Corporation shall adopt
appropriate  resolutions and cause the Corporation to take all actions necessary
to obtain the consent of each holder of an outstanding option to purchase Shares
("Options") to the effect that, upon the Share Purchase, each Option, whether or
not then vested or exercisable,  shall no longer be exercisable for the purchase
of Shares but shall entitle each holder thereof,  in cancellation and settlement
therefor, to a payment in cash (subject to any applicable withholding taxes, the
"Cash  Payment"),  equal to the  product  of (x) the  total  number of shares of
Common  Stock  subject to such  Option as to which such  Option  could have been
exercised and (y) the excess of the Per Share Amount over the exercise price per
share of Common Stock subject to such Option,  each such Cash Payment to be paid
to each holder (or, without duplication, the beneficial owner) of an outstanding
Option on the date of the Share Purchase; and

    (b)  All  stock  option  plans  of the  Corporation  ("Stock  Plans")  shall
terminate as of the  Effective  Time and the  provisions  in any other  Employee
Benefit Plan providing for the issuance,  transfer or grant of any capital stock
of the  Corporation  or any  interest  in  respect of any  capital  stock of the
Corporation shall be deleted as of the Effective Time, and the Corporation shall
ensure  that  following  the  Effective  Time  no  holder  of an  Option  or any
participant  in any Stock Plan shall have any right  thereunder  to acquire  any
capital  stock of the  Corporation,  Parent or the  Surviving  Corporation.  The
Corporation will ensure that neither the Corporation nor any of its Subsidiaries
is or  will  be  bound  by any  Options,  other  options,  warrants,  rights  or
agreements which would entitle any Person,  other than Parent or its affiliates,
to own any capital stock of the Surviving Corporation or any of its Subsidiaries
or to receive any payment in respect thereof. Notwithstanding the foregoing, the
holders of Options who did not receive the Cash Payment on the date of the Share
Purchase   shall   thereafter  be  entitled  to  receive  the  Cash  Payment  in
cancellation  and  settlement  of such  Options  as  provided  in the  preceding
paragraph (a).

                   ARTICLE II--THE MERGER AND RELATED MATTERS

    SECTION 2.1.  THE MERGER.  (a) Subject to the terms and  conditions  of this
Agreement,  at the time of the Closing (as defined in Section  2.11  hereof),  a
certificate  of merger (the  "Certificate  of Merger")  shall be duly  prepared,
executed and acknowledged by Sub and the Corporation in accordance with the DGCL
and shall be filed on the Closing Date (as defined in Section 2.11 hereof).  The
Merger shall become  effective upon the filing of the Certificate of Merger with
the  Secretary  of  State  of the  State  of  Delaware  in  accordance  with the
provisions and requirements of the DGCL. The date and time when the Merger shall
become effective is hereinafter referred to as the "Effective Time".

    (b) At the Effective Time, Sub shall be merged with and into the Corporation
and the separate  corporate  existence of Sub shall cease,  and the  Corporation
shall  continue  as the  surviving  corporation  under  the laws of the State of
Delaware   under  the  name  of  "The   Union   Corporation"   (the   "Surviving
Corporation").

    (c) From and after the Effective Time, the Merger shall have the effects set
forth in Section 259 of the DGCL.

    SECTION 2.2. CONVERSION OF STOCK. At the Effective Time:

    (a) Each share of Common  Stock then issued and  outstanding  other than (i)
any shares of Common Stock which are held by any  Subsidiary of the  Corporation
or in  the  treasury  of  the  Corporation,  or  which  are  held,  directly  or
indirectly,  by Parent or any direct or indirect subsidiary of Parent (including
Sub),  all of which  shall be  cancelled  and none of which  shall  receive  any
payment with respect  thereto and (ii) shares of Common Stock held by Dissenting
Shareholders  (as defined in Section 2.3 hereof) shall,  by virtue of the Merger
and without any action on the part of the holder thereof,  be converted into and
represent the right to receive an amount in cash, without interest, equal to the
Per Share Amount (the "Merger Consideration"); and

    (b) Each  share of common  stock,  par value  $0.01 per  share,  of Sub then
issued and outstanding  shall, by virtue of the Merger and without any action on
the part of the holder thereof, become one fully paid and nonassessable share of
common stock, $0.50 par value, of the Surviving Corporation.

     SECTION 2.3. DISSENTING STOCK.  Notwithstanding  anything in this Agreement
to the contrary but only to the extent required by DGCL,  shares of Common Stock
that are issued and outstanding  immediately prior to the Effective Time and are
held by holders of Common Stock who comply with all the  provisions  of Delaware
law  concerning  the right of holders of Common Stock to dissent from the Merger
and  require   appraisal   of  their   shares  of  Common   Stock   ("Dissenting
Shareholders")  shall not be  converted  into the right to  receive  the  Merger
Consideration but shall become the right to receive such consideration as may be
determined  to be due such  Dissenting  Shareholder  pursuant to the laws of the
State of Delaware;  PROVIDED,  HOWEVER,  that (i) if any Dissenting  Shareholder
shall  subsequently  deliver  a  written  withdrawal  of his or her  demand  for
appraisal  (with the written  approval  of the  Surviving  Corporation,  if such
withdrawal is not tendered within 60 days after the Effective  Time), or (ii) if
any Dissenting Shareholder fails to establish and perfect his or her entitlement
to  appraisal  rights as  provided  by  applicable  law,  then  such  Dissenting
Shareholder  or  Shareholders,  as the case may be,  shall  forfeit the right to
appraisal of such shares and such shares shall  thereupon be deemed to have been
converted  into the right to  receive,  as of the  Effective  Time,  the  Merger
Consideration,  without interest.  The Corporation shall give Parent and Sub (A)
prompt notice of any written  demands for appraisal,  withdrawals of demands for
appraisal and any other related instruments received by the Corporation, and (B)
the  opportunity  to direct all  negotiations  and  proceedings  with respect to
demands for appraisal.  The Corporation  will not  voluntarily  make any payment
with respect to any demands for  appraisal  and will not,  except with the prior
written consent of Parent, settle or offer to settle any demand.

    SECTION 2.4.  SURRENDER OF CERTIFICATES.  (a) Concurrently  with or prior to
the Effective  Time,  Parent shall  designate a bank or trust company located in
the United  States to act as paying agent (the  "Paying  Agent") for purposes of
making the cash payments  contemplated  hereby. As soon as practicable after the
Effective  Time,  Parent  shall  cause  the  Paying  Agent to mail  and/or  make
available  to each  holder of a  certificate  theretofore  evidencing  shares of
Common  Stock  (other  than  those  which  were  held by any  Subsidiary  of the
Corporation or in the treasury of the  Corporation or which are held directly or
indirectly by Parent or any direct or indirect  subsidiary of Parent  (including
Sub))  a  notice  and  letter  of  transmittal   advising  such  holder  of  the
effectiveness  of the Merger and the  procedure for  surrendering  to the Paying
Agent such certificate or certificates  which immediately prior to the Effective
Time represented  outstanding Common Stock (the  "Certificates") in exchange for
the Merger Consideration deliverable in respect thereof pursuant to this Article
II.  Upon  the  surrender  for   cancellation   to  the  Paying  Agent  of  such
Certificates, together with a letter of transmittal, duly executed and completed
in accordance with the  instructions  thereon,  and any other items specified by
the letter of  transmittal,  the Paying  Agent shall  promptly pay to the Person
entitled thereto the Merger Consideration  deliverable in respect thereto. Until
so surrendered, each Certificate shall be deemed, for all corporate purposes, to
evidence only the right to receive upon such surrender the Merger  Consideration
deliverable in respect thereof to which such Person is entitled pursuant to this
Article  II.  No  interest  shall be paid or  accrued  in  respect  of such cash
payments.

    (b) If the Merger  Consideration (or any portion thereof) is to be delivered
to a Person other than the Person in whose name the  Certificate  surrendered in
exchange therefor are registered,  it shall be a condition to the payment of the
Merger  Consideration  that the  Certificates  so surrendered  shall be properly
endorsed or accompanied by appropriate stock powers and otherwise in proper form
for  transfer,  that  such  transfer  otherwise  be proper  and that the  Person
requesting  such  transfer  pay to the Paying  Agent any transfer or other taxes
payable by reason of the  foregoing  or  establish  to the  satisfaction  of the
Paying Agent that such taxes have been paid or are not required to be paid.

    (c) In the event any Certificate  shall have been lost, stolen or destroyed,
upon the  making  of an  affidavit  of that  fact by the  Person  claiming  such
Certificate  to be lost,  stolen or  destroyed,  the Paying  Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article II,
provided that, the Person to whom the Merger  Consideration  is paid shall, as a
condition  precedent to the payment  thereof,  give the Surviving  Corporation a
bond  in  such  sum  as it may  direct  or  otherwise  indemnify  the  Surviving
Corporation  in a manner  satisfactory  to it against any claim that may be made
against the Surviving  Corporation  with respect to the  Certificate  claimed to
have been lost, stolen or destroyed.

    SECTION  2.5.  PAYMENT.  Concurrently  with  or  immediately  prior  to  the
Effective Time,  Parent or Sub shall deposit in trust with the Paying Agent cash
in United States dollars in an aggregate  amount equal to the product of (i) the
number of  shares of Common Stock outstanding immediately prior to the Effective
Time (other than shares of Common Stock which are held by any  Subsidiary of the
Corporation or in the treasury of the  Corporation or which are held directly or
indirectly by Parent or any direct or indirect  subsidiary of Parent  (including
Sub)  or a  Person  known  at  the  time  of  such  deposit  to be a  Dissenting
Shareholder) and (ii) the Merger  Consideration  (such amount being  hereinafter
referred to as the  "Payment  Fund").  The Payment Fund shall be invested by the
Paying  Agent as  directed by Parent  only in direct  obligations  of the United
States,  obligations for which the full faith and credit of the United States is
pledged to provide for the payment of principal and interest,  commercial  paper
rated of the highest quality by Moody's Investors  Services,  Inc. or Standard &
Poor's Ratings Group or certificates of deposit,  bank repurchase  agreements or
bankers' acceptances of a commercial bank having at least $100,000,000 in assets
(collectively,  "Permitted  Investments")  or in money  market  funds  which are
invested in Permitted  Investments,  and any net earnings  with respect  thereto
shall be paid to Parent as and when requested by Parent. The Paying Agent shall,
pursuant to irrevocable  instructions,  make the payments referred to in Section
2.2(a)  hereof out of the Payment  Fund.  The Payment Fund shall not be used for
any other purpose except as otherwise  agreed to by Parent.  Promptly  following
the date which is three months after the Effective  Time, the Paying Agent shall
return to Parent all cash,  certificates and other instruments in its possession
that  constitute any portion of the Payment Fund (other than net earnings on the
Payment Fund which shall be paid to Parent), and the Paying Agent's duties shall
terminate.   Thereafter,  each  holder  of  a  Certificate  may  surrender  such
Certificate to the Surviving  Corporation  and (subject to applicable  abandoned
property,  escheat and similar  laws)  receive in exchange  therefor  the Merger
Consideration,  without  interest,  but shall have no greater rights against the
Surviving Corporation or Parent than may be accorded to general creditors of the
Surviving  Corporation  or Parent  under  applicable  law.  Notwithstanding  the
foregoing,  neither the Paying  Agent nor any party  hereto shall be liable to a
holder of shares of Common  Stock for any Merger  Consideration  delivered  to a
public official pursuant to applicable  abandoned property,  escheat and similar
laws.

    SECTION  2.6. NO FURTHER  RIGHTS OF  TRANSFERS.  At and after the  Effective
Time,  each  holder  of a  Certificate  shall  cease  to have  any  rights  as a
shareholder  of the  Corporation,  except  for,  in the  case of a  holder  of a
Certificate (other than shares to be cancelled pursuant to Section 2.2(a) hereof
and other than shares held by Dissenting  Shareholders),  the right to surrender
his or her Certificate in exchange for payment of the Merger  Consideration  or,
in the case of a Dissenting Shareholder,  to perfect his or her right to receive
payment  for his or her  shares  pursuant  to  Delaware  law if such  holder has
validly  perfected and not withdrawn his or her right to receive payment for his
or her shares,  and no  transfer of shares of Common  Stock shall be made on the
stock transfer books of the Surviving Corporation. Certificates presented to the
Surviving  Corporation after the Effective Time shall be cancelled and exchanged
for cash as provided in this  Article II. At the close of business on the day of
the Effective  Time the stock ledger of the  Corporation  with respect to Common
Stock shall be closed.

    SECTION 2.7. CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION.  The
Certificate of Incorporation of the Corporation,  as in effect immediately prior
to  the  Effective  Time,  shall  be the  Certificate  of  Incorporation  of the
Surviving  Corporation and shall be amended such that it is substantially in the
form of the Amended and Restated Certificate of Incorporation attached hereto as
Exhibit 2.7.

    SECTION 2.8. BY-LAWS OF THE SURVIVING CORPORATION. The By-Laws of Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation.

     SECTION 2.9.  DIRECTORS AND OFFICERS OF THE SURVIVING  CORPORATION.  At the
Effective  Time,  the directors of Sub  immediately  prior to the Effective Time
shall be the directors of the Surviving  Corporation,  each of such directors to
hold  office,  subject  to  the  applicable  provisions  of the  Certificate  of
Incorporation  and By-Laws of the Surviving  Corporation,  until the next annual
shareholders'  meeting of the Surviving  Corporation and until their  respective
successors  shall be duly elected or appointed and  qualified.  At the Effective
Time, the officers of the  Corporation  immediately  prior to the Effective Time
shall, subject to the applicable  provisions of the Certificate of Incorporation
and By-Laws of the  Surviving  Corporation,  be the  officers  of the  Surviving
Corporation until their respective successors shall be duly elected or appointed
and qualified.

    SECTION 2.10. CLOSING.  The closing of the Merger (the "Closing") shall take
place at the offices of White & Case, 1155 Avenue of the Americas, New York, New
York,  as soon as  practicable  after  the last of the  conditions  set forth in
Article VII hereof is fulfilled or waived  (subject to applicable law) but in no
event later than the fifth  business day  thereafter,  or at such other time and
place and on such other date as Parent and the Corporation  shall mutually agree
(the "Closing Date").

    SECTION  2.11.  PROXY  STATEMENT,  SCHEDULE  14D-9 AND SCHEDULE  14D-1.  The
definitive proxy statement and related materials,  if required,  to be furnished
to the holders of Common Stock in connection with the Merger pursuant to Section
5.7 hereof (the "Proxy Statement") will comply in all material respects with the
Exchange Act and the rules and regulations  thereunder and any other  applicable
laws. If at any time prior to the  Effective  Time any event occurs which should
be  described  in an  amendment  or  supplement  to  the  Proxy  Statement,  the
Corporation will file and disseminate,  as required,  an amendment or supplement
which complies in all material  respects with the Exchange Act and the rules and
regulations  thereunder and any other  applicable  laws. None of the information
supplied by the Corporation for inclusion or  incorporation  by reference in (i)
the Offer Documents or (ii) the Proxy Statement,  will, in the case of the Offer
Documents,  at the respective  times the Offer Documents are filed with the SEC,
or, in the case of the Proxy Statement, at the date such information is supplied
and at the Effective  Time,  contain any untrue  statement of a material fact or
omit to state any material fact necessary in order to make the statements  made,
in light of the circumstance under which they are made, not misleading.  None of
the  information in the Schedule  14D-9,  at the  respective  times the Schedule
14D-9 is filed with the SEC,  will  contain any untrue  statement  of a material
fact or omit to state a material fact necessary to make the statements  made, in
light  of  the  circumstances   under  which  they  are  made,  not  misleading.
Notwithstanding  the  foregoing,  no  representation  or  warranty  is  made  by
Corporation with respect to any information with respect to Parent, Sub or their
officers,  directors or affiliates  provided to the Corporation by Parent or Sub
in writing for inclusion in the Schedule  14D-9.  The Schedule 14D-9 will comply
in all material  respects  with the  Exchange Act and the rules and  regulations
thereunder and any other applicable laws. If at any time prior to the expiration
or  termination  of the Offer any event  occurs  which should be described in an
amendment or  supplement  to the Schedule  14D-9 or any  amendment or supplement
thereto, the Corporation will file and disseminate, as required, an amendment or
supplement  which  complies in all material  respects  with the Exchange Act the
rules and regulations  thereunder and any other  applicable  laws.  Prior to its
filing with the SEC, the  amendment or  supplement  shall be delivered to Parent
and Sub and their counsel.


         ARTICLE III--REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

    The Corporation represents and warrants to Parent and Sub that:

    SECTION 3.1. CORPORATE EXISTENCE AND POWER. The Corporation is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Delaware  and has all  corporate  power,  authority  and legal right to
conduct its business as it is now being  conducted and to own the properties and
assets it now owns.  Except as shown in Paragraph 3.1 of the  Disclosure  Letter
("DL") heretofore  prepared by the Corporation and delivered to Parent,  foreign
corporation  and is in good  standing in every  jurisdiction,  both domestic and
foreign, where the character of the property owned or leased by it or the nature
of its activities makes such qualification necessary, except where the continued
failure  to be so  qualified  or  licensed  is not  reasonably  likely to have a
Material  Adverse  Effect on the  Corporation.  The  Corporation  has previously
delivered to Purchaser true and correct copies of the Corporation's  Certificate
of Incorporation and By-Laws, as currently in effect.

    SECTION 3.2.  CORPORATE  AUTHORIZATION.  The  Corporation has full corporate
power and authority to enter into this Agreement  and,  subject to obtaining the
necessary  approval  of the  Merger  by  its  stockholders,  to  carry  out  the
transactions  contemplated hereby. The Board of Directors of the Corporation has
taken  all  actions   required  by  applicable   law  and  its   Certificate  of
Incorporation  and  By-Laws to  authorize  the  execution  and  delivery  by the
Corporation  of this  Agreement  and,  subject to obtaining  the approval of the
Merger by the holders of not less than two-thirds of the outstanding shares, the
performance by the Corporation of the  transactions  contemplated  hereby.  This
Agreement has been duly and validly  executed and  delivered by the  Corporation
and no other corporate  action is necessary in connection  therewith (other than
the  approval of the Merger by the  holders of a two- thirds of the  outstanding
shares of Common Stock entitled to vote),  and this Agreement  (assuming the due
authorization,  execution  and  delivery  hereof by Parent  and Sub) is a legal,
valid and  binding  obligation  of the  Corporation  enforceable  against  it in
accordance with its terms,  except to the extent that enforcement may be limited
by  applicable  bankruptcy,  insolvency,  reorganization  or other  similar laws
affecting  creditors'  rights  generally  and by  general  equitable  principles
(regardless of whether enforcement is sought in equity or at law).

    SECTION 3.3. CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming (i) the filings
required under the HSR Act are made and the waiting  period  thereunder has been
terminated or has expired, (ii) the requirements of the Exchange Act relating to
the Proxy Statement (if required) and the Offer are met, (iii) the filing of the
Certificate  of Merger  and  other  appropriate  merger  documents,  if any,  as
required by DGCL are made and (iv) approval of the Merger by holders  two-thirds
of the  outstanding  shares of Common Stock entitled to vote, if required by the
DGCL,  is  received,  the  execution  and  delivery  of  this  Agreement  by the
Corporation  and  the  consummation  by  the  Corporation  of  the  transactions
contemplated  hereby will not: (1) violate any provision of the  Certificate  of
Incorporation  or  By-Laws  of  the  Corporation  or  the  comparable  governing
documents of any of its Subsidiaries,  in each case, as amended; (2) violate any
statue,  ordinance,  rule,  regulation,  order or  decree of any court or of any
governmental  or  regulatory  body,  agency  or  authority   applicable  to  the
Corporation  or any of its  Subsidiaries  or by which  any of  their  respective
properties  or assets may be bound;  (3) except as set forth in DL 3.3,  require
any filing with, or permit,  consent or approval of, or the giving of any notice
to, any governmental or regulatory body,  agency or authority;  or (4) except as
set  forth in DL 3.3,  result  in a  violation  or  breach  of,  conflict  with,
constitute  (with or without  due notice or lapse of time or both) a default (or
give rise to any right of termination,  cancellation,  payment or  acceleration)
under,  or  result in the  creation  of any  mortgage,  pledge,  lien,  security
interest,  encumbrance or charge of any kind (each an "Encumbrance") upon any of
the properties or assets of the  Corporation or any of its  Subsidiaries  under,
any of  the  terms,  conditions  or  provisions  of any  note,  bond,  mortgage,
indenture,  license, franchise, permit, agreement, lease, franchise agreement or
other  instrument  or  obligation  to  which  the  Corporation  or  any  of  its
Subsidiaries is a party, or by which it or any of their respective properties or
assets are bound or subject, except for in the case of clauses (3) and (4) above
for any such filing, permit, consent, approval, violation, breach or Encumbrance
which would not reasonably be expected to (a) have a Material  Adverse Effect on
the  Corporation  and its  Subsidiaries,  taken as a whole,  or (b)  prevent  or
materially  delay   consummation  of  the  transactions   contemplated  by  this
Agreement.

    SECTION 3.4. COMPLIANCE WITH LAWS. Subject to Section 3.16 and except as set
forth in DL 3.4, the Corporation and its Subsidiaries are in compliance with all
applicable laws, regulations, orders, judgements and decrees (including, but not
limited  to,  the Fair  Debt  Collection  Practices  Act and any  state or local
counterpart  or  equivalent)  except where the failure to so comply would not be
reasonably  likely to (i) have a Material  Adverse Effect on the Corporation and
its  Subsidiaries  taken  as  a  whole  or  (ii)  prevent  or  materially  delay
consummation of the transactions contemplated by this Agreement.

    SECTION 3.5. CAPITALIZATION. The authorized capital stock of the Corporation
consists of  15,000,000  shares of common stock,  par value $.50 per share,  and
500,000 shares of preferred  stock, par value $.50 per share. As of December 22,
1997,  there were issued and outstanding  5,802,641  shares of such common stock
(not including  2,944,837  shares held in the  Corporation's  treasury),  all of
which are of one class,  and no shares of such preferred  stock.  All issued and
outstanding  shares of Corporation  Stock have been duly  authorized and validly
issued and are fully paid and  nonassessable  and are not  subject  to, nor were
they issued in violation  of, any  preemptive  rights.  As of December 22, 1997,
728,548  shares of  Corporation  Stock were issuable upon exercise of Options to
purchase such stock,  which Options were issued  pursuant to the Stock Plans (as
defined  in Section  1.4),  which  plans are listed in DL 3.5(i).  Except as set
forth in this Section,  in DL 3.5(i) or in the Rights Agreement,  as of the date
hereof  there are no,  and at the  Effective  Time  there  will be no, (i) other
outstanding  shares of, (ii) securities of the Corporation  convertible  into or
exchangeable  for,  (iii)  options or other rights  (including  any  pre-emptive
rights)   to  acquire   from  the   Corporation,   or  (iv)   other   contracts,
understandings,   arrangements  or  obligations   (whether  or  not  contingent)
providing for the issuance or sale by the  Corporation,  directly or indirectly,
of, any capital stock or other equity or debt security of the Corporation. As of
the date  hereof,  except as set forth in DL  3.5(i) or in  connection  with the
exercise of any Options,  there are no, and at the Effective  Time there will be
no, outstanding contractual obligations of the Corporation to repurchase, redeem
or  otherwise  acquire  any  outstanding  shares of  Corporation  Stock or other
securities issued by the Corporation.

     SECTION 3.6. SUBSIDIARIES. Attached hereto as DL 3.6 is a true and complete
list of each subsidiary of the Corporation (the  "Subsidiaries"),  and except as
set forth on DL 3.6, each of the  Subsidiaries is duly  incorporated and validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation,  with full corporate  power and authority to conduct its business
as it is now conducted and to own the properties and assets it now owns.  Except
as set forth in DL 3.6, each of the  Subsidiaries  is duly qualified or licensed
to do  business  as a  foreign  corporation  and is in good  standing  in  every
jurisdiction,  both  domestic and foreign,  where the  character of the property
owned or leased by it or the nature of its activities  makes such  qualification
necessary,  except  where the  failure to be so  qualified  or  licensed  is not
reasonably  likely to have a Material  Adverse Effect on the Corporation and its
Subsidiaries,  taken as a whole. All Subsidiaries are wholly owned,  directly or
indirectly,  by the Corporation.  Except for the Subsidiaries or as set forth in
DL 3.6, the  Corporation  does not own,  directly or  indirectly,  securities or
other ownership interests in any other entity and except as set forth in DL 3.6,
neither the Corporation nor any of its Subsidiaries is subject to any obligation
or  requirement to provide funds for or to make any investment (in the form of a
loan,  capital  contribution  or  otherwise)  to or in any  entity  other than a
Subsidiary.  All of the shares of capital  stock of the  Subsidiaries  have been
duly authorized and validly issued,  are fully paid and  nonassessable,  are not
subject to, nor were they issued in violation of, any preemptive rights, and are
owned,  directly  or  indirectly,  by the  Corporation  free  and  clear  of all
Encumbrances, options or claims whatsoever. No shares of capital stock of any of
the  Subsidiaries  are reserved for  issuance  and there are no  outstanding  or
authorized options,  warrants, rights,  subscriptions,  claims of any character,
agreements,  obligations,  rights of  redemption,  convertible  or  exchangeable
securities,  or other  commitments,  contingent  or  otherwise,  relating to the
capital  stock of any  Subsidiary,  pursuant to which such  Subsidiary is or may
become  obligated to issue any shares of capital stock of such Subsidiary or any
securities  convertible  into,  exchangeable  for, or  evidenced in the right to
subscribe for, any shares of such Subsidiary. Except as set forth in DL 3.6(ii),
there are no  restrictions of any kind which prevent the payment of dividends by
any of the Subsidiaries.

    SECTION 3.7. SEC FILINGS.  (a) The Corporation  has previously  delivered to
Parent a true, correct and complete copy of the Corporation's  Annual Reports on
Form 10-K for the years ended June 30, 1996 and June 30, 1997 (the  "Corporation
10-Ks"),  the  Corporation's  proxy statement  relating to its annual meeting of
stockholders  to be held on November 19, 1997, all other reports or registration
statements  filed by the  Corporation  with the SEC since June 30, 1996, and all
amendments and supplements to the foregoing (the "Corporation Filings"). Each of
the  Corporation  Filings  has  been  timely  filed,  subject  to any  allowable
extensions,  and was prepared in all material  respects in  accordance  with the
requirements  of the  Securities  Act or a  material  fact or  omit  to  state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  The Corporation Filings constitute all of the documents required to
be filed by the Corporation with the SEC since June 30, 1996.

    (b) None of the  information  supplied  to  Parent  by the  Corporation  for
inclusion  in the Offer  Documents  will,  at the  respective  times  such Offer
Documents or any amendments or supplements thereto are filed with the SEC or are
first published, sent or given to stockholders,  as the case may be, contain any
untrue statement of material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.

    SECTION 3.8. FINANCIAL  STATEMENTS.  The financial statements (including the
notes thereto) (the "Corporation  Financial  Statements") of the Corporation and
its  Subsidiaries  included in the Corporation  Filings fairly  present,  in all
material  respects,  the consolidated  financial position of the Corporation and
its Subsidiaries as of the respective dates thereof and the consolidated results
of its  operations,  cash  flows and  stockholders'  equity  for the  respective
periods  then  ended,  all in  conformity  with  generally  accepted  accounting
principles  applied on a consistent  basis ("GAAP"),  except as indicated in the
notes thereto.

    SECTION 3.9. NO UNDISCLOSED LIABILITIES.  Except as set forth in DL 3.9 (the
"Corporation Disclosed Liabilities"), the Corporation has no liabilities, claims
or other obligations  (absolute,  accrued, or contingent) (herein referred to as
the  "Corporation  Liabilities")  except (a) Corporation  Liabilities  which are
accrued or  otherwise  reflected  on the  Corporation  Financial  Statements  or
disclosed in the notes  thereto,  (b)  Corporation  Liabilities  incurred in the
ordinary course of business since June 30, 1997 (the "Balance Sheet Date"),  (c)
Corporation  Liabilities  which  are  otherwise  disclosed  in  the  Corporation
Filings, (d) Corporation Liabilities otherwise permitted by this Agreement,  and
(e)  Corporation  Liabilities  which would not  reasonably be expected to have a
Material Adverse Effect.

    SECTION 3.10. ABSENCE OF CERTAIN CHANGES. Except as set forth in DL 3.10,
since the Balance Sheet Date, neither the Corporation nor any of the
Subsidiaries has:

    (a) suffered any Material Adverse Effect;

    (b)  except  for  transactions  contemplated  by this  Agreement,  made  any
declaration, setting aside or payment of any dividend or other distribution with
respect to its capital stock, except dividends from Subsidiaries to Corporation;

    (c) made any change in accounting principles except for the adoption of such
accounting  principles  which  have,  pursuant  to the  rules  of the  Financial
Accounting  Standards Board or the SEC, become  effective for the  Corporation's
fiscal year ending June 30, 1998;

     (d) granted any general  increase  in the  compensation  of its  directors,
officers  or  employees  or any  increase  in  compensation  payable to or to be
payable to any such director,  officer, or employee, except for increases in the
ordinary  course of business and consistent  with past practice or as previously
disclosed to Parent;

    (e) made any capital  expenditures  (other than (i) capital  expenditures in
the  ordinary  course of business and  consistent  with past  practice,  (ii) as
provided in Section 5.1(b)(iii), and (iii) as otherwise provided in any Material
Contracts listed in DL 3.18);

    (f) incurred any material  increase in net borrowings  outstanding under the
Amended and Restated  Credit  Agreement by and between the  Corporation  and The
First  National  Bank of Boston (now,  Bank of Boston  Connecticut)  dated as of
December  31,  1994,  as amended by the  Amendment  dated  October 23, 1996 (the
"Credit  Agreement") or incurred any other indebtedness  (except in each case in
the ordinary course of business);

    (g) taken any action  referred to in Sections  5.1, 5.2 and 5.13,  except as
permitted thereby; or

    (h) agreed, whether in writing or otherwise, to take any action described in
this Section, except as otherwise contemplated herein.

    SECTION 3.11. TITLE TO PROPERTIES; ENCUMBRANCES. Except as set forth in DL
3.11:

    (a) the  Corporation and each of the  Subsidiaries  have good and marketable
title to their  respective  material  properties  and  assets  reflected  on the
Corporation's  balance sheet  included in the  Corporation's  Form 10-K, for the
fiscal  year  ending  June 30,  1997 (the  "1997  10-K"),  except for (i) assets
related to capitalized leases and (ii) properties and assets sold or disposed of
since the Balance Sheet Date in the ordinary course of business;

    (b)  none of the  properties  or  assets  of the  Corporation  or any of the
Subsidiaries  is subject  to any  mortgage,  pledge,  lien,  security  interest,
encumbrance or charge of any kind  (collectively  referred to herein as "Liens")
except the following (herein called "Permitted  Liens"):  (i) Liens reflected on
the Corporation Financial Statements (including the notes thereto),  (ii) public
or  statutory  Liens or liens of  lessors,  carriers,  warehousemen,  mechanics,
suppliers,  materialmen,  repairmen or other like Liens  arising in the ordinary
course of business,  (iii) Liens  incurred or deposits made in  connection  with
workers' compensation, unemployment insurance and other types of social security
benefits,  (iv) Liens which  individually  or in the aggregate do not materially
detract  from the  value,  use or  enjoyment  of such  properties  or  assets or
otherwise would have a Material Adverse Effect on the business operations of the
Corporation and the  Subsidiaries,  taken as a whole; and (v) Liens with respect
to taxes, assessments and charges not yet due or the validity of which are being
contested in good faith by appropriate actions.

    SECTION 3.12. LITIGATION. Subject to Section 3.16 and except as set forth in
DL 3.12 or as disclosed in the Corporation Filings, there are no actions, suits,
proceedings or  investigations  pending or, to the knowledge of the Corporation,
threatened  against the Corporation or any of the Subsidiaries  before any court
or  arbitrator  or any  governmental  body,  agency  or  official  which (i) are
reasonably likely,  individually or in the aggregate, to have a Material Adverse
Effect on the Corporation and the Subsidiaries,  taken as a whole, (ii) question
or challenge  the validity of this  Agreement or the  transactions  contemplated
hereby,  or (iii)  would be  reasonably  likely to prevent or  materially  delay
consummation of the transactions contemplated hereby.

    SECTION 3.13. TAXES. Except as set forth in DL 3.13 or where such failure to
duly file or pay  would not be  reasonably  likely  to have a  Material  Adverse
Effect on the Corporation and its Subsidiaries, taken as a whole:

     (i) TAX RETURNS.  The Corporation and each of its  Subsidiaries  has timely
filed or caused to be timely filed with the appropriate  taxing  authorities all
Federal  and  other  returns,  statements,  forms  and  reports  for  Taxes  (as
hereinafter  defined)  ("Returns")  that are  required  to be filed  by, or with
respect  to,  the  Corporation  and  such  Subsidiaries.   The  Returns  reflect
accurately all liability for Taxes of the Corporation and such  Subsidiaries for
the periods  covered  thereby.  "Taxes" means all taxes,  assessments,  charges,
duties,  fees,  levies  or  other  governmental  charges,   including,   without
limitation,  all Federal,  state, local,  foreign, and other income,  franchise,
profits,  capital  gains,  capital  stock,  transfer,  sales,  use,  occupation,
property,   excise,  severance,   windfall  profits,  stamp,  license,  payroll,
withholding and other taxes, assessments, charges, duties, fees, levies or other
governmental  charges of any kind  whatsoever  (whether  payable  directly or by
withholding and whether or not requiring the filing of a Return),  all estimated
taxes,  deficiency  assessments,  additions to tax,  penalties  and interest and
shall  include  any  liability  for such  amounts as a result  either of being a
member  of a  combined,  consolidated,  unitary  or  affiliated  group  or  of a
contractual obligation to indemnify any person or other entity;

    (ii) PAYMENT OF TAXES.  All Taxes and Tax liabilities of the Corporation and
its  Subsidiaries  have  been  timely  paid or  adequately  disclosed  and fully
provided  for as a liability on the  consolidated  financial  statements  of the
Corporation and its Subsidiaries in accordance with GAAP; and

    (iii) OTHER TAX  MATTERS.  (A) DL  3.13(iii)(A)  sets forth (1) each taxable
year or other taxable period of the Corporation or any of its  Subsidiaries  for
which an audit or other  examination of Taxes by the appropriate tax authorities
of any nation,  state or locality is currently in progress (or, to the knowledge
of the  Corporation,  scheduled to be conducted)  together with the names of the
respective tax  authorities  conducting (or scheduled to conduct) such audits or
examinations  and a  description  of  the  subject  matter  of  such  audits  or
examinations, (2) the most recent taxable year or other taxable period for which
an  audit  or  other  examination  relating  to  Federal  income  taxes  of  the
Corporation and its Subsidiaries has been finally  completed and the disposition
of such audit or examination,  (3) the taxable years or other taxable periods of
the  Corporation  or any of its  Subsidiaries  which  will not be subject to the
normally  applicable  statute  of  limitations  by  reason of the  existence  of
circumstances  that would cause any such statute of  limitations  for applicable
Taxes to be  extended,  (4) the  amount  of any  proposed  adjustments  (and the
principal  reason  therefor)  relating to any Returns for Tax  liability  of the
Corporation or any of its  Subsidiaries  which have been proposed or assessed by
any taxing  authority and (5) a list of all notices  received by the Corporation
or any of its Subsidiaries from any taxing authority relating to any issue which
could affect the Tax liability of the  Corporation  or any of its  Subsidiaries,
which issue has not been finally  determined and which, if determined  adversely
to the Corporation or any such subsidiaries, could result in a Tax liability.

    (B) Except as shown in DL  3.13(iii)(B),  neither the Corporation nor any of
its  Subsidiaries  has  been  included  in  any  "consolidated,"   "unitary"  or
"combined" Return (other than Returns which include only the Corporation and any
Subsidiaries  of the  Corporation)  provided  for  under  the law of the  United
States, any foreign  jurisdiction or any state or locality with respect to Taxes
for any taxable period for which the statute of limitations has not expired.

    (C) All Taxes which the  Corporation or any of its  Subsidiaries is (or was)
required by law to withhold or collect have been duly withheld or collected, and
have been  timely  paid over to the  proper  authorities  to the  extent due and
payable.

    (D) Except as previously disclosed to Parent, the Corporation is not a party
to any agreement that would require it to make any payment that would constitute
an "excess  parachute  payment"  for  purposes of Sections  280G and 4999 of the
Internal Revenue Code of 1986, as amended (the "Code").

    (E)  There  are no  tax  sharing,  allocation,  indemnification  or  similar
agreements or arrangements in effect as between the Corporation, any Subsidiary,
or any predecessor or affiliate  thereof and any other party under which Parent,
Sub or the  Corporation  (or any of its  Subsidiaries)  could be liable  for any
Taxes or other claims of any other party under such agreements or arrangements.

    (F) No indebtedness of the Corporation or any of its  Subsidiaries  consists
of "corporate acquisition indebtedness" within the meaning of Section 279 of the
Code.

    (G) Neither the Corporation nor any of its Subsidiaries  will be required to
include in income any  adjustment  pursuant to Section 481 of the Code by reason
of a voluntary  change in accounting  method initiated by the Corporation or any
of its  Subsidiaries  after the date hereof and during the period  ending at the
time of the Share Purchase,  and the Internal  Revenue Service has not initiated
or proposed any such adjustment or change in accounting method.

    SECTION 3.14.  EMPLOYEE  BENEFIT PLANS.  Set forth in DL 3.14 is an accurate
and complete list of each domestic and foreign employee benefit plan, within the
meaning of Section 3(3) of the Employee  Retirement Income Security Act of 1974,
as amended, and the rules and regulations  thereunder ("ERISA"),  whether or not
subject to ERISA, and each stock option,  stock appreciation  right,  restricted
stock, incentive, bonus, profit-sharing, savings, deferred compensation, health,
medical, life, disability,  accident,  supplemental  unemployment or retirement,
employment,   severance  or  salary  or  benefits  continuation  plan,  program,
arrangement  or  agreement   maintained  by  the   Corporation  or  any  of  its
Subsidiaries or affiliates  (including,  for this purpose and for the purpose of
all of the  representations  in  this  Section  3.14,  any  predecessors  to the
Corporation or to any such Subsidiaries or affiliates and all employers (whether
or not incorporated)  that would be treated together with the Corporation and/or
any of its  Subsidiaries  as a single employer within the meaning of Section 414
of the Code,  or to which the  Corporation  or any such  Subsidiary or affiliate
contributes  (or has any  obligation to  contribute),  has any liability or is a
party  (collectively,  the "Employee Benefit Plans").  Except to the extent that
any breach of the following  representations could not reasonably be expected to
have a Material Adverse Effect on the Corporation or as disclosed in DL 3.14,(i)
each Employee Benefit Plan (and each related trust,  insurance contract or fund)
is in compliance with applicable law (including,  without limitation,  ERISA and
the Code) and has been  administered  and operated in all respects in accordance
with its terms;(ii)  except as set forth in DL 3.14, each Employee  Benefit Plan
which is intended to be "qualified"  within the meaning of Section 401(a) of the
Code has received a favorable  determination  letter from the  Internal  Revenue
Service,  and  no  event  has  occurred  and no  condition  exists  which  could
reasonably   be   expected   to   result   in  the   revocation   of  any   such
determination;(iii)  no complete or partial  termination of any Employee Benefit
Plan  covered by Title IV of ERISA has  occurred  and no  proceedings  have been
instituted  to terminate or appoint a trustee to  administer  any such  Employee
Benefit  Plan,  and no such  Employee  Benefit  Plan has been the  subject  of a
"reportable  event" (as  defined in Section  4043 of ERISA) for which the 30-day
notice  requirement  has  not  been  waived  by  the  Pension  Benefit  Guaranty
Corporation   (the  "PBGC");   (iv)neither   the  Corporation  nor  any  of  its
Subsidiaries has incurred any unsatisfied  liability to the PBGC with respect to
any Employee  Benefit Plan which is an "employee  pension  benefit plan" (within
the  meaning  of Section  3(2) of ERISA),  including,  without  limitation,  any
liability  under Section 4069 of ERISA or any penalty imposed under Section 4071
of ERISA, or otherwise incurred any liability under Title IV of ERISA or Chapter
43 of the Code with respect to any such Employee  Benefit Plan, and no event has
occurred and no condition  or  circumstance  has existed that would give rise to
any such  liability;(v)  no Employee  Benefit Plan subject to Section 412 of the
Code or Section 302 of ERISA has incurred  any  accumulated  funding  deficiency
within the meaning of such  sections of the Code or ERISA or obtained or applied
for  a  waiver  of  any  minimum  funding  standards  or  an  extension  of  any
amortization  period  under  Section  412 of the Code or  Section  303 or 304 of
ERISA;(vi) the actuarial  present value of the  accumulated  plan benefits under
any Employee Benefit Plan that is an "employee pension benefit plan" (within the
meaning of  Section  3(2) of ERISA),  whether  or not vested and  determined  in
accordance with PBGC actuarial  methods,  factors and assumptions  applicable to
such a plan  terminating on the Closing Date,  does not exceed the fair value of
the assets allocable thereto;(vii) no Employee Benefit Plan is a "multi-employer
plan" (as  defined in the Code or Section  4001(a)(3)  of ERISA) or a  "multiple
employer  plan"  (within  the  meaning  of the Code or ERISA)  and  neither  the
Corporation nor any Subsidiary  contributes to or has contributed to, or had any
liability or  obligation  with respect to any  multi-employer  plan;(viii)  full
payment has been timely made of all amounts which the  Corporation or any of its
Subsidiaries is required under applicable law or under any Employee Benefit Plan
or related  agreement to have paid as of the last day of the most recent  fiscal
year, of such Employee Benefit Plan or related agreement ended prior to the date
hereof, and the Corporation and its Subsidiaries have made adequate  provisions,
in accordance with GAAP, in their  financial  statements for all obligations and
liabilities under all Employee Benefit Plans that have accrued but have not been
paid because they are not yet due under the terms of any such  Employee  Benefit
Plan, related agreement,  or applicable law;(ix) neither the Corporation nor any
of its  Subsidiaries  have any  unfunded  liabilities  pursuant to any  Employee
Benefit Plan which is an "employee  pension benefit plan" (within the meaning of
Section 3(2) of ERISA) that is not intended to be qualified under Section 401(a)
of the Code; (x) the applicable  requirements of Part 6 of Subtitle B of Title I
of ERISA  and  Section  4980B of the Code  have  been met with  respect  to each
Employee  Benefit Plan that is a "group health plan" (as such term is defined in
Section  607(1) of ERISA or Section  5000(b)(1)  of the  Code);(xi)  no Employee
Benefit Plan provides for  post-employment or retiree health,  life insurance or
other  welfare  benefits  which  could  result in a  material  liability  of the
Corporation or any Subsidiary;(xii)  neither the Corporation nor any Subsidiary,
nor  any  of  their  respective  directors,   officers  or  employees,   or,  to
Corporation's  knowledge, any other "disqualified person" or "party in interest"
(as  defined  in  Section  4975(e)(2)  of the Code and  Section  3(14) of ERISA,
respectively)  has  engaged  in  any  transaction,  act  or  omission  to act in
connection with any Employee  Benefit Plan that could  reasonably be expected to
result in the  imposition of a penalty or fine pursuant to Section 502 of ERISA,
damages  pursuant to Section 409 of ERISA or a tax  pursuant to Section  4975 of
the  Code;(xiii) no plan or agreement to which the Corporation or any Subsidiary
is a party or by which it may be bound will or may,  by reason of the  execution
of this Agreement and the consummation of the transactions  contemplated  hereby
(either  alone or upon the  occurrence of any  additional or subsequent  event),
result in any payment,  "parachute  payment" (as such term is defined in Section
280G of the Code), severance,  bonus, retirement or job security or similar-type
benefit,  or increase any benefits or  accelerate  the payment or vesting of any
benefits to any employee or former  employee or director of the  Corporation  or
any  Subsidiary,  and no  Employee  Benefit  Plan  provides  for the  payment of
severance,  termination, change in control or similar-type payments or benefits;
and (xiv) no  liability,  claim,  action,  audit,  examination  or litigation is
pending  or, to the  Corporation's  knowledge,  threatened  with  respect to any
Employee  Benefit  Plan (other than routine  claims for benefits  payable in the
ordinary course).

    SECTION 3.15. BROKERS. There is no investment banker, broker, finder or
other intermediary other than CIBC Oppenheimer Corp. which or who has been
retained by, or is authorized to act for, the Corporation in connection with the
transactions contemplated by this Agreement or is otherwise entitled to payment
of any fee or commission.

    SECTION 3.16.  ENVIRONMENTAL MATTERS.

    (a) PROVISION CONTROLS. Anything elsewhere in this Agreement to the contrary
notwithstanding,   this  Section  3.16   contains  the  entire   agreement   and
understanding  of the parties  relating  to  environmental  representations  and
warranties concerning the Corporation and the Subsidiaries.

    (b) ENVIRONMENTAL DISCLOSURES.  DL 3.16 sets forth all environmental matters
that are within the scope of the  specific  categories  set forth  below  which,
individually  or in the  aggregate,  could  reasonably  be  expected  to  have a
Materially  Adverse Effect on the  Corporation and the  Subsidiaries  taken as a
whole:

        (1) all  permits,  licenses  and other  authorizations  possessed by the
    Corporation and the Subsidiaries  issued under Federal,  state or local laws
    relating to pollution or  protection of worker or public  health,  safety or
    the environment (collectively,  the "Environmental Permits"),  whether based
    on statute,  regulation,  common law,  equity or any other legal theory (the
    "Environmental  Laws")  including,  but not  limited to,  those  relating to
    emissions,   discharges,   releases  or  threatened  releases  of  hazardous
    substances,  pollutants,  contaminants,  or hazardous  or toxic  material or
    wastes into ambient air,  surface water,  groundwater or land  ("Releases").
    Each of such Releases and violations of an Environmental  Law is referred to
    herein as an "Environmental Incident";

        (2)  to  the  knowledge  of  the  Corporation,  all  violations  by  the
    Corporation   or  any   Subsidiary  of  the  terms  and  conditions  of  any
    Environmental  Permits or  Environmental  Laws or of any other  limitations,
    restrictions,    conditions,    standards,    prohibitions,    requirements,
    obligations,  schedules  and  timetables  contained in  Environmental  Laws;
    applicable  orders,  agreements,  variances,  injunctions,  decrees,  writs,
    judgments,  awards or arbitration  awards relating thereto;  and all past or
    present events, conditions, circumstances, activities, practices, incidents,
    actions or plans concerning the business or operations of the Corporation or
    any of its  Subsidiaries  or any entity that was formerly a subsidiary  or a
    controlled  affiliate  of the  Corporation  which may give rise to any legal
    liability  of  the  Corporation  or  any  of  its  Subsidiaries   under  any
    Environmental  Law or otherwise from any claim,  action,  suit,  proceeding,
    hearing or investigation in connection with any Environmental Incident;

        (3)  all  orders  (including,   without  limitations,   decrees,  writs,
    judgments,  awards  or  notice  or demand  letters)  or  agreements  issued,
    entered,  promulgated or approved by any Person under or in connection  with
    Environmental Laws which bind, restrict, obligate, or otherwise apply to the
    Corporation or any of the Subsidiaries or any of their respective properties
    or assets,  which remain in effect or which were issued or effective  during
    the five years prior to the date of this Agreement;

        (4) all actions,  claims, suits, proceedings or investigations under any
    Environmental  Laws either pending or, to the knowledge of the  Corporation,
    threatened  against the  Corporation  or any of the  Subsidiaries  or any of
    their respective  properties or assets before any court or arbitrator or any
    Governmental Authority;

        (5) all  agreements  (including,  but not limited to, consent orders and
    agreements among potentially  responsible  parties) to which the Corporation
    or  any of  the  Subsidiaries  is a  party  and  which  relate  to  benefits
    (including,  but not  limited to,  indemnification)  or  obligations  of the
    Corporation or any of the Subsidiaries in connection with Environmental Laws
    or  any  Environmental  Incident,  and  any  effect  that  the  transactions
    contemplated by this Agreement will have on the benefits (including, without
    limitation,  indemnification)  granted  to  the  Corporation  or  any of the
    Subsidiaries  under  any  such  agreements   including  any  assignments  or
    approvals required in connection with such benefits;

        (6) any Owned Real Property or Leased Real Property,  whether or not set
    forth in DL 3.11,  that is subject to any  applicable  law that  conditions,
    restricts,   prohibits,  or  requires  any  notification  or  disclosure  in
    connection  with the  transactions  contemplated  hereby  for  environmental
    reasons ("Environmental Property Transfer or Disclosure Law"). To the extent
    an  Environmental  Property  Transfer or Disclosure Law is applicable to any
    such Owned Real  Property or Leased Real  Property  in  connection  with the
    transactions  contemplated  hereby,  as and when appropriate the Corporation
    will take (or cooperate with Parent in taking),  such action as is necessary
    to fully comply with the requirements of such laws; and

        (7) any proceeding or investigation  concerning  criminal  violations of
    any  Environmental  Law to which the Corporation and its Subsidiaries or any
    entity  that was  formerly  a  subsidiary  or  controlled  affiliate  of the
    Corporation,  are,  or have  been,  subject  at any time  during the past 10
    years.

    (c) CONDUCT OF BUSINESS BY THE CORPORATION PENDING THE EFFECTIVE TIME.

    Anything  elsewhere in this Agreement to the contrary  notwithstanding,  the
Corporation  retains the right,  with prior  notice to Parent,  to take only the
actions  and make only the  payouts  set forth in DL 3.16A,  if  required,  with
respect to environmental matters.

     SECTION 3.17. PROPRIETARY RIGHTS. Except as set forth in DL 3.17, as of the
date  hereof  the  Corporation  has  received  no  notice  that it or any of its
Subsidiaries has infringed,  and to the knowledge of the Corporation  neither it
nor any of its  Subsidiaries  is now  infringing,  on any  patent,  trade  name,
trademark,  service  mark,  copyright,  trade  secret,  technology,  know-how or
process (collectively,  the "Proprietary Rights") belonging to any other person,
which  infringement,  in the aggregate,  would have a Material Adverse Effect on
the Corporation and its Subsidiaries,  taken as a whole.  Except as set forth in
DL 3.17, (i) the Corporation is not aware of any infringement by any third party
of any  Proprietary  Rights of the Corporation or any of its  Subsidiaries,  and
(ii)  neither  the  Corporation  nor any of its  Subsidiaries  is a party to any
material  license,  agreement or  arrangement  with  respect to any  Proprietary
Rights. DL 3.17 lists all the Proprietary Rights owned by the Corporation or any
of the  Subsidiaries  that are  composed of  registered  patents,  trade  names,
trademarks,  service marks or  copyrights  that are material to its business and
sets forth, if and as applicable, the registration number, country, application,
registration  and expiration  dates,  and class with respect to such Proprietary
Rights.

    SECTION  3.18.  MATERIAL  CONTRACTS AND LEASES.  The list of agreements  set
forth in DL 3.18 includes all the Material Contracts (as defined below) that the
Corporation or any of the Subsidiaries is party to, or is bound by. For purposes
of this Agreement,  a "Material Contract" shall mean (i) any contract,  lease or
other agreement  (except for purchase orders entered into in the ordinary course
of business and contracts and agreements cancelable by the Corporation or any of
its  Subsidiaries  at  will  or on  notice  of 30 days or  less)  to  which  the
Corporation or any of its Subsidiaries is a party or by which the Corporation or
any of its  Subsidiaries  is bound,  which by its terms calls for the payment by
either  party to such  contract or  agreement  of $250,000 or more in any fiscal
year or is material to the business,  operations  or financial  condition of the
Corporation and its subsidiaries, taken as a whole, (ii) any material agreement,
contract  or  commitment  not in the  ordinary  course  of  business,  (iii) any
agreement,  indenture  or other  instrument  which  contains  restrictions  with
respect to  payment of  dividends  or any other  distribution  in respect of its
capital  stock,  (iv) any  agreement,  contract or  commitment  to be  performed
relating to capital  expenditures in excess of $100,000 in any calendar year, or
in the  aggregate  requiring  expenditures  in  excess  of  $1,000,000,  (v) any
material  agreement,  indenture  or  instrument  relating  to  indebtedness  for
borrowed  money or the  deferred  purchase  price of property  (excluding  trade
payables  in  the  ordinary  course  of  business,   intercompany  indebtedness,
intercompany  transfers,  and  operating  leases),  (vi) any loan or  advance to
(other than advances to employees in the ordinary  course of business in amounts
of  $25,000 or less to any  individual  and  $100,000  in the  aggregate  to all
employees),  or  investment in (other than  investments  in  Subsidiaries),  any
Person, or any agreement,  contract or commitment  relating to the making of any
such loan,  advance or  investment  or any  agreement,  contract  or  commitment
involving a sharing of profits (except for bonus or commission arrangements with
employees  entered into in the ordinary course of business  consistent with past
practice),  (vii) any guarantee or other contingent  liability in respect of any
indebtedness  or obligation of any Person (other than in the ordinary  course of
business and other than with respect to any  indebtedness  or  obligation of the
Corporation or any Subsidiary), (viii) any management service, consulting or any
other  similar  type of contract  (other than  contingent  fee  agreements  with
collection attorneys), involving payments of more than $150,000 annually, unless
terminable by the Corporation or Subsidiary on not more than 90 days notice,(ix)
any agreement, contract or commitment limiting the ability of the Corporation or
any of its Subsidiaries to engage in any line of business or to compete with any
Person, (x) any warranty,  guaranty or other similar undertaking with respect to
a contractual performance extended by the Corporation or any of its Subsidiaries
other than in the ordinary course of business,  or (xi) any agreement,  contract
or commitment to employ any of its officers or employees, and (xii) any material
amendment,  modification  or  supplement  in  respect  of any of the  foregoing.
Neither the  Corporation  nor any of its  Subsidiaries  is in default  under any
Material Contract,  except for such defaults which will not,  individually or in
the  aggregate,  have a  Material  Adverse  Effect  on the  Corporation  and its
Subsidiaries,  taken as a whole.  Except  as shown in DL 3.18,  no  approval  or
consent of, or notice to, any person is needed in order that each such  Material
Contract  shall  continue in full force and effect in accordance  with its terms
without  penalty,  acceleration or rights of early  termination by reason of the
consummation of the transactions contemplated by this Agreement.

    SECTION 3.19. INSURANCE.  DL 3.19 sets forth a list of all material policies
of insurance  maintained on the date hereof by the  Corporation  and each of its
Subsidiaries  with respect to their  respective  businesses,  which policies are
currently in full force and effect.  As of the date hereof,  except as set forth
in DL 3.19,  neither the  Corporation nor any of its  Subsidiaries  has received
notice of cancellation or refusal to renew with respect to any insurance  policy
set forth in DL 3.19.

     SECTION  3.20.  LABOR  RELATIONS.  Neither the  Corporation  nor any of its
Subsidiaries  is currently  party to any  collective  bargaining  agreement with
respect to any of its employees.  The  Corporation  has previously  furnished or
made available to Parent a true,  complete and correct copy of the handbooks and
administrative  policies and practices  relating to employees of the Corporation
and its Subsidiaries and any other material agreement regarding its relationship
with the  Corporation's  employees or those of its  Subsidiaries.  Except as set
forth in DL 3.20 and except for any  violations  which,  individually  or in the
aggregate,  would not reasonably be expected to have a Material  Adverse Effect,
each of the Corporation and its  Subsidiaries is in substantial  compliance with
all federal, state or other applicable laws respecting employment and employment
practices,  terms and conditions of employment and wages and hours,  and has not
and is not engaged in any unfair labor practice.  Except as disclosed in DL 3.20
or in the Corporation Filings, there exist no employment, consulting, severance,
indemnification  agreements  or  deferred  compensation  agreements  between the
Corporation  and any  director,  officer or employee of the  Corporation  or any
agreement  that would give any Person the right to receive any payment  from the
Corporation as a result of the Offer or the Merger.

    SECTION 3.21. VOTING REQUIREMENTS. After the Share Purchase, the affirmative
vote of the  holders of  two-thirds  of the  outstanding  shares of  Corporation
Common Stock  entitled to be cast  approving  this Agreement is the only vote of
the holders of any class or series of the Corporation's  capital stock necessary
to approve this Agreement and the transactions contemplated by this Agreement.

    SECTION 3.22. RIGHTS  AGREEMENT.  The Corporation and the Board of Directors
of the  Corporation  have taken and will  maintain in effect  during the term of
this  Agreement  all  necessary  action  to  (i)  render  the  Rights  Agreement
inapplicable  with respect to the Offer,  the Merger and the other  transactions
contemplated  by this Agreement,  and (ii) ensure that (x) neither  Parent,  nor
Sub, nor any of their  Affiliates,  or Associates (each as defined in the Rights
Agreement)  is  considered  to be an Acquiring  Person (as defined in the Rights
Agreement)  and  (y) the  provisions  of the  Rights  Agreement,  including  the
occurrence of a Distribution Date (as defined in the Rights Agreement),  are not
and shall not be triggered by reason of the  announcement or consummation of the
Offer, the Merger or the other transactions  contemplated by this Agreement. The
Corporation  has  delivered  to Parent a complete and correct copy of the Rights
Agreement as amended and  supplemented to the date of this Agreement.  The Board
of Directors of the Corporation, at a meeting duly called and held, has resolved
that the Rights  shall be  redeemed  immediately  prior to, and  subject to, the
acceptance  for  payment  and  purchase  of  not  less  than  two-thirds  of the
outstanding  Shares  pursuant to the Offer in accordance  with the terms of this
Agreement.

    SECTION 3.23. CUSTOMERS  RELATIONS.  Except as disclosed on DL 3.23, none of
the  top  twenty  customers  of the  Corporation  (based  on  the  Corporation's
consolidated  revenues for the fiscal year ended June 30, 1997) has notified the
Corporation or any of its  Subsidiaries  that it intends to either (i) terminate
or  modify  in a manner  materially  adverse  to the  Corporation  or any of its
Subsidiaries  its  contractual  arrangements  with the Corporation or any of its
Subsidiaries or (ii)  substantially  curtail the amount of business it currently
does with the Corporation or any of its Subsidiaries.

    SECTION 3.24. OPINION OF FINANCIAL ADVISOR. The Corporation has received the
opinion of CIBC  Oppenheimer  Corp.,  to the effect that, as of the date of this
Agreement,  the  consideration to be received in the Offer and the Merger by the
Corporation's  shareholders  is fair to the  Corporation's  shareholders  form a
financial  point of view, and a complete and correct signed copy of such opinion
has been, or promptly upon receipt thereof will be, delivered to Parent.

          ARTICLE IV--REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

    Each of Parent and Sub represents and warrants to the Corporation that:

    SECTION  4.1.  CORPORATE  EXISTENCE  AND POWER.  Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware,  and each has all  corporate  power,  authority  and legal right to
conduct its business as it is now being  conducted and to own the properties and
assets it now owns. Parent and Sub have delivered to Corporation  true,  compete
and  correct  copies  of their  respective  certificates  of  incorporation  and
by-laws.

    SECTION 4.2.  CORPORATE  AUTHORIZATION.  Each of Parent and Sub (a) has full
corporate  power and authority to enter into this Agreement and to carry out the
transactions   contemplated  hereby,  (b)  has  taken  all  action  required  by
applicable law and its Certificate of Incorporation  and By-Laws,  including the
authorization  of this  Agreement and the  transactions  contemplated  hereby by
their  respective  Boards  of  Directors  and  (if  required)  stockholders,  to
authorize the execution and delivery of this  Agreement and the  performance  by
Parent and Sub of the transactions contemplated hereby, (c) has duly and validly
executed and delivered this Agreement and no other corporate action is necessary
in  connection  therewith.  This  Agreement  (assuming  the  due  authorization,
execution and delivery hereof by the Corporation) is a legal,  valid and binding
obligation  of  each  of  Parent  and Sub  enforceable  against  each of them in
accordance with its terms,  except to the extent that enforcement may be limited
by  applicable  bankruptcy,  insolvency,  reorganization  or other  similar laws
affecting  creditors'  rights  generally  and by  general  equitable  principles
(regardless of whether enforcement is sought in equity or at law).

    SECTION 4.3.  CONSENTS AND APPROVALS.  Except as contemplated by Section 4.6
hereof and except for the  requirements of the federal and state securities laws
and the HSR Act, and assuming the filing of the  Certificate of Merger and other
appropriate  merger  documents,  if any, as required by the laws of the State of
Delaware,  no consent,  approval or authorization of, or declaration,  filing or
registration  with,  any United  States or foreign  governmental  or  regulatory
authority  or any other  person or entity is  required to be made or obtained by
Parent or any of its affiliates in connection  with the execution,  delivery and
performance  of  this  Agreement  or  the   consummation  of  the   transactions
contemplated hereby.

    SECTION 4.4. NO VIOLATION.  The execution,  delivery and performance of this
Agreement  by  Parent  and  Sub  and  the   consummation  of  the   transactions
contemplated  hereby  (a) will  not  violate  any  provision  of the  respective
Certificates  of  Incorporation  or  By-Laws  of  Parent  or Sub or any of their
affiliates, (b) except as set forth in the Disclosure Letter heretofore prepared
by Parent and delivered to the Corporation,  will not violate, or be in conflict
with,  or  constitute  a  default  under  any  material  contract,  lease,  loan
agreement,  license,  permit or other  agreement  to which  Parent or any of its
affiliates is a party,  or by which Parent or any of its  affiliates is bound or
to  which  it or any of them is  subject  and (c)  will  not  violate  any  law,
judgment,  decree,  order,  regulation  or rule  of any  court  or  governmental
authority  by which  Parent  or any of its  affiliates  is bound or any of their
respective  properties  is subject,  except in any case where the  violation  or
default  would not  materially  adversely  affect  Parent's or Sub's  ability to
consummate the transactions  contemplated by this Agreement (including,  without
limitation, its ability to complete the Share Purchase pursuant to the Offer).

    SECTION  4.5.  FINANCIAL   STATEMENTS.   The  audited  financial  statements
(including the notes thereto,  the "Parent  Audited  Financial  Statements")  of
Parent  for its  most  recently  completed  fiscal  year,  a copy of  which  has
previously been delivered to the  Corporation,  present fairly,  in all material
respects,  the consolidated financial position of Parent and its subsidiaries as
of the date thereof and their consolidated results of operations, cash flows and
stockholders' equity for the period then ended, all in conformity with GAAP. The
unaudited financial  statements  (including the notes thereto) of Parent for the
period ended June 30, 1997, a copy of which has been previously delivered to the
Corporation, were prepared in a manner consistent with the basis of presentation
used in the Parent Audited Financial Statements and in accordance with GAAP, and
fairly present, in all material respects, the consolidated financial position of
Parent and its  subsidiaries  as at and for the  periods  indicated,  subject to
normal recurring year-end adjustments.

    SECTION 4.6.  FINANCING.  Parent and Sub have  obtained  letters  (copies of
which  have  been  delivered  to the  Corporation)  from  responsible  financial
institutions  providing  for,  subject to certain  conditions set forth therein,
commitments to provide all funds necessary, together with funds available to the
Parent and Sub, to consummate the transactions contemplated hereby.

     SECTION 4.7. OFFER DOCUMENTS;  OTHER  INFORMATION.  None of the information
contained in any of the Offer Documents (excluding information described therein
as being  supplied  by the  Corporation  with  respect to itself)  will,  at the
respective  times such Offer Documents or any amendments or supplements  thereto
are filed with the SEC or are first published, sent or given to stockholders, as
the case may be, contain any untrue  statement of material fact or omit to state
any material  fact  required to be stated  therein or necessary in order to make
the  statements  therein,  in light of the  circumstances  under which they were
made, not misleading.

    SECTION  4.8.  LITIGATION.  There  are no  actions,  suits,  proceedings  or
investigations pending or, to the knowledge of Parent or Sub, threatened against
Parent or Sub or any of their  affiliates  before any court or arbitrator or any
governmental body, agency or official which are reasonably likely,  individually
or in the aggregate, to materially adversely affect Parent's or Sub's ability to
consummate the transactions contemplated hereby or which questions or challenges
the validity of this Agreement or the transactions contemplated hereby.

     ARTICLE V--CONDUCT OF BUSINESS BY THE CORPORATION PENDING THE CLOSING

    From the date hereof until immediately after the Closing (or, if sooner, the
termination of this Agreement), and except as otherwise consented to or approved
by Parent in  writing,  which  consent  or  approval  shall not be  unreasonably
withheld or delayed:

    SECTION 5.1. REGULAR COURSE OF BUSINESS.  (a) The Corporation will, and will
cause its Subsidiaries to, conduct business  substantially in the same manner as
heretofore  conducted and neither the  Corporation  nor any of its  Subsidiaries
will engage in any transaction or activity, enter into any agreement or make any
commitment  (or  materially  amend any  Material  Contract  existing on the date
hereof),  except (i) as set forth on DL 5.1(a),  (ii) in the ordinary  course of
business and consistent with past practices or pursuant to an agreement to which
the  Corporation or any of such  Subsidiaries  is a party on the date hereof (it
being understood that transactions in the call center outsourcing business shall
be deemed to be within the ordinary  course of business of the  Corporation  and
any Subsidiary  which is engaged in such business as of the date hereof),  (iii)
as contemplated by this Agreement,  or (iv) which would not be reasonably likely
to have a  Material  Adverse  Effect.  Except  as  otherwise  permitted  by this
Agreement,  the Corporation  will not, and will cause the  Subsidiaries  not to,
intentionally  take any action that would cause, or  intentionally  omit to take
any  reasonable  action  that  in  all  likelihood  would  prevent,  any  of the
representations  and warranties  contained in Article III which are qualified as
to  materiality  to  fail  to  be  true  and  correct  in  any  respect  or  any
representation  or warranty  not so  qualified to fail to be true and correct in
all material respects,  as if such representations and warranties were deemed to
be made at and as of the Closing  (except to the extent any such  representation
or warranty was expressly made only as of a different date).

     (b) Without limiting the generality of subsection (a) of this Section,  the
Corporation  will not, and will not permit any Subsidiary to, except pursuant to
this Agreement or as otherwise  permitted by DL 5.1(b):  (i) acquire (by merger,
consolidation or acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof, make any material investment in
any other  entity which is not a wholly owned  affiliate of the  Corporation  or
relinquish any material contract rights;  (ii) acquire  (including by lease) any
material  assets or  properties  or dispose of,  mortgage or encumber any of its
material  assets or  properties  (except in each case in the ordinary  course of
business and consistent  with past practice or pursuant to an agreement to which
the Corporation or any Subsidiary is a party on the date hereof);  (iii) make or
commit to make any capital  expenditures  in excess of  $150,000,  (iv) make any
change in accounting principles (except as may be required by generally accepted
accounting  principles or SEC regulations,  in which event, the Corporation will
fully disclose any such change and the reason(s)  therefor);  (v) sell or pledge
or agree to sell or  pledge  any stock  owned by it in any of its  Subsidiaries;
(vi) except to the extent required under existing  employee and director benefit
plans,  agreements or  arrangements  as in effect on the date of this Agreement,
increase the  compensation or fringe benefits of any of its directors,  officers
or employees,  except for increases in salary, wages or commissions of employees
of the Corporation or its  Subsidiaries  who are not officers of the Corporation
in the ordinary  course of business in accordance  with past practice,  or grant
any  severance  or  termination  pay not  currently  required  to be paid  under
existing severance plans or agreements or enter into any employment,  consulting
or  severance  agreement  or  arrangement  with any present or former  director,
officer or other  employee of the  Corporation  or any of its  subsidiaries,  or
establish,  adopt,  enter into or amend or terminate any collective  bargaining,
bonus, profit sharing,  thrift,  compensation,  stock option,  restricted stock,
pension, retirement, deferred compensation,  employment,  termination, severance
or other plan, agreement,  trust, fund, policy or arrangement for the benefit of
any directors,  officers or employees; (vii) except for transactions between the
Corporation and  Subsidiaries  or in the ordinary course of business,  transfer,
lease,  license,  guarantee,  sell,  mortgage,  pledge,  dispose of, encumber or
subject to any lien, any material assets or incur or modify any  indebtedness or
other liability (other than indebtedness incurred under the Amended and Restated
Credit  Agreement  dated December 31, 1994,  between the Corporation and Bank of
Boston, Connecticut (the "Existing Credit Facility");  PROVIDED that there shall
not be any  material  increase in the  amounts  outstanding  under the  Existing
Credit Facility,  other than in the ordinary course of business, or otherwise as
an  accommodation,  except for  guarantees  by  Corporation  of  obligations  of
Subsidiaries  or guarantees by  Subsidiaries  of  obligations  of  Subsidiaries,
become  responsible  for the  obligations  of any person  or,  other than in the
ordinary  course of business  consistent  with past  practice,  make any loan or
other  extension  of  credit  except  for  intercompany   transactions   between
Corporation  and  Subsidiaries  and between  Subsidiaries;  (viii)  agree to the
settlement of any material claim or litigation  (including,  but not limited to,
any  claim or  litigation  in  respect  of,  related  to or  arising  out of any
Environmental Law,  Environmental Permit or Pollution  Incident);  (ix) make any
material tax election or settle or compromise  any material tax  liability;  (x)
permit any insurance  policy naming it as beneficiary or a loss payable payee to
be cancelled without notice to Parent,  except for the cancellation of insurance
policies  required  to be  maintained  by third  parties  for the benefit of the
Corporation or any Subsidiary of which such cancellation neither the Corporation
nor  any  Subsidiary  has  notice;  (xi)  adopt a plan of  complete  or  partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or  other  reorganization  of the  Corporation  or any of its  Subsidiaries  not
constituting an inactive  Subsidiary (other than the Merger); or (xii) agree, in
writing or otherwise, to take any of the foregoing actions.

    SECTION 5.2.  CHARTER  DOCUMENTS  AND CAPITAL  CHANGES.  Except as expressly
authorized by this Agreement or required by Section 1.2, neither the Corporation
nor any of its  Subsidiaries  will  (a)  change  or  amend  its  Certificate  of
Incorporation,  By-Laws or the Certificate of Incorporation or By-Laws of any of
its Subsidiaries,  (b) issue or sell any shares of its capital stock (other than
shares  issuable  upon  exercise of currently  outstanding  options),  nor issue
options  (other  than  automatic  issuances  pursuant  to the terms of a plan in
effect on the date hereof or pursuant  to the terms of any  existing  employment
agreement),  warrants to purchase,  or rights to subscribe to, any shares of its
capital stock, or enter into any  arrangement or contract with respect  thereto,
or (c) make any other  material  changes in its  capital  structure,  other than
dividends and other intercompany transfers,  allocations and transactions in the
ordinary  course  of  business  between  any  wholly-owned  Subsidiary  and  the
Corporation or any other wholly-owned Subsidiary.

    SECTION 5.3.  ORGANIZATION AND GOOD WILL. Except as set forth in DL 5.3, the
Corporation will use all reasonable  efforts to preserve the business,  business
organization and good will of the Corporation and each of its Subsidiaries, keep
in place their present executive officers and key employees,  and preserve their
present relationships with persons having business dealings with them.

    SECTION 5.4. INSURANCE. The Corporation will use all commercially reasonable
efforts to maintain,  and cause each of its Subsidiaries to maintain,  insurance
substantially at current levels on all property, real, personal and mixed, owned
or leased by them.

    SECTION 5.5. COMPLIANCE WITH LAWS. The Corporation will use its best efforts
to duly  comply,  and cause  each of its  Subsidiaries  to duly  comply,  in all
material  respects  with  all  laws  applicable  to them  and  their  respective
properties,  operations,  business and employees, except where the failure to do
so  is  not  reasonably  likely  to  have  a  Material  Adverse  Effect  on  the
Corporation.

    SECTION  5.6.  SEC  REPORTS.  The  Corporation  will duly  file all  reports
required to be filed by it with the SEC  pursuant to the  Exchange  Act and will
submit copies thereof to Parent simultaneously with the time of filing thereof.

     SECTION 5.7.  PROXY  STATEMENT.  If  shareholder  approval of the Merger is
required by law, as promptly as practicable  following the Share  Purchase,  the
Corporation will prepare and file a preliminary Proxy Statement with the SEC and
will use its best  efforts to respond to the  comments of the SEC in  connection
therewith  and to furnish all  information  required  to prepare the  definitive
Proxy  Statement  (including,  without  limitation,   financial  statements  and
supporting   schedules  and  certificates  and  reports  of  independent  public
accountants).  Promptly following the Share Purchase, if required by the DGCL in
order to consummate the Merger,  the Corporation will cause the definitive Proxy
Statement to be mailed to the shareholders of the Corporation and, if necessary,
after  the  definitive  Proxy  Statement  shall  have been so  mailed,  promptly
circulate amended,  supplemental or supplemented proxy material and, if required
in connection therewith, resolicit proxies.

    SECTION  5.8.  SHAREHOLDER  APPROVAL.   (a)  Promptly  following  the  Share
Purchase,   if  required  by  DGCL  in  order  to  consummate  the  Merger,  the
Corporation,  acting through its Board of Directors,  shall,  in accordance with
applicable law, duly call,  convene and hold a special meeting of the holders of
Common  Stock for the purpose of voting upon this  Agreement  and the Merger and
the Corporation  agrees that this Agreement and the Merger shall be submitted at
such special meeting.  The Corporation  shall use its reasonable best efforts to
solicit from its shareholders proxies, and shall take all other action necessary
and advisable,  to secure the vote of shareholders required by applicable law to
obtain the approval for this Agreement and the Merger. Subject to Section 5.9 of
this  Agreement,  the  Corporation  agrees  that it will  include  in the  Proxy
Statement the  recommendation  of its Board of Directors  that holders of Common
Stock approve and adopt this Agreement and approve the Merger. Parent will cause
all shares of Common Stock owned by Parent and its  subsidiaries  to be voted in
favor of the Merger.

    (b)  Notwithstanding  the foregoing,  in the event that Sub shall acquire at
least 90% of the outstanding  Corporation Common Stock, the Corporation  agrees,
subject to Article VII, to take all  necessary and  appropriate  action to cause
the Merger to become  effective  as soon as  reasonably  practicable  after such
acquisition,  without a meeting of the Corporation's shareholders, in accordance
with Section 253 of the DGCL.

     SECTION 5.9. NO SOLICITATION  OF OTHER OFFERS.  (a) The Corporation and its
affiliates  and  each  of  their  respective  officers,  directors,   employees,
representatives   and  agents  shall   immediately   cease  any  discussions  or
negotiations  with any other  parties  that may be ongoing  with  respect to any
Acquisition Proposal (as defined below).  Neither the Corporation nor any of its
affiliates,  shall, directly or indirectly,  take (and the Corporation shall not
authorize  or permit  its or its  affiliates,  officers,  directors,  employees,
representatives,  consultants,  investment  bankers,  attorneys,  accountants or
other agents or affiliates, to so take) any action to (i) encourage,  solicit or
initiate the making of any Acquisition  Proposal,  (ii) enter into any agreement
with  respect to any  Acquisition  Proposal or (iii)  participate  in any way in
discussions or negotiations with, or furnish or disclose any information to, any
Person (other than Parent or Sub or their  representatives)  in connection with,
or take any other  action  to  facilitate  any  inquiries  or the  making of any
proposal  (including without limitation by taking any action (except as required
by Section 1.2) that would make the Rights Agreement, Section 203 of the DGCL or
the   provisions  of  Article  FIFTH  of  the   Corporation's   Certificate   of
Incorporation inapplicable to an Acquisition Proposal) that constitutes,  or may
reasonably be expected to lead to, any Acquisition Proposal,  PROVIDED, HOWEVER,
that the Corporation,  in response to an unsolicited Acquisition Proposal and in
compliance with its obligations under Section 5.9(b) hereof,  may participate in
discussions or negotiations with or furnish information to any third party which
proposes  a  transaction  which  the  Board  of  Directors  of  the  Corporation
reasonably  determines  will  result  in a  Superior  Proposal  if the  Board of
Directors  believes  (and has been  advised in writing  by  independent  outside
counsel)  that  failing to take such  action  would  constitute  a breach of its
fiduciary  duties  under  applicable  law.  In  addition,  neither  the Board of
Directors of the  Corporation  nor any  Committee  thereof shall (x) withdraw or
modify,  or propose to withdraw or modify,  in a manner adverse to Parent or Sub
the approval and  recommendation  of the Offer and this Agreement or (y) approve
or recommend,  or propose to approve or  recommend,  any  Acquisition  Proposal,
provided that the Corporation  may recommend to its  shareholders an Acquisition
Proposal  and in  connection  therewith  withdraw  or  modify  its  approval  or
recommendation  of the Offer or the Merger if (i) the Board of  Directors of the
Corporation has determined that the Acquisition Proposal is a Superior Proposal,
(ii) all the conditions to the  Corporation's  right to terminate this Agreement
in accordance with Section 8.1(e) have been satisfied  (including the expiration
of the three  day  period  described  therein  and the  payment  of all  amounts
required  pursuant to Section 9.1), (iii)  simultaneously  with such withdrawal,
modification or recommendation,  this Agreement is terminated in accordance with
Section  8.1(e)  and (iv) the  Acquisition  Proposal  does not  provide  for any
breakup fee or other inducement to the acquiror other than  reimbursement of out
of pocket expenses  incurred in connection with such Acquisition  Proposal.  Any
actions  permitted  under,  and taken in compliance with, this Section 5.9 shall
not be deemed a breach of any other  covenant  or  agreement  contained  in this
Agreement.

    "Acquisition  Proposal"  shall mean any inquiry,  proposal or offer from any
Person  relating  to  any  direct  or  indirect  acquisition  or  purchase  of a
substantial amount of assets of the Corporation or any of its Subsidiaries or of
over 10% of any  class of equity  securities  of the  Corporation  or any of its
Subsidiaries,  any tender  offer or  exchange  offer that if  consummated  would
result  in any  person  beneficially  owning  10% or more of any class of equity
securities  of  the  Corporation  or  any  of  its  Subsidiaries,   any  merger,
consolidation,  business  combination,  sale of  substantially  all the  assets,
recapitalization,  liquidation, dissolution or similar transaction involving the
Corporation or any of its Subsidiaries, other than the transactions contemplated
by this  Agreement,  or any other  transaction  the  consummation of which could
reasonably be expected to impede,  interfere with,  prevent or materially  delay
the  Offer or the  Merger  or which  would  reasonably  be  expected  to  dilute
materially  the  benefits  to Parent of the  transactions  contemplated  hereby.
"Superior  Proposal"  shall mean a BONA FIDE  proposal  made by a third party to
acquire all of the outstanding  shares of the  Corporation  pursuant to a tender
offer, a merger or a sale of all of the assets of the  Corporation  (x) on terms
which a majority of the  members of the Board of  Directors  of the  Corporation
determines  in its good  faith  reasonable  judgement  (based  on the  advice of
independent  outside  financial and legal  advisors) to be more favorable to the
Corporation and its shareholders than the transactions  contemplated hereby, (y)
for which in the good  faith  reasonable  judgement  of the  Board of  Directors
adequate  financing or other  consideration is then available and (z) which does
not provide for any breakup fee or other  inducement to the acquiror  other than
reimbursement of documented  out-of-pocket  expenses incurred in connection with
the Superior Proposal.

    (b) In addition to the obligations of the Corporation set forth in paragraph
(a), on the date of receipt thereof,  the Corporation shall advise Parent of any
request for information or any Acquisition  Proposal, or any inquiry or proposal
with respect to any Acquisition Proposal,  and the material terms and conditions
of such request or takeover proposal.

    (c) Immediately  following the Share Purchase,  the Corporation will request
each  person  who  has  heretofore  executed  a  confidentiality   agreement  in
connection  with its  consideration  of acquiring the Corporation or any portion
thereof  (the   "Confidentiality   Agreements")   to  return  all   confidential
information  heretofore  furnished  to  such  person  by or  on  behalf  of  the
Corporation.

    SECTION 5.10.  NOTIFICATION OF CERTAIN MATTERS.  The Corporation  shall give
prompt notice to Parent of: (a) any notice of, or other  communication  relating
to, a default or event that, with notice or lapse of time or both,  would become
a default,  received by the Corporation or any of its Subsidiaries subsequent to
the date of this Agreement and prior to the Effective  Time,  under any Material
Contract to which the  Corporation or any of its  Subsidiaries  is a party or is
subject;   and  (b)  any  change  or  occurrence  in  the  Corporation  and  its
Subsidiaries  taken as a whole  which has had a Material  Adverse  Effect on the
Corporation  and its  Subsidiaries,  taken as a whole,  or the occurrence of any
event which is reasonably  likely to result in such a Material  Adverse  Effect.
Each of the  Corporation  and Parent shall give prompt notice to the other party
of any notice or other  communication  from any third  party  alleging  that the
consent  of such  third  party  is or may be  required  in  connection  with the
transactions contemplated by this Agreement.

    SECTION 5.11. RIGHTS AGREEMENT.  The Corporation shall not redeem the Rights
or amend (other than to delay the  Distribution  Date (as defined therein) or to
render the Rights  inapplicable  to the Offer and the Merger) or  terminate  the
Rights  Agreement  prior to the Effective Time without the consent of the Parent
unless required to do so by a court of competent jurisdiction.

    SECTION 5.12. PROPERTIES;  MATERIAL CONTRACTS. The Corporation will use, and
will cause its  Subsidiaries to use, all reasonable  efforts to (a) maintain and
keep their  respective  properties  in their  current  condition in all material
respects,  except for ordinary wear and tear and damage due to casualty or other
extraordinary  occurrence,  and  (b)  perform  in all  material  respects  their
respective obligations under the Material Contracts.

    SECTION 5.13. DIVIDENDS, ETC. Prior to the Closing, the Corporation will not
declare, pay or set aside for payment any dividend or distributions, including a
distribution of rights,  in respect of its capital stock or redeem,  purchase or
otherwise  acquire any shares of its capital stock,  except as  contemplated  by
this  Agreement,  in  connection  with the  cancellation  or  exercise  of stock
options,  or any such  dividends,  distributions  or payments  made by or to any
Subsidiary.

    SECTION 5.14. FULL ACCESS. The Corporation will, until the Closing afford to
Parent, its counsel, accountants and other authorized representatives,  full and
complete  access,  upon  reasonable  notice and in a reasonable  manner,  to the
offices,  properties,  books  and  records  of the  Corporation  and each of its
Subsidiaries  in order  that  Parent  may have  full  opportunity  to make  such
reasonable  investigations  as it shall desire as to the business and affairs of
the  Corporation  and its  Subsidiaries.  The  Corporation  will also  cause its
officers,  accountants and attorneys to furnish, upon reasonable notice and in a
reasonable  manner,  such  additional  financial  and  operating  data and other
information as Parent shall from time to time reasonably request.  Parent shall,
and shall cause its directors,  officers, employees,  partners, agents, counsel,
accountants  and  other  authorized  representatives  and any  proposed  lender,
placement  agent or underwriter  to, keep  confidential  any and all information
(whether  in  writing or  otherwise)  obtained  or  developed  pursuant  to this
Agreement in accordance with the provisions of Section 6.1 hereof.

                        ARTICLE VI--COVENANTS OF PARTIES

    The Corporation  hereby covenants and agrees with Parent and Sub, and Parent
and Sub hereby covenant and agree with the Corporation, that:

     SECTION 6.1. CONFIDENTIALITY.  (a) Until the Closing Time, or, in the event
of the  termination of this Agreement  pursuant to Article VIII, for a period of
three years from the date of such termination,  the Corporation,  Parent and Sub
and their respective affiliates,  consultants,  advisors,  officers,  employees,
directors and agents  ("Representatives") shall hold in strictest confidence and
not divulge,  use or make  available to any other person any  information of the
other  obtained  from any  investigation  of the  other in  connection  with the
transactions contemplated hereby (including all data, reports,  interpretations,
electronic images,  computer software,  forecasts and records), or given to them
by the  other or by  others  performing  services  for them or the other or in a
confidential  relationship  with the other (herein  collectively  referred to as
"Information"),  except to the extent (i) such party is  compelled  to  disclose
such Information by judicial or administrative process or, in the opinion of its
counsel,  by other  requirements of law (provided such disclosing party provides
the other parties hereto with prompt notice of such proposed  disclosure so that
such other  parties may seek a protective  order or other  appropriate  remedy),
(ii) such Information  becomes generally available to the public other than as a
result of a breach of this Section or is otherwise  available from third parties
not under a duty to keep such Information  confidential,  (iii) such Information
was at the time of its  disclosure to such person  previously  known to it, (iv)
such  disclosure is permitted by Section 6.4 (relating to public  announcements)
or otherwise pursuant to this Agreement,  or (v) such Information is divulged to
such party's Representatives  (provided that each such person agrees to be bound
by the provisions of this Section). Neither Parent, Sub nor the Corporation, nor
any of their  respective  Representatives,  will misuse to the  detriment of the
other,  any Information  obtained from the other. If the Share Purchase does not
occur,  upon the request of the Corporation or Parent and Sub, the party to whom
such request is made shall as directed by the requesting party destroy or return
to the  requesting  party any and all copies of written  Information  covered by
this Section furnished to such  non-requesting  party or its representatives by,
or on behalf  of,  the  requesting  party or  otherwise  obtained,  prepared  or
developed  by or on behalf of the  non-requesting  party,  and such  destruction
shall be certified in writing to the requesting party.

    (b) For a period of three  years  from the date of the  termination  of this
Agreement,  if the Share  Purchase  does not occur,  Parent  (and any  affiliate
thereof)  will not (i)  solicit  for hire or employ  any  person who on the date
hereof or on the date of such  termination was an employee of the Corporation or
any of its  Subsidiaries or (ii) cause any individual  engaged as an independent
contractor by the Corporation or any of its  Subsidiaries to breach or void such
individual's independent contractor agreement with the Corporation.

    (c) Contemporaneous with the Share Purchase,  Parent shall make or cause the
Corporation and each of its  Subsidiaries to make, by certified or bank check or
other means acceptable to the payee thereof,  all payments which are required to
be made on or after such time under any  agreement  in effect on the date hereof
between the Corporation or any of such Subsidiaries and (i) any officer or other
employee  thereof as a result of a "change of  control"  (as defined in any such
agreement)  having  occurred or as a result of the termination of such officer's
or  employee's  employment,   whether  voluntary  or  otherwise,  and  (ii)  all
non-employee  directors of the Company  with  respect to deferred  compensation,
including,  without limitation the severance, bonus and other payments listed in
DL 6.1, which amounts have been reviewed and approved by Parent and Sub.

    SECTION 6.2.  COOPERATION.  The  Corporation  and Parent will cooperate with
each other and each such party  shall take all  reasonable  actions  that may be
necessary or desirable to consummate the transactions  contemplated  pursuant to
this  Agreement,  including,  but not limited to,  furnishing to each other,  or
reviewing,  the  information  relating to each of them  required  by  applicable
statutes,  rules  and  regulations  for  the  purpose  of  preparing  the  Offer
Documents,  any federal and state  securities  law filings and any filings under
the HSR Act. Prior to the execution of this  Agreement,  Parent will provide the
Corporation  with a copy in draft  form of the  Offer  Documents  and will  make
available a final copy of the Offer Documents prior to filing with the SEC. Each
party covenants that all such information  furnished to the other or reviewed by
it will be true and correct in all  material  respects to the  knowledge of such
party. Parent and the Corporation will promptly notify the other party hereto of
any  comments  or  requests  for  additional  information  from the SEC or state
securities  law  administrators  or  relating  to any  filing  under the HSR Act
relating to the Offer,  and will upon request  supply the other  parties  hereto
with copies of all correspondence  between them or their representatives and the
SEC or members of its staff or state securities law administrators  with respect
to the transaction  contemplated  hereby or relating to any filing under the HSR
Act relating thereto.

    SECTION 6.3.  FILINGS;  CONSENTS;  REMOVAL OF OBJECTIONS.  Each party hereto
agrees to exert all reasonable efforts to consummate the Offer and the Merger at
the earliest practicable time, including,  without limitation, (i) preparing and
filing all requisite applications, documents and notifications (including filing
with the FTC and the DOJ the Notification and Report Forms under the HSR Act and
cooperating  with each  other  with  respect  to the  filing  of any  additional
information   with  respect   thereto)  in  connection   with  the   transaction
contemplated  herein  required by applicable law, (ii) responding as promptly as
practicable  to  all  inquiries  in  connection  therewith,  (iii)  removing  or
satisfying,  if  reasonably  practicable,  any  objections  to the  validity  or
legality  of the Share  Purchase,  and (iv)  satisfying  the  conditions  to the
consummation of the Share Purchase set forth herein.

    SECTION 6.4. PUBLIC  ANNOUNCEMENTS.  Parent,  Sub and the  Corporation  will
consult  with each other before  issuing any press  release or making any public
statement  with  respect to the Offer or this  Agreement  and,  except as may be
required  by  applicable  law or the NYSE  Rules,  will not issue any such press
release or make any such public statement without the prior consent of the other
party hereto, which consent will not be unreasonably withheld or delayed.

     SECTION 6.5.  EMPLOYEE  BENEFITS.  (a) Until the first  anniversary  of the
Effective  Time,  Parent  shall  ensure that all  employees  and officers of the
Corporation and Subsidiaries  receive compensation and benefits in the aggregate
substantially  comparable  to the  compensation  and  benefits  received by such
individuals immediately prior to the date hereof. Notwithstanding the foregoing,
following the  Effective  Time,  the Parent may terminate the  employment of any
employee  (subject to the payment of severance  benefits payable to the employee
in connection with such termination).

    (b) Until the first  anniversary of the Effective Time, Parent shall keep in
effect all severance  policies that are  applicable to employees and officers of
the Corporation and its Subsidiaries immediately prior to the date hereof.

    (c) Following the Effective  Time,  (i) Parent shall ensure that no employee
welfare benefit plan adopted by the Corporation or the  Subsidiaries  shall have
any preexisting  condition  limitations and (ii) Parent shall honor all premiums
and deductibles paid by the employees, officers and directors of the Corporation
and  Subsidiaries  under all Employee  Benefit Plans up to (and  including)  the
Effective Time.

    (d) Following the Effective  Time, for purposes of eligibility  and vesting,
Parent shall honor all service  credit  accrued by the  employees,  officers and
directors of the Corporation and  Subsidiaries  under all Employee Benefit Plans
up to (and including) the Effective Time.

    SECTION 6.6.  INDEMNIFICATION  AND  INSURANCE.  (a) From and after the Share
Purchase,  Parent shall cause the  Corporation  to (i) maintain in effect in the
Certificate of  Incorporation  of the Corporation the provisions with respect to
the indemnification set forth in Article VII of the Certificate of Incorporation
of the Corporation as in effect at the Share Purchase,  which  provisions  shall
not be amended,  repealed or  otherwise  modified  for a period of six (6) years
from the  Effective  Time in any manner that would  adversely  affect the rights
thereunder of  individuals  (or their estates) who at the date of this Agreement
and/or as of the closing of the Share Purchase are or were directors,  officers,
employees  or  agents  of the  Corporation  or  its  Subsidiaries,  unless  such
modification  is required by law and (ii) maintain in effect for a period of six
(6) years from the Share Purchase each  Indemnification  Agreement in effect (as
of such date) between the  Corporation or any of its  Subsidiaries  and officers
and directors of the Corporation  and its  Subsidiaries,  which  Indemnification
Agreement shall not be amended or modified during such period in any manner that
would adversely affect the rights of the individual who is a party thereto.

    (b) Prior to the Share Purchase,  the Corporation  shall purchase a six year
"tail" insurance policy with its current carrier substantially  identical in all
respects  to  the  Corporation's  current  directors'  and  officers'  liability
insurance  coverage  (and  providing  coverage  for  an  amount  not  less  than
$30,000,000 and providing for two reinstatement options, exercisable at any time
during such six year tail period of $30,000,000)  covering those persons who are
currently covered on the date of this Agreement by the Corporation's  directors'
and officers'  liability  insurance  policy (a copy of which has been heretofore
delivered to Parent) (the "Indemnified Parties").

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

    (d)  Notwithstanding  the  foregoing,  nothing  herein shall be construed to
relieve  Parent  or the  Corporation  of  their  respective  obligations  to any
Indemnified Party pursuant to this Section,  and each of the Indemnified Parties
shall  be  entitled  to  enforce  such  obligations   (including  the  right  to
indemnification)  directly  against the Parent or the Corporation  without first
making any claim with  respect  thereto  against  any  applicable  successor  or
assign.

     (e) This Section 6.6 shall survive the  consummation  of the Share Purchase
and the Merger,  if necessary,  is intended to benefit the  Corporation  and the
Indemnified  Parties,  and shall be binding on all successors and assigns of the
Corporation  and the Parent.  Parent  shall cause the  Corporation  to honor its
obligations pursuant to this Section 6.6 from and after the Share Purchase.

    SECTION 6.7.  RESIGNATION OF DIRECTORS.  The Corporation shall cause each of
the persons who are members of the Board of Directors of the  Corporation  or of
the Board of Directors of the Subsidiaries  (other than Allied Bond & Collection
Agency,  Inc.) immediately prior to the Closing to deliver their resignations as
directors of the Corporation and such Subsidiaries,  which resignations shall be
effective as of the Closing.

    SECTION 6.8. CONFIDENTIALITY AGREEMENT. Purchaser and the Corporation hereby
agree that as of the date hereof the Confidentiality  Agreement dated August 18,
1997 between Purchaser and the Corporation shall in all respects be terminated.

    SECTION 6.9. CERTAIN ACTIONS OF PARENT AND SUB. Parent and Sub will not take
any action, or omit to take any reasonable action, which in all likelihood would
(i) have a Material Adverse Effect on the ability of Parent or Sub to consummate
the transactions  contemplated  hereby, or (ii) cause any of the representations
and warranties  contained in Article IV which are qualified as to materiality to
fail to be true  and  correct  in any  respect  or any  such  representation  or
warranty  which  is not so  qualified  to  fail to be true  and  correct  in all
material respects, as if such representations and warranties were made at and as
of the  Closing,  except to the extent any such  representation  or warranty was
expressly made only as of a different date.

             ARTICLE VII--CONDITIONS TO CONSUMMATION OF THE MERGER

    SECTION 7.1.  CONDITIONS  PRECEDENT TO  OBLIGATIONS  OF PARENT,  SUB AND THE
CORPORATION.  The respective obligations of Parent and Sub, on the one hand, and
the  Corporation,  on the other  hand,  to effect the Merger are  subject to the
satisfaction  or waiver (subject to applicable law) at or prior to the Effective
Time of each of the following conditions:

        (a) APPROVAL OF  CORPORATION'S  SHAREHOLDERS.  To the extent required by
    applicable  law, this  Agreement and the Merger shall have been approved and
    adopted by  holders of the  requisite  number of  outstanding  shares of the
    Common  Stock  of the  Corporation  entitled  to  vote  in  accordance  with
    applicable  law (if  required  by  applicable  law)  and  the  Corporation's
    Certificate of Incorporation and By-Laws;

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

        (c)  INJUNCTION.  No preliminary or permanent  injunction or other order
    shall have been  issued by any court or by any  governmental  or  regulatory
    agency, body or authority which prohibits the consummation of the Merger and
    the  transactions  contemplated  by this Agreement and which is in effect at
    the  Effective  Time,  PROVIDED,  HOWEVER,  that,  in the case of a  decree,
    injunction or other order,  each of the parties  shall have used  reasonable
    efforts to prevent  the entry of any such  injunction  or other order and to
    appeal as promptly as possible  any decree,  injunction  or other order that
    may be entered; and

        (d) STATUTES. No statute, rule,  regulation,  executive order, decree or
    order of any kind shall have been enacted, entered,  promulgated or enforced
    by any court or governmental  authority which prohibits the  consummation of
    the  Merger or has the  effect of making the  purchase  of the Common  Stock
    illegal.

                   ARTICLE VIII--TERMINATION AND ABANDONMENT

    SECTION 8.1. TERMINATION. This Agreement may be terminated prior to the
Share Purchase and the Merger may be abandoned after the Share Purchase:

        (a) by mutual written consent of the Corporation, on the one hand, and
    of Parent and Sub, on the other hand;

        (b) by either Parent, on the one hand, or the Corporation,  on the other
    hand, if any  governmental or regulatory  agency shall have issued an order,
    decree  or  ruling  or  taken  any  other  action   permanently   enjoining,
    restraining  or  otherwise  prohibiting  the  acceptance  for payment of, or
    payment  for shares of Common  Stock  pursuant  to the Offer and such order,
    decree or ruling or other action shall have become final and nonappealable;

        (c) by Parent,  on the one hand, or the Corporation,  on the other hand,
    if the  Share  Purchase  shall  not have  occurred  within  120  days  after
    commencement of the Offer, unless the Share Purchase shall not have occurred
    because of a material breach of any  representation,  warranty,  obligation,
    covenant,  agreement or condition set forth in this Agreement on the part of
    the party seeking to terminate this Agreement;

        (d) by the Parent,  in the event of a breach by the  Corporation  of any
    representation,  warranty, covenant or agreement contained in this Agreement
    which  (A)  would  give  rise to the  failure  of a  condition  set forth in
    paragraph (d) or (f) of Annex I to this Agreement, and (B) cannot or has not
    been cured  prior to the  earlier of (i) 15 days after the giving of written
    notice of such breach to the Corporation and (ii) two business days prior to
    the date on which the Offer expires;

        (e) by either Parent, on the one hand, or the Corporation,  on the other
    hand,  if the  Board of  Directors  of the  Corporation  determines  that an
    Acquisition  Proposal constitutes a Superior Proposal and the Board believes
    (and has been  advised by  independent  outside  counsel)  that a failure to
    terminate  this Agreement and enter into an agreement to effect the Superior
    Proposal  would  constitute  a breach  of its  fiduciary  duties;  PROVIDED,
    HOWEVER,  the Corporation may not terminate this Agreement  pursuant to this
    Section 8.1(e) unless and until three days have elapsed  following  delivery
    to  Parent  of a  written  notice  of such  determination  by the  Board  of
    Directors  and  during  such  three day  period  the  Corporation  has fully
    cooperated with the Parent,  including,  without  limitation,  informing the
    Parent of the terms and conditions of such Superior Proposal with the intent
    of  enabling  both  parties  to agree to a  modification  of the  terms  and
    conditions of this Agreement so that the  transactions  contemplated  hereby
    may be  effected;  and  PROVIDED  FURTHER  that at the end of such three day
    period  the  Board  of  Directors  of the  Corporation  determines  that the
    Acquisition Proposal constitutes a Superior Proposal and the Board continues
    to believe (and has again been advised by independent  outside counsel) that
    a failure to terminate  this Agreement and enter into an agreement to effect
    the Superior  Proposal  would  constitute a breach of its fiduciary  duties;
    PROVIDED  FURTHER that this Agreement  shall not terminate  pursuant to this
    Section 8.1(e) unless (i) prior to such termination  Parent has received all
    fees and  expenses  set forth in Section  9.1 by wire  transfer  in same day
    funds and (ii)  simultaneously  with such termination the Corporation enters
    into a  definitive  acquisition,  merger or similar  agreement to effect the
    Superior Proposal which acquisition agreement (x) permits the Corporation to
    terminate the  acquisition  agreement in the event the Board of Directors of
    the Corporation  determines to effect a transaction with Parent and (y) does
    not provide for breakup fee or other  inducement to the acquiror  other than
    reimbursement  of documented out of pocket  expenses  incurred in connection
    with such Superior Proposal;

          (f) by the Corporation,  in the event of a breach by the Parent or Sub
     of any  representation,  warranty,  covenant or agreement contained in this
     Agreement  which  cannot or has not been  cured  within  15 days  after the
     giving of written notice of such breach to the Parent and Sub,  except,  in
     any case where such failure is not  reasonably  likely to affect  adversely
     Parent's or Sub's ability to complete the Offer and/or Merger.

    SECTION 8.2. EFFECT OF TERMINATION.  In the event of the termination of this
Agreement  pursuant to Section 8.1 hereof by Parent or Sub, on the one hand,  or
the  Corporation,  on the other hand,  written notice thereof shall forthwith be
given to the other party or parties  specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall become void and have no
effect, and there shall be no liability  hereunder on the part of Parent, Sub or
the Corporation,  except that Sections 6.1, 6.4, 9.1 and this Section 8.2 hereof
shall survive any  termination  of this  Agreement.  Nothing in this Section 8.2
shall  relieve  any party to this  Agreement  of  liability  for  breach of this
Agreement.

                           ARTICLE IX--MISCELLANEOUS

    SECTION 9.1. FEES AND EXPENSES. (a) Except as provided in paragraph (b)
below, all costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.

    (b) If this Agreement is terminated:

        (i) by Parent because of an event set forth in clause (iv)(e) of Annex I
    of this Agreement; or

        (ii) by  Parent  or the  Corporation  in  accordance  with the  terms of
    Section 8.1(e) of this Agreement; or

        (iii) by the Corporation  pursuant to Section 8.1(c),  if, prior to such
    termination,  the Corporation shall have directly or indirectly notified any
    of its stockholders that a third party has made an Acquisition Proposal or a
    third party shall have announced an Acquisition Proposal,  and within twelve
    months after such  termination,  the Corporation or any of its  Subsidiaries
    enters into an agreement  with  respect to any merger or any other  business
    combination,  sale or other  disposition  of any material  amount of assets,
    sale of shares of capital stock which would give the acquirors not less than
    10% of the  issued  Shares,  a tender  offer or  exchange  offer or  similar
    transaction  involving the  Corporation  or one or more of its  Subsidiaries
    accounting for more than 10% of the Corporation's consolidated income in its
    prior  fiscal  year  (a  "Third  Party  Acquisition"),   or  a  Third  Party
    Acquisition occurs within twelve months after the Corporation's  termination
    of this Agreement  pursuant to Section 8.1(c),  involving any such party (or
    any  affiliate or associate  thereof) (x) with whom the  Corporation  or any
    Subsidiary  (or their  respective  representatives)  during the term of this
    Agreement had any discussions with respect to a Third Party Acquisition, (y)
    to whom  the  Corporation  or any  Subsidiary  (or any of  their  respective
    representatives)  during the term of this  Agreement  furnished  information
    with respect to or with a view toward a Third Party Acquisition,  or (z) who
    during the term of this  Agreement had submitted a proposal or expressed any
    interest  publicly  or to  the  Corporation  or  any  Subsidiary  (or  their
    respective representatives) in a Third Party Acquisition,  which Third Party
    Acquisition  contemplates a direct or indirect  consideration  for shares of
    Common Stock in excess of the Merger  Consideration,  in the case of each of
    clauses (x),  (y) and (z) prior to such  termination;  then the  Corporation
    shall  (except as required to be earlier  paid in  accordance  with  Section
    8.1(e)) pay to Parent in same day funds Seven Million Seven Hundred Thousand
    Dollars ($7,700,000.00),  which shall be deemed to include reimbursement for
    all  out-of-pocket  fees and expenses incurred by Parent or on its behalf in
    connection with the transactions contemplated hereby.

    SECTION 9.2. NOTICES. All notices,  requests and other communications to any
party  hereunder  shall be in writing and shall be given by  personal  delivery,
reputable  overnight courier service,  certified mail (postage  prepaid,  return
receipt requested), facsimile (with a copy sent via prepaid first class mail) or
first class mail, as follows:

    If to the Corporation, to:

       The Union Corporation
       211 King Street
       Suite 100
       Charleston, South Carolina 29401
       Attention: William B. Hewitt, President
               and Chief Executive Officer

       Fax: (803) 958-3850

    with a copy to:

       Zimet, Haines, Friedman & Kaplan
       460 Park Avenue
       New York, New York 10022
       Attention: Robert H. Haines, Esq.
       Fax: (212) 223-1151

    If to Parent and Sub, to:

       c/o Outsourcing Solutions Inc.
       390 South Woods Mill Road
       Suite 150
       Chesterfield, MO 63017
       Attention: Timothy G. Beffa, President
               and Chief Executive Officer
       Fax: (314) 576-1867

    with a copy to:

       White & Case
       1155 Avenue of the Americas
       New York, New York 10036
       Attention: Frank L. Schiff, Esq.
       Fax: (212) 819-7817

or to such other  address as such party may  hereafter  specify by notice to the
other party hereto delivered in accordance with this Section.  Each such notice,
request or other communication  shall be effective (a) if personally  delivered,
when presented,  (b) if by reputable  overnight  courier,  the next business day
following  the  delivery  thereof  to such  courier  (or such  later  date as is
demonstrated  by a BONA FIDE receipt  therefor),  (c) if given by certified mail
(postage prepaid,  return receipt requested),  three business days after deposit
in the mails,  (d) if given by  facsimile,  when the  appropriate  answerback or
other  confirmation of receipt is received,  or (e) if given by any other means,
when received.

    SECTION  9.3.   TERMINATION   OF   REPRESENTATIONS   AND   WARRANTIES.   The
representations  and warranties  contained  herein shall  terminate at the Share
Purchase  and neither  the  Corporation  nor any  officer,  director,  employee,
stockholder,  fiduciary or agent of the Corporation shall be under any liability
or obligation  whatsoever  with respect to any such  representation  or warranty
after such time.  This Section  shall not limit any covenant or agreement of the
parties  hereto  which by its  terms  contemplates  performance  after the Share
Purchase.

    SECTION 9.4.  AMENDMENTS.  Subject to applicable  law, this Agreement may be
amended,  modified or supplemented  only by the mutual written  agreement of the
parties  hereto at any time prior to the  Effective  Time with respect to any of
the terms contained herein;  except that Sections 6.1(c),  6.5 and 6.6 above may
not be amended or  supplemented  to the  detriment of any  intended  third party
beneficiary thereof without the express written consent of such beneficiary.

    SECTION 9.5. WAIVERS.  At any time prior to the Closing,  Parent, on the one
hand,  and the  Corporation,  on the other hand, may (a) extend the time for the
performance of any agreement of the other party hereto, (b) waive any inaccuracy
in the  representations and warranties of the other party contained herein or in
any  document  delivered  pursuant  hereto  or (c)  waive  compliance  with  any
agreement of the other party or any condition  contained herein (unless pursuant
hereto such  condition  may not be waived) to be  satisfied by such other party.
Any  agreement  on the part of any  party to any  such  extension,  and any such
waiver,  shall be effective  only if set forth in a writing  signed on behalf of
such party and delivered to the other party hereto.

    SECTION 9.6. SUCCESSORS AND ASSIGNS.  The provisions of this Agreement shall
be  binding  upon and  inure to the  benefit  of the  parties  hereto  and their
respective  successors  and  assigns;  PROVIDED,  that no party  may  assign  or
otherwise transfer any of its rights or obligations under this Agreement without
the prior written consent of the other party hereto and any attempt to so assign
such right or obligation shall be void AB INITIO.

    This  Agreement  shall be binding  upon and is solely for the benefit of the
parties  hereto and their  respective  permitted  successors  and  assigns,  and
nothing in this Agreement is intended to confer upon any other person any rights
or  remedies  of any  nature  whatsoever  under or by reason of this  Agreement,
except that (i) in the event that the Share Purchase shall be consummated,  then
from and after the Share Purchase the provisions of Sections 6.1(c), 6.5 and 6.6
shall inure to the benefit of the  employees,  option  holders and other persons
specified therein,  who, as the intended  beneficiaries of such Sections,  shall
each be entitled to enforce his or her rights  under such  Sections and (ii) the
provisions of Section 6.6 shall inure to the benefit of the Indemnified Parties,
who, as the intended  beneficiaries  of such Section 6.6, shall each be entitled
to enforce his or her rights under such Section.

    SECTION 9.7.  GOVERNING LAW AND FORUM.  This Agreement shall be construed in
accordance  with the laws of the State of New York  applicable to contracts made
and to be performed  entirely  therein,  except that, with respect to matters of
corporate law, Delaware law shall apply.

    SECTION 9.8.  COUNTERPARTS;  EFFECTIVENESS.  This Agreement may be signed in
any number of  counterparts,  each of which shall be an original,  with the same
force and effect as if the  signatures  thereto  and  hereto  were upon the same
instrument.  This Agreement shall become  effective when each party hereto shall
have received counterparts hereof signed by the other parties hereto.

    SECTION 9.9.  ENTIRE  AGREEMENT;  SCHEDULES  AND EXHIBITS.  This  Agreement,
including the Schedules and Annex I hereto (which are hereby made a part of this
Agreement),  contains  all of the  terms,  conditions  and  representations  and
warranties  agreed  upon by the parties  relating to the subject  matter of this
Agreement and supersedes all prior and contemporaneous agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter.

    SECTION 9.10. HEADINGS AND TABLE OF CONTENTS. The headings in this Agreement
and the Table of Contents are included  herein for  reference  purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.

                             ARTICLE X--DEFINITIONS

    For  purposes  of  this  Agreement,  the  following  terms  shall  have  the
respective meanings ascribed to such terms in this Article.

    (a)  "Balance  Sheet Date"  shall have the meaning  ascribed to such term in
Section 3.9.

    (b) "Cash Payment"  shall have the meaning  ascribed to such term in Section
1.4.

    (c)  "Certificate of Merger" shall have the meaning ascribed to such term in
Section 2.1.

    (d)  "Certificates"  shall have the meaning ascribed to such term in Section
2.4.

    (e) "Closing" shall have the meaning ascribed to such term in Section 2.10.

    (f) "Closing  Date" shall have the meaning  ascribed to such term in Section
2.10.

    (g) "Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.

    (h)  "Corporation  Filings" shall have the meaning  ascribed to such term in
Section 3.7.

    (i) "Corporation  Financial  Statements"  shall have the meaning ascribed to
such term in Section 3.8.

    (j) "Corporation  Stock" shall have the meaning ascribed to such term in the
preamble to this Agreement.

    (k)  "Corporation  10-Ks"  shall have the  meaning  ascribed to such term in
Section 3.7.

    (l)  "Credit  Agreement"  shall have the  meaning  ascribed  to such term in
Section 3.10.

    (m) "DGCL" shall have the meaning ascribed to such term in Section 1.2.

    (n) "DL" is the Disclosure Letter.

    (o) "DOJ" shall mean the United States Department of Justice.

    (p) "Dissenting  Shareholders"  shall have the meaning ascribed to such term
in Section 2.3.

    (q) "Effective Time" shall have the meaning ascribed to such term in Section
2.1.

    (r) "ERISA" shall have the meaning ascribed to such term in Section 3.14.

    (s) "Exchange  Act" shall have the meaning  ascribed to such term in Section
1.1.

    (t) "FTC" shall mean the Federal Trade Commission.

    (u) "GAAP" shall have the meaning ascribed to such term in Section 3.8.

    (v) "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

    (w)  "Material  Adverse  Effect"  shall  mean any change in or effect on the
applicable  corporation that either is, or in all reasonable likelihood will be,
materially adverse to the business, operations,  financial condition, results of
operations,  assets,  liabilities  or  reserves  of  such  corporation  and  its
subsidiaries, taken as a whole.

    (x)  "Material  Contracts"  shall have the meaning  ascribed to such term in
Section 3.18.

    (y) "Merger" shall have the meaning ascribed to such term in the preamble of
this Agreement.

    (z) "Merger  Consideration"  shall have the meaning ascribed to such term in
Section 2.2.

    (aa) "NYSE Rules" shall mean the rules and  regulations  promulgated  by the
New York Stock Exchange, Inc.

    (bb) "Offer" shall have the meaning ascribed to such term in the preamble of
this Agreement.

    (cc)  "Offer  Documents"  shall have the  meaning  ascribed  to such term in
Section 1.1(b).

    (dd) "Options" shall have the meaning ascribed to such term in Section 1.4.

    (ee) "Parent Audited  Financial  Statements" shall have the meaning ascribed
to such term in Section 4.5.

    (ff) "Paying Agent" shall have the meaning  ascribed to such term in Section
2.4.

    (gg) "Person" shall mean and include an individual,  a partnership,  a joint
venture, a corporation,  a limited liability company, a trust, an unincorporated
organization, a group and a government or other department or agency thereof.

    (hh) "Per Share Amount" shall have the meaning  ascribed to such term in the
preamble to this Agreement.

    (ii)  "Proxy  Statement"  shall have the  meaning  ascribed  to such term in
Section 2.11.

    (jj)  "Rights  Agreement"  shall have the  meaning  ascribed to such term in
Section 1.2.

    (kk)  "Schedule  14D-1"  shall  have the  meaning  ascribed  to such term in
Section 1.1(b).

    (ll)  "Schedule  14D-9"  shall  have the  meaning  ascribed  to such term in
Section 1.2(b).

    (mm) "SEC" shall mean the United States Securities and Exchange Commission.

    (nn) "Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

    (oo)  "Share  Purchase"  shall  have the  meaning  ascribed  to such term in
Section 1.1.

    (pp) "Shares"  shall have the meaning  ascribed to such term in the preamble
to this Agreement.

    (qq) "Subsidiaries"  shall have the meaning ascribed to such term in Section
3.6.

    (rr) "Surviving Corporation" shall have the meaning ascribed to such term in
Section 2.1(b).


    IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be duly
executed by their  respective  authorized  officers as of the day and year first
above written.

ATTEST:                         THE UNION CORPORATION

                                By:  /s/ MELVIN S. COOPER
/s/ NICHOLAS P. GILL                 ----------------------------------------
------------------------------       Name: Melvin S. Cooper
Name: Nicholas P. Gill               Title: Chairman of the Board

ATTEST:
                                OUTSOURCING SOLUTIONS INC.

                                By:  /s/ TYLER T. ZACHEM
/s/ S. WARD ATTERBURY                ----------------------------------------
------------------------------       Name: Tyler T. Zachem
Name: S. Ward Atterbury              Title: Vice President

ATTEST:
                                SHERMAN ACQUISITION CORPORATION

                                By:  /s/ TYLER T. ZACHEM
/s/ S. WARD ATTERBURY                ----------------------------------------
------------------------------       Name: Tyler T. Zachem
Name: S. Ward Atterbury              Title: Vice President and Treasurer
<PAGE>
                                    ANNEX I
                 TO SHARE PURCHASE AGREEMENT AND PLAN OF MERGER

                        CONDITIONS TO THE SHARE PURCHASE

    The capitalized terms used in this Annex I shall have the meanings set forth
in the Agreement to which it is annexed.

    Notwithstanding any other provision of the Offer or the Agreement, Sub shall
not be required to accept for payment or,  subject to any  applicable  rules and
regulations  of the SEC,  including  Rule 14e-1c under the Exchange Act, pay for
any shares of Common Stock tendered  pursuant to the Offer and may terminate the
Offer or amend the Offer as and to the extent  provided  in  Section  1.1 of the
Agreement and may postpone the acceptance of, and payment for,  shares of Common
Stock, if (i) there shall not have been validly tendered and not withdrawn prior
to the  expiration  of the  Offer a number  of  shares  of  Common  Stock  which
represent two-thirds of the total voting power of all shares of capital stock of
the  Corporation  outstanding  on a  fully-diluted  basis,  (ii) any  applicable
waiting  period  under the HSR Act shall not have  expired  or been  terminated,
(iii)  Parent  shall not have  received  financing  necessary  for it and Sub to
consummate the Offer and the other transactions contemplated by the Agreement in
accordance with the terms of the bank commitment letter dated December 22, 1997,
to Parent from The Chase Manhattan Bank, Chase Securities Inc. and Goldman Sachs
Credit  Partners  L.P.  or (iv)  if,  at any  time on or  after  the date of the
Agreement and at or before the Share Purchase any of the following shall occur:

        (a) there shall be instituted or pending any action or proceeding by any
    government or governmental  authority or agency,  domestic or foreign, or by
    any other  Person,  domestic  or foreign,  before any court or  governmental
    authority or agency,  domestic or foreign, (i) challenging or seeking to, or
    which  could  reasonably  be  expected  to make  illegal,  impede,  delay or
    otherwise directly or indirectly materially restrain,  prohibit or make more
    costly the Offer or the Merger or seeking to obtain material  damages,  (ii)
    seeking to prohibit or materially limit the ownership or operation by Parent
    or Sub of all or any  material  portion  of the  business  or  assets of the
    Corporation or any of its Subsidiaries  taken as a whole or to compel Parent
    or Sub to dispose of or hold  separately all or any material  portion of the
    business  or  assets  of  Parent  or Sub or  the  Corporation  or any of its
    Subsidiaries  taken as a whole or seeking to impose any material  limitation
    by reason of the  transactions  contemplated by the Agreement on the ability
    of Parent or Sub to conduct its business or own such assets,  (iii)  seeking
    to  impose  limitations  on the  ability  of Parent  or Sub  effectively  to
    exercise full rights of ownership of the shares of Common Stock,  including,
    without limitation, the right to vote any shares of Common Stock acquired or
    owned  by  Sub  or  Parent  on  all  matters   properly   presented  to  the
    Corporation's shareholders, (iv) seeking to require divestiture by Parent or
    Sub of any shares of Common  Stock,  (v)  otherwise  directly or  indirectly
    relating to the Offer or the Merger and which,  could reasonably be expected
    to materially adversely affect the Corporation or any of its Subsidiaries or
    Sub or Parent,  or (vi)  otherwise  having a Material  Adverse Effect on the
    Corporation and its Subsidiaries taken as a whole;

        (b) there shall be any action taken, or any statute,  rule,  regulation,
    legislation,   interpretation,   judgment,  order  or  injunction  proposed,
    enacted, enforced, promulgated,  amended, issued or deemed applicable to (i)
    Parent,  Sub, the  Corporation or any Subsidiary of the  Corporation or (ii)
    the Offer or the Merger,  by any  legislative  body,  court,  government  or
    governmental,  administrative or regulatory authority or agency, domestic or
    foreign, other than the routine application of the waiting period provisions
    of the HSR Act to the Offer or to the  Merger,  which  could  reasonably  be
    expected  to  directly  or  indirectly,  result  in any of the  consequences
    referred to in clauses (i) through (vi) of paragraph (a) above;

        (c) any change (other than as a result of general  economic  conditions)
    shall have occurred,  or Parent shall have become aware of any fact, that is
    reasonably  likely to have a Material  Adverse Effect on the Corporation and
    its Subsidiaries taken as a whole;

        (d) any of the  representations or warranties made by the Corporation in
    the  Agreement  that are  qualified  as to  materiality  shall be  untrue or
    incorrect in any respect or any of such  representations and warranties that
    are not so qualified shall be untrue or incorrect in any material respect as
    of the date of this Agreement or immediately prior to the Share Purchase;

        (e) the Corporation's Board of Directors shall have withdrawn,  modified
    or amended in any respect adverse to Parent or Sub its recommendation of the
    Offer or the Merger, or shall have resolved to do so;

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

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

which,  in the reasonable  judgment of Sub, makes it inadvisable to proceed with
such acceptance for payment or payment.

    The  foregoing  conditions  (including  those set forth in clauses  (i)-(iv)
above) are for the sole benefit of the Parent and Sub and may be asserted by any
of them,  or may be waived by the Parent or Sub, in whole or in part at any time
and from time to time in its sole  discretion.  The failure by the Parent or Sub
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.