PURCHASE AGREEMENT

                                      among

                           Outsourcing Solutions Inc.

                                       and

                           the Purchasers named herein

                          Dated as of December 10, 1999

                                  Relating to:

                       $100,000,000 in Units Consisting of
                                25,000 Shares of
           Class A 14% Senior Mandatorily Redeemable Preferred Stock,
                                75,000 Shares of
            Class B 14% Senior Mandatorily Redeemable Preferred Stock

                                       and

            596,913.07 Shares of Voting Common Stock, $.01 Par Value
<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

RECITALS ......................................................................1

                                    SECTION 1

                        DEFINITIONS AND ACCOUNTING TERMS

1.01.    Definitions...........................................................2
1.02.    Computation of Time Periods..........................................13
1.03.    Accounting Terms.....................................................13

                                    SECTION 2

                 AUTHORIZATION, ISSUANCE AND SALE OF SECURITIES

2.01.    Authorization of Issue...............................................13
2.02.    Sale.................................................................13
2.03.    Closing..............................................................14
2.04.    Allocation of Purchase Price.........................................14

                                    SECTION 3

                              CONDITIONS TO CLOSING

3A.      Conditions to Obligation of Each Purchaser to Close..................14
3.01A.   Representations and Warranties.......................................14
3.02A.   Performance; No Default Under Other Agreements.......................15
3.03A.   Compliance Certificates..............................................15
         (a)   Officer's Certificate..........................................15
         (b)   Secretary's Certificate........................................15
3.04A.   Opinions of Counsel..................................................15
3.05A.   Recapitalization.....................................................16
3.06A.   No Adverse Events....................................................16
3.07A.   Financial Information................................................16
3.08A.   Proceedings and Documents............................................16
3.09A.   Purchase Permitted by Applicable Law, etc............................17
3.10A.   Transaction Documents in Force and Effect; Information;
            Certificate of  Designation.......................................17
         (a)   Transaction Documents..........................................17
         (b)   Accuracy of Information........................................17
         (c)   Filing of Amended and Restated Certificate of
                Incorporation and Certificate of Designation..................17
3.11A.   No Violation; No Legal Constraints; Consents, Authorizations
           and Filings, etc...................................................18
3.12A.   Credit Agreement.....................................................18
3.13A.   Fees and Expenses of the Recapitalization............................18
3.14A.   Solvency Certificate.................................................18
3.15A.   Litigation...........................................................19
3.16A.   Disbursement Instructions............................................19
3.17A.  Junior Preferred Stock................................................19
3B.      Conditions to Obligation of the Company to Close.....................19
3.01B.   Representations and Warranties.......................................19
3.02B.   Compliance with Covenants............................................19
3.03B.   Litigation...........................................................19
3.04B.   Documentation........................................................19

                                    SECTION 4

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

4.01.    Due Incorporation; Power and Authority...............................20
4.02.    Capitalization.......................................................20
4.03.    Subsidiaries.........................................................21
4.04.    Due Authorization, Execution and Delivery............................21
         (a)   Agreement......................................................21
         (b)   Senior Preferred Stock; Certificate of Designation.............21
         (c)   Common Stock Registration Rights Agreement; Preferred
               StockRegistration Rights Agreement.............................22
         (d)   Common Stock...................................................22
         (e)   Stockholders Agreement.........................................22
         (f)   Other Transaction Documents....................................22
4.05.    Noncontravention; Authorizations and Approvals.......................23
4.06.    Company Financial Statements.........................................23
4.07.    Absence of Undisclosed Liabilities or Events.........................24
4.08.    No Actions or Proceedings............................................25
4.09.    Title to Properties..................................................25
4.10.    Intellectual Property Rights.........................................25
4.11.    Taxes................................................................25
4.12.    Employee Benefit Plans...............................................27
4.13.    Private Offering; No Integration or General Solicitation.............29
4.14.    Eligibility for Resale Under Rule 144A...............................30
4.15.    [INTENTIONALLY OMITTED]..............................................30
4.16.    Insurance............................................................30
4.17.    Environmental Laws and Regulations...................................30
4.18.    Solvency.............................................................31
4.19.    Affiliate Transactions...............................................31
4.20.    Material Contracts...................................................31
4.21.    Brokerage Fees.......................................................31
4.22.    Employment Relations and Agreements..................................31
4.23.    [INTENTIONALLY OMITTED]..............................................32
4.24.    Compliance with Laws; Licenses.......................................32

                                    SECTION 5

                        REPRESENTATIONS OF THE PURCHASERS

5.01.    Purchase for Investment..............................................32
5.02.    Organization of the Purchasers.......................................33
5.03.    Authorization of Transaction.........................................33
5.04.    Noncontravention.....................................................33
5.05.    Brokers' Fees........................................................34

                                    SECTION 6

                  PROVISIONS RELATING TO RESALES OF SECURITIES

6.01.    Private Offerings....................................................34
         (a)   Offers and Sales of Senior Preferred Stock Only to
                 Institutional Accredited Investors or Qualified
                 Institutional Buyers.........................................34
         (b)   No General Solicitation........................................34
         (c)   Purchases by Non-Bank Fiduciaries..............................35
         (d)   Restrictions on Transfer; Legend...............................35
         (e)   No Future Liability............................................35
         (f)   Securities Act Restrictions....................................35
6.02.    Resale Offering Assistance...........................................36
6.03.    Blue Sky Compliance..................................................38
6.04.    Common Stock Registration Rights Agreement; Preferred Stock
           Registration Rights Agreement......................................39
6.05.    No Integration.......................................................39
6.06.    DTC Agreement and PORTAL.............................................39
6.07.    [Intentionally Omitted]..............................................39
6.08.    Form of Legend for the Securities....................................39

                                    SECTION 7

                           THE SENIOR PREFERRED STOCK

7.01.    Execution............................................................41
7.02.    Terms of the Senior Preferred Stock..................................41
7.03.    Payments and Computations............................................41
7.04.    Registration; Registration of Transfer and Exchange..................41
         (a)   Security Register..............................................41
         (b)   Registration of Transfer.......................................41
         (c)   Exchange.......................................................42
         (d)   Effect of Registration of Transfer or Exchange.................42
         (e)   Requirements; Charges..........................................42
         (f)   Certain Limitations............................................42
7.05.    Mutilated, Destroyed, Lost and Stolen Shares.........................42
7.06.    Persons Deemed Owners................................................43
7.07.    Cancellation.........................................................43
7.08.    Home Office Payment..................................................44
7.09.    Separability.........................................................44
7.10.    Board Observation....................................................44
7.11.    Reports, Books, Records and Access...................................45

                                    SECTION 8

                                   REDEMPTION

8.01.    Right of Redemption..................................................46
8.02.    Partial Redemptions..................................................46
8.03.    Notice of Redemption.................................................46
8.04.    Deposit of Redemption Price..........................................46
8.05.    Shares Payable on Redemption Date....................................46
8.06.    Shares Redeemed in Part..............................................47

                                    SECTION 9

                          EXPENSES, INDEMNIFICATION AND

                          CONTRIBUTION AND TERMINATION

9.01.    Expenses.............................................................47
9.02.    Indemnification......................................................48
         (a)   Indemnification by the Company.................................48
         (b)   Indemnification by the Purchasers..............................48
         (c)   Notifications and Other Indemnification Procedures.............49
9.03.    Contribution.........................................................50
9.04.    Survival.............................................................51
9.05.    Termination..........................................................51

                                   SECTION 10

                                  MISCELLANEOUS

10.01.   Notices..............................................................52
10.02.   Benefit of Agreement; Assignments and Participations.................52
10.03.   No Waiver; Remedies Cumulative.......................................53
10.04.   Amendments, Waivers and Consents.....................................53
10.05.   Counterparts.........................................................53
10.06.   Reproduction.........................................................54
10.07.   Headings.............................................................54
10.08.   Governing Law; Submission to Jurisdiction; Venue.....................54
10.09.   Severability.........................................................55
10.10.   Entirety.............................................................55
10.11.   Survival of Representations and Warranties...........................56
10.12.   Incorporation........................................................56
10.13.   Press Releases and Public Announcements..............................56
10.14.   Public Disclosures...................................................56



<PAGE>

EXHIBITS

Exhibit A      -      Form of Certificate of Designation
Exhibit B      -      Form of Preferred Stock Registration Rights Agreement
Exhibit C      -      Form of Common Stock Registration Rights Agreement
Exhibit D      -      Form of Officer's Certificate
Exhibit E      -      Form of Secretary's Certificate
Exhibit F-1    -      Form of Opinion of Company Counsel
Exhibit F-2    -      Form of Opinion of Cahill Gordon & Reindel
Exhibit G      -      Form of Amended and Restated Certificate of Incorporation
Exhibit H      -      Form of Stockholders Agreement

SCHEDULES

Schedule A     -      Information Relating to Purchasers


<PAGE>

                               PURCHASE AGREEMENT

             PURCHASE AGREEMENT, dated  as  of  December  10, 1999, by and among
Outsourcing   Solutions  Inc.,  a  Delaware   corporation   (together  with  its
successors,  the  "Company"),  and Ares Leveraged  Investment  Fund,  L.P., Ares
Leveraged  Investment  Fund II, L.P., DB Capital  Investors,  L.P.,  First Union
Investors,  Inc., Abbott Capital 1330 Investors II, L.P., Abbott Capital Private
Equity Fund III, L.P., BNY Partners Fund,  L.L.C.,  Heller  Financial,  Inc. and
Magnetite Asset Investors  L.L.C.  (each a "Purchaser"  and,  collectively,  the
"Purchasers").


                                    RECITALS

               WHEREAS,  upon the terms and subject to the  conditions set forth
in this Agreement,  the Company has agreed to sell to the  Purchasers,  and each
Purchaser,  acting  severally  and not  jointly,  has  agreed  to  purchase  for
aggregate gross proceeds of $100.0 million from the Company,  100,000 units (the
"Units") in the  aggregate  consisting  of (i) either one share of the Company's
Class A 14% Senior Mandatorily  Redeemable  Preferred Stock (the "Class A Senior
Preferred  Stock") or one share of the Company's Class B 14% Senior  Mandatorily
Redeemable  Preferred Stock (the "Class B Senior Preferred Stock"), in each case
with terms and conditions as set forth in the  Certificate of  Designation,  the
form  of  which  is  attached   hereto  as  Exhibit  A  (the   "Certificate   of
Designation"),  and (ii)  596,913.07  shares of the  Company's  Common Stock (as
defined),  as set  forth on  Schedule  A. The  Class A  Senior  Preferred  Stock
together with the Class B Senior  Preferred  Stock are herein referred to as the
"Senior Preferred Stock." The Senior Preferred Stock together with the shares of
Common  Stock  issued  to  the  Purchasers   are  herein   referred  to  as  the
"Securities."

               WHEREAS,  the  Company is issuing the  Securities  as part of its
recapitalization (the  "Recapitalization")  pursuant to a Stock Subscription and
Redemption   Agreement   dated  as  of  October  8,   1999,   as  amended   (the
"Recapitalization  Agreement"),  by and  among  the  Company,  Madison  Dearborn
Capital  Partners  III,  L.P.  (the  "Equity   Investor")  and  certain  of  the
stockholders, optionholders and warrantholders of the Company party thereto.

               WHEREAS,  simultaneously  with receipt of the  proceeds  from the
sale of the  Securities,  the Company will utilize such proceeds,  proceeds from
borrowings  under the Credit Agreement (as defined) and proceeds from the equity
contribution  from  the  Equity  Investor,  certain  Purchasers,  certain  other
investors and management of the Company to effect the Recapitalization.

               WHEREAS,  the holders of the Senior  Preferred Stock from time to
time will be entitled to the benefits of a Registration Rights Agreement,  dated
the date hereof (the "Preferred Stock Registration  Rights  Agreement"),  by and
among the Company and the Purchasers in the form of Exhibit B hereto.

               WHEREAS,  the holders of Common Stock and Non-Voting Common Stock
from time to time will be entitled  to the  benefits  of a  Registration  Rights
Agreement,  dated  the  date  hereof  (the  "Common  Stock  Registration  Rights
Agreement"),  by and among the Company, the Equity Investor, the Purchasers, and
others in the form of Exhibit C hereto.

               WHEREAS,  the holders of Common Stock and Non-Voting Common Stock
from  time  to  time  will  be  entitled  to the  benefits  of the  Stockholders
Agreement,  dated the date hereof (the "Stockholders  Agreement"),  by and among
the  Company,  the Equity  Investor,  certain  stockholders,  optionholders  and
warrantholders of the Company, the Purchasers, and others in the form of Exhibit
H hereto.

               NOW, THEREFORE, the parties hereto agree as follows:

                                    SECTION 1

                        DEFINITIONS AND ACCOUNTING TERMS

               1.01.  Definitions.  As  used  herein,  the following terms shall
have the meanings specified herein unless the context otherwise requires

               "Accredited  Investor"  means any Person  that is an  "accredited
investor" within the meaning of Rule 501(a) under the Securities Act.

               "Additional Company Information" is defined in Section 6.02.

               "Affiliate" means with respect to any specified  Person:  (i) any
other Person directly or indirectly controlling or controlled by or under direct
or indirect  common  control with such specified  Person;  (ii) any other Person
that  owns,  directly  or  indirectly,  10% or more of such  specified  Person's
Capital  Stock;  or (iii) any other  Person 10% or more of the  Voting  Stock of
which is  beneficially  owned or held directly or  indirectly by such  specified
Person. For the purposes of this definition, "control" when used with respect to
any specified  Person means the power to direct the  management  and policies of
such  Person,  directly  or  indirectly,  whether  through  ownership  of voting
securities,   by  contract  or  otherwise;   and  the  terms  "controlling"  and
"controlled"  have meanings  correlative to the foregoing.  With respect to each
Purchaser,  an Affiliate  shall also  include,  without  limitation,  any Person
managed or  advised  by, or  controlling  or under  common  control  with,  such
Purchaser  or any of its  Affiliates.  Notwithstanding  anything to the contrary
contained  herein,  (x) no  portfolio  company  of the Equity  Investor  nor any
portfolio  company of a fund managed by or affiliated  with the Equity  Investor
shall be deemed an Affiliate of the Company and (y) no Purchaser or any of their
respective Affiliates shall be deemed an Affiliate of the Company.

               "Agent" is defined in Section 10.08(c).

               "Agreement" is defined in Section 10.04.

               "Amended and Restated  Certificate  of  Incorporation"  means the
Fourth Amended and Restated  Certificate of  Incorporation of the Company in the
form of Exhibit G hereto.

               "Applicable Law" means all applicable laws,  statutes,  treaties,
rules, codes (including building codes), ordinances, regulations,  certificates,
orders and licenses of, and interpretations  by, any Governmental  Authority and
judgments,  decrees,  injunctions,  writs, permits,  orders or like governmental
action of any Governmental  Authority  (including any  Environmental Law and any
laws pertaining to health or safety) applicable to any parties hereto (including
their respective property or operations), as appropriate.

               "Assistance Period" is defined in Section 6.02.

               "Audit Date" means December 31, 1998.

               "Benefit Plan" is defined in Section 4.12.

               "Board Observer" is defined in Section 7.10.

               "Board of Directors"  means the Board of Directors of the Company
or one of its Subsidiaries,  as the case may be, or any authorized  committee of
such Board of Directors.

               "Business Day" means any day other than a Legal Holiday.

               "Capital  Stock"  means (i) with  respect to any Person that is a
corporation,  corporate  stock;  (ii) in the case of any association or business
entity,  any  and  all  shares,  interests,  participations,   rights  or  other
equivalents  (however  designated and whether or not voting) of corporate stock,
including each class of common stock and preferred  stock of such Person;  (iii)
with respect to any Person that is not a corporation,  any and all  partnership,
membership or other equity interests of such Person; and (iv) any other interest
or  participation  that  confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.

               "Capitalized  Lease Obligation"  means, at the time determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be  required  to be  capitalized  on a balance  sheet in
accordance with GAAP.

               "CERCLA" is defined in Section 4.17.

               "Certificate  of  Designation" is defined in the first recital to
this Agreement.

               "Change of Control" is defined in the Certificate of Designation.

               "Class A Senior  Preferred Stock" is defined in the first recital
to this Agreement.

               "Class B Senior  Preferred Stock" is defined in the first recital
to this Agreement.

               "Closing Time" is defined in Section 2.03.

               "COBRA" is defined in Section 4.12.

               "Code" means the Internal  Revenue Code of 1986,  as amended from
time to time, and the rules and regulations promulgated  thereunder,  as amended
from time to time.

               "Commission"  means the  Securities and Exchange  Commission,  as
from time to time constituted, created under the Exchange Act or, if at any time
after the  execution  of this  Agreement  such  Commission  is not  existing and
performing  the duties  now  assigned  to it under the  Exchange  Act,  the body
performing such duties at such time.

               "Common Stock" means the Company's Voting Common  Stock, $.01 par
value.

               "Common Stock  Registration  Rights  Agreement" is defined in the
fifth recital to this Agreement.

               "Company" shall have the meaning assigned in the preamble to this
Agreement and shall include its successors and permitted assigns.

               "Company Financial Statements" is defined in Section 4.06.

               "Company Indemnified Person" is defined in Section 9.02(b).

               "Company Property" is defined in Section 4.17.

               "Compensation Commitment" is defined in Section 4.12.

               "Competitor"  means any Person who is engaged in the (i) accounts
receivable  management  services and  outsourcing  business,  (ii) consumer debt
purchasing  business  (other than related to asset backed  securities or similar
investments)   or  (iii)  credit  card  business  and  shall  include,   without
limitation,  Capital One,  Providian,  Metris and NCO Group;  provided,  that no
Person or any  Affiliate  thereof  shall be a  Competitor  for  purposes of this
Agreement  solely by  reason  of (a) the  beneficial  ownership  for  investment
purposes  of (x) less than 15% of the  voting  equity  securities  of any Person
engaged,  directly or through  its  Affiliates,  in the  business  described  in
clauses (i) or (ii) or (y) less than 50% of the voting equity  securities of any
Person engaged, directly or through its Affiliates, in the business described in
clause  (iii),  and (b) being a lender  to any  Person,  whether  or not it is a
Competitor.

               "consolidated"  or on a  "consolidated  basis,"  when  used  with
reference  to any  financial  term in this  Agreement  (but not when  used  with
respect to any Tax Return or tax liability), means the aggregate for two or more
Persons  of the  amounts  signified  by such  term  for all such  Persons,  with
intercompany items eliminated and, with respect to net income or earnings, after
eliminating  the  portion of net income or  earnings  properly  attributable  to
minority  interests,  if  any,  in the  capital  stock  of any  such  Person  or
attributable  to shares of  preferred  stock of any such Person not owned by any
other such Person, in accordance with GAAP.

               "Controlling Person" is defined in Section 9.02(a).

               "Credit  Agreement"  means  the  Credit  Agreement  dated  as  of
November 30, 1999 among the Company,  certain  subsidiaries  of the Company,  as
guarantors,  DLJ Capital  Funding,  Inc., as Syndication  Agent,  Fleet National
Bank,  N.A.,  as  Administrative  Agent,  and Harris  Trust & Savings  Bank,  as
Documentation  Agent,  and the other  financial  institutions  from time to time
party thereto, together with the related documents (including notes, guarantees,
collateral  documents,  instruments and agreements executed  therewith),  and in
each  case  as  amended  (including  any  amendment  and  restatement  thereof),
modified, renewed, refunded, replaced or refinanced from time to time, including
any  agreement  extending the maturity of,  refinancing,  replacing or otherwise
restructuring   (including   increasing  the  amount  of  available   borrowings
thereunder  or adding  Subsidiaries  of the Company as  additional  borrowers or
guarantors  thereunder)  all  or any  portion  of the  Indebtedness  under  such
agreement or any successor or  replacement  agreement and whether by the same or
any other agent, lender or group of creditors.

               "Depositary" is defined in Section 6.06.

               "Dividend   Payment  Date"  is  defined  in  the  Certificate  of
Designation.

               "Dividend   Record  Date"  is  defined  in  the   Certificate  of
Designation.

               "Enforceability  Exceptions" means, with respect to any specified
obligation,  any  limitations on the  enforceability  of such  obligation due to
bankruptcy,  insolvency,  reorganization,  moratorium, and other similar laws of
general  applicability  relating to or  affecting  creditors'  rights or general
equity  principles  (other  than,  in any such case,  any  federal or state laws
relating  to  fraudulent  transfers)  and,  in the  case  of any  indemnity  for
securities law obligations,  to the extent such indemnity may not be enforceable
due to public policy considerations.

               "Environmental Law" is defined in Section 4.17.

               "Equity  Investor"  is  defined  in the  second  recital  to this
Agreement.

               "ERISA" is defined in Section 4.12.

               "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
amended, and the rules and regulations promulgated by the Commission thereunder.

               "Fair Market Value" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length free market  transaction,
for cash, between an informed and willing seller under no compulsion to sell and
an informed and willing buyer  neither of which is under  pressure or compulsion
to complete the transaction.  Fair Market Value shall be determined by the Board
of Directors of the Company or the applicable  Subsidiary  acting reasonably and
in good faith.

               "GAAP" means, at any date of  determination,  generally  accepted
accounting principles in effect in the United States which are applicable at the
date of  determination  and which are  consistently  applied for all  applicable
periods.

               "Governmental  Authority"  means (a) the government of the United
States or any State or other political  subdivision  thereof, (b) any government
or political  subdivision of any other  jurisdiction in which the Company or any
Subsidiary  conducts  all  or  any  part  of  its  business,  or  which  asserts
jurisdiction  over any properties of the Company or any  Subsidiary,  or (c) any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any such government.

               "guarantee"  means a  guarantee  (other  than by  endorsement  of
negotiable  instruments  for  collection  in the ordinary  course of  business),
direct or indirect,  in any manner (including,  without  limitation,  letters of
credit and reimbursement  agreements in respect thereof),  of all or any part of
any Indebtedness.

               "Hazardous Materials" is defined in Section 4.17.

               "Hedging  Obligations"  means,  with  respect to any Person,  the
obligations of such Person under (i) currency exchange agreements, interest rate
swap agreements, interest rate cap agreements or interest rate collar agreements
and (ii) other  agreements  or  arrangements  designed  to protect  such  Person
against fluctuations in currency exchange or interest rates.

               "Holder"  means  any  Person  in  whose  name a share  of  Senior
Preferred  Stock or Common Stock,  as applicable,  purchased  pursuant hereto is
registered.

               "Indebtedness"   means,   with   respect  to  any   Person,   any
indebtedness of such Person,  whether or not contingent,  in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of  credit  (or  reimbursement   agreements  in  respect  thereof)  or  banker's
acceptances  or  representing  Capitalized  Lease  Obligations  or  the  balance
deferred and unpaid of the purchase price of any property (other than contingent
or  "earnout"  payment  obligations)  or  representing  any Hedging  Obligations
(except any such balance that  constitutes an accrued  expense or trade payable)
or any Redeemable  Capital Stock of such Person, if and to the extent any of the
foregoing  indebtedness  (other than letters of credit and Hedging  Obligations)
would  appear as a liability  upon a balance  sheet of such  Person  prepared in
accordance with GAAP, as well as all indebtedness of others secured by a Lien on
any  asset of such  Person  in an amount  equal to the  lesser of the  aggregate
amount  of such  indebtedness  secured  by such Lien and the value of all of the
assets  of  such  Person  securing  such  indebtedness   (whether  or  not  such
indebtedness  is  assumed by such  Person)  and,  to the  extent  not  otherwise
included, the guarantee by such Person of any indebtedness of any other Person.

               "Indemnified Person" is defined in Section 9.02(c).

               "Institutional   Accredited  Investors"  is  defined  in  Section
6.01(a).

               "Intellectual  Property" means (a) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements   thereto,   and  all  patents,   patent  applications  and  patent
disclosures,      together     with     all     reissuances,      continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b) all
trademarks,  service marks, trade dress, logos, trade names and corporate names,
together  with  all  translations,  adaptations,  derivations  and  combinations
thereof and including all goodwill associated  therewith,  (c) all copyrightable
works,  all  copyrights  and all  applications,  registrations  and  renewals in
connection  therewith,  (d) all  broadcast  rights,  (e) all mask  works and all
applications,  registrations  and  renewals  in  connection  therewith,  (f) all
know-how,   trade  secrets  and  confidential  business   information,   whether
patentable  or  unpatentable  and whether or not reduced to practice  (including
ideas,   research  and  development,   know-how,   formulas,   compositions  and
manufacturing and production processes and techniques,  technical data, designs,
drawings,  specifications,   customer  and  supplier  lists,  pricing  and  cost
information and business and marketing  plans and  proposals),  (g) all computer
software (including data and related  documentation),  (h) all other proprietary
rights,  (i) all copies and tangible  embodiments  thereof (in whatever  form or
medium) and (j) all licenses and agreements in connection therewith.

               "IRS" is defined in Section 4.12(c).

               "Junior  Preferred  Stock"  means 7,000  shares of the  Company's
Junior Preferred Stock issued on the date hereof to certain  stockholders of the
Company.

               "Knowledge Group"  means each of Timothy Beffa, Gary Weller, Eric
Fencl, Esq., Paul Wood and Timothy Hurd.

               "Legal  Holiday"  means a  Saturday,  a Sunday  or a day on which
banking  institutions  in The  City of New  York or at a place  of  payment  are
authorized by law, regulation or executive order to remain closed.

               "License" is defined in Section 4.24.

               "Lien"  means,  with respect to any asset,  any  mortgage,  lien,
pledge, charge,  security interest or encumbrance of any kind in respect of such
asset,  whether or not filed,  recorded or otherwise  perfected under Applicable
Law (including any  conditional  sale or other title  retention  agreement,  any
lease in the nature  thereof,  any option or other  agreement  to sell or give a
security  interest  in and any  filing  of or  agreement  to give any  financing
statement  under the Uniform  Commercial  Code (or  equivalent  statutes) of any
jurisdiction).

               "Mandatory Redemption Date" means the date that is the eight year
anniversary of the Closing Time.

               "Material  Adverse Effect" means a material adverse effect on (a)
the  business,  prospects,   operations,  results  of  operations  or  financial
condition of the Company and its Subsidiaries, taken as a whole, (b) the ability
of the  Company or any  Subsidiary  to perform any of its  material  obligations
under any of the Transaction Documents, or (c) the validity or enforceability of
any Transaction Document.

               "Non-Voting  Common Stock" means the Company's  Non-Voting Common
Stock, $.01 par value.

               "Obligations"  means any accrued and unpaid  dividends  and other
liabilities  payable by the Company under or in respect of this Agreement or the
Certificate of Designation.

               "Officer" means, with respect to any Person, the President, Chief
Executive Officer or the Chief Financial Officer of such Person.

               "Officer's  Certificate"  means,  with  respect to any Person,  a
certificate signed by an Officer of such Person;  provided,  however, that every
Officer's  Certificate  with respect to compliance  with a covenant or condition
provided for in this  Agreement  shall include (i) a statement  that the Officer
making or giving such  Officer's  Certificate  has read such  condition  and any
definitions or other provisions contained in this Agreement relating thereto and
(ii) a statement as to whether, in the opinion of the signer, such condition has
been complied with.

               "outstanding"  means,  when  used  with  respect  to  the  Senior
Preferred Stock as of the date of determination,  all shares of Senior Preferred
Stock   theretofore   executed  and  delivered  under  this  Agreement  and  the
Certificate of Designation, except:

               (i)    shares theretofore canceled by the Company or delivered to
the Company for cancellation;

              (ii) shares for whose payment or redemption money in the necessary
        amount has been  theretofore set aside by the Company with a third party
        in trust for the holders of such  shares;  provided  that if such shares
        are to be  redeemed,  notice of such  redemption  has been duly given as
        provided in this Agreement; and

             (iii)  shares  which have been paid  pursuant to Section 7.07 or in
        exchange  for or in lieu of which other  shares have been  executed  and
        delivered  pursuant  to this  Agreement,  other than any such  shares in
        respect of which there shall have been  presented  to the Company  proof
        satisfactory to it that such shares are held by a bona fide purchaser in
        whose hands such shares are valid obligations of the Company;

provided,  however,  that in  determining  whether the Holders of the  requisite
number of the  outstanding  shares  of Senior  Preferred  Stock  have  given any
request, demand, authorization,  direction, notice, consent or waiver hereunder,
shares of Senior  Preferred Stock owned by the Company or any other obligor upon
the Senior  Preferred  Stock or any  Affiliate  of the  Company or of such other
obligor shall be disregarded and deemed not to be outstanding.  Shares of Senior
Preferred  Stock so owned which have been  pledged in good faith may be regarded
as outstanding if the pledgee  establishes to the  satisfaction  of the Required
Holders the  pledgee's  right so to act with respect to such shares and that the
pledgee is not the Company or any other obligor upon the shares or any Affiliate
of the Company or of such other obligor.

               "Permitted  Business"  means the  business of the Company and its
Subsidiaries as of the Closing Time and any other business  reasonably  related,
ancillary or complementary thereto.

               "Person" means any individual, corporation,  partnership, limited
liability  company,  joint venture,  association,  joint-stock  company,  trust,
unincorporated organization or government or any agency or political subdivision
thereof.

               "PORTAL Market" is defined in Section 6.06.

               "Preferred  Stock"  means,  with  respect to any Person,  Capital
Stock of any class or  classes  (however  designated)  of such  Person  which is
preferred  as to  the  payment  of  dividends  or  distributions,  or as to  the
distribution  of  assets  upon  any  voluntary  or  involuntary  liquidation  or
dissolution  of such  Person,  over  Capital  Stock of any  other  class of such
Person.  With respect to the Company,  the term "Preferred  Stock" shall include
the Senior Preferred Stock.

               "Preferred Stock Registration Rights Agreement" is defined in the
fourth recital to this Agreement.

               "Private  Offering" is any offering by any of the  Purchasers  of
some  or  all  of  the  Securities  that  are  Registrable   Securities  without
registration under the Securities Act.

               "property"  means any  interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.

               "Purchase Price" is defined in Section 2.02.

               "Purchaser Indemnified Person" is defined in Section 9.02(a).

               "Purchasers" is defined in the preamble to this Agreement.

               "Qualified  Institutional  Buyer"  means  any  Person  that  is a
"qualified institutional buyer" within the meaning of Rule 144A.

               "Recapitalization"  is  defined  in the  second  recital  to this
Agreement.

               "Recapitalization  Agreement" is defined in the second recital to
this Agreement.

               "Recapitalization Documents" means the Recapitalization Agreement
and any other related documents delivered in connection therewith.

               "Redeemable  Capital  Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is  exchangeable),  or  upon  the  happening  of  any  event,  matures  or is
mandatorily  redeemable,  pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the date that is 91 days after the Stated  Maturity  of the Senior  Preferred
Stock.

               "Redemption  Date" means,  when used with respect to any share of
Senior Preferred Stock to be redeemed,  the date fixed for such redemption by or
pursuant to this Agreement or the Certificate of Designation.

               "Redemption Price", when used with respect to any share of Senior
Preferred  Stock to be  redeemed,  means the price at which it is to be redeemed
pursuant to this Agreement or the Certificate of Designation.

               "Registrable  Securities"  means  the  Securities  and any  other
securities  issued  or  issuable  in  exchange  for  the  Securities.  As to any
particular Registrable Securities, once issued such securities shall cease to be
Registrable  Securities  when (a) a  registration  statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement,  (b) they shall have been  distributed to the public pursuant to Rule
144, (c) they shall have been otherwise  transferred,  new certificates for them
not bearing a legend  restricting  further transfer shall have been delivered by
the Company and subsequent disposition of them shall not require registration or
qualification  of them under the  Securities  Act or any similar  Applicable Law
then in force, or (d) they shall have ceased to be outstanding.

               "Regulation  S" means  Regulation S under the  Securities Act (or
any successor provision), as it may be amended from time to time.

               "Release" is defined in Section 4.17.

               "Reorganization" means the Company's corporate  reorganization of
its Subsidiaries as described in the  Recapitalization  Agreement (including the
schedules thereto).

               "Required  Holders"  means  holders  of  more  than  50%  of  the
outstanding shares of Senior Preferred Stock.

               "Resale Materials" is defined in Section 6.02(c).

               "Returns" is defined in Section 4.11(a).

               "Rule  144"  means  Rule 144  under  the  Securities  Act (or any
successor provision), as it may be amended from time to time.

               "Rule  144A"  means  Rule 144A under the  Securities  Act (or any
successor provision), as it may be amended from time to time.

               "Securities" is defined in the first recital to this Agreement.

               "Securities Act" mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder.

               "Security Register" has the meaning given to such term in Section
7.04(a).

               "Senior  Preferred Stock" is defined in the first recital to this
Agreement.

               "Senior  Subordinated  Notes"  means  the  Company's  11%  Senior
Subordinated Notes due 2006.

               "Significant  Holder" means (a) any Purchaser that, together with
its Affiliates, holds at least 20% of the outstanding shares of Senior Preferred
Stock and (b) Ares Leveraged  Investment Fund,  L.P., Ares Leveraged  Investment
Fund II, L.P. and any of their  respective  Affiliates  so long as such entities
described  in  this  clause  (b)  hold  in the  aggregate  at  least  15% of the
outstanding shares of Senior Preferred Stock.

               "Solvent" means, with respect to any Person as of the date of any
determination,  that on such  date (a) such  Person is able to pay its debts and
other liabilities,  contingent  obligations and other commitments as they mature
in the normal  course of business,  (b) such Person does not intend to, and does
not believe  that it will,  incur  debts or  liabilities  beyond  such  Person's
ability to pay as such debts and  liabilities  mature and (c) such Person is not
engaged in a business or a transaction, and is not about to engage in a business
or a transaction, for which such Person's property would constitute unreasonably
small capital after giving due  consideration to current and anticipated  future
capital requirements and current and anticipated future business conduct and the
prevailing  practice  in the  industry  in which  such  Person  is  engaged.  In
computing the amount of contingent  liabilities  at any time,  such  liabilities
shall be computed as the amount which,  in light of the facts and  circumstances
existing at such time,  represents the amount that can reasonably be expected to
become an actual or matured liability.

               "Stated  Maturity"  means (a) with respect to any share of Senior
Preferred Stock, the Mandatory Redemption Date, (b) with respect to any dividend
on the  Senior  Preferred  Stock,  the dates  specified  in the  Certificate  of
Designation  as the fixed date on which such dividend is due and payable and (c)
with respect to any other  Indebtedness,  the date  specified in the  instrument
governing  such  Indebtedness  as the fixed date on which the  principal of such
Indebtedness or any installment of interest is due and payable.

               "Stockholders  Agreement" has the meaning  specified in the sixth
recital to this Agreement.

               "Subsequent Purchaser" is defined in Section 4.13(a).

               "Subsidiary"   means,  with  respect  to  any  Person,   (a)  any
corporation  of which the  outstanding  shares of Voting Stock having at least a
majority of the votes entitled to be cast in the election of directors  shall at
the time be owned, directly or indirectly,  by such Person, (b) any partnership,
limited liability company,  association,  joint venture or other entity in which
such Person and/or one or more of its  Subsidiaries  have at least a majority of
the shares of Voting Stock of such entity at the time or (c) any partnership (i)
the sole general partner or the managing general partner of which is such Person
or a Subsidiary  of such Person or (ii) the only  general  partners of which are
such  Person or one or more  Subsidiaries  of such  Person  (or any  combination
thereof).

               "Tax" is defined in Section 4.11(a).

               "Transaction Documents" means, collectively,  this Agreement, the
Certificate   of   Designation,   the  Amended  and  Restated   Certificate   of
Incorporation,  the Common Stock  Registration  Rights Agreement,  the Preferred
Stock  Registration  Rights Agreement,  the Stockholders  Agreement,  the Senior
Preferred Stock, the Common Stock issued hereunder,  the Credit  Agreement,  the
Recapitalization  Documents  and all  certificates,  instruments,  financial and
other  statements and other  documents made or delivered in connection  herewith
and therewith.

               "Transactions" means, collectively, the transactions provided for
in,  or  contemplated  by,  the  Transaction   Documents   (including,   without
limitation, the Recapitalization).

               "United  States" shall have the meaning  assigned to such term in
Regulation S.

               "Units" is defined in the first recital to this Agreement.

               "Voting Rights Triggering Event" is defined in the Certificate of
Designation.

               "Voting  Stock"  means  any class or  classes  of  Capital  Stock
pursuant  to which the  holders  thereof  have the  general  voting  power under
ordinary  circumstances  to elect at least a majority of the board of directors,
managers or trustees of any Person (irrespective of whether or not, at the time,
stock of any other class or classes shall have,  or might have,  voting power by
reason  of the  happening  of any  contingency);  provided  that  the  Company's
Preferred Stock will be considered  Voting Stock to the extent, at any time, the
voting rights therein entitle the holders thereof to designate a director.

               1.02.  Computation of Time Periods.  For purposes of  computation
of periods of time hereunder, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."

               1.03.  Accounting Terms.  Accounting terms used but not otherwise
defined  herein  shall  have the  meanings  provided  in,  and be  construed  in
accordance with, GAAP.

                                    SECTION 2

                        AUTHORIZATION, ISSUANCE and sale OF SECURITIES

               2.01.  Authorization  of Issue.  The Company has  authorized  the
issue and sale of (i) 25,000 shares of Class A Senior Preferred Stock and 75,000
shares of Class B Senior  Preferred  Stock,  each with terms as set forth in the
Certificate of Designation, and (ii) 596,913.07 shares of Common Stock.

               2.02.  Sale. On the basis of the  representations  and warranties
herein  contained and subject to the terms and conditions  herein set forth, the
Company agrees to sell to each Purchaser,  and each Purchaser,  acting severally
and not jointly,  agrees to purchase from the Company,  the aggregate  number of
shares of Class A Senior  Preferred Stock or Class B Senior  Preferred Stock, as
applicable,  and the aggregate  number of shares of Common Stock,  in each case,
set forth on Schedule A opposite the name of such  Purchaser at a purchase price
(the "Purchase Price") of $1,000 for each Unit consisting of one share of either
Class A Senior Preferred Stock or Class B Senior Preferred Stock, as applicable,
and 5.9691307 shares of Common Stock.

               2.03.  Closing.  The purchase and sale of Securities  pursuant to
this  Agreement  shall occur at the offices of White & Case LLP,  1155 Avenue of
the Americas,  New York, New York 10005-1702,  at 9:00 a.m., New York City time,
on  December  10,  1999,  or such  other  time as  shall be  agreed  upon by the
Purchasers  and the Company  (such time and date of payment and  delivery  being
herein called the "Closing Time"). At the Closing Time, the Company will deliver
to each  Purchaser  certificates  for the  Securities  to be  purchased  by such
Purchaser at the Closing  Time,  in such  denominations  as such  Purchaser  may
request  (but with  respect to the Senior  Preferred  Stock,  in  increments  of
$1,000), dated the Closing Time and registered in such Purchaser's name, against
payment  by such  Purchaser  to the  Company  by wire  transfer  of  immediately
available funds in the amount of the Purchase Price to be paid by such Purchaser
therefor to such bank  account or accounts as the Company may request in writing
at least two Business Days prior to the Closing Time.

               2.04. Allocation of Purchase Price.  For all income tax purposes,
the Company and the Purchasers  agree that the Purchase Price for each Unit paid
by each  Purchaser  shall be  allocable  as follows:  $776.3367 to each share of
Senior Preferred Stock and $37.47 to each share of Common Stock.

                                    SECTION 3

                              CONDITIONS TO CLOSING

               3A.  Conditions to Obligation  of Each  Purchaser to Close.  Each
Purchaser's  several  obligation  to purchase and pay for the  Securities  to be
purchased by it at the Closing Time is subject to the  satisfaction or waiver by
each  Purchaser  prior  to or at the  Closing  Time of  each  of the  conditions
specified below in this Section 3A:

               3.01A.    Representations    and   Warranties.    Each   of   the
representations  and  warranties of the Company in this Agreement and in each of
the  other  Transaction  Documents  shall be true and  correct  in all  material
respects when made and at and as of the Closing Time as if made on and as of the
Closing Time (unless  expressly  stated to relate to a specific earlier date, in
which case such  representations and warranties shall be true and correct in all
material respects as of such earlier date and, in any such case, there shall not
have  occurred  since such date and prior to the Closing  Time any  developments
with respect to the subject matter of any such representation and warranty which
would have a Material  Adverse  Effect as determined by the  Purchasers in their
reasonable judgment);  provided,  that any representations and warranties of the
Company in this Agreement or any of the other  Transaction  Documents  which are
qualified as to  "materiality"  or "Material  Adverse  Effect" shall be true and
correct in all respects.

               3.02A.  Performance;  No  Default  Under  Other  Agreements.  The
Company  shall have  performed  and complied in all  material  respects (or such
performance  or  compliance  shall have been  waived)  with all  agreements  and
conditions  contained  in  this  Agreement  and  each of the  other  Transaction
Documents  required to be  performed  or complied  with by it prior to or at the
Closing Time (including,  without  limitation,  obtaining the requisite consents
and/or waivers from holders of Senior  Subordinated  Notes or  repurchasing  the
Senior  Subordinated  Notes  pursuant to a change of control offer in accordance
with the  indenture  governing the Senior  Subordinated  Notes) and after giving
effect to the issue and sale of the Securities and the other  Transactions  (and
the  application  of the proceeds  thereof as  contemplated  by the  Transaction
Documents),  no Voting  Rights  Triggering  Event  shall  have  occurred  and be
continuing  and no  default  or event of  default  shall  have  occurred  and be
continuing under any of the other Transaction Documents.

               3.03A.  Compliance Certificates.

               (a) Officer's  Certificate.  The Company shall have  delivered to
the Purchasers an Officer's Certificate,  dated the Closing Time, in the form of
Exhibit D hereto,  certifying  that the conditions  specified in Sections 3.01A,
3.02A, 3.05A, 3.06A, 3.07A, 3.09A, 3.10A and 3.11A have been fulfilled (it being
understood  that the Company does not have to certify as to any matter set forth
in any section to the extent that the determination thereof is to be made by the
Purchasers).

               (b) Secretary's Certificate.  The Company shall have delivered to
the  Purchasers  a  certificate  substantially  in the form of  Exhibit E hereto
certifying as to the  Company's  certificate  of  incorporation  (including  the
Certificate  of  Designation),  bylaws and  resolutions  attached  thereto,  the
incumbency and signatures of certain  officers of the Company,  other  corporate
proceedings of the Company relating to the authorization, execution and delivery
of the Securities,  this Agreement,  the Certificate of Designation,  the Common
Stock Registration  Rights Agreement,  the Preferred Stock  Registration  Rights
Agreement  and the other  Transaction  Documents  to the extent the Company is a
party  thereto  and as to the  good  standing  of the  Company  in the  State of
Delaware  and in each other  jurisdiction  in which the Company is  qualified to
transact business.

               3.04A.  Opinions of Counsel.  Such Purchaser  shall have received
favorable  opinions in form and substance  satisfactory to it, dated the Closing
Time,  from (i) various  counsel for the Company,  which  collectively  shall be
substantially  in the form set forth in Exhibit F-1 and as to such other matters
as such Purchaser may reasonably request, (ii) Cahill Gordon & Reindel,  certain
of the  Purchasers'  special  counsel  in  connection  with  such  transactions,
substantially  in the form set forth in  Exhibit  F-2,  and (iii)  each  counsel
delivering an opinion in connection  with the  Recapitalization,  a copy of each
such  legal  opinion,  accompanied  by a letter  from  each such  counsel  (or a
statement  included in such opinion)  authorizing the Purchasers to rely on such
opinion.

               3.05A.  Recapitalization.  The  transactions  contemplated by the
Recapitalization  Documents  shall have been  consummated in accordance with the
Recapitalization  Documents.  Any  amendments  or  waivers  with  respect to the
Recapitalization  Documents  shall be reasonably  satisfactory to the Purchasers
and their  respective  special  counsel.  The Company shall have (i) received at
least $199.5 million as an equity  contribution  from the Equity Investor or its
designees,  (ii) received at least $17.0 million as an equity  contribution from
the Company's  management and certain  stockholders in the form of a rollover of
existing equity interests,  (iii) received at least $400.0 million of term loans
and a revolving credit facility of $75.0 million (of which only $4.0 million may
be drawn at the Closing Time) under the Credit  Agreement and (iv) completed the
consent  solicitation  with  respect to, or  refinanced,  $100.0  million of the
Company's Senior Subordinated Notes. After giving effect to the Recapitalization
and the  financing  thereof,  the  Company  shall  have no more  than  $583.8 of
outstanding  Indebtedness and the Company's only outstanding  Capital Stock will
be (a)  5,956,712.25  million  shares of Common  Stock,  including  4,843,239.78
shares issued to the Equity  Investor and its designees  and  596,913.07  shares
issued to the Purchasers  pursuant to this  Agreement,  (b) 480,321.3  shares of
Non-Voting Common Stock, (c) 25,000 shares of Class A Senior Preferred Stock and
75,000 shares of Class B Senior  Preferred Stock in the aggregate  issued to the
Purchasers,  (d) 7,000  shares  of Junior  Preferred  Stock and (e)  options  to
purchase 440,425 shares of Common Stock issued to management of the Company.

               3.06A.  No Adverse Events.  Since the Audit Date, there  has been
no material adverse change in the business,  prospects,  operations,  results of
operations, or financial condition of the Company and its Subsidiaries, taken as
a whole.
               3.07A. Financial Information. The Company shall have delivered to
such  Purchaser a pro forma  consolidated  balance sheet for the Company and its
Subsidiaries  as of the Closing  Time after giving  effect to the  Transactions,
including the issuance of the Senior Preferred Stock and the use of the proceeds
from the  issuance  of the  Securities,  which has been  certified  by the Chief
Financial Officer of the Company and which is in form and substance satisfactory
to such Purchaser.

               3.08A.   Proceedings  and  Documents.  All  corporate  and  other
proceedings  in  connection  with the  Transactions  and the other  transactions
contemplated  by this  Agreement and the other  Transaction  Documents,  and all
documents and instruments  incident to such  transactions and the terms thereof,
shall be reasonably  satisfactory to such Purchaser and such Purchaser's special
counsel,  and such  Purchaser  and the  Purchaser's  special  counsel shall have
received  all  counterpart  originals  or  certified  or other copies of all the
Transaction  Documents  and  all  documents  and  instruments  incident  to  all
corporate  and  other   proceedings  or  transactions  in  connection  with  the
Transactions as it or they may reasonably request. The Company shall have agreed
in writing that all fees owing as of the Closing Time pursuant to this Agreement
and the transactions contemplated hereby shall be paid in full to each Purchaser
within two Business Days following the Closing Time..

               3.09A.  Purchase Permitted by Applicable Law, etc. At the Closing
Time, such Purchaser's  purchase of the Securities shall (a) be permitted by the
laws and  regulations  of each  jurisdiction  to which  it is  subject,  (b) not
violate any Applicable Law (including, without limitation,  Regulation U, T or X
of the Board of  Governors  of the Federal  Reserve  System) and (c) not subject
such  Purchaser  to any tax,  penalty  or  liability  under or  pursuant  to any
Applicable Law.

               3.10A.  Transaction Documents in Force and  Effect;  Information;
Certificate of Designation.

               (a)  Transaction  Documents.  The Company shall have delivered to
such Purchaser true and correct copies of all Transaction Documents and (i) such
documents (A) shall have been duly executed and delivered by the Company and its
Subsidiaries  party  thereto,  (B)  shall  be in form and  substance  reasonably
satisfactory  to such  Purchaser and its special  counsel and (C) shall be valid
and legally  binding  obligations  of the Company and its  Subsidiaries  a party
thereto  enforceable  against each of them in accordance  with their  respective
terms, subject to the Enforceability  Exceptions, and (ii) there shall have been
no material amendments,  alterations,  modifications or waivers of any provision
thereof since the date of this Agreement.

               (b) Accuracy of  Information.  All  information  furnished by the
Company and its  representatives  to such  Purchaser  on or prior to the Closing
Time with respect to the business, management, prospects, operations, results of
operations  or  condition  (financial  or  otherwise)  of the  Company  and  its
Subsidiaries, as the case may be, shall be accurate and complete in all material
respects.

               (c) Filing of Amended and Restated  Certificate of  Incorporation
and Certificate of Designation. Each of (i) the Amended and Restated Certificate
of  Incorporation  and (ii) the Certificate of Designation  shall have been duly
and validly approved by all necessary  corporate  action,  shall have been filed
with the Secretary of State of Delaware and shall have become effective.

               3.11A.  No    Violation;    No    Legal  Constraints;   Consents,
Authorizations and Filings, etc.

               (a) The  consummation by the Company and its  Subsidiaries of the
Transactions shall not contravene, violate or conflict with any Applicable Law.

               (b) All consents, authorizations and filings, if any, required in
connection  with the execution,  delivery and performance by the Company and its
Subsidiaries  of the  Transaction  Documents  to which they are party shall have
been obtained or made and shall be in full force and effect,  and such Purchaser
shall have been furnished with  appropriate  evidence  thereof,  and all waiting
periods shall have lapsed without  extension or the imposition of any conditions
or restrictions,  except,  in the case of the Common Stock  Registration  Rights
Agreement,   the  Preferred  Stock   Registration   Rights   Agreement  and  the
Stockholders Agreement, for such consents,  authorizations and filings which are
required under federal or state securities laws.

               (c) There shall be no  inquiry,  injunction,  restraining  order,
action,  suit or proceeding  pending or entered or any statute or rule proposed,
enacted or promulgated by any Governmental  Authority or any other Person which,
in the opinion of the Purchasers,  (i) individually or in the aggregate, has had
or would reasonably be expected to have a Material Adverse Effect or which seeks
to  enjoin  or  seek  damages  against  the  Company  or any  of  the  Company's
Subsidiaries or any of the Purchasers as a result of the Transactions, including
the  issuance  of  the  Senior  Preferred  Stock,  (ii)  relates  to  any of the
Transactions  and has or will have a material  adverse  effect on any Purchaser,
(iii) alleges  liability on the part of any  Purchaser in  connection  with this
Agreement,  any other  Transaction  Document or the  Transactions  or any of the
other transactions contemplated hereby or thereby or (iv) would bar the issuance
of the  Securities  or the use of the proceeds  thereof in  accordance  with the
terms of this Agreement and the other Transaction Documents.

               3.12A. Credit Agreement.  Such Purchaser shall have been provided
with true and correct  copies of the executed  Credit  Agreement and any related
documents,  and  such  Credit  Agreement  shall  contain  terms  and  conditions
satisfactory to such Purchaser in its sole judgment.  The financial institutions
party to the Credit  Agreement  shall  have  irrevocably  committed  to fund the
Recapitalization simultaneously with the funding of such Purchaser's payment for
the sale of the Securities.

               3.13A.  Fees and Expenses of the  Recapitalization.  The fees and
expenses incurred in connection with the  Recapitalization  (including,  without
limitation,  the  related  financings)  shall not  exceed  $48.0  million in the
aggregate.

               3.14A.  Solvency Certificate.  Such Purchaser shall have received
a certificate  from the Company's Chief Financial  Officer  satisfactory to such
Purchaser that shall certify that the Company and its  Subsidiaries  (other than
Pay Tech, Inc.),  immediately after giving effect to the Recapitalization,  will
be Solvent.
               3.15A.  Litigation.  No  litigation  by  any  entity  (private or
governmental)   shall  be   pending   or   threatened   with   respect   to  the
Recapitalization  which the Purchasers shall  reasonably  determine could have a
Material Adverse Effect.

               3.16A.  Disbursement  Instructions.  Such  Purchaser  shall  have
received written  instructions from the Company to such Purchaser  directing the
payment of any  proceeds  of the  Securities  that are to be paid at the Closing
Time.
               3.17A.  Junior  Preferred  Stock.  Such Purchaser shall have been
provided with true and correct  copies of the documents  governing the Company's
Junior Preferred Stock, which shall contain terms and conditions satisfactory to
such Purchaser in its sole judgment.

               3B.  Conditions   to   Obligation  of  the Company to Close.  The
obligation of the Company to consummate the  transactions  to be performed by it
at the Closing Time is subject to the following conditions:

               3.01B.    Representations    and   Warranties.    Each   of   the
representations and warranties of the Purchasers in this Agreement shall be true
and correct in all material respects when made and at and as of the Closing Time
as if made on and as of the Closing Time (unless expressly stated to relate to a
specific earlier date, in which case such  representations  and warranties shall
be true and correct in all material respects as of such earlier date).

               3.02B.  Compliance with Covenants.  The   Purchasers  shall  have
performed  and complied  with all of their  covenants  hereunder in all material
respects through the Closing Time.

               3.03B.  Litigation.  No  litigation   by  any  entity (private or
governmental)   shall  be   pending   or   threatened   with   respect   to  the
Recapitalization or which could prevent consummation of any of the Transactions.

               3.04B.  Documentation.  All actions to be taken by the Purchasers
in connection with consummation of the transactions  contemplated hereby and all
certificates,  opinions,  instruments and other documents required to effect the
transactions  contemplated  hereby will be satisfactory in form and substance to
the Company.

                                    SECTION 4

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

               The Company  represents and warrants to each of the Purchasers as
of the date hereof and as of the Closing Time that:

               4.01. Due Incorporation; Power and Authority. Each of the Company
and the Company's  Subsidiaries  (a) is duly organized,  validly existing and in
good standing under the laws of its  jurisdiction of  organization,  (b) is duly
qualified  or  licensed  to  do  business  and  is  in  good  standing  in  each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification  necessary,  other than
any failures to so qualify,  to be so licensed or to be in good standing  which,
individually  or in the  aggregate,  have not had and would not have a  Material
Adverse  Effect,  (c) has all requisite  power and  authority to own,  lease and
operate its  properties  and to carry on its  businesses  as they are  currently
conducted,  and (d) has all  requisite  power and  authority  to enter  into and
perform its obligations under each of the Transaction Documents to which it is a
party.

               4.02. Capitalization. As of the Closing Time, after giving effect
to the Transactions, the authorized Capital Stock of the Company consists solely
of (a) 15.0 million shares of its Common Stock,  of which  5,956,712.25  million
are issued and  outstanding,  (b) 2.0 million  shares of its  Non-Voting  Common
Stock, of which 480,321.3 shares are issued and outstanding,  (c) 250,000 shares
of  Preferred  Stock,  no par  value,  of which  (i)  50,000  shares  have  been
designated  as the Class A Senior  Preferred  Stock,  of which 25,000 shares are
issued and outstanding,  (ii) 150,000 shares have been designated as the Class B
Senior  Preferred  Stock,  of which 75,000 shares are issued and outstanding and
(iii) 50,000 shares have been designated as the Junior Preferred Stock, of which
7,000 shares are issued and  outstanding.  No shares of any class of the Capital
Stock of the Company are held by the Company in its treasury or by the Company's
Subsidiaries.  All the issued and outstanding  shares of Common Stock (including
all  shares of Common  Stock to be  issued  upon the  exercise  of  warrants  or
options)  have been  duly  authorized  and are (or in the case of  Common  Stock
issued upon exercise of warrants or options, will be) validly issued, fully paid
and  nonassessable  and are (or in the case of Common Stock issued upon exercise
of warrants or options,  will be) free of preemptive rights. Except as set forth
in the first sentence of this Section 4.02 or on Schedule 4.02, (i) there are no
shares of Capital Stock of the Company  authorized,  issued or  outstanding  and
(ii) there are not as of the date  hereof,  and at the Closing Time after giving
effect to the  Transactions  there will not be, any  outstanding  or  authorized
options, warrants, rights (including preemptive rights),  subscriptions,  claims
of  any  character,   agreements,   obligations,   convertible  or  exchangeable
securities,  or other commitments,  contingent or otherwise,  relating to Common
Stock or any other shares of Capital Stock of the Company, pursuant to which the
Company is or may become  obligated to issue shares of Common  Stock,  any other
shares of its Capital Stock or any  securities  convertible  into,  exchangeable
for, or evidencing  the right to subscribe  for, any shares of the Capital Stock
of the Company. Except as set forth on Schedule 4.02, there are no voting trusts
or other  agreements  or  understandings  to  which  the  Company  or any of its
Subsidiaries  is a party with  respect to the  holding,  voting or  disposing of
Capital Stock of the Company or any of its Subsidiaries.  Except as set forth on
Schedule  4.02,  neither  the  Company  nor  any of  its  Subsidiaries  has  any
outstanding  bonds,  debentures,  notes or other obligations or other securities
that entitle the holders thereof to vote with the stockholders of the Company or
any of  its  Subsidiaries  on any  matter  or  which  are  convertible  into  or
exercisable for securities having such a right to vote.

               4.03.  Subsidiaries.  Schedule  4.03  lists all of the  Company's
Subsidiaries.  Except  as set forth on  Schedule  4.03,  all of the  outstanding
shares of Capital  Stock of each of the  Company's  Subsidiaries  have been duly
authorized and validly issued,  are fully paid and  nonassessable and are owned,
of  record  and  beneficially,  by the  Company,  free and  clear of all  liens,
encumbrances,  options or claims whatsoever,  except for liens, encumbrances and
claims created pursuant to the Credit Agreement. Except as set forth on Schedule
4.03,  no shares  of  Capital  Stock of any of the  Company's  Subsidiaries  are
reserved  for  issuance  and there are no  outstanding  or  authorized  options,
warrants,   rights,   subscriptions,   claims  of  any  character,   agreements,
obligations,  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 evidencing  the right to subscribe for, any shares of such
Subsidiary.  Except as set forth on Schedule  4.03,  the  Company  does not own,
directly or  indirectly,  any Capital  Stock in any Person or have any direct or
indirect equity or ownership  interest in any Person and neither the Company 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 Person.

               4.04.  Due Authorization, Execution and Delivery.

               (a) Agreement. This Agreement has been duly authorized,  executed
and  delivered  by the  Company  and  constitutes  a valid and  legally  binding
obligation of the Company,  enforceable  against the Company in accordance  with
its terms, subject to the Enforceability Exceptions.

               (b) Senior  Preferred  Stock;  Certificate  of  Designation.  The
shares of Senior  Preferred  Stock to be  purchased by the  Purchasers  from the
Company are governed by the terms of the Certificate of  Designation,  have been
duly  authorized  for issuance and sale  pursuant to this  Agreement  and,  when
issued and delivered by the Company at the Closing Time as provided herein, will
have been duly and validly executed,  issued and delivered by the Company,  will
be fully paid and nonassessable,  will not be subject to capital calls, will not
have been issued in violation of, and will not be subject to, any  preemptive or
similar rights, and will constitute valid and legally binding obligations of the
Company,  enforceable against it in accordance with their terms,  subject to the
Enforceability   Exceptions.  The  Certificate  of  Designation  has  been  duly
authorized,  executed  and  delivered  by the Company  and,  when filed with the
Secretary of State of the State of Delaware, will constitute a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to the Enforceability  Exceptions.  The certification of
incorporation of the Company, by virtue of the Certificate of Designation,  sets
forth the rights, preferences and priorities of the Senior Preferred Stock.

               (c) Common Stock Registration  Rights Agreement;  Preferred Stock
Registration  Rights  Agreement.  Each of the Common Stock  Registration  Rights
Agreement and the Preferred Stock  Registration  Rights  Agreement has been duly
authorized,  executed and  delivered by the Company and  constitutes a valid and
legally binding  obligation of the Company,  enforceable  against the Company in
accordance with its terms, subject to the Enforceability Exceptions.

               (d) Common  Stock.  The Company has  authorized  the issuance and
delivery of 596,913.07 shares of its Common Stock pursuant to this Agreement and
such shares of Common  Stock have been duly  authorized  for  issuance  and sale
pursuant to this  Agreement and, when issued and delivered by the Company at the
Closing  Time as  provided  herein,  will have been duly and  validly  executed,
issued and delivered by the Company, will be fully paid and nonassessable,  will
not be subject to capital  calls,  will not have been issued in violation of and
will not be subject to any preemptive or similar rights, and at the Closing Time
will constitute 8.67% of the shares of Common Stock and Non-Voting  Common Stock
of the Company  (determined  on a fully  diluted  basis as of the Closing  Time,
after giving effect to the Transactions and without giving effect to claims with
respect to the Company's Common Stock described in item two (2) of Schedule 4.08
hereto), such shares having the rights, restrictions, privileges and preferences
set forth in the  Amended  and  Restated  Certificate  of  Incorporation  of the
Company,  and Holders of such shares of Common Stock and Non-Voting Common Stock
will have the  benefit  of and be  subject  to the terms and  conditions  of the
Stockholders  Agreement.  A detailed  calculation of the fully diluted shares of
Common Stock and Non-Voting Common Stock of the Company,  after giving effect to
the Transactions, is set forth on Schedule 4.04.

               (e) Stockholders  Agreement.  The Stockholders Agreement has been
duly  authorized,  executed and delivered by the Company and constitutes a valid
and legally binding obligation of the Company,  enforceable  against the Company
in accordance with its terms, subject to the Enforceability Exceptions.

               (f) Other Transaction Documents. Each Transaction Document (other
than those  referred to in paragraphs  (a) through (e) of this Section 4.04) (i)
has been duly authorized, executed and delivered by the Company, to the extent a
party thereto,  and (ii)  constitutes a valid and legally binding  obligation of
the Company,  to the extent a party thereto,  enforceable against the Company in
accordance with its terms, subject to the Enforceability Exceptions.

               4.05.  Noncontravention;  Authorizations and Approvals.  Assuming
the filings required under the Hart-Scott-Rodino  Antitrust  Improvements Act of
1976, as amended, are made and the waiting period thereunder has been terminated
or has  expired  (a) the  execution  and  delivery  by the Company or any of the
Company's  Subsidiaries  of any of the  Transaction  Documents  to which it is a
party,  (b)  the  performance  by any of them of  their  respective  obligations
thereunder, (c) the consummation of the transactions contemplated thereby or (d)
the issuance and delivery of the Securities  hereunder will not: (i) violate any
provision of the certificate of  incorporation  or by-laws of the Company or the
comparable  governing  documents  of any of its  Subsidiaries;  (ii) violate any
statute,  ordinance,  rule,  regulation,  order or  decree  of any  Governmental
Authority  applicable to the Company or any of its  Subsidiaries or by which any
of their respective  properties or assets may be bound; (iii) require any filing
with,  or  permit,  consent or  approval  of, or the giving of any notice to, or
obtaining any new or additional  licenses from any Governmental  Authority;  and
(iv) except as set forth on Schedule  4.05,  result in a violation or breach of,
conflict with,  constitute (with or without due notice or lapse of time or both)
a  material  default  (or give rise to any right of  termination,  cancellation,
payment or acceleration)  under, or result in the creation of any lien, security
interest,  charge or  encumbrance  upon any of the  properties  or assets of the
Company  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  Company  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 (iii) and (iv) above,  such as would not have a Material Adverse
Effect,   and  would  not  prevent  or  materially  delay  consummation  of  the
Transactions.  No violation of any provision of the certificate of incorporation
or by-laws of the Company or the  comparable  governing  documents of any of its
Subsidiaries exists as a result of the Reorganization.

               4.06. Company Financial Statements.  The Company has delivered to
each Purchaser the following financial  statements  (collectively,  the "Company
Financial  Statements"):  (i)  complete and correct  copies of the  consolidated
balance sheets of the Company and its  Subsidiaries  as of December 31, 1998 and
1997 and the related consolidated statements of operations, stockholders' equity
and cash flows for the years then ended,  including  the footnotes  thereto,  in
each case audited by Deloitte & Touche LLP, (ii) complete and correct  copies of
the unaudited consolidated balance sheets of the Company and its Subsidiaries as
of September  30, 1999 and  September 30, 1998 and as of March 31, 1999 and June
30,  1999 and the  related  unaudited  consolidated  statements  of  operations,
stockholders'  equity and cash flows for such quarters,  and, in the case of the
quarters ending September 30, 1999 and September 30, 1998, each of the months in
such quarters,  respectively,  then ended,  (iii) complete and correct copies of
the  unaudited  consolidated  pro forma  balance  sheet of the  Company  and its
Subsidiaries as of September 30, 1999, and the unaudited pro forma  consolidated
statements of operations  for the nine months ended  September 30, 1999 and (iv)
complete  and  correct  copies  of  unaudited   consolidated  monthly  financial
statements  for each of the months from July through  October 1999, in each case
showing  a  comparison  of  such  financial  statements  to the  budget  for the
applicable  month.  Each of the  consolidated  balance  sheets  contained in the
Company  Financial  Statements  fairly  presents in all  material  respects  the
consolidated  financial  position of the Company and its  Subsidiaries as of its
date and each of the consolidated statements of operations, stockholders' equity
and cash flows included in the Company  Financial  Statements fairly presents in
all  material  respects  the  consolidated  results of  operations  and  income,
retained earnings and stockholders' equity or cash flows, as the case may be, of
the Company and its  Subsidiaries for the periods to which they relate (subject,
in the case of any unaudited  interim financial  statements,  to normal year-end
adjustments  that will not be  material  in amount or  effect),  in each case in
accordance with GAAP. The pro forma financial  statements of the Company and its
Subsidiaries contained in the Company Financial Statements fairly present in all
material  respects the  consolidated  financial  position of the Company and its
Subsidiaries  as of the date and for the periods to which they  relate,  in each
case after giving effect to the  Transactions,  have been prepared in accordance
with the  Commission's  rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described  therein,  and
the  assumptions  used  in  the  preparation  thereof  are  reasonable  and  the
adjustments used therein are appropriate to give effect to the Transactions. All
projections  provided  by or on  behalf  of the  Company  to the  Purchasers  in
connection  with the  Transactions  have been  prepared  in good faith  based on
assumptions believed by management of the Company to be reasonable.

               4.07.  Absence of Undisclosed Liabilities or Events.

               (a) Except as set forth in Schedule 4.07(a),  neither the Company
nor  any  of  its  Subsidiaries   has  any  material   claims,   liabilities  or
indebtedness,  contingent  or  otherwise,  required  to  be  set  forth  on  its
consolidated  balance sheet in accordance with GAAP,  except as set forth in the
consolidated  balance  sheet as of the Audit Date or as  included in the Company
Financial  Statements and except for liabilities incurred subsequent to any such
date in the ordinary course of business.

               (b) Except as set forth in Schedule 4.07(b), since the Audit Date
there has been no Material Adverse Effect.

               (c) The information,  reports, financial statements, exhibits and
schedules  furnished  in writing  by or on behalf of the  Company to each of the
Purchasers in connection with the  negotiation,  preparation or delivery of this
Agreement and the other  Transaction  Documents or included herein or therein or
delivered  pursuant hereto or thereto,  when taken as a whole do not contain any
untrue  statement of material fact or omit to state any material fact  necessary
to make the statements herein or therein not misleading.

               4.08. No Actions or Proceedings.  Except as set forth in Schedule
4.08, there is no action, suit, condemnation,  expropriation or other proceeding
at  law or in  equity,  or  any  arbitration  or  any  administrative  or  other
proceeding  by or before (or to the  knowledge of the Company any  investigation
by) any Governmental  Authority,  pending,  or, to the knowledge of the Company,
threatened,  against or affecting the Company or any of its Subsidiaries, or any
of their  properties or rights which,  would: (i) have a Material Adverse Effect
or (ii) is, or is seeking certification as, a class action. In addition,  except
as set forth on Schedule 4.08,  neither the Company nor any of its  Subsidiaries
is subject to any consent decrees or judicial or administrative  order under the
Fair Debt Collection  Practices Act or any state law equivalent  relating to the
ongoing conduct of the Company's business.

               4.09. Title to Properties.  Except as set forth in Schedule 4.09,
each of the Company and its Subsidiaries has (a) good and valid title to and fee
simple ownership of, or a good and valid leasehold  interest in, all of its real
property,  and (b) good title to, or a good and valid leasehold interest in, all
of its equipment and other personal property, in each case free and clear of all
Liens,  except for (1) Liens reflected on the Company's  consolidated  unaudited
balance  sheet as of September 30, 1999,  and (2) Liens which do not  materially
detract  from the  value of,  or  materially  impair  the use of,  any  material
property  by the  Company or any of its  Subsidiaries  in the  operation  of its
respective  business or which do not have a Material Adverse Effect. Each of the
Company and its  Subsidiaries  have paid or  discharged,  or reserved  for,  all
lawful  claims  which,  if unpaid,  might  become a Lien against any property or
assets of the Company or any of its Subsidiaries, except where the failure to do
so would not have a Material Adverse Effect.

               4.10.  Intellectual  Property  Rights.  Except  as set  forth  in
Schedule 4.10,  each of the Company and its  Subsidiaries  owns or possesses all
Intellectual  Property  reasonably  necessary to conduct its  businesses  as now
conducted,  except  where  the  expiration  or loss of any of such  Intellectual
Property,  individually or in the aggregate,  would not have a Material  Adverse
Effect.  To the best knowledge of the Company,  (a) there is no infringement of,
or  conflict  with,  such  Intellectual  Property by any third party and (b) the
conduct of its  businesses  as  currently  conducted do not infringe or conflict
with any  Intellectual  Property of any third party, in each case other than any
such  infringements or conflicts which,  individually or in the aggregate,  have
not had or would not have a Material Adverse Effect.

               4.11.  Taxes.

               (a) Tax  Returns.  The Company and each of its  Subsidiaries  has
filed  or  caused  to be  filed  or will  file or  cause  to be  filed  with the
appropriate  taxing  authorities  on a timely  basis all  material  returns  and
reports ("Returns")  relating to Taxes that are required to be filed by, or with
respect to, the Company and each of its  Subsidiaries at or prior to the Closing
Time (taking into account any  extension of time to file granted to or on behalf
of the Company or any of its Subsidiaries).  All such Returns have been prepared
in compliance with all applicable laws and regulations and are true and accurate
in all material respects.  As used herein, "Tax" or "Taxes" shall mean all taxes
including,  without  limitation,  all U.S.  federal,  state,  local and  foreign
income,  franchise,  profits,  capital gains,  capital stock,  sales, use, value
added, occupation,  property,  excise, stamp, license, payroll, social security,
withholding  and all other taxes of any kind  whatsoever,  all estimated  taxes,
deficiency assessments,  and additions to tax, penalties and interest in respect
of the foregoing.

               (b) Payment of Taxes. All material Tax liabilities of the Company
and its  Subsidiaries due and payable with respect to all taxable years or other
taxable  periods  (including  portions  thereof) ending on or prior to the Audit
Date  have  been,  or prior to the  Closing  Time  will be,  paid or  adequately
disclosed as a liability on the most recent Company  Financial  Statements.  All
material Tax  liabilities  of the Company and its  Subsidiaries  due and payable
with  respect  to all  taxable  years or  taxable  periods  (including  portions
thereof)  which did not end prior to the day after the Audit  Date and which end
at or prior to the Closing Time have been, or prior to the Closing Time will be,
paid.

               (c) Other Tax Matters.  Schedule 4.11 sets forth (i) each taxable
year or other taxable  period of the Company and its  Subsidiaries  for which an
audit or other  examination  of Taxes by any taxing  authority  is  currently in
progress or, to the knowledge of the Company, threatened against or with respect
to the Company or any of its Subsidiaries  that, if determined  adversely to the
Company or its  Subsidiaries,  would result in a material  Tax  liability of the
Company or its  Subsidiaries  after the Closing Time, and (ii) the taxable years
or other taxable periods of the Company and its  Subsidiaries  which, for income
tax  purposes,  will  not be  subject  to the  normally  applicable  statute  of
limitations because of written waivers or agreements given by the Company or its
Subsidiaries.

               (d)    Except as set forth on Schedule 4.11:

          (i)  subject to Section  5.03(j)  of the  Recapitalization  Agreement,
     neither the Company nor any of its Subsidiaries has made any payments,  nor
     is or may become obligated (under any contract or agreement entered into at
     or  before  the  Closing  Time)  to  make  any   payments,   that  will  be
     non-deductible  under Section 280G of the Code (or any analogous provisions
     of state, local or foreign Tax law),

          (ii) the Company and each of its  Subsidiaries  has  withheld and paid
     all  Taxes  required  to have been  withheld  and paid in  connection  with
     amounts paid or owing to any employee,  independent  contractor,  creditor,
     stockholder  or other  third  party  other  than  such  Taxes  which in the
     aggregate,  are not material,  and all material Forms W-2 and 1099 required
     with respect thereto have been properly completed and timely filed;

          (iii) there are no liens for material  Taxes (other than current Taxes
     not yet due and payable)  upon the assets or  properties  of the Company or
     any of its Subsidiaries;

          (iv) the Company and its  Subsidiaries are entitled to each Tax refund
     claimed or  received by the  Company or any  Subsidiary  at or prior to the
     Closing  Time,  except to the extent the  disallowance  of which  would not
     result in any material  Tax  liability,  or loss of a pending  material Tax
     refund claim;

          (v) the  Company  and its  Subsidiaries  are not and will  not  become
     liable for any material  Taxes as a result of the  Reorganization  nor will
     the  Reorganization  create any material  gains or income,  the taxation of
     which is deferred under Treasury  Regulation ss.  1.1502-13 (or any similar
     provision of state, local or foreign law);

          (vi) neither the Company nor any of its Subsidiaries is a party to any
     Tax allocation,  sharing,  or similar  agreement under which the Company or
     such  Subsidiaries has any current or potential  contractual  obligation to
     indemnify any other Person with respect to Taxes;

          (vii) the Company and each of its Subsidiaries has properly accrued on
     its  respective   financial   statements   all  material  Tax   liabilities
     (determined in accordance  with GAAP) and the amount so accrued is at least
     equal to its respective liability for such Taxes; and

          (viii)  neither  the  Company  nor  any of its  Subsidiaries  has  any
     liability  for material  Taxes arising as a result of the Company or any of
     its  Subsidiaries  at any time  being a member of an  affiliated  group (as
     defined  in  section  1504(a)  of the  Code  and  any  analogous  combined,
     consolidated or unitary group defined under state,  local or foreign income
     Tax law) other than a group the  common  parent of which is the  Company or
     any of its Subsidiaries.

               4.12.  Employee Benefit Plans.

               (a) Schedule  4.12  contains an accurate and complete list of (i)
each  "employee  benefit plan" (as such term is defined in Section (3)(3) of the
Employee   Retirement  Income  Security  Act  of  1974,  as  amended  ("ERISA"))
contributed  to,   maintained  or  sponsored  by  the  Company  or  any  of  its
Subsidiaries,  or with  respect to which the Company or any of its  Subsidiaries
has any  liability  or  potential  liability;  and (ii) each  other  retirement,
savings,  thrift,  deferred  compensation,  severance,  stock  ownership,  stock
purchase, stock option, performance,  bonus, incentive, material fringe benefit,
hospitalization or other medical,  disability,  life or other insurance, and any
other welfare benefit policy,  trust,  understanding or arrangement  contributed
to,  maintained or sponsored by the Company or any of its  Subsidiaries  for the
benefit of any present or former employee, officer or director of the Company or
any of its  Subsidiaries,  or with  respect  to which the  Company or any of its
Subsidiaries has any liability or potential liability.  Each such item listed on
Schedule 4.12 is referred to herein as a "Benefit Plan."

               (b) Schedule  4.12 also contains an accurate and complete list of
each  agreement or commitment of the Company or any Subsidiary of the Company or
to which the Company or any of its Subsidiaries may have any liability,  with or
for the  benefit of any current or former  employee,  officer or director of the
Company  or  any  of  its  Subsidiaries  (including,  without  limitation,  each
employment,  compensation  or termination  agreement or commitment but excluding
employment  agreements with annual  payments of less than  $100,000).  Each such
item  listed  on  Schedule  4.12  is  referred  to  herein  as  a  "Compensation
Commitment."

               (c) With  respect to each  Benefit  Plan that is  intended  to be
qualified  within the meaning of Section 401(a) of the Internal  Revenue Code of
1986, as amended (the "Code") (i) it has received a determination  letter, or in
the case of a standardized  prototype  plan,  such prototype plan has received a
favorable determination letter from the Internal Revenue Service (the "IRS"), or
has been timely  submitted  for a  determination  letter from the IRS, that such
Benefit  Plan is  qualified  under  Section  401(a)  of the  Code,  and,  to the
knowledge of the Company and its  Subsidiaries,  nothing has occurred  since the
date of such determination  letter or submission that could adversely affect the
qualification of such Benefit Plan or the exemption from taxation of the related
trust and (ii) no such Benefit Plan is a "defined  benefit  plan" (as defined in
Section (3)(35) of ERISA) or a "multiemployer  plan" (as defined in Section 4001
(a)(3) of ERISA).

               (d) Except as described on Schedule  4.12 (i) none of the Benefit
Plans  or  Compensation   Commitments  obligates  the  Company  or  any  of  its
Subsidiaries  to pay any separation,  severance,  termination or similar benefit
solely  as a result  of any  transaction  contemplated  by the  Recapitalization
Agreement or solely as a result of a change in control or  ownership  within the
meaning of Section 280G of the Code;  and (ii) there is no contract,  agreement,
plan or arrangement  covering any employee or former  employee of the Company or
any of its  Subsidiaries  that  provides for payment,  prior to or in connection
with the Recapitalization, by the Company or any of its Subsidiaries that is not
deductible under Section 162 or 404 of the Code, or that is an "excess parachute
payment" pursuant to Section 280G of the Code.

               (e) (i)  Each  Benefit  Plan  and any  related  trust,  insurance
contract or fund has been maintained and administered in substantial  compliance
with its respective terms and in substantial compliance with all applicable laws
and regulations,  including,  but not limited to, ERISA and the Code; (ii) there
has been no application or waiver of the minimum  funding  standards  imposed by
Section  412 of the Code with  respect to any  Benefit  Plan,  and  neither  the
Company nor any of its Subsidiaries is aware of any facts or circumstances  that
would  materially  change  the funded  status of any such  Benefit  Plan;  (iii)
neither the Company nor any of its Subsidiaries has incurred any liability under
Title IV of ERISA or to the Pension Benefit Guaranty Corporation; (iv) there are
no pending or, to the knowledge of the Company and its Subsidiaries, threatened,
material  actions,  suits,  investigations or claims with respect to any Benefit
Plan or Compensation  Commitment  (other than routine claims for benefits),  and
neither the Company nor any of its Subsidiaries has knowledge of any facts which
could give rise to (or reasonably be expected to give rise to) any such actions,
suits,  investigations or claims; (v) there have been no prohibited transactions
as defined in Section 406 of ERISA or Section  4975 of the Code with  respect to
any Benefit Plan; and (vi) all contributions  which are due with respect to each
Benefit Plan have been timely made, and all  contributions for periods ending on
the date of the  Closing  Time  which  are not then due  have  been  accrued  in
accordance with GAAP.

               (f) The Company and each of its  Subsidiaries has complied in all
material  respects  with the health care  continuation  requirements  of Section
4980B of the Code and Part 6 of  Subtitle B of Title I of ERISA  ("COBRA");  and
the Company and its  Subsidiaries  have no  obligation  under any Benefit  Plan,
Compensation Commitment or otherwise to provide health or other welfare benefits
to or with respect to former employees of the Company or any of its Subsidiaries
or any other person, except as specifically required by COBRA.

               (g)  With  respect  to  each   Benefit   Plan  and   Compensation
Commitment,  the Company has furnished or made available to the Purchasers  true
and complete  copies,  as applicable,  of (a) the plan  documents,  summary plan
descriptions and employee handbooks;  (b) IRS Form 5500 Annual Report (including
all  attachments)  for  the  most  recent  plan  year;  (c)  all  related  trust
agreements,  insurance contracts or other funding arrangements; and (d) the most
recent favorable determination letter issued by the IRS.

               4.13.  Private Offering; No Integration or General Solicitation.

               (a)   Subject  to   compliance   by  the   Purchasers   with  the
representations  and  warranties  set  forth in  Section  5 hereof  and with the
procedures set forth in Section 6 hereof, it is not necessary in connection with
the offer,  sale and delivery of the  Securities  to the  Purchasers  and to any
Person to whom any Purchaser sells any of such  Securities  (each, a "Subsequent
Purchaser")  in the  manner  contemplated  by this  Agreement  to  register  the
Securities under the Securities Act.

               (b) The Company has not, directly or indirectly, offered, sold or
solicited any offer to buy and will not, directly or indirectly,  offer, sell or
solicit any offer to buy,  any  security of a type or in a manner which would be
integrated  with the sale of the  Securities  and require the  Securities  to be
registered  under the  Securities  Act. None of the Company or its Affiliates or
any  Person  acting on its behalf  (other  than the  Purchasers,  as to whom the
Company makes no  representation  or warranty) has engaged or will engage in any
form of general  solicitation or general advertising (within the meaning of Rule
502(c)  under  the  Securities  Act) in  connection  with  the  offering  of the
Securities.  With respect to the  Securities,  if any, sold in reliance upon the
exemption afforded by Regulation S: (i) none of the Company or its Affiliates or
any  Person  acting on its behalf  (other  than the  Purchasers,  as to whom the
Company makes no  representation  or warranty) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S and (ii) each of the
Company and its  Affiliates  and any Person acting on its behalf (other than the
Purchasers,  as to whom the Company  makes no  representation  or warranty)  has
complied and will comply with the offering  restrictions set forth in Regulation
S.

               4.14.  Eligibility for Resale Under Rule 144A. The Securities are
eligible for resale  pursuant to Rule 144A and will not, at the Closing Time, be
of the  same  class as  securities  listed  on a  national  securities  exchange
registered  under  Section 6 of the Exchange  Act or quoted on a U.S.  automated
interdealer quotation system.

               4.15.  [INTENTIONALLY OMITTED].

               4.16.  Insurance.  Each of the Company  and  its Subsidiaries are
insured by financially sound institutions with policies in such amounts and with
such  deductibles  and covering such risks as the Company deems adequate for its
and its Subsidiaries' businesses.

               4.17. Environmental Laws and Regulations.  Except as set forth on
Schedule  4.17,  (a)  Hazardous  Materials  have not been (i)  generated,  used,
treated or stored on, or transported  to or from,  any Company  Property or (ii)
Released or disposed of on or from any Company Property,  except, in the case of
clauses (i) or (ii) in a manner which could not  reasonably  be expected to give
rise to material  liabilities under  Environmental Law, (b) the Company and each
of its Subsidiaries have complied and are in compliance in all material respects
with applicable  Environmental  Laws and the  requirements of any permits issued
under such  Environmental  Laws,  and (c) there are no past,  pending or, to the
Company's  knowledge,  threatened  claims  under  Environmental  Law against the
Company or any of its Subsidiaries.

               For purposes of this  Agreement,  the following  terms shall have
the  following  meanings:  (A) "Company  Property"  means any real  property and
improvements at any time owned, leased, or operated by the Company or any of its
Affiliates, Subsidiaries or any of their respective predecessors; (B) "Hazardous
Materials" means (i) any petroleum or petroleum products,  radioactive materials
or friable asbestos and (ii) any chemicals,  materials or substances  defined as
"hazardous   substances,"  under  the  Comprehensive   Environmental   Response,
Compensation,  and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601 et seq.
("CERCLA")  and (iii) all other  materials or substances the Release of which is
prohibited  or  regulated  or  as  to  which  liability  may  be  imposed  under
Environmental  Laws; (C) "Environmental  Law" means any federal,  state or local
statute, law, rule,  regulation,  ordinance or code,  contractual  obligation or
common law or other legal requirement,  in each case in effect and as amended as
of the  date  hereof  and the  Closing  Time,  relating  to the  environment  or
Hazardous  Materials,   including,  without  limitation,  CERCLA,  the  Resource
Conservation  and  Recovery  Act, as amended,  42 U.S.C.  ss. 6901 et seq.;  the
Federal Water Pollution Control Act, as amended, 33 U.S.C. ss. 1251 et seq.; the
Toxic Substances  Control Act, 15 U.S.C. ss. 2601 et seq.; the Clean Air Act, 42
U.S.C. ss. 7401 et seq.; and the Safe Drinking Water Act, 42 U.S.C. ss. 33808 et
seq.;  and (D) "Release"  means  disposing,  discharging,  injecting,  spilling,
leaking, leaching, dumping, emitting,  escaping,  emptying, seeping, placing and
the like, into or upon any land or water or air, or otherwise  entering into the
environment.

               4.18.  Solvency.  The Company and its  Subsidiaries  (other  than
Pay Tech,  Inc.)  are,  and after  giving  effect to the  Transactions  will be,
Solvent.
               4.19.  Affiliate  Transactions.  Except as  disclosed on Schedule
4.19,  there  are  no  understandings,   agreements  or  arrangements  with  any
stockholder  of the  Company or its  Affiliates  which  would be  required to be
disclosed  pursuant to Item 404 of Regulation S-K promulgated under the Exchange
Act if an annual report on Form 10K were made on the date hereof.

               4.20. Material  Contracts.  Except as set forth on Schedule 4.20,
neither  the Company nor any  Subsidiary  has or is bound by (a) any  agreement,
contract or commitment  relating to the  employment of any Person by the Company
or any  Subsidiary  which cannot be terminated by the Company or the  Subsidiary
upon notice of 60 days or less without  penalty or premium and  involves  annual
compensation  in excess of $100,000  annually,  (b) any  agreement,  contract or
commitment  materially  limiting the freedom of the Company or any Subsidiary to
engage in any line of  business or to compete  with any other  Person or (c) any
agreement,  contract or  commitment  not entered into in the ordinary  course of
business  which  materially   affects  the  business  of  the  Company  and  the
Subsidiaries  taken as a whole and is not cancelable  without  penalty within 90
days. There is no material default under any contract listed on Schedule 4.20 as
a result of the Reorganization.

               4.21.  Brokerage  Fees.  Except as disclosed on Schedule 4.21, no
agent,  broker,  Person or firm  acting on behalf of the Company is, or will be,
entitled to any fee,  commission  or  broker's or finder's  fees from any of the
parties hereto, or from any Person  controlling,  controlled by, or under common
control with any of the parties hereto, in connection with this Agreement or any
of the Transactions.

               4.22. Employment Relations and Agreements. Except as disclosed on
Schedule 4.22, (i) each of the Company and its  Subsidiaries is in compliance in
all  material  respects  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;  (ii) no representation question exists respecting the employees
of the  Company  or any of its  Subsidiaries;  (iii)  no  collective  bargaining
agreement  is  currently  being   negotiated  by  the  Company  or  any  of  its
Subsidiaries and neither the Company nor any of its Subsidiaries is a party to a
collective  bargaining  agreement;  and (iv)  neither the Company nor any of its
Subsidiaries  has experienced any labor  difficulty  during the last year except
(in the case of this clause (iv)) as would not have a Material  Adverse  Effect.
Except as disclosed on Schedule  4.22,  there exist no  employment,  consulting,
severance,   indemnification  agreements  or  deferred  compensation  agreements
between the Company and any director,  officer or employee of the Company or any
agreement  that would give any Person the right to receive any payment  from the
Company as a result of the Transactions.

               4.23.  [INTENTIONALLY OMITTED].

               4.24.  Compliance with Laws; Licenses.

               (i) Except as set forth on  Schedule  4.24,  the  Company and its
Subsidiaries  are in compliance with all applicable laws and regulations and all
orders,  judgments  and  decrees  (including,  but not limited to, the Fair Debt
Collection  Practices  Act and any  state or local  counterpart  or  equivalent)
relating to its  business  and  operations  (other  than with  respect to taxes,
Environmental Laws, employee benefits, employee relations and federal securities
laws  which  are the  subject  of  specific  representations  contained  in this
Agreement)  except  where the  failure  to so comply  would not have a  Material
Adverse  Effect  or  would  prevent  or  materially  delay  consummation  of the
Transactions.

              (ii)  The  Company  and  each  of  its  Subsidiaries  possess  all
licenses,  certificates  of authority,  certificates  of need,  permits or other
authorizations and regulatory  approvals required by law (a "License") necessary
for the ownership of its properties and the conduct of its business as presently
conducted  in each  jurisdiction  in which the  Company and such  Subsidiary  is
required  to  possess a License,  except  where the  failure  to possess  such a
License would not have a Material Adverse Effect.  All such Licenses are in full
force and effect and neither the Company nor any  Subsidiary  has  received  any
written notice of any event,  inquiry,  investigation or proceeding  threatening
the validity of such  Licenses,  except where the failure of such Licenses to be
in full force and effect or such event,  inquiry,  investigation  or  proceeding
would not have a Material Adverse Effect.

                                    SECTION 5

                        REPRESENTATIONS OF THE PURCHASERS

               Each Purchaser  severally and not jointly represents and warrants
to the Company as of the date hereof and as of the Closing Time as follows:

               5.01.  Purchase for Investment.

               (a)  Such  Purchaser  is  acquiring  the  Securities  for its own
account,  for  investment  and  not  with a view  to or for  offer  or  sale  in
connection with any  distribution  thereof (within the meaning of the Securities
Act) that would be in violation of the  securities  laws of the United States or
any state thereof.

               (b) Such Purchaser  understands  that (i) the Securities have not
been registered  under the Securities Act and are being issued by the Company in
transactions exempt from the registration requirements of the Securities Act and
(ii) the Securities  may not be offered or sold except  pursuant to an effective
registration  statement  under the  Securities  Act or pursuant to an applicable
exemption from registration under the Securities Act.

               (c) Such Purchaser  further  understands  that the exemption from
registration  afforded  by Rule 144 (the  provisions  of which are known to such
Purchaser)  promulgated  under the Securities Act depends on the satisfaction of
various conditions,  and that, if applicable,  Rule 144 may afford the basis for
sales only in limited amounts.

               (d) Such  Purchaser  did not,  and is not  obligated  to, pay any
broker  or finder  in  connection  with the  transactions  contemplated  in this
Agreement.

               (e)    Such Purchaser is an Accredited Investor.

               5.02.  Organization  of  the  Purchasers.  Such  Purchaser  is  a
corporation,  limited partnership or limited liability company,  duly organized,
validly  existing and in good standing under the laws of the jurisdiction of its
organization.

               5.03. Authorization of Transaction. Such Purchaser has full power
and  authority  (including  full  corporate,  partnership  or limited  liability
company  power and  authority)  to execute and  deliver  this  Agreement  and to
perform its  obligations  hereunder.  This Agreement  constitutes  the valid and
legally binding obligation of such Purchaser, enforceable in accordance with its
terms and conditions,  subject to the Enforceability Exceptions.  Such Purchaser
need not give any notice to, make any filing with, or obtain any  authorization,
consent or approval of any  Governmental  Authority in order to  consummate  the
transactions contemplated by this Agreement.

               5.04. Noncontravention. Neither the execution and the delivery of
this Agreement,  nor the consummation of the transactions  contemplated  hereby,
will (i)  violate  any  constitution,  statute,  regulation,  rule,  injunction,
judgment, order, decree, ruling, charge or other restriction of any Governmental
Authority to which such Purchaser is subject or any provisions of its charter or
by-laws  or (ii)  conflict  with,  result in a breach of,  constitute  a default
under,  result  in the  acceleration  of,  create  in any  party  the  right  to
accelerate,  terminate,  modify,  or  cancel or  require  any  notice  under any
agreement,  contract, lease, license,  instrument, or other arrangement to which
such  Purchaser is a party or by which it is bound or to which any of its assets
is subject;  provided,  that notwithstanding  anything to the contrary contained
herein,  such  Purchaser  is  making  no  representations  or  warranties  as to
compliance with applicable securities laws.

               5.05.   Brokers'  Fees.   Such  Purchaser  has  no  liability  or
obligation to pay any fees or commissions to any broker,  finder or agent (other
than to the Equity  Investor) with respect to the  transactions  contemplated by
this Agreement for which the Company could become liable or obligated.

                                    SECTION 6

                  PROVISIONS RELATING TO RESALES OF Securities

               6.01.  Private Offerings.  The  Company  and the Purchasers agree
that the following provisions will apply to any Private Offerings:

               (a)  Offers  and  Sales  of  Senior   Preferred   Stock  Only  to
        Institutional  Accredited Investors or Qualified  Institutional  Buyers.
        Offers and sales of the  Securities  will be made only by the Holders or
        Affiliates thereof qualified to do so in the jurisdictions in which such
        offers or sales are made.  Prior to the  effectiveness of a registration
        statement with respect to the Senior Preferred Stock, each offer or sale
        of Senior  Preferred  Stock  shall only be made (i) to persons  whom the
        offeror or seller  reasonably  believes  to be  Qualified  Institutional
        Buyers, (ii) to other institutional  accredited investors referred to in
        Rule  501(a)(1),  (2),  (3) or (7) of  Regulation  D that the offeror or
        seller  reasonably  believes  to be  and,  with  respect  to  sales  and
        deliveries,  that are Accredited  Investors  ("Institutional  Accredited
        Investors") or (iii) non-U.S.  persons that are financial  institutions,
        investment advisors or affiliates of the foregoing or would otherwise be
        substantially equivalent to an Institutional Accredited Investor outside
        the  United  States to whom the  offeror or seller  reasonably  believes
        offers and sales of the Senior  Preferred  Stock may be made in reliance
        upon Regulation S under the Securities Act;  provided that (A) this will
        not  prohibit  offers  and sales of shares  of  Senior  Preferred  Stock
        pursuant to Rule 144 (or any  successor  provision)  to any Person or of
        any  Securities  pursuant  to a  registration  statement  filed with the
        Commission  under the Securities  Act, (B) no Holder shall offer or sell
        any of the Securities to any Competitor of the Company;  provided,  that
        each Purchaser shall be permitted to offer,  sell or otherwise  transfer
        any of the  Securities to any of its  Affiliates  and (C) each Purchaser
        shall  give the  Company at least 5 days  prior  notice of any  proposed
        offer or sale of Securities to any Person that is not (x) a Purchaser or
        one of its Affiliates or (y) a nationally  recognized investment banking
        firm (it being  acknowledged  that such firm,  as an assignee,  shall be
        bound by the terms of this Agreement, including this Section 6.01).

               (b) No General  Solicitation.  The Securities  will be offered by
        approaching prospective Subsequent Purchasers on an individual basis. No
        general  solicitation or general advertising (within the meaning of Rule
        502(c) under the  Securities  Act) will be used in the United States and
        no directed  selling  efforts (as defined in  Regulation S) will be made
        outside  the  United  States  in  connection  with the  offering  of the
        Securities.

               (c) Purchases by Non-Bank Fiduciaries.  In the case of a non-bank
        Subsequent Purchaser of any Senior Preferred Stock acting as a fiduciary
        for one or more third parties,  in connection  with an offer and sale to
        such purchaser by any Holder  pursuant to this Section 6.01,  each third
        party  shall,  in  the  judgment  of  the  applicable   Holder,   be  an
        Institutional  Accredited Investor or a Qualified Institutional Buyer or
        a non-U.S. person outside the United States.

               (d) Restrictions on Transfer;  Legend.  Upon original issuance by
        the Company, and until such time as the same is no longer required under
        the applicable  requirements  of the Securities Act, the Securities (and
        all securities issued in exchange  therefor or in substitution  thereof)
        shall  bear  such  legend  as is  required  under  Section  6.08 of this
        Agreement. The restrictions on transfer set forth herein are in addition
        to any other  restrictions  on  transfer  set  forth in the  Transaction
        Documents.

               (e) No Future Liability.  Following the sale of the Securities by
        any Purchaser to Subsequent  Purchasers in accordance  with the terms of
        this Section 6, such Purchaser shall not be liable or responsible to the
        Company for any losses,  damages or liabilities  suffered or incurred by
        the Company,  including  any losses,  damages or  liabilities  under the
        Securities  Act,  arising  from or relating to any resale or transfer of
        any Security by such Subsequent Purchaser.

               (f)    Securities Act Restrictions.

               (i) A  Holder  selling  Securities  in a  Private  Offering  to a
        transferee that is an Accredited  Investor or a Qualified  Institutional
        Buyer must satisfy each of the following conditions:

                      (1)   such transferee must make all of the representations
               and warranties set forth in Section 5; and

                      (2)  such  transferee  must  agree  to  be  bound  by  the
               provisions of this Section 6.01 with respect to any resale of the
               Securities.

              (ii)  A  Holder  may  sell  its  Securities  to  a  transferee  in
        accordance  with  Regulation  S  under  the  Securities  Act;  provided,
        however, that each of the following conditions is satisfied:

                      (1)   the offer of Securities must not be made to a person
               in the United States;

                      (2)    either:

                             (A) at the time the buy  order is  originated,  the
                      transferee  is outside the United States or the Holder and
                      any person acting on its behalf  reasonably  believes that
                      the transferee is outside the United States, or

                             (B) the  transaction  must be  executed  in,  on or
                      through the facilities of a designated offshore securities
                      market and neither the Holder nor any person acting on its
                      behalf knows that the transaction was pre-arranged  with a
                      buyer in the United States;

                      (3)  no   directed   selling   efforts   may  be  made  in
               contravention  of the  requirements  of Rule  903(b) or 904(b) of
               Regulation S under the Securities Act, as applicable; and

                      (4) the  transaction  must not be part of a plan or scheme
               to evade the registration requirements of the Securities Act.

             (iii) In the event of a proposed  sale that does not qualify  under
        either  subclause  (i) or (ii) above,  a Holder may sell its  Securities
        only if:

                      (1) such Holder gives written notice to the Company of its
               intention to effect such sale,  which  notice (A) shall  describe
               the manner  and  circumstances  of the  proposed  transaction  in
               reasonable  detail and (B) shall  designate  the counsel for such
               Holder,  which counsel shall be  reasonably  satisfactory  to the
               Company;

                      (2)  counsel  for the  Holder  renders  an  opinion to the
               effect  that  such   proposed   sale  may  be  effected   without
               registration under the Securities Act or state Blue Sky laws; and

                      (3)  such  Holder  or  transferee  complies with subclause
               (i)(1) and (2) above.

               6.02.  Resale Offering Assistance.

               (a) At any time  following  12  months  after  the  Closing  Time
(provided  that the Company is not then subject to, and in compliance  with, the
reporting  requirements  of  Section  13 or  15(d)  of the  Exchange  Act)  (the
"Assistance Period"),  the Company will, if reasonably requested by the Required
Holders, use commercially reasonable efforts to assist the Holders of Securities
in completing any private or public resale of any portion thereof (including any
such resales of the Senior Preferred Stock pursuant to any Private  Offering) in
accordance with the Holders'  intended method of  distribution.  Such assistance
may, in each case, include the following:

               (i)  reasonable  direct  contact  between  the  Company's  senior
        management and advisors and prospective purchasers at mutually agreeable
        times and hosting of one or more meetings of prospective purchasers;

              (ii) responding to reasonable  inquiries of, and providing answers
        to, each  prospective  purchaser who so requests  concerning the Company
        and its Subsidiaries (to the extent such information is available or can
        be  acquired  and  made  available  to  prospective  purchasers  without
        unreasonable  effort or expense and to the extent the provision  thereof
        is  not  prohibited  by  Applicable  Law or  applicable  confidentiality
        restrictions)   and  the  terms  and   conditions   of  the   applicable
        distribution;

             (iii) if  requested  by the Required  Holders,  using  commercially
        reasonable  efforts to make  available  information  and materials to be
        used in  connection  with  the  distribution  (including  assistance  in
        completion of any sales or placement agent's,  if any, or in the case of
        an underwritten offering, the lead managers' and co-managers' reasonable
        due diligence review of the Company and its Subsidiaries); and

              (iv) using commercially reasonable efforts to promptly prepare and
        provide to the Holders (or any sales or placement agent therefor and any
        underwriter  thereof)  all  information  with  respect  to the  Company,
        including projections,  as such Holders (or any sales or placement agent
        therefor and any underwriter  thereof) may reasonably request.  Any such
        projections  that will so be made  available  to such  Holders  (or each
        placement or sales agent, if any, therefor and each underwriter, if any,
        thereof) by the Company or any of its  representatives  will be prepared
        in good faith based upon reasonable assumptions.

               (b) During the  Assistance  Period,  the  Company  will allow the
Required Holders (or any sales or placement agent therefor or, in the case of an
underwritten  offering,  the lead manager and co-managers thereof, in each case,
as may be  selected  by the  Purchasers  and  is  reasonably  acceptable  to the
Company),  in  consultation  with the  Company,  to manage  all  aspects  of the
distribution,  including  decisions as to the  selection of  institutions  to be
approached and when and how they will be approached.

               (c) During the  Assistance  Period,  all  materials  supplied  or
available  under  this  Section  6.02  or  under  Section  4.06  by the  Company
(including  any  materials  referred to or  incorporated  by reference  therein,
"Resale  Materials")  will not, to the knowledge of the Company,  as of its date
and as of the closing of such Private Offering,  when taken as a whole,  include
an  untrue  statement  of a  material  fact  or omit to  state a  material  fact
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances under which they were made, not misleading.  During the Assistance
Period,  all  information  about a Holder  supplied in writing to the Company by
such Holder expressly for use in any Resale Materials will not, to the knowledge
of such Holder,  as of its date and as of the closing of such Private  Offering,
when taken as a whole, include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements  therein, in the
light of the circumstances under which they were made, not misleading.

               (d) If, prior to the  completion of any sale of the Securities by
the selling Holders (as evidenced by a notice in writing from the Holders to the
Company),  any event  shall  occur or  condition  exist as a result of which the
Resale  Materials would contain a misstatement of a material fact or an omission
of a material fact required to make the statements  therein, in the light of the
circumstances,  not misleading,  then the Company agrees to promptly prepare and
furnish at its own expense to the selling Holders,  further  information so that
the  statements in the Resale  Materials,  taken as a whole,  will not contain a
misstatement  of a material  fact or an omission of a material  fact required to
make the statements therein, in the light of the circumstances,  not misleading.
The  Company  hereby  expressly   acknowledges  that  the   indemnification  and
contribution  provisions  of  Sections  9.02 and 9.03  hereof  are  specifically
applicable and relate to Resale Materials.

               (e) In addition (and not in limitation of the foregoing), for the
benefit of Holders and beneficial  owners from time to time of  Securities,  the
Company shall, upon the request of any such Holder, use commercially  reasonable
efforts  to  furnish,  at its  expense,  to  Holders  and  beneficial  owners of
Securities and prospective  purchasers thereof information  ("Additional Company
Information") satisfying the requirements of subsection (d)(4) of Rule 144A.

               6.03.  Blue  Sky  Compliance.  In  connection  with  any  Private
Offering of the Securities, the Company shall cooperate with the selling Holders
and counsel for the selling  Holders to obtain  exemptions  from the application
of, or if necessary  because of any change in the  Applicable  Law to qualify or
register  the Senior  Preferred  Stock,  and the  shares of Common  Stock of any
Holder, if applicable,  for sale under, the Blue Sky or state securities laws of
those  jurisdictions  designated  by the  selling  Holders  with  respect to the
relevant  Securities,  shall  comply  with  such laws and  shall  continue  such
exemptions,  qualifications  and registrations in effect so long as required for
the  distribution  of the Senior  Preferred Stock and shares of Common Stock, if
applicable.  The  Company  shall  not  be  required  to  qualify  as  a  foreign
corporation  or to take any action that would  subject it to general  service of
process  in any  such  jurisdiction  where  they are not  then  qualified  or to
taxation as a foreign  corporation.  The Company will advise the selling Holders
promptly of the suspension of any exemption  relating to or the qualification or
registration  of the Senior  Preferred Stock or the Common Stock, if applicable,
for offering, sale or trading in any jurisdiction or any initiation or threat of
any  proceeding  for any such  purpose,  and in the event of the issuance of any
order  suspending such exemption,  qualification  or  registration,  the Company
shall,  with the  cooperation  of the selling  Holders,  use its best efforts to
obtain the withdrawal thereof at the earliest possible moment.

               6.04. Common Stock Registration Rights Agreement; Preferred Stock
Registration Rights Agreement.  The Company shall comply with all provisions and
obligations of each of the Common Stock  Registration  Rights  Agreement and the
Preferred  Stock  Registration  Rights  Agreement  and  shall  comply  with  all
applicable federal and state securities laws in connection therewith.

               6.05. No  Integration.  The Company  agrees that it shall not and
(to the extent within its control) it shall cause its respective  Affiliates not
to make any offer or sale of  securities  of any class of the  Company  if, as a
result  of the  doctrine  of  "integration"  referred  to in Rule 502  under the
Securities  Act, such offer or sale would render invalid (for the purpose of (a)
the sale of the Securities by the Company to the  Purchasers,  (b) the resale of
Securities  by the  Purchasers  to  Subsequent  Purchasers  or (c) the resale of
Securities by such  Subsequent  Purchasers to others) any  applicable  exemption
from the  registration  requirements  of the  Securities Act provided by Section
4(2) thereof or by Rule 144A or Regulation S thereunder or otherwise.

               6.06.  DTC  Agreement  and  PORTAL.  The Company  will,  promptly
following the request of and with the cooperation of the Required  Holders,  use
its best  efforts  to cause  the  Senior  Preferred  Stock to be  registered  in
book-entry  form in the name of Cede & Co., as nominee of The  Depository  Trust
Company (the  "Depositary"),  pursuant to an agreement among the Company and the
Depositary  in the form  then  required  by the  Depositary.  The  Company  will
cooperate  with the  Holders  and use its best  efforts  to  permit  the  Senior
Preferred  Stock and the shares of Common  Stock of Holders to be  eligible  for
clearance and settlement through the facilities of the Depositary. In connection
therewith,  the Company  shall  obtain a CUSIP  number for the Senior  Preferred
Stock.  The  Company  will,  promptly  following  the  request  of and  with the
cooperation  of the  Required  Holders,  use  its  best  efforts  to  cause  the
Securities  (if  eligible)  to be  eligible  for  the  National  Association  of
Securities Dealers, Inc. PORTAL Market (the "PORTAL Market").

               6.07.  [INTENTIONALLY OMITTED].

               6.08.  Form  of  Legend  for  the  Securities.  Unless  otherwise
permitted by Section  6.01(f),  every share of Senior Preferred Stock issued and
delivered hereunder shall bear a legend in substantially the following form:

               THE  SECURITY  REPRESENTED  BY  THIS  CERTIFICATE  HAS  NOT  BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
        ACT"),  OR  QUALIFIED  UNDER  ANY STATE  SECURITIES  LAWS AND MAY NOT BE
        TRANSFERRED,  SOLD OR OTHERWISE  DISPOSED OF EXCEPT WHILE A REGISTRATION
        STATEMENT  IS IN EFFECT  OR  PURSUANT  TO AN  AVAILABLE  EXEMPTION  FROM
        REGISTRATION  UNDER THE SECURITIES ACT AND APPLICABLE  STATE  SECURITIES
        LAWS.  THE  HOLDER  OF THIS  SECURITY  IS  SUBJECT  TO THE  TERMS OF THE
        PURCHASE  AGREEMENT,  DATED  AS OF  DECEMBER  10,  1999  (THE  "PURCHASE
        AGREEMENT"),  AMONG  OUTSOURCING  SOLUTIONS INC. (THE "COMPANY") AND THE
        PURCHASERS NAMED THEREIN. A COPY OF SUCH PURCHASE AGREEMENT IS AVAILABLE
        AT THE OFFICES OF THE COMPANY.

               Unless  otherwise  permitted  by Section  6.01(f),  each share of
Common Stock issued and delivered hereunder shall bear a legend in substantially
the following form:

               THE  SECURITY  REPRESENTED  BY  THIS  CERTIFICATE  HAS  NOT  BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
        ACT"),  OR  QUALIFIED  UNDER  ANY STATE  SECURITIES  LAWS AND MAY NOT BE
        TRANSFERRED,  SOLD OR OTHERWISE  DISPOSED OF EXCEPT WHILE A REGISTRATION
        STATEMENT  IS IN EFFECT  OR  PURSUANT  TO AN  AVAILABLE  EXEMPTION  FROM
        REGISTRATION  UNDER THE SECURITIES ACT AND APPLICABLE  STATE  SECURITIES
        LAWS.  THE  HOLDER  OF THIS  SECURITY  IS  SUBJECT  TO THE  TERMS OF THE
        PURCHASE   AGREEMENT  AND  THE  REGISTRATION   RIGHTS  AND  STOCKHOLDERS
        AGREEMENT,  EACH  DATED  AS OF  DECEMBER  10,  1999,  AMONG  OUTSOURCING
        SOLUTIONS INC. (THE "COMPANY") AND THE PARTIES NAMED THEREIN.  COPIES OF
        SUCH AGREEMENTS ARE AVAILABLE AT THE OFFICES OF THE COMPANY.

                                    SECTION 7

                           THE senior preferred stock

               7.01.  Execution.  The shares of Senior  Preferred Stock shall be
executed  on  behalf  of the  Company  by  its  President  or  one  of its  Vice
Presidents,  under  its  corporate  seal  reproduced  thereon  attested  by  its
Secretary or one of its  Assistant  Secretaries.  The  signature of any of these
officers on the shares of Senior Preferred Stock may be manual or facsimile.

               Shares of Senior  Preferred Stock bearing the manual or facsimile
signatures  of  individuals  who  were at any time the  proper  officers  of the
Company shall bind the Company,  notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the  authentication  and delivery
of such shares or did not hold such offices at the date of such shares.

               7.02.  Terms  of  the  Senior  Preferred Stock.  The terms of the
Senior Preferred Stock shall be as set forth in the Certificate of Designation.

               7.03. Payments and Computations. All payments of dividends on the
Senior  Preferred  Stock  shall be paid to the  Holders  thereof at the close of
business on the Dividend  Record Date and all redemption  payments on the shares
of  Senior  Preferred  Stock  shall  be paid to the  Holders  thereof  as of the
applicable Redemption Date or at the Stated Maturity, as applicable.  Redemption
payments on any share of Senior  Preferred  Stock shall be payable  only against
surrender  therefor,  while payments of dividends on shares of Senior  Preferred
Stock shall be made, in  accordance  with the  Certificate  of  Designation  and
subject to applicable laws and regulations, by check mailed on or before the due
date for such payment to the person  entitled  thereto at such person's  address
appearing on the Security  Register or, by wire  transfer to such account as any
Holder thereof shall designate by written  instructions  received by the Company
no less than 15 days prior to any applicable  Dividend  Payment Date, which wire
instruction  shall  continue in effect  until such time as the Holder  otherwise
notifies  the Company or such Holder no longer is the  registered  owner of such
share or shares of Senior Preferred Stock.

               7.04.  Registration; Registration of Transfer and Exchange.

               (a) Security Register. The Company shall maintain a register (the
"Security  Register") for the  registration  or transfer of the shares of Senior
Preferred Stock. The name and address of the Holder of each such share,  records
of any  transfers of the shares and the name and address of any  transferee of a
share of Senior  Preferred  Stock shall be entered in the Security  Register and
the Company shall,  promptly upon receipt thereof,  update the Security Register
to reflect all information  received from a Holder.  There shall be no more than
one Holder for each share of Senior  Preferred  Stock,  including all beneficial
interests therein.

               (b) Registration of Transfer.  Upon surrender for registration of
transfer of any share of Senior  Preferred  Stock at the office or agency of the
Company,  the Company shall execute and deliver,  in the name of the  designated
transferee or transferees,  one or more new shares of Senior Preferred Stock, of
any authorized denominations and like aggregate number of shares.

               (c)  Exchange.  At the option of the  Holder of Senior  Preferred
Stock,  shares of Senior  Preferred  Stock may be exchanged  for other shares of
Senior  Preferred Stock, of any authorized  denominations  and of like aggregate
number of shares,  upon surrender of the shares of Senior  Preferred Stock to be
exchanged  at such  office or agency.  Whenever  any shares of Senior  Preferred
Stock are so surrendered for exchange, the Company shall execute and deliver the
shares of Senior  Preferred  Stock  which the  Holder  making  the  exchange  is
entitled to receive.

               (d) Effect of Registration of Transfer or Exchange. All shares of
Senior  Preferred Stock issued upon any  registration of transfer or exchange of
shares of Senior Preferred Stock shall be the valid  obligations of the Company,
evidencing  the same  obligation,  and entitled to the same benefits  under this
Agreement and the Certificate of Designation,  as the shares of Senior Preferred
Stock surrendered upon such registration of transfer or exchange.

               (e) Requirements;  Charges. Every share of Senior Preferred Stock
presented or surrendered for  registration of transfer or for exchange shall (if
so required by the Company) be duly  endorsed,  or be  accompanied  by a written
instrument of transfer in form satisfactory to the Company duly executed, by the
Holder  thereof or his attorney duly  authorized in writing.  No service  charge
shall be made for any  registration  of transfer or exchange of shares of Senior
Preferred  Stock,  but the Company may require  payment of a sum  sufficient  to
cover any tax or other  governmental  charge  that may be imposed in  connection
with any  registration  of transfer  or  exchange of shares of Senior  Preferred
Stock.

               (f) Certain Limitations.  If the shares of Senior Preferred Stock
are to be redeemed  in part,  the  Company  shall not be required  (i) to issue,
register the transfer of or exchange any share of Senior  Preferred Stock during
a period  beginning  at the  opening of  business  15 days before the day of the
mailing of a notice of  redemption  of any such shares  selected for  redemption
under  Section  8.02 and  ending  at the  close of  business  on the day of such
mailing,  or (ii) to register the transfer of or exchange any shares so selected
for redemption in whole or in part, except the unredeemed  portion of any shares
being redeemed in part.

               7.05.  Mutilated,  Destroyed,  Lost  and  Stolen  Shares.  If any
mutilated  share or shares  of  Senior  Preferred  Stock is  surrendered  to the
Company,  the Company shall execute and deliver in exchange therefor a new share
or shares of Senior  Preferred Stock of the same aggregate  number of shares and
bearing a number not contemporaneously outstanding.

               If there shall be  delivered  to the Company (a)  evidence to its
satisfaction of the destruction,  loss or theft of any share of Senior Preferred
Stock and (b) such  security or  indemnity as may be required by it to save each
of it and any agent harmless, then, in the absence of notice that such share has
been acquired by a bona fide  purchaser,  the Company shall execute and deliver,
in lieu of any such destroyed, lost or stolen share of Senior Preferred Stock, a
new share of Senior  Preferred  Stock  bearing  a number  not  contemporaneously
outstanding.

               In case any such  mutilated,  destroyed,  lost or stolen share of
Senior  Preferred  Stock has become or is about to become due and  payable,  the
Company  in its  discretion  may,  instead  of  issuing  a new  share of  Senior
Preferred Stock,  redeem such share of Senior Preferred Stock in accordance with
the terms hereof and of the Certificate of Designation.

               Upon the  issuance  of any new  share of Senior  Preferred  Stock
under this Section,  the Company may require the payment of a sum  sufficient to
cover any tax or other  governmental  charge  that may be  imposed  in  relation
thereto and any other expenses connected therewith.

               Every new share of Senior Preferred Stock issued pursuant to this
Section in lieu of any destroyed, lost or stolen share of Senior Preferred Stock
shall constitute an original additional  contractual  obligation of the Company,
whether  or not the  destroyed,  lost  or  stolen  share  shall  be at any  time
enforceable  by  anyone,  and  shall be  entitled  to all the  benefits  of this
Agreement and the Certificate of Designation  equally and  proportionately  with
any and all other shares duly issued hereunder.

               The  provisions of this Section are exclusive and shall  preclude
(to the  extent  lawful)  all other  rights  and  remedies  with  respect to the
replacement or payment of mutilated, destroyed, lost or stolen shares.

               7.06. Persons Deemed Owners.  Prior to due presentment of a share
of Senior  Preferred  Stock for  registration  of transfer,  the Company and any
agent of the Company may treat the Person in whose name such share is registered
as the owner of such share for the purpose of receiving payment of dividends on,
or redemption of, such share and for all other purposes  whatsoever,  whether or
not such payment with respect to such share be overdue,  and neither the Company
nor any agent of the Company shall be affected by notice to the contrary.

               7.07.   Cancellation.   All  shares  of  Senior  Preferred  Stock
surrendered  for  redemption,  registration  of transfer or exchange  shall,  if
surrendered  to any Person other than the  Company,  be delivered to the Company
and shall be  promptly  canceled by it. The  Company  shall  cancel any share of
Senior  Preferred  Stock  previously  issued and delivered  hereunder  which the
Company may have reacquired.

               7.08.  Home  Office  Payment.  So  long as any  Purchaser  or its
nominee  shall  be the  Holder  of any  share of  Senior  Preferred  Stock,  and
notwithstanding  anything  contained  in this  Agreement or the  Certificate  of
Designation to the contrary,  the Company will pay all sums becoming due on such
share by such method  (which may be by check if the amount of such check is less
than $100,000,  or by wire transfer of immediately  available funds) and at such
address as such Purchaser  shall have from time to time specified to the Company
in writing for such purpose, without the presentation or surrender of such share
or the making of any notation  thereon,  except that upon written request of the
Company  made  concurrently  with  or  reasonably   promptly  after  payment  or
prepayment in full of any share,  such Purchaser  shall surrender such share for
cancellation  reasonably  promptly after any such request, to the Company at its
principal executive office.  Prior to any sale or other disposition of any share
held by such  Purchaser or its nominee such  Purchaser  will,  at its  election,
either  endorse  thereon  the  amount  paid  thereon  and the last date to which
dividends  have been paid  thereon or  surrender  such  share to the  Company in
exchange for a new share or shares  pursuant to Section  7.04.  The Company will
afford the benefits of this Section 7.08 to any direct or indirect transferee of
any share purchased by such Purchaser under this Agreement and that has made the
same  agreement  relating to such share as such  Purchaser  made in this Section
7.08.

               7.09.  Separability.  The Senior  Preferred  Stock and the shares
of Common  Stock  comprising  the Units  shall be  separable  at any time at the
option of the Purchasers.

               7.10.  Board  Observation.  So  long  as  any  shares  of  Senior
Preferred Stock are  outstanding,  the Required  Holders shall have the right to
appoint one Board Observer (the "Board  Observer") and such Board Observer shall
be appointed on each  anniversary  of the Closing Time;  provided that the first
Board  Observer may be appointed by DB Capital  Investors,  L.P. and First Union
Investors, Inc. at any time prior to the first meeting of the Board of Directors
after the Closing Time.  The Company will give to the Board  Observer  notice of
all  regular  meetings  and all  special  meetings  of the  Company's  Board  of
Directors  at the time notice is given to the  directors,  will permit the Board
Observer to attend  such  meetings  as an  observer  and will  provide the Board
Observer and each  Purchaser with all  information  provided to directors of the
Company at the time such  information  is provided to the  directors;  provided,
however,  that such  observation  rights  pursuant to this Section 7.10 shall be
temporarily  suspended  if, in the opinion of counsel of the Company,  the Board
Observer's  attendance  at such meeting could violate any member of the Board of
Directors' fiduciary duty, any confidentiality obligation or any attorney-client
privilege  that may exist in  connection  with such  meeting.  The Company shall
reimburse the Board  Observer for its reasonable  travel  incurred in connection
with its board observation rights pursuant to this Section 7.10.

               7.11.  Reports,  Books,  Records and  Access.  (a) (i) As soon as
available, but in any event within thirty (30) days after the end of each fiscal
month (or with  respect to any  fiscal  month that is the last month in a fiscal
quarter, sixty (60) days after the end of such fiscal month) of the Company, the
Company shall deliver to each Purchaser the unaudited consolidated balance sheet
of the Company  and its  Subsidiaries  as of the end of such month,  the related
consolidated statements of operations, income, cash flows, retained earnings and
shareholders'  equity for such month and for the  elapsed  portion of the fiscal
year  ended  with  the  last  day of such  month,  in each  case  setting  forth
comparative figures for the corresponding month in the prior fiscal year and for
the corresponding  month in the annual budget provided as required below, all of
which shall be certified by the Chief Financial Officer or equivalent officer of
the Company, subject to normal year-end audit adjustments.

              (ii) As soon as  available  and in any event not later than thirty
(30) days after the first day of each  fiscal year of the  Company,  the Company
shall deliver to each Purchaser an annual  consolidated budget and business plan
(including  consolidated budgeted statements of operations,  income, cash flows,
retained  earnings and  shareholders'  equity and balance sheets for the Company
and its  Subsidiaries)  prepared  by the  Company  for each month of such fiscal
year.

             (iii) Concurrently with the delivery of information packages to the
Board of Directors,  the Corporation shall deliver to each Significant  Holder a
duplicate and complete copy of such information package, including copies of all
financial statements and other information provide therein;  provided,  however,
that the provision of information packages pursuant to this Section 7.11(a)(iii)
shall be temporarily  suspended,  upon notice to such Significant Holders, if in
the opinion of counsel of the Company the provision of such information packages
could  violate  any  member  of the  Board of  Directors'  fiduciary  duty,  any
confidentiality  obligation or any  attorney-client  privilege that may exist in
connection therewith.

               (b) If reasonably  requested by any Holder,  and upon  reasonable
notice,  the Company  shall,  and shall cause its  Subsidiaries  to,  subject to
compliance  with  Applicable  Laws  and  confidentiality  obligations  to  third
parties,  (x) give each Holder that is not a Competitor of the Company or any of
its Subsidiaries and their  authorized  representatives  (including any sales or
placement  agent or  underwriter  participating  in any  resale of such  shares)
reasonable access during normal business hours to all contracts, books, records,
personnel,  offices and other  facilities  and properties of the Company and its
Subsidiaries and access to their legal advisors,  accountants and, to the extent
available  to the Company  after the Company uses  reasonable  efforts to obtain
them,  access to the accountants'  work papers;  provided,  that (A) the Company
will not be required to allow such access to Holders  more than two times in the
aggregate,  in any twelve  month  period and (B) any Holder that  requests  such
access  shall give each other Holder at least 10 days' prior  written  notice of
such  request so that any other  Holder may obtain such access at the same time,
(y) permit such Holder (and any such sales or placement agent or underwriter) to
make such copies and inspections  thereof as such Holder may reasonably  request
and (z)  furnish  such  Holder  (and  any  such  sales  or  placement  agent  or
underwriter)  with such financial and operating data and other  information with
respect to the business and  properties of the Company and its  Subsidiaries  as
such Holder (and any such sales or placement agent or underwriter) may from time
to time reasonably request.

                                    SECTION 8

                                   REDEMPTION

               8.01.  Right of  Redemption.  The Senior  Preferred  Stock may be
redeemed at the election of the Company and otherwise upon such  conditions,  at
such times,  in such amounts and at the applicable  Redemption  Price  (together
with any  applicable  accrued  and  unpaid  dividends  to the  Redemption  Date)
specified in the Certificate of Designation.

               8.02.  Partial  Redemptions.  In case the Company is entitled to,
and  elects  to,  redeem  less  than all of the  outstanding  shares  of  Senior
Preferred  Stock,  the Company shall redeem the Senior  Preferred Stock pro rata
from each  Holder (or as nearly pro rata as  practicable).  For all  purposes of
this Agreement and the Certificate of Designation,  unless the context otherwise
requires,  all provisions  relating to the redemption of Senior  Preferred Stock
shall relate, in the case of any shares of Senior Preferred Stock redeemed or to
be redeemed  only in part, to the portion of such shares which has been or is to
be redeemed.

               8.03.  Notice of Redemption.  Notice of redemption shall be given
as set forth in the Certificate of  Designation.  Notice of redemption of shares
to be redeemed at the election of the Company  shall be given by the Company and
at the expense of the Company.

               8.04.  Deposit of Redemption Price. Prior to any Redemption Date,
the Company shall  segregate and hold in trust an amount of money  sufficient to
pay the  Redemption  Price of,  and  (except if the  Redemption  Date shall be a
Dividend  Payment Date) any applicable  accrued and unpaid dividends on, all the
shares which are to be redeemed on that date.

               8.05.  Shares Payable on Redemption Date. If notice of redemption
shall have been given as provided above, the shares of Senior Preferred Stock so
to be redeemed  shall,  on the  Redemption  Date,  become due and payable at the
Redemption  Price  therein  specified,  and from and after such date (unless the
Company shall default in the payment of the Redemption  Price and any applicable
accrued and unpaid  dividends)  such  shares  shall not accrue  dividends.  Upon
surrender of any such share for redemption in accordance with said notice,  such
share shall be paid by the Company at the  Redemption  Price,  together with any
applicable  accrued  and unpaid  dividends  to the  Redemption  Date;  provided,
however,  that dividends  whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such shares,  or one or more predecessor
shares,  registered  as such at the close of business on the  relevant  Dividend
Record Dates according to their terms and the provisions of this Agreement.

               If any share of Senior  Preferred  Stock  called  for  redemption
shall not be so paid upon surrender  thereof for redemption,  the principal (and
premium, if any) shall, until paid, accrue dividends from the Redemption Date at
the rate provided by the Certificate of Designation.

               8.06.  Shares Redeemed in Part. Any share which is to be redeemed
only in part shall be surrendered at the principal offices of the Company (with,
if the Company so  requires,  due  endorsement  by, or a written  instrument  of
transfer  in form  satisfactory  to the  Company  duly  executed  by, the Holder
thereof or his  attorney  duly  authorized  in writing),  and the Company  shall
execute and deliver to the Holder of such share without  service  charge,  a new
share or shares, of any authorized  denomination as requested by such Holder, in
an amount  equal to and in exchange for the  unredeemed  portion of the share so
surrendered.

                                    SECTION 9

                          EXPENSES, INDEMNIFICATION AND

                          CONTRIBUTION AND TERMINATION

               9.01.  Expenses.  Whether  or not the  transactions  contemplated
hereby are  consummated,  the Company will pay all reasonable costs and expenses
(including  reasonable  and  documented  attorneys'  and  accountants'  fees and
disbursements)  incurred  by each  Purchaser  or any  Holder  of a  Security  in
connection with the  Transactions  (including the preparation and negotiation of
the  Transaction  Documents),  in  connection  with any  amendments,  waivers or
consents under or in respect of this Agreement,  the other Transaction Documents
or the  Securities  (whether or not such  amendment,  waiver or consent  becomes
effective,  including,  without limitation:  (a) each Purchaser's reasonable and
documented   out-of-pocket   expenses  in  connection   with  such   Purchaser's
examinations and appraisals of the properties,  books and records of the Company
and  its  Subsidiaries,  (b) the  reasonable  costs  and  expenses  incurred  in
enforcing,  defending or declaring  (or  determining  whether or how to enforce,
defend or  declare)  any  rights or  remedies  under this  Agreement,  the other
Transaction  Documents or the  Securities  or in  responding  to any subpoena or
other legal process or informal  investigative  demand issued in connection with
this Agreement, the other Transaction Documents or the Securities,  or by reason
of being a Holder of any  Securities,  (c) the  reasonable  costs and  expenses,
including reasonable and documented consultants' and advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary of
the  Company  or in  connection  with  any  work-out  or  restructuring  of  the
transactions  contemplated hereby, by the other Transaction  Documents or by the
Securities  and (d) any transfer,  stamp,  documentary  or other similar  taxes,
assessments or charges levied by any  Governmental  Authority in respect of this
Agreement or the Transaction  Documents or any other document referred to herein
or therein.  The Company will pay, and will save the  Purchasers  and each other
Holder of a Security  harmless from, all claims in respect of any fees, costs or
expenses,  if any, of brokers and finders in relation to the  Transactions.  The
Purchasers  will  deliver  to the  Company  on or prior to the date  that is two
Business  Days prior to the date of the Closing  Time an invoice for those costs
and expenses payable at the Closing Time in accordance herewith.  Subject to the
last sentence of Section  3.08A,  the Company will pay any costs and expenses of
the Purchasers  contemplated in this Section 9.01 in connection with the Closing
Time within five Business Days after the Closing Time.

               9.02.  Indemnification.

               (a)  Indemnification  by  the  Company.  The  Company  agrees  to
indemnify and hold harmless (i) each Purchaser and each Person who  participates
as a placement or sales agent or as an underwriter in any Private Offering, (ii)
each  Person,  if any,  who  controls  (within  the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) any such Person referred to in
clause (i) (any of the Persons referred to in this clause (ii) being referred to
herein as a "Controlling Person") and (iii) the respective officers,  directors,
managing   directors,   stockholders,   partners,   representatives,   trustees,
fiduciaries,  and  agents of any  Person  referred  to in clause (i) or any such
Controlling  Person (any such Person referred to in clause (i), (ii) or (iii), a
"Purchaser   Indemnified  Person")  against  any  losses,   claims,  damages  or
liabilities,  joint or several,  to which such Purchaser  Indemnified Person may
become subject,  under the Securities Act or otherwise,  insofar as such losses,
claims,  damages or liabilities (or actions in respect  thereof) arise out of or
are based upon (i) subject to Section 10.11,  in whole or in part any inaccuracy
in any of the  representations and warranties of the Company contained herein of
which  the  Knowledge  Group  had  knowledge,  (ii) in whole or in part upon the
failure of the Company to perform its obligations  hereunder or (iii) any untrue
statement or alleged untrue statement of a material fact contained in any Resale
Materials, or arise out of or are based upon the omission or alleged omission to
state  therein a material  fact  necessary  to make the  statements  therein not
misleading, except insofar as the same are a result of any information furnished
in writing to the Company by such Purchaser Indemnified Person expressly for use
therein; and will reimburse each such Purchaser Indemnified Person for any legal
and other expenses incurred by such Purchaser  Indemnified  Person in connection
with  investigating  or defending any such action or claims as such expenses are
incurred.  The indemnity agreement set forth in this Section 9.02(a) shall be in
addition to any liabilities that the Company may otherwise have.

               (b)  Indemnification  by the Purchasers.  Each Purchaser  agrees,
severally and not jointly, to indemnify and hold harmless (i) the Company,  (ii)
each  Controlling  Person of the  Company  and (iii)  the  respective  officers,
directors,  employees,  representatives  and  agents of the  Company or any such
Controlling  Person (any such Person referred to in clause (i), (ii) or (iii), a
"Company   Indemnified   Person")  against  any  losses,   claims,   damages  or
liabilities,  joint or several,  to which such  Company  Indemnified  Person may
become subject,  under the Securities Act or otherwise,  insofar as such losses,
claims,  damages or liabilities (or actions in respect  thereof) arise out of or
are based upon (i) in whole or in part any inaccuracy of any of such Purchaser's
representations  and  warranties  in  Section  5 or (ii) in whole or in part the
failure of such Purchaser to perform its obligations in Section 6.01(f) or 6.08;
and will  reimburse  the  Company  Indemnified  Persons  for any legal and other
expenses  reasonably  incurred by the Company  Indemnified Persons in connection
with  investigating or defending any such actions or claims as such expenses are
incurred.  The indemnity agreement set forth in this Section 9.02(b) shall be in
addition to any liabilities that each Purchaser may otherwise have.

               (c) Notifications and Other Indemnification Procedures.  Promptly
after receipt by a Purchaser  Indemnified Person or a Company Indemnified Person
(each,  an  "Indemnified  Person") of notice of the  commencement of any action,
such  Indemnified  Person  shall,  if a claim in  respect  thereof is to be made
against an indemnifying  party under Section 9.02(a) or 9.02(b),  as applicable,
notify such indemnifying party in writing of the commencement  thereof,  but the
omission  so to notify  the  indemnifying  party  will not  relieve  it from any
liability  which it may have to any  Indemnified  Person  otherwise  than  under
Section 9.02(a) or 9.02(b), as applicable, or to the extent it is not materially
prejudiced  as a proximate  result of such  failure.  In case any such action is
brought against any Indemnified Person and it shall notify an indemnifying party
of the  commencement  thereof,  the  indemnifying  party  will  be  entitled  to
participate  therein and, to the extent that it shall elect within 30 days after
receiving  any such  notification,  jointly  with any other  indemnifying  party
similarly notified,  to assume the defense thereof, with counsel satisfactory to
such  Indemnified  Person  (who  shall  not,  except  with  the  consent  of the
Indemnified Person, which consent shall not be unreasonably withheld, be counsel
to the indemnifying  party),  and, after notice from the  indemnifying  party to
such Indemnified  Person of its election so to assume the defense  thereof,  the
indemnifying  party shall not be liable to such  Indemnified  Person  under such
paragraph for any legal expenses of other counsel or any other expenses, in each
case  subsequently  incurred by such Indemnified  Person, in connection with the
defense thereof other than reasonable  costs of  investigation.  Notwithstanding
the foregoing,  any  Indemnified  Person shall have the right to employ separate
counsel in any such action and participate in the defense thereof,  but the fees
and expenses of such counsel shall be at the expense of the  Indemnified  Person
unless  (i) the  Indemnified  Person  shall have been  advised  by counsel  that
representation of the Indemnified Person by counsel provided by the indemnifying
party would be inappropriate  due to actual or potential  conflicting  interests
between the indemnifying party and the Indemnified Person,  including situations
in which  there are one or more  legal  defenses  available  to the  Indemnified
Person  that  are  different  from  or  additional  to  those  available  to the
indemnifying party, (ii) the indemnifying party shall have authorized in writing
the  employment  of counsel  for the  Indemnified  Person at the  expense of the
indemnifying  party or (iii) the indemnifying  party shall have failed to assume
the defense or retain counsel reasonably satisfactory to the Indemnified Person;
provided, however, that the indemnifying party shall not, in connection with any
one such action or proceeding or separate but  substantially  similar actions or
proceedings arising out of the same general allegations,  be liable for the fees
and  expenses of more than one  separate  firm of  attorneys at any time for all
Indemnified  Persons,  except to the extent that local  counsel,  in addition to
their regular counsel,  is required in order to effectively  defend against such
action or proceeding.  No indemnifying party shall,  without the written consent
of the Indemnified Person, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or  threatened  action or
claim  in  respect  of  which  indemnification  or  contribution  may be  sought
hereunder (whether or not the Indemnified Person is an actual or potential party
to such action or claim)  unless such  settlement,  compromise  or judgment  (i)
includes an unconditional  release of the Indemnified  Person from all liability
arising out of such action or claim and (ii) does not include a statement  as to
or an  admission of fault,  culpability  or a failure to act, by or on behalf of
any Indemnified Person.

               9.03.  Contribution.  If  the  indemnification  provided  for  in
Section 9.02 is  unavailable  or  insufficient  to hold harmless an  Indemnified
Person  under  paragraph  (a) or (b) of Section  9.02 in respect of any  losses,
claims,  damages or  liabilities  (or  actions in respect  thereof)  referred to
therein,  then each  indemnifying  party  shall,  in lieu of  indemnifying  such
Indemnified Person, contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (or actions in
respect  thereof)  in such  proportion  as is  appropriate  to  reflect  the (i)
relative  benefits received by the Company on the one hand and the Purchasers on
the other  hand from the  issuance  and sale of the  Securities;  or (ii) if the
allocation  provided in clause (i) is not permitted by  Applicable  Law, in such
proportion as is appropriate to reflect not only the related  benefits  referred
to in clause (i) above but also the relative fault of the indemnifying  party on
the one hand and the  Indemnified  Person  on the other in  connection  with the
statements  or  omissions  which  resulted in such  losses,  claims,  damages or
liabilities  (or  actions in  respect  thereof),  as well as any other  relevant
equitable  considerations.  The relative benefits received by the Company on the
one hand and the Purchasers on the other hand in connection with the sale of the
Securities  pursuant  to  this  Agreement  shall  be  deemed  to be in the  same
respective  proportions  as the  total net  proceeds  from the  offering  of the
Securities  pursuant to this Agreement (before deducting  expenses)  received by
the Company  and the fee payable to the  Purchasers  at the  Closing  Time.  The
relative fault shall be determined by reference to, among other things,  whether
the untrue or alleged  untrue  statement  of a material  fact or the omission or
alleged omission to state a material fact relates to information supplied by the
indemnifying  party on the one hand or the  Indemnified  Person on the other and
the parties' relative intent,  knowledge,  access to information and opportunity
to correct or prevent  such  statement or  omission.  The parties  agree that it
would not be just and equitable if  contributions  pursuant to this Section 9.03
were  determined by pro rata allocation  (even if the  Indemnified  Persons were
treated as one entity for such  purpose)  or by any other  method of  allocation
which does not take account of the equitable considerations referred to above in
this  Section  9.03.  The amount paid or payable by an  Indemnified  Person as a
result of the  losses,  claims,  damages or  liabilities  (or actions in respect
thereof)  referred to above in this  Section 9.03 shall be deemed to include any
legal or other  expenses  reasonably  incurred  by such  Indemnified  Person  in
connection   with   investigating   or  defending  any  such  action  or  claim.
Notwithstanding  the  provisions  of this Section  9.03,  no Purchaser  shall be
required to contribute  any amount which,  when taken  together with any amounts
paid by such  Purchaser  under  Section  9.02(b)  exceeds the fee payable to the
Purchasers at the Closing Time. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution   from  any  person   who  was  not   guilty  of  such   fraudulent
misrepresentation.

               The  obligations  of the  Company and the  Purchasers  under this
Section  9.03 shall be in  addition to any  liability  which the Company and the
respective Purchasers may otherwise have.

               9.04.  Survival.  The  obligations  of  the  Company  under  this
Section 9 will survive the payment or transfer of any Security, the enforcement,
amendment or waiver of any provision of this  Agreement and the  termination  of
this Agreement.

               9.05.  Termination.

               (a) The  Purchasers  and the Company may terminate this Agreement
by written  consent of each  Purchaser  and the Company at any time prior to the
Closing Time.  The Purchasers  may terminate  this  Agreement,  by notice to the
Company,  (1) at any  time  at or  prior  to  December  31,  1999  if any of the
conditions in Section 3 are not satisfied or waived in writing by the Purchasers
or are not capable of being so  satisfied  or waived at or prior to December 31,
1999, (2) if the Transactions  have not closed prior to December 31, 1999 or (3)
at any time at or prior to the Closing Time if there has been, since the time of
execution of this Agreement or since the Audit Date, any material adverse change
in the  business,  prospects,  operations,  results of  operations  or financial
condition  of the Company and its  Subsidiaries  considered  as one  enterprise,
whether or not arising in the ordinary course of business.

               (b) Liabilities. If this Agreement is terminated pursuant to this
Section 9.05, such  termination  shall be without  liability of any party to any
other party except as provided in Section 9.01 hereof, and provided further that
Sections 1, 9.02, 9.03, 9.04, 10.08 and 10.11 shall survive such termination and
remain in full force and effect.

                                   SECTION 10

                                  MISCELLANEOUS

               10.01.  Notices.  Except as otherwise  expressly provided herein,
all  notices  and other  communications  shall have been duly given and shall be
effective  (a) when  delivered,  (b) when  transmitted  via  telecopy  (or other
facsimile  device)  to the  number  set out below if the  sender on the same day
sends a  confirming  copy of such  notice  by a  recognized  overnight  delivery
service (charges  prepaid),  (c) the day following the day on which the same has
been delivered prepaid to a reputable  national overnight air courier service or
(d) the  third  Business  Day  following  the day on  which  the same is sent by
certified or registered mail,  postage  prepaid,  in each case to the respective
parties at the address set forth below,  or at such other  address as such party
may specify by written notice to the other party hereto:

               (i) if to a Purchaser  or its  nominee,  to the  Purchaser or its
          nominee at the address  specified for such  communications in Schedule
          A, with a copy to  (A)Cahill  Gordon & Reindel,  80 Pine  Street,  New
          York, New York 10005-1702, attention: Jonathan A. Schaffzin, Esq., and
          (B) Kennedy Covington Lobdell & Hickman,  L.L.P., 100 N. Tryon Street,
          Suite 4200,  Charlotte,  North  Carolina  28202,  attention:  Henry W.
          Flint,  Esq., or at such other address as the Purchaser or its nominee
          shall have specified to the Company in writing;

               (ii) if to any other Holder to such Holder at the address of such
          Holder  appearing  in the Security  Register or such other  address as
          such Holder shall have specified to the Company in writing; or

               (iii) if to the Company at 390 South Woods Mill Road,  Suite 350,
          Chesterfield, Missouri 63017, attention: Eric Fencl, Esq., with a copy
          to (A) Madison  Dearborn Capital Partners III, L.P., Suite 3800, Three
          First National Plaza, Chicago,  Illinois 60602, attention:  Timothy M.
          Hurd,  and (B) Kirkland & Ellis,  200 E. Randolph,  Chicago,  Illinois
          60601,  attention:  Michael H. Kerr, P.C., or at such other address as
          the Company shall have specified to the Holders in writing.

               10.02.  Benefit of  Agreement;  Assignments  and  Participations.
Except with respect to Section 7.10 and 7.11 and as otherwise expressly provided
herein,  all  covenants,  agreements  and  other  provisions  contained  in this
Agreement by or on behalf of any of the parties hereto shall bind,  inure to the
benefit  of and be  enforceable  by  their  respective  successors  and  assigns
(including,  without limitation, any subsequent holder of a Security) whether so
expressed  or not  (other  than  Section  6.08  as to  Persons  other  than  the
Purchasers and their Affiliates);  provided,  however,  that the Company may not
assign and transfer any of its rights or  obligations  without the prior written
consent of the other parties  hereto and each  Subsequent  Purchaser,  except as
otherwise permitted under paragraph (j)(viii) of the Certificate of Designation.

               Nothing in this Agreement,  the Certificate of Designation or the
Securities,  express or implied, shall give to any Person other than the parties
hereto,  their  successors  and assigns and the Holders from time to time of the
Securities  any benefit or any legal or equitable  right,  remedy or claim under
this Agreement.

               10.03. No Waiver; Remedies Cumulative. No failure or delay on the
part of any  party  hereto or any  Holder  in  exercising  any  right,  power or
privilege  hereunder,   under  the  Certificate  of  Designation  or  under  the
Securities  and no course of dealing  between the Company and any other party or
Holder  shall  operate  as a waiver  thereof;  nor shall any  single or  partial
exercise of any right,  power or privilege  hereunder,  under the Certificate of
Designation  or under the  Securities  preclude  any other or  further  exercise
thereof or the  exercise of any other  right,  power or  privilege  hereunder or
thereunder.  The rights and remedies  provided  herein,  in the  Certificate  of
Designation and in the Securities are cumulative and not exclusive of any rights
or remedies which the parties or Holders would  otherwise  have. No notice to or
demand on the  Company in any case  shall  entitle  the  Company to any other or
further  notice or demand in  similar or other  circumstances  or  constitute  a
waiver of the rights of the other parties  hereto or the Holders to any other or
further action in any circumstances without notice or demand.

               10.04.  Amendments,  Waivers and Consents.  This Agreement may be
amended,   and  the  observance  of  any  term  hereof  may  be  waived  (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required  Holders (or, if prior to the Closing Time,  Purchasers
who have agreed to purchase a majority of the shares of Senior Preferred Stock);
provided,  however,  that no such  amendment  or waiver  may,  without the prior
written  consent  of the  Holder of each  share of Senior  Preferred  Stock then
outstanding  and  affected  thereby,  subject  any  Purchaser  or  Holder to any
additional obligation  hereunder.  No amendment or waiver of this Agreement will
extend to or affect any obligation,  covenant or agreement not expressly amended
or waived or thereby impair any right consequent  thereon.  As used herein,  the
term this "Agreement" and references thereto shall mean this Agreement as it may
from time to time be amended or supplemented.

               10.05. Counterparts. This Agreement may be executed in any number
of  counterparts,  each of which  when so  executed  and  delivered  shall be an
original,  but all of which shall  constitute  one and the same  instrument.  It
shall not be necessary  in making proof of this  Agreement to produce or account
for more than one such counterpart.  Each counterpart may consist of a number of
copies hereof,  each signed by less than all, but together signed by all, of the
parties hereto.

               10.06.  Reproduction.   This  Agreement,  the  other  Transaction
Documents  and all documents  relating  hereto and thereto,  including,  without
limitation,  (a)  consents,  waivers and  modifications  that may  hereafter  be
executed,  (b) documents  received by the Purchasers at the Closing Time (except
the  shares  of Senior  Preferred  Stock or Common  Stock  themselves),  and (c)
financial statements, certificates and other information previously or hereafter
furnished  in  connection  herewith,  may be  reproduced  by  any  photographic,
photostatic,  microfilm,  microcard,  miniature  photographic  or other  similar
process and any original  document so reproduced  may be destroyed.  The Company
agrees and stipulates  that, to the extent permitted by Applicable Law, any such
reproduction  shall be  admissible  in  evidence as the  original  itself in any
judicial  or  administrative  proceeding  (whether  or not  the  original  is in
existence and whether or not such reproduction was made in the regular course of
business)  and  any  enlargement,  facsimile  or  further  reproduction  of such
reproduction shall likewise be admissible in evidence.  This Section 10.06 shall
not prohibit the Company,  any other party hereto or any Holder from  contesting
any such reproduction to the same extent that it could contest the original,  or
from   introducing   evidence  to   demonstrate   the  inaccuracy  of  any  such
reproduction.

               10.07.  Headings.  The  headings  of the sections and subsections
hereof are  provided  for  convenience  only and shall not in any way affect the
meaning or construction of any provision of this Agreement.

               10.08.  Governing Law; Submission to Jurisdiction; Venue.

               (a) THIS  AGREEMENT  AND THE  SECURITIES  SHALL BE CONSTRUED  AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW  PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE  APPLICATION  OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.

               (b) If any action,  proceeding or litigation  shall be brought by
the Company, any Purchaser or any Holder in order to enforce any right or remedy
under this  Agreement or any of the  Securities,  the Company and each Purchaser
hereby consent and will submit, and, in the case of the Company, will cause each
of its Subsidiaries to submit, to the jurisdiction of any state or federal court
of  competent  jurisdiction  sitting  within the area  comprising  the  Southern
District  of New  York on the  date of this  Agreement.  The  Company  and  each
Purchaser hereby irrevocably waive any objection, including, but not limited to,
any  objection  to the  laying  of venue or based on the  grounds  of forum  non
conveniens,  which they may now or  hereafter  have to the  bringing of any such
action,  proceeding  or litigation  in such  jurisdiction.  The Company and each
Purchaser  further  agree that they shall not,  and, in the case of the Company,
shall cause its Subsidiaries not to, bring any action,  proceeding or litigation
arising out of this Agreement,  the Securities or any other Transaction Document
in any state or federal court other than any state or federal court of competent
jurisdiction  sitting within the area  comprising  the Southern  District of New
York on the date of this Agreement.

               (c) The Company hereby designates CT Corporation at an address in
New York City  designated  at the Closing Time as the  designee,  appointee  and
agent of the Company (the "Agent") to receive, for and on behalf of the Company,
service of process in such jurisdiction in any action,  proceeding or litigation
with respect to this Agreement,  the Securities or any of the other  Transaction
Documents (it being  understood  that, with prior written notice to the Required
Holders,  the  Company  may  designate  any  other  Person  as its Agent for the
purposes of this Section 10.08(c)). It is understood that a copy of such process
served on such agent will be  promptly  forwarded  by mail to the Company at its
address set forth opposite its signature  below,  but the failure of the Company
to have  received  such copy  shall not  affect in any way the  service  of such
process.  The Company further irrevocably  consents to the service of process of
any of the aforementioned courts in any such action, proceeding or litigation by
the mailing of copies thereof by registered or certified mail,  postage prepaid,
to the Company at its said address, such service to become effective thirty (30)
days after such mailing.

               (d) Nothing  herein  shall affect the right of the Company or any
Holder of a share of Senior Preferred Stock to serve process in any other manner
permitted by law or to commence legal  proceedings or otherwise  proceed against
any party hereto in any other  jurisdiction.  If service of process is made on a
designated  agent it should  be made by either  (i)  personal  delivery  or (ii)
mailing a copy of summons and complaint to the agent via registered or certified
mail, return receipt requested.

               (e) THE  COMPANY  AND EACH  PURCHASER  HEREBY  WAIVE  ANY AND ALL
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION,  PROCEEDING OR
LITIGATION  DIRECTLY OR INDIRECTLY  ARISING OUT OF, UNDER OR IN CONNECTION  WITH
THIS AGREEMENT OR ANY OF THE SECURITIES.

               10.09.  Severability.  If any  provision  of  this  Agreement  is
determined to be illegal,  invalid or  unenforceable,  such  provision  shall be
fully severable to the extent of such illegality, invalidity or unenforceability
and the remaining  provisions shall remain in full force and effect and shall be
construed  without  giving  effect  to the  illegal,  invalid  or  unenforceable
provisions.

               10.10.   Entirety.   This  Agreement   together  with  the  other
Transaction  Documents represents the entire agreement of the parties hereto and
thereto,  and  supersedes  all  prior  agreements  and  understandings,  oral or
written,  if any,  relating to the  Transaction  Documents  or the  transactions
contemplated herein or therein.

               10.11.   Survival  of   Representations   and   Warranties.   All
representations and warranties and covenants and indemnities made by the Company
herein shall survive the execution and delivery of this Agreement,  the issuance
and transfer of all or any portion of the  Securities  and the payment of Senior
Preferred  Stock  and  any  other  obligations  hereunder,   regardless  of  any
investigation  made at any time by or on behalf of the  Purchasers  or any other
holder that is Affiliated with the Purchasers; provided that the representations
and  warranties  made by the  Company  herein or  pursuant  to the  certificates
contemplated  hereby  shall  terminate  180 days  after  the  Closing  Time (the
"Survival Termination Date");  provided,  further, that if the Company's audited
financial  statements are not completed by the 150th day after the Closing Time,
the Survival  Termination Date shall be tolled for one day for every day between
the 150th day after the Closing Time and the day the Company's audited financial
statements are completed.  All statements contained in any certificate delivered
by or on  behalf  of the  Company  pursuant  to this  Agreement  shall be deemed
representations and warranties of the Company under this Agreement.

               10.12.  Incorporation.   All  Exhibits   and  Schedules  attached
hereto are incorporated as part of this Agreement as if fully set forth herein.

               10.13. Press Releases and Public Announcements.  No party to this
Agreement shall issue any press release or make any public announcement relating
to the subject  matter of this  Agreement  prior to the Closing Time without the
prior  written  approval of each of the  Purchasers  and the Company;  provided,
however, that any party may make any public disclosure it believes in good faith
is required by Applicable Law or any listing or trading agreement concerning its
publicly-traded  securities  (in which  case the  disclosing  party will use its
reasonable  best  efforts  to advise  the  other  parties  prior to  making  the
disclosure).

               10.14. Public  Disclosures.  The Company shall not, and shall not
permit  any of its  Subsidiaries  to,  disclose  the  name  or  identity  of any
Purchaser  as an investor in the  Company in any press  release or other  public
announcement or in any document or material filed with any governmental  entity,
unless  (i) such  Purchaser  consents  to such  disclosure  or (ii) the  Company
believes  such   disclosure  is  required  by  applicable  law  or  governmental
regulations  or by  order  of a  court  of  competent  jurisdiction  or  in  any
registration  statement, in which case the Company or such Subsidiary shall give
prior written  notice to such  Purchaser  describing  in  reasonable  detail the
proposed  content of such  disclosure  and shall permit such Purchaser to review
and comment upon the form and substance of such disclosure.

               10.15.  Heller.  Notwithstanding   anything   to  the   contrary,
nothing containedin this Agreement shall affect,  limit or impair the rights and
remedies  of  Heller  Financial,  Inc.  in its  capacity  as (i) a lender to the
Company or any Subsidiary  pursuant to any agreement  under which the Company or
any Subsidiary has borrowed or may borrow money, and (ii) the beneficiary of any
and all agreements entered into by the Company or any Subsidiary for the benefit
of Heller Financial, Inc., as lender.


<PAGE>


               IN  WITNESS  WHEREOF,  each of the  parties  hereto  has caused a
counterpart  of this  Agreement to be duly executed and delivered as of the date
first above written.

                                               OUTSOURCING SOLUTIONS INC.

                                                By: /s/ Gary L. Weller
                                                    ----------------------------
                                                     Name: Gary L. Weller
                                                     Title: EVP

                                               ARES LEVERAGED INVESTMENT FUND,
                                                 L.P.

                                                By:  Ares Management, L.P.,
                                                     its General Partner

                                                By: /s/ Jeffrey Serota
                                                    ----------------------------
                                                     Name: Jeffrey Serota
                                                     Title: Vice President


                                               ARES LEVERAGED INVESTMENT FUND
                                                 II, L.P.

                                                By:  Ares Management II, L.P.,
                                                     its General Partner

                                                By: /s/ Jeffrey Serota
                                                    ----------------------------
                                                     Name: Jeffrey Serota
                                                     Title: Vice President

                                                DB CAPITAL INVESTORS, L.P.

                                                By: DB Capital Parnters, L.P.
                                                       its General Partner

                                                By DB Capital Parners, Inc.

                                                By: /s/ Tyler Zachem
                                                    ----------------------------
                                                     Name: Tyler Zachem
                                                     Title: Managing Director

<PAGE>

                                               FIRST UNION INVESTORS, INC.

                                                By: /s/ Frederick W. Eubank
                                                    ----------------------------
                                                     Name: Frederick W. Eubank,
                                                             II
                                                     Title: Senior Vice
                                                                President

                                               ABBOTT CAPITAL 1330 INVESTORS
                                                  II, L.P.

                                                By: Abbott Capital 1330  GenPar
                                                       II, L.L.C.,
                                                       its General Partner

                                                By: /s/ Thomas W. Hallagan
                                                    ----------------------------
                                                     Name:  Thomas W. Hallagan
                                                     Title:  Manager

                                               ABBOTT CAPITAL PRIVATE EQUITY
                                                  FUND III, L.P.

                                                By:  Abbott Capital Management,
                                                       L.L.C.,
                                                       its General Partner

                                                By: /s/ Raymond L. Held
                                                    ----------------------------
                                                      Name: Raymond L. Held
                                                      Title: Managind Director

                                                BNY PARTNERS FUND, L.L.C.

                                                By: BNY Private Investment
                                                      Management, Inc.,
                                                    its Member Manager

                                                By: /s/ Burton M. Siegal
                                                    ----------------------------
                                                    Name: Burton M. Siegal
                                                    Title: Senior Vice President


<PAGE>



                                               HELLER FINANCIAL, INC.

                                                By: /s/ Timothy P. Davitt
                                                    ----------------------------
                                                     Name: Timothy P. Davitt
                                                     Title: Vice President

                                               MAGNETITE ASSET INVESTORS L.L.C.

                                                By:  BlackRock Financial
                                                       Management, Inc.,
                                                       as Managing Member

                                                By: /s/ Dennis M. Schaney
                                                    ----------------------------
                                                     Name: Dennis M. Schaney
                                                     Title: Managing Director

<PAGE>