<PAGE>
 
                                                                    EXHIBIT 2.12

                           STOCK PURCHASE AGREEMENT

     This Stock Purchase Agreement (the "Agreement") is entered into effective
as of September 4, 1997 by and  among LITIGATION RESOURCES OF AMERICA, INC., a
Texas corporation (the "Parent"), LITIGATION RESOURCES OF AMERICA-NORTHEAST,
INC., a New York corporation (the "Buyer"), and MARTIN H. BLOCK, an individual
("Mr. Block" or "Seller").  Seller is the sole shareholder of BLOCK COURT
REPORTING, INC., a District of Columbia corporation (the  "Company").  The
Company is the sole shareholder of Block Tape Transcription Services, Inc., a
District of Columbia corporation ("Block Transcription"). Seller was the sole
shareholder of Block Court Reporting Services, Inc., a District of Columbia
corporation ("Block Predecessor") whose Certificate and Articles of
Incorporation were revoked by Proclamation.  Buyer, Parent and Seller may be
hereinafter referred to collectively as the "Parties" and individually as a
"Party."

     This Agreement contemplates a transaction in which the Buyer will purchase
from the Seller, and the Seller will sell to the Buyer, all of the outstanding
capital stock of the Company in return for cash and the other consideration set
forth in SECTION 2 (b) below.

     Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.

     1.  CERTAIN DEFINITIONS.

     "Accounts Payable Report" means a report prepared as of the time specified
containing a summary of the outstanding accounts payable of the Company to each
of its suppliers,  court reporters or other creditors by creditor and age of
each account payable.

     "Accounts Receivable" means all amounts due and owing to the Company by
each of its customers.

     "Accounts Receivable Report" means a report prepared as of the time
specified containing a summary of the outstanding Accounts Receivable of the
Company by customer and age of each Account Receivable.

     "Accredited Investor" has the meaning set forth in Regulation D promulgated
under the Securities Act.

     "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.

     "Balance Sheet Report" means the balance sheet of the Company as of a given
date showing the assets, liabilities and equity of the Company prepared by the
Company in accordance with GAAP on a consistent basis as with prior time
periods.
<PAGE>
 
     "Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or is reasonably likely to form the
basis for any specified consequences.

     "Block Employment Agreement" means that certain Employment Agreement by and
between the Company and Mr. Block.

     "Block Finder's Fee Agreement" means that certain Finder's Fee Agreement by
and between the Parent and Mr. Block.

     "Block Noncompetition Agreement" means that certain Confidentiality and
Noncompetition Agreement by and between the  Buyer and Mr. Block.

     "Block Predecessor" means Block Court Reporting Services, Inc. a District
of Columbia corporation.

     "Block Transcription" means Block Tape Transcription Services, Inc., a
District of Columbia corporation and a wholly-owned subsidiary of the Company.

     "Buyer" shall mean Litigation Resources of America-Northeast, Inc., a New
York corporation.

     "Buyer's Accountants" shall mean the independent certified public
accounting firm of Coopers & Lybrand located in Houston, Texas.

     "Buyer's Disclosure Schedule" has the meaning set forth in SECTION 4B
below.

     "Buyer Financial Statements" has the meaning set forth in SECTION 4B(D)
below.

     "Buyer Indemnified Parties" has the meaning set forth in SECTION 7(B)
below.

     "Cash Payment" has the meaning set forth in SECTION 2(B) below.

     "Charges" shall mean all federal, state, county, city, municipal, local,
foreign or other governmental taxes at the time due and payable, levies,
assessments, charges, liens, claims or encumbrances upon or relating to (i) any
of a corporation's employees, payroll, income or gross receipts, (ii) any of a
corporation's ownership or use of any of its assets, or (iii) any other aspect
of a corporation's business.

     "Closing" has the meaning set forth in SECTION 2(C) below.

     "Closing Date" has the meaning set forth in SECTION 2(C) below.

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

                                      -2-
<PAGE>
 
     "Company" shall mean Block Court Reporting, Inc., a District of Columbia
corporation.

     "Company's Accountants" shall mean the independent certified public
accounting firm of Klavsner, Bartko & Dubinsky, P.A.

     "Confidential Information" means any information concerning the businesses
and affairs of the Company that is not (a) generally known or available to the
public; (b) after the date of this Agreement, generally known or readily
available through no violation of this Agreement; or (c)  in or does not
hereafter become a part of the public domain through no violation of this
Agreement.

     "Controlled Group" means the Company and any trade or business (whether or
not incorporated) which together with the Company would be deemed to be a
"single employer" within the meaning of ERISA Section 4001(b)(1) or subsections
(b), (c), (m) or (o) of Code Section 414.

     "Customarily Permitted Liens" shall mean:

     (a) Liens for ad valorem taxes, assessments or other governmental Charges
or levies, not yet due and payable;

     (b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other like Liens imposed by law, created in the
ordinary course of business and for amounts not yet due (or which are being
contested in good faith by appropriate proceedings or other appropriate actions
which are sufficient to prevent imminent foreclosure of such Liens); and

     (c) easements (including, without limitation, reciprocal easement
agreements and utility agreements), encroachments, variations and other
restrictions, Charges or encumbrances customary to the type of real property
affected and which do not impair the current use, occupancy, value or the
marketability of title of the real property subject thereto.

     "Damages" has the meaning set forth in SECTION 7(B) below.

     "Effective Date" shall mean 12:01 a.m. on the Closing Date.

     "Effective Date Accounts Payable Report" means the Accounts Payable Report
for the Company as of the Effective Date.

     "Effective Date Accounts Receivable" shall mean the entire amount of
Accounts Receivable for the Company as of the Effective Date.

     "Effective Date Accounts Receivable Report" means the Accounts Receivable
Report for the Company as of the Effective Date.

     "Effective Date Balance Sheet Report" means the Balance Sheet Report for
the Company as of the close of business on the Effective Date.

                                      -3-
<PAGE>
 
     "Employee Benefit Plan" means any (a) Employee Pension Benefit Plan, (b)
Employee Welfare Benefit Plan, or (c) personnel policy, stock option plan,
collective bargaining agreement, bonus plan or arrangement, incentive award plan
or arrangement, vacation policy, severance pay plan, policy or agreement,
deferred compensation agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement, employment agreement and
each other employee benefit plan, agreement, arrangement, program, practice or
understanding which is not described in clause (a) or (b) of this sentence.

     "Employee Pension Benefit Plan" has the meaning set forth in ERISA SECTION
3(2), including, but not limited to, employee pension benefit plans, such as
foreign plans, which are not subject to the provisions of ERISA.

     "Employee Welfare Benefit Plan" has the meaning set forth in ERISA SECTION
3(1), including, but not limited to, employee welfare benefit plans, such as
foreign plans, which are not subject to the provisions of ERISA.

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

     "Fiduciary" has the meaning set forth in ERISA SECTION 3(21).

     "Final Net Worth" means the Net Worth as of the Effective Date as
determined in accordance with SECTION  2(E) below.

     "Financial Statements" has the meaning set forth in SECTION 4A(e) below.

     "GAAP" means generally accepted accounting principles as in effect from
time to time.

     "Guaranteed Net Worth" means $75,000.

     "Income Statement Reports" means a statement of revenues and expenses of
the Company as of a specified date prepared by the Company on an accrual basis
and on a basis consistent with prior time periods.

     "IRS" means the United States Internal Revenue Service or such equivalent
successor agency of the United States with the responsibility of assessing
and/or collecting Taxes.

     "Investor" shall mean Pecks.

     "Knowledge" means an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:

     (a)  such individual is actually aware of such fact or other matter; or

                                      -4-
<PAGE>
 
     (b)  a prudent individual could be expected to discover or otherwise become
          aware of such fact or other matter in the course of conducting a
          reasonably comprehensive investigation concerning the existence of
          such fact or other matter.

A person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) has Knowledge of such fact or other matter.

     "Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.

     "Liens" means any mortgages, deeds of trust, liens, security interests,
pledges, claims, charges, liabilities, obligations, or other encumbrances.

     "Net Worth" means the dollar amount of  total assets minus the total
liabilities of the Company as of a given time period as determined by the
Balance Sheet Report as of such time period.

     "Note 1" has the meaning set forth in SECTION 2(B)(II) below.

     "Note 2" has the meaning set forth in SECTION 2(B)(III) below.

     "Notice of Action" has the meaning set forth in SECTION 7(B) below.

     "Notice of Election" has the meaning set forth in SECTION 7(B) below.

     "Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).

     "Parent" has the meaning set forth in the preamble of this Agreement.

     "Party" shall mean, individually, the Buyer, the Parent or the Seller.

     "Parent Shares" means any of the shares of common stock of the Parent.

     "Parties" shall mean, collectively, the Buyer and the Seller.

     "PBGC" means the Pension Benefit Guaranty Corporation.

     "Pecks" shall mean Pecks Management Partners Ltd., a New York limited
partnership.

     "Permitted Encumbrances" with respect to property of a Party shall mean (i)
Security Interests expressly permitted, or consented in writing to by the other
Party; (ii) Purchase Money 

                                      -5-
<PAGE>
 
Liens; (iii) Customarily Permitted Liens; and (iv) Liens of judgment creditors
provided such Liens do not exceed $3,000 individually or $15,000 in the
aggregate (other than Liens bonded or insured to the reasonable satisfaction of
the other Party).

     "Person" means an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).

     "Pledge Agreement" has the meaning set forth in SECTION  5(A) below.

     "Prohibited Transaction" has the meaning set forth in ERISA Section 406 and
Code Section 4975.

     "Public Offering" means the sale by the Parent of any of its securities for
cash in an underwritten public offering registered on the appropriate form with
the Securities and Exchange Commission.

     "Purchase Money Liens" shall mean Liens incurred in connection with the
acquisition of any asset; provided that (i) each such Lien shall attach only to
the asset to be acquired, (ii) a description of the asset so acquired is
furnished to the other Party, and (iii) the indebtedness incurred in connection
with such acquisitions shall not individually exceed $3,000 or in the aggregate
exceed $15,000.

     "Purchase Price" has the meaning described in SECTION 2(B) below.

     "Registration Rights Agreements" has the meaning set forth in SECTION
7(A)(ix) below.

     "Reportable Event" has the meaning set forth in ERISA SECTION 4043.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.

     "Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's and similar
liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
Purchase Money Liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.

     "Seller" shall mean Mr. Block.

     "Seller's Disclosure Schedule" has the meaning set forth in SECTION 4A
below.

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<PAGE>
 
     "Senior Lender" shall mean Texas Commerce Bank, N.A.

     "Shareholders' Agreement" shall mean that certain First Amended and
Restated Shareholders' Agreement by and among the Buyer and its shareholders, or
such other form of shareholders' agreement as may be required by Parent.

     "Subject Shares" means all of the issued and outstanding capital stock of
the Company, all of which are described in SECTION 4A(b) of the Seller's
Disclosure Schedule.

     "Subordination Agreements" means those certain Subordination Agreements of
even date herewith entered into among Seller and any of the Company, the Parent,
Affiliates, and holders of Senior Indebtedness (as such term is defined in 
Note 1 or Note 2).

     "Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors thereof.

     "Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium
windfall profits, environmental (including taxes under Code Section 5(A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.

     "Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

     2.   PURCHASE AND SALE OF SUBJECT SHARES.

     A.   BASIC TRANSACTION.  On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees
to sell to the Buyer, all of the Subject Shares for the consideration specified
below in this SECTION 2.

     B.   PURCHASE PRICE.  The purchase price is One Million, One Hundred
Thousand and No/100 Dollars ($1,100,000.00) to be paid and delivered by the
Buyer to the Seller on the Closing Date, subject to adjustments thereto under
this Agreement, as follows (collectively, the "Purchase Price"):

          (i)  Subject to the provisions of SECTION 2(F), by wire transfer to
     the Gnessin & Waldman Escrow Account for the benefit of Seller, in the
     amount of Six Hundred Thousand and No/100 Dollars ($600,000.00) (the "Cash
     Payment")

                                      -7-
<PAGE>
 
          (ii)  Subject to the provisions of SECTION 2(F), a convertible
     subordinated promissory note in substantially the form of EXHIBIT A-1 in
     the amount of Two Hundred Forty Thousand and No/100 Dollars ($240,000.00),
     bearing interest and being due, payable, convertible and subordinated as
     provided therein ("Note 1"); and

          (iii) Subject to the provisions of SECTION 2(F), a convertible
     subordinated promissory note in substantially the form of EXHIBIT A-2 in
     the amount of Three Hundred Sixty Thousand and No/100 Dollars
     ($360,000.00), bearing interest and being due, payable, convertible and
     subordinated as provided therein ("Note 2").

     C.   THE CLOSING.  The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place  effective as of the effective date
hereof by Seller delivering to Buyer, and Buyer delivering to Seller, by
overnight courier, the items described in SECTION 2(D) below, except for Seller
delivering the Cash Payment by wire transfer, unless otherwise mutually agreed,
on  the effective date hereof (the "Closing Date").

     D.   DELIVERIES AT THE CLOSING.  At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in SECTION 6(A) below, (ii) the Buyer will deliver to the Seller the
various certificates, instruments, and documents referred to in SECTION 6(B)
below, (iii) the Seller will deliver to the Buyer stock certificates
representing all of the Subject Shares, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) the Buyer will deliver to the Seller the
Purchase Price.

     E.   DETERMINATION OF FINAL NET WORTH.  The Effective Date Balance Sheet
Report, the Effective Date Accounts Receivable Report and the Effective Date
Accounts Payable Report (collectively, the "Effective Date Financial Reports")
shall be prepared by the Company and the Company's Accountants as promptly as
possible after the Closing, and the Seller shall deliver the Effective Date
Reports to the Buyer and the Buyer's Accountants as soon as possible but in no
event later than 30 days after the Closing Date.  The Buyer's Accountants shall
review the Effective Date Financial Reports (including any corresponding work
papers of Company's Accountants) and report to the  Company's Accountants in
writing within 15 days of receipt thereof of any discrepancy.  If the Company's
Accountants and the Buyer's Accountants cannot resolve such discrepancy within
15 days after the Company's Accountants receipt of such report, then they shall
so notify the Seller and the Buyer, and the Seller and the Buyer shall attempt
to resolve the discrepancy within 15 days of such notice.  If the Seller and the
Buyer cannot resolve the discrepancy to their mutual satisfaction, another
independent public accounting firm acceptable to the Seller and the Buyer shall
be retained to review the Effective Date Financial Reports.  Such firm's
conclusions as to any accounting issues relating to the Effective Date Financial
Reports for purposes of determining the Final Net Worth of the Company shall be
conclusive.  The Seller and the Buyer shall share equally in the expenses of
retaining such accounting firm.  The Buyer shall pay the expenses of the Buyer's
Accountants for their review of the Effective Date Financial Reports, and the
Seller shall pay the expenses of Company's Accountants for their review of the
Effective Date Financial Reports.

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<PAGE>
 
     F.   POST-CLOSING ADJUSTMENT OF PURCHASE PRICE.  After the Closing Date,
the Purchase Price set forth in SECTION 2(B) shall be adjusted as follows: (i)
if the Final Net Worth of the Company as finally determined pursuant to SECTION
2(E) shall be more than the Guaranteed Net Worth, then each element of the
Purchase Price (cash,  principal of Note 1 and  principal of Note 2) shall be
increased in proportion to the percentage it represents of the total Purchase
Price paid at Closing, and Buyer shall promptly pay to Seller the amount of the
increase of the cash portion of the Purchase Price and execute and deliver to
Seller such modifications of Note 1 and Note 2 as Seller may reasonably request,
and (ii) if the Final Net Worth of the Company as finally determined pursuant to
SECTION 2(E) shall be less than the Guaranteed Net Worth, then each element of
the Purchase Price (cash,  principal of Note 1 and  principal of Note 2) shall
be decreased in proportion to the percentage it represents of the Purchase Price
paid at Closing, and Seller shall promptly return any portion of cash
overpayment to Buyer, and execute and deliver such modifications of Note 1 and
Note 2 as Buyer may reasonably request.

     3.   REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
 
     A.   REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Buyer that the statements contained in this SECTION 3A are
correct and complete as of the date of this Agreement, except as set forth in
the schedules of exceptions attached hereto as SCHEDULE 3A.

          (a) AUTHORIZATION OF TRANSACTION.  Seller has full power and authority
     to execute and deliver this Agreement and to perform his or her obligations
     hereunder.  This Agreement constitutes the valid and legally binding
     obligation of the Seller, enforceable in accordance with its terms and
     conditions, except to the extent that enforcement thereof may be limited by
     applicable bankruptcy, reorganization, insolvency or moratorium laws or
     other laws or principles of equity affecting the enforcement of creditors'
     rights.  Seller represents and warrants that he need not give any notice
     to, make any filing with, or obtain any authorization, consent, or approval
     of any government or governmental agency in order to consummate the
     transactions contemplated by this Agreement.

          (b) NONCONTRAVENTION.  Neither the execution and the delivery of this
     Agreement by the Seller, nor the consummation of the transactions by the
     Seller as contemplated hereby, will (i) to Seller's Knowledge violate any
     constitution, statute, regulation, rule, charge or other restriction to
     which Seller or the Company is subject, (ii) violate any injunction,
     judgment, order, decree, ruling, charge, or other restriction of any
     government, governmental agency, or court to which Seller or the Company is
     subject, or (iii) 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 Seller or the Company is a party or by which he or  it is bound or
     to which any of his or  its assets is subject.

          (c) BROKERS' FEES.  The Seller has no Liability or obligation to pay
     any fees or commissions to any broker, finder, or agent with respect to the
     transactions contemplated by this Agreement for which the Buyer or the
     Company could become liable or obligated.

                                      -9-
<PAGE>
 
          (d)  INVESTMENT.  Seller (i) understands that neither  Note 1 nor 
     Note 2 has been registered under the Securities Act, or under any state
     securities laws, and same are being offered and sold in reliance upon
     federal and state exemptions for transactions not involving any public
     offering, (ii) is acquiring  Note 1 and Note 2 solely for his or her own
     account for investment purposes, and not with a view to the distribution
     thereof, (iii) is a sophisticated investor with knowledge and experience in
     business and financial matters, (iv) has received  such information
     concerning the Buyer and the Parent as Seller has requested, and has had
     the opportunity to obtain additional information as desired in order to
     evaluate the merits and the risks inherent in holding  Note 1 and Note 2,
     (v) is able to bear the economic risk and lack of liquidity inherent in
     holding  Note 1 and Note 2, and (vi) is an Accredited Investor.

          (e)  SUBJECT SHARES.  Seller holds of record and owns beneficially the
     number of Subject Shares set forth next to his name in SECTION 4A(b) of the
     Seller's Disclosure Schedule, free and clear of any restrictions on
     transfer (other than any restrictions under the Securities Act and state
     securities laws), Taxes, Security Interests, options, warrants, purchase
     rights, or other contracts or commitments that could require Seller to
     sell, transfer, or otherwise dispose of any capital stock of the  Company
     (other than this Agreement)).  Seller is not a party to any voting trust,
     proxy, or other agreement or understanding with respect to the voting of
     any of the Subject Shares.

     B.   REPRESENTATIONS AND WARRANTIES OF THE BUYER.  The Buyer represents and
warrants to the Seller that the statements contained in this SECTION 3B are
correct and complete as of the date of this Agreement, except as set forth in
the schedule of exceptions attached hereto as SCHEDULE 3B.

          (a)  ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
     organized, validly existing, and in good standing under the laws of New
     York. The Buyer is qualified to do business in each jurisdiction in which
     the nature of its business, the ownership of its assets or the lease of its
     properties require it to be so qualified.

          (b)  AUTHORIZATION OF TRANSACTION. The Buyer has full power and
     authority (including full corporate power and authority) to execute and
     deliver this Agreement and to perform its obligations hereunder, including
     without limitation the issuance of Note 1 and Note 2. The Board of
     Directors of the Buyer has duly authorized the execution, delivery and
     performance of this Agreement and the other agreements and transactions
     contemplated hereby, including, without limitation, the issuance of Note 1
     and Note 2, and no other corporate proceedings on the Buyer's part are
     necessary to authorize this Agreement or the transactions contemplated
     hereby, including, without limitation, the issuance of Note 1 and Note 2.
     Upon execution and delivery of this Agreement by the Parties hereto, this
     Agreement shall constitute legal, valid and binding obligations of the
     Buyer, enforceable against the Buyer in accordance with its terms, except
     to the extent that enforcement hereof may be limited by applicable
     bankruptcy, reorganization, insolvency or moratorium laws or other laws or
     principles of equity affecting the enforcement of creditors' rights. 

                                      -10-
<PAGE>
 
     The Buyer represents and warrants that it need not give any notice to, make
     any filing with, or obtain any authorization, consent, or approval of any
     government or governmental agency in order to consummate the transactions
     contemplated by this Agreement.

          (c)  NONCONTRAVENTION.  Neither the execution and the delivery of this
     Agreement, nor the consummation of the transactions contemplated hereby,
     will violate any constitution, statute, regulation, rule, injunction,
     judgment, order, decree, ruling, charge, or other restriction of any
     government, governmental agency, or court to which the Buyer is subject or
     any provision of its charter or bylaws.

          (d)  BROKERS' FEES.  The Buyer has no Liability or obligation to pay
     any fees or commissions to any broker, finder, or agent with respect to the
     transactions contemplated by this Agreement for which the Seller could
     become liable or obligated.  Buyer shall pay all fees or commissions
     payable to the Gulfstar Group, Inc.

     4.   REPRESENTATIONS AND WARRANTIES CONCERNING THE PARTIES.

     A.   REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.   Seller
represents and warrants to the Buyer that the statements contained in this
SECTION 4 are correct and complete as of the date of this Agreement, except as
set forth in Seller's Disclosure Schedule attached hereto as SCHEDULE 4A
("Seller's Disclosure Schedule").  Factual matters disclosed in one section of
the Seller's Disclosure Schedule shall be deemed  to be disclosed with respect
to all representations and warranties set forth in this SECTION 4 to the extent
but only to the extent that the disclosure is adequate in scope and detail to
alert the Buyer, without further investigation, that such disclosure applies to
other representations and warranties in this SECTION 4.

          (a)  ORGANIZATION, QUALIFICATION, AND CORPORATE POWER.  Except as set
     forth in SECTION 4A(a) of the Seller's Disclosure Schedule, each of the
     Company, Block Transcription and the Block Predecessor is a corporation
     duly organized, validly existing, and in good standing under the laws of
     the District of Columbia.  The Block Predecessor has not conducted any
     business in the preceding eighteen (18) months, and is currently in the
     process of dissolution.  The Company is not qualified to do business in any
     other jurisdiction, and the nature of its business does not require such
     qualification.  The Company has full corporate power and authority and all
     material licenses, permits, and authorizations necessary to carry on the
     businesses in which it is engaged and to own and use the properties owned
     and used by it. SECTION 4A(a) of the Seller's Disclosure Schedule lists all
     of the directors and officers of the Company.  The Seller has delivered to
     the Buyer correct and complete copies of the articles of incorporation and
     bylaws of the Company, as amended to date.  The minute book (containing the
     records of meetings of the stockholders, the board of directors, and any
     committees of the board of directors), the stock certificate books, and the
     stock record books of the Company are correct and complete in all material
     respects.  The Company is not in default under or in violation of any
     provision of its articles of incorporation or bylaws.

                                      -11-
<PAGE>
 
          (b)  CAPITALIZATION.  The entire authorized capital stock, the issued
     and outstanding  shares and the treasury shares of the Company are
     accurately set forth in SECTION 4A(b) of the Seller's Disclosure Schedule.
     All of the issued and outstanding Subject Shares have been duly authorized,
     are validly issued, fully paid, and nonassessable, and are held of record
     by the Seller as set forth in SECTION 4A(b) of the Seller's Disclosure
     Schedule.  There are no outstanding or authorized options, warrants,
     purchase rights, subscription rights, conversion rights, exchange rights,
     or other contracts or commitments that would require the Company to issue,
     sell, or otherwise cause to become outstanding any of its capital stock.
     There are no outstanding or authorized stock appreciation, phantom stock,
     profit participation, or similar rights with respect to the Company. There
     are no voting trusts, proxies, or other agreements or understandings with
     respect to the voting of the capital stock of the Company.

          (c) 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 government, governmental agency, or court to which the Company is
     subject, (ii) violate any provision of the articles of incorporation or
     bylaws of the Company, or (iii) 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 the Company is a party or by which it is bound or to
     which any of its assets is subject (or result in the imposition of any
     Security Interest upon any of its assets).  The Company does not need to
     give any notice to, make any filing with, or obtain any authorization,
     consent, or approval of any government or governmental agency in order for
     the Parties to consummate the transactions contemplated by this Agreement.

          (d)  SUBSIDIARIES. The Company does not have any ownership interest in
     any Subsidiaries other than Block Transcription. The Company owns all of
     the outstanding capital stock of Block Transcription free and clear of any
     lien, claim, encumbrance, restriction or transfer, options, warrants,
     purchase rights, voting agreements or other agreements of any type. The
     Company does not control, directly or indirectly, or have any direct or
     indirect equity participation in, any corporation, partnership, trust, or
     other business association which is not a Subsidiary. Except as disclosed
     in SECTION 4(A)(d) of the Seller's Disclosure Schedule, neither Block
     Transcription nor the Block Predecessor has any liabilities in excess of
     $2,500 individually nor $7,500 in the aggregate. Except as contemplated in
     the following sentence, neither Block Transcription nor the Block
     Predecessor has ever disposed of any of its assets other than for
     reasonably equivalent value in the Ordinary Course of Business. The Company
     has succeeded to all of the assets of the Block Predecessor.

          (e)  FINANCIAL STATEMENTS.  The Seller has previously furnished the
     Buyer with the following financial statements (collectively the "Financial
     Statements"):  (i)  Balance Sheet Reports and Income Statement Reports for
     the fiscal years ended December 31, 1995 

                                      -12-
<PAGE>
 
     and December 31, 1996 compiled by Company's Accountants; (ii) Balance Sheet
     Reports and Income Statement Reports for the period ended June 30, 1997
     prepared by the Company's Accountants, (iii) an Accounts Receivable Report
     dated as of June 30, 1997, and (iv) an Accounts Payable Report dated as of
     June 30, 1997. The Financial Statements (including the notes thereto) have
     been prepared on an accrual basis, have been prepared on a consistent basis
     throughout the periods covered thereby, present fairly the financial
     condition of the Company as of such dates and the results of operations of
     the Company for such periods, are correct and complete in all material
     respects, and are consistent in all material respects with the books and
     records of the Company (which books and records are correct and complete in
     all material respects).

          (f)  EVENTS SUBSEQUENT TO JUNE 30, 1997.  Except as disclosed on
     SECTION 4A(f) of the Seller's Disclosure Schedule, since June 30, 1997,
     there has not been any material adverse change in the business, financial
     condition, operations, results of operations, or future prospects of the
     Company.  Without limiting the generality of the foregoing, since 
     June 30, 1997:

               (i)   the Company has not sold, leased, transferred, or assigned
          any of its assets, tangible or intangible, other than for a fair
          consideration in the Ordinary Course of Business;

               (ii)  the Company has not entered into any agreement, contract,
          lease, or license (or series of related agreements, contracts, lease,
          and licenses) either involving more than $3,000 singly (exclusive of
          agreements to perform court reporting or litigation support services
          which do not extend beyond the Closing Date) or $15,000 in the
          aggregate or outside the Ordinary Course of Business;

               (iii) the Company has not accelerated, terminated, modified, or
          canceled any agreement, contract, lease, or license (or series of
          related agreements, contracts, leases, and licenses) involving more
          than $3,000 singly (exclusive of agreements to perform court reporting
          or litigation support services which do not extend beyond the Closing
          Date) or $15,000 in the aggregate to which the Company is a party or
          by which it is bound;

               (iv)  the Company has not imposed any Security Interest upon any
          of its assets, tangible or intangible, except for Permitted
          Encumbrances;

               (v)   the Company has not made any capital expenditure (or series
          of related capital expenditures) either involving more than $3,000
          singly or $15,000 in the aggregate or outside the Ordinary Course of
          Business;

               (vi)  the Company has not made any capital investment in, any
          loan to, or any acquisition of the securities or assets of, any other
          Person (or series or related 

                                      -13-
<PAGE>
 
          capital investments, loans, and acquisitions) either involving more
          than $3,000 singly or $15,000 in the aggregate;

               (vii)  the Company has not issued any note, bond, or other debt
          security or created, incurred, assumed, or guaranteed any indebtedness
          for borrowed money or capitalized lease obligation either involving
          more than $3,000 singly or $15,000 in the aggregate;

               (viii) the Company has not delayed or postponed the payment of
          accounts payable or other Liabilities for a period of more than sixty
          (60) days after the date of invoice;

               (ix)   the Company has not canceled, compromised, waived, or
          released any right or claim (or series of related rights and claims)
          either involving more than $3,000 singly or $15,000 in the aggregate
          or outside the Ordinary Course of Business;

               (x)    there has been no change made or authorized in the
          articles of incorporation or bylaws of the Company;

               (xi)   the Company has not issued, sold, or otherwise disposed of
          any of its capital stock, or granted any options, warrants, or other
          rights to purchase or obtain (including upon conversion, exchange, or
          exercise) any of its capital stock;

               (xii)  the Company has not declared, set aside, or paid any
          dividend or made any distribution with respect to its capital stock
          (whether in cash or in kind) or redeemed, purchased, or otherwise
          acquired any of its capital stock;

               (xiii) the Company has not experienced any damage, destruction,
          or loss (whether or not covered by insurance) to its property valued,
          individually or in the aggregate, in excess of (i) $10,000 for all
          property which, at the time of such damage or destruction, was subject
          to or covered by property, casualty or any other form of insurance,
          and (ii) $3,000 for all property which, at the time of such damage or
          destruction, was not subject to or covered by property, casualty or
          any other form of insurance;

               (xiv)  the Company has not made any loan to, or entered into any
          other transaction with, any of its directors, officers, and employees;

               (xv)   the Company has not entered into any employment contract
          or collective bargaining agreement, written or oral, or modified the
          terms of any such existing contract or agreement;

                                      -14-
<PAGE>
 
               (xvi)   the Company has not granted any increase in the base
          compensation of any of its directors, officers, or employees outside
          the Ordinary Course of Business;

               (xvii)  the Company has not adopted, amended, modified, or
          terminated any bonus, profit-sharing, incentive, severance, or other
          plan, contract, or commitment for the benefit of any of its directors,
          officers or employees (or taken any such action with respect to any
          other Employee Benefit Plan);

               (xviii) the Company has not  made any other change in the
          employment terms of any of its directors, officers, and employees
          outside the Ordinary Course of Business;

               (xix)   the Company has not made or pledged to make any
          charitable or other capital contribution outside the Ordinary Course
          of Business;

               (xx)    there has not been any adverse occurrence, event,
          incident, action, failure to act, or transaction outside the Ordinary
          Course of or Business involving the Company which exceeds $3,000
          individually or $15,000 in the aggregate; and

               (xxi)   the Company has not agreed or committed to any of the
          foregoing.

          (g)  UNDISCLOSED LIABILITIES.  Except as disclosed on SECTION 4A(g) of
     the Seller's Disclosure Schedule, the Company does not  have any Liability
     (and, to the best of the Seller's Knowledge, there is no Basis for any
     present or future action, suit, proceeding, hearing, investigation, charge,
     complaint, claim, or demand against any of them giving rise to any
     Liability), except for (i) Liabilities reflected in the then most current
     Financial Statements (including any notes thereto) and (ii) Liabilities
     which have arisen after June 30, 1997 in the Ordinary Course of Business
     (none of which results from, arises, out of, relates to, is in the nature
     of, or was caused by any breach of contract, breach of warranty, tort,
     infringement, or violation of law).

          (h)  LEGAL COMPLIANCE.  Except as disclosed in SECTION 4A(h) of the
     Seller's Disclosure Schedule, to the Knowledge of Seller, the Company,
     Block Transcription and the Block Predecessor have substantially complied
     with all applicable laws (including rules, regulations, codes, plans,
     injunctions, judgments, orders, decrees, rulings, and charges thereunder)
     of federal, state, local, and foreign governments (and all agencies
     thereof), and, except as disclosed in SECTION 4A(h) of the Seller's
     Disclosure Schedule, to the Seller's Knowledge, no action, suit,
     proceeding, hearing, investigation, charge, complaint, claim, demand, or
     notice has been filed or commenced against the Company, Block Transcription
     or the Block Predecessor alleging any failure so to comply.

                                      -15-
<PAGE>
 
          (i)  TAX MATTERS. Except as disclosed on SECTION 4A(i) of the Seller's
     Disclosure Schedule:

               (i)   The Company has filed all Tax Returns that it was required
          to file, and all such Tax Returns were correct and complete in all
          material respects. All Taxes shown to be due on the Tax Returns have
          been paid or accrued for the Balance Sheet. The Company is not
          currently the beneficiary of any extension of time within which to
          file any Tax Return. No written claim has ever been delivered to the
          Seller or the Company, and to the Knowledge of Seller no other claim
          has ever been made by a Tax authority in a jurisdiction where the
          Company does not file Tax Returns that it is or may be subject to
          taxation by that jurisdiction. There are no Security Interests on the
          assets of the Company that arose in connection with any failure (or
          alleged failure) to pay any Tax.

               (ii)  The Company has withheld and paid all Taxes required to
          have been withheld and paid in connection with amounts paid or owing
          to any employee, creditor, stockholder, or other third party.

               (iii) There is no dispute or claim concerning any Tax Liability
          of the Company either (A) claimed or raised by any Tax authority in
          writing to the Company or its agents or (B) as to which the Seller and
          the directors and officers (and employees responsible for Tax matters)
          of the Company has Knowledge.  SECTION 4A(i) of the Seller's
          Disclosure Schedule lists all federal, state, local, and foreign
          income Tax Returns filed with respect to the Company for taxable
          periods ended on or after December 31, 1996, indicates those Tax
          Returns that have been audited, and indicates those Tax Returns that
          currently are the subject of an audit.  The Seller has delivered to
          the Buyer correct and complete copies of all federal income Tax
          Returns, examination reports, and statements of deficiencies assessed
          against or agreed to by the Company.

               (iv)  The Company has not waived any statute of limitations in
          respect of Taxes or agreed to any extension of time with respect to a
          Tax assessment or deficiency.

               (v)   The Company has not made an election under Section 341(f)
          of the Code.

               (vi)  The Company's Financial Statements for the period from 
          July 1, 1996, through June 30, 1997, include accruals for Taxes not
          yet due and payable in appropriate amounts based on the Company's
          experience and its historical practices, which accruals are, to the
          Knowledge of the Seller, adequate.

          (j)  TITLE TO ASSETS. The Company has good and marketable title to, or
     a valid leasehold interest in, the properties and assets used by it, or
     shown in the Financial 

                                      -16-
<PAGE>
 
     Statements or acquired after the date thereof, free and clear of all
     Security Interests, except for properties and assets disposed of in the
     Ordinary Course of Business since June 30, 1997, and except for Permitted
     Encumbrances.

          (k)  REAL PROPERTY.  The Company does not own any real property.
     SECTION 4A(k) of the Seller's Disclosure Schedule lists and describes
     briefly all real property leased or subleased to the Company.  The Seller
     has delivered to the Buyer correct and complete copies of the leases and
     subleases listed in SECTION 4A(k) of the Seller's Disclosure Schedule (as
     amended to date). Except as disclosed on SECTION 4A(k) of the Seller's
     Disclosure Schedule, with respect to each lease and sublease listed in
     SECTION 4A(k) of the Seller's Disclosure Schedule:

               (i)   To the Knowledge of Seller, the lease or sublease is legal,
          valid, binding, enforceable, and in full force and effect;

               (ii)  To the Knowledge of Seller, the lease or sublease will
          continue to be legal, valid, binding, enforceable, and in full force
          and effect on identical terms following the consummation of the
          transactions contemplated hereby;

               (iii) The Company is not in material breach or default of any
          lease or sublease, and to the Seller's Knowledge, no third party to
          any such lease or sublease is in material breach or material default,
          and to the Seller's Knowledge, no event has occurred which, with
          notice or lapse of time or both, would constitute a material breach or
          material default or permit termination, modification, or acceleration
          thereunder;

               (iv)  with respect to each sublease, to the Seller's Knowledge,
          the representations and warranties set forth in subsections (i)
          through (iii) above are true and correct with respect to the
          underlying lease; and

               (v)   the Company has not assigned, transferred, conveyed,
          mortgaged, deeded in trust, or encumbered any interest in the
          leasehold or subleasehold, except Customarily Permitted Liens.

          (l)  TANGIBLE ASSETS.  The Company owns or leases all buildings,
     machinery, equipment, and other tangible assets necessary for the conduct
     of its businesses as presently conducted.  Each such tangible asset is
     suitable for the purpose for which it is presently used.

          (m)  INVENTORY.  The Company does not carry or maintain any inventory.

          (n)  CONTRACTS.  SECTION 4A(n) of the Seller's Disclosure Schedule
     lists the following contracts and other agreements currently in effect to
     which the Company is a party:

                                      -17-
<PAGE>
 
               (i)    any agreement (or group of related agreements) for the
          lease of personal property to or from any Person providing for lease
          payments in excess of $15,000 per annum;

               (ii)   any agreement (or group of related agreements) for the
          furnishing or receipt of services, the performance of which will
          extend over a period of more than one year from the Closing Date or
          involve consideration in excess of $15,000;

               (iii)  any agreement concerning a partnership or joint venture;

               (iv)   any agreement (or group of related agreements) under which
          it has created, incurred, assumed, or guaranteed any indebtedness for
          borrowed money, or any capitalized lease obligation, in excess of
          $15,000 or under which it has imposed a Security Interest on any of
          its assets, tangible or intangible;

               (v)    any agreement concerning confidentiality or
          noncompetition;

               (vi)   any agreement with Seller or any Affiliate of Seller
          (other than the Company);

               (vii)  any profit sharing, stock option, stock purchase, stock
          appreciation, deferred compensation, severance, or other material plan
          or arrangement for the benefit of its current or former directors,
          officers, and employees;

               (viii) any written agreement for the employment of any
          individual on a full-time, part-time, consulting, or other basis
          providing annual compensation in excess of $15,000, or providing
          severance benefits;

               (ix)   any agreement under which it has advanced or loaned any
          amount to any of its directors, officers or employees outside the
          Ordinary Course of Business;

               (x)    any agreement under which the consequences of a default or
          termination  would reasonably be expected to  result in a $30,000
          decrease in the Company's revenues during any 12-month period, or a
          $10,000 reduction in the Company's earnings during any 12-month
          period; or

               (xi)   any other agreement (or group of related agreements) the
          performance of which involves consideration in excess of $15,000.

     The Seller has delivered to the Buyer a correct and complete copy of each
     written agreement listed in SECTION 4A(n) of the Seller's Disclosure
     Schedule (as amended to date) and a written summary setting forth the terms
     and conditions of each oral agreement referred to in SECTION 4A(n) of the
     Seller's Disclosure Schedule.  With respect to each such agreement:  (A) to
     the Seller's Knowledge, the agreement is legal, valid, binding,
     enforceable, and in full 

                                      -18-
<PAGE>
 
     force and effect; (B) the Company is not , nor to the Seller's Knowledge is
     any other party in breach or default, and to the Seller's Knowledge, no
     event has occurred which with notice or lapse of time or both would
     constitute a breach or default, or permit termination, modification, or
     acceleration, under the agreement, and (C) the Company has not repudiated
     any provision of any such agreement nor to the Seller's Knowledge has any
     other party repudiated any provision of any such agreement.

          (o)  NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
     of the Company are properly recorded on each Accounts Receivable Report
     delivered to the Buyer, reflected properly on the Company's books and
     records and are properly due and owing.

          (p)  POWERS OF ATTORNEY.  Except as disclosed on SECTION 4A(p) of the
     Seller's Disclosure Schedule, there are no outstanding powers of attorney
     executed on behalf of the Company.

          (q)  INSURANCE.  SECTION 4A(q) of the Seller's Disclosure Schedule
     lists each insurance policy (including policies providing property,
     casualty, liability, and workers' compensation coverage and bond and surety
     arrangements) to which the Company is currently a party, copies of which
     have been furnished to the Buyer.
 
          (r)  LITIGATION.  SECTION 4A(r) of the Seller's Disclosure Schedule
     sets forth each instance in which the Company (i) is subject to any
     outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
     is a party or, to the Knowledge of the Seller, is threatened to be made a
     party to any action, suit, proceeding, hearing, or investigation of, in, or
     before any court of quasi-judicial or administrative agency of any federal,
     state, local, or foreign jurisdiction or before any arbitrator.

          (s)  CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY.  Except as
     disclosed on SECTION 4A(s) of the Seller's Disclosure Schedule, neither the
     Seller nor any of Seller's Affiliates has been involved in any business
     arrangement or relationship with the Company within the past 12 months, and
     neither the Seller nor any of Seller's Affiliates owns any asset, tangible
     or intangible, with a replacement cost of $1,000 individually or $3,000 in
     the aggregate, which is used in the business of the Company.

          (t)  GUARANTIES.  The Company is not a guarantor or otherwise liable
     for any Liability or obligation (including indebtedness) of any other
     Person.

          (u)  EMPLOYEES. To the Seller's Knowledge, no executive, key employee,
     or group of employees has any plans to terminate employment with the
     Company. The Company has not committed any unfair labor practice. The
     Seller does not have any Knowledge of any organizational effort presently
     being made or threatened by or on behalf of any labor union with respect to
     employees of the Company. SECTION 4A(u) of the Seller's Disclosure Schedule
     sets forth by number and employment classification the approximate numbers
     of employees employed by the Company as of the date of this Agreement, and
     none 

                                      -19-
<PAGE>
 
     of said employees are subject to union or collective bargaining agreements
     with the Company.

          (v)  EMPLOYEE BENEFITS.

               (i)   SECTION 4A(v) of the Seller's Disclosure Schedule lists
          each Employee Benefit Plan that the Company maintains or to which it
          contributes.

                     (A)  Each such Employee Benefit Plan (and each related
               trust, insurance contract, or fund) complies in form and in
               operation in all material respects with the applicable
               requirements of ERISA and its implementing laws, and the Code.

                     (B)  All required reports and descriptions (including Form
               5500 Annual Reports, Summary Annual Reports, PBGC-1's, and
               Summary Plan Descriptions) have been filed or distributed
               appropriately with respect to each such Employee Benefit Plan.
               The requirements of Part 6 of Subtitle B of Title I of ERISA and
               of Code Section 4980B have been met with respect to each such
               Employee Benefit Plan which is an Employee Welfare Benefit Plan.

                     (C)  All contributions (including all employer
               contributions and employee salary reduction contributions) which
               are due have been paid to each such Employee Benefit Plan which
               is an Employee Pension Benefit Plan and all contributions for any
               period ending on or before the Closing Date which are not yet due
               have been paid to each such Employee Pension Benefit Plan or
               accrued in accordance with the past custom and practice of the
               Company. All premiums or other payments for all periods ending on
               or before the Closing Date have been paid with respect to each
               such Employee Benefit Plan.

                     (D)  The Company has substantially performed all
               obligations, whether arising by operation of law or by contract,
               required to be performed by it in connection with such Employee
               Benefit Plans, and to Seller's Knowledge, there has been no
               default or violation by any other party to such Employee Benefit
               Plans.

                     (E)  The Seller has delivered to the Buyer correct and
               complete copies of the plan documents and summary plan
               descriptions, the most recent Form 5500 Annual Report, and all
               related trust agreements, insurance contracts, and other funding
               agreements which relate to each such Employee Benefit Plan.

                                      -20-
<PAGE>
 
               (ii)  The execution and delivery of this Agreement and the
          consummation of the transactions contemplated hereby will not (A)
          require the Company to make a larger contribution to, or pay greater
          benefits under, any Employee Benefit Plan than it otherwise would or
          (B) create or give rise to any additional vested rights or service
          credits under any Employee Benefit Plan.

               (iii) Each such Employee Benefit Plan has been terminated by the
          Company in compliance with all applicable laws on or before the
          Closing Date.

          (w)  BROKERS' FEES.  The Company does not  have any Liability or
     obligation to pay any fees or commissions to any broker, finder, or agent
     with respect to the transactions contemplated by this Agreement.

          (x)  OPERATION OF BUSINESS.  To the Seller's Knowledge (i) all court
     reporters that are or have been hired (including independent contractors)
     by the Company are qualified to perform the jobs that they are hired to
     perform and they are not required by law to obtain any certification to
     perform their jobs, (ii) all documents that the Company is or has been
     required to maintain, store or handle in connection with conducting its
     business are or have been maintained, stored or handled in the manner
     agreed to between the Company and its respective clients or in material
     conformity with prevailing standards regarding such matters in the
     Company's industry, and (iii) the Company performs all aspects and
     operations of its business at or above the prevailing standards for the
     Company's industry.

          (y)  DISCLOSURE.  To the best knowledge of Seller, the representations
     and warranties contained in this SECTION 4A do not contain any untrue
     statement of a material fact or omit to state any material fact necessary
     in order to make the statements and information contained in this SECTION
     4A not misleading.

     B.   REPRESENTATIONS AND WARRANTIES CONCERNING THE  PARENT.  The Parent and
the Buyer jointly and severally  represent and  warrant to the Seller that the
statements contained in this SECTION 4B are correct and complete as of the date
of this Agreement, except as set forth in the Buyer's Disclosure Schedule
attached hereto as SCHEDULE 4B (the "Buyer's Disclosure Schedule").

          (a)  ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The Parent is a
     corporation duly organized, validly existing, and in good standing under
     the laws of the jurisdiction of its incorporation. The Parent is duly
     authorized to conduct business and is in good standing under the laws of
     each jurisdiction where such qualification is required. Each of the Parent
     and its Subsidiaries has full corporate power and authority and all
     material licenses, permits, and authorizations necessary to carry on the
     businesses in which it is engaged and to own and use the properties owned
     and used by it. SECTION 4B(a) of the Buyer's Disclosure Schedule lists the
     directors and officers of the Parent. The Parent has delivered to the
     Seller correct and complete copies of the articles of incorporation and
     bylaws of the Parent (as amended to date). The minute books (containing the
     records of meetings of the stockholders, the board of directors, and any
     committees of the board of directors), the 

                                      -21-
<PAGE>
 
     stock certificate books, and the stock record books of the Parent are
     correct and complete in all material respects. The Parent is not in default
     under or in violation of any provision of its articles of incorporation or
     bylaws.

          (b)  AUTHORIZATION OF TRANSACTION. The Parent has full power and
     authority (including full corporate power and authority) to execute and
     deliver this Agreement and to perform its obligations hereunder, including
     without limitation with respect to Note 1 and Note 2. The Board of
     Directors of the Parent has duly authorized the execution, delivery and
     performance of this Agreement and the other agreements and transactions
     contemplated hereby, including, without limitation, with respect to SECTION
     6(G) hereof , and no other corporate proceedings on the Parent's part are
     necessary to authorize this Agreement or the transactions contemplated
     hereby. Upon execution and delivery of this Agreement by the Parties
     hereto, this Agreement shall constitute legal, valid and binding
     obligations of the Parent, enforceable against the Parent in accordance
     with its terms, except to the extent that enforcement hereof may be limited
     by applicable bankruptcy, reorganization, insolvency or moratorium laws or
     other laws or principles of equity affecting the enforcement of creditors'
     rights. The Parent represents and warrants that it need not give any notice
     to, make any filing with, or obtain any authorization, consent, or approval
     of any government or governmental agency in order to consummate the
     transactions contemplated by this Agreement.

          (c)  CAPITALIZATION.  The entire authorized capital stock, the issued
     and outstanding shares and the treasury shares of the  Parent are
     accurately set forth in SECTION 4B(c) of the Buyer's Disclosure Schedule
     together with the changes thereto contemplated by the acquisition of the
     Company.  All of the issued and outstanding shares of the  Parent have been
     duly authorized, are validly issued, fully paid, and nonassessable, and all
     of the Parent Shares to be issued upon conversion of Note 1 or Note 2 will,
     upon conversion thereof in accordance with the terms thereof, and issuance
     of the Parent Shares, be validly issued, fully paid and nonassessable.

          (d)  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
     government, governmental agency, or court to which the  Parent is subject,
     (ii) violate any provision of the articles of incorporation or bylaws of
     the  Parent, or (iii) 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 the  Parent is a party or by which it is bound or to which any of
     its assets is subject (or result in the imposition of any Security Interest
     upon any of its assets).  The  Parent does not need to give any notice to,
     make any filing with, or obtain any authorization, consent, or approval of
     any government or governmental agency in order for the Parties to
     consummate the transactions contemplated by this Agreement.

                                      -22-
<PAGE>
 
          (e)  PARENT FINANCIAL STATEMENTS.  Parent has delivered to Seller the
     unaudited consolidated balance sheet, unaudited consolidated income
     statement, and unaudited consolidated cash flow statement of Parent for the
     period commencing January 17, 1997, and ending June 30, 1997 (the "Parent
     Financial Statements").  Each of the Parent Financial Statements (i) fairly
     represents the financial position of Parent and its consolidated
     subsidiaries as of each respective Parent Financial Statement date, and the
     results of their operations for the respective periods indicated, and (ii)
     were true and correct in all material respects as of the respective dates
     thereof, subject to finalization of purchase accounting adjustments in
     accordance with GAAP.

          (f)  LEGAL COMPLIANCE.  To the Knowledge of Parent, the Parent has
     substantially complied with all applicable laws (including rules,
     regulations, codes, plans, injunctions, judgments, orders, decrees,
     rulings, and charges thereunder) of federal, state, local, and foreign
     governments (and all agencies thereof), and, to the Parent's Knowledge, no
     action, suit, proceeding, hearing, investigation, charge, complaint, claim,
     demand, or notice has been filed or commenced against the Buyer or the
     Parent alleging any failure so to comply.

          (g)  TAX MATTERS.  Except as disclosed on SECTION 4B(g) of the Buyer's
     Disclosure Schedule:

               (i)   The Parent has filed all Tax Returns that it was required
          to file, and all such Tax Returns were correct and complete in all
          material respects. All Taxes shown to be due on the Tax Returns have
          been paid or accrued for the Balance Sheet. The Parent is not
          currently the beneficiary of any extension of time within which to
          file any Tax Return. No written claim has ever been made, and to the
          Knowledge of Parent no other claim has ever been delivered to the
          Parent, by a Tax authority in a jurisdiction where the Parent does not
          file Tax Returns that it is or may be subject to taxation by that
          jurisdiction. There are no Security Interests on the assets of the
          Parent that arose in connection with any failure (or alleged failure)
          to pay any Tax.

               (ii)  The Parent has withheld and paid all Taxes required to have
          been withheld and paid in connection with amounts paid or owing to any
          employee,  creditor, stockholder, or other third party.

               (iii) There is no dispute or claim concerning any Tax Liability
          of the Parent either (A) claimed or raised by any Tax authority in
          writing to the Parent or its agents or (B) as to which the Parent and
          the directors and officers (and employees responsible for Tax matters)
          of the Parent has Knowledge.   The Parent has not filed any federal,
          state, local, or foreign income Tax Returns with respect to the
          Parent.

               (iv)  The Parent has not waived any statute of limitations in
          respect of Taxes or agreed to any extension of time with respect to a
          Tax assessment or deficiency.

                                      -23-
<PAGE>
 
               (v)   The Parent has not made an election under Section 341(f) of
          the Code.

          (h)  LITIGATION. SECTION 4B(h) of the Buyer's Disclosure Schedule sets
     forth each instance in which the Parent or the Buyer (i) is subject to any
     outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
     is a party or, to the Knowledge of the Parent, is threatened to be made a
     party to any action, suit, proceeding, hearing, or investigation of, in, or
     before any court of quasi-judicial or administrative agency of any federal,
     state, local, or foreign jurisdiction or before any arbitrator.

          (i)  EMPLOYEE BENEFITS.

               (i)   SECTION 4B(i) of the Buyer's Disclosure Schedule lists each
          Employee Benefit Plan that the Parent maintains or to which it
          contributes. Each such Employee Benefit Plan (and each related trust,
          insurance contract, or fund) complies in form and in operation in all
          material respects with the applicable requirements of ERISA and its
          implementing laws, and the Code. The Company has substantially
          performed all obligations, whether arising by operation of law or by
          contract, required to be performed by it in connection with such
          Employee Benefit Plans, and to Seller's Knowledge, there has been no
          default or violation by any other party to such Employee Benefit
          Plans.

          (j)  PARENT'S UNDISCLOSED LIABILITIES. Except as disclosed on SECTION
     4B(j) of the Buyer's Disclosure Schedule, the Parent and the Buyer do not
     have any Liability (and, to the best of the Parent's Knowledge, there is no
     Basis for any present or future action, suit, proceeding, hearing,
     investigation, charge, complaint, claim, or demand against either of them
     giving rise to any Liability), except for (i) Liabilities reflected in the
     then most current Parent Financial Statements (including any notes thereto)
     and (ii) Liabilities which have arisen after June 30, 1997 in the Ordinary
     Course of Business (none of which results from, arises, out of, relates to,
     is in the nature of, or was caused by any breach of contract, breach of
     warranty, tort, infringement, or violation of law).

          (k)  DISCLOSURE.  The representations and warranties contained in this
     SECTION 4B do not contain any untrue statement of a material fact or omit
     to state any material fact necessary in order to make the statements and
     information contained in this SECTION 4B not misleading.

          (l)  SECURITIES LAWS. Note 1 and Note 2 have not been issued, and upon
     conversion thereof the Parent Stock will not be issued, in violation of the
     registration requirements of the federal securities laws.

                                      -24-
<PAGE>
 
     5.   ITEMS TO BE DELIVERED AT CLOSING.

     A.   SELLER'S CLOSING DELIVERIES. At Closing, Seller shall deliver or cause
to be delivered to Buyer in form and content reasonably acceptable to the
Parties and their counsel:

          (i)    The stock certificates representing the Subject Shares,
     together with appropriate stock powers or such other instruments of
     assignment and transfer or otherwise as Buyer shall reasonably request;

          (ii)   Two (2) counterparts of the Block Employment Agreement executed
     by Mr. Block;

          (iii)  Two (2) counterparts of the Block Noncompetition Agreement
     executed by Mr. Block;

          (iv)   Two (2) counterparts of the Block Finder's Fee Agreement
     executed by Mr. Block;

          (v)    From counsel to the Seller, an opinion in form and substance
     acceptable to Buyer, addressed to the Buyer, and dated as of the Closing
     Date containing such opinions, assumptions and qualifications as may be
     reasonably acceptable to Buyer's legal counsel;

          (vi)   Two (2) counterparts of a Registration Rights Agreement
     executed by Seller in a form similar to those previously entered into by
     similarly situated shareholders of Buyer (the "Registration Rights
     Agreement");

          (vii)  Two (2) counterparts of a Subordination Agreement in form and
     content reasonably acceptable to Seller, Buyer and the senior lender for
     Buyer, executed by Seller (the "TCB Subordination Agreement");

          (viii) Two (2) counterparts of a Subordination Agreement in form and
     content reasonably acceptable to Seller, Buyer and the Investor, executed
     by the Seller (the "Pecks Subordination Agreement");

          (ix)   Two (2) counterparts of a Contingent Stock Pledge Agreement
     executed by Mr. Block pursuant to which Mr. Block pledges the stock of
     Buyer to be issued to Mr. Block under Note 1 and/or Note 2, in order to
     secure performance of his obligations hereunder (the "Pledge Agreement");

          (x)    Investor Representation Letters in form and content reasonably
     acceptable to Seller and Buyer, duly executed by the Seller;

          (xi)   Resignation Letters in form and content reasonably acceptable
     to Buyer, duly executed by all of the directors and officers of the
     Company, and by Victor A. Block and Richard E. Block;

                                      -25-
<PAGE>
 
          (xii)  Evidence reasonably acceptable to Buyer of the acquisition of
     Block Transcription by the Company;

          (xiii) Evidence reasonably acceptable to Buyer that the Certificate
     and Articles of Incorporation of Block Predecessor were revoked by
     Proclamation;

          (xiv)  Such consents, waivers, estoppel letters or similar
     documentation as Buyer shall request, in Buyer's sole discretion, in
     connection with the transfer of the Subject Shares; and

          (xv)   All other items required to be delivered hereunder or as may be
     requested which are necessary or would reasonably facilitate consummation
     of the transactions contemplated hereby.

Notwithstanding any provisions in this Agreement to the contrary, and
notwithstanding the fact that the Company and Block Transcription are named
parties to the Subordination Agreements, the Subordination Agreements are to be
executed as of Closing by Seller individually and not on behalf of either the
Company or Block Transcription, and Buyer will, following Closing, cause the
Subordination Agreements to be executed by the Company and Block Transcription.
In addition, Seller will put Buyer into full and peaceful possession and
enjoyment of the Assets and the Leased Assets immediately upon the occurrence of
the Closing.

     B.   BUYER'S CLOSING DELIVERIES.  At Closing, Buyer shall deliver or cause
to be delivered to Seller, or a designated by Buyer and the senior lender for
Buyer;

          (i)    The Cash Payment;

          (ii)   Note 1 executed by Buyer;

          (iii)  Note 2 executed by Buyer;

          (iv)   Two (2) counterparts of the TCB Subordination Agreement 
     executed by Buyer and the senior lender for Buyer;

          (v)    Two (2) counterparts of the Pecks Subordination Agreement
     executed by Buyer and the Investor;

          (vi)   Two (2) counterparts of the Block Noncompetition Agreement
     executed by Buyer;

          (vii)  Two (2) counterparts of the Block Employment Agreement executed
     by Buyer;

          (viii) Two (2) counterparts of the Block Finder's Fee Agreement
     executed by Parent;

                                      -26-
<PAGE>
 
          (ix)   Two (2) counterparts of the Pledge Agreement executed by Buyer;

          (x)    Two (2) counterparts of the Registration Rights Agreement
     executed by Buyer;

          (xi)   From counsel to Buyer, an opinion in form and substance
     acceptable to Seller, addressed to the Seller, and dated as of the Closing
     Date containing such opinions, assumptions and qualifications as may be
     reasonably acceptable to Buyer's legal counsel;

          (xii)  Certified resolutions of the respective Boards of Directors of
     Buyer and Parent, authorizing the execution, delivery and performance of
     this Agreement and all documents, instruments and agreements contemplated
     herein to be executed by the Buyer and Parent, respectively; and

          (xiii) All other items required to be delivered hereunder or as may be
     requested or which are necessary or would reasonably facilitate
     consummation of the transactions contemplated

     6.   POST-CLOSING COVENANTS.  The Parties agree as follows with respect to
the period following the Closing:

     A.   GENERAL.  In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party may reasonably
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under SECTION 8 below).

     B.   LITIGATION SUPPORT.  In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand to which the other
Party is not subject (either by virtue of the indemnification provisions
contained in SECTION 7 below or otherwise) in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, the other Party will cooperate with him or it and his or
its counsel in the contest or defense, make available their personnel, and
provide such testimony and access to their books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or defending
Party is entitled to indemnification therefor under SECTION 8 below).  The Buyer
acknowledges and agrees that if Seller is individually brought into any
litigation in connection with the Company, Seller shall be indemnified to the
maximum extent that directors and officers of corporations are permitted to be
indemnified under the laws of the District of Columbia, for all costs of
litigation as well as any judgments or settlement amounts paid.  Notwithstanding
the foregoing, Seller shall not be entitled to indemnification to the extent of
any of the following:

                                      -27-
<PAGE>
 
          (i)   suit against Seller with respect to a matter for which Seller is
     required to indemnify the Buyer pursuant to this Agreement; or

          (ii)  to the extent that Seller is found to have engaged in gross
     negligence or willful misconduct.

     C.   CONFIDENTIALITY.  The Seller will treat and hold as such all of the
Confidential Information and refrain from using any of the Confidential
Information except in connection with this Agreement and all of the other
agreements executed in connection herewith and except in connection with
handling all of the litigation described on SECTION 4A(r) of the Seller's
Disclosure Schedule.  In the event that Seller is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, Seller will notify the Buyer promptly of
the request or requirement so that the Buyer may seek an appropriate protective
order or waive compliance with the provisions of this SECTION 6C.  If, in the
absence of a protective order or the receipt of a waiver hereunder, Seller is,
on the advice of counsel, compelled to disclose any Confidential Information to
any tribunal or else stand liable for contempt, Seller may disclose the
Confidential Information to the tribunal; PROVIDED, HOWEVER, that Seller  shall
use his reasonable best efforts to obtain, at the reasonable request of the
Buyer, an order or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be disclosed as the
Buyer shall designate; provided, however that all of  Seller's costs including
but not limited to legal fees shall be paid by the Buyer.  The foregoing
provisions shall not apply to any Confidential Information which is generally
available to the public immediately prior to the time of disclosure.

     D.   ACCOUNTS RECEIVABLE. Seller shall, during the term of his employment
by the Company, use reasonable efforts to  assist the Company in collecting the
Accounts Receivable in the Ordinary Course of Business.

     E.   PARENT'S SHAREHOLDERS' AGREEMENT.  Notwithstanding any provision of
this Agreement, Note 1 or Note 2 to the contrary, the Parties hereby acknowledge
and agree that no Parent Shares can or will be issued upon conversion of Note 1
or Note 2 unless and until Seller becomes a party to a Shareholders' Agreement
in the form required by the Parent (the "Shareholders' Agreement") (provided
that this will not be required with respect to any Parent Stock issued after the
Public Offering), gives appropriate investment representations concerning
knowledge about the investment, and acknowledges applicable restrictions on
transferability, in form and content reasonably acceptable to the Parent, and
substantially in the form of the investor representation letter to be executed
by the Seller and delivered at Closing.

     F.   REMOVAL FROM GUARANTY.  The Parties hereby acknowledge and agree that
the Company currently has a line of credit from George Mason Bank in a maximum
principal amount of $25,000, and a term loan with an outstanding principal
amount of $31,250 or less.  Buyer will cause the personal guaranty of Seller of
these credit facilities to be terminated at Closing.

                                      -28-
<PAGE>
 
     G.   FUNDING OF NOTE PAYMENTS.  Parent hereby agrees that upon consummation
of any Public Offering resulting in proceeds to the Parent of at least forty
million dollars ($40,000,000), Parent will, subject to the terms and conditions
of the TCB Subordination Agreement, within five (5) business days after the
receirees to issue to Seller any Parent Shares then issuable upon conversion of
Note 2, in accordance with the terms and provisions thereof.  Parent and Buyer
hereby acknowledge reliance by Seller upon the covenants and agreements of
Parent in this SECTION 6(G) in entering into the transactions contemplated
herein, and that Seller would not have entered into this Agreement but for the
covenants and agreements of Parent set forth in this SECTION 6G.

     H.   AUTOMOBILE DEBT.  Seller hereby assumes as of the Effective Date, and
hereby agrees to pay and indemnify Buyer and the Company with respect to, all of
the outstanding indebtedness relating to the automobiles transferred to the
Seller on or about the Closing Date.

7.   INDEMNIFICATION.

     A.   SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

     All of the representations and warranties of the Parties contained in this
Agreement shall  survive the Closing hereunder and continue in full force and
effect for two years thereafter except that the representations and warranties
contained in SECTION 4A(i), and SECTION 4A(j) which shall survive for three
years after the Closing.

     B.   INDEMNIFICATION PROVISIONS.

          (i)   BY THE SELLER.  Seller shall indemnify, save, defend and hold
harmless the Buyer and the Buyer's shareholders, directors, officers, partners,
agents and employees (and in the event the Buyer assigns its right, title and
interest hereunder to a corporation, which shall be permitted hereunder, such
assignee) (collectively, the "Buyer Indemnified Parties") from and against any
and all costs, lawsuits, losses, Liabilities, deficiencies, claims and expenses,
including interest, penalties, reasonable attorneys' fees and all reasonable
amounts paid in investigation, defense or settlement of any of the foregoing
(collectively referred to herein as "Damages"), incurred in connection with or
arising out of or resulting from or incident to any breach of (or in the event
any third party alleges facts that, if true, would mean the Seller has breached)
any covenant, warranty or representation made by the Seller in or pursuant to
this Agreement or any other agreement delivered pursuant to this Agreement or in
any schedule, certificate, exhibit, or other instrument furnished or to be
furnished by the Seller or any of Seller's Affiliates pursuant to the terms of
this Agreement; provided, however, that the Seller shall not be liable for any
such Damages to the extent, 

                                      -29-
<PAGE>
 
if any, such Damages result from or arise out of a breach or violation of this
Agreement by any Buyer Indemnified Parties.

          (ii)  BY THE BUYER. The Buyer and Parent, jointly and severally,
shall indemnify, save, defend and hold harmless the Seller and his agents,
assignees and heirs (collectively, the "Seller Indemnified Parties") from and
against any and all Damages incurred in connection with or arising out of or
resulting from or incident to any breach of (or in the event any third party
alleges facts that, if true, would mean the Buyer or Parent has breached), any
covenant, warranty or representation made by the Buyer or Parent in or pursuant
to this Agreement or any other agreement delivered pursuant to this Agreement
contemplated hereby or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by the Buyer or Parent under this
Agreement; provided, however, that neither the Buyer nor the Parent shall be
liable for any such Damages to the extent, if any, such Damages result from or
arise out of a breach or violation of this Agreement by the Seller.

          (iii) DEFENSE OF CLAIMS. If any lawsuit or enforcement action is filed
against any Party entitled to the benefit of indemnity hereunder, written notice
thereof describing such lawsuit or enforcement action in reasonable detail and
indicating the amount (estimated, if necessary) or good faith estimate of the
reasonably foreseeable estimated amount of Damages (which estimate shall in no
way limit the amount of indemnification the indemnified Party is entitled to
receive hereunder), shall be given to the indemnifying Party as promptly as
practicable (and in any event within ten (10) days after the service of the
citation or summons) ("Notice of Action"); provided that the failure of any
indemnified Party to give timely notice shall not affect its rights to
indemnification hereunder to the extent that the indemnified Party demonstrates
that the amount the indemnified Party is entitled to recover exceeds the actual
damages to the indemnifying Party caused by such failure to so notify within ten
(10) days; provided further that a Notice of Action must be sent to the
indemnifying Party within ten (10) days after the applicable survival period as
provided in SECTION 7(A) of this Agreement. The indemnifying Party may elect to
compromise or defend any such asserted liability and to assume all obligations
contained in this SECTION 7(B) to indemnify the indemnified Party by a delivery
of notice of such election ("Notice of Election") within ten (10) days after
delivery of the Notice of Action. Upon delivery of the Notice of Election, the
indemnifying Party shall be entitled to take control of the defense and
investigation of such lawsuit or action and to employ and engage attorneys of
its own choice to handle and defend the same, at the indemnifying Party's sole
cost, risk and expense, and such indemnified Party shall cooperate in all
reasonable respects, at the indemnifying Party's sole cost, risk and expense,
with the indemnifying Party and such attorneys in the investigation, trial, and
defense of such lawsuit or action and any appeal arising therefrom; provided,
however, that the indemnified Party may, at its own cost, risk and expense,
participate in such investigation, trial and defense of such lawsuit or action
and any appeal arising therefrom. If the Notice of Election is delivered to the
indemnified Party, the indemnified Party shall not pay, settle or compromise
such claim without the indemnifying Party's consent, which consent shall not be
unreasonably withheld. If the indemnifying Party elects not to defend the claim
of the indemnified Party or does not deliver to the indemnified Party a Notice
of Election within ten (10) days after delivery of the Notice of Action, the
indemnified Party may, but shall not be obligated to defend, or the indemnified
Party may compromise or settle (exercising reasonable business 

                                      -30-
<PAGE>
 
judgment) the claim or other matter on behalf, for the account, and at the risk,
of the indemnifying Party.

          (IV)  THIRD PARTY CLAIMS.  The provisions of this SECTION 7 are not 
limited to matters asserted by the Parties, but cover costs, losses, 
liabilities, damages, lawsuits, claims and expenses incurred in connection with 
third party claims.

          (V)   LIMITATION ON CLAIMS.  Notwithstanding any provision of this 
Agreement neither the Buyer and Parent, collectively, nor the Seller shall be 
required to pay the Seller Indemnified Parties collectively, or the Buyer 
Indemnified Parties, collectively, respectively, any amount with respect to any 
claim for Damages under this SECTION 7(B) or with respect to any claim for 
Damages due to a claim of breach or default under this Agreement which is not a 
claim for indemnification, until the Damages which the Buyer Indemnified 
parties, collectively, or the Seller Indemnified Parties, collectively, as 
applicable, suffered under this Agreement (including indemnification and other 
claims) aggregate at least $25,000, at which time an in such event the Buyer 
Indemnified Parties, collectively, or the Seller Indemnified Parties, 
collectively, as applicable, shall be entitled to receive payment for the entire
amount of aggregate Damages to the extent they exceed $25,000. Neither the Buyer
Indemnified Parties, collectively, nor the Seller Indemnified Parties,
collectively, shall be entitled to indemnification or payment of other claims
hereunder in an aggregate amount in excess of the Purchase Price.

     8.   REMEDIES.

     A.   SPECIFIC PERFORMANCE.  Each of the Parties hereby agrees that the 
transactions comtemplated by this Agreement are unique, and that each Party 
shall have, in addition to any other legal or equitable remedy available to it, 
the right to enforce this Agreement by decree of specific performance.  If any 
legal action or other proceeding is brought for the enforcement of this 
Agreement, or because of an alleged dispute, breach, default or 
misrepresentation in connection with any of the provisions of this Agreement, 
the successful or prevailing Party or Parties shall be entitled to recover 
reasonable attorney' fees and other costs incurred in that action or proceeding 
in addition to any other remedies to which it, he or they may be entitled at law
or equity.  The rights and remedies granted herein are cumulative and not 
exclusive of any other right or remedy granted herein or provided by law.

     B.   OFFSET.  To the extent permitted by applicable law, all amounts due 
and owing to Seller or any Affiliate of Seller under this Agreement or any
document, instrument, or agreement executed in connection herewith or therewith,
including without limitation Note 1 and/or Note 2, shall be subject to offset by
the Buyer to the extent of any damages incurred as a result of the breach by
Seller or any Affiliate of Seller of this Agreement or any document, instrument,
or agreement executed by Seller or any Affiliate of a Seller in connection
herewith, upon the earlier to occur of (i) resolution of any disputes by
arbitration or mediation or a final ruling by a trial court in the event of
litigation, or (ii) the expiration of three (3) months after Buyer notifies
Seller of its damages and intent to offset, after which three-month period
payments shall be made into an escrow account on reasonably standard terms
(including indemnification and release of the escrow agent) pending final
resolution of the matters in controversy. All fees and expenses of the

                                     -31-
<PAGE>
 
escrow agent or otherwise arising out of the escrow arrangement, shall be 
divided evenly by Seller, on the one hand, and Buyer and Parent, collectively, 
on the other.  In the event of a conversion of Note 1 and/or Note 2 prior to a 
final resolution, only such number of Parent Shares as are reasonably required 
to compensate the Buyer Indemnified Parties for their alleged Damages shall be 
held in escrow, and in any event, such Parent Shares shall be held subject to 
the Pledge Agreement.  The Seller acknowledges and agrees that but for the right
of offset contained in this Agreement, the Buyer would not have entered into 
this Agreement or any of the transactions comtemplated herein.  If any legal 
action or other proceeding is brought for the enforcement of this Agreement, or 
any document, instrument, or agreement executed in connection herewith, or 
because of an alleged dispute, breach, default or misrepresentation in 
connection with any of the provisions of this Agreement or any document, 
instrument, or agreement executed in connection herewith, the successful or 
prevailing Party shall be entitled to recover reasonable attorneys' fees and 
other costs incurred in that action or proceeding.  For purposes of this SECTION
8(B), if the claimant recovers more than one-half of its alleged Damages, then 
it shall be deemed the prevailing Party, and if the claimant recovers one-half 
of its alleged Damages or less, then the other Party shall be deemed the 
prevailing Party.

     9.  MISCELLANEOUS.

     A.  PUBLIC ANNOUNCEMENTS.  No Party shall issue any press release or make 
any public announcement relating to the subject matter of this Agreement 
(including the documents referred to herein) without the prior written approval 
of the Buyer and the Seller; provided, however, that any Party may make any 
public disclosure it believes in good faith upon the advice of legal counsel it 
is required by applicable law (in which case the disclosing Party will use its 
best efforts to advise the other Parties prior to making the disclosure).

     B.  NO THIRD-PARTY BENEFICIARIES.  This Agreement shall not confer any 
rights or remedies upon any Person other than the Parties and their respective 
successors and permitted assigns.

     C.  ENTIRE AGREEMENT.  This Agreement (including the documents referred to 
herein) constitutes the entire agreement among the Parties and supersedes any 
prior understanding, agreements, or representations by or among the Parties, 
written or oral, to the extent they related in any way to the subject matter 
hereof.

     D.  SUCCESSION AND ASSIGNMENT.  This Agreement shall be binding upon and 
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the Buyer and the Seller; provided, however, that the Buyer may (i)
assign any or all of its rights and interests hereunder (x) to one or more of
its Affiliates, and (y) to one or more financial institutions lending funds to
the Buyer for the purpose of financing the purchase of the Subject Shares
hereunder and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).

                                     -32-
<PAGE>
 
     E.   COUNTERPARTS.  This Agreement may be executed in one or more 
counterparts, each of which shall be deemed an original but all of which 
together will constitute one and the same instrument.

     F.   HEADINGS.  The Section headings contained in this Agreement are 
inserted for convenience only and shall not affect in any way the meaning or 
interpretation of this Agreement.

     G.   NOTICES.  All notices, requests, demands, claims, and other 
communications hereunder will be in writing.  Any notice, request, demand, 
claims or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by overnight courier, and addressed to the
intended recipient as set forth below:

     If to Mr. Block:     Martin H. Block
                          7014 Vagabond Drive
                          Falls Church, Virginia  22042

     With a copy to:      Mr. Alan Gnessin
                          Gnessin & Waldman
                          1300 19th Street, N.W., Suite 408
                          Washington, D.C.  20036
                          Telephone:  (202) 833-1547
                          Telefax:  (202) 452-1605

     If to the Buyer:     Litigation Resources of America-Northeast, Inc.
                          1001 Fannin, Suite 650
                          Houston, Texas  77002-2731
                          Telephone:  (713) 653-7100
                          Telefax:  (713) 673-7172
                          Attn:  Mr. Richard O. Looney, Chief Executive Officer

     Copy to:             Boyer Ewing & Harris Incorporated
                          Nine Greenway Plaza, Suite 3100
                          Houston, Texas  77046
                          Telephone:  (713) 871-2025
                          Telefax:  (713) 871-2024
                          Attn:  David A. Jones, Jr.

Any Party may send any notice, request, demand, claim, or other communication 
hereunder to the intended recipient at the address set forth above using any 
other means (including personal delivery, expedited courier, messenger service, 
telecopy, telex, ordinary mail, or electronic mail), but no such notice, 
request, demand, claim or other communication shall be deemed to have been duly 
given unless and until it actually is received by the intended recipient.  Any 
Party may change the address to which notices, requests, demands, claims, and 
other communications hereunder are to be delivered by giving the other Parties 
notice in the manner herein set forth.


                                     -33-

<PAGE>
 
     H.   GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN 
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT 
TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE DISTRICT OF 
COLUMBIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF TEXAS.

     I.   AMENDMENTS AND WAIVERS.  No amendments of any provision of this 
Agreement shall be valid unless the same shall be in writing and signed by the 
Parties.  No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to 
extend to any prior or subsequent default, misrepresentation, or breach of 
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.

     J.   SEVERABILITY.  Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the 
validity or enforceability of the remaining terms and provisions hereof or the 
validity or enforceability of the offending term or provision in any other 
situation or in any other jurisdiction.

     K.   EXPENSES.  Any costs or expenses (including legal or accounting fees 
and expenses) to be paid by the Company in connection with this Agreement and 
the transactions contemplated herein shall be paid by the Company prior to 
Closing, or accrued in the Effective Date Financial Reports.

     L.   CONSTRUCTION.  Any reference to any federal, state, local, or foreign 
statute or law shall be deemed also to refer to all rules and regulations 
promulgated thereunder, unless the context requires otherwise.  The word 
"including" shall mean including without limitation.  The Parties intend that 
each representation, warranty, and covenant contained herein shall have 
independent significance.  If any Party has breached any representation, 
warranty, or covenant contained herein in any respect, the fact that there 
exists another representation, warranty, or covenant relating to the same 
subject matter (regardless of the relative levels of specificity) which the 
Party has not breached shall not detract from or mitigate the fact that the 
Party is in breach of the first representation, warranty, or covenant.

     M.   INCORPORATION OF EXHIBITS AND SCHEDULES.  The Exhibits and Schedules 
identified in this Agreement are incorporated herein by reference and made a 
part hereof.

     N.   ARBITRATION.  If a dispute arises out of or relates to this Agreement,
or the breach thereof, and if said dispute cannot be settled through 
negotiation, the Parties agree first to try in good faith to settle the dispute 
by mediation under the Commercial Mediation Rules of the American Arbitration 
Association, before resorting to arbitration, litigation, or some other dispute 
resolution procedure as required by this SECTION 9(N).  Failing an adequate 
resolution by mediation, any controversy or claim arising out of or relating to 
this Agreement or the transactions comtemplated hereby, including any 
controversy or claim arising out of or relating to the Parties' decision to 
enter


                                     -34-
<PAGE>
 
into this Agreement, shall be settled by binding arbitration. There shall be one
arbitrator to be mutually agreed upon by the Parties involved in the controversy
and to be selected from the National Panel of Commercial Arbitrators (or
successor panel, if any). If within 45 days after service of the demand for
arbitration the Parties are unable to agree upon such an arbitrator who is
willing to serve, then an arbitrator shall be appointed by the American
Arbitration Association in accordance with its rules. Except as specifically
provided in this SECTION 9(N), the arbitration shall be conducted in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
The arbitrator shall not render an award of punitive damages. Any arbitration
commenced by Seller hereunder shall be held at the offices of Boyer, Ewing &
Harris in Houston, Texas or such other location in metropolitan Houston, Texas,
as may be selected by Parent. Any arbitration commenced by Buyer or Parent
hereunder shall be held at the offices of Gnessin & Waldman in Washington, D.C.,
or such other location in metropolitan Washington, D.C. or Pittsburgh,
Pennsylvania, as may be selected by Seller. Expenses related to the arbitration,
including counsel fees, shall be borne by the Party incurring such expenses
except to the extent otherwise provided herein. The fees of the arbitrator and
of the American Arbitration Association, if any, shall be divided equally among
the Parties involved in the controversy. Judgment upon the award rendered by the
arbitrator (which may, if deemed appropriate by the arbitrator, include
equitable or mandatory relief with respect to performance of obligations
hereunder) may be entered in any court of competent jurisdiction. The arbitrator
shall award the prevailing Party in any arbitration proceeding recovery of its
attorneys' fees and other costs in connection with the arbitration from the non-
prevailing Party. Injunctive relief can be sought in a court of appropriate 
jurisdiction.

     O.  JURISDICTION AND VENUE. Each Party hereby agrees that venue for any
litigation commenced by the Seller shall be commenced in Houston, Harris County,
Texas, and that venue for any litigation commenced by Buyer or Parent with
respect to the subject matter of this Agreement shall be in Washington, D.C.
Each Party hereby irrevocably submits to personal jurisdiction in Houston,
Harris County, Texas and Washington, D.C., as applicable, for purposes of this
SECTION 9(O). Each Party hereby waives all objections to personal jurisdiction
and venue as described in this SECTION 9(O) for purposes of such litigation.

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as 
of the date first above written.


                            BUYER:
                            -----

                            LITIGATION RESOURCES OF
                            AMERICA-NORTHEAST, INC.
                            a New York corporation



                            By: /s/ Richard O. Looney
                                ------------------------------------------
                                Richard O. Looney, Chief Executive Officer


                                     -35-
<PAGE>
 
                               SELLER:
                               ------

  
                               /s/ Martin H. Block
                               ----------------------------------------------
                               MARTIN H. BLOCK


                               PARENT:
                               ------

                               LITIGATION RESOURCES
                               OF AMERICA, INC.,
                               a Texas corporation



                               By: /s/ Richard O. Looney
                                   ------------------------------------------
                                   Richard O. Looney, Chief Executive Officer





                            SCHEDULES AND EXHIBITS

Schedule 3A  -     Exceptions to the Seller's Representations and Warranties
Schedule 3B  -     Exceptions to the Buyer's Representations and Warranties
Schedule 4A  -     Seller's Disclosure Schedule
Schedule 4B  -     Buyer's Disclosure Schedule



                                     -36-
<PAGE>
 
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, NOR THE
SECURITIES LAWS OF ANY STATE. NEITHER THIS NOTE NOR SUCH SHARES MAY BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME, EXCEPT UPON (A) SUCH
REGISTRATION, OR (B) DELIVERY TO THE ISSUER OF THIS NOTE OR SUCH SHARES OF AN
OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS
NOT REQUIRED FOR SUCH TRANSFER, OR (C) THE SUBMISSION TO THE ISSUER OF THIS NOTE
OR SUCH SHARES OF OTHER EVIDENCE, REASONABLY ACCEPTABLE TO THE ISSUER, TO THE
EFFECT THAT ANY SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER WILL NOT BE IN
VIOLATION OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR OTHER
APPLICABLE SECURITIES LAWS OF ANY STATE, OR ANY RULES OR REGULATIONS PROMULGATED
THEREUNDER.

THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO (A) THE SENIOR
DEBT, AS DEFINED IN, PURSUANT TO, AND TO THE EXTENT PROVIDED IN, THE
SUBORDINATION AGREEMENT EFFECTIVE AS OF THE DATE HEREOF BY THE MAKER HEREOF AND
PAYEE NAMED HEREIN IN FAVOR OF TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AND (B)
THE SENIOR SUBORDINATED DEBT, AS DEFINED IN, PURSUANT TO, AND TO THE EXTENT
PROVIDED IN, THE SUBORDINATION AGREEMENT EFFECTIVE AS OF THE DATE HEREOF BY THE
MAKER HEREOF AND PAYEE NAMED HEREIN IN FAVOR OF THE DELAWARE STATE EMPLOYEES'
RETIREMENT FUND, DECLARATION OF TRUST FOR DEFINED BENEFIT PLAN OF ICI AMERICAN
HOLDINGS, INC., AND DECLARATION OF TRUST FOR DEFINED BENEFIT PLAN OF ZENECA
HOLDINGS, INC.

THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE BEEN PLEDGED PURSUANT TO THE
TERMS OF A CONTINGENT STOCK PLEDGE AGREEMENT OF EVEN DATE HEREWITH, EXECUTED BY
THE COMPANY AND THE HOLDER.


                LITIGATION RESOURCES OF AMERICA-NORTHEAST, INC.
                    Convertible Subordinated Promissory Note
                                    (Note 1)

$240,000                  Houston, Texas                   September 4, 1997


     Litigation Resources of America-Northeast, Inc., a New York corporation
(the "Company"), for value received, hereby promises to pay to MARTIN H. BLOCK,
an individual (the "Holder"), or permitted assigns, the principal sum of TWO
HUNDRED FORTY THOUSAND AND NO/100 DOLLARS ($240,000.00) together with accrued
interest on the amount of such principal sum, payable in accordance with the
terms set forth below.

     THE OBLIGATIONS OF THE COMPANY CONTAINED IN THIS NOTE ARE SUBORDINATED TO
ALL SENIOR INDEBTEDNESS, AS HEREINAFTER DEFINED, NOW OWING OR HEREAFTER EXISTING
OR ARISING TO THE EXTENT SET FORTH IN THE SUBORDINATION AGREEMENTS, AS
HEREINAFTER DEFINED, AND SHALL BE ON AN EQUIVALENT BASIS WITH OTHER SUBORDINATED
INDEBTEDNESS, AS HEREINAFTER DEFINED.
<PAGE>
 
                                   ARTICLE I
                                  Definitions

     For all purposes of this Note, except as otherwise expressly provided or
unless the context otherwise requires, (i) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular, (ii) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally accepted
accounting principles of the Accounting Principles Board of the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board that are applicable from time to time, and (iii) the words "herein" and
"hereof" and other words of similar import refer to this Note as a whole and not
to any particular Article, Section or other subdivision.

     1.1  "Annual Cash Flow" means the net income from operations of Block Court
Reporting, Inc. before interest, taxes, depreciation and amortization ("Net
Income"), calculated quarterly on a trailing twelve-month basis.  For the first
three quarterly computations during the term of this Note,  Annual Cash Flow
shall be computed as follows:  For the first quarterly computation following the
date of this Note, Net Income for the first calendar quarter following the date
of this Note (the "First Calendar Quarter") shall be multiplied by four (4);
for the second quarterly computation following the date of this Note, Net Income
for the second calendar quarter following the date of this Note  shall be added
to Net Income for the First Calendar Quarter and the sum (the "Second Quarter
Sum") shall be multiplied by two (2);   for the third quarterly computation
following the date of this Note, Net Income for the third calendar quarter
following the date of this Note shall be added to the Second Quarter Sum and the
total shall be divided by .75.  If Net Income for a full calendar quarter is not
available for purposes of this calculation, Net Income for the partial quarter
shall be divided by the number of days in the partial quarter and the result
shall be multiplied by 90 to create a full calendar quarter.

     1.2  "Block Cash Flow" means $178,770.

     1.3  "Board of Directors" means the board of directors of the Company as
elected from time to time or any duly authorized committee of that board.

     1.4  "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in Houston, Texas are
authorized or obligated by law or executive order to be closed.

     1.5  "Change in Control" shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"); provided that, without limitation, such a change in control
shall be deemed to have occurred if (W) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the Holder or any
Parent of the Holder becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the Company's then
outstanding securities other than as a result of the sale by the Parent of
securities in a private transaction, and the Pecks Group of Investors no longer
has the right to elect a majority of the Board of Directors of the Parent, or
(X) during any period of two consecutive years during the term of this Note,
individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least a majority thereof, unless
the election of each director who was not a director at the beginning of such
period is as a result of the stockholder permitted to designate such director to
fill a position making a change in such designee or if additional directors are
added to the board as a result of an expansion of the board of directors for
purposes of the Company conducting a Public Offering or for any other business
reason, or (Y) the Parent consummates a Public Offering, or (Z) all or
substantially all of the assets of the Parent are sold.


                                      -2-
<PAGE>
 
     1.6  "Default"  means any event which is, or after notice or passage of
time would be, an Event of Default.

     1.7  "Event of Default" has the meaning specified in Section 3.1.

     1.8  "GAAP" means generally accepted accounting principles of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board that are applicable
from time to time.

     1.9  "Indebtedness" of any Person means all indebtedness of such Person,
whether outstanding on the date of this Note or hereafter created, incurred,
assumed or guaranteed, (i) for the principal of, premium on and interest on all
debts of the Person whether outstanding on the date of this Note or thereafter
created for money borrowed by such Person (including capitalized lease
obligations), money borrowed by others (including capitalized lease obligations)
and guaranteed, directly or indirectly, by such Person, or purchase money
indebtedness, or indebtedness secured by property ("Purchase Money
Indebtedness") at the time of the acquisition of such property by such Person,
for the payment of which the Person is directly or contingently liable, (ii) for
all accrued obligations of the Person in respect of any contract, agreement or
instrument imposing an obligation upon the Person to pay over funds, (iii) for
all trade debt of the Person, and (iv) for all deferrals, renewals, extensions
and refundings of, and amendments, modifications and supplements to, any of the
indebtedness referred to in (i), (ii) or (iii) above.

     1.11 "Lien" means any mortgage, deed of trust, lien, security interest,
pledge, claim, charge, liability, obligation or other encumbrance.

     1.12 "Maturity Date", when used with respect to this Note means September
15, 2002 (or such other date upon which this Note becomes due and payable).

     1.13 "Note" means this Convertible Subordinated Promissory Note.

     1.14 "Other Subordinated Indebtedness" means any other Indebtedness now or
hereinafter due and owing by the Parent or its affiliates, and any preferred
stock issued by the Parent, to any person who is the seller of a court reporting
and/or litigation service business in connection with the financing of  all or
part of the purchase price thereof.

     1.15 "Parent" means Litigation Resources of America, Inc., a Texas
corporation.

     1.16 "Parent Stock"  means shares of common stock, $.01 par value, of
Parent and any securities for which such stock may be exchanged or into which it
may be converted.

     1.17 "Pecks Group of Investors"  means those persons defined as "Investors"
who are parties to the  Securities Purchase Agreement dated effective January
17, 1997 among the Investors, the Parent and certain subsidiaries of the Parent,
and the permitted assigns of the Investors.

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

     1.19 "Public Offering" means the sale by the Parent of securities for cash
in an underwritten public offering registered on the appropriate form with the
SEC.

     1.20 "Purchase Agreement" means that certain Stock Purchase Agreement dated
as of the date hereof, executed by and among the Company, the Parent and the
Holder.


                                      -3-
<PAGE>
 
     1.21 "SEC"  means the United States Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act of 1933 or
any successor act thereto.

     1.22 "Senior Indebtedness" means any and all indebtedness, liabilities and
obligations of the Parent or the Company to any Person other than Other
Subordinated Indebtedness, whether direct or indirect, absolute or contingent,
now owing or hereafter existing or arising, or due or to become due, including
without limitation, future indebtedness (principal, interest, fees and expenses,
collection costs or otherwise) and future advances of funds, and all
modifications, renewals, extensions or rearrangements of any of the foregoing.

     1.23 "Subordination Agreements" means those certain Subordination
Agreements executed as of even date herewith by and among the Company, the
Parent, the Holder, and the holders of the Senior Indebtedness.

     1.24 "Subsidiary" means a corporation or other entity in which more than
50% of the outstanding voting stock or equity interests is owned or controlled,
directly or indirectly, by the Company or any combination of the Company and one
or more other Subsidiaries.  For the purposes of this definition, "voting stock"
means stock or other interests which ordinarily has voting power for the
election of directors, and equity interests means the right to receive the
profits of the entity, when disbursed, or the assets of the entity upon
liquidation or dissolution.

                                   ARTICLE II
                                    Payments

     2.1  Interest.  From the date of this Note through the Maturity Date,
interest shall accrue hereunder on the unpaid outstanding principal sum of this
Note at a rate of seven percent (7.0%) per annum, calculated on the basis of a
365-day year or 366-day year as the case may be.  All past due payments of
principal, and if permitted by applicable law, of interest shall bear interest
from day to day at a rate of fourteen percent (14%) per annum, all to be
computed from maturity (whether stated or by acceleration) until paid.

     2.2  Payment of Principal and Interest.  Beginning September 15, 1997, the
Company shall make quarterly payments of all accrued and unpaid interest and, in
addition, beginning December 15, 1998, the Company shall make fifteen (15)
quarterly payments of principal, each in the amount of fifteen thousand dollars
($15,000), on or before  the 15th day of each December, March, June and
September (and if the first day is not a Business Day, the first Business Day
thereafter) of each quarter thereafter, with the sixteenth (16/th/) and final
payment of principal and accrued interest being due and payable on September 15,
2002, subject to the provisions of Section 2.3 below.  Prepayments will be
credited first to the accrued but unpaid interest, and then to installments of
unpaid principal in the order of maturity.

     2.3  Cash Flow Requirements.  Notwithstanding Section 2.2 above,  the
Company shall not be required to make a quarterly payment of principal due under
this Note if Block Court Reporting, Inc. has not generated Annual Cash Flow at
least equal to the Block Cash Flow for the quarter ended on the last day of the
month preceding the month in which the payment is due.  In each such case, (i)
the quarterly interest payment shall be deferred until the first regularly
scheduled quarterly payment date which is not excused pursuant to the preceding
sentence, at which time all accrued but unpaid interest shall become due and
payable, and (ii) the Maturity Date shall be extended for an additional three-
month period, at which time the Note shall be paid in full.  This Section 2.3
shall not apply if  a Termination Without Cause or Termination for Good Reason
(as such terms are defined in the Employment Agreement of even date herewith
between Block Court Reporting, Inc. and Martin H. Block) has occurred, or such
Employment Agreement has expired, and 


                                      -4-
<PAGE>
 
Annual Cash Flow for the quarter immediately preceding the date of termination
or expiration was at least equal to the Block Cash Flow.

                                  ARTICLE III
                                    Remedies

     3.1  Events of Default.  An "Event of Default" occurs if:

          3.1.1  the Company defaults in the performance of any covenant made by
the Company in this Note, and such default remains uncured for a period of 180
days after notice from the Holder; or

          3.1.2  the Company defaults in the performance of or breaches any of
the terms, covenants, or conditions contained in any of the documents
evidencing, securing or guaranteeing any Senior Indebtedness, including, but not
limited to, any loan agreements, promissory notes or security agreements, and
the applicable grace periods expire, unless such default is waived or the
holders of the Senior Indebtedness elect not to declare a default thereunder or
the Company is permitted to make payments under this Note; or

          3.1.3  (i) a receiver, liquidator, custodian, or trustee of the
Company, or of any material property thereof is appointed by court order of a
court of competent jurisdiction and such order remains in effect on the 90th day
after its entry, or (ii) a petition is filed, a case is commenced, or relief is
ordered against the Company under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, or liquidation law of any
jurisdiction, whether now or hereafter in effect, and is not dismissed with 90
days of such filing, commencement, or order; or

          3.1.4  the Company (i) commences a voluntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or any other case or proceeding and is adjudicated a bankrupt or
insolvent, (ii) files a petition, answer or consent seeking reorganization or
similar relief under any applicable federal or state law, (iii) makes an
assignment for the benefit of creditors, or (iv) admits in writing its inability
to pay its debts generally as they become due.

     3.2  Acceleration of Maturity.   This Note and all accrued interest shall
become immediately due and payable at the option of the Holder at any time after
notice by Holder to the Company of the occurrence of an Event of Default which
is not cured within fifteen (15) days thereafter.  Notwithstanding the
provisions of Section 3.1 herein, this Note and all accrued interest shall at
the option of the Holder either become immediately (i) due and payable on the
first Business Day following the date on which Texas Commerce Bank National
Association, or its successors or assigns, accelerates the maturity of any
Senior Indebtedness as the result of a transaction resulting in a Change of
Control, or is paid in full (ii) convertible into shares of Parent Stock in
connection with the consummation of the transactions resulting in a Change in
Control, as further set forth in Article V hereof.  The provisions of this
Section 3.2 shall govern notwithstanding any other agreement or document of the
Company or the Parent (with the exception of the Subordination Agreements).

     3.3  Sale of Company.  If all or substantially all of the stock or assets
of the Company is or are sold, the Parent must either (i) pay this Note in full
or cause this Note to be paid in full or (ii) assume the obligations of the
Company under this Note.

                                   ARTICLE IV
                                   Covenants


                                      -5-
<PAGE>
 
     The Company covenants and agrees that, so long as this Note is outstanding:

     4.1  Payment of Principal and Accrued Interest.  The Company will duly and
punctually pay or cause to be paid the principal sum of this Note, together with
interest accrued thereon from the date hereof to the date of payment, in
accordance with the terms hereof, except to the extent of any limitations
contained in the Purchase Agreement or the Subordination Agreements.

     4.2  Limitation on Liens.  The Company will not create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, except for:

          (a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with respect
thereto are maintained on the books of the Company in conformity with GAAP;

          (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business in respect of
obligations which are not overdue for a period of more than 90 days beyond the
Company's customary payment terms or which are being contested in good faith by
appropriate proceedings;

          (c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;

          (d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business not to exceed $1,000,000 in the aggregate at any
given time;

          (e) encumbrances and restrictions on the use of real property which do
not materially impair the use thereof;

          (f) any interest or title of (i) a lessor in assets being leased to
the Company or (ii) a seller in assets being purchased by the Company; and

          (g) Liens granted in connection with the Senior Indebtedness.

                                   ARTICLE V
                                   Conversion

     5.1.1     Change In Control Other than Public Offering.  On the date of and
simultaneously with the closing of  the first event following execution of this
Note which causes a Change in Control (other than a Public Offering), the Holder
shall have the one-time right to convert all, or any portion, of the outstanding
principal balance of this Note and any accrued interest due thereon into shares
of Parent Stock at a price equal to the Transaction Price, as hereinafter
defined, and otherwise on and subject to the terms and conditions set forth in
this Article V.  As used in this Section 5.1.1, the term "Transaction Price"
shall mean the value of the Parent Stock determined at the time of such
transaction giving rise to a Change in Control.  The Company must give the
Holder 20 days' prior written notice of the date of the event (the "Event Date")
giving rise to the Change in Control and the Holder may then exercise such
Holder's right to convert all, or any portion, of the outstanding principal
amount of this Note into shares of Parent Stock by (i) giving written notice at
least 5 days prior to the Event Date to the Company that the Holder elects to
convert all or a portion of the outstanding principal amount of this Note and
any accrued interest due thereon into Parent Stock, 


                                      -6-
<PAGE>
 
(ii) stating in such written notice the denominations in which the Holder wishes
the certificate or certificates for Parent Stock to be issued, and (iii)
surrendering this Note to the Company for notation or cancellation, as
appropriate. If not exercised when it first becomes available, or if exercised
only in part, the right to convert all or the portion of this Note for which
this option has not been exercised as described herein shall not continue and
shall expire at midnight, Houston, Texas time, on the date which is 5 days prior
to the Event Date.

     5.1.2     Change In Control Upon Public Offering.  Parent is currently
proceeding with plans to conduct a Public Offering and, in connection therewith,
currently intends to file a Registration Statement with the Securities and
Exchange Commission on or after September 12, 1997.  The Company will keep the
Holder apprised of Parent's progress with respect to the Public Offering, and
will deliver to the Holder drafts of the Registration Statement prior to the
filing thereof.  The Holder shall be required to promptly review each new draft
of the Registration Statement and prior to the later of (i) September 9, 1997 or
(ii) forty-eight (48) hours prior to the actual filing of the Registration
Statement, provide to the Company and the Parent written irrevocable notice of
its election to convert all, or any portion, of the outstanding principal
balance of this Note and any accrued interest due thereon (including any
interest which has been withheld pursuant to Section 2.3) into shares of Parent
Stock, at a price equal to the initial issuance price per share of the Parent
Stock issued in the Public Offering, without giving effect to any underwriting
discounts or commissions.  In the event the Holder elects to exercise its right
to convert, it shall also state in such notice the denomination in which the
Holder wishes the certificate or certificates for Parent Stock to be issued, and
surrender this Note to the Company for notation or cancellation, as appropriate.
If not exercised prior to the later of (i) September 9, 1997, or (ii) forty-
eight (48) hours prior to the filing of the Registration Statement, or if
exercised only in part, the foregoing right to convert shall terminate with
respect to any principal or interest not converted, and the unpaid principal
balance, together with all accrued but unpaid interest, shall mature and become
due and payable upon consummation of the Public Offering.

     5.2  Accrued Interest; Fractional Shares; Conversion Date. In the event of
any conversion, the Company will, as soon as practicable after surrender of this
Note and compliance by the Holder with the other conditions herein contained,
cause to be issued and delivered to the surrendering Holder certificates for the
number of full shares of Parent Stock to which the Holder shall be entitled as
aforesaid, together with any unpaid interest on the principal amount, if not
converted, accrued through the Event Date.  The Holder shall not  be entitled to
receive fractional shares of Parent Stock upon conversion or script in lieu
thereof, but the number of shares of Parent Stock to be received by the Holder
upon conversion shall be rounded down to the next whole number and the Holder
shall be entitled to payment for the fractional share in cash at the then
applicable Transaction Price.  Such conversion shall be deemed to have been made
as of the Event Date, so that the persons entitled to receive the shares of
Parent Stock upon conversion of the principal amount hereof shall be treated for
all purposes as having been the record holder or holders of such shares of
Parent Stock at such time.

     5.3  No Shareholder Rights; Representations and Agreements Upon Issuance.
This Note shall not entitle the Holder to any voting rights or other rights as a
stockholder of the Parent, or to any other rights whatsoever except the rights
herein expressed and such as are set forth, and no dividends shall be payable or
accrue in respect of this Note or the interest represented hereby or the Parent
Stock purchasable hereunder until or unless, and except to the extent that, the
outstanding principal amount hereof and any accrued interest due thereon shall
be converted.  No shares of Parent Stock can or will be issued upon conversion
until the Holder becomes a party to a Shareholders' Agreement in the form
required by the Parent and gives appropriate investment representations
concerning knowledge about the investment and acknowledgments of any applicable
restrictions on transferability.


                                      -7-
<PAGE>
 
                                  ARTICLE VI
                                 Miscellaneous

     6.1  Collection Fees.  If this Note is placed in the hands of an attorney
for collection, and if it is collected through any legal proceedings at law or
in equity or in bankruptcy, receivership or other court proceedings, the Company
hereby undertakes to pay all costs and expenses of collection including, but not
limited to, court costs and the reasonable attorney's fees of Holder.

     6.2  Consent to Amendments.  This Note may be amended, and the Company may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, if and only if the Company shall obtain the prior written
consent to such amendment, action or omission to act from the Holder.

     6.3  Benefits of Note.  Except as set forth in Section 3.3, nothing in this
Note, express or implied, shall give to any Person, other than the Company,
Holder, and their successors any benefit or any legal or equitable right, remedy
or claim under or in respect of this Note.

     6.4  Successors and Assigns.  All covenants and agreements in this Note
contained by or on behalf of the Company and the Holder shall bind and inure to
the benefit of the respective successors and assigns of the Company and the
Holder.

     6.5  Restrictions on Transfer.  This Note shall not be transferable or
assignable in any manner whatsoever except in compliance with federal and state
securities laws, and if applicable, the laws of descent and distribution.   In
addition, any transfer or assignment shall be made expressly subject to the
terms and provisions of the Contingent Stock Pledge Agreement and the Stock
Purchase Agreement, and any defenses to payment or offset rights set forth
therein.

     6.6  Waiver; Remedies Cumulative.  No failure to exercise and no delay on
the part of Holder in exercising any power or right in connection herewith shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power.  No course of dealing between the Company
and Holder shall operate as a waiver of any right of Holder under this Note.  No
modification or waiver of any provision of this Note or any other instrument
evidencing, securing, or guaranteeing this Note nor any consent to any departure
therefrom shall in any event be effective unless the same shall be in writing
and signed by the person against whom enforcement thereof is to be sought, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given.  All rights and remedies of Holder existing
hereunder are cumulative to and not exclusive of any rights or remedies
otherwise available thereto.

     6.7  Notice; Address of Parties.  Except as otherwise provided, all
communications to the Company or Holder provided for herein or with reference to
this Note shall be deemed to have been sufficiently given or served for all
purposes on the first business day after being sent by overnight courier to the
following addresses: if to the Company, 1001 Fannin, Suite 950 Houston, Texas
77002, Fax 713/653-7172 or at any other address designated by the Company in
writing to Holder; if to Holder, 7014 Vagabond Drive, Falls Church, Virginia
22042, or at any other address designated by Holder to the Company in writing.

     6.8  Separability Clause.  In case any provision in this Note shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions in such jurisdiction shall not in
any way be affected or impaired thereby; provided, however, such construction
does not destroy the essence of the bargain provided for hereunder.


                                      -8-
<PAGE>
 
     6.9  Governing Law.  This Note shall be construed and enforced in
accordance with and governed by the laws of the State of New York.

     6.10 Arbitration.  The arbitration provisions contained in Article 9 of the
Purchase Agreement shall govern this Note.

     THIS NOTE, ANY AND ALL ADDITIONAL PROMISSORY NOTES, IF ANY, ISSUED BY THE
COMPANY TO HOLDER, AND ALL DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION
HEREWITH OR THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE COMPANY AND
HOLDER WITH RESPECT TO THE OBLIGATIONS OWED THEREBY TO HOLDER AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE COMPANY AND HOLDER.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE COMPANY AND THE HOLDER.  PAYMENT OF THIS NOTE IS SUBJECT
TO THE PURCHASE AGREEMENT AND THE SUBORDINATION AGREEMENTS.

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed on the date first above written.

                         LITIGATION RESOURCES OF AMERICA-NORTHEAST, INC.,
                         A NEW YORK CORPORATION

                         By:_____________________________________________
                            Name:________________________________________
                            Title:_______________________________________

          The Parent has executed this Note solely to evidence its agreement to
the obligations, potential or actual, of the Parent with respect to (i) payment
or assumption of this Note as set forth in Section 3.3 hereof, (ii) conversion
of this Note into Parent Common Stock, as set forth in Section 3.2 and Article V
hereof, and (iii) the arbitration provisions of Section 6.10 hereof.

                         LITIGATION RESOURCES OF AMERICA, INC.,
                         A TEXAS CORPORATION
 

                         By:_____________________________________________
                            Name:________________________________________
                            Title:_______________________________________





                                      -9-
<PAGE>
 
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, NOR THE
SECURITIES LAWS OF ANY STATE. NEITHER THIS NOTE NOR SUCH SHARES MAY BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME, EXCEPT UPON (A) SUCH
REGISTRATION, OR (B) DELIVERY TO THE ISSUER OF THIS NOTE OR SUCH SHARES OF AN
OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS
NOT REQUIRED FOR SUCH TRANSFER, OR (C) THE SUBMISSION TO THE ISSUER OF THIS NOTE
OR SUCH SHARES OF OTHER EVIDENCE, REASONABLY ACCEPTABLE TO THE ISSUER, TO THE
EFFECT THAT ANY SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER WILL NOT BE IN
VIOLATION OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR OTHER
APPLICABLE SECURITIES LAWS OF ANY STATE, OR ANY RULES OR REGULATIONS PROMULGATED
THEREUNDER.

THE INDEBTEDNESS EVIDENCED BY THIS INSTRUMENT IS SUBORDINATED TO (A) THE SENIOR
DEBT, AS DEFINED IN, PURSUANT TO, AND TO THE EXTENT PROVIDED IN, THE
SUBORDINATION AGREEMENT EFFECTIVE AS OF THE DATE HEREOF BY THE MAKER HEREOF AND
PAYEE NAMED HEREIN IN FAVOR OF TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AND (B)
THE SENIOR SUBORDINATED DEBT, AS DEFINED IN, PURSUANT TO, AND TO THE EXTENT
PROVIDED IN, THE SUBORDINATION AGREEMENT EFFECTIVE AS OF THE DATE HEREOF BY THE
MAKER HEREOF AND PAYEE NAMED HEREIN IN FAVOR OF THE DELAWARE STATE EMPLOYEES'
RETIREMENT FUND, DECLARATION OF TRUST FOR DEFINED BENEFIT PLAN OF ICI AMERICAN
HOLDINGS, INC., AND DECLARATION OF TRUST FOR DEFINED BENEFIT PLAN OF ZENECA
HOLDINGS, INC.

THE SHARES OF COMMON STOCK ISSUABLE HEREUNDER HAVE BEEN PLEDGED PURSUANT TO THE
TERMS OF A CONTINGENT STOCK PLEDGE AGREEMENT OF EVEN DATE HEREWITH, EXECUTED BY
THE COMPANY AND THE HOLDER.


                LITIGATION RESOURCES OF AMERICA-NORTHEAST, INC.
                    Convertible Subordinated Promissory Note
                                    (Note 2)

$360,000.00               Houston, Texas                   September 4, 1997


     Litigation Resources of America-Northeast, Inc., a New York corporation
(the "Company), for value received, hereby promises to pay to MARTIN H. BLOCK,
an individual (the "Holder"), the principal sum of THREE HUNDRED SIXTY THOUSAND
AND NO/100 DOLLARS ($360,000.00) together with accrued interest on the amount of
such principal sum, payable in accordance with the terms set forth below.
<PAGE>
 
     THE OBLIGATIONS OF THE COMPANY CONTAINED IN THIS NOTE ARE SUBORDINATED TO
ALL SENIOR INDEBTEDNESS, AS HEREINAFTER DEFINED, NOW OWING OR HEREAFTER EXISTING
OR ARISING TO THE EXTENT SET FORTH IN THE SUBORDINATION AGREEMENTS, AS
HEREINAFTER DEFINED.

                                   ARTICLE I
                                  Definitions

     For all purposes of this Note, except as otherwise expressly provided or
unless the context otherwise requires, (i) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular, (ii) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally accepted
accounting principles of the Accounting Principles Board of the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board that are applicable from time to time, and (iii) the words "herein" and
"hereof" and other words of similar import refer to this Note as a whole and not
to any particular Article, Section or other subdivision.

     1.1  "Board of Directors" means the board of directors of the Company as
elected from time to time or any duly authorized committee of that board.

     1.2  "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in Houston, Texas are
authorized or obligated by law or executive order to be closed.

     1.3  "Change in Control" shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"); provided that, without limitation, such a change in control
shall be deemed to have occurred if (W) any "person" (as such term is used in
Section 13(d) and 14(d) of the Exchange Act), other than the Parent or Holder,
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
40% or more of the combined voting power of the Company's then outstanding
securities other than as a result of the sale by the Parent of securities in a
private transaction, and the Pecks Group of Investors no longer has the right to
elect a majority of the Board of Directors of the Parent, or (X) during any
period of two consecutive years during the term of this Note, individuals who at
the beginning of such period constitute the Board of Directors cease for any
reason to constitute at least a majority thereof, unless the election of each
director who was not a director at the beginning of such period is as a result
of the stockholder permitted to designate such director to fill a position
making a change in such designee or if additional directors are added to the
board as a result of an expansion of the board of directors for purposes of the
Company conducting a Public Offering or for any other business reason, or (Y)
the Parent consummates a Public Offering, or (Z) all or substantially all of the
assets of the Parent or the Company are sold.

     1.4  "Default"  means any event which is, or after notice or passage of
time would be, an Event of Default.


                                      -2-
<PAGE>
 
     1.5   "Event of Default" has the meaning specified in Section 3.1.

     1.6   "GAAP" means generally accepted accounting principles of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board that are applicable
from time to time.

     1.7   "Indebtedness" of any Person means all indebtedness of such Person,
whether outstanding on the date of this Note or hereafter created, incurred,
assumed or guaranteed, (i) for the principal of, premium on and interest on all
debts of the Person whether outstanding on the date of this Note or thereafter
created for money borrowed by such Person (including capitalized lease
obligations), money borrowed by others (including capitalized lease obligations)
and guaranteed, directly or indirectly, by such Person, or purchase money
indebtedness, or indebtedness secured by property ("Purchase Money
Indebtedness") at the time of the acquisition of such property by such Person,
for the payment of which the Person is directly or contingently liable, (ii) for
all accrued obligations of the Person in respect of any contract, agreement or
instrument imposing an obligation upon the Person to pay over funds, (iii) for
all trade debt of the Person, and (iv) for all deferrals, renewals, extensions
and refundings of, and amendments, modifications and supplements to, any of the
indebtedness referred to in (i), (ii) or (iii) above.

     1.8   "Lien" means any mortgage, deed of trust, lien, security interest,
pledge, claim, charge, liability, obligation or other encumbrance.

     1.9   "Maturity Date" when used with respect to this Note means September
15, 2005 (or such other date upon which this Note becomes due and payable).

     1.10  "Note" means this Convertible Subordinated Promissory Note.

     1.11  "Other Subordinated Indebtedness" means any other Indebtedness now or
hereinafter due and owing by the Parent or any of its affiliates, and any
preferred stock issued by the Parent, to any person who is the seller of a court
reporting and/or litigation service business in connection with financing all or
part of the purchase price thereof.

     1.12  "Parent" means Litigation Resources of America, Inc., a Texas
corporation.

     1.13  "Parent Stock"  means shares of common stock, $.01 par value, of
Parent and any securities for which such stock may be exchanged or into which it
may be converted.

     1.14  "Pecks Group of Investors" means those persons defined as "Investors"
who are parties to the Securities Purchase Agreement dated effective January 17,
1997, among the Investors, the Parent and certain subsidiaries of the Parent,
and the permitted assigns of the Investors.
 
     1.15  "Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

                                      -3-
<PAGE>
 
     1.16  "Public Offering" means the sale by the Parent of securities for cash
in an underwritten public offering registered on the appropriate form with the
SEC.

     1.17  "Purchase Agreement" means that certain Stock Purchase Agreement
dated as of the date hereof executed by and among the Company, the Parent and
the Holder.

     1.18  "SEC"  means the United States Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act of 1933 or
any successor act thereto.

     1.19  "Senior Indebtedness" means any and all indebtedness, liabilities and
obligations of the Company to any Person including Other Subordinated
Indebtedness that is incurred by the Company or its affiliates in financing the
purchase by it or its affiliates of a court reporting and/or litigation service
business, whether direct or indirect, absolute or contingent, now owing or
hereafter existing or arising, or due or to become due, including without
limitation, future indebtedness (principal, interest, fees and expenses,
collection costs or otherwise) and future advances of funds, and all
modifications, renewals, extensions or rearrangements of any of the foregoing.

     1.20  "Subordination Agreements" means those certain Subordination
Agreements executed as of even date herewith by and among the Company, the
Holder, and the holders of the Senior Indebtedness.

     1.21  "Subsidiary" means a corporation or other entity in which more than
50% of the outstanding voting stock or equity interests is owned or controlled,
directly or indirectly, by the Company or any combination of the Company and one
or more other Subsidiaries.  For the purposes of this definition, "voting stock"
means stock or other interests which ordinarily has voting power for the
election of directors, and equity interests means the right to receive the
profits of the entity, when disbursed, or the assets of the entity upon
liquidation or dissolution.

                                   ARTICLE II
                                    Payments

     2.1  Interest.  From the date of this Note through the Maturity Date,
interest shall accrue hereunder on the unpaid outstanding principal sum of this
Note at a rate of six and three-eighths percent (6.375%) per annum, calculated
on the basis of a 365-day year or 366-day year as the case may be.

     2.2  Payment of Principal and Interest.  Beginning September 15, 1997, the
Company shall make monthly payments of interest on the fifteenth day of each
month during the term of this Note (and if the fifteenth day is not a Business
Day, the first Business Day thereafter) with the entire principal amount of this
Note and accrued interest thereon being due and payable on September 15, 2005.
Prepayments of this Note are not permitted without the consent of the Holder in
Holder's sole discretion.

                                  ARTICLE III
                                    Remedies


                                      -4-
<PAGE>
 
     3.1    Events of Default.  An "Event of Default" occurs if:

     3.1.1  the Company fails to make when due any payment of interest due
under this Note, and such default remains uncured for a period of 10 days after
notice from the Holder;

     3.1.2  the Company fails to make when due the principal payment due
under this Note, and such default remains uncured for a period of 180 days after
notice from the Holder; or

     3.1.3  the Company defaults in the performance of any other covenant
made by the Company in this Note, and such default remains uncured for a period
of 180 days after notice from the Holder.

     3.2    NO ACCELERATION OF MATURITY.  REGARDLESS OF  THE OCCURRENCE OF AN
EVENT OF DEFAULT (AND THE EXPIRATION OF ANY APPLICABLE CURE OR GRACE PERIOD),
THE HOLDER SHALL HAVE NO RIGHT TO ACCELERATE THE MATURITY OF THIS NOTE.

                                   ARTICLE IV
                                   Covenants

     The Company covenants and agrees that, so long as this Note is outstanding:

     4.1  Payment of Principal and Accrued Interest.  The Company will duly and
punctually pay or cause to be paid the principal sum of this Note, together with
interest accrued thereon from the date hereof to the date of payment, in
accordance with the terms hereof, except to the extent of any limitations
contained in the Purchase Agreement or the Subordination Agreements.

                                   ARTICLE V
                                   Conversion

     5.1  Conversion Events. On the date of and simultaneously with the closing
(the "Event Date") of  the first event which causes a Change in Control, all of
the outstanding principal amount of this Note shall be automatically converted
into shares of Parent Stock at a price equal to $8.50 per share ("Conversion
Price"), and otherwise on and subject to the terms and conditions set forth in
this Article V.  The outstanding principal amount of this Note shall be deemed
converted  into shares of Parent Stock on the Event Date but shall not be
complete until (i) the Company has given written notice to the Holder, which
notice shall be given at least twenty days prior to the Event Date, that the
outstanding principal amount of this Note has been converted, which notice shall
disclose the Conversion Price, the Event Date and the number of shares of Parent
Stock to be received by the Holder (although failure to give notice shall not
affect the conversion, nor the completion of same, upon performance by Holder of
items (ii), (iii) and (iv) below), (ii) the Holder has delivered written
instructions to the Company which states the denominations in which the Holder
wishes the certificate or certificates for Parent Stock to be issued, (iii) the
Holder has surrendered this Note to the Company, and (iv) the Holder has
delivered to the Parent an executed counterpart of a shareholders' agreement
(upon a Change of Control other than a Public Offering) and an investor
representation letter, in form and content acceptable to Parent.



                                      -5-
<PAGE>
 
     5.2  Accrued Interest; Fractional Shares; Conversion Date. In the event of
any conversion, the Company will, as soon as practicable after surrender of this
Note and compliance by the Holder with the other conditions herein contained,
cause to be issued and delivered to the surrendering Holder certificates for the
number of full shares of Parent Stock to which the Holder shall be entitled as
aforesaid, together with any unpaid interest on the principal amount converted
accrued through the Event Date.  The Holder shall not  be entitled to receive
fractional shares of Parent Stock upon conversion or script in lieu thereof, but
the number of shares of Parent Stock to be received by the Holder upon
conversion shall be rounded down to the next whole number and the Holder shall
be entitled to payment for the fractional share in cash at the Conversion Price.
Such conversion shall be deemed to have been made as of the close of business on
the Event Date, so that the persons entitled to receive the shares of  Parent
Stock upon conversion of the principal amount hereof shall be treated for all
purposes as having been the record holder or holders of such shares of Parent
Stock at such time.

     5.3  No Shareholder Rights; Representations and Agreements Upon Issuance.
This Note shall not entitle the Holder to any voting rights or other rights as a
stockholder of the Parent, or to any other rights whatsoever except the rights
herein expressed and such as are set forth, and no dividends shall be payable or
accrue in respect of this Note or the interest represented hereby or the Parent
Stock purchasable hereunder until or unless, and except to the extent that, the
outstanding principal amount hereof shall be converted.  No shares of Parent
Stock can or will be issued upon conversion until the Holder becomes a party to
a Shareholders' Agreement in the form required by the Parent and gives
appropriate investment representations concerning knowledge about the investment
and acknowledgments of any applicable restrictions on transferability.

                                  ARTICLE VI
                                 Miscellaneous

     6.1  No Collection Fees.  If this Note is placed in the hands of an
attorney for collection, and if it is collected through any legal proceedings at
law or in equity or in bankruptcy, receivership or other court proceedings, the
Company will not pay any costs or expenses of collection including, but not
limited to, court costs and the reasonable attorney's fees of Holder.

     6.2  Consent to Amendments.  This Note may be amended, and the Company may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, if and only if the Company shall obtain the prior written
consent to such amendment, action or omission to act from the Holder.

     6.3  Benefits of Note.  Nothing in this Note, express or implied, shall
give to any Person, other than the Company, Holder, and their successors any
benefit or any legal or equitable right, remedy or claim under or in respect of
this Note.

     6.4  Successors and Assigns.  All covenants and agreements in this Note
contained by or on behalf of the Company and the Holder shall bind and inure to
the benefit of the respective successors and assigns of the Company and the
Holder.


                                      -6-
<PAGE>
 
     6.5  Restrictions on Transfer.  This Note shall not be transferable or
assignable in any manner whatsoever except in compliance with federal and state
securities laws, and if applicable, the laws of descent and distribution.  In
addition, any transfer or assignment shall be made expressly subject to the
terms and provisions of the Contingent Stock Pledge Agreement and the Stock
Purchase Agreement, and any defenses to payment or offset rights set forth
therein.

     6.6  Waiver; Remedies Exclusive.  No failure to exercise and no delay on
the part of Holder in exercising any power or right in connection herewith shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power.  No course of dealing between the Company
and Holder shall operate as a waiver of any right of Holder under this Note.  No
modification or waiver of any provision of this Note or any other instrument
evidencing, securing, or guaranteeing this Note nor any consent to any departure
therefrom shall in any event be effective unless the same shall be in writing
and signed by the person against whom enforcement thereof is to be sought, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. All rights and remedies of Holder existing
hereunder are exclusive and not cumulative of any rights or remedies otherwise
available thereto.

     6.7  Notice; Address of Parties.  Except as otherwise provided, all
communications to the Company or Holder provided for herein or with reference to
this Note shall be deemed to have been sufficiently given or served for all
purposes on the first business day after being sent by overnight courier to the
following addresses: if to the Company, 1001 Fannin, Suite 650 Houston, Texas
77002, Fax 713/653-7172 or at any other address designated by the Company in
writing to Holder; if to Holder, 7014 Vagabond Drive, Falls Church, Virginia
22042, or at any other address designated by Holder to the Company in writing.

     6.8  Separability Clause.  In case any provision in this Note shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions in such jurisdiction shall not in
any way be affected or impaired thereby; provided, however, such construction
does not destroy the essence of the bargain provided for hereunder.

     6.9  Governing Law.  This Note shall be construed and enforced in
accordance with and governed by the laws of the State of New York.

     6.10 Arbitration.  The arbitration provisions contained in Article 9 of the
Purchase Agreement shall govern this Note.

     6.11 Antidilution Protection.  The Company shall, and shall induce Parent
to, grant to Holder any antidilution protection granted to any other holder of
shares of Parent Stock or of securities, options, warrants or other rights to
acquire, or any other securities convertible into,  shares of Parent Stock,
except for antidilution protection previously granted or granted in the future
to institutional investors.


                                      -7-
<PAGE>
 
     THIS NOTE, ANY AND ALL ADDITIONAL PROMISSORY NOTES, IF ANY, ISSUED BY THE
COMPANY TO HOLDER, AND ALL DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION
HEREWITH OR THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE COMPANY AND
HOLDER WITH RESPECT TO THE OBLIGATIONS OWED THEREBY TO HOLDER AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE COMPANY AND HOLDER.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE COMPANY AND THE HOLDER.  PAYMENT OF THIS NOTE IS SUBJECT
TO THE PURCHASE AGREEMENT AND THE SUBORDINATION AGREEMENTS.

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed on the date first above written.

                         LITIGATION RESOURCES OF AMERICA-NORTHEAST, INC., A NEW
                         YORK CORPORATION
 
                            By: /s/ RICHARD O. LOONEY
                                _________________________________________
                            Name:________________________________________
                            Title:_______________________________________

     The Parent has executed this Note solely to evidence its agreement to the
obligations, potential or actual, of the Parent with respect to (i) conversion
of the Note into Parent Common Stock, as set forth in Article V of this Note,
(ii) the arbitration provisions set forth in Section 6.10 hereof, and (iii) the
antidilution provisions set forth in Section 6.11 hereof.

                         LITIGATION RESOURCES OF AMERICA, INC.,
                         A TEXAS CORPORATION
 
                            By: /s/ RICHARD O. LOONEY
                                _________________________________________
                            Name:________________________________________
                            Title:_______________________________________




                                      -8-