Arrangement Letter - Confidential Information
Fox Photo, Inc. (12-10-97)


                  Applied Intelligence Group, Inc.
                        13800 Benson Road
                         Edmond, OK 73013





December 10, 1997

Mr. Alan D. Kerschner
Executive Vice President of Finance & CFO
Fox Photo, Inc.
1706 Washington Avenue
St. Louis, MO  63103

Dear Mr. Kerschner:
Applied Intelligence Group, Inc. (AIG) is pleased to present
this Arrangement Letter (Letter) defining the agreement
between our firms for AIG to provide services to Fox Photo,
Inc. (Fox Photo) to design and implement elements of the Sales
Audit and POS data processing system that are scheduled to
replace Fox's current systems by March 31, 1998.  This Letter
supersedes and replaces the previous arrangement letter
between Fox Photo and AIG dated October 28, 1997.

SCOPE AND APPROACH
The scope of this project is to provide Fox Photo with the
retail expertise and professional services of AIG's employees.
AIG will perform professional services for Fox Photo on a time
and expenses basis to assist in the replacement of Fox's
current Sales Audit and POS data processing systems.  As
mutually agreed between Fox Photo and AIG, AIG will use its
best efforts to:
     Assist Fox Photo in the development and implementation of
     the above-mentioned Sales Audit and POS data processing
     systems

     Provide written System Requirements Document (SRD) for
     included applications

     Provide written high-level procedure descriptions

     Provide Data Conversion Requirements Document for
     historical data

     Provide training services and documentation for Fox Photo
     employees on the new systems

AIG will provide updates and status reports on a weekly basis
so that Fox Photo can identify AIG's progress and make
changes, if necessary, in the scope, schedule, and/or budget
for this project.

ASSUMPTIONS
The assumptions AIG used to develop scheduling and terms are
listed in this section.  If any of these assumptions needs to
change, AIG reserves the right to adjust our proposed terms
and timeframes accordingly.
     Development of the new systems will be performed on-site
     at AIG.

     Leased communications lines or direct connections will be
     established and maintained by Fox Photo.  AIG will provide an
     AS/400 and work stations for work done in Edmond, Oklahoma.
     See Exhibit B for pricing information.

     All the systems will not be in place by March 31, 1997.
     AIG will work with Fox Photo to develop unavoidable business
     systems as a highest priority, as agreed by Fox and AIG.

SPECIFIC TERMS AND CONDITIONS
The specific terms and conditions related to the services that
AIG will provide to Fox within the scope of this agreement are
listed in the following section.
  PROJECT MANAGEMENT
  Fox will provide a suitable Project Manager to coordinate
  the project and an Executive Sponsor with overall
  responsibility for project implementation and direction
  within Fox.  AIG will also provide a Project Manager who
  will be Fox's primary project contact. AIG's proposed
  project timeframe assumes that Fox personnel are available
  to participate in the project as required.

GENERAL TERMS AND CONDITIONS
For the General Terms and Conditions section of this Letter,
Fox will be referred to as the Client.
  OWNERSHIP
  AIG and the Client agree that the tools, method,
  techniques, and documentation developed by AIG for the
  Client are confidential and proprietary.  The Client may
  not sell, share, lease, loan, transfer, or give these
  assets to any other entity without prior written approval
  from AIG.  In the event that a new parent corporation
  acquires Fox, the transfer of this asset can be made to the
  new parent corporation.
  Under the terms of this Letter, the Client receives a non-
  transferable, non-assignable, non-exclusive right to use
  the tools, method, techniques, software, and documentation
  developed by AIG for the Client in its headquarters and
  stores, as well as the headquarters and stores of any of
  the Client's subsidiaries or parent corporation.

  WARRANTY
  The work AIG performs will be done in a professional and
  workmanlike manner.  AIG does not warrant that the systems,
  software, plans, strategies, designs, recommendations or
  services provided by AIG will meet the strategic or
  business needs of the Client.  AIG only warrants that the
  analysis and recommendations are based on information
  provided to AIG by the Client.

  CONFIDENTIALITY
  AIG recognizes the confidential nature of our clients'
  business plans and strategies and agrees to treat these
  plans and strategies appropriately.  Likewise, AIG's tools,
  techniques, and proprietary documentation are important
  company assets which we consider to be confidential and
  proprietary.  The Client agrees to treat AIG materials,
  plan, and strategies in the same confidential manner as its
  own material.  Both companies agree that no confidential
  information will be released or disclosed to any persons
  other than the Client's or AIG's employees.  Both companies
  also agree to label confidential information as such before
  information is exchanged.

  LIMITATION OF LIABILITY
  In no event will AIG be liable for any reason beyond the
  total amount paid to AIG for services performed within the
  scope of this Letter.  AIG disclaims any and all liability
  for special, incidental or consequential damages.  This
  disclaimer includes any loss of profit arising out of, or
  related to, any service provided under the terms of this
  Letter.  This limitation of liability applies even if AIG
  was aware of the possibility of such damage.

  HIRING OF PERSONNEL
  The Client and its staff agree not to solicit, and will
  instruct its staff not to solicit, AIG staff members.  If
  the Client hires any AIG staff person who works with the
  Client on this engagement within twelve months of project
  completion, then the Client agrees to compensate AIG in the
  amount of that staff member's annual salary, including
  benefits.  AIG agrees to be bound by the same terms
  regarding the hiring of the Client's personnel.

  RIGHTS AND REMEDIES
  The rights and remedies granted to AIG are in addition to
  and not in lieu of any rights and remedies granted by law
  or in equity.  No action arising out of this Letter,
  regardless of form, may be brought more than one year after
  the cause of action has accrued.

  ORIGIN OF AGREEMENT
  This agreement will be deemed to be made in the State of
  Missouri.

  TAXES
  The Client will pay any applicable state, county, or local
  sales taxes or assessments and other applicable expenses.

  RESOLUTION OF DISPUTES
  In the event that AIG and/or the Client disagree and are
  not able to come to resolution about the execution of
  either party's responsibilities regarding the terms of this
  Letter, AIG and the Client mutually agree to enter into
  binding arbitration for quick resolution of issues.  The
  arbitration process will be governed by the Commercial
  Arbitration Rules of the American Arbitration Association
  (AAA).  The AAA will appoint an individual with experience
  in handling disputes in information systems matters as the
  chairperson and neutral arbitrator, with any additional
  arbitrators to be selected by the parties from individuals
  with background and training in the computer industry.
  Venue for all hearings shall be established by the party
  initiating the arbitration.  The cost of arbitrators shall
  be borne equally by the parties, but other costs for
  arbitration (i.e., travel, exhibits, copies, attorney)
  shall be borne by the company incurring the costs.  The
  parties will have no right to take discovery of the other
  party by any method.  The arbitrators may award reasonable
  attorneys' fees to the prevailing party as an element of
  the cost of arbitration, and judgment upon the award may be
  entered in any court having jurisdiction.

PROJECT TIMEFRAME AND COST
Upon receiving Fox Photo's approval to proceed, AIG will begin
work on October 29, 1997.  AIG expects this work to last six
(6) months.
The cost for AIG's professional services under the terms of
this Letter are AIG's current rates as listed in Exhibit A of
this Letter, plus expenses, invoiced monthly.  Out-of-pocket
expenses, if any, will also be invoiced monthly and supported
by the appropriate paperwork.  AIG agrees not to charge any
significant expenses without the prior written approval of the
Client.  AIG invoices may include charges for late payment
which will accrue at the rate of one and one-half percent (1 1/2
%) per month (or the maximum amount allowed by law, whichever
is less) on the unpaid balance from the due date until the
date the payment is received by AIG.
In consideration for the payment of services related to this
agreement, AIG will also provide Fox with a written Store
Systems Requirement Plan, as outlined in Exhibit C of this
Letter.  The development of the Store Systems Requirement Plan
will be conducted at no fee; however, Fox will pay reasonable
expenses.  These out-of-pocket expenses, primarily for travel,
will be invoiced monthly and supported by the appropriate
paperwork.

EXPIRATION OF THIS OFFER
This offer expires fifteen (15) calendar days from the date of
this Letter, unless accepted and signed by both parties.

TERMINATION OF AGREEMENT
This Letter will terminate one (1) year from the date of
signature unless both parties mutually agree to extend the
Letter.  The responsibilities for payment of fees, all
limitations of liability, all terms regarding ownership of
products and techniques, the rights and remedies clause,
resolutions of disputes, and the restrictions regarding
confidentiality shall survive the expiration of this Letter.

EXHIBIT
Exhibit A contains a list of Other Provisions related to this
Letter.
Exhibit B is a list of AIG's current applicable professional
rates and equipment costs.
Exhibit C is an outline of the Store Systems Requirement Plan.

APPROVAL
This Letter, attached Exhibit, and its terms and conditions
are agreed to by both Fox Photo  and AIG on this day.

Applied Intelligence Group,     Fox Photo, Inc.
Inc.

Signature                        Signaturee
 Name     Robert Barcum           Name
 Title    President               Title
 Date     December 10, 1997       Date


Schedule and Attachments

                          Exhibit A.
                       Other Provisions


     In this Exhibit Fox Photo will be referred to as the
                           "Client".


ENTIRE AGREEMENT
This Letter and Exhibits constitute the entire agreement
between AIG and the Client concerning the subject matter of
this Letter.  Agreement is defined as the Arrangement Letter
to which this Exhibit is attached, this Exhibit, and any other
exhibits, amendments, supplements, and addenda, including any
future written amendments, modifications, or supplements to
these documents.
MODIFICATION
Any modification or amendment to this agreement must be in
writing signed by the parties.  For AIG, the writing must be
signed by an officer of the corporation.  Any written document
that is inconsistent with this agreement or adds to its terms
and conditions will not be binding on either AIG or the
Client.  AIG's failure to object to any provision outside of
this Letter shall not be considered to be a waiver of the
terms and conditions of this Letter or an acceptance of such a
provision.
BINDING
This agreement is binding on AIG, the Client, and their
respective successors and assigns to the extent permitted by
this agreement.
AUTHORITY
AIG and the Client, as parties to this agreement, warrant to
each other that:

     If organized as a corporation, partnership, limited
     partnership, or other non-natural person, the party is
     organized and subsisting under the laws of the jurisdiction of
     its incorporation or existence.

     The party has full power and authority to enter into this
     agreement.

     The persons executing this agreement have actual
     authority to bind the parties to this agreement.

SINGULAR/PLURAL
Singular words will include the plural and vice versa.
Masculine, feminine, and neuter genders will include the
others.  The word "person" will include corporations, firms,
partnerships, joint ventures, trusts, or estates, in addition
to natural persons.
FORCE MAJEURE
Except for the obligation to make payments due under the terms
of this agreement, neither AIG nor the Client will be held
liable for failure to perform due to circumstances beyond the
control of the parties.  These circumstances include, but are
not limited to: accidents; acts of God; labor disputes;
supplier or material shortages; embargoes; rationing; fuel
shortages; actions of local, state or national governments, or
governmental agencies or authorities, or military authorities;
utility or communication failures; delays in transportation;
fire, flood, epidemics, riots, or strikes; war or criminal
activities; delays in delivery or failure to manufacture or
deliver.

CAPTIONS
The captions of various paragraphs in this Letter are for
convenience only.  They are not intended to be part of the
body or text of this agreement.  They are also not intended to
be referred to in construing any of the provisions of the
agreement.
COUNTERPARTS
This agreement may be executed in any number of counterparts,
any of which will be deemed to be an original.
INDEPENDENT CONTRACTORS
AIG and the Client are strictly independent contractors.
Neither party has the right to bind the other in any manner.
Nothing in this agreement should be interpreted to make either
part the agent or legal representative of the other, or to
make the parties joint venturers or partners.
OTHER INSTRUMENTS
The Client agrees to execute any instruments or documents that
may be required in order to effect the terms, conditions,
purpose, or objective of this agreement.
OTHER TRANSACTIONS
In addition to the services provided under the terms of this
agreement, AIG may perform other services or provide other
products through separate written agreements which must be
executed by AIG before AIG is bound.  AIG and the Client agree
that these additional products and services cannot be the
subject of an oral agreement.
ASSIGNMENT
The Client agrees to obtain prior written consent from AIG
before assigning this agreement, or the rights and obligations
created under this agreement, to any third party.

SEVERABILITY
The parties agree that if any provision of this agreement is
invalid or unenforceable, the remaining provisions of this
Letter will be valid and enforceable to the fullest extent
permitted by law.
TRADEMARK USAGE
The Client agrees not to make use of any of AIG's trademarks,
service marks, or trade names for any reason without the prior
express written consent of AIG.
NONWAIVER
AIG's failure at any time to require the Client to perform any
provision of this agreement will in no way affect AIG's right
at a later time to require performance of that provision.
AIG's waiver of any breach of a provision of this agreement
will not be construed as a waiver of:
     Succeeding breaches of that provision.
     That provision itself.
     Any right under this agreement.

NOTICE
All communications and notices related to this agreement will
be made in writing and delivered to the following addresses:
     Applied Intelligence Group, Inc.
     13800 Benson Road
     Edmond, OK 73013-6417
     Fox Photo, Inc.
     1706 Washington Avenue
     St. Louis, MO  63103
Address changes will be communicated by written notice to the
other party on a timely basis.  Communications and notices may
be delivered by any of the following methods with effective
date as listed:
     Delivered personally with same day effective date.
     Mailed by certified mail, postage prepaid, with effective
     date five business days after mailing.
     Sent by overnight courier with effective date one day
     after sending.




                             Exhibit B.
                        1997 AIG Rates





                          Exhibit C.
                Store Systems Requirement Plan


       This Exhibit outlines AIG services related to the
      development of a Store Systems Requirement Plan for
               retail store operations for Fox.

SCOPE AND APPROACH
The scope of AIG's work for this project focuses on developing
a Store Systems Requirement Plan,  along with a master plan
for Point-of-Sale functionality in Fox Photo retail stores.
The following points highlight the nature of AIG's approach:
     Interview Fox executives and MIS personnel to determine
     business and operational requirements.

     Review current Fox documentation and previous systems
     requirements documentation provided by Fox.

     Evaluate Fox current operations - systems, plans,
     objectives and databases.

    Identify and document hardware, software, and
     communications issues, including information flow of current
     systems, by spending at least one to two days at as many as
     three stores of Fox's choosing.

    Perform a high-level review of third-party software
     solutions.

    Build the Store Systems Requirement Plan.

    Build the Store Systems Architecture Document.

    Develop implementation timelines of the various projects
     and recommendations in the Store Systems Requirement Plan.

    Do a cost/benefit analysis.

    Conduct an executive presentation to review our findings
     and to make recommendations.

DELIVERABLES
This list details specific deliverables to be provided to Fox
by AIG within the scope of this agreement.
    A detailed workplan identifying the approach, tasks,
     resources and responsibilities for the ongoing project.

    A timeline identifying tasks and expected start and stop
     dates.

    A Store Systems Requirements Plan based on retail
     operations "best practices" which outlines what AIG, along
     with Fox, considers to be acceptable standards for POS and
     retail operations in Fox stores.

    A cost estimate.

    A presentation of the results and recommendations to Fox
    executive management.