SCHEDULE 14A

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
[AMENDMENT NO. ]

Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]

Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

The Eastwind Group, Inc.

(Name of Registrant as Specified in Its Charter)


(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:


2) Aggregate number of securities to which transaction applies:


3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):


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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by Registration Statement number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:_________________________________________

2) Form, Schedule or Registration Statement No.:____________________

3) Filing Party:___________________________________________________

4) Date Filed:_____________________________________________________


THE EASTWIND GROUP, INC.

May 7, 1997

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of The Eastwind Group, Inc. (the "Corporation"), which will be held on Thursday, June 5, 1997, at the Eagle Lodge, Ridge Pike and Manor Road, Lafayette Hill, Pennsylvania, 19444 commencing at 9:00 A.M. Your Board of Directors and management look forward to greeting you.

At the meeting, stockholders will be asked to elect eight directors, to approve certain amendments to the Corporation's Certificate of Incorporation, to approve certain amendments to the Corporation's two stock option plans and to consider such other matters as may properly come before the meeting. These matters are discussed in greater detail in the accompanying proxy statement.

Your Board of Directors recommends a vote FOR the election of all directors, FOR the amendments to the Certificate of Incorporation, and FOR the amendments to the stock option plans.

Regardless of the number of shares you own or whether or not you plan to attend, it is important that your shares be represented and voted at the meeting. You are requested to sign, date and mail the enclosed proxy promptly. The return of your proxy will not prevent you from voting in person if you attend the meeting.

Your interest and participation in the affairs of the Corporation are most appreciated.

Sincerely,

/s/ Paul A. DeJuliis
Paul A. DeJuliis
Chairman of the Board
and Chief Executive Officer


THE EASTWIND GROUP, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 5, 1997
May 7, 1997

To the Stockholders of THE EASTWIND GROUP, INC.

The Annual Meeting of Stockholders (the "Meeting") of The Eastwind Group, Inc. (the "Corporation") will be held at the Eagle Lodge, Ridge Pike and Manor Road, Lafayette Hill, Pennsylvania 19444 on Thursday, June 5, 1997, at 9:00 A.M. for the following purposes:

(1) to elect eight directors;

(2) to approve an amendment of the Corporation's Certificate of Incorporation to change the name and address of the Corporation's registered agent and to make technical corrections;

(3) to approve an amendment to the Corporation's Certificate of Incorporation to classify the Board of Directors of the Corporation;

(4) to approve amendments of the Stock Option Incentive Plan to (i) increase the number of shares of Common Stock reserved for issuance thereunder,
(ii) modify the administration of the plan, and (iii) relax certain option transfer restrictions;

(5) to approve amendments of the Non-Employee Directors Stock Option Plan to (i) increase the number of shares of Common Stock reserved for issuance thereunder and (ii) relax certain option transfer restrictions; and

to transact such other business as may properly come before the Meeting and at any adjournments thereof.

The Board of Directors has fixed the close of business on April 30, 1997 as the record date for determining the stockholders entitled to notice of and to vote at the Meeting and at any adjournments or postponements thereof. Only stockholders of record of the Corporation's Common Stock and Series B Preferred Stock at the close of business on April 30, 1997 will be entitled to notice of and to vote at the Meeting and at any adjournments or postponements thereof.

You are requested to fill in and sign the enclosed form of proxy which is being solicited by the Board of Directors and to mail it promptly in the enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a later dated proxy. Stockholders of record who attend the Meeting may vote in person, even if they have previously delivered a signed proxy.

By Order of the Board of Directors

/s/ William B. Miller
William B. Miller
Secretary

YOUR VOTE IS IMPORTANT

You are urged to sign, date and promptly

return your proxy in the enclosed reply envelope.


THE EASTWIND GROUP, INC.
100 Four Falls Corporate Center, Suite 305
West Conshohocken, Pennsylvania 19428

PROXY STATEMENT

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board") of The Eastwind Group, Inc. (the "Corporation") to be voted at the Annual Meeting of Stockholders of the Corporation on Thursday, June 5, 1997, and at any adjournments or postponements thereof (the "Meeting") for the purposes described in the foregoing notice of the Meeting. Proxies which are validly executed by stockholders and received by the Corporation prior to the Meeting will be voted in accordance with the instructions contained thereon. If no instructions are given, a proxy will be voted for the election of the eight nominees proposed for election as directors, and if the proposed amendment of the Corporation's Certificate of Incorporation (the "Certificate") respecting the classification of the Board is approved, for their election to the classes of the Board to which they are nominated; will be voted for approval of certain amendments of the Certificate; and will be voted for approval of the amendments to the Corporation's Stock Option Incentive Plan and Non-Employee Directors Stock Option Plan.

The only securities entitled to vote at the Meeting consist of shares of Common Stock and of Series B Preferred Stock. At the close of business on April 30, 1997 (the "Record Date"), there were 2,786,019 shares of the Corporation's Common Stock and 9,000 shares of the Corporation's Series B Preferred Stock outstanding. Each share of Common Stock is entitled to one vote, and each share of Series B Preferred Stock to one-tenth of a vote. Only holders of record at the close of business on the Record Date will be entitled to notice of and to vote at the Meeting. The holders of a majority of the outstanding shares entitled to vote must be present in person or represented by proxy at the Meeting in order to constitute a quorum for the transaction of business. Abstentions and broker non-votes will be counted for the purpose of determining a quorum but will not be counted in the election of directors. Directors will be elected by a plurality of the votes of the shares present in person or represented by proxy at the Meeting and entitled to vote. All other proposals coming before the Meeting require the affirmative vote of the majority of shares present in person or represented by proxy at the Meeting and entitled to vote. For purposes of determining whether proposals other than the election of directors have received a majority vote, abstentions will be counted in the vote totals with the result that they have the same effect as a negative vote. A broker non-vote on a matter is considered not entitled to vote on that matter and thus is not counted in determining whether the affirmative vote of a majority of the shares present and entitled to vote has been received.

A stockholder may revoke a proxy at any time before it has been exercised by filing a written revocation with the Secretary of the Corporation; by filing a duly executed proxy bearing a later date; or by appearing in person and voting by ballot at the Meeting. The presence (without further action) of a stockholder at the Meeting will not constitute revocation of a previously given proxy.

A copy of the Corporation's Annual Report for the fiscal year ended December 31, 1996 accompanies this proxy statement which, along with the accompanying notice and form of proxy, were first mailed or given to stockholders on or about May 7, 1997.


1. ELECTION OF DIRECTORS

All of the nominees identified below, except Edward F. Sager, Jr. are presently members of the Board. If the proposed amendments of the Corporation's Certificate relating to the classification of the Board, which is to be voted upon at the Meeting, is approved (see Proposal 3), a classified Board will be established. The terms of all directors will expire at the Meeting, and the Board has nominated the seven current directors named below for re-election to either one, two or three year terms as set forth below and has nominated Mr. Sager to a one year term. It is the intention of the persons named in the accompanying form of proxy to vote such proxy for the election of these nominees as directors for the terms specified below. In the event that any nominee is unable to serve or will not serve as a director, it is intended that the proxies solicited hereby will be voted for such other person or persons as may be nominated by management. The stockholders of the Corporation do not presently have the right of cumulative voting in the election of directors, nor is any such cumulative voting requirement proposed.

There is a voting agreement between the Corporation, Messrs. Paul A. DeJuliis and John R. Thach, Sector Associates, Ltd. ("Sector"), American Maple Leaf Financial Corporation ("AMLF") and FAC Enterprises, Inc. ("FAC") which provides that all parties will vote their shares of Common Stock so that one director shall be nominated by Sector, one director shall be jointly nominated by FAC and AMLF and five shall be nominated by Messrs. DeJuliis and Thach. Sector, FAC and AMLF have nominated Messrs. Panzo and Bibb. Messrs. DeJuliis and Thach have nominated, in addition to themselves, Messrs. Miller, Murray and Mendicino. An agreement between the Corporation and Mentor Special Situation Fund, L.P. ("MSSF") dated June 20, 1996 gives MSSF the right to nominate a director to the Board. Mr. Sager is MSSF's nominee.

                         Position with the Corporation,          Year in Which
                         Business Background                     Service as a
Name               Age   and Other Directorships                 Director Began
- ----               ---   -------------------------------         --------------

DIRECTOR NOMINEES FOR TERMS WHICH EXPIRE AT THE ANNUAL MEETING OF STOCKHOLDERS IN 2000 (CLASS I):

Paul A. DeJuliis    41   Mr. DeJuliis is Chairman of the Board,            1993
                         Chief Executive Officer and a founder
                         of the Corporation. Prior to assuming
                         his current roles, he was a partner
                         in Phoenix Management Services, Inc., a
                         turnaround consulting firm (1989-91).
                         Previously, he was Vice-President,
                         Corporate Finance for Colmen & Co., a
                         national investment banking firm
                         (1987-89), and Manager, Corporate
                         Turnaround Consulting Group for Coopers &
                         Lybrand (1986-87).  Mr. DeJuliis was a
                         director and officer of Lavelle Aircraft
                         Company, an aerospace manufacturing
                         company which filed for bankruptcy in
                         1994.  Mr. DeJuliis has a B.S. in finance
                         and accounting from the University of
                         Delaware.  He is also a certified public
                         accountant.

John R. Thach       46   Mr. Thach is President and a Director and         1993
                         a founder of the Corporation.  Prior to
                         assuming his current roles, Mr. Thach
                         was an Associate, Vice President and Senior
                         Vice President for  Butcher & Co. (1985 to
                         1987), Philadelphia First  (1987 to 1989),
                         and  Philadelphia Investment Banking (1989
                         to 1991), respectively,  three regional
                         investment banking firms where he was
                         involved  extensively in advisory roles to
                         a number of industrial companies.

2

                         Position with the Corporation,         Year in Which
                         Business Background                    Service as a
Name               Age   and Other Directorships                Director Began
- ----               ---   -------------------------------        --------------

                         Other experience includes Mr. Thach's
                         active participation (as an investor and
                         in management) in a number of successful
                         start-ups ranging from the creation of an
                         industrial chemical sales  division of a
                         major U.S. corporation to the creation
                         of a municipal  waste ash treatment company.
                         Mr. Thach was a director and  officer of
                         Lavelle Aircraft Company, an aerospace
                         manufacturing  company which filed for
                         bankruptcy in 1994.  Mr. Thach holds an
                         undergraduate degree from the University of
                         Virginia, and an  MBA from the Darden School
                         at the University of Virginia.

William B. Miller  56    Mr. Miller has been a Senior Vice                 1995
                         President, Chief Financial Officer,
                         Secretary, Treasurer and a Director of the
                         Corporation since 1995.  Mr. Miller is a
                         certified public accountant and founder, in
                         1976, of the public accounting firm of
                         Kreischer, Miller & Co. which he left in 1987.
                         Prior to the formation of that firm, he was
                         with Price Waterhouse in Philadelphia (1966-71).
                         Mr. Miller also served as Vice President and
                         Treasurer of WPHL-TV, Inc. in Philadelphia
                         (1971-75); President of Marian Financial
                         Services Corp. in Philadelphia, the real estate
                         finance affiliate of a private bank (1987-92);
                         Chief Financial Officer of Worlco, Inc.
                         (1990-91), a holding company for an insurance,
                         equipment leasing and commercial mortgage
                         brokerage companies which filed for bankruptcy
                         in 1993; and President of Schulmerich Carillons,
                         Inc. (1992-94).  Mr. Miller holds an accounting
                         and economics degree from Muhlenberg College.

DIRECTOR NOMINEES FOR TERMS WHICH EXPIRE AT THE ANNUAL MEETING OF STOCKHOLDERS IN 1999 (CLASS II):

Anthony J. Mendicino 49  Mr. Mendicino has been Senior Vice President      1995
                         and Chief Operating Officer since January
                         1997 and is a Director of the Corporation.
                         Mr. Mendicino was Senior Vice President,
                         Chief Financial Officer and a director of UTI
                         Energy Corp., a diversified oil field service
                         company listed on the American Stock Exchange,
                         from 1987 through 1996.  Prior thereto, since
                         1981, Mr. Mendicino served in various
                         capacities for UGI Corporation, initially as
                         Director of Corporate Development and, from
                         1984, as Treasurer.  He holds a degree in
                         engineering from Lehigh University and an
                         MBA from the Wharton School of the University
                         of Pennsylvania.

Bruce P. Murray     51   Mr. Murray is a Director of the Corporation.      1995
                         He is a founder and President of the Bannock
                         Burn Group, Ltd., a management consulting firm
                         with a national practice specializing in
                         assisting businesses in transition. Prior to
                         the founding of his firm in 1987, he was part
                         of a senior operating turnaround team

3

                         Position with the Corporation,         Year in Which
                         Business Background                    Service as a
Name               Age   and Other Directorships                Director Began
- ----               ---   -------------------------------        --------------

                         recruited by The Sun Company to manage
                         Sun Ship in Chester, Pennsylvania and
                         thereafter part of the senior management
                         group at Sun Carriers, a trucking
                         subsidiary of the Sun Company.  Prior
                         to that, Mr. Murray was employed by the
                         U.S. Maritime Administration as the
                         on-site representative at the Bath
                         Ironworks in Maine, where he was
                         responsible for managing the Maritime
                         Administration's interests in major
                         ship construction contracts. He is a
                         graduate of the United States Merchant
                         Marine Academy and has a masters degree
                         from Rensselaer Polytechnic Institute.
                         He was formerly Chairman and a Director

of the Board of EA Industries, Inc., the stock of which is traded on the New York Stock Exchange.

DIRECTOR NOMINEES FOR TERMS WHICH EXPIRE AT THE ANNUAL MEETING OF STOCKHOLDERS IN 1998 (CLASS III):

Andrew Panzo        32   Mr. Panzo is a Director of the Corporation.       1995
                         He is the managing  1995 director of American
                         Maple Leaf Financial Corporation, an
                         investment banking advisor to the Corporation
                         which specializes in emerging growth companies.
                         He was the President and is also a director
                         of Sector Associates, Ltd., a publicly-held
                         company.  Mr. Panzo was a director of Florida
                         West Airlines, Inc. from July through December
                         1993. Mr. Panzo was formerly Executive Vice
                         President of HMA Investments, Inc., an
                         investment banking firm where he managed
                         certain diversified securities investments.
                         He is formerly an associate with Venture
                         Partners, Ltd., a venture capital firm.
                         Mr. Panzo is a graduate of the University of
                         Connecticut and has a masters degree in
                         international business and finance from Temple
                         University.

Porter Bibb        59    Mr. Bibb is a Director of the Corporation.        1996
                         He has been with Ladenburg Thalmann & Co.,
                         Inc., an investment bank, since 1984 and is
                         currently serving as a Principal and its Co-
                         Director of Corporate Finance. Mr. Bibb was
                         formerly a Managing Director of Bankers'
                         Trust Company and Director of Corporate
                         Development of New York Times Company and
                         President and Co-Founder of Financial
                         Management, Inc.  Mr. Bibb is a director of
                         PMC International, a publicly-held asset
                         management company.  He is a graduate of
                         Yale University and has studied in graduate
                         programs at New York University, the London
                         School of Economics and Harvard Business School.

4

                            Position with the Corporation,       Year in Which
                            Business Background                  Service as a
Name                  Age   and Other Directorships              Director Began
- ----                  ---   -------------------------------      --------------

Edward F. Sager, Jr.   49   Mr. Sager has been the President of
                            Mentor Management Company since 1994,
                            general partner of Mentor Special
                            Situation Fund, L.P., an investment
                            fund, and President of Mentor Capital

Partners, Ltd., a venture capital firm since 1994. From 1985 to 1994 Mr. Sager was President of Sager & Associates, a merchant banking firm providing access to venture capital for small to medium size companies. He is a graduate of Lafayette College with a B. S. degree in Mechanical Engineering and he received an MBA in Finance from New York University.

Your Board recommends that stockholders vote FOR all of the director nominees for the terms to which they have been nominated.

BOARD MEETINGS AND COMMITTEES

There are currently seven members of the Board. The Board held three meetings in 1996. All members of the Board have attended more than seventy-five percent of the meetings of the Board and of all committees on which they serve.

The following committees of the Board have primary responsibility for audit and compensation matters:

Audit Committee: This committee has primary responsibility to review accounting procedures and methods employed in connection with audit programs and related management policies. The Audit Committee is the principal liaison between the Board and the independent auditors for the Corporation. The Audit Committee recommends the independent auditors to report on the Corporation's annual financial statements. Messrs. Mendicino (Chairman), Murray and Bibb compose the Audit Committee, which held no meetings in 1996.

Compensation Committee: It is the responsibility of this committee to make a continuing review of the Corporation's compensation and benefit programs, to consider its organizational structure, including management development and succession, and to make recommendations to the Board regarding such programs and structure. The Compensation Committee consists of Mr. Murray. Mr. Mendicino resigned from the Compensation Committee effective December 31, 1996 because he became an employee of the Corporation on January 1, 1997. The Compensation Committee held three meetings in 1996.

The Corporation does not have a Nominating Committee. The Board has nominated its current members and one other person for election as directors at the Meeting pursuant to provisions in the Corporation's Certificate. The Corporation's By-laws provide that a stockholder may nominate a person for election as a director if written notice of the stockholder's intent to nominate a person for election as a director at a meeting is received by the Secretary of the Corporation not less than 50 days nor more than 75 days prior to the meeting of stockholders at which directors are to be elected. The notice must contain specified information about the stockholder and the nominee, including such information as would be required to be included in a proxy statement pursuant to the rules and regulations established by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "1934 Act").

EXECUTIVE COMPENSATION

The following table discloses for the fiscal years ended December 31, 1994, 1995, and 1996, individual compensation information relating to the chief executive officer of the Corporation and the executive officers of the Corporation who earned in excess of $100,000 during 1996 (the "Named Executive Officers").

                                  Annual Compensation              Long Term Compensation
                          --------------------------------     -------------------------------
                                                               Restricted
                                               Other Annual      Stock    Options/     LTIP      All Other
Name and                   Salary     Bonus    Compensation     Awards      SARS     Payouts   Compensation
Principal Position          ($)        ($)         ($)            ($)        (#)       ($)         ($)
- --------------------       ------     -----    ------------   ----------- --------   -------   ------------
Paul A. DeJuliis/(1)/
Chief Executive Officer
   1996                      204,167     0         4,812           0       75,000       0           0
   1995                      157,917     0         3,661           0      125,000       0           0
   1994                       64,500     0             0           0            0       0           0

John R. Thach/(1)/
President
   1996                      190,321     0         3,841           0       75,000       0           0
   1995                      161,167     0         1,916           0       70,000       0           0
   1994                       77,500     0             0           0            0       0           0

William B. Miller
Chief Financial Officer
   1996                      103,500     0         2,765           0       35,000       0           0
   1995                       70,000     0         1,814           0       70,000       0           0
   1994                            0     0             0           0            0       0           0


(1) Mr. DeJuliis and Mr. Thach received no compensation or other benefits from the Corporation during fiscal year 1994. The amounts reported above for that year were paid to them by Princeton Academic Press, which is presently a wholly owned subsidiary of the Corporation but, during 1994, was owned by a corporation not related to the Corporation.

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Aggregated Option/SAR Exercises in Last Fiscal Year and F/Y End
Option/SAR Values

The following table sets forth information with respect to option exercises and fiscal year-end option values for the Named Executive Officers.

                                                                        Number of
                                                                  Securities Underlying              Value of
                              Shares Acquired      Value          Unexercised Options/      Unexercised in-the-money
                                On Exercise       Realized         SARS at FY-End (#)       Options/SARS at FY-End ($1)
Name                                (#)             ($)         Exercisable/Unexercisable   Exerciseable/Unexercisable
- -----------------             ---------------     --------      -------------------------   --------------------------
Paul A. DeJuliis                     0              ---               41,667 / 158,333               0 / $9,375
John R. Thach                        0              ---               23,333 / 121,667               0 / $9,375
William B. Miller                    0              ---               23,333 /  81,667               0 / $4,375


(1) Based upon the closing price of the Corporation's Common stock on December 31, 1996 of $4.625.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

The following table sets forth information with respect to option grants during 1996 to the Named Executive Officers.

                                   Number of                    Percent of
                             Securities Underlying            Total Options/
                                 Options/SARs                  SARs Granted             Exercise
                                    Granted                    to Employees               Price              Expiration
Name                                 (#)                      in Fiscal Year             ($/sh.)               Date
- ------------------          ----------------------            --------------            --------             ----------
Paul A. DeJuliis                 75,000                            26%                   $4.50                  2006
John R. Thach                    75,000                            26%                   $4.50                  2006
William B. Miller                35,000                            12%                   $4.50                  2006

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EMPLOYMENT ARRANGEMENTS

Effective as of January 1, 1995, the Corporation entered into employment agreements with Paul A. DeJuliis and John R. Thach. Each of these agreements provides, based on recently consummated significant acquisitions, for a base salary of $250,000 annually with certain automatic adjustments in the event certain targets relating to the financial performance of the Corporation are satisfied (incremental increases of $25,000 for each $1.0 million increase in annual pre-tax net income over a base of $1.5 million), together with discretionary bonuses, if any, to be declared by the Board, but with a provision that at such time as each of their equity stock ownership in the Corporation is reduced to 10% or less of the total issued and outstanding shares of all classes of equity stock, then such employee shall be entitled to annual minimum incentive compensation equal to 3% of the Corporation's annual pre-tax net income. These agreements also provide for certain benefits, including vacation, health and medical insurance, reimbursement of certain expenses and stock option plan participation, but only to the extent such benefits are offered to comparable employees by the Board. Such agreements contain covenants regarding confidentiality of proprietary information of the Corporation and a restrictive covenant in favor of the Corporation under certain circumstances. Each agreement has an initial term of five years, and thereafter is annually renewable for successive two-year periods. Such agreements will earlier terminate as a result of the employee's death, permanent disability or dismissal for just cause. If the termination results from death or permanent disability, the agreements provide for continuation of base compensation and fringe benefits for a period of six months, but if the termination results from any reason other than death, permanent disability, termination for just cause, or where the employee terminates his employment for good reason, then his base compensation and all existing fringe benefits shall be continued for the balance of the unexpired term of his employment agreement, but in no event for less than one year, after which the employee shall be entitled to all earned and accrued incentive compensation. Moreover, if his termination follows a change of control and the employee owns no more than 20% of the total issued and outstanding securities of the Corporation, he shall be entitled to a lump sum severance benefit equal to 500% of his annual base compensation.

In May 1995, the Corporation entered into an employment agreement with William B. Miller. Such agreement provides for a base salary in the first year of $84,000 per year, together with discretionary bonuses, if any, to be declared by the Board. The base salary will automatically increase to $102,000 per year upon the completion of a significant acquisition by the Corporation. The agreement also provides for certain benefits, including vacation, health and medical insurance, reimbursement of certain expenses and stock option plan participation, if such are implemented for comparable employees by the Board. The agreement contains covenants regarding confidentiality of proprietary information of the Corporation and a restrictive covenant in favor of the Corporation. The agreement is for a term of one year, and thereafter is annually renewable for successive one year periods, although either party may terminate the agreement upon six months written notice to the other and the Corporation may discharge the employee at any time with or without cause. If the employee is terminated without cause, the Corporation shall pay to the employee a severance allowance equal to six months base compensation.

As of January 1, 1997, the Corporation entered into an Employment Agreement with Anthony J. Mendicino. Such Agreement provides for a base salary in the first year of $150,000 together with discretionary bonuses, if any, to be declared by the Board. The base salary will be reviewed at least annually. The Agreement also provides for certain benefits, including vacation, health and medical insurance, reimbursement of certain expenses and Stock Option Plan participation, if such are implemented for comparable employees by the Board. The Corporation agreed to grant the employee options to purchase 55,000 shares of its Common Stock at market price on December 31, 1996. The Agreement contains covenants regarding confidentiality of proprietary information of the Corporation and a restrictive covenant in favor of the Corporation. The Agreement is for a term of one year, and thereafter is annually renewable for successive one year periods, although either party may terminate the Agreement upon six months written notice to the other and the Corporation may discharge the employee at any time with or without cause. However, if the employee is discharged without cause the Corporation will provide him with severance compensation by continuing to pay him his monthly base salary and by continuing coverage under group insurance programs in which he is then enrolled, for a period of six months following the date of termination.

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COMPENSATION OF DIRECTORS

Non-employee directors receive no cash compensation, but they participate in a non-qualified stock option plan, under which Messrs. Panzo and Murray received an option to purchase 40,000 shares of Common Stock in 1995 and Mr. Bibb received an option to purchase 40,000 shares of Common Stock in 1996. Prior to his employment by the Corporation, Mr Mendicino also received an option to purchase 40,000 shares of Common Stock in 1995. Employee directors receive no compensation in connection with their services as director. See Proposal 5 for a description of the Non-Employee Directors Stock Option Plan.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of April 30, 1997, information with respect to the beneficial ownership of the Corporation's Common Stock by all persons who may be deemed the beneficial owners of 5% or more of the Corporation's outstanding Common Stock, by all officers and directors and the non-director nominee, individually, and all officers and directors as a group.

                          AMOUNT & NATURE OF
                               BENEFICIAL
   STOCKHOLDER                 OWNERSHIP              % OF OWNERSHIP
- -----------------         -------------------        ----------------

Paul A. DeJuliis              517,667/1/                  17.2%
John R. Thach                 499,333/2/                  16.7%
William B. Miller              48,333/3/                   1.7%
Anthony J. Mendicino           31,333/4/                   1.1%
Edward F. Sager, Jr.           30,000/5/                   1.1%
Andrew Panzo                   23,333/4/                     *
Bruce P. Murray                13,333/4/                     *
Porter Bibb                    13,333/4/                     *
All Officers and Director
as a group (7 persons)      1,146,667/6/                  34.8%


* Less than 1% 1 Includes 216,667 shares which may be obtained through currently exercisable warrants and options. 2 Includes 198,333 shares which may be obtained through currently exercisable warrants and options. 3 Includes 38,333 shares which may be obtained through currently exercisable options. 4 Includes 13,333 shares which may be obtained through currently exercisable warrants and options. 5 Represents shares underlying currently exercisable warrants held by Mentor Management Company. 6 Includes 506,665 shares which may be obtained through currently exercisable warrants and options.

The address of Messrs. DeJuliis, Thach, Mendicino, and Miller is 100 Four Falls Corporate Center, Suite 305, West Conshohocken, PA 19428. The address of Mr. Panzo is 401 City Avenue, Suite 725, Bala Cynwyd, PA 19004. The address of Mr. Bibb is c/o Ladenburg Thalmann & Co., Inc. 540 Madison Avenue, New York, NY 10022. The address of Mr. Murray is c/o Bannock Burn Group, 712 Pheasant Run, Suite Two, Kennett Square, PA 19348. The address of Mr. Sager is 570 Nottingham Drive, Yardley, PA 19067.

There are 9,000 shares of the Corporation's Series B Preferred Stock outstanding all of which are currently held by Bruce K. Worrall. The Series B Preferred Stock is entitled to vote with the Common Stock and each share is entitled to one-tenth of a vote. Mr. Worrall's address is 48 Collins Lane, Schwenksville, Pennsylvania 19473.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Equity Infusion from Sector Associates, Ltd.

Effective on March 10, 1995, pursuant to a Securities Purchase Agreement (the "Securities Purchase Agreement") dated January 25, 1995, Sector purchased securities from the

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Corporation consisting of 200,000 shares of its Common Stock, 250,000 Class A Common Stock Purchase Warrants, 187,500 Class B Common Stock Purchase Warrants and 250,000 Class C Common Stock Purchase Warrants for an aggregate purchase price in cash of $500,000. The prompt registration of such securities was a requirement of the Securities Purchase Agreement, and following the effectiveness of this registration statement, Sector distributed such securities to its stockholders on a pro rata basis. Pursuant to the Securities Purchase Agreement, Sector was given the unilateral right to determine how to equitably apportion fractional shares and warrants in such distribution. In November 1995, the exercise prices of the Class A, B and C Warrants were reduced to $3.00, $4.00, and $6.00 per share from their original exercise prices of $4.00, $5.50, and $8.00 per share, respectively.

The Securities Purchase Agreement contains customary representations, warranties and covenants of the Corporation for the benefit of Sector and its shareholder distributees of the Corporation's securities, including customary indemnification provisions. In addition, the Corporation's By-laws were amended pursuant to the Securities Purchase Agreement to ensure that there shall be a minimum of seven directors and the parties to the Securities Purchase Agreement entered into a separate voting agreement concerning the election of such directors. Pursuant to that voting agreement, Sector was guaranteed the ability to elect at least one of the seven directors. The Corporation's By-laws were further amended pursuant to the Securities Purchase Agreement and the voting agreement to require the approval of 75% of the outstanding voting securities for certain fundamental transactions. By an Agreement of Amendment and Waiver dated April 25, 1997, the parties to the Securities Purchase Agreement and the voting agreement agreed to waive and/or amend certain provisions of such agreements relating to the specification of the number of directors on the Board and the supermajority voting requirements applicable to certain fundamental transactions. The Corporation's By-laws were concurrently modified to reflect such waivers and amendments.

Description of Investment Banking Advisor Agreements

The Corporation entered into an Investment Banking Advisor Agreement on January 25, 1995 with FAC and AMLF (collectively, the "Investment Advisors"). Pursuant to such agreement, the Investment Advisors are required to provide certain consulting services of an investment banking and financial relations nature to the Corporation in exchange for which the Corporation issued 40,000 shares of its Common Stock to FAC and 10,000 shares to Andrew Panzo on March 10, 1995.

Pursuant to the agreement, the Corporation was also obligated to issue an aggregate of 100,000 additional shares of its Common Stock and an aggregate of 100,000 Class A-1 Warrants to the Investment Advisors, but only upon the satisfaction of certain conditions tied to their performance. The agreement was amended on December 15, 1995 to accelerate delivery of all of these conditional shares and warrants provided that all of the Class A Warrants were exercised before December 31, 1995. As of December 31, 1995, all Class A Warrants had been exercised. Accordingly, the conditional Class A-1 Warrants and Common Stock were issued as of that date.

The Investment Advisors are granted similar registration rights with respect to the Common Stock issued and the conditional shares and warrants issuable to them under the Investment Banking Advisory Agreement as have been granted to Sector. The Investment Advisors are also given similar rights of first refusal, similar indemnification and similar tag-along rights as those given to Sector. The Investment Advisors, acting jointly, retain the right to nominate one director of the Corporation.

In addition, the Investment Banking Advisor Agreement further provided that the Corporation will pay the Investment Advisors a monthly fee of $6,000 (the allocation of such aggregate fee between the two investment advisors to be determined by them). Payment of such fee has been discontinued as of December 31, 1996.

The Investment Banking Advisor Agreement was the product of arm's length negotiation, and the Corporation believes that the terms of such agreement are not less favorable than could otherwise have been obtained as of the date of the agreement.

Transactions with DTF Media, Inc.

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The Corporation acquired the shares of Princeton Academic Press, Inc. ("Princeton") in a share exchange with DTF Media, Inc. ("DTF"), a company formed by Messrs. DeJuliis and Thach, officers and principal stockholders of the Corporation, and the other founding stockholders, Graeme Frazier IV and Robert Spahr, who owned the shares of Princeton. Messrs. DeJuliis, Thach and Frazier each received 66,000 shares of Common Stock and Mr. Spahr received 22,000 shares of Common Stock in exchange for all of the outstanding shares of Princeton. In addition, the Corporation assumed certain specific liabilities of DTF, including certain liabilities for professional fees ($26,000), and an intercompany obligation payable to Princeton in a principal amount of $283,005. The aggregate cost of the shares of Princeton in June 1993 was approximately $596,000. Inasmuch as the share exchange reflected the initial organization of the Corporation, there was no issue of valuation of the Princeton shares and, for accounting purposes, the Princeton shares were accounted for on the basis of the initial acquisition of the Princeton assets from PUP.

Investment in Lavelle Company

In March 1996, the Corporation invested $450,000 in Lavelle Company ("Lavelle") in the form of a subordinated debenture. The debenture matures in March 2001 and pays quarterly interest at a rate of 20% per year. In connection with its investment, the Corporation has guaranteed the indebtedness of Lavelle under a $900,000 equipment facility. The Corporation's debenture is subordinate to the equipment facility indebtedness. In addition, the Corporation has pledged a $100,000 security interest in favor of the equipment facility lender.

Lavelle was incorporated to purchase the net assets of Lavelle Aircraft which was liquidated under Chapter 11 of the U.S. Bankruptcy Law. Lavelle Aircraft is owned by DTM Aerospace, Inc. of which Messrs. DeJuliis and Thach are directors, officers and principal stockholders.

The $450,000 debenture has been recorded as a non-current asset on the balance sheet of the Corporation. Because of the Corporation's guarantee and pledge relating to Lavelle's equipment facility, any loss of Lavelle will be recognized by the Corporation in its statement of operations and recorded as a reduction in the carrying amount of its investment. To the extent Lavelle's losses exceed the amount of the investment, a liability will be recorded on the Corporation's balance sheet. In 1996, the Corporation provided working capital advances to Lavelle of $366,000 and earned interest of $121,000 on its debenture investment and such advances.

In January 1997, the Corporation entered into a stock exchange agreement with all of the stockholders of Lavelle and exchanged an aggregate of 44,537 shares of the Corporation's Common Stock for all of the issued and outstanding shares of Lavelle, aggregating 156,700 shares. As a result of such exchange, Lavelle became a wholly owned subsidiary of the Corporation. None of the stockholders of Lavelle were officers, directors or other affiliates of the Corporation or of its officers, directors or significant stockholders.

Transactions with Mentor Special Situation Fund, L.P.

In June 1996, the Corporation, in a private placement, sold and issued to MSSF a 12% Subordinated Debenture in an aggregate principal amount of $500,000 and a common stock purchase warrant to purchase up to 80,000 shares of the Corporation's Common Stock at an exercise price of $6.00 per share, in exchange for a cash payment by MSSF to the Corporation of $500,080. Concurrently therewith, the Corporation entered into a Registration Rights Agreement with MSSF granting MSSF certain registration rights with respect to the common stock purchase warrants and the underlying shares of Common Stock at the same time as the Corporation files its next Registration Statement. Edward F. Sager, Jr., a nominee to the Board, is the president of Mentor Management Company, the general partner of MSSF.

LEGAL PROCEEDINGS

Centennial Printing Corporation, a subsidiary of the Corporation, ("Centennial") instituted a Demand for Arbitration with the American Arbitration Association on March 31, 1997, through the Corporation, against the former owner of Centennial, who presently owns all of the outstanding Series B Preferred Stock of the Corporation, pursuant to

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the indemnification provisions of the Merger Agreement between Centennial and the Corporation executed in October 1996 (the "Merger Agreement"). The Demand for Arbitration asserts
various theories of recovery and seeks damages of at least $4.5 million as well as an order terminating obligations of Centennial to an employee under a purported employment agreement between Centennial and such employee. The former owner of Centennial has responded to the Corporation's Demand for Arbitration and claimed certain amounts purportedly due under the Merger Agreement. At this time, management is unable to state whether an outcome favorable to the Corporation is either probable or remote, nor can management assess the amount or range of expected recovery in the event of a favorable outcome.

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2. PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION TO CHANGE NAME AND ADDRESS OF CORPORATION'S REGISTERED AGENT AND TO MAKE TECHNICAL CORRECTIONS

Article Two of the current Certificate identifies the Corporation's registered agent. The Board has approved, subject to stockholder approval at the Meeting, the change in the Corporation's registered agent. The Corporation's proposed new registered agent is PHS Corporate Services, Inc., which is a company affiliated with the Corporation's primary outside counsel. The Corporation believes that utilization of PHS Corporate Services, Inc. will enable the Corporation to eliminate certain annual fees presently charged to it and its subsidiary corporations and will also foster greater control and responsiveness to service of process in connection with litigation matters involving the Corporation or its subsidiaries.

Due to an oversight upon filing, the current Certificate does not contain an Article Three which defines generally the purpose of the Corporation. A new Article Three is proposed to be inserted which articulates the Corporation's purpose to be any lawful purpose. Such purpose was contained in the Corporation's original Certificate of Incorporation and has remained the purpose of the Corporation throughout its existence.

The text of the proposed amendments to Articles Two and Three of the Certificate are set forth in full in Exhibit I hereto and reference is made thereto for a complete statement thereof. If this proposal is approved by the stockholders, the Corporation intends to include such amendments in a Second Amended and Restated Certificate of Incorporation and to file such document with the Secretary of the State of Delaware promptly after the Meeting.

Your Board believes that these amendments are in the best interests of the Corporation and its stockholders and recommends that stockholders vote FOR this proposal.

3. PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION TO CLASSIFY THE BOARD

Article Seven of the Corporation's current Certificate provides for a Board numbering such persons as determined from time to time by a majority of the Board. It further provides that all members of the Board are to be elected annually for a term of one year. Under the proposed amendments to the Certificate respecting classification of the Board, approximately one-third of the directors would be elected each year. Initially, however, all members of the Board will be elected at the Meeting with assigned terms of from one to three years. If the proposed amendments are adopted, the slate of eight directors proposed for election at the Meeting would be elected to three separate classes as follows: three directors constituting the Class I Directors would be elected for a term expiring at the 2000 annual meeting; two directors constituting the Class II Directors would be elected for a term expiring at the 1999 annual meeting; and three directors constituting the Class III Directors would be elected for a term expiring at the 1998 annual meeting. At each annual meeting of stockholders after the 1997 annual meeting, directors would be elected to succeed those persons whose terms expired at such annual meeting, with each newly elected director to serve for a three year term. The classification of the Board in this manner is permitted under Section 141(d) of the Delaware General Corporate Law. See "Election of Directors" above for information regarding the individual nominees for election as a director in 1997 and the class in which they will initially serve. If the proposed amendment is not adopted, the eight nominees for election as directors will be nominated for election to a term of one year each.

Under the proposed amendments, vacancies in the Board may be filled by a majority vote of the directors then in office or by the sole remaining director and the directors so chosen will hold office for a term expiring at the annual meeting of stockholders at which the term of the class to which they have been elected expires and until their successors are duly elected and qualified.

Adoption of the proposed amendments may have a significant effect on the ability of stockholders to change the composition of an incumbent Board and to benefit from certain business transactions which are opposed by an incumbent Board. It may therefore discourage accumulations by third parties of voting stock in the Corporation because its provisions would operate to delay the purchaser's ability to obtain control of the Board in a relatively short period of time. This delay arises because in the context of a classified Board, as proposed, it would generally take a purchaser of a

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majority of the Corporation's stock at least two annual meetings of stockholders to elect a majority of the Board, and the purchaser would need to obtain the affirmative vote of the holders of at least a majority of the voting power of the outstanding shares entitled to vote in an election of directors in order to remove any directors, and then only for cause. Consequently, the effect of these amendments may be to enhance the longevity of present management and discourage certain mergers, tender offers, proxy contests or other potential takeover proposals which some or a majority of the stockholders of the Corporation might otherwise believe to be in their best interests.

The Corporation's current Certificate contains provisions that may be considered to have an anti-takeover effect including provisions which state that directors may only be removed for cause and that prohibit stockholders from calling a special meeting or from voting by unanimous written consent. The Certificate authorizes the issuance of 3,000,000 shares of preferred stock, par value $.10 per share, issuable in one or more series, and, to date, two series have been authorized by the Board. The Series A Preferred Stock consists of 1,000 shares, all of which have been issued. The Series B Preferred Stock consists of 9,000 shares, all of which have been issued. The Series A Preferred Stock does not provide for any special rights for the holders to elect any directors, or vote upon any proposal presented at the Meeting. However, the Series B Preferred Stock permits the holders to vote upon the election of directors and any other matters requiring stockholder approval at a weighting of one vote per share of Series B Preferred Stock equal to one-tenth of a vote per share of Common Stock. If any preferred stock were to be issued in the future, it is possible that such stock would be given special rights as a class to elect one or more directors. If that were the case, the proposed amendments respecting classification of the Board would not apply to any such directors.

The Board has no knowledge of any present effort to gain control of the Corporation, either through acquisition of stock or by means of a proxy contest or otherwise. Moreover, there has been no concern in the past or at the present time with management continuity or stability. However, particularly in view of the current environment of stock accumulations, hostile takeovers and proxy contests facing public companies, the Board believes that it is prudent and in the interest of stockholders generally to provide the advantage of greater assurance of continuity of Board composition which will result from the adoption of the proposed amendments to classify the Board. The Board believes such advantage outweighs any disadvantage relating to discouraging potential acquirors from making an effort to obtain control of the Corporation.

If the proposed amendments are adopted, the Board could not be declassified without the approval of the holders of a majority of the voting power of the outstanding shares entitled to vote in an election of directors.

If the amendments are not adopted, then the present Certificate will remain in effect, and all of the nominees for election to the Board would instead automatically be nominated only for a term of one year expiring at the 1998 annual meeting of stockholders.

The proposed amendments to classify the Board are not part of a plan by management to adopt a series of amendments that may be considered to have an anti-takeover effect and, while it reserves the right to do so, management has no present intention to propose any other anti-takeover measures in future proxy solicitations.

The text of the proposed amendments to Article Seven of the Certificate is set forth in full in Exhibit II hereto and reference is made thereto for a complete statement thereof. If this proposal is approved by the stockholders, the Corporation intends to include such amendments in Article Six of a Second Amended and Restated Certificate of Incorporation and to file such document with the Secretary of the State of Delaware promptly after the Meeting.

Your Board believes that the proposed amendments are in the best interests of the Corporation and its stockholders and recommends that stockholders vote FOR this proposal.

4. AMENDMENTS TO THE EMPLOYEE STOCK OPTION INCENTIVE PLAN

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The Corporation's Stock Option Incentive Plan (the "Employee Option Plan") was approved by the Board on August 6, 1995 and by the stockholders on August 24, 1995. The Employee Option Plan is a stock option plan for management and other key employees of the Corporation and its subsidiaries, including a limited number of outside consultants and advisors. A total of 750,000 shares of Common Stock have been reserved for issuance under the Employee Option Plan, the purpose of which is to attract and retain qualified personnel and provide additional incentives to employees, officers and a limited number of others who are not also serving as directors. To date, 585,000 non-qualified stock options are currently outstanding under the Employee Option Plan, of which 113,334 have vested. The following persons have received options under the Employee Option Plan (with the underlying share amounts immediately following each person or group): Mr. DeJuliis (200,000); Mr. Thach (145,000); Mr. Miller (105,000); Mr. Mendicino (55,000); all current executive officers as a group (505,000); all other employees as a group (80,000). The closing price of the Common Stock on April 30, 1997 was $5.00 per share.

Of the aggregate number of shares reserved for issuance under the Employee Option Plan, there are 165,000 shares available for grant. This effectively limits the number of awards which may be made to any one person under such plan and the number of employees eligible to receive awards under the plan. Accordingly, the Board has recommended that the number of shares of Common Stock reserved for issuance under the Plan be increased by 750,000 to 1,500,000 shares.

The Employee Option Plan is currently administered by the Compensation Committee. The terms of the plan require that the Compensation Committee consist of two or more members. Presently, the Board's Compensation Committee consists of only one member since Mr. Mendicino resigned from such committee concurrently with his becoming an employee of the Corporation on January 1, 1997. In order to provide greater flexibility in granting awards pursuant to the Employee Option Plan and to more readily assure that such grants remain exempt under the regulations under Section 16 of the 1934 Act which govern short-swing profit liability imposed by that section and which require, among other things, that the Compensation Committee be composed of two or more "non- employee directors," the Board recommends that the Employee Option Plan be modified (i) to require that the Compensation Committee administering the plan be composed solely of two or more "non-employee directors" as that term is defined in Rule 16b-3(b)(3) under the 1934 Act and, (ii) to enable the Board to make grants of awards and perform other administrative duties under the Plan if the composition of the Compensation Committee differs from the prescribed composition by reason of resignation, termination, ineligibility or other reason. Such amendments will allow the Board to effectively co-administer the Employee Option Plan and would eliminate any potential problems associated with the composition of the Compensation Committee at any given time.

The Employee Option Plan, as currently composed, permits certain transfers of options upon the death of an option recipient as provided in his will or by applicable laws of descent and distribution, but otherwise places significant transfer restrictions on options. The Corporation believes that this unduly restricts an employee's estate planning flexibility with respect to options, and notes that limited transfers to immediate family members or to trusts for the benefit of such family members would be useful for an option recipient's estate planning purposes and are customarily permitted in other publicly-held companies' stock option plans. Accordingly, the Board recommends that the Employee Option Plan be amended to permit limited transfer of options to immediate family members or trusts for their benefit in order to enhance an option recipient's estate planning flexibility.

The proposed amendments to the Employee Option Plan are set forth in full in Exhibit III hereto and reference is made thereto for a complete statement thereof.

It should be noted that the officers of the Corporation who serve on the Board, which recommended these amendments, potentially may benefit from such amendments, both as to the number of stock options which may be granted to them in the future and with respect to the increased estate planning flexibility permitting limited transfer of options to immediate family members.

SUMMARY OF MATERIAL FEATURES OF THE EMPLOYEE OPTION PLAN

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The Employee Option Plan provides for the granting to eligible employees, outside consultants and advisors of incentive stock options ("ISOs"), nonqualified stock options ("NQOs") and stock appreciation rights ("SARs"), which SARs may either be awarded in tandem with stock options ("Tandem SARs") or independently ("Non-Tandem SARs"). There are 35 employees of the Corporation and its subsidiaries eligible to receive such awards. Presently, the Compensation Committee administers the plan. If the proposed amendments to the plan are approved, either the Board or the Compensation Committee may administer the plan. The Compensation Committee determines the terms of all options or SARs granted, their exercise price, the number of shares subject to the options or SARs and when they may be exercised. No option can be granted at an exercise price which is less than the fair market value of the Common Stock on the date of grant. ISOs may only be granted to employees who are then employees of the Corporation or one of its subsidiaries for a term not to exceed ten years from the date of grant, and the aggregate fair market value (determined with respect to each ISO at the time it is granted) of the shares of Common Stock with respect to which the ISO is exercisable for the first time by an employee during any calendar year shall not exceed $100,000. Additional restrictions apply in the case of the grant of an ISO to any employee who owns Common Stock possessing more than 10% of the total combined voting power of all classes of stock of the Corporation (including requirements that the option price be at least equal to 110% of the fair market value of the Common Stock at the date of grant and that no such ISO may be exercised after five years from the date of grant). As presently composed, the Employee Option Plan provides that no option or SAR may be transferred by the employee other than by will or the laws of descent or distribution. During the lifetime of the employee, the option or the SAR may be exercised only by him or his legally appointed guardian or representative. Payment of the exercise price of an option may be made in cash, by delivery of Common Stock or with such other consideration as is approved by the Compensation Committee. The Compensation Committee determines at the time of grant the terms under which options and SARs shall vest and become exercisable. Tandem SARs are exercisable only to the extent that the related option is exercisable and only for the period determined by the Compensation Committee. Options and SARs may be exercised within three months following the termination of an employee's employment with, or a consultant's provision of active consulting services to, the Corporation (other than by death or total disability) but in no case later than the term specified in the grant. Upon the death or total disability of an employee or consultant while employed by the Corporation or during the term of the consultant's active role with the Corporation (or upon the death of the employee or consultant within three months after such termination), options and SARs shall remain exercisable for one year following such employee's or consultant's death, for nine months following the date the employee first receives benefits under the Corporation's Long Term Disability Plan (and with respect to a consultant, nine months following the determination of total disability of such consultant).

Shares of Common Stock attributable to unexercised options which expire or are terminated, surrendered or canceled (other than in connection with the exercise of an SAR) may become available for subsequent award under the Employee Option Plan at the Compensation Committee's discretion. The number of shares available under the Employee Option Plan may be adjusted by the Compensation Committee to prevent dilution or enlargement of rights in the event of various changes in the capitalization of the Corporation. The Board may suspend, amend, modify or terminate the Employee Option Plan; provided, however, that the Corporation's stockholders must approve any amendment that would materially increase the aggregate number of shares issuable under such Plan, materially increase the benefits accruing to employees under such plan, or materially modify the requirements for eligibility to participate in such Plan. Awards granted prior to termination of the Employee Option Plan shall continue in accordance with their terms following such termination. No amendment, suspension or termination of the Employee Option Plan shall adversely affect the rights of any employee in awards previously granted without such employee's consent.

On February 12, 1997, the Corporation adopted a loan plan for officers, directors and key employees (the "Loan Plan") designed to provide interest-free loans to those officers, directors and other key employees of the Corporation who are subject to certain restrictions on the purchase and sale of Common Stock imposed under Section 16(b) of the 1934 Act, or in other cases where exercise of stock options granted could impose a hardship upon the optionee wishing to exercise such options. The loans are granted in lieu of SARs and are designed to eliminate the borrowing costs of holding stock for the six-month holding period required by Section 16(b). The Loan Plan is administered by the Compensation Committee. The terms of the plan provide, in general, for the loans to become due and payable after the six-month holding period elapses unless the market price of the stock at the end of that period is below the market price of the stock on the date of exercise. In that event, the loan term may continue for a greater period

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of time, not to exceed five years unless extended by the Compensation Committee. Loan amounts are limited to the amount required for the exercise of stock options. Each loan is secured by a pledge of all of the shares of Common Stock acquired pursuant to such exercise, and is made with full recourse against the individual participant obtaining the loan. The Compensation Committee has complete discretion in determining whether or not to make a loan in a particular case. To date, no loans have been made under the Loan Plan.

See "Federal Income Tax Consequences Relevant to Stock Option Plans" below for a discussion of the tax consequences relevant to the Employee Option Plan.

Your Board of Directors believes that the proposed amendments of the Employee Option Plan are in the best interests of the Corporation and its stockholders, and recommends that stockholders vote FOR this proposal.

5. AMENDMENTS TO THE NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

The Board and the stockholders approved the Non-Employee Directors Stock Option Plan (the "Directors Option Plan") on August 24, 1995. A total of 250,000 shares of Common Stock have been reserved for issuance under the Directors Option Plan. The purpose of this Plan is to attract, retain and motivate highly qualified individuals to serve as directors of the Corporation. To date, options for a total of 160,000 shares of Common Stock have been granted under the Directors Option Plan, of which, options for 53,333 shares are currently vested and exercisable. Messrs. Mendicino, Murray, Panzo and Bibb have each received an option to purchase 40,000 shares of Common Stock under the Directors Option Plan. Under the formula provision of the Directors Option Plan, Messrs. Murray, Panzo and Bibb, if re-elected as directors at the Meeting, will each receive such additional options to purchase an amount of shares of Common Stock to be determined by dividing $10,000 by the fair market value of a share of Common Stock on the day after the Meeting (as further described below under "Summary of Material Features of Directors Option Plan") with an exercise price equivalent to such fair market value. Additionally, Mr. Sager, if elected, will receive an option to purchase 40,000 shares of Common Stock plus a formula grant identical to the other directors. Accordingly, the Board has recommended that the number of shares reserved for issuance under the Plan be increased by 250,000 to 500,000 shares.

The Directors Option Plan, as currently composed, permits certain transfers upon the death of an option recipient as provided in his will or by applicable laws of descent and distribution but otherwise places significant transfer restrictions on options. The Corporation believes that this unduly restricts a director's estate planning flexibility with respect to options, and notes that limited transfers to immediate family members or to trusts for the benefit of such family members would be useful for an option recipient's estate planning purposes and are customarily permitted in other publicly-held companies' stock option plans. Accordingly, the Board recommends that the Directors Option Plan be amended to permit limited transfer of options to immediate family members or trusts for their benefit in order to enhance an employee option recipient's estate planning flexibility.

The proposed amendments to the Directors Option Plan are attached as Exhibit IV to this Proxy Statement.

It should be noted that the non-employee members of the Board who recommended these amendments, potentially may benefit from such amendments, both as to the number of stock options which may be granted to them in the future and with respect to the increased estate planning flexibility permitting limited transfer of options to immediate family members.

SUMMARY OF MATERIAL FEATURES OF THE DIRECTORS OPTION PLAN

The number of NQOs granted annually (the exercise price of which will be the fair market value of the Common Stock on the date of grant) to each eligible director is determined by dividing $10,000 by the fair market value of a share of Common Stock on the first Friday following the Corporation's annual meeting of stockholders (the "Valuation Date"). In addition, upon joining the Board, each director is awarded 40,000 options with an exercise price equal to the fair market value of the Common Stock. For these purposes, the fair market value of the Common Stock

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shall be determined by the higher of (i) the simple average of the high and low prices at which the Common Stock traded on the date of grant, as quoted on the NASDAQ reporting system or other principal exchange on which such Common Stock is traded or (ii) the price of the last sale of Common Stock on that date as quoted by the NASDAQ reporting system or such other principal exchange, which price shall then be rounded up to the next higher multiple of $.125 (unless that figure is already a multiple of $.125). NQOs granted under the Directors Option Plan generally become exercisable at the rate of one-third for each full year of the director's continued service following the date of grant and shall expire ten years after the date of grant. In no event may shares of Common Stock issued upon exercise of such NQOs be sold or otherwise disposed of within six months following the date of grant. Upon a director's cessation of service as a director (except as a result of reaching a mandatory retirement age, death or disability) only those NQOs immediately exercisable at such date may be exercised, and they must be exercised within six months following cessation of service or they shall be forfeited. If the director is terminated as a director by reason of a permanent disability, all unexercised NQOs, whether or not then vested, shall be exercisable, but must be exercised within six months following such retirement date, date of death or termination as a director by reason of disability, or they shall be forfeited.

The Directors Option Plan is administered by the Board or by a committee of the Board comprised of those directors not eligible to receive options under the Directors Option Plan. As presently composed, NQOs granted under the Directors Option Plan may not be transferred other than by will or the laws of descent and distribution, and, during the director's lifetime, an NQO may only be exercised by him or his legally appointed guardian or representative. The Directors Option Plan requires that the Corporation's stockholders approve any amendment that would materially increase the aggregate number of shares issuable under such plan, materially increase the benefits accruing to optionees under such plan, or materially modify the requirements for eligibility to participate in such plan.

Options granted under the Directors Option Plan are also subject to the Loan Plan described above under "Summary of Material Features of the Employee Option Plan."

See "Federal Income Tax Consequences Relevant to Stock Option Plans" below for a discussion of the tax consequences relevant to the Directors Option Plan.

Your Board of Directors believes that the proposed amendments to the Directors Option Plan are in the best interests of the Corporation and its stockholders, and recommends that stockholders vote FOR this proposal.

FEDERAL INCOME TAX CONSEQUENCES RELEVANT TO STOCK OPTION PLANS

The following is intended only as a brief summary of the federal income tax rules relevant to stock options issued and supplemental cash payments made under the Employee Option Plan and the Directors Option Plan. These rules are highly technical and subject to change in the future. In particular, the discussion of ISOs is based, in part, on temporary or proposed regulations which may be amended substantially before they are adopted in final form.

A publicly held corporation may not, subject to limited exceptions, deduct for federal income tax purposes certain compensation paid to an executive who is the chief executive or one of the four other highest paid executives in excess of $1 million in any taxable year (the "$1 million cap"). Compensation attributable to the exercise of options could be counted in determining whether the $1 million cap has been exceeded in any taxable year. Whether the $1 million cap with respect to such an executive will be exceeded, and whether the Corporation's deductions for compensation are in excess of the $1 million cap will be denied, will depend on the resolution of various factual and legal issues that cannot be determined at this time.

Loans granted pursuant to the Loan Plan may be subject to the original issue discount rules (the "OID Rules") or the below-market loan rules (the "Below-Market Rules") of the Federal tax law. If loans are subject to the OID Rules or the Below-Market Rules, the Corporation may recognize taxable interest income without the receipt of cash and may receive a compensation expense deduction subject to various rules. Whether such loans would be subject to the OID Rules or the Below-Market Rules, and the tax consequences thereof, will depend upon the resolution of various factual and legal issues that cannot be determined generally at this time.

Nonqualified Stock Options

In general, an optionee will not recognize any taxable income, and the Corporation will not be entitled to a deduction, upon the grant of an NQO. Upon the exercise of an NQO where the exercise price is paid in cash, the optionee will recognize ordinary income (subject to wage and employment tax withholding) equal to the excess of the

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fair market value of the shares acquired over the option exercise price. The amount of such excess is generally determined by reference to the fair market value of the Common Stock on the date of exercise. However, in the case of an optionee subject to six month short-swing profit liability under Section 16(b) of the 1934 Act (a "16(b) Person") -- typically, officers, directors and major stockholders of the Corporation, such excess is determined by using the fair market value on the later of the date of exercise or the date six months after the date of grant, unless such optionee elects to be taxed based on the fair market value of the Common Stock on the date of exercise by filing an appropriate election with the Internal Revenue Service within 30 days after the exercise date. An optionee's basis in the stock received will equal such stock's fair market value on the date of exercise (or on the date six months after the date of grant, if later, in the case of an optionee who is a 16(b) Person and who makes no such election). The Corporation will be entitled to a deduction (subject to the $1 million cap) equal to the compensation taxable to the optionee.

Upon the sale of shares of Common Stock acquired pursuant to the exercise of an NQO, such optionee will recognize capital gain or loss equal to the difference between the selling price of the shares and the optionee's basis in the shares. Such capital gain or loss will be long-term gain or loss if the optionee has held the shares for more than one year. In the case of an optionee who is a 16(b) Person and who does not make the election described above, any such capital gain will be long-term only if the stock has been held for more than one year after the later of the exercise date or the date six months after the date of grant. The Corporation will not be entitled to any deduction with respect to any capital gain recognized by the optionee.

Incentive Stock Options

An optionee will not recognize taxable income on the grant or exercise of an ISO. However, the excess of the Common Stock's fair market value on the exercise date (the fair market value on the exercise date or six months after the date of grant, whichever is later, is likely to govern in the case of a
16(b) Person) over the option exercise price will be included in the optionee's alternative minimum taxable income and thereby may subject the optionee to an alternative minimum tax. Such alternative minimum tax may be payable even though the optionee receives no cash upon the exercise of his or her ISO with which to pay such tax. Upon the disposition of shares of Common Stock acquired pursuant to the exercise of an ISO (i) more than one year after the date of exercise, and
(ii) more than two years after the date of grant (the "Required Holding Periods"), the optionee will recognize long-term capital gain or loss, as the case may be, measured by the difference between the stock's selling price and the exercise price. The Corporation will not be entitled to any tax deduction by reason of the grant or exercise of an ISO, or a disposition of stock received upon the exercise of an ISO after the Required Holding Periods have been satisfied.

If an optionee disposes of the shares of Common Stock acquired pursuant to the exercise of an ISO before the expiration of the Required Holding Periods (a "Disqualifying Disposition"), the difference between the exercise price of such shares and the lesser of (i) the fair market value of the shares upon the date of exercise (the fair market value on the exercise date or six months after the date of grant, whichever is later, is likely to govern in the case of a 16(b) Person), or (ii) the selling price, will constitute compensation taxable to the optionee as ordinary income. The Corporation will be entitled to a corresponding tax deduction (subject to the $1 million cap) equal to the amount of compensation taxable to the optionee. If the selling price of the stock exceeds the fair market value on the exercise date (or six months after the date of grant, if later, in the case of a 16(b) Person), the excess will be taxable to the optionee as a capital gain (long-term or short-term, depending upon whether the optionee held the stock for more than one year). The Corporation will not be entitled to a deduction with respect to any such capital gain recognized by the optionee.

If the proposed amendments to the Employee Option Plan permitting certain transfers of options to family members are approved, such may preclude an option grant qualifying as an ISO unless the particular operative agreement granting the option reimposes the restrictions upon lifetime transfers which applied generally under the Employee Option Plan prior to such amendments.

SARs

The grant of SARs will normally not result in taxable income to the optionee. At the time of exercise, an optionee should recognize ordinary compensation income in an amount equal to the cash and the fair market value of the Common Stock the optionee receives to satisfy the optionee's SAR. The tax basis of any such shares of Common Stock received by the optionee pursuant to a SAR should be equal to the amount includable in the optionee's gross income as compensation in respect of such shares, and the optionee's holding period thereafter should normally commence on the

19

day on which the optionee receives such shares. The Corporation will be entitled to a deduction with respect to any compensation income recognized by the optionee.

Use of Common Stock to Pay Option Price

If an optionee delivers previously-acquired Common Stock, however acquired, in payment of all or part of the option exercise price of an NQO, the optionee will not, as a result of such delivery, recognize gain or loss for federal income tax purposes on the shares surrendered. The optionee's tax basis in, and holding period for, the previously acquired stock surrendered will carry over to an equal number of the option shares received on a share-for-share basis. The fair market value of the shares received in excess of the shares surrendered will constitute compensation taxable to the optionee as ordinary income. Such fair market value will be determined on the date of exercise except in the case of 16(b) Persons as discussed above. The tax basis for the shares received in excess of the Shares surrendered will equal their fair market value as so determined, and such shares' holding period begins on the date on which the fair market value of such shares is determined. The Corporation will be entitled to a tax deduction (subject to the $1 million cap) equal to the compensation income recognized by the optionee. The Corporation will not be entitled to a deduction with respect to any capital gain recognized by the optionee.

If an optionee delivers previously-acquired Common Stock (other than stock acquired upon exercise of an ISO and not held for the Required Holding Periods) in payment of all or part of the option price of an ISO, the optionee will not recognize gain or loss for federal income tax purposes on the shares surrendered. The optionee's tax basis in, and holding period (for capital gain purposes, but not for the purpose of the Disqualifying Disposition rules) for, the previously-acquired stock surrendered will carry over to an equal number of the option shares received on a share-for-share basis. Shares received in excess of the shares surrendered will have a tax basis equal to the amount paid (if any) in excess of the previously-acquired shares used to pay the exercise price, and such shares' holding period will begin on the date of exercise (with the possible exception of a 16(b) Person). Proposed regulations provide that where an ISO is exercised using previously-acquired stock, a later Disqualifying Disposition of the shares received will be deemed to have been a disposition of the shares having the lowest basis first. The Corporation will not be entitled to a deduction with respect to any capital gain recognized by the optionee.

If an optionee pays the exercise price of an ISO in whole or in part with previously-acquired Common Stock that was acquired upon the exercise of an ISO and that has not been held for the Required Holding Periods, the optionee will recognize ordinary income (but not capital gain) under the rules applicable to Disqualifying Dispositions. The Corporation will be entitled to a corresponding deduction (subject to the $1 million cap). The optionee's basis in the shares received in exchange for the shares surrendered will be increased by the amount of ordinary income the optionee recognizes.

OTHER MATTERS

The Board does not know of any other matter which is intended to be brought before the meeting, but if such matter is presented, the persons named in the enclosed proxy intend to vote the same according to their best judgment.

The Corporation's auditors are Arthur Andersen LLP. A representative of Arthur Andersen LLP has been invited and is expected to attend the Meeting. Such representative will be given an opportunity to make a statement if so desired and is expected to be available to respond to appropriate questions.

EXPENSES OF SOLICITATION

The cost of this proxy solicitation will be borne by the Corporation. In addition to the use of mail, proxies may be solicited in person or by telephone by employees of the Corporation without additional compensation. The Corporation will reimburse brokers and other persons holding stock in their names or in the names of nominees for their expenses incurred in sending proxy material to principals and obtaining their proxies.

1998 STOCKHOLDER PROPOSALS

20

In order for stockholder proposals for the 1998 Annual Meeting of Stockholders to be eligible for inclusion in the Corporation's proxy statement, they must be received by the Corporation at its principal office in West Conshohocken, Pennsylvania, on or before February 5, 1998.

PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN

THE ENCLOSED REPLY ENVELOPE.

THE EASTWIND GROUP, INC.

May 7, 1997

21

EXHIBIT I

Proposed New Article Two will read as follows:

ARTICLE TWO

REGISTERED OFFICE

The address of the Corporation's registered office in the state of Delaware is Suite 1600, 1201 Market Street, P.O. Box 1709, Wilmington, Delaware 19899- 1709 in the County of New Castle. The name of its registered agent at such address is PHS Corporate Services, Inc.


Proposed New Article Three will read as follows:

ARTICLE THREE

PURPOSES

The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.


EXHIBIT II

The proposed amendments to current Article Seven if adopted, will be contained in proposed new Article Six of the Corporation's Second Amended and Restated Certificate of Incorporation and will read as follows:

ARTICLE SIX

The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its Directors and Stockholders:

(a) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, and the Board of Directors is empowered to delegate such of its duties and authority as it shall determine to an Executive Committee of such Board of Directors provided such delegation is in accord with the General Corporation Law of the State of Delaware.

(b) The exact number of directors of the Corporation shall be determined from time to time by resolution of the Board of Directors.

(c) The Board of Directors shall be divided into three classes. Each class shall consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board of Directors, and the term of office of one class shall expire each year. At the first annual meeting of stockholders at which this Certificate of Amendment of this Corporation's Certificate of Incorporation shall be duly and properly approved by the requisite vote of stockholders (the "Approval Date"), directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting, provided that such Certificate of Amendment to the Certificate of Incorporation of this Corporation shall be promptly filed with the office of the Secretary of State of the State of Delaware following the Approval Date. Subject to the foregoing, at each annual meeting of stockholders after the Approval Date, the stockholders shall elect directors of the class whose term then expires, to hold office until the third succeeding annual meeting. Each director shall hold office for the term for which elected and until his or her successor shall be elected and shall qualify.

(d) Any director, any class of directors or the entire Board of Directors may be removed by majority stockholder vote at any time, but only for cause. Vacancies in the Board of Directors, including newly created directorships resulting from any increase in the authorized number of directors, may be filled by a majority vote of the directors then in office, though less than a quorum or by a sole remaining director. The directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of the class to which they have been elected expires and until their successors are duly elected and qualified. No decrease in the number of directors constituting the Board of Directors shall shorten the term of an incumbent director.

(e) Whenever the holders of any class or series of preferred stock shall have the right, voting separately as a class, to elect one or more directors of the Corporation, none of the foregoing provisions of this Article Six shall apply with respect to the director or directors elected by such holders of preferred stock.

(f) In addition to the power and authority herein before or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the General Corporation Law of the State of Delaware, this Certificate of Amendment to the Certificate of Incorporation and any Bylaws adopted by the Stockholders; provided, however, that no Bylaws hereafter adopted by the Stockholders shall invalidate any prior act of the directors which would have been valid if such Bylaws had not been adopted.


(g) Special meetings of Stockholders, for any purpose or purposes, may be called only by either the Chairman, if there be one, or the President and shall be called by the Secretary or any Assistant Secretary, if there be one, at the request in writing of majority of the Board of Directors.

(h) No action required or permitted to be taken at any annual or special meeting of Stockholders of the Corporation may be taken without a meeting, and Stockholders of the Corporation may not take action by written consent.

(i) The Corporation expressly elects to be governed by Section 203 of the General Corporation Law of the State of Delaware.


EXHIBIT III

THE EASTWIND GROUP, INC.

AMENDMENT NO. 1 TO
STOCK OPTION INCENTIVE PLAN

Whereas, The Eastwind Group, Inc. (the "Corporation") first established its Stock Option Incentive Plan by adoption by its Board of Directors on August 6, 1995, subsequently approved by its Stockholders on August 24, 1995.

Now, as of this 12th day of February, 1997, the Corporation, by proper action of its Board of Directors, desires to amend the Plan in certain respects and further intends to submit such amendments for approval by its stockholders at its next Annual Meeting of Stockholders and will disseminate information to such stockholders regarding such proposed amendments in its proxy materials:

WHEREAS, the Corporation has determined that it does not have sufficient remaining shares available under the Plan and wishes to increase the maximum number of shares available;

WHEREAS, the Corporation wishes to provide additional flexibility in administration of the Plan in order to cover changes in the composition of the committee administering the Plan and to further assure compliance with the Rules under (S)16 of the Securities Exchange Act of 1934; and

WHEREAS, the Corporation has determined that in some cases optionees may wish to engage in estate planning activities regarding the shares subject to option, but under the current provisions of the Plan are limited to transfers of such options upon death, and would like additional flexibility for inter vivos gifting of such options to immediate members of the optionee's family, and also to incorporate provisions of ERISA relating to qualified domestic relations orders.

NOW, THEREFORE, the Plan is amended in the following respects:

(1) Section 2.2 of the Plan is amended to increase the maximum aggregate number of shares of Common Stock available for award under the Plan from 750,000 shares to 1,500,000 shares.

(2) Section 3.1 of the Plan, which governs the composition of the administering committee, is hereby amended in its entirety, as follows:

"The Plan shall be administered by a Compensation Committee (the "Committee") appointed by the Board and consisting solely of two or more "non- employee directors" as that term is defined in Rule 16b-3(b)(3) under the Securities Exchange Act of 1934, as amended (the "1934 Act"). Should the composition of the Committee at any time be different than as prescribed above, by reason of resignation, ineligibility or for any other reason, then the remaining member(s) of the Committee may continue to serve as the Committee for the administration of the Plan until the Board has appointed an additional member or members of such Board to the Committee who are qualified to serve thereon under the provisions of this Section, but during such intervening period, grants of Options or Stock Appreciation Rights, if any, must be made by the entire Board of Directors."

(3) Section 3.2 of the Plan, which governs the powers of the administering committee is amended by adding new language in the forepart of that section to read as follows:

"Subject to the express provisions of the Plan, the Committee (but if the composition of the Committee at any time differs from that prescribed in
Section 3.1 above for any reason, then the full Board of Directors) shall have the power and authority . . ."


(4) Article 8 of the Plan is hereby amended in its entirety as follows:

"Nontransferability of Options and Stock Appreciation Rights

(a) No Option or Stock Appreciation Right may be transferred, assigned, sold, pledged, encumbered or hypothecated by an employee or other optionee (whether by operation of law or otherwise), except (a) as provided by will or by applicable laws of descent and distribution, or (b) in the case of a Nonstatutory Stock Option, (i) pursuant to a "domestic relations order" as defined in (S)414 of the Code or (S)206 of ERISA, or (ii) by transfer without consideration by an optionee, subject to such rules as the Committee may adopt to preserve the purposes of the Plan, (including limiting such transfers to transfers by optionees who are directors or senior executives), to (A) a member of his or her Immediate Family, (B) a trust solely for the benefit of the optionee and his or her Immediate Family, or
(C) a partnership or limited liability company whose only partners or shareholders are the optionee and his or her Immediate Family members, (each transferee described in (i)-(ii) is hereafter referred to as a "Permitted Transferee"), provided that the Committee is notified in advance in writing of the terms and conditions of any proposed transfer intended to be described in (i) or (ii) and it determines that the proposed transfer complies with the requirements of the Plan and the applicable option agreement. Any purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance that does not qualify under (i) or (ii) shall be void and unenforceable against the Company. For this purpose, "Immediate Family" means, with respect to a particular optionee, the optionee's spouse, children or grandchildren (including adopted and stepchildren and grandchildren).

(b) The terms of the Nonqualified Stock Option shall apply to the beneficiaries, executors and administrators of the optionee and of the Permitted Transferees of the optionee (including the beneficiaries, executors and administrators of the Permitted Transferees), including the right to agree to any amendment of the applicable option agreement, except that Permitted Transferees shall not transfer any Nonqualified Stock Option other than by will or by the laws of descent and distribution.

(c) A Nonqualified Stock Option shall be exercised only by the optionee (or his or her attorney in fact or guardian) (including, in the case of a transferred option, by a Permitted Transferee), or, in the case of the optionee's death, by the optionee's executor or administrator (including, in the case of a transferred option, by the executor or administrator of the Permitted Transferee), and no shares shall be issued by the Company unless the exercise of a Nonqualified Stock Option is accompanied by sufficient payment, as determined by the Company, to meet its withholding tax obligations on such exercise or by other arrangements satisfactory to the Committee to provide for such payment."

(5) Each of Sections 9.1, 9.2 and 9.3 hereof shall be amended by adding the following sentence at the end thereof:

"In such event, any Option or Stock Appreciation Right made the subject of a permitted gift or domestic relations order pursuant to Article 8 hereof may be exercised by such donee or transferee at any time within the original period for which such Option or Stock Appreciation Right was exercisable under the original terms of its grant."

(6) Article 10 of the Plan shall be amended by adding the following sentence at the end thereof:

"In such event, any Option or Stock Appreciation Right made the subject of a permitted gift or domestic relations order pursuant to Article 8 hereof may be exercised by such donee or transferee at any time within the original period for which such Option or Stock Appreciation Right was exercisable under the original terms of its grant."

(7) In all other respects, the remaining provisions of the Plan not specifically changed or amended hereby shall remain in full force and effect.

These amendments were duly adopted by the Board of Directors of the Corporation on February 12, 1997 and will be presented to the Stockholders for approval at the next Annual Meeting of Stockholders of this Corporation.

THE EASTWIND GROUP, INC.

By: /s/ WILLIAM B. MILLER


the original period for which such Option or Stock Appreciation Right was exercisable under the original terms of its grant."

(7) In all other respects, the remaining provisions of the Plan not specifically changed or amended hereby shall remain in full force and effect.

These amendments were duly adopted by the Board of Directors of the Corporation on February 12, 1997 and will be presented to the Stockholders for approval at the next Annual Meeting of Stockholders of this Corporation.

THE EASTWIND GROUP, INC.

By:  /s/ William B. Miller
    ----------------------------------
      William B. Miller, Secretary


EXHIBIT IV

THE EASTWIND GROUP, INC.

AMENDMENT NO. 1 TO
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

Whereas, The Eastwind Group, Inc. (the "Corporation") first established its Non-Employee Directors Stock Option Plan by adoption by its Board of Directors and Stockholders on August 24, 1995.

Now, as of this 12th day of February, 1997, the Corporation, by proper action of its Board of Directors, desires to amend the Plan in certain respects and further intends to submit such amendments for approval by its stockholders at its next Annual Meeting of Stockholders and will disseminate information to such stockholders regarding such proposed amendments in its proxy materials:

WHEREAS, the Corporation has determined that it does not have sufficient remaining shares available under the Plan and wishes to increase the number of maximum shares available; and

WHEREAS, the Corporation has determined that in some cases optionees may wish to engage in estate planning activities regarding the shares subject to option, but under the current provisions of the Plan are limited to transfers of such options upon death, and would like additional flexibility for inter vivos gifting of such options to immediate members of the optionee's family, and also to incorporate provisions of ERISA relating to qualified domestic relations orders.

NOW, THEREFORE, the Plan is amended in the following respects:

(1) Section 3(a) of the Plan is amended to increase the maximum aggregate number of shares of Common Stock available for award under the Plan from 250,000 shares to 500,000 shares.

(2) Each of Sections 8, 9, 10 and 11 of the Plan, dealing with the cessation of service, retirement, death or disability of a director, respectively shall be amended by adding the following sentence at the end thereof:

"In such event, any NQSO made the subject of a permitted gift or domestic relations order pursuant to Section 15 hereof may be exercised by such donee or transferee at any time within the original period for which such NQSO was exercisable under the original terms of its grant."

(3) Section 15 of the Plan is hereby amended in its entirety as follows:

"Non-transferability

(a) No Stock Option granted under this Plan may be transferred, assigned, sold, pledged, encumbered or hypothecated by a Director (whether by operation of law or otherwise), except (a) as provided by will or by applicable laws of descent and distribution, or (b) in the case of a NQSO,
(i) pursuant to a "domestic relations order" as defined in (S)414 of the Code or (S)206 of ERISA, or (ii) by transfer without consideration by a Director, subject to such rules as the Committee may adopt to preserve the purposes of the Plan, to (A) a member of his or her Immediate Family, (B) a trust solely for the benefit of the Director and his or her Immediate Family, or


(C) a partnership or limited liability company whose only partners or shareholders are the Director and his or her Immediate Family members, (each transferee described in (i)-(ii) is hereafter referred to as a "Permitted Transferee"), provided that the Committee is notified in advance in writing of the terms and conditions of any proposed transfer intended to be described in (i) or (ii) and it determines that the proposed transfer complies with the requirements of the Plan and the applicable option agreement. Any purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance that does not qualify under (i) or (ii) shall be void and unenforceable against the Company. For this purpose, "Immediate Family" means, with respect to a particular Director, the Director's spouse, children or grandchildren (including adopted and stepchildren and grandchildren).

(b) The terms of the NQSO shall apply to the beneficiaries, executors and administrators of the Director and of the Permitted Transferees of the Director (including the beneficiaries, executors and administrators of the Permitted Transferees), including the right to agree to any amendment of the applicable option agreement, except that Permitted Transferees shall not transfer any NQSO other than by will or by the laws of descent and distribution.

(c) A NQSO shall be exercised only by the Director (or his or her attorney in fact or guardian) (including, in the case of a transferred option, by a Permitted Transferee), or, in the case of the Director's death, by the Director's executor or administrator (including, in the case of a transferred option, by the executor or administrator of the Permitted Transferee), and no shares shall be issued by the Company unless the exercise of a NQSO is accompanied by sufficient payment, as determined by the Company, to meet its withholding tax obligations on such exercise or by other arrangements satisfactory to the Committee to provide for such payment."

(4) In all other respects, the remaining provisions of the Plan not specifically changed or amended hereby shall remain in full force and effect.

These amendments were duly adopted by the Board of Directors of the Corporation on February 12, 1997 and will be presented to the Stockholders for approval at the next Annual Meeting of Stockholders of this Corporation.

THE EASTWIND GROUP, INC.

By:  /s/ William B. Miller
    ------------------------------------
    William B. Miller, Secretary


ANNUAL MEETING
OF
THE EASTWIND GROUP, INC.

THURSDAY, JUNE 5, 1997
9:00 A.M.
EAGLE LODGE
RIDGE PIKE AND MANOR ROAD
LAFAYETTE HILL, PA 19444

AGENDA

. Election of Directors

. Amendment of Certificate of Incorporation to change registered agent, registered address and make technical corrections

. Amendment of the Certificate of Incorporation to classify the Board of Directors

. Amendments to the Stock Option Incentive Plan

. Amendments to the Non-Employees Directors Stock Option Plan

THE EASTWIND GROUP, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Paul A. DeJuliis, John R. Thach and Anthony J. Mendicino, and each of them, Proxies with power to appoint a substitute and hereby authorizes them to represent and to vote all shares of Common Stock of The Eastwind Group, Inc. held of record by the undersigned on April 30, 1997 at the Annual Meeting of Stockholders of The Eastwind Group, Inc. to be held on June 5, 1997, and at any adjournments thereof, and to vote as directed on the reverse side of this card and, in their discretion, upon such other matters not specified as may come before said meeting.

Election of Directors          Change of Address and Comments

   Paul A. DeJuliis            _____________________________
   John R. Thach
   William B. Miller
   Anthony J. Mendicino        _____________________________
   Bruce P. Murray
   Andrew Panzo                (If you have written in the above
   Porter Bibb                 space, please mark the corresponding
   Edward F. Sager, Jr.        box on the reverse side of this card.)

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.

THE PROXIES CANNOT VOTE YOUR SHARES
UNLESS YOU SIGN AND RETURN THIS CARD

SEE REVERSE SIDE


THE EASTWIND GROUP, INC.

DIRECTORS RECOMMEND A VOTE FOR ALL NOMINEES AND FOR THE AMENDMENTS TO THE CERTIFICATE OF INCORPORATION AND FOR THE AMENDMENTS TO THE STOCK OPTION INCENTIVE PLAN AND FOR THE AMENDMENTS TO THE NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

1. Election of Directors

For Withheld

FOR, except vote withheld from the following nominee(s):

2. Amendment of the Certificate of Incorporation to change the name and address of the Corporation's registered agent and to make other technical corrections

For Against Abstain

3. Amendment to the Certificate of Incorporation to classify the board of directors

For Against Abstain

4. Amendment of the Stock Option Incentive Plan

For Against Abstain

5. Amendment of the Non-Employee Director Stock Option Plan

For Against Abstain

Change of Address/Comments on Reverse Side

PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE REQUIRED IF MAILED IN THE UNITED STATES

NOTE: Please sign name(s) exactly as printed
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.

PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE REQUIRED IF MAILED IN THE UNITED STATES.