Document:

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                                                                     Exhibit 4.1

                          REGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of
this ____ day of July, 1999 by and among ServiceWare, Inc., a Pennsylvania
corporation (the "Company"), the persons or entities listed on Schedule A
attached hereto (individually, an "Investor", and collectively, the "Investors")
and the Shareholders (as hereinafter defined).

         1.       Certain Definitions.

                  As used in this Agreement, the following terms shall have the
following meanings.

                  (a) "Commission" means the Securities and Exchange Commission,
         or any other federal agency at the time administering the Securities
         Act and Exchange Act.

                  (b) "Common Stock" means: (i) the Company's Common Stock, no
         par value per share, as authorized on the date of this Agreement; (ii)
         any other capital stock of any class or classes (however designated) of
         the Company, authorized on or after the date hereof, the holders of
         which shall have the right, without limitation as to amount, either to
         all or to a share of the balance of current dividends and liquidating
         dividends after the payment of dividends and distributions on any
         shares entitled to preference, and the holders of which shall
         ordinarily, in the absence of contingencies or in the absence of any
         provision to the contrary in the Company's Articles of Incorporation,
         as amended, be entitled to vote for the election of a majority of
         directors of the Company (even though the right to vote has been
         suspended by the happening of such a contingency or provision); and
         (iii) any other securities into which or for which any of the
         securities described in (i) or (ii) may be converted or exchanged
         pursuant to a plan of recapitalization, reorganization, merger, sale of
         assets or otherwise.

                  (c) "Exchange Act" means the Securities Exchange Act of 1934,
         as amended, or any similar federal statute, and the rules and
         regulations of the Commission thereunder, as shall be in effect at the
         time.

                  (d) "Person" means an individual, corporation, partnership,
         joint venture, trust, or unincorporated organization, or a government
         or any agency or political subdivision thereof.

                  (e) "Registrable Securities" means any shares of Common Stock
         owned by an Investor or its permitted successors and assigns, including
         but not limited to shares of Common Stock issued or issuable upon
         conversion of any shares of Series A Convertible Preferred Stock,
         Series B Convertible Preferred Stock, Series C Convertible Preferred
         Stock, Series D Convertible Preferred Stock or Series E Convertible
         Preferred Stock or upon exercise of any warrants to purchase Common
         Stock; except for any shares of such
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         Common Stock that: (i) have at any time been sold by such parties other
         than to a permitted assignee, as defined in Section 5 hereof; and (ii)
         which have at any time been sold in a registered public offering or
         pursuant to Rule 144 promulgated under the Securities Act.

                  (f) "Securities Act" means the Securities Act of 1933, as
         amended, or any similar federal statute, and the rules and regulations
         of the Commission thereunder, all as the same shall be in effect at the
         time.

                  (g) "Shareholders' Agreement" means that certain Shareholders'
         Agreement dated as of the date hereof among the Company, the Investors
         and the Shareholders.

                  (h) "Shareholders" mean Jeff Pepper, Rajiv Enand, and Bruce
         Molloy.

                  (i) "Shareholders' Shares" shall mean all shares of Common
         Stock owned by the Shareholders now held or hereafter acquired, but
         excluding any such Common Stock that has been: (i) registered under the
         Securities Act pursuant to an effective registration statement filed
         thereunder and disposed of in accordance with that registration
         statement; or (ii) publicly sold pursuant to Rule 144 under the
         Securities Act.

         2.       Registration Rights.

                  (a) Piggyback Registrations. If at any time or times after the
         date hereof, the Company shall determine to register any of its Common
         Stock or securities convertible into or exchangeable for Common Stock
         under the Securities Act, whether in connection with a public offering
         of securities by the Company (a "primary offering"), a public offering
         thereof by shareholders (a "secondary offering"), or both (but not in
         connection with a registration effected solely to register securities
         issuable pursuant to, or rights or interests under, an employee benefit
         plan or a transaction to which Rule 145 or any other similar rule of
         the Commission under the Securities Act is applicable), the Company
         will promptly give written notice thereof to the holders of Registrable
         Securities and Shareholders' Shares then outstanding (the "Holders"),
         and will use its best efforts to effect the registration under the
         Securities Act of all Registrable Securities and Shareholders' Shares
         which the Holders may request in a writing delivered to the Company
         within fifteen (15) days after the notice given by the Company;
         provided, however, that in the event that any registration pursuant to
         this Section 2(a) (including a registration requested under Section
         2(b) and subsequently converted into a piggyback registration at the
         election of the Company, as provided in Section 2(b)) shall be, in
         whole or in part, an underwritten public offering of Common Stock, the
         number of shares of Registrable Securities and Shareholders' Shares to
         be included in such an underwriting may be reduced (pro rata among the
         requesting Holders based upon the number of shares of Registrable
         Securities and Shareholders' Shares owned by such Holders) if and to
         the extent that the managing underwriter shall be of the opinion that
         such inclusion would adversely affect the marketing of the securities
         to be sold by the Company therein provided, further, that, prior to any
         such reduction, the Company shall first exclude from

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         such registration, in the following order, all shares of Common Stock
         sought to be included therein by: (i) any holder thereof not having any
         such contractual, incidental registration rights; and (ii) any holder
         thereof having contractual, incidental registration rights subordinate
         and junior to the rights of the Holders of Registrable Securities. The
         Holders acknowledge that the rights of holders of Registrable
         Securities and Shareholders' Shares exercising their "piggyback rights"
         pursuant to this Section 2(a) shall be junior to the rights of holders
         of Registrable Securities who have exercised their demand rights under
         Section 2(b) in a situation in which the Company did not elect to make
         a primary offering, as provided in Section 2(b).

                  (b) Demand Registrations. If at any time following the date
         which is six months after the Company's initial public offering, one or
         more of the holders of an aggregate of not less than 20% of the
         Registrable Securities then outstanding shall notify the Company in
         writing that it or they intend to offer or cause to be offered for
         public sale all or any portion of their Registrable Securities, the
         Company will notify all of the holders of Registrable Securities who
         would be entitled to notice of a proposed registration under the terms
         of this Agreement. Upon the written request of any such holder after
         receipt from the Company of such notification, the Company shall
         either: (A) elect to make a primary offering, in which case the rights
         of Holders shall be as set forth with respect to a primary offering in
         Section 2(a) and such registration shall be deemed to be a registration
         under Section 2(a) and not a registration hereunder (in which event the
         Company shall not be required to cause a registration statement
         requested pursuant to this Section 2(b) to become effective prior to 90
         days following the effective date of the registration statement
         initiated by the Company under Section 2(a)); or (B) file as soon as
         practicable, and in any event within 60 days of the receipt of such
         written request, a registration statement, and use its best efforts to
         cause to become effective the registration of such Registrable
         Securities as may be requested by any holders (including the holder or
         holders giving the initial notice of intent to register hereunder) to
         be registered under the Securities Act in accordance with the terms of
         this Section 2(b). Anything herein to the contrary notwithstanding, the
         Company shall be obligated to comply with this Section 2(b) on two
         occasions only.

                  (c) Form S-3. If the Company becomes eligible to use Form S-3,
         the Company shall use its commercially reasonable efforts to continue
         to qualify at all times for registration of securities on Form S-3. If
         and when the Company becomes entitled to use Form S-3, the holders of
         an aggregate of such number of Registrable Securities that have an
         aggregate sales price of not less than $250,000 shall have the right to
         request and have effected not more than one registration per year of
         shares of Registrable Securities held by them on Form S-3. Such
         requests shall be in writing and shall state the number of shares of
         Registrable Securities to be disposed of and the intended method of
         disposition of such shares by such holder or holders. The Company shall
         not be required to cause a registration statement requested pursuant to
         this Section 2(c) to become effective prior to 90 days following the
         effective date of a registration statement initiated by the Company, if
         the request for registration has been received by the Company
         subsequent to the giving of written notice by the Company, made in good
         faith, to the

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         holders or Registrable Securities to the effect that the Company is
         commencing to prepare a Company-initiated registration statement (other
         than a registration effected solely to register securities issuable
         pursuant to, or rights or interests under, an employee benefit plan or
         a transaction to which Rule 145 or any other similar rule of the
         Commission under the Securities Act is applicable); provided, however,
         that the Company shall use its best efforts to achieve such
         effectiveness promptly following such 90-day period. The Company shall
         give notice to all holders of Registrable Securities of the receipt of
         a request for registration pursuant to this Section 2(c) and shall
         provide a reasonable opportunity for such holders to participate in the
         registration. Subject to the foregoing, the Company will use its best
         efforts to effect promptly the registration of all shares of Common
         Stock on Form S-3 to the extent requested by the holder or holders
         thereof for purposes of disposition. Notwithstanding the foregoing, the
         Company shall not be required to effect a registration under this
         Section 2(c) or Section 2(a) or 2(b) if such Holders of Registrable
         Securities may then sell all Registrable Securities within any two
         successive 3-month periods without registration under the Securities
         Act. In connection with any Form S-3, the Shareholders agree: (i) to
         provide all such information and material and take all actions as may
         be reasonably required in order to enable the Company to comply with
         all applicable requirements of the Commission and to obtain
         acceleration of the effective dates of any Form S-3; (ii) that the
         distribution of shares of Common Stock included in the Form S-3 shall
         be made in accordance with the plan of distribution set forth in such
         registration statement and with all applicable rules and regulations of
         the Commission; (iii) not to deliver any form of prospectus in
         connection with the sale of any shares of Common Stock as to which the
         Company has advised the Holders in writing that it is preparing an
         amendment or supplement; and (iv) to notify the Company promptly in
         writing upon the sale by the Holder of any shares of Common Stock
         covered by the Form S-3.

                  (d) Registration Expenses. In the event of a registration
         described in Section 2(a) or 2(b), all expenses of registration and
         offering of the Holders participating in the offering including,
         without limitation, printing expenses, fees and disbursements of
         counsel (including one counsel for the selling Holders of Registrable
         Securities or Shareholders' Shares), and independent public
         accountants, fees and expenses (including counsel fees incurred by the
         Company in connection with complying with state securities or "blue
         sky" laws), fees of the National Association of Securities Dealers,
         Inc. and fees of transfer agents and registrars), shall be borne by the
         Company, except that the Holders shall bear underwriting commissions
         and discounts attributable to their Registrable Securities or
         Shareholders' Shares, as the case may be, being registered. In the
         event of a registration described in Section 2(c), all expenses of
         registration and offering of the Holders shall be paid for pro rata by
         the Holders whose Registrable Securities are included in the Form S-3.

                  (e) Further Obligations of the Company. Whenever under the
         preceding sections of this Agreement the Company is required hereunder
         to register Registrable Securities or Shareholders' Shares, it agrees
         that it shall also do the following:

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                           (i) use commercially reasonable efforts to diligently
                  prepare for filing with the Commission a registration
                  statement and such amendments and supplements to said
                  registration statement and the prospectus used in connection
                  therewith as may be necessary to keep said registration
                  statement effective and to comply with the provisions of the
                  Securities Act with respect to the sale of securities covered
                  by said registration statement for the period necessary to
                  complete the proposed public offering;

                           (ii) furnish to each selling Holder such copies of
                  each preliminary and final prospectus and such other documents
                  as such Holder may reasonably request to facilitate the public
                  offering of his Registrable Securities or Shareholders'
                  Shares;

                           (iii) enter into and perform its obligations under
                  any underwriting agreement with provisions reasonably required
                  by the proposed underwriter for the selling Holders, if any;

                           (iv) use its commercially reasonable efforts to
                  register or qualify the Registrable Securities and
                  Shareholders' Shares covered by said registration statement
                  under the securities or "blue-sky" laws of such jurisdictions
                  as any selling holder of Registrable Securities or
                  Shareholders' Shares may reasonably request, provided that the
                  Company shall not be required to register in any states which
                  shall require it to qualify to do business or subject itself
                  to general service of process as a condition of such
                  registration;

                           (v) prepare and file with the Commission such
                  amendments and supplements to such registration statement and
                  the prospectus used in connection with such registration
                  statement as and to the extent necessary to comply with the
                  federal securities and any applicable state securities statute
                  or regulation;

                           (vi) notify each holder of Registrable Securities
                  covered by such registration statement at any time when a
                  prospectus relating thereto is required to be delivered under
                  the Securities Act, of the happening of any event as a result
                  of which the prospectus included in such registration
                  statement, as then in effect, includes an untrue statement of
                  a material fact or omits to state a material fact required to
                  be stated therein or necessary to make the statements therein
                  not misleading in light of the circumstances then existing;

                           (vii) cause all such Registrable Securities
                  registered pursuant hereto to be listed or quoted on each
                  securities exchange or tier of The Nasdaq Stock Market on
                  which similar securities issued by the Company are then listed
                  or quoted;

                           (viii) provide a transfer agent and registrar for all
                  Registrable Securities registered hereunder not later than the
                  effective date of such registration.

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         3.       Indemnification.

                  (a) Incident to any registration referred to in this
         Agreement, and subject to applicable law, the Company will indemnify
         each underwriter, each Holder of Registrable Securities and
         Shareholders' Shares so registered, the officers and directors of each
         Holder of Registrable Securities and each person controlling any of
         them against all claims, losses, damages and liabilities, including
         legal and other expenses reasonably incurred in investigating or
         defending against the same, arising out of any untrue statement or
         alleged untrue statement of a material fact contained in any prospectus
         or other document (including any related registration statement) or any
         omission or alleged omission to state therein a material fact required
         to be stated therein or necessary to make the statements therein not
         misleading, or arising out of any violation or alleged violation by the
         Company of the Securities Act, the Exchange Act, any state securities
         or "blue-sky" laws or any rule or regulation thereunder in connection
         with such registration; provided, however, that the Company will not be
         liable in any case to the extent that any such claim, loss, damage or
         liability may have been caused by an untrue statement or omission based
         upon information furnished in writing to the Company by such
         underwriter or such Holder expressly for use therein. In the event of
         any registration of any of the Registrable Securities or Shareholders'
         Shares under the Securities Act pursuant to this Agreement, each seller
         of Registrable Securities or Shareholders' Shares, as the case may be,
         severally and not jointly, will indemnify and hold harmless the
         Company, each of its directors and officers and each underwriter (if
         any) and each person, if any, who controls the Company or any such
         underwriter within the meaning of the Securities Act or the Exchange
         Act against any claim, losses, damages and liabilities, including legal
         and other expenses reasonably incurred in investigating, or defending
         it against the same, arising out of any untrue statement of a material
         fact contained in any prospectus or other document (including any
         related registration statement) or any omission to state therein a
         material fact required to be stated therein or necessary to make the
         statement therein not misleading, if the statement or omission was made
         in reliance upon and in conformity with information furnished in
         writing to the Company by or on behalf of such selling Holder,
         specifically for use in connection with the preparation of such
         registration statement, prospectus, amendment or supplement; provided,
         however, that the obligations of such selling Holders hereunder shall
         be limited to an amount equal to the proceeds to each Holder of
         Registrable Securities or Shareholders' Shares sold as contemplated
         herein.

                  (b) Promptly after receipt by an indemnified party under this
         Section of notice of the commencement of any action, such indemnified
         party will, if a claim in respect thereof is to be made against any
         indemnifying party under this subsection, notify the indemnifying party
         who shall have the right to participate in, and, to the extent the
         indemnifying party so desires, jointly with any other indemnifying
         party similarly notified, to assume the defense thereof with counsel
         mutually satisfactory to the parties; provided, however, that the
         indemnified parties in any such proceeding shall have the right to
         retain one counsel at the expense of the indemnifying party, if there
         is or could reasonably be expected to be a conflict of interest with
         respect to a third party between

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         the position of the indemnified parties and the indemnifying party. The
         failure to notify an indemnifying party promptly of the commencement of
         any such action, if prejudicial to his ability to defend such action,
         shall relieve such indemnifying party of any liability to the
         indemnified party under this subsection, but the omission so to notify
         the indemnifying party will not relieve him of any liability that he
         may have to any indemnified party otherwise than under this Section.

                  (c) To the extent that the indemnification provided for in
         this Section 3 from the indemnifying party is held by a court of
         competent jurisdiction (by the entry of a final judgment or decree and
         the expiration of time to appeal or the denial of the last right of
         appeal) to be unavailable to an indemnified party hereunder in respect
         of any losses, claims, damages liabilities or expenses referred to
         therein, then the indemnifying party, in lieu of indemnifying such
         indemnified party, shall contribute to the amount paid or payable by
         such indemnified party as a result of such losses, claims, damages,
         liabilities or expenses in such proportion as is appropriate to reflect
         the relative fault of the indemnifying party and indemnified parties in
         connection with the actions which resulted in such losses, claims,
         damages, liabilities or expenses, as well as any other relevant
         equitable considerations. The relative fault of such indemnifying party
         and indemnified parties shall be determined by reference to, among
         other things, whether any action in question, including any untrue or
         alleged untrue statement of a material fact or omission or alleged
         omission to state a material fact, has been made by, or relates to
         information supplied by, such indemnifying party or indemnified
         parties, and the parties' relative intent, knowledge, access to
         information and opportunity to correct or prevent such action. No
         person or entity guilty of fraudulent misrepresentation (within the
         meaning of Section 11(f) of the Securities Act) shall be entitled to
         contribution from any person who was not guilty of such fraudulent
         misrepresentation.

                  (d) The obligations of the Company and the Holders under this
         Section 3 shall survive the completion of any offering of Registrable
         Securities in a registration statement under Section 2.

         4. Rule 144 Requirements. If the Company becomes subject to the
reporting requirements of either Section 13 or Section 15(d) of the Exchange
Act, the Company will use its best efforts to file with the Commission such
information as the Commission may require under either of said Sections; and in
such event, the Company shall use its best efforts to take all action as may be
required as a condition to the availability of Rule 144 under the Securities Act
(or any successor exemptive rule hereinafter in effect). The Company shall
furnish to any Holder of Registrable Securities or Shareholders' Shares upon
request, a written statement executed by the Company as to the steps it has
taken to comply with the reporting requirements of Rule 144.

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         5. Transfer of Registration Rights. The registration rights of the
Holders under this Agreement may be transferred to any transferee of any shares
of Series A Convertible Preferred Stock, shares of Series B Convertible
Preferred Stock, shares of Series C Convertible Preferred Stock, shares of
Series D Preferred Stock, shares of Series E Convertible Preferred Stock,
Registrable Securities or Shareholders' Shares who: (i) is a Holder of shares of
Series A Convertible Preferred Stock, shares of Series B Convertible Preferred
Stock, shares of Series C Convertible Preferred Stock, shares of Series D
Convertible Preferred Stock, shares of Series E Convertible Preferred Stock,
Registrable Securities or Shareholders' Shares as of the date of this Agreement;
(ii) is an affiliate, as that term is defined in the Investment Company Act of
1940, of a Holder of Registrable Securities as of the date of this Agreement
(including a partner of such Holder); or (iii) is the owner of an investment
account which is managed or advised by an Investor, an affiliate of an Investor,
or any person or entity that acquires 76,000 shares of Series B Convertible
Preferred Stock (as adjusted for stock splits, stock dividends,
reclassifications, recapitalizations or other similar events) (each a "permitted
assignee"). Each such transferee shall be deemed to be a "Holder" for purposes
of this Agreement; provided, that, no transfer of registration rights by a
Holder pursuant to this Section 5 shall create any additional rights in the
transferee beyond those rights granted to Holders in this Agreement.

         6. Granting of Registration Rights. The Company shall not, without the
prior written consent of the holders of at least a majority in interest of the
Registrable Securities, grant any rights to any Persons to register any shares
of capital stock or other securities of the Company if such rights could
reasonably be expected to be superior to or be on parity with, the rights of the
holders of Registrable Securities granted pursuant to this Agreement.

         7. Prior Agreements. All parties to that certain Registration Rights
Agreement dated June 29, 1995 (the "June 29 Agreement") acknowledge and agree
that the June 29 Agreement which was superseded and replaced by the April 24
Agreement (defined below) has no effect whatsoever and is null and void. Poly
Ventures II, L.P. acknowledges and agrees that this Agreement supersedes and
replaces the registration rights provisions contained in Section 11 ("Section
11") of that certain Share Purchase Agreement with the Company dated as of July
25, 1994 in all respects and Section 11 is hereby rendered null and void. All
parties to that certain Registration Rights Agreement dated April 24, 1996 (the
"April 24 Agreement") acknowledge and agree that this Agreement supersedes and
replaces the April 24 Agreement in all respects, and the April 24 Agreement is
hereby rendered null and void.

         8.       Miscellaneous.

                  (a) Damages. The Company recognizes and agrees that the
         holders of Registrable Securities will not have an adequate remedy if
         the Company fails to comply with this Agreement and that damages may
         not be readily ascertainable, and the Company expressly agrees that, in
         the event of such failure, it shall not oppose an application by a
         Holder of Registrable Securities requiring specific performance of any
         and all provisions hereof or enjoining the Company from continuing to
         commit any such breach of this Agreement.

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                  (b) No Waiver; Cumulative Remedies. No failure or delay on the
         part of any party to this Agreement in exercising any right, power or
         remedy hereunder shall operate as a waiver thereof; nor shall any
         single or partial exercise of any such right, power or remedy preclude
         any other or further exercise thereof or the exercise of any other
         right, power or remedy hereunder. The remedies herein provided are
         cumulative and not exclusive of any remedies provided by law.

                  (c) Amendments and Waivers. Except as hereinafter provided,
         amendments to this Agreement shall require and shall be effective upon
         receipt of the written consent of: (i) the Company; (ii) the holders of
         at least a majority in interest of the Registrable Securities; and
         (iii) in the case of any amendment adversely affecting the rights of
         the Shareholders, the holders of at least a majority in interest of the
         Shareholders' Shares. Except as hereinafter provided, compliance with
         any covenant or provision set forth herein may be waived upon written
         consent by the party or parties whose rights are being waived;
         provided, that: (i) if the rights of holders of Registrable Securities
         are being waived, upon the written consent of the holders of at least a
         majority in interest of the Registrable Securities; and (ii) if the
         rights of holders of Shareholders' Shares are being waived, upon the
         written consent of the holders of at least a majority in interest of
         the Shareholders' Shares. Notwithstanding the foregoing, no waivers or
         amendments shall be effective to reduce the percentage in interest of
         the Registrable Securities or Shareholders' Shares the consent of the
         holders of which is required under this Section. Any waiver or
         amendments may be given subject to satisfaction of conditions stated
         therein and any waiver or amendments shall be effective only in the
         specific instance and for the specific purpose for which given.

                  (d) Notices. As the terms "notice" or "notices" are used
         herein as between the parties, such term shall mean a written document,
         explaining the reason for the notice, and the same shall be mailed by
         United States Postal Service, via Certified Mail, Return Receipt
         Requested, addressed as follows:

         to the Company:

                           ServiceWare, Inc.
                           333 Allegheny Ave.
                           Oakmont, PA 15139
                           Attn: Rajiv Enand

         with a copy by mail and fax (which shall not constitute notice) to:

                           Marlee S. Myers, Esquire
                           Morgan, Lewis & Bockius LLP
                           One Oxford Centre
                           Pittsburgh, PA  15219-1417
                           Facsimile:  412-560-3399

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         to the holders of Series B Preferred Stock:

                           at the addresses on Schedule A,

         with a copy by mail and fax (which shall not constitute notice) to:

                           William B. Asher, Jr., Esquire
                           Testa, Hurwitz & Thibeault
                           53 State Street
                           Boston, MA  02109

                           and

         to the holders of Series C Preferred Stock:

                           at the addresses on Schedule A,

         with a copy by mail and fax (which shall not constitute notice) to:

                           Steven E. Bochner, Esquire
                           Wilson Sonsini Goodrich & Rosati
                           650 Page Mill Road
                           Palo Alto, CA  94304

         to the holders of Series D Preferred Stock:

                           at the addresses on Schedule A,

         with a copy by mail and fax (which shall not constitute notice) to:

                           Golenbock, Eiseman, Assor & Bell
                           437 Madison Avenue
                           New York, NY  10022-7302
                           Attn: Lawrence M. Bell, Esq.
                           Telephone: 212-907-7300
                           Facsimile: 212-754-0330

         to the holders of Series E Preferred Stock:

                           at the addresses on Schedule A,

         with a copy by mail and fax (which shall not constitute notice) to:

                           Golenbock, Eiseman, Assor & Bell
                           437 Madison Avenue

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                           New York, NY  10022-7302
                           Attn: Lawrence M. Bell, Esq.
                           Telephone: 212-907-7300
                           Facsimile: 212-754-0330

         Such notice shall be deemed to have been given on the date received by
         the addressee. The parties shall, as a matter of convenience and
         courtesy, send each party receiving notice a copy of said notice by
         facsimile or electronic means, or by courier, Federal Express, or
         similar service, but such notifications shall not be deemed lawful
         "notice" as required hereby. The parties may from time to time amend
         the above addresses and names by written notice given the other party.

                  (e). Binding Effect; Assignment. This Agreement shall be
         binding upon and inure to the benefit of the parties hereto and their
         respective heirs, successors and permitted assigns, except that the
         Company shall not have the right to delegate its obligations hereunder
         or to assign its right hereunder or any interest herein without the
         prior written consent of the holders of at least a majority in interest
         of the Registrable Securities.

                  (f) Prior Agreement. This Agreement constitutes the entire
         agreement between the parties and supersedes any prior understandings
         or agreements concerning the subject matter hereof.

                  (g) Severability. The provisions of this Agreement are
         severable and, in the event that any court of competent jurisdiction
         shall determine that any one or more of the provisions or part of a
         provision contained in this Agreement, shall, for any reason, be
         held to be invalid, illegal or unenforceable in any respect, such
         invalidity, illegality or unenforceability shall not affect any other
         provision or part of a provision of this Agreement, but this Agreement
         shall be reformed and construed as if such invalid or illegal or
         unenforceable provision, or part of a provision, had never been
         contained herein, and such provisions or part reformed so that it would
         be valid, legal and enforceable to the maximum extent possible.

                  (h) Governing Law. This Agreement shall be governed by and
         construed in accordance with the substantive laws of the Commonwealth
         of Pennsylvania, excluding its conflict of laws principles.

                  (i) Headings. Article, section and subsection headings in this
         Agreement are included herein for convenience of reference only and
         shall not constitute a part of this Agreement for any other purpose.

                  (j) Counterparts. This Agreement may be executed in any number
         of counterparts, all of which taken together shall constitute one and
         the same instrument, and any of the parties hereto may execute this
         Agreement by signing any such counterpart.

                                       11
<PAGE>   12
                  (k) Further Assurances. From and after the date of this
         Agreement, upon the request of any party hereto, the other parties
         shall execute and deliver such Agreements, documents and other writings
         as may be reasonably necessary or desirable to confirm and carry out
         and to effectuate fully the intent and purposes of this Agreement.

                                       12
<PAGE>   13
         IN WITNESS WHEREOF, the undersigned have executed this Registration
Rights Agreement as of the day and year first above written.

                          SERVICEWARE, INC.

                          By: ___________________________
                                Rajiv Enand
                                Chief Executive Officer

                          SHAREHOLDERS:

                          _______________________________
                          Jeff Pepper, individually and as trustee under various
                          family trusts

                          _______________________________
                          Rajiv Enand, individually and as trustee under various
                          family trusts and Voting Trust Agreement dated as
                          of December 28, 1995

                          _______________________________
                          Bruce Molloy

                          SERIES A INVESTOR:

                          POLY VENTURES II, L.P.

                          By: ___________________________
                              General Partner

                          SERIES B INVESTORS:

                          POLY VENTURES II, L.P.

                          By: ___________________________
                              General Partner
<PAGE>   14
                          GEOCAPITAL III, L.P.

                          By:  Geocapital Management, L.P.

                                 By:______________________
                                    General Partner

                          _________________________
                          Paul Deninger

                          _________________________
                          Charles Federman

                          _________________________
                          Bernard Goldstein

                          _________________________
                          Harvey Poppel

                          _________________________
                          Stephen Smith

                          SERIES C INVESTOR:

                          NORWEST EQUITY PARTNERS V
                          A Minnesota Limited Liability Partnership

                          By:      ITASCA PARTNERS V, L.L.P.,
                                   General Partner

                                   By:_____________________
                                        Kevin G. Hall, Partner
<PAGE>   15
                          SERIES D INVESTORS:

                          POLY VENTURES II, L.P.

                          By:____________________________
                          Name:_________________________
                          Title:__________________________

                          GEOCAPITAL III, L.P.

                          By:____________________________
                          Name:_________________________
                          Title:__________________________

                          NORWEST EQUITY PARTNERS V
                          A Minnesota limited liability partnership

                          By:  Itasca Partners V, LLP, General Partner

                               By:__________________________
                                       Kevin G. Hall
                                       Partner

                          LOVETT MILLER VENTURE FUND II,
                          Limited Partnership

                          By: Lovett Miller Venture Partners II, LLC
                              Its General Partner

                              By:__________________________
                                       W. Scott Miller
                                       Managing Director
<PAGE>   16
                              CEO VENTURE FUND III

                              By:____________________________
                              Name:_________________________
                              Title:__________________________

                              _______________________________
                              Andrew Blum

                              LANCASTER INVESTMENT PARTNERS

                              By:____________________________
                              Name:_________________________
                              Title:__________________________

                              _______________________________
                              Bruce Lewellyn

                              _______________________________
                              Burt Rubin

                              _______________________________
                              Edmund Shea

                              _______________________________
                              Alan Edelman

                              _______________________________
                              Estelle Konviser

                              _______________________________
                              James Borner

                              _______________________________
                              Lizabeth Moses
<PAGE>   17
                              COMMONWEALTH ASSOCIATES LP

                              By:____________________________
                              Name:_________________________
                              Title:__________________________

                              LINDEN PARTNERS

                              By:____________________________
                              Name:_________________________
                              Title:__________________________

                              HULL OVERSEAS, LTD.

                              By:____________________________
                              Name:_________________________
                              Title:__________________________

                              _______________________________
                              Rick Berdon

                              _______________________________
                              Stanley Cohen

                              STANLEY COHEN 1994 IRREVOCABLE
                              RETAINED ANNUITY TRUST

                              By:____________________________
                              Name:_________________________
                              Title:__________________________

                              _______________________________
                              Steve Frankel
<PAGE>   18
                              RADIX ASSOCIATES

                              By:____________________________
                              Name:_________________________
                              Title:__________________________

                              TAMAR VENTURE CAPITAL LTD.

                              By:____________________________
                              Name:_________________________
                              Title:__________________________

                              SERIES E INVESTORS:

                              _______________________________
                              Jody Owen

                              _______________________________
                              Robert C. Harris, Jr.

                              _______________________________
                              John A. Dexheimer

                              _______________________________
                              Thomas I. Unterberg

                              _______________________________
                              A. Robert Towbin
<PAGE>   19
                              PARK CITY INVESTMENTS

                              By: _________________________
                              Name: _______________________
                              Title: ________________________

                              UNTERBERG HARRIS PRIVATE EQUITY
                              PARTNERS, LP

                              By: _________________________
                              Name: _______________________
                              Title: ________________________

                              UNTERBERG HARRIS PRIVATE EQUITY
                              PARTNERS, CV

                              By: _________________________
                              Name: _______________________
                              Title: ________________________

                              UNTERBERG HARRIS 401K PROFIT SHARING
                              FBO ANDREW ARNO

                              By: _________________________
                              Name: _______________________
                              Title: ________________________

                              ANDREW ARNO, ACF
                              MATTHEW ARNO, U/NY/UGMA
                              (DOB - 8/10/93)

                              By: _________________________
                              Name: _______________________
<PAGE>   20
                              ANDREW ARNO, ACF
                              JESSE ARNO, U/NY/UGMA
                              (DOB - 10/8/89)

                              By: _________________________
                              Name: _______________________

                              _______________________________
                              Steven Hellman

                              PAINE WEBBER F/B/O MARTIN E. HELLMAN IRA

                              By: _________________________

                              MARTIN E. HELLMAN AND DOROTHY L. HELLMAN
                              TRUSTEES, FAMILY REVOCABLE TRUST UAD
                              7/6/88

                              By: _________________________

                              C. E. UNTERBERG, TOWBIN, LLC

                              By: _________________________
                              Name: _______________________
                              Title: ________________________

                              C. E. UNTERBERG, TOWBIN INTERACTIVE
                              MEDIA PARTNERSHIP LP, CV

                              By: _________________________
                              Name: _______________________
                              Title: ________________________
<PAGE>   21
                              C. E. UNTERBERG, TOWBIN, LP

                              By: _________________________
                              Name: _______________________
                              Title: ________________________

                              ________________________
                              James C. Arnold

                              ________________________
                              Donald S. Arnold, III

                              GEORGE R. BEGLEY, ACF
                              G. ROLLO BEGLEY, U/NY/UGMA
                              (DOB -        )

                              By: _________________________
                                   Name:  George R. Begley

                              GEORGE R. BEGLEY, ACF
                              TRACY C. BEGLEY, U/NY/UGMA
                              (DOB -        )

                              By: _________________________
                              Name:  George R. Begley

                              _______________________________
                              John R. Lakian

                              _______________________________
                              Martha Logan

                              _______________________________
                              Edward Swyer

                              _______________________________
                              Carol H. Plum
<PAGE>   22
                              UNTERBERG TOWBIN CAPITAL PARTNERS I

                              By: _________________________
                              Name: _______________________
                              Title: ________________________

                              _______________________________
                              Thomas Unterberg

                              MARJORIE & CLARENCE E. UNTERBERG
                              FOUNDATION, INC.

                              By: ___________________________

                              _______________________________
                              Ellen Unterberg Celli

                              _______________________________
                              Emily Unterberg Satloff

                              _______________________________
                              Louis Venezia

                              FTS CAPITAL MANAGEMENT AG

                              By: _________________________
                              Name: _______________________
                              Title: ________________________

                              TIGAN CAPITAL HOLDINGS LTD.

                              By: _________________________
                              Name: _______________________
                              Title: ________________________
<PAGE>   23
SCHEDULE A

                         NAMES AND ADDRESSES OF PARTIES

         Jeff Pepper
         ServiceWare, Inc.
         333 Allegheny Avenue
         Oakmont, PA 15139

         Rajiv Enand
         ServiceWare, Inc.
         333 Allegheny River Blvd.
         Oakmont, PA 15139

         Bruce Molloy
         Molloy Group, Inc.
         Four Century Drive
         Parsippany, NJ  07054

         Poly Ventures  II, L.P.
         901 Route 110
         Room 123
         Farmingdale,  NY 11735

         Geocapital Capital III, L.P.
         One Bridge Plaza
         Fifth Floor
         Fort Lee,  NJ 07024

         Paul Deninger
         c/o Broadview Associates
         One Bridge Plaza
         Fifth Floor
         Fort Lee,  NJ 07024

         Bernard Goldstein
         c/o Broadview Associates
         One Bridge Plaza
         Fifth Floor
         Fort Lee,  NJ 07024
<PAGE>   24
         Charles Federman
         c/o Broadview Associates
         One Bridge Plaza
         Fifth Floor
         Fort Lee,  NJ 07024

         Harvey Poppel
         c/o Broadview Associates
         One Bridge Plaza
         Fifth Floor
         Fort Lee,  NJ 07024

         Stephen Smith
         c/o Broadview Associates
         One Bridge Plaza
         Fifth Floor
         Fort Lee,  NJ 07024

         Norwest Equity Partners V
         3000 Sand Hill Road
         Suite 3-105
         Menlo Park,  CA 94025
         Attn: Kevin Hall

         Lovett Miller Venture Fund II, Limited Partnership
         Uwharrie Point Parkway
         Badin Lake, NC  28127
         Attn:  Kevin Emery/Scott Miller

         CEO Venture Fund III
         2000 Technology Drive
         Pittsburgh, PA  15219
         Attn:  Gary Glausser

         Andrew Blum
         c/o C. E. Unterberg, Towbin
         10 East 50th Street, 22nd Floor
         New York, NY  10022

         Lancaster Investment Partners
         500 North Gulph Road, Suite 10
         King of Prussia, PA  19406
         Attn:  Dan Gardner
<PAGE>   25
         Bruce Lewellyn
         30 Rockefeller Plaza
         New York, NY  10112

         Burt Rubin
         30 Rockefeller Plaza
         New York, NY  10012

         Edmund Shea
         655 Brea Canyon Road
         Walnut, CA  91789

         Alan Edelman
         1408 Locust Avenue
         Baltimore, MD  21204

         Estelle Konviser
         c/o C. E. Unterberg, Tobin
         10 East 50th Street, 22nd Floor
         New York, NY  10022

         James Borner
         716 S. Columbus Avenue
         Mt. Vernon, NY 10550

         Lizabeth Moses
         c/o C. E. Unterberg, Towbin
         10 East 50th Street, 22nd Floor
         New York, NY  10022

         Commonwealth Associates LP
         830 Third Avenue, 4th Floor
         New York, NY  10022
         Attn:  Michael Falk

         Linden Partners
         10 East 50th Street, 10th Floor
         New York, NY  10022
         Attn:  Michael Marrus

         Hull Overseas, Ltd.
         152 West 57th Street, 11th Floor
         New York, NY  10019
         Attn:  Mitch Hull

         Rick Berdon
<PAGE>   26
         717 Post Road, Suite 105
         Scarsdale, NY  10583

         Stanley Cohen
         c/o C. E. Unterberg, Towbin
         10 East 50th Street, 22nd Floor
         New York, NY  10022
         Attn:  Stanley Cohen

         Stanley Cohen 1994 Irrevocable Retained Annuity Trust
         c/o C. E. Unterberg, Towbin
         10 East 50th Street, 22nd Floor
         New York, NY  10022
         Attn:  Steve Frankel

         Radix Associates
         135 East 57th Street, 11th Floor
         New York, NY  10022
         Attn:  Stewart Shapiro

         Tamar Venture Capital Ltd.
         50 Yamat Yam
         46851 Herzlia Petuach
         Israel
         Attn:  Zohar Gilan

         Jody Owen
         473 West End Avenue (11C)
         New York, NY  10023

         Robert C. Harris, Jr.
         2535 Green Street
         San Francisco, CA  94123

         John A. Dexheimer
         38 Tory Hill Lane
         Rowayton, CT  06853

         Thomas I. Unterberg
         15 West 53rd Street
         New York, NY  10019
<PAGE>   27
         A. Robert Towbin
         1010 Fifth Avenue (11B)
         New York, NY  10028

         Park City Investments
         Swiss Bank Tower,
         10 East 50th Street
         22nd Floor
         New York, NY  10022

         Unterberg Harris
         Private Equity Partners, LP
         Swiss Bank Tower
         10 East 50th Street
         22nd Floor
         New York, NY  10022

         Unterberg Harris
         Private Equity Partners, CV
         P.O. Box 224, Piet Ermaai 15
         Curacao, Netherlands Antilles

         C.E. Unterberg, Towbin, LLC
         Swiss Bank Tower
         10 East 50th Street
          22nd Floor
         New York, NY  10022

         Unterberg Harris 401k Profit Sharing
         Fbo Andrew Arno
         Swiss Bank Tower
         10 East 50th Street
            22nd Floor
         New York, NY  10022

         Andrew Arno, ACF
         Mathew Arno, U/NY/UGMA
         (DOB = 8/10/93)
         270 West End Avenue (9S)
         New York, NY 10023
<PAGE>   28
         Andrew Arno, ACF
         Jesse Arno, U/NY/UGMA
         (DOB = 10/8/89)
          270 West End Avenue (9S)
         New York, NY  10023

         C.E. Unterberg, Towbin, LP
         Swiss Bank Tower
         10 East 50th Street, 22nd Floor
         New York, NY 10022

         Unterberg Harris Interactive Media Limited Partnership, C.V.
         Swiss Bank Tower
         10 East 50th Street, 22nd Floor
         New York, NY 10022

         Don Arnold
         Jim Arnold
         c/o Vernat Company
         Vermont National Bank Trust Department
         87 West St, Box 669
         Rutland, VT 05702-9995

         John R. Lakian
         The Fort Hill Group
         767 Third Avenue, 20th Floor
         New York, NY 10017

         George Begley, ACR G. Rollo Begley U/NY/UGMA
         George Begley, ACR Tracey C. Begley U/NY/UGMA
         FTS Capital Management AG
         Tigan Capital Holdings Ltd.
         c/o George Begley
         108 East 82nd Street
         New York, NY 10018

         Edward Swyer
         The Swyer Companies
         10 Executive Park Drive
         Albany, NY 12203

         Martha Logan
         2075 Millburn Avenue
         Maplewood, NJ 07040

         Carol H. Plum
<PAGE>   29
         2 Beekman Place, Apt. 7F
         New York, NY 10022

         Unterberg Towbin Capital Partners I
         Swiss Bank Tower
         10 East 50th Street, 22nd Floor
         New York, NY 10022

         Marjorie & Clarence E. Unterberg Foundation, Inc.
         Ellen Unterberg Celli
         Emily Unterberg Satloff
         c/o Thomas Unterberg
         Swiss Bank Tower
         10 East 50th Street, 22nd Floor
         New York, NY 10022

         Louis Venezia
         Molloy Group, Inc.
         4 Century Drive
         Parsippany, New Jersey 07054<PAGE>   1
                                                                    Exhibit 10.1

                                 LOAN AGREEMENT

          THIS LOAN AGREEMENT (this "AGREEMENT"), is entered into as of
December 10, 1999, between SERVICEWARE, INC., a Pennsylvania corporation (the
"BORROWER"), and PNC BANK, NATIONAL ASSOCIATION (the "BANK").

          For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and intending to be legally bound, and subject to
the terms and conditions hereof and relying upon the representations and
warranties herein set forth in this Agreement, the Borrower and the Bank agree
as set forth below.

          1.   LOAN. The Bank agrees to make secured loans to the Borrower at
any time or from time to time on or after the date hereof under the following
credit facilities (collectively, whether one or more, the "LOAN") in the
aggregate maximum amount of $8,250,000 (the "AGGREGATE LOAN AMOUNT") in
accordance with the terms of this Agreement.

          (a)  REVOLVING CREDIT. A revolving credit facility (the "REVOLVING
               CREDIT") in the maximum amount of $7,500,000 (the "REVOLVING
               CREDIT AMOUNT"), provided, however, the aggregate principal
               balance outstanding at any one time under the Revolving Credit
               shall not exceed $5,000,000 unless and until the Borrower has
               made a Mandatory Prepayment (as defined hereinafter) in an amount
               equal to the then outstanding principal balance of and accrued
               but unpaid interest owing on the Term Loan (as defined
               hereinafter) as a result of an IPO (as defined hereinafter).
               Proceeds of the Revolving Credit shall be used (i); together with
               the proceeds of the Term Loan (as defined hereinafter), to repay
               on the Closing Date the then outstanding principal balance and
               accrued but unpaid interest owing on certain indebtedness (the
               "PRIOR BANK INDEBTEDNESS") from the Borrower to the Bank pursuant
               to that certain Amended and Restated Loan Agreement dated
               September 3, 1998, between the Borrower and the Bank, as amended
               by that certain Second Amendment to the Loan Agreement dated May
               13, 1999 (the "1998 LOAN AGREEMENT"), except the then outstanding
               principal balance and accrued but unpaid interest owing on that
               Equipment Line Note (as defined in the 1998 Loan Agreement, the
               "PRIOR EQUIPMENT LINE NOTE"), and (ii) to finance the Borrower's
               working capital requirements; provided, however, advances under
               the Revolving Credit shall be available to the Borrower only to
               the extent provided in Section (2)(d)(i) below. Advances under
               the Revolving Credit may be borrowed, repaid and re-borrowed at
               any time prior to the Revolving Credit Maturity Date.

<PAGE>   2
     (b)  EQUIPMENT LINE. A convertible line of credit facility (the "EQUIPMENT
          LINE") in the maximum amount of $750,000 (the "EQUIPMENT LINE AMOUNT")
          that shall be used (i) to repay on the Closing Date the then
          outstanding principal balance and accrued but unpaid interest owing on
          the Prior Equipment Line Note, and (ii) to finance up to 90% of the
          invoice amount of new equipment purchased by the Borrower during the
          period commencing 30 days prior to the Closing Date and ending on the
          day immediately prior to the Conversion Date. After the funding to
          occur on the Closing Date, the balance of the principal amount
          available under the Equipment Line shall be advanced to the Borrower
          in accordance with the provisions of Sections 2(d)(ii) and 2(e)(ii)
          below. No amount borrowed under the Equipment Line may be re-borrowed
          after being repaid.

     (c)  TERM LOAN. A term loan (the "TERM LOAN") in the maximum amount of
          $2,500,000 (the "TERM LOAN AMOUNT"). Proceeds of the Term Loan shall
          be available to the Borrower in a single advance on the Closing Date
          and shall be used, together with the proceeds of the Revolving Credit,
          to repay on the Closing Date the then outstanding principal balance
          and accrued but unpaid interest owing on the Prior Bank Indebtedness.
          No amount borrowed under the Term Loan may be re-borrowed after being
          repaid.

     2.   TERMS AND CONDITIONS. The Revolving Credit, the Equipment Line and
the Term Loan shall have the following terms:

     (a)  MATURITY AND CONVERSION DATES.

          (i)  REVOLVING CREDIT. The Revolving Credit will mature on December
               10, 2001 (the "REVOLVING CREDIT MATURITY DATE").

         (ii)  EQUIPMENT LINE. On June 8, 2000 (the "CONVERSION DATE") all
               amounts then outstanding under the Equipment Line will convert to
               a single term loan that will be amortized in equal monthly
               installments of principal, plus accrued interest, over a period
               of thirty-six (36) months with payments due on the 1st day of
               each month commencing on July 1, 2000.

        (iii)  TERM LOAN. The outstanding principal on the Term Loan shall be
               due and payable in two equal installments, the first of which
               shall be due and payable on June 10, 2001, with the remaining
               outstanding principal, together with accrued and unpaid interest
               thereon shall be due and payable on December 10, 2001 (the "TERM
               LOAN MATURITY DATE"); provided, however, that principal shall be
               due and payable earlier upon the occurrence of a

                                      -2-
<PAGE>   3
          Mandatory Prepayment (as defined hereinafter) or of an Event of
          Default.

 (b)  INTEREST RATE.

  (i)     REVOLVING CREDIT. Each advance outstanding under the Revolving Credit
          shall bear interest at a rate per annum equal to the sum of the Base
          Rate (as defined hereinafter) and 0.50%, but in no event greater than
          the maximum rate permitted by law. Interest will be computed on the
          basis of a 360 day year and for the actual days elapsed.

  (ii)    EQUIPMENT LINE. The principal amount from time to time outstanding
          under the Equipment Line prior to the Conversion Date, and the
          principal amount outstanding on the Equipment Line from and after the
          Conversion Date, shall bear interest at a rate per annum equal to the
          sum of the Base Rate and 0.75%, but in no event greater than the
          maximum rate permitted by law. Interest will be computed on the basis
          of a 360 day year and for the actual days elapsed.

 (iii)    TERM LOAN. The principal amount outstanding on the Term Loan shall
          bear interest at a rate per annum equal to the sum of the Base Rate
          and 2.25%, but in no event greater than the maximum rate permitted by
          law. Interest will be computed on the basis of a 360 day year and for
          the actual days elapsed.

  (iv)    For purposes hereof, the term "BASE RATE" means the lesser of (A) the
          Bank's Prime Rate (as defined hereinafter) and (B) the sum of the
          Federal Fund's Effective Rate (as defined hereinafter) and 2.0%.

          For purposes hereof, the term "PRIME RATE" means the rate of interest
          per annum announced by the Bank from time to time as its prime rate.
          The Prime Rate is not tied to any external rate or index and does not
          necessarily reflect the lowest rate of interest actually charged to
          any particular class or category of customers of the Bank. If and when
          the Prime Rate changes, the rate of interest on the Loans bearing
          interest at the Prime Rate will change automatically without notice to
          the Borrower, effective on the date of any such change.

          For purposes hereof, the term "FEDERAL FUNDS EFFECTIVE RATE" means,
          for any day, the weighted average (rounded upwards, if necessary, to
          the next 1/100 of 1%) of the rates on overnight

                                      -3-

<PAGE>   4
          Federal funds transactions with members of the Federal Reserve System
          arranged by Federal funds brokers, as published on the next succeeding
          Business Day by the Federal Reserve Bank of New York, or, if such rate
          is not so published for any day that is a Business Day, the average
          (rounded upwards, if necessary, to the next 1/100 of 1%) of the
          quotations for such day for transactions received by the Bank from
          three Federal funds brokers of recognized standing selected by the
          Bank.

          For purposes hereof, the term "BUSINESS DAY" means any day other than
          a Saturday, Sunday or public holiday under the laws of the
          Commonwealth of Pennsylvania.

(c)  FEES.

     The Borrower shall pay to the Bank at Closing (i) $5,000 representing a
     facility fee in respect of the Revolving Credit (the "REVOLVING CREDIT
     FACILITY FEE"), and (ii) $25,000 representing a facility fee in respect of
     the Term Loan (the "TERM LOAN FACILITY FEE" and, collectively with the
     Revolving Credit Facility Fee, the "FACILITY FEES").

(d)  BORROWING BASE/AVAILABILITY.

     (i)  REVOLVING CREDIT. Proceeds of the Revolving Credit shall be available
          to the Borrower from time to time prior to the Revolving Credit
          Maturity Date only in amounts determined in accordance with the
          Borrowing Base Rider; provided, however, that, at any time while any
          amount of principal shall be outstanding on the Term Loan, advances on
          the Revolving Credit shall not exceed $5,000,000.

    (ii)  EQUIPMENT LINE.  The proceeds of the Equipment Line shall be available
          to the Borrower in a single advance prior to the Conversion Date in an
          amount not less than (A) $200,000 determined in accordance with an
          equipment line request to be submitted to the Bank by the Borrower in
          the form attached as Exhibit B (the "EQUIPMENT LINE REQUEST") or (B)
          the amount available under the Equipment Line after repayment of the
          Prior Equipment Line Note on the Closing Date, which amount is the
          lesser.

   (iii)  TERM LOAN.  All of the proceeds of the Term Loan shall be available to
          the Borrower on the Closing Date.

                                      -4-

<PAGE>   5
(e)   REQUESTS.

      (i)   REVOLVING CREDIT. Except as otherwise provided herein, the
            Borrower may from time to time prior to the Revolving Credit
            Maturity Date, request the Bank to make a loan under the Revolving
            Credit, by making a telephonic request to the Bank (each a "LOAN
            REQUEST"), not later than 12:00 noon Pittsburgh time on the Business
            Day that the loan is to be made, which shall be immediately
            confirmed in writing in a form acceptable to the Bank and delivered
            by mail, facsimile or telex, it being understood that the Bank may
            rely on the authority of any individual making such a telephonic
            request without the necessity of receipt of such written
            confirmation. Each Loan Request shall be irrevocable and (A) shall
            specify (i) the proposed borrowing date, and (ii) the amount of the
            requested loan, which shall not exceed the Revolving Credit, and (B)
            shall be accompanied by a duly executed and properly completed
            Borrowing Base Certificate in the form attached to the Borrowing
            Base Rider.

      (ii)  EQUIPMENT LINE. Except as otherwise provided herein, the Borrower
            may prior to the Conversion Date request the Bank to make a loan
            under the Equipment Line by delivery to the Bank of a duly executed
            and properly completed Equipment Line Request, accompanied by
            supporting invoices, not less than one (1) day prior to the date of
            the proposed borrowing date and by otherwise following the request
            procedures in Section 2(e)(i) above.

(f)   NOTES.

      The obligation of the Borrower to repay loans under the Revolving Credit,
      together with interest thereon, shall be evidenced by a single line of
      credit note of the Borrower (the "REVOLVING CREDIT NOTE") payable to the
      order of the Bank in a face amount equal to the Revolving Credit Amount.
      The obligation of the Borrower to repay the advance under the Equipment
      Line, together with interest thereon, shall be evidenced by a single
      convertible equipment loan note (the "CONVERTIBLE EQUIPMENT LOAN NOTE")
      payable to the order of the Bank in a face amount equal to the Equipment
      Line Amount. The obligation of the Borrower to the Term Loan, together
      with interest thereon, shall be evidenced by a promissory note (the "TERM
      LOAN NOTE" and, together with the Revolving Credit Note and the
      Convertible Equipment Loan Note, collectively, the "NOTES"). All loans
      evidenced by the Notes and all payments of the principal thereof and
      interest thereon and the respective dates thereof shall be recorded in the
      books and records of the Bank; provided, however, that

                                      -5-
<PAGE>   6
               the failure of the Bank to make such a notation or any error in
               such a notation shall not affect the obligations of the Borrower
               under the Notes.

          (g)  MANDATORY PREPAYMENTS. From the date hereof through the Term Loan
               Maturity Date, each of the following events, (A) a sale of a
               material portion of the assets of the Borrower not in the
               ordinary course of business or (B) an Initial Public Offering (as
               defined hereinafter), will trigger a mandatory prepayment in an
               amount equal to the proceeds realized by the Borrower from such
               event up to the maximum aggregate amount of the outstanding
               principal balance of the Term Loan and accrued interest thereon
               (each a "MANDATORY PREPAYMENT"). For purposes hereof, the term
               "INITIAL PUBLIC OFFERING" means the Borrower's first firm
               commitment underwritten public offering of the its common stock
               registered under the Securities Act of 1933.

          (h)  ADDITIONAL EXIMBANK TERMS.

               Additional terms related to the Revolving Credit may be reflected
               in an Eximbank Borrower Agreement (as defined in the Borrowing
               Base Rider). Upon execution of an Eximbank Borrower Agreement,
               the terms thereof shall be incorporated herein in their entirety
               and the principal amount available to the Borrower from time to
               time under Revolving Credit shall be reduced by then outstanding
               principal balance owing under the Eximbank Borrower Agreement,
               except as otherwise provided to the contrary in the Eximbank
               Borrower Agreement.

          3.   SECURITY. To secure repayment of the Loan, the Borrower shall
contemporaneously execute and deliver to the Bank the Security Agreement
(including any Riders thereto) (the "SECURITY DOCUMENTS"), which shall secure
repayment of the Loan, the Notes and all other loans, advances, debts,
liabilities, obligations, covenants and duties owing by the Borrower to the Bank
of any kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether arising under this Agreement or any other
agreement, instrument or document, whether or not for the payment of money,
whether arising by reason of an extension of credit, opening of a letter of
credit, loan or guarantee or in any other manner, whether arising out of
overdrafts on deposit or other accounts or electronic funds transfers
(whether through automatic clearing houses or otherwise) or out of the Bank's
non-receipt of or inability to collect funds or otherwise not being made whole
in connection with depository transfer check or other similar arrangements,
whether direct or indirect (including those acquired by assignment or
participation), absolute or contingent, joint or several, due or to become due,
now existing or hereafter arising, and any amendments, extensions, renewals or
increases and all reasonable costs and expenses of the Bank incurred in the
documentation, negotiation, modification, enforcement, collection or otherwise
in connection with any of the foregoing, including but not limited to reasonable
attorneys' fees and expenses (hereinafter referred to collectively as the
"OBLIGATIONS"). Unless expressly provided to the contrary in documentation for
any other loan or loans, it is the express intent of the Bank and the Borrower

                                      -6-
<PAGE>   7
that all Obligations including those included in the Loan be
cross-collateralized and cross-defaulted, such that collateral securing any of
the Obligations shall secure repayment of all Obligations and a default under
any Obligation shall be a default under all Obligations. This Agreement
(including the Addendum), the Notes, the Security Documents and all other
documents executed and delivered in connection herewith or related hereto are
collectively referred to as the "LOAN DOCUMENTS."

     4.   REPRESENTATIONS AND WARRANTIES. The Borrower hereby makes the
following representations and warranties, which shall be continuing in nature
and remain in full force and effect until the Obligations are paid in full, and
which shall be true and correct except as otherwise set forth on the Addendum
attached hereto and incorporated herein by reference (the "ADDENDUM").

          4.1. EXISTENCE, POWER AND AUTHORITY. The Borrower is duly organized,
     validly existing and in good standing under the laws of the state of its
     incorporation and has the corporate power and authority to own and operate
     its assets and to conduct its business as now or proposed to be carried on,
     and is duly qualified, licensed and in good standing to do business in all
     jurisdictions where its ownership of property or the nature of its business
     requires such qualification or licensing, except where the failure to be so
     qualified or licensed would not have a material adverse effect on the
     business, operations, or financial condition, or results of operations or
     prospects of the Borrower. The Borrower is duly authorized to execute and
     deliver the Loan Documents, all necessary corporate action to authorize the
     execution and delivery of the Loan Documents has been properly taken, and
     the Borrower is and will continue to be duly authorized to borrow under
     this Agreement and to perform all of the other terms and provisions of the
     Loan Documents. The Borrower is a corporation incorporated under the law of
     the Commonwealth of Pennsylvania. The individuals who represent themselves
     to the Bank as holding one or more of the executive officer positions with
     the Borrower listed in the Addendum hereto (each an "AUTHORIZED OFFICER")
     shall be authorized to execute and deliver on behalf of the Borrower the
     certifications contemplated under this Agreement to be delivered in the
     future.

          4.2. FINANCIAL STATEMENTS. The Borrower has delivered or caused to be
     delivered to the Bank its audited balance sheet and income statement and
     audited statement of results of operations for the period ending December
     31, 1998 (the "DECEMBER 1998 FINANCIAL STATEMENTS"), and its unaudited
     interim management financial statements as of March 31, 1999 (the "MARCH
     1999 FINANCIAL STATEMENTS"), June 30, 1999 (the "JUNE 1999 FINANCIAL
     STATEMENTS"), and September 30, 1999 (the "SEPTEMBER 1999 FINANCIAL
     STATEMENTS," and, together with the December 1998 Financial Statements, the
     March 1999 Financial Statements and the June 1999 Financial Statements, are
     true, complete and accurate in all material respects and fairly present the
     financial condition, assets and liabilities, whether accrued, absolute,
     contingent or otherwise and the result of the Borrower's operations for the
     period specified therein. The

                                      -7-
<PAGE>   8
Historical Financial Statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied from period to
period.

     4.3.  NO MATERIAL ADVERSE CHANGE. Since September 30, 1999, the Borrower
has not suffered any damage, destruction or loss to any material portion of its
assets (tangible or intangible), and no event or condition has occurred or
exists, which has resulted or could reasonably be expected to result in a
material adverse change in its business, assets, operations, financial
condition, results of operations or prospects.

     4.4.  BINDING OBLIGATIONS. The Borrower has full corporate power and
authority to enter into the transactions provided for in this Agreement and has
been duly authorized to do so by appropriate action of its Board of Directors
and there are no consents, approvals or waivers required that have not been
obtained. The Loan Documents, when executed and delivered by the Borrower, will
constitute the legal, valid and binding obligations of the Borrower
enforceable in accordance with their terms, except as such enforceability may
be limited by bankruptcy; insolvency, reorganization or similar laws relating
to or limiting creditors' rights generally or by equitable principles relating
to enforceability.

     4.5. NO DEFAULTS OR VIOLATIONS. There does not exist any Event of Default
under this Agreement, or any event, fact or circumstance that, with the
delivery of notice, passage of time, or both would constitute any Event of
Default under this Agreement, or any material default or violation by the
Borrower of or under any of the terms, conditions or obligations of: (i) its
articles or certificate of incorporation or bylaws; (ii) any indenture,
mortgage, deed of trust, franchise, permit, contract, agreement, or other
instrument to which it is a party or by which it or its assets are bound; or
(iii) any law, regulation, ruling, order, injunction, decree, condition or
other requirement applicable to or imposed upon or against the Borrower or its
assets by any law, the action by any court or any governmental authority or
agency; and the consummation of this Agreement and the transactions set forth
herein will not result in any such default or violation.

     4.6. TITLE TO ASSETS.  Except for assets disposed of by the Borrower in
the ordinary course of business since September 30, 1999, the Borrower has good
title to or a valid leasehold interest in the assets reflected on the September
1999 Financial Statements, free and clear of all liens and encumbrances, except
for (I) current taxes and assessments not yet due and payable, (ii) liens and
encumbrances, if any, reflected or noted in the September 1999 Financial
Statements, (iii) those liens or encumbrances specified on the Addendum, (iv)
liens securing the payment of taxes or other governmental charges not yet
delinquent or being contested in good faith by appropriate proceeding, for
which adequate reserves are maintained in accordance with generally accepted
accounting principles; (v) liens securing claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like persons imposed
without action of such parties, provided that the payment thereof is not yet
required; (vi) liens incurred or deposits made in the ordinary course of the
Borrower's or a subsidiary's

                                      -8-
<PAGE>   9
business in connection with worker's compensation, unemployment insurance,
social security and other like laws; (vii) non-exclusive licenses and
sublicenses of its Patent, Trademarks and Copyrights (each as defined in the
Security Agreement) granted to others in the ordinary course of business; (viii)
liens arising from judgments, decrees or attachments to the extent and only so
long as such judgment, decree or attachment has not caused or resulted in an
Event of Default; (ix) liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection with the
importation of goods; (x) liens which constitute rights of set-off of a
customary nature or bankers' liens with respect to amounts on deposit, whether
arising by operation of law or by contract, in connection with arrangements
entered into with banks in the ordinary course of business; (xi) those other
liens and encumbrances that do not individually or in the aggregate materially
diminish the value of the assets or impair their use in the Borrower's business
as it is currently conducted; or (xii) those liens and encumbrances in favor of
or approved by the Bank (the liens and encumbrances described in the foregoing
clauses hereof being hereinafter collectively called the "PERMITTED LIENS").

     4.7. LITIGATION. There are no actions, suits, proceedings or governmental
investigations pending or, to the Borrower's knowledge, threatened against the
Borrower, which could reasonably be expected to result in a material adverse
change in its business assets, operations, financial condition, results of
operations or prospects and there is no basis known to the Borrower for any
action, suit, proceedings or investigation which could reasonably be expected
to result in such a material adverse change. All litigation pending against the
Borrower or litigation threatened against the Borrower of which Borrower has
knowledge is listed on the Addendum.

     4.8. TAX RETURNS. The Borrower has filed all returns and reports that are
required to be filed by it in connection with any federal, state or local tax,
duty or charge levied, assessed or imposed upon it or its property withheld by
it, including unemployment, social security and similar taxes and all of such
taxes, have been either paid or adequate reserves or other provision for the
payment thereof have been made.

     4.9. EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which the
Borrower may have any liability complies in all material respects with all
applicable provisions of the Employee Retirement Income Security Act of 1974,
as amended from time to time ("ERISA"), including minimum funding requirements,
and form (i) no Prohibited Transaction (as defined under Section 4043 of ERISA)
has occurred with respect to any such plan which would cause the Pension
Benefit Guaranty Corporation to institute proceedings under Section 4042 of
ERISA, (iii) the Borrower has not withdrawn from any such plan or initiated
steps to do so, and (iv) no steps have been taken to terminate any such plan.

     4.10. ENVIRONMENTAL MATTERS. The Borrower is (or, in respect of prior owned
or operated real property, was) in compliance, in all material respects, with
all

                                      -9-
<PAGE>   10
Environmental Laws, including, without limitation, all Environmental Laws in
jurisdictions in which the Borrower owns or operates or has owned or operated a
facility or site, stores or has stored Collateral, arranges or has arranged for
a disposal or treatment of hazardous substances, solid waste or other waste,
accepts or has accepted for transport any hazardous substances, solid waste or
other wastes or holds or has held any interest in real property or otherwise.
No litigation or proceeding arising under, relating to or in connection with
any Environmental Law is pending or, to the best of the Borrower's knowledge,
threatened against the Borrower, any real property which the Borrower holds or
has held an interest or any past or present operation of the Borrower. To the
Borrower's knowledge, no release, threatened release or disposal of hazardous
waste, solid waste or other wastes in material violation of any Environmental
Law is occurring, or to the Borrower's knowledge has occurred, on, under or to
any real property in which the Borrower holds any interest or performs any of
its operations. As used in this Section, "LITIGATION OR PROCEEDING" means any
demand, claim notice, suit, suit in equity, action, administrative action,
investigation or inquiry whether brought by a governmental authority or other
person, and "ENVIRONMENTAL LAWS" means all provisions of laws, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by any
governmental authority concerning health, safety and protection of, or
regulation of the discharge of substances into, the environment.

     4.11  INTELLECTUAL PROPERTY. The Borrower owns or has a valid and
enforceable right to use free and clear of all liens and encumbrances except
Permitted Liens all patents and patent rights necessary for the conduct of its
business as currently conducted that are material to the condition, business or
operations of the Borrower. To the knowledge of Borrower, Borrower owns or has
a valid and enforceable right to use all trademarks, trade names, service
marks, copyrights, intellectual property, technology, know-how and processes
necessary for the conduct of its business as currently conducted that are
material to the condition (financial or otherwise), business or operations of
the Borrower free and clear of all liens and encumbrances except Permitted
Liens.

     4.12  REGULATORY MATTERS. No part of the proceeds of the Loan will be used
"purchasing" or "carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time in effect or for any
purpose which violates the provisions of the Regulations of such Board of
Governors.

     4.13  SOLVENCY. As of the date hereof and after giving effect to the
transactions contemplated by the Loan Documents, (i) the aggregate value of the
Borrower's assets will exceed its liabilities (including contingent liabilities
of which the Borrower is aware, subordinated, unmatured and unliquidated
liabilities), (ii) the Borrower will have sufficient cash flow to enable it to
pay its debts as they mature, and (iii) the Borrower will not have unreasonably
small capital for the business in which it is engaged.

                                      -10-
<PAGE>   11
               4.14.  YEAR 2000. The Borrower has reviewed the areas within its
     business and operations which could be adversely affected by, and has
     developed and is implementing a program to address on a timely basis the
     risk that certain computer applications used by the Borrower may be unable
     to recognize and perform properly date-sensitive functions involving dates
     prior to and after December 31, 1999 (the "YEAR 2000 PROBLEM"). The
     Borrower does not expect the Year 2000 Problem to have a material adverse
     effect on the business, assets, operations, financial condition, or results
     of operations or prospects of the Borrower.

               4.15.  DISCLOSURE. None of the Loan Documents contains any untrue
     statement of material fact or omits to state a material fact necessary in
     order to make the statements contained in this Agreement or the Loan
     Documents not misleading. There is no fact known to the Borrower which
     materially adversely affects or is reasonably likely to materially affect,
     the business, assets, operations, financial condition, or results of
     operations or prospects of the Borrower and which has not otherwise been
     fully set forth in this Agreement, the Addendum or in the other Loan
     Documents. Each of the certificates delivered or to be delivered by the
     Borrower or any of its officers pursuant to the terms of this Agreement
     will be true and accurate and complete in all material respects.

          5.   AFFIRMATIVE COVENANTS. The Borrower agrees that from the date of
execution of this Agreement until all Obligations have been fully paid and any
commitments of the Bank to the Borrower have been terminated, the Borrower will:

               5.1.   BOOKS AND RECORDS. Maintain accurate and complete books
     and records. The Borrower will give representatives of the Bank access to
     books and records of account at all reasonable times, including permission
     to examine, copy and make abstracts from any of such books and records and
     such other information as the Bank may from time to time reasonably
     request, and the Borrower will make available to the Bank upon request for
     examination copies of any reports, statements or returns which the Borrower
     may make to or file with any governmental department, bureau or agency,
     federal or state. So long as an Event of Default does not exist, the Bank
     shall give reasonable notice prior to conducting any examination under the
     preceding sentence and only one of such examinations shall be conducted at
     the Borrower's expense in any calendar year. The Bank shall treat as
     confidential all non-public information contained in such books and
     records; provided, however, that if the Bank is required to disclose
     confidential information pursuant to a court order, subpoena or similar
     process, prior to disclosure the Bank shall: (i) promptly provide the
     Borrower with a copy of the court order or subpoena; (ii) cooperate with
     the Borrower at the Borrower's expense in obtaining a protective or similar
     order; and (iii) in any event, disclose only such confidential information
     as the Bank, with the advice of its counsel, shall deem necessary to comply
     with such court order or subpoena.

               5.2.   INTERIM FINANCIAL STATEMENTS: ACCOUNTS RECEIVABLE AND
     CERTIFICATES. Furnish the Bank within 20 days after the end of each month a
     detailed

                                      -11-

<PAGE>   12
report on its accounts receivable aging and accounts payable aging in such
reasonable detail consistent with the form currently used by the Borrower's
management. The Borrower shall provide within 20 days of the end of each month
its Financial Statements (as defined hereinafter) for such period, in
reasonable detail, certified by an Authorized Officer of the Borrower and
prepared in accordance with GAAP consistently applied from period to period.
Such certification shall accompany the Financial Statements and shall be in the
form attached hereto as Exhibit C, each of which shall report whether the
Borrower has complied with all applicable financial covenants for the period
then ended and whether any Event of Default exists, and, if the Borrower
reports that it has not complied or an Event of Default exists, then such
certification shall state the nature thereof and the corrective measures the
Borrower proposes to take. "FINANCIAL STATEMENTS" means the Borrower's
consolidated and, if required by the Bank in its sole discretion, consolidating
balance sheets, income statements and statements of cash flows for the year,
month or quarter together with year-to-date figures and comparative figures for
the corresponding periods of the prior year. The Borrower shall also deliver an
updated Borrowing Base Certificate within 20 days of month end.

     5.3  ANNUAL FINANCIAL STATEMENTS.  Furnish the Borrower's Financial
Statements for each annual period ending December 31 (the "ANNUAL FINANCIAL
STATEMENTS") to the Bank within 120 days after the end of each fiscal year
beginning with the fiscal year ending December 31, 1999. The Annual Financial
Statements will be prepared in accordance with GAAP and audited by the
independent certified public accounting firm that audited the December 1998
Financial Statements or by another independent certified public accounting firm
of national standing selected by the Borrower. The audited Annual Financial
Statements shall contain the unqualified opinion of such independent certified
public accountant satisfactory to the bank and its examination shall have been
made in accordance with GAAP consistently applied from period to period. The
Borrower will also provide projections, forecasts, financial pro formas and
such other information reasonably requested by the Bank from time to time.

     5.4  PAYMENT OF TAXES AND OTHER CHARGES.  Pay and discharge when due all
indebtedness and all taxes, assessments, charges, levies and other liabilities
imposed upon the Borrower, its income, profits, property or business, except
those which currently are being contested in good faith by appropriate
proceedings and for which the Borrower shall have set aside adequate reserves
in accordance with GAAP or made other adequate provision with respect thereto
acceptable to the Bank in its reasonable discretion.

     5.5  MAINTENANCE OF EXISTENCE, OPERATION AND ASSETS. Do all things
necessary to maintain, renew and keep in full force and effect its
organizational existence and all rights, permits and franchises necessary to
enable it to continue its business; continue in operation in substantially the
same manner as at present; keep its properties in good operating condition and
repair; and make all necessary and proper repairs, renewals, replacements,
additions and improvements thereto.

                                      -12-

<PAGE>   13
      5.6.  INSURANCE. Maintain with financially sound and reputable insurers
insurance with respect to its property and business against such casualties and
contingencies, of such types and in such amounts as is customary for established
companies engaged in the same or similar business and similarly situated and in
conformity with the requirements of Section 4(j) of the Security Agreement.

      5.7.  COMPLIANCE WITH LAWS. Comply in all material respects with all laws
applicable to the Borrower and to the operation of its business (including any
statute, rule or regulation relating to employment practices and pension
benefits or to environmental, occupational and health standards and controls).

      5.8.  FINANCIAL COVENANTS. Comply with all of the financial and other
covenants, if any, set forth on the Addendum.

      5.9.  ADDITIONAL REPORTS. Provide prompt written notice to the Bank of the
occurrence of any of the following of which the Borrower obtains knowledge
(together with a description of the action which the Borrower proposes to take
with respect thereto): (i) any Event of Default or an event or circumstance that
with the passage of time, provision of notice or both would constitute an Event
of Default, (ii) any litigation filed by or against the Borrower claiming in
excess of $50,000, (iii) any Reportable Event or Prohibited Transaction with
respect to any Employee Benefit Plan(s) (as defined in ERISA) or (iv) any event
which is reasonably expected to result in a material adverse change in the
business, assets, operations, financial condition or results or operation of the
Borrower.

      5.10. MEETING OF DIRECTORS. Upon the occurrence and continuation of an
Event of Default, the Borrower shall provide to the Bank copies of all reports
provided to the Board of Directors of the Borrower and the Bank shall be
entitled to attend meetings of the directors of the Borrowers of the purpose of
observing such proceedings, unless such attendance would be inappropriate as
determined in good faith by the Chairman of the Borrower's Board of Directors.

      5.11. OPERATING ACCOUNTS. Maintain its primary depositary accounts with
the Bank.

      5.12. OPINION OF BORROWER'S COUNSEL. Deliver to the Bank at Closing, or,
upon waiver of such delivery by the Bank, on or prior to the date fifteen (15)
days after the Closing, an opinion of Borrower's counsel in form and substance
reasonably satisfactory to the Bank and its counsel.
<PAGE>   14
     6.   NEGATIVE COVENANTS. The Borrower covenants and agrees that from the
date of execution of this Agreement until all Obligations have been fully paid
and any commitments of the Bank to the Borrower have been terminated, the
Borrower will not, except as set forth in the Addendum, without the Bank's prior
written consent not to be unreasonably withheld:

          6.1. INDEBTEDNESS. Incur any indebtedness for borrowed money other
     than: (i) the Loan and any subsequent indebtedness to the Bank, and (ii)
     existing indebtedness disclosed on the September 1999 Financial Statements
     referred to in Section 4.2.

          6.2  LIENS AND ENCUMBRANCES. Except for Permitted Liens, create,
     assume or permit to exist any mortgage, pledge, encumbrance or other
     security interest or lien upon any assets now owned or hereafter acquired
     or enter into any lease or any arrangement for the acquisition of property
     subject to any conditional sales agreement, other than security interests
     granted in connection with indebtedness permitted under Section 6.1 hereof.

          6.3. GUARANTEES. Guarantee, endorse or become contingently liable for
     the obligations of any person, firm or corporation, except in connection
     with the endorsement and deposit of checks in the ordinary course of
     business for collection.

          6.4. LOANS, INVESTMENTS OR ADVANCES. Purchase or hold beneficially any
     stock, other securities or evidences of indebtedness, or make any
     investment or acquire any interest whatsoever in, any other person, firm or
     corporation, except (i) investments disclosed on the September 1999
     Financial Statements, or (ii) investments acceptable to the Bank in its
     reasonable discretion or previously approved by the Bank in accordance with
     the terms of the documents evidencing the Prior Bank Indebtedness;
     provided, however, that the Borrower may in the ordinary course of business
     extend (A) loans to employees or make other loans and advances which shall
     not at any time exceed in the aggregate $100,000 and (B) loans to
     management employees which are directly related to relocation expenses
     incurred by such management employees and which do not exceed $15,000 with
     respect to any single employee or $50,000 in the aggregate outstanding at
     any time.

          6.5. MERGER OR TRANSFER OF ASSETS. Merge or consolidate with or into
     any person, firm or corporation or lease, sell, transfer or otherwise
     dispose of all, or substantially all, of its property, assets and business
     whether now owned or hereafter acquired; except for a merger, consolidation
     or dissolution of Molloy Group, Inc. provided that the Borrower is the
     survivor in any such merger or consolidation.

          6.6. CHANGE IN BUSINESS, MANAGEMENT OR OWNERSHIP. Make or permit any
     material change (i) in the nature of its business as carried on as of the
     date hereof, (ii) in the composition of its current executive management,
     as described in the Addendum hereto; or (iii) in its equity ownership other
     than transfers to heirs and

                                      -14-
<PAGE>   15
beneficiaries of a stockholder upon the death of a stockholder or in connection
with an Initial Public Offering.

          6.7  DIVIDENDS. Declare or pay any cash dividends on or make any cash
distribution with respect to any class of its equity or ownership interest, or
purchase, redeem, retire or otherwise acquire any of its equity other than in
connection with employee repurchase agreements entered into by the Borrower
pursuant to the grant of stock options or stock grants issued to employees under
a stock option plan approved by the Borrower's Board of Directors.

     7.   EVENTS OF DEFAULT; REMEDIES

          7.1  EVENT OF DEFAULT. The occurrence of any of the following will be
deemed to be an "EVENT OF DEFAULT":

     (a)  PAYMENT DEFAULT. The Borrower shall fail to pay any payment of
          principal when due or any payment of interest within five (5) calendar
          days following the date when due, in respect of the Obligations.

     (b)  MATERIAL ADVERSE CHANGE. There shall be a material adverse change in
          the business, operations, assets, financial condition or results of
          operations of Borrower.

     (c)  COVENANT DEFAULT. The borrower shall default in the performance of, or
          violate any of, the covenants or agreements contained in this
          Agreement (other than the Obligation to pay principal and interest on
          the Notes) and, if capable of being cured, such default or violation
          shall continue uncured for a period of fifteen (15) calendar days
          after written notice thereof is given to the Borrower by the Bank.

     (d)  BREACH OF WARRANTY. Any Financial Statement, representation, warranty
          or certificate made or furnished by the Borrower to the Bank in
          connection with this Agreement shall be false, incorrect or incomplete
          in any material respect when made.

     (e)  BANKRUPTCY OR INSOLVENCY. A proceeding shall have been instituted in a
          court having jurisdiction over the Borrower seeking a decree or order
          for relief in respect of Borrower in an involuntary case under any
          applicable bankruptcy, insolvency reorganization or other similar law
          and such involuntary case shall remain undismissed or unstayed and in
          effect for a period of thirty (30) consecutive days, or Borrower shall
          commence a voluntary case under any such law or consent to the
          appointment of a

                                      -15-
<PAGE>   16
               receiver, liquidator, assignee, custodian, trustee, sequestrator,
               conservator (or other similar official).

          (f)  OTHER DEFAULT. The occurrence of an Event of Default as defined
               in the Notes or any of the Security Documents.

               7.2. REMEDIES. Upon the occurrence of an Event of Default
     described in Section 7.1(e), the principal of and accrued interest and all
     other amounts due and owing on the Loan (if not then due and payable) shall
     become due and payable immediately, with presentment, demand, notice,
     protest, declaration or any other requirement of any kind, all which the
     Borrower expressly waives. Upon the occurrence and continuance of an Event
     of Default other than as described in Section 7.1(e), the Bank may provide
     written notice to the Borrower stating that an Event of Default has
     occurred and declaring that the principal of and accrued interest and all
     other amounts due and owing on the Loan (if not then due and payable) shall
     become due and payable immediately, without any further notice,
     presentment, demand, protest, declaration or other requirement of any kind,
     all of which the Borrower expressly waives. Upon the occurrence and
     continuance of an Event of Default, and irrespective of whether the Loan
     has been declared due and payable pursuant to the immediately preceding
     sentence, the Bank will have all rights and remedies specified in the Notes
     and the Security Documents and all rights and remedies (which are
     cumulative and not exclusive) available under applicable law or in equity.
     Upon the occurrence and continuance of an Event of Default, the Bank may
     notify any persons who are account debtors of the Borrower to submit all
     payments in respect of the Borrower's accounts receivable directly to the
     Bank and shall provide written notice to the Borrower that it has done so.

               8.   CONDITIONS. The closing of the loan shall take place at such
     place and on such date (the "CLOSING DATE") as the Borrower and the Bank
     shall mutually agree. The Bank's obligation to make any advance or fund any
     draw under the Loan is subject to the conditions that as of the date of the
     advance:

               8.1.  NO EVENT OF DEFAULT. No Event of Default or fact, event or
     circumstance which with the passage of time, provision of notice or both
     would constitute an Event of Default shall have occurred and be continuing.

               8.2.  AUTHORIZATION DOCUMENTS. The Bank shall have been furnished
     certified copies of resolutions of the Borrower's Board of Directors
     authorizing the execution of this Agreement, the Note or any of the
     Security Documents; or other proof of authorization satisfactory to the
     Bank.

               8.3.  RECEIPT OF LOAN DOCUMENTS AND WARRANT. The Bank shall have
     received the Loan Documents and such other instruments and documents which
     the Bank may reasonably request in connection with the transactions
     provided for in this
<PAGE>   17
     Agreement. As additional consideration for the extension of credit under
     the Loan, the Borrower has agreed to issue to the Bank a warrant to
     purchase up to 80,000 shares of the Borrower's common stock at a price per
     share of $3.75, which price the Borrower represents to the Bank to be the
     price per share paid by outside investors in the most recent offering by
     the Borrower of shares of its preferred stock, which price will be subject
     to adjustment from time to time upon the occurrence of certain events and
     contingencies. On the Closing Date and as a condition to Closing, the
     Borrower shall deliver to the Bank a duly signed warrant certificate in
     form and substance reasonably satisfactory to the Bank and its counsel.

          8.4  REPRESENTATIONS AND WARRANTIES.  The representations and
     warranties of the Borrower to the Bank shall be true and correct in all
     respects.

          8.5  OPENING BALANCE SHEET.  The Borrower shall furnish the Bank with
     its Opening Balance Sheet. "OPENING BALANCE SHEET" means the balance sheet
     of the Borrower dated September 30, 1999.

          8.6  EQUIPMENT LINE.  On or prior to a draw under the Equipment Line,
     the Borrower shall deliver to the Bank invoices supporting the invoice cost
     amount included in the calculation of the first draw in accordance with
     Exhibit B.

          8.7  PAYMENT OF FEES.  The Borrower shall have paid, to the extent
     due, the Facility Fees.

     9.   EXPENSES.  The Borrower agrees to pay the Bank, upon the closing of
this Agreement, and otherwise on demand, all reasonable and necessary legal and
filing costs and expenses incurred by the Bank in connection with the (i)
preparation, negotiation and delivery of this Agreement and the other Loan
Documents, and any modifications thereto, and (ii) collection of payments due
under the Loan or instituting, maintaining, preserving, enforcing and
foreclosing the security interest in any of the collateral securing the Loan,
whether through judicial proceedings or otherwise, including reasonable fees
and expenses of counsel, expenses for auditors, appraisers and environmental
consultants, lien searches, recording and filing fees and taxes.

     10.  INCREASED COSTS.  Within thirty (30) days following written demand,
together with the written evidence of the justification therefor, the Borrower
agrees to pay the Bank, all direct costs incurred and any losses suffered or
payments made by the Bank as a consequence of making the Loan by reason of any
change in law or regulation or its interpretation imposing any reserve,
deposit, allocation of capital or similar requirement (including without
limitation, Regulation D of the board of Governors of the Federal Reserve
System) on the Bank, its holding company or any of their respective assets.

     11.  MISCELLANEOUS.

          11.1  NOTICES.  All notices, demands, requests, consents, approvals
     and other communications required or permitted hereunder must be in writing
     and will be

                                      -17-
<PAGE>   18
effective upon receipt if delivered personally to such party, or if sent by
facsimile transmission with confirmation of delivery, or by nationally
recognized overnight courier service, to the address set forth below or to such
other address as any party may give to the other in writing for such purpose:

     To the Bank:                            To the Borrower:

     PNC Bank, National Association          ServiceWare, Inc.
     600 Grant Street                        333 Allegheny Avenue
     29th Floor                              Oakmont, PA 15139
     Pittsburgh, PA 15219                    Attention: Stephen McMahon,
     Attention: Jeffrey D. Sletten                      Chief Financial Officer
     Facsimile No.: 412-768-9259             Facsimile No.: 412-826-0577

          11.2 PRESERVATION OF RIGHTS. No delay or omission on the part of the
Bank to exercise any right or power arising hereunder will impair any such
right or power or be considered a waiver of any such right or power or any
acquiescence therein, nor will the action or inaction of the Bank impair any
right or power arising hereunder. The Bank's rights and remedies hereunder are
cumulative and not exclusive of any other rights or remedies which the Bank may
have under other agreements, at law or in equity.

          11.3 ILLEGALITY. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

          11.4 CHANGES IN WRITING. No modification, amendment or waiver of any
provision of this Agreement nor consent to any departure by the Borrower
therefrom, will in any event be effective unless the same is in writing and
signed by the Bank, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on the Borrower in any case will entitle the Borrower to any other or
further notice or demand in the same, similar or other circumstance.

          11.5 ENTIRE AGREEMENT. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof.

          11.6 COUNTERPARTS. This Agreement may be signed in any number of
counterpart copies and by the parties hereto on separate counterparts, but all
such copies shall constitute one and the same instrument.

          11.7 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
inure to the benefit of the Borrower and the Bank and their respective,
successors and assigns; provided, however, that the Borrower may not assign
this Agreement in whole or

                                      -18-
<PAGE>   19
in part without the prior written consent of the Bank and the Bank at any time
may assign this Agreement in whole or in part.

     11.8. INTERPRETATION. In this Agreement, unless the Bank and the Borrower
otherwise agree in writing, the singular includes the plural and the plural the
singular; words importing any gender include the other genders; references to
statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; the word "or"
shall be deemed to include "and/or," the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections) or exhibits are
to those of this Agreement unless otherwise indicated; and references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications to such instruments, but only to
the extent such amendments and other modifications are not prohibited by the
terms of this Agreement. Section headings in this Agreement are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose. Unless otherwise specified in this Agreement, all
accounting terms shall be interpreted and all accounting determinations shall be
made in accordance with GAAP. If this Agreement is executed by more than one
party as Borrower, the obligations of such persons or entities will be joint and
several.

     11.9. INDEMNITY. The Borrower agrees to indemnify each of the Bank, its
directors, officers and employees and each legal entity, if any, which controls
the Bank (the "INDEMNIFIED PARTIES") and to hold each Indemnified Party harmless
from and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, all fees of counsel with whom any Indemnified
Party may consult and all expenses of litigation or preparation therefor) which
any Indemnified Party may incur or which may be asserted against any Indemnified
Party in connection with or arising out of the matters referred to in this
Agreement or in the other Loan Documents by any person, entity or governmental
authority (including any person or entity claiming derivatively on behalf of the
Borrower), whether (a) arising from or incurred in connection with any breach of
a representation, warranty or covenant by the Borrower, or (b) arising out of or
resulting from any suit, action, claim, proceeding or governmental
investigation, pending or threatened, whether based on statute, regulation or
order, or tort, or contract or otherwise, before any court or governmental
authority, which arises out of or relates to this Agreement, any other Loan
Document, or the use of the proceeds of the Loan; provided, however, that the
foregoing indemnity agreement shall not apply to claims, damages, losses,
liabilities and expenses solely attributable to an Indemnified Party's gross
negligence or willful misconduct. The indemnity agreement contained in this
Section shall survive the termination of this Agreement, payment of any Loan and
assignment of any rights hereunder. The Borrower may participate at its expense
in the defense of any such action or claim.

     11.10. TERMINATION; REINSTATEMENT. Except as otherwise provided in Section
9 and Section 11.9 and the other indemnification obligations and waivers under

                                      -19-
<PAGE>   20
the Loan Documents, this Agreement will terminate upon satisfaction of the
following events: (a) payment to the Bank in full (unconditionally and
indefeasibly) of all monetary Obligations due hereunder and under the Loan
Documents and (b) the termination of the Bank's commitment to lend under the
Revolving Credit; provided, however, that this Agreement and the other Loan
Documents will, to the maximum extent not prohibited by applicable law, be
reinstated and the Obligations correspondingly increased (as though such
payment(s) had not been made) if at any time any amount received by the Bank
in respect of any Obligations is rescinded or must otherwise be restored,
refunded or returned by the Bank to the Borrower or any other person or entity
(X) upon or as a result of the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Borrower or (Y) upon or as a result of the appointment
of any receiver, intervenor, conservator, trustee or similar official for the
Borrower or for any substantial part of the assets of the Borrower.

     11.11. ASSIGNMENTS AND PARTICIPATION. At any time, without any notice to
the Borrower, the Bank may sell, assign, transfer, negotiate, grant
participation in, or otherwise dispose of all or any part of the Bank's
interest in the Loan. The Borrower hereby authorizes the Bank to provide,
without any notice to the Borrower, any information concerning the Borrower,
including information pertaining to the Borrower's financial condition,
business operations or general creditworthiness, to any person or entity not a
competitor of Borrower which may succeed to or participate in all or any part
of the Bank's interest in the Loan, provided that such person or entity agrees
to maintain the confidentiality of such information.

     11.12. GOVERNING LAW.

            THIS AGREEMENT HAS BEEN DELIVERED TO AN ACCEPTED BY THE BANK AND
WILL BE DEEMED TO BE MADE IN THE COMMONWEALTH OF PENNSYLVANIA. THIS AGREEMENT
WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA,
EXCLUDING ITS CONFLICT OF LAWS RULES.

     11.13. CHOICE OF FORUM.

            THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT SEATED IN ALLEGHENY COUNTY OR THE
WESTERN DISTRICT OF PENNSYLVANIA, AND CONSENTS THAT ALL SERVICE OF PROCESS BE
SENT BY NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE DIRECTED TO THE
BORROWER AT THE BORROWER'S ADDRESS SET FORTH HEREIN AND SERVICE SO MADE WILL BE
DEEMED TO BE COMPLETED ON THE BUSINESS DAY AFTER DEPOSIT WITH SUCH COURIER;
PROVIDED THAT NOTHING CONTAINED IN THIS AGREEMENT

                                      -20-
<PAGE>   21
WILL PREVENT THE BANK FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT
OR EXERCISING ANY RIGHTS AGAINST THE BORROWER INDIVIDUALLY, AGAINST ANY
SECURITY OR AGAINST ANY PROPERTY OF THE BORROWER WITHIN ANY OTHER COUNTY, STATE
OR OTHER FOREIGN OR DOMESTIC JURISDICTION. THE BANK AND THE BORROWER AGREE THAT
THE VENUE PROVIDED ABOVE IS THE MOST CONVENIENT FORUM FOR BOTH THE BANK AND THE
BORROWER. THE BORROWER WAIVES ANY OBJECTION TO VENUE AND ANY OBJECTION BASED ON
A MORE CONVENIENT FORUM IN ANY ACTION INSTITUTED UNDER THIS AGREEMENT.

     11.14. WAIVER OF JURY TRIAL.

          EACH OF THE BORROWER AND THE BANK IRREVOCABLY WAIVES ANY AND ALL
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY
NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE
BORROWER AND THE BANK ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND
VOLUNTARY.

          THE BORROWER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS AGREEMENT, INCLUDING THE WAIVER OF JURY TRIAL, AND HAS BEEN
ADVISED BY COUNSEL AS NECESSARY OR APPROPRIATE.

                           [Signature Page to Follow]

                                      -21-
<PAGE>   22
     WITNESS the due execution of this Loan Agreement as a document under seal,
as of the date first written above.

ATTEST:                                 SERVICEWARE, INC.

By: /s/ Stephen McMahon                 By: Rajiv Enand                 (SEAL)
   ----------------------------            -----------------------------
Print Name: Stephen McMahon             Print Name: Rajiv Enand
           --------------------
Title: CFO                              Title: Chief Executive Officer
      -------------------------

                                        PNC BANK, NATIONAL ASSOCIATION

                                        By: /s/ Jeffrey D. Sletten (SEAL)
                                           ------------------------
                                        Print Name: Jeffrey D. Sletten
                                        Title: Vice President

                                      -22-
<PAGE>   23
     ADDENDUM to that certain Loan Agreement dated December 10, 1999, between
SERVICEWARE, INC., as the Borrower, and PNC BANK, NATIONAL ASSOCIATION, as the
Bank. Capitalized terms used in this Addendum and not otherwise defined shall
have the meanings given them in the Agreement.

                              FINANCIAL COVENANTS

1.   The Borrower will not permit its Tangible Net Worth to be less than the
     following amounts as of the end of each quarterly accounting period as
     specified below:

          Quarter Ending           Tangible Net Worth
          --------------           ------------------
          December 31, 1999               $ 3,450,000
          March 31, 2000                  $ 4,200,000
          June 30, 2000                   $ 4,700,000
          September 30, 2000              $ 6,300,000
          December 31, 2000               $ 8,550,000

2.   The Borrower shall have a minimum "Quick Ratio" at the end of each month
     or quarterly accounting period as specified below:

          Month/Quarter Ending     Quick Ratio
          --------------------     -----------
          November 30, 1999         0.78
          December 31, 1999         1.60
          March 31, 2000            1.60
          June 30, 2000             1.60
          September 30, 2000        1.90

3.   Reporting to commence with the accounting quarter ending June 30, 2000,
     which means that the initial report shall cover the consecutive quarterly
     accounting periods ending March 31, 2000 and June 30, 2000, the Borrower
     will not report Negative Net Operating Income in any two consecutive
     quarterly accounting periods.

                                      A-1

<PAGE>   24
DEFINITIONS:

"CASH" means cash, cash equivalents and marketable securities as appears on
the balance sheet delivered in accordance with Section 5.2 of this Agreement.

"CURRENT LIABILITIES" means the sum of all current liabilities determined in
accordance with generally accepted accounting principles other than deferred
revenue plus indebtedness to the Bank for money borrowed under the Term Loan.

"NEGATIVE NET OPERATING INCOME" means earnings before interest, taxes,
depreciation and amortization less than zero calculated in accordance with
generally accepted accounting principles.

"QUICK RATIO" means the sum of Cash and accounts receivable divided by Current
Liabilities.

"TANGIBLE NET WORTH" means shareholders' equity as reflected in the Financial
Statements of the Borrower delivered to the Bank pursuant to Sections 5.2 and
5.3 of this Loan Agreement, plus, without duplication, deferred revenue, and
minus good will and other intangible assets.

<PAGE>   25
                              AUTHORIZED OFFICERS

     Rajiv Enand, Chief Executive Officer
     Stephen McMahon, Chief Financial Officer and Treasurer
     Mark Tapling, President

            SCHEDULE OF EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES

All information contained in the following schedule of exceptions is to be
considered as an entirety and any information appearing under one Section
heading or subheading shall be deemed to be in response to all requests for
information in all Sections of the Agreement. In addition, all descriptions of
agreements or other matters appearing on this schedule are not complete
descriptions of agreements and other matters and are qualified by reference to
the more complete documents and records referred to thereby.

4.1  EXISTENCE, POWER AND AUTHORITY

The Company may not be qualified to do business in certain states in which it
has development and sales offices.

4.2  FINANCIAL STATEMENTS

The financial statements for the years ended December 31, 1998 and 1997 are
completed, but the audit opinion has not yet been signed. Adjustments for a
change in revenue recognition and for preferred stock accretion are to be made
and a footnote regarding subsequent events is to be added to disclose the July
23, 1999 merger and financing.

4.4  BINDING OBLIGATIONS

The Borrower has obtained those shareholder and contractual approvals, waivers
and consents required in connection with (i) the Borrower's incurrence of
indebtedness pursuant to this Agreement and (ii) the Borrower's issuance of the
Warrant in accordance with Section ___ of this Agreement.

4.5  NO DEFAULTS OR VIOLATIONS

As required by the share purchase agreements and the Amended and Restated Loan
Agreement, the Company failed to provide 1998 audited financial statements to
its Series A, Series B, and Series C preferred shareholders and PNC Bank on a
timely basis.

Additionally, monthly financial statements have not been provided to the
Preferred shareholders and Investors in accordance with their stock purchase
agreements and the Amended and Restated Articles of Incorporation.

                                      A-1
<PAGE>   26
The Company has not held annual shareholders meetings in accordance with
Section 1.01 of the Bylaws. Only two such meetings have been held on 7/26/94
and 6/15/95. A unanimous written consent in lieu of an annual meeting was
executed on 4/11/96.

At times, the Company has been out of compliance with the covenants and
collateral requirements of the loan agreements with PNC  Bank, N.A.

4.7   LITIGATION

The Company is currently being sued for royalty fees owed in connection with a
distribution agreement entered into with another company.

4.8   TAX RETURNS

The Company's tax returns that have been filed to date have not been audited or
settled.

Sales tax: The Company has collected and needs to remit sales tax for sales made
in Texas and Massachusetts amounting to approximately $24,000 in total at
9/30/99. Additionally, a reserve of $100,000 has been set up to account for any
additional unknown sales tax liability.

4.9   EMPLOYEE BENEFIT PLANS

(i)   The Company plans to terminate the 401(k) plan of Molloy Group, Inc., its
      wholly owned subsidiary, and consolidate this plan into the Service Ware
      401(k) plan.

4.14  YEAR 2000

The Company has not received Year 2000 compliance certificates from all of its
third party software suppliers.

The Company's voice mail system is not Year 2000 compliant. However, a Year 2000
software upgrade has been ordered, and the system should be Year 2000 compliant
by December 31, 1999.
<PAGE>   27
EXHIBIT A

                              BORROWING BASE RIDER

          THIS BORROWING BASE RIDER ("RIDER") is executed this 10th day of
December, 1999, by and between SERVICEWARE, INC., a Pennsylvania corporation
(the "BORROWER"), and PNC BANK, NATIONAL ASSOCIATION (the "BANK"). This Rider is
incorporated into and made part of that certain Loan Agreement by and between
the Borrower and the Bank of even date herewith (the "LOAN AGREEMENT").

          Pursuant to and subject to the terms and conditions set forth in the
Loan Agreement, the Bank has extended a Loan to the Borrower which includes a
secured revolving credit facility (the "REVOLVING CREDIT") in an amount not to
exceed $7,500,000, under which the Borrower may borrow, repay and reborrow funds
at any time prior to the Revolving Credit Maturity Date. As a condition to the
Bank's willingness to extend the Revolving Credit to the Borrower, the Bank and
the Borrower are entering into this Rider in order to set forth their agreement
regarding the maximum amount which may be outstanding under the Revolving Credit
at any given time, and for the other purposes set forth below:

          NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound, the parties hereto covenant and agree as follows:

          In addition to the terms defined in Section 3 hereof or elsewhere in
this Rider, initially capitalized terms used and not otherwise defined herein
shall have the same meanings ascribed to them in the Loan Agreement.

          1.  LIMITATIONS ON BORROWINGS UNDER REVOLVING CREDIT. Notwithstanding
any provisions to the contrary in any of the other Loan Documents, at no time
shall the aggregate principal amounts of indebtedness outstanding at any one
time under the Revolving Credit exceed a dollar amount equal to the Borrowing
Base at such time. If at any time the aggregate principal amount of indebtedness
outstanding under the Revolving Credit exceeds the limitation set forth in this
Section 1 for any reason other than a return of goods by an Account Debtor, then
the Borrower shall immediately repay the amount of such excess to the Bank in
immediately available funds. If the aggregate principal amount of indebtedness
outstanding under the Revolving Credit exceeds the Borrowing Base because of a
return of goods by an Account Debtor such that the Account represented thereby
ceases to constitute a Qualified Account, the Borrower shall repay the amount of
such excess to the Bank in immediately available funds within thirty (30) days
from the date of such return unless the Account Debtor accepts replacement goods
prior to the expiration of such 30-day period.

<PAGE>   28
     2. BORROWING BASE CERTIFICATES. In addition to any and all provisions of
the other Loan Documents which establish conditions to the Borrower's ability
to request and obtain any advance under the Revolving Credit, the Borrower may
not request an advance under the Revolving Credit unless a Borrowing Base
Certificate shall have been delivered to the Bank not more than five (5)
calendar days prior to the date of such proposed advance.

     3. ADDITIONAL DEFINITIONS. The following terms shall have the following
meanings when used in this Rider:

     "ACCOUNT" shall mean an "account" or a "general intangible" as defined in
the Uniform Commercial Code as in effect in the jurisdiction whose Law governs
the perfection of the Bank's security interest therein, whether now owned or
hereafter acquired or arising.

     "ACCOUNT DEBTOR" shall mean, with respect to any Account, each Person who
is obligated to make payments to the Borrower on such Account.

     "AFFILIATE" of the Borrower or any Account Debtor shall mean (a) any
Person who (either alone or with a group of Persons, and either directly or
indirectly through one or more intermediaries) is in control of, is controlled
by or is under common control with the Borrower or such Account Debtor, (b) any
director, officer, partner, employee or agent of the Borrower or such Account
Debtor, and (c) any member of the immediate family of any natural person
described in the preceding clauses (a) and (b). A Person or group of Persons
shall be deemed to be in control of the Borrower or an Account Debtor when such
Person or group of Persons possesses, directly or indirectly, the power to
direct or cause the direction of the management or policies of the Borrower or
such Account Debtor, whether through the ownership of voting securities, by
contract or otherwise.

     "BORROWING BASE" at any time shall mean 80% of Qualified Accounts. The
value of Qualified Accounts at any time shall be determined by reference to the
most recent Borrowing Base Certificate delivered by the Borrower to the Bank.

     "BORROWING BASE CERTIFICATE" shall mean each Borrowing Base Certificate to
be delivered by the Borrower to the Bank pursuant to Section 2 of this Rider,
in substantially the form attached as Exhibit A to this Rider, with blanks
appropriately completed, as amended, supplemented or otherwise modified from
time to time.

     "EXIMBANK BORROWER AGREEMENT" shall mean any agreement made and entered
into by the Borrower and acknowledged by the Bank as a condition to the making
of any Loan (as defined in the applicable Eximbank Borrower Agreement) by the
Bank to the Borrower the repayment of which is guaranteed, in whole or in part,
by the Export-Import Bank of the United States.

     "EXIMBANK BORROWING BASE" shall mean the Borrowing Base as defined in the
applicable Eximbank Borrower Agreement.

                                       2
<PAGE>   29
     "LAW" shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award
of any Official Body.

     "LIEN" shall mean any mortgage, pledge, security interest, bailment,
encumbrance, claim, lien or charge of any kind, including any agreement to give
any of the foregoing, any conditional sale or other title retention agreement
and any lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code.

     "OFFICIAL BODY" shall mean any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of any government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

     "PERSON" shall mean an individual, sole proprietorship, corporation,
partnership (general or limited), trust, business trust, limited liability
company, unincorporated organization or association, joint venture, joint-stock
company, Official Body, or any other entity of whatever nature.

     "QUALIFIED ACCOUNTS" shall mean Accounts which are and at all times
continue to be acceptable to the Bank in its reasonable discretion. In order
for an Account to be acceptable to the Bank it must meet the following
requirements and amounts owing under it shall be subject to the following
limitations:

          (a) It complies with all requirements of applicable Law, including,
              without limitation, if applicable, usury Laws, the Federal Truth
              in Lending Act, the Federal Consumer Credit Protection Act, the
              Fair Credit Billing Act, and Regulation Z of the Board of
              Governors of the Federal Reserve System;

          (b) It is not originated in any jurisdiction the Laws of which, nor is
              it subject to any law the effect of which, would make it or the
              grant of a security interest in the Account to the Bank unlawful,
              invalid or unenforceable;

          (c) It was originated by the Borrower in connection with (i) a sale of
              goods by the Borrower in the ordinary course of business, which
              sale has been consummated and the goods sold therein delivered in
              accordance with the terms of such sale, or (ii) the rendering of
              services by the Borrower in the ordinary course of business, which
              services have been fully rendered, in each case, such that the
              performance of the related contract has been completed by the
              Borrower and by all parties other than the Account Debtor to the
              extent necessary thereunder to enforce payment of the Account
              against the Account Debtor;

          (d) It is evidenced by a written invoice or other documentation and
              arises from an enforceable contract, all of which are in form and
              substance satisfactory to the Bank;

                                      -3-
<PAGE>   30
          (e) It does not arise out of a contract with, or order from, an
              Account Debtor that, by its terms, forbids or makes void or
              unenforceable the grant of the security interest by the Borrower
              to the Bank in and to the Account arising with respect thereto;

          (f) The title of the Borrower to the Account and, except as to the
              Account Debtor, to any related goods is absolute and is not
              subject to any Lien except Liens in favor of the Bank;

          (g) It or the contract giving rise to it provides for payment in
              United States Dollars by the Account Debtor;

          (h) The amounts owing under it are not less than the amounts
              represented by the Borrower to be owing under it in the applicable
              Borrowing Base Certificate;

          (i) Any portion of an Account for which income has not yet been earned
              or which constitutes unearned discount, service charges or
              deferred interest shall be ineligible;

          (j) It is not subject to any defense, claim of reduction,
              counterclaim, set-off, recoupment, or any dispute or claim for
              credits, allowances or adjustments by the Account Debtor because
              of returned, inferior, damaged goods or unsatisfactory service, or
              for any other reason;

          (k) The goods the sale of which gave rise to the Account were shipped
              or delivered or provided to the Account Debtor on an absolute sale
              basis and not (i) on a bill and hold sale basis, (ii) a
              consignment sale basis, (iii) a guaranteed sale basis, (iv) a sale
              or return basis, or (v) on the basis of any other similar terms
              making the Account Debtor's payment obligations conditional;

          (l) No default exists under the Account by any party thereto, and all
              rights and remedies of the Borrower under the Account are freely
              assignable by the Borrower;

          (m) It or the contract giving rise to it does not provide for deferred
              payments terms and it has not been outstanding for more than
              ninety (90) days past the invoice date;

          (n) It shall be ineligible if 50% or more, in amount, of the Accounts
              of the Account Debtor and its Affiliates are more than ninety (90)
              days past due from the date of original invoice therefor;

          (o) If, when added to the outstanding Accounts of the Account Debtor
              and its Affiliates, such Accounts in the aggregate would exceed
              20% (the

                                      -4-

<PAGE>   31
          "AGGREGATE LIMIT") of all of the Borrower's Accounts, then amount
          thereof in excess of such Aggregate Limit shall be ineligible;

     (p)  The Borrower has not received any note, trade acceptance, draft,
          chattel paper or other instrument with respect to, or in payment of,
          the Account, unless, if any such instrument has been received, the
          Borrower immediately notifies the Bank and, at the Bank's request,
          endorses or assigns and delivers such instrument to the Bank;

     (q)  The Borrower has not received any notice of (i) the death of the
          Account Debtor or a partner thereof; (ii) the filing by or against the
          Account Debtor of any proceeding in bankruptcy, receivership,
          insolvency, reorganization, liquidation, conservatorship or any
          similar proceeding, or (iii) any assignment by the Account Debtor for
          the benefit of creditors. Upon receipt by the Borrower of any such
          notice, it will give the Bank prompt written notice thereof;

     (r)  The Account Debtor is not an Affiliate of the Borrower;

     (s)  The Account Debtor is domiciled in the United States of America or, if
          the Account Debtor is domiciled in a country other than the United
          States of America, such Account shall be eligible to the extent of the
          portion thereof that is (i) supported by a documentary letter of
          credit, duly assigned to and in the possession of the Bank, from a
          financial institution acceptable to the Bank and the terms and
          conditions of which are acceptable to the Bank, and (ii) excluded from
          the Eximbank Borrowing Base;

     (t)  It shall be ineligible if the Account Debtor is an Official Body,
          unless the Borrower shall have taken all actions deemed necessary by
          the Bank in order to perfect the Bank's security interest therein,
          including but not limited to any notices or filings required under the
          Federal Assignment of Claims Act of 1940, as amended, or other
          applicable Laws; and

     (u)  The Bank has not reasonably deemed such Account ineligible because of
          uncertainty about the creditworthiness of the Account Debtor
          (including, without limitation, unsatisfactory past experiences of the
          Borrower or the Bank with the Account Debtor or unsatisfactory
          reputation of the Account Debtor) or because the Bank otherwise makes
          a reasonable determination that the collateral value of the Account to
          the Bank is impaired or that the Bank's ability to realize such value
          is insecure.

The Bank may revise from time to time the requirements for acceptability of
Accounts, in each case in its reasonable judgment. In the case of any dispute
about whether an Account is or has ceased to be a Qualified Account, the
decision of the Bank shall be final.

<PAGE>   32
     4. GOVERNING LAW.

     THIS RIDER WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA, EXCLUDING ITS CONFLICT OF LAW RULES.

     5. COUNTERPARTS. This Rider may be signed in any number of counterpart
copies and by the parties hereto on separate counterparts, but all such copies
shall constitute one and the same instrument.

                           [Signature Page to Follow]

                                      -6-
<PAGE>   33
     WITNESS the due execution of this Borrowing Base Rider as a document under
seal as of the date first written above.

ATTEST:                               SERVICEWARE, INC.

By:________________________________   By:________________________________(SEAL)

Print Name:________________________   Print Name: Rajiv Enand

Title:_____________________________   Title: Chief Executive Officer

                                      PNC BANK, NATIONAL ASSOCIATION

                                      By:________________________________(SEAL)

                                      Print Name: Jeffrey D. Sletten

                                      Title: Vice President

                                      -7-
<PAGE>   34
                                   EXHIBIT A

                           BORROWING BASE CERTIFICATE

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                                        ACCOUNTS
COLLATERAL STATUS                                                       RECEIVABLE              TOTAL
------------------------------------------------------------------------------------------------------------
<S>  <C>                                                                <C>                     <C>
1.   Beginning Balance (Previous Report - Line 4)
------------------------------------------------------------------------------------------------------------
2.   Additions (New Billings, Increases and Adjustments)
------------------------------------------------------------------------------------------------------------
3.   Deductions (Gross Invoices Paid)
------------------------------------------------------------------------------------------------------------
4.   Total
------------------------------------------------------------------------------------------------------------
5.   Less Ineligible Amounts
------------------------------------------------------------------------------------------------------------
6.   Total Eligible Amounts
------------------------------------------------------------------------------------------------------------
LOAN STATUS
------------------------------------------------------------------------------------------------------------
7.   Advance Percentage (Non-EXIM Bank Guaranty)                          80%
------------------------------------------------------------------------------------------------------------
8.   Value (Eligible Amount x Advance Percentage)
------------------------------------------------------------------------------------------------------------
9.   Advance Percentage (EXIM Bank Guaranty)                             100%
------------------------------------------------------------------------------------------------------------
10.  Value (Eligible Amount x Advance Percentage
------------------------------------------------------------------------------------------------------------
11.  Total of Lines 8 and 11
------------------------------------------------------------------------------------------------------------
12.  Lesser of Value or Credit Limit of $7,500,000(1)
------------------------------------------------------------------------------------------------------------
13.  Previous Loan Balance (Previous Report - Line 14)
------------------------------------------------------------------------------------------------------------
14.  Less: Repayments, Adjustments and Other Decreases
------------------------------------------------------------------------------------------------------------
15.  Subtotal for Loan Balance
------------------------------------------------------------------------------------------------------------
16.  Additional Loan Increase: Request on funds and Return items
------------------------------------------------------------------------------------------------------------
17.  Adjusted Loan Balance
------------------------------------------------------------------------------------------------------------
18.  Amount Available for Loan
</TABLE>

     To induce PNC Bank, National Association ("the Bank") to grant advances or
other financial accommodations to us pursuant to the terms of our Loan
Agreement dated as of December 10, 1999 with the Bank, as the same may be
extended, amended, and/or restated from time to time ("Loan Agreement"), we
hereby certify, represent and warrant the following to the Bank, all as of the
date hereof: (1) the foregoing statements of our accounts receivable collateral
described above are true and complete; (2) the total eligible collateral
described in line 6 above represents only Qualified Accounts as defined in the
Loan Agreement, (3) we are in compliance with all of the terms and provisions
of the Loan Agreement; (4) there exists no Default or Event of Default under
the Loan Agreement; and (5) the undersigned is an Authorized Officer.

                              DATE:
                                         --------------------------

                              BORROWER:  ServiceWare, Inc.

                              BY:
                                         --------------------------

------------
(1) Except as limited to $5,000,000 pursuant to terms of Loan Agreement while
    principal remains outstanding on the Term Loan.

Document #: 1021955v3
<PAGE>   35
EXHIBIT B

                             EQUIPMENT LINE REQUEST
________________________________________________________________________________

         -------------------------------------------------------------
               BASIS               INVOICE COST
                                     @ 100%                 TOTAL
         -------------------------------------------------------------
          Beginning Amount
         -------------------------------------------------------------
          Additional Amounts
         -------------------------------------------------------------
          Total
         -------------------------------------------------------------
          Advance Rate                x0.90%
         -------------------------------------------------------------
          Maximum Available                                 $(1)
         -------------------------------------------------------------
          Remainder Available
         -------------------------------------------------------------

     To induce PNC Bank, National Association ("the Bank") to grant advances or
other financial accommodations to us pursuant to the terms of our Loan Agreement
dated as of December 10, 1999 with the Bank, as the same may be extended,
amended, and/or restated from time to time ("Loan Agreement"), we hereby
certify, represent and warrant the following to the Bank, all as of the date
hereof: (1) the foregoing statements of equipment purchases described above are
true and complete; (2) we are in compliance with all of the terms and
provisions of the Loan Agreement; (3) there exists no Default or Event of
Default under the Loan Agreement; and (4) the undersigned is an Authorized
Officer.

                                       SERVICEWARE, INC.

                                       By:
                                          -------------------------------------
                                       Print Name:
                                                  -----------------------------
                                       Title:
                                             ----------------------------------

                                       Date:
                                            --------------

------------------
(1)  Enter dollar amount equal to $500,000 minus the lesser of (i) $150,000 or
(ii) the principal amount outstanding as of the Closing Date on that certain
loan to Borrower from Silicon Valley Bank referenced in the Loan Agreement.
<PAGE>   36
EXHIBIT C

                  OFFICER'S FINANCIAL STATEMENT CERTIFICATION
                         AND CERTIFICATE OF NO DEFAULT

          The undersigned hereby certifies that he or she is an Authorized
Officer of SERVICEWARE, INC. (The "BORROWER") and is furnishing this Compliance
Certificate and these certified Financial Statements on behalf of the Borrower
pursuant to that certain Loan Agreement dated December 10, 1999 (as the same
may be extended, amended or restated from time to time, the "LOAN AGREEMENT"),
with PNC BANK, NATIONAL ASSOCIATION (the "BANK").

          Initially capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to them in the Loan Agreement.

          The undersigned hereby represents and agrees as follows.

     1.   He or she is familiar with the provisions of the Loan Documents and
the transactions contemplated thereby, and has reviewed the Loan Documents, had
such discussions with the Borrower's management and employees and done such
other investigation as reasonably necessary to support the statements made
below.

     2.   The attached Financial Statements are delivered pursuant to Section
5.2 of the Loan Agreement, and have been prepared in accordance with GAAP
consistently applied from period to period.

     3.   No Event of Default exists under the Loan Documents and no event has
occurred which with the passage of time, delivery of notice or both would
constitute an Event of Default.

     4.   The Borrower has performed all of its obligations under the Loan
Documents, and all of the representations and warranties made by the Borrower
in the Loan Documents are true and correct as of the date hereof in all
material respects.

     5.   If applicable, the calculations set forth on Exhibit A hereto
manifest in reasonable detail the Borrower's compliance with each and every
financial covenant contained in the Loan Documents as of the close of the
period indicated thereon.

          WITNESS the due execution hereof with the intent to be legally bound
hereby as of this ___ day of ___________________, ____.

                                        By: _____________________

                                        Print Name: _____________

                                        Title: __________________
<PAGE>   37
                                   EXHIBIT A

               Financial Covenants for Period Ending ___________

1. Tangible Net Worth

   Actual:

   Shareholder's Equity
   Less: Intangible Assets
   Tangible Net Worth

   Covenant: Tangible Net Worth

2. Quick Ratio

   Actual:

   Cash + Accounts Receivable                                              (A)
   Current Liabilities                                                     (B)
   Quick Ratio                                                         (A)/(B)

   Covenant: Quick Ratio

3. Quarterly Loss for Most Recent Quarter End

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