Document:

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                                                                    Exhibit 10.2

                          AGREEMENT AND PLAN OF MERGER

         AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of July 13, 1999,
by and among ServiceWare, Inc., a Pennsylvania corporation ("ServiceWare"),
Molloy Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of ServiceWare ("Sub"), and Molloy Group, Inc., a Delaware
corporation ("Molloy").

         WHEREAS, the Boards of Directors of ServiceWare, Sub and Molloy deem it
advisable and in the best interests of each corporation and its respective
stockholders that ServiceWare and Molloy combine in order to advance the
long-term business interests of ServiceWare and Molloy;

         WHEREAS, the strategic combination of ServiceWare and Molloy shall be
effected by the terms of this Agreement through a transaction in which Sub will
merge with and into Molloy, Molloy will become a wholly owned subsidiary of
ServiceWare and the stockholders of Molloy will become shareholders of
ServiceWare (the "Merger");

         WHEREAS, Bruce Molloy, Unterberg Harris Private Equity Partners, LP,
Unterberg Harris and C.E. Unterberg Towbin, LP (the "Molloy Principal
Stockholders") hold shares of the capital stock of Molloy representing, in the
aggregate, approximately 76% of the voting power of all issued and outstanding
capital stock of Molloy;

         WHEREAS, the Molloy Principal Stockholders have agreed, pursuant to a
letter agreement in substantially the form of Exhibit A-l attached hereto (the
"Molloy Principal Stockholder Agreements") to vote all the shares of capital
stock of Molloy beneficially owned by them in favor of the matters included as
part of the Molloy Stockholder Approval (as defined in Section 7.01 (a)) and to
be bound by the provisions of Sections 6.01(a) and 8.03 hereof;

         WHEREAS, Jeff Pepper, Rajiv Enand, Poly Ventures II, L.P., Geocapital
III, L.P. and Norwest Equity Partners V (the "ServiceWare Principal
Shareholders") hold shares of capital stock of ServiceWare, representing, in the
aggregate, approximately 97% of the voting power of all issued and outstanding
capital stock of ServiceWare;

         WHEREAS, the ServiceWare Principal Shareholders have agreed, pursuant
to a letter agreement in substantially the form of Exhibit A-2 attached hereto
(the "ServiceWare Principal Shareholder Agreements") to vote all the shares of
capital stock of ServiceWare beneficially owned by them in favor of the matters
included as part of the ServiceWare Shareholder Approval (as defined in Section
7.01 (a)) and to be bound by the provisions of Section 6.01(b) hereof;

         WHEREAS, immediately prior to the Merger, the Articles of Incorporation
of ServiceWare shall be amended and restated as set forth in Exhibit B attached
hereto (the "ServiceWare Articles");
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         NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:

                                    ARTICLE I

                                   THE MERGER

         Section 1.01 Effective Time of the Merger. Subject to the provisions of
this Agreement, a certificate of merger (the "Certificate of Merger") in such
form as is required by the relevant provisions of the Delaware General
Corporation Law ("DGCL") shall be duly prepared, executed and acknowledged by
the Continuing Corporation (as defined in Section 1.03) and thereafter delivered
to the Secretary of State of the State of Delaware, for filing, as provided in
the DGCL, as soon as practicable on or after the Closing Date (as defined in
Section 1.02). The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware or at
such time thereafter as is provided in the Certificate of Merger (the "Effective
Time").

         Section 1.02 Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m., prevailing time, on a date (the "Closing Date") to be
specified by ServiceWare and Molloy, which shall be no later than the second
business day after satisfaction or waiver of the latest to occur of the
conditions set forth in Article VII (other than those conditions that, by their
terms, cannot be satisfied until the Closing Date), at the offices of Morgan,
Lewis & Bockius, LLP, One Oxford Centre, 32nd floor, Pittsburgh, PA 15219, or at
such other place as ServiceWare and Molloy may agree.

         Section 1.03 Effects of the Merger.

         (a) At the Effective Time (i) the separate existence of Sub shall cease
and Sub shall be merged with and into Molloy (Sub and Molloy are sometimes
referred to below as the "Constituent Corporations" and Molloy is sometimes
referred to below as the "Continuing Corporation"), (ii) the Certificate of
Incorporation of Sub in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation of the Continuing Corporation, and (iii) the
Bylaws of Sub as in effect immediately prior to the Effective Time shall be the
Bylaws of the Continuing Corporation.

         (b) At and after the Effective Time, the Continuing Corporation shall
possess all the rights, privileges, powers and franchises of a public as well as
of a private nature, and be subject to all the restrictions, disabilities and
duties of each of the Constituent Corporations; and all and singular rights,
privileges, powers and franchises of each of the Constituent Corporations, and
all property, real, personal and mixed, and all debts due to either of the
Constituent Corporations on whatever account, as well as all other things in
action or belonging to each of the Constituent Corporations, shall be vested in
the Continuing Corporation, and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Continuing Corporation as they were of the Constituent
Corporations, and the title to any real estate vested by deed or otherwise, in
either of the Constituent Corporations, shall not revert or be in any way
impaired; but all rights of creditors and all liens upon any property of either
of the

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Constituent Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the Constituent Corporations shall thereafter attach
to the Continuing Corporation, and may be enforced against it to the same extent
as if such debts and liabilities had been incurred by it.

                                   ARTICLE II

                            CONVERSION OF SECURITIES

         Section 2.01 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of Molloy or Sub:

         (a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Continuing
Corporation.

         (b) Cancellation of Treasury Stock. All shares of common stock, par
value $.0001 per share of Molloy ("Molloy Common Stock"), if any, that are owned
by Molloy as treasury stock shall be canceled and retired and shall cease to
exist, and no stock of ServiceWare or other consideration shall be delivered in
exchange therefor.

         (c) Exchange of Molloy Common Stock. At the Effective Time, except as
provided in Section 2.01(j), each issued and outstanding share of Molloy Common
Stock (other than shares to be canceled in accordance with Section 2.01(b))
shall be converted into the right to receive 0.3330 (the "Conversion Number")
fully paid and nonassessable shares of common stock, no par value, of
ServiceWare ("ServiceWare Common Stock"). All such shares of Molloy Common
Stock, when so converted at the Effective Time, shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the shares of
ServiceWare Common Stock to be issued in consideration therefor upon the
surrender of such certificate to ServiceWare in accordance with Section 2.02.

         (d) Exchange of Molloy Preferred Stock. At the Effective Time, except
as provided in Section 2.01(j), (i) each issued and outstanding share of Series
A Non-Cumulative Convertible Preferred Stock of Molloy ("Molloy Series A
Preferred Stock") shall be converted into the right to receive 0.3796 fully paid
and nonassessable shares of Series E Convertible Preferred Stock, par value
$1.00 per share of ServiceWare as set forth in the ServiceWare Articles
("ServiceWare Series E Preferred Stock"), and (ii) each issued and outstanding
share of Series B Non-Cumulative Convertible Preferred Stock of Molloy ("Molloy
Series B Preferred Stock" and, together with the Molloy Series A Preferred
Stock, the "Molloy Preferred Stock") shall be converted into the right to
receive 12.9042 fully paid and nonassessable shares of Series E Convertible
Preferred Stock. All such shares of Molloy Preferred Stock, when so converted at
the Effective Time, shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto,

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except the right to receive the shares of ServiceWare Series E Preferred Stock
to be issued in consideration therefor upon the surrender of such certificate to
ServiceWare in accordance with Section 2.02.

         (e) Warrants to Purchase Molloy Common Stock. At the Effective Time,
except as provided in Section 2.01(j), each then outstanding warrant to purchase
one share of Molloy Common Stock (the "Molloy Common Stock Warrants") shall be
exchanged for a warrant to purchase a number of shares of ServiceWare Common
Stock equal to the Conversion Number (the "ServiceWare Common Stock Warrants")
at an exercise price equal to the exercise price of such Molloy Common Stock
Warrant divided by the Conversion Number. All such Molloy Common Stock Warrants,
when so exchanged at the Effective Time, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a Molloy Common Stock Warrant shall cease to have any rights with
respect thereto, except the right to receive the ServiceWare Common Stock
Warrants to be issued in consideration therefor upon the surrender of such
Molloy Common Stock Warrants to ServiceWare in accordance with Section 2.02.

         (f) Molloy Stock Options. At the Effective Time, all then outstanding
options to purchase Molloy Common Stock under the Molloy Group Inc. 1996 Stock
Plan (the "Molloy Option Plan") shall be assumed by ServiceWare in accordance
with Section 6.07.

         (g) Exchange of Warrants and Notes. At the Effective Time, except as
provided in Section 2.01(j), each $1,000 in outstanding principal amount plus
accrued and unpaid interest of subordinated promissory notes (each, a "November
Note") issued pursuant to the Note and Preferred Stock Warrant Purchase
Agreement dated as of November 30, 1998 among Molloy and certain purchasers and
the related warrant to purchase 1,250 shares of Molloy's Series C Non-Cumulative
Convertible Preferred Stock (each, a "Molloy Preferred Stock Warrant" and,
together with the related November Note, a "Unit") shall be exchanged for
416.2613 fully paid and nonassessable shares of Series E Convertible Preferred
Stock. All such Units, when so converted at the Effective Time, shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a Unit shall cease to have any rights with respect
thereto, except the right to receive the shares of ServiceWare Series E
Preferred Stock to be issued in consideration therefor upon the surrender of
such Unit to ServiceWare in accordance with Section 2.02.

         (h) Notes. At the Effective Time, except as provided in Section
2.10(j), the notes issued by Molloy on June 1, 1999 in the aggregate principal
amount of $500,000, the additional notes issued by Molloy on June 25, 1999 in
the aggregate principal amount of $500,000 and the notes issued by Molloy on
July 13, 1999 in the aggregate principal amount of $200,000 (collectively, the
"Working Capital Notes") will be exchanged at the rate of 277.5075, 302.7355 and
302.7355, respectively, fully paid and nonassessable shares of Series E
Convertible Preferred Stock for each $1,000 in outstanding principal amount plus
accrued and unpaid interest thereon. All such Working Capital Notes, when so
exchanged at the Effective Time, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a Working Capital Note shall cease to have any rights with respect thereto,
except the right to receive the ServiceWare Series E Preferred Stock to be
issued in consideration therefor upon the surrender of such Working Capital
Notes to ServiceWare in accordance with Section 2.02.

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         (i)      Escrow of Shares

                  (i) Escrow of Shares. Notwithstanding anything to the contrary
contained in this Article II, at the Effective Time, shares of Common Stock and
Series E Preferred Stock representing, in the aggregate, two percent of the
Fully Diluted Merger Consideration (as defined below) (the "Escrowed Shares")
issuable to each person or entity holding Molloy Common Stock, Molloy Preferred
Stock, Units and/or Working Capital Notes (each, an "Escrow Participant"), shall
not be delivered by ServiceWare to such Escrow Participant upon surrender of its
Molloy Common Stock, Molloy Preferred Stock, Units and/or Working Capital Notes
and shall instead be deposited in escrow with an escrow agent selected by
ServiceWare and reasonably satisfactory to Molloy (the "Escrow Agent").
ServiceWare shall deliver into escrow, on behalf of each Escrow Participant,
certificates representing shares of ServiceWare Common Stock and ServiceWare
Series E Preferred Stock (rounded to the nearest whole share) in the proportion
that the Fully Diluted Merger Consideration issuable to such Escrow Participant
bears to the Fully Diluted Merger Consideration issuable to all Escrow
Participants (in each case without giving effect the escrow of shares pursuant
to this Section 2.01 (i)). Each certificate for Escrowed Shares shall be
registered in the name of the appropriate Escrow Participant. As a condition to
its receipt of merger consideration hereunder, each Escrow Participant shall
execute a stock power in blank with respect to each certificate for Escrowed
Shares and shall deliver such stock power to ServiceWare. ServiceWare shall
deliver to the Escrow Agent (A) two share certificates, together with signed
stock powers, with respect to the ServiceWare Common Stock deposited in escrow
on behalf of each Escrow Participant that will receive ServiceWare Common Stock
in the Merger, each representing one-half of such Escrow Participant's Escrowed
Shares of ServiceWare Common Stock and (B) two share certificates, together with
signed stock powers, with respect to the ServiceWare Series E Preferred Stock
deposited in escrow on behalf of each Escrow Participant that will receive
ServiceWare Series E Preferred Stock in the Merger, each representing one-half
of such Escrow Participant's Escrowed Shares of ServiceWare Series E Preferred
Stock. The Escrow Agent shall hold such certificates until it it is required to
deliver them pursuant to Section 2.01(i)(iii).

                  (ii) Delivery of Shares. In the event that the Combined
Company (as defined below) shall, from July 1, 1999 through December 31, 1999,
receive orders or binding commitments from the prospective customers of Molloy
listed on Schedule 1 attached hereto ("Bookings"):

                           (A) in an aggregate amount equal to less than $6
million, the Escrowed Shares and related stock powers shall be delivered to
ServiceWare and canceled;

                           (B) in an aggregate amount equal to at least $6
million but less than $7.5 million, one-half of the number of the Escrowed
Shares deposited in escrow on behalf of each Escrow Participant (rounded to the
nearest whole share) and related stock powers shall be delivered to such Escrow
Participant, and the remaining Escrowed Shares and related stock powers shall be
delivered to the Company and canceled; or

                           (C) in an aggregate amount equal to $7.5 million or
more, all the Escrowed Shares and related stock powers deposited in escrow on
behalf of each Escrow Participant shall be delivered to such Escrow Participant.

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         (iii) Procedures. Promptly following the end of the calendar year
ending December 31, 1999 (but in any event no later than March 31, 1999),
ServiceWare shall determine the amount of Bookings. Upon making such
determination, ServiceWare shall deliver to the Escrow Agent and the
Representative a certificate of ServiceWare's Chief Executive Officer (an
"Officer's Certificate") (A) certifying (I) the amount of Bookings and (II) if
the Officer's Certificate indicates that amount of the Bookings is less than
$7.5 million reasonably detailed back-up information as to the Bookings received
(by customer and amount) and (B) directing the Escrow Agent to deliver the
Escrowed Shares in accordance with the appropriate provision of Section
2.01(i)(ii), unless the Escrow Agent receives a timely Participant Request (as
defined below). If the Officer's Certificate indicates that the amount of the
Bookings is less than $7.5 million, no later than ten days following delivery of
the Officer's Certificate, the Representative may request (a "Participant
Request") a review by ServiceWare's independent certified public accountants
(the "Accountants") of the Bookings. Upon such request, ServiceWare shall engage
the Accountants to perform such review and shall use its best efforts to cause
such Accountants to determine the amount of the Bookings in no more than 30 days
from the date of the Participant Request. The Accountants shall deliver their
preliminary report to ServiceWare and to the Representative, and shall entertain
questions from such parties with respect to such report. The final determination
of the Accountants shall be made no later than 30 days after delivery by the
Accountants of their preliminary report. The final determination of the
Accountants (the "Accountants' Determination"), which shall be delivered in
writing to ServiceWare, the Representative and the Escrow Agent, shall state the
amount of the Bookings and shall be final and binding on ServiceWare and the
Escrow Participants. If the Accountants determine that the actual amount of the
Bookings differs from the amount of Bookings as certified in the Officers'
Certificate and, as a result of such difference, the Escrow Participants would
have received fewer Escrowed Shares than they are entitled to, the cost of the
review shall be borne by ServiceWare; otherwise, the cost of the review shall be
borne by the Escrow Participants.

                  If the Escrow Agent does not receive a Participant Request
within 10 days after the Escrow Agent receives the Officer's Certificate, the
Escrow Agent shall deliver the Escrowed Shares and related stock powers in
accordance with the directions set forth in the Officer's Certificate. If the
Escrow Agent receives a Participant Request within 10 days after the Escrow
Agent receives the Officer's Certificate, the Escrow Agent shall retain the
Escrowed Shares and shall deliver them and the related stock powers only upon
receipt of (i) joint instructions from ServiceWare and the Representative
directing the Escrow Agent as to delivery of the Escrow Shares or (ii) receipt
of the Accountants' Determination, in which event the Escrow Agent shall deliver
the Escrowed Shares and related stock powers in accordance with the appropriate
provision of Section 2.01(i)(ii), depending on the amount of the Bookings
specified in the Accountants' Determination.

         (iv)     Definitions.

                  (A) "Fully Diluted Merger Consideration" means the aggregate
number of shares of ServiceWare Common Stock (I) issuable on conversion of
Molloy Common Stock, (II) issuable on exercise of ServiceWare Common Stock
Warrants issuable in exchange for Molloy Common Stock Warrants, (III) issuable
on conversion of ServiceWare Series E Preferred Stock and (IV) issuable on
exercise of options to purchase Molloy Common Stock pursuant to Section 6.07.

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                  (B) "Combined Company" means ServiceWare, Inc. and Molloy
Group, Inc., on a pro forma combined basis as if the Merger had occurred on July
1, 1999.

         (v)      Escrow Agent.

                  (A) The Escrow Agent (I) shall have no duties or
responsibilities except as expressly set forth in this Section 2.01(i), (II)
shall not be responsible in its capacity as Escrow Agent for any recitals,
statements, representations or warranties contained herein, or in any
certificate or other document referred to herein, the validity, effectiveness or
enforceability of this Agreement, or the failure of any party to perform any of
its obligations hereunder, (III) shall not be required to initiate or conduct
any litigation or collection proceedings and (IV) shall not be responsibility
for any action taken or omitted to be taken hereunder except for its gross
negligence or willful misconduct. The Escrow Agent may consult with legal
counsel and other experts selected by it in its sole discretion at the expense
of ServiceWare, and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel or
experts.

                  (B) The Escrow Agent shall be entitled to rely upon any
certification, notice or other communication believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper person or
entity and delivered in accordance with this Agreement. The Escrow Agent shall
not be required to take any action which shall expose it to personal liability
or which is contrary to this Agreement or applicable law.

                  (C) The Escrow Agent shall not be deemed to have knowledge or
notice of the occurrence of any event unless it shall have received written
notice thereof in accordance with this Agreement.

                  (D) ServiceWare hereby agrees to indemnify the Escrow Agent
for any and all losses, liabilities, damages, deficiencies or expenses of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Escrow Agent in its capacity as such in any way relating to or
arising out of this Agreement or the transactions contemplated hereby, including
the enforcement of any of the terms hereof. Except as expressly required herein,
the Escrow Agent shall in all cases be fully justified in failing or refusing to
act hereunder unless it shall receive further assurances to its reasonable
satisfaction from ServiceWare of its indemnification obligations hereunder and
against any and all losses, liabilities, damages, deficiencies or expenses that
may be incurred by the Escrow Agent by reason of taking or continuing to take
such action in accordance with the terms hereof.

                  (E) Any fees or other amounts due to the Escrow Agent in
connection with its obligations hereunder shall be paid by ServiceWare.

         (j)      Adjustment of Conversion Number and Conversion Rates.

                  (1) In the event that, between the date of execution of this
Agreement and the Closing, (i) ServiceWare issues or agrees to issue any equity
security or security convertible into or exchangeable for any equity security
resulting in a change in the number of shares of

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ServiceWare Common Stock on a fully diluted as-converted basis (other than (A)
pursuant to this Agreement, (B) the issuance of (1) warrants to PNC Bank,
National Association ("PNC") pursuant to the Second Amendment to Amended and
Restated Loan Agreement between ServiceWare and PNC (the "PNC Warrants") and (2)
warrants exercisable for not more than 28,000 shares of ServiceWare Common Stock
issuable pursuant to Convertible Demand Promissory Notes issued and to be issued
by ServiceWare for working capital financing in May, June and July 1999, (such
warrants in clauses (1) and (2) aggregating no more than 38,000 shares) and (C)
in connection with the issuance of ServiceWare's Series D Convertible Preferred
Stock and related warrants to purchase Common Stock in the ServiceWare Financing
(as defined in Section 7.01(d)), (ii) subdivides (by any stock split, stock
dividend or otherwise) its outstanding shares of any equity security into which
any security of Molloy is to be converted or exchanged in the Merger into a
larger number of shares or combines such securities into a smaller number of
shares, then, in each such case, the Conversion Number and the rate of
conversion of the Molloy Preferred Stock, Units and Working Capital Notes into
securities of ServiceWare shall be appropriately adjusted.

                  (2) The Conversion Number and the number of shares of
ServiceWare Series E Preferred Stock issuable in exchange for Molloy Preferred
Stock, Units and Working Capital Notes have been determined on the basis of an
allocation that takes account of accrued and unpaid interest on the November
Notes and the Working Capital Notes through July 23, 1999. In the event that the
Effective Time occurs prior to or after July 23, 1999, the Conversion Number and
the number of shares of ServiceWare Series E Preferred Stock issuable in
exchange for Molloy Preferred Stock, Units and Working Capital Notes will be
appropriately adjusted to take account of the difference in the amount of
accrued and unpaid interest on the November Notes and the Working Capital Notes.

                  (k) Allocation Schedule. Attached to this Agreement as Annex B
is a schedule prepared by Molloy showing the allocation of the merger
consideration under this Section 2.01 among the holders of securities of Molloy.

         Section 2.02      Exchange of Securities.

                  (a) Exchange Procedures. Upon surrender to ServiceWare of a
certificate for Molloy Common Stock or Molloy Preferred Stock (a "Certificate")
or of any of the Units or Working Capital Notes, together with a duly executed
shareholder representation letter in substantially the form of Exhibit D
attached hereto (a "Representation Letter"), subject to Section 2.01(i), the
holder of such Certificate, Unit or Working Capital Note shall be entitled to
receive in exchange therefor a certificate representing the number of shares of
ServiceWare Common Stock or ServiceWare Series E Preferred Stock, as the case
may be, which such holder has the right to receive in respect of such
Certificate, Unit or Working Capital Note pursuant to the provisions of this
Article II. Any Certificate or Molloy Preferred Stock Warrant so surrendered
shall forthwith be canceled, and any Working Capital Note or November Note so
surrendered shall forthwith be marked paid. Upon surrender to ServiceWare of a
Molloy Common Stock Warrant, together with a duly executed Representation
Letter, the holder of such Molloy Common Stock Warrant shall be entitled to
receive in exchange therefor a ServiceWare Common Stock Warrant exercisable for
the number of shares of ServiceWare Common Stock to which such holder is
entitled pursuant to the

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provisions of this Article II. Any Molloy Common Stock Warrant so surrendered
shall forthwith be canceled. From and after the Effective Time, no interest will
accrue or be payable on any amount payable upon surrender of a Certificate, a
Molloy Common Stock Warrant, a Unit or a Working Capital Note. No ServiceWare
Common Stock or ServiceWare Series E Preferred Stock will be issued to any
person or entity other than the person or entity in whose name the Certificate,
Unit or Working Capital Note surrendered for exchange is registered, and no
ServiceWare Common Stock Warrant will be issued to any person or entity other
than the person in whose name the Molloy Common Stock Warrant surrendered for
exchanged is registered.

                  (b) Distributions with Respect to Unexchanged Shares; Voting
Rights. Notwithstanding any other provision of this Agreement, no dividends or
other distributions on shares of ServiceWare Common Stock or ServiceWare Series
E Preferred Stock shall be paid until such Certificate, Working Capital Note or
Unit is surrendered for exchange as provided herein, nor shall any ServiceWare
Common Stock Warrant to be issued in exchange for a Molloy Common Stock Warrant
be exercisable until such Molloy Common Stock Warrant is surrendered for
exchange as provided herein; provided that, upon surrender, the holder of any
Certificate, Working Capital Note or Unit shall be entitled to receive dividends
and distributions declared between the Effective Time and surrender on the
Serviceware Common Stock or ServiceWare Series E Preferred Stock that such
holder is entitled to receive. At the Effective Time persons shown on the books
of Molloy as the record holders of Certificates, Working Capital Notes or Units
shall be entitled to vote and give and express consent with respect to that
number of shares of ServiceWare Common Stock or ServiceWare Series E Preferred
Stock issuable pursuant to this Article II upon conversion or exchange of their
Certificates, Working Capital Notes or Units at any regular or special meeting
of ServiceWare's shareholders with a record date, or by written consent dated,
after the Effective Time.

                  (c) Fractional Shares. No fractional shares of ServiceWare
Common Stock or ServiceWare Series E Preferred Stock or cash in lieu thereof
shall be issued or paid in the Merger, and the number of shares of ServiceWare
Common Stock or ServiceWare Series E Preferred Stock to be issued shall be
rounded to the nearest whole share. Whether or not fractional shares are
issuable shall be determined on the basis of the total number of shares of
Molloy Common Stock, Molloy Preferred Stock, Units and Working Capital Notes
that any holder is surrendering for exchange and the total number of shares of
ServiceWare Common Stock or ServiceWare Series E Preferred Stock issuable in
exchange.

                  (c) No Liability. Notwithstanding any other provision of this
Agreement, neither ServiceWare nor any other person shall be liable to any
person for any amount properly delivered to a public official upon his request
pursuant to applicable abandoned property, escheat or similar laws.

                  (d) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and such arrangements as ServiceWare shall reasonably
require as indemnity against any claim that may be made against it with respect
to such Certificate, ServiceWare will issue in exchange for such lost, stolen or
destroyed Certificate a

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certificate representing shares of ServiceWare Common Stock or ServiceWare Serie
E Preferred Stock, as the case may be, as issuable in respect thereof pursuant
to this Agreement.

                                   ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF MOLLOY

         Molloy represents and warrants to ServiceWare and Sub that the
statements contained in this Article III are true and correct as of the date
hereof and will be true and correct at the Effective Time, except as set forth
in the disclosure schedule delivered by Molloy to ServiceWare on or before the
date of this Agreement (the "Molloy Disclosure Schedule"). The Molloy Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article III and the disclosure in any
paragraph shall be deemed to qualify all other clearly relevant paragraphs in
this Article III.

         Section 3.01 Organization. Molloy is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power to own, lease and operate its
property and to carry on its business as now being conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified is reasonably expected
to have a material adverse effect on its business, assets (including intangible
assets), financial condition or results of operations ("Material Adverse
Effect"). Molloy does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any corporation, partnership, joint venture or other business association
or entity.

         Section 3.02      Capital Structure.

         (a) The Molloy Disclosure Schedule sets forth (i) the authorized,
issued and outstanding capital stock of Molloy, (ii) the number of shares of
each class or series of Molloy capital stock issuable as of the date hereof
under outstanding warrants or other rights to purchase capital stock (other than
employee stock options referred to in clause (iii) below) or held in the
treasury of Molloy (iii) the number of shares of Molloy Common Stock reserved
for issuance pursuant to stock options granted and outstanding under each Molloy
Option Plan, (iv) the number of shares of Molloy Common Stock available for
grant under each Molloy Option Plan, and (v) the amount of outstanding principal
and accrued and unpaid interest as of July 23, 1999 on the November Notes and
the Working Capital Notes. All outstanding shares of Molloy Common Stock and
Molloy Preferred Stock are duly authorized, validly issued, fully paid and
nonassessable. All shares of Molloy Common Stock and Molloy Preferred Stock
subject to issuance as specified above, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Molloy
has no obligations, contingent or otherwise, to repurchase, redeem or otherwise
acquire any shares of Molloy Common Stock, Molloy Preferred Stock or any other
capital stock of Molloy or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any entity.

                                       10
<PAGE>   11
         (b) Except as set forth in Section 3.02 of the Molloy Disclosure
Schedule, there are no equity securities of any class of Molloy, or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding. Except as set forth in Section 3.02 of the Molloy
Disclosure Schedule, there are no options, warrants, equity securities, calls,
rights, commitments or agreements of any character to which Molloy is a party or
by which it is bound obligating Molloy to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of Molloy or
obligating Molloy to grant, extend, accelerate the vesting of or enter into any
such option, warrant, equity security, call, right, commitment or agreement.
Except as set forth in Section 3.02 of the Molloy Disclosure Schedule, there are
no voting trusts, proxies or other agreements or understandings (including
agreements with respect to registration rights) with respect to the shares of
capital stock of Molloy.

             Section 3.03 Authority; No Conflict; Required Filings and Consents.

         (a) Molloy has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Molloy, subject only to the Molloy Stockholder
Approval (as defined in Section 7.01(a)). This Agreement has been duly executed
and delivered by Molloy and, assuming the due authorization, execution and
delivery by ServiceWare and Sub, constitutes the valid and binding obligation of
Molloy enforceable in accordance with its terms, except as such enforceability
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to creditors rights generally and (ii)
the availability of injunctive relief and other equitable remedies.

         (b) The execution and delivery of this Agreement by Molloy do not, and
the consummation of the transactions contemplated hereby will not, (i) conflict
with, or result in any violation or breach of any provision of the Certificate
of Incorporation or Bylaws of Molloy, (ii) result in any violation or breach of,
or constitute (with or without notice or lapse of time, or both) a default (or
give rise to a right of termination, cancellation or acceleration of any
obligation) under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which Molloy is a party or by which it or any of its properties or
assets may be bound, or (iii) subject to obtaining Molloy Stockholder Approval
and compliance with the requirements set forth in Section 3.03(c) below,
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Molloy
or any of its properties or assets, except in the case of (ii) and (iii) for any
such conflicts, violations, defaults, terminations, cancellations or
accelerations which are not reasonably expected to have a Material Adverse
Effect on Molloy or on the ability of Molloy to consummate the transactions
contemplated by this Agreement.

         (c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity"), is
required by or with respect to Molloy in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing of the Certificate of Merger with the Delaware
Secretary of State,

                                       11
<PAGE>   12
(ii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws and the laws of any foreign country and (iii) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, are not reasonably expected to have a Material Adverse Effect
on Molloy.

         Section 3.04 Financial Statements. Molloy's balance sheets as at
December 31, 1997 and 1998 and its statements of operations, cash flows and
shareholders' equity for the years then ended, audited and reported on by M.I.
Grossman & Company L.L.C., independent certified public accountants for Molloy,
and its unaudited interim balance sheets as at March 31, 1999 (the "Molloy
Balance Sheet") and 1998 and its statements of operations, cash flows and
shareholders' equity for the periods then ended were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved ("GAAP") and fairly present the financial
position of Molloy as at the respective dates and the results of its operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements (i) were or are subject to normal year-end adjustments
which were not or are not expected to be material in amount, and (ii) do not
contain footnote disclosure.

         Section 3.05 No Undisclosed Liabilities. Molloy does not have any
liabilities as of the date hereof, either accrued or contingent (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles), and whether due or to become due, which,
individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect on Molloy, other than (i) liabilities reflected in the Molloy
Balance Sheet, (ii) liabilities specifically described in this Agreement or in
the Molloy Disclosure Schedule, (iii) normal or recurring liabilities incurred
since March 31, 1999 in the ordinary course of business consistent with past
practices and which are not individually or in the aggregate, material to the
business, results, operations or financial condition of Molloy, (iv) borrowings
under the Transamerica Credit Documents, (v) liabilities under the Working
Capital Notes, (vi) liabilities relating to additional cash flow borrowings not
to exceed $500,000 and (vii) liabilities relating to this Agreement and the
transactions contemplated hereby.

         Section 3.06 Absence of Certain Changes or Events. Since the date of
the Molloy Balance Sheet, Molloy has conducted its business only in the ordinary
course and in a manner consistent with past practice and, since such date, there
has not been (i) any material adverse change in Molloy's financial condition,
results of operations or business (a "Material Adverse Change"), excluding
changes in general economic conditions affecting companies generally; (ii) any
damage, destruction or loss (whether or not covered by insurance), which damage,
destruction or loss had or could be reasonably expected to have, a Material
Adverse Effect on Molloy; (iii) any material change by Molloy in its accounting
methods, principles or practices except as required by concurrent changes in
generally accepted accounting principles; (iv) any revaluation by Molloy of any
of its assets having a Material Adverse Effect on Molloy; or (v) except as
disclosed in the Molloy Disclosure Schedule, any other action or event that
would have required the consent of ServiceWare pursuant to Section 5.01 of this
Agreement had such action or event occurred after the date of this Agreement and
that has or could be reasonably expected to have a Material Adverse Effect on
Molloy.

         Section 3.07      Taxes.

                                       12
<PAGE>   13
         (a) Definition of Taxes. For the purposes of this Agreement, a "Tax"
or, collectively, "Taxes," means any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.

         (b)      Tax Returns and Audits.

                  (i) Molloy has prepared and filed on a timely basis all
material federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") required to be filed relating to any and all
Taxes concerning or attributable to Molloy or its operations, and such Returns
are true and correct in all material respects and have been completed in all
material respects in accordance with applicable law.

                  (ii) Molloy (A) has paid or accrued all Taxes it is required
to pay or accrue prior to the Effective Time and (B) has withheld with respect
to its employees all federal and state income taxes, FICA, FUTA and other Taxes
required to be withheld, except (i) where any failure to make such payment,
accrual or withholding is not reasonably expected to have a Material Adverse
Effect on Molloy and (ii) if Molloy is contesting any such Taxes in good faith
by appropriate proceedings diligently conducted and has established such reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP.

                  (iii) There is no Tax deficiency outstanding or assessed or to
the knowledge of Molloy proposed, against Molloy that is not reflected as a
liability on the Molloy Balance Sheet (except to the extent that Molloy is
contesting the related Tax in good faith by appropriate proceedings diligently
conducted and has established such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP) nor has Molloy executed any
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax.

         Section 3.08 Title to Assets. Molloy does not own any real property.
Molloy has good title to all of its properties, as reflected in the Molloy
Balance Sheet, except for properties and assets that have been disposed of in
the ordinary course of business since the date of the Molloy Balance Sheet, free
and clear of all mortgages, liens, pledges, charges or encumbrances of any
nature, except (a) the lien of Transamerica Business Credit Corporation
("Transamerica") pursuant to the Loan and Security Agreement dated February 20,
1998, as amended, between Molloy and Transamerica and related documents (the
"Transamerica Credit Documents"), (b) the lien of current taxes, payments of
which are not delinquent, (c) such encumbrances, if any, which, singly or in the
aggregate, are not reasonably expected to have a Material Adverse Effect on
Molloy. All leases of all real property leased by Molloy ("Molloy Leases") are
valid and effective in accordance with their respective terms, and Molloy is not
in default under any of such Molloy Leases, except where the lack of such
validity and effectiveness or the existence of such default is not reasonably
expected to have a Material Adverse Effect on Molloy.

                                       13
<PAGE>   14
         Section 3.09      Intellectual Property.

         (a) Molloy owns, or has license to or otherwise has the right to use,
all patents, trademarks, trade names, service marks, copyrights, schematics,
technology, know-how, computer software programs or code and tangible or
intangible proprietary information or material and any applications for any
patents, trademarks, trade names, service marks, copyrights or other proprietary
rights, that are used in the business of Molloy (the "Molloy Intellectual
Property Rights"), except where the failure to possess such rights is not
reasonably expected to have a Material Adverse Effect on Molloy. Schedule 3.09
of the Molloy Disclosure Schedule lists (i) all patents and patent applications
and all trademarks, registered copyrights, mask works, trade names and service
marks, which Molloy considers to be material to its business and included in the
Molloy Intellectual Property Rights, including the jurisdictions in which each
such Molloy Intellectual Property Right has been issued or registered or in
which any such application for such issuance or registration has been filed,
(ii) all licenses, sublicenses and other agreements as to which Molloy is a
party and pursuant to which any person is authorized to use any Molloy
Intellectual Property Rights, which are material to the business of Molloy, and
(iii) all material licenses, sublicenses and other agreements as to which Molloy
is a party and pursuant to which Molloy is authorized to use any third party
patents, trademarks, trade names, service marks, copyrights, mask works,
schematics, technology, know-how, computer software programs or code and
tangible or intangible proprietary information or material ("Molloy Third Party
Intellectual Property Rights") which are incorporated in, are, or form a part of
any Molloy product or service that is material to the business of Molloy (except
for any license of generally commercially available software).

         (b) Molloy is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Molloy Intellectual Property Rights or Molloy Third Party Intellectual
Property Rights, except such breaches which do not, and are not reasonably
expected to, have a Material Adverse Effect on Molloy.

         (c) Molloy has not been sued in any suit, action or proceeding which
involves a claim of infringement of any patents, trademarks, service marks,
copyrights or violation of any trade secret or other proprietary right of any
third party; and Molloy has no knowledge that the manufacturing, marketing,
licensing or sale of its products infringes any patent, trademark, service mark,
copyright, trade secret or other proprietary right of any third party.

         Section 3.10 Agreements, Contracts and Commitments. Molloy has not
breached, or received in writing any claim or threat that it has breached, any
of the terms or conditions of any agreement, contract or commitment that is
material to the business of Molloy as currently conducted ("Molloy Material
Contracts") in such a manner as would permit any other party to cancel or
terminate the same or would entitle any other party to damages from Molloy under
any Molloy Material Contract which cancellation, termination or damages are
reasonably expected to have a Material Adverse Effect on Molloy. Each Molloy
Material Contract that has not expired or been terminated is in full force and
effect, and Molloy is not aware of any material default thereunder by any party
obligated to Molloy pursuant to such Molloy Material Contract.

                                       14
<PAGE>   15
         Section 3.11 Litigation. There is no action, suit or proceeding, claim,
arbitration, litigation or investigation ("Action"), against Molloy pending or
as to which Molloy has received any written notice of assertion, or, to the
knowledge of Molloy, threatened, nor, to Molloy's knowledge, is there any such
Action against any current or former affiliate of Molloy as to whom Molloy has
or may have an indemnification obligation, except any such Action as is not
reasonably likely to have a Material Adverse Effect and any Action as may arise
after the date hereof relating to the transactions contemplated by this
Agreement.

         Section 3.12 Environmental Matters.

         (a) Hazardous Material. Except as is not reasonably expected to have a
Material Adverse Effect on Molloy (i) as of the date hereof, to the knowledge of
Molloy, no underground storage tanks for the storage of Hazardous Material (as
defined below) are present under any property that Molloy has at any time owned,
operated, occupied or leased; and (ii) as of the date hereof, no material amount
of any substance that has been designated by any Governmental Entity or by
applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
PCBs, asbestos, petroleum, urea-formaldehyde and all substances listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the United States Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated pursuant to said laws, (a
"Hazardous Material"), but excluding office and janitorial supplies, are
present, as a result of the actions of Molloy or, to the knowledge of Molloy,
otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water, that Molloy has at any time owned,
operated, occupied or leased.

         (b) Hazardous Materials Activities. At no time has Molloy transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before the
Closing Date, nor has Molloy disposed of, transported, sold, or manufactured any
product containing a Hazardous Material (collectively, "Hazardous Materials
Activities") in violation of any rule, regulation, treaty or statute promulgated
by any Governmental Entity to prohibit, regulate or control Hazardous Materials
or any Hazardous Material Activity, which such violation is reasonably expected
to have a Material Adverse Effect on Molloy.

         (c) Permits. Molloy currently holds all environmental approvals,
permits, licenses, clearances and consents (the "Environmental Permits")
necessary for the conduct of any Hazardous Material Activities it conducts and
other businesses of Molloy as such activities and businesses are currently being
conducted, the absence of which is reasonably expected to have a Material
Adverse Effect on Molloy.

         (d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending or, to the
knowledge of Molloy, threatened concerning any Environmental Permit or any
Hazardous Materials Activity of Molloy other than any action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim which is
not reasonably expected to have a Material Adverse Effect on Molloy. Molloy is
not aware of any

                                       15
<PAGE>   16
fact or circumstance which could involve Molloy in any environmental litigation
or impose upon Molloy any environmental liability which is reasonably expected
to have a Material Adverse Effect on Molloy.

         Section 3.13  Employment Matters.

         (a) Definition. "Employee Plans" means all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and all bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
employee benefit plans, and all unexpired severance agreements, written or
otherwise, for the benefit of, or relating to, any current or former employee of
an entity or any trade or business (whether or not incorporated) which is a
member or which is under common control with such entity (an "ERISA Affiliate")
within the meaning of Section 414 of the Code.

         (b) Schedule and Documents. Molloy has set forth on Schedule 3.13 of
the Molloy Disclosure Schedule a list of each Employee Plan of Molloy (the
"Molloy Employee Plans"). With respect to each Molloy Employee Plan, Molloy has
made available to ServiceWare, a true and correct copy of (i) the most recent
annual report (Form 5500) filed with the Internal Revenue Service ("IRS"), (ii)
such Molloy Employee Plan, (iii) each trust agreement and group annuity
contract, if any, relating to such Molloy Employee Plan and (iv) the most recent
actuarial report or valuation relating to a Molloy Employee Plan subject to
Title IV of ERISA.

         (c) No Liability. With respect to the Molloy Employee Plans,
individually and in the aggregate, no event has occurred, and to the knowledge
of Molloy, there exists no condition or set of circumstances in connection with
which Molloy is likely to be subject to any liability that is reasonably likely
to have a Material Adverse Effect on Molloy, under ERISA, the Code or any other
applicable law.

         (d) Contributions. With respect to the Molloy Employee Plans,
individually and in the aggregate, (i) as of March 31, 1999, there are no funded
benefit obligations for which contributions have not been made or properly
accrued and there are no unfunded benefit obligations which have not been
accounted for by reserves, or otherwise properly footnoted in accordance with
generally accepted accounting principles, on the financial statements of Molloy,
and (ii) the Molloy Disclosure Schedule describes any funded or unfunded benefit
obligations which have arisen since March 31, 1999, which obligations referred
to in clause (i) or (ii) above are reasonably likely to have a Material Adverse
Effect on Molloy.

         (e) Certain Agreements. Except as set forth in Schedule 3.13 of the
Molloy Disclosure Schedule and except as provided for in this Agreement, Molloy
is not a party to any oral or written (i) union or collective bargaining
agreement, (ii) agreement with any officer or other key employee of Molloy or
any of its Subsidiaries, the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a transaction involving
Molloy of the nature contemplated by this Agreement, (iii) agreement with any
officer of Molloy providing any term of employment or compensation guarantee
extending for a period longer than one year from the date hereof or for the
payment of compensation in excess of $25,000 per annum, or (iv) agreement or
plan, including

                                       16
<PAGE>   17
any stock option plan, stock appreciation right plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.

         (f) Employee Relations. There are no significant controversies pending
or, to the knowledge of Molloy, threatened between Molloy and any
representatives of its employees. To the knowledge of Molloy, there are no
organizational efforts presently being made involving any employees of Molloy.
There are no proceedings now pending or threatened against Molloy before the
National Labor Relations Board, any state department of labor, any state
commission on human rights, the Equal Employment Opportunity Commission or any
other local, state or federal agencies having jurisdiction over employee rights,
except for any of the foregoing which would not have a Material Adverse Effect
on Molloy.

         Section 3.14 Compliance With Laws. Molloy has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which are not reasonably expected to have a
Material Adverse Effect on Molloy.

         Section 3.15. Year 2000 Compliant. Except as set forth on the Molloy
Disclosure Schedule, all equipment, software and systems (including without
limitation those developed pursuant to the license dated September 24, 1996
between Molloy and Bruce Molloy (the "Molloy License")) of, or used, by Molloy,
whether internally or for sale or license to third parties, that store, process
or present date information, including without limitation those sold or licensed
to others for use in, or used internally in, designing, manufacturing, ordering,
costing and billing, are Millennium Compliant in all material respects;
provided, however, that with respect to (a) equipment, software and systems
manufactured or developed by third parties and used by Molloy, Molloy is relying
solely on representations of such third parties (which Molloy has no reason to
believe are false) that such equipment, software or system is Millennium
Compliant, supplemented, in certain cases, by internal tests (which tests may,
at most, indicate Millennium Compliant status of the tested software in a
controlled test environment, and such tests may indicate Millennium Compliant
Status for items that are not Millennium Compliant), and (b) software
manufactured or developed by Molloy, Molloy is relying on internal tests
conducted by Molloy of its standard test suite. Notwithstanding the foregoing,
the current standard application suite of software manufactured or developed by
Molloy, when used in its current environments and in the current shipping
version, is Millennium Compliant in all material respects. "Millennium
Compliant" means such equipment, software and systems each has the ability to
provide all of the following functions: (i) accurately process all date
information whether before, during or after January 1, 2000, including,
without limitation, accepting date input, providing accurate date output and
performing accurate calculation involving dates or portions of dates;
(ii) function accurately, efficiently and without interruption before,
during and after January 1, 2000 without any change in operations, or in
any input or output procedures; (iii) accurately process date input in a
way that does not create any ambiguity as to century; (iv) accurately store,
retrieve and process date information in a manner that does not create any
ambiguity as to century; and (v) accurately present all date output
information in a manner that does not create any

                                       17
<PAGE>   18
ambiguity as to century. Molloy estimates that the aggregate unpaid cost to
become Millennium Compliant will be less than $150,000, including costs
associated with the replacement of computerized systems, hardware and equipment

         Section 3.16. Disclosure. No representation or warranty of Molloy in
this Agreement or any certificate, schedule, statement, document or instrument
furnished or to be furnished to ServiceWare pursuant hereto or in connection
herewith, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact required to be stated herein or
therein or necessary to make any statement herein or therein not misleading.

                                   ARTICLE IV

              REPRESENTATIONS AND WARRANTIES OF SERVICEWARE AND SUB

         ServiceWare and Sub jointly and severally represent and warrant to
Molloy and to each person or entity that will receive ServiceWare Common Stock,
ServiceWare Series E Preferred Stock, ServiceWare Common Stock Warrants or
vested options to purchase ServiceWare Common Stock in the Merger (a "Molloy
Holder") that the statements contained in this Article IV are true and correct
as of the date hereof and will be true and correct at the Effective Time, except
as set forth in the disclosure schedule delivered by ServiceWare to Molloy on or
before the date of this Agreement (the "ServiceWare Disclosure Schedule"). The
ServiceWare Disclosure Schedule shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Article IV and the
disclosure in any paragraph shall be deemed to qualify all other clearly
relevant paragraphs in this Article IV.

         Section 4.01 Organization. ServiceWare and each of its Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has all requisite corporate power
to own, lease and operate its property and to carry on its business as now being
conducted, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to be so qualified
is reasonably expected to have a Material Adverse Effect on ServiceWare and its
Subsidiaries, taken as a whole. Except for Sub, ServiceWare does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity. As used in this Agreement, the
word "Subsidiary" means, with respect to any party, any corporation, other
organization, whether incorporated or unincorporated, of which (i) such party or
any other Subsidiary of such party is a general partner (excluding partnerships,
the general partnership interests of which held by such party or any Subsidiary
of such party do not have a majority of the voting interest in such partnership)
or (ii) at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.

                                       18
<PAGE>   19
         Section 4.02  Capital Structure.

         (a) The ServiceWare Disclosure Schedule sets forth (i) the authorized,
issued and outstanding capital stock of ServiceWare and Sub, (ii) the number of
shares of each class and series of capital stock of ServiceWare issuable as of
the date hereof under outstanding warrants or other rights to purchase capital
stock of ServiceWare (other than the employee stock options referred to in
clause (iii) below) or held in the treasury of ServiceWare, (iii) the number of
shares of ServiceWare Common Stock reserved for issuance pursuant to stock
options granted and outstanding under ServiceWare's Amended and Restated Stock
Option Plan (the "ServiceWare Option Plan"), and (iv) the number of shares of
ServiceWare Common Stock available for grant under each ServiceWare Option Plan.
There are no outstanding warrants, options or other rights to purchase capital
stock of Sub, nor is any capital stock of Sub available for grant under the
ServiceWare Option Plan. All outstanding shares of capital stock of ServiceWare
and Sub are, and all shares to be issued in the Merger will be, duly authorized,
validly issued, fully paid and nonassessable. All shares of ServiceWare capital
stock subject to issuance as specified above, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Neither
ServiceWare nor Sub has any obligations, contingent or otherwise, to repurchase,
redeem or otherwise acquire any shares of capital stock of ServiceWare or Sub or
to provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any entity, except as provided in ServiceWare's
Amended and Restated Articles of Incorporation as in effect on the date hereof.

         (b) Except as set forth in Section 4.02 of the ServiceWare Disclosure
Schedule, there are no equity securities of any class of ServiceWare, or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding. Except as set forth in Section 4.02 of the
ServiceWare Disclosure Schedule, there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any character to which
ServiceWare is a party or by which it is bound obligating ServiceWare to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock of ServiceWare or obligating ServiceWare to grant, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. Except for the Stockholders
Agreement dated as of April 24, 1996 among ServiceWare and certain of its
shareholders, the Registration Rights Agreement dated dated as of April 24, 1996
among ServiceWare and certain of its shareholders, there are no voting trusts,
proxies or other agreements or understandings (including agreements with respect
to registration rights) with respect to the shares of capital stock of
ServiceWare.

             Section 4.03 Authority; No Conflict; Required Filings and Consents.

         (a) Each of ServiceWare and Sub have all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of ServiceWare and Sub, subject
only to the ServiceWare Shareholder Approval (as defined in Section 7.01(a)).
This Agreement has been duly executed and delivered by ServiceWare and Sub and,
assuming the due authorization, execution and delivery by Molloy, constitutes
the valid and binding obligation of ServiceWare and

                                       19
<PAGE>   20
Sub, enforceable in accordance with its terms, except as such enforceability may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors rights generally and (ii) the
availability of injunctive relief and other equitable remedies.

         (b) The execution and delivery of this Agreement by ServiceWare and Sub
do not, and the consummation of the transactions contemplated hereby will not,
(i) conflict with, or result in any violation or breach of any provision of the
Articles of Incorporation or Bylaws of ServiceWare or the Certificate of
Incorporation or Bylaws of Sub, (ii) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, contract or other agreement, instrument or obligation to which
ServiceWare or Sub is a party or by which either of them or any of their
properties or assets may be bound, or (iii) subject to obtaining the ServiceWare
Shareholder Approval and compliance with the requirements set forth in Section
4.03(c) below, conflict with or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to ServiceWare or any of its Subsidiaries or any of their properties
or assets, except in the case of (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations which are not
reasonably expected to have a Material Adverse Effect on ServiceWare and its
Subsidiaries, taken as a whole, or on the ability of ServiceWare and Sub to
consummate the transactions contemplated by this Agreement.

         (c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to ServiceWare or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the ServiceWare Articles with
the Pennsylvania Secretary of the Commonwealth, (ii) the filing of the
Certificate of Merger with the Delaware Secretary of State, (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws and the laws
of any foreign country and (iv) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, are not reasonably
expected to have a Material Adverse Effect on ServiceWare and its Subsidiaries,
taken as a whole.

         Section 4.04 Financial Statements. ServiceWare's consolidated balance
sheets as at December 31, 1997 and 1998 and its consolidated statements of
operations, cash flows and shareholders' equity for the years then ended,
audited and reported on by Ernst & Young, independent certified public
accountants for ServiceWare, and its unaudited interim consolidated balance
sheets as at March 31, 1999 (the "ServiceWare Balance Sheet") and 1998 and its
consolidated statements of operations, cash flows and shareholders' equity for
the periods then ended were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved and fairly present the financial position of ServiceWare and its
Subsidiaries as at the respective dates and the results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements (i) were or are subject to normal year-end adjustments
which were not or are not expected to be material in amount, and (ii) do not
contain footnote disclosure.

                                       20
<PAGE>   21
         Section 4.05 No Undisclosed Liabilities. ServiceWare and its
Subsidiaries do not have any liabilities as of the date hereof, either accrued
or contingent (whether or not required to be reflected in financial statements
in accordance with generally accepted accounting principles), and whether due or
to become due, which, individually or in the aggregate, are reasonably likely to
have a Material Adverse Effect on ServiceWare and its Subsidiaries, taken as a
whole, other than (i) liabilities reflected in the ServiceWare Balance Sheet,
(ii) liabilities specifically described in this Agreement or in the ServiceWare
Disclosure Schedule, (iii) normal or recurring liabilities incurred since March
31, 1999 in the ordinary course of business consistent with past practices and
which are not individually or in the aggregate, material to the business,
results, operations or financial condition of ServiceWare and its Subsidiaries,
taken as a whole and (iv) liabilities relating to this Agreement, the
transactions contemplated hereby and the ServiceWare Financing (as defined in
Section 7.01(d).

         Section 4.06 Absence of Certain Changes or Events. Since the date of
the ServiceWare Balance Sheet, ServiceWare has conducted its business only in
the ordinary course and in a manner consistent with past practice and, since
such date, there has not been (i) any Material Adverse Change affecting
ServiceWare and it Subsidiaries, taken as a whole, excluding changes in general
economic conditions affecting companies generally; (ii) any damage, destruction
or loss (whether or not covered by insurance), which damage, destruction or loss
had or could be reasonably expected to have, a Material Adverse Effect on
ServiceWare and its Subsidiaries, taken as a whole; (iii) any material change by
ServiceWare in its accounting methods, principles or practices except as
required by concurrent changes in generally accepted accounting principles; (iv)
any revaluation by ServiceWare of any of its assets having a Material Adverse
Effect on ServiceWare and its Subsidiaries, taken as a whole, or (v) except as
disclosed in the ServiceWare Disclosure Schedule, any other action or event that
would have required the consent of Molloy pursuant to Section 5.02 of this
Agreement had such action or event occurred after the date of this Agreement and
that has or could be reasonably expected to have a Material Adverse Effect on
ServiceWare and its Subsidiaries, taken as a whole.

         Section 4.07      Taxes.

         (a)      Tax Returns and Audits.

                  (i) ServiceWare has prepared and filed on a timely basis all
material Returns required to be filed relating to any and all Taxes concerning
or attributable to ServiceWare or its operations, and such Returns are true and
correct in all material respects and have been completed in all material
respects in accordance with applicable law.

                  (ii) ServiceWare (A) has paid or accrued all Taxes it is
required to pay or accrue prior to the Effective Time and (B) has withheld with
respect to its employees all federal and state income taxes, FICA, FUTA and
other Taxes required to be withheld, except (i) where any failure to make such
payment, accrual or withholding is not reasonably expected to have a Material
Adverse Effect on ServiceWare and its Subsidiaries, taken as a whole, and (ii)
if ServiceWare is contesting any such Taxes in good faith by appropriate
proceedings diligently conducted and has established such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP.

                                       21
<PAGE>   22
                  (iii) There is no Tax deficiency outstanding or assessed or to
ServiceWare's knowledge proposed, against ServiceWare that is not reflected as a
liability on the ServiceWare Balance Sheet (except to the extent that
ServiceWare is contesting the related Tax in good faith by appropriate
proceedings diligently conducted and has established such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP) nor
has ServiceWare executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.

         Section 4.08 Title to Assets. Neither ServiceWare nor any of its
Subsidiaries owns any real property. ServiceWare and its Subsidiaries have good
title to all of their properties, as reflected in the ServiceWare Balance Sheet,
except for properties and assets that have been disposed of in the ordinary
course of business since the date of the ServiceWare Balance Sheet, free and
clear of all mortgages, liens, pledges, charges or encumbrances of any nature,
except (a) the lien of PNC pursuant to the Amended and Restated Loan Agreement
dated as of September 3, 1998, as amended, between ServiceWare and PNC and
related documents (the "PNC Credit Documents"), (b) the lien of current taxes,
payments of which are not delinquent, (c) such encumbrances, if any, which,
singly or in the aggregate, are not reasonably expected to have a Material
Adverse Effect on ServiceWare. All leases of all real property leased by
ServiceWare or any of its Subsidiaries ("ServiceWare Leases") are valid and
effective in accordance with their respective terms, and ServiceWare or such
Subsidiary is not in default under any of such ServiceWare Leases, except where
the lack of such validity and effectiveness or the existence of such default is
not reasonably expected to have a Material Adverse Effect on ServiceWare and its
Subsidiaries, taken as a whole.

         Section 4.09      Intellectual Property.

         (a) ServiceWare owns, or has license or otherwise has the right to use,
all patents, trademarks, trade names, service marks, copyrights, schematics,
technology, know-how, computer software programs or code and tangible or
intangible proprietary information or material and any applications for any
patents, trademarks, trade names, service marks, copyrights or other proprietary
rights, that are used in the business of ServiceWare (the "ServiceWare
Intellectual Property Rights"), except where the failure to possess such rights
is not reasonably expected to have a Material Adverse Effect on ServiceWare and
its Subsidiaries, taken as a whole. Schedule 4.09 of the ServiceWare Disclosure
Schedule lists (i) all patents and patent applications and all trademarks,
registered copyrights, mask works, trade names and service marks, which
ServiceWare considers to be material to its business and included in the
ServiceWare Intellectual Property Rights, including the jurisdictions in which
each such ServiceWare Intellectual Property Right has been issued or registered
or in which any such application for such issuance or registration has been
filed, (ii) all licenses, sublicenses and other agreements as to which
ServiceWare is a party and pursuant to which any person is authorized to use any
ServiceWare Intellectual Property Rights, which are material to the business of
ServiceWare, and (iii) all material licenses, sublicenses and other agreements
as to which ServiceWare is a party and pursuant to which ServiceWare is
authorized to use any third party patents, trademarks, trade names, service
marks, copyrights, mask works, schematics, technology, know-how, computer
software programs or code and tangible or intangible proprietary information or
material ("ServiceWare Third Party Intellectual Property Rights") which are

                                       22
<PAGE>   23
incorporated in, are, or form a part of any ServiceWare product or service that
is material to the business of ServiceWare (except for any license of generally
commercially available software).

         (b) ServiceWare is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the ServiceWare Intellectual Property Rights or ServiceWare Third Party
Intellectual Property Rights, except such breaches which do not, and are not
reasonably expected to, have a Material Adverse Effect on ServiceWare and its
Subsidiaries, taken as a whole.

         (c) ServiceWare (i) has not been sued in any suit, action or proceeding
which involves a claim of infringement of any patents, trademarks, service
marks, copyrights or violation of any trade secret or other proprietary right of
any third party; and (ii) has no knowledge that the manufacturing, marketing,
licensing or sale of its products infringes any patent, trademark, service mark,
copyright, trade secret or other proprietary right of any third party.

         Section 4.10 Agreements, Contracts and Commitments. ServiceWare has not
breached, or received in writing any claim or threat that it has breached, any
of the terms or conditions of any agreement, contract or commitment that is
material to the business of ServiceWare as currently conducted ("ServiceWare
Material Contracts") in such a manner as would permit any other party to cancel
or terminate the same or would entitle any other party to damages from
ServiceWare under any ServiceWare Material Contract which cancellation,
termination or damages would reasonably be expected to have a Material Adverse
Effect on ServiceWare and its Subsidiaries, taken as a whole. Each ServiceWare
Material Contract that has not expired or been terminated is in full force and
effect, and ServiceWare is not aware of any material default thereunder by any
party obligated to ServiceWare pursuant to such ServiceWare Material Contract.

         Section 4.11 Litigation. There is no Action against ServiceWare pending
or as to which ServiceWare has received any written notice of assertion, or, to
ServiceWare's knowledge, threatened, nor, to ServiceWare's knowledge, is there
any such Action against any current or former affiliate of ServiceWare as to
whom ServiceWare has or may have an indemnification obligation, except any such
Action as is not reasonably likely to have a Material Adverse Effect and any
Action as may arise after the date hereof relating to the transactions
contemplated by this Agreement.

         Section 4.12      Environmental Matters.

         (a) Hazardous Material. Except as is not reasonably expected to have a
Material Adverse Effect on ServiceWare and its Subsidiaries, taken as a whole,
(i) as of the date hereof, to the knowledge of ServiceWare, no underground
storage tanks for the storage of Hazardous Materials are present under any
property that ServiceWare or any of its Subsidiaries has at any time owned,
operated, occupied or leased; and (ii) as of the date hereof, no material amount
of any substance that has been designated by any Governmental Entity or by
applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
any Hazardous Material, but excluding office and janitorial supplies, are
present, as a result of the actions of ServiceWare or any of its Subsidiaries
and, to the knowledge of ServiceWare,

                                       23
<PAGE>   24
otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water, that ServiceWare or any of its
Subsidiaries has at any time owned, operated, occupied or leased.

         (b) Hazardous Materials Activities. At no time has ServiceWare or any
of its Subsidiaries transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in violation
of any law in effect on or before the Closing Date, nor has ServiceWare or any
of its Subsidiaries conducted any Hazardous Materials Activities in violation of
any rule, regulation, treaty or statute promulgated by any Governmental Entity
to prohibit, regulate or control Hazardous Materials or any Hazardous Material
Activity, which such violation is reasonably expected to have a Material Adverse
Effect on ServiceWare and its Subsidiaries, taken as a whole.

         (c) Permits. ServiceWare currently holds all Environmental Permits
necessary for the conduct of any Hazardous Material Activities which it or any
of its Subsidiaries may conduct and other businesses of ServiceWare and its
Subsidiaries as such activities and businesses are currently being conducted,
the absence of which is reasonably expected to have a Material Adverse Effect on
ServiceWare and its Subsidiaries, taken as a whole.

         (d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending or, to the
knowledge of ServiceWare, threatened concerning any Environmental Permit or any
Hazardous Materials Activity of ServiceWare or any of its Subsidiaries other
than any action, proceeding, revocation proceeding, amendment procedure, writ,
injunction or claim which is not reasonably expected to have a Material Adverse
Effect on ServiceWare and its Subsidiaries, taken as a whole. ServiceWare is not
aware of any fact or circumstance which could involve ServiceWare or any of its
Subsidiaries in any environmental litigation or impose upon ServiceWare or any
of its Subsidiaries any environmental liability which is reasonably expected to
have a Material Adverse Effect on ServiceWare and its Subsidiaries taken as a
whole.

         Section 4.13      Employment Matters.

         (a) No Liability. With respect to the Employee Plans of ServiceWare
(the "ServiceWare Employee Plans"), individually and in the aggregate, no event
has occurred, and to the knowledge of ServiceWare, there exists no condition or
set of circumstances in connection with which ServiceWare is likely to be
subject to any liability that is reasonably likely to have a Material Adverse
Effect on ServiceWare and its Subsidiaries, taken as a whole, under ERISA, the
Code or any other applicable law.

         (b) Contributions. With respect to the ServiceWare Employee Plans,
individually and in the aggregate, (i) as of March 31, 1999, there are no funded
benefit obligations for which contributions have not been made or properly
accrued and there are no unfunded benefit obligations which have not been
accounted for by reserves, or otherwise properly footnoted in accordance with
generally accepted accounting principles, on the financial statements of
ServiceWare and (ii) the ServiceWare Disclosure Schedule describes any funded or
unfunded benefit obligations which have

                                       24
<PAGE>   25
arisen since March 31, 1999, which obligations referred to in clause (i) or (ii)
above are reasonably likely to have a Material Adverse Effect on ServiceWare and
its Subsidiaries, taken as a whole.

         (c) Employee Matters. ServiceWare is not party to any union or
collective bargaining agreement. There are no significant controversies pending
or, to the knowledge of ServiceWare, threatened between ServiceWare and any
representatives of its employees. To the knowledge of ServiceWare, there are no
organizational efforts presently being made involving any employees of
ServiceWare. There are no proceedings now pending or threatened against
ServiceWare before the National Labor Relations Board, any state department of
labor, any state commission on human rights, the Equal Employment Opportunity
Commission or any other local, state or federal agencies having jurisdiction
over employee rights, except for any of the foregoing which would not have a
Material Adverse Effect on ServiceWare and its Subsidiaries, taken as a whole.

         Section 4.14 Compliance With Laws. Each of ServiceWare and its
Subsidiaries has complied with, is not in violation of, and has not received any
notices of violation with respect to, any federal, state or local statute, law
or regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for failures to comply or violations which are
not reasonably expected to have a Material Adverse Effect on ServiceWare and its
Subsidiaries, taken as a whole.

         Section 4.15. Year 2000 Compliant. Except as set forth on the
ServiceWare Disclosure Schedule, all equipment, software and systems of, or
used, by ServiceWare, whether internally or for sale or license to third
parties, that store, process or present date information, including without
limitation those sold or licensed to others for use in, or used internally in,
designing, manufacturing, ordering, costing and billing, are Millennium
Compliant in all material respects; provided, however, that with respect to
equipment, software and systems manufactured or developed by third parties and
used by ServiceWare, ServiceWare is relying solely on representations of such
third parties that such equipment, software or system is Millennium Compliant.
ServiceWare has prepared a plan to become Millennium Compliant, which plan (i)
identifies the business systems of or used by ServiceWare (whether internally or
for sale or license to third parties), including computer software, computer
systems and other equipment within information systems infrastructure, financial
and administrative systems, process control and manufacturing operating systems
and significant vendors and customers, that are susceptible to system failures
or processing errors as a result of the Year 2000 or century date change issues,
and (ii) involves the actual remediation and replacement of such business
systems. ServiceWare estimates that the aggregate unpaid cost to become
Millennium Compliant will be less than $100,000, including costs associated with
the replacement of computerized systems, hardware and equipment.

         Section 4.16. U.S. Real Property Holding Corporation.  ServiceWare is
not now and has never been a "United States Real Property Holding Corporation",
as defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.

         Section 4.17. Section 1202 Stock Qualification.  As of the Closing and
taking into account the Merger, (i) ServiceWare will be a "qualified small
business" within the meaning of Section 1202(d) of the Code, (ii) the shares of
ServiceWare to be issued in connection with the Merger shall

                                       25
<PAGE>   26
qualify as "qualified small business stock" within the meaning of Section
1202(c) of the Code and (iii) ServiceWare will meet the active business
requirements of Section 1202(e) of the Code. The parties acknowledge that there
are no final treasury regulations promulgated under Section 1202 of the Code,
and the foregoing representation is based on ServiceWare's reasonable
interpretation of Section 1202 as it is currently written.

         Section 4.18. Disclosure. No representation or warranty of ServiceWare
in this Agreement or any certificate, schedule, statement, document or
instrument furnished or to be furnished to ServiceWare pursuant hereto or in
connection herewith, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated herein
or therein or necessary to make any statement herein or therein not misleading.

                                    ARTICLE V

                               CONDUCT OF BUSINESS

         Section 5.01 Covenants of Molloy. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement and the Effective Time, Molloy agrees (except to the extent that
ServiceWare shall otherwise consent in writing), to carry on its business in the
usual, regular and ordinary course in substantially the same manner as
previously conducted, to pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform other obligations when due,
and to use all reasonable efforts consistent with past practices and policies to
preserve intact its present business organization, keep available the services
of its present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it, to the end that its goodwill and ongoing businesses
be substantially unimpaired at the Effective Time. Molloy shall promptly notify
ServiceWare of any event or occurrence not in the ordinary course of its
business (including without limitation the filing of any Action against it or
the receipt by it of any threat in writing of any Action relating to this
Agreement and the transactions contemplated hereby). Except as expressly
contemplated by this Agreement, Molloy shall not, without the prior written
consent of ServiceWare:

         (a) Accelerate, amend or change the period of exercisability of options
or restricted stock granted under any employee stock plan or authorize cash
payments in exchange for any options granted under any of such plans except as
required by the terms of such plans or any related agreements in effect as of
the date of this Agreement;

         (b) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to its Intellectual Property Rights, other than in
the ordinary course of business consistent with past practices;

         (c) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its

                                       26
<PAGE>   27
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of such
party, or purchase or otherwise acquire, directly or indirectly, any shares of
its capital stock;

         (d) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any shares of its
capital stock or securities convertible into shares of its capital stock, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities, other than shares of Molloy Common Stock or Molloy
Preferred Stock issuable pursuant to its existing stock option plans, warrants
or rights (which options, warrants or rights are outstanding on the date
hereof);

         (e) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or in any other manner, any business or any corporation, partnership,
association or other business organization or division, or otherwise acquire or
agree to acquire any assets otherwise than in the ordinary course of business;

         (f) Directly or indirectly sell, lease, license or otherwise dispose of
any of its properties or assets except in the ordinary course of business;

         (g) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary or
wages of employees in accordance with past practice, (ii) increase or agree to
increase the compensation payable or to become payable to officers or grant any
additional severance or termination pay to or enter into any employment or
severance agreements with, such officers, (iii) grant any severance or
termination pay to, or enter into any employment or severance agreement, with
any employee, except in the ordinary course of business consistent with
practices or policies currently in effect, (iv) enter into any collective
bargaining agreement, (v) establish, adopt, enter into or amend any bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, trust, fund, policy or arrangement for the benefit of any directors,
officers or employees except as contemplated by this Agreement;

         (h) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of such party or any of its Subsidiaries or
guarantee any debt securities of others, other than indebtedness incurred under
the terms existing on the date hereof under the Transamerica Credit Documents,
indebtedness incurred by Molloy to meet its working capital requirements and
indebtedness contemplated by that certain letter agreement dated April 29, 1999
between Molloy and C. E. Unterberg Towbin Capital Partners I L.P.;

         (i) Make or commit to make any capital or other extraordinary
expenditures;

         (j) Amend or propose to amend its Certificate of Incorporation or
Bylaws; or

                                       27
<PAGE>   28
         (k) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (j) above, or any action which is reasonably
likely to make any of its representations or warranties contained in this
Agreement untrue or incorrect in any material respect on the date made (to the
extent so limited) or as of the Effective Time.

         Section 5.02 Covenants of ServiceWare. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement and the Effective Time, ServiceWare agrees as to itself and its
Subsidiaries (except to the extent that Molloy shall otherwise consent in
writing) to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform other obligations when due, and to use all reasonable efforts
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
key employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it,
to the end that its goodwill and ongoing businesses be substantially unimpaired
at the Effective Time. ServiceWare shall promptly notify Molloy of any event or
occurrence not in the ordinary course of its business (including without
limitation the filing of any Action against it or the receipt by it of any
threat of any Action relating to this Agreement and the transactions
contemplated hereby). Except as expressly contemplated by this Agreement,
ServiceWare shall not, without the prior written consent of Molloy:

         (a) Accelerate, amend or change the period of exercisability of options
or restricted stock granted under any employee stock plan or authorize cash
payments in exchange for any options granted under any of such plans except as
required by the terms of such plans or any related agreements in effect as of
the date of this Agreement;

         (b) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to its Intellectual Property Rights, other than in
the ordinary course of business consistent with past practices;

         (c) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock of such party, or purchase or otherwise acquire,
directly or indirectly, any shares of its capital stock, except for the
declaration of accrued dividends on ServiceWare's Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock (so long as the holders thereof
have previously agreed to receive payment of such dividends in ServiceWare
Common Stock);

         (d) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of, or purchase or propose the purchase of, any shares of its
capital stock or securities convertible into shares of its capital stock, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities, except as contemplated by this Agreement, in connection
with the ServiceWare Financing or as required by ServiceWare's existing stock
option plans, by the PNC

                                       28
<PAGE>   29
Warrants or in connection with indebtedness incurred by ServiceWare to meet its
working capital requirements;

         (e) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or in any other manner, any business or any corporation, partnership,
association or other business organization or division, or otherwise acquire or
agree to acquire any assets otherwise than in the ordinary course of business;

         (f) Directly or indirectly sell, lease, license or otherwise dispose of
any of its properties or assets except in the ordinary course of business;

         (g) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary or
wages of employees in accordance with past practice, (ii) increase or agree to
increase the compensation payable or to become payable to officers or grant any
additional severance or termination pay to or enter into any employment or
severance agreements with, such officers, (iii) grant any severance or
termination pay to, or enter into any employment or severance agreement, with
any employee, except in the ordinary course of business consistent with
practices or policies currently in effect, (iv) enter into any collective
bargaining agreement, (v) establish, adopt, enter into or amend any bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, trust, fund, policy or arrangement for the benefit of any directors,
officers or employees except as contemplated by this Agreement;

         (h) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of such party or any of its Subsidiaries or
guarantee any debt securities of others, other than indebtedness incurred under
the terms existing on the date hereof under the PNC Credit Documents and
indebtedness incurred by ServiceWare to meet its working capital requirements;

         (i) Make or commit to make any capital or other extraordinary
expenditures;

         (j) Amend or propose to amend its Articles of Incorporation or Bylaws,
except as contemplated by this Agreement;

         (k) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (j) above, or any action which is reasonably
likely to make any of its representations or warranties contained in this
Agreement untrue or incorrect in any material respect on the date made (to the
extent so limited) or as of the Effective Time.

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<PAGE>   30
                                   ARTICLE VI

                              ADDITIONAL AGREEMENTS

         Section 6.01 No Solicitation.  From and after the date hereof until the
earlier of the termination of this Agreement and the Effective Time:

         (a) Molloy agrees that neither it nor any of its shareholders, officers
or directors shall, and Molloy shall cause its employees, agents and
representatives (including, without limitation, any investment banking, legal or
accounting firm retained by it and any individual member or employee of the
foregoing) (each, an "Agent") not to, (a) initiate, solicit or seek, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its stockholders
or any of them) with respect to a merger, acquisition, consolidation,
recapitalization, liquidation, dissolution or similar transaction involving, or
any purchase of all or any substantial portion of the assets or any equity
securities of, Molloy or any of its subsidiaries (any such proposal or offer
being hereinafter referred to as a "Molloy Acquisition Proposal"), or (b) engage
in any negotiations concerning, or provide any confidential information or data
to, or have any substantive discussions with, any person relating to a Molloy
Acquisition Proposal, or (c) otherwise cooperate in any effort or attempt to
make, implement or accept a Molloy Acquisition Proposal. Molloy and its
stockholders and Agents shall immediately cease and cause to be terminated any
existing activities, including discussions or negotiations with any parties,
conducted heretofore with respect to any Molloy Acquisition Proposal and shall
take the necessary steps to inform the individuals and entities referred to in
the first sentence hereof of the obligations undertaken in this Section 6.01(a).
Molloy shall notify ServiceWare immediately if any inquiries, proposals or
offers related to a Molloy Acquisition Proposal are received by, any
confidential information or data is requested from, or any negotiations or
discussions related to a Molloy Acquisition Proposal are sought to be initiated
or (subject to any outstanding confidentiality obligations of Molloy) continued
with, it or any individual or entity referred to in the first sentence of this
Section 6.01(a). Notwithstanding the foregoing, this provision shall not
eliminate the ability of Molloy to seek outside financing to meet its working
capital needs (subject to the provisions of Section 7.02(g) and to the
understanding that in no event shall the percentage of the post-Merger fully
diluted as converted ownership of ServiceWare, as provided in Article II, be
adjusted as a result of any equity component of such outside financing).

         (b) ServiceWare agrees that neither it nor any of its stockholders,
officers or directors shall, and ServiceWare shall cause its Agents not to, (a)
initiate, solicit or seek, directly or indirectly, any inquiries or the making
or implementation of any proposal or offer (including, without limitation, any
proposal or offer to its stockholders or any of them) with respect to a merger,
acquisition, consolidation, recapitalization, liquidation, dissolution or
similar transaction involving, or any purchase of all or any substantial portion
of the assets or any equity securities of, ServiceWare or any of its
subsidiaries (any such proposal or offer being hereinafter referred to as a
"ServiceWare Acquisition Proposal"), or (b) engage in any negotiations
concerning, or provide any confidential information or data to, or have any
substantive discussions with, any person relating to a ServiceWare Acquisition
Proposal, or (c) otherwise cooperate in any effort or attempt to make, implement
or accept a ServiceWare Acquisition Proposal. Neither ServiceWare nor any of its

                                       30
<PAGE>   31
Agents is currently engaged in any activities, discussions or negotiations with
any parties with respect to a ServiceWare Acquisition Proposal (except for the
Merger and the ServiceWare Financing). ServiceWare shall notify Molloy
immediately if any inquiries, proposals or offers related to a ServiceWare
Acquisition Proposal are received by, any confidential information or data is
requested from, or any negotiations or discussions related to a ServiceWare
Acquisition Proposal are sought to be initiated with, it or any individual or
entity referred to in the first sentence of this Section 6.01(b).
Notwithstanding the foregoing, this provision shall not eliminate the ability of
ServiceWare to seek outside financing to meet its working capital needs.

         Section 6.02 Access to Information. Upon reasonable notice and subject
to applicable laws, Molloy and ServiceWare shall afford to the officers,
employees, accountants, counsel and other representatives of the other, access,
during normal business hours during the period prior to the earlier of the
termination of this Agreement and the Effective Time, to all its properties,
books, contracts, commitments and records. During the period prior to the
earlier of the termination of this Agreement or the Effective Time, Molloy and
ServiceWare shall furnish promptly to the other all information concerning its
business, properties and personnel as the other may reasonably request. The
parties acknowledge that they are bound by the provisions of the Confidentiality
Agreement previously entered into between ServiceWare and Molloy (the
"Confidentiality Agreement") . No information or knowledge obtained in any
investigation pursuant to this Section 6.02 shall affect or be deemed to modify
a representation or warranty of Molloy or ServiceWare contained in this
Agreement or the conditions to the obligations of the parties to consummate the
Merger.

         Section 6.03 Stockholders' Meetings. Molloy, ServiceWare and Sub each
shall call a meeting of its respective stockholders or solicit a written consent
of its respective stockholders to be held or executed as promptly as practicable
after the execution and delivery of this Agreement for the purpose of obtaining
the Molloy Stockholder Approval and the ServiceWare Stockholder Approval (each
as defined in Section 7.01(a)).

         Section 6.04 Legal Conditions to Merger. Each of ServiceWare and Molloy
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the Merger and will
promptly cooperate with and furnish information to each other in connection with
any such requirements imposed upon any of them or any of their Subsidiaries in
connection with the Merger. Each of ServiceWare and Molloy will, and will cause
its Subsidiaries to, take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other third party,
required to be obtained or made by ServiceWare, Molloy or any of their
Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement.

         Section 6.05 Public Disclosure. ServiceWare and Molloy shall consult
with each other before issuing any press release or otherwise making any public
statement with respect to the Merger or this Agreement and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by law.

                                       31
<PAGE>   32
         Section 6.06 Tax-Free Reorganization.  ServiceWare and Molloy shall
each use its best efforts to cause the Merger to be treated as a reorganization
within the meaning of Section 368(a) of the Code.

         Section 6.07 Stock Plans and Other Employee Benefit Matters.

         (a) At the Effective Time, (i) ServiceWare shall assume and become the
sponsor of the Molloy Option Plan (the "Assumed Option Plan"), (ii) the names of
the Assumed Option Plan shall be changed to reflect the ServiceWare name, (iii)
except as provided in Section 2.01(j), there shall be substituted a number of
shares of ServiceWare Common Stock equal to the Conversion Number for each share
of Molloy Common Stock available at the Effective Time under the Assumed Option
Plan for future option grants and (iv) except as provided in Section 2.01(j),
each outstanding option to purchase shares of Molloy Common Stock (a "Molloy
Stock Option") under the Molloy Option Plan, whether vested or unvested, shall
be deemed to constitute an option to acquire a number of shares of ServiceWare
Common Stock equal to the Conversion Number (a "ServiceWare Stock Option") for
each share of Molloy Common Stock subject to such Molloy Stock Option, at an
exercise price equal to the exercise price per share of Molloy Common Stock
divided by the Conversion Number. The ServiceWare Stock Options shall each vest
in accordance with the vesting schedules applicable to the corresponding Molloy
Stock Options and shall be incentive stock options or non-qualified stock
options as shall correspond to the applicable Molloy Stock Option.

         (b) As soon as practicable after the Effective Time, ServiceWare shall
deliver to the participants in Molloy Option Plan appropriate notice setting
forth such participants' rights pursuant thereto and the grants pursuant to
Molloy Option Plan shall continue in effect on the same terms and conditions,
except as set forth above.

         (c) ServiceWare shall take all corporate action necessary at or prior
to the Effective Time to reserve for issuance 4 million shares of ServiceWare
Common Stock, which shall include a sufficient number of shares of ServiceWare
Common Stock for delivery under the Assumed Option Plan plus an additional
240,000 shares for issuance of new stock options to be granted to former Molloy
employees under the terms of the ServiceWare Plan.

         (d) Each Molloy employee shall receive full credit for his service as a
full-time employee of Molloy under any employee benefit plan or arrangement of
ServiceWare for purposes of eligibility to participate in any such plan or
arrangement and, where applicable, for purposes of determining the extent to
which the employee's benefit under such plan or arrangement is vested.

         Section 6.08 Brokers or Finders. Each of ServiceWare and Molloy
represents, as to itself, its Subsidiaries and its affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement,
except that ServiceWare is obligated to pay a brokers' fee of no more than
$250,000 to PNC.

                                       32
<PAGE>   33
         Section 6.09 Indemnification.

         (a) From and after the Effective Time, ServiceWare and the Continuing
Corporation shall, indemnify, defend and hold harmless each person who is as of
the date hereof, an officer or director of Molloy (the "Indemnified Parties")
against, and shall advance the expenses of each Indemnified Party with respect
to, all losses, claims, damages, costs, expenses (including reasonable
attorneys' fees), liabilities or judgments or amounts that are paid in
settlement with the approval of the indemnifying party (which approval shall not
unreasonably be withheld or delayed) of or in connection with any claim, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is or was a director or
officer of Molloy, pertaining to any matter existing or occurring at or prior to
the Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time, including without limitation the transactions contemplated by
this Agreement ("Indemnified Liabilities"), to the full extent a corporation is
permitted under the DGCL to indemnify and advance expenses to its own directors
or officers, as the case may be, provided that neither ServiceWare nor the
Continuing Corporation shall be liable for any settlement of any claim effected
without its written consent (which consent shall not be unreasonably withheld or
delayed). Any Indemnified Party wishing to claim indemnification under this
Section 6.09, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify ServiceWare and the Continuing Corporation,
and shall deliver to ServiceWare and the Continuing Corporation the undertaking
contemplated by Section 145(e) of the DGCL. The Indemnified Parties as a group
shall only be entitled to be represented by one law firm to represent them as a
group with respect to each such matter unless there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the positions of any two or more Indemnified Parties.

         (b) The provisions of this Section 6.09 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and representatives.

         Section 6.10 Additional Agreements; Reasonable Efforts. Subject to the
terms and conditions of this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the Molloy Stockholder Approval and the ServiceWare
Shareholder Approval, including cooperating fully with the other party. In case
at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement or to vest the Continuing
Corporation with full title to all properties, assets, rights, approvals,
immunities and franchises of either of the Constituent Corporations, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.

                                       33
<PAGE>   34
                                   ARTICLE VII

                              CONDITIONS TO MERGER

         Section 7.01 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction, or waiver by Molloy and
ServiceWare, on or prior to the Closing Date of the following conditions:

         (a) Stockholder Approval. This Agreement, the Merger and the allocation
of the consideration payable in the Merger among the holders of capital stock of
Molloy, Molloy Common Stock Warrants, Units and Working Capital Notes shall have
been approved and adopted by the affirmative vote of such holders of Molloy
Common Stock, Molloy Preferred Stock and other securities issued by Molloy as
may be required under the governing instruments of Molloy, any other applicable
agreements and applicable law (including, if necessary, through amendment of the
Certificate of Incorporation of Molloy) (the "Molloy Stockholder Approval"). The
Merger shall have been approved by ServiceWare as the sole stockholder of Sub,
and the issuance of shares of ServiceWare Common Stock pursuant to the Merger
and adoption of the ServiceWare Articles shall have been approved by the
affirmative vote of such holders of ServiceWare Common Stock and outstanding
series of preferred stock of ServiceWare ("ServiceWare Preferred Stock") as may
be required under the governing instruments of ServiceWare and by applicable law
(such approvals by the shareholders of Sub and the ServiceWare being referred to
as the "ServiceWare Shareholder Approval").

         (b) Certificates of Amendment. The Certificate of Amendment relating to
the ServiceWare Articles and the Certificate of Amendment to the Certificate of
Incorporation of Molloy, if included as part of the Molloy Stockholder Approval,
shall have been filed with the Secretary of State of the State of Delaware.

         (c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Merger or limiting or restricting
ServiceWare's conduct or operation of the business of ServiceWare after the
Merger shall have been issued, nor shall there be any statute, rule, regulation
or order enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger illegal.

         (d) ServiceWare Financing. Contemporaneously with the Effective Time,
ServiceWare shall have completed the equity financing (the "ServiceWare
Financing") contemplated by a Series D Convertible Preferred Stock and Common
Stock Warrant Purchase Agreement in substantially the form attached hereto as
Exhibit E, and shall have entered into a Shareholders' Agreement in
substantially the form attached hereto as Exhibit F (which includes provisions
pursuant to which the parties thereto agree to vote their shares of ServiceWare
to elect a director nominated by the Molloy Holders holding voting securities of
ServiceWare ) (the "Shareholders' Agreement) and a Registration Rights Agreement
in substantially the form attached hereto as Exhibit G (the "Registration Rights
Agreement").

                                       34
<PAGE>   35
         (e) Consulting and Employment Arrangements. ServiceWare shall have
entered into a Compensation, Consulting and Severance Agreement with Bruce
Molloy in substantially the form attached hereto as Exhibit H and shall have
entered into employment arrangements with Louis Venezia satisfactory to
ServiceWare and to each such employee.

         Section 7.02 Additional Conditions to Obligations of ServiceWare and
Sub. The obligations of ServiceWare and Sub to effect the Merger are subject to
the satisfaction of each of the following conditions, any of which may be waived
in writing exclusively by ServiceWare and Sub:

         (a) Representations and Warranties. The representations and warranties
of Molloy set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, except for (i) changes
contemplated by this Agreement and (ii) where the failure to be true and correct
would not have a Material Adverse Effect on Molloy or a material adverse effect
upon the consummation of the transactions contemplated hereby; and ServiceWare
shall have received a certificate signed on behalf of Molloy by the chief
executive officer of Molloy to such effect.

         (b) Performance of Obligations of Molloy. Molloy shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date; and ServiceWare shall have
received a certificate signed on behalf of Molloy by the chief executive officer
of Molloy to such effect.

         (c) Approvals. The authorizations, consents, orders or approvals of
third parties and any Governmental Entity, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity set forth on
Sections 3.03(b) and 3.03 (c) of the Molloy Disclosure Schedule (other than that
of Transamerica) shall have been filed, occurred or been obtained.

         (d) Blue Sky Laws. ServiceWare shall have received all state securities
or "Blue Sky" permits and other authorizations necessary to issue shares of
ServiceWare Common Stock pursuant to the Merger.

         (e) Dissenters' and Appraisal Rights. The period for the assertion of
dissenters' and appraisal rights by stockholders of Molloy shall have expired,
and no holders of Molloy Common Stock or Molloy Preferred Stock shall have
perfected or preserved such rights in connection with the Merger.

         (f) Transfer of Intellectual Property. Bruce Molloy shall have
transferred to Molloy all his right, title and interest in and to "System and
Method for Representing and Retrieving Knowledge in an Adaptive Cognitive
Network," U. S. Patent Serial No. 5,787,234, and the trademarks "TOP OF MIND"
and "COGNITIVE PROCESSOR," Trademark Register No. 1,919,047 (which is the only
intellectual property right of any kind owned by Bruce Molloy and used or
currently contemplated to be used in the business of Molloy), free and clear of
any liens, charges or encumbrances, pursuant to an assignment in substantially
the form of Exhibit I attached hereto

                                       35
<PAGE>   36
(subject to a License Agreement between ServiceWare and Bruce Molloy in
substantially the form of Exhibit J attached hereto (the "License")).

         (g) Repayment of Indebtedness. Molloy shall have repaid all of its
indebtedness for borrowed money, except that Molloy may have outstanding up
working capital debt in an amount not to exceed the borrowing base under the
Transamerica Credit Documents and secured as provided therein.

         (h) Termination of Certain Agreements. Except as provided in Article
II, all voting trusts, proxies and other agreements or understandings (including
registration rights agreements) with respect to the capital stock of Molloy
shall have been terminated in writing pursuant to instruments reasonably
satisfactory to ServiceWare.

         (i) Non-Competition Agreement. Bruce Molloy shall have executed and
delivered a Non-Competition Agreement in substantially the form attached hereto
as Exhibit K.

         (j) Opinion of Counsel. ServiceWare shall have received the favorable
opinion of Golenbock, Eiseman, Assor & Bell as to the matters set forth in
Exhibit L (subject to customary exceptions and qualifications reasonably
satisfactory to counsel for ServiceWare).

         (k) Appointment of Representative. The Molloy Holders shall have
appointed the persons identified on Annex A or other Molloy Holders reasonably
satisfactory to ServiceWare to serve as their representatives (collectively, the
"Representative") for purposes of this Agreement, and the Representative shall
have agreed to serve in accordance with the procedures set forth in Annex A.

         Section 7.03 Additional Conditions to Obligations of Molloy. The
obligation of Molloy to effect the Merger is subject to the satisfaction of each
of the following conditions, any of which may be waived, in writing, exclusively
by Molloy:

         (a) Representations and Warranties. The representations and warranties
of ServiceWare and Sub set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the extent
such representations speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, except for, (i) changes contemplated
by this Agreement and (ii) where the failure to be true and correct would not
have a Material Adverse Effect on ServiceWare and its Subsidiaries, taken as a
whole, or a material adverse effect upon the consummation of the transactions
contemplated hereby; and Molloy shall have received a certificate signed on
behalf of ServiceWare by the chief executive officer of ServiceWare to such
effect.

         (b) Performance Of Obligations of ServiceWare and Sub. ServiceWare and
Sub shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and
Molloy shall have received a certificate signed on behalf of ServiceWare by the
chief executive officer of ServiceWare to such effect.

                                       36
<PAGE>   37
         (c) License. ServiceWare and Bruce Molloy shall have executed and
delivered the License.

         (d) Termination of Certain Agreements. Except for the Articles, the
Shareholders' Agreement, the Registration Rights Agreement, the agreements
relating to the purchase and sales of the ServiceWare Preferred Stock, the PNC
Warrants and the warrants to purchase common stock issued in connection with
indebtedness incurred by ServiceWare to meet its working capital requirements,
all voting trusts, proxies and other agreements or understandings (including
registration rights agreements) with respect to the capital stock of ServiceWare
shall have been terminated in writing pursuant to instruments reasonably
satisfactory to Molloy.

         (e) Opinion of Counsel. Molloy shall have received the favorable
opinion of Morgan, Lewis & Bockius LLP as to the matters set forth in Exhibit M
(subject to customary exceptions and qualifications reasonably satisfactory to
counsel for Molloy).

         (f) Approvals. The authorizations, consents, orders or approvals of
third parties and any Governmental Entity, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity set forth on
Sections 4.03(b) and 4.03 (c) of the ServiceWare Disclosure Schedule shall have
been filed, occurred or been obtained.

                                  ARTICLE VIII

                            TERMINATION AND AMENDMENT

         Section 8.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time by written notice by the terminating party to the
other party under the circumstances set forth below:

         (a)      by mutual written consent of ServiceWare and Molloy; or

         (b) by either ServiceWare or Molloy if the Merger shall not have been
consummated by August 31, 1999 (provided that the right to terminate this
Agreement under this Section 8.01(b) shall not be available to any party whose
failure to fulfill any material obligation under this Agreement has been a cause
of or has resulted in the failure of the Merger to occur on or before such
date); or

         (c) by either ServiceWare or Molloy if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger; or

         (d) by Molloy, if, at the stockholders' meetings of ServiceWare and Sub
(including any adjournment or postponement) the ServiceWare Shareholder Approval
shall not have been obtained, or by ServiceWare if at the Molloy stockholders'
meeting (including any adjournment or

                                       37
<PAGE>   38
postponement), the Molloy Stockholder Approval shall have not been obtained
(subject to ServiceWare's rights under the Principal Stockholder Agreements).

         Section 8.02 Effect of Termination; Survival. In the event of
termination of this Agreement as provided in Section 8.01, this Agreement shall
immediately become void and there shall be no liability or obligation on the
part of ServiceWare, Molloy, Sub or their respective officers, directors,
stockholders or affiliates, except as set forth in Section 8.03 and further
except to the extent that such termination results from the wilful breach by a
party of any of its representations, warranties or covenants set forth in this
Agreement or in any Molloy Principal Stockholder Agreement or ServiceWare
Principal Shareholder Agreement; provided that, the provisions of Section 8.03
of this Agreement and the Confidentiality Agreement shall remain in full force
and effect and survive any termination of this Agreement.

         Section 8.03 Fees and Expenses. Except as set forth in this Section
8.03, each of ServiceWare and Molloy shall bear its own expenses, including the
fees and disbursements of investment bankers, counsel and accountants, incurred
in connection with this Agreement and the transactions contemplated hereby;
provided, however, that if a Closing occurs the Molloy Principal Stockholders
shall be responsible for paying any fees and expenses of Molloy incurred in
connection with this Agreement and the transactions contemplated hereby other
than reasonable fees and expenses of Golenbock, Eiseman, Assor & Bell, of M. I.
Grossman & Company L.L.C. and of Mark Finkel ; and provided further that if this
Agreement is terminated by ServiceWare or Molloy by reason of a material breach
hereof by the other or, in the case of a termination by ServiceWare by reason of
a material breach hereof or of any Molloy Principal Stockholder Agreement by a
Molloy Principal Stockholder, or, in the case of a termination by Molloy by
reason of a material breach hereof or of any ServiceWare Principal Shareholder
Agreement by a ServiceWare Principal Shareholder, the breaching party shall pay
the reasonable legal and accounting expenses incurred to the date of termination
by the terminating party in connection with this Agreement and the transactions
contemplated hereby.

         Section 8.04 Amendment. This Agreement may be amended by the parties
hereto at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Molloy or of ServiceWare, but,
after any such approval, no amendment shall be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of Molloy and ServiceWare.

         Section 8.05 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto may, to the extent legally allowed, (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed by or on behalf of such
party.

                                       38
<PAGE>   39
                                   ARTICLE IX

                                 INDEMNIFICATION

         Section 9.01. Indemnification by Molloy Holders. By accepting
consideration in the Merger, on the terms and subject to the conditions set
forth herein, each Molloy Holder agrees to defend, indemnify and hold harmless
ServiceWare and the Continuing Corporation in accordance with this Article IX in
the event that, following the Closing Date, ServiceWare or the Continuing
Corporation suffers, sustains, incurs or becomes subject to any loss, liability,
damage or deficiency (including without limitation penalties and reasonable
attorneys' fees, but not including special or consequential damages (including
lost profits)) arising out of any inaccuracy of any representation of Molloy or
any breach of any warranty or covenant of Molloy contained in this Agreement
arising from a bona fide, third party claim asserted on or prior to March 31,
2001 to the extent attributable to matters having an origin prior to the Closing
Date (such loss, liability, damage or deficiency being hereinafter referred to
as a "Covered ServiceWare Loss").

         Section 9.02. Indemnification by ServiceWare. ServiceWare shall defend,
indemnify and hold harmless each Molloy Holder in accordance with this Article
IX in the event that, following the Closing Date, such Molloy Holder suffers,
sustains, incurs or becomes subject to any loss, liability, damage or deficiency
(including without limitation penalties and reasonable attorneys' fees, but not
including special or consequential damages (including lost profits)) arising out
of any inaccuracy of any representation of ServiceWare or Sub or any breach of
any warranty or covenant of ServiceWare or Sub contained in this Agreement
arising from a bona fide, third party claim asserted on or prior to March 31,
2001 to the extent attributable to matters having an origin prior to the Closing
Date (such loss, liability, damage or deficiency being hereinafter referred to
as a "Covered Molloy Loss").

         Section 9.03 Manner of Indemnification.

         (a) Any indemnification payment made by the Molloy Holders to
ServiceWare may be made, at the option of each Molloy Holder, in cash or by the
delivery to ServiceWare of an aggregate number of shares of ServiceWare Common
Stock having a Fair Market Value (as defined below), or of ServiceWare Series E
Preferred Stock convertible into ServiceWare Common Stock having a Fair Market
Value, equal to the amount of the Covered ServiceWare Loss. Each Molloy Holder
shall contribute cash or shares of ServiceWare Common Stock and/or ServiceWare
Series E Preferred Stock in such proportion (the "Indemnification Percentage")
as (i) the total aggregate number of shares of ServiceWare Common Stock issued
to such Molloy Holder in the Merger and into which ServiceWare Series E
Preferred Stock issued to such Molloy Holder in the Merger is convertible bears
to (ii) the total aggregate number of shares of ServiceWare Common Stock issued
to all Molloy Holders in the Merger and into which ServiceWare Series E
Preferred Stock issued to all Molloy Holders in the Merger is convertible. If a
Molloy Holder holds both ServiceWare Series E Preferred Stock and ServiceWare
Common Stock, such Molloy Holder shall first contribute ServiceWare Series E
Preferred Stock prior to contributing ServiceWare Common Stock.

                                       39
<PAGE>   40
         (b) Any indemnification payment made by ServiceWare to the Molloy
Holders shall be made by the issuance by ServiceWare to the Molloy Holders of
(i) an aggregate number of shares of ServiceWare Common Stock having a Fair
Market Value equal to the amount of the Covered Molloy Loss plus (ii) such
number of shares of ServiceWare Common Stock as shall be equitably required to
eliminate the dilutive effects of the issuance of shares provided for in the
preceding clause (i). Any such payment shall be allocated among the Molloy
Holders in accordance with each Molloy Holder's Indemnification Percentage.

         (c) Payment shall be made under this Article IX when either (i)
ServiceWare and the Representative agree as to the amount of the Covered
ServiceWare Loss or Covered Molloy Loss, as the case may be or (ii) the amount
of the Covered ServiceWare Loss or Covered Molloy Loss, as the case may be,
shall have been finally determined by a court of competent jurisdiction with no
appeal taken or with the time for appeal having passed. If a Covered ServiceWare
Loss has occurred for which payment is required pursuant to the preceding
sentence, ServiceWare shall so notify the Molloy Holders in writing specifying
(x) the number of shares of ServiceWare Common Stock and ServiceWare Series E
Preferred Stock required to be delivered by each Molloy Holder if the entire
amount as to which ServiceWare is entitled to indemnification hereunder were to
be paid in ServiceWare Common Stock and ServiceWare Series E Preferred Stock and
(y) the cash payment required to be made by each Molloy Holder if the entire
amount as to which ServiceWare is entitled to indemnification hereunder were to
be paid in cash, and each Molloy Holder shall make such payment, in cash or
through the surrender of ServiceWare Common Stock or ServiceWare Series E
Preferred Stock within 10 days after delivery of such notice. If, within such
10-day period, ServiceWare has not received the entire payment from each Molloy
Holder in cash or through the surrender of ServiceWare Common Stock or
ServiceWare Series E Preferred Stock, ServiceWare may treat the shares of
ServiceWare Common Stock and ServiceWare Series E Preferred Stock equivalent to
the amount for which cash payment was not made and held by each Molloy Holder to
the extent he or it did not pay in cash or through surrender of such shares as
being no longer outstanding for any purpose at such time.

         (d) "Fair Market Value" means: (i) if the ServiceWare Common Stock is
listed on a national securities exchange reporting a closing trade price, the
average of the closing trade prices for the ServiceWare Common Stock on the
principal such exchange on which the ServiceWare Common Stock is listed reported
by Bloomberg Financial Markets ("Bloomberg") for the ten trading days preceding
the date of determination, (ii) if the ServiceWare Common Stock is not listed on
a securities exchange reporting a closing trade price, but is traded in the
over-the-counter market, the last closing bid price of the ServiceWare Common
Stock reported by Bloomberg (or if no closing bid price is reported by
Bloomberg, the average of the bid prices of any market makers for the
ServiceWare Common Stock as reported in the "pink sheets" by the National
Quotation Bureau, Inc.) for the ten trading days preceding the date of
determination, or (iii) if the ServiceWare Common Stock is not listed on a
national securities exchange or in the over-the-counter market, the amount
resulting by dividing (a) the highest price for which ServiceWare could be sold
as a going concern to an independent third party, assuming a reasonable time (up
to 12 months) to accomplish such sale, by (b) the number of shares of
ServiceWare Common Stock then outstanding on an as converted basis and taking
into account outstanding ServiceWare Common Stock Warrants and vested options to
purchase ServiceWare Common Stock (net of the exercise price therefor). In order

                                       40
<PAGE>   41
to determine the Fair Market Value under clause (iii) above, ServiceWare and the
Representative, shall use their best efforts to reach an agreement on the Fair
Market Value. If such parties are unable to reach an agreement within a
reasonable amount of time (not to exceed 30 business days), such parties will
use their best efforts to agree upon the selection of an independent appraiser
or investment banking firm within 20 business days after giving of notice that
requires a determination of Fair Market Value. Such appraiser or investment
banking firm will have 20 business days in which to determine the Fair Market
Value, and its determination will be final and binding on all parties concerned.
All costs of such determination shall be borne by the party (ServiceWare or the
Molloy Holders) that proposed a fair market value furthest from the Fair Market
Value determined by the appraiser or investment banking firm.

         Section 9.04 Threshold and Cap. ServiceWare shall not be entitled to
any indemnification under Section 9.01, and the Molloy Holders shall not be
entitled to indemnification under Section 9.02, (i) unless the amount of all
Covered ServiceWare Losses or Covered Molloy Losses, respectively, exceeds
$250,000 (calculated on a cumulative and not a per item basis, and, as to
Covered Molloy Losses, calculated as to all Molloy Holders) and then only with
respect to the excess over such $250,000 or (ii) in excess of the Fair Market
Value of the aggregate number of shares of ServiceWare Common Stock and
ServiceWare Series E Preferred Stock issued or issuable in connection with the
Merger (the "Maximum Recovery Amount").

         Section 9.05 Amount of Indemnification.

         (a) The amount of any Covered ServiceWare Losses or Covered Molloy
Losses shall be determined (i) net of any benefit (including any tax benefit if
and when actually realized as an offset by any tax burden resulting from the
matter for which a claim is asserted or from the indemnification; provided,that
no indemnified party shall be required solely for the purpose of realizing a
benefit to take any tax position that could have an adverse effect on such
indemnified party if taken and (ii) net of any amounts recovered or recoverable
in respect thereof or in connection therewith under any one or more policies of
insurance maintained by ServiceWare or the Continuing Corporation, on the one
hand, or a Molloy Holder, on the other hand, as the case may be, or any third
party by or on behalf of (x) ServiceWare or the Continuing Corporation (or their
successors or assigns) in the case of a Covered ServiceWare Loss or (y) a Molloy
Holder (or its successor or assigns) in the case of a Covered Molloy Loss

         (b) Neither ServiceWare nor any Molloy Holder shall be entitled to any
indemnity for any Covered ServiceWare Loss or Covered Molloy Loss, as the case
may be, to the extent that the existence of such loss, the breach of covenant or
warranty or the falsity of the representation upon which such loss would be
based is disclosed in the Molloy Disclosure Schedule (in the case of a Covered
ServiceWare Loss) or the ServiceWare Disclosure Schedule (in the case of a
Covered Molloy Loss) or which is disclosed in a written notice furnished to the
indemnified party prior to the Closing; provided, however, that any such
misrepresentation or breach of warranty or covenant so disclosed after the
execution and delivery of this Agreement and prior to the Closing shall not
affect the right of ServiceWare or Molloy, as the case may be, to elect not to
close the transactions contemplated by this Agreement to the extent provided in
Article VII hereof (it being understood and agreed that if, despite such right
of the ServiceWare or Molloy to elect not to close by reason

                                       41
<PAGE>   42
of the misrepresentation or breach so disclosed, ServiceWare or Molloy
nevertheless elects to close, thereby waiving such misrepresentation or breach,
ServiceWare or the Molloy Holder, as the case may be, shall thereafter have no
indemnity right by reason of any such misrepresentation or breach of warranty or
covenant).

         (c) In the event that the effect of any misrepresentation of Molloy or
ServiceWare or any breach of warranty or covenant of Molloy or ServiceWare
contained in this Agreement or any document executed and delivered pursuant
hereto is that the amount of assets of Molloy or ServiceWare has been overstated
or the amount of liabilities of Molloy or ServiceWare has been understated as of
the end of any fiscal period, the Covered ServiceWare Losses or Covered Molloy
Losses, as the case may be, caused by such overstatement or understatement shall
in no event exceed the net amount of such overstatement and/or understatement,
without adjustment for estimated impacts on future earnings.

         (d) In the event of any Covered ServiceWare Loss, the Molloy Holders
shall be entitled to credit or offset against any such liability an amount equal
to (i) any windfall and other contingent assets of Molloy, and the amount of any
windfall reduction of non-cancellable contractual obligations payable by Molloy
(without a corresponding loss of benefit) resulting from an occurrence prior to
the Closing Date, which in any such case is not recorded as an asset or
liability on the Molloy Balance Sheet and in respect of which ServiceWare or the
Continuing Corporation derives a financial benefit after the Closing Date, and
(ii) the net overstated liabilities of Molloy. In the event of any Covered
Molloy Loss, ServiceWare shall be entitled to credit or offset against any such
liability an amount equal to (i) any windfall and other contingent assets of
ServiceWare, and the amount of any windfall reduction of non-cancellable
contractual obligations payable by ServiceWare (without a corresponding loss of
benefit) resulting from an occurrence prior to the Closing Date, which in any
such case is not recorded as an asset or liability on the ServiceWare Balance
Sheet and in respect of which ServiceWare or the Continuing Corporation derives
a financial benefit after the Closing Date, and (ii) the net overstated
liabilities of ServiceWare.

         (e) It is specifically understood and agreed that in the event a
misrepresentation or breach of warranty or covenant is discovered by ServiceWare
or a Molloy Holder after the Closing, the remedy of the ServiceWare or such
Molloy Holder, as the case may be, shall be limited to the indemnity forth in
this Article IX and such party shall not be entitled to a rescission of this
Agreement or any other damages.

         Section 9.06. Notice and Defense. If at any time ServiceWare shall
receive notice of any Covered ServiceWare Loss, ServiceWare shall promptly give
written notice thereof to the Representative, and if at any time any Molloy
Holder shall receive notice of any Covered Molloy Loss, such Molloy Holder shall
promptly give written notice thereof to the Representative and to ServiceWare;
provided that a delay in giving notice shall only relieve the indemnifying party
of liability to the extent such indemnifying party suffers actual prejudice
because of the delay. Any such notice shall set forth with reasonable
specificity (i) the basis under this Agreement, and the facts that otherwise
form the basis, of such claim, (ii) an estimate of the amount of such claim
(which estimate shall not be conclusive of the final amount of such claim) and
an explanation of the calculation of such estimate, including a statement of any
significant assumptions employed therein,

                                       42
<PAGE>   43
and (iii) the date on and manner in which the party delivering such notice
became aware of the existence of such claim. With respect to any claim giving
rise to a Covered ServiceWare Loss, ServiceWare shall have the right, but not
the obligation to participate at its own expense in a defense of such claim by
counsel of its own chosing, but the Representative shall be entitled to control
the defense; provided, however, that the Representative shall not, without the
consent of ServiceWare, which consent shall not unreasonably be withheld,
settle, compromise, pay or discharge the same except by order of a court of
competent jurisdiction. With respect to any claim giving rise to a Covered
Molloy Loss, the Representative shall have the right, but not the obligation to
participate at the expense of the Molloy Holders in a defense of such claim by
counsel of its own chosing, but ServiceWare shall be entitled to control the
defense; provided, however, that ServiceWare shall not, without the consent of
the Representative, which consent shall not unreasonably be withheld, settle,
compromise, pay or discharge the same except by order of a court of competent
jurisdiction. If the indemnified party does not consent to any bona fide
settlement or compromise proposed by the indemnifying party, the indemnifying
party shall be liable for indemnification hereunder only to the lesser of the
final judgment against the indemnified party or the amount proposed to be paid
in the settlement.

                                    ARTICLE X

                                  MISCELLANEOUS

         Section 10.01 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, by
facsimile (which is confirmed) or mailed by registered certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):

                  (a)      if to ServiceWare or Sub, to

                           ServiceWare, Inc.
                           333 Allegheny Ave.
                           Oakmont, PA 15139
                           Attn:  Chief Executive Officer
                           Fax:  412-826-0577

                           with a copy to:
                           Morgan, Lewis & Bockius LLP
                           One Oxford Center, 32nd floor
                           Pittsburgh, PA  15219
                           Attention:   Marlee S. Myers, Esquire
                           Fax:  412-560-3399

                                       43
<PAGE>   44
         (b)      if to Molloy, to

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

                           with a copy to

                           Golenbock, Eiseman, Assor & Bell
                           437 Madison Avenue
                           New York, NY  10022
                           Attn:  Lawrence M. Bell
                           Fax:  212-754-0330

         Section 10.02 Interpretation. When a reference is made in this
Agreement to Articles, Sections, such reference shall be to an Article or a
Section of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement they
shall be deemed to be followed by the words "without limitation." The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available.

         Section 10.03 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.

         Section 10.04 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to herein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Sections 6.09 and 9.02, are
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.

         Section 10.05 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to any applicable conflicts of law.

         Section 10.06 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned (whether by operation of
law or otherwise) by Molloy without the prior written consent of ServiceWare or
by ServiceWare or Sub without the prior written consent of Molloy. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.

                                       44
<PAGE>   45
IN WITNESS WHEREOF, ServiceWare, Sub and Molloy have caused this Agreement to be
signed by their respective officers thereunto, duly authorized as of the date
first written above.

                                         SERVICEWARE, INC.

                                         By:
                                            ------------------------------------

                                         Title:
                                               ---------------------------------

                                         MOLLOY ACQUISITION CORPORATION

                                         By:
                                            ------------------------------------

                                         Title:
                                               ---------------------------------

                                         MOLLOY GROUP, INC.

                                         By:
                                            ------------------------------------

                                         Title:
                                               ---------------------------------

                                       45
<PAGE>   46
                             EXHIBITS AND SCHEDULES

<TABLE>
<CAPTION>
      Exhibit
      -------
<S>                   <C>
        A-1           Form of Molloy Principal Stockholder Agreement
        A-2           Form of ServiceWare Principal Shareholder Agreement
         B            Amended and Restated Articles of Incorporation of ServiceWare
         C            [Reserved]
         D            Form of Molloy Holders' Representation Letter
         E            Series D Convertible Preferred Stock Purchase Agreement
         F            Shareholders' Agreement of ServiceWare
         G            Registration Rights Agreement of ServiceWare
         H            Consulting Agreement between ServiceWare and Bruce Molloy
         I            Assignment of Patent from Bruce Molloy to ServiceWare
         J            License Agreement between ServiceWare and Bruce Molloy
         K            Noncompetition Agreement
         L            Opinion of Golenbock, Eiseman, Assor & Bell
         M            Opinion of Morgan, Lewis & Bockius LLP
</TABLE>

     Schedules
     ---------
         1            Schedule of Projected Molloy Bookings
                      Molloy Disclosure Schedule
                      ServiceWare Disclosure Schedule

      Annexes
      -------
         A            Molloy Representatives
         B            Allocation Schedule

                                       46<PAGE>   1
                                                                    Exhibit 10.3

                                COMMERCIAL LEASE

MADE this 31st day of May, 1995, by and between SIBRO Enterprises hereinafter
called "LESSOR" and ServiceWare, Incorporated hereinafter called "TENANT."

1.  DEMISE AND TERM: LESSOR, hereby leases to TENANT for the term of Ten Years,
commencing on the 1st day of April, 1996, and ending on the 31st day of March,
2006, (the "TERM") the following described premises in its proposed condition:

Term:
     See Item #1 -- Addendum #1
     New three story office building located at the corner of Allegheny Avenue
     and Washington Avenue to be constructed. See Item #2 of Addendum #1
     attached and hereby made a part of this Lease.

(the "PREMISES"). TENANT also has a nonexclusive license for the benefit of
TENANT, its employees, agents and invitees for access to and from the leased
premises through the building and over property of LESSOR appurtenant thereto,
and to use those parts of the building designated by LESSOR for use by TENANTS
including but not limited to toilet rooms, elevators and unrestricted parking
areas, if any.

2.  RENEWAL: TENANT, if not in default under this lease, may extend the Term of
this lease by written notice to the LESSOR received no later than three months
before the expiration of the previous Term, for an additional period of Five
year(s) at the renewal Rent stated below, under the terms of this same lease.

3.  RENT: The TENANT covenants to pay as Rent the total sum of One Million Nine
Hundred Sixty-One Thousand Two Hundred Eighty Dollars ($1,961,280.00), payable
in installments of See Item #3 -- Addendum #1 Dollars (See Item #3 Addendum #1)
per month, in advance without demand on or before the first day of each month at
the office of the LESSOR. In the event of renewal of this lease, Total rent for
Five year(s) will be One Million One Hundred Ninety-One Thousand Seven Hundred
Fifty Dollars ($1,191,750.00), payable in installments of Nineteen Thousand
Eight Hundred Sixty Two and 50 Cents Dollars ($19,862.50) per month without
demand in advance on or before the first day of each month.

     The TENANT shall pay all Rent when due and payable, without any setoff,
deduction or prior demand therefor whatsoever. Any payment by TENANT or
acceptance by LESSOR of a lesser amount than shall be due from TENANT to LESSOR
shall be treated as payment on account. The acceptance by LESSOR of a check for
a lesser amount with an endorsement or statement thereon, or upon any letter
accompanying such check, that such lesser amount is payment in full, shall be
given no effect, and LESSOR may accept such check without prejudice to any
other rights or remedies which LESSOR may have against TENANT.

     The TENANT waives to the LESSOR the benefit of all laws now or hereafter in
force, in this State or elsewhere exempting property from liability for rent or
for debt, including but not limited to Act No. 20 approved April 6, 1951,
entitled "The Landlord And Tenant Act of 1951."

4.  LATE CHARGES: Any provision of this lease to the contrary notwithstanding,
TENANT shall pay a late charge in the amount of Five percent (5%) of the
outstanding delinquent balance for any payment of Rent or Additional Rent not
made within ten (10) days after the due date thereof to cover the extra expense
involved in handling late payments. This charge is in addition to any other
rights or remedies of the LESSOR.

5.  ADDITIONAL RENT: TENANT shall pay as additional rental for the PREMISES,
all gas and electricity used thereon, all garbage collection charges, all
sanitary sewer charges or assessments, and all water rents assessed on the
premises whether by meter rate or flat rate as due. On failure of TENANT to pay
the same when due, LESSOR shall enforce payment thereof in the same manner as
rent in arrears. *See Item #4 -- Addendum #1

6.  CONDITION OF PREMISES; USE OF PREMISES: The TENANT hereby agrees to
maintain and keep the PREMISES during the term of this lease in good repair,
including but not limited to water pipes, their connection and all plumbing
fixtures. The TENANT also agrees to keep the PREMISES, including the common
areas of the building, property of the LESSOR appurtenant thereto, and
sidewalks free of rubbish, and in such condition as the Board of Health may
require. TENANT further agrees to keep all sidewalks free from snow and ice.
<PAGE>   2
     All repairs, except those specific repairs set forth below which are the
responsibility of the LESSOR, shall be made by the TENANT at its own expense. If
the LESSOR pays for the same or any part thereof, it will be Additional Rent
payable forthwith.

     TENANT further agrees not to make any alterations or improvements to the
PREMISES without the consent of LESSOR, or to remove any additions or
improvements whether made by the LESSOR or TENANT, nor to post bills or erect
billboards or signs, without the written consent of the LESSOR, under penalty of
instant forfeiture of this lease and the terms hereof.

     The TENANT covenants to use the PREMISES only for OFFICE and to surrender
the same in as good order as they now are, reasonable wear and tear and
accidents by fire alone excepted.

     The LESSOR shall be responsible for making only the following repairs:

     (1) See Item #5 - Addendum #1

     (2) structural repairs to exterior walls, structural columns and structural
floors which collectively enclose the PREMISES (excluding, however, storefronts)
and the roof over the PREMISES: provided TENANT shall give LESSOR notice of the
necessity for such repairs and that such repairs did not arise from nor were
they caused by the negligence or willful acts of TENANT, its agents,
concessionaires, officers, employees, licensees, invitees, or contractors.

     7. ASSIGNMENTS AND SUB-LETTING: The TENANT hereby agrees not to assign this
lease voluntarily or involuntarily, nor to sub-let the premises or any part
thereof, without the written consent of the LESSOR, under penalty of instant
forfeiture of this lease. See Item #6 - Addendum #1

     8. COMPLIANCE WITH PUBLIC LAWS: The TENANT further agrees to perform, fully
obey and comply with all ordinances, rules, regulations and laws of all public
authorities, boards and officers relating to said premises, or any part thereof,
for any purpose or use in violation of any law, statute or ordinance, whether
federal, state or municipal, during the term of said lease or any renewal
thereof.

     9. TERMINATION; VACATING THE PREMISES: This lease shall terminate at the
end of the Term or any renewal thereof without the necessity of any notice from
either LESSOR or TENANT to terminate the same, and TENANT hereby expressly
waives all right to any notice which may be required under any laws now or
hereafter enacted and in force in Pennsylvania, including The Landlord And
Tenant Act of 1951, Act of April 6, 1951, as amended. TENANT covenants and
agrees to give up quiet and peaceful possession without further notice from said
Lessor or agent.

     10. SECURITY DEPOSIT: The Tenant contemporaneously with the first Rent
installment, agrees to deposit with the LESSOR ONE HUNDRED THOUSAND DOLLARS
($100,000) which sum shall be held by the Lessor, without liability for
interest, as security for the full faith and performance by Tenant of all of the
terms, covenants and conditions of this lease by said Tenant to be kept and
performed during the Term or any renewal thereof. See Item #15 - Addendum #1

     If Rent becomes overdue and is unpaid, or any other sum payable by the
TENANT to the LESSOR shall be overdue and unpaid, then the LESSOR may at its
discretion, appropriate and apply any portion of the deposit to the payment of
such sum. It is also within the LESSOR'S discretion to use such deposit to
compensate for loss or damage suffered or sustained by LESSOR due to a failure
of the TENANT to keep and perform any of the other terms, covenants and
conditions of this lease. Should the entire deposit, or any portion thereof, be
applied to LESSOR for the above stated purposes, then TENANT shall remit a
sufficient amount in cash to restore said security to the original sum
deposited. Failure to do so within 10 days of the LESSOR'S written demand will
result in breach.

     Should TENANT comply with all of the terms of this lease, the deposit will
be returned to TENANT in full within 30 days of the expiration of the term.

     11. DISTRAINT: As additional security, TENANT acknowledges the LESSOR'S
right to distrain, hold and sell with due legal notice all property on or to be
brought on the premises in order to satisfy unpaid Rent, expenses, and
Additional Rent. Any attempt by TENANT to remove said property while rents
remain overdue will be deemed fraudulent and will result in the acceleration of
rent, thereby causing all rent for the entire term to become due and payable.
All goods so removed may be followed for 30 days and seized for the collection
of unpaid amounts. See Item #8 - Addendum #1

     12. DEFAULT; BREACH: It is further agreed that if the said TENANT shall
default in the payment of any installment of Rent or Additional Rent; or shall
remove or attempt to remove or express or declare an intention to remove any of
the goods and chattels from the premises, or should an execution be issued
against the TENANT, bankruptcy proceeding be begun by or against said TENANT, or
an assignment be made by TENANT for the benefit of creditors, or a receiver
appointed for TENANT, then and in such case the entire Rent for the balance of
the said Term shall become immediately due and payable. In case of such
assignment, bankruptcy proceedings, appointment of a receiver, or of a sale on
legal process of TENANT'S goods, LESSOR shall have the right to demand and
receive the Rent for the balance of the Term, or renewal term which shall be
first paid out of the proceeds of such assignment, bankruptcy or receiver's
proceedings or sale on legal process, any law, usage or custom to the contrary
notwithstanding. See Item #9 - Addendum #1

<PAGE>   3
15. LESSOR NOT LIABLE FOR INJURY OR DAMAGE TO PERSONS OR PROPERTY: The LESSOR
shall not be liable for any injury or damage to any person or to any property at
any time on said PREMISES or building from any cause whatever that may at any
time exist from the use or condition of the PREMISES or building from any cause,
during the Term or any renewal thereof. See Item #12 Addendum #1

16. INCREASED TAXES: In the event the taxes, including those imposed by any
municipality, County, or School District, levied and assessed against the real
estate of which the PREMISES are a part are increased beyond that imposed for
the year 1996, whether occasioned by an increase in millage or an increase in
assessment or otherwise, the TENANT shall pay as Additional Rent its
proportionate share of the increased taxes during the Term of this lease or any
renewal thereof.

17. EXCLUSIVITY OF LESSOR'S REMEDIES: The receipt of rent after default, or
after judgment or after execution, shall not deprive the LESSOR  of other
actions against the Tenant for possession or for rent or for damages, and all
such remedies are non-exclusive and can be exercised concurrently or separately
as LESSOR desires. The LESSOR may use the remedies herein given or those
prescribed by law, or both, and the LESSOR or Agent may enter at will to inspect
the premises, to take or send persons on said property, seeking to rent or
purchase, make repairs or improvements and post notices of "To Let" and "For
Sale."

18. SUCCESSORS AND ASSIGNS: All rights and liabilities herein given to or
imposed upon either of the parties hereto, shall extend to the heirs, executors,
administrators, successors and assigns of such party.

19. CONDEMNATION CLAUSE: In the event that all or part of the PREMISES is taken
by eminent domain or conveyed in lieu thereof, if the leased PREMISES cannot
reasonably be used by TENANT for their intended purpose, then this lease will
terminate effective as of the date that the condemning authority shall take
possession of the same.

20. TENANT'S WAIVER OF DAMAGES AND EXCEPTIONS: TENANT hereby wives all claims
against LESSOR by reason of a taking of the PREMISES and assigns to LESSOR any
rights and damages to which TENANT might otherwise be entitled for condemnation
of the leasehold estate created by this lease; except that TENANT shall be
entitled to make any claim against the condemning authority for relocation
damages, damages for tenant improvements and any other payments lawfully due
tenants as such, without diminution of the sums due LESSOR.

21. FIRE CLAUSE: The TENANT hereby agrees to notify LESSOR of any damages to the
leased PREMISES by fire or other hazard and also of any dangerous or hazardous
condition within the leased PREMISES immediately upon the occurrence of such
fire or other hazard or discovery of such condition.

     Upon occurrence of a fire, repairs shall be made by LESSOR as soon as
reasonably may be done unless the costs of repairing the PREMISES exceed 25% of
the replacement cost of the building in which case the LESSOR may, at its
option, terminate this lease by giving TENANT written notice of termination with
forty-five (45) days of the date of the occurrence.

<PAGE>   4
     If the LESSOR does not terminate this Lease pursuant to the paragraph
above, then LESSOR has forty-five (45) days after the date of occurrence to
give written notice to TENANT setting forth its unqualified commitment to make
all necessary repairs or replacements, the projected date of commencement of
such repairs, and the LESSOR'S best good faith estimate of the date of
completion of the same.

     If the LESSOR fails to give such notice, or if the date of completion is
more than 90 days after the date of occurrence, then the TENANT may, at its
option, terminate this lease and the LESSOR will be obliged to refund to the
TENANT any rent allocable to the period subsequent to the date of the fire.

22.  WAIVER OF NONPERFORMANCE:  Failure of the LESSOR to exercise any of its
rights under this lease upon nonperformance by the TENANT of any condition,
covenant or provision herein contained shall not be considered a waiver
thereof, nor shall any waiver of nonperformance of any such condition, covenant
or provision by the LESSOR be construed as a waiver of the rights of the LESSOR
as to any subsequent defective performance or nonperformance hereunder.

23.  PAROL EVIDENCE CLAUSE:  This instrument constitutes the final, fully
integrated expression of the agreement between the LESSOR and the TENANT. As
such, it cannot be modified or amended in any way except in writing signed by
the LESSOR and TENANT.

24.  SUBORDINATION.  This lease is subordinate to the lien of all present or
future mortgages which affect the leased PREMISES and to all renewals,
modifications, replacements and extensions thereof. This clause shall be
self-operative, but in any event TENANT hereby agrees to execute promptly and
deliver any estoppel certificate or other assurances that LESSOR may request in
furtherance hereof; provided, however, that in the event of foreclosure of any
such mortgage or modification TENANT shall attorn to the purchaser in
foreclosure or who shall be named in any deed in lieu of foreclosure and shall
recognize such purchaser as the LESSOR under this lease; and provided, further,
that so long as TENANT is not in default hereunder, this lease shall remain in
full force and effect.

25.  SEVERABILITY CLAUSE.  If any term, covenant, condition, or provision of
this lease is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.

26.  PENNSYLVANIA LAW TO APPLY.  This lease shall be construed under and in
accordance with the laws of the Commonwealth of Pennsylvania.

      In Witness Whereof, the undersigned LESSOR and TENANT hereto execute this
lease as of the day and date first above written.

WITNESS/ATTEST

[sig]                                 SIBRO ENTERPRISES (LESSOR)
-------------------------------       -----------------

                                      By  [sig]
-------------------------------          ----------------------------

                                      Title [illegible]
                                            -------------------------

[sig]                                  Jeff Pepper for  (LESSEE)
-------------------------------       -----------------

                                      SERVICEWARE, INC. (LESSEE)
-------------------------------       -----------------

                                      By  Jeff Pepper
-------------------------------          ----------------------------

                                      Title  President/CEO
                                            -------------------------

      LEASE

      From

       To

Rent $      per

Payable

Expires

Assigns to

Renewed to

Renewed to

Renewed to

=======================

---------------------------------------------
P. O NALY CO. 427 FOURTH AVE., PGH., PA 15219
<PAGE>   5
May 31, 1995

ServiceWare, Inc.
Lease

                                  ADDENDUM #1

Item #1   -    SIBRO intends to complete construction of Phase I Building by
               April 1, 1996, however, acknowledges ServiceWare's desire to
               occupy as soon as possible and will put forth every effort to
               complete Phase I Building by December 31, 1995. In turn,
               ServiceWare agrees that the commencement date of the "Lease" will
               begin within 30 days of notification that space is ready for
               occupancy.

Item #2   -    SIBRO Enterprises ("SIBRO") will construct a three story office
               building located at the corner of Allegheny Avenue and Washington
               Avenue substantially in accord with the portion of the attached
               diagram (Exhibit "A") labeled Phase I (the Phase I Building). The
               Phase I Building will have a total gross area of approximately
               19,000 square feet (three floors of approximately 6,480 square
               feet per floor).

               ServiceWare, Inc. ("ServiceWare") will lease the entire building
               exclusive of approximately 2,400 square feet of the first floor
               reserved for a restaurant to be located in the north end of the
               building and adjacent space of 1980 square feet as shown on
               Exhibit "A".

               ServiceWare may elect to lease the approximate 4080 square feet
               of commercial space on first floor of Phase I Building adjacent
               to the lobby for a period of ninety (90) days from the date of
               the execution of the Lease at $13.00 per square foot.

Item #3   -    Rent for leased space in Phase I Building shall be as follows:
               (Based on gross area of 18.620 S.F.)

                                                  ANNUAL     MONTHLY    SF/GA
                                                  ------     -------    -----

               1. 4/1/96     Through 3/31/98     177,060    14,755.00   13.00
               2. 4/1/98     Through 3/31/001    183,870    15,322.50   13.50
               3. 4/1/2001   Through 3/31/006    211,110    17,592.50   13.50
               4. 4/1/2006   Through 3/31/011    238,350    19,862.50   17.50

               (Item #4 is in reference to Tenant's 5 year option)
<PAGE>   6
               Base Building Standards Schedule and Specifications shall meet
               with the approval of ServiceWare. See Exhibit "B" attached.

Item #4  -     Section 5 - Lessor agrees to provide separate meters for gas,
               water and electricity for each Tenant (exclusive of any approved
               sub-tenant of ServiceWare).

Item #5  -     Section 6 Para. 1 - Lessor shall be responsible for the
               replacement of carpeting, plumbing, heating, ventilating and air
               conditioning equipment servicing the premises if and to the
               extent installed by the Lessor, and replacement is caused by
               normal wear and tear and not caused by the negligence or willfull
               acts of the Tenant, its Agents, Consessionaires, Officers,
               Employees, Licensees, Invitees or Contractors.

Item #6  -     Section 7 - Lessor Agrees that consent to assign or sub-let the
               premises shall not be unreasonably withheld.

Item #7  -     Section 10 - Lessor agrees that intent of this Section excludes
               normal wear and tear relative to this section only.

Item #8  -     Section 11 - Relative to this section only Lessor and Tenant
               mutually agree that "entire term" be limited to the remaining
               term of the Lease or five (5) years (whichever is less, and that
               Lessor may follow all goods removed for a period of ninety (90)
               days in lieu or thirty (30) days as stated.

Item #9  -     Section 12 - Relative to this section only, Lessor and Tenant
               mutually agree that a grace period of thirty (30) days shall be
               granted by the Lessor to the Tenant relative to only payment of
               any installment of rent or additional rent due. All other
               conditions of this paragraph shall remain in effect.

Item #10  -    Section 13 - DELETED

Item #11  -    Section 14 - DELETED

Item #12  -    Add "except for the Lessors gross negligence or willfull
               misconduct".

<PAGE>   7
Item #13 - Lessor agrees to permit Tenant to run computer network cable at
           Tenants expense. Lessor further agrees to furnish approximately sixty
           (60) receptacles that will accomodate the cable and provide adequate
           space in wiring raceways to receive the cable. Tenant agrees to
           furnish necessary information to Lessor on a timely basis in order TO
           NOT cause delays in construction.

Item #14 - Lessor and Tenant mutually agree and understand that rents as stated
           in Item #3 of Addendum #1 are based on Base Building Standards
           (Exhibit "B") and if Tenant for any reason elects to upgrade these
           standards it shall be done at Tenant's expense. It is also agreed and
           understood that Tenant shall make decisions on any upgrades in and
           expeditious manner in order TO NOT cause delays in design and or
           construction.

Item #15 - As a form of guaranteeing the Lease, Tenant shall provide the
           following to the Lessor:

           1)   ServiceWare, within 30 days of the signing of the Lease, agrees
                to deposit with SIBRO One Hundred Thousand Dollars ($100,000.00)
                which sum shall be held by SIBRO (without liability for
                interest) for a period of one year from date of occupancy of
                building by ServiceWare. The security deposit will be reduced
                to Fifty Thousand Dollars ($50,000.00) on the first year
                anniversary date of occupancy and shall be held by SIBRO
                (without liability for interest) for the balance of the term of
                the Lease.

           2a)  ServiceWare, at the signing of the Lease, agrees to provide
                SIBRO with 10,000 stock options for ServiceWare's common stock
                at the option price of $1.42. Options shall be exercisable for a
                period of five (5) years.

           2b)  As an additional incentive to SIBRO to expedite the occupancy
                date of the building ServiceWare agrees to offer SIBRO
                additional stock options at $1.42 in accordance with the
                following:

                1) Additional 10,000 options if occupancy is available within
                   seven (7) months of signing of the Lease and receipt of
                   $100,000.00 security deposit.
<PAGE>   8
                2) Additional 5,000 options if occupancy is available within
                   nine (9) months of signing of the Lease and receipt of
                   $100,000.00 security deposit.

            3.  ServiceWare also agrees to fully cooperate with SIBRO with the
                procurement of a Payment Bond. Such cooperation shall include
                but not limited to furnishing ServiceWare's current financial
                information as may be required by the Bonding Company. Cost of
                such Payment Bond shall be at SIBRO's expense.

Item #16a - All repairs and maintenance, shall be made by ServiceWare at its own
            expense except the following:

            1) Structural repairs to exterior walls
            2) Structural repairs to structural columns
            3) Structural repairs to structural floors
            4) Repairs to roof

Item #16b - SIBRO agrees to assist ServiceWare in the coordination of all
            maintenance and repairs as may be required. SIBRO's assistance shall
            include recommendation of various maintenance contractors,
            soliciting of bids, review and awarding of such bids, etc.
            ServiceWare shall make all final decisions regarding the awarding of
            such bids, etc.

Item #17  - If fire or casualty render the premises untentable through no fault
            of the tenant, there shall be a pro-rata reduction in the rent for
            the time the premises (or part thereof) is untentable.

Item #18a - ServiceWare will have first option to lease any and all future Phase
            II and Phase III space as indicated on Exhibit "A". Rents per Square
            Foot for Phase II and Phase III shall not exceed an escalation
            figure of six percent (6%) per year over rents as established in
            Item #3 of this Addendum.

Item #18b - SIBRO agrees to construct Phase II Building on a timely basis based
            on the following conditions:

            1) Lease for Phase I is in full effect and ServiceWare is in good
               standing with the terms and conditions of Phase I Lease.
<PAGE>   9
            2) ServiceWare occupies all available space in Phase I Building.

            3) ServiceWare's written commitment to leasing a minimum of 9000
               square feet of second and third floors of Phase II Building as
               evidenced by an executed Lease that is mutually agreeable to both
               parties.

Item #18c - SIBRO agrees to construct Phase III Building on a timely basis
            based on the following conditions:

            1) Lease for Phase I and Phase II are in full effect and
               ServiceWare is in good standing with the terms and conditions of
               Phase I and Phase II Leases.

            2) ServiceWare occupies all available space in Phase I and Phase II
               Buildings.

            3) ServiceWare's written commitment to leasing a minimum of
               sixty-seven percent (67%) of available footage of Phase III
               Building as evidenced by an executed Lease that is mutually
               agreeable to both parties.

Item #19  - ServiceWare agrees to lease office space they presently occupy in
            Allegheny Plaza I at the rental rate as set forth in ServiceWare's
            present lease until such time Phase I Building is available for
            occupancy at which time ServiceWare will be released from their
            lease at Allegheny Plaza I at no cost to ServiceWare. It is further
            agreed and understood that ServiceWare will have first option at any
            additional space that may become available in Allegheny Plaza I for
            $12.00 per square foot. ServiceWare agrees to notify Landlord of
            their decision to exercise their option within seven days of being
            notified of upcoming available space.

Item #20  - SIBRO agrees to furnish ServiceWare with one parking space per 250
            square feet of net useable leased space for Phases I and II.

Item #21 -  ServiceWare shall furnish a Corporate Resolution to SIBRO empowering
            their President, Mr. Jeff Pepper, to enter into a long term lease.
<PAGE>   10
Item #22a -- Construction of Phase I Building will begin within three (3) days
             of executed lease and approved Architectural Drawings.

Item #23  -- ServiceWare shall be afforded the opportunity to review
             preliminary architectural designs and SIBRO agrees to fairly
             consider ServiceWares input as long as such consideration are
             reasonable and do not cause financial impact on the cost of the
             building or delays in the completion date.

Item #24  -- SIBRO agrees that if ServiceWare does not take entire space on
             second or third floor of Phase II and additional tenants (other
             than approved sublets or assigns of ServiceWare) occupy a portion
             of the space, that the rent for the common areas as well as all
             utilities shall be pro-rated for such tenants directly
             proportionate to the square footage leased.

             Tenants on first floor shall be excluded from such pro-ration if
             they have independent facilities (toilets, etc.) and are
             separately metered.

SIGNED:                                 ACCEPTED:

/s/ Vincent J. Siciliano                /s/ Jeff Pepper
------------------------------------    ----------------------------------------
Vincent J. Siciliano                    Jeff Pepper
Partner, SIBRO Enterprises              President, ServiceWare, Inc.

             6/3/95                                     6/3/95
------------------------------------    ----------------------------------------
Date                                    Date

                                        CORPORATE SEAL

<PAGE>   11
                                   EXHIBIT A

                                  [FLOOR PLAN]

<PAGE>   12
                                  EXHIBIT "B"

Lessor's Work:  The Building Standard interior finishes shall be provided by the
                Lessor as follows:

Unit Allowances:

1)   Partitions - Interior Partition - 40 L.F. per 1000 S.F.
                                       of useable space
                  Demising Partition - As required

2)   Corridor - Suite Entrance Door  - 1 Per Floor

3)   Interior Doors                  - 1 Per 25 L.F. of interior
                                       partition

4)   Carpet                          - All Floors

5)   Acoustical Tile Ceiling         - All Ceilings

6)   Flourescent Light Fixture       - 12 per 1000 S.F. of
                                       useable space

7)   Wall Light Switch               - 4 per 1000 S.F. of
                                       useable space

8)   Wall Duplex Electrical Outlet   - 7 per 1000 S.F. of
                                       useable space

9)   Air Conditioning Zone           - Building Standards

NOTES:

1)   Partitions          Ceiling height drywall system painted in Building
                         Standard colors.

2)   Doors               Prefinished solid core 3'-0" x 6'-8"

3)   Door Hardware       a) Interior - Building Standard latch sets
                         b) Corridor - Building Standard with one lock set,
                                       exposed closure and two sets of keys.

4)   Ceilings            Suspended acoustical tile 2' x 4' grid lay in type.

5)   Floors              Loading - 70 PSF (including partitions) live load

6)   Floor Covering      Building Standard carpet in all areas.
                         (22 ounce 15 yr. warranty).

<PAGE>   13
                                  EXHIBIT "B"

7)    Lighting          Furnish and install Building Standard 2' x 4' recessed
                        troffer fixtures with parabolic lenses.

8)    Electric          Furnish and install duplex electric receptacles.
                        Dedicated and special lines at tenants expense.

9)    Telephone         Tenant to furnish and install.

10)   Electric Service  The service capacity of electricity at electric closets
                        shall be 1.25 watts average per square foot.

11)   H.V.A.C.          For normal office useage, furnish and install the
                        complete heating, ventilating and air conditioning
                        system.

                        a) Design Criteria - Roof U-Valve .08
                                             Wall U-Valve .20

                        b) Design Temperatures:
                              1) Outside Winter Temp. @  0 Degrees:
                                                        75 Degrees

                              2) Outside Summer Temp. @ 75/55 Degrees:
                                                        91/73 Degrees

Additional work shall be at tenants expense.

1) Lightning Protection - To be determined (negotiable).

2) Operable Windows     - Additional cost over fixed to be determined
                          (negotiable).

APPROVAL

/s/  JEFF PEPPER
---------------------------------
ServiceWare, Inc.
<PAGE>   14
May 31, 1995

                                  ADDENDUM #2

Item #1  If Phase I Building is not ready for occupancy within thirteen (13)
         months after signing of Lease and receipt of $100,000.00 security
         deposit through the gross negligence of SIBRO, SIBRO agrees to
         reimburse ServiceWare any rents paid on ServiceWare's then existing
         facilities until such time Phase I Building is ready for occupancy.

Item #2  After the seventh anniversary date of Phase I Lease, ServiceWare may
         elect to terminate the Lease for Phase I based on the following
         conditions:

         a)  Lease is in full effect and ServiceWare is in good standing with
             the terms and conditions of the Lease.

         b)  One Hundred Eighty (180) days written notice of intent to
             terminate.

         c)  Certified check in the amount equal to six months current rent made
             payable to SIBRO Enterprises to accompany written notice.

SIGNED:                                 ACCEPTED:

/s/ Vincent J. Siciliano                /s/ Jeff Pepper
----------------------------------      ----------------------------------
Vincent J. Siciliano                    Jeff Pepper
Partner, SIBRO Enterprises              President, ServiceWare, Inc.

              6/3/95                                  6/3/95
----------------------------------      ----------------------------------
Date                                    Date

                                        CORPORATE SEAL
<PAGE>   15
May 31, 1995

ServiceWare, Inc.
Lease

                                  ADDENDUM #1

Item #1   -    SIBRO intends to complete construction of Phase I Building by
               April 1, 1996, however, acknowledges ServiceWare's desire to
               occupy as soon as possible and will put forth every effort to
               complete Phase I Building by December 31, 1995. In turn,
               ServiceWare agrees that the commencement date of the "Lease" will
               begin within 30 days of notification that space is ready for
               occupancy.

Item #2   -    SIBRO Enterprises ("SIBRO") will construct a three story office
               building located at the corner of Allegheny Avenue and Washington
               Avenue substantially in accord with the portion of the attached
               diagram (Exhibit "A") labeled Phase I (the Phase I Building). The
               Phase I Building will have a total gross area of approximately
               18,000 square feet (three floors of approximately 6,000 square
               feet per floor).

               ServiceWare, Inc. ("ServiceWare") will lease the entire building
               exclusive of approximately 2,400 square feet of the first floor
               reserved for a restaurant to be located in the north end of the
               building and adjacent space of 1980 square feet as shown on
               Exhibit "A".

               ServiceWare may elect to lease the approximate 1980 square feet
               of commercial space on first floor of Phase I Building adjacent
               to the lobby for a period of ninety (90) days from the date of
               the execution of the Lease at $13.00 per square foot.

Item #3   -    Rent for leased space in Phase I Building shall be as follows:
               (Based on gross area of 13.620 S.F.)

                                                  ANNUAL     MONTHLY    SF/GA
                                                  ------     -------    -----

               1. 4/1/96     Through 3/31/98     177,060    14,755.00   13.00
               2. 4/1/98     Through 3/31/001    183,870    15,322.50   13.50
               3. 4/1/2001   Through 3/31/006    211,110    17,592.50   13.50
               4. 4/1/2006   Through 3/31/011    238,350    19,862.50   17.50

               (Item #4 is in reference to Tenant's 5 year option)
<PAGE>   16
            Base Building Standards Schedule and Specifications shall meet with
            the approval of ServiceWare. See Exhibit "B" attached.

Item #4  -- Section 5 -- Lessor agrees to provide separate meters for gas,
            water and electricity for each Tenant (exclusive of any approved
            sub-tenant of ServiceWare).

Item #5  -- Section 6 Para. 1 -- Lessor shall be responsible for the
            replacement of carpeting, plumbing, heating, ventilating and air
            conditioning equipment servicing the premises if and to the extent
            installed by the Lessor, and replacement is caused by normal wear
            and tear and not caused by the negligence or willfull acts of the
            Tenant, its Agents, Consessionaires, Officers, Employees,
            Licensees, Invitees or Contractors.

Item #6  -- Section 7 -- Lessor agrees that consent to assign or sub-let the
            premises shall not be unreasonably withheld.

Item #7  -- Section 10 -- Lessor agrees that intent of this Section excludes
            normal wear and tear relative to this section only.

Item #8  -- Section 11 -- Relative to this section only Lessor and Tenant
            mutually agree that "entire term" be limited to the remaining term
            of the Lease or five (5) years (whichever is less) and that Lessor
            may follow all goods removed for a period of ninety (90) days in
            lieu of thirty (30) days as stated.

Item #9  -- Section 12 -- Relative to this section only, Lessor and Tenant
            mutually agree that a grace period of thirty (30) days shall be
            granted by the Lessor to the Tenant relative to only payment of any
            installment of rent or additional rent due. All other conditions of
            this paragraph shall remain in effect.

Item #10 -- Section 13 -- DELETED

Item #11 -- Section 14 -- DELETED

Item #12 -- Add "except for the Lessors gross negligence or willfull
            misconduct".

<PAGE>   17
Item #13 - Lessor agrees to permit Tenant to run computer network cable at
           Tenants expense. Lessor further agrees to furnish approximately
           sixty (60) receptacles that will accommodate the cable and provide
           adequate space in wiring raceways to receive the cable. Tenant
           agrees to furnish necessary information to Lessor on a timely basis
           in order TO NOT cause delays in construction.

Item #14 - Lessor and Tenant mutually agree and understand that rents as stated
           in Item #3 of Addendum #1 are based on Base Building Standards
           (Exhibit "B") and if Tenant for any reason elects to upgrade these
           standards it shall be done at Tenant's expense. It is also agreed
           and understood that Tenant shall make decisions on any upgrades in
           and expeditious manner in order TO NOT cause delays in design and or
           construction.

Item #15 - As a form of guaranteeing the Lease, Tenant shall provide the
           following to the Lessor:

           1)  ServiceWare, within 30 days of the signing of the Lease, agrees
               to deposit with SIBRO One Hundred Thousand Dollars ($100,000.00)
               which sum shall be held by SIBRO (without liability for interest)
               for a period of one year from date of occupancy of building by
               ServiceWare. The security deposit will be reduced to Fifty
               Thousand Dollars ($50,000.00) on the first year anniversary date
               of occupancy and shall be held by SIBRO (without liability for
               interest) for the balance of the term of the Lease.

           2a) ServiceWare, at the signing of the Lease, agrees to provide
               SIBRO with 10,000 stock options for ServiceWare's common stock
               at the option price of $1.42. Options shall be exercisable for a
               period of five (5) years.

           2b) As an additional incentive to SIBRO to expedite the occupancy
               date of the building, ServiceWare agrees to offer SIBRO
               additional stock options at $1.42 in accordance with the
               following:

               i) Additional 10,000 options if occupancy is available within
                  seven (7) months of signing of the Lease and receipt of
                  $100,000.00 security deposit.
<PAGE>   18
               2)   Additional 5,000 options if occupancy is available within
                    nine (9) months of signing of the Lease and receipt of
                    $100,000.00 security deposit.

          3.   ServiceWare also agrees to fully cooperate with SIBRO with the
               procurement of a Payment Bond. Such cooperation shall include but
               not limited to furnishing ServiceWare's current financial
               information as may be required by the Bonding Company. Cost of
               such Payment Bond shall be at SIBRO's expense.

Item #16a -    All repairs and maintenance, shall be made by ServiceWare at its
               own expense except the following:

               1) Structural repairs to exterior walls

               2) Structural repairs to structural columns

               3) Structural repairs to structural floors

               4) Repairs to roof

Item #16b -    SIBRO agrees to assist ServiceWare in the coordination of all
               maintenance and repairs as may be required. SIBRO's assistance
               shall include recommendation of various maintenance contractors,
               soliciting of bids, review and awarding of such bids, etc.
               ServiceWare shall make all final decisions regarding the awarding
               of such bids, etc.

Item #17 -     If fire or casualty render the premises untentable through no
               fault of the tenant, there shall be a pro-rata reduction in the
               rent for the time the premises (or part thereof) is untentable.

Item #18a -    ServiceWare will have first option to lease any and all future
               Phase II and Phase III space as indicated on Exhibit "A". Rents
               per Square Foot for Phase II and Phase III shall not exceed an
               escalation figure of six percent (6%) per year over rents as
               established in Item #3 of this Addendum.

Item #18b -    SIBRO agrees to construct Phase II Building on a timely basis
               based on the following conditions:

               1) Lease for Phase I is in full effect and ServiceWare is in good
                  standing with the terms and conditions of Phase I Lease.
<PAGE>   19
               2)   ServiceWare occupies all available space in Phase I
                    Building.

               3)   ServiceWare's written commitment to leasing a minium of 9000
                    square feet of second and third floors of Phase II Building
                    as evidenced by an executed Lease that is mutually agreeable
                    to both parties.

Item #18c -    SIBRO agrees to construct Phase III Building on a timely basis
               based on the following conditions:

               1)   Lease for Phase I and Phase II are in full effect and
                    ServiceWare is in good standing with the terms and
                    conditions of Phase I and Phase II Leases.

               2)   ServiceWare occupies all available space in Phase I and
                    Phase II Buildings.

               3)   ServiceWare's written commitment to leasing a minimum of
                    sixty-seven percent (67%) of available footage of Phase III
                    Building as evidenced by an executed Lease that is mutually
                    agreeable to both parties.

Item #19 -     ServiceWare agrees to lease office space they presently occupy in
               Allegheny Plaza I at the rental rate as set forth in
               ServiceWare's present lease until such time Phase I Building is
               available for occupancy at which time ServiceWare will be
               released from their lease at Allegheny Plaza I at no cost to
               ServiceWare. It is further agreed and understood that ServiceWare
               will have first option at any additional space that may become
               available in Allegheny Plaza I for $12.00 per square foot.
               ServiceWare agrees to notify Landlord of their decision to
               exercise their option within seven days of being notified of
               upcoming available space.

Item #20 -     SIBRO agrees to furnish ServiceWare with one parking space per
               250 square feet of net useable leased space for Phases I and II.

Item #21 -     ServiceWare shall furnish a Corporate Resolution to SIBRO
               empowering their President, Mr. Jeff Pepper, to enter into a long
               term lease.

<PAGE>   20
Item #22a  - Construction of Phase 1 Building will begin within three (3) days
             of executed lease and approved Architectural Drawings.

Item #23   - ServiceWare shall be afforded the opportunity to review preliminary
             architectural designs and SIBRO agrees to fairly consider
             ServiceWares input as long as such considerations are reasonable
             and do not cause financial impact on the cost of the building or
             delays in the completion date.

Item #24   - SIBRO agrees that if ServiceWare does not take entire space on
             second or third floor of Phase II and additional tenants (other
             than approved sublets or assigns of ServiceWare) occupy a portion
             of the space, that the rent for the common areas as well as all
             utilities shall be pro-rated for such tenants directly
             proportionate to the square footage leased.

             Tenants on first floor shall be excluded form such pro-ration if
             they have independent facilities (toilets, etc.) and are separately
             metered.

SIGNED:                                   ACCEPTED:

/s/ Vincent J. Siciliano                  /s/ Jeff Pepper
--------------------------------          -------------------------------
Vincent J. Siciliano                      Jeff Pepper
Partner, SIBRO Enterprises                President, ServiceWare, Inc.

6/3/95                                    6/3/95
--------------------------------          --------------------------------
Date                                      Date

                                          CORPORATE SEAL
<PAGE>   21

                                   EXHIBIT A

                                  [FLOOR PLAN]

<PAGE>   22
                                  EXHIBIT "B"

Lessor's Work:    The Building Standard interior finishes shall be provided by
                  the Lessor as follows:

Unit Allowances:

1)  Partitions - Interior Partition - 40 L.F. per 100 S.F. of useable space
                 Demising Partition - As required

2)  Corridor - Suite Entrance Door  - 1 Per Floor

3)  Interior Doors                  - 1 Per 25 L.F. of interior partition

4)  Carpet                          - All Floors

5)  Acoustical Tile Ceiling         - All Ceilings

6)  Flourescent Light Fixture       - 12 per 1000 S.F. of usable space

7)  Wall Light Switch               - 4 per 1000 S.F. of usable space

8)  Wall Duplex Electrical Outlet   - 7 per 1000 S.F. of useable space

9)  Air Conditioning Zone           - Building Standards

NOTES:

1)  Partitions          Ceiling height drywall system painted in Building
                        Standard colors.

2)  Doors               Prefinished solid core 3'-0"  x 6'-8"

3)  Door Hardware       a) Interior - Building Standard latch sets
                        b) Corridor - Building Standard with one lock set,
                        exposed closure and two sets of keys.

4)  Ceilings            Suspended acoustical tile 2' x 4' grid lay in type.

5)  Floors              Loading - 70 PSF (including partitions) live load

6)  Floor Covering      Building Standard carpet in all areas. (22 ounce 15 yr.
                        warranty).
<PAGE>   23
                                  EXHIBIT "B"

7)  Lighting            Furnish and install Building Standard 2' X 4' recessed
                        troffer fixtures with parabolic lenses.

8)  Electric            Furnish and install duplex electric receptacles.
                        Dedicated and special lines at tenants expense.

9)  Telephone           Tenant to furnish and install.

10) Electrical Service  The service capacity of electricity at electric closets
                        shall be 1.25 watts average per square foot.

11) H.V.A.C.            For normal office useage, furnish and install the
                        complete heating, ventilating and air conditioning
                        system.

                        a) Design Criteria - Roof U-Valve .08
                                             Wall U-Valve .20

                        b) Design Temperatures:
                           1) Outside Winter Temp. @  0 Degrees:
                                                     75 Degrees

                           2) Outside Summer Temp. @ 75/55 Degrees:
                                                     91/73 Degrees

Additional work shall be at tenants expense.

1) Lightning Protection - To be determined (negotiable).

2) Operable Windows     - Additional cost over fixed to be determined
                          (negotiable).

APPROVAL

/s/ Jeff Pepper
----------------------
ServiceWare, Inc.
<PAGE>   24
May 31, 1995

                                  ADDENDUM #2

Item #1   If Phase I Building is not ready for occupancy within thirteen (13)
          months after signing of Lease and receipt of $100,000.00 security
          deposit through the gross negligence of SIBRO, SIBRO agrees to
          reimburse ServiceWare any rents paid on ServiceWare's then existing
          facility until such time Phase I Building is ready for occupancy.

Item #2   After the seventh anniversary date of Phase I Lease, ServiceWare may
          elect to terminate the Lease for Phase I based on the following
          conditions:

          a)   Lease is in full effect and ServiceWare is in good standing with
               the terms and conditions of the Lease.

          b)   One Hundred Eighty (180) days written notice of intent to
               terminate.

          c)   Certified check in the amount equal to six months current rent
               made payable to SIBRO Enterprises to accompany written notice.

SIGNED:                                      ACCEPTED:

/s/ Vincent  J. Siciliano                    /s/ Jeff Pepper
________________________________             ____________________________
Vincent J. Siciliano                         Jeff Pepper
Partner, SIBRO Enterprises                   President, ServiceWare, Inc.

6/3/95                                       6/3/95
________________________________             ____________________________
Date                                         Date

                                             CORPORATE SEAL
<PAGE>   25
No. 36 C COMMERCIAL LEASE
(C) 1988 P.O. Naly Co. Fgh, PA 15219

                                COMMERCIAL LEASE

MADE this 1st day of August 1996, by and between

hereinafter called "LESSOR" and

                                                    hereinafter called "TENANT."

1. DEMISE AND TERM: LESSOR, hereby leases to TENANT for the term of NINE YEARS &
NINE MONTHS on the 1st day of August, 1996, and ending the 31st day of MARCH
2006 (the "TERM") the following described premises in its present condition:

     INDOOR PARKING GARAGE - PHASE I. LOCATED AT THE CORNER OF ALLEGHENY AVE AND
WASHINGTON AVE WITH PROVISIONS FOR TWO (2) HANDICAP SPACES AND AN ADDITIONAL
SIXTEEN (16) PARKING SPACES FOR A TOTAL OF EIGHTEEN PARKING SPACES.

(the "PREMISES"), TENANT also has a nonexclusive license for the benefit of
TENANT, its employees, agents and invitees for access to and from the leased
premises through the building and over property of LESSOR appurtenant thereto,
and to use those parts of the building designated by LESSOR for use by TENANTS
including but not limited to toilet rooms, elevators and unrestricted parking
areas, if any.

2. RENEWAL: TENANT, if not in default under this lease, may extend the Term of
this lease by written notice to the LESSOR received no later than three months
before the expiration of the previous Term, for an additional period of FIVE
year(s) at the renewal Rent stated below, under the terms of this same lease.

3. RENT: The TENANT covenants to pay as Rent the total sum of TWO HUNDRED AND
THIRTY-TWO THOUSAND Dollars ($232,000.00), payable in installments of TWO
THOUSAND Dollars $(2,000.00) per month, in advance without demand on or before
the first day of each month, at the office of the LESSOR. In the event of
renewal of this lease, monthly rent for FIVE year(s) will be ONE HUNDRED AND
EIGHTY THOUSAND Dollars ($180,000.00) annually, payable in installments of THREE
THOUSAND Dollars ($3,000.00) per month without demand in advance on or before
the first day of each month.

     The TENANT shall pay all Rent when due and payable, without any setoff,
deduction or prior demand therefor whatsoever. Any payment by TENANT or
acceptance by LESSOR of a lessor amount than shall be due from TENANT to LESSOR
shall be treated as payment on account. The acceptance by LESSOR of a check for
a lesser amount with an endorsement or statement thereon, or upon any letter
accompanying such check, that such lesser amount is payment in full, shall be
given no effect, and LESSOR may accept such check without prejudice to any other
rights or remedies which LESSOR may have against TENANT.

     The TENANT waives to the LESSOR the benefit of all laws now or hereafter in
force, in this State or elsewhere exempting property from liability for rent or
for debt, including but not limited to Act No. 20 approved April 6, 1951,
entitled "The Landlord And Tenant Act of 1951."

4. LATE CHARGES: Any provision of this lease to the contrary notwithstanding,
TENANT shall pay a late charge in the amount of FIVE percent (.5%) of the
outstanding delinquent balance for any payment of Rent or Additional Rent not
made within ten (10) days after the due date thereof to cover the extra expense
involved in handling late payments. This charge is in addition to any other
rights or remedies of the LESSOR.

5. ADDITIONAL RENT: TENANT shall pay as additional rental for the PREMISES, all
gas and electricity used thereon, all garbage collection charges, all sanitary
sewer charges or assessments, and all water rents assessed on the premises
whether by meter rate or flat rate as due. On failure of TENANT to pay the same
when due, LESSOR shall enforce payment thereof in the same manner as rent in
arrears. ALL UTILITIES TO BE PAID BY LESSEE.

6. CONDITION OF PREMISES; USE OF PREMISES: The TENANT hereby agrees to maintain
and keep the PREMISES during the term of this lease in good repair, including
but not limited to water pipes, their connections and all plumbing fixtures. The
TENANT also agrees to keep the PREMISES, including the common areas of the
building, property of the LESSOR appurtenant thereto, and sidewalks free of
rubbish, and in such condition as the Board of Health may require. TENANT
further agrees to keep all sidewalks free from snow and ice.
<PAGE>   26
     All repairs, except those specific repairs set forth below which are the
responsibility of the LESSOR, shall be made by the TENANT at its own
expense. If the LESSOR pays for the same or any part thereof, it will be
Additional Rent payable forthwith.

     TENANT further agrees not to make any alterations or improvements to the
PREMISES without the consent of LESSOR, or to remove any additions or
improvements whether made by the LESSOR or TENANT, nor to post bills or erect
billboards or signs, without the written consent of the LESSOR, under penalty
of instant forfeiture of the lease and the terms hereof.

     The TENANT convenants to use the PREMISES only for parking of vehicles and
to surrender the same in as good order as they now are, reasonable wear and
tear and accidents by fire alone expected.

     The LESSOR shall be responsible for making only the following repairs:

     (1) repairs to any sprinkler system or heating, ventilating or
air-conditioning system serving the PREMISES, by LESSEE.

     (2) structural repairs to exterior walls, structural columns and
structural floors which collectively enclose the PREMISES (excluding, however,
storefronts) and the roof over the PREMISES; provided TENANT shall give LESSOR
notice of the necessity for such repairs and that such repairs did not arise
from not were they caused by the negligence or willfull acts of TENANT, its
agents, concessionaires, officers, employees, licensees, invitees, or
contractors.

7. ASSIGNMENTS AND SUB-LETTING: The TENANT hereby agrees not to assign this
lease voluntarily or involuntarily, not to sub-let the premises or any part
thereof, without the written consent of the LESSOR, under penalty of instant
forfeiture of this lease.

8. COMPLIANCE WITH PUBLIC LAWS: The TENANT further agrees to perform, fully
obey and comply with all ordinances, rules, regulations and laws of all public
authorities, beards and officers relating to said premises, or any part
thereof, for any purpose or use in violation of any law, statute or ordinance,
whether federal, state or municipal, during the term of said lease or any
renewal thereof.

9. TERMINATION: VACATING THE PREMISES: This lease shall terminate at the end of
the Term or any renewal thereof without the necessity of any notice from either
LESSOR or TENANT to terminate the same, and TENANT hereby expressly waives all
right to any notice which may be required under any laws now or hereinafter
enacted and in force in Pennsylvania, including The Landlord And Tenant Act of
1961, Act of April 6, 1951, as amended. TENANT convenants and agrees to give up
quiet and peaceful possession without further notice from said Lessor or Agent.

10. SECURITY DEPOSIT: The TENANT, contemporaneously with the first Rent
installment, agrees to deposit with the LESSOR -0- Dollars ($-0-) which sum
shall be held by the Lessor, without liability for interest, as security for
the full faith and performance by Tenant of all of the terms, covenants and
conditions of this lease by said Tenant to be kept and performed during the
Term or any renewal thereof.

     If Rent becomes overdue and is unpaid, or any other sum payable by the
TENANT to the LESSOR shall be overdue and unpaid, then the LESSOR may at its
discretion, appropriate and apply any portion of the deposit to the payment of
such sum. It is also within the LESSOR'S discretion to use such deposit to
compensate for loss or damage suffered or sustained by LESSOR due to a failure
of the TENANT to keep and perform any of the other terms, covenants and
conditions of this lease. Should the entire deposit, or any portion thereof, be
applied by LESSOR for the above stated purposes, then TENANT shall remit a
sufficient amount in cash to restore said security to the original sum
deposited. Failure to do so within 10 days of the LESSOR'S written demand will
result in breach.

     Should TENANT comply with all of the terms of this lease, the deposit will
be returned to TENANT in full within 30 days of the expiration of the term.

11. DISTRAINT: As additional security, TENANT acknowledges the LESSOR'S right
to distrain, hold and sell with due legal notice all property on or to be
brought on the premises in order to satisfy unpaid Rent, expenses, and
Additional Rent. Any attempt by TENANT to remove said property while rents
remain overdue will be deemed fraudulent and will result in the acceleration of
rent, thereby causing all rent for the entire term to become due and payable.
All goods so removed may be followed for 80 days and seized for the collection
of unpaid amounts.

12. DEFAULT: BREACH: It is further agreed that if the said TENANT shall default
in the payment of any installment of Rent or Additional Rent; or shall remove
or attempt or express or declare an intention to remove any of the goods and
chattals from the premises, or should an execution be issued against the
TENANT, bankruptcy proceeding be begun by or against said TENANT, or an
assignment be made by TENANT for the benefit of creditors, or a receiver
appointed for TENANT, then and in such case the entire Rent to the balance of
the said Term shall become immediately due and payable. In case of such
assignment, bankruptcy proceedings, appointment of a receiver, or of a sale on
legal process of TENANT'S goods, LESSOR shall have the right to demand and
receive the Rent for the balance of the Term, or renewal term which shall be
first paid out of the proceeds of such assignment, bankruptcy or receiver's
proceedings or sale on legal process, any law, usage or custom to the contrary
notwithstanding.

<PAGE>   27
15. LESSOR NOT LIABLE FOR INJURY OR DAMAGE TO PERSONS OR PROPERTY: The LESSOR
shall not be liable for any injury or damage to any person or to any property
at any time on said PREMISES or building from any cause whatever that may at
any time exist from the use or condition of the PREMISES or building from any
cause, during the Term or any renewal thereof.

16. INCREASED TAXES: In the event the taxes, including those imposed by any
municipality, County, or School District, levied and assessed against the real
estate of which the PREMISES are a part are increased beyond that imposed for
the year 1996, whether occasioned by an increase in mileage or an increase in
assessment or otherwise, the TENANT shall pay as Additional Rent its
proportionate share of the increased taxes during the Term of this lease or any
renewal thereof.

17. EXCLUSIVITY OF LESSOR'S REMEDIES: The receipt of rent after default, or
after judgment or after execution, shall not deprive the LESSOR of other
actions against the Tenant for possession or for rent or for damages, and all
such remedies are non-exclusive and can be exercised concurrently or separately
as LESSOR desires. The LESSOR may use the remedies herein given or those
prescribed by law, or both, and the LESSOR or Agent may enter at will to
inspect the premises, to take or send persons on said property, seeking to rent
or purchase, make repairs or improvements and post notices of "To Let" and "For
Sale."

18. SUCCESSORS AND ASSIGNS: All rights and liabilities herein given to or
imposed upon either of the parties hereto, shall extend to the heirs,
executors, administrators, successors and assigns of such party.

19. CONDEMNATION CLAUSE: In the event that all or a part of the PREMISES is
taken by eminent domain or conveyed in lieu thereof. If the leased PREMISES
cannot reasonably be used by TENANT for their intended purpose, then this lease
will terminate effective as of the date that the condemning authority shall
take possession of the same.

20. TENANT'S WAIVER OF DAMAGES AND EXCEPTIONS: TENANT hereby waives all claims
against LESSOR by reason of a taking of the PREMISES and assigns to LESSOR any
rights and damages to which TENANT might otherwise be entitled for condemnation
of the leasehold estate created by this lease; except that TENANT shall be
entitled to make any claim against the condemning authority for relocation
damages, damages for tenant improvements and any other payments lawfully due
tenants as such, without diminution of the sums due LESSOR.

21. FIRE CLAUSE: The TENANT hereby agrees to notify LESSOR of any damages to
the leased PREMISES by fire or other hazard and also of any dangerous or
hazardous condition within the leased PREMISES immediately upon the occurrence
of such fire or other hazard or discovery of such condition.

     Upon occurrence of a fire, repairs shall be made by LESSOR as soon as
reasonably may be done unless the costs of repairing the PREMISES exceed 25% of
the replacement cost of the building in which case the LESSOR may, at its
option, terminate this lease by giving TENANT written notice of termination
with forty-five (45) days of the date of the occurrence.

<PAGE>   28
      If the LESSOR does not terminate this Lease pursuant to the paragraph
above, then LESSOR has forty-five (45) days after the date of occurrence to give
written notice to TENANT setting forth its unqualified commitment to make all
necessary repairs or replacements, the projected date of commencement of such
repairs, and the LESSOR'S best good faith estimate of the date of completion of
the same.

      If the LESSOR fails to give such notice, or if the date of completion is
more than 30 days after the date of occurrence, then the TENANT may, at its
option, terminate this lease and the LESSOR will be obliged to refund to the
TENANT any rent allocable to the period subsequent to the date of the fire.

22. WAIVER OF NONPERFORMANCE:  Failure of the LESSOR to exercise any of its
rights under this lease upon nonperformance by the TENANT of any condition,
covenant or provision herein contained shall not be considered a waiver thereof,
nor shall any waiver of nonperformance of any such condition, covenant or
provision by the LESSOR be construed as a waiver of the rights of the LESSOR as
to any subsequent defective performance or nonperformance hereunder.

23. PAROL EVIDENCE CLAUSE:  This instrument constitutes the final, fully
integrated expression of the agreement between the LESSOR and the TENANT. As
such, it cannot be modified or amended in any way except in writing signed by
the LESSOR and TENANT.

24. SUBORDINATION:  This lease is subordinate to the lien of all present or
future mortgages which affect the leased PREMISES and to all renewals,
modifications, replacements and extensions thereof. This clause shall be
self-operative but in any event TENANT hereby agrees to execute promptly and
deliver any estoppel certificate or other assurances that LESSOR may request in
furtherance hereof; provided, however, that in the event of foreclosure of any
such mortgage or modification TENANT shall attorn to the purchaser in
foreclosure or who shall be named in any deed in lieu of foreclosure and shall
recognize such purchaser as the LESSOR under this lease; and provided, further,
that so long as TENANT is not in default hereunder, this lease shall remain in
full force and effect.

25. SEVERABILITY CLAUSE:  If any term, covenant, condition, or provision of this
lease is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.

26. PENNSYLVANIA LAW TO APPLY:  This lease shall be construed under and in
accordance with the laws of the Commonwealth of Pennsylvania.

In Witness Whereof, the undersigned LESSOR and TENANT hereto execute this lease
as of the day and date first above written.

                                           Sibro Enterprises       (LESSOR)
------------------------           ----------------------------------------
                                   By      Vincent Suiliani
------------------------           ----------------------------------------
                                   Title   Partner
                                   ----------------------------------------
                                                                   (LESSEE)
------------------------           ----------------------------------------
                                             Jeff Pepper           (LESSEE)
------------------------           ----------------------------------------
                                   By      ServiceWare Inc.
------------------------           ----------------------------------------
                                   Title   President
------------------------           ----------------------------------------

LEASE

               From

               To

Rent $         per

Payable

Expire

Assigned to

Reserved to

Renewal to

Reserved to

P.Onaly Co., 427 Fourth Ave., Pgh., PA 15218

<PAGE>   29
                             [ELECTRICAL SCHEMATIC]
<PAGE>   30
                               ADDENDUM TO LEASE

                                    BETWEEN

                               SIBRO ENTERPRISES
                           BY V-J CORPORATION, AGENT

                                      AND

                           SERVICEWARE, INCORPORATED

The provisions of this Addendum shall be attached to, incorporated fully
therein, and made a part of the Lease between SIBRO Enterprises, Lessor, by V-J
CORPORATION, AGENT, and ServiceWare, Incorporated, dated May 31, 1995.

Demise and Term: Lessor, hereby leases to Tenant for the term of nine years and
five months commencing on the first day of November, 1996 and ending on the
31st day of March, 2006 (the term) the following described premises in its
proposed condition:

     New three story office building located at 333 Allegheny Avenue known as
     Phase II and presently under construction. The leased space referenced more
     specifically by this Addendum is the Third Floor representing 4,860 SF,
     more or less, the Second Floor representing 4,860 SF, more or less and the
     Garage Level representing 4,860 SF more or less.

     ServiceWare will have first option to lease all available space on First
     Floor.
<PAGE>   31
Rent Schedule for leased space in Phase II Building shall be as follows:
<TABLE>
<CAPTION>
                                          Monthly
                                          -------
<S>                                      <C>
1) 11/1/96 - 4/30/97                      7,403.00*
2)  5/1/97 - 3/31/98                     13,325.00
3)  4/1/98 - 3/31/01                     14,756.00
4)  4/1/01 - 3/31/06                     18,865.00
5)  4/1/06 - 3/31/011 (5 year option)    22,353.00
</TABLE>

*Reflects six months free rent for Second Floor.

NOTE: All other terms and conditions of existing Lease dated May 31, 1995 shall
remain in effect and this Addendum shall become an integral part of existing
Lease.

The parties hereto enter into this Addendum with the intent to be legally bound
hereby, this 27th day of September, 1996.

Signed in the presence of:              LESSOR:

                                        BY V-J CORPORATION, AGENT

/s/ [Illegible]                         BY SIBRO ENTERPRISES
--------------------------                 ----------------------------------
                                        BY /s/ Vincent J. Siciliano
--------------------------                 ----------------------------------

                                        TENANT:
/s/ Molyane W. Gillespie                BY /s/ Jeff Pepper
--------------------------                 ----------------------------------
                                        BY ServiceWare, Inc.
--------------------------                 ----------------------------------

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