Document:

Exhibit 10.2 to Vascular Solutions, Inc. Form 10-Q dated March 31, 2005

EXHIBIT 10.2  

CONSENT OF LANDLORD TO SUBLEASE 

        This Consent of Landlord to
Sublease (this “Consent”) is made effective as of the 31st day of March, 2005 (the “Effective Date”) by and
between Insignia Systems, Inc. (“Tenant”) and Vascular Solutions, Inc.
(“Subtenant”), and IRET – Plymouth, LLC (“Landlord”). 

RECITALS 

	A. 	  	Landlord owns the commercial office and warehouse
property commonly known as “Northgate I,” located at 6464 Sycamore Court, Maple Grove, Minnesota (the
“Property”), and more particularly described in the Master Lease (as hereafter defined). 

	B. 	  	By virtue of a “Standard Commercial Lease”
dated as of October 31, 2002 (the “Master Lease”) between Landlord’s predecessor in interest and Tenant,
Landlord’s predecessor in interest leased approximately 47,000 square feet of the Property to Tenant (as specifically
described in the Master, Lease, the “Premises”). 

	C. 	  	Tenant desires to sublease a portion of
Tenant’s interest in and to the Master Lease, relating to approximately 10,227 square feet of the Premises (the “Sublet
Space”) to Subtenant, and Subtenant desires to sublease the Sublet Space from Tenant. The proposed sublease between Tenant
and Subtenant is attached hereto as Exhibit 1 (the “Sublease”). The Sublet Space is more
particularly identified on Exhibit B of the Sublease. 

	D. 	  	Landlord desires to consent to the Sublease,
contingent upon the terms and conditions of this Consent being satisfied by Tenant and Subtenant. 

        NOW, THEREFORE, for
and in consideration of the Recitals set forth above, which are deemed a material and substantive part of this Consent, the
parties agree as follows: 

        1.    The
Recitals set forth above are incorporated herein and shall be deemed terms and provisions hereof. 

        2.    Subject
to the terms, conditions, and agreements contained herein, Landlord hereby consents to the Subtenant’s sublease of the
Premises from the Tenant. 

        3.    Landlord
shall not be bound by any of the terms, covenants, conditions or provisions of the Sublease. This Consent is only Landlord’s
consent to the act of subletting by Tenant to Subtenant. Nothing in this Consent shall be construed as a consent to, or approval
or satisfaction by Landlord of, any of the terms, covenants, conditions or provisions of the Sublease. 

        4.    Landlord
reserves all of its rights under the Master Lease. The Sublease shall not enlarge or increase any of Landlord’s obligations
under the Master Lease. The Sublease is at all times subject and subordinate to the Master Lease, and to all of the covenants,
agreements, terms, provisions, and conditions of the Master Lease and this Consent. 

        5.    This
Consent shall not be deemed to release or relieve Tenant from any of its liabilities and obligations under the Master Lease for
the full term thereof, regardless of whether 

1 

rental payments to Landlord are directly made by Subtenant or continue to be
made by Tenant. If at any time there is an uncured default by Tenant under the Master Lease, Landlord may require any rental or
other payments being made under the Sublease to be paid directly to Landlord as a credit against the rentals otherwise due from
Tenant under the Master Lease. 

        6.    Subtenant
shall not do or permit anything to be done in connection with Subtenant’s occupancy of the Sublet Space that would violate
any of the covenants, agreements, terms, provisions, and conditions of the Master Lease or this Consent. Any act or omission of
Subtenant (or anyone claiming under or through Subtenant) that violates any of the provisions of the Master Lease shall be deemed
a violation of the Master Lease by Tenant. 

        7.    Subtenant
shall not, without the prior written consent of Landlord in each instance, which consent may be withheld or conditioned by
Landlord in its sole discretion: (i) assign the Sublease or this Consent, or further sublet the Sublet Space or any part thereof;
or (ii) hereafter sublet, take by assignment, or otherwise occupy any space in the Property other than the Sublet Space. Subtenant
agrees that Tenant may assign its interest in the Sublease to Landlord without the consent of Subtenant. 

        8.    The
Sublease is subject and subordinate to the mortgage currently in place on the Property, and to any future mortgage placed on the
Property by Landlord. Subtenant shall execute and deliver an instrument, in recordable form, as reasonably required by Landlord or
its mortgagee (“Lender”), within ten (10) calendar days of Landlord’s written request. Any such instrument shall
contain any provisions reasonably required by Lender, including without limitation provisions whereby Subtenant agrees that Lender
shall not be: (i) liable for any act or omission of Landlord or Tenant; (ii) liable for return of any security deposit, unless and
only to the extent that Lender actually receives such security deposit; (iii) subject to any offsets or defenses which the
Subtenant might have against Landlord or Tenant (provided the foregoing shall not relieve Lender from any obligation of the
landlord under the Master Lease accruing or arising after Lender’s succeeding to the interest of Landlord under the Master
Lease); (iv) bound by any rent or additional rent which the Subtenant might have paid in advance for more than the current month;
or (v) bound by any representation or warranty made by Landlord or Tenant. Any such instrument shall provide for Lender’s
recognition of the Sublease and agreement not to disturb Subtenant so long as Subtenant is not in default under the Sublease.
Subtenant shall execute and deliver an estoppel certificate, in form reasonably required by Landlord, within ten (10) calendar
days of Landlord’s written request, certifying (if such be the case or if not the case, specifying with particularity any
exception) to the following: (i) that the Sublease is in full force and effect (or if there have been modifications that the
Sublease as modified is in full force and effect and stating the modifications); (ii) the dates to which the rent and other
charges have been paid; (iii) that Tenant is not in default in any provision of the Sublease or, if in default, the nature thereof
specified in detail; (iv) the amount of monthly rental currently payable by Subtenant; (v) the amount of any prepaid rent; (vi)
the commencement and termination dates of the Sublease; and (vii) to such other matters as may be reasonably requested by Lessor,
Lender, or any prospective purchaser of the Property. 

        9.    Landlord
acknowledges that Subtenant may use certain materials in its manufacturing processes that are potentially environmentally
hazardous materials, as specifically described on Exhibit 2 of this Consent (the “Materials”), and that
the use of the Materials may generate chemical waste requiring special storage and disposal. Notwithstanding Paragraph 14.8 of the
Master Lease, Landlord consents to the Subtenant’s use, storage, and disposal of the Materials at the Sublet Space. Tenant
and Subtenant jointly and severally represent, warrant, and agree that Subtenant’s use, storage, and disposal of the 

2 

Materials shall at all times comply with any applicable federal and state
laws and regulations, and that Subtenant and Tenant will comply with all other requirements in Paragraph 14.8 of the Master Lease.
Tenant and Subtenant shall jointly and severally indemnify and hold Landlord harmless from any claims, damages, fines, judgments,
penalties, costs, liability, or losses (including but not limited to sums paid for settlement, attorney’s fees and
expert’s fees) arising in whole or in part out of the use, storage, generation, or disposal of any hazardous materials
(including without limitation the Materials) at the Property. This indemnification includes without limitation any and all costs
incurred because of any investigation of the site or any cleanup, removal, or restoration mandated by any federal, state or local
agency or political subdivision. The liability and indemnity of Tenant and Subtenant hereunder shall survive the termination or
expiration of the Master Lease. 

        10.    Upon
the expiration or earlier termination of the Master Lease, or the surrender of the Master Lease by Tenant to Landlord, the
Sublease and the term and estate thereby granted shall automatically expire and come to an end as of the effective date of such
expiration, termination or surrender, and Subtenant shall vacate the Sublet Space on or before such date. In case of the failure
of Subtenant to so vacate, Landlord shall be entitled to all of the rights and remedies which are available to a landlord against
a tenant holding over after the expiration of a term, in addition to any rights and remedies which are available to Landlord
pursuant to the Master Lease. 

        11.    Tenant
and Subtenant jointly and severally represent, warrant, and agree that: (i) Subtenant is financially responsible, of good
reputation, and engaged in a business which is in keeping with the first-class standards of the Property and its occupancy; (ii)
no compensation or consideration of any kind other than as set forth in the Sublease has been, or will be, paid by Subtenant to
Tenant in connection with the Sublease; (iii) the Sublet Space (subject to all of the covenants, agreements, terms, provisions,
and conditions of the Lease) shall be used by Subtenant in compliance with all applicable laws and regulations solely for office,
light manufacturing and warehouse purposes; and (iv) the Sublease shall not be modified or amended in any way without the prior
written consent of Landlord, which consent may be withheld or conditioned in Landlord’s sole discretion. 

        12.    The
consent of Landlord to this Sublease shall in no way be construed to relieve Tenant from obtaining the express written consent of
Landlord to any future subleasing or assignment. 

        13.    In
the event of any conflict between the provisions of (i) the Master Lease or this Consent and (ii) the Sublease, the provisions of
the Master Lease or this Consent shall prevail unaffected by the provisions of the Sublease. 

        14.    All
notices required or desired to be given to Subtenant hereunder or under the Master Lease shall be addressed to Subtenant at the
respective address set forth in the Sublease. 

        15.    Tenant
and Subtenant agree that Landlord is not responsible for the payment of any brokerage commissions, or finder’s fees or
similar charges of any nature in connection with this transaction and they each jointly and severally agree to indemnify and hold
Landlord harmless from and against any claims liability, losses or expenses, including reasonable attorneys’ fees, incurred
by Landlord in connection with any claims for a commission by any broker or agent in connection with this transaction. 

3 

        16.    This
Consent shall be interpreted and construed in accordance with the laws of the State of Minnesota. Each capitalized term, word, or
phrase not defined in this Consent shall have the meaning set forth for such term in the Master Lease. This Consent has been duly
executed and delivered by each respective party, and constitutes the valid and binding obligations of each party, enforceable in
accordance with its terms. Each party has all necessary authority, has taken all action necessary to enter into this Consent and
to consummate the transaction contemplated hereby, and to perform its obligations hereunder. This Consent shall be binding upon
and inure to the benefit of the parties hereto, and their legal and personal representatives, successors, and assigns. 

        17.    This
Consent may be executed in counterparts and all counterparts shall collectively constitute a single agreement. 

        IN WITNESS WHEREOF, the
parties hereto have caused this Consent to be properly executed, as of the day and year first above written. 

TENANT:  

Insignia Systems, Inc. 

By:____________________________ 

   Its: 

SUBTENANT:  

Vascular Solutions, Inc. 

By:____________________________ 

      Its: 

LANDLORD:  

IRET – Plymouth, LLC 

   By:   IRET Properties, a North Dakota Limited Partership

    Its:   Managing Member 

	 	 	 	 
	By:   	 	IRET, Inc.
	Its:    	 	Sole General partner
	 
	 	 	By:   	____________________________ 
	 	 	 	Thomas A. Wentz, Jr.
Its:   Senior Vice President

4LOAN AGREEMENT

Exhibit 10.1

LOAN AGREEMENT

By and Among

MANUFACTURERS AND TRADERS TRUST COMPANY,

As Administrative Agent and Letter of Credit Issuer,

THE LENDERS PARTY HERETO

and

COMPUTER TASK GROUP, INCORPORATED

 

 

As of April 21, 2005

 

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TABLE OF CONTENTS

	 	 	
 

    	
    
    Page

	 	 	 
	1.	 DEFINITIONS. 	1
	 	 	 	 
	 	1.1 	Definitions 	1
	 	1.2 	Construction 	20
	 	1.3 	Accounting Terms. 	20
	 	 	 	 
	2. 	THE REVOLVING CREDIT LOAN. 	21
	 	 	 	 
	 	2.1 	Agreement to Lend; Advances 	21
	 	2.2 	Promissory Notes. 	22
	 	2.3 	Interest and Interest Payments. 	22
	 	2.4 	Principal Payments. 	23
	 	2.5 	Default Rate 	23
	 	2.6 	Maximum Allowable Interest Rate 	24
	 	2.7 	Payments. 	24
	 	2.8 	Use of Proceeds 	25
	 	2.9 	Fees. 	25
	 	2.10 	Late Fees 	25
	 	2.11 	Prepayment 	25
	 	2.12 	Termination or Permanent Reduction of the Commitments
    	25
	 	2.13 	Change in Circumstances 	26
	 	2.14 	Letters of Credit.	29
	 	2.15 	Sharing in Set-Offs, Etc 	33
	 	2.16 	Settlement between Administrative Agent and Lenders 
    	34
	 	 	 	 
	3. 	COLLATERAL SECURITY. 	34
	 	 	 	 
	 	3.1 	Security for Loans 	34
	 	3.2 	Related Matters 	35
	 	 	 	 
	4. 	REPRESENTATIONS AND WARRANTIES 	36
	 	 	 	 
	 	4.1 	Organizational Status 	36
	 	4.2 	Power and Authorization 	36
	 	4.3 	Execution and Binding Effect 	36
	 	4.4 	Compliance with Laws; Governmental Approvals and Filings
    	36
	 	4.5 	Absence of Conflicts 	37
	 	4.6 	Labor Matters 	37
	 	4.7 	Absence of Undisclosed Liabilities 	38
	 	4.8 	Accurate and Complete Disclosure 	38
	 	4.9 	Existing Indebtedness 	38
	 	4.10 	Margin Regulations 	38
	 	4.11 	Projections 	39

-ii-

	 	4.12 	Subsidiaries, Partnerships, etc. 	39
	 	4.13 	No Defaults on Other Agreements; Adverse Contracts 
    	39
	 	4.14 	Litigation 	40
	 	4.15 	Absence of Events of Default 	40
	 	4.16 	Insurance 	40
	 	4.17 	Title to Property; Security Interest 	40
	 	4.18 	Intellectual and Other Property 	40
	 	4.19 	Taxes	41
	 	4.20 	Employee Benefits 	41
	 	4.21 	Environmental Matters 	41
	 	4.22 	No Guaranties or Indemnities 	42
	 	4.23 	Potential Conflicts of Interest 	42
	 	4.24 	Bank Accounts 	42
	 	4.25 	Trade Relations 	42
	 	4.26 	Financial Information 	42
	 	4.27	Investment Company Act; Public Utility Holding Company Act
    	43
	 	4.28 	No Material Adverse Change 	43
	 	4.29 	Survival of Representations and Warranties 	43
	 	 	 	 
	5. 	CONDITIONS OF LENDING. 	43
	 	 	 	 
	 	5.1 	Conditions of Revolving Credit Loans 	43
	 	5.2 	Conditions of Each Advance Under Revolving Credit Loan
    	46
	 	 	 	 
	6. 	AFFIRMATIVE COVENANTS 	47
	 	 	 	 
	 	6.1 	Payment 	47
	 	6.2 	Basic Reporting Requirements.	47
	 	6.3 	Insurance 	50
	 	6.4 	Payment of Taxes and Other Potential Charges and Priority Claims
    	50
	 	6.5 	Preservation of Status 	51
	 	6.6 	Conduct of Business 	51
	 	6.7 	Financial Covenants 	51
	 	6.8 	Protection of Collateral 	52
	 	6.9 	Maintenance of Financial Records; Fiscal Year 	52
	 	6.10 	Maintenance of Properties 	52
	 	6.11 	Further Assurances 	52
	 	 	 	 
	7. 	NEGATIVE COVENANTS 	53
	 	 	 	 
	 	7.1 	Liens 	53
	 	7.2 	Indebtedness 	54
	 	7.3 	Sale or Transfer of Assets; Suspension of Business Operations
    	55
	 	7.4 	Transactions with Affiliates 	56
	 	7.5 	Limitation on Other Restrictions on Liens	56
	 	7.6 	Limitation on Other Restrictions on Amendment of the Loan
        Documents, etc 	56
	 	7.7 	Restrictions on Nature of Business 	56

-iii-

	 	7.8 	Special Restrictions on Inactive Subsidiaries 	56
	 	7.9 	Dividends 	57
	 	7.10 	Subsidiaries 	57
	 	7.11 	Fundamental Changes	58
	 	7.12 	Guaranties and Advances 	58
	 	7.13 	Merger, Consolidation; Acquisitions 	59
	 	7.14 	Accounting 	59
	 	7.15 	Governing Documents 	60
	 	7.16 	Hazardous Materials 	60
	 	7.17 	CTG Europe 	60
	 	7.18 	Payments on Foreign Subsidiary Loans 	60
	 	 	 	 
	8. 	EVENTS OF DEFAULT 	60
	 	 	 	 
	 	8.1 	Nonpayment 	60
	 	8.2 	Insolvency; Receivership 	61
	 	8.3 	Breach of Representation 	61
	 	8.4 	Judgment 	61
	 	8.5 	Default 	61
	 	8.6 	Events of Default Under Other Agreements 	61
	 	8.7 	Plan Events 	62
	 	8.8 	Environmental Lien 	63
	 	8.9 	Failure of Lien 	63
	 	8.10 	Failure of Loan Document 	63
	 	8.11 	Change of Control 	63
	 	8.12 	Attachment 	63
	 	8.13 	Material Adverse Change 	63
	 	8.14 	Certain Actions 	63
	 	8.15 	Conduct of Business 	63
	 	 	 	 
	9. 	RIGHTS ON DEFAULT. 	64
	 	 	 	 
	 	9.1 	Rights and Remedies 	64
	 	9.2 	Certain Events of Default 	64
	 	9.3 	Non-Exclusivity 	64
	 	 	 	 
	10. 	INDEMNIFICATION 	64
	 	 	 	 
	11. 	EXPENSES 	65
	 	 	 	 
	12. 	AGENCY 	65
	 	 	 	 
	 	12.1 	Appointment, Powers and Immunities 	65
	 	12.2 	Reliance by Administrative Agent 	66
	 	12.3 	Defaults 	66
	 	12.4 	Rights as a Lender 	67
	 	12.5 	Indemnification 	67
	 	12.6 	Non-Reliance on Administrative Agent and Other Lenders
    	67

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	 	12.7 	Failure to Act 	68
	 	12.8 	Resignation of Administrative Agent 	68
	 	12.9 	Consents under Loan Documents 	68
	 	 	 	 
	13. 	MISCELLANEOUS. 	69
	 	 	 	 
	 	13.1 	Entire Agreement; Binding Effect 	69
	 	13.2 	Amendments; Waivers 	69
	 	13.3 	Notices 	69
	 	13.4 	Assignment 	70
	 	13.5 	Participation and/or Assignment 	70
	 	13.6 	Governing Law 	71
	 	13.7 	Enforceability of Obligations 	71
	 	13.8 	WAIVER OF JURY TRIAL 	71
	 	13.9 	Jurisdiction and Venue 	71
	 	13.10 	Survival 	72
	 	13.11 	Severability 	72
	 	13.12 	Headings 	72
	 	13.13 	Counterparts 	72
	 	13.14 	Further Assurances 	72

      
    
  

 

	

    EXHIBITS	
A 	
Form of Revolving Credit Note
	 	
B 	
Revolving Credit Loan Pricing Grid
	 	
C 	
Form of Borrowing Base Certificate
	 	
D 	
Form of Compliance Certificate
	 	
E 	
Form of Assignment and Assumption Agreement

  

	

    SCHEDULES 	
A 	
Lenders
	 	
4.4 	
Governmental Approvals and Filings
	 	
4.6 	
Labor Matters
	 	
4.7 	
Absence of Undisclosed Liabilities
	 	
4.9 	
Existing Indebtedness
	 	
4.12 	
Partnerships, Subsidiaries, etc.
	 	
4.13	
No Default
	 	
4.14 	
Litigation
	 	
4.18 	
Intellectual Property
	 	
4.19 	
Taxes
	 	
4.20 	
Employee Benefits
	 	
4.21 	
Environmental Matters
	 	
4.22 	
Guaranties and Indemnities
	 	
4.24 	
Bank Accounts
	 	
4.26 	
Financial Statements
	 	
7.1 	
Permitted Liens
	 	
7.2(i) 	
Certain Existing Indebtedness
	 	
7.4 	
Transactions with Affiliates

LOAN AGREEMENT

                THIS LOAN AGREEMENT is made as of the 21st day
of April, 2005, by and among COMPUTER TASK GROUP, INCORPORATED, a New
York corporation ("Borrower"), the LENDERS party hereto
from time to time (the "Lenders" as defined further below), and 
MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation,
having an office and place of business at One Fountain Plaza, Buffalo, New York
14203, as issuer of letters of credit ("Bank") and as agent
for the Lenders and Bank (in such capacity, together with its successors in such
capacity, the "Administrative Agent").

W I T N E S S E T H:

                WHEREAS, the parties hereto wish to arrange for a
revolving credit facility to be made available by Lenders to Borrower in the
maximum principal amount of Thirty-Five Million Dollars ($35,000,000) including
a sub limit of Ten Million Dollars ($10,000,000) thereunder for letters of
credit to be issued by Bank, all on the terms and conditions set forth herein;

                NOW, THEREFORE, for due consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1. 
DEFINITIONS.

        1.1     Definitions. The following terms shall have the following meanings
in this Agreement, except where otherwise specifically indicated:

                "Accounts" shall mean all accounts, as such term
is defined in the UCC, and shall include each and every right to the payment of
money, whether such right to payment now exists or hereafter arises, whether
such right to payment arises out of a sale, lease or other disposition of goods
or other property, out of a rendering of services, out of a loan, out of the
overpayment of taxes or other liabilities, or otherwise arises under any
contract or agreement, whether such right to payment is created, generated or
earned by a Loan Party or by some other person who subsequently transfers such
person's interest to the Loan Party, whether such right to payment is or is not
already earned by performance, and howsoever such right to payment may be
evidenced, together with all other rights and interests (including all Liens)
which such Loan Party may at any time have by law or agreement against any
account debtor or other obligor obligated to make any such payment or against
any property of such account debtor or other obligor; all including but not
limited to all present and future accounts, contract rights, loans and
obligations receivable, chattel papers, bonds, notes and other debt instruments,
tax refunds and rights to payment in the nature of general intangibles.

                "Acquisition" means any transaction pursuant to
which the Borrower or any Subsidiary: (a) acquires equity securities (or
warrants, options or other rights to acquire such securities) of any Person
(other than the Borrower or any Person which is then a Subsidiary of Borrower),
pursuant to a solicitation of tenders therefor, or in one or more negotiated
block, market or other transactions not involving a tender offer, or a
combination of any of the foregoing; (b) makes any Person a Subsidiary of
Borrower, or causes any such Person to be merged into Borrower or any
Subsidiary, in any case pursuant to a merger, purchase of assets or

-2-

any reorganization providing for the delivery or issuance to
the holders of such Person's then outstanding securities, in exchange for such
securities, of cash or securities of any Borrower or any Subsidiary, or a
combination thereof; or (c) purchases all or substantially all of the business
or assets of any Person.

                "Actual Leverage Ratio" means, as of the end of
any fiscal quarter ending during each period, the ratio of Borrower's (i) total
Funded Indebtedness outstanding at the end of such fiscal quarter, to (ii)
EBITDA for the four (4) fiscal quarters ending on such date taken as one
accounting period.

                "Adjusted Base Rate" shall mean the greater of (a)
the Federal Funds Rate plus 1⁄2% and (b) the Prime Rate, each as the same may
change from time to time. Any changes in the Adjusted Base Rate resulting from a
change in the Federal Funds Rate or the Prime Rate shall be effective from and
including the effective date of such change in the Federal Funds Rate or Prime
Rate without notice or demand of any kind.

                "Administrative Agent" shall have the meaning
given such term in the Preamble to this Agreement.

                "Affiliate" shall mean, with respect to any
Person, any other Person that, directly or indirectly, controls, is controlled
by or is under common control with such Person or is a director, officer,
general partner, member or manager of such Person or, with respect to an
individual, has a relationship with such individual by blood, adoption or
marriage not more remote than first cousin. For purposes of this definition, the
term "control" (including the terms "controlling,"
"controlled by" and "under common control with") of
a Person shall mean the possession, direct or indirect, of the power to vote 10%
or more of the Voting Interests in such Person or to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Voting Interests, by virtue of being a general partner or managing
member, by contract or otherwise.

                "Agreement" shall mean this Loan Agreement, as the
same may be amended, modified or supplemented from time to time in accordance
with its terms.

                "Applicable Margin" shall mean the interest
spread to be added to the Adjusted Base Rate or LIBOR Rate, as appropriate, as
determined in accordance with the Revolving Credit Loan Pricing Grid attached
hereto as Exhibit B.

                "Assignment and Assumption Agreement" shall mean
an Assignment and Assumption Agreement in the form of Exhibit E
hereto.

                "Authorized Representative" shall mean Borrower's
Chief Executive Officer, President, Chief Financial Officer, Director, Audit &
Treasury Services, Controller or Senior Accountant.

                "Automatic Continuation Option" shall, with
respect to any LIBOR Loan, mean the option to have the then-current Interest
Period duration, as previously selected by Borrower, remain the same for the
succeeding Interest Period.

-3-

                "Availability" shall mean, at the time of
determination, (a) the lesser of (i) the Borrowing Base and (ii) the Revolving
Credit Facility, minus (b) the outstanding principal balance under the Revolving
Credit Notes, minus (c) the L/C Amount.

                "Availability Block Amount" shall
mean $3,000,000.

                "Bank" shall have the meaning given such term
in the Preamble to this Agreement.

                "Base Rate" shall mean (a) the Adjusted Base Rate,
as the same may change from time to time, plus (b) the Applicable Margin. 

                "Base Rate Loan" shall mean any Revolving Credit
Loan then bearing interest at the Base Rate.

                "Borrower" shall have the meaning given such term
in the Preamble to this Agreement.

                "Borrowing Base" shall mean the sum in Dollars of
the following, determined as of the most recent Borrowing Base Certificate
delivered hereunder, (a) 85% of Eligible Billed Accounts plus (b) the lesser of
(i) 75% of both Eligible Unbilled Accounts and Eligible Unbilled ISTG Accounts
and (ii) Ten Million Dollars ($10,000,000) minus (c) the Availability Block
Amount and minus (d) the aggregate amount of reserves established from time to
time by the Administration Agent for Interest Rate Protection Obligations and
Foreign Exchange Obligations that are secured by the Collateral pursuant to the
Loan Documents.

                "Business Day" shall mean (a) any day other than (i)
a Saturday or Sunday or (ii) any other day on which commercial banks in Buffalo,
New York are authorized or required by law to close and, (b) if the applicable
day relates to a LIBOR Loan or an advance requested as a LIBOR Loan, or a notice
with respect to the same or an Interest Period with respect thereto, a day on
which dealings in Dollar deposits are also carried on in the London interbank
market and banks are open for business in London.

                "Capitalized Lease" shall mean at any time any
lease which is, or is required under GAAP to be, capitalized on the balance
sheet of the lessee at such time, and "Capitalized Lease Obligation"
of any Person at any time shall mean the aggregate amount which is, or is
required under GAAP to be, reported as a liability on the balance sheet of such
Person at such time with respect to Capitalized Leases.

                "Capitalized Rentals" of any Person
shall mean as of the date of any determination thereof the amount at which the
aggregate present value of future Rentals due and to become due under all
Capitalized Leases under which such Person is a lessee would be reflected as a
liability on a consolidated or combined balance sheet of such Person in
accordance with GAAP.

                "Change of Control"
shall mean the occurrence of any of the following: (a) any person or group of
persons (within the meaning of Section 13 or 14 of the Securities Exchange Act
of 1934, as amended) shall have acquired beneficial ownership (within the
meaning of Rule 

-4-

13d-3 promulgated by the Securities and Exchange Commission
under said Act) of 30% or more of the outstanding shares of common stock of
Borrower or (b) during any period of twelve consecutive calendar months,
individuals who were directors of Borrower on the first day of such period
(together with any new directors whose election by such board of directors or
whose nomination for reelection by the shareholders of Borrower was approved by
a vote of a majority of the directors of Borrower then still in office who where
either directors on the first day of such period or whose election or nomination
for election was previously so approved) shall cease to constitute a majority of
the board of directors of Borrower.

                "Closing" shall mean the closing of the
transactions contemplated by the Loan Documents on the Closing Date.

                "Closing Date" shall mean the date of execution
and delivery by Borrower, Administrative Agent, Lenders and Bank of this
Agreement and the execution, where applicable, and delivery by Borrower of the
other requirements of Section 5.1.

                "Code" shall mean the United States Internal
Revenue Code, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to sections
of the Code shall be construed also to refer to any successor sections.

                "Collateral" shall mean the property from time to
time subject to or purported to be subject to the Liens of the Security
Documents pursuant to their terms.

                "Commitment Fee" shall have the meaning given such term in
Section 2.9.

                "Commitment Fee Rate" shall have the meaning given such term in
Section 2.9.

                "Continuing Obligations" shall mean contingent
Obligations, including indemnification obligations under Section 10, that have
not arisen at the time of termination of this Loan Agreement but that survive
such termination.

                "Controlled Group Member" shall mean each trade or
business (whether or not incorporated) which together with any Loan Party is
treated as a single employer under Section 4001(a)(14) or 4001(b)(1) of ERISA or
Section 414(b), (c), (m) or (o) of the Code.

                "Copyrights" shall mean all copyrights, whether
statutory or common law, owned by or assigned to any Loan Party, any renewals
and extensions thereof and foreign copyrights corresponding thereto throughout
the world.

                "CTG Europe" means Computer Task Group Europe, B.V.,
an entity organized under the laws of the Netherlands.

                "Default Interest Rate" shall mean a rate of
interest which is two percent (2%) per annum in excess of the rate otherwise
applicable to the relevant Obligation or, if no rate is applicable to such
Obligation, two percent (2%) in excess of the Base Rate, which shall change
simultaneously with each change in the Adjusted Base Rate.

-5-

                "Dollar" and the symbol "$" shall
mean lawful money of the United States of America.

                "Domestic Loan Parties" shall mean Borrower and
each of its Domestic Subsidiaries and "Domestic Loan Party" shall
mean any of them. 

                "Domestic Subsidiaries" shall mean each of
Borrower's direct and indirect Subsidiaries, other than Inactive Subsidiaries,
which is incorporated in a state of the United States and "Domestic
Subsidiary" shall mean any of them.

                "EBITDA" shall mean, for any period, (a) net
income, plus (b) interest expense, plus (c) income tax expense, 
plus (d) depreciation expense, plus (e) amortization, and plus
(f) all non-cash charges, expenses and losses, minus (g) all cash and
non-cash extraordinary or non-operating income and gains, in each case as such
item is used in the computation of net income for such period. 

                "Eligible Accounts" shall mean all unpaid Accounts
of the Domestic Loan Parties arising from the sale or lease of goods or the
performance of services, net of any credits, but excluding any such Accounts or,
where specified below, portion thereof, having any of the following
characteristics:

        
          

                (a)     That portion of Accounts unpaid more than 90 days
        past the stated invoice date (or 120 days if the account debtor is a
        Healthcare Provider); provided however, that, no portion of
        Accounts which are fully insured or fully covered by a letter of credit
        shall be excluded pursuant to this clause (a);

                (b)     That portion of Accounts that is (i) disputed or
        (ii) subject to a claim of offset or a contra account;

                (c)     Accounts owed by any unit of government, whether
        foreign or domestic (provided, however, that there shall be
        included in Eligible Accounts that portion of Accounts owed by such
        units of government for which the Borrower has, at Borrower's expense,
        provided evidence satisfactory to the Administrative Agent that (i) the
        Administrative Agent has a first priority perfected security interest
        and (ii) such Accounts may be enforced by the Administrative Agent
        directly against such unit of government under all applicable laws);

                (d)     Accounts owed by an account debtor located
        outside the United States and Canada which are not (i) covered by a
        foreign receivables insurance policy acceptable to the Administrative
        Agent in its sole discretion and naming the Administrative Agent as loss
        payee, or (ii) backed by a bank letter of credit naming the
        Administrative Agent or a Domestic Loan Party as beneficiary and, if the
        Administrative Agent is not the beneficiary, assigned to the
        Administrative Agent;

          

        
-6-

        
          
                (e)     Accounts owed by an account debtor that any Loan
        Party knows is insolvent, the subject of bankruptcy proceedings, has
        gone out of business or whose business has failed or is suspended or
        terminated;

                 (f)     Accounts owed by a Subsidiary, Affiliate, member,
        manager, officer or employee of any Loan Party;

                (g)     Accounts not subject to a duly perfected security
        interest in the Administrative Agent's favor or which are subject to any
        Lien in favor of any Person other than the Administrative Agent; 

                 (h)     That portion of Accounts that has been
        restructured, extended, amended or modified;

                 (i)     That portion of Accounts that constitutes
        advertising, finance charges, service charges or sales or excise taxes;

                (j)     Accounts owed by an account debtor, regardless of
        whether otherwise eligible, if (i) the sum of all Accounts owed by such
        account debtor exceeds $1,000,000 and 50% or more of the total amount
        due under Accounts from such account debtor is ineligible under
        clause (a), (b)(i) or (h) above or (ii) the sum of all Accounts owed by
        such account debtor is $1,000,000 or less and 50% or more of the total
        amount due under Accounts from such account debtor is ineligible under
        clause (a) (but for purposes of this clause (ii) the reference to "90
        days" in such clause (a) will be deemed to be replaced by "120 days" and
        the reference to "120 days" in such clause (a) will be deemed to be
        replaced by "240 days"), (b)(i) or (h) above; 

                (k)     Accounts owed by an account debtor (other than
        International Business Machines Corporation or any Affiliate thereof) if
        the total unpaid Accounts owing from such account debtor exceed 25% of
        all Accounts of the Borrower and its Subsidiaries; and

                (l)     Accounts, or portions thereof, otherwise deemed
        ineligible by the Administrative Agent (due to its belief that such
        Account, or portion thereof, is unlikely to be paid by such debtor) in
        its discretion reasonably exercised.

          

      
    
  

                "Eligible Billed Accounts" shall mean Eligible
Accounts for which an invoice has been sent to the applicable account debtor.

                "Eligible Unbilled Accounts" shall mean
Eligible Accounts for which an invoice has not been sent, but an invoice will be
sent to the applicable account debtor within 30 days and for which the
applicable account debtor is not the IBM STG.

                "Eligible Unbilled ISTG Accounts" shall mean
Eligible Accounts for which an invoice has not been sent, but an invoice will be
sent to the applicable account debtor within 30 days and for which the
applicable account debtor is the IBM STG. 

-7-

                "Environment" shall mean all air, surface water,
groundwater, land, including land surface and subsurface, and includes all fish,
wildlife, biota, flora, fauna and all natural resources.

                "Environmental Affiliate" shall mean, with respect
to any Person, any other Person whose liability (contingent or otherwise) for
any Environmental Claim such Person has retained, assumed or otherwise is liable
for (by Law, agreement or otherwise).

                "Environmental Approvals" shall mean any
Governmental Action pursuant to or required under any Environmental Law.

                "Environmental Claim" shall mean, with respect to
any Person, any action, suit, proceeding, investigation, notice, claim,
complaint, demand, request for information or other communication (written or
oral) by any other Person (including, but not limited to, any Governmental
Authority, citizens' group or present or former employee of such Person)
alleging, asserting or claiming any actual or potential (a) violation of any
Environmental Law, (b) liability under any Environmental Law or (c) liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, fines or penalties
arising out of, based on or resulting from the presence, or release into the
Environment, of any Environmental Concern Materials at any location, whether or
not owned by such Person.

                "Environmental Cleanup Site" shall mean any
location which is listed or proposed for listing on the National Priorities
List, on CERCLIS or on any similar state list of sites requiring investigation
or cleanup, or which is the subject of any pending or threatened action, suit,
proceeding or investigation related to or arising from any alleged violation of
any Environmental Law.

                "Environmental Concern Materials" shall mean
(a) any flammable substance, explosive, radioactive material, Hazardous
Material, hazardous waste, toxic substance, solid waste, pollutant, contaminant
or any related material, raw material, substance, product or by-product of any
substance specified in or regulated or otherwise affected by any Environmental
Law (including, but not limited to, any "hazardous substance" as defined in
CERCLA or any similar state Law), (b) any toxic chemical or other substance from
or related to industrial, commercial or institutional activities, and
(c) asbestos, gasoline, diesel fuel, motor oil, waste and used oil, heating oil
and other petroleum products or compounds, polychlorinated biphenyls, radon and
urea formaldehyde.

                "Environmental Law" shall mean any Law, whether
now existing or subsequently enacted or amended, relating to (a) pollution or
protection of the Environment, including natural resources, (b) exposure of
Persons, including, but not limited to, employees, to Environmental Concern
Materials, (c) protection of the public health or welfare from the effects of
products, by-products, wastes, emissions, discharges or releases of
Environmental Concern Materials or (d) regulation of the manufacture, use or
introduction into commerce of Environmental Concern Materials including their
manufacture, formulation, packaging, labeling, distribution, transportation,
handling, storage or disposal. Without limitation, "Environmental Law" shall
also include any Environmental Approval and the terms and conditions thereof.

-8-

                "Environmental Lien" shall mean a Lien in favor of
the United States government, or any state, or political subdivision, or any
entity exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government for (a) any liability
under federal or state environmental laws or regulations, or (b) for damages
arising from or costs incurred by such governmental entity in response to a
release of a hazardous or toxic waste substance or constituent, or other
substance into the Environment.

                "Equity Interests" shall mean, with respect to any
Person, the shares of capital stock of (or other ownership, partnership,
membership or profit interests in) such Person, the warrants, options or other
rights for the purchase or other acquisition from such Person of shares of
capital stock of (or other ownership, partnership, membership or profit
interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership, partnership,
membership or profit interests in) such Person or warrants, rights or options
for the purchase or other acquisition from such Person of such shares (or such
other interests), and the other ownership, partnership, membership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are authorized or otherwise existing on any
date of determination.

                "Equity Rights" shall mean, with respect to any
Person, any subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including any stockholders' or voting trust agreements)
for the issuance or sale of, or securities convertible into, any additional
shares of capital stock of any class, or partnership or other ownership
interests of any type in, such Person.

                "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor statute of similar import
and regulations thereunder, as in effect from time to time. References to
sections of ERISA shall be construed also to refer to any successor sections.

                "Event of Default" shall have the meaning given such term in
Section 8.

                "Extraordinary Receipt" shall mean any cash
received by or paid to or for the account of any Person as proceeds of insurance
or condemnation awards (and payments in lieu thereof).

                "Facility Documents" shall have the same meaning
as the term "Loan Documents."

                "Federal Funds Rate"
shall mean the rate per annum equal for each day to the weighted average of the
rates (rounded upward, if necessary, to the nearest whole multiple of 1/16 of 1%
per annum) on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the immediately preceding Business Day)
by the Federal Reserve Bank of New York or, if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day for
such transactions received by the Administrative Agent from 

-9-

three federal funds brokers of recognized standing selected
by it, such rate to change automatically effective as of the effectiveness of
each change in the Federal Funds Rate.

                "Foreign Exchange Obligations" shall mean all
obligations of the Borrower or its Subsidiaries pursuant to and under any and
all foreign exchange contracts and agreements to which Borrower or any
Subsidiary is a party as of any date of computation as if such foreign exchange
agreement were to be terminated or declared to be in default on such date (after
giving effect to any netting provisions).

                "Foreign Subsidiaries" shall mean, collectively
(a) Computer Task Group of Canada, Inc., a corporation organized under the laws
of the Province of Ontario, (b) Computer Task Group Europe, B.V., an entity
organized under the laws of the Netherlands, (c) Computer Task Group (U.K.),
Ltd., a corporation organized under the laws of the United Kingdom, (d) Computer
Task Group Belgium N.V., an entity organized under the laws of Belgium, (e)
Computer Task Group Luxembourg, S.A., an entity organized under the laws of
Luxembourg and (f) such other corporations, partnerships or limited liability
companies organized under the laws of any jurisdiction other than the United
States, as may become Subsidiaries of the Borrower from time to time, other than
Inactive Subsidiaries.

                "Funded Indebtedness" shall mean, for the
Borrower and its Subsidiaries, without duplication (a) all Indebtedness of the
Borrower and its Subsidiaries under this Agreement and the Revolving Credit
Notes (other than undrawn Letters of Credit), (b) all other Indebtedness of the
Borrower and its Subsidiaries for borrowed money to the extent such Indebtedness
has a final maturity of one or more than one year from the date of origin
thereof (or which is renewable or extendable at the option of the obligor for a
period or periods more than one year from the date of origin), (c) all
Indebtedness of the Borrower and its Subsidiaries which has been incurred in
connection with the acquisition of assets (excluding leases defined as
"operating leases" under GAAP), in each case having a final maturity of one or
more than one year from the date of origin thereof (or which is renewable or
extendable at the option of the obligor for a period or periods more than one
year from the date of origin), (d) all payments in respect of items (b) and (c)
above that were required to be made within one year prior to the date of any
determination of Funded Indebtedness, if the obligation to make such payments
shall constitute a current liability of the obligor under GAAP and (e) all
Capitalized Rentals of the Borrower and its Subsidiaries.

                "GAAP" shall have the meaning set forth in Section 1.3.

    
                    "Governmental Action" shall have the meaning set forth in
    Section 4.4.

  

                "Governmental Authority" shall mean any government
or political subdivision or any agency, authority, branch, bureau, central bank,
commission, department or instrumentality of either, or any court, tribunal,
grand jury or public or private mediator or arbitrator, in each case whether
foreign or domestic and whether federal, state, local or otherwise.

                "Governing Documents"
of a Person shall mean each of the following, as applicable, such Person's
certificate of limited partnership, limited partnership agreement, 

-10-

certificate or articles of incorporation, by-laws, limited
liability company agreement, operating agreement, certificate of formation or
organization, articles of formation or organization or other organizational or
governing documents. 

                "Guaranties" by any Person shall mean all
obligations (other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person guaranteeing,
or in effect guaranteeing, any Indebtedness, dividend or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including all obligations incurred through an agreement, contingent
or otherwise, by such Person: (a) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (b) to advance or supply
funds (i) for the purchase or payment of such Indebtedness or obligation, or
(ii) to maintain working capital or other balance sheet condition or otherwise
to advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (c) to lease property or to purchase securities or
other property or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of the Indebtedness or obligation, or (d) otherwise to assure the owner
of the Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend or, if
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder), as
determined by such Person in good faith.

                "Hazardous Material" shall include any flammable
or ignitable (as such term is used under the statutes, codes, laws, ordinances,
rules and regulations described in this paragraph) materials, explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, pollutant, hazardous or toxic pollutant, polychlorinated biphenyls
(PCBs), solid waste, petroleum, petroleum product, pesticide, asbestos or any
other material as defined and/or subject to regulation by: (a) any Federal,
state or local environmental health or safety statutes, code, law, ordinance,
rule, or regulation including the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, 
et seq.) ("CERCLA"), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Section 1801, et seq.),
the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 9601,
et seq.), the Federal Water Pollution Control Act, as amended (33
U.S.C. Section 1251, et seq.), the Toxic Substances Control Act,
as amended (15 U.S.C. Section 2601, et seq.), and statutes
codified in the New York Environmental Conservation Law, as amended, and the New
York Navigation Law, as amended and in the rules and regulations adopted
pursuant to each of the foregoing, or (b) any Governmental Authority having or
claiming jurisdiction over the property or assets of any Loan Party. The term 
"Hazardous Material" shall include any constituent and degradation
product of a Hazardous Material.

                "Healthcare Provider" shall mean an entity engaged
primarily in the business of providing healthcare services to patients, such as
a hospital or physician group, and which receives a substantial portion of its
revenue in the form of reimbursement from Medicare, Medicare, other federal,
state or local healthcare programs or other third party payors.

-11-

                "IBM STG" shall mean the IBM Systems & Technology
Group of International Business Machines Corporation or, after notice from
Borrower to the Administrative Agent, any successor group, department or
affiliate which becomes bound by the IBM STG Contract. 

                "IBM STG Contract" shall mean the Predominant
Supplier Attachment to the Technical Services Statement of Work effective as of
November 12, 2004 between Borrower and International Business Machines
Corporation, as amended from time to time, provided that Borrower shall give the
Administrative Agent prompt written notice of any material amendment thereof.

                "IBM STG Eligible Indebtedness" shall mean IBM
STG Indebtedness in an amount not to exceed (i) $15,000,000 as of July 1, 2005,
September 30, 2005 and December 31, 2005, (ii) $8,000,000 as of March 31, 2006
and (iii) zero as of the end of any other fiscal quarter of Borrower.

                "IBM STG Indebtedness" shall mean the amount of
Indebtedness incurred under this Agreement and the Revolving Credit Notes to
generate IBM STG Receivables which are listed on the attachment to the relevant
Compliance Certificate.

                "IBM STG Receivables" shall mean Eligible Accounts
generated under the IBM STG Contract. 

                "Inactive Subsidiaries" means (a) Computer Task
Group of Delaware, Inc., a Delaware corporation, (b) Computer Task Group of
Kansas, Inc., a Missouri corporation, (c) Computer Task Group (Holdings) Ltd., a
United Kingdom corporation, (d) Rendeck Macro-4 Software N.V., an entity
organized under the laws of the Netherlands, (e) CTG of England, Ltd., an entity
organized under the laws of the United Kingdom, and (f) Computer Task Group
France, S.A.S., a corporation organized under the laws of France.

                "Indebtedness" of a Person shall mean:

        
          

                (a)     All obligations on account of money borrowed by,
        or credit extended to or on behalf of, or for or on account of deposits
        with or advances to, such Person;

                (b)     All obligations of such Person evidenced by
        bonds, debentures, notes or similar instruments;

                (c)     All obligations of such Person for the deferred
        purchase price of property or services;

               (d)   
        All obligations secured by a Lien on property
        owned by such Person (whether or not assumed); and all Capitalized Lease
        Obligations of such Person (without regard to any limitation of the
        rights and remedies of the holder of such Lien or the lessor under any
        such Capitalized Lease to, repossession or sale of such property);

          

        
-12-

        
          
               (e)     The face amount of all letters of credit issued
        for the account of such Person and, without duplication, the
        Reimbursement Obligation or other unreimbursed amount of all drafts
        drawn thereunder and any reimbursed amount under any letter of credit
        which reimbursed amount may be subject to avoidance, rescission or other
        return in any ongoing bankruptcy action, and all other obligations of
        such Person associated with such letters of credit or draws thereon; 
        provided, however, any such letter of credit shall not be included
        in this definition of Indebtedness if the debt such letter of credit
        secures has already been included in this definition.

                (f)     All obligations of such Person in respect of
        acceptances or similar obligations issued for the account of such
        Person;

               (g)     All obligations of such Person under a product
        financing or similar arrangement described in paragraph 8 of FASB
        Statement of Accounting Standards No. 49 or any similar requirement of
        GAAP; 

               (h)     All obligations of such Person under any interest
        rate or currency protection agreement, interest rate or currency future,
        interest rate or currency option, interest rate or currency swap or cap
        or other interest rate or currency hedge agreement, including any
        Interest Rate Protection Agreement; and

               (i)     All Guaranties of obligations of others. 

          

      
    
  

                "Interest Period" shall mean, with respect to any
LIBOR Loan, any period commencing on the date such LIBOR Loan is made or the
date of a subsequent interest rate selection, as the case may be, and ending one
(1) month, two (2) months, three (3) months or six (6) months later, as Borrower
may request, provided that: (y) any Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next preceding or
succeeding Business Day as is the custom in the London interbank market to which
such advance relates; and (z) no Interest Period shall end after the Revolving
Credit Loan Maturity Date.

                "Interest Rate" shall mean either the Base Rate or
the LIBOR Based Rate option as elected by Borrower in accordance with the
provisions of Section 2.3.

                "Interest Rate Protection Agreement" shall mean
any interest rate swap agreement, interest rate cap agreement, interest rate
collar agreement, interest rate insurance, interest rate protection agreement or
any other agreement or arrangement designed to provide protection against
fluctuations in interest rates, together with all extensions, renewals,
amendments, substitutions and replacements to and of any of the foregoing.

                "Interest Rate Protection Obligations" means all
obligations of the Borrower or its Subsidiaries pursuant to and under any and
all Interest Rate Protection Agreements to which Borrower or any Subsidiary is a
party as of any date of computation as if such Interest Rate Protection
Agreement were to be terminated or declared to be in default on such date (after
giving effect to any netting provisions).

-13-

                "Law" shall mean any law (including common law),
constitution, statute, treaty, convention, regulation, rule, ordinance, order,
injunction, writ, decree or award of any Governmental Authority.

                "L/C Amount" shall mean the sum of (a) the
aggregate face amount of any issued and outstanding Letters of Credit and (b)
the aggregate amount of all unpaid Reimbursement Obligations.

                "L/C Application" shall mean, collectively, an
application and agreement for letters of credit, including a letter of credit
reimbursement agreement, all in a form acceptable to Bank.

                "Lenders" shall mean, collectively, the Persons
listed on Schedule A hereto and any other Person that shall have
become a party hereto pursuant to an Assignment and Assumption Agreement, other
than any such Person that has ceased to be a party hereto pursuant to an
Assignment and Assumption Agreement showing a Lender which is a Lender on the
date thereof as assignor. "Lender" shall mean any of the Lenders.

                "Letter of Credit" shall have the meaning given
such term in Section 2.14(a).

                "Letter of Credit Advance" shall mean a
Revolving Credit Loan made or purchased by the Bank or any of the Lenders
pursuant to Section 2.14(b)(ii), 2.14(d) or 2.14(e)(i).

                "Letter of Credit Sublimit" shall mean, at
any time, $10,000,000, as such amount may be reduced at or prior to such time
pursuant to Section 2.12.

                "Leverage Ratio" shall have the meaning given such
term in Section 6.7(a).

                "LIBOR Based Rate" shall mean the LIBOR Rate plus
the Applicable Margin.

                "LIBOR Loan" shall mean any Revolving Credit Loan
then bearing interest at a LIBOR Based Rate.

                "LIBOR Rate" shall mean the rate per annum at
which Dollar deposits approximately equal in principal amount to the amount of
the applicable advance on which Borrower chooses to have interest accrue at a
LIBOR Based Rate and for a maturity equal to the applicable Interest Period are
offered in immediately available funds to the Administrative Agent, by leading
banks in the London Interbank Eurodollar Market, at approximately 11:00 a.m.,
London Time (or as soon thereafter as practicable), two (2) Business Days prior
to the commencement of such Interest Period; provided, however, if the
rate described above does not appear on page 3750 of the Dow Jones Markets
Screen on any applicable interest determination date, the LIBOR Rate shall be
the rate (rounded upward, if necessary, to the nearest one hundred-thousandth of
a percentage point) determined on the basis of the offered rates for deposits in
U.S. Dollars for a period of time comparable to such Interest Period which are
offered by four major banks in the London interbank market at approximately
11:00 a.m. London time on the day that is two (2) Business Days preceding the
first day of such Interest Period. Such banks shall be selected by the
Administrative Agent. The principal London office 

-14-

of each of the four major London banks will be requested to
provide a quotation of its U.S. Dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted for loans
in U.S. Dollars to leading European banks for a period of time comparable to
such Interest Period offered by major banks in New York City at approximately
11:00 a.m. Buffalo, New York time, on the day that is two (2) Business Days
preceding the first day of such Interest Period. In the event that the
Administrative Agent is unable to obtain any such quotation as provided above,
it will be deemed that the LIBOR Rate cannot be determined and the requested
borrowing shall bear interest at the Base Rate.

                In the event that the Board of Governors of the Federal
Reserve System shall impose a Reserve Percentage with respect to LIBOR deposits
of the Administrative Agent then for any Interest Period during which such
Reserve Percentage shall apply, LIBOR shall be equal to the amount determined
above divided by an amount equal to 1 minus the Reserve Percentage.

                "Lien" shall mean any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, claim or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature, including any conditional sale or other title
retention agreement and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code as adopted in any jurisdiction.

                "Loan Documents" shall mean this Agreement, the
Revolving Credit Notes, the Security Documents, the Subsidiary Guaranties, the
Negative Pledge Agreements, any Interest Rate Protection Agreement with
Administrative Agent, Lender, or any Affiliate of any of them with respect to
any Revolving Credit Loan(s), any L/C Application, any Letter of Credit, any
Authorizations to File Financing Statements, Perfection Certificates and the
Borrower certifications delivered by the Borrower to Administrative Agent on or
about the date hereof and from time to time hereafter, and all other agreements
and instruments extending, renewing, refinancing, refunding or reaffirming any
Indebtedness, obligation or liability arising under any of the foregoing, in
each case as the same may be amended, modified or supplemented from time to time
hereafter in accordance with their respective terms.

                "Loan Parties" shall mean Borrower and each of its
Subsidiaries and "Loan Party" shall mean any of them.

                "Material Adverse Effect" shall mean: (a) a
material adverse effect on the business, operations, results of operations,
prospects, assets, liabilities or financial condition of the Loan Parties, taken
as a whole, (b) a material adverse effect on the ability of any Loan Party to
perform or comply with any of the terms and conditions of any Loan Document to
which it is a party or by which it or its assets are bound or on the ability of
Borrower to cause any Subsidiary to comply with the covenants applicable to such
Subsidiary and contained in any Loan Document, or (c) a material adverse effect
on (i) the legality, validity, binding effect, enforceability or admissibility
into evidence of any Loan Document, (ii) the ability of the Administrative Agent
to enforce any right, or remedy under or in connection with any Loan Document,
or (iii) the ability of the Administrative Agent to realize the intended
benefits of any Security Document, including a material adverse effect on the
status, existence, perfection, 

-15-

priority (subject to Permitted Liens) or enforceability of
any Lien or purported Lien intended to secure payment or performance of the
Obligations. 

                "Multiemployer Plan" shall mean any employee
benefit plan (a) which is a pension benefit plan, (b) is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA and (c) to which any Loan
Party or any Controlled Group Member has an obligation to contribute.

                "Negative Pledge Agreement" and "Negative
Pledge Agreements" shall have the meanings given such terms in Section
3.2(b).

                "Net Cash Proceeds" shall mean, with
respect to any sale, lease, transfer or other disposition of any property or
assets by, or the incurrence or issuance of any Indebtedness by, or the sale or
issuance of any Equity Interests in, any Person, as the case may be, the
aggregate amount of cash received from time to time (whether as initial
consideration or through payment or disposition of deferred consideration) by or
on behalf of such Person for its own account in connection with any such
transaction, after deducting therefrom only:

        
          

                (a)     reasonable and customary brokerage commissions,
        underwriting fees and discounts, legal fees, finder's fees and other
        similar fees, costs and commissions;

                (b)     the amount of taxes payable in connection with or
        as a result of such transaction; and

                (c)     in the case of any sale, lease, transfer or other
        disposition of any property or asset, the outstanding principal amount
        of, the premium or penalty, if any, on, and any accrued and unpaid
        interest on, any Indebtedness (other than Indebtedness under or in
        respect of the Loan Documents) that is secured by a Lien on the property
        and assets subject to such sale, lease, transfer or other disposition
        and is required to be repaid under the terms of such Indebtedness
        as a result of such sale, lease, transfer or other disposition;

          

        

      
    
  

in each case to the extent, but only to the extent, that the
amounts so deducted are properly attributable to such transaction or to the
property or asset that is the subject thereof and in the case of clauses (a) and
(c) of this definition, are actually paid at the time of receipt of such cash to
a Person that is not an Affiliate of such Person or any of the Loan Parties or
any Affiliate of any of the Loan Parties.

                "New Luxembourg" shall have the meaning given such
term in Section 7.10.

                "Obligations" shall mean all Indebtedness,
obligations and liabilities of any Loan Party to Administrative Agent, Bank or
any Lender or any of their respective successors or assigns from time to time
arising under or in connection with or related to or evidenced by or secured by
this Agreement, the Revolving Credit Notes or any other Loan Document, and all
extensions, renewals or refinancings thereof, whether such Indebtedness,
obligations or liabilities are direct or indirect, secured or unsecured, joint
or several, absolute or contingent, due or to 

-16-

become due, whether for payment or
performance, now existing or hereafter arising. Such Indebtedness, obligations
and liabilities include all obligations under any interest rate or currency
protection agreement, interest rate or currency future, interest rate or
currency option, interest rate or currency swap or cap or other interest rate or
currency hedge agreement relating to any Loan, including any Interest Rate
Protection Agreement, with Administrative Agent, Bank or any Lender relating to
the Revolving Credit Loan, any Reimbursement Obligations, the principal amount
of the Revolving Credit Loans, interest, overdrafts, foreign exchange
transactions, cash management services, fees, indemnities or expenses under or
in connection with this Agreement or any other Loan Document, and all
extensions, renewals and refinancings thereof, whether or not such Revolving
Credit Loans were made or other transactions were entered into in compliance
with the terms and conditions of this Agreement. 

                "Patents" shall mean all patents issued or
assigned to and all patent applications made by any Loan Party and all reissues,
divisions, continuations, extensions and continuations-in-part thereof.

                "PBGC" shall mean the Pension Benefit Guaranty
Corporation established under Title IV of ERISA or any other governmental
agency, department or instrumentality succeeding to the functions of said
corporation.

                "Pension-Related Event" shall mean any of the
following events or conditions:

        
          

                (a)     Any action is taken by any Person (i) to
        terminate, or which would result in the termination of, a Plan, either
        pursuant to its terms or by operation of law (including any amendment of
        a Plan which would result in a termination under Section 4041(e) of
        ERISA) other than in compliance with Section 4041(b) of ERISA, or
        (ii) to have a trustee appointed for a Plan pursuant to Section 4042 of
        ERISA;

                (b)     PBGC notifies any Person of its determination
        that an event described in Section 4042 of ERISA has occurred with
        respect to a Plan, that a Plan should be terminated, or that a trustee
        should be appointed for a Plan;

                 (c)     Any Reportable Event occurs with respect to a
        Plan;

                (d)     Any action occurs, or is taken by Borrower, which
        could result in any Loan Party or any Controlled Group Member becoming
        subject to liability for a complete or partial withdrawal by any Person
        from a Multiemployer Plan (including seller liability incurred under
        Section 4204(a)(2) of ERISA), or any Loan Party or any Controlled Group
        Member receives from any Person a notice or demand for payment on
        account of any such alleged or asserted liability; or

                 (e)     (i) There occurs any failure to meet the minimum
        funding standard under Section 302 of ERISA or Section 412 of the Code
        with respect to a Plan, or any tax return is filed by Borrower or any
        Controlled Group Member showing any tax payable under Section 4971(a) of
        the Code with respect to any such failure, or Borrower or any Controlled
        Group Member receives a notice of deficiency from the Internal Revenue
        Service with respect to any alleged or asserted such failure, (ii) any
        request is made by any Person for a variance from the minimum funding
        standard, or an extension of the period for amortizing unfunded
        liabilities, with respect to a Plan, or (iii) Borrower or any Controlled
        Group Member is required to provide security to a defined benefit Plan
        in accordance with Code Section 401(a)(29).

          

      
    
  

-17-

                "Permitted Liens" shall have the meaning given
such term in Section 7.1. 

                "Person" shall mean an individual, corporation,
partnership, limited liability company, trust, unincorporated association, joint
venture, joint-stock company, Governmental Authority or any other entity.

                "Plan" shall mean any employee pension benefit
plan subject to Title IV of ERISA (other than a Multiemployer Plan) as defined
in Section 3(2) of ERISA maintained for employees of Borrower, any of Borrower's
Subsidiaries or any Controlled Group Member or to which Borrower or any
Controlled Group Member makes or is required to make contributions. 

                "Pledge Agreement" and "Pledge Agreements"
shall have the meaning given such terms in Section 3.1(b).

                "Potential Default" shall mean any event or
condition which with notice, passage of time, or both, would constitute an Event
of Default.

                "Pricing Period" shall mean (a) the period
beginning on the date of this Agreement and ending the day before the beginning
of the first period in clause (b); and (b) following the date hereof, each
period beginning on the first Business Day of the month following the date on
which the Administrative Agent receives the Compliance Certificate required to
be delivered by the Borrower pursuant to Section 6.2(d) and the financial
statements required to be delivered by the Borrower pursuant to Section 6.2(b)
for the most recently ended fiscal quarter, and ending on the day immediately
preceding the commencement of the next Pricing Period.

                "Prime Rate" shall mean the per annum rate of
interest announced by the Administrative Agent, from time to time, as its prime
rate (which is not necessarily the best or lowest rate of interest charged
borrowers), such rate to change automatically effective as of the effectiveness
of each announced change in such prime rate.

                "Pro Rata Share" of any amount shall mean,
with respect to any of the Lenders at any time, the product of (a) such amount
multiplied by (b) a fraction the numerator of which is the amount of such
Lender's Revolving Credit Commitment(s) at such time (or, if the Revolving
Credit Commitments shall have been terminated at or prior to such time, such
Lender's Revolving Credit Commitment(s) as in effect immediately prior to such
termination) and the denominator of which is the aggregate amount of Revolving
Credit Commitments at such time (or, if the Revolving Credit Commitments shall
have been terminated at or prior to such time, the Revolving Credit Commitments
as in effect immediately prior to such termination).

                "Regular Payment Date" shall mean the first day of
each calendar month.

-18-

                "Reimbursement Obligations" shall have the meaning
given such term in Section 2.14(b).

                "Rentals" shall mean and include as of the date
of any determination thereof all payments (including as such all payments which
the lessee is obligated to make to the lessor on termination of the lease or
surrender of the property, and all payments, if any, required to be paid by the
lessee regardless of sales volume or gross revenues) payable by the Borrower or
any of its Subsidiaries, as lessee or sublessee under a lease of real or
personal property, but shall be exclusive of any amounts required to be paid by
the Borrower or any of its Subsidiaries (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges.

                "Reportable Event" shall mean (a) a reportable
event described in Section 4043 of ERISA and regulations thereunder; or (b) a
withdrawal by a substantial employer from a single-employer plan which has two
or more contributing sponsors, at least two of which are not under common
control, as referred to in Section 4063(b) of ERISA.

                "Required Lenders" shall mean, at any time,
Lenders having Revolving Credit Commitments representing at least 50% of the
total Revolving Credit Commitments at such time but at least two Lenders if
there is more than one Lender.

                "Requirement of Law" shall mean, as to any Person,
the Governing Documents of such Person and any Law, right, privilege,
qualification, license or franchise or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable or binding upon such
Person or any of its property (now owned or hereafter acquired) or to which such
Person or any of its property is subject or pertaining to any or all of the
transactions contemplated or referred to herein.

                "Reserve Percentage" shall mean the maximum
aggregate reserve requirement (including all basic, supplemental, marginal and
other reserves) which is imposed on member banks of the Federal Reserve System
against "Euro-currency Liabilities" as defined in Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.

                "Revolving Credit Commitment" shall mean, at any
time, for each Lender, the obligation of such Lender to make Revolving Credit
Loans in principal amounts set forth opposite the name of such Lender on 
Schedule A hereto under the caption "Revolving Credit Commitment," as
such amounts may be reduced at or prior to such time pursuant to Section 2.12.
The aggregate principal amount of all Revolving Credit Commitments is the
Revolving Credit Facility.

                "Revolving Credit Facility" shall mean, at
any time, the aggregate Revolving Credit Commitments of all of the Lenders at
such time. The aggregate amount of the Revolving Credit Facility on the date of
this Agreement is Thirty-Five Million Dollars ($35,000,000).

                "Revolving Credit Loan" shall have the meaning set
forth in Section 2.1(a). 

                "Revolving Credit Loan Maturity Date" shall mean
April 20, 2008.

-19-

                "Revolving Credit Notes" shall have the meaning
set forth in Section 2.2(a).

                "Security Agreements" shall have the meaning given
such term in Section 3.1(a).

                "Security Documents" shall mean the Security
Agreements, the Pledge Agreements and any other notes, mortgages, assignments of
note or mortgage, agreements or instruments from time to time granting or
purporting to grant a Lien in or on any property to secure the Obligations or
amending, restating or replacing any of the foregoing.

                "Solvent" shall mean, with respect to any Person
at any time, that at such time (a) the sum of the debts and liabilities (whether
or not reflected on a balance sheet prepared in accordance with GAAP, including
contingent liabilities) of such Person are not greater than all of the assets of
such Person at a fair valuation, (b) the present fair salable value of the
assets of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and
matured, (c) such Person has not incurred, does not intend to incur, and does
not believe that it will incur, debts or liabilities (including contingent
liabilities) beyond such person's ability to pay such debts and liabilities as
they mature, and (d) such Person is not otherwise insolvent as defined in, or
otherwise in a condition which could in any circumstances then or subsequently
render any transfer, conveyance, obligation or act then made, incurred or
performed by it avoidable or fraudulent pursuant to, any Law that may be
applicable to such Person pertaining to bankruptcy, insolvency or creditors'
rights (including, but not limited to, the Bankruptcy Code of 1978, as amended,
and, to the extent applicable to such Person, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act, or any other applicable Law pertaining
to fraudulent conveyances or fraudulent transfers or preferences).

                "Special Account" shall mean a specified cash
collateral account maintained by Bank in connection with Letters of Credit as
contemplated by Section 2.14(a)(v).

                "Subsidiary" of a Person at any time shall mean
any Person of which a majority (by number of shares, Equity Interests or number
of votes) of any class of outstanding capital stock or Equity Interest
(determined by value) is at such time owned directly or indirectly, beneficially
or of record, by such Person or one or more Subsidiaries of such Person, and any
trust or other Person of which a majority of any class of outstanding Equity
Interest is at such time owned directly or indirectly, beneficially or of
record, by such Person or one or more Subsidiaries of such Person.

                "Subsidiary Guaranty" and "Subsidiary
Guaranties" shall have the meanings given such terms in Section 3.2(a).

                "Tangible Net Worth" shall mean the Borrower's
shareholders' equity less intangibles.

                "Taxes" shall have the meaning set forth in
Section 4.19.

                "Trademarks" shall mean all federal and state
trademark and servicemark registrations and applications made by any Loan Party.

-20-

                "UCC" shall mean the Uniform Commercial Code as in
effect in the State of New York, or in any other state whose laws are held to
govern this Agreement, the Collateral or any portion hereof.

                "Voting Interests" shall mean shares of
capital stock issued by a corporation, or equivalent Equity Interests in any
other Person, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even if the right to so vote has
been suspended by the happening of such a contingency. 

        1.2
    Construction. Unless the context of this Agreement otherwise clearly
requires or unless otherwise defined in this Agreement references to the plural
include the singular and the singular the plural; "or" has the inclusive meaning
represented by the phrase "and/or"; and "property" includes all properties and
assets of any kind or nature, tangible or intangible, real, personal or mixed.
References in this Agreement to "determination" (and similar terms) by the
Administrative Agent or the Required Lenders include good faith estimates by
such party (in the case of quantitative determinations) and good faith beliefs
by such party (in the case of qualitative determinations). The words "hereof,"
"herein," "hereunder" and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
terms "include" and "including" mean "including without limitation." The Section
and other headings contained in this Agreement and the Table of Contents
preceding this Agreement are for reference purposes only and shall not control
or affect the construction of this Agreement or the interpretation thereof in
any respect. Section, subsection, exhibit and schedule references are to this
Agreement unless otherwise specified.

        1.3
    

Accounting Terms.

                (a)     All accounting terms not specifically defined in this
Agreement shall be construed in accordance with generally accepted accounting
principles in the United States ("GAAP") which, except as
contemplated by Section 1.3(c), shall be applied on a basis consistent with the
principles used in preparing the most recent annual financial statements of
Borrower furnished to Administrative Agent hereunder.

                (b)     Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters, including
those in Section 6.7 and those referenced in Exhibit B, shall be made, and all
financial statements to be delivered pursuant to this Agreement shall be
prepared, in accordance with GAAP (including principles of consolidation), and
all accounting or financial terms shall have the meanings ascribed to such terms
by GAAP; provided that in making determinations of the aggregate
Indebtedness of a Person and its Subsidiaries, any Indebtedness of such Person
or any such Subsidiary described in clause (i) of the definition of Indebtedness
herein shall be treated as if such Person or such Subsidiary were an obligor
with respect to such Indebtedness.

                (c)     In the event of a change in GAAP from GAAP as used in the
preparation of the financial statements referred to in Section 4.26(a) hereof,
either the Borrower or the Required Lenders may by notice to the Administrative
Agent and the Borrower, respectively, require that the Required Lenders and the
Borrower negotiate in good faith to revise any covenants in  

-21-

Section 6.7 of this
Agreement, or any related definitions, affected thereby in order to make such
covenants consistent with GAAP then in effect and the standards in Section 6.7.
No delay by the Borrower or the Required Lenders in requiring such negotiation
shall limit their right to so require such a negotiation at any time after such
a change in accounting principles provided that any request for
negotiation given by Borrower must be given prior to the date that the next
quarterly financial statements are required to be delivered pursuant to
Section 6.2. Until any such covenant is amended, covenant calculations shall be
made in accordance with GAAP as used in the preparation of the financial
statements referred to in Section 4.26(a) hereof.

2. THE REVOLVING CREDIT LOAN.

        2.1     Agreement to Lend; Advances. Subject to all of the terms and conditions of this
Agreement and relying on the representations and warranties herein set forth, 

                (a)     Revolving Credit Loan. Each Lender
severally agrees to make revolving credit loans to Borrower from time to time
(collectively, the "Revolving Credit Loan" or "Revolving
Credit Loans", and each a "Revolving Credit Loan") in a
maximum principal amount up to, but not exceeding, the amount of the Revolving
Credit Commitment of such Lender, subject to Section 2.1(b). Bank agrees to
issue Letters of Credit for the account of Borrower in accordance with Section
2.14 hereof.

                (b)     Advances. Under the Revolving Credit Loan,
Borrower may borrow, repay and reborrow from time to time (subject to
limitations on timing of repayment of advances then bearing interest at a LIBOR
Based Rate) up to Availability. An advance under the Revolving Credit Loan shall
be requested by telephone, with subsequent fax confirmation, or by fax, on
behalf of Borrower by its Authorized Representative providing to the
Administrative Agent (i) in the case of an advance bearing interest at a LIBOR
Based Rate, not less than two (2) Business Days' advance written notice of a
request for such advance, which advance shall be in an amount of at least
$500,000 and in $100,000 increments if in excess thereof, and shall be requested
no later than 12:00 noon on the day which is two days prior to the date the
advance is requested to be made and (ii) in the case of an advance bearing
interest at the Base Rate, written notice no later than 3:00 p.m., Buffalo, New
York time of a request for such advance on the same Business Day that such
advance is requested to be made, which advance need not be in any minimum
amount. Each request for an advance hereunder shall (i) specify the date of such
advance, whether such advance shall bear interest at a LIBOR Based Rate or the
Base Rate, and, if such advance is a LIBOR Loan, the duration of the Interest
Period applicable thereto and whether Borrower is electing the Automatic
Continuation Option for such LIBOR Loan and (ii) be signed by an Authorized
Representative; provided, however, that there shall be no more than six
(6) LIBOR Loans outstanding under the Revolving Credit Loan at any time. Each
request for advance shall be made to the Administrative Agent at the following
address and fax number:

                Manufacturers and Traders Trust Company,

                    As Administrative Agent

                One Fountain Plaza

                Buffalo, New York 14202

                Attn: Keri Cicchitti, Special Loan Operations

                Phone: (716) 848-7258

-22-

                Fax: (716) 848-7881

                (c)     Treatment of Overadvances. If at any time
the Administrative Agent determines that the total principal sum outstanding
under the Revolving Credit Notes plus the L/C Amount exceeds the lesser of the
Borrowing Base and the Revolving Credit Facility, then, immediately upon demand
therefor by the Administrative Agent, Borrower shall make payments to the
Administrative Agent, for the accounts of the applicable Lenders, in an amount
sufficient to reduce the sum of the L/C Amount and the principal amount
outstanding under the Revolving Credit Notes to the lesser of the Borrowing Base
and the Revolving Credit Facility.

                (d)     Funding. Each Lender shall credit an
account of Borrower maintained with Bank with the proceeds of each advance of
the Revolving Credit Loan on the date thereof. 

    2.2     Promissory Notes.

                (a)     Revolving Credit Note. The obligation to
repay all amounts outstanding from time to time under the Revolving Credit Loan
shall be evidenced by one or more promissory notes in the form of Exhibit
A hereto in the aggregate principal amount of up to the Revolving Credit
Facility (each, as the same may be amended, modified or supplemented from time
to time in accordance with its terms, a "Revolving Credit Note"
and, collectively the "Revolving Credit Note").

                (b)     Notes Generally. Each Lender is hereby
authorized to record the date, amount and type of each Revolving Credit Loan
made by such Lender, the date and amount of each payment or prepayment of
principal thereof, the LIBOR Rate or Adjusted Base Rate and Applicable Margin
applicable thereto and, in the case of LIBOR Loans, the length of each Interest
Period with respect thereto, on its internal books and records and/or on any
schedule annexed to and constituting a part of any Revolving Credit Note, and
any such recordation on such schedule, or any such entries made on such Lender's
books and records, shall constitute presumptive evidence of the accuracy of the
information so recorded; provided that the failure by any Lender to make
any such recordation, or any error therein, shall not limit or in any manner
affect the Obligations of the Borrower.

    2.3     Interest and Interest Payments.

                (a)     Applicable Rate.

                        (i)     Revolving Credit Loan. Each advance under
the Revolving Credit Loan shall bear interest, calculated daily at the per annum
Interest Rate and, in the case of a LIBOR Loan, for the Interest Period,
selected by Borrower, in the case of the initial Interest Rate, in a letter
delivered to the Administrative Agent at least two (2) Business Days prior to
the Closing Date, and, thereafter, communicated to the Administrative Agent at
the times and in the manner set forth in Section 2.1(b) for advances which times
and manner shall likewise apply to subsequent interest rate changes, in each
case from the following two options (A) the applicable Base Rate or (B) the
applicable LIBOR Based Rate.

                        (ii)     Computation.
All computations of LIBOR Based Rate interest shall be made on the basis of a
three hundred sixty (360) day year and the actual number of days 

-23-

elapsed. All computations of Base Rate interest shall be made
on the basis of a three hundred sixty-five (365) or three hundred sixty-six
(366) day year, as the case may be, and the actual number of days elapsed.
Interest shall be calculated from and including the date of the applicable Loan
or advance to, but excluding, the date the outstanding principal balance
thereof, with all accrued interest, is paid in full.

                (b)     Interest Rate Elections. Borrower shall
give the Administrative Agent, in accordance with Section 2.3(a) hereof, notice
of its elected rate option with respect to the applicable portion of the
Revolving Credit Loans. If Borrower does not elect a new Interest Period prior
to the expiration of any Interest Period, the interest rate for the relevant
advance(s) may be set by the Administrative Agent at the applicable Base Rate or
at the applicable one month LIBOR Based Rate at the Administrative Agent's
discretion. Borrower will have the right to change from a Base Rate to a LIBOR
Based Rate at any time with respect to any advance but may change from a LIBOR
Based Rate to a Base Rate only at the end of the applicable Interest Period for
such advance.

                (c)     Interest Payments. Borrower shall make
payments of interest to the Administrative Agent for the account of the
applicable Lenders, on the outstanding balance of the Revolving Credit Loans at
the Interest Rate calculated from time to time in accordance with Section 2.3
hereof, (i) with respect to Revolving Credit Loans bearing interest at the Base
Rate, on each Regular Payment Date, beginning with the first such date occurring
after the Closing Date and (ii) with respect to Revolving Credit Loans bearing
interest at the LIBOR Based Rate, on the last day of each Interest Period unless
the applicable Interest Period is ninety (90) days or longer, in which case
interest shall be payable every ninety (90) days and on the last day of the
applicable Interest Period, in each case beginning with the first such date
occurring after the Closing Date. 

                (d)     Conversion Upon Default. Unless the
Administrative Agent shall otherwise consent in writing, if a Potential Default
or Event of Default has occurred and is continuing, Borrower may not elect to
have any advance converted or continued as a LIBOR Loan or obtain any advance
which bears interest at a LIBOR Based Rate. Further, the Administrative Agent,
in its sole discretion, may (i) permit any outstanding LIBOR Loans to continue
until the last day of the applicable Interest Period at which time such Loan
shall automatically be converted into a Base Rate Loan or (ii) convert any
outstanding LIBOR Loans into a Base Rate Loan before the end of the applicable
Interest Period applicable to such LIBOR Loan. Nothing herein shall be construed
to be a waiver by Administrative Agent to have any Loan accrue interest at the
Default Interest Rate or the right of the Administrative Agent to the amounts
set forth in Section 2.13(d) of this Agreement.

    2.4     
Principal Payments. 

Each Lender's obligation to make advances under the Revolving
Credit Loan shall terminate, and the outstanding principal balance of the
Revolving Credit Loan, together with any accrued and unpaid interest and any
other amount due under this Agreement or the Loan Documents shall be due and
payable by Borrower to the Administrative Agent, for the accounts of the
applicable Lenders, on the Revolving Credit Loan Maturity Date.

    2.5     
Default Rate. After (a) the occurrence and
during the continuance of any Event of Default and (b) written notice thereof
from the Administrative Agent to Borrower with the 

-24-

concurrence of the Required Lenders, the interest rate on the
Revolving Credit Notes shall change to the Default Interest Rate and Borrower
shall pay interest on the Revolving Credit Notes to the Administrative Agent,
for the benefit of the Lenders, at the Default Interest Rate.

    2.6     
Maximum Allowable Interest Rate. It is the intent of all parties hereto that in no event
shall interest be payable hereunder at a rate in excess of the maximum rate
permitted by applicable law (the "Maximum Legal Rate"). If at any
time the rate of interest on any Revolving Credit Loan would exceed the Maximum
Legal Rate, the interest payable on the Revolving Credit Loan shall be limited
to the Maximum Legal Rate. Any interest received by the Administrative Agent or
any Lender in excess of the Maximum Legal Rate shall be applied to the
outstanding principal balance of the Revolving Credit Loan or, if required by
law, returned to the Borrower.

    2.7     
Payments.

            (a)     Except as otherwise provided herein with respect to
amounts under Section 2.13, the Borrower shall, at the time of making each
payment under this Agreement or any Revolving Credit Note, specify the Revolving
Credit Loan, Reimbursement Obligation or other amounts payable by the Borrower
to which such payment is to be applied, provided, that if the Borrower
fails to so specify the Administrative Agent may apply such payment in such
manner as it may determine to be appropriate.

            (b)     Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Borrower
under this Agreement with respect to the Revolving Credit Loan and the Revolving
Credit Notes, and, except to the extent otherwise provided therein, all payments
to be made by the Borrower under any other Loan Document, shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent, for the account of the applicable
Lenders, at any banking office of the Administrative Agent, not later than (i)
12:00 noon Buffalo, New York time in the case of LIBOR Loans or (ii) 3:00 p.m.
Buffalo, New York time in the case of Base Rate Loans, in each case on the date
on which such payment shall become due (each such payment made after such time
on such due date to be deemed to have been made on the next succeeding Business
Day).

            (c)     The Borrower hereby irrevocably authorizes the
Administrative Agent (but the Administrative Agent shall not be obligated) to
charge, when due, the amount of any principal, interest or other amount payable
by the Borrower hereunder against funds in any deposit account of the Borrower
with the Administrative Agent, without the requirement of prior notice to the
Borrower.

            (d)     If the due date of any payment under this Agreement or
any Revolving Credit Note would otherwise fall on a day that is not a Business
Day, such due date shall be extended to the next succeeding Business Day, and
interest shall be payable on any principal so extended for the period of such
extension.

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    2.8     Use of Proceeds. The proceeds of the Revolving Credit Loans and of each
Letter of Credit issued hereunder shall be used by Borrower to refinance
existing Indebtedness of the Borrower and for working capital, general corporate
and acquisition purposes.

    2.9     Fees.

            (a)     Commitment Fee. For the period from
the Closing Date through the Revolving Credit Loan Maturity Date, Borrower
agrees to pay to the Administrative Agent, for the account of the applicable
Lenders, a commitment fee (the "Commitment Fee") calculated by
applying the Commitment Fee Rate, determined by the corresponding Leverage
Ratio, calculated by the Administrative Agent, in accordance with Exhibit
B hereto (the "Commitment Fee Rate"), to the difference
between (i) the amount of the Revolving Credit Facility (which shall be an
average daily amount for any month in which the amount of the Revolving Credit
Facility changes) and (ii) the sum of the average daily outstanding Revolving
Credit Loans and the average daily outstanding L/C Amount. The Commitment Fee
shall be calculated on the basis of a 360 day year for the actual number of days
elapsed and shall be payable monthly in arrears on each Regular Payment Date
beginning with the first such date occurring after the Closing Date and on the
Revolving Credit Loan Maturity Date.

            (b)     Letter of Credit Fees. The Borrower agrees
to pay letter of credit fees as set forth in Section 2.14 hereof.

            (c)     Other Fees. The Borrower agrees to pay to
the Administrative Agent (for its own account) such fees payable in such amounts
and at such times as separately agreed in writing between the Borrower and the
Administrative Agent.

    2.10     Late Fees. Any payment due will be a late payment if it is not
made on or before the tenth (10th) Business Day of the month in which
it is due. Any late payment on the Revolving Credit Loan will be assessed an
additional charge of two percent (2%) of the overdue payment which shall be
payable to the Administrative Agent immediately, for the account of the
applicable Lenders (according to each Lender's Pro Rata Share).

    2.11     
Prepayment. 

                (a)     Voluntary Prepayment of Base Rate Loans.
Borrower may, at any time, prepay all or part of the outstanding principal
amount of the Revolving Credit Loan then bearing interest at the Base Rate
without premium or penalty.

                (b)     Voluntary Prepayment of LIBOR Loans.
Borrower shall not make any principal payment on any LIBOR Loan prior to the end
of the applicable Interest Period and, if Borrower makes any such payment,
Borrower shall pay to the Administrative Agent, for the account of the
applicable Lenders, the amounts described in Section 2.13(d) hereof. Any
principal payment on any LIBOR Loan made at the end of the applicable Interest
Period may be made without premium or penalty.

    2.12     
Termination or Permanent Reduction of the Commitments. 

-26-

                (a)     Optional. The Borrower may, upon at least
three Business Days' notice to the Administrative Agent, terminate in whole or
permanently reduce in part the unused portions of the 

Revolving Credit Commitments; provided that each
partial permanent reduction of the Revolving Credit Facility shall be in a
minimum amount of $1,000,000.; and provided further, that the
Borrower shall be responsible for the payment of such amounts as provided in
Section 2.13(d) with respect to the prepayment of any LIBOR Loan prepaid on any
date other than the last day of the corresponding Interest Period. In addition,
but subject to the foregoing, as a condition to giving effect to any termination
or permanent reduction of the Revolving Credit Commitments, the aggregate
principal of all Revolving Credit Loans shall be fully prepaid, in the case of a
termination, or prepaid in an amount sufficient to reduce the outstanding
principal to the amount of the reduced Revolving Credit Commitments, in the case
of a permanent reduction, and, in each case, together with interest thereon
accrued to the date of such payment and any other fees and amounts payable under
this Agreement.

                (b)     Mandatory. The Borrower shall, on the date
of receipt by Borrower or any of its Subsidiaries of (i) Net Cash Proceeds from:

    

                    (x)     the sale, lease, transfer or other disposition of any
    property or assets of Borrower or any of its Subsidiaries (other than any
    property or assets expressly permitted to be sold, leased, transferred or
    disposed of under Section 7.3); or

                    (y)     the incurrence or issuance by Borrower or any of its
    Subsidiaries of any Indebtedness (other than Indebtedness expressly
    permitted to be incurred or issued pursuant to Section 7.2); or

                    (z)     the sale or issuance of any Equity Interests in any
    of Borrower's Subsidiaries (other than sales or issuance of Equity Interests
    expressly permitted pursuant to Section 7.3 or 7.10);

  

  

                or (ii) any Extraordinary Receipt, prepay an aggregate
principal amount of the Revolving Credit Loan in an amount equal to 100% of the
amount of such Net Cash Proceeds or Extraordinary Receipt until the Revolving
Credit Loan is paid in full. Each prepayment under this Section 2.12(b) shall be
a permanent reduction of the Revolving Credit Commitments.

                (c)     Application of Commitment Reductions. Upon each permanent reduction of the Revolving Credit Facility pursuant
to this Section 2.12, the Revolving Credit Commitment of each of the Lenders
under such Revolving Credit Facility shall be reduced by such Lender's Pro Rata
Share of the amount of the reduction. The Letter of Credit Sublimit shall be
automatically and permanently reduced on the date of each reduction in the
Revolving Credit Facility by an amount equal to the amount, if any, by which
(A) the Letter of Credit Sublimit on such date exceeds (B) the Revolving
Credit Facility on such date (after giving effect to such reduction of the
Revolving Credit Facility).

    2.13     Change in
Circumstances. (a) If at any time the Administrative Agent
determines (which determination shall be conclusive absent manifest error) that,
by reason of circumstances affecting the relevant market generally, deposits in
Dollars (in the applicable amounts) are not being offered in the relevant market
for such Interest Period, then the 

-27-

Administrative Agent shall forthwith give notice thereof to
Borrower, whereupon until the Administrative Agent notifies Borrower that the
circumstances giving rise to such suspension no longer exist, the obligation of
the Lenders to make the LIBOR Based Rate option available to Borrower shall be
suspended for future advances and all amounts made available to Borrower by the
Lenders hereunder to which such LIBOR Based Rate option then applies shall bear
interest at the LIBOR Based Rate option for the remainder of the then applicable
Interest Period and thereafter at the Base Rate option. Upon notification from
the Administrative Agent to Borrower that the circumstances giving rise to the
suspension no longer exist, the LIBOR Based Rate option shall again be available
to Borrower in accordance with the terms of this Agreement.

                (b)     If, after the date hereof, the introduction of, or any
change in, any applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof or compliance by a Lender with any
request or directive (whether or not having the force of law) of any such
authority shall make it unlawful or impossible for such Lender to make available
to Borrower the LIBOR Based Rate option, such Lender shall forthwith give notice
thereof to the Administrative Agent who shall forthwith transmit the same to
Borrower. Upon receipt of such notice, all amounts owed by Borrower to such
Lender then bearing interest at the LIBOR Based Rate option shall bear interest
at the LIBOR Based Rate option for the remainder of the then applicable Interest
Period and thereafter at the Base Rate option.

                (c)(i)     If after the date hereof the adoption of, or any
change in, any applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by a Lender with any request or directive (whether or not having the force of
law) made by any such authority, central bank or comparable agency after the
date hereof (each, a "Regulatory Change"):

            
              
                

                    (A)     shall subject such Lender, to any tax, duty
            or other charge with respect to any portion of the Revolving Credit
            Loan then bearing interest at the LIBOR Based Rate option, or shall
            change the basis of taxation of payments to such Lender of the
            principal of or interest on any portion of the Revolving Credit Loan
            bearing interest at the LIBOR Based Rate option (except for changes
            in the rate of tax on the overall net income of such Lender); or

                    (B)     shall impose, modify or deem applicable any
            reserve (including any imposed by the Board of Governors of the
            Federal Reserve System), Reserve Percentage, special deposit or
            similar requirement against assets of, deposits with or for the
            account of, or credit extended by, such Lender, or shall impose on
            such Lender or on the United States market for certificates of
            deposit or the London interbank market any other condition affecting
            any portion of the Revolving Credit Loan bearing interest at the
            LIBOR Based Rate option;

                

              

          
        
      
    
  

and the result of any of the foregoing is to increase the
cost to such Lender of making available to Borrower the LIBOR Based Rate option
with respect to any portion of the Revolving Credit 

-28-

Loan or to reduce the amount of any sum received or
receivable by such Lender under this Loan Agreement or any Revolving Credit
Note, by an amount deemed by such Lender to be material, then, upon demand by
such Lender, through the Administrative Agent, Borrower agrees to pay to the
Administrative Agent, for the account of such Lender within thirty (30) days of
demand such additional amount or amounts as will compensate such Lender for such
increased cost or reduction.

                        (ii)     If after the date hereof a Lender shall have determined
that the adoption of any applicable law, rule or regulation regarding capital
adequacy, reserve requirements, taxes (except for changes in the rate of tax on
the overall net income of such Lender) or other charges, or any change therein,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender with any
request or directive regarding capital adequacy, reserve requirements, taxes
(except for changes in the rate of tax on the overall net income of such Lender)
or other charges (whether or not having the force of law) of any such authority,
central bank or comparable agency (each, an "Other Change"), has
or would have the effect of reducing the rate of return on such Lender's capital
as a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy,
reserve requirements, taxes and other charges) by an amount deemed by such
Lender to be material, then from time to time, within thirty (30) days after
demand by such Lender, through the Administrative Agent, Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender for
such reductions.

                        (iii)     Each Lender will promptly notify the Administrative
Agent, which shall promptly notify Borrower, of any event of which it has
knowledge which will entitle such Lender to compensation pursuant to this
Section 2.13(c). A certificate of such Lender setting forth the basis for
determining such additional amount or amounts necessary to reasonably compensate
such Lender shall be conclusive in the absence of manifest error. In determining
such amount, such Lender may use any reasonable averaging and attribution
methods. Notwithstanding the foregoing, no amount shall be payable by Borrower
under this Section 2.13(c) with respect to any period in excess of 270 days
prior to the date of any demand by the Administrative Agent unless the effect of
a Regulatory Change or Other Change is retroactive by its terms to a period
prior to the date of the implementation of such Regulatory Change or Other
Change, in which case any additional amount or amount shall be payable for the
retroactive period but only if the Administrative Agent provides its written
demand not later than 270 days after the implementation of such Regulatory
Change or Other Change.

                (d)     Borrower shall pay to the Administrative Agent for the
account of each applicable Lender, promptly upon the request by such Lender
through the Administrative Agent, such amount or amounts as shall be sufficient
to compensate such Lender for any loss, cost or expense which such Lender
determines is attributable to (x) the payment or prepayment of all or any
portion of the Revolving Credit Loan to which the LIBOR Based Rate option
applies on a date other than the last day of the applicable Interest Period or
(y) Borrower's failure to draw down, in whole or in part, a LIBOR Loan requested
under Section 2.1(b) or Borrower's attempt to revoke a LIBOR Loan or (z) the
conversion of the rate of interest on the Revolving Credit Loan or any portion
thereof from the LIBOR Based Rate to the Base Rate in accordance with  

-29-

Section
2.3(d) hereof. Without limiting the foregoing, such compensation shall include
an amount equal to the excess, if any, of (i) the amount of interest which
otherwise would have accrued on the principal amount so paid or prepaid for the
period from the date of such payment or prepayment to the last day of the
applicable Interest Period at the applicable rate of interest for the Revolving
Credit Loan or portion thereof over (ii) the interest component of the amount
such Lender would have bid in the London interbank market for Dollar deposits of
leading banks in each case, in amounts comparable to such principal amount and
with maturities comparable to such period, as determined by such Lender. The
determination by the Administrative Agent of the foregoing amount shall, in the
absence of manifest error, be conclusive and binding upon Borrower.

        2.14    
Letters of Credit.

                    (a)     Letters of Credit.

                            (i)     Issuance. Bank agrees, on the terms and
subject to the conditions herein set forth, to issue, from the Closing Date to
the Revolving Credit Loan Maturity Date, one or more irrevocable standby or
commercial or documentary letters of credit (each, a "Letter of Credit")
for the Borrower's account. The Bank shall have no obligation to issue, amend,
renew or extend any Letter of Credit if the face amount of the Letter of Credit
to be issued would (and upon issuance, amendment, renewal or extension of each
Letter of Credit, the Borrower shall be deemed to represent and warrant that the
face amount of such Letter of Credit will not) exceed the lesser of:

                            (A)     The Letter of Credit Sublimit less the L/C Amount, or

                            (B)     Availability.

                            (ii)     L/C Application. Each Letter of Credit, if
any, shall be issued pursuant to a separate L/C Application entered into between
the Borrower and the Bank, completed in a manner satisfactory to the Bank. The
terms and conditions set forth in each such L/C Application shall supplement the
terms and conditions hereof, but (i) if the terms of any such L/C Application
and the terms of this Agreement are inconsistent, the terms hereof shall
control, (ii) the term "Event of Default" in any such L/C Application shall be
deemed to have the meaning given such term in this Agreement, (iii) any interest
on any Revolving Credit Loan shall be as set forth in this Agreement and,
without double counting, any interest applicable to any Reimbursement Obligation
shall be as set forth in the L/C Application, and (iv) any provision in the L/C
Application indicating that the L/C Application, with or without other
documents, represents the entire agreement among the parties with respect to the
applicable Letter of Credit shall be deemed amended to provide that the L/C
Application together with this Agreement and any other documents referenced in
such provision, represents the entire agreement among the parties with respect
to the applicable Letter of Credit. Each Letter of Credit issued by Bank upon
the application of Borrower or any Subsidiary in 2005 but prior to the date of
this Agreement shall, upon execution of this Agreement, be deemed to have been
issued pursuant to this Agreement and the applicable L/C Application.

-30-

                            (iii)     Expiration Date. No Letter of Credit
shall be issued with an expiry date later than 30 days prior to the Revolving
Credit Loan Maturity Date in effect as of the date of issuance.

                            (iv)     Representation. Any request for Bank to
issue a Letter of Credit shall be deemed to be a representation by the Borrower
that the conditions set forth in Section 5.2 have been satisfied as of the date
of the request.

                            (v)     Special Account. If any Revolving Credit
Commitment is terminated for any reason while the L/C Amount exceeds zero, the
Borrower shall thereupon pay the Bank in immediately available funds for deposit
in the Special Account an amount equal to the L/C Amount. The Special Account
shall be an interest bearing account maintained at the Bank. Any interest earned
on amounts deposited in the Special Account shall be credited to the Special
Account. Bank may apply amounts on deposit in the Special Account at any time or
from time to time to the Obligations in the Bank's sole discretion. The Borrower
may not withdraw any amounts on deposit in the Special Account as long as the
L/C Amount exceeds zero.

                (b)     Payment of Amounts Drawn Under Letters of Credit;
Reimbursement Obligations. The Borrower shall pay to the Bank any and
all amounts required to be paid under the applicable L/C Application, when and
as required to be paid thereby, and the amounts designated below, when and as
designated.

                            (i)     Reimbursement Obligations. The Borrower
shall pay to the Bank on the day a draft is honored under any Letter of Credit
the amount provided for in the applicable L/C Application relative to such draw,
in accordance with such L/C Application, plus interest on all such amounts,
charges and expenses as set forth below (the Borrower's obligation to pay all
such amounts is herein referred to as the "Reimbursement Obligation").

                            (ii)     Revolving Credit Advance. Whenever a draft
is honored under a Letter of Credit, the Bank shall be deemed to have made a
Base Rate advance under the Revolving Credit Loan in the amount of the
Reimbursement Obligation, the proceeds of which advance shall be deemed to have
been applied to pay the Reimbursement Obligation. Such advance shall be
repayable in accordance with and be treated in all other respects as an advance
under the Revolving Credit Loan.

                            (iii)     Demand Obligation. If a draft is
submitted under a Letter of Credit when the Borrower is unable, due to an Event
of Default or for any other reason, to obtain an advance under the Revolving
Credit Loan to pay the Reimbursement Obligation, such advance shall nonetheless
be deemed to have been made pursuant to Section 2.14(b)(ii) and the Borrower
shall pay to the Bank on demand and in immediately available funds, the amount
of the deemed Base Rate advance under the Revolving Credit Loan together with
interest thereon, accrued from the date of the draft until payment in full at
the Default Rate applicable to the Revolving Credit Loan. 

-31-

                            (iv)     Revolving Credit Notes. The Borrower's
obligation to pay any advance made under this Section 2.14, shall be evidenced
by the Revolving Credit Notes and shall bear interest as provided in Section
2.3.

                (c)     Obligations Absolute. The Borrower's
obligations arising under this Section 2.14 shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Section 2.14, under all circumstances whatsoever, including the following
circumstances, provided, however, that Borrower's performance of its absolute
obligations hereunder shall not constitute a waiver by Borrower of any remedy it
may otherwise have against Bank:

                            (i)     Related Documents. Any lack of validity or
enforceability of any Letter of Credit or any other agreement or instrument
relating to any Letter of Credit (collectively the "Related Documents");

                            (ii)     Amendment; Waiver. Any amendment or waiver
of or any consent to departure from all or any of the Related Documents;

                            (iii)     Claims. The existence of any claim,
setoff, defense or other right which the Borrower may have at any time, against
any beneficiary or any transferee of any Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be acting), or
other person or entity, whether in connection with this Agreement, the
transactions contemplated herein or in the Related Documents or any unrelated
transactions;

                            (iv)     Insufficiency. Any statement or any other
document presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;

                            (v)     Noncompliance. Payment by or on behalf of
the Bank under any Letter of Credit against presentation of a draft or
certificate which does not strictly comply with the terms of such Letter of
Credit; or

                            (vi)     Other Circumstances. Any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing.

                (d)     Letter of Credit Fees. The Borrower agrees
to pay, on demand, with respect to Letters of Credit issued hereunder, the
following fees: (i) to the Administrative Agent for the benefit of the Lenders
(according to each Lender's Pro Rata Share), a letter of credit fee in respect
of each Letter of Credit issued hereunder which accrues at a per annum rate
equal to (x) the face amount of such Letter of Credit multiplied by (y) the
Applicable Margin for LIBOR Loans, as the same may change from time to time,
such fees to be calculated on the basis of a 360 day year for the number of days
from issuance of such Letter of Credit to its expiration date and to be paid by
the Borrower in advance upon issuance, and any renewal or extension, thereof,
and (ii) to the Bank, for its own account, the documentation and administrative
fees and other charges charged by the Bank in connection with the issuance of
any Letter of Credit, honoring of drafts thereunder, amendments thereto,
transfers thereof and all other activity with respect to the Letters of Credit.
The Administrative Agent is authorized to make a Revolving Credit Loan to the
Borrower for the amount of any fee described in this paragraph.

-32-

                (e)     Letter of Credit Advances. (i) Upon demand
by the Bank, each of the Lenders shall purchase from the Bank, and the Bank
shall sell and assign to each of the Lenders, such Lender's Pro Rata Share of
each of the outstanding Letter of Credit Advances arising under this Section
2.14 and owing to the Bank as of the date of such demand, by making available to
the Administrative Agent for the account of the Bank, in same day funds, an
amount equal to its Pro Rata Share of each such outstanding Letter of Credit
Advance. Promptly after receipt of such funds, the Administrative Agent shall
transfer such funds to the Bank. Each of the Lenders hereby agrees to purchase
its Pro Rata Share of each outstanding Letter of Credit Advance owing to the
Bank for which a demand for the purchase thereof has been made on (A) the
Business Day on which demand therefor is made by the Bank so long as notice of
such demand is given not later than 1:00 P.M. (Buffalo, New York time) on such
Business Day or (B) the first Business Day next succeeding such demand if notice
of such demand is given after such time. The Borrower hereby agrees to each such
sale and assignment. Upon any such assignment by the Bank to any of the Lenders
of a portion of a Letter of Credit Advance owing to the Bank, the Bank
represents and warrants to such Lender that the Bank is the legal and beneficial
owner of such interest being assigned by it, free and clear of any adverse
claim, but makes no other representation or warranty and assumes no
responsibility with respect to such Letter of Credit Advance, any of the Loan
Documents or any of the Loan Parties. If and to the extent that any of the
Lenders shall not have so made its Pro Rata Share of any applicable Letter of
Credit Advance available to the Administrative Agent in accordance with the
foregoing provisions of this Section 2.14(e)(i), such Lender hereby agrees to
pay to the Administrative Agent forthwith on demand the amount of its Pro Rata
Share of such Letter of Credit Advance, together with all accrued and unpaid
interest thereon, for each day from the date of demand therefor by the Bank
until the date on which such amount is paid to the Administrative Agent, at the
Base Rate. If any of the Lenders shall pay to the Administrative Agent the
amount of its Pro Rata Share of any applicable Letter of Credit Advance for the
account of the Bank on any Business Day, such amount so paid in respect of
principal shall constitute a Letter of Credit Advance made by such Lender on
such Business Day for all purposes of this Agreement, and the outstanding
principal amount of the applicable Letter of Credit Advance made by the Bank
shall be reduced by such amount on such Business Day.

                        (ii)     The obligation of each of the Lenders to purchase its
Pro Rata Share of each outstanding Letter of Credit Advance owing to the Bank
upon demand for the purchase thereof pursuant to clause (i) of this
Section 2.14(e) shall be absolute, unconditional and irrevocable, and shall be
made strictly in accordance with the terms thereof under all circumstances,
including the following circumstances:

    

                    (A)     any lack of validity or enforceability of any of the
    Loan Documents, any L/C Application, any of the Letters of Credit or any of
    the other agreements or instruments relating thereto;

                    (B)     the existence of any claim, set-off, defense or other
    right that such Lender or any other Person may have at any time against any
    beneficiary or any transferee of a Letter of Credit (or any Persons for whom
    any such beneficiary or any such transferee may be acting), the Bank, the
    Borrower, any of the other Loan Parties or any other Person, whether in
    connection with the transactions contemplated by the Loan Documents or any
    unrelated transaction;

    

    
-33-

    
                    (C)     the validity, sufficiency or genuineness of any
    documents, or of any endorsement thereon, even if such documents should
    prove to be in any or all respects invalid, insufficient, fraudulent or
    forged or any of the statements made therein shall prove to be in any or all
    respects incorrect;

                    (D)     payment by the Bank against presentation of any
    documents that do not strictly comply with the terms of a Letter of Credit,
    including the failure of any documents to bear any reference or adequate
    reference to the Letter of Credit;

                    (E)      the occurrence and continuance of any Potential
    Default or Event of Default; or

                    (F)      any other circumstance or happening whatsoever,
    whether or not similar to any of the foregoing.

  

  

                        (f)     Failure to Make Letter of Credit Advances. 
The failure of any of the Lenders to purchase its Pro Rata Share of any
outstanding Letter of Credit Advance owing to the Bank for which a demand for
the purchase thereof has been made pursuant to Section 2.14(e)(i) shall not
relieve any of the other Lenders of its obligation to purchase its Pro Rata
Share of such outstanding Letter of Credit Advance on the date of demand
therefor, but none of the Lenders shall be responsible for the failure of any of
the other Lenders to purchase its Pro Rata Share of such outstanding Letter of
Credit Advance on the date of demand therefor.

    2.15    
Sharing in Set-Offs, Etc. (a) The Borrower agrees that, in addition to (and
without limitation of) any right of set-off, banker's lien or counterclaim a
Lender may otherwise have, each Lender shall be entitled, at its option, to set
off against the amounts owing under the Revolving Credit Notes any property held
in a deposit or other account with such Lender or any of its Affiliates or
otherwise owing by such Lender or any of its Affiliates in any capacity to
Borrower or any guarantor or endorser of any Obligation. Such set off shall be
deemed to have been exercised immediately at the time such Lender or such
Affiliate elects to do so. In the event of any such set off, such Lender shall
promptly notify the Borrower and the Administrative Agent thereof, provided
that such Lender's failure to give such notice shall not affect the
validity thereof.

                        (b)    
If any Lender to whom any Obligations are owed shall obtain from any Loan Party
payment of any amount under this Agreement or any other Loan Document through
the exercise of any right of set-off, banker's lien or counterclaim or similar
right or otherwise (other than from the Administrative Agent), and, as a result
of such payment, such Lender shall have received a greater percentage of its Pro
Rata Share of the Obligations than the percentage received by any other Lender,
it shall promptly purchase from such other Lenders participation in (or, if and
to the extent specified by such Lender, direct interests in) the Revolving
Credit Loans or such other amounts, respectively, owing to such other Lenders
(or in interest due thereon, as the case may be) in such amounts, and/or make
such other adjustments from time to time as shall be equitable, so that all the
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
in accordance with their Pro Rata Shares. All Lenders agree to make appropriate
adjustments among themselves (by the resale of participation sold or otherwise)
if such payment 

-34-

is rescinded or must otherwise be restored. The Borrower
agrees that any Lender so purchasing such a participation (or direct interest)
may exercise all rights of set-off, banker's lien, counterclaim or similar
rights with respect to such participation as fully as if such Lender were a
direct holder of Revolving Credit Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation. Any amount referenced
in this Section 2.15(b) which is in excess of the outstanding Obligations shall
be promptly remitted to the Administrative Agent for appropriate distribution.

                        (c)     Nothing contained herein shall require any Lender to
exercise any of its rights under this Section 2.15 or shall affect the right of
any Lender to exercise, and retain the benefits of exercising, any such right
with respect to any other Indebtedness or obligation of the Borrower to such
Lender. If, under any applicable bankruptcy, insolvency or other similar law,
any Lender receives a secured claim in lieu of a set-off to which this Section
2.15 applies, such Lender shall, to the extent practicable, exercise its rights
in respect of such secured claim in a manner consistent with the rights of the
Lenders entitled under this Section 2.15 to share in the benefits of any
recovery on such secured claim.

    2.16     Settlement between
Administrative Agent and Lenders. The Administrative Agent and the Lenders shall settle on an
aggregated and netted basis (the "Settlement Amount") on a weekly basis
or with such greater frequency as the Administrative Agent may determine (each
such date on which such a settlement occurs being a "Settlement Date")
for all amounts which shall have become due to and due from the Administrative
Agent and the Lenders since the immediately preceding Settlement Date with
respect to any Obligations, other than the Settlement Amount which became due on
the immediately preceding Settlement Date. The Administrative Agent shall notify
the Lenders by 11:00 A.M. on each Settlement Date of the Settlement Amount which
is payable by the Administrative Agent or the Lenders, and the Administrative
Agent or the Lenders, as the case may be, shall make payment of the Settlement
Amount by an electronic funds transfer not later than 5:00 P.M. on the
Settlement Date. Nothing in this Section 2.16 or the settlement procedures made
pursuant to this Section 2.16 shall be deemed to change, as between the Borrower
and the Lenders, the amount of the Revolving Credit Loans which are outstanding
under the Revolving Credit Notes to each of the Lenders or the accrual of
interest due to each of the Lenders on such Revolving Credit Loans.

3. COLLATERAL SECURITY.

        3.1     
Security for Loans. The Obligations of Borrower under this Agreement and
the Loan Documents shall be secured by certain security interests granted to the
Administrative Agent for the benefit of itself, the Lenders and Bank and set
forth in the following documents:

               
(a)     Security Agreements.
A good and valid first priority security interest (subject only to Permitted
Liens) in and to all tangible assets, other than real estate, located in the
United States of each Domestic Loan Party and all intangible assets of each
Domestic Loan Party, whether now owned or hereafter acquired, and wherever
located, pursuant to one or more security and negative pledge agreements and/or
patent and trademark security agreements (each, as the same may be amended,
modified or supplemented from time to time in accordance with its terms, a "Security
Agreement" and, collectively, the "Security Agreements")
delivered to the 

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Administrative Agent by Borrower and each Domestic Loan Party
and in form and substance satisfactory to Administrative Agent.

                (b)     Pledge Agreements. A good and valid first
priority security interest in (i) all of the Voting Interests of each of
Borrower's direct and indirect Domestic Subsidiaries, and (ii) 65% of the Voting
Interests of each of Borrower's direct and indirect Foreign Subsidiaries
pursuant to one or more Pledge Agreements (each, as the same may be amended,
modified or supplemented from time to time in accordance with its terms, a "Pledge
Agreement" and, collectively, the "Pledge Agreements")
delivered to the Administrative Agent by Borrower, together with original stock
certificates and undated stock powers duly executed in blank, all in form and
substance satisfactory to the Administrative Agent. Borrower and Administrative
Agent have agreed that (i) no Pledge Agreement shall be required to be delivered
at Closing with respect to the outstanding shares of Computer Task Group of
Canada, Inc., Computer Task Group Luxembourg, S.A. or New Luxembourg and (ii)
promptly upon the request of the Administrative Agent (which, in the case of New
Luxembourg, may be made only after its formation), (A) Borrower shall, or shall
cause the applicable Subsidiary which holds such shares to, execute and deliver
to the Administrative Agent, a Pledge Agreement with respect to 65% of the
Voting Interests of any or all of such entities, as specified by the
Administrative Agent, together with original stock certificates and undated
stock powers duly executed in blank and opinions of local counsel, all in form
and substance reasonably satisfactory to the Administrative Agent and/or (B)
Borrower shall cause New Luxembourg to execute and deliver to the Administrative
Agent, a Negative Pledge Agreement and/or Affiliate Subordination Agreement or
joinder thereto, together with an opinion of local counsel, all in form and
substance reasonably satisfactory to the Administrative Agent.

In the event that Borrower enters into any Interest Rate
Protection Agreement with Administrative Agent, any Lender, or any Affiliate of
any of them with respect to the Revolving Credit Loans or any portion thereof,
Borrower's obligations under each such Interest Rate Protection Agreement shall
be pari passu with the Borrower's Loan obligations under this Loan Agreement and
shall be secured by the Liens granted pursuant to the Security Documents
referenced in this Section 3.1.

    3.2     Related Matters. The Obligations of Borrower under this Agreement and
the Loan Documents shall be subject to guarantees and negative pledges granted
to the Administrative Agent for the benefit of itself, the Lenders and Bank and
set forth in the following documents:

                (a)     Subsidiary Guaranties. Each of Borrower's
direct and indirect Domestic Subsidiaries shall have guaranteed payment and
performance of the Obligations pursuant to one or more Guaranties (each, as the
same may be amended, modified or supplemented from time to time in accordance
with its terms, a "Subsidiary Guaranty" and, collectively, the 
"Subsidiary Guaranties") delivered to the Administrative Agent by
such Domestic Subsidiaries and in form and substance satisfactory to the
Administrative Agent.

                (b)     Negative Pledge Agreements. Each of
Borrower's direct and indirect Foreign Subsidiaries shall have agreed, for the
benefit of Administrative Agent, Lenders and Bank not to incur Indebtedness or
to pledge assets, all pursuant to one or more Negative Pledge  

-36-

Agreements (each,
as the same may be amended, modified or supplemented from time to time in
accordance with its terms, a "Negative Pledge Agreement" and,
collectively, the "Negative Pledge Agreements") delivered to the
Administrative Agent by such Foreign Subsidiaries and in form and substance
satisfactory to the Administrative Agent.

4. REPRESENTATIONS AND WARRANTIES. Borrower makes the following representations and
warranties which shall be deemed to be continuing representations and warranties
so long as any Obligations, other than Continuing Obligations, remain unpaid:

        4.1     
Organizational Status. Borrower is a New York corporation. Each Loan Party is an
entity which is duly organized, validly existing and in good standing under the
laws of its jurisdiction of formation or incorporation and has the power and
authority to own its assets and to transact the business in which it is now
engaged or presently proposes to be engaged. Each Loan Party is duly qualified
to do business as a foreign corporation or other entity and is in good standing
in all jurisdictions in which the ownership of its properties or the nature of
its activities or both makes such qualification necessary or advisable, except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

        4.2     Power and Authorization. Each Loan Party has the power and authority to execute,
deliver, perform, and take all actions contemplated by, each Loan Document to
which it is a party, and all such action has been duly and validly authorized by
all necessary proceedings on its part, including all necessary proceedings on
the part of its shareholders, partners or members, as the case may be. Without
limitation of the foregoing, Borrower has the corporate, partnership or limited
liability company power and authority to request the Revolving Credit Loans in
accordance with, and to grant the security interests granted under, the Loan
Documents to the fullest extent permitted hereby and thereby from time to time,
and has taken all necessary action to authorize such requests and the borrowings
and security interests contemplated hereby and thereby.

        4.3     
Execution and Binding Effect. This Agreement and each other Loan Document to which
any Loan Party is a party has been duly and validly executed and delivered by
such Loan Party. This Agreement and each other Loan Document constitutes the
legal, valid and binding obligation of each Loan Party executing the same,
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights.

        4.4     
Compliance with Laws; Governmental Approvals and
Filings. The Borrower is in compliance with all Laws of all
Governmental Authorities relating to its business operations and assets, except
for Laws the violation of which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as otherwise
set forth on Schedule 4.4 hereof, no approval, order, consent,
authorization, certificate, license, permit or validation of or from, or
exemption or other action by, or filing, recording or registration with, or
notice to, any Governmental Authority (collectively, "Governmental Action")
is or will be necessary in connection with the execution or delivery of any Loan
Document by any Loan Party, the consummation by any Loan Party of the
transactions herein or therein contemplated or the performance of or compliance
with the terms and conditions hereof or thereof by any Loan 

-37-

Party, except for recordings and filings necessary to perfect
the Liens granted by the Security Documents. No Loan Party has made any
application to any Governmental Authority requesting, or in connection with, any
Governmental Action which application, when taken together with all amendments,
supplements and modifications thereto, contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements contained therein not misleading.

        4.5     Absence of Conflicts. Neither the execution and delivery of any Loan Document
by any Loan Party, nor the consummation by any Loan Party of the transactions
herein or therein contemplated, nor performance of or compliance with the terms
and conditions hereof or thereof by any Loan Party, as the case may be, does or
will

                    (a)     violate or conflict with any Requirement of Law, or

                    (b)     violate, conflict with or result in a breach of any term
or condition of, or constitute a default under, or result in (or give rise to
any right, contingent or otherwise, of any Person to cause) any termination,
cancellation, prepayment or acceleration of performance of, or result in the
creation or imposition of (or give rise to any obligation, contingent or
otherwise, to create or impose) any Lien upon the assets of any Loan Party
(except for any Lien in favor of Administrative Agent securing the Obligations)
pursuant to, or otherwise result in (or give rise to any right, contingent or
otherwise, of any Person to cause) any change in any right, power, privilege,
duty or obligation of any Loan Party under or in connection with,

                                (i)     the Governing Documents of any Loan Party or any general
partner or managing member of any Loan Party, if applicable,

                                (ii)    any contractual obligations creating, evidencing or
securing any Indebtedness to which any Loan Party is a party or by which it or
any of its properties (now owned or hereafter acquired) may be subject or bound,
or

                                (iii)   any other contractual obligation of any Loan Party,
where the violation, conflict, breach or default, or result, is, has or would be
reasonably likely to be or have a Material Adverse Effect, or

                (c)     require the consent of, or notice to, any Person pursuant
to any of the items referenced in clauses (i), (ii) or (iii) of Section 4.5(b)
above, which consent has not been obtained or which notice has not been given.

        4.6     Labor Matters

                (a)     Except as set forth on 
Schedule 4.6 (i) no employee of any Loan Party is represented by a labor
union, no labor union has been certified or recognized as a representative of
any such employee, and no Loan Party has any obligation under any collective
bargaining agreement or other agreement with any labor union or any obligation
to recognize or deal with any labor union, and there are no such contracts or
other agreements pertaining to or which determine the terms or conditions of
employment of any employee of any Loan Party; (ii) Borrower has no knowledge of
any pending or threatened representation campaigns, elections or proceedings;
(iii) Borrower has no knowledge of any strikes, slowdowns or work stoppages of

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any kind, or threats thereof, and no such activities occurred during the
24-month period preceding the date hereof; (iv) no Loan Party has engaged in,
admitted committing or been held to have committed any material unfair labor
practice; and (v) there are no controversies or grievances between any Loan
Party and any of its employees or representatives thereof, except, in the case
of this clause (v), for any such controversies or grievances which, either
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

                        (b)     Except as set forth on Schedule 4.6, each
Loan Party has at all times complied in all material respects, and is in
material compliance with, all applicable laws, rules and regulations respecting
employment, wages, hours, compensation, benefits, and payment and withholding of
taxes in connection with employment.

                        (c)     Except as set forth on Schedule 4.6, the
Loan Parties have at all times complied in all material respects with, and are
in material compliance with, all applicable laws, rules and regulations
respecting occupational health and safety, whether now existing or subsequently
amended or enacted, including the Occupational Safety & Health Act of 1970, 29
U.S.C. Section 651 et seq. analogous state laws, rules and regulations, all as
amended or superseded from time to time, and any common law doctrine relating to
worker health and safety.

        4.7     
Absence of Undisclosed Liabilities. Except as set forth on Schedule 4.7 or as
referred to or provided for in the most recent financial statements delivered
pursuant to Section 6.2, no Loan Party has any liability or obligation of any
nature whatever (whether absolute, accrued, contingent or otherwise, whether or
not due), except liabilities or obligations that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

        4.8     Accurate and
Complete Disclosure. No representation or warranty made at any time by any
Loan Party pursuant to or in connection with this Agreement or the other Loan
Documents, and no statement made at any time by any Loan Party in any financial
statement, certificate, report, exhibit or document furnished by it or on its
behalf to Administrative Agent or any Lender pursuant to or in connection with
this Agreement or the other Loan Documents, was false or misleading in any
material respect (including by omission of material information necessary to
make such representation, warranty or statement not misleading) at the time made
or deemed made. There is no fact known to the Borrower which materially
adversely affects, or which could reasonably be expected to materially adversely
affect, the business, assets, results of operations, financial condition or
prospects of the Borrower and its Subsidiaries taken as a whole, exclusive of
effects resulting from changes in general economic conditions.

        4.9     Existing
Indebtedness. No Loan Party has any Indebtedness except Indebtedness
created by or permitted under the Loan Documents. All Indebtedness of the Loan
Parties on the Closing Date is listed on Schedule 4.9 hereto.

        4.10     Margin
Regulations. No part of the proceeds of the Revolving Credit Loans
will be used for the purpose of buying or carrying any "margin stock," as such
term is used in Regulations G and U of the Board of Governors of the Federal
Reserve System, as amended from time-to-time, or to extend credit to others for
the purpose of buying or carrying any 

-39-

"margin stock." No Loan Party is engaged in the business of
extending credit to others for the purpose of buying or carrying margin stock.
No Loan Party owns directly or indirectly any "margin stock" (as defined in
Regulation U of the Board of Governors of the Federal Reserve System, as
supplemented from time to time). Neither the making of the Revolving Credit
Loans nor any use of proceeds of the Revolving Credit Loans will violate or
conflict with the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System as amended from time to time. 

        4.11     
Projections. The most recent projections delivered by Borrower
pursuant to Section 6.2(e) were prepared on the basis of the accompanying
assumptions and estimates. The most recent such projections, assumptions and
estimates, as of the date of preparation thereof and as of the date of this
representation, are reasonable, are made in good faith and represent Borrower's
best judgment as to such matters on the date thereof. Nothing contained in this
Section shall constitute a representation or warranty that such future financial
performance or results of operations will in fact be achieved.

        4.12     
Subsidiaries, Partnerships, etc.  
Set forth on Schedule 4.12 is a complete and
correct list of all Subsidiaries of Borrower, together with, for each such
Subsidiary, (a) the correct name and jurisdiction of organization of such
Subsidiary, (b) each Person holding ownership interests in such Subsidiary and
(c) the nature of the ownership interests held by each such Person and the
percentage of ownership of such Subsidiary represented by such ownership
interests. Except as disclosed on Schedule 4.12, (i) each Borrower
and its respective Subsidiaries owns, free and clear of Liens (other than Liens
permitted hereunder), and has the unencumbered right to vote, all outstanding
ownership interests in each Person shown to be held by it in Schedule 4.12,
(ii) all of the issued and outstanding capital stock of each such Person
organized as a corporation is validly issued, fully paid and nonassessable and
(iii) there are no outstanding Equity Rights with respect to such Person. As of
the date of this Loan Agreement, the authorized, issued and outstanding capital
stock of the Borrower and its Subsidiaries consists of the capital stock
described on Schedule 4.12, all of which is duly and validly
issued and outstanding, fully paid and nonassessable. The Inactive Subsidiaries
do not engage in any business or activity of any kind and no Inactive Subsidiary
owns assets having a total book value in excess of $250,000 in the aggregate
(other than intercompany receivables reflected on the books of such Inactive
Subsidiaries as to which no cash has been or will be paid by the Borrower or any
Subsidiary to such Inactive Subsidiaries). Except as set forth on 
Schedule 4.12, no Loan Party is a partner (general or limited) of any
partnership, is a party to any joint venture, is a member of a limited liability
company, or is an owner (beneficially or of record) of any Equity Interest in
any Person (including, but not limited to, any interest pursuant to which
Borrower has or may in any circumstance have an obligation to make capital
contributions to, or be generally liable for or on account of the liabilities,
acts or omissions of such other Person).

        4.13     No Defaults on
Other Agreements; Adverse Contracts. Schedule 4.13 hereto is a complete and
correct list, as of the date of this Agreement of each contract and arrangement
to which any Loan Party is a party for which breach, nonperformance,
cancellation or failure to renew could reasonably be expected to have a Material
Adverse Effect. True and complete copies of each agreement listed on the
appropriate part of Schedule 4.13 have been delivered to the
Administrative Agent, together with all amendments, waivers and other
modifications thereto. All such agreements are valid, subsisting, in full force
and effect, are currently binding 

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and will continue to be binding upon each Loan Party that is
a party thereto and, to the best knowledge of the Borrower, binding upon the
other parties thereto in accordance with their terms. No Loan Party is in
default in any material respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument material to its business to which it is a party. No Loan Party is a
party to or subject to any long term lease, forward purchase contract or futures
contract, covenant not to compete, or other agreement, or subject to any charter
or corporate restriction which, in each case, materially adversely restricts its
ability to conduct its business, or has or could reasonably be expected to have
a Material Adverse Effect.

        4.14     Litigation. Except as set forth in Schedule 4.14
hereof, there is no pending or, to Borrower's knowledge, threatened action,
suit, claim, proceeding or investigation by or before any Governmental Authority
against or affecting any Loan Party as to which, individually or in the
aggregate, a ruling adverse to a Loan Party could reasonably be expected to have
a Material Adverse Effect.

        4.15     Absence of
Events of Default. No event has occurred and is continuing and no
condition exists which constitutes an Event of Default or a Potential Default.

        4.16     Insurance. Each Loan Party maintains with reputable insurers the
insurance required by this Agreement.

        4.17     Title to
Property; Security Interest. Each Loan Party has good title to all property of
whatever nature owned or purported to be owned by it (except for minor defects
in title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes),
in each case free and clear of all Liens, other than Permitted Liens. The
Security Documents when executed, together with the filing of the appropriate
Uniform Commercial Code financing statements in favor of Administrative Agent,
create valid and perfected first priority liens on and security interests in the
Collateral intended to be covered thereby (subject to Permitted Liens) securing
the payment of the Obligations.

        4.18     Intellectual
and Other Property. Each Loan Party owns, or is licensed or otherwise has
the right to use, all the patents, trademarks, service marks, franchises, names
(trade, service, fictitious or otherwise), copyrights, technology (including,
but not limited to, all equipment, and computer programs and software),
processes, databases and other rights, necessary to own and operate its
properties and to carry on its business as presently conducted and presently
planned to be conducted without conflict with the rights of others except for
any such violations that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. To the Borrower's knowledge,
no such license, patent, trademark or right has been declared invalid, been
limited by any court or by any agreement to which any Loan Party is a party or
is the subject of any infringement, interference or other proceeding or
challenge which could reasonably be expected to have a Material Adverse Effect.
Set forth on Schedule 4.18 hereto is a complete list of all
Patents, Trademarks and registered Copyrights (each of the foregoing, together
with any other intellectual property material to the business of the Borrower
and its Subsidiaries being referred to herein as "Proprietary Rights").
Schedule 4.18 clearly identifies all Patents, Trademarks and
registered Copyrights that have been duly registered in, filed in or issued by
the PTO or the United States Register of Copyrights  

-41-

(collectively, the "Registered
Proprietary Rights"). The Registered Proprietary Rights have been
properly maintained and renewed in accordance with all applicable provisions of
law and administrative regulations in the United States, as applicable. The
Borrower has taken commercially reasonable steps to protect the Registered
Proprietary Rights and to maintain the confidentiality of all Proprietary Rights
that are not generally in the public domain.

        4.19     Taxes. Except as set forth on Schedule 4.19
hereto, all tax and information returns required to be filed by or on behalf of
any Loan Party have been properly prepared, executed and filed or appropriate
extensions have been properly obtained and remain in effect. All taxes,
assessments, fees and other governmental charges upon any Loan Party or upon any
of its properties, incomes, sales, use or franchises (collectively, "Taxes")
which are due and payable have been paid other than those not yet delinquent and
payable without premium or penalty, and except for those not material in amount
which are being diligently contested in good faith by appropriate proceedings,
and in each case adequate reserves and provisions for taxes have been made on
the books of such Loan Party. The reserves and provisions for taxes on the books
of each Loan Party are adequate for all open years and for its current fiscal
period. Borrower does not know of any proposed additional assessment or basis
for any material assessment for additional taxes against any Loan Party (whether
or not reserved against) which could reasonably be expected to have a Material
Adverse Effect.

        4.20     Employee
Benefits. Schedule 4.20 hereof sets forth a list of
all Plans and Multiemployer Plans. Except as set forth in Schedule 4.20
hereof, no Loan Party or Controlled Group Member has any liability (contingent
or otherwise) for or in connection with, and none of their respective properties
is subject to a Lien in connection with, any Pension-Related Event.

        4.21     
Environmental Matters. Except as set forth on Schedule 4.21 hereto:

                    (a)     Each Loan Party and, to Borrower's knowledge, each of its
Environmental Affiliates, is and has been in compliance with all applicable
Environmental Laws, except for Environmental Laws the violation of which could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

                    (b)     All material Environmental Approvals necessary for the
ownership and operation of Borrower's business, and the facilities and
businesses of the Loan Parties as presently owned and operated and as presently
proposed to be owned and operated have been duly obtained and are in full force
and effect.

                    (c)     There is no material Environmental Claim pending or, to
Borrower's knowledge, threatened, and, to Borrower's knowledge, there are no
present acts, omissions, events or circumstances and, to Borrower's knowledge,
no past acts, omissions, events or circumstances, including, but not limited to,
any dumping, leaching, deposition, removal, abandonment, escape, emission,
discharge or release of any Environmental Concern Material at, on or under any
facility or property now or previously owned, operated or leased by any Loan
Party or, to Borrower's knowledge, any of their respective Environmental
Affiliates, that could form the basis of any material Environmental Claim
against any Loan Party or any of their respective Environmental Affiliates.

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                    (d)     To Borrower's knowledge, no real estate at any time owned
or leased by any Loan Party is located, in whole or in part, on an Environmental
Cleanup Site. Neither any Loan Party nor, to Borrower's knowledge, any of its
Environmental Affiliates, has directly transported or directly arranged for the
transportation of any material quantities of Environmental Concern Materials to
any Environmental Cleanup Site. No Lien exists and, to Borrower's knowledge, no
condition exists which could reasonably be expected to result in the filing of a
Lien against any property of any Loan Party or any of their respective
Environmental Affiliates under any Environmental Law.

        4.22     No Guaranties or
Indemnities. Except for guaranties and indemnities under the Loan
Documents or as set forth on Schedule 4.22 hereto, or entered into
after the date hereof and permitted under Section 7.2 hereof, no Loan Party is
obligated on any Guaranty or any indemnification of any kind for the debts,
liabilities or obligations of any Person, including any Affiliate, other than
indemnities and hold harmless provisions entered into in favor of customers,
bonding agencies and sureties in the ordinary course of business.

        4.23     Potential
Conflicts of Interest. No Loan Party or Affiliate of a Loan Party has any
material contract, agreement or arrangement with any Loan Party (the "Contracting
Party") that is not an arm's length agreement on terms substantially
equivalent to those terms contained in similar agreements or arrangements
between such Contracting Party and unrelated third parties.

        4.24     Bank Accounts. Schedule 4.24 lists all banks and other
financial institutions at which any Loan Party maintains deposits and/or other
accounts as of the date of this Loan Agreement, and such Schedule correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number.

        4.25     Trade Relations. There exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between any Loan Party and any customer or any group of customers
whose purchases of goods or services individually or in the aggregate are
material to the business of such Loan Party, or with any material supplier, and
there exists no present condition or state of facts or circumstances which would
materially adversely affect any Loan Party or prevent such Loan Party from
conducting its businesses after the consummation of the transactions
contemplated by this Agreement in substantially the same manner in which such
businesses heretofore have been conducted.

        4.26     
Financial Information. The Borrower has delivered to the Administrative Agent
(a) consolidated balance sheets, statements of operations, shareholders' equity
and cash flows of the Borrower for its fiscal years ending December 31, 2004 and
December 31, 2003, audited by KPMG LLP, certified public accountants and (b)
consolidated balance sheets, statements of operations, shareholders' equity and
cash flows of the Borrower for its fiscal years ending December 31, 2002 and
December 31, 2001 audited by Deloitte & Touche LLP, certified public
accountants. Except as disclosed on Schedule 4.26, such financial
statements fairly present the consolidated results of operations and financial
condition of the Borrower for the periods indicated.

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        4.27     
Investment Company Act; Public Utility Holding Company
Act. None of the Loan Parties is an "investment company" or
an affiliated person" of, or "promoter" or "principal underwriter" for, or a
company "controlled" by, an investment company, each within the meaning of the
Investment Company Act of 1940, as amended. No Loan Party is a "holding
company" or a "subsidiary company" of a "holding company", or
an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", each within the meaning of the
Public Utility Holding Company Act of 1935, as amended. 

        4.28    
No Material Adverse Change. Since the date of the most recent audited financial
statements delivered pursuant to Section 6.2 hereof, there has been no material
adverse change in the business, assets, operations or condition (financial or
otherwise) of any Loan Party (other than Inactive Subsidiaries).

        4.29     
Survival of Representations and Warranties. All representations and warranties contained in this
Agreement and the other Loan Documents shall survive the execution and delivery
of this Agreement.

5. CONDITIONS OF LENDING.

        5.1     Conditions of Revolving Credit
Loans. Subject to Section 5.2, Lenders' obligations to make
the Revolving Credit Loans, and Bank's obligations to issue, amend, renew or
extend any Letter of Credit, shall be conditioned upon satisfaction of each of
the following conditions on or before the Closing Date (in the case of
documentation, each such document to be in form and substance satisfactory to
the Administrative Agent):

                (a)     Agreement, Revolving Credit Notes, Loan Documents.
The Administrative Agent shall have received an executed counterpart of this
Agreement, duly executed by Borrower, the Revolving Credit Notes duly executed
by Borrower and conforming to the requirements hereof and all of the other Loan
Documents, duly executed on behalf of each Loan Party intended to be a party
thereto.

                 (b)      Certain Security Documents Pertaining to Personal
Property. The Administrative Agent shall have received the following:

                            (i)     Evidence of (A) the execution or delivery, as applicable,
of all documents to be recorded or filed pursuant to or with respect to the
Security Documents as may be necessary or desirable to create or perfect the
Liens created or purported to be created by such Security Documents as valid,
continuing and perfected Liens in favor of Administrative Agent securing the
Obligations, prior to all other Liens except for Permitted Liens and (B) the
delivery of all such documents to the appropriate party for recording or filing,
as the case may be; and evidence of the payment of any necessary fee, tax or
expense relating to each such recording or filing. 

                            (ii)     Evidence of the insurance required by the terms of this
Agreement.

                           (iii)    Evidence that all other actions necessary or desirable
to create, perfect or protect the Liens created or purported to be created by
the Security Documents have been taken.

-44-

                           (iv)    Searches, satisfactory to the Administrative Agent, of UCC, tax, judgment, and litigation dockets and records and other appropriate
registers shall have revealed no filings or recordings in effect with respect to
the Collateral purported to be covered by the above Security Documents or the
assets of Borrower's Domestic Subsidiaries, other than filings with respect to
Permitted Liens, and the Administrative Agent shall have received a copy of the
search reports received as a result of such searches and of copies of the
financing statements or other instruments required to be filed or recorded
pursuant to this subsection.

                (c)     Corporate, Partnership and/or Limited Liability
Company Proceedings. The Administrative Agent shall have received
certificates of the Secretary, or other officer acceptable to the Administrative
Agent, of each Loan Party, other than the Inactive Subsidiaries, and of its
general partner, manager or managing member, where applicable, dated as of the
Closing Date as to (i) true, correct and complete copies of the Governing
Documents of such Loan Party and of each general partner, manager or managing
member of such Loan Party, in each case in effect on such date, (ii) true copies
of all corporate, partnership and limited liability company action taken by such
Loan Party, and its general partner or managing member, if applicable, relative
to this Agreement and the other Loan Documents and (iii) the incumbency and
signature of the respective officers of such Loan Party (or its general partner
or managing member on its behalf) executing this Agreement and the other Loan
Documents, together with evidence satisfactory to the Administrative Agent of
the incumbency of such Secretary, or other officer acceptable to the
Administrative Agent. The Administrative Agent shall have received certificates
from the appropriate Secretaries of State or other applicable Governmental
Authorities dated not more than thirty (30) days before the Closing Date showing
the good standing of each Loan Party, other than the Inactive Subsidiaries, and
its general partner or managing member, if applicable, in its state of
incorporation or organization and each state in which it is qualified to do
business.

                (d)     Legal Opinion. The Administrative Agent
shall have received (i) an opinion addressed to it, dated the Closing Date, of
counsel to Borrower as to such matters as may be requested by the Administrative
Agent and (ii) such opinions of local counsel as the Administrative Agent shall
request.

                (e)     Material Adverse Change. There shall have
been no material adverse change in Borrower's projected ability to achieve the
most recent annual projections delivered to Administrative Agent pursuant to
Section 6.2(e) hereof, or in the business, operations or condition (financial or
otherwise) of any Loan Party or the Collateral or any material adverse change in
United States financial markets which, in the judgment of the Administrative
Agent, could reasonably be expected to adversely affect the ability of the
Administrative Agent to enforce any right or remedy under or in connection with
any Loan Document, or prevent the realization of the intended rights and
benefits of Administrative Agent under such Loan Document. 

                (f)     Payment of Fees. Borrower shall have paid
or provided for payment of all of the fees and expenses owed by Borrower to the
Administrative Agent.

                (g)     Termination or Assignment of Existing Indebtedness
and Liens. The Administrative Agent shall have received evidence
acceptable to it that (i) all Indebtedness of  

-45-

Borrower to J.P. Morgan Business
Credit Corp., acting through JPMorgan Chase Bank and the other Lenders party to
an Amended and Restated Secured Credit Agreement dated as of May 9, 2002, as
amended, and any other third party Indebtedness not permitted by Section 7.2,
has been repaid in full, and, (ii) all Liens securing such Indebtedness, shall
have been terminated, discharged, and released. The Administrative Agent shall
have received executed releases (in the form of payoff letters, termination
statements, discharges or assignments of mortgage and/or any other assignment,
release or termination of documents requested by the Administrative Agent)
or have agreed to an acceptable escrow arrangement in connection with the
delivery thereof, together with the original stock certificates and stock powers
executed in blank pursuant to the Pledge Agreements, all in form and substance
satisfactory to the Administrative Agent.

                (h)     Legal Fees. Borrower shall have paid the
reasonable legal fees, expenses and disbursements of counsel to the
Administrative Agent in connection with this Agreement, the other Loan Documents
and the Revolving Credit Loans. 

                (i)     Representations and Warranties. The
representations and warranties set forth in this Agreement and in the Loan
Documents shall be true, correct and complete on the Closing Date.

                (j)       No Event of Default. No Event of Default or
Potential Default shall have occurred and be continuing on the Closing Date.

                (k)    Officer's Certificate. The Administrative
Agent shall have received a certificate of a senior officer of Borrower, dated
the date hereof, to the effect that (i) no Event of Default or Potential Default
has occurred and is continuing; (ii) Borrower is in compliance with each of the
covenants herein and in the Loan Documents; and (iii) the representations and
warranties made by Borrower in Section 4 of this Agreement, and in the Loan
Documents, are true on and as of the date hereof with the same force and effect
as if made on and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date).

                (l)     No Orders or Decrees. No Governmental
Authority having jurisdiction in the premises shall have entered a decree or
order for relief in respect of any Loan Party or any material portion of the
Collateral under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of any Loan Party or any
material portion of the Collateral or for any substantial part of the property
of any Loan Party or ordering the winding up or liquidation of the affairs of
any thereof.

                (m)    No Material Litigation. There shall exist
no action, suit, investigation, litigation, arbitration or proceeding pending
or, to the Borrower's knowledge, threatened against or affecting any of the Loan
Parties or any of their respective property or assets in any court or before any
arbitrator or by or before any Governmental Authority of any kind that (i)
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or (ii) purports to affect any aspect of the
transactions contemplated hereby, any of the Loan Documents or the transactions
contemplated thereby.

-46-

                (n)     Contingent Liabilities. The Administrative
Agent shall be reasonably satisfied with the amount and nature of all tax, ERISA,
employee retirement benefit and other contingent liabilities to which any Loan
Party may be subject.

                (o)     Solvency Certificate. The Administrative
Agent shall have received a certificate of an Authorized Representative of
Borrower, in form and substance satisfactory to Administrative Agent, that
Borrower is Solvent, immediately before and immediately after giving effect to
the transactions contemplated by the Loan Documents.

                (p)     Proceedings Generally; Details, Proceedings and
Documents. The Administrative Agent shall have received such other
certificates, opinions, documents and instruments as may be reasonably requested
by the Administrative Agent. All corporate and other proceedings, and all
documents, instruments, reports, agreements and other matters required by this
Section 5.1 or otherwise delivered in connection with the Closing in respect of
transactions contemplated by this Agreement and the other Loan Documents shall
be reasonably satisfactory in form and substance to the Administrative Agent.
All legal details and proceedings in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be reasonably
satisfactory to the Administrative Agent and its counsel, and the Administrative
Agent shall have received all such counterpart originals or certified or other
copies of such documents and proceedings in connection with such transactions,
in form and substance reasonably satisfactory to the Administrative Agent, as
the Administrative Agent may from time to time request. 

        5.2    
Conditions of Each Advance Under Revolving
Credit Loan. The obligations of the Lenders to make any advance
under the Revolving Credit Loan, or of the Bank to issue, amend, renew or extend
any Letter of Credit, shall be conditioned upon satisfaction of each of the
following conditions on the date of such advance or the date of issuance,
amendment, renewal or extension of such Letter of Credit:

                   
(a)    
No Event of Default. No Event of Default or Potential
Default shall have occurred and be continuing.

                  
(b)    
No Orders or Decrees. At the time of such advance, no
Governmental Authority having jurisdiction in the premises shall have entered a
decree or order for relief in respect of any Loan Party under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of any Loan Party or for any substantial part of the
property of any Loan Party or ordering the winding up or liquidation of the
affairs of any thereof.

                   
(c)    
No Excess Borrowing. At the time of, and immediately
following such advance, the total principal sum outstanding under the Revolving
Credit Notes plus the L/C Amount does not exceed the lesser of the Borrowing
Base and the Revolving Credit Facility

                   
(d)    
Request for Advance. The Administrative Agent shall
have received a request for advance in accordance with Section 2.1(b) hereof.

                   
(e)    
Material Adverse Change. There shall have been no material
adverse change in Borrower's projected ability to achieve the most recent annual
projections delivered to 

-47-

Administrative Agent pursuant to Section 6.2(e) hereof, or in
the business, operations or condition (financial or otherwise) of any Loan Party
or any material adverse change in United States financial markets which could,
in the judgment of the Administrative Agent, adversely affect the ability of the
Administrative Agent to enforce any right or remedy under or in connection with
any Loan Document, or prevent the realization of the intended rights and
benefits of Administrative Agent under such Loan Document.

                   
(f)    
Representations and Warranties. The representations
and warranties set forth in this Agreement and in the Loan Documents shall be
true, correct and complete as of the date of such requested advance and the same
shall be deemed remade by the Borrower as of such specific date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).

                   
(g)    
Proceedings Generally; Details, Proceedings and Documents.
All corporate and other proceedings, and all documents, instruments,
reports, agreements and other matters required by this Section 5.2 or otherwise
delivered in connection with the requested advance shall be reasonably
satisfactory in form and substance to the Administrative Agent. All legal
details and proceedings in connection with the requested advance shall be
reasonably satisfactory to the Administrative Agent and its counsel and the
Administrative Agent shall have received all such counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions, in form and substance reasonably satisfactory to the
Administrative Agent, as the Administrative Agent may from time to time request.

6. AFFIRMATIVE COVENANTS. During the term of this Agreement and so long as any of
the Obligations, other than Continuing Obligations, remain unpaid, any Letter of
Credit remains outstanding or any Lender shall have any Revolving Credit
Commitment under this Agreement:

        6.1     Payment. Borrower will duly and punctually make payments of
principal and interest on all Indebtedness incurred by it pursuant to this
Agreement, including the Revolving Credit Loans and Reimbursement Obligations
and all fees, disbursements, expenses and other amounts required to be paid by
it pursuant to the Loan Documents in the manner set forth in the Loan Documents.

        6.2     Basic Reporting
Requirements.

                (a)     
Annual Audit Reports. As soon as practicable, and in any event within
ninety (90) days after the close of each fiscal year of Borrower, Borrower shall
deliver to the Administrative Agent consolidated statements of income, cash
flows and changes in stockholders' equity of Borrower and its consolidated
subsidiaries for such fiscal year, consolidated balance sheets of Borrower and
its consolidated subsidiaries as of the close of such fiscal year, and notes
thereto, all in reasonable detail, setting forth in comparative form the
corresponding figures for the preceding fiscal year. Such financial statements
shall be accompanied by an unqualified opinion of independent certified public
accountants of recognized national standing selected
by Borrower. Such opinion shall be free of exceptions other than exceptions for
accounting changes or for matters relating solely to internal controls which do
not affect the reported values of the Collateral and which are not reasonably
likely to result in a violation of Section 6.7(a) or (b) hereof. Such opinion in
any event shall contain a  

-48-

 written statement of such accountants substantially to
the effect that (i) such accountants examined such financial statements in
accordance with generally accepted auditing standards and accordingly made such
tests of accounting records and such other auditing procedures as such
accountants considered necessary in the circumstances and (ii) in the opinion of
such accountants such financial statements present fairly in all material
respects the financial position of Borrower and its consolidated subsidiaries as
of the end of such fiscal year and the results of operations and cash flows and
changes in stockholders' equity for such fiscal year, in conformity with GAAP.
Each annual audited financial statement delivered pursuant to this Agreement
shall be accompanied by a schedule of Indebtedness and liabilities and a
description of material liens, judgments and litigation. 

                (b)     Quarterly Reports. As soon as practicable,
and in any event within forty-five (45) days after the close of each calendar
quarter of each fiscal year of Borrower, Borrower shall deliver to
Administrative Agent unaudited consolidated statements of income and cash flows
for such calendar quarter and for the period from the beginning of such fiscal
year to the end of such calendar quarter and unaudited consolidated balance
sheets of Borrower and its consolidated subsidiaries as of the close of such
calendar quarter, all in reasonable detail, setting forth in comparative form
the corresponding figures for the same periods or as of the same date during the
preceding fiscal year (except for the balance sheets, which shall set forth in
comparative form the corresponding balance sheets as of the prior fiscal year
end). Such financial statements shall be certified by the chief financial
officer of Borrower as presenting fairly the financial position of Borrower and
its consolidated subsidiaries as of the end of such calendar quarter and the
results of operations and cash flows for such fiscal year, in conformity with
GAAP, subject to normal and recurring year-end audit adjustments. With respect
to those financial statements which are required to be certified by the chief
financial officer of Borrower, such certification shall state that such
financial statements are complete and correct, were prepared in accordance with
GAAP (except for year end adjustments and footnotes) and fairly present the
financial condition at the respective dates indicated therein and the results of
operations for the respective periods indicated therein of Borrower and its
consolidated subsidiaries.

                (c)     Financial Reports. Borrower shall furnish
to the Administrative Agent, within seventeen (17) days after the end of each
month, each of the following, certified by an Authorized Representative: (i) a
completed borrowing base certificate in the form attached hereto as 
Exhibit C, and (ii) an accounts receivable aging report listing billed
and unbilled accounts receivable separately and dividing the latter into those
where IBM STG is the account debtor and those where it is not. Borrower shall
furnish such detail, and supporting documentation, with respect to IBM STG
Receivables and IBM STG Indebtedness as the Administrative Agent shall from time
to time request.

                (d)     Compliance Certificate. Borrower shall
furnish to the Administrative Agent, within forty-five (45) days after the end
of each calendar quarter, a completed Compliance Certificate in the form
attached hereto as Exhibit D, and executed by an Authorized
Representative; 

                (e)     Budget and Projections.
Within ninety (90) days after the end of each fiscal year of Borrower, Borrower
shall submit to Administrative Agent an annual budget, 

-49-

income forecast and annual cash flow projections for Borrower
and its Subsidiaries for the next fiscal year, which projections will be
accompanied by a written statement of the assumptions and estimates underlying
such projections. 

                (f)     Other Information. Borrower shall deliver
to Administrative Agent, (i) contemporaneously with the filing thereof, copies
of all materials and reports filed with the Securities and Exchange Commission,
(ii) with reasonable promptness, such collection reports, deposit records,
equipment schedules, copies of reports and other financial and other information
respecting the financial condition, business or operations of any Loan Party as
Administrative Agent may from time to time request.

                (g)     Notice of Certain Events. Promptly upon
becoming aware of any of the following, Borrower shall give Administrative Agent
notice thereof, together with a written statement of an Authorized
Representative of Borrower setting forth the details thereof and any action with
respect thereto taken or proposed to be taken by Borrower:

                            (i)     Any Event of Default or Potential Default.

                          (ii)    Any change in the business, operations or condition
(financial or otherwise) or prospects of any Loan Party that could reasonably be
expected to have a Material Adverse Effect.

                          (iii)   Any pending or threatened action, suit, proceeding or
investigation by or before any Governmental Authority against or affecting any
Loan Party (collectively, "Actions") (i) seeking a recovery against the Borrower
in excess of $1,000,000 or (ii) which, if adversely determined, could, when
aggregated with all other Actions, reasonably be expected to have a Material
Adverse Effect.

                          (iv)  Promptly upon knowledge thereof, the Borrower will
deliver to the Administrative Agent notice of (i) any disputes or claims by the
Borrower's customers or suppliers exceeding $500,000 individually or $1,000,000
in the aggregate during any fiscal year; (ii) credit memos exceeding $500,000
individually or $1,000,000 in the aggregate during any fiscal year; and
(iii) any goods returned to or recovered by the Borrower the aggregate value of
which exceeds $1,000,000 during any fiscal year.

                          (v)     Any violation, breach or default by any Loan Party of or
under any agreement or instrument to which such Loan Party is a party that could
reasonably be expected to have a Material Adverse Effect.

                          (vi)     Any Pension-Related Event, which notice shall be
accompanied by a copy of any notice, request, return, petition or other document
received by any Loan Party or any Controlled Group Member from any Person, or
which has been or is to be filed with or provided to any Person (including the
Internal Revenue Service, PBGC or any Plan participant, beneficiary, alternate
payee or employer representative), in connection with such Pension-Related
Event.

                          (vii)    
Any Environmental Claim pending or threatened against any Loan Party or any of
its Environmental Affiliates, or any past or present acts, omissions, events or 

-50-

circumstances (including, but not limited to, any dumping,
leaching, deposition, removal, abandonment, escape, emission, discharge or
release of any Environmental Concern Material at, on or under any facility or
property now or previously owned, operated or leased by any Loan Party or any of
its Environmental Affiliates) that could form the basis of such Environmental
Claim, which Environmental Claim, if adversely resolved, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

                        (viii)     notice of any loss of or material damage to any
Collateral having a value in the aggregate in excess of $500,000 or of any
substantial adverse change in any Collateral having a value in the aggregate in
excess of $500,000 or the prospect of payment thereof.

                (h)     Visitation; Verification. Upon reasonable
prior notice, Borrower shall, and shall cause each Subsidiary to, permit
Administrative Agent and/or its accountants, attorneys or other agents to visit
its offices, to examine its books and records and take copies and extracts
therefrom and to discuss its affairs with each Loan Party (and the officers and
directors thereof) and its independent accountants at such times as
Administrative Agent may request. Borrower hereby irrevocably authorizes such
officers and directors and independent accountants to discuss with
Administrative Agent the affairs of each Loan Party. Administrative Agent shall
have the right to examine and verify accounts, equipment, inventory and other
properties and liabilities of each Loan Party from time to time, and Borrower
shall cooperate with Administrative Agent in such verification. Borrower shall
pay, on demand, Administrative Agent's reasonable fees and expenses in
connection with such inspection and examination; 
provided, however, that unless an Event of Default or Potential Default then
exists, the Borrower shall not be obligated to reimburse Administrative Agent
for inspections and examinations occurring more than once per fiscal year.

        6.3     Insurance. Borrower shall, and shall cause each of its
Subsidiaries to obtain and at all times maintain insurance with responsible
insurance carriers in such amounts and against such risks as may from time to
time be required by the Administrative Agent, but in all events in such manner
and to the extent that like properties are usually insured by other companies
engaged in business of a similar character in the same general localities.
Without limiting the generality of the foregoing, Borrower shall and shall cause
each of its Subsidiaries to maintain insurance (a) against fire, theft,
collision (for Collateral consisting of motor vehicles) and other hazards on all
of its property so insurable, including business interruption insurance,
including coverage for force majeure and (b) against liability on account of
damage to persons or property and under all applicable workers' compensation
laws. Borrower shall deliver promptly to Administrative Agent upon request,
certificates of insurance evidencing those insurance policies required to be
carried by the Borrower and its Subsidiaries pursuant hereto. All policies,
other than worker's compensation policies, evidencing the insurance required by
the preceding sentence shall name the Administrative Agent as additional insured
and loss payee as its interests may appear and shall provide for at least thirty
(30) days written notice to the Administrative Agent prior to cancellation,
lapse, reduction in policy limits or material change in coverage.

        6.4     Payment of
Taxes and Other Potential Charges and Priority Claims. Borrower shall, and shall cause each Subsidiary to, pay
or discharge:

-51-

                (a)     on or prior to the date on which penalties attach
thereto, all Taxes;

                (b)    on or prior to the date when due, all lawful claims of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons
which, if unpaid, could result in the creation of a Lien upon any Collateral;
and

                (c)    on or prior to the date when due, all other lawful claims
which, if unpaid, could result in the creation of a Lien upon any Collateral or
which, if unpaid, could give rise to a claim entitled to priority over general
creditors of Borrower or such Loan Party in a case under Title 11 (Bankruptcy)
of the United States Code, as amended;

provided that, unless and until foreclosure, distraint, levy, sale or
similar proceedings shall have been commenced, Borrower need not pay or
discharge any such tax, assessment, charge or claim so long as (x) the validity
thereof is contested in good faith and by appropriate proceedings diligently
conducted and (y) such reserves or other appropriate provisions as may be
required by GAAP shall have been made therefor.

        6.5     Preservation
of Status. Except as may be permitted herein, Borrower shall, and
shall cause each Subsidiary to, maintain its status, as the case may be, as a
corporation, partnership, limited liability company or other entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation, and, unless failure to do so could not reasonably be
expected to have a Material Adverse Effect, be duly qualified to do business as
a foreign corporation, partnership or limited liability company as the case may
be, and in good standing in all jurisdictions in which the ownership of its
properties or the nature of its business or both make such qualification
necessary or advisable.

        6.6     Conduct of Business. Borrower shall continue, and cause each of its Domestic
and Foreign Subsidiaries to continue, to engage in an efficient and economical
manner in a business of the same general type as conducted by it on the date of
this Agreement.

        6.7     
Financial Covenants.

                (a)     Maximum Leverage Ratio. The Borrower will
maintain, as of the end of any fiscal quarter ending during each period
described below, its ratio of (i) (A) total Funded Indebtedness outstanding at
the end of such fiscal quarter, less (B) IBM STG Eligible Indebtedness, to (ii)
EBITDA for the four (4) fiscal quarters ending on such date taken as one
accounting period ("Leverage Ratio"), at not more than the ratio
set forth opposite such period.

	
    

    Quarter
	
    Maximum Leverage Ratio

    
    
	
     	
     
	
    From the Closing Date through July 1, 2005
	
    3.50 to 1.00

	
     	
     
	
    From July 2, 2005 through September 30, 2005
	
    3.25 to 1.00

	
     	
     
	
    From October 1, 2005 through December 31, 2006 and each
    fiscal quarter thereafter
	
    3.00 to 1.00

-52-

                (b)     Minimum Tangible Net Worth. So long as this
Agreement is in effect, at all times the Tangible Net Worth of Borrower shall be
at least $18,300,000 (the "Minimum TNW Amount"). The Minimum TNW
Amount shall, as of the last day of each fiscal year of Borrower, (i) be
increased by 50% of Borrower's net profits for such fiscal year and (ii) be
adjusted to add to shareholders' equity any negative change in Borrower's
foreign currency adjustment and to subtract therefrom any positive change in
Borrower's foreign currency adjustment, in each case during such fiscal year.
The Minimum TNW Amount, as adjusted in accordance with the preceding sentence,
shall become the Minimum TNW Amount under this Section 6.7(b) for the fiscal
year commencing the day after such adjustment and shall again be adjusted on the
last day of such fiscal year as set forth herein.

                (c)     Capital Expenditures. The
Borrower will not incur or contract to incur capital expenditures of more than
$5,000,000 in the aggregate during any fiscal year.

        6.8     Protection of Collateral. The Borrower will defend the Collateral against all
Liens, claims or demands (other than Permitted Liens) of all Persons (other than
the Administrative Agent, the Lenders and the Bank) claiming the Collateral or
any interest therein. The Borrower will keep all Collateral free and clear of
all Liens except Permitted Liens. 

        6.9     Maintenance of Financial Records;
Fiscal Year. Borrower shall keep, and cause each of its Subsidiaries to
keep, adequate records and books of account, in which complete entries will be
made in accordance with GAAP, reflecting all financial transactions of the
Borrower and its Subsidiaries. To enable the ready and consistent determination
of compliance with the covenants set forth in Section 6.7 of this Agreement,
Borrower shall maintain, and shall cause each of its Subsidiaries to maintain,
December 31st of each year as the end of Borrower's or such Subsidiary's fiscal
year.

        6.10     Maintenance of
Properties. Borrower shall maintain, keep and preserve, and cause each
of its Subsidiaries to maintain, keep and preserve, all of its properties
(tangible and intangible) necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.

        6.11     Further Assurances. Borrower shall, and shall cause each Subsidiary to,
cooperate with the Administrative Agent and execute and deliver such further
agreements, instruments and documents and take such other action as
Administrative Agent (i) may from time to time request to cause Administrative
Agent to have a first priority, perfected security interest in all of Borrower's
assets, except real estate, subject only to Permitted Liens or (ii) may
reasonably request in order to carry out the intent of this Agreement, and, in
each case, such agreements, instruments and documents to be in form reasonably
satisfactory to the Administrative Agent. Borrower will pay for the filing of
all documents, including financing statements, which Administrative Agent, or
the Required Lenders, acting through the Administrative Agent, may request in
connection with this Agreement.

-53-

7.  NEGATIVE COVENANTS. During the term of this Agreement and so long as any
Obligations, other than Continuing Obligations, remain unpaid, any Letter of
Credit remains outstanding or any Lender shall have any Revolving Credit
Commitment under this Agreement:

        7.1     Liens. Borrower shall not, and shall not permit any Subsidiary
to, at any time, create, incur, assume or suffer to exist any Lien on any of its
assets, including the Collateral or agree, become or remain liable (contingently
or otherwise) to do any of the foregoing with respect to any of its assets,
including the Collateral, and neither Borrower nor any Subsidiary shall create,
incur, assume or suffer to exist any Lien on any of the outstanding Equity
Interests or Voting Interests of any Subsidiary of Borrower or take any action
to facilitate the creation of any such Lien, except, in each case, for the
following ("Permitted Liens"):

                    (a)     Liens pursuant to the Security Documents in favor of the
Administrative Agent to secure the Obligations;

                    (b)     Liens arising from taxes, assessments, charges or claims
described in Section 6.4 hereof that are (i) not yet due or, (ii) if due, that
remain payable without penalty or are being diligently contested in good faith
by appropriate proceedings and for which appropriate reserves are maintained;

                    (c)     Deposits or pledges of cash or securities in the ordinary
course of business to secure (i) workers' compensation, unemployment insurance
or other social security obligations, (ii) performance of bids, tenders, trade
contracts (other than for payment of money) or leases, (iii) stay, surety or
appeal bonds, or (iv) other obligations of a like nature incurred in the
ordinary course of business;

                    (d)     Liens on fixed or capital assets, other than real
property, securing all or part of the purchase price of, aggregate lease
obligations in respect of or costs of constructing or improving such fixed or
capital assets (including but not limited to Liens in respect of Capitalized
Leases); provided that: (i) such Liens secure Indebtedness (including
Capitalized Leases) permitted by Section 7.2(c), (ii) such Lien is created
before or substantially simultaneously with, but no later than 90 days after,
the purchase, lease, construction or improvement of such assets by any Loan
Party; (iii) such Lien is confined solely to the assets so purchased, leased,
constructed or improved; (iv) the aggregate amount secured by all such Liens on
any particular property at the time purchased, leased, constructed or improved
by such Loan Party shall not exceed the lesser of (x) the cost of acquiring,
constructing or improving such property and reasonable costs of collection of
such Indebtedness and (y) the then fair market value of such property, without
taking into account such Lien; (v) such Lien shall not apply to any other
property or assets of any Loan Party; and (vi) no Event of Default or Potential
Default has occurred and is continuing at the time of creation of such Lien;

                    (e)     Liens in existence on the Closing Date and listed on 
Schedule 7.1 hereto; and

                    (f)     Liens on assets of Borrower's Foreign Subsidiaries, 
provided that (i) each such Lien shall secure Indebtedness permitted by
Section 7.2(h) and not guaranteed by any Domestic Loan Party, (ii) no such Lien
applies to any assets of any Foreign Subsidiary consisting 

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of capital stock or other Equity Interests held in any other
Subsidiary, and (iii) no such Lien applies to any property or assets of any
Domestic Loan Party or Inactive Subsidiary;

provided, however, that no Lien in favor of any
Loan Party shall be a Permitted Lien hereunder. 

        7.2     Indebtedness. Borrower shall not, and shall not permit any Subsidiary
to, at any time, create, incur, assume or suffer to exist any Indebtedness or
agree, become or remain liable (contingently or otherwise) to do any of the
foregoing, except:

                    (a)     Indebtedness to the Administrative Agent, Lenders and
Bank pursuant to this Agreement, the Revolving Credit Notes, or the other Loan
Documents;

                    (b)     Accounts payable to trade creditors arising out of
purchases of goods or services in the ordinary course of business and accrued
payroll benefits and incentives; 

                    (c)     Unsecured Indebtedness and Indebtedness secured by Liens
permitted by Section 7.1(d) hereof and, in each case, limited to the amounts
described in Section 7.1(d) hereof, provided that the aggregate amount of
all Indebtedness outstanding under this Section 7.2(c) shall not exceed at any
time $5,000,000 less any Indebtedness outstanding at such time under
Section 7.2(h); and provided, further, however, that no Indebtedness of
any Foreign Subsidiary to any Domestic Loan Party, whether or not prohibited by
Section 7.2(d), or of any Domestic Loan Party to any Loan Party, whether or not
prohibited by Section 7.2(e), or of any Foreign Subsidiary to any third party,
whether or not prohibited by Section 7.2(h), shall be permitted under this
Section 7.2(c);

                    (d)     Indebtedness of the Foreign Subsidiaries to the Domestic
Loan Parties, provided that the aggregate principal amount of all
Indebtedness of the Foreign Subsidiaries to the Domestic Loan Parties does not
exceed $2,500,000 in the aggregate at any one time outstanding;

                    (e)     Indebtedness of the Domestic Loan Parties to the Domestic
Loan Parties or Foreign Subsidiaries, provided that, whether or not
described in Section 7.2(i), (i) such Indebtedness shall be unsecured, (ii) no
such Indebtedness shall accrue interest at a rate exceeding the then prevailing
market rate for loans made in arms' length transactions between non-affiliated
parties and (iii) such Indebtedness, (A) if to a Foreign Subsidiary shall be
subordinated to the Obligations pursuant to the Affiliate Subordination
Agreement and (B) if to a Domestic Loan Party shall be Collateral pursuant to a
Security Agreement in effect naming such Domestic Loan Party as Debtor;

                    (f)     Indebtedness of any Foreign Subsidiary to any other
Foreign Subsidiary, provided that either (i) the aggregate principal
amount of such Indebtedness does not exceed $2,500,000 in the aggregate at any
one time outstanding or (ii) the aggregate principal amount of such Indebtedness
does not exceed $5,000,000 in the aggregate at any one time outstanding and
Borrower has provided Administrative Agent notice that such Indebtedness exceeds
$2,500,000 and, if and when requested by Administrative Agent, has provided
Administrative Agent with a schedule of all then existing Indebtedness of any
Foreign Subsidiary to any other Foreign Subsidiary, including parties, amounts
and terms, which schedule will be updated by Borrower 

-55-

periodically as requested by Administrative Agent during any
period that such Indebtedness exceeds $2,500,000; 

                    (g)     Indebtedness in respect of Interest Rate Protection
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which any Loan Party is exposed in the conduct of its business or the
management of its liabilities; and

                    (h)     Indebtedness of the Foreign Subsidiaries, other than to
any Loan Party(ies) or Affiliate(s), in an aggregate amount not to exceed
$2,000,000 outstanding and/or committed at any time; and 

                    (i)     Indebtedness existing on the date hereof which is set
forth on Schedule 7.2(i) annexed hereto and has been designated on
such schedule as Indebtedness that will remain outstanding following the funding
of the initial Revolving Credit Loans. 

provided, however, that no Indebtedness of one
Loan Party to another shall be permitted by this Section 7.2 if such
Indebtedness is evidenced by an instrument which has not been delivered to the
Administrative Agent as Collateral for the Obligations.

        7.3     Sale or
Transfer of Assets; Suspension of Business Operations. Borrower shall not, and shall not permit any Subsidiary
to, (a) sell (including as part of a sale-leaseback transaction), convey,
assign, lease, transfer, abandon or otherwise dispose of, voluntarily or
involuntarily, (i) the stock or Equity Interests of any Subsidiary, except for
the transfer of 100% of the outstanding shares thereof (or at least 99% in the
case of the shares of Computer Task Group Belgium, N.V.) to Borrower or to
another Subsidiary the outstanding stock of which is subject to a Pledge
Agreement, and except that the stock or Equity Interests of any Domestic
Subsidiary may not be sold to any Foreign Subsidiary, (ii) any of its now owned
or hereafter acquired assets, or (iii) any Collateral or any interest therein
(whether in one transaction or in a series of transactions) to any other Person
other than the sale of Inventory in the ordinary course of business and
disposition of obsolete equipment or (b) liquidate, dissolve or suspend business
operations, or agree, become or remain liable (contingently or otherwise) to do
any of the foregoing with respect to any assets or Collateral, except any sale,
lease, assignment, or other transfer of assets by any Loan Party, provided
that (x) Borrower is in compliance with the covenants set forth in Section 6.7
at the time of, and immediately following, any such disposition, (y) the
aggregate value of the assets so disposed of by all Loan Parties shall not
exceed $1,000,000 from the Closing Date through the Revolving Credit Loan
Maturity Date and (z) Borrower gives Administrative Agent prior notice of any
transaction permitted by clause (i) above, and upon the request of
Administrative Agent, Borrower or the relevant Subsidiary delivers to the
Administrative Agent, (a) a Subsidiary Guaranty and Pledge Agreement, in the
case of the transfer of stock or Equity Interests in a Domestic Subsidiary, (b)
a Pledge Agreement, Negative Pledge Agreement and Affiliate Subordination
Agreement or joinder thereto, in the case of the transfer of stock or Equity
Interests of a Foreign Subsidiary and (c) pursuant to the applicable Security
Documents, if such stock or Equity Interests are certificated, the certificates
evidencing such shares of stock (or 65% thereof in the case of issuance of
shares by a Foreign Subsidiary), accompanied by undated stock powers executed in
blank, together with an opinion of local counsel in form and substance
reasonably satisfactory to the Administrative 

-56-

Agent and shall take such other action as the Administrative
Agent shall request to create a valid and enforceable first priority Lien on
such shares (pursuant to such Security Documents). 

        7.4     Transactions
with Affiliates. Except as expressly
permitted by this Agreement, Borrower shall not take any of the following
actions or permit any Subsidiary to take any of the following actions: (a) make
any loan, advance or investment in an Affiliate; (b) transfer, sell, lease,
assign or otherwise dispose of any property to an Affiliate; (c) merge into or
consolidate with an Affiliate, or purchase or acquire property from an
Affiliate; or (d) enter into any other transaction directly or indirectly with
or for the benefit of an Affiliate (including, without limitation, guarantees
and assumptions of obligations of an Affiliate); provided that the
Borrower may engage in and continue the transactions with or for the benefit of
Affiliates which are described in Schedule 7.4 hereto so long as
the terms of such transactions are not less favorable to the Loan Parties than
the terms of a commercially reasonable, arms' length transaction between
non-affiliated parties.

        7.5     Limitation
on Other Restrictions on Liens. Except for the Loan Documents, Borrower shall not, and
shall not permit any Subsidiary to, enter into, become or remain subject to any
agreement or instrument by which it or any of the Collateral may be subject or
bound that would prohibit the grant of any Lien upon any of the Collateral to
the Administrative Agent (provided that this Section shall not be violated by a
provision in any agreement or instrument with or for the benefit of the party
holding a Permitted Lien upon Collateral specifically described in Section
7.1(d)(iii) and prohibiting any Loan Party from granting a Lien solely on such
specific Collateral).

        7.6     Limitation
on Other Restrictions on Amendment of the Loan Documents, etc. Except for the Loan Documents, Borrower shall not and
shall not permit any Subsidiary to, enter into, become or remain subject to any
agreement or instrument by which it or any of the Collateral may be subject or
bound that would prohibit, or require the consent of any Person to, any
amendment, modification or supplement to any of the Loan Documents.

        7.7     Restrictions
on Nature of Business. Borrower shall not, and shall not permit any Subsidiary
to, engage in any line of business materially different from that presently
engaged in by Borrower or such Loan Party or to purchase, lease or otherwise
acquire assets not related to its business. 

        7.8     Special Restrictions
on Inactive Subsidiaries. Notwithstanding anything herein to the contrary,
Borrower shall not take any of the following actions or permit any Subsidiary to
take any of the following actions: (a) make any loan, advance, capital
contribution or investment in an Inactive Subsidiary; (b) transfer, sell, lease,
assign or otherwise dispose of any property to an Inactive Subsidiary; (c) merge
into or consolidate with an Inactive Subsidiary (unless the Borrower or another
Subsidiary is the surviving entity), or purchase or acquire property from an
Inactive Subsidiary; (d) enter into any other transaction directly or indirectly
with or for the benefit of an Inactive Subsidiary; or (e) permit any Inactive
Subsidiary to engage in any business or activity of any kind or own assets
having a total book value in excess of $250,000 in the aggregate (other than
intercompany receivables reflected on the books of such Inactive Subsidiaries as
to which no cash has been or will be paid by the Borrower or any Subsidiary to
such Inactive Subsidiaries).

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        7.9     
Dividends. Without the prior written consent of the Required Lenders,
Borrower shall not take or permit any Subsidiary to take any of the following
actions: (a) declare or pay any dividends, (b) purchase, redeem, retire or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such
whether in cash, assets or in obligations of the Borrower or any Subsidiary,
(c) allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of any shares of
its capital stock, or (d) make any other distribution by reduction or return of
capital or otherwise in respect of any shares of its capital stock or permit any
Subsidiary to purchase or otherwise acquire for value any stock of the Borrower
or another Subsidiary, except that:

                (i)     Borrower may declare and deliver dividends and make
    distributions payable solely in common stock of Borrower;

               (ii)    Borrower may repurchase or otherwise acquire shares
    of its capital stock, provided that (A) each such repurchase is at a
    price not exceeding the then current market price and (B) the aggregate
    number of shares repurchased shall not exceed 1,200,000 from the Closing
    Date through the Revolving Credit Loan Maturity Date, with the balance of
    such amount concurrently adjusted for any stock splits, reverse stock splits
    and similar events and (C) no Event of Default or Potential Default shall
    occur as a result of, or exist immediately following, such repurchase or
    acquisition;

                (iii)   Any Subsidiary may declare and deliver dividends or
    other distributions directly to any Loan Party other than any Inactive
    Subsidiary; and

                (iv)   any Foreign Subsidiary of CTG Europe may declare and
    deliver dividends to CTG Europe.

  

  

        7.10     
Subsidiaries. 

                    (a)     Except as set forth in Section 7.10(c), Borrower shall
not, and shall not permit any Subsidiary to, sell or otherwise dispose of any
shares of capital stock of any Subsidiary, or permit any Subsidiary to do so,
except in connection with a transaction permitted under Section 7.13 or permit
any such Subsidiary to issue any additional shares of its capital stock, except
(i) directors' qualifying shares of Foreign Subsidiaries, and (ii) the issuance
of shares by any Subsidiary to any Subsidiary or to Borrower, which, in each
case, already owns or will thereafter own one-hundred percent (100%) (or at
least ninety-nine percent (99%) in the case of the shares of Computer Task Group
Belgium, N.V.) of the outstanding shares of such Subsidiary; provided
that, prior to such transfer, Borrower or such Subsidiary delivers to the
Administrative Agent, (x) a Subsidiary Guaranty and Pledge Agreement, in the
case of the issuance of shares by a Domestic Subsidiary, (y) a Pledge Agreement,
Negative Pledge Agreement and Affiliate Subordination Agreement or joinder
thereto, in the case of the issuance of shares by a Foreign Subsidiary and (z)
pursuant to the applicable Security Documents, if such stock or Equity Interests
are certificated, the certificates evidencing such shares of stock (or 65%
thereof in the case of issuance of shares by a Foreign Subsidiary), accompanied
by undated stock powers executed in blank, together with an opinion of local
counsel in form and substance reasonably satisfactory to the Administrative
Agent and shall take such other action as the 

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Administrative Agent shall request to create a valid and
enforceable first priority Lien on such shares (pursuant to such Security
Documents). 

                    (b)     Except as set forth in Section 7.10(c), neither Borrower,
nor any Subsidiary, shall create, acquire or suffer to exist any Subsidiary not
set forth on Schedule 4.12 hereto without the prior written
consent of the Administrative Agent, which may be conditioned upon the execution
and delivery by such Subsidiary and/or such Loan Party, as the case may be, of
an amendment to one or more Loan Documents, a guaranty of the Obligations, a
security agreement with respect to such Subsidiary's assets, a pledge of some or
all of the Equity Interests in such Subsidiary, other documents, certificates
and/or instruments and satisfactory results of due diligence with respect to
liens, title and environmental matters relating to such entity and its assets
and Equity Interests. 

                    (c)     Notwithstanding Section 7.4, (i) CTG Europe may form a
new Subsidiary in Luxembourg ("New Luxembourg") and (ii)
notwithstanding Section 7.12, including the Dollar limitation therein, which
shall not apply to the following purchase, the Borrower may purchase from CTG
Europe all of the issued and outstanding shares of existing Foreign Subsidiary
Computer Task Group Luxembourg, S.A. for a purchase price of 1.5 million Euros.
Borrower shall give the Administrative Agent prompt notice of either of the
occurrences described in the preceding sentence.

        7.11     Fundamental
Changes. Borrower shall not, and shall not permit any Subsidiary
to, change its name, corporate, limited partnership or limited liability company
form, as the case may be, or jurisdiction of incorporation, formation or
organization without the prior written consent of the Administrative Agent,
which consent will not be withheld except and unless the attachment, perfection
or priority of any security interest intended to be created or existing under
any Loan Document would be adversely affected.

        7.12     
Guaranties and Advances. Borrower shall not, and shall not permit any
Subsidiary to, without the prior written consent of Administrative Agent, 
guarantee, endorse or otherwise in any way become or be responsible for any
obligations of any other Person, other than a Subsidiary, whether directly or
indirectly, by agreement to purchase the indebtedness of any other Person or
through the purchase of goods, supplies or services, or maintenance of working
capital or other balance sheet covenants or conditions, or by way of equity
purchase, capital contribution, advance or loan for the purpose of paying or
discharging any indebtedness or obligation of such other Person or otherwise,
except endorsements of negotiable instruments for collection in the ordinary
course of business. Borrower shall not make or permit to remain outstanding, or
permit any Subsidiary to make or permit to remain outstanding, (a) any loans or
advances except as permitted by Section 7.2 or (b) any capital contributions or
investments of any kind in or make any distributions of cash or other assets of
any kind to any other Person, except that (i) any Domestic Loan Party may make
investments in any other Domestic Loan Party, (ii) any Loan Party may make
distributions in the form of loan repayments with respect to loans permitted by
Section 7.2, (iii) the Borrower and its Subsidiaries may continue to own their
existing equity investments in their respective Subsidiaries, to the extent (but
only to the extent) such investments are outstanding as of the date of this
Agreement, and (iv) the Borrower and its Subsidiaries may make other
investments, provided that the aggregate amount expended by the Borrower
and its Subsidiaries for all such investments under this Section 7.12
cumulatively from 

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the Closing Date less the aggregate amount of any cash
proceeds received by the Borrower and its Subsidiaries from and after the
Closing Date from the liquidation of any such investments made under this
Section 7.12 shall not exceed $1,500,000., and (v) Borrower and its Subsidiaries
may make travel advances, advances of prepaid rent not exceeding two months,
security deposits and the like in the ordinary course of business.

        7.13     Merger, Consolidation; Acquisitions. (a) Borrower shall not, and shall not permit any
Subsidiary to, without the prior written consent of Administrative Agent,
consolidate or merge, or enter into any binding agreement to consolidate with or
merge, into any other Person or permit any other Person to merge into it whereby
such Loan Party assumes or agrees to assume liabilities of such other party or
is not the surviving entity, provided, however, that the consent
of the Administrative Agent to any transaction described above which is solely
between Foreign Subsidiaries or solely between Domestic Loan Parties shall not
be required (so long as Borrower is the surviving corporation of any merger
involving Borrower and so long as, in any merger of Foreign Subsidiaries, the
outstanding stock of the surviving entity is subject to a Pledge Agreement in
form and substance satisfactory to Administrative Agent and such surviving
entity has delivered the applicable documentation described in Section 7.10 to
the extent requested by the Administrative Agent) but Borrower shall give
Administrative Agent thirty (30) days' prior notice thereof and shall, prior to
the effective date of such merger, execute, deliver and file, and/or cause its
Subsidiary(ies) to execute, deliver and file, amendments to one or more Loan
Documents, and other documents, certificates and/or instruments, and shall
respond promptly to Administrative Agent's request for due diligence with
respect to the proposed transaction, related pro forma financial statements and
the like.

                    (b)     Borrower shall not make or permit any Subsidiary to make
any Acquisition; provided, however, that so long as no Event of Default
or Potential Default shall have occurred and be continuing and no Event of
Default or Potential Default shall be caused thereby and the Borrower has given
the Administrative Agent not less than 10 Banking Days' prior written notice of
such proposed Acquisition, the Borrower may make Permitted Acquisitions, 
provided that (i) the aggregate purchase price paid by the Borrower for all
such Acquisitions under Section 7.13(a)(exclusive of Acquisitions described in
the proviso therein) and Section 7.13(b) shall not exceed $3,500,000 in any
fiscal year of Borrower or $10,000,000 cumulatively from the Closing Date; (ii)
the business or assets so acquired are owned by an entity organized under the
laws of a jurisdiction within the United States and are located in the United
States, (iii) in the case of a Permitted Acquisition structured as a stock
purchase, the issuer of the stock to be purchased is organized under the laws of
a jurisdiction within the United States, (iv) the Borrower shall have
demonstrated to the Administrative Agent that the principal amount to be
outstanding on the Revolving Credit Notes at the time of, and immediately
following such Acquisition, does not exceed pro forma Availability after
giving effect to such Acquisition, and (v) the Borrower shall have demonstrated
to the Administrative Agent pro forma compliance with Section 6.7 hereof
after giving effect to such Acquisition.

        7.14    
Accounting. The Borrower will not adopt any material change in
accounting principles other than as required by GAAP. Borrower shall not, and
shall not permit any Subsidiary to, adopt, permit or consent to any change in
its fiscal year.

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        7.15    
Governing Documents. The Borrower will not, and will not permit any Subsidiary
to, amend its respective Governing Documents in such a manner so as to (a) cause
a Material Adverse Effect, (b) remove or diminish the Administrative Agent's,
any Lender's or the Bank's rights under this Agreement or any Loan Document, (c)
immediately or after the passage of time, cause the Security Interest to become
unperfected with respect to any Collateral, (d) substantially impair the ability
of the Administrative Agent to monitor and manage the Collateral and the
Obligations, collect payments, fees, and expenses, or otherwise take action
under this Agreement or any Loan Document.

        7.16    Hazardous Materials. Borrower shall not use, generate, treat, store, dispose of
or otherwise introduce, or permit any Subsidiary to use, generate, treat, store,
dispose of or otherwise introduce, any Hazardous Materials into or on any real
property owned or leased by any of them and will not cause, suffer, allow or
permit anyone else to do so, except in compliance with all applicable
Environmental Laws.

        7.17    CTG Europe. Notwithstanding anything herein to the contrary, Borrower
shall not permit CTG Europe to (a) engage in any business or activity other than
(i) holding title to all of the capital stock or other Equity Interests of its
existing Subsidiaries as of the date hereof as set forth on Schedule 4.12
and (ii) as set forth in Section 7.10(c), (b) hold any assets except for the
capital stock or other Equity Interests of New Luxembourg (when created) and its
existing Subsidiaries as of the date hereof as set forth on Schedule 4.12
and the proceeds of the sale of Computer Task Group Luxembourg, S.A. in
accordance with Section 7.10(c) or (c) incur or permit to exist any Indebtedness
or other liabilities (other than under the Loan Documents), assume or guarantee
any Indebtedness of any other Person or create, incur, assume or permit to exist
any Liens on any or all of its assets (other than any Liens created under the
Loan Documents or any Permitted Lien).

        7.18    Payments on Foreign
Subsidiary Loans. Borrower shall not make or permit any Subsidiary to make
any payment or prepayment of principal of, premium, if any, or interest on, or
redemption purchase, retirement, defeasance (including economic or legal
defeasance), sinking fund or similar payment with respect to any Indebtedness of
Borrower to a Foreign Subsidiary permitted under Section 7.2(e), provided
that so long as no Event of Default or Potential Default shall have occurred and
be continuing and no Event of Default or Potential Default shall be caused
thereby, any Loan Party may repay the principal amount of any such Indebtedness
in accordance with Section 7.2(e), together with interest thereon at a per annum
rate not exceeding the rate permitted by Section 7.2(e).

8. 
EVENTS OF DEFAULT. "Event of Default" shall mean the
occurrence or existence of one or more of the following events or conditions
(for any reason, whether voluntary, involuntary or effected or required by Law):

        8.1     Nonpayment.
Either (a) the Borrower shall fail to pay any principal of or interest on any
Revolving Credit Loan or any fee or, except as provided in paragraph (b), other
amount due under this Agreement or any Revolving Credit Note within five (5)
calendar days after the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof, by acceleration of such
due or prepayment date, or otherwise, or (b) the 

-61-

Borrower shall fail to pay any such Reimbursement Obligation
in accordance with Section 2.14(b) when the same shall become due and payable;
or

        8.2     Insolvency; Receivership. Any Loan Party shall generally not, or be unable to, or
shall admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against any Loan Party seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding-up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, administrator or other similar official for it or for any substantial
part of its property and assets and, in the case of any such proceeding
instituted against it (but not instituted by it) that is being diligently
contested by it in good faith, either such proceeding shall remain undismissed
or unstayed for a period of at least thirty (30) days or any of the actions
sought in such proceeding (including the entry of an order for relief against,
or the appointment of a receiver, trustee, custodian or other similar official
for, it or any substantial part of its property and assets) shall occur; or a
petition shall be filed by Borrower under the United States Bankruptcy Code
naming the Borrower as debtor; or any event or action analogous to or having a
substantially similar effect to any of the events or actions set forth above in
this Section 8.2 shall occur under the Requirement of Law of any jurisdiction
applicable to any Loan Party; or any Loan Party, including a member, equity
owner(s) or managing member of such Loan Party, shall take any corporate,
partnership, limited liability company, or other similar action to authorize any
of the actions set forth above in this Section 8.2; or

        8.3     Breach of Representation. If any certificate, statement, representation,
warranty, financial statement or audit heretofore or hereafter furnished by or
on behalf of any Loan Party to Administrative Agent (including the
representations and warranties contained herein) shall prove to be untrue or
misleading in any material respect or to have omitted any material contingent or
unliquidated liability or claim against any Loan Party as of the date when made,
deemed made or furnished; or

        8.4     Judgment. Entry of a judgment, arbitration award, decree or order
for the payment of money in excess of $1,000,000 individually or cumulative
judgments, arbitration awards, decrees and/or orders in excess of $2,000,000 in
the aggregate for all judgments, awards, decrees and orders (excluding any
judgment for which the Borrower is fully insured other than any applicable
standard deductible) against any one or more Loan Party(ies) which are not
stayed, discharged, dismissed or bonded within thirty (30) days after the date(s)
thereof; or

        8.5     Default. Default by any Loan Party in the observance or
performance of, or breach of, (i) any of the covenants applicable to such Loan
Party set forth in Sections 6.2, 6.4, 6.5 or 6.7 or in Article 7, or (ii) any
term, covenant or agreement contained in this Agreement (other than those
referred to elsewhere in this Section 8) or any other Loan Document, and, in the
case of this clause (ii), such failure shall continue for fifteen (15)
consecutive days after Administrative Agent shall have first given Borrower
notice of such failure; or

        8.6     Events of Default Under Other
Agreements. The occurrence of (i) any event of default under the
terms of any loan agreement, note, indenture, mortgage, security agreement or

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other agreement evidencing or securing long term debt (as defined by GAAP) of
any Loan Party, which default could reasonably be expected to result in a
liability of over $500,000 and which has not been cured within any applicable
grace or notice period, or (ii) if any Loan Party shall commit any act, or fail
to take any action, the occurrence or non-occurrence of which constitutes an
event of default under the terms of any lease, agreement, contract, indenture,
mortgage, deed of trust, security agreement or other instrument executed or to
be executed by it or by which it or its assets is bound which default could
reasonably be expected to result in a liability of over $500,000 and which has
not been cured within any applicable grace or notice period; or 

        8.7     Plan Events. (a) Borrower or any Controlled Group Member is required
to provide security to a Plan in accordance with Code Section 401(a)(29) 
provided that the adverse effect of the same on the Borrower is not cured to
the satisfaction of Administrative Agent within thirty (30) days after Borrower
or any Controlled Group Member receives notice of such requirement, or (b) the
occurrence of any of the following actions or events provided, in the case of
this clause (b), that the Administrative Agent reasonably determines that such
action or event could reasonably be expected to have a Material Adverse Effect
and provided that the adverse effect of such action or event is not cured
to the satisfaction of Administrative Agent within ten (10) days after notice
and demand to cure from the Administrative Agent:

                        (i)     PBGC notifies a Plan by service of a complaint, threat to
file a lawsuit, or otherwise of its determination that an event described in
Section 4042(a) of ERISA has occurred, that the Plan shall be terminated, or
that trustees should be appointed for the Plan; or

                        (ii)     Any action is taken to terminate or reorganize a Plan or
Multiemployer Plan, or the administrator (as defined in Section 3(16)(A) of ERISA) of a Plan provides to the PBGC or other affected party a notice of intent
to terminate a Plan in accordance with Section 4041 of ERISA; or

                        (iii)     Any action taken by the administrator (as defined in
Section 3(16)(A) of ERISA) of a Plan to have a trustee appointed for the Plan
pursuant to Section 4042 of ERISA; or

                        (iv)     There is an accumulated funding deficiency (as defined
in Section 412(a) of the Code) with respect to a Plan or Multiemployer Plan; or

                        (v)     A Reportable Event or Pension-Related Event occurs with
respect to a Plan; or

                        (vi)     Any action is taken to amend a Plan into a defined
contribution plan described in Section 4021(b)(1) of ERISA causing a termination
for the purposes of Section 4041(e) of ERISA; or

                        (vii)     Borrower or any Controlled Group Member withdraws from
any Multiemployer Plan in a complete or partial withdrawal (within the meaning
of Sections  4203 and 4205 of ERISA), or receives a notice of withdrawal
liability or demand for payment of withdrawal liability on account of a complete
or partial withdrawal from a Multiemployer Plan  

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or on account of secondary
liability for withdrawal liability following a sale of assets subject to
Section 4204 of ERISA; or

                        (viii)     Any other event or condition occurs which might
constitute grounds under Section 4041(a) or 4042 of ERISA for the termination or
the appointment of a trustee or administrator of any Plan or Multiemployer Plan;
or 

                        (ix)     Any other event or condition shall occur or exist which
could subject the Borrower or any Controlled Group Member to any material tax,
penalty or other liability with respect to a Plan; or

        8.8     Environmental Lien. The continued existence, for a period of forty-five
(45) days, of any Environmental Lien securing an obligation in excess of
$500,000 on any assets or properties of any Loan Party; or

        8.9     Failure of Lien. Any Security Document shall cease to be in full force
and effect, or any Lien created or purported to be created in any Collateral
pursuant to any Security Document shall fail to be a valid, enforceable and
perfected Lien in favor of the Administrative Agent securing the Obligations
prior to all other Liens (other than other Liens in favor of the Administrative
Agent and Permitted Liens), except as expressly provided in the Loan Documents,
or any Loan Party shall assert any of the foregoing; or

        8.10    Failure of Loan
Document. Any Loan Document shall at any time or for any reason cease
to be in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by Borrower or any
Subsidiary, or Borrower or any Subsidiary shall deny it has any further
liability or obligations thereunder; or

        8.11     
Change of Control. Any Change of Control shall occur; or 

       8.12    
Attachment. Any writs or warrants of attachment, garnishment,
execution, distraint or similar process exceeding in value the amount of
$250,000 individually or $500,000 in the aggregate for all writs, warrants or
process for all affected Loan Parties taken together shall have been issued
against any one or more Loan Parties or any of the properties of any Loan Party
and shall have remained undischarged and unstayed for a period of thirty (30)
days; or

       8.13     Material Adverse
Change. The Required Lenders, acting through the Administrative
Agent, shall have reasonably determined that an event or condition has occurred
which has had, or which could be expected to have, a Material Adverse Effect; or

        8.14    
Certain Actions. The Borrower shall liquidate, dissolve, terminate or
suspend its business operations or otherwise fail to operate its business in the
ordinary course, or sell or attempt to sell all or substantially all of its
assets, without the Required Lenders' prior written consent; or

        8.15     
Conduct of Business. Any Loan Party shall be enjoined, restrained or in any
way prevented by the order of any court or any administrative or regulatory
agency from conducting any material part of its business and such order shall
continue in effect for more than fifteen (15) days.

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9. RIGHTS ON DEFAULT.

        9.1     Rights and Remedies.     (a) Upon the occurrence of any Event of Default the
Administrative Agent shall, upon request of the Required Lenders, do any one or
more of the following:

                (i)     Immediately terminate the obligations of Administrative
Agent, Lenders and Bank under this Agreement by written notice to Borrower, and
all Obligations shall immediately become due and payable, at the option of the
Administrative Agent, without presentment, demand, protest or further notice of
any kind, all of which are hereby waived.

                (ii)     Exercise any right with respect to any Collateral held
by it pursuant to this Agreement or any of the Loan Documents.

              (iii)    Set off against any amount due or demanded from any
Loan Party any amount which any Loan Party has on deposit or invested with the
Administrative Agent and any amount that the Administrative Agent or any Lender
owes to any Loan Party.

               (iv)    Make demand upon the Borrower and, forthwith upon such
demand, the Borrower will pay to the Administrative Agent in immediately
available funds for deposit in the Special Account pursuant to Section 2.14 an
amount equal to the L/C Amount.

                (v)     Exercise any other rights or remedies available to the
Administrative Agent, the Lenders or the Bank at law or in equity. 

        9.2     Certain Events of Default. Upon the occurrence of any Event of Default described
in Section 8.2, all Obligations shall immediately become due and payable,
without notice or demand.

        9.3     Non-Exclusivity. All of the rights and remedies of the Administrative
Agent, the Lenders and the Bank pursuant to this Agreement or otherwise shall be
cumulative, and no such right or remedy shall be exclusive of any other such
right or remedy or any right or remedy which the Administrative Agent, the
Lenders or the Bank would otherwise have at law. No single or partial exercise
or waiver or delay in exercising any right or remedy shall preclude any other or
further exercise of that or any other right or remedy.

10. INDEMNIFICATION. Borrower shall indemnify and hold harmless the
Administrative Agent, each Lender, the Bank and their respective directors,
officers, employees and agents (each such Person, an "Indemnitee"),
to the maximum extent permitted by Law, from and against any and all losses,
claims, damages, liabilities, costs, expenses, including reasonable counsel and
local counsel fees and disbursements (whether incurred in a third party action
or in an action to enforce this Agreement) (including the reasonable fees and
disbursements of counsel for such Indemnitee in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto),
obligations, penalties, actions, judgments, suits, costs or disbursements of any
kind or nature whatsoever, incurred at any time by or asserted at any time
against any of them or any such person arising out of, or in any way connected
with, or as a result of (i) the use of any of the proceeds of any Revolving
Credit Loan or Letter of Credit, including any transaction financed in  

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whole or
in part or directly or indirectly with the proceeds of any Revolving Credit
Loan, (ii) any of the Loan Documents, (iii) the performance by any Loan Party of
its obligations hereunder and thereunder, (iv) the breach of any representation
or warranty made by any Loan Party in the Loan Documents, (v) any indemnity
given by Administrative Agent in any power of attorney executed by it in
connection with the execution of any Loan Document, or (vi) any claim,
litigation, investigation or proceedings relating to any of the foregoing; 
provided, however, that such indemnity shall not, as to any Indemnitee,
apply to any such losses, claims, damages, liabilities or related expenses to
the extent that they result from the bad faith or willful misconduct of such
Indemnitee. All amounts due under this Section 10 shall be payable promptly
after written demand therefor.

11. EXPENSES. Borrower shall pay or reimburse (i) Administrative
Agent and the Bank promptly for all costs and expenses, including reasonable
counsel fees and disbursements (including, but not limited to, all charges for
title examination, title insurance and survey, recording and filing fees,
mortgage recording taxes, indebtedness taxes, appraisal fees, environmental
inspection and audit fees and search fees) (collectively, "Expenses"), incurred
by the Administrative Agent and the Bank in connection with (A) the entry into
this Agreement and any Indebtedness created hereunder, including the
negotiation, preparation, execution and delivery of the Loan Documents and
(B) the administration or performance of and under the Loan Documents and any
requested amendments, modifications, supplements, waivers or consents thereunder,
which are not entered into during the continuance of, or in response to, an
Event of Default or Potential Default and (ii) Administrative Agent, the Lenders
and the Bank promptly for all Expenses, incurred by the Administrative Agent,
the Lenders and the Bank in connection with, (A) any requested amendments,
modifications, supplements, waivers or consents under the Loan Documents which
are entered into during the continuance of, or in response to, an Event of
Default or Potential Event of Default, and (B) any Event of Default and any
action taken to collect the Obligations or to enforce the Administrative
Agent's, the Lenders' or the Bank's rights under such Loan Documents, including
the negotiation of any restructuring or "work-out" (whether or not consummated)
of the Obligations or any portion thereof.

12. AGENCY

        12.1     Appointment,
Powers and Immunities. (a)  Each Lender and the Bank hereby irrevocably
appoints and authorizes the Administrative Agent to act as its agent hereunder
and under the other Loan Documents with such powers as are specifically
delegated to the Administrative Agent by the terms of this Agreement and of the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent (which term as used in this
sentence and in Section 12.5 and the first sentence of Section 12.6 hereof shall
include reference to its Affiliates and its own and its Affiliates' officers,
directors, employees and agents) (i) shall have no duties or responsibilities
except those expressly set forth in this Agreement and in the other Loan
Documents and shall not by reason of this Agreement or any other Loan Document
be a trustee for any Lender; (ii) shall not be responsible to the Lenders or the
Bank for any recitals, statements, representations or warranties contained in
this Agreement or in any of the other Loan Documents, or in any certificate or
other document referred to or provided for in, or received by any of them under,
this Agreement or any of the other Loan Documents, or for the value, validity,
effectiveness, genuineness, enforceability, perfection or sufficiency of this
Agreement, any Revolving Credit Note or any of the other Loan  

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Documents or any
other document referred to or provided for herein or therein or for any failure
by any Loan Party or any other Person to perform any of its obligations
hereunder or thereunder; (iii) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other Loan Document;
and (iv) shall not be responsible for any action taken or omitted to be taken by
it hereunder or under any other Loan Document or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct. The Administrative Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. In addition, the Administrative
Agent may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it 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, independent public accountants or
experts. The Administrative Agent may deem and treat the payee of any Revolving
Credit Note as the holder thereof for all purposes hereof unless and until a
notice of the assignment or transfer thereof shall have been filed with the
Administrative Agent.

                (b)     The provisions of this Section 12 are solely for the
benefit of the Administrative Agent, the Lenders and the Bank, and no Loan Party
shall have any rights to rely on or enforce any of the provisions hereof. In
performing its functions and duties under this Agreement, the Administrative
Agent shall act solely for itself and as agent of the Lenders and the Bank and
does not assume and shall not be deemed to have assumed any obligations toward
or relationship of agency or trust with or for any Loan Party.

        12.2     
Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon
any certification, notice or other communication (including any certification,
notice or other communication by telephone, telecopy, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Administrative Agent. As to any matters not expressly provided for by this
Agreement or any of the other Loan Documents, the Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or,
if provided herein, in accordance with the instructions given by all of the
Lenders as is required in such circumstance, and such instructions of such
Lenders and any action taken or failure to act pursuant thereto shall be binding
on all of the Lenders; provided, however, that the Administrative Agent
shall not be required to take any action which shall expose the Administrative
Agent to personal or criminal liability or which is contrary to this Agreement
or applicable law.

        12.3     
Defaults. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of a Potential Default or Event of Default
(other than the non-payment of principal of or interest on Loans) unless the
Administrative Agent has received notice from a Lender or a Loan Party
specifying such Potential Default or Event of Default and stating that such
notice is a "Notice of Potential Default" or a "Notice of
Event of Default". In the event that the Administrative Agent receives
such a notice of the occurrence of a Potential Default or Event of Default, the
Administrative Agent shall give prompt notice thereof to the Lenders (and shall
give each Lender prompt notice of each such non-payment). The Administrative
Agent  

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shall (subject to Section 12.7 hereof) take such action with respect to
such Potential Default or Event of Default as shall be directed by the Required
Lenders, provided that, unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Potential Default or Event of Default as it shall deem advisable in the
best interest of the Lenders except to the extent that this Agreement expressly
requires that such action be taken, or not be taken, only with the consent or
upon the authorization of the Required Lenders or all of the Lenders.

        12.4     
Rights as a Lender. Manufacturers and Traders Trust Company ("M&T")
(and any successor acting as Administrative Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Administrative
Agent, and the term "Lender" or "Lenders" shall
include the Administrative Agent in its individual capacity. M&T (and any
successor acting as Administrative Agent) and its Affiliates may (without having
to account therefor to any Lender) issue Letters of Credit as "Bank" in
accordance with this Agreement, accept deposits from, lend money to, make
investments in and generally engage in any kind of banking, trust or other
business with any Loan Party(ies) and any of the Affiliates of any Loan
Party(ies) as if it were not acting as the Administrative Agent, and M&T and its
Affiliates may accept fees and other consideration from the same for services in
connection with this Agreement or otherwise without having to account for the
same to the Lenders.

        12.5     
Indemnification. The Lenders agree to indemnify the Administrative Agent
(to the extent not reimbursed by the Loan Parties under Section 10 hereof, but
without limiting the obligations of any Loan Party under said Section 10)
ratably in accordance with the aggregate principal amount of the Loans held by
the Lenders, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Administrative Agent (including by any Lender) arising out of or by
reason of any investigation or in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (including the costs and expenses that the Loan Parties are obligated to
pay under Section 10 hereof, but excluding, unless an Event of Default has
occurred and is continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents, provided that no
Lender shall be liable for any of the foregoing to the extent they are found in
a final decision by a court of competent jurisdiction to have resulted from the
gross negligence or willful misconduct of the party to be indemnified.

        12.6     
Non-Reliance on Administrative Agent and Other Lenders. 
Each Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Loan Parties and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement. The Administrative Agent shall not be
required to keep itself informed as to the performance or 

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observance by any Loan Party of this Agreement or any of the
other Loan Documents or any other document referred to or provided for herein or
therein or to inspect the properties or books of any Loan Party or any Affiliate
thereof. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of any Loan Party or any Affiliate thereof that
may come into the possession of the Administrative Agent or any of its
Affiliates.

        12.7     
Failure to Act. Except for action expressly required of the
Administrative Agent hereunder and under the other Loan Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 12.5 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.

       12.8     
Resignation of Administrative Agent. Subject to the appointment and acceptance of a
successor Administrative Agent as provided below, the Administrative Agent may
resign at any time by giving notice thereof to the Lenders and the Borrower.
Upon any such resignation, the Required Lenders shall have the right to appoint
a successor Administrative Agent. If no successor Administrative Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, that shall be a bank
which has an office in New York, New York with a combined capital and surplus of
at least Two Hundred Million Dollars ($200,000,000). Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
Section 12 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Administrative
Agent.

        12.9     
Consents under Loan Documents. Except as otherwise provided in Section 13.2 hereof
with respect to this Agreement, the Administrative Agent may, with the prior
consent of the Required Lenders (but not otherwise), consent to any
modification, supplement or waiver under any of the Loan Documents, provided
that, without the prior consent of each Lender, the Administrative Agent
shall not (except as provided in this Agreement or in the Security Documents)
consent to any modification, supplement or waiver under any of the Loan
Documents which would (a) increase the principal amount of the Revolving Credit
Loan, (b) extend the Revolving Credit Loan Maturity Date, (c) modify the payment
terms of the Revolving Credit Loan, (d) reduce any Applicable Margin with
respect to the Revolving Credit Loan or otherwise modify the interest payment
terms relating thereto, (e) reduce the amount of any fees payable by the
Borrower, (f) postpone the scheduled payment of any interest or fees, (g)
release all or a substantial portion of the Collateral for the Revolving Credit
Loans or any guarantee of any portion of the Loans, (h) change any of the
provisions of this Section 12.9 or any other  

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provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or under the Loan Documents or to make any determination or grant any
consent hereunder, or (i) modify the definition of Required Lenders, (except
that no such consent shall be required, and the Administrative Agent is hereby
authorized, to release any Lien covering property or assets of any Loan Party or
any Affiliate thereof which is the subject of a Permitted Lien (other than
pursuant to Section 7.1(a) hereof) or the subject of a disposition of property
or assets permitted hereunder or under the Security Documents or to which the
Required Lenders have consented. 

13. MISCELLANEOUS.

        13.1     Entire Agreement; Binding Effect. This Agreement, the other Loan Documents and any
separate letter agreements with respect to fees payable to the Administrative
Agent, for its own account and benefit and/or for the account and benefit of the
Lenders, represents the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
negotiations, including the commitment letter from Manufacturers and Traders
Trust Company to Borrower dated December 8, 2004, and any course of dealing
between the parties with respect to the subject matter hereof. This Agreement
shall be binding upon Borrower and its successors and assigns, and shall inure
to the benefit of, and be enforceable by, the Administrative Agent, the Lenders,
the Bank and their respective successors and assigns. 

        13.2     Amendments; Waivers. Except as otherwise expressly provided in this
Agreement, this Agreement cannot be amended, supplemented or modified orally (or
by any course of conduct or usage of trade) but may only be amended,
supplemented or modified by a writing duly executed by Borrower, the
Administrative Agent, the Bank and the Required Lenders and specifically
referring to each provision of this Agreement being modified. Borrower hereby
waives protest, presentment and notice of any kind in connection with the
delivery, acceptance, performance, default or enforcement of any of the Loan
Documents, except as specifically provided for herein. No course of dealing or
performance and no failure or delay on the part of the Administrative Agent, the
Lenders or the Bank in exercising any right or power hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise by the Administrative
Agent, any Lender or Bank of any right or power hereunder preclude any other or
further exercise thereof or the exercise of any other right or power. No waiver
by the Administrative Agent, any Lender or Bank of any such right or remedy
shall be effective unless made in a writing duly executed by the Required
Lenders and Bank (or by the Administrative Agent with the consent of the
Required Lenders and Bank) and specifically referring to such waiver and each
such waiver shall relate only to the specific transaction referenced therein.

        13.3     Notices. Except as set forth in Section 2.1(b), any notice,
demand or communication to be given pursuant to this Agreement or any Loan
Document must be in writing, and shall be delivered by certified mail, return
receipt requested, by reputable overnight courier service with receipt of
delivery acknowledged, or by telecopier. All notices shall be sent to the
applicable party at the address stated on the signature pages hereto or in
accordance with the last unrevoked written direction from such party to the
other parties hereto, in all cases with postage or other charges prepaid. Any
demand, notice or communication hereunder shall be deemed to have been given on
the date received or on the date delivered and refused; provided,  

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 however,
that a facsimile transmission shall be deemed to be received when transmitted so
long as the transmitting machine has provided an electronic confirmation of such
transmission.

        13.4     Assignment. Neither this Agreement nor any of the rights or
obligations of Borrower hereunder may be assigned or transferred by Borrower, by
operation of law or otherwise, without the prior written consent of the Required
Lenders, acting through the Administrative Agent.

        13.5     Participation and/or Assignment. (a) The Administrative Agent may, at any time or from
time to time without consent of or notice to the Borrower sell participations to
one or more commercial banks or other Persons (each, a "Participant")
in a portion of its rights and obligations under this Agreement and the other
Loan Documents (including all or a portion of the Revolving Credit Notes held by
it). In the event of any such sale by Administrative Agent of a participating
interest to a Participant, the Administrative Agent's obligations under this
Agreement to the Borrower shall remain unchanged. In such event, transferor
(Administrative Agent) shall remain solely responsible for the performance
hereof and shall remain the holder of any such obligation owing to it hereunder
for all purposes under this Agreement, and Borrower shall continue, and shall
have the right to continue, to deal solely and directly with Administrative
Agent, in connection with the rights and obligations under this Agreement of the
Administrative Agent. Each Loan Party agrees that, while an Event of Default
shall have occurred and be continuing, if amounts outstanding under this
Agreement are due or unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set off in respect of its participating
interest in amounts owing under this Agreement and the Loan Documents to the
same extent as if the amount of its participating interest were owing directly
to it under this Agreement.

                        (b)     Administrative Agent may, while an Event of Default shall
have occurred and be continuing, assign to any one or more lending institutions
(each, an "Assignee") all or a part, but no less than Five Million
Dollars ($5,000,000) in principal amount, of its rights and obligations under
this Agreement and the Revolving Credit Loans or any portion thereof.
Administrative Agent, as the case may be, as the assigning lender thereunder,
shall, to the extent of the interest assigned be released from its obligations
under this Agreement.

                        (c)     Borrower authorizes Administrative Agent to disclose to
any Participant, or Assignee (each, a "Transferee") and any
prospective Transferee (whether or not, in the case of any Person that is a
prospective Transferee, such Person in fact becomes a Transferee), any and all
financial information, operating and other information in Administrative Agent's
possession concerning Borrower and its Affiliates which has been delivered to
Administrative Agent by or on behalf of Borrower pursuant to this Agreement or
which has been delivered to Administrative Agent in connection with its credit
evaluation of Borrower. Administrative Agent will use reasonable efforts to have
any financial information and operating information concerning Borrower and its
Affiliates to be treated as confidential; provided, however, that such
financial information may be disclosed (i) as required by Law or pursuant to
GAAP, (ii) to officers, directors, employees, agents, partners, attorneys,
accountants, rating agencies, engineers and other consultants of the
Administrative Agent who need to know such information, (iii) by Administrative
Agent to any Transferee, (iv) as needed to permit 

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Administrative Agent to enforce its rights under the Loan
Documents, or (v) upon the written consent of Borrower, which consent will not
be unreasonably withheld, conditioned or delayed. 

        13.6     Governing Law. This Agreement, the Loan Documents, any and all other
documents executed in connection with this Agreement, and the acts and
obligations of the parties hereunder shall be construed and interpreted in
accordance with the laws of the State of New York (including for such purposes
Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New
York), without regard to its principles of conflict of laws. 

       13.7     Enforceability of Obligations. The Obligations of Borrower and each Loan Party
pursuant to the Loan Documents and all other instruments, documents and
agreements executed in connection therewith shall not be impaired or avoided for
any reason including the unenforceability of such Obligations against any other
party, including any guarantor, or the incapacity or lack of authority of any
signatory for Borrower. The Administrative Agent or the Required Lenders, acting
through the Administrative Agent, may compromise or settle, extend the period of
duration for the time for payment, discharge performance of, or may refuse to
enforce, or may release, all or any part of any and all of the Obligations
hereunder due to it, and of the Collateral for such Obligations, and may grant
other indulgences to any of Borrower or any guarantor in respect thereof, or
agree to the release or substitution of any guarantor, all without otherwise
affecting or impairing the obligations of Borrower hereunder.

       13.8     WAIVER OF JURY TRIAL. EACH OF ADMINISTRATIVE AGENT, EACH LENDER, BANK AND
BORROWER, BY EXECUTING THIS AGREEMENT OR ANY OTHER DOCUMENT PROVIDED FOR BY THIS
AGREEMENT, WAIVES ITS RIGHTS TO A TRIAL BY JURY IN ANY ACTION, WHETHER ARISING
IN CONTRACT OR TORT, BY STATUTE OR OTHERWISE, IN ANY WAY RELATED TO THIS
AGREEMENT OR ANY DOCUMENT PROVIDED FOR BY THIS AGREEMENT. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR LENDERS TO EXTEND CREDIT TO BORROWER AND NO WAIVER OR
LIMITATION OF THE RIGHTS OF ADMINISTRATIVE AGENT, BANK OR ANY LENDER UNDER THIS
SECTION SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY SIGNED ON BEHALF OF
ADMINISTRATIVE AGENT, BANK OR SUCH LENDER. BORROWER AGREES THAT ADMINISTRATIVE
AGENT, BANK OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THIS WAIVER OF RIGHT TO TRIAL BY
JURY.

                        Borrower acknowledges that the above paragraph has been
expressly bargained for by Administrative Agent and that, but for Borrower's
agreement thereto, Lenders would not extend the Loans to Borrower for the term
and interest rate provided in the Revolving Credit Notes described herein and
Bank would not agree to issue Letters of Credit for the benefit of Borrower.

        13.9     Jurisdiction and Venue.
Borrower hereby agrees that all actions or proceedings arising directly or
indirectly out of this Agreement shall be litigated in the Supreme Court of the
State of New York, Erie County, or the United States District Court for the
Western District of New York or in any court in which Administrative Agent shall
initiate such action, to the extent 

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such court has jurisdiction. Borrower hereby expressly
submits and consents in advance to such jurisdiction and waives any claim that
Buffalo, New York or the Western District of New York is an inconvenient forum
or an improper forum based on lack of venue. Borrower agrees that a copy of this
Agreement kept in Administrative Agent's course of business may be admitted into
evidence as an original.

        13.10     Survival. Borrower's obligations under Sections 10 and 11 hereof
shall continue notwithstanding that Borrower may have fully repaid all other
amounts owing pursuant to this Agreement.

        13.11     Severability. If any provision of this Agreement shall be determined
by a court to be invalid, such provision shall be deemed modified to conform to
the minimum requirements of applicable law.

        13.12     Headings. The section headings inserted in this Agreement are
provided for convenience of reference only and shall not be used in the
construction or interpretation of this Agreement.

        13.13     Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute one and the same Agreement.

        13.14     
Further Assurances. Borrower shall, at its expense and without expense to
the Administrative Agent, Bank or any Lender execute, acknowledge and deliver
such further instruments, assignments, notices and assurances as the
Administrative Agent shall, from time to time, reasonably require for the better
assuring, assigning, and confirming to the Administrative Agent, Bank and the
Lenders the rights granted to them hereunder and under the Loan Documents, or
for carrying out the intention or facilitating the performance of the terms of
this Agreement.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

-73-

                    IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their duly authorized officers as of the day and year
first above written.

                        	 	

                        
                            COMPUTER TASK GROUP, INCORPORATED
	 	 
	 	 
	 	By:
                        	 /s/Peter P. Radetich
                            
	 	Name: Peter P. Radetich
	 	Title: Senior Vice President
                            
	 	
	 	Address for Notices:
	 	 
	 	800 Delaware Avenue
	 	Buffalo, New York 14209
	 	Attention: Peter P. Radetich
	 	Senior Vice President & General Counsel
	 	 
	 	Telephone: 716-887-7366
	 	Telecopier: 716-887-7370

 

	 	
                        
                      MANUFACTURERS AND TRADERS TRUST COMPANY, as
                        Administrative Agent, Bank and as a Lender
	 	 
	 	 
	 	By:	 /s/Edward J. Graber
    
	 	Edward J. Graber
	 	Vice President 
	 	 
	 	Address for Notices:
	 	 
	 	One Fountain Plaza
	 	12th Floor
	 	Buffalo, NY 14203
	 	Attention: Mr. Edward J. Graber
	 	Vice President
	 	 
	 	Telephone: 716-848-7314
	 	Telecopier: 716-848-7318

 

	 	
                        
                        KEYBANK NATIONAL ASSOCIATION, 

                        as a Lender
	 	 
	 	 
	 	By:	 /s/Mark F. Wachowiak
    
	 	Name: Mark F. Wachowiak
	 	Title: Vice President
	 	 
	 	Address for Notices:
	 	 
	 	Key Center
	 	50 Fountain Plaza
	 	Buffalo, NY 14202-2299
	 	Attention: Mark Wachowiak 
	 	Telephone: 716-847-2330
	 	Telecopier: 716-847-7897

                        
 

EXHIBIT A

FORM OF REVOLVING CREDIT NOTE

REVOLVING CREDIT NOTE

 

	$_________	Buffalo, New York
	 	April __, 2005

 

                FOR VALUE RECEIVED, the undersigned, COMPUTER TASK GROUP,
INCORPORATED ("Borrower"), a New York corporation with its chief executive
office at 800 Delaware Avenue, Buffalo, New York 14209, promises to pay to the
order of ________________________ (the "Lender"), on or before the Revolving
Credit Loan Maturity Date, and at such earlier dates as may be required by the
Agreement (as defined below), the principal sum of ____ Million and 00/100
Dollars ($__,000,000.00) or the outstanding principal amount of this Note, if
less. The Borrower further promises to pay to the order of the Lender interest
on the unpaid principal amount hereof from time to time outstanding at the rate
or rates per annum determined pursuant to the Agreement, payable on the dates
set forth in the Agreement, together with fees, costs and expenses as set forth
in the Agreement.

                This Note is one of the Revolving Credit Notes referred to
in, is due and payable as provided in, is subject to the terms and conditions
set forth in, and is entitled to the benefits of, the Loan Agreement dated as of
April __, 2005, by and between Borrower, the Bank and Lenders, as defined
therein, and Manufacturers and Traders Trust Company, as Administrative Agent
(as the same may be amended, modified or supplemented from time to time, the
"Agreement"), which among other things provides for the acceleration of the
maturity hereof upon the occurrence of certain events and for prepayments in
certain circumstances and upon certain conditions. Terms defined in the
Agreement and capitalized herein have the same meanings herein as in the
Agreement. 

                This Note is secured by and is entitled to the benefits of
the Liens created by or existing under the Security Documents referred to in the
Agreement.

                This Note may be prepaid in whole or in part at any time in
accordance with the terms and provisions of the Agreement.

                This Note is issued by Borrower to Lender in connection with
the Revolving Credit Loan. Lender may make any advance of the Revolving Credit
Loan in reliance upon any oral (including, but not limited to, telephonic),
written (including, but not limited to teletransmitted) or other request made by
the Administrative Agent. Lender shall incur no liability to Borrower or any
other person as a direct or indirect result of making any advance in accordance
with this paragraph and the request of the Administrative Agent.

                The Borrower hereby expressly waives presentment, demand,
notice, protest and all other demands and notices, unless notice is specifically
provided for in the Agreement, in connection with the delivery, acceptance,
performance, default or enforcement of this Note and the Agreement, and an
action for amounts due hereunder or thereunder shall immediately accrue. 

                Borrower agrees that a copy of this Note kept in Lender's
course of business may be admitted into evidence as an original.

                This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without regard to principles
of choice of law. 

	 	

                        COMPUTER TASK GROUP, INCORPORATED
	 	 
	 	 
	 	By:
                        	 
	 	Name: 
	 	Title: 
	 	
	 	Address for Notices:
	 	800 Delaware Avenue
	 	Buffalo, New York 14209
	 	Attention: Peter P. Radetich
	 	Senior Vice President & General Counsel
	 	 
	 	Telephone: 716-887-7366
	 	Telecopier: 716-887-7370

                        
                        

 

EXHIBIT B

REVOLVING CREDIT LOAN PRICING GRID

        The Commitment Fee Rate, and the Applicable Margin to be
added to either the Adjusted Base Rate or the LIBOR Rate with respect to the
Revolving Credit Loans, shall be determined by the corresponding Actual Leverage
Ratio, defined in the Loan Agreement, computed as of the end of each fiscal
quarter, which Applicable Margin shall be determined using the table below and
applied to the Pricing Period next commencing:

	
    Level
	
    Actual Leverage Ratio
	
    Adjusted Base Rate 

    Applicable Margin

    (in Basis Points)
	
    LIBOR Rate

    Applicable

    Margin 

    (in Basis Points)

    

     

     
	
    Commitment Fee Rate

    (in Basis Points)

	
    I
	Less than 1.50 to 1.00	
    0
	
    150
	
    20.0

	
    II
	Greater than or equal to 1.50 to 1.00 and less
    than 2.00 to 1.00	
    25
	
    175
	
    25.0

	
    III
	Greater than or equal to 2.00 to 1.00 and less
    than or equal to 2.50 to 1.00	
    50
	
    200
	
    25.0

	
    IV
	Greater than or equal to 2.50 to 1.00	
    75
	
    225
	
    37.5

 

EXHIBIT C

FORM OF BORROWING BASE CERTIFICATE

 

BORROWING BASE CERTIFICATE

	
    (Amounts in $000s)
	 	 
	 	
    For the Applicable Billing Period Ending                          
    , 20__
	 	 
	
    I.	
    ACCOUNTS RECEIVABLE AGING as of             
                                   
    

	 	 
	 	
    Invoice/Mail Date Aging
	
  Current	
    31-90	
    91-180
	
    Over 180
	
    Total
	 	 	__________	__________	__________	___________	__________

	 	 
	
    II.
	
    BORROWING BASE
	 	 
	
    A.
	
    BORROWING BASE COMPONENTS
	 	 
	
    1.
	
    ELIGIBLE BILLED ACCOUNTS
	 	 
	 	
    (A)
	
    Total Billed Accounts of the Domestic Loan Parties, net of credits	 	 
	 	 	

      
      Less:	 	 
	 	 	
    (i)(a) Non-Healthcare Provider Over 90 Days Past Invoice Date
	 	 
	 	 	
    (i)(b) Healthcare Provider Over 120 Days Past Invoice Date
	 	 
	 	 	
    (ii) Disputed, offset or contra account (i.e. vendor receivables)
	 	 
	 	 	
    (iii) Unperfected Government
	 	 
	 	 	
    (iv) Account debtor outside U.S.
	 	 
	 	 	
    (v) Insolvency/Bankruptcy
	 	 
	 	 	
    (vi) Affiliate A/R
	 	 
	 	 	
    (vii) Unperfected
	 	 
	 	 	
    (viii) Restructured
	 	 
	 	 	
    (ix) Advertising, charges, taxes
	 	 
	 	 	
    (x) Ineligible Receivables under clause (j) of Eligible Accounts
        definition
	 	 
	 	 	
    (xi) Concentration in Excess of 25% of consolidated A/R	 	 
	 	 	
    (excluding IBM)
	 	 
	 	 	
    (xii) Ineligible Receivables under clause (l) of Eligible Accounts
        definition
	 	 
	 	 	 	 	 
	 	(B)	
    Total Ineligible Receivables
	 	 
	 	 	 	 	 
	 	(C)	
    Total Eligible Billed Accounts (line A less line B)
	 	 
	 	 	 	 	 
	 	(D)	
    Total Eligible Billed Accounts Availability (line C x 85%)
	 	 
	 	 	 	 	 
	 	
    (E)
	
    Total Eligible Billed Accounts for which IBM STG is the account debtor
	 	 

Page 1

	
    (Amounts in $000s)
	 	 
	 	
    For the Applicable Billing Period Ending                                            
    

	 	 
	
    2.
	
    ELIGIBLE UNBILLED ACCOUNTS
	 	 
	 	
    (A)
	
    Total Unbilled Accounts of the Domestic Loan Parties, net of credits
	 	 
	 	 	
    
      Less:	 	 
	 	 	
    (i) Over 30 Days in Unbilled status
	 	 
	 	 	
    (ii) Disputed, offset or contra account (i.e. vendor receivables)
	 	 
	 	 	
    (iii) Unperfected Government
	 	 
	 	 	
    (iv) Account debtor outside U.S.
	 	 
	 	 	
    (v) Insolvency/Bankruptcy
	 	 
	 	 	
    (vi) Affiliate A/R
	 	 
	 	 	
    (vii) Unperfected
	 	 
	 	 	
    (viii) Restructured
	 	 
	 	 	
    (ix) Advertising, charges, taxes
	 	 
	 	 	
    (x) Ineligible Receivables under clause (j) of Eligible Accounts
        definition
	 	 
	 	 	
    (xi) Concentration in Excess of 25% of consolidated A/R	 	 
	 	 	
    (excluding IBM)
	 	 
	 	 	
    (xii) Ineligible Receivables under clause (l) of Eligible Accounts definition
	 	 
	 	 	 	 	 
	 	(B)	
    Total Ineligible Receivables
	 	 
	 	 	 	 	 
	 	(C)	
    Total Eligible Unbilled ISTG Accounts
	 	 
	 	 	 	 	 
	 	(D)	
    Total Eligible Unbilled Accounts (line A less line B less line C)
	 	 
	 	 	 	 	 
	 	(E)	
    Available at 75% ((line C + line D) x 75%)
	 	 
	 	 	 	 	 
	 	(F)	
    Eligible Unbilled and Eligible Unbilled ISTG Cap Amount
	
    
    10,000
	 
	 	 	 	 	 
	 	(G)	
    Total Eligible Unbilled and Eligible Unbilled ISTG Account Availability

      (lesser of line E and line F)
	 	 

Page 2

	
    (Amounts in $000s)
	 	 
	 	
    For the Applicable Billing Period Ending                                    
    

	 	 
	
    3.
	
    AVAILABILITY BLOCK AMOUNT
	
    
    3,000
	 
	 	 	 	 
	
    B.
	
    BORROWING BASE CALCULATION	 	 
	 	 	 	 
	
    Total Eligible Billed Accounts Availability (from line A1(D) above)
	
     	
    , plus
	 	 	 	 
	
    Total Eligible Unbilled and Eligible Unbilled ISTG Accounts Availability
	 	 
	
    (from line A2(G) above)
	 	
    , minus
	 	 	 	 
	
    Availability Block Amount (item A3 above)
	
    
    3,000
	
    , minus
	 	 	 	 
	
    Reserves for Interest Rate Protection Obligations and Foreign Exchange
    Obligations
	 	
    ,
	 	 	 	 
	
    BORROWING BASE
	 	 
	 	 	 	 
	 	 	 	 
	
    C.
	
    AVAILABILITY CALCULATION	 	 
	 	 	 	 
		(A)	
    Borrowing Base*
	
     	
	 	 	 	 	 
	 	(B)	
    Aggregate Outstanding Revolving Credit Loans
	 	 
	 	 		 	 
	 	(C)	
    Aggregate L/C Amount
	 	 
	 	 	 	 	 
	 	(D)	
    Availability (line A less line B less line C)
	 	 
	 	 
	
    *Availability ceiling is lesser of Borrowing Base and Revolving Credit
Facility. If Borrowing Base exceeds Revolving Credit Facility, insert aggregate
Revolving Credit Facility in line (A) above.

Page 3

    

(Amounts in $000s)

            For the Applicable Billing Period Ending                                                  

    
  

This Borrowing Base Certificate and the accounts receivable aging report
attached hereto as Schedule A, which lists billed and unbilled accounts
receivable separately, are submitted as of the date set forth below, under and
pursuant to the Loan Agreement dated as of April __, 2005 (the "Loan Agreement")
by and among Manufacturers and Traders Trust Company, as Administrative Agent,
the Lenders party thereto, the Bank, as defined therein, and Computer Task
Group, Incorporated and are tendered for the purpose of inducing the Lenders to
advance funds to the Borrower, and are certified to be true and correct in all
respects. Terms capitalized, but not defined, in this Borrowing Base Certificate
shall have the meanings given such terms in the Loan Agreement. Notwithstanding
the abbreviated descriptions of categories in this Borrowing Base Certificate,
the Borrowing Base, Availability and all other amounts set forth herein have
been calculated in accordance with the applicable provisions of the Loan
Agreement.

COMPUTER TASK GROUP, INCORPORATED

By:                                                                                                                                             DATE:                                                                         

Name:___________________________________________________

Title:___________________________________________________ 

[Authorized Representative]

Page 4

 

Schedule A

Accounts Receivable Aging

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 1

 

EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

 

COMPLIANCE CERTIFICATE

[Date]

Manufacturers and Traders Trust Company,

as Administrative Agent 

One Fountain Plaza

Buffalo, New York 14203

Ladies and Gentlemen:

The undersigned certifies that the following computations
required by the affirmative covenants set forth in Section 6.7 of the Loan
Agreement (as the same may be amended, modified or supplemented from time to
time in accordance with its terms, the "Loan Agreement") dated as of April ___,
2005 among Computer Task Group, Incorporated, a New York corporation ("Borrower"),
the Lenders party thereto from time to time (the "Lenders"), and
Manufacturers and Traders Trust Company, a New York banking corporation, having
an office and place of business at One Fountain Plaza, Buffalo, New York 14203,
as issuer of letters of credit (in such capacity, "Bank") and as agent
for the Lenders and Bank (in such capacity, together with its successors in such
capacity, the "Administrative Agent") are true and correct as of
__________________ and that the Borrower is in compliance with such covenants.
Capitalized terms used in this certificate and not defined herein shall have the
meanings given such terms in the Loan Agreement.

Section 6.7(a) Maximum Leverage Ratio

 

(A1) As of the end of its fiscal quarter ending                                 , 20__
(the "FQE Date") the Borrower had total Funded Indebtedness outstanding, of 
                                                   

(A2) As of the FQE Date,                             
 the Borrower had IBM STG Eligible
Indebtedness totaling __________________.

A true and correct list of Borrower's IBM STG Receivables is
attached hereto, including date, billed or unbilled status and amount.

(B) For the four (4) fiscal quarters ending on the FQE Date taken as one
accounting period, the Borrower had EBITDA of                                         

Ratio of (A1 minus A2) to B                                         

Page 1

                
Covenant: The Borrower will maintain, as of the end
of any fiscal quarter ending during each period described below, its ratio of (i) (A)
total Funded Indebtedness outstanding at the end of such fiscal quarter, less
(B) IBM STG Eligible Indebtedness, to (ii) EBITDA for the four (4) fiscal
quarters ending on such date taken as one accounting period ("Leverage
Ratio"), at not more than the ratio set forth opposite such period.

	
    

    
    Quarter
	
    Maximum Leverage Ratio

    
    
	
     	
     
	
    From the Closing Date through July 1, 2005
	
    3.50 to 1.00

	
     	
     
	
    From July 2, 2005 through September 30, 2005
	
    3.25 to 1.00

	
     	
     
	
    From October 1, 2005 through

    December 31, 2006 and thereafter

    	
    3.00 to 1.00

 

Section 6.7(b) Minimum Tangible Net Worth

As of the FQE Date, the Borrower had a Tangible Net Worth of
________________.

                
Covenant: So long as this Agreement is in effect, at
all times the Tangible Net Worth of Borrower shall be at least $18,300,000 (the
"Minimum TNW Amount"). The Minimum TNW Amount shall, as of the
last day of each fiscal year of Borrower, (i) be increased by 50% of Borrower's
net profits for such fiscal year and (ii) be adjusted to add to shareholders'
equity any negative change in Borrower's foreign currency adjustment and to
subtract therefrom any positive change in Borrower's foreign currency
adjustment, in each case during such fiscal year. The Minimum TNW Amount, as
adjusted in accordance with the preceding sentence, shall become the Minimum TNW
Amount under this Section 6.7(b) for the fiscal year commencing the day after
such adjustment and shall again be adjusted on the last day of such fiscal year
as set forth herein.

Section 6.7(c) Capital Expenditures

For its fiscal year ending _______________, 20__ the Borrower incurred and
contracted to incur capital expenditures of ________________ [TO BE COMPLETED
ONLY IF THE FQE DATE FOR PURPOSES OF THIS CERTIFICATE IS ALSO THE END OF
BORROWER'S FISCAL YEAR]

Covenant: The Borrower will not incur or contract to incur capital
expenditures of more than $5,000,000 in the aggregate during any fiscal year.

Page 2

Section 2.3 Applicable Margin

                The Actual Leverage Ratio as of the FQE Date is
________________. 

                Accordingly, the Commitment Fee Rate, and the Applicable
Margin to be added to either the Adjusted Base Rate or the LIBOR Rate with
respect to the Revolving Credit Loans, for the Pricing Period next commencing,
shall be as set forth in Exhibit B to the Loan Agreement.

The undersigned further certifies that (i) [no Event of
Default or Potential Default has occurred and is continuing] OR [except as
otherwise described in Schedule __ attached to this Certificate, no Event of
Default or Potential Default has occurred and is continuing [if a Default or
Event of Default has occurred and is continuing, include a statement as to the
nature thereof and the action which is proposed to be taken with respect
thereto]; (ii) except as may be specified in clause (i) above, Borrower is in
compliance with each of the covenants herein and in the Loan Documents; and
(iii) except as may be specified in clause (i) above, the representations and
warranties made by Borrower in Section 4 of this Agreement, and in the Loan
Documents, are true on and as of the date hereof with the same force and effect
as if made on and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date).

                        	 	COMPUTER TASK GROUP, INCORPORATED
	 	 
	 	 
	 	By: 	 
	 	 	Name:
	 	 	Title:
	 	 	[Authorized Representative]

Page 3

IBM STG Receivables

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 4

 

EXHIBIT E

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

                This Assignment and Assumption Agreement (the "Assignment")
is dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor] (the "Assignor") and [Insert
name of Assignee] (the "Assignee"). Capitalized terms used but not
defined herein shall have the meanings given to them in the Loan Agreement
identified below (as amended, modified or supplemented from time to time, the "Loan
Agreement"), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment as if set forth herein in full.

                For an agreed consideration, the Assignor hereby irrevocably
sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases
and assumes from the Assignor, subject to and in accordance with the Standard
Terms and Conditions and the Loan Agreement, as of the Effective Date inserted
by the Administrative Agent as contemplated below, the interest in and to all of
the Assignor's rights and obligations under the Loan Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor's outstanding
rights and obligations under the respective facilities identified below (the "Assigned
Interest"). Such sale and assignment is without recourse to the Assignor
and, except as expressly provided in this Assignment, without representation or
warranty by the Assignor.

                    	1. 	Assignor: 	______________________________
	 	 	 
	2. 	Assignee: 	______________________________ 
	 	 	 
	3. 	Borrower(s): 	Computer Task Group, Incorporated
	 	 	 
	4. 	Administrative Agent: 	Manufacturers and Traders Trust Company,
                        as the Administrative Agent under the Loan Agreement
	 	 	 
	5. 	Loan Agreement: 	The Loan Agreement dated as of April __,
                        2005 among the Borrower listed above, the Lenders
                        parties thereto and Manufacturers and Traders Trust
                        Company, as Administrative Agent and Letter of Credit
                        Issuer.

                
 

                	6. 	Lending Office 	 
	 	of Assignee: 	______________________________
	 	 	______________________________
	 	 	______________________________ 

                7.     Assigned Interest:

              
            
          
        
      
    
  

	
    

    

    

    Facility Assigned
	
    Aggregate

    Amount of Commitment/Loans 

    for all Lenders
	
    Amount of Commitment/Loans

 Assigned
	
    

    Percentage

    Assigned of

    
    Revolving Credit Loans

	
    Revolving Credit Loan
	
    $35,000,000.00
	
    $_____________
	
    __________%

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

The terms set forth in this Assignment are hereby agreed to:

	 	ASSIGNOR
	 	
	 	[NAME OF ASSIGNOR]
	 	 
	 	By:______________________________
	 	   Title:
	 	 
	 	ASSIGNEE
	 	 
	 	[NAME OF ASSIGNEE]
	 	 
	 	By:______________________________
	 	   Title:

Accepted:

MANUFACTURERS AND TRADERS TRUST COMPANY, as 

  Administrative Agent

By_________________________________

  Title:

 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT

AND ASSUMPTION AGREEMENT

                1. Representations and Warranties. 

                1.1 Assignor. The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien or encumbrance and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and to consummate the transactions contemplated hereby;
and (b) assumes no responsibility with respect to (i) any statements, warranties
or representations made in or in connection with any Loan Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Agreement or any other Loan Document other than this Assignment, or
any collateral thereunder, (iii) the financial condition of the Borrower, any of
its Subsidiaries or Affiliates or any other Person obligated in respect of any
Loan Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.

                1.2. Assignee. The Assignee (a) represents and
warrants that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and to consummate the
transactions contemplated hereby and to become a Lender under the Loan
Agreement, (ii) it meets all requirements of an Eligible Assignee under the Loan
Agreement, (iii) from and after the Effective Date, it shall be bound by the
provisions of the Loan Agreement and, to the extent of the Assigned Interest,
shall have the obligations of a Lender thereunder, and (iv) it has received a
copy of the Loan Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 6.2(a) and (b) thereof, as applicable,
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

                2. Payments. From and after the Effective Date, the
Administrative Agent shall make all payments collected by the Administrative
Agent in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have accrued
to but excluding the Effective Date and to the Assignee for amounts which have
accrued from and after the Effective Date.

                3. General Provisions. This Assignment shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment may be executed in any number
of counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment by telecopy shall be
effective as delivery of a manually executed counterpart of this Assignment.
This Assignment shall be governed by, and construed in accordance with, the law
of the State of New York, without regard to conflicts of laws principles.

                        Schedule A

                        

                        Lenders

                         

                      
                    
                  
                
              
            
          
        
      
    
  

	
    

    Name of Lender
	
    Revolving Credit Commitment

	
    Manufacturers and Traders Trust Company

    	
    $23,000,000

	
    KeyBank National Association
	
    $12,000,000

	
    Total:
	
    $35,000,000

 

SCHEDULE 4.4

Governmental Approvals and Filings

None

 

 

SCHEDULE 4.6

Labor Matters

None

 

 

SCHEDULE 4.7

Absence of Undisclosed Liabilities

See Schedule 4.14

 

 

SCHEDULE 4.9

Existing Indebtedness

    	1.	Bank Guaranties aggregating approximately EUR 297,472 given by Fortis
    Bank on behalf of CTG Belgium N.V. in the ordinary course of business and
    secured by the lien set forth in Item 4 on Schedule 7.1.
	 	 
	2.	Bank Guaranties aggregating approximately EUR 245,000 given by RaboBank
    on behalf of CTG Europe B.V. in the ordinary course of business and secured
    by the bank account listed as Item 9 on Schedule 4.24.
	 	 
	3.	Any capital leases or purchase money financing arrangements with respect
    to any equipment identified in any of the Uniform Commercial Code filings
    set forth in Item 1 on Schedule 7.1.
	 	 
	4.	Payment of a $65,000 deferred license fee to Dorenfest due on May 15,
    2005.
	 	 
	5.	Obligations of the Borrower in the amount of $2,500 a month for the
    remainder of the life of J. David Ehlke in connection with the judgment set
    forth in Item 6 on Schedule 7.1.
	 	 
	6.	See attached Schedule of Intercompany Payable Amounts.

    
    
    
 

  

	CTG, Inc.	 	
	 	
	Intercompany Payable amounts	
	 	 	
	
    Computer Task Group, Incorporated	
	 	 	
	CTG Europe	$ 914,828.80 	
	CTG UK	$ 23,528.64 	
	CTG Belgium	$ 135,583.24 	
	CTG Luxembourg	$ 22,969.74 	
	  	 	
	CTG UK 	 	
	  	 	
	CTG Europe	$ 220,310.43 	
	CTG Holdings	$ 180,537.27 	
	CTG, Inc.	$ 1,086,432.31 	
	CTG Canada	$ 123,247.54 	
	 	 	
	CTG Belgium	 	
	  	 	
	CTG Europe	$ 1,189,215.12 	
	CTG Luxembourg	$ 20,416.26 	
	CTG UK	$ 58,818.85 	
	CTG Canada	$ 911.94 	
	 	 	
	CTG Luxembourg	 	
	 	 	
	Belgium	$ 4,549.00 	
	CTG Europe	$ 393,893.39 	
	CTG UK	$ 74.17 	
	  	 	
	CTG Canada	 	
	 	 	 
	Belgium	$ 20,047.06 	
	CTG, Inc	$ 1,344,489.05 	
	  	 	
	CTG International	 	
	 	  	
	CTG, Inc.	$ 595,823.00 	
	CTG Europe	$ 1,132.60 	
	  	 	
	CTG Europe	
     
	
    

  

		
    	
	CTG, Inc.	$ 30,954,177.69	
	CTG UK	$ 2,394.39 	
	CTG Canada	$ 231.20 	
	CTG Luxembourg	$ 713.21 	
	  	 	 
	CTG of Buffalo	 	
	 	  	
	CTG, Inc.	$ 1,764,271.34 	

 

SCHEDULE 4.12

Partnerships, Subsidiaries, etc.

        Domestic Subsidiaries

	

        
        Name

    	

        
        Type of Organization

    	

        
        Jurisdiction of Formation

    	

        
        Ownership

    
	

        Computer Task Group International, Inc. 

    	

        Corporation

    	

        Delaware

    	

        Wholly owned by Computer Task Group, Incorporated

    
	

        CTG of Buffalo, Inc.

    	

        Corporation

    	

        New York

    	

        Wholly owned by Computer Task Group, Incorporated

    

        Foreign Subsidiaries

	Name	Type of

    Organization	Jurisdiction of Formation	Ownership
	 	 	 	 
	Computer Task Group Europe B.V.	Netherlands Corporation	The Netherlands	Wholly owned by Computer Task Group
    International, Inc.
	Computer Task Group (UK) Limited	English Corporation	UK	Wholly owned by Computer Task Group Europe, B.V.

  

  
 

	Computer Task Group Belgium N.V.	Belgium corporation	Belgium	99.99% owned by Computer Task Group Europe, B.V.
    01% owned by Rendeck Macro-4 Software B.V.

	Computer Task Group Luxembourg, S.A.	Luxembourg corporation	Luxembourg	Wholly owned by Computer Task Group Europe, B.V.
	Computer Task Group of Canada Inc.	Ontario Corporation	Province of Ontario, Canada	Wholly owned by Computer Task Group,
    Incorporated

        Inactive Subsidiaries

 

	Computer Task Group of Delaware, Inc.*	Corporation	

        Delaware

    	Wholly owned by Computer Task Group,
    Incorporated
	Computer Task Group of Kansas, Inc.*	Corporation	

        Missouri

    	Wholly owned by Computer Task Group (Holdings),
    Ltd.

	Computer Task Group (Holdings) Ltd. *	English Corporation	UK	Wholly owned by Computer Task Group,
    Incorporated
	Rendeck Macro-4 Software B.V.*	Netherlands Corporation	The Netherlands	Wholly owned by Computer Task Group Europe, B.V.
	Computer Task Group France, S.A.S.*	French Corporation	France	Wholly owned by Computer Task Group Europe, B.V.
	CTG of England, Ltd. **	English Corporation	UK 	Wholly owned by Computer Task Group (U.K.),
    Ltd.

* Inactive                         **Inactive or dissolved

SCHEDULE 4.13

Material Agreements

    
	1.	

    Technical Services Agreement (Agreement # 4998CC0046) with International
    Business Machines, Inc. ("IBM") dated 11/1/02, as amended. A copy of
    this agreement has been furnished to Administrative Agent.

    
    
    
 

     

  
  SCHEDULE 4.14

  Litigation

  

XPAN, LLC v. Computer Task Group, Inc., CASE NO. 5:03-CV-225, Northern
District of Ohio, Eastern Division. This action stems from a contract for
the provision of software development services. A number of allegations,
including breach of contract, are delineated in the complaint. The court
recently granted CTG's motion for partial summary judgment seeking to limit
damages to the value of the contract.

 

SCHEDULE 4.18

Intellectual Property

	 	 	 	 	 	 	
    
    Statement

    Of Continued

	
    Trademark	
    Class
	
    
    For Use With
	
    
    Filed
	
    
    Issued
	
    
    Registration No.
	
    
    Use due
	
    
    Renew by

								
	CTG	
    35, 42
	
    Computer Services
	
    9/3/1981
	
    2/8/1983
	
    1,226,870
	
    filed
	
    2/8/2013

	CTG (logo)	
    35, 42
	
    Computer Services
	
    7/5/1994
	
    9/19/1995
	
    1,920,102
	
    9/19/2001
	
    9/19/2007

	 	 	 	 	 	 	 	 
	CTG HealthCare Solutions	
    35
	
    Computer Svcs for Healthcare
	
    5/19/1999
	
    7/23/2002
	
    2598451
	
    7/23/2007
	
    7/23/2007

	CTG HealthCare Solutions
    (logo)	
    35
	
    Computer Svcs for Healthcare
	
    5/19/1999
	
    6/25/2002
	
    2585809
	
    6/25/2007
	
    6/25/2007

	 	
    
	 	
    
	
    
	
    
	
    
	
    

	OneVision	
    9
	
    Computer Software in Steel Industry
	
    5/8/1996
	
    2/24/1998
	
    2,138,231
	
    filed
	
    2/24/2009

	 	 	 	 	 	 	 	 
	TransMarc	
    35
	
    Y2K Data Processing
	
    1/12/1998
	
    9/28/1999
	
    2,280,688
	
    9/28/2005
	
    9/28/2005

								
	Elumen	
    35,42
	
    Health Care Computer Services
	
    11/3/1997
	
    12/26/2000
	
    2,416,109
	
    12/26/2006
	
    12/26/2006

								
	Elumen Solutions	
    35,42
	
    Health Care Computer Services
	
    11/3/1997
	
    12/26/2000
	
    2,416,109
	
    12/26/2006
	
    12/26/2006

								
	Zenius	
    42
	
    Computer Services
	
    12/29/1999
	
    12/18/2001
	
    2520996
	
    12/18/2006
	
	 	 	 	 	 	 	 	 
	Zenius (logo)	 	
    Computer Services
	
    2/22/2000
	
    1/1/2002
	
    2526012
	
    1/1/2007
	 
	 	 	 	 	 	 	 	 
	ITCapital	
    42
	
    Computer Services
	
    1/13/2000
	
    9/25/2001
	
    2493504
	
    9/25/2006
	 

 

	 	 	 	 	 	 	 	 
	exemplar	
    42
	
    Computer Services
	
    12/29/1999
	
    8/26/2002
	
    2605345
	
    8/6/2007
	 
	 	 	 	 	 	 	 	 
	We've been where you want to
    go	
    42
	
    Computer Services
	
    2/2/2000
	
    12/25/2001
	
    2523381
	
    12/25/2006
	 
	 	 	 	 	 	 	 	 
	Assureware	
    42
	
    Computer Services
	
    2/22/2001
	
    3/18/2003
	
    2698752
	
    3/18/2008
	

 

	
    Copyright Registration	
    Serial No.
	
    Date of Registration
	
				
	Best
    Practices Database (IDX)	
    TX 6-007-652
	
    7/21/2004
	
	E-Business
    Readiness Test	
    TX 5-194-892
	
    4/10/2000
	
	HIPAA
    Interactive Readiness Test	
    TX 5-181-409
	
    4/14/2000
	

Patents

None

Foreign Trademarks:

	
    Country 	 Mark 	 Registration Date	 Reg.
No. 	 Owned by
	Canada 	ctg logo	March 16, 1996	TMA455,299 	Computer Task Group of Canada Inc.
	UK 	ctg logo	December 22, 1995	1576994	Computer Task Group Europe B.V.
	UK 	ctg logo 	November 14, 1997	1576995 	Computer Task Group Europe B.V.
	Benelux	ctg logo	June 30, 1994	556973 	Computer Task Group Europe B.V.
	Benelux	ctg logo	June 30, 1994	557142	Computer Task Group Europe B.V.
	Benelux 	ctg logo	June 30, 1994 	557143	Computer Task Group Europe B.V.

 

SCHEDULE 4.19

Taxes

A possible $20k tax liability exposure was just recently brought to the
Borrower's attention. The alleged exposure stems from a 2001 withholding tax
issue that is currently being investigated.

 

 

SCHEDULE 4.20

Employee Benefits

None

 

SCHEDULE 4.21

Environmental Matters

None

 

 

SCHEDULE 4.22

Guaranties and Indemnities

See Schedule 7.2(i)

 

 

SCHEDULE 4.24

Bank Accounts

 

 

SCHEDULE 4.26

Financial Statements

None

 

 

SCHEDULE 7.1

Permitted Liens

 

    
    	1.	Any Lien against the Borrower listed below in this Item 1 arising out of
    any financing or other transaction reflected by any filing listed below in
    this Item 1 but limited to the Collateral specified below in this Item 1:

  

	Debtor
	Secured Party	Filing Date
    

    & Number	Filing
    

    Jurisdiction	Collateral
	Computer Task Group, Inc.	MCI Capital Services	7/25/00 1450637/26/00

    Q80-5724

    	New York StateErie County,
    

    NY
	Lease #6879109 Leased computer equipment
	Computer Task Group, Incorporated	Dell Financial Services, L.P.	10/29/01209991
	New York	Equipment leased pursuant to Master Lease
    Agreement #1240316 6/8/00

    	 	 
	2.	Liens granted in typical bank documentation in conjunction with the
    opening of the bank accounts listed on Schedule 4.24 but limited to the
    amounts on deposit in the related bank account.
	 	 
	3.	The legal privilege (art. 20-1° of Title XVIII - Privileges and Mortgages
    of the Belgian Civil Code) of the landlord on the movable office
    furniture/equipment and inventory located in the rented premises at
    Woluwelaan 140A/140B, B 1831 Diegem, Belgium for matured unpaid rent (up to
    a maximum of 2 years) and the unmatured rent over the remaining rental
    period.
	 	 
	4.	Liens granted by CTG Belgium N.V. in connection with a pledge on the
    tangible and intangible personal property of CTG Belgium N.V. in favor of
    Fortis Bank as security for up to EUR 272,682.88 for an overdraft facility
    and for the issuance of rental and performance guarantees up to a joint
    maximum amount of EUR 297,472 and listed on Schedule 7.2(i).
	 	 
	5.	Liens granted on the bank account of CTG Europe B.V. listed as Item 9 on
    Schedule 4.24 in connection with bank guaranties given by RaboBank in the
    ordinary course of business and listed on Schedule 7.2(i).
	 	 
	6.	Judgment against the Borrower in favor of J. David Ehlke filed in Erie
    County in an amount of $2,500 per month for the remainder of the life of J.
    David Ehlke.

 

	7.	Liens in favor of JPMorgan Chase Bank, N.A. ("Chase") under a Cash
    Collateral Agreement between Chase and the Borrower dated on or about the
    date of this Agreement.

    
    

  

SCHEDULE 7.2(i)

Certain Existing Indebtedness

    	1.	Bank Guaranties aggregating approximately EUR 297,472 given by Fortis
    Bank on behalf of CTG Belgium N.V. in the ordinary course of business and
    secured by the lien set forth in Item 4 on Schedule 7.1.
	 	 
	2.	Bank Guaranties aggregating approximately EUR 245,000 given by RaboBank
    on behalf of CTG Europe B.V. in the ordinary course of business and secured
    by the bank account listed as Item 9 on Schedule 4.24.
	 	 
	3.	Any capital leases or purchase money financing arrangements with respect
    to any equipment identified in any of the Uniform Commercial Code filings
    set forth in Item 1 on Schedule 7.1.
	 	 
	4.	Payment of a $65,000 deferred license fee to Dorenfest due on May 15,
    2005.
	 	 
	5.	Obligations of the Borrower in the amount of $2,500 a month for the
    remainder of the life of J. David Ehlke in connection with the judgment set
    forth in Item 6 on Schedule 7.1.
	 	 
	6.	See attached Schedule of Intercompany Payable Amounts.

    
    
    
 

  

	CTG, Inc.	  	
	Intercompany Payable amounts	
	  	  	
	
    Computer Task Group, Incorporated	
	  	  	
	CTG Europe	$ 914,828.80 	
	CTG UK	$ 23,528.64 	
	CTG Belgium	$ 135,583.24 	
	CTG Luxembourg	$ 22,969.74 	
	  	 	 
	CTG UK	 	
	  	  	
	CTG Europe	$ 220,310.43 	
	CTG Holdings	$ 180,537.27 	
	CTG, Inc.	$ 1,086,432.31 	
	CTG Canada	$ 123,247.54 	
	  	  	
	CTG Belgium	  	
	  	  	
	CTG Europe	$ 1,189,215.12 	
	CTG Luxembourg	$ 20,416.26 	
	CTG UK	$ 58,818.85 	
	CTG Canada	$ 911.94 	
	  	  	
	CTG Luxembourg	  	
	  	  	
	Belgium	$ 4,549.00 	
	CTG Europe	$ 393,893.39 	
	CTG UK	$ 74.17 	
	  	  	
	CTG Canada	  	
	  	  	
	Belgium	$ 20,047.06 	
	CTG, Inc	$ 1,344,489.05 	
	  	  	
	CTG International	  	
	  	  	
	CTG, Inc.	$ 595,823.00 	
	CTG Europe	$ 1,132.60 	
	  	  	
	CTG Europe	  	

  
  
 

	  	  	
	CTG, Inc.	$ 30,954,177.69	
	CTG UK	$ 2,394.39 	
	CTG Canada	$ 231.20 	
	CTG Luxembourg	$ 713.21 	
	  	  	
	CTG of Buffalo	  	
	  	  	
	CTG, Inc.	$ 1,764,271.34 	

 

SCHEDULE 7.4

Transactions with Affiliates

Borrower owns 60,000 shares (or approximately 12.5%) of WineISIT.com.
WineISIT.com is a national marketing, media and information company for the
three-tier beverage alcohol industry.

Borrower owns a Stock Employee Compensation Trust (SECT) to provide funding
for existing employee stock plans and benefit programs. The SECT currently
maintains approximately 19% of the shares of Borrower. The SECT currently owes
$403,351.20 to the Borrower.

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