-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E+qUjYuTZcNF4b0Vtsu+uRqangHNFLPekDzbO7ZsCC7o9937KtbDGqoxikB5eQQH Ldt5OhNq7Z8oh3zXdaoGuQ== 0000941157-98-000028.txt : 19980522 0000941157-98-000028.hdr.sgml : 19980522 ACCESSION NUMBER: 0000941157-98-000028 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19980521 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER TASK GROUP INC CENTRAL INDEX KEY: 0000023111 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 160912632 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-32163 FILM NUMBER: 98629650 BUSINESS ADDRESS: STREET 1: 800 DELAWARE AVE CITY: BUFFALO STATE: NY ZIP: 14209 BUSINESS PHONE: 7168828000 MAIL ADDRESS: STREET 1: 800 DELAWARE AVE CITY: BUFFALO STATE: NY ZIP: 14209 FORMER COMPANY: FORMER CONFORMED NAME: MARKS BAER INC DATE OF NAME CHANGE: 19690128 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER TASK GROUP INC STOCK EMPLOYEE COMPENSATION TRUST CENTRAL INDEX KEY: 0001042368 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: COMPUTER TASK GROUP INC STREET 2: 800 DELAWARE AVENUE CITY: BUFFALO STATE: NY ZIP: 14209 BUSINESS PHONE: 7168877366 MAIL ADDRESS: STREET 1: COMPUTER TAKS GROUP INC STREET 2: 800 DELAWARE AVE CITY: BUFFALO STATE: NY ZIP: 14209 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 3)* Computer Task Group, Incorporated (Name of Issuer) Common Stock, Par Value $.01 Per Share 205477 10 2 (CUSIP Number) Peter P. Radetich, Esq. Computer Task Group, Incorporated 800 Delaware Avenue Buffalo, New York 14209 Tel. 716-882-8000 Fax. 716-887-7370 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 29, 1997 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7(b) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 205477102 1. Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person: Computer Task Group, Incorporated Stock Employee Compensation Trust Thomas R. Beecher, Trustee I.R.S. Id No. 16-1453664 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [ ] 3. SEC Use Only: 4. Source of Funds: SC 5. Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ]. 6. Citizenship or Place of Organization: New York 7. Sole Voting Power: 4,536,537 8. Shared Voting Power: -0- 9. Sole Dispositive Power: -0- 10. Shared Dispositive Power: 4,536,537 11. Aggregate Amount Beneficially Owned by Each Reporting Person: 4,536,537 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] 13. Percent of Class Represented by Amount in Row (11): 21.86% 14. Type of Reporting Person: EP, 00 SCHEDULE 13D Item 1. Security and Issuer. Item 1 is hereby amended and restated as follows: This amendment no. 3 ("Amendment No. 3") amends the statement on Schedule 13D (the "Statement") filed on May 12, 1994 with the Securities and Exchange Commission (the "SEC"), as amended by Amendment No. 1 filed with the SEC on December 14, 1994 ("Amendment No. 1") and Amendment No. 2 filed with the SEC on August 26, 1997 ("Amendment No. 2") by the person named in Item 2 of the Statement relating to the Common Stock, $.01 par value (the "Common Stock") of Computer Task Group, Incorporated, a New York corporation (the "Issuer" or "CTG"). The principal executive offices of the Issuer are located at 800 Delaware Avenue, Buffalo, New York 14209. Item 3. Source and Amount of Funds or Other Consideration. Item 3 is hereby amended and restated as follows: Effective May 3, 1994, (a) the Issuer and the Trustee, as trustee of the Trust, entered into a trust agreement creating the Trust (the "Trust Agreement"); (b) the Trust borrowed $13,400,000 from the Issuer pursuant to the terms of a Promissory Note (the "Original Note"); (c) the Trust purchased an aggregate of 1,570,200 shares of the Issuer's Common Stock (the "Original Shares") for $13,346,700 ($8.50 per Original Share) in privately negotiated transactions from two unrelated third parties; and (d) the Trust pledged the Original Shares to the Issuer as collateral for the Original Note. The Original Note bears interest at a rate equal to the "prime" rate of interest charged from time to time by Manufacturers and Traders Trust Company and is payable in quarterly installments through April 1, 2004. Effective December 7, 1994, (a) the Trust borrowed $1,481,200 from the Issuer pursuant to the terms of a promissory note (the "Second Note"); (b) the Trust purchased an aggregate of 200,000 shares of the Issuer's Common Stock (the "Second Shares") for $1,481,200 ($7.406 per Second Share) from International Business Machines Corporation in a privately negotiated transaction; and (c) the Trust pledged the Second Shares to the Issuer as collateral for the Second Note. The Second Note bears interest at a rate equal to the "prime" rate of interest charged from time to time by Manufacturers and Traders Trust Company and is payable in quarterly installments through October 1, 2004. Effective March 21, 1997, (a) the Trust borrowed $7,113,521.00 from the Issuer pursuant to the terms of a promissory note (the "Third Note"); (b) the Trust used the borrowed funds to acquire shares of the Issuer in the transactions described below (the "Third Shares"); and (c) the Trust pledged the Third Shares to the Issuer as collateral for the Third Note. The Third Note bears interest at a rate equal to the "prime" rate of interest charged from time to time by Manufacturers and Traders Trust Company and is payable in quarterly installments through July 1, 2007. The Trust engaged in the following transactions since it filed Amendment No. 1: 04/28/95 60,418 shares purchased from former officer of Issuer in privately negotiated transaction 01/13/97 6,533 shares distributed between CTG Employee Stock Purchase Plan and Employee Stock Option Plan 02/10/97 3,203 shares distributed between CTG Employee Stock Option Plan and Deferred Compensation Plan 03/21/97 31,900 shares - open market purchase 03/24/97 18,100 shares - open market purchase 03/25/97 25,000 shares - open market purchase 03/25/97 25,000 shares - open market purchase 03/26/97 20,000 shares - open market purchase 03/27/97 6,800 shares - open market purchase 03/28/97 4,753 shares distributed to CTG Employee Stock Purchase Plan 03/31/97 8,900 shares - open market purchase 04/01/97 4,300 shares - open market purchase 04/03/97 1,200 shares - open market purchase 04/04/97 1,400 shares - open market purchase 05/09/97 50,000 shares acquired from treasury 05/19/97 Record Date for 2-for-1 stock split effective 06/02/97 05/29/97 19,475 shares distributed to CTG Employee Stock Option Plan 06/02/97 2,008,728 acquired due to 2-for-1 stock split 06/03/97 5,838 shares distributed to CTG Employee Stock Option Plan 06/04/97 25,313 shares distributed to cover due bill for stock split 06/09/97 10,000 shares distributed to CTG Employee Stock Option Plan 06/23/97 2,250 shares distributed to CTG Employee Stock Option Plan 06/25/97 4,450 shares distributed to CTG Employee Stock Option Plan 06/27/97 10,286 shares distributed to CTG Employee Stock Purchase Plan Effective October 29, 1997, (a) the Trust entered into a promissory note with the Issuer permitting it to borrow up to $65,000,000 (the "Fourth Note"); (b) the Trust used the borrowed funds to acquire shares of the Issuer in the transactions described below (the "Fourth Shares"); and (c) the Trust pledged the Fourth Shares to the Issuer as collateral for the Fourth Note. The Fourth Note is a Demand Grid Note that bears interest at a rate equal to the "prime" rate of interest charged from time to time by Manufacturers and Traders Trust Company and is payable on demand. The Trust engaged in the following transactions subsequent to the filing of Amendment No. 2: 06/28/97 Transfer to Stock Option Plan 14,000 07/07/97 Transfer to Stock 750 Option Plan 07/21/97 Transfer to Stock 40,000 Option Plan 08/07/97 Transfer to Stock 21,000 Option Plan 08/08/97 Transfer to Stock 11,000 Option Plan 08/25/97 Transfer to Stock 7,100 Option Plan 09/03/97 Transfer to Stock 22,900 Option Plan 09/05/97 Transfer to Stock 250 Option Plan 09/08/97 Transfer to Stock 10,500 Option Plan 09/09/97 Transfer to Stock 150 Option Plan 09/23/97 Open Market Purchase 37,000 09/24/97 Open Market Purchase 4,000 09/25/97 Open Market Purchase 25,000 09/26/97 Open Market Purchase 6,100 09/26/97 Transfer to Employee 6,761 Stock Purchase Plan 10/15/97 Open Market Purchase 126,800 10/16/97 Open Market Purchase 23,200 10/21/97 Open Market Purchase 75,000 10/23/97 Open Market Purchase 25,000 10/24/97 Open Market Purchase 10,000 10/29/97 Open Market Purchase 40,000 11/03/97 Open Market Purchase 2,100 11/04/97 Open Market Purchase 7,900 11/05/97 Open Market Purchase 10,000 11/06/97 Open Market Purchase 25,000 11/07/97 Open Market Purchase 25,000 11/10/97 Open Market Purchase 25,000 11/11/97 Open Market Purchase 21,000 11/12/97 Open Market Purchase 29,000 11/13/97 Open Market Purchase 25,000 11/18/97 Open Market Purchase 23,400 11/19/97 Open Market Purchase 26,600 11/20/97 Open Market Purchase 10,500 11/21/97 Open Market Purchase 14,500 11/24/97 Open Market Purchase 6,900 11/25/97 Open Market Purchase 18,100 11/26/97 Open Market Purchase 23,306 11/28/97 Open Market Purchase 12,100 12/01/97 Open Market Purchase 25,000 12/02/97 Open Market Purchase 25,000 12/03/97 Open Market Purchase 4,300 12/04/97 Open Market Purchase 35,700 12/05/97 Open Market Purchase 45,750 12/07/97 Transfer to Stock 7,000 Option Plan 12/12/97 Open Market Purchase 20,300 12/15/97 Open Market Purchase 73,950 12/31/97 Transfer to Employee 11,991 01/12/98 Stock Purchase Plan 12,150 Transfer to Stock Option Plan 01/15/98 Transfer to 401(K) Plan 955 01/29/98 Transfer to 401(k) Plan 1,148 02/12/98 Transfer to 401(k) Plan 1,250 02/13/98 Transfer to Stock Option Plan 9,350 02/17/98 Transfer to Stock Option Plan 5,000 02/19/98 Transfer to Stock Option Plan 1,000 02/20/98 Transfer to Stock Option Plan 15,000 02/23/98 Transfer to Stock Option Plan 5,000 02/25/98 Transfer to 401(k) Plan 944 02/26/98 Transfer to Stock Option Plan 10,900 03/03/98 Transfer to Stock Option Plan 8,373 03/04/98 Transfer to Stock Option Plan 42,000 03/10/98 Transfer to Stock Option Plan 1,000 03/11/98 Transfer to 401(k) Plan 1,057 03/12/98 Transfer to Stock Option Plan 1,625 03/19/98 Transfer to Stock Option Plan 1,250 03/26/98 Transfer to 401(k) Plan 993 03/30/98 Transfer to Stock Option Plan 2,000 04/01/98 Transfer to Employee Stock 8,726 04/03/98 Purchase Plan 4,425 04/08/98 Transfer to Stock Option Plan 1,091 04/17/98 Transfer to 401(k) Plan 21,000 04/22/98 Transfer to Stock Option Plan 1,174 Transfer to 401(k) Plan Item 4. Purpose of Transaction. Item 4 is hereby amended and restated as follows: This Amendment No. 3 updates the status of the aggregate shareholdings of the Trust. As of April 30, 1998 the Trust owned a total of 4,536,537 shares equaling approximately 21.86% of the Issuer's total shares outstanding. This represents an increase of 596,691 shares from the total number of 3,939,846 shares owned as of the date of Amendment No. 2 and an increase in percentage owned to approximately 21.86% from approximately 18.99% as of the date of Amendment No. 2. The Trust engaged in the transactions described herein for the purpose of supplying shares to various Issuer equity based employee benefit plans. The Issuer has advised the Trustee that the Trust was created to foster employee ownership in the Issuer with an intent to motivate employees and thus to enhance the Issuer's long-term performance, thereby benefiting all stockholders of the Issuer. The Trust may in the future acquire additional securities of the Issuer in open market or privately negotiated transactions, and it may dispose of securities by transferring them to fund the Issuer's employee share benefit plans or by selling them in order to promote the purposes of the Trust. The Issuer has further advised the Trustee that the Issuer is aware that the creation of the Trust and the purchase of shares of Common Stock by the Trust may have certain anti-takeover effects. The Trust Agreement provides that the Trustee, in his sole discretion, shall vote or abstain from voting, all common stock of the Issuer held by the Trust, and shall tender or exchange, or refrain from tendering or exchanging common stock of the Issuer held in the Trust in any tender offer or exchange offer relating to shares of the Issuer's stock. The Trust Agreement also provides that in exercising such rights, the Trustee agrees to consider in connection with such decisions not only the direct financial impact on the Trust fund, but also the potential effects, direct or indirect, upon participants in the Issuer's employee benefit plans served by the Trust and the Issuer's current and former employees. In connection with such deliberations, the Trustee shall undertake, to the extent possible, to obtain information as to how shares of the Issuer's stock previously held in the Trust and currently held by such plans will be voted, tendered or exchanged. Further, the Trustee agrees to consult with the Board of Directors and the Operating Committee of the Issuer to obtain their assessment of the effects exercising such rights will have on the Issuer. The Trust Agreement provides that the Trustee shall not be held to be in breach of any fiduciary duty for any consideration given to the preceding factors, or such other factors as the Trustee in his reasonable judgment determine should be considered. The Trust Agreement also provides that except as required by law or court order, the Trustee shall maintain confidential all information regarding the manner of voting or tendering of common stock held by the Trust. The foregoing is merely a summary of certain provision of the Trust Agreement and is qualified in its entirety by reference to the Trust Agreement, a copy of which was previously filed as Exhibit A to Amendment No. 1 of this Schedule 13D. The Issuer has advised the Trustee of the following potential anti-takeover effects of the Trust. Under the New York Business Corporation Law, a merger generally requires the affirmative vote of two-thirds of the outstanding shares of the Issuer. The transfer of shares of Common Stock to the Trust may thus make it more difficult for an acquiror to obtain an affirmative merger vote without the support of the Trustee. Section 912 of the New York Business Corporation Law provides that, unless the approval of a "business combination" is received from the Board of Directors of a "resident domestic corporation" (an "RDC"), such as the Issuer, by a potential acquiror prior to such acquiror gaining beneficial ownership of 20% of the outstanding voting stock of the RDC, or unless the Board of Directors has approved the stock acquisition that caused the acquiror to pass the 20% threshold, the unapproved shareholder will be prohibited for a minimum of five years from the date of crossing the 20% threshold from engaging in a "business combination" with the RDC unless certain "formula" price provisions are met. The term "business combination" is broadly defined to include not only mergers and consolidations but also self-dealing transactions between the unapproved shareholder and the RDC, such as certain sales or purchases of assets over specified thresholds and obtaining the benefit (other than proportionately as a shareholder) of any loans, advances or other financial assistance provided by the RDC. At the end of the five year period, the unapproved shareholder is permitted to effect a "business combination" with the RDC only if such "business combination" is approved by a majority of the shares of the RDC not held by the unapproved shareholder. Alternatively, the unapproved shareholder may effect a "business combination" provided it meets the two thirds voting approval requirement and pays all remaining shareholders of the RDC a price equal to a "formula" price designed to assure that all shareholders of the RDC receive at least the highest price paid for the RDC's shares by the unapproved shareholder within the previous five years. The Trust holds approximately 21.86% of the Company's outstanding shares of Common Stock. Thus, a potential acquiror who has not received Board approval may find it more difficult to obtain the requisite shareholder approval for a "business combination" unless it is able to induce the Trustee to support its proposal. The Issuer's Certificate of Incorporation and by-laws (the "Organizational Documents") provide, among other things, that the Issuer shall maintain a classified Board of Directors. The Organizational Documents also provide that shareholders may adopt, alter, amend or repeal provisions of the Organizational Documents only by 66 2/3% of the voting power of the outstanding voting stock, voting together as a single class. Accordingly, a potential acquiror would find it more difficult to obtain the necessary shareholder approval in order to change provisions of the Organizational Documents that might facilitate a change in control of the Issuer unless it was able to induce the Trustee to support its proposals. The foregoing discussions of the New York Business Corporation Law and of the Organizational Documents are merely brief summaries of certain provisions that the Issuer believes may be relevant to the anti-takeover effects of the Trust, do not purport to provide complete or definitive statements of such law or of the Organizational Documents, and are qualified in their entirety by reference to such law and the Organizational Documents for their actual terms. Except as described above and in the Trust Agreement, neither the Trust nor the Trustee have any plans or proposals which relate to or would result in: (a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) Any material change in the present capitalization or dividend policy of the Issuer; (e) Any other material change in the Issuer's business or corporate structure; (f) Changes in the Issuer's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (g) Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (h) A class of equity securities of the Issuer becoming eligible for termination or registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or (i) Any action similar to any of those enumerated above. Item 5 is hereby amended and restated as follows: Item 5. Interest in Securities of the Issuer. Item 5 is hereby amended and restated as follows: The Trust beneficially owns 4,536,537 shares as to which it may be deemed to have sole voting power and shared dispositive power. The Shares constitute 21.86% of the outstanding Common Stock. The Shares are held by the Trust and will be released by the Trust to the Issuer's share benefit plans served by the Trust (the "Plans") as the Trust repays the Note and as the Compensation Committee of the Issuer's Board of Directors directs the Trustee, all as provided in the Trust Agreement. The Shares are pledged to the Issuer as collateral security for the Notes pursuant to the terms of a Pledge Agreement with the Issuer (the "Pledge Agreement"). The Issuer has advised the Trustee that the Issuer's contributions to the Plans will be decreased by the value of the shares allocated to the Plans from the Trust. For a discussion of the Trustee's powers with respect to voting or tendering the Common Stock held by the Trust, see Item 4, above. For a discussion of the transactions by which the Trust acquired the Shares, see Item 3, above. Item 7. Material to be filed as Exhibits. Item 7 is hereby amended and restated as follows: (A) Trust Agreement, effective May 3, 1994, between Computer Task Group, Incorporated and Thomas R. Beecher, Jr., as trustee for the Computer Task Group, Incorporated Stock Employee Compensation Trust - Previously filed. (B) Pledge Agreement, dated May 3, 1994, between Thomas R. Beecher, Jr., as Trustee of the Computer Task Group, Incorporated Stock Employee Compensation Trust and Computer Task Group, Incorporated - Previously filed. (C) Promissory Note, dated May 3, 1994, issued to Computer Task Group, Incorporated by Thomas R. Beecher, Jr., as Trustee for the Computer Task Group, Incorporated Stock Employee Compensation Trust - Previously filed. (D) Agreement of Representation and Indemnity, dated, May 3, 1994, between Computer Task Group, Incorporated and Thomas R. Beecher, Jr., - Previously filed. (E) Promissory Note, dated December 7, 1994, issued to Computer Task Group, Incorporated by Thomas R. Beecher, Jr., as Trustee for the Computer Task Group, Incorporated Stock Employee Compensation Trust - Previously filed. (F) Promissory Note, dated March 21, 1997, issued to Computer Task Group, Incorporated by Thomas R. Beecher, Jr., as Trustee for the Computer Task Group, Incorporated Stock Employee Compensation Trust. (G) Promissory Note, dated October 29, 1998, issued to Computer Task Group, Incorporated by Thomas R. Beecher, Jr., as Trustee for the Computer Task Group, Incorporated Stock Employee Compensation Trust. Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: May 15, 1998 Computer Task Group, Incorporated Stock Employee Compensation Trust By: /s/ Thomas R. Beecher, Jr. Thomas R. Beecher, Jr., Trustee of the Computer Task Group, Incorporated Stock Employee Compensation Trust Index to Exhibits
Page (A) Trust Agreement, effective May 3, 1994, between Computer Task Group, Incorporated and Thomas R. Beecher, Jr., as trustee for the Computer Task Group, Incorporated Stock Employee Compensation Trust - Previously filed. * (B) Pledge Agreement, dated May 3, 1994, between Thomas R. Beecher, Jr., as Trustee of the Computer Task Group, Incorporated Stock Employee Compensation Trust and Computer Task Group, Incorporated - Previously filed. * (C) Promissory Note, dated May 3, 1994, issued to Computer Task Group, Incorporated by Thomas R. Beecher, Jr., as Trustee for the Computer Task Group, Incorporated Stock Employee Compensation Trust - Previously filed. * (D) Agreement of Representation and Indemnity, dated, May 3, 1994, between Computer Task Group, Incorporated and Thomas R. Beecher, Jr., - Previously filed. * (E) Promissory Note, dated December 7, 1994, issued to Computer Task Group, Incorporated by Thomas R. Beecher, Jr., as Trustee for the Computer Task Group, Incorporated Stock Employee Compensation Trust - Previously filed. ** (F) Promissory Note, dated March 21, 1997, issued to Computer Task Group, Incorporated by Thomas R. Beecher, Jr., as Trustee for the Computer Task Group, Incorporated Stock Employee Compensation Trust. *** (G) Promissory Note, dated October 29, 1997, issued to Computer Task Group, Incorporated by Thomas R. Beecher, Jr. as Trustee for the Computer Task Group, Incorporated Stock Employee Compensation Trust 12
* Filed as an Exhibit to original Schedule 13D dated May 3, 1994 ** Filed as an Exhibit to Schedule 13D dated December 7, 1994 *** Filed as an Exhibit to Schedule 13D dated March 21, 1997 EX-1 2 EXHIBIT 1 DEMAND GRID NOTE $65,000,000.00 October 29, 1997 Buffalo, New York FOR VALUE RECEIVED, the undersigned, Computer Task Group, Incorporated Stock Employee Compensation Trust, with its principal business address at 200 Theatre Place, Buffalo, New York 14202 ("Borrower"), promises to pay to the order of Computer Task Group, Incorporated ("Lender") in lawful money of the United States, on demand (1) the principal amount of SIXTY FIVE MILLION ($65,000,000.00) DOLLARS, (the "Limiting Principal Amount") or the outstanding principal amount of this Note (the "Outstanding Principal Amount"), if less, (2) interest, calculated on the basis of a 365 day year on the Outstanding Principal Amount from and including the date of this Note to but not including the date the Outstanding Principal Amount is paid in full at a rate per year that shall equal the prime rate of interest charged by Manufacturers and Traders Trust Company; provided, however, that (i) in no event shall such interest be payable at a rate in excess of the maximum rate permitted by applicable law and (ii) solely to the extent necessary to result in such interest not being payable at a rate in excess of such maximum rate, any amount that would be treated as part of such interest under a final judicial interpretation of applicable law shall be deemed to have been a mistake and automatically canceled, and, if received by the Lender, shall be refunded to the Borrower, it being the intention of the Lender and the Borrower that such interest not be payable at a rate in excess of such maximum rate and (3) each cost and expense (including, but not limited to, the reasonable fees and disbursements of counsel, whether retained for advice, litigation or any other purpose) incurred by the Lender in endeavoring to (a) collect any of the Outstanding Principal Amount, any interest payable pursuant to this Note and remaining unpaid or any other amount payable by the Borrower to the Lender pursuant to this Note and remaining unpaid, (b) preserve or exercise any right or remedy of the Lender relating to, enforce or realize upon any collateral, subordination, guaranty, endorsement or other security or assurance of payment, whether now existing or hereafter arising, that now or hereafter directly or indirectly secures the payment of or is otherwise now or hereafter directly or indirectly applicable to any of the Outstanding Principal Amount, any such interest or any such other amount or (c) preserve or exercise any right or remedy of the Lender pursuant to this Note. This Note is issued by the Borrower to the Lender in connection with a line of credit made available by the Lender to the Borrower (the "Credit"). The Lender may make any loan pursuant to the Credit (individually a "Loan" and collectively "Loans") in reliance upon any oral (including, but not limited to, telephonic), written (including, but not limited to, facsimile) or other request (a "Request") therefor that the Lender in good faith believes to be valid and to have been made on behalf of the Borrower by its trustee. The Credit is available subject to the Lender's continuing review and right of modification, restriction, suspension or termination at any time for any reason. No modification, restriction, suspension or termination of the Credit shall affect the Borrower's obligation to repay the original principal amount of each Loan, the Borrower's obligation to pay interest on the outstanding principal amount of each Loan or any other obligation of the Borrower to the Holder pursuant to this Note or otherwise. There shall be payable as principal pursuant to this Note only so much of the Limiting Principal Amount as shall have been advanced by the Lender as a Loan and is outstanding. The Holder shall set forth on the schedule attached to and made a part of this Note or any similar schedule or loan (including, but not limited to, any similar schedule or loan account maintained in computerized records) annotations evidencing (1) the date and original principal amount of each Loan and (2) the date and amount of each payment applied to the Outstanding Principal Amount. Each such annotation shall, in the absence of manifest error, be conclusive and binding upon the Borrower. No failure by the Holder to make and no error by the Holder in making any annotation on such attached schedule or any such similar schedule or loan account shall affect the obligation of the Borrower to repay the principal amount of each Loan, the obligation of the Borrower to pay interest on the outstanding principal amount of each Loan or any other obligation of the Borrower pursuant to this Note. All amounts payable pursuant to this Note and remaining unpaid shall, without any notice, demand, presentment or protest of any kind (each of which is knowingly, voluntarily, intentionally and irrevocably waived by the Borrower), automatically become immediately due if the Borrower commences or has commenced against it any bankruptcy or insolvency proceeding. This Note shall be governed by and construed, interpreted and enforced in accordance with the internal law of the State of New York, without regard to principles of conflict of laws. All payments of principal and interest under this Note are to be made to the Lender at 800 Delaware Avenue, Buffalo, New York 14209, or at such other address as the Lender may from time to time designate in writing. Computer Task Group, Incorporated Stock Employee Compensation Trust By: /s/ Thomas R. Beecher, Jr. Thomas R. Beecher, Jr., as Trustee of the Computer Task Group, Incorporated Stock Employees Compensation Trust Schedule of Advance and Payments Principal Principal Outstanding Date Amount Amount Principal Approving Advanced Advanced Date Paid Paid Amount Employee - -------- --------- --------- --------- ----------- --------- -----END PRIVACY-ENHANCED MESSAGE-----