COMPLETE BUSINESS SOLUTIONS INC, S-1, 1997-08-04

COMPLETE BUSINESS SOLUTIONS INC
S-1, 1997-08-04
COMPUTER PROGRAMMING SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 4, 1997

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------

COMPLETE BUSINESS SOLUTIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)

MICHIGAN
(State or Other Jurisdiction
of Incorporation or Organization)
7371
(Primary Standard Industrial
Classification Code Number)
38-2606945
(I.R.S. Employer
Identification No.)

32605 WEST TWELVE MILE ROAD
SUITE 250
FARMINGTON HILLS, MICHIGAN 48334
(248) 488-2088
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Executive Offices)
------------------------------

RAJENDRA B. VATTIKUTI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
COMPLETE BUSINESS SOLUTIONS, INC.
32605 WEST TWELVE MILE ROAD
SUITE 250
FARMINGTON HILLS, MICHIGAN 48334
(248) 488-2088
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
------------------------------

With Copies to:

ARTHUR DUDLEY, II
JUSTIN G. KLIMKO
Butzel Long
150 W. Jefferson, Suite 900
Detroit, MI 48226-4430
(313) 225-7000
DOUGLAS R. NEWKIRK
J. TODD ARKEBAUER
Sachnoff & Weaver, Ltd.
30 South Wacker Drive, 29th Floor
Chicago, IL 60606
(312) 207-1000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 434,
please check the following box. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=======================================================================================================================
PROPOSED PROPOSED AMOUNT
AMOUNT MAXIMUM MAXIMUM OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value..................... 2,587,500 27$3/8 $70,832,812 $21,464
=======================================================================================================================
</TABLE>

(1) Includes 337,500 shares that are subject to an over-allotment option granted
to the Underwriters.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 on the basis of the
average high and low prices of the Common Stock on the Nasdaq National
Market on July 31, 1997.
------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION
OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED AUGUST 4, 1997

PROSPECTUS
, 1997

2,250,000 SHARES

CBSI LOGO
COMMON STOCK

Of the 2,250,000 shares of Common Stock being offered hereby, 1,250,000
shares are being sold by Complete Business Solutions, Inc. ("CBSI" or the
"Company") and 1,000,000 shares are being sold by the Selling Shareholders. See
"Principal and Selling Shareholders." The Company will not receive any part of
the proceeds from the sale of shares by the Selling Shareholders.

The Common Stock is traded on the Nasdaq National Market under the symbol
"CBSL." On July 31, 1997, the last reported sale price of the Common Stock was
$27 1/2 per share. See "Price Range of Common Stock."
------------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO THE DISCOUNTS AND TO THE THE SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share............... $ $ $ $
Total(3)................ $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------

(1) See "Underwriting" for indemnification arrangements with the Underwriters.

(2) Before deducting expenses, estimated at $850,000, which will be paid by the
Company.

(3) The Company and the Selling Shareholders have granted to the Underwriters a
30-day option to purchase up to 337,500 additional shares of Common Stock at
the Price to the Public, less Underwriting Discounts and Commissions, solely
to cover over-allotments, if any. If such option is exercised in full,
187,500 of such shares will be sold by the Company and 150,000 shares will
be sold by the Selling Shareholders. The total Price to the Public,
Underwriting Discounts and Commissions, Proceeds to the Company and Proceeds
to the Selling Shareholders will be $ , $ , $ and
$ , respectively. The Company will not receive any of the proceeds
from the sale of shares of Common Stock by the Selling Shareholders pursuant
to the Underwriters' over-allotment, if exercised. See "Principal and
Selling Shareholders" and "Underwriting."

The shares of Common Stock are being offered by the several Underwriters
when, as and if delivered to and accepted by the Underwriters and subject to
various prior conditions, including their right to reject orders in whole or in
part. It is expected that delivery of the share certificates will be made in New
York, New York, on or about , 1997.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

UBS SECURITIES
LEGG MASON WOOD WALKER
INCORPORATED
<PAGE> 3

APECS(R) is a registered trademark of the Company. COSMO(SM) and The Time
Machine 2000(SM) are service marks of the Company. All trademarks, service marks
and trade names referred to in this Prospectus are the property of their
respective owners.
------------------------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT COVERING
TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"UNDERWRITING."
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and the
Consolidated and Unaudited Condensed Consolidated Financial Statements and
related Notes thereto appearing elsewhere in this Prospectus. Unless otherwise
indicated, all information contained in this Prospectus assumes that the
Underwriters' over-allotment option is not exercised. Per share data for periods
prior to March 5, 1997 have been adjusted to give retroactive effect to the
conversion by JF Electra (Mauritius) Limited ("JF Electra") of its shares of
common stock in CBS Complete Business Solutions (Mauritius) Limited ("CBS
Mauritius") into 552,632 shares of no par value common stock of the Company (the
"Common Stock"). Unless otherwise indicated, the terms "Company" and "CBSI"
refer collectively to Complete Business Solutions, Inc. and its subsidiaries.

THE COMPANY

CBSI is a worldwide provider of information technology ("IT") services to
large and mid-size organizations. The Company offers its clients a broad range
of IT services, from advising clients on strategic technology plans to
developing and implementing appropriate IT applications solutions. CBSI offers
custom-tailored solutions based on an assessment of each client's needs. The
Company's services include: (i) Year 2000 conversion and testing services; (ii)
large systems applications development and maintenance; (iii) reengineering
legacy applications to client/server technology; (iv) client/server applications
development; (v) IT consulting services; (vi) packaged software implementation;
and (vii) contract programming services.

CBSI provides services in a wide variety of computing environments and uses
leading technologies, including Year 2000 tools, client/server architectures,
object-oriented programming languages and tools, distributed database management
systems, and the latest network and communications technologies. The Company
believes that the breadth of its service offerings foster long-term client
relationships, affords cross-selling opportunities, minimizes dependence on any
single technology or client and enables the Company to serve as a single source
provider for its clients' IT applications solutions. This single or preferred
provider approach is consistent with CBSI's full life-cycle, client-oriented
approach to IT solutions.

CBSI provides IT services to clients in a diverse range of industries. Its
clients include American President Lines, Chrysler Corporation, Citibank, Ford
Motor Company, IBM, IBM Global Solutions/Foremost Insurance, Lands' End, the
State of Indiana, the State of Nevada, S.W.I.F.T., Spartan Stores and UNUM Ltd.
During 1996, the Company provided services to over 220 clients in the U.S.,
Europe and Asia. The Company's strategy is to maximize its client retention rate
and secure additional engagements by providing both quality services and client
responsiveness. For each of the fiscal years 1994, 1995, and 1996, and for the
six-month period ended June 30, 1997, existing clients from the previous fiscal
year generated at least 80% of the Company's revenues. These recurring revenues
have contributed significantly to the Company's 29% compound annual revenue
growth rate over the past five fiscal years.

Since 1992, CBSI has developed an extensive offshore infrastructure in
India, including two modern software development centers in Bangalore and Madras
and a training center in Hyderabad. The Company believes this established
offshore infrastructure is one of the largest in the industry and differentiates
it from those competitors who have no offshore capability, have only recently
established offshore capability or rely mostly on contract service providers to
offer such services. With its offsite and offshore development options, the
Company can quickly provide clients with IT applications solutions on a
cost-effective basis.

The Company's goal is to become the preferred provider of IT services to an
expanding base of clients. The Company's strategy to achieve this goal is to:
(i) cross-sell services to existing clients; (ii) increase and build upon Year
2000 engagements; (iii) capitalize on significant investments in infrastructure
and increase its international capabilities; (iv) expand service offerings such
as Enterprise Resource Planning software package installation and
Internet/intranet applications; and (v) pursue targeted acquisitions.
3
<PAGE> 5

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company......................... 1,250,000 shares
Common Stock offered by the Selling Shareholders............ 1,000,000 shares
Common Stock to be outstanding after the offering........... 10,580,000 shares(1)
Use of proceeds............................................. Expansion of existing operations,
including the Company's offshore
software development operations;
development of new service lines and
possible acquisitions of related
businesses; and general corporate
purposes, including working capital.
Nasdaq National Market symbol............................... CBSL
</TABLE>

- -------------------------
(1) Excludes: (i) options outstanding on the date hereof to purchase 622,368
shares of Common Stock at a weighted average exercise price of $9.19 per
share; and (ii) 466,266 additional shares of Common Stock reserved for
issuance upon exercise of options that may be granted in the future under
the Company's 1996 Stock Option Plan. See "Management -- Employee Benefit
Plans."
4
<PAGE> 6

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------------------------- ---------------------
1992 1993 1994 1995 1996 1996 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL STATEMENT OF INCOME
DATA:
Revenues......................... $32,382 $43,795 $56,358 $67,399 $83,241 $39,548 $50,937
Gross profit..................... 7,159 10,290 13,522 13,790 19,939 9,746 13,540
Income from operations........... 1,410 1,937 2,635 1,966 4,484 2,515 4,155
Interest expense (income)........ 185 197 345 692 539 300 (378)
Provision for income taxes....... -- -- -- -- 84 36 1,991
Minority interest................ 36 127 176 252 158 113 82
Net income....................... $ 1,189 $ 1,613 $ 2,114 $ 1,022 $ 3,703 $ 2,066 $ 2,460
PRO FORMA STATEMENT OF INCOME DATA:
Revenues................................................................ $83,241 $39,548 $50,937
Gross profit............................................................ 19,939 9,746 13,540
Income from operations(1)............................................... 4,337 2,442 4,131
Interest income(2)...................................................... (71) (11) (431)
Provision for income taxes(3)........................................... 1,582 881 1,440
Net income(4)........................................................... $ 2,826 $ 1,572 $ 3,122
Net income per common share............................................. $ 0.34 $ 0.19 $ 0.36
Weighted average shares outstanding(5).................................. 8,213 8,130 8,712
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
---------------------
AS
ACTUAL ADJUSTED(6)
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................................................... $17,763 $49,313
Working capital................................................................... 27,512 59,062
Total assets...................................................................... 48,778 80,328
Total shareholders' equity........................................................ 35,521 67,071
</TABLE>

- -------------------------
(1) Reflects the amortization of goodwill over a period of 20 years as a result
of the Company's purchase of the 28% minority interest in CBS Mauritius. See
Notes 1 and 16 of Notes to Consolidated Financial Statements.

(2) Reflects the elimination of interest expense to give effect to the repayment
of the Company's revolving credit facility and long-term debt. See Note 16
of Notes to Consolidated Financial Statements.

(3) Reflects provision for federal and state income taxes at the effective
income tax rate as if the Company had been taxed as a C corporation and no
foreign tax holidays had been granted during the periods presented. The
effective tax rate was 35.9%, 35.9% and 31.6% for the fiscal year ended
December 31, 1996, and the six-month periods ended June 30, 1996 and 1997,
respectively.

(4) Reflects the elimination of minority interest due to the issuance of 552,632
shares of Common Stock in exchange for the minority interest in CBS
Mauritius. See Notes 1 and 16 of Notes to Consolidated Financial Statements.

(5) Reflects pro forma weighted average shares of Common Stock, plus the portion
of the Common Stock sold in the Company's initial public offering needed to
generate proceeds sufficient to repay the Company's revolving credit
facility and long-term debt at the end of each period.

(6) Adjusted to give effect to the sale of 1,250,000 shares of Common Stock by
the Company offered hereby at an assumed public offering price of $27 1/2
per share, net of underwriting discounts and commissions and estimated costs
of this offering.
5
<PAGE> 7

RISK FACTORS

RECRUITMENT AND RETENTION OF IT PROFESSIONALS

The Company's business involves delivering IT services and is
labor-intensive. The Company's success depends upon its ability to attract,
develop, motivate and retain highly-skilled IT professionals and project
managers possessing the technical skills and experience necessary to deliver the
Company's services. Qualified IT professionals are in high demand worldwide and
are likely to remain a limited resource for the foreseeable future. There can be
no assurance that qualified IT professionals will continue to be available to
the Company in sufficient numbers, or that the Company will be successful in
retaining current or future employees. Failure to attract or retain qualified IT
professionals in sufficient numbers could have a material adverse effect on the
Company's business, operating results and financial condition. Historically, the
Company has conducted a significant portion of its recruiting outside the
countries where the client's work was performed. Accordingly, any perception
among the Company's IT professionals, whether or not well founded, that the
Company's ability to assist them in obtaining H-1B temporary work permits and
permanent residency status has diminished could lead to significant employee
attrition which could result in the Company incurring increased costs for IT
professionals. See "Business -- Human Resources" and "Business -- Competition."

GOVERNMENT REGULATION OF IMMIGRATION

The Company recruits its IT professionals on a global basis to create a
workforce that it can deploy wherever required and, therefore, must comply with
the immigration laws in the countries in which it operates, particularly the
United States. As of June 30, 1997, approximately 41% of CBSI's worldwide
workforce was working under H-1B temporary work permits in the United States.
There is a limit on the number of new H-1B permits that may be approved in a
fiscal year. In years in which this limit is reached, the Company may be unable
to obtain enough H-1B permits to meet its personnel requirements. If the Company
were unable to obtain H-1B permits for its employees in sufficient quantities or
at a sufficient rate, the Company's business, operating results and financial
condition could be materially and adversely affected. Furthermore, Congress and
administrative agencies with jurisdiction over immigration matters have
periodically expressed concerns over the levels of legal and illegal immigration
into the U.S. These concerns have often resulted in proposed legislation, rules
and regulations aimed at reducing the number of work permits that may be issued.
Any changes in such laws and regulations making it more difficult to hire
foreign nationals or limiting the ability of the Company to retain foreign
employees, could require the Company to incur additional unexpected labor costs
and other expenses. Any such restrictions or limitations on the Company's hiring
practices could have a material adverse effect on the Company's business,
operating results and financial condition. See "Business -- Human Resources."

INCREASING SIGNIFICANCE AND RISKS OF NON-U.S. OPERATIONS

The Company's international consulting and offshore software development
operations are important elements of its growth strategy. The Company opened
offices in the United Kingdom in 1990, in Madras, India in 1992, in Bangalore,
India in 1995 and in Hyderabad, India in 1996. The international operations of
the Company accounted for 4.7%, 6.8%, 6.9% and 9.6% of the Company's total
revenues in fiscal years 1994, 1995, and 1996, and for the six-month period
ended June 30, 1997, respectively. These operations depend greatly upon business
and technology transfer laws in those countries, and upon the continued
development of technology infrastructure. There can be no assurance that the
Company's international operations will continue to be profitable or support the
Company's growth strategy. The risks inherent in the Company's international
business activities include unexpected changes in regulatory environments,
foreign currency fluctuations, tariffs and other trade barriers, difficulties in
managing international operations and potential foreign tax consequences,
including repatriation of earnings and the burden of complying with a wide
variety of foreign laws and regulations. The Company's failure to manage growth,
attract and retain personnel, manage major development efforts, or profitably
deliver services or a significant interruption in the Company's ability to
transmit data via satellite, could have a material adverse impact on the
Company's ability to maintain and

6
<PAGE> 8

develop successfully its international operations and could have a material
adverse effect on the Company's business, operating results and financial
condition. See "Business -- CBSI Growth Strategies."

The Company's international operations are subject to a number of special
risks, including currency exchange rate fluctuations, trade barriers, exchange
controls, political risks and risk of increases in duties, taxes and
governmental royalties, as well as changes in laws and policies governing
operations of foreign-based companies.

VARIABILITY OF QUARTERLY OPERATING RESULTS

The Company's revenues and operating results are subject to significant
variation from quarter to quarter depending on a number of factors, including
the timing and number of client projects commenced and completed during the
quarter, the number of working days in a quarter, employee hiring, attrition and
utilization rates and progress on fixed-price projects during the quarter.
Because a high percentage of the Company's expenses, in particular personnel and
facilities costs, are relatively fixed, a variation in revenues may cause
significant variations in operating results. Additionally, the Company
periodically incurs cost increases due to both the hiring of new employees and
strategic investments in its infrastructure in anticipation of future
opportunities for revenue growth. No assurances can be given that quarterly
results will not fluctuate, causing a material adverse effect on the Company's
financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Quarterly Results."

POTENTIAL DECREASE IN DEMAND FOR YEAR 2000 SERVICES

The Company realized 7% and 9% of its total revenues from Year 2000
engagements during fiscal year 1996 and the six-month period ended June 30,
1997, respectively. The Company expects that it will continue to receive
increased revenues from additional Year 2000 engagements in the near term.
However, the Company expects that Year 2000 engagements and revenues derived
from such engagements will peak prior to calendar year 2000 as companies address
their needs. Thereafter, the Company expects that revenues derived from Year
2000 engagements will steadily decline. In the absence of additional revenues
from other sources, a decline in such engagements could have a material adverse
effect on the Company's business, operating results and financial condition.

EXPOSURE TO REGULATORY AND GENERAL ECONOMIC CONDITIONS IN INDIA

A significant element of the Company's business strategy is to continue to
develop its offshore software development centers in Bangalore and Madras,
India. As of June 30, 1997, the Company had approximately 30% of its workforce
in India. The Indian government, as a means of encouraging foreign investment,
provides significant tax incentives and exemptions to regulatory restrictions.
Certain of these benefits that directly affect the Company include, among
others, tax holidays (temporary exemptions from taxation on operating income)
and liberalized import and export duties. To be eligible for certain of these
tax benefits, the Company must continue to meet certain conditions. A failure to
meet such conditions in the future could result in the cancellation of the
benefits. There can be no assurance that such tax benefits will be continued in
the future at their current levels. With respect to duties, subject to certain
conditions, goods, raw materials and components for production imported by the
Company's offices in India are exempt from the levy of a customs duty.

Although wage costs in India are significantly lower than in the U.S. and
elsewhere for comparably skilled IT professionals, wages in India are increasing
at a faster rate than in the U.S. In the past, India has experienced significant
inflation and shortages of foreign exchange, and has been subject to civil
unrest and acts of terrorism. Although the inflation rate for the periods
discussed in this Prospectus has been insignificant, increases in inflation in
the future could have a material adverse effect on the Company's business,
operating results and financial condition. Additionally, changes in interest
rates, taxation or other social, political, economic or diplomatic developments
affecting India in the future could also have a material adverse effect on the
Company's business, operating results and financial condition. See
"Business -- The CBSI Solution."

7
<PAGE> 9

FIXED-PRICE PROJECTS

The Company undertakes certain projects on a fixed-price basis, as
distinguished from billing on a time-and-materials basis. Significant cost
overruns on fixed-price projects could have a material adverse effect on the
Company's business, operating results and financial condition. These risks may
be heightened if the Company acts as a subcontractor on a fixed-price project
because of its limited ability to control project variables and to negotiate
directly with the ultimate client. For example, in 1994 and 1995, the Company
provided services as a subcontractor on a fixed-price project to design and
develop a human services and child support enforcement system for a state
government. The Company incurred approximately $3.0 million in excess personnel
costs, primarily in 1995, to meet the demands of this project and the Company's
overall gross profit margin therefore declined from 24% in 1994 to 21% in 1995.
Excluding the excess costs associated with this project, the Company's gross
profit margins would have remained constant from 1994 to 1995. Although the
Company intends to solicit fewer fixed-price project engagements in the future,
there can be no assurance that any fixed-price project engagements that are
accepted by the Company will be profitable. Failure to achieve profitability on
any fixed-price project engagement could have a material adverse effect on the
Company's business, operating results and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."

COMPETITION

The IT services industry is highly competitive and served by numerous
national, regional and local firms, all of which are either existing or
potential competitors of the Company. Primary competitors include Cambridge
Technology Partners, Information Management Resources, Inc., Keane, Inc. and
participants within a variety of market segments, including "Big Six" accounting
firms, implementation firms, software applications firms, service groups of
computer equipment companies, general management consulting firms, programming
companies and temporary staffing firms. Many of these competitors have
substantially greater financial, technical and marketing resources and greater
name recognition than the Company. In addition, there are relatively few
barriers to entry into the Company's markets and the Company has faced, and
expects to continue to face, additional competition from new entrants into its
markets. Moreover, there is a risk that clients may elect to increase their
internal IT resources to satisfy their applications solutions needs. Further,
the IT services industry is undergoing consolidation which may result in
increasing pressure on margins. These factors may limit the Company's ability to
increase prices commensurate with increases in compensation. There can be no
assurance that the Company will compete successfully with existing or new
competitors. See "Business -- Competition."

CONCENTRATION OF REVENUES; RISK OF TERMINATION

The Company's ten largest clients accounted for approximately 49% and 51%
of revenues in fiscal year 1996 and for the six-month period ended June 30,
1997, respectively. International Business Machines and its affiliates ("IBM")
accounted for approximately 12% and 9% of the Company's revenues in fiscal year
1996 and for the six-month period ended June 30, 1997, respectively. Revenues
from IBM are generated by multiple projects for various end users. Most of the
Company's projects are terminable by the client without penalty. An
unanticipated termination of a major project could result in the loss of
revenues and could require the Company to maintain or terminate a number of
unassigned IT professionals. The loss of any significant client or project could
have a material adverse effect on the Company's business, operating results and
financial condition. See "Business -- Clients."

MANAGEMENT OF GROWTH; CHANGING NATURE OF BUSINESS

The Company has experienced rapid growth that has placed significant
demands on the Company's managerial, administrative and operational resources.
Revenues have grown from $32.4 million in fiscal year 1992 to $83.2 million in
fiscal year 1996, and the number of employees has grown from 480 as of December
31, 1992 to 1,632 as of June 30, 1997. The Company's continued growth depends on
its ability to recruit managers, to increase its international operations, to
add service lines and to further expand its offshore facilities. Prior to March
5, 1997, no members of senior management had previously managed a public

8
<PAGE> 10

company. Effective management of growth initiatives will require the Company to
continue to improve its operational, financial and other management processes
and systems. Failure to manage growth effectively could have a material adverse
effect on the Company's business, operating results and financial condition. See
"Business -- CBSI Growth Strategies."

RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW SOLUTIONS

The IT industry is characterized by rapid technological change, evolving
industry standards, changing client preferences and new product introductions.
The Company's success will depend in part on its ability to develop IT solutions
that keep pace with changes in the IT industry. There can be no assurance that
the Company will be successful in addressing these developments on a timely
basis or that, if these developments are addressed, the Company will be
successful in the marketplace. In addition, there can be no assurance that
products or technologies developed by others will not render the Company's
services noncompetitive or obsolete. The Company's failure to address these
developments could have a material adverse effect on the Company's business,
operating results and financial condition. See "Business -- The IT Services
Industry."

A significant number of organizations are attempting to migrate business
applications from a mainframe environment to advanced technologies, including
client/server architectures. As a result, the Company's ability to remain
competitive will be dependent on several factors, including its ability to help
existing employees maintain or develop mainframe skills and to train and hire
employees with skills in advanced technologies. The Company's failure to hire,
train and retain employees with such skills could have a material and adverse
impact on the Company's business. See "Business -- Human Resources." The
Company's ability to remain competitive will also be dependent on its ability to
design and implement, in a timely and cost-effective manner, effective
transition strategies for clients moving from the mainframe environment to
client/server or other advanced architectures. The failure of the Company to
design and implement such transition strategies in a timely and cost-effective
manner could have a material adverse effect on the Company's business. See
"Business -- The IT Services Industry."

DEPENDENCE ON PRINCIPALS

The success of the Company is highly dependent on the efforts and abilities
of Rajendra B. Vattikuti and Timothy S. Manney, the Company's President and
Chief Executive Officer, and Executive Vice President of Finance and
Administration, respectively. Messrs. Vattikuti and Manney have entered into
employment agreements with the Company of five and three years, respectively.
Such agreements contain noncompetition covenants that extend for a period of one
year following termination of employment and nondisclosure covenants. However,
such agreements do not guarantee that Messrs. Vattikuti and Manney will continue
their employment with the Company or that such covenants will be enforceable.
The loss of the services of either of these key executives for any reason could
have a material adverse effect on the Company's business, operating results and
financial condition. The Company maintains key-man life insurance on Mr.
Vattikuti in the amount of $2.0 million. In the event of Mr. Vattikuti's death,
that sum would be paid to the Company to offset the financial effect of his
death. No assurance can be given, however, that such amount of insurance would
be adequate for that purpose. See "Management -- Executive Officers and
Directors."

RISKS RELATED TO POSSIBLE ACQUISITIONS

The Company may expand its operations through the acquisition of additional
businesses. There can be no assurance that the Company will be able to identify,
acquire or profitably manage additional businesses or successfully integrate any
acquired businesses into the Company without substantial expenses, delays or
other operational or financial problems. Further, acquisitions may involve a
number of special risks, including diversion of management's attention, failure
to retain key acquired personnel, unanticipated events or circumstances, legal
liabilities and amortization of acquired intangible assets, some or all of which
could have a material adverse effect on the Company's business, operating
results and financial condition. Client satisfaction or performance problems
within an acquired firm could have a material adverse impact on the reputation
of the Company as a whole. In addition, there can be no assurance that acquired
businesses, if any, will achieve anticipated revenues and earnings. The failure
of the Company to manage its acquisition strategy

9
<PAGE> 11

successfully could have a material adverse effect on the Company's business,
operating results and financial condition. In addition, the Company may issue
additional shares of its Common Stock to acquire such additional businesses
which may reduce the percentage ownership of existing shareholders. See
"Business -- CBSI Growth Strategies."

INTELLECTUAL PROPERTY RIGHTS

The Company's success depends in part upon certain methodologies it
utilizes in designing, developing and implementing applications systems and
other proprietary intellectual property rights. The Company has developed and
owns proprietary rights for The Time Machine 2000 and COSMO methodologies under
common law. Although such ownership may enable the Company to contest the use by
its competitors of its methodologies, no assurance can be given that the Company
will be successful in doing so. Copyrights to such methodologies have not been
registered. This lack of protection may impair the Company's ability to protect
The Time Machine 2000 and COSMO methodologies and could have a material and
adverse effect on the Company's business. The Company also owns service marks
for The Time Machine 2000 and COSMO and has submitted federal trademark
applications for each. The Company has also developed and copyrighted or
acquired software products which are generally licensed to users pursuant to a
license agreement. The Company's software products include APECS, APECS Custom
View and Micro APECS Scheduler. APECS is a registered trademark of the Company.
The Company relies upon a combination of nondisclosure and other contractual
arrangements and trade secret, copyright and trademark laws to protect its
proprietary rights and the proprietary rights of third parties from whom the
Company licenses intellectual property. The Company enters into confidentiality
agreements with its employees and limits distribution of proprietary
information. There can be no assurance that the steps taken by the Company in
this regard will be adequate to deter misappropriation of proprietary
information or that the Company will be able to detect unauthorized use of and
take appropriate steps to enforce its intellectual property rights. In addition,
the laws of certain foreign countries in which the Company's products are, or
may be, developed or sold may not protect the Company's products or intellectual
property rights to the same extent as do the laws of the U.S. This lack of
protection may impair the Company's ability to protect its intellectual property
adequately and could have a material adverse impact on the Company's business.
Although the Company does not believe that its products infringe on the rights
of third parties, there can be no assurance that third parties will not assert
infringement claims against the Company in the future, or that such assertions
will not result in costly litigation or require the Company to obtain a license
for the intellectual property rights of third parties. There can be no assurance
that such licenses will be available on reasonable terms or at all. See
"Business -- The CBSI Solution" and "Business -- Intellectual Property Rights."

LIMITED TRADING HISTORY OF COMMON STOCK; STOCK PRICE VOLATILITY

The Common Stock first became publicly traded on March 5, 1997 after the
Company's initial public offering at $12 per share. Between March 5, 1997 and
July 31, 1997, the closing sale price has ranged from a low of $8 3/4 per share
to a high of $32 3/8 per share. The market price of the Common Stock could
continue to fluctuate substantially due to a variety of factors, including
quarterly fluctuations in results of operations, adverse circumstances affecting
the introduction or market acceptance of new products and services offered by
the Company, announcements of new products and services by competitors, changes
in the IT environment, changes in earnings estimates by analysts, changes in
accounting principles, sales of Common Stock by existing holders, loss of key
personnel and other factors. The market price for the Company's Common Stock may
also be affected by the Company's ability to meet analysts' expectations, and
any failure to meet such expectations, even if minor, could have a material
adverse effect on the market price of the Company's Common Stock. In addition,
the stock market is subject to extreme price and volume fluctuations. This
volatility has had a significant effect on the market prices of securities
issued by many companies for reasons unrelated to the operating performance of
these companies. In the past, following periods of volatility in the market
price of a company's securities, securities class action litigation has often
been instituted against such a company. Any such litigation instigated against
the Company could result in substantial costs and a diversion of management's
attention and resources, which could have a material adverse effect on the
Company's business, operating results and financial condition. See "Price Range
of Common Stock."

10
<PAGE> 12

CONTROL BY PRINCIPAL SHAREHOLDER

Upon completion of this offering, Mr. Vattikuti will beneficially own
approximately 49.1% of the outstanding shares of Common Stock. As a result, Mr.
Vattikuti will retain the voting power to exercise significant control over the
election of directors and other matters requiring a vote of the shareholders of
the Company. Such a concentration of ownership may have the effect of delaying
or preventing a change in control of the Company, and may also impede or
preclude transactions in which shareholders might otherwise receive a premium
for their shares over then current market prices. See "The Company,"
"Management -- Executive Officers and Directors" and "Principal and Selling
Shareholders."

LIMITATIONS ON DIRECTORS' LIABILITIES

The Company's Restated Articles of Incorporation, as amended (the
"Articles"), provide that, to the full extent permitted by law, a director of
the Company will not be personally liable to the Company or its shareholders for
damages for breach of fiduciary duty as a director. This provision would
ordinarily eliminate the liability of directors for monetary damages to the
Company and its shareholders even in instances in which the directors had been
negligent or grossly negligent. Under the Michigan Business Corporation Act
("MBCA"), a director's liability may not be limited: (i) for any breach of the
director's duty of loyalty to the Company or its shareholders; (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law; (iii) for a violation of Section 551(1) of the MBCA; (iv) for
any transaction from which the director derived any improper personal benefit;
or (v) for any act or omission occurring prior to the date when the provision
becomes effective.

ANTI-TAKEOVER PROVISIONS

The Company's Articles and Bylaws and the MBCA include provisions that may
be deemed to have anti-takeover effects and may delay, defer or prevent a
takeover attempt that shareholders might consider in their best interests.
Directors of the Company are divided into three classes and are elected to serve
staggered three-year terms. The Articles provide for 1,000,000 authorized shares
of preferred stock, the rights, preferences, qualifications, limitations and
restrictions of which may be fixed by the Board of Directors without any vote or
action by the shareholders, which could have the effect of diluting the Common
Stock or reducing working capital that would otherwise be available to the
Company. Chapter 7A of the MBCA provides, with certain exceptions, that business
combinations between a Michigan corporation and an "interested shareholder"
generally require the approval of 90% of the votes of each class of stock
entitled to be cast by the shareholders of the corporation, and not less than
2/3 of the votes of each class of stock entitled to be cast by the shareholders
of the corporation other than voting shares owned by such interested
shareholder. An "interested shareholder" is a person directly or indirectly
owning 10% or more of a corporation's outstanding voting power, or an affiliate
of a corporation who at any time within two years prior to the date in question
directly or indirectly owned 10% or more of such voting power. These provisions
may have the effect of delaying or preventing a change in control of the Company
without action by the shareholders, may discourage bids for the Common Stock at
a premium over the market price and may deter efforts to obtain control of the
Company.

Chapter 7B of the MBCA provides that "control shares" of a corporation
acquired in a control share acquisition have no voting rights except as granted
by the shareholders of the corporation. "Control shares" are shares which, when
added to shares then owned or controlled by a shareholder, increase such
shareholder's control of voting power above one of three thresholds: more than
20%, more than 33 1/3% or more than a majority of the outstanding voting power
of the corporation. Subject to certain limited exceptions, voting rights for
shares acquired in a control share acquisition must be approved by a majority of
the votes cast by holders of shares entitled to vote, excluding shares voted or
controlled by the acquiror and certain officers and directors. Under certain
circumstances, if a corporation's articles of incorporation or bylaws so provide
prior to a control share acquisition, control shares may be redeemed by the
corporation. Unless otherwise provided in a corporation's articles of
incorporation or bylaws, if control shares are accorded full voting rights and
the acquiring person has acquired a majority of all voting power of the
corporation, the shareholders of the corporation, other than the acquiring
person, have dissenters' rights to have their shares purchased by the

11
<PAGE> 13

corporation. The Articles and Bylaws of the Company currently contain no
provisions with respect to control shares.

SHARES ELIGIBLE FOR FUTURE SALE

Immediately after completion of this offering, the Company will have
10,580,000 shares of Common Stock outstanding, of which the 2,250,000 shares
sold pursuant to this offering as well as the 2,500,000 shares sold in the
initial public offering will be freely tradeable without restriction or further
registration under the Securities Act of 1933, as amended (the "Securities
Act"), except for 30,940 shares purchased in the open market by affiliates and
any additional shares acquired by affiliates of the Company. Holders of the
remaining shares will be eligible to sell such shares pursuant to Rule 144
("Rule 144") under the Securities Act at prescribed times and subject to the
manner of sale, volume, notice and information restrictions of Rule 144. The
Company has granted certain registration rights covering an aggregate of 435,832
shares of currently issued and outstanding Common Stock (427,582 shares if the
Underwriters' over-allotment option is exercised in full). In addition, 622,368
shares of Common Stock (49,231 of which are currently exercisable) are issuable
upon the exercise of outstanding stock options, which shares will be registered
by the Company under the Securities Act and after issuance upon exercise will be
freely tradeable without restriction. The Company, together with certain of its
shareholders (holding in the aggregate 5,846,679 shares of Common Stock upon
consummation of this offering), have agreed not to offer, sell, contract to sell
or otherwise dispose of, directly or indirectly, any Common Stock, or any
securities convertible into or exchangeable or exercisable for Common Stock or
exercise registration rights, until 90 days after the date of this Prospectus,
without the prior consent of Donaldson, Lufkin & Jenrette Securities
Corporation. Sales of substantial amounts of such shares in the public market or
the availability of such shares for future sale could adversely affect the
market price of the shares of Common Stock and the Company's ability to raise
additional capital at a price favorable to the Company. See "Shares Eligible for
Future Sale" and "Underwriting."

POTENTIAL LIABILITY TO CLIENTS

Many of the Company's engagements, including Year 2000 projects, involve
projects that are critical to the operations of its clients' businesses and
provide benefits that may be difficult to quantify. Although the Company
attempts to contractually limit its liability for damages arising from errors,
mistakes, omissions or negligent acts in rendering its services, there can be no
assurance that its attempts to limit liability will be successful. The Company's
failure or inability to meet a client's expectations in the execution of its
services could result in a material adverse change to the client's operations
and, therefore, could give rise to claims against the Company or damage the
Company's reputation, adversely affecting its business, operating results and
financial condition.

SIGNIFICANT UNALLOCATED NET PROCEEDS

None of the anticipated net proceeds of this offering has been designated
for specific uses. Therefore, the Board of Directors will have broad discretion
with respect to the use of the net proceeds of this offering. See "Use of
Proceeds."

ABSENCE OF DIVIDENDS

The Company does not anticipate paying any dividends on its Common Stock in
the foreseeable future. See "Dividend Policy."

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

Included in this Prospectus are various forward-looking statements,
including, among others, the expected growth related to the Year 2000 problem,
the Company's goals and strategies, the importance and expected growth of the IT
applications solutions market, the pace of change in the IT marketplace, the
demand for IT services, the ability of the Company to capitalize on offshore
investments and infrastructure,

12
<PAGE> 14

the Company's goal to expand service offerings and to pursue acquisitions, and
the ability to leverage Year 2000 engagements into additional contracts.

These statements are forward-looking and reflect the Company's current
expectations. Such statements are subject to a number of risks and
uncertainties, including, but not limited to, changes in the economic and
political environments, changes in technology and changes in the IT marketplace.
In light of the many risks and uncertainties surrounding the Company and the IT
marketplace, a prospective purchaser should keep in mind that there can be no
assurance that the forward-looking statements described in this Prospectus will
transpire.

THE COMPANY

Complete Business Solutions, Inc. was incorporated under the laws of the
State of Michigan in 1985. The Company maintains its principal executive offices
at 32605 West Twelve Mile Road, Suite 250, Farmington Hills, Michigan 48334. The
Company's web site is www.cbsinc.com. The Company's web site is not part of this
Prospectus. The Company's telephone number is (248) 488-2088.

On March 4, 1997, the Company became the sole shareholder of its
subsidiary, CBS Mauritius, which owns all of the issued and outstanding shares
of Complete Business Solutions (India) Private Limited ("CBS India"), a
corporation organized under the laws of India, and Complete Business Solutions
(Singapore) Private Limited ("CBS Singapore"), a corporation organized under the
laws of Singapore. CBS India and CBS Singapore provide offshore development
services and recruiting and training services for CBSI.

13
<PAGE> 15

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
offered by the Company are approximately $31.6 million, based on an assumed
price to the public of $27 1/2 per share and after deducting estimated
underwriting discounts and commissions and offering expenses. The Company
expects to use the net proceeds from this offering for expansion of existing
operations, including the Company's offshore software development operations;
development of new service lines and possible acquisitions of related
businesses; and general corporate purposes, including working capital. Although
the Company actively seeks to acquire related businesses, it currently has no
understandings, commitments or agreements with respect to any acquisitions.
Pending their application as described above, such proceeds will be invested in
short-term, investment grade, interest-bearing securities. The principal
purposes of this offering are to increase the Company's equity capital and
financial flexibility, to provide working capital to fund the Company's growth
strategy and to provide liquidity for the Company's shareholders.

The Company will not receive any proceeds from the sale of Common Stock by
the Selling Shareholders. See "Principal and Selling Shareholders."

PRICE RANGE OF COMMON STOCK

The Company's Common Stock has been traded on the Nasdaq National Market
under the symbol CBSL since March 5, 1997. The following table sets forth, for
the periods indicated, the range of high and low closing sale prices for the
Common Stock as reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
1997 HIGH LOW
<S> <C> <C>
First Quarter (from March 5, 1997)........................ $12 1/4 $8 3/4
Second Quarter............................................ $25 3/4 $8 7/8
Third Quarter (through July 31, 1997)..................... $32 3/8 $ 24
</TABLE>

On July 31, 1997, the closing price of the Company's Common Stock was
$27 1/2 per share. At July 30, 1997, the Company had approximately 37
shareholders of record.

14
<PAGE> 16

DIVIDEND POLICY

The Company intends to retain all of its future earnings to fund growth and
the operation of its business and therefore does not anticipate paying any cash
dividends in the foreseeable future. Future cash dividends, if any, will be at
the discretion of the Company's Board of Directors and will depend upon, among
other things, the Company's future operations and earnings, capital requirements
and surplus, general financial condition, contractual restrictions and such
other factors as the Board of Directors may deem relevant. The Company
distributed approximately $8.8 million of the proceeds from the initial public
offering to certain shareholders as part of the S corporation termination.

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1997, and as adjusted to give effect to the sale of 1,250,000 shares of
Common Stock by the Company (at an assumed public offering price of $27 1/2 per
share). The following table should be read in conjunction with the Consolidated
and Unaudited Condensed Consolidated Financial Statements and related Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus:

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
----------------------
ACTUAL AS ADJUSTED
(IN THOUSANDS)
<S> <C> <C>
Shareholders' equity:
Preferred stock, no par value; 1,000,000 shares
authorized; no shares issued........................... $ -- $ --
Common stock, no par value; 30,000,000 shares authorized;
9,300,000 shares issued and outstanding; 10,580,000
shares issued and outstanding, as adjusted(1).......... -- --
Additional paid-in capital................................ 35,803 67,353
Retained earnings......................................... 2,117 2,117
Stock subscriptions receivable............................ (2,125) (2,125)
Cumulative translation adjustment......................... (274) (274)
------- -------
Total shareholders' equity............................. 35,521 67,071
------- -------
Total capitalization.............................. $35,521 $67,071
======= =======
</TABLE>

- -------------------------
(1) Excludes: (i) options outstanding on June 30, 1997 to purchase 644,368
shares of Common Stock at a weighted average exercise price of $8.74 per
share; and (ii) 474,266 additional shares of Common Stock reserved for
issuance upon exercise of options that may be granted in the future under
the Company's 1996 Stock Option Plan. See "Management -- Employee Benefit
Plans."

15
<PAGE> 17

SELECTED FINANCIAL DATA

The selected historical financial data presented below for the five years
ended December 31, 1996, are derived from the Company's Consolidated Financial
Statements and related Notes thereto which have been audited by Arthur Andersen
LLP, independent public accountants. The amounts provided as pro forma statement
of income data have been adjusted to reflect certain transactions as noted.

The selected financial data as of and for each of the interim periods ended
June 30, 1996 and 1997, are derived from Unaudited Condensed Consolidated
Financial Statements of the Company, which in the opinion of management, include
all adjustments that are necessary for a fair presentation of the results for
the interim periods, and all such adjustments that are of a normal recurring
nature. The results of operations for the interim period ended June 30, 1997 are
not necessarily indicative of the results to be expected for any other interim
period or for the full year. The selected financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated and Unaudited Condensed
Consolidated Financial Statements and related Notes thereto appearing elsewhere
in this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL STATEMENT OF INCOME DATA:
Revenues....................................... $32,382 $43,795 $56,358 $67,399 $83,241 $39,548 $50,937
Cost of revenues............................... 25,223 33,505 42,836 53,609 63,302 29,802 37,397
------- ------- ------- ------- ------- ------- -------
Gross profit................................... 7,159 10,290 13,522 13,790 19,939 9,746 13,540
Selling, general and administrative expenses... 5,749 8,353 10,887 11,824 15,455 7,231 9,385
------- ------- ------- ------- ------- ------- -------
Income from operations......................... 1,410 1,937 2,635 1,966 4,484 2,515 4,155
Interest expense (income)...................... 185 197 345 692 539 300 (378)
------- ------- ------- ------- ------- ------- -------
Income before provision for income taxes and
minority interest............................ 1,225 1,740 2,290 1,274 3,945 2,215 4,533
Provision for income taxes..................... -- -- -- -- 84 36 1,991
Minority interest.............................. 36 127 176 252 158 113 82
------- ------- ------- ------- ------- ------- -------
Net income..................................... $ 1,189 $ 1,613 $ 2,114 $ 1,022 $ 3,703 $ 2,066 $ 2,460
======= ======= ======= ======= ======= ======= =======
PRO FORMA STATEMENT OF INCOME DATA:
Revenues................................................................................... $83,241 $39,548 $50,937
Gross profit............................................................................... 19,939 9,746 13,540
Income from operations(1).................................................................. 4,337 2,442 4,131
Interest income(2)......................................................................... (71) (11) (431)
Provision for income taxes(3).............................................................. 1,582 881 1,440
Net income(4).............................................................................. $ 2,826 $ 1,572 $ 3,122
Net income per common share................................................................ $ 0.34 $ 0.19 $ 0.36
Weighted average shares outstanding(5)..................................................... 8,213 8,130 8,712
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
--------------------------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL BALANCE SHEET DATA:
Cash and cash equivalents..................... $ 66 $ 425 $ 319 $ 830 $ 3,382 $ 641 $17,763
Working capital............................... 1,961 2,420 3,745 5,799 10,077 7,331 27,512
Total assets.................................. 11,021 16,031 20,740 23,423 31,258 27,429 48,778
Revolving credit facility and long-term
debt........................................ 2,754 4,189 5,933 6,316 6,191 7,557 --
Minority interest............................. 48 175 350 552 1,503 656 --
Total shareholders' equity.................... 4,598 6,211 8,325 9,188 13,951 11,227 35,521
</TABLE>

(3) Reflects provision for federal and state income taxes at the effective
income tax rate as if the Company had been taxed as a C corporation and no
foreign tax holidays had been granted during the periods presented. The
provision for income taxes was computed as follows:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, -----------------
1996 1996 1997
<S> <C> <C> <C>
Statutory federal income tax rate........................... 34.0% 34.0% 34.0%
State income taxes, net of federal tax effect............... 2.7 2.7 1.6
Tax rate differences on foreign earnings not subject to U.S.
tax........................................................ (3.0) (3.0) (4.0)
Amortization of goodwill.................................... 1.4 1.4 0.5
Other....................................................... 0.8 0.8 (0.5)
----- ----- -----
35.9% 35.9% 31.6%
===== ===== =====
</TABLE>

(5) Reflects pro forma weighted average shares of Common Stock, plus the portion
of Common Stock sold in the Company's initial public offering needed to
generate proceeds sufficient to repay the Company's revolving credit
facility and long-term debt at the end of each period.

16
<PAGE> 18

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains certain forward-looking statements that
involve substantial risks and uncertainties. When used in this section, the
words "anticipate," "believe," "estimate," "expect" and similar expressions as
they relate to the Company or its management are intended to identify such
forward-looking statements. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Factors that could cause or contribute to
such differences include those discussed in "Risk Factors."

OVERVIEW

Complete Business Solutions, Inc. is a worldwide provider of IT services to
large and mid-size organizations. The Company has been profitable every year
since its inception in 1985, and has experienced a compound annual revenue
growth rate of 29% over the past five fiscal years. The Company leverages its
existing client base by providing quality services and by being responsive to
clients. For each of the fiscal years 1994, 1995, and 1996, and for the
six-month period ended June 30, 1997, existing clients from the previous fiscal
year generated at least 80% of the Company's revenues.

The Company's revenues are generated primarily from professional services
fees. The Company's service offerings include: (i) Year 2000 conversion and
testing services; (ii) large systems applications development and maintenance;
(iii) reengineering legacy applications to client/server technology; (iv)
client/server applications development; (v) IT consulting services; (vi)
packaged software implementation; and (vii) contract programming services.
Contract programming services are typically provided as a member of a project
team working under the direct supervision of the client, are typically billed on
a time-and-materials basis, and have lower gross profit margins than other
professional service offerings. For all other professional service offerings,
the Company generally assumes responsibility for project management and may bill
the client on either a time-and-materials or fixed-price basis, although such
projects are generally billed on a time-and-materials basis. The Company has
been shifting its business away from contract programming services toward higher
margin service offerings. For the six-month period ended June 30, 1996, contract
programming services represented approximately 38% of professional service fee
revenues. For the six-month period ended June 30, 1997, contract programming
services represented approximately 23% of professional services fee revenues.
Gross profit margin for contract programming services and all other service
offerings was approximately 22% and 29%, respectively, for the six-month period
ended June 30, 1997.

The Company recognizes revenues on a time-and-materials basis as the
services are performed. On fixed-price engagements, the Company recognizes
revenues under the percentage of completion method. For the six-month period
ended June 30, 1997, revenues from fixed-price engagements represented
approximately 9.6% of professional service fee revenues.

CBSI's most significant cost is project personnel cost, which consists
primarily of salaries, wages and benefits for its IT professionals. The Company
strives to maintain its gross profit margin by controlling project costs and
offsetting increases in salaries and benefits with increases in billing rates.
The Company has also established a human resource allocation team to ensure that
IT professionals are quickly placed on assignments to minimize nonbillable time
and are placed on assignments that utilize their technical skills and allow for
maximum billing rates. In addition, the Company has realized higher gross profit
margins from the Company's shift to offshore projects in India, where the
salaries of IT professionals are lower as a percentage of professional service
fees. This benefit is partially offset due to additional coordination efforts
and costs for offshore projects. For example, for the six-month period ended
June 30, 1997, CBSI's operating income as a percentage of revenues overall was
approximately 8%, whereas operating income as a percentage of revenues for work
performed offshore in India was approximately 22%.

In 1994, the Company began to provide services as a subcontractor on a
fixed-price project (the "Fixed-Price Project") to design and develop a human
services and child support enforcement system for a state government. The
Company incurred $3.0 million in excess personnel costs, primarily in 1995, to
meet the

17
<PAGE> 19

demands of this project and overall gross profit margin therefore declined from
24% in 1994 to 21% in 1995. Excluding the excess costs associated with this
project, gross profit margins would have remained constant from 1994 to 1995. In
addition, although the Company's revenues increased 20% from 1994 to 1995, the
Company's income from operations decreased approximately 25% for the same period
as a result of the Fixed-Price Project.

In an effort to sustain its growth and profitability, the Company has made
and continues to make substantial investments in infrastructure, including: (i)
software development centers in three locations in the U.S. and two locations in
India; (ii) Year 2000 conversion factories in the U.S. and India; (iii) global
recruiting and training centers; (iv) a local technical charter school; and (v)
an expanded training program for recent U.S. college graduates. The Company
believes that the results of these strategic investments have not yet been fully
realized.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, selected
statement of income data as a percentage of revenues:

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED
ENDED DECEMBER 31, JUNE 30,
------------------------ --------------
1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C>
Revenues.................................................. 100% 100% 100% 100% 100%
Cost of revenues.......................................... 76 79 76 75 73
--- --- --- --- ---
Gross profit.............................................. 24 21 24 25 27
Selling, general and administrative expenses.............. 19 18 19 19 19
--- --- --- --- ---
Income from operations.................................... 5% 3% 5% 6% 8%
</TABLE>

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO JUNE 30, 1996

Revenues. The Company's revenues increased approximately 29% to $50.9
million for the six-month period ended June 30, 1997 from $39.5 million for the
same period in 1996. This growth in revenues is primarily attributable to
increases in the Company's IT professional workforce, increases in average
billing rates, further expansion of the Company's international operations and
additional services provided to existing clients. The Company's IT professional
workforce increased approximately 13% for the six-month period ended June 30,
1997 from the comparable six-month period in 1996. Revenues from international
operations, principally offshore development centers, increased approximately
81% to $4.9 million for the six-month period ended June 30, 1997 from $2.7
million for the same period in 1996. Revenues from existing clients increased
approximately $5.2 million for the six-month period ended June 30, 1997 from the
same period in 1996.

Gross Profit. Gross profit consists of revenues less cost of revenues. Cost
of revenues consists primarily of salaries (including nonbillable and training
time), benefits, travel and relocation for IT professionals. In addition, cost
of revenues includes depreciation and amortization, direct facility costs and
contractual services. Gross profit increased approximately 39% to $13.5 million
for the six-month period ended June 30, 1997 from $9.7 million for the same
period in 1996. This increase in gross profit is primarily attributable to
increases in the Company's IT professional workforce and average U.S. billing
rates, as well as the continued expansion of the Company's offshore development
centers. Gross profit as a percentage of revenues increased to approximately 27%
for the six-month period ended June 30, 1997 from 25% for the same period in
1996. This increase in gross profit as a percentage of revenues is primarily
attributable to the Company's continued strategic shift of its business toward
higher margin service offerings, including Year 2000 services, and the
increasing utilization and expansion of the Company's offshore development
centers which operate at higher gross profit and operating margins. For the
six-month period ended June 30, 1997, approximately 23% of the Company's
revenues were generated from contract programming services, as compared with
approximately 38% for the same period in 1996.

18
<PAGE> 20

Selling, General and Administrative Expenses. Selling, general and
administrative expenses consist primarily of costs associated with the Company's
direct selling and marketing efforts, human resources and recruiting
departments, administration, training and indirect facility costs. Selling,
general and administrative expenses increased approximately 30% to $9.4 million
for the six-month period ended June 30, 1997 from $7.2 million for the same
period in 1996. This increase resulted from the continued expansion of the
Company's direct selling and marketing effort, further enhancement of
infrastructure, and other general overhead cost increases necessary to support
the Company's continued revenue growth. Selling, general and administrative
expenses represented approximately 19% of revenues for the six-month periods
ended June 30, 1997 and 1996.

1996 COMPARED TO 1995

Revenues. The Company's revenues increased 23% to $83.2 million in fiscal
year 1996 from $67.4 million in fiscal year 1995. This growth in revenues is
primarily attributable to additional services provided to existing clients and
the expansion of the Company's client base to 222 as of December 31, 1996 from
209 as of December 31, 1995. Revenues from existing clients in 1996 increased
$7.5 million over revenues from those clients during 1995. Revenues from the
Company's international operations increased 24% to $5.7 million in 1996 from
$4.6 million in 1995.

Gross Profit. Gross profit increased approximately 44% to $19.9 million in
fiscal year 1996 from $13.8 million in fiscal year 1995. This increase in gross
profit is attributable primarily to the expansion of the Company's client base
and the impact of the Fixed-Price Project on fiscal year 1995 results. Gross
profit as a percentage of revenues increased to 24% in 1996 from 21% in 1995.
This increase is due primarily to billing rate increases partially offset by
salary increases to IT professionals in 1996 and the impact of the Fixed-Price
Project on fiscal year 1995 results.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 31% to $15.5 million in 1996 from $11.8
million in 1995. This increase resulted from expenses incurred to build and
enhance the infrastructure necessary to support the Company's continued revenue
growth. As a percentage of revenues, selling, general and administrative
expenses increased to 19% in fiscal year 1996 from 18% in fiscal year 1995.

1995 COMPARED TO 1994

Revenues. The Company's revenues increased 20% to $67.4 million in fiscal
year 1995 from $56.4 million in fiscal year 1994. This growth in revenues is
primarily attributable to additional services provided to existing clients, the
expansion of the Company's client base to 209 as of December 31, 1995 from 187
as of December 31, 1994, and the expansion of the Company's international
operations. Revenues from existing clients in 1995 increased $5.6 million over
revenues from those clients during 1994. Revenues from the Company's
international operations increased 77% to $4.6 million in fiscal year 1995 from
$2.6 million in fiscal year 1994.

Gross Profit. Gross profit increased 2% to $13.8 million in fiscal year
1995 from $13.5 million in fiscal year 1994, despite the impact of the
Fixed-Price Project on fiscal year 1995 results. Gross profit represented 21% of
total revenues in fiscal year 1995 as compared to 24% in fiscal year 1994.
Excluding the excess costs associated with the Fixed-Price Project, gross profit
margins would have remained constant from fiscal year 1994 to fiscal year 1995.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 8% to $11.8 million in fiscal year 1995 from
$10.9 million in fiscal year 1994. This increase was primarily attributable to
infrastructure investments in CBSI's offshore facilities and general overhead
cost increases. As a percentage of revenues, these expenses decreased to 18% in
fiscal year 1995 from 19% in fiscal year 1994.

19
<PAGE> 21

QUARTERLY RESULTS

The following table sets forth certain unaudited quarterly operating
information for each of the eight quarters ending with the quarter ended June
30, 1997. This information has been prepared on the same basis as the audited
consolidated financial statements contained elsewhere in this Prospectus and
includes, in the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for the fair presentation of the
information for the periods presented. This information should be read in
conjunction with the Company's Consolidated and Unaudited Condensed Consolidated
Financial Statements and related Notes thereto. Results of operations for any
previous fiscal quarter are not indicative of results for the full year or any
future quarter. See "Risk Factors -- Variability of Quarterly Operating
Results."

<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1995 1996 1996 1996 1996 1997 1997
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........................ $16,487 $16,903 $19,128 $20,420 $21,951 $21,742 $24,275 $26,662
Cost of revenues................ 13,245 13,736 14,284 15,518 16,737 16,763 17,918 19,479
------- ------- ------- ------- ------- ------- ------- -------
Gross profit.................... 3,242 3,167 4,844 4,902 5,214 4,979 6,357 7,183
Selling, general and
administrative expenses....... 2,928 2,746 3,613 3,618 3,855 4,369 4,576 4,809
------- ------- ------- ------- ------- ------- ------- -------
Income from operations.......... 314 421 1,231 1,284 1,359 610 1,781 2,374
Interest expense (income)....... 205 155 141 159 146 93 (65) (313)
Provision for income taxes...... -- -- 17 19 24 24 1,135 856
Minority interest............... (6) 132 35 78 67 (22) 82 --
------- ------- ------- ------- ------- ------- ------- -------
Net income...................... $ 115 $ 134 $ 1,038 $ 1,028 $ 1,122 $ 515 $ 629 $ 1,831
======= ======= ======= ======= ======= ======= ======= =======
Pro forma incremental income tax
provision (benefit)........... 15 18 358 353 383 166 (560)(1) --
------- ------- ------- ------- ------- ------- ------- -------
Pro forma net income............ $ 100 $ 116 $ 680 $ 675 $ 739 $ 349 $ 1,189 $ 1,831
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

- -------------------------
(1) Represents elimination of impact for termination of S corporation status.

LIQUIDITY AND CAPITAL RESOURCES

From the Company's inception in 1985 through March 5, 1997, the Company
generally funded its operations and working capital needs through internally
generated funds, periodically supplemented by borrowings under the Company's
revolving credit facility with a commercial bank. The Company's cash provided by
operations was $0.6 million, $1.3 million, $4.5 million and $6.5 million for the
fiscal years ended December 31, 1994, 1995, and 1996, and for the six-month
period ended June 30, 1997, respectively.

The principal use of cash for investing activities during the three years
ended December 31, 1996 and the six-month period ended June 30, 1997 was for the
purchase of property and equipment and computer software primarily as part of
the development and enhancement of the Company's offshore software development
centers.

Historically, borrowings and repayments under the Company's revolving
credit facility represented the most significant components of cash provided or
used by financing activities. However, net cash provided by financing activities
increased to approximately $8.8 million during the six-month period ended June
30, 1997 primarily due to the Company realizing net proceeds of approximately
$23.8 million from its initial public offering in March 1997. All outstanding
borrowings under the revolving credit facility as of March 5, 1997 were repaid
from the proceeds of the initial public offering. In connection with the
termination of the Company's S corporation status, the Company made partial
distributions of its previously undistributed S corporation earnings totalling
approximately $8.8 million during the six-month period ended June 30, 1997.

Under an arrangement with a commercial bank, the Company may borrow an
amount not to exceed $21 million with interest at the bank's prime interest rate
or the Libor rate. The borrowings under this facility are short-term, payable on
demand and are secured by trade accounts receivable and equipment of the
Company.

20
<PAGE> 22

As of June 30, 1997, there were no borrowings outstanding under this facility.
In recent years, the Company has executed several short-term notes with the bank
to finance the purchase of equipment and software. During the six-month period
ended June 30, 1997, the balances outstanding on these notes were repaid.

During 1996, CBS Mauritius repurchased its stock held by an affiliated
entity for approximately $2.7 million. Concurrently therewith, CBS Mauritius
sold a 28% ownership interest to JF Electra for approximately $4.0 million, with
proceeds of approximately $3.5 million, net of transaction costs.

In 1996, Mr. Vattikuti made a capital contribution to CBSI of approximately
$1.1 million and loaned the Company approximately $0.6 million. This loan,
including interest of approximately $23,000 at 8.25% per annum, was repaid on
December 30, 1996.

The international operations of the Company, principally the offshore
development centers, accounted for approximately 4.7%, 6.8%, 6.9% and 9.6% of
the Company's total revenues in fiscal years 1994, 1995, and 1996, and for the
six-month period ended June 30, 1997, respectively. Most of the Company's
international revenues are billed in U.S. dollars. The Company recognizes
transaction gains and losses in the period of occurrence. Foreign currency
fluctuations in fiscal years 1994, 1995, and 1996, and for the six-month period
ended June 30, 1997, did not have a material impact on income from operations as
currency fluctuations on revenue denominated in a foreign currency were offset
by currency fluctuations on expenses denominated in a foreign currency. There
were no material operating trends or effects on liquidity as a result of
fluctuations in the functional currency due to the insignificance of the
revenues and expenses denominated in foreign currencies. In addition, all
significant monetary assets and liabilities are denominated in U.S. dollars, and
therefore, the Company does not generally use any types of derivatives to hedge
against foreign currency fluctuations, nor does it speculate in foreign
currency.

Inflation did not have a material impact on the Company's revenues or
income from operations in fiscal years 1994, 1995, and 1996, and for the
six-month period ended June 30, 1997.

The Company currently anticipates that the proceeds from this offering,
together with existing sources of liquidity and cash generated from operations
and the initial public offering, will be sufficient to satisfy its cash needs at
least through the next twelve months.

RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

Statement of Financial Accounting Standards No. 128, "Earnings per Share,"
was issued in February 1997. The Company will be required to adopt the new
standard for the year and quarter ended December 31, 1997. Early adoption of
this standard is not permitted. The primary requirements of this standard are:
(i) replacement of primary earnings per share with basic earnings per share,
which eliminates the dilutive effect of options and warrants; (ii) use of an
average share price in applying the treasury method to compute dilution for
options and warrants for diluted earnings per share; and (iii) disclosure
reconciling the numerator and denominator of earnings per share calculations.
The Company plans to adopt this statement in fiscal year 1997. See Note 5 of
Notes to Unaudited Condensed Consolidated Financial Statements.

Statement of Financial Accounting Standards No. 129, "Disclosure of
Information about Capital Structure," was issued in February 1997. The Company
will be required to adopt the new standard for the year ended December 31, 1998.
This statement requires specific disclosure regarding the Company's capital
structure, including descriptions of the securities comprising the capital
structure and the contractual rights of the holders of such securities. The
Company plans to adopt this statement in fiscal year 1998.

Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," was issued in June 1997. The Company will be required to
adopt the new standard for the year ended December 31, 1998, although early
adoption is permitted. The primary objective of this statement is to report and
disclose a measure ("comprehensive income") of all changes in equity of a
Company that result from transactions and other economic events of the period
other than transactions with owners. The Company will adopt this statement in
fiscal year 1998 and does not anticipate that the statement will have a
significant impact on its financial statements.

21
<PAGE> 23

Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information," was issued in June 1997. The
Company will be required to adopt the new standard for the year ended December
31, 1998, although early adoption is permitted. This statement requires use of
the "management approach" model for segment reporting. The management approach
model is based on the way the Company's management organizes segments within the
Company for making operating decisions and assessing performance. Reportable
segments are based on products and services, geography, legal structure,
management structure, or any other manner in which management disaggregates a
company. The Company will adopt this statement in fiscal year 1998.

22
<PAGE> 24

BUSINESS

SUMMARY

CBSI is a worldwide provider of IT services to large and mid-size
organizations. The Company offers its clients a broad range of IT services, from
advising clients on strategic technology plans to developing and implementing
appropriate IT applications solutions. CBSI offers custom-tailored solutions
based on an assessment of each client's needs. The Company's services include:
(i) Year 2000 conversion and testing services; (ii) large systems applications
development and maintenance; (iii) reengineering legacy applications to
client/server technology; (iv) client/server applications development; (v) IT
consulting services; (vi) packaged software implementation; and (vii) contract
programming services.

CBSI provides services in a wide variety of computing environments and uses
leading technologies, including Year 2000 tools, client/server architectures,
object-oriented programming languages and tools, distributed database management
systems, and the latest network and communications technologies. The Company
believes that the breadth of its service offerings fosters long-term client
relationships, affords cross-selling opportunities, minimizes dependence on any
single technology or client and enables the Company to serve as a single source
provider for its clients' IT applications solutions. This single or preferred
provider approach is consistent with CBSI's full life-cycle, client-oriented
approach to IT solutions.

Since 1992, CBSI has developed an extensive offshore infrastructure in
India, including two modern software development centers in Bangalore and Madras
and a training center in Hyderabad. The Company believes this established
offshore infrastructure is one of the largest in the industry and differentiates
it from those competitors who have no offshore capability, have recently
established offshore capability or rely mostly on contract service providers to
offer such services. With its offsite and offshore development options, the
Company can quickly provide clients with IT applications solutions on a
cost-effective basis.

The Company's goal is to become the preferred provider of IT services to an
expanding base of clients. The Company's strategy to achieve this goal is to:
(i) cross-sell services to existing clients; (ii) increase and build upon Year
2000 engagements; (iii) capitalize on significant investments in infrastructure
and increase its international capabilities; (iv) develop new and expand
recently added service offerings such as Enterprise Resource Planning ("ERP")
software package installation and Internet/intranet applications; and (v) pursue
targeted acquisitions.

THE IT SERVICES INDUSTRY

Heightened competition, deregulation, globalization and rapid technological
advances are forcing organizations to make fundamental changes in their business
processes. These pressures have compelled organizations to improve the quality
of products and services, shorten time to market, reduce costs and strengthen
client relationships. Increasingly, organizations are addressing these issues by
utilizing IT solutions that facilitate the rapid and flexible collection,
analysis and dissemination of information. Accordingly, an organization's
ability to integrate and deploy new information technologies in a cost-effective
manner has become critical to competing successfully in today's rapidly changing
business environment.

During this time of increasing reliance on IT, rapid technological change
is challenging the capabilities of MIS departments within these organizations.
The pace of this change quickly renders existing IT infrastructure obsolete and
makes it more difficult for organizations to maintain the requisite internal
expertise needed to

23
<PAGE> 25

evaluate, develop and integrate new technologies. As a result, organizations are
increasingly turning to third-party IT service providers to help them develop
and support complex IT systems and applications.

Due to the foregoing factors, demand for IT services has grown
significantly. According to industry sources, the worldwide market for IT
services was approximately $185 billion in 1995, and is projected to increase to
$292 billion in 2000. The worldwide market for systems integration, consulting
applications development and outsourcing services was approximately $91 billion
in 1994 according to industry sources and is estimated to grow by 16.5% annually
through 1999. The domestic IT services market is projected to grow from
approximately $75 billion in 1995 to approximately $130 billion in 2000.

The Year 2000 problem, which prevents existing applications from properly
interpreting dates after 1999, represents a significant opportunity for IT
services providers. The prevalence and interdependence of date-dependent
applications in complex control systems is expected to cause the Year 2000
problem to have a widespread impact on technology-dependent organizations.
Industry sources estimate that a typical Fortune 100 company will spend between
$50 million and $100 million for Year 2000 services. Smaller companies will also
spend significant amounts to solve this problem. Solutions to the Year 2000
problem include: (i) renovation of existing applications with Year 2000
compliant code; (ii) replacement of existing software with Year 2000 compliant
software packages; and (iii) reengineering of legacy applications to Year 2000
compliant client/server technologies.

While the general industry trend is toward client/server architectures,
many organizations choose to maintain certain legacy mainframe systems because
such systems provide a superior solution to their specific needs or because of
the costs required to replace such systems. As university programs cease
teaching mainframe related skills and programmers cross-train away from these
areas, MIS managers are experiencing increasing difficulty finding affordable,
qualified personnel to support the vast number of legacy systems. For these
reasons, the maintenance and reengineering of legacy systems continues to
represent a substantial opportunity for IT services providers.

THE CBSI SOLUTION

The CBSI solution enables its clients to use IT as a more effective
business tool consistent with their evolving business needs. The following are
key attributes of the CBSI solution:

Provide a Broad Range of IT Services. The Company offers its clients a
broad range of IT services from development, reengineering and maintenance of
legacy applications systems to client/server applications development,
Internet/intranet and other emerging technologies. The Company therefore can
serve as the single source for a client's IT applications solutions. The Company
provides its services in a wide variety of computing environments and uses
technologies that include mainframe and client/server architectures,
object-oriented programming languages and tools, distributed database management
systems, Year 2000 tools and network and communications technologies.

Solve Year 2000 Problem. The Company has developed a formal project
management methodology, known as The Time Machine 2000, that addresses all
aspects of the Year 2000 problem in mainframe, client/server and LAN
environments. This methodology helps assure a quality conversion process and
addresses application portfolio analysis, impact assessment, strategic planning,
conversion, testing and implementation. This methodology is one of a limited
number that has been certified by the Information Technology Association of
America ("ITAA") as being compliant with the industry standard promulgated by
ITAA. The Company has developed Year 2000 conversion factories to provide
cost-effective and timely conversion solutions for its clients. The conversion
factories, located at both CBSI's U.S. and Indian headquarters, employ
professionals who have been specifically trained to meet the particular demands
of Year 2000 engagements. The Company also provides Year 2000 enterprise-level
consulting and testing services. CBSI has already successfully completed all
phases of Year 2000 projects for a division of Chrysler Corporation and for IBM
Global Solutions/Foremost Insurance and is currently working on 25 additional
Year 2000 projects.

24
<PAGE> 26

Offer Flexible Project Delivery. The Company offers its clients a choice
among any combination of the following three options for delivery of project
work: (i) onsite at the client facility; (ii) offsite at a CBSI development
facility in Michigan, California or Illinois; and (iii) offshore at CBSI
development facilities in India. These options enable the Company's clients to
determine their degree of project oversight and to control the costs and speed
of project delivery. Execution of all or part of IT projects offshore can result
in significant time and cost savings when compared to domestic delivery of such
services. CBSI has developed a formal project management methodology, CBSI
Offsite Success Management Methodology ("COSMO"), which is specifically designed
to meet the needs of offsite and offshore projects.

To meet the growing worldwide demand for offshore IT services, the Company
has invested in an extensive offshore infrastructure in India, including two ISO
9001 compliant software development centers in Madras and Bangalore. In contrast
to competitors who have no offshore capability, have only recently established
offshore capability or rely mostly on contract service providers to offer such
services, the Company has established an offshore infrastructure which it
believes is one of the largest in the industry. The Company employs over 500
professionals in these centers which have the capacity to accommodate
approximately 800 professionals. With its offsite and offshore development
options, the Company can quickly provide solutions tailored to the IT needs of
its clients.

Recruit and Train Globally. The Company has established a domestic and
international network to recruit employees of all experience levels, from recent
college graduates to seasoned IT professionals. The Company provides new
recruits with up to two months of training in software engineering techniques
and key technologies. The Company has made significant investments in two
training centers, located in Michigan and India. These centers employ full-time
instructors and are equipped with client/server and mainframe hardware, software
and development tools. These training resources provide the Company with
qualified IT professionals to service its clients' needs.

CBSI GROWTH STRATEGIES

The Company's goal is to become the preferred provider of IT services to an
expanding base of clients. The Company's strategy to achieve this goal includes
the following elements:

Cross-Sell Services to Existing Clients. The Company believes it will grow
by continuing to establish and maintain long-term client relationships. The
access and goodwill offered by these relationships provide the Company with
significant advantages over its competitors in marketing additional services and
solutions to such clients. The Company also believes its long-term client
relationships and ability to address all of its clients' IT applications needs
distinguish the Company from many of its competitors. During 1996, the Company
provided services to over 220 clients in the U.S., Europe and Asia. The
Company's strategy is to maximize its client retention rate and secure
additional engagements by providing quality services and client responsiveness.
For each of the fiscal years 1994, 1995, and 1996, and for the six-month period
ended June 30, 1997, existing clients from the previous fiscal year generated at
least 80% of the Company's revenues.

Increase and Build Upon Year 2000 Engagements. The Company is actively
marketing its Year 2000 conversion capabilities and Year 2000 testing services
to existing and new clients. CBSI anticipates that Year 2000 conversion services
will represent an increasing percentage of its revenues for the next few years.
The Company performs a detailed analysis of clients' existing IT systems and
applications in connection with these services. The Company intends to expand
its Year 2000 enterprise-level consulting and testing services in mainframe,
client/server and LAN environments. The Company's strategy is to leverage its
knowledge of clients' IT applications systems obtained during Year 2000 projects
into additional engagements involving other services, including maintaining
existing applications systems and reengineering to client/server technology,
implementing ERP software packages and providing Internet/intranet applications
solutions.

Capitalize and Expand on Significant Investments in Infrastructure and
Capabilities and Increase International Capabilities. The Company has made and
will continue to make additional significant investments in its offsite and
offshore infrastructures as well as its systems, methodologies, training
programs and marketing efforts. These investments include two client/server
labs, three U.S. software development centers, two offshore software development
centers, two training centers and dedicated, high-speed satellite

25
<PAGE> 27

communication links. The Company believes that its existing offshore investments
can support a larger organization and in addition, intends to significantly
expand its U.S. and offshore facilities.

Expand Service Offerings. The Company evaluates emerging technologies as a
source of additional service offerings for its existing and prospective clients.
For example, the Company recently added new service offerings, including
Internet/intranet applications and implementation of ERP software packages such
as ORACLE, PEOPLESOFT and SAP. The Company anticipates that its broad and
expanding range of services will minimize its dependence on any single
technology.

Pursue Targeted Acquisitions. Using either cash or its Common Stock, or a
combination thereof, the Company seeks acquisitions that complement its core
skills and that have the potential to increase the overall value of the Company,
rather than merely increase its revenues. Examples of such companies would
include those with specific industry or technical skills that fit well with the
Company's existing and targeted client base.

26
<PAGE> 28

CBSI SERVICES

The Company offers its clients a broad range of IT services, from advising
clients on strategic technology plans to developing and implementing appropriate
IT solutions. The Company provides services in the following categories:
- --------------------------------------------------------------------------------

CBSI SERVICES DESCRIPTION
- ----------------------------------------------------
<S> <C> <C> <C>
Year 2000 Conversion and Testing Services - Conduct impact assessments and assist clients
with strategic planning for Year 2000 compliance
- Renovate existing applications to make them Year
2000 compliant
- Replace existing software with Year 2000
compliant software packages
- Reengineer legacy applications to Year 2000
compliant client/server technology
- Enterprise-level consulting and testing services
- -----------------------------------------------------------------------------------------------------------------
Large Systems Applications Development, - Design large-scale, complex solutions capable of
Reengineering and Maintenance managing transaction-intensive applications
- Develop and maintain applications using COBOL,
CICS, DB2 and other mainframe programming
environments
- -----------------------------------------------------------------------------------------------------------------
Reengineering Legacy Applications to - Reengineer from centralized, mainframe-based
Client/Server Technology systems to open, distributed architecture
- Preserve core application logic
- Reengineer existing legacy systems into
mainframe-based super server in multi-tiered,
distributed architecture
- -----------------------------------------------------------------------------------------------------------------
Client/Server Applications Development - Conceptualize and design systems based on
distributed object-oriented technologies and
methodologies such as BOOCH and RAMBAUGH
- Develop applications using SYBASE, SQL Server,
ORACLE, INFORMIX, and Access databases; Visual
Basic, Powerbuilder, C++ as graphical user
interfaces; and UNIX, OS/2 and Windows NT
operating systems
- -----------------------------------------------------------------------------------------------------------------
Packaged Software Implementation - Implement packaged software solutions
(PEOPLESOFT, ORACLE, SAP, WALKER)
- Customize software packages to client
specifications
- Provide user group training
- -----------------------------------------------------------------------------------------------------------------
IT Consulting Services - Provide technical architecture and network
design, information technology planning, data
warehousing and business process reengineering
consulting services
- Conceptualize and design Internet and intranet
solutions using Java/Java Script/Java applets
and HTML
- -----------------------------------------------------------------------------------------------------------------
Contract Programming Services - Develop software applications (client/server and
mainframe)
- Reengineer software applications across
platforms
- Maintain and enhance software applications
(client/server and mainframe)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

The Company uses both industry-proven and proprietary methodologies to
enhance the quality, consistency and efficiency of its projects. All levels of
the Company's IT consultants, from entry-level programmers to project managers,
are given formal instruction in various aspects of these methodologies. A
methodology used by the Company is METHOD/1, which the Company licenses from
Andersen Consulting.

27
<PAGE> 29

CBSI has extended METHOD/1 to incorporate the Company's Time Machine 2000 and
COSMO methodologies. The COSMO methodology is specifically designed to meet the
needs of offsite and offshore projects. This methodology contains the specific
procedures required to coordinate the activities of multiple sites across
different time zones. All three methodologies enable CBSI to provide
applications development in a controlled manner with repeatable and proven
processes. Quality assurance is handled by a common centralized unit. A team of
quality specialists performs project quality reviews and inspections, maintains
the Company's project management methodologies and assists project managers in
estimating costs and executing projects.

SOFTWARE PRODUCTS

The Company's primary software product offering is the Advanced Program for
Educational Computer Solutions ("APECS") software which is licensed by 70
different users. Clients use APECS to manage the business and student records of
educational institutions for K-12 school districts and for higher education. The
Company provides periodic enhancements to the product and maintenance to the
users. APECS systems are installed at major sites throughout the United States.
Among the current users are Allentown High School District, Pennsylvania;
University of Detroit Mercy, Michigan; Martin County Schools, Florida; and
Monroe Community College, Michigan. The Company is currently reengineering this
system to a client/server environment. The Company maintains this product at its
Madras, India and Lombard, Illinois facilities.

SALES AND MARKETING

The majority of new sales are generated by the Company's business units,
each of which focus on clients within a geographic area or industry group. The
manager of each business unit is compensated based on the financial performance
of the unit and other contributions to the Company. The business unit manager is
responsible for managing client relationships, ensuring the delivery team is
performing as expected and identifying new business opportunities. This
structure fosters an entrepreneurial atmosphere within each business unit.
Because of the relationships the business unit managers maintain with their
clients, these managers are positioned to identify opportunities to cross-sell
the Company's services. Such relationships also result in a significant number
of client referrals.

The Company also uses telemarketers to establish initial client contact and
prequalify potential new clients. Qualified prospective clients are referred to
the Company's dedicated sales group, whose backgrounds include both technical
and sales experience. This sales group is responsible for identifying clients'
needs and promoting the Company's services to potential clients. Once potential
clients are further qualified by the sales group, the Company assembles a team
consisting of sales group members, the appropriate business unit manager and a
project delivery manager. This team makes the client sales call and is
ultimately responsible for closing the sale.

In addition to its sales group, the Company has a dedicated marketing
department which works in conjunction with an outside public relations firm. The
marketing department is responsible for coordination of all corporate
communications, including the scheduling of press conferences to promote the
Company's services and delivery methodologies.

CLIENTS

The Company's largest client, IBM, accounted for 19%, 12% and 9% of the
Company's total revenues for fiscal years 1995 and 1996, and for the six-month
period ended June 30, 1997, respectively. The IT services provided to IBM were
divided among several divisions and subsidiaries. No other client accounted for
more than 10% of the Company's revenues for the same periods. During 1996, the
Company provided services to over 220 clients in the U.S., Europe and Asia. The
Company's strategy is to maximize its client retention rate and secure
additional engagements by providing quality services and client responsiveness.

28
<PAGE> 30

Organizations to which the Company provided services during the six-month
period ended June 30, 1997, include:

<TABLE>
<CAPTION>
YEAR OF
FIRST
CLIENT ENGAGEMENT
<S> <C>
Manufacturing:
Chrysler Corporation......... 1985
Ford Motor................... 1989
Johnson Controls............. 1994
Retail Distributions:
Spartan Stores............... 1992
The GAP...................... 1993
Lands' End................... 1996
Public Sector:
State of Michigan............ 1988
State of Indiana............. 1992
State of Nevada.............. 1992
Transportation:
American President Lines..... 1990
</TABLE>

<TABLE>
<CAPTION>
YEAR OF
FIRST
CLIENT ENGAGEMENT
<S> <C>
Financial Services:
S.W.I.F.T.................... 1985
Harris Bank.................. 1993
Bank of America.............. 1995
Citibank..................... 1996
Insurance:
UNUM Ltd..................... 1995
IBM Global Solutions/Foremost
Insurance................. 1996
Technology:
IBM.......................... 1989
Tandem Computers............. 1989
Union Pacific Technology..... 1992
Utilities:
Michigan Consolidated Gas
Co........................ 1992
Southern California Edison... 1994
</TABLE>

REPRESENTATIVE ENGAGEMENTS

Examples of the Company's engagements, which are representative of the
nature of CBSI services and client relationships, are set forth below:

CLIENT/SERVER-BASED APPLICATIONS DEVELOPMENT/END-TO-END YEAR 2000 CONVERSION
PROJECT (OFFSITE/ONSITE)

Problem. A division of a manufacturer required software enhancements
in order to properly process expanded part number codes and dates beyond
the year 1999.

Solution. The Company provided impact assessment, strategic planning,
coding, testing and implementation of the required software enhancements.
Year 2000 modifications were carried out in accordance with the Company's
Time Machine 2000 methodology. The project environment included IMS/DB,
DB2, CICS, IMS/DC and COBOL on an IBM mainframe. The majority of work was
completed offsite at one of the Company's U.S. software development
centers. At its peak, 75 Company IT professionals were assigned to this
project, which was completed in nine months.

LARGE-SCALE APPLICATIONS DEVELOPMENT IN CLIENT/SERVER TECHNOLOGY (OFFSITE)

Problem. A manufacturing company required IT systems which would tie
production volume to international sales forecasts, thereby eliminating
undesired inventory build-up.

Solution. The Company provided a team of project managers,
client/server architects and software developers to design, code, test and
implement a forecasting application tool using C++, Powerbuilder, APOL,
ENTERA and SYBASE. Software design was carried out using object-oriented
methodologies, Erwin for database design and Rational Rose for data
modeling. At its peak, the project team consisted of 30 Company IT
professionals. Two versions of the forecasting application tool have
already been delivered, and the Company is currently deploying the latest
version at 170+ sites on 5 continents around the world. The project, which
is being conducted offsite, has an expected duration of two years.

REENGINEERING LEGACY APPLICATIONS TO CLIENT/SERVER TECHNOLOGY
(ONSITE/OFFSHORE)

Problem. An insurance company wanted to replace existing
mainframe-based applications with client/server-based applications in order
to reduce software maintenance costs.

Solution. The Company has partnered with this client to redesign its
existing systems in a client/server environment under OS/2, SYBASE, and SQL
Server as RDBMS using NS-DK as the

29
<PAGE> 31

graphical user interface ("GUI") and C as the development language. This
system fully supports the European Monetary Unit. Using a combination of
onsite and offshore project teams, the Company was responsible for
requirements analysis, as well as for designing, coding, testing and
implementing systems. The system was successfully delivered on time and the
Company has been retained to provide ongoing maintenance.

LARGE SYSTEMS APPLICATIONS MAINTENANCE (ONSITE/OFFSHORE)

Problem. A financial services organization wanted to outsource
maintenance of a software application in order to reduce costs and
re-deploy its internal IT professionals on new projects.

Solution. The Company is executing the project both onsite at the
client's facilities and offshore at CBSI's Bangalore, India facility. The
client uses the Company as the "center of expertise" with respect to the
application. A team of 15 Company IT professionals has been assigned to
this project for two years. The project environment includes VAX/VMS, Open
VMS, DOS, UNIX, Novell NetWare, PROIV, ANSI C and Pascal.

REENGINEERING LEGACY APPLICATIONS TO CLIENT/SERVER TECHNOLOGY
(ONSITE/OFFSHORE)

Problem. A grocery wholesaler wanted to reengineer all of its business
applications, including Year 2000 conversion.

Solution. The Company provided the client with the necessary technical
expertise onsite to redesign, program, test and implement all of its core
software applications. The Company has deployed a project team of 35 IT
professionals, which is growing to 60 IT professionals for the Year 2000
conversion. The Company has executed strategic studies through joint
application development ("JAD") sessions, business process reengineering
and phased design, development and implementation. Some of the client's
systems are being reengineered to a client/server platform under a UNIX
operating system, using INFORMIX as the database and Visual Basic as the
graphical user interface. Mainframe applications to undergo Year 2000
conversion include systems running under DB2, ADABAS, NATURAL and COBOL.

APPLICATIONS MAINTENANCE AND YEAR 2000 CONVERSION SERVICES (ONSITE/OFFSHORE)

Problem. A utility needed a cost effective solution to application
maintenance and Year 2000 conversion requirements for customer service,
accounts receivable, inventory and general ledger applications.

Solution. The Company provided a partnership approach to assume
responsibility to maintain and enhance key existing systems using a
combined team of offshore and onsite maintenance professionals. By
deploying a team of 25 IT professionals onsite, combined with 40 IT
professionals offshore, the utility was able to leverage the business
knowledge of the Company's onsite team together with the cost advantages of
the Company's offshore facility in Madras, India. Using the knowledge
gained by the Company's maintenance team for the affected applications,
together with the tools, techniques and process from the Company's Time
Machine 2000 methodology, the Company began the Year 2000 conversion
effort. The applications being maintained and renovated for the Year 2000
include COBOL/CICS/DB2 and IDMS/ADSO mainframe technology.

HUMAN RESOURCES

The Company's success depends in large part on its ability to attract,
develop, motivate and retain highly skilled IT professionals. The Company's
strategy for achieving "career-based employment" includes career planning,
thorough initial and ongoing training, allocation of assignments in accordance
with employee skills and career objectives and a comprehensive benefits package
including a Company-matched 401(k) plan, health and dental insurance, short-term
disability insurance, a flexible spending account and tuition reimbursement.
Since the initial public offering of Common Stock on March 5, 1997, the Company
has increased the use of employee stock options as part of its recruitment and
retention strategy.

The Company has 26 full-time employees dedicated to recruiting IT
professionals and managing its human resources. The Company's recruiting
activities draw on an international pool of IT talent. The

30
<PAGE> 32

Company has full-time personnel dedicated to handling visa application and
compliance issues for international recruits. CBSI actively recruits in the
United States, India, England, Australia, New Zealand, the Philippines, Mexico
and Singapore. Recruiting methods include advertisement in leading newspapers,
trade magazines, the Company's web site and participation in career fairs. The
Company also participates in on-campus recruiting for recent college graduates
and has hired employees from various schools, including the University of
Michigan, Michigan State University, Ohio State University, the University of
Notre Dame, Albion College, Loyola College, Indiana University, the University
of California and the University of Illinois. During the past two years, the
Company has hired 106 recent U.S. college graduates. In addition, the Company's
employees are actively involved in referring individuals and screening
candidates for new positions.

The Company has established two employee training centers located in
Michigan and India. These training centers employ full-time instructors and are
equipped with client/server and mainframe hardware, software and development
tools. New college graduates receive two months of full-time classroom
instruction in mainframe (IMS, DB2, CICS, COBOL) or client/server (UNIX, C, C++,
OS/2 Presentation Manager) skills. This training is followed by one month of
self-study. Employees receive full salary and benefits during this training
period. Between projects and after business hours, all IT professionals receive
ongoing training on a variety of technology platforms. The Company's education
and training department helps employees make the transition from legacy to
client/server skills by providing cross-platform training in new technologies.
In addition to comprehensive technical training, the Company provides extensive
training in quality processes and cross-cultural communication skills. In
addition, the Company recently began offering training courses to non-employees
for a fee. The Company may hire graduates of these training programs.

As part of its retention efforts, the Company has formulated a strategy for
minimizing turnover which emphasizes: (i) human resource management; (ii)
contractual limitations effective upon termination of employment; (iii)
competitive salaries; (iv) comprehensive benefits; (v) employee stock options;
and (vi) deferred compensation.

The Company's IT professionals typically have Bachelor's or Master's
degrees in Computer Science or another technical discipline. As of June 30,
1997, the Company had 1,632 employees comprised of 1,456 IT professionals, 32
sales and marketing personnel and 144 general and administrative personnel. As
of June 30, 1997, the Company also had 62 independent contractors working on
client engagements.

COMPETITION

The IT services industry is highly competitive and served by numerous
national, regional and local firms, all of which are either existing or
potential competitors of the Company. Primary competitors include Cambridge
Technology Partners, Information Management Resources, Inc. and Keane, Inc.,
along with participants from a variety of market segments, including "Big Six"
accounting firms, and implementation firms, applications software firms, service
groups of computer equipment companies, general management consulting firms,
programming companies and temporary staffing firms. The Company believes that
the principal competitive factors in the IT services industry include the range
of services offered, technical expertise, responsiveness to client needs, speed
in delivering IT solutions, quality of service and perceived value. Based on the
Company's experience in competitive situations, the Company believes that it
competes favorably with respect to these factors. See "Risk Factors --
Competition."

INTELLECTUAL PROPERTY RIGHTS

The Company relies upon a combination of nondisclosure and other
contractual arrangements and trade secret, copyright and trademark laws to
protect its proprietary rights and the proprietary rights of third parties from
whom the Company licenses intellectual property. The Company enters into
confidentiality agreements with its employees and limits distribution of
proprietary information. There can be no assurance that the steps taken by the
Company in this regard will be adequate to deter misappropriation of proprietary
information or that the Company will be able to detect unauthorized use and take
appropriate steps to enforce its intellectual property rights. In addition, the
laws of certain foreign countries in which the Company's products are, or may
be, developed or sold may not protect the Company's products or intellectual
property rights to the same extent as do the laws of the U.S. This lack of
protection may impair the Company's ability to protect its

31
<PAGE> 33

intellectual property adequately and could have a material adverse impact on the
Company's business. See "Risk Factors -- International Property Rights."

The Company has developed and owns the proprietary rights for The Time
Machine 2000 and COSMO methodologies; however, the copyrights to such
methodologies have not been registered. In addition, the Company owns service
marks for The Time Machine 2000 and COSMO and has submitted federal trademark
applications for each.

Software developed by the Company in connection with a client engagement is
typically assigned to the client. In limited situations, the Company may retain
ownership, or obtain a license from its client, which permits CBSI or a third
party to market the software for the joint benefit of the client and CBSI or for
the sole benefit of CBSI. The Company has also developed and copyrighted or
acquired software products which are generally licensed to users pursuant to a
license agreement. The Company's software products include APECS, APECS Custom
View and Micro APECS Scheduler. APECS is a registered trademark of the Company.

FACILITIES

The Company leases approximately 50,000 square feet of office space in
Farmington Hills, Michigan which is used by the Company's senior management,
administrative personnel, human resources and sales and marketing functions.
This lease expires on June 15, 2003. The Company also leases facilities in
Lombard, Illinois and Milpitas, California.

In addition, the Company has offshore offices. The Company leases
approximately 24,530 square feet of office space in Madras, India which serves
as its headquarters in India. This lease expires on January 12, 2002. The
Company owns a facility totaling approximately 6,625 square feet in Bangalore,
India. The Company also leases facilities in the United Kingdom, Bangalore and
Hyderabad, India.

The Company believes that these facilities are adequate for its anticipated
future needs.

LITIGATION

On February 3, 1997, the Company received a third-party complaint filed
against it and other parties by Network Six, Inc. ("NSI") in the Circuit Court
of the First Circuit for the State of Hawaii. The third-party claims are
asserted in an action that the State of Hawaii has brought against NSI. On
January 31, 1997, the Company also received an answer and counterclaim served by
NSI in an action brought by the Company against NSI in the Superior Court of the
State of Rhode Island. The Company acted as a subcontractor to NSI in connection
with the development of software for the State of Hawaii. Additionally, NSI and
the Company were parties to a letter of intent, now terminated, for the purpose
of exploring a business combination or merger. The Company's suit against NSI in
Rhode Island, as well as the State of Hawaii's suit against NSI in Hawaii, arise
from the Hawaii software project.

The allegations of NSI's third-party complaint in the Hawaii action and
NSI's counterclaim in the Rhode Island action are substantively identical. NSI
alleges that the Company wrongfully used information gained in connection with
the letter of intent to attempt to gain control of the State of Hawaii project,
interfered with NSI's relationship with the State of Hawaii, employed or
solicited the employment of NSI employees in violation of contract, and
otherwise breached contractual or other obligations to NSI. NSI seeks damages of
$481,139.79 from the Company for services and personnel allegedly provided to it
by NSI, damages of $60,000,000 predicated on a decline in the market value of
NSI's publicly-traded stock, and other unspecified losses. On May 30, 1997, the
Circuit Court of the First Circuit for the State of Hawaii granted the Company's
motion to dismiss claims asserting bad faith breach of contract with prejudice,
and conspiracy without prejudice.

The Company believes that it has not breached any contractual or other
obligation to NSI as alleged either in the third-party complaint or the
counterclaim, and that it possesses meritorious defenses or set-offs to all of
NSI's claims. The Company does not believe that NSI's actions will result in
material liability to it, or that they will have a material adverse effect on
its financial condition, business, or operations, and intends to vigorously
contest the claims asserted in both actions.

32
<PAGE> 34

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The Company's executive officers and directors and their respective ages
and positions as of June 30, 1997, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Rajendra B. Vattikuti................ 45 President, Chief Executive Officer and Director
Timothy S. Manney.................... 38 Executive Vice President of Finance and Administration,
Treasurer and Director
Daniel S. Rankin..................... 42 Vice President of Technical Services
Gena M. Lodolo....................... 48 Vice President of Sales
Nanjappa S. Venugopal................ 44 Director of Human Resources
Douglas S. Land...................... 40 Director
Frank D. Stella...................... 78 Director
John A. Stanley...................... 59 Director
</TABLE>

Rajendra B. Vattikuti, the founder of the Company, has served as President
and Chief Executive Officer and as a Director since the Company's formation in
February 1985. From 1983 to 1985, Mr. Vattikuti was Director of M.I.S. for
Yurika Foods Corporation. From 1977 to 1983, Mr. Vattikuti was an M.I.S. Project
Leader for Chrysler Corporation. Mr. Vattikuti holds a Bachelor of Science
degree in Electrical Engineering from the College of Engineering, Guindy (India)
and a Master of Science degree in Electrical and Computer Engineering from Wayne
State University.

Timothy S. Manney has served as Executive Vice President of Finance and
Administration and Treasurer and as a Director since November 1993. From
February 1990 to November 1993, Mr. Manney held various positions with the
Company, most recently as Chief Financial Officer. From 1980 until 1990, Mr.
Manney was an Audit Manager at Arthur Andersen LLP. He is a member of the
Michigan Association of Certified Public Accountants. Mr. Manney holds a
Bachelor of Business Administration degree from the University of Michigan.

Daniel S. Rankin has served as Vice President of Technical Services since
September 1994. From September 1990 to September 1994, Mr. Rankin served as
Director of Insurance Services for Medstat, Inc. From July 1989 to September
1990, Mr. Rankin held the position of Vice President of Turnkey Systems for the
Company. From May 1978 to July 1989, Mr. Rankin served in various positions at
Andersen Consulting, during which time he managed several large, multi-year
systems-development projects in a variety of computer hardware and software
environments. Mr. Rankin holds a Bachelor of Business Administration degree and
Master of Business Administration degree from the University of Michigan.

Nanjappa S. Venugopal has served as Director of Human Resources since
October 1996. Mr. Venugopal also served as the business unit manager for the
manufacturing sector of the Company from September 1991 to September 1996. From
December 1975 to August 1991, he held several technical and managerial positions
at Tata Consultancy Services in the U.S., Asia and Europe. From October 1988 to
August 1991, Mr. Venugopal was regional manager of Tata's New York office. Mr.
Venugopal holds a Bachelor of Mechanical Engineering degree from Bangalore
University and a Master of Aeronautical Engineering degree from the Indian
Institute of Technology.

Gena M. Lodolo has served as Vice President of Sales since June 1997. From
April 1995 to June 1997, Ms. Lodolo was an independent marketing consultant to
manufacturing companies. From January 1986 to April 1995, Ms. Lodolo held
various sales related positions at Data General Corporation, including positions
as Sales Director, Reseller Division and District Manager, Midwest Division.
From March 1982 to January 1986, Ms. Lodolo was employed by Tandem Computers,
Inc. as a District Manager. Ms. Lodolo holds a Bachelor of Arts degree from the
University of Minnesota.

Douglas S. Land has served as a Director since November 1993 and as an
advisor to the Company since 1988. Mr. Land is the founder and President of
Economic Analysis Group, Ltd., a Washington DC-based

33
<PAGE> 35

consulting firm that has been providing financial and economic consulting
services since 1983. Mr. Land is also the President and founder of The
Chesapeake Group, a financial advisory firm that has been providing consulting
to start-up and middle-market firms since 1985. From January 1992 to February
1993, Mr. Land was an Executive Vice President of Hambro Resource Development
Incorporated, an affiliate of Hambros Bank London, which provides investment and
merchant banking services. Mr. Land holds a Bachelor of Science degree in
Economics, a Master of Business Administration degree in Finance and a Master of
Arts degree in International Relations from the University of Pennsylvania.

Frank D. Stella has served as a Director since November 1993. Mr. Stella
has served as President of F.D. Stella Products Company, a food service and
dining equipment company, since 1946. Mr. Stella was appointed to the Commission
for White House Fellows by President Ronald W. Reagan in 1983 and has served as
Chairman of the Income Tax Board of Review, City of Detroit, since 1965. Mr.
Stella is also a board member of VFS, Inc., an insurance holding company, and a
former board member of the Federal Home Loan Bank of Indianapolis. He is also on
the boards of several medical and charitable organizations. Mr. Stella holds a
degree from the College of Commerce and Finance at the University of Detroit.

John A. Stanley has served as a Director since June 1997. Mr. Stanley has
served as President of European Operations of Lexmark International since March
1991. Previously, he was employed by IBM for 22 years. Mr. Stanley is a graduate
of FitzWilliam College, University of Cambridge, England with a Master of Arts
degree, and holds a degree in Personnel Management from The London School of
Economics.

The Company's executive officers are appointed annually by, and serve at
the discretion of, the Board of Directors. Each executive officer is a full-time
employee of the Company. The Company's Board of Directors is divided into three
classes. The Board of Directors currently consists of five members. The Board is
divided into three classes, whose members serve for staggered three-year terms.
Rajendra Vattikuti and Timothy Manney are Class I Directors and will serve a
three-year term. Douglas Land and Frank Stella are Class II Directors and will
serve a one-year term. John Stanley is a Class III Director and will serve a
two-year term. At each annual meeting of shareholders, the appropriate number of
directors will be elected for a three-year term to succeed the directors of the
same class whose terms are then expiring. There are no family relationships
between any director or executive officer of the Company.

BOARD COMMITTEES

The Audit Committee is responsible for reviewing with management the
financial controls, accounting, audit and reporting activities of the Company.
The Audit Committee reviews the qualifications of the Company's independent
auditors, makes recommendations to the Board of Directors regarding the
selection of independent auditors, reviews the scope, fees and results of any
audit and reviews non-audit services provided by the independent auditors. The
members of the Audit Committee are Frank Stella and Douglas Land. All members of
the Audit Committee are independent directors.

The Compensation Committee is responsible for the administration of all
salary and incentive compensation plans for the officers and key employees of
the Company, including bonuses. The Compensation Committee also administers the
Company's 1996 Plan (as hereinafter defined). The members of the Compensation
Committee are Frank Stella and John Stanley. Doug Land is a non-voting member of
the Compensation Committee. All members of the Compensation Committee are
independent directors.

DIRECTOR COMPENSATION

During 1996, Mr. Land and Mr. Stella were each paid $24,000 for their
services provided as directors. During 1996, Mr. Stella was granted a
non-incentive stock option to acquire 8,913 shares of Common Stock at an
exercise price of $8.41 per share. All directors are reimbursed for travel
expenses incurred in connection with attending board and committee meetings.
Directors are not entitled to additional fees for serving on committees of the
Board of Directors. After the effective date of this offering, the Company shall
issue options each year to purchase up to 10,000 shares of Common Stock, as a
formula grant, to directors who are not executive officers of the Company.

34
<PAGE> 36

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning compensation
earned by the Company's Chief Executive Officer and each of the other executive
officers whose salary and bonus compensation for the fiscal year ended December
31, 1996 exceeded $100,000 (collectively, the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
------------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OTHER OPTIONS(#) COMPENSATION(3)
<S> <C> <C> <C> <C> <C>
Rajendra B. Vattikuti.............. $411,000 $288,000 $ 14,729(1) -- $3,800
President and Chief Executive
Officer
Timothy S. Manney.................. 150,000 50,000 2,746(2) -- 3,800
Executive Vice President of
Finance and Administration,
Treasurer
Daniel S. Rankin................... 160,000 35,000 -- -- 3,800
Vice President of Technical
Services
Nanjappa S. Venugopal.............. 100,000 35,000 -- 29,711 3,240
Director of Human Resources
Roy Ely............................ 160,621 -- -- -- --
Executive Vice President of
Sales(4)
Jennifer Grey...................... 102,102 -- -- -- 2,450
Director of Operations(4)
</TABLE>

- -------------------------
(1) Includes $3,576 representing the imputed value of certain health and life
insurance benefits provided by the Company to Mr. Vattikuti and $11,153
representing the personal use of corporate cars. Does not include benefits
from certain non-interest bearing loans outstanding during 1996. See
"Certain Transactions."

(2) Represents the imputed value of certain health and life insurance benefits
provided by the Company.

(3) Represents amount of contribution by the Company on behalf of such
individual to the Company's 401(k) Plan.

(4) No longer an employee of the Company.

The following table sets forth certain information with respect to the
grant of incentive stock options by the Company during 1996:

OPTION GRANTS IN 1996

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
----------------------------------------------------- ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(1)
OPTION EMPLOYEES IN EXERCISE EXPIRATION --------------------
NAME GRANTED FISCAL YEAR PRICE(2) DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Nanjappa S. Venugopal(3)........ 29,711 10% $8.41 9/12/06 $157,142 $398,228
</TABLE>

- -------------------------
(1) The potential realizable value is calculated based on the term of the option
at the time of grant (ten years). Assumed stock price appreciation of 5% and
10% is based on the fair value at the time of grant.

(2) The exercise price equals the fair market value of the Common Stock as of
the grant date as determined by the Board of Directors, based upon a
contemporaneous independent appraisal.

(3) Mr. Venugopal's options are exercisable in three equal annual installments
commencing on September 12, 1997.

35
<PAGE> 37

The following table sets forth certain information with respect to the
stock options held at December 31, 1996 by the Named Executive Officers below
who held options during 1996:

AGGREGATED OPTION EXERCISES IN 1996 AND 1996 OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT YEAR END(#) AT YEAR END ($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Timothy S. Manney............ 267,402 $2,083,062 -- -- $ -- $ --
Daniel S. Rankin............. -- -- -- 148,557 -- 1,157,259
Nanjappa S. Venugopal........ -- -- -- 29,711 -- 106,662
</TABLE>

- -------------------------
(1) Calculated based on the initial public offering price of $12.00 per share,
less the exercise price payable for such shares.

EMPLOYEE BENEFIT PLANS

1996 Stock Option Plan. The Company's 1996 Stock Option Plan (the "1996
Plan") provides for the granting of incentive stock options to employees within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and
for the granting to employees, directors and consultants of nonstatutory stock
options. The 1996 Plan was adopted by the Board of Directors on July 10, 1996
and approved by the sole shareholder on September 10, 1996. Unless terminated
sooner, the 1996 Plan will terminate automatically on December 31, 2006. The
Board of Directors has the authority to amend, suspend or terminate the 1996
Plan, subject to any required shareholder approval under applicable law.
Notwithstanding the foregoing, no amendment, suspension or termination of the
1996 Plan, without the consent of the holder of a previously granted option, may
adversely affect such holder's right under such option.

Since the inception of the 1996 Plan, options have been granted to
approximately 75 employees and a total of 1,623,727 shares of Common Stock are
authorized for issuance pursuant to the 1996 Plan. As of the date of this
Prospectus, 622,368 shares were outstanding, and 466,266 shares remained
available for future grant under the 1996 Plan.

The 1996 Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"). The Committee has the power to determine the terms
of the options granted, including the exercise price, the number of shares
subject to the option and the exercisability thereof, and the form of
consideration payable upon exercise. Options granted under the 1996 Plan are not
generally transferable by the optionee, and each option is exercisable during
the lifetime of the optionee only by such optionee. Incentive stock options
granted under the 1996 Plan must be exercised within three months of such
optionee's termination by death or within twelve months of such optionee's
termination by disability, but in no event later than the expiration of the
option's term. The exercise price of all incentive stock options granted under
the 1996 Plan must be at least equal to the fair market value of the Common
Stock on the date of grant. With respect to any employee who owns stock
possessing more than 10% of the voting power of all classes of the Company's
outstanding capital stock, the exercise price of any incentive stock option
granted to such employee must equal or exceed 110% of the fair market value of
the Common Stock on the grant date and the term of the option must not exceed
five years. The aggregate fair market value of the Common Stock (determined at
the time the option is granted) with respect to which incentive stock options
granted to an individual first become exercisable in any calendar year shall not
exceed $100,000. The term of all options (other than the incentive stock options
referred to in the second preceding sentence) may not exceed ten years.

The 1996 Plan provides that in the event of a merger, consolidation or sale
or transfer by the Company of substantially all of its assets, the date of
termination of any outstanding options and the date on or after which such
options, or any portion of such options not then exercisable may be exercised,
shall be advanced to a date fixed by the Committee which date shall be no more
than 15 days prior to the date of such merger, consolidation, sale or transfer.

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<PAGE> 38

The Company has agreed to indemnify certain holders of the options against
certain liabilities resulting from the holders' involvement with the Company.

401(k) Plan. The Company maintains a 401(k) profit sharing and defined
contribution plan (the "401(k) Plan"). All employees of the Company who have
reached 21 years of age and who have completed one year of employment are
eligible to participate in the 401(k) Plan, pursuant to which each participant
may contribute up to 18% of eligible compensation (up to a statutorily
prescribed annual limit of $9,500 in 1997). The Company matches 40% of the
contributions made by employees to the 401(k) Plan (up to 6% of eligible
compensation). All amounts contributed by employee participants and earnings on
these contributions are fully vested at all times. Employee participants may
elect to invest their contributions in various established funds.

EMPLOYMENT AGREEMENTS

In December 1996, the Company entered into an employment agreement with
Rajendra B. Vattikuti which became effective March 5, 1997, that provides for
his employment as President and Chief Executive Officer for an initial term
ending on December 31, 2001. Effective January 1, 1998, the term is
automatically extended for an additional year, unless before such date either
party shall notify the other of its refusal to extend the term, so that the term
of this agreement upon such renewal is always five years. The agreement provides
for an annual base salary of $350,000, a bonus in an amount not to exceed the
base annual salary, to be determined by the Compensation Committee, and benefits
under the Company's benefit plans. Special death and disability benefits also
are included. The agreement also provides, among other things, that, if Mr.
Vattikuti's employment is terminated by the Company with or without cause for
any reason other than willful misconduct, or by Mr. Vattikuti under certain
conditions (including a change in control as defined in the agreement), the
Company will pay to him an amount equal to 2.99 times his annual base salary and
bonus in effect immediately prior to such termination. If the Company terminates
Mr. Vattikuti's employment for any reason other than willful misconduct, the
Company is obligated to provide certain benefits to Mr. Vattikuti over a period
of time. The agreement contains a restrictive covenant that prohibits Mr.
Vattikuti from competing anywhere in the world with the Company's business
during any period in which he receives compensation and for one year after the
cessation of such compensation.

In December 1996, the Company entered into an agreement with Timothy Manney
that provides for his employment as Executive Vice President of Finance and
Administration for an initial term ending on December 31, 1999. Effective
January 1, 1998, the term is automatically extended for an additional year,
unless before such date either party shall notify the other of its refusal to
extend the term, so that the term of this agreement upon such renewal is always
three years. The agreement provides for an annual base salary of not less than
$180,000, a bonus in an amount not to exceed 60% of his base annual salary, to
be determined by the Compensation Committee, and benefits under the Company's
benefit plans. Special death and disability benefits also are included. The
agreement also provides, among other things, that, if Mr. Manney's employment is
terminated by the Company without cause, or by Mr. Manney under certain
conditions (including a change in control as defined in the agreement), the
Company will pay to him an amount equal to 2.5 times his base salary in effect
immediately prior to such termination and the greater of his most recent bonus
or the bonus received immediately prior to his most recent annual bonus. The
agreement contains a restrictive covenant that prohibits Mr. Manney from
competing anywhere in the world with the Company's business during any period in
which he receives compensation and for one year after the cessation of such
compensation.

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<PAGE> 39

CERTAIN TRANSACTIONS

In May 1997, Padmaja Vattikuti, Rajendra Vattikuti's wife, purchased 20,290
shares of Common Stock in the open market at a weighted average purchase price
of $13 1/2 per share. As a result of the previously unanticipated sale by Mr.
Vattikuti, the Company's President and Chief Executive Officer, of certain of
his shares of Common Stock in this offering, approximately $285,000 of the
proceeds of such sale (representing the difference between the cost basis of Ms.
Vattikuti's shares and the sale of 20,290 of Mr. Vattikuti's shares in this
offering at the assumed public offering price of $27 1/2 per share) will be paid
to the Company as required under Section 16(b) of the Exchange Act.

Pursuant to an Agreement (the "Acquisition Agreement") among the Company,
JF Electra, CBS Mauritius and Mr. Vattikuti, on July 19, 1996, JF Electra
acquired a 28% interest in CBS Mauritius for approximately $4.0 million. CBS
Mauritius concurrently redeemed, for a purchase price of approximately $2.7
million, all of the shares of CBS Mauritius then owned by the Indian Investment
Trust, a revocable grantor trust of which Ms. Vattikuti was the grantor and
trustee. Also concurrently, Mr. Vattikuti made a capital contribution to CBSI of
approximately $1.1 million and loaned the Company approximately $0.6 million.
This loan, including interest of approximately $23,000 at 8.25% per annum, was
repaid on December 30, 1996.

In connection with the investment by JF Electra, the parties to the
Acquisition Agreement and CBS India entered into a Shareholders Agreement (the
"Shareholders Agreement") that gave JF Electra the right, under certain
conditions, to convert its shares of CBS Mauritius into 552,632 shares of Common
Stock. In March 1997, JF Electra converted all of its CBS Mauritius shares into
Common Stock and JF Electra sold a portion of these shares in the Company's
initial public offering. As a result of this conversion, the Shareholders
Agreement terminated.

The Company entered into two note arrangements aggregating $660,000 with
Mr. Vattikuti with a weighted average interest rate of approximately 6%. The
amount outstanding on these notes was approximately $574,000 as of December 31,
1994. These notes were repaid during 1995.

During 1994 and 1995, the Company made non-interest bearing advances
totaling approximately $87,000 and approximately $177,000, respectively, to Mr.
Vattikuti for his personal use. The outstanding advances were repaid in full in
1995. In 1996, the Company made non-interest bearing advances totaling
approximately $46,000 to Mr. Vattikuti for his personal use. The outstanding
advances were repaid by Mr. Vattikuti on December 30, 1996. In addition, during
1996 CBSI made personal loans in the aggregate amount of approximately $100,000
to Vanaja Gangavarapu. Ms. Gangavarapu is the mother-in-law of Mr. Vattikuti.
These loans were short-term, payable on demand and non-interest bearing. The
loans were repaid in February 1997. During 1997, Mr. Vattikuti made an
approximate $46,000 non-interest bearing advance to the Company. As of June 30,
1997, this advance was still outstanding.

On December 30, 1996, Timothy Manney exercised his stock options and the
Company issued an aggregate of 267,402 shares of Common Stock for an aggregate
purchase price of $1,125,000 to Mr. Manney. Pursuant to the terms of the
Nonqualified Stock Option Agreement between Mr. Manney and the Company, the
Company loaned Mr. Manney $1,125,000 to purchase the shares. The promissory note
executed by Mr. Manney provides that the loan matures on April 25, 2006 and
bears interest at the rate of 8.25% per annum. Interest on the loan is payable
on January 1 and July 1 of each year. Interest payments are not required to be
made until Mr. Manney's shares have been registered under the Securities Act.
Mr. Manney will use part of the proceeds from the sale of his shares in this
offering to repay a portion of the note.

On December 30, 1996, Douglas Land exercised his stock options and the
Company issued an aggregate of 237,691 shares of Common Stock for an aggregate
purchase price of $1,000,000 to Mr. Land. Pursuant to the terms of the
Nonqualified Stock Option Agreement between Mr. Land and the Company, the
Company loaned Mr. Land $1,000,000 to purchase the shares. The promissory note
executed by Mr. Land provides that the loan matures on April 25, 2006 and bears
interest at the rate of 8.25% per annum. Interest on the loan is payable on
January 1 and July 1 of each year. Interest payments are not required to be made
until Mr. Land's shares have been registered under the Securities Act. Mr. Land
will use part of the proceeds from the sale of his shares in this offering to
repay a portion of the note.

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<PAGE> 40

In each of the fiscal years 1994, 1995, and 1996, and for the six-month
period ended June 30, 1997, Mr. Land and certain entities affiliated with him
earned collectively approximately $226,000, $96,000, $244,000 and $12,000,
respectively, for serving as a Director and providing consulting services to the
Company. In addition, The Chesapeake Group, an entity affiliated with Mr. Land,
earned $100,000 for financial advisory services rendered in connection with this
offering, and $160,000 for financial advisory services rendered in connection
with the initial public offering on March 5, 1997.

During 1995 and 1996, CBSI provided consulting services to Little Caesars
Enterprises, of which one of the former directors of the Company is a principal
shareholder. For services rendered, the Company earned approximately $111,000 in
1995, $216,000 in 1996 and $46,000 in the six-month period ended June 30, 1997.

Subsequent to March 5, 1997, the Company distributed to certain
shareholders approximately $8.8 million from the proceeds of its initial public
offering as part of the termination of the Company's S corporation status.

39
<PAGE> 41

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of July 31, 1997, and as adjusted to
reflect the sale of the shares offered hereby, by: (i) each person known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock; (ii) each director of the Company; (iii) each of the Named Executive
Officers; and (iv) by all executive officers and directors as a group. Except as
noted, all persons listed below have sole voting and investment power with
respect to their shares of Common Stock, subject to community property laws
where applicable.

<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP OWNERSHIP
PRIOR TO OFFERING NUMBER AFTER OFFERING(1)
-------------------- OF SHARES --------------------
NUMBER OF BEING NUMBER OF
NAME SHARES PERCENT OFFERED SHARES PERCENT
<S> <C> <C> <C> <C> <C>
Rajendra B. Vattikuti(2)....................... 5,942,275 63.9% 750,000 5,192,275 49.1%
JF Electra (Mauritius) Limited(3).............. 352,632 3.8% 165,000 187,632 1.8%
Timothy S. Manney.............................. 267,402 2.9% 35,000 232,402 2.2%
Douglas S. Land(4)............................. 223,430 2.4% 20,000 203,430 1.9%
Daniel S. Rankin(5)............................ 74,279 * 30,000 44,279 *
Frank D. Stella(6)............................. 9,952 * -- 9,952 *
Nanjappa S. Venugopal(7)....................... 9,903 * -- 9,903 *
John A. Stanley................................ 5,650 * -- 5,650 *
Gena M. Lodolo................................. -- -- -- -- --
Roy Ely(8)..................................... -- -- -- -- --
Jennifer Grey(8)............................... -- -- -- -- --
All directors and executive officers as a group
(8 persons).................................. 6,532,891 69.6% 835,000 5,697,891 53.6%
</TABLE>

- ------------------------------
* Less than 1%.

(1) Assumes no exercise of the Underwriters' over-allotment option to purchase
up to an aggregate of 337,500 shares of Common Stock from the Company or the
Selling Shareholders.

(2) The address of Mr. Vattikuti is c/o Complete Business Solutions, Inc., 32605
West Twelve Mile Road, Suite #250, Farmington Hills, Michigan 48334. Does
not include 20,290 shares owned by Padmaja Vattikuti, Mr. Vattikuti's wife.
Mr. Vattikuti disclaims beneficial ownership of such shares.

(3) The address of JF Electra is 4/F Les Cascades Building, Edith Cavell Street,
Port Louis, Mauritius.

(4) Does not include 14,261 shares transferred to certain family members. Mr.
Land disclaims beneficial ownership of such shares.

(5) Includes 74,279 shares subject to options currently exercisable, 30,000 of
which will be exercised on the date of this Prospectus and sold in this
offering.

(6) Includes 4,952 shares subject to options currently exercisable.

(7) Consists of 9,903 shares subject to options which are exercisable September
12, 1997.

(8) No longer an employee of the Company.

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<PAGE> 42

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, no par value per share, and 1,000,000 shares of preferred
stock, no par value per share ("Preferred Stock"). The following description of
the capital stock of the Company is a summary, and as such, does not purport to
be complete and is subject, and qualified in its entirety by reference to, the
more complete descriptions contained in the Restated Articles of Incorporation
of the Company, as amended (the "Articles"), and the Bylaws of the Company, as
amended, copies of each of which are incorporated by reference as exhibits to
the Registration Statement of which this Prospectus is a part. The Company
currently has outstanding 9,300,000 shares of Common Stock and no shares of
Preferred Stock. Upon completion of this offering, the Company will have
10,580,000 outstanding shares of Common Stock and no outstanding shares of
Preferred Stock. As of July 30, 1997, there were 37 record holders of Common
Stock.

COMMON STOCK

The Company's authorized common stock consists of 30,000,000 shares of
Common Stock which is traded on the Nasdaq National Market. The holders of
Common Stock are entitled to one vote for each share held of record on all
matters submitted to a vote of shareholders. Subject to preferences that may be
applicable to outstanding shares of Preferred Stock, if any, the holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Company's Board of Directors out of funds legally available therefor.
Holders of Common Stock have no preemptive, subscription or redemption rights,
and there are no conversion or similar rights with respect to such shares. The
outstanding shares of Common Stock are fully paid and nonassessable.

PREFERRED STOCK

The Company is authorized to issue up to 1,000,000 shares of undesignated
Preferred Stock. The Board of Directors has the authority to issue the
undesignated Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions granted to or imposed upon any wholly
unissued shares of undesignated Preferred Stock, as well as to fix the number of
shares constituting any series and the designation of such series, without any
further vote or action by the shareholders. The Board of Directors, without
shareholder approval, may issue Preferred Stock with voting and conversion
rights which could materially adversely affect the voting power of the holders
of Common Stock. The issuance of Preferred Stock could also decrease the amount
of earnings and assets available for distribution to holders of Common Stock. In
addition, the issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company. At present, the
Company has no plans to issue any shares of Preferred Stock. See "Risk Factors
- -- Anti-Takeover Provisions."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is First Chicago
Trust Company of New York.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 10,580,000 shares
of Common Stock outstanding. Of these shares, the 2,250,000 shares sold in this
offering and the 2,500,000 shares issued in the Company's initial public
offering will be freely tradable without restriction or further registration
under the Securities Act, except for the 30,940 shares purchased by "affiliates"
in the open market and any future purchases by "affiliates" of the Company, as
that term is defined under the Securities Act ("Affiliates"), may generally only
be sold in compliance with the limitations of Rule 144 described below.

All of the remaining 5,830,000 shares of Common Stock and the 30,940 shares
purchased by the Affiliates in the open market (the Restricted Shares)
constitute restricted securities under Rule 144. Of these "Restricted Shares,"
5,846,679 will be subject to a lock-up period expiring 90 days after the date of
this

41
<PAGE> 43

Prospectus (the "Lock-Up Period"). Following the Lock-Up Period, 5,846,679 of
the Restricted Shares will immediately become eligible for sale, subject,
however, to the volume limitations and restrictions (other than the holding
period requirement) of Rule 144. The remaining 14,261 Restricted Shares will
become eligible for sale under Rule 144 in December 1997. See "Underwriting."

In general, under Rule 144 of the Securities Act as currently in effect, a
person (or persons whose shares are aggregated) who has beneficially owned
Restricted Shares for at least one year, including a person who may be deemed an
Affiliate of the Company, is entitled to sell within any three-month period a
number of shares of Common Stock that does not exceed the greater of 1% of the
then outstanding shares of Common Stock or the average weekly trading volume of
the Common Stock as reported on the Nasdaq National Market during the four
calendar weeks preceding such sale. Sales under Rule 144 are subject to certain
restrictions relating to manner of sale, notice and the availability of current
public information about the Company. In addition, under Rule 144(k), a person
who is not an Affiliate of the Company at any time 90 days preceding a sale, and
who has beneficially owned shares for at least two years, would be entitled to
sell such shares without regard to the volume limitations, manner of sale
provisions or notice or other requirements of Rule 144.

REGISTRATION RIGHTS

The Company has entered into stock option agreements with Timothy S.
Manney, Douglas S. Land, and Daniel S. Rankin, pursuant to which the Company has
granted them certain registration rights. Pursuant to the terms of the stock
option agreements with Messrs. Manney and Land, at any time after September 5,
1997, each has the right, subject to certain restrictions set forth in their
respective agreements, to require the Company to register under the Securities
Act the Common Stock owned by such holders on the date of this offering at the
Company's expense. Pursuant to the terms of the stock option agreement with Mr.
Rankin, at any time beginning six months after he exercises his options, he will
have the right, subject to certain conditions set forth in his agreement, to
require the Company to register his Common Stock. In addition, the Company,
pursuant to the terms of the stock option agreements, agrees to indemnify
Messrs. Manney, Land and Rankin against, among other things, any and all claims,
suits, actions or proceedings and against any payments in satisfaction of any
related judgment, fine or penalty caused by or resulting from any of their acts,
omissions, negligence or wilful conduct resulting from their respective
involvement with the Company and its subsidiaries and affiliates.

The Company intends to file a registration statement on Form S-8 under the
Securities Act in September 1997 to register an aggregate of 1,088,634 shares of
Common Stock reserved for issuance under the Company's 1996 Plan. See
"Management -- Employee Benefit Plans -- 1996 Stock Option Plan." Accordingly,
shares registered under such registration statement will, subject to Rule 144
volume limitations applicable to affiliates, be available for sale in the open
market, unless such shares are subject to vesting restrictions with the Company
or the lock-up agreements described above. As of the date of this Prospectus,
options to purchase 622,368 shares of Common Stock were outstanding and 466,266
shares of Common Stock remained available for future grant under the 1996 Plan.

The Company can make no prediction as to the effect, if any, that market
sales of shares of Common Stock or the availability of shares for sale will have
on the market price prevailing from time to time. Nevertheless, sales of
significant numbers of shares of the Common Stock in the public market could
adversely affect the market price of the Common Stock and could impair the
Company's future ability to raise capital through an offering of its equity
securities. See "Risk Factors -- Shares Eligible for Future Sale."

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<PAGE> 44

UNDERWRITING

Subject to certain terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), have agreed severally to purchase
from the Company and the Selling Shareholders, and the Company and the Selling
Shareholders have agreed severally to sell to each of the Underwriters, an
aggregate of 2,250,000 shares of Common Stock at the public offering price per
share less the underwriting discounts and commissions set forth on the cover of
this Prospectus. The number of shares of Common Stock that each Underwriter has
agreed to purchase is set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
UBS Securities LLC..........................................
Legg Mason Wood Walker, Incorporated........................

---------
Total.................................................. 2,250,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase the shares of Common Stock offered hereby are subject
to approval by their counsel of certain legal matters and to certain other
conditions. The Underwriters are obligated to purchase all shares of Common
Stock offered hereby (other than those covered by the over-allotment option
described below) if any are purchased.

The Underwriters propose to initially offer the shares of Common Stock in
part directly to the public at the price to the public set forth on the cover
page of this Prospectus and in part to certain dealers (including the
Underwriters) at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may re-allow to certain
other dealers, a concession not in excess of $ per share. After this
offering, the public offering price and other selling terms may be changed by
the Underwriters.

Pursuant to the Underwriting Agreement, the Company and certain Selling
Stockholders have granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to an aggregate
of 337,500 additional shares of Common Stock at the public offering price set
forth on the cover page of this Prospectus less the underwriting discounts and
commissions. The Underwriters may exercise such option solely to cover
over-allotments, if any, made in connection with this offering. To the extent
that the Underwriters exercise such option, each Underwriter will become
obligated, subject to certain conditions, to purchase its pro rata portion of
such additional shares based on such Underwriter's percentage underwriting
commitment as indicated in the preceding table, and the Company will be
obligated, pursuant to the option, to sell such shares to the Underwriters.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof. The Company, its executive officers and
directors and the Selling Shareholders have each agreed, subject to certain
exceptions, not to (i) offer, pledge, sell, contract to sell, engage in any
short sale, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock;
or (ii) enter into any swap or similar agreement that transfers, in whole or in
part, the economic risk of ownership of the Common Stock for a period of 90 days
after the date of this Prospectus (the "Lock-Up Period") without the prior
written consent of Donaldson, Lufkin & Jenrette Securities Corporation. In
addition, all Selling Shareholders holding registration rights have agreed that,
without the prior written consent of Donaldson Lufkin & Jenrette Securities
Corporation, will not, during the Lock-Up Period, make any demand

43
<PAGE> 45

for or exercise any right with respect to, the registration of any shares of
Common Stock or any security convertible into or exercisable or exchangeable for
Common Stock.

The Chesapeake Group, an entity affiliated with Douglas Land, a shareholder
and director of the Company, earned $160,000 for financial advisory services
rendered in connection with the Company's initial public offering in March 1997
and $100,000 in connection with this offering.

The Underwriters and dealers may engage in passive market making
transactions in the Common Stock in accordance with Rule 103 of Regulation M
promulgated by the Commission. In general, a passive market maker may not bid
for or purchase shares of Common Stock at a price that exceeds the highest
independent bid. In addition, the net daily purchases made by any passive market
maker generally may not exceed 30% of its average daily trading volume in the
Common Stock during a specified two-month prior period, or 200 shares, whichever
is greater. A passive market maker must identify passive market making bids as
such on the Nasdaq electronic inter-dealer reporting system. Passive market
making may stabilize or maintain the market price of the Common Stock above
independent market levels. Underwriters and dealers are not required to engage
in passive market making and may end passive market making activities at any
time.

In connection with this offering, certain Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may overallot this offering,
creating a syndicate short position. In addition, the Underwriters may bid for
and purchase shares of Common Stock in the open market to cover syndicate short
positions or to stabilize the price of the Common Stock. Finally, the
underwriting syndicate may reclaim selling concessions from syndicate members in
this offering, if the syndicate repurchases previously distributed Common Stock
in syndicate covering transactions, in stabilization transactions or otherwise.
Any of these activities may stabilize or maintain the market price of the Common
Stock above independent market levels. The Underwriters are not required to
engage in these activities and may end any of these activities at any time.

LEGAL MATTERS

The validity of the issuance of the Common Stock offered hereby and certain
other legal matters in connection with this offering will be passed upon for the
Company by Butzel Long, Detroit, Michigan. Certain legal matters in connection
with this offering will be passed upon for the Underwriters by Sachnoff &
Weaver, Ltd., Chicago, Illinois.

EXPERTS

The Consolidated Financial Statements as of December 31, 1995 and 1996, and
for each of the three years ended December 31, 1996, included in this Prospectus
and the Consolidated Financial Statement Schedule included in this Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, to the extent and for the periods as indicated in their reports
with respect thereto, and are included therein in reliance upon the authority of
said firm as experts in giving said reports.

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith, files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information may be inspected and copied at the public reference room of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549, and at the public reference facilities at the Commission's Regional
Offices at Seven World Trade Center, 13th Floor, New York, New York 10048 and
North-West Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material may be obtained at prescribed rates by writing to
the Commission, Public Reference Section, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, DC 20549. In addition, material filed by CBSI may be

44
<PAGE> 46

inspected at the offices of the National Association of Securities Dealers,
Inc., Reports Section, 1735 K Street, N.W., Washington, DC 20006. The
Registration Statement, including the exhibits and schedules thereto, may be
obtained from the Commission's web site at www.sec.gov.

The Company has filed with the Commission a Registration Statement on Form
S-1 (together with any amendments or supplements thereto, the "Registration
Statement") under the Securities Act of 1933, as amended with respect to the
shares of Common Stock offered hereby. As permitted by the rules and regulations
of the Commission, this Prospectus does not contain all the information set
forth in the Registration Statement. Such additional information may be obtained
from the public reference section of the Commission at 450 Fifth Street, N.W.,
Washington, DC 20549. Statements contained in this Prospectus as to the contents
of any contract or other document referred to herein are not necessarily
complete and, in each instance, reference is made to the copy of such contract
or other documents filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. Copies of reports,
proxy and information statements and other information regarding registrants
that file electronically are available on the Commission's web site.

GLOSSARY OF CERTAIN TECHNICAL TERMS

Architecture. A particular design for bringing together and utilizing
selected computer hardware, network systems software and applications software
to achieve an overall objective.

Client/server. The linking or networking of two or more computers to allow
multiple users to access and share information. Client/server design is
contrasted with "mainframe" design.

Conversion. The process of converting data and applications from one format
to another in connection with an organization's adoption of different, usually
more technologically advanced, hardware or software.

Distributed computing environments. The distribution of hardware and
software applications within an organization, across multiple hardware
platforms, thereby contributing to overall processing power. Distributed
computer environments can use client/server architectures or more proprietary
architectures.

Electronic Data Interchange. Industry standard methods and formats for
electronic exchange of business documents such as purchase orders.

Enterprise Resource Planning. Large, integrated application packages used
to manage information on an enterprise-wide basis.

Graphical user interface. A user interface which typically uses a mouse as
a pointing device, icons representing basic computer operations,
"what-you-see-is-what-you-get" on-screen page representation and multiple
on-screen windows. A graphical user interface is designed to make computer
applications easier to operate. Examples of graphical user interfaces are
Microsoft Windows and the Macintosh user interface.

Internet. An open global network of interconnected commercial, educational
and governmental computer networks which utilize a common communications
protocol.

Intranet. An organization's private network of its local area networks
which utilizes Internet data formats and communications protocols and which may
use the Internet's facilities as the backbone for network communications.

Legacy. As in hardware and applications, which are information technology
systems based on older proprietary technologies.

Mainframe. A centralized computer, capable of handling large amounts of
data and interfacing with numerous terminals (end-users), on which an
organization maintains information.

Migration. The process of moving applications and data from one computing
environment, such as a mainframe environment, to another, such as client/server
environment. Also called reengineering.

45
<PAGE> 47

Object-oriented programming. A type of software design in which software
elements are linked together as needed to achieve the desired programming
result. This style of programming promotes re-usability of objects (data
combined with a procedural code) to improve programmer efficiency.

Operating System. The software that controls the allocation of computer
resources to various software applications in order to maximize the efficiency
of those resources.

Relational database management system (RDBMS). A particular style of
database management system in which computer data is stored in two-dimensional
tables. Each table defines the relationship between the items listed in the rows
(data records) and columns (data fields). Data from two or more tables can be
related and accessed through common data fields to permit multi-dimensional
searching.

Year 2000. Refers to the software problems resulting from the date change
on December 31, 1999 to the year 2000. Many software applications must be
modified in order to operate properly after this date.

46
<PAGE> 48

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets as of December 31, 1995 and
1996...................................................... F-3
Consolidated Statements of Income for the years ended
December 31, 1994, 1995, and 1996......................... F-4
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1994, 1995, and 1996............. F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995, and 1996......................... F-6
Notes to Consolidated Financial Statements.................. F-7
Condensed Consolidated Statements of Income for the three-
and six-month periods ended June 30, 1997 and 1996........ F-20
Condensed Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996..................................... F-21
Condensed Consolidated Statements of Shareholders' Equity
for the six-month periods ended June 30, 1996, December
31, 1996, and June 30, 1997............................... F-22
Condensed Consolidated Statements of Cash Flows for the
six-month periods ended June 30, 1997 and 1996............ F-23
Notes to Condensed Consolidated Financial Statements........ F-24
</TABLE>

F-1
<PAGE> 49

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Complete Business Solutions, Inc.:

We have audited the accompanying consolidated balance sheets of Complete
Business Solutions, Inc. (a Michigan corporation) and subsidiaries as of
December 31, 1995 and 1996, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Complete Business Solutions,
Inc. and subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Detroit, Michigan,
January 29, 1997.
(except with respect to the
matter discussed in Note 13,
as to which the date is
February 11, 1997).

F-2
<PAGE> 50

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1996
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 830 $ 3,382
Accounts receivable, net............................... 16,759 19,114
Unbilled revenues...................................... 534 1,627
Prepaid expenses and other............................. 531 1,136
------- -------
Total current assets.............................. 18,654 25,259
------- -------
Property and equipment, net................................. 3,571 5,167
Computer software, net...................................... 992 639
Other assets................................................ 206 193
------- -------
Total assets...................................... $23,423 $31,258
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... $ 1,562 $ 2,304
Accrued payroll and related costs...................... 3,895 4,907
Revolving credit facility.............................. 5,350 5,400
Other accrued liabilities.............................. 549 961
Current portion of deferred revenue.................... 1,062 1,124
Current portion of long-term debt...................... 437 486
------- -------
Total current liabilities......................... 12,855 15,182
------- -------
Deferred revenue, less current portion...................... 299 317
Long-term debt, less current portion........................ 529 305
Minority interest........................................... 552 1,503
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value, 1,000,000 shares
authorized, none issued............................... -- --
Common stock, no par value, 30,000,000 shares
authorized, 5,942,275 and 6,447,368 shares issued and
outstanding as of December 31, 1995 and 1996,
respectively.......................................... -- --
Additional paid-in capital............................. 1 3,226
Retained earnings...................................... 9,346 13,049
Stock subscriptions receivable......................... -- (2,125)
Cumulative translation adjustment...................... (159) (199)
------- -------
Total shareholders' equity........................ 9,188 13,951
------- -------
Total liabilities and shareholders' equity........ $23,423 $31,258
======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.

F-3
<PAGE> 51

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1994 1995 1996
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C>
Revenues:
Professional service fees.............................. $53,696 $64,635 $80,601
Software products...................................... 2,662 2,764 2,640
------- ------- -------
Total revenues.................................... 56,358 67,399 83,241
------- ------- -------
Cost of revenues:
Salaries, wages and employee benefits.................. 35,219 45,888 53,504
Contractual services................................... 2,487 1,909 3,712
Project travel and relocation.......................... 3,144 3,126 3,458
Cost of software products sold......................... 1,802 1,879 1,546
Depreciation and amortization.......................... 184 807 1,082
------- ------- -------
Total cost of revenues............................ 42,836 53,609 63,302
------- ------- -------
Gross profit...................................... 13,522 13,790 19,939
Selling, general and administrative expenses................ 10,887 11,824 15,455
------- ------- -------
Income from operations............................ 2,635 1,966 4,484
Interest expense............................................ 345 692 539
------- ------- -------
Income before provision for income taxes and
minority interest............................... 2,290 1,274 3,945
Provision for income taxes.................................. -- -- 84
Minority interest........................................... 176 252 158
------- ------- -------
Net income........................................ $ 2,114 $ 1,022 $ 3,703
======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
PRO FORMA
INFORMATION
(UNAUDITED)
(NOTE 14)
<S> <C> <C>
Net income as reported...................................... $ 1,022 $ 3,703
Pro forma incremental income tax provision.................. 135 1,260
------- -------
Pro forma net income........................................ $ 887 $ 2,443
======= =======
Pro forma net income per common share....................... $ .12 $ .32
======= =======
Pro forma weighted average shares outstanding............... 7,396 7,658
======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE> 52

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON ADDITIONAL STOCK CUMULATIVE TOTAL
SHARES PAID-IN RETAINED SUBSCRIPTIONS TRANSLATION SHAREHOLDERS'
OUTSTANDING CAPITAL EARNINGS RECEIVABLE ADJUSTMENT EQUITY
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance -- December 31, 1993..... 5,942,275 $ 1 $ 6,210 $ -- $ -- $ 6,211
Net income..................... -- -- 2,114 -- -- 2,114
--------- ------ ------- ------- ----- -------
Balance -- December 31, 1994..... 5,942,275 1 8,324 -- -- 8,325
Net income..................... -- -- 1,022 -- -- 1,022
Translation adjustment......... -- -- -- -- (159) (159)
--------- ------ ------- ------- ----- -------
Balance -- December 31, 1995..... 5,942,275 1 9,346 -- (159) 9,188
Net income..................... -- -- 3,703 -- -- 3,703
Translation adjustment......... -- -- -- -- (40) (40)
Capital contribution........... -- 1,100 -- -- -- 1,100
Stock options exercised........ 505,093 2,125 -- (2,125) -- --
--------- ------ ------- ------- ----- -------
Balance -- December 31, 1996..... 6,447,368 $3,226 $13,049 $(2,125) $(199) $13,951
========= ====== ======= ======= ===== =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE> 53

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1995 1996
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net income.................................................. $ 2,114 $ 1,022 $ 3,703
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.......................... 1,082 1,812 2,221
Provision for doubtful accounts........................ 100 105 120
Minority interest...................................... 176 252 158
Change in assets and liabilities--
Accounts receivable and unbilled revenues............ (3,503) (3,164) (3,601)
Prepaid expenses and other........................... (170) 29 (614)
Other assets......................................... (33) (4) 12
Accounts payable..................................... 83 641 752
Accrued payroll and related costs and other accrued
liabilities....................................... 340 261 1,625
Deferred revenue..................................... 251 312 80
Other................................................ 125 -- --
------- ------- -------
Net cash provided by operating activities....... 565 1,266 4,456
------- ------- -------
Cash flows from investing activities:
Investment in computer software........................... (313) -- (566)
Purchases of property and equipment....................... (2,155) (1,618) (3,097)
Net repayments on notes receivable -- shareholder......... 54 519 4
------- ------- -------
Net cash used in investing activities........... (2,414) (1,099) (3,659)
------- ------- -------
Cash flows from financing activities:
Net borrowings (payments) on revolving credit facility.... 1,500 (100) 50
Proceeds from issuance of long-term debt.................. 500 828 356
Payments on long-term debt................................ (257) (346) (531)
Proceeds from sale of stock in subsidiary, net............ -- -- 3,500
Repurchase of stock in subsidiary......................... -- -- (2,708)
Capital contribution...................................... -- -- 1,100
------- ------- -------
Net cash provided by financing activities....... 1,743 382 1,767
------- ------- -------
Effect of exchange rate changes on cash..................... -- (38) (12)
------- ------- -------
Increase (decrease) in cash and cash equivalents............ (106) 511 2,552
Cash and cash equivalents at beginning of period............ 425 319 830
------- ------- -------
Cash and cash equivalents at end of period.................. $ 319 $ 830 $ 3,382
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE> 54

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Operations

Complete Business Solutions, Inc. (the Company) was founded in 1985. The
Company is a worldwide provider of information technology (IT) services to large
and mid-size organizations. The Company offers its clients a broad range of IT
services, from advising clients on strategic technology plans to developing and
implementing appropriate IT solutions.

The Risk Factors on pages 6 to 13 of this Registration Statement are
incorporated herein by reference.

Common Stock

The Company, through two resolutions, has effected a 5,942-for-1 forward
stock split and an increase in the authorized capital to 30,000,000 shares of
Common Stock. Accordingly, the Company's shareholders' equity accounts and the
number of shares in the accompanying consolidated financial statements and notes
thereto have been retroactively restated to give effect to the forward stock
split and the increase in the number of authorized shares of Common Stock.

Principles of Consolidation and Organization

The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in the accompanying consolidated financial statements.

Through July 1996, the Company held a 76% interest in Complete Business
Solutions (India) Private Limited (CBS India) with the remaining 24% interest
held by an entity affiliated with the Company's shareholder (affiliated entity).
In July 1996, the Company formed CBS Complete Business Solutions (Mauritius)
Limited (CBS Mauritius) and the Company and the affiliated entity each
contributed its ownership interest in CBS India for a similar interest in CBS
Mauritius.

In July 1996, CBS Mauritius sold an ownership interest to an unrelated
entity for approximately $3,500, net of transaction costs. Simultaneously, CBS
Mauritius repurchased its stock held by the affiliated entity for approximately
$2,708 and the Company made a capital contribution of $1,708 to CBS Mauritius.
The net loss on this transaction was not material. As of December 31, 1996, the
Company owns 72% and the unrelated entity owns 28% of CBS Mauritius, which owns
100% of CBS India.

The 28% shareholder of CBS Mauritius has an option to convert its ownership
interest in CBS Mauritius into an 8.5% ownership interest in the Company during
the option period as specified in the CBS Mauritius shareholders' agreement.
This 8.5% ownership interest was calculated based upon the outstanding shares of
the Company on the date of the shareholders' agreement. This option will be
exercised in connection with the Company's contemplated initial public offering.
Upon conversion, the Company will issue additional shares of Common Stock and
acquire all outstanding minority shares of CBS Mauritius. The acquisition of the
minority shares will be accounted for under the purchase method of accounting.
The excess of the aggregate purchase price over the fair value of the net assets
acquired will be recognized as goodwill. See Note 16 for further discussion on
the pro forma effects of this transaction.

Foreign Currency

For significant foreign operations, the local currencies have been
designated as the functional currencies. The financial statements of these
subsidiaries are translated into U.S. dollars using exchange rates in effect at
year end for assets and liabilities and at the average rate during the year for
revenues and expenses. The resulting foreign currency translation adjustment is
reflected as a separate component of shareholders' equity

F-7
<PAGE> 55

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

as of December 31, 1995 and 1996. The translation adjustment for the year ended
December 31, 1994 was not material.

Transaction gains and losses, which were not significant in the years
presented, are reflected in the consolidated statements of income.

Cash and Cash Equivalents

Cash and cash equivalents include investments in highly liquid money market
funds with an initial maturity of three months or less.

Financial Instruments

The fair values and carrying amounts of certain of the Company's financial
instruments, primarily accounts receivable and payable, are approximately
equivalent. These financial instruments are classified as current and will be
liquidated within the next operating cycle.

The carrying amount for the revolving credit facility and certain long-term
debt approximates fair value due to the variable rate of interest on these
notes. The fair value of the fixed-rate debt, which approximates the carrying
value, has been estimated based on current rates offered to the Company for debt
of the same remaining maturities.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the assets.
Leasehold improvements are amortized over the expected life of the asset or term
of the lease, whichever is shorter.

Revenue Recognition

The Company recognizes professional service fee revenue on
time-and-materials contracts as the services are performed for the clients.
Revenues on fixed-priced contracts are recognized using the percentage of
completion method. Percentage of completion is determined by relating the actual
cost of work performed to date to the estimated total cost for each contract. If
the estimate indicates a loss on a particular contract, a provision is made for
the entire estimated loss without reference to the percentage of completion.
Retainages, which are not material for any of the years presented, are included
in accounts receivable in the accompanying consolidated balance sheets. The
Company does not have significant contracts whose original duration is in excess
of twelve months.

Software products revenue consists of both license revenue and maintenance
revenue. License revenue is recognized when both a software license agreement is
signed and the software has been shipped and made available to the customer.
Maintenance revenue is recorded as deferred revenue in the consolidated balance
sheets when invoiced and is recognized over the term of the maintenance
contract, generally one year.

Unbilled Revenues

Unbilled revenues represent costs incurred and related earnings not
currently billable under the terms of the contract. These amounts are expected
to be billed and collected over a period of less than twelve months.

Computer Software

The Company performs research to develop software for various business
applications. The costs of such research are charged to expense when incurred.
When the technological feasibility of the product is established, subsequent
costs are capitalized and amortized using the straight-line method over the
estimated economic life of the product, generally three years. The establishment
of technological feasibility and the

F-8
<PAGE> 56

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ongoing assessment of the recoverability of these costs requires considerable
judgment by management with respect to certain external factors, including, but
not limited to, anticipated future gross product revenue, estimated economic
product lives and changes in software and hardware technology. The policy is
reevaluated and adjusted as necessary at the end of each accounting period. On
an ongoing basis, management reviews the valuation and amortization of
capitalized development costs. As part of this review, the Company considers the
value of future cash flows attributable to the capitalized development costs in
evaluating potential impairment of the asset. The amortization of software
development costs was $371, $551 and $719 for the years ended December 31, 1994,
1995 and 1996, respectively.

Accumulated amortization on computer software amounted to $1,392 and $2,111
as of December 31, 1995 and 1996, respectively.

Amounts capitalized were $313 and $566 for the years ended December 31,
1994 and 1996, respectively. No amounts were capitalized during the year ended
December 31, 1995.

Amounts charged to expense for research and development of computer
software were not material in the periods presented.

Cost of Software Products Sold

Cost of software products sold includes salaries, contractual services,
project travel and amortization expense related to the Company's software
products.

Income Taxes

The Company and its shareholders have elected to be taxed under the
provisions of Sub-Chapter S of the United States Internal Revenue Code. Under
those provisions, the shareholders are liable for individual Federal income
taxes on the Company's taxable income. As a result, no provision for United
States income taxes has been included in the accompanying consolidated
statements of income.

CBS Mauritius is incorporated in Mauritius and is not subject to income
taxes. CBS India is an Indian corporation subject to income taxes. CBS India's
operating facilities are located in a free trade zone. Under the Indian Income
Tax Act of 1961, the entire profits of a company situated in a free trade zone
are exempt from income tax for a period of five consecutive years within the
first eight years of operations, at the option of the Company. The Company has
opted for this exemption for the years ended March 31, 1992 to March 31, 1996
for its original facility in India. Two other facilities were opened during 1995
and 1996. These facilities may be exempt from income tax until 2002 and 2003,
respectively. CBS India also receives various export deductions at all three
facilities reducing its regular taxable income. As a result, other than the
minimum alternative tax discussed below, no tax provision related to the CBS
India income has been required.

During 1996, the government of India instituted a minimum alternative tax
with an effective rate of approximately 13% of CBS India's income. This tax
provision has been included in the consolidated statement of income for the year
ended December 31, 1996 as a provision for income taxes.

Termination of S Corporation Election

Certain events, including the public offering of the Company's Common
Stock, will automatically terminate its S corporation status, thereby subjecting
future income to Federal and state income taxes at the corporate level. Due to
temporary differences in recognition of revenue and expenses, income for
financial reporting purposes has exceeded income for income tax purposes.
Accordingly, the application of the provisions of SFAS No. 109, "Accounting for
Income Taxes" will result in the recognition of deferred tax liabilities and a
corresponding charge to expense in the period in which the initial public
offering occurs. If the S corporation status had been terminated as of December
31, 1996, this liability would have been approximately $4,982. As a result of
certain tax elections made by the Company, approximately $3,876 of this

F-9
<PAGE> 57

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

liability will be payable by the shareholders. The remaining liability of
approximately $1,106 will be paid by the Company in 1997. This liability has
been reflected as deferred taxes in the accompanying consolidated pro forma
balance sheet as of December 31, 1996.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2. ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK

Allowance for doubtful accounts was $162 and $214 at December 31, 1995 and
1996, respectively.

The Company's largest client represents 18%, and 5% of accounts receivable
as of December 31, 1995 and 1996, respectively, and represents 29%, 19% and 12%
of total revenues for the years ended December 31, 1994, 1995 and 1996,
respectively. Revenues from this client are generated by multiple projects for
various end users. No other client accounted for more than 10% of total revenues
for the three years ended December 31, 1996. In addition, 80%, 82% and 84% of
total revenues in each year for the years ended December 31, 1994, 1995 and
1996, respectively, were generated from existing clients from the previous
fiscal year.

The Company grants credit to clients based upon management's assessment of
their creditworthiness. Substantially all of the Company's revenues (and the
resulting accounts receivable) are from large and mid-size companies, major
systems integrators and governmental agencies.

3. PROPERTY AND EQUIPMENT

As of December 31, 1995 and 1996, property and equipment consisted of the
following:

<TABLE>
<CAPTION>
DECEMBER 31, ESTIMATED
----------------- USEFUL
1995 1996 LIVES
<S> <C> <C> <C>
Equipment................................................ $ 4,422 $ 5,549 3-5 years
Buildings................................................ 58 986 31 years
Purchased software....................................... 1,432 1,915 3-5 years
Furniture and fixtures................................... 656 970 5-7 years
Leasehold improvements................................... 230 340 5 years
Automobiles.............................................. 84 219 5 years
------- -------
6,882 9,979
Accumulated depreciation................................. (3,311) (4,812)
------- -------
Property and equipment, net.............................. $ 3,571 $ 5,167
======= =======
</TABLE>

4. RELATED PARTY TRANSACTIONS

During July 1996, a shareholder loaned $608 to the Company in exchange for
a note. The note was short-term and bore interest at 8.25%. This note and
accrued interest of $23 were repaid in December 1996.

During 1996, CBS India loaned approximately $100 to a related party. This
loan was short-term, payable on demand and noninterest bearing.

F-10
<PAGE> 58

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company entered into two note arrangements aggregating $660 with a
shareholder with a weighted average interest rate of approximately 6%. The
amount outstanding on the notes was $574 as of December 31, 1994. These notes
were repaid during 1995.

During 1994 and 1995, the Company made non-interest bearing advances
totaling $87 and $177, respectively, to a shareholder. The outstanding advances
were repaid in 1995. In 1996, the Company made non-interest bearing advances of
$46 to the same shareholder for his personal use. The outstanding advances were
repaid by the shareholder in December, 1996.

The Company provided services to a client whose principal shareholder was a
former director of the Company. The Company earned approximately $111 and $216
for these services in 1995 and 1996, respectively. No services were provided to
this client for the year ended December 31, 1994.

The Company incurred approximately $135 and $182 for the years ended
December 31, 1994 and 1996, respectively, for consulting services provided by an
affiliate of an outside director. No consulting services were provided to the
Company by the director's affiliate during 1995.

The above transactions were at prices and terms believed to be equivalent
to those available from unrelated parties.

See Note 1 for additional related party disclosures.

5. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for interest for the years ended December 31, 1994, 1995 and 1996
was $404, $705 and $553, respectively. Cash paid for income taxes for the year
ended December 31, 1996 was $134. There were no income taxes paid during 1994
and 1995.

6. REVOLVING CREDIT FACILITY

Under a credit arrangement with a commercial bank, the Company may borrow
an amount not to exceed the lesser of $16,000 or 80% of trade accounts
receivable less than 90 days outstanding at the bank's prime interest rate, or a
Eurodollar rate. At December 31, 1995 and 1996, the permitted borrowings under
the agreement were approximately $10,500, and $15,187, respectively. The
borrowings under the facility are short-term, payable on demand and are secured
by trade accounts receivable of the Company.

The balance outstanding under this agreement at December 31, 1995 and 1996
was $5,350 and $5,400, respectively. Average month-end outstanding borrowings
under these arrangements were $4,862, $7,231 and $5,988 for the years ended
December 31, 1994, 1995 and 1996, respectively. The weighted average interest
rate on the outstanding borrowings was 7.9% and 7.7% at December 31, 1995 and
1996, respectively.

The Company also has a working capital facility and an equipment
line-of-credit aggregating $3,000 and $2,000, respectively, with a commercial
bank at the bank's prime interest rate (8.5% and 8.25% at December 31, 1995 and
1996, respectively). The borrowings under the facility and the equipment
line-of-credit are short-term, payable on demand and secured by all assets of
the Company. No amounts have been borrowed under the working capital facility or
the equipment line-of-credit during the years presented.

The credit agreements contain various restrictive covenants which, among
other items, require the Company to maintain certain levels of tangible net
worth and a current ratio.

F-11
<PAGE> 59

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. LONG-TERM DEBT

As of December 31, 1995 and 1996, long-term debt consisted of the
following:

<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Note payable to a bank, payable in monthly installments of
$15 plus interest at 9.6% through March, 1988
collateralized by equipment............................... $ 408 $ 219
Note payable to a bank, payable in monthly installments of
$14 plus interest at prime plus .25% (8.75% and 8.5% at
December 31, 1995 and 1996, respectively) through July
1997, collateralized by equipment......................... 278 97
Note payable to a bank, payable in monthly installments of
$8 plus interest at prime (8.5% and 8.25% at December 31,
1995 and 1996, respectively) through August 1998,
collateralized by equipment............................... 262 159
Note payable to a bank, payable in monthly installments of
$10 plus interest at prime (8.25% at December 31, 1996)
through August 1999, collateralized by equipment.......... -- 316
Other....................................................... 18 --
----- -----
966 791
Less -- Current portion..................................... (437) (486)
----- -----
$ 529 $ 305
===== =====
</TABLE>

Maturities of the principal amounts outstanding at December 31, 1996 are as
follows:

8. SELF-INSURANCE

The Company is self-insured for health and dental benefits up to $70 per
occurrence. Insurance coverage is carried for risks in excess of this amount.
The Company has recognized health and dental benefits expense of approximately
$1,702, $1,691 and $2,266 for the years ended December 31, 1994, 1995 and 1996,
respectively. Estimated claims incurred but not reported were $282 and $300 as
of December 31, 1995 and 1996, respectively, and are included in other accrued
liabilities in the accompanying consolidated balance sheets. There are no
receivables from insurance carriers as of December 31, 1995 and 1996.

9. LEASES

The Company leases its headquarters, regional offices, equipment and
certain automobiles under noncancelable, long-term operating leases.

F-12
<PAGE> 60

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Rent expense for the years ended December 31, 1994, 1995 and 1996 amounted
to approximately $720, $1,005, and $1,030, respectively. The future minimum
lease payments required under these operating leases for the years ending
December 31, are as follows:

<TABLE>
<S> <C>
1997........................................................ $ 970
1998........................................................ 828
1999........................................................ 904
2000........................................................ 938
2001........................................................ 942
Thereafter.................................................. 1,356
------
$5,938
======
</TABLE>

10. STOCK OPTIONS

The Company maintains a Stock Option Plan (the Plan). Under the Plan,
eligible employees and directors may be granted either Incentive Stock Options
(ISOs) or Non-Incentive Stock Options (NISOs) at the discretion of the Board of
Directors. There are 1,623,727 shares of Common Stock authorized for grant under
the Plan. Options under the Plan are granted at fair value on the date of grant
as determined by an independent appraisal, therefore, no compensation expense
has been recognized. The options vest over periods ranging from one to four
years.

The stock option agreements provide for the option holder to exercise the
options in exchange for a promissory note payable to the Company over a period
of at least five years for NISOs and at least two years for ISOs. These notes
are full recourse and bear interest at the prime rate of interest determined at
the date of exercise. In December 1996, 505,093 NISOs were exercised. In
connection therewith, the Company loaned the option holders approximately $2,125
to purchase the shares, which has been reflected as stock subscriptions
receivable as of December 31, 1996 in the shareholders' equity section of the
accompanying consolidated balance sheet. The promissory notes executed by the
option holders provide that the loans mature on April 25, 2006 and bear interest
at the rate of 8.25% per annum. Interest on the loans is payable on January 1
and July 1 of each year. Interest payments are not required to be made until the
shares have been registered under the Securities Act.

The Company has elected to provide the pro forma disclosures, as permitted
under the provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost has
been recognized for the Plan within the accompanying consolidated statements of
income. Had compensation expense for the Plan been determined based on the fair
value at the grant date for awards in 1995 and 1996 consistent with the
provisions of SFAS No. 123, the Company's pro forma net income and pro forma net
income per common share would have been reduced to the amounts indicated below:

<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Pro forma net income --
As reported............................................... $887 $2,443
SFAS No. 123 pro forma.................................... 772 1,844
Pro forma net income per common share --
As reported............................................... .12 .32
SFAS No. 123 pro forma.................................... .10 .24
</TABLE>

F-13
<PAGE> 61

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the status of the Plan at December 31, 1995 and 1996 and
changes during the years then ended is presented in the table below:

<TABLE>
<CAPTION>
1995 1996
------------------- --------------------
WTD. AVG. WTD. AVG.
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
<S> <C> <C> <C> <C>
Outstanding, beginning of year................ -- $ -- 668,506 $4.21
Granted....................................... 668,506 4.21 297,411 8.41
Exercised..................................... -- -- (505,093) 4.21
------- ----- -------- -----
Outstanding, end of year...................... 668,506 $4.21 460,824 $6.92
======= ===== ======== =====
Exercisable, end of year...................... -- $ -- 4,952 $4.21
======= ===== ======== =====
Weighted average fair value of options
granted..................................... $1.11 $1.90
======= ========
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions used for
the 1995 and 1996 grants: risk-free rate of interest of 6.20% and 7.04%,
respectively; dividend yield of 0%; and expected lives of 10 years.

11. BENEFIT PLAN

The Company maintains the Complete Business Solutions, Inc. Incentive
Savings Plan and Trust (the 401(k) Plan). All employees of the Company are
eligible to participate in the 401(k) Plan once they have completed one year of
service and have attained age 21.

The 401(k) Plan is a defined contribution plan, qualified as a profit
sharing plan under Section 401(k) of the Internal Revenue Code. The 401(k) Plan
allows eligible employees to contribute up to 18% of their compensation with the
Company matching a percentage of the contributions. The matching contribution
percentages and maximum Company match (as a percentage of the participant's
compensation) for each plan year are as follows:

<TABLE>
<CAPTION>
MATCHING MAXIMUM
COMPANY COMPANY
CONTRIBUTION MATCH
<S> <C> <C>
1994........................................................ 30% 1.8%
1995........................................................ 40% 2.4%
1996........................................................ 40% 2.4%
</TABLE>

Matching contributions made by the Company amounted to approximately $183,
$301 and $406 for the years ended December 31, 1994, 1995 and 1996,
respectively. The Company may also make an additional contribution, at its
discretion, to the 401(k) Plan. No such additional contributions have been made
to date.

F-14
<PAGE> 62

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. GEOGRAPHIC OPERATIONS INFORMATION

The following table summarizes selected financial information of the
Company's operations by geographic location:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1995 1996
<S> <C> <C> <C>
Revenues --
United States.......................................... $55,220 $65,906 $80,678
India.................................................. 1,885 3,390 3,399
Other international.................................... 760 1,196 2,350
Intersegment........................................... (1,507) (3,093) (3,186)
------- ------- -------
Total............................................... $56,358 $67,399 $83,241
======= ======= =======
Income From Operations --
United States.......................................... $ 1,927 $ 846 $ 3,708
India.................................................. 568 897 680
Other international.................................... 140 223 96
------- ------- -------
Total............................................... $ 2,635 $ 1,966 $ 4,484
======= ======= =======
Identifiable Assets --
United States.......................................... $19,509 $21,607 $23,838
India.................................................. 980 1,320 3,966
Other international.................................... 251 496 3,454
------- ------- -------
Total............................................... $20,740 $23,423 $31,258
======= ======= =======
</TABLE>

13. COMMITMENTS AND CONTINGENCIES

The Company has received a third-party complaint filed against it and other
parties on February 3, 1997, by Network Six, Inc. ("NSI") in the Circuit Court
of the First Circuit for the State of Hawaii. The third-party claims are
asserted in an action that the State of Hawaii has brought against NSI. The
Company has also received an answer and counterclaim, dated January 31, 1997,
served by NSI in an action brought by the Company against NSI in the Superior
Court of the State of Rhode Island. The Company acted as a subcontractor to NSI
in connection with the development of software for the State of Hawaii.
Additionally, NSI and the Company were parties to a letter of intent, now
terminated, for the purpose of exploring a business combination or merger. The
Company's suit against NSI in Rhode Island, as well as the State of Hawaii's
suit against NSI in Hawaii, arise from the Hawaii software project.

The allegations of NSI's third-party complaint in the Hawaii action and
NSI's counterclaim in the Rhode Island action are substantively identical. NSI
alleges that the Company wrongfully used information gained in connection with
the letter of intent to attempt to gain control of the State of Hawaii project,
interfered with NSI's relationship with the State of Hawaii, employed or
solicited the employment of NSI employees in violation of contract, and
otherwise breached contractual or other obligations to NSI. NSI seeks damages of
approximately $481 from the Company for services and personnel allegedly
provided to it by NSI, damages of $60,000 predicated on a decline in the market
value of NSI's publicly-traded stock, and other unspecified losses.

F-15
<PAGE> 63

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company is also, from time to time, a party to ordinary, routine
litigation incidental to the Company's business. After discussion with its legal
counsel, the Company does not believe that the ultimate resolution of any other
existing matter will have a material adverse effect on its financial condition,
results of operations or cash flows.

14. PRO FORMA AND SUPPLEMENTAL NET INCOME PER COMMON SHARE (UNAUDITED)

Pro Forma Statement of Income Information

The pro forma adjustments for the incremental income tax provision included
in the accompanying consolidated statements of income reflects the additional
provision for Federal and state income taxes at the effective income tax rate as
if the Company had been taxed as a C corporation and no foreign tax holidays had
been granted during the periods presented. The differences between the United
States Federal statutory rate and the consolidated effective rate are as
follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------
1995 1996
<S> <C> <C>
Statutory Federal income tax rate........................... 34.0% 34.0%
State income taxes, net of Federal tax effect............... 3.0 3.0
Tax rate differences on foreign earnings not subject to U.S.
tax....................................................... (26.6) (2.4)
Other....................................................... 2.8 0.9
------ -----
13.2% 35.5%
====== =====
</TABLE>

The Company considers all undistributed earnings of foreign subsidiaries to
be permanently invested. Therefore, no United States income taxes have been
provided on these earnings.

Pro forma weighted average shares outstanding is based on the following:
(i) the weighted average number of shares of Common Stock outstanding; (ii) the
dilutive effect of outstanding Common Stock equivalents; (iii) the stock options
and convertible shares issued during the twelve months immediately preceding the
offering date (using the treasury stock method and the proposed initial public
offering price per share) for all periods presented; and (iv) the sale of a
sufficient number of shares of the Company's common stock necessary to provide
funds to pay the cash portion of the S corporation distribution.

Pro forma fully diluted earnings per share approximates primary earnings
per share for the years ended December 31, 1995 and 1996.

Supplemental

Supplemental net income per common share reflects: (i) pro forma net
income; (ii) the elimination of interest expense related to the use of proceeds,
net of related income tax effects using an assumed effective tax rate; and (iii)
the issuance of shares of Common Stock, the net proceeds of which are used to
repay indebtedness. Supplemental net income for the years ended December 31,
1995 and 1996 was $1,515, and $2,836, respectively. Supplemental net income per
common share for the same periods was $.19, and $.35, respectively.

15. SUBSEQUENT EVENTS (UNAUDITED)

In connection with the proposed initial public offering by the Company,
subsequent to December 31, 1996, the following transactions are anticipated to
occur:

(i) termination of the Company's S corporation status as described in
Note 1. In connection with this termination, the Company will be required
to record deferred tax liabilities with a corresponding tax provision in
accordance with SFAS 109 in the period the termination occurs; and

F-16
<PAGE> 64

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(ii) the issuance of 552,632 shares of the Company's Common Stock in
exchange for the 28% minority interest in CBS Mauritius.

16. INITIAL PUBLIC OFFERING AND RELATED TRANSACTIONS (UNAUDITED)

On December 20, 1996, the Company filed a Registration Statement on Form
S-1 with the Securities and Exchange Commission for the sale of its Common
Stock. The net proceeds to the Company from this offering are intended to be
used for: payment of undistributed S corporation earnings estimated to be
$9,000; the repayment of existing debt, estimated to be $3,000 at the closing
date ($6,191 at December 31, 1996); expansion of existing operations, including
the Company's offshore software development operations; development of new
service lines and possible acquisitions of related businesses; and general
corporate purposes, including working capital.

The unaudited pro forma consolidated balance sheet shown below as of
December 31, 1996 gives effect to the following transactions as if such
transactions occurred on that date: (i) the sale of shares of Common Stock by
the Company, at the initial public offering price of $12.00 per share and the
application of the estimated net proceeds therefrom; (ii) recording of deferred
tax liabilities upon termination of the Company's S corporation status; (iii)
the transfer of undistributed retained earnings to additional paid-in capital;
and (iv) issuance of 552,632 shares of Common Stock in exchange for the 28%
minority interest in CBS Mauritius, including the elimination of the minority
interest.

<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents........................... $ 3,382 $ 9,077 $12,459
Other............................................... 21,877 -- 21,877
------- -------- -------
Total current assets........................... 25,259 9,077 34,336
------- -------- -------
Property and equipment, net........................... 5,167 -- 5,167
Computer software, net................................ 639 -- 639
Goodwill.............................................. -- 2,931 2,931
Other assets.......................................... 193 -- 193
------- -------- -------
Total assets................................... $31,258 $ 12,008 $43,266
======= ======== =======
Current liabilities:
Current portion of long-term debt................... $ 486 $ (486) $ --
Revolving credit facility........................... 5,400 (5,400) --
Deferred taxes...................................... -- 767 767
Other............................................... 9,296 -- 9,296
------- -------- -------
Total current liabilities...................... 15,182 (5,119) 10,063
------- -------- -------
Deferred revenue, less current portion................ 317 -- 317
Long-term debt, less current portion.................. 305 (305) --
Deferred taxes........................................ -- 339 339
Minority interest..................................... 1,503 (1,503) --
Shareholders' equity:
Common and preferred stock.......................... -- -- --
Additional paid-in capital.......................... 3,226 31,645 34,871
Retained earnings................................... 13,049 (13,049) --
Stock subscriptions receivable...................... (2,125) -- (2,125)
Cumulative translation adjustment................... (199) -- (199)
------- -------- -------
Total shareholders' equity..................... 13,951 18,596 32,547
------- -------- -------
Total liabilities and shareholders' equity..... $31,258 $ 12,008 $43,266
======= ======== =======
</TABLE>

F-17
<PAGE> 65

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The unaudited pro forma consolidated statements of income shown below for
the years ended December 31, 1995 and 1996, give effect to the following
transactions as if such transactions had occurred as of the beginning of the
periods:

(i) amortization of goodwill over a period of 20 years as a result
of the Company's purchase of the 28% minority interest in CBS Mauritius,
including the elimination of the minority interest;

(ii) elimination of interest expense to give effect to the repayment
of the Company's revolving credit facility and long-term debt;

(iii) provision for Federal and state income taxes at the effective
income tax rate as if the Company had been taxed as a C corporation and no
foreign tax holidays had been granted during the periods presented. The tax
provision was computed as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1995 1996
<S> <C> <C>
Statutory Federal income tax rate........................... 34.0% 34.0%
State income taxes, net of Federal tax effect............... 1.7 2.7
Tax rate differences on foreign earnings not subject to U.S.
tax....................................................... (19.6) (3.0)
Amortization of goodwill.................................... 3.4 1.4
Other....................................................... 1.6 0.8
----- ----
21.1% 35.9%
===== ====
</TABLE>

F-18
<PAGE> 66

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(iv) reflects pro forma weighted average shares of Common Stock, plus
the portion of Common Stock sold in the Company's initial public offering
needed to generate proceeds sufficient to repay the Company's revolving
credit facility and long-term debt at the end of each period.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
---------------------------------------
PRO
HISTORICAL ADJUSTMENTS FORMA
<S> <C> <C> <C>
Revenues............................................ $67,399 $ -- $ 67,399
Cost of revenues.................................... 53,609 -- 53,609
------- ------ ----------
Gross profit...................................... 13,790 -- 13,790
Selling, general and administrative expenses........ 11,824 -- 11,824
Amortization of goodwill............................ -- 147 147
------- ------ ----------
Income from operations............................ 1,966 (147) 1,819
Interest expense (income)........................... 692 (724) (32)
------- ------ ----------
Income before provision for income taxes and
minority interest.............................. 1,274 577 1,851
Provision for income taxes.......................... -- 391 391
Minority interest................................... 252 (252) --
------- ------ ----------
Net income........................................ $ 1,022 $ 438 $ 1,460
======= ====== ==========
Pro forma net income per share...................... $ .18
==========
Pro forma weighted average shares outstanding....... 7,961,000
==========
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
---------------------------------------
PRO
HISTORICAL ADJUSTMENTS FORMA
<S> <C> <C> <C>
Revenues............................................ $83,241 $ -- $ 83,241
Cost of revenues.................................... 63,302 -- 63,302
------- ------ ----------
Gross profit...................................... 19,939 -- 19,939
Selling, general and administrative expenses........ 15,455 -- 15,455
Amortization of goodwill............................ -- 147 147
------- ------ ----------
Income from operations............................ 4,484 (147) 4,337
Interest expense (income)........................... 539 (610) (71)
------- ------ ----------
Income before provision for income taxes and
minority interest.............................. 3,945 463 4,408
Provision for income taxes.......................... 84 1,498 1,582
Minority interest................................... 158 (158) --
------- ------ ----------
Net income........................................ $ 3,703 $ (877) $ 2,826
======= ====== ==========
Pro forma net income per share...................... $ .34
==========
Pro forma weighted average shares outstanding....... 8,213,000
==========
</TABLE>

F-19
<PAGE> 67

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1997 1996 1997 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues................................................ $26,662 $20,420 $50,937 $39,548
Cost of revenues:
Salaries, wages and employee benefits................. 15,774 13,566 30,490 26,103
Contractual services.................................. 2,137 777 3,905 1,496
Project travel and relocation......................... 1,275 793 2,345 1,488
Depreciation and amortization......................... 293 382 657 715
------- ------- ------- -------
Total cost of revenues........................ 19,479 15,518 37,397 29,802
------- ------- ------- -------
Gross profit.................................. 7,183 4,902 13,540 9,746
Selling, general and administrative expenses............ 4,809 3,618 9,385 7,231
------- ------- ------- -------
Income from operations........................ 2,374 1,284 4,155 2,515
Interest expense (income)............................... (313) 159 (378) 300
------- ------- ------- -------
Income before provision for income taxes and
minority interest........................... 2,687 1,125 4,533 2,215
Provision for income taxes.............................. 856 19 1,991 36
Minority interest....................................... -- 78 82 113
------- ------- ------- -------
Net income.................................... $ 1,831 $ 1,028 $ 2,460 $ 2,066
======= ======= ======= =======

<CAPTION>
PRO FORMA INFORMATION
(UNAUDITED)
-----------------------------
<S> <C> <C> <C> <C>
Net income as reported.................................. $ 1,028 $ 2,460 $ 2,066
Adjustment to provision for income taxes................ 385 (560) 759
------- ------- -------
Net income.............................................. $ 643 $ 3,020 $ 1,307
======= ======= =======
Net income per common share............................. $ .19 $ .08 $ .35 $ .17
======= ======= ======= =======
Weighted average shares outstanding..................... 9,600 7,627 8,712 7,576
======= ======= ======= =======
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-20
<PAGE> 68

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $17,763 $ 3,382
Accounts receivable, net.................................. 21,141 20,741
Prepaid expenses and other................................ 1,303 1,136
------- -------
Total current assets................................... 40,207 25,259
------- -------
Property and equipment, net................................. 5,076 5,167
Goodwill, net............................................... 2,882 --
Other assets................................................ 613 832
------- -------
Total assets........................................... $48,778 $31,258
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 3,051 $ 2,304
Accrued payroll and related costs......................... 5,405 4,907
Revolving credit facility................................. -- 5,400
Distribution and loan payable to shareholders............. 422 --
Current portion of deferred revenue....................... 1,866 1,124
Current portion of long-term debt......................... -- 486
Other accrued liabilities................................. 1,951 961
------- -------
Total current liabilities.............................. 12,695 15,182
------- -------
Deferred revenue, less current portion...................... 262 317
Long-term debt, less current portion........................ -- 305
Deferred taxes.............................................. 300 --
Minority interest........................................... -- 1,503
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value, 1,000,000 shares
authorized, none issued................................ -- --
Common stock, no par value, 30,000,000 shares authorized,
9,300,000 and 6,447,368 shares issued and outstanding
as of June 30, 1997 and December 31, 1996,
respectively........................................... -- --
Additional paid-in capital................................ 35,803 3,226
Retained earnings......................................... 2,117 13,049
Stock subscriptions receivable............................ (2,125) (2,125)
Cumulative translation adjustment......................... (274) (199)
------- -------
Total shareholders' equity............................. 35,521 13,951
------- -------
Total liabilities and shareholders' equity............. $48,778 $31,258
======= =======
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
balance sheets.

F-21
<PAGE> 69

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON ADDITIONAL STOCK CUMULATIVE TOTAL
SHARES PAID-IN RETAINED SUBSCRIPTIONS TRANSLATION SHAREHOLDERS'
OUTSTANDING CAPITAL EARNINGS RECEIVABLE ADJUSTMENT EQUITY
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Balance -- December 31, 1995.... 5,942,275 $ 1 $ 9,346 $ -- $(159) $ 9,188
Net income...................... -- -- 2,066 -- -- 2,066
Translation adjustment.......... -- -- -- -- (27) (27)
--------- ------- -------- ------- ----- -------
Balance -- June 30, 1996........ 5,942,275 1 11,412 -- (186) 11,227
--------- ------- -------- ------- ----- -------
Net income...................... -- -- 1,637 -- -- 1,637
Translation adjustment.......... -- -- -- -- (13) (13)
Capital contribution............ -- 1,100 -- -- -- 1,100
Stock options exercised......... 505,093 2,125 -- (2,125) -- --
--------- ------- -------- ------- ----- -------
Balance -- December 31, 1996.... 6,447,368 3,226 13,049 (2,125) (199) 13,951
--------- ------- -------- ------- ----- -------
Net income...................... -- -- 2,460 -- -- 2,460
Translation adjustment.......... -- -- -- -- 2 2
Conversion of minority
shareholder................... 552,632 4,593 -- -- (77) 4,516
Initial public offering, net.... 2,300,000 23,792 -- -- -- 23,792
Distribution to shareholders.... -- -- (9,200) -- -- (9,200)
Recapitalization................ -- 4,192 (4,192) -- -- --
--------- ------- -------- ------- ----- -------
Balance -- June 30, 1997........ 9,300,000 $35,803 $ 2,117 $(2,125) $(274) $35,521
========= ======= ======== ======= ===== =======
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-22
<PAGE> 70

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1997 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Net income.................................................. $ 2,460 $ 2,066
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 1,195 1,098
Provision for doubtful accounts........................... 150 60
Minority interest......................................... 82 113
Change in assets and liabilities --
Accounts receivable.................................... (550) (3,815)
Prepaid expenses and other............................. (167) (103)
Accounts payable....................................... 747 (68)
Accrued payroll and related costs and other
liabilities........................................... 1,574 504
Deferred revenue....................................... 687 150
Other.................................................. 303 (2)
------- -------
Net cash provided by operating activities............ 6,481 3
------- -------
Cash flows from investing activities:
Investment in computer software........................... -- (407)
Purchases of property and equipment....................... (876) (1,019)
------- -------
Net cash used in investing activities................ (876) (1,426)
------- -------
Cash flows from financing activities:
Net borrowings (payments) on revolving credit facility.... (5,400) 1,500
Payments on long-term debt................................ (791) (259)
Net proceeds from issuance of common stock................ 23,792 --
S corporation distribution................................ (8,825) --
------- -------
Net cash provided by financing activities............ 8,776 1,241
------- -------
Effect of exchange rate changes on cash..................... -- (7)
------- -------
Increase (decrease) in cash and cash equivalents............ 14,381 (189)
------- -------
Cash and cash equivalents at beginning of period............ 3,382 830
------- -------
Cash and cash equivalents at end of period.................. $17,763 $ 641
======= =======

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest............................................... $ 69 $ 266
Income taxes........................................... $ 1,678 $ --
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-23
<PAGE> 71

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been
prepared by management, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of management, the
accompanying unaudited condensed consolidated financial statements contain all
adjustments, consisting of normal recurring adjustments, necessary to present
fairly the financial position of Complete Business Solutions, Inc. (the Company)
as of June 30, 1997, the results of its operations for the three- and six-month
periods ended June 30, 1997 and 1996, and cash flows for the six-month periods
ended June 30, 1997 and 1996. These financial statements should be read in
conjunction with the consolidated financial statements and footnotes thereto
included in the Company's Registration Statement on Form S-1, dated August 4,
1997.

The results of operations for the three-month period ended June 30, 1997
are not necessarily indicative of the results to be expected in future quarters
or for the full fiscal year ending December 31, 1997.

2. PRINCIPLES OF CONSOLIDATION AND ORGANIZATION

The condensed consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated in the accompanying condensed consolidated
financial statements.

As of December 31, 1996, the Company owned 72% of CBS Complete Business
Solutions (Mauritius) Limited (CBS Mauritius) and an unrelated entity owned the
remaining 28%. CBS Mauritius owns 100% of Complete Business Solutions (India)
Private Limited (CBS India). As authorized in the CBS Mauritius Shareholders
Agreement and in connection with the initial public offering of the Company's
Common Stock, the 28% shareholder of CBS Mauritius converted its ownership
interest in CBS Mauritius into 552,632 shares of the Company's Common Stock. The
acquisition of the minority shares was accounted for under the purchase method
of accounting. The excess of the aggregate purchase price over the fair value of
the net assets acquired has been recognized as goodwill of approximately $2,931
in the condensed consolidated balance sheets. The impact of this transaction on
prior years was not significant, therefore pro forma information has not been
provided.

3. COMMON STOCK OFFERINGS

In March 1997, the Company completed an initial public offering of
2,500,000 shares of its Common Stock at a price of $12.00 per share. That
offering consisted of 2,300,000 shares of newly issued Common Stock and 200,000
shares sold by a selling shareholder. After underwriting discounts, commissions
and other issuance costs, net proceeds to the Company from this offering were
approximately $23,792. The net proceeds from that offering have been invested in
cash equivalents with an initial maturity of three months or less.

On August 4, 1997, the Company filed a Registration Statement on Form S-1
with the Securities and Exchange Commission for the sale of an additional
2,250,000 shares of its Common Stock. This secondary offering is contemplated to
consist of 1,250,000 shares of newly issued Common Stock and 1,000,000 shares
sold by selling shareholders at an assumed offering price of $27 1/2. The net
proceeds to the Company from this offering are intended to be used for:
expansion of existing operations, including the Company's offshore software
development operations; development of new service lines and possible
acquisitions of related businesses; and general corporate purposes, including
working capital.

F-24
<PAGE> 72

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. INCOME TAXES

Prior to March 4, 1997, the shareholders of the Company had elected, under
the provisions of Subchapter S of the United States Internal Revenue Code, to
have income and related tax benefits of the Company included in the taxable
income of the shareholders. As a result, no provision for U.S. federal or state
income taxes has been included in the condensed consolidated statements of
income prior to March 4, 1997.

On March 4, 1997, in connection with the initial public offering discussed
in Note 3, the shareholders and the Company revoked the Subchapter S election,
thereby subjecting future income of the Company to federal and state income
taxes at the corporate level. Accordingly, the application of the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," resulted in the recognition of deferred tax assets and liabilities, and
a corresponding charge to the provision for income taxes of approximately $920
during the six-month period ended June 30, 1997.

Subsequent to March 4, 1997, the Company has provided federal and state
income taxes in the condensed consolidated statements of income based on the
anticipated effective tax rate for fiscal year 1997. The unaudited pro forma net
income in the condensed consolidated statements of income reflect applicable
after pro forma adjustments to the provision for income taxes to reflect net
income as if the Subchapter S election had been revoked prior to January 1,
1996. The differences between the United States Federal statutory rate and the
consolidated effective rate for the six-month period ended June 30, 1997 are as
follows:

<TABLE>
<S> <C>
Statutory Federal income tax rate........................... 34.0%
Foreign earnings not subject to U.S. tax.................... (4.0)
Other....................................................... 1.6
-----
31.6%
S corporation termination................................... 20.0
S corporation earnings...................................... (7.7)
-----
Effective tax rate.......................................... 43.9%
=====
</TABLE>

CBS Mauritius is incorporated in Mauritius and is not subject to income
taxes. CBS India is an Indian corporation subject to income taxes and receives
exemptions from Indian income taxes under free trade zone and software exporters
provisions of Indian tax law. The Company considers all undistributed earnings
of its foreign subsidiaries to be permanently invested. Therefore, no United
States income taxes have been provided on these earnings.

5. EARNINGS PER SHARE

Statement of Financial Accounting Standards No. 128, "Earnings per Share,"
was issued in February 1997. The Company will be required to adopt the new
standard for the year and the quarter ended December 31, 1997. Early adoption of
this standard is not permitted. The primary requirements of this standard are:
(i) replacement of primary earnings per share with basic earnings per share
which eliminates the dilutive effect of options and warrants; (ii) use of an
average share price in applying the treasury method to compute dilution for
options and warrants for diluted earnings per share; and (iii) disclosure
reconciling the

F-25
<PAGE> 73

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

numerator and denominator of earnings per share calculations. The effect of this
accounting change on pro forma net income per share is as follows:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
-----------------
1997 1996
<S> <C> <C>
Per share amounts --
Pro forma net income per common share as reported........... $0.35 $0.17
Effect of SFAS No. 128...................................... 0.01 0.03
----- -----
Pro forma basic net income per common share................. $0.36 $0.20
===== =====
Pro forma diluted net income per common share............... $0.35 $0.17
===== =====
</TABLE>

F-26
<PAGE> 74

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY OF THE SELLING
SHAREHOLDERS OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary........................ 3
Risk Factors.............................. 6
The Company............................... 13
Use of Proceeds........................... 14
Price Range of Common Stock............... 14
Dividend Policy........................... 15
Capitalization............................ 15
Selected Financial Data................... 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 17
Business.................................. 23
Management................................ 33
Certain Transactions...................... 38
Principal and Selling Shareholders........ 40
Description of Capital Stock.............. 41
Shares Eligible for Future Sale........... 41
Underwriting.............................. 43
Legal Matters............................. 44
Experts................................... 44
Additional Information.................... 44
Glossary of Certain Technical Terms....... 45
Index to Financial Statements............. F-1
</TABLE>

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

2,250,000 SHARES

CBSI LOGO

COMMON STOCK

------------------------

PROSPECTUS
------------------------

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

UBS SECURITIES

LEGG MASON WOOD WALKER
INCORPORATED

, 1997

======================================================
<PAGE> 75

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses to be incurred in connection with this offering are
as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 21,464
National Association of Securities Dealers, Inc. fee........ 7,583
Nasdaq National Market additional listing fee............... 17,500
Printing expenses and other................................. 100,000
Legal fees and expenses..................................... 100,000
Blue sky fees and expenses.................................. 1,000
Accountants' fees and expenses.............................. 150,000
Miscellaneous............................................... 452,453
--------
Total.................................................. $850,000
========
</TABLE>

- -------------------------
* Estimated

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Bylaws require the Company to indemnify any director,
officer, former director or officer of the Company or any person who may have
served at the request of the Company as a director or officer of another
corporation in which the Company owns shares of capital stock, or of which it is
a creditor, against reasonable expenses (including attorneys' fees) actually and
necessarily incurred by such person in connection with the defense of any civil,
criminal or administrative action, suit or proceeding in which such person is
made a party or with which such person is threatened by reason of being or
having been or because of any act as a director or officer of the Company within
the course of such person's duties; or employment, except in relation to matters
as to which such person is adjudged to be liable for negligence or misconduct in
the performance of such person's duties. The Company may also reimburse any
director or officer for the reasonable costs of settlement of any such action,
suit or proceeding, if it is found by a majority of a committee composed of the
directors not involved in the matter in controversy (whether or not a quorum)
that it was in the interests of the Company that such settlement be made and
that the director or officer was not guilty of negligence or misconduct. The
right of indemnification will extend to the estate, personal representative,
guardian and conservator of any deceased or former director or officer or person
who would have been entitled to indemnification. Such rights of indemnification
and reimbursement will not be deemed exclusive of any other rights to which such
director or officer may be entitled under any statute, agreement, vote of
shareholders, or otherwise.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In the three years preceding the filing of this Registration Statement, the
Company has issued the following securities that were not registered under the
Securities Act:

On October 27, 1995, the Company granted non-incentive stock options
representing an aggregate of 267,402 shares of Common Stock to Timothy Manney.
The options were exercisable on the first anniversary from the date of the grant
at the purchase price of $4.21 per share. On December 30, 1996, Mr. Manney
exercised such stock options and the Company issued an aggregate of 267,402
shares of Common Stock for an aggregate purchase price of $1,125,000 to Mr.
Manney.

On October 27, 1995, the Company granted non-incentive stock options
representing an aggregate of 237,691 shares of Common Stock to Douglas Land. The
options were exercisable on the first anniversary from the date of the grant at
the purchase price of $4.21 per share. On December 30, 1996, Mr. Land exercised
such stock options and the Company issued an aggregate of 237,691 shares of
Common Stock for an aggregate purchase price of $1,000,000 to Mr. Land.

II-1
<PAGE> 76

On October 27, 1995, the Company granted non-incentive stock options
representing an aggregate of 148,557 shares of Common Stock to Daniel Rankin.
The options are exercisable in two equal annual installments, commencing April
26, 1997, at an exercise price of $4.21.

On October 27, 1995, the Company granted non-incentive stock options
representing an aggregate of 14,856 shares of Common Stock to Frank Stella. The
options are exercisable on the first three anniversaries of the date of the
grant, at an exercise price of $4.21. On September 12, 1996, the Company granted
non-incentive stock options representing an aggregate of 8,913 shares of Common
Stock to Mr. Stella. The options are exercisable on the first three
anniversaries of the date of the grant, at an exercise price of $8.41.

On September 12, 1996, the Company also granted non-incentive stock options
representing an aggregate of 14,856 shares to Sreedhar Kajeepeta. The options
are exercisable in four equal annual installments, commencing one year from the
date of the grant, at an exercise price of $8.41.

On September 12, 1996, the Company also granted incentive stock options
representing an aggregate of 273,642 shares to various employees of the Company.
All the options are exercisable in either three or four annual installments,
commencing one year from the date of the grant, at an exercise price of $8.41.

In March 1997, the Company also granted incentive stock options
representing an aggregate of 154,500 shares to various employees of the Company.
All the options are exercisable in no less than three equal annual installments,
commencing one year from the date of grant at an exercise price to $12.00.

Pursuant to an Agreement (the "Acquisition Agreement") among the Company,
JF Electra (Mauritius) Limited ("JF Electra"), CBS Complete Business Solutions
(Mauritius) Limited ("CBS Mauritius") and Rajendra Vattikuti, on July 19, 1996,
JF Electra acquired a 28% interest in CBS Mauritius. On March 4, 1997, JF
Electra exchanged its 28% interest in CBS Mauritius into 552,632 shares of
Common Stock.

On June 3, 1997, the Company granted incentive stock options representing
25,000 shares to Gena Lodolo. Such options are exercisable in four equal annual
installments commencing one year from the date of grant at $18.38.

On June 3, 1997, the Company granted non-qualified stock options
representing 10,000 shares to John Stanley. Such options are exercisable in
three equal annual installments commencing one year from date of grant at
$18.38.

On July 29, 1997, the Company granted incentive stock options representing
8,000 shares to various employees. Such options are exercisable in four equal
annual installments commencing one year from date of grant at $27.00.

The sales and issuances of the shares of the Common Stock discussed above
were exempt from registration by virtue of Sections 3(a), 3(b) and 4(2) of the
Securities Act.

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
</TABLE>

II-2
<PAGE> 77
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
10.3(a) Lease amendments Nos. 8 and 9 dated June 11, 1997, and June
20, 1997, respectively, between the Company and Orchard
Ridge Office Park Limited Partnership.
10.5* 1996 Stock Option Plan.
10.6* Form of Incentive Stock Option Agreement.
10.7* Nonqualified Stock Option Agreement dated April 25, 1996
between the Company and Daniel S. Rankin.
10.8* Nonqualified Stock Option Agreement dated April 25, 1996
between the Company and Douglas S. Land.
10.9* Nonqualified Stock Option Agreement dated April 25, 1996
between the Company and Timothy S. Manney.
10.10* U.S. License Agreement dated November 3, 1995 between the
Company and Andersen Consulting LLP, as amended.
10.11* Acquisition Agreement, dated as of July 19, 1996 between the
Company, JF Electra (Mauritius) Limited, CBS Complete
Business Solutions (Mauritius) Limited and Raj Vattikuti
(without Exhibits).
10.13 Loan Agreement dated June 18, 1997 between the Company and
NBD Bank.
10.14* Promissory Note dated December 30, 1996 and Exercise and
Loan Notice and Stock Pledge dated December 30, 1996, each
executed by Douglas S. Land.
10.15* Promissory Note dated December 30, 1996 and Exercise and
Loan Notice and Stock Pledge dated December 30, 1996, each
executed by Timothy S. Manney.
10.16* Incentive Stock Option Agreement dated September 12, 1996
between the Company and Nanjappa S. Venugopal.
10.17(a)* Nonqualified Stock Option Agreement dated March 3, 1997
between the Company and Frank Stella regarding October 27,
1995 grant date.
10.17(b)* Nonqualified Stock Option Agreement dated March 3, 1997
between the Company and Frank Stella regarding September 12,
1996 grant date.
10.18 Lease Agreement, dated June 17, 1997 between Complete
Business Solutions (India) Private Limited and the President
of India through the Development Commissioner, Madras Export
Processing Zone.
11.1* Computation of Per Share Earnings for Pro Forma Net Income
for the years ended December 31, 1996 and 1995.
11.1(a)* Computation of Per Share Earnings for Supplemental Net
Income for the years ended December 31, 1996 and 1995.
11.1(b)* Computation of Per Share Earnings for Pro Forma Net Income
for the years ended December 31, 1996 and 1995.
11.1(c) Computation of Per Share Earnings for the three- and
six-month periods ended June 30, 1996 and 1997.
21.1 Subsidiaries of Registrant.
23.1 Consent of Butzel Long (included as part of Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
24.1 Powers of Attorney (included on signature page).
27.1 Financial Data Schedule.
</TABLE>

- -------------------------
* Incorporated herein by reference to exhibit of the same number in the Form
S-1 Registration Statement of the Registrant (Registration No. 333-18413)
dated as of December 20, 1996, as amended.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(1) That for purposes of determining any liability under the
Securities Act, the information omitted from the form of Prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of Prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) of 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective; and

II-3
<PAGE> 78

(2) That for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described above or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

II-4
<PAGE> 79

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE

We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Complete Business Solutions, Inc. and
subsidiaries included in this Registration Statement and have issued our report
thereon dated January 29, 1997. Our audits were made for the purpose of forming
an opinion on the basic consolidated financial statements as a whole. The
schedule of Valuation and Qualifying Accounts -- Schedule II is presented for
purposes of complying with the Securities and Exchange Commission's rules and
regulations and is not part of the basic consolidated financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic consolidated financial statements and, in our opinion, fairly states
in all material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Detroit, Michigan,
January 29, 1997.

II-5
<PAGE> 80

SCHEDULE II

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
DEDUCTIONS
--
BALANCE AT CHARGED TO AMOUNTS BALANCE AT
BEGINNING COSTS AND DEEMED TO BE END OF
PERIOD ENDED DESCRIPTION OF PERIOD EXPENSES UNCOLLECTIBLE PERIOD
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
December 31, 1994........ Allowance for uncollectible accounts $ 62 $100 $(62) $100
December 31, 1995........ Allowance for uncollectible accounts 100 105 (43) 162
December 31, 1996........ Allowance for uncollectible accounts 162 120 (68) 214
</TABLE>

II-6
<PAGE> 81

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Farmington Hills, State of Michigan,
on August 4, 1997.

COMPLETE BUSINESS SOLUTIONS, INC.

By: /s/ RAJENDRA B. VATTIKUTI

------------------------------------
Rajendra B. Vattikuti
President, Chief Executive Officer
and Director

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Rajendra B. Vattikuti and Timothy Manney, and
each of them individually, as his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and any
subsequent registration statements pursuant to Rule 462 of the Securities Act
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<C> <S> <C>
/s/ RAJENDRA B. VATTIKUTI President, Chief Executive Officer August 4, 1997
- --------------------------------------------- and Director
Rajendra B. Vattikuti

/s/ TIMOTHY S. MANNEY Executive Vice President of Finance August 4, 1997
- --------------------------------------------- and Administration, Treasurer and
Timothy S. Manney Director Principal Financial and
Accounting Officer

/s/ FRANK D. STELLA Director August 4, 1997
- ---------------------------------------------
Frank D. Stella

/s/ DOUGLAS S. LAND Director August 4, 1997
- ---------------------------------------------
Douglas S. Land

/s/ JOHN A. STANLEY Director August 4, 1997
- ---------------------------------------------
John A. Stanley
</TABLE>
<PAGE> 82

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
</TABLE>

1.1 Form of Underwriting Agreement.
3.1* Restated Articles of Incorporation of the Company, as
amended.
3.2* Bylaws of the Company.
4.1* See Exhibits 3.1 and 3.2 for provisions of the Restated
Articles of Incorporation and Restated Bylaws of the Company
defining rights of the holders of Common Stock of the
Company.
4.2* Specimen Stock Certificate.
5.1 Opinion of Butzel Long, counsel to the Company, as to the
legality of the shares being registered.
10.1* Employment Agreement dated December 12, 1996 between the
Company and Rajendra B. Vattikuti.
10.2* Employment Agreement dated December 12, 1996 between the
Company and Timothy S. Manney.
10.3* Lease dated October 22, 1992 and its seven amendments dated
October 1, 1993, June 14, 1994, June 28, 1994, September 30,
1994, October 14, 1994, August 10, 1995 and August 6, 1996,
between the Company and Orchard Ridge Office Park Limited
Partnership.
10.3(a) Lease amendments Nos. 8 and 9 dated June 11, 1997, and June
20, 1997, respectively, between the Company and Orchard
Ridge Office Park Limited Partnership.
10.5* 1996 Stock Option Plan.
10.6* Form of Incentive Stock Option Agreement.
10.7* Nonqualified Stock Option Agreement dated April 25, 1996
between the Company and Daniel S. Rankin.
10.8* Nonqualified Stock Option Agreement dated April 25, 1996
between the Company and Douglas S. Land.
10.9* Nonqualified Stock Option Agreement dated April 25, 1996
between the Company and Timothy S. Manney.
10.10* U.S. License Agreement dated November 3, 1995 between the
Company and Andersen Consulting LLP, as amended.
10.11* Acquisition Agreement, dated as of July 19, 1996 between the
Company, JF Electra (Mauritius) Limited, CBS Complete
Business Solutions (Mauritius) Limited and Raj Vattikuti
(without Exhibits).
10.13 Loan Agreement dated June 18, 1997 between the Company and
NBD Bank.
10.14* Promissory Note dated December 30, 1996 and Exercise and
Loan Notice and Stock Pledge dated December 30, 1996, each
executed by Douglas S. Land.
10.15* Promissory Note dated December 30, 1996 and Exercise and
Loan Notice and Stock Pledge dated December 30, 1996, each
executed by Timothy S. Manney.
10.16* Incentive Stock Option Agreement dated September 12, 1996
between the Company and Nanjappa S. Venugopal.
10.17(a)* Nonqualified Stock Option Agreement dated March 3, 1997
between the Company and Frank Stella regarding October 27,
1995 grant date.
10.17(b)* Nonqualified Stock Option Agreement dated March 3, 1997
between the Company and Frank Stella regarding September 12,
1996 grant date.
10.18 Lease Agreement, dated June 17, 1997 between Complete
Business Solutions (India) Private Limited and the President
of India through the Development Commissioner, Madras Export
Processing Zone.
11.1* Computation of Per Share Earnings for Pro Forma Net Income
for the years ended December 31, 1996 and 1995.
11.1(a)* Computation of Per Share Earnings for Supplemental Net
Income for the years ended December 31, 1996 and 1995.
<PAGE> 83
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
11.1(b)* Computation of Per Share Earnings for Pro Forma Net Income
for the years ended December 31, 1996 and 1995.
11.1(c) Computation of Per Share Earnings for the three- and
six-month periods ended June 30, 1996 and 1997.
21.1 Subsidiaries of Registrant.
23.1 Consent of Butzel Long (included as part of Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
24.1 Powers of Attorney (included on signature page).
27.1 Financial Data Schedule.
</TABLE>

<PAGE> 1
EXHIBIT 1.1

2,250,000 Shares(1)

COMPLETE BUSINESS SOLUTIONS, INC.

Common Stock

UNDERWRITING AGREEMENT

August , 1997
--
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
UBS SECURITIES LLC
LEGG MASON WOOD WALKER, INC.
As representatives of the
several underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172

Gentlemen and Ladies:

COMPLETE BUSINESS SOLUTIONS, INC., a Michigan corporation (the "COMPANY"),
and the Selling Shareholders named on Schedule II hereto (the "SELLING
SHAREHOLDERS"), propose to sell an aggregate of 2,250,000 shares of common
stock, no par value, of the Company (the "FIRM SHARES"), to the several
underwriters named in Schedule I hereto (the "UNDERWRITERS"). The Firm Shares
consist of 1,250,000 shares to be issued and sold by the Company and 1,000,000
outstanding shares to be sold by the Selling Shareholders. The Company and
the Selling Shareholders also propose to sell to the several
Underwriters not more than 337,500 additional shares of common stock, no par
value, of the Company (the "OPTION SHARES"), if and to the extent requested by
the Underwriters as provided in Section 2 hereof. The Firm Shares and the
Option Shares are herein collectively called the "SHARES." The shares of common
stock of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "COMMON STOCK." The
Company and the Selling Shareholders are hereinafter collectively called the
"SELLERS."

- ------------------------
(1)Plus an option to purchase up to 337,500 additional shares from the Company
and the Selling Shareholders to cover over-allotments.

<PAGE> 2

1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "COMMISSION") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"ACT"), a registration statement on Form S-1 (File No. 333-______) including a
prospectus relating to the Shares, which may be amended in accordance herewith.
The term "ORIGINAL REGISTRATION STATEMENT" as used in this Agreement shall
mean such registration statement, including all exhibits thereto, all financial
statements therein, all documents incorporated by reference therein and all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, in the form in which such prospectus became
effective, and, in the event of any amendment thereto after the effective date
of such registration statement (the "EFFECTIVE DATE"), shall also mean (from
and after the effectiveness of such amendment) such registration statement as
so amended. The term "REGISTRATION STATEMENT" as used in this Agreement shall
mean the Original Registration Statement, together with the registration
statement filed pursuant to Rule 462(b) of the Act, if any (the "462(B)
REGISTRATION STATEMENT"). The term "PROSPECTUS" as used in this Agreement
shall mean the prospectus, including the documents incorporated by reference
therein, relating to the Shares first filed with the Commission pursuant to
Rule 424(b) and Rule 430A (or if no such filing is required, as included in the
Original Registration Statement) and, in the event of any supplement or
amendment to such prospectus after the Effective Date, shall also mean (from
and after the filing of such supplement with the Commission or of the
effectiveness of such amendment) such prospectus as so supplemented or amended.
The term "PRELIMINARY PROSPECTUS" as used in this Agreement shall mean each
preliminary prospectus included in the Original Registration Statement prior to
the time it becomes effective.

2. Agreements to Sell and Purchase; Other Covenants.

(a) Firm Shares. On the basis of the representations and warranties
contained in this Agreement, and subject to its terms and conditions, (i)
the Company agrees to issue and sell 1,250,000 Firm Shares, (ii) each
Selling Shareholder agrees, severally and not jointly, to sell the number
of Firm Shares set forth opposite such Selling Shareholder's name in the
top portion of Schedule II hereto, and (iii) each Underwriter agrees,
severally and not jointly, to purchase from each Seller at a price per
share of $_____ (the "PURCHASE PRICE") the number of Firm Shares (subject
to such adjustments to eliminate fractional shares as you may determine)
that bears the same proportion to the total number of Firm Shares to be
sold by such Seller as the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto bears to the total number
of Firm Shares.

(b) Option Shares. On the basis of the representations and
warranties contained in this Agreement, and subject to its terms and
conditions, (i) the Company agrees to issue and sell the Option Shares to
the Underwriters; (ii) each Selling Shareholder named in Schedule II
hereto agrees, severally and not jointly, to sell the number of Option
Shares set forth opposite such Selling Shareholder's

<PAGE> 3

name in the lower portion of Schedule II hereto; and (iii) the
Underwriters shall have the right to purchase, severally and not jointly,
up to an aggregate 337,500 Option Shares from the Sellers at the Purchase
Price. Option Shares may be purchased solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares.
The Underwriters may exercise their right to purchase Option Shares in
whole or in part from time to time by giving written notice thereof to
the Company, in care of its Chief Executive Officer, and to Rajendra B.
Vattikuti and Timothy S. Manney, the attorneys-in-fact for the Selling
Shareholders (the "ATTORNEYS"), within 30 days after the date of the
Prospectus. You shall give any such notice on behalf of the Underwriters
and such notice shall specify the aggregate number of Option Shares to be
purchased pursuant to such exercise and the date for payment and delivery
thereof. The date specified in any such notice shall be a business day
(i) no earlier than the Closing Date (as hereinafter defined), (ii) no
later than ten business days after such notice has been given, and (iii)
no earlier than two business days after such notice has been given. If
any Option Shares are to be purchased, each Underwriter, severally and
not jointly, agrees to purchase from the Company and each Selling
Shareholder the number of Option Shares (subject to such adjustments to
eliminate fractional shares as you may determine) which bears the same
proportion to the total number of Option Shares to be purchased from the
Company as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I bears to the total number of Firm Shares.

(c) Lock-Up. Each Seller hereby agrees, severally and not jointly,
and solely with respect to his, her or itself and his, her or its Shares,
and the Company shall, concurrently with the execution of this Agreement,
deliver an agreement (a "LOCK-UP AGREEMENT") executed by each of the
directors and executive officers of the Company who is not a Selling
Shareholder, pursuant to which each such person agrees, during the period
ending ninety (90) days after the date of the Prospectus (the "LOCK-UP
PERIOD"), not to (1) offer, pledge, sell, contract to sell, engage in any
short sale, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or (2) enter into any swap
or similar agreement that transfers, in whole or in part, the economic
risk of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise, otherwise
than (i) as a bona fide gift or gifts, (ii) by will or intestacy to such
person's immediate family or to a trust the beneficiaries of which are
exclusively such person's and/or a member or members of his or her
immediate family, (iii) as a distribution to limited partners or
shareholders of such entity, or (iv) with the prior written consent of
Donaldson Lufkin & Jenrette Securities Corporation. In addition, all
Sellers holding registration rights agree that, without the prior written
consent of Donaldson Lufkin & Jenrette Securities Corporation on behalf
of the Underwriters, he, she or it will not, during the Lock-up Period,
make any demand

<PAGE> 4

for or exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock. Notwithstanding the foregoing, during the
Lock-Up Period (i) the Company may grant stock options pursuant to the
Company's existing stock option plan provided that such options are not,
by their terms, exercisable during the Lock-Up Period, and (ii) the
Company may issue shares of its Common Stock upon the exercise of an
option or warrant or the conversion of a security outstanding on the date
hereof.

3. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose (i) to make a public offering of their respective portions
of the Shares as soon after the effective date of the Registration Statement as
in your judgment is advisable, and (ii) initially to offer the Shares upon the
terms set forth in the Prospectus.

4. Delivery and Payment. Delivery to the Underwriters of and payment for
the Firm Shares shall be made at 10:00 A.M., New York City time, on the third
or fourth business day following the date of the initial public offering (the
"CLOSING DATE"), unless otherwise permitted by the Commission pursuant to Rule
15c6-1 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
at such place as you shall designate. The Closing Date and the location of
delivery of and the form of payment for the Firm Shares may be varied by
agreement between you and the Sellers.

Delivery to the Underwriters of, and payment for, any Option Shares to be
purchased by the Underwriters shall be made at such place as you shall
designate at 10:00 A.M., New York City time, on the date specified in the
applicable exercise notice given by you pursuant to Section 2 (an "OPTION
CLOSING DATE"). Any such Option Closing Date and the location of delivery of
and the form of payment for such Option Shares may be varied by agreement among
you, the Company and the Attorneys.

Payment for Shares purchased from the Company shall be made to the
Company or its order, and payment for the Shares purchased from the Selling
Shareholders shall be made to the Custodian (as defined herein), for the
account of the Selling Shareholders, in each case in same day funds. Such
payment shall be made against delivery of certificates for the Shares to you
for the respective accounts of the several Underwriters as set forth below,
against receipt therefor signed by you. Certificates for the Shares shall be
registered in such names and issued in such denominations as you shall request
in writing not later than two full business days prior to the Closing Date or
an Option Closing Date, as the case may be. Such certificates shall be made
available to you for inspection not later than 9:30 A.M., New York City time,
on the business day next preceding the Closing Date or an Option Closing Date,
as the case may be. Certificates in definitive form evidencing the Shares shall
be delivered to you on the Closing Date or an Option Closing Date, as the case
may be, with any transfer taxes, if any, thereon duly paid by the respective
Sellers, for the respective accounts of the several Underwriters, against
payment of the Purchase Price therefor by wire transfer of same day funds to
the order of the applicable Sellers.

<PAGE> 5

5. Agreements of the Company. The Company agrees with you:

(a) If the Registration Statement is not effective as of the execution of
this Agreement, to use its best efforts to cause the Registration Statement to
become effective at the earliest possible time.

(b) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) when the Registration Statement has become effective and
when any post-effective amendment to it becomes effective, (ii) of any request
by the Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement (a "STOP ORDER"), (iv) of the receipt by the Company
of any notification with respect to the suspension of qualification of the
Shares for offer or sale in any jurisdiction, or with respect to the initiation
of any proceeding for such purposes, and (v) of the happening of any event
during the period referred to in paragraph (e) below which makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or which requires the making of any additions to or changes in the Registration
Statement or the Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue a Stop Order, the Company
will make every reasonable effort to obtain the withdrawal or lifting of such
order at the earliest possible time.

(c) To furnish to you, without charge, five signed copies of the
Registration Statement as first filed with the Commission and of each amendment
to it, including all exhibits, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the Registration Statement
as so filed and of each amendment to it, without exhibits, as you may
reasonably request.

(d) Not to file any amendment or supplement to the Registration Statement,
whether before or after the time when it becomes effective, or to make any
amendment or supplement to the Prospectus of which you shall not previously
have been advised or to which you shall reasonably object; and to prepare and
file with the Commission, promptly upon your reasonable request, any amendment
to the Registration Statement or supplement to the Prospectus which may be
necessary or advisable in connection with the distribution of the Shares by
you, and to use its best efforts to cause the same to become promptly
effective.

(e) Promptly after the Registration Statement becomes effective, and
from time to time thereafter for such period as in the reasonable opinion of
counsel for the Underwriters a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, to furnish to each
Underwriter and dealer as many copies of the Prospectus (and of any amendment
or supplement to the Prospectus) as such Underwriter or dealer may reasonably
request.

<PAGE> 6

(f) If during the period specified in paragraph (e), any event shall occur
as a result of which, in the reasonable opinion of counsel for the Underwriters
it becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with any law, forthwith to prepare and file
with the Commission an appropriate amendment or supplement to the Prospectus so
that the statements in the Prospectus, as so amended or supplemented, will not
in the light of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with law, and to furnish to each Underwriter
and to such dealers as you shall specify, such number of copies thereof as such
Underwriter or dealers may reasonably request.

(g) Prior to any public offering of the Shares, to cooperate with you and
counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters and
by dealers under the state securities or Blue Sky laws of such jurisdictions as
you may request, to continue such qualification in effect so long as required
for distribution of the Shares and to file such consents to service of process
or other documents as may be necessary in order to effect such registration or
qualification.

(h) To mail and make generally available to its shareholders not later
than the 45th day following the end of the fifth fiscal quarter occurring after
the Effective Date an earnings statement in accordance with Section 11(a) of
the Act and Rule 158 thereunder, and to advise you in writing when such
statement has been so made available.

(i) During the period of five years after the date of this Agreement, to
mail as soon as reasonably practicable after the end of each fiscal year to the
record holders of its Common Stock a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified
by independent certified public accountants.

(j) During the period referred to in paragraph (i), to furnish to you as
soon as available a copy of each report or other publicly available information
of the Company mailed to the holders of Common Stock or filed with the
Commission and such other publicly available information concerning the Company
and its subsidiaries as you may reasonably request.

(k) To pay all costs, expenses, fees and taxes (other than expenses of
counsel to the Underwriters, except as provided in subclause (iii) below)
incident to (i) the preparation, printing, filing and distribution under the
Act of the Registration Statement (including financial statements and
exhibits), each Preliminary Prospectus and all amendments and supplements to
any of them prior to or during the period specified in

<PAGE> 7

paragraph (e), (ii) the printing and delivery of the Prospectus and all
amendments and supplements to it during the period specified in paragraph (e),
(iii) the printing and delivery of this Agreement, the Preliminary and
Supplemental Blue Sky Memoranda and all other agreements, memoranda,
correspondence and other documents printed and delivered in connection
with the offering of the Shares (including in each case any disbursements of
counsel for the Underwriters relating to such printing and delivery), (iv) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states (including in each case the
fees and disbursements of counsel for the Underwriters relating to such
registration or qualification and memoranda relating thereto), (v) filings and
clearance with the National Association of Securities Dealers, Inc. ("NASD") in
connection with the offering, (vi) the listing of the Shares on the Nasdaq
National Market, (vii) furnishing such copies of the Registration Statement,
the Prospectus and all amendments and supplements thereto as may be requested
for use in connection with the offering or sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold, and (viii) the
performance by the Sellers of their other obligations under this Agreement.

(l) To use its best efforts to maintain the inclusion of the Common Stock
in the Nasdaq National Market (or on a national securities exchange) for a
period of five years after the effective date of the Registration Statement.

(m) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company prior to
the Closing Date or any Option Closing Date, as the case may be, and to satisfy
all conditions precedent to the delivery of the Shares.

6. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter that:

(a) The Registration Statement has become effective; no Stop Order is in
effect, and no proceedings for such purpose are pending before or threatened by
the Commission.

(b) (i) Each part of the Registration Statement, when such part became
effective, did not contain and each such part, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will comply
in all material respects with the Act and (iii) the Prospectus does not contain
and, as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this paragraph (b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.

<PAGE> 8

(c) Each Preliminary Prospectus filed as part of the Original Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, and each Registration Statement filed
pursuant to Rule 462(b) under the Act, if any, complied when so filed in all
material respects with the Act and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

(d) The Company owns, beneficially and of record, 100% of the capital
stock of CBS Complete Business Solutions (Mauritius) Limited, a company
organized under the laws of Mauritius ("CBSI MAURITIUS"), which Company, in
turn, owns 100% of the capital stock of Complete Business Solutions (India)
Private Limited, a company organized under the laws of India ("CBSI INDIA" and
collectively with CBSI Mauritius, the "SUBSIDIARIES"); all such shares of
capital stock are owned by the Company free and clear of any security interest,
claim, lien, encumbrance or adverse interest of any nature. The Company does
not own or control, directly or indirectly, any corporation, association or
other entity other than the Subsidiaries.

(e) The Company and each of the Subsidiaries has been duly incorporated,
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to
carry on its business as it is currently being conducted and to own, lease and
operate its properties, and each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on business,
prospects, condition (financial or otherwise) or results of operations of the
Company and the Subsidiaries, taken as a whole (any such effect to be referred
to as a "MATERIAL ADVERSE EFFECT").

(f) The conversion of the minority interest in CBSI Mauritius into
Common Stock by the Selling Shareholder contemplated by the Shareholders'
Agreement dated as of July 19, 1996 (the "SHAREHOLDERS' AGREEMENT"), among the
Company, the Selling Shareholder, CBSI Mauritius and Rajendra Vattikuti, has
been duly and validly consummated and is effective under applicable law. No
consent, approval, authorization or order of any government or governmental
agency, which has jurisdiction over any of the parties to the Shareholders'
Agreement or over their respective properties, is required for the execution
and delivery of the Shareholders' Agreement and the consummation of the
transactions contemplated thereby, except for such consents, approvals,
authorizations or orders as have been duly and timely received or obtained. The
performance of the Shareholders' Agreement and the consummation of the
transactions therein contemplated will not result in a breach or violation of
any of the terms or provisions of, or constitute a default under, (i) any bond,
debenture, note or other evidence of indebtedness, indenture, mortgage, deed of
trust or loan agreement, or under any material lease, contract, joint venture
or other agreement, in each case to the best of the Company's knowledge, to

<PAGE> 9

which any of the parties to the Shareholders' Agreement was a party or
by which any of such parties or their respective properties were bound, (ii)
the charter or by-laws of any of the parties to the Shareholders' Agreement, or
(iii) any law or, to the best of the Company's knowledge, order of any court
which had jurisdiction over any of the parties to the Shareholders' Agreement
or over their respective property.

(g) All the outstanding shares of capital stock of the Company and the
Subsidiaries (including the Shares to be sold by the Selling Shareholder) have
been duly authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights; and the Shares to be issued
and sold by the Company hereunder have been duly authorized and, when issued
and delivered to the Underwriters against payment therefor as provided by this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar
rights.

(h) The authorized capital stock of the Company, including the Common
Stock, conforms as to legal matters to the description thereof contained in the
Prospectus.

(i) Neither the Company nor either of the Subsidiaries is in violation of
its respective charter or by-laws or in default in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or
any other evidence of indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of the Company and the
Subsidiaries, taken as a whole, to which the Company or either of the
Subsidiaries is a party or by which it or either of the Subsidiaries or their
respective property is bound.

(j) The execution, delivery and performance of this Agreement,
compliance by the Company with all the provisions hereof and the provisions of
the Shareholders' Agreement and the consummation of the transactions
contemplated hereby and thereby will not require any consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body, except as such may be required under the
securities or Blue Sky laws of the various states, and will not conflict with
or constitute a breach of any of the terms or provisions of, or a default
under, the charter or by-laws of the Company or any of its Subsidiaries or any
agreement, indenture or other instrument to which it or any of its Subsidiaries
is a party or by which it or any of the Subsidiaries or their respective
property is bound, or violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to the Company or the
Subsidiaries, or their respective property.

(k) Except as otherwise set forth in the Prospectus, there are no material
legal or governmental proceedings pending to which the Company or any of its
Subsidiaries is a party or to which any of their respective property is the
subject, and, to the Company's knowledge, no such proceedings are threatened or
contemplated. No contract or document of a character required to be described
in the Registration Statement

<PAGE> 10

or the Prospectus or to be filed as an exhibit to the Registration Statement
is not so described or filed as required.

(l) Neither the Company nor either of the Subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection
of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), nor any foreign,
federal or state law relating to discrimination in the hiring, promotion or pay
of employees nor any applicable federal or state wages and hours laws, nor any
provisions of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder, which in each case might result in any
Material Adverse Effect.

(m) The Company and each of the Subsidiaries has such permits, licenses,
franchises and authorizations of governmental or regulatory authorities
("PERMITS"), including, without limitation, under any applicable Environmental
Laws, as are necessary to own, lease and operate its respective properties and
to conduct its business in the manner described in the Prospectus, except those
Permits the absence of which would not, singly or in the aggregate, give rise
to a Material Adverse Effect; the Company and each of its Subsidiaries has
fulfilled and performed all of its material obligations with respect to such
Permits and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit; and, except
as described in the Prospectus, such Permits contain no restrictions that are
materially burdensome to the Company or any of its Subsidiaries.

(n) Except as otherwise set forth in the Prospectus or such as are not
material to the business, prospects, financial condition or results of
operation of the Company and its Subsidiaries, taken as a whole, the Company
and each of the Subsidiaries has good and marketable title, free and clear of
all liens, claims, encumbrances and restrictions except liens for taxes not yet
due and payable, to all property and assets described in the Registration
Statement as being owned by it. All leases to which the Company or either of
the Subsidiaries is a party are valid and binding and no default has occurred
or is continuing thereunder, which might result in any Material Adverse Effect,
and the Company and the Subsidiaries enjoy peaceful and undisturbed possession
under all such leases to which any of them is a party as lessee with such
exceptions as do not materially interfere with the use made by the Company or
such Subsidiary.

(o) The Company and each of the Subsidiaries maintain reasonably adequate
errors and omissions and other liability insurance.

(p) Arthur Andersen LLP are independent public accountants with respect to
the Company as required by the Act.

(q) The financial statements, together with related schedules and notes
forming part of the Registration Statement and the Prospectus (and any
amendment or

10
<PAGE> 11

supplement thereto), present fairly the consolidated financial position,
results of operations and changes in financial position of the Company and the
Subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein; and the other financial and
statistical information and data set forth in the Registration Statement and
the Prospectus (and any amendment or supplement thereto) are, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.

(r) Except as disclosed in or specifically contemplated by the Prospectus,
the Company and the Subsidiaries, taken as a whole, have sufficient
intellectual property rights (including, without limitation, trademarks, trade
names, patent rights, copyrights and licenses), approvals and governmental
authorizations to conduct their businesses as now conducted; the expiration of
any intellectual property rights (including, without limitation, trademarks,
trade names, patent rights, copyrights and licenses), approvals or governmental
authorizations would not have a Material Adverse Effect; and the Company has no
knowledge of any infringement by it or the Subsidiaries of intellectual
property rights (including, without limitation, trademarks, trade names, patent
rights, copyrights and licenses), trade secret or other similar rights of
others, and there is no claim being made against the Company or any Subsidiary
regarding trademark, trade name, patent, copyright, license, trade secret or
other infringement of intellectual property rights which could have a Material
Adverse Effect.

(s) The Company is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended.

(t) Except as disclosed in the Registration Statement, no holder of any
security of the Company has any right to require registration of shares of
Common Stock or any other security of the Company.

(u) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).

(v) The Company's outstanding Common Stock is registered pursuant to
Section 12(g) of the Exchange Act and is listed on the Nasdaq National Market.

(w) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, the Company except as
otherwise disclosed in the Registration Statement.

11
<PAGE> 12

(x) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed therein by
Item 404 of Regulation S-K of the Commission.

(y) Except as disclosed in the Prospectus, the Company has not paid any
dividends to any holders of the capital stock of the Company.

(z) There is (i) no significant unfair labor practice complaint pending
against the Company or any of its Subsidiaries or, to the knowledge of the
Company, threatened against any of them, before the National Labor Relations
Board or any state or local labor relations board, and no significant grievance
or significant arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Company or any of its
Subsidiaries or, to the knowledge of the Company, threatened against any of
them, and (ii) no significant strike, labor dispute, slowdown or stoppage
pending against the Company or any of its Subsidiaries or, to the knowledge of
the Company, threatened against it or any of its Subsidiaries except for such
actions specified in clause (i) above, which, singly or in the aggregate could
not reasonably be expected to have a Material Adverse Effect.

(aa) All material tax returns required to be filed by the Company and each
of its Subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by the
Company or any of its Subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.

7. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder severally represents, warrants and, with respect to
paragraph 7(i) below, covenants and agrees, in each case solely with respect to
him, her or itself and his, her or its Shares, to and with each Underwriter
that:

(a) Such Selling Shareholder is the lawful owner of the Shares to be sold
by such Selling Shareholder pursuant to this Agreement and has, and on the
Closing Date (and Option Closing Date, if applicable) will have, good and clear
title to such Shares, free of all restrictions on transfer, liens,
encumbrances, security interests and claims whatsoever.

(b) Upon delivery of and payment for the Shares to be sold by such Selling
Shareholder pursuant to this Agreement, good and clear title to such Shares
will pass to the Underwriters, free of all restrictions on transfer, liens,
encumbrances, security interests and claims whatsoever.

(c) Such Selling Shareholder has, and on the Closing Date will have, full
legal right, power and authority to enter into this Agreement and the Custody
Agreement (the "CUSTODY AGREEMENT") between such Selling Shareholder First
Chicago

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<PAGE> 13

Trust Company of New York, as Custodian (the "CUSTODIAN") and to sell,
assign, transfer and deliver such Shares in the manner provided herein and
therein, and this Agreement and the Custody Agreement have been duly
authorized, executed and delivered by such Selling Shareholder and each of this
Agreement and the Custody Agreement is a valid and binding agreement of such
Selling Shareholder enforceable in accordance with its terms, except as rights
to indemnity and contribution hereunder may be limited by applicable law.

(d) The power of attorney signed by such Selling Shareholder appointing
the Attorneys, or any one of them, as his, her or its attorneys-in-fact to the
extent set forth therein with regard to the transactions contemplated hereby
and by the Registration Statement and the Custody Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling Shareholder
and is a valid and binding instrument of such Selling Shareholder enforceable
in accordance with its terms, and, pursuant to such power of attorney, such
Selling Shareholder has authorized, as appropriate, the Attorneys, or any one
of them, to execute and deliver on its behalf this Agreement and any other
document necessary or desirable in connection with transactions contemplated
hereby and to deliver the Shares to be sold by such Selling Shareholder
pursuant to this Agreement.

(e) Such Selling Shareholder has not taken, and will not take, directly or
indirectly, any action designed to, or which might reasonably be expected to,
cause or result in stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Shares pursuant to the
distribution contemplated by this Agreement, and other than as permitted by the
Act, such Selling Shareholder has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and sale
of the Shares.

(f) The execution, delivery and performance of this Agreement by such
Selling Shareholder, compliance by such Selling Shareholder with all the
provisions hereof and the consummation of the transactions contemplated
hereby will not require any consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental body
(except as such may be required under the Act, state securities laws or Blue
Sky laws), will not require any consent, approval, authorization or other order
of any board of directors, shareholders or other governing body of such Selling
Shareholder (other than the consent of the board of directors of such Selling
Shareholder, if applicable, which has previously been obtained), and will not
conflict with or constitute a breach of any of the terms or provisions of, or a
default under, organizational documents of such Selling Shareholder or any
agreement, indenture or other instrument to which such Selling Shareholder is a
party or by which such Selling Shareholder or property of such Selling
Shareholder is bound, or violate or conflict with any laws, administrative
regulation or ruling or court decree applicable to such Selling Shareholder or
property of such Selling Shareholder.

(g) Certificates in negotiable form for the Shares to be sold by such
Selling Shareholder have been placed in custody under the Custody Agreement
with

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<PAGE> 14

Custodian for delivery under this Agreement. Such Selling Shareholder
specifically agrees that the Shares represented by the certificates so held in
custody for such Selling Shareholder are subject to the interests of the
several Underwriters and the Company, that the arrangements made by such
Selling Shareholder for such custody, including the Power of Attorney
referenced in such Custody Agreement, are to that extent irrevocable, and that
the obligations of such Selling Shareholder shall not be terminated by any act
of such Selling Shareholder or by operation of law, whether by the death or
incapacity of such Selling Shareholder (or, in the case of a Selling
Shareholder that is not an individual, the dissolution or liquidation of such
Selling Shareholder) or the occurrence of any other event; if any such death,
incapacity, dissolution, liquidation or such other event should occur before
the delivery of such Shares hereunder, certificates for such Shares shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such death, incapacity, dissolution, liquidation or other event
had not occurred, regardless of whether the Custodian shall have received
notice of such death, incapacity, dissolution, liquidation or other event.

(h) Such parts of the Registration Statement under the captions
"Management," "Principal and Selling Shareholders" and "Certain Transactions"
which specifically relate to such Selling Shareholder do not, and will not on
the Closing Date (and any Option Closing Date, if applicable), contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
circumstances under which they were made, not misleading.

(i) At any time during the period described in paragraph 5(e) hereof, if
there is any change in the information referred to in paragraph 7(h) above with
respect to such Selling Shareholder, such Selling Shareholder will immediately
notify you of such change.

8. Indemnification.

(a) The Company and each Selling Shareholder agree, jointly and severally,
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments ("LOSSES"), joint or several, to which such
indemnified parties or any of them may become subject under the Act, the
Exchange Act, state securities laws, common law or otherwise, and the Company
and the Selling Shareholders jointly and severally agree to reimburse each such
Underwriter and controlling person for any legal or other expenses (including,
except as otherwise hereinafter provided, reasonable fees and disbursements of
counsel) incurred by the respective indemnified parties in connection with
defending against any such Losses or in connection with any investigation or
inquiry of, or other proceeding which may be brought against, the respective
indemnified parties, in each case arising out of or based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in or
incorporated by reference into the Registration Statement (including the
Prospectus as part thereof) or any post-effective amendment thereto, or the

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<PAGE> 15

omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) any untrue statement or alleged untrue statement of a material fact
contained or incorporated by reference into any Preliminary Prospectus or the
Prospectus (as amended or supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that (i) the indemnity agreements of
the Company and the Selling Shareholders contained in this paragraph (a) with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages and
liabilities and judgments purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Underwriter to such person, if required
by law so to have been delivered, at or prior to the written confirmation of
the sale of the Shares to such person, and if the Prospectus (as so amended and
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or judgment; provided, however, that the aggregate liability
of any Selling Stockholder pursuant to the provisions of this paragraph (a) and
paragraph (d) below shall be limited to an amount equal to the product of the
Purchase Price times the number of Shares sold by such Selling Shareholder
hereunder.

(b) In case any action shall be brought against any Underwriter or any
person controlling such Underwriter, based upon any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto
and with respect to which indemnity may be sought against the Company and the
Selling Shareholders, such Underwriter shall promptly notify the Company and
the Selling Shareholder as appropriate, in writing, and the Company and the
Selling Shareholders shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all reasonable fees and expenses of such counsel. Any Underwriter or
any such controlling person shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the employment of such counsel has been
specifically authorized in writing by the Company, (ii) the Company and the
Selling Shareholders shall have failed to assume the defense and employ counsel
or (iii) the named parties to any such action (including any impleaded parties)
include both such Underwriter or such controlling person and the Company or the
Selling Shareholder, as the case may be, and such Underwriter or such
controlling person shall have been advised by such counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the Company or the Selling Shareholders, as
the case may be (in which case the Company and the Selling Shareholders shall
not have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that the
Company and the Selling Shareholders shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or

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<PAGE> 16

circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all such
Underwriters and controlling persons, which firm shall be designated in writing
by Donaldson, Lufkin & Jenrette Securities Corporation and that all such
reasonable fees and expenses shall be reimbursed as they are incurred). A
Seller shall not be liable for any settlement of any such action effected
without the written consent of such Seller but if settled with the written
consent of such Seller, such Seller agrees to indemnify and hold harmless any
Underwriter and any such controlling person from and against any Losses by
reason of such settlement. Notwithstanding the immediately preceding sentence,
if in any case where the fees and expenses of counsel are at the expense of the
indemnifying party and an indemnified party shall have requested the
indemnifying party to reimburse the indemnified party for such fees and
expenses of counsel as incurred, such indemnifying party agrees that it shall
be liable for any settlement of any action effected without its written consent
if (i) such settlement is entered into more than thirty business days after the
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall have failed to reimburse the indemnified party in
accordance with such request for reimbursement prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.

(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the
Registration Statement, any person controlling the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, each Selling
Shareholder and each person, if any, controlling each Selling
Shareholder within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Sellers to
each Underwriter but only with reference to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter through
you expressly for use in the Registration Statement, the Prospectus or any
Preliminary Prospectus. In case any action shall be brought against the
Company, any of its directors, any such officer or any person controlling the
Company, any Selling Shareholder or any person controlling such Selling
Shareholder based on the Registration Statement, the Prospectus or any
Preliminary Prospectus and in respect of which indemnity may be sought against
any Underwriter, the Underwriter shall have the rights and duties given to the
Sellers (except that if any Seller shall have assumed the defense thereof, such
Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of such Underwriter), and the Company, its
directors, any such officers and any person controlling the Company and such
Selling Shareholder and any person controlling the Selling Shareholder shall
have the rights and duties given to the Underwriter, in each case by Section
8(b) hereof.

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<PAGE> 17

(d) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party in respect of any Losses referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such Losses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Sellers on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Sellers and the Underwriters in
connection with the statements or omissions which resulted in such Losses, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers and the Underwriters shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Sellers, and the total underwriting discounts and
commissions received by the Underwriters, bear to the total price to the public
of the Shares, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Sellers and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Company, the Selling Shareholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

The Sellers and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the Losses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective number of Shares
purchased by each of the Underwriters hereunder and not joint.

(f) Each Seller hereby designates ____________________, as its authorized
agent, upon which process may be served in any action, suit or proceeding which
may be instituted in any state or federal court in the State of New York by any
Underwriter or person controlling an Underwriter asserting a claim for
indemnification or

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<PAGE> 18

contribution under or pursuant to this Section 8, and each Seller will
accept the jurisdiction of such court in such action, and waives, to the
fullest extent permitted by applicable law, any defense based upon lack of
personal jurisdiction or venue. A copy of any such process shall be sent or
given to such Seller, at the address for notices specified in Section 12
hereof.

9. Conditions of Underwriters' Obligations. The several obligations of the
Underwriters to purchase the Firm Shares under this Agreement are subject to
the satisfaction of each of the following conditions:

(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date with the same
force and effect as if made on and as of the Closing Date.

(b) The Registration Statement shall have become effective not later than
5:00 P.M. (and in the case of a Registration Statement filed under Rule 462(b)
of the Act, not later than 10:00 p.m.), New York City time, on the date of this
Agreement or at such later date and time as you may approve in writing, and at
the Closing Date no Stop Order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been commenced or shall be pending before or contemplated by the Commission.

(c)(i) Since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, there shall not have been any
material adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the earnings,
affairs or business prospects, whether or not arising in the ordinary course of
business, of the Company, (ii) since the date of the latest balance sheet
included in the Registration Statement and the Prospectus, there shall not have
been any change, or any development involving a prospective material adverse
change, in the capital stock or in the long-term debt of the Company from that
set forth in the Registration Statement and Prospectus, (iii) the Company and
its Subsidiaries shall have no liability or obligation, direct or contingent,
which is material to the Company and its Subsidiaries, taken as a whole, other
than those reflected in the Registration Statement and the Prospectus, and (iv)
on the Closing Date you shall have received a certificate dated the Closing
Date, signed by Rajendra Vattikuti and Timothy S. Manney, in their capacities
as the Chief Executive Officer and Chief Financial Officer of the Company,
respectively, confirming the matters set forth in paragraphs (a), (b), and (c)
of this Section 9.

(d) All the representations and warranties of the Selling Shareholders
contained in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date, and you
shall have received a certificate to such effect, dated the Closing Date, from
each Selling Shareholder.

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<PAGE> 19

(e) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Butzel Long, counsel for the Company, substantially to the effect that:

(i) the Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and authority required to carry on
its business as it is currently being conducted and to own, lease and operate
its properties;

(ii) the Company is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect;

(iii) all the outstanding shares of Common Stock (including the Shares to
be sold by the Selling Shareholders) have been duly authorized and validly
issued and are fully paid, non-assessable and not subject to any preemptive or
similar rights;

(iv) the Shares to be issued and sold by the Company hereunder have been
duly authorized, and when issued and delivered to the Underwriters against
payment therefor as provided by this Agreement, will have been validly issued
and will be fully paid and non-assessable, and the issuance of such Shares is
not subject to any preemptive or similar rights;

(v) this Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company and each Selling
Shareholder, enforceable in accordance with its terms (except as enforceability
(i) may be limited by laws relating to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally, and (ii) may be limited by general principles of equity);

(vi) the authorized capital stock of the Company, including the Common
Stock, conforms as to legal matters to the description thereof contained in the
Prospectus;

(vii) the Registration Statement has become effective under the Act, no
Stop Order suspending its effectiveness has been issued and no proceedings for
that purpose are, to the knowledge of such counsel, pending before or
contemplated by the Commission;

(viii) the statements under "Risk Factors--Shares Eligible for Future
Sale," "Description of Capital Stock" and "Shares Eligible for Future Sale" in
the Prospectus and Items 14 and 15 of Part II of the Registration Statement,
insofar as such statements constitute a summary of legal matters documents or
proceedings referred to

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<PAGE> 20

therein, fairly present the information called for with respect to such legal
matters, documents and proceedings;

(ix) the Company is not in violation of its charter or by-laws and, to
such counsel's knowledge after due inquiry, the Company is not in default in
the performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any other
agreement, indenture or instrument material to the conduct of the business of
the Company and its Subsidiaries, taken as a whole, to which the Company is a
party or by which it or its property is bound;

(x) the execution, delivery and performance of this Agreement by the
Company and each Selling Shareholder, compliance by the Company and each
Selling Shareholder with all the provisions hereof and the consummation of the
transactions contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body (except as such may be required under the Act
or other securities or Blue Sky laws) and will not conflict with or constitute
a breach of any of the terms or provisions of, or a default under, the charter
or by-laws of the Company or the organizational documents of any Selling
Shareholder that is not an individual or, to the best of such counsel's
knowledge, any material agreement, indenture or other instrument to which the
Company or any Selling Shareholder is a party or by which the Company or any
Selling Shareholder or their respective properties are bound, or violate or
conflict with any laws, administrative regulations or, to the best of such
counsel's knowledge, rulings or court decrees applicable to the Company or any
Selling Shareholder or their respective properties;

(xi) such counsel does not know of any legal or governmental proceeding
pending or threatened to which the Company is a party or to which any of its
property is subject which is required to be described in the Registration
Statement or the Prospectus and is not so described, or of any contract or
other document which is required to be described in the Registration Statement
or the Prospectus or is required to be filed as an exhibit to the Registration
Statement which is not described or filed as required;

(xii) to such counsel's knowledge, the Company has not violated any
Environmental Laws, nor any federal or state law relating to discrimination in
the hiring, promotion or pay of employees nor any applicable federal or state
wages and hours laws, nor any provisions of the Employee Retirement Income
Security Act or the rules and regulations promulgated thereunder, which in each
case might result in any Material Adverse Effect;

(xiii) to such counsel's knowledge, the Company has such material permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("material permits"), including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease and operate its
properties and to conduct its business in the manner described in the
Prospectus; to such counsel's knowledge, the Company has fulfilled and
performed all of its material obligations with

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<PAGE> 21

respect to such material permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of the holder
of any such material permit, subject in each case to such qualification as may
be set forth in the Prospectus; and, except as described in the Prospectus,
such material permits contain no restrictions that are materially burdensome to
the Company;

(xiv) the Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended;

(xv) to such counsel's knowledge, no holder of any security of the
Company has any right to require registration of shares of Common Stock or any
other security of the Company, except as disclosed and to the extent and on
the terms described in the Prospectus;

(xvi) to such counsel's knowledge, except as otherwise set forth in the
Registration Statement or such as are not material to the business, prospects,
financial condition or results of operation of the Company and its
Subsidiaries, taken as a whole, the Company has good and marketable title, free
and clear of all liens, claims, encumbrances and restrictions except liens for
taxes not yet due and payable, to all material property and assets described
in the Registration Statement as being owned by it;

(xvii) to such counsel's knowledge, all leases to which the Company is a
party are valid and binding and no default has occurred or is continuing
thereunder, which might result in any Material Adverse Effect, and the Company
enjoys peaceful and undisturbed possession under all such leases to which it is
a party as lessee with such exceptions as do not materially interfere with the
use made by the Company; and

(xviii) The Registration Statement and the Prospectus comply as to form in
all material respects as to the requirements of the Act, except that such
counsel does not need to express any opinion as to the financial statements and
related notes, schedules and other financial, statistical and accounting data
included in or excluded from the Registration Statement or in the Prospectus
and except that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus.

(xix) The Custody Agreement has been duly authorized, executed and
delivered by each Selling Shareholder and is a valid and binding agreement of
such Selling Shareholder enforceable in accordance with its terms; except (A)
as rights to indemnity and contribution may be limited by applicable laws and
considerations of public policy, (B) as may be limited by the effects of
applicable bankruptcy, insolvency, reorganization, receivership, moratorium and
other similar laws affecting rights and remedies of creditors generally, and
(C) as may be limited by the effects of general

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<PAGE> 22

principles of equity (including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing), whether applied by a
court of law or equity.

(xx) Each Selling Shareholder has full legal right, power and authority,
and any approval required by law (other than any approval imposed by the
applicable state securities and Blue Sky laws) to sell, assign, transfer and
deliver the Shares to be sold by such Selling Shareholder in the manner
provided in this Agreement and the Custody Agreement.

(xxi) Delivery of the Shares to be sold by each Selling Shareholder to
the Underwriters against payment therefor as provided in this Agreement will
pass title to such Shares free and clear of any adverse claim, assuming that
each Underwriter purchases the Shares in good faith without notice of any
adverse claim.

(xxii) The Power of Attorney signed by each Selling Shareholder appointing
the Attorneys, or either of them, as his attorneys-in-fact to the extent set
forth therein with regard to the transactions contemplated hereby and by the
Registration Statement has been duly authorized, executed and delivered by or
on behalf of such Selling Shareholder and is a valid and binding instrument of
such Selling Shareholder enforceable in accordance with its terms,
except (A) as rights to indemnity and contribution may be limited by applicable
laws and considerations of public policy, (B) as may be limited by the effects
of applicable bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar laws affecting rights and remedies of creditors generally,
and (C) as may be limited by the effects of general principles of equity
(including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing), whether applied by a court of law or equity, and
pursuant to such Power of Attorney, each of the Selling Shareholders has
authorized the Attorneys, or either of them, to execute and deliver on their
behalf this Agreement and any other document necessary or desirable in
connection with transactions contemplated hereby and to deliver the Shares to
be sold by such Selling Shareholders pursuant to this Agreement.

In addition to the matters set forth above, such opinion shall also
include a statement to the effect that although such counsel has not
independently verified the accuracy or completeness of the information in the
Registration Statement and Prospectus, they have participated in conferences
with representatives of the Company and its independent accountants and
investment bankers and their counsel at which the contents of the Registration
Statement and the Prospectus were discussed at length and nothing has come to
their attention that causes them to believe that (except for financial
statements and schedules, as to which no belief need be expressed) the
Registration Statement and the Prospectus included therein at the time the
Registration Statement became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus, as amended or supplemented, if applicable (except for financial
statements and schedules and other financial or statistical data, as aforesaid)
contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the

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<PAGE> 23

statements therein, in the light of the circumstances under which they were
made, not misleading.

The opinion of Butzel Long described in paragraph (e) above shall be
rendered to you at the request of the Company, and shall so state therein.

(f) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Singhania & Co., counsel for CBSI India to the effect that:

(i) CBSI India has been duly organized and is validly existing
as a private company limited by shares in good standing under the laws of India;

(ii) CBSI India has 2,000,000 shares of stock authorized, 552,756
of which are issued and outstanding; all necessary and proper corporate
proceedings have been taken in order to authorize validly such authorized
stock; all outstanding shares of such stock have been duly and validly issued,
are fully paid and non-assessable, have been issued in compliance with Indian
law, were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase any securities;

(iii) All of the outstanding shares of capital stock of, or other
ownership interests in, CBSI India have been duly and validly authorized and
issued and are fully paid and non-assessable, and are owned by CBSI Mauritius,
except one share held by Mr. Rajendra Vattikuti, one of the directors of CBSI
India, as nominee shareholder of CBSI Mauritius, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature; and

(iv) The consummation of the transactions contemplated hereby
will not result in a breach of, or constitute a default under, any material
indenture, mortgage, deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other material agreement or instrument
to which CBSI India is a party or by which any of its properties may be bound,
or violate any statute, judgment, decree, order, rule or regulation known to
such counsel of any court or governmental body having jurisdiction over CBSI
India or any of its properties and to such counsel's knowledge, no approval,
authorization, order or consent of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery of
this Agreement or the consummation by CBSI India of the transactions
contemplated herein, except as have been made or obtained.

In rendering such opinion, such counsel may rely as to matters of fact, on
certificates of the officers of CBSI India and of governmental officials, in
which case their opinion shall state that they are so doing and that the
Underwriters are justified in relying on such opinions or certificates and
copies of said opinions or certificates shall be attached to the opinion.

23
<PAGE> 24

(g) [ you shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Maigrot & Koenig, counsel for JF Electra (Mauritius) Limited ("JF ELECTRA"),
to the effect that:

(i) JF Electra has been duly incorporated, is validly existing
as a corporation in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and authority required to
carry on its business as it is currently being conducted;

(ii) This Agreement has been duly authorized, executed and
delivered by JF Electra and is a valid and binding agreement of JF
Electra enforceable in accordance with its terms (except as
enforceability (i) may be limited by laws relating to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally, (ii) may be limited by
general principles of equity and (iii) of provisions relating to
indemnity and contribution hereunder may be limited by principles of
public policy);

(iii) To such counsel's knowledge, the execution, delivery and
performance of this Agreement by JF Electra, compliance by JF Electra
with all the provisions hereof and the consummation of the transactions
contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except as such may be
required under the Act or other securities or Blue Sky laws) and will
not conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter, by-laws or other
organizational documents of JF Electra or any material agreement,
indenture or other instrument known to such counsel to which JF Electra
is a party or by which JF Electra or its properties are bound, or
violate or conflict with any laws, administrative regulations or
rulings or court decrees applicable to JF Electra or its properties;

(iv) The Custody Agreement has been duly authorized, executed and
delivered by JF Electra and is a valid and binding agreement of such
entity, enforceable in accordance with its terms, except for
limitations on enforceability set forth in subpart (ii) above;

(v) JF Electra has full legal right, power and authority, and any
approval required by law (other than any approval imposed by the
applicable state securities and Blue Sky laws) to sell, assign,
transfer and deliver the Shares to be sold by it in the manner provided
in this Agreement and the Custody Agreement;

(vi) JF Electra has good and clear title to the certificates for
the Shares to be sold by it and upon delivery thereof, pursuant hereto
and

24
<PAGE> 25

payment therefor, good and clear title will pass to the
Underwriters, severally, free of all restrictions on transfer, liens,
encumbrances, security interests and claims whatsoever; and

(vii) The power of attorney signed by JF Electra appointing the
Attorneys, or any of them as its attorney-in-fact to the extent set
forth therein with regard to the transactions contemplated hereby and
by the Registration Statement has been duly authorized, executed and
delivered by or on behalf of JF Electra and is a valid and binding
instruments of JF Electra, enforceable in accordance with its terms
(except for limitations on enforceability set forth in subpart (ii)
above), and pursuant to such power of attorney, JF Electra has
authorized the Attorneys, or any of them as its attorney-in-fact to
execute and deliver on its behalf this Agreement and any other document
necessary or desirable in connection with transactions contemplated
hereby and to deliver the Shares to be sold by it pursuant to this
Agreement.

(h) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Sachnoff & Weaver, Ltd., counsel for the Underwriters, as to
the matters set forth therein. In making the statements analogous to those
following section 9(e)(xviii) in the opinion for counsel for the issuer, above,
such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification except as
specified.

(i) You shall have received from Arthur Andersen LLP a letter or letters,
in form and substance reasonably satisfactory to you and your counsel addressed
to the Underwriters and dated the Closing Date and any later date on which
Option Shares are purchased, confirming that they are independent public
accountants with respect to the Company within the meaning of the Act and based
upon the procedures described in their letter delivered to you concurrently
with the execution of this Agreement (herein called the "ORIGINAL LETTER"), but
carried out to a date not more than five business days prior to the Closing
Date or such later date on which the Option Shares are purchased, as the case
may be, (iii) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing
Date or such later date, as the case may be, and (iv) setting forth any
revisions and additions to the statements and conclusions set forth in the
Original Letter, or their knowledge thereof, after the date of the Original
Letter or to reflect the availability of more recent financial statements, date
or information. If such Original Letter discloses any material adverse
decreases or increases, as the case may be, in the items specified therein
which are not set forth in or contemplated by the Prospectus, or if the
subsequent letter or letters to be delivered at the Closing discloses any
material adverse change in the statements and conclusions set forth in the
Original Letter, which in either case, in the reasonable judgment of the
Underwriters, makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares on the terms and in the manner
contemplated by the Prospectus, this Agreement and all obligations of the
Underwriters hereunder may be terminated by

25
<PAGE> 26

the Underwriters by notifying the Company in the matter and with the
effect provided below in Section 12 of this Agreement.

(j) The Company and the Selling Shareholders shall not have failed at or
prior to the Closing Date to perform or comply with any of the agreements
herein contained and required to be performed or complied with by the Company
at or prior to the Closing Date.

(k) You shall have received on the Closing Date, a certificate of JF
Electra to the effect that JF Electra is not a US Person (as defined under
applicable US federal tax legislation), which certificate may be in the form of
a properly completed and executed United States Treasury Department Form W-8
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).

(l) You shall have received on the Closing Date a properly completed and
executed United States Treasury Department Form W-8 from the Selling
Shareholders.

(m) You shall have received on the Closing Date an opinion (reasonably
satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Hamid Moolan, Q.C., counsel for CBSI Mauritius to the effect that:

(i) CBSI Mauritius has been duly organized and is validly existing
as a private company limited by shares holding an offshore certificate in good
standing under the laws of Mauritius;

(ii) CBSI Mauritius has 100,000 shares of common stock authorized,
49,025 of which are issued and outstanding; all necessary and proper corporate
proceedings have been taken in order to authorize validly such authorized
stock; all outstanding shares of common stock have been duly and validly
issued, are fully paid and non-assessable, have been issued in compliance with
Mauritius law, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase any securities;

(iii) All of the outstanding shares of capital stock of, or other
ownership interests in, CBSI Mauritius have been duly and validly authorized
and issued and are fully paid and non-assessable, and are owned by the Company,
directly or indirectly, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature; and

(iv) The consummation of the transactions contemplated hereby will not
result in a breach of, or constitute a default under, any indenture, mortgage,
deed of trust, trust (constructive or other), loan agreement, lease, franchise,
license or other material agreement or instrument to which CBSI Mauritius is a
party or by which any of its properties may be bound, or violate any statute,
judgment, decree, order, rule or regulation known to such counsel of any court
or governmental body having jurisdiction

26
<PAGE> 27

over the Subsidiaries or any of their properties and to such counsel's
knowledge, no approval, authorization, order or consent of any court,
regulatory body, administrative agency or other governmental body is required
for conversion of the JF Electra shares, the execution and delivery of this
Agreement and the consummation by CBSI Mauritius of the transactions
contemplated herein, except as have been made or obtained.

In rendering such opinion, such counsel may rely as to matters of fact, on
certificates of the officers of CBSI Mauritius and of governmental officials,
in which case their opinion is to state that they are so doing and that the
Underwriters are justified in relying on such opinions or certificates and
copies of said opinions or certificates are to be attached to the opinion.

The several obligations of the Underwriters to purchase any Option Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of such Option
Shares and other matters related to the issuance of such Option Shares.

10. Termination.

(a) This Agreement may be terminated at any time prior to the Closing
Date by you by written notice to the Sellers if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Company and Subsidiaries, taken as a whole, or
the earnings, affairs, or business prospects of the Company and its
Subsidiaries, taken as a whole, whether or not arising in the ordinary course
of business, which would, in your judgment, make it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere that, in your judgment, is material and
adverse and would, in your judgment, make it impracticable to market the Shares
on the terms and in the manner contemplated in the Prospectus, (iii) the
suspension or material limitation of trading in securities on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq National Market or
limitation on prices for securities on any such exchange or Nasdaq National
Market, (iv) the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and adversely affects,
or will materially and adversely affect, the business or operations of the
Company or any Subsidiary, (v) the declaration of a banking moratorium by
either federal or New York State authorities or (vi) the taking of any action
by any federal, state or local government or agency in respect of its monetary
or fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.

27
<PAGE> 28

(b) If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Option Shares, as the case may be, which it or they have agreed
to purchase hereunder on such date and the aggregate number of Firm
Shares or Option Shares, as the case may be, which such defaulting Underwriter
or Underwriters, as the case may be, agreed but failed or refused to purchase
is not more than one-tenth of the total number of Shares to be purchased on
such date by all Underwriters, each non-defaulting Underwriter shall be
obligated severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule I bears to the total number of Firm Shares
which all the non-defaulting Underwriters, as the case may be, have agreed to
purchase, or in such other proportion as you may specify, to purchase the Firm
Shares or Option Shares, as the case may be, which such defaulting Underwriter
or Underwriters, as the case may be, agreed but failed or refused to purchase
on such date; provided, however, that in no event shall the number of Firm
Shares or Option Shares, as the case may be, which any Underwriter has agreed
to purchase pursuant to Section 2 hereof be increased pursuant to this Section
10 by an amount in excess of one-ninth of such number of Firm Shares or Option
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date or on an Option Closing Date, as the case may be, any
Underwriter or Underwriters shall fail or refuse to purchase Firm Shares, or
Option Shares, as the case may be, and the aggregate number of Firm Shares or
Option Shares, as the case may be, with respect to which such default occurs is
more than one-tenth of the aggregate number of Shares to be purchased on such
date by all Underwriters and arrangements satisfactory to you and the
applicable Sellers for purchase of such Shares are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter and the applicable Sellers. In any such case
which does not result in termination of this Agreement, either you or the
Sellers shall have the right to postpone the Closing Date or the applicable
Option Closing Date, as the case may be, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of any such Underwriter under this
Agreement.

11. Agreements of the Selling Shareholders. Each Selling Shareholder
agrees with you and the Company:

(a) To pay or to cause to be paid all transfer taxes, if any, with
respect to the Shares to be sold by such Selling Shareholder; and

(b) To take all reasonable actions in cooperation with the Company
and the Underwriters to cause the Registration Statement to become effective
at the earliest possible time, to do and perform all things to be done and
performed under this Agreement prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Shares pursuant to this Agreement.

28
<PAGE> 29

12. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, to Complete
Business Solutions, Inc., 32605 West Twelve Mile Road, Suite 250, Farmington
Hills, MI 48334, (b) if to any Selling Shareholder, to any of the Attorneys,
and (c) if to any Underwriter or to you, to you c/o Donaldson, Lufkin &
Jenrette Securities Corporation, 277 Park Avenue, New York, New York 10172,
Attention: Syndicate Department, or in any case to such other address as the
person to be notified may have requested in writing.

The respective indemnities, contribution agreements, representations,
warranties and other statements of the Selling Shareholder, the Company, its
officers and directors and of the several Underwriters set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter or by or on behalf of the Sellers, the officers or directors of
the Company or any controlling person of the Sellers, (ii) acceptance of the
Shares and payment for them hereunder and (iii) termination of this Agreement.

If this Agreement shall be terminated by the Underwriters because of any
failure or refusal on the part of the Sellers to comply with the terms or to
fulfill any of the conditions of this Agreement, the Sellers agree to reimburse
the several Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them.

Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Sellers, the Underwriters, any
controlling persons referred to herein and their respective successors and
assigns, all as and to the extent provided in this Agreement, and no other
person shall acquire or have any right under or by virtue of this Agreement.
The term "SUCCESSORS AND ASSIGNS" shall include controlling persons and
successors in interest by operation of law, or by virtue of sale of all the
assets of an entity, but shall not include a purchaser of any of the Shares
from any of the several Underwriters merely because of such purchase.

This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without reference to the rules governing the
conflicts of laws.

This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.

* * * * *

29
<PAGE> 30

Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Shareholders and the several Underwriters.

Very truly yours,

COMPLETE BUSINESS SOLUTIONS, INC.

By:
-------------------------------------------
Title: President and Chief Executive
Officer

THE SELLING SHAREHOLDERS NAMED IN SCHEDULE II
HERETO

By:
-------------------------------------------
Attorney-in-fact

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
UBS SECURITIES LLC
LEGG MASON WOOD WALKER, INC.

Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto

By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

By:
----------------------------
Title:
----------------------------

<PAGE> 31

SCHEDULE I

UNDERWRITERS

<TABLE>
<CAPTION>
NUMBER OF FIRM SHARES
NAME TO BE PURCHASED
---- ---------------
<S> <C>
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION............................
UBS SECURITIES LLC.....................
LEGG MASON WOOD WALKER, INC............
---------
TOTAL................................. 2,250,000
</TABLE>

<PAGE> 32

SCHEDULE II

SELLING SHAREHOLDERS

<TABLE>
<CAPTION> NUMBER OF FIRM SHARES
NAME BEING SOLD
- ---- ----------
<S> <C>
Rajendra B. Vattikuti 750,000
J.F. Electra (Mauritus) Limited 165,000
Timothy S. Manney 35,000
Douglas S. Land 20,000
Daniel S. Rankin 30,000

</TABLE>

<TABLE>
<CAPTION>
NUMBER OF OPTION SHARES
NAME BEING SOLD
- ---- ----------
<S> <C>
Rajendra B. Vattikuti 112,500
J.F. Electra (Mauritus) Limited 24,750
Timothy S. Manney 5,250
Douglas S. Land 3,000
Daniel S. Rankin 4,500

</TABLE>

<PAGE> 1
EXHIBIT 5.1

Detroit Office
August 1, 1997

Complete Business Solutions, Inc.
32605 West Twelve Mile Road, Suite 250
Farmington Hills, Michigan 48344

RE: REGISTRATION STATEMENT ON FORM S-1

Ladies and Gentlemen:

You have requested our opinion in connection with the above-captioned
Registration Statement on Form S-1 to be filed by Complete Business Solutions,
Inc., a Michigan corporation (the "Company"), with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations promulgated thereunder (the "Rules"). The
Registration Statement relates to the offering of up to 2,250,000 shares (the
"Shares") of common stock (the "Common Stock").

We have examined such records and documents and have made such examination
of law as we considered necessary to form a basis for the opinions set forth
herein. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity with the originals of all documents submitted to us as copies
thereof.

Based upon such examination, it is our opinion that when there has been
compliance with the Act and applicable state securities laws and when the
Underwriting Agreement, a form of which will be filed as an exhibit to the
Registration Statement, is duly and validly executed and delivered, the Common
Stock, when issued, delivered and paid for in the manner described in such
Underwriting Agreement, will be validly issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion as an exhibit to the
Registration and to the reference to our firm under the caption "Legal Matters"
in the Registration Statement. In doing so, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Act or
under the Rules.

Very truly yours,

Butzel Long

<PAGE> 1
EXHIBIT 10.3(a)

EIGHTH AMENDMENT TO LEASE

This Eighth Amendment to Lease is dated this ___ day of June 1997 between
Orchard Ridge Office Park Limited Partnership, a Michigan limited partnership,
whose address is 32605 West Twelve Mile Road, Suite 290, Farmington Hills,
Michigan 48224 ("Landlord") and Complete Business Solutions, Inc., a Michigan
corporation, whose address is 32605 West Twelve Mile Road, Suite 250,
Farmington Hills, Michigan 48224 ("Tenant"). Capitalized terms not otherwise
defined herein shall have the meaning ascribed thereto in the Lease, as
modified by any prior amendments thereto.

WITNESSETH

WHEREAS, Landlord and Tenant entered into a certain Lease and Riders to
Lease dated October 22, 1992 for Suite 250 and First, Second, Third, Fourth,
Fifth, Sixth and Seventh Amendments to said Lease for Suites 110, 115, 120,
125, 130, 140, and 195 (collectively "Leased Premises") of the office building
located at 32605 West Twelve Mile Road, Farmington Hills, Michigan.

WHEREAS, Landlord and Tenant desire to amend the Lease to include the
rental of additional spaces located on the third floor of the east-wing more
particularly described as Suites 305-308.

NOW, THEREFORE, in consideration of the mutual covenants between Landlord
and Tenant and other good and valuable consideration, the adequacy and
sufficiency of which are hereby acknowledge and accepted, the parties hereby
agree as follows:

1. Paragraph 1 of the Lease is amended to reflect that at such time as
Landlord shall deliver possession of Suites 305 and 308, Substantially Complete
in accordance with the Floor Plans attached as Exhibit A, the Leased Premises
shall thereupon be composed of Suites 110, 115, 120, 125, 130, 140, 195, 250,
305 and 308. It is acknowledged and agreed between the parties that at such
time as Suites 305 and 308, consisting of 6,093 square feet shall be delivered
to Tenant, the Leased Premises shall consist of 48,182 square feet constituting
40.8% of the Building.

2. Paragraph 2 of the Lease is amended to provide for a Lease Term for
Suite 305 and 308 to commence on June 1, 1997 or such earlier date as Landlord
shall deliver Suite 305 and 308 to Tenant. The lease term for the entire
Leased Premises shall end on June 15, 2003. Rent for any partial month shall
be prorated ratably.

3. Paragraph 3 of the Lease is amended to reflect that Tenant shall pay
Landlord an aggregate Rent over the entire Term of the Lease inclusive of this
Eighth Amendment to Lease in monthly installments specified on the Schedule of
Rents attached hereto as Exhibit B, which Schedule of Rent reflects inclusion
of Suites 305 and 308 in the amounts specified in Exhibit B.

<PAGE> 2

4. Beginning on the earlier of June 1, 1997, or on the date Landlord shall
deliver Suite 305 and 308 to Tenant Substantially Complete in accordance with
the Floor Plans attached as Exhibit A, the Schedule of Rents is and shall be as
set forth on the attached Schedule of Rents to Eighth Amendment to Lease. In
the event Suites 305 and 308 shall be delivered to Tenant prior to or after
June 1, 1997, Tenant shall either pay landlord or receive a credit in the
amount of $321.58 for each day prior to or after June 1, 1997, before or after
which Suites 305 and 308 are delivered to Tenant, as the case may be.

5. Exhibit A of the Lease is amended to include the attached Floor Plans
for Suite 305 and 308 for which Landlord will perform certain improvements
using building standard materials, as shown on the attached Floor Plans and for
which Tenant shall reimburse Landlord fifty percent (50%) of Landlord's bill to
Tenant for such improvements but in no event will the amount owing from Tenant
for its share of improvements exceed $50,000. Tenant shall pay Landlord upon
the signing of this agreement an initial payment of $25,000 for its share of
improvements and the balance owing upon delivery of Suite 305 and 308. Any
improvements which are not building standard and are not indicated on the
attached Floor Plans, shall be paid one hundred percent (100%) by Tenant.

6. Both parties acknowledge that as of this date each party has fulfilled
all obligations under the Lease, excluding those obligations that Tenant may
have to fulfill for 1997 Property Taxes as outlined in Paragraph 27 of the
Lease, and there is no circumstances which with or without the providing of
notice would constitute a default by either party hereunder. The parties
acknowledge and agree that, notwithstanding anything to the contrary contained
in this or any prior Amendments or the Lease, Tenant shall not be required to
extend the term of the Lease with respect to any future space expansions and
Landlord shall not be required to offer Tenant any future space expansions.

7. Tenant currently has seven (7) reserved parking spaces assigned to
them. When Intellivoice vacates the Building, Landlord shall assign to Tenant
two (2) of the reserved parking spaces currently assigned to Intellivoice.
Accordingly, the Lease is hereby amended to reflect that Tenant shall now have
the right to nine (9) reserved parking spaces instead of ten (10).

8. Upon the expiration of the lease for Intellivoice or upon Intellivoice
vacating its suite should this occur first, Landlord shall allow Tenant the
right to erect an illuminated sign on the exterior of the building in the
location of the current "Intellivoice" sign under the terms and conditions
previously outlined in Paragraph 33 of the Lease and to the extent that Tenant
shall lease the Intellivoice space, no other sign will be erected on the east
side of the Building.

9. As additional reimbursement to Landlord, Tenant shall reimburse
Landlord monthly for electricity at $0.50 per square foot per year. Landlord
will not bill Tenant for

<PAGE> 3

any extraordinary electrical energy provided under Paragraph 36.b of the Lease.
If Landlord needs to add additional power, panels, and circuitry to the
building, including additional risers and other equipment as a result of the
Tenant's electrical usage then Tenant shall bear the entire cost involving
extraordinary electrical demands.

10. All other terms and conditions of the Lease are hereby ratified and
confirmed and remain in full force and effect.

IN WITNESS WHEREOF, this Eighth Amendment to Lease has been executed by
the parties hereto as of the day and year first above written.

WITNESSES: "LANDLORD"
ORCHARD RIDGE OFFICE PARK LIMITED
PARTNERSHIP, a Michigan corporation

By:
-----------------------------------
- -------------------
Its:
----------------------------------

WITNESSES: "TENANT"
COMPLETE BUSINESS SOLUTIONS, INC., a
Michigan corporation

By:
-----------------------------------
- -------------------
Its:
----------------------------------

<PAGE> 4

EXHIBIT A
FLOOR PLAN

Suite 305

<PAGE> 5

EXHIBIT A
FLOOR PLAN

Suite 308

<PAGE> 6

EXHIBIT B
SCHEDULE OF RENTS TO EIGHTH AMENDMENT TO LEASE

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
PERIOD PRIOR SUITE 305 & 308 TOTAL
COVERED MONTHLY RENT MONTHLY RENT MONTHLY RENT
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
06/01/1997 thru 05/31/1998 52,821.51 9,647.25 62,468.76
06/01/1998 thru 05/31/1999 63,551.83 10,129.61 73,681.44
06/01/1999 thru 05/31/2000 66,542.84 10,637.36 77,180.20
06/01/2000 thru 05/31/2001 69,173.41 11,170.50 80,343.91
06/01/2001 thru 05/31/2002 71,803.96 11,729.03 83,532.99
06/01/2002 thru 05/31/2003 74,434.53 12,318.02 86,752.55
06/01/2003 thru 06/15/2003 37,266.30 6,446.20 43,732.50
</TABLE>

<PAGE> 7
NINTH AMENDMENT TO LEASE

WITNESSETH

WHEREAS, Landlord and Tenant entered into a certain Lease and Riders to
Lease dated October 22, 1992 for Suite 250 and First, Second, Third, Fourth,
Fifth, Sixth, Seventh and Eighth Amendments to said Lease for Suites 110, 115,
120, 125, 130, 140, 195, 305 and 308 (collectively "Leased Premises") of the
office building located at 32605 West Twelve Mile Road, Farmington Hills,
Michigan.

WHEREAS, Landlord and Tenant desire to amend the Lease to include the
rental of additional spaces located on the first floor of the west-wing more
particularly described as Suites 100.

1. This Ninth Amendment to Lease is contingent upon the current tenant of
Suite 100, Bridgewall Construction Company, Inc., moving out on midnight June
29, 1997 or before and making Suite 100 available to Tenant to lease from
Landlord. Upon such occurrence, Tenant will immediately take possession of
Suite 100 on June 30, 1997 or before and sign an Estoppel Letter for Suite 100.
This Ninth Amendment will be null and void in the event Bridgewall
Construction Company, Inc. does not move out by midnight June 29, 1997 and
neither party shall have any obligations to the other as a result of
Bridgewall's failure to vacate the premises.

2. Paragraph 1 of the Lease is amended to reflect that at such time as
Landlord shall deliver possession of Suite 100, the Leased Premises shall
thereupon be composed of Suites 110, 115, 120, 125, 130, 140, 195, 250, 305,
308 and 100. It is acknowledged and agreed between the parties that at such
time as Suites 100, consisting of 1,850 square feet shall be delivered to
Tenant, the Leased Premises shall consist of 50,032 square feet constituting
42.4% of the Building.

2. Paragraph 2 of the Lease is amended to provide for a Lease Term for
Suite 100 to commence on June 30, 1997 or such earlier date as Landlord shall
deliver

<PAGE> 8

Suite 100 to Tenant. The lease term for the entire Leased Premises shall end
on June 15, 2003. Rent for any partial month shall be prorated ratably.

3. Paragraph 3 of the Lease is amended to reflect that Tenant shall pay
Landlord an aggregate Rent over the entire Term of the Lease inclusive of this
Ninth Amendment to Lease in monthly installments specified on the Schedule of
Rents attached hereto as Exhibit B, which Schedule of Rent reflects inclusion
of Suites 100 in the amounts specified in Exhibit B.

4. Beginning on the earlier of June 30, 1997 or before, the Schedule of
Rents is and shall be as set forth on the attached Schedule of Rents to Ninth
Amendment to Lease. In the event Suite 100 shall be delivered to Tenant prior
to June 30, 1997, Tenant shall either pay landlord the amount of $150 for each
day prior to June 30, 1997.

5. Exhibit A of the Lease is amended to include the attached Floor Plans
for Suite 100 for which Landlord will accept the suite in its "as is"
condition.

6. Tenant acknowledge that as of this date Landlord has fulfilled all
obligations under the Lease and there is no circumstances which with or without
the providing of notice would constitute a default by Landlord hereunder.

7. All other terms and conditions of the Lease are hereby ratified and
confirmed and remain in full force and effect.

IN WITNESS WHEREOF, this Ninth Amendment to Lease has been executed by the
parties hereto as of the day and year first above written.

WITNESSES: "LANDLORD"
ORCHARD RIDGE OFFICE PARK LIMITED
PARTNERSHIP, a Michigan corporation

By:
----------------------------------
- -----------------
Its:
---------------------------------

WITNESSES: "TENANT"
COMPLETE BUSINESS SOLUTIONS, INC., a
Michigan corporation

By:
----------------------------------
- -----------------
Its:
---------------------------------

<PAGE> 9

EXHIBIT A
FLOOR PLAN

Suite 100

<PAGE> 10

EXHIBIT B
SCHEDULE OF RENTS TO NINTH AMENDMENT TO LEASE

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
PERIOD PRIOR SUITE 305 & 308 TOTAL
COVERED MONTHLY RENT MONTHLY RENT MONTHLY RENT
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
06/29/1997 thru 06/30/1997 150.00 150.00
07/01/1997 thru 05/31/1998 62,468.76 4,500.00 66,968.76
06/01/1998 thru 05/31/1999 73,681.44 4,725.00 78,406.44
06/01/1999 thru 05/31/2000 77,180.20 4,961.25 82,141.44
06/01/2000 thru 05/31/2001 80,343.91 5,209.31 85,553.22
06/01/2001 thru 05/31/2002 83,532.99 5,469.78 89,002.77
06/01/2002 thru 05/31/2003 86,752.55 5,743.27 92,495.82
06/01/2003 thru 06/15/2003 43,732.50 3,015.22 46,747.72
</TABLE>

<PAGE> 1
EXHIBIT 10.13

CREDIT AUTHORIZATION AGREEMENT

NBD Bank (the "Bank"), 611 Woodward Avenue, Detroit, Michigan 48226-3947,
has approved the credit authorization listed below to Complete Business
Solutions, Inc. (the "Borrower"), a Michigan corporation, 32605 West Twelve
Mile Road, Suite 250, Farmington Hills, Michigan 48334, subject to the terms
and conditions set forth in this agreement.

1.0 CREDIT FACILITIES.

1.1 CREDIT AUTHORIZATION. The Bank has approved an uncommitted Credit
Authorization to the Borrower in the principal sum not to exceed $21,000,000.00
in the aggregate at any one time outstanding (the "Credit Authorization"),
subject to the terms and conditions of this agreement and the Bank's continuing
satisfaction with the Borrower's financial status. The Credit Authorization
shall include the issuance of commercial and standby letters of credit not
exceeding $3,000,000 in the aggregate at any one time outstanding (the "Letters
of Credit"). Each commercial letter of Credit shall expire not later than six
(6) months from its date of issue. Each standby Letter of Credit shall expire
not later than one (1) year from its date of issue. Each Letter of Credit
shall be in form acceptable to the Bank. Standby Letters of Credit shall bear
a fee of 1% per year of the face amount of each standby Letter of Credit.
Commercial Letters of Credit shall bear a fee in accordance with the Bank's
standard pricing schedule for commercial letters of credit on the date any
commercial Letter of Credit is issued. Credit under the Credit Authorization
shall be: (A) in the form of disbursements of loan proceeds (the "Advances")
that (a) will be evidenced by credits to the Borrower's account and (b) shall
bear interest and be repayable as set forth in (i) Sections 1.2, 1.4 and 1.6
below and (ii) a Master Demand Promissory Note executed concurrently (referred
to in this agreement as the "Note"); or (b) by the issuance of a commercial or
standby Letter of Credit upon the completion of an application acceptable to
the bank, with the draws (and any interest on any draws) being payable as
provided in (i) sections 1.3, 1.4 and 1.6 below and (ii) the application
executed in connection with such Letter of Credit. The making of Advances and
the issuance of Letters of Credit under the Credit Authorization are solely at
the Bank's discretion. Any Advance, or any issuance of a Letter of Credit, on
one or more occasions shall not commit the Bank to make any subsequent Advances
or to issue any subsequent Letters of Credit. The proceeds of the Credit
Authorization shall be used for the working capital purposes, general corporate
purposes and special business purposes, including, without limitation, the
carrying of unbilled receivables in preparation for large contracts, the
purchase of proprietary software and approved acquisitions. The Credit
Authorization shall expire on April 30, 1998, unless earlier withdrawn.

1.2 INTEREST ON ADVANCES.

A. BUSINESS DAY. "Business Day" means (a) a day other, than a
Saturday or Sunday, on which the Bank is open for the transaction of
substantially all of its banking functions; and (b) with respect to any Libor
Rate Loans, also a day on which dealings in U.S. Dollar deposits are carried on
in the London interbank market.

<PAGE> 2

B. FLOATING RATE. "Floating Rate" means, for the Floating Rate Loan,
the per annum rate of interest equal to the per annum rate announced by
the Bank as its "prime" rate in effect from time to time, which rate may not
necessarily be the lowest rate charged by the Bank to any of its customers,
such rate to change simultaneously with any change in the Bank's prime rate.

C. FLOATING RATE LOAN. "Floating Rate Loan" means the portion of the
outstanding principal balance of all Advances of the Credit Authorization that
bear interest at the Floating Rate.

D. LIBOR BASE RATE. "Libor Base Rate" means, with respect to any Libor
Rate Loan for any Libor Interest Period, the per annum rate of interest
(rounded upwards, if necessary, to the nearest 1/16 of 1%) at which deposits in
U.S. Dollars, for such Libor Interest Period and in an amount equal to the
amount of such Libor Rate Loan, are offered to the Bank by other prime banks in
the London interbank market at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Libor Interest Period. The Bank's
determination of the Libor Base Rate shall be conclusive absent manifest error.

E. LIBOR INTEREST PERIOD. "Libor Interest Period" means, with
respect to any Libor Rate Loan, a period of one (1) month, three (3)
months or six (6) months, as selected by the Borrower under subsection I below.
Each Libor Interest Period shall commence on the date that the Libor Rate Loan
is converted from the Floating Rate Loan or renewed, as the case may be, and
shall expire on then numerically corresponding day of the first, third or
sixth, as the case may be, calendar month thereafter; provided that if a Libor
Interest Period would end on a day that is not a Business Day, such Libor
Interest Period shall be extended to the next succeeding Business Day, unless
such next succeeding Business Day is in a different calendar month, in which
case, such Libor Interest Period shall end on the immediately preceding
Business Day.

F. LIBOR RATE. "Libor Rate" means, for any Libor Rate Loan, for any
Libor Interest Period, a rate per annum equal to the sum of: (a) the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Bank to be the quotient obtained by dividing (i) the Libor
Base Rate for such Libor Rate Loan for such Libor Rate Interest Period by (ii)
one minus the Reserve Requirement for such Libor Rate Loan for such Libor
Interest Period; plus (b) one and half percent (1 1/2%) per annum.

G. LIBOR RATE LOAN. "Libor Rate Loan" means the portion of the
outstanding principal balance of all Advances of the Credit Authorization that
bear interest at the Libor Rate for a particular Libor Interest Period.

H. RESERVE REQUIREMENTS. "Reserve Requirement" means, for any Libor
Interest Period for any Libor Rate Loan, the average maximum rate at which
reserves (including any marginal, supplemental or emergency reserves) are
required to be maintained during such Libor Interest Period under Regulation D
by member banks of the Federal Reserve System in Detroit Michigan with deposits
exceeding $1,000,000,000 against "Eurocurrency liabilities" (as such term is
used in Regulation D). Without limiting the effect of the foregoing, the
Reserve

<PAGE> 3

Requirement shall reflect any other reserves required to be maintained by such
member banks against: (a) any category of liabilities which includes deposits
by reference to which the Libor Base Rate is determined; or (b) any category of
extensions of credit or other assets which include Libor Rate Loans.

I. INTEREST RATES APPLICABLE TO ADVANCES; INTEREST RATE ELECTIONS. All
Advances of the Credit Authorization shall bear interest at, and shall be a
part of, the Floating Rate Loan until they are converted into a Libor Rate Loan
pursuant to the terms of this subsection I. Without limitation of the
foregoing, unless the Borrower shall have complied with all of the requirements
of this subsection I with respect to any particular Advance by 11:00 a.m.
(Detroit time) on the date that is at least three (3) Business Days before the
date of such Advance, then such Advance shall be a part of the Floating Rate
Loan. The Borrower may: (a) convert all or a portion of the outstanding
principal balance of the Floating Rate Loan into Libor Rate Loan(s); and (b)
renew any expiring Libor Rate Loan(s); in each case, subject to the conditions
and limitations set forth in this section 1.2. In order to convert a portion
of the Floating Rate Loan (or to renew an expiring Libor Rate Loan) the
Borrower must give written notice of such conversion or renewal (a "Libor
Notice") to the Bank at least three (3) Business Days prior to (i) the date
that the requested Libor Interest Period is to commence, for a conversion, or
(ii) the last day of the expiring Libor Interest Period, for a renewal. Each
Libor Notice must specify: (I) the amount of the requested Libor Rate Loan;
(II) the requested Libor Interest Period; and (III) the date that the requested
Libor Interest Period is to commence. Each Libor Rate Loan must be in an
amount equal to at least $1,000,000 and in integral multiples of $1,000,000 in
excess thereof. At no time may any Libor Notice specify a Libor Interest
Period that would end after April 30, 1998. If the Borrower has not delivered
a Libor Notice (as defined below) for the renewal of a particular Libor Rate
Loan to the Bank on or before 11:00 a.m. (Detroit time) on a date that is at
least three (3) Business Days prior to the last day of the Libor Interest
Period for an expiring Libor Rate Loan, then the Libor Rate Loan for which such
a Libor Notice was not given shall be automatically converted to be a part of
the Floating Rate Loan on the last day of such Libor Interest Period.

J. ADDITIONAL COSTS. If any applicable domestic or foreign law,
treaty, rule or regulation now or later in effect (whether or not it
now applies to the Bank) or the interpretation or administration thereof by a
governmental authority charged with such interpretation or administration, or
compliance by the Bank with any guideline, request or directive of such an
authority (whether or not having the force of law), shall: (a) affect the
basis of taxation of payments to the Bank of any amounts payable by the
Borrower under this agreement (other than taxes imposed on the overall net
income by the Bank by the jurisdiction or by any political office); or (b)
impose, modify or deem applicable any reserve, special deposit, deposit
insurance or assessment or similar requirement against assets of, deposits with
or for the account of, or credit extended by the Bank; or (c) impose any other
condition with respect to this agreement or the Notes; and, in each of cases
(a) through (c) above, the result of such occurrence is to increase the cost to
the Ban of maintaining any Libor rate Loan or to reduce the amount of any sum
receivable by the Bank on such a Libor Rate Loan (such increases in costs
and/or reductions in sums receivable being collectively called the "Additional
Costs"), then the Borrower shall pay to the Bank, from time to time, upon
request by the Bank, additional amounts sufficient

<PAGE> 4

to compensate the Bank for the Additional Costs. A statement as to
the amount of any Additional costs, prepared in good faith and in reasonable
detail by the Bank and submitted by the Bank to the Borrower, shall be
conclusive and binding for all purposes, absent manifest error in computation.

K. CAPITAL ADEQUACY. If any applicable domestic or foreign law,
treaty, rule or regulation now or later in effect (whether or not it
now applies to the Bank), or any interpretation or administration thereof by
any governmental authority charged with its interpretation or administration,
or compliance by the bank (or any corporation controlling the bank) with any
guideline, request or directive of such an authority (whether or not having the
force of law), including any risk-based capital guidelines, affects or would
affect the amount of capital required or expected to be maintained by the Bank
(or any corporation controlling the bank) and the bank determines that the
amount of such capital is increased by or based upon the existence of the
Bank's obligations under this agreement and if the increase has the effect of
reducing the rate of return on the bank's (or its controlling corporation's)
capital, as a consequence of the obligations under this agreement, to a level
below that which the Bank (or its controlling corporation) could have achieved
but for such circumstances (taking into consideration its policies with respect
to capital adequacy) by an amount deemed by the Bank to be material, then the
Borrower shall pay to the Bank, from time to time, upon request by the Bank,
additional amounts sufficient to compensate the Bank (or such controlling
corporation) for any increase in the amount of capital and/or reduced rate of
return which the Bank reasonably determines to be allocable to the existence of
the Bank's obligations under this Agreement. A statement as to the amount of
such compensation, prepared in good faith and in reasonable detail by the bank
and submitted by the Bank to the Borrower, shall be conclusive in binding for
all purposes, absent manifest error in computation.

L. ILLEGALITY; UNAVAILABILITY. Notwithstanding any other provision in
this agreement or the other Loan Documents, if: (a) the Bank determines (which
determination shall be conclusive) that the quotations of interest rates for
U.S. Dollar deposits referred to in the definition of "Libor Base Rate" are not
being provided in the relevant amounts or for the relevant Libor Interest
Period; or (b) it becomes unlawful for the Bank to (i) honor its obligation to
renew Libor rate Loans hereunder, (ii) to convert portions of the Floating Rate
Loan into Libor Rate Loans or (iii) maintain Libor rate Loans hereunder; then,
in any such case, (I) the Bank shall promptly notify the Borrower of such
facts, (II) the Bank's obligation to renew Libor Rate Loans, and to convert
portions of the Floating Rate Loan into Libor Rate Loans, shall be suspended
until such time as the Bank may again maintain Libor Rate Loans and (III) all
then existing Libor Rate Loans shall be converted to the Floating Rate Loan
upon the expiration of their then current Libor Interest Period.

M. USURY. Notwithstanding any provisions of this agreement or the
other Loan Documents, in no event shall the amount of interest paid or
agreed to be paid by the Borrower exceed an amount computed at the highest rate
of interest permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this agreement or the other Loan
documents at the time performance of such provision shall be due, shall involve
exceeding the interest rate limitation validly prescribed by law which a court
of competent

<PAGE> 5

jurisdiction may deem applicable to this agreement or other Loan Documents,
then, ipsofacto, the obligations to be fulfilled shall be reduced to an amount
computed at the highest rate of interest permissible under applicable law, and
if for any reason whatsoever, the Bank shall ever receive as interest an amount
which would be deemed unlawful under such applicable law, such interest shall
be automatically applied to the payment of principal of the Credit
Authorization outstanding under this agreement (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the
Borrower if such principal has been paid in full.

N. BREAKAGE COSTS. The Borrower shall pay to the Bank, upon the
request of the Bank, such amount or amounts as shall be sufficient (in
the reasonable opinion of the Bank) to compensate the Bank for any loss, cost
or expense which the Bank determines is attributable to (a) any payment,
prepayment or conversion of a Libor Rate Loan made by the Bank on a date other
than the last day of the Libor Interest Period for such Libor rate Loan
(whether by reason of acceleration, demand, mandatory prepayment or otherwise);
(b) any failure by the borrower to convert a portion of the Floating Rate Loan
into a Libor Rate Loan on the date specified therefor in the applicable Libor
Notice; or (c) any failure by the Borrower to renew an expiring Libor Rate Loan
on the last day of the expiring Libor Interest Period, if a Libor Notice for
such a renewal has been delivered to the Bank. A determination of the Bank as
to the amounts payable pursuant to this subsection N shall be conclusive absent
manifest error. The compensation payable under this subsection N is called the
"Breakage Costs." Breakage Costs shall be payable on the date of the payment,
prepayment, conversion, failure to convert or failure to renew that give rise
to the Breakage Costs.

O. INTEREST ACCRUAL. Interest shall accrue on the outstanding and
unpaid principal amount of each Advance at the applicable interest rate
from time to time, from the date such Advances are made to but excluding the
date such Advances are repaid, and such interest shall be calculated on the
basis of the actual number of days elapsed in a 360 day year.

P. INTEREST PAYMENT DATES. Accrued interest on each Libor Rate Loan
with a Libor Interest Period of one or three months shall be payable on
(a) the last day of the applicable Libor Interest Period or (b) at any other
time, upon demand, if the repayment of such Libor Rate Loan is demanded by the
Bank on any day other than the last day of such Libor Interest Period. Accrued
interest on each Libor Rate Loan with a Libor Interest Period of six months
shall be payable: (i) on both (I) the date that is three months after the
first day of the applicable Libor Interest Period and (II) on the last day of
the applicable Libor Interest Period; or (ii) at any other time, on demand, if
the repayment of such Libor Rate Loan is demanded by the Bank on any date other
than the payment dates specified above. All accrued but unpaid interest on the
Floating Rate Loan from time to time shall be paid on the fifteenth (15th) day
of each month or, at any other time, upon demand, if the repayment of all or
any part of the Floating Rate Loan is demanded by the Bank on any day other
than the fifteenth (15) day of any month.

Q. DEFAULT RATE. After the maturity of any Advance under the Credit
Authorization whether by demand, acceleration, expiration of time or otherwise:
(a) all existing Libor Rate Loans will be converted to be a part of the
Floating Rate Loan upon the expiration of the current Libor Interest Period
with respect thereto; (b) the Floating Rate Loan will bear

<PAGE> 6

interest at the Floating Rate, plus three percent (3%); and (c) all then
existing Libor Rate Loans shall bear interest at the applicable Libor Rate,
plus three percent (3%) (i.e. the reserve adjusted Libor Base Rate plus 4
1/2%), until they are converted as provided in clause (a) above, after which
they will bear interest at the Floating Rate, plus three percent (3%) (the
rates of interest described in clauses (b) and (c) of this subsection Q being
called the "Default Rate").

1.3. INTEREST ON LETTER OF CREDIT DRAWS. If there is a draw under any
Letter of credit, such draw shall bear interest at the Floating Rate until it
is repaid in full. Such interest payments shall also be subject to the terms
of subsections 1.2 B, C, M, O, P and Q above.

1.4 DEMAND NATURE; MATURITY. All Advances of the Credit Authorization and
the repayment of any draws under any Letter of Credit, shall be due and
payable, at any time, upon demand by the Bank and, if not sooner paid in full,
shall be due and payable, in full, on the Expiration Date.

1.5 LOAN REQUEST. Upon a request given by telephone, fax or letter, by a
person designated to the Bank as the Borrower's duly authorized representative
for an Advance under the Credit Authorization, the Bank may advance and credit
to the Borrower's account at the Bank, or transfer to another bank designated
by the Borrower, such sums of money as may mutually be agreed upon at the time
of the request. Notwithstanding the foregoing, any request for an Advance
under the Credit Authorization that is to bear interest at a Libor Rate must be
received by the Bank no later than 11:00 a.m. (Detroit time) on the third
Business Day preceding the proposed funding date and must satisfy all of the
other requirements of section 1.2 above. The Borrower and the Bank each shall,
upon the other's request, forward to the other a written confirmation of any
Advance under the Credit Authorization, including a confirmation of the date,
Libor Interest Period (if any), interest rate and amount of the Advance. The
Borrower shall provide the Bank with a list of the persons designated by the
Borrower as its duly authorized representatives. The Bank may act upon the
written or oral instructions of any person designated by the Borrower as its
authorized representative.

1.6 PAYMENTS DUE ON DAY OTHER THAN BUSINESS DAY. Whenever any payment
under this Agreement becomes due and payable on a day that is not a Business
Day, and if no demand has occurred and no event of acceleration has occurred
and is continuing, the date for such payment shall be extended to the next
succeeding Business Day.

2.0 CONDITIONS PRECEDENT.

2.1 CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT. Before the first
extension of credit under this agreement, whether by the disbursement of an
Advance, the issuance of a Letter of Credit or otherwise, the Borrower shall
deliver to the Bank, in form and substance satisfactory to the Bank:

A. LOAN DOCUMENTS. The Note, the letter of credit applications
required by section 1.1 above, the security agreements and financing
statements required by section 4.1 below and any other loan documents which the
Bank may reasonably require to give effect to the

<PAGE> 7

transactions contemplated by this agreement (all of the foregoing, and all
amendments, modifications, substitutions and replacements for the foregoing
from time to time, are collectively called the "Loan Documents");

B. EVIDENCE OF DUE ORGANIZATION AND GOOD STANDING. Evidence
satisfactory to the Bank of the due organization and good standing of
the Borrower and every other business entity that is a party to this agreement
or any other Loan Document; and

C. EVIDENCE OF AUTHORITY TO ENTER INTO LOAN DOCUMENTS. Evidence
satisfactory to the Bank that (i) each party to this agreement or any other
Loan document is authorized to enter into the transactions contemplated by this
agreement and the other Loan Documents, and (ii) the person signing on behalf
of each party is authorized to do so.

2.2 CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT. Before each
extension of credit under this agreement, whether by the disbursement of an
Advance, the issuance of a Letter of Credit or otherwise, the following
conditions shall have been satisfied:

A. REPRESENTATIONS. The representations contained in section 7.0 below
shall be true on and as of the date of the extension of credit;

B. NO EVENT OF ACCELERATION. No event of acceleration shall have
occurred and be continuing or would result from the extension of
credit.

C. CONTINUED SATISFACTION WITH FINANCIAL CONDITION. The Bank shall
have remained satisfied with the Borrower's managerial and financial status;

D. CONTINUING SATISFACTION OF CONDITIONS PRECEDENT. The conditions set
forth in section 2.1 above shall continue to be fulfilled to the satisfaction
of the Bank; and

E. ADDITIONAL APPROVALS, OPINIONS AND DOCUMENTS. The Bank shall have
received such other approvals, opinions and documents as it may reasonably
request.

3.0 FEES AND EXPENSES.

3.1 LETTERS OF CREDIT FEES. The Borrower shall pay the fees set forth in
section 1.1 above with respect to each Letter of Credit at the time of the
issuance of each Letter of Credit.

3.2 OUT-OF-POCKET EXPENSES. The Borrower shall, upon demand, reimburse
the Bank for its out-of-pocket expenses and reasonable attorney's fees
(including the fees of "in-house" counsel) allocated to the Credit Facilities.

4.0 SECURITY.

4.1 Payment of the borrowings under or in connection with the Credit
Authorization, including, without limitation, all Advances, all draws under any
Letters of Credit and all other

<PAGE> 8

fees, interest, charges and sums payable under or in connection with this
agreement or any of the other Loan Documents (collectively, the "Obligations"),
shall be secured by a first security interest covering the following property
and all its additions, substitutions, increments, proceeds and products,
whether now owned or later acquired (collectively, the "Collateral"):

A. ACCOUNTS RECEIVABLE. All of the Borrower's accounts, chattel paper,
general intangibles, instruments, and documents (as those terms are defined in
the Michigan Uniform Commercial Code), rights to refunds of taxes paid at any
time to any governmental entity and any letters of credit and drafts under them
given in support of the foregoing, wherever located. The Borrower shall
deliver to the Bank executed security agreements and financing statements in
form and substance satisfactory to the Bank.

B. INVENTORY. All of the Borrower's inventory, wherever located. The
Borrower shall deliver to the Bank executed security agreements and financing
statements in form and substance satisfactory to the Bank.

C. EQUIPMENT. All of the Borrower's equipment, wherever located. The
Borrower shall deliver to the Bank executed security agreements and financing
statements in form and substance satisfactory to the Bank.

The Bank and the Borrower acknowledge that: (a) the foregoing security
interests have already been granted to the Bank pursuant to (i) Continuing
Security Agreements from the Borrower to the Bank, dated May 13, 1988, March
23, 1992 and September 20, 1994 (the "Security Agreements") and (ii) Financing
Statements in favor of the Bank that have been filed with the Secretary of
State of Michigan as document nos. C074583, C706862, C585024 and C891591 (the
"Financing Statements"); (b) the Security Agreements and Financing Statements
secure all of the Borrower's liabilities to the Bank, including without
limitation, the Obligations; and (c) no additional security agreements or
financing statements are required as of the date of this agreement.

4.2 FORBEARANCE. No forbearance or extension of time granted any
subsequent owner of the Collateral shall release the Borrower from liability.

4.3 ADDITIONAL COLLATERAL/SETOFF. To further secure payment of the
Obligations and all of the Borrower's other liabilities to the Bank, the
Borrower grants to the bank a continuing security interest in: (A) all
securities and other property of the Borrower in the custody, possession or
control of the Bank (other than property held by the Bank solely in a fiduciary
capacity); and (B) all balances of deposit accounts of the Borrower with the
bank. The Bank shall have the right at any time to apply its own debt or
liability to the Borrower, or to any other party liable for payment of the
Obligations, in whole or in partial payment of such Obligations or any other
present or future liabilities, without any requirement of mutual maturity.

4.4. CROSS LIEN. Any of the Borrower's other property in which the Bank
has a security interest to secure payment of any other debt, whether absolute,
contingent, direct or

<PAGE> 9

indirect, including the Borrower's guaranties of the debts of others, shall
also secure payment of the Obligations and be part of the Collateral.

5.0 AFFIRMATIVE COVENANTS. So long as any of the Obligations remain
outstanding, the Borrower, and each of its subsidiaries, if any, shall:

5.1 INSURANCE. Maintain insurance with financially sound and reputable
insurers covering its properties and business against those casualties and
contingencies and in the types and amounts as shall be in accordance with sound
business and industry practices.

5.2 EXISTENCE. Maintain its existence and business operations as
presently in effect in accordance with all applicable laws and regulations, pay
its debts and obligations when due under normal terms and pay on or before
their due date, all taxes, assessments, fees and other governmental monetary
obligations, except as they may be contested in good faith if they have been
properly reflected on its books and, at the Bank's request, adequate funds or
security has been pledged to insure payment.

5.3 FINANCIAL RECORDS. Maintain proper books and records of account, in
accordance with generally accepted accounting principles where applicable, and
consistent with financial statements previously submitted to the Bank.

5.4 NOTICE. Give prompt notice to the Bank of the occurrence of (A) any
event of acceleration and (B) any other development, financial or otherwise,
which would affect the Borrower's business, properties or affairs in a
materially adverse manner.

5.5 FINANCIAL REPORTS. Furnish to the Bank whatever information, books,
and records the Bank may reasonably request, including at a minimum (If the
Borrower has subsidiaries, all financial statements required will be provided
on a consolidated and on a separate basis):

A. within sixty (60) days after each quarterly period, the 10Q
financial statements of the Borrower, certified as correct by one of
its authorized agents; and

B. within one hundred twenty (120) days after, and as of the end of,
each of its fiscal years, the 10K financial statements of the Borrower,
audited by an independent certified public accountant of recognized standing
acceptable to the Bank.

6.0 NEGATIVE COVENANTS

6.1 DEFINITIONS. As used in this agreement, the following terms shall
have the following respective meanings:

A. SUBORDINATED DEBT. "Subordinated Debt" means debt subordinated to
the Bank in manner and by agreement satisfactory to the Bank.

<PAGE> 10

B. TANGIBLE NET WORTH. "Tangible Net Worth" means total assets less
intangible assets and total liabilities, calculated in accordance with
generally accepted accounting principles, consistently applied. Intangible
assets include goodwill, patents, copyrights, mailing lists, catalogs,
trademarks, bond discount and underwriting expenses, organization expenses, and
all other intangibles.

C. NET INCOME. "Net Income" means the after tax net income of the
Borrower, calculated in accordance with generally accepted accounting
principles, consistently applied.

D. FUNDED DEBT. "Funded Debt" means the sum of (a) aggregate
outstanding principal balance of all interest bearing debt of the
Borrower and (b) the aggregate imputed principal amount of all capitalized
lease obligations of the Borrower, all calculated in accordance with generally
accepted accounting principles, consistently applied.

E. EBITDA. "EBITDA" means the earnings of the Borrower before
interest, taxes, depreciation and amortization, calculated in
accordance with generally accepted accounting principles, consistently applied.

F. CAPITALIZATION. "Capitalization" means the sum of (a) the
Tangible Net Worth of the Borrower, plus (b) the Funded Debt of the
Borrower.

6.2 GAAP STANDARDS. Unless otherwise noted, the financial requirements
set forth I n this section shall be computed in accordance with generally
accepted accounting principles applied on a basis consistent with financial
statements previously submitted by the Borrower to the Bank.

6.3 NEGATIVE COVENANTS. Without the written consent of the Bank, so long
as any Obligations remain outstanding, the Borrower shall not (where
appropriate, covenants apply on a consolidated basis):

A. DEBT. Incur, or permit to remain outstanding, debt for borrowed
money or installment obligations, except debt reflected in the latest
financial statement of the Borrower furnished to the Bank prior to execution of
this agreement and not to be paid with proceeds of Advances under the Credit
Authorization. For purposes of this covenant, the sale of any accounts
receivable shall be deemed the incurring of debt for borrowed money.

B. LIENS. Create or permit to exist any lien on any of its property,
real or personal, except existing liens known to the Bank, liens to the
Bank, liens incurred in the ordinary course of business securing current
nondelinquent liabilities for taxes, worker's compensation, unemployment
insurance, social security and pension liabilities and liens for taxes being
contested in good faith.

C. USE OF PROCEEDS. Use, or permit any proceeds of the Credit
Authorization to be used, directly or indirectly, for the purpose of
"purchasing or carrying any margin stock"

<PAGE> 11

within the meaning of Federal Reserve Board Regulation U. At the Bank's
request, the Borrower shall furnish to the Bank a completed Federal Reserve
Board Form U-1.

D. TANGIBLE NET WORTH COVENANT. Permit its Tangible Net worth to be
less than $30,000,000 at any time prior to March 31, 1997, with such
amount increasing quarterly, on the last day of each calendar quarter, by an
amount equal to fifty percent (50%) of the Net Income of the Borrower for the
immediately preceding calendar quarter.

E. DEBT TO EARNINGS RATIO. Permit, at any time, the ratio of the
Funded Debt of the Borrower to the EBITDA of the Borrower for the
immediately preceding four consecutive calendar quarters to be more than 3.00
to 1.00.

F. FUNDED DEBT TO CAPITALIZATION RATIO. Permit, at any time, the
ratio of its Funded Debt to Capitalization to exceed 40%.

7.0 REPRESENTATIONS TO BORROWER. Borrower represents that: (A) the
execution and delivery of this agreement, the Note and the other Loan
Documents, and the performance of the obligations they impose, do not violate
any law, conflict with any agreement by which the Borrower is bound or require
the consent or approval of any governmental authority or other third party; (B)
this agreement, the Note and other Loan Documents are valid and binding
agreements, enforceable in accordance with their terms; (C) all balance sheets,
profit and loss statements and other financial statements furnished to the Bank
are accurate and fairly reflect the financial condition of the organizations
and persons to which they apply on their effective dates, including contingent
liabilities of every type, which financial condition has not changed materially
and adversely since those dates; (d) it is duly organized, existing and in good
standing under the laws of the jurisdiction under which it was organized; and
(E) the execution and delivery of this agreement, the Note and the other Loan
Documents, and the performance of the obligations they impose, (a) are within
its powers, (b) have been duly authorized by all necessary action of its
governing body and (c) do not contravene the terms of its articles of
incorporation or organization, its bylaws or any partnership, operating or
other agreement governing its affairs.

8.0 ACCELERATION.

8.1 EVENTS OF ACCELERATION. If any of the following events occurs, the
Credit Authorization shall terminate and all of the Obligations shall be due
immediately, without notice, at the Bank's option, whether or not the Bank has
made demand.

A. The Borrower or any guarantor of any of the Obligations (a
"Guarantor") fails to pay when due any amount payable under or in
connection with the Obligations or under any agreement or instrument evidencing
debt to any creditor.

B. The Borrower or any Guarantor (a) fails to observe or perform any
other term of this agreement, the Note or the other Loan Documents, (b)
makes any materially incorrect or misleading representation, warranty, or
certificate to the Bank, (c) makes any materially incorrect or misleading
representation in any financial statement or other information delivered to

<PAGE> 12

the Bank or (d) defaults under the terms of any agreement or instrument
relating to any debt for borrowed money (other than the Obligations, but
including other obligations and liabilities owing from the Borrower to the
Bank), such that the creditor declares the debt due before its maturity.

C. There is a default under the terms of any Loan Document, or any
guaranty of the Obligations becomes unenforceable in whole or in part, or any
Guarantor fails to promptly perform under its guaranty;

D. A "reportable event" (as defined in the Employee Retirement Income
Security Act of 1974 as amended) occurs that would permit the Pension Benefit
Guaranty Corporation to terminate any employee benefit plan of the Borrower or
any affiliate of the Borrower;

E. The Borrower or any Guarantor becomes insolvent or unable to pay its
debts as they become due;

F. The Borrower or any Guarantor (a) makes an assignment for the
benefit of creditors, (b) consents to the appointment of a custodian,
receiver or trustee for it or for a substantial part of its assets or (c)
commences any proceeding under any bankruptcy, reorganization, liquidation or
similar laws of any jurisdiction.

G. A custodian, receiver or trustee is appointed for the Borrower or
any Guarantor or for a substantial part of its assets without its consent and is
not removed within 60 days after such appointment;

H. Proceedings are commenced against the Borrower or any Guarantor
under any bankruptcy, reorganization, liquidation, or similar laws of any
jurisdiction, and such proceedings remain undismissed for 60 days after
commencement, or the Borrower or Guarantor consents to the commencement of such
proceedings;

I. Any judgment is entered against the Borrower or any Guarantor, or
any attachment, levy or garnishment is issued against any property of the
Borrower or any Guarantor; in each case in an aggregate amount in
excess of $250,000

J. The Borrower or any Guarantor dies;

K. The Borrower or any Guarantor, without the Bank's written consent,
(a) is dissolved, (b) merges or consolidates with any third party, (c) leases,
sells or otherwise conveys a material part of its assets or business outside
the ordinary course of business, (d) leases, purchases, or otherwise acquires a
material part of the assets of any other corporation or business entity, except
in the ordinary course of business, or (e) agrees to do any of the foregoing
(notwithstanding the foregoing, any subsidiary may merge or consolidate with
any other subsidiary, or with the Borrower, so long as the Borrower is the
survivor);

<PAGE> 13

L. There is a substantial change in the existing or prospective
financial condition of the Borrower or any Guarantor which the Bank in
good faith determines to be materially adverse; or

M. The Bank in good faith shall deem itself insecure.

8.2 REMEDIES. If any of the Obligations is not paid at maturity, whether
by demand, acceleration or otherwise (or if any of the Obligations is not
performed when such performance is required), the bank shall have all of the
rights and remedies provided by any law or agreement. Any requirement of
reasonable notice shall be met if the Bank sends the notice to the Borrower at
least seven (7) days prior to the date of sale, disposition or other event
giving rise to the required notice. The Bank is authorized to cause all or any
part of the Collateral to be transferred to or registered in its name or in the
name of any other person, firm or corporation, with or without designation of
the capacity of such nominee. The Borrower shall be liable for any deficiency
remaining after disposition of any Collateral. The Borrower is liable to the
Bank for all reasonable costs and expenses of every kind incurred in the making
or collection of the Obligations and the Loan documents, including, without
limitation, reasonable attorney's fees and court costs (whether attributable to
the Bank's "in-house" or outside counsel). These costs and expenses shall
include, without limitation, any costs or expenses incurred by the Bank in any
bankruptcy, reorganization, insolvency or other similar proceeding.

9.0 MISCELLANEOUS.

9.1 Notice from one party to another relating to this agreement shall be
deemed effective if made in writing (including telecommunications) and
delivered to the recipient's address, telex number or fax number set forth
under its name below by any of the following means: (a) hand delivery; (b)
registered or certified mail, postage prepaid, with return receipt requested;
(c) first class or express mail, postage prepaid; (d) Federal Express, or like
overnight courier service; or (e) fax, telex or other wire transmission with
request for assurance of receipt in a manner typical with respect to
communication of that type. Notice made in accordance with this section shall
be deemed delivered upon receipt if delivered by hand or wire transmission, 3
business days after mailing if mailed by first class, registered or certified
mail, or one business day after mailing or deposit with an overnight courier
service if delivered by express mail or overnight courier.

9.2 No delay on the part of the Bank in the exercise of any right or
remedy shall operate as a waiver. No single or partial exercise by the Bank of
any right or remedy shall preclude any other future exercise of it or the
exercise of any other right or remedy. No waiver or indulgence by the Bank of
any default shall be effective unless in writing and signed by the Bank, nor
shall a waiver on one occasion be construed as a bar to or waiver of that right
on any future occasion.

9.3 This agreement, the Note and the other related Loan Documents embody
the entire agreement and understanding between the Borrower and the bank and
supersede all prior agreements and understandings relating to their subject
matter. If any one or more of the

<PAGE> 14

obligations of the Borrower under this agreement, the Note or the other Loan
Documents shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining obligations of the
Borrower shall not in any way be affected or impaired, and such validity,
illegality or unenforceability in one jurisdiction shall not affect the
validity, legality or enforceability of the obligations of the Borrower under
this agreement, the Note or the other Loan Documents in any other jurisdiction.

9.4 The Borrower, if more than one, shall be jointly and severally liable.

9.5. This agreement is delivered in the State of Michigan and governed by
Michigan law. This Agreement is binding on the Borrower and its successors,
and shall inure to the benefit of the Bank, its successors and assigns.

9.6 Section headings are for convenience of reference only and shall not
affect the interpretation of this agreement.

10.0 WAIVER OF JURY TRIAL. The Bank and the Borrower, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this agreement or any related
instrument or agreement or any of the transactions contemplated by this
agreement or any course of conduct, dealing, statements (whether oral or
written), or actions of either of them. Neither the Bank nor the Borrower
shall seek to consolidate, by counterclaim or otherwise, any action in which a
jury trial has been waived with any other action in which a jury trial cannot
be or has not been waived. These provision shall not be deemed to have been
modified in any respect or relinquished by either the Bank or the Borrower
except by a written instrument executed by both of them.

Executed by the parties on : ____________, 1997

"BANK" "BORROWER"

NBD BANK COMPLETE BUSINESS SYSTEMS, INC.

By:________________________ By:________________________
Name: Jean Davis Name: Rajendra Vattikuti
Its: Vice President Its: President

ADDRESS FOR NOTICES: ADDRESS FOR NOTICES:

28660 Northwestern Highway 32605 West Twelve Mile Road, Suite 250
Southfield, Michigan 48034 Farmington Hills, Michigan 48334
Fax/Telex No. 810-799-5826 Fax/Telex No. 810-488-2089

<PAGE> 15

MASTER DEMAND PRIMISSORY NOTE

$21,000,000.00 Detroit, Michigan

___________, 1997

For value received, the undersigned (the "Borrower") promises to pay, ON
DEMAND, to the order of NBD BANK (the "Bank"), at the Bank's principal office
in the State of Michigan, in lawful money of the United States of America and
in immediately available funds, the principal sum of TWENTY ONE MILLION AND
00/100 DOLLARS ($21,000,000.00) or such lesser amount as is indicated on the
Bank's records, together with interest computed on the balance from time to
time unpaid, on the basis of the actual number of days elapsed in a year of 360
days, at the rate (s) per annum determined from time to time pursuant to the
Credit Agreement (as defined below) and reflected on the Bank's records, which
interest shall be payable in accordance with the terms set forth in the Credit
Agreement, and to pay interest on overdue principal at the Default Rate
provided in the Credit Agreement.

In no event shall the interest rate exceed the maximum rate allowed by
law. Any interest which would for any reason be deemed unlawful under
applicable law shall be applied to principal.

Waiver: The Borrower and each endorser of this note and any other party
liable for the debt evidenced by this note severally: (a) waives demand,
presentment, notice of dishonor and protest of this note; and (b) consents to
(i) any extension or postponement of time of its payment without limit as to
number or period, (ii) any substitution, exchange or release of all or any part
of any collateral securing this note, (iii) the addition of any party and (iv)
the release, discharge, or suspension of any rights and remedies against any
person who may be liable for the payment of this note. No delay on the part of
the holder in the exercise of any right or remedy shall operate as a waiver.
No single or partial exercise by the holder of any right or remedy shall
preclude any future exercise of that right or remedy or the exercise of any
other right or remedy. No waiver or indulgence by the holder of any default
shall be effective unless it is in writing and signed by the holder, nor shall
a waiver on one occasion be construed as a bar to or waiver of any right on any
future occasion.

This note evidences the debt under a certain Credit Authorization
Agreement between the Bank and the Borrower, dated _________, 1997, as amended
from time to time (the "Credit Agreement"), all of the terms of which Credit
Agreement are incorporated by reference into this note. Reference should be
made to the Credit Agreement for additional terms and conditions, including,
without limitation, advance, security, interest rate, maturity, default, remedy
and acceleration provisions.

The Bank has authorized a discretionary credit facility to the Borrower
under the Credit Agreement in the principal amount not to exceed the face
amount of this note. Said facility is called the Credit Authorization and may
be made in form of Advances (as defined in the Credit
<PAGE> 16

Agreement) from time to time by the Bank to the Borrower at the Bank's sole
discretion. This note evidences the Borrower's obligation to repay
Advances under the Credit Authorization. The aggregate principal amount of the
debt evidenced by this note shall be the amount reflected from time to time in
the records of the Bank but shall not exceed the face amount of this note. The
Borrower acknowledges and agrees that no provision of this note, and no course
of dealing by the Bank, shall commit the Bank to make Advances to the Borrower
and that, notwithstanding any provision of this note or any other instrument or
document, all Advances evidenced by this note are due and payable on demand,
which may be made by the Bank at any time, whether or not any event of
acceleration then exists.

WAIVER OF JURY TRIAL. The Bank and the Borrower, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this note, or any related instrument or
agreement, or any of the transactions contemplated by this note, or any course
of conduct, dealing, statements (whether oral or written), or actions of either
of them. Neither the Bank nor the Borrower shall seek to consolidate, by
counterclaim or otherwise, any such action in which a jury trial has been
waived with any other action in which a jury trial cannot be or has not been
waived. These provisions shall not be deemed to have been modified in any
respect or relinquished by either the Bank or the Borrower except by a written
instrument executed by both of them.

ADDRESS: COMPLETE BUSINESS SOLUTIONS, INC.

32605 W. Twelve Mile Road By:______________________________
Suite 250 Name: Rajendra Vattikuti
Farmington Hills, Michigan 48226 Its: President
Fax No: 810-488-2089

<PAGE> 1
EXHIBIT 10.18

L E A S E

This indenture of lease made at Madras on the day of 17th June 1997 (One
thousand nine hundred and ninety seven) between the PRESIDENT OF INDIA through
the Development Commissioner, Madras Export Processing Zone, Ministry of
Commerce, presently Administrative Office Building, 45, National Highways,
Tambaram, MADRAS 600 045, hereinafter called "Lessor" (which expression shall
unless the context does not so admit include his successors in office and
assigns) on the one part and M/S. COMPLETE BUSINESS SOLUTIONS (INDIA) PRIVATE
LIMITED and represented by its General Manager-Administration Shri R.S. Iyengar
S/o. S. Raghavan, who has been authorised under special Power of Attorney and
resides at 20-A-2, Dwaraka Colony, Mylapore, Chennai 600 004, hereinafter
referred to as the "Lessee" (in which expression are included, unless such
inclusion is inconsistent with the context of the meaning thereof his/their
heirs, executors, administrators and assigns/its executors and assigns) of the
other part. WHEREAS by an Indenture of Lease made at Madras on the Seventeenth
day of June, 1997 between the Development Commissioner, Madras Export
Processing Zone, therein and hereinafter referred to as the Lessor of the one
part and the Lessee of the other part, the lessor in consideration of the
premises and of the rent therein referred to and of the covenants and
agreements on the part of the Lessee, the Lessor did demise up to the Lessee
all that place of Land known as Plot No. A/35 in the Madras Export Processing
Zone Area within the village limits of Kadapperi, Taluk Saidapet, District
Chengalpattu containing by admeasurement 1956.25 Sq. meter or thereabouts and
more particularly described
<PAGE> 2

in the First Schedule thereunder written for use as Madras Export Processing
Zone, Government of India.
WHEREAS the Government of India have constituted the Madras Export Processing
Zone, hereinafter called the MEPZ in the land acquired for the purpose with the
object of encouraging the export industries in India and for earning from the
MEPZ in the interest of the national economy by establishing industrial units
in the said zone and WHEREAS the Lessee have approached the lessor for demising
to it/him/them all the piece of land known as Plot No. A/35 in the land
acquired for the purpose within the village limits of Kadapperi of Taluk
Saidapet, District Cehngalpattu containing by admeasurement square meters OR
thereabouts and more particularly described in the second schedule hereunder
written in the bounded area of the said Export Processing Zone and forming part
of the land demised to the Lessor and more particularly described in the First
Schedule hereunder written to establish manufacturing/processing establishments
for the manufacture of export goods, at the rent and upon the terms and
conditions hereinafter contained and to grant to it/him/them all facilities and
a variety of concessions.
AND WHEREAS the Lessor has agreed to demise to the Lessee the said piece of
land known as Plot No. A/35 with effect from 1 April 1995 in the said land
within the village limits of Kadapperi of Taluk Saidapet, District Chengalpattu
containing admeasurement 1956.25 Square Meters or thereabout and more
particularly described in the schedule hereunder written, AND WHEREAS, it has
been agreed by and between the parties hereto the stamp duty and registration
charges shall be borne and paid by the Lessee.

2
<PAGE> 3

NOW THIS DEED WITNESSETH AS FOLLOWS:
1. In consideration of the premises and of various facilities and a variety of
concessions made available to the Lessee and the rent hereby reserved and of
the covenants and agreements on the part of the Lessee hereinafter contained,
the Lessor both hereby demise all the piece of land known as Plot No. A/35 in
MEPZ forming part of survey Nos. 164/I withi the village limits of Kadapperi of
Taluk Saidapet, District Chengalpattu contained by admeasurement 1956.25 square
meters or thereabouts and hereinafter referred to the said premises, and more
particularly described in the second schedule hereunder written TOGETHER with
the building and structures now or at any time standing and beting thereon
Excepting and Reserving unto the Lessor all mines and minerals in and under the
said land or any part thereof. To HOLD the said premises hereunder expressly
demised unto the Lessee for the term of 15 years computed from the date of
allotment, 1 April 1995 upto 31 March 2010, paying therefore, the Quarterly
Rental during the said term unto the Lessor through demand drafts of
Nationalised Bank or as may be otherwise required by the lessor the said
Quarterly Rent of Rs. 15,650/- (effective from 1-1-96, the prerevised quarterly
rent upto 31.12.95 being Rs.8803/-) in advance being the rent by the Lessor
without any deductions whatsoever. The lease rent shall be revisable next with
effect from 1-1-98 and every three years thereafter, subject to a maximum of
25% of the last lease rent payable in respect of the demised premises.
2. The lease with intent to bind all persons into whatsoever hands the
demised premises may come doth hereby covenant with the lessor as follows:

3
<PAGE> 4

(a) During the said term hereby created to pay unto the Lessor
the said rent and all other charges tha may be fixed from time to
time by the Development Commissioner at the times on days and in
manner herein before appointed for payment thereof clear all
deductions.
(b) To pay all existing and future taxes, rates, assessments and
outgoings of every description for the time being payable either by
landlord or tenant or by the occupier in respect of demised premises
and any thing for the time being thereon.
(c) To utilise fully the floor space index as specified by
relevant rules and regulations for the time being in force within a
period of one year from the date of commencement of the lease
provided always that in the event the lease for cause beyond the
control the lessee is are unable to utilise fully the floor space as
aforesaid the Development Commissioner, Madras Export Processing
Zone (hereinafter referred to as the "Development Commissioner")
shall at his discretion extend such period for a further period as
he considers necessary within which extended period the Lessee shall
complete the work so as to fully utilise the floor space subject
nevertheless that the Lessee was/were not prevented from any cause
beyond his/their control to utilise fully the floor space as
aforesaid within the extended period allowed by him as aforesaid,
the Lessee shall be liable to pay the lease rent at five times the
normal lease rent as provided herein in respect of the area
remaining unutilised.

4
<PAGE> 5

(d) Not to make any excavation upon any part of the said land
hereby demised nor remove any stone, sand gravel, caly or earth
there from except for the purpose of forming foundations of building
or for the purpose of executing any work pursuant to the term of
this lease.
(e) During the said term hereby agreed to manufacture products as
authorised by the Development Commissioner from time to time.
(f) Not to manufacture/process any article, thing, materials,
components and instruments which do not in any way relate to the
industry other than the authorised one for which permission was
granted.
(g) to submit from time to time to the Development Commissioner,
plans and the schemes of the particular industry to be established
together with such details as may be required.
(h) to commence production within three months from the date of
completion of the factory premises.
(i) To export the entire production (whether
manufactured/processed including seconds, wastes and scrap material
to foreign countries in accordance with the provisions of law and
with the provisions of letter of approval/license subject to such
concessions and facilities as may be given by the Government to the
Lessee in the matter of disposal of seconds, wastes and scrap
material the customs duty, routing of applications or import
licenses etc. and such other concessions as may be notified
hereafter from time to time.

5
<PAGE> 6

(j) To furnish a legal undertaking as may be prescribed for the
fulfilment of export obligations set out in their application for
setting up industries in the zone.
(k) to arrange forwarding/clearance of manufactured/processed
goods for export or import of raw materials spares and such other
materials as are required for manufacture/processing by the
Development Commissioner or agencies authorised by the Development
Commissioner.
(l) Not to allow any of the products manufactured/processed in
MEPZ produced by the Lessee to enter or pass into and/or be sold in
any market in India or anywhere in India provided always that the
Development Commissioner may permit the Lessee to sell and/or
dispose of the products to enter or pass into and/or be sold in any
market in India or anywhere in India.
(m) To sell or dispose of the products manufactured/processed by
the Lessee in the local markets in India or as may be directed by
the Development Commissioner in the event the Development
Commissioner considers that the said products are essential or
necessary for national defence or for countering natural disaster or
considered urgent and necessary for the national economy upon
payment as may be mutually agreed upon and that the Lessee shall not
be entitled to make any other claim for compensation for delivering
the products as aforesaid in any manner whatsoever.

6
<PAGE> 7

(n) To permit the Development Commissioner or any officer
surveyor, workmen or other persons employed by him from time to time
at any time and without any prior notice being given to enter into
and upon the demised premises and to inspect the general state of
the demised premises and also processing plant and machinery etc.
and the books of account and other documents and vouchers concerning
the products manufactured by the Lessee.
(o) Not to do or permit anything to be done or stored (except
those for production of products approved for manufacture in the
demised premises) which may be in nuisance, annoyance, dangerous or
disturbance to the owners, occupiers, or residents or other premises
in the vicinity.
(p) To use the demised premises only for the purpose of
manufacturing, processing or assembling products for export and
other purposes incident thereto the same and not to use the said
demised premises or any part thereof for any other purpose.
(q) to keep the demised premises insured against loss or damage
by fire on account of explosions, electrical apparatus and
appliances and hazardous goods in the sum of at least Rs. 25 lacs
(Rupees twenty five lacs only) and to pay the premium and sum of
money payable for taht purpose so as to keep such insurance policy
alive and subsisting and as soon as such payments are made, deliver
to the Lessor the receipts for the same and

7
<PAGE> 8

that in the event of the Lessee failing or neglecting to keep the
said premises so insured or to delivery any such receipt as
aforesaid, then and in every such case, it shall be lawful for the
Lessor to insure the said premises for the amount aforesaid and all
sums of money expended by the Lessor I or about such insurance with
interest thereon at the rate of twelve percent per annum computed
from the time the Lessor had paid such sums, shall be repaid by the
lessee to the Lessor forthwith on demand.
(r) At the expiration or sooner of the termination of the said
term quietly to deliver upto the Lessor the vacant possession of the
demised land after removing all erections buildings and structures
erected on the said land and such delivery should be given within a
period of two months after the expiration of sooner of the
termination of the said term provided always that in the event the
lessee fails to deliver vacant and peaceful possession of the land
after removing the structure, buildings etc., as aforesaid, the said
building, structures etc., shall belong to the Lessor and the lessee
shall not be entitled to any compensation therefore provided always
that in case Lessee desires to sell the building, structures etc. to
the Lessor and the lessor is willing and agreeable to take over the
said buildings, structures etc. the Lessor shall pay to the Lessee
such compensation as is mutually agreed to and the Lessee shall do
all acts

8
<PAGE> 9

and things as are necessary for handing over the possession of such
buildings, and structures, etc.
(s) Not to sublet, transfer, assign or change alineate his
interest in the premises or part thereof without the prior consent
in writing of the Lessor first hand and obtain and subject to such
terms and conditions as the Lessor may prescribe in granting the
possession to the lessee for the transfer of the said demised
premises or any part thereof as hereinbefore mentioned.
(t) to intimate before hand in writing the Lessor within a
fortnight of the changes made or effected in the corporate structure
or the constitution of the Lessee.
(u) To submit the statements of accounts and such other details
within such time as may be stipulated by the Lessor during the term
of these presents giving all the necessary particulars as may be
required by the lessor.
(v) to allow the persons and vehicle entering and leaving MEPZ to
be examined by the staff of the Lessor or any agency authorised by
the Development Commissioner for the purpose of checking that no
products or any materials manufactured in the demised premises are
removed in the manner not authorised by these presents.
(w) To erect the factory premises or any other structure of
building in accordance with the plans approved by the Lessor and the
rules, bye-laws and regulations of the local authorities concerned
prescribed by the law.

9
<PAGE> 10

(x) Not to make any structural alterations or changes of any
nature whatsoever to the factory premises or any additions
alterations or changes of any nature whatsoever to the building
erected on the demised premises without the previous permission of
the Lessor have been obtained in writing, and if permitted to carry
out the same in accordance with building bye-laws of the local
authority or any other statutory regulations.
(y) To permit construction, if necessary, of utilities such as
electric substation etc. in the demised premises and to allow laying
of underground cables through the demised premises as may be
directed by the Lessor.
(z) To observe and perform all rules and regulations prescribed
under the Labour Legislation such as Industrial Disputes Act,
workmen's Compensation Act, Payment of Wages Act, Minimum Wages Act
or any other statutes governing the relationship of the employers
including the Factories Act and Fatal Accidents Act.
(aa) If the said rent hereby reserved shall be in arrears for the
space of 30 days whether the same shall have been legally demanded
or not or if within a period of ONE year from the date of the
commencement of the lease the entire demised premises are not
utilised for the purpose for which the same has been demised or if
the Lessee ceases to manufacture products for a period of six
continuous months for whatsoever cause arising, including a strike,
lockout or any injunction from

10
<PAGE> 11

Court in any sort of litigation, if and whenever there shall be a
breach of any of the covenants and conditions here before set out or
referred to including breach of any of the conditions of meeting the
exort obligations already undertaken by the Lessee and/or as may be
notified from time to time by the Lessor or the Lessee becoming
insolvent or is would up or amalgamated or merged with other body
corporate or otherwise pursuant to the Court's orders or under the
provisions of law then in force or under any agreement entered into
by the Lessee, the Lessor may re-enter upon any part of the demised
premises in the name of the whole and thereupon the demise hereby
granted shall absolutely cease and determine and in that case,
PROVIDED ALWAYS that the lessor shall in addition to the right of
determination of this lease and to effect re-entry as mentioned
aforesaid be entitled to recover as and by way of compensation such
amount as may be considered by the Lessor as appropriately
recoverable from the Lessee in the event the Lessee were not given or
granted all those various concessions and variety of facilities.
(ab) If the said rent hereby reserved shall be in arrears for a
period of 30 days whether the same shall have been legally demanded
or not the Lessor may take steps to recover the arrears of rent as
arrears of land revenue or move to the appropriate court of law for
recovery.

11
<PAGE> 12

(ac) A penal interest shall be payable on rent in arrears at 12%.
Penal interest on default would start, if the rent is overdue by 30
days, irrespective of the periodicity.
(ad) The Lessor doth hereby covenant with the Lessee that the
Lessee paying the rent hereby reserved and performing in the
covenants hereinbefore on the lessee's part contained shall and may
peaceably enjoy the demised premises for the said term hereby
granted without any interruption or disturbance for from or by the
Lessor or any person or persons lawfully claiming by from or under
the Lessors.
(ae) All disputes and differences arising out of or in any way
touching or concerning these presents (except as to any matters the
decision of which left to the sole discretion of the said Lessor, as
especially provided for in these presents) shall be referred to the
arbitration of two arbitrators one each to be appointed by the
respective parties to these presents. The arbitrators so appointed
shall appoint an umpire in the manner provided in the Arbitration
Act, 1940. It will be no objection that the person appointed as
Arbitrator on behalf of the Lessor is or was an employee of the
Government, that he had to deal with the matters to which the lease
herein relates and/or that in the course of his duties as such
employee of the Government he had expressed a view on all or any of
the matters in dispute or difference. In the event of either or
both of the arbitrators dying, neglecting or refusing to act or
resigning or being unable to act for

12
<PAGE> 13

any reason, the substitutes(s) to be appointed by the concerned
parties shall be entitled to proceed with the reference from the
stage at which it was left by the previous Arbitrator/Arbitrators.
The cost of and in connection with the arbitration shall be in the
discretion of the Arbitrators who may make a suitable provisions for
the same in their award subject to the aforesaid, the provisions of
the Arbitration Act, 1940 and the rules there under and any statutory
modifications thereof for the time being in force shall apply to the
arbitration proceedings under this clause.
(af) If the Lessee shall have duly performed and observed the
covenants and conditions on the part of the Lessee hereinbefore
contained and shall at the end of the said terms hereby granted by
desirous of receiving a new lease of the demised premises and of
such desire shall give notice in writing to the Lessor before the
expiration of the term hereby granted, the Lessor shall and will at
the cost and expenses in every respect of the Lease granted to the
Lessee a new lease of the demised premises for a further term of 15
years on payment of Quarterly rent as may be determined by the
Lessor AND WITH covenants, provision and stipulations hereinbefore
contained except this provision for renewal and such new lease shall
contain in lieu of this clause a covenant that at the end of the
said renewed term of 15 years the Lessor shall at the like cost and
expense grant to the Lessee further renewals and that every such

13
<PAGE> 14

renewal shall be for such terms and subject to such covenants,
provisions and stipulations.
Subject as aforesaid, the Arbitration Act, 1940 shall apply to the arbitration
proceedings under this clause.
IN WITNESS WHEREOF Shri. M.B. Pranesh, I.A.S., Development Commissioner, Madras
Export Processing Zone (MEPZ), Government of India, Ministry of Commerce, on
behalf of President of India, set his/her hand and affixed the common seal of
office hereto o its behalf and the Lessee hath here unto set their hand/and the
common seal for the company the day and year first above written.

For COMPLETE BUSINESS SOLUTIONS (INDIA)
PRIVATE LIMITED

_______________________________________

14
<PAGE> 15

SCHEDULE (DESCRIPTION OF LAND)
All that piece of land know as Plot No. A/35 (Survey No. 164/1) in the Madras
Export Processing Zone, situated in No. 165 Kadapperi Village, Saidapet Taluk,
District Changalpattu MGR, within the Sub-Registrar Tambaram and Registration
District of Madras South, containing by admeasurement 1956.25 Square Meters or
thereabouts and bounded as follows, that is to say

North by A - 34

East by A - 36

South by 15.4 Metre Road

West by 26 Metre Road

Measuring on the Norby by East to West by 63.8/48.3 M

on the East by North to South 63.8 M

on the South by East to West 31.75 M

on the West by North to South 37.75/27.25 M

Covering an extent of 1956.25 Square Meters.

For COMPLETE BUSINESS SOLUTIONS (INDIA)
PRIVATE LIMITED

________________________________________

<PAGE> 16

SIGNED, SEALED AND DELIVERED

Shri.M.B. Pranesh, I.A.S.
Development Commissioner,
MEPZ.

Development Commissioner

Madras Export Processing Zone

on behalf of President of India

in the presence of:

1. Signature:

Name:

Address:

2. Signature:

Name:

Address:

SIGNED, SEALED AND DELIVERED

For COMPLETE BUSINESS SOLUTIONS (INDIA) PRIVATE LIMITED

By the above named Lessee

In the presence of

16
<PAGE> 17

1. Signature:

Name:

Address:

2. Signature:

Name:

Address:

17
<PAGE> 18

LEASE AGREEMENT

THIS INDENTURE of lease made at Madras on 17th of June, 1997 between the
PRESIDENT OF INDIA through the Development Commissioner, Madras Export
Processing Zone, Ministry of Commerce, presently at the Administrative Office
Building, National Highway 45, Tambaram Madras - 600 045, hereinafter called
"Lessor" (which expression shall unless the context does not admit including
his successors in office and assigns) on the one part and M/s. Complete
Business Solutions (India) Private Limited, Unite 13, Block 2, SDF Buildings,
Madras Export Processing Zone, Tambaram, Madras - 600 045, and represented by
its General Manager-Administration, Mr. R.S. Lyengar, S/o. S. Raghavan, who
has been authorized under special Power of Attorney and resides at 20-A-2,
Dwaraka Colony, Mylapore, Chennai 600 004, hereinafter referred to as the
"Lessee" ( which expression are included, unless such inclusion is inconsistent
with the context of the meaning thereof its executors and assigns) of the other
part; WHEREAS the Government of India has constituted, the Madras Export
Processing Zone, hereinafter called the MEPZ in the land acquired for the
purpose with the object of encouraging the export industries in India and for
earning foreign exchange on the export of various kinds of products from the
MEPZ in the interest of the national economy by establishing industrial units
in the said zone; AND WHEREAS the Lessor has constructed a building known as
Standard Design Factory on a portion of the land in MEPZ for the purpose of
allotting the same to various entrepreneurs

<PAGE> 19
carrying on business of manufacturing and or processing articles, things,
materials components and instruments relating to various items of manufacture.

AND WHEREAS the Lessee have approached the Lessor for demising to it a portion
of the said building constructed and or erected on the Units Nos. 1, 12, 13, 14
and 15 SDF Buildings, Phase I (as per annexure attached), in the MEPZ within
the village limits of Kadaperi of Taluk Saidapet, District Chengalpattu,
Sub-Registration district of Tambaram containing the admeasurement 2453 sq.
Meters or thereabouts and more particularly described in the first schedule
hereunder written to establish manufacturing/processing establishment for the
manufacture of articles, things, materials, components, instruments relating to
the items for manufacture of export goods at the rent and upon the terms and
conditions hereinafter contained and to grant to it all facilities and a
variety of concessions.

AND WHEREAS it has been agreed by and between the parties hereto that the stamp
___ and registration charges shall be borne and paid by the Lessee.

NOW THIS DEED WITNESSETH AS FOLLOWS:

(i) In consideration of the premises and various facilities and a
variety of concessions made available to the Lessee and the rent
hereby reserved and of the covenants and agreements on the
part of the Leesee hereinafter contained, the Lessor doth hereby,
demise to HOLD the said premises hereunder expressly demised unto the
Lessee for the term of five years computed from the first day of month
& year of possession paying therefor the yearly rental during the said
term unto the Lessor through DD Central Bank of India, Madras as may
be otherwise required by the Lessor the said rent of Rs.380/ - per Sq.
Meter per annum payable on quarterly basis (effective from 1.1.96, the
prerevised quarterly rent upto 31.12.95 being Rs.300/ - per Sq. Meter
per annum) in advance being the Lease rent by the Lessor without any
deductions whatsoever. The lease rent shall be revisable next with
effect from 1.1.98 and every three years thereafter,

<PAGE> 20

subject a maximum of 25% of the last lease rent payable in
respect to the demised premises.

ii) The lease with intent to bind all persons into whatsoever hands the
demised premises may come doth hereby covenant with the lessor as
follows:

(a) During the said term hereby created to pay unto the Lessor the said
rent and all other charges that may be fixed from time to time by the
Development Commissioner at the times on the days and in manner herein
before appointed for payment thereof clear of all deductions.

(b) To pay all existing and future taxes, rates, assessments and
outgoings of every description for the time being payable either by
Lessor or Lessee or by the occupier in respect of demised premises and
any thing for the time being thereon.

(c) It is hereby agreed and declared that in the event the Lessor
insures and/or keeps insured the building including the demised
premises the Lessee shall be liable to pay to the Lessor amount of the
Premium/premiums in proportion to the area of the demised premises
within fifteen days on receipt of notice by the Lessor for payments of
the amount of premium(s) and that the Lessee shall pay the same without
objection provided always in the event of dispute arising between the
Lessor & Lessee regarding the liability of the Lessee to pay the said
amount of insurance premium, the decision of the Development
Commissioner shall be final and binding upon the Lessee.

(d) During the said term hereby agreed to manufacture products as
authorized by the Development Commissioner from time to time.

(e) to commence production within three months from the date of
completion of the factory premises.

(f) Not to manufacture/process any article, thing, materials,
components and instruments which do not in any way relate to the
industry other than the authorised one for which permission was
granted.

(g) To submit from time to time to the Development Commissioner, plans
and the schemes of the particular industry to be established together
with such details as may be required.

(h) To export the entire production (whether manufactured/processed
including seconds, wastes and scrap material to foreign countries in
accordance with the provisions of law and with the provisions of letter
of approval/license subject to such concessions and facilities as may
be given by the Government to the

<PAGE> 21

Lessee in the matter of disposal of seconds, wastes and scrap material
the customs duty, routing of applications or import licenses etc. and
such other concessions as may be notified hereafter from time to time.

(i) To furnish a legal undertaking as may be prescribed for the
fulfillment of export obligations set out in their application for
setting up industries in the zone.

(j) To arrange forwarding/clearance of manufactured/processed goods for
export or import of raw materials spares and such other materials as
are required for manufacture/processing by the Development Commissioner
or agencies authorized by the Development Commissioner.

(k) Not to allow any of the products manufactured/processed in MEPZ
produced by the Lessee to enter or pass into and/or be sold in any
market in India or anywhere in India provided always that the
Development Commissioner may permit the Lessee to sell and/or dispose
of the products to enter or pass into and/or be sold in any market in
India or anywhere in India.

(l) To sell or dispose of the products manufactured/processed by the
Lessee in the local markets in India or as may be directed by the
Development Commissioner in the event the Development Commissioner
considers that the said products are essential or necessary for
national defense or for countering natural disaster or considered
urgent and necessary for the national economy upon payment as may be
mutually agreed upon and that the Lessee shall not be entitled to make
any other claim for compensation for delivering the products as
aforesaid in any manner whatsoever.

(m) To permit the Development Commissioner or any officer surveyor,
workmen or other persons employed by him from time to time at any time
and without any prior notice being given to enter into and upon the
demised premises and to inspect the general state of the demised
premises and also processing plant and machinery etc. and the books of
account and other documents and vouchers concerning the products
manufactured by the Lessee.

(n) Not to do or permit anything to be done or stored (except those for
production of products approved for manufacture in the demised
premises) which may be in nuisance, annoyance, dangerous or disturbance
to the owners, occupiers, or residents or other premises in the
vicinity.

(o) To use the demised premises only for the purpose of manufacturing,
processing or assembling products for export and other purposes
incident thereto the same and not to use the said demised premises or
any part thereof for any other purpose.

<PAGE> 22

(p) Not to sublet, transfer, assign or change alineate his interest in
the premises or part thereof without the prior consent in writing of
the Lessor first hand and obtain and subject to such terms and
conditions as the Lessor may prescribe in granting the possession to
the lessee for the transfer of the said demised premises or any part
thereof as hereinbefore mentioned.

(q) To intimate before hand in writing the Lessor within a fortnight of
the changes made or effected in the corporate structure or the
constitution of the Lessee.

(r) To submit the statements of accounts and such other details within
such time as may be stipulated by the Lessor during the term of these
presents giving all the necessary particulars as may be required by the
lessor.

(s) To allow the persons and vehicle entering and leaving MEPZ to be
examined by the staff of the Lessor or any agency authorized by the
Development Commissioner for the purpose of checking that no products
or any materials manufactured in the demised premises are removed in
the manner not authorized by these presents.

(t) Not to make any structural alterations or changes of any nature
whatsoever to the factory premises or any additions alterations or
changes of any nature whatsoever to the building erected on the demised
premises without the previous permission of the Lessor have been
obtained in writing, and if permitted to carry out the same in
accordance with building bye-laws of the local authority or any other
statutory regulations.

(u) Not to cause any annoyance or hindrance to other tenants/lessees of
the lessor and to so conduct the activities which will impede and other
lessee of the lessor in manufacturing or processing the multi products
AND in the event the Lessee experiences or finds any difficulty in a
conducting its/his/their business and/or activities connected therewith
smoothly and efficiently by reason of the user of the said building or
any portion thereof by the other tenants of the building the same shall
be referred to the Development Commissioner and any directions or
orders issued by the Development Commissioner in relations thereto
shall be complied with the Lessee.

(v) To observe and perform all rules and regulations prescribed under
the Labour Legislation such as Industrial Disputes Act, Workmen's
Compensation Act, Payment of Wages Act, Minimum Wages Act and any other
statutes governing the relationship of the employers including the
Factories Act and Fatal Accidents Act.

(w) If the said rent hereby reserved shall be in arrears for the space
of 30 days whether the same shall have been legally demanded or not or
if within a period of ONE year from the date of the commencement of the
lease the entire demised

<PAGE> 23

premises are not utilized for the purpose for which the same has been
demised or if the Lessee ceases to manufacture products for a period of
six continuous months for whatsoever cause arising, including a strike,
lockout or any injunction from Court in any sort of litigation, if and
whenever there shall be a breach of any of the covenants and conditions
here before set out or referred to including breach of any of the
conditions of meeting the exort obligations already undertaken by the
Lessee and/or as may be notified from time to time by the Lessor or the
Lessee becoming insolvent or is would up or amalgamated or merged with
other body corporate or otherwise pursuant to the Court's orders or
under the provisions of law then in force or under any agreement
entered into by the Lessee, the Lessor may re-enter upon any part of
the demised premises in the name of the whole and thereupon the demise
hereby granted shall absolutely cease and determine and in that case,
PROVIDED ALWAYS that the lessor shall in addition to the right of
determination of this lease and to effect re-entry as mentioned
aforesaid be entitled to recover as and by way of compensation such
amount as may be considered by the Lessor as appropriately recoverable
from the Lessee in the event the Lessee were not given or granted all
those various concessions and variety of facilities.

(x) At the expiration or sooner of the termination of the said terms
quietly to deliver upto the Lessor the vacant possession of the demised
premises after removing the partitions and fittings and fixtures
pertaining thereto any alternations, changes or additions erected on
the demised premises by the Lessee and such removal should be done
without in any way damaging or defacing the premises and such delivery
should be given within a period of SIXTY days after expiration or
sooner determination of the said term, provided always that in the
event the Lessee fails to deliver vacant and peaceful possession of the
demised premises as aforesaid, the said partitions and fittings and
fixtures and any alterations, changes or additions as aforesaid on the
expiry of the above mentioned period shall belong to the Lessor and the
Lessee shall not be entitled any compensation therefor provided always
that in case the Lessor desires to retain the said partitions and
fittings and fixtures, etc. as aforesaid the Lessor shall pay to the
Lessee compensation thereof as may be determined by the Development
Commissioner and the Lessee shall not be entitled to raise any
objections against such retention and or the valuation determined by
the said Development Commissioner as aforesaid, provided always that
the Lessee shall continue to be liable to pay compensation for the
period of unauthorised occupation of the said premises till the date
the Lessor hands over vacant and peaceful possession of the demised
premises at such rates as may be charged by the Lessor.

(y) If the said rent hereby reserved shall be in arrears for a period
of 30 days whether the same shall have been legally demanded or not the
Lessor may take steps to recover the arrears of rent as arrears of land
revenue or move to the appropriate court of law for recovery.

<PAGE> 24

(z) A penal interest shall be payable on rent in arrears at 12%. Penal
interest on default would start, if the rent is overdue by 30 days,
irrespective of the periodicity.

(aa) The Lessor doth hereby covenant with the Lessee that the Lessee paying
the rent hereby reserved and performing in the covenants hereinbefore on
the lessee's part contained shall and may peaceably enjoy the demised
premises for the said term hereby granted without any interruption or
disturbance for from or by the Lessor or any person or persons lawfully
claiming by from or under the Lessors.

(ab) All disputes and differences arising out of or in any way touching or
concerning these presents (except as to any matters the decision of
which left to the sole discretion of the said Lessor, as especially
provided for in these presents) shall be referred to the
arbitration of two arbitrators one each to be appointed by the
respective parties to these presents. The arbitrators so appointed
shall appoint an umpire in the manner provided in the Arbitration Act,
1940. It will be no objection that the person appointed as Arbitrator
on behalf of the Lessor is or was an employee of the Government, that
he had to deal with the matters to which the lease herein relates
and/or that in the course of his duties as such employee of the
Government he had expressed a view on all or any of the matters in
dispute or difference. In the event of either or both of the
arbitrators dying, neglecting or refusing to act or resigning or being
unable to act for any reason, the substitutes(s) to be appointed by the
concerned parties shall be entitled to proceed with the reference from
the stage at which it was left by the previous Arbitrator/Arbitrators.
The cost of and in connection with the arbitration shall be in the
discretion of the Arbitrators who may make a suitable provisions for
the same in their award subject to the aforesaid, the provisions of the
Arbitration Act, 1940 and the rules there under and any statutory
modifications thereof for the time being in force shall apply to the
arbitration proceedings under this clause.

(ac) If the Lessee shall have duly performed and observed the covenants and
conditions on the part of the Lessee hereinbefore contained and shall
at the end of the said terms hereby granted by desirous of receiving a
new lease of the demised premises and of such desire shall give
notice in writing to the Lessor before the expiration of the term
hereby granted, the Lessor shall and will at the cost and expenses in
every respect of the Lease granted to the Lessee a new lease of the
demised premises for a further term of five years on payment of yearly
rent as may be determined by the Lessor AND WITH covenants, provision
and stipulations hereinbefore contained except this provision for
renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the
Lessor shall at the like cost and expense grant to the Lessee further
renewals and that every such renewal shall be for such terms and
subject to such covenants, provisions and stipulations. Subject

<PAGE> 25

as aforesaid, the Arbitration Act, 1940 shall apply to the arbitration
proceedings under this clause.

IN WITNESS WHEREOF Shri. M.B. Pranesh, I.A.S., Development Commissioner, Madras
Export Processing Zone (MEPZ), Government of India, Ministry of Commerce, on
behalf of President of India, set his/her hand and affixed the common seal of
office hereto on its behalf and the Lessee hath here unto set their hand/and
the common seal for the company the day and year first above written.

<PAGE> 26

FIRST SCHEDULE
(Description of Building)

All that piece of parcel of land and premises numbered as Unit 1, 12, 13, 14
and 15 SDF Buildings, Phase 1, MEPZ, Tambaram, Madras - 600 045 in the Madras
Export Processing Zone in Survey No. 164/1 part within the he village limits of
Kadaperi, Taluk Saidapet, District Chengalpattu containing by admeasurement
2453 sq. Mtrs or thereabouts and bounded as follows, with partitions, fittings
and fixtures thereof listed in Second Schedule annexed to that to say -

On or towards the north say ... Plot A-35
On or towards the south say ... Corridor/Vacant space between
each Block
On or towards the east say .... Common Corridor & Pathway
On or towards the west say .... By Road

SECOND SCHEDULE
INVENTORY OF ELECTRICAL INSTALLATION FOR EACH UNIT

Name of the Occupant M/s. Complete Business Solutions (India)
Private Limited

Location Unit 1, Block 1, SDF Buildings, Madras
Export Processing Zone

S1. NO. Description Quantity
1 2 3

A. LIGHT FIXTURES, WIRING & OTHER ACCESSORIES FOR
EACH UNIT

1. "Philips" make single mounting soil type light fixtures type 11 Nos.
TMS 21/140 with accessories and fluorescent lampt

2. "Philips" make twin mounting soil type light fixtures TMC 2 Nos.
21/240 with accessories and fluorescent lamps.

3. "Philips" make twin mounting Industrial type light fixtures 32 Nos.
type TKC 22/240 with accessories and fluorescent lamps.

4. Mirror light fittings and 20w fluorescent lamp 2 Nos.

5. 5 Amps Piano type switches 81 Nos.

6. 5 Amps 3 pin sockets 10 Nos.

<PAGE> 27

7. 15 Amps piano type switches 14 Nos.

8. 15 Amps 3 pin socket 14 Nos.

9. Total No of light points 47 Nos.

10. Total No of fan points 29 Nos.

11. Total No of 5 Amps 3 pin plug points 10 Nos.

12. Total No of 15 Amps 3 Pin plug points 14 Nos.

B. MAIN BOARDS & MCB DISTRIBUTION BOARD ETC. FOR
EACH UNIT

1. 8 WAY SP MCB DB WITH ACCESSORIES:

i. 63 Amps Isolator 1 No.) 2 Sets
ii. 10 Amps SP MCB 6 Nos.)

2. 12 WAY SP MCB DB WITH ACCESSORIES:

i. 60 Amps Isolator 1 No.) 2 sets
ii. 15 Amps SP MCB 8 Nos.)

3. 200 Amps TPN sw fuse switch unit with HRC fuse (fixed on 1 No.
angle iron frame work)

4. 100 Amps TPM fuse switch unit with HRC fuse (fixed on 2 Nos.
angle iron frame work)

5. MAIN PENAL BOARD WITH FOLLOWING ITEMS:

<TABLE>
<S> <C>
i. 200 Amps TPN fuse switch unit with HRC fuse 1 No
ii. 100 Amps TPN fuse switch unit with HRC fuse 3 Nos.
iii. 32 Amps SPN switch fuse unit 4 Nos. 1 Set
iv. Ammeter-0 to 200 A with CTS & selector switch 1 No.
v. Voltmeter 0 to 600 V with selector switch 1 No.
vi. Indicating lamps with bulbs 3 Nos.
vii. Side lock fuses 3 Nos.
viii. Toggle Swtiches 3 Nos.
ix. 200 Amps busbar chamber with Al. Busbars 1 No.

</TABLE>

TOILETS, PANTRY, AHU & HALL PORTION FOR EACH UNIT

<PAGE> 28

1. Wash basin with fittings (l/C tap) 2 Nos.
2. Indian Water Closet with fittings 3 Nos.
3. High level flush tank (Cost Iron) 3 Nos.
4. European Water Closet with fittings 1 No.
5. Porcelain low level flush cistern 2 Nos.
6. Mirror 2 Nos.
7. Brass Bib Cock 4 Nos.
8. Brass Stop cock 7 Nos.
9. Porcelain urinal 2 Nos. with automatic cistern 1 set
10. Nahini trap 5 Nos.
11. Kitchen sink with fittings (l/C) 1 No.
12. Wooden door (Flush) shutters 7 Nos.
12.A Wooden door (Flush) double shutter 1 No.
13. M.S. Rolling Shutter 1 No.
14. Anodised Aluminum glaxed door with all fittings D1 1 No.
D2 2 Nos.
15. Aluminum glaxed windows W1 1 No
W4 1 No
W2 16 Nos
W5 8 Nos.
W3 (Ventilators) 5 Nos.

<PAGE> 29

SIGNED, SEALED AND DELIVERED

behalf of President of Indian in the presence of

SIGNED, SEALED AND DELIVERED

By the above named Lessee and represented by its General Mangaer,
Administration,

in the presence of

1. 2.

THE COMMON SEAL of the above named License was, pursuant to a Resolution of its
Board of the Directors passed in that behalf of
affixed hereto in the presence of:

1. 2.

<PAGE> 30

<TABLE>
<CAPTION>
UNIT BLOCK DATE OF AREA QUARTERLY RENT REMARKS
ALLOTMENT
<S> <C> <C> <C> <C> <C>
1 1 SDF Bldg.s 01.10 1994 500 sq. mtrs Rs 47,500/-
Phase 1, MEPZ
12 11, SDF Bldgs 01.07 1994 500 sq. mtrs. Rs 47,500/-
Phase 1, MEPZ
13 11, SDF Bldg.s 23,09 1986 500 sq. mtrs. Rs 47,500/- The last lease
Phase 1, MEPZ agreement executed
expired on 13 01 1997
14 11, SDF Bldgs. 01 08 1993 453 sq. mtrs. Rs 43,035/-
Phase 1, MEPZ
15 11, SDF Bldgs. 15 02 1995 500 sq. mtrs. Rs 47.500/-
Phase 1, MEPZ
</TABLE>

<PAGE> 1

EXHIBIT 11.1(c)

COMPUTATION OF PER SHARE EARNINGS

COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
PRO FORMA OR ACTUAL NET INCOME PER COMMON SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
------------------------
1997 1996
---------- ----------
<S> <C> <C>
Weighted average number of shares of Common Stock
outstanding............................................... 9,300,000 5,942,275
Common Stock equivalents calculated using the weighted
average stock price per share for the periods presented... 299,924 237,215
Stock options and convertible stock issued during the twelve
months immediately preceding the offering date............ -- 641,501
Stock issued to satisfy S corporation distribution based
upon the estimated initial public offering price per
share..................................................... -- 806,452
---------- ----------
Weighted average shares outstanding......................... 9,599,924 7,627,443
========== ==========
Actual or pro forma net income.............................. $1,831,000 $ 643,000
========== ==========
Actual or pro forma net income per common share............. $ .19 $ .08
========== ==========

<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1997 1996
---------- ----------
<S> <C> <C>
Weighted average number of shares of Common Stock
outstanding............................................... 8,300,828 5,942,275
Common Stock equivalents calculated using the weighted
average stock price per share for the periods presented... 227,322 185,462
Stock options and convertible stock issued during the twelve
months immediately preceding the offering date............ 184,211 641,501
Stock issued to satisfy S corporation distribution based
upon the estimated initial public offering price per
share..................................................... -- 806,452
---------- ----------
Weighted average shares outstanding......................... 8,712,361 7,575,690
========== ==========
Pro forma net income........................................ $3,020,000 $1,307,000
========== ==========
Pro forma net income per common share....................... $ .35 $ .17
========== ==========
</TABLE>

<PAGE> 1
EXHIBIT 21.1

List of Subsidiaries of Complete Business Solutions, Inc.

Name of Subsidiary Jurisdiction of Incorporation

CBS Complete Business Solutions Mauritius
(Mauritius) Limited

Complete Business Solutions India
(India) Private Limited

Complete Business Solutions
(Singapore) Private Limited Singapore

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Detroit, Michigan,
August 4, 1997

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 17,763
<SECURITIES> 0
<RECEIVABLES> 21,505
<ALLOWANCES> (364)
<INVENTORY> 0
<CURRENT-ASSETS> 40,207
<PP&E> 10,855
<DEPRECIATION> (5,779)
<TOTAL-ASSETS> 48,778
<CURRENT-LIABILITIES> 12,695
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 35,521
<TOTAL-LIABILITY-AND-EQUITY> 48,778
<SALES> 0
<TOTAL-REVENUES> 50,937
<CGS> 0
<TOTAL-COSTS> 37,397
<OTHER-EXPENSES> 9,235
<LOSS-PROVISION> 150
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,533
<INCOME-TAX> 1,991
<INCOME-CONTINUING> 2,460
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,460
<EPS-PRIMARY> .35
<EPS-DILUTED> 0

</TABLE>