Exh. 10-34
                               SECURITY AGREEMENT


This  Security  Agreement  (this  Agreement)  is  entered  into  this 6th day of
November,1997,  by and between Larco Environmental  Services,  Inc., a Louisiana
corporation (the Debtor),  whose address is 2208 Industrial Boulevard,  Sulphur,
Louisiana  70663,  and  American   Physicians   Service  Group,  Inc.,  a  Texas
corporation (the Secured Party), whose address is 1301 Capital of Texas Highway,
 Suite C-300, Austin, Texas 78746.

                                   RECITALS:

A.  Consolidated  Eco-Systems,  Inc.,  an Idaho  corporation  formerly  known as
Exsorbet  Industries,  Inc.  (Consolidated)  executed and delivered that certain
Promissory  Note dated  November  26, 1996 (the  Original  Note) in the original
principal amount of Three Million Three Hundred  Thousand  Dollars  ($3,300,000)
payable to the order of Secured Party.

B. The Original Note was secured pursuant to the following  agreements,  all for
the benefit of Secured Party: (i) that certain Security Agreement dated December
12, 1996,  entered into by7-7,  Inc., an Arkansas  corporation  (7-7),  formerly
known as 7-7 Merger,  Inc.; (ii) that certain Security Agreement dated September
30,  1996,  entered  into by 77;  (iii) that  certain  Assignment  and  Security
Agreement dated September 30, 1996, entered into by Consolidated; and (iv) those
certain Guaranty  Agreements  dated September 30, 1996,  entered into by each of
the following entities:

        a.      Consolidated Environmental Services, Inc., an Arkansas
                    corporation (CES);

        b.      Cierra, Inc., an Arkansas corporation (Cierra);

        c.      Debtor;

        d.      KR Industrial Services of Alabama, Inc., an Alabama corporation
                    (KR Industrial);

        e.      Exsorbet Technical Services, Inc., an Arkansas corporation
                    (Exsorbet Technical) doing business as SpilTech Services,
                    Inc.;

        f.      Eco Acquisition, Inc., an Arkansas corporation (Acquisition),
                    also known as Eco-Systems, Inc.; and

        g.      7-7

(all of the  agreements  described  in (i) through  (iv) above are  collectively
referred to herein as the Original Security Documents).
<PAGE>

C.  Consolidated  has executed and  delivered a new note of even date  herewith,
payable to the order of  Secured  Party,  in the  original  principal  amount of
$3,788,580 (the New Note), in renewal and extension of the Original Note,  which
New Note is also secured pursuant to (i) the Original  Security  Documents,  and
(ii) that  certain  Assignment  and  Security  Agreement  of even date  herewith
entered into for the benefit of Secured Party by Consolidated  (the Consolidated
Security Agreement).

D. Debtor has received, and will continue to receive,  valuable consideration as
a result of the transactions evidenced by, or related to, the Original Note, the
New Note,  and the Security  Documents (as  hereinafter  defined).  Accordingly,
Secured Party has requested that Debtor pledge the Collateral (as defined below)
to secure certain obligations and liabilities,  including without limitation (i)
Consolidateds  obligations  to Secured  Party under the New Note,  (ii) Debtors,
Consolidateds  and all of  Consolidateds  subsidiaries,  obligations  under, and
performance  of the  covenants  set forth in, the Original  Security  Documents,
(iii)  Consolidateds  obligations  under,  and  performance of the covenants set
forth in, the Consolidated Security Agreement,  (iv) Consolidateds,  Debtors and
all of  Consolidateds  subsidiaries,  obligations  under, and performance of the
covenants set forth in, that certain Master  Refinancing  Agreement of even date
herewith  entered into for the benefit of Secured Party by Debtor,  Consolidated
and all of  Consolidateds  subsidiaries  (the  Refinancing  Agreement),  and (v)
Debtors  performance of the covenants more fully set forth herein.  The Original
Security  Documents,   the  Refinancing  Agreement,  the  Consolidated  Security
Agreement,  and this  Agreement  are  collectively  referred  to  herein  as the
Security Documents.


                                  AGREEMENTS:

Now,  Therefore,  in  consideration  of the  foregoing  and  the  covenants  and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which Debtor  acknowledges,  Debtor and Secured Party
agree as follows:


                                   ARTICLE I
                            AGREEMENT; INDEBTEDNESS

1.1 SECURITY  INTEREST.  Subject to the applicable terms of this Agreement,  for
good and valuable  consideration,  the receipt and  sufficiency  of which Debtor
acknowledges,  Debtor  assigns and  transfers  to Secured  Party,  and grants to
Secured Party a continuing  security  interest in and lien upon,  the Collateral
(as defined in Article II below) to secure the payment  and the  performance  of
the Indebtedness (the Security Interest).

1.2 INDEBTEDNESS.  The following indebtedness and obligations (the Indebtedness)
are secured by this Agreement:
<PAGE>

(a)  All  debt,  obligations,  liabilities,  and  agreements  of  Debtor  and/or
Consolidated  to Secured  Party,  now or hereafter  existing,  arising  directly
between  Debtor and Secured  Party  and/or  Consolidated  and  Secured  Party or
acquired  outright,  conditionally,  or as  collateral  security from another by
Secured Party, absolute or contingent,  joint or several,  secured or unsecured,
due or not due, contractual or tortious, liquidated or unliquidated,  arising by
operation of law or otherwise,  including,  without limitation,  all obligations
and amounts due under the New Note,  the Security  Documents,  and all renewals,
extensions, modifications, or rearrangements of any of the foregoing.

(b) Secured Partys participation in any debt of Debtor to another person.

(c) All costs  incurred  by Secured  Party to  obtain,  preserve,  perfect,  and
enforce this Agreement and the Security  Interest,  to collect the Indebtedness,
and to maintain,  preserve,  collect, and enforce the Collateral,  including but
not  limited to taxes,  assessments,  insurance  premiums,  repairs,  reasonable
attorneys fees and legal expenses,  feed,  rent,  storage costs, and expenses of
sale.

(d) Interest on the above amounts as agreed between Secured Party and Debtor, or
if there is no agreement, at the highest lawful rate.


                                   ARTICLE II
                                   COLLATERAL

2.1 DESCRIPTION OF COLLATERAL. The Security Interest is granted in the following
(the Collateral):

(a) All of Debtors assets,  including without  limitation all accounts,  chattel
paper, contract rights, equipment, inventory, fixtures, general intangibles, and
investment property, as more particularly described in Exhibit-A attached to and
incorporated herein by reference.

(b) All  substitutes and  replacements  for,  accessions,  attachments and other
additions to, tools,  parts and equipment used in connection  with, and proceeds
and  products  of, the above  Collateral  (including  all  income  and  benefits
resulting  from any of the  above),  all  certificates  of title,  manufacturers
statements of origin, other documents,  accounts, and chattel paper arising from
or related to the above Collateral,  and returned or repossessed Collateral, any
of which,  if  received by Debtor,  shall be  delivered  immediately  to Secured
Party.

(c) All policies of  insurance  covering the  Collateral  and proceeds  thereof.
<PAGE>

(d) All security for the payment of any of the  Collateral,  and all goods which
gave or will give rise to any of the Collateral or are evidenced, identified, or
represented therein or thereby.

(e) All property similar to the above hereafter acquired by Debtor.

(f) All proceeds of the items  described in subsections  (a) through (e) of this
Section 2.1.


                                  ARTICLE III
                               DEBTORS WARRANTIES

Debtor represents and warrants to Secured Party as follows:

3.1 FINANCING STATEMENTS.  No statement covering the Collateral is or will be on
file in any public  office,  except the  financing  statements  relating to this
Security  Interest  and  those  relating  to the  Prior  Liens  (as  hereinafter
defined). In the past five (5) years, Debtor has not used or done business under
any name  other than its legal name which is set forth on the first page of this
Agreement.

3.2  OWNERSHIP.  Debtor  owns,  or will use the proceeds of any loans by Secured
Party to become  the owner  of,  the  Collateral  free from any  setoff,  claim,
restriction,  lien, security interest, or encumbrance except liens for taxes not
yet due, the Security Interest, and the Prior Liens.

3.3 FIXTURES AND ACCESSIONS. Except for Collateral of nominal value, none of the
Collateral  is affixed to real estate or is an accession  to any goods,  or will
become a fixture or accession, except as expressly set out herein.

3.4 CLAIMS OF DEBTORS ON COLLATERAL. No account debtors and other obligors whose
debts or  obligations  are part of the  Collateral  have any  right to  setoffs,
counterclaims, or adjustments, or any defenses in connection therewith.

        3.5 LIENS.  Neither  Debtor nor any person acting on Debtors behalf has,
or shall have any right, power, or authority to and shall not create,  incur, or
permit to be  placed or  imposed  upon the  Collateral,  any lien of any type or
nature  whatsoever  superior  to the liens in favor of  Secured  Party  provided
herein,  except only the liens in favor of Dimmitt & Owens Financial,  Inc. (the
Prior  Liens).  As to the Prior Liens,  neither  Debtor nor any person acting on
Debtors  behalf  shall  have any right,  power,  or  authority  to and shall not
increase  the  amount  of  indebtedness  secured  by  the  Prior  Liens  or  the
Collateral.  No item of  Collateral  is subject to more than one(1) of the Prior
Liens.
<PAGE>

3.6 ACCURACY OF FINANCIAL STATEMENTS.  All balance sheets,  earnings statements,
and other  financial  data  which have been or  hereafter  may be  furnished  to
Secured Party to induce it to permit the  Indebtedness or to make this Agreement
or in  conjunction  herewith  truly  represent  or  shall  truly  represent  the
financial condition and operations of Debtor as of the dates and for the periods
shown thereon; and all other information, reports, papers, and data furnished to
Secured  Party are or shall be, at the time  furnished,  accurate and correct in
all respects and complete  insofar as necessary to give Secured Party a true and
accurate knowledge of the subject matter.

3.7 POWER AND  AUTHORITY.  Debtor  has full  power  and  authority  to make this
Agreement.

3.8 PRINCIPAL PLACE OF BUSINESS.  Debtors chief  executive  office is at Debtors
address stated above in Sulphur,  Calcasieu Parish,  Louisiana, and such address
is also where Debtor keeps its books and records.

3.9 LOCATION OF COLLATERAL. All of Debtors Inventory and Equipment is located at
Debtors  principal  place of  business  located  at 2208  Industrial  Boulevard,
Sulphur, Louisiana. Debtor has exclusive possession and control of its Inventory
and Equipment.

3.10 PERFECTION. Upon the filing of the UCC financing statements with the Office
of the Louisiana  Secretary of State and the Office of the Arkansas Secretary of
State, the Security Interest will constitute a valid and perfected lien upon and
security  interest  in the  Collateral  superior to all other  liens,  claims or
encumbrances except only the Prior Liens.

3.11 SOLVENCY.  As of the date hereof, and after giving effect to this Agreement
and the completion of all other transactions  contemplated by Debtor at the time
of the execution of this Agreement,  (i) Debtor is and will be solvent, (ii) the
fair  saleable  value of Debtor's  assets  exceeds  and will  continue to exceed
Debtor's  liabilities  (both fixed and  contingent),  (iii) Debtor is paying and
will   continue  to  be  able  to  pay  its  debts  as  they  mature  or  within
forty-five(45) days thereafter, and (iv) if Debtor is not an individual,  Debtor
has and will have  sufficient  capital to carry on Debtor's  businesses  and all
businesses in which Debtor is about to engage.
<PAGE>

                                   ARTICLE IV
                               DEBTORS COVENANTS

Debtor covenants and agrees that:

4.1 INDEBTEDNESS AND THIS AGREEMENT.  Debtor shall pay, or cause the payment of,
the  Indebtedness in accordance with its terms and shall promptly perform all of
his (or its) agreements  herein and in any other agreements  between him (or it)
and Secured Party.

4.2  OWNERSHIP  OF  COLLATERAL.  At the time  Debtor  grants to Secured  Party a
security interest in any Collateral,  Debtor shall be the absolute owner thereof
(subject  only to the  Prior  Liens)  and  shall  have the  right to grant  such
security  interest.  Debtor shall defend the  Collateral  against all claims and
demands of all persons at any time  claiming  any  interest  therein  adverse to
Secured Party. Debtor shall keep the Collateral free from all liens and security
interests  except those for taxes not yet due, the  Security  Interest,  and the
Prior Liens.

4.3 INSURANCE.  Debtor shall insure the Collateral with companies  acceptable to
Secured Party against such casualties and in such amounts as Secured Party shall
require.  All insurance  policies shall be written for the benefit of Debtor and
Secured Party as their  interests may appear,  or in other form  satisfactory to
Secured Party,  and such policies or  certificates  evidencing the same shall be
furnished to Secured Party.  All policies of insurance shall provide for written
notice to Secured Party  simultaneously with any notice of cancellation or other
termination  being  given to Debtor,  and in any event at least 10 days prior to
cancellation  or other  termination.  Risk of loss or damage is  Debtors  to the
extent of any deficiency in any effective insurance  coverage.  Secured Party is
appointed Debtors attorney-in-fact to collect any return or unearned premiums or
the  proceeds of such  insurance  and to endorse  any draft or check  payable to
Debtor therefor.

4.4  MAINTENANCE.  Debtor  shall  keep  and  maintain  the  Collateral  in  good
condition, reasonable wear and tear excepted.

4.5  SECURED  PARTYS  COSTS.  Debtor  shall pay all costs  necessary  to obtain,
preserve,  perfect,  defend,  and enforce this  Security  Interest,  collect the
Indebtedness,  and  preserve,  defend,  enforce,  and  collect  the  Collateral,
including but not limited to taxes,  assessments,  insurance premiums,  repairs,
reasonable  attorneys fees and legal expenses,  feed,  rent,  storage costs, and
expenses of sales. Whether Collateral is or is not in Secured Partys possession,
and without any  obligation  to do so and without  waiving  Debtors  default for
failure to make any such  payment,  Secured Party at its option may pay any such
costs  and  expenses,  discharge  encumbrances  on the  Collateral,  and pay for
insurance of Collateral,  and such payment shall be a part of the  Indebtedness.
Debtor agrees to reimburse Secured Party on demand for any costs so incurred.
<PAGE>

4.6  INFORMATION  AND  INSPECTION.  Debtor shall (i) furnish  Secured  Party any
financial  statements  of Debtor or reports to Debtor by  accountants  or others
pertaining to Debtors  business as soon as available,  and any information  with
respect to the Collateral  requested by Secured Party;  (ii) allow Secured Party
to inspect the Collateral,  at any time and wherever located, and to inspect and
copy,  or furnish  Secured  Party with  copies of, all  records  relating to the
Collateral and the Indebtedness; (iii) furnish Secured Party such information as
Secured  Party  may  request  to  identify  inventory,   accounts,  and  general
intangibles  in  Collateral,  at the time and in the form  requested  by Secured
Party;  and (iv)  deliver upon  request to Secured  Party  shipping and delivery
receipts  evidencing  the shipment of goods and invoices  evidencing the receipt
of, and the payment for, inventory in Collateral.

4.7  ADDITIONAL  DOCUMENTS.  Debtor  shall sign any papers  furnished by Secured
Party which are necessary in the judgment of Secured Party to obtain,  maintain,
and perfect the Security Interest and to enable Secured Party to comply with the
Federal  Assignment  of Claims Act or any other federal or state law in order to
obtain or perfect Secured Partys interest in collateral or to obtain proceeds of
collateral.

4.8 PARTIES  LIABLE ON  COLLATERAL.  Debtor will  preserve the  liability of all
obligors on any  Collateral  and will  preserve  the  priority  of all  security
therefor.  Secured  Party  shall  have no duty to  preserve  such  liability  or
security,  but may do so at the  expense  of  Debtor,  without  waiving  Debtors
default.

4.9  MODIFICATION  OF COLLATERAL.  Without the written consent of Secured Party,
which consent shall not be unreasonably withheld,  Debtor shall not agree to any
modification  of any of the terms of any  accounts,  contracts,  chattel  paper,
general intangibles, or instruments constituting part of the Collateral.

         4.10 RIGHT OF SECURED  PARTY TO NOTIFY  DEBTORS.  At any time,  whether
Debtor is or is not in default  under this  Agreement,  Secured Party may notify
persons  obligated on any Collateral to make payments  directly to Secured Party
and Secured  Party may take  control of all  proceeds of any  Collateral.  Until
Secured Party elects to exercise such rights, Debtor, as agent of Secured Party,
shall collect and enforce all payments owed on Collateral.

         4.11  DELIVERY OF  RECEIPTS  OF SECURED  PARTY;  REJECTED  GOODS.  Upon
Secured  Party's  demand,  Debtor  shall  deposit,  upon receipt and in the form
received,  with any necessary endorsement,  all payments received as proceeds of
Collateral,  in a special bank account in a bank of Secured  Party's choice over
which  Secured  Party  alone shall have power of  withdrawal.  The funds in said
account shall secure the  Indebtedness.  Secured Party is authorized to make any
endorsement in Debtor's name and behalf. Pending such deposit,  Debtor shall not
mingle any such payments with any of Debtor's other funds or property,  but will
hold them  separate and upon an express trust for Secured  Party.  Secured Party
may from time to time  apply  the whole or any part of the funds in the  special
account  against the  Indebtedness.  Unless  Secured  Party  notifies  Debtor in
writing that it dispenses  with any one or more of the  following  requirements,
Debtor shall:
<PAGE>

                  (a) inform  Secured  Party  immediately  of the  rejection  of
         goods,  delay in delivery or  performance,  or claim made, in regard to
         any Collateral;

                  (b)  keep  returned  goods   segregated  from  Debtor's  other
         property,  and hold the goods as trustee for Secured Party until it has
         paid Secured  Party the amount  loaned  against the related  account or
         chattel paper and deliver the goods on demand to Secured Party; and

                  (c) pay  Secured  Party the  unpaid  amount of any  account in
         Collateral  (i) if the account is not paid when due;  (ii) if purchaser
         rejects  the goods or  services  covered  by the  account;  or (iii) if
         Secured  Party shall at any time reject the account as  unsatisfactory.
         Secured Party may retain the account in  Collateral.  Secured Party may
         charge any deposit amount of Debtor with any such amounts.

         4.12 RECORDS OF COLLATERAL.  Debtor at all times will maintain accurate
books and records  covering the  Collateral.  Debtor  immediately  will mark all
books and records with an entry showing the absolute  assignment of all accounts
in  Collateral  to Secured  Party and Secured Party is hereby given the right to
audit the books and  records of Debtor  relating to  Collateral  at any time and
from time to time.  The amounts shown as owed to Debtor on Debtor's books and on
any assignment schedule will be the undisputed amounts owing and unpaid.  Debtor
shall  disclose  to  Secured  Party  all   agreements   modifying  any  account,
instrument, or chattel pater.

         4.13  DISPOSITION  OF  COLLATERAL.  Debtor  will  not  sell,  transfer,
mortgage,  or otherwise  encumber any  Collateral or impair the value thereof in
any manner without Secured Party's prior written consent,  which Debtor is under
no obligation  whatsoever  to give,  including  without  limitation by purchase,
lease, barter, trade, payment deferral, or the creation, assumption or guarantee
of indebtedness  or other lending of credit;  provided,  however,  the foregoing
shall not be applicable to Debtor with respect to (i)  inventory  sold,  leased,
manufactured,  processed,  or consumed in the ordinary  course of business,  and
(ii) unsecured open account trade debts to unrelated  parties incurred by Debtor
in the ordinary course of business,  not to exceed,  cumulatively,  $50,000 over
the  aggregate  amount of such debts as of October  15,  1997.  Secured  Party's
written consent to any sale,  mortgage,  transfer,  or encumbrance  shall not be
construed to be a waiver of this provision in respect to any subsequent proposed
sale, mortgage, transfer, or encumbrance. If disposition of any Collateral gives
rise to an account,  chattel paper,  or  instrument,  Debtor  immediately  shall
notify Secured Party,  and upon request of Secured Party shall assign or endorse
the same to Secured Party.
<PAGE>

         4.14  ACCOUNTS   RECEIVABLE.   Each  account  receivable   constituting
Collateral will represent the valid and legally enforceable  obligation of third
parties and shall not be evidenced by any  instrument or chattel  paper.  In the
event any account  shall give rise to any  instrument or chattel  paper,  Debtor
shall  immediately  endorse the same to Secured  Party and deliver all  original
such instruments and chattel paper to Secured Party.

         4.15  LOCATION OF ACCOUNTS  AND  INVENTORY.  Debtor  shall give Secured
Party  written  notice  of each  office of  Debtor  in which  records  of Debtor
pertaining  to  accounts  in  Collateral  are kept,  and each  location at which
inventory  in  Collateral  is or will be  kept,  and of any  change  of any such
location.  If no such  notice is given,  all  records  of Debtor  pertaining  to
accounts  and all  inventory  are and shall be kept at  Debtor's  address  shown
above.

         4.16 NOTICE OF CHANGES. Debtor will notify Secured Party immediately of
any  material  change in the  Collateral,  of a change in Debtor's  residence or
location,  of a change in any matter  warranted or represented by Debtor in this
Agreement or furnished to Secured Party, and of any Event of Default.

         4.17 USE AND REMOVAL OF COLLATERAL.  Debtor will not use the Collateral
illegally nor, except for Collateral of nominal value,  permit the Collateral to
be affixed to real or personal  property  without the prior  written  consent of
Secured  Party.  Debtor will not permit any of the Collateral to be removed from
the locations  specified  herein  without the written  consent of Secured Party,
except for equipment used in Texas,  Louisiana or Alabama in the ordinary course
of Debtor's business as previously conducted.

         4.18  POSSESSION OF  COLLATERAL.  If the  Collateral is chattel  paper,
documents,  instruments, or investment securities or other instruments,  Secured
Party may deliver a copy of this Agreement to the broker or seller  thereof,  or
any person in possession  thereof,  and such delivery shall constitute notice to
such person of Secured Party's  security  interest  therein and shall constitute
Debtor's  instruction to such person to deliver to Secured Party certificates or
other  evidence  of the  same as soon as  available.  Debtor  will  deliver  all
investment securities, other instruments, documents, and chattel paper which are
part  of the  Collateral  and  in  Debtor's  possession  to  the  Secured  Party
immediately,  or  if  hereafter  acquired,  immediately  following  acquisition,
appropriately  endorsed to Secured Party's order, or with appropriate,  executed
powers. Debtor waives presentment,  demand, notice of dishonor, protest, and all
other notices with respect thereto.

         4.19  CHATTEL  PAPER.  Debtor has  perfected or will perfect a security
interest  by means  satisfactory  to Secured  Party in goods  covered by chattel
paper in Collateral.

         4.20  CONSUMER   CREDIT.   If  any  Collateral  or  proceeds   includes
obligations  of third  parties to Debtor,  the  transactions  giving rise to the
Collateral  shall  conform in all  respects to the  applicable  state or federal
consumer  credit law.  DEBTOR SHALL HOLD  HARMLESS AND  INDEMNIFY  SECURED PARTY
AGAINST ANY COST,  LOSS,  OR EXPENSE  INCLUDING  ATTORNEY'S  FEES,  ARISING FROM
DEBTOR'S BREACH OF THIS COVENANT.
<PAGE>

         4.21 CHANGE OF NAME.  Debtor  shall not change its name (or any assumed
name or other name under which Debtor does business) or its corporate  structure
without Secured Party's prior written  consent,  which shall not be unreasonably
withheld.  Debtor  will  not  change  its  principal  place of  business,  chief
executive  office,  or the place  where it keeps its  books and  records  unless
Debtor (i) shall have given Secured Party thirty (30) days prior written  notice
thereof,  and (ii) shall have taken all action deemed  necessary or desirable by
Secured Party to cause the Security Interest to be and remain perfected with the
priority required by this Agreement. Debtor shall execute all such documents and
agreements   (including  without  limitation  security   agreements,   financing
statements,  and  amendments  to  financing  statements)  as  Secured  Party may
reasonably request in connection with any such name change.

         4.22  NOTATION  ON TITLE  CERTIFICATES.  If  certificates  of title are
issued or outstanding  with respect to any of the Collateral,  Debtor will cause
the Security Interest to be properly noted therein.

         4.23 POWER OF  ATTORNEY.  Debtor  appoints  Secured  Party as  Debtor's
attorney-in-fact  with full  power in  Debtor's  name and behalf to do every act
which  Debtor is obligated  to do or may be required to do  hereunder;  however,
nothing in this section shall be construed to obligate Secured Party to take any
action hereunder.

         4.24 DEBTOR'S WAIVERS.  Debtor waives notice of the creation,  advance,
increase,  existence,  extension,  or  renewal  of, and of any  indulgence  with
respect to, the Indebtedness;  waives notice of intent to accelerate,  notice of
acceleration,  notice  of  intent  to  demand,  presentment,  demand,  notice of
dishonor,  and  protest;  waives  notice  of  the  amount  of  the  Indebtedness
outstanding  at any time,  notice of any change in  financial  condition  of any
person liable for the  Indebtedness or any part thereof,  notice of any Event of
Default,  and all other notices  respecting  the  Indebtedness;  and agrees that
maturity of the Indebtedness and any part thereof may be accelerated,  extended,
or renewed one or more times by Secured Party in its discretion,  without notice
to Debtor.

         4.25 OTHER PARTIES AND OTHER COLLATERAL.  No renewal or extension of or
any other  indulgence with respect to the  Indebtedness or any part thereof,  no
release  of any  security,  no  release  of any  person  (including  any  maker,
endorser,  guarantor,  or  surety)  liable  on the  Indebtedness,  no  delay  in
enforcement  of payment,  and no delay or admission or lack of diligence or care
in  exercising  any  right or power  with  respect  to the  Indebtedness  or any
security  therefor or guaranty  thereof or under this  Agreement  shall in other
manner  impair or affect the rights of Secured  Party under the law,  under this
Agreement, or under any other agreement pertaining to the other security for the
Indebtedness,  before  foreclosing upon the Collateral for the purpose of paying
the  Indebtedness.  Debtor  waives any right to the  benefit of or to require or
control application of any other security or proceeds thereof, and Debtor agrees
that Secured  Party shall have no duty or  obligation  to Debtor to apply to the
Indebtedness any such other security or proceeds thereof.
<PAGE>

                                    ARTICLE V
                       RIGHTS AND POWERS OF SECURED PARTY

         Secured Party, after default,  without liability to Debtor, may: obtain
from any  person  information  regarding  Debtor  or  Debtor's  business,  which
information  any such  person  also may  furnish  without  liability  to Debtor;
require Debtor to give possession or control of any Collateral to Secured Party;
endorse as  Debtor's  agent any  instruments,  documents,  or  chattel  paper in
Collateral or  representing  proceeds of  Collateral;  contact  account  debtors
directly to verify  information  furnished by Debtor;  take control of proceeds;
release  Collateral in its  possession to any Debtor  temporarily  or otherwise;
require additional  collateral;  reject as unsatisfactory any property hereafter
offered by Debtor as Collateral;  set standards from time to time to govern what
may be used as  after-acquired  collateral;  designate,  from  time to  time,  a
certain  percent  of the  Collateral  as the loan  value and  require  Debtor to
maintain  the  Indebtedness  at or below  such  figure;  take  control  of funds
generated by the Collateral,  such as cash dividends,  interest, and proceeds or
refunds from insurance,  and use same to reduce any part of the Indebtedness and
exercise all other rights which an owner of such Collateral may exercise, except
the right to vote or dispose of  Collateral  before an Event of Default;  at any
time  transfer any of the  Collateral  or evidence  thereof into its own name of
that of its nominee; and demand, collect,  convert, redeem, receipt for, settle,
compromise,  adjust, sue for, foreclose, or realize upon Collateral,  in its own
name or in the name of Debtor,  as Secured  Party may  determine in its sole and
absolute  discretion.  Secured  Party shall not be liable for failure to collect
any account or instrument, or for any act or omission on the part of the Secured
Party,  its officers,  agents,  or employees,  except  willful  misconduct.  The
foregoing  rights and powers of Secured  Party will be in addition to, and not a
limitation upon, any rights and powers of Secured Party given by law,  elsewhere
in this  Agreement,  or  otherwise.  If Debtor  fails to maintain  any  required
insurance,  to the extent  permitted by applicable law Secured Party may (but is
not obligated to) purchase single interest insurance coverage for the Collateral
which insurance may at Secured Party's option (i) protect only Secured Party and
not provide any  remuneration or protection for Debtor directly and (ii) provide
coverage only after the  Indebtedness  has been declared due as herein provided.
The premiums for any such  insurance  purchased by Secured Party shall be a part
of the Indebtedness and shall bear interest as provided in Section 1.2(d) above.

                                   ARTICLE VI
                                     DEFAULT

         6.1 Events of Default.  The  following are events of default under this
Agreement ("Events of Default"):
<PAGE>

                  (a)  default,  which  exists  for  longer  than  fifteen  (15)
         calendar  days,  in the  timely  payment of any part of the New Note or
         other  Indebtedness  or in  performance  or observance of the terms and
         conditions  herein, in any of the other Security  Documents,  or in any
         other agreement between Debtor and Secured Party;

                  (b)  any  warranty,   representation,  or  statement  made  or
         furnished  to  Secured  Party  by  Debtor,  Consolidated,   or  any  of
         Consolidated's  subsidiaries  proves to have been false in any material
         respect when made or furnished;

                  (c)   acceleration   of  the   maturity  of  debt  of  Debtor,
         Consolidated,  or  any of  Consolidated's  subsidiaries  to  any  other
         person;

                  (d) substantial change in any fact warranted or represented in
         this  Agreement or in any other  agreement  between  Debtor and Secured
         Party or in any  statement,  schedule,  or other  writing  furnished in
         connection therewith;

                  (e) sale, loss, theft, destruction,  encumbrance,  or transfer
         of any Collateral in violation  hereof,  or  substantial  damage to any
         Collateral;

                  (f) belief by Secured  Party that the  prospect  of payment of
         the Indebtedness or performance of this Agreement is impaired;

                  (g) death, incapacity,  dissolution, merger, or consolidation,
         termination of existence,  insolvency or business  failure of Debtor or
         any person liable on the Indebtedness;  commencement of proceedings for
         the appointment of a receiver for any property of Debtor;  commencement
         of any proceeding  under any bankruptcy or insolvency law by or against
         Debtor (or any corporate  action shall be taken to effect same), or any
         partnership  of which Debtor is a partner,  or by or against any person
         liable  upon the  Indebtedness  or any part  thereof,  or  liable  upon
         Collateral;

                  (h)      levy on,  seizure,  or  attachment  of any property
         of Debtor,  Consolidated,  or any of Consolidated's subsidiaries;

                  (i) a  judgment  against  Debtor in  excess of $1,000  becomes
         final and remains  unsatisfied  and unappealed for thirty (30) calendar
         days; or

                  (j) any  liability or agreement of third  parties to Debtor or
         on the Collateral shall not be paid or performed in accordance with the
         terms thereof.

         6.2 REMEDIES OF SECURED  PARTY UPON  DEFAULT.  When an Event of Default
occurs,  and at any time thereafter,  Secured Party without notice or demand may
declare  the  Indebtedness  in whole  or part  immediately  due and may  enforce
payment  of the same and  exercise  any rights  under the Texas UCC,  rights and
remedies of Secured Party under this Agreement, or otherwise. Secured Party may
<PAGE>

require Debtor to assemble the Collateral and make it available to Secured Party
at a place which is reasonably convenient to both parties. Unless the Collateral
is  perishable  or  threatens  to  decline  speedily  in  value  or is of a type
customarily  sold  on a  recognized  market,  Secured  Party  will  give  Debtor
reasonable  notice of the time and place of any  public  sale  thereof or of the
time after which any private sale or other intended disposition thereof is to be
made. Expenses of retaking,  holding,  preparing for sale, selling,  leasing, or
the like shall include  Secured  Party's  reasonable  attorney's  fees and legal
expenses.  Secured Party shall be entitled to immediate  possession of all books
and records  evidencing  any accounts or general  intangibles  or  pertaining to
chattel  paper  covered by this  Agreement and shall have the authority to enter
upon any premises upon which any of the same, or any Collateral, may be situated
and remove the same therefrom without liability. Secured Party may surrender any
insurance  policies in  Collateral  and receive the  unearned  premium  thereon.
Debtor shall be entitled to any surplus  after payment of the  Indebtedness  and
shall be  liable  to  Secured  Party  for any  deficiency.  The  process  of any
disposition after default available to satisfy the Indebtedness shall be applied
to the  Indebtedness  in such order and in such  manner as Secured  Party in its
discretion  shall  decide.  If, in the  opinion of Secured  Party,  there is any
question that a public sale or  distribution  of any Collateral will violate any
state or federal securities law, Secured Party (i) may offer and sell securities
privately to purchasers who will agree to take them for investment  purposes and
not with a view to distribution  and who will agree to imposition of restrictive
legends on the  certificates  representing  the security,  or (ii) may sell such
securities in an intrastate  offering  under Section  3(a)(11) of the Securities
Act of 1933,  and no sale so made in good faith by Secured Party shall be deemed
to be not "commercially reasonable" because so made.

                                   ARTICLE VII
                                     GENERAL

         7.1 PARTIES BOUND.  Secured Party's rights under this Agreement and the
Security Interest shall inure to the benefits of its successors and assigns, and
in the event of any  assignment  or transfer of any of the  Indebtedness  or the
Collateral,  Secured  Party  thereafter  shall  be  fully  discharged  from  any
responsibility  with respect to the Collateral so assigned or  transferred,  but
Secured  Party shall  retain all rights and powers  hereby given with respect to
any of the  Indebtedness  or  Collateral  not so  assigned or  transferred.  All
representations, warranties, and agreements of Debtor if more than one are joint
and several, and all shall be binding upon the personal representatives,  heirs,
successors,  and assigns of Debtor.  Debtor may not assign this Agreement or any
of its rights or obligations hereunder without the express prior written consent
of Secured Party in each instance.

         7.2 WAIVER.  No delay of Secured Party in exercising any power or right
shall operate as a waiver thereof;  nor shall any single or partial  exercise of
any power or right preclude other or further exercise thereof or the exercise of
any other power or right.  No waiver by Secured Party of any right  hereunder of
any default by Debtor shall be binding upon Secured Party unless in writing, and
no failure by Secured  Party to exercise any power or right  hereunder or waiver
of any  default  by Debtor  shall  operate  as a waiver of any other or  further
exercise of such right or power of any further default.
<PAGE>

         7.3 AGREEMENT CONTINUING.  This Agreement shall constitute a continuing
agreement,  applying to all future as well as existing transactions,  whether or
not of the  character  contemplated  at the date of this  Agreement,  and if all
transactions between Secured Party and Debtor shall be closed at any time, shall
be equally  applicable to any new  transactions  thereafter.  Provisions of this
Agreement,  unless  by their  terms  exclusive,  shall be in  addition  to other
agreements between the parties.

         7.4 DEFINITIONS. Unless the context indicates otherwise, definitions in
the  Texas  UCC  apply to words  and  phrases  in this  Agreement;  if Texas UCC
definitions conflict, Chapter 9 definitions apply.

         7.5 NOTICE. Notice shall be deemed reasonable if mailed postage prepaid
at least 5 days  before  the  related  action  (or if the  Texas  UCC  elsewhere
specifies a longer period, such longer period) to Debtor's address shown above.

         7.6  INTEREST.  No  agreement  relating  to the  Indebtedness  shall be
construed to be a contract for or to authorize charging or receiving, or require
the  payment or permit the  collection  of,  interest  at a rate or in an amount
above that  authorized by law.  Interest  payable under any agreement above that
authorized by law shall be reduced automatically to the highest amount permitted
by law.

         7.7  MODIFICATIONS.  No  provision  hereof shall be modified or limited
except by a written agreement  expressly  referring hereto and to the provisions
so modified or limited and signed by Debtor and Secured Party,  nor by course of
conduct, usage of trade, or by the law merchant.

         7.8  SEVERABILITY.  The  unenforceability  of  any  provision  of  this
Agreement  shall  not  affect  the  enforceability  or  validity  of  any  other
provision.

         7.9 GENDER AND NUMBER.  Where appropriate,  the use of one gender shall
be construed to include the others or any of them; and the singular number shall
be construed to include the plural, and vice versa.

         7.10  APPLICABLE  LAW AND  VENUE.  THIS  AGREEMENT  SHALL BE  CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES OF
AMERICA  APPLICABLE TO TRANSACTIONS  IN THE STATE OF TEXAS.  Except at otherwise
stated,  this  Agreement  and  the  Security  Interest  shall  be  construed  in
accordance  with the Uniform  Commercial Code as in effect in the State of Texas
("Texas UCC").  This Agreement is performable by Debtor in the county of Secured
Party's address set out above.
<PAGE>

         7.11 FINANCING STATEMENT. A carbon, photographic, or other reproduction
of this security  agreement or any financing  statement  covering the Collateral
shall be sufficient as a financing statement.

         7.12  LIMITATIONS  OF LAW. If any law prohibits or limits any charge or
expense  provided  for in this  Agreement  in  connection  with any loan secured
hereby,  such charge or expense will not be made or incurred in connection  with
such loan beyond the limits permitted by such law.


EXECUTED this 6th day of November, 1997.

DEBTOR:

                                           LARCO ENVIRONMENTAL SERVICES, INC.

                                           By: /s/ James J. Connors, Jr.

                                           Name: James J. Connors, Jr.

                                           Title: President/CEO

SECURED PARTY:

                                         AMERICAN PHYSICIANS SERVICE GROUP, INC.

                                         By: /s/ Duane Boyd

                                         Name: Duane Boyd

                                         Title: Senior VP



<PAGE>



                                    EXHIBIT-A

                            LIST OF ASSETS OF DEBTOR

<PAGE>