<PAGE>

                             LOAN AND SECURITY AGREEMENT


     THIS AGREEMENT made this 29th day of May, 1997 by and between NATIONAL BANK
OF CANADA, a Canadian chartered bank ("Lender"), with an address at One Tabor
Center, 1200 Seventeenth Street, Suite 2760, Denver, Colorado 80202, and
CET ENVIRONMENTAL SERVICES, INC., a California corporation, with an address at
7670 South Vaughn Court, Suite 130, Englewood, Colorado 80112 ("Borrower").


                                     WITNESSETH:

     WHEREAS, the parties wish to provide for the terms and conditions upon
which Loans may be made, and Letters of Credit may be issued, for the account of
Borrower;

     NOW, THEREFORE, in consideration of any Loans made and/or Letters of Credit
issued for the account of Borrower, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Borrower, the parties agree as follows:

     1.   DEFINITIONS.

          (a)  "Acceptable Equipment" shall mean Equipment owned or to be
acquired by Borrower and used by Borrower in the ordinary course of business in
which Lender shall have a valid, perfected, first priority security interest
subject to no other lien, encumbrance or security interest and which is
otherwise acceptable to Lender.

          (b)  "Account," "Account Debtor," "Chattel Paper," "Documents,"
"Equipment," "General Intangibles," "Goods," "Instruments" and "Inventory" shall
have the respective meanings assigned to such terms, as of the date of this
Agreement, in the Colorado Uniform Commercial Code.

          (c)  "Affiliate" shall mean any Person directly or indirectly
controlling, controlled by or under common control with another Person.

          (d)  "Agreement" shall mean this Loan and Security Agreement, any
exhibits or schedules hereto, any concurrent or subsequent riders hereto and any
extensions, supplements, amendments or modifications hereto.

          (e)  "Blocked Account" shall have the meaning specified in Section 8
hereof.

          (f)  "Closing" shall mean satisfaction of the conditions precedent in
Section 4 below and closing of the transactions contemplated by the Agreement.

          (g)  "Collateral" shall mean all of the property of Borrower described
in Section 5 hereof, together with all other real or personal property of
Borrower now or hereafter


<PAGE>

pledged to Lender to secure repayment of any of the Liabilities, including,
without limitation, all Accounts, Inventory, General Intangibles and Equipment
of Borrower.

          (h)  "Collateral Report" shall have the meaning specified in Section 9
hereof.

          (i)  "Eligible Accounts" shall mean those Accounts of Borrower which
are unpaid less than ninety (90) days from invoice date, and which Lender, in
its sole discretion, determines to be eligible.  Eligible Accounts may, at
Lender's option, include up to $625,000 of bonded accounts.  Without limiting
Lender's discretion, unless otherwise agreed by Lender, the following Accounts
of Borrower are not Eligible Accounts:  (i) all Accounts owing by a single
Account Debtor, including currently scheduled Accounts, if twenty-five percent
(25%) or more of the balance owing by such Account Debtor to Borrower is
ineligible under clauses (iv) or (v) below; (ii) Accounts with respect to which
the Account Debtor is an officer, director, employee, Subsidiary or Affiliate of
Borrower; (iii) Accounts with respect to which the Account Debtor is not a
resident of the United States unless the Account Debtor has supplied Borrower
with an irrevocable letter of credit, in form and substance satisfactory to
Lender, issued by a U.S. financial institution satisfactory to Lender, to cover
the full amount of such Account, and such letter of credit is assigned and
delivered to Lender; (iv) Accounts in dispute or with respect to which the
Account Debtor has asserted a counterclaim or has asserted a right of setoff;
(v) Accounts with respect to which the prospect of payment or performance by the
Account Debtor is or will be impaired, as determined by Lender in the exercise
of its sole discretion; (vi) Accounts with respect to which Lender does not have
a first and valid fully perfected security interest; (vii) Accounts with respect
to which the Account Debtor is the subject of bankruptcy or a similar insolvency
proceeding or has made an assignment for the benefit of creditors or whose
assets have been conveyed to a receiver or trustee; (viii) Accounts with respect
to which the Account Debtor's obligation to pay the Account is conditional upon
the Account Debtor's approval or is otherwise subject to any prepurchase
obligation or return right, as with sales made on a bill-and-hold, guaranteed
sale, sale-or-return, sale on approval or consignment basis; (ix) Accounts to
the extent that the Account Debtor's indebtedness to Borrower exceeds a credit
limit determined by Lender in Lender's discretion; (x) Accounts with respect to
which the Account Debtor is located in New Jersey or Minnesota unless Borrower
(a) with respect to each such state, has received a certificate of authority to
do business and is in good standing in such state, or (b) has filed a Notice of
Business Activities Report with the New Jersey Division of Taxation or the
Minnesota Department of Revenue, as applicable, for the then current year;
(xi) Accounts which arise out of sales not made in the ordinary course of
Borrower's business; (xii) Accounts with respect to which the Account Debtor has
returned to Borrower any portion of the Inventory the sale of which gave rise to
such Accounts; and (xiii) Accounts with respect to which any document or
agreement executed or delivered in connection therewith, or any procedure used
in connection with any such document or agreement, fails in any material respect
to comply with the requirements of applicable law.

          (j)  "Eligible Unbilled Accounts" shall mean those Eligible Accounts
with respect to which the work giving rise to such Eligible Account was
completed within the last thirty days but for which no invoice has yet been
issued.


                                         -2-
<PAGE>

          (k)  "Equipment Loan" or "Equipment Loans" means all advances made by
Lender to Borrower pursuant to paragraph 2(b) below.

          (l)  "Equipment Value" shall mean, at any time, up to eighty percent
(80%) of the cost as determined by Lender in its sole discretion of new
Acceptable Equipment (less any costs for installation, transportation, and
tooling) purchased or being purchased by Borrower.

          (m)  "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

          (n)  "Event of Default" shall have the meaning specified in Section 13
hereof.

          (o)  "Indemnified Party" shall have the meaning specified in
Section 15 hereof.

          (p)  "Letter of Credit Issuer" shall mean Lender or its designee.

          (q)  "Letters of Credit" shall mean any Letter of Credit which shall
now or hereafter be issued by the Letter of Credit Issuer at the request and for
the account of Borrower pursuant to the terms of this Agreement.

          (r)  "Liabilities" shall mean any and all obligations, liabilities and
indebtedness of Borrower to Lender or to any Affiliate of Lender of any and
every kind and nature, howsoever created, arising or evidenced and howsoever
owned, held or acquired, whether now or hereafter existing, whether now due or
to become due, whether primary, secondary, direct, indirect, absolute,
contingent or otherwise (including, without limitation, obligations of
performance), whether several, joint or joint and several, and whether arising
or existing under written or oral agreement or by operation of law, including,
without limitation, all obligations for payment of the Loans and for payment of
the reimbursement obligations under paragraph 2(c) with respect to the Letters
of Credit.

          (s)  "Loans" shall mean all advances made by Lender to Borrower
pursuant to Section 2 and shall refer collectively to the Revolving Loans,
Equipment Loans and the Term Loans.

          (t)  "Maturity Date" shall mean the earliest to occur of the
following:  (i) November 30, 1998, and (ii) the date the Liabilities are
accelerated pursuant to Section 14 hereof.

          (u)  "Maximum Loan Availability" shall mean (a) the lesser of Nine
Million Dollars ($9,000,000) or Revolving Loan Availability minus (b) the
outstanding principal amount of all Equipment Loans minus (c) the aggregate
undrawn face amount of all Letters of Credit.

          (v)  "Obligor" shall mean Borrower and each Person who is or shall
become primarily or secondarily liable for any of the Liabilities.


                                         -3-
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          (w)  "Other Agreements" shall mean all agreements, instruments and
documents, including, without limitation, guaranties, mortgages, trust deeds,
pledges, powers of attorney, consents, assignments, security agreements,
intercreditor agreements, financing statements and all other writings
heretofore, now or from time to time hereafter executed by or on behalf of
Borrower or any other Person and delivered to Lender or to any Affiliate of
Lender in connection with the Liabilities or the transactions contemplated
hereby.

          (x)  "Permitted Liens" shall mean (i) statutory liens of landlords,
carriers, warehousemen, mechanics, materialmen or suppliers incurred in the
ordinary course of business and securing amounts not yet due or declared to be
due by the claimant thereunder, (ii) liens or security interests in favor of
Lender, (iii) zoning restrictions and easements, licenses, covenants and other
restrictions affecting the use of real property that do not individually or in
the aggregate have a material adverse effect on Borrower's ability to use such
real property  for its intended purpose in connection with Borrower's business,
and (iv) the liens set forth on EXHIBIT B.

          (y)  "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or foreign or United States government
(whether federal, state, county, city, municipal or otherwise), including,
without limitation, any instrumentality, division, agency, body or department
thereof.

          (z)  "Plan" shall mean any employee benefit plan defined in
Section 3(3) of ERISA, including any multiemployer plan or any employee welfare
benefit plan which is maintained or has been maintained pursuant to a collective
bargaining agreement to which two or more unrelated employers contribute and in
respect of which Borrower is an "employer" as defined in Section 3(5) of ERISA.

          (aa) "Reference Rate" shall mean the rate of interest publicly
announced from time to time by National Bank of Canada at its principal office
as its United States (rather than Canadian) prime lending rate.  The Reference
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer.  Any change in the Reference Rate shall
be effective as of the effective date stated in the announcement by National
Bank of Canada of such change.

          (bb) "Revolving Loan" or "Revolving Loans" shall mean all advances
made by Lender to Borrower pursuant to paragraph 2(a) hereof.

          (cc) "Revolving Loan Availability" shall mean at any time, the sum of
the following:

               (i)  up to eighty percent (80%) of the face amount (less maximum
discounts, credits and allowances which may be taken by or granted to Account
Debtors in connection therewith) then outstanding under existing Eligible
Accounts at such time, less such reserves as Lender in its sole discretion
elects to establish; and


                                         -4-
<PAGE>

               (ii) up to fifty percent (50%) of the face amount (less maximum
discounts, credits and allowances which may be taken by or granted to Account
Debtors in connection therewith) then outstanding under existing Eligible
Unbilled Accounts at such time, less such reserves as Lender in its sole
discretion elects to establish.

Lender may at any time and from time to time in its sole discretion change the
advance percentage as set forth above.

          (dd) "Subsidiary" shall mean any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time stock of any other class of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned by Borrower or by any partnership or joint
venture of which more than fifty percent (50%) of the outstanding equity
interests are at the time, directly or indirectly, owned by Borrower.

          (ee) "Subordinated Debt" means collectively (i) indebtedness to
Dorothy R. Munroe as Trustee of the Dorothy R. Munroe Trust in the amount of
$84,250.00 (ii) indebtedness to Dorothy R. Munroe as Trustee for Stephanie Ann
Davis in the amount of $16,850.00, (iii) indebtedness to Dorothy R. Munroe as
Trustee for Charles Howe Davis in the amount of $16,850.00, (iv) indebtedness to
Dorothy R. Munroe as Trustee of Birnie Children's Trust I in the amount of
$337,000.00, (v) indebtedness to Dorothy R. Munroe, as the Trustee of the Rempel
Family Trust in the amount of $16,850.00, and (vi) indebtedness to Dorothy R.
Munroe as Trustee of the Birnie Children's Trust I in the amount of $200,000.00.

          (ff) "Term Loan" shall have the meaning set forth in paragraph 2(d)
below.

          (gg) "Term Loan Availability" shall mean up to eighty percent (80%) of
the acceptable auction value for existing Acceptable Equipment as determined
pursuant to an appraisal acceptable to Lender in its sole discretion.

     2.   LOANS, LETTERS OF CREDIT.

          (a)  Subject to the terms and conditions of this Agreement and the
Other Agreements, prior to the Maturity Date, Lender may, in its reasonable
discretion, make Revolving Loans to Borrower as Borrower shall from time to time
request for general working capital purposes.  The aggregate unpaid principal
amount of all Revolving Loans outstanding at any one time shall not exceed the
Maximum Loan Availability at such time.  The Revolving Loan shall be repaid as
provided elsewhere in this Agreement.  If at any time the outstanding principal
balance of the Revolving Loan exceeds the Maximum Loan Availability, Borrower
shall immediately, and without the necessity of a demand of Lender, pay to
Lender such amount as may be necessary to eliminate such excess.

          (b)  Subject to the terms and conditions of this Agreement and the
Other Agreements, prior to the Maturity Date, Lender may, in its reasonable
discretion, make


                                         -5-
<PAGE>

Equipment Loans to Borrower as Borrower shall from time to time request to
purchase Acceptable Equipment.  The maximum amount of each Equipment Loan shall
not exceed the lesser of (1) the Equipment Value of the Acceptable Equipment
purchased with such Equipment Loan, (2) One Million Dollars ($1,000,000) minus
the aggregate unpaid principal amount of all Equipment Loans outstanding on such
date and (3) the Maximum Loan Availability minus the outstanding principal
amount of all Revolving Loans.  Borrower shall make equal monthly principal
payments on each Equipment Loan on the first day of each month based on a
sixty-month (60) straight line amortization schedule, commencing with the first
payment on July 1, 1997, and continuing on the first day of each month
thereafter until the Maturity Date at which time the entire outstanding amount
of each Equipment Loan shall be due and payable in full.

          (c)  Subject to the terms and conditions of this Agreement and the
Other Agreements, prior to the Maturity Date, Lender may, in its reasonable
discretion, at Borrower's request, cause Letters of Credit to be issued for the
account of Borrower; provided, that the aggregate undrawn face amount of the
Letters of Credit shall not at any time exceed the lesser of (i) FIVE HUNDRED
THOUSAND DOLLARS ($500,000) and (ii) Maximum Loan Availability.  If at any time
the outstanding principal balance of the Revolving Loan is zero and Maximum Loan
Availability is less than zero, Borrower shall provide cash collateral to Lender
in an amount equal to the amount by which Maximum Loan Availability is less than
zero to secure any Letters of Credit.  The Letters of Credit shall be in form
and substance satisfactory to Lender and shall have an expiration date not later
than the earlier of (1) twelve (12) months from the date of issuance or (2) the
Maturity Date.  Borrower authorizes Lender to reimburse the Letter of Credit
Issuer for any payments made in respect of the Letters of Credit.  Borrower
shall reimburse Lender, immediately upon demand, in the amount of any payments
made by Lender to the Letter of Credit Issuer or any Person with respect to the
Letters of Credit, and until Lender shall have been so reimbursed by Borrower
such payments by Lender shall be deemed to be Revolving Loans.  In connection
with the Letters of Credit, Borrower hereby indemnifies Lender for any payments
made by Lender with respect to the Letters of Credit and for any taxes, levies,
deductions, charges and costs and expenses incurred by Lender with respect to
the Letters of Credit.  The Lender will not release any collateral until such
time as all Letters of Credit have been canceled.

          (d)  Subject to the terms and conditions of this Agreement and the
Other Agreements, Lender shall make a loan to Borrower (the "Term Loan") in an
amount equal to the lesser of (A) ONE MILLION DOLLARS ($1,000,000) and (B) Term
Loan Availability at the time of the advance of the Term Loan.  Borrower shall
make equal monthly principal payments on the Term Loan on the first day of each
month based on a sixty-month (60) straight line amortization schedule with the
first payment commencing on the first day of the month following the advance of
the Term Loan, and continuing on the first day of each month thereafter until
the Maturity Date at which time the entire unpaid principal balance of the Term
Loan shall be due and payable in full.

          (e)  The Loans and all other amounts due to Lender from Borrower shall
be due and payable in full on the Maturity Date.


                                         -6-
<PAGE>

     3.   FEES AND CHARGES.  Borrower shall pay to Lender the following fees:

          (a)  Borrower shall pay to Lender interest on the outstanding
principal balance of the Loans monthly in arrears beginning on June 1, 1997, at
the per annum rate of one-quarter of one percent (0.25%) plus the Reference
Rate.  If Borrower's earnings net of extraordinary income for the year ended
December 31, 1997 exceed $2,000,000 and the ratio of Borrower's
liabilities-to-net worth calculated in accordance with Section 12(q)(iv) below
is less than 2.5 to 1 for the fiscal year ending on December 31, 1997, then the
interest rate set forth above shall be reduced by one-quarter of one percent
(0.25%) to the Reference Rate; effective upon receipt by Lender of audited
financial statements acceptable to Lender together with such other information
as Lender may require.  If Borrower's earnings net of extraordinary income for
the year ended December 31, 1997 are less than $1,000,000 then the interest rate
set forth above shall be increased by one-quarter of one percent (0.25%) to
one-half percent (0.50%) plus the Reference Rate; effective retroactively to the
date of this Agreement; provided that if audited financials are not received on
or before March 31, 1998, the interest rate shall be increased one-quarter
percent effective retroactively to the date of this Agreement until such time as
such audited financial statements are received and then shall be adjusted in
accordance with the results set forth in such audited financial statements.  If
the interest rate is increased effective retroactively to the date of this
Agreement, Borrower shall, within five days after request by Lender, pay to
Lender all additional interest due as a result of the retroactive increase.
Following the occurrence of an Event of Default, Borrower shall pay to Lender
interest on the outstanding principal balance of the Loans at the per annum rate
of two percent (2%) plus the Reference Rate.  Interest shall be computed on the
basis of a year of three hundred sixty (360) days for the actual number of days
elapsed.

          (b)  Borrower shall pay to Lender a letter of credit fee equal to one
and one-half percent (1.5%) per annum (computed on the basis of a year of three
hundred sixty (360) days for the actual number of days elapsed) of the average
undrawn face amount of the Letters of Credit, payable monthly in arrears within
10 days after the end of each month; provided, that following the occurrence of
an Event of Default, the letter of credit fee shall increase to three and
one-half percent (3.5%) per annum.  In addition, Borrower shall pay to Lender
all expenses incurred by Lender and the Letter of Credit Issuer in connection
with the issuance and negotiation of any Letter of Credit, payable on the date
incurred by Lender or the Letter of Credit Issuer.

          (c)  Borrower shall pay to Lender a closing fee equal to TWENTY-FIVE
THOUSAND DOLLARS ($25,000.00) at Closing.

          (d)  Borrower shall pay to Lender an audit fee at a rate of FIVE
HUNDRED DOLLARS ($500.00) per auditor per day, plus travel and other
out-of-pocket expenses, which shall be payable by Borrower upon completion of
each audit.

          (e)  Borrower shall pay to Lender a monthly unused fee equal to the
(i) product obtained by multiplying (A) one-quarter of one percent (0.25%) per
annum (computed on the basis of a year of three hundred sixty (360) days for the
actual number of days elapsed) times,


                                         -7-
<PAGE>

(B) the amount by which (i) $10,000,000 exceeds (2) the sum of the average daily
outstanding balance of the Loans during each calendar month and the average
outstanding face amount of all Letters of Credit during such month, and
(ii) dividing such product by 360 and multiplying the results by the number of
days in the month.  Such unused fee shall be payable monthly in arrears within
ten (10) days after the end of each month.

          (f)  If Borrower elects to terminate this Agreement prior to the
Maturity Date, but within 365 days after Closing, Borrower will pay Lender an
early termination fee equal to the amount obtained by multiplying one-half
percent times $10,000,000, which amount shall be payable at the time Borrower
terminates this Agreement.

          (g)  It is the intent of the parties that the rate of interest and the
other fees and charges to Borrower under this Agreement shall be lawful;
therefore, if for any reason the interest or other fees and charges payable
under this Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which Lender may lawfully charge Borrower,
then the obligation to pay interest and other charges shall automatically be
reduced to such limit and, if any amount in excess of such limit shall have been
paid, then such amount shall be refunded to Borrower.

     4.   CONDITIONS OF ADVANCES AND LETTERS OF CREDIT.  Without limiting
Lender's discretion to make advances hereunder, the making of any advance
provided for in this Agreement shall be conditioned upon the following:

          (a)  Lender shall have received, (i) with respect to a request for an
advance in connection with the Revolving Loan, by at least twelve o'clock p.m.
(12:00 p.m.) Denver time on the day on which such advance is requested to be
made hereunder with respect to request for an advance in connection with an
Equipment Loan by at least twelve o'clock p.m. (12:00 p.m.) Denver time on the
day which is three business days prior to the day on which such advance is
requested to be made hereunder, a telephonic request from an officer of Borrower
(or any Person authorized by Borrower pursuant to a written list provided to
Lender), for an advance in a specific amount, and (ii) with respect to a request
for the issuance of a Letter of Credit in connection with the Revolving Loan, at
least five days prior to the date such Letter of Credit is requested to be
issued, an application for such Letter of Credit executed by an officer of
Borrower.  In addition, Lender shall also have received all of the schedules and
reports required to have been delivered by Borrower pursuant to Section 9
hereof;

          (b)  No Event of Default shall have occurred and be continuing, in no
event that with notice, or the passage of time, or both could become an Event of
Default shall have occurred;

          (c)  All of the representations and warranties contained in this
Agreement and the Other Agreements shall be true and correct as if made on the
date the request for an advance or Letter of Credit is made;


                                         -8-
<PAGE>

          (d)  With respect to any advance of an Equipment Loan, Borrower shall
have provided Lender evidence of the Equipment Value of the Acceptable
Equipment;

          (e)  Within fifteen days after the making of any prior Equipment Loan,
Borrower shall have provided to Lender the information required pursuant to
Section 12(t) below;

          (f)  Lender shall have received, in form and substance satisfactory to
Lender, all certificates, orders, authorities, consents, affidavits, schedules,
instruments, security agreements, financing statements, opinions, mortgages and
other documents which are provided for hereunder, or which Lender may at any
time request, including without limitation a Subordination Agreement in
connection with the Subordinated Debt;

          (g)  With respect to the initial advance of the Loans, Lender shall
have satisfactorily completed all due diligence on the Borrower and the
collateral which Lender determines is necessary, including, without limitation,
field audits and financial review;

          (h)  There shall have been no material adverse change in the
condition, financial or otherwise, of Borrower as reasonably determined by
Lender;

          (i)  With respect to the initial advance of the Revolving Loan, the
amount of Revolving Loan Availability minus the amount of such advance and minus
all accounts payable of Borrower in excess of thirty days must be at least
$1,000,000;

          (j)  With respect to the advance of the Term Loan, (i) Lender shall
have received appraisals acceptable to Lender in its sole discretion in order to
determine Term Loan Availability, (ii) Lender shall have received UCC search
results from such jurisdictions as Lender may require which must be acceptable
to Lender in its sole discretion, (iii) Lender shall have a valid, perfected
lien on all vehicles owned by Borrower and (iv) Lender shall have received such
other documents and information as Lender may reasonably require; and

          (k)  Lender shall have received such other documents, instruments,
agreements or information as Lender may reasonably require.

     5.   GRANT OF SECURITY INTEREST TO LENDER.  As security for the payment or
other satisfaction of all Liabilities, Borrower hereby assigns to Lender and
grants to Lender a continuing security interest in the following property of
Borrower, whether now or hereafter owned, existing, acquired or arising and
wherever now or hereafter located:  (a) all Accounts and all Goods whose sale,
lease or other disposition by Borrower has given rise to Accounts and have been
returned to or repossessed or stopped in transit by Borrower; (b) all Chattel
Paper, Instruments, Documents and General Intangibles (including, without
limitation, all patents, patent applications, trademarks, trademark
applications, tradenames, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, tax refund claims, claims against carriers
and shippers, guarantee claims, contracts rights, security interests, security
deposits and any rights to indemnification); (c) all Inventory and other Goods,
including, without


                                         -9-
<PAGE>

limitation, Equipment, vehicles and fixtures; (d) all deposits and cash and any
other property of Borrower now or hereafter in the possession, custody or
control of Lender or any agent or any Affiliate of Lender or any participant
with Lender in the Loans and/or Letters of Credit for any purpose (whether for
safekeeping, deposit, collection, custody, pledge, transmission or otherwise);
(e) all mobile goods; (f) Account No. 1018171774 at Norwest Bank Colorado,
National Association, and all renewals thereof or substitutions, additions
thereto, proceeds therefrom, and all cash and other amounts at any time on
deposit therein and all interest and dividends thereon; (g) Account No.
4500148743 at Union Bank of California, N.A., and all renewals thereof or
substitutions, additions thereto, proceeds therefrom, and all cash and other
amounts at any time on deposit therein and all interest and dividends thereon;
and (h) all additions and accessions to, substitutions for, and replacements,
products and proceeds of the foregoing property, including, without limitation,
proceeds of all insurance policies insuring the foregoing property, and all of
Borrower's books and records relating to any of the foregoing and to Borrower's
business.

     6.   PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN.  Borrower shall, at Lender's request, at any time and from time to
time, execute and deliver to Lender such financing statements, documents and
other agreements and instruments (and pay the cost of filing or recording the
same in all public offices deemed necessary or desirable by Lender) and do such
other acts and things as Lender may deem necessary or desirable in order to
establish and maintain a valid, attached and perfected security interest in the
Collateral in favor of Lender (free and clear of all other liens, claims and
rights of third parties whatsoever, whether voluntarily or involuntarily
created, except Permitted Liens) to secure payment of the Liabilities, and in
order to facilitate the collection of the Collateral.  Borrower irrevocably
hereby makes, constitutes and appoints Lender (and all Persons designated by
Lender for that purpose) as Borrower's true and lawful attorney and
agent-in-fact to execute such financing statements, documents and other
agreements and instruments and do such other acts and things as may be necessary
to preserve and perfect Lender's security interest in the Collateral.  Borrower
further agrees that a carbon, photographic, photostatic or other reproduction of
this Agreement or of a financing statement shall be sufficient as a financing
statement.

     7.   CAPITAL ADEQUACY.  If Lender shall reasonably determine that the
application or adoption of any law, rule, regulation, directive, interpretation,
treaty or guideline regarding capital adequacy, or any change therein or in the
interpretation or administration thereof, whether or not having the force of
law, increases the amount of capital required or expected to be maintained by
Lender or any Person controlling, directly or indirectly, Lender, and such
increase is based upon the existence of Lender's obligations hereunder and other
commitments of this type, then from time to time, within thirty (30) days after
demand from Lender, Borrower shall pay to Lender such amount or amounts as will
compensate Lender or such controlling Person, as the case may be, for such
increased capital requirement.  The determination of any amount to be paid by
Borrower under this Section 7 shall take into consideration the policies of
Lender or any Person controlling Lender with respect to capital adequacy and
shall be based upon any reasonable averaging, attribution and allocation methods
selected by Lender.  A certificate of Lender setting forth the amount or amounts
as shall be


                                         -10-
<PAGE>

necessary to compensate Lender as specified in this Section 7 shall be delivered
to Borrower and shall be conclusive in the absence of manifest error.  If Lender
invokes its rights under this Section 7, the Borrower shall have the right, in
lieu of making such payment to the Lender, to terminate this Agreement without
payment of any fees that would otherwise be payable under Section 3(f) hereof,
by giving the Lender written notice of such election within thirty (30) days of
demand by the Lender for payment and within thirty (30) days after giving such
notice, making payment of the Liabilities in full and causing the Letters of
Credit to be canceled and fully terminated.

     8.   COLLECTIONS.

          (a)  Borrower shall establish an account (the "Blocked Account") in
Borrower's name with a financial institution acceptable to Lender, into which
Borrower will immediately deposit all payments received by Borrower with respect
to Accounts and other Collateral in the identical form in which such payments
were made, whether by cash or check.  If Borrower, any Affiliate or Subsidiary
of Borrower, or any shareholder, officer, director, employee or agent of
Borrower or any Affiliate or Subsidiary of Borrower, or any other Person acting
for or in concert with Borrower shall receive any monies, checks, notes, drafts
or other payments relating to or as proceeds of Accounts or other Collateral,
Borrower and each such Person shall receive all such items in trust for, and as
the sole and exclusive property of, Lender and, immediately upon receipt
thereof, shall remit the same (or cause the same to be remitted) in kind to the
Blocked Account.  The financial institution with which the Blocked Account is
established shall acknowledge and agree, in a manner satisfactory to Lender,
that the amounts on deposit in such Blocked Account are the sole and exclusive
property of Lender, that such financial institution has no right to setoff
against the Blocked Account, and that such financial institution shall by ACH
transfer, wire transfer, or otherwise transfer in immediately available funds in
a manner satisfactory to Lender, funds deposited in the Blocked Account on a
daily basis as such funds are collected, to Lender.  Lender shall, two
(2) business days after receipt by Lender of immediately available funds, apply
the whole or any part of such collections or proceeds against the Liabilities in
such order as Lender shall determine in its sole discretion.  Borrower agrees
that all payments deposited to such Blocked Account or otherwise received by
Lender, whether in respect of the Accounts or as proceeds of other Collateral or
otherwise, will be applied on account of the Liabilities in accordance with the
terms of this Agreement.  All checks, drafts, instruments and other items of
payment or proceeds of Collateral shall be endorsed by Borrower to Lender, and,
if that endorsement of any such item shall not be made for any reason, Lender is
hereby irrevocably authorized to endorse the same on Borrower's behalf.  For the
purpose of this paragraph, Borrower irrevocably hereby makes, constitutes and
appoints Lender (and all Persons designated by Lender for that purpose) as
Borrower's true and lawful attorney and agent-in-fact (i) to endorse Borrower's
name upon said items of payment and/or proceeds of Collateral and upon any
Chattel Paper, document, instrument, invoice or similar document or agreement
relating to any Account of Borrower or goods pertaining thereto; (ii) to take
control in any manner of any item of payment or proceeds thereof; and (iii) if
an Event of Default occurs and is continuing, to have access to any lock box or
postal box into which any of Borrower's mail is deposited, and open and process
all mail addressed to Borrower and deposited therein; provided, however, that
all such mail and contents thereof that do not constitute


                                         -11-
<PAGE>

Collateral shall be forwarded to the Borrower at its chief executive office in a
timely fashion; and provided further that any mail sent to the Borrower from its
attorneys or accountants shall be forwarded unopened to the Borrower.

          (b)  Lender may, at any time and from time to time after the
occurrence and during the continuance of an Event of Default, whether before or
after notification to any Account Debtor and whether before or after the
maturity of any of the Liabilities, (i) enforce collection of any of Borrower's
Accounts or contract rights by suit or otherwise; (ii) exercise all of
Borrower's rights and remedies with respect to proceedings brought to collect
any Accounts; (iii) surrender, release or exchange all or any part of any
Accounts, or compromise or extend or renew for any period (whether or not longer
than the original period) any indebtedness thereunder; (iv) sell or assign any
Account of Borrower upon such terms, for such amount and at such time or times
as Lender deems advisable; (v) prepare, file and sign Borrower's name on any
proof of claim in bankruptcy or other similar document against any Account
Debtor; and (vi) do all other acts and things which are necessary, in Lender's
sole discretion, to fulfill Borrower's obligations under this Agreement and to
allow Lender to collect the Accounts.  In addition to any other provision
hereof, Lender may at any time after the occurrence of an Event of Default, at
Borrower's expense, notify any parties obligated on any of the Accounts to make
payment directly to Lender of any amounts due or to become due thereunder.

          (c)  Lender, in its sole discretion, without waiving or releasing any
obligation, liability or duty of Borrower under this Agreement or the other
Agreements or any Event of Default, may at any time or times hereafter, but
shall not be obligated to, pay, acquire or accept an assignment of any security
interest, lien, encumbrance or claim asserted by any Person in, upon or against
the Collateral; provided, however, that so long as no Event of Default has
occurred and is continuing, Lender shall first notify the Borrower of such lien
and allow ten (10) business days for the Borrower to pay or otherwise settle
such lien.  All sums paid by Lender in respect thereof and all costs, fees and
expenses, including, without limitation, reasonable attorneys' fees, all court
costs and all other charges relating thereto incurred by Lender shall constitute
Revolving Loans, payable by Borrower to Lender on demand and, until paid, shall
bear interest at the rate then applicable to Loans hereunder.

          (d)  Immediately upon Borrower's receipt of any portion of the
Collateral evidenced by an agreement, Instrument or Document, including, without
limitation, any Chattel Paper, Borrower shall deliver the original thereof to
Lender together with an appropriate endorsement or other specific evidence of
assignment thereof to Lender (in form and substance acceptable to Lender).  If
an endorsement or assignment of any such items shall not be made for any reason,
Lender is hereby irrevocably authorized, as Borrower's attorney and
agent-in-fact, to endorse or assign the same on Borrower's behalf.

     9.   SCHEDULES AND REPORTS.

          (a)  Borrower shall deliver to Lender, on a monthly basis, a
collateral report (the "Collateral Report") describing the aging of the
Accounts, all Eligible Accounts created or acquired by Borrower subsequent to
the immediately preceding Collateral Report, information in


                                         -12-
<PAGE>

connection with any Account which has ceased to be an Eligible Account since the
most recent Collateral Report, and information on all amounts collected by
Borrower on Accounts subsequent to the immediately preceding Collateral Report;
provided that (i) Lender reserves the right to require such report on a weekly
or more frequent basis at any time requested by Lender and (ii) such report
shall be required on a weekly basis at all times after the Maximum Loan
Availability decreases below $1,000,000.00 unless otherwise agreed by Lender.
The Collateral Reports shall contain such additional information as Lender shall
require.  Borrower shall also furnish copies of any other reports or information
concerning the Accounts and Inventory included, described or referred to in the
Collateral Reports, including, without limitation, but only if specifically
requested by Lender, copies of all invoices prepared in connection with
Accounts.  Lender, through its officers, employees or agents, shall have the
right, at any time and from time to time in Lender's name, in the name of a
nominee of Lender or in Borrower's name, to verify the validity, amount or any
other matter relating to any of the Accounts, by mail, telephone, telegraph or
otherwise.  Borrower shall reimburse Lender, on demand, for all costs, fees and
expenses incurred by Lender in this regard.

          (b)  Without limiting the generality of the foregoing, Borrower shall
deliver to Lender, at lease once a month (or more frequently when requested by
Lender), a report with respect to Borrower's Accounts and Inventory reconciling
the information described in paragraph 9(a) for such month.

          (c)  All schedules, certificates, reports, and assignments and other
items delivered by Borrower to Lender hereunder shall be executed by an
authorized representative of Borrower and shall be in such form and contain such
information as Lender shall specify.

     10.  TERMINATION.  This Agreement shall be in effect until the Maturity
Date.  The security interests and liens created under this Agreement and the
Other Agreements shall survive such maturity until the Letters of Credit have
been terminated and canceled and the payment of the other Liabilities has become
indefeasible.  At such time as Borrower has repaid all of the Liabilities and
this Agreement has terminated, Borrower shall deliver to Lender a release, in
form and substance satisfactory to Lender, of all obligations and liabilities of
Lender and its officers, directors, employees, agents and Affiliates to Borrower
and Lender shall deliver to Borrower a similar release of all claims other than
those intended to survive repayment of the Loans.  Without limiting the
generality of the foregoing, Borrower and Lender agree that the provisions of
Section 15 are intended to survive repayment of the Loans and shall not be
released.

     11.  REPRESENTATIONS, WARRANTIES AND COVENANTS.  Borrower hereby
represents, warrants and covenants that:

          (a)  the financial statements delivered or to be delivered by Borrower
to Lender at or prior to the date of this Agreement and at all times subsequent
thereto accurately reflect the financial condition of Borrower, and there has
been no adverse change in the financial condition, the operations or any other
status of Borrower since the date of the financial statements delivered to
Lender most recently prior to the date of this Agreement;


                                         -13-
<PAGE>

          (b)  the office where Borrower keeps its books, records and accounts
(or copies thereof) concerning the Collateral and Borrower's principal place of
business is the location set forth in the introduction on page 1; all of
Borrower's other places of business and locations of Collateral or locations
where Borrower maintains any offices or conducts any business are as set forth
in EXHIBIT A; Borrower shall promptly (but in no event less than ten (10) days
prior thereto) advise Lender in writing of the proposed opening or establishment
of any new office, place of business or location at which Borrower conducts
business, the closing of any existing place of business, any change in the
location of Borrower's books, records and accounts (or copies thereof) or the
opening or closing of any post office box of Borrower;

          (c)  the Collateral, including, without limitation, the Equipment is
and shall be based, only at the addresses set forth on the first page of this
Agreement or on Schedule 1 of EXHIBIT A;

          (d)  if any of the Collateral consists of Goods of a type normally
used in more than one state, whether or not actually so used, Borrower shall
immediately give written notice to Lender of any use of any such Goods in any
state other than a state in which Borrower has previously advised Lender such
Goods shall be used, and such Goods shall not, unless Lender shall otherwise
consent in writing, be used outside of the continental United States;

          (e)  each Account which Borrower shall, expressly or by implication,
request Lender to classify as an Eligible Account or Eligible Unbilled Account,
respectively, shall, as of the time when such request is made, conform in all
respects to the requirements of such classification as set forth in the
respective definitions of "Eligible Account" and "Eligible Unbilled Account" as
set forth herein and as otherwise established by Lender from time to time, and
Borrower shall promptly notify Lender in writing if any such Eligible Account or
Eligible Unbilled Account shall subsequently become ineligible;

          (f)  Borrower is and shall at all times be the lawful owner of its
property now purportedly owned or hereafter purportedly acquired by Borrower
(including without limitation the Collateral), free from all liens, claims,
security interests and encumbrances whatsoever, whether voluntarily or
involuntarily created and whether or not perfected, other than the Permitted
Liens;

          (g)  Borrower has the right and power and is duly authorized and
empowered to enter into, execute and deliver this Agreement and the Other
Agreements and perform its obligations hereunder and thereunder; Borrower's
execution, delivery and performance of this Agreement and the Other Agreements
does not and shall not conflict with the provisions of any statute, regulation,
ordinance or rule of law, or any agreement, contract or other document which may
now or hereafter be binding on Borrower, and Borrower's execution, delivery and
performance of this Agreement and the Other Agreements shall not result in the
imposition of any lien or other encumbrance upon any of the Borrower's property
under any existing indenture, mortgage, deed of trust, loan or credit agreement
or other agreement or instrument by which Borrower or any of its property may be
bound or affected;



                                         -14-
<PAGE>

          (h)  there are no actions or proceedings which are pending or
threatened against Borrower which might result in any material adverse change in
its financial condition or materially adversely affect Borrower's property and
Borrower shall, promptly upon becoming aware of any such pending or threatened
action or proceeding, give written notice thereof to Lender;

          (i)  Borrower has obtained all licenses, authorizations, approvals,
and permits, the lack of which would have a material adverse effect on the
operation of its business, and Borrower is and shall remain in compliance in all
material respects with all applicable federal, state, local and foreign
statutes, orders, regulations, rules and ordinances, the failure to comply with
which could reasonably be expected to have a material adverse effect on its
business, property, assets, operations or condition, financial or otherwise;

          (j)  all written information now, heretofore or hereafter furnished by
Borrower to Lender is and shall be true and correct as of the date with respect
to which such information was or is furnished;

          (k)  Borrower is not conducting, permitting or suffering to be
conducted, nor shall it conduct, permit or suffer to be conducted, any
activities or transactions with any Affiliate of Borrower; provided, however,
that Borrower may enter into transactions with Affiliates of Borrower in the
ordinary course of business pursuant to terms that are no less favorable to
Borrower than the terms upon which such transfers or transactions would have
been made had they been made to or with a Person that is not an Affiliate of
Borrower and, in connection therewith, may transfer cash or property to
Affiliates of Borrower for fair value;

          (l)  Borrower's name has always been as set forth on the first page of
this Agreement and Borrower uses no tradenames or division names in the
operation of its business, except as set forth on EXHIBIT A; Borrower shall
notify Lender in writing within ten (10) days of the change of its name or the
use of any tradenames or division names not previously disclosed to Lender in
writing;

          (m)  with respect to Borrower's Equipment:  (i) Borrower has good and
indefeasible and merchantable title to and ownership of all Equipment that it
purports to own, including, without limitation, the Equipment described or
listed on the schedule of Equipment delivered to Lender concurrently with this
Agreement and any Equipment with respect to which Lender makes an Equipment
Loan; (ii) Borrower shall keep and maintain the Equipment in good operating
condition and repair and shall make all necessary replacements thereof and
renewals thereto so that the value and operating efficiency thereof shall at all
times be preserved and maintained; (iii) Borrower shall not permit any such
items to become a fixture to real estate or an accession to other personal
property; and (iv) Borrower, immediately on demand by Lender, shall deliver to
Lender any and all evidence of ownership of, including, without limitation,
certificates of title and applications of title to, any of the Equipment;


                                         -15-
<PAGE>

          (n)  this Agreement and the Other Agreements to which Borrower is a
party are the legal, valid and binding obligations of Borrower and are
enforceable against Borrower in accordance with their respective terms;

          (o)  Borrower is solvent, is able to pay its debts as they become due
and has capital sufficient to carry on its business, now owns property having a
value both at fair valuation and at present fair saleable value greater than the
amount required to pay its debts, and will not be rendered insolvent by the
execution and delivery of this Agreement or any of the Other Agreements or by
completion of the transactions contemplated hereunder or thereunder;

          (p)  Borrower is not now obligated, nor shall it create, incur, assume
or become obligated (directly or indirectly), for any loans or other
indebtedness for borrowed money other than the Loans, except that Borrower may
(i) borrow money from a Person other than Lender on an unsecured and
subordinated basis if a subordination agreement in favor of Lender and in form
and substance satisfactory to Lender is executed and delivered to Lender
relative thereto; (ii) borrow money from a Person other than Lender on a secured
and unsubordinated basis provided that such secured and unsubordinated
indebtedness is incurred to purchase equipment and the amount of such
indebtedness incurred after the date hereof and outstanding at any one time does
not exceed $100,000; (iii) maintain the Subordinated Debt and any other present
indebtedness to any Person which is set forth on EXHIBIT C; (iv) incur unsecured
indebtedness to trade creditors in the ordinary course of Borrower's business;
and (v) other than financing of insurance premiums in the ordinary course of
Borrower's business.

          (q)  Borrower does not own any margin securities, and none of the
proceeds of the Loans hereunder shall be used for the purpose of purchasing or
carrying any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin securities or
for any other purpose not permitted by Regulation G or Regulation U of the Board
of Governors of the Federal Reserve System as in effect from time to time;

          (r)  Other than as set forth on EXHIBIT A, Borrower has no
Subsidiaries or divisions, nor is Borrower engaged in any joint venture or
partnership with any other Person;

          (s)  Borrower is duly organized and in good standing in its state of
organization and Borrower is duly qualified and in good standing in all states
where the nature and extent of the business transacted by it or the ownership of
its assets makes such qualification necessary;

          (t)  Borrower is not in default under any material contract, lease or
commitment to which it is a party or by which it is bound, nor does Borrower
know of any dispute regarding any contract, lease or commitment which is
material to the continued financial success and well-being of Borrower;

          (u)  there are no controversies pending or threatened between Borrower
and any of its employees, other than employee grievances arising in the ordinary
course of business


                                         -16-
<PAGE>

which are not, in the aggregate, material to the continued financial success and
well-being of Borrower, and Borrower is in compliance in all material respects
with all federal and state laws respecting employment and employment terms,
conditions and practices; and

          (v)  Borrower possesses, and shall continue to possess, adequate
licenses, patents, patent applications, copyrights, service marks, trademarks,
trademark applications, tradestyles and tradenames to continue to conduct its
business as heretofore conducted by it.

          (w)  Exhibit D attached hereto contains a complete list of all
vehicles owned by Borrower and a complete and accurate list of the state in
which each such vehicle is titled.

          (x)  Except as otherwise disclosed in writing to and approved by
Lender, in connection with each request for an advance hereunder, Borrower
represents and warrants that in connection with each Eligible Account, (i) the
contract giving rise to such Eligible Account is in full force and effect,
(ii) all work covered by the invoice giving rise to such Eligible Account was
performed in full compliance with all requirements of law and the contract,
(iii) the invoice giving rise to the Eligible Account was prepared in compliance
with all requirements of the contract and accurately reflects both the work to
which it relates and the amounts payable under the contract, (iv) the invoice
giving rise to such Eligible Account was presented for payment in compliance
with all requirements of the contract and all amounts evidenced by such invoice
are due under the contract and do not exceed the amount properly due and payable
under the contract and (v) no party under any contract giving rise to any
Eligible Account has requested that any audit be conducted in connection with
such contract nor has any such party requested any retroactive adjustments of
any amounts previously invoiced in connection with any such contract.

          (y)  All of the information set forth in the Representation and
Warranty Certificate, dated May 14, 1997, and delivered to Lender is true and
correct.

Borrower and Lender agree that all of the representations and warranties set
forth in EXHIBIT A attached hereto are incorporated herein and made a part
hereof by this reference just as if such representations and warranties were set
forth in this Section 11.  Borrower represents, warrants and covenants to Lender
that all representations, warranties and covenants of Borrower contained in this
Agreement (whether appearing in EXHIBIT A, Sections 11 or 12 hereof or
elsewhere) shall be true at the time of Borrower's execution of this Agreement,
shall survive the execution, delivery and acceptance hereof by the parties
hereto and the closing of the transactions described herein or related hereto,
shall remain true until the repayment in full of all of the Liabilities and
termination of this Agreement, and shall be remade by Borrower at the time each
Loan is made or Letters of Credit issued pursuant to this Agreement.

     12.  ADDITIONAL COVENANTS OF BORROWER.  Until payment or satisfaction in
full of all Liabilities and termination of this Agreement, unless Borrower
obtains Lender's prior written consent waiving or modifying any of Borrower's
covenants hereunder in any specific instance, Borrower agrees as follows:


                                         -17-
<PAGE>

          (a)  Borrower shall at all times keep accurate and complete books,
records and accounts with respect to all of Borrower's business activities, in
accordance with sound accounting practices and generally accepted accounting
principles consistently applied, and shall keep such books, records and
accounts, and any copies thereof, only at the addresses indicated for such
purpose on EXHIBIT A;

          (b)  Borrower agrees to deliver to Lender the following financial
information, all of which shall be prepared in accordance with generally
accepted accounting principles consistently applied:  (i) no later than
forty-five (45) days after each calendar month, copies of internally prepared
financial statements, including, without limitation, balance sheets and
statements of income, certified by the Chief Financial Officer of Borrower;
(ii) no later than ninety (90) days after the end of each of Borrower's fiscal
years, annual financial statements audited by independent certified public
accountants selected by Borrower and satisfactory to Lender; (iii) quarterly,
within forty-five (45) days after the end of each quarter, a covenant compliance
certificate in a form acceptable to Lender confirming Borrower's compliance with
the financial covenants set forth in Section 12(s) below, and (iv) such other
financial information as Lender shall reasonably request;

          (c)  Borrower shall promptly advise Lender in writing of any material
adverse change in business, assets or condition, financial or otherwise, of
Borrower, the occurrence of any Event of Default hereunder or the occurrence of
any event which, if uncured, will become an Event of Default hereunder after
notice or lapse of time (or both);

          (d)  Lender, or any Persons designated by it, shall have the right, at
any time, to call at Borrower's places of business at any reasonable times, and,
without hindrance or delay, to inspect the Collateral and to inspect, audit,
check and make extracts from Borrower's books, records, journals, orders,
receipts and any correspondence and other data relating to Borrower's business,
the Collateral or any transactions between the parties hereto, and shall have
the right to make such verification concerning Borrower's business as Lender may
consider reasonable under the circumstances.  Borrower shall furnish to Lender
such information relevant to Lender's rights under this Agreement as Lender
shall at any time and from time to time request.  Borrower authorizes Lender to
discuss the affairs, finances and business of Borrower with any officers,
employees or directors of Borrower or with any Affiliate or the officers,
employees or directors of any Affiliate, and to discuss the financial condition
of Borrower with Borrower's independent public accountants.  Any such
discussions shall be without liability to Lender or to Borrower's independent
public accountants.  Borrower shall pay to Lender all customary fees and
out-of-pocket expenses incurred by Lender in the exercise of its rights
hereunder, and all of such fees and expenses shall constitute Revolving Loans
hereunder, payable on demand and, until paid, shall bear interest at the rate
then applicable to Loans hereunder;

          (e)  Borrower shall:

               (i)  keep the Collateral properly housed and shall keep the
          Collateral insured for the full insurable value thereof against loss
          or damage by fire, theft, explosion, sprinklers, collision (in the
          case of motor vehicles) and such other risks


                                         -18-
<PAGE>

          as are customarily insured against by Persons engaged in businesses
          similar to that of Borrower with such companies, in such amounts and
          under policies in such form as shall be satisfactory to Lender.  At
          the request of Lender, original (or certified) copies of such policies
          of insurance shall be delivered to Lender, together with evidence of
          payment of all premiums therefor, and shall contain an endorsement, in
          form and substance acceptable to Lender, showing loss under such
          insurance policies payable to Lender.  Such endorsement, or an
          independent instrument furnished to Lender, shall provide that the
          insurance company shall give Lender at least thirty (30) days written
          notice before any such policy of insurance is altered or cancelled and
          that no act, whether willful or negligent, or default of Borrower or
          any other Person shall affect the right of Lender to recover under
          such policy of insurance in case of loss or damage.  Borrower hereby
          directs all insurers under such policies of insurance to pay all
          proceeds payable thereunder directly to Lender and all proceeds
          received by Lender may be applied to the Liabilities in such order and
          manner as Lender shall determine.  Borrower irrevocably, makes,
          constitutes and appoints Lender (and all officers, employees or agents
          designated by Lender) as Borrower's true and lawful attorney (and
          agent-in-fact) for the purpose of making, settling and adjusting
          claims under such policies of insurance, endorsing the name of
          Borrower on any check, draft, instrument or other item of payment for
          the proceeds of such policies of insurance and making all
          determinations and decisions with respect to such policies of
          insurance; and

               (ii) maintain, at its expense, such public liability and third
          party property damage insurance as is customary for Persons engaged in
          businesses similar to that of Borrower with such companies and in such
          amounts, with such deductibles and under policies in such form as
          shall be satisfactory to Lender and, at the request of Lender,
          original (or certified) copies of such policies shall be delivered to
          Lender, together with evidence of payment of all premiums therefor;
          each such policy shall contain an endorsement showing Lender as
          additional insured thereunder and providing that the insurance company
          shall give Lender at least thirty (30) days written notice before any
          such policy shall be altered or cancelled.

          If Borrower at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay any premium
in whole or in part relating thereto, then Lender, without waiving or releasing
any obligation or default by Borrower hereunder, may (but shall be under no
obligation to) obtain and maintain such policies of insurance and pay such
premiums and take such other actions with respect thereto as Lender deems
advisable.  All sums disbursed by Lender in connection with any such actions,
including, without limitation, court costs, expenses, other charges relating
thereto and reasonable attorneys' fees, shall constitute Revolving Loans
hereunder and shall be payable on demand by Borrower to Lender and, until paid,
shall bear interest at the rate then applicable to Loans hereunder;


                                         -19-
<PAGE>

          (f)  Borrower shall not use its property, or any part thereof, in any
unlawful business or for any unlawful purpose or use or maintain any of its
property in any manner that does or could result in material damage to the
environment or a violation of any applicable environmental laws, rules or
regulations; shall keep its property in good condition, repair and order; shall
permit Lender to examine any of its property at any time; shall not permit its
property, or any part thereof, to be levied upon under execution, attachment,
distraint or other legal process; shall not grant a security interest in or
suffer to exist a lien on any of its property other than the Permitted Liens;
shall not sell, lease, transfer or otherwise dispose of any of its property
except in the ordinary course of its business; and shall not secrete or abandon
any of its property, or remove or permit removal of any of its property from any
of the locations listed on Schedule 1 of EXHIBIT A or in any written notice to
Lender pursuant to paragraph 10(b) hereof, except for the removal of Inventory
sold in the ordinary course of Borrower's business;

          (g)  all monies and other property obtained by Borrower from Lender
pursuant to this Agreement will be used solely for business purposes of
Borrower;

          (h)  Borrower shall, at the request of Lender, indicate on its records
concerning the Collateral a notation, in form satisfactory to Lender, of the
security interest of Lender hereunder, and Borrower shall not maintain
duplicates or copies of such records at any address other than Borrower's
principal place of business set forth on the first page of this Agreement;

          (i)  Borrower shall file all required tax returns and pay all of its
taxes when due, including, without limitation, taxes imposed by federal, state
or municipal agencies, and shall cause any liens for taxes to be promptly
released; provided, that Borrower shall have the right to contest the payment of
such taxes in good faith by appropriate proceedings so long as (i) the amount so
contested is shown on Borrower's financial statements, (ii) the contesting of
any such payment does not give rise to a lien for taxes, (iii) Borrower keeps on
deposit with Lender (such deposit to bear interest at a rate reasonably
determined by Lender) an amount of money which, in the sole judgment of Lender,
is sufficient to pay such taxes and any interest or penalties that may accrue
thereon, and (iv) if Borrower fails to prosecute such contest with reasonable
diligence, Lender may apply the money so deposited in payment of such taxes.  If
Borrower fails to pay any such taxes and in the absence of any such contest by
Borrower, Lender may (but shall be under no obligation to) advance and pay any
sums required to pay any such taxes and/or to secure the release of any lien
therefor, and any sums so advanced by Lender shall constitute Revolving Loans
hereunder, shall be payable by Borrower to Lender on demand, and, until paid,
shall bear interest at the rate then applicable to Loans hereunder;

          (j)  Borrower shall not assume, guarantee or endorse, or otherwise
become liable in connection with, the obligations of any Person, except by
endorsement of instruments for deposit or collection or similar transactions in
the ordinary course of business;

          (k)  Borrower shall not enter into any merger or consolidation, or 
enter into any transaction outside the ordinary course of Borrower's 
business, including, without limitation, any purchase, redemption or 
retirement of any shares of any class of its stock, and any issuance of any 
shares of, or warrants or other rights to receive or purchase any shares of, 
any class of its 

                                         -20-
<PAGE>

stock; provided, however, that the parties agree that the following 
transactions, without limitation, shall be deemed to be within the ordinary 
course of the Borrower's business:  (1) the granting of options, and the 
issuance of stock upon the exercise of such options, pursuant to any stock 
option plan duly adopted by the Borrower's shareholders; (2) the issuance of 
common stock upon the exercise of currently outstanding warrants to purchase 
up to 300,000 shares of such stock; and (3) the future issuance of warrants 
to purchase up to 100,000 shares of common stock per year, and the issuance 
of stock upon exercise of such warrants.

          (l)  Borrower shall not declare or pay any dividend or other
distribution (whether in cash or in kind) on any class of its stock;

          (m)  After the date of this Agreement, Borrower shall not make any
loans or similar advances to any of its officers or any Person related to any
such officer;

          (n)  Borrower shall (i) keep in full force and effect any and all
plans which may, from time to time, come into existence under ERISA, unless such
Plans can be terminated without liability to Borrower; (ii) make contributions
to all of the Plans in a timely manner and in a sufficient amount to comply with
the requirements of ERISA; (iii) comply with all material requirements of ERISA
which relate to Plans (including, without limitation, the minimum funding
standards of Section 302 of ERISA); and (iv) notify Lender immediately upon
receipt by Borrower of any notice of the institution of any proceeding or other
action which may result in the termination of any Plans;

          (o)  Borrower shall not invest in, purchase or otherwise acquire, or
contract to invest in, purchase or otherwise acquire, the obligations or stock
of any Person, other than direct obligations of the United States;

          (p)  Borrower shall not amend its organizational documents or change
its fiscal year;

          (q)  Borrower shall reimburse Lender for all costs and expenses,
including, without limitation, legal expenses and reasonable attorneys' fees,
incurred by Lender in connection with documentation and consummation of this
transaction and any other transactions between Borrower and Lender, including,
without limitation, Uniform Commercial Code and other public record searches,
lien filings, Federal Express or similar express or messenger delivery,
appraisal costs, surveys, title insurance and environmental audit or review
costs, and in seeking to administer, collect, protect or enforce any rights in
or to the Collateral or incurred by Lender in seeking to collect any Liabilities
and to administer, participate, assign and/or enforce any of Lender's rights
under this Agreement and the Other Agreements.  All such costs, expenses and
charges shall constitute Revolving Loans hereunder, shall be payable by Borrower
to Lender on demand, and, until paid, shall bear interest at the rate then
applicable to Loans hereunder;

          (r)  Borrower at all times shall comply with the following financial
covenants:



                                         -21-
<PAGE>

               (i)  Borrower shall not make or incur any capital expenditures
     (as such term is defined in accordance with GAAP), exceeding $1,500,000 in
     the aggregate during any fiscal year (beginning with the fiscal year ending
     December 31, 1997).

               (ii) Borrower shall achieve net profit after taxes and before
     extraordinary gains (as such terms are defined in accordance with GAAP) for
     each fiscal year of at least $500,000 per fiscal year beginning with the
     fiscal year ending December 31, 1997.

               (iii)     Borrower shall achieve net profit before extraordinary
     gains (as such terms are defined in accordance with GAAP) of at least zero
     ($0) for each fiscal quarter beginning with the fiscal quarter commencing
     on April 1, 1997.

               (iv) Total liabilities of Borrower to tangible net worth of
     Borrower (as such term is defined in accordance with GAAP) shall not exceed
     2.50 to 1.0 at any time.

               (v)  Borrower's minimum tangible net worth (as such term is
     defined in accordance with GAAP) shall not be less than (A) $6,600,000 for
     the fiscal year ended December 31, 1996 and (B) for each fiscal quarter
     (calculated at the end of the fiscal quarter), commencing with the fiscal
     quarter beginning January 1, 1997, $6,600,000 plus 90% of net income after
     taxes from and after January 1, 1997 plus any additional new equity
     contributed to Borrower or invested in Borrower after January 1, 1997.  The
     calculation of tangible net worth pursuant to this subsection (v) shall
     exclude all intangible assets and other similar assets and shall include
     the Subordinated Debt.

               (vi) Borrower shall maintain a ratio of earnings before interest
     and taxes to interest expense (as such terms are defined in accordance with
     GAAP) of at least 2.0 to 1 for each fiscal quarter, calculated at the end
     of each fiscal quarter, commencing with the quarter beginning April 1,
     1997;

          (s)  Within fifteen days after the making of any Equipment Loan,
Borrower shall provide to Lender evidence that the proceeds of such Equipment
Loan have been used to acquire Acceptable Equipment, which evidence may include,
but shall not be limited to a bill of sale or certificate of title; and

          (t)  Immediately upon request by Lender, Borrower shall take all
actions necessary to comply with the Assignment of Claims Act of 1940, as
amended.

          (u)  Immediately upon request of Lender, Borrower shall provide a list
of each location at which any Equipment or other Collateral is located (which
list shall include not only offices but each individual job site) and
immediately take all actions required by Lender and execute all UCC Financing
Statements required by Lender in order to allow Lender to be fully perfected in
each such jurisdiction.


                                         -22-
<PAGE>

     13.  DEFAULT.  The occurrence of any one or more of the following events
shall constitute an "Event of Default" by Borrower hereunder:

          (a)  the failure of any Obligor to pay any of the Liabilities when
due;

          (b)  the failure of any Obligor to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations of such obligor under
this Agreement or any of the Other Agreements;

          (c)  the failure of any Obligor to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations of such Obligor under
any other agreement with any Person if such failure may have a material adverse
effect on such Obligor's business property, assets, operations or condition,
financial or otherwise;

          (d)  the making or furnishing by any Obligor to Lender of any
representation, warranty, certificate, schedule, report or other communication
within or in connection with this Agreement or the or the Other Agreements or in
connection with any other agreement between such Obligor and Lender, which is
untrue or misleading any respect;

          (e)  the making of any levy, seizure or attachment of any of
Borrower's property with a fair market value in excess of $100,000 in the
aggregate;

          (f)  the commencement of any proceedings in bankruptcy by or against
any Obligor or for the liquidation or reorganization of any Obligor, or alleging
that such Obligor is insolvent or unable to pay its debts as they mature, or for
the readjustment or arrangement of any Obligor's debts, whether under the United
States Bankruptcy Code or under any other law, whether state or federal, now or
hereafter existing for the relief of debtors, or the commencement of any
analogous statutory or non-statutory proceedings involving any Obligor;
provided, however, that if such commencement of proceedings against such Obligor
is involuntary and such Obligor is contesting such proceedings in good faith,
such action shall not constitute an Event of Default unless such proceedings are
not dismissed within thirty (30) days after the commencement of such
proceedings;

          (g)  the appointment of a receiver or trustee for any Obligor, for any
of the Collateral or for any substantial part of any Obligor's assets or the
institution of any proceedings for the dissolution, or the full or partial
liquidation, of any Obligor which is a corporation or a partnership; provided,
however, that if such appointment or commencement of proceedings against such
Obligor is involuntary and such Obligor is contesting such proceedings in good
faith, such action shall not constitute an Event of Default unless such
appointment is not revoked or such proceedings are not dismissed within thirty
(30) days after the commencement of such proceedings;

          (h)  the entry of any judgment or order against any Obligor which
remains unsatisfied or undischarged and in effect for thirty (30) days after
such entry without a stay of enforcement or execution;


                                         -23-
<PAGE>

          (i)  the death of any Obligor who is a natural Person or the
dissolution of any Obligor which is a partnership or corporation;

          (j)  the occurrence of a change of control, direct or indirect, of
Borrower;

          (k)  the occurrence of an event of default under, or the revocation or
termination of, any agreement, instrument or document executed and delivered by
any Person to Lender pursuant to which such Person has guaranteed to Lender the
payment of all or any of the Liabilities or has granted Lender a security
interest in or lien upon some or all of such Person's real and/or personal
property to secure the payment of all or any of the Liabilities;

          (l)  the institution in any court of a criminal proceeding against any
Obligor, or the indictment of any Obligor for any crime; or

          (m)  there shall occur a material adverse change, as reasonably
determined by Lender, in the condition, financial or otherwise, of the Borrower
or the Collateral.

     References herein to an Event of Default having occurred and be continuing
or to the occurrence and continuance of an Event of Default are not intended to
and shall not be construed as providing the Borrower any additional cure periods
other than those specifically set forth in this Section 13 nor shall Lender be
under any obligation to accept any cure from Borrower other than during the cure
period specifically set forth in this Section 13 and any agreement to accept any
cure by Borrower other than during the cure period specifically set forth in
this Section 13 shall be in Lender's sole and absolute discretion.

     14.  REMEDIES UPON AN EVENT OF DEFAULT.

          (a)  Upon the occurrence of an Event of Default described in
paragraph 13(f) hereof, all of Borrower's Liabilities shall immediately and
automatically become due and payable, without notice of any kind and upon the
occurrence of any other Event of Default, all Liabilities may, at the option of
Lender, and without demand, notice or legal process of any kind, be declared,
and immediately shall become, due and payable.

          (b)  Upon the occurrence of an Event of Default, Lender may exercise
from time to time any rights and remedies available to it under the Uniform
Commercial Code and any other applicable law in addition to, and not in lieu of,
any rights and remedies expressly granted in this Agreement or in any of the
Other Agreements and all of Lender's rights and remedies shall be cumulative and
non-exclusive to the extent permitted by law.  In particular, but not by way of
limitation of the foregoing, Lender may, without notice, demand or legal process
of any kind, take possession of any or all of the Collateral (in addition to
Collateral of which it already has possession), wherever it may be found, and
for that purpose may pursue the same wherever it may be found, and may enter
into any of Borrower's premises where any of the Collateral may be, and search
for, take possession of, remove, keep and store any of the Collateral until the
same shall be sold or otherwise disposed of, and Lender shall have the right to
store the same at any of


                                         -24-
<PAGE>

Borrower's premises without cost to Lender.  At Lender's request, Borrower
shall, at Borrower's expense, assemble the Collateral and make it available to
Lender at one or more places to be designated by Lender and reasonably
convenient to Lender and Borrower.  Borrower recognizes that if Borrower fails
to perform, observe or discharge any of its Liabilities under this Agreement or
the Other Agreements, no remedy at law will provide adequate relief to Lender,
and agrees that Lender shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.  Any
notification of intended disposition of any of the Collateral required by law
will be deemed reasonably and properly given if given at least ten (10) calendar
days before such disposition.  Any proceeds of any disposition by Lender of any
of the Collateral may be applied by Lender to the payment of expenses in
connection with the Collateral, including, without limitation, legal expenses
and reasonable attorneys' fees, and any balance of such proceeds may be applied
by Lender toward the payment of such of the Liabilities, and in such order of
application, as Lender may from time to time elect, including, without
limitation, to provide cash collateral to secure the Letters of Credit.

     15.  INDEMNIFICATION.  Borrower agrees to defend (with counsel satisfactory
to Lender), protect, indemnify and hold harmless Lender, each Affiliate of
Lender, and each of their respective officers, directors, employees, attorneys
and agents (each an "Indemnified Party") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature (including,
without limitation, the disbursements and the reasonable fees of counsel for
each Indemnified Party in connection with any investigative, administrative or
judicial proceeding, whether or not the Indemnified Party shall be designated a
party thereto), which may be imposed on, incurred by, or asserted against, any
Indemnified Party (whether direct, indirect or consequential and whether based
on any federal, state or local laws or regulations, including, without
limitation, securities, environmental and commercial laws and regulations, under
common law or in equity, or based on contract or otherwise) in any manner
relating to or arising out of this Agreement or any Other Agreement, or any act,
event or transaction related or attendant thereto, the making and the management
of the Loans or any Letters of Credit or the use or intended use of the proceeds
of the Loans or any Letters of Credit; provided, however, that Borrower shall
not have any obligation hereunder to any Indemnified Party with respect to
matters caused by or resulting from the willful misconduct or gross negligence
of such Indemnified Party.  To the extent that the undertaking to indemnify set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, Borrower shall satisfy such undertaking to the maximum
extent permitted by applicable law.  Any liability, obligation, loss, damage,
penalty, cost or expense covered by this indemnity shall be paid to each
Indemnified Party on demand, and, failing prompt payment, shall, together with
interest thereon at the highest rate then applicable to Loans hereunder from the
date incurred by each Indemnified Party until paid by Borrower, be added to the
Liabilities of Borrower and be secured by the Collateral.  The provisions of
this Section 15 shall survive the satisfaction and payment of the other
Liabilities and the termination of this Agreement.

     16.  NOTICE.  All written notices and other written communications with
respect to this Agreement shall be sent by ordinary, certified or overnight
mail, by telecopy or delivered in person, and in the case of Lender shall be
sent to it at One Tabor Center, 1200 Seventeenth


                                         -25-
<PAGE>

Street, Suite 2760, Denver, Colorado 80202, and in the case of Borrower shall be
sent to it at its principal place of business set forth on the first page of
this Agreement, Attention:  Rick C. Townsend.

     17.  CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION.  This
Agreement and the Other Agreements are submitted by Borrower to Lender for
Lender's acceptance or rejection as an offer by Borrower to borrow monies from
Lender now and from time to time hereafter, and shall not be binding upon Lender
or become effective until accepted by lender, in writing.  If so accepted by
Lender, this Agreement and the Other Agreements shall be deemed to have been
made at said place of business.  THIS AGREEMENT AND THE OTHER AGREEMENTS SHALL
BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF COLORADO AS TO
INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER
RESPECTS, INCLUDING, WITHOUT LIMITATION, THE LEGALITY OF THE INTEREST RATE AND
OTHER CHARGES, BUT EXCLUDING PERFECTION OF THE SECURITY INTERESTS IN THE
COLLATERAL, WHICH SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE RELEVANT
JURISDICTION.  If any provision of this Agreement shall be held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or remaining provisions of this Agreement.

          To induce Lender to accept this Agreement, Borrower irrevocably agrees
that, subject to Lender's sole and absolute election, ALL ACTIONS OR PROCEEDINGS
IN ANY WAY, MANNER OR RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS
AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL SHALL BE LITIGATED IN COURTS
HAVING SITUS WITHIN THE CITY OF DENVER, STATE OF COLORADO.  BORROWER HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS
LOCATED WITHIN SAID CITY AND STATE.  BORROWER HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER
BY LENDER IN ACCORDANCE WITH THIS SECTION.

     18.  PARTICIPATION; ASSIGNMENT.  Lender shall have the right to sell or
assign all or any of its rights under this Agreement and the Other Agreements,
and/or to offer participation interests therein or to syndicate the Loans, to
any Person, without the consent of Borrower; provided Lender retains at least a
50% interest in the Loans.  In such event, Borrower shall execute such
agreements, instruments and documents as Lender shall request in connection
therewith, including, without limitation, agreements, instruments and documents
in favor of each assignee and participant.

     19.  MODIFICATION AND BENEFIT OF AGREEMENT.  This Agreement and the Other
Agreements may not be modified, altered or amended except by an agreement in
writing signed by Borrower and Lender.  Borrower may not sell, assign or
transfer this


                                         -26-
<PAGE>

Agreement, or the Other Agreement or any portion thereof, including, without
limitation, Borrower's rights, titles, interest, remedies, powers or duties
thereunder.

     20.  HEADINGS OF SUBDIVISIONS.  The headings of subdivisions in this
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the provisions of this Agreement.

     21.  POWER OF ATTORNEY.  Borrower acknowledges and agrees that its
appointment of Lender as its attorney and agent-in-fact for the purposes
specified in this Agreement is an appointment coupled with an interest and shall
be irrevocable until all of the Liabilities are paid in full and this Agreement
is terminated.

     22.  WAIVER OF JURY TRIAL; OTHER WAIVERS.

          (a)  BORROWER HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, ANY OF
THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL, ANY ALLEGED TORTIOUS
CONDUCT BY BORROWER OR LENDER OR WHICH, IN ANY WAY, DIRECTLY OR INDIRECTLY,
ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN BORROWER AND LENDER.  IN NO
EVENT SHALL LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL
DAMAGES.

          (b)  Borrower hereby waives demand, presentment, protest and notice of
nonpayment, and further waives the benefit of all valuation, appraisal and
exemption laws.

          (c)  BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY LENDER OF ITS RIGHTS TO REPOSSESS THE COLLATERAL
OF BORROWER WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON SUCH
COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.

          (d)  Lender's failure, at any time or times hereafter, to require
strict performance by Borrower of any provision of this Agreement or any of the
Other Agreements shall not waive, affect or diminish any right of Lender
thereafter to demand strict compliance and performance therewith.  Any
suspension or waiver by Lender of an Event of Default under this Agreement or
any default under any of the Other Agreements shall not suspend, waive or affect
any other Event of Default under this Agreement or any other default under any
of the Other Agreements, whether the same is prior to subsequent thereto and
whether of the same or of a different kind or character.  No delay on the part
of Lender in the exercise of any right or remedy under this Agreement or any
Other Agreement shall preclude other or further exercise thereof or the exercise
of any right or remedy.  None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement or any of
the Other Agreements and no Event of Default under this Agreement or default
under any of the Other Agreements shall be deemed to have been suspended or
waived by Lender unless such suspension or waiver is in



                                         -27-
<PAGE>

writing, signed by a duly authorized officer of Lender and directed to Borrower
specifying such suspension or waiver.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the 29th day of May, 1997.

                         NATIONAL BANK OF CANADA, a Canadian chartered bank



                         By       /S/ 
                           -----------------------------------------------------
                           Name:  Andrew M. Conneen, Jr.
                           Title:  Vice President



                         CET ENVIRONMENTAL SERVICES, INC., a California
                           corporation
 


                         By       /S/ 
                           -----------------------------------------------------
                           Name  Rick C. Townsend
                           Title:   Executive Vice President


                                         -28-
<PAGE>

                                   LIST OF EXHIBITS

A    -    Business and Collateral Locations (Representation and Warranty
          Certificate)

B    -    Permitted Liens

C    -    Indebtedness

D    -    Owned Vehicles


<PAGE>

                                      EXHIBIT A

                          BUSINESS AND COLLATERAL LOCATIONS
                      (REPRESENTATION AND WARRANTY CERTIFICATE)


                                       ATTACHED


<PAGE>

                                      EXHIBIT B

                                   PERMITTED LIENS


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
     SECURED PARTY                FILING OFFICE                COLLATERAL               FILING       FILING
         NAME                                                                            DATE          NO.
--------------------------------------------------------------------------------------------------------------
<S>                             <C>                      <C>                           <C>          <C>
RDO Equipment Inc., dba         Arizona Secretary        Reed Screen-All Model CV-     05/24/96     899361-0
Arizona Industrial              of State                 40-D Serial No. 1507
Machinery Co.
--------------------------------------------------------------------------------------------------------------
Associates Capital Services     Louisiana Central        All present and future        07/10/95     08-371206
Corp.                           Filing                   Motorola products
--------------------------------------------------------------------------------------------------------------
Power Motive Corporation        Colorado Secretary       RD40B S/N 40B986              08/29/95     952064813
                                of State
--------------------------------------------------------------------------------------------------------------
Power Motive Corporation        Colorado Secretary       WA250 S/N A65514              09/18/96     962069669
                                of State
--------------------------------------------------------------------------------------------------------------
American Compressor             California Secretary     300 CFM @ 7 PSIG 12.2         09/13/93     93185583
Company                         of State                 BHP 91.6 dba s/n 8457 SM
--------------------------------------------------------------------------------------------------------------
Bengal Equipment and            California Secretary     Used JCB Model 505-19         07/14/94     94143540
Tractor Co.                     of State                 Loadall
--------------------------------------------------------------------------------------------------------------
Paragon Environmental           California Secretary     ICON Fluid Bed Solvent        12/02/96     9633760756
Systems, Inc.                   of State                 Recovery System
--------------------------------------------------------------------------------------------------------------

</TABLE>



<PAGE>

                                      EXHIBIT C

                                     INDEBTEDNESS

                                       ATTACHED


<PAGE>

                                      EXHIBIT D

                                       VEHICLES

                                       ATTACHED