EXHIBIT 10.53









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



                               SECURITY AGREEMENT

                           dated as of August 11, 1999

                                     between

                         GKMG CONSULTING SERVICES, INC.,

                                    as Debtor

                                       and

                              BANK OF AMERICA, N.A.
                            d/b/a NationsBank, N.A.,
                         successor to NationsBank, N.A.,

                                    as Agent
                            ----------------------------------------------------


<PAGE>




                                       ii


                                        i

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


<S>                                                                                                              <C>
ARTICLE I DEFINITIONS.............................................................................................4
 Section 1.1 Definitions Generally................................................................................4
 Section 1.2 UCC Definitions......................................................................................6

ARTICLE II SECURITY INTERESTS.....................................................................................6
 Section 2.1 Grant of Security Interests..........................................................................6
 Section 2.2 Continuing Liability of the Debtor...................................................................7
 Section 2.3 Sales and Collections................................................................................8
 Section 2.4 Segregation of Proceeds..............................................................................8
 Section 2.5 Verification of Receivables..........................................................................9
 Section 2.6 Release of Collateral................................................................................9

ARTICLE III REPRESENTATIONS AND WARRANTIES.........................................................................
 Section 3.1 Title to Collateral.................................................................................10
 Section 3.2 Validity, Perfection and Priority of Security Interests.............................................10
 Section 3.3 Enforceability of Receivables and Other Intangibles.................................................11
 Section 3.4 Place of Business...................................................................................11
 Section 3.5 Location of Collateral..............................................................................11
 Section 3.6 Trade Names.........................................................................................11
 Section 3.7 Patents and Trademarks..............................................................................11

ARTICLE IV COVENANTS.............................................................................................11
 Section 4.1 Perfection of Security Interests....................................................................12
 Section 4.2 Further Actions.....................................................................................12
 Section 4.3 Change of Name, Identity or Structure...............................................................13
 Section 4.4 Place of Business and Collateral....................................................................13
 Section 4.5 Fixtures............................................................................................13
 Section 4.6 Maintenance of Records..............................................................................13
 Section 4.7 Compliance with Laws................................................................................13
 Section 4.8 Payment of Taxes....................................................................................14
 Section 4.9 Compliance with Terms of Accounts and Contracts.....................................................14
 Section 4.10 Limitation on Liens on Collateral..................................................................14
 Section 4.11 Limitations on Modifications of Receivables and Other Intangibles;
     No Waivers or Extensions....................................................................................14
 Section 4.12 Maintenance of Insurance...........................................................................14
 Section 4.13 Limitations on Dispositions of Collateral..........................................................14
 Section 4.14 Further Identification of Collateral...............................................................15
 Section 4.15 Notices............................................................................................15
 Section 4.16 Change of Law......................................................................................15
 Section 4.17 Right of Inspection................................................................................15
 Section 4.18 Maintenance of Equipment...........................................................................16
 Section 4.19 Covenants Regarding Patent and Trademark Collateral................................................16
 Section 4.20 Termination of Federal Contracts...................................................................17
 Section 4.21 Federal Contracts..................................................................................17
 Section 4.22 Reimbursement Obligation...........................................................................18

ARTICLE V REMEDIES; RIGHTS UPON DEFAULT..........................................................................18
 Section 5.1 UCC Rights..........................................................................................18
 Section 5.2 Payments on Collateral..............................................................................18
 Section 5.3 Possession of Collateral............................................................................19
 Section 5.4 Sale of Collateral; Notice..........................................................................19
 Section 5.5 Rights of Purchasers................................................................................20
 Section 5.6 Additional Rights of the Agent......................................................................20
 Section 5.7 Remedies Not Exclusive, etc.........................................................................21
 Section 5.8 Waiver and Estoppel.................................................................................21
 Section 5.9 Power of Attorney; Powers Coupled With An Interest..................................................22
 Section 5.10 Certain Provisions Relating to Securities..........................................................23
 Section 5.11 Application of Monies..............................................................................23

ARTICLE VI MISCELLANEOUS.........................................................................................24
 Section 6.1 Notices.............................................................................................24
 Section 6.2 No Waiver; Cumulative Remedies......................................................................24
 Section 6.3 Amendments and Waivers..............................................................................24
 Section 6.4 Successors and Assigns..............................................................................24
 Section 6.5 Governing Law.......................................................................................25
 Section 6.6Limitation by Law; Severability......................................................................25
 Section 6.7 Counterparts........................................................................................25
 Section 6.8 Expenses of the Agent...............................................................................25
 Section 6.9 Indemnification.....................................................................................25
 Section 6.10 Termination; Survival..............................................................................26
 Section 6.11 Judicial Proceedings; Waiver of Jury Trial.........................................................26
 Section 6.12 Integration........................................................................................27
 Section 6.13 Authority of Agent.................................................................................27
 Section 6.14 Headings, Bold Type and Table of Contents..........................................................27

</TABLE>


Schedule 3.4......         -        Place of Business
Schedule 3.5......         -        Location of Collateral
Schedule 3.6......         -        Trade Names, Division Names, etc.
Schedule 3.7......         -        Patents and Trademarks
Schedule 4.1......         -        UCC Filings
Exhibit A.........         -        Assignment of Federal Contract


<PAGE>


24

                               SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of August 11th, 1999 (as amended, supplemented
or  modified  from  time to time,  the  "Security  Agreement"),  is made by GKMG
Consulting  Services,  Inc., a District of Columbia  corporation (the "Debtor"),
and BANK OF AMERICA,  N.A. d/b/a  NationsBank,  N.A.,  successor to NationsBank,
N.A., a national banking  association (the "Agent") in its capacity as Agent for
the lenders (the  "Lenders")  from time to time a party to the Revolving  Credit
Agreement, dated as of November 20, 1998 (as amended,  supplemented or otherwise
modified from time to time,  the  "Revolving  Credit  Agreement"),  by and among
Hagler Bailly, Inc., a Delaware  corporation (the "Company"),  the Agent, in its
capacity as such thereunder, and the Lenders.
                                                      W I T N E S S E T H:

WHEREAS,  pursuant to the Revolving Credit Agreement, the Lenders have severally
agreed to make available to the Company a revolving line of credit for Revolving
Loans, Swing Line Loans and Standby Letters of Credit in an aggregate  principal
amount at any time not to exceed the Maximum  Available  Amount,  subject to the
terms and conditions contained therein;

WHEREAS,  the  Company  has  recently  acquired  Debtor,  and the  Company  owns
directly, all of the issued and outstanding shares of stock of the Debtor;

     WHEREAS,  the Debtor  constitutes a Material Domestic  Subsidiary under the
Revolving Credit Agreement;

WHEREAS,  pursuant to the  provisions of the  Revolving  Credit  Agreement,  the
Company is  required  to cause each of its  Material  Domestic  Subsidiaries  to
execute and  deliver to the Agent,  for the ratable  benefit of the  Lenders,  a
Subsidiary Security Agreement, as more fully provided therein;

WHEREAS,  the  proceeds of such  Revolving  Loans,  Swing Line Loans and Standby
Letters of Credit may be used to enable the Company to make  valuable  transfers
to the Debtor in  connection  with the  operation  of its  business  and for the
Permitted Uses;

WHEREAS,  the Debtor will derive  substantial  direct and indirect  benefit from
such Revolving Loans, Swing Line Loans and Standby Letters of Credit; and

     WHEREAS,  the Debtor desires to enter into this Security  Agreement for the
ratable benefit of the Lenders;

NOW,  THEREFORE,  in  consideration  of the  premises  and the mutual  covenants
contained herein, and to induce the Lenders to make or maintain their respective
Revolving  Loans and Swing  Line Loans to,  and the  Issuing  Lender to issue or
maintain the Standby Letters of Credit under the Revolving Credit Agreement, and
for other good and valuable consideration,  the receipt and sufficiency of which
are  hereby  acknowledged,  the Debtor  hereby  agrees  with the Agent,  for the
ratable benefit of the Lenders, as follows:


ARTICLE I.........
                                   DEFINITIONS

Section 1.1.......Definitions  Generally.  Capitalized terms used herein without
definition shall have the respective  meanings specified in the Revolving Credit
Agreement,  and the  following  terms shall have the  following  meanings  (such
meanings to be, when  appropriate,  equally  applicable to both the singular and
plural forms of the terms defined):

"Account Debtor" shall mean, with respect to any Receivable or Other Intangible,
any Person obligated to make payment  thereunder,  including without  limitation
any account debtor thereon.

     "Assignment of Claims Act" shall mean the Assignment of Claims Act of 1940,
31 U.S.C.  3727, 41 U.S.C.  15 (1986),  ------------------------- as
the same may be amended and any successor statute of similar import.

"Assignment  of Federal  Contract"  shall have the meaning  specified in Section
4.21 hereof.

"Cash  Collateral  Account"  shall have the  meaning  specified  in Section  2.4
hereof.

"Collateral" shall have the meaning set forth in Section 2.1.

"Company" shall have the meaning specified in the preamble hereof.

"Debtor" shall have the meaning specified in the preamble hereof.

"Equipment"  shall mean all  equipment  now owned or  hereafter  acquired by the
Debtor, including all items of machinery, equipment, furnishings and fixtures of
every kind, whether affixed to real property or not, as well as all automobiles,
trucks and  vehicles  of every  description,  trailers,  handling  and  delivery
equipment,  fittings,  special  tools,  all  additions  to,  substitutions  for,
replacements  of or  accessions  to  any  of  the  foregoing,  all  attachments,
components,  parts  (including  spare parts) and accessories  whether  installed
thereon or affixed thereto and all fuel for any thereof.

"Federal  Contract" means any contract or agreement  with,  involving or for the
benefit  of  the  United  States  of  America  or  any  department,   agency  or
instrumentality  thereof  (collectively,  the "U.S.  Government"),  whether  now
existing or hereafter arising, in each case as the same may be amended, modified
or otherwise supplemented from time to time.

"First Union" means First Union National Bank of Washington, D.C.

"First  Union  Security  Agreement"  means  the  Promissory  Note  and  Security
Agreement,  dated  October 25,  1995,  executed by Debtor under its former name,
Galland,  Kharasch,  Morse &  Garfinkle,  P.C.,  in  favor of  First  Union,  in
connection  with the First Union Loan  Agreement.  "First Union Loan  Agreement"
means that certain Loan Agreement, dated October 25, 1995, between Debtor, under
its former name Galland, Kharasch, Morse & Garfinkle, P.C., and First Union.

"Inventory"  shall mean all  inventory  now owned or  hereafter  acquired by the
Debtor,  including (i) all goods and other personal  property which are held for
sale or  lease or are  furnished  or are to be  furnished  under a  contract  of
service or which constitute raw materials,  work in process or materials used or
consumed or to be used or consumed in the Debtor's business, (ii) all inventory,
wherever located, evidenced by negotiable and non-negotiable documents of title,
warehouse receipts and bills of lading,  (iii) all of the Debtor's rights in, to
and under all purchase orders now owned or hereafter  received or acquired by it
for goods or  services  and (iv) all rights of the  Debtor as an unpaid  seller,
including rescission, replevin, reclamation and stopping in transit.

"Lenders" shall have the meaning specified in the preamble hereof.

"Obligations"  shall  mean  any  and  all  now  existing  or  hereafter  arising
indebtedness, obligations, liabilities and covenants of each Credit Party to any
Lender, the Agent, their respective  Affiliates,  successors and assigns and any
other Indemnified Person under or arising out of any Credit Document,  including
without  limitation  (i) all Revolving  Loans and all Swing Line Loans  together
with  interest  thereon  and all  Standby  Letters  of  Credit,  (ii) all  fees,
expenses,  indemnity  payments and other  amounts due or to become due under the
Revolving  Credit  Agreement,  the Revolving  Notes,  the Swing Line Note or any
other  Credit  Document,   (iii)  all  liabilities  and  obligations  under  the
Subsidiary  Guarantee  and any other  agreement  executed  by any  Credit  Party
guarantying the obligations of the Borrower under the Revolving Credit Agreement
or any other Credit  Document,  (iv) all liabilities  and obligations  under any
agreement  providing  collateral for any of the foregoing  (including any Pledge
Agreement  and the  Subsidiary  Security  Agreements)  and (v) any  agreement or
instrument  refinancing or  restructuring  all or any portion of the obligations
and liabilities under any of foregoing or under any successor agreement or note,
in each case whether  direct or indirect,  absolute or  contingent  or due or to
become due.

"Other  Intangibles"  shall mean all  accounts,  accounts  receivable,  contract
rights,  documents,  instruments,  notes,  chattel  paper,  money,  indemnities,
warranties and general intangibles now owned or hereafter acquired by the Debtor
including,  without limitation,  all goodwill,  customer lists, permits, federal
and state tax refunds,  reversionary interests in pension plan assets,  Patents,
Trademarks,  licenses,  copyrights  and other rights in  intellectual  property,
other than Receivables.

"Patents"  shall  mean all  letters  patent  of the  United  States or any other
country,  and all  applications  for letters  patent of the United States or any
other country, in which the Debtor may now or hereafter have any right, title or
interest and all reissues,  continuations,  continuations-in-part  or extensions
thereof. "Proceeds" shall mean all proceeds,  including (i) whatever is received
upon  any  collection,  exchange,  sale  or  other  disposition  of  any  of the
Collateral  and any  property  into which any of the  Collateral  is  converted,
whether  cash or non-cash,  (ii) any and all payments or other  property (in any
form whatsoever) made or due and payable on account of any insurance, indemnity,
warranty  or  guaranty  payable  to  the  Debtor  with  respect  to  any  of the
Collateral,  (iii) any and all payments (in any form whatsoever) made or due and
payable in connection with any requisition, confiscation,  condemnation, seizure
or forfeiture of all or any part of the  Collateral  by any  governmental  body,
authority,  bureau or agency (or any person,  corporation,  agency, authority or
other entity acting under color of any governmental  authority) and (iv) any and
all other amounts from time to time paid or payable under or in connection  with
any of the Collateral.

"Receivables"  shall mean all accounts now or hereafter owing to the Debtor, and
all accounts  receivable,  contract  rights,  documents,  instruments or chattel
paper representing amounts payable or monies due or to become due to the Debtor,
arising from the sale of Inventory or the  rendition of services in the ordinary
course of business or otherwise (whether or not earned by performance), together
with all  Inventory  returned  by or  reclaimed  from  customers  wherever  such
Inventory  is located,  and all  guaranties,  securities  and liens held for the
payment of any such  account,  account  receivable,  contract  right,  document,
instrument or chattel paper.

"Security Agreement" shall have the meaning specified in the preamble hereof.

"Trademarks" shall mean all right, title or interest which the Debtor may now or
hereafter have in any or all trademarks,  trade names,  corporate names, company
names, business names,  fictitious business names, trade styles,  service marks,
logos, other source of business  identifiers,  prints and labels on which any of
the foregoing have appeared or appear,  designs and general  intangibles of like
nature,  now existing or hereafter  adopted or acquired,  all  registrations and
recordings  thereof and all  applications  in  connection  therewith,  including
without  limitation,  registrations,  recordings and  applications in the United
States  Patent and  Trademark  Office or in any similar  office or agency of the
United States,  any state thereof or any other country or political  subdivision
thereof and all reissues, extensions or renewals thereof.

"UCC" shall mean the Uniform Commercial Code in effect on the date hereof in the
Commonwealth of Virginia.

     "U.S.  Government"  has the meaning  specified in the definition of Federal
Contract contained herein.

Section 1.2.......UCC Definitions.  The uncapitalized terms "account",  "account
debtor",  "chattel paper",  "contract right",  "document",  "warehouse receipt",
"bill of  lading",  "document  of title",  "instrument",  "inventory",  "general
intangible",  "money",  "security",   "certificated  security",  "uncertificated
security",  "financial asset" and "proceeds" as used in Section 1.1 or elsewhere
in this Security  Agreement shall have the respective  meanings set forth in the
UCC.

ARTICLE II........
                               SECURITY INTERESTS

Section  2.1.......Grant of Security  Interests.  To secure the due and punctual
payment of all Obligations,  howsoever  created,  arising or evidenced,  whether
direct or indirect,  absolute or contingent, now or hereafter existing or due or
to become  due,  whether at  maturity  or upon  acceleration  or  otherwise,  in
accordance with the terms thereof and to secure the due and punctual performance
of all of the Obligations and in order to induce the Lenders to continue to make
or maintain the extensions of credit under and pursuant to the Revolving  Credit
Agreement, the Debtor hereby pledges, assigns,  delivers,  conveys and transfers
to the Agent,  for the ratable benefit of the Lenders,  and grants to the Agent,
for the ratable benefit of the Lenders, a first priority and continuing security
interest in and lien on, all of the  Debtor's  right,  title and interest in, to
and under the  following,  whether  now  existing  or  hereafter  acquired  (the
"Collateral") except that, so long as any indebtedness  remains outstanding,  or
any loan commitment remains in effect, under the First Union Loan Agreement, the
Debtor  only  grants to the Agent,  for the ratable  benefit of the  Lenders,  a
second priority  security interest in and lien on that portion of the Collateral
in which First Union shall have a perfected  security  interest  under the First
Union Security Agreement:

(i)      all Receivables;
(ii)     all Other Intangibles;
(iii)    all Equipment;
(iv)     all Inventory;
(v)     to the extent not included in the  foregoing,  all  securities  (whether
        certificated or  uncertificated)  and all financial assets,  whether now
        existing  or  hereafter  arising,  including,  without  limitation,  all
        capital  stock  issued  by any  Person  and  held  by  Debtor,  and  all
        partnership interests, whether in the nature of a joint venture, limited
        liability company member's interest, master limited partnership, teaming
        arrangement or otherwise;
(vi)    to  the  extent  not  included  in the  foregoing,  all  other  personal
        property,  whether tangible or intangible,  and wherever located whether
        within or outside of the United States,  including,  but not limited to,
        the balance of every  deposit  account now or hereafter  existing of the
        Debtor with any bank or other  financial  institution  and all monies of
        the Debtor and all rights to payment of money of the Debtor;
(vii)   to the extent not  included  in the  foregoing,  all books,  ledgers and
        records and all computer  programs,  tapes,  discs,  punch  cards,  data
        processing  software,   transaction  files,  master  files  and  related
        property  and  rights  (including  computer  and  peripheral  equipment)
        necessary or helpful in enforcing,  identifying or establishing any item
        of Collateral; and
(viii)  to the extent not otherwise  included,  all Proceeds and products of any
        or all of the foregoing,  whether existing on the date hereof or arising
        hereafter;
provided,  however,  notwithstanding  anything to the contrary contained herein,
the  Debtor is not  assigning,  pledging  or  otherwise  encumbering  under this
Security Agreement its interests in any Federal Contract to which it is a party,
or in accounts or receivables due to Debtor under such Federal Contract,  to the
extent,  but only to the extent,  such assignment,  pledge or other  encumbrance
would  breach or violate or would cause Debtor to breach or violate such Federal
Contract or statutes or regulations applicable thereto, it being understood that
this proviso does not apply to, or in any way limit, Debtor's assignment, pledge
or encumbrance of Proceeds of all Federal Contracts to which it is a party.

Section 2.2 Continuing Liability of the Debtor.  Anything herein to the contrary
notwithstanding,  the Debtor shall remain  liable to observe and perform all the
terms and  conditions  to be observed and  performed  by it under any  contract,
agreement,  warranty or other  obligation  with respect to the  Collateral;  and
shall do nothing to impair the  security  interests  herein  granted.  The Agent
shall not have any obligation or liability  under any such contract,  agreement,
warranty or obligation by reason of or arising out of this Security Agreement or
the receipt by the Agent of any payment  relating to any  Collateral,  nor shall
the Agent be required to perform or fulfill any of the obligations of the Debtor
with  respect  to the  Collateral,  to make  any  inquiry  as to the  nature  or
sufficiency of any payment  received by it or the sufficiency of the performance
of any party's  obligations  with respect to any  Collateral.  Furthermore,  the
Agent  shall not be  required  to file any claim or demand to collect any amount
due or to enforce the  performance of any party's  obligations  with respect to,
the Collateral.

Section 2.3       Sales and Collections.

(a) Sales of  Inventory  in the  Ordinary  Course  of  Business.  The  Debtor is
authorized (i) to sell in the ordinary course of its business for fair value and
on an  arm's-length  basis  any of its  Inventory  normally  held by it for such
purpose and (ii) to use and consume, in the ordinary course of its business, any
raw materials,  supplies and materials normally held by it for such purpose. The
Agent may, upon the occurrence of any Event of Default, without cause or notice,
curtail or terminate such authority at any time.

(b) Collection of Receivables. The Debtor is authorized to collect amounts owing
to it with respect to the Collateral, except as otherwise provided in connection
with the Assignment of Federal Contract, if any as provided herein. However, the
Agent may, upon and during the continuance of an Event of Default or a Potential
Event of Default, notify Account Debtors obligated to make payments under any or
all Receivables or Other  Intangibles that the Agent has a security  interest in
such Collateral and that payments shall be made directly to the Agent.  Upon the
request of the Agent upon and during the continuance of an Event of Default or a
Potential  Event of Default,  as the case may be, the Debtor will so notify such
Account  Debtors  and  will  execute  such  contract  assignments,   notices  of
assignment or other  documents as may be required by such Account  Debtors.  The
Debtor will use all  reasonable  efforts to cause each Account  Debtor to comply
with the foregoing  instruction.  In furtherance  of the  foregoing,  the Debtor
authorizes the Agent upon and during the continuance of an Event of Default or a
Potential  Event of Default (i) to ask for,  demand,  collect,  receive and give
acquittances  and  receipts  for any and all amounts due and to become due under
any Collateral and in the name of the Debtor or its own name or otherwise,  (ii)
to  take  possession  of,  endorse  and  collect  any  checks,   drafts,  notes,
acceptances  or other  instruments  for the  payment  of  monies  due  under any
Collateral  and (iii) to file any claim or take any other action in any court of
law or equity or  otherwise  which it may deem  appropriate  for the  purpose of
collecting  any  amounts  due under any  Collateral.  The  Agent  shall  have no
obligation  to obtain or record any  information  relating to the source of such
funds or the obligations in respect of which payments have been made.

Section 2.4       Segregation of Proceeds.

(a) Cash Collateral  Account  Maintained by Agent. Upon an Event of Default or a
Potential  Event of  Default,  the Agent shall have the right at any time during
the  continuance  thereof to cause to be opened and  maintained at the office of
the Agent in McLean,  Virginia a  non-interest  bearing  bank account (the "Cash
Collateral  Account") which will contain only Proceeds.  Any "cash proceeds" (as
such term is defined  in  Section  9-306(1)  of the UCC)  received  by the Agent
directly from Account  Debtors  obligated to make payments under  Receivables or
Other Intangibles  pursuant to Section 2.3 hereof or from the Debtor pursuant to
clause (b) of this Section 2.4,  whether  consisting of checks,  notes,  drafts,
bills of exchange, money orders,  commercial paper or other Proceeds received on
account of any  Collateral,  shall be promptly  deposited in the Cash Collateral
Account, and until so deposited shall be held in trust for the Agent as property
of the  Agent  and shall not be  commingled  with any  funds of the  Debtor  not
constituting  Proceeds  of  Collateral.  The name in which  the Cash  Collateral
Account is carried shall clearly  indicate that the funds deposited  therein are
the  property  of the  Debtor,  subject to the  security  interest  of the Agent
hereunder. Such Proceeds, when deposited,  shall continue to be security for the
Obligations   and  shall  not  constitute   payment  thereof  until  applied  as
hereinafter  provided.  The Agent shall have sole  dominion and control over the
funds deposited in the Cash Collateral Account,  and such funds may be withdrawn
therefrom only by the Agent.

(b) Deposit of  Proceeds  by the Debtor.  Upon notice by the Agent to the Debtor
that the Cash  Collateral  Account has been  opened,  the Debtor shall cause all
cash  Proceeds  collected  by it to be  delivered  to the Agent  forthwith  upon
receipt,  in the original  form in which  received  (with such  endorsements  or
assignments as may be necessary to permit collection  thereof by the Agent), and
for such  purpose the Debtor  hereby  irrevocably  authorizes  and  empowers the
Agent,  its officers,  employees and  authorized  agents to endorse and sign the
name of the Debtor on all checks, drafts, money orders or other media of payment
so delivered,  and such endorsements or assignments shall, for all purposes,  be
deemed to have been made by the Debtor prior to any  endorsement  or  assignment
thereof by the Agent.  The Agent may use any  convenient or customary  means for
the purpose of collecting  such checks,  drafts,  money orders or other media of
payment.

Section 2.5 Verification of Receivables.  The Agent shall have the right to make
test  verifications  of  Receivables  in any  reasonable  manner and through any
medium that it considers  advisable,  and the Debtor  agrees to furnish all such
assistance and  information  as the Agent may  reasonably  require in connection
therewith.  The Debtor at its expense will cause its chief financial  officer to
furnish to the Agent at any reasonable time and from time to time, promptly upon
the Agent's reasonable request,  the following reports:  (i) a reconciliation of
all Receivables, (ii) an aging of all Receivables, (iii) trial balances and (iv)
a test verification of such Receivables as the Agent may request.

Section 2.6       Release of Collateral.

(a) Security  Interest of Agent Ceases Upon Permitted  Dispositions.  The Debtor
may sell or realize upon or transfer or otherwise  dispose of Collateral only to
the extent permitted by Section 4.13, and the security interests of the Agent in
such  Collateral so sold,  realized upon or disposed of (but not in the Proceeds
arising from such sale, realization or disposition) shall cease immediately upon
such sale, realization or disposition, without any further action on the part of
the Agent.  The Agent,  if requested in writing by the Debtor but at the expense
of the Debtor,  is hereby  authorized  and  instructed to deliver to the Account
Debtor or the purchaser or other transferee of any such Collateral a certificate
stating  that the Agent no longer  has a  security  interest  therein,  and such
Account Debtor or such purchaser or other  transferee  shall be entitled to rely
conclusively on such certificate for any and all purposes.

(b) Filing of  Termination  Statements.  Upon the  payment in full of all of the
Obligations  and if  there  is no  commitment  by any  Lender  to  make  further
advances,  incur obligations or otherwise give value, the Agent will (as soon as
reasonably  practicable  after receipt of notice from the Debtor  requesting the
same but at the  expense  of the  Debtor)  deliver  to the  Debtor  (i) for each
jurisdiction  in  which a UCC  financing  statement  is on file to  perfect  the
security  interests  granted to the Agent  hereunder,  a  termination  statement
(appropriately  completed)  to the  effect  that the  Agent no  longer  claims a
security  interest under such financing  statement and (ii) such other documents
as  the  Debtor  shall  reasonably  request   evidencing   satisfaction  of  the
Obligations  and the  release  of the  security  interests  granted to the Agent
hereunder.

ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         The Debtor represents and warrants that:

Section 3.1 Title to Collateral.  Except for the security  interests  granted to
the Agent  pursuant to this  Security  Agreement  and as otherwise  permitted by
Section 6.2(a) of the Revolving Credit  Agreement,  the Debtor is the sole owner
of each item of the Collateral,  having good and marketable title thereto,  free
and clear of any and all Liens.

Section 3.2       Validity, Perfection and Priority of Security Interests.

(a) By complying  with Section 4.1 hereof,  the Debtor will have created a valid
security  interest in favor of the Agent in all existing  Collateral  and in all
identifiable  Proceeds of such  Collateral,  which security  interest (except in
respect of  Collateral  not located at a facility  identified  on  Schedule  3.5
hereto  and motor  vehicles  for  which the  exclusive  manner of  perfecting  a
security interest therein is by noting such security interest in the certificate
of title in accordance with local law) would be prior to the claims of a trustee
in bankruptcy under Section 544(a) of the Bankruptcy Code. Continuing compliance
by the Debtor  with the  provisions  of Section  4.2 hereof will also (i) create
valid security interests in all Collateral acquired after the date hereof and in
all  identifiable  Proceeds  of such  Collateral  and (ii) cause  such  security
interests in all Collateral and in all Proceeds which are (A) identifiable  cash
Proceeds of  Collateral  covered by  financing  statements  required to be filed
hereunder,  (B)  identifiable  Proceeds  in  which a  security  interest  may be
perfected  by such  filing  under  the UCC and  (C)  any  Proceeds  in the  Cash
Collateral Account to be duly perfected under the UCC, in each case prior to the
claims of a trustee in bankruptcy  under the Bankruptcy  Code (except in respect
of Collateral not located at a facility identified on Schedule 3.5 hereto).

(b) The  security  interests  of the  Agent  in the  Collateral  located  at the
facilities   identified   on  Schedule  3.5  hereto  rank  second  in  priority,
subordinate  only to the security  interests  granted to First Union pursuant to
the First Union Security  Agreement.  Other than  financing  statements or other
similar  documents  perfecting  the  security  interests in favor of First Union
pursuant to the First Union Security Agreement and those financing statements or
other similar documents perfecting the security interests in favor of the Agent,
no financing statements, deeds of trust, mortgages or similar documents covering
all or any part of the  Collateral  are on file or of record  in any  government
office in any  jurisdiction in which such filing or recording would be effective
to perfect a security interest in such Collateral,  nor is any of the Collateral
in the  possession  of any Person  (other than the Debtor)  asserting  any claim
thereto or security interest therein.

Section 3.3  Enforceability  of Receivables and Other  Intangibles.  To the best
knowledge of the Debtor,  each  Receivable  and Other  Intangible is a valid and
binding obligation of the related Account Debtor in respect thereof, enforceable
in accordance with its terms,  except as such  enforceability  may be limited by
applicable bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
affecting  the  enforcement  of  creditors'  rights  generally  and  by  general
provisions of equity (regardless of whether such enforceability is considered in
a  proceeding  in equity or at law),  and  complies  with any  applicable  legal
requirements.

Section  3.4 Place of  Business.  Schedule  3.4  correctly  sets forth the chief
executive  office and principal  place of business of the Debtor and the offices
of the Debtor where records  concerning  Receivables  and Other  Intangibles are
kept.

Section 3.5  Location  of  Collateral.  Schedule  3.5  correctly  sets forth the
location of all Equipment and Inventory,  other than rolling stock, aircraft and
goods in transit.  Except as otherwise  specified in Schedule 3.5, all Inventory
and Equipment  has been located at the address  specified on Schedule 3.5 at all
times during the  four-month  period prior to the date hereof while owned by the
Debtor.  All Inventory has been and will be produced in compliance with the Fair
Labor Standards Act, 29 U.S.C.  ss.ss.  201-219,  except for such non-compliance
which could not reasonably be expected to have a material  adverse effect on the
Debtor. No Inventory is evidenced by a negotiable  document of title,  warehouse
receipt  or bill of  lading.  No  non-negotiable  document  of title,  warehouse
receipt or bill of lading has been  issued to any person  other than the Debtor,
and the Debtor has retained possession of all of such non-negotiable  documents,
warehouse receipts and bills of lading. No amount payable under or in connection
with  any  of  the  Collateral  is  evidenced  by  promissory   notes  or  other
instruments.

Section 3.6 Trade  Names.  Schedule 3.6  correctly  sets forth any and all trade
names,  division  names,  assumed  names or other  names  under which the Debtor
currently  transacts  business or has transacted  business within the four-month
period prior to the date hereof.

Section  3.7 Patents  and  Trademarks.  Schedule  3.7  correctly  sets forth all
Patents,  Patent  licenses,  Trademarks and Trademark  licenses now owned by the
Debtor.

ARTICLE IV
                                    COVENANTS

The Debtor  covenants and agrees that until all  obligations  and liabilities in
respect of the  Obligations  shall have  performed and paid in full and until no
Standby Letters of Credit are outstanding or fully cash  collateralized  and the
Commitments are terminated:

Section 4.1 Perfection of Security  Interests.  The Debtor will, at its expense,
cause all filings and recordings and other actions  specified on Schedule 4.1 to
have been completed on or prior to the Effective Date.

Section 4.2       Further Actions.

(a) At all times after the date hereof, the Debtor will, at its expense,  comply
with the following:
(i)     as to all Receivables,  Other Intangibles,  Equipment and Inventory,  it
        will cause UCC financing  statements and  continuation  statements to be
        filed and to be on file in all applicable  jurisdictions  as required to
        perfect the security  interests  granted to the Agent hereunder,  to the
        extent that applicable law permits  perfection of a security interest by
        filing under the UCC;
(ii)    as to all  Proceeds,  it will  cause all UCC  financing  statements  and
        continuation  statements  filed in  accordance  with clause (i) above to
        include a statement  or a checked box  indicating  that  Proceeds of all
        items of Collateral described herein are covered;
(iii)   as to  any  amount  payable  under  or in  connection  with  any  of the
        Collateral  which shall be or shall become  evidenced by any  promissory
        note or other  instrument,  the Debtor  will  promptly  (but in no event
        later  than  ten  (10)  Business  Days  after  receipt  of such  note or
        instrument),  pledge and deliver  such note or other  instrument  to the
        Agent as part of the  Collateral,  duly endorsed in a manner  reasonably
        satisfactory to the Agent;
(iv)    at the  request  of the  Agent,  the  Debtor  shall  deliver  all  other
        Collateral consisting of certificated securities,  endorsed for transfer
        in  a  manner  reasonably  satisfactory  to  the  Agent  (or  execute  a
        securities   intermediary   account  control  agreement  to  the  extent
        possession by the Agent of such securities is not feasible); and
(v)     as to all Patents,  Patent licenses,  Trademarks or Trademark  licenses,
        the Debtor will effect the  recordation or renewal of the recordation of
        the security  interests of the Agent therein so as to maintain valid and
        perfected  security  interests  therein under all  applicable  state and
        federal laws.

(b) Further  Assurances.  The Debtor will, from time to time and at its expense,
execute, deliver, file or record such UCC financing statements, applications for
certificates  of title  and such  other  statements,  assignments,  instruments,
documents,  agreements  or other  papers and take any other  action  that may be
necessary or desirable,  or that the Agent may reasonably  request,  in order to
create,  preserve,  perfect,  confirm or validate the  security  interest of the
Agent in the Collateral, to enable the Agent to obtain the full benefits of this
Security  Agreement  or to enable it to exercise  and enforce any of its rights,
powers and remedies hereunder,  including, without limitation, its right to take
possession of the Collateral.

(c) Signature. To the fullest extent permitted by law, the Debtor authorizes the
Agent to sign and file  financing and  continuation  statements  and  amendments
thereto with respect to the Collateral without its signature thereon.

Section 4.3 Change of Name,  Identity or  Structure.  The Debtor will not change
its name, identity or corporate structure in any manner and, except as set forth
on  Schedule  3.6,  will not conduct its  business  under any trade,  assumed or
fictitious  name unless it shall have given the Agent at least  forty-five  (45)
days'  prior  written  notice  thereof  and shall have taken all action (or made
arrangements to take such action  substantially  simultaneously with such change
if it is  impossible  to take such action in advance)  necessary  or  reasonably
requested  by the  Agent  to  amend  any  financing  statement  or  continuation
statement relating to the security interests granted hereby in order to preserve
such  security  interests  and to  effectuate  or maintain the priority  thereof
against all Persons.

Section 4.4 Place of  Business  and  Collateral.  The Debtor will not change the
location of (i) its places of business, (ii) its chief executive office or (iii)
the  office or other  locations  where it keeps or holds any  Collateral  or any
records relating thereto from the applicable  location listed on Schedule 3.4 or
3.5 unless,  prior to such change, it notifies the Agent forty-five (45) days in
advance of such change,  makes all UCC filings required by Section 4.2 and takes
all other action necessary or that the Agent may reasonably request to preserve,
perfect,  confirm and protect the security  interests granted hereby. The Debtor
will in no event  change the  location of any  Collateral  if such change  would
cause the security  interest granted hereby in such Collateral to lapse or cease
to be  perfected.  The Debtor  will at all times  maintain  its chief  executive
office within one of the forty-eight contiguous states in which Article 9 of the
uniform commercial code is in effect.

Section  4.5  Fixtures.  The Debtor  will not permit any  Equipment  to become a
fixture  unless it shall  have  given the  Agent at least ten (10)  days'  prior
written  notice  thereof and shall have taken all such action and  delivered  or
caused to be delivered to the Agent all  instruments  and documents,  including,
without  limitation,  waivers and subordination  agreements by any landlords and
mortgagees, and filed all financing statements necessary or reasonably requested
by the Agent, to preserve and protect the security  interest  granted herein and
to effectuate or maintain the priority  thereof  against all Persons;  provided,
however,  that,  so long as no Event of  Default or  Potential  Event of Default
shall have  occurred  and be  continuing,  the Debtor  shall not be obligated to
comply with the provisions of this Section 4.5 with respect to the first $50,000
of Equipment (determined based on the then fair market value thereof).

Section 4.6 Maintenance of Records. The Debtor will keep and maintain at its own
cost and expense complete books and records relating to the Collateral which are
satisfactory  to the  Agent  including,  without  limitation,  a  record  of all
payments received and all credits granted with respect to the Collateral and all
of its other  dealings with the  Collateral.  The Debtor will mark its books and
records pertaining to the Collateral to evidence this Security Agreement and the
security interests granted hereby.  For the Agent' further security,  the Debtor
agrees  that the Agent  shall  have a special  property  interest  in all of the
Debtor's  books and records  pertaining to the  Collateral  and the Debtor shall
deliver  and  turn  over any  such  books  and  records  to the  Agent or to its
representatives at any time on demand of the Agent.

Section 4.7 Compliance with Laws The Debtor will comply in all material respects
with all  acts,  rules,  regulations,  orders,  decrees  and  directions  of any
government or any state or local government  applicable to the Collateral or any
part thereof or to the operation of the Debtor's  business  except to the extent
that the  failure  to comply  would not have a  material  adverse  effect on the
financial or other condition of the Debtor;  provided,  however, that the Debtor
may  contest  any act,  rule,  regulation,  order,  decree or  direction  in any
reasonable  manner which shall not, in the sole opinion of the Agent,  adversely
affect the Agent's  rights or, in the case of  Collateral  located at a facility
identified on Schedule 3.4 hereto,  the priority of its security interest in the
Collateral.

Section 4.8 Payment of Taxes.  The Debtor will pay promptly  when due all taxes,
assessments and governmental charges or levies imposed upon the Collateral or in
respect of its income or  profits  therefrom,  as well as all claims of any kind
(including claims for labor, materials and supplies), except that no such charge
need be paid if (i) the  validity  thereof is being  contested  in good faith by
appropriate  proceedings and (ii) such charge is adequately  reserved against in
accordance  with  generally  accepted  accounting  principles,  as  consistently
applied.

Section 4.9  Compliance  with Terms of Accounts and  Contracts.  The Debtor will
perform and comply in all material  respects with all of its  obligations  under
all agreements  relating to the Collateral to which it is a party or by which it
is bound.

Section  4.10  Limitation  on Liens on  Collateral.  The Debtor will not create,
permit or suffer to exist,  and will  defend  the  Collateral  and the  Debtor's
rights with respect  thereto  against and take such other action as is necessary
to  remove  any  Lien,  security  interest,  encumbrance,  or claim in or to the
Collateral other than the security interests created hereunder and such Liens to
the  extent  permitted  pursuant  to  Section  6.2(a)  of the  Revolving  Credit
Agreement.

Section 4.11 Limitations on Modifications of Receivables and Other  Intangibles;
No Waivers or Extensions.  The Debtor will not (i) amend,  modify,  terminate or
waive any  provisions  of any material  Receivable  or Other  Intangible  in any
manner which might, when taken together with all such other Receivables or Other
Intangibles,  respectively,  materially  reduce the value of all  Receivables or
Other  Intangibles,  respectively,  in the  Collateral,  (ii)  fail to  exercise
promptly and  diligently  each and every  material right which it may have under
each  Receivable  and Other  Intangible  or (iii) fail to deliver to the Agent a
copy of each material demand,  notice or document received by it relating in any
way  to  any  Receivable  or  Other  Intangible.  Section  4.12  Maintenance  of
Insurance.  The Debtor will maintain with financially sound insurance  companies
licensed to do business in the  jurisdictions in which the Collateral is located
insurance  policies  on the  Inventory  and  Equipment  in  accordance  with the
provisions of Section 6.1(m) of the Revolving Credit Agreement.

Section 4.13  Limitations on  Dispositions  of  Collateral.  The Debtor will not
directly or indirectly (through the sale of stock, merger or otherwise), without
the prior  written  consent of the Agent,  sell,  transfer,  lease or  otherwise
dispose of any of the Collateral,  or attempt, offer or contract to do so except
for (i) sales of Inventory in the ordinary course of its business for fair value
in  arm's-length  transactions  and  (ii) so long as no  Event  of  Default  (or
Potential  Event of Default) has occurred and is continuing,  dispositions  in a
commercially reasonable manner of Equipment which has become redundant, worn out
or obsolete or which should be replaced so as to improve  productivity,  so long
as the  proceeds  of any such  disposition  are (x) used to acquire  replacement
equipment  which has comparable or better utility and equivalent or better value
and which is  subject to a first  priority  (or,  as  permitted  by Section  2.1
hereof,  a second  priority)  security  interest in favor of the Agent  therein,
except as permitted by Section 6.2(a) of the Revolving Credit Agreement,  or (y)
applied to repay the  Obligations.  The inclusion of Proceeds of the  Collateral
under the security interests granted hereby shall not be deemed a consent by the
Agent to any sale or disposition  of any  Collateral  other than as permitted by
this Section 4.13.

Section 4.14 Further  Identification  of Collateral.  The Debtor will furnish to
the Agent from time to time  statements and schedules  further  identifying  and
describing  the  Collateral  and  such  other  reports  in  connection  with the
Collateral as the Agent may reasonably request. The Debtor shall promptly notify
the Agent if the value of the Collateral located at the facilities identified on
Schedule 3.5 hereto is less than 80% of the value of all of the Collateral.

Section  4.15  Notices.  The  Debtor  will  advise  the  Agent  promptly  and in
reasonable detail (i) of any Lien, security interest,  encumbrance or claim made
or  asserted  against  any of the  Collateral,  other  than,  unless  reasonably
requested  by the Agent,  Liens  permitted  by Section  6.2(a) of the  Revolving
Credit  Agreement,  (ii)  of  any  material  change  in the  composition  of the
Collateral,  and (iii) of the  occurrence  of any other event which would have a
material  adverse  effect on the  aggregate  value of the  Collateral  or on the
security interests granted to the Agent in this Security Agreement.

Section 4.16 Change of Law. The Debtor  shall  promptly  notify the Agent of any
change in law known to it which (i) adversely  affects or will adversely  affect
the validity,  perfection or priority of the security  interests granted hereby,
(ii)  requires  or will  require a change in the  proceedings  to be followed in
order to maintain and protect such  validity,  perfection  and priority or (iii)
could result in the Agent not having a perfected security interest in any of the
Collateral.

Section 4.17      Right of Inspection.

(a) Access to Books and Records. The Debtor shall,  following any request by the
Agent and upon reasonable  notice,  permit the Agent or its  representatives  to
have  full  and free  access  during  normal  business  hours to all the  books,
correspondence and records of the Debtor,  and the Agent or its  representatives
may examine the same, take extracts therefrom, make photocopies thereof and have
such discussions with officers,  employees and public  accountants of the Debtor
as the Agent may deem reasonably  necessary,  and the Debtor agrees to render to
the Agent, at the Debtor's cost and expense,  such clerical and other assistance
as  may  be  reasonably  requested  with  regard  thereto.  The  Agent  and  its
representatives  shall upon  reasonable  notice and during normal business hours
also  have the  right to enter  into  and  upon any  premises  where  any of the
Inventory or the  Equipment is located for the purpose of  inspecting  the same,
observing its use or protecting the interests of the Agent therein.

(b)  Audits.  The  Debtor  shall  permit  the  Lenders,   the  Agent  and  their
representatives  and advisors to review the operations of the Debtor and perform
the audits and  examinations  as  provided  in Section  6.1(l) of the  Revolving
Credit Agreement.

Section 4.18 Maintenance of Equipment. The Debtor will, at its expense, maintain
the Equipment in good operating condition, ordinary wear and tear excepted.
Section 4.19      Covenants Regarding Patent and Trademark Collateral.

(a)  Generally.  At  such  time as the  Debtor  shall  acquire  any  Patents  or
Trademarks,  it will comply with the terms,  covenants  and  warranties  of this
Section 4.19.

(b) Continued Use of Trademark.  The Debtor (either itself or through licensees)
will, unless the Debtor shall reasonably determine,  after consultation with the
Agent,  that a Trademark  is of  negligible  economic  value to the Debtor,  (i)
continue  to use each  Trademark  on each  and  every  Trademark  class of goods
applicable  to its current  products  and  services as  reflected in its current
catalogs,  brochures and price lists in order to maintain each Trademark in full
force and free from any claim of  abandonment  for non-use,  (ii) maintain as in
the past the quality of products  and  services  offered  under each  Trademark,
(iii) employ each Trademark with the appropriate  notice of  registration,  (iv)
not adopt or use any mark which is confusingly  similar to a colorable imitation
of any Trademark and (v) not (and not permit any licensee or sublicensee thereof
to) do any act or knowingly  omit to do any act whereby any Trademark may become
invalidated.

(c) No  Abandonment.  The Debtor will not,  unless the Debtor  shall  reasonably
determine,  after  consultation  with the Agent,  that a Patent is of negligible
economic  value to the  Debtor,  do any act,  or  knowingly  omit to do any act,
whereby any Patent may be abandoned or dedicated.

(d) Notice of Abandonment or Adverse Determinations. The Debtor shall notify the
Agent  immediately if it knows,  or has reason to know,  that any application or
registration  relating  to any  Patent or  Trademark  may  become  abandoned  or
dedicated,  or of any adverse determination or development  (including,  without
limitation,  the institution of, or any such determination or development in any
proceeding  in the United  States  Patent and  Trademark  Office or any court of
tribunal in any  country)  regarding  the  Debtor's  ownership  of any Patent or
Trademark, its right to register the same or keep and maintain the same.

(e) Filings After Notice to Agent.  In no event shall the Debtor,  either itself
or through any agent,  employee,  licensee or designee,  file an application for
registration  of any  Patent or  Trademark  with the  United  States  Patent and
Trademark  Office or any  similar  office or agency in any other  country or any
political  subdivision  thereof,  unless it promptly informs the Agent and, upon
request of the Agent, executes and delivers any and all agreements, instruments,
documents  and papers as the Agent may request to evidence the Agent's  security
interest in such Patent or Trademark and the goodwill and general intangibles of
the  Debtor  relating  thereto or  represented  thereby,  and the Debtor  hereby
constitutes the Agent its attorney-in-fact to execute and file all such writings
for the foregoing purposes, all such acts of such attorney being hereby ratified
and confirmed.

(f) Pursuit of Applications  and Maintenance of  Registrations.  The Debtor will
take all necessary  steps,  including,  without  limitation,  in any  proceeding
before the United States Patent and  Trademark  Office or any similar  office or
agency in any other country or any political  subdivision  thereof,  to maintain
and pursue each  application  (and to obtain the relevant  registration)  and to
maintain each  registration  of the Patents and  Trademarks,  including  without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability;  provided,  however, that no such Patent or Trademark shall
be required to be  maintained  or pursued to the extent such Patent or Trademark
is  determined  by the  Debtor,  after  consultation  with the  Agent,  to be of
negligible economic value to the Debtor.

(g) Notice of  Infringement.  If any of the Patent and  Trademark  Collateral is
infringed,  misappropriated  or  diluted  by a third  party,  the  Debtor  shall
promptly  notify the Agent after it learns thereof and shall,  unless the Debtor
shall reasonably determine,  after consultation with the Agent, that such Patent
and Trademark Collateral is of negligible economic value to the Debtor, promptly
sue for infringement, misappropriation of dilution, seek injunctive relief where
appropriate   and  recover   any  and  all   damages   for  such   infringement,
misappropriation  or  dilution,  or take such other  action as the Debtor  shall
reasonably deem appropriate  under the  circumstances to protect such Patent and
Trademark Collateral.

Section  4.20  Termination  of Federal  Contracts.  With respect to each Federal
Contract in respect of which the Debtor is required to execute an  Assignment of
Federal  Contract in accordance with Section 4.21 hereof,  the Debtor shall give
prompt written  notice to the Agent if the U.S.  Government  shall  terminate or
threaten to  terminate  (whether  for  convenience  or default) any such Federal
Contract  with the Debtor  having a value  (including  unexercised  options)  of
$100,000 or more. In addition,  the Debtor shall give prompt  written  notice to
the Agent if the U.S.  Government  shall  terminate or threaten to terminate any
contract between the U.S.  Government and any other prime contractor under which
the  Debtor  is a  subcontractor  if the  value of such  subcontract  (including
unexercised options) is $100,000 or more.

Section 4.21 Federal  Contracts.  The Debtor shall provide to the Agent, as soon
as reasonably  practicable but not later than forty-five (45) days following the
end of each Fiscal Quarter,  a report identifying each Federal Contract to which
it is a party,  having  attached  thereto  a copy of the first two pages of such
Federal  Contract  and any  amendment  thereto,  to the  extent  not  previously
provided to the Agent.  At the request of the Agent  (unless an Event of Default
shall have  occurred and be  continuing,  in which case no such request shall be
required),  the Debtor shall  execute and deliver to the Agent an  Assignment of
Federal Contract, in substantially the form of Exhibit A hereto (the "Assignment
of Federal Contract"), and execute any other instruments or take any other steps
required  by the Agent in order  that all moneys due or to become due under such
Federal  Contracts shall be assigned to the Agent and notice thereof given under
the Assignment of Claims Act, including without  limitation  delivery of Notices
of Assignments with respect to each Federal Contract as contemplated by Appendix
A to Exhibit A hereto.

Section 4.22 Reimbursement Obligation. Should the Debtor fail to comply with the
provisions of this Security  Agreement,  the Revolving  Credit  Agreement or any
other agreement relating to the Collateral such that the value of any Collateral
or the validity,  perfection,  rank or value of any security interest granted to
the  Agent  hereunder  or  thereunder  is  thereby   diminished  or  potentially
diminished or put at risk (as reasonably  determined by the Agent), the Agent on
behalf of the Debtor may, but shall not be required to,  effect such  compliance
on behalf of the Debtor,  and the Debtor shall  reimburse the Agent for the cost
thereof on demand,  and interest shall accrue on such  reimbursement  obligation
from the date the relevant  costs are incurred  until  reimbursement  thereof in
full at the Default Rate.

ARTICLE V
                          REMEDIES; RIGHTS UPON DEFAULT

Section 5.1 UCC Rights.  In the event that any  portion of the  Obligations  has
been declared or becomes due and payable in accordance with the Revolving Credit
Agreement or other Credit  Documents and such  Obligations have not been paid in
full,  the Agent may in addition to all other rights and remedies  granted to it
in this Security  Agreement and in any other  instrument or agreement  securing,
guarantying,  evidencing or relating to the Obligations, exercise (i) all rights
and  remedies of a secured  party under the UCC (whether or not in effect in the
jurisdiction  where  such  rights  are  exercised)  and  (ii) all  other  rights
available to the Agent at law or in equity.

Section 5.2  Payments on  Collateral.  Without  limiting the rights of the Agent
under any other  provision of this  Security  Agreement,  if an Event of Default
shall occur and be continuing:

(i)     all payments  received by the Debtor under or in connection  with any of
        the Collateral shall be held by the Debtor in trust for the Agent, shall
        be segregated  from other funds of the Debtor and shall  forthwith  upon
        receipt by the Debtor be turned  over to the Agent,  in the same form as
        received by the Debtor  (duly  indorsed  by the Debtor to the Agent,  if
        required to permit collection thereof by the Agent); and

(ii)    all such  payments  received  by the Agent  (whether  from the Debtor or
        otherwise)  may,  in the sole  discretion  of the Agent,  be held by the
        Agent as collateral  security for, and/or then or at any time thereafter
        applied in whole or in part by the Agent to the payment of, the expenses
        and the Obligations as set forth in Section 5.11 hereof.

Section 5.3  Possession of Collateral.  In  furtherance  of the  foregoing,  the
Debtor  expressly  agrees  that,  if an  Event of  Default  shall  occur  and be
continuing, the Agent may (i) by judicial powers, or without judicial process if
it can be done without breach of the peace, enter any premises where any of such
Collateral is or may be located and,  without  charge or liability to the Agent,
seize and remove such  Collateral from such premises and (ii) have access to and
use of the Debtor's books and records relating to such Collateral.








Section 5.4       Sale of Collateral; Notice.

(a) Sale of Collateral.  The Debtor expressly agrees that if an Event of Default
shall occur and be continuing, the Agent, without demand of performance or other
demand or notice of any kind (except the notice  specified below of the time and
place of any public or private  sale) to or upon the Debtor or any other  Person
(all of which  demands  and/or  notices are hereby  waived by the  Debtor),  may
forthwith (i) apply the cash, if any, then held by it as collateral as specified
in Section  5.11 hereof and (ii) if there shall be no cash or such cash shall be
insufficient to pay the Obligations in full, collect,  receive,  appropriate and
realize upon the Collateral,  and/or sell, assign,  give an option or options to
purchase or otherwise  dispose of and deliver the  Collateral (or contract to do
so) or any part thereof in one or more parcels (which need not be in round lots)
at public or  private  sale,  at any  office of the Agent or  elsewhere  in such
manner as is  commercially  reasonable and, as the Agent may deem best, for cash
or on credit or for future delivery  without  assumption of any credit risk. The
Agent shall have the right upon any such public sale,  and, if the Collateral is
of a type customarily  sold in a recognized  market or is of a type which is the
subject of widely distributed  standard price quotations,  upon any such private
sale or sales,  to purchase the whole or any part of the Collateral so sold, and
thereafter to hold the same,  absolutely and free from any right or claim of any
kind. To the extent  permitted by applicable  law, the Debtor waives all claims,
damages  and  demands  against  the  Agent  arising  out  of  the   foreclosure,
repossession, retention or sale of the Collateral.

(b) Notice of Sale. Unless the Collateral threatens to decline speedily in value
or is of a type  customarily sold on a recognized  market,  the Agent shall give
the Debtor  ten (10)  days'  written  notice of its  intention  to make any such
public or private sale or sale at a broker's board or on a securities  exchange.
Such  notice  shall (i) in the case of a public  sale,  state the time and place
fixed  for  such  sale,  (ii) in the  case of sale at a  broker's  board or on a
securities  exchange,  state the board or  exchange  at which such sale is to be
made and the day on which the  Collateral,  or the portion  thereof  being sold,
will first be offered  for sale and (iii) in the case of a private  sale,  state
the day after which such sale may be consummated.  The Agent shall not obligated
to make any such sale  pursuant  to any such  notice.  The Agent may adjourn any
public or private  sale or cause the same to be  adjourned  from time to time by
announcement at the time and place fixed for the sale, and such sale may be made
at any time or place to which the same may be so  adjourned.  In the case of any
sale of all or any part of the Collateral on credit or for future delivery,  the
Collateral  so sold may be retained by the Agent until the selling price is paid
by the purchaser thereof, but the Agent shall not incur any liability in case of
the failure of such purchase to take up and pay for the  Collateral so sold and,
in the case of such failure, such Collateral may again be sold upon like notice.

(c) Special  Provisions  Relating to Sales of Securities.  The Debtor recognizes
that  the  Agent  may be  unable  to  effect  a  public  sale  of any or all the
Collateral  constituting a "security" (as such term is defined in the Securities
Act) by reason of  certain  prohibitions  contained  in the  Securities  Act and
applicable state securities laws or otherwise, and may be compelled to resort to
one or more private sales thereof to a restricted  group of purchasers that will
be obliged to agree,  among other things,  to acquire such  securities for their
own account for  investment  and not with a view to the  distribution  or resale
thereof.  The Debtor  acknowledges  and agrees  that any such  private  sale may
result in prices and other terms less  favorable than if such sale were a public
sale and, notwithstanding such circumstances,  agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The Agent
shall be under no obligation to delay a sale of any of Collateral constituting a
security  for the  period of time  necessary  to permit  the  issuer  thereof to
register  such  securities  for public sale under the  Securities  Act, or under
applicable state securities laws, even if such issuer would agree to do so.

Section  5.5  Rights of  Purchasers.  Upon any sale of the  Collateral  (whether
public or  private),  the Agent  shall  have the right to  deliver,  assign  and
transfer  to the  purchaser  thereof  the  Collateral  so sold.  Each  purchaser
(including  the  Agent)  at any such  sale  shall  hold the  Collateral  so sold
absolutely,  free from any claim or right of whatever kind, including any equity
or right of redemption of the Debtor who, to the extent permitted by law, hereby
specifically waives all rights of redemption, including, without limitation, any
right to redeem the Collateral  under Section 9-506 of the UCC, and any right to
a judicial or other stay or approval  which it has or may have under any law now
existing or hereafter adopted.

Section 5.6       Additional Rights of the Agent.

(a) Right to Maintain Proceedings.  The Agent (i) shall have the right and power
to institute and maintain such suits and proceedings as it may deem  appropriate
to protect and enforce the rights  vested in it by this  Security  Agreement and
(ii) may proceed by suit or suits at law or in equity to enforce such rights and
to foreclose  upon the  Collateral and to sell all or, from time to time, any of
the   Collateral   under  the  judgment  or  decree  of  a  court  of  competent
jurisdiction.

(b)  Appointment  of  Receiver.  The Agent  shall,  to the extent  permitted  by
applicable law,  without notice to the Debtor to any party claiming  through the
Debtor,  without regard to the solvency or insolvency at such time of any Person
then liable for the  payment of any of the  Obligations,  without  regard to the
then value of the Collateral and without requiring any bond from any complainant
in such  proceedings,  be entitled as a matter of right to the  appointment of a
receiver  or  receivers  (who may be the  Agent) of the  Collateral  or any part
thereof,  pending  such  proceedings,  with such powers as the court making such
appointment  shall  confer,  and to the  entry  of an order  directing  that the
profits, revenues and other income of the property constituting the whole or any
part of the Collateral be segregated,  sequestered and impounded for the benefit
of the Agent,  and the Debtor  irrevocably  consents to the  appointment of such
receiver or receivers and to the entry of such order.

(c) No Duty to  Exercise  Rights.  In no event  shall the Agent have any duty to
exercise any rights or take any steps to preserve the rights of the Agent in the
Collateral,  nor shall the Agent be liable to the Debtor or any other Person for
any loss caused by the Agent's failure to meet any obligation imposed by Section
9-207 of the UCC or any successor provision. Without limiting the foregoing, the
Agent  shall be deemed to have  exercised  reasonable  care in the  custody  and
preservation  of the  Collateral in its possession if the Collateral is accorded
treatment  substantially equal to that which the Agent accords its own property,
it being understood that the Agent shall not have any duty or responsibility for
(i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities,  tenders or other matters relative to any Collateral, whether or not
the Agent has or is deemed to have knowledge of such matters, or (ii) taking any
necessary  steps to preserve  rights  against any  parties  with  respect to any
Collateral.

Section 5.7       Remedies Not Exclusive, etc.

(a) Remedies Not Exclusive. No remedy conferred upon or reserved to the Agent in
this  Security  Agreement  is intended to be  exclusive  of any other  remedy or
remedies,  but every such remedy shall be cumulative and shall be in addition to
every other  remedy  conferred  herein or now or  hereafter  existing at law, in
equity or by statute.

(b)  Restoration  of Rights.  If the Agent shall have  proceeded  to enforce any
right,  remedy or power under this Security Agreement and the proceeding for the
enforcement  thereof shall have been discontinued or abandoned for any reason or
shall have been  determined  adversely  to the  Agent,  the Debtor and the Agent
shall,   subject  to  any  determination  in  such  proceeding,   severally  and
respectively  be  restored  to their  former  positions  and  rights  under this
Security Agreement,  and thereafter all rights, remedies and powers of the Agent
shall continue as though no such proceedings had been taken.

(c)  Enforcement.  All rights of action  under this  Security  Agreement  may be
enforced by the Agent without the  possession of any  instrument  evidencing any
Obligation or the production  thereof at any trial or other proceeding  relative
thereto, and any suit or proceeding  instituted by the Agent shall be brought in
its name and any judgment shall be held as part of the Collateral.


Section 5.8       Waiver and Estoppel.

(a) No Actions to Impede Sale of Collateral. The Debtor agrees, to the extent it
may lawfully do so, that it will not at any time in any manner  whatsoever claim
or take the benefit or advantage of any appraisal,  valuation,  stay, extension,
moratorium,  turnover or redemption  law, or any law permitting it to direct the
order in which the  Collateral  shall be sold,  now or at any time  hereafter in
force  which  may  delay,   prevent  or  otherwise  affect  the  performance  or
enforcement  of this  Security  Agreement,  and  hereby  waives  all  benefit or
advantage of all such laws. The Debtor covenants that it will not hinder,  delay
or impede  the  execution  of any power  granted  to the Agent in this  Security
Agreement, any Assignment of Federal Contract or any other Credit Document.

(b) Collateral Sold As An Entirety. The Debtor, to the extent it may lawfully do
so, on behalf of itself and all who claim through or under it, including without
limitation any and all  subsequent  creditors,  vendees,  assignees and lienors,
waives  and  releases  all  rights to demand or to have any  marshalling  of the
Collateral upon any sale, whether made under any power of sale granted herein or
pursuant to judicial  proceedings or under any foreclosure or any enforcement of
this Security Agreement,  and consents and agrees that all of the Collateral may
at any such sale be offered and sold as an entirety.

(c) Waiver of  Notices.  The Debtor  waives,  to the  extent  permitted  by law,
presentment,  demand,  protest  and any notice of any kind  (except  the notices
expressly required hereunder) in connection with this Security Agreement and any
action taken by the Agent with respect to the Collateral.

Section 5.9       Power of Attorney; Powers Coupled With An Interest.

(a) Power of Attorney.  Without limiting any other right granted hereunder,  the
Debtor hereby irrevocably constitutes and appoints the Agent, with full power of
substitution,  as its true and  lawful  attorney-in-fact  with full  irrevocable
power and  authority in the place and stead of the Debtor and in the name of the
Debtor  or in its  own  name,  from  time  to  time  in the  Agent's  reasonable
discretion,  for the  purpose  of  carrying  out  the  terms  of  this  Security
Agreement,  to take any and all  appropriate  action and to execute  any and all
documents and instruments  which may be necessary or desirable to accomplish the
purpose of this Security  Agreement and,  without limiting the generality of the
foregoing,  hereby gives the Agent the power and right, on behalf of the Debtor,
without notice to or assent by the Debtor,  to do the  following:  (i) to pay or
discharge  taxes,  liens,  security  interests or other  encumbrances  levied or
placed on or threatened against
        the Collateral;
(ii)    to effect any repairs or any  insurance  called for by the terms of this
        Security  Agreement or any other Credit Document,  and to pay all or any
        part of the premiums therefor and the costs thereof;

     (iii) upon the  occurrence  and  continuance  of any Event of  Default  and
otherwise to the extent provided in this Security

     Agreement,  (A) to direct any party liable for any payment under any of the
Collateral  to  make  payment  of any  and all -  moneys  due  and to  come  due
thereunder  directly to the Agent or as the Agent shall  direct,  (B) to receive
payment of and - receipt  for,  and to demand and sue for,  any and all  moneys,
claims  and other  amounts  due and to become  due at any time in  respect of or
arising out of the Collateral, (C) to sign and indorse and receive, take, assign
and  deliver,  any  -  checks,  notes,  drafts,  negotiable  and  non-negotiable
instruments, any invoices, freight or express bills, bills of lading, storage or
warehouse  receipts,  drafts against  debtors,  assignments,  verifications  and
notices  in  connection  with  accounts  and  other  documents  relating  to the
Collateral, (D) to commence, settle, compromise,  compound, - prosecute,  defend
or  adjust  any  claim,  suit,  action  or  proceeding  with  respect  to, or in
connection with, the Collateral, (E) to sell, transfer, assign or otherwise deal
in or with the Collateral or any part thereof,  as fully and - effectively as if
the Agent were the absolute  owner thereof and (F) to do, at its option,  but at
the  expense  of the - Debtor,  at any time or from  time to time,  all acts and
things which the Agent deems necessary to protect,  preserve or realize upon the
Collateral and the Agent's  security  interest  therein,  in order to effect the
intent of this Security  Agreement,  all as fully and  effectively as the Debtor
might do.

(b) Powers Coupled With an Interest.  All authorizations and agencies granted or
provided  herein with respect to the  Collateral,  including the powers  granted
under clause (a) of this Section 5.9, are irrevocable and powers coupled with an
interest.

Section 5.10 Certain Provisions  Relating to Securities.  Solely with respect to
any Collateral  constituting a "security" (as defined in the Securities Act), if
an Event of Default shall have occurred and be continuing,  all such  securities
(as defined in the Securities Act)  constituting a part of the Collateral shall,
at the  request  of the  Agent,  be  registered  in the name of the Agent or its
nominee,  and the Agent or its nominee may  thereafter  exercise (i) all voting,
corporate and other rights,  powers and privileges pertaining to such Collateral
at any meeting of shareholders of the issuer thereof or otherwise,  and (ii) any
and all  rights of  conversion,  exchange,  subscription  and any other  rights,
privileges or options  pertaining to such  Collateral as if it were the absolute
owner  thereof  (including,  without  limitation,  the right to  exchange at its
discretion  any  and  all  such  Collateral  upon  the  merger,   consolidation,
reorganization, recapitalization or other fundamental change in the structure of
any such  issuer,  or upon the exercise by the Debtor or the Agent of any right,
privilege or option pertaining to such Collateral,  and in connection therewith,
the right to deposit and deliver any and all such Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine), all without liability except to account for
property  actually  received  by it and except as  provided  in  Section  5.6(c)
hereof,  but the Agent  shall  have no duty to the Debtor to  exercise  any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.

Section  5.11  Application  of  Monies.  The  proceeds  of any sale of, or other
realization  upon,  all or any part of the  Collateral  shall be  applied by the
Agent in the following order of priority:
         first,  to payment of the  expenses of such sale or other  realization,
         including  reasonable  compensation  to the  Agent and its  agents  and
         counsel, and all expenses, liabilities and advances incurred or made by
         the Agent,  its  agents  and  counsel  in  connection  therewith  or in
         connection with the care, safekeeping or otherwise of any or all of the
         Collateral; second, to payment of the Obligations, in such order as the
         Agent may elect; and third, any surplus then remaining shall be paid to
         the Debtor,  or its  successors  or assigns,  or to  whomsoever  may be
         lawfully  entitled to receive the same  (including  pursuant to Section
         9-504(1)(C)  of the UCC) or as a court of  competent  jurisdiction  may
         direct.





ARTICLE VI
                                  MISCELLANEOUS

Section 6.1 Notices.  All notices,  requests and other communications to a party
hereunder  shall be in writing  and shall be given to such party at its  address
set forth on the  signature  page hereof or such other address as such party may
hereafter  specify for that  purpose by notice to the other.  Each such  notice,
request or other  communication shall be effective (i) in the case of telephonic
notice (to the extent  expressly  permitted  hereunder),  when made, (ii) in the
case of notice delivered by overnight  express  courier,  one Business Day after
the Business Day such notice was delivered to such courier, (iii) in the case of
notice  delivered by first class mail, three Business Days after being deposited
in the mail,  postage  prepaid,  return receipt  requested,  (iv) in the case of
notice by hand,  when  delivered,  or (v) in the case of notice by any customary
means of telecommunication, when sent provided confirmation of receipt or answer
back has been  received,  in each  case if  addressed  to any  party  hereto  as
provided  herein.  Rejection or refusal to accept,  or the  inability to deliver
because of a changed address of which no notice was given,  shall not affect the
validity of notice given in accordance with this section.

Section  6.2 No  Waiver;  Cumulative  Remedies.  The Agent  shall not by any act
(except by a written  instrument  pursuant  to Section  6.3 hereof) be deemed to
have waived any right or remedy hereunder. No failure to exercise, nor any delay
in exercising,  on the part of the Agent any right, power or privilege hereunder
shall operate as a waiver thereof.  No single or partial  exercise of any right,
power or  privilege  hereunder  shall  preclude  any other or  further  exercise
thereof or the exercise of any other right, power or privilege.  A waiver by the
Agent  of any  right  or  remedy  hereunder  on any one  occasion  shall  not be
construed as a bar to any right or remedy which the Agent would  otherwise  have
on any future occasion.  The rights and remedies herein provided are cumulative,
may be  exercised  singly or  concurrently  and are not  exclusive  of any other
rights or remedies provided by law.

Section 6.3  Amendments  and Waivers.  None of the terms or  provisions  of this
Security Agreement may be amended,  supplemented or otherwise modified except by
a written  instrument  executed by the Debtor and the Agent;  provided  that any
provision of this  Security  Agreement may be waived by the Agent in a letter or
agreement  executed by the Agent or by telex or facsimile  transmission from the
Agent.

Section 6.4  Successors and Assigns.  The provisions of this Security  Agreement
shall be binding  upon and inure to the benefit of the parties  hereto and their
respective  successors and assigns;  provided,  however, that the Debtor may not
assign or transfer any of its rights or obligations  hereunder without the prior
written consent of the Agent.

Section 6.5  Governing  Law. THIS  SECURITY  AGREEMENT  SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE  COMMONWEALTH  OF VIRGINIA,  OTHER
THAN ITS LAWS RESPECTING CHOICE OF LAW OTHER THAN THOSE CONTAINED IN THE UCC.

Section 6.6       Limitation by Law; Severability.

(a) All rights,  remedies and powers provided in this Security  Agreement may be
exercised  only to the extent  that the  exercise  thereof  does not violate any
applicable  provision of law, and all the provisions of this Security  Agreement
are intended to be subject to all applicable  mandatory  provisions of law which
may be controlling  and to be limited to the extent  necessary so that they will
not render this Security Agreement  invalid,  unenforceable in whole or in part,
or not entitled to be recorded,  registered or filed upon the  provisions of any
applicable law.

(b) If any provision hereof is invalid and  unenforceable  in any  jurisdiction,
then, to the fullest extent  permitted by law, (i) the other  provisions  hereof
shall  remain  in full  force  and  effect  in such  jurisdiction  and  shall be
liberally  construed in favor of the Agent in order to carry out the  intentions
of the parties  hereto as nearly as may be possible and (ii) the  invalidity  or
unenforceability  of any provision hereof in any  jurisdiction  shall not affect
the validity or enforceability of such provision in any other jurisdiction.

Section 6.7 Counterparts.  This Security Agreement may be executed in any number
of counterparts and by different parties hereto on separate  counterparts,  each
complete set of which,  when so executed and delivered by all parties,  shall be
an original, but all such counterparts shall together constitute but one and the
same instrument.

Section 6.8  Expenses of the Agent.  The Debtor shall pay to the Agent from time
to time upon demand,  all of the costs and expenses incurred by the Agent or any
Lender (including,  without limitation, the reasonable fees and disbursements of
counsel  and any  amounts  payable  by the  Agent or any  Lender to any of their
respective   agents)  (i)  arising  in  connection   with  the   administration,
modification, amendment, waiver or termination of this Security Agreement or any
document or agreement  contemplated hereby or any consent or waiver hereunder or
thereunder  or (ii)  incurred  in  connection  with the  administration  of this
Security  Agreement,  or any document or agreement  contemplated  hereby,  or in
connection  with the  administration,  sale or other  disposition  of Collateral
hereunder  or  under  any  document  or  agreement  contemplated  hereby  or the
preservation,  protection or defense of the rights of the Agent or any Lender in
and to the Collateral.

Section 6.9 Indemnification.  The Debtor shall at all times hereafter indemnify,
hold  harmless  and,  on demand,  reimburse  the Agent and the Lenders and their
respective subsidiaries,  affiliates,  successors, assigns, officers, directors,
employees and agents,  and their respective  heirs,  executors,  administrators,
successors and assigns (all of the foregoing parties, including, but not limited
to, the Agent, being hereinafter  collectively  referred to as the "Indemnities"
and  individually  as an  "Indemnitee")  from,  against  and  for  any  and  all
liabilities, obligations, claims, damages, actions, penalties, causes of action,
losses, judgments, suits, costs, expenses and disbursements,  including, without
limitation,  attorney's  fees (any and all of the  foregoing  being  hereinafter
collectively referred to as the "Liabilities" and individually as a "Liability")
which the Indemnitees,  or any of them, might be or become subjected,  by reason
of,  or  arising  out of the  preparation,  execution,  delivery,  modification,
administration  or  enforcement  of, or performance of the Agent's rights under,
this  Security  Agreement  or  any  other  document,   instrument  or  agreement
contemplated hereby or executed in connection herewith;  provided, however, that
the Debtor shall not be liable to any Indemnitee for any Liability caused solely
by the gross negligence or willful  misconduct of such  Indemnitee.  In no event
shall any Indemnitee,  as a condition to enforcing its rights under this Section
6.9 or  otherwise,  be  obligated  to  make a claim  against  any  other  Person
(including,  without  limitation,  the Agent) to enforce  its rights  under this
Section 6.9.

Section 6.10 Termination; Survival. This Security Agreement shall terminate when
the security  interests granted hereunder have terminated and the Collateral has
been  released  as  provided  in  Section  2.6;  provided,   however,  that  the
obligations  of the Debtor under Section 4.22 and the provisions of this Article
6 shall survive any such termination.

Section 6.11 Judicial Proceedings; Waiver of Jury Trial. Any judicial proceeding
brought  against the Debtor with respect to any Credit  Agreement  Related Claim
hereby may be brought in any court of competent jurisdiction in the Commonwealth
of Virginia,  County of Fairfax, or any Federal court in the Eastern District of
Virginia, and, by execution and delivery of this Security Agreement,  the Debtor
(a) accepts,  generally and  unconditionally,  the nonexclusive  jurisdiction of
such courts and any related  appellate court and irrevocably  agrees to be bound
by any judgment rendered thereby in connection with any Credit Agreement Related
Claim and (b)  irrevocably  waives any objection it may now or hereafter have as
to the venue of any such proceeding brought in such a court or that such a court
is an inconvenient  forum.  The Debtor hereby waives personal service of process
and  consents  that  service  of  process  upon it may be made by  certified  or
registered  mail,  return  receipt  requested,   at  its  address  specified  or
determined in accordance with the provisions of Section 6.1 hereof,  and service
so made shall be deemed  completed on the earlier of (x) the receipt thereof and
(y) if sent by  registered or certified  mail (return  receipt  requested),  the
fifth (5th)  Business Day after such  service is deposited in the mail.  Nothing
herein shall affect the right of the Agent to serve  process in any other manner
permitted  by law or shall  limit the  right of the  Agent to bring  proceedings
against  the  Debtor  in the  courts  of any other  jurisdiction.  Any  judicial
proceeding by the Debtor  against the Agent  relating to or involving any Credit
Agreement  Related  Claim hereby shall be brought only in a court located in the
Commonwealth of Virginia, County of Fairfax, or the Federal court in the Eastern
District of  Virginia.  THE DEBTOR AND THE AGENT  HEREBY  UNCONDITIONALLY  WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING ANY
CREDIT AGREEMENT RELATED CLAIM.

Section 6.12 Integration. This Security Agreement and the other Credit Documents
constitute the entire agreement of the Agent, the Lenders,  the Borrower and the
other Credit Parties with respect to the subject matter hereof and thereof,  and
there are no promises, undertakings,  representations or warranties by the Agent
or any Lender relative to the subject matter hereof or thereof not expressly set
forth or referred to herein or in the other Credit Documents.

Section 6.13  Authority of Agent.  The Debtor  acknowledges  that the rights and
responsibilities  of the Agent under this Security Agreement with respect to any
action  taken by the Agent or the exercise or  non-exercise  by the Agent of any
option,  voting right,  request,  judgment or other right or remedy provided for
herein or resulting or arising out of this Security  Agreement shall, as between
the Agent and the Lenders,  be governed by the Revolving Credit Agreement and by
such other  agreements with respect thereto as may exist from time to time among
them, but, as between the Agent and the Debtor,  the Agent shall be conclusively
presumed to be acting as agent for the Lenders with full and valid  authority so
to act or refrain from acting, and the Debtor shall not be under any obligation,
or entitlement, to make any inquiry respecting such authority.

Section 6.14 Headings,  Bold Type and Table of Contents.  The section  headings,
subsection headings,  and bold type used herein and the Table of Contents hereto
have been  inserted  for  convenience  of reference  only and do not  constitute
matters to be considered in interpreting this Security Agreement.


<PAGE>


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

                                              GKMG CONSULTING SERVICES, INC.

Address:
Canal Square
1054 Thirty-first Street, NW
Washington, District of Columbia 20007      By: /s/ Morris R. Garfinkle
Attention:                                           Name: Morris R. Garfinkle
Phone:  (202) 342-5200                      Title: President
Fax:  (202) 337-8787


                              BANK OF AMERICA, N.A.
                            d/b/a NationsBank, N.A.,
                         successor to NationsBank, N.A.

Address:
6610 Rockledge Drive
Bethesda, Maryland 20817                    By:/s/ James W. Gaittens
Attention:  James W. Gaittens               Name: James W. Gaittens
Phone:  (301) 493-2976                      Title: Senior Vice President
Fax:  (301) 571-9098


<PAGE>


                                  Schedule 3.4

                                Place of Business



                                  Canal Square
                          1054 Thirty-first Street, NW
                     Washington, District of Columbia 20007





                                  Schedule 3.5

                             Location of Collateral


                                  Canal Square
                          1054 Thirty-first Street, NW
                     Washington, District of Columbia 20007





                                  Schedule 3.6

                        Trade Names, Division Names, etc.

                                      GKMG
                                 GKMG CONSULTING






                                  Schedule 3.7

                             Patents and Trademarks


                                      NONE





                                  Schedule 4.1

                                   UCC Filings


<PAGE>


     Exhibit A to Security Agreement

                                     FORM OF
                         ASSIGNMENT OF FEDERAL CONTRACT

This ASSIGNMENT OF FEDERAL CONTRACT, dated as of _____, __ (the "Agreement"), is
made by GKMG Consulting Services,  Inc., a District of Columbia corporation (the
"Assignor"),  in  favor  of BANK  OF  AMERICA,  N.A.  d/b/a  Nationsbank,  N.A.,
successor to NationsBank,  N.A.,] a national banking  association (the "Agent"),
in its  capacity  as  Agent  for the  lenders  from  time to time a party to the
Revolving  Credit  Agreement (as defined in the Security  Agreement  referred to
below).
                                                      W I T N E S S E T H:

WHEREAS,  the  Assignor has secured  certain  obligations  undertaken  by Hagler
Bailly,  Inc.  pursuant to the provisions of a Security  Agreement,  dated as of
___________________, ____ (as the same may be amended, supplemented or otherwise
modified  from time to time,  the  "Security  Agreement"),  by and  between  the
Assignor and the Agent;  and WHEREAS,  the Assignor is a party to, and from time
to time will become entitled to receive moneys under and by virtue of, a certain
contract  with,  involving or for the benefit of the United States of America or
any department,  agency or  instrumentality  thereof (herein  referred to as the
"Government"),  designated  as  Contract  Number  _______  entered  into  by the
Assignor and the Government on ________ __, 19__ (which contract,  together with
all additions, change orders, supplements, amendments, renewals, extensions, and
modifications  thereto now or hereafter in effect, are hereinafter  collectively
called the "Contract");  and WHEREAS,  pursuant to the Security  Agreement,  the
Assignor has  undertaken  to  effectuate  the  assignment(s)  and other  actions
contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the Assignor covenants and agrees as follows:
         1. Incorporation By Reference. The provisions of the Security Agreement
are  incorporated  herein by  reference,  and the terms  defined in the Security
Agreement are used herein with the same meanings.

         2.  Representations.  The Assignor represents and warrants to the Agent
that (a) the Contract is legal,  valid and binding on the  Assignor  and, to its
knowledge,  the other parties thereto,  is in full force and effect,  and is not
evidenced  by any  chattel  paper or  instrument,  (b) upon due  filing  of this
Agreement,  together  with a Notice of Assignment  substantially  in the form of
Appendix A hereto with the authorized representative, the execution and delivery
of this Agreement does not violate and is not in conflict with the provisions of
the  Contract,  (c) there has been no default on the part of the Assignor or any
other party to the Contract, (d) the Assignor has made no previous assignment of
the  Contract to any person and knows of no fact or defense that will render the
moneys due or to be due  thereunder  uncollectible,  (e) no financing  statement
covering  the  Contract  is on  file  in  any  public  office  except  financing
statements in favor of the Agent,  (f) no set-off or  counterclaim to any moneys
due or to become  due  under the  Contract  exists  on the date  hereof,  and no
agreement  has been made with any person  under which any  deduction or discount
may be claimed,  and (g) the address of the office where the Assignor  keeps its
records concerning the Contract is ____________________.

         3. Collateral. As security and collateral for the payment of all of the
Obligations  (defined in the Security  Agreement)  and for  performance  of, and
compliance  with,  by the  Assignor,  all of the terms,  covenants,  conditions,
stipulations,  and  agreements  contained in this  Agreement and in the Security
Agreement,  the Assignor hereby assigns to the Agent,  and grants to the Agent a
lien on and  security  interest  in,  all  moneys  and claims for moneys now and
hereafter  due and to  become  due to the  Assignor  under or by  reason  of the
Contract,  together  with all  cash and  non-cash  proceeds  thereof;  provided,
however,  that nothing  contained  herein shall impose upon the Agent any of the
obligations or liabilities of the Assignor under the Contract.

     4. Covenants. Until payment and performance in full of the Obligations, the
Assignor covenants as follows:

(a) The  Assignor  shall  place  on any and all  vouchers,  invoices,  or  other
instruments demanding payment under the Contract the direction that such payment
is to be made to the Agent in accordance with Section 5 of this Agreement.

(b) The Assignor shall promptly upon request execute,  acknowledge,  and deliver
any  notice,  financing  statement,   renewal,   affidavit,   deed,  assignment,
continuation statement,  security agreement,  certificate,  or other document as
the  Agent  may  require  in  order to  perfect,  preserve,  maintain,  protect,
continue, and/or extend the assignment, lien, and security interest of the Agent
under this  Agreement and its priority.  The Assignor  shall pay to the Agent on
demand all taxes,  costs, and expenses  incurred by the Agent in connection with
the  preparation,  execution,  recording,  and  filing of any such  document  or
instrument  mentioned  aforesaid,  and such taxes,  costs,  and  expenses  shall
constitute  and become a part of the  Obligations.  A carbon,  photographic,  or
other  reproduction  of  a  security  agreement  or  a  financing  statement  is
sufficient as a financing statement.

(c) The Assignor shall fully,  promptly,  and faithfully comply with and perform
its  obligations  and duties  under the  Contract in  accordance  with the terms
thereof and will make no changes or  amendments  to the Contract or terminate or
cancel the  Contract  without the prior  written  consent of the Agent except as
permitted by the Security  Agreement.  In the event that any change,  amendment,
termination  or  cancellation  of  the  Contract  is  made  or  effected  by the
Government,  the Assignor  will  promptly  notify the Agent thereof and promptly
furnish to the Agent a copy of any  document or  agreement  evidencing  any such
change, amendment, termination, or cancellation.

(d)      The Assignor will promptly

     (i) furnish to the Agent all information received by the Assignor affecting
the moneys due and to become due under the  Contract,  (ii)  inform the Agent of
any delay in  performance  of, or claims  made in regard to, the  Contract,  and
(iii) notify the Agent in writing of the failure of any party to the Contract to
perform any of its  obligations  thereunder and any rejection of any performance
rendered by the  Assignor  under or in  connection  with the  Contract.  (e) The
Assignor will at all times keep accurate and complete  records of performance by
the  Assignor  under the  Contract,  and the Agent and its agents shall have the
right,  during normal business hours and upon reasonable advance notice, to call
at the place or places of business of the Assignor at intervals to be determined
by the Agent, and without hindrance or delay, to inspect, audit, check, and make
extracts from the books, records,  journals,  orders, receipts,  correspondence,
and other data relating to the Contract or to any other transactions between the
parties hereto related to the Contract.

5.  Payments.  The  Assignor  hereby  authorizes,   empowers,  and  directs  the
Government to draw all checks,  drafts,  or other  instruments  representing the
payments of money due the Assignor under the Contract  (herein called the "Items
of Payment") to the order of  NationsBank,  N.A.,  assignee of Assignor,  and to
send the same (i) if by mail,  to , (ii) if by electronic  transfer,  to BANK OF
AMERICA, N.A. d/b/a Nationsbank,  N.A., successor to NationsBank,  N.A., for the
account of ________________,  Bank Account #__________, Agent ABA#_________,  or
(iii) if by wire transfer,  to BANK OF AMERICA,  N.A. d/b/a  Nationsbank,  N.A.,
successor to  NationsBank,  N.A., for the account of  _________________________,
Bank  Account  #_______,  ABA#___________.   If,  despite  this  direction,  any
instruments or checks representing payments should be delivered to the Assignor,
the Assignor will immediately  endorse and deliver such instruments or checks to
the order of the  Agent.  The  Assignor  does  hereby  irrevocably  (subject  to
revocation  with  the  consent  of  the  Agent)  designate  and  appoint  (which
appointment is coupled with an interest) the Agent,  and the Agent's  successors
in interest by operation of law, the  Assignor's  true and lawful  attorney with
power irrevocable for the Assignor and in the Assignor's name, place, and stead,
but at the sole cost and  expense of the  Assignor,  to  receive,  endorse,  and
collect all Items of Payment,  and to ask, demand,  receive,  receipt,  and give
acquittances  for any and all amounts  which may be payable or which  become due
and payable by the Government under the Contract,  and in the Agent's discretion
to file any  claim or to take any  other  action  or  proceeding,  either in the
Agent's own name or in the name of the Assignor or otherwise, which to the Agent
or any successor in interest thereof may seem necessary or desirable in order to
collect or endorse  the payment of any and all amounts now due or owing or which
may hereafter be or become due or owing on account of the Contract. All Items of
Payment  received by the Agent pursuant hereto which are finally paid in cash or
solvent  credits  shall be applied  against the  Obligations  as provided in the
Security  Agreement.  Any portion of the Items of Payment which the Agent elects
not to so apply  shall be paid over to the  Assignor or to  whomsoever  shall be
entitled thereto under applicable law, including pursuant to Section 9-504(1)(C)
of the Uniform Commercial Code of the Commonwealth of Virginia.

6. No Waiver.  Neither this Agreement nor any term,  condition,  representation,
warranty,  covenant, or agreement hereof may be changed, waived,  discharged, or
terminated  orally,  but only by an  instrument  in writing by the party against
whom such change, waiver, discharge, or termination is sought.

7.  Governing  law.  THIS  AGREEMENT  SHALL  BE  GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE  WITH THE LAWS OF THE  COMMONWEALTH  OF VIRGINIA,  WITHOUT  REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.

8. Gender.  Whenever used herein,  the singular number shall include the plural,
the plural  the  singular,  and the use of the  masculine,  feminine,  or neuter
gender shall include all genders.

     9. Counterparts.  This Agreement may be executed in any number of duplicate
originals,  each of which shall be an original but all of which  together  shall
constitute one and the same instrument.

     10. Paragraph  Headings.  The paragraph  headings of this Agreement are for
convenience only and shall not limit or define the provisions of this Agreement.


<PAGE>


         IN WITNESS  WHEREOF,  Assignor and the Agent have caused this Agreement
to be duly executed and delivered by their respective  representatives thereunto
duly authorized as of the date first above written.
                                               GKMG CONSULTING SERVICES, INC.

ATTEST:



                 , Secretary
                                                     By:
[Corporate Seal]                                     Name:
                                     Title:
WITNESS:




                           BANK OF AMERICA, N.A. d/b/a
NationsBank, N.A., successor to                              NationsBank, N.A.

ATTEST:

                 , Secretary
                                                     By:
                                     Title:
WITNESS:



<PAGE>


     Appendix A To Assignment of Federal Contract
                             Notice of Assignment



     Date: ____________

To:      Contracting Officer
[Address]



     Re: CONTRACT NUMBER  ___________ (the "Contract") MADE BY THE UNITED STATES
OF AMERICA

                 By:      Department of the [Applicable U.S. Government Agency]
                                    [Address]

                                    with [Name of Subsidiary] (the "Contractor")
                                            [Address]

             for manufacture and support of a [Brief description of
                              Subject of Contract]

                                    dated _______________

PLEASE TAKE NOTICE that moneys due or to become due under the Contract have been
assigned  to BANK  OF  AMERICA,  N.A.  d/b/a  Nationsbank,  N.A.,  successor  to
NationsBank, N.A., pursuant to the provisions of the Assignment of Claims Act of
1940,  as  amended  (31 USC ss.  3727  and 41 USC ss.  15).  A true  copy of the
Assignment  executed by the Contractor on the date hereof (the  "Assignment") is
attached to the original of this Notice of Assignment. Please file this original
Notice of Assignment  along with the copy of the Assignment in the contract file
for the  Contract  and  forward  one of the  enclosed  copies of this  Notice of
Assignment to the current disbursing office for the Contract. Payments due or to
become due under the Contract should be made (i) if by mail, to BANK OF AMERICA,
N.A.   d/b/a    Nationsbank,    N.A.,    successor   to    NationsBank,    N.A.,
____________________,  (ii) if by electronic transfer,  to BANK OF AMERICA, N.A.
d/b/a  Nationsbank,  N.A.,  successor to  NationsBank,  N.A., for the account of
______________________,  Bank Account #__________, Agent ABA#_____________,  and
(iii) if by wire transfer,  to BANK OF AMERICA,  N.A. d/b/a  Nationsbank,  N.A.,
successor to NationsBank,  N.A., for the account of  __________________________,
Bank Account  #_________,  ABA#_________.  Please return enclosed copies of this
Notice of Assignment  with  appropriate  notations  showing the date and hour of
receipt,  and duly signed by the person  acknowledging  receipt on behalf of the
addressee,  to Bank of America, 6610 Rockledge Drive, Bethesda,  Maryland 20817,
Attention: James W. Gaittens, Senior Vice President.
                                        Very truly yours,

                                       GKMG CONSULTING SERVICES, INC.

                                     By:      ________________________________
                                      Name:
                                     Title:

Receipt  is  hereby  acknowledged  of the above  notice  and a copy of the above
mentioned  instrument  of  assignment.  These were  received at  _________[A.M.]
[P.M.] on ______________________, 199__.



                                           ------------------------------------
                                      Name:
                                     Title:



                        on behalf of Contracting Officer
                                    [Address]