AMENDED AND RESTATED
                           REVOLVING CREDIT AGREEMENT


                                   dated as of
                                 August 27, 1999


                                 by and between

                             GRC INTERNATIONAL, INC.

                                (the "Borrower")

                                       and

                             MERCANTILE-SAFE DEPOSIT
                                AND TRUST COMPANY

                                  (the "Bank")


<PAGE>




                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

Section                                                                                                   Page
-------                                                                                                   ----

                                 Credit Facility
                                 ---------------
<S>        <C>                                                                                            <C>

1.1      Revolving Credit Loan; Letters of Credit                                                        2
1.2      Advances and Payments                                                                           2
1.3      Election of Fluctuating Rate                                                                    3
1.4      General Loan Provisions                                                                         4
1.5      Notice and Manner of Borrowing                                                                  7
1.6      Method of Payment                                                                               7
1.7      Use of Loan Proceeds                                                                            7
1.8      Fees                                                                                            7
1.9      Collateral Security                                                                             8

                                   Definitions
                                   -----------

2.1      Definitions                                                                                     8
2.2      Amendments, etc. Included                                                                      14


                         Representations and Warranties

3.1      Organization and Authority; Conflicting Laws and Agreements                                    15
3.2      Subsidiaries                                                                                   15
3.3      Margin Stock                                                                                   15
3.4      Financial Statements                                                                           15
3.5      Financial Condition                                                                            15
3.6      Litigation; Tax Returns; Governmental Approvals                                                15
3.7      Liens                                                                                          16
3.8      Enforceability                                                                                 16
3.9      No Defaults                                                                                    16
3.10     ERISA                                                                                          16
3.11     Commercial Loan                                                                                17
3.12     Hazardous Materials                                                                            17
3.13     Assignments under the Federal Assignment of Claims Act                                         17
<PAGE>

Section                                                                                                  Page
-------                                                                                                  ----

                                    Covenants
                                    ---------

4.1      Payment of Taxes and Other Claims                                                              17
4.2      Maintenance of Properties                                                                      17
4.3      Corporate Existence                                                                            18
4.4      Maintenance of Insurance                                                                       18
4.5      Financial Information, Tax Returns and Reports                                                 18
4.6      Indebtedness                                                                                   20
4.7      Liens                                                                                          21
4.8      Disposition of Stock and Indebtedness                                                          21
4.9      Investments, Loans, Advances, Guarantees and Contingent Liabilities                            22
4.10     Merger and Sale of Assets                                                                      22
4.11     Dealings with Affiliates                                                                       23
4.12     Limitations on Certain Contracts                                                               23
4.13     ERISA                                                                                          23
4.14     Issuance of Stock                                                                              24
4.15     Financial Ratio                                                                                24
4.16     Obligations of the Borrower Unconditional                                                      24
4.17     Businesses                                                                                     24
4.18     Compliance with Laws                                                                           24
4.19     Hazardous Materials                                                                            25
4.20     Material Agreements                                                                            25
4.21     Assignments under the Federal Assignment of Claims Act                                         25
4.22     Additional Subsidiaries                                                                        25


                         Events of Default and Remedies
                         ------------------------------

5.1      Events of Default                                                                              26
5.2      Acceleration                                                                                   28
5.3      Costs of Collection                                                                            28
5.4      Consent to Jurisdiction; Waiver of Jury Trial                                                  28
5.5      Service of Process                                                                             29
5.6      Acceleration of Other Obligations to Bank                                                      29
5.7      Remedies Cumulative                                                                            29

<PAGE>

Section                                                                                                  Page
-------                                                                                                  ----

                         Conditions Precedent to Lending
                         -------------------------------

6.1      Conditions to the Making of the Initial
           Advance under the Revolving Credit Loan                                                      29
6.2      Conditions to the Making of Each Advance under
           the Revolving Credit Loan                                                                    30


                               Collateral Security
                               -------------------

7.1      Security Documents                                                                             31
7.2      Deposit Balances                                                                               31


                                  Miscellaneous
                                  -------------

8.1      Exercise of Rights                                                                             31
8.2      Payment Due on Banking Day                                                                     32
8.3      Assessments                                                                                    32
8.4      Survival                                                                                       32
8.5      Notices                                                                                        32
8.6      Counterparts                                                                                   32
8.7      Successors and Assigns; Governing Law; Amendments                                              33
8.8      Section Headings; Construction                                                                 33
8.9      Transaction Expenses                                                                           33
8.10     Estoppel Certificates                                                                          33
8.11     Indemnification                                                                                34
8.12     Publicity                                                                                      34


</TABLE>

Exhibit A -- Form of Consolidated, Amended and Restated
---------
   Revolving Credit Master Note


<PAGE>




                              AMENDED AND RESTATED
                              --------------------
                           REVOLVING CREDIT AGREEMENT
                           --------------------------


                  THIS AMENDED AND RESTATED  REVOLVING  CREDIT  AGREEMENT  (this
"Agreement")  is dated as of the 27th day of August,  1999,  by and  between GRC
INTERNATIONAL,    INC.,   a   Delaware   corporation   (the   "Borrower"),   and
MERCANTILE-SAFE  DEPOSIT AND TRUST COMPANY, a Maryland banking  institution (the
"Bank").


                              W I T N E S S E T H:
                              - - - - - - - - - -

                  WHEREAS,  pursuant to (i) that  certain  Amended and  Restated
Revolving  Credit and Term Loan  Agreement  dated as of February 12, 1996 by and
among the Bank,  the Borrower,  SWL Inc. and General  Research  Corporation,  as
amended by that certain First  Confirmation and Amendment  effective as of March
31, 1996, that certain Second  Confirmation  and Amendment  effective as of June
30, 1996, that certain Third Confirmation and Amendment effective as of June 30,
1996, that certain Fourth  Confirmation  and Amendment  effective as of December
31, 1996, that certain Fifth  Confirmation  and Amendment  effective as of April
30, 1997 and that certain Sixth Confirmation and Amendment effective as of March
31, 1997  (collectively,  the "1996 Loan Agreement"),  (ii) that certain Amended
and  Restated  Revolving  Credit  Master  Note dated  July 18,  1996 in the face
principal  amount of  $22,000,000  executed by the Borrower in favor of the Bank
(the "1996  Revolving  Credit Note") and (iii) that certain Term Loan Note dated
February 12, 1996 in the face principal amount of $2,200,000,  that certain Term
Loan Note dated March 8, 1996 in the face principal  amount of $400,000 and that
certain  Secured  Note  (Commercial)  dated  June 7, 1996 in the face  principal
amount of $2,600,000, all as subsequently amended (collectively,  the "1996 Term
Notes"), the Bank has established a $22,000,000 revolving credit facility and an
$8,000,000  standby credit  facility in favor of the Borrower,  with the current
aggregate outstanding principal balance under the 1996 Revolving Credit Note and
the 1996 Term Notes being $___________; and

                  WHEREAS, the Borrower has requested and the Bank has agreed to
amend and restate the 1996 Loan  Agreement for the purpose,  among other things,
of consolidating the revolving credit and standby credit facilities  referred to
above  and  the  aggregate  principal  outstanding  balances  thereunder  and of
increasing  the  maximum  aggregate  availability  under  such  facilities  from
$30,000,000 to $35,000,000 (such indebtedness, as so consolidated and increased,
the "Revolving  Credit Loan") by having the Borrower  execute and deliver to the
Bank a Consolidated,  Amended and Restated  Revolving  Credit Master Note in the
form attached as Exhibit A hereto (the "Revolving Credit Note").
<PAGE>

                  NOW,  THEREFORE,  in  consideration  of the  foregoing and the
mutual covenants herein contained, the parties hereby agree as follows:

         1.       CREDIT FACILITY.
                  ---------------

         1.1. Revolving Credit Loan; Letters of Credit. (a) On the date that the
Borrower  shall have  satisfied  all of the  conditions  precedent  set forth in
Section  6.1 hereof but in no event  later than  August 31,  1999 (the  "Closing
Date"),  the Borrower shall execute and deliver to the Bank the Revolving Credit
Note.  The Revolving  Credit Loan shall bear  interest at a fluctuating  rate of
interest  established  from time to time in the manner set forth in Section  1.3
hereof.  During  such  period(s)  as the  Revolving  Credit  Loan or a component
thereof  is a Prime Rate  Loan,  accrued  interest  on such  component  shall be
payable monthly on the first day of each calendar  month.  During such period(s)
as the  Revolving  Credit  Loan or a  component  thereof is a  Eurodollar  Loan,
accrued  interest  on such  component  shall be  payable  on the last day of the
applicable  Interest Period;  provided that in the case of an Interest Period of
six  months,  accrued  interest  shall also be payable on the day which is three
months  after  the  first  day of such  Interest  Period.  The  Bank  is  hereby
authorized to indicate by notation on its internal loan accounting system,  with
appropriate  reference to the customer number assigned by the Bank, all advances
of the Revolving Credit Loan made pursuant to this Agreement and all payments of
principal.  Such  notations  shall be  presumptive  as to the  aggregate  unpaid
principal  balance of the Revolving  Credit Loan, but the failure of the Bank to
make  any such  notation  shall  not  affect  the  obligations  of the  Borrower
hereunder or in connection  with the  Revolving  Credit Loan.  The entire,  then
outstanding  principal  balance of the Revolving Credit Loan,  together with the
accrued and unpaid interest thereon, shall be due and payable on August 27, 2001
(the "Maturity Date").

                  (b)  Subject  to the terms  and  conditions  hereof,  the Bank
agrees to issue letters of credit for the account of the Borrower on any Banking
Day prior to the  Maturity  Date,  in such form as may be approved  from time to
time by the Bank;  provided  that the Bank shall have no obligation to issue any
letter of credit if, after giving effect to such issuance,  the aggregate amount
of all  letters  of credit so issued  and  outstanding,  when  added to the then
outstanding  principal  balance of the Revolving  Credit Loan,  would exceed the
Commitment.  Each  letter  of  credit  shall be issued  pursuant  to the  Bank's
standard letter of credit application, reimbursement agreement and/or such other
documentation  as the Bank may  require,  and  shall  be in such  amount(s)  and
subject to such  duration,  draw and other  conditions as are  acceptable to the
Bank in its sole discretion.

         1.2. Advances and Payments.  The aggregate amount of all advances under
the  Revolving  Credit  Loan at any one time  outstanding  shall not  exceed the
Commitment.  The  Borrower  shall  from  time  to time  make  such  payments  of
principal,  together with accrued interest on the principal so paid, to the Bank
as shall be  necessary  in order to  maintain  the  outstanding  balance of such
advances at or below the Commitment.

                                       2
<PAGE>

         1.3.  Election of  Fluctuating  Rate.  (a) Commencing as of the Closing
Date, the Revolving  Credit Loan may from time to time be a Prime Rate Loan or a
Eurodollar  Loan,  at the election of the Borrower upon notice to the Bank prior
to 12 noon on the Banking Day  immediately  preceding the date of advance of any
such Prime Rate Loan or Eurodollar Loan.  During any period(s) that the Borrower
has not made an effective  election under this Section 1.3, the Revolving Credit
Loan shall be a Prime Rate Loan.

                  (b) The  Borrower  may elect from time to time to convert  any
Eurodollar  Loan to a Prime Rate Loan,  by giving notice of such election to the
Bank  prior to 12 noon on the  Banking  Day  immediately  preceding  the date of
conversion,  provided that any such  conversion may only be made on the last day
of an Interest Period with respect thereto.  The Borrower may elect from time to
time to convert  any Prime Rate Loan to a  Eurodollar  Loan by giving  notice of
such  election  to the Bank  prior  to 12 noon on the  Banking  Day  immediately
preceding the date of conversion.  Any such notice of conversion to a Eurodollar
Loan  shall  specify  the  length  of  the  initial  Interest  Period  therefor.
Notwithstanding  the  foregoing,  no Prime  Rate  Loan may be  converted  into a
Eurodollar  Loan when any Default or Event of Default shall have occurred and be
continuing  and the Bank shall have  determined  that such a  conversion  is not
appropriate.

                  (c) Any  Eurodollar  Loan may be  continued  as such  upon the
expiration  of the then  current  Interest  Period with  respect  thereto by the
Borrower giving notice to the Bank, in accordance with the applicable provisions
of the defined term  "Interest  Period" set forth in Section 2.1 hereof,  of the
length of the next Interest  Period to be applicable  to such  Eurodollar  Loan,
provided  that no  Eurodollar  Loan may be continued as such when any Default or
Event of Default shall have  occurred and be continuing  and the Bank shall have
determined that such continuation is not appropriate.

                  (d)  Any  notice  of  conversion  to or  continuation  of  any
Eurodollar Loan pursuant to Section 1.3(b) or 1.3(c) hereof may,  subject to the
applicable  provisions  of the term  determined  "Interest  Period" set forth in
Section 2.1 hereof, specify more than one Interest Period for different portions
of such  Eurodollar  Loan;  provided  that if the  Borrower  elects to split any
Eurodollar  Loan into more  than one  Interest  Period  for  different  portions
thereof, then each such Interest Period portion of such Eurodollar Loan shall be
in an amount of at least $500,000 and may be amounts greater than $500,000 which
are whole  multiples of $100,000 (for example,  $600,000,  $700,000,  etc.).  In
addition,  the  Borrower  may in any such  notice  elect to split the  Revolving
Credit Loan into a Prime Rate Loan component and a Eurodollar Loan component, so
long as the  Eurodollar  Loan  component of the  Revolving  Credit Loan is in an
amount of at least  $500,000 and may be amounts  greater than $500,000 which are
whole multiples of $100,000 (for example, $600,000, $700,000, etc.). In no event
shall there be more than ten (10) different  Eurodollar Loans outstanding at any
time.

                                       3
<PAGE>

                  (e)  The  fluctuating  rate  of  interest  applicable  to  all
Eurodollar  Loans shall be the Eurodollar Rate plus the Applicable  Margin.  The
fluctuating  rate of  interest  applicable  to all Prime Rate Loans shall be the
Prime Rate plus the Applicable Margin.

                  (f) All  elections by the Borrower  under this Section 1.3 may
be made in such  manner  as the Bank  from  time to time  deems  reasonable  and
appropriate under the circumstances.

                  1.4.  General  Loan  Provisions.  (a)  Inability  to Determine
Eurodollar Rate. In the event that prior to the first day of any Interest Period
the Bank shall have  determined  (which  determination  shall be conclusive  and
binding  upon the  Borrower)  that,  by reason of  circumstances  affecting  the
relevant market, adequate and reasonable means do not exist for ascertaining the
Eurodollar  Base Rate for such  Interest  Period,  the Bank  shall  give  notice
thereof to the  Borrower as soon as  practicable  thereafter.  If such notice is
given,  (x) any  Eurodollar  Loan  requested to be made on the first day of such
Interest Period shall be made as a Prime Rate Loan, (y) any Prime Rate Loan that
was to have  been  converted  on the  first  day of such  Interest  Period  to a
Eurodollar  Loan shall be continued as a Prime Rate Loan, and (z) any Eurodollar
Loan that on the first day of such  Interest  Period was to have been  continued
as, or converted  to, a Eurodollar  Loan shall be converted to or continued as a
Prime Rate Loan.  Until such notice has been  withdrawn by the Bank,  no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrower have
the right to convert any Prime Rate Loan to a Eurodollar Loan.

                  (b) Illegality. Notwithstanding any other provision herein, if
any change in any law, rule or  regulation  or order of court  applicable to the
Bank or the Borrower,  or in the  interpretation or application  thereof,  shall
make  it  unlawful  for  the  Bank to make  or  maintain  a  Eurodollar  Loan as
contemplated by this Agreement, (x) the commitment of the Bank hereunder to make
a Eurodollar  Loan,  continue a Eurodollar Loan as such and convert a Prime Rate
Loan to a Eurodollar  Loan shall  forthwith be cancelled  and (y) any portion of
the  Revolving  Credit  Loan then  outstanding  as a  Eurodollar  Loan  shall be
converted automatically to a Prime Rate Loan on the last day of the then current
Interest  Period with  respect to such portion of the  Revolving  Credit Loan or
within such  earlier  period as required  by law.  If any such  conversion  of a
Eurodollar  Loan  occurs on a day which is not the last day of the then  current
Interest Period with respect  thereto,  the Borrower shall pay to such Bank such
amounts, if any, as may be required pursuant to Section 1.4(e) hereof.

                  (c)  Requirements  of Law. (x) In the event that any change in
any law,  rule or  regulation  or order of court  applicable  to the Bank or the
Borrower,  or in the interpretation or application thereof, or compliance by the
Bank with any request or directive (whether or not having the force of law) from
any central bank or other  governmental  authority  made  subsequent to the date
hereof:

                      (i)  shall  subject  the  Bank  to any  tax  of  any  kind
whatsoever with respect to this Agreement, any Note, or any Eurodollar Loan made
by it, or change

                                       4
<PAGE>

the basis of taxation of  payments  to the Bank in respect  thereof  (except for
taxes  covered by Section  1.4(d)  hereof and  changes in the rate of tax on the
overall net income of the Bank); or

                      (ii) shall impose,  modify or hold applicable any reserve,
special deposit,  compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of the
Bank which is not otherwise included in the determination of the Eurodollar Rate
hereunder; or

                      (iii) shall impose on the Bank any other condition;

and the result of any of the  foregoing is to increase the cost to the Bank,  by
an amount  which the Bank  deems to be  material,  of making,  converting  into,
continuing or maintaining a Eurodollar  Loan or to reduce any amount  receivable
hereunder  in respect  thereof,  then,  in any such  case,  the  Borrower  shall
promptly  pay the  Bank,  upon  demand,  any  additional  amounts  necessary  to
compensate the Bank for such increased cost or reduced amount receivable. If the
Bank becomes  entitled to claim any additional  amounts pursuant to this Section
1.4(c), it shall promptly notify the Borrower of the event by reason of which it
has become so  entitled.  The Bank also agrees to use its best efforts to notify
the Borrower of any event that could reasonably be expected to result in a claim
for  additional  amounts  pursuant to this  Section  1.4(c);  provided  that the
failure to give any such  notice  shall not in any way have any  adverse  effect
upon the  rights  of the Bank  hereunder.  A  certificate  as to any  additional
amounts  payable  pursuant to this Section  1.4(c)  submitted by the Bank to the
Borrower shall be conclusive in the absence of manifest error.

                  (y) In the event that the Bank shall have  determined that any
change in any law, rule or  regulation or order of court  applicable to the Bank
or  the  Borrower  regarding  capital  adequacy  or  in  the  interpretation  or
application  thereof,  or compliance by the Bank or any corporation  controlling
the Bank with any request or directive  regarding  capital adequacy  (whether or
not having the force of law) from any governmental  authority made subsequent to
the date hereof, does or shall have the effect of reducing the rate of return on
the Bank's or such  corporation's  capital as a consequence  of its  obligations
hereunder  (whether in respect of a Prime Rate Loan, a Eurodollar Loan, a letter
of credit or otherwise) to a level below that which the Bank or such corporation
could  have   achieved,   but  for  such  change  or  compliance   (taking  into
consideration the Bank's or such corporation's  policies with respect to capital
adequacy),  by an amount  deemed by the Bank to be  material,  then from time to
time,  after  submission  by the  Bank  to the  Borrower  of a  written  request
therefor, the Borrower shall pay to the Bank the additional amount or amounts as
will compensate the Bank for such reduction.

                                       5
<PAGE>

                  (z) The  covenants  set  forth in this  Section  1.4(c)  shall
survive the  termination  of this  Agreement  and the  payment of the  Revolving
Credit  Note  and all  other  amounts  payable  hereunder  and  under  the  Loan
Documents.

                  (d)  Taxes.  All  payments  made by the  Borrower  under  this
Agreement and the Note shall be made free and clear of, and without deduction or
withholding  for or on account of, any present or future income,  stamp or other
taxes, levies, imposts,  duties, charges, fees, deductions or withholdings,  now
or  hereafter  imposed,   levied,   collected,   withheld  or  assessed  by  any
governmental authority,  excluding net income taxes and franchise taxes (imposed
in lieu of net  income  taxes)  imposed  on the Bank as a result of a present or
former connection between the jurisdiction of the government or taxing authority
imposing such tax and the Bank  (excluding a connection  arising solely from the
Bank having  executed,  delivered  or  performed  its  obligations  or receive a
payment  under,  or  enforced,  any  of the  Loan  Documents)  or any  political
subdivision or taxing authority thereof or therein (all such non-excluded taxes,
levies,  imposts,  duties,  charges,  fees,  deductions and  withholdings  being
hereinafter  called "Taxes").  If any Taxes are required to be withheld from any
amounts  payable to the Bank hereunder or under the Note, the amounts so payable
to the Bank  shall be  increased  to the extent  necessary  to yield to the Bank
(after  payment  of all  Taxes)  interest  or any  such  other  amounts  payable
hereunder  at the rates or in the amounts  specified in this  Agreement  and the
Note.  Whenever any Taxes are payable by the  Borrower,  as promptly as possible
thereafter  the Borrower  shall send to the Bank a certified copy of an original
official  receipt  received by the  Borrower  showing  payment  thereof.  If the
Borrower fails to pay any Taxes when due to the appropriate  taxing authority or
fails to remit to the Bank the required  receipts or other required  documentary
evidence,  the Borrower  shall  indemnify  the Bank for any  incremental  taxes,
interest  or  penalties  that may become  payable by the Bank as a result of any
such  failure.   The  agreements  in  this  Section  1.4(d)  shall  survive  the
termination  of this Agreement and the payment of the Note and all other amounts
payable hereunder and under the Loan Documents.

                  (e) Indemnity.  The Borrower  agrees to indemnify the Bank and
to hold the Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of (a) default by the Borrower in payment when due of the
principal amount of or interest on the Revolving Credit Loan, (b) default by the
Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice  requesting  the same in  accordance
with the provisions of this Agreement, (c) default by the Borrower in making any
prepayment  after the Borrower has given a notice thereof in accordance with the
provisions  of  this  Agreement,  or  (d)  the  making  of a  prepayment  of any
Eurodollar  Loan on a day which is not the last day of an  Interest  Period with
respect thereto,  including (without  limitation) in each case, any such loss or
expense  arising  from the  reemployment  of funds  obtained  by it or from fees
payable to terminate  the  deposits  from which such funds were  obtained.  This
covenant shall survive the  termination of this Agreement and the payment of the
Note and all other amounts payable hereunder and under the Loan Documents.

                                       6
<PAGE>

                  (f)  Prepayment.   The  Borrower  shall  have  the  right  and
privilege to prepay any Prime Rate Loan, in whole or in part,  at any time,  and
no such prepayment shall be subject to any premium or penalty for prepayment. No
Eurodollar  Loan  shall be  prepaid  prior  to the  last  day of its  applicable
Interest Period.

         1.5. Notice and Manner of Borrowing. The Bank shall, from time to time,
subject  to the  Commitment  and so long as no Event  of  Default  or  Potential
Default has occurred or is continuing,  make advances under the Revolving Credit
Loan upon  receipt  of  requests  therefor  (which may be given in  writing,  by
telephone or in any other manner which the Bank deems reasonable and appropriate
under the  circumstances)  from the Borrower's  chief executive  officer,  chief
financial  officer,  controller or such other authorized  officer or officers as
the  Borrower  may from time to time  specify to the Bank in writing.  Each such
request shall include the date and amount of the advance subject thereto and the
information  required  by  Section  1.3  hereof,  and  shall  comply  with  such
additional requirements as may be set forth in the Revolving Credit Note.

         1.6. Method of Payment.  All payments hereunder and under the Revolving
Credit  Note shall be made by not later than 2:00 P.M.  (Baltimore  time) on the
date when due, to the Bank at its  address  referred to in Section 8.5 hereof in
immediately  available  funds.  Whenever  any  payment  hereunder  or under  the
Revolving  Credit  Note  becomes  due  on a  day  which  is  not a  Banking  Day
(hereinafter  defined),  such payment may be made on the next succeeding Banking
Day and such  extension  of time shall be  included  in the  computation  of the
interest due.

         1.7.  Use of Loan  Proceeds.  The  Borrower may use the proceeds of the
Revolving  Credit Loan for  acquisitions,  working  capital and other  corporate
purposes (including, without limitation, for the purpose of funding that portion
of the operations of the Borrower and its Subsidiaries that otherwise would have
been funded by payments on  government  contracts,  during such time as the U.S.
federal government fails to make or delays making such payments,  in whole or in
part,  as a  result  of  the  Year  2000  Problem),  subject,  however,  to  the
restrictions set forth in this Agreement.

         1.8.  Fees.  (a) The Borrower shall pay to the Bank on the Closing Date
an  origination  fee of  $87,500,  equal  to  0.25%  (25  basis  points)  of the
Commitment.

                  (b) The Borrower shall also pay to the Bank a facility fee for
the period  from the Closing  Date to the  Maturity  Date,  equal to the average
daily amount of the Commitment (i.e., $35,000,000/360, or $97,222.22) multiplied
by (i) 0.30% (30 basis  points),  for any such fiscal quarter in which the ratio
of the Debt of the Borrower and its  Subsidiaries  (determined on a consolidated
basis in  accordance  with GAAP) to EBITDA is less than  1.75:1,  (ii) 0.40% (40
basis points), for any such fiscal quarter in which the ratio of the Debt of the
Borrower and its Subsidiaries  (determined on a consolidated basis in accordance
with  GAAP) to EBITDA is greater  than or equal to 1.75:1 but less than  2.25:1,
(iii) 0.50% (50 basis points), for any such fiscal quarter in which the ratio of
the Debt of the  Borrower and its  Subsidiaries  (determined  on a  consolidated
basis in

                                       7
<PAGE>

accordance with GAAP) to EBITDA is greater than or equal to 2.25:1 but less than
2.75:1,  and (iv) 0.75% (75 basis points),  for any such fiscal quarter in which
the ratio of the Debt of the  Borrower  and its  Subsidiaries  (determined  on a
consolidated  basis in accordance  with GAAP) to EBITDA is greater than or equal
to 2.75:1.  Such  facility fee (x) shall be payable  quarterly in arrears on the
last Banking Day of each  September,  December,  March and June and the Maturity
Date,  commencing on September 30, 1999, (y) shall be calculated on the basis of
a  90-day  quarter  except  for (1) the  period  between  the  Closing  Date and
September  30, 1999 and (2) the period  between  June 30, 2001 and the  Maturity
Date,  in which case such fee shall be calculated on the basis of a 360-day year
factor applied to actual days elapsed and (z) and shall be calculated  such that
(1) the payment due on the last Banking Day of any  September  shall be based on
the ratio of the Debt of the  Borrower  and its  Subsidiaries  (determined  on a
consolidated  basis in  accordance  with  GAAP) to EBITDA for the period of four
consecutive fiscal quarters ending on the preceding June 30, (2) the payment due
on the last  Banking  Day of any  December  shall be based on such ratio for the
period of four consecutive fiscal quarters ending on the preceding September 30,
(3) the payment due on the last  Banking Day of any March shall be based on such
ratio for the period of four consecutive fiscal quarters ending on the preceding
December 31 and (4) the payment due on the last Banking Day of any June, as well
as the payment due on the  Maturity  Date,  shall be based on such ratio for the
period of four consecutive fiscal quarters ending on the preceding March 31.

         1.9.  Collateral  Security.  The Borrower covenants and agrees that all
advances under the Revolving Credit Loan at any time outstanding and all present
and future indebtedness from time to time owing to the Bank from the Borrower or
any Subsidiary  (hereinafter defined),  whether pursuant to this Agreement,  any
other credit facility, any guarantee or otherwise, shall at all times be secured
by and  entitled  to the  benefit of all  collateral  security of every type and
description  heretofore  or  hereafter  afforded the Bank by the Borrower or any
Subsidiary,  whether pursuant to this Agreement,  any other credit facility, any
guarantee or otherwise.

         2.       DEFINITIONS.
                  -----------

         2.1. Definitions. The following terms, when used herein, shall have the
following meanings:

         "Additional  Borrower"  shall  have the  meaning  set forth in  Section
4.22(b) hereof.

         "Affiliate"  shall mean a Person  (including  a  subsidiary)  (i) which
directly  or  indirectly  through  one or more  intermediaries  controls,  or is
controlled  by, or is under  common  control  with,  the  Borrower,  (ii)  which
beneficially  owns or holds five percent (5%) or more of any class of the voting
shares  (that  is,  shares  entitled  to vote for  corporate  directors)  of the
Borrower,  or (iii) five  percent  (5%) or more of the voting  shares (or in the
case of a Person  which is not a  corporation,  five percent (5%) or more of the
equity  interest)  of which is  beneficially  owned or held by the  Borrower  or
another  Affiliate.  The  term  "control"  means  the  possession,  directly  or
indirectly, of the power to
                                       8
<PAGE>

direct or cause the direction of the management and policies of a Person whether
through the ownership of voting securities, by contract or otherwise.

         "Applicable  Margin"  shall  mean the rate per annum  set  forth  below
opposite the  quarterly  ratio of the Debt of the Borrower and its  Subsidiaries
(determined in accordance with GAAP) to EBITDA:

<TABLE>
<CAPTION>

         Debt/EBITDA                        Prime Rate Loans             Eurodollar Loans
         -----------                        ----------------             ----------------
<S>            <C>                               <C>                         <C>

                                                      0%                      1.10%
         < 1.75:1
                                                      0%                      1.20%
         < 2.25:1 but > 1.75:1
                      -
                                                      0%                      1.30%
         < 2.75:1 but > 2.25:1
                      -
                                                      0%                      1.50%
         > 2.75:1
         -
</TABLE>

         The Applicable Margin shall be determined and adjusted on the date that
is the first  Banking Day of the month  immediately  following the date by which
the Borrower is required to provide financial information in accordance with the
provisions  of  Section  4.5(a) or 4.5(b),  as the case may be, and the  related
certificate   required   pursuant  to  Section   4.5(c)   (each,   an  "Interest
Determination  Date"), such that (1) for the fiscal quarter ending September 30,
the applicable  Interest  Determination  Date shall be the following December 1,
(2)  for  the  fiscal  quarter  ending  December  31,  the  applicable  Interest
Determination  Date shall be the following  March 1, (3) for the fiscal  quarter
ending  March  31,  the  applicable  Interest  Determination  Date  shall be the
following  June 1and (4) for the fiscal  year  ending  June 30,  the  applicable
Interest Determination Date shall be the following October 1; provided, however,
that in the  event  that  the  financial  statements  required  to be  delivered
pursuant  to  Section  4.5(a)  or  Section  4.5(b)  (as the case may be) and the
related  certificate  required pursuant to Section 4.5(c) are not delivered when
due, then, during the period from the date upon which such financial  statements
are required to be delivered  until one (1) Banking Day  following the date upon
which they actually are delivered, the highest rate shall be determined to be in
effect for the purposes of  determining  Applicable  Margin  during such period.
Such Applicable  Margin shall be effective with respect to all then  outstanding
Eurodollar  Loans and Prime  Rate Loans from such  Interest  Determination  Date
until the next such Interest Determination Date.  Notwithstanding the foregoing,
the initial Applicable Margin shall be determined as if the ratio of the Debt of
the Borrower and its Subsidiaries (determined in accordance with GAAP) to EBITDA
is <1.75:1.

         "Banking Day" shall have the meaning set forth in the form of Revolving
Credit Note attached as Exhibit A hereto.

         "Closing  Date"  shall have the  meaning  set forth in  Section  1.1(a)
hereof.
         "Collateral" shall have the meaning collectively set forth in Section 1
of the Security Agreement.

                                       9
<PAGE>

         "Commitment" shall mean $35,000,000.

         "Consolidated  Net  Income" or  "Consolidated  Net Loss" for any fiscal
period shall mean the amount which, in conformity with GAAP,  would be set forth
opposite the caption  "net  income" (or any like  caption) or "net loss" (or any
like caption),  as the case may be, on a  consolidated  statement of earnings of
the Borrower and its Subsidiaries for such fiscal period.

         "Debt" of any Person, at any date, without duplication,  shall mean the
sum of (a) all  indebtedness of such Person for borrowed money, (b) the deferred
purchase  price of property or services  (other than current  trade  liabilities
incurred in the  ordinary  course of business  and  payable in  accordance  with
customary practices), including without limitation the amount which the Borrower
or any  Subsidiary is  contractually  obligated to pay to the  seller(s),  or to
directors,  officers or  employees  of the  seller(s),  in  connection  with any
Permitted  Acquisition after the closing thereof,  (c) any other indebtedness of
such person which is evidenced by a note, bond, debenture or similar instrument,
(d) all obligations of such Person under Financing  Leases,  (e) all obligations
of such  Person in respect of letters of credit and  acceptances  and letters of
credit  issues or created  for the  account of such  Person  (including  without
limitation  such  letters  of credit  issued by the Bank),  (f) all  liabilities
secured  by any lien or other  encumbrance  (whether  statutory,  consensual  or
otherwise) on any property  owned by such Person even though such Person has not
assumed or otherwise  become liable for the payment  thereof and (g) all Debt of
the types  referred to in clauses  (a)  through  (f) above  which is  guaranteed
directly or indirectly by such Person.

         "Default  Rate" shall mean a  fluctuating  rate of  interest,  adjusted
daily, equal to the Prime Rate plus 3%.

         "EBITDA" for any fiscal period shall mean the  Consolidated  Net Income
or Consolidated Net Loss of the Borrower and its  Subsidiaries,  as the case may
be, for such fiscal period,  after excluding  therefrom amounts included therein
on account of  extraordinary  gain and restoring  thereto (a)  depreciation  and
amortization (including write-offs or write-downs of amortizable and depreciable
items),  (b) the amount of interest expense of such person or entity (determined
on a  consolidated  basis  in  accordance  with  GAAP)  for such  period  on the
aggregate  principal amount of its consolidated  Indebtedness and (c) the amount
of tax expense of such person or entity  (determined on a consolidated  basis in
accordance  with  GAAP) for such  period.  The  Borrower  shall  include  in any
calculation of Consolidated  Net Income or Consolidated  Net Loss the net income
or net loss of any Person then a  Subsidiary  that was not a  Subsidiary  at all
times  during  the  fiscal  period  covered  by  such  calculation   (each  such
Subsidiary,  a  "Transition  Subsidiary");   provided,   however,  that  if  the
Consolidated  Net Income or Consolidated  Net Loss for any such fiscal period is
larger by reason of such inclusion, then EBITDA for such period shall be reduced
by thirty  percent (30%) of the increase in EBITDA  resulting from the inclusion
of such Transition Subsidiary.

                                       10
<PAGE>

         "Environmental Complaint" shall mean any complaint,  order, citation or
notice with regard to air emissions,  water  discharges,  noise emissions or any
other environmental, health or safety matter affecting the Borrower.

         "ERISA,"  "Plan,"  and  "PBGC"  shall  have the  meanings  set forth in
Section 3.10 hereof.

         "Eurocurrency  Reserve  Requirements" shall mean for any day as applied
to  a  Eurodollar  Loan,  the  aggregate  (without  duplication)  of  the  rates
(expressed as a decimal fraction) of reserve  requirements in effect on such day
(including,  without  limitation,  basic,  supplemental,  marginal and emergency
reserves under any  regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred  to as  "Eurocurrency  Liabilities"  in  Regulation  D of  such  Board)
maintained by a member bank of such System.

         "Eurodollar  Base Rate" shall mean with respect to any Eurodollar  Loan
for any one month or three month Interest Period,  the "London Interbank Offered
Rate" (LIBOR)  listed in the "Money  Rates" table of The Wall Street  Journal on
the Banking Day immediately  preceding the first day of such Interest Period, as
specified in any request  made in  accordance  with  Sections 1.3 and 1.5 hereof
(and rounded, if necessary, upward to the nearest 1/100 of 1%).

         "Eurodollar Loans" shall mean each portion of the Revolving Credit Loan
the rate of interest applicable to which is based upon the Eurodollar Rate.

         "Eurodollar  Rate"  shall mean with  respect  to each day  during  each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded, if necessary, upward
to the nearest whole multiple of 1/100th of 1%):

                              Eurodollar Base Rate
                    ----------------------------------------
                    1.00 - Eurocurrency Reserve Requirements

         "Event of Default"  shall mean any of the events  specified  in Section
5.1  hereof.  "Potential  Default"  shall  mean the  occurrence  of any event or
existence of any  condition  which,  with the giving of notice,  would become an
Event of Default.

         "Financial  Statements" shall have the meaning set forth in Section 3.4
hereof.

         "Financing  Lease" shall mean any lease of property,  real or personal,
the  obligations  of the lessee in respect of which are required (in  accordance
with GAAP) to be capitalized on a balance sheet of the lessee.

                                       11
<PAGE>

         "Hazardous  Material" shall mean any oil,  petroleum  products or their
byproducts or any  hazardous,  toxic or dangerous  waste,  substance or material
defined  as  such  in (or  for  purposes  of)  the  Comprehensive  Environmental
Response,   Compensation  and  Liability  Act,  any  so-called   "Superfund"  or
"Superlien" law or any other federal,  state or local statute,  law,  ordinance,
code, rule, regulation,  order or decree (collectively,  "Toxic Waste Laws"), as
now or any  time  hereafter  in  effect,  regulating,  relating  to or  imposing
liability or standards of conduct  concerning any hazardous,  toxic or dangerous
waste, substance or material.

         "Interest  Period" shall mean, with respect to any Eurodollar Loan: (a)
initially,  the period  commencing on the  borrowing or conversion  date, as the
case may be, with respect to such  Eurodollar  Loan and ending one, three or six
months  thereafter,  as selected by the  Borrower in its notice of  borrowing or
notice of  conversion,  as the case may be, given with  respect  thereto and (b)
thereafter,  each  period  commencing  on the  last  day of the  next  preceding
Interest Period  applicable to such Eurodollar Loan and ending one, three or six
months  thereafter,  as  selected  by the  Borrower  in a  notice  of  borrowing
delivered to the Bank by 10:00 a.m., Baltimore, Maryland time, not later than 12
noon on the Banking Day  immediately  prior to the last day of the then  current
Interest Period with respect thereto;

provided that, all of the foregoing  provisions relating to Interest Periods are
subject to the following:

                  (1) if any Interest  Period  pertaining  to a Eurodollar  Loan
         would  otherwise  end on a day that is not a Banking Day, such Interest
         Period shall be extended to the next succeeding  Banking Day unless the
         result of such  extension  would be to carry such Interest  Period into
         another calendar month in which event such Interest Period shall end on
         the immediately preceding Banking Day;

                  (2) any Interest Period that would otherwise extend beyond the
         Maturity  Date  shall end on such  maturity  date or such date of final
         payment, as the case may be;

                  (3) any Interest  Period  pertaining to a Eurodollar Loan that
         begins on the last  Banking  Day of a  calendar  month (or on a day for
         which there is no numerically  corresponding  day in the calendar month
         at the end of such  Interest  Period) shall end on the last Banking Day
         of a calendar month.

                  (4) the Borrower  shall select  Interest  Periods so as not to
         require  a payment  or  prepayment  of any  Eurodollar  Loan  during an
         Interest Period for such Loan.

         "Loan  Documents"  shall  mean,   collectively,   this  Agreement,  the
Revolving Credit Note and the Security Documents.

                                       12
<PAGE>

         "Maturity  Date"  shall have the  meaning  set forth in Section  1.1(a)
hereof.
         "Obligations"  shall  mean,  collectively,   (i)  the  payment  of  all
principal  of and  interest  on the  Revolving  Credit Note as and when the same
become due and payable  (whether by lapse of time,  acceleration  or otherwise),
(ii) the payment of all interest, fees and charges payable by the Borrower under
the terms of the Loan  Documents,  (iii) the payment of all other  indebtedness,
obligations and liabilities arising under, and the observance and performance of
all covenants and agreements contained in, the Loan Documents,  (iv) the payment
of all principal of and interest on any other loans,  credits or advances at any
time  heretofore or hereafter  made to the Borrower by the Bank,  whether or not
related to or arising from the Revolving Credit Loan or the Loan Documents,  and
(v) the  payment  in full of all  expenses  and  charges,  legal  or  otherwise,
including  reasonable  attorneys'  fees,  suffered  or  incurred  by the Bank in
collecting or enforcing  payment of the  Revolving  Credit Note or any or all of
the other foregoing  indebtedness or in realizing upon, protecting or preserving
any   collateral   security  for  the  Revolving   Credit  Note  or  such  other
indebtedness.

         "Permitted  Acquisition"  shall mean any  acquisition  by the Borrower,
directly  or through  any  Subsidiary,  of (i) all or  substantially  all of the
assets of any Person or (ii) a majority  of the  issued and  outstanding  voting
shares (that is, shares entitled to vote for corporate directors or members of a
similar  governing  body) of any Person,  including any such  acquisition  which
takes the form of a merger,  consolidation,  corporate reorganization or similar
transaction as long as the Borrower, if a merging party, is the surviving entity
in any such  transaction,  provided  that no  Default  or Event of  Default  has
occurred and is then  continuing or would otherwise exist after giving effect to
any such Permitted Acquisition.

         "Person" shall mean any individual, partnership,  corporation, business
trust, joint stock company, trust, unincorporated association,  joint venture or
other entity of whatever nature.

         "Premises"   shall  mean  the  significant   sites  of  the  Borrower's
operations, as set forth on Schedule I attached hereto.

         "Prime Rate" shall mean the  fluctuating  interest rate set by the Bank
from time to time as an interest rate base for borrowings. The Prime Rate is one
of several  interest  rate  bases used by the Bank,  and the Bank lends at rates
above and below the Prime  Rate.  On the date hereof the Prime Rate is eight and
one-quarter  percent (8 1/4%) per  annum.  All  interest  rates  established  or
imposed  under the Loan  Documents  which are based upon the Prime Rate shall be
adjusted  upwards and downwards on and as of the date of any change in the Prime
Rate and shall be  calculated  on the basis of a 360-day year factor  applied to
actual days elapsed.

                                       13
<PAGE>

         "Prime Rate Loans" shall mean each portion of the Revolving Credit Loan
the rate of interest applicable to which is based upon the Prime Rate.

         "Revolving  Credit Loan" shall have the meaning set forth in the second
recital paragraph hereof.

         "Revolving  Credit Note" shall have the meaning set forth in the second
recital paragraph hereof.

         "Security  Agreement" and "Security  Documents" shall have the meanings
set forth in Section 7.1 hereof.

         "Subsidiary"  shall  mean each  Person  (if any)  actively  engaged  in
business,  a majority  of the issued and  outstanding  voting  shares  (that is,
shares  entitled  to vote  for  corporate  directors  or  members  of a  similar
governing  body) of which shall,  at the time as of which any  determination  is
being made, be owned by the Borrower either directly or through Subsidiaries.

         "Taxes" shall have the meaning set forth in Section 1.4(d) hereof.

         "UCC"  shall  mean the  Uniform  Commercial  Code,  as in effect in any
applicable jurisdiction.

         "Year 2000 Problem"  shall mean the inability of computer  applications
used  by  the  U.S.  federal   government  to  recognize  and  perform  properly
date-sensitive  functions  involving certain dates prior to, and any date after,
December 31, 1999.

         "1996 Loan  Agreement"  shall have the  meaning  set forth in the first
recital paragraph hereof.

         "1996  Revolving  Credit  Note" shall have the meaning set forth in the
first recital paragraph hereof.

         "1996 Term Notes" shall have the meaning set forth in the first recital
paragraph hereof.

         2.2.   Amendments,   etc.  Included.   All  defined  terms  herein  for
agreements,  instruments  and other documents shall be deemed to include any and
all amendments,  modifications,  extensions and renewals thereof,  substitutions
therefor and supplements, exhibits and schedules thereto.

         3.       REPRESENTATIONS AND WARRANTIES.
                  ------------------------------

                  The Borrower represents and warrants to the Bank that:

                                       14
<PAGE>

         3.1. Organization and Authority;  Conflicting Laws and Agreements.  The
Borrower is a  corporation  duly  organized and existing and is in good standing
under the laws of the jurisdiction of its  incorporation,  has full and adequate
corporate  power  to own  its  property  and to  carry  on its  business  as now
conducted,  is duly  licensed or qualified  to do business in all  jurisdictions
where the nature of its  business or the  character of its  properties  requires
such licensing or qualification and has full right, power and authority to enter
into this Agreement and the Security  Documents,  to make the borrowings  herein
provided for, to issue the Revolving  Credit Note and to perform each and all of
the  matters  and things  provided  for in this  Agreement  and in the  Security
Documents; and the Loan Documents do not, nor will the performance or observance
by the Borrower or any  Subsidiary of any of the matters or things  provided for
in any Loan Document,  contravene,  conflict with or in any way be restricted by
any law, rule or regulation  or order of court  applicable to the Borrower,  any
Subsidiary or any of their  respective  businesses,  operations or properties or
any  provision  of any  organizational  document  of the  Borrower or any lease,
mortgage,  indenture,  contract or agreement of or affecting the  Borrower,  any
Subsidiary or any of their respective properties.

         3.2.  Subsidiaries.  As  of  the  date  hereof,  the  Borrower  has  no
Subsidiaries.  The foregoing  representation and warranty shall not be deemed to
prohibit the Borrower or any Subsidiary from effecting a Permitted Acquisition.

         3.3.  Margin Stock.  Neither the Borrower nor any Subsidiary is engaged
in the business of extending  credit for the purpose of  purchasing  or carrying
margin  stock  (within the meaning of  Regulation U of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of the Revolving Credit
Loan  hereunder  will be used to purchase or carry any margin stock or to extend
credit to others for that purpose.

         3.4. Financial Statements. The consolidated financial statements of the
Borrower  and the  Subsidiaries  audited by Deloitte & Touche LLP for the fiscal
year ended June 30, 1998 (the  "Financial  Statements"),  which have  heretofore
been  furnished to the Bank,  are  complete  and correct and fairly  present the
consolidated financial condition of the Borrower and the Subsidiaries as of said
date and the results of their operations for the period covered thereby,  all in
accordance with GAAP,  except as otherwise  noted therein.  Neither the Borrower
nor any  Subsidiary has any  liabilities  which are material to the Borrower and
such  Subsidiary,  direct  or  indirect,  fixed  or  contingent,  other  than as
indicated in the Financial Statements.

         3.5. Financial Condition.  Since the date of the Financial  Statements,
there have been no  material  adverse  changes in the  condition,  financial  or
otherwise,  of  the  Borrower  and  the  Subsidiaries  nor  any  changes  in the
operations of the Borrower and the  Subsidiaries  except those  occurring in the
ordinary course of business.

         3.6.  Litigation;  Tax  Returns;  Governmental  Approvals.  There is no
litigation  or  governmental  proceeding  pending,  nor to the  knowledge of the
Borrower threatened,  against the Borrower or any Subsidiary which, if adversely
determined,  would result in

                                       15
<PAGE>

any material adverse change in the consolidated financial condition, properties,
business or operations of the Borrower or the performance by the Borrower of its
obligations  hereunder,  under the  Security  Documents  or under the  Revolving
Credit Note, except as previously disclosed in writing to the Bank. All federal,
state and local  income tax returns of the  Borrower for the tax year ended June
30, 1998,  and for all tax years ended prior to said date,  have been filed with
the appropriate  taxing  authorities,  and all taxes shown due thereon have been
timely paid. To the best of the Borrower's  knowledge there are no objections to
or controversies in respect of any of the income tax returns of the Borrower and
the  Subsidiaries  for  any  fiscal  year  ended  after  said  date  pending  or
threatened,  except for those (if any)  previously  disclosed  in writing to the
Bank, the Borrower  warranting that such disclosures are true and accurate as of
the date hereof. No authorization, consent, approval, license, exemption, filing
or  registration  from or with any court or governmental  department,  agency or
instrumentality,  is or will be necessary for the valid  execution,  delivery or
performance by the Borrower of any of the Loan Documents.

         3.7. Liens.  There are no liens,  security interests or encumbrances on
any of the assets or  properties  of the Borrower or any  Subsidiary,  except as
permitted by Section 4.7 hereof.

         3.8.  Enforceability.  The Loan  Documents  are the  legal,  valid  and
binding  obligations  of the  Borrower,  enforceable  against  the  Borrower  in
accordance  with their  respective  terms,  except as the same may be limited by
bankruptcy,  insolvency,  reorganization,  moratorium  or other  similar laws of
general  application  relating to or affecting  the  enforcement  of  creditor's
rights and by general principles of equity.

         3.9. No Defaults.  The  Borrower is and will remain in full  compliance
with  all of the  terms  and  conditions  hereof,  and no Event  of  Default  or
Potential Default has occurred and is continuing.

         3.10. ERISA. The Borrower and the Subsidiaries are in compliance in all
material  respects  with the  Employee  Retirement  Income  Security Act of 1974
("ERISA") as amended, to the extent applicable to them or to any plan, including
both single employer and  multi-employer  plans subject to Title IV of ERISA and
established or maintained for employees or former employees of the Borrower, any
Subsidiary or any member of the "controlled group" (as defined in ERISA) (such a
plan being  hereinafter  referred to as a "Plan").  Neither the Borrower nor any
Subsidiary  has  received any notice to the  contrary  from the Pension  Benefit
Guaranty Corporation ("PBGC") or any other governmental entity or agency, and no
"reportable event" (as defined in ERISA) has occurred and is continuing.  Except
as specifically  otherwise  disclosed in any information  given to the Bank, the
present value of all vested benefits (determined on PBGC-guaranteed benefits and
using PBGC interest and mortality  assumptions) under all single-employer  Plans
maintained by the Borrower or a  commonly-controlled  Person does not, as of the
most  recent  valuation  date,  exceed  the value of the  assets  of such  Plans
allocable to such benefits.

                                       16
<PAGE>

         3.11. Commercial Loan. The Revolving Credit Loan is a "commercial loan"
within the meaning of Section  12-101(c)  of the  Commercial  Law Article of the
Annotated Code of Maryland, as amended.

         3.12. Hazardous Materials. Except as previously disclosed in writing to
the  Bank,  to the best of its  knowledge,  the  Borrower  has  never  caused or
permitted  any  Hazardous  Material to be disposed of on, under or at any of its
properties  (including,  without  limitation,  the  Premises),  and  none of its
properties  have  ever  been  used  (whether  by the  Borrower  or,  to its best
knowledge,  by any other Person) as a dump site or storage (whether permanent or
temporary)  site  for any  Hazardous  Material.  To the  best of the  Borrower's
knowledge  the  Premises  contain  no  underground  tanks or  asbestos,  nor any
transformers containing Polychlorinated Biphenyls.

         3.13. Assignments under the Federal Assignment of Claims Act. Except as
previously  disclosed  in  writing to the Bank,  neither  the  Borrower  nor any
Subsidiary has executed an assignment of a government  contract (i) with respect
to  which  the  United   States  or  any  of  its   departments,   agencies   or
instrumentalities  is currently making payments,  and (ii) which has been filed,
along with a notice of assignment,  pursuant to the Federal Assignment of Claims
Act.

         4.       COVENANTS.
                  ---------

                  So long as the Revolving Credit Note remains outstanding,  the
Borrower hereby covenants and agrees with the Bank as follows:

         4.1.  Payment of Taxes and Other Claims.  The Borrower  will,  and will
cause each  Subsidiary  to, pay or discharge or cause to be paid or  discharged,
before the same shall become delinquent,  (a) all taxes, judgments,  assessments
and  governmental  charges levied or imposed upon the Borrower or any Subsidiary
or upon the income,  profits or property of the Borrower or any  Subsidiary  and
(b) all lawful claims for labor, materials and supplies which if unpaid might by
law become a lien upon the property of the Borrower or any Subsidiary; provided,
however, that the Borrower shall not be required to pay or discharge or cause to
be paid or discharged  any such tax,  assessment,  charge or claim,  the amount,
applicability  or validity of which is being  contested  diligently  and in good
faith by  appropriate  proceedings  and for which the Borrower or the Subsidiary
concerned  shall  have set aside on its books  adequate  reserves  with  respect
thereto;  provided,  further,  that the foregoing  proviso shall not relieve the
Borrower of its  obligation  to comply with  Section 4.7 hereof;  and  provided,
further, that such proceedings do not materially impair the value or security of
the Collateral or any part thereof.

         4.2.  Maintenance of  Properties.  The Borrower will cause the Premises
and all other  properties  owned,  leased or  operated  by the  Borrower  or any
Subsidiary  and  used  or  held  for  use in the  conduct  of  their  respective
businesses to be maintained and kept in

                                       17
<PAGE>

good  condition,  repair  and  working  order and  supplied  with all  necessary
equipment,  and  will  cause  to  be  made  all  necessary  repairs,   renewals,
replacements,  betterments and  improvements  thereof,  all as in the reasonable
judgment of the  Borrower  may be  necessary  or  advisable so that the business
carried on in connection therewith may be properly and advantageously  conducted
at all times.

         4.3. Corporate Existence. The Borrower will do or cause to be done, and
will cause each  Subsidiary to do or cause to be done,  all things  necessary to
preserve  and keep in full  force and  effect  their  existence,  organizational
status and good standing in the state of their  organization  and in every other
jurisdiction  where the  character  of their  properties  or the nature of their
businesses  requires  them to  qualify  to do  business,  as well as the  rights
(charter and statutory) and franchises of the Borrower and each Subsidiary.  The
Borrower will not create any new subsidiaries,  nor change its name, identity or
corporate structure,  nor transact business under any trade name, nor change the
location  of any  material  item of the  Collateral  or of its  chief  executive
offices or principal place of business  without,  in each case, first giving the
Bank thirty (30) days' prior written notice of its intent to do so.

         4.4. Maintenance of Insurance. In addition to the specific requirements
set forth in Section 2(f) of the Security Agreement, the Borrower will maintain,
and will cause each  Subsidiary  to  maintain,  insurance  coverage  by good and
responsible  insurance  underwriters  in such forms and amounts and against such
risks as are customary for companies  engaged in similar  businesses  and owning
and operating similar properties. The Borrower shall from time to time file with
the Bank,  promptly upon its request,  a detailed list of the insurance  then in
effect covering the Borrower's properties  (including,  without limitation,  the
Collateral), stating the names of the insurance companies, the amounts and rates
of the  insurance,  the dates of the  expiration  thereof and the properties and
risks covered thereby.

         4.5. Financial Information, Tax Returns and Reports. The Borrower will,
and will cause each Subsidiary to, employ GAAP and furnish to the Bank:

                  (a) as soon as available  and in any event  within  forty-five
(45) days after the end of each  interim  fiscal  quarter of each fiscal year of
the Borrower (or on the next Banking Day  thereafter,  if the forty-fifth day is
not a Banking  Day),  a  consolidated  and  consolidating  balance  sheet of the
Borrower and the Subsidiaries as of the end of such interim fiscal period, and a
consolidated  and  consolidating  statement  of earnings of the Borrower and the
Subsidiaries  for such fiscal  period and for the period  beginning on the first
day of such fiscal year and ending on the date of such  balance  sheet,  setting
forth in comparative form the corresponding figures for the corresponding period
of the  preceding  fiscal year,  all in  reasonable  detail and certified by the
chief financial officer of the Borrower;

                  (b) as soon as available  and in any event within  ninety (90)
days  after  the  last day of each  fiscal  year  (or on the  next  Banking  Day
thereafter, if the ninetieth day is

                                       18
<PAGE>

not a Banking Day), consolidated financial statements which have been audited by
Deloitte & Touche LLP or  another  firm of  independent  public  accountants  of
recognized  standing  selected by the Borrower,  covering the  operations of the
Borrower  and the  Subsidiaries  as of the end of such  year and a  consolidated
statement of earnings,  shareholders'  equity and cash flow for the Borrower and
the  Subsidiaries  for the year then  ended,  each on a  comparative  basis with
corresponding   financial  statements  for  the  preceding  fiscal  year,  which
financial statements shall be accompanied by a report of such independent public
accountants  without exceptions or qualifications not acceptable to the Bank and
stating in  substance  that such  financial  statements  have been  prepared  in
accordance  with GAAP and that the audit of  accounts  in  connection  with such
financial  statements  has been made in accordance  with GAAP and,  accordingly,
included such tests of accounting records and other auditing  procedures as such
accountants  considered necessary or advisable under the circumstances;  and the
Borrower shall also provide the Bank with such unaudited consolidating financial
statements as are used to prepare the foregoing financial statements;

                  (c) each set of  financial  statements  delivered  to the Bank
pursuant to  paragraphs  (a) and (b) above shall be  accompanied  by the written
certificate of the Borrower,  signed by its chief financial officer,  (i) to the
effect  that such  officer  has  reexamined  the terms  and  provisions  of this
Agreement and the Security Documents and that, to the best of his knowledge, the
Borrower  has not been in default  during  the  preceding  fiscal  period in the
fulfillment of any of the terms,  covenants,  provisions or conditions hereof or
thereof,  and that no Event of Default or Potential  Default has occurred and is
continuing  as of the date of said  statement;  or if the signer is aware of any
such Event of Default or  Potential  Default,  he shall  disclose in  reasonable
detail the nature  thereof and such curative  action as may be or has been taken
by the Borrower and (ii) setting forth the computations  used by the Borrower in
determining  (as of the end of such fiscal period)  compliance with the covenant
contained in Section 4.15 hereof;

                  (d)  [intentionally omitted];
                        ---------------------

                  (e)  [intentionally omitted];
                        ---------------------

                  (f)  promptly  upon any filing  thereof by the Borrower or any
Subsidiary with the Securities and Exchange Commission,  any annual, periodic or
special report or registration  statement (without exhibits) generally available
to the public;

                  (g) promptly upon any request  therefor by the Bank, a copy of
any  application  for any  patent,  copyright,  trademark,  trade  name or other
intellectual  property  right filed by the Borrower or any  Subsidiary  with the
United States Patent and Trademark  Office,  the United States Copyright Office,
or any similar office or agency of the United States or any State thereof;

                  (h)   such   additional   information   (including,    without
limitation,  federal,  state and local  income tax and  property tax returns and
separate financial statements) for

                                       19
<PAGE>

the Borrower and/or any Subsidiary as the Bank may reasonably request concerning
the Borrower and such  Subsidiary(ies)  in order to enable the Bank to determine
whether the covenants, terms and provisions of this Agreement have been complied
with by the  Borrower;  and for  that  purpose  the  Borrower  agrees  that  all
pertinent and relevant  books,  documents and vouchers  relating to its business
and  affairs and those of its  Subsidiaries  shall at all times  during  regular
business hours be open to the inspection of such  accountant or other agent (who
may make  copies  of all or any part  thereof)  as  shall  from  time to time be
designated by the Bank; and

                  (i) promptly upon any officer of the Borrower  learning of the
same,  notice of the occurrence of any Event of Default,  notice of any material
change in the financial status of the Borrower or any Subsidiary,  and notice of
the institution of any litigation  against the Borrower or any Subsidiary  which
could, if adversely determined, have a material, adverse effect on the financial
condition or operations of the Borrower or any Subsidiary.

         The  Bank  agrees  that it will  hold  and  maintain  confidential  all
financial  information,  Backlog Reports and other proprietary  information with
respect to the Borrower and its Subsidiaries and all information obtained during
inspections of the books and records of Borrower and its Subsidiaries  which are
specifically  designated by the Borrower as confidential  and will not,  without
the consent of the Borrower,  disclose such  information  to any  non-affiliated
third party.  Notwithstanding the foregoing obligation of the Bank, the Borrower
hereby  authorizes the Bank to disclose  information  obtained  pursuant to this
Agreement (i) where required by governmental or regulatory  authorities and (ii)
to its outside and in-house legal counsel, auditors,  examiners and accountants.
In addition,  the foregoing obligation of the Bank shall not apply in connection
with any  exercise of the Bank's  rights and remedies  under the Loan  Documents
arising  during any  period(s)  when an Event of  Default  has  occurred  and is
continuing.

         4.6.  Indebtedness.  The Borrower  covenants that it will not, and will
not permit  any  Subsidiary  to,  create,  incur,  assume or suffer to exist any
indebtedness for borrowed money (including as such all indebtedness representing
the deferred purchase price of property), except:

                  (a)  the indebtedness evidenced by the Revolving Credit Note;

                  (b)  indebtedness  or leases of the Borrower or any Subsidiary
outstanding  on the date hereof and  disclosed  or  reflected  in the  Financial
Statements or in the footnotes thereto;

                  (c)   indebtedness   of  the  Borrower  or  any  wholly  owned
Subsidiary to any other wholly owned Subsidiary;

                  (d)  purchase  money  indebtedness  of the  Borrower  and  all
Subsidiaries;

                                       20
<PAGE>

                  (e) any  existing  or future  indebtedness  owed solely to the
Bank or any Payee under the Revolving Credit Note;

                  (f) leases  entered  into by the  Borrower or any wholly owned
Subsidiary in the ordinary course of business;

                  (g)  any  unsecured  indebtedness  in  addition  to any of the
foregoing,  which is subordinated to the Revolving  Credit Note and which in the
aggregate does not exceed $1,500,000 at any time; and

                  (h) with  respect  to any  Permitted  Acquisition,  the amount
which the Borrower or any  Subsidiary is  contractually  obligated to pay to the
seller(s),  or to directors,  officers or employees of the seller(s),  after the
closing thereof.

         4.7.  Liens.  The  Borrower  covenants  that it will not,  and will not
permit any Subsidiary to, create,  assume or suffer to exist any lien,  security
interest or encumbrance upon any of their property or assets,  whether now owned
or hereafter acquired, except:

                  (a) liens  for  taxes not yet due or which are being  actively
contested in good faith by appropriate proceedings;

                  (b) other liens,  security interests,  charges or encumbrances
incidental  to the  conduct  of  their  businesses  or the  ownership  of  their
properties  and assets which were not incurred in connection  with the borrowing
of money or the  obtaining  of  advances  or  credit,  and which do not,  in the
aggregate,  materially  detract from the value of their  properties or assets or
materially impair the use thereof in the operation of their businesses;

                  (c) liens and security  interests  existing on the date hereof
and  disclosed or  reflected in the  Financial  Statements  or in the  footnotes
thereto;

                  (d)  liens and security interests in favor of the Bank; and

                  (e)  liens  and  security  interests  on  property  or  assets
securing  indebtedness  incurred  to purchase  such  property or assets (but not
extending  to any other  property  or  assets),  to the extent  permitted  under
Section 4.6(d) hereof.

         4.8. Disposition of Stock and Indebtedness. The Borrower covenants that
it will not, and will not allow any Subsidiary  to, sell,  transfer or otherwise
dispose of, or part with control of, any shares of stock or  indebtedness of any
Subsidiary,  except to the Borrower or any other wholly owned  Subsidiary  or to
the Bank as collateral security for the Revolving Credit Note.

                                       21
<PAGE>

         4.9.   Investments,   Loans,   Advances,   Guarantees   and  Contingent
Liabilities.  The Borrower  covenants  that it will not, and will not permit any
Subsidiary to, make or permit to remain  outstanding  any loan or advance to, or
guarantee,  endorse or otherwise be or become contingently  liable,  directly or
indirectly,  in connection with the obligations,  stock or dividends of, or own,
purchase  or  acquire  any stock,  obligations  or  securities  of, or any other
interest in, or make any capital  contribution  to, any other Person  (including
any joint venture), except that the Borrower or any Subsidiary may:

                  (a) permit to remain outstanding all presently existing loans,
advances and  investments  in or to any Subsidiary and disclosed or reflected in
the Financial Statements or in the footnotes thereto;

                  (b) make loans,  advances and  investments in or to any wholly
owned Subsidiary;

                  (c) acquire and own stock,  obligations or securities received
in settlement of debts (created in the ordinary course of business) owing to the
Borrower or any Subsidiary;

                  (d) own,  purchase or acquire prime commercial paper rated P-1
by Moody's Investor  Services,  Inc. and A-1 by Standard and Poors  Corporation,
bankers  acceptances  of, and  certificates of deposit in, the Bank or any other
United States  commercial bank with capital resources in excess of $500,000,000,
obligations  of  the  United  States  Government  or  any  agency  thereof,  and
obligations guaranteed by the United States Government,  all of the foregoing in
each case to become due within one (1) year from the date of purchase;

                  (e) permit to exist  guarantees of  obligations  of any wholly
owned Subsidiary, which obligations are not prohibited by Section 4.6;

                  (f)  make  deposits  and  extensions  of  credit  and  endorse
negotiable instruments for deposit or collection,  all in the ordinary course of
business; and

                  (g) effect Permitted Acquisitions.

         4.10.  Merger and Sale of Assets.  The Borrower  covenants that it will
not, and will not permit any Subsidiary to, merge or consolidate  with any other
Person, or sell, lease,  transfer or otherwise dispose of all or any substantial
part of their assets, except that:

                  (a) any Subsidiary may merge with the Borrower  (provided that
such Borrower shall be the continuing or surviving  corporation) or with any one
or more other Subsidiaries;

                                       22
<PAGE>

                  (b) any  Subsidiary  may sell,  lease,  transfer or  otherwise
dispose of any of its assets to the Borrower or any Subsidiary; and

                  (c) the Borrower or any Subsidiary may effect any merger which
constitutes a Permitted Acquisition.

         4.11.  Dealings  with  Affiliates.  The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction with an Affiliate except on
terms  no  less  favorable  to the  Borrower  or  such  Subsidiary  than if such
transaction were an arm's length transaction with a non-affiliated Person.

         4.12. Limitations on Certain Contracts. The Borrower will not, and will
not permit any Subsidiary to, enter into or be a party to:

                  (a) any contract  providing for the making of loans,  advances
or capital  contributions by the Borrower or any Subsidiary to any Person or for
the  purchase of any  property  from any Person  (except for  employee  loans or
advances in the ordinary  course of  business),  in each case in order to enable
such Person to maintain  working  capital,  net worth or any other balance sheet
condition or to pay debts, dividends or expenses;

                  (b) any  contract  for the  purchase  by the  Borrower  or any
Subsidiary of materials, supplies or other property or services if such contract
(or any related document) requires that payment for such materials,  supplies or
other property or services  shall be made  regardless of whether or not delivery
of such  materials,  supplies  or other  property  or  services  is ever made or
tendered;

                  (c) any  contract  to rent or lease  (as  lessee)  any real or
personal property if such contract (or any related  document)  provides that the
obligation  to make  payments  thereunder  is absolute and  unconditional  under
conditions  not  customarily  found in commercial  leases then in general use or
requires that the lessee purchase or otherwise acquire securities or obligations
of the lessor;

                  (d) any contract for the sale or use of materials, supplies or
other  property or the rendering of services  which requires that payment to the
Borrower or any Subsidiary for such materials,  supplies or other  property,  or
the use thereof,  or for such services shall be subordinated to any indebtedness
of the purchaser or user of such  materials,  supplies or other  property or the
Person  entitled to the benefit of such services owed or to be owed to any other
Person; or

                  (e)  any  other  contract  which,  in  economic   effect,   is
substantially  equivalent  to a guarantee  by the  Borrower  or any  Subsidiary,
except as permitted by Section 4.9 hereof.

         4.13.  ERISA.  The Borrower  will,  and will cause each  Subsidiary to,
promptly pay and discharge all obligations  and liabilities  arising under ERISA
of a character

                                       23
<PAGE>

which,  if unpaid or  unperformed,  might result in the  imposition of a lien or
charge against any of their  properties or assets,  and will promptly notify the
Bank of the occurrence of any reportable event (as defined in ERISA) which might
result in the termination by PBGC of any Plan or of termination of any such Plan
or appointment of a trustee  therefor.  The Borrower will notify the Bank of its
or any  Subsidiary's  intention to terminate or withdraw  from any Plan and will
not, and will not permit any Subsidiary to,  terminate any such Plan or withdraw
therefrom unless the Borrower or such Subsidiary shall be in compliance with all
of the  terms  and  conditions  of this  Agreement  after  giving  effect to any
liability to PBGC or to the Plan resulting from such  termination or withdrawal.
For purposes of this Section  4.13,  the Bank hereby  acknowledges  notification
from the Borrower to the effect that the employee  stock  ownership  plan of its
announced  acquisition  candidate,  Management  Consulting & Research  Inc.,  is
intended to be terminated in connection with such acquisition.

         4.14.  Issuance of Stock.  The Borrower shall not permit any Subsidiary
(either  directly,  or  indirectly  by the issuance of rights or options for, or
securities  convertible  into,  such  shares)  to issue,  sell or dispose of any
shares of any class of its stock,  except to the  Borrower  or any other  wholly
owned Subsidiary.

         4.15. Financial Ratio.  Commencing with the fiscal year ending June 30,
2000, the Borrower shall not, and shall not permit any Subsidiaries to, directly
or  indirectly,  permit  for any  fiscal  quarter  the  ratio of the Debt of the
Borrower and its Subsidiaries  (determined on a consolidated basis in accordance
with  GAAP) to EBITDA,  calculated  for the  period of four  consecutive  fiscal
quarters  ending on the last day of such  fiscal  quarter,  to be  greater  than
3.00:1.

         4.16.  Obligations  of the  Borrower  Unconditional.  The  payment  and
performance by the Borrower of its obligations hereunder and under the Revolving
Credit Note and the  Security  Documents  shall be absolute  and  unconditional,
irrespective  of any defense or right of set-off,  recoupment or counterclaim it
might  otherwise  have  against the Bank or any other  Person;  and the Borrower
shall pay  absolute  net  during the term  thereof  all  payments  to be made on
account of the Revolving  Credit Loan as prescribed in the Revolving Credit Note
and all other payments required hereunder and thereunder, free of all deductions
and without any abatement, diminution or set-off whatsoever.

         4.17.  Businesses.  The  Borrower  will not,  and will not  permit  any
Subsidiary  to, make or suffer to be made any  material  change in the manner in
which their  businesses are conducted.  The Borrower shall not be deemed to have
breached or  defaulted  under the  foregoing  covenant  simply  because the U.S.
federal  government  shall have failed to make or delayed making to the Borrower
or any Subsidiary,  in whole or in part, any payment under a government contract
as a result of the Year 2000 Problem.

         4.18.  Compliance  with Laws.  The Borrower  will,  and will cause each
Subsidiary to, comply with all applicable federal,  state and local laws, rules,
ordinances and regulations  where  noncompliance  could have a material  adverse
effect on their respective

                                       24
<PAGE>

financial conditions,  properties,  businesses or operations; provided, however,
that the Borrower or any  Subsidiary,  as the case may be, may in good faith and
by appropriate  proceedings  contest the  applicability  or validity of any such
law, so long as such  Borrower or such  Subsidiary is  prosecuting  such contest
diligently  and has set  aside  on its  books  adequate  reserves  with  respect
thereto.

         4.19. Hazardous  Materials.  The Borrower will indemnify and defend the
Bank  and  hold  the  Bank  harmless  from  and  against  any  and  all  losses,
liabilities, damages, injuries, costs, expenses and claims of any and every kind
whatsoever paid, incurred or suffered by, or asserted against the Bank for, with
respect to, or as a direct or indirect  result of, the presence on or under,  or
the escape, seepage,  leakage,  spillage,  discharge,  emission,  discharging or
release  from the Premises or any of the  Borrower's  other  properties  of, any
Hazardous Material  (including,  without  limitation,  any losses,  liabilities,
damages, injuries, costs, expenses or claims asserted or arising under any Toxic
Waste Laws),  regardless  of whether or not caused by, or within the control of,
the  Borrower.  If the Borrower  receives any notice of (a) the happening of any
event involving the use, spill,  discharge or clean-up of any Hazardous Material
or (b) an Environmental  Complaint from any Person,  including,  but not limited
to, the United States  Environmental  Protection Agency, then the Borrower shall
promptly  give  both  oral and  written  notice  of the same to the  Bank.  Upon
obtaining  knowledge of an  Environmental  Complaint  from any source and by any
means,  the Bank  shall have the right,  but not the  obligation,  upon five (5)
Banking  Days' prior  written  notice to the  Borrower  to take such  reasonable
actions as it deems  necessary  or  advisable  to clean up,  remove,  resolve or
minimize the impact of, or otherwise deal with,  any such Hazardous  Material or
Environmental  Complaint.  Any  and all  sums  expended  by the  Bank  for  such
purposes,  together  with  interest  thereon  at  the  Default  Rate,  shall  be
immediately  reimbursed by the Borrower and shall constitute an Obligation which
is secured by the Collateral.

         4.20.  Material  Agreements.  Upon the request of the Bank from time to
time,  the  Borrower  shall  deliver a list of all material  leases,  mortgages,
indentures, contracts or agreements of or affecting the Borrower, any Subsidiary
or any of  their  respective  properties  and true and  correct  copies  of such
document(s) as the Bank may specify.

         4.21.  Assignments under the Federal  Assignment of Claims Act. Neither
the Borrower nor any  Subsidiary  shall execute any assignment of any government
contract,  to which the Borrower or any such  Subsidiary is a party (either as a
contractor or subcontractor), in favor of any person other than the Bank without
the prior written  consent of the Bank. In addition,  the Borrower will promptly
notify the Bank upon its  discovery  of any attempt by any person other than the
Bank to file such an assignment under the Federal Assignment of Claims Act.

         4.22.  Additional  Subsidiaries.  (a) With  respect  to any  Subsidiary
created or acquired  after the Closing Date by the Borrower,  the Borrower shall
(i) cause such Subsidiary  promptly to become a party to the Security  Agreement
pursuant to

                                       25
<PAGE>

documentation to be in form and substance  reasonably  satisfactory to the Bank,
(ii) execute and deliver such amendments to this Agreement requested by the Bank
to reflect the  existence of such new  Subsidiary,  (iii)  execute and deliver a
Pledge and Security Agreement in form and substance  satisfactory to the Bank to
effect  the pledge to the Bank of the equity  interests  of such new  Subsidiary
thereunder  and (iv) if so  requested  by the Bank,  deliver  to the Bank  legal
opinions  relating  to the  matters  described  in  clauses  (i)  through  (iii)
immediately preceding and such other matters as the Bank may reasonably require,
which opinions  shall be in form and substance  reasonably  satisfactory  to the
Bank.

                  (b) With respect to any  Subsidiary  created or acquired after
the  Closing  Date by the  Borrower,  the  Borrower  shall  (i)  designate  such
Subsidiary as a "Borrower"  hereunder  (an  "Additional  Borrower"),  cause such
Additional  Borrower  promptly to become a party to this  Agreement  pursuant to
documentation to be in form and substance  reasonably  satisfactory to the Bank,
(iii) execute and deliver such  amendments to this  Agreement and the other Loan
Documents  (including without limitation the Revolving Credit Note) requested by
the Bank to reflect the existence of such Additional Borrower,  (iv) execute and
deliver such other approvals, certificates or documents requested by the Bank in
its reasonable  discretion  and (v) if so requested by the Bank,  deliver to the
Bank legal  opinions  relating to the matters  described  in clauses (i) through
(iv)  immediately  preceding and such other  matters as the Bank may  reasonably
require,  which opinions shall be in form and substance reasonably  satisfactory
to the Bank.

         5.       EVENTS OF DEFAULT AND REMEDIES.
                  ------------------------------

         5.1. Events of Default.  The occurrence or existence of any one or more
of the following events or conditions shall constitute an Event of Default:

                  (a) (i) default in the payment when due of any  installment of
the principal of or interest on any Note, whether at the stated maturity thereof
or at any other time provided in such Note or in this Agreement, or (ii) default
for a period of five (5) days after  notice in the payment when due of any other
amount payable by the Borrower under any Loan Document;

                  (b) default in the  observance or  performance of any covenant
set forth in Sections 4.6 through 4.13, 4.15 or 4.17 hereof;

                  (c) default in the  observance or  performance by the Borrower
of any other provision of this Agreement or any of the Security  Documents which
is not remedied  within thirty (30) days after notice thereof to the Borrower by
Bank; provided,  however, that if such default cannot be corrected within thirty
(30) days, it shall not be an Event of Default so long as, in the opinion of the
Bank, the Borrower is diligently  taking  appropriate  corrective action to cure
the same and such default will not, in the sole judgment of the Bank, impair the
security for the Revolving Credit Loan;

                                       26
<PAGE>

                  (d) a default  shall occur under any evidence of  indebtedness
issued,  assumed or guaranteed by the Borrower or any Subsidiary (other than any
such  indebtedness  owing  by any  Subsidiary  to  the  Borrower  or to  another
Subsidiary) or under any indenture,  agreement or other  instrument  under which
the same may be issued,  and such default shall  continue for the period of time
(if any)  necessary  to permit  the  acceleration  of the  maturity  of any such
indebtedness in the aggregate amount of $250,000 or more;

                  (e) any  representation  or warranty  made by the  Borrower in
this  Agreement  or any of the  Security  Documents,  or in any of the  exhibits
hereto or thereto,  or in any opinion,  report,  statement  (including,  without
limitation,  financial  statements) or  certificate  furnished by it pursuant to
this  Agreement  or any of the  Security  Documents,  proves to have been false,
misleading or incomplete in any material  respect as of the date of the issuance
or making thereof;

                  (f) the  Borrower  or any  Subsidiary  shall (i) have  entered
involuntarily  against it an order for relief under the United States Bankruptcy
Code,  as amended,  (ii) not pay, or admit in writing its  inability to pay, its
debts generally as they become due or suspend payment of its obligations,  (iii)
become insolvent or make an assignment for the benefit of creditors,  (iv) apply
for,  seek,  consent  to,  or  acquiesce  in,  the  appointment  of a  receiver,
custodian,  trustee,  conservator,  liquidator or similar official for it or any
substantial part of its property,  (v) institute any proceeding seeking an order
for relief or other  protection  under the United  States  Bankruptcy  Code,  as
amended,  or  seeking  dissolution,  winding  up,  liquidation,  reorganization,
arrangement, marshalling of assets, adjustment or composition of it or its debts
under any law relating to bankruptcy,  insolvency or reorganization or relief of
debtors,  or fail to file an  answer  or other  pleading  denying  the  material
allegations  of any such  proceeding  filed  against it, (vi) fail to contest in
good faith any appointment or proceeding  described in Section 5.1(g) hereof, or
(vii) take any corporate action in furtherance of any of the foregoing purposes;

                  (g) a custodian, receiver, trustee, conservator, liquidator or
similar  official  shall be appointed for the Borrower or any  Subsidiary or any
substantial part of any of their respective properties, or a proceeding for such
purposes or the purposes  described in Section 5.1(f) hereof shall be instituted
against  the  Borrower  or  any  Subsidiary  and  such   appointment   continues
undischarged  or any such  proceeding  continues  undismissed  or unstayed for a
period of thirty (30) days;

                  (h) any final judgments, writs or warrants of attachment or of
any similar  processes  aggregating  in excess of  $250,000  shall be entered or
filed against the Borrower, any Subsidiary or against any of their properties or
assets and remain unpaid, unvacated, unbonded or unstayed on appeal for a period
of five (5) days after entry or filing;

                                       27
<PAGE>

                  (i)  any  "reportable  event"  (as  defined  in  ERISA)  which
constitutes  grounds  for the  termination  of any Plan of the  Borrower  or any
member of the "controlled group" (as defined by ERISA) or for the appointment by
the  appropriate  United  States  District  Court of a trustee to  administer or
liquidate any such Plan, shall have occurred and be continuing  thirty (30) days
after written notice of such effect shall have been given to the Borrower by the
PBGC or the Bank; or any such Plan shall be  terminated;  or the Borrower or any
member of the controlled  group shall have withdrawn from such Plan or a trustee
shall be appointed by the appropriate United States District Court to administer
any  such  Plan;  or the PBGC  shall  institute  proceedings  to  administer  or
terminate any such Plan; and in the case of vested liabilities  allocable to, or
the withdrawal  liability of the Borrower or any members of the controlled group
with respect to, such Plans shall exceed  (either  singly or in the aggregate in
the case of any such liability  arising under more than one such Plan and in the
case of more than one  liability  arising  under  one or more such  Plans) 5% of
consolidated  assets of the  Borrower and its  Subsidiaries  (as  determined  in
accordance with GAAP);

                  (j) the  Borrower or any  Subsidiary  shall lose any  license,
franchise  or permit which  materially  affects  their  business  operations  as
presently  conducted,  if the same is not restored within thirty (30) days after
such loss.

         5.2. Acceleration.  (a) When any Event of Default (other than any Event
of Default  described  in Sections  5.1(f) and (g) hereof) has  occurred  and is
continuing,  the Bank may declare the  principal of and the accrued  interest on
the  Revolving  Credit Note to be forthwith  due and payable and  thereupon  the
Revolving  Credit Note,  including  both  principal and  interest,  shall be and
become  immediately  due and payable,  together with all other  amounts  payable
under the Loan Documents, without further demand, presentment, protest or notice
of any kind.

                  (b) When any Event of Default  described in Section  5.1(f) or
(g) hereof has occurred and is continuing,  then the Revolving Credit Note shall
immediately  become due and payable,  together  with all other  amounts  payable
under the Loan Documents, without presentment,  demand, protest or notice of any
kind.

         5.3.  Costs of Collection.  The Borrower  agrees to pay to the Bank all
expenses and costs incurred or paid by the Bank, including reasonable attorneys'
fees and court costs, in connection  with any default by the Borrower  hereunder
or in  connection  with the  enforcement  of any of the  terms  hereof or of the
Revolving Credit Note or any Security  Document or in connection with protecting
or realizing  upon any  collateral  for the  Obligations,  including  any of the
foregoing incurred in connection with any bankruptcy,  reorganization or similar
proceedings instituted by or against the Borrower or any Subsidiary.

         5.4.  Consent to  Jurisdiction;  Waiver of Jury Trial. (a) The Borrower
hereby  agrees that any action or proceeding  with respect to this  Agreement or
the  Revolving  Credit Note or any action or  proceeding  brought to enforce any
breach hereof or thereof

                                       28
<PAGE>

against  the  Borrower or any of its  property  may be brought in any federal or
state court  situated in the State of Maryland  and/or in any other court having
jurisdiction over the subject matter, in one or more actions or proceedings, all
at the  sole  election  of the  Bank,  and by  execution  and  delivery  of this
Agreement, the Borrower irrevocably consents to jurisdiction in each such court.

                  (b) The Borrower irrevocably waives any right it may have to a
trial by jury in any action or  proceeding  described in the  foregoing  Section
5.4(a),  and hereby acknowledge that this waiver is a material provision of this
Agreement and shall be specifically enforceable.

         5.5. Service of Process.  If, for any reason, the Borrower is unable to
receive  service  of process in the manner  provided  by the  Maryland  Rules of
Procedure, then the Borrower hereby irrevocably appoints the State Department of
Assessments  and  Taxation as its agent for the purpose of gaining  jurisdiction
over  the  Borrower  in the  State of  Maryland  in  connection  with any of the
Obligations; provided, however, that the Bank shall promptly notify the Borrower
in writing of any such service of process.

         5.6.  Acceleration  of Other  Obligations  to Bank.  When any  Event of
Default  has  occurred  and is  continuing,  the Bank may declare any and/or all
other  indebtedness of the Borrower or any Subsidiary owing to the Bank, whether
now  existing  or created in the  future,  to be  immediately  due and  payable,
without presentment, demand, protest or further notice of any kind.

         5.7. Remedies Cumulative.  All rights,  remedies and powers of the Bank
hereunder are irrevocable and cumulative,  and not alternative or exclusive, and
shall be in addition to all other rights, remedies and powers given hereby or by
any of the other Loan Documents or any laws now existing or hereafter enacted.

         6.  CONDITIONS PRECEDENT TO LENDING.
             -------------------------------

         6.1.  Conditions  to  the  Making  of the  Initial  Advance  under  the
Revolving  Credit Loan. The  obligation of the Bank to make the initial  advance
under the Revolving Credit Loan hereunder is subject to the following conditions
precedent:

                  (a)  Revolving  Credit Note.  The Bank shall have received the
Revolving Credit Note, duly executed by the Borrower on the Closing Date.

                  (b) Opinion of Borrower's  In-House  Legal  Counsel.  The Bank
shall  have  received  a written  opinion  of  in-house  legal  counsel  for the
Borrower,  dated the Closing Date, in form and substance reasonably satisfactory
to the Bank.

                  (c) Evidence of  Authorization.  The Bank shall have  received
copies of all  corporate  action  taken by the  Borrower to  authorize  the Loan
Documents and the  borrowings  hereunder  and under the  Revolving  Credit Note,
certified as of the Closing

                                       29
<PAGE>

                  Date and including a  certification  as to the  incumbency and
signature(s) of the person(s)  authorized to execute and deliver or furnish such
documents and all related materials and information.

                  (d) Estoppel  Certificate.  The Borrower  shall deliver to the
Bank a  certificate,  dated as of the  Closing  Date,  to the effect that (i) no
Event of Default or Potential  Default has occurred and is  continuing  and (ii)
all  representations  and  warranties  contained  herein  and  in  the  Security
Documents are true, accurate and complete in all material respects.

                  (e) Security  Documents.  (i) The Bank shall have received the
Security Agreement duly executed by the Borrower.

                      (ii) The  Borrower  shall have  delivered  to the Bank for
filing   against  the  Borrower  all   necessary  and  advisable  UCC  financing
statements,  amendments and other appropriate  filings (including  recording tax
allocation  certificates),  fully executed and in due and proper form for filing
in all appropriate  recording  offices situated in such  jurisdictions as may be
appropriate,  in order to perfect the Bank's first priority lien on and security
interest in all collateral security under any of the Security Documents; and the
Borrower shall have provided for payment of all  applicable  filing or recording
fees and taxes with respect thereto.

                  (f)  Organizational  Documents.  The Borrower shall deliver to
the Bank certified  copies of the  organizational  documents of the Borrower and
certificates  of good  standing  for the  Borrower  from the States of Delaware,
Virginia, California and Ohio.

                  (g)  Consents  and  Approvals.  The Bank shall  have  received
copies of such  consents and approvals as the Borrower may be required to obtain
from any Person in order to enter  into this  Agreement  or any of the  Security
Documents and to consummate the transactions contemplated hereby or thereby.

                  (h)  Transaction  Expenses.  The Borrower  shall have paid any
statements for transaction expenses which are payable under Section 8.9 hereof.

                  (i) Disclosure  Letter.  The Bank shall have received specific
written disclosure from the Borrower prior to the Closing Date as to any matters
for which disclosure is required under Section 3.6 or 3.12 hereof.

                  (j) Other  Documents.  The Bank shall have received such other
documents,  certificates and opinions, and evidence of such other matters, as it
may reasonably require.

         6.2.  Conditions  to the  Making of Each  Advance  under the  Revolving
Credit Loan. The obligation of the Bank to make each advance under the Revolving
Credit  Loan) is subject  to the  conditions  precedent  that on the date of the
making of such

                                       30
<PAGE>

advance,  (i) the Borrower shall have performed and observed,  and shall then be
in  compliance  with,  all of the terms,  covenants  and  conditions of the Loan
Documents,  (ii)  there  shall not have  occurred  or be  existing  any Event of
Default,  and (iii) the representations  and warranties  contained herein and in
the Security Documents,  as such representations and warranties may from time to
time  hereafter  be modified or otherwise  noticed to the Bank in writing  (with
such modifications or other written  notifications  approved by the Bank), shall
be  true,   accurate  and  complete,   with  the  same  effect  as  though  such
representations  and warranties  had been made at the time of such advance;  and
each and every  request  for an advance  under the  Revolving  Credit Loan shall
constitute a confirmation and warranty by the Borrower that this Section 6.2 has
been satisfied in full.

         7.  COLLATERAL SECURITY.
             -------------------

         7.1. Security Documents. As collateral security for the Obligations the
Borrower has executed and delivered to the Bank an Amended and Restated Security
Agreement (the "Security  Agreement" and,  together with the Security  Agreement
and any and all additional documents,  agreements,  instruments and certificates
which may from time to time  secure all or any portion of the  Revolving  Credit
Loan,  including without limitation any Pledge and Security Agreement  delivered
after  the  date  hereof   pursuant  to  Section  4.22  hereof,   the  "Security
Documents"),  covering  and  creating a security  interest in any and all of its
inventory,  goods, accounts, accounts receivable,  general intangibles,  chattel
paper,  instruments  and  equipment,  whether now owned or existing or hereafter
acquired or arising.

         7.2.  Deposit  Balances.   As  additional  security  for  the  payment,
performance and discharge of the Obligations, the Borrower hereby pledges to the
Bank,  grants  the Bank a  security  interest  in, and gives to the Bank a first
priority lien upon and a right of set-off  against,  all deposit balances now or
hereafter  arising in any of its  accounts  with the Bank and all  property  and
securities  of every  kind and  nature  which  have been or at any time shall be
delivered to the Bank or otherwise come into the Bank's  possession,  custody or
control for any purpose  whatsoever,  whether or not for the express  purpose of
being used by the Bank as  collateral  security  or for  safekeeping  or for any
other or  different  purpose,  or which  shall be in  transit to the Bank or set
apart  for or on  behalf of the Bank,  in any way,  by the  Borrower  or for its
account, or in which the Borrower may have any interest,  whether the Bank shall
accept the same for the purpose for which delivered or not, and any and all cash
and non-cash  proceeds of said property and  securities  and every part thereof,
with the right of the Bank,  in its  discretion,  to resort first to any part of
said security  without  exhausting  its rights  against any other  collateral or
source of payment.

         8.  MISCELLANEOUS.
             -------------

         8.1.  Exercise  of  Rights.  Any  delay  on the  part  of the  Bank  in
exercising any power,  privilege or right under this Agreement shall not operate
as a waiver thereof,  and no single or partial exercise of any power,  privilege
or right hereunder shall preclude

                                       31
<PAGE>

other or further exercise thereof, or the exercise of any other power, privilege
or  right.  The  waiver by the Bank of any  default  by the  Borrower  shall not
constitute a waiver of any subsequent  defaults,  but shall be restricted to the
default so  waived.  The  failure  of the Bank to  enforce  any of the terms and
provisions  hereof, or its failure to declare a default  hereunder,  shall apply
only in the particular  instance,  and shall not operate as a continuing waiver.
If any part of this Agreement should be contrary to any law which the Bank might
seek to apply or enforce, or should be otherwise defective, the other provisions
of this  Agreement  shall not be affected  thereby,  but shall  continue in full
force and effect.

         8.2.  Payment  Due on Banking  Day.  If any  payment or  prepayment  of
principal or interest on the Revolving Credit Note shall fall due on a day which
is not a Banking Day,  interest at the applicable  rate shall continue to accrue
on such  principal  from the stated due date thereof to and  including  the next
succeeding Banking Day, on which day the same shall be payable.

         8.3. Assessments. The Borrower agrees that it will pay all documentary,
stamp,  recording  and similar  taxes which are payable in respect of any of the
Loan Documents,  including  interest and penalties,  in the event any such taxes
are assessed, irrespective of when such assessment is made.

         8.4. Survival.  All representations and warranties of the Borrower made
herein or in certificates  given pursuant hereto shall survive the execution and
delivery of the Loan Documents, and shall continue in full force and effect with
respect to the date as of which they were made as long as the  Revolving  Credit
Note shall remain outstanding.

         8.5. Notices. All notices and other communications  provided for herein
or in any of the  Security  Documents  shall be in writing,  except as otherwise
specifically provided for hereinabove, and shall be deemed to have been given or
made when served personally or on the first Banking Day following deposit in the
United  States mail and  addressed,  if to the Borrower,  to GRC  International,
Inc.,  1900 Gallows Road,  Vienna,  Virginia 22182,  Attention:  Chief Financial
Officer (with a copy to Thomas E. McCabe, Esq., Senior Vice President,  Director
of Corporate Development and General Counsel, at the same address), or if to the
Bank, to Two Hopkins Plaza, Baltimore,  Maryland 21201, Attention: Mr. Philip G.
Enstice, Senior Vice President (with a copy to Venable, Baetjer and Howard, LLP,
2010  Corporate  Ridge,  Suite 400,  McLean,  Virginia  22102,  Attn:  Joseph C.
Schmelter,  Esq.),  or at such other  address as shall be  designated  by either
party  hereto in a written  notice to the other party  pursuant to this  Section
8.5.

         8.6.  Counterparts.  This  Agreement  may be  executed in any number of
counterparts,  and by different parties on different counterparts,  all of which
taken together shall constitute one and the same instrument.  Any of the parties
hereto may execute this  Agreement by signing any such  counterpart  and each of
such  counterparts  shall for all  purposes  be deemed to be an  original.  This
Agreement shall become

                                       32
<PAGE>

effective  when each of the parties  hereto has  executed  this  Agreement  or a
separate counterpart hereof, and delivered the same to the Bank.

         8.7. Successors and Assigns; Governing Law; Amendments.  This Agreement
shall be binding  upon the Borrower and its  successors  and assigns,  and shall
inure to the benefit of the Bank and its successors and assigns, the term "Bank"
as used herein to include any  subsequent  holder of any Note. The Bank reserves
the right to sell, assign, encumber, transfer or otherwise dispose of all or any
part of its right,  title and  interest  in and to any of the  Revolving  Credit
Note, the Collateral,  the Security Documents and this Agreement,  including any
undivided  participation  therein,  all  without the consent of or notice to the
Borrower;  provided,  however, that the Borrower shall continue to recognize the
Bank as the  holder  of such  right,  title  and  interest  until it shall  have
received  written  notice from the Bank of  disposition.  This Agreement and the
rights and duties of the parties  hereto shall be construed  and  determined  in
accordance  with the internal laws of the State of Maryland,  without  regard to
principles  of  conflicts  of  laws.  This  Agreement   constitutes  the  entire
understanding  of the parties with respect to the subject  matter hereof and any
prior understandings,  commitments and agreements, whether written or oral, with
respect  thereto  are  superseded  hereby.  No Loan  Document  may be amended or
modified except by a written instrument signed by the Borrower and the Bank. The
Borrower may not assign its rights or  obligations  hereunder  without the prior
written consent of the Bank.

         8.8.  Section  Headings;  Construction.  Section  headings used in this
Agreement  are for  convenience  of  reference  only and  shall not  affect  the
construction of this Agreement. When used in this Agreement, the singular of any
word shall include the plural, the plural shall include the singular and the use
of any gender shall include all genders.

         8.9.  Transaction  Expenses.  The Borrower shall pay all  out-of-pocket
costs and  expenses  incurred by the Bank in  connection  with the  negotiation,
preparation, execution and delivery of this Agreement, all related documents and
any  subsequent  amendments  hereof  or  thereof,  or  in  connection  with  the
consummation  of  any  of  the  transactions  contemplated  hereby  or  thereby,
including the reasonable fees and expenses of Venable,  Baetjer and Howard, LLP,
special counsel for the Bank.

         8.10.  Estoppel  Certificates.  The Borrower  will,  upon not less than
fifteen (15) Banking Days' request by the Bank, execute, acknowledge and deliver
to the Bank a  statement  in  writing,  certifying  (a) that this  Agreement  is
unmodified  and in full force and effect and that the  payments  required by the
Loan  Documents  to be paid by the  Borrower  have been  paid,  and (b) the then
unpaid balance of the Revolving  Credit Loan; and stating whether or not, to the
knowledge of the signer of such  certificate,  any Event of Default or Potential
Default has occurred and is continuing and, if so,  specifying each such default
of which the signer may have knowledge.

                                       33
<PAGE>

         8.11.  Indemnification.  The Borrower shall protect, indemnify and save
harmless the Bank and its officers,  employees and agents from and against,  any
and all liabilities, suits, actions, claims, demands, losses, expenses and costs
of every kind and nature incurred by, or asserted or imposed  against,  the Bank
and its  officers,  agents  or  employees,  or any of  them,  by  reason  of any
accident, injury (including death) or damage to any person or property,  however
caused (other than if by the willful misconduct of such person), resulting from,
connected  with or  growing  out of any act of  commission  or  omission  of the
Borrower or any officer, employee, agent, assignee,  contractor or subcontractor
of  the  Borrower  or  any  use,  non-use,  possession,  occupation,  condition,
operation, service, design, construction, acquisition, maintenance or management
of, or on, or in connection  with,  the Premises,  the  Collateral,  or any part
thereof,  or by reason of any suit or proceeding  brought by or against the Bank
in any way relating to or arising out of the  transactions  contemplated  by the
Loan  Documents,  the enforcement of any of the terms thereof or the exercise of
any  of  the  remedies   provided  for  therein,   regardless  of  whether  such
liabilities,  suits, actions,  claims,  demands,  damages,  losses, expenses and
costs  are  against  or are  suffered  or  sustained  by the  Bank or any of its
officers, agents or employees, or are against legal entities to whom the Bank or
any of its  officers,  agents or  employees  may  become  liable  therefor.  The
Borrower,  if so requested by the Bank,  shall undertake to defend,  at its sole
cost and expense, any and all suits, actions and proceedings brought against the
Bank or any of its officers,  agents or employees in connection  with any of the
matters mentioned in this Section 8.11.

         8.12.  Publicity.  Except as may be required to comply with  applicable
law, any public notices,  advertisements  or similar  announcements  relating to
this  Agreement  or the  Revolving  Credit  Loan  shall be  subject to the prior
approval of each of the parties hereto.

                                       34
<PAGE>

         IN WITNESS  WHEREOF,  the parties have caused this Loan Agreement to be
duly executed under seal, intending it to be a sealed instrument,  as of the day
and year first above written.

[SEAL]

ATTEST or WITNESS:                      GRC INTERNATIONAL, INC.


----------------------------------      By:                               (SEAL)
Herbert L. Raiche                           ------------------------------
                                        Name: Thomas E. McCabe
Assistant Gen. Cnsl. & Ass't Sec.       Title:  SVP, Dir. Corp. Dev't, GC & Sec.


ATTEST or WITNESS:                      MERCANTILE-SAFE DEPOSIT
                                          AND TRUST COMPANY


----------------------------------      By:                               (SEAL)
                                            -----------------------------
                                            Name:
                                                  ------------------------------
                                            Title:
                                                  ------------------------------

                                       36
<PAGE>