EXHIBIT 10.12

             Amended and Restated Credit Agreement November 8,1997
                             PSW TECHNOLOGIES, INC.




                      AMENDED AND RESTATED CREDIT AGREEMENT

THIS  AMENDED  AND  RESTATED   CREDIT   AGREEMENT  (as  amended,   restated  and
supplemented from time to time, this Agreement)  between PSW TECHNOLOGIES,  INC.
(Borrower)  and TEXAS COMMERCE BANK NATIONAL  ASSOCIATION  (Bank) is dated as of
November 8, 1997 (the Effective Date).

PRELIMINARY  STATEMENT,  Borrower and Bank entered into a Credit Agreement dated
as of November 8, 1996,  and have agreed to modify and replace such agreement in
its entirety, as provided hereinafter.

1.       THE LOANS.

REVOLVING  CREDIT NOTE 1.1.A Subject to the terms and  conditions  hereof,  Bank
agrees  to make  loans  (Loans)  to  Borrower  from  time to time  before  the
Termination  Date,  not to  exceed  at any one time  outstanding  the  lesser of
(i) $10,000,000.00  or (ii) the  greater of  $7,500,000.00 or the Borrowing Base
(such amount referred to herein as the Commitment).  Borrower has the right to
borrow,  repay and reborrow the Loans.  Each Loan and each  repayment must be at
least  the  minimum  amount  required  in the  Note.  Loans may only be used for
financing Borrower's working capital needs and for making acquisitions.  Chapter
15 of the Texas Credit Code (and any successor enactment) will not apply to this
Agreement,  the Note or any Loan.  Loans  will be  evidenced  by,  and will bear
interest and be payable as provided in, the  promissory  note of Borrower  dated
the  Effective   Date   (together   with  any  and  all  renewals,   extensions,
modifications and replacements thereof and substitutions  therefor, the Note).
Termination  Date  means the  earlier  of.  (a) May 1,  1999;  or (b) the date
specified by Bank pursuant to Section 6.1 hereof.

LETTERS OF CREDIT 1.1.B Upon Borrower's  application on the Bank's standard form
(Application),  Bank  in  its  discretion  may  from  time  to  time  until  the
Termination  Date issue  commercial  and  standby  tenets of credit  (Letters of
Credit) subject terms and conditions of this Agreement. Each Application made by
Borrower after the effective date of this Section 1.1B shall be deemed to be for
a Letter of Credit subject to this Agreement,  unless such Application expressly
and prominently states otherwise. The Commitment shall be reduced by the sum of.
(a)'the face amount of all outstanding  Letters of Credit; and (b) the amount of
any unreimbursed drawings or other amounts owing to the Bank under or in respect
of any Letter of Credit or Application  (such sum being the "L/C  Obligations"),
so that,  on any  date,  the sum of  (x)'all  Loans  outstanding  and (y) all UC
Obligations  does  not  exceed  the  Commitment.  The  aggregate  amount  of L/C
Obligations  shall never exceed  $5,000,000.00 at any one time. Each Application
shall be deemed to include Borrower's  representation that no default under this
Agreement exists and is continuing as of the date of such application,  and that
all of Borrower's  representations and warranties are true as of such date. Each
Application  and UC  Obligation  is an  Obligation  within  the  meaning of this
Agreement.  Bank is entitled to all rights,  powers,  benefits,  privileges  and
remedies  granted  under any  provision of the Loan  Documents  and by law or in
equity in respect of all UC Obligations.  Bank's rights and interests under this
Agreement and the other Loan Documents  shall be cumulative  with the rights and
interests granted in each Application (which shall be included in the definition
of "Loan  Documents").  Any Event of  Default  under this  Agreement  shall be a
default  under  each  Application,  and each  default  against  the terms of any
Application is an Event of Default under this Agreement.  Borrower shall pay all
fees and charges  quoted by Bank to Borrower at the time of the  Application  is
made, or if not quoted, all of Bank's standard fees and charges as of such time.
Bank may (but is not required to) make advances under the Note without notice to
Borrower to pay any UC Obligation.
BORROWING  BASE 1.2 The Borrowing Base will be the amount shown as the BORROWING
BASE on the most recent  Borrowing Base Report,  subject to verification by Bank
and calculated using the eligibility criteria, borrowing base factors and dollar
ceilings  for  various   components   specified   in  the  attached   Exhibit'A,
incorporated herein by reference; provided, however that REQUIRED PAYMENT 1.3 If
the unpaid  amount of the Loans at any time exceeds the  Borrowing  Base then in
effect,  Borrower  must make a payment  on the Note in an amount  sufficient  to
reduce  the unpaid  principal  balance of the Note to an amount no more than the
greater of $7,500,000.00 or the amount of the Borrowing Base. Such payment shall
be accompanied by any  prepayment  charge  required by the Note and shall be due
concurrently with the Borrowing Base Report.

COMMITMENT FEE;  TERMINATION 1.4 Borrower will pay a commitment fee (computed on
the  basis  of a year  comprised  of 360 days of 3/16%  per  annum on the  daily
average difference between the Commitment and the principal balance of the Note,
from the date  hereof  to the  Termination  Date.  The  Commitment  fee shall be
computed,  and be due and  payable,  quarterly  in  arrears.  Borrower  shall be
entitled,  upon delivery of 30 days advance written notice to Bank, to terminate
its use of the unused portion of the Commitment as of the effective date of such
notice.  Upon the effective date of such notice of  termination,  accrual of the
commitment  fee shall  cease;  Borrower  shall  thereupon  not have the right to
borrow or reborrow new Loans under the Commitment  (notwithstanding  anything in
this Agreement or the other Loan  Documents to the contrary);  and the amount of
such  fee  seemed  through  the  effective  date of such  termination  shall  be
immediately due and payable.

CAPITAL  ADEQUACY  1.5 With  respect to any Loan  bearing  interest at the LIBOR
Rate, if Bank  determines  after the date of this  Agreement  that any change in
applicable laws, rules or regulations  regarding capital adequacy, or any change
in the interpretation or administration thereof by any appropriate  governmental
agency,  or compliance  with any request or directive to Bank regarding  capital
adequacy (whether or not having the force of law) of any such agency,  increases
the capital  required to be maintained with respect to any Loan bearing interest
at the LIBOR Rate and  therefore  reduces  the rate of return on Bank's  capital
below the level Bank  could  have  achieved  but for such  change or  compliance
(taking into  consideration  Bank's policies with respect to capital  adequacy),
then  Borrower  will pay to Bank  from  time to time,  within  15 days of Bank's
request,  any additional  amount required to compensate Bank for such reduction.
Bank will request any additional  amount by delivering to Borrower a certificate
of Bank setting forth the amount  necessary to compensate  Bank. The certificate
will be  conclusive  and  binding,  absent  manifest  error.  Bank  may make any
assumptions,  and may use any allocations of costs Ad expenses and any averaging
and attribution methods, which Bank in good faith finds reasonable.

2.       CONDITIONS PRECEDENT.
ALL  LOANS  2.1 Bank is not  obligated  to make any Loan  unless:  (a) Bank  has
received the  following,  duly  executed and in Proper Form:  (1)'a  Request for
Loan,  substantially  in the form of Exhibit B, within the time  required in the
Note;  provided  however,  Bank may accept and act upon verbal advance  requests
received  from  Borrower's  representative  reasonably  believed  by  Bank to be
authorized to make such  requests;  (2) if the aggregate  outstanding  amount of
Loans after making the  requested  Loan will exceed  $7,500,000-00,  a Borrowing
Base Report  within the time  required by this  Agreement;  and  (3)'such  other
documents as Bank reasonably may require;  (b) no Event of Default  exists;  and
(e)'the making of the Loan is not prohibited by, or subjects Bank to any penalty
or onerous  condition under any Legal  Requirement.  If Bank fails to make Loans
solely on the basis of clause (c) of the  preceding  sentence,  then  during the
period that such clause (c) applies,  the commitment fee provided for in section
1.4 shall not accrue.

FIRST LOAN 2.2 In addition to the matters  described in the  preceding  section,
Bank will not be  obligated  to make the first Loan unless Bank has received all
of the Loan Documents specified on Annex I in Proper Form.

3.  REPRESENTATIONS AND WARRANTIES.  To induce Bank to enter into this Agreement
and to make the Loans, Borrower represents and warrants as of the Effective Date
that each of the following statements is true and correct:

ORGANIZATION  AND STATUS 3.1  Borrower and each  Subsidiary  of Borrower is duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of the
jurisdiction  of its  organization;  has all power and  authority to conduct its
business as  presently  conducted,  and is duly  qualified to do business and in
good standing in each jurisdiction in which the nature of the business conducted
by it makes such qualification desirable.  Borrower has no Subsidiary other than
those  listed  on Annex  if and each  Subsidiary  is  owned by  Borrower  in the
percentage set forth on Annex II.

FINANCIAL STATEMENTS 3.2 All financial statements delivered to Bank are complete
and correct and fairly present, in accordance with generally accepted accounting
principles,  consistently  applied  ("GAAP"),  the  financial  condition and the
results of  operations  of Borrower  and each  Subsidiary  of Borrower as at the
dates and for the periods indicated.  No material adverse change has occurred in
the assets, liabilities, financial condition, business or affairs of Borrower or
any Subsidiary of Borrower since the dates of such financial statements. Neither
Borrower  nor any  Subsidiary  of  Borrower  is  subject  to any  instrument  or
agreement materially and adversely affecting its financial  condition,  business
or affairs.

ENFORCEABILITY 3.3 The Loan Documents are legal,  valid and binding  obligations
of the Borrower enforceable in accordance with their respective terms, except as
may be  limited by  bankruptcy,  insolvency  and other  similar  laws  affecting
creditors' rights generally. The execution, delivery and performance of the Loan
Documents have all been duly authorized by all necessary action;  are within the
power and  authority  of the  Borrower;  do not and will not  violate  any Legal
Requirement,  the  Organizational  Documents of the Borrower or any agreement or
instrument binding or affecting the Borrower or any of its Property.

COMPLIANCE 3.4 Borrower and each Subsidiary of Borrower has filed all applicable
tax returns and paid all taxes shown  thereon to be due,  except those for which
extensions  have been obtained and those which are being contested in good faith
and for  which  adequate  reserves  have  been  established.  Borrower  and each
Subsidiary of Borrower is in compliance with all applicable  Legal  Requirements
and manages and operates  (and will continue to manage and operate) its business
in accordance with good industry practices.  Neither Borrower nor any Subsidiary
of Borrower is in default in the payment of any other  indebtedness or under any
agreement to which it is a party.  The Parties have obtained all consents of and
registered  with all  Governmental  Authorities  or other  Persons  required  to
execute, deliver and perform the Loan Documents.

LITIGATION  3.5 Except as previously  disclosed to Bank in writing,  there is no
litigation  or  administrative  proceeding  pending  or,  to  the  knowledge  of
Borrower,  threatened  against,  nor any outstanding  judgment,  order or decree
affecting  Borrower or any Subsidiary of Borrower before or by any  Governmental
Authority  which,  if  determined  adversely to Borrower,  would have a material
adverse effect on Borrower's business or financial condition.

TITLE AND RIGHTS 3.6  Borrower  and each  Subsidiary  of  Borrower  has good and
marketable  title to its  Property,  free and clear of any Lien except for Liens
permitted by this  Agreement and the other Loan  Documents.  Except as otherwise
expressly stated in the Loan Documents or permitted by this Agreement, the Liens
of the Loan Documents will constitute  valid and perfected first and prior Liens
on the  Property  described  therein,  subject  to no  other  Liens  whatsoever.
Borrower  and each  Subsidiary  of Borrower  possesses  all  permits,  licenses,
patents,  trademarks  and  copyrights  requited  to conduct  its  business.  All
casements,  rights-of-way  and other  rights  necessary  to maintain and operate
Borrower's Property have been obtained and are in full force and effect.

REGULATION U; BUSINESS PURPOSE 3.7 None of the proceeds of any Loan will be used
to purchase or carry, directly or indirectly,  any margin stock or for any other
purpose  which would make this credit a "purpose  credit"  within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System.  All Loans
will be used for business,  commercial,  investment or other similar purpose and
not  primarily  for  personal,   family,  or  household  use  or  primarily  for
agricultural  purposes as such terms are used in Chapter One of the Texas Credit
Code.

ENVIRONMENT  3.8 Borrower and each  Subsidiary  of Borrower  have  complied with
applicable  Legal  Requirements  in each  instance  in  which  any of them  have
generated,  handled, used, stored or disposed of any hazardous or toxic waste or
substance, on or off its premises (whether or not owned by any of them). Neither
Borrower nor any  Subsidiary of Borrower has any material  contingent  liability
for noncompliance  with  environmental or hazardous waste laws. Neither Borrower
nor any  Subsidiary  of Borrower  has  received any notice that it or any of its
Property or operations does not comply with, or that any Governmental  Authority
is investigating its compliance with, any environmental or hazardous waste laws.

INVESTMENT  COMPANY  ACT/PUBLIC UTILITY HOLDING COMPANY ACT 3.9 Neither Borrower
nor any Subsidiary of Borrower is an investment  company within the meaning of
the Investment Company Act of 1940 or a holding company or an affiliate of a
holding company or a public utility within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

STATEMENTS  BY OTHERS  3.10 All  material  written  statements  and  information
provided by or on behalf of Borrower, any Subsidiary of Borrower or any other of
the Parties in connection with any Loan Document  constitute the representations
and warranties of Borrower hereunder.

4.  AFFIRMATIVE  COVENANTS.  Borrower agrees to do, and if necessary cause to be
    done, and cause its Subsidiaries to do, each of the following:

CORPORATE  FUNDAMENTALS 4.1 (a) Pay when due all taxes and governmental  charges
of every kind upon it or against its  income,  profits or  Property,  unless and
only to the extent that the same shall be  contested  in good faith and adequate
reserves have been established  therefor;  (b)'and keep in full force and effect
all of its licenses,  permits and  franchises as may be reasonably  necessary to
conduct its business  properly and  efficiently;  (c) Do all things necessary to
preserve  its  corporate  existence  and its  qualifications  and  rights in all
jurisdictions  where such  qualification  is necessary or desirable;  (d)'Comply
with all applicable Legal  Requirements;  and (a) Protect,  maintain and keep in
good repair its Property and make all replacements and additions to its Property
as may be reasonably necessary to conduct its business properly and efficiently.

INSURANCE 4.2 Maintain insurance with such reputable financially sound insurers,
on such of its Property and personnel, in such amounts and against such risks as
is customary with similar Persons or as may be reasonably  required by Bank, and
furnish  Bank  satisfactory  evidence  thereof  promptly  upon  request.   These
insurance  provisions  are  cumulative of the insurance  provisions of the other
Loan  Documents.  Bank must be named as a beneficiary,  loss payee or additional
insured of such  insurance as its interest may appear and Borrower  must provide
Bank with copies of the policies of insurance and a  certificate  of the insurer
that the  insurance  required by this  section may not be  canceled,  reduced or
affected in any manner without 30 days' prior written notice to Bank.

FINANCIAL  INFORMATION/BORROWING  BASE REPORT 4.3 Furnish to Bank in Proper Form
(i)'the  financial  statements  prepared in conformity with GAAP on consolidated
and consolidating  bases and the other information  described in, and within the
times required by, Exhibit C. Reporting  Requirements,  Financial  Covenants and
Compliance  Certificate  attached hereto and  incorporated  herein by reference;
(ii) the Borrowing Base Report substantially in the form of, and within the time
required by, Exhibit A along with the other information required by Exhibit A to
be submitted;  (iii)'within the time required by Exhibit C, Exhibit C signed and
certified by the chief financial officer or president of Borrower; (iv) promptly
after such request is submitted to the appropriate  Governmental Authority,  any
request for waiver of funding  standards or extension  of  amortization  periods
with  respect to any  employee  benefit  plan;  (v)'copies  of  special  audits,
studies, reports and analyses prepared for the management of Borrower by outside
parties and (vi) such other information  relating to the financial condition and
affairs  of the  Borrower  and  guarantors  and their  Subsidiaries  as Bank may
request from time to time in its discretion.

MATTERS REQUIRING NOTICE 4.4 Notify Bank immediately,  upon acquiring  knowledge
of  (a)'the   institution   or   threatened   institution   of  any  lawsuit  or
administrative  proceeding  which,  if adversely  determined,  might  materially
adversely  affect  Borrower;  (b) any  material  adverse  change in the  assets,
liabilities, financial condition, business or affairs of Borrower; (c) any Event
of  Default;  or  (d) any  reportable  event or any  prohibited  transaction  in
connection with any employee benefit plan.

INSPECTION  4.5 Permit Bank and its  affiliates  to inspect and  photograph  its
Property,  to examine and copy its files, books and records,  and to discuss its
affairs with its officers and  accountants,  at such times and  intervals and to
such extent as Bank reasonably desires.

ASSURANCES  4.6  Promptly  execute and  deliver any and all further  agreements,
documents,  instruments,  and other  writings  that Bank may request to cure any
defect in the  execution  and  delivery  of any Loan  Document  or more fully to
describe  particular  aspects of the  agreements set forth or intended to be set
forth in the Loan Documents.

CERTAIN  CHANGES  4.7 Notify Bank at least 30 days prior to the date that any of
the Parties  changes its name or the location of its chief  executive  office or
principal place of business or the place where it keeps its books and records,

EXHIBIT C 4.8 Comply with each of the other  affirmative  covenants set forth in
         Exhibit C.

5.  NEGATIVE  COVENANTS.  The Borrower  will not, and no  Subsidiary of Borrower
will,  without  the prior  written  consent  of the Bank,  which  Bank  shall be
entitled to withhold in its sole and absolute  discretion (Bank agreeing that it
will respond in writing to each written request for such consent with reasonable
promptness):

INDEBTEDNESS  5.1 Create,  incur,  or permit to exist,  or assume or  guarantee,
directly  or  indirectly,  or become or  remain  liable  with  respect  to,  any
Indebtedness,  contingent  or otherwise,  unless there is a permitted  amount in
Exhibit C, except:  (a)'Indebtedness  to Bank, or secured by Liens  permitted by
this  Agreement,  or  otherwise  approved in writing by Bank,  and  renewals and
extensions (but not increases)  thereof-,  and (b)'current  accounts payable and
unsecured  current  liabilities,  not  the  result  of  borrowing,  to  vendors,
suppliers  and  Persons  providing  services,  for  expenditures  for  goods and
services  normally  required by it in the  ordinary  course of  business  and on
ordinary trade terms.

LIENS 5.2 Create or permit to exist any Lien upon any of its  Property now owned
or hereafter  acquired,  or acquire any Property  upon any  conditional  sale or
other title  retention  device or  arrangement  or any purchase  money  security
agreement;  or in any manner  directly or  indirectly  sell,  assign,  pledge or
otherwise transfer any of its accounts or other Property, unless as permitted in
Exhibit C, except:  (a)'Liens,  not for borrowed money,  arising in the ordinary
course of business;  (b)'Liens for taxes not  delinquent  or being  contested in
good faith by  appropriate  proceedings;  (e)'Liens in effect on the date hereof
and disclosed to Bank in writing, so long as neither the principal  Indebtedness
secured  thereby nor the Property  covered thereby  increases;  and (d) Liens in
favor of  Bank,  or  otherwise  approved  in  writing  by Bank.  Notwithstanding
anything  to the  contrary  herein,  Borrower  will not,  and no  Subsidiary  of
Borrower  will permit any Lien on any  inventory  that  secures the Loans unless
Bank shall provide Borrower with Bank's prior written consent.

FINANCIAL  AND OTHER  COVENANTS  5.3 Fail to comply with the required  financial
covenants and other covenants described, and calculated as set forth, in Exhibit
C. Unless otherwise  provided on Exhibit'C,  all such amounts and ratios will be
calculated:  (a)'on  the  basis  of  GAAP;  and  (b)'on  a  consolidated  basis.
Compliance with the requirements of Exhibit C will be determined as of the dates
of the financial statements to be provided to Bank.

CORPORATE  CHANGES  5.4 In any  single  transaction  or series of  transactions,
directly or indirectly:  (a)'liquidate  or dissolve;  (b)'sell or dispose of any
interest in any of its Subsidiaries,  or permit any of its Subsidiaries to issue
any additional equity other than to Borrower;  (c)'sell,  convey or lease all or
any substantial part of its assets, except for sale of inventory in the ordinary
course of business;  or (d)'permit any change in ownership of Borrower affecting
more than 49% of the stock ownership of Borrower (as of the Effective Date).

RESTRICTED  PAYMENTS  5.5 Unless  otherwise  provided  on Exhibit C, at any time
redeem, retire or otherwise acquire,  directly or indirectly,  any shares of its
capital stock or other equity interest.

NATURE OF  BUSINESS;  MANAGEMENT  5.6  Substantially  change  the  nature of its
business or enter into any business  which is  substantially  different from the
business in which it is presently engaged,  or permit any material change in its
management  (which shall be  understood to have occurred if more than one of the
persons who are  President,  Chief  Financial  Officer and the Vice President of
Finance of the Borrower are changed).

AFFILIATE  TRANSACTIONS  5.7 Enter into any  transaction  or agreement  with any
Affiliate  except  upon terms  substantially  similar to those  obtainable  from
wholly unrelated sources.

SUBSIDIARIES  5.8 Form,  create or acquire any Subsidiary;  except that Borrower
shall be permitted to do any of the foregoing in  compliance  with the covenants
in Exhibit C, if in advance of or substantially  simultaneously with such action
such Subsidiary shall execute a continuing guaranty of the Obligations in Proper
Form.

6.       EVENTS OF DEFAULT AND REMEDIES.
EVENTS OF DEFAULT 6.1  Each of the following is an "Event of Default":
(a) Any  Obligor  fails to pay any  principal  of or interest on the Note or any
other obligation under any Loan Document as and when due; or
(b) Any Obligor or any  Subsidiary  of  Borrower  fails to pay at  maturity,  or
within any applicable period of grace, any principal of or interest on any other
borrowed money obligation  (which shall not include any capital lease) in excess
of $100,000.00,  or fails to observe or perform any term,  covenant or agreement
contained in any agreement with respect to any such obligation; or
(c) Any representation or warranty made in connection with any Loan Document was
incorrect, false or misleading when made; or
(d)     Any Obligor violates any covenant contained in any Loan Document; or
(e) An event of default  occurs  under any other Loan  Document  and any cure or
grace  period  with  respect  to such  default  has  elapsed  with such  default
continuing; or
(f) Final  judgment  for the  payment of money over  $1,000,000.00  is  rendered
against  Obligor or any  Subsidiary of Borrower and remains  undischarged  for a
period of 30 days during which execution is not effectively stayed; or
(g) The making of any levy,  seizure,  garnishment,  sequestration or attachment
thereof or  thereon;  or the  uninsured  loss,  theft,  substantial  damage,  or
destruction of any material portion of Borrower's Property; or
(h) Any order is entered in any proceeding against Borrower or any Subsidiary of
Borrower  decreeing the dissolution,  liquidation or split-up thereof,  and such
order shall remain in effect for 30 days; or
(i) Any Obligor or any subsidiary of Borrower makes a general assignment for the
benefit  of  creditors  or  shall  petition  or apply  to any  tribunal  for the
appointment  of a  trustee,  custodian,  receiver  or  liquidator  of all or any
substantial  part of its  business,  estate  or  assets  or shall  commence  any
proceeding under any bankruptcy,  insolvency,  dissolution or liquidation law of
any  jurisdiction,  whether now or hereafter in effect;  or any such petition or
application shall be filed or any such proceeding shall be commenced against any
Obligor or any subsidiary of Borrower and the Obligor or such  subsidiary by any
act or omission shall indicate approval thereof, consent thereto or acquiescence
therein, or an order shall be entered appointing a trustee, custodian,  receiver
or liquidator of all or any substantial part of the assets of any Obligor or any
subsidiary  of Borrower or granting  relief to any Obligor or any  subsidiary of
Borrower or approving the petition in any such proceeding,  and such order shall
remain in effect  for more than 30 days;  or any  Obligor or any  subsidiary  of
Borrower  shall fail generally to pay its debts as they become due or suffer any
writ of  attachment  or execution or any similar  process to be issued or levied
against  it or any  substantial  part of its  property  which  is not  released,
stayed, handed or vacated within 30 days after its issue or levy; or
(j) Any Obligor or any  Subsidiary  of Borrower  conceals or removes any part of
its  Propeny,  with  intent to hinder,  delay or defraud  any of its  creditors:
(A)'makes or permits a transfer of any of its Property  which may be  fraudulent
under any  bankruptcy,  fraudulent  conveyance  or similar law; or (B)'makes any
unscheduled  transfer  of its  Property to or for the benefit of a creditor at a
time when  other  creditors  similarly  situated  have not been  paid;  or
(k) A material  adverse  change occurs in the assets,  liabilities  or financial
condition of any Obligor,  or any  Subsidiary  of Borrower,  which is reasonably
related to such  Obligor's  ability to perform  its  obligations  under the Loan
Documents and/or usability to avoid any Event of Default; or
(1) Any change  occurs in the  ownership  of  Borrower  other than as  expressly
permitted  by this  Agreement;  or (in) Any  Obligor  that is not an  individual
dissolves.

RIGHTS AND REMEDIES  6.2 If any Event of Default  defined in Section 6.1 occurs,
then Bank may do any or all of the following:  (1) declare the Obligations to be
immediately  due and payable  without notice of  acceleration or of intention to
accelerate, presentment and demand or protest, all of which are hereby expressly
waived;  (2)  without  notice  to any  Obligor,  terminate  the  Commitment  and
accelerate  the  Termination  Date;  (3) set  off,  in any  order,  against  the
indebtedness  of  Borrower  under the Loan  Documents  any debt owing by Bank to
Borrower (whether such debt is owed individually or jointly), including, but not
limited to, any deposit  account,  which right is hereby  granted by Borrower to
Bank; and (4) exercise any and all other rights  pursuant to the Loan Documents,
at law, in equity or otherwise.

CURE  PERIOD  FOR  CERTAIN  EVENTS  OF  DEFAULT  6.3  Notwithstanding  any other
provision of this Agreement or any other Loan Document to the contrary, the Bank
shall not take the actions  described in Section'6.2  during the Cure Period (as
defined  hereinafter),  with respect to:  (i)'any Event of Default  described in
section 6.1 (a) or (b) which consists of delay in making a payment of money;  or
(it) an Event of Default  described in section 6.1 (b) or (d) which  consists of
delay in delivering reports or documents; or (iii)'an Event of Default described
in section  6.1(d) which  consists of a curable  failure to maintain a financial
covenant  set out in  Exhibit  C Part C.  With  respect  to an Event of  Default
described in clause (i)'of the preceding sentence,  the "Cure Period" shall be 5
business days  beginning on the first day of the Event of Default.  With respect
to an Event of Default described in clause (it) or (in) of the first sentence of
this section, the "Cure Period" shall be 15 calendar days beginning on the first
day of the Event of  Default.  This  section  6.3 shall be void and of no effect
unless  Borrower shall,  to the extent  Borrower has actual  knowledge  thereof,
provide  prompt notices to Bank (in writing if requested by the Bank) of (x)'the
occurrence or expected occurrence of such Event of Default, with a certification
to Bank of Borrower's good faith expectation that such Event of Default shall be
cured by Borrower before the end of the Cure Period;  and (y)'the  occurrence of
Borrower's  cure of the  Event of  Default  before  the end of the Cure  Period,
During the Cure Period, an Event of Default shall be deemed to have occurred and
be  continuing  until  actually  cured by Borrower,  for all purposes  including
without  limitation  Section 2. 1(b) hereof If the Event of Default is not cured
before the end of the Cure Period,  Bank shall have all of the rights  described
in  Section'6.2  and each of the other Loan  Documents  without any  restriction
imposed by this section  whatsoever.  This  section  shall not restrict the Bank
from taking any remedy with respect to any Event of Default not specified in the
first sentence of this section.

REMEDIES  CUMULATIVE  6.4 No remedy,  right or power of Bank is exclusive of any
other remedy,  right or power now or hereafter existing by contract,  at law, in
equity, or otherwise, and all remedies, rights and powers are cumulative.

7.       MISCELLANEOUS.
NO WAIVER 7.1 No waiver of any  default or Event of Default  will be a waiver of
any other  default  or Event of  Default.  No failure  to  exercise  or delay in
exercising any right or power under any Loan Document will be a waiver  thereof,
nor shall any single or partial exercise of any such right or power preclude any
further or other  exercise  thereof or the exercise of any other right or power.
The making of any Loan during  either the  existence  of any default or Event of
Default,  or subsequent  to the  occurrence of an Event of Default will not be a
waiver of any such default or Event of Default.  No amendment,  modification  or
waiver of any Loan Document will be effective  unless the same is in writing and
signed by the Person  against  whom such  amendment,  modification  or waiver is
sought to be enforced.  No notice to or demand on any Person  shall  entitle any
Person  to  any  other  or  further   notice  or  demand  in  similar  or  other
circumstances.

NOTICES 7.2 All notices  required under the Loan  Documents  shall be in writing
and either  delivered  against  receipt  therefor,  or mailed by  registered  or
certified mail, return receipt requested,  in each case addressed to the address
shown on the  signature  page  hereof or to such  other  address  as a party may
designate. Except for the notices required by Section'2.1,  which shall be given
only upon  actual  receipt by Bank,  notices  shall be deemed to have been given
(whether  actually  received or not) when delivered (or, if mailed,  on the next
Business Day).

GOVERNING  LAW/ARBITRATION 7.3 (a)'UNLESS OTHERWISE SPECIFIED THEREIN, EACH LOAN
DOCUMENT IS GOVERNED BY TEXAS LAWS AND THE APPLICABLE  LAWS OF THE UNITED STATES
OF AMERICA.  To the maximum  extent  permitted by law, any  controversy or claim
arising out of or relating to the Loans or any Loan Document,  including but not
limited  to any claim  based on or arising  from an  alleged  tort or an alleged
breach of any agreement  contained in any of the Loan  Documents,  shall, at the
request of any party to the Loan or Loan  Documents  (either before or after the
commencement  of  judicial  proceedings),  be settled by  mandatory  and binding
arbitration in accordance with the Commercial  Arbitration Rules of the American
Arbitration  Association (the "AAA Rules") and pursuant to Title 9 of the United
States Code, or if Title 9 does not apply, the Texas General Arbitration Act. In
any  arbitration  proceeding:  (i)  all  statutes  of  limitations  which  would
otherwise be applicable  shall apply; and (it) the proceeding shall be conducted
in the city in which the  office of Bank  originating  the Loans is located by a
panel of three arbitrators. Arbitrators are empowered to resolve any controversy
by summary  rulings  substantially  similar to summary  judgments and motions to
dismiss.  Arbitrators  may order  discovery  conducted  in  accordance  with the
Federal  Rules of Civil  Procedures.  All  arbitrators  will be  selected by the
process  of  appointment  from a panel,  pursuant  to the AAA  Rules.  Any award
rendered in the arbitration  proceeding will be final and binding,  and judgment
upon any such award may be entered in any court having jurisdiction.  (b)'If any
party to the Loan or Loan  Documents  files a proceeding in any court to resolve
any controversy or claim,  such action will not constitute a waiver of the right
of such party or a bar to the right of any other party to seek arbitration under
the  provisions of this Section or that of any other claim or  controversy,  and
the court  shall,  upon motion of any party to the  proceeding,  direct that the
controversy  or claim be  arbitrated in  accordance  with this  Section.  (c) No
provision of, or the exercise of any rights  under,  this Section shall limit or
impair the right of any party to the Loan Documents before,  during or after any
arbitration  proceeding to:  (i)'exercise  self-help  remedies including but not
limited  to  setoff  or  repossession;  (ii)'foreclose  any Lien on or  security
interest in any  Collateral;  or  (iii)'obtain  relief from a court of competent
jurisdiction  to  prevent  the  dissipation,   damage,  destruction,   transfer,
hypothecation,  pledging or concealment of assets or Collateral  including,  but
not  limited  to  attachments,  garnishments,  sequestrations,  appointments  of
receivers,  injunctions  or other relief to preserve the status quo,  (d)'To the
maximum extent  permitted by applicable law and the AAA Rules,  neither Bank nor
any Obligor or any Affiliate, officer, director, employee, attorney, or agent of
either  shall have any  liability  with  respect  to, and Bank and each  Obligor
waives,  releases,  and agrees  not to sue any of them  upon,  any claim for any
special, indirect,  incidental and consequential damages suffered or incurred by
such Person in connection  with,  arising out of, or in any way related to, this
Agreement  or any of the other  Loan  Documents.  Each of Bank and each  Obligor
waives,  releases,  and agrees not to sue each other or any of their Affiliates,
officers,  directors,  employees,  attorneys,  or agents  for  consequential  or
punitive damages in respect of any claim in connection with,  arising out of, or
in my way related to, this Agreement or any of the other Loan Documents,  or any
of the  transactions  contemplated  by this  Agreement  or any of the other Loan
Documents.  Nothing contained herein, however, shall be construed as a waiver of
any Obligor's or the Bank's tight to compel  arbitration of disputes pursuant to
subparagraphs (a) and (b), above.

(e) Nothing  herein  shall be  considered  a waiver of the right or  protections
afforded Bank by 12 U.S.C.  9 1, Texas  Banking Code Art.  342-609 or anysimilar
statute.
(f) Each party agrees that any other party may proceed  against any other liable
Person,  jointly or  severally,  or against one or more of them,  less than all,
without impairing rights against any other liable Persons.  A party shall not be
required  to join the  principal  Obligor  or any other  liable  Persons  (e.g.,
sureties or  guarantors)  in any  proceeding  against  any  Person.  A party may
release or settle with one or more liable Persons as the party deems fit without
releasing or impairing right to proceed against any Persons not so released.

SURVIVAL; PARTIES BOUND; TERM OF AGREEMENT 7.4 All representations,  warranties,
covenants and agreements made by or on behalf of Borrower in connection with the
Loan  Documents  will survive the execution and delivery of the Loan  Documents;
will not be affected  by any  investigation  made by any  Person,  and will bind
Borrower and the  successors,  trustees,  receivers  and assigns of Borrower and
will  benefit  the  successors  and  assigns of the Bank;  provided  that Bank's
agreement  to make  Loans to  Borrower  will not  inure  to the  benefit  of any
successor or assign of Borrower.  Except as otherwise  provided herein, the term
of this  Agreement will be until the later of the final maturity of the Note and
the full and final payment of all Obligations and all amounts due under the Loan
Documents.

DOCUMENTARY  MATTERS 7.5 This  Agreement  may be  executed in several  identical
counterparts,  on separate  counterparts;  each  counterpart  will constitute an
original instrument,  and all separate  counterparts will constitute but one and
the same  instrument.  The headings and captions in the Loan Documents have been
included  solely for  convenience and should not be considered in construing the
Loan  Documents.  If any provision of any Loan  Document is invalid,  illegal or
unenforceable in any respect under any applicable law, the remaining  provisions
will remain  effective.  The Loans and all other obligations and indebtedness of
Borrower to Bank are entitled to the benefit of the Loan Documents.

EXPENSES 7.6 Upon the execution of this Agreement, Borrower agrees to pay Bank a
$500.00 fee for Bank's preparation,  negotiation and handling of this Agreement.
Following the execution of this Agreement,  Borrower agrees to pay on demand all
out-of-pocket expenses (including,  without limitation, the fees and expenses of
counsel for Bank) in connection with the  negotiation,  preparation,  execution,
filing, recording, modification,  supplementing and waiver of the Loan Documents
and the making,  servicing and collection of the Loans.  The  obligations of the
Borrower  under this and the following  section will survive the  termination of
this Agreement.

USURY  NOT  INTENDED  7.8  Borrower  and Bank  intend  to  conform  strictly  to
applicable usury laws. Therefore, the total amount of interest (as defined under
applicable law) contracted for, charged or collected under this Agreement or any
other Loan Document will never exceed the Highest Lawful Rate. If Bank contracts
for, charges or receives any excess interest,  it will be deemed a mistake. Bank
will  automatically  reform the Loan Document or charge to conform to applicable
law,  and if excess  interest  has been  received,  Bank will either  refund the
excess to  Borrower or credit the excess on any unpaid  principal  amount of the
Note or any other Loan  Document.  All  amounts  constituting  interest  will be
spread  throughout  the full term of the Loan  Document  or  applicable  Note in
determining whether interest exceeds lawful amounts.

NO COURSE OF DEALING 7.9 NO COURSE OF DEALING BY BORROWER  WITH BANK,  NO COURSE
OF PERFORMANCE AND NO TRADE PRACTICES OR OTHER EXTRINSIC  EVIDENCE OF ANY NATURE
MAY BE  USED  TO  CONTRADICT,  VARY,  SUPPLEMENT  OR  MODIFY  ANY  TERM  OF THIS
AGREEMENT.

8. DEFINITIONS.
Unless the context otherwise requires,  capitalized terms used in Loan Documents
and not defined  elsewhere shall have the meanings  provided by GAAP,  except as
follows:

Account  Debtor means any person in any way obligated on or in  connection  with
any  Account.  Affiliate  means,  as to any  Person,  any other  Person (a) that
directly  or  indirectly,  through  one or more  intermediaries,  controls or is
controlled by, or is under common control with, such Person;  (b)'that  directly
or indirectly  beneficially owns or holds five percent (5%) or more of any class
of voting stock of such Person;  or (c)'five  percent (5%) or more of the voting
stock of which  is  directly  or  indirectly  beneficially  owned or held by the
Person in question. The term "control" means to possess, directly or indirectly,
the power to direct the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise. Bank is not under any
circumstances to be deemed an Affiliate of Borrower or any of its  Subsidiaries.
Authority  Documents  means  certificates  of  authority  to transact  business,
certificates  of  good  standing,   borrowing   resolutions   (with  secretary's
certificate),  secretary's certificates of incumbency, and other documents which
empower and enable  Borrower  or its  representatives  to enter into  agreements
evidenced by Loan Documents or evidence such authority. Business Day means a day
when the main  office  of Bank is open for the  conduct  of  commercial  lending
business.  Corporation  means  corporations,   partnerships,  limited  liability
companies,  joint  ventures,  joint  stock  associations,  associations,  banks,
business trusts and other business entities.

Debt means all revolving,  term and other interest and non-interest bearing debt
from banks and other financial institutions excluding accounts payable and other
accruals.

EBITDA  means  Borrower's   earnings  before  interest,   taxes,   depreciation,
amortization and other Specified  Non-Cash  Charges.  Government  Accounts means
receivables  owed by the U.S.  government  or by the  government  of any  state,
county, municipality, or other political subdivision as to which Bank's security
interest or ability to obtain direct  payment of the proceeds is governed by any
federal  or  state  statutory  requirements  other  than  those  of the  Uniform
Commercial Code, including, without limitation, the Federal Assignment of Claims
Act of 1940, as amended.  Governmental  Authority means any foreign governments]
authority,  the United States of America, any state of the United States and any
political  subdivision  of any of the  foregoing,  and any  agency,  department,
commission, board, bureau, court or other tribunal having jurisdiction over Bank
or any Obligor,  or any  Subsidiary  of Borrower or their  respective  Property.
Highest Lawful Rate means the maximum  nonusurious rate of interest permitted to
be charged by  applicable  Federal or Texas law  (whichever  permits  the bigger
lawful  rate) from time to time in effect.  if Chapter  One of the Texas  Credit
Code  establishes  the  Highest  Lawful  Rate,  the  Highest  Lawful Rate is the
"indicated  rate  ceiling" as defined in that  Chapter.  Indebtedness  means and
includes (a) all items which in accordance  with GAAP,  would be included on the
liability side of a balance sheet on the date as of which  Indebtedness is to be
determined  (excluding  capital stock,  surplus,  surplus  reserves and deferred
credits);  it being  understood that operating lease  obligations and other such
obligations which under GAAP do not appear as liabilities on Borrower's  balance
sheet  are  not  Indebtedness;   (b)'all  guaranties,   endorsements  and  other
contingent  obligations  in  respect  of,  or any  obligations  to  purchase  or
otherwise acquire,  Indebtedness of others, and (e)'all  Indebtedness secured by
any  Lien  existing  on any  interest  of  the  Person  with  respect  to  which
indebtedness  is being  determined,  in  Property  owned  subject  to such Lien,
whether  or not  the  Indebtedness  secured  thereby  has  been  assumed.  Legal
Requirement means any law,  ordinance,  decree,  requirement,  order,  judgment,
rule,  regulation (or  interpretation of any of the foregoing) of, and the terms
of any license or permit issued by, any Governmental Authority.  Lien shall mean
any  mortgage,  pledge,  charge,  encumbrance,   security  interest,  collateral
assignment  or other lien or  restriction  of any kind,  whether based on common
law,  constitutional  provision,  statute or contract. Loan Documents means this
Agreement,   the   agreements,   documents,   instruments   and  other  writings
contemplated  by this  Agreement  or listed  on Annex 1, all other  assignments,
deeds,  guaranties,  pledges,  instruments,  certificates  and agreements now or
hereafter  executed or delivered to the Bank  pursuant to any of the  foregoing,
and  all  amendments,   modifications,   renewals,  extensions,   increases  and
rearrangements  of, and  substitutions  for, any of the  foregoing.  Obligations
means all principal,  interest and other amounts which are or become owing under
this Agreement, the Note or any other Loan Document.

Obligor  means each  Borrower  and any  guarantor,  surety,  co-signer,  general
partner or other  person who may now or hereafter be obligated to pay all or any
part of the Obligations.

   
Organizational  Documents means, with respect to a corporation,  the certificate
of incorporation, articles of incorporation and bylaws of such corporation; with
respect  to  a  limited  liability   company,   the  articles  of  organization,
regulations  and other  documents  establishing  such entity,  with respect to a
partnership,  joint venture, or trust, the agreement,  certificate or instrument
establishing   such  entity;  in  each  case  including  all  modifications  and
supplements  thereof  as of the  date of the  Loan  Document  referring  to such
Organizational  Document and any and all future modifications  thereof which are
consented to by Bank.  Parties means all Persons  other than Bank  executing any
Loan Document, Person means any individual,  Corporation,  trust, unincorporated
organization,  Governmental  Authority or any other form of entity.  Proper Form
means in form  and  substance  satisfactory  to the  Bank.  Property  means  any
interest  in any kind of  property or asset,  whether  real,  personal or mixed,
tangible or intangible. Specified Non-Cash Charges means all non-cash charges to
the Borrower's  income statement (not reflected as depreciation or amortization)
(a)'resulting  from stock option  transactions;  or (b)'as  agreed in writing by
Bank in its sole discretion, upon Borrower's request.
    

Subordinated  Debt means any Indebtedness  subordinated to Indebtedness due Bank
pursuant to a written subordination  agreement in Proper Form by and among Bank,
subordinated  creditor and Borrower  which at a minimum must  prohibit:  (a)'any
action by  subordinated  creditor which will result in an occurrence of an Event
of Default or default under this Agreement,  tire subordination agreement or the
subordinated Indebtedness; and (b)'upon the happening of any Event of Default or
default under any Loan Document, the subordination  agreement, or any instrument
evidencing  the  subordinated  Indebtedness  (i)'any  payment of  principal  and
interest on the  subordinated  Indebtedness;  (ii)'any act to compel  payment of
principal or interest on  subordinated  Indebtedness;  and  (iii)'any  action to
realize upon any Property securing the subordinated Indebtedness.

Subsidiary  means,  as to a particular  parent  Corporation,  any Corporation of
which 50% or more of the  indicia of equity  rights is at the time  directly  or
indirectly owned by such parent Corporation or by one or more Persons controlled
by, controlling or under common control with such parent Corporation.

THIS WRITTEN LOAN AGREEMENT  REPRESENTS THE FINAL AGREEMENT BETWEEN BANK AND THE
PARTIES AND MAY NOT BE  CONTRADICTED BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS,  OR
SUBSEQUENT ORAL AGREEMENTS OF BANK AND THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN BANK AND THE PARTIES.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.

BORROWER:           PSW TECHNOLOGIES, INC.

By: /s/ Patrick Motola

Name: Patrick Motola

Title: CFO, Sr. VP

BANK:               TEXAS COMMERCE BANK NATIONAL ASSOCIATION

By: /s/ Ralph T. Beasley

Name: Ralph T. Beasley

Title: Vice President

EXHIBIT'S                                                          ANNEXES
       A Borrowing Base Report                               I Loan Documents
       B Request for Loan                                    II Subsidiaries
       C Reporting Requirements, Financial Covenants,
         and Compliance Certificate