EXHIBIT 10.43




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                               SECURITY AGREEMENT

                          dated as of November 20, 1998

                                     between

                      PRIVATE LABEL ENERGY SERVICES, INC.,

                                    as Debtor

                                       and

                               NATIONSBANK, N.A.,

                                    as Agent
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                                    1565253






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                               SECURITY AGREEMENT

                  This  SECURITY  AGREEMENT,  dated as of November  20, 1998 (as
amended,  supplemented or modified from time to time, the "Security Agreement"),
is made by PRIVATE  LABEL ENERGY  SERVICES,  INC., a Delaware  corporation  (the
"Debtor"),  and NATIONSBANK,  N.A., a national banking association (the "Agent")
in its  capacity as Agent for the lenders  (the  "Lenders")  from time to time a
party to the  Revolving  Credit  Agreement,  dated as of  November  20, 1998 (as
amended,  supplemented  or otherwise  modified from time to time, the "Revolving
Credit Agreement"), by and among the Hagler Bailly, Inc., a Delaware corporation
(the "Company"), the Agent, in its capacity as such thereunder, and the Lenders.

                                               W I T N E S S E T H:

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

                  WHEREAS,  the Company owns,  directly or indirectly,  [all] of
the  issued  and  outstanding  shares of  capital  of stock of, or other  equity
interests in, the Debtor;

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

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

                  WHEREAS,  the  Company  is  required  to cause  the  Debtor to
execute  this  Agreement  pursuant to the  provisions  of the  Revolving  Credit
Agreement;

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

ARTICLE I.

                                               DEFINITIONS

Section  1.01.  Definitions  Generally.  Capitalized  terms used herein  without
definition shall have the respective  meanings specified in the Revolving Credit
Agreement,  and the  following  terms shall have the  following  meanings  (such
meanings to be, when  appropriate,  equally  applicable to both the singular and
plural forms of the terms defined):

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

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

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

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

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

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

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

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

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

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

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

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

                  "Patents"  shall mean all letters  patent of the United States
or any other  country,  and all  applications  for letters  patent of the United
States or any other  country,  in which the Debtor may now or hereafter have any
right, title or interest and all reissues, continuations,  continuations-in-part
or extensions thereof.

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

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

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

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

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

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

Section 1.02. UCC  Definitions.  The  uncapitalized  terms  "account",  "account
debtor",  "chattel paper",  "contract right",  "document",  "warehouse receipt",
"bill of  lading",  "document  of title",  "instrument",  "inventory",  "general
intangible",  "money",  "security",   "certificated  security",  "uncertificated
security",  "financial asset" and "proceeds" as used in Section 1.1 or elsewhere
in this Security  Agreement shall have the respective  meanings set forth in the
UCC.

ARTICLE II.

                                            SECURITY INTERESTS

Section  2.01.  Grant of  Security  Interests.  To secure  the due and  punctual
payment of all Obligations,  howsoever  created,  arising or evidenced,  whether
direct or indirect,  absolute or contingent, now or hereafter existing or due or
to become  due,  whether at  maturity  or upon  acceleration  or  otherwise,  in
accordance with the terms thereof and to secure the due and punctual performance
of all of the  Obligations  and in order to induce the Agent and the  Lenders to
enter into the Revolving  Credit Agreement and the other Credit  Documents,  the
Debtor hereby pledges,  assigns,  delivers,  conveys and transfers to the Agent,
for the ratable benefit of the Lenders, and grants to the Agent, for the ratable
benefit of the Lenders, a first priority and continuing security interest in and
lien on, all of the  Debtor's  right,  title and  interest  in, to and under the
following, whether now existing or hereafter acquired (the "Collateral"):

(i)      all Receivables;

(ii)     all Other Intangibles;

(iii)    all Equipment;

(iv)     all Inventory;

(v) to the  extent  not  included  in the  foregoing,  all  securities  (whether
certificated or uncertificated)  and all financial assets,  whether now existing
or hereafter arising, including, without limitation, all capital stock issued by
any Person and held by Debtor,  and all  partnership  interests,  whether in the
nature of a joint venture,  limited liability company member's interest,  master
limited partnership, teaming arrangement or otherwise;

(vi) to the extent not included in the foregoing,  all other personal  property,
whether  tangible or intangible,  and wherever located whether within or outside
of the United  States,  including,  but not  limited  to,  the  balance of every
deposit  account now or hereafter  existing of the Debtor with any bank or other
financial  institution and all monies of the Debtor and all rights to payment of
money of the Debtor;

(vii) to the extent not  included  in the  foregoing,  all  books,  ledgers  and
records and all computer  programs,  tapes,  discs, punch cards, data processing
software,  transaction  files,  master  files and  related  property  and rights
(including computer and peripheral equipment) necessary or helpful in enforcing,
identifying or establishing any item of Collateral; and

(viii) to the extent not otherwise included, all Proceeds and products of any or
all of the foregoing, whether existing on the date hereof or arising hereafter;

provided,  however,  notwithstanding  anything to the contrary contained herein,
the  Debtor is not  assigning,  pledging  or  otherwise  encumbering  under this
Security Agreement its interests in any Federal Contract to which it is a party,
or in accounts or receivables due to Debtor under such Federal Contract,  to the
extent,  but only to the extent,  such assignment,  pledge or other  encumbrance
would  breach or violate or would cause Debtor to breach or violate such Federal
Contract or statutes or regulations applicable thereto, it being understood that
this proviso does not apply to, or in any way limit, Debtor's assignment, pledge
or encumbrance of Proceeds of all Federal Contracts to which it is a party.

Section  2.02.  Continuing  Liability  of the  Debtor.  Anything  herein  to the
contrary notwithstanding,  the Debtor shall remain liable to observe and perform
all the  terms and  conditions  to be  observed  and  performed  by it under any
contract,   agreement,   warranty  or  other  obligation  with  respect  to  the
Collateral;  and  shall do  nothing  to impair  the  security  interests  herein
granted.  The Agent shall not have any  obligation  or liability  under any such
contract,  agreement, warranty or obligation by reason of or arising out of this
Security  Agreement  or the receipt by the Agent of any payment  relating to any
Collateral,  nor shall the Agent be  required  to perform or fulfill  any of the
obligations of the Debtor with respect to the Collateral, to make any inquiry as
to the nature or sufficiency of any payment received by it or the sufficiency of
the  performance  of any party's  obligations  with  respect to any  Collateral.
Furthermore,  the  Agent  shall not be  required  to file any claim or demand to
collect any amount due or to enforce the performance of any party's  obligations
with respect to, the Collateral.

Section 2.03.     Sales and Collections.

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

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

Section 2.04.     Segregation of Proceeds.

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

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

Section 2.05.  Verification  of  Receivables.  The Agent shall have the right to
make test  verifications of Receivables in any reasonable manner and through any
medium that it considers  advisable,  and the Debtor  agrees to furnish all such
assistance and  information  as the Agent may  reasonable  require in connection
therewith.  The Debtor at its expense will cause its chief financial  officer to
furnish to the Agent at any reasonable  time and from time to time promptly upon
the Agent's reasonable request,  the following reports:  (i) a reconciliation of
all Receivables, (ii) an aging of all Receivables, (iii) trial balances and (iv)
a test verification of such Receivables as the Agent may request.

Section 2.06.     Release of Collateral.

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

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

ARTICLE III.

                                      REPRESENTATIONS AND WARRANTIES

         The Debtor represents and warrants that:

Section 3.01. Title to Collateral.  Except for the security interests granted to
the Agent  pursuant to this  Security  Agreement  and as otherwise  permitted by
Section 6.2(a) of the Revolving Credit  Agreement,  the Debtor is the sole owner
of each item of the Collateral,  having good and marketable title thereto,  free
and clear of any and all Liens.

Section 3.02.     Validity, Perfection and Priority of Security Interests.

(a) By complying  with Section 4.1 hereof,  the Debtor will have created a valid
security  interest in favor of the Agent in all existing  Collateral  and in all
identifiable  Proceeds of such  Collateral,  which security  interest (except in
respect of  Collateral  not located at a facility  identified  on  Schedule  3.7
hereto  and motor  vehicles  for  which the  exclusive  manner of  perfecting  a
security interest therein is by noting such security interest in the certificate
of title in accordance with local law) would be prior to the claims of a trustee
in bankruptcy under Section 544(a) of the Bankruptcy Code. Continuing compliance
by the Debtor  with the  provisions  of Section  4.2 hereof will also (i) create
valid security interests in all Collateral acquired after the date hereof and in
all  identifiable  Proceeds  of such  Collateral  and (ii) cause  such  security
interests in all Collateral and in all Proceeds which are (A) identifiable  cash
Proceeds of  Collateral  covered by  financing  statements  required to be filed
hereunder,  (B)  identifiable  Proceeds  in  which a  security  interest  may be
perfected  by such  filing  under  the UCC and  (C)  any  Proceeds  in the  Cash
Collateral Account to be duly perfected under the UCC, in each case prior to the
claims of a trustee in bankruptcy  under the Bankruptcy  Code (except in respect
of Collateral not located at a facility identified on Schedule 3.5 hereto).

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

Section 3.03.  Enforceability of Receivables and Other Intangibles.  To the best
knowledge of the Debtor,  each  Receivable  and Other  Intangible is a valid and
binding obligation of the related Account Debtor in respect thereof, enforceable
in accordance with its terms,  except as such  enforceability  may be limited by
applicable bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
affecting  the  enforcement  of  creditors'  rights  generally  and  by  general
provisions of equity (regardless of whether such enforceability is considered in
a  proceeding  in equity or at law),  and  complies  with any  applicable  legal
requirements.

Section 3.04.  Place of Business.  Schedule 3.4  correctly  sets forth the chief
executive  office and principal  place of business of the Debtor and the offices
of the Debtor where records  concerning  Receivables  and Other  Intangibles are
kept.

Section 3.05.  Location of  Collateral.  Schedule 3.5  correctly  sets forth the
location of all Equipment and Inventory,  other than rolling stock, aircraft and
goods in transit.  Except as otherwise  specified in Schedule 3.5, all Inventory
and Equipment  has been located at the address  specified on Schedule 3.5 at all
times during the  four-month  period prior to the date hereof while owned by the
Debtor.  All Inventory has been and will be produced in compliance with the Fair
Labor Standards Act, 29 U.S.C.  ss.ss.  201-219,  except for such non-compliance
which could not reasonably be expected to have a material  adverse effect on the
Debtor. No Inventory is evidenced by a negotiable  document of title,  warehouse
receipt  or bill of  lading.  No  non-negotiable  document  of title,  warehouse
receipt or bill of lading has been  issued to any person  other than the Debtor,
and the Debtor has retained possession of all of such non-negotiable  documents,
warehouse receipts and bills of lading. No amount payable under or in connection
with  any  of  the  Collateral  is  evidenced  by  promissory   notes  or  other
instruments.

Section 3.06.  Trade Names.  Schedule 3.6 correctly sets forth any and all trade
names,  division  names,  assumed  names or other  names  under which the Debtor
currently  transacts  business or has transacted  business within the four-month
period prior to the date hereof.

          Section 3.07.  Patents and  Trademarks.  Schedule 3.7  correctly  sets
          forth all Patents, Patent licenses,  Trademarks and Trademark licenses
          now owned by the Debtor.

ARTICLE IV.

                                                COVENANTS

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

Section 4.01. Perfection of Security Interests. The Debtor will, at its expense,
cause all filings and recordings and other actions  specified on Schedule 4.1 to
have been completed on or prior to the Effective Date.

Section 4.02.     Further Actions.

(a) At all times after the date hereof, the Debtor will, at its expense,  comply
with the following:

(i) as to all Receivables,  Other Intangibles,  Equipment and Inventory, it will
cause UCC financing statements and continuation statements to be filed and to be
on file in all  applicable  jurisdictions  as required  to perfect the  security
interests  granted to the Agent  hereunder,  to the extent that  applicable  law
permits perfection of a security interest by filing under the UCC;

(ii)  as to all  Proceeds,  it  will  cause  all UCC  financing  statements  and
continuation  statements  filed in accordance with clause (i) above to include a
statement or a checked box  indicating  that Proceeds of all items of Collateral
described herein are covered;

(iii) as to any amount payable under or in connection with any of the Collateral
which  shall  be or  shall  become  evidenced  by any  promissory  note or other
instrument,  the  Debtor  will  promptly  (but in no event  later  than ten (10)
Business Days after receipt of such note or instrument), pledge and deliver such
note or other  instrument to the Agent as part of the Collateral,  duly endorsed
in a manner reasonably satisfactory to the Agent;

(iv) at the request of the Agent,  the Debtor shall deliver all other Collateral
consisting  of  certificated  securities,  endorsed  for  transfer  in a  manner
reasonably  satisfactory  to the Agent (or  execute  a  securities  intermediary
account  control  agreement  to the  extent  possession  by the  Agent  of  such
securities is not feasible); and

(v) as to all Patents,  Patent licenses,  Trademarks or Trademark licenses,  the
Debtor will effect the recordation or renewal of the recordation of the security
interests of the Agent therein so as to maintain  valid and  perfected  security
interests therein under all applicable state and federal laws.

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

Section 4.03. Change of Name, Identity or Structure.  The Debtor will not change
its name, identity or corporate structure in any manner and, except as set forth
on  Schedule  3.6,  will not conduct its  business  under any trade,  assumed or
fictitious  name unless it shall have given the Agent at least  forty-five  (45)
days'  prior  written  notice  thereof  and shall have taken all action (or made
arrangements to take such action  substantially  simultaneously with such change
if it is  impossible  to take such action in advance)  necessary  or  reasonably
requested  by the  Agent  to  amend  any  financing  statement  or  continuation
statement relating to the security interests granted hereby in order to preserve
such  security  interests  and to  effectuate  or maintain the priority  thereof
against all Persons.

Section 4.04.  Place of Business and Collateral.  The Debtor will not change the
location of (i) its places of business, (ii) its chief executive office or (iii)
the  office or other  locations  where it keeps or holds any  Collateral  or any
records relating thereto from the applicable  location listed on Schedule 3.4 or
3.5 unless,  prior to such change, it notifies the Agent forty-five (45) days in
advance of such change,  makes all UCC filings required by Section 4.2 and takes
all other action necessary or that the Agent may reasonably request to preserve,
perfect,  confirm and protect the security  interests granted hereby. The Debtor
will in no event  change the  location of any  Collateral  if such change  would
cause the security  interest granted hereby in such Collateral to lapse or cease
to be  perfected.  The Debtor  will at all times  maintain  its chief  executive
office within one of the forty-eight contiguous states in which Article 9 of the
uniform commercial code is in effect.

Section  4.05.  Fixtures.  The Debtor will not permit any  Equipment to become a
fixture  unless it shall  have  given the  Agent at least ten (10)  days'  prior
written  notice  thereof and shall have taken all such action and  delivered  or
caused to be delivered to the Agent all  instruments  and documents,  including,
without  limitation,  waivers and subordination  agreements by any landlords and
mortgagees, and filed all financing statements necessary or reasonably requested
by the Agent, to preserve and protect the security  interest  granted herein and
to effectuate or maintain the priority  thereof  against all Persons;  provided,
however,  that,  so long as no Event of  Default or  Potential  Event of Default
shall have  occurred  and be  continuing,  the Debtor  shall not be obligated to
comply with the provisions of this Section 4.5 with respect to the first $50,000
of Equipment (determined based on the then fair market value thereof).

Section 4.06.  Maintenance of Records.  The Debtor will keep and maintain at its
own cost and expense complete books and records relating to the Collateral which
are satisfactory to the Agent  including,  without  limitation,  a record of all
payments received and all credits granted with respect to the Collateral and all
of its other  dealings with the  Collateral.  The Debtor will mark its books and
records pertaining to the Collateral to evidence this Security Agreement and the
security interests granted hereby.  For the Agent' further security,  the Debtor
agrees  that the Agent  shall  have a special  property  interest  in all of the
Debtor's  books and records  pertaining to the  Collateral  and the Debtor shall
deliver  and  turn  over any  such  books  and  records  to the  Agent or to its
representatives at any time on demand of the Agent.

Section  4.07.  Compliance  with Laws The  Debtor  will  comply in all  material
respects with all acts, rules,  regulations,  orders,  decrees and directions of
any government or any state or local government  applicable to the Collateral or
any part  thereof or to the  operation of the  Debtor's  business  except to the
extent that the failure to comply  would not have a material  adverse  effect on
the  financial or other  condition of the Debtor;  provided,  however,  that the
Debtor may contest any act, rule, regulation,  order, decree or direction in any
reasonable  manner which shall not, in the sole opinion of the Agent,  adversely
affect the Agent's  rights or, in the case of  Collateral  located at a facility
identified on Schedule 3.7 hereto,  the first priority of its security  interest
in the Collateral.

Section 4.08. Payment of Taxes. The Debtor will pay promptly when due all taxes,
assessments and governmental charges or levies imposed upon the Collateral or in
respect of its income or  profits  therefrom,  as well as all claims of any kind
(including claims for labor, materials and supplies), except that no such charge
need be paid if (i) the  validity  thereof is being  contested  in good faith by
appropriate  proceedings and (ii) such charge is adequately  reserved against in
accordance  with  generally  accepted  accounting  principles,  as  consistently
applied.

Section 4.09.  Compliance with Terms of Accounts and Contracts.  The Debtor will
perform and comply in all material  respects with all of its  obligations  under
all agreements  relating to the Collateral to which it is a party or by which it
is bound.

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

Section 4.11. Limitations on Modifications of Receivables and Other Intangibles;
No Waivers or Extensions.  The Debtor will not (i) amend,  modify,  terminate or
waive any  provisions  of any material  Receivable  or Other  Intangible  in any
manner which might, when taken together with all such other Receivables or Other
Intangibles,  respectively,  materially  reduce the value of all  Receivables or
Other  Intangibles,  respectively,  in the  Collateral,  (ii)  fail to  exercise
promptly and  diligently  each and every  material right which it may have under
each  Receivable  and Other  Intangible  or (iii) fail to deliver to the Agent a
copy of each material demand,  notice or document received by it relating in any
way to any Receivable or Other Intangible.

Section  4.12.   Maintenance  of  Insurance.   The  Debtor  will  maintain  with
financially   sound  insurance   companies   licensed  to  do  business  in  the
jurisdictions  in which the  Collateral  is located  insurance  policies  on the
Inventory and Equipment in accordance  with the  provisions of Section 6.1(m) of
the Revolving Credit Agreement.

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

Section 4.14. Further  Identification of Collateral.  The Debtor will furnish to
the Agent from time to time  statements and schedules  further  identifying  and
describing  the  Collateral  and  such  other  reports  in  connection  with the
Collateral as the Agent may reasonably request. The Debtor shall promptly notify
the Agent if the value of the Collateral located at the facilities identified on
Schedule 3.7 hereto is less than 80% of the value of all of the Collateral.

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

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

Section 4.17.     Right of Inspection.

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

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

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

Section 4.19.     Covenants Regarding Patent and Trademark Collateral.

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

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

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

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

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

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

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

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

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

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

ARTICLE V.

                                      REMEDIES; RIGHTS UPON DEFAULT

Section 5.01. UCC Rights.  In the event that any portion of the  Obligations has
been declared or becomes due and payable in accordance with the Revolving Credit
Agreement or other Credit  Documents and such  Obligations have not been paid in
full,  the Agent may in addition to all other rights and remedies  granted to it
in this Security  Agreement and in any other  instrument or agreement  securing,
guarantying,  evidencing or relating to the Obligations, exercise (i) all rights
and  remedies of a secured  party under the UCC (whether or not in effect in the
jurisdiction  where  such  rights  are  exercised)  and  (ii) all  other  rights
available to the Agent at law or in equity.

          Section 5.02.  Payments on Collateral.  Without limiting the rights of
          the Agent under any other provision of this Security Agreement,  if an
          Event of Default shall occur and be continuing:

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

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

Section 5.03.  Possession of Collateral.  In  furtherance of the foregoing,  the
Debtor  expressly  agrees  that,  if an  Event of  Default  shall  occur  and be
continuing, the Agent may (i) by judicial powers, or without judicial process if
it can be done without breach of the peace, enter any premises where any of such
Collateral is or may be located and,  without  charge or liability to the Agent,
seize and remove such  Collateral from such premises and (ii) have access to and
use of the Debtor's books and records relating to such Collateral.

Section 5.04.     Sale of Collateral; Notice.

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

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

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

Section 5.05.  Rights of Purchasers.  Upon any sale of the  Collateral  (whether
public or  private),  the Agent  shall  have the right to  deliver,  assign  and
transfer  to the  purchaser  thereof  the  Collateral  so sold.  Each  purchaser
(including  the  Agent)  at any such  sale  shall  hold the  Collateral  so sold
absolutely,  free from any claim or right of whatever kind, including any equity
or right of redemption of the Debtor who, to the extent permitted by law, hereby
specifically waives all rights of redemption, including, without limitation, any
right to redeem the Collateral  under Section 9-506 of the UCC, and any right to
a judicial or other stay or approval  which it has or may have under any law now
existing or hereafter adopted.

Section 5.06.     Additional Rights of the Agent.

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

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

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

Section 5.07.     Remedies Not Exclusive, etc.

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

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

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

Section 5.08.     Waiver and Estoppel.

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

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

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

Section 5.09.     Power of Attorney; Powers Coupled With An Interest.

(a) Power of Attorney.  Without limiting any other right granted hereunder,  the
Debtor hereby irrevocably constitutes and appoints the Agent, with full power of
substitution,  as its true and  lawful  attorney-in-fact  with full  irrevocable
power and  authority in the place and stead of the Debtor and in the name of the
Debtor  or in its  own  name,  from  time  to  time  in the  Agent's  reasonable
discretion,  for the  purpose  of  carrying  out  the  terms  of  this  Security
Agreement,  to take any and all  appropriate  action and to execute  any and all
documents and instruments  which may be necessary or desirable to accomplish the
purpose of this Security  Agreement and,  without limiting the generality of the
foregoing,  hereby gives the Agent the power and right, on behalf of the Debtor,
without notice to or assent by the Debtor, to do the following:

          (i) to pay or  discharge  taxes,  liens,  security  interests or other
          encumbrances levied or placed on or threatened against the Collateral;

(ii) to effect  any  repairs  or any  insurance  called for by the terms of this
Security  Agreement or any other Credit Document,  and to pay all or any part of
the premiums therefor and the costs thereof;

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

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

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

          Section 5.11.  Application of Monies.  The proceeds of any sale of, or
          other  realization  upon, all or any part of the  Collateral  shall be
          applied by the Agent in the following order of priority:

                  first,  to  payment  of the  expenses  of such  sale or  other
realization,  including reasonable  compensation to the Agent and its agents and
counsel,  and all  expenses,  liabilities  and advances  incurred or made by the
Agent, its agents and counsel in connection  therewith or in connection with the
care, safekeeping or otherwise of any or all of the Collateral;

          second, to payment of the Obligations,  in such order as the Agent may
          elect; and

                  third, any surplus then remaining shall be paid to the Debtor,
or its  successors  or assigns,  or to  whomsoever  may be lawfully  entitled to
receive the same (including  pursuant to Section 9-504(1)(C) of the UCC) or as a
court of competent jurisdiction may direct.

ARTICLE VI.

                                              MISCELLANEOUS

Section 6.01. Notices. All notices, requests and other communications to a party
hereunder  shall be in writing  and shall be given to such party at its  address
set forth on the  signature  page hereof or such other address as such party may
hereafter  specify for that  purpose by notice to the other.  Each such  notice,
request or other  communication shall be effective (i) in the case of telephonic
notice (to the extent  expressly  permitted  hereunder),  when made, (ii) in the
case of notice delivered by overnight  express  courier,  one Business Day after
the Business Day such notice was delivered to such courier, (iii) in the case of
notice  delivered by first class mail, three Business Days after being deposited
in the mail,  postage  prepaid,  return receipt  requested,  (iv) in the case of
notice by hand,  when  delivered,  or (v) in the case of notice by any customary
means of telecommunication, when sent provided confirmation of receipt or answer
back has been  received,  in each  case if  addressed  to any  party  hereto  as
provided  herein.  Rejection or refusal to accept,  or the  inability to deliver
because of a changed address of which no notice was given,  shall not affect the
validity of notice given in accordance with this section.

Section 6.02.  No Waiver;  Cumulative  Remedies.  The Agent shall not by any act
(except by a written  instrument  pursuant  to Section  6.3 hereof) be deemed to
have waived any right or remedy hereunder. No failure to exercise, nor any delay
in exercising,  on the part of the Agent any right, power or privilege hereunder
shall operate as a waiver thereof.  No single or partial  exercise of any right,
power or  privilege  hereunder  shall  preclude  any other or  further  exercise
thereof or the exercise of any other right, power or privilege.  A waiver by the
Agent  of any  right  or  remedy  hereunder  on any one  occasion  shall  not be
construed as a bar to any right or remedy which the Agent would  otherwise  have
on any future occasion.  The rights and remedies herein provided are cumulative,
may be  exercised  singly or  concurrently  and are not  exclusive  of any other
rights or remedies provided by law.

Section 6.03.  Amendments  and Waivers.  None of the terms or provisions of this
Security Agreement may be amended,  supplemented or otherwise modified except by
a written  instrument  executed by the Debtor and the Agent;  provided  that any
provision of this  Security  Agreement may be waived by the Agent in a letter or
agreement  executed by the Agent or by telex or facsimile  transmission from the
Agent.

Section 6.04.  Successors and Assigns. The provisions of this Security Agreement
shall be binding  upon and inure to the benefit of the parties  hereto and their
respective  successors and assigns;  provided,  however, that the Debtor may not
assign or transfer any of its rights or obligations  hereunder without the prior
written consent of the Agent.

          Section 6.05. Governing Law. THIS SECURITY AGREEMENT SHALL BE GOVERNED
          BY AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE  COMMONWEALTH  OF
          VIRGINIA,  OTHER  THAN ITS LAWS  RESPECTING  CHOICE OF LAW OTHER  THAN
          THOSE CONTAINED IN THE UCC.

Section 6.06.     Limitation by Law; Severability.

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

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

Section  6.07.  Counterparts.  This  Security  Agreement  may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each complete set of which, when so executed and delivered by all parties, shall
be an original,  but all such counterparts shall together constitute but one and
the same instrument.

Section 6.08. Expenses of the Agent. The Debtor shall pay to the Agent from time
to time upon demand,  all of the costs and expenses incurred by the Agent or any
Lender (including,  without limitation, the reasonable fees and disbursements of
counsel  and any  amounts  payable  by the  Agent or any  Lender to any of their
respective   agents)  (i)  arising  in  connection   with  the   administration,
modification, amendment, waiver or termination of this Security Agreement or any
document or agreement  contemplated hereby or any consent or waiver hereunder or
thereunder  or (ii)  incurred  in  connection  with the  administration  of this
Security  Agreement,  or any document or agreement  contemplated  hereby,  or in
connection  with the  administration,  sale or other  disposition  of Collateral
hereunder  or  under  any  document  or  agreement  contemplated  hereby  or the
preservation,  protection or defense of the rights of the Agent or any Lender in
and to the Collateral.

Section  6.09.  Indemnification.   The  Debtor  shall  at  all  times  hereafter
indemnify, hold harmless and, on demand, reimburse the Agent and the Lenders and
their  respective  subsidiaries,   affiliates,  successors,  assigns,  officers,
directors,   employees  and  agents,  and  their  respective  heirs,  executors,
administrators, successors and assigns (all of the foregoing parties, including,
but not limited to, the Agent, being hereinafter collectively referred to as the
"Indemnities" and individually as an "Indemnitee") from, against and for any and
all liabilities,  obligations,  claims, damages, actions,  penalties,  causes of
action, losses, judgments, suits, costs, expenses and disbursements,  including,
without  limitation,  attorney's  fees  (any  and  all  of the  foregoing  being
hereinafter  collectively referred to as the "Liabilities" and individually as a
"Liability")  which  the  Indemnitees,  or  any  of  them,  might  be or  become
subjected, by reason of, or arising out of the preparation, execution, delivery,
modification,  administration  or enforcement  of, or performance of the Agent's
rights  under,  this  Security  Agreement or any other  document,  instrument or
agreement  contemplated  hereby or executed in  connection  herewith;  provided,
however, that the Debtor shall not be liable to any Indemnitee for any Liability
caused solely by the gross negligence or willful  misconduct of such Indemnitee.
In no event shall any  Indemnitee,  as a condition to enforcing its rights under
this Section 6.9 or  otherwise,  be obligated to make a claim  against any other
Person (including,  without  limitation,  the Agent) to enforce its rights under
this Section 6.9.

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

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

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

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

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



<PAGE>


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

Address:                                    PRIVATE LABEL ENERGY
77 Franklin Street                                   SERVICES, INC.
Suite 600
Boston, MA  02110                       By:      /s/ Glenn J. Dozier___________
Attention:  Glenn J. Dozier                          Name:  Glenn J. Dozier
Phone:  (617)  423-0545                            Title:  Senior Vice President
Fax:  (617) 422-0694                                 and Chief Financial Officer


Address:                                    NATIONSBANK, N.A.
8300 Greensboro Drive
Suite 550                                    By:      /s/ James W. Gaittens_____
McLean, Virginia  22102                      Name:  James W. Gaittens
Attention:  James W. Gaittens                Title:  Senior Vice President
Phone:  (703) 761-8405
Fax: (703) 917-0519





<PAGE>






                                  Schedule 3.4
                       PRIVATE LABEL ENERGY SERVICES, INC.
                                Place of Business

                               77 Franklin Street
                                    Suite 600
                           Boston, Massachusetts 02110





                                     <PAGE>


                                  Schedule 3.5

PRIVATE LABEL ENERGY SERVICES

                                              Location of Collateral


                               77 Franklin Street
                                    Suite 600
                           Boston, Massachusetts 02110



                                     <PAGE>


                                  Schedule 3.6
                       PRIVATE LABEL ENERGY SERVICES, INC.
                              Trade/Division Names

Private Label Energy Services, Inc.
Private Label Energy Services
PLES f/k/a HB Energy, Inc.









                                     <PAGE>


                                  Schedule 3.7
                       PRIVATE LABEL ENERGY SERVICES, INC.
                          Primary Collateral Locations

                               77 Franklin Street
                                   Suite 600
                          Boston, Massachusetts 02110








<PAGE>


                                  Schedule 3.8
                       PRIVATE LABEL ENERGY SERVICES, INC.
                             Patents and Trademarks

                                     None.






                                     <PAGE>


                                  Schedule 4.1



                          PRIVATE ENERGY SERVICES, INC.

                                   UCC FILINGS



None.