EXHIBIT 10.31








                                                    $50,000,000
                                            REVOLVING CREDIT AGREEMENT

                                                      between

                                               Hagler Bailly, Inc.,
                                                    as Borrower

                                                        and

                                               The Lenders From Time
                                              To Time a Party Hereto,
                                                    as Lenders


                                                       with


                                                NationsBank, N.A.,
                                                     as Agent



                                           Dated as of November 20, 1998






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72



                                            REVOLVING CREDIT AGREEMENT

                  This REVOLVING CREDIT AGREEMENT, dated as of November 20, 1998
(as  amended,  modified,  or  otherwise  supplemented  from  time to  time,  the
"Agreement"),  is between (i) HAGLER BAILLY,  INC., a Delaware  corporation (the
"Borrower"), (ii) THE LENDERS FROM TIME TO TIME A PARTY TO THIS AGREEMENT (each,
a "Lender" and,  collectively,  the  "Lenders") and (iii)  NATIONSBANK,  N.A., a
national  banking  association  and in its  separate  capacity  as agent for the
Lenders hereunder (in such capacity, the "Agent").

                                               W I T N E S S E T H:
                  WHEREAS,  the  Borrower  has  requested  the  Lenders  to make
available  to the  Borrower a revolving  line of credit for loans and letters of
credit  up to an  aggregate  of  $50,000,000  for  general  corporate  purposes,
including  financing  the general  working  capital  requirements  and permitted
acquisitions of the Borrower (the "Permitted Uses"), in each case upon the terms
and subject to the conditions set forth herein;

                  WHEREAS,  to induce  the  Lenders  and the Agent to enter into
this Agreement,  and as a condition to the obligations of the Lenders  hereunder
becoming  effective on the Effective  Date, (i) the Borrower has agreed to enter
into the  Borrower  Security  Agreement  with the Agent,  pursuant  to which the
Borrower  shall grant to the Agent,  for the ratable  benefit of the Lenders,  a
first priority lien on and security interest in the Borrower's assets,  (ii) the
Borrower has agreed to cause certain  subsidiaries of the Borrower to enter into
respective Subsidiary Security Agreements with the Agent, pursuant to which such
subsidiaries shall grant to the Agent, for the ratable benefit of the Lenders, a
first priority lien on and security interest in such  subsidiaries'  assets, and
(iii) the  Borrower has agreed to cause  certain  domestic  subsidiaries  of the
Borrower  to enter into the  Subsidiary  Guarantee  with the Agent,  pursuant to
which such subsidiaries shall guarantee to the Agent, for the ratable benefit of
the Lenders, the obligations of the Borrower hereunder;

                  WHEREAS,  as a further inducement to cause the Lenders and the
Agent to enter into this  Agreement,  the  Borrower  has agreed,  subject to the
terms and conditions  contained  herein, to from time to time pledge or cause to
be pledged to the Agent,  for the  ratable  benefit of the  Lenders,  65% of the
outstanding  shares of capital  stock of  certain  Foreign  Subsidiaries  of the
Borrower;

                  WHEREAS,  the  Lenders are willing to make the loans and issue
the  letters  of credit to the  Borrower,  and the  Agent is  willing  to act as
"Agent" in connection  therewith,  upon the terms and subject to the  conditions
and provisions set forth herein; and

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
mutual covenants and agreements herein contained,  the Borrower, the Lenders and
the Agent hereby agree as follows:

ARTICLE I.

                                     DEFINITIONS AND ACCOUNTING TERMS

         Section 1.01  Definitions.  As used in this  Agreement,  and unless the
context  requires  a  different  meaning,  the  following  terms  shall have the
meanings indicated (such meanings to be, when appropriate, equally applicable to
both the singular and plural forms of the terms defined):

                  "ABR"  means,  for any day,  the greater of (x) the Bank Prime
         Rate as in  effect  on such day and (y) the  Federal  Funds  Rate as in
         effect on such day plus one-half of 1%.

                  "ABR Loan"  shall mean any  Revolving  Loan  bearing  interest
based on the ABR.

                  "Accumulated  Funding  Deficiency" has the meaning ascribed to
that term in ERISA Section 302.

                  "Acquisition   Consideration"   shall   mean   the   aggregate
         consideration  paid  for  any  Acquisition  Party,   including  without
         limitation all cash, cash equivalents,  the value of all capital stock,
         the aggregate amount of all promissory  notes (or other  instruments of
         indebtedness)  issued, the amount of Acquisition Party debt assumed, or
         otherwise,  and whether such consideration  shall be paid at closing or
         be deferred or subject to earnouts or any other contingency.

     "Acquisition  Party" has the meaning  specified  in Section  6.2(e) of this
     Agreement.


 "Administrative Fee" shall have the meaning specified in Section 3.7(b) hereof.

                  "Administrative  Fee Letter" shall have the meaning  specified
in Section 3.7(b) hereof.

                  "Affiliate"  means, with respect to a Person, any other Person
         that,  directly  or  indirectly  through  one or  more  intermediaries,
         controls,  or is controlled by, or is under common  control with,  such
         first Person.  For purposes of this definition,  "control"  (including,
         with correlative meanings, the terms "controlling",  "controlled by" or
         "under  common  control  with"),  as applied to any  Person,  means the
         possession, directly or indirectly, of the power to vote 10% or more of
         the  securities  having  voting  power for the election of directors of
         such  Person or  otherwise  to direct  or cause  the  direction  of the
         management and policies of that Person,  whether  through the ownership
         of voting securities or by contract or otherwise.

                  "Agent"  has the  meaning  specified  in the  preamble of this
         Agreement and shall include any successor Agent  appointed  pursuant to
         Section 8.7 hereof.

                  "Agent Lending  Office" or "Lending Office of the Agent" means
         the Agent's  offices at NationsBank,  N.A.,  care of Kay  Finlaw-Creel,
         VA-200-05-02,  8300 Greensboro Drive,  McLean,  Virginia 22102, or such
         other  office in the  United  States of America of Agent as it may from
         time to time  designate  to the  Borrower  or the  Lenders  by  written
         notice.

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

                  "Applicable  L/C Margin" means,  for any period,  in the event
         the Funded Debt to EBITDA ratio  calculated  pursuant to Section 6.1(e)
         hereof is (a) less than .50 to 1.00,  then 0.80%,  (b) greater  than or
         equal to 0.50 to 1.00 but less  than  1.50 to  1.00,  then  1.00%,  (c)
         greater than or equal to 1.50 to 1.00 but less than 2.50 to 1.00,  then
         1.25%,  and (d) greater than or equal to 2.50 to 1.00, then 1.75%.  The
         Applicable L/C Margin for any Fiscal Quarter shall be determined  based
         on the  financial  statements  delivered  by the  Borrower  during  the
         immediately preceding Fiscal Quarter;  provided,  however, that if such
         financial  statements  are not  delivered  when due,  then the  highest
         Applicable L/C Margin shall apply.

                  "Applicable  LIBOR Rate" means,  for any period,  in the event
         the Funded Debt to EBITDA ratio  calculated  pursuant to Section 6.1(e)
         hereof is (a) less than 0.50 to 1.00, LIBOR plus .80%, (b) greater than
         or equal to 0.50 to 1.00 but less than 1.50 to 1.00,  LIBOR plus 1.00%,
         (c)  greater  than or equal to 1.50 to 1.00 but less than 2.50 to 1.00,
         LIBOR plus 1.25%,  and (d) greater than or equal to 2.50 to 1.00, LIBOR
         plus 1.75%.  The Applicable  LIBOR Rate for any Fiscal Quarter shall be
         determined based on the financial  statements delivered by the Borrower
         during the immediately  preceding  Fiscal Quarter;  provided,  however,
         that if such financial  statements are not delivered when due, then the
         highest Applicable LIBOR Rate shall apply.

                  "Applicable  Swing Line Rate"  means,  for any period,  in the
         event the Funded Debt to EBITDA  ratio  calculated  pursuant to Section
         6.1(e)  hereof is (a) less than 0.50 to 1.00,  the Base Swing Line Rate
         plus  1.10%,  (b)  greater  than or equal to 0.50 to 1.00 but less than
         1.50 to 1.00, the Base Swing Line Rate plus 1.30%,  (c) greater than or
         equal to 1.50 to 1.00 but less than 2.50 to 1.00,  the Base  Swing Line
         Rate plus  1.55%,  and (d) greater  than or equal to 2.50 to 1.00,  the
         Base Swing Line Rate LIBOR plus 2.05%.  The Applicable  Swing Line Rate
         for any  Fiscal  Quarter  shall be  determined  based on the  financial
         statements  delivered by the Borrower during the immediately  preceding
         Fiscal Quarter;  provided,  however,  that if such financial statements
         are not delivered when due, then the highest Applicable Swing Line Rate
         shall apply.

                  "Authorized Officer" means any of the Chief Executive Officer,
         Chief  Financial  Officer  or  Treasurer  of  any  Person  which  is  a
         corporation, partnership, or other business organization.

                  "Autoborrow   Services   Agreement"  shall  have  the  meaning
specified in Section 2.4(c) hereof.

                  "Bank  Prime  Rate"  means,  for  any  period,  a  fluctuating
         interest  rate  per  annum  equal  to the  rate  of  interest  publicly
         announced  by the Agent as its prime  rate in effect  from time to time
         (which rate may not be the lowest rate of interest charged by the Agent
         to commercial borrowers).

                  "BankBoston  Credit  Facility"  means the credit facility made
         available  to Putnam,  Hayes &  Bartlett,  Inc.,  a  subsidiary  of the
         Borrower,  under that  certain  First  Amended and  Restated  Revolving
         Credit Agreement,  dated as of May 29, 1998, between  BankBoston,  N.A.
         and  Putnam,  Hayes &  Bartlett,  Inc.,  as the same has been  amended,
         modified or supplemented from time to time.

                  "Bankruptcy  Code"  shall mean  Title 11 of the United  States
         Code or any similar or successor federal law for the relief of debtors,
         as the same may be amended from time to time.

                  "Base  Swing Line Rate" shall have the  meaning  specified  in
Section 2.4(c) hereof.

                  "Benefit  Plan" means any employee  benefit plan  (including a
         Multiemployer  Plan),  the funding  requirements  of which (under ERISA
         Section  302 or Section 412 of the Code) are, or at any time within six
         years  immediately  preceding the time in question were, in whole or in
         part, the responsibility of the Borrower or an ERISA Affiliate.

     "Borrower" has the meaning specified in the preamble of this Agreement.

                  "Borrower  Account"  means the bank  account  of the  Borrower
         maintained with the Agent for general purposes and assigned the account
         number designated by the Agent in writing to the Borrower.

                  "Borrower  Security  Agreement" means the Security  Agreement,
         substantially  in the form of Exhibit A hereto,  executed and delivered
         by the Borrower in favor of the Agent on or prior to the Effective Date
         pursuant  to  Section  4.1(i)(B)  hereof,  as the same may be  amended,
         modified or supplemented from time to time.

     "Borrowing  Notice" has the  meaning  specified  in Section  2.2(a) of this
     Agreement.

  "Breakage Period" has the meaning specified in Section 3.9 of this Agreement.

                  "Business  Day"  means any day on which  commercial  banks are
         open for business  (and not required or  authorized by law to close) in
         Fairfax County, Virginia, and Charlotte, North Carolina.

                   "Capital Expenditures" shall mean all expenditures classified
         as capital expenditures in accordance with GAAP.

                  "Capital  Lease"  of any  Person  shall  mean any lease of any
         property (whether real, personal or mixed) by such Person (as lessee or
         guarantor or other  surety) which would,  in  accordance  with GAAP, be
         required to be  classified  and  accounted  for as a capital lease on a
         balance sheet of such Person.

                  "Cash  Flow" shall  mean,  with  respect to any Person for any
         period of  determination,  such  Person's  EBITDA plus rental and lease
         expense less Capital  Expenditures,  as determined  in accordance  with
         GAAP.

                  "Cash  Flow   Multiple"   shall  mean,   as  of  any  date  of
         determination, an amount equal to the product of (x) 300% multiplied by
         (y) the EBITDA of the Borrower  and its  Consolidated  Subsidiaries  as
         determined  on a rolling  four  quarter  basis and as  adjusted to give
         effect to the acquisition of any Acquisition  Party as contemplated by,
         and in accordance  with the manner set forth in, the proviso to Section
         6.2(e) hereof.

                  "Change in Control" means one or more of the following events:

                  (a) if any  Person  (including  a person as defined in Section
         3(a)(9),  Section  13(d) or Section  14(d) of the  Exchange  Act) is or
         becomes  the owner or  beneficial  owner,  directly or  indirectly,  of
         securities  of the Borrower  representing  thirty-three  and  one-third
         percent  (33-1/3%)  or  more  of  the  combined  voting  power  of  the
         Borrower's then outstanding  securities (the term "beneficial owner" as
         used  herein  shall  include  but not be limited to any person with the
         attributes or interests described in Rule 13d-3 (as now in effect or as
         amended) promulgated under the Exchange Act); or

                  (b) (i) the  shareholders of the Borrower  approve one or more
         mergers,  consolidations or combinations of the Borrower with any other
         corporations or entities  which,  if consummated  prior to the Maturity
         Date,  would  result  in (A)  the  voting  securities  of the  Borrower
         outstanding  on the date hereof  (together  with any voting  securities
         issued  by  the  Borrower   permitted   under  Section  6.2(c)  herein)
         representing  less than 50% of the combined  voting power of the voting
         securities of the Borrower or such surviving entity  immediately  after
         consummation of any such merger,  consolidation or combination,  or (B)
         after giving effect to such merger,  consolidation  or  combination,  a
         change in the person holding the Office of Chief  Executive  Officer of
         the  Borrower  relative to the person  holding such  respective  office
         immediately  prior to giving  effect to such merger,  consolidation  or
         combination, or (ii) the shareholders of the Borrower approve a plan of
         liquidation  of the Borrower or an agreement for the sale,  disposition
         or transfer by the Borrower of all or  substantially  all the assets of
         the Borrower.

                  "Code"  means the Internal  Revenue  Code of 1986,  as amended
         from time to time, and any successor Federal statute.

                  "Commitment"   shall  mean,  with  respect  to  each  Lender's
         commitment to make Revolving  Loans and to issue (or participate in the
         issuance of) Standby Letters of Credit, the aggregate Dollar amount set
         forth on  Schedule  I hereto  opposite  such  Lender's  name  under the
         heading  "Commitment"  or assigned  to it in  accordance  with  Section
         9.8(c),  as such amount may be reduced or otherwise  adjusted from time
         to time in accordance with the provisions of this Agreement.

                  "Contingent  Obligations"  means,  with respect to any Person,
         any obligation of such Person  guaranteeing  or in effect  guaranteeing
         any  Indebtedness,  leases,  dividends or other  obligations  ("primary
         obligations")  of any  other  Person  (the  "primary  obligor")  in any
         manner, whether directly or indirectly,  including, without limitation,
         any  obligation  of  such  Person,  whether  or not  contingent  (a) to
         purchase  any such  primary  obligation  or any  property  constituting
         direct or indirect  security  therefor,  (b) to advance or supply funds
         (i) for the purchase or payment of any such primary  obligation or (ii)
         to maintain  the net worth or solvency or the primary  obligor,  (c) to
         purchase property,  securities or services primarily for the purpose of
         assuring the owner of any such primary obligation of the ability of the
         primary  obligor to make  payment  of such  primary  obligation  or (d)
         otherwise  to  assure  or hold  harmless  the  owner  of  such  primary
         obligation  against  loss  in  respect  thereof.   The  amount  of  any
         Contingent  Obligation  shall be deemed  to be an  amount  equal to the
         stated  or  determinable   amount  (based  on  the  maximum  reasonably
         anticipated  net  liability  in respect  thereof as  determined  by the
         Borrower in good faith) of the primary obligation or portion thereof in
         respect of which such  Contingent  Obligation is made or, if not stated
         or determinable,  the maximum  reasonably  anticipated net liability in
         respect   thereof   (assuming   such  person  is  required  to  perform
         thereunder) as determined by the Borrower in good faith.

                  "Consolidated  Cash  Flow"  shall  mean,  for  any  period  of
         determination,  the  Cash  Flow of the  Borrower  and its  Consolidated
         Subsidiaries, taken as a whole.

                  "Consolidated  Fixed  Charges"  shall mean,  for any period of
         determination,   the  sum  of  the  Borrower's  and  its   Consolidated
         Subsidiaries'  interest  expense  contractually  due,  lease and rental
         expenses,  dividends  paid,  declared  or  accumulated  on any class of
         capital  stock and payments of  principal  due (during the period as to
         which such computation  relates) under any Indebtedness,  as determined
         in accordance  with GAAP,  but excluding all repayments of principal in
         respect of the  Indebtedness  outstanding  during  the 12 month  period
         occurring  prior to the  Effective  Date under each of the State Street
         Bank Credit Facility and the BankBoston Credit Facility.

                  "Consolidated Subsidiary" means, with respect to any Person at
         any time, any Subsidiary or other Person the accounts of which would be
         consolidated  with  those  of such  first  Person  in its  consolidated
         financial statements as of such time.

                  "Credit  Agreement  Related  Claim"  means any claim  (whether
         civil,  criminal  or  administrative  and  whether  sounding  in  tort,
         contract  or  otherwise)  in any way  arising  out of,  related  to, or
         connected  with this  Agreement  or any other  Credit  Document  or the
         relationships established hereunder or thereunder.

                  "Credit Documents" means this Agreement,  the Revolving Notes,
         the Swing Line Note, the Borrower Security  Agreement,  each Subsidiary
         Security  Agreement,  each Pledge Agreement executed and delivered by a
         Pledgor pursuant to Section 6.1(w) hereof, the Subsidiary Guarantee and
         the Administrative Fee Letter.

                  "Credit  Party" shall mean the  Borrower  and each  Subsidiary
         thereof that is a party to any Credit Document.

                  "Default  Rate"  means the rate of interest  applicable  under
         Section 3.3 of this Agreement from time to time.

                  "Dollars", "U.S.$" and the sign "$" mean such coin or currency
         of the United States of America as at the time shall  constitute  legal
         tender for the payment of public and private debts.

                  "Domestic  Subsidiary"  shall  mean  any  Subsidiary  that  is
         created  under the laws of any State of the United States of America or
         the District of Columbia.

     "Drawing" has the meaning specified in Section 2.3(e) of this Agreement.

                  "EBITDA" shall mean, with respect to any Person for any period
         of   determination,   all  of  such   Person's  and  its   Consolidated
         Subsidiaries'  earnings  before  interest,   taxes,   depreciation  and
         amortization, extraordinary gains, non-cash, non-recurring compensatory
         charges  incurred  in  connection  with  acquisitions,   and  non-cash,
         non-recurring  charges in respect  of the  write-down  of assets of any
         Person who has been acquired by the Borrower or any Subsidiary  thereof
         or the write-down of assets of the Borrower or any  Subsidiary  thereof
         on account of and in connection with the acquisition by the Borrower or
         any  Subsidiary  thereof (as permitted  hereunder)  of any  Acquisition
         Party, as determined in accordance with GAAP; provided,  however, that,
         for the purposes of  calculating  EBITDA and solely with respect to any
         Affiliate of such Person,  (i) EBITDA shall  include the income of such
         Affiliate only to the extent such Person receives such income from such
         Affiliate,  and (ii) EBITDA shall exclude the losses of such  Affiliate
         except to the  extent  such  Affiliate  shall have  received  from such
         Person funds in respect of such losses.

     "Effective  Date"  has  the  meaning  specified  in  Section  4.1  of  this
     Agreement.

                  "Equity  Rights"  means,  with  respect  to  any  Person,  any
         subscriptions,  options,  warrants,  commitments,  preemptive rights or
         agreements of any kind (including  without limitation any stockholders'
         or voting trust  agreements)  for the issuance,  sale,  registration or
         voting of, or securities  convertible  into, any  additional  shares of
         capital stock of any class, or partnership or other ownership interests
         of any type, in such Person.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended from time to time.

                  "ERISA Affiliate" means any Person,  including a Subsidiary or
         other Affiliate,  that is a member of any group of organizations within
         the meaning of Code Sections 414(b),  (c), (m) or (o) of which Borrower
         is a member.

     "Event  of  Default"  has the  meaning  specified  in  Section  7.1 of this
     Agreement.

                  "Exchange Act" means the  Securities  Exchange Act of 1934, as
         amended, and any successor Federal statute.

                  "Federal  Funds Rate"  means,  for any day, the rate per annum
         (rounded  upward to the  nearest  1/100th of 1%) equal to the  weighted
         average  of the rates on  overnight  Federal  funds  transactions  with
         members  of the  Federal  Reserve  System  arranged  by  Federal  funds
         brokers,  as  published  on the  next  succeeding  Business  Day by the
         Federal  Reserve Bank of New York;  provided that if no such rate is so
         published  for any day which is a Business  Day, then the Federal Funds
         Rate for such day  shall be the  average  rate  quoted to the Agent for
         such day on such  transactions  received  by the Agent  from  three (3)
         Federal  funds  brokers of  recognized  standing  selected  by it; and,
         provided  further,  that  if  for  any  reason  the  Agent  shall  have
         determined (which  determination shall be conclusive and binding absent
         manifest  error) that it is unable to ascertain  the Federal Funds Rate
         for any  reason,  including  the  inability  or failure of the Agent to
         obtain sufficient  quotations in accordance with the terms hereof, then
         the ABR  shall  be  determined  without  regard  to  clause  (y) of the
         definition of ABR until the circumstances giving rise to such inability
         no longer exist.

                  "Fee Payment Date" means (i) in the case of the Unused Portion
         Fee and the L/C Fee, the first  Business Day  following  the end of any
         Fiscal  Quarter  (or  part  thereof),   and(ii)  in  the  case  of  the
         Administrative  Fee, on the dates specified in the  Administrative  Fee
         Letter.

                  "Fiscal  Quarter"  means the quarter,  during any Fiscal Year,
         ending March 31, June 30, September 30 and December 31.

     "Fiscal  Year"  has  the  meaning  specified  in  Section  6.1(a)  of  this
     Agreement.

                  "Fixed Charge  Coverage Ratio" means the ratio of Consolidated
         Cash Flow to  Consolidated  Fixed  Charges as  contemplated  by Section
         6.1(g) hereof.

                  "Foreign  Subsidiary"  shall mean any  Subsidiary  that is not
         created or organized  under the laws of any State of the United  States
         of America or the District of Columbia.

                  "Form 8-K" means Form 8-K of the Exchange Act.

                  "Form 10-K" means Form 10-K of the Exchange Act.

                  "Form 10-Q" means Form 10-Q of the Exchange Act.

     "Funded  Debt"  means,  as of any  date  of  determination,  the sum of all
     Indebtedness.

                  "Funding  Date" shall mean the date on which any loan shall be
         made by a Lender to the Borrower hereunder.

       "GAAP" has the meaning specified in Section 1.2 of this Agreement.

                  "Governmental  Body" means (i) the United States of America or
         any State thereof or any department,  agency, commission, board, bureau
         or  instrumentality  of the  United  States  of  America  or any  State
         thereof,  and (ii) any  quasi-governmental  body,  agency or  authority
         (including any central bank) exercising  regulatory  authority over the
         Lender  pursuant  to  applicable  law in  respect  of the  transactions
         contemplated by this Agreement.

                  "Guarantors" means those Subsidiaries of the Borrower who have
         executed the Subsidiary Guarantee on or prior to the Effective Date, or
         who may  thereafter  become  a party  to the  Subsidiary  Guarantee  in
         accordance with the provisions hereof.

     "Hazardous  Substances"  shall have the meaning  specified  in Section 5.11
     hereof.

                  "Indebtedness"  of  any  Person  means,  as  of  any  date  of
         determination and without duplication, the sum of (i) all indebtedness,
         obligations and liabilities for money borrowed by such Person,  whether
         or  not  evidenced  by a  note,  bond,  indenture  or  other  agreement
         (including  in  the  case  of the  Borrower,  without  limitation,  the
         Revolving Notes and the Swing Line Note),  (ii) all obligations of such
         Person upon which interest charges are customarily paid, (iii) the face
         amount of all letters of credit  issued for the account of such Person,
         (iv) all  obligations of such Person as lessee under any Capital Lease,
         (v) all amounts owing by such Person under purchase money  mortgages or
         other  purchase  money  liens  or  conditional  sales  or  other  title
         retention  agreements,  (vi) all indebtedness or liabilities secured by
         purchase money mortgages, liens, security interests,  conditional sales
         or other title retention  agreements upon property owned by such Person
         (whether  or not such  Person  has  assumed  or become  liable  for the
         payment of such indebtedness or liabilities),  (vii) all obligations of
         such  Person for the  deferred  purchase  price of property or services
         (other  than  current  trade  payables or  liabilities  incurred in the
         ordinary  and usual  course of  business),  including  any  deferred or
         contingent payments (including earnout payments) in connection with any
         acquisition  and  any  amounts  payable  under  deferred   compensation
         agreements executed in connection with any acquisition,  (viii) the net
         obligations  and  liabilities of such Person in respect of any interest
         rate  swap,  collar,  floor  or  ceiling  agreement  or  other  hedging
         agreement,  and (ix)  all  Contingent  Obligations  of such  Person  in
         respect of the Indebtedness of others.

     "Indemnified  Person" has the meaning  specified in Section 9.10(b) of this
     Agreement.

     "Initial Fiscal Quarter" has the meaning specified in Section 6.1(e).

                  "Interest  Payment  Date"  means (x) in the case of  Revolving
         Loans bearing interest at the ABR, the last Business Day of each Fiscal
         Quarter (or part thereof) in which  interest  accrues on such Revolving
         Loans,  (y) in the case of any LIBOR Loan,  the expiration of the LIBOR
         Period in respect of such LIBOR Loan,  and (z) in the case of any Swing
         Line Loan,  on the last  Business  Day [of each month during which such
         Swing Line Loan shall be outstanding].

                  "Issuing Lender" shall mean the Agent.

     "L/C Fee" has the meaning specified in Section 2.3(b) of this Agreement.

     "Lender" or "Lenders"  have the meanings  specified in the preamble of this
     Agreement.

                  "Lender   Availability"   shall  mean,   as  of  any  date  of
         determination and with respect to each Lender, the amount determined by
         deducting  (x) the amount of such  Lender's Pro Rata Share of the Total
         Outstanding  Amount from (y) the amount of such Lender's Pro Rata Share
         of the Maximum Available Amount.

                  "LIBOR" means,  with respect to any LIBOR Period,  (x) the per
         annum  interest  rate  (rounded  upward to the  nearest  1/100th of 1%)
         determined on the basis of the offered rates for Dollar  deposits for a
         term  comparable  to such LIBOR  Period and in an amount  substantially
         equal to the  outstanding  amount of the Revolving  Loans in respect of
         which such  determination  is made which appear on the Telerate  Screen
         Page 3750 as of 11:00 a.m.  (London  time) on the day that is two LIBOR
         Business Days prior to the first day of such LIBOR  Period,  divided by
         (y) a number equal to 1.00 minus the LIBOR Reserve Rate.

                  "LIBOR Business Day" means any day on which  commercial  banks
         are open for  international  business  (including  dealings  in  Dollar
         deposits) in London or such other  Euro-dollar  interbank market as may
         be selected by the Lender in its sole discretion.

     "LIBOR  Conversion"  has the meaning  specified  in Section  3.8(a) of this
     Agreement.

     "LIBOR  Conversion  Notice" has the meaning  specified in Section 3.8(a) of
     this Agreement.

                  "LIBOR Loans" means the Revolving Loans which bear interest at
the Applicable LIBOR Rate.

                  "LIBOR Period" means the one month, two month,  three month or
         six month  interest  period  selected by the  Borrower  pursuant to any
         LIBOR Conversion Notice or Borrowing Notice.

                  "LIBOR  Reserve  Rate"  means,  for any day with  respect to a
         LIBOR Loan, the maximum rate (expressed as a decimal) at which a Lender
         would be required to maintain  reserves under Regulation D of the Board
         of Governors  of the Federal  Reserve  System,  as amended from time to
         time (or any successor or similar regulations  relating to such reserve
         requirements), against "Eurocurrency liabilities" (as that term is used
         in  Regulation  D), if such  liabilities  were  outstanding.  The LIBOR
         Reserve Rate shall be adjusted automatically on and as of the effective
         date of any change in the LIBOR Reserve Rate.

                  "Lien" of any Person shall mean any  mortgage,  deed of trust,
         lien, pledge, adverse interest in property,  charge,  security interest
         or other  encumbrance in or on, or any interest or title of any vendor,
         lessor,  Lender or other  secured  party to or of such Person under any
         conditional  sale or other title  retention  agreement or Capital Lease
         with respect to, any property or asset owned or held by such Person, or
         the signing or filing of any security  agreement with respect to any of
         the  foregoing  authorizing  any  other  party  as  the  secured  party
         thereunder to file any financing statement.

     "Mandatory  Borrowing"  shall have the meaning  specified in Section 2.4(e)
     hereof.

                  "Material  Domestic  Subsidiary" shall mean, as of any date of
         determination,  any Domestic  Subsidiary  of any Person if (x) the book
         value  of  all  assets  (both  real  and  personal)  of  such  Domestic
         Subsidiary  equals or exceeds $250,000 or (y) such Domestic  Subsidiary
         has annual revenues of $250,000 or more.

                  "Maturity Date" means November 30, 2001.

                  "Maximum  Available  Amount"  shall  mean,  as of any  date of
         determination,  the lesser of (x) the Revolving Loan Commitment and (y)
         the Cash Flow Multiple.

                  "Multiemployer Plan" means any "multiemployer plan" as defined
         in  ERISA  Section  4001(a)(3)  to  which  the  Borrower  or any  ERISA
         Affiliate is making or accruing an obligation to make contributions, or
         has  within  any of the  preceding  three plan years made or accrued an
         obligation to make contributions.

                  "Obligations" shall mean all now existing or hereafter arising
         indebtedness, obligations, liabilities and covenants of the Borrower to
         the Lenders or the Agent,  their  respective  Affiliates  or  permitted
         successors and assigns or any other  Indemnified  Person,  in each case
         arising under or in connection  with or evidenced by this  Agreement or
         any other Credit  Document,  whether  direct or  indirect,  absolute or
         contingent, now or hereafter existing, or due or to become due.

                  "Optional  Prepayment" means the optional  prepayment of Swing
         Line Loans  pursuant to Section  2.4(f)  hereof or of  Revolving  Loans
         pursuant to Section 3.6(b) hereof.

                  "Permitted Investment" means each of (i) direct obligations of
         the United States of America,  and agencies  thereof;  (ii) obligations
         fully guaranteed by the United States of America; (iii) certificates of
         deposit  issued by, or bankers'  acceptance  of, or time deposits with,
         any bank, trust company or national banking association incorporated or
         doing business under the laws of the United States of America or one of
         the states  thereof  having  combined  capital and surplus and retained
         earnings of at least  $500,000,000;  (iv) commercial paper of companies
         having a rating assigned to such commercial  paper by Standard & Poor's
         Corporation  or Moody's  Investors  Service,  Inc. (or, if neither such
         organization  shall  rate such  commercial  paper at any  time,  by any
         nationally  recognized  rating  organization  in the  United  States of
         America)  of  A-1 or  P-1,  respectively;  (v)  money-market  funds  or
         money-market  mutual  funds which (a) seek to  maintain a constant  net
         asset  value,  (b)  maintain  fund assets  under  management  having an
         aggregate  market  value  of  at  least  $500,000,000  and  (c)  invest
         primarily in  Permitted  Investments  of the type  described in clauses
         (i),  (ii),  (iii) or (iv) hereof;  or (vi) any  investment in any debt
         security  or equity  security so long as the amount of all such debt or
         equity  investments  shall not exceed,  in the  aggregate  at any time,
         $1,000,000, provided that the aggregate amount of all voting securities
         (or debt  securities  convertible  into voting  securities)  of any one
         Person  held or  purchased  pursuant  to this  clause  (vi)  shall  not
         constitute more than 20% of the outstanding shares of voting securities
         of such Person.

                  "Permitted Uses" shall have the meaning specified in the first
Whereas clause hereof.

                  "Person"   means  an  individual,   partnership,   corporation
         (including   a   business   trust),   joint   stock   company,   trust,
         unincorporated  association,  joint  venture  or  other  entity,  or  a
         government or any political subdivision or agency thereof.

                  "Pledge Agreement" means a Pledge Agreement,  substantially in
         the form of Exhibit B executed and delivered pursuant to Section 6.1(w)
         hereof, as the same may be amended,  modified or supplemented from time
         to time.

                  "Pledgor"  shall mean each Person who shall have  executed and
         delivered a Pledge  Agreement in favor of the Agent pursuant to Section
         6.1(w) hereof.

     "Potential Change in Control" means one or more of the following events:

                           (a)  the  Borrower  enters  into  an  agreement,  the
                  consummation  of which  would  result in the  occurrence  of a
                  Change In Control; or

                           (b) the Board of Directors  of the Borrower  adopts a
                  resolution, the effect of which would result in the occurrence
                  of a Change in Control.

                  "Potential  Event of  Default"  means an event,  condition  or
         circumstance  which, with the giving of notice or the lapse of time, or
         both, would constitute an Event of Default.

     "Prohibited  Transaction"  shall have the meaning  ascribed to such term in
     ERISA.

                  "Pro Rata Share" shall mean,  as of any date of  determination
         and with respect to any Lender, a fraction (expressed as a percentage),
         the numerator of which shall be the amount of such Lender's  Commitment
         and  the  denominator  of  which  shall  be  the  aggregate  amount  of
         Commitments  of all  Lenders,  as such  Commitments  may be  reduced or
         otherwise  adjusted from time to time in accordance with the provisions
         of this Agreement;  provided,  however,  that if all of the Commitments
         are terminated or reduced to zero  hereunder,  the Pro Rata Share shall
         mean, as of any date of determination and with respect to any Lender, a
         fraction  (expressed as a percentage),  the numerator of which shall be
         the sum of the aggregate  amount of such Lender's  Revolving Loans then
         outstanding plus the aggregate amount of such Lender's participation in
         any  outstanding  Standby Letter of Credit and the denominator of which
         shall be the sum of the aggregate  amount of all  Revolving  Loans then
         outstanding plus all Standby Letters of Credit then outstanding.

                  "Regulatory Change" means any applicable law,  interpretation,
         directive,  request or  guideline  (whether  or not having the force of
         law), or any change  therein or in the  administration  or  enforcement
         thereof,  that becomes effective or is implemented or first required or
         expected to be complied with after the date hereof, whether the same is
         (i) the  result  of an  enactment  by a  government  or any  agency  or
         political subdivision thereof, a determination of a court or regulatory
         authority,  or otherwise or (ii) enacted,  adopted,  issued or proposed
         before  or after the date  hereof,  including  any such  that  imposes,
         increases or modifies any tax, reserve  requirement,  insurance charge,
         special   deposit   requirement,   assessment   or   capital   adequacy
         requirement, but excluding any such that imposes, increases or modifies
         any income or franchise tax imposed upon any Lender by any jurisdiction
         (or any  political  subdivision  thereof)  in which  any  Lender or any
         office is located.

                  "Reportable  Event" means any event or condition  described in
         ERISA Section 4043(b), other than an event or condition with respect to
         which the 30-day notice requirement has been waived.

                  "Required Lenders" shall mean, except as otherwise provided in
         Section 8.9(i) hereof,  as of any date of  determination,  such Lenders
         whose  Pro  Rata  Shares  of  the  Revolving  Loan  Commitment,  in the
         aggregate,  are greater than fifty percent  (50%);  provided,  however,
         that for so long as only two financial institutions  constitute Lenders
         hereunder  (it  being  understood  that,  solely  for the  purposes  of
         determining the number of financial  institutions  constituting Lenders
         under this  proviso,  each  financial  institution,  together  with its
         Affiliates,  shall constitute a single Lender),  Required Lenders shall
         mean, except as otherwise  provided in Section 8.9(i) hereof, as of any
         date of  determination,  such  Lenders  whose  Pro Rata  Shares  of the
         Revolving Loan  Commitment,  in the  aggregate,  constitute one hundred
         percent (100%).

     "Revolving  Loan(s)"  shall have the meaning  specified  in Section  2.1(a)
     hereof.

                  "Revolving Loan  Commitment"  shall mean the commitment of the
         Lenders  to make  Revolving  Loans  and issue  (or  participate  in the
         issuance of) Standby Letters of Credit in an aggregate  amount of up to
         $50,000,000,  as such amount may be reduced or otherwise  adjusted from
         time to time in accordance with the provisions of this Agreement.

                  "Revolving  Note" means any promissory note issued to a Lender
         by the Borrower  pursuant to this Agreement,  substantially in the form
         (appropriately  completed) of Exhibit C to this Agreement,  as the same
         may be amended,  modified or  supplemented  from time to time,  and any
         other promissory note issued in exchange or substitution  thereof,  and
         "Revolving  Notes" means,  collectively,  all such promissory  notes so
         issued.

     "SEC" means the Securities and Exchange  Commission or any similar  Federal
     agency.

                  "Securities Act" means the Securities Act of 1933, as amended,
         and any successor Federal statute.

     "Stamp Taxes" has the meaning specified in Section 9.5 of this Agreement.

     "Standby  Letter of Credit" has the meaning  specified in Section 2.3(a) of
     this Agreement.

                  "State Street Bank" means State Street Bank and Trust Company.

                  "State  Street  Credit  Facility"  shall mean the  $15,000,000
         credit  facility made available to Hagler Bailly  Consulting,  Inc. and
         Hagler  Bailly  Services,  Inc.,  as  co-borrowers,  under that certain
         Credit Agreement,  dated as of September 30, 1997, between State Street
         Bank, Hagler Bailly Consulting,  Inc. and Hagler Bailly Services, Inc.,
         as the same has been  amended,  modified or  supplemented  from time to
         time.

                  "Subsidiary"  shall mean any  corporation,  limited  liability
         company,  partnership,  trust or other entity a majority of the capital
         stock (or equivalent ownership or controlling interest) of which at the
         time  outstanding,  having  ordinary  voting  power for the election of
         directors (or  equivalent  controlling  interest or person),  is owned,
         directly or indirectly,  by any other  corporation,  limited  liability
         company, partnership,  trust or other entity, and "Subsidiaries" means,
         collectively, all such entities.

                  "Subsidiary   Guarantee"   means  the  Subsidiary   Guarantee,
         substantially  in the form of Exhibit D hereto,  executed and delivered
         by the Guarantors in favor of the Agent on or before the Effective Date
         pursuant  to Section  4.1(i)(C)  hereof (or by an  Guarantor  after the
         Effective Date as required by Sections 6.2(e) and 6.2(g) hereof) as the
         same may be amended, modified or supplemented from time to time.

                  "Subsidiary  Security  Agreement"  shall  mean  each  Security
         Agreement,  substantially in the form of Exhibit E hereto, executed and
         delivered by a  Subsidiary  of the Borrower in favor of the Agent on or
         prior to the  Effective  Date pursuant to Section  4.1(i)(E)  hereof or
         after the Effective Date as provided by Section  6.1(w) hereof,  as the
         same may be amended, modified or supplemented from time to time.

                  "Swing  Line  Lender"  shall  have the  meaning  specified  in
Section 2.4(a) hereof.

                  "Swing Line Loan" shall have the meaning  specified in Section
2.4(a) hereof.

                  "Swing  Line Note"  means the  promissory  note  issued by the
         Borrower to NationsBank,  N.A. pursuant to this Agreement in respect of
         the  Swing  Line  Loans,   substantially  in  the  form  (appropriately
         completed) of Exhibit F to this Agreement,  as the same may be amended,
         modified or  supplemented  from time to time, and any other  promissory
         note issued in exchange or substitution therefor.

                  "Swing Line  Subfacility"  shall have the meaning specified in
Section 2.4(a) hereof.

                  "Termination  Event" means,  with respect to any Benefit Plan,
         (i) any  Reportable  Event with respect to such Benefit Plan,  (ii) the
         termination  of such Benefit  Plan, or the filing of a notice of intent
         to terminate  such Benefit  Plan,  or the treatment of any amendment to
         such Benefit Plan as a termination  under ERISA Section 4041(c),  (iii)
         the  institution  of  proceedings  to terminate such Benefit Plan under
         ERISA Section 4042 or (iv) the  appointment  of a trustee to administer
         such Benefit Plan under ERISA Section 4042.

     "Total  Outstanding  Amount" has the meaning specified in Section 2.1(a) of
     this Agreement.

                  "Triggering   Event"  means  the  occurrence  of  any  of  the
         following  events:  (a) with respect to any Foreign  Subsidiary  of the
         Borrower  and  as  determined  from  time  to  time,  if  such  Foreign
         Subsidiary  has annual  revenues of  $10,000,000  or more,  (b) for any
         quarterly  or annual  period of  determination,  if total  revenues  or
         profits from all Foreign  Subsidiaries  of the Borrower  comprise  more
         than 20% of the total  revenues  or  profits  of the  Borrower  and its
         Consolidated  Subsidiaries,  or (c)  upon  an  Event  of  Default.  All
         determinations  made with respect to the definition of Triggering Event
         shall be calculated in Dollars  based on the  applicable  exchange rate
         quoted in The Wall Street Journal on any date of determination.

                  "Uniform  Commercial  Code" shall mean the Uniform  Commercial
         Code in effect in the relevant jurisdiction.

     "Unused  Portion Fee" has the meaning  specified in Section  3.7(a) of this
     Agreement.

     "Year 2000  Compliant"  has the meaning  specified  in Section 5.13 of this
     Agreement.

     "Year 2000  Problem"  has the  meaning  specified  in Section  5.13 of this
     Agreement.

     Section 1.02.  Accounting  Terms.  All  accounting  terms not  specifically
     defined  herein shall be construed in accordance  with  generally  accepted
     accounting principles consistently applied in the United States ("GAAP").

         Section 1.03. Time Period Computations.  In the computation of a period
of time specified in this Agreement from a specified date to a subsequent  date,
the word "from" means "from and  including"  and the words "to" and "until" mean
"to but excluding".








ARTICLE II.

GENERAL PROVISIONS OF REVOLVING CREDIT FACILITY

Section 2.01.     The Revolving Loans.

 Revolving  Loan  Borrowings.  Subject  to the  terms  and  conditions  of  this
Agreement,  each Lender severally and not jointly agrees to make revolving loans
(each,  a "Revolving  Loan" and,  collectively,  the  "Revolving  Loans") to the
Borrower,  at any time and from  time to time on and after  the  Effective  Date
until one Business  Day prior to the Maturity  Date in an amount which shall not
exceed such Lender's Pro Rata Share of the Revolving Loan Commitment;  provided,
however,  that (i) the sum of the aggregate  outstanding amount of all Revolving
Loans  plus the  aggregate  outstanding  amount of all Swing Line Loans plus the
aggregate  amount  then  available  to be drawn  under all  outstanding  Standby
Letters of Credit (such sum, the "Total  Outstanding  Amount")  shall at no time
exceed the Maximum Available Amount,  and (ii) the aggregate  outstanding amount
of all Revolving Loans made by each  individual  Lender pursuant to this Section
2.1 plus the aggregate  amount then available to be drawn under all  outstanding
Standby  Letters of Credit  made by or deemed  made by such  Lender  pursuant to
Section 2.3 hereof  shall at no time exceed such  Lender's Pro Rata Share of the
Maximum  Available  Amount.  Within  the  limits  and  subject  to the terms and
conditions set forth in this Agreement, the Borrower may borrow pursuant to this
Section  2.1 and  Section 2.2  hereof,  may prepay  pursuant  to Section  3.6(b)
hereof, and reborrow under this Section 2.1 hereof.

         Section 2.02. The Revolving Notes;  Maturity.  The Revolving Loans made
by each Lender pursuant hereto shall be evidenced by a separate  Revolving Note.
Each  Revolving  Note shall be issued on or before the Effective  Date and shall
bear interest, for the period from the initial Funding Date hereunder until such
Revolving Note shall be paid in full, on the unpaid  principal amount thereof at
the rate  specified  in Section  3.1 of this  Agreement.  Each  Lender is hereby
authorized to record in the books and records of such Lender (without making any
notation in such Lender's Revolving Note or any schedule  thereto),  among other
things,  the amount and Funding Date of each Revolving Loan made by such Lender,
the amount and date of each payment or prepayment of any Revolving  Loan and the
amount and date of any LIBOR Conversion or of any LIBOR Loan converted to an ABR
Loan,  as the case may be. No failure to so record nor any error in so recording
shall affect the  obligations  of the  Borrower to repay the actual  outstanding
principal amount of the Revolving Loans, with interest  thereon,  as provided in
this Agreement.  The aggregate  principal amount of the Revolving Loans shall be
payable on the Maturity Date, unless sooner accelerated pursuant to the terms of
this Agreement.

         Section 2.03.     Revolving Loan Borrowing Procedures.

(a) Notice of  Revolving  Borrowing.  Whenever  the  Borrower  desires to borrow
Revolving  Loans under  Section 2.1 hereof,  the Borrower  shall  deliver to the
Agent  irrevocable  written notice (each such notice,  a "Borrowing  Notice") no
later than 12:00 noon  (Eastern  time) on the Funding Date of a Revolving  Loan;
provided,  however,  that  if any  Revolving  Loan  requested  pursuant  to such
Borrowing Notice is to bear interest based on LIBOR, such Borrowing Notice shall
be delivered no later than 12:00 noon (Eastern  time) on the date (which must be
a Business Day) that is three (3) LIBOR  Business Days prior to the Funding Date
of such Revolving Loan. The Borrowing Notice shall specify (i) that the Borrower
wishes to effect  one or more  Revolving  Loans,  (ii) the  aggregate  principal
amount of each  Revolving Loan thereby  requested  (which shall not be less than
$1,000,000  and shall be in  multiples  of  $250,000  with  respect to each such
Revolving Loan),  (iii) the requested  Funding Date of each such Revolving Loan,
which date shall be a Business  Day (whether or not any  Revolving  Loans are to
bear  interest  based on the ABR or LIBOR),  (iv)  whether  any  Revolving  Loan
requested  pursuant to such Borrowing Notice shall bear interest based on LIBOR,
in which case such Borrowing  Notice shall specify the  applicable  LIBOR Period
being selected by the Borrower (it being understood and agreed that no change in
LIBOR with respect to any then outstanding LIBOR Loan may be effected during the
LIBOR Period  relating  thereto) and (v) the Cash Flow  Multiple then in effect.
Each  Borrowing  Notice  shall  be  accompanied  by  the  officer's  certificate
contemplated   by  Section   4.2(vi)   hereof.   In  lieu  of   delivering   the
above-described  Borrowing Notice, and only with the consent of the Agent in its
sole discretion at such time, the Borrower may give the Agent telephonic  notice
of any such proposed borrowing by the time period, as applicable, required under
this Section  2.2(a);  provided  that, in the event the Agent so consents,  such
notice shall be confirmed in writing by delivery to the Agent  promptly  (but in
no event  later  than  12:00  noon  (Eastern  time) on the  Funding  Date of the
requested  Revolving  Loans) of a Borrowing Notice (it being understood that any
such telephonic  notice shall be irrevocable and shall be conclusive and binding
as against  the  Borrower).  Notwithstanding  anything  contained  herein to the
contrary, if on any Interest Payment Date or Fee Payment Date the credit balance
in the Borrower Account is insufficient to permit the debit  contemplated by the
second  sentence of Section  3.4(a) of this  Agreement,  the Agent,  without any
notice or other authorization  being required,  shall (and is hereby irrevocably
instructed  by the Borrower to) effect  Revolving  Loans (which shall  initially
bear  interest  at the ABR) in an amount  sufficient  to permit such debit to be
implemented or, if the amount of such debit is greater than the aggregate of the
Lender  Availability of all Lenders, in the amount of the unused portion of such
Lender Availability.

(b) Making of Revolving  Loans.  Promptly  after  receipt of a Borrowing  Notice
under  clause  (a) of this  Section  2.2 (or  telephonic  notice if the Agent so
consents  thereto),  the Agent shall  notify each Lender by telecopy or telex or
other customary form of teletransmission of the requested borrowing. Each Lender
shall make the amount of its  Revolving  Loan  available to the Agent in Dollars
and in immediately  available funds, not later than 3:00 P.M.  (Eastern time) on
the Funding Date  applicable  to Revolving  Loan(s)  specified in the  Borrowing
Notice.  After the Agent's  receipt of the proceeds of such Revolving Loans from
the  Lenders,  the Agent  shall  (unless it shall have  learned  that any of the
conditions  precedent  set forth in Section 4.2 hereof have not been  satisfied)
make the  proceeds of such  Revolving  Loans  available  to the Borrower on such
Funding Date  relating  thereto and shall  disburse such funds in Dollars to the
Borrower in immediately available funds by crediting the Borrower Account.

(c) Failure to Fund by Lender.  Unless the Agent shall have been notified by any
Lender  prior to 2:00 P.M.  (Eastern  time) on any  Funding  Date in  respect of
Revolving  Loans  requested  under a Borrowing  Notice that such Lender does not
intend to make  available  to the Agent  such  Lender's  Revolving  Loan on such
Funding  Date,  the  Agent may  assume  that such  Lender  has made such  amount
available to the Agent on such Funding Date and the Agent in its sole discretion
may,  but  shall  not  be  obligated  to,  make  available  to  the  Borrower  a
corresponding  amount on such Funding Date. If such corresponding  amount is not
in fact  made  available  to the  Agent by such  Lender on or prior to 3:00 P.M.
(Eastern  time) on a Funding  Date,  such Lender  agrees to pay and the Borrower
agrees  to repay to the Agent  forthwith  on demand  such  corresponding  amount
together with interest  thereon,  for each day from the date such amount is made
available  to the  Borrower  until the date such amount is paid or repaid to the
Agent,  at (i) in the case of such Lender,  the Federal Funds Rate,  and (ii) in
the case of the  Borrower,  the ABR, and no such  payment by the Borrower  shall
prejudice any rights which the Company or the Agent may have against such Lender
on  account of such  Lender's  failure to so fund its  Revolving  Loan.  If such
Lender  shall pay to the Agent such  corresponding  amount,  such amount so paid
shall  constitute such Lender's  Revolving Loan, and if both such Lender and the
Borrower shall have paid and repaid,  respectively,  such corresponding  amount,
the Agent shall promptly pay over to the Borrower such  corresponding  amount in
same day  funds,  but the  Borrower  shall  remain  obligated  for all  interest
thereon. Nothing contained in this Section 2.2(c) shall be deemed to relieve any
Lender of its  obligation  hereunder to make its  Revolving  Loan on any Funding
Date.

(d) Maximum Number of LIBOR Loans  Outstanding at Anytime.  No more than six (6)
LIBOR Loans shall be permitted  to be  outstanding  under this  Agreement at any
time. In the event that the Borrower  shall request (i) a Revolving  Loan on any
Funding Date to bear interest  based on LIBOR pursuant to this Section 2.2, (ii)
any LIBOR Conversion  pursuant to a LIBOR Conversion Notice under Section 3.8(a)
hereof or (iii) to  continue  any LIBOR  Loan  pursuant  to a  successive  LIBOR
Conversion  Notice under Section 3.8(c) hereof,  the Agent and the Lenders shall
have no  obligation  to make such  Revolving  Loan based on LIBOR or effect such
LIBOR  Conversion or continue any LIBOR Loan if, after giving effect to any such
transaction,  there shall be outstanding  under this Agreement more than six (6)
LIBOR  Loans,  and the Agent and the  Lenders  shall be  irrevocably  authorized
without  notice to the  Borrower to make such  Revolving  Loan as an ABR Loan or
continue  such ABR Loan as such or convert  such  expiring  LIBOR Loan to an ABR
Loan.

         Section 2.04.     Standby Letters of Credit.

(a)  Generally.  Subject to and in accordance  with the terms and conditions set
forth  herein,  the Borrower may request the Issuing  Lender,  from time to time
during the period  commencing on the Effective  Date and ending 10 Business Days
prior to the  Maturity  Date,  to issue,  and  subject  to the terms  hereof the
Issuing  Lender  shall  issue,  for the account of the Borrower and on behalf of
itself or any Subsidiary thereof, one or more standby letters of credit (each, a
"Standby Letter of Credit") pursuant to the Issuing Lender's customary letter of
credit application.  The aggregate  outstanding amount at any time and from time
to time of all  Standby  Letters  of Credit  shall not  exceed  $5,000,000.  The
Issuing  Lender shall have no obligation  to issue any Standby  Letter of Credit
if, after giving effect to the issuance thereof,  the Total  Outstanding  Amount
shall then exceed the Maximum  Available  Amount (it being  understood  that the
Issuing  Lender shall,  upon request of the Borrower,  issue a Standby Letter of
Credit in an amount that would, after giving effect to the issuance thereof, not
cause the Maximum Available Amount to be exceeded).

(b) Standby Letter of Credit Fees;  Maturity.  The Borrower  shall,  among other
things,  pay to the Issuing  Lender for the benefit of the Lenders,  pro rata, a
quarterly fee (the "L/C Fee"),  payable in arrears on the Fee Payment Date.  The
L/C Fee shall be  computed  by  multiplying  the  Applicable  L/C Margin then in
effect by the daily average of the aggregate  available amount to be drawn under
all Standby Letters of Credit outstanding during the Fiscal Quarter  immediately
preceding  the Fee Payment Date (and shall be  calculated  on the basis of a 360
day year and the actual number of days elapsed).  All Standby  Letters of Credit
issued by the Issuing Lender as contemplated by this Section 2.3 shall expire no
later than the Maturity Date. Notwithstanding that the Issuing Lender shall have
no obligation to issue any Standby Letter of Credit the expiration date of which
shall extend  beyond the Maturity  Date, if the  expiration  date of any Standby
Letter of Credit shall in fact extend beyond the Maturity Date, then on the last
Business Day immediately  preceding the Maturity Date,  there shall be deemed to
have been made  Revolving  Loans in the  aggregate  amount then  available to be
drawn under all  Standby  Letters of Credit the  expiration  date of which shall
occur after the Maturity  Date,  the proceeds of which the Issuing  Lender shall
deposit in a collateral account at the Issuing Lender or an Affiliate thereof in
order to  collateralize  such  outstanding  Standby  Letters  of  Credit,  which
collateral  account  shall bear  interest for the account of the Borrower  based
upon  investment  of the funds as agreed  between  the  Issuing  Lender  and the
Borrower.

(c) Standby Letter of Credit Request  Procedure.  Whenever the Borrower  desires
that a Standby  Letter of Credit be issued on its  behalf or on behalf of any of
its Subsidiaries,  the Borrower shall give the Issuing Lender (with copies to be
sent by the Issuing Lender to the Agent and each other Lender) at least five (5)
Business Days' prior written notice therefor. The execution and delivery of each
request for a Standby  Letter of Credit  shall be deemed to be a  representation
and warranty by the Borrower that such Standby Letter of Credit may be issued in
accordance  with,  and will not violate the  requirements  of, this Section 2.3.
Unless the Issuing  Lender has received  notice from any Lender before it issues
the  respective  Standby  Letter  of Credit  that one or more of the  conditions
specified  in Section 4.2 are not then  satisfied,  or that the issuance of such
Standby Letter of Credit would violate this Section 2.3, then the Issuing Lender
may issue the requested Standby Letter of Credit for the account of the Borrower
in accordance  with the terms of this Agreement and, with respect to any matters
not  specifically  covered by this  Agreement,  in  accordance  with the Issuing
Lender's usual and customary practices as in effect from time to time.

(d)      Letter of Credit Participations.

  Immediately  upon the issuance by the Issuing  Lender of any Standby Letter of
Credit,  the Issuing Lender shall be deemed to have sold and transferred to each
Lender  (other than the Issuing  Lender),  and each such Lender  shall be deemed
irrevocably and  unconditionally to have purchased and received from the Issuing
Lender,  without recourse or warranty,  an undivided interest and participation,
in proportion to such Lender's Pro Rata Share, in such Standby Letter of Credit,
each drawing made  thereunder  and the  obligations  of the Borrower  under this
Agreement with respect thereto, and any collateral therefor.  Upon any change in
a Lender's Pro Rata Share of the Revolving Loan Commitment,  it is hereby agreed
that with respect to all outstanding  Standby Letters of Credit,  there shall be
an automatic adjustment to the participations pursuant to this Section 2.3(d) to
reflect the new Pro Rata Share of the Revolving Loan Commitment of the assigning
and assignee Lenders.

 In determining  whether to pay under any Standby Letter of Credit,  the Issuing
Lender shall have no  obligation  relative to the Lenders  other than to confirm
that any documents  required to be delivered under such Standby Letter of Credit
appear to have been  delivered and that they appear to comply on their face with
the  requirements of such Standby Letter of Credit.  Any action taken or omitted
to be taken by the Issuing Lender under or in connection with any Standby Letter
of Credit,  if taken or omitted in the  absence of gross  negligence  or willful
misconduct,  shall not create for the Issuing Lender any resulting  liability to
any Lender.

 Upon the request of any Lender, the Issuing Lender shall furnish to such Lender
copies of any Standby  Letter of Credit to which the Issuing Lender is party and
such  other  documentation  relating  to such  Standby  Letter  of Credit as may
reasonably be requested by such Lender.

 As between the Borrower on the one hand and the Issuing  Lender and the Lenders
on the other hand, the Borrower  assumes all risks of the acts and omissions of,
or misuse of, the Standby Letters of Credit by the respective  beneficiaries  of
such  Standby  Letters  of  Credit.  Without  limiting  the  generality  of  the
foregoing,  neither the Issuing Lender nor any other Lender shall be responsible
(except  in the case of its gross  negligence  or  willful  misconduct)  for the
following:

                           (A)  the  form,  validity,   sufficiency,   accuracy,
                  genuineness or legal effect of any documents  submitted by any
                  party in connection  with the  application for and issuance of
                  or any drawing under such Standby  Letters of Credit,  even if
                  it  should  in  fact  prove  to be in  any  respects  invalid,
                  insufficient, inaccurate, fraudulent or forged;

                           (B) the  validity or  sufficiency  of any  instrument
                  transferring  or assigning or purporting to transfer or assign
                  any such  Standby  Letter of Credit or the rights or  benefits
                  thereunder or proceeds thereof, in whole or in part, which may
                  prove to be invalid or ineffective for any reason;

                           (C) failure of the  beneficiary  of any such  Standby
                  Letter of Credit to comply fully with  conditions  required in
                  order to draw upon such Standby  Letter of Credit,  other than
                  material  conditions or instructions  that expressly appear in
                  such Standby Letter of Credit;

                           (D) errors, omissions, interruptions or delays in the
                  transmission  or  delivery  of any  messages  by mail,  cable,
                  telegraph, telecopier, telex or otherwise, whether or not they
                  are encoded;

                           (E)      errors in interpretation of technical terms;

                           (F)  any  loss  or  delay  in  the   transmission  or
                  otherwise of any document  required in order to make a drawing
                  under  any such  Standby  Letter  of  Credit  or the  proceeds
                  thereof;

                           (G) the misapplication by the beneficiary of any such
                  Standby Letter of Credit of the proceeds of any drawing of any
                  such Standby Letter of Credit; or

                           (H) any  consequences  arising from causes beyond the
                  control of the Issuing Lender,  including  without  limitation
                  any acts of governments.

 The obligations of the Lenders to make payments to the Agent for the account of
the  Issuing  Lender  with  respect  to  Standby  Letters  of  Credit  shall  be
irrevocable  and not subject to any  qualification  or exception  whatsoever and
shall be made in  accordance  with the terms and  conditions  of this  Agreement
under all circumstances,  including,  without  limitation,  any of the following
circumstances:

     (A) any lack of validity or  enforceability of this Agreement or any of the
     other Credit Documents;

                           (B) the  existence of any claim,  setoff,  defense or
                  other right which the Borrower or any of its  Subsidiaries may
                  have at any time  against  a  beneficiary  named in a  Standby
                  Letter of Credit,  any  transferee  of any  Standby  Letter of
                  Credit  (or any  Person  for whom any such  transferee  may be
                  acting),  the Agent,  the Issuing Lender,  any Lender,  or any
                  other Person,  whether in connection with this Agreement,  any
                  Standby Letter of Credit, the transactions contemplated herein
                  or any unrelated transactions;

                           (C) any  draft,  certificate  or any  other  document
                  presented under the Standby Letter of Credit shall prove to be
                  forged, fraudulent,  invalid or insufficient in any respect or
                  any  statement  therein shall prove to be untrue or inaccurate
                  in any respect;

     (D) the  surrender or  impairment  of any security for the  performance  or
     observance of any of the terms of any of the Credit Documents;

     (E) the  occurrence of any Event of Default or Potential  Event of Default;
     or

                           (F)  the   termination   of  this  Agreement  or  any
Commitment.

                  (e) Standby  Letter of Credit  Drawings  Constitute  Revolving
Loans.  The Issuing Lender shall promptly notify the Agent,  and the Agent shall
promptly  notify  each  Lender,  in each  case by  telecopy  or  telex  or other
customary form of  teletransmission,  of any drawing under any Standby Letter of
Credit (each drawing, a "Drawing").  Each Drawing shall immediately be deemed to
be and for all purposes of this  Agreement  shall  constitute  a Revolving  Loan
hereunder in the amount of such drawing  (which  Revolving  Loan shall,  for the
avoidance  of doubt,  bear  interest  initially  at the ABR).  Each Lender shall
promptly  and  unconditionally  pay to the Agent for the  account of the Issuing
Lender an amount  equal to such  Lender's Pro Rata Share of such Drawing in same
day funds.  Such payment shall be made to the Agent at the Agent Lending Office.
If the Agent  delivers  such notice to such Lender  prior to 2:00 P.M.  (Eastern
time) on any Business  Day,  such Lender shall make its required  payment on the
same  Business  Day.  If and to the  extent  such  Lender  shall  not have  made
available to the Agent for the account of the Issuing  Lender such  Lender's Pro
Rata  Share of such  Drawing,  such  Lender  agrees  to pay to the Agent for the
account of the Issuing Lender,  promptly upon demand, such amount, together with
interest thereon, for each day from such date until the date such amount is paid
to the Agent for the  account of the Issuing  Lender at the  Federal  Funds Rate
plus 100 basis points.  The failure of any Lender to make available to the Agent
for the  account of the Issuing  Lender its Pro Rata Share of any Drawing  shall
not relieve any other Lender of its  obligation  hereunder to make  available to
the  Agent for the  account  of the  Issuing  Lender  its Pro Rata  Share of any
Drawing on the date so  required;  provided,  however,  that no Lender  shall be
responsible  for the failure of any other Lender to make  available to the Agent
for the account of the Issuing Lender such other Lender's Pro Rata Share of such
Drawing.

         Section 2.05.     Swing Line Loan Subfacility.

                  (a)  Swing  Line   Subfacility.   Subject  to  the  terms  and
conditions hereof,  NationsBank,  N.A., in its individual capacity (as such, the
"Swing Line Lender"),  shall, in its sole and absolute discretion from and after
the Effective Date until one Business Day prior to the Maturity Date, make swing
line loans (each, a "Swing Line Loan" and, collectively, the "Swing Line Loans")
to the Borrower;  provided,  however, that (i) the aggregate principal amount of
all Swing Line Loans shall at no time exceed  $5,000,000.00  (such  amount,  the
"Swing Line Subfacility"),  and (ii) the sum of the aggregate outstanding amount
of all Revolving Loans (whether  bearing interest at the ABR or Applicable LIBOR
Rate)  plus the  aggregate  outstanding  amount of all Swing Line Loans plus the
aggregate  amount  then  available  to be drawn  under all  outstanding  Standby
Letters of Credit shall at no time exceed the Maximum Available Amount.

                  (b) The Swing Line Note;  Maturity.  The Swing Line Loans made
by the Swing Line Lender  pursuant to this  Section 2.4 shall be  evidenced by a
separate  Swing Line Note.  The Swing Line Note shall be issued on or before the
Effective  Date and shall  bear  interest  for the  period  from the date of the
initial  funding  of any  Swing  Line  Loan  until  paid in  full on the  unpaid
principal amount thereof.  The Swing Line Lender is hereby  authorized to record
in its books and records  (without making any notation on the Swing Line Note or
any  schedule  thereto)  the  amount and date of funding of each Swing Line Loan
made by it, and the amount and date of each payment or  prepayment  of any Swing
Line Loan.  No failure to so record nor any error in so  recording  shall affect
the obligations of the Borrower to repay the actual outstanding principal amount
of the Swing Line Loans, with interest  thereon,  as provided in this Agreement.
The aggregate  principal  amount of the Swing Line Loans shall be payable on the
Maturity  Date,  unless  sooner  accelerated  pursuant  to  the  terms  of  this
Agreement.

                  (c) Swing Line Loan Borrowing Procedure. The Swing Line Lender
shall make Swing Line Loans to the  Borrower  upon the terms and  subject to the
conditions  contained in the autoborrow  services  agreement entered into by the
Borrower and the Swing Line Lender (as such  agreement may be amended,  modified
or supplemented  from time to time, the "Autoborrow  Services  Agreement"),  and
otherwise  on the date (which shall be a Business  Day),  at the time and in the
amount as provided in the Autoborrow Services Agreement. The Autoborrow Services
Agreement shall specify,  among other things,  the base interest rate applicable
to any Swing Line Loan (such  rate,  the "Base  Swing Line  Rate"),  the minimum
amount of each Swing Line Loan and the minimum and maximum  period  during which
any Swing Line Loan may remain outstanding.  The Swing Line Lender shall have no
obligation to make available to the Borrower any Swing Line Loan until such time
as the Borrower and the Swing Line Lender shall have  executed and delivered the
Autoborrow Services Agreement.

                  (d) Interest on Swing Line Loans. Subject to the provisions of
clause (e) of this  Section  2.4, in the event that the Swing Line Lender  shall
make any Swing Line Loan  pursuant to this Section 2.4 the  aggregate  principal
amount of Swing Line Loans  outstanding from time to time shall bear interest at
a rate per annum  equal to the  Applicable  Swing Line Rate  (based on a 360 day
year and the actual  number of days  elapsed  for the period  during  which such
Swing Line Loan shall remain  outstanding).  No Swing Line Loan may be converted
into a LIBOR Loan.

                  (e)  Repayment of Swing Line Loans.  Each Swing Line Loan made
by the Swing Line Lender  hereunder shall be due and payable upon the expiration
of the period for which  such Swing Line Loan shall be made in  accordance  with
the terms of the Autoborrow  Services  Agreement.  The Swing Line Lender may, at
any time and in its sole and  absolute  discretion,  by  written  notice  to the
Borrower and the Agent (which shall promptly deliver a copy thereof to the other
Lenders),  demand  repayment of its Swing Line Loans then  outstanding by way of
the making of a Revolving  Loan  borrowing (a "Mandatory  Borrowing"),  in which
case the Borrower  shall be deemed to have  requested a Revolving Loan borrowing
in the amount of the then outstanding Swing Line Loans which shall bear interest
initially at the ABR and shall be applied to refund the then  outstanding  Swing
Line Loans; provided,  however, that, in the following  circumstances,  any such
demand shall also be deemed to have been given one Business Day prior to each of
(i) the  occurrence of the Maturity  Date,  (ii) the  occurrence of any Event of
Default  described  in clause  (g) or (h) of  Section  7.1  hereof,  (iii)  upon
acceleration  of the  Obligations  hereunder,  whether on account of an Event of
Default  described  in clause  (g) or (h) of Section  7.1 or any other  Event of
Default,  and (iv) the exercise of remedies in accordance with the provisions of
Section 7.1 hereof. Each Lender hereby irrevocably agrees to make such Revolving
Loans promptly upon any such request or deemed request on account of a Mandatory
Borrowing, in the amount (but in proportion to each Lender's Pro Rata Share) and
in the manner  specified  in the  preceding  sentence  and on the same such date
notwithstanding  that (A) the amount of the  Mandatory  Borrowing may not comply
with the minimum amount for  borrowings of Revolving  Loans  otherwise  required
hereunder,  (B)  whether  any  conditions  specified  in  Section  4.2 are  then
satisfied,  (C) whether an Event of Default or  Potential  Event of Default then
exists, (D) failure of any such request or deemed request for Revolving Loans to
be made by the time  otherwise  required in Section 2.2 hereof,  (E) the date of
such Mandatory Borrowing,  or (F) any reduction in the Revolving Loan Commitment
or termination of the Commitments  relating  thereto  immediately  prior to such
Mandatory  Borrowing  or  contemporaneously  therewith.  In the  event  that any
Mandatory Borrowing cannot for any reason be made on the date otherwise required
above  (including,  without  limitation,  as a result of the  commencement  of a
proceeding in bankruptcy with respect to the Borrower),  then each Lender hereby
agrees that it shall forthwith purchase (as of the date the Mandatory  Borrowing
would otherwise have occurred,  but adjusted for any payments  received from the
Borrower on or after such date and prior to such  purchase)  from the Swing Line
Lender such  participations in the then outstanding Swing Line Loans as shall be
necessary  to cause each such  Lender to share in such Swing Line Loans  ratably
based  upon its  respective  Pro Rata  Share of the  Revolving  Loan  Commitment
(determined  before  giving  effect to any  termination  of the  Revolving  Loan
Commitments  pursuant to the last  paragraph of Section 7.1);  provided that (1)
all  interest  payable on the Swing Line Loans  shall be for the  account of the
Swing Line Lender  until the date as of which the  respective  participation  of
each  other  Lender  is  purchased,   and  (2)  at  the  time  any  purchase  of
participations pursuant to this sentence is actually made, the purchasing Lender
shall be  required to pay to the Swing Line  Lender  interest  on the  principal
amount of such  participation  purchased for each day from and including the day
upon  which  the  Mandatory  Borrowing  would  otherwise  have  occurred  to but
excluding the date of payment for such  participation,  at the rate equal to, if
paid within 2 Business Days of the date of the Mandatory Borrowing,  the Federal
Funds Rate, and thereafter at a rate equal to the Applicable Swing Line Rate.

                  (f) Optional  Prepayment  of Swing Line Loans.  Subject to the
provisions of this clause (f), the Borrower may, at its sole option,  prepay the
principal  amount of the Swing  Line Loans in whole or in part (and in an amount
not less than the amount provided in the Autoborrow  Services  Agreement) at any
time and from time to time,  without  premium  or  penalty.  In  respect of each
Optional  Prepayment  of a Swing Line Loan  proposed to be made by the Borrower,
the right of the  Borrower to make such  Optional  Prepayment  is subject to the
Agent's receipt from the Borrower,  no later than 12:00 P.M. on the Business Day
specified  therein as the date on which such Optional  Prepayment is to be made,
of a written  notice  (which shall be  irrevocable  and a copy thereof  shall be
promptly  delivered by the Agent to the Swing Line Lender)  specifying  (i) that
the Borrower  desires to prepay such Swing Line Loan, (ii) the principal  amount
of such Optional Prepayment,  and (iii) the date (which shall be a Business Day)
on which such Optional  Prepayment  will be made.  Any Optional  Prepayment of a
Swing Line Loan,  which has not been converted to a Revolving  Loan, made by the
Borrower as  permitted  hereunder  shall be paid to the Agent for the account of
the Swing Line Lender no later than 12:00 P.M.  (Eastern Time) on the applicable
prepayment date.

ARTICLE III.

                                       INTEREST, FEES AND REPAYMENT

         Section 3.01.     Interest on the Revolving Loans

(a) ABR.  Except as provided  pursuant to clause (b) of this  Section  3.1,  the
aggregate  principal amount of the Revolving Loans outstanding from time to time
shall  bear  interest  at a rate per annum  equal to the ABR  until  the  entire
principal  amount of the Revolving  Loans shall have been repaid.  Any change in
the rate of interest on the Revolving  Loans  resulting from a change in the ABR
shall be effective as of the opening of business on the day on which such change
is effective.

(b) LIBOR Rate.  In the event the Borrower  shall effect a LIBOR  Conversion  in
accordance  with the  provisions  of Section 3.8 of this  Agreement  or obtain a
Revolving Loan that shall bear interest  initially at the Applicable  LIBOR Rate
as provided in Section 2.2(a)  hereof,  the aggregate  principal  amount of each
Revolving Loan that is the subject of such LIBOR Conversion or Borrowing Notice,
as the  case may be,  shall  bear  interest  at a rate  per  annum  equal to the
Applicable LIBOR Rate in respect of such Revolving Loan.

     (c)  Regulatory  Changes.  If,  after  the  date  of  this  Agreement,  any
     Regulatory Change

 shall  subject any Lender to any tax,  duty or other charge with respect to its
obligation  to make or  maintain  any  Revolving  Loan or Swing Line Loan or any
Standby  Letter  of  Credit  or its  Commitment,  or shall  change  the basis of
taxation  of  payments  to such  Lender of the  principal  of or interest on the
Revolving Loans or Swing Line Loans or in respect of any other amounts due under
this  Agreement in respect of its obligation to make any Revolving Loan or Swing
Line Loan or any Standby Letter of Credit or maintain its Commitment or maintain
any  Standby  Letter of Credit  (except  for  changes  in the rate of tax on the
overall net income of such Lender);  or shall impose,  modify or deem applicable
any reserve, assessment,  special deposit, capital adequacy, capital maintenance
or similar  requirement  against assets of, deposits with or for the account of,
or credit  extended  by,  such  Lender or shall  impose on such Lender any other
condition  affecting  (x) the  obligation  of the Lender to make or maintain the
Revolving  Loans or Swing Line Loans or its  Commitment or any Standby Letter of
Credit, or (y) the Revolving Notes or the Swing Line Note; and the result of any
of the foregoing is to increase the cost to such Lender of making or maintaining
any  Revolving  Loan or Swing  Line  Loan or any  Standby  Letter  of  Credit or
maintaining  its  Commitment  or to reduce  the  amount of any sum  received  or
receivable by such Lender  under,  or the rate of return  attributable  to, this
Agreement  or under the  Revolving  Notes or the Swing Line Note or any  Standby
Letter of Credit,  then such Lender shall give written notice to the Borrower if
such  Regulatory  Change shall impose costs in excess of those costs,  or reduce
the  amount  of any  such  sum or rate of  return  below  the  amount  or  rate,
applicable  on the date of this  Agreement,  and the Borrower  shall pay to such
Lender for the account of such Lender,  not later than 30 days following receipt
by the Borrower of such Lender's  notice,  such additional  amount or amounts as
will  compensate  such Lender for such  increase or  reduction as reflected in a
certificate  of such Lender  attached to such notice setting forth the basis for
the amount of said  increase  or  reduction,  as the case may be.  The  Lender's
certificate  attached  to such  notice  shall be  conclusive  and binding on the
Borrower in the absence of manifest error.

         Section 3.02.  Interest after Due Date. In the event the Borrower fails
to make  any  payment  of the  principal  amount  of or  interest  on any of the
Revolving Loans or Swing Line Loans or of the Unused Portion Fee, the L/C Fee or
the  Administrative  Fee or any other amount owing hereunder,  in each case when
due (whether by demand,  acceleration or otherwise),  the Borrower, shall pay to
the Agent for the account of the Lenders interest on such unpaid amount, payable
from time to time on demand,  from the date such amount shall have become due to
the date of payment thereof, accruing on a daily basis, at a per annum rate (the
"Default Rate") equal to the sum of (x) the ABR plus (y) two percent (2%).


         Section 3.03.     Payment and Computations.

(a) Payments. All payments required or permitted to be made to the Agent, to the
Agent for the account of the Lenders,  or to any Lender under this  Agreement or
under any Revolving  Note or the Swing Line Note shall be made in Dollars (i) if
to the Agent, at the Lending Office of the Agent in immediately  available funds
and (ii) if to any Lender,  to it in immediately  available  funds at an account
specified  by such  Lender in  writing  to the  Borrower.  The  Borrower  hereby
irrevocably  instructs  and  authorizes  the Agent to  effect  each  payment  of
interest on the  Revolving  Loans and the Swing Line Loans due on each  Interest
Payment Date, and of each payment of the Unused Portion Fee, the L/C Fee and the
Administrative Fee due on the Fee Payment Date, by debiting the Borrower Account
on such Interest  Payment Date or Fee Payment Date, as the case may be, with the
aggregate amount thereof,  in each case, after giving effect to the crediting to
the Borrower Account of the proceeds of the Revolving Loan, if any, made on such
Interest  Payment Date or Fee Payment  Date,  as the case may be, in  accordance
with Section 2.2(a) of this  Agreement.  The Agent shall provide to the Borrower
an  invoice  showing  the  amount of such  debit and the  manner in which it was
calculated.

(b)  Computations  of Interest.  Interest on the unpaid portion of the Revolving
Loans and the Swing Line Loans, and interest accruing at the Default Rate on any
amount owing  hereunder,  shall each be calculated for the actual number of days
(including  the  first day but  excluding  the last  day)  elapsed  and shall be
computed on the basis of a year of 360 days.

(c) Interest on Loans.  Interest on the Revolving Loans and the Swing Line Loans
shall be payable in arrears on each Interest Payment Date.

(d)      Application of Payments; Apportionment.

                           (i) Apportionment of Payments and Prepayments. Unless
                  a Lender shall be in default of its obligations to advance any
                  Revolving Loan or reimburse the Agent as provided herein,  all
                  payments and  prepayments of principal and interest in respect
                  of outstanding Revolving Loans and all payments of fees (other
                  than any  fees  payable  pursuant  to the  Administrative  Fee
                  Letter)  and  all  other  payments  in  respect  of any  other
                  Obligations  (other than with respect to the Swing Line Loans)
                  shall be allocated  among (and paid over as soon as reasonably
                  practicable  after receipt  thereof to) such of the Lenders as
                  are entitled  thereto in  proportion to their  respective  Pro
                  Rata Share.  All payments  and  prepayments  of principal  and
                  interest and other  amounts in respect of the Swing Line Loans
                  that  have not been  converted  to  Revolving  Loans  shall be
                  allocated  to the  Swing  Line  Lender,  and all fees  payable
                  pursuant to the  Administrative  Fee Letter shall be allocated
                  only to the Agent.

                           (ii) Upon the occurrence  and during the  continuance
                  of an Event of  Default,  the Agent  shall,  unless  otherwise
                  specified  by the  Required  Lenders as  provided  in the last
                  paragraph of this clause (ii),  apply all payments  (including
                  the proceeds of any  collateral  obtained upon the exercise by
                  the Agent of any remedy  specified in any Credit  Document) in
                  respect of any Obligations:

                                    (A) first,  to pay  Obligations to the Agent
                           in respect of reimbursement of any costs and expenses
                           (including    reasonable    attorney's    fees    and
                           disbursements) in connection with the exercise of any
                           remedies by the Agent under any Credit Document;

                                    (B)  second,  to pay  interest  on and  then
                           principal of any portion of the Revolving Loans which
                           the Agent may have  advanced  on behalf of any Lender
                           for which the Agent has not then been  reimbursed  by
                           such Lender or the Borrower;

                                    (C) third,  to pay Obligations in respect of
                           any fees, expense reimbursement or indemnities due to
                           the Agent  other than as provided  in  subclause  (A)
                           above;

                                    (D) fourth, to pay Obligations in respect of
                           any   fees,   expense   reimbursement,   indemnities,
                           increased  costs or breakage then due to the Lenders,
                           pro rata;

                                    (E) fifth, to the ratable payment of overdue
                           interest  or  late  charges,  if  any,  then  due the
                           Lenders;

                                    (F)  sixth,   to  the  ratable   payment  of
                           interest  due in respect of the  Revolving  Loans and
                           the Swing Line Loans;

                                    (G)  seventh,  to  the  ratable  payment  or
                           prepayment   of  principal  due  in  respect  of  the
                           Revolving Loans and the Swing Line Loans; and

     (H) eighth, to the ratable payment of all other Obligations;

provided, however, that no Lender that shall be in default of its obligations to
fund Revolving Loans or reimburse the Agent as provided herein shall be entitled
to its  ratable  share of payments  in respect of any  Obligations  prior to the
payment  to all  non-defaulting  Lenders  of all  amounts  due such  Lenders  as
provided herein.

                  The order of priority set forth in this Section  3.4(d)(ii) is
set forth solely to  determine  the rights and  priorities  of the Agent and the
Lenders as among  themselves.  The order of  priority  set forth in clauses  (D)
through (H) of this Section  3.4(d)(ii) may at any time and from time to time be
changed by the Required Lenders without  necessity of notice to or consent of or
approval by the Borrower,  or any other Person.  The order of priority set forth
in clauses (A) through (C) of this Section  3.4(d)(ii)  may be changed only with
the prior written consent of the Agent.

         Section 3.04. Payment at Maturity.  Any outstanding principal amount of
the Revolving  Notes and the Swing Line Note  theretofore  not repaid,  together
with any accrued and unpaid Unused Portion Fee,  Administrative  Fee or L/C Fee,
any accrued and unpaid interest thereon, together with any other amounts due and
payable in accordance with the provisions hereof (including  pursuant to Section
9.10  hereof),  shall be due and payable in full on the  Maturity  Date  (unless
sooner accelerated  pursuant to the terms hereof),  and this Agreement shall not
terminate until all Obligations shall have been paid in full.

         Section 3.05.     Prepayments; Certain Early Repayments.

(a)  Mandatory  Prepayment  of  Revolving  Loans,  Swing Line Loans and  Standby
Letters of Credit. If at any time the Total Outstanding  Amount shall be greater
than the Maximum Available Amount,  the Borrower shall,  without notice from the
Lender,  prepay that portion of the Revolving Loans, Swing Line Loans and/or the
Standby  Letters  of  Credit,  as the case may be,  in an  amount  equal to such
excess.

(b) Optional Prepayments of Revolving Loans. Subject to the terms and conditions
of clause (c) below and Section 3.9 hereof, the Borrower may, at its sole option
prepay the principal  amount of the Revolving Loans (whether bearing interest at
the ABR or  Applicable  LIBOR  Rate)  in  whole  or in  part  (in an  amount  of
$1,000,000  or more and in  multiples  of $250,000) at any time and from time to
time, without premium or penalty.

(c) Optional  Prepayment  Procedure.  In respect of each Optional  Prepayment of
Revolving Loans (whether  bearing  interest at the ABR or Applicable LIBOR Rate)
proposed  to be made by the  Borrower,  the right of the  Borrower  to make such
Optional  Prepayment  is subject to the Agent's  receipt from the  Borrower,  no
later than 10:00 A.M.  (Eastern  Time) on the Business Day specified  therein as
the date on which such  Optional  Prepayment is to be made (unless such Optional
Prepayment  shall relate to the prepayment of any LIBOR Loan, in which case such
notice shall be given no later than 10:00 A.M. (Eastern time) at least three (3)
Business Days prior to the date of prepayment), of a written notice (which shall
be irrevocable) specifying (i) that the Borrower desires to prepay the Revolving
Loans,  (ii) the  principal  amount of such Optional  Prepayment  and the extent
which any portion  thereof  relates the  prepayment of any LIBOR Loan, and (iii)
the date (which shall be a Business Day or, if such Optional  Prepayment relates
to a LIBOR Loan, a LIBOR Business Day) on which such Optional Prepayment will be
made.  Any  Optional  Prepayment  of  Revolving  Loans made by the  Borrower  as
permitted hereunder shall be paid to the Agent for the account of the Lenders no
later than 12:00 P.M.  (Eastern Time) on the applicable  prepayment date (except
that any  prepayment  of a LIBOR  Loan  shall be paid no later  than  10:00 A.M.
(Eastern Time) on the applicable prepayment date).

         Section 3.06.     Unused Portion Fee and Administrative Fee.

(a) Unused  Portion Fee. For each Fiscal  Quarter (or part  thereof)  during the
period from the Effective  Date until the Maturity  Date, the Borrower shall pay
to the Agent,  for the account of the Lenders pro rata based upon each  Lender's
Pro Rata Share of the  Revolving  Loan  Commitment,  an unused  portion fee (the
"Unused  Portion Fee")  determined by subtracting the Total  Outstanding  Amount
(computed on the basis of the daily  average for such Fiscal  Quarter)  from the
Revolving Loan Commitment  Amount. The Unused Portion Fee shall be computed at a
rate per annum equal to, in the event the Funded Debt to EBITDA ratio calculated
pursuant  to Section  6.1(e)  hereof is (i) less than 0.50 to 1.00,  then 0.19%,
(ii) greater than or equal to 0.50 but less than 1.50 to 1.00, then 0.22%, (iii)
greater  than or equal to 1.50 to 1.00 but less than 2.50 to 1.00,  then  0.25%,
and (iv) greater than or equal to 2.50 to 1.00,  then 0.25%.  The Unused Portion
Fee shall be due and  payable in arrears on the Fee  Payment  Date to which such
Unused  Portion Fee relates and on the Maturity Date, and shall be calculated on
the basis of a 360 day year and the actual days elapsed.  The Unused Portion Fee
for any Fiscal  Quarter  shall be determined  based on the financial  statements
delivered by the  Borrower  during the  immediately  preceding  Fiscal  Quarter;
provided, however, that if such financial statements are not delivered when due,
then the highest Funded Debt to EBITDA ratio shall apply.

(b)  Administrative  Fee. During the term of this Agreement,  the Borrower shall
pay to the Agent, as compensation for the services of the Agent hereunder, a fee
(the  "Administrative  Fee") in an amount specified in, and subject to the terms
and  conditions  of, that certain letter  agreement,  dated the Effective  Date,
between  the  Borrower  and the  Agent  (as the same  may  from  time to time be
amended,  modified  or  supplemented,  the  "Administrative  Fee  Letter").  The
Administrative  Fee  shall be due and  payable  on each  Fee  Payment  Date,  as
provided in the Administrative Fee Letter.

         Section 3.07.     LIBOR Conversion.

(a)  Conversion.  So long as no Event of Default or  Potential  Event of Default
shall have  occurred and be  continuing,  the  Borrower  shall have the right to
convert all or part of the  outstanding  ABR Loans to loans bearing  interest at
the  then  Applicable  LIBOR  Rate  (such  conversion,  a  "LIBOR  Conversion");
provided,  however,  that the LIBOR Period to which such LIBOR  Conversion shall
relate  will not extend  beyond the  Maturity  Date.  In order to effect a LIBOR
Conversion,  the Borrower shall give the Agent irrevocable  written notice (such
notice, a "LIBOR  Conversion  Notice") prior to 10:00 A.M. (Eastern time) on the
date  (which must be a Business  Day) that is at least three (3) LIBOR  Business
Days prior to the first day of the LIBOR  Period to which such LIBOR  Conversion
shall apply,  stating that (i) the Borrower wishes to effect a LIBOR Conversion,
(ii) the aggregate  principal amount of outstanding ABR Loans which the Borrower
wishes to bear interest at the  Applicable  LIBOR Rate (it being  understood and
agreed  that no LIBOR  Conversion  shall be  permitted  in an  amount  less than
$1,000,000.00  and shall be in multiples of  $250,000.00),  (iii) the applicable
LIBOR Period being elected by the Borrower (it being  understood  that no change
in LIBOR with respect to any then outstanding  LIBOR Loan may be effected during
the LIBOR Period relating  thereto) and (iv) the Business Day on which the LIBOR
Period is to be effective.

(b) Notice of LIBOR to Borrower. In the event the Borrower has requested a LIBOR
Conversion,  the Agent shall give written notice to the Borrower and the Lenders
of LIBOR as promptly as reasonably  possible after such rate is determined.  The
Agent's  determination  of LIBOR shall be  conclusive in the absence of manifest
error.

(c) Successive Notice of LIBOR  Conversion.  Subject to the provisions of clause
(a) of this  Section 3.8,  the  Borrower  may, by  executing a LIBOR  Conversion
Notice at least  three LIBOR  Business  Days prior to the first day of the LIBOR
Period to which such LIBOR  Conversion  Notice shall apply,  execute  successive
LIBOR  Conversions  with respect to any then  outstanding ABR Loan together with
any then  outstanding  LIBOR  Loans the  LIBOR  Period  in  respect  of which is
scheduled to expire on or before the start of the LIBOR Period specified in such
LIBOR  Conversion  Notice.  If, with respect to any LIBOR Loans, the Agent shall
not have received a LIBOR Conversion Notice for the next immediately  succeeding
LIBOR Period which  complies  with the  provisions of clause (a) of this Section
3.8, such LIBOR Loans shall, immediately upon the expiration of the then current
LIBOR Period and without any notice to the Borrower, bear interest at the ABR in
accordance with the provisions of Section 3.1(a) of this Agreement.

         Section  3.08.  Breakage,  etc. In the event of the  prepayment  of any
LIBOR Loan  (whether by way of  acceleration  or otherwise or due to an Optional
Prepayment of any LIBOR Loan pursuant to Section  3.6(b)  hereof),  the Borrower
shall  pay to each  Lender  whose  LIBOR  Loan has been so  prepaid  any loss or
expense  which such  Lender may incur or  sustain  directly  as a result of such
prepayment,  including,  without limitation, an amount equal to (i) an amount of
interest  which  would have  accrued  on the  amount so  prepaid  for the period
beginning  on the  date of such  prepayment  and  ending  on the last day of the
applicable LIBOR Period (such period, the "Breakage Period"),  at the Applicable
LIBOR Rate minus (ii) the amount of interest (as  reasonably  determined by each
affected  Lender)  which  would have  accrued to such  Lender on such  amount by
placing such amount on deposit for the Breakage Period with leading banks in the
London interbank market.  All amounts owing to a Lender pursuant to this Section
3.9 shall be paid by the Borrower promptly upon written request therefor.

         Section 3.09.  Inability to Determine Interest Rate for LIBOR Loans. In
the event that the Agent shall have  determined  (which  determination  shall be
conclusive  and binding upon the Borrower)  that (a) by reason of  circumstances
affecting the London interbank market  generally,  adequate and reasonable means
do not exist for ascertaining LIBOR for any LIBOR Period with respect to (i) any
proposed Revolving Loan that the Borrower has requested be made as a LIBOR Loan,
(ii) any LIBOR Loans that will result from the  requested  conversion  of all or
part of any ABR Loans into LIBOR Loans,  or (iii) the  continuation of any LIBOR
Loan as such for an  additional  LIBOR  Period,  (b) LIBOR  determined  or to be
determined  for any LIBOR Period will not adequately and fairly reflect the cost
to the Lenders of making or  maintaining  their affected LIBOR Loans during such
LIBOR Period by reason of  circumstances  affecting the London  interbank market
generally  or (c) dollar  deposits in the  relevant  amount and for the relevant
period with respect to any such LIBOR Loan are not available to the Agent in the
London interbank  market,  then the Agent shall,  prior to the requested Funding
Date or the conversion date or the last day of the then applicable LIBOR Period,
as the case may be, notify the Borrower (by telephone or otherwise, confirmed in
writing), with a copy to the Lenders, of such determination.  If the Agent shall
have given such notice,  then (x) any requested LIBOR Loans shall be made as ABR
Loans,  (y) any ABR Loans that were to have been  converted to LIBOR Loans shall
be  continued  as ABR  Loans,  and (z) any  outstanding  LIBOR  Loans  shall  be
converted,  on the last day of the then current LIBOR Period applicable thereto,
into ABR Loans.  Until such notice has been  withdrawn by the Agent,  no further
LIBOR Loans shall be made and no ABR Loans shall be converted to LIBOR Loans.

ARTICLE IV.

                                           CONDITIONS PRECEDENT

         Section 4.01.  Conditions  Precedent to Effective Date. This Agreement,
and the  Revolving  Loan  Commitment  of the  Lenders  hereunder,  shall  become
effective at a closing at the offices of Crowell & Moring LLP, 1001 Pennsylvania
Avenue, N.W.,  Washington,  D.C. 20004, only on the Business Day (the "Effective
Date")  on which  all of the  following  conditions  precedent  shall  have been
fulfilled to the  satisfaction of the Lenders;  provided,  however,  that in the
event the  Effective  Date shall have not  occurred on or prior to December  31,
1998, the Lenders shall have no further obligations hereunder:

                  (i) The Agent,  on behalf of the Lenders,  shall have received
from the  Borrower  the  following  instruments,  agreements,  certificates  and
payments, as the case may be, on or prior to the Effective Date:

                  (A) Revolving  Notes. A Revolving  Note,  dated on or prior to
         the Effective  Date,  payable to the order of each Lender in the amount
         of such Lender's Pro Rata Share of the Revolving  Loan  Commitment  and
         duly executed by the Borrower;

                  (B)  Borrower  Security   Agreement.   The  Borrower  Security
         Agreement,  dated on or prior to the Effective  Date,  duly executed by
         the Borrower in favor of the Agent;

                  (C) Subsidiary Guarantee.  The Subsidiary Guarantee,  dated on
         or prior to the Effective  Date, duly executed in favor of the Agent by
         each of Hagler Bailly Services,  Inc., Hagler Bailly Consulting,  Inc.,
         HB Capital,  Inc.,  Putnam,  Hayes & Bartlett,  Inc., TB&A Group, Inc.,
         Theodore Barry and Associates,  Private Label Energy Services, Inc. and
         Fieldston Publications, Inc.;

                  (D) Swing Line Note.  A Swing Line Note,  dated on or prior to
         the Effective Date,  payable to the order of NationsBank,  N.A., in the
         amount of $5,000,000.00 and duly executed by the Borrower;

                  (E)  Subsidiary  Security  Agreements.  A separate  Subsidiary
         Security  Agreement,  dated  on or prior to the  Effective  Date,  duly
         executed in favor of the Agent by each of Hagler Bailly Services, Inc.,
         Hagler Bailly  Consulting,  Inc.,  HB Capital,  Inc.,  Putnam,  Hayes &
         Bartlett,  Inc.,  TB&A  Group,  Inc.,  Theodore  Barry and  Associates,
         Private Label Energy Services, Inc. and Fieldston Publications, Inc.;

                  (F)  Financing   Statements.   All  uniform   commercial  code
         financing  statements  shall  have been  filed,  and all other  actions
         (including,  without  limitation,  the filing of notices of  assignment
         with the United States  government,  as required by the Lenders)  shall
         have been  taken,  as shall be  necessary  or  advisable  to effect the
         perfection of the Agent's security  interest in the collateral  pledged
         or assigned under the Borrower  Security  Agreement and each Subsidiary
         Security Agreement, as applicable;

                  (G) Legal  Opinions.  The Agent  shall  have  received  (i) an
         opinion  of Hogan &  Hartson,  L.L.P.,  special  counsel  to the Credit
         Parties,  dated the  Effective  Date and addressed to the Agent and the
         Lenders,   covering   such   matters   incident  to  the   transactions
         contemplated  by the Credit  Documents as the Lenders shall  reasonably
         request and in form and substance satisfactory to the Lenders and their
         counsel,  and (ii) an opinion of Stephen V.R.  Whitman,  Esq.,  General
         Counsel of the  Borrower,  dated the Effective  Date,  addressed to the
         Agent  and  the  Lenders,   covering  such  matters   incident  to  the
         transactions  contemplated by the Credit Documents as the Lenders shall
         reasonably  request  and in  form  and  substance  satisfactory  to the
         Lenders and their  counsel.  Each such opinion will permit the reliance
         thereon by any financial institution that becomes a party to the Credit
         Documents following the execution thereof by way of assignment;

                  (H)  Resolutions.  A certified copy of the  resolutions of the
         Board of Directors of each Credit Party  authorizing  the execution and
         delivery of the Credit Documents to which it is a party;

                  (I) Charter  Documents.  A copy of the charter  documents  and
         by-laws of each Credit  Party,  together with all  amendments  thereto,
         certified by the Secretary of such Credit Party as being true, complete
         and correct and in effect as of the Effective Date;

                  (J) Incumbency  Certificate.  An incumbency certificate of the
         Secretary,  an Assistant  Secretary  or an Assistant  Treasurer of each
         Credit Party  certifying the names and true  signatures of each officer
         of such Credit  Party  authorized  to execute the Credit  Documents  to
         which such Credit Party is a party;

                  (K)  Compliance  Certificate.  A certificate  of an Authorized
         Officer of the Borrower,  dated the Effective Date, certifying that the
         matters  contained in clauses (iii), (iv) and (v) of Section 4.2 hereof
         are true and correct;

                  (L) Insurance.  A certificate of an Authorized  Officer of the
         Borrower,  dated the Effective Date, certifying,  in form and substance
         reasonably  satisfactory to the Lenders, the Borrower's compliance with
         Section 6.1(m) hereof, having attached to such certificate a summary in
         reasonable  detail of the  Borrower's and its  Subsidiaries'  insurance
         coverage.  The Borrower shall deliver an insurance  report, in form and
         substance  reasonably  acceptable  to the  Lenders,  of an  independent
         insurance  broker as to due  compliance as of the  Effective  Date with
         Section 6.1(m) hereof; and

                  (M) Lien  Search.  The  results of a recent  search,  upon the
         records  maintained with the appropriate  Secretary of State and county
         or city recorder offices of all  jurisdictions  deemed advisable by the
         Lenders,  regarding personal property,  judgment and tax liens, if any,
         on file with such offices and naming the Borrower or any  Subsidiary as
         a debtor, which results shall be satisfactory to the Lenders.

                  (ii) Financial  Disclosure.  The Borrower shall have disclosed
to the Lenders  promptly from time to time any material  developments or changes
in the  Borrower  and its  Subsidiaries',  taken as a whole,  business,  assets,
results  of  operations,   condition  (financial  or  otherwise)  or  prospects,
including  without  limitation  amendments  to their  charter  documents  or the
Borrower's  Form  10-K  or 10-Q  and  the  exhibits  thereto,  and any  material
amendments, changes or terminations of any material contracts or the award of or
loss of any material bid or proposal. Any such material developments, changes or
amendments  shall not have affected  adversely the assumptions  contained in the
credit analysis of the Borrower  performed by the Lenders prior to the execution
of this Agreement or resulted in a material  adverse change since  September 30,
1998 in the business,  assets,  results of operations,  condition  (financial or
otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole;

                  (iii) Financial Statements.  The Borrower shall have delivered
to the Lenders (A) the  Borrower's  Form 10-K for the Fiscal Year ended December
31, 1997 and Form 10-Q for the Fiscal Quarters ended March 31, June 30, 1998 and
September  30,  1998,  and  (B)  such  other  unaudited  consolidated  financial
statements of the Borrower and its  Subsidiaries as any Lender shall  reasonably
request,  together  with,  in each case,  an  officer's  certificate,  dated the
Effective  Date,  from  each  of the  Borrower's  Chief  Financial  Officer  and
Treasurer, stating that, to their personal knowledge after having performed such
due diligence as would  customarily be performed by a corporate officer in their
position but no additional  due  diligence,  the  Borrower's  Form 10-K and Form
10-Qs and unaudited consolidated financial statements,  if any, attached thereto
as of the Effective  Date do not contain an untrue  statement of a material fact
or omit to state a material fact  required to be stated  therein or necessary to
make the statements therein not misleading;

                  (iv)  Legal  Matters.  All  legal  matters  incident  to  this
Agreement  shall be  satisfactory  to counsel for the Lenders,  and the Borrower
shall have  reimbursed  the Lenders for their fees and expenses and the fees and
expenses of the Lenders'  counsel in connection  with the preparation or review,
as the case may be, of the Credit Documents and all matters incident thereto (it
being understood that such statement may not reflect the final statement of fees
and  expenses   incurred  by  the  Lenders'  counsel  in  connection  with  such
preparation or review);

     (v) Schedules.  All schedules  delivered hereunder by the Borrower shall be
     in form and substance satisfactory to the Lenders;

                  (vii) Due Diligence.  The Lenders shall have  completed  their
due  diligence  review of the Borrower  and its  Subsidiaries,  including  their
business,  assets,  results of operations,  condition  (financial or otherwise),
prospects,  liabilities  (both actual and  contingent,  including  environmental
liabilities),  management and affairs,  and the results  thereof shall have been
satisfactory to the Lenders in their sole discretion;

                  (viii)  State  Street  Bank Credit  Facility.  The Lenders and
State Street Bank shall have entered into an arrangement,  in form and substance
satisfactory  to the Lenders,  providing for the payment in full of all amounts,
if any,  owing under the State Street Bank Credit  Facility as of the  Effective
Date with the  proceeds  of the  Revolving  Loans  made to the  Borrower  on the
Effective Date.  State Street Bank shall have (A) agreed to permit the filing of
the Uniform Commercial Code financing statements contemplated by clause (iii) of
this  Section 4.1 prior to the  termination  of the credit  facility  commitment
under the State Street Bank Credit  Facility  and (B)  delivered to the Agent on
the  Effective   Date  a  Uniform   Commercial   Code   termination   statement,
appropriately  completed,  in respect of each Uniform  Commercial Code financing
statement filed by State Street Bank that covers property of the Borrower or any
Subsidiary  thereof and that secures the  indebtedness  arising  under the State
Street Bank Credit  Facility.  State  Street Bank shall have agreed  that,  upon
payment in full of all amounts, if any, owing under the State Street Bank Credit
Facility as of the Effective Date, the Agent shall be permitted to file all such
Uniform Commercial Code termination statements on behalf of State Street Bank;

                  (ix)  BankBoston  Credit  Facility.  The  Lenders  shall  have
received  from  BankBoston,  N.A.  evidence  that all  amounts  owing  under the
BankBoston  Credit  Facility  have been  repaid and that the  facility  provided
thereunder  has been  terminated.  In  addition,  BankBoston,  N.A.  shall  have
delivered  to  the  Agent  on  the  Effective  Date a  Uniform  Commercial  Code
termination  statement,  appropriately  completed,  in respect  of each  Uniform
Commercial  Code  financing  statement  filed by  BankBoston,  N.A.  that covers
property  of  Putnam,  Hayes &  Bartlett,  Inc.  or the  Borrower  or any  other
Subsidiary  thereof  and  that  secures  the  indebtedness   arising  under  the
BankBoston Credit Facility;

                  (x)  NationsBank,  N.A. shall have received from the Borrower,
by wire  transfer of  immediately  available  funds to an account  designated by
NationsBank,  N.A., the syndication fee payable by the Borrower  pursuant to the
Administrative Fee Letter;

                  (xi) Miscellaneous. The Lenders shall have received such other
documents,  instruments,  certificates,  opinions, agreements and information as
the Lenders or their counsel  shall  reasonably  request in their  discretion in
connection  with  the  consummation  of the  transactions  contemplated  by this
Agreement (including, without limitation, current consolidated and consolidating
financial  statements of the Borrower and its Subsidiaries,  a report describing
the aggregate  amount and current age status of accounts  receivable and payable
of the Borrower and its Subsidiaries,  a report describing the current status of
goods or services on backlog with the Borrower or any  Subsidiary  thereof and a
report describing the status of pending or threatened litigation).

Section  2.01.  Further  Conditions  Precedent  to  Revolving  Loans and Standby
Letters of Credit.  The  obligation of the Agent,  on behalf of the Lenders,  to
make any  Revolving  Loan,  the  obligation of the Swing Line Lender to make any
Swing Line Loan,  and the  obligation of the Issuing Lender to issue any Standby
Letter of Credit shall be subject to the fulfillment to the  satisfaction of the
Lenders,  in the case of Revolving Loans and Standby Letters of Credit,  and the
Swing Line Lender,  in the case of Swing Line Loans,  of the further  conditions
precedent  that, on the Funding Date for such  Revolving Loan or Swing Line Loan
or the issuance date for such Standby Letter of Credit, as the case may be:

                  (i)  Notice.  In the  case of any  Revolving  Loan or  Standby
         Letter of Credit,  the Agent  shall have  received a  Borrowing  Notice
         (except as otherwise provided in the last sentence of Section 2.2(a) of
         this Agreement) in accordance with Section 2.2(a) or the Issuing Lender
         shall  have  received  a  request  for a  Standby  Letter  of Credit in
         accordance  with  Section  2.3(c),  as the  case may be,  in each  case
         executed by an Authorized  Officer of the Borrower (or other officer of
         the Borrower  designated by such Authorized Officer as having authority
         to execute such notice);

                  (ii)  Payment of  Obligations.  The prospect of payment of all
         obligations and liabilities  outstanding or to become outstanding under
         this Agreement is not impaired due to acts or events materially bearing
         upon the  financial  condition of the  Borrower,  as  determined by the
         Required Lenders in their sole discretion;

                  (iii) No Material  Adverse Change.  Since the date of the most
         recent  financial  statements or  projections  provided to the Lenders,
         there shall have been no material  adverse change in the Borrower's and
         the  Guarantors'  (taken  as a  whole)  financial  condition  or in the
         Borrower's and the Guarantors'  (taken as a whole) assets or prospects,
         in each  case as  determined  by the  Required  Lenders  in their  sole
         discretion;

                  (iv)  Representations and Warranties.  The representations and
         warranties  of each Credit Party in the Credit  Documents  are true and
         correct as of such Funding Date (or, in the case of Standby  Letters of
         Credit,  the date of issuance thereof) as though made on and as of such
         Funding Date (or, in the case of Standby Letters of Credit, the date of
         issuance  thereof),  except  to the  extent  such  representations  and
         warranties  relate  solely  to an  earlier  date,  in which  case  such
         representations  and  warranties  shall be true and  correct as of such
         earlier date (and, if any such representation and warranty shall not be
         true and correct,  the Borrower  shall describe in writing to the Agent
         the nature of such misrepresentation and warranty);

                  (v)  No  Event  of  Default.  No  event  has  occurred  and is
         continuing, or would result from such Revolving Loan or Swing Line Loan
         after giving  effect to the  application  of the proceeds  therefrom or
         from the issuance of such Standby  Letter of Credit if the  beneficiary
         thereof  were to fully draw upon such  Standby  Letter of Credit on the
         date of  issuance,  which  constitutes  an  Event of  Default  or would
         constitute a Potential Event of Default;

                  (vi) Maximum  Available  Amount.  After  giving  effect to the
         making of such  Revolving  Loan or Swing Line Loan on the Funding  Date
         thereof  or the  issuance  of such  Standby  Letter  of  Credit  on the
         issuance date thereof,  the Total  Outstanding  Amount shall not exceed
         the Maximum Available Amount; and

                  (vii) Officer's Certificate. In the case of any Revolving Loan
         or  Standby  Letter  of  Credit,   the  Agent  shall  have  received  a
         certificate,  addressed to the Lenders, of an Authorized Officer of the
         Borrower,  dated the date of the Borrowing Notice,  certifying that the
         matters contained in clauses (iii),  (iv), (v) and (vi) of this Section
         4.2 are true and correct.

ARTICLE V.
                                      REPRESENTATIONS AND WARRANTIES

                  In order to induce  the  Lenders  and the Agent to enter  into
this Agreement and make the Revolving Loans and Swing Line Loans contemplated by
the terms hereof,  the Borrower  represents  and warrants with respect to itself
and its Subsidiaries, as the context shall require, as of the date hereof and as
of the Effective Date that:

         Section 5.1  Existence,  Power and  Authority.  The  Borrower  and each
Subsidiary  thereof is a  corporation  or other entity duly  organized,  validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
incorporation  or  organization,  with  full  corporate  or  company  power  and
authority  to carry on its business as  currently  conducted  and to own or hold
under lease its  property;  the  Borrower  and each  Subsidiary  thereof is duly
qualified  to do  business  as a  foreign  corporation  or other  entity in good
standing in each other  jurisdiction in which the conduct of its business or the
maintenance of its property requires it to be so qualified and where the failure
to be so  qualified  would  have a  material  adverse  effect  on the  financial
condition,  business or operation of the Borrower or such  Subsidiary;  and, the
Borrower and the other Credit  Parties have full power and authority  (corporate
or  otherwise)  to execute and deliver the Credit  Documents to which they are a
party and to carry out the transactions contemplated thereby.

         Section  5.02.  Authorization;  Enforceable  Obligations.  Each  Credit
Document to which the Borrower and the other Credit Parties are a party has been
duly authorized, executed and delivered (or will, on the Effective Date, be duly
authorized,  executed  and  delivered)  by the  Borrower  and such other  Credit
Parties and constitutes the legal,  valid and binding obligation of the Borrower
and such other Credit Parties,  enforceable  against the Borrower and such other
Credit Parties in accordance with its terms (except as such  enforceability  may
be  limited  by  general  principles  of the law of equity or by any  applicable
bankruptcy,  reorganization,  insolvency,  moratorium  or similar  laws and laws
affecting creditors' rights generally).

         Section 5.03. No Legal Bar. The execution,  delivery and performance by
the Borrower and the other Credit Parties of the Credit  Documents to which they
are a party (i) do not or will not  violate  the  certificate  of  incorporation
(including any preferred stock designations or provisions  incorporated  therein
or attached  thereto),  by-laws or other  charter or  formation  document of the
Borrower  or such  other  Credit  Parties,  (ii) do not or will not  violate  or
conflict with any law,  governmental  rule or regulation or any judgment,  writ,
order,  injunction,  award or decree of any  court,  arbitrator,  administrative
agency or other governmental  authority applicable to the Borrower or such other
Credit  Parties,  or any  indenture,  mortgage,  contract,  agreement  or  other
undertaking  or instrument to which the Borrower or such other Credit Parties is
a party or by which their respective  property may be bound and (iii) do not and
will not result in the creation or  imposition of any lien,  mortgage,  security
interest or other  encumbrance on any of its property pursuant to the provisions
of any such indenture,  mortgage,  contract,  agreement or other  undertaking or
instrument other than pursuant to the Credit Documents.

         Section 5.04. Consents. The execution,  delivery and performance by the
Borrower and the other Credit Parties of the Credit  Documents to which they are
a party do not require any consent,  which has not been  obtained,  of any other
Person  (including,  without  limitation,  stockholders  of the Borrower or such
other Credit Parties) or any consent,  license,  permit,  authorization or other
approval  of,  any  giving  of  notice  to,  exemption  by,  any   registration,
declaration or filing with, or any taking of any other action in respect of, any
court, arbitrator, administrative agency or other governmental authority.

         Section 5.05.  Litigation.  Except as set forth on Schedule 5.5 hereto,
there is no action,  suit,  investigation  or proceeding by or before any court,
arbitrator, administrative agency or other governmental authority pending or, to
the knowledge of the Borrower or the Subsidiaries, threatened (i) which involves
any of the  transactions  contemplated  by this  Agreement  or any other  Credit
Document or (ii) against or affecting  the  Borrower or any  Subsidiary  thereof
which, if adversely  determined  against the Borrower or such Subsidiary,  would
result in a judgment of $400,000 or more or, if such action, suit, investigation
or proceeding does not seek money damages,  could in the reasonable  judgment of
the Borrower materially  adversely affect the financial  condition,  business or
operation of the Borrower or such Subsidiary.

         Section 5.06.  No Default.  Except as set forth on Schedule 5.6 hereto,
neither the Borrower nor any  Subsidiary  thereof is in default under any order,
writ,  injunction,  award or decree  of any  court,  arbitrator,  administrative
agency or other governmental  authority binding upon it or its property,  or any
indenture,  mortgage,  or other undertaking or instrument of indebtedness or any
material contract,  agreement or other arrangement, to which it is a party or by
which its property may be bound, and nothing has occurred which would materially
adversely  affect  the  ability  of any of them to  carry  on  their  respective
business or perform their  respective  obligations  under any such order,  writ,
injunction,  award  or  decree  or  any  such  indenture,   mortgage,  or  other
undertaking or instrument of indebtedness or any material contract, agreement or
other arrangement.

         Section 5.07  Financial  Condition.  The  financial  statements  of the
Borrower   (including  the   Borrower's   Form  10-K  and  Form  10-Q)  and  its
Subsidiaries,  copies of which have been furnished to the Lenders, were prepared
in None of the  proceeds  of any  Revolving  Loan  have  been or will be used to
purchase  or carry,  or reduce or retire or  refinance  any credit  incurred  to
purchase or carry,  any margin stock (within the meaning of  Regulations G, T, U
and X of the Board of  Governors  of the  Federal  Reserve  system) or to extend
credit to others for the purchasing or carrying of any margin stock. Neither the
Borrower  nor any of its  Subsidiaries  is engaged in the  business of extending
credit for the purpose of purchasing or carrying any margin stock.

         Section  5.08.  Borrower  Not an  Investment  Company.  TC "Section 5.9
Borrower Not an Investment Company." \f C \l "2" Neither the Borrower nor any of
its  Subsidiaries is an "investment  company",  or a company  "controlled" by an
"investment company",  within the meaning of the Investment Company Act of 1940,
as amended.

         Section 5.09 Taxes.  TC "Section  5.10 Taxes." \f C \l "2" The Borrower
and its Subsidiaries  have filed or caused to be filed all tax returns which are
required  to be filed by them and have paid or caused to be paid all taxes which
have been shown to be due and  payable by such  returns or (except to the extent
being  contested  in good faith and for the payment of which  adequate  reserves
have been provided) tax  assessments  received by the Borrower or any Subsidiary
thereof to the extent that such taxes have become due and payable.

         Section 5.10.  Environmental  Matters.  TC "Section 5.11  Environmental
Matters." \f C \l "2" The Borrower and its Subsidiaries conduct their respective
operations in compliance with all applicable laws and regulations concerning the
discharge of substances  into the environment  and other  environmental  control
matters,  except to the  extent  that  non-compliance  would not have a material
adverse effect on the business, results of operations or condition (financial or
otherwise) of the Borrower and the  Guarantors  (taken as a whole).  Neither the
Borrower nor any Subsidiary thereof has any liability,  contingent or otherwise,
under any law,  ordinance  or  regulation  relating to the  storage,  transport,
disposal  or  release of "oil",  "petroleum  products",  "hazardous  substance",
"hazardous  waste",   "hazardous  material",   "hazardous  chemical  substance",
"refuse"  or any other term of similar  import (as such terms are defined in any
such law,  ordinance  or  regulation)  (collectively,  "Hazardous  Substances"),
except to the extent that any such liability  would not have a material  adverse
effect on the  business,  results  of  operations  or  condition  (financial  or
otherwise) of the Borrower and the Guarantors (taken as a whole).

         Section 5.11. Subsidiaries. TC "Section 5.12 Subsidiaries." \f C \l "2"
Set  forth on  Schedule  5.12  hereof  is a  complete  and  correct  list of all
Subsidiaries  of the Borrower as of the date hereof together with, for each such
Subsidiary,  (i) the jurisdiction of organization of such Subsidiary,  (ii) each
Person holding  ownership  interests in such  Subsidiary and (iii) the nature of
the ownership  interests held by each Person and percentage of ownership of such
Subsidiary  represented  by such  ownership  interests.  Except as  disclosed on
Schedule 5.12 hereof,  (x) each of the Borrower and its Subsidiaries  owns, free
and clear of Liens  (other  than (A) any Liens  created  pursuant  to the Credit
Documents  and (B) Liens for taxes  and  assessments  not yet due),  and has the
unencumbered right to vote, all outstanding  ownership  interests in each Person
shown  to be held by it on  Schedule  5.12  hereof,  (y) all of the  issued  and
outstanding  shares  of  capital  stock  of  each  such  Person  organized  as a
corporation is validly issued,  fully paid and nonassessable,  and (z) there are
no outstanding  Equity Rights with respect to such Person except for such Equity
Rights as are set forth on Schedule 5.12 hereof.  As of the date hereof,  (i) no
Foreign  Subsidiary  of the Borrower has annual  revenues of  $10,000,000.00  or
more, and (ii) the total revenues or profits of all Foreign  Subsidiaries of the
Borrower for any  quarterly or annual period ended prior to the date hereof have
not comprised more than 20% of the total revenues or profits of the Borrower and
its Consolidated Subsidiaries.  As of the Effective Date, no Domestic Subsidiary
of the Borrower  constitutes  a Material  Domestic  Subsidiary  other than those
Subsidiaries of the Borrower listed on Schedule 5.12 and specifically identified
as Material Domestic Subsidiaries.

         Section  5.12.  Year  2000  Compliance.  TC  "Section  5.13  Year  2000
Compliance."  \f C \l "2" The Borrower has (i) initiated a review and assessment
of all areas within its and each of its  Subsidiaries'  business and  operations
(including  those  affected by suppliers  and  vendors)  that could be adversely
affected by the risk that computer  applications  used by the Borrower or any of
its  Subsidiaries  (or its suppliers and vendors) may be unable to recognize and
perform properly  date-sensitive  functions involving certain dates prior to and
any date after  December 31, 1999 (the "Year 2000  Problem"),  (ii)  developed a
plan and timeline for  addressing  the Year 2000 Problem on a timely basis,  and
(iii) to date,  implemented  that plan in accordance  with that  timetable.  The
Borrower reasonably believes that all computer applications  (including those of
its suppliers and vendors) that are material to its or any of its  Subsidiaries'
business  and  operations  will on a timely  basis be able to  perform  properly
date-sensitive  functions  for all dates before and after  January 1, 2000 (such
compliance, "Year 2000 Compliant"), except to the extent that a failure to do so
could not  reasonably  be  expected  to have a  material  adverse  effect on the
Borrower and the Guarantors, taken as a whole.

         Section 5.13. Ownership of Property;  Liens. TC "Section 5.14 Ownership
of  Property;  Liens."  \f  C \l  "2"  Neither  the  Borrower  nor  any  of  its
Subsidiaries  owns any real  property,  except  as set  forth on  Schedule  5.14
hereof. The Borrower and each of its Subsidiaries has valid leasehold  interests
in all its respective  material real property  purported to be leased by it, and
has good title to all its respective  material  other  property  purported to be
owned by it,  and none of such  property  is  subject  to any  Lien,  except  as
permitted by Section 6.2(a) hereof, and all of such property taken as a whole is
sufficient  in all material  respects for the Borrower and its  Subsidiaries  to
conduct  their  respective  business  as it  has  been  and is  presently  being
conducted by them.

         Section  5.14 Public  Utility  Holding  Company  Act. TC "Section  5.15
Public  Utility  Holding  Company Act." \f C \l "2" Neither the Borrower nor any
Subsidiary  thereof  is a  "holding  company",  or an  affiliate  of a  "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.

ARTICLE VI.

                                                COVENANTS

Section 6.01. Affirmative Covenants.  TC "Section 6.1 Affirmative Covenants." \f
C \l "2" The Borrower  covenants and agrees for itself and its  Subsidiaries (in
which case the Borrower  shall cause such  Subsidiaries  to take or refrain from
taking the actions described below) that, so long as this Agreement shall remain
in effect or any Obligation shall remain unpaid:

(a) Audited Annual Financials.  The Borrower shall deliver to the Agent and each
Lender,  as soon as available but within 120 days of the end of each fiscal year
of the Borrower ending December 31 (each such year, a "Fiscal Year"), a full and
complete set of the annual audited consolidated  financial statements (including
statements  of  financial   condition,   income,   cash  flows  and  changes  in
shareholders' equity),  together with all notes thereto, of the Borrower and its
Consolidated  Subsidiaries  prepared in accordance with GAAP and certified by an
independent accounting firm of national recognition reasonably acceptable to the
Required  Lenders  (which  certificate  shall be  accompanied  by an unqualified
opinion of such  accounting  firm of such  statements).  The  audited  financial
statement required to be delivered under this clause (a) shall be accompanied by
a certificate of any  Authorized  Officer of the Borrower to the effect that the
Borrower  and the other  Credit  Parties are in  compliance  with all  covenants
contained in this Agreement  (including the financial  ratios  contained in this
Section  6.1) and the other  Credit  Documents  and that no Event of  Default or
Potential Event of Default has occurred and is continuing hereunder.

(b) Quarterly Financial Statements.  The Borrower shall deliver to the Agent and
each Lender,  as soon as available but within 45 days  following the end of each
of  the  Borrower's  Fiscal  Quarters,   internally  prepared  consolidated  and
consolidating   financial  statements  of  the  Borrower  and  its  Consolidated
Subsidiaries (including a balance sheet (d)(ii) is set forth solely to determine
the rights and priorities of the Agent and the Lenders as among themselves.  The
order the  Required  Lenders  without  necessity  of notice to or  consent of or
approval by the  Borrower,  or any other  Person.  The order  acceptable  to the
Agent,  relating to the Borrower and its Consolidated  Subsidiaries as the Agent
shall reasonably  request,  and (iii) a statement  computing the ratio of Funded
Debt to  EBITDA  pursuant  to  Section  6.1(e)  hereof,  demonstrating  that the
Borrower and its  Consolidated  Subsidiaries  shall have not suffered a net loss
pursuant to Section 6.1(f) hereof and computing the Fixed Charge  Coverage Ratio
pursuant  to Section  6.1(g)  hereof,  in each case as of the end of such Fiscal
Quarter.  The financial  statements and reports  required to be delivered  under
this clause (b) shall be accompanied  by a certificate of an Authorized  Officer
of the Borrower to the effect that the information contained therein is true and
accurate as of the date of such  certificate,  that the  Borrower  and the other
Credit Parties are in compliance with all covenants  contained in this Agreement
(including  the  financial  ratios  contained in this Section 6.1) and the other
Credit  Documents and that no Event of Default or Potential Event of Default has
occurred and is continuing hereunder.

(c) Exchange Act and Securities Act Filings.  The Borrower shall deliver to each
Lender and the Agent, within 5 days following the filing with the SEC, copies of
all filings by it or any of its  Subsidiaries  under the Exchange Act (including
reports on Forms 10-Q, 10-K and 8-K) and registration  statements filed with the
SEC under  either the  Securities  Act or the Exchange  Act. The Borrower  shall
deliver to each  Lender  and the Agent  copies of all of the  Borrower's  annual
reports  and proxy  statements  and, at the  request of such  Lender,  any other
shareholder communication.

(d) Tax Forms.  From time to time,  the Borrower shall cause each of its Foreign
Subsidiaries to cooperate with each Lender and shall execute and deliver to such
Lender in a timely manner such forms (including  Internal Revenue Service Forms)
and certificates as such Lender shall reasonably  request,  in each case for the
purpose of confirming  that such Lender is capable,  under the provisions of any
applicable  tax treaty  concluded with the United States of America or any other
applicable law, of receiving payments of interest hereunder without deduction or
withholding  of any tax.  In the event that any such tax shall be required to be
withheld or deducted, the Borrower shall pay to such Lender an amount that would
fully indemnify such Lender for such withheld or deducted amount.

(e) Funded Debt to EBITDA Ratio. The Borrower and its Consolidated Subsidiaries,
taken as a whole,  shall  maintain,  for (and at all times  during)  each Fiscal
Quarter beginning with the Fiscal Quarter ended September 30, 1998 (the "Initial
Fiscal  Quarter"),  a ratio of Funded Debt to EBITDA of not greater than 3.00 to
1.00. The ratio  contemplated  by this clause (e) shall be computed on the basis
of a rolling four quarter period and shall include the results of operations for
the Fiscal Quarter for which such ratio shall be determined plus the immediately
preceding three Fiscal Quarters;  provided, however, that to the extent that any
Acquisition  Party  acquired in accordance  with Section 6.2(e) hereof shall not
constitute a Subsidiary  for a period  falling within such rolling four quarters
at the time of the  determination of this ratio, then EBITDA for the purposes of
this ratio shall include,  for such rolling four quarter period as it relates to
such Acquisition  Party, (i) the pro forma EBITDA of such Acquisition  Party for
that portion of the rolling four quarter  period  during which such  Acquisition
Party was not a Subsidiary of the  Borrower,  and (ii) the actual EBITDA of such
Acquisition  Party for that portion of the rolling four  quarter  period  during
which such Acquisition Party  constitutes a Subsidiary of the Borrower.  For the
purposes  of  illustration  of the  proviso  to the  preceding  sentence,  if an
Acquisition  Party is acquired on March 31, 2000 and the ratio  contemplated  by
this clause (e) shall be determined  for the period  ending June 30, 2000,  then
such Acquisition Party's pro forma EBITDA as it existed prior to the acquisition
for the quarters  ending  September  30,  1999,  December 31, 1999 and March 31,
2000,  together with such  Acquisition  Party's actual EBITDA as a Subsidiary of
the Borrower for the quarter  ending June 30, 2000,  shall be taken into account
for the purposes of calculating this ratio.

(f) No Net Loss.  The Borrower  and its  Consolidated  Subsidiaries,  taken as a
whole,  shall not suffer a net loss  (before  (i)  extraordinary  gains and (ii)
non-cash,   non-recurring  compensatory  charges  incurred  in  connection  with
acquisitions) for any Fiscal Quarter.

(g) Fixed Charge Coverage Ratio. The Borrower and its Consolidated Subsidiaries,
taken as a whole,  shall at all times  maintain,  for (and at all times  during)
each Fiscal  Quarter  beginning  with the  Initial  Fiscal  Quarter,  a ratio of
Consolidated  Cash Flow to  Consolidated  Fixed Charges of not less than 2.00 to
1.00. The ratio  contemplated  by this clause (g) shall be computed on the basis
of a rolling four quarter period and shall include the results of operations for
Fiscal  Quarter for which such ratio shall be  determined  plus the  immediately
preceding three Fiscal Quarters;  provided, however, that to the extent that any
Acquisition  Party  acquired in accordance  with Section 6.2(e) hereof shall not
constitute a Subsidiary  for a period  falling within such rolling four quarters
at the time of the  determination of this ratio, then Consolidated Cash Flow for
the purposes of this ratio shall  include,  for such rolling four quarter period
as it relates  to such  Acquisition  Party,  (i) the pro forma Cash Flow of such
Acquisition  Party for that portion of the rolling four  quarter  period  during
which such Acquisition Party was not a Subsidiary of the Borrower,  and (ii) the
actual Cash Flow of such Acquisition  Party for that portion of the rolling four
quarter period during which such Acquisition  Party  constitutes a Subsidiary of
the Borrower.  For the purposes of  illustration of the proviso to the preceding
sentence,  if an  Acquisition  Party is acquired on March 31, 2000 and the ratio
contemplated  by this clause (g) shall be determined  for the period ending June
30, 2000, then such Acquisition  Party's pro forma Cash Flow as it existed prior
to the acquisition for the quarters ending September 30, 1999, December 31, 1999
and March 31, 2000, together with such Acquisition Party's actual Cash Flow as a
Subsidiary of the Borrower for the quarter ending June 30, 2000,  shall be taken
into account for the purposes of calculating this ratio.

(h) Proceeds.  The Borrower shall use the proceeds of the Revolving  Loans,  the
Swing Line Loans and the Standby  Letters of Credit for the  Permitted  Uses and
for no other purpose.

(i) Payment of Debts and Taxes. The Borrower and its Subsidiaries  shall pay all
debts,  liabilities,  taxes, assessments and other governmental charges when due
in the ordinary course;  provided,  however, that no such debt, liability,  tax,
assessment or other governmental  charge need be paid if such is being contested
in good faith by appropriate legal proceedings promptly initiated and diligently
conducted and if such reserves or other appropriate provision,  if any, as shall
be required by GAAP shall have been made therefor.

(j) Conduct of Business.  The Borrower and its  Subsidiaries  shall  continue to
engage in business of the same general type as now  conducted by the Borrower or
such Subsidiary. The Borrower and its Subsidiaries will conduct and manage their
respective business and affairs in the ordinary course, and shall take all steps
necessary  and  reasonable  for the  purpose  of  preserving  the value of their
respective business and assets.

(k) Preservation of Corporate Existence.  Except as otherwise permitted pursuant
to Section 6.2(e) hereof,  the Borrower and its Subsidiaries  shall at all times
preserve and keep in full force and effect their respective  corporate existence
and their  respective  rights,  privileges,  licenses and  franchises  which are
necessary in the normal conduct of their business.

(l) Books and Records. The Borrower and its Subsidiaries shall at all times keep
and maintain complete and accurate books, accounts and records of its operations
and affairs in accordance with customary and sound business practices, and shall
permit  each  Lender  and the Agent and their  respective  officers,  employees,
agents and  representatives  to,  from time to time upon  reasonable  notice and
during normal business hours, have access to its place of business, examine such
books,  accounts and records and make copies  thereof (at such  Lender's and the
Agent's  expense unless an Event of Default has occurred and is continuing)  and
discuss of Default" shall have occurred and be  continuing,  the Lenders and the
Agent and their  respective  representatives  and advisors shall be permitted to
conduct more than one such  examination  and audit during any annual period,  as
requested  by the  Lenders,  and the  costs  and  expenses  of  such  additional
examinations and audits shall be for the account of the Borrower.

(m)  Insurance.  The  Borrower and its  Subsidiaries  shall carry or cause to be
carried in full force and effect, with financially sound and reputable insurance
companies  and in  amounts  reasonably  satisfactory  to the Bank,  policies  of
insurance on all their property and general liability  insurance in such amounts
and  covering  such risks as is  consistent  with sound  business  practice  for
companies  similarly  situated  and in  the  same  or  similar  businesses.  Any
insurance may be subject to  deductibility  or similar clauses which, in effect,
result in  self-insurance of certain losses,  provided that such  self-insurance
under the insurance referred to above is in accord with the general practices of
companies  similarly  situated and adequate insurance reserves are maintained in
connection  with such  self-insurance.  Any  policies  of  insurance  carried in
accordance  with this Section 6.1(m) and any policies taken out in  substitution
or replacement for any such policies shall (i) in the case of insurance  against
loss or damage to property of the Borrower or its  Subsidiaries,  name the Agent
as loss  payee  (the  "Loss  Payee"),  (ii)  in the  case  of  public  liability
insurance,  name the Agent as  additional  insured (the  "Additional  Insured"),
(iii)  provide  that in the case of any  policies  that  contain any  condition,
warranty  or  declaration  (other than the failure to pay  premiums)  which,  if
breached  or violated  prior to a loss,  would void the  insurance  or allow the
underwriters  to avoid  liability  under the policy,  the  insurance  under such
policies shall not be invalidated, in respect to the respective interests of the
Loss  Payee and the  Additional  Insured  in such  insurance,  by any  action or
inaction of the Borrower or its Subsidiaries,  and shall insure the Loss Payee's
and the Additional Insured's interests, regardless of any breach or violation of
any  warranty,  declaration  or  condition  contained  in such  policies  by the
Borrower or any of its  Subsidiaries,  (iv) provide that,  if such  insurance is
cancelled for any reason  whatsoever,  or any substantial  change is made in the
policy which affects the coverage  certified to the Agent,  or if such insurance
is allowed to lapse for  nonpayment  of premium,  such  cancellation,  change or
lapse shall not be effective as to the Loss Payee and the Additional Insured for
30 days after  receipt by the Agent of written  notice from such insurer of such
cancellation,  change or lapse,  (v) provide that neither the Loss Payee nor the
Additional  Insured  shall  have  any  obligation  or  liability  for  premiums,
commissions,  assessments  or calls in  connection  with  such  insurance,  (vi)
provide that the insurers waive (A) any rights to set-off,  counterclaims or any
other deduction, whether by attachment or otherwise, which they may have against
the Loss Payee or the  Additional  Insured,  and (B) any  rights of  subrogation
against the Loss Payee or any Additional Insured, (vii) be primary without right
of contribution  from any other insurance which may be carried by the Loss Payee
or any Additional Insured,  and (viii) in the case of public liability policies,
provide that all  provisions of such  insurance,  except the limits of liability
(which shall be borne solely by the  Borrower)  shall operate in the same manner
as if there were a separate  policy  covering each named  insured.  The Borrower
will  furnish to the Agent upon  request full  information  as to all  insurance
carried by the Borrower or any Subsidiary.

(n) Compliance  with Laws. The Borrower and its  Subsidiaries  shall comply with
all  applicable  laws,  rules,  regulations  and orders of any  governmental  or
regulatory  body or authority,  a breach of which could have a material  adverse
effect  on  the  financial  condition  or  business  of  the  Borrower  and  its
Subsidiaries taken as a whole.

(o)  Lending  Relationship  with the Agent.  The  Borrower  shall  maintain  its
principal banking  relationship with the Agent and shall maintain with the Agent
the Borrower Account.

(p) Borrower Ownership of Subsidiaries.  The Borrower will, at all times, either
directly  or  indirectly  own all of the  outstanding  shares  of each  class of
capital stock (or other equity interests) of each Subsidiary thereof;  provided,
however,  that (i) as of the date hereof in the case of Hagler  Bailly  Services
(India) Ltd., the Borrower may own, directly or indirectly, not less than 74% of
such capital stock (or other equity  interests)  thereof and (ii) in the case of
any Foreign  Subsidiary of the  Borrower,  not more than 5% of the capital stock
(or other equity interests) of such Foreign Subsidiary may be owned by directors
of such Foreign Subsidiary.  So long as any Obligation remains outstanding,  the
Borrower  shall  continue to  consolidate  the  accounts of each its Foreign and
Domestic Subsidiaries on the consolidated financial statements of the Borrower.

(q) Notice of  Default.  The  Borrower  shall,  promptly  after  becoming  aware
thereof, deliver to each Lender and the Agent notice of any Event of Default and
Potential Event of Default,  and such notice shall contain an express  reference
to this  Agreement  and that such notice is a "notice of an Event of Default" or
"notice of Potential Event of Default," as the case may be.

(r) Notice of  Environmental  Claims.  The Borrower shall deliver to each Lender
and the  Agent a copy of any  notice or other  communication  (i)  alleging  any
violation  by the  Borrower  or its  Subsidiaries  of any  laws  or  regulations
concerning  the  discharge  of  substances   into  the   environment  and  other
environmental   control  matters  or  (ii)  under  which  the  Borrower  or  its
Subsidiaries  shall  admit to any such  violation.  Each copy of any such notice
shall be delivered to the Lenders and the Agent  promptly  following the receipt
or issuance thereof by the Borrower or such Subsidiary.

(s) Seniority.  Under applicable laws in force from time to time, the claims and
rights of the Lenders and the Agent  against  each Credit Party under the Credit
Documents will not be  subordinate  to, and will rank senior in right of payment
to, the claims and rights of each other creditor of each Credit Party.

(t) Year 2000  Compliance.  The Borrower will  promptly  notify the Agent in the
event  the  Borrower  discovers  or  determines  that any  computer  application
(including those of its suppliers and vendors) that is material to its or any of
its  Subsidiaries'  business and operations will not be Year 2000 Compliant on a
timely  basis,  except to the extent that such failure  could not  reasonably be
expected to have a material  adverse effect upon the Borrower or such Subsidiary
taken as a whole.

     (u) Maximum Available Amount. The Total Outstanding Amount shall not at any
     time exceed the Maximum Available Amount.

(v)  Pledge of Stock of Foreign  Subsidiaries.  (i) Upon the  occurrence  of any
Triggering  Event pursuant to clause (a) thereof or (ii) at the written  request
of the  Agent  to the  Borrower  upon the  occurrence  of any  Triggering  Event
pursuant to clause (b) or (c) thereof,  the  Borrower  shall pledge or cause its
Subsidiary  to pledge,  as the case may be, within five (5) Business Days of the
occurrence of such Triggering Event or the Agent's request,  as the case may be,
sixty-five  percent (65%) of the  outstanding  shares of capital stock (or other
equity  interests) of each Foreign  Subsidiary as to which such Triggering Event
relates pursuant to one or more Pledge  Agreements in favor of the Agent and for
the ratable benefit of the Lenders, which Pledge Agreements shall be accompanied
by such resolutions, incumbency certificates, stock powers and legal opinions as
are reasonably  requested by the Agent and its counsel;  provided,  however, (A)
that if a Triggering  Event  pursuant to clause (b) thereof shall have occurred,
the Borrower shall,  at the written request of the Agent,  pledge or cause to be
pledged  to the Agent  sixty-five  percent  (65%) of the  outstanding  shares of
capital stock (or other equity  interests) of such Foreign  Subsidiaries  which,
after giving effect to the pledge thereof,  will result in Agent having a pledge
of such shares in respect of Foreign  Subsidiaries  of the Borrower  selected by
the Agent whose  revenues or profits  comprise at least eighty  percent (80%) of
the revenues or profits of all Foreign  Subsidiaries  of the  Borrower,  and (B)
that if a Triggering  Event  pursuant to clause (c) thereof shall have occurred,
the Borrower shall,  at the written request of the Agent,  pledge or cause to be
pledged  to the Agent  sixty-five  percent  (65%) of the  outstanding  shares of
capital  stock (or other equity  interests) of all Foreign  Subsidiaries  of the
Borrower.

(w) Execution of Subsidiary  Security  Agreements After the Effective Date. With
respect to each Domestic  Subsidiary of the Borrower not a party to a Subsidiary
Security  Agreement,  at the written  request of the Agent at any time following
the  occurrence  and  continuance  of an  Event  of  Default  or  such  Domestic
Subsidiary constituting a Material Domestic Subsidiary,  the Borrower shall from
time to time cause each Domestic Subsidiary identified in the Agent's request to
execute  and  deliver  in favor of the  Agent,  for the  ratable  benefit of the
Lenders,  a Subsidiary  Security Agreement not later than five (5) Business Days
following such request, which Subsidiary Security Agreement shall be accompanied
by such resolutions,  incumbency  certificates,  financing statements (and other
documents or instruments as shall be reasonably required to perfect the security
interest created thereby) and legal opinions as are reasonably  requested by the
Agent and its counsel.

Section 6.02. Negative Covenants.  TC "Section  6.2Negative  Covenants." \f C \l
"2" The Borrower  covenants and agrees for itself and its Subsidiaries (in which
case the Borrower shall cause such  Subsidiaries  to take or refrain from taking
the actions  described  below),  that, so long as this Agreement shall remain in
effect or any Obligation shall remain unpaid:

(x) Liens. The Borrower and its Subsidiaries  shall not, directly or indirectly,
create, incur, assume, grant, pledge or permit to exist any Lien on the property
or assets of the Borrower and its  Subsidiaries,  taken as a whole,  whether now
owned or hereafter acquired, or any income or profits therefrom, other than:

                  (i) any Lien  (other  than a Lien  arising  out of a  purchase
         money security  interest)  which,  together with all such other similar
         Liens, are no greater than $250,000;

                  (ii) any Lien which shall constitute a purchase money security
         interest (excluding,  for the purpose of this clause (ii), any purchase
         money security interest Lien assumed in connection with the acquisition
         of any Acquisition  Party) which,  together with all such other similar
         Liens, are no greater than $1,000,000;

                  (iii)  any  Lien  which  shall  constitute  a  purchase  money
         security   interest  and  that  is  assumed  in  connection   with  the
         acquisition  of any  Acquisition  Party which,  together  with all such
         other Liens, are no greater than  $4,000,000.00  less the amount of all
         unsecured  indebtedness assumed, and all unsecured promissory notes (or
         similar  instruments) issued, by the Borrower or any Subsidiary thereof
         in connection with the  acquisition of any Acquisition  Party permitted
         hereunder; and

                  (iv)  the  Liens  granted  by  or  created  under  the  Credit
Documents.

(b) Indebtedness.  Neither the Borrower nor its Subsidiaries shall,  directly or
indirectly,  create,  incur or assume, or otherwise become or remain directly or
indirectly   liable  with   respect   to,  any   indebtedness   (including   any
Indebtedness), other than:

                  (i) the  Indebtedness  incurred by the Borrower  hereunder and
         evidenced  by the  Revolving  Notes,  and the  Swing  Line Note and the
         Indebtedness of the Guarantors under the Subsidiary Guarantee;

                  (ii) trade debt, operating leases,  accounts payable and other
         similar indebtedness  incurred in the ordinary course of the Borrower's
         or its Subsidiaries' business;

                  (iii) the  Indebtedness  evidenced  by the Standby  Letters of
         Credit, if any, issued by the Issuing Lender in accordance with Section
         2.3 hereof;

                  (iv)  indebtedness  of the type  described  in clause  (ii) of
         Section  6.2(a) which does not exceed (in the  aggregate  and as to the
         Borrower and its  Subsidiaries,  taken as a whole) the amount set forth
         in clause (ii) of Section 6.2(a);

                  (v) any  guarantee,  suretyship  agreement  or  other  similar
         arrangement entered into by the Borrower or any Guarantor effecting the
         assumption or guarantee of a debt or  obligation of or the  endorsement
         of any  promissory  note or other  instrument  or  obligation  of,  any
         Guarantor  or the  Borrower,  in  each  case  provided  the  underlying
         obligation so guaranteed is entered into in the ordinary  course of the
         Borrower's or such Guarantor's business and is necessary and beneficial
         in connection with the operation thereof;

                  (vi)  the indebtedness described on Schedule 6.2(b) hereof;

                  (vii)  indebtedness  of the type  described in clause (iii) of
         Section 6.2(a) hereof which does not exceed (in the aggregate and as to
         the Borrower and its Subsidiaries, taken as a whole) $4,000,000.00 less
         the amount of all  unsecured  indebtedness  assumed,  and all unsecured
         promissory notes (or similar  instruments)  issued,  by the Borrower or
         any  Subsidiary  thereof  in  connection  with the  acquisition  of any
         Acquisition Party permitted hereunder; and

                  (viii)  unsecured  indebtedness  assumed,  and  all  unsecured
         promissory notes (or similar  instruments)  issued,  by the Borrower or
         any  Subsidiary  thereof  in  connection  with the  acquisition  of any
         Acquisition  Party  permitted  hereunder  provided  all such  unsecured
         indebtedness and unsecured promissory notes (or similar instruments) do
         not exceed  $4,000,000  less all purchase money  security  indebtedness
         assumed by the Borrower or any  Subsidiary  thereof in connection  with
         the acquisition of any Acquisition Party permitted hereunder.

(c) Capital Stock.  Without the prior written  consent of the Required  Lenders,
neither the Borrower nor any Subsidiary  thereof shall,  directly or indirectly,
repurchase,  redeem or retire any of their capital stock,  create new classes of
capital  stock,  issue any capital  stock or Equity  Rights in respect  thereof,
declare or pay any  dividends  (whether in cash or  property)  on their  capital
stock, except that the Borrower may:

                  (i)  repurchase  from  time to time the  capital  stock of the
         Borrower provided such repurchases do not,  throughout the term of this
         Agreement,  exceed in the aggregate  $5,000,000 and,  provided further,
         that after giving effect to any such repurchase,  the Borrower shall be
         in compliance with all provisions of this Agreement (including, without
         limitation,  all financial ratios contained in Section 6.1 hereof based
         on the financial  statements most recently  provided by the Borrower to
         the Lenders);

                  (ii)  any  Subsidiary  of the  Borrower  may  declare  and pay
         dividends or make other distributions on its capital stock provided the
         proceeds thereof are received by the Borrower or any Guarantor;

                  (iii) issue securities  authorized under stock incentive plans
         described in the Borrower's Form 10-K or Proxy Statement; and

                  (iv)  issue  shares of common  stock of the  Borrower  at fair
         market  value  (or an  average  fair  market  value  as  determined  by
         reference  to not  more  than a  30-day  period  prior  to the  date of
         issuance of such common stock) pursuant to any  registration  statement
         filed under the  Securities  Act or an exemption  therefrom,  except as
         otherwise contemplated by clause (iii) above.

(d) Loan.  Neither the Borrower nor any Subsidiary  thereof  shall,  directly or
indirectly,  make any loans or advances to any corporate  officers or directors,
or any employees, or any insiders or affiliates (as defined in the Exchange Act)
or to any Subsidiary of the Borrower not a party to the Subsidiary  Guarantee or
to any other Person, other than:

                  (i) travel,  relocation and other salary  advances made in the
         ordinary course of the Borrower's or its Subsidiaries' business;

                  (ii)  loans of the  proceeds  of the  Revolving  Loans and the
         Swing Line Loans to any Domestic Subsidiary of the Borrower that is not
         a party to the  Subsidiary  Guarantee  for the purpose of financing the
         acquisition  of  any  Acquisition  Party  as  contemplated  by,  and in
         accordance  with the  limitations  contained in,  Section 6.2(e) hereof
         (provided such  Subsidiary  shall have become a party to the Subsidiary
         Guarantee in accordance with Section 6.2(g) hereof);

                  (iii) loans to any officer of the Borrower;  provided that the
         aggregate  amount  of all  loans  made  pursuant  to  this  clause  and
         outstanding from time to time shall not exceed $1,000,000.00;

                  (iv) loans to any Foreign  Subsidiary  of the Borrower if such
         loans,  together  with all such other Foreign  Subsidiary  loans by the
         Borrower  and all other  advances  made by the  Borrower to any Foreign
         Subsidiary pursuant to Section 6.2(g) hereof, do not at any time exceed
         $8,000,000.00; and

                 (v) loans or advances to any domestic joint venture  company in
         which the Borrower or any Subsidiary thereof owns at least one-third of
         the equity interests  therein provided the aggregate amount of all such
         loans does not exceed $5,000,000.00.

(e) No Merger or Acquisition.  Without the prior written consent of the Required
Lenders,  neither the Borrower nor any Subsidiary thereof shall acquire, whether
by stock or asset purchase, merger, consolidation or other business combination,
any corporation,  partnership, joint venture or other business organization (any
such entity, an "Acquisition  Party");  provided,  however, that the Borrower or
any direct or indirect  Consolidated  Subsidiary thereof may acquire,  either by
way of stock or asset acquisition,  merger,  consolidation or otherwise,  one or
more  Acquisition  Parties involved in a line of business similar to the line of
business of the Borrower if:

                  (i) the cash component of the Acquisition Consideration (which
         shall consist of all cash, cash equivalents, promissory notes (or other
         similar  instruments)  issued and the  assumption  of debt, as provided
         therein)  paid  for  all   Acquisition   Parties   (including   foreign
         Acquisition Parties permitted pursuant to clause (vi) below) (A) during
         the  12-month  period  commencing  from the  Effective  Date  shall not
         exceed,  in the  aggregate,  $40,000,000.00,  and (B) during the period
         commencing  from the Effective Date and ending on the date on which all
         of the  Obligations  hereunder  shall  have been paid in full shall not
         exceed, in the aggregate, $50,000,000.00;

                  (ii)  the  cash  component  of the  Acquisition  Consideration
         (which shall consist of all cash, cash  equivalents,  promissory  notes
         (or other similar  instruments)  issued and the  assumption of debt, as
         provided therein) paid for any individual Acquisition Party (whether in
         one transaction or a series of related  transactions)  shall not exceed
         $10,000,000.00;

                  (iii) the corporate  headquarters  of such  Acquisition  Party
         shall be located in the  continental  United  States of America  unless
         such Acquisition Party is a foreign Person and the acquisition  thereof
         is permitted by the terms of this Agreement;

                  (iv) such  Acquisition  Party's EBITDA shall, for the 12-month
         period immediately preceding the acquisition of such Acquisition Party,
         be greater than $0.00;

                  (v) the  Borrower  and its  Subsidiaries  shall,  after giving
         effect to the  acquisition  of any such  Acquisition  Party as provided
         herein,  be in  compliance  with  all of the  terms  of this  Agreement
         including the financial covenants described in Sections 6.1(e),  6.1(f)
         and 6.1(g) hereof, as determined on a pro-forma basis;

                  (vi) such acquisition, merger, consolidation (or otherwise) is
         not hostile or pursued by way of tender  offer,  proxy contest or other
         contested  manner  (unless the  Required  Lenders  shall have waived in
         writing compliance with this clause (vi));

                  (vii) during the term of this Agreement,  Acquisition  Parties
         that are not  organized  under the laws of a state of the United States
         of America or the District of Columbia may not be so acquired except to
         the extent that the cash component of Acquisition  Consideration (which
         shall consist of all cash, cash equivalents, promissory notes (or other
         similar  instruments)  issued and the  assumption  of debt, as provided
         therein)  paid  for  all  such  Acquisition  Parties  does  not  exceed
         $8,000,000.00  (it being understood and agreed that such  $8,000,000.00
         shall at any time of determination be reduced by the amount of any loan
         or advance made by the Borrower to any Foreign  Subsidiary as permitted
         by  the   provisions  of  Sections   6.2(d)(iv)   and  6.2(g)   hereof,
         respectively);

                  (viii) such Acquisition Party shall have become a party to the
         Subsidiary  Guarantee pursuant to an instrument in writing satisfactory
         to the Agent (unless such Acquisition Party shall,  after giving effect
         to the acquisition  thereof,  (A) constitute a Foreign  Subsidiary,  in
         which case the  entity  acquiring  the  capital  stock or other  equity
         interests of such  Acquisition  Party shall pledge to the Agent for the
         benefit of the Lenders,  pursuant to a pledge agreement satisfactory to
         the Agent,  not more than 65% of the issued and  outstanding  shares of
         capital stock or other equity  interests of such  Acquisition  Party to
         the extent  required by Section  6.1(v) hereof or (B) not  constitute a
         Material Domestic Subsidiary); and

                  (ix) five (5) Business Days prior to consummation thereof, the
         Borrower  shall  have  delivered  to the Agent  (which  shall  promptly
         deliver a copy to the Lenders) a certificate, executed by an Authorized
         Officer of the Borrower,  demonstrating in sufficient detail compliance
         with the  financial  covenants  contained in this  Section  6.2(e) and,
         further,  certifying  that,  after giving effect to the consummation of
         such   acquisition,   merger,   consolidation   (or   otherwise),   the
         representations and warranties of the Borrower contained herein will be
         true  and  correct  and  that  the  Borrower,  as of the  date  of such
         consummation, will be in compliance with all other terms and conditions
         contained herein.

Notwithstanding  anything to the contrary  contained in this Section 6.2(e), any
Subsidiary  of the  Borrower  may merge  with and into or  consolidate  with the
Borrower or any other Subsidiary of the Borrower,  or the Borrower may cause the
dissolution or liquidation of any of its  Subsidiaries;  provided,  that,  after
giving effect to such merger, consolidation,  dissolution or liquidation, (w) in
the case of any merger or consolidation with the Borrower, the Borrower shall be
the  surviving  entity,  (x) in the case of any merger or  consolidation  of any
Subsidiary of the Borrower with any other such Subsidiary,  the surviving entity
resulting  therefrom  shall have  succeeded,  by operation  of law,  contract or
otherwise, to all of the rights, properties, both real and personal,  privileges
and franchises of the disappearing  Subsidiary,  (y) in the event such merged or
consolidated  Subsidiary shall be a party to any Credit Document,  the surviving
Subsidiary  resulting from such merger or  consolidation  shall, by operation or
law,  contract or  otherwise  and, at the request of any Lender,  pursuant to an
agreement in writing, be bound by the agreements, covenants and other provisions
contained in each such Credit Document. to which the disappearing Subsidiary was
a party, and (z) in the event of the dissolution or liquidation of a Subsidiary,
the  rights,  properties,  both real and  personal,  privileges  and  franchises
thereof  shall be  distributed  or  otherwise  conveyed and  transferred  to the
Borrower  or another  Domestic  Subsidiary  thereof  (unless  the  dissolved  or
liquidating  Subsidiary  is a Foreign  Subsidiary,  in which  case such  rights,
properties, both real and personal, privileges and franchises may be distributed
or otherwise  conveyed and  transferred  to another  Foreign  Subsidiary  of the
Borrower).

(f) Fiscal Year. The Borrower and its Subsidiaries  shall not, without the prior
written consent of the Required Lenders,  make any material change in accounting
policies or reporting practices, including a change in their Fiscal Year.

(g) Advances to Subsidiaries and Affiliates. The Borrower shall not, without the
prior  written  consent  of the  Required  Lenders,  make any  advances  (either
directly or indirectly), whether such advances are made from the proceeds of the
Revolving  Loans or Swing Line Loans or Standby  Letters of Credit or otherwise,
to any of its Subsidiaries or Affiliates not a party to the Subsidiary Guarantee
unless such  Subsidiary  or  Affiliate  shall have  entered into an agreement or
instrument (in form and substance  acceptable to the Required  Lenders) pursuant
to which such  Subsidiary  or Affiliate  shall have agreed to be bound by all of
the terms,  conditions,  covenants and  agreements  contained in the  Subsidiary
Guarantee and such  Subsidiary or Affiliate shall have delivered such documents,
certificates and opinions as any Lender may reasonably request to implement such
agreement or instrument;  provided, however, that the Borrower may make advances
to any Foreign  Subsidiary  without such Foreign Subsidiary being a party to the
Subsidiary  Guarantee so long as the  aggregate  amount of all such  advances to
such  Foreign  Subsidiaries,  together  with  all  loans  made to  such  Foreign
Subsidiaries,  do not exceed at any time $8,000,000.00;  and, provided, further,
that the Borrower  may make loans or advances to any joint  venture in which the
Borrower  or any  Subsidiary  thereof  owns at  least  one-third  of the  equity
interests to the extent permitted by Section 6.2(d)(v)  hereof.  (h) Creation of
Subsidiaries.  Neither the Borrower nor any  Subsidiary  thereof shall create or
cause to be formed any  Subsidiary  without the consent of the Required  Lenders
unless such  Subsidiary is a Consolidated  Subsidiary of the Borrower and agrees
to be bound by the terms and conditions of the Subsidiary  Guarantee pursuant to
an  agreement  of the type and to the  extent  described  in clause  (g) of this
Section  6.2  or  such  Subsidiary  does  not  constitute  a  Material  Domestic
Subsidiary;  provided,  however, that no Foreign Subsidiary so created or formed
shall be required to be a party to the Subsidiary Guarantee except to the extent
required by Sections 6.2(e)(viii) and 6.2(g) hereof.

(i)  Disposition  of Assets.  Neither the  Borrower nor any  Subsidiary  thereof
shall, without the prior written consent of the Required Lenders, sell, transfer
or otherwise  dispose of (including by way of a sale and leaseback  transaction)
any of its assets  (whether real or personal) other than (i) in the ordinary and
usual course of its business for fair value in arm's-length transactions and, 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 (A)
used to acquire replacement equipment which has comparable or better utility and
equivalent or better value or (B) applied to repay the Obligations,  and (ii) as
otherwise permitted by any other Credit Document.

(j)  Permitted  Investments.  Neither the  Borrower nor any  Subsidiary  thereof
shall,  without the prior  written  consent of the  Required  Lenders,  make any
investment  in  any  security  (whether  consisting  of  debt  or  equity  or  a
partnership,  limited  liability  company or other  interest) or like instrument
except for  Permitted  Investments  (it being  understood  and agreed  that this
clause  (j)  shall  not  prohibit  the  acquisition  of  the  securities  of any
Acquisition  Party to the extent  permitted by the  provisions of Section 6.2(e)
hereof).

ARTICLE VII.

                                            EVENTS OF DEFAULT

Section 7.01. Events of Default. TC "Section 7.1 Events of Default." \f C \l "2"
If one or more of the  following  events  or  conditions  (each,  an  "Event  of
Default") shall occur and be continuing, that is to say:

(a) the Borrower defaults in the payment of principal of any Revolving Note when
due, or any Guarantor defaults in the observance or performance of any agreement
contained in Section 2 of the Subsidiary Guarantee; or

(b) the Borrower  defaults in the payment of interest on any  Revolving  Loan or
Swing Line Loan, or of the Unused  Portion Fee, the L/C Fee, the  Administrative
Fee or of any other fee,  expense or other amount  payable  hereunder  after the
same  becomes due and payable for more than two (2)  Business  Days after notice
thereof  has  been  given by the  Agent to the  Borrower  (which  notice  may be
telephonic); or

(c) the Borrower or any Subsidiary  thereof defaults in any payment of principal
of or interest on, or fees and  expenses  relating to any other  obligation  for
borrowed  money beyond any period of grace  provided with respect  thereto or in
the  performance  of any other  agreement,  term or  condition  contained in any
instrument or agreement evidencing, securing, guaranteeing or otherwise relating
to any such  obligation  and shall not have cured such default within any period
of grace provided by such agreement and such obligation,  either individually or
in the aggregate, is for an amount in excess of $100,000.00; or

(d) any  written  representation  or  warranty  made by any  Credit  Party in or
pursuant  to  this  Agreement  or any  other  Credit  Document  or in any  other
documents, certificates, financial statements or reports furnished by any Credit
Party in connection  with the  transactions  contemplated  hereby shall prove to
have been false or  misleading  in any  material  respect as of the time made or
furnished; or

(e) the Borrower shall default in the performance or observance of any covenant,
condition or agreement  contained in clause (c),  (d),  (i), (j), (k), (l), (m),
(r), (s) or (t) of Section 6.1 and such default shall remain unremedied for more
than  ten  (10)  Business  Days,  or (ii)  the  Borrower  shall  default  in the
performance  or  observance  of  any  other  covenant,  condition  or  agreement
contained in Section 6.1 or any  covenant,  condition or agreement  contained in
Section 6.2; or

(f) the Borrower  shall  default in the  performance  or observance of any other
covenant,  condition or provision  hereof or in any other Credit Document or any
other  Credit  Party  shall  default in the  performance  or  observance  of any
covenant,  condition or provision in any other Credit  Document  (other than the
Subsidiary  Guarantee) or any  Guarantor  shall  default in the  performance  or
observance of any covenant,  condition or provision in the Subsidiary  Guarantee
(other  than  Section 2  thereof,  as to which  clause (a) of this  Section  7.1
relates),  as the case may be, and such  default  shall not be  remedied  within
thirty (30) days after written notice thereof is received by the Borrower or any
other Credit Party, as the case may be, from any Lender or the Agent; or

(g) a  proceeding  (other than a  proceeding  commenced  by the  Borrower or any
Subsidiary  thereof,  as the case may be) shall have been  instituted in a court
having  jurisdiction  in the  premises  seeking a decree or order for  relief in
respect of the  Borrower or such  Subsidiary  in an  involuntary  case under any
applicable  bankruptcy,  insolvency  or other  similar law now or  hereafter  in
effect, or for the appointment of a receiver,  liquidator,  assignee, custodian,
trustee,  sequestrator (or similar  official) of the Borrower or such Subsidiary
or for any  substantial  part of its  total  assets,  or for the  winding-up  or
liquidation  of its affairs and such  proceedings  shall remain  undismissed  or
unstayed  and in effect  for a period of thirty  (30)  consecutive  days or such
court  shall  enter a  decree  or  order  granting  the  relief  sought  in such
proceeding; or

(h) the Borrower or any Subsidiary thereof, as the case may be, shall commence a
voluntary case under any applicable bankruptcy,  insolvency or other similar law
now or hereafter in effect, shall consent to the entry of an order for relief in
an involuntary  case under any such law, or shall consent to the  appointment of
or taking possession by a receiver,  liquidator,  assignee,  trustee, custodian,
sequestrator  (or other similar  official) of the Borrower or such Subsidiary or
for any substantial part of its total assets, or shall make a general assignment
for the benefit of creditors,  or shall fail  generally to pay its debts as they
become  due, or shall take any  corporate  action in  furtherance  of any of the
foregoing; or

(i) a judgment or order shall be entered  against the Borrower or any Subsidiary
thereof,  by any  court,  and (i) in the case of a  judgment  or  order  for the
payment of money that has not been vacated,  stayed or appealed (and bonded,  if
required)  within  the time  required  by the terms of such  judgment  or order,
either (A) such judgment or order shall  continue  undischarged  for a period of
fifteen (15) days in which the aggregate amount of all such judgments and orders
exceeds $100,000 or (B) enforcement  proceedings  shall have been commenced upon
such judgment or order,  and (ii) in the case of any judgment or order for other
than the payment of money,  such  judgment  or order  could,  in the  reasonable
judgment of any Lender, together with all other such judgments or orders, have a
materially adverse effect on the Borrower and its Subsidiaries taken as a whole;
or

(j) the  occurrence of a material  adverse  change in the  financial  condition,
properties, assets or results of operations of the Borrower and its Consolidated
Subsidiaries, taken as a whole; or

(k) any Termination Event shall occur with respect to any Benefit Plan, (ii) any
Accumulated Funding Deficiency,  whether or not waived, shall exist with respect
to any Benefit Plan, (iii) any Person shall engage in any Prohibited Transaction
involving any Benefit Plan, (iv) the Borrower or any ERISA Affiliate shall be in
"default"  (as defined in ERISA  Section  4219(c)(5))  with  respect to payments
owing  to a  Multiemployer  Plan as a  result  of the  Borrower's  or any  ERISA
Affiliate's  complete or partial  withdrawal (as described in ERISA Section 4203
or 4205) from such  Multiemployer  Plan, (v) the Borrower or any ERISA Affiliate
shall  fail to pay when  due an  amount  that is  payable  by it to the  Pension
Benefit  Guaranty  Corporation or to a Benefit Plan under Title IV of ERISA,  or
(vi) a proceeding shall be instituted by a fiduciary of any Benefit Plan against
the  Borrower  or any ERISA  Affiliate  to enforce  ERISA  Section  515 and such
proceeding shall not have been dismissed within 30 days thereafter,  except that
no event or condition  referred to in clauses (i) through (vi) shall  constitute
an Event of Default if it,  together with all other such events or conditions at
the time  existing,  has not had,  and in the  reasonable  determination  of the
Required Lenders will not have, a materially  adverse effect on the Borrower and
its Subsidiaries, taken as whole; or

(l) if (i) the Borrower or any Subsidiary thereof shall be suspended or debarred
from  contracting  with the United  States  Government  and such  suspension  or
debarment shall not have been lifted within fifteen (15) Business Days after the
imposition  thereof,  or (ii) the United States Government shall have terminated
any contract to which the Borrower or any Subsidiary thereof is a party and such
termination would have a material adverse effect upon the financial condition or
prospects of the Borrower and its Consolidated Subsidiaries, taken as a whole;

(m)     the occurrence of a Change in Control or a Potential Change in Control;

(n) the Borrower Security  Agreement,  any Subsidiary  Security Agreement or any
Pledge  Agreement  shall  cease for any reason to be in full  force and  effect,
shall  cease to be  effective  to grant a  perfected  security  interest  in the
collateral  pledged thereunder with the priority stated to be created thereby or
shall be declared  null and void by any  Governmental  Body,  or the validity or
enforceability  thereof shall be contested by any party thereto  (other than the
Agent or any  Lender) or any  Credit  Party  shall deny that it has any  further
liability or obligation thereunder; or

(o) the  Subsidiary  Guaranty shall cease for any reason to be in full force and
effect  or shall be  declared  null and void by any  Governmental  Body,  or the
validity or enforceability  thereof shall be contested by any Guarantor,  or any
Guarantor shall deny that it has any further  liability or obligation  under the
Subsidiary Guaranty; or

(p) any  creditor of any Credit  Party  shall  obtain  possession  of any of the
collateral  pledged  by any  Credit  Party in favor of the  Agent by any  means,
including,  without limitation,  levy, distraint,  replevin or self-help, or any
such creditor  shall  establish or obtain any right in such which is equal to or
senior to the security interests of the Agent in such collateral; or

(q) the Agent or any Lender  shall  allege in writing that one or more Events of
Default have  occurred and the  Borrower  shall have failed,  after 15 [Business
Days]  notice  thereof  from the Agent or such  Lender,  to  provide  reasonably
satisfactory  evidence to the Agent and the Lenders  that such Events of Default
have not in fact occurred;

then,  and upon any such  event,  the Agent,  with the  consent of the  Required
Lenders,  may (1) upon notice to the  Borrower,  declare the entire  outstanding
principal  amount,  if any, of the Revolving Notes, the Swing Line Note, any and
all accrued and unpaid interest thereon,  the aggregate amount outstanding under
all Standby Letters of Credit, any and all accrued and unpaid Unused Portion Fee
and L/C Fee,  and any and all  other  amounts  payable  by the  Borrower  to the
Lenders or the Agent under this  Agreement or the  Revolving  Notes or the Swing
Line Note to be forthwith  due and  payable,  whereupon  the entire  outstanding
principal  amount,  if any,  of the  Revolving  Notes or the  Swing  Line  Note,
together  with any and all accrued and unpaid  interest  thereon,  the aggregate
amount  outstanding under all Standby Letters of Credit, any and all accrued and
unpaid Unused Portion Fee and L/C Fee, and any and all other such amounts, shall
become and be forthwith due and payable, without presentment, demand, protest or
further  notice of any kind,  all of which are  hereby  expressly  waived by the
Borrower;  provided,  however,  that in the  event of the  entry of an order for
relief  with  respect  to the  Borrower  or any of its  Subsidiaries  under  the
Bankruptcy  Code, any principal amount of the Revolving Notes and the Swing Line
Note then  outstanding,  together  with any and all accrued and unpaid  interest
thereon,  the aggregate amount  outstanding under all Standby Letters of Credit,
any and all accrued and unpaid  Unused  Portion Fee and L/C Fee, and any and all
such other amounts shall thereupon  automatically  become and be due and payable
without  presentment,  demand,  protest or notice of any kind,  all of which are
hereby expressly  waived by the Borrower;  (2) terminate or reduce the Revolving
Loan Commitment and the Swing Line Subfacility;  and (3) exercise any rights and
remedies  available to it under any Credit  Document or under  applicable  laws,
including  without  limitation  any rights and remedies of a secured party under
the Uniform  Commercial Code in effect in the Commonwealth of Virginia and under
any other applicable laws.


ARTICLE VIII.

                                                THE AGENT

     Section 8.01.  Appointment of Agent. TC "Section 8.1 Appointment of Agent."
     \f C \l "2"

(a) Appointment  Generally.  Each of the Lenders hereby  designates and appoints
NationsBank, N.A. as the Agent of such Lender under this Agreement and the other
Credit  Documents,  and each of the Lenders  hereby  irrevocably  authorizes the
Agent to take such action on its behalf under the  provisions of this  Agreement
and the other  Credit  Documents  and to  exercise  such powers as are set forth
herein and therein,  together with such other powers as are incidental  thereto.
The Agent  agrees to act as such on the  express  conditions  contained  in this
Article VIII.

(b) Agent Acts for Lenders.  The  provisions of this Article VIII are solely for
the benefit of the Agent and the Lenders,  and the Borrower  shall have no right
(including  as  third  party  beneficiary)  to  rely  on or  enforce  any of the
provisions  hereof.  In  performing  its  functions  and other duties under this
Agreement  and the other Credit  Documents,  the Agent shall act solely as agent
for the Lenders and does not assume and shall not be deemed to have  assumed any
obligation toward or relationship of agency or trust with or for the Borrower or
any of its Affiliates.

     Section 8.02. Nature of Duties; Non-Reliance on Agent and other Lenders. TC
     "Section 8.2 Nature of Duties; Non-Reliance on Agent and other Lenders." \f
     C \l "2"

(a) The  Agent  shall  not have any  duties  or  responsibilities  except  those
expressly  set forth in this  Agreement  or in the other Credit  Documents.  The
duties of the Agent shall be mechanical and  administrative in nature. The Agent
shall not have,  by reason of this  Agreement  or any other Credit  Document,  a
fiduciary  relationship  in respect  of any Lender and is not a trustee  for the
Lenders.  Nothing  in  this  Agreement  or any of the  other  Credit  Documents,
expressed  or implied,  is intended to or shall be  construed to impose upon the
Agent any  obligations  in respect of this  Agreement or any of the other Credit
Documents  except as expressly set forth herein and therein.  If the Agent seeks
the consent or approval of the Lenders to the taking or  refraining  from taking
of any action hereunder, the Agent shall send notice thereof to each Lender. The
Agent shall promptly notify each Lender at any time the Required  Lenders or all
of the Lenders,  as the case may be, have instructed the Agent to act or refrain
from acting pursuant  hereto.  The Agent may execute any of its duties hereunder
or under any other Credit Document by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties.  The Agent shall not be responsible  for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.

(b) Each Lender  expressly  acknowledges  that  neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any  representations  or  warranties  to it and that no act by the  Agent or any
Affiliate thereof hereinafter taken,  including any review of the affairs of the
Borrower  or  any  Subsidiary  thereof,   shall  be  deemed  to  constitute  any
representation or warranty by the Agent to any Lender. Each Lender represents to
the Agent that it has,  independently and without reliance upon the Agent or any
other  Lender,  and based on such  documents  and  information  as it has deemed
appropriate,  made its own  appraisal of and  investigation  into the  business,
assets,  operations,  property,  financial and other  conditions,  prospects and
creditworthiness  of the Borrower and its Subsidiaries and made its own decision
to make its Revolving  Loans and issue or participate in the issuance of Standby
Letters of Credit  hereunder and enter into this  Agreement and the other Credit
Documents  to  which  it  is a  party.  Each  Lender  covenants  that  it  will,
independently and without reliance upon the Agent or any other Lender, and based
on such  documents and  information  as it shall deem  appropriate  at the time,
continue to make its own credit analysis,  appraisals and decisions in taking or
not taking action under this Agreement or any other Credit  Document to which it
is a party,  and to make such  investigations  as it deems  necessary  to inform
itself as to the business,  assets,  operations,  property,  financial and other
conditions, prospects and creditworthiness of the Borrower and its Subsidiaries.
Except  for  notices,  reports  and other  documents  expressly  required  to be
furnished  to the Lenders by the Agent  hereunder,  the Agent shall not have any
duty  or  responsibility  to  provide  any  Lender  with  any  credit  or  other
information concerning the business, operations, assets, property, financial and
other  conditions,  prospects  or  creditworthiness  of  the  Borrower  and  its
Subsidiaries  which  may come  into the  possession  of the  Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.

Section 8.03.  Rights,  Exculpation,  Etc. TC "Section 8.3 Rights,  Exculpation,
Etc." \f C \l "2" Neither the Agent nor any of its  Affiliates  nor any of their
respective  officers,  directors,  employees,  agents,  attorneys or consultants
shall be liable to any  Lender  for any  action  taken or  omitted by it or such
Person  hereunder or under any of the other Credit  Documents,  or in connection
herewith or therewith, except that (i) the Agent shall be obligated on the terms
set forth herein for performance of its express obligations hereunder,  and (ii)
neither the Agent nor any such other Person shall have any  liability  hereunder
or under any other Credit  Document  except to the extent arising out of its own
gross negligence or willful misconduct (as determined by the final judgment of a
court  of  competent  jurisdiction).  The  Agent  shall  not be  liable  for any
apportionment  or  distribution of payments made by it in good faith pursuant to
the terms of this Agreement and if any such  apportionment  or  distribution  is
subsequently  determined  to have been made in error  the sole  recourse  of any
Lender to whom  payment was due,  but not made,  shall be to recover  from other
Lenders any payment in excess of the amount to which they are determined to have
been  entitled.  The  Agent  shall  not be  responsible  to any  Lender  for any
recitals, statements,  representations or warranties made by the Borrower or any
Subsidiary  thereof in this Agreement or in any other Credit  Document or in any
other  document,  certificate,  report or financial  statement  delivered by the
Borrower or any  Subsidiary  thereof in connection  herewith or therewith or for
the   execution,    effectiveness,    genuineness,   validity,   enforceability,
collectibility,  or  sufficiency  of this  Agreement  or any of the other Credit
Documents, or any of the transactions contemplated thereby, or for the financial
condition  of the  Borrower or any of its  Subsidiaries.  The Agent shall not be
required to make any inquiry  concerning  conditions of this Agreement or any of
the  Credit  Documents  or  the  financial  condition  of  the  Borrower  or its
Subsidiaries  or the existence or possible  existence of any Potential  Event of
Default or Event of Default. The Agent may at any time request instructions from
the Lenders with respect to any actions or approvals  which by the terms of this
Agreement  or of any of the other  Credit  Documents  the Agent is  permitted or
required to take or to grant, and if such  instructions are promptly  requested,
the Agent shall be  absolutely  entitled to refrain from taking any action or to
withhold any approval and shall not incur any liability whatsoever to any Person
for  refraining  from any action or  withholding  any approval  under any of the
Credit  Documents  until it  shall  have  received  such  instructions  from the
Required Lenders or, to the extent specifically provided herein, all the Lenders
or unless it shall  first be  indemnified  by the  Lenders  against  any and all
liability  and expense  which may be incurred by it by reason of  refraining  to
take any action or withholding any approval.  Without limiting the foregoing, no
Lender shall have any right of action  whatsoever  against the Agent as a result
of the Agent acting or refraining from acting under this Agreement or any of the
other  Credit  Documents in  accordance  with the  instructions  of the Required
Lenders or, to the extent  specifically  provided herein,  all the Lenders,  and
such instructions  shall be binding upon all Lenders (including their successors
and assigns).

     Section 8.04. Reliance; Notice of Default. TC "Section 8.4 Reliance; Notice
     of Default." \f C \l "2"

(a) The Agent  shall be entitled  to rely upon any  written  notice,  statement,
certificate,  order, letter,  cablegram,  telegram,  telecopy, telex or teletype
message,  statement or other document or any telephone message believed by it in
good  faith to be genuine  and  correct  and to have been  signed or made by the
proper Person,  and with respect to all matters  pertaining to this Agreement or
any of the other Credit Documents and its duties  hereunder or thereunder,  upon
advice of legal counsel  (including  counsel for any Credit Party),  independent
public  accountants and other experts  selected by it with reasonable  care. The
Agent may deem and treat each Lender as the owner of its interests hereunder for
all  purposes  unless and until the Agent  shall have  received a duly  executed
instrument of assignment as  contemplated by Section 9.8(c) hereof and the other
conditions to assignment, to the extent applicable, shall have been satisfied.

(b) The Agent shall not be deemed to have  knowledge or notice of the occurrence
of any Event of  Default  or  Potential  Event of  Default  unless the Agent has
received  notice  from a Lender or the  Borrower  referring  to this  Agreement,
describing  such Event of Default or Potential Event of Default and stating that
such notice is a "notice of Event of Default" of "notice of  Potential  Event of
Default",  as the case may be. The Agent shall take such action with  respect to
such  Event of  Default or  Potential  Event of  Default as shall be  reasonably
directed by the Required Lenders.

Section 8.05. Indemnification.  TC "Section 8.5 Indemnification." \f C \l "2" To
the extent that the Agent is not reimbursed  and  indemnified by the Borrower or
the  Borrower  fails upon  demand by the Agent to  perform  its  obligations  to
reimburse  or indemnify  the Agent,  the Lenders will  severally  reimburse  and
indemnify  the  Agent  for and  against  any and all  liabilities,  obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted  against the Agent in any way relating to or arising out of this
Agreement or any of the other Credit Documents or any action taken or omitted by
the  Agent  under  this  Agreement  or any of the  other  Credit  Documents,  in
proportion  to each Lender's Pro Rata Share;  provided,  that no Lender shall be
liable for (i) any portion of such liabilities,  obligations,  losses,  damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross  negligence or willful  misconduct  (as determined by the
final judgment of a court of competent  jurisdiction) or (ii) the legal fees and
expenses  incurred by the Agent in connection with the execution and delivery of
this  Agreement and the other Credit  Documents (to the extent not reimbursed by
the  Borrower).  The  obligations  of the Lenders  under this  Section 8.5 shall
survive the payment in full of the Revolving  Loans and the  termination of this
Agreement.

Section 8.06. The Agent Individually.  TC "Section 8.6 The Agent  Individually."
\f C \l "2" With  respect  to its Pro Rata  Share  hereunder  and the  Revolving
Loans,  Standby  Letters of Credit and any Swing Line Loan made by it, the Agent
shall have and may exercise the same rights and powers  hereunder and is subject
to the same  obligations  and  liabilities as and to the extent set forth herein
for any other Lender.  The term  "Lenders" or "Required  Lenders" or any similar
terms shall, unless the context clearly otherwise  indicates,  include the Agent
in its individual  capacity as a Lender. The Agent and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of banking, trust
or other  business  with the  Borrower  and its  Subsidiaries  as if it were not
acting as Agent pursuant hereto.

     Section  8.07.  Successor  Agent;  Resignation  of Agent.  TC "Section  8.7
     Successor Agent; Resignation of Agent." \f C \l "2"

(a) The Agent may  resign  from the  performance  of its  functions  and  duties
hereunder at any time by giving at least thirty (30) days' prior written  notice
to the Lenders and the Borrower. In the event that the Agent gives notice of its
desire to resign from the performance of its functions and duties as Agent,  any
such resignation shall take effect only upon the acceptance by a successor Agent
of appointment pursuant to clause (b) or (c) below.

(b) The Required Lenders shall jointly appoint a successor Agent, which shall be
a Lender hereunder.

(c) If a  successor  Agent shall not have been so  appointed  within said twenty
(20) day period,  the retiring  Agent shall then  appoint a successor  Agent who
shall serve as Agent until such time, if any, as the Lenders appoint a successor
Agent as provided above, it being understood and agreed that any successor Agent
so  appointed  by the  retiring  Agent  pursuant to this clause (c) need not be,
notwithstanding  the provisions of clause (b) above, a Lender  hereunder so long
as such successor  Agent is a commercial  bank  organized  under the laws of the
United  States of America or of any State thereof or of the District of Columbia
and has a combined capital and surplus of at least $400,000,000.00.

Upon the  appointment  of a successor  Agent,  the term "Agent"  shall,  for all
purposes of this Agreement and the other Credit  Documents,  thereafter  include
such successor Agent, the retiring Agent shall be discharged from its duties and
obligations as Agent, as appropriate,  under this Agreement and the other Credit
Documents and the successor Agent shall  thereupon  succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, except
that the retiring  Agent shall reserve all rights as to  obligations  accrued or
due to it,  in its  capacity  as such,  at the time of such  succession  and all
rights (whenever arising) under Section 9.10 hereof.

Section 8.08. Certain Matters Requiring the Consent of all Lenders.  TC "Section
8.8 Certain  Matters  Requiring the Consent of all Lenders." \f C \l "2" Subject
to the  provisions  of Section  8.9(ii)  hereof,  the consent of all the Lenders
shall be required for taking any of the following  required or permitted actions
hereunder:

                  (i) any  decrease or increase in any  interest  rate or margin
         applicable  to any  Revolving  Loan or  Swing  Line  Loan or in any fee
         payable  hereunder,  or change in the method of computing  the interest
         rate or margin  applicable to any Revolving  Loan or Swing Line Loan or
         in any fee payable hereunder;

                  (ii)  any change in the Maturity Date;

                  (iii)  any increase in the Revolving Loan Commitment;

                  (iv)  any change in the definition of Required Lenders;

     (v) any assignment or delegation of the Borrower's  Obligations  and rights
     hereunder;

                  (vi) any postponement of the date of payment of any principal,
         interest or fees (other  than any fee,  if any,  payable  solely to the
         Agent,  which may be postponed or waived at the sole  discretion of the
         Agent) due hereunder;

                  (vii) the  release  of any  collateral  pledged  by any Credit
         Party under the Borrower Security  Agreement,  any Subsidiary  Security
         Agreement or any Pledge Agreement;

     (viii)  the  release  of any  Guarantor  from  its  obligations  under  the
     Subsidiary Guarantee; and

                  (ix) any  amendment,  modification  or waiver of this  Section
8.8.

For the avoidance of doubt, all other actions,  consents, waivers and amendments
permitted or required  hereunder by the Lenders shall be by the Required Lenders
(unless  such  action,  consent,  waiver or  amendment  shall  relate only to an
individual  Lender,  in which  case  such  action  may be  taken by such  Lender
individually).

Section 8.09.  Defaulting  Lenders Vote Not Counted.  TC "Section 8.9 Defaulting
Lenders Vote Not Counted." \f C \l "2" Whenever the  "Required  Lenders" or "all
the Lenders"  shall be required or permitted to take any action  pursuant to the
provisions of any Credit  Document,  for so long as a Lender shall be in default
of its  obligation  to advance its Pro Rata Share of any  Revolving  Loan or, if
applicable,  any Swing Line Loan or advance  any other funds to the Agent or any
other Lender as required hereunder:

                  (i)  until the  earlier  of the cure of such  default  and the
         termination of the Revolving Loan Commitment, the term Required Lenders
         for  purposes  of this  Agreement  shall mean  Lenders  (excluding  all
         Lenders  whose default shall have not been cured) whose Pro Rata Shares
         represent  more than  fifty  percent  (50%) of the  aggregate  Pro Rata
         Shares of such Lenders; and

                  (ii)  until the  earlier of the cure of such  default  and the
         termination  of the  Revolving  Loan  Commitment,  the  term  "all  the
         Lenders" for purposes of this Agreement  shall mean Lenders  (excluding
         all Lenders  whose  default  shall have not been cured)  whose Pro Rata
         Shares  represent one hundred  percent (100%) of the aggregate Pro Rata
         Shares of such Lenders.

ARTICLE IX.

                                              MISCELLANEOUS

Section  9.01.  Amendments  and Waivers;  Cumulative  Remedies.  TC "Section 9.1
Amendments and Waivers; Cumulative Remedies." \f C \l "2" No delay or failure of
any  Lender or the Agent or the holder of any the  Revolving  Notes or the Swing
Line Note in  exercising  any right,  power or privilege  hereunder or under any
other Credit Document shall affect such right, power or privilege; nor shall any
single or partial exercise thereof or any abandonment or discontinuance of steps
to enforce  such a right,  power or  privilege  preclude  any  further  exercise
thereof or of any other right,  power or  privilege.  The rights and remedies of
any Lender or the Agent or any other holder of the Revolving  Notes or the Swing
Line Note are  cumulative  and not exclusive of any rights or remedies which any
of them  would  otherwise  have.  Neither  this  Agreement  or any other  Credit
Document,  nor  any  term,  condition,  representation,  warranty,  covenant  or
agreement hereof or thereof,  may be changed,  waived,  discharged or terminated
orally but only by an instrument  in writing  executed by the party against whom
such change,  waiver,  discharge or termination is sought.  Any waiver,  permit,
consent  or  approval  of any kind or  character  (whether  involving  a breach,
default,  provision,  condition or term hereof or  otherwise) on the part of any
Lender or the Agent or any other holder of any  Revolving  Note,  the Swing Line
Note,  or of the  Borrower  under  this  Agreement,  or under any  other  Credit
Document  shall be effective  only in the specific  instance and for the purpose
for which given and only to the extent set forth  specifically  in  writing.  No
notice or demand given  hereunder  shall  entitle the  recipient  thereof to any
other or further notice or demand in similar or other circumstances.

Section  9.02.  Survival of  Representations  and  Warranties.  TC "Section  9.2
Survival of  Representations  and Warranties." \f C \l "2" All  representations,
warranties,  covenants  and  agreements  of the  Borrower  and the other  Credit
Parties contained herein or made in writing in connection herewith shall survive
the execution and delivery of this Agreement and the other Credit Documents, the
making of Revolving  Loans or Swing Line Loans hereunder and the issuance of the
Revolving Notes and the Swing Line Note.

Section 9.03. Supervening Illegality TC "Section 9.3 Supervening  Illegality" \f
C \l "2" . If, after the date  hereof,  as the result of (i) the adoption of any
law,  rule or  regulation  by any  Governmental  Body,  (ii) any  change  in the
existing  laws,  rules  and  regulations  of any  Governmental  Body,  (iii) the
issuance of any order or decree by any Governmental Body, (iv) any change in the
interpretation or administration of any applicable law, rule, regulation,  order
or decree by any  Governmental  Body  (including  any  central  bank or  similar
agency)  charged with the  interpretations  or  administration  thereof,  or (v)
compliance  by any Lender with any request or  directive  (whether or not having
the force of law) of any  Governmental  Body, it shall be unlawful or impossible
for such Lender to maintain or make any LIBOR Loan,  then the obligation of such
Lender to  maintain  or make any LIBOR Loan or  convert  any ABR Loan to a LIBOR
Loan shall  forthwith be cancelled and such Lender shall  automatically  convert
any  outstanding  LIBOR  Loan to an ABR  Loan.  The  Borrower  shall pay to such
Lender,  promptly upon demand,  any additional  amounts  necessary to compensate
such Lender for any costs  incurred by such Lender in making any  conversion  in
accordance with this Section 9.3 including,  but not limited to, any interest or
fees payable by such Lender to lenders of funds  obtained by it in order to make
or maintain the LIBOR Loans hereunder,  and such Lender's notice to the Borrower
of such costs shall be conclusive and binding absent manifest error.

Section  9.04.  No  Reduction  in  Payments.  TC "Section  9.4 No  Reduction  in
Payments." \f C \l "2" All payments due to the Lenders hereunder,  and all other
terms, conditions,  covenants and agreements to be observed and performed by the
Borrower hereunder, shall be made, observed or performed by the Borrower without
any reduction or deduction whatsoever,  including any reduction or deduction for
any set-off,  recoupment,  counterclaim  (whether sounding in tort,  contract or
otherwise) or tax.

Section  9.05.  Stamp  Taxes.  TC  "Section  9.5 Stamp  Taxes."  \f C \l "2" The
Borrower,  on behalf of itself and the other Credit Parties,  agrees to pay, and
to save each Lender harmless from all liability for, any State or Federal stamp,
transfer,  documentary or similar taxes,  assessments or charges  (herein "Stamp
Taxes"),  and any  penalties  or interest  with  respect  thereto,  which may be
assessed,  levied,  collected  or imposed by or upon such  Lender,  or otherwise
become payable by such Lender,  in connection with the execution and delivery of
this Agreement or the other Credit Documents.

Section  9.06.  Notices  TC  "Section  9.6  Notices"  \f C \l "2" . Any  notice,
statement,  request or demand  required or permitted  hereunder to be in writing
may be given by telecopy,  telex,  cable or other  customary means of electronic
communication  or by registered or certified mail (return receipt  requested) or
express courier, postage prepaid. All notices, statements,  requests and demands
given to or made upon any party hereto in accordance with the provisions of this
Agreement  shall  be  deemed  to have  been  given  or  made(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 the Borrower, to it at:

                           Hagler Bailly, Inc.
                           1530 Wilson Boulevard
                           Suite 400
                           Arlington, Virginia  22209
                           Attention:  Glenn J. Dozier
                           Telephone: (703) 351-0338
                           Telecopy: (703) 528-3786

                  to the Agent, to it at:

                           NationsBank, N.A.
                           8300 Greensboro Drive
                           Suite 550
                           McLean, VA  22102
                           Attention:  James W. Gaittens
                           Telephone: (703) 761-8022
                           Telecopy:(703) 761-8059

                           and if to any Lender, to it at its
                           address specified opposite its name
                           on the signature pages hereto.

or such other address for notice as any party hereto may designate for itself in
a notice to the other  party,  except in cases  where it is  expressly  provided
herein that such  notice,  statement,  request or demand  shall not be effective
until received by the party to whom it is addressed.

Section 9.07.  Governing  Law. TC "Section 9.7 Governing  Law." \f C \l "2" THIS
AGREEMENT AND THE OTHER CREDIT  DOCUMENTS  SHALL BE DEEMED TO BE CONTRACTS UNDER
THE  LAWS OF THE  COMMONWEALTH  OF  VIRGINIA  AND,  FOR ALL  PURPOSES,  SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE  COMMONWEALTH  OF
VIRGINIA WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES.



     Section  9.08.  Successors  and Assigns;  Participations;  Assignments.  TC
     "Section 9.8 Successors and Assigns; Participations;  Assignments." \f C \l
     "2"

(a)  Successors and Assigns.  This Agreement  shall be binding upon and inure to
the benefit of and be  enforceable by the  respective  permitted  successors and
assigns of the parties  hereto,  provided  that the  Borrower  may not assign or
transfer any of its interest  hereunder without the prior written consent of all
the Lenders and the Agent.

(b) Participations.  Any Lender may sell participation in all or any part of the
Revolving  Loans made by it or its Commitment or any other interest herein or in
its Revolving Note or in any other document delivered or instrument delivered in
connection  herewith  to  another  bank or  other  entity.  In the  case of such
participation by a Lender,  (i) the participant  shall not have any rights under
this  Agreement  or the  applicable  Revolving  Note or any  other  document  or
instrument  delivered in connection  herewith (the participant's  rights against
such  Lender  in  respect  of such  participation  to be those  set forth in the
agreement executed by such Lender in favor of the participant relating thereto),
(ii) all amounts  payable by the Borrower  shall be determined as if such Lender
had not sold such  participation  and (iii) the Borrower  shall continue to deal
directly with such Lender with respect to the transactions contemplated hereby.

(c) Assignments. Each Lender may assign any of its rights or interests under the
Credit Documents to one or more financial institutions, provided that:

                  (i) each such  assignment  shall be in an amount not less than
         $10,000,000.00  (or such lesser  amount if, after giving effect to such
         assignment  and  all  other   assignments  by  such  Lender   occurring
         substantially  simultaneously  therewith,  such assigning  Lender shall
         hold no Commitment or any Revolving Loan or Swing Line Loan);

                  (ii) each such  assignment  by a Lender of its  Commitment  or
         Revolving  Loans or Swing  Line Loans  shall be made in such  manner so
         that the same portion of such  Lender's  Commitment,  Revolving  Loans,
         Revolving Note, Swing Line Loans and Swing Line Note and obligations in
         respect of any Standby  Letter of Credit is assigned to the  respective
         assignee Lender;

     (iii) the  assigning  Lender  shall pay to the Agent a one-time  fee in the
     amount of $3,500.00; and

                  (iv) the Agent and, so long as no Event of Default  shall have
         occurred and be  continuing,  the Borrower shall have consented to such
         assignment,  which  consent  shall  not  be  unreasonably  withheld  or
         delayed.

Upon  execution and delivery by the assignee to the Borrower and the Agent of an
instrument in writing  pursuant to which such  assignee  agrees to be a "Lender"
hereunder (if not already a Lender) having the  Commitment  and Revolving  Loans
and Swing Line Loans specified in such  assignment,  and upon the consent of the
Agent and, if  applicable,  the Borrower as provided  above,  the assignee shall
have, to the extent of such assignment,  the rights, benefits and obligations of
a Lender hereunder holding the Commitment,  Revolving Loans and Swing Line Loans
(or  portions  thereof) and Standby  Letters of Credit or deemed  participations
therein, as applicable,  assigned to it pursuant to such assignment (in addition
to the Commitment,  Revolving  Loans and Swing Line Loans (or portions  thereof)
and Standby Letters of Credit or deemed  participations  therein, as applicable,
theretofore  held by such  assignee),  and the assigning  Lender  shall,  to the
extent of such assignment,  be relieved from its Commitment (or portion thereof)
and other obligations hereunder so assigned.

Section  9.09.  Affirmative  Rate of Interest  Permitted by Law. TC "Section 9.9
Affirmative  Rate of  Interest  Permitted  by Law." \f C \l "2"  Nothing in this
Agreement or in any Revolving Note or Swing Line Note shall require the Borrower
to pay interest to the Agent for the account of the Lenders at a rate  exceeding
the maximum rate  permitted by  applicable  law to be charged or received by the
Lenders,  it being  understood that this Section 9.9 is not intended to make the
criminal  laws of any  jurisdiction  applicable in  circumstances  in which they
would not otherwise  apply. If the rate of interest  specified  herein or in any
Revolving  Note would  otherwise  exceed the  maximum  rate so  permitted  to be
charged or received with respect to any amounts  outstanding  hereunder or under
such  Revolving  Note, or Swing Line Note,  the rate of interest  required to be
paid to the Agent for the account of the Lenders shall be automatically  reduced
to such maximum rate.

Section 9.10.  Costs and Expenses;  Indemnification.  TC "Section 9.10 Costs and
Expenses;  Indemnification." \f C \l "2" Without regard to whether the Effective
Date shall have come into  existence or whether any Revolving Loan or Swing Line
Loan or Standby Letter of Credit shall have been made or issued  hereunder,  the
Borrower  shall  pay to each  Lender  and the  Agent,  as the case  may be,  and
reimburse  each  Lender  and the Agent  for,  as the case may be,  and save each
Lender and the Agent,  as the case may be,  harmless  from,  and indemnify  each
Lender and the Agent, as the case may be, against, losses from:

                  (i) in the case of the Agent, (x) all  out-of-pocket  cost and
         expenses of the Agent in connection  with the  preparation,  execution,
         delivery, waiver, modification, amendment, filing and recording of this
         Agreement and any other Credit Document (to the extent  applicable) and
         any other  document or  instrument  delivered  in  connection  with the
         transactions  contemplated hereby, including,  without limitation,  the
         reasonable  fees and  expenses  of counsel  for the Agent with  respect
         thereto,  and  (y)  all  out-of-pocket  costs  and  expenses,   if  any
         (including without limitation,  reasonable counsel and advisor fees and
         expenses),  of such  Agent  in such  capacity  in  connection  with the
         enforcement  (whether  through   negotiations,   legal  proceedings  or
         otherwise)  of or  exercise of remedies  under this  Agreement  and any
         other Credit Document and any other document or instrument delivered in
         connection with the transactions  contemplated hereby,  including,  for
         the avoidance of doubt and without limitation,  reasonable counsel fees
         and expenses in connection  with the  enforcement  of rights under this
         clause (i); and

                  (ii) in the case of any Lender,  all  out-of-pocket  costs and
         expenses, if any (including without limitation, reasonable counsel fees
         and  expenses),  of such  Lender  in  connection  with the  enforcement
         (whether through  negotiations,  legal  proceedings or otherwise) of or
         exercise of remedies under this Agreement and any other Credit Document
         and any other document or instrument  delivered in connection  with the
         transactions contemplated hereby, including, for the avoidance of doubt
         and  without  limitation,  reasonable  counsel  fees  and  expenses  in
         connection with the enforcement of rights under this clause (ii).

(a) The Borrower  shall  indemnify and hold harmless each Lender,  the Agent and
their respective affiliates, officers, directors, employees, agents and advisors
(each,  an  "Indemnified  Person") from and against,  and pay and reimburse each
Indemnified Person for, any and all claims, damages,  fines, penalties,  losses,
liabilities, costs and expenses (including, without limitation,  reasonable fees
and  disbursements  of counsel)  which may be incurred by or asserted or awarded
against any  Indemnified  Person (i) arising out of or in connection  with or by
reason of any investigation,  litigation or proceeding (of whatever nature),  or
the  preparation  of a defense of any  investigation,  litigation or proceeding,
relating to this  Agreement,  any other Credit  Document,  any other document or
instrument  delivered in connection with the transactions  contemplated  hereby,
the proceeds of the  Revolving  Loans or Swing Line Loans any other  transaction
contemplated  hereby or  thereby,  and (ii) with  respect  to any  environmental
matters, any environmental  compliance expenses and remediation expenses, to the
extent required under any environmental law (whether statutory or common law) in
connection with the presence or suspected presence of any Hazardous Substance in
or into the air, soil, groundwater, surface water or improvements at, on, about,
under,  or within any of the  Borrower's or its current or former  Subsidiaries'
present,  past or future  properties,  or any portion  thereof,  or elsewhere in
connection  with the  transportation  of  Hazardous  Substances  to or from such
properties,  and in the case of clause (i) or (ii) whether or not an Indemnified
Person is a party hereto or thereto and whether or not the Effective  Date shall
have come into  existence or any Revolving  Loan or any Standby Letter of Credit
has been  made or issued  under  this  Agreement;  provided,  however,  that the
Borrower shall have no obligation to indemnify or hold harmless any  Indemnified
Person under this Section 9.10(b) to the extent arising out of such  Indemnified
Person's gross negligence or willful misconduct.

(b) All  amounts  payable  by the  Borrower  under  this  Section  9.10 shall be
immediately  due upon written  request by a Lender or the Agent, as the case may
be, for the payment thereof.  The obligations of the Borrower under this Section
9.10 shall survive the repayment of the Revolving  Notes and the Swing Line Note
and reimbursement for any Drawing under any Standby Letter of Credit.

Section 9.11. Set-Off;  Suspension of Payment and Performance.  TC "Section 9.11
Set-Off; Suspension of Payment and Performance." \f C \l "2" Each Lender and the
Agent is hereby  authorized by the Borrower,  at any time and from time to time,
without  notice  (a) to set off  against,  and to  appropriate  and apply to the
payment of, the  liabilities  of the Borrower then due under this  Agreement and
any other  Credit  Document any and all  liabilities  owing by any Lender or the
Agent or any of their Affiliates to the Borrower  (whether payable in Dollars or
any other currency, whether matured or unmatured and, in the case of liabilities
that are deposits (including, without limitation, any funds from time to time on
deposit in the Borrower  Account or other account  maintained with any Lender or
the Agent, whether general or special,  time or demand and however evidenced and
whether  maintained at a branch or office  located  within or without the United
States),  and (b)  during  any Event of  Default,  to suspend  the  payment  and
performance of such  liabilities  owing by such Person or its Affiliates and, in
the case of liabilities that are deposits,  to return as unpaid for insufficient
funds any and all checks and other items drawn against such deposits.

Section  9.12.  Judicial  Proceedings;  Waiver of Jury Trial.  TC "Section  9.12
Judicial Proceedings; Waiver of Jury Trial." \f C \l "2" Any judicial proceeding
brought against the Borrower with respect to any Credit Agreement  Related Claim
may be brought in any court of competent  jurisdiction  in the  Commonwealth  of
Virginia,  and, by execution  and delivery of this  Agreement,  the Borrower (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 Borrower 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 9.6 of this Agreement,  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 any Lender,  the Agent or any other Indemnified Person
to serve  process in any other manner  permitted by law or shall limit the right
of any Lender,  the Agent or any other  Indemnified  Person to bring proceedings
against  the  Borrower  in the courts of any other  jurisdiction.  Any  judicial
proceeding by the Borrower  against any Lender or the Agent involving any Credit
Agreement  Related  Claim  shall  be  brought  only  in a court  located  in the
Commonwealth  of  Virginia.  THE  BORROWER  AND THE LENDERS AND THE AGENT HEREBY
WAIVE  TRIAL  BY JURY IN ANY  JUDICIAL  PROCEEDING  TO WHICH  THEY  ARE  PARTIES
INVOLVING ANY CREDIT AGREEMENT RELATED CLAIM.

Section  9.13.  Integration.  TC "Section  9.13  Integration."  \f C \l "2" This
Agreement and the other Credit  Documents  and, when  executed,  the  Autoborrow
Services  Agreement  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  9.14.  Further Acts and  Assurances.  TC "Section 9.14 Further Acts and
Assurances." \f C \l "2" The Borrower shall,  and shall cause the Credit Parties
to promptly and duly  execute and deliver to a Lender or the Agent,  as the case
may be, and to such other  persons as such Lender or the Agent shall  reasonably
designate, such further instruments and shall take such further action as may be
required by law or as such Lender or the Agent may from time to time  request in
order more  effectively  to carry out and  accomplish  the intent and purpose of
this  Agreement and the other Credit  Documents and to establish and protect the
rights and  remedies  created or intended to be created in favor of the Agent or
any Lender hereunder or under any other Credit Document.

Section  9.15.  No  Fiduciary  Relationship.   TC  "Section  9.15  No  Fiduciary
Relationship."  \f C \l "2" The Borrower  acknowledges that no provision of this
Agreement  or in any of the other  Credit  Documents,  and no course of  dealing
between any Lender or the Agent and the  Borrower,  or any other  Credit  Party,
shall be deemed to create any  fiduciary  duty by the Agent or any Lender to the
Borrower or any other Credit Party.

Section  9.16.  Severability.  TC "Section 9.16  Severability."  \f C \l "2" The
provisions of this  Agreement are  severable,  and if any clause or provision of
this Agreement shall be held invalid or unenforceable in whole or in part in any
jurisdiction,  then such clause or provision shall, as to such jurisdiction,  be
ineffective to the extent of such invalidity or unenforceability  without in any
manner affecting the validity or  enforceability  of such clause or provision in
any other jurisdiction or the remaining provisions hereof in any jurisdiction.

Section 9.17.  Counterparts.  TC "Section 9.17  Counterparts."  \f C \l "2" This
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  9.18.  Headings,  Bold Type and Table of  Contents.  TC  "Section  9.18
Headings,  Bold Type and Table of Contents."  \f C \l "2" 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 Agreement.



<PAGE>


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

                                    BORROWER

                               HAGLER BAILLY, INC.


                     By:_/s/ Glenn J. Dozier_______________
                              Name: Glenn J. Dozier
                          Title: Senior Vice President
                           and Chief Financial Officer


                                      AGENT

                           Address: NATIONSBANK, N.A.


             8300 Greensboro Drive By:_____________________________
                      Fifth Floor Name: James W. Gaittens
              McLean, Virginia 22102 Title: Senior Vice President
                        Attention: Mr. James W. Gaittens
                           Telephone: (703) 761-8022
                           Telecopier: (703) 761-8059


                                     LENDERS

                                NATIONSBANK, N.A.
                       By: /s/ James W. Gaittens__________
                             Name: James W. Gaittens
                          Title: Senior Vice President


                                    Address:
                             8300 Greensboro Drive
                                  Fifth Floor
McLean, Virginia  22102
Attention:  Mr. James W. Gaittens
Telephone:  (703) 761-8022
Telecopier:  (703) 761-8059


<PAGE>




     Exhibit A to Revolving Credit Agreement








                     Form of Borrower Security Agreement has
      been intentionally omitted. See Security Agreement executed by Hagler
     Bailly, Inc. in the form of the Borrower Security Agreement attached to
                   the Revolving Credit Agreement as Exhibit A



<PAGE>


                                  Exhibit B to
                           Revolving Credit Agreement




                                                   INTENTIONALLY DELETED








                                     <PAGE>


                                  Exhibit C to
                           Revolving Credit Agreement













                                          Form of Revolving Note has been
                                     intentionally omitted. See Revolving Note
                                    executed by Hagler Bailly, Inc. in the form
                                                  of the Revolving








                                     <PAGE>


                                  Exhibit D to
                           Revolving Credit Agreement











                        Form of Subsidiary Guarantee has
              been intentionally omitted. See Subsidiary Guarantee
              by those Domestic Subsidiaries of Hagler Bailly, Inc.
                     constituting, as of November 20, 1998,
                      Material Domestic Subsidiaries in the
                    form of the Subsidiary Guarantee attached
                 to the Revolving Credit Agreement as Exhibit D






<PAGE>



                                  Schedule I to
                         The Revolving Credit Agreement


                     Name of Lender Commitment (in Dollars)


                        NationsBank, N.A. $50,000,000.00






                                     <PAGE>


                                  Schedule 5.5

                                                    Litigation

1.    Hagler Bailly's  indirect  subsidiary,  Theodore Barry & Associates,  is a
      defendant in a lawsuit brought in the United States District Court for the
      Northern  District  of  Illinois,  Michael  A. Laros v.  Theodore  Barry &
      Associates,  No. 95-C4175, by one of its former executives seeking payment
      of a bonus and  salary  allegedly  due him and  payment of  principal  and
      interest on a subordinated note of TB&A held by him,  prejudgment interest
      and costs and fees.

2.    Apogee  Research,  Inc.  ("Apogee"),  one of Hagler  Bailly's wholly owned
      subsidiaries,  has  received a subpoena  from the Office of the  Inspector
      General of the  Environmental  Protection  Agency (the  "EPA")  requesting
      records from April 1993  through  October  1995  pertaining  to a contract
      between  Apogee  and the  EPA.  The  work  under  this  contract  has been
      completed. The subpoena was served in connection with an EPA investigation
      relating to the submission of potential false  statements and false claims
      under the contract.

3.    A former  employee  of Hagler  Bailly,  Inc.  has  filed a claim  with the
      Arlington  County Human  Rights  Commission  against the Company  alleging
      discrimination in relation to her termination.

4.    HB Capital, Inc., a wholly owned subsidiary of the Company, is seeking the
      payment  of  approximately  $133,000  in  fees  and  a  success  fee  from
      Engineering  Power Systems  Group,  Inc.  ("EPS") in  connection  with the
      financing of a barge mounted power system in Case No. 1998 ST.J. No. 3233,
      Supreme  Court  of   Newfoundland,   Trial  Division.   EPS  has  filed  a
      counterclaim  against HB Capital,  Inc. in this case.  No specific  dollar
      amount of damages is claimed in the counterclaim.




<PAGE>


                                  Schedule 5.6

                                                     Defaults

None.



<PAGE>
<TABLE>
<CAPTION>

                                  Schedule 5.12
              Subsidiaries

                                                                            Book Value
                                                                            of Total      Shares of Cap Incorporation
Name                                                                        Assets of     Stock O/S                       Ownership
                                                                            Material
                                                                            Domestic
                                                    Type                   Subsidiaries
                                                    of                     as of
                                                   Subsidiary             9/30/98
<S>  <C>                                        <C>                     <C>               <C>               <C>           <C>  
1.     Hagler Bailly Texas, Inc.                   Domestic               -0-              Texas             100          100% (4)
2.     Hagler Bailly Consulting France, S.A.       Foreign                $1,314,547       France            10,000       100% (1)*
3.     Hagler Bailly Indonesia, Inc.               Foreign                $1,346,828       Delaware          100          100% (1)
4.     PT Hagler Bailly Indonesia                  Foreign                -0-              Indonesia         150,000      100% (2)
5.     Hagler Bailly Consulting, Ltd.              Foreign                522,883          Ireland           1,000,000    100% (1)
6.     TB&A Group, Inc.                            Material Domestic      $7,005,623       Delaware          1,000        100% (3)
7.     Theodore Barry & Associates                 Material Domestic      $9,203.368       California        10,648       100% (7)
8.     Apogee Research, Inc.                       Domestic               -0-              Maryland          1,000        100% (3)
9.     Apogee Research International Ltd.          Foreign                $704,285         Canada            100          100% (6)
10.   Izsak, Grapin et Associes, S.A.R.L.          Foreign                $2,386,985       France            2,500        100% (3)
11.   Hagler Bailly, S.A.                          Foreign                $518,163         Argentina         12,000       100% (1&8)
12.   Estudio Q Ingenieros Asociados S.R.L.        Foreign                -0-              Argentina         12,000       100% (3)
13.   Estudio Q S.A.                               Foreign                $430,788         Argentina         12,000       100% (3)
14.   Hagler Bailly Services, Inc.                 Material Domestic      $20,962,178      Delaware          100          100% (3)
15.   Hagler Bailly Consulting, Inc.               Material Domestic      $6,939,134       Delaware          100          100% (3)
16.   HB Capital, Inc.                             Material Domestic      $387,450         Delaware          100          100% (3)
17.   HB Capital Securities, Inc.                  Material Domestic      -0-              Delaware          1,000        100% (9)
18.   Private Label Energy Services, Inc.          Material Domestic      $1,000,000       Delaware          100          100% (9)
19.   Hagler Bailly Services (India) Ltd.          Foreign                -0-              India             125,000       74% (1)
20.   Hagler Bailly Armenia                        Foreign                $34,359          Delaware          0            100% (1)
21.   Hagler Bailly Pakistan (Private) Ltd.        Foreign                -0-              Pakistan          40,000        25% (1)+
22.   Putnam, Hayes & Bartlett, Inc.               Material Domestic      $29,238,015      Massachusetts     1,000        100% (3)
23.   Putnam, Hayes & Bartlett - Asia Pacific Ltd  Foreign                $3,951,522       New Zealand       20,000       100% (5)
24.    Putnam, Hayes & Bartlett - Asia Pacific     Foreign                $1,804,506       Australia         150,000      100% (5)
      Pty Ltd
25.   Hagler Bailly International S.A.             Foreign                -0-              Belgium           2,000         50% (1)++
26.   ZAO Hagler Bailly                            Foreign                -0-              Russia            0            100% (1)
27.   Core Management Systems Ltd                  Foreign                -0-              New Zealand       100          100% (10)
28.   Fieldston Publications, Inc.                 Domestic               $189,656         Maryland          100          100% (3)
--------------------------------------------------
Shares owned by six (6) individuals
+ Seventy-five  percent (75%) of shares owned by three (3)  individuals ++ Fifty
percent (50%) of shares owned by RCG International, Inc .
</TABLE>
<PAGE>


(1)      Hagler Bailly Services, Inc.
(2)      Hagler Bailly Indonesia, Inc.
(3)      Hagler Bailly, Inc.
(4)      Hagler Bailly Consulting, Inc.
(5)      Putnam, Hayes & Bartlett, Inc.
(6)      Apogee Research, Inc.
(7)      TB&A Group, Inc.
(8)      Estudio Q Ingenieros Asociados S.R.L.
(9)      HB Capital, Inc
(10)     Putnam, Hayes & Bartlett - Asia Pacific Ltd



<PAGE>






                                  Schedule 5.14




                                                   Real Property


None.




<PAGE>


                                 Schedule 6.2(b)


                                               Certain Indebtedness


1.       A Standby  letter of credit issued in the amount of $12,121.00 by State
         Street Bank and Trust Company in favor of Superintencia De Electricita,
         Government of Bolivia.




<PAGE>




                                                     SCHEDULES



Schedule I -- Commitments TC "Schedule I -- Commitments" \f C \l "1"



Schedule 5.5 -- Litigation TC "Schedule 5.5 -- Litigation" \f C \l "1"



Schedule 5.6 -- Defaults TC "Schedule 5.6 -- Defaults" \f C \l "1"



Schedule 5.12 -- Subsidiaries TC "Schedule 5.12 -- Subsidiaries" \f C \l
"1"




Schedule 5.14 -- Real Property TC "Schedule 5.14 -- Real Property" \f C \l
"1"




Schedule 6.2(b) -- Certain Indebtedness TC "Schedule 6.2(b) -- Certain
Indebtedness" \f C \l "1"