AMENDED AND RESTATED CREDIT AGREEMENT

                                      AMONG

                               TELOS CORPORATION,
                             A MARYLAND CORPORATION,

                               TELOS CORPORATION,
                            A CALIFORNIA CORPORATION
                            (COLLECTIVELY, BORROWERS)

                                       AND

                                NATIONSBANK, N.A.
                                     (BANK)

                                NATIONSBANK, N.A.
                                     (AGENT)




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

                            Dated as of July 1, 1997
                     -----------------------------------------


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<TABLE>
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                                                  TABLE OF CONTENTS


                                                                                                                Page
<S>                                                                                                              <C>   

ARTICLE I  DEFINITIONS...........................................................................................17

ARTICLE II  AMOUNT AND TERMS OF THE LOANS........................................................................30

ARTICLE III  LETTERS OF CREDIT...................................................................................42

ARTICLE IV  REPRESENTATIONS AND WARRANTIES.......................................................................43

ARTICLE V  CONDITIONS OF EFFECTIVENESS OF THIS AGREEMENT AND LENDING.............................................51

ARTICLE VI  AFFIRMATIVE COVENANTS................................................................................53

ARTICLE VII  NEGATIVE COVENANTS..................................................................................59

ARTICLE VIII  FINANCIAL COVENANTS................................................................................64

ARTICLE IX  DEFAULTS; REMEDIES...................................................................................67

ARTICLE X  SETOFFS, ETC..........................................................................................71

ARTICLE XI  EXPENSES.............................................................................................72

ARTICLE XII  AMENDMENTS AND WAIVERS, ETC.........................................................................72

ARTICLE XIII  PARTICIPATIONS.....................................................................................72

ARTICLE XIV  INDEMNIFICATION.....................................................................................73

ARTICLE XV  THE AGENT............................................................................................74

ARTICLE XVI  MISCELLANEOUS.......................................................................................77

</TABLE>
<PAGE>


         THIS AMENDED AND RESTATED CREDIT  AGREEMENT (this  "Agreement") is made
and  entered  into  as of the __ day of  July,  1997,  by and  among  (i)  Telos
Corporation, a Maryland corporation,  formerly known as C3, Inc. ("Telos Corp.")
and Telos Corporation,  a California  corporation  ("Telos Sub")  (individually,
"Borrower"  and  collectively,  "Borrowers"),  and  (ii)  NationsBank,  N.A.,  a
national  banking  association,  successor by merger to American  Security Bank,
N.A. (together with its successors and assigns,  "NationsBank").  NationsBank in
its capacity as Agent is sometimes referred to herein as the "Agent."

                                   WITNESSETH:

         A. Telos Corp., Telos Sub, NationsBank, and the Agent entered into that
certain  Revolving and Reducing  Senior  Facility  Credit  Agreement dated as of
January 14, 1992, as  subsequently  amended through the date hereof (as amended,
the "Original Credit Agreement").

         B. Telos Corp.,  Telos Sub,  NationsBank  and the Agent desire to amend
and restate the Original  Credit  Agreement in its entirety (i) to amend certain
terms and  provisions  of the  Original  Credit  Agreement,  (ii) to reflect the
amendments  previously executed and delivered by Borrowers,  NationsBank and the
Agent and (iii) to make certain other changes.

     C. The Banks (as  defined in Article I) are  willing,  subject to the terms
and conditions of this Agreement, to make available to Borrowers, on a revolving
basis, up to a maximum principal amount of $45,000,000.

         NOW  THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency  of which are hereby  acknowledged,  the  parties,  intending  to be
legally  bound,  hereby amend and restate the Original  Credit  Agreement in its
entirety as follows:


                                    ARTICLE I

                                   DEFINITIONS

         1.1 General Interpretive  Principles.  If the context requires, the use
of any gender  shall also refer to any other  gender.  Defined  terms shall also
mean in the  singular  number the plural  and in the  plural the  singular.  All
accounting  terms not  specifically  defined  have the  meanings  determined  by
reference  to  United   States   generally   accepted   accounting   principles,
consistently  applied  ("GAAP").  The  word  "including"  is not  exclusive;  if
exclusion is intended,  the word  "comprising"  is used  instead.  The word "or"
shall mean "and/or" unless the context clearly prohibits that construction.  All
references  to Articles,  Sections,  Exhibits and  Schedules are to articles and
sections of, and exhibits and schedules to, this Agreement.

     1.2  Certain  Definitions.  As  used  herein,  the  following  terms,  when
capitalized, have the following respective meanings:

         Acceptance  Date:  The  date on  which  customers  of a  Borrower  or a
Subsidiary become contractually  obligated to pay for products delivered by each
such  Borrower or each such  Subsidiary  pursuant  to the terms of the  relevant
contract  (e.g.,  in  the  case  of  certain  Military  Departments  under  U.S.
Government Contracts, the date of execution of DD Form 250, "Material Inspection
and Receiving Report").

     Accountants: The independent certified public accounting firm of recognized
national standing selected by Telos Corp. and acceptable to the Agent.

         Administrative Fee:  The meaning specified in Section 2.5(d).

         Affiliate: As applied to any Person, any member, director or officer of
such Person,  any corporation,  association,  firm or other entity of which such
Person is a member,  director  or  officer,  and any other  Person  directly  or
indirectly controlling, controlled by or under direct or indirect common control
with  such  Person.  The  term  "control"  means  the  possession,  directly  or
indirectly,  of the power to direct or to cause the direction of the  management
and policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise;  provided, however, that neither the Banks nor the Agent
shall be considered an Affiliate of either Borrower or a Subsidiary for purposes
of this Agreement.

         Agent:  NationsBank, and any successor agent.

         Agreement:  This Amended and Restated Credit Agreement and the Exhibits
and Schedules  attached  hereto (all of which  Exhibits and Schedules are hereby
incorporated  by reference and made a part hereof),  as amended or  supplemented
from time to time in accordance with the terms hereof.

         Application:  The meaning specified in Section 3.1.

     Assignment of Claims Act: 31 U.S.C.  ss. 3727 and 41 U.S.C. ss. 15, and any
similar or  successor  federal  statute,  and the rules and  regulations  issued
thereunder, all as the same shall be in effect from time to time.

         Assignment  of  Tenant's   Interest   Under  Leases:   The   collateral
assignments  of the leases of Borrowers,  all of which  assignments  shall be in
proper  recordable form as required by the laws of the applicable  jurisdictions
and otherwise in the form previously delivered to the Agent.

         Audit Fee:  The meaning specified in Section 2.5(b).

         Bank or Banks:  NationsBank or any other bank or financial  institution
which is a participant  in, or assignee of, all or a portion of the  Commitment,
and their respective successors and assigns.

     Banking  Day:  A day other  than a  Saturday,  Sunday or other day on which
commercial  banks in  Washington,  D.C. or New York,  New York are authorized or
required by law to close.

         Base Applicable Margin:  The meaning specified in Section 2.4(b).

         Base Interest Rate:  The Base Rate plus the Base Applicable Margin.

         Base  Eurodollar  Rate: For any Eurodollar Loan for any Interest Period
therefor,  the rate per annum  (rounded  upwards,  if necessary,  to the nearest
1/100 of 1%)  appearing  on Telerate  Page 3750 (or any  successor  page) as the
London  interbank  offered rate for deposits in dollars at  approximately  11:00
a.m.  (London time) two (2) Banking Days prior to the first day of such Interest
Period for a term  comparable  to such Interest  Period.  If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Loan for any Interest Period therefor,  the rate per annum (rounded upwards,  if
necessary,  to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposit in dollars at approximately  11:00
a.m.  (London time) two (2) Banking Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is  specified on Reuters  Screen LIBO Page,  the  applicable  rate
shall be the arithmetic mean of all such rates.

         Base  Rate:  The rate of  interest  from time to time  established  and
publicly  announced  by  NationsBank,  in its sole  discretion,  as its base (or
prime) rate of interest to be used as an index in  determining  actual  rates of
interest to be charged to certain of NationsBank's  borrowers. The Base Rate may
not be the lowest rate charged by NationsBank  to its borrowers.  The rate shall
be adjusted as of the effective date of each change in NationsBank's Base Rate.

     Base Rate  Loan:  Any Loan for which  interest  on all or a portion  of the
outstanding  principal  thereof is to be  computed  with  reference  to the Base
Interest Rate.

     Borrowers:  Telos  Corp.  and Telos Sub,  or either of them as the  context
requires, and their respective successors and assigns.

         Borrowing Base: At any time, the collateral  value of certain assets of
Borrowers and the  Subsidiaries,  on a consolidated  basis,  against which Loans
shall be made by the Banks hereunder,  calculated as provided in Section 2.2, as
reflected in the most recently delivered Borrowing Base Certificate.

         Borrowing  Base  Certificate:  A  certificate  of the  President,  Vice
President or the chief financial  officer of Telos Corp.,  substantially  in the
form of Exhibit F hereto.

         Capital  Expenditure:  An expenditure by a Borrower or a Subsidiary for
property classified as a "fixed asset" under GAAP. Such term shall also include,
whether or not required by GAAP, the obligations  under a Capitalized  Lease and
expenditures  for spare  parts  for Telos  Field  Engineering,  Inc.,  but shall
exclude expenditures specifically reimbursable under contracts.

         Capitalized  Lease:  Any lease of  property  (real,  personal or mixed)
which,  in accordance with GAAP,  should be capitalized on the lessee's  balance
sheet or for which  the  amount of the  asset  and  liability  thereunder  if so
capitalized should be disclosed in a note to such balance sheet. For purposes of
this Agreement, any Person shall be deemed to be the owner of any property which
it has acquired or holds  subject to a  Capitalized  Lease or  conditional  sale
agreement or other arrangement  pursuant to which title to the property has been
retained by or vested in some other person for security purposes.

     Change  of  Control:  If John  R.C.  Porter or  entities  wholly-owned  and
controlled  by John R.C.  Porter  shall no longer own or control,  by  contract,
proxy or  otherwise,  an  aggregate  amount  of at least 51% of the  issued  and
outstanding voting stock of Telos Corp.

         Closing Date:  July 1, 1997.

         Code: The Internal  Revenue Code of 1986, as amended from time to time,
and any Treasury regulations,  revenue rulings or technical information releases
issued thereunder.

         Collateral:  (i) The  "Collateral"  as  such  term  is  defined  in the
Security  Agreements,  (ii) the "Pledged  Collateral" as such term is defined in
the Pledge  Agreements,  and (iii) all other  property,  now owned or  hereafter
acquired,  of a Borrower or a Subsidiary  in which such  Borrower or  Subsidiary
shall have  created a security  interest to secure the Loans,  and all  Proceeds
thereof.

         Collateral Account:  The meaning specified in Section 2.15.

         Collections:  The meaning specified in Section 2.14.

         Commission:  The  Securities  and  Exchange  Commission  and any  other
similar  or  successor  agency  of  the  federal  government  administering  the
Securities Act, the Exchange Act or the Trust Indenture Act.

        Commitment:  The Commitment of the Banks as set forth in Section 2.1(a).

        Commitment Fee:  The meaning specified in Section 2.5(a).

        Compliance Certificate:  The meaning specified in Section 6.8.

        Consents:  The meaning specified in Section 4.17.

        Debt Ratio:  The meaning specified in Section 2.4(d).

     Deposit  Accounts:  The deposit accounts  established by Borrowers with the
Agent pursuant to Section 6.15 hereof.

         Early Termination Fee:  The meaning specified in Section 2.6.

     EBITDA:   For  any  period,   consolidated  net  income  of  Borrowers  and
Subsidiaries   before   deductions  for  interest,   taxes,   depreciation   and
amortization, all as determined in accordance with GAAP.

     Eligible Billed Commercial Receivables: All Receivables (excluding Eligible
Billed Government Receivables) of Borrowers and the Subsidiaries (i) which arose
from services  performed or products delivered by a Borrower or a Subsidiary and
such services have been  performed or such products have been  delivered for the
appropriate obligor, (ii) which are based upon an enforceable order or contract,
written or oral, for services performed or products  delivered,  (iii) the title
to such  Receivables  is  absolute  and not  subject  to any prior  Lien  except
Permitted Liens, (iv) in which the Agent has a first priority perfected security
interest,  (v) the obligors with respect to which are independent  third parties
having  their  principal  places of  business  located in the  United  States of
America,  (vi) the Acceptance  Date for which has occurred,  (vii) for which the
obligors have not notified any Borrower or Subsidiary of any dispute concerning,
or claimed  nonconformity  of, any of the services or products  from the sale of
which such  Receivables  arose,  (viii)  which are due and payable not more than
thirty (30) days from the original  invoice date, (ix) which are not outstanding
more than ninety (90) days after (A) for products,  the later of the  Acceptance
Date or the original  invoice  date or (B) for  services,  the original  invoice
date, (x) which have not had any payment date extended,  (xi) which do not arise
out of any  contract  or order  that,  by its  terms,  forbids  or makes void or
unenforceable the assignment by such Borrower or Subsidiary to the Agent of such
Receivable, (xii) for which the Borrowers and the Subsidiaries have not received
any  note,  trade  acceptance  draft or other  instrument,  unless,  if any such
instrument has been received,  Borrowers  immediately notified the Agent and, at
the Agent's  request,  endorsed or assigned and delivered such instrument to the
Agent,  (xiii) the obligors of which are not subsidiaries or other affiliates of
any Borrower or Subsidiary, (xiv) which are not for advance payment on any order
or contract (xv) which are in connection with "ship in place" or "bill and hold"
practices  or  instructions  or any  other  practices  or  instructions  to hold
services  or  products  for any  period of time,  (xvi)  the  amount of which is
reduced by the amount of any deposit  received by such  Borrower or  Subsidiary,
(xvii) which are not  obligations of an obligor which has dissolved,  terminated
its  existence  or has become  insolvent or is subject to any  proceeding  under
bankruptcy or insolvency laws (however  evidenced),  (xviii) which do not relate
in whole or in part to  services  or  products  which have been  rejected by any
obligor,  (xix) which have not been  reserved as doubtful and have not otherwise
failed to meet  credit  standards  acceptable  to the Agent,  (xx) which are not
subject to any claim of  reduction,  counterclaim,  setoff,  recoupment,  or any
claim  for  credits,   allowances,   or  a   adjustments   by  the  obligor  for
unsatisfactory  services or for any other reason;  (xxi) which the Agent has not
deemed ineligible  because of uncertainty as to the obligor or because the Agent
otherwise  reasonably  considers the collateral  value thereof to be impaired or
its  ability  to  realize  such value to be  insecure,  and (xxii)  which do not
constitute a final billing or close out billing related to a completed contract;
provided,  however,  that in the case of any  obligor  obligated  in  respect of
Receivables  having an aggregate  face amount of $500,000 or more,  if more than
fifty percent (50%) in aggregate  amount of the Receivable of such obligor shall
fail to meet any of the foregoing criteria,  no Receivable of such obligor shall
be an Eligible  Billed  Commercial  Receivable as defined  hereunder;  provided,
further,  that  no  Receivable  due to  Telos  International  Corp.,  to  Kuwait
International  Inc. or to any joint  venture to which a Borrower or a Subsidiary
is a party shall be included for purposes of this definition.

     Eligible Billed Government Receivables: All Receivables arising out of U.S.
Government  Contracts of  Borrowers  and the  Subsidiaries  (i) which arose from
services  performed or products delivered by a Borrower or a Subsidiary and such
services  have been  performed  or such  products  have been  delivered  for the
appropriate obligor, (ii) which are based upon an enforceable order or contract,
written or oral, for services performed or products  delivered,  (iii) the title
to such  Receivables  is  absolute  is and not  subject to any prior Lien except
Permitted Liens, (iv) in which the Agent has a first priority perfected security
interest,  (v) the  Acceptance  Date for which has occurred,  (vi) for which the
obligors have not notified any Borrower or Subsidiary of any dispute concerning,
or claimed  nonconformity  of, any of the services or products  from the sale of
which such  Receivables  arose,  (vii)  which are due and  payable not more than
thirty  (30)  days  from  the  original  invoice  date,  (viii)  which  are  not
outstanding more than ninety (90) days after (A) for products,  the later of the
Acceptance Date or the original  invoice date or (B) for services,  the original
invoice date,  (ix) which have not had any payment date  extended,  (x) which do
not arise out of any contract or order that, by its terms, forbids or makes void
or  unenforceable  the assignment by such Borrower or Subsidiary to the Agent of
such  Receivable,  (xi) for which the  Borrowers and the  Subsidiaries  have not
received any note, trade acceptance draft or other  instrument,  unless,  if any
such instrument has been received, Borrowers immediately notified the Agent and,
at the Agent's  request,  endorsed or assigned and delivered such  instrument to
the Agent, (xii) which do not relate in whole or in part to services or products
which have been rejected by any obligor,  (xiii) which have not been reserved as
doubtful and have not otherwise  failed to meet credit  standards  acceptable to
the Agent,  (xiv) which is not subject to any claim of reduction,  counterclaim,
setoff, recoupment, or any claim for credits,  allowances, or adjustments by the
obligor for unsatisfactory  services or for any other reason, (xv) which are not
for advance payment on any order or contract, (xvi) which are in connection with
"ship in  place"  or "bill  and hold"  practices  or  instructions  or any other
practices or  instructions  to hold services or products for any period of time,
(xvii) the amount of which is reduced by the amount of any  deposit  received by
such Borrower or Subsidiary  and (xviii) which do not constitute a final billing
or close out billing related to a completed contract; provided, however, that in
the case of any Government  Contract having an aggregate face amount of $500,000
or more,  if more  than  fifty  percent  (50%)  of the  Receivables  under  such
Government  Contract  shall  fail  to meet  any of the  foregoing  criteria,  no
Receivables of such Government  Contract shall be an Eligible Billed  Government
Receivable as defined hereunder;  provided,  further,  that no Receivable due to
Telos International  Corp., to Kuwait International Inc. or to any joint venture
to which a Borrower or a Subsidiary is a party shall be included for purposes of
this definition.

     Eligible Hardware Inventory:  Hardware Inventory of Borrowers (i) which has
been purchased in connection  with firm orders or created in the ordinary course
of  business,  (ii)  which  can be  shipped  to a  customer  without  repair  or
modification,  except  assembly or  integration  of components  performed in the
ordinary  course of business,  and (iii) in which the Agent has a first priority
perfected security interest.

     Eligible  Receivables:  Eligible Billed  Government  Receivables,  Eligible
Billed Commercial Receivables and Eligible Unbilled Government Receivables.

     Eligible  Unbilled  Government  Receivables:  All unbilled  Receivables  of
Borrowers and the Subsidiaries arising from Government Contracts (which by their
terms are billable  within  thirty (30) days from the date on which the services
were performed or the products delivered) pending billing (i) in which the Agent
has a first  priority  perfected  security  interest  and  (ii) (x)  which  have
remained  unbilled for no more than such thirty (30) day period,  (y) which will
be billed within thirty (30) days of the date of the Borrowing Base  Certificate
prepared in respect of the period in which the  services  were  performed or the
products  were  delivered,  and (z) which are due to be paid within  thirty (30)
days  of such  billing;  provided,  however,  that no  Receivable  due to  Telos
International  Corp.,  to Kuwait  International  Inc. or to any joint venture to
which a Borrower or a  Subsidiary  is a party shall be included  for purposes of
this definition.

     Enforcement  Costs:  All  reasonable  expenses,  charges,  costs  and  fees
(including, without limitation,  reasonable attorneys' fees and expenses) of any
nature  whatsoever  paid or incurred by or on behalf of the Banks in  connection
with (a) the collection or enforcement of any or all of the Obligations,  and/or
any  of  the  Revolving  Loan  Documents,  and  (b)  the  creation,  perfection,
collection,  maintenance,  preservation,  defense, protection, realization upon,
disposition,  collection,  sale  or  enforcement  of  all  or  any  part  of the
Collateral.

     enterWorks:   enterWorks.com,   Inc.,  a  Delaware  corporation,   and  its
successors and assigns.

     enterWorks Notes: Collectively,  those certain Series A Senior Subordinated
Unsecured Notes Due July 11, 2001 dated July 12, 1996 issued by enterWorks.

     enterWorks  Stock:  The capital stock of, and any other equity or ownership
interests in, enterWorks and all certificates representing such stock, equity or
ownership interests, and all dividends, cash, instruments and other property and
rights received, receivable or distributed in respect of or in exchange for such
stock, equity or ownership interests.

     enterWorks  Subordination  Agreement:  That certain Subordination Agreement
dated as of July 12, 1996 among NationsBank, Telos Corp., enterWorks and each of
the holders of the enterWorks Notes.

     Equipment: The meaning specified in the U.C.C.

     ERISA: The Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations issued pursuant to its authority.

     ERISA Affiliate:  All members of a controlled group of corporations and all
trades or businesses  (whether or not incorporated)  under common control which,
together with Borrowers and the  Subsidiaries,  are treated as a single employer
under Section 414(b), 414(c) or 414(m) of the Code.

     ERISA Termination Event: (a) A "Reportable Event" described in Section 4043
of ERISA and the regulations  issued thereunder (other than a "Reportable Event"
not subject to the provision for 30-day notice to the Pension  Benefit  Guaranty
Corporation ("PBGC") under such regulations),  (b) the withdrawal of a Borrower,
a Subsidiary or any ERISA  Affiliate  from a Plan during a Plan year in which it
was a "substantial  employer" as defined in Section 4001(a)(2) of ERISA, (c) the
filing  of a notice of intent to  terminate  a Plan or the  treatment  of a Plan
Amendment as a termination  under Section 4041 of ERISA,  (d) the institution of
proceedings to terminate a Plan by the PBGC, or (e) any other event or condition
which might  constitute  grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan.

     Eurodollar Applicable Margin: The meaning specified in Section 2.4(g).

     Eurodollar  Banking Day: A Banking Day on which  commercial  banks are open
for  international  business  (including  dealings in U.S.  dollar  deposits) in
London.

     Eurodollar  Loan:  Any Loans for which  interest on all or a portion of the
outstanding principal thereof is to be computed with reference to the Eurodollar
Rate.

     Eurodollar  Rate: The Base Eurodollar  Rate plus the Eurodollar  Applicable
Margin specified in Section 2.4(g).

     Event of Default:  The meaning specified in Section 9.1.

     Excepted Collateral:  The Property, Plant and Equipment.

     Exchange Act: The  Securities  Exchange  Act of 1934, and  any similar or
successor  federal  statute,  and the rules and  regulations  of the  Commission
thereunder, all as the same shall be in effect from time to time.

     Excluded Claims:  The meaning specified in Section 14.1.

     Executive Officer:  The meaning specified in Section 5.1(d).

     Federal  Reserve  Board:  The Board of  Governors  of the  Federal  Reserve
System.

     Financial Statements:  The meaning specified in Section 4.7.

     Franchises:  The meaning specified in Section 4.11.

     Funded Debt: As of the date of determination, the sum of Loan Outstandings,
outstanding  Subordinated Debt and the outstanding  amount under the Capitalized
Leases.

     Government Contracts: Any contract with the United States or with any state
or political  subdivision thereof, or any department,  agency or instrumentality
of the United States, or any state or political subdivision thereof.

     Guarantee: By any Person, any obligation,  contingent or otherwise, of such
Person   guaranteeing  or  having  the  economic  effect  of  guaranteeing   any
Indebtedness or obligation of any other Person in any manner,  whether  directly
or indirectly, and including, without limitation, any obligation of such Person,
direct or  indirect,  (i) to purchase or pay (or advance or supply funds for the
purchase  or payment  of) such  Indebtedness  or to  purchase  (or to advance or
supply  funds  for  the  purchase  of) any  security  for  the  payment  of such
Indebtedness,  (ii) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such  Indebtedness,
or (iii)  to  maintain  working  capital,  equity  capital  or  other  financial
statement  condition of the primary  obligor so as to enable the primary obligor
to pay such Indebtedness; provided, however, that the term "Guarantee" shall not
include  endorsements  for  collection  or  deposit  in the  ordinary  course of
business or  obligations  in respect of  performance or bid bonds granted in the
ordinary course of business and not to exceed $250,000 in the aggregate.

     Guaranties of Subsidiaries:  The Guaranties of the Subsidiaries in the form
attached hereto as Exhibit B.

     Indebtedness:  With  respect to any  Person,  (i) all  obligations  of such
Person for borrowed  money, or with respect to deposits or advances of any kind,
(ii)  all  obligations  of such  Person  evidenced  by loan  agreements,  bonds,
debentures, notes or similar instruments,  (iii) all obligations of such Persons
upon which interest  charges are customarily  paid, (iv) all obligations of such
Person issued or assumed as the deferred  purchase price of property or services
(other than  accounts  payable to suppliers  incurred in the ordinary  course of
business), (v) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right,  contingent or otherwise, to be secured
by) any Lien on property  owned or  acquired  by such Person  whether or not the
obligations  secured  thereby have been assumed,  (vi) all  obligations  of such
Person under Capitalized Leases, (vii) all Guarantees of such Person, and (viii)
all reimbursement  obligations of such Person (whether  contingent or otherwise)
in respect of letters of credit, time drafts or similar obligations.

     Indemnified Party: The meaning specified in Section 14.1.

     Interest Period:  (a) As to any Eurodollar  Loan, the period  commencing on
and including  the date of such Loan (or on the  effective  date of the election
pursuant  to Section  2.4(e) by which such Loan  became a  Eurodollar  Loan) and
ending on and  including  the day preceding the same day (or if there is no such
same  day,  the date  preceding  the last  day) in the  first,  third,  or sixth
calendar month  thereafter,  as selected by Borrowers in accordance with Section
2.4(e),  and  thereafter  such  period  commencing  on  and  including  the  day
immediately  following the last day of the then ending  Interest Period for such
Loan and ending on and including the day preceding the day  corresponding to the
first day of such Interest Period (or if there is no such corresponding day, the
day  preceding  the last day),  in the first,  third,  or sixth  calendar  month
thereafter,  as so selected by Borrowers;  provided,  however,  that if any such
Interest  Period  would  otherwise  end on a day  prior  to a day  that is not a
Banking  Day,  it shall be  extended  so as to end on the day  prior to the next
succeeding Banking Day unless the same would fall in a different calendar month,
in which case such  Interest  Period  shall end on the day  preceding  the first
Banking Day preceding such next  succeeding  Banking Day; and (b) as to any Base
Rate Loan,  the period  commencing on and including the date of such Loan (or on
the effective date of the election pursuant to Section 2.4(e) by which such Loan
became a Base Rate  Loan)  and  continuing  until  terminated  by the  Borrowers
pursuant to a subsequent election pursuant to Section 2.4(e) provided,  however,
that if any such  Interest  Period would  otherwise  end on a day prior to a day
that is not a Banking day, it shall be extended so as to end on the day prior to
the next succeeding Banking Day.

     Interest  Rate  Protection  Agreement:  Any interest  rate swap  agreement,
interest rate cap  agreement,  interest  rate collar  agreement or other similar
agreement or arrangement,  executed in connection with this Agreement,  designed
to protect Borrowers against fluctuations in interest rates.

     Interest  Rate:  The  Base  Interest  Rate  or  the  Eurodollar   Rate,  as
applicable.

     Interest Rate Request: The meaning specified in Section 2.4(j).

     Inventory: The meaning assigned to such term in the U.C.C.

     Investor Notes:  Collectively,  those certain Series B Senior  Subordinated
Secured Notes and those certain Series C Senior Subordinated Unsecured Notes and
subordinated  in right of  payment  in the manner and to the extent set forth in
the Investor Subordination Agreement.

     Investor  Subordination  Agreement:  That certain Subordination  Agreement,
dated as of October  13,  1995,  among  NationsBank,  Borrowers  and each of the
holders of the Investor Notes.

     Issuance Effective Date: The meaning specified in Section 3.2.

     Items of Payment: All checks, drafts, cash and other remittances in payment
or on account of payment of the  Receivables  (as defined in the U.C.C.) and any
other Collateral and the cash proceeds of any returned,  rejected or repossessed
goods, the sale or lease of which gave rise to a Receivable.

     Leased Real  Property:  Real property  leased by a Borrower or a Subsidiary
(as lessee) at any time.

     Legal Requirement:  Any requirement imposed upon any bank by any law of the
United States of America or by a regulation,  order,  interpretation,  ruling or
official  directive  (whether  or not  having  the force of law) of the  Federal
Reserve Board, the Federal Deposit Insurance Corporation,  or any other board or
governmental  or  administrative  agency of the United  States of America or any
political subdivision thereof.

     Letter of Credit: The meaning specified in Section 3.1.

     Lien:  (a) Any interest in property  (whether  real,  personal or mixed and
whether tangible or intangible)  which secures an obligation owed to, or a claim
by, a Person other than the owner of such  property,  whether  such  interest is
based on common law, statute or contract, including without limitation, any such
interest  arising from a  Capitalized  Lease,  arising from a mortgage,  charge,
pledge, security agreement, conditional sale, lease, trust receipt or deposit in
trust,  or arising from a consignment  or bailment  given for security  purposes
(other than a trust receipt or deposit given in the ordinary  course of business
which does not secure any obligation for borrowed  money),  (b) any  encumbrance
upon  such  property  which  does not  secure  such an  obligation,  and (c) any
exception  to any  policy  of title  insurance  for or defect in the title to or
ownership   interest   in  such   property,   including,   without   limitation,
reservations,   rights  of  entry,  possibilities  of  reverter,  encroachments,
easements, rights of way, restrictive covenants and licenses.

     Loan or Loans: The meanings specified in Section 2.1(a).

     Loan Account: The meaning specified in Section 2.14.

     Loan  Outstandings:  As of any date,  the aggregate  outstanding  principal
amount of the Loans.

     Loan Request: The meaning specified in Section 2.1(b).

     Material Agreements: The meaning specified in Section 4.12.

     Maturity Date: The meaning specified in Section 2.1(d).

     NationsBank:  NationsBank,  N.A., a national banking  association,  and its
successors and assigns.

     Net Book Value:  Solely when  applied to  Inventory,  the net book value of
such  Inventory,  as determined in accordance with GAAP without giving effect to
any  adjustment  made to state  inventory on the basis of the  last-in-first-out
method.

     Net Worth:  Consolidated  stockholder's  equity  (including the Telos Corp.
Preferred Stock) of Borrowers and the Subsidiaries, less any amount reflected as
treasury stock.

     New Subsidiaries:  Collectively,  Telos Field Engineering, Inc., a Delaware
corporation,  Telos  International  Corp., a Delaware  corporation,  enterWorks,
Kuwait  International  Inc.,  a  Delaware  corporation,   and  their  respective
successors and assigns.

     Note or Notes: The meaning specified in Section 2.3.

     Obligations: Collectively, (i) all payment obligations of Borrowers and the
Subsidiaries to the Banks under the Revolving Loan Documents including,  without
limitation,  all  obligations  of Borrowers and the  Subsidiaries  in respect of
payment of the principal of and interest on the Loans and all commissions, fees,
expenses and other amounts payable by Borrowers and the  Subsidiaries  under the
Revolving Loan Documents and (ii) all extensions,  renewals,  modifications, and
substitutions of (or for) any of the foregoing.

     Periodic LC Fee: The meaning specified in Section 3.2.

     Permitted  Investments:  (i) Securities  issued that are directly and fully
guaranteed  or  insured  by  the  United  States  Government  or any  agency  or
instrumentality  thereof having  maturities of not more than six months from the
date  of  acquisition,  (ii)  time  deposits  and  certificates  of  deposit  of
NationsBank, or any other domestic commercial bank having capital and surplus in
excess  of  $100,000,000  (and  the  holding  company  of  such  other  domestic
commercial bank which has outstanding  commercial paper meeting the requirements
specified in clause (iv) below)  having  maturities  of not more than six months
from the date of  acquisition,  (iii)  repurchase  agreements with a term of not
more than seven days for underlying securities of the types described in clauses
(i) and  (ii)  above  (provided  that  the  underlying  securities  of the  type
described  in clause (i) may have  maturities  of more than six months  from the
date of  acquisition)  entered  into with any bank  meeting  the  qualifications
specified in clause (ii) above or with securities dealers of recognized national
standing,  provided that the terms of such agreements comply with the guidelines
set forth in the Federal Financial Institutions  Examination Council Supervisory
Policy Repurchase Agreements of Depositary  Institutions With Securities Dealers
and Others as adopted by the  Comptroller  of the  Currency  on October 31, 1985
(the "Supervisory Policy"), and provided, further, that possession or control of
the underlying  securities is established as provided in the Supervisory Policy,
and (iv) commercial paper rated (as of the date of acquisition thereof) at least
A-1 or the equivalent  thereof by Standard & Poor's  Corporation  and P-1 or the
equivalent  thereof  by  Moody's  Investors  Service,  Inc.  and in either  case
maturing  within six months after the date of its  acquisition.  The purchase of
forward  contracts  by a  Borrower  or  a  Subsidiary  shall  not  be  Permitted
Investments.

     Permitted  Liens:  (a) Liens for taxes,  assessments or other  governmental
charges  or  claims  the  payment  of  which is not at the  time  required,  (b)
statutory Liens of landlords and Liens of carriers, warehousemen,  mechanics and
materialmen and other like liens incurred in the ordinary course of business for
sums not yet due, (c) Liens  (other than any Lien imposed by ERISA)  incurred or
deposits made in the ordinary  course of business in connection  with  workman's
compensation,  unemployment  insurance and other types of social  security,  (d)
Liens  incurred  in  connection  with  the  Indebtedness   relating  to  Capital
Expenditures  permitted under Section 7.1(c) hereof,  (e) such  imperfections of
title,  covenants,  restrictions,  easements and  encumbrances  on real property
which, in each case, do not arise out of the incurrence of any  Indebtedness and
which do not  interfere  with or impair in any  material  respect the utility or
value of the real  property on which such Lien is imposed,  (f)  purchase  money
security   interests  in  the  ordinary   course  of  business  for  non-capital
expenditures and (g) the possessory Liens created in favor of the Agent pursuant
to the Security Documents.

     Person: A corporation,  an association,  a partnership, a joint venture, an
organization,  a business, an individual,  a government or political subdivision
thereof or a governmental agency.

     Plan: Any employee  benefit plan as defined in Section 3(3) of ERISA that a
Borrower or a Subsidiary  maintains  or to which a Borrower or a  Subsidiary  is
obligated to  contribute  for the benefit of employees or former  employees of a
Borrower or a Subsidiary.

     Pledge Agreements:  Those certain Pledge Agreements among Borrowers and the
Agent,  substantially  in the form of  Exhibit D  hereto,  as  further  amended,
modified or  supplemented  from time to time in accordance  with the  respective
terms thereof.

     Pledged Stock: The stock of Telos Sub and certain of the Subsidiaries which
has been pledged to NationsBank pursuant to the Pledge Agreements.

     Proceeds: The meaning assigned to such term in the U.C.C.

     Property,  Plant and Equipment:  (i) Any real or personal property,  plant,
building, facility,  structure,  equipment or unit, or other asset owned, leased
or  operated by Telos  Corp.,  (ii) all of Telos  Corp.'s  owned  equipment  and
fixtures,  including,  without limitation,  furniture,  machinery,  vehicles and
trade fixtures,  together with any and all accessions,  parts and  appurtenances
thereto,  substitutions  therefor  and  replacements  thereof  owned,  leased or
operated by Telos Corp., and (iii) all of the proceeds of the property described
in clauses (i) and (ii) of this definition.

     Public   Preferred  Stock:   Telos  Corp.'s  12%  Cumulative   Exchangeable
Redeemable Preferred Stock.

     Receivables:  All Accounts (as defined in the U.C.C.), of Borrowers and the
Subsidiaries on a consolidated  basis,  whether now owned or hereafter acquired,
whether  billed or  unbilled  and whether now  existing  or  hereafter  arising,
including,  without  limitation,  those arising under the Government  Contracts,
including the products and Proceeds of any thereof.

     Regulation G, Regulation T,  Regulation U and Regulation X:  Regulations G,
T, U and X,  respectively,  of the Board of  Governors  of the  Federal  Reserve
System from time to time in effect  including any successor or other  regulation
or official  interpretation of said Board of Governors relating to the extension
of credit by banks for the  purpose of  purchasing  or  carrying  margin  stocks
applicable to member banks of the Federal  Reserve System or to the extension of
credit by brokers or dealers or persons other than banks, brokers or dealers for
the purpose of  purchasing or carrying  margin stocks  applicable to persons who
are required to register  with said Board of Governors  under Part 207, 220, 221
and 224, respectively, of Title 12 to the Code of Federal Regulations.

     Revolving  Loan  Documents:   This  Agreement,   the  Notes,  the  Security
Documents,  the Investor Subordination  Agreement,  the enterWorks Subordination
Agreement  and any other  documents,  instruments,  certificates  or  agreements
executed or delivered,  or required to be executed or delivered,  pursuant to or
in connection with any of the foregoing.

     Securities Act: The Securities Act of 1933, as amended,  and any similar or
successor  federal  statute,  and the rules and  regulations  of the  Commission
thereunder, all as the same shall be in effect from time to time.

     Security Agreements:  Those certain Security Agreements between each of the
Borrowers  and the  Subsidiaries  and the  Agent,  substantially  in the form of
Exhibit C hereto, as further amended, modified or supplemented from time to time
in accordance with the terms thereof.

     Security   Documents:   The  Security   Agreements,   the   Guaranties   of
Subsidiaries,  the Pledge  Agreements  and the  Assignment of Tenant's  Interest
under Leases.

     Series B Senior  Subordinated  Secured Notes: The seven (7) Series B Senior
Subordinated  Secured Notes Due October 1, 2000 dated October 13, 1995 issued by
Telos Corp.

     Series C Senior Subordinated Unsecured Notes: The seven (7) Series C Senior
Subordinated  Notes Due  October 1, 2000 dated  October 13, 1995 issued by Telos
Corp.

         Subordinated  Debt:  The debt  evidenced by the Investor  Notes and the
enterWorks Notes and any amounts incurred to repay or refinance all or a portion
thereof ("Refinancing Debt"), provided that (i) the scheduled principal payments
on any Refinancing Debt do not occur prior to the scheduled  principal  payments
on the Investor Notes or the enterWorks Notes, respectively, being refinanced by
such  Refinancing Debt and (ii) the Refinancing Debt is subordinated in right of
payment  to  Senior  Indebtedness  (as  defined  in the  Investor  Subordination
Agreement  and  the  enterWorks   Subordination  Agreement)  on  the  terms  and
conditions   substantially   similar   to  those  set  forth  in  the   Investor
Subordination   Agreement  and  the  enterWorks   Subordination   Agreement,  as
applicable.

     Subordinated Loan Documents:  The Investor Notes, the Subordinated Security
Agreement,  the enterWorks Notes, the Investor  Subordination  Agreement and the
enterWorks   Subordination  Agreement  and  any  other  documents  executed  and
delivered in connection with the Subordinated Debt.

     Subordinated Security Agreement: That certain Collateral Trust and Security
Agreement,  dated as of February 1, 1996,  among Telos Corp.,  State Street Bank
and  Trust  Company,  as  trustee,  and  the  holders  of the  Series  B  Senior
Subordinated  Secured  Notes,  as such  agreement  may be  amended,  modified or
supplemented from time to time in accordance with the terms thereof.

     Subsidiaries:  Telos  Computing,  Inc.,  a  California  corporation,  Telos
Software  Products,  Inc.,  a  California  corporation,  DMA,  Inc., a Wisconsin
corporation, the New Subsidiaries,  and their respective successors and assigns,
and any other subsidiary of either Borrower or Subsidiary.

     Tangible Capital Funds:  The sum of Net Worth and Subordinated  Debt, minus
all  intangible  assets of Borrowers and the  Subsidiaries  (including,  without
limitation, goodwill, organizational costs, unamortized bank debt, discounts and
expenses, franchises, licenses, patents and trademarks).

     Tax: Any tax, levy, impost, duty,  deduction,  withholding or other charges
of whatever nature required by any Legal Requirement (i) to be paid by the Banks
or (ii) to be withheld or deducted from any payment otherwise required hereby to
be made by a Borrower or a Subsidiary to the Banks; provided,  however, that the
term "Tax" shall not include any taxes imposed upon the net income of any Bank.

     Telerate Page 3750: The British Bankers Association Libor Rates (determined
at 11:00 a.m. London time) that are published by Dow Jones Telerate, Inc.

     Telos Corp.: Telos Corporation, a Maryland corporation,  and its successors
and assigns.

     Telos  Corp.  Preferred  Stock:  The  Public  Preferred  Stock  and the UBS
Preferred Stock.

     Telos Sub: Telos Corporation, a California corporation,  and its successors
and assigns.

     Total  Liabilities:  At any date,  all  liabilities  of  Borrowers  and the
Subsidiaries,   on  a  consolidated   basis,  as  shown  on  their  most  recent
consolidated financial statements.

     Treasury Obligation: The meaning specified in Section 2.4(g).

     Trust  Indenture  Act: The Trust  Indenture Act of 1939, and any similar or
successor  federal  statute,  and the rules and  regulations  of the  Commission
thereunder, all as the same may be in effect from time to time.

     UBS:  Union de Banques  Suisses  (Luxembourg)  S.A, and its  successors and
assigns.

     UBS Preferred Stock: The Class B Preferred Stock issued by Telos Corp. to .
UBS on January 14, 1992.

     U.C.C.:  The Uniform  Commercial  Code as in effect in the  Commonwealth of
Virginia from time to time.

     U.S. Government  Contracts:  Government Contracts with the United States of
America.

     Warrant Agreement: That certain Warrant Agreement,  dated as of January 14,
1992,  between Telos Corp.  and UBS,  pursuant to the terms of which Telos Corp.
granted  to  UBS  rights  under  certain   circumstances   to  purchase  certain
percentages  of Telos  Corp.  Class A common  stock,  as  amended,  modified  or
supplemented from time to time.

     1.3 Use of "Subsidiary". With respect to any representation or warranty set
forth in this Agreement, the term "Subsidiary" shall refer to each Subsidiary in
existence  at the time the  representation  or  warranty is made or deemed to be
made.  Covenants and other  provisions  shall apply to Subsidiaries  actually in
existence from time to time.



                                   ARTICLE II
                          AMOUNT AND TERMS OF THE LOANS

         2.1   Loans.

               (a)  Establishment. Subject to the terms and conditions hereof,  
upon thesatisfaction of the conditions  precedent set forth in Article V and in 
relianceon the representations and warranties contained herein, the Banks shall 
advance to Borrowers up to  a maximum  principal  amount  of  $45,000,000  (the 
"Commitment").  Each  borrowing  hereunder  shall be  referred to  as  a "Loan" 
and all  borrowings made hereunder shall be referred to herein as the "Loans."

               (b)   Loan Requests. Subject to the provisions of Sections 2.1(a)
and 2.2, each Loanhereunder shall be made by the Banks upon Borrowers' request. 
All requests (a"Loan  Request") for a Loan hereunder shall be made to the Agent 
and shall be in an  amount not less  than $100,000.  Each Loan  Request shall be
made pro rata  among the  Banks and  shall be funded  pro rata among the Banks. 
Loans shall be made on aBanking Date at such times before the Maturity  Date as 
Borrowers  may request prior to  12:00 noon   (Washington,  D.C.  time) on such 
Banking  Day.  Such LoanRequests (i) shall specify  the proposed  date  and the 
aggregate  amount of the requested  Loans and  (ii) shall be  irrevocable.  The 
Banks  shall  make Loans  on such proposed  date  in United  States  Dollars in 
immediately available funds. All proceeds of the Loans shall be credited to one 
or more Deposit Accounts.

               (c)   Continuing  Validity  of Representations and  Warranties.  
Each Loan Request shall be deemed to include a representation  and  warranty by 
Borrowers that all  of the  representations  and  warranties of  Borrowers  set 
forth in  the  Revolving Loan Documents continue to be correct and complete and 
that all conditions  precedentto the  requested  Loan have been  satisfied,  as 
of the time the Loan Request issubmitted to the Agent.

               (d)   Maturity Date.  Subject to the provisions of  Sections 2.6 
and 2.7, all loans shall mature on July 1, 2000 or on such  other date on which 
the principal amount of  the Notes becomes due and payable as herein provided,  
whether  by  declaration  of  acceleration,  prepayment or  otherwise  (the   
"Maturity Date").

               (e)   Prepayment and Reborrowings.  During the period  prior to 
the Maturity Date, Borrowers  may, at their option,  from  time to time  prepay 
all or any portion of the Loans made from time to time hereunder,subject to the 
provisions of Section 2.6.  Borrowers  may reborrow amounts so repaid  provided 
that such reborrowings do not exceed the Commitment,  subject to the provisions 
of Sections  2.1(d) (with respect to the  maturity date of  such Loans), 2.2 and
2.7.

         2.2   Limitation on Loans; Borrowing Base.  Borrowers acknowledge that 
the Loans Outstanding shall at no time exceed the lesser of:

               (a)   the Commitment, or

               (b)   the Borrowing Base, which is equal to:

                            (i)    ninety percent (90%) of the face amount of   
                                   Eligible Billed Government Receivables;

                            (ii)   eighty-five  percent  (85%) of   the  face 
                                   amount  of   Eligible   Billed  Commercial 
                                   Receivables;

                            (iii)  the lesser of  (A) fifty  percent (50%) of 
                                   Eligible  Unbilled  Government  Receivables 
                                   and (B) $7,000,000; and

                            (iv)   the lesser of (A) fifty percent (50%) of 
                                   the  aggregate Net Book  Value of Eligible
                                   Hardware Inventory and (B) $11,000,000


The  Borrowing  Base shall be  determined  by  reference  to  Borrowers  and the
Subsidiaries on a consolidated basis.

         2.3   Notes.    The Loans of each   Bank shall   be  evidenced   by  a 
promissory note of Borrowers made payable to such Bank in a maximum  principal 
amount equal to the commitment of such Bank  (individually, as  amended and  in 
effect  from  time  to time,  a "Note" and  collectively, the "Notes").  On the 
Closing Date, Borrowers shall  execute an  Amended  and  Restated  Note in the 
form  attached  hereto as Exhibit A.  The  outstanding  principal amount of the 
Notes shall be finally due and payable on the Maturity Date. The Notes shall 
bear interest (computed on the basis of the actual number of days elapsed  over 
a 360-day  year) on the unpaid principal  amount  thereof  at the  applicable  
rate or rates  set forth in this Article II.

         2.4   Interest.

               (a)    Interest Rates.  Until the Maturity Date, interest on the 
outstanding principal amount of the Loans shall accrue for each  day at either  
the Base  Interest  Rate for such day or the Eurodollar  Rate for the Interest 
Period  which  includes such  day,  all as  elected  and  specified (including  
specification  as to length of Interest  Period,  as permitted by the definition
of  that term, with  respect to  any  election  of  the  Eurodollar  Rate) by  
Borrowers in  accordance  with Section 2.4(i) hereof. 

               (b)    Base Rate Option.  The outstanding principal amount of the
Loans shall bear interest until  paid in full at the  Base Rate   plus a margin 
(the "Base  Applicable   Margin")  equal  to  1.00%  per  annum,   subject  to  
adjustment  as set  forth in Sections 2.4(c) and (d).

               (c)    Increase in Base Applicable Margin.  Notwithstanding the 
foregoing, the Base Applicable Margin shall be  increased by one quarter of one 
percent  (0.25%) in the event that on any day of  the month for  which interest 
is  calculated,  the Loan  Outstandings,  as calculated  by the Agent,  exceeds
the sum of (i) ninety percent  (90%) of the face  amount  of  Eligible  Billed 
Government  Receivables and(ii) eighty-five percent (85%) of the face amount of 
Eligible Billed Commercial Receivables, as calculated by the Agent.

               (d)    Reduction in Base Applicable Margin.   Borrowers shall be 
entitled to a reduction of the Base Applicable  Margin in the event that and at 
such time that  (i) Net  Worth is  determined  by the  Agent  to be  equal to  
$12,000,000 or greater, and  (ii)   Borrowers  have  requested  the  Agent  and 
the  Banks in   writing  to  permanently   reduce  the  amount  set forth  in  
Section   2.2(b)(iii) (B)  from   $7,000,000  to  $2,000,000.   In such event,  
the amount  of  reduction of  the Base Applicable  Margin shall be determined  
quarterly  based upon the calculation of the Debt Ratio as follows:

                                                         Amount of Reduction
                                                               of Base
                                  Debt Ratio              Applicable Margin
                                  ----------              -----------------
                          
                                If the Debt Ratio
                                is less than 4:1                0.25%

                                If the Debt Ratio
                                is less than 3:1                0.50%

                                If the Debt Ratio
                                is less than 2:1                0.75%

         For purposes of this Section 2.4(d),  "Debt Ratio" shall mean the ratio
of Funded Debt to EBITDA. For purposes of calculating the Debt Ratio, (i) Funded
Debt shall be  calculated  as the average of month-end  Funded Debt on a rolling
twelve (12) month basis and (ii) EBITDA shall be calculated on a rolling  twelve
(12) month basis, based upon the four (4) most recent Form 10Q reports delivered
by Borrowers to Agent.

         The determination of reductions,  if any, to the Base Applicable Margin
shall  commence  on the  date of  receipt  by the  Agent of  Borrowers'  audited
financial  statements  for fiscal  year 1997 and shall be  determined  quarterly
thereafter upon receipt by the Agent of Borrowers' Form 10Q reports.

               (e)     Determination of  Interest Rates.   Upon  the request of 
Borrowers, the Agent shall, as soon as  practicable, notify  Borrowers of each 
determination  of a Eurodollar Rate; provided,  however, that any failure to do 
so shall not relieve Borrowers of any liability hereunder.   Each determination 
of an Interest Rate by the Agent pursuant to any  provision of this  Agreement  
shall be conclusive and binding on Borrowers in the absence of manifest error.  
The Agent shall, at the request of Borrowers, deliver to Borrowers a statement  
showing the  quotations  used by the Agent in  determining  any  Interest  Rate 
pursuant hereto.

               (f)     Payment of Interest.


                            (i)     Interest accruing on the outstanding
                                    principal  amount  of any  Base  Rate
                                    Loan   shall  be  due  and   payable
                                    monthly  in arrears on the first day
                                    of the month following the month for
                                    which interest has accrued.

                             (ii)   Interest accruing on  the  outstanding 
                                    principal amount of any Eurodollar Loan
                                    during any Interest Period shall be jointly 
                                    and severally payable by Borrowers on the
                                    last Banking Day of such then current 
                                    Interest Period; provided, however, that 
                                                      --------  -------
                                    with respect to Eurodollar Loans for which 
                                    the Interest Period selected by Borrowers
                                    pursuant to Section 2.4(e) hereof is 
                                    greater than three (3) months, interest
                                    shall be payable quarterly on the last
                                    Banking Day of such quarterly period with
                                    the first such quarterly period commencing 
                                    on the first day of the applicable Interest 
                                    Period with any remaining unpaid interest
                                    being due and payable on the last day of 
                                    such Interest Period; provided, further, 
                                                          --------- --------
                                    that all accrued interest on any Eurodollar
                                    Loan converted or prepaid prior to the last
                                    Banking  Day  of  the  applicable  Interest
                                    Period shall be paid immediately upon such
                                    prepayment or conversion.

                             (iii)  All  interest  accrued  on the Notes but
                                    unpaid as of the  Maturity  Date (whether
                                    by acceleration or otherwise) shall be
                                    payable on the Maturity Date. In no event
                                    shall the amount paid or agreed to be paid
                                    by Borrowers  as  interest on the Notes
                                    exceed  the   highest   lawful  rate
                                    permissible under any law applicable
                                    thereto.

               (g)     Eurodollar Rate Option.  Notwithstanding the foregoing, 
upon Borrowers' election of a  Eurodollar  Rate  pursuant  to Section  2.4(i),  
the  outstanding principal  amount of the Eurodollar  Loan shall bear interest 
until paid in full at the Base Eurodollar Rate plus a  margin (the "Eurodollar  
Applicable  Margin") according to the Base Interest Rate in effect at the time, 
as follows:

              Base Interest Rate                  Eurodollar Applicable Margin

              Base Rate + 1.25%                          + 4.00%
              Base Rate + 1.00%                          + 3.75%
              Base Rate + 0.75%                          + 3.50%
              Base Rate + 0.50%                          + 3.25%
              Base Rate + 0.25%                          + 3.00%

               (h)     Inability  to  Determine Base  Eurodollar Rate.  In  the 
event that the Agent shall  have  determined  (which  determination  shall  be  
conclusive  and  binding  upon Borrowers)  that,  by  reason of  circumstances  
affecting  the London  interbank eurodollar  market,  adequate  and  reasonable 
means do not exist for ascertainingthe Base  Eurodollar Rate for any requested  
Interest  Period with respect to a Loan that Borrowers  have  requested be made 
or converted as a Eurodollar  Loan, the Agent shall  forthwith  give notice of 
such  determination  to  Borrowers at least one (1) day prior to the  proposed  
date for  funding or converting  such Eurodollar Loan. If such notice is given, 
any requested Eurodollar Loan shall be made or converted as a Base Rate Loan.  
Until such notice has been  withdrawn by the Agent, Borrowers will not request 
that any Loan be made as or converted to a Eurodollar Loan.

                              (i)    Election of Interest Rates.   By a  proper 
and timely Interest Rate  Request in  accordance with Section 2.4(j), Borrowers 
shall select the initial Interest Rate to be charged on advances of the Loans. 
Not more frequently than one (1) time in each  calendar  month,  Borrowers  may 
elect in writing an initial Interest Rate for any  advance  of the  Loans,  or  
to  convert  the  Interest  Rate  on  any  sums outstanding  under  the  Loans  
to any  other  Interest  Rate  (including,  when applicable, the selection of 
the Interest Period); provided, however, that;

                                      (i)   Borrowers  shall  not  select any
                                            Interest Period that extends beyond
                                            the Maturity Date;

                                      (ii)  except  as  otherwise   provided  in
                                            Section 2.4(j),  no such change from
                                            the  Eurodollar  Rate  to  the  Base
                                            Interest Rate shall become effective
                                            on a day other  than the day,  which
                                            must be a Banking Day,  and, if such
                                            change  involves  a Loan upon  which
                                            interest is, or will be,  calculated
                                            at  the  Eurodollar   Rate,  also  a
                                            Eurodollar    Banking   Day,    next
                                            following   the   last  day  of  the
                                            Interest  Period  last in effect for
                                            such Eurodollar Loan;

                                      (iii) any change of the Interest Rate on a
                                            Loan   made  on  a  date  on   which
                                            principal  of such Loan is scheduled
                                            to be paid  shall be made only after
                                            such payment is made;

                                      (iv)  any  elections   made  by  Borrowers
                                            pursuant to this Section 2.4(i) with
                                            respect to a  Eurodollar  Loan shall
                                            be  in   the   minimum   amount   of
                                            $5,000,000,   plus  any   additional
                                            increments of $1,000,000;

                                      (v)   the aggregate amount of all
                                            Eurodollar Loans shall not exceed
                                            $20,000,000 at any one time; and

                                      (vi)  the  first  day  of  each   Interest
                                            Period as to a Eurodollar Loan shall
                                            be a Banking Day.

     In the absence of an election by  Borrowers  of the  Eurodollar  Rate,  or,
having made such election but Borrowers fail or are not entitled under the terms
of this  Agreement  to elect to  continue  such  Interest  Rate and  specify the
applicable  Interest  Period  therefor,  then upon the  expiration  of such then
current Interest  Period,  interest on the Loan shall accrue for each day at the
Base  Interest  Rate for such day,  until  Borrowers,  in  accordance  with this
Section 2.4(i),  elect a different Interest Rate and specify the Interest Period
for the Loan.

               (j)     Interest Rate Request.  The Agent will not be  obligated 
to make Loans, convert the  Interest  Rate on the  Loans to  another  Interest  
Rate or to act upon any election by Borrowers  pertaining to Interest  Rates or 
Interest  Periods unless the Agent shall have received an  irrevocable  written 
notice (an "Interest Rate Request") from Borrowers at the times and specifying 
the information as follows:


                       (a)     the amount to be borrowed, prepaid or converted;

                       (b)     any election among the Base Interest Rate or the
                               Eurodollar Rate;

                       (c)     the requested date on which such election is to 
                               be effective; and

                       (d)     the length of the Interest Period applicable to
                               such advance of the Loan.

     Such Interest Rate Request (or telephone advice thereof promptly  confirmed
in  writing)  shall be  received  by the Agent  prior to 12:00  p.m.  Baltimore,
Maryland time, at least:

                               (i)   three (3) Eurodollar Banking Days prior to 
                                     the requested effective date of such 
                                     election in the case of Eurodollar Loans,
 
                               (ii)  on the effective date of such election in 
                                     the case of Base Rate Loans.

               (k)     Indemnity.  Borrowers  jointly and  severally  agree to 
indemnify and reimburse the Agent and the  Banks and to hold the Agent and the 
Banks  harmless  from any  loss, cost  (including  administrative   costs)  or 
expense which the Agent and the Banks may  sustain or incur as a  consequence  
of (a)  default by  Borrowers in payment when due of the principal amount of or 
interest on any Eurodollar Loans, (b) failure of Borrowers to make,  or convert 
the Interest Rate of, a Eurodollar Loan after  Borrowers  have  given (or are  
deemed to have given)  an  Interest Rate Request,  and/or  (c) the making by  
Borrowers  of a payment or  prepayment  of a Eurodollar  Loan on a day which is
not the last day of the Interest  Period with respect  thereto, calculated  as  
provided  in the following  paragraph.  This agreement  and  covenant shall 
survive  terminations  or  expiration  of  this Agreement and payment of the
Obligations.


     Contemporaneously  with  any  payment  or  prepayment  of  principal  of  a
Eurodollar Loan, a prepayment fee shall be due and payable to the Agent and each
Bank in an amount equal to the product of

                      (A)    the amount so prepaid the Agent or to such Bank

multiplied by
-------------

                      (B)     the difference (but not less than zero) of

                                (i)     the   constant    maturity   360-day
                                        interest  yield (as of the first day
                                        of  the  then   effective   Interest
                                        Period and  expressed  as a decimal)
                                        for a United States  Treasury  bill,
                                        note,    or   bond   (a    "Treasury
                                        Obligation")  selected by the Agent,
                                        in an aggregate amount comparable to
                                        the amount prepaid,  and having,  as
                                        of  the   first   day  of  the  then
                                        effective    Interest    Period,   a
                                        remaining term  approximately  equal
                                        to the original Interest Period,
minus
-----

                                (ii)    the  360-day  interest  yield (as of
                                        the    Banking    Day    immediately
                                        preceding  the  prepayment  date and
                                        expressed  as  a  decimal)  on  such
                                        Treasury  obligation and having,  as
                                        of  the  Banking   Day   immediately
                                        preceding  the  prepayment  date,  a
                                        remaining    term   until   maturity
                                        approximately equal to the unexpired
                                        portion of the Interest Period,

multiplied by
-------------

                      (C)     the quotient of

                                (i)     the number of calendar days in the 
                                        unexpired portion of the Interest
                                        Period, divided by

                                (ii)    360.

     The applicable yields on the Treasury Obligations  described above shall be
determined based upon the Federal Reserve Statistical Release H.15 published for
the  applicable  determination  dates set forth above.  Any Treasury  Obligation
selected  when the  related  Interest  Period  is one (1) year or less  shall be
United States Treasury Bills. Neither the Agent nor the Banks shall be obligated
or required to have actually  reinvested  the prepaid  amount of the  Eurodollar
Loan in any such  Treasury  Obligation  as a condition  precedent to  Borrowers'
being obligated to pay a prepayment fee as outlined above. Neither the Agent nor
the Banks shall be obligated to accept any prepayment of principal  unless it is
accompanied  by the  prepayment  fee,  if any  due in  connection  therewith  as
calculated  pursuant to the  provisions of this  paragraph.  No  prepayment  fee
payable in connection  herewith shall in any event or under any circumstances be
deemed or construed as a penalty.

     2.5 Fees.

     (a)  Commitment  Fee.  Borrowers  shall pay each Bank a commitment fee (the
"Commitment  Fee")  for the  period  commencing  on the  Closing  Date up to and
including the Maturity Date,  equal to  one-quarter  of one percent  (0.25%) per
annum  (computed on the basis of the actual number of days elapsed over a 365 or
366 (as the case may be) day year) of the average  daily unused  portion of such
Bank's  percentage of the  Commitment,  as reduced from time to time pursuant to
Section 2.6 or 2.7. The  Commitment  Fee shall be payable to each Bank quarterly
in arrears on the first Banking Day of January,  April, July and October of each
year and on the date of termination of the Commitment.

     (b) Audit Fee.  Borrowers  shall pay to the Agent an audit fee (the  "Audit
Fee") in an initial  amount of $5,000 per quarter for the period  commencing  on
the Closing Date up to and including the Maturity  Date.  The Audit Fee shall be
subject to reasonable adjustment in the Agent's sole and absolute discretion and
shall be payable in advance on the first Banking Day of January, April, July and
October  of each  year.  Borrowers  shall  also  reimburse  the Agent for direct
expenses  incurred by the Agent in connection  with audit services  performed by
employees or agents of the Agent.

     (c)  Facility  Fee.  Borrowers  shall  pay to the Agent a  facility  fee of
$25,000 on the Closing Date.

     (d) Administrative  Fee. Borrowers shall pay to the Agent an administrative
fee (the "Administrative Fee") in an amount equal to $15,000 per quarter for the
period commencing on the Closing Date up to and including the Maturity Date. The
Administrative  Fee shall be  payable in  advance  on the first  Banking  Day of
January, April, July and October of each year.

     2.6       Early Termination Fee. In the event of the termination by, or on 
behalf of Borrowers,  of the Commitment (unless that termination is accompanied 
by the repayment of the Loans from the proceeds of the sale of substantially all
of the assets of any Borrower or Subsidiary or an initial public offering of the
common stock of any Borrower of Subsidiary and not from the proceeds of loans 
or other debt),  Borrowers  shall pay a fee (the  "Early  Termination  Fee") 
equal to the following amount:

                    Date                                 Amount

         Closing Date through July 1, 1998                $675,000
         July 2, 1998 through July 1, 1999                $450,000
         On or after July 2, 1999                         $225,000

     In the event of the  termination  of the  Commitment  and  repayment of the
Loans from the proceeds of the sale of substantially all of the assets of one or
more of  Borrowers  or the  Subsidiaries  or an initial  public  offering of the
common stock of one or more of Borrowers or Subsidiaries,  the Early Termination
Fee shall be $75,000.

     Simultaneously  with the  termination  of the  Commitment  pursuant to this
Section 2.6,  Borrowers  shall (i) pay to each Bank the percentage  share of the
total Commitment Fee of such Bank's pro-rata  portion of the Commitment  accrued
to the date of such  termination  and (ii) subject to the provisions of Sections
2.10 and 2.11 prepay each Bank's Note(s) without penalty or premium in an amount
equal to the  unpaid  principal  balance  of each  such  Note  outstanding  plus
interest accrued but unpaid thereon on such date.

     2.7   Mandatory   Prepayments;    Mandatory   Reductions   of   Commitment.
           
     (a) If,  at any  time,  the Loan  Outstandings  to any Bank  plus  interest
accrued  but  unpaid  thereon  exceed  such  Bank's   percentage  share  of  the
Commitment,  Borrowers  shall make  mandatory  prepayments  to such Bank in such
amounts as may be necessary to eliminate such excess.

     (b)  Simultaneously  with any  termination  or reduction of the  Commitment
pursuant  to  this  Section  2.7,  Borrowers  shall  (i) pay to  each  Bank  the
Commitment Fee on the terminated or reduced  portion of its percentage  share of
the Commitment accrued to the date of such termination or reduction, (ii) in the
event of termination in full of the Commitment,  pay the Early  Termination Fee;
and (iii) subject to the provisions of Sections 2.10 and 2.11,  prepay each such
Bank's  Note(s)  without  penalty or premium in a principal  amount equal to the
amount,  if any,  by  which  the  Loan  Outstandings  on such  date  exceed  the
Commitment on such date, after giving effect to such termination.

     (c) At the option of the Agent,  there shall be a mandatory  prepayment  of
the Loans in an amount  equal to 100% of the net cash  proceeds  received by any
Borrower or any Subsidiary  from the sale or issuance of its common stock in one
or more public offerings pursuant to an effective  registration  statement under
the Securities  Act (other than a registration  statement on Form S-8) after the
date hereof.

     (d) All  prepayments  referred to in this  Section 2.7 shall be applied pro
rata among the Banks.

     (e) At the option of the Agent,  there shall be a  Commitment  reduction in
the sole discretion of the Banks of 100% of the net cash proceeds (after payment
of related taxes and expenses)  from the sale of assets (other than the Excepted
Collateral)  received by a Borrower  or a  Subsidiary  that  results in net cash
proceeds  in  excess  of  $250,000;  provided,  however,  that  entering  into a
sale-leaseback transaction shall not be considered a sale of assets for purposes
of this provision.

     (f) At the option of the Agent,  there shall be a mandatory  prepayment  of
the Loans in full in the event that any prepayment,  or any event which causes a
prepayment,  of all or any portion of the  outstanding  principal  amount of the
Investor  Notes or the  enterWorks  Notes occurs.  Such events which may cause a
prepayment of the Investor Notes or the enterWorks Notes may include but are not
limited  to: (i) the  distribution  and sale of common  stock of a  Borrower  or
Subsidiary pursuant to an effective registration statement (some of the proceeds
of which sale are  available  to such  Borrower  or  Subsidiary)  in one or more
public offerings  (other than a registration  statement on Form S-4 or Form S-8)
which has been filed with the Commission and has become effective; (ii) any sale
of securities of a Borrower or a Subsidiary,  which results in net cash proceeds
to such  Borrower  or a  Subsidiary  in excess  of  $1,000,000,  other  than (A)
obligations for borrowed money due within one year and (B) other obligations for
money  borrowed  from  the  Banks  and/or  their  successors,   substitutes  and
participants and their respective assigns and any refinancing  thereof; or (iii)
a Merger. For purposes of this Section 2.7(f), "Merger" shall mean (x) a merger,
consolidation or other  combination (1) to which a Borrower or a Subsidiary is a
party,  but  in  which  such  Borrower  or a  Subsidiary  is not  the  surviving
corporation or (2) which results in the acquisition of "beneficial ownership" of
securities of a Borrower or a Subsidiary  that represent  fifty percent (50%) or
more of the total number of votes that may be cast for the election of directors
by any "person" or "group" (as such terms are defined in Rule 13(d)  promulgated
under the Exchange  Act),  or (y) a sale by a Borrower or a Subsidiary of all or
substantially all of its assets.

     2.8 Form and Terms of Payment.

     (a) All  payments by Borrowers of principal of or interest on the Notes and
of any fee due hereunder shall be made at the addresses of the Banks hereinafter
set forth in this  Agreement  (or at such  other  address as any Bank shall have
furnished to Borrowers in writing) and shall be made in United States Dollars in
immediately  available funds. All payments by Borrowers of any amount due to the
Agent hereunder shall be made in U.S. Dollars in immediately  available funds at
the address of the Agent as  hereinafter  set forth (or at such other address as
the Agent shall have furnished to Borrowers in writing).

     (b)  Whenever  any  payment  to be made  hereunder  or under any Note shall
become due on a day that is not a Banking Day, such payment shall be made on the
next  succeeding  Banking  Day.  If the date for any  payment  of  principal  is
extended by operation of the foregoing  sentence or law or  otherwise,  interest
thereon shall be payable for such extended period.

     (c) Any  prepayment  of  principal  of any Loans  shall be  accompanied  by
accrued and unpaid  interest  on the  principal  so prepaid  through the date of
payment.

     2.9 Late Payments. If Borrowers shall fail to make any payment of principal
of or interest on the Note of any Bank or any other  amount due  hereunder  when
the same becomes due and payable, whether at maturity or at a date fixed for the
payment of any installment or prepayment thereof or by declaration, acceleration
or otherwise,  Borrowers shall pay to such Bank, on demand, an additional amount
as a premium  on such  unpaid  amount  from the date due until paid in full at a
rate or rates  per  annum  equal to two  percent  (2%)  above  the rate or rates
otherwise applicable in accordance with the terms of this Agreement.

     2.10 Increased Costs and Reduced Return.

     (a) Increased Costs. In the event that any Legal  Requirement or any change
in a Legal  Requirement or other law or regulation or in the  interpretation  or
application  thereof or  compliance  by any Bank with any  request or  directive
(whether  or not  having  the  force  of law)  from  any  central  bank or other
governmental authority:

                (i)     does or shall subject such Bank to any tax  of any  kind
        whatsoever with respect  to this  Agreement or any Loan or  change  the 
        basis of  taxation  ofpayments to such Bank of  principal,  commitment  
        fees,   interest  or any  other amount payable  hereunder  (except  for 
        changes in the rate of taxes on the overallnet income of such Bank);

                (ii)    does or shall  impose,  modify  or hold applicable any
        reserve,  special deposit,  compulsory loan or similar requirement
        against assets held by, or deposits or other liabilities in or for the
        account of, advances or loans  by,  or other  credit  extended  by, or  
        any  other acquisition of funds by, any office of such Bank; or
        

                (iii)   does or shall impose on such Bank any other condition;
        and the result of any of the foregoing  is to increase the cost to such
        Bank of making,  renewing or  maintaining  any Loan, any   portion  of
        the Commitment or to reduce any amount receivable hereunder,  then, in 
        any such case, Borrowers shall promptly pay such Bank, upon its demand,
        any additional  amounts  necessary to compensate  such  Bank  for such
        additional  cost  actually incurred  or reduced amount to be received  
        which such  Bank,  in its sole  discretion,  deems to be material.  
        If any Bank becomes entitled to claim any additional amounts pursuant 
        to the foregoing sentence, it shall promptly notify Borrowers with a  
        copy to the Agent of the event by reason of which it has become so   
        entitled. A certificate as to any additional amounts payable pursuant
        to this Section 2.10(a) submitted by such Bank to Borrowers  shall be  
        conclusive in the absence of manifest error.  This  covenant  shall    
        survive  the termination of this Agreement and repayment of the Loans.
        All  such amounts shall be invoiced  separately by a Bank and shall be  
        paid by Borrowers within five (5) days of receipt by Borrowers of such 
        invoice.

     (b)  Reduction  of Rate of  Return.  In the event  that any Bank shall have
determined  that the adoption of any law, rule or regulation  regarding  capital
adequacy,  or any change therein or in the interpretation or application thereof
or compliance  by such Bank or any  corporation  controlling  such Bank with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any central bank or governmental authority,  does or shall have the
effect  of  reducing  the rate of return  on such  Bank's or such  corporation's
capital as a  consequence  of its  obligations  hereunder  to a level below that
which such Bank or such  corporation  could have achieved but for such adoption,
change  or   compliance   (taking  into   consideration   such  Bank's  or  such
corporation's  policies with respect to capital adequacy) by an amount deemed by
such Bank to be material, then, from time to time, after submission by such Bank
to Borrowers of a written  request  therefor,  Borrowers  shall pay to such Bank
such  additional  amount or amounts as will  compensate such Bank for the actual
amount of such  reduction.  A certificate as to any additional  amounts  payable
pursuant to this  Section  2.10(b)  submitted  by a Bank to  Borrowers  shall be
conclusive in the absence of manifest error.  All such amounts shall be invoiced
separately  by a Bank and  shall be paid by  Borrowers  within  five (5) days of
receipt by Borrowers of such invoice.

     (c) Conversion of Loans.  Notwithstanding  Sections 2.10 (a) and (b) above,
if any Bank incurs the  increased  costs  described in Section  2.10(a) above or
makes the  determination  described in Section 2.10(b) above,  then all Loans of
such Bank then  outstanding  and affected  thereby shall be converted into Loans
which are not affected  thereby (if not otherwise  prohibited under the terms of
this Agreement).

     2.11 Funding  Losses.  Borrowers  agree to indemnify  each Bank and to hold
each Bank harmless from any loss or expense which such Bank may sustain or incur
as a  consequence  of (i)  default  by  Borrowers  in  payment  when  due of the
principal  amount of or  interest  on any Loan or any other  amount  payable  by
Borrowers  hereunder,  (ii)  default by  Borrowers  in making a borrowing  after
Borrowers  have given a notice of  borrowing  or a notice of  conversion  and/or
(iii) default by Borrowers in making any prepayment after Borrowers have given a
notice.  This covenant shall survive termination of this Agreement and repayment
of the Loans. All such amounts shall be invoiced  separately by a Bank and shall
be paid by  Borrowers  within five (5) days after  receipt by  Borrowers of such
invoice.

     2.12 Taxes. Each Bank shall receive payments of amounts of principal of and
interest on the Note of such Bank without  deduction  for any Taxes.  If (i) any
Bank shall be subject to any Tax in respect of any Loan or (ii) Borrowers  shall
be  required  to  withhold  or  deduct  any such Tax from any such  amount,  the
interest  rate  otherwise  payable  hereunder  shall be  adjusted to reflect all
additional  costs incurred by such Bank in connection  with the payments by such
Bank or the  withholding  by Borrowers of such Tax and  Borrowers  shall provide
such Bank with a statement detailing the amount of any such Tax actually paid by
Borrowers.  Determination  by a Bank of the amount of such costs  shall,  in the
absence of manifest  error,  be  conclusive.  All such amounts shall be invoiced
separately  by a Bank and  shall be paid by  Borrowers  within  five (5) days of
receipt by Borrowers of such invoice.

     2.13  Security.  The  Obligations  shall be secured by and  entitled to the
benefits of (i) a first priority  perfected  security interest in the Collateral
pursuant to the terms of the Security Agreements and the Pledge Agreements; (ii)
an assignment of monies due or to become due meeting all of the  requirements of
the Assignment of Claims Act for all Government  Contracts  (provided,  however,
that with  respect  to monies due and to become due in  relation  to  Government
Contracts,  the ultimate funded value of which will not exceed  $1,000,000,  the
Agent may, in its sole discretion, not file the "Notice of Assignment" and other
documents  required by the  Assignment of Claims Act);  (iii) the  Assignment of
Tenant's Interest under Leases; and (iv) the Guaranties of Subsidiaries.

     2.14 Loan Account.  The Agent will establish and maintain an account on its
books (the "Loan Account") to which (a) the principal  amount of each advance of
the Loan made by the Agent shall be debited on the date made,  (b) each  payment
made by Borrowers to the Agent for credit to the Loan Account  shall be credited
on the date received,  (c) all or any part of the collected funds (collectively,
the  "Collections")  credited to the Collateral Account which are to be credited
to the Loan  Account  shall be  credited  on the date such credit is made in the
amount of each such  Collection,  (d) all  accrued  interest on the Loan and any
Enforcement  Costs  shall be debited on the date such  interest  or  Enforcement
Costs  became past due, (e) all  Enforcement  Costs shall be debited on the date
the same  become  due and (f) all fees due to the Banks  and the Agent  shall be
debited by  recording  therein on the date imposed the amount of such charges or
fees.  All  credit  entries to the Loan  Account  are  conditional  and shall be
readjusted  as of the date made if final payment is not received by the Agent in
cash or solvent credits. The Agent shall not less frequently than monthly render
a statement  or  statements  of account to  Borrowers  with  respect to the Loan
Account.

     2.15 Collateral Account. The Borrower will deposit or cause to be deposited
to a bank  account  designated  by the Agent and from which the Agent  alone has
power of access and withdrawal (the "Collateral  Account") all Items of Payment.
Borrowers shall deposit Items of Payment for credit to the Collateral Account on
the day of the receipt thereof,  and in precisely the form received,  except for
the  endorsement of Borrowers  where necessary to permit the collection of Items
of Payment,  which  endorsement  Borrowers  hereby agrees to make.  Pending such
deposit, Borrowers will not commingle any Items of Payment with any of its other
funds or property, but will hold them separate and apart. The Agent shall credit
all of the  Collections  that  exceed the  aggregate  debit  balance of the Loan
Account to a banking  account of Borrowers  with the Agent on the first  Banking
Day following the deposit of the Collections to the Collateral Account.

     2.16 Illegality.  Notwithstanding  any other provisions herein, if any laws
or  regulations or any change  therein or in the  interpretation  or application
thereof shall make it unlawful for any Bank to make or maintain Eurodollar Loans
as contemplated by this Agreement,  (i) the commitment of such Bank hereunder to
make  Eurodollar  Loans shall  forthwith  be  canceled,  and (ii) the Loans then
outstanding as Eurodollar  Loans,  if any, shall be repaid and made as Base Rate
Loans (if not  otherwise  prohibited  under the terms of this  Agreement) at the
option of Borrowers in  accordance  with the  election  procedures  set forth in
Section  2.4(i);  provided,  however,  that prior to the effective  date of such
election,  interest shall be calculated at the Base Interest Rate. Any remaining
commitment of such Bank hereunder to make Eurodollar Loans (but not other Loans)
shall  terminate  forthwith  and  borrowings  from  such  Bank  at a  time  when
borrowings from the other banks are to be of Eurodollar Loans shall be by way of
Base Rate Loans as provided herein. Upon the occurrence of any such change, such
Bank shall promptly notify Borrowers thereof,  and shall furnish to Borrowers in
writing evidence thereof certified by such Bank.

     If any repayment to such Bank of any Eurodollar Loan (including conversions
thereof)  is made under this  Section  2.16 on a day other than a day  otherwise
scheduled  for a payment of  principal  of or interest  on such Loan,  Borrowers
jointly and  severally  shall pay to such Bank upon its  request  such amount or
amounts as will  compensate  it for the amount by which the rate of  interest on
such  Loan  immediately  prior to such  repayment  exceeds  the  stated  rate of
interest on relending or reinvesting  the funds received in connection with such
prepayment,  in each case for the period from the date of such prepayment to the
Banking Day next succeeding the last day of such then current  Interest  Period,
all as determined by such Bank in its good faith discretion.


                                   ARTICLE III

                                LETTERS OF CREDIT

         3.1  Issuance.  Borrowers and the Banks  acknowledge  that from time to
time  Borrowers  may  request  that a Bank issue a standby  letter or letters of
credit (each being herein  referred to as a "Letter of Credit"),  in  connection
with Borrowers' business operations. Any such request by Borrowers shall be made
by submitting to such Bank an  Application  and Agreement for Standby  Letter of
Credit  (each  being  herein  referred  to as an  "Application")  on such Bank's
standard form,  which  Application  shall be executed by authorized  officers of
each Borrower,  and be accompanied by such other  supporting  documentation  and
information,  borrowing and other corporate  resolutions and opinions of counsel
as such Bank may from time to time request.  Each Application shall be deemed to
govern  the  terms  of  issuance  of the  subject  Letter  of  Credit;  it being
understood, however, that the fees for issuance thereof shall be as set forth in
Section 3.2.

         3.2  Fees.  In  addition  to the  payment  of all fees as set  forth in
Section  2.5 and  Article  13,  Borrowers  shall  pay to the  issuing  Bank  the
following  for each  Letter of Credit  issued  by such Bank for the  benefit  of
Borrowers: (i) a one-time origination fee in the amount of $300.00, payable upon
the  issuance of each such  Letter of Credit,  and (ii) for each three (3) month
period (or partial  three (3) month  period)  during which such Letter of Credit
remains outstanding,  a fee (the "Periodic LC Fee") in the amount of one-half of
one percent (0.50%) of the original issued amount of such Letter of Credit, with
the first  Periodic LC Fee payment being payable on the date of issuance of such
Letter of Credit,  and each subsequent  Periodic LC Fee payment being payable in
advance  on the first  Banking  Day of each and  every  successive  third  (3rd)
calendar month after the Issuance  Effective Date until such Letter of Credit is
canceled or expires.  For purposes of this Section 3.2, the "Issuance  Effective
Date"  shall be  deemed to be the  first  day of the  calendar  month in which a
Letter of  Credit  is issued  (irrespective  of the  actual  date of  issuance).
Notwithstanding  the foregoing,  it is expressly  understood and agreed that the
Banks shall not issue any Letters of Credit having an expiration date beyond the
Maturity Date.

         3.3 Other Matters.  In the event a Bank issues any Letter(s) of Credit,
(i) the maximum amount of credit available under the Commitment shall be reduced
by the issued  amount of each Letter of Credit (so long as such Letter of Credit
remains  outstanding),  and (ii) any  amounts  drawn  under any Letter of Credit
shall be  deemed a Loan and shall be  deemed  to be an  advance  under the Note,
shall bear interest and be payable in accordance  with the terms of the Note and
shall be secured by the Security Documents (in the same manner as all other sums
advanced  under the  Note).  It is  expressly  understood  and  agreed  that all
obligations  and  liabilities  of Borrowers to such Bank in connection  with any
such Letter(s) of Credit shall be deemed to be Obligations,  and such Bank shall
have no obligation to release its rights under the Security  Documents until the
Note and all other sums due to such Bank in connection  with the Loans have been
paid and satisfied in full,  all Letters of Credit have been canceled or expired
(i.e.,  none are  outstanding),  and  such  Bank has no  further  obligation  or
responsibility  to make additional Loans or issue additional  Letters of Credit.
Furthermore, in no event whatsoever shall such Bank have any obligation to issue
any Letter of Credit which would cause the issued amount of all then outstanding
Letters of Credit issued by such Bank for the benefit of Borrowers to exceed, in
the aggregate, $300,000.



                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         In order to induce the Banks to enter into this  Agreement  and to make
the  Loans  as  provided  hereunder,  Borrowers  make  the  representations  and
warranties  set forth in Section 4.1 through  4.35  inclusive  as of the Closing
Date,  on the  date  of  each  new  Loan  and  as of  any  date  on  which  such
representation and/or warranty is stated to be made herein.

         4.1  Organization,   Standing,  etc.  of  Telos  Corp.  Telos  Corp.  
is  a corporation duly organized, validly existing and in good standing under 
the laws of the State of Maryland.  Telos Corp.  is qualified to do business as 
a foreign corporation in each  jurisdiction  in which the character of its 
business  or  the  nature or location of  the  assets it owns or leases  would
require Telos Corp. to be  qualified  and where  failure  so to qualify  would 
have a material  adverse effect  on  its  business,  assets,  operations  or  
conditions, financial  or otherwise.  Telos Corp. has all requisite  corporate
power and authority to own and  operate  its  properties  and to  carry on its 
business as now conducted and ascontemplated to be conducted. Telos Corp. does 
not own any stock or other equity interest in any Person other than the 
entities listed on Schedule 4.1.

         4.2  Organization,  Standing,  etc. of Telos Sub and the  Subsidiaries.
Telos Sub and each of the Subsidiaries are corporations duly organized,  validly
existing  and in good  standing  under  the laws of their  respective  states of
incorporation.  Telos  Sub and  each of the  Subsidiaries  are  qualified  to do
business as foreign  corporations in each jurisdiction in which the character of
their respective  businesses or the nature or location of the assets they own or
lease would  require  them to be so  qualified  and where  failure so to qualify
would have a material  adverse effect on their  respective  businesses,  assets,
operations  or  conditions,  financial or  otherwise.  Telos Sub and each of the
Subsidiaries have all requisite corporate power and authority to own and operate
their respective  properties and to carry on their respective  businesses as now
conducted and as contemplated to be conducted.  Neither Telos Sub nor any of the
Subsidiaries  owns any stock or other  equity  interest in any Person other than
the entities listed on Schedule 4.2.

         4.3 Corporate Authority. Each of Telos Corp., Telos Sub and each of the
Subsidiaries has the full corporate power and authority to execute,  deliver and
perform  the  Revolving  Loan  Documents  to which it is a party.  Each of Telos
Corp.,  Telos Sub and each of the  Subsidiaries has taken all action required by
law and its articles of  incorporation  and bylaws to authorize  and approve the
execution,  delivery and performance of the Revolving Loan Documents to which it
is party and the transactions contemplated thereby.

         4.4 Valid and Binding  Obligations.  The Revolving  Loan Documents have
been duly executed and  delivered by each of Telos Corp.,  Telos Sub and each of
the Subsidiaries party thereto and are valid and binding  obligations of each of
Telos Corp., Telos Sub and each of the Subsidiaries  party thereto,  enforceable
against  each of  Telos  Corp.,  Telos  Sub and each of the  Subsidiaries  party
thereto in accordance with their respective terms,  except as enforceability may
be limited by  applicable  bankruptcy,  moratorium  and similar  laws of general
application  affecting  the rights of  creditors  generally,  and except as such
enforceability  may be  limited by  applicable  principles  of  equity,  whether
applied by a court of equity or a court of law.

         4.5 Authorized and Outstanding  Capital Stock;  Subsidiaries.  Schedule
4.5 attached hereto  correctly sets forth, as to each of Telos Corp.,  Telos Sub
and each of the  Subsidiaries,  the number of authorized  shares,  the number of
shares of each class of capital stock outstanding and the identity of the owners
of such  outstanding  shares.  All of the  outstanding  capital stock of each of
Telos Corp.,  Telos Sub and each of the  Subsidiaries is validly  issued,  fully
paid and nonassessable and is owned by the Persons  identified on said Schedule,
free and clear of all Liens.  All of the Pledged Stock and the enterWorks  Stock
listed on Schedule 4.5 has been validly issued,  is fully paid and nonassessable
and is owned free and clear of all Liens, except for Liens created by the Pledge
Agreements.  Except as stated in Schedule 4.5, neither Telos Corp. nor Telos Sub
nor any  Subsidiary  has  granted  or issued,  or agreed to grant or issue,  any
options,  warrants or similar rights to acquire or receive any of the authorized
but  unissued  shares of its  capital  stock or any  securities  convertible  or
exchangeable into shares of its capital stock.

         4.6 Compliance with Laws;  Non-Contravention.  Neither any Borrower nor
any Subsidiary is bound by any agreement or instrument or subject to any charter
or other  corporate  restriction  which  materially  and  adversely  affects its
business, assets, operations or condition,  financial or otherwise.  Neither any
Borrower nor any Subsidiary is in violation of its Articles of  Incorporation or
By-Laws or of any statute, law, rule or regulation, or of any judgment,  decree,
writ,  injunction,  order  or  award of any  arbitrator,  court or  governmental
authority  applicable to it, other than violations of statutes,  laws,  rules or
regulations  which  do not  have a  material  adverse  effect  on the  business,
financial  condition  or  operations  of a Borrower  or a  Subsidiary  or on the
transactions   contemplated  by  the  Revolving  Loan  Documents.   Neither  the
authorization,  execution  and delivery of the  Revolving  Loan  Documents,  the
consummation  of  the  transactions  herein  or  therein  contemplated  nor  the
fulfillment  of or compliance  with the terms of the Revolving  Loan  Documents,
conflicts  with or results or will conflict with or will result,  in a breach of
any of the terms of the Articles of  Incorporation or By-Laws of a Borrower or a
Subsidiary or any other corporate  restriction or of any material statute,  law,
rule or regulation or of any judgment, decree, writ, injunction, order or decree
of any arbitrator, court or governmental authority, or of any material agreement
or  instrument,  which is applicable to a Borrower or a Subsidiary or by which a
Borrower  or a  Subsidiary  or any assets  thereof  may be subject or bound,  or
constitutes or will constitute a default  thereunder,  or results or will result
in the imposition of any material Lien upon any of the properties or assets of a
Borrower or a Subsidiary, except for Permitted Liens.

         4.7 Financial  Information,  etc. All of the financial  statements  and
other reports  provided by Borrowers to the Agent (the  "Financial  Statements")
(i) are  complete  and  correct  in all  respects,  (ii) have been  prepared  in
accordance with GAAP and (iii) fairly present the financial position and results
of operations,  as the case may be, of Borrowers and the  Subsidiaries as of the
dates and for the periods indicated, subject to normal year-end adjustments that
will not, in the aggregate, be material.  There are no material liabilities of a
Borrower or a Subsidiary,  direct or indirect, absolute or contingent, as of the
dates of the Financial Statements that are not reflected therein or in the notes
thereto.

         4.8 No Material Adverse Change. Since December 31, 1996, there has been
no material adverse change in the businesses, properties, prospects, operations,
liabilities or condition  (financial or otherwise) of any of Telos Corp.,  Telos
Sub or the  Subsidiaries,  individually  or on a consolidated  basis,  except as
otherwise expressly disclosed to the Agent in writing not later than forty-eight
(48) hours prior to the Closing Date.

         4.9 The Collateral.  Except for the security  interests  granted in the
Security  Documents,  each of the Borrowers and the  Subsidiaries is, or, to the
extent that the Collateral will be acquired after the date hereof,  will be, the
legal and  beneficial  owner of the  Collateral,  free and  clear of all  Liens,
except Permitted Liens. Except for the Security Documents,  neither any Borrower
nor any  Subsidiary  has executed any other  security or similar  agreement with
respect to the  Collateral or the Pledged Stock and neither any Borrower nor any
Subsidiary  has  heretofore  given  any Lien or  security  interest  of any kind
(whether  purchase money or otherwise) in the Collateral or the Pledged Stock to
any Person.  The  security  interest  granted by the  Security  Documents in the
Collateral  and the Pledged  Stock shall  constitute a first  priority  security
interest  and Lien in the  Collateral  and the Pledged  Stock as provided by the
Uniform Commercial Code in effect in the appropriate jurisdictions.  Neither any
Borrower or any Subsidiary has executed any security agreement, pledge agreement
or similar  agreement  with  respect to the  enterWorks  Stock and  neither  any
Borrower or any Subsidiary  has given any Lien or security  interest of any kind
(whether purchase money or otherwise) in the enterWorks Stock to any Person. All
information with respect to the Collateral, the Pledged Stock and the enterWorks
Stock set forth in any schedule furnished at any time by a Borrower to the Agent
hereunder is and will be true and  complete in all  material  respects as of the
date furnished.

         4.10 Eligible  Receivables.  All Eligible  Receivables are and shall be
good and valid accounts  representing  undisputed bona fide  indebtedness of the
account  debtor  to a  Borrower  or a  Subsidiary,  as  the  case  may  be,  for
merchandise theretofore shipped or delivered pursuant to or in connection with a
contract for sale,  or for services  theretofore  performed by such  Borrower or
such Subsidiary to or for said account debtor. There are and shall be no setoffs
or counterclaims of any nature whatsoever  against any Eligible  Receivable.  No
agreement  under which any deduction or discount may be claimed has been or will
be made with the account debtor of any of the Eligible Receivables.  Each of the
Borrowers and the  Subsidiaries is and shall be the lawful owner of all Eligible
Receivables  and has and shall  have the  unrestricted  right to  pledge,  sell,
assign and  transfer the Eligible  Receivables  and grant the security  interest
granted  herein and in the  Security  Documents.  This  representation  shall be
deemed  made as of the date  Borrowers  report  to the  Agent  that an  Eligible
Receivable exists,  including,  without  limitation,  the date of each Borrowing
Base  Certificate  and  as of  the  date  a  certificate,  report  or  statement
concerning  Eligible  Receivables  is  delivered  by or on behalf  of  Borrowers
pursuant to this Agreement.

         4.11  Licenses;   Franchises;   etc.   Schedule  4.11  attached  hereto
accurately  and  completely  lists all  authorizations,  licenses,  permits  and
franchises of any public or governmental regulatory body (i) granted or assigned
to a Borrower or a Subsidiary  and (ii) which are  necessary  for the conduct of
the business of a Borrower or a Subsidiary,  as now conducted and proposed to be
conducted except (as to authorizations,  licenses,  permits and franchises other
than those required for the performance of U.S. Government  Contracts) where the
failure to have  fulfilled  or performed  its  obligations  thereunder  does not
materially and adversely affect the business,  financial condition or operations
of a Borrower  or a  Subsidiary  (such  authorizations,  licenses,  permits  and
franchises,  together  with all  extensions  or renewals  thereof,  being herein
sometimes  referred  to,  collectively,  as  the  "Franchises").   All  of  such
Franchises are validly issued and in full force and effect and each Borrower and
each Subsidiary has fulfilled and performed all of its obligations  with respect
thereto  required to have been  fulfilled  and  performed and has full power and
authority  to  operate  thereunder,  except (as to  Franchises  other than those
required for the performance of U.S.  Government  Contracts) where failure so to
have fulfilled or performed obligations does not materially and adversely affect
the business,  assets,  operations or  condition,  financial or otherwise,  of a
Borrower or a Subsidiary.

         4.12 Material Agreements.  Schedule 4.12 attached hereto accurately and
completely  lists all  material  leases and all  material  agreements  involving
future  payment or receipt of more than  $100,000  which are presently in effect
("Material  Agreements")  in  connection  with the conduct of the  businesses of
Borrowers and the Subsidiaries. All such leases and agreements are in full force
and effect,  and each of the  Borrowers and the  Subsidiaries  has fulfilled and
performed all of its material  obligations with respect thereto required to have
been fulfilled and  performed.  All Material  Agreements in connection  with the
business of Borrowers  and the  Subsidiaries  are in the name of Telos Corp.  or
Telos Sub. except as described on Schedule 4.12.

         4.13  Tax  Returns  and  Payments.   Each  of  the  Borrowers  and  the
Subsidiaries  has filed all tax returns required by law to be filed and has paid
all Taxes,  assessments  and other  governmental  charges levied upon any of its
properties,  assets, income or franchises,  other than those not yet delinquent,
except  payments  for Taxes that have been  deferred  by such  Borrower  or such
Subsidiary because such Borrower or such Subsidiary is contesting the imposition
or amount of such  Taxes in good  faith and has made  adequate  reserves  on its
books  therefor.  The  charges,  accruals and reserves on the books of each such
Borrower  or  Subsidiary,  as the case  may be,  in  respect  of its  Taxes  are
adequate,  and neither any  Borrower nor any  Subsidiary  knows of any actual or
proposed  assessment for additional  Taxes for any fiscal period or of any basis
therefor.

         4.14  Indebtedness.  Neither  any  Borrower  nor any  Subsidiary  is in
default  beyond any grace period under any  outstanding  Indebtedness.  Schedule
4.14 attached hereto correctly describes (i) all outstanding Indebtedness of the
Borrowers  and the  Subsidiaries  and (ii) all existing  Liens in respect of any
property  or assets of  Borrowers  and the  Subsidiaries.  For  purposes of this
Section  4.14,  the term  "Indebtedness"  shall  not  include  obligations  by a
Borrower or a  Subsidiary  to vendors  and  suppliers  incurred in the  ordinary
course of business.

         4.15 Title to Properties.  Borrowers and the Subsidiaries have good and
marketable title to all of their respective  properties and assets,  and none of
such properties or assets is subject to any Lien, except Permitted Liens. Except
as set forth on  Schedule  4.15,  Borrowers  and the  Subsidiaries  enjoy  quiet
possession under all leases to which they are a party as lessee, and all of such
leases are valid,  subsisting and in full force and effect.  None of such leases
contains any provision  restricting the incurrence of indebtedness by the lessee
or any  unusual or  burdensome  provision  materially  adversely  affecting  the
business,  assets,  operations  or  condition,  financial or  otherwise,  of any
Borrower or any Subsidiary.

         4.16 Litigation.  There are no actions,  suits or proceedings at law or
in equity or by or before any  governmental  instrumentality  or other agency or
regulatory  authority now pending or, to Borrowers' best  knowledge,  threatened
against  or  affecting  any  Borrower  or any  Subsidiary  which,  if  adversely
determined,  could,  individually or in the aggregate, (i) materially impair the
ability of such  Borrower  or such  Subsidiary  to conduct  its  business as now
conducted, (ii) materially and adversely affect the business, assets, operations
or  condition,  financial or otherwise,  of such Borrower or such  Subsidiary or
(iii) impair the validity or enforceability  of, or the ability of such Borrower
or such Subsidiary to perform its obligations  under,  any of the Revolving Loan
Documents.

         4.17 Approvals;  Consents.  Neither any Borrower nor any Subsidiary nor
any of their respective  shareholders is required to obtain any order,  consent,
approval or  authorization  of, or required  to make any  declaration  or filing
with,  any  governmental  authority in  connection  with (i) the  execution  and
delivery by Borrowers or the Subsidiaries of the Revolving Loan Documents,  (ii)
the granting by any Borrower or any Subsidiary of the security  interests in the
Collateral and the Pledged Stock pursuant to the Security Documents or (iii) the
ability of any  Borrower or any  Subsidiary  to conduct its business in the same
manner after the date hereof as such  business has been  conducted  prior to the
date hereof (other than  ministerial  duties to be performed in connection  with
any such order,  consent,  approval or authorization).  Schedule 4.17 sets forth
all orders,  consents,  approvals and authorizations of governmental authorities
which are necessary to continue the businesses of Borrowers and the Subsidiaries
(collectively, the "Consents"). All material Consents have been obtained and are
in full force and effect.

     4.18 Compliance with ERISA. 

          (a) The consummation of any of the transactions  contemplated by any 
of the Revolving   Loan  Documents  is  not  and  will  not  constitute  a  
"prohibited transaction"  within the meaning of Section 4975 of the Code,  or 
Section 406 of ERISA.  None of the  Plans is a  multi-employer  plan,  as  
defined  in  Section 4001(a)(3) of ERISA (a  "Multi-employer  Plan") and no  
Multi-employer  Plan has been  maintained or contributed  to at any time during
the five calendar  years  preceding this Agreement.  There has been no material 
"prohibited  transaction," as such term is defined in Section  406 of ERISA and
Section  4975 of the Code, with respect to any Plan,  which could result in any 
material  liability of any Borrower or any  Subsidiary.  All Plans are, to the 
knowledge of  Borrowers,  in compliance in all material respects with  the 
requirements  prescribed by any andall statutes (including ERISA and the Code),
orders, or governmental rules and regulations currently in effect with  respect
thereto.  Each Plan  intended to qualify  under  Section  401(a) of the Code and
each trust  intended  to qualify under Section  501(a) of the Code does so 
qualify.  Neither any Borrower nor any Subsidiary  maintains  any  defined  
benefit  plan,  as such term is  defined in Section 414(j) of  the Code.   
Full payment has been made (or will be made prior to any applicable deadline)  
by a Borrower or a Subsidiary, as appropriate  or by  an ERISA  Affiliate,  as  
applicable,  of all amounts which are required  under the terms of each Plan to 
have been paid as  contributions  to such Plan.  There has been no  termination 
of a Plan or trust  created under any Plan that would give rise to a  material 
liability  to the  PBGC  on the  part  of a  Borrower  or a Subsidiary, as
appropriate,  or an ERISA Affiliate. No material liability to the PBGC  has been
or is  expected  to be  incurred  with  respect  to any Plan by a Borrower or
a Subsidiary,  as appropriate,  or an ERISA Affiliate.  The PBGC has not  
instituted proceedings to terminate any Plan which is maintained or is to be
maintained by a Borrower or a Subsidiary, as appropriate, or an ERISA Affiliate.
There exists no condition or set of circumstances  which present a material risk
of  termination  or partial  termination of any Plan by the PBGC. No Plan has an
"accumulated  funding deficiency"  (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA.

          (b)  No event has occurred that could give rise to any lien, 
constructive or otherwise and no lien, constructive or otherwise, has arisen 
under ss.ss. 4068(a) or 302(f) of ERISA with  respect to any defined  benefit  
pension  plan that could affect any asset of a Borrower or a Subsidiary.

          (c)  Neither any Borrower nor any Subsidiary has maintained, or 
maintains, any plan, fund, program,  commitment,  or arrangement pursuant to 
which it provides, or promises to provide, to current or former employees  post-
retirement  benefits other than pensions  within the meaning of Statement of 
Financial  Accounting  Standard No. 106.

         4.19 Brokers,  etc.  Neither any Borrower nor any  Subsidiary has taken
any action which would  obligate any holder of the Notes to pay a broker's  fee,
finder's fee or commission in connection with the  transactions  contemplated by
the Revolving Loan Documents.

         4.20 Compliance with Environmental  Laws. Each of the Borrowers and the
Subsidiaries  is in  compliance  with  all  applicable  statutes,  laws,  rules,
regulations and orders of all governmental authorities relating to environmental
protection and pollution control with respect to the conduct of its business and
the ownership of its properties, except violations which do not in the aggregate
have  a  material  adverse  effect  on  the  business,  financial  condition  or
operations  of  such  Borrower  or  such  Subsidiary  or  on  the   transactions
contemplated by this Agreement.

         4.21  Status  under  Certain  Statutes.  Neither any  Borrower  nor any
Subsidiary  is (i) a "public  utility  company"  or a "holding  company,"  or an
"affiliate" or a "subsidiary  company" of a "holding company," or an "affiliate"
of such a "subsidiary  company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended,  or (ii) a "public  utility" as defined
in the Federal  Power Act, as amended,  or (iii) an  "investment  company" or an
"affiliated  person"  thereof or an "affiliate  person" of any such  "affiliated
person" as such terms are  defined in the  Investment  Company  Act of 1940,  as
amended.

         4.22  Disclosure.  None of the  Revolving  Loan  Documents or any other
document,  certificate, or statement furnished to any Bank or the Agent by or on
behalf  of a  Borrower  or a  Subsidiary  in  connection  with the  transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading;  provided,  however,  that (i) no statement that has
been  modified or  superseded  by a  subsequent  statement  in writing  shall be
considered  untrue or misleading,  and (ii) financial  projections  shall not be
considered  untrue  or  misleading   provided  they  were  prepared  based  upon
assumptions  that were  reasonable  at the time the financial  projections  were
made. There is no fact known to Borrowers which materially and adversely affects
the business, properties,  operations or condition, financial or otherwise, of a
Borrower or a Subsidiary which has not been set forth in this Agreement,  any of
the other  Revolving  Loan  Documents or  otherwise  disclosed in writing to the
Banks.

         4.23  Exchange Act  Registration.  Except for the Public Preferred 
Stock, no class of any security of any Borrower or any Subsidiary is now or is 
required to be registered with the Commission pursuant to Section 12 of the 
Exchange Act.

         4.24  Use of  Proceeds.  The proceeds of the Loans will be used for the
purpose of (i)  working  capital and (ii)  Capital  Expenditures,  as  permitted
herein.  Borrowers will not use any part of such proceeds for any other purpose,
including,  without  limitation,  any purpose which would involve a violation of
Section 7 of the Exchange Act or Regulation G, T, U or X.

         4.25  Suspension or Debarment. Neither any Borrower nor any Subsidiary 
nor any of their respective directors, officers or employees has received any 
notice of or information concerning any proposed or contemplated suspension or 
debarment from U.S. Government contracting.  No basis exists for the default
termination of any current U.S. Government Contract.

         4.26  Claims and  Investigations.  There are no  pending or  threatened
claims,  investigations  (whether  formal or  informal),  litigation,  disputes,
protests,  or other  controversies  involving  any  Borrower  or any  Subsidiary
pertaining to or arising out of any U.S. Government Contract which, if adversely
determined,  would  have a  material  adverse  effect on the  business,  assets,
operations  or  condition,  financial  or  otherwise,  of  any  Borrower  or any
Subsidiary.  Neither any Borrower nor any Subsidiary  has filed or  contemplates
the filing of any claims or demands for payment  against the U.S.  Government or
any  other  party  arising  out of or in  connection  with any  U.S.  Government
Contract, other than progress billings,  public vouchers, and invoices submitted
in the ordinary course of business.

         4.27  Violation of Contracting  Statutes.  Neither any Borrower nor any
Subsidiary has committed any violation (which violation could individually or in
the aggregate have a material adverse effect on the business, assets, operations
or condition,  financial or otherwise,  of such Borrower or such  Subsidiary) of
any federal  statute or regulation  pertaining to or affecting  U.S.  Government
contractors  or U.S.  Government  procurement  in  general,  including,  without
limitation,  the  following:  the Armed  Services  Procurement  Act of 1947; the
Federal Property and Administrative  Services Act of 1949; the False Claims Act;
the  False   Statements   Act;  the  U.S.   espionage   laws;  the  U.S.  Export
Administration Act; the U.S. Anti-Trust Statutes; the Anti-Kickback Act of 1986;
laws  pertaining  to  restrictions  on  private  sector   employment  of  former
Government  officers or employees (e.g., 10 U.S.C. ss.ss. 2397b and 2397c); laws
prohibiting  the payment of bribes,  gratuities or contingent fees to Government
personnel;  the Competition in Contracting Act; except as otherwise  provided in
this Agreement and in the Security Agreements, the Assignment of Claims Act; the
Anti-Deficiency  Act; laws pertaining to the examination of books and records by
the Comptroller  General and other agencies of the Federal  Government (e.g., 10
U.S.C.  ss. 2313,  2306a);  the  Truth-In-Negotiations  Act; laws  pertaining to
rights  in  technical  data  and  computer  software  (e.g.,  10  U.S.C.  ss.ss.
2320-2321);  laws  pertaining  to  commercial  pricing for spare or repair parts
(e.g., 10 U.S.C.  ss. 2323);  laws pertaining to the allowability of costs under
U.S.  Government  Contracts (e.g., 10 U.S.C.  ss. 2324);  laws pertaining to the
prohibition  against  unreasonable  limitations on  subcontractors  sales to the
United  States  (e.g.,  10 U.S.C.  ss.  2402);  labor laws  pertaining  to equal
employment  opportunity and affirmative  action,  minimum wages, and other labor
standards;  the Walsh-Healey Public Contracts Act; laws pertaining to employment
of and affirmative  actions for the  handicapped  and Vietnam era veterans;  the
Small  Business Act; the Buy American Act; DOD  Appropriation  Acts; the Federal
Acquisition Regulations;  the Department of Defense FAR Supplement;  regulations
pertaining to Cost Accounting Standards;  and all other statutes and regulations
pertaining in any way to U.S. Government Contracting.

         4.28 U.S. Government  Contracts.  No U.S. Government Contract of either
Borrower  or  any  Subsidiary   contains  a  clause   prohibiting  or  otherwise
restricting the assignment of payments thereof or imposing any requirements with
respect to any such  assignment  other than those  provided in the Assignment of
Claims  Act  generally.  All U.S.  Government  Contracts  of  Borrowers  and the
Subsidiaries are in full force and effect.  None of the  transactions  that have
occurred or are  contemplated to occur under the Revolving Loan Documents has or
will  result  in (i)  any  material  default  or  any  other  government  action
precluding any Borrower or any Subsidiary  from  performing any U.S.  Government
Contract,  (ii)  any  withdrawal  or  termination  of any  Consent  or  material
Franchise necessary for the performance by any Borrower or any Subsidiary of any
U.S. Government Contract or (iii) violation of any federal statute or regulation
pertaining  to or  affecting  U.S.  Government  contractors  or U.S.  Government
procurement. All U.S. Government Contracts of Borrowers and the Subsidiaries are
in good standing, full force and effect, and all material obligations thereunder
have been performed in accordance with their  respective  terms by Borrowers and
the Subsidiaries.  Schedule 4.28 attached hereto accurately and completely lists
all U.S.  Government  Contracts of the New Subsidiaries with a monetary value of
$250,000 or more.

         4.29 Subcontractors. Neither Borrower nor any Subsidiary has knowledge
that any supplier or subcontractor to any Borrower or any Subsidiary in 
connection with a U.S. Government Contract is in material default or is unable 
to fulfill any material obligation to such Borrower or to such Subsidiary in 
connection with any such U.S. Government Contract.

         4.30  No Assignment of Payments.  No payments due or to become due 
under any U.S. Government Contract held by any Borrower or any Subsidiary have 
been assigned to any third party except as provided for in this Agreement.


         4.31 Audits.  Neither any Borrower nor any Subsidiary is undergoing any
audit (other than normal and ordinary audits of a routine nature) or to the best
knowledge of Borrowers,  any investigation by the Defense Contract Audit Agency,
the Inspector General of any federal agency, or any other governmental entity in
connection with any U.S. Government Contract.

         4.32 Security Clearances.  Each of the Borrowers and the Subsidiaries 
has in full force and effect all necessary security clearances, including 
facility clearances and personnel clearances necessary to perform all of its 
contractual obligations.  No U.S. Government Contract held by a Borrower or a 
Subsidiary involves the services of any employee or consultant who is not a U.S.
citizen or an immigrant alien within the meaning of the U.S. Industrial 
Security Regulation and U.S. Industrial Security Manual, other than as approved 
by the appropriate government agency.  No U.S. Government Contract held by a 
Borrower or a Subsidiary involves orrequires access to classified information 
other than "Secret," "Top Secret" or "Confidential."

         4.33 Certain Agreements. Neither Borrower nor any Subsidiary is a party
to or bound by any Teaming  Agreement or similar  "Contractor Team  Arrangement"
within the meaning of Federal  Acquisition  Regulations,  Subpart 9.6, which (i)
restricts  the right of a Borrower or a Subsidiary to compete  independently  or
with  others  for any  procurement  opportunity  other  than the  specific  U.S.
Government  contracting  program enumerated in such Teaming  Agreement,  or (ii)
contains any provision obligating a Borrower or a Subsidiary to pay any costs or
expenses of any other party to such Teaming  Agreement,  other than payments for
non-recurring engineering costs incurred in the ordinary course of business.

         4.34 Export  Control Laws.  Each of the Borrowers and the  Subsidiaries
and all of  their  respective  officers,  members  of the  Board  of  Directors,
employees,  agents  and  representatives  have  operated  in the  past  and  are
operating  as of the Closing  Date in material  compliance  with all  applicable
government  export control laws and regulations  including,  but not limited to,
the  provisions  of  the  following  U.S.  Government  Regulations:  the  Export
Administration Regulations,  the International Traffic in Arms Regulations,  the
Foreign Assets Control Regulations,  the Cuban Assets Control  Regulations,  and
the Libyan  Sanctions  Regulations,  the  material  breach of which would have a
material  adverse  effect on the  business,  assets,  operations  or  condition,
financial or otherwise, of a Borrower or a Subsidiary.



                                    ARTICLE V

                       CONDITIONS OF EFFECTIVENESS OF THIS
                              AGREEMENT AND LENDING

         5.1  Effectiveness  of  this  Agreement.   The  effectiveness  of  this
Agreement is subject to satisfaction of the following conditions precedent on or
prior to the Closing Date (unless otherwise  specified),  documentation of which
shall be in form and substance satisfactory to counsel for the Banks:

              (a)  Absence of Litigation.  No action, proceeding, regulation or 
legislation shall have been  instituted,  threatened  or proposed  before any 
court, governmental agency or legislative body to enjoin, restrain or prohibit, 
or to obtain damages in  respect  of, or which is  related to the  transactions 
contemplated  in the Revolving Loan Documents which, in the reasonable judgment 
of the Agent,  would likely cause  Borrowers or the  Subsidiaries to become 
unable to comply with the terms and conditions set forth herein, or in the 
other Revolving Loan Documents.

              (b)  Absence of Material Adverse Changes. As of the Closing Date,
there shall have been no material  adverse change in the  business, properties,
operations  or condition  (financial  or  otherwise)  of Borrowers  and  the  
Subsidiaries  on a consolidated  basis since  December  31,  1996,  except as  
otherwise expressly disclosed to the Agent in writing not later than forty-eight
(48) hours prior to the Closing Date.

              (c)  The Revolving Loan Documents.  Each of the Borrowers and the 
Subsidiaries shall have executed and delivered  each of the Revolving  Loan 
Documents to which each is a party.  Without  limiting the generality of the 
foregoing,  each of the New Subsidiaries  shall have executed and  delivered 
(i) a Guarantee of  Subsidiary, substantially  in the form  attached  as  
Exhibit B hereto,  and (ii) a Security Agreement substantially in the form 
attached as Exhibit C hereto.

              (d)  Opinions and Certificates.  The Agent shall have received:

                   (i) The favorable  opinions of Messrs.  McGuire Woods Battle 
              & Booth L.L.P. counsel for Borrowers,  dated as of the Closing 
              Date,  substantially in the form attached as Exhibit G hereto; and

                   (ii) A  certificate,  dated as of such  date, signed  on 
              behalf  of  Borrowers  by  any  one  of  their President, Chief 
              Executive  Officer,   Chief  Financial Officer or Vice President
              (each  sometimes  referred  to hereinafter as an "Executive
              Officer"),  certifying  that the  conditions specified  in this 
              Section 5.1 have been fulfilled and the representations and
              warranties set forth in Article IV hereto are true and correct.
                      

              (e)  Corporate Documents. The Agent shall have received:

                   (i)  Articles of Incorporation. Certified copies of each New
              Subsidiary's Articles of Incorporation and Bylaws;

                   (ii) Good Standing Certificates.  Long-form good standing 
              certificates from the State of incorporation of each Borrower and 
              each Subsidiary dated not more than seven (7) days before the
              Closing Date;

                   (iii) Resolutions.  Certified copies of resolutions adopted 
              by each Borrower's and each Subsidiary's board of directors in 
              form and substance satisfactory to the Agent, authorizing the 
              execution, delivery and performance of the Revolving Loan
              Documents;

                   (iv) Incumbency Certificates.  Certificates of incumbency of 
              each Borrower and each Subsidiary showing the signatures and 
              corporate authority of the officers executing the Revolving Loan 
              Documents; and

                   (v)  Other  Information.  All other information and documents
              which the Banks or their respective  counsel may reasonably 
              request in connection with the transactions contemplated  by  the 
              Revolving  Loan   Documents,  such  information   and  documents  
              where   appropriate  to  be certified  by an Executive Officer or 
              by the  appropriate governmental authorities.

              (f) Payment of Fees.  The fees, or portion of fees,  described in 
Sections 2.5 and 3.2 and Article 13, which are due as of the Closing Date shall 
have been paid,  or  contemporaneously  will  be  paid  on the  Closing  Date,  
in full by Borrowers.

              (g) Legal Requirements.  The transactions contemplated by the 
Revolving Loan Documents  shall  not  violate  any  Legal   Requirement,   
including,   without limitation, Regulations G, T, U and X.

              (h) Legal and Organizational Structure.  All terms and conditions 
of the capital management, legal and organizational structure of Borrowers and 
the Subsidiaries shall be acceptable to the Agent in its sole and absolute 
discretion.

              (i)  U.C.C., Tax Lien and Judgment Searches. The Agent shall have 
received such title  reports and lien and judgment  searches as are  necessary 
to  demonstrate that title to the Collateral and Pledged Stock of Borrowers and 
the Subsidiaries is free  and  clear of all  Liens  except  Permitted  Liens,  
that all  U.C.C.-1 financing  statements  required to perfect the  security  
interests of the Agent have  been  duly  filed in the  appropriate  offices,  
and that all  pledges  of uncertificated securities included in the Collateral 
have been duly registered so that,  when the Loans are advanced,  the security 
interests of the Agent and the Banks in the Collateral  and the Pledged Stock
will be valid,  perfected and of first priority.

         5.2 Each Loan.  The  obligation  of each of the Banks to make a Loan is
subject to the additional  conditions  precedent that,  immediately prior to the
making  of such  Loan:  (i) the  representations  and  warranties  of  Borrowers
contained in Article IV of this Agreement,  Section 4 of the Security Agreements
and  Section  5 of the  Pledge  Agreements  shall  be true and  complete  in all
material respects on and as of the date of the Loans as if they had been made on
such date  (except  to the  extent  that  such  representations  and  warranties
expressly  relate to an earlier  date or are  affected  by the  consummation  of
transactions permitted under this Agreement); (ii) the Banks shall have received
such additional certificates and documents as they may have reasonably requested
prior to such date with respect to the Revolving Loan Documents,  the use of the
proceeds  hereof  and  compliance  with the  provisions  of the  Revolving  Loan
Documents;  (iii) the Banks shall have received reports and  certificates  which
comply with the provisions of Section 6.2; (iv) after giving effect to the Loans
to be made on such date, no Event of Default (as specified in Article IX hereof)
nor any event which with the giving of notice or  expiration  of any  applicable
grace period or both would  constitute  an Event of Default  shall have occurred
and be continuing;  (v) since the date of this Agreement,  there shall have been
no material  adverse  change in the business,  assets,  operations or condition,
financial or otherwise,  of Borrowers  and the  Subsidiaries  on a  consolidated
basis,  and (vi) after  giving  effect to such Loan,  the  aggregate of the Loan
Outstanding shall not exceed the Borrowing Base. Each request for a Loan made by
Borrowers  hereunder shall constitute a representation and warranty to the Banks
that all of the conditions  specified in this Section 5.2 have been satisfied in
all respects as of the date of each such Loan.



                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

     Borrowers  covenant and agree that, so long as any of the Commitment  shall
remain available to Borrowers,  or any Loans shall remain  outstanding and until
the  principal of and  interest on the Notes and all fees and other  amounts due
hereunder and under the other  Revolving Loan Documents  shall have been paid in
full:

     6.1  Financial  Statements,  etc.  Borrowers  will  furnish  or cause to be
furnished to each Bank:
                      

          (a) within ninety (90) days after the end of each fiscal year of each
Borrower and each Subsidiary (and no later than the date of the filing by Telos 
Corp. of its Form  10-K for such  fiscal  year),  the  balance  sheet  of 
Borrowers  and the Subsidiaries and the related statements of income, 
stockholders' equity and cash flow on an unconsolidated, consolidated and 
consolidating basis as at the end of such year, setting  forth in  comparative  
form with respect to such  financial statements  figures for the previous  
fiscal year, all in reasonable  detail and certified by the Accountants, which
opinion shall be unqualified and shall state that such  financial  statements 
have been  prepared  in  accordance  with GAAP applied on a basis  consistent  
with that of the preceding  fiscal year and that the audit by such  Accountants
in connection with such financial  statements has been made in accordance with
GAAP;

          (b) within forty-five (45) days after the end of each of the first 
three quarterly accounting  periods in each fiscal year of Borrowers (and no 
later than the date of the filing by Telos  Corp.  of Form 10-Q for each such 
quarterly  accounting period),  Borrowers'  and the  Subsidiaries'  unaudited  
balance  sheet  and the related unaudited statements of income, stockholders' 
equity and cash flow on an unconsolidated, consolidated and consolidating basis 
for such period and for the period from the beginning of the current  fiscal 
year to the end of such period, including  a  comparison  to budget  and a  
comparison  to  the  figures  for   the  corresponding   periods  in  the  
immediately  preceding  fiscal  year,  all  in reasonable detail and certified 
on behalf of Borrowers by the Executive Officers of  Borrowers  to be  complete
and  correct  in all  respects  and to have been prepared in accordance with 
GAAP applied on a basis  consistent with that of the preceding fiscal year;

          (c) within thirty (30) days after the end of each month, Borrowers' 
and the Subsidiaries'  balance sheets and the related statements of income and 
cash flow on an unconsolidated,  consolidated and consolidating  basis for such
period and certified  on behalf of  Borrowers  by an  Executive  Officer to be 
complete and  correct  in  all  respects  and  to have  been  prepared  in 
accordance  with GAAP applied on a basis consistent with that of the preceding 
fiscal year;

          (d) promptly upon their becoming available, copies of any (i) weekly
periodic management  reports,  budgets,   forecasts  and  other  summaries  of 
financial performance  of  Borrowers  and the  Subsidiaries  as the Agent  may
reasonably request,  and  (ii)  periodic  or  special  reports  filed  by a  
Borrower  or a Subsidiary with any federal,  state or local  governmental  
agency or authority, and copies of any material  notices and other  material  
adverse  communications from  any  federal,  state or  local  governmental 
agency  or  authority  which specifically relate to a Borrower or a Subsidiary;

          (e) promptly upon receipt    of    any     material  notice or  
other communication from any holder of Subordinated Debt, copies of such  
notice, report or communication;

          (f) with reasonable promptness, all management letters from 
accountants including, without  limitation,  the annual  management  letter from
the Accountants  which shall be  provided  to each Bank no later than ninety 
(90) days after the end of each fiscal year;

          (g) within forty-five (45) days after the end of each quarter, the
contract backlog reports of each Borrower and each Subsidiary;

          (h) within two (2) Banking Days of a payment date (whether at maturity
or at a date fixed for  payment  or by  declaration,  acceleration  or  
otherwise)  under the Subordinated  Loan Documents  confirmation that such
payment has been made or if no such payment has been made an explanation of such
non-payment; and

              (i)  within thirty (30) days after the end of each month, a  
report classifying by age or number of days outstanding all payables of each 
Borrower and Subsidiary.

     6.2  Borrowing  Base  Reporting.  Borrowers  will  furnish to the Banks the
following reports on a bi-weekly basis:

              (a)  a report classifying by age or number of days outstanding,
by contract, and otherwise categorizing, all Receivables of Borrowers and the
Subsidiaries;

               (b) a report classifying Inventory of Borrowers and the
Subsidiaries by category, location,  ownership and value and indicating the 
amount of inventory under firm orders within one hundred twenty (120) days of 
the order date;

               (c  a Borrowing Base Certificate; and

               (d) a certificate of a President, Vice President or Chief 
Financial Officer as to the accuracy of the reports furnished pursuant to 
subsections (a) through (c) above.

     6.3 Legal  Existence;  Franchises;  Compliance  with Laws, etc. Each of the
Borrowers and the  Subsidiaries  will (i) maintain its  corporate  existence and
business;  (ii) maintain all  properties  which are necessary for the conduct of
such  business,  now or  hereafter  owned,  in good  repair,  working  order and
condition;  (iii) take all actions  necessary to maintain and keep in full force
and effect its material rights and franchises,  including,  without  limitation,
material  Franchises  and any  security  clearances  which may be required for a
Borrower or a Subsidiary to bid for,  obtain or perform  directly or indirectly,
U.S. Government Contracts;  and (iv) except as otherwise provided herein, comply
in all material respects with all applicable  statutes,  rules,  regulations and
orders  of,  and  all  applicable  restrictions  imposed  by,  all  governmental
authorities  in respect of the conduct of its business and the  ownership of its
properties.  Borrowers will not engage,  and will cause the  Subsidiaries not to
engage,  without the express prior written  consent of the Banks, in any primary
business  other than that of  providing  services  with  respect to  integrating
computer  systems,  computer  maintenance,  computer  software  development  and
related activities.

     6.4 Payment of Taxes, etc. Borrowers will pay and discharge, and will cause
the  Subsidiaries to pay and discharge,  promptly as they become due and payable
(i) all  Taxes  imposed  upon any of them or their  income  or upon any of their
property or assets, or upon any part thereof,  and (ii) all lawful claims of any
kind  (including  claims for labor,  materials and supplies)  which,  if unpaid,
might by law  become a Lien  upon  their  property;  provided,  however,  that a
Borrower or a Subsidiary  may defer the payment of any Tax if (a) such  Borrower
or such  Subsidiary,  as the case may be, is contesting the imposition or amount
of such Tax in good faith and has made adequate  reserves on its books therefor,
(b) such Borrower or such Subsidiary, as the case may be, is lawfully permitted,
in view of such contest,  to defer  payment and (c) the Agent is satisfied  that
the  deferral of the payment will not impair the  Collateral  or the Leased Real
Property,  a Bank's or the Agent's rights to exercise  remedies upon an Event of
Default or the  ability  of such  Borrower  or such  Subsidiary  to conduct  its
business.  Upon the  Agent's  request,  Borrowers  shall  provide the Agent with
copies of all federal and state  corporate  income tax filings of Borrowers  and
the  Subsidiaries  within two (2) days following the date that such filings were
made.

     6.5  Payment  of  Obligations.  Borrowers  will  pay,  and will  cause  the
Subsidiaries to pay,  promptly when due, or in conformance  with customary trade
terms, all obligations  incident to the conduct of their business other than the
Subordinated  Debt,  which  will be paid in  accordance  with  the  terms of the
Investor Subordination Agreement and this Agreement;  provided,  however, that a
Borrower or a  Subsidiary  may defer the payment of any  obligation  if (i) such
Borrower or such  Subsidiary is contesting the payment of the obligation in good
faith and has made adequate  reserves on its books therefor,  (ii) such Borrower
or such  Subsidiary is lawfully  permitted,  in view of such  contest,  to defer
payment and (iii) the Agent is  satisfied  that the deferral of the payment will
not impair the Collateral,  the Agent's or a Bank's rights to exercise  remedies
upon an Event of Default or the ability of such  Borrower or such  Subsidiary to
conduct its business.

     6.6  Interest  Rate  Protection  Agreements.  Upon  request  of the  Agent,
Borrowers shall,  within five (5) Banking Days thereof,  enter into and cause to
remain in effect one or more Interest Rate Protection Agreements satisfying each
of the following conditions:

          (a)  each Interest Rate Protection Agreement shall be in form and
       substance and in a notional principal amount satisfactory to the Agent;

          (b)  each  Interest  Rate   Protection   Agreement   shall
       terminate  not earlier  than the Maturity  Date and shall  provide that
       Borrowers'  payment  amount,  if any, be  calculated  on the basis of a
       fixed rate of interest on the notional principal amount thereof; and

          (c) the  counterpart  to  each  Interest  Rate  Protection
       Agreement shall be a bank or other financial  institution  satisfactory
       to the Agent.

     6.7 Further Assurances. From time to time hereafter, Borrowers will execute
and deliver,  or will cause to be executed and  delivered,  at  Borrowers'  sole
expense, such additional instruments,  certificates or documents,  and will take
all such related actions as any Bank or the Agent may reasonably request for the
purposes of implementing  or  effectuating  the provisions of the Revolving Loan
Documents.

     6.8 Compliance  Certificates.  Within forty-five (45) days after the end of
each calendar quarter, Borrowers will deliver to the Agent a certificate, signed
by an Executive  Officer  substantially in the form attached hereto as Exhibit E
(a  "Compliance  Certificate"),  stating  that a  review  of the  activities  of
Borrowers and the Subsidiaries  during such reporting period has been made under
their supervision and that no Event of Default or condition or event which, with
notice or lapse of time,  or both,  would  constitute  an Event of  Default  has
occurred, or, if such has occurred, specifying the nature and status thereof.

     6.9 Notice of Defaults,  Disputes and Other Matters. Borrowers will execute
and  deliver  to  the  Agent  a  certificate  signed  by an  Executive  Officer,
specifying  the nature and  status  (including  a  discussion  of what  action a
Borrower  has taken,  is taking or proposes to take with  respect  thereto)  not
later than  fifteen  (15) days (or such other time period as is specified in any
of the following  clauses)  after any officer of a Borrower  becomes  aware,  or
should have become aware, of the occurrence of the following events (except that
in the case of any event  described  in clauses (j), (k) and (l) of this Section
6.9, such certificate shall be so executed and delivered  promptly upon any such
officer so becoming aware of such event):

         (a)    a Borrower or any of the Subsidiaries shall have changed its 
respective corporate name or shall do business under any name other than its 
respective name as of the date hereof; or

          (b)   a Borrower or any of the Subsidiaries shall have changed its 
principal place of business or its chief executive office or shall have opened 
any new principal place of business; or

          (c)   a Borrower or any of the Subsidiaries shall have changed its
fiscal year; or

          (d)   a Borrower or any of the Subsidiaries shall have opened or 
closed any material place of business; or

          (e)   any strike or walkout shall have occurred relating to any office
or facility owned or leased by a Borrower or any of the Subsidiaries or any 
labor contract to which a Borrower or any of the Subsidiaries is a party or by
which it is bound expires; or

          (f)   any citations, order to show cause, or other legal process or 
order, or protest, or reconsideration  affecting a Franchise or Consent held by
a Borrower or any of the Subsidiaries or directing a Borrower or any of the 
Subsidiaries to become a party to or to appear at any  proceeding  or  hearing 
by or before any governmental instrumentality (including,  without limitation,
any federal, state or local  municipality  or other  instrumentality  which 
shall have granted to a Borrower or any of the  Subsidiaries a Consent or 
Franchise)  which might result in  any  of the  foregoing,  either individually 
or in  the  aggregate,  being materially adverse to a Borrower or any of the 
Subsidiaries, including with such notice a copy of any such  citation, order to 
show cause or other legal process or order; or

          (g)   any (i) refusal or failure by any governmental agency or other 
instrumentality to renew or extend  any  material  Consent  or  Franchise  with 
respect  to the business  of a  Borrower  or any  of the  Subsidiaries,  (ii) 
proposed  denial, threatened denial, abandonment or proposed or actual 
revocation,  termination or materially  adverse  modification of any Consent or
Franchise by any Person,  or (iii)  threats,  notices,  or requests by any 
Person with  respect to any of the foregoing  or  with  respect  to  any 
proceeding  or  hearing  relating  to the foregoing, which might result in any
of the foregoing, either individually or in the  aggregate,   being  materially
adverse  to  a  Borrower  or  any  of  the Subsidiaries; or

          (h)   any dispute concerning, or any threatened non-renewal or
modification of, any lease  for  real  or  personal  property  to  which  a 
Borrower  or  any of the Subsidiaries is a party, if such dispute, threatened 
nonrenewal or modification, either  individually or in the aggregate,  could 
have a material  adverse effect upon a Borrower or any of the Subsidiaries; or

          (i)    a Borrower or any of the Subsidiaries shall become a party
to one or more suits,  actions or proceedings which could have a material 
adverse effect on the business,  assets,  operations  or condition,  financial
or  otherwise,  of such Borrower or such Subsidiary; or

          (j)    any condition or event which constitutes or which, with notice
or lapse of time, or both, would constitute an Event of Default shall have
occurred; or

          (k)    the occurrence of any event which constitutes, or with notice 
or lapse of time or both would constitute, a default or an event of default 
under any contractual obligation  of a  Borrower  or any  of the  Subsidiaries,
which,  if  adversely determined,  could,  either  individually  or in the 
aggregate,  have a material adverse effect on the business, assets,  operations 
or condition,  financial or otherwise, of a Borrower or any of the Subsidiaries;
or

           (l)   an ERISA Termination Event or a material "prohibited
transaction" (as such term is defined in Section 4975 of the Code) with respect 
to any Plan has  occurred, or any officer of a Borrower or any of the  
Subsidiaries  has  knowledge  of the PBGC's  intention  to terminate or have a 
trustee  appointed to  administer  any Plan; or

           (m)   as soon as possible and in any event (A) within thirty (30) 
days after a Borrower or any of the  Subsidiaries or any ERISA  Affiliate 
thereof knows that any ERISA  Termination  Event described in clause (a) of the 
definition of ERISA Termination  Event  with  respect  to  any  Plan  of a 
Borrower  or  any of the Subsidiaries  has  occurred and (B) within ten (10)
days after a Borrower or any of the  Subsidiaries or any ERISA  Affiliate 
thereof knows that any other ERISA Termination  Event  with  respect  to  any  
Plan  of a  Borrower  or  any of the Subsidiaries  or any ERISA  Affiliate 
thereof has occurred, a statement of the Chief Financial Officers of Borrowers  
describing such ERISA  Termination Event and the  action,  if any,  which a 
Borrower or any of the  Subsidiaries  or such ERISA Affiliate proposes to take 
with respect thereto; or

           (n)   promptly and in any event within ten (10) days after receipt
thereof by a Borrower or any of the Subsidiaries or any ERISA Affiliate from the
PBGC, copies of each notice  received by a Borrower or any of the  Subsidiaries
or such ERISA Affiliate of the PBGC's  intention to terminate any Plan of such
Borrower or any of the  Subsidiaries or such ERISA  Affiliate or to have a 
trustee  appointed to administer  any Plan of such Borrower or any of the  
Subsidiaries  or such ERISA Affiliate; or

           (o)   promptly and in any event within thirty (30) days after the 
reasonable request of the Agent,  copies of each Schedule B (Actuarial 
Information)  to the annual report (Form 5500 Series) with respect to each Plan;
or

           (p)   promptly and in any event within ten (10) days after receipt
thereof by a Borrower or any of the  Subsidiaries  or any ERISA  Affiliate 
thereof  from the sponsor of a Plan which is a multiemployer  plan, a copy of 
each notice received by a Borrower or any of the Subsidiaries or such ERISA 
Affiliate  concerning the imposition or amount of withdrawal liability pursuant 
to Section 4202 of ERISA; or

            (q)   promptly after a Borrower or any of the Subsidiaries obtains 
knowledge of the commencement  thereof,  notice of all actions,  suits and 
proceedings before any court  or  governmental  department,   commission,   
board,  bureau,  agency  or instrumentality,  domestic  or  foreign,  affecting 
a  Borrower  or  any of the Subsidiaries of the type described in Section 4.16;
or

             (r)  any condition shall exist which has resulted in or which is 
likely, in the reasonable judgment of Borrowers,  to result in a material 
adverse change in the business, assets, operations or condition, financial or 
otherwise, of a Borrower or any of the Subsidiaries; or

             (s)  there shall have occurred an event of default under any of  
the Subordinated Loan Documents.

     6.10 Inspection and Other Information.  Each Bank, and such persons as such
Bank may designate, may visit and inspect any of the properties of Borrowers and
the Subsidiaries,  examine their books of account,  take extracts  therefrom and
discuss the affairs,  finances and  accounts of Borrowers  and the  Subsidiaries
with their  officers,  employees and public  accountants  (and by this provision
Borrowers  authorize  the  Accountants  to  discuss  with any such Bank and such
persons their finances and accounts),  at such reasonable  times during business
hours and as often as such Bank may reasonably desire.

     6.11 Compliance  with  Environmental,  OSHA and ERISA Laws.  Borrowers will
comply, and will cause the Subsidiaries to comply, in all material respects with
all  applicable  statutes,  rules,  regulations  and orders of all  governmental
authorities with respect to the conduct of their businesses and the ownership of
their properties,  including,  without limitation,  (i) all applicable statutes,
rules, regulations and orders relating to environmental protection and pollution
control,  (ii) the Occupational  Safety and Health Act of 1970, as amended,  and
(iii) ERISA.

     6.12 Notices of Events Involving Securities.  Borrowers will give notice to
each Bank with a copy to the Agent  within  two (2) days after  Borrowers  shall
have filed with the  Commission  or with any  national  securities  exchange (as
defined in the Exchange Act) either an application to register any securities of
a Borrower  or a  Subsidiary  pursuant  to Section 12 of the  Exchange  Act or a
registration  statement  under Section 5 of the  Securities  Act relating to any
securities of a Borrower or a Subsidiary.

     6.13 Protection of the Collateral.  Borrowers shall, at their sole expense,
defend  the  Collateral  and the Leased  Real  Property  against  all claims and
demands  of all  other  Persons  at any time  claiming  any Lien on or  interest
therein.  Other than sales by Borrowers  of Inventory in the ordinary  course of
business and in compliance with the Security Documents,  Borrowers shall not and
shall cause each Subsidiary not to transfer,  sell or assign any interest in the
Collateral  or the  Leased  Real  Property  or permit  any Lien to be created or
remain thereon, other than the Liens expressly created by this Agreement and the
Security Documents.

     6.14 Press Releases; Notice of Press Releases.  Borrowers shall provide the
Agent, within one (l) day upon their becoming available,  all press releases and
other public  announcements of Borrowers and the Subsidiaries.  Without limiting
the generality of the foregoing, Borrowers shall consult with the Agent prior to
the release of any press release or other public  announcement  of Borrowers and
the  Subsidiaries  that mentions the Agent or any  Affiliate,  or relates to any
transaction involving the Agent or any Affiliate or any role or participation by
the Agent or any of its  Affiliates  (whether or not named) in any  transaction,
without,  in each case, the Agent's express prior written consent,  such consent
not to be unreasonably withheld.

     6.15  Bank  Accounts.   Borrowers  shall  maintain,  and  shall  cause  the
Subsidiaries to maintain,  all bank accounts (or other similar accounts utilized
for the purpose of investing short-term cash holdings) having balances in excess
of $25,000  under the names of  Borrowers  only and only with  NationsBank  (the
"Deposit Accounts").  Borrowers shall not and shall cause each Subsidiary not to
maintain  aggregate  balances  exceeding $50,000 in bank accounts other than the
Deposit  Accounts.  From and after the date hereof,  Borrowers  shall notify the
Agent of the opening by either Borrower or any Subsidiary of any bank accounts.

     6.16  Management  of  Borrowers.  Borrowers  shall  provide  the Agent with
detailed  information  regarding the  management  structure of Borrowers and the
Subsidiaries,  and shall advise the Agent  promptly of any future  changes to be
made.

     6.17  Landlords'/Mortgagees'  Waivers.  Within  thirty  (30) days after the
Closing  Date,  Borrowers  shall  provide  to the  Agent a  waiver,  in form and
substance  acceptable  to the Agent,  executed by the landlord of Telos  Corp.'s
principal offices located at 19886 Ashburn Road, Ashburn, Virginia 20147. Within
thirty (30) days after either  Borrower or any Subsidiary  enters into any lease
for Leased Real Property,  Borrowers shall provide to the Agent waivers, in form
and  substance  acceptable  to the  Agent,  executed  by the  landlords  of such
property.  Such  waivers  shall  include a  consent  to each  Assignment  of the
Tenant's  Interest Under Lease and shall assure the Agent of its ability to gain
access to such premises and remove the Collateral  without  interference  by the
landlord,  even if Borrowers  are in default  under any leases or mortgages  (or
deeds of trust) affecting such premises.

     6.18 enterWorks Subordination Agreement.  Within thirty (30) days after the
Closing Date, Borrowers shall deliver to the Agent the enterWorks  Subordination
Agreement  which is duly executed and delivered by each holder of the enterWorks
Notes.

     6.19  Bringdown  of  Schedules.  Within  thirty (30) days after the Closing
Date,  Borrowers  shall  deliver to the Agent updated  Schedules  4.12 and 4.28,
which  shall  set  forth  true  and  correct  information  as of the date of the
delivery of such Schedules.



                                   ARTICLE VII

                               NEGATIVE COVENANTS

     Borrowers  covenant and agree that, so long as the Commitment  shall remain
available  to Borrowers  or any Loans shall  remain  outstanding,  and until the
principal  of and  interest  on the  Notes and all fees and  other  amounts  due
hereunder and under the other  Revolving Loan Documents  shall have been paid in
full to the satisfaction of the Agent:

     7.1  Indebtedness.  Borrowers will not, and will cause the Subsidiaries not
to,  create,  incur,  assume  or  become or  remain  liable  in  respect  of any
Indebtedness, except:

          (a)   the Notes;

          (b)   the Subordinated Debt;

          (c)   Indebtedness pertaining to Capital Expenditures in an aggregate
amount notexceeding $250,000 during any fiscal year;

          (d)   Indebtedness incurred to repay in full or to refinance all 
amounts due the Banks under the Revolving Loan Documents; and

          (e)   Guaranties of Subsidiaries.

     7.2 Liens.  Borrowers  will not,  and will cause the  Subsidiaries  not to,
directly or indirectly,  create, incur, assume or suffer to exist, any Lien with
respect to any property or asset now owned or hereafter acquired by Borrowers or
the Subsidiaries  including,  without limitation,  the Collateral and the Leased
Real Property, except:

          (a)    Liens on assets or property of Borrowers or the Subsidiaries
existing on the date hereof and described in Schedule 7.2(a) which are to 
remain outstanding, but no extension or renewal thereof;

          (b)    Liens securing the payment of taxes, assessments and 
governmental charges or levies,  provided  that  (i)  a  Borrower  or a 
Subsidiary  is  contesting  the imposition or amount of such tax in good faith
and has made adequate reserves on its books therefor, (ii)such Borrower or such
Subsidiary is lawfully permitted, in view of such contest, to defer payment and 
(iii) the Agent is satisfied that the  deferral of the payment will not impair
the  Collateral  or the Leased Real Property,  any Bank's or the Agent's right
to exercise remedies upon an Event ofDefault or the ability  of such  Borrower  
or such  Subsidiary  to conduct  its business;

          (c)    Liens incurred in connection with the security interest in the
Collateral created hereby and in certain Collateral and certain other assets of 
Telos Corp. under the Security Documents;

          (d)    Liens incurred in connection and simultaneously with the 
acquisition of capital assets as provided in Section 7.1(c) hereof not to  
exceed $250,000 at any one time;

          (e)    Liens on securities pledged as collateral to secure performance
bonds or bid bonds obtained in the ordinary course of business, provided that
the fair market value of  securities  so pledged  shall not exceed at any time 
$250,000  in the aggregate;

          (f)    Permitted Liens; and

          (g)    the PP&E Lien, as defined in the Investor Subordination
Agreement.

     7.3  Corporate  Restrictions.  Borrowers  will  not,  and  will  cause  the
Subsidiaries not to, directly or indirectly:

          (a)    amend or otherwise change their Articles of Incorporation or 
By-Laws or the terms of any preferred stock of a Borrower,  including the Telos
Corp. Preferred Stock,  in a manner that would  reasonably be likely to have a
material  adverse effect on the business, assets, projects, operations or 
conditions, financial or otherwise, of a Borrower or a Subsidiary; or

          (b)   issue, sell, pledge, or authorize the issuance of any preferred 
stock (other than the issuance by Telos Corp. of preferred stock having terms 
substantially equal to that of the Telos Corp. Preferred Stock), any redeemable
or exchangeable security or any security convertible into any of the foregoing
or any right to acquire any of the foregoing; or

          (c)   other than with respect to the Public Preferred Stock,
reclassify, combine, split or subdivide any of its capital stock; or

          (d)   other than dividends payable by Telos Sub or a Subsidiary to
its corporate parent, make any  payment of cash  dividends,  or any other cash  
distribution, whether direct or indirect,  on or on account of any class of 
stock of Borrowers or  any  Subsidiary  now  or  hereafter  outstanding; 
provided,  however,  that Borrowers may make payments of dividends on the Telos 
Corp.  Preferred Stock if, after giving effect to such payments, Borrowers and
the Subsidiaries are in full compliance  with the  financial  covenants  
specified  in Article VIII and there exists no Event of Default;  provided,  
however, that Borrowers hereby agree not to seek and the Banks  shall not grant 
any waiver to permit the  payment of cash dividends on Telos Corp. common stock 
unless Borrowers simultaneously seek and the Banks also agree to simultaneously 
grant a waiver to permit the cash payment under the Warrant Agreement required 
as a result of the payment of such dividend on the Telos Corp. common stock as
described in the Warrant Agreement.

          (e)   other than (i) any repurchase of the Public Preferred Stock, 
(ii) any redemption in accordance with the provisions of Telos Corp.  Preferred
Stock and (iii) any redemption or purchase of enterWorks Stock or Telos Corp.
common stock from departing  employees in a total amount not to exceed $250,000
in any fiscal year, redeem, purchase or otherwise acquire, directly or 
indirectly,  any shares of any class of stock of Telos  Corp.  now or hereafter 
outstanding  or of any warrants or rights to purchase any such stock  
(including,  without  limitation, the  repurchase of any such stock or warrant
or any refund of the purchase price thereof in  connection with the exercise by 
the holder  thereof of any right of recision or similar remedies with respect
thereto);  provided, however, that any repurchase  or  redemption  permitted  by
this clause (e) shall be made only if, after  giving effect to  such repurchase 
or  redemption,  Borrowers  and the Subsidiaries  are in full compliance with 
the financial  covenants  specified in Article VIII and there exists no Event
of Default; or

          (f)    make any changes other than in the ordinary course of business
and in a manner consistent with past practice with respect to accounting 
policies or procedures, other than those required by GAAP; or

          (g)    change its fiscal year; or

          (h)    agree or commit to do any of things listed in Sections 7.3(a) 
through (g) above.

     7.4  Loans  and  Investments.  Borrowers  will not make or permit to remain
outstanding  any loan or advance to, or guarantee or endorse (except as a result
of endorsing  negotiable  instruments  for deposit or collection in the ordinary
course of  business) or  otherwise  assume or remain  liable with respect to any
obligation  of, or make or own any  investment  in, or  acquire  (except  in the
ordinary  course of business) the properties or assets of, any Person,  and will
cause the Subsidiaries not to engage in any of the foregoing activities except:

          (a)    the presently outstanding investments and loans referred to in
Schedule 7.4 attached hereto;

          (b)    transactions permitted by Section 7.1(c); and

          (c)    loans to employees of Borrowers or Subsidiaries in an aggregate
outstanding amount not to exceed $150,000 at any time; and

          (d)    the Permitted Investments.

     7.5 Leases.  Borrowers  will not, and will cause the  Subsidiaries  not to,
enter into any Capitalized  Lease,  except as otherwise  permitted under Section
7.1(c).

     7.6 Consolidation;  Sale of Assets. Borrowers will not make any substantial
change in the nature of their businesses,  and will not sell, lease or otherwise
dispose of any part of their  properties  or assets  (other than in the ordinary
course of business) or merge or consolidate with any other Person and will cause
the Subsidiaries not to do any of the foregoing.

     7.7  Acquisition of Stock and Other  Interests;  Creation of  Subsidiaries.
Except as otherwise  permitted by Section  7.3(e),  Borrowers will not, and will
cause the Subsidiaries not to, acquire or hold or make any offer to acquire,  in
any manner, any capital stock of a corporation or any interest whatsoever in any
partnership,  joint venture, or other entity. Borrowers will not, and will cause
the  Subsidiaries  not to,  create  any  corporate  subsidiaries,  nor will they
participate as a partner or joint  venturer in any  partnership or joint venture
to the extent such  partnership or joint venture will obligate  Borrowers or the
Subsidiaries to contribute funds if an Event of Default would result  hereunder;
provided,  however,  that this  provision  shall not  restrict  the  ability  of
Borrowers to bid contracts jointly with other government contractors.

     7.8 Amendment of Other  Documents.  Borrowers will not, without the express
prior  written  consent of the  Agent,  consent  or agree to any  amendment  of,
modification of or waiver with respect to the  Subordinated  Loan Documents,  or
any other  agreements  relating to the foregoing.  Borrowers will not enter into
any agreement or instrument relating to any Indebtedness which in any way limits
or restricts a Borrower's ability to perform its obligations under the Revolving
Loan Documents.

     7.9  Sale  and   Leasebacks.   Borrowers  will  not,  and  will  cause  the
Subsidiaries  not to, enter into any arrangement,  directly or indirectly,  with
any Person  whereby they shall sell or transfer any property,  real or personal,
used or useful in their business,  whether now owned or hereafter acquired,  and
thereafter  rent or lease such property or other  property  which they intend to
use for substantially the same purpose or purposes.

     7.10 Transactions  with Affiliates.  Borrowers will not, and will cause the
Subsidiaries  not to,  directly  or  indirectly,  enter  into any lease or other
transaction  with any Affiliate of a Borrower or Subsidiary or any  shareholders
of a Borrower, Subsidiary or any Affiliate of any shareholder of a Borrower or a
Subsidiary   unless  such  Borrower  shall  have   reasonably   determined  such
transaction  is on  terms  that  are no  less  favorable  to  such  Borrower  or
Subsidiary  than those which might be obtained at the time from  Persons who are
not Affiliates.

     7.11 ERISA.  Borrowers will not, and shall cause the  Subsidiaries  not to,
permit any  employee  pension  benefit  plan,  as that term is defined in ERISA,
maintained by either of them to (a) engage in any  "prohibited  transaction"  as
that term is  defined in Section  4975 of the Code,  (b) incur any  "accumulated
funding deficiency" as that term is defined in ERISA,  whether or not waived, or
(c)  terminate in any manner which could result in the  imposition  of a lien or
encumbrance  on the assets of a Borrower  or any owned  Subsidiary  pursuant  to
Section 4068 of ERISA.

     7.12 Observance of Subordinated Loan Documents. Borrowers will not make, or
cause or permit to be made: (i) any payments in respect of Subordinated  Debt in
contravention   of  the  Investor   Subordination   Agreement,   the  enterWorks
Subordination  Agreement or other agreement  evidencing such Subordinated  Debt;
(ii) any  prepayment in respect of principal of, or premium,  if any, in respect
of,  Subordinated  Debt;  (iii) any  payment of cash  interest in respect of the
Subordinated Debt; provided, however, that, except as otherwise permitted in the
Investor  Subordination  Agreement or the  enterWorks  Subordination  Agreement,
Borrowers may make payment of accrued but unpaid  interest in cash  described in
clause (iii) above  (including  interest  accrued on due but unpaid interest) on
regularly  scheduled  interest  payment  dates;  or (iv) any payment which would
result in the defeasance of any instrument under which the Subordinated  Debt is
outstanding;  nor will  Borrowers  amend,  modify or change in any manner any of
such subordination provisions without the prior written consent of the Bank.

     7.13  Government  Contracts.  Borrowers  will  not,  and  shall  cause  the
Subsidiaries  not to, take any action that would  result in: the  suspension  or
debarment  from U.S.  Government  contracting;  default  or  termination  of any
current U.S. Government  Contract;  violation of any of the statutes referred to
in Section 4.27 or Section 4.34;  suspension or  extinguishment  of the right of
the Agent to receive payments pursuant to any assignment of any U.S.  Government
Contracts made pursuant to the Revolving Loan  Documents;  any assignment to any
party  other  than the Agent of the right to  payment  under any  contract  with
respect  to which  Receivables  have  been or are to be  assigned  to the  Agent
hereunder;  or termination or suspension of any facility  security  clearance or
personnel security clearance held by a Borrower or a Subsidiary.

     7.14 Use of Proceeds.  Borrowers will not use the proceeds of the Loans for
any  purposes  other  than  those  set  forth  in,  and in  accordance  with the
provisions of, Section 4.24.

     7.15 Capital Expenditures. Borrowers will not, directly or indirectly, make
Capital  Expenditures in any fiscal year in excess of $2,700,000,  or such other
amount  approved by the Bank in advance  upon  submission  by  Borrowers  of the
annual budget for capital  expenditures  which submission shall be in writing no
later  than  February  15 of each  fiscal  year,  which  approval  shall  not be
unreasonably withheld.

     7.16  Negative  Pledge.  Borrowers  will  not,  and  will  not  permit  any
Subsidiary to, enter into any security agreement,  pledge agreement,  collateral
assignment,  mortgage or other  agreement,  instrument  or document  (including,
without  limitation,  financing  statements)  which  gives  rise to,  creates or
perfects a Lien  against the  Collateral  or the Pledged  Stock  (other than the
Security  Documents) or against the  enterWorks  Stock.  Borrowers will not, and
will not permit any Subsidiary to, create,  incur, assume or permit to exist any
Lien, or any other  encumbrance  against,  on or with respect to the  enterWorks
Stock.

     7.17  Restrictions  on Intercompany  Transactions.  Borrowers will not, and
will not permit any Subsidiary to,  declare,  order,  pay, make,  advance or set
apart any sum or property to any Subsidiary or joint venture to which a Borrower
or a  Subsidiary  is a party  without  the prior  written  consent of the Agent;
provided,  however,  that Borrowers may make advances (a) to Telos International
Corp.  in an amount not to exceed  $500,000  in any fiscal year and (b) to Telos
Field Engineering for Capital Expenditures.



                                  ARTICLE VIII

                               FINANCIAL COVENANTS


     Borrowers  covenant  and  agree  that for so long as the  Commitment  shall
remain available to Borrowers, or any Loans shall remain outstanding,  and until
the  principal of and  interest on the Notes and all fees and other  amounts due
hereunder and under the other  Revolving Loan Documents  shall have been paid in
full to the satisfaction of the Agent:

     8.1 Fixed Charge Coverage.

     On  a  consolidated   basis,  the  ratio  of  the  sum  of  pretax  income,
depreciation,  interest  expense  and  amortization  minus  cash  taxes paid and
unfinanced capital  expenditures  (including  capitalized  software  development
costs) (the "Numerator"), divided by the sum of amounts paid or payable for debt
principal repayment,  interest expense after giving effect to interest payments,
if any, received under any Interest Rate Protection  Agreement,  and capitalized
lease  payments  (the  "Denominator")  shall  not be less  than  1.25:1  for any
calendar quarter. This covenant shall be tested on the last day of each calendar
quarter.

     8.2 Minimum Tangible Capital Funds.

     On a consolidated basis,  Tangible Capital Funds shall not be less than the
following during any of the periods described below:

              Period                                Required Amount

         Closing Date through                               $6,500,000
           September 29, 1997

         September 30, 1997 through                         $7,250,000
           December 30, 1997

         December 31, 1997 through                          $9,500,000
           December 30, 1998

         December 31, 1998 through                          $14,000,000
           the Maturity Date

<PAGE>

     8.3 Minimum Net Worth.

     On a  consolidated  basis,  Net Worth shall not be less than the  following
during any of the periods described below:

                 Period                                   Required Amount

         Closing Date through                               $6,500,000
           September 29, 1997

         September 30, 1997 through                         $7,250,000
           December 30, 1997

         December 31, 1997 through                          $9,500,000
           December 30, 1998

         December 31, 1998 through                          $12,500,000
           the Maturity Date

     8.4 Leverage Ratio.

     On a consolidated  basis, the ratio of Total Liabilities minus Subordinated
Debt to Net  Worth  plus  Subordinated  Debt  will  not at any time  exceed  the
following during any of the periods described below:


                 Period                                Required Ratio

         Closing Date through                             4.0:1
           December 30, 1997

         December 31, 1997 through                        3.2:1
           December 30, 1998

         December 31, 1998 through                        3.0:1
           the Maturity Date

     8.5 Borrower's Operating Income.

     On a consolidated basis, the sum of Borrowers' net income, depreciation and
amortization  (excluding  amounts reported as capitalized lease amortization but
which are actually cash rental expenses paid) shall not result in a net loss for
any calendar quarter.

     8.6 enterWorks Financial Performance.

          (a) At any time  during  fiscal  year  1997,  enterWorks  shall not 
incur a cumulative  operating  loss greater than  $4,000,000;  provided, 
however,  that enterWorks may incur a cumulative  operating loss in excess of 
$4,000,000 in the event,  but  only  to  the  extent,  enterWorks  obtains  
additional  equity  or financing,  which  amount  shall  be  determined  by the 
Agent  in its sole and absolute discretion.

          (b) At any time after fiscal year 1997, enterWorks shall not incur a 
cumulative operating loss.

          (c) At any time during fiscal year 1997, enterWorks shall not incur 
capitalized product and software development costs not otherwise included in  
the calculation of  operating  loss for  purposes of Section  8.6(a) in an  
aggregate  amount in excess of $2,000,000; provided, however, that enterWorks 
may incur such costs in excess of $2,000,000 in the event,  but only to the 
extent,  enterWorks  obtains additional equity or financing, which amount shall
 be determined by the Agent in its sole and absolute discretion.




                                   ARTICLE IX

                               DEFAULTS; REMEDIES

     9.1 Events of Default; Acceleration. Each of the following shall constitute
an "Event of Default" under this Agreement:

          (a) if Borrowers fail to pay (x) the principal of or premium, if any,
on any Note, when the same becomes due and payable,  whether at the  maturity  
thereof,  on a date fixed for payment or for a prepayment,  or  otherwise,  
(y) the interest on any Note or (z) a fee or other amount  payable  hereunder, 
when and as the same becomes due and payable,  and such  failure  shall have  
continued  for five (5) days; or

          (b) if Borrowers shall default in the performance or compliance with 
any term contained in Sections 6.3, 6.4, 6.5, 6.6 or 6.11 hereof,  and such 
default shall not have been remedied  within ten (10) days of the occurrence of 
such default; or

          (c) if Borrowers default in the performance of or compliance with any 
term contained in Articles VI (other than those listed in clauses (a) or 
(b) hereof), VII or VIII; or 

          (d) if Borrowers shall default in the performance of or compliance 
with any agreement contained herein other than those referred to above in this
Article IX and such  default shall not have been  remedied  within  thirty (30) 
days after written notice thereof shall have been given to Borrowers by the
Agent; or

          (e) if a Borrower or a Subsidiary shall default in the performance of 
or compliance with any agreement contained in the other Revolving Loan Documents
or in any of the Subordinated Loan Documents, or in the performance of or 
compliance with any material  term   contained  in  any  other  written   
agreement  in  respect  of Indebtedness  between a Borrower or a Subsidiary  or 
the Banks (or the Agent on their  behalf),  and such  default  shall  continue  
for more than the period of grace,  if any,  specified  therein  and  shall not 
have  been  waived  pursuant thereto; or

          (f) if any representation or warranty made by Borrowers herein, in  
the other Revolving Loan Documents or pursuant  hereto or thereto shall prove  
to have been false or incorrect in any material respect on the date as of which 
made; or

          (g) if a Borrower or a Subsidiary shall default in any payment due on 
any Indebtedness  in respect of borrowed  money with an unpaid  principal 
amount in excess of $250,000,  any Interest Rate  Protection  Agreement,  any  
Capitalized Lease or the deferred  purchase  price of property,  and any such
default  shall continue for more than the period of grace, if any,  specified 
therein and shall not have been waived pursuant thereto; or

          (h) if a Borrower or a Subsidiary shall default in payment or 
performance of any material obligation  (except  Indebtedness, which is covered 
in Section 9.1(g) above),  whether now or hereafter incurred,  and such default 
shall continue for more than the  period of grace,  if any,  specified  in the 
agreement  or other documents  setting  forth the terms of such  obligation,  
or shall not have been waived pursuant  thereto, and in the reasonable judgment 
of the Agent, either individually or together with any other defaults hereunder,
jeopardizes or could reasonably be expected to jeopardize  repayment of any 
Note, or  consummation of the  transactions  contemplated  in  the  Revolving  
Loan  Documents  or  the Subordinated Loan Documents; or

          (i) if any action, proceeding, regulation or legislation shall have 
been instituted,  threatened  or proposed  before any court,  governmental  
agency or legislative  body to enjoin,  restrain,  or  prohibit,  or to obtain 
damages in respect  of,  or  which  is  related  to or  arises  out of the  
Revolving  Loan Documents, the Subordinated Loan Documents, or the transactions
contemplated hereby or thereby; provided, however, that the institution or 
threat of such an action or proceeding shall not constitute an Event of Default
hereunder if (i) independent  counsel retained by Borrowers shall have delivered
to the Banks an opinion  stating  that  there is no  material  likelihood  that 
such  action or proceeding  will be adversely determined  against a Borrower or 
a Subsidiary or (ii) the outcome of the  proceeding, if adversely  determined,  
will not have a material and adverse effect on the business, condition,  
financial or otherwise, or operations of a Borrower or a Subsidiary or the 
transactions  contemplated by the Revolving Loan Documents or the Subordinated
Loan Documents; or

          (j) if a Borrower or a Subsidiary shall discontinue its primary
 business, or shall make a general assignment for the benefit of creditors,  or
 shall fail generally to pay its debts as such debts become due, or shall apply 
for or consent to the appointment  of or taking  possession by a trustee,  
receiver or liquidator (or other similar official) of a Borrower or a Subsidiary
or any substantial part of the  property  of a  Borrower  or a  Subsidiary,  or 
if there  shall  occur  any commencement  by any Borrower or  Subsidiary  of a 
voluntary  case or proceeding under any applicable federal or state bankruptcy, 
insolvency,  reorganization or other  similar  law or of any  other  case or 
 proceeding  to be  adjudicated  a bankrupt or insolvent, or the consent by any
 Borrower or Subsidiary to the entry of a decree or order for relief in respect 
of such  Borrower or Subsidiary in an involuntary case or proceeding under any
 applicable federal or state bankruptcy, insolvency  reorganization  or  other  
similar  law or the  commencement  of any bankruptcy or insolvency case or 
proceeding against any Borrower or Subsidiary, or the filing by any Borrower or
Subsidiary  of a petition or answer or consent seeking reorganization or relief 
under any applicable  federal or state law, or the consent by any Borrower or 
Subsidiary  to the filing of such petition or to the  appointment of or taking  
possession by a custodian  receiver, liquidator,assignee, trustee, sequestrator 
or  similar  official  of  such  Borrower  or Subsidiary or of any  substantial 
part of such Borrower or  Subsidiary,  or the making of an assignment  for the
benefit of  creditors,  or the admission by any Borrower or Subsidiary in
writing of its inability to pay its debts generally as they become due, or the
taking of corporate action by any Borrower or Subsidiary in furtherance of any 
such action; or

        (k) if there shall occur any refusal or failure by the U.S. Government, 
any state, or any  agency  or  instrumentality  thereof  to renew or  extend  
any  material Franchise or Consent held by a Borrower or a Subsidiary (provided,
however, that any refusal or failure to renew or extend a Consent or Franchise
required  for performance by a Borrower or a Subsidiary of U.S. Government  
Contracts shall be considered   material)  or  any  denial,   forfeiture  or   
revocations  by  any governmental  authority or any  authorization  required by 
law or the expiration without renewal of any such authorization,  and such 
events, either individually or in the aggregate,  jeopardize, or could 
reasonably be expected to jeopardize, repayment  of the Notes or the  
continuation  of the business of a Borrower or a Subsidiary as it has been 
conducted in the past; or

          (l) (i) if there shall be commenced against a Borrower or a Subsidiary
a case under the federal  bankruptcy  laws,  as now or  hereafter  constituted, 
or any other applicable  federal or state  bankruptcy,  insolvency  or other
similar law, and within  sixty  (60)  days of such  commencement  such  case  
shall not have been dismissed or all orders or  proceedings  thereunder  
affecting the operations or the  business of a Borrower or a Subsidiary stayed,
or if the stay of any such order or proceeding shall thereafter be set aside, 
or (ii) if, within sixty (60) days after the entry of a decree  appointing a 
trustee,  receiver or  liquidator (or  other  similar  official) of a  Borrower 
or any  substantial  part of the property  of a Borrower or a  Subsidiary  such 
appointment  shall not have been vacated; or

          (m) a final judgment which, with other outstanding final judgments 
against a Borrower or a  Subsidiary,  exceeds an aggregate of $200,000 shall be 
rendered against a Borrower or a  Subsidiary  and if,  within sixty (60) days 
after entry thereof,  such  judgment  shall not have been  discharged  or 
execution  thereof stayed pending appeal, or if, within sixty (60) days after 
the expiration of any such  stay,  such  judgment  shall not have  been  
discharged  or a  warrant  of attachment or execution or similar process shall
be issued or levied against any property of a Borrower or a Subsidiary  and if, 
within  three (3) Banking Days after the issue or levy  thereof,  such  warrant
or process  shall not have been discharged or stayed pending appeal  (whether
by action of a court, by agreement or  otherwise),  or if,  within three (3)
days after the  expiration of any such stay, such warrant or process shall not
have been discharged; or 

          (n) if a Borrower or a Subsidiary loses, fails to keep in force,
suffers the termination or revocation of or terminates,  forfeits or suffers an 
amendment to any  Franchise  or  Consent  at any time held by it which  would 
have a material adverse effect on its financial condition; or

          (o) if a Change of Control shall occur; or

          (p) if there shall occur (i) any suspension, termination (other than  
a termination for convenience of the U.S. Government) or revocation of any kind 
(exclusive of expiration  and  non-renewal)  of any  Government  Contract  or 
any  commercial contract of a Borrower or any  Subsidiary  with a  remaining  
contract  value of $10,000,000 or more; (ii) any investigation of, or sanctions
(including, without limitation,  fines,  penalties  or  forfeitures)  against, 
a  Borrower  or  any Subsidiary  which has, or is likely to have, a materially 
adverse effect on the business or operations of  Borrowers and the Subsidiaries 
taken as a whole, including,  without  limitation, any final  decision  subject 
to any applicable disputes  clause or  unilateral  Government  Contract
modification  assessing a material penalty or material damages; any assertion of
a material claim based on asserted  violations of Cost Accounting  Standards
("CAS") or defective pricing; any notice of a proposed material disallowance of 
indirect cost claims in excess of reserves  therefor;  any subpoena or notice  
signifying  the initiation of an investigation  by  Government  investigative 
or  enforcement  agency other than normal audits in the ordinary  course of 
business; any notice from a Government that any material cost or claim contained
in any invoice or request for progress payment has been  disallowed; any other  
notice from the  cognizant  Government contracting  officer  alleging  the 
failure by a Borrower or any  Subsidiary  to provide goods or services fully in 
conformity to, or otherwise to comply in any material way with, any applicable 
Government Contract provision,  specification or regulation;  or (iii) the 
initiation of a debarment or suspension  proceeding by the Government against a
Borrower or any Subsidiary; or

          (q) if at any time any of the following individuals, or substitutions 
for such individuals  satisfactory to the Agent in its sole and absolute 
discretion,  arenot in the respective positions listed below:

                 John B. Wood            President and Chief Executive Officer

                 Lorenzo Tellez          Vice President, Chief Financial Officer
                                         and Treasurer; or

          (r) If the Subordinated Debt or preferred stock of any Borrower or any
Subsidiary is the subject of any restructuring, refinancing, modification or 
substitution without the prior written consentof the Agent; or

          (s) If any action, suit, litigation or other proceeding at law or in 
equity is commenced or threatened (i) seeking to enjoin or to unwind the
transactions contemplated by that certain Settlement Agreement by and among, 
inter alia, John R.C. Porter and C3 Investors, L.P. dated as of September 27, 
1993 or any document or agreement referenced therein, (ii) seeking to dispute 
the legality, permissibility oradvisability of the settlement of the cases 
styled Fred Knoll, et al. v. C3, Inc., et al., Case No. 931119026, CE163830 in 
the Circuit Court for Baltimore City and Knoll v. Porter, Civil Case 
No. 93125044 in the CircuitCourt for Baltimore City (the "Litigation"), or 
(iii) involving any of the issues which were raised by or in connection with 
the Litigation; or

          (t) If any of the provisions of the Standstill Agreement among John 
R.C. Porter, Fred Knoll and Alfredo Frohlich, dated as of September 27, 1993,
are breached or such agreement is no longer in full force and effect; or

          (u) If all or any part of the Litigation is reinstituted by any party 
with respect to any matter arising out of the Litigation;

              then, and at any time thereafter, if any such Event of Default 
shall then be continuing,  either or both of the  following  actions  may be
taken.  The Agent shall (i) declare the  principal of and accrued  interest in
respect of Notes to be forthwith due and payable, whereupon the principal of  
and accrued interest in respect of the Notes shall become forthwith due and  
payable without presentment, demand,  protest or other notice of any kind, all  
of which are hereby  expressly waived by Borrowers,  and/or (ii) declare the 
Commitment terminated,  whereupon the Commitment of the Banks to make Loans 
hereunder  shall  forthwith  terminate without any other notice of any kind; 
provided, however, that,  notwithstanding the above, if there shall occur an 
Event of Default under clauses (j), (l), (o), (s), (t), or (u) above, then any 
and all of the Obligations shall be immediately due and payable without 
presentment,  demand,  protest or other notice or action of any kind by the
Agent, all of which are hereby expressly waived by Borrowers.

         9.2 Remedies on Default, etc. In case any one or more Events of Default
shall  occur and are  continuing,  the Agent  shall be  entitled  to  proceed to
protect and enforce the rights of the Banks by an action at law,  suit in equity
or other  appropriate  proceeding,  whether for the specific  performance of any
agreement  contained  herein  or in  any  Revolving  Loan  Documents,  or for an
injunction against a violation of any of the terms hereof or thereof,  or in aid
of the  exercise  of any power  granted  hereby or  thereby  or by law.  Without
limiting the  generality  of the  foregoing,  the Agent shall be entitled (i) to
exercise all of the rights and remedies of a secured party under the U.C.C. with
respect to the Collateral including,  without limitation, those described in the
Security  Documents  and (ii) to exercise  all rights and remedies of a creditor
available at law and equity with respect to the Leased Real Property. In case of
a default in the payment of any principal of or interest on the Notes, or in the
payment of any fee or other  amount  due  hereunder,  Borrowers  will pay to the
Banks such further  amount as shall be  sufficient to cover the cost and expense
of  collection,  including,  without  limitation,  reasonable  attorneys'  fees,
including  allocated cost of in-house  counsel  expenses and  disbursements.  No
course  of  dealing  and no  delay  on the  part of the  Banks  or the  Agent in
exercising  any right shall operate as a waiver  thereof or otherwise  prejudice
the  Agent or any  Bank's  rights.  No right  conferred  by any  Revolving  Loan
Document  upon the Agent or any of the  Banks  shall be  exclusive  of any other
right  referred to therein or now or hereafter  available at law, in equity,  by
statute or otherwise.

     9.3 Waiver of Stay or  Extension  Laws.  Each  Borrower  covenants  (to the
extent that it may lawfully do so) that it will not at any time insist upon,  or
plead,  or in any manner  whatsoever  claim or take the benefit or advantage of,
any stay or extension  law  wherever  enacted,  now or at any time  hereafter in
force, which may affect the covenants or the performance of any of the Revolving
Loan  Documents;  and each  Borrower  (to the extent that it may lawfully do so)
hereby  expressly  waives all benefit or advantage of any such law and covenants
that it will not  hinder,  delay or impede  the  execution  of any power  herein
granted to the Banks or the Agent,  but will suffer and permit the  execution of
every such power as though no such law had been enacted.

     9.4  Banks  May  File  Proofs  of  Claim.  In case of the  pendency  of any
receivership, insolvency, liquidation, bankruptcy, reorganization,  arrangement,
adjustment,  composition or other judicial  proceeding relative to a Borrower or
any other of such other  obligor of the Note or the property of a Borrower or of
such other obligor or their  creditors,  the Bank or the Agent  (irrespective of
whether  the  principal  of the Note  shall  then be due and  payable as therein
expressed or by declaration or otherwise and  irrespective of whether the holder
of the Note shall have made any demand on a Borrower  for the payment of overdue
principal, interest or premium) shall be entitled and empowered, by intervention
in such  proceeding  or otherwise to file and prove a claim for the whole amount
of principal  and  interest  owing and unpaid in respect of the Note and to file
such other papers or documents as may be necessary or advisable in order to have
the claims of the holder of the Note allowed in such judicial proceeding.



                                    ARTICLE X

                                  SETOFFS, ETC.

     Any  Indebtedness  from any Bank to  Borrowers  may be offset  and  applied
toward the payment of any Indebtedness  from Borrowers to such Bank,  whether or
not such Indebtedness, or any part thereof, shall then be due.

     The Banks agree between  themselves that, with respect to all sums received
by the Banks applicable to the payment of principal of or interest on the Notes,
equitable adjustment will be made between the Banks so that, in effect, all such
sums shall be shared ratably by each of the Banks whether  received by voluntary
payment,  by  the  exercise  of  the  right  of  setoff  or  bankers'  lien,  by
counterclaim  or crossclaim or by the enforcement of any or all of the Notes. If
a Bank  receives  any  payment  on its  Notes of a sum or sums in  excess of its
appropriate portion, then such Bank receiving such excess payment shall purchase
for cash, at par plus accrued  interest,  from the other Bank an interest in its
Notes in such amounts as shall result in an appropriate participation by each of
the  Banks  in the  aggregate  unpaid  amount  of the  Notes  then  outstanding;
provided,  however,  that  if all or any  portion  of  such  excess  payment  is
thereafter  recovered  from such Bank,  the purchase  shall be rescinded and the
purchase price restored to the extent of such  recovery,  but without  interest.
Borrowers  expressly  consent to the foregoing  arrangements and agree that each
Bank  so  purchasing  a  participation   may  exercise  all  rights  of  payment
(including,   without  limitation,  all  rights  of  setoff,  bankers'  lien  or
counterclaim)  with  respect  to such  portion as fully as if such Bank were the
direct holder of such portion.



                                   ARTICLE XI

                                    EXPENSES

     Whether or not the transactions  contemplated  hereby shall be consummated,
Borrowers  agree  to pay:  (a)  all  reasonable  expenses,  including  fees  and
disbursements  of counsel  for the Agent and the  Banks,  which the Agent or the
Banks have incurred in connection  with the  preparation  of the Revolving  Loan
Documents  and all  other  documents  related  thereto  and  (b) all  reasonable
expenses,  including fees and disbursements of respective counsel for the Banks,
which  the  Agent  or the  Banks  may  hereafter  incur in  connection  with the
Revolving Loan Documents and all other documents related thereto  (including any
amendment,  consent or waiver  hereafter  requested  by  Borrowers  hereunder or
thereunder) and the transactions  contemplated  hereby or the enforcement of the
rights of the Agent or the Banks hereunder or under the Revolving Loan Documents
in the event of a default thereunder by Borrowers.



                                   ARTICLE XII

                          AMENDMENTS AND WAIVERS, ETC.

     12.1  Amendment.  Any term of this Agreement or of the Notes may be amended
and the  observance  of any term of the Revolving  Loan  Documents may be waived
(either  generally  or in a  particular  instance  and either  retroactively  or
prospectively)  only  with the  written  consent  of  Borrowers  and the  Agent;
provided,  however,  that no such amendment or waiver shall, without the express
prior  written  consent  of all of the Banks (i) extend  the fixed  maturity  or
reduce the principal amount of, or reduce the rate or extend the time of payment
of  interest  on, or reduce  the  amount or extend  the time of  payment  of any
principal of, any Note;  (ii) reduce the amount or extend the time of payment of
any fee payable hereunder; (iii) change the Commitment of any Bank; (iv) release
the security  interest in, or assignment  with respect to, any Collateral or the
Leased Real  Property;  or (v) amend this Article  XII. Any  amendment or waiver
effected in  accordance  with this Article XII shall be binding upon each holder
of the  Note at the  time  outstanding,  each  future  holder  of the  Note  and
Borrowers.

     12.2 No Waiver. Any Bank's or the Agent's failure to insist upon the strict
performance  of any term,  condition or other  provision of the  Revolving  Loan
Documents or to exercise any right or remedy  hereunder or thereunder  shall not
constitute  a waiver by such Bank or the Agent of any such  term,  condition  or
other provision or default or Event of Default in connection therewith;  and any
such waiver shall not affect or alter the Revolving Loan Documents, and each and
every term,  condition and other provision of the Revolving Loan  Documents,  in
such event,  shall continue in full force and effect and shall be operative with
respect  to any other  existing  or  subsequent  default  or Event of Default in
connection therewith.



                                  ARTICLE XIII

                                 PARTICIPATIONS

     At any time and from time to time, each Bank may freely sell participations
in its  Note or  assign  its  interests  under  the  Revolving  Loan  Documents;
provided, however, that no assignee,  participant or transferee of NationsBank's
rights shall be entitled to receive any greater payments under Sections 2.10 and
2.11 than  NationsBank  would have been  entitled to receive with respect to the
rights assigned, participated or otherwise transferred.  Borrowers shall execute
and deliver such  documents as may be required to effect any such  participation
or assignment  and shall pay to the Agent an agent fee equal to $50,000 per year
or any portion  thereof,  payable in advance on the date such  participation  or
assignment is made and on each anniversary thereof.



                                   ARTICLE XIV

                                 INDEMNIFICATION

     14.1 Indemnification  Under Agreement.  Borrowers shall indemnify each Bank
and the Agent, and their respective officers, directors,  employees,  Affiliates
and  agents  (each,  an  "Indemnified  Party")  for  any  and  all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses  (including  reasonable  attorneys' fees,  including  allocated cost of
in-house  counsel) or disbursements of any kind and nature  whatsoever which may
be imposed on, incurred by or asserted against such Indemnified Party in any way
relating to or arising out of any Revolving  Loan Document or any other document
contemplated  by or referred to therein or the  transactions  contemplated by or
referred to therein,  the  enforcement of any of the terms of any Revolving Loan
Document or any such other documents;  provided,  however,  that Borrowers shall
not be liable for any of the  foregoing  to the  extent  they arise from (i) the
gross  negligence or willful  misconduct  of such  Indemnified  Party,  (ii) any
actions or suits which are  brought by such Bank  against the Agent or (iii) any
actions or suits which are brought by the Agent against such Bank (the "Excluded
Claims").

     14.2 Indemnification  Relating to Legal Actions.  Should any of the Agent's
or any  Bank's  officers  or  employees  be  involved  in any  legal  action  or
proceeding in connection with the transactions  contemplated  hereby (other than
relating to an Excluded  Claim),  Borrowers  shall  compensate the Agent or such
Bank in a reasonable  amount to be mutually  agreed upon per officer or employee
per day for each day or  portion  thereof  that such  employee  is  involved  in
preparation and testimony pertaining to any such legal action or proceeding. The
Agent or such Bank,  as the case may be,  shall give  Borrowers  prompt  written
notice of any claim setting forth a description  of those  elements of the claim
of which the Agent or such Bank has knowledge. Borrowers shall have the right at
any time during which a claim is pending to select  counsel to defend and settle
any claims for which Borrowers are indemnitors  hereunder so long as in any such
event  Borrowers  shall have stated in a writing  delivered  to such Bank or the
Agent  that,  as between  Borrowers  and such Bank or the Agent,  Borrowers  are
responsible  to such Bank or the Agent with  respect to such claim to the extent
and subject to the limitations set forth herein. In any other case, such Bank or
the Agent shall have the right to select  counsel and control the defense of any
claims to the extent provided for herein;  provided,  however, that neither such
Bank nor the Agent  shall  settle any claims as to which it is  controlling  the
defense  without  Borrowers'  consent,  which consent shall not be  unreasonably
withheld.  With respect to any claim for which  Borrowers are entitled to select
counsel,  such  Bank or the Agent  shall  have the  right,  at its  expense,  to
participate in the defense of such claim.

     14.3   Contribution.   If  for  any  reason  the  foregoing   indemnity  is
unenforceable  by any Indemnified  Party or insufficient to hold it or them free
and harmless as  contemplated  by the preceding  clauses,  then Borrowers  shall
contribute to the amount paid or payable by such  Indemnified  Party as a result
of any claim (other than an Excluded Claim) in such proportion as is appropriate
to reflect not only the relative  benefits received by Borrowers on the one hand
and such  Indemnified  Party on the other hand,  but also the relative  fault of
Borrowers and such  Indemnified  Party, as well as any other relevant  equitable
considerations.

     14.4 No Interference  with Other  Agreements.  The obligations of Borrowers
under this  Article  XIV shall  survive  payment  and  performance  of all other
Obligations to the Banks and are in addition to, and shall not otherwise  limit,
any warranties or similar obligations of Borrowers or any Affiliate of Borrowers
in any other agreement or instrument.



                                   ARTICLE XV

                                    THE AGENT

     15.1  Appointment,  Powers and  Immunities.  The Banks  hereby  irrevocably
appoint and authorize  the Agent to act as their agent  hereunder and under each
of the other  Revolving  Loan  Documents  with such  powers as are  specifically
delegated to the Agent by the terms of the Revolving  Loan  Documents,  together
with such other powers as are reasonably  incidental  thereto.  The Agent (which
term shall include  reference to its Affiliates and its own and its  Affiliates'
officers,  directors,  employees  and  agents):  (a)  shall  have no  duties  or
responsibilities  except  those  expressly  set  forth  in  the  Revolving  Loan
Documents;  (b)  shall  not  be  responsible  to the  Banks  for  any  recitals,
statements,  representations  or  warranties  contained  in any  Revolving  Loan
Document,  or in any  certificate or other document  referred to or provided for
in, or received by any of them under,  any Revolving Loan  Document,  or for the
value,  validity,  effectiveness,  genuineness,  enforceability,  perfection  or
sufficiency of any Revolving Loan Document or any other document  referred to or
provided  for or for any failure by Borrowers or any other Person to perform any
of its obligations  thereunder;  (c) shall have the right, at its option,  in an
Event of Default of  Borrowers  hereunder,  to purchase  the Note of any Bank at
par, plus accrued interest; (d) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder; and (e) shall not be responsible
for any action  taken or omitted to be taken by it  hereunder or under any other
document  or  instrument  referred to or  provided  for herein or in  connection
herewith,  except for its own gross negligence or willful misconduct.  The Agent
may employ agents and  attorneys-in-fact  and shall not be  responsible  for the
negligence or misconduct of any such agents or attorneys-in-fact  selected by it
with reasonable  care.  Subject to the foregoing,  the Agent shall, on behalf of
the Banks:  (i) execute any and all of the Revolving Loan Documents on behalf of
the Banks,  except where the Banks are parties thereto,  (ii) hold and apply the
Pledged Stock,  and the proceeds  thereof,  in accordance  with the terms of the
Pledge  Agreements  and  this  Agreement;  (iii)  hold  and  apply  any  and all
Collateral,  and the proceeds thereof, at any time received by it, in accordance
with the provisions of the Security Documents and this Agreement;  (iv) exercise
any and all rights,  powers and remedies of the Banks under any  Revolving  Loan
Document,  including the giving of any consent or waiver or the entering into of
any amendment,  subject to the provisions of Section 12.1; (v) execute, deliver,
file and possess  instruments on behalf of any or all of the Banks;  and (vi) in
the event of acceleration  of Borrowers'  indebtedness  hereunder,  use its best
efforts to sell or otherwise  liquidate or dispose of the Collateral referred to
herein, in the Security Documents and otherwise exercise the rights of the Banks
thereunder.

     15.2 Reliance. The Agent shall be entitled to rely upon any certifications,
notices or other  communications  (including  any  communications  by telephone,
telex,  telegram or cable)  reasonably  believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal  counsel,  independent  accountants  and
other experts  selected by such Agent. As to any matters not expressly  provided
for by this  Agreement,  the  Agent  shall in all  cases be fully  protected  in
acting, or in refraining from acting,  hereunder in accordance with instructions
signed by the Banks, and such  instructions of the Banks and any action taken or
failure to act pursuant thereto, shall be binding on the Banks.

     15.3  Defaults.  The Agent  shall not be  deemed to have  knowledge  of the
occurrence of an Event of Default  (other than the nonpayment of principal of or
interest on the Notes)  unless it has  received  notice from a Bank or Borrowers
specifying  such Event of Default.  In the event that the Agent  receives such a
notice of the  occurrence  of an Event of Default,  it shall give prompt  notice
thereof  to the Banks  (and  shall  give each  Bank  prompt  notice of each such
nonpayment).  The Agent shall  (subject to Section  15.7) take such  action,  or
refrain  from taking such  action,  with  respect to such Event of Default as it
shall deem advisable in the best interest of the Banks.

     15.4 Rights as a Bank. With respect to the Commitment and the Loans made by
it, the Agent, in its capacity as a Bank  hereunder,  shall have the same rights
and powers  hereunder  as the other Banks and may exercise the same as though it
were not acting as the Agent,  and the term "Bank" or "Banks" shall,  unless the
context otherwise indicates,  include the Agent in its individual capacity.  The
Agent and its  Affiliates may (without  having to account  therefor to the other
Banks) accept deposits from,  lend money to and generally  engage in any kind of
banking,  trust or other business with Borrowers and any of its Affiliates as if
it were not  acting  as the  Agent,  and the  Agent  may  accept  fees and other
consideration  from the Borrowers for services as the Agent or otherwise without
having to account for the same to the other Banks.

     15.5  Indemnification.  The Banks agree to indemnify  the Agent  ratably in
accordance  with the aggregate  principal  amount of the Notes held by the Banks
(or, if no such  principal  or interest is at the time  outstanding,  ratably in
accordance  with their  respective  Commitments),  for any and all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements of any kind and nature whatsoever (including,  without
limitation,  the costs and expenses  which  Borrowers  are  obligated to pay but
excluding,  unless an Event of Default has  occurred and is  continuing,  normal
administrative  costs and  expenses  incident to the  performance  of its agency
duties  hereunder)  which may be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of any  Revolving  Loan  Document or
any other  document  contemplated  by or  referred  to herein or  therein or the
transactions   contemplated  by  or  referred  to  herein  or  therein,  or  the
enforcement  of any of the terms of any  Revolving  Loan Document or of any such
other documents;  provided, however, that no Bank shall be liable for any of the
foregoing  to the  extent  they  arise  from the  gross  negligence  or  willful
misconduct of the party to be indemnified.

     15.6  Non-Reliance on Agent and Other Banks.  Each Bank agrees that it has,
independently and without reliance on the Agent or the other Banks, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of Borrowers and its own decision to enter into this Agreement and that
it will,  independently  and without reliance upon the other Banks, and based on
such  documents  and  information  as it shall  deem  appropriate  at the  time,
continue to make its own analysis and  decisions in taking or not taking  action
under this Agreement. The Agent shall not be required to keep itself informed as
to the  performance  or observance  by Borrowers of this  Agreement or any other
document  referred to or provided  for herein or to inspect  the  properties  or
books of  Borrowers.  Except  for  notices,  reports  and  other  documents  and
information  expressly  required  to be  furnished  to the  Banks  by the  Agent
hereunder,  the Agent shall not have any duty or  responsibility  to provide any
Bank with any credit or other  information  concerning  the  affairs,  financial
condition or business of  Borrowers  which may come into the  possession  of the
Agent or any of its Affiliates.  Notwithstanding  the foregoing,  the Agent will
use its best efforts to provide to the Banks any and all information  reasonably
requested  by them and  reasonably  available  to the Agent  promptly  upon such
request.

     15.7  Failure to Act.  Except for actions  expressly  required of the Agent
hereunder,  the  Agent  shall in all  cases be fully  justified  in  failing  or
refusing to act hereunder  unless it shall be indemnified to its satisfaction by
the Banks  against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action.

     15.8  Resignation of Agent.  Subject to the appointment and acceptance of a
successor  Agent as provided  below,  the Agent may resign at any time by giving
notice thereof to the Banks and Borrowers. Upon any such resignation,  the Banks
shall  have the right to  appoint a  successor  Agent  without  the  consent  of
Borrowers.  Such successor Agent so appointed by the Banks shall be a bank which
has a combined capital and surplus of at least $75,000,000.  Upon the acceptance
of any appointment as the Agent hereunder by a successor  Agent,  such successor
Agent shall thereupon succeed to and become vested with all the rights,  powers,
privileges  and duties of the retiring  Agent,  and the retiring  Agent shall be
discharged from its duties and obligations hereunder. After the retiring Agent's
resignation hereunder as Agent, the provisions of this Article XV shall continue
in effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as the Agent.

     15.9  Cooperation of Banks.  Each Bank shall (a) promptly  notify the other
Banks and the  Agent of any  Event of  Default  known to such  Bank  under  this
Agreement and not reasonably  believed to have been previously  disclosed to the
other  Banks and the Agent,  (b) provide the other Banks and the Agent with such
information and  documentation  as the other Banks or the Agent shall reasonably
request in the performance of their respective duties  hereunder,  including all
information relative to the outstanding balance of principal, interest and other
sums owed to any such Bank by Borrowers;  and (c) cooperate  with the Agent with
respect to any and all  collections  and/or  foreclosure  procedures at any time
commenced  against  Borrowers or otherwise in respect of the  Collateral  by the
Agent on behalf of the Banks.

     15.10  Amendment of Article XV.  Borrowers  hereby agree that the foregoing
provisions of this Article XV  constitute  an agreement  among the Agent and the
Banks (and the Agent and the Banks  acknowledge  that Borrowers are not party to
or bound by such foregoing  provisions and will not be bound by any amendment of
such  foregoing  provisions)  and  that  any and all of the  provisions  of this
Article  XV may be amended  at any time by the Banks and the Agent  without  the
consent or approval of, or notice to,  Borrowers  (other than the requirement of
notice to Borrowers of the resignation of the Agent).



                                   ARTICLE XVI

                                  MISCELLANEOUS

         16.1  Notices,  etc. All notices and other  communications  required or
permitted  to be given  hereunder  shall be in  writing  and shall be  delivered
personally,  telegraphed,  telexed,  sent by facsimile  transmission  or sent by
certified,  registered,  or express mail, postage prepaid, to the parties at the
addresses set forth below (or to such other addresses as the parties may specify
by due  notice  to  the  others).  Notices  or  other  communications  given  by
certified,  registered,  or express mail shall be deemed given three (3) Banking
Days  after the date of  mailing.  Notices or other  communications  sent in any
other manner shall be deemed given only when actually received.


                     (a)          If to Borrowers, to:

                                  Telos Corporation (on behalf of each Borrower)
                                  19886 Ashburn Road
                                  Ashburn, Virginia  20147
                                  Attention:  President and
                                              Chief Financial Officer
                                  Telecopy:  (703) 724-3855

                      (b)         If to NationsBank, to:

                                  NationsBank, N.A.
                                  8300 Greensboro Drive, Suite 550
                                  McLean, Virginia  22102-3604
                                  Attention:  Catherine G. Beddow
                                              Vice President
                                  Telecopy:  (703) 761-8344

                                  with a copy to:

                                  Hogan & Hartson L.L.P.
                                  Columbia Square
                                  555 Thirteenth Street, N.W.
                                  Washington, D.C.  20004-1109
                                  Attention:  Claudette M. Christian, Esq.
                                  Telecopy:  (202) 637-5910


                      (c)         If to the Agent to:

                                  NationsBank, N.A.
                                  8300 Greensboro Drive, Suite 550
                                  McLean, Virginia  22102-3604
                                  Attention:  Catherine G. Beddow
                                              Vice President
                                  Telecopy:  (703) 761-8344

                                  with a copy to:

                                  Hogan & Hartson L.L.P.
                                  Columbia Square
                                  555 Thirteenth Street, N.W.
                                  Washington, D.C.  20004-1109
                                  Attention:  Claudette M. Christian, Esq.
                                  Telecopy:  (202) 637-5910


          (d) If to any other Bank, as set forth in a written notice to each
other party hereto or to such other address or addresses as the party to whom 
such notice is directed may have designated in writing to the other parties 
hereto.

     16.2  Calculations,  etc.  Subject  to the  provisions  of this  Agreement,
calculations hereunder shall be made and financial data required hereby shall be
prepared,  both as to classification  of items and as to amounts,  in accordance
with GAAP, which  principles and practices shall be consistently  applied and in
conformity  with those used in the  preparation  of the  consolidated  financial
statements referred to in Section 6.1.

     16.3  Governmental  Approval.  Borrowers  agree to take any related  action
which any Bank may  reasonably  request  in order to  obtain  and enjoy the full
rights and benefits granted to such Bank by the Revolving Loan Documents.

     16.4  Survival of  Agreements,  etc. The Revolving  Loan  Documents and the
rights and obligations  specified  therein shall be binding upon and shall inure
to the  benefit of the  parties  thereto  and their  respective  successors  and
assigns,  and any subsequent  holder or holders of the Note, and the term "Bank"
shall  include any such holder  whenever  the  context  permits,  subject to the
provisions of Section 13 hereof. All  representations and warranties made herein
and in the Original Credit Agreement shall survive the execution and delivery of
this  Agreement  and the  making of the Loans  hereunder  until such time as all
amounts owing under this Agreement have been paid in full.

     16.5  Counterparts,  etc. To facilitate  execution,  this  Agreement may be
executed  in as  many  counterparts  as may be  required;  and it  shall  not be
necessary  that the  signatures  of, or on behalf of,  each  party,  or that the
signatures  of  all  persons  required  to  bind  any  party,   appear  on  each
counterpart; but it shall be sufficient that the signatures of, or on behalf of,
each party;  or that the  signatures of the persons  required to bind any party,
appear on one or more of the counterparts.  Delivery of an executed  counterpart
of a  signature  page to this  Agreement  by  facsimile  shall be  effective  as
delivery of a manually executed  signature page hereto.  All counterparts  shall
collectively  constitute a single agreement. It shall not be necessary in making
proof  of this  Agreement  to  produce  or  account  for more  than a number  of
counterparts  containing the  respective  signatures of, or on behalf of, all of
the parties hereto.

     16.6 Amendment.  The Revolving Loan Documents may not be changed orally but
only by an  agreement  in writing  signed by the party  against whom any waiver,
change, modification or discharge is sought.

     16.7 WAIVER OF JURY TRIAL AND SETOFF;  CONSENT TO  JURISDICTION.  BORROWERS
HEREBY WAIVE,  TO THE EXTENT  PERMITTED BY APPLICABLE  LAW, TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN  CONNECTION  WITH, OR ARISING OUT OF
THIS  AGREEMENT,  ANY OTHER  REVOLVING  LOAN  DOCUMENT,  THE  COLLATERAL  OR ANY
INSTRUMENT OR DOCUMENT  DELIVERED  PURSUANT TO THIS AGREEMENT,  OR THE VALIDITY,
PROTECTION,  INTERPRETATION,  COLLECTION OR  ENFORCEMENT  THEREOF,  OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING,  BETWEEN BORROWERS, ON THE ONE HAND, AND THE
AGENT OR ANY ONE OR MORE OF THE BANKS,  ON THE OTHER HAND; AND BORROWERS  HEREBY
WAIVE,  TO THE EXTENT  PERMITTED BY  APPLICABLE  LAW, THE RIGHT TO INTERPOSE ANY
SETOFF OR COUNTERCLAIM  OR CROSS-CLAIM IN CONNECTION  WITH ANY SUCH  LITIGATION,
IRRESPECTIVE OF THE NATURE OF SUCH SETOFF, COUNTERCLAIM OR CROSS-CLAIM EXCEPT TO
THE  EXTENT  THAT THE  FAILURE  SO TO ASSERT ANY SUCH  SETOFF,  COUNTERCLAIM  OR
CROSS-CLAIM WOULD PERMANENTLY PRECLUDE THE PROSECUTION OF OR RECOVERY UPON SAME.
BORROWERS HEREBY  IRREVOCABLY  CONSENT TO THE  NONEXCLUSIVE  JURISDICTION OF THE
COURTS  OF THE  COMMONWEALTH  OF  VIRGINIA  AND,  TO  THE  EXTENT  PERMITTED  BY
APPLICABLE LAW, OF ANY FEDERAL COURT LOCATED IN THE  COMMONWEALTH OF VIRGINIA IN
CONNECTION  WITH ANY ACTION OR PROCEEDING  ARISING OUT OF OR RELATING TO ANY ONE
OR MORE OF THIS AGREEMENT, ANY OTHER REVOLVING LOAN DOCUMENT, OR ANY DOCUMENT OR
INSTRUMENT DELIVERED PURSUANT TO THIS AGREEMENT.

     16.8 Governing Law. The Revolving Loan  Documents,  including the Notes and
the validity  thereof and the rights and obligations of the parties  thereunder,
shall be construed in accordance  with the laws of the  Commonwealth of Virginia
(but not including the choice of law rules thereof).

     16.9 Time of Essence.  The parties  acknowledge that time is of the essence
in effecting the transactions contemplated hereby.

     16.10  Replacement  Notes. If any Note shall become  mutilated,  destroyed,
lost or stolen,  Borrowers shall, upon the written request of the holder of such
Note,  execute  and  deliver in the  replacement  thereof a new Note in the same
form, in the same original  principal amount and dated the same date as the Note
so mutilated,  destroyed,  lost or stolen. If such Note has been destroyed, lost
or stolen,  the holder of such Note shall furnish to Borrowers  such security or
indemnity as may be reasonably  required by Borrowers to save Borrowers harmless
and evidence satisfactory to Borrowers of the destruction, loss or theft of such
Note and of the ownership  thereof;  provided,  however,  that, if the holder of
such Note is NationsBank,  the written  undertaking of NationsBank  delivered to
Borrowers shall be sufficient security and indemnity.

     16.11 Lien.  Borrowers hereby grant to each Bank and the Agent a continuing
Lien for all  obligations  under the Revolving  Loan  Documents and any interest
therein upon any and all monies,  securities or other  property of Borrowers and
the proceeds  thereof,  now or hereafter  held or received by, or in transit to,
such Bank or the Agent from or for Borrowers, whether for safekeeping,  custody,
pledge,  transmission,  collection  or  otherwise,  and  also  upon  any and all
deposits  (general or special)  and credits of Borrowers  with,  and any and all
claims of Borrowers against,  such Bank or the Agent at any time existing.  Upon
the  occurrence  of an Event of  Default,  each Bank and the  Agent  are  hereby
authorized at any time and from time to time,  without  notice to Borrowers,  to
set off,  appropriate and apply any or all items hereinabove referred to against
all indebtedness of Borrowers to such Bank or the Agent.

     16.12 Information. The Agent and each Bank are hereby authorized to deliver
any  information,  reports,  communications,  notices and  financial  statements
furnished  to any of them by or on  behalf  of  Borrowers  or any  Affiliate  of
Borrowers or obtained by any of them from Borrowers under this Agreement, to (i)
any holder of Subordinated Debt or regulatory body or the Agent or such Bank (to
the extent  requested by such regulatory  body or agency),  (ii) any prospective
participant in or prospective  assignee of the Loans or any portion  thereof and
which is a financial institution or (iii) any other Person which shall, or shall
have any right or obligation  to,  succeed to all or any part of the interest of
the Agent or such Bank in the Revolving Loan Documents, or any security provided
for or otherwise securing the obligations of Borrower hereunder.

     16.13  Revision of  Schedules.  From and after the date  hereof,  Borrowers
shall have the limited right to update the Schedules  attached to this Agreement
provided  that  any  additional  information  reflected  in such  update  is not
material in any respect to Borrowers or to the transactions  contemplated by the
Revolving Loan Documents.

     16.14 Joint and Several Liability.  To the extent that more than one person
or entity is included in the term  "Borrowers,"  then the  liability of all such
persons  shall  be  joint  and  several.  In  addition,  all  references  to the
"Borrowers" shall be interpreted as references to each such Person  individually
and to all such Persons collectively.


<PAGE>


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date first above written.


                                              TELOS CORPORATION,  formerly known
                                              as C3, INC.

                                              By: /s/ William L.P. Brownley

                                              Title:  Vice President 
                                                      & General Counsel

                                              TELOS CORPORATION

                                              By: /s/ Lorenzo Tellez

                                              Title: Chief Financial Officer
                                                     &Treasurer

                                              NATIONSBANK, N.A.

                                              By: /s/ Catherine G. Beddow

                                              Title: Vice President


                                              NATIONSBANK, N.A.,
                                              as the Agent

                                              By: /s/ Catherine G. Beddow

                                              Title: Vice President