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                    SECURITIES AND EXCHANGE COMMISSION
                                     
                          Washington, D.C.  20549
                                     
                                     
                                 FORM 8-K
                                     
                              CURRENT REPORT
                                     
  Pursuant to Section 13 and 15(d) of the Securities Exchange Act of 1934
  
  
  Date of Report (Date of earliest event reported):   October 6, 1998
  
  
  
                          HALIFAX CORPORATION
            (Exact name of registrant as specified in charter)
  
  
  
  
       Virginia                   2-84160-W           54-0829246
  (State or other jurisdiction    (Commission
   of incorporation)               File Number)      (IRS Employer
                                                     Identification No.)
  
  
  
  
  
    5250 Cherokee Avenue,  Alexandria, Virginia        22312
  (Address of principal executive offices)           (Zip Code)
  
  
  
  
  Registrant's telephone number, including area code:     (703) 750-2202
  
  
  
                        Not Applicable
  (Former name or former address, if changed since last report)
  
  
  
  
                                     
                                     
                                     
                                     
                        FIFTH AMENDED AND RESTATED
                        LOAN AND SECURITY AGREEMENT
  
  
       THIS FIFTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated
  as of the 25th day of June, 1998 (the Agreement), is made by and
  between CRESTAR BANK, a Virginia banking corporation (the Lender), and
  HALIFAX CORPORATION, a Virginia corporation (the Company), HALIFAX
  ENGINEERING, INC., a Virginia corporation (Engineering), HALIFAX
  TECHNICAL SERVICES, INC., a Virginia corporation (Technical), HALIFAX
  REALTY, INC., a Virginia corporation (Realty), HALIFAX TECHNOLOGY
  SERVICES COMPANY, a Virginia corporation (Technology), and each other
  Subsidiary (as defined below) that becomes a party to this Agreement
  with the Lender's approval, in accordance with the provisions set forth
  below (together with the Company and Engineering, Technical, Realty,
  and Technology, collectively, the Borrowers, and individually, a
  Borrower).
  
                                 RECITALS
                                     
       The Lender has agreed to provide financing to the Borrowers,
  subject to the terms and conditions of this Agreement.  Each Borrower
  will derive substantial direct and indirect benefits by the credit
  extended by the Lender to the other Borrowers.  Accordingly, for good
  and valuable consideration, the receipt and sufficiency of which are
  acknowledged, the Lender and the Borrowers agree as follows:
  
         Definitions.  As used in this Agreement, the following terms
  shall have the meanings assigned to them below, which meanings shall be
  equally applicable to the singular and plural forms of the terms
  defined.
  
       "Accounts Receivable" means, collectively, and includes all of the
  following, whether now owned or hereafter acquired by a Borrower:  all
  property included within the definitions of "accounts," "chattel
  paper," "documents" and "instruments" set forth in the UCC; all present
  and future rights to payments for goods sold or leased or for services
  rendered, whether or not represented by instruments or chattel paper,
  and whether or not earned by performance; contract rights; all present
  and future rights to payments for computer software, computer hardware
  or computer systems sold, leased or licensed; proceeds of any letter of
  credit of which a Borrower is a beneficiary; all forms of obligations
  whatsoever owed to a Borrower, together with all instruments and
  documents of title representing any of the foregoing; all rights in any
  goods that any of the foregoing may represent; any and all rights in
  any returned or repossessed goods; and all rights, security and
  guaranties with respect to any of the foregoing, including, without
  limitation, any right of stoppage in transit.
  
       "Affiliate" means, with respect to any specified Person, any other
  Person that, directly or indirectly, through one or more
  intermediaries, controls or is controlled by, or is under common
  control with, such specified Person.  The term "control" means the
  possession, direct or indirect, of the power to direct or cause the
  direction of the management and policies of a Person, whether through
  ownership of common stock, by contract or otherwise.  The MPS Joint
  Venture, if formed, shall be an Affiliate.
  
       "Aging" means a schedule of all outstanding Receivables of the
  Borrowers showing the age of such Receivables in intervals of 30 days.
  
       "Agreement" means this Loan and Security Agreement, as the same
  may be amended, modified or supplemented from time to time.
  
       "Assignment of Claims Act" means, collectively, the Assignment of
  Claims Act of 1940, as amended, 31 U.S.C.  3727, 41 U.S.C.  15, any
  applicable rules, regulations and interpretations issued pursuant
  thereto, and any amendments to any of the foregoing.
  
       "Assumption Agreement" means each Assumption Agreement,
  substantially in the form of Exhibit A attached to this Agreement,
  executed by a Subsidiary that becomes a party to this Agreement in
  accordance with the provisions of Section 0 below.
  
       "Borrowing Base" means, at any time, without duplication, the sum
  of (a) 90% of Eligible Billed Government Receivables, plus (b) 85% of
  Eligible Billed Commercial Receivables, plus (c) the Tier Two
  Contribution, provided that at no time shall the Borrowing Base
  attributable to the Tier Two Contribution exceed $2,000,000.
  
       "Borrowing Base Certificate" means a certificate of the Company
  containing a computation of the Borrowing Base and certifying that no
  Default or Event of Default has occurred and is continuing, in
  substantially the form of Exhibit B attached to this Agreement.
  
       "Business Day" means any day other than a Saturday, Sunday or
  other day on which commercial banks are authorized or required to close
  under the laws of the State, and, with respect to the determination of
  LIBOR, on which banks in the London interbank market are open for
  business.
  
       "Capital Expenditures" means, for any period, expenditures made by
  the Company or any of its Subsidiaries to acquire or construct fixed
  assets, plant and equipment (including renewals, improvements and
  replacements, but excluding repairs) during such period, computed in
  accordance with GAAP.
  
       "Capital Lease" means any lease that has been or should be
  capitalized on the books of the lessee in accordance with GAAP.
  
       "Cash Management Agreement" means any applicable agreement between
  the Company and the Lender pursuant to which funds are transferred
  automatically to and from the Company's operating account or controlled
  disbursement account with the Lender, as any such agreement may be
  amended, modified or supplemented from time to time.
  
       "Closing" means the initial disbursement of the Loans.
  
       "Closing Date" means the date of the Closing.
  
       "Code" means the Internal Revenue Code of 1986, as amended from
  time to time, and all regulations issued pursuant thereto.
  
       "Collateral" means, collectively, and includes all Accounts
  Receivable, Deposit Accounts, Equipment, General Intangibles,
  Intellectual Property, Inventory, Investment Property and all other
  property of a Borrower in which a Lien is granted to the Lender
  pursuant to this Agreement or any other Loan Document.
  
       "Commercial Receivable" means any Account Receivable that does not
  arise out of a Government Contract on which a Borrower is the prime
  contractor.  An Account Receivable arising out of a Government Contract
  on which a Borrower is a subcontractor shall be a Commercial
  Receivable.
  
       "Covenant Compliance Certificate" means a certificate executed by
  a Principal Officer of the Company, substantially in the form of
  Exhibit C attached to this Agreement, containing a calculation of the
  financial covenants contained in Section 6.11 below and certifying that
  no Default or Event of Default has occurred.
  
       "Customer" means any Person obligated on a Receivable.
  
       "Customer List" means a schedule of all Customers of the
  Borrowers, showing the address of each Customer and a listing of the
  active contracts between each Borrower and such Customer, which is
  otherwise in form and substance satisfactory to the Lender.
  
       "Date Affected Information Technology" means a system comprised of
  one or more components including computer hardware, computer software
  or equipment with computerized functions, which reads, produces or
  processes date data by input, output or otherwise.
  
       "Debt" means, collectively, and includes, without duplication,
  with respect to any specified Person, (a) indebtedness or liability for
  borrowed money (whether by loan, the issuance and sale of debt
  securities or the sale of assets to another Person subject to an
  understanding or agreement, contingent or otherwise, to repurchase such
  assets from such Person) or for the deferred purchase price of property
  or services; (b) obligations as a lessee under a Capital Lease;
  (c) obligations to reimburse the issuer of letters of credit or
  acceptances; (d) all guaranties, endorsements (other than for
  collection or deposit in the ordinary course of business) and other
  contingent obligations to purchase, to provide funds for payment, to
  supply funds to invest in any other Person or otherwise to assure a
  creditor against loss; (e) obligations under interest rate swap, cap or
  collar agreements or similar agreements or arrangements designed to
  protect that Person against fluctuations in interest rates; (f)
  obligations under any foreign exchange contract, currency swap or other
  similar agreements or arrangements designed to protect that Person
  against fluctuations in currency values; and (g) obligations secured by
  any Lien on property owned by the specified Person, whether or not the
  obligations have been assumed.
  
       "Debt Coverage Ratio" means, for each 12-month period ending on
  the last day of each fiscal quarter of the Company, the ratio of
  (a) EBITDA for such period, minus Capital Expenditures for such period,
  minus dividends paid during such period, minus cash expenditures for
  taxes during such period, to (b) the sum of interest expense for such
  period plus  principal payments due during the next succeeding 12-month
  period with respect to Debt outstanding on the last day of such fiscal
  quarter (other than the Revolving Loans).  The foregoing shall be
  determined on a consolidated basis for the Company and its Subsidiaries
  in accordance with GAAP.
  
       "Default" means any event that, with the giving of notice, the
  lapse of time, or both, would constitute an Event of Default.
  
       "Default Rate" means the rate at which interest accrues on the
  loans upon the occurrence of an Event of Default, determined in
  accordance with the provisions of Section 2.5.
  
       "Deposit Account" means any "deposit account," as defined in
  Section 9-105 of the UCC, whether now owned or hereafter acquired by a
  Borrower.
  
       "Dollars" and "$" means the lawful currency of the United States
  of America.
  
       "DSSMP Contract" means Contract No. DAAB07-97-D-L016, dated
  June 30, 1997, between the Company and the United States Army
  Communications - Electronics Command.
  
       "EBITDA" means, for any period, (a) consolidated Net Income of the
  Company and its Subsidiaries for such period plus (b) to the extent
  deducted to determine such consolidated Net Income, the sum of
  (1) depreciation expense, (2) interest expense, (3) amortization
  expense, and (4) tax expense less (c) to the extent added to determine
  such consolidated Net Income, extraordinary or unusual gains or other
  gains not incurred in the ordinary course of business plus  (d)  to the
  extent deducted to determine such consolidated Net Income,
  extraordinary or unusual losses or other losses not incurred in the
  ordinary course of business.
  
       "Eligible Billed Commercial Receivable" means an Eligible Billed
  Receivable that is not an Eligible Billed Government Receivable.
  
       "Eligible Billed Government Receivables" means Eligible Billed
  Receivables arising out of a Government Contract on which a Borrower is
  the prime contractor.
  
       "Eligible Billed Receivables" means Eligible Receivables that have
  been billed to the appropriate Customer and are aged not greater than
  90 days from the date of the initial invoice.  For the purposes of this
  definition, the term "initial invoice" shall mean the first invoice
  relating to the applicable goods shipped or services rendered, and not
  any subsequent invoice relating thereto.
  
       "Eligible Bonded Receivables" means, at any time, Accounts
  Receivable of a Borrower that satisfy all of the criteria of Eligible
  Billed Receivables other than the requirement that such Accounts
  Receivable not arise out of a contract secured by a surety bond.
  
       "Eligible Inventory" means Inventory valued at the lower of cost
  or market value (a) to which any Borrower or Borrowers other than
  Technology have acquired title, and in which the Lender has a
  perfected, first priority security interest, (b) that has been
  delivered to any of the locations of any such Borrower or Borrowers set
  forth on Schedule 1 hereto, free and clear of all Liens other than the
  security interest granted to the Lender, (c) that continues to be in
  full conformity with the representations and warranties made by the
  applicable Borrowers to the Lender herein, and (d) is otherwise
  satisfactory to the Lender, in its sole discretion, for inclusion in
  the Borrowing Base.  Inventory shall lose its status as Eligible
  Inventory when any applicable Borrower sells, leases, assigns or
  otherwise disposes of it or passes title to it to another Person or
  consigns it to another Person.
  
       "Eligible Receivables" means Accounts Receivable of a Borrower
  (a) that represent valid obligations incurred by a Customer for
  software, goods or services licensed, shipped and delivered, installed
  or completed under valid contracts of license, sale, or service that
  have been formally awarded to a Borrower, for which all required
  contract documents have been executed by such Borrower and such
  Customer, and, if the Government is the Customer, for which funds have
  been appropriated and allocated; (b) that are due and payable not more
  than 30 days from the date of the initial invoice; (c) on which the
  Customer is not an Affiliate or Subsidiary of a Borrower; (d) with
  respect to which no Borrower has knowledge or notice of any inability
  of the Customer to make full payment; (e) from the face amounts of
  which have been deducted all payments, setoffs, amounts subject to
  adverse claims made in writing to a Borrower, contractual allowances,
  bad debt reserves and other credits applicable thereto; (f) that are
  subject to no Liens other than those permitted by this Agreement;
  (g) that continue to be in full conformity with the representations and
  warranties made by the Borrowers to the Lender in this Agreement;
  (h) with respect to which the Lender is and continues to be satisfied
  with the credit standing of the Customer; (i) on which the Customer is
  not a creditor of a Borrower; (j) on which the Customer  is not a
  Foreign Customer, unless the Foreign Customer's obligations are secured
  by a letter of credit acceptable to the Lender, or the Lender elects,
  in its sole discretion, to permit such Account Receivable to be
  included in the Borrowing Base if it otherwise is an Eligible
  Receivable, at such advance percentage as the Lender may elect in its
  sole discretion; (k) that are not subject to any dispute; (l) with
  respect to which the applicable software, goods or services have been
  accepted by the applicable Customer on an absolute sale basis and not
  on a bill and hold sale basis, a consignment sale basis, a guaranteed
  sale basis, a sale or return basis or on the basis of any other similar
  understanding pursuant to which such Borrower would repurchase or
  accept a return of, or give a credit for, any such software, goods or
  services; and (m) that are not subject to any contingencies; provided,
  however, and without limiting any other provisions of this Agreement
  with respect to the exclusion of Accounts Receivable from the category
  of Eligible Receivables and the Borrowing Base, that (1) if the Lender
  reasonably determines that the collectibility of any Account Receivable
  makes it unacceptable for inclusion in the Borrowing Base and gives
  written notice to the Company indicating the reasons for such
  determination, then such Account Receivable shall thereafter be
  excluded from the category of Eligible Receivables, (2) if more than
  50% of the aggregate face amount of Accounts Receivable owed by a
  Customer are aged 90 days or more, then all Accounts Receivable owed by
  such Customer shall be excluded from the category of Eligible
  Receivables, (3) in no case shall Eligible Receivables include any
  Accounts Receivable representing or arising out of retainages,
  holdbacks, progress billings, the final payment due under a Government
  Contract, revenues recognized or costs incurred in excess of approved
  or allowed reimbursement rates, cost overruns, unauthorized work or
  work beyond the scope of a contract, rebillings, contracts secured by
  surety bonds or classified Government Contracts; (4) an Account
  Receivable arising out of a Material IP Agreement shall not be an
  Eligible Receivable unless the applicable Intellectual Property, and an
  appropriately completed instrument sufficient to file and record the
  Lender's Lien with respect thereto, shall be duly registered and filed
  with the United States Copyright Office and the United States Patent
  and Trademark Office, as applicable.  If required by the Lender, no
  Eligible Receivable shall be included in more than three month-end
  Borrowing Base calculations.
  
       "Eligible Tier Two Term Loan State and Local Receivables" means,
  at any time, Accounts Receivable of a Borrower due from any state or
  political subdivision of a state that are Eligible Receivables that
  have been billed, and are aged not greater than 120 days from the date
  of the initial invoice (as such term is used in the definition of
  Eligible Billed Receivables).
  
       "Eligible Unbilled Receivables" means, at any time, Accounts
  Receivable of the Company arising out of the DSSMP Contract or the
  LTLSC Contract that satisfy all of the criteria of Eligible Billed
  Receivables other than the requirement that such Accounts Receivable be
  billed to the appropriate Customer and for which the Company is
  entitled to send a bill within ___ days.  If required by the Lender, no
  Eligible Unbilled Receivable shall be included in more than ____ month-
  end Borrowing Base calculations.
  
       "Equipment" means collectively and includes all of the following,
  whether now owned or hereafter acquired by a Borrower:  equipment and
  fixtures, including, without limitation, computer hardware, computer
  software, computer systems, furniture, machinery, vehicles and trade
  fixtures together with any and all accessories, accessions, parts and
  appurtenances thereto, substitutions therefor and replacements thereof,
  together with all other such items that are included within the
  definitions of "equipment" and "fixtures" as set forth in the UCC.
  
       "Equity Issuance" means any issuance or sale by a Person of its
  capital stock or other similar equity security, or any warrants,
  options or similar rights to acquire, or securities convertible into or
  exchangeable for, such capital stock or other similar equity security.
  
       "ERISA" means the Employee Retirement Income Security Act of 1974,
  as amended from time to time, and all regulations issued pursuant
  thereto.
  
       "Event of Default" means any of the events specified as an "Event
  of Default" under this Agreement, provided that any requirement for the
  giving of notice, the lapse of time, or both, or any other condition,
  has been satisfied.
  
       "Existing Agreement" means the Fourth Amended and Restated Loan
  and Security Agreement, dated as of November 26, 1996, between the
  Lender and the Borrowers, as amended to the date hereof.
  
       "Existing Subordination Agreement" means the Subordination
  Agreement, dated as of January 27, 1998, between the Lender, the
  Company and Research Industries.
  
       "Foreign Customer" means a Customer that is a foreign government,
  an entity organized under the laws of a country other than the United
  States or an individual who is not a United States citizen.
  
       "Fully Date Capable" means the ability to correctly process date
  data (including, but not limited to, reading, producing, calculating,
  comparing, and sequencing date data) from, into, and between the
  twentieth and twenty-first centuries) without material degradation in
  performance and without unusual intervention, including correct and
  continuous processing during the transition between 1999 and 2000, and
  correct processing of leap years.
  
       "Funded Debt" means, for any Person, the sum of the consolidated
  Debt of such Person and its Subsidiaries for (a) borrowed money, the
  deferred purchase price of property or services and obligations under
  repurchase agreements, (b) Capital Lease obligations, (c) the amount of
  any outstanding Debt guaranteed and (d) contingent or matured
  reimbursement obligations for letters of credit issued for the account
  of such Person or any Subsidiary of such Person, in each case
  determined in accordance with GAAP.
  
       "Funded Debt Ratio" means, at any time, the ratio of
  (a) consolidated Funded Debt of the Company and its Subsidiaries
  outstanding on the last day of the most recently ended fiscal quarter
  of the Company, minus Subordinated Debt, to (b) consolidated EBITDA of
  the Company and its Subsidiaries for the period of 12 months then
  ended.
  
       "GAAP" means generally accepted accounting principles consistently
  applied.
  
       "General Intangibles" means, collectively, and includes all of the
  following, whether now owned or hereafter acquired by a Borrower: all
  property that is included within the definition of "general
  intangibles" as set forth in the UCC; choses in action, causes of
  action and all other intangible property of every kind and nature,
  including, without limitation, corporate or other business records,
  inventions, designs, patents, patent applications, trademarks,
  trademark applications, trade names, trade secrets, good will,
  registrations, copyrights, licenses, franchises, customer lists, tax
  refunds, tax refund claims, rights of claims against carriers and
  shippers, leases and rights to indemnification.
  
       "Government" means the United States of America or any agency or
  instrumentality thereof.
  
       "Government Contract" means any contract with the Government under
  which a Borrower is a prime contractor or a subcontractor.
  
       "Increased Costs" means any reserve, special deposit, capital
  adequacy guideline or similar requirement relating to any extensions of
  credit, Letters of Credit, or other assets of the Lender, or the
  deposits with or other liabilities of the Lender, that  (a) is imposed
  as a result of any Regulatory Change or as a result of the application
  of existing capital adequacy guidelines (including, without limitation,
  any Regulatory Change or capital adequacy guideline that requires that
  letters of credit issued, or lines of credit established, by the Lender
  be classified as "risk assets" for purposes of, or otherwise be subject
  to the provisions of, any capital adequacy guidelines applicable to the
  Lender), and (b) increases the cost to the Lender of making, issuing or
  maintaining any Loan or Letter of Credit, reduces the amount receivable
  by the Lender in connection with any Loan or Letter of Credit, or
  reduces the rate of return on the Lender's capital as a consequence of
  its obligations under this Agreement.
  
       "Ineligible Receivables" means any Account Receivable of a
  Borrower that is not an Eligible Billed Receivable.
  
       "Intellectual Property" means, collectively, and includes all of
  the following, whether now owned or hereafter acquired by a Borrower:
  all copyrights (whether registered or unregistered), copyright
  registrations, trademarks, servicemarks, patents and rights as a
  licensor or licensee of any of the foregoing and all applications with
  respect to any of the foregoing.
  
       "Interest Payment Date" means the first day of each calendar
  month.
  
       "Inventory" means collectively and includes all of the following,
  whether now owned or hereafter acquired by a Borrower:  all goods,
  computer hardware, computer software and computer systems held or
  intended for sale, lease, installation or licensing by a Borrower, or
  furnished or to be furnished under contracts of service, all raw
  materials, work in process, finished goods, materials and supplies of
  every nature used or usable in connection with the manufacture,
  packing, shipping, advertising or sale of any such goods, together with
  all property including within the definition of "inventory" set forth
  in the UCC.
  
       "Investment Property" means all of the following, whether now
  owned or hereafter acquired by a Borrower:  all property that is
  included within the definition of "investment property" as set forth in
  the UCC, including all securities, whether certificated or
  uncertificated, security entitlements, securities accounts, commodity
  contracts and commodity accounts, and all financial assets held in any
  securities account or otherwise, and any commercial paper, securities,
  repurchase agreements, deposit accounts or other instruments or
  obligations purchased for the Borrower pursuant to a Cash Management
  Agreement.
  
       "Letters of Credit" means any letter of credit issued by the
  Lender for the account of any Borrower, whether now outstanding or
  issued after the date of this Agreement.
  
       "Letter of Credit Agreement" means, collectively and individually,
  each standard form of Application and Agreement for Irrevocable Standby
  Letter of Credit, to be executed and delivered by the Borrowers to the
  Lender in connection with each Letter of Credit, as any of the same may
  be amended, modified or supplemented from time to time.
  
       "LIBOR" means for each calendar month, the rate at which dollar
  deposits with a one-month maturity are offered to leading banks in the
  London interbank market at 11:00 a.m. (London time) on the first
  Business Day of such calendar month, based on the British Bankers
  Association quotations published by an On-Line Information Service,
  selected by the Lender, plus adjustments (expressed as a percentage)
  for reserve requirements, deposit insurance premium assessments,
  broker's commissions and other regulatory costs, all of the foregoing
  as determined by the Lender's Funds Management Division in accordance
  with its customary practices.
  
       "Lien" means any mortgage, deed of trust, pledge, security
  interest, hypothecation, assignment, deposit arrangement, encumbrance,
  lien (statutory or other), or preference, priority or other security
  agreement, or preferential arrangement, charge or encumbrance of any
  kind or nature whatsoever (including, without limitation, any
  conditional sale or other title retention agreement, any Capital Lease
  and the filing of any financing statement under the UCC or comparable
  law of any jurisdiction to evidence any of the foregoing).
  
       "Loans" means the Revolving Loans, the Tier Two Term Loan and the
  Tier Three Term Loan.
  
       "Loan Documents" means this Agreement, the Notes, each Assumption
  Agreement, each Letter of Credit Agreement, each Cash Management
  Agreement, the Existing Subordination Agreement, and any other document
  now or hereafter executed or delivered in connection with the
  Obligations, in evidence thereof or as security therefor, including,
  without limitation, any life insurance assignment, pledge agreement,
  security agreement, deed of trust, mortgage, guaranty, promissory note
  or subordination agreement.
  
       "LTLCS Contract" means Contract No. DAAB07-98-D-L771, dated
  November 25, 1997, between the Company and the United States Army
  Communications - Electronics Command.
  
       "Material Adverse Effect" means a material adverse effect on
  ()(a) the business, assets, operations, prospects or condition,
  financial or otherwise, of the Company and its Subsidiaries taken as a
  whole, (b) the ability of any Borrower to perform its obligations under
  any Loan Document or (c) the rights of or benefits available to the
  Lender under any Loan Document.
  
       "Material Contract" means any contract or other arrangement (other
  than the Loan Documents), whether written or oral, to which a Borrower
  or any Subsidiary is a party (a) requiring annual payments by any party
  thereto of more than 10% of the annual consolidated gross revenues of
  the Company and its Subsidiaries, or (b) as to which the breach,
  nonperformance, cancellation or failure to renew by any party thereto
  could have a Material Adverse Effect.
  
       "Material IP Agreement" means any contract or agreement between a
  Borrower and a Customer providing for the sale or licensing to such
  Customer of Intellectual Property owned by such Borrower and subject or
  entitled to United States copyright, patent or trademark protection,
  unless such sale or license is ancillary to other goods or services
  provided under such contract or agreement and is not a material element
  of such goods or services.
  
       "Maximum Amount" means $12,500,000.
  
       "Minimum Compliance Level" means $7,250,000 as of June 30, 1998,
  and September 30, 1998, $12,400,000 as of December 31, 1998, and
  adjusted upward, effective as of March 31, 1999, and as of the end of
  each fiscal year thereafter, by an amount equal to the sum of (a) 50%
  of the consolidated Net Income of the Company and its Subsidiaries for
  such fiscal year, with each of the foregoing increases being fully
  cumulative, and with no reduction being made on account of any negative
  consolidated Net Income of the Company and its Subsidiaries for any
  fiscal year, plus (b) the net proceeds of cash and other consideration
  received by the Borrower or any Subsidiary in respect of any Equity
  Issuance and Subordinated Debt issued after the date hereof, provided
  that the aggregate amount of the adjustment to the Minimum Compliance
  Level required by this clause (b) shall be $4,500,000.
  
       "MPS Contract" means the contract, if any, awarded to the MPS
  Joint Venture in connection with its bid on the Marine Corps
  Prepositioning Solicitation.
  
       "MPS Joint Venture" means the joint venture arrangement to be
  formed by the Company and VSE Corporation to perform the MPS Contract.
  
       "Net Income" means, for any Person for any period, the
  consolidated gross revenues of such Person and its Subsidiaries for
  such period less all consolidated operating and non-operating expenses
  (including taxes) of such Person and its Subsidiaries for such period,
  all as determined in accordance with GAAP.
  
       "Notes" means the Revolving Note, the Tier Two Term Note, and the
  Tier Three Note.
  
       "Obligations" means the Loans, the Notes, the Letter of Credit
  Agreements, all indebtedness and obligations of a Borrower under this
  Agreement and the other Loan Documents and all other indebtedness and
  obligations of a Borrower to the Lender, now existing or hereafter
  arising, of every kind and description, direct or indirect, fixed or
  contingent, liquidated or unliquidated, due or to become due, secured
  or unsecured, joint, several or joint and several, as amended,
  modified, renewed, extended or increased from time to time, including,
  without limitation, any overdrafts in any Deposit Account maintained by
  a Borrower with the Lender.
  
       "On-Line Information Service" means a text line or other on-line
  information service provided to the Lender by any of Reuters
  Information Services, Inc., Knight-Ridder Financial/Americas, Dow Jones
  Telerate, Inc. or Bloomberg Financial Markets News Services, or any
  comparable reporting service selected by the Lender.
  
       "Optional Termination Date" means the date on which the Borrowers
  elect to terminate the Lender's obligations to make Loans and issue
  Letters of Credit in accordance with a notice given pursuant to Section
  0.
  
       "Person" means an individual, partnership, corporation, business
  trust, joint stock company, trust, unincorporated association, joint
  venture, governmental authority, limited liability company or other
  entity of whatever nature.
  
       "Primary Operating Account" means any deposit account or
  controlled disbursement account on which the Company draws to pay all
  or substantially all of its operating expenses.
  
       "Prime Rate" means the rate of interest established and announced
  from time to time by the Lender and recorded in its Central Credit
  Administration Division as its Prime Rate, it being understood and
  agreed that the Prime Rate is used as a reference for fixing the
  lending rate on commercial loans and is not necessarily the lowest or
  most favorable rate of interest charged by the Lender on such loans.
  
       "Principal Officer" means the President, the Chief Executive
  Officer or the Chief Financial Officer of the Company.
  
       "Receivables" means the Accounts Receivable and the General
  Intangibles.
  
       "Regulatory Change" means any change, after the date of this
  Agreement, in any federal or state laws, rules and regulations, or
  interpretations thereof, or the adoption after the date of this
  Agreement of any rules, interpretations, directives or requests,
  applying to a class of financial institutions including the Lender,
  under any federal or state laws or regulations by any court or
  regulatory authority charged with the interpretation or administration
  thereof.
  
       "Required Quarterly Curtailment" means, for any principal payment
  due with respect to the Tier Two Term Loan or the Tier Three Term Loan,
  the greater of (a) $125,000, or (b) 50% of (1) the consolidated Net
  Income of the Company and its Subsidiaries for the fiscal quarter
  immediately preceding such payment, less (2) dividends paid by the
  Company during such quarter.
  
       "Research Industries" means Research Industries Incorporated, a
  Delaware corporation.
  
       "Revolving Loans" means the loans to be made by the Lender to the
  Borrowers pursuant to Section 0 of this Agreement.
  
       "Revolving Note" means a promissory note in the principal amount
  equal to the Maximum Amount, in substantially the form of Exhibit D
  attached to this Agreement, made by the Borrowers and payable to the
  order of the Lender, as amended, modified or supplemented from time to
  time.
  
       "Spread" shall mean the percentage corresponding to the Funded
  Debt Ratio set forth below, as calculated by the Lender.  The
  applicable Spreads on the date hereof are Price Level 2.  The Spreads
  will be adjusted on a quarterly basis based on the table set forth
  below:
  <TABLE>
  
  <CAPTION>
  
                                       Tier Two                   
                             Revolvi   Revolving  Tier Two   Tier Three
  Price                         ng     Component    Term     Term Loan
  Level  Funded Debt Ratio    Loans     Spread      Loan       Spread
                              Spread               Spread
  <S>    <C>                 <C>      <C>         <C>        <C>
    1    Equal to or less    1.75%     2.10%      2.10%      3.00%
         than 2.75 to 1
    2    Greater than 2.75   2.00%     2.35%      2.35%      3.25%
         to 1 but equal to
         or  less than 3.75
         to 1
    3    Greater than 3.75   2.25%     2.65%      2.65%      3.55%
         to 1
  
  </TABLE>
  
  
  The Spread will be adjusted to the percentage corresponding to the
  applicable Funded Debt Ratio in effect as of the last day of each
  fiscal quarter of the Company.  The adjustment will become effective as
  of the first day of the calendar month next succeeding the last day of
  the 30-day period within which the Company must deliver its financial
  statements to the Lender for such fiscal quarter pursuant to Section 0.
  No decrease in the Spread shall become effective if, at such time, any
  Default or Event of Default has occurred and is continuing.  If the
  Company's financial statements are not delivered to the Lender within
  the specified time periods, the Spread may be increased, at the option
  of the Lender, to Price Level 3 from the date on which the statements
  were due through the next adjustment date.
  
       "State" means the Commonwealth of Virginia.
  
       "Subordinated Debt" means (a) the Debt of the Company to Research
  Industries outstanding on the date hereof and subject to the terms of
  the Existing Subordination Agreement, and (b) any unsecured Debt of the
  Company incurred after the date hereof that has a maturity of not less
  than three years, is subordinated to the Obligations pursuant to a
  subordination agreement containing terms that are identical in all
  material respects to those contained in the Existing Subordination
  Agreement, and accruing interest at a rate acceptable to the Lender.
  
       "Subsidiary" as to any Person, means a corporation, partnership,
  limited partnership, limited liability company or other entity of which
  shares of stock or other ownership interests having ordinary voting
  power (other than stock or such other ownership interests having such
  power only by reason of the happening of a contingency) to elect a
  majority of the board of directors or other managers of such entity are
  at the time owned, or the management of which is otherwise controlled,
  directly or indirectly through one or more intermediaries, or both, by
  such Person.  Unless otherwise qualified, all references to a
  "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
  Subsidiary or Subsidiaries of the Company.
  
       "Synthetic Lease" means any synthetic lease, tax retention
  operating lease, off-balance sheet loan or similar off-balance sheet
  financing product where the transaction is considered Debt for borrowed
  money for federal income tax purposes but is classified as an operating
  lease in accordance with GAAP for financial reporting purposes.
  
       "Tangible Capital Funds" means, at any time, the sum of Tangible
  Net Worth plus Subordinated Debt.
  
       "Tangible Net Worth" means, at any time, amounts that would be
  included under redeemable preferred stock and stockholders' equity on
  the consolidated balance sheet of the Company and its Subsidiaries,
  provided that, in any event, such amounts are to be net of amounts
  carried on the books of the Company and its Subsidiaries for ()(1) any
  write-up in the book value of any assets of the Company resulting from
  a revaluation subsequent to the date of this Agreement, (2) investments
  in non-marketable securities, (3) treasury stock, (4) unamortized debt
  discount expense, (5) any cost of investments in excess of net assets
  acquired at any time of acquisition, (6) loans, advances or other
  amounts owed to the Company or any of its Subsidiaries by any of its
  officers, directors, shareholders, employees or Affiliates, except for
  travel advances made in the ordinary course of business, (7) leasehold
  improvements, (8) prepaid expenses, and (9) patents, patent
  applications, copyrights, trademarks, trade names, goodwill, research
  and development costs, organizational expenses, capitalized software
  costs and other like intangibles.
  
       "Termination Date" means July 31, 2000, and any extension or
  extensions thereof granted by the Lender in accordance with the
  provisions of Section 0(0) below.
  
       "Tier Two Borrowing Base" means, at any time, the sum of the
  following, without duplication, (a) 35% of Eligible Inventory, provided
  that the Tier Two Borrowing Base attributable to this clause (a) shall
  not exceed $1,000,000 at any time, plus (b) 80% of Eligible Bonded
  Receivables of up to $1,500,000 outstanding at any time, provided that
  the Tier Two Borrowing Base attributable to this clause (b) shall not
  exceed $1,200,000 at any time, plus (c) 5% of Eligible Tier Two Term
  Loan State and Local Receivables.
  
       "Tier Two Contribution" means, at any time, the sum of the
  following, without duplication:  (a) 80% of Eligible Bonded Receivables
  in excess of $1,500,000 outstanding, provided that the Tier Two
  Contribution attributable to this clause (a) shall not exceed
  $2,000,000 at any time, plus (b) 15% of Eligible Unbilled Receivables,
  provided that the Tier Two Contribution attributable to this clause (b)
  shall not exceed $500,000 at this time.
  
       "Tier Two Revolving Component" means, at any time, the amount by
  which the aggregate amount of outstanding Revolving Loans and Letters
  of Credit exceeds (a) 90% of Eligible Billed Government Receivables,
  plus (b) 85% of Eligible Billed Commercial Receivables.
  
       "Tier Three Term Loan" means the loan to be made by the Lender to
  the Borrowers pursuant to Section 2.3 of this Agreement.
  
       "Tier Three Term Note" means the $2,500,000 promissory note, in
  substantially the form of Exhibit E attached to this Agreement,
  evidencing the joint and several obligations of the Borrowers to repay
  the Tier Three Term Loan, together with interest thereon, and all
  extensions, renewals, modifications and amendments of such note.
  
       "Tier Two Term Loan" means the loan to be made by the Lender to
  the Borrowers pursuant to Section 2.2 of this Agreement.
  
       "Tier Two Term Note" means the $2,500,000 promissory note, in
  substantially the form of Exhibit F attached to this Agreement,
  evidencing the joint and several obligations of the Borrowers to repay
  the Tier Two Term Loan, together with interest thereon, and all
  extensions, renewals, modifications and amendments of such note.
  
        "UCC" means the Uniform Commercial Code as adopted in the State,
  and all amendments thereto.
  
       "Unused Fee Percentage" means (a) .25% per annum when Price Level
  1 is in effect for the Spread, (b) .30% per annum when Price Level 2 is
  in effect for the Spread, and (c) .35% per annum when Price Level 3 is
  in effect for the Spread.  Adjustments to the Unused Fee Percentage
  shall become effective on each date on which Spread adjustments become
  effective.
  
         Loans and Letters of Credit.
  
         Revolving Loans and Letters of Credit.
  
            Subject to the terms and conditions of this Agreement, the
  Lender agrees to make Revolving Loans to the Borrowers from time to
  time until the Termination Date in an aggregate principal amount not to
  exceed at any one time outstanding the Maximum Amount.  Up to the
  Maximum Amount, the Borrowers may borrow, repay without penalty and
  reborrow hereunder from the date of this Agreement until the
  Termination Date; provided, however, that no Revolving Loan will be
  disbursed by the Lender (1) if, after such disbursement the aggregate
  principal amount of the Revolving Loans and outstanding Letters of
  Credit would exceed the Borrowing Base, or (2) until the Tier Two Term
  Loan and the Tier Three Term Loan have been disbursed.
  
            The proceeds of the Revolving Loans shall be used to
  refinance Debt outstanding under the Existing Agreement and for short-
  term working capital purposes.
  
            The Company authorizes the Lender to make Revolving Loans
  from time to time in amounts sufficient to pay checks drawn on the
  operating accounts of the Company with the Lender, subject to the
  limitation set forth in Section 0(0) above, all as more particularly
  described in the Cash Management Agreement.  In addition, the Company
  may request that a Revolving Loan be made.  Any request for a Revolving
  Loan must be received by the Lender no later than 12:00 noon
  (Washington, D.C. time) on the date on which the Revolving Loan is to
  be made.  Each request must specify the amount of the Revolving  Loan
  and, at the option of the Lender, shall be accompanied by a current
  Borrowing Base Certificate and a current Aging.  The Lender, in its
  sole discretion, may accept requests from the Company by telephone.  If
  required by the Lender, any request made by telephone shall include all
  of the information required by a current Borrowing Base Certificate and
  a current Aging.  Requests made by telephone shall be confirmed in
  writing and delivered to the Lender, and if requested by the Lender,
  accompanied by the current Borrowing Base Certificate and the current
  Aging, within two Business Days after the date of the request.  Each
  Borrower appoints the Company as its agent to request and receive the
  proceeds of the Revolving Loans on behalf of all Borrowers.  The
  Company agrees to distribute the proceeds of the Revolving Loans among
  the Borrowers when and as needed by the Borrowers for working capital.
  Revolving Loans may be requested by those individuals designated by the
  Company from time to time in written instruments delivered to the
  Lender; provided, however, that the Borrowers shall remain liable with
  respect to any Revolving Loan disbursed by the Lender in good faith
  hereunder, even if such Loan is requested by an individual who has not
  been so designated.  The proceeds of each Revolving Loan will be
  credited to a Deposit Account maintained with the Lender by the Company
  pursuant to the Cash Management Agreement.  The Company agrees to
  confirm in writing from time to time, when and as requested by the
  Lender, the purpose for which the proceeds of each Revolving Loan were
  used.
  
            The unpaid principal balance of the Revolving Loans shall
  bear interest at a rate per annum equal to LIBOR plus the applicable
  Spread in effect from time to time, with the Tier Two Revolving
  Component Spread being the same as the Spread for the Tier Two Term
  Loan.  The interest rate on the Revolving Loans shall be determined
  initially based on LIBOR in effect on the Closing Date and shall be
  adjusted on the first Business Day of each succeeding calendar month
  (to be effective as of the first day of such calendar month if not a
  Business Day) to reflect LIBOR then in effect, and the applicable
  Spread shall be adjusted from time to time as provided in the
  definition of such term.  Payments of interest on each Revolving Loan
  shall be made on each Interest Payment Date, beginning on the Interest
  Payment Date next succeeding the date of disbursement of such Revolving
  Loan.
  
            The joint and several obligations of the Borrowers to repay
  the Revolving Loans, together with interest thereon, shall be evidenced
  by the Revolving Note.  The unpaid principal balance of the Revolving
  Note shall be payable on the Termination Date.
  
            The Lender from time to time may agree, in its sole
  discretion, to extend the Termination Date or increase the amount of
  Revolving Loans to be provided under this Agreement, or both.  During
  any such periods of extension, the remaining terms and conditions of
  this Agreement shall remain in full force and effect, and the Borrowers
  shall execute and deliver any amendments or modifications to the Loan
  Documents that the Lender may require in connection with any such
  extension or increase.  Nothing in this Section 0(0) shall obligate the
  Lender to grant such extensions or to increase the amount of credit
  provided under this Agreement.
  
            Subject to the terms and conditions of this Agreement, the
  Lender, in its sole and absolute discretion, may issue Letters of
  Credit for the account of the Borrowers from time to time until the
  Termination Date, upon the request of the Company; provided, however,
  that no Letter of Credit will be issued by the Lender if, after such
  issuance, the aggregate principal amount of the outstanding Revolving
  Loans and Letters of Credit would exceed the Borrowing Base.  Prior to
  the issuance of any Letter of Credit, the Lender must receive an
  appropriately completed Letter of Credit Agreement, executed by the
  Borrowers, not less than five Business Days prior to the date on which
  the Letter of Credit is to be issued.  Each such request shall specify
  the name of the beneficiary of the Letter of Credit, the amount and
  expiration date of the Letter of Credit and the purpose for which the
  Letter of Credit is being issued.  Unless otherwise approved by the
  Lender in its sole discretion, no Letter of Credit shall have a stated
  maturity of more than one year after the date of its issuance, and in
  no event shall a Letter of Credit expire later than the Termination
  Date.  The purpose for which each Letter of Credit is to be issued and
  the form of each Letter of Credit shall be subject to the Lender's
  approval.  The Borrowers shall pay to the Lender upon its demand
  therefor any amounts paid by the Lender under a Letter of Credit,
  together with interest on such amounts from the date of demand at the
  applicable per annum rate specified by the Lender in the applicable
  Letter of Credit Agreement.  The Borrowers shall pay such fees and
  commissions as the Lender shall require with respect to any Letter of
  Credit.
  
              Tier Two Term Loan.
  
            Subject to the terms and conditions of this Agreement, the
  Lender agrees to make the Tier Two Term Loan to the Borrowers in a
  principal amount equal to the lesser of $2,500,000 or the Tier Two
  Borrowing Base as of the Closing Date.  The Borrowers shall not be
  allowed to borrow the Tier Two Term Loan unless they first borrow the
  Tier Three Term Loan.  The proceeds of the Tier Two Term Loan shall be
  used to refinance Debt of the Borrowers to the Lender under the
  Existing Agreement.
  
            The unpaid principal balance of the Tier Two Term Loan from
  time to time outstanding shall bear interest at a per annum rate equal
  to LIBOR plus the Spread in effect from time to time.  The interest
  rate on the Tier Two Term Loan shall be determined initially based on
  LIBOR in effect on the Closing Date and shall be adjusted on the first
  Business Day of each succeeding calendar month (to become effective as
  of the first day of such calendar month if not a Business Day) to
  reflect LIBOR then in effect, and the Spread shall be adjusted from
  time to time as provided in the definition of such term.  Payments of
  interest on the Tier Two Term Loan shall be made on each Interest
  Payment Date, beginning on the Interest Payment Date next succeeding
  the Closing Date.
  
            The joint and several obligations of the Borrowers to repay
  the Tier Two Term Loan, together with interest thereon, shall be
  evidenced by the Tier Two Term Note.  The principal of the Tier Two
  Term Loan shall be payable in consecutive quarterly installments, each
  in the amount of the Required Quarterly Curtailment, due on the last
  day of each March, June, September, and December, beginning on the
  first such payment date next succeeding the payment in full of the Tier
  Three Term Loan, and continuing until Termination Date, when the unpaid
  principal balance of the Tier Two Term Loan and all accrued and unpaid
  interest thereon shall be due and payable.  The Borrowers shall have
  the right to prepay the Tier Two Term Note in whole or in part at any
  time after the Tier Three Term Loan has been paid in full.  Partial
  prepayments of the Tier Two Term Note shall be applied to installments
  due thereunder in the inverse order of their maturities.  Amounts
  prepaid with respect to the Tier Two Term Loan may not be reborrowed.
  
        Tier Three Term Loan.
  
            Subject to the terms and conditions of this Agreement, the
  Lender agrees to make the Tier Three Term Loan to the Borrowers in an
  amount not to exceed $2,500,000.  The proceeds of the Tier Three Term
  Loan shall be used to refinance Debt of the Borrowers to the Lender
  under the Existing Agreement.
  
            The unpaid principal balance of the Tier Three Term Loan from
  time to time outstanding shall bear interest at a per annum rate equal
  to LIBOR plus the Spread in effect from time to time.  The interest
  rate on the Tier Three Term Loan shall be determined initially based on
  LIBOR in effect on the Closing Date and shall be adjusted on the first
  Business Day of each succeeding calendar month (to become effective as
  of the first day of such calendar month if not a Business Day) to
  reflect LIBOR then in effect, and the Spread shall be adjusted from
  time to time as provided in the definition of such term.  Payments of
  interest on the Tier Three Term Loan shall be made on each Interest
  Payment Date, beginning on the Interest Payment Date next succeeding
  the Closing Date.
  
            The joint and several obligations of the Borrowers to repay
  the Tier Three Term Loan, together with interest thereon, shall be
  evidenced by the Tier Three Term Note.  The principal amount of the
  Tier Three Term Loan shall be payable in consecutive quarterly
  installments, each in the amount of the Required Quarterly Curtailment,
  due on the last day of each March, June, September and December,
  beginning on September 30, 1998.  If not sooner paid, the entire unpaid
  principal balance of the Tier Three Term Loan and all accrued and
  unpaid interest thereon shall be due and payable in full on the
  Termination Date.  The Borrowers shall have the right to prepay the
  Tier Three Term Note in whole or in part at any time.  Partial
  prepayments of the Tier Three Term Note shall be applied to
  installments due thereunder in the inverse order of their maturities.
  Amounts prepaid with respect to the Tier Three Term Loan may not be
  reborrowed.
  
         Modifications to Loans.
  
            If the Company achieves a Funded Debt Ratio of 3.5 or less,
  and if no Default or Event of Default has occurred and is continuing,
  the Lender agrees that upon the written request of the Company, the
  Lender will increase the Maximum Amount to $14,500,000, subject to the
  execution and delivery by the Borrowers of a Revolving Note in the
  amount of $14,500,000 and the amendment described in Section 2.4(e)
  below.
  
            If the Tier Two Term Loan and the Tier Three Term Loan are
  paid in full, and if no Default or Event of Default has occurred and is
  continuing, the Lender agrees that, upon the written request of the
  Company, the Lender will (1) increase the Maximum Amount to
  $15,000,000, or, if the Maximum Amount has previously been increased to
  $14,500,000 pursuant to Section 2.4(a), to $17,500,000, subject to the
  execution and delivery by the Borrowers of a Revolving Note in a
  principal amount equal to the increased Maximum Amount, and the
  amendment described in Section 2.4(e) below, and (2) execute an
  amendment to this Agreement pursuant to which (i) the Borrowing Base
  will be revised to be equal to the sum of (w) 90% of Eligible Billed
  Government Receivables, plus (x) 85% of Eligible Billed Commercial
  Receivables, plus (y) 25% of Eligible Inventory, provided that the
  revised Borrowing Base attributable to this clause (y) will not exceed
  $1,000,000, plus (z) 70% of Eligible Bonded Receivables, provided that
  the revised Borrowing Base attributable to this clause (z) will not
  exceed $3,000,000, and (ii) all references to the Tier Two Contribution
  and the Tier Two Revolving Component will be deleted.
  
            If the Company receives net proceeds of Equity Issuances and
  Subordinated Debt issuances after the date of this Agreement and prior
  to the December 31, 1998, in an aggregate amount of $4,500,000 or more,
  and if no Default or Event of Default has occurred and is continuing,
  the Lender agrees that it will, upon the written request of the
  Company, execute an amendment to this Agreement lowering each Spread to
   .25% per annum below the amounts set forth herein.
  
            If the Lender declines to finance the MPS Contract, the
  Lender agrees that it will, upon the Borrower's written request,
  execute an amendment to this Agreement pursuant to which up to
  $1,000,000 of the Company's capitalized investment in the MPS Joint
  Venture will not be deducted as an intangible asset for purposes of
  computing Tangible Net Worth.
  
            If the Maximum Amount is increased to $14,500,000 pursuant to
  Section 2.4(a), the Borrowers shall execute an amendment to this
  Agreement pursuant to which the requirements for the maximum Funded
  Debt Ratio set forth in Section 6.11(b) are reduced from 4.5 to 1 to 4
  to 1, 4.25 to 1 to 3.75 to 1, and 4 to 1 to 3.5 to 1, respectively.  If
  the Maximum Amount is increased to $17,500,000 pursuant to Section
  2.4(b), the Borrowers shall execute an amendment to this Agreement
  pursuant to which the maximum Funded Debt Ratio permitted by Section
  6.11(b) shall not exceed 3.5 to 1.
  
         Payments and Computations.  All payments due under this
  Agreement (including any payment or prepayment of principal, interest,
  fees and other charges) or with respect to the Notes, the Letter of
  Credit Agreements or the Loans shall be made in lawful money of the
  United States of America, in immediately available funds, without
  defense, setoff or counterclaim, to the Lender at its office at
  Commercial Loan Services, P.O. Box 26202, Richmond, Virginia 23260-
  6202, or at such other place as the Lender may designate, and shall be
  applied first to accrued fees, next to accrued late charges, next to
  accrued interest and then to principal.  If any payment of principal,
  interest or fees is due on a day other than a Business Day, then the
  due date will be extended to the next succeeding full Business Day and
  interest and fees will be payable with respect to the extension.  If
  any payment of principal, interest or fees is not made within ten days
  of its due date, the Borrowers agree to pay to the Lender a late charge
  equal to 5% of the amount of the payment; provided, however, that as
  long as a Borrower makes payments of principal, interest and fees
  through the Lender's automatic debit service, no late charge shall be
  payable if the Lender fails to debit any such payment when it is due
  (if sufficient collected funds are on deposit in such Borrower's
  account with the Lender), and such failure shall not constitute an
  Event of Default hereunder.  Upon the occurrence of an Event of Default
  and during the continuation of such Event of Default, interest shall
  accrue on the Loans at a per annum rate of 2% above the rate of
  interest that otherwise would be applicable.  Interest and fees shall
  be computed on the basis of a year of 360 days and actual days elapsed.
  The Lender may, but shall not be obligated to, debit the amount of any
  payment due from the Borrowers under this Agreement to any deposit or
  investment account of any Borrower maintained with the Lender or any
  Affiliate of the Lender.  No setoff, claim, counterclaim, reduction or
  diminution of any obligation of any defense of any kind or nature that
  a Borrower has or may have against the Lender (other than the defense
  of payment) shall be available against the Lender in any suit or action
  brought by the Lender to enforce this Agreement or any other Loan
  Document.  The foregoing shall not be construed as a waiver by the
  Borrowers of any rights or claims that the Borrowers may have against
  the Lender, but any recovery upon such rights and claims shall be had
  from the Lender separately, it being the intent of this Agreement and
  the other Loan Documents that the Borrowers shall be obligated to pay,
  absolutely and unconditionally, all amounts due hereunder and under the
  other Loan Documents.
  
         Increased Costs.  If, as a result of any Regulatory Change or
  for any other reason, the Lender incurs Increased Costs, the Borrowers
  agree to pay such Increased Costs to the Lender within ten Business
  Days after receipt by the Company of the Lender's invoice therefor.
  The invoice will be accompanied by a written statement of the Lender
  setting forth in reasonable detail the basis and the calculation of the
  Increased Costs.  The Lender's calculation shall include reasonable
  averaging and attribution methods to determine the Increased Costs
  attributable to the Loans and the Letters of Credit.
  
         Fees.
  
            In consideration of the expenses incurred by the Lender in
  connection with administering the Loans and monitoring the Borrowing
  Base, the Borrowers agree to pay to the Lender a commitment  fee on the
  daily average balance of the amount by which the Maximum Amount (as
  increased from time to time) exceeds the amount of outstanding
  Revolving Loans and Letters of Credit.  The commitment fee shall be
  payable for the period beginning on the date of this Agreement and
  ending on the Termination Date at a per annum rate equal to the Unused
  Fee Percentage in effect from time to time.  The commitment fee shall
  be payable quarterly, in arrears, on the last day of each March, June,
  September and December, beginning on September 30, 1998, and on the
  Termination Date.
  
            On the Closing Date, the Borrowers shall pay to the Lender a
  structuring and underwriting fee equal to $25,000.
  
         Primary Depository Relationship.  If the Company fails to
  maintain its Primary Operating Account with the Lender, interest shall
  accrue on the Loans at a per annum rate of 1.0% above the rate of
  interest that otherwise would be applicable, effective as of the first
  day following the day on which the Company moves its Primary Operating
  Account.
  
         Mandatory Prepayment.  The Borrowers shall first prepay the
  Revolving Loans and then provide cover for the Letters of Credit, as
  specified below, upon the Lender's demand therefor, to the extent that
  the aggregate amount of outstanding Revolving Loans and Letters of
  Credit exceeds the Borrowing Base at any time.  In the event that the
  Borrowers shall be required to provide cover for the Letters of Credit,
  the Borrowers shall effect the same by paying to the Lender immediately
  available funds in an amount equal to the required amount, which funds
  shall be retained by the Lender in a cash collateral account until such
  time as the Letters of Credit shall have been terminated and all
  Obligations with respect to the Letter of Credit are paid in full.
  
         Optional Termination Date.  The Borrowers may terminate the
  Lender's obligations to make Revolving Loans and issue Letters of
  Credit under this Agreement provided that (a) the Company gives the
  Lender not less than 30 days' prior written notice of such termination,
  specifying the Optional Termination Date, (b) the Borrowers pay in
  full, on the Optional Termination Date, all Obligations, and (c) the
  Borrowers shall, on the Optional Termination Date, provide cover for
  the Letters of Credit pursuant to Section 2.9.
  
        Covenants, Representations and Other Terms Regarding Collateral.
  
         Security Interest.  To secure the Obligations, each Borrower
  grants to the Lender, its successors and assigns, a first priority
  security interest in the Accounts Receivable, the Deposit Accounts, the
  Equipment, the General Intangibles, the Intellectual Property, the
  Inventory and the Investment Property, all additions and accessions
  thereto and replacements thereof, all proceeds and products thereof,
  all books of account and records, including all computer software
  relating thereto, all policies of insurance on any property of a
  Borrower and all proceeds of such policies.
  
         Receivables.
  
            Each Borrower represents and warrants as to each and every
  Eligible Receivable now existing that:  (1) it is a bona fide existing
  obligation, valid and enforceable against the Customer, for software
  installed or licensed, goods sold or leased or services rendered in the
  ordinary course of business; (2) it is subject to no dispute, defense
  or offset in excess of $75,000 except as disclosed in writing to the
  Lender; (3) all instruments, chattel paper and other evidence of
  indebtedness issued to a Borrower with respect to any Eligible
  Receivable have been delivered to the Lender, and, together with all
  supporting documents delivered to the Lender, are genuine, complete,
  valid and enforceable in accordance with their terms; (4) it is not
  subject to any discount, allowance or special terms of payment except
  as disclosed in writing to the Lender; and (5) it is not and shall not
  be subject to any prohibition or limitation upon assignment.  Each
  Borrower covenants and agrees that each Eligible Receivable arising
  after the date of this Agreement will be in conformance with the
  foregoing representations.
  
            Each Borrower shall immediately notify the Lender of (1) any
  dispute in excess of $75,000 with a Customer and (2) the bankruptcy,
  insolvency, receivership, assignment for the benefit of creditors or
  suspension of business of any Customer of which such Borrower has
  knowledge.  No Borrower shall compromise or discount any Receivable of
  more than $10,000 without the prior written consent of the Lender
  except for (i) ordinary trade discounts or allowances for prompt
  payment, and (ii) prior to the occurrence of a Default or an Event of
  Default, such compromises or discounts that, after giving effect
  thereto, will not cause the Borrowing Base to be less than the unpaid
  principal balance of the Revolving Loans and Letters of Credit then
  outstanding.
  
            Upon the written request of the Lender, each Borrower shall
  establish and maintain a lockbox with the Lender and shall direct all
  Customers to make payments on Receivables to such lockbox by printing
  such direction on all invoices given to Customers.  Each Borrower also
  shall remit to such lockbox or deliver to the Lender all payments on
  Receivables received by such Borrower.  Such payments shall be remitted
  or delivered in their original form on the day of receipt.  All notes,
  checks and other instruments so received by each Borrower shall be duly
  endorsed to the order of the Lender.  The payments remitted to the
  lockbox and all payments delivered to the Lender shall be credited to a
  cash collateral account maintained by the Lender in the name of the
  Company over which the Lender shall have the exclusive power of
  withdrawal.  All funds in the cash collateral account shall be retained
  in the cash collateral account and be held as security for the
  Obligations, and funds in the cash collateral account may be applied to
  the Obligations by the Lender from time to time, whether or not such
  Obligations are then due.
  
            Upon the occurrence of a Default or an Event of Default, the
  Lender shall have the right to notify account debtors of its security
  interest in the Receivables and require payments to be made directly to
  the Lender, and to facilitate direct collection of the Receivables, the
  Lender shall have the right to take over the post office boxes of the
  Borrowers or make other arrangements, with which the Borrowers shall
  cooperate, to receive the mail of each Borrower, provided that the
  Lender shall not be entitled to receive any mail that does not concern
  the Receivables.
  
            The Borrowers shall execute all other agreements, instruments
  and documents and shall perform all further acts that the Lender may
  require with respect to Receivables owing by the Government to ensure
  compliance with the Assignment of Claims Act.
  
         Inventory and Equipment.
  
            All of the Inventory and Equipment will be kept only at the
  places of business listed on Schedule 3.3 to this Agreement.  The
  Borrowers shall give the Lender prior written notice before any
  Inventory or Equipment is moved or delivered to a location other than
  such designated places of business, and the Lender's lien and security
  interest will be maintained despite the location of the Inventory or
  Equipment.  Without the prior written consent of the Lender, no
  Borrower shall move or deliver the Inventory or Equipment with a book
  value in any instance or in the aggregate of $100,000 or more to a
  location outside of the United States of America.
  
            Each Borrower shall keep and maintain the Equipment in good
  operating condition and repair, reasonable wear and tear excepted.  No
  Borrower shall permit any of the Equipment to become a fixture to any
  real estate unless subordination agreements satisfactory to the Lender
  are obtained by any owner or mortgagee of such real estate.  Each
  Borrower, immediately on demand therefore by the Lender, shall deliver
  to the Lender any and all evidence of ownership of any of the
  Equipment.  None of the Equipment shall be sold, transferred, leased or
  otherwise disposed of without the prior written consent of the Lender,
  except for (1) sales or dispositions of obsolete or unnecessary
  Equipment, and (2) sales or dispositions of any item of Equipment that
  is replaced contemporaneously with Equipment of comparable value and
  utility.
  
            The Lender's security interest shall extend and attach to
  Inventory that is presently in existence and is owned by each Borrower
  or in which a Borrower purchases or acquires an interest at any time
  and from time to time in the future, whether such Inventory is in
  transit or in such Borrower's constructive, actual or exclusive
  occupancy or possession or not and wherever the same may be located,
  including, without limitation, all Inventory that may be located at the
  premises of a Borrower or upon the premises of any carriers, forwarding
  agents, truckers, warehousemen, vendors, selling agents, finishers,
  convertors or other third parties who may have possession of the
  Inventory.
  
            Upon the sale, exchange, lease or disposition of the
  Inventory, the security interest of the Lender, without break in
  continuity and without further formality or act, shall continue in and
  attach to all cash and non-cash proceeds of such sale, exchange, lease
  or disposition, including Inventory returned or rejected by Customers
  or repossessed by either a Borrower or the Lender.  As to any such
  sale, exchange, lease or disposition, the Lender shall  have all of the
  rights of an unpaid seller, including stoppage in transit, replevin,
  detinue and reclamation.
  
            Except for licenses, sales or leases made in the ordinary
  course of business and Liens permitted by this Agreement, no Borrower
  shall sell, lease, encumber, license or dispose of, or permit the sale,
  lease, encumbrance or disposal of, any Inventory without the prior
  written consent of the Lender.
  
            Each Borrower shall have the Equipment and Inventory insured
  against loss or damage by fire, theft, burglary, pilferage, loss in
  transportation and such other hazards as the Lender shall specify, by
  insurers satisfactory to the Lender, in amounts satisfactory to the
  Lender and under policies containing loss payable clauses satisfactory
  to the Lender.  Any such insurance policies, or evidence thereof
  satisfactory to the Lender, shall be deposited with the Lender.  Each
  Borrower agrees that the Lender shall have a security interest in such
  policies and the proceeds thereof, and, if any loss should occur, the
  proceeds may be applied to the payment of the Obligations or to the
  replacement or restoration of the Inventory or Equipment damaged or
  destroyed, as the Lender may elect or direct.  After the occurrence of
  a Default or an Event of Default, the Lender shall have the right to
  file claims under any insurance policies, to receive, receipt and given
  acquittance for any payments that may be made thereunder, and to
  execute any and all endorsements, receipts, releases, assignments,
  reassignments or other documents that may be necessary to effect to the
  collection, compromise, or settlement of any claims under any of the
  insurance policies.
  
         Intellectual Property.
  
            All of each Borrower's present and future Intellectual
  Property that is subject to United States copyright, patent or
  trademark protection, the sale, licensing or other disposition of which
  results in the creation of Receivables pursuant to a Material IP
  Agreement, shall be registered with the United States Copyright Office
  or the United States Patent and Trademark Office, as applicable, prior
  to the date such Borrower includes any such Receivables in the
  Borrowing Base.
  
            Upon the occurrence of an Event of Default, in addition to
  any other remedies available to the Lender, each Borrower agrees that
  the Lender shall have a non-exclusive, royalty-free license to use, or
  to grant a license to use, the Intellectual Property.
  
         Defense of Collateral.  Each Borrower, at its expense, will
  defend the Collateral against any claims or demands adverse to the
  Lender's security interest and will promptly pay when due all taxes or
  assessments levied against such Borrower on the Collateral.
  
         Information Regarding Collateral.  Each Borrower shall provide
  the Lender such information as the Lender from time to time reasonably
  may request with respect to the Collateral, including, without
  limitation, statements describing, designating, identifying and
  evaluating all Collateral.
  
         Perfection of Security Interest.  Each Borrower shall perform
  any and all steps in all relevant or appropriate jurisdictions as may
  be necessary or reasonably requested by the Lender to perfect, maintain
  and protect the Lender's security interest in the Collateral.  All
  instruments and chattel paper that are part of the Collateral shall be
  delivered to the Lender, duly endorsed to the order of the Lender.
  Each Borrower shall pay the taxes and costs of, or incidental to, any
  recording or filing of any financing statements concerning the Lender's
  security interests.  Each Borrower agrees that a carbon, photographic,
  photostatic or other reproduction of this Agreement or of a financing
  statement is sufficient as a financing statement.
  
         Power of Attorney.  Each Borrower appoints the Lender and any
  officer, employee or agent of the Lender, as the Lender from time to
  time may designate, as attorneys-in-fact for a Borrower to perform all
  actions necessary or desirable in the discretion of the Lender to
  effect the provisions of this Agreement and to carry out the intent of
  this Agreement, to do any act that a Borrower is required to do
  pursuant to the terms of this Agreement and to exercise such rights and
  powers as each Borrower might exercise with respect to the Collateral,
  all at the cost and expense of the Borrowers.  Each Borrower agrees
  that neither the Lender nor any other such attorney-in-fact will be
  liable for any acts of omission or commission, unless such acts were
  willful and malicious or grossly negligent, nor for any error of
  judgment or mistake of law or fact.  This power is coupled with an
  interest and is irrevocable so long as any Obligations are outstanding.
  The Lender agrees that it shall not be entitled to exercise its rights
  under this Section 3.8 prior to the occurrence of a Default or an Event
  of Default.
  
         Limitations on Obligations.  It is expressly agreed by each
  Borrower that, notwithstanding any other provision of this Agreement,
  each Borrower shall remain liable under each Receivable and contract
  giving rise to each Receivable to observe and perform all the
  conditions and obligations to be observed and performed by each
  Borrower in accordance with and pursuant to the terms and provisions of
  each such Receivable and contract.  The Lender shall not have any
  obligation or liability under any Receivable or contract by reason of
  or arising out of this Agreement or the assignment of such Receivable
  or contract to the Lender or the receipt by the Lender of any payment
  relating to the Receivable pursuant to this Agreement, nor shall the
  Lender be required or obligated in any manner to perform or fulfill any
  of the obligations of a Borrower under or pursuant to any Receivable or
  contract, or to make any payment, or to make any inquiry as to the
  nature or the sufficiency of any payment received by it or the
  sufficiency of any performance by any party under any Receivable, or to
  present or file any claim, or to take any action to collect or enforce
  any performance or the payment of any amounts that may have been
  assigned to it or to which it may be entitled at any time or times.
  
         Indemnification.  In any suit, proceeding or action brought by
  or against the Lender relating to the Collateral, the Borrowers will
  save, indemnify and keep the Lender harmless from and against all
  expense, loss or damage suffered by reason of any defense, setoff,
  counterclaim, recoupment or reduction of liability whatsoever of any
  obligor thereunder, arising out of a breach by a Borrower of any
  obligation thereunder or arising out of any other agreement,
  indebtedness or liability at any time owing to or in favor of such
  obligor or its successors from a Borrower, and all such obligations of
  the Borrowers shall be and remain enforceable against and only against
  the Borrowers and shall not be enforceable against the Lender.  The
  foregoing obligation of the Borrowers to indemnify the Lender shall not
  extend to any suit, proceeding or action arising out of the Lender's
  gross negligence or willful or malicious misconduct.
  
          Representations and Warranties.  Each Borrower represents and
  warrants that:
  
         Incorporation, Good Standing and Due Qualification.  Each
  Borrower (a) is a corporation duly organized, validly existing and in
  good standing under the laws of the jurisdiction of its incorporation
  or formation; (b) has the power and authority to own its assets and to
  transact the business in which it is now engaged or in which it is
  proposed to be engaged; and (c) is duly qualified as a foreign
  corporation and in good standing under the laws of each other
  jurisdiction in which such qualification is required.  As of the date
  of this Agreement, the Company has no Subsidiaries other than
  Engineering, Technical, Realty and Technology, and no other Borrower
  has any Subsidiary.
  
         Power and Authority.  The execution, delivery and performance by
  the Borrowers of the Loan Documents have been duly authorized by all
  necessary corporate actions and do not and will not (a) require any
  consent or approval of, or filing or registration with, any
  governmental agency or authority or the stockholders of a Borrower;
  (b) contravene a Borrower's articles of incorporation or bylaws;
  (c) result in a breach of or constitute a default under any agreement
  or instrument to which a Borrower is a party or by which it or its
  properties may be bound or affected; (d) result in or require the
  creation or imposition of any Lien upon or with respect to any of the
  properties now owned or hereafter acquired by a Borrower; or (e) cause
  a Borrower to be in default under any law, rule, regulation, order,
  writ, judgment, injunction, decree, determination or award applicable
  to the Borrower.
  
         Legally Enforceable Agreement.  This Agreement is, and each of
  the other Loan Documents when delivered under this Agreement will be,
  legal, valid and binding obligations of each Borrower, enforceable
  against each Borrower in accordance with their respective terms.
  
         Financial Statements.  The financial statements of the Borrowers
  that have been furnished to the Lender in connection with this
  Agreement are complete and correct and fairly present the financial
  condition of the Borrowers as of the dates of such statements.  Since
  the dates of such statements, there has been no Material Adverse Change
  in the condition (financial or otherwise), business or operations of
  the Borrowers.
  
         Litigation.  There is no pending or threatened action,
  investigation or proceeding against or affecting a Borrower before any
  court, governmental agency or arbitrator, that, in any one case or in
  the aggregate, if adversely determined, would have a Material Adverse
  Effect on the financial condition, operations, properties or business
  of a Borrower.
  
         Ownership and Liens.  Each Borrower has title to all of its
  assets, including the Collateral, and none of the Collateral or such
  assets is subject to any Lien, except Liens permitted by this
  Agreement.
  
         ERISA.  No Borrower has incurred any material "accumulated
  funding deficiency" within the meaning of  302 of ERISA or  412 of
  the Code, nor has the Borrower incurred any material liability to the
  PBGC in connection with any "employee pension benefit plan" (as defined
  in  3(2) of ERISA) established or maintained by a Borrower.  None of
  the employee pension benefit plans (as defined above) of a Borrower,
  nor any trusts created thereunder, nor any trustee or administrator
  thereof, has engaged in a "prohibited transaction," as such term is
  defined in  406 of ERISA or  4975 of the Code, that could subject
  such plans or any of them, any such trust, or any trustee or
  administrator thereof, or any party dealing with such plans or any such
  trust to any material liability or tax or penalty on prohibited
  transactions imposed by such  406 or 4975.  Neither the Borrowers nor
  any Affiliate of the Borrowers are now, or at any time in the past have
  been, obligated to make contributions to a "multiemployer plan," as
  such term is defined in  4001(a)(3) of ERISA.
  
         Taxes.  Each Borrower has filed all tax returns (federal, state
  and local) required to be filed and has paid all taxes, assessments and
  governmental charges and levies thereon to be due, including interest
  and penalties.
  
         Debt.  No Borrower is in no manner directly or contingently
  obligated with respect to any Debt that is not permitted by this
  Agreement.  No Borrower is in default with respect to any Debt.
  
         Corporate Name; Chief Executive Office.  During the five years
  immediately preceding the date of this Agreement, no Borrower nor any
  predecessor of a Borrower has used any name other than its current
  corporate name and the names listed on Schedule 4.10.  The chief
  executive office of each Borrower, within the meaning of Section
  9.103(3)(d) of the UCC, is at 5250 Cherokee Avenue, Alexandria,
  Virginia.
  
         Debarment and Suspension.  No event has occurred and no
  condition exists that may result in the debarment or suspension of a
  Borrower from any contracting with the Government, and no Borrower nor
  any Affiliate of a Borrower has been subject to any such debarment or
  suspension prior to the date of this Agreement.
  
         Year 2000.  Each Borrower has undertaken reasonable efforts to
  determine whether all material Date Affected Information Technology
  used in the business operations of each Borrower is Fully Date Capable,
  and, to the extent necessary, each Borrower has initiated efforts to
  make its material Date Affected Information Technology Fully Date
  Capable prior to the date that the failure to be Fully Date Capable
  would adversely affect the operation thereof.
  
         Material Contracts.  Attached hereto as Schedule 4.13 is a
  correct and complete list, as of the date of this Agreement, of each
  Material Contract.  No Borrower, Subsidiary or any other party thereto
  is in material default under any Material Contract.
  
         Intellectual Property.  As of the date hereof, the Borrowers and
  the Subsidiaries do not own or hold any Intellectual Property subject
  or entitled to United States copyright, patent or trademark protection,
  other than as listed on Schedule 4.14 attached hereto.  All such
  Intellectual Property has been registered with the United States Patent
  and Trademark Office and the Register of Copyrights.  Each Borrower and
  each Subsidiary owns or has the right to use under valid license
  agreements or otherwise all Intellectual Property that is required or
  necessary for the conduct of the business of each Borrower and its
  Subsidiaries as now conducted or proposed to be conducted without any
  conflict with any rights of any other Person.
  
         True and Complete Information.  All factual and financial
  information (taken as a whole) previously furnished to the Lender in
  connection with this Agreement by the Borrowers and each Subsidiary is,
  and all factual and financial information (taken as a whole) furnished
  to the Lender by the Borrowers and the Subsidiaries after the date of
  this Agreement will be, true and accurate in all material respects on
  the date on which such information is dated, certified or furnished,
  and is not, and will not be, incomplete by omitting to state any fact
  necessary to make such information (taken as a whole) not misleading at
  such time in light of the circumstances under which such information
  was provided.
  
         Integrated Business.  The Borrowers and the Subsidiaries will be
  engaged as an integrated group in providing services and goods to their
  respective Customers.  The integrated operation will require financing
  on such a basis that credit supplied to the Borrowers be made available
  from time to time to all Borrowers and Subsidiaries of the Borrowers,
  as required for the successful operation of the Borrowers and the
  Subsidiaries separately, and the integrated operation as a whole.  In
  that connection, the Borrowers and the Subsidiaries will request that
  the Lender provide the Loans to and issue the Letters of Credit for the
  Borrowers to finance such operation.  Each Borrower will derive
  benefit, directly and indirectly, from the credit so extended to the
  Borrowers, both in its separate capacity and as a member of the
  integrated group.
  
         Employee Relations.  Except as set forth on Schedule 4.17, no
  Borrower is a party to any collective bargaining agreement nor has any
  labor union been recognized as the representative of its employees.  No
  Borrower knows of any pending, threatened or contemplated strikes, work
  stoppage or other collective labor disputes involving its employees.
  
         Burdensome Provisions.  No Borrower is a party to any indenture,
  agreement, lease or other instrument, or subject to any corporate or
  partnership restriction, governmental approval or applicable law which
  is so unusual or burdensome as in the foreseeable future could be
  reasonably expected to have a Material Adverse Effect.  The Borrowers
  do not presently anticipate that future expenditures needed to meet the
  provisions of any statutes, orders, rules or regulations of a
  governmental authority will be so burdensome as to have a Material
  Adverse Effect.
  
         Absence of Defaults.  No event has occurred and is continuing
  which constitutes a Default or an Event of Default.  No event has
  occurred and is continuing which constitutes, or which with the passage
  of time or giving of notice or both would constitute, a default or
  event of default by any Borrower under any Material Contract or
  judgment, decree or order to which any Borrower is a party or by which
  any Borrower or any of its properties may be bound or which would
  require any Borrower to make any payment thereunder prior to the
  scheduled maturity date therefor.
  
            Survival of Representations and Warranties, Etc.  All
  statements contained in any certificate, financial statement or other
  instrument delivered by or on behalf of any Borrower to the Lender
  pursuant to or in connection with this Agreement or any of the other
  Loan Documents (including, but not limited to, any such statement made
  in or in connection with any amendment thereto or any statement
  contained in any certificate, financial statement or other instrument
  delivered by or on behalf of any Borrower prior to the date hereof and
  delivered to the Lender in connection with closing the transactions
  contemplated hereby) shall constitute representations and warranties
  made by the Borrowers under this Agreement.  All representations and
  warranties made under this Agreement and the other Loan Documents shall
  be deemed to be made at and as of the date hereof, the Closing Date and
  at and as of the date of the disbursement of any Loan or issuance of
  any Letter of Credit, except to the extent that such representations
  and warranties expressly relate solely to an earlier date (in which
  case such representations and warranties shall have been true and
  accurate on and as of such earlier date).  All such representations and
  warranties shall survive the effectiveness of this Agreement, the
  execution and delivery of the Loan Documents, the making of the Loans
  and the issuance of the Letters of Credit.
  
         Affirmative Covenants.  Each Borrower covenants and agrees that:
  
         Maintenance of Existence.  Each Borrower will preserve and
  maintain its corporate existence and good standing in the jurisdiction
  of its formation, and qualify and remain qualified, as a foreign
  corporation in each jurisdiction in which such qualification is
  required.
  
         Maintenance of Records.  Each Borrower will keep adequate
  records and books of account, in which complete entries will be made in
  accordance with GAAP, reflecting all financial transactions of such
  Borrower.  The principal records and books of account, including those
  concerning the Collateral, shall be kept at the chief executive office
  of the Borrowers described above.  No Borrower will move such records
  and books of account or change its chief executive office or the name
  under which it does business without (a) giving the Lender at least 30
  days' prior written notice, and (b) executing and delivering financing
  statements satisfactory to the Lender prior to such move or change.
  
         Maintenance of Properties.  Each Borrower will maintain, keep
  and preserve all of its properties (tangible and intangible) necessary
  or useful in the proper conduct of its business in good working order
  and condition, ordinary wear and tear excepted.
  
         Conduct of Business.  Each Borrower will continue to engage in a
  business of the same general type as conducted by it on the date of
  this Agreement.
  
         Maintenance of Insurance.  Each Borrower will maintain insurance
  with financially sound and reputable insurance companies or
  associations in such amounts and covering such risks as are usually
  carried by companies engaged in the same or a similar business and
  similarly situated, including, without limitation, insurance covering
  the Inventory and Equipment as required hereby.
  
         Compliance with Laws.  Each Borrower will comply in all respects
  with all applicable laws, rules, regulations and orders (including,
  without limitation, ERISA), such compliance to include, without
  limitation, paying, before the same become delinquent, all taxes,
  assessments and governmental charges imposed upon it or upon its
  property.
  
         Right of Inspection.  At any reasonable time and from time to
  time, with reasonable notice, each Borrower will permit the Lender or
  any agent or representative of the Lender to audit, examine and verify
  the Collateral, examine and make copies of and abstracts from the
  records and books of account of, and visit the properties of, each
  Borrower, and to discuss the affairs, finances and accounts of each
  Borrower with any of its officers and directors and each Borrower's
  independent accountants.  The Borrowers agree to reimburse the Lender
  for all reasonable audit and Collateral verification and examination
  expenses incurred by it.
  
         Reporting Requirements.  The Borrowers will furnish to the
  Lender:
  
            Monthly Financial Statements of the Company.  As soon as
  available and in any event within 30 days after the end of each
  calendar month, financial statements of the Company and its
  Subsidiaries as of the end of such month in substantially the same
  format as Schedule 5.8(a) attached hereto, and prepared in accordance
  with the GAAP.  Such financial statements shall be certified to be
  accurate by a Principal Officer of the Company (subject to year-end
  adjustments) and shall be accompanied by a Covenant Compliance
  Certificate for such period;
            
            Annual Financial Statements of the Company.  As soon as
  available and, in any event, within 120 days after the end of each
  fiscal year of the Company, audited financial statements consisting of
  the consolidated and consolidating balance sheets of the Company and
  its Subsidiaries as of the end of such fiscal year, and consolidated
  and consolidating statements of income, stockholders' equity and cash
  flows of the Company and its Subsidiaries for such fiscal year, all in
  reasonable detail and all prepared in accordance with GAAP, accompanied
  by an opinion thereon acceptable to the Lender of Ernst & Young or any
  other independent certified public accounting firm selected by the
  Company and acceptable to the Lender;
  
            Management Letters.  Promptly upon receipt thereof, copies of
  any reports submitted to the Company by independent certified public
  accountants in connection with examination of the financial statements
  of the Company made by such accountants;
  
            Notice of Litigation.  Promptly after the commencement
  thereof, notice of all actions, suits, investigations and proceedings
  before any court or governmental department, commission, board, bureau,
  agency or instrumentality, domestic or foreign, affecting a Borrower,
  that, if determined adversely to such Borrower, could have a Material
  Adverse Effect;
  
            Notice of Defaults and Events of Default.  As soon as
  possible and, in any event, within ten days after the occurrence of
  each Default and Event of Default, a written notice setting forth the
  details of such Default or Event of Default and the action that is
  proposed to be taken by the Borrowers with respect thereto;
  
            SEC Reports; Proxy Statements, etc.  Promptly after the
  sending or filing thereof, copies of all proxy statements, financial
  statements and reports that the Company files with the Securities and
  Exchange Commission or sends to its stockholders;
  
            Borrowing Base Certificate and Receivables Detail.  As soon
  as available and, in any event, within 20 days after the end of each
  calendar month, (1) a Borrowing Base Certificate appropriately
  completed and executed by a Principal Officer of the Company and
  including a computation of the Borrowing Base as of the last day of
  such calendar month, accompanied by (i) an Aging as of the last day of
  the previous calendar month, (ii) such other supporting documents as
  the Lender from time to time reasonably may request, and (iii) such
  invoices, instruments, chattel paper and other evidence of indebtedness
  representing any Receivables, duly endorsed to the Lender, as the
  Lender may request; (2) an unbilled Receivables report in form and
  detail acceptable to the Lender, and (3) a contract backlog report
  reflecting all contracts of the Borrowers, the work completed and
  billed under such contracts, the work remaining to be completed and
  billed and the type and term of each contract.  A copy of each item
  described in this Section 0(0) shall be delivered within the deadline
  specified to the Lender's Government Contracts Administration Division
  at 8245 Boone Boulevard, 3rd Floor, Vienna, Virginia  22182-3871,
  Attention:  Betty Lillard;
  
            Inventory Report.  Within 20 days after the end of each
  calendar month, a report, in form and detail acceptable to the Lender,
  listing all Inventory of the Borrowers on hand as of the last day of
  such calendar month;
  
            Customer List.  If required by the Lender, within 90 days
  after the end of each fiscal quarter of the Company, a current Customer
  List;
  
            Management Changes.  At least 30 days prior written notice of
  any new appointments to the offices of the president, chairman or chief
  financial officer of any Borrower;
  
            Projections.  At least 30 days prior to the end of each
  fiscal year, consolidated and consolidating balance sheets, income
  statements and cash flows of the Borrowers setting forth projections
  for each fiscal quarter of the next succeeding fiscal year, and setting
  forth in reasonable detail the assumptions underlying such projections;
  
            Notice of Material Adverse Effect.  Prompt notice of any
  change in the business, assets, liabilities, financial condition,
  results of operations or business prospects of the Company or any
  Subsidiary which has had or may have a Material Adverse Effect;
  
            Government Contract Audits.  Promptly after a Borrower's
  receipt thereof, notice of any final decision of a contracting officer
  disallowing costs aggregating more than $100,000;
  
            Material Contracts.  Promptly after entering into any
  Material Contract or amendment thereof (other than contracts awarded to
  a Borrower in the ordinary course of business and amendments thereof),
  a notice containing a description of such Material Contract or
  amendment (with copies thereof if requested by the Lender), and prompt
  written notice of the termination or breach by any Person of a Material
  Contract; and
  
            General Information.  Such other information respecting the
  condition or operations, financial or otherwise, of the Borrowers as
  the Lender from time to time reasonably may request.
  
         Year 2000 Compliance.  The Borrowers shall initiate and maintain
  a program to identify any Date Affected Information Technology used in
  the business operations of the Borrowers that is not Fully Date
  Capable, and, in connection therewith, undertake in good faith to make
  all material Date Affected Information Technology used in such business
  operations Fully Date Capable prior to the date that the failure to be
  Fully Date Capable would adversely affect the operation thereof.  The
  Borrowers shall advise the Lender in the event that any Borrower has
  reason to believe that any material Date Affected Information
  Technology will not be Fully Date Capable prior to the date that the
  failure to be Fully Date Capable would adversely affect the operation
  thereof, and advise the Lender in the event that any Borrower has
  reason to believe that it will be adversely affected by the failure of
  any affiliated or nonaffiliated entity to have its Date Affected
  Information Technology Fully Date Capable.  Each Borrower agrees to
  provide the Lender, upon request, access to and copies of information
  necessary to permit the Lender to determine whether such Borrower's
  Date Affected Information Technology is, or will be, Fully Date
  Capable, including, without limitation, (i) minutes, resolutions and
  reports to and from such Borrower's Board of Directors or committee
  thereof, (ii) internally generated reports, consultant reports or
  auditor's report regarding the status of such Borrower's Date Affected
  Information Technology, (iii) all documents relating to a "Year 2000"
  program, and (iv) officer certificates or other statements requested by
  the Lender regarding the status of Date Affected Information
  Technology.  The Borrowers acknowledge that the Lender's right to
  receive, or the Lender's receipt of, the foregoing information does not
  impose any obligation on the Lender to assess the accuracy or effect of
  such information, or to recommend or require remedial action of any
  kind.  The Borrowers hereby acknowledge that the actual or potential
  failure or degradation of any material Date Affected Information
  Technology due to its failure to be Fully Date Capable may constitute a
  Material Adverse Effect.
  
         Negative Covenants.  The Borrowers agree that, without first
  obtaining the prior written consent of the Lender:
  
         Liens.  The Borrowers will not create, incur, assume or permit
  to exist, any Lien upon or with respect to any of their properties, now
  owned or hereafter acquired, except:  (a) Liens in favor of the Lender;
  (b) Liens that are incidental to the conduct of the business of a
  Borrower, are not incurred in connection with the obtaining of credit
  and do not materially impair the value or use of assets of such
  Borrower; (c) purchase-money Liens, whether now existing or hereafter
  arising (including those arising out of a Capital Lease) on any fixed
  assets provided that (1) any property subject to a purchase-money Lien
  is acquired by a Borrower in the ordinary course of its respective
  business and the Lien on any such property is created contemporaneously
  with such acquisition, (2) each such Lien shall attach only to the
  property so acquired, (3) the Debt secured by all such Liens shall not
  exceed the aggregate at any time outstanding $600,000 in the aggregate
  for all of the Borrowers; and (d) the Lien on the Technology Inventory
  in favor of IBM Credit Corporation.
  
         Debt.  The Borrowers will not create, incur, assume or permit to
  exist, any Debt, except:  (a) the Obligations; (b) Subordinated Debt;
  (c) ordinary trade accounts payable; (d) Debt of a Borrower (including
  Debt arising out of a Capital Lease) or any Subsidiary secured by
  purchase-money Liens permitted by this Agreement; (e) Debt of
  Technology to IBM Credit Corporation arising out of the Inventory floor
  plan financing provided by IBM Credit Corporation to Technology; and
  (f) Debt of the Company incurred to finance the MPS Contract if the
  Lender does not provide financing for the MPS Contract, provided that
  any such Debt for which a Borrower is liable shall be included as
  Funded Debt.
  
         Mergers, etc.  No Borrower will merge or consolidate with any
  Person, or permit any Subsidiary to do so, except that one Borrower may
  merge into or transfer assets to any other Borrower.
  
         Sale and Leaseback; Synthetic Leases.  No Borrower will (a)
  sell, transfer or otherwise dispose of, any real or personal property
  to any Person and thereafter, directly or indirectly, lease back the
  same or similar property; or (b) create, incur, assume, or permit to
  exist any obligations under a Synthetic Lease.
  
        Dividends; Distributions; Subordinated Debt Payments.  The
  Company will not declare or pay any dividends or distributions; or make
  any payments with respect to Subordinated Debt; or purchase, redeem,
  retire, prepay or otherwise acquire for value any of its capital stock
  or Subordinated Debt now or hereafter outstanding; or make any
  distribution of assets to its stockholders as such whether in cash,
  assets or obligations of the Company; or allocate or otherwise set
  apart any sum for the payment of any dividend or distribution on, or
  for the purchase, redemption or retirement of, any shares of its
  capital stock; or make any other distribution by reduction of capital
  or otherwise in respect of any shares of its capital stock; except
  that, subject to the compliance by the Company with the provisions of
  Section 6.11 below, (a) the Company may declare and deliver dividends
  and make distributions payable solely in common stock of the Company,
  and (b) provided that after giving effect thereto, no Default or Event
  of Default has occurred or shall occur, the Company may pay dividends
  out of retained earnings to its shareholders and make regularly
  scheduled payments of interest due with respect to Subordinated Debt.
  
         Sale of Assets.  No Borrower will sell, lease, assign, transfer,
  license or otherwise dispose of, any of its now owned or hereafter
  acquired assets, except for (a) Inventory and Intellectual Property
  sold, licensed or leased in the ordinary course of business, and
  (b) the sale or other disposition of assets other than Inventory and
  $100,000 in the aggregate for all Borrowers during any fiscal year.
  
         Loans.  No Borrower will make any loan or advance to any Person
  except for (a) travel advances or other advances in an aggregate amount
  not to exceed $100,000 at any one time outstanding, which are made to
  any employee of any Borrower in the ordinary course of such Borrower's
  business and in furtherance of such employee's performance under a
  contract with a Customer and (b) loans made to a Borrower by any other
  Borrower, and (c) loans to officers and employees of the Borrowers not
  to exceed $100,000 in the aggregate outstanding at any time for all
  Borrowers, provided that, after giving effect thereto, no Default or
  Event of Default shall occur.
  
         Guaranties, etc.  No Borrower will assume, guarantee, endorse or
  otherwise be or become directly or contingently responsible or liable
  (including, but not limited to, any liability arising out of any
  agreement to purchase any obligation, stock, assets, goods or services,
  or to supply or advance any funds, assets, goods or services, or to
  maintain or cause such Person to maintain a minimum working capital or
  net worth or otherwise to assure the creditors of any Person against
  loss) for obligations of any Person, or permit any such guaranties or
  liabilities to exist, except guaranties by endorsement of negotiable
  instruments for deposit or collection or similar transactions in the
  ordinary course of business.
  
         Acquisitions.  No Borrower will form a Subsidiary, become a
  partner or joint venturer with any person, or purchase or acquire all
  or substantially all of the assets of any Person, or any capital stock
  of or ownership interest in any other Person, other than the Company's
  investment in the MPS Joint Venture.  If the Lender consents to the
  acquisition or formation of a Subsidiary by a Borrower, such Borrower
  will cause such Subsidiary to (a) execute and deliver to the Lender an
  Assumption Agreement, and (b) satisfy all of the conditions set forth
  in Section 7.3. The Lender agrees that it will not withhold its consent
  to a Borrower entering into a joint venture or teaming agreement with
  another Person in the ordinary course of business, provided that such
  Borrower does not assume any obligations of any other Person in
  connection therewith.
  
         Transactions with Affiliates.  No Borrower will enter into any
  transaction, including, without limitation, the purchase, sale or
  exchange of property or the rendering of any service, with any
  Affiliate, except in the ordinary course of and pursuant to the
  reasonable requirements of such Borrower's business and upon fair and
  reasonable terms no less favorable to such Borrower than would be
  applicable in a comparable arm's-length transaction with a Person not
  an Affiliate.
  
         Financial Covenants.  The Company will not:
  
            Tangible Capital Funds.  Permit Tangible Capital Funds to be
  less than the Minimum Compliance Level as of the end of any fiscal
  quarter, beginning with the fiscal quarter ended on June 30, 1998;
  
            Funded Debt Ratio.  Permit the Funded Debt Ratio as of the
  end of any fiscal quarter to be greater than (1) 4.5 to 1 through and
  including December 31, 1998; (2) 4.25 to 1 as of March 31, 1999 through
  and including June 30, 1999; and (3) 4 to 1 as of September 30, 1999,
  and at all times thereafter;
  
            Capital Expenditures.  Incur Capital Expenditures of greater
  than $600,000 during any 12-month period; or
  
            Debt Coverage Ratio.  Permit the Debt Coverage Ratio to be
  less than (1) 1.15 to 1 as of June 30, 1998; (2) 1.25 to 1 as of
  September 30, 1998; (3) 1.30 to 1 as of December 31, 1998; and (4) 1.35
  to 1 as of March 31, 1999, and as of the end of each fiscal quarter
  thereafter.
  
         Conditions of Lending.  The making of the Loans shall be subject
  to the following conditions:
  
         Conditions Precedent to Closing.  The initial disbursement of
  the Loans shall be subject to the following conditions precedent,
  provided, however, that if the Lender elects to make such initial
  disbursement prior to all of such conditions precedent being satisfied,
  the Borrowers agree that they shall cause all such conditions to be
  satisfied within 30 days after such disbursement:
  
            The Loan Documents shall have been appropriately completed,
  duly executed by the parties thereto, recorded where necessary and
  delivered to the Lender.
  
            No Default or Event of Default shall have occurred and be
  continuing.
  
            All representations and warranties contained herein shall be
  true and correct at the Closing Date.
  
            All legal matters incident to the Loans shall be satisfactory
  to counsel for the Lender, and the Borrowers agree to execute and
  deliver to the Lender such additional documents and certificates
  relating to the Loans as the Lender reasonably may request.
  
            Financing statements in form and substance satisfactory to
  the Lender shall have been properly filed in each office where
  necessary to perfect the Lender's security interest in the Collateral,
  termination statements shall have been filed with respect to any other
  financing statements covering all or any portion of the Collateral and
  all taxes and fees with respect to such recording and filing shall have
  been paid by the Borrowers.
  
            All Intellectual Property subject or entitled to United
  States copyright, patent or trademark protection, and such documents as
  are necessary to perfect the Lender's security interest therein, shall
  have been duly registered with the United States Patent and Trademarks
  Office or the Register of Copyrights, as applicable, and the Lender
  shall have received a search report confirming that no Liens are
  recorded with respect thereto.
  
            The Borrowers shall have delivered to the Lender
  (1) certified copies of evidence of all corporate actions taken by the
  Borrowers to authorize the execution and delivery of the Loan
  Documents, (2) certified copies of the article of incorporation, and
  bylaws of the Borrowers, (3) a certificate of incumbency for the
  officers of the Borrowers executing the Loan Documents, (4) a good
  standing certificate, dated not more than 30 days prior to the Closing
  Date, from the appropriate state official of any state in which the
  Borrowers are incorporated or qualified to do business, and (5) such
  additional supporting documents as the Lender or counsel for the Lender
  reasonably may request.
  
            The Lender shall have received (1) a Borrowing Base
  Certificate, (2) an Aging, and (3) a report setting forth the status of
  all contracts relating to Eligible Receivables from the most recent
  fiscal month and shall be in form and substance satisfactory to the
  Lender.
  
            The Lender shall have received a field examination report of
  the Collateral in form and substance acceptable to it.
  
            The Lender shall have received the written opinion of counsel
  to the Company, in form and substance satisfactory to the Lender.
  
            The Lender shall have received financing statement, judgment
  and tax lien searches reflecting that there are no Liens outstanding
  against the Collateral other than those permitted by the Agreement.
  
            The Lender shall have received evidence that the Borrowers
  have obtained the insurance required by this Agreement.
  
            The Lender shall have received such landlord and mortgage
  waivers as it shall require.
  
         Conditions Precedent to Subsequent Disbursements.  The
  disbursement and issuance of subsequent Loans and Letters of Credit
  shall be subject to the following conditions precedent:
  
            No Default or Event of Default shall have occurred and be
  continuing.
  
            No Material Adverse Effect shall have occurred in the
  financial condition of any Borrower.
  
            All representations and warranties of the Borrowers contained
  in the Loan Documents shall be true and correct at the date of such
  disbursement.
  
            No change shall have occurred in any law or regulations
  thereunder or interpretations thereof that, in the opinion of counsel
  for the Lender, would make it illegal for the Lender to make Loans
  hereunder.
  
            If required by the Lender, the Company shall have delivered
  to the Lender a current Borrowing Base Certificate and a current Aging,
  duly executed by the president or treasurer of the Company and
  appropriately completed, and such other supporting data and
  documentation relating to the Collateral as may be required by the
  Lender in its reasonable discretion.
  
         Conditions Precedent to Subsidiaries Becoming Borrowers.  Any
  Subsidiary of the Company shall become a Borrower under this Agreement,
  subject to the satisfaction of the following conditions precedent:
  
            The Subsidiary shall execute and deliver to the Lender an
  Assumption Agreement.
  
            No Default or Event of Default shall have occurred and be
  continuing.
  
            All legal matters incident to such Subsidiary becoming a
  Borrower shall be satisfactory to counsel for the Lender, and the
  Subsidiary shall execute and deliver to the Lender such additional
  documents and certificates relating to the Loans as the Lender may
  reasonably request.
  
            The Lender shall have received an opinion of counsel to the
  Subsidiary, addressed to the Lender, covering such matters as the
  Lender may request, in form and substance satisfactory to the Lender.
  
            Financing statements in form and substance satisfactory to
  the Lender shall have been properly filed in each office where
  necessary to perfect the security interest of the Lender in the
  Collateral of the Subsidiary, termination statements shall have been
  filed with respect to any other financing statements covering all or
  any portion of such Collateral (except with respect to Liens or
  security interests permitted by this Agreement), all taxes and fees
  with respect to such recording and filing shall have been paid by such
  Subsidiary and the Lender shall have received such lien searches or
  reports as it shall require confirming that the foregoing filings and
  recordings have been completed.
  
            The Subsidiary shall have delivered the following documents
  to the Lender, each of which shall be certified as of the date on which
  it is to become a Borrower, by its secretary or representative
  performing similar functions:  (1) copies of evidence of all actions
  taken by the Subsidiary to authorize the execution and delivery of the
  Assumption Agreement and the other Loan Documents; (2) copies of the
  articles or certificate of incorporation and bylaws (or comparable
  organizational documents) of the Subsidiary; and (3) a certificate as
  to the incumbency and signatures of the officers executing the Loan
  Documents.
  
            The Lender shall have received a certificate of good standing
  and qualification (or similar instrument) issued by the appropriate
  state official of the state of incorporation of the Subsidiary, dated
  within 30 days of the date of the applicable Loan Documents.
  
            The Lender shall have received a listing and aging of
  Accounts Receivable, a Borrowing Base Certificate, an Inventory
  schedule, a report setting forth the status of all contracts relating
  to its Eligible Receivables and such other financial information of
  such Subsidiary as may be requested by the Lender from time to time,
  all of which shall be of a current date and shall be in form and
  substance satisfactory to the Lender.
  
            If required by the Lender, the Lender shall have received a
  satisfactory field examination of the Collateral and internal control
  systems of the Subsidiary performed by a consultant selected by the
  Lender, and the Borrowers shall have reimbursed the Lender for the cost
  of such consultant.
  
            If required by the Lender, it shall have received a landlord
  waiver from each landlord of the Subsidiary, which shall be in form and
  substance acceptable to the Lender.
  
            All Intellectual Property of such Subsidiary that is subject
  to a Material IP Agreement shall have been duly registered with the
  Register of Copyrights or the United States Patent and Trademark
  Office, as applicable, all documents necessary to perfect the Lender's
  security interest therein shall have been recorded in such office, and
  the Lender shall have received evidence that it has a first priority
  perfected Lien with respect thereto.
  
            The Borrowers agree no Receivable of a Subsidiary shall be
  included in the Borrowing Base prior to the date on which all of the
  foregoing conditions are satisfied.
  
         Default.
  
         Events of Default.  Each of the following shall constitute an
  Event of Default under this Agreement:
  
            Failure of a Borrower to pay any Obligation to the Lender,
  including, without limitation, the principal of or interest on any
  Notes or the Loans, or amounts due under a Letter of Credit Agreement,
  when the same shall become due and payable, whether at maturity, or
  otherwise, and such failure shall continue for a period of ten days; or
  
            If a Borrower refuses to permit the Lender to inspect,
  examine, verify or audit the Collateral in accordance with the
  provisions of this Agreement; or
  
            Failure of a Borrower to perform or observe any covenant
  contained in Section 6 of this Agreement; or
  
            Failure of the Borrowers to perform their obligations under
  Section 5.8(g) and such failure shall continue for a period of five
  days; or
  
            Failure of a Borrower to perform or observe any other term,
  condition, covenant, warranty, agreement or other provision contained
  in this Agreement (except any such failure resulting in the occurrence
  of another Event of Default described in this Section), within 30 days
  after the earlier of actual knowledge thereof by such Borrower or
  written notice from the Lender to the Company specifying such failure;
  or
  
            If any representation or warranty made or deemed made by a
  Borrower in this Agreement, any Loan Document or any statement or
  representation made in any certificate, report or opinion delivered
  pursuant to this Agreement (including any Covenant Compliance
  Certificate, Borrowing Base Certificate or financial statements) or in
  connection with any borrowing under this Agreement was materially
  untrue or is breached in any material respect; or
  
            If, as a result of default, any other obligation of a
  Borrower for the payment of any Debt becomes or is declared to be due
  and payable prior to the expressed maturity thereof, unless and to the
  extent that the declaration is being contested in good faith in a court
  of appropriate jurisdiction; or
  
            A Borrower makes an assignment for the benefit of creditors,
  files a petition in bankruptcy, petitions or applies to any tribunal
  for any receiver or any trustee of such Borrower or any substantial
  part of its property, or commences any proceeding relating to such
  Borrower under any reorganization, arrangement, readjustments of debt,
  dissolution or liquidation law or statute of any jurisdiction, whether
  now or hereafter in effect; or
  
            If, within 60 days after the filing of a bankruptcy petition
  or the commencement of any proceeding against a Borrower seeking any
  reorganization, arrangement, composition, readjustment, liquidation,
  dissolution or similar relief under any present or future statute, law
  or regulation, the proceeding shall not have been dismissed, or, if,
  within 60 days after the appointment, without the consent or
  acquiescence of such Borrower, of any trustee, receiver or liquidator
  of a Borrower or of all or any substantial part of the properties of a
  Borrower, the appointment shall not have been vacated; or
  
            Any judgment against a Borrower in excess of $100,000 or any
  attachment in excess of $100,000 against any property of a Borrower
  that remains unpaid, undischarged, unbonded or undismissed for a period
  of 30 days, unless and to the extent that the judgment or attachment is
  appealed in good faith in a court of higher jurisdiction and the appeal
  remains pending; or
  
            If any of the following events shall occur or exists with
  respect to any Borrower or any employee benefit or other plan
  established, maintained or to which contributions have been made by any
  Borrower, any Affiliate of any Borrower or any other Person that,
  together with the Borrower, would be treated as a single employer under
   4001 of ERISA, and the Lender determines that the same would have a
  Material Adverse Effect:  ()(1) any prohibited transaction (as defined
  in  406 of ERISA or  4975 of the Code), (2) any reportable event (as
  defined in  4043 of ERISA and the regulations issued thereunder),
  (3) the filing under  4041 of ERISA of a notice of intent to terminate
  any such plan or the termination of such plan, or (4) the institution
  of proceedings by the PBGC under  4042 of ERISA for the termination
  of, or the appointment of a trustee to administer, any such plan; or
  
            If any Borrower, any Subsidiary or any Affiliate of any
  Borrower or Subsidiary shall be debarred or suspended from any
  contracting with the Government; or
  
            The Loan Documents shall for any reason cease to create a
  valid and perfected first priority security interest in any of the
  Collateral purported to be covered thereby or if any Loan Document
  ceases to be in full force and effect; or
  
            If the Lender, in good faith, deems itself insecure in its
  reasonable judgment or determines that an event has occurred that will
  result in a Material Adverse Effect, and the cause for such
  determination is not cured to the Lender's satisfaction within 30 days
  after notice from the Lender to the Company specifying the Lender's
  basis therefor; or
  
            The dissolution, liquidation or termination of existence of a
  Borrower; or
  
            If a Borrower fails to give the Lender any notice required by
  this Agreement within ten days after the occurrence of the event giving
  rise to the obligation to give such notice, provided that such failure
  to give notice shall not constitute an Event of Default if the
  applicable Event of Default or breach is cured within any grace period
  that otherwise would have been applicable had the notice been timely
  given; or
  
            The occurrence of an event of default under any other Loan
  Document and the expiration of all applicable cure periods; or
  
            If:
  
                 Any "person" or "group" (as such terms are used in
       Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
       as amended (the "Exchange Act")), but excluding Research
       Industries and Arch C. Scurlock, is or becomes the "beneficial
       owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
       Act, except that a Person will be deemed to have "beneficial
       ownership" of all securities that such Person has the right to
       acquire, whether such right is exercisable immediately or only
       after the passage of time), directly or indirectly, of more than
       25% of the total voting power of the then outstanding voting stock
       of the Company; or
       
                 During any twelve-month period (commencing on or after
       the Agreement Date), a majority of the Board of Directors of the
       Company shall no longer be composed of individuals (A) who were
       members of such Board of Directors on the first date of such
       period, (B) whose election or nomination to such Board of
       Directors was approved by individuals referred to in clause (A)
       above constituting at the time of such election or nomination at
       least a majority of such Board of Directors or (C) whose election
       or nomination to such Board of Directors was approved by
       individuals referred to in clauses (A) and (B) above constituting
       at the time of such election or nomination at least a majority of
       such Board of Directors; or
       
            If any Subordinated Debt holder gives written notice to the
  Lender purporting to terminate the effect of the subordination thereof
  to the Obligations.
  
         Remedies upon Default.  Upon the occurrence of an Event of
  Default, the following provisions shall be applicable:
  
            The Lender, at its option, may terminate its obligation to
  make Loans and issue Letters of Credit under this Agreement and declare
  all Obligations, whether incurred prior to, contemporaneous with or
  subsequent to the date of this Agreement, and whether represented in
  writing or otherwise, immediately due and payable and may exercise all
  of its rights and remedies against the Borrowers and any Collateral.
  The Lender also may require the Borrowers to pay, and the Borrowers
  agree to pay, to the Lender an amount of cash equal to the aggregate
  amount of the Letters of Credit then outstanding, and any amounts paid
  by the Borrowers shall be held by the Lender in a cash collateral
  account, over which the Lender shall have the exclusive power of
  withdrawal, as security for the Obligations arising out of the Letters
  of Credit and the Letter of Credit Agreements.
  
            The Lender may foreclose its lien and security interest in
  the Collateral in any way permitted by law and shall have, without
  limitation, the remedies of a secured party under the UCC.  The Lender
  may enter the premises of any Borrower without legal process and
  without incurring liability to any Borrower and remove the Collateral
  to such place or places as the Lender may deem advisable, or the Lender
  may require the Borrowers to assemble the Collateral and make the
  Collateral available to the Lender at a convenient place and, with or
  without having the Collateral at the time or place of sale, the Lender
  may sell or otherwise dispose of all or any part of the Collateral
  whether in its then condition or after further preparation or
  processing, either at public or private sale or at any broker's board,
  in lots or in bulk, for cash or for credit, at any time or place, in
  one or more sales and upon such terms and conditions as the Lender may
  elect.  The Lender shall give not less than five Business Days' prior
  written notice to the Borrowers of the time and place of any public
  sale of the Collateral or the time after which the Collateral may be
  sold in a private sale, which each Borrower agrees constitutes
  commercially reasonable notice.  At any such sale the Lender may be the
  purchaser, subject to the applicable provisions of the UCC.
  
            The proceeds from any sale of the Collateral by the Lender
  shall first be applied to any costs and expenses in securing possession
  of the Collateral and to any expenses in connection with the sale.  The
  net proceeds will be applied toward the payment of the Obligations.
  Application of the net proceeds as to particular Obligations or as to
  principal, interest and fees shall be in the Lender's absolute
  discretion.  Any deficiency will be paid to the Lender by the Borrowers
  forthwith upon demand, and any surplus will be paid to the Borrowers,
  as applicable.
  
            The Lender is hereby authorized at any time or from time to
  time, without notice to the Borrowers (any such notice being expressly
  waived by each Borrower), to setoff and apply any deposit (general or
  special, time or demand, provisional or final) or investment account at
  any time held, including any certificate of deposit, and other
  indebtedness at any time owed by the Lender or any of its affiliates,
  whether or not any such deposit or indebtedness is then due, to or for
  the credit or account of any Borrower against any and all of the
  Obligations.  The Lender shall give prompt written notice of any setoff
  to the Borrowers.
  
            EACH BORROWER, HAVING KNOWLEDGE THAT IT MAY BE ENTITLED TO
  NOTICE AND A HEARING PRIOR TO REPOSSESSION OF THE COLLATERAL, WAIVES
  ANY RIGHT THAT IT MAY HAVE UNDER EXISTING OR FUTURE LAW TO NOTICE OF
  FORECLOSURE AND ANY OTHER ACT DESCRIBED HEREIN, TO ANY HEARING THAT MAY
  BE HELD RELATING TO FORECLOSURE OR ANY OTHER SUCH ACTS, AND TO ANY
  NOTICE THAT MAY BE REQUIRED TO BE GIVEN BY THE LENDER PRIOR TO SUCH
  HEARING, OTHER THAN THE NOTICES REQUIRED BY THE LOAN DOCUMENTS OR THE
  UCC.  THE LENDER AND EACH BORROWER EXPRESSLY WAIVE THEIR RESPECTIVE
  RIGHTS TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION RELATING TO
  THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
  
            The Lender itself may perform or comply, or otherwise cause
  performance or compliance, with the obligations of a Borrower contained
  in this Agreement, including, without limitation, the obligations of
  each Borrower to defend and insure the Collateral.  The expenses of the
  Lender incurred in connection with such performance or compliance,
  together with interest thereon at the Prime Rate plus 2%, shall be
  payable by the Borrowers to the Lender on demand and shall constitute
  Obligations.
  
         Miscellaneous.
  
         Collection Costs.  The Borrowers shall pay all of the reasonable
  costs and expenses incurred by the Lender in connection with the
  enforcement of this Agreement and the other Loan Documents, including,
  without limitation, reasonable attorneys' fees and expenses.
  
         Modification and Waiver.  Except for the other documents
  expressly referred to in this Agreement, this Agreement contains the
  entire agreement between the parties and supersedes all prior
  agreements between the Lender and the Borrowers concerning the Loans
  and the Letters of Credit.  No modification or waiver of any provision
  of this Agreement or any other Loan Document and no consent by the
  Lender to any departure therefrom by any Borrower shall be effective
  unless such modification or waiver shall be in writing and signed by an
  officer of the Lender with a title of vice president or any higher
  office, and the same shall then be effective only for the period and on
  the conditions and for the specific instances and purposes specified in
  such writing.  No notice to or demand on any Borrower in any case shall
  entitle any Borrower to any other or further notice or demand in
  similar or other circumstances.  No failure or delay by the Lender in
  exercising any right, power or privilege hereunder shall operate as a
  waiver thereof; nor shall any single or partial exercise thereof
  preclude any other or further exercise thereof or the exercise of any
  other right, power or privilege.  The rights and remedies of the Lender
  contained in this Agreement and the other Loan Documents are cumulative
  and not exclusive of any rights or remedies otherwise provided by law.
  
         Notices.  All notices, requests, demands or other communications
  provided for in this Agreement (except for requests for Loans made by
  telephone as described in Section 0 above) shall be in writing and
  shall be delivered by hand, sent prepaid by Federal Express (or a
  comparable overnight delivery service) or sent by the United States
  mail, certified, postage prepaid, return receipt requested, to the
  Lender at 8245 Boone Boulevard, 3rd Floor, Vienna, Virginia 22182,
  Attention:  Mr. Timothy J. Duggan, or to the Borrowers at 5250 Cherokee
  Avenue, Alexandria, Virginia 22312, Attention:  Mr. John D. D'Amore.
  Any notice, request, demand or other communication delivered or sent in
  the foregoing manner shall be deemed given or made (as the case may be)
  upon the earliest of (a) the date it is actually received, (b) the
  business day after the day on which it is delivered by hand, (c) the
  business day after the day on which it is properly delivered to Federal
  Express (or a comparable overnight delivery service), or (d) the third
  business day after the day on which it is deposited in the United
  States mail.  Any Borrower or the Lender may change its address by
  notifying the other party of the new address in any manner permitted by
  this Section 0.  Rejection or other refusal to accept or the inability
  to deliver because of a changed address of which no notice was given
  shall not affect the date of such notice, election or demand sent in
  accordance with the foregoing provisions.
  
         Counterparts.  This Agreement may be executed by the parties
  hereto individually or in any combination, in one or more counterparts,
  each of which shall be an original and all of which together constitute
  one and the same agreement.
  
         Captions.  The captions of the various sections and paragraphs
  of this Agreement have been inserted only for the purposes of
  convenience; such captions are not a part of this Agreement and shall
  not be deemed in any manner to modify, explain, enlarge or restrict any
  of the provisions of this Agreement.
  
         Survival of Agreements.  All agreements, representations and
  warranties made herein shall survive the delivery of this Agreement and
  the making and renewal of the Loans hereunder.
  
         Fees and Expenses.  Whether or not any Loans are made hereunder,
  the Borrowers shall pay on demand all out-of-pocket costs and expenses
  incurred by the Lender in connection with the preparation, negotiation,
  execution, delivery, filing, recording and enforcement of this
  Agreement and any of the documents executed or delivered in connection
  herewith, including, without limitation, the reasonable fees and
  expenses of counsel to the Lender, and local counsel who may be
  retained by the Lender, with respect to this Agreement and such
  documents and any amendments thereof and with respect to advising the
  Lender as to its rights and responsibilities thereunder.
  
         Use of Defined Terms.  All terms defined in this Agreement shall
  have the defined meanings when used in certificates, reports or other
  documents made or delivered pursuant to this Agreement, unless the
  context shall otherwise require.
  
         Successors and Assigns.  This Agreement shall inure to the
  benefit of and bind the respective parties hereto and their successors
  and assigns; provided, however, that no Borrower may assign its rights
  hereunder without the prior written consent of the Lender.
  
         Accounting Terms.  All accounting terms used herein that are not
  otherwise expressly defined in this Agreement shall have the meanings
  respectively given to them in accordance with GAAP in effect on the
  date of this Agreement.  Except as otherwise provided herein, all
  financial computations made pursuant to this Agreement shall be made in
  accordance with GAAP and all balance sheets and other financial
  statements shall be prepared in accordance with GAAP.  Except as
  otherwise provided herein, whenever reference is made in any provision
  of this Agreement to a balance sheet or other financial statement or
  financial computation with respect to a Borrower, such terms shall mean
  a consolidated balance sheet or other financial statement or financial
  computation, as the case may be, with respect to such Borrower and its
  Subsidiaries.
  
         Confidentiality.  Except as otherwise provided by applicable
  law, the Lender shall utilize all non-public information obtained
  pursuant to the requirements of this Agreement which has been
  identified as confidential or proprietary by the Company in accordance
  with its customary procedure for handling confidential information of
  this nature and in accordance with safe and sound banking practices but
  in any event may make disclosure:  (a) to any of its affiliates
  (provided they shall agree to keep such information confidential in
  accordance with the terms of this Section); (b) as reasonably required
  by any bona fide assignee, participant or other transferee in
  connection with the contemplated transfer of any Loan or participations
  therein (provided they shall agree to keep such information
  confidential in accordance with the terms of this Section); (c) as
  required by any governmental authority or representative thereof or
  pursuant to legal process; (d) to the Lender's independent auditors,
  counsel and other professional advisors (provided they shall be
  notified of the confidential nature of the information and they agree
  to keep such information confidential); and (e) after the happening and
  during the continuance of an Event of Default, to any other Person, in
  connection with the exercise by the Lender of rights hereunder or under
  any of the other Loan Documents.
  
         Limitation of Liability.  Each Borrower hereby waives, releases,
  and agrees not to sue the Lender or any of the Lender's Affiliates,
  officers, directors, employees, attorneys, or agents for punitive
  damages in respect of any claim in connection with, arising out of, or
  in any way related to, this Agreement or any of the other Loan
  Documents, or any of the transactions contemplated by this Agreement or
  financed hereby.
  
         Waiver.  EACH OF THE LENDER AND THE BORROWERS EXPRESSLY WAIVES
  ITS RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION OR OTHER
  DISPUTE RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
  
         Severability.  If any provision of any Loan Document is held to
  be illegal, invalid or unenforceable under present or future laws
  during the term of this Agreement, such provision shall be fully
  severable, such Loan Document shall be construed and enforced as if
  such illegal, invalid or unenforceable provision had never comprised a
  part of such Loan Document, and the remaining provisions of such Loan
  Document shall remain in full force and effect and shall not be
  affected by the illegal, invalid or unenforceable provision or by its
  severance from such Loan Document.
  
         Consent to Jurisdiction.  Each party to this Agreement hereby
  irrevocably submits generally and unconditionally for itself and in
  respect of its property to the jurisdiction of the Circuit Court for
  Fairfax County, Virginia, or the United States District Court for the
  Eastern District of Virginia, Alexandria Division, over any suit,
  action or proceeding arising out of or relating to this Agreement, any
  Loan Document or the Obligations.  Each party to this Agreement hereby
  irrevocably waives, to the fullest extent permitted by law, any
  objection that it may now or hereafter have to the laying of venue in
  any such court and any claim that any such court is an inconvenient
  forum.  Each Borrower hereby agrees and consents that, in addition to
  any methods of service of process provided for under applicable law,
  all service of process in any such suit, action or proceeding in the
  courts designated above may be made by certified or registered mail,
  return receipt requested, directed to such Borrower at its address for
  notice stated in Section 0 above, or at a subsequent address of which
  the Lender received actual notice from such Borrower in accordance with
  the terms hereof, and service so made shall be complete five days after
  the same shall have been so mailed.  The foregoing provisions shall not
  limit the right of the Lender or any other party hereto to serve
  process in any other manner permitted by law or limit the right of the
  Lender or other party hereto to bring any suit, action or proceeding or
  to obtain execution on any judgment rendered in any suit, action or
  proceeding in any other appropriate jurisdiction or in any other
  manner.
  
         Interpretation.
  
            This Agreement and the rights and obligations of the parties
  hereunder shall be construed and interpreted in accordance with the
  laws of the State, without reference to conflict of laws principles.
  
            The representations, warranties, covenants and agreements
  contained in this Agreement shall be deemed to have been given and
  undertaken by the Borrowers jointly and severally.
  
         Amendment and Restatement.  The Lender and the Borrowers agree
  that the Existing Agreement is amended and restated in its entirety by
  this Agreement.  This Agreement is an amendment, and not a novation, of
  the Existing Agreement.
  
                       [SIGNATURES ON FOLLOWING PAGE]
                                     
       <PAGE>
  
       IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
  Agreement to be signed by their duly authorized representatives all as
  of the day and year first above written.
  
       LENDER:
  
                                CRESTAR BANK,
                                 a Virginia banking corporation
                                
                                By:  ___________________________
                                Name:     ___________________________
                                Title:    ___________________________
                                
                                
                                BORROWERS:
                                
                                HALIFAX CORPORATION,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX ENGINEERING, INC.,
                                 a Virginia corporation
                                
                                By: ______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX TECHNICAL SERVICES, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                  [SIGNATURES CONTINUE ON FOLLOWING PAGE]
                                <PAGE>
                                
                                
                                HALIFAX REALTY, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX TECHNOLOGY SERVICES COMPANY,
                                a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                <PAGE>
                                
                       LIST OF SCHEDULES & EXHIBITS
  
  
                 Exhibit A      - Assumption Agreement
                 
                 Exhibit B      - Borrowing Base Certificate
                 
                 Exhibit C      - Covenant Compliance Certificate
                 
                 Exhibit D      - Form of Revolving Note
                 
                 Exhibit E      - Form of Tier Three Term Note
                 
                 Exhibit F      - Form of Tier Two Term Note
                 
                 Schedule 1          - Eligible Inventory Locations
                 
                 Schedule 3.3        - Equipment and Inventory Locations
                 
                 Schedule 4.10       - Corporate Names and Chief
                 Executive Offices
                 
                 Schedule 4.13       - Intellectual Property
                 
                 Schedule 4.14       - Material Contracts
                 
                 Schedule 4.17       - Collective Bargaining Agreements
                 
                 Schedule 5.8(a)     - Form of Monthly Financials
                 
  <PAGE>
                                 EXHIBIT A
  
                                  Form of
                           Assumption Agreement
  
       THIS ASSUMPTION AGREEMENT (as the same may be amended, modified or
  supplemented from time to time, the Assumption), dated as of
  _____________, _____, made by ____________________________, a
  _____________ corporation (the Subsidiary), in favor of the Lender (as
  defined below), recites and provides:
  
                              R E C I T A L S
  
       Pursuant to the terms of a Fifth Amended and Restated Loan and
  Security Agreement, dated as of June 25, 1998 (as amended, modified or
  supplemented from time to time, the Loan Agreement), between Halifax
  Corporation, a Virginia corporation (the Company), Halifax Engineering,
  Inc., a Virginia corporation (Engineering), Halifax Technical Services,
  Inc., a Virginia corporation (Technical), Halifax Realty, Inc., a
  Virginia corporation (Realty), and Halifax Technology Services Company,
  a Virginia corporation (Technology, and together with the Company,
  Engineering, Technical, and Realty, the Original Borrowers), and
  Crestar Bank, a Virginia banking corporation (the Lender), the Lender
  agreed to extend credit to the Original Borrowers.  Terms defined in
  the Loan Agreement shall have the same defined meanings when such terms
  are used in this Assumption.
  
       [The Company owns 100% of the capital stock of the Subsidiary.]
  The Original Borrowers and the Subsidiary, together with the other
  Subsidiaries of the Original Borrowers, are engaged in business on a
  consolidated and integrated basis, and their integrated operations
  include applying for and making use of credit on a joint basis.
  Accordingly, the Original Borrowers have requested that the Subsidiary
  become a Borrower under the Loan Agreement and the other Loan
  Documents.  The Lender has agreed to accept the Subsidiary as a
  Borrower thereunder, and the Subsidiary has agreed to assume the
  Obligations.  Accordingly, the Subsidiary agrees as follows:
  
       The Subsidiary (a) assumes and agrees to be jointly and severally
  liable with each other Borrower for all of the Obligations now existing
  or hereafter arising, including, without limitation, the Obligations
  arising out of the Loan Agreement, the Loans, the Notes, the Letter of
  Credit Agreements and the other Loan Documents, and (b) agrees to be
  jointly and severally bound by all of the terms, covenants and
  conditions of the Loan Agreement, the Notes, the Letter of Credit
  Agreements and the other Loan Documents, and hereby assumes all of the
  Obligations of the Borrowers thereunder and agrees to be jointly and
  severally liable therefor.
  
       The Subsidiary represents that (a) its chief executive office,
  within the meaning of Section 9.103(3)(d) of the UCC, is located at
  [______________________], and (b) during the five years prior to the
  date of this Assumption, the Subsidiary has not used any fictitious or
  corporate name other than its current corporate name.  All of the
  representations and warranties set forth in the Loan Agreement are
  incorporated by reference in this Assumption, and shall be deemed to
  have been made and given by the Subsidiary as of the date hereof as
  though such representations and warranties were applicable to it.
  
       The Subsidiary grants to the Lender, in accordance with and
  subject to the provisions of the Loan Agreement, a security interest in
  all of the Collateral of the Subsidiary as security for the
  Obligations.
  
       The Subsidiary also agrees to execute, deliver and, if applicable,
  record, such additional instruments, documents and agreements as the
  Lender may reasonably require for the purpose of effecting the
  assumption described herein.
  
       IN WITNESS WHEREOF, the Subsidiary has caused this Assumption to
  be executed by its duly authorized representative as of the day and
  year first written above.
  
  
                                _____________________,  a ___________
                                
                                
                                
                                By:  _____________________________
                                Name:     _____________________________
                                Title:    _____________________________
  
  
  <PAGE>
                                 EXHIBIT B
  
                            HALIFAX CORPORATION
                                     
                        BORROWING BASE CERTIFICATE
                                     
                                     
  In connection with the terms of the Fifth Amended and Restated Loan and
  Security Agreement, dated as of ________(as further amended, modified
  or supplemented from time to time, the Loan Agreement) between Halifax
  Corporation (the Parent), Halifax Engineering, Inc. (Engineering),
  Halifax Technical Services, Inc. (Technical), Halifax Realty, Inc.
  (Realty,) and Halifax Technology Services Company, (HTSC, and together
  with the Company, Engineering, Technical, and Realty, collectively, the
  Borrowers), and Crestar Bank (the Lender), the undersigned, on behalf
  of the Parent and the other Borrowers, certifies that the following is
  true and correct:
  
  I     Tier One
  
  A.  Accounts Receivable
  
       Billed Accounts Receivable as of last report
  
  
  Additions:  (a) New Billings
              (b) Adjustments
  
  Less:  (a) Collections since last report
         (b) Adjustments
  
  1.  Total Billed Accounts Receivable:
  
  2.  Less Ineligible Receivables:
       (a) Receivables aged over 90 days
       (b) Bonded Receivables
       (c) "At Risk" Work
       (d) Rebills
       (e) Other  Ineligible Receivables
  
  3. Total Ineligible Receivable (Line A2-Ae)
  
  4.  Total Eligible Billed Accounts Receivable:
  
  5.  Eligible Billed Government Accounts Receivable on Line 4
  
  6.  Government contribution to Borrowing Base (90% of Line 5):
  
  7.  Eligible Billed Commercial Accounts Receivable on Line 4:
  
  8.  Commercial contribution to Borrowing Base (85% of Line 7)
  
  9.  Tier one Borrowing Base (A6 + A8)
  
  II Tier Two Contribution
  
  A. Bonded Contract Account Receivable:
  
  1.  Total Billed Bonded Accounts Receivable:
  
  2.  Less $1,500,000 excess factor:
  
  
  
  
  
  3.  Less Ineligible Receivables:
          (a) Receivables aged over 90 days:
          (b)  "At Risk"/Rebills
          (c) Other Ineligible Receivables:
  
  4.  Total Ineligible Bonded Accounts Receivable (Line A3a-A3c):
  
  5. Total Eligible Bonded Accounts Receivable (Line 1-2-4):
  
  6.  Contribution to Borrowing Base (80% of Line 5,
       not to exceed $2,000,000 cap)
  
  B  Unbilled Accounts Receivable:
            Limited to DSSMP/LTLCS
  
  1.  Unbilled DSSMP/LTLCS Accounts Receivable as of
      last report dated:
  
  2.  Additions:
          (a) New Unbilled DSSMP/LTLCS Acct. Rec.
  
  3.  Total Unbilled DSSMP/LTLCS Acct. Rec.
  
  4.  Less:
      (a) Conversion to Billed Acct. Rec since last report:
      (b) Unbilled Acct. Rec. on Ln 3 not billable w/in 90 days
      (c) Other Unbilled Acct. Rec that are not Eligible Rec.
  
  5.  Total Ineligible Unbilled Acct. Rec. (Line 4a-4c):
  
  6.  Total Eligible Unbilled Accounts Receivables (Line B3-Line B5):
  
  7. Contribution to Borrowing Base (15% of Line B6,
       not to exceed $500,000 cap):
  
  8. Total Tier Two Contribution (Line A6 + B7) Not
      to exceed total $2,000,000 cap:
  
  C. Total Borrowing Base (Tier I Borrowing Base +
      Tier II Contribution) Not to exceed  $12,500,000
  
  
  As of the date of this Borrowing Base Certificate, no Default or Event
  has occurred and is continuing.
  
  Capitalized terms used in this Borrowing Base Certificate Shall  have
  the same meanings as those assigned to them in the Loan Agreement.  The
  foregoing is true and correct as of ___________
  
  HALIFAX CORPORATION
  
  BY___________________________
  Title  Vice President Finance & Accounting, CFO
  
  Date:  _______________________
  
  
  <PAGE>
                                 EXHIBIT C
                                     
                                  Form of
                      Covenant Compliance Certificate
  
       In connection with the terms of the Fifth Amended and Restated
  Loan Agreement, dated as of June 25, 1998 (as amended, supplemented or
  modified from time to time, the Loan Agreement), between Halifax
  Corporation, a Virginia corporation (the Company), the Subsidiaries of
  the Company that are parties to the Loan Agreement, and Crestar Bank, a
  Virginia banking corporation (the Lender), the undersigned certifies
  that the following information is true and correct as of the date of
  this Covenant Compliance Certificate:
  
       1.   No Default or Event of Default has occurred and is continuing.
       
       2.   The Minimum Compliance Level as of _______________________ was
  required to be $_____, and Tangible Capital Funds as of such date was
  $___________ calculated as set forth in Schedule 1.
  3.   The Funded Debt Ratio for the 12-month period ended on
  ____________, ____ was ______ to 1, calculated as set forth on Schedule
  2.  The required Funded Debt Ratio for such period was not greater than
  _____ to 1.
  4.   The Debt Coverage Ratio for the 12-month period ended on
  ____________, ____ was ____ to 1, calculated as set forth on Schedule
  3.  The required Debt Coverage Ratio for such period was not less than
  ____ to 1.
  5.   For purposes of determining the Spread, the Funded Debt Ratio for
  the fiscal quarter ended on _______________, ______ was __ to 1,
  calculated as set forth in Schedule 1, and accordingly, effective as of
  _______________,  ____ the Spread will be ___% and the Unused Fee
  Percentage will be ___%.
       
       Capitalized terms used in this Covenant Compliance Certificate
  shall have the same meanings as those assigned to them in the
  Agreement.  The foregoing is true and correct as of _______________,
  19___.
  
  
       Dated ______________, 19___.
  
  
                                
                                
                                Name:
                                     Chief Financial Officer
                                     Halifax Corporation
  [CAPTION]
  <PAGE>
  <TABLE>
  <CAPTION>
                                     
                                Schedule 1
                                     
                        Tangible Capital Funds and
                         Minimum Compliance Level
                                     
                          Tangible Capital Funds
                                     
  
  <S>                                                       <C>
  1.   Tangible Net Worth:                                      $___________
  
  (a) Consolidated stockholder equity of the         
  Company and its Subsidiaries as of ________________:          $___________
  (b) Write-up in book value of assets of the Company and its  
      Subsidiaries subsequent to the date of the Agreement      $___________
  (c) Investments in non-marketable securities                  $___________
  (d) Treasury stock                                            $___________
  (e) Unamortized debt discount expense                         $___________
  (f) Costs of investments in excess of net assets acquired at 
      time of acquisition                                       $___________
  (g) Loans, advances and other amounts owed to the Company    
      and its Subsidiaries by officers, directors,              
      shareholders, employees or Affiliates                    $___________
  (h) Leasehold improvements                                   $___________
  (i) Patents, patent applications, copyrights, trademarks,    
      trade names, goodwill, research and development costs,    
      organizational expenses, capitalized software costs and  $___________
      other like intangibles
  TOTAL [(a) minus (b) through (i)]                            $___________
  2.   Subordinated Debt:                                      $___________
  (a) Subordinated Debt payable to Research Industries         $___________
  (b) Other                                                    $___________
    Total                                                      $___________
                                                                 
  3.   Tangible Capital Funds (1 + 2)                          $___________
                                                            
  </TABLE>
  <PAGE>
  <TABLE>
  <CAPTION>
  
                         Minimum Compliance Level
                                     
  <S>                                                       <C>
  1.  Tangible Capital Funds as of                          *___________
  ________________________
                                                            
  2.  50% of Consolidated Net Income of Company and         $___________
  Subsidiaries from April 1, 1998 (without deduction for
  losses)
                                                                 
  3.  Equity Issuances from April 1, 1998                   $___________
                                                            
  4.  Subordinated Debt issued subsequent to April 1, 1998  $___________
                                                            
  5.   Minimum Compliance Level (1 + 2 + 3)**               $___________
                                     
                                 </TABLE>
                                     
                                     
  *$7,250,000 as of 6/30/98 and 9/30/98, and $12,400,000 as of 12/31/98.
                                     
      **Maximum required to be added by items 3 and 4 is $4,500,000.
                                     
  <PAGE>
  <TABLE>
  <CAPTION>
                                     
                                Schedule 2
                                     
                             Funded Debt Ratio
                                     
                                     
  <S>                                                     <C>
  1.   Funded Debt as of ____________________:            
  (a) Borrowed money                                         $___________
  (b) Repurchase agreement obligations                       $___________
  (c) Deferred purchase price obligations                    $___________
  (d) Capital Lease obligations                              $___________
  (e) Obligations for letters of credit and acceptances      $___________
  (f) Guaranties                                             $___________
  TOTAL (a+b+c+d+e+f)                                        $___________
  2.   EBITDA for the 12-month period ended on            
  _____________
  (a) Consolidated Net Income of the Company and its         $___________
      Subsidiaries
  (b) Depreciation                                           $___________
  (c) Interest expense                                       $___________
  (d) Amortization                                           $___________
  (e) Taxes                                                  $___________
  (f) Extraordinary, unusual or non-recurring gains          $___________
  (g) Extraordinary, unusual or non-recurring losses         $___________
  TOTAL (a+b+c+d+e-f+g)                                      $___________
  3.   Subordinated Debt as of _____________                 $___________
  5.   Funded Debt Ratio                                  
          Funded Debt ($_________) - Subordinated Debt    = ____ to 1
  ($_________)
                 EBITDA Flow ($_________)
                                     
                                 </TABLE>
                                     
                                  <PAGE>
                                  <TABLE>
                                 <CAPTION>
                                     
                                Schedule 3
                                     
                            Debt Coverage Ratio
                                     
  
  <S>                                                              <C>
  1.   EBITDA for the 12- month period ended on ____________       $__________
  (from Schedule 2)
  2.   Capital Expenditures for the 12-month period ended on       $__________
  __________
  3.   Dividends paid during the 12-month period ended on          $__________
  __________
  4.   Cash expenditures for taxes during the 12-month period      $__________ 
       ended on _________
  5.   Cash Flow Available for Debt Service (1 - 2 - 3 - 4)        
  6.   Debt Service                                                $__________
  (a)   Principal payments of Debt due during the                  $___________
        12-month period ended on ___________
  (b)   Interest expense for the 12-month period ended             $___________
        on ___________
  TOTAL (a+b)                                                   $___________
  7.   Debt Coverage Ratio                                         
         Cash Flow Available for Debt Service ($_________)    = ____ to 1
                  Debt Service ($_________)
  </TABLE>
  
  
  <PAGE>
                                 EXHIBIT D
                                     
                                  Form of
                              Revolving Note
  
  
  
  $12,500,000                                          June 25,1998
                                               Alexandria, Virginia
  
       FOR VALUE RECEIVED, the undersigned, each a Virginia corporation
  (collectively, the Borrowers and individually, a Borrower) hereby
  jointly and severally promise to pay to the order of CRESTAR BANK, a
  Virginia banking corporation (the Lender), at Commercial Loan Services,
  P.O. Box 26202, Richmond, Virginia 23260-6202, or such other location
  as the holder hereof may in writing designate, the principal sum of
  TWELVE MILLION FIVE HUNDRED THOUSAND AND NO/00 DOLLARS ($12,500,000)
  (or such lesser amount as shall equal the aggregate unpaid principal
  amount of the Revolving Loans made by the Lender to the Borrowers under
  the Loan Agreement (as defined below)), in lawful money of the United
  States of America in immediately available funds, on the Termination
  Date, without defense, offset or counterclaim, and to pay interest on
  the unpaid principal amount of the Revolving Loans, at such office, in
  like money and funds, for the period commencing on the date of each
  Revolving Loan until such Revolving Loan shall be paid in full, at the
  applicable rate per annum and on the dates provided in the Loan
  Agreement.  The Borrowers may borrow, prepay, and reborrow hereunder in
  accordance with the provisions of the Loan Agreement.
  
       The Lender is hereby authorized by the Borrowers to maintain
  records of the amount of each Revolving Loan made by the Lender, the
  date such Revolving Loan is made, and the amount of each payment or
  prepayment of principal of such Revolving Loan received by the Lender.
  Each Borrower agrees that the amounts so evidenced in such records,
  absent manifest error, shall constitute conclusive evidence of the
  amount owed hereunder.
  
       This Revolving Note is the Revolving Note referred to in the Fifth
  Amended and Restated Loan and Security Agreement (as amended, modified
  or supplemented form time to time, the Loan Agreement), dated as of
  June 25, 1998, between the Borrowers and the Lender, and evidences
  Revolving Loans made by the Lender thereunder.  Undefined capitalized
  terms used in this Revolving Note have the respective meanings assigned
  to them in the Loan Agreement.
  
       Upon the occurrence and continuation of an Event of Default, the
  principal hereof and accrued interest hereon may be declared to be, or
  may become, forthwith due and payable in the manner, upon the
  conditions and with the effect provided in the Loan Agreement.
  
       Each Borrower, and every guarantor and endorser hereof, hereby
  waive presentment, demand, notice of dishonor, protest and all other
  demands and notices in connection with the delivery, acceptance,
  performance and enforcement of this Revolving Note.
  
       This Revolving Note shall be governed by and construed in
  accordance with the laws of the Commonwealth of Virginia, without
  reference to conflict of laws principles.
  
       IN WITNESS WHEREOF, each Borrower has caused this Revolving Note
  to be executed by its duly authorized representative as of the day and
  year first above written.
  
  
                                BORROWERS:
                                
                                HALIFAX CORPORATION,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX ENGINEERING, INC.,
                                 a Virginia corporation
                                
                                By: ______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX TECHNICAL SERVICES, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                  [SIGNATURES CONTINUE ON FOLLOWING PAGE]
                                <PAGE>
                                
                                
                                HALIFAX REALTY, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX TECHNOLOGY SERVICES COMPANY,
                                a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
  <PAGE>
                                 EXHIBIT E
                                     
                                  Form of
                           Tier Three Term Note
  
  
  
  $2,500,000                                           June 25,1998
                                               Alexandria, Virginia
  
       FOR VALUE RECEIVED, the undersigned, each a Virginia corporation
  (collectively, the Borrowers and individually, a Borrower) hereby
  jointly and severally promise to pay to the order of CRESTAR BANK, a
  Virginia banking corporation (the Lender), at Commercial Loan Services,
  P.O. Box 26202, Richmond, Virginia 23260-6202, or such other location
  as the holder hereof may in writing designate, the principal sum of TWO
  MILLION FIVE HUNDRED THOUSAND AND NO/00 DOLLARS ($2,500,000), in lawful
  money of the United States of America in immediately available funds,
  on the dates set forth below, without defense, offset or counterclaim,
  and to pay interest on the unpaid principal amount hereof, at such
  office, in like money and funds, for the period commencing on the date
  of disbursement of the Tier Three Term Loan until the Tier Three Term
  Loan shall be paid in full, at the applicable rate per annum and on the
  dates provided in the Loan Agreement.
  
       The principal balance hereof shall be payable in quarterly
  installments, each in the amount of the Required Quarterly Curtailment,
  due on the last day of each March, June, September and December,
  beginning on September 30, 1998.  If not sooner paid, the unpaid
  principal balance hereof, and all accrued and unpaid interest thereon,
  shall be due and payable in full on the Termination Date.
  
       This Note is the Tier Three Term Note referred to in the Fifth
  Amended and Restated Loan and Security Agreement (as amended, modified
  or supplemented form time to time, the Loan Agreement), dated as of
  June 25, 1998, between the Borrowers and the Lender, and evidences the
  Tier Three Term Loan made by the Lender thereunder.  Undefined
  capitalized terms used in this Note have the respective meanings
  assigned to them in the Loan Agreement.
  
       Upon the occurrence and continuation of an Event of Default, the
  principal hereof and accrued interest hereon may be declared to be, or
  may become, forthwith due and payable in the manner, upon the
  conditions and with the effect provided in the Loan Agreement.
  
       Each Borrower, and every guarantor and endorser hereof, hereby
  waive presentment, demand, notice of dishonor, protest and all other
  demands and notices in connection with the delivery, acceptance,
  performance and enforcement of this Note.
  
       This Note shall be governed by and construed in accordance with
  the laws of the Commonwealth of Virginia, without reference to conflict
  of laws principles.
  
       IN WITNESS WHEREOF, each Borrower has caused this Note to be
  executed by its duly authorized representative as of the day and year
  first above written.
  
                                BORROWERS:
                                
                                HALIFAX CORPORATION,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX ENGINEERING, INC.,
                                 a Virginia corporation
                                
                                By: ______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX TECHNICAL SERVICES, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX REALTY, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX TECHNOLOGY SERVICES COMPANY,
                                a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
  <PAGE>
                                 EXHIBIT F
                                     
                                  Form of
                            Tier Two Term Note
  
  
  $2,500,000                                           June 25,1998
                                               Alexandria, Virginia
  
       FOR VALUE RECEIVED, the undersigned, each a Virginia corporation
  (collectively, the Borrowers and individually, a Borrower) hereby
  jointly and severally promise to pay to the order of CRESTAR BANK, a
  Virginia banking corporation (the Lender), at Commercial Loan Services,
  P.O. Box 26202, Richmond, Virginia 23260-6202, or such other location
  as the holder hereof may in writing designate, the principal sum of TWO
  MILLION FIVE HUNDRED THOUSAND AND NO/00 DOLLARS ($2,500,000), in lawful
  money of the United States of America in immediately available funds,
  on the dates set forth below, without defense, offset or counterclaim,
  and to pay interest on the unpaid principal amount hereof, at such
  office, in like money and funds, for the period commencing on the date
  of disbursement of the Tier Two Term Loan until the Tier Two Term Loan
  shall be paid in full, at the applicable rate per annum and on the
  dates provided in the Loan Agreement.
  
       The principal balance hereof shall be payable in quarterly
  installments, each in the amount of the Required Quarterly Curtailment,
  due on the last day of each March, June, September and December,
  beginning on the first such payment date next succeeding the payment in
  full of the Tier Three Term Note.  If not sooner paid, the unpaid
  principal balance hereof, and all accrued and unpaid interest thereon,
  shall be due and payable in full on the Termination Date.
  
       This Note is the Tier Two Term Note referred to in the Fifth
  Amended and Restated Loan and Security Agreement (as amended, modified
  or supplemented form time to time, the Loan Agreement), dated as of
  June 25, 1998, between the Borrowers and the Lender, and evidences the
  Tier Two Term Loans made by the Lender thereunder.  Undefined
  capitalized terms used in this Note have the respective meanings
  assigned to them in the Loan Agreement.
  
       Upon the occurrence and continuation of an Event of Default, the
  principal hereof and accrued interest hereon may be declared to be, or
  may become, forthwith due and payable in the manner, upon the
  conditions and with the effect provided in the Loan Agreement.
  
       Each Borrower, and every guarantor and endorser hereof, hereby
  waive presentment, demand, notice of dishonor, protest and all other
  demands and notices in connection with the delivery, acceptance,
  performance and enforcement of this Note.
  
       This Note shall be governed by and construed in accordance with
  the laws of the Commonwealth of Virginia, without reference to conflict
  of laws principles.
  
       IN WITNESS WHEREOF, each Borrower has caused this Note to be
  executed by its duly authorized representative as of the day and year
  first above written.
  
                                BORROWERS:
                                
                                HALIFAX CORPORATION,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX ENGINEERING, INC.,
                                 a Virginia corporation
                                
                                By: ______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX TECHNICAL SERVICES, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX REALTY, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX TECHNOLOGY SERVICES COMPANY,
                                a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
metadata_documents: [{"type": "8-K", "sequence": "1", "secsgml_size_bytes": 174410}]
metadata_filer: {"company-data": {"conformed-name": "HALIFAX CORP", "cik": "0000720671", "assigned-sic": "7370", "irs-number": "540829246", "state-of-incorporation": "VA", "fiscal-year-end": "0331"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-08964", "film-number": "98721427"}, "business-address": {"street1": "5250 CHEROKEE AVE", "city": "ALEXANDRIA", "state": "VA", "zip": "22312", "phone": "7037502202"}, "mail-address": {"street1": "5250 CHEROKEE AVENUE", "city": "ALEXANDRIA", "state": "VA", "zip": "22312"}, "former-company": {"former-conformed-name": "HALIFAX ENGINEERING INC/VA", "date-changed": "19911204"}}
text: SECURITIES AND EXCHANGE COMMISSION
                                     
                          Washington, D.C.  20549
                                     
                                     
                                 FORM 8-K
                                     
                              CURRENT REPORT
                                     
  Pursuant to Section 13 and 15(d) of the Securities Exchange Act of 1934
  
  Date of Report (Date of earliest event reported):   October 6, 1998
  
                          HALIFAX CORPORATION
            (Exact name of registrant as specified in charter)
  
       Virginia                   2-84160-W           54-0829246
  (State or other jurisdiction    (Commission
   of incorporation)               File Number)      (IRS Employer
                                                     Identification No.)
  
    5250 Cherokee Avenue,  Alexandria, Virginia        22312
  (Address of principal executive offices)           (Zip Code)
  
  Registrant's telephone number, including area code:     (703) 750-2202
  
                        Not Applicable
  (Former name or former address, if changed since last report)
  
                                     
                                     
                                     
                                     
                        FIFTH AMENDED AND RESTATED
                        LOAN AND SECURITY AGREEMENT
  
       THIS FIFTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated
  as of the 25th day of June, 1998 (the Agreement), is made by and
  between CRESTAR BANK, a Virginia banking corporation (the Lender), and
  HALIFAX CORPORATION, a Virginia corporation (the Company), HALIFAX
  ENGINEERING, INC., a Virginia corporation (Engineering), HALIFAX
  TECHNICAL SERVICES, INC., a Virginia corporation (Technical), HALIFAX
  REALTY, INC., a Virginia corporation (Realty), HALIFAX TECHNOLOGY
  SERVICES COMPANY, a Virginia corporation (Technology), and each other
  Subsidiary (as defined below) that becomes a party to this Agreement
  with the Lender's approval, in accordance with the provisions set forth
  below (together with the Company and Engineering, Technical, Realty,
  and Technology, collectively, the Borrowers, and individually, a
  Borrower).
  
                                 RECITALS
                                     
       The Lender has agreed to provide financing to the Borrowers,
  subject to the terms and conditions of this Agreement.  Each Borrower
  will derive substantial direct and indirect benefits by the credit
  extended by the Lender to the other Borrowers.  Accordingly, for good
  and valuable consideration, the receipt and sufficiency of which are
  acknowledged, the Lender and the Borrowers agree as follows:
  
         Definitions.  As used in this Agreement, the following terms
  shall have the meanings assigned to them below, which meanings shall be
  equally applicable to the singular and plural forms of the terms
  defined.
  
       "Accounts Receivable" means, collectively, and includes all of the
  following, whether now owned or hereafter acquired by a Borrower:  all
  property included within the definitions of "accounts," "chattel
  paper," "documents" and "instruments" set forth in the UCC; all present
  and future rights to payments for goods sold or leased or for services
  rendered, whether or not represented by instruments or chattel paper,
  and whether or not earned by performance; contract rights; all present
  and future rights to payments for computer software, computer hardware
  or computer systems sold, leased or licensed; proceeds of any letter of
  credit of which a Borrower is a beneficiary; all forms of obligations
  whatsoever owed to a Borrower, together with all instruments and
  documents of title representing any of the foregoing; all rights in any
  goods that any of the foregoing may represent; any and all rights in
  any returned or repossessed goods; and all rights, security and
  guaranties with respect to any of the foregoing, including, without
  limitation, any right of stoppage in transit.
  
       "Affiliate" means, with respect to any specified Person, any other
  Person that, directly or indirectly, through one or more
  intermediaries, controls or is controlled by, or is under common
  control with, such specified Person.  The term "control" means the
  possession, direct or indirect, of the power to direct or cause the
  direction of the management and policies of a Person, whether through
  ownership of common stock, by contract or otherwise.  The MPS Joint
  Venture, if formed, shall be an Affiliate.
  
       "Aging" means a schedule of all outstanding Receivables of the
  Borrowers showing the age of such Receivables in intervals of 30 days.
  
       "Agreement" means this Loan and Security Agreement, as the same
  may be amended, modified or supplemented from time to time.
  
       "Assignment of Claims Act" means, collectively, the Assignment of
  Claims Act of 1940, as amended, 31 U.S.C.  3727, 41 U.S.C.  15, any
  applicable rules, regulations and interpretations issued pursuant
  thereto, and any amendments to any of the foregoing.
  
       "Assumption Agreement" means each Assumption Agreement,
  substantially in the form of Exhibit A attached to this Agreement,
  executed by a Subsidiary that becomes a party to this Agreement in
  accordance with the provisions of Section 0 below.
  
       "Borrowing Base" means, at any time, without duplication, the sum
  of (a) 90% of Eligible Billed Government Receivables, plus (b) 85% of
  Eligible Billed Commercial Receivables, plus (c) the Tier Two
  Contribution, provided that at no time shall the Borrowing Base
  attributable to the Tier Two Contribution exceed $2,000,000.
  
       "Borrowing Base Certificate" means a certificate of the Company
  containing a computation of the Borrowing Base and certifying that no
  Default or Event of Default has occurred and is continuing, in
  substantially the form of Exhibit B attached to this Agreement.
  
       "Business Day" means any day other than a Saturday, Sunday or
  other day on which commercial banks are authorized or required to close
  under the laws of the State, and, with respect to the determination of
  LIBOR, on which banks in the London interbank market are open for
  business.
  
       "Capital Expenditures" means, for any period, expenditures made by
  the Company or any of its Subsidiaries to acquire or construct fixed
  assets, plant and equipment (including renewals, improvements and
  replacements, but excluding repairs) during such period, computed in
  accordance with GAAP.
  
       "Capital Lease" means any lease that has been or should be
  capitalized on the books of the lessee in accordance with GAAP.
  
       "Cash Management Agreement" means any applicable agreement between
  the Company and the Lender pursuant to which funds are transferred
  automatically to and from the Company's operating account or controlled
  disbursement account with the Lender, as any such agreement may be
  amended, modified or supplemented from time to time.
  
       "Closing" means the initial disbursement of the Loans.
  
       "Closing Date" means the date of the Closing.
  
       "Code" means the Internal Revenue Code of 1986, as amended from
  time to time, and all regulations issued pursuant thereto.
  
       "Collateral" means, collectively, and includes all Accounts
  Receivable, Deposit Accounts, Equipment, General Intangibles,
  Intellectual Property, Inventory, Investment Property and all other
  property of a Borrower in which a Lien is granted to the Lender
  pursuant to this Agreement or any other Loan Document.
  
       "Commercial Receivable" means any Account Receivable that does not
  arise out of a Government Contract on which a Borrower is the prime
  contractor.  An Account Receivable arising out of a Government Contract
  on which a Borrower is a subcontractor shall be a Commercial
  Receivable.
  
       "Covenant Compliance Certificate" means a certificate executed by
  a Principal Officer of the Company, substantially in the form of
  Exhibit C attached to this Agreement, containing a calculation of the
  financial covenants contained in Section 6.11 below and certifying that
  no Default or Event of Default has occurred.
  
       "Customer" means any Person obligated on a Receivable.
  
       "Customer List" means a schedule of all Customers of the
  Borrowers, showing the address of each Customer and a listing of the
  active contracts between each Borrower and such Customer, which is
  otherwise in form and substance satisfactory to the Lender.
  
       "Date Affected Information Technology" means a system comprised of
  one or more components including computer hardware, computer software
  or equipment with computerized functions, which reads, produces or
  processes date data by input, output or otherwise.
  
       "Debt" means, collectively, and includes, without duplication,
  with respect to any specified Person, (a) indebtedness or liability for
  borrowed money (whether by loan, the issuance and sale of debt
  securities or the sale of assets to another Person subject to an
  understanding or agreement, contingent or otherwise, to repurchase such
  assets from such Person) or for the deferred purchase price of property
  or services; (b) obligations as a lessee under a Capital Lease;
  (c) obligations to reimburse the issuer of letters of credit or
  acceptances; (d) all guaranties, endorsements (other than for
  collection or deposit in the ordinary course of business) and other
  contingent obligations to purchase, to provide funds for payment, to
  supply funds to invest in any other Person or otherwise to assure a
  creditor against loss; (e) obligations under interest rate swap, cap or
  collar agreements or similar agreements or arrangements designed to
  protect that Person against fluctuations in interest rates; (f)
  obligations under any foreign exchange contract, currency swap or other
  similar agreements or arrangements designed to protect that Person
  against fluctuations in currency values; and (g) obligations secured by
  any Lien on property owned by the specified Person, whether or not the
  obligations have been assumed.
  
       "Debt Coverage Ratio" means, for each 12-month period ending on
  the last day of each fiscal quarter of the Company, the ratio of
  (a) EBITDA for such period, minus Capital Expenditures for such period,
  minus dividends paid during such period, minus cash expenditures for
  taxes during such period, to (b) the sum of interest expense for such
  period plus  principal payments due during the next succeeding 12-month
  period with respect to Debt outstanding on the last day of such fiscal
  quarter (other than the Revolving Loans).  The foregoing shall be
  determined on a consolidated basis for the Company and its Subsidiaries
  in accordance with GAAP.
  
       "Default" means any event that, with the giving of notice, the
  lapse of time, or both, would constitute an Event of Default.
  
       "Default Rate" means the rate at which interest accrues on the
  loans upon the occurrence of an Event of Default, determined in
  accordance with the provisions of Section 2.5.
  
       "Deposit Account" means any "deposit account," as defined in
  Section 9-105 of the UCC, whether now owned or hereafter acquired by a
  Borrower.
  
       "Dollars" and "$" means the lawful currency of the United States
  of America.
  
       "DSSMP Contract" means Contract No. DAAB07-97-D-L016, dated
  June 30, 1997, between the Company and the United States Army
  Communications - Electronics Command.
  
       "EBITDA" means, for any period, (a) consolidated Net Income of the
  Company and its Subsidiaries for such period plus (b) to the extent
  deducted to determine such consolidated Net Income, the sum of
  (1) depreciation expense, (2) interest expense, (3) amortization
  expense, and (4) tax expense less (c) to the extent added to determine
  such consolidated Net Income, extraordinary or unusual gains or other
  gains not incurred in the ordinary course of business plus  (d)  to the
  extent deducted to determine such consolidated Net Income,
  extraordinary or unusual losses or other losses not incurred in the
  ordinary course of business.
  
       "Eligible Billed Commercial Receivable" means an Eligible Billed
  Receivable that is not an Eligible Billed Government Receivable.
  
       "Eligible Billed Government Receivables" means Eligible Billed
  Receivables arising out of a Government Contract on which a Borrower is
  the prime contractor.
  
       "Eligible Billed Receivables" means Eligible Receivables that have
  been billed to the appropriate Customer and are aged not greater than
  90 days from the date of the initial invoice.  For the purposes of this
  definition, the term "initial invoice" shall mean the first invoice
  relating to the applicable goods shipped or services rendered, and not
  any subsequent invoice relating thereto.
  
       "Eligible Bonded Receivables" means, at any time, Accounts
  Receivable of a Borrower that satisfy all of the criteria of Eligible
  Billed Receivables other than the requirement that such Accounts
  Receivable not arise out of a contract secured by a surety bond.
  
       "Eligible Inventory" means Inventory valued at the lower of cost
  or market value (a) to which any Borrower or Borrowers other than
  Technology have acquired title, and in which the Lender has a
  perfected, first priority security interest, (b) that has been
  delivered to any of the locations of any such Borrower or Borrowers set
  forth on Schedule 1 hereto, free and clear of all Liens other than the
  security interest granted to the Lender, (c) that continues to be in
  full conformity with the representations and warranties made by the
  applicable Borrowers to the Lender herein, and (d) is otherwise
  satisfactory to the Lender, in its sole discretion, for inclusion in
  the Borrowing Base.  Inventory shall lose its status as Eligible
  Inventory when any applicable Borrower sells, leases, assigns or
  otherwise disposes of it or passes title to it to another Person or
  consigns it to another Person.
  
       "Eligible Receivables" means Accounts Receivable of a Borrower
  (a) that represent valid obligations incurred by a Customer for
  software, goods or services licensed, shipped and delivered, installed
  or completed under valid contracts of license, sale, or service that
  have been formally awarded to a Borrower, for which all required
  contract documents have been executed by such Borrower and such
  Customer, and, if the Government is the Customer, for which funds have
  been appropriated and allocated; (b) that are due and payable not more
  than 30 days from the date of the initial invoice; (c) on which the
  Customer is not an Affiliate or Subsidiary of a Borrower; (d) with
  respect to which no Borrower has knowledge or notice of any inability
  of the Customer to make full payment; (e) from the face amounts of
  which have been deducted all payments, setoffs, amounts subject to
  adverse claims made in writing to a Borrower, contractual allowances,
  bad debt reserves and other credits applicable thereto; (f) that are
  subject to no Liens other than those permitted by this Agreement;
  (g) that continue to be in full conformity with the representations and
  warranties made by the Borrowers to the Lender in this Agreement;
  (h) with respect to which the Lender is and continues to be satisfied
  with the credit standing of the Customer; (i) on which the Customer is
  not a creditor of a Borrower; (j) on which the Customer  is not a
  Foreign Customer, unless the Foreign Customer's obligations are secured
  by a letter of credit acceptable to the Lender, or the Lender elects,
  in its sole discretion, to permit such Account Receivable to be
  included in the Borrowing Base if it otherwise is an Eligible
  Receivable, at such advance percentage as the Lender may elect in its
  sole discretion; (k) that are not subject to any dispute; (l) with
  respect to which the applicable software, goods or services have been
  accepted by the applicable Customer on an absolute sale basis and not
  on a bill and hold sale basis, a consignment sale basis, a guaranteed
  sale basis, a sale or return basis or on the basis of any other similar
  understanding pursuant to which such Borrower would repurchase or
  accept a return of, or give a credit for, any such software, goods or
  services; and (m) that are not subject to any contingencies; provided,
  however, and without limiting any other provisions of this Agreement
  with respect to the exclusion of Accounts Receivable from the category
  of Eligible Receivables and the Borrowing Base, that (1) if the Lender
  reasonably determines that the collectibility of any Account Receivable
  makes it unacceptable for inclusion in the Borrowing Base and gives
  written notice to the Company indicating the reasons for such
  determination, then such Account Receivable shall thereafter be
  excluded from the category of Eligible Receivables, (2) if more than
  50% of the aggregate face amount of Accounts Receivable owed by a
  Customer are aged 90 days or more, then all Accounts Receivable owed by
  such Customer shall be excluded from the category of Eligible
  Receivables, (3) in no case shall Eligible Receivables include any
  Accounts Receivable representing or arising out of retainages,
  holdbacks, progress billings, the final payment due under a Government
  Contract, revenues recognized or costs incurred in excess of approved
  or allowed reimbursement rates, cost overruns, unauthorized work or
  work beyond the scope of a contract, rebillings, contracts secured by
  surety bonds or classified Government Contracts; (4) an Account
  Receivable arising out of a Material IP Agreement shall not be an
  Eligible Receivable unless the applicable Intellectual Property, and an
  appropriately completed instrument sufficient to file and record the
  Lender's Lien with respect thereto, shall be duly registered and filed
  with the United States Copyright Office and the United States Patent
  and Trademark Office, as applicable.  If required by the Lender, no
  Eligible Receivable shall be included in more than three month-end
  Borrowing Base calculations.
  
       "Eligible Tier Two Term Loan State and Local Receivables" means,
  at any time, Accounts Receivable of a Borrower due from any state or
  political subdivision of a state that are Eligible Receivables that
  have been billed, and are aged not greater than 120 days from the date
  of the initial invoice (as such term is used in the definition of
  Eligible Billed Receivables).
  
       "Eligible Unbilled Receivables" means, at any time, Accounts
  Receivable of the Company arising out of the DSSMP Contract or the
  LTLSC Contract that satisfy all of the criteria of Eligible Billed
  Receivables other than the requirement that such Accounts Receivable be
  billed to the appropriate Customer and for which the Company is
  entitled to send a bill within ___ days.  If required by the Lender, no
  Eligible Unbilled Receivable shall be included in more than ____ month-
  end Borrowing Base calculations.
  
       "Equipment" means collectively and includes all of the following,
  whether now owned or hereafter acquired by a Borrower:  equipment and
  fixtures, including, without limitation, computer hardware, computer
  software, computer systems, furniture, machinery, vehicles and trade
  fixtures together with any and all accessories, accessions, parts and
  appurtenances thereto, substitutions therefor and replacements thereof,
  together with all other such items that are included within the
  definitions of "equipment" and "fixtures" as set forth in the UCC.
  
       "Equity Issuance" means any issuance or sale by a Person of its
  capital stock or other similar equity security, or any warrants,
  options or similar rights to acquire, or securities convertible into or
  exchangeable for, such capital stock or other similar equity security.
  
       "ERISA" means the Employee Retirement Income Security Act of 1974,
  as amended from time to time, and all regulations issued pursuant
  thereto.
  
       "Event of Default" means any of the events specified as an "Event
  of Default" under this Agreement, provided that any requirement for the
  giving of notice, the lapse of time, or both, or any other condition,
  has been satisfied.
  
       "Existing Agreement" means the Fourth Amended and Restated Loan
  and Security Agreement, dated as of November 26, 1996, between the
  Lender and the Borrowers, as amended to the date hereof.
  
       "Existing Subordination Agreement" means the Subordination
  Agreement, dated as of January 27, 1998, between the Lender, the
  Company and Research Industries.
  
       "Foreign Customer" means a Customer that is a foreign government,
  an entity organized under the laws of a country other than the United
  States or an individual who is not a United States citizen.
  
       "Fully Date Capable" means the ability to correctly process date
  data (including, but not limited to, reading, producing, calculating,
  comparing, and sequencing date data) from, into, and between the
  twentieth and twenty-first centuries) without material degradation in
  performance and without unusual intervention, including correct and
  continuous processing during the transition between 1999 and 2000, and
  correct processing of leap years.
  
       "Funded Debt" means, for any Person, the sum of the consolidated
  Debt of such Person and its Subsidiaries for (a) borrowed money, the
  deferred purchase price of property or services and obligations under
  repurchase agreements, (b) Capital Lease obligations, (c) the amount of
  any outstanding Debt guaranteed and (d) contingent or matured
  reimbursement obligations for letters of credit issued for the account
  of such Person or any Subsidiary of such Person, in each case
  determined in accordance with GAAP.
  
       "Funded Debt Ratio" means, at any time, the ratio of
  (a) consolidated Funded Debt of the Company and its Subsidiaries
  outstanding on the last day of the most recently ended fiscal quarter
  of the Company, minus Subordinated Debt, to (b) consolidated EBITDA of
  the Company and its Subsidiaries for the period of 12 months then
  ended.
  
       "GAAP" means generally accepted accounting principles consistently
  applied.
  
       "General Intangibles" means, collectively, and includes all of the
  following, whether now owned or hereafter acquired by a Borrower: all
  property that is included within the definition of "general
  intangibles" as set forth in the UCC; choses in action, causes of
  action and all other intangible property of every kind and nature,
  including, without limitation, corporate or other business records,
  inventions, designs, patents, patent applications, trademarks,
  trademark applications, trade names, trade secrets, good will,
  registrations, copyrights, licenses, franchises, customer lists, tax
  refunds, tax refund claims, rights of claims against carriers and
  shippers, leases and rights to indemnification.
  
       "Government" means the United States of America or any agency or
  instrumentality thereof.
  
       "Government Contract" means any contract with the Government under
  which a Borrower is a prime contractor or a subcontractor.
  
       "Increased Costs" means any reserve, special deposit, capital
  adequacy guideline or similar requirement relating to any extensions of
  credit, Letters of Credit, or other assets of the Lender, or the
  deposits with or other liabilities of the Lender, that  (a) is imposed
  as a result of any Regulatory Change or as a result of the application
  of existing capital adequacy guidelines (including, without limitation,
  any Regulatory Change or capital adequacy guideline that requires that
  letters of credit issued, or lines of credit established, by the Lender
  be classified as "risk assets" for purposes of, or otherwise be subject
  to the provisions of, any capital adequacy guidelines applicable to the
  Lender), and (b) increases the cost to the Lender of making, issuing or
  maintaining any Loan or Letter of Credit, reduces the amount receivable
  by the Lender in connection with any Loan or Letter of Credit, or
  reduces the rate of return on the Lender's capital as a consequence of
  its obligations under this Agreement.
  
       "Ineligible Receivables" means any Account Receivable of a
  Borrower that is not an Eligible Billed Receivable.
  
       "Intellectual Property" means, collectively, and includes all of
  the following, whether now owned or hereafter acquired by a Borrower:
  all copyrights (whether registered or unregistered), copyright
  registrations, trademarks, servicemarks, patents and rights as a
  licensor or licensee of any of the foregoing and all applications with
  respect to any of the foregoing.
  
       "Interest Payment Date" means the first day of each calendar
  month.
  
       "Inventory" means collectively and includes all of the following,
  whether now owned or hereafter acquired by a Borrower:  all goods,
  computer hardware, computer software and computer systems held or
  intended for sale, lease, installation or licensing by a Borrower, or
  furnished or to be furnished under contracts of service, all raw
  materials, work in process, finished goods, materials and supplies of
  every nature used or usable in connection with the manufacture,
  packing, shipping, advertising or sale of any such goods, together with
  all property including within the definition of "inventory" set forth
  in the UCC.
  
       "Investment Property" means all of the following, whether now
  owned or hereafter acquired by a Borrower:  all property that is
  included within the definition of "investment property" as set forth in
  the UCC, including all securities, whether certificated or
  uncertificated, security entitlements, securities accounts, commodity
  contracts and commodity accounts, and all financial assets held in any
  securities account or otherwise, and any commercial paper, securities,
  repurchase agreements, deposit accounts or other instruments or
  obligations purchased for the Borrower pursuant to a Cash Management
  Agreement.
  
       "Letters of Credit" means any letter of credit issued by the
  Lender for the account of any Borrower, whether now outstanding or
  issued after the date of this Agreement.
  
       "Letter of Credit Agreement" means, collectively and individually,
  each standard form of Application and Agreement for Irrevocable Standby
  Letter of Credit, to be executed and delivered by the Borrowers to the
  Lender in connection with each Letter of Credit, as any of the same may
  be amended, modified or supplemented from time to time.
  
       "LIBOR" means for each calendar month, the rate at which dollar
  deposits with a one-month maturity are offered to leading banks in the
  London interbank market at 11:00 a.m. (London time) on the first
  Business Day of such calendar month, based on the British Bankers
  Association quotations published by an On-Line Information Service,
  selected by the Lender, plus adjustments (expressed as a percentage)
  for reserve requirements, deposit insurance premium assessments,
  broker's commissions and other regulatory costs, all of the foregoing
  as determined by the Lender's Funds Management Division in accordance
  with its customary practices.
  
       "Lien" means any mortgage, deed of trust, pledge, security
  interest, hypothecation, assignment, deposit arrangement, encumbrance,
  lien (statutory or other), or preference, priority or other security
  agreement, or preferential arrangement, charge or encumbrance of any
  kind or nature whatsoever (including, without limitation, any
  conditional sale or other title retention agreement, any Capital Lease
  and the filing of any financing statement under the UCC or comparable
  law of any jurisdiction to evidence any of the foregoing).
  
       "Loans" means the Revolving Loans, the Tier Two Term Loan and the
  Tier Three Term Loan.
  
       "Loan Documents" means this Agreement, the Notes, each Assumption
  Agreement, each Letter of Credit Agreement, each Cash Management
  Agreement, the Existing Subordination Agreement, and any other document
  now or hereafter executed or delivered in connection with the
  Obligations, in evidence thereof or as security therefor, including,
  without limitation, any life insurance assignment, pledge agreement,
  security agreement, deed of trust, mortgage, guaranty, promissory note
  or subordination agreement.
  
       "LTLCS Contract" means Contract No. DAAB07-98-D-L771, dated
  November 25, 1997, between the Company and the United States Army
  Communications - Electronics Command.
  
       "Material Adverse Effect" means a material adverse effect on
  ()(a) the business, assets, operations, prospects or condition,
  financial or otherwise, of the Company and its Subsidiaries taken as a
  whole, (b) the ability of any Borrower to perform its obligations under
  any Loan Document or (c) the rights of or benefits available to the
  Lender under any Loan Document.
  
       "Material Contract" means any contract or other arrangement (other
  than the Loan Documents), whether written or oral, to which a Borrower
  or any Subsidiary is a party (a) requiring annual payments by any party
  thereto of more than 10% of the annual consolidated gross revenues of
  the Company and its Subsidiaries, or (b) as to which the breach,
  nonperformance, cancellation or failure to renew by any party thereto
  could have a Material Adverse Effect.
  
       "Material IP Agreement" means any contract or agreement between a
  Borrower and a Customer providing for the sale or licensing to such
  Customer of Intellectual Property owned by such Borrower and subject or
  entitled to United States copyright, patent or trademark protection,
  unless such sale or license is ancillary to other goods or services
  provided under such contract or agreement and is not a material element
  of such goods or services.
  
       "Maximum Amount" means $12,500,000.
  
       "Minimum Compliance Level" means $7,250,000 as of June 30, 1998,
  and September 30, 1998, $12,400,000 as of December 31, 1998, and
  adjusted upward, effective as of March 31, 1999, and as of the end of
  each fiscal year thereafter, by an amount equal to the sum of (a) 50%
  of the consolidated Net Income of the Company and its Subsidiaries for
  such fiscal year, with each of the foregoing increases being fully
  cumulative, and with no reduction being made on account of any negative
  consolidated Net Income of the Company and its Subsidiaries for any
  fiscal year, plus (b) the net proceeds of cash and other consideration
  received by the Borrower or any Subsidiary in respect of any Equity
  Issuance and Subordinated Debt issued after the date hereof, provided
  that the aggregate amount of the adjustment to the Minimum Compliance
  Level required by this clause (b) shall be $4,500,000.
  
       "MPS Contract" means the contract, if any, awarded to the MPS
  Joint Venture in connection with its bid on the Marine Corps
  Prepositioning Solicitation.
  
       "MPS Joint Venture" means the joint venture arrangement to be
  formed by the Company and VSE Corporation to perform the MPS Contract.
  
       "Net Income" means, for any Person for any period, the
  consolidated gross revenues of such Person and its Subsidiaries for
  such period less all consolidated operating and non-operating expenses
  (including taxes) of such Person and its Subsidiaries for such period,
  all as determined in accordance with GAAP.
  
       "Notes" means the Revolving Note, the Tier Two Term Note, and the
  Tier Three Note.
  
       "Obligations" means the Loans, the Notes, the Letter of Credit
  Agreements, all indebtedness and obligations of a Borrower under this
  Agreement and the other Loan Documents and all other indebtedness and
  obligations of a Borrower to the Lender, now existing or hereafter
  arising, of every kind and description, direct or indirect, fixed or
  contingent, liquidated or unliquidated, due or to become due, secured
  or unsecured, joint, several or joint and several, as amended,
  modified, renewed, extended or increased from time to time, including,
  without limitation, any overdrafts in any Deposit Account maintained by
  a Borrower with the Lender.
  
       "On-Line Information Service" means a text line or other on-line
  information service provided to the Lender by any of Reuters
  Information Services, Inc., Knight-Ridder Financial/Americas, Dow Jones
  Telerate, Inc. or Bloomberg Financial Markets News Services, or any
  comparable reporting service selected by the Lender.
  
       "Optional Termination Date" means the date on which the Borrowers
  elect to terminate the Lender's obligations to make Loans and issue
  Letters of Credit in accordance with a notice given pursuant to Section
  0.
  
       "Person" means an individual, partnership, corporation, business
  trust, joint stock company, trust, unincorporated association, joint
  venture, governmental authority, limited liability company or other
  entity of whatever nature.
  
       "Primary Operating Account" means any deposit account or
  controlled disbursement account on which the Company draws to pay all
  or substantially all of its operating expenses.
  
       "Prime Rate" means the rate of interest established and announced
  from time to time by the Lender and recorded in its Central Credit
  Administration Division as its Prime Rate, it being understood and
  agreed that the Prime Rate is used as a reference for fixing the
  lending rate on commercial loans and is not necessarily the lowest or
  most favorable rate of interest charged by the Lender on such loans.
  
       "Principal Officer" means the President, the Chief Executive
  Officer or the Chief Financial Officer of the Company.
  
       "Receivables" means the Accounts Receivable and the General
  Intangibles.
  
       "Regulatory Change" means any change, after the date of this
  Agreement, in any federal or state laws, rules and regulations, or
  interpretations thereof, or the adoption after the date of this
  Agreement of any rules, interpretations, directives or requests,
  applying to a class of financial institutions including the Lender,
  under any federal or state laws or regulations by any court or
  regulatory authority charged with the interpretation or administration
  thereof.
  
       "Required Quarterly Curtailment" means, for any principal payment
  due with respect to the Tier Two Term Loan or the Tier Three Term Loan,
  the greater of (a) $125,000, or (b) 50% of (1) the consolidated Net
  Income of the Company and its Subsidiaries for the fiscal quarter
  immediately preceding such payment, less (2) dividends paid by the
  Company during such quarter.
  
       "Research Industries" means Research Industries Incorporated, a
  Delaware corporation.
  
       "Revolving Loans" means the loans to be made by the Lender to the
  Borrowers pursuant to Section 0 of this Agreement.
  
       "Revolving Note" means a promissory note in the principal amount
  equal to the Maximum Amount, in substantially the form of Exhibit D
  attached to this Agreement, made by the Borrowers and payable to the
  order of the Lender, as amended, modified or supplemented from time to
  time.
  
       "Spread" shall mean the percentage corresponding to the Funded
  Debt Ratio set forth below, as calculated by the Lender.  The
  applicable Spreads on the date hereof are Price Level 2.  The Spreads
  will be adjusted on a quarterly basis based on the table set forth
  below:
  Tier Two                   
                             Revolvi   Revolving  Tier Two   Tier Three
  Price                         ng     Component    Term     Term Loan
  Level  Funded Debt Ratio    Loans     Spread      Loan       Spread
                              Spread               Spread
  1    Equal to or less    1.75%     2.10%      2.10%      3.00%
         than 2.75 to 1
    2    Greater than 2.75   2.00%     2.35%      2.35%      3.25%
         to 1 but equal to
         or  less than 3.75
         to 1
    3    Greater than 3.75   2.25%     2.65%      2.65%      3.55%
         to 1
  The Spread will be adjusted to the percentage corresponding to the
  applicable Funded Debt Ratio in effect as of the last day of each
  fiscal quarter of the Company.  The adjustment will become effective as
  of the first day of the calendar month next succeeding the last day of
  the 30-day period within which the Company must deliver its financial
  statements to the Lender for such fiscal quarter pursuant to Section 0.
  No decrease in the Spread shall become effective if, at such time, any
  Default or Event of Default has occurred and is continuing.  If the
  Company's financial statements are not delivered to the Lender within
  the specified time periods, the Spread may be increased, at the option
  of the Lender, to Price Level 3 from the date on which the statements
  were due through the next adjustment date.
  
       "State" means the Commonwealth of Virginia.
  
       "Subordinated Debt" means (a) the Debt of the Company to Research
  Industries outstanding on the date hereof and subject to the terms of
  the Existing Subordination Agreement, and (b) any unsecured Debt of the
  Company incurred after the date hereof that has a maturity of not less
  than three years, is subordinated to the Obligations pursuant to a
  subordination agreement containing terms that are identical in all
  material respects to those contained in the Existing Subordination
  Agreement, and accruing interest at a rate acceptable to the Lender.
  
       "Subsidiary" as to any Person, means a corporation, partnership,
  limited partnership, limited liability company or other entity of which
  shares of stock or other ownership interests having ordinary voting
  power (other than stock or such other ownership interests having such
  power only by reason of the happening of a contingency) to elect a
  majority of the board of directors or other managers of such entity are
  at the time owned, or the management of which is otherwise controlled,
  directly or indirectly through one or more intermediaries, or both, by
  such Person.  Unless otherwise qualified, all references to a
  "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
  Subsidiary or Subsidiaries of the Company.
  
       "Synthetic Lease" means any synthetic lease, tax retention
  operating lease, off-balance sheet loan or similar off-balance sheet
  financing product where the transaction is considered Debt for borrowed
  money for federal income tax purposes but is classified as an operating
  lease in accordance with GAAP for financial reporting purposes.
  
       "Tangible Capital Funds" means, at any time, the sum of Tangible
  Net Worth plus Subordinated Debt.
  
       "Tangible Net Worth" means, at any time, amounts that would be
  included under redeemable preferred stock and stockholders' equity on
  the consolidated balance sheet of the Company and its Subsidiaries,
  provided that, in any event, such amounts are to be net of amounts
  carried on the books of the Company and its Subsidiaries for ()(1) any
  write-up in the book value of any assets of the Company resulting from
  a revaluation subsequent to the date of this Agreement, (2) investments
  in non-marketable securities, (3) treasury stock, (4) unamortized debt
  discount expense, (5) any cost of investments in excess of net assets
  acquired at any time of acquisition, (6) loans, advances or other
  amounts owed to the Company or any of its Subsidiaries by any of its
  officers, directors, shareholders, employees or Affiliates, except for
  travel advances made in the ordinary course of business, (7) leasehold
  improvements, (8) prepaid expenses, and (9) patents, patent
  applications, copyrights, trademarks, trade names, goodwill, research
  and development costs, organizational expenses, capitalized software
  costs and other like intangibles.
  
       "Termination Date" means July 31, 2000, and any extension or
  extensions thereof granted by the Lender in accordance with the
  provisions of Section 0(0) below.
  
       "Tier Two Borrowing Base" means, at any time, the sum of the
  following, without duplication, (a) 35% of Eligible Inventory, provided
  that the Tier Two Borrowing Base attributable to this clause (a) shall
  not exceed $1,000,000 at any time, plus (b) 80% of Eligible Bonded
  Receivables of up to $1,500,000 outstanding at any time, provided that
  the Tier Two Borrowing Base attributable to this clause (b) shall not
  exceed $1,200,000 at any time, plus (c) 5% of Eligible Tier Two Term
  Loan State and Local Receivables.
  
       "Tier Two Contribution" means, at any time, the sum of the
  following, without duplication:  (a) 80% of Eligible Bonded Receivables
  in excess of $1,500,000 outstanding, provided that the Tier Two
  Contribution attributable to this clause (a) shall not exceed
  $2,000,000 at any time, plus (b) 15% of Eligible Unbilled Receivables,
  provided that the Tier Two Contribution attributable to this clause (b)
  shall not exceed $500,000 at this time.
  
       "Tier Two Revolving Component" means, at any time, the amount by
  which the aggregate amount of outstanding Revolving Loans and Letters
  of Credit exceeds (a) 90% of Eligible Billed Government Receivables,
  plus (b) 85% of Eligible Billed Commercial Receivables.
  
       "Tier Three Term Loan" means the loan to be made by the Lender to
  the Borrowers pursuant to Section 2.3 of this Agreement.
  
       "Tier Three Term Note" means the $2,500,000 promissory note, in
  substantially the form of Exhibit E attached to this Agreement,
  evidencing the joint and several obligations of the Borrowers to repay
  the Tier Three Term Loan, together with interest thereon, and all
  extensions, renewals, modifications and amendments of such note.
  
       "Tier Two Term Loan" means the loan to be made by the Lender to
  the Borrowers pursuant to Section 2.2 of this Agreement.
  
       "Tier Two Term Note" means the $2,500,000 promissory note, in
  substantially the form of Exhibit F attached to this Agreement,
  evidencing the joint and several obligations of the Borrowers to repay
  the Tier Two Term Loan, together with interest thereon, and all
  extensions, renewals, modifications and amendments of such note.
  
        "UCC" means the Uniform Commercial Code as adopted in the State,
  and all amendments thereto.
  
       "Unused Fee Percentage" means (a) .25% per annum when Price Level
  1 is in effect for the Spread, (b) .30% per annum when Price Level 2 is
  in effect for the Spread, and (c) .35% per annum when Price Level 3 is
  in effect for the Spread.  Adjustments to the Unused Fee Percentage
  shall become effective on each date on which Spread adjustments become
  effective.
  
         Loans and Letters of Credit.
  
         Revolving Loans and Letters of Credit.
  
            Subject to the terms and conditions of this Agreement, the
  Lender agrees to make Revolving Loans to the Borrowers from time to
  time until the Termination Date in an aggregate principal amount not to
  exceed at any one time outstanding the Maximum Amount.  Up to the
  Maximum Amount, the Borrowers may borrow, repay without penalty and
  reborrow hereunder from the date of this Agreement until the
  Termination Date; provided, however, that no Revolving Loan will be
  disbursed by the Lender (1) if, after such disbursement the aggregate
  principal amount of the Revolving Loans and outstanding Letters of
  Credit would exceed the Borrowing Base, or (2) until the Tier Two Term
  Loan and the Tier Three Term Loan have been disbursed.
  
            The proceeds of the Revolving Loans shall be used to
  refinance Debt outstanding under the Existing Agreement and for short-
  term working capital purposes.
  
            The Company authorizes the Lender to make Revolving Loans
  from time to time in amounts sufficient to pay checks drawn on the
  operating accounts of the Company with the Lender, subject to the
  limitation set forth in Section 0(0) above, all as more particularly
  described in the Cash Management Agreement.  In addition, the Company
  may request that a Revolving Loan be made.  Any request for a Revolving
  Loan must be received by the Lender no later than 12:00 noon
  (Washington, D.C. time) on the date on which the Revolving Loan is to
  be made.  Each request must specify the amount of the Revolving  Loan
  and, at the option of the Lender, shall be accompanied by a current
  Borrowing Base Certificate and a current Aging.  The Lender, in its
  sole discretion, may accept requests from the Company by telephone.  If
  required by the Lender, any request made by telephone shall include all
  of the information required by a current Borrowing Base Certificate and
  a current Aging.  Requests made by telephone shall be confirmed in
  writing and delivered to the Lender, and if requested by the Lender,
  accompanied by the current Borrowing Base Certificate and the current
  Aging, within two Business Days after the date of the request.  Each
  Borrower appoints the Company as its agent to request and receive the
  proceeds of the Revolving Loans on behalf of all Borrowers.  The
  Company agrees to distribute the proceeds of the Revolving Loans among
  the Borrowers when and as needed by the Borrowers for working capital.
  Revolving Loans may be requested by those individuals designated by the
  Company from time to time in written instruments delivered to the
  Lender; provided, however, that the Borrowers shall remain liable with
  respect to any Revolving Loan disbursed by the Lender in good faith
  hereunder, even if such Loan is requested by an individual who has not
  been so designated.  The proceeds of each Revolving Loan will be
  credited to a Deposit Account maintained with the Lender by the Company
  pursuant to the Cash Management Agreement.  The Company agrees to
  confirm in writing from time to time, when and as requested by the
  Lender, the purpose for which the proceeds of each Revolving Loan were
  used.
  
            The unpaid principal balance of the Revolving Loans shall
  bear interest at a rate per annum equal to LIBOR plus the applicable
  Spread in effect from time to time, with the Tier Two Revolving
  Component Spread being the same as the Spread for the Tier Two Term
  Loan.  The interest rate on the Revolving Loans shall be determined
  initially based on LIBOR in effect on the Closing Date and shall be
  adjusted on the first Business Day of each succeeding calendar month
  (to be effective as of the first day of such calendar month if not a
  Business Day) to reflect LIBOR then in effect, and the applicable
  Spread shall be adjusted from time to time as provided in the
  definition of such term.  Payments of interest on each Revolving Loan
  shall be made on each Interest Payment Date, beginning on the Interest
  Payment Date next succeeding the date of disbursement of such Revolving
  Loan.
  
            The joint and several obligations of the Borrowers to repay
  the Revolving Loans, together with interest thereon, shall be evidenced
  by the Revolving Note.  The unpaid principal balance of the Revolving
  Note shall be payable on the Termination Date.
  
            The Lender from time to time may agree, in its sole
  discretion, to extend the Termination Date or increase the amount of
  Revolving Loans to be provided under this Agreement, or both.  During
  any such periods of extension, the remaining terms and conditions of
  this Agreement shall remain in full force and effect, and the Borrowers
  shall execute and deliver any amendments or modifications to the Loan
  Documents that the Lender may require in connection with any such
  extension or increase.  Nothing in this Section 0(0) shall obligate the
  Lender to grant such extensions or to increase the amount of credit
  provided under this Agreement.
  
            Subject to the terms and conditions of this Agreement, the
  Lender, in its sole and absolute discretion, may issue Letters of
  Credit for the account of the Borrowers from time to time until the
  Termination Date, upon the request of the Company; provided, however,
  that no Letter of Credit will be issued by the Lender if, after such
  issuance, the aggregate principal amount of the outstanding Revolving
  Loans and Letters of Credit would exceed the Borrowing Base.  Prior to
  the issuance of any Letter of Credit, the Lender must receive an
  appropriately completed Letter of Credit Agreement, executed by the
  Borrowers, not less than five Business Days prior to the date on which
  the Letter of Credit is to be issued.  Each such request shall specify
  the name of the beneficiary of the Letter of Credit, the amount and
  expiration date of the Letter of Credit and the purpose for which the
  Letter of Credit is being issued.  Unless otherwise approved by the
  Lender in its sole discretion, no Letter of Credit shall have a stated
  maturity of more than one year after the date of its issuance, and in
  no event shall a Letter of Credit expire later than the Termination
  Date.  The purpose for which each Letter of Credit is to be issued and
  the form of each Letter of Credit shall be subject to the Lender's
  approval.  The Borrowers shall pay to the Lender upon its demand
  therefor any amounts paid by the Lender under a Letter of Credit,
  together with interest on such amounts from the date of demand at the
  applicable per annum rate specified by the Lender in the applicable
  Letter of Credit Agreement.  The Borrowers shall pay such fees and
  commissions as the Lender shall require with respect to any Letter of
  Credit.
  
              Tier Two Term Loan.
  
            Subject to the terms and conditions of this Agreement, the
  Lender agrees to make the Tier Two Term Loan to the Borrowers in a
  principal amount equal to the lesser of $2,500,000 or the Tier Two
  Borrowing Base as of the Closing Date.  The Borrowers shall not be
  allowed to borrow the Tier Two Term Loan unless they first borrow the
  Tier Three Term Loan.  The proceeds of the Tier Two Term Loan shall be
  used to refinance Debt of the Borrowers to the Lender under the
  Existing Agreement.
  
            The unpaid principal balance of the Tier Two Term Loan from
  time to time outstanding shall bear interest at a per annum rate equal
  to LIBOR plus the Spread in effect from time to time.  The interest
  rate on the Tier Two Term Loan shall be determined initially based on
  LIBOR in effect on the Closing Date and shall be adjusted on the first
  Business Day of each succeeding calendar month (to become effective as
  of the first day of such calendar month if not a Business Day) to
  reflect LIBOR then in effect, and the Spread shall be adjusted from
  time to time as provided in the definition of such term.  Payments of
  interest on the Tier Two Term Loan shall be made on each Interest
  Payment Date, beginning on the Interest Payment Date next succeeding
  the Closing Date.
  
            The joint and several obligations of the Borrowers to repay
  the Tier Two Term Loan, together with interest thereon, shall be
  evidenced by the Tier Two Term Note.  The principal of the Tier Two
  Term Loan shall be payable in consecutive quarterly installments, each
  in the amount of the Required Quarterly Curtailment, due on the last
  day of each March, June, September, and December, beginning on the
  first such payment date next succeeding the payment in full of the Tier
  Three Term Loan, and continuing until Termination Date, when the unpaid
  principal balance of the Tier Two Term Loan and all accrued and unpaid
  interest thereon shall be due and payable.  The Borrowers shall have
  the right to prepay the Tier Two Term Note in whole or in part at any
  time after the Tier Three Term Loan has been paid in full.  Partial
  prepayments of the Tier Two Term Note shall be applied to installments
  due thereunder in the inverse order of their maturities.  Amounts
  prepaid with respect to the Tier Two Term Loan may not be reborrowed.
  
        Tier Three Term Loan.
  
            Subject to the terms and conditions of this Agreement, the
  Lender agrees to make the Tier Three Term Loan to the Borrowers in an
  amount not to exceed $2,500,000.  The proceeds of the Tier Three Term
  Loan shall be used to refinance Debt of the Borrowers to the Lender
  under the Existing Agreement.
  
            The unpaid principal balance of the Tier Three Term Loan from
  time to time outstanding shall bear interest at a per annum rate equal
  to LIBOR plus the Spread in effect from time to time.  The interest
  rate on the Tier Three Term Loan shall be determined initially based on
  LIBOR in effect on the Closing Date and shall be adjusted on the first
  Business Day of each succeeding calendar month (to become effective as
  of the first day of such calendar month if not a Business Day) to
  reflect LIBOR then in effect, and the Spread shall be adjusted from
  time to time as provided in the definition of such term.  Payments of
  interest on the Tier Three Term Loan shall be made on each Interest
  Payment Date, beginning on the Interest Payment Date next succeeding
  the Closing Date.
  
            The joint and several obligations of the Borrowers to repay
  the Tier Three Term Loan, together with interest thereon, shall be
  evidenced by the Tier Three Term Note.  The principal amount of the
  Tier Three Term Loan shall be payable in consecutive quarterly
  installments, each in the amount of the Required Quarterly Curtailment,
  due on the last day of each March, June, September and December,
  beginning on September 30, 1998.  If not sooner paid, the entire unpaid
  principal balance of the Tier Three Term Loan and all accrued and
  unpaid interest thereon shall be due and payable in full on the
  Termination Date.  The Borrowers shall have the right to prepay the
  Tier Three Term Note in whole or in part at any time.  Partial
  prepayments of the Tier Three Term Note shall be applied to
  installments due thereunder in the inverse order of their maturities.
  Amounts prepaid with respect to the Tier Three Term Loan may not be
  reborrowed.
  
         Modifications to Loans.
  
            If the Company achieves a Funded Debt Ratio of 3.5 or less,
  and if no Default or Event of Default has occurred and is continuing,
  the Lender agrees that upon the written request of the Company, the
  Lender will increase the Maximum Amount to $14,500,000, subject to the
  execution and delivery by the Borrowers of a Revolving Note in the
  amount of $14,500,000 and the amendment described in Section 2.4(e)
  below.
  
            If the Tier Two Term Loan and the Tier Three Term Loan are
  paid in full, and if no Default or Event of Default has occurred and is
  continuing, the Lender agrees that, upon the written request of the
  Company, the Lender will (1) increase the Maximum Amount to
  $15,000,000, or, if the Maximum Amount has previously been increased to
  $14,500,000 pursuant to Section 2.4(a), to $17,500,000, subject to the
  execution and delivery by the Borrowers of a Revolving Note in a
  principal amount equal to the increased Maximum Amount, and the
  amendment described in Section 2.4(e) below, and (2) execute an
  amendment to this Agreement pursuant to which (i) the Borrowing Base
  will be revised to be equal to the sum of (w) 90% of Eligible Billed
  Government Receivables, plus (x) 85% of Eligible Billed Commercial
  Receivables, plus (y) 25% of Eligible Inventory, provided that the
  revised Borrowing Base attributable to this clause (y) will not exceed
  $1,000,000, plus (z) 70% of Eligible Bonded Receivables, provided that
  the revised Borrowing Base attributable to this clause (z) will not
  exceed $3,000,000, and (ii) all references to the Tier Two Contribution
  and the Tier Two Revolving Component will be deleted.
  
            If the Company receives net proceeds of Equity Issuances and
  Subordinated Debt issuances after the date of this Agreement and prior
  to the December 31, 1998, in an aggregate amount of $4,500,000 or more,
  and if no Default or Event of Default has occurred and is continuing,
  the Lender agrees that it will, upon the written request of the
  Company, execute an amendment to this Agreement lowering each Spread to
   .25% per annum below the amounts set forth herein.
  
            If the Lender declines to finance the MPS Contract, the
  Lender agrees that it will, upon the Borrower's written request,
  execute an amendment to this Agreement pursuant to which up to
  $1,000,000 of the Company's capitalized investment in the MPS Joint
  Venture will not be deducted as an intangible asset for purposes of
  computing Tangible Net Worth.
  
            If the Maximum Amount is increased to $14,500,000 pursuant to
  Section 2.4(a), the Borrowers shall execute an amendment to this
  Agreement pursuant to which the requirements for the maximum Funded
  Debt Ratio set forth in Section 6.11(b) are reduced from 4.5 to 1 to 4
  to 1, 4.25 to 1 to 3.75 to 1, and 4 to 1 to 3.5 to 1, respectively.  If
  the Maximum Amount is increased to $17,500,000 pursuant to Section
  2.4(b), the Borrowers shall execute an amendment to this Agreement
  pursuant to which the maximum Funded Debt Ratio permitted by Section
  6.11(b) shall not exceed 3.5 to 1.
  
         Payments and Computations.  All payments due under this
  Agreement (including any payment or prepayment of principal, interest,
  fees and other charges) or with respect to the Notes, the Letter of
  Credit Agreements or the Loans shall be made in lawful money of the
  United States of America, in immediately available funds, without
  defense, setoff or counterclaim, to the Lender at its office at
  Commercial Loan Services, P.O. Box 26202, Richmond, Virginia 23260-
  6202, or at such other place as the Lender may designate, and shall be
  applied first to accrued fees, next to accrued late charges, next to
  accrued interest and then to principal.  If any payment of principal,
  interest or fees is due on a day other than a Business Day, then the
  due date will be extended to the next succeeding full Business Day and
  interest and fees will be payable with respect to the extension.  If
  any payment of principal, interest or fees is not made within ten days
  of its due date, the Borrowers agree to pay to the Lender a late charge
  equal to 5% of the amount of the payment; provided, however, that as
  long as a Borrower makes payments of principal, interest and fees
  through the Lender's automatic debit service, no late charge shall be
  payable if the Lender fails to debit any such payment when it is due
  (if sufficient collected funds are on deposit in such Borrower's
  account with the Lender), and such failure shall not constitute an
  Event of Default hereunder.  Upon the occurrence of an Event of Default
  and during the continuation of such Event of Default, interest shall
  accrue on the Loans at a per annum rate of 2% above the rate of
  interest that otherwise would be applicable.  Interest and fees shall
  be computed on the basis of a year of 360 days and actual days elapsed.
  The Lender may, but shall not be obligated to, debit the amount of any
  payment due from the Borrowers under this Agreement to any deposit or
  investment account of any Borrower maintained with the Lender or any
  Affiliate of the Lender.  No setoff, claim, counterclaim, reduction or
  diminution of any obligation of any defense of any kind or nature that
  a Borrower has or may have against the Lender (other than the defense
  of payment) shall be available against the Lender in any suit or action
  brought by the Lender to enforce this Agreement or any other Loan
  Document.  The foregoing shall not be construed as a waiver by the
  Borrowers of any rights or claims that the Borrowers may have against
  the Lender, but any recovery upon such rights and claims shall be had
  from the Lender separately, it being the intent of this Agreement and
  the other Loan Documents that the Borrowers shall be obligated to pay,
  absolutely and unconditionally, all amounts due hereunder and under the
  other Loan Documents.
  
         Increased Costs.  If, as a result of any Regulatory Change or
  for any other reason, the Lender incurs Increased Costs, the Borrowers
  agree to pay such Increased Costs to the Lender within ten Business
  Days after receipt by the Company of the Lender's invoice therefor.
  The invoice will be accompanied by a written statement of the Lender
  setting forth in reasonable detail the basis and the calculation of the
  Increased Costs.  The Lender's calculation shall include reasonable
  averaging and attribution methods to determine the Increased Costs
  attributable to the Loans and the Letters of Credit.
  
         Fees.
  
            In consideration of the expenses incurred by the Lender in
  connection with administering the Loans and monitoring the Borrowing
  Base, the Borrowers agree to pay to the Lender a commitment  fee on the
  daily average balance of the amount by which the Maximum Amount (as
  increased from time to time) exceeds the amount of outstanding
  Revolving Loans and Letters of Credit.  The commitment fee shall be
  payable for the period beginning on the date of this Agreement and
  ending on the Termination Date at a per annum rate equal to the Unused
  Fee Percentage in effect from time to time.  The commitment fee shall
  be payable quarterly, in arrears, on the last day of each March, June,
  September and December, beginning on September 30, 1998, and on the
  Termination Date.
  
            On the Closing Date, the Borrowers shall pay to the Lender a
  structuring and underwriting fee equal to $25,000.
  
         Primary Depository Relationship.  If the Company fails to
  maintain its Primary Operating Account with the Lender, interest shall
  accrue on the Loans at a per annum rate of 1.0% above the rate of
  interest that otherwise would be applicable, effective as of the first
  day following the day on which the Company moves its Primary Operating
  Account.
  
         Mandatory Prepayment.  The Borrowers shall first prepay the
  Revolving Loans and then provide cover for the Letters of Credit, as
  specified below, upon the Lender's demand therefor, to the extent that
  the aggregate amount of outstanding Revolving Loans and Letters of
  Credit exceeds the Borrowing Base at any time.  In the event that the
  Borrowers shall be required to provide cover for the Letters of Credit,
  the Borrowers shall effect the same by paying to the Lender immediately
  available funds in an amount equal to the required amount, which funds
  shall be retained by the Lender in a cash collateral account until such
  time as the Letters of Credit shall have been terminated and all
  Obligations with respect to the Letter of Credit are paid in full.
  
         Optional Termination Date.  The Borrowers may terminate the
  Lender's obligations to make Revolving Loans and issue Letters of
  Credit under this Agreement provided that (a) the Company gives the
  Lender not less than 30 days' prior written notice of such termination,
  specifying the Optional Termination Date, (b) the Borrowers pay in
  full, on the Optional Termination Date, all Obligations, and (c) the
  Borrowers shall, on the Optional Termination Date, provide cover for
  the Letters of Credit pursuant to Section 2.9.
  
        Covenants, Representations and Other Terms Regarding Collateral.
  
         Security Interest.  To secure the Obligations, each Borrower
  grants to the Lender, its successors and assigns, a first priority
  security interest in the Accounts Receivable, the Deposit Accounts, the
  Equipment, the General Intangibles, the Intellectual Property, the
  Inventory and the Investment Property, all additions and accessions
  thereto and replacements thereof, all proceeds and products thereof,
  all books of account and records, including all computer software
  relating thereto, all policies of insurance on any property of a
  Borrower and all proceeds of such policies.
  
         Receivables.
  
            Each Borrower represents and warrants as to each and every
  Eligible Receivable now existing that:  (1) it is a bona fide existing
  obligation, valid and enforceable against the Customer, for software
  installed or licensed, goods sold or leased or services rendered in the
  ordinary course of business; (2) it is subject to no dispute, defense
  or offset in excess of $75,000 except as disclosed in writing to the
  Lender; (3) all instruments, chattel paper and other evidence of
  indebtedness issued to a Borrower with respect to any Eligible
  Receivable have been delivered to the Lender, and, together with all
  supporting documents delivered to the Lender, are genuine, complete,
  valid and enforceable in accordance with their terms; (4) it is not
  subject to any discount, allowance or special terms of payment except
  as disclosed in writing to the Lender; and (5) it is not and shall not
  be subject to any prohibition or limitation upon assignment.  Each
  Borrower covenants and agrees that each Eligible Receivable arising
  after the date of this Agreement will be in conformance with the
  foregoing representations.
  
            Each Borrower shall immediately notify the Lender of (1) any
  dispute in excess of $75,000 with a Customer and (2) the bankruptcy,
  insolvency, receivership, assignment for the benefit of creditors or
  suspension of business of any Customer of which such Borrower has
  knowledge.  No Borrower shall compromise or discount any Receivable of
  more than $10,000 without the prior written consent of the Lender
  except for (i) ordinary trade discounts or allowances for prompt
  payment, and (ii) prior to the occurrence of a Default or an Event of
  Default, such compromises or discounts that, after giving effect
  thereto, will not cause the Borrowing Base to be less than the unpaid
  principal balance of the Revolving Loans and Letters of Credit then
  outstanding.
  
            Upon the written request of the Lender, each Borrower shall
  establish and maintain a lockbox with the Lender and shall direct all
  Customers to make payments on Receivables to such lockbox by printing
  such direction on all invoices given to Customers.  Each Borrower also
  shall remit to such lockbox or deliver to the Lender all payments on
  Receivables received by such Borrower.  Such payments shall be remitted
  or delivered in their original form on the day of receipt.  All notes,
  checks and other instruments so received by each Borrower shall be duly
  endorsed to the order of the Lender.  The payments remitted to the
  lockbox and all payments delivered to the Lender shall be credited to a
  cash collateral account maintained by the Lender in the name of the
  Company over which the Lender shall have the exclusive power of
  withdrawal.  All funds in the cash collateral account shall be retained
  in the cash collateral account and be held as security for the
  Obligations, and funds in the cash collateral account may be applied to
  the Obligations by the Lender from time to time, whether or not such
  Obligations are then due.
  
            Upon the occurrence of a Default or an Event of Default, the
  Lender shall have the right to notify account debtors of its security
  interest in the Receivables and require payments to be made directly to
  the Lender, and to facilitate direct collection of the Receivables, the
  Lender shall have the right to take over the post office boxes of the
  Borrowers or make other arrangements, with which the Borrowers shall
  cooperate, to receive the mail of each Borrower, provided that the
  Lender shall not be entitled to receive any mail that does not concern
  the Receivables.
  
            The Borrowers shall execute all other agreements, instruments
  and documents and shall perform all further acts that the Lender may
  require with respect to Receivables owing by the Government to ensure
  compliance with the Assignment of Claims Act.
  
         Inventory and Equipment.
  
            All of the Inventory and Equipment will be kept only at the
  places of business listed on Schedule 3.3 to this Agreement.  The
  Borrowers shall give the Lender prior written notice before any
  Inventory or Equipment is moved or delivered to a location other than
  such designated places of business, and the Lender's lien and security
  interest will be maintained despite the location of the Inventory or
  Equipment.  Without the prior written consent of the Lender, no
  Borrower shall move or deliver the Inventory or Equipment with a book
  value in any instance or in the aggregate of $100,000 or more to a
  location outside of the United States of America.
  
            Each Borrower shall keep and maintain the Equipment in good
  operating condition and repair, reasonable wear and tear excepted.  No
  Borrower shall permit any of the Equipment to become a fixture to any
  real estate unless subordination agreements satisfactory to the Lender
  are obtained by any owner or mortgagee of such real estate.  Each
  Borrower, immediately on demand therefore by the Lender, shall deliver
  to the Lender any and all evidence of ownership of any of the
  Equipment.  None of the Equipment shall be sold, transferred, leased or
  otherwise disposed of without the prior written consent of the Lender,
  except for (1) sales or dispositions of obsolete or unnecessary
  Equipment, and (2) sales or dispositions of any item of Equipment that
  is replaced contemporaneously with Equipment of comparable value and
  utility.
  
            The Lender's security interest shall extend and attach to
  Inventory that is presently in existence and is owned by each Borrower
  or in which a Borrower purchases or acquires an interest at any time
  and from time to time in the future, whether such Inventory is in
  transit or in such Borrower's constructive, actual or exclusive
  occupancy or possession or not and wherever the same may be located,
  including, without limitation, all Inventory that may be located at the
  premises of a Borrower or upon the premises of any carriers, forwarding
  agents, truckers, warehousemen, vendors, selling agents, finishers,
  convertors or other third parties who may have possession of the
  Inventory.
  
            Upon the sale, exchange, lease or disposition of the
  Inventory, the security interest of the Lender, without break in
  continuity and without further formality or act, shall continue in and
  attach to all cash and non-cash proceeds of such sale, exchange, lease
  or disposition, including Inventory returned or rejected by Customers
  or repossessed by either a Borrower or the Lender.  As to any such
  sale, exchange, lease or disposition, the Lender shall  have all of the
  rights of an unpaid seller, including stoppage in transit, replevin,
  detinue and reclamation.
  
            Except for licenses, sales or leases made in the ordinary
  course of business and Liens permitted by this Agreement, no Borrower
  shall sell, lease, encumber, license or dispose of, or permit the sale,
  lease, encumbrance or disposal of, any Inventory without the prior
  written consent of the Lender.
  
            Each Borrower shall have the Equipment and Inventory insured
  against loss or damage by fire, theft, burglary, pilferage, loss in
  transportation and such other hazards as the Lender shall specify, by
  insurers satisfactory to the Lender, in amounts satisfactory to the
  Lender and under policies containing loss payable clauses satisfactory
  to the Lender.  Any such insurance policies, or evidence thereof
  satisfactory to the Lender, shall be deposited with the Lender.  Each
  Borrower agrees that the Lender shall have a security interest in such
  policies and the proceeds thereof, and, if any loss should occur, the
  proceeds may be applied to the payment of the Obligations or to the
  replacement or restoration of the Inventory or Equipment damaged or
  destroyed, as the Lender may elect or direct.  After the occurrence of
  a Default or an Event of Default, the Lender shall have the right to
  file claims under any insurance policies, to receive, receipt and given
  acquittance for any payments that may be made thereunder, and to
  execute any and all endorsements, receipts, releases, assignments,
  reassignments or other documents that may be necessary to effect to the
  collection, compromise, or settlement of any claims under any of the
  insurance policies.
  
         Intellectual Property.
  
            All of each Borrower's present and future Intellectual
  Property that is subject to United States copyright, patent or
  trademark protection, the sale, licensing or other disposition of which
  results in the creation of Receivables pursuant to a Material IP
  Agreement, shall be registered with the United States Copyright Office
  or the United States Patent and Trademark Office, as applicable, prior
  to the date such Borrower includes any such Receivables in the
  Borrowing Base.
  
            Upon the occurrence of an Event of Default, in addition to
  any other remedies available to the Lender, each Borrower agrees that
  the Lender shall have a non-exclusive, royalty-free license to use, or
  to grant a license to use, the Intellectual Property.
  
         Defense of Collateral.  Each Borrower, at its expense, will
  defend the Collateral against any claims or demands adverse to the
  Lender's security interest and will promptly pay when due all taxes or
  assessments levied against such Borrower on the Collateral.
  
         Information Regarding Collateral.  Each Borrower shall provide
  the Lender such information as the Lender from time to time reasonably
  may request with respect to the Collateral, including, without
  limitation, statements describing, designating, identifying and
  evaluating all Collateral.
  
         Perfection of Security Interest.  Each Borrower shall perform
  any and all steps in all relevant or appropriate jurisdictions as may
  be necessary or reasonably requested by the Lender to perfect, maintain
  and protect the Lender's security interest in the Collateral.  All
  instruments and chattel paper that are part of the Collateral shall be
  delivered to the Lender, duly endorsed to the order of the Lender.
  Each Borrower shall pay the taxes and costs of, or incidental to, any
  recording or filing of any financing statements concerning the Lender's
  security interests.  Each Borrower agrees that a carbon, photographic,
  photostatic or other reproduction of this Agreement or of a financing
  statement is sufficient as a financing statement.
  
         Power of Attorney.  Each Borrower appoints the Lender and any
  officer, employee or agent of the Lender, as the Lender from time to
  time may designate, as attorneys-in-fact for a Borrower to perform all
  actions necessary or desirable in the discretion of the Lender to
  effect the provisions of this Agreement and to carry out the intent of
  this Agreement, to do any act that a Borrower is required to do
  pursuant to the terms of this Agreement and to exercise such rights and
  powers as each Borrower might exercise with respect to the Collateral,
  all at the cost and expense of the Borrowers.  Each Borrower agrees
  that neither the Lender nor any other such attorney-in-fact will be
  liable for any acts of omission or commission, unless such acts were
  willful and malicious or grossly negligent, nor for any error of
  judgment or mistake of law or fact.  This power is coupled with an
  interest and is irrevocable so long as any Obligations are outstanding.
  The Lender agrees that it shall not be entitled to exercise its rights
  under this Section 3.8 prior to the occurrence of a Default or an Event
  of Default.
  
         Limitations on Obligations.  It is expressly agreed by each
  Borrower that, notwithstanding any other provision of this Agreement,
  each Borrower shall remain liable under each Receivable and contract
  giving rise to each Receivable to observe and perform all the
  conditions and obligations to be observed and performed by each
  Borrower in accordance with and pursuant to the terms and provisions of
  each such Receivable and contract.  The Lender shall not have any
  obligation or liability under any Receivable or contract by reason of
  or arising out of this Agreement or the assignment of such Receivable
  or contract to the Lender or the receipt by the Lender of any payment
  relating to the Receivable pursuant to this Agreement, nor shall the
  Lender be required or obligated in any manner to perform or fulfill any
  of the obligations of a Borrower under or pursuant to any Receivable or
  contract, or to make any payment, or to make any inquiry as to the
  nature or the sufficiency of any payment received by it or the
  sufficiency of any performance by any party under any Receivable, or to
  present or file any claim, or to take any action to collect or enforce
  any performance or the payment of any amounts that may have been
  assigned to it or to which it may be entitled at any time or times.
  
         Indemnification.  In any suit, proceeding or action brought by
  or against the Lender relating to the Collateral, the Borrowers will
  save, indemnify and keep the Lender harmless from and against all
  expense, loss or damage suffered by reason of any defense, setoff,
  counterclaim, recoupment or reduction of liability whatsoever of any
  obligor thereunder, arising out of a breach by a Borrower of any
  obligation thereunder or arising out of any other agreement,
  indebtedness or liability at any time owing to or in favor of such
  obligor or its successors from a Borrower, and all such obligations of
  the Borrowers shall be and remain enforceable against and only against
  the Borrowers and shall not be enforceable against the Lender.  The
  foregoing obligation of the Borrowers to indemnify the Lender shall not
  extend to any suit, proceeding or action arising out of the Lender's
  gross negligence or willful or malicious misconduct.
  
          Representations and Warranties.  Each Borrower represents and
  warrants that:
  
         Incorporation, Good Standing and Due Qualification.  Each
  Borrower (a) is a corporation duly organized, validly existing and in
  good standing under the laws of the jurisdiction of its incorporation
  or formation; (b) has the power and authority to own its assets and to
  transact the business in which it is now engaged or in which it is
  proposed to be engaged; and (c) is duly qualified as a foreign
  corporation and in good standing under the laws of each other
  jurisdiction in which such qualification is required.  As of the date
  of this Agreement, the Company has no Subsidiaries other than
  Engineering, Technical, Realty and Technology, and no other Borrower
  has any Subsidiary.
  
         Power and Authority.  The execution, delivery and performance by
  the Borrowers of the Loan Documents have been duly authorized by all
  necessary corporate actions and do not and will not (a) require any
  consent or approval of, or filing or registration with, any
  governmental agency or authority or the stockholders of a Borrower;
  (b) contravene a Borrower's articles of incorporation or bylaws;
  (c) result in a breach of or constitute a default under any agreement
  or instrument to which a Borrower is a party or by which it or its
  properties may be bound or affected; (d) result in or require the
  creation or imposition of any Lien upon or with respect to any of the
  properties now owned or hereafter acquired by a Borrower; or (e) cause
  a Borrower to be in default under any law, rule, regulation, order,
  writ, judgment, injunction, decree, determination or award applicable
  to the Borrower.
  
         Legally Enforceable Agreement.  This Agreement is, and each of
  the other Loan Documents when delivered under this Agreement will be,
  legal, valid and binding obligations of each Borrower, enforceable
  against each Borrower in accordance with their respective terms.
  
         Financial Statements.  The financial statements of the Borrowers
  that have been furnished to the Lender in connection with this
  Agreement are complete and correct and fairly present the financial
  condition of the Borrowers as of the dates of such statements.  Since
  the dates of such statements, there has been no Material Adverse Change
  in the condition (financial or otherwise), business or operations of
  the Borrowers.
  
         Litigation.  There is no pending or threatened action,
  investigation or proceeding against or affecting a Borrower before any
  court, governmental agency or arbitrator, that, in any one case or in
  the aggregate, if adversely determined, would have a Material Adverse
  Effect on the financial condition, operations, properties or business
  of a Borrower.
  
         Ownership and Liens.  Each Borrower has title to all of its
  assets, including the Collateral, and none of the Collateral or such
  assets is subject to any Lien, except Liens permitted by this
  Agreement.
  
         ERISA.  No Borrower has incurred any material "accumulated
  funding deficiency" within the meaning of  302 of ERISA or  412 of
  the Code, nor has the Borrower incurred any material liability to the
  PBGC in connection with any "employee pension benefit plan" (as defined
  in  3(2) of ERISA) established or maintained by a Borrower.  None of
  the employee pension benefit plans (as defined above) of a Borrower,
  nor any trusts created thereunder, nor any trustee or administrator
  thereof, has engaged in a "prohibited transaction," as such term is
  defined in  406 of ERISA or  4975 of the Code, that could subject
  such plans or any of them, any such trust, or any trustee or
  administrator thereof, or any party dealing with such plans or any such
  trust to any material liability or tax or penalty on prohibited
  transactions imposed by such  406 or 4975.  Neither the Borrowers nor
  any Affiliate of the Borrowers are now, or at any time in the past have
  been, obligated to make contributions to a "multiemployer plan," as
  such term is defined in  4001(a)(3) of ERISA.
  
         Taxes.  Each Borrower has filed all tax returns (federal, state
  and local) required to be filed and has paid all taxes, assessments and
  governmental charges and levies thereon to be due, including interest
  and penalties.
  
         Debt.  No Borrower is in no manner directly or contingently
  obligated with respect to any Debt that is not permitted by this
  Agreement.  No Borrower is in default with respect to any Debt.
  
         Corporate Name; Chief Executive Office.  During the five years
  immediately preceding the date of this Agreement, no Borrower nor any
  predecessor of a Borrower has used any name other than its current
  corporate name and the names listed on Schedule 4.10.  The chief
  executive office of each Borrower, within the meaning of Section
  9.103(3)(d) of the UCC, is at 5250 Cherokee Avenue, Alexandria,
  Virginia.
  
         Debarment and Suspension.  No event has occurred and no
  condition exists that may result in the debarment or suspension of a
  Borrower from any contracting with the Government, and no Borrower nor
  any Affiliate of a Borrower has been subject to any such debarment or
  suspension prior to the date of this Agreement.
  
         Year 2000.  Each Borrower has undertaken reasonable efforts to
  determine whether all material Date Affected Information Technology
  used in the business operations of each Borrower is Fully Date Capable,
  and, to the extent necessary, each Borrower has initiated efforts to
  make its material Date Affected Information Technology Fully Date
  Capable prior to the date that the failure to be Fully Date Capable
  would adversely affect the operation thereof.
  
         Material Contracts.  Attached hereto as Schedule 4.13 is a
  correct and complete list, as of the date of this Agreement, of each
  Material Contract.  No Borrower, Subsidiary or any other party thereto
  is in material default under any Material Contract.
  
         Intellectual Property.  As of the date hereof, the Borrowers and
  the Subsidiaries do not own or hold any Intellectual Property subject
  or entitled to United States copyright, patent or trademark protection,
  other than as listed on Schedule 4.14 attached hereto.  All such
  Intellectual Property has been registered with the United States Patent
  and Trademark Office and the Register of Copyrights.  Each Borrower and
  each Subsidiary owns or has the right to use under valid license
  agreements or otherwise all Intellectual Property that is required or
  necessary for the conduct of the business of each Borrower and its
  Subsidiaries as now conducted or proposed to be conducted without any
  conflict with any rights of any other Person.
  
         True and Complete Information.  All factual and financial
  information (taken as a whole) previously furnished to the Lender in
  connection with this Agreement by the Borrowers and each Subsidiary is,
  and all factual and financial information (taken as a whole) furnished
  to the Lender by the Borrowers and the Subsidiaries after the date of
  this Agreement will be, true and accurate in all material respects on
  the date on which such information is dated, certified or furnished,
  and is not, and will not be, incomplete by omitting to state any fact
  necessary to make such information (taken as a whole) not misleading at
  such time in light of the circumstances under which such information
  was provided.
  
         Integrated Business.  The Borrowers and the Subsidiaries will be
  engaged as an integrated group in providing services and goods to their
  respective Customers.  The integrated operation will require financing
  on such a basis that credit supplied to the Borrowers be made available
  from time to time to all Borrowers and Subsidiaries of the Borrowers,
  as required for the successful operation of the Borrowers and the
  Subsidiaries separately, and the integrated operation as a whole.  In
  that connection, the Borrowers and the Subsidiaries will request that
  the Lender provide the Loans to and issue the Letters of Credit for the
  Borrowers to finance such operation.  Each Borrower will derive
  benefit, directly and indirectly, from the credit so extended to the
  Borrowers, both in its separate capacity and as a member of the
  integrated group.
  
         Employee Relations.  Except as set forth on Schedule 4.17, no
  Borrower is a party to any collective bargaining agreement nor has any
  labor union been recognized as the representative of its employees.  No
  Borrower knows of any pending, threatened or contemplated strikes, work
  stoppage or other collective labor disputes involving its employees.
  
         Burdensome Provisions.  No Borrower is a party to any indenture,
  agreement, lease or other instrument, or subject to any corporate or
  partnership restriction, governmental approval or applicable law which
  is so unusual or burdensome as in the foreseeable future could be
  reasonably expected to have a Material Adverse Effect.  The Borrowers
  do not presently anticipate that future expenditures needed to meet the
  provisions of any statutes, orders, rules or regulations of a
  governmental authority will be so burdensome as to have a Material
  Adverse Effect.
  
         Absence of Defaults.  No event has occurred and is continuing
  which constitutes a Default or an Event of Default.  No event has
  occurred and is continuing which constitutes, or which with the passage
  of time or giving of notice or both would constitute, a default or
  event of default by any Borrower under any Material Contract or
  judgment, decree or order to which any Borrower is a party or by which
  any Borrower or any of its properties may be bound or which would
  require any Borrower to make any payment thereunder prior to the
  scheduled maturity date therefor.
  
            Survival of Representations and Warranties, Etc.  All
  statements contained in any certificate, financial statement or other
  instrument delivered by or on behalf of any Borrower to the Lender
  pursuant to or in connection with this Agreement or any of the other
  Loan Documents (including, but not limited to, any such statement made
  in or in connection with any amendment thereto or any statement
  contained in any certificate, financial statement or other instrument
  delivered by or on behalf of any Borrower prior to the date hereof and
  delivered to the Lender in connection with closing the transactions
  contemplated hereby) shall constitute representations and warranties
  made by the Borrowers under this Agreement.  All representations and
  warranties made under this Agreement and the other Loan Documents shall
  be deemed to be made at and as of the date hereof, the Closing Date and
  at and as of the date of the disbursement of any Loan or issuance of
  any Letter of Credit, except to the extent that such representations
  and warranties expressly relate solely to an earlier date (in which
  case such representations and warranties shall have been true and
  accurate on and as of such earlier date).  All such representations and
  warranties shall survive the effectiveness of this Agreement, the
  execution and delivery of the Loan Documents, the making of the Loans
  and the issuance of the Letters of Credit.
  
         Affirmative Covenants.  Each Borrower covenants and agrees that:
  
         Maintenance of Existence.  Each Borrower will preserve and
  maintain its corporate existence and good standing in the jurisdiction
  of its formation, and qualify and remain qualified, as a foreign
  corporation in each jurisdiction in which such qualification is
  required.
  
         Maintenance of Records.  Each Borrower will keep adequate
  records and books of account, in which complete entries will be made in
  accordance with GAAP, reflecting all financial transactions of such
  Borrower.  The principal records and books of account, including those
  concerning the Collateral, shall be kept at the chief executive office
  of the Borrowers described above.  No Borrower will move such records
  and books of account or change its chief executive office or the name
  under which it does business without (a) giving the Lender at least 30
  days' prior written notice, and (b) executing and delivering financing
  statements satisfactory to the Lender prior to such move or change.
  
         Maintenance of Properties.  Each Borrower will maintain, keep
  and preserve all of its properties (tangible and intangible) necessary
  or useful in the proper conduct of its business in good working order
  and condition, ordinary wear and tear excepted.
  
         Conduct of Business.  Each Borrower will continue to engage in a
  business of the same general type as conducted by it on the date of
  this Agreement.
  
         Maintenance of Insurance.  Each Borrower will maintain insurance
  with financially sound and reputable insurance companies or
  associations in such amounts and covering such risks as are usually
  carried by companies engaged in the same or a similar business and
  similarly situated, including, without limitation, insurance covering
  the Inventory and Equipment as required hereby.
  
         Compliance with Laws.  Each Borrower will comply in all respects
  with all applicable laws, rules, regulations and orders (including,
  without limitation, ERISA), such compliance to include, without
  limitation, paying, before the same become delinquent, all taxes,
  assessments and governmental charges imposed upon it or upon its
  property.
  
         Right of Inspection.  At any reasonable time and from time to
  time, with reasonable notice, each Borrower will permit the Lender or
  any agent or representative of the Lender to audit, examine and verify
  the Collateral, examine and make copies of and abstracts from the
  records and books of account of, and visit the properties of, each
  Borrower, and to discuss the affairs, finances and accounts of each
  Borrower with any of its officers and directors and each Borrower's
  independent accountants.  The Borrowers agree to reimburse the Lender
  for all reasonable audit and Collateral verification and examination
  expenses incurred by it.
  
         Reporting Requirements.  The Borrowers will furnish to the
  Lender:
  
            Monthly Financial Statements of the Company.  As soon as
  available and in any event within 30 days after the end of each
  calendar month, financial statements of the Company and its
  Subsidiaries as of the end of such month in substantially the same
  format as Schedule 5.8(a) attached hereto, and prepared in accordance
  with the GAAP.  Such financial statements shall be certified to be
  accurate by a Principal Officer of the Company (subject to year-end
  adjustments) and shall be accompanied by a Covenant Compliance
  Certificate for such period;
            
            Annual Financial Statements of the Company.  As soon as
  available and, in any event, within 120 days after the end of each
  fiscal year of the Company, audited financial statements consisting of
  the consolidated and consolidating balance sheets of the Company and
  its Subsidiaries as of the end of such fiscal year, and consolidated
  and consolidating statements of income, stockholders' equity and cash
  flows of the Company and its Subsidiaries for such fiscal year, all in
  reasonable detail and all prepared in accordance with GAAP, accompanied
  by an opinion thereon acceptable to the Lender of Ernst & Young or any
  other independent certified public accounting firm selected by the
  Company and acceptable to the Lender;
  
            Management Letters.  Promptly upon receipt thereof, copies of
  any reports submitted to the Company by independent certified public
  accountants in connection with examination of the financial statements
  of the Company made by such accountants;
  
            Notice of Litigation.  Promptly after the commencement
  thereof, notice of all actions, suits, investigations and proceedings
  before any court or governmental department, commission, board, bureau,
  agency or instrumentality, domestic or foreign, affecting a Borrower,
  that, if determined adversely to such Borrower, could have a Material
  Adverse Effect;
  
            Notice of Defaults and Events of Default.  As soon as
  possible and, in any event, within ten days after the occurrence of
  each Default and Event of Default, a written notice setting forth the
  details of such Default or Event of Default and the action that is
  proposed to be taken by the Borrowers with respect thereto;
  
            SEC Reports; Proxy Statements, etc.  Promptly after the
  sending or filing thereof, copies of all proxy statements, financial
  statements and reports that the Company files with the Securities and
  Exchange Commission or sends to its stockholders;
  
            Borrowing Base Certificate and Receivables Detail.  As soon
  as available and, in any event, within 20 days after the end of each
  calendar month, (1) a Borrowing Base Certificate appropriately
  completed and executed by a Principal Officer of the Company and
  including a computation of the Borrowing Base as of the last day of
  such calendar month, accompanied by (i) an Aging as of the last day of
  the previous calendar month, (ii) such other supporting documents as
  the Lender from time to time reasonably may request, and (iii) such
  invoices, instruments, chattel paper and other evidence of indebtedness
  representing any Receivables, duly endorsed to the Lender, as the
  Lender may request; (2) an unbilled Receivables report in form and
  detail acceptable to the Lender, and (3) a contract backlog report
  reflecting all contracts of the Borrowers, the work completed and
  billed under such contracts, the work remaining to be completed and
  billed and the type and term of each contract.  A copy of each item
  described in this Section 0(0) shall be delivered within the deadline
  specified to the Lender's Government Contracts Administration Division
  at 8245 Boone Boulevard, 3rd Floor, Vienna, Virginia  22182-3871,
  Attention:  Betty Lillard;
  
            Inventory Report.  Within 20 days after the end of each
  calendar month, a report, in form and detail acceptable to the Lender,
  listing all Inventory of the Borrowers on hand as of the last day of
  such calendar month;
  
            Customer List.  If required by the Lender, within 90 days
  after the end of each fiscal quarter of the Company, a current Customer
  List;
  
            Management Changes.  At least 30 days prior written notice of
  any new appointments to the offices of the president, chairman or chief
  financial officer of any Borrower;
  
            Projections.  At least 30 days prior to the end of each
  fiscal year, consolidated and consolidating balance sheets, income
  statements and cash flows of the Borrowers setting forth projections
  for each fiscal quarter of the next succeeding fiscal year, and setting
  forth in reasonable detail the assumptions underlying such projections;
  
            Notice of Material Adverse Effect.  Prompt notice of any
  change in the business, assets, liabilities, financial condition,
  results of operations or business prospects of the Company or any
  Subsidiary which has had or may have a Material Adverse Effect;
  
            Government Contract Audits.  Promptly after a Borrower's
  receipt thereof, notice of any final decision of a contracting officer
  disallowing costs aggregating more than $100,000;
  
            Material Contracts.  Promptly after entering into any
  Material Contract or amendment thereof (other than contracts awarded to
  a Borrower in the ordinary course of business and amendments thereof),
  a notice containing a description of such Material Contract or
  amendment (with copies thereof if requested by the Lender), and prompt
  written notice of the termination or breach by any Person of a Material
  Contract; and
  
            General Information.  Such other information respecting the
  condition or operations, financial or otherwise, of the Borrowers as
  the Lender from time to time reasonably may request.
  
         Year 2000 Compliance.  The Borrowers shall initiate and maintain
  a program to identify any Date Affected Information Technology used in
  the business operations of the Borrowers that is not Fully Date
  Capable, and, in connection therewith, undertake in good faith to make
  all material Date Affected Information Technology used in such business
  operations Fully Date Capable prior to the date that the failure to be
  Fully Date Capable would adversely affect the operation thereof.  The
  Borrowers shall advise the Lender in the event that any Borrower has
  reason to believe that any material Date Affected Information
  Technology will not be Fully Date Capable prior to the date that the
  failure to be Fully Date Capable would adversely affect the operation
  thereof, and advise the Lender in the event that any Borrower has
  reason to believe that it will be adversely affected by the failure of
  any affiliated or nonaffiliated entity to have its Date Affected
  Information Technology Fully Date Capable.  Each Borrower agrees to
  provide the Lender, upon request, access to and copies of information
  necessary to permit the Lender to determine whether such Borrower's
  Date Affected Information Technology is, or will be, Fully Date
  Capable, including, without limitation, (i) minutes, resolutions and
  reports to and from such Borrower's Board of Directors or committee
  thereof, (ii) internally generated reports, consultant reports or
  auditor's report regarding the status of such Borrower's Date Affected
  Information Technology, (iii) all documents relating to a "Year 2000"
  program, and (iv) officer certificates or other statements requested by
  the Lender regarding the status of Date Affected Information
  Technology.  The Borrowers acknowledge that the Lender's right to
  receive, or the Lender's receipt of, the foregoing information does not
  impose any obligation on the Lender to assess the accuracy or effect of
  such information, or to recommend or require remedial action of any
  kind.  The Borrowers hereby acknowledge that the actual or potential
  failure or degradation of any material Date Affected Information
  Technology due to its failure to be Fully Date Capable may constitute a
  Material Adverse Effect.
  
         Negative Covenants.  The Borrowers agree that, without first
  obtaining the prior written consent of the Lender:
  
         Liens.  The Borrowers will not create, incur, assume or permit
  to exist, any Lien upon or with respect to any of their properties, now
  owned or hereafter acquired, except:  (a) Liens in favor of the Lender;
  (b) Liens that are incidental to the conduct of the business of a
  Borrower, are not incurred in connection with the obtaining of credit
  and do not materially impair the value or use of assets of such
  Borrower; (c) purchase-money Liens, whether now existing or hereafter
  arising (including those arising out of a Capital Lease) on any fixed
  assets provided that (1) any property subject to a purchase-money Lien
  is acquired by a Borrower in the ordinary course of its respective
  business and the Lien on any such property is created contemporaneously
  with such acquisition, (2) each such Lien shall attach only to the
  property so acquired, (3) the Debt secured by all such Liens shall not
  exceed the aggregate at any time outstanding $600,000 in the aggregate
  for all of the Borrowers; and (d) the Lien on the Technology Inventory
  in favor of IBM Credit Corporation.
  
         Debt.  The Borrowers will not create, incur, assume or permit to
  exist, any Debt, except:  (a) the Obligations; (b) Subordinated Debt;
  (c) ordinary trade accounts payable; (d) Debt of a Borrower (including
  Debt arising out of a Capital Lease) or any Subsidiary secured by
  purchase-money Liens permitted by this Agreement; (e) Debt of
  Technology to IBM Credit Corporation arising out of the Inventory floor
  plan financing provided by IBM Credit Corporation to Technology; and
  (f) Debt of the Company incurred to finance the MPS Contract if the
  Lender does not provide financing for the MPS Contract, provided that
  any such Debt for which a Borrower is liable shall be included as
  Funded Debt.
  
         Mergers, etc.  No Borrower will merge or consolidate with any
  Person, or permit any Subsidiary to do so, except that one Borrower may
  merge into or transfer assets to any other Borrower.
  
         Sale and Leaseback; Synthetic Leases.  No Borrower will (a)
  sell, transfer or otherwise dispose of, any real or personal property
  to any Person and thereafter, directly or indirectly, lease back the
  same or similar property; or (b) create, incur, assume, or permit to
  exist any obligations under a Synthetic Lease.
  
        Dividends; Distributions; Subordinated Debt Payments.  The
  Company will not declare or pay any dividends or distributions; or make
  any payments with respect to Subordinated Debt; or purchase, redeem,
  retire, prepay or otherwise acquire for value any of its capital stock
  or Subordinated Debt now or hereafter outstanding; or make any
  distribution of assets to its stockholders as such whether in cash,
  assets or obligations of the Company; or allocate or otherwise set
  apart any sum for the payment of any dividend or distribution on, or
  for the purchase, redemption or retirement of, any shares of its
  capital stock; or make any other distribution by reduction of capital
  or otherwise in respect of any shares of its capital stock; except
  that, subject to the compliance by the Company with the provisions of
  Section 6.11 below, (a) the Company may declare and deliver dividends
  and make distributions payable solely in common stock of the Company,
  and (b) provided that after giving effect thereto, no Default or Event
  of Default has occurred or shall occur, the Company may pay dividends
  out of retained earnings to its shareholders and make regularly
  scheduled payments of interest due with respect to Subordinated Debt.
  
         Sale of Assets.  No Borrower will sell, lease, assign, transfer,
  license or otherwise dispose of, any of its now owned or hereafter
  acquired assets, except for (a) Inventory and Intellectual Property
  sold, licensed or leased in the ordinary course of business, and
  (b) the sale or other disposition of assets other than Inventory and
  $100,000 in the aggregate for all Borrowers during any fiscal year.
  
         Loans.  No Borrower will make any loan or advance to any Person
  except for (a) travel advances or other advances in an aggregate amount
  not to exceed $100,000 at any one time outstanding, which are made to
  any employee of any Borrower in the ordinary course of such Borrower's
  business and in furtherance of such employee's performance under a
  contract with a Customer and (b) loans made to a Borrower by any other
  Borrower, and (c) loans to officers and employees of the Borrowers not
  to exceed $100,000 in the aggregate outstanding at any time for all
  Borrowers, provided that, after giving effect thereto, no Default or
  Event of Default shall occur.
  
         Guaranties, etc.  No Borrower will assume, guarantee, endorse or
  otherwise be or become directly or contingently responsible or liable
  (including, but not limited to, any liability arising out of any
  agreement to purchase any obligation, stock, assets, goods or services,
  or to supply or advance any funds, assets, goods or services, or to
  maintain or cause such Person to maintain a minimum working capital or
  net worth or otherwise to assure the creditors of any Person against
  loss) for obligations of any Person, or permit any such guaranties or
  liabilities to exist, except guaranties by endorsement of negotiable
  instruments for deposit or collection or similar transactions in the
  ordinary course of business.
  
         Acquisitions.  No Borrower will form a Subsidiary, become a
  partner or joint venturer with any person, or purchase or acquire all
  or substantially all of the assets of any Person, or any capital stock
  of or ownership interest in any other Person, other than the Company's
  investment in the MPS Joint Venture.  If the Lender consents to the
  acquisition or formation of a Subsidiary by a Borrower, such Borrower
  will cause such Subsidiary to (a) execute and deliver to the Lender an
  Assumption Agreement, and (b) satisfy all of the conditions set forth
  in Section 7.3. The Lender agrees that it will not withhold its consent
  to a Borrower entering into a joint venture or teaming agreement with
  another Person in the ordinary course of business, provided that such
  Borrower does not assume any obligations of any other Person in
  connection therewith.
  
         Transactions with Affiliates.  No Borrower will enter into any
  transaction, including, without limitation, the purchase, sale or
  exchange of property or the rendering of any service, with any
  Affiliate, except in the ordinary course of and pursuant to the
  reasonable requirements of such Borrower's business and upon fair and
  reasonable terms no less favorable to such Borrower than would be
  applicable in a comparable arm's-length transaction with a Person not
  an Affiliate.
  
         Financial Covenants.  The Company will not:
  
            Tangible Capital Funds.  Permit Tangible Capital Funds to be
  less than the Minimum Compliance Level as of the end of any fiscal
  quarter, beginning with the fiscal quarter ended on June 30, 1998;
  
            Funded Debt Ratio.  Permit the Funded Debt Ratio as of the
  end of any fiscal quarter to be greater than (1) 4.5 to 1 through and
  including December 31, 1998; (2) 4.25 to 1 as of March 31, 1999 through
  and including June 30, 1999; and (3) 4 to 1 as of September 30, 1999,
  and at all times thereafter;
  
            Capital Expenditures.  Incur Capital Expenditures of greater
  than $600,000 during any 12-month period; or
  
            Debt Coverage Ratio.  Permit the Debt Coverage Ratio to be
  less than (1) 1.15 to 1 as of June 30, 1998; (2) 1.25 to 1 as of
  September 30, 1998; (3) 1.30 to 1 as of December 31, 1998; and (4) 1.35
  to 1 as of March 31, 1999, and as of the end of each fiscal quarter
  thereafter.
  
         Conditions of Lending.  The making of the Loans shall be subject
  to the following conditions:
  
         Conditions Precedent to Closing.  The initial disbursement of
  the Loans shall be subject to the following conditions precedent,
  provided, however, that if the Lender elects to make such initial
  disbursement prior to all of such conditions precedent being satisfied,
  the Borrowers agree that they shall cause all such conditions to be
  satisfied within 30 days after such disbursement:
  
            The Loan Documents shall have been appropriately completed,
  duly executed by the parties thereto, recorded where necessary and
  delivered to the Lender.
  
            No Default or Event of Default shall have occurred and be
  continuing.
  
            All representations and warranties contained herein shall be
  true and correct at the Closing Date.
  
            All legal matters incident to the Loans shall be satisfactory
  to counsel for the Lender, and the Borrowers agree to execute and
  deliver to the Lender such additional documents and certificates
  relating to the Loans as the Lender reasonably may request.
  
            Financing statements in form and substance satisfactory to
  the Lender shall have been properly filed in each office where
  necessary to perfect the Lender's security interest in the Collateral,
  termination statements shall have been filed with respect to any other
  financing statements covering all or any portion of the Collateral and
  all taxes and fees with respect to such recording and filing shall have
  been paid by the Borrowers.
  
            All Intellectual Property subject or entitled to United
  States copyright, patent or trademark protection, and such documents as
  are necessary to perfect the Lender's security interest therein, shall
  have been duly registered with the United States Patent and Trademarks
  Office or the Register of Copyrights, as applicable, and the Lender
  shall have received a search report confirming that no Liens are
  recorded with respect thereto.
  
            The Borrowers shall have delivered to the Lender
  (1) certified copies of evidence of all corporate actions taken by the
  Borrowers to authorize the execution and delivery of the Loan
  Documents, (2) certified copies of the article of incorporation, and
  bylaws of the Borrowers, (3) a certificate of incumbency for the
  officers of the Borrowers executing the Loan Documents, (4) a good
  standing certificate, dated not more than 30 days prior to the Closing
  Date, from the appropriate state official of any state in which the
  Borrowers are incorporated or qualified to do business, and (5) such
  additional supporting documents as the Lender or counsel for the Lender
  reasonably may request.
  
            The Lender shall have received (1) a Borrowing Base
  Certificate, (2) an Aging, and (3) a report setting forth the status of
  all contracts relating to Eligible Receivables from the most recent
  fiscal month and shall be in form and substance satisfactory to the
  Lender.
  
            The Lender shall have received a field examination report of
  the Collateral in form and substance acceptable to it.
  
            The Lender shall have received the written opinion of counsel
  to the Company, in form and substance satisfactory to the Lender.
  
            The Lender shall have received financing statement, judgment
  and tax lien searches reflecting that there are no Liens outstanding
  against the Collateral other than those permitted by the Agreement.
  
            The Lender shall have received evidence that the Borrowers
  have obtained the insurance required by this Agreement.
  
            The Lender shall have received such landlord and mortgage
  waivers as it shall require.
  
         Conditions Precedent to Subsequent Disbursements.  The
  disbursement and issuance of subsequent Loans and Letters of Credit
  shall be subject to the following conditions precedent:
  
            No Default or Event of Default shall have occurred and be
  continuing.
  
            No Material Adverse Effect shall have occurred in the
  financial condition of any Borrower.
  
            All representations and warranties of the Borrowers contained
  in the Loan Documents shall be true and correct at the date of such
  disbursement.
  
            No change shall have occurred in any law or regulations
  thereunder or interpretations thereof that, in the opinion of counsel
  for the Lender, would make it illegal for the Lender to make Loans
  hereunder.
  
            If required by the Lender, the Company shall have delivered
  to the Lender a current Borrowing Base Certificate and a current Aging,
  duly executed by the president or treasurer of the Company and
  appropriately completed, and such other supporting data and
  documentation relating to the Collateral as may be required by the
  Lender in its reasonable discretion.
  
         Conditions Precedent to Subsidiaries Becoming Borrowers.  Any
  Subsidiary of the Company shall become a Borrower under this Agreement,
  subject to the satisfaction of the following conditions precedent:
  
            The Subsidiary shall execute and deliver to the Lender an
  Assumption Agreement.
  
            No Default or Event of Default shall have occurred and be
  continuing.
  
            All legal matters incident to such Subsidiary becoming a
  Borrower shall be satisfactory to counsel for the Lender, and the
  Subsidiary shall execute and deliver to the Lender such additional
  documents and certificates relating to the Loans as the Lender may
  reasonably request.
  
            The Lender shall have received an opinion of counsel to the
  Subsidiary, addressed to the Lender, covering such matters as the
  Lender may request, in form and substance satisfactory to the Lender.
  
            Financing statements in form and substance satisfactory to
  the Lender shall have been properly filed in each office where
  necessary to perfect the security interest of the Lender in the
  Collateral of the Subsidiary, termination statements shall have been
  filed with respect to any other financing statements covering all or
  any portion of such Collateral (except with respect to Liens or
  security interests permitted by this Agreement), all taxes and fees
  with respect to such recording and filing shall have been paid by such
  Subsidiary and the Lender shall have received such lien searches or
  reports as it shall require confirming that the foregoing filings and
  recordings have been completed.
  
            The Subsidiary shall have delivered the following documents
  to the Lender, each of which shall be certified as of the date on which
  it is to become a Borrower, by its secretary or representative
  performing similar functions:  (1) copies of evidence of all actions
  taken by the Subsidiary to authorize the execution and delivery of the
  Assumption Agreement and the other Loan Documents; (2) copies of the
  articles or certificate of incorporation and bylaws (or comparable
  organizational documents) of the Subsidiary; and (3) a certificate as
  to the incumbency and signatures of the officers executing the Loan
  Documents.
  
            The Lender shall have received a certificate of good standing
  and qualification (or similar instrument) issued by the appropriate
  state official of the state of incorporation of the Subsidiary, dated
  within 30 days of the date of the applicable Loan Documents.
  
            The Lender shall have received a listing and aging of
  Accounts Receivable, a Borrowing Base Certificate, an Inventory
  schedule, a report setting forth the status of all contracts relating
  to its Eligible Receivables and such other financial information of
  such Subsidiary as may be requested by the Lender from time to time,
  all of which shall be of a current date and shall be in form and
  substance satisfactory to the Lender.
  
            If required by the Lender, the Lender shall have received a
  satisfactory field examination of the Collateral and internal control
  systems of the Subsidiary performed by a consultant selected by the
  Lender, and the Borrowers shall have reimbursed the Lender for the cost
  of such consultant.
  
            If required by the Lender, it shall have received a landlord
  waiver from each landlord of the Subsidiary, which shall be in form and
  substance acceptable to the Lender.
  
            All Intellectual Property of such Subsidiary that is subject
  to a Material IP Agreement shall have been duly registered with the
  Register of Copyrights or the United States Patent and Trademark
  Office, as applicable, all documents necessary to perfect the Lender's
  security interest therein shall have been recorded in such office, and
  the Lender shall have received evidence that it has a first priority
  perfected Lien with respect thereto.
  
            The Borrowers agree no Receivable of a Subsidiary shall be
  included in the Borrowing Base prior to the date on which all of the
  foregoing conditions are satisfied.
  
         Default.
  
         Events of Default.  Each of the following shall constitute an
  Event of Default under this Agreement:
  
            Failure of a Borrower to pay any Obligation to the Lender,
  including, without limitation, the principal of or interest on any
  Notes or the Loans, or amounts due under a Letter of Credit Agreement,
  when the same shall become due and payable, whether at maturity, or
  otherwise, and such failure shall continue for a period of ten days; or
  
            If a Borrower refuses to permit the Lender to inspect,
  examine, verify or audit the Collateral in accordance with the
  provisions of this Agreement; or
  
            Failure of a Borrower to perform or observe any covenant
  contained in Section 6 of this Agreement; or
  
            Failure of the Borrowers to perform their obligations under
  Section 5.8(g) and such failure shall continue for a period of five
  days; or
  
            Failure of a Borrower to perform or observe any other term,
  condition, covenant, warranty, agreement or other provision contained
  in this Agreement (except any such failure resulting in the occurrence
  of another Event of Default described in this Section), within 30 days
  after the earlier of actual knowledge thereof by such Borrower or
  written notice from the Lender to the Company specifying such failure;
  or
  
            If any representation or warranty made or deemed made by a
  Borrower in this Agreement, any Loan Document or any statement or
  representation made in any certificate, report or opinion delivered
  pursuant to this Agreement (including any Covenant Compliance
  Certificate, Borrowing Base Certificate or financial statements) or in
  connection with any borrowing under this Agreement was materially
  untrue or is breached in any material respect; or
  
            If, as a result of default, any other obligation of a
  Borrower for the payment of any Debt becomes or is declared to be due
  and payable prior to the expressed maturity thereof, unless and to the
  extent that the declaration is being contested in good faith in a court
  of appropriate jurisdiction; or
  
            A Borrower makes an assignment for the benefit of creditors,
  files a petition in bankruptcy, petitions or applies to any tribunal
  for any receiver or any trustee of such Borrower or any substantial
  part of its property, or commences any proceeding relating to such
  Borrower under any reorganization, arrangement, readjustments of debt,
  dissolution or liquidation law or statute of any jurisdiction, whether
  now or hereafter in effect; or
  
            If, within 60 days after the filing of a bankruptcy petition
  or the commencement of any proceeding against a Borrower seeking any
  reorganization, arrangement, composition, readjustment, liquidation,
  dissolution or similar relief under any present or future statute, law
  or regulation, the proceeding shall not have been dismissed, or, if,
  within 60 days after the appointment, without the consent or
  acquiescence of such Borrower, of any trustee, receiver or liquidator
  of a Borrower or of all or any substantial part of the properties of a
  Borrower, the appointment shall not have been vacated; or
  
            Any judgment against a Borrower in excess of $100,000 or any
  attachment in excess of $100,000 against any property of a Borrower
  that remains unpaid, undischarged, unbonded or undismissed for a period
  of 30 days, unless and to the extent that the judgment or attachment is
  appealed in good faith in a court of higher jurisdiction and the appeal
  remains pending; or
  
            If any of the following events shall occur or exists with
  respect to any Borrower or any employee benefit or other plan
  established, maintained or to which contributions have been made by any
  Borrower, any Affiliate of any Borrower or any other Person that,
  together with the Borrower, would be treated as a single employer under
   4001 of ERISA, and the Lender determines that the same would have a
  Material Adverse Effect:  ()(1) any prohibited transaction (as defined
  in  406 of ERISA or  4975 of the Code), (2) any reportable event (as
  defined in  4043 of ERISA and the regulations issued thereunder),
  (3) the filing under  4041 of ERISA of a notice of intent to terminate
  any such plan or the termination of such plan, or (4) the institution
  of proceedings by the PBGC under  4042 of ERISA for the termination
  of, or the appointment of a trustee to administer, any such plan; or
  
            If any Borrower, any Subsidiary or any Affiliate of any
  Borrower or Subsidiary shall be debarred or suspended from any
  contracting with the Government; or
  
            The Loan Documents shall for any reason cease to create a
  valid and perfected first priority security interest in any of the
  Collateral purported to be covered thereby or if any Loan Document
  ceases to be in full force and effect; or
  
            If the Lender, in good faith, deems itself insecure in its
  reasonable judgment or determines that an event has occurred that will
  result in a Material Adverse Effect, and the cause for such
  determination is not cured to the Lender's satisfaction within 30 days
  after notice from the Lender to the Company specifying the Lender's
  basis therefor; or
  
            The dissolution, liquidation or termination of existence of a
  Borrower; or
  
            If a Borrower fails to give the Lender any notice required by
  this Agreement within ten days after the occurrence of the event giving
  rise to the obligation to give such notice, provided that such failure
  to give notice shall not constitute an Event of Default if the
  applicable Event of Default or breach is cured within any grace period
  that otherwise would have been applicable had the notice been timely
  given; or
  
            The occurrence of an event of default under any other Loan
  Document and the expiration of all applicable cure periods; or
  
            If:
  
                 Any "person" or "group" (as such terms are used in
       Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
       as amended (the "Exchange Act")), but excluding Research
       Industries and Arch C. Scurlock, is or becomes the "beneficial
       owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
       Act, except that a Person will be deemed to have "beneficial
       ownership" of all securities that such Person has the right to
       acquire, whether such right is exercisable immediately or only
       after the passage of time), directly or indirectly, of more than
       25% of the total voting power of the then outstanding voting stock
       of the Company; or
       
                 During any twelve-month period (commencing on or after
       the Agreement Date), a majority of the Board of Directors of the
       Company shall no longer be composed of individuals (A) who were
       members of such Board of Directors on the first date of such
       period, (B) whose election or nomination to such Board of
       Directors was approved by individuals referred to in clause (A)
       above constituting at the time of such election or nomination at
       least a majority of such Board of Directors or (C) whose election
       or nomination to such Board of Directors was approved by
       individuals referred to in clauses (A) and (B) above constituting
       at the time of such election or nomination at least a majority of
       such Board of Directors; or
       
            If any Subordinated Debt holder gives written notice to the
  Lender purporting to terminate the effect of the subordination thereof
  to the Obligations.
  
         Remedies upon Default.  Upon the occurrence of an Event of
  Default, the following provisions shall be applicable:
  
            The Lender, at its option, may terminate its obligation to
  make Loans and issue Letters of Credit under this Agreement and declare
  all Obligations, whether incurred prior to, contemporaneous with or
  subsequent to the date of this Agreement, and whether represented in
  writing or otherwise, immediately due and payable and may exercise all
  of its rights and remedies against the Borrowers and any Collateral.
  The Lender also may require the Borrowers to pay, and the Borrowers
  agree to pay, to the Lender an amount of cash equal to the aggregate
  amount of the Letters of Credit then outstanding, and any amounts paid
  by the Borrowers shall be held by the Lender in a cash collateral
  account, over which the Lender shall have the exclusive power of
  withdrawal, as security for the Obligations arising out of the Letters
  of Credit and the Letter of Credit Agreements.
  
            The Lender may foreclose its lien and security interest in
  the Collateral in any way permitted by law and shall have, without
  limitation, the remedies of a secured party under the UCC.  The Lender
  may enter the premises of any Borrower without legal process and
  without incurring liability to any Borrower and remove the Collateral
  to such place or places as the Lender may deem advisable, or the Lender
  may require the Borrowers to assemble the Collateral and make the
  Collateral available to the Lender at a convenient place and, with or
  without having the Collateral at the time or place of sale, the Lender
  may sell or otherwise dispose of all or any part of the Collateral
  whether in its then condition or after further preparation or
  processing, either at public or private sale or at any broker's board,
  in lots or in bulk, for cash or for credit, at any time or place, in
  one or more sales and upon such terms and conditions as the Lender may
  elect.  The Lender shall give not less than five Business Days' prior
  written notice to the Borrowers of the time and place of any public
  sale of the Collateral or the time after which the Collateral may be
  sold in a private sale, which each Borrower agrees constitutes
  commercially reasonable notice.  At any such sale the Lender may be the
  purchaser, subject to the applicable provisions of the UCC.
  
            The proceeds from any sale of the Collateral by the Lender
  shall first be applied to any costs and expenses in securing possession
  of the Collateral and to any expenses in connection with the sale.  The
  net proceeds will be applied toward the payment of the Obligations.
  Application of the net proceeds as to particular Obligations or as to
  principal, interest and fees shall be in the Lender's absolute
  discretion.  Any deficiency will be paid to the Lender by the Borrowers
  forthwith upon demand, and any surplus will be paid to the Borrowers,
  as applicable.
  
            The Lender is hereby authorized at any time or from time to
  time, without notice to the Borrowers (any such notice being expressly
  waived by each Borrower), to setoff and apply any deposit (general or
  special, time or demand, provisional or final) or investment account at
  any time held, including any certificate of deposit, and other
  indebtedness at any time owed by the Lender or any of its affiliates,
  whether or not any such deposit or indebtedness is then due, to or for
  the credit or account of any Borrower against any and all of the
  Obligations.  The Lender shall give prompt written notice of any setoff
  to the Borrowers.
  
            EACH BORROWER, HAVING KNOWLEDGE THAT IT MAY BE ENTITLED TO
  NOTICE AND A HEARING PRIOR TO REPOSSESSION OF THE COLLATERAL, WAIVES
  ANY RIGHT THAT IT MAY HAVE UNDER EXISTING OR FUTURE LAW TO NOTICE OF
  FORECLOSURE AND ANY OTHER ACT DESCRIBED HEREIN, TO ANY HEARING THAT MAY
  BE HELD RELATING TO FORECLOSURE OR ANY OTHER SUCH ACTS, AND TO ANY
  NOTICE THAT MAY BE REQUIRED TO BE GIVEN BY THE LENDER PRIOR TO SUCH
  HEARING, OTHER THAN THE NOTICES REQUIRED BY THE LOAN DOCUMENTS OR THE
  UCC.  THE LENDER AND EACH BORROWER EXPRESSLY WAIVE THEIR RESPECTIVE
  RIGHTS TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION RELATING TO
  THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
  
            The Lender itself may perform or comply, or otherwise cause
  performance or compliance, with the obligations of a Borrower contained
  in this Agreement, including, without limitation, the obligations of
  each Borrower to defend and insure the Collateral.  The expenses of the
  Lender incurred in connection with such performance or compliance,
  together with interest thereon at the Prime Rate plus 2%, shall be
  payable by the Borrowers to the Lender on demand and shall constitute
  Obligations.
  
         Miscellaneous.
  
         Collection Costs.  The Borrowers shall pay all of the reasonable
  costs and expenses incurred by the Lender in connection with the
  enforcement of this Agreement and the other Loan Documents, including,
  without limitation, reasonable attorneys' fees and expenses.
  
         Modification and Waiver.  Except for the other documents
  expressly referred to in this Agreement, this Agreement contains the
  entire agreement between the parties and supersedes all prior
  agreements between the Lender and the Borrowers concerning the Loans
  and the Letters of Credit.  No modification or waiver of any provision
  of this Agreement or any other Loan Document and no consent by the
  Lender to any departure therefrom by any Borrower shall be effective
  unless such modification or waiver shall be in writing and signed by an
  officer of the Lender with a title of vice president or any higher
  office, and the same shall then be effective only for the period and on
  the conditions and for the specific instances and purposes specified in
  such writing.  No notice to or demand on any Borrower in any case shall
  entitle any Borrower to any other or further notice or demand in
  similar or other circumstances.  No failure or delay by the Lender in
  exercising any right, power or privilege hereunder shall operate as a
  waiver thereof; nor shall any single or partial exercise thereof
  preclude any other or further exercise thereof or the exercise of any
  other right, power or privilege.  The rights and remedies of the Lender
  contained in this Agreement and the other Loan Documents are cumulative
  and not exclusive of any rights or remedies otherwise provided by law.
  
         Notices.  All notices, requests, demands or other communications
  provided for in this Agreement (except for requests for Loans made by
  telephone as described in Section 0 above) shall be in writing and
  shall be delivered by hand, sent prepaid by Federal Express (or a
  comparable overnight delivery service) or sent by the United States
  mail, certified, postage prepaid, return receipt requested, to the
  Lender at 8245 Boone Boulevard, 3rd Floor, Vienna, Virginia 22182,
  Attention:  Mr. Timothy J. Duggan, or to the Borrowers at 5250 Cherokee
  Avenue, Alexandria, Virginia 22312, Attention:  Mr. John D. D'Amore.
  Any notice, request, demand or other communication delivered or sent in
  the foregoing manner shall be deemed given or made (as the case may be)
  upon the earliest of (a) the date it is actually received, (b) the
  business day after the day on which it is delivered by hand, (c) the
  business day after the day on which it is properly delivered to Federal
  Express (or a comparable overnight delivery service), or (d) the third
  business day after the day on which it is deposited in the United
  States mail.  Any Borrower or the Lender may change its address by
  notifying the other party of the new address in any manner permitted by
  this Section 0.  Rejection or other refusal to accept or the inability
  to deliver because of a changed address of which no notice was given
  shall not affect the date of such notice, election or demand sent in
  accordance with the foregoing provisions.
  
         Counterparts.  This Agreement may be executed by the parties
  hereto individually or in any combination, in one or more counterparts,
  each of which shall be an original and all of which together constitute
  one and the same agreement.
  
         Captions.  The captions of the various sections and paragraphs
  of this Agreement have been inserted only for the purposes of
  convenience; such captions are not a part of this Agreement and shall
  not be deemed in any manner to modify, explain, enlarge or restrict any
  of the provisions of this Agreement.
  
         Survival of Agreements.  All agreements, representations and
  warranties made herein shall survive the delivery of this Agreement and
  the making and renewal of the Loans hereunder.
  
         Fees and Expenses.  Whether or not any Loans are made hereunder,
  the Borrowers shall pay on demand all out-of-pocket costs and expenses
  incurred by the Lender in connection with the preparation, negotiation,
  execution, delivery, filing, recording and enforcement of this
  Agreement and any of the documents executed or delivered in connection
  herewith, including, without limitation, the reasonable fees and
  expenses of counsel to the Lender, and local counsel who may be
  retained by the Lender, with respect to this Agreement and such
  documents and any amendments thereof and with respect to advising the
  Lender as to its rights and responsibilities thereunder.
  
         Use of Defined Terms.  All terms defined in this Agreement shall
  have the defined meanings when used in certificates, reports or other
  documents made or delivered pursuant to this Agreement, unless the
  context shall otherwise require.
  
         Successors and Assigns.  This Agreement shall inure to the
  benefit of and bind the respective parties hereto and their successors
  and assigns; provided, however, that no Borrower may assign its rights
  hereunder without the prior written consent of the Lender.
  
         Accounting Terms.  All accounting terms used herein that are not
  otherwise expressly defined in this Agreement shall have the meanings
  respectively given to them in accordance with GAAP in effect on the
  date of this Agreement.  Except as otherwise provided herein, all
  financial computations made pursuant to this Agreement shall be made in
  accordance with GAAP and all balance sheets and other financial
  statements shall be prepared in accordance with GAAP.  Except as
  otherwise provided herein, whenever reference is made in any provision
  of this Agreement to a balance sheet or other financial statement or
  financial computation with respect to a Borrower, such terms shall mean
  a consolidated balance sheet or other financial statement or financial
  computation, as the case may be, with respect to such Borrower and its
  Subsidiaries.
  
         Confidentiality.  Except as otherwise provided by applicable
  law, the Lender shall utilize all non-public information obtained
  pursuant to the requirements of this Agreement which has been
  identified as confidential or proprietary by the Company in accordance
  with its customary procedure for handling confidential information of
  this nature and in accordance with safe and sound banking practices but
  in any event may make disclosure:  (a) to any of its affiliates
  (provided they shall agree to keep such information confidential in
  accordance with the terms of this Section); (b) as reasonably required
  by any bona fide assignee, participant or other transferee in
  connection with the contemplated transfer of any Loan or participations
  therein (provided they shall agree to keep such information
  confidential in accordance with the terms of this Section); (c) as
  required by any governmental authority or representative thereof or
  pursuant to legal process; (d) to the Lender's independent auditors,
  counsel and other professional advisors (provided they shall be
  notified of the confidential nature of the information and they agree
  to keep such information confidential); and (e) after the happening and
  during the continuance of an Event of Default, to any other Person, in
  connection with the exercise by the Lender of rights hereunder or under
  any of the other Loan Documents.
  
         Limitation of Liability.  Each Borrower hereby waives, releases,
  and agrees not to sue the Lender or any of the Lender's Affiliates,
  officers, directors, employees, attorneys, or agents for punitive
  damages in respect of any claim in connection with, arising out of, or
  in any way related to, this Agreement or any of the other Loan
  Documents, or any of the transactions contemplated by this Agreement or
  financed hereby.
  
         Waiver.  EACH OF THE LENDER AND THE BORROWERS EXPRESSLY WAIVES
  ITS RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION OR OTHER
  DISPUTE RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
  
         Severability.  If any provision of any Loan Document is held to
  be illegal, invalid or unenforceable under present or future laws
  during the term of this Agreement, such provision shall be fully
  severable, such Loan Document shall be construed and enforced as if
  such illegal, invalid or unenforceable provision had never comprised a
  part of such Loan Document, and the remaining provisions of such Loan
  Document shall remain in full force and effect and shall not be
  affected by the illegal, invalid or unenforceable provision or by its
  severance from such Loan Document.
  
         Consent to Jurisdiction.  Each party to this Agreement hereby
  irrevocably submits generally and unconditionally for itself and in
  respect of its property to the jurisdiction of the Circuit Court for
  Fairfax County, Virginia, or the United States District Court for the
  Eastern District of Virginia, Alexandria Division, over any suit,
  action or proceeding arising out of or relating to this Agreement, any
  Loan Document or the Obligations.  Each party to this Agreement hereby
  irrevocably waives, to the fullest extent permitted by law, any
  objection that it may now or hereafter have to the laying of venue in
  any such court and any claim that any such court is an inconvenient
  forum.  Each Borrower hereby agrees and consents that, in addition to
  any methods of service of process provided for under applicable law,
  all service of process in any such suit, action or proceeding in the
  courts designated above may be made by certified or registered mail,
  return receipt requested, directed to such Borrower at its address for
  notice stated in Section 0 above, or at a subsequent address of which
  the Lender received actual notice from such Borrower in accordance with
  the terms hereof, and service so made shall be complete five days after
  the same shall have been so mailed.  The foregoing provisions shall not
  limit the right of the Lender or any other party hereto to serve
  process in any other manner permitted by law or limit the right of the
  Lender or other party hereto to bring any suit, action or proceeding or
  to obtain execution on any judgment rendered in any suit, action or
  proceeding in any other appropriate jurisdiction or in any other
  manner.
  
         Interpretation.
  
            This Agreement and the rights and obligations of the parties
  hereunder shall be construed and interpreted in accordance with the
  laws of the State, without reference to conflict of laws principles.
  
            The representations, warranties, covenants and agreements
  contained in this Agreement shall be deemed to have been given and
  undertaken by the Borrowers jointly and severally.
  
         Amendment and Restatement.  The Lender and the Borrowers agree
  that the Existing Agreement is amended and restated in its entirety by
  this Agreement.  This Agreement is an amendment, and not a novation, of
  the Existing Agreement.
  
                       [SIGNATURES ON FOLLOWING PAGE]
  IN WITNESS WHEREOF, the Borrowers and the Lender have caused this
  Agreement to be signed by their duly authorized representatives all as
  of the day and year first above written.
  
       LENDER:
  
                                CRESTAR BANK,
                                 a Virginia banking corporation
                                
                                By:  ___________________________
                                Name:     ___________________________
                                Title:    ___________________________
                                
                                
                                BORROWERS:
                                
                                HALIFAX CORPORATION,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX ENGINEERING, INC.,
                                 a Virginia corporation
                                
                                By: ______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX TECHNICAL SERVICES, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                  [SIGNATURES CONTINUE ON FOLLOWING PAGE]
  HALIFAX REALTY, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX TECHNOLOGY SERVICES COMPANY,
                                a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
  LIST OF SCHEDULES & EXHIBITS
  
                 Exhibit A      - Assumption Agreement
                 
                 Exhibit B      - Borrowing Base Certificate
                 
                 Exhibit C      - Covenant Compliance Certificate
                 
                 Exhibit D      - Form of Revolving Note
                 
                 Exhibit E      - Form of Tier Three Term Note
                 
                 Exhibit F      - Form of Tier Two Term Note
                 
                 Schedule 1          - Eligible Inventory Locations
                 
                 Schedule 3.3        - Equipment and Inventory Locations
                 
                 Schedule 4.10       - Corporate Names and Chief
                 Executive Offices
                 
                 Schedule 4.13       - Intellectual Property
                 
                 Schedule 4.14       - Material Contracts
                 
                 Schedule 4.17       - Collective Bargaining Agreements
                 
                 Schedule 5.8(a)     - Form of Monthly Financials
  EXHIBIT A
  
                                  Form of
                           Assumption Agreement
  
       THIS ASSUMPTION AGREEMENT (as the same may be amended, modified or
  supplemented from time to time, the Assumption), dated as of
  _____________, _____, made by ____________________________, a
  _____________ corporation (the Subsidiary), in favor of the Lender (as
  defined below), recites and provides:
  
                              R E C I T A L S
  
       Pursuant to the terms of a Fifth Amended and Restated Loan and
  Security Agreement, dated as of June 25, 1998 (as amended, modified or
  supplemented from time to time, the Loan Agreement), between Halifax
  Corporation, a Virginia corporation (the Company), Halifax Engineering,
  Inc., a Virginia corporation (Engineering), Halifax Technical Services,
  Inc., a Virginia corporation (Technical), Halifax Realty, Inc., a
  Virginia corporation (Realty), and Halifax Technology Services Company,
  a Virginia corporation (Technology, and together with the Company,
  Engineering, Technical, and Realty, the Original Borrowers), and
  Crestar Bank, a Virginia banking corporation (the Lender), the Lender
  agreed to extend credit to the Original Borrowers.  Terms defined in
  the Loan Agreement shall have the same defined meanings when such terms
  are used in this Assumption.
  
       [The Company owns 100% of the capital stock of the Subsidiary.]
  The Original Borrowers and the Subsidiary, together with the other
  Subsidiaries of the Original Borrowers, are engaged in business on a
  consolidated and integrated basis, and their integrated operations
  include applying for and making use of credit on a joint basis.
  Accordingly, the Original Borrowers have requested that the Subsidiary
  become a Borrower under the Loan Agreement and the other Loan
  Documents.  The Lender has agreed to accept the Subsidiary as a
  Borrower thereunder, and the Subsidiary has agreed to assume the
  Obligations.  Accordingly, the Subsidiary agrees as follows:
  
       The Subsidiary (a) assumes and agrees to be jointly and severally
  liable with each other Borrower for all of the Obligations now existing
  or hereafter arising, including, without limitation, the Obligations
  arising out of the Loan Agreement, the Loans, the Notes, the Letter of
  Credit Agreements and the other Loan Documents, and (b) agrees to be
  jointly and severally bound by all of the terms, covenants and
  conditions of the Loan Agreement, the Notes, the Letter of Credit
  Agreements and the other Loan Documents, and hereby assumes all of the
  Obligations of the Borrowers thereunder and agrees to be jointly and
  severally liable therefor.
  
       The Subsidiary represents that (a) its chief executive office,
  within the meaning of Section 9.103(3)(d) of the UCC, is located at
  [______________________], and (b) during the five years prior to the
  date of this Assumption, the Subsidiary has not used any fictitious or
  corporate name other than its current corporate name.  All of the
  representations and warranties set forth in the Loan Agreement are
  incorporated by reference in this Assumption, and shall be deemed to
  have been made and given by the Subsidiary as of the date hereof as
  though such representations and warranties were applicable to it.
  
       The Subsidiary grants to the Lender, in accordance with and
  subject to the provisions of the Loan Agreement, a security interest in
  all of the Collateral of the Subsidiary as security for the
  Obligations.
  
       The Subsidiary also agrees to execute, deliver and, if applicable,
  record, such additional instruments, documents and agreements as the
  Lender may reasonably require for the purpose of effecting the
  assumption described herein.
  
       IN WITNESS WHEREOF, the Subsidiary has caused this Assumption to
  be executed by its duly authorized representative as of the day and
  year first written above.
  
                                _____________________,  a ___________
                                
                                
                                
                                By:  _____________________________
                                Name:     _____________________________
                                Title:    _____________________________
  EXHIBIT B
  
                            HALIFAX CORPORATION
                                     
                        BORROWING BASE CERTIFICATE
                                     
                                     
  In connection with the terms of the Fifth Amended and Restated Loan and
  Security Agreement, dated as of ________(as further amended, modified
  or supplemented from time to time, the Loan Agreement) between Halifax
  Corporation (the Parent), Halifax Engineering, Inc. (Engineering),
  Halifax Technical Services, Inc. (Technical), Halifax Realty, Inc.
  (Realty,) and Halifax Technology Services Company, (HTSC, and together
  with the Company, Engineering, Technical, and Realty, collectively, the
  Borrowers), and Crestar Bank (the Lender), the undersigned, on behalf
  of the Parent and the other Borrowers, certifies that the following is
  true and correct:
  
  I     Tier One
  
  A.  Accounts Receivable
  
       Billed Accounts Receivable as of last report
  
  Additions:  (a) New Billings
              (b) Adjustments
  
  Less:  (a) Collections since last report
         (b) Adjustments
  
  1.  Total Billed Accounts Receivable:
  
  2.  Less Ineligible Receivables:
       (a) Receivables aged over 90 days
       (b) Bonded Receivables
       (c) "At Risk" Work
       (d) Rebills
       (e) Other  Ineligible Receivables
  
  3. Total Ineligible Receivable (Line A2-Ae)
  
  4.  Total Eligible Billed Accounts Receivable:
  
  5.  Eligible Billed Government Accounts Receivable on Line 4
  
  6.  Government contribution to Borrowing Base (90% of Line 5):
  
  7.  Eligible Billed Commercial Accounts Receivable on Line 4:
  
  8.  Commercial contribution to Borrowing Base (85% of Line 7)
  
  9.  Tier one Borrowing Base (A6 + A8)
  
  II Tier Two Contribution
  
  A. Bonded Contract Account Receivable:
  
  1.  Total Billed Bonded Accounts Receivable:
  
  2.  Less $1,500,000 excess factor:
  
  3.  Less Ineligible Receivables:
          (a) Receivables aged over 90 days:
          (b)  "At Risk"/Rebills
          (c) Other Ineligible Receivables:
  
  4.  Total Ineligible Bonded Accounts Receivable (Line A3a-A3c):
  
  5. Total Eligible Bonded Accounts Receivable (Line 1-2-4):
  
  6.  Contribution to Borrowing Base (80% of Line 5,
       not to exceed $2,000,000 cap)
  
  B  Unbilled Accounts Receivable:
            Limited to DSSMP/LTLCS
  
  1.  Unbilled DSSMP/LTLCS Accounts Receivable as of
      last report dated:
  
  2.  Additions:
          (a) New Unbilled DSSMP/LTLCS Acct. Rec.
  
  3.  Total Unbilled DSSMP/LTLCS Acct. Rec.
  
  4.  Less:
      (a) Conversion to Billed Acct. Rec since last report:
      (b) Unbilled Acct. Rec. on Ln 3 not billable w/in 90 days
      (c) Other Unbilled Acct. Rec that are not Eligible Rec.
  
  5.  Total Ineligible Unbilled Acct. Rec. (Line 4a-4c):
  
  6.  Total Eligible Unbilled Accounts Receivables (Line B3-Line B5):
  
  7. Contribution to Borrowing Base (15% of Line B6,
       not to exceed $500,000 cap):
  
  8. Total Tier Two Contribution (Line A6 + B7) Not
      to exceed total $2,000,000 cap:
  
  C. Total Borrowing Base (Tier I Borrowing Base +
      Tier II Contribution) Not to exceed  $12,500,000
  
  As of the date of this Borrowing Base Certificate, no Default or Event
  has occurred and is continuing.
  
  Capitalized terms used in this Borrowing Base Certificate Shall  have
  the same meanings as those assigned to them in the Loan Agreement.  The
  foregoing is true and correct as of ___________
  
  HALIFAX CORPORATION
  
  BY___________________________
  Title  Vice President Finance & Accounting, CFO
  
  Date:  _______________________
  EXHIBIT C
                                     
                                  Form of
                      Covenant Compliance Certificate
  
       In connection with the terms of the Fifth Amended and Restated
  Loan Agreement, dated as of June 25, 1998 (as amended, supplemented or
  modified from time to time, the Loan Agreement), between Halifax
  Corporation, a Virginia corporation (the Company), the Subsidiaries of
  the Company that are parties to the Loan Agreement, and Crestar Bank, a
  Virginia banking corporation (the Lender), the undersigned certifies
  that the following information is true and correct as of the date of
  this Covenant Compliance Certificate:
  
       1.   No Default or Event of Default has occurred and is continuing.
       
       2.   The Minimum Compliance Level as of _______________________ was
  required to be $_____, and Tangible Capital Funds as of such date was
  $___________ calculated as set forth in Schedule 1.
  3.   The Funded Debt Ratio for the 12-month period ended on
  ____________, ____ was ______ to 1, calculated as set forth on Schedule
  2.  The required Funded Debt Ratio for such period was not greater than
  _____ to 1.
  4.   The Debt Coverage Ratio for the 12-month period ended on
  ____________, ____ was ____ to 1, calculated as set forth on Schedule
  3.  The required Debt Coverage Ratio for such period was not less than
  ____ to 1.
  5.   For purposes of determining the Spread, the Funded Debt Ratio for
  the fiscal quarter ended on _______________, ______ was __ to 1,
  calculated as set forth in Schedule 1, and accordingly, effective as of
  _______________,  ____ the Spread will be ___% and the Unused Fee
  Percentage will be ___%.
       
       Capitalized terms used in this Covenant Compliance Certificate
  shall have the same meanings as those assigned to them in the
  Agreement.  The foregoing is true and correct as of _______________,
  19___.
  
       Dated ______________, 19___.
  
                                
                                
                                Name:
                                     Chief Financial Officer
                                     Halifax Corporation
  [CAPTION]
  Schedule 1
                                     
                        Tangible Capital Funds and
                         Minimum Compliance Level
                                     
                          Tangible Capital Funds
  1.   Tangible Net Worth:                                      $___________
  
  (a) Consolidated stockholder equity of the         
  Company and its Subsidiaries as of ________________:          $___________
  (b) Write-up in book value of assets of the Company and its  
      Subsidiaries subsequent to the date of the Agreement      $___________
  (c) Investments in non-marketable securities                  $___________
  (d) Treasury stock                                            $___________
  (e) Unamortized debt discount expense                         $___________
  (f) Costs of investments in excess of net assets acquired at 
      time of acquisition                                       $___________
  (g) Loans, advances and other amounts owed to the Company    
      and its Subsidiaries by officers, directors,              
      shareholders, employees or Affiliates                    $___________
  (h) Leasehold improvements                                   $___________
  (i) Patents, patent applications, copyrights, trademarks,    
      trade names, goodwill, research and development costs,    
      organizational expenses, capitalized software costs and  $___________
      other like intangibles
  TOTAL [(a) minus (b) through (i)]                            $___________
  2.   Subordinated Debt:                                      $___________
  (a) Subordinated Debt payable to Research Industries         $___________
  (b) Other                                                    $___________
    Total                                                      $___________
                                                                 
  3.   Tangible Capital Funds (1 + 2)                          $___________
  Minimum Compliance Level
  1.  Tangible Capital Funds as of                          *___________
  ________________________
                                                            
  2.  50% of Consolidated Net Income of Company and         $___________
  Subsidiaries from April 1, 1998 (without deduction for
  losses)
                                                                 
  3.  Equity Issuances from April 1, 1998                   $___________
                                                            
  4.  Subordinated Debt issued subsequent to April 1, 1998  $___________
                                                            
  5.   Minimum Compliance Level (1 + 2 + 3)**               $___________
  *$7,250,000 as of 6/30/98 and 9/30/98, and $12,400,000 as of 12/31/98.
                                     
      **Maximum required to be added by items 3 and 4 is $4,500,000.
  Schedule 2
                                     
                             Funded Debt Ratio
  1.   Funded Debt as of ____________________:            
  (a) Borrowed money                                         $___________
  (b) Repurchase agreement obligations                       $___________
  (c) Deferred purchase price obligations                    $___________
  (d) Capital Lease obligations                              $___________
  (e) Obligations for letters of credit and acceptances      $___________
  (f) Guaranties                                             $___________
  TOTAL (a+b+c+d+e+f)                                        $___________
  2.   EBITDA for the 12-month period ended on            
  _____________
  (a) Consolidated Net Income of the Company and its         $___________
      Subsidiaries
  (b) Depreciation                                           $___________
  (c) Interest expense                                       $___________
  (d) Amortization                                           $___________
  (e) Taxes                                                  $___________
  (f) Extraordinary, unusual or non-recurring gains          $___________
  (g) Extraordinary, unusual or non-recurring losses         $___________
  TOTAL (a+b+c+d+e-f+g)                                      $___________
  3.   Subordinated Debt as of _____________                 $___________
  5.   Funded Debt Ratio                                  
          Funded Debt ($_________) - Subordinated Debt    = ____ to 1
  ($_________)
                 EBITDA Flow ($_________)
  Schedule 3
                                     
                            Debt Coverage Ratio
  1.   EBITDA for the 12- month period ended on ____________       $__________
  (from Schedule 2)
  2.   Capital Expenditures for the 12-month period ended on       $__________
  __________
  3.   Dividends paid during the 12-month period ended on          $__________
  __________
  4.   Cash expenditures for taxes during the 12-month period      $__________ 
       ended on _________
  5.   Cash Flow Available for Debt Service (1 - 2 - 3 - 4)        
  6.   Debt Service                                                $__________
  (a)   Principal payments of Debt due during the                  $___________
        12-month period ended on ___________
  (b)   Interest expense for the 12-month period ended             $___________
        on ___________
  TOTAL (a+b)                                                   $___________
  7.   Debt Coverage Ratio                                         
         Cash Flow Available for Debt Service ($_________)    = ____ to 1
                  Debt Service ($_________)
  EXHIBIT D
                                     
                                  Form of
                              Revolving Note
  
  $12,500,000                                          June 25,1998
                                               Alexandria, Virginia
  
       FOR VALUE RECEIVED, the undersigned, each a Virginia corporation
  (collectively, the Borrowers and individually, a Borrower) hereby
  jointly and severally promise to pay to the order of CRESTAR BANK, a
  Virginia banking corporation (the Lender), at Commercial Loan Services,
  P.O. Box 26202, Richmond, Virginia 23260-6202, or such other location
  as the holder hereof may in writing designate, the principal sum of
  TWELVE MILLION FIVE HUNDRED THOUSAND AND NO/00 DOLLARS ($12,500,000)
  (or such lesser amount as shall equal the aggregate unpaid principal
  amount of the Revolving Loans made by the Lender to the Borrowers under
  the Loan Agreement (as defined below)), in lawful money of the United
  States of America in immediately available funds, on the Termination
  Date, without defense, offset or counterclaim, and to pay interest on
  the unpaid principal amount of the Revolving Loans, at such office, in
  like money and funds, for the period commencing on the date of each
  Revolving Loan until such Revolving Loan shall be paid in full, at the
  applicable rate per annum and on the dates provided in the Loan
  Agreement.  The Borrowers may borrow, prepay, and reborrow hereunder in
  accordance with the provisions of the Loan Agreement.
  
       The Lender is hereby authorized by the Borrowers to maintain
  records of the amount of each Revolving Loan made by the Lender, the
  date such Revolving Loan is made, and the amount of each payment or
  prepayment of principal of such Revolving Loan received by the Lender.
  Each Borrower agrees that the amounts so evidenced in such records,
  absent manifest error, shall constitute conclusive evidence of the
  amount owed hereunder.
  
       This Revolving Note is the Revolving Note referred to in the Fifth
  Amended and Restated Loan and Security Agreement (as amended, modified
  or supplemented form time to time, the Loan Agreement), dated as of
  June 25, 1998, between the Borrowers and the Lender, and evidences
  Revolving Loans made by the Lender thereunder.  Undefined capitalized
  terms used in this Revolving Note have the respective meanings assigned
  to them in the Loan Agreement.
  
       Upon the occurrence and continuation of an Event of Default, the
  principal hereof and accrued interest hereon may be declared to be, or
  may become, forthwith due and payable in the manner, upon the
  conditions and with the effect provided in the Loan Agreement.
  
       Each Borrower, and every guarantor and endorser hereof, hereby
  waive presentment, demand, notice of dishonor, protest and all other
  demands and notices in connection with the delivery, acceptance,
  performance and enforcement of this Revolving Note.
  
       This Revolving Note shall be governed by and construed in
  accordance with the laws of the Commonwealth of Virginia, without
  reference to conflict of laws principles.
  
       IN WITNESS WHEREOF, each Borrower has caused this Revolving Note
  to be executed by its duly authorized representative as of the day and
  year first above written.
  
                                BORROWERS:
                                
                                HALIFAX CORPORATION,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX ENGINEERING, INC.,
                                 a Virginia corporation
                                
                                By: ______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX TECHNICAL SERVICES, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                  [SIGNATURES CONTINUE ON FOLLOWING PAGE]
  HALIFAX REALTY, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                
                                HALIFAX TECHNOLOGY SERVICES COMPANY,
                                a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
  EXHIBIT E
                                     
                                  Form of
                           Tier Three Term Note
  
  $2,500,000                                           June 25,1998
                                               Alexandria, Virginia
  
       FOR VALUE RECEIVED, the undersigned, each a Virginia corporation
  (collectively, the Borrowers and individually, a Borrower) hereby
  jointly and severally promise to pay to the order of CRESTAR BANK, a
  Virginia banking corporation (the Lender), at Commercial Loan Services,
  P.O. Box 26202, Richmond, Virginia 23260-6202, or such other location
  as the holder hereof may in writing designate, the principal sum of TWO
  MILLION FIVE HUNDRED THOUSAND AND NO/00 DOLLARS ($2,500,000), in lawful
  money of the United States of America in immediately available funds,
  on the dates set forth below, without defense, offset or counterclaim,
  and to pay interest on the unpaid principal amount hereof, at such
  office, in like money and funds, for the period commencing on the date
  of disbursement of the Tier Three Term Loan until the Tier Three Term
  Loan shall be paid in full, at the applicable rate per annum and on the
  dates provided in the Loan Agreement.
  
       The principal balance hereof shall be payable in quarterly
  installments, each in the amount of the Required Quarterly Curtailment,
  due on the last day of each March, June, September and December,
  beginning on September 30, 1998.  If not sooner paid, the unpaid
  principal balance hereof, and all accrued and unpaid interest thereon,
  shall be due and payable in full on the Termination Date.
  
       This Note is the Tier Three Term Note referred to in the Fifth
  Amended and Restated Loan and Security Agreement (as amended, modified
  or supplemented form time to time, the Loan Agreement), dated as of
  June 25, 1998, between the Borrowers and the Lender, and evidences the
  Tier Three Term Loan made by the Lender thereunder.  Undefined
  capitalized terms used in this Note have the respective meanings
  assigned to them in the Loan Agreement.
  
       Upon the occurrence and continuation of an Event of Default, the
  principal hereof and accrued interest hereon may be declared to be, or
  may become, forthwith due and payable in the manner, upon the
  conditions and with the effect provided in the Loan Agreement.
  
       Each Borrower, and every guarantor and endorser hereof, hereby
  waive presentment, demand, notice of dishonor, protest and all other
  demands and notices in connection with the delivery, acceptance,
  performance and enforcement of this Note.
  
       This Note shall be governed by and construed in accordance with
  the laws of the Commonwealth of Virginia, without reference to conflict
  of laws principles.
  
       IN WITNESS WHEREOF, each Borrower has caused this Note to be
  executed by its duly authorized representative as of the day and year
  first above written.
  
                                BORROWERS:
                                
                                HALIFAX CORPORATION,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX ENGINEERING, INC.,
                                 a Virginia corporation
                                
                                By: ______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX TECHNICAL SERVICES, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX REALTY, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX TECHNOLOGY SERVICES COMPANY,
                                a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
  EXHIBIT F
                                     
                                  Form of
                            Tier Two Term Note
  
  $2,500,000                                           June 25,1998
                                               Alexandria, Virginia
  
       FOR VALUE RECEIVED, the undersigned, each a Virginia corporation
  (collectively, the Borrowers and individually, a Borrower) hereby
  jointly and severally promise to pay to the order of CRESTAR BANK, a
  Virginia banking corporation (the Lender), at Commercial Loan Services,
  P.O. Box 26202, Richmond, Virginia 23260-6202, or such other location
  as the holder hereof may in writing designate, the principal sum of TWO
  MILLION FIVE HUNDRED THOUSAND AND NO/00 DOLLARS ($2,500,000), in lawful
  money of the United States of America in immediately available funds,
  on the dates set forth below, without defense, offset or counterclaim,
  and to pay interest on the unpaid principal amount hereof, at such
  office, in like money and funds, for the period commencing on the date
  of disbursement of the Tier Two Term Loan until the Tier Two Term Loan
  shall be paid in full, at the applicable rate per annum and on the
  dates provided in the Loan Agreement.
  
       The principal balance hereof shall be payable in quarterly
  installments, each in the amount of the Required Quarterly Curtailment,
  due on the last day of each March, June, September and December,
  beginning on the first such payment date next succeeding the payment in
  full of the Tier Three Term Note.  If not sooner paid, the unpaid
  principal balance hereof, and all accrued and unpaid interest thereon,
  shall be due and payable in full on the Termination Date.
  
       This Note is the Tier Two Term Note referred to in the Fifth
  Amended and Restated Loan and Security Agreement (as amended, modified
  or supplemented form time to time, the Loan Agreement), dated as of
  June 25, 1998, between the Borrowers and the Lender, and evidences the
  Tier Two Term Loans made by the Lender thereunder.  Undefined
  capitalized terms used in this Note have the respective meanings
  assigned to them in the Loan Agreement.
  
       Upon the occurrence and continuation of an Event of Default, the
  principal hereof and accrued interest hereon may be declared to be, or
  may become, forthwith due and payable in the manner, upon the
  conditions and with the effect provided in the Loan Agreement.
  
       Each Borrower, and every guarantor and endorser hereof, hereby
  waive presentment, demand, notice of dishonor, protest and all other
  demands and notices in connection with the delivery, acceptance,
  performance and enforcement of this Note.
  
       This Note shall be governed by and construed in accordance with
  the laws of the Commonwealth of Virginia, without reference to conflict
  of laws principles.
  
       IN WITNESS WHEREOF, each Borrower has caused this Note to be
  executed by its duly authorized representative as of the day and year
  first above written.
  
                                BORROWERS:
                                
                                HALIFAX CORPORATION,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX ENGINEERING, INC.,
                                 a Virginia corporation
                                
                                By: ______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX TECHNICAL SERVICES, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX REALTY, INC.,
                                 a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________
                                
                                HALIFAX TECHNOLOGY SERVICES COMPANY,
                                a Virginia corporation
                                
                                By: _______________________________
                                Name: ____________________________
                                Title: _____________________________