REVOLVING LINE OF CREDIT LOAN AGREEMENT AND SECURITY AGREEMENT

Exhibit 10.3

REVOLVING LINE OF CREDIT LOAN AGREEMENT
AND SECURITY AGREEMENT

     THIS REVOLVING LINE OF CREDIT LOAN AGREEMENT AND SECURITY AGREEMENT (“Agreement”) is made as of March 2, 2006, by and among Horne Engineering Services, LLC, and Spectrum Sciences & Software Holdings Corp., both having an address at c/o HORNE ENGINEERING SERVICES, LLC, 3130 Fairview Park Drive, Suite 400, Falls Church, Virginia 22042, and Bank of America, N.A., a national banking association, having an address at 1101 Wootton Parkway, 4 ^th Floor, Rockville, Maryland 20852.

RECITALS

     A. The Borrower has applied to the Lender for a revolving loan facility in the maximum principal amount of Six Million and 00/100 Dollars ($6,000,000.00) to be used by the Borrower for working capital, capital expenditures and to finance the performance of government contracts, the payments under which are to be assigned as security for the Revolving Loan.

     B. The Lender is willing to make the Revolving Loan on the terms and conditions hereinafter set forth.

AGREEMENTS

     NOW, THEREFORE, in consideration of the premises, the mutual agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby agree as follows:

     ARTICLE 1. DEFINITIONS .

1.1 Defined Terms . Certain capitalized terms not otherwise defined herein are used in this Agreement with the following meanings, unless the context otherwise requires:

     a. “ Account ” means a right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy provide or to be provided, or (iv) for use or hire of a vessel under a charter or other contract.

     b. “ Advance ” means an advance of funds under the Revolving Loan.

     c. “ Affiliate ” means, with respect to any specified Person, any other Person which, 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, directly or indirectly, of the power to direct or cause the direction of management and policies of a Person, whether through ownership of common stock, by contract, or otherwise.

     d. “ Agreement ” means this Revolving Line of Credit Loan Agreement and Security Agreement, as the same may be amended, modified or supplemented from time to time.

     e. “ Allowed Amount of Advances ” means the aggregate amount of all Advances of principal under the Revolving Loan permitted to be outstanding at any particular time under the Paragraph below titled “Allowed Amount of Advances.”

     f. “ Assignment ” means a direct assignment of Payments under Government Contracts, pursuant to and in compliance with the Assignment of Claims Act.

     g. “ Assignment of Claims Act ” means Title 31, United States Code § 3727, and Title 41, United States Code § 15, as revised or amended, and any rules or regulations issued pursuant thereto, and also shall be deemed to include any other laws, rules or regulations governing the assignment of payments under Government Contracts or claims against a Government.

     h. “ Billed ” means that Borrower has submitted an invoice to a Customer requesting payment for goods or services provided by Borrower.

     i. “ Borrower ” means Horne Engineering Services, LLC, a Virginia limited liability company, and Spectrum Sciences & Software Holdings Corp., a Delaware corporation, and to each such Person or to all of them, as the context may require, and the representations and obligations hereunder of the Persons comprised by the term “Borrower” shall be joint and several. For purposes of testing compliance with the financial covenants hereinafter, the negative covenants hereinafter, the unused fee provided hereinafter, financial information concerning the Borrower shall mean financial information for Horne Engineering Services, LLC, Spectrum Sciences & Software Holdings Corp., Spectrum Sciences & Software, Inc., Coast Engine & Equipment Company, Inc., and M&M Engineering Limited, stated on a consolidated basis.

     j. “ Borrowing Base ” means:

     1. Ninety percent (90%) of the Borrower’s Eligible Government Accounts; plus

     2. Eighty Five percent (85%) of the Borrower’s Eligible Subcontract Accounts; plus

     3. Eighty percent (80%) of Borrower’s Eligible Commercial Accounts; plus

     4. The lesser of (i) Fifty percent (50%) of Borrower’s Unbilled Eligible Accounts, or (ii) $1,500,000.00.

The Accounts of M&M Engineering Limited, a wholly owned subsidiary of the Borrower, shall not at any time be included in the Borrowing Base. In the absence of manifest error, Lender’s determination of the amount of the Borrowing Base shall be conclusive.

     k. “ Borrowing Base Certificate ” means a certificate substantially in the form of Schedule 1.1(A) attached hereto and made a part hereof (or such subsequent form as the Lender shall require).

     l. “ Borrowing Date ” means the date on which an Advance is made.

     m. “ Business Day ” means any day that is not a Saturday, Sunday or banking holiday in the Commonwealth of Virginia.

     n. “ Capital Lease ” means any lease which has been or should be capitalized on the books of the lessee in accordance with GAAP.

     o. “ Cash Collateral Account ” means an account which may be established by Lender in Borrower’s name, with the Lender, for the purpose of receiving Payments, which shall constitute part of the Collateral unless and until disbursed to the Borrower or applied for the Borrower’s account in accordance with this Agreement.

     p. “ Closing Date ” means as of March 2, 2006.

     q. “ Code ” means the Internal Revenue Code of the United States, as amended.

     r. “ Collateral ” means all of the following kinds of property now owned or hereafter acquired by the Borrower:

     1. Accounts;

     2. Chattel Paper;

     3. Deposit Accounts;

     4. Documents;

     5. Equipment;

     6. Fixtures;

     7. General Intangibles (including payment intangibles and software);

     8. Instruments;

     9. Inventory;

     10. Investment Property;

     11. Intellectual Property;

     12. Money;

     13. Supporting Obligations (including letter of credit rights);

     14. all books and records and computer hardware, software and systems;

     15. all policies of insurance and the proceeds thereof;

     16. all additions and accessions to and replacements of the collateral described above; and

     17. all products and proceeds of all of the collateral described above.

     s. “ Commercial Accounts ” means all Accounts due from Customers other than the Government.

     t. “ Compliance Certificate ” means a certificate substantially in the form of Schedule 1.1(B) attached hereto and made a part hereof.

     u. “ Contra Account ” means an Account due from an account debtor to which the Borrower owes money.

     v. “ Customer ” means any governmental entity (federal, state, county, municipal or otherwise) or business entity (corporation, association, partnership, limited liability company or partnership, sole proprietorship or otherwise) or individual to which Borrower provides goods or services for compensation; however, certain individual agencies of the United States Government and certain branches of certain major corporations, as determined by the Lender in its sole discretion, shall be treated as Customers in their own right, separate and distinct from other such agencies or branches and from the United States Government or the corporation of which they are a part.

     w. “ Debt ” means:

     1. indebtedness or liability for borrowed money, or for the deferred purchase price of property or services;

     2. obligations as a lessee under a Capital Lease;

     3. obligations to reimburse the issuer of letters of credit or acceptances;

     4. 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 Person or otherwise to assure a creditor against loss; and

     5. obligations secured by any lien or Encumbrance on property owned by the Borrower.

     x. “ EBITDA ” means the Borrower’s consolidated net income, plus income taxes, plus interest expense, plus depreciation and amortization, adjusted by adding back non-cash compensation for the immediate period.

     y. “ Eligible ,” when used to describe an Account, means that the Account conforms to the following criteria:

     1. the Account has been Billed;

     2. in the case of any Account, less than ninety-one (91) days have passed from the original billing date;

     3. at Lender’s option, in the case of a Government Account, Borrower has made an Assignment of all Payments due or to become due under the Government Contract giving rise to the Account, which Government Contract has at least Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) in payment obligations to Borrower and which has a duration of at least six months;

     4. the Account arose from a bona fide sale of goods or services to a Customer; the goods or services have been delivered or provided to the Customer; Borrower possesses receipts from the Customer acknowledging delivery of the goods or performance of the services; and Customer has not returned or rejected the goods or services;

     5. the Account is based upon an enforceable written order or contract for goods or services;

     6. the Borrower’s title to the Account is absolute and is not subject to any prior assignment, claim, escrow agreement, lien or security interest, and Borrower otherwise has the full and unqualified right and power to assign and grant a security interest in the Account to the Lender;

     7. the amount shown on the books of Borrower and on any invoice, certificate, schedule or statement delivered to the Lender regarding the amount due on the Account is due and owing to Borrower;

     8. the Account is not subject to any claim of reduction, counterclaim, set-off, recoupment or other defense in law or equity, or any claim for credits, allowances or adjustments by the Customer because of returned, inferior or damaged goods, unsatisfactory services or for any other reason;

     9. the Customer has not notified Borrower of any dispute concerning any of the goods or services giving rise to the Account, nor made claim that the goods or services fail to conform to the requirements of the Customer’s order or contract, nor notified Borrower to cure any default under the Customer’s order or contract;

     10. the Account does not arise out of a Customer’s contract or order that by its terms forbids or makes void or unenforceable the Borrower’s assignment of the Account to the Lender;

     11. the Borrower has not received any note, trade acceptance draft or other instrument tendered in payment of the Account;

     12. Borrower has not received any notice of the death of the Customer or any partner in a Customer that is a partnership; nor has Borrower received any notice of dissolution, termination of existence, insolvency, business failure, appointment of a receiver for any part of the property of, assignment for the benefit of creditors by, or the filing of a petition in bankruptcy or the commencement of any proceeding under any bankruptcy or insolvency laws by or against the Customer;

     13. the Customer is not incorporated in any jurisdiction outside the United States and is not conducting its business primarily outside the United States;

     14. Borrower is not indebted in any manner to the Customer;

     15. no bond has been issued or is contemplated with respect to the goods or services furnished by the Borrower or with respect to the project or contract for which those goods or services were furnished; and

     16. the Account is not an Ineligible Account.

In the event of any dispute, under the foregoing criteria, as to whether an Account is, or has ceased to be, an Eligible Account, the Lender’s decision shall control.

     z. “ Encumbrance ” means any mortgage, pledge, deed of trust, assignment, security interest, hypothecation, lien or charge of any kind (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction).

     aa. “ Ending Date ” means April 30, 2007.

     bb. “ Environmental Laws ” mean all laws relating to Hazardous Wastes, Toxic Substances or materials that might be emitted, released or discharged into the environment or other laws or regulations protecting the environment.

     cc. “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto, as interpreted by the rules and regulations thereunder, all as the same may be in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections.

     dd. “ ERISA Affiliate ” means an entity, whether or not incorporated, which is under common control with the Borrower or any of its subsidiaries within the meaning of Section 4001(a)(14) of ERISA, or is a member of a group which includes the Borrower or any of its subsidiaries and which is treated as a single employer under Sections 414(b), (c), (m), or (o) of the Code.

     ee. “ Event of Default ” means any one of the events specified as an “Event of Default” under this Agreement.

     ff. “ Funded Debt ” means the sum of all outstanding liabilities of Borrower for borrowed money and all other interest bearing liabilities, including without limitation, current and long term debt, Capitalized Leases and the face amount of outstanding Letters of Credit, whether or not any such items are subordinated to the obligations owing by Borrower to the Lender.

     gg. “ GAAP ” means generally accepted accounting principles in the United States of America.

     hh. “ Governance Documents ” means the Borrower’s Articles or Certificate of Incorporation or Organization and Bylaws or Operating Agreement (as applicable) or other documents or agreements affecting the Borrower’s corporate governance.

     ii. “ Government ” means the government of the United States of America or the departments or agencies of the United States, but does not include the government of any state or the District of Columbia or any departments or agencies of any state or of the District of Columbia.

     jj. “ Government Accounts ” means all Accounts arising out of any Government Contract.

     kk. “ Government Contracts ” means all contracts with a Government, including all renewals, extensions, modifications, change orders and amendments thereof and thereto.

     ll. “ Hazardous Wastes ” mean all waste materials subject to regulation under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., or applicable state

law and any other applicable federal, state or local laws and their regulations now in force or hereafter enacted relating to hazardous wastes.

     mm. “ Ineligible Accounts ” shall include the following Accounts:

     1. Accounts that do not conform with the criteria set forth for Eligible Accounts;

     2. An Account owing by any account debtor for which the Lender has deemed fifty percent (50%) or more of the account debtor’s other Accounts to be non-Eligible; however, for purposes of determining this category of Ineligible Accounts, each Government Contract shall be treated as an individual Customer;

     3. Government Accounts arising under Government Contracts which contain an express prohibition against assignment of Borrower’s rights to Payment;

     4. The last payment due on a Government Account, unless such Government Account arises from a Government Contract which is a “fixed price contract” (as defined in the Federal Acquisition Regulations) which does not include any provision for progress payments, incentive arrangements or price redetermination;

     5. Contra Accounts;

     6. Accounts receivable from Affiliates or subsidiaries of the Borrower;

     7. Accounts for which Borrower has not submitted an invoice to a Customer requesting payment for goods or services provided by Borrower, including without limitation, progress payments, retainages, milestones, and final payments; or

     8. Any Account deemed by the Lender, in the exercise of its sole and absolute discretion, to be an Ineligible Account because of uncertainty as to the creditworthiness of the Customer or because the Lender otherwise considers the collateral value thereof to the Lender to be impaired or its ability to realize such value to be insecure.

     nn. “ Intellectual Property ” shall mean all patents, licenses, trade names, trademarks, copyrights, inventions, service marks, trademark registrations, service mark registrations and copyright registrations, whether domestic or foreign and applications for any of the foregoing, and all proprietary technology, know-how, trade secrets or other intellectual property rights owned or used by the Borrower or any subsidiary in the operation of their respective businesses.

     oo. “ Item ” means any “item” as defined in Section 4-104 of the Uniform Commercial Code, to include, without exclusion or limitation, checks, drafts, money orders or other media by which Payment may be made.

     pp. “ Lender ” means Bank of America, N.A. and its successors and assigns.

     qq. “ Letter of Credit ” means a letter of credit issued by the Lender for the account of the Borrower under this Agreement.

     rr. “ Letter of Credit Agreement ” means the Application and Agreement for Standby Letter of Credit form or Lender’s other standard form of application and reimbursement agreement in effect from time to time that Lender requires as a condition for each letter of credit that Lender issues to one of its Customers.

     ss. “ Letter of Credit Sublimit ” means Seven Hundred Fifty Thousand and 00/100 Dollars ($750,000.00).

     tt. “ Loan ” means the Revolving Loan.

     uu. “ Loan Documents ” mean this Agreement, the Revolving Note, or any other document executed by the Borrower or any other Person evidencing, securing, guaranteeing or relating to the Revolving Loan, as such documents or instruments may be amended, modified or extended from time to time.

     vv. “ LOC Obligations ” means, at any time, the sum of (i) the maximum amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Letters of Credit; plus (ii) the aggregate amount of all drawings under Letters of Credit honored by Lender but not reimbursed.

     ww. “ Maximum Revolving Commitment Amount ” means Six Million and 00/100 Dollars ($6,000,000.00), or such lesser amount that Borrower may request as hereinafter provided.

     xx. “ Multiemployer Plan ” means a Plan which is a multiemployer plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.

     yy. “ Multiple Employer Plan ” means a Plan which the Borrower or any of its subsidiaries or any ERISA Affiliate and at least one employer other than the Borrower or any of its subsidiaries or any ERISA Affiliate are contributing sponsors.

     zz. “ Operating Account ” means a demand deposit account to be established by the Borrower with the Lender for the Borrower’s use in connection with its business operations and with the Revolving Loan.

     aaa. “ Payment ” or “ Payments ” means any check, draft, cash or any other remittance or credit in payment or on account of any or all of the Borrower’s Accounts.

     bbb. “ PBGC ” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA and any successor thereto.

     ccc. “ Person ” means any individual, partnership, association, trust, corporation, limited liability company or partnership, or other entity.

     ddd. “ Plan ” means any employee benefit plan (as defined in Section 3(3) of ERISA) which is covered by ERISA and with respect to which the Borrower or any of its subsidiaries or any ERISA Affiliate is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” within the meaning of Section 3(5) of ERISA.

     eee. “ Reportable Event ” means a “reportable event” as defined in Section 4043 of ERISA with respect to which the notice requirements to the PBGC have not been waived.

     fff. “ Revolving Loan ” means the Revolving Loan facility made available by Lender to Borrower pursuant to this Agreement in the maximum principal amount of Six Million and 00/100 Dollars ($6,000,000.00), evidenced by the Revolving Note.

     ggg. “ Revolving Note ” means the Borrower’s promissory note, of even date, in the amount of Six Million and 00/100 Dollars ($6,000,000.00), payable to the order of the Lender, and evidencing Borrower’s obligation to repay the Revolving Loan.

     hhh. “ Single Employer Plan ” means any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan.

     iii. “ Subcontract Accounts ” means Commercial Accounts arising from a subcontract between the Borrower and another Person, in which the prime contract is a Government Contract between such Person and the Government.

     jjj. “ Tangible Net Worth ” means the value of, on a consolidated basis, the Borrower’s total stockholder’s equity less intangible assets (i.e., goodwill, patents, trademarks, trade names, organization expense, capitalized or deferred research and development costs, investment in joint ventures, deferred marketing expenses, and other like intangibles) and monies due from Affiliates, officers, directors, employees, shareholders, members or managers of Borrower.

     kkk. “ Termination Event ” means (i) with respect to any Plan, the occurrence of a Reportable Event or the substantial cessation of operations (within the meaning of Section 4062(e) of ERISA); (ii) the withdrawal of the Borrower or any of its subsidiaries or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a substantial employer (as such term is defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan; (iii) the distribution of a notice of intent to terminate or the actual termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA; (iv) the institution of proceedings to terminate or the actual termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (vi) the complete

or partial withdrawal of the Borrower or any of its subsidiaries or any ERISA Affiliate from a Multiemployer Plan.

     lll. “ Toxic Substances ” mean any materials which have been shown to have significant adverse effects on human health or which are subject to regulation under the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., applicable state law, or any other applicable federal, state or local laws now in force or hereafter enacted relating to toxic substances. “Toxic Substances” includes, but is not limited to, asbestos, polychlorinated biphenyls (PCBs), petroleum products, and lead-based paints.

     mmm. “ UCC ” means the Uniform Commercial Code in the state(s) as set forth in Section 1.4 of this Agreement.

     nnn. “ Unbilled Eligible Accounts ” means Government Accounts arising from federal Government Contracts which (1) have been fully funded by the federal Government, (2) are billable within 30 days, (3) meet all of the criteria for being Eligible Accounts except those set forth in clauses 1 and 2 of Section 1.1 y., and (4) which are not Ineligible Accounts, disregarding clause 7 of Section 1.1 mm.

1.2 Accounting Terms . Accounting terms used in this Agreement but not defined in this Agreement shall have the meanings given to them in accordance with GAAP in effect on the date of this Agreement. Except as otherwise provided in this Agreement, all financial computations made pursuant to this Agreement and all financial reports provided to the Lender shall be made in accordance with GAAP, consistently applied. Except as otherwise provided in this Agreement, whenever this Agreement refers to a balance sheet, financial statement or the information contained in a balance sheet or other financial statement, the Agreement shall be construed to refer to the most recent consolidated balance sheet or other financial statement that Borrower has provided to the Lender.

1.3 Use of Defined Terms . All terms defined in this Agreement shall have the same defined meanings when used in any certificate, report or other document made or delivered in connection with this Agreement, unless otherwise set forth therein.

1.4 UCC Terms . Terms that incorporate definitions provided in the Uniform Commercial Code shall have such meanings as are mandated by the Uniform Commercial Code of the state or states applicable for determination of such meanings. Terms not otherwise defined herein and not incorporating a definition under the Uniform Commercial Code of any particular state, but which are defined in the Uniform Commercial Code as adopted by the Commonwealth of Virginia, shall have the meanings ascribed to them under the Uniform Commercial Code as adopted by the Commonwealth of Virginia.

     ARTICLE 2. LOAN .

2.1 Revolving Line of Credit . The Lender agrees to extend the Revolving Loan to Borrower, subject to the terms and conditions of this Agreement. Until the Ending Date, Borrower may borrow, repay and reborrow Advances in accordance with this Agreement.

     a.  Allowed Amount of Advances . The aggregate principal amount of Advances outstanding at any time shall not exceed the lesser of:

     1. the difference between (i) the Maximum Revolving Commitment Amount and (ii) the LOC Obligations; or

     2. the difference between (i) the Borrowing Base and (ii) the LOC Obligations.

     b.  Mandatory Prepayments . If the principal outstanding under the Revolving Loan, at any time exceeds the Allowed Amount of Advances, then Borrower shall make an immediate payment of principal under the Revolving Loan in an amount sufficient that the principal outstanding under the Revolving Loan will no longer exceed the Allowed Amount of Advances. If the amount of the Borrower’s Funded Debt at any time exceeds the maximum amount that will enable Borrower to comply with any of the affirmative covenants provided hereinafter (including, without limiting the generality of the foregoing, any covenant limiting the Borrower’s ratio of Funded Debt to EBITDA), then Borrower shall make an immediate payment of principal under the Revolving Loan in an amount sufficient to enable Borrower to comply with all applicable financial covenants provided hereinafter.

     c.  Procedure for Advances . Unless Borrower has previously entered into a separate auto borrow or similar cash management service with Lender, Borrower may request Advances by telephone through its employees or agents, as hereinafter provided. Each Advance request must be received by Lender not later than 1:00 p.m. (Eastern Standard time) on the date the Advance is to be made and must specify the amount of the Advance. Lender shall deposit the Advance into Borrower’s Operating Account if Borrower is entitled to the Advance, subject to the terms and conditions of this Agreement. If Borrower has entered into a separate auto borrow or similar cash management service with Lender, then the provisions of such service shall control with respect to the procedures for making Advances to Borrower. Lender shall have the right to terminate such auto borrow or similar cash management service at any time, as determined by Lender in its sole and absolute discretion.

     d.  Letter of Credit Subfacility . At Lender’s discretion, Lender shall issue Letters of Credit for the account of the Borrower from time to time upon request from the Closing Date until the Ending Date, subject to the following terms and conditions:

     1. the aggregate amount of LOC Obligations shall at no time exceed the Letter of Credit Sublimit;

     2. any request for a Letter of Credit to be issued must be delivered and received by Lender not later than five (5) business days prior to the date that Borrower wishes to have the Letter of Credit issued;

     3. no Letter of Credit shall have an original expiry date more than one year from the date of issuance or beyond the Ending Date unless otherwise agreed to by Lender in writing or unless Borrower’s obligation to reimburse Lender for drawings under the Letter of Credit has been fully secured by a cash deposit with the Lender;

     4. Borrower shall execute and deliver to Lender a Letter of Credit Agreement with respect to each Letter of Credit to be issued by Lender, using the Lender’s standard reimbursement agreement form at the time the Letter of Credit is issued. The form and substance of each Letter of Credit, and any reimbursement agreement required by Lender in relation to a Letter of Credit, must be satisfactory to the Lender, in its sole judgment;

     5. issuance of the Letter of Credit shall not cause the aggregate outstanding principal amount of all Advances to exceed the Allowed Amount of Advances, determined taking into account the increase in the amount of the LOC Obligations caused by the issuance of the Letter of Credit;

     6. Lender shall not be required to issue any Letter of Credit if any circumstance exists that would entitle Lender not to honor a request for an Advance under the Revolving Loan;

     7. upon notice from Lender of any drawing under any Letter of Credit, Borrower shall, as to be determined in Lender’s sole and absolute discretion, either (a) deliver cash to Lender, in an amount satisfactory to secure all LOC Obligations and all amounts payable by the Borrower to the Lender under any Letter of Credit Agreement pertaining to such LOC Obligations, or (b) immediately reimburse Lender for the amount of the drawing, plus interest from the date of the drawing at the highest rate of interest then in effect under the Revolving Note. The Borrower’s obligation to reimburse the Lender for any drawing under a Letter of Credit shall be absolute and unconditional, irrespective of any rights of set-off, counterclaim or defense to payment the Borrower may claim or have against the Lender, the beneficiary of the Letter of Credit or any other Person;

     8. unless the Borrower makes reimbursement from another source on the day of the drawing under any Letter of Credit, the Borrower shall be deemed to have requested an Advance under the Revolving Loan in the amount of the drawing, and (i) Lender, at its option, may make such an Advance (irrespective of whether Borrower would then be entitled to an Advance under the terms of this Agreement) and apply the proceeds of the Advance to satisfy the Borrower’s obligation to reimburse Lender for the

amount drawn on the Letter of Credit; and (ii) any such Advance shall be repayable, with interest, in accordance with the terms and conditions of the Revolving Note; and

     9. the provisions of the Letter of Credit Agreement pertaining to each Letter of Credit are deemed incorporated into this Agreement by this reference and shall be binding upon the Lender and Borrower as if fully set forth herein. If a conflict exists between the terms of the Letter of Credit Agreement and any other Loan Document, the terms of the Letter of Credit Agreement shall control with respect to the Letter of Credit issued pursuant to that Letter of Credit Agreement but not as to other matters governed by this Agreement or such Loan Document.

2.2 Repayment of Revolving Loan; Auto Debit . Borrower promises to repay the Revolving Loan, with interest, at the time and in the manner and in accordance with the terms provided in the Revolving Note. Borrower has elected to authorize Lender to effect payment of sums due under the Revolving Note and this Agreement by means of debiting Borrower’s account with Lender, account number 004134369781. This authorization shall not affect the obligation of Borrower to pay such sums when due, without notice, if there are insufficient funds in such account to make payment in full on the due date thereof, or if Lender fails to debit the account.

2.3 Use of Revolving Loan Proceeds . The proceeds of the Revolving Loan shall be used for working capital, for capital expenditures and to finance the performance of Government Contracts, and for no other purpose.

2.4 Revolving Loan Fees . Borrower promises to pay Lender the following fees in consideration of entering into this Agreement. These fees are in addition to interest payable under the Revolving Note:

     a. an unused fee for each day that any part of the Maximum Revolving Commitment Amount is unused. The unused fee shall be calculated and payable quarterly, in arrears, commencing on the first day of the first fiscal quarter of Borrower after the date of this Agreement. The unused fee shall be determined for each day by multiplying the part of the Maximum Revolving Commitment Amount that is unused on that day by a per-diem rate equal to .35, divided by 360.

     b. the fees and costs associated with each field examination performed by the Lender or its agents, for up to two (2) field examinations per year. However, the Lender shall have the right to perform such additional field examinations at any time, in its sole discretion. Each additional field examination will be at Lender’s own expense if no Event of Default has occurred and remains uncured at the time of the additional field examination, but shall be at the Borrower’s expense if an Event of Default has occurred and remains uncured at the time of the additional field examination.

     c. an annual letter of credit fee for each day that any Letter of Credit is outstanding. The letter of credit fee shall be calculated and payable in advance of the issuance of such Letter of Credit. The letter of credit fee for each Letter of Credit to be issued in accordance with this Agreement shall be determined by multiplying the amount of such Letter of Credit by a per-annum rate equal to 1.50, divided by 360. Borrower shall also be obligated to pay to Lender, on demand, the Lender’s standard fees then in effect for issuance of Letters of Credit and/or any amendments thereto.

     ARTICLE 3. CONDITIONS PRECEDENT TO LOAN .

3.1 Conditions Precedent to Initial Advance . The Lender shall be under no obligation to make the first Advance under this Agreement until, in the Lender’s sole judgment, all of the following conditions are satisfied:

     a.  Representations and Warranties; Compliance . All representations and warranties made by Borrower in or in connection with this Agreement or any of the other Loan Documents or otherwise made in writing in connection with this Agreement shall be true and correct on the Closing Date, and the Borrower shall have performed all of the promises or undertakings under this Agreement and satisfied all of the conditions of this Agreement that the Borrower was required to perform or to satisfy as of the Closing Date.

     b.  Documents Concerning the Borrower . Borrower shall deliver to the Lender copies of all documents requested by the Lender, including, without limitation, (i) if Borrower is a corporation, a complete, correct and current copy of the Borrower’s Articles of Incorporation, certified by the Secretary of State of the Borrower’s state of incorporation; a complete, correct and current copy of its Bylaws, certified by Borrower’s corporate secretary; a complete, correct and current copy of all resolutions of Borrower’s Board of Directors authorizing the execution, delivery and performance of this Agreement and of the other Loan Documents, certified by Borrower’s corporate secretary; and appropriate certificates of incumbency for those officers of Borrower executing this Agreement or any of the other Loan Documents, certified by Borrower’s corporate secretary and president, (ii) if Borrower is a limited liability company, a complete, correct and current copy of the Borrower’s Articles of Organization, certified by the Borrower’s authorized manager or managing member; a complete, correct and current copy of its Operating Agreement, certified by Borrower’s authorized manager or managing member; and a complete, correct and current copy of all resolutions of Borrower’s members and managers authorizing the execution, delivery and performance of this Agreement and of the other Loan Documents, executed by all of Borrower’s members and managers, (iii) if Borrower is a limited partnership, a complete, correct and current copy of the Borrower’s Limited Partnership Agreement, certified by the Borrower’s authorized general partner; a complete, correct and current copy of its Certificate of Limited Partnership, certified by Borrower’s authorized general partner; and a complete, correct and current copy of all resolutions of Borrower’s general partners authorizing the execution, delivery and performance of this Agreement and of the other Loan Documents, executed by all of Borrower’s general partners (and limited partners, if the consent of the limited partners is so required under the Borrower’s Limited Partnership Agreement and/or Certificate of

Limited Partnership), and (iv) if Borrower is a general partnership, a complete, correct and current copy of the Borrower’s Partnership Agreement, certified by the Borrower’s authorized general partner; and a complete, correct and current copy of all resolutions of Borrower’s general partners authorizing the execution, delivery and performance of this Agreement and of the other Loan Documents, executed by all of Borrower’s general partners. In addition, the following documents and materials shall have been delivered to the Lender, and must be satisfactory to the Lender in form and substance:

     1. all supporting documentation with regard to the Borrower and the Revolving Loan as the Lender may require;

     2. a field examination of Borrower performed by Lender or an accounting firm or other agent of Lender’s choosing;

     3. such additional information, instruments, opinions, documents, certificates and reports relating to the Borrower or the Collateral as the Lender may deem necessary; and

     4. such lien releases or termination statements as Lender may deem necessary to remove any Encumbrances on the Collateral.

     c.  Executed Note and Loan Documents . Borrower shall deliver to the Lender, fully executed: this Agreement, the Revolving Note, Assignments of Payments Under Government Contracts, UCC-1 Financing Statements and such other documents, instruments and certificates as the Lender may reasonably require, in form and substance satisfactory to the Lender. All taxes, fees and charges with respect to the preparation, filing and recording of the Loan Documents shall have been paid by Borrower.

     d.  Landlord and Mortgagee Waivers . The Lender shall have received such landlord and mortgagee waivers as it shall request with respect to any of the Borrower’s landlords or mortgagees which could claim an interest in any Collateral as a remedy for a default under any lease, mortgage or deed of trust.

     e.  Financing Statements and Control Agreements . All financing statements and control agreements deemed necessary by the Lender to perfect its security interest in the Collateral or any other collateral securing the Loan.

     f.  Legal Opinion . Borrower shall deliver to the Lender a written opinion or opinions of legal counsel for Borrower dated the Closing Date and addressed to the Lender, which opinions must be in form and content satisfactory to the Lender. Without limiting the generality of the foregoing, the opinion or opinions must address the Borrower’s organization, existence, power, good standing and authority and as to the validity, binding effect and enforceability of the Loan Documents, including the existence, validity, enforceability, attachment, perfection, and

binding effect of any security interest, lien or assignment being granted by Borrower or any Guarantor or other Person providing Collateral to Lender with respect to the Collateral.

     g.  Operating Account . The Borrower shall establish the Operating Account with the Lender.

     h.  Compliance with Covenants . Borrower shall establish to Lender’s satisfaction that the Advance will not cause Borrower to cease to comply with Borrower’s financial covenants as set forth hereinafter.

     i.  Borrowing Base Certificate . Borrower shall deliver to the Lender a Borrowing Base Certificate dated the Closing Date with supporting schedules attached thereto, including without limitation, current accounts receivable and accounts payable reports.

3.2 Future Advances . The obligation of the Lender to make any Advance under the Revolving Loan subsequent to the Closing Date is further conditional on:

     a.  Conditions of First Advance Remain Satisfied . The Lender shall have determined, in its sole judgment, that the conditions precedent to the first Advance are satisfied as of the Borrowing Date for the subsequent Advance; the Loan Documents shall remain in full force and effect; and neither the Borrower nor any Person providing Collateral or a Guaranty shall have purported to terminate any of the Loan Documents or notified Lender of an intention not to perform under any applicable Loan Document;

     b.  Borrowing Base Certificate . The Lender shall have received a Borrowing Base Certificate, executed by a duly authorized officer of the Borrower with supporting updated schedules attached thereto;

     c.  Representations and Warranties . All representations and warranties contained herein shall be true and correct at the date of such disbursement;

     d.  No Material Adverse Change . The Lender shall have determined, in its sole discretion, that no material adverse change has occurred in the financial condition of the Borrower from that disclosed in the most recent financial statements furnished to the Lender prior to the Closing Date; and

     e.  No Default . No Event of Default has occurred and remains uncured, and no event has occurred or circumstance exists which, with the passage of time or the giving of notice or both, would constitute an Event of Default.

3.3 Lender’s Right To Rely On Communications . The Borrower authorizes the Lender to accept, rely upon, act upon and comply with, any verbal or written instructions, requests, confirmations and orders of any employee or agent of the Borrower. The Borrower acknowledges that the transmission between the Borrower and the Lender of any such instructions, requests, confirmations and orders involves the possibility of errors, omissions,

mistakes and discrepancies and agrees to adopt such internal measures and operational procedures as Borrower deems necessary to protect its interests. The Borrower hereby assumes all risk of loss arising out of: (i) the Lender’s acceptance, reliance on, compliance with or observation of any such instructions, requests, confirmations or orders that Lender, in good faith, believes are genuine; and (ii) any such errors, omissions, mistakes and discrepancies, except those caused by the Lender’s gross negligence or willful misconduct. Borrower agrees to indemnify Lender and to hold Lender harmless for and from all claims, demands, suits, actions, judgments, decrees, losses or damages, including attorneys fees and expenses, that Lender may incur as a result of the foregoing events or occurrences for which the Borrower has assumed the risk of loss.

     ARTICLE 4. SECURITY .

4.1 Grant of Security Interest . As security for (i) the payment of the Loan, and any other extensions of credit, loans, letters of credit or other financial accommodations now or hereafter made by the Lender for the benefit of the Borrower, and (ii) the performance of the Borrower’s obligations under or in connection with any interest rate swap agreement as defined in 11 U.S.C. ‘101 by and between the Borrower and the Lender or any Affiliate of the Lender (whether absolute or contingent and whether now or hereafter becoming due or owing), and (iii) any other liability or obligation of Borrower to Lender whether now or hereafter existing, of every kind and description, whether or not evidenced by notes or other instruments, and whether or not such liability or obligations are direct or indirect, fixed or contingent, liquidated or unliquidated, the Borrower hereby assigns, grants and conveys to the Lender a security interest in the Collateral. In addition, except as provided by law, Borrower grants to Lender a security interest in all deposit accounts and other bank accounts of Borrower with Lender or any of Lender’s Affiliates. Proceeds of the Collateral shall be allocated pari passu among the Loan and any outstanding interest rate swap agreements. The Borrower further agrees that the Lender shall have in respect of the Collateral all of the rights and remedies of a secured party under the Uniform Commercial Code, other applicable law and this Agreement. The Borrower covenants and agrees to execute and deliver, and hereby authorizes Lender to prepare and file with the financing records for such jurisdictions as Lender deems appropriate, such financing statements and other instruments and filings or perform any and all acts as are necessary in the opinion of the Lender to perfect, maintain and protect the security interest hereby granted. The Borrower shall not dispose of the Collateral, or any part thereof, other than in the ordinary course of its business or as otherwise may be permitted by this Agreement.

4.2 Covenants Regarding Inventory and Equipment . With regard to Collateral that constitutes Inventory or Equipment, the Borrower further covenants as follows:

     a. The Borrower shall not 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.

     b. The Lender’s security interest shall extend and attach to Inventory which is presently in existence and is owned by the Borrower or in which the 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 the Borrower’s constructive, actual or exclusive occupancy or possession or not, and wherever the same may be located, including, without limitation, all Inventory which may be located at the premises of the 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.

     c. Upon sale, exchange, lease or disposition of the Inventory or Equipment, the security interest of the Lender shall without break in continuity and without further formality or act 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 the 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.

4.3 Certain Rights of the Lender . The Lender shall have the right, but not the obligation, (i) to pay any taxes or levies on the Collateral or any costs to repair or to preserve the Collateral; and (ii) to cure any defaults by Borrower on contracts by the Borrower intended to give rise to Accounts. Such payments and the costs of curing such defaults shall constitute Advances under the Revolving Note and shall be secured pursuant to this Agreement, irrespective of whether the Borrower would then be entitled to such Advances under this Agreement.

4.4 Financing Statements; Possession of Collateral by Lender; Control . At the request of the Lender, Borrower will execute financing statements, continuation statements and other documents with respect to the Collateral pursuant to the Uniform Commercial Code or otherwise, in form satisfactory to the Lender, and Borrower will pay the cost of filing the same in all public offices wherever the Lender deems filing to be necessary or desirable. Borrower agrees that a carbon, photographic, photostatic or other reproduction of this Agreement or of a financing statement is sufficient as a financing statement, provided however, that it shall not limit the obligations of Borrower as previously set forth herein. Borrower grants the Lender the right, and hereby authorizes Lender, at the Lender’s option, to file any or all such financing statements, continuation statements and other documents pursuant to the UCC and otherwise, without Borrower’s signature, and irrevocably appoints the Lender as Borrower’s attorney-in-fact to execute any such statements and documents in Borrower’s name and to perform all other acts which the Lender deems appropriate to perfect and to continue the security interests conferred by this Agreement.

In addition, upon request of Lender, Borrower shall immediately deliver to Lender, or authorize and direct any and all Persons in possession of Collateral, to immediately deliver to Lender all Collateral for which Lender requires possession to perfect its security interest in such Collateral, properly endorsed or acknowledged. Furthermore, Borrower shall take all such actions as may

be requested by Lender to allow Lender to exercise control over any Collateral for such purpose of allowing Lender to perfect its security interest in Collateral, which Collateral may include Deposit Accounts, Investment Property, Letter-of-Credit Rights and electronic Chattel Paper. At Lender’s request, Borrower shall execute and deliver to Lender, and have any other Persons in possession or control of Collateral, execute and deliver to Lender, control or other agreements, in form and substance satisfactory to Lender.

4.5 Records of Collateral; Information . Borrower at all times will maintain accurate books and records covering the Collateral. Borrower immediately will mark all books and records with an entry showing the absolute assignment of and granting of a security interest in all Collateral to Lender, and hereby grants the Lender the right to audit the books and records of Borrower relating to Collateral at any time and from time to time. Borrower shall (i) promptly furnish the Lender with any information with respect to Collateral requested by Lender; (ii) allow the Lender or its representatives to inspect the Collateral, at any time and wherever located and in whomever’s possession the Collateral may be, and to inspect and copy, or furnish the Lender or its representatives with copies of all records relating to the Collateral; (iii) furnish the Lender or its representatives such information as the Lender may request to identify the Collateral, at the time and in the form requested by Lender; and (iv) deliver upon request to Lender shipping and delivery receipts evidencing the shipment of goods and invoices evidencing the receipt of the Collateral and payment for the Collateral.

4.6 No Release . No injury to the Collateral, loss or destruction of the Collateral, failure to perfect or to continue the perfection of Lender’s security interest in the Collateral, or release of Lender’s security interest in the Collateral, or any part of it, shall relieve Borrower of any obligation under this Agreement or under any of the other Loan Documents. Borrower expressly waives all defenses based on suretyship or impairment of collateral, and shall not be released or discharged of any obligation under the Loan Documents, in whole or in part, by Lender’s failure to protect or preserve the Collateral. No Person, in deciding to enter into this Loan Agreement, has relied on the execution of this Loan Agreement or the granting of a security interest in Collateral by any other Person. Each Person comprised by the term Borrower waives notice of any change in financial condition of any Person liable for the Loans or any part thereof, and agrees that maturity of the Loans or any part thereof may be accelerated, extended or renewed one or more times by Lender in its discretion, without notice to the Person and without affecting Lender’s security interest in the Collateral. Lender shall not be required to bring any action against any other Person or to resort to any other security or to any balance of any deposit account as a condition of enforcing its rights against any of the Collateral.

4.7 Assignment of Payments Under Certain Government Contracts and Government Accounts . On the Closing Date, and thereafter upon the creation of any Government Contract or Government Account, Borrower shall, at Lender’s option, execute and deliver to the Lender specific Assignments of Payments due or to become due with respect to any Government Account designated by the Lender which has at least Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) in payment obligations to Borrower and which has a duration of at least six months. Borrower shall execute and deliver any and all documents and take any and all steps

necessary to provide the Lender with an Assignment. The separate Assignment to the Lender of a right to payment under specific Government Contracts, as contemplated under this Section, shall not be deemed to limit the Lender’s security interest to Payments under those particular Government Contracts and the related Government Accounts, but rather the Lender’s security interest, as stated above, shall extend to Payments under any and all Government Contracts and the related Government Accounts and proceeds thereof, now or hereafter owned or acquired by Borrower.

4.8 Additional Remedy for Failure to Assign Payments . Borrower acknowledges that the Lender will be irreparably harmed if Borrower fails to assign Payments due or to become due under any Government Contract when required by this Agreement, and that the Lender shall have no adequate remedy at law. Therefore, the Borrower agrees that the Lender shall be entitled to the following remedies, in addition to all other remedies allowed by law or under this Agreement,

     a. an injunction compelling Borrower’s compliance with the provisions of this Agreement requiring the Borrower to assign Payments due or to become due under any Government Contract;

     b. the appointment of a receiver, within instructions that the receiver shall comply, in the Borrower’s name and on its behalf, with the provisions of this Agreement requiring the Borrower to assign Payments due or to become due under any Government Contract; and

     c. such other or further equitable relief as may be necessary or desirable to secure to Lender the benefits of the rights of an assignee under the Assignment of Claims Act.

4.9 Indemnification; Risk of Loss . In any suit, proceeding or action brought by or against the Lender relating to the Collateral, the Borrower will defend, indemnify and keep the Lender harmless from and against all expense, loss or damage (including reasonable attorneys’ fees) suffered by reason of any defense, set-off, counterclaim, recoupment or reduction of liability whatsoever of account debtor or other obligor of the Borrower. The foregoing obligation of the Borrower to indemnify the Lender shall survive the payment of the Loans and the termination of this Agreement, but shall not extend to any suit, proceeding or action arising out of the Lender’s gross negligence or willful misconduct.

In addition, the risk of any loss or damage associated with the Collateral, including without limitation, any Collateral in the possession of Lender shall be borne by the Borrower; provided, that Lender shall be responsible for any loss resulting from Lender’s gross negligence or willful misconduct. In the event that Lender is in possession of Collateral, (a) Borrower shall be liable to Lender and shall pay to Lender, upon demand, all reasonable expenses, including the cost of insurance and payment of taxes or other charges, incurred in the custody, preservation, use or operation of the Collateral, and all such expenses shall be secured by the Collateral; and (b) Lender may use and operate the Collateral, as determined in its sole and absolute discretion, (i) to preserve the Collateral or its value, (ii) as permitted by an order of a court having competent

jurisdiction, or (iii) as otherwise set forth herein or as previously or hereafter agreed to by Borrower. Notwithstanding anything in this Agreement to the contrary, Lender shall have no duty and be under no obligation to collect any income accruing on the Collateral or to preserve any rights relating to the Collateral.

     ARTICLE 5. BORROWER’S REPRESENTATIONS AND WARRANTIES .

     To induce the Lender to enter into this Agreement and to extend the Revolving Loan to Borrower, Borrower makes the following representations and warranties to the Lender. These representations and warranties are continuing, and each request for an Advance shall be deemed to be an affirmation of these representations and warranties as of the date of the most recent Borrowing Base Certificate submitted prior to the request.

5.1 Corporate Authority; Subsidiaries . Each Per