8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) September 1, 2004

DYNAMICS RESEARCH CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Massachusetts

(State or Other Jurisdiction of Incorporation)

000-023479	042-2211809
(Commission File Number)	(IRS Employer Identification No.)

60 Frontage Road Andover, Massachusetts	01810
(Address of Principal Executive Offices)	(Zip Code)

(978) 475-9090

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Section 1 – Registrant’s Business and Operations
	Item 1.01. Entry into a Material Definitive Agreement.
Section 2 – Financial Information
	Item 2.01. Completion of Acquisition or Disposition of Assets.
	Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Section 9 – Financial Statements and Exhibits
	Item 9.01. Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
Ex-2.1 Equity Purchase Agreement
Ex-10.1 2nd Amended and Restated Loan Agreement
Ex-10.2 Master Unlimited Guaranty
Ex-10.3 Security Agreement
Ex-10.4 Pledge Agreement
Ex-10.5 Patent & Patent Application Security Agreement
Ex-10.6 Trademark & Trademark Application Security Agreement

Section 1 – Registrant’s Business and Operations

Item 1.01. Entry into a Material Definitive Agreement.

See Item 2.03 below.

Section 2 – Financial Information

Item 2.01.  Completion of Acquisition or Disposition of Assets.

On September 1, 2004, the Dynamics Research Corporation (the “company”) completed the previously announced acquisition of Impact Innovations Group LLC (“Impact Innovations”) from J3 Technology Services Corp., a Georgia corporation (“Seller”) for $53.4 million in cash, subject to adjustment based upon the value of tangible net assets acquired. The company acquired all of the outstanding membership interests of Impact Innovations, which constituted the government contracts business of Seller. Impact Innovations, based in the Washington, D.C. area, has annual revenues approximating $47 million based on its results for the trailing 12 months ended June 30, 2004, and offers solutions in business intelligence, enterprise software, application development, information technology service management and other related areas. Its customers include United States Government intelligence agencies and various Department of Defense agencies, as well as federal civilian agencies.

The terms of the acquisition of Impact Innovations are set forth in the Equity Purchase Agreement dated August 2, 2004, between the company, Impact Innovations and Seller, filed as Exhibit 2.1 to this Current Report on Form 8-K, and incorporated herein by reference.

The terms of the transaction and the consideration paid by the company to Seller were a result of arm’s length negotiations between the company’s representatives and representatives of Seller. Prior to the completion of the transaction, neither the company nor, to the company’s knowledge, any of its directors and officers and their respective associates had any material relationship with Seller. The company used borrowings under the secured financing agreement described in Item 2.03 below to pay the consideration for the acquisition on the closing date.

Item 2.03.  Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On September 1, 2004, the company entered into a new secured financing agreement (the “facility”) with its bank group to restructure and increase the company’s credit facilities to $100.0 million, inclusive of the current mortgage on the company’s Andover, Massachusetts corporate headquarters, which had a balance of $7.9 million at closing (the “term loan”). The secured financing agreement provides for a $55.0 million, five-year term loan (the “acquisition term loan”) with a seven-year amortization schedule for the purchase of the government division of Impact Innovations LLC (see Item 2.01 above), and a $37.0 million, five-year revolving credit agreement for working capital (the “revolver”). The bank group, led by Brown Brothers Harriman & Co. as a lender and as administrative agent (when acting in such capacity, the “Administrative Agent”), also includes KeyBank National Association, Banknorth, NA and Fleet National Bank. The acquisition term loan and the revolver replace the company’s previous $50.0 million revolving credit agreement, which was entered into on June 28, 2002.

All of the obligations of the company and its subsidiaries under the new facility are secured by a security interest granted to the Administrative Agent in substantially all of the assets of the company and its subsidiaries. The agreement requires financial covenant tests to be performed against the company’s annual results beginning with the results for the year ended December 31, 2005, that, if met, would result in the release of all collateral securing the facility except for the mortgage that secures the term loan. If the company’s results do not meet specific financial ratio requirements, the company and its subsidiaries will be required to perfect the security interest which was granted to the Administrative Agent in all of the government contracts of the company and its subsidiaries.

On an ongoing basis, the facility requires the company to meet certain financial covenants, including maintaining a minimum net worth and certain cash flow and debt coverage ratios. The covenants also limit the company’s ability to incur additional debt, pay dividends, purchase capital assets, sell or dispose of assets, make additional acquisitions or investments, or enter into new leases, among other restrictions. In addition, the facility provides that the bank group may accelerate payment of all unpaid principal and all accrued and unpaid interest under the facility, upon the occurrence and continuance of certain events of default, including, among others, the following:

• Any failure by the company and its subsidiaries to make any payment of principal, interest and other sums due under the facility within three (3) calendar days of the date when such payment is due;

• Any breach by the company or any of its subsidiaries of certain covenants, representations and warranties;

• Any default and acceleration of any indebtedness owed by the company or any of its subsidiaries to any person (other than the bank group) which is in excess of $1,000,000;

• Any final judgment against the company or any of its subsidiaries in excess of $1,000,000 which has not been insured to the reasonable satisfaction of Brown Brothers Harriman & Co. as Administrative Agent;

• Any bankruptcy (voluntary or involuntary) of the company or any of its subsidiaries; and

• Any material adverse change in the business or financial condition of the company and its subsidiaries; or

• Any change in control of the company.

The terms of the facility are more fully described in the Second Amended and Restated Loan Agreement, dated September 1, 2004, by and among the company, all of the subsidiaries of the company, Brown Brothers Harriman & Co., Banknorth, N.A., KeyBank National Association and Fleet National Bank, which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and the related ancillary agreements, filed as Exhibits 10.2, 10.3, 10.4, 10.5 and 10.6 to this Current Report on Form 8-K, and incorporated herein by reference.

Acquisition term loan
Approximately $53 million of the proceeds from the acquisition term loan were drawn at closing to complete the acquisition of Impact Innovations described in Item 2.01 above. The facility requires quarterly principal payments on the acquisition term loan of approximately $2 million, with a final payment of approximately $16 million on September 1, 2009.

The company has the option of selecting an interest rate for the acquisition term loan equal to either: (a) the then applicable LIBOR Rate plus 1.75% per annum to 3.25% per annum, depending on the company’s most recently reported leverage ratio; or (b) the base rate as announced from time to time by the Administrative Agent (the “Base Rate”) plus 0.00% per annum to 0.50% per annum, depending on the company’s most recently reported leverage ratio. For those portions of the acquisition term loan accruing at the LIBOR Rate, the company has the option of selecting interest periods of 30, 60, 90 or 180 days.

Term loan
The company has a ten-year term loan as amended and restated on September 1, 2004, with an outstanding principal balance of $7.9 million, which is secured by a mortgage on the company’s headquarters in Andover, Massachusetts. The agreement requires quarterly principal payments of $125,000, with a final payment of $5.0 million due on May 1, 2010. The company has the option of selecting an interest rate for the term loan equal to either: (a) the then applicable LIBOR Rate plus 1.50% per annum to 3.00% per annum, depending on the company’s most recently reported leverage ratio; or (b) the Base Rate plus 0.00% per annum to 0.50% per annum, depending on the company’s most recently reported leverage ratio. For those portions of the term loan accruing at the LIBOR Rate, the company has the option of selecting interest periods of 30, 60, 90 or 180 days.

Revolver
The revolver has a five-year term and is available to the company for general corporate purposes, including strategic acquisitions. The outstanding balance of approximately $23 million on the company’s previous revolver was transferred to the new revolver as part of the transaction. The fee on the unused portion of the revolver ranges from 0.25% to 0.50%, depending on the company’s leverage ratio, and is payable quarterly in arrears. The company has the option of selecting an annual interest rate for the revolver equal to either: (a) the then applicable LIBOR Rate plus 1.50% per annum to 3.00% per annum, depending on the company’s most recently reported leverage ratio; or (b) the Base Rate plus 0.00% per annum to 0.50% per annum, depending on the company’s most recently reported leverage ratio. For those portions of the revolver accruing at the LIBOR rate, the company has the option of selecting interest periods of 30, 60, 90 or 180 days. The revolver matures on September 1, 2009.

Excess cash flow recapture
In addition to the principal payments required on the acquisition term loan and the term loan, the company will also make annual payments on February 15 of each year, commencing in 2006. The payment amount will be equal to 50.0% of the company’s excess cash flow, defined as EBITDA (earnings before interest, taxes, depreciation and amortization) plus net decreases in working capital or less net increases in working capital, minus interest expense and principal payments on the acquisition term loan and term loan, capital expenditures, and all cash taxes and cash dividends paid for the most recently completed year fiscal year, commencing with the year ended December 31, 2005. Each payment will be applied: first, to the outstanding balance of the revolver, provided the outstanding balance on the last day of the fiscal year compared with the outstanding balance of the revolver on the last day of the previous fiscal year does not already reflect such a reduction; second, to the outstanding principal balance of the acquisition term loan; and lastly, to the outstanding principal balance of the term loan.

Section 9 – Financial Statements and Exhibits

Item 9.01.  Financial Statements and Exhibits.

(a)	Financial Statements of Businesses Acquired
	The required financial statements relating to the government division of Impact Innovations LLC are not included in this Report. The Registrant will file the required financial statements by amendment no later than 71 calendar days after the date this Current Report on Form 8-K is required to be filed with the Securities and Exchange Commission.
(b)	Unaudited Pro Forma Financial Information
	The required pro forma financial information is not included in this Report. The Registrant will file the required pro forma financial information by amendment no later than 71 calendar days after the date this Current Report on Form 8-K is required to be filed with the Securities and Exchange Commission.
(c)	Exhibits

2.1	Equity Purchase Agreement among Dynamics Research Corporation and Impact Innovations Group LLC and J3 Technology Services Corp., dated August 2, 2004.
10.1	Second Amended and Restated Loan Agreement by and among Dynamics Research Corporation, DRC International Corporation, H.J. Ford Associates, Inc., Andrulis Corporation, Impact Innovations Group LLC as the Borrowers, and The Lenders Party hereto and Brown Brothers Harriman & Co., as Administrative Agent and Banknorth, N.A. as Documentation Agent and KeyBank National Association as Co-Syndication Agent and Fleet National Bank, a Bank of America company as Co-Syndication Agent, as of September 1, 2004.
10.2	Master Unlimited Guaranty dated as of September 1, 2004 by each of Dynamics Research Corporation, DRC International Corporation, H.J. Ford Associates, Inc., Andrulis Corporation and Impact Innovations Group LLC, in favor of Brown Brothers Harriman & Co., for itself and as Administrative Agent for each of the Lenders which are and which may become parties to the Loan Agreement.
10.3	Security Agreement among Brown Brothers Harriman & Co., as Administrative Agent for the Lenders Party to the Loan Agreement and Dynamics Research Corporation, DRC International Corporation, H.J. Ford Associates, Inc., Andrulis Corporation and Impact Innovations Group LLC, dated September 1, 2004.
10.4	Pledge Agreement by and between Dynamics Research Corporation and Brown Brothers Harriman & Co., for itself and as Administrative Agent for each of the Lenders which are and which may become parties to the Loan Agreement, as of September 1, 2004.
10.5	Patent and Patent Application Security Agreement by Dynamics Research Corporation and Brown Brothers Harriman & Co., as administrative agent for itself and for each of the other Lenders as may become parties to the Loan Agreement, dated September 1, 2004.
10.6	Trademark and Trademark Application Security Agreement by Dynamics Research Corporation and Brown Brothers Harriman & Co., as administrative agent for itself and for each of the other Lenders as may become parties to the Loan Agreement, dated September 1, 2004.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	DYNAMICS RESEARCH CORPORATION (Registrant)
Date: September 7, 2004	By:	/s/ David Keleher
		David Keleher
		Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

2.1	Equity Purchase Agreement among Dynamics Research Corporation and Impact Innovations Group LLC and J3 Technology Services Corp., dated August 2, 2004.	Filed herewith
10.1	Second Amended and Restated Loan Agreement by and among Dynamics Research Corporation, DRC International Corporation, H.J. Ford Associates, Inc., Andrulis Corporation, Impact Innovations Group LLC as the Borrowers, and The Lenders Party hereto and Brown Brothers Harriman & Co., as Administrative Agent and Banknorth, N.A. as Documentation Agent and KeyBank National Association as Co-Syndication Agent and Fleet National Bank, a Bank of America company as Co-Syndication Agent, as of September 1, 2004.	Filed herewith
10.2	Master Unlimited Guaranty dated as of September 1, 2004 by each of Dynamics Research Corporation, DRC International Corporation, H.J. Ford Associates, Inc., Andrulis Corporation and Impact Innovations Group LLC, in favor of Brown Brothers Harriman & Co., for itself and as Administrative Agent for each of the Lenders which are and which may become parties to the Loan Agreement.	Filed herewith
10.3	Security Agreement among Brown Brothers Harriman & Co., as Administrative Agent for the Lenders Party to the Loan Agreement and Dynamics Research Corporation, DRC International Corporation, H.J. Ford Associates, Inc., Andrulis Corporation and Impact Innovations Group LLC, dated September 1, 2004.	Filed herewith
10.4	Pledge Agreement by and between Dynamics Research Corporation and Brown Brothers Harriman & Co., for itself and as Administrative Agent for each of the Lenders which are and which may become parties to the Loan Agreement, as of September 1, 2004.	Filed herewith
10.5	Patent and Patent Application Security Agreement by Dynamics Research Corporation and Brown Brothers Harriman & Co., as administrative agent for itself and for each of the other Lenders as may become parties to the Loan Agreement, dated September 1, 2004.	Filed herewith
10.6	Trademark and Trademark Application Security Agreement by Dynamics Research Corporation and Brown Brothers Harriman & Co., as administrative agent for itself and for each of the other Lenders as may become parties to the Loan Agreement, dated September 1, 2004.	Filed herewith

EX-2.1

                                                                     EXHIBIT 2.1

                                                                  EXECUTION COPY

                            EQUITY PURCHASE AGREEMENT

                                      AMONG

                          DYNAMICS RESEARCH CORPORATION

                                       AND

                          IMPACT INNOVATIONS GROUP LLC

                                       AND

                          J3 TECHNOLOGY SERVICES CORP.

                                 AUGUST 2, 2004



                                TABLE OF CONTENTS



                                                                                                                          PAGE
                                                                                                                          ----
                                                                                                                       
ARTICLE 1         DEFINITIONS AND RULES OF CONSTRUCTION..........................................................           1

         1.1.     Definitions....................................................................................           1
         1.2.     Certain Interpretive Matters...................................................................          10

ARTICLE 2         PURCHASE AND SALE OF THE INTERESTS.............................................................          12

         2.1.     Purchase and Sale of the Interests.............................................................          12
         2.2.     Purchase Price and Payment.....................................................................          12
         2.3.     Payment of Indebtedness........................................................................          12
         2.4.     Adjustment to Purchase Price...................................................................          13
         2.5.     Allocation.....................................................................................          14

ARTICLE 3         THE CLOSING....................................................................................          15

         3.1.     Closing and Closing Date.......................................................................          15
         3.2.     Documents and Items to Be Delivered to Buyer by Seller Parties.................................          15
         3.3.     Documents and Items to Be Delivered to Seller by Buyer.........................................          17

ARTICLE 4         REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES...............................................          18

         4.1.     Organization and Qualification of the Company..................................................          18
         4.2.     Subsidiaries...................................................................................          18
         4.3.     Capitalization.................................................................................          18
         4.4.     Authority of the Company.......................................................................          18
         4.5.     Organization and Authority of Seller...........................................................          19
         4.6.     Enforceability.................................................................................          19
         4.7.     Issuance of the Interests; Seller's Title to the Interests.....................................          19
         4.8.     No Violation or Conflict; Consents.............................................................          19
         4.9.     Delivery of Documents; Books and Records.......................................................          20
         4.10.    Financial Statements...........................................................................          20
         4.11.    Undisclosed Liabilities........................................................................          21
         4.12.    Accounting Practices...........................................................................          21
         4.13.    Absence of Certain Changes.....................................................................          21
         4.14.    Compliance with Law; Necessary Permits.........................................................          21
         4.15.    Litigation.....................................................................................          22
         4.16.    Owned and Leased Real Property.................................................................          22
         4.17.    Tangible Personal Property.....................................................................          23
         4.18.    Intellectual Property..........................................................................          23
         4.19.    Accounts Receivable............................................................................          24
         4.20.    Accounts Payable...............................................................................          24
         4.21.    Liens..........................................................................................          25
         4.22.    Insurance......................................................................................          25
         4.23.    Material Contracts.............................................................................          25
         4.24.    Government Contracts...........................................................................          28
         4.25.    Related Party Transactions.....................................................................          30
         4.26.    Customers and Suppliers........................................................................          30
         4.27.    Employees; Employment Agreements...............................................................          31
         4.28.    Employee Relations.............................................................................          31
         4.29.    Employee Benefit Matters.......................................................................          32
         4.30.    Tax Matters....................................................................................          35


                                       i





                                                                                                                        
         4.31.    Environmental Matters..........................................................................          36
         4.32.    Banks; Powers of Attorney......................................................................          37
         4.33.    Brokers........................................................................................          37
         4.34.    Certain Business Practices.....................................................................          37
         4.35.    Personally Identifiable Information and Privacy................................................          37
         4.36.    Complete Disclosure............................................................................          38

ARTICLE 5         REPRESENTATIONS AND WARRANTIES OF BUYER........................................................          38

         5.1.     Organization...................................................................................          38
         5.2.     Authority of Buyer.............................................................................          38
         5.3.     Enforceability.................................................................................          38
         5.4.     No Violation or Conflict; Consents.............................................................          38
         5.5.     Brokers........................................................................................          39
         5.6.     Investment Intent..............................................................................          39
         5.7.     Financing......................................................................................          39
         5.8.     Litigation.....................................................................................          40

ARTICLE 6         COVENANTS OF THE PARTIES.......................................................................          40

         6.1.     Conduct of Business of the Company.............................................................          40
         6.2.     Access to Information; Customer Visits.........................................................          42
         6.3.     Reasonable Best Efforts; Compliance with Antitrust Laws........................................          42
         6.4.     Notification of Certain Matters................................................................          43
         6.5.     Public Announcements...........................................................................          44
         6.6.     Confidential Business Information..............................................................          44
         6.7.     Exclusive Dealing; Acquisition Proposals.......................................................          44
         6.8.     Preparation of Certain Financial Statements....................................................          44
         6.9.     Transition.....................................................................................          45
         6.10.    Certain Taxes..................................................................................          45
         6.11.    Non-Competition; Non-Interference..............................................................          45
         6.12.    Trademark License..............................................................................          46
         6.13.    280G Covenant..................................................................................          46
         6.14.    Transition Services............................................................................          46
         6.15.    GSA Schedule Rates.............................................................................          47
         6.16.    Certain Contracts..............................................................................          47

ARTICLE 7         CONDITIONS TO CLOSING..........................................................................          47

         7.1.     Conditions to Obligations of Seller Parties....................................................          47
         7.2.     Conditions to Obligations of Buyer.............................................................          48

ARTICLE 8         TERMINATION....................................................................................          49

         8.1.     Termination....................................................................................          49
         8.2.     Effect of Termination..........................................................................          49

ARTICLE 9         INDEMNIFICATION................................................................................          50

         9.1.     Survival.......................................................................................          50
         9.2.     Terms of Indemnification.......................................................................          50
         9.3.     Procedures with Respect to Third-Party Claims..................................................          51
         9.4.     Indemnification Cap and Threshold..............................................................          51
         9.5.     Additional Indemnification Provisions..........................................................          52
         9.6.     Exclusive Remedy...............................................................................          53


                                       ii





                                                                                                                        
ARTICLE 10        GENERAL PROVISIONS.............................................................................          54

         10.1.    Parties in Interest; Successors and Assigns; No Third Party Rights.............................          54
         10.2.    Assignment.....................................................................................          54
         10.3.    Notices........................................................................................          54
         10.4.    Entire Agreement...............................................................................          56
         10.5.    Counterparts and Facsimile Signature...........................................................          56
         10.6.    Severability...................................................................................          56
         10.7.    Amendment......................................................................................          56
         10.8.    Waiver.........................................................................................          56
         10.9.    Further Assurances.............................................................................          57
         10.10.   Legal Counsel..................................................................................          57
         10.11.   Expenses.......................................................................................          57
         10.12.   Governing Law..................................................................................          57
         10.13    Resolution of Conflicts; Arbitration...........................................................          57


                                      iii



                                    EXHIBITS



                        
Exhibit A                  Escrow Agreement
Exhibit B                  Confidentiality and Non-Solicitation Agreement
Exhibit C                  Trademark License Agreement
Exhibit D                  Transition Services Agreement


                                    SCHEDULES



Schedule                   Description
- --------                   -----------
                        
1.1                        Offers and Acceptance Letters
2.5                        Selected Accounting Firms
4.1                        Jurisdictions
4.3                        Capitalization
4.7                        Seller Title Exceptions
4.8                        No Violation or Conflicts; Consents
4.13                       Absence of Certain Changes
4.15                       Litigation
4.16(b)                    Leased Real Property
4.17                       Tangible Personal Property
4.18(a)                    Intellectual Property
4.19                       Accounts Receivable
4.20                       Accounts Payable
4.21                       Liens
4.22                       Insurance
4.23                       Material Contracts
4.24                       Government Contracts and Government Bids
4.25                       Related Party Transactions
4.26                       Customers
4.27                       Employees and Consultants
4.28                       Employee Litigation
4.29(a)                    Employee Benefit Plans
4.29(c)                    Plans That Cannot Be Terminated Within 30 Days
4.29(e)                    Effect of Transaction
4.30(c)                    Tax Matters
4.32                       Banks; Powers of Attorney
4.33                       Brokers
6.2(b)                     Customer Visits


                                       iv



                            EQUITY PURCHASE AGREEMENT

      THIS EQUITY PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of August 2, 2004, by and among Dynamics Research Corporation, a
Massachusetts corporation ("BUYER"), Impact Innovations Group LLC, a Delaware
limited liability company (the "COMPANY") and J3 Technology Services Corp., a
Georgia corporation ("SELLER").

                                    RECITALS

      WHEREAS, Seller is the owner of all of the outstanding units of interest
of the Company (the "INTERESTS"); and

      WHEREAS, Buyer desires to purchase the Interests from Seller, and Seller
desires to sell the Interests to Buyer, all upon the terms and conditions set
forth in this Agreement;

      NOW, THEREFORE, in consideration of the premises, the mutual covenants,
agreements, representations and warranties contained in this Agreement, and
other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

                                    ARTICLE 1

                      DEFINITIONS AND RULES OF CONSTRUCTION

      1.1. DEFINITIONS. As used in this Agreement, the following terms have the
meanings set forth below:

            "ACCOUNTS PAYABLE" has the meaning set forth in SECTION 4.20.

            "ACCOUNTS RECEIVABLE" means all of the billed and net unbilled,
current and long term accounts receivable of the Company.

            "AFFILIATE" means with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
the first Person on or after the date of this Agreement. For the purposes of
this definition, "CONTROL", when used with respect to any Person, means the
possession, directly or indirectly, of the power to (i) vote 25% or more of the
voting securities of such Person or (ii) direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise, and the terms "CONTROLLING" and
"CONTROLLED" have meanings correlative to the foregoing.

            "AGREEMENT" has the meaning set forth in the introduction to this
Agreement.

            "AUDITED FINANCIAL STATEMENTS" has the meaning set forth in SECTION
4.10.

            "BREACH" means (a) any inaccuracy in, or breach or violation of, or
default under, or failure to perform or comply with, any representation,
warranty, covenant, obligation or other



provision of this Agreement or any of the other Transaction Documents; or (b)
any claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with any such representation, warranty, covenant, obligation or
other provision.

            "BUYER" has the meaning set forth in the introduction to this
Agreement.

            "BUYER PARTY" means (a) prior to the Closing, each of Buyer, its
Affiliates and their respective stockholders, directors, officers, employees,
agents, advisors and other representatives, including legal counsel, accountants
and financial advisors; and (b) from and after Closing, each of Buyer and its
Affiliates, the Company and its Affiliates and their respective stockholders,
directors, officers, employees, agents, advisors and other representatives,
including legal counsel, accountants and financial advisors.

            "BUYER'S ACCOUNTANTS" has the meaning set forth in SECTION 6.8.

            "BUYER'S COUNSEL" has the meaning set forth in SECTION 3.1.

            "CLAIMS" has the meaning set forth in SECTION 10.13(a).

            "CLOSING" has the meaning set forth in SECTION 3.1.

            "CLOSING BALANCE SHEET" means, as finally determined pursuant to
SECTION 2.5, an unaudited balance sheet of the Company as of the close of
business on the Closing Date immediately prior to giving effect to the Closing,
prepared in accordance with GAAP and, to the extent consistent with GAAP, using
the same methods and criteria employed by the Company in connection with its
preparation of the Financial Statements.

            "CLOSING DATE" has the meaning set forth in SECTION 3.1.

            "CLOSING PAYMENT" has the meaning set forth in SECTION 2.2(b).

            "CLOSING TANGIBLE ASSET VALUE" means the dollar value of the
tangible assets of the Company (excluding cash) minus the total liabilities of
the Company, excluding Indebtedness, deferred tax assets and liabilities,
accrued 401(k) match (to be paid by Seller at Closing), and accrued medical
payable, as shown on the Closing Balance Sheet and as calculated pursuant to
SECTION 2.5.

            "CODE" means the Internal Revenue Code of 1986, as amended, and
rules and regulations promulgated pursuant thereto.

            "COMMITMENT LETTER" has the meaning set forth in SECTION 5.7.

            "COMPANY" has the meaning set forth in the introduction to this
Agreement.

            "COMPANY ACQUISITION" has the meaning set forth in SECTION 6.7.

            "COMPANY INTELLECTUAL PROPERTY" has the meaning set forth in SECTION
4.18(a).

            "COMPANY SECURITIES" has the meaning set forth in SECTION 4.3.

                                       2


            "COMPANY'S ACCOUNTANTS" means Deloitte & Touche LLP.

            "CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement,
dated as of June 8, 2004, executed by Buyer and Seller.

            "CONSENT" means any consent, approval, license, ratification,
waiver, novation, award or other authorization, including any Permit.

            "CONTRACT" means any agreement, contract, instrument, obligation,
commitment, covenant, understanding, promise, promissory note, bond, indenture,
insurance policy, deed, lease, license, franchise, invoice, quotation, purchase
order, sales order or other obligation, undertaking or arrangement (whether
written or oral and whether express or implied) that is legally binding.

            "DAMAGES" means any and all losses, charges, claims, damages,
liabilities, obligations, judgments, settlements, taxes, fines, penalties,
awards, demands, offsets, costs, deficiencies and expenses including reasonable
attorney and expert fees, whether absolute, accrued, conditional or otherwise
and whether or not resulting from third-party claims and including all amounts
paid in investigation, defense or settlement of the foregoing.

            "DISCHARGES" has the meaning set forth in SECTION 2.3.

            "EMPLOYMENT AGREEMENTS" has the meaning set forth in SECTION
4.27(b).

            "ENVIRONMENTAL, HEALTH AND SAFETY LAW" means (a) any Law relating to
pollution or protection of the environment, public health or safety, worker
health and safety or natural resources, including laws relating to the use,
treatment, storage, cleanup, transportation or handling of Hazardous Materials
or the release, discharge, spill, emission, treatment, transportation or
disposal of Hazardous Materials; or (b) any Law relating to exposure to toxic,
hazardous or other controlled, prohibited or regulated substances; and (c)
without limiting the generality of clauses (a) and (b) of this definition, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Sections 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901 et seq. ("RCRA"), the Toxic Substances Control Act, 15
U.S.C. Sections 2601 et seq. ("TSCA"), the Occupational, Safety and Health Act,
29 U.S.C. Sections 651 et seq., the Clean Air Act, 42 U.S.C. Sections 7401 et
seq., the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 et seq.,
the Safe Drinking Water Act, 42 U.S.C. Sections 300f et seq., the Hazardous
Materials Transportation act, 49 U.S.C. Sections 1802 et seq. ("HMTA"), the
Emergency Planning and Community Right to Know Act, 42 U.S.C. Sections 11001 et
seq. ("EPCRA"), the Federal Food, Drug and Cosmetic Act, 21 U.S.C. Sections 301
et seq., and other comparable Laws.

            "ERISA" means the Employee Retirement Income Security Act of 1974.

            "ERISA AFFILIATE" means any member of a group of trades or
businesses under common control (as defined in Sections 4001(a)(14) or
4001(b)(1) of ERISA) with that entity, or that is required to be considered a
single employer with that entity pursuant to Sections 414(b), (c), (m) or (o) of
the Code.

                                       3


            "ESCROW AGENT" has the meaning set forth in SECTION 2.2(c).

            "ESCROW AGREEMENT" has the meaning set forth in SECTION 2.2(c).

            "ESCROW AMOUNT" means the amount of Two Million Five Hundred
Thousand Dollars ($2,500,000) placed into escrow by Buyer from the Purchase
Price, $500,000 of which comprises the Tangible Assets Escrow.

            "EXCHANGE ACT" means the Securities Exchange Act of 1934 and the
rules and regulations promulgated pursuant thereto.

            "FINANCIAL STATEMENTS" has the meaning set forth in SECTION 4.10.

            "GAAP" means United States generally accepted accounting principles,
consistently applied.

            "GOVERNMENTAL AUTHORITY" means: (a) any nation, state, county, city,
town, municipality, village, district, territory or other jurisdiction of any
nature; (b) any federal, state, municipal or local governmental or
quasi-governmental entity or authority of any nature; (c) any court or tribunal
exercising or entitled to exercise judicial authority or power of any nature;
(d) any multinational organization or body; and (e) any department or
subdivision of any of the foregoing, including any commission, branch, board,
bureau, agency, official or other instrumentality exercising or entitled to
exercise any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.

            "GOVERNMENT BID" means any offer, proposal or quote made by the
Company prior to the Closing Date which is outstanding and which, if accepted,
would result in a Government Contract.

            "GOVERNMENT CONTRACT" means any contract, subcontract, teaming
agreement or arrangement, joint venture, basic ordering agreement, blanket
purchasing agreement, Federal Supply Schedule contract, pricing agreement,
CRADA, letter agreement, grant or other similar Contract of any kind, between
the Company, on the one hand, and (a) any Governmental Authority, (b) any prime
contractor of a Governmental Authority in its capacity as a prime contractor, or
(c) any subcontractor with respect to any Contract of a type described in
clauses (a) or (b) of this definition, on the other hand. A task, purchase or
delivery order under a Government Contract shall not constitute a separate
Government Contract, for purposes of this definition, but shall be part of the
Government Contract to which it relates.

            "HAZARDOUS MATERIALS" means each and every element, compound,
chemical mixture, contaminant, pollutant, material, waste or other substance
which is defined, determined or identified as hazardous or toxic under any
Environmental, Health and Safety Law, or the release of which is regulated under
any Environmental, Health and Safety Law, or that poses a hazard to the health
and safety of persons or the environment. Without limiting the generality of the
foregoing, the term includes: "hazardous substances" as defined in CERCLA;
"extremely hazardous substances" as defined in EPCRA; "hazardous waste" as
defined in RCRA; "hazardous materials" as defined in HMTA; "chemical substance
or mixture" as defined in TSCA; crude oil, petroleum products or any fraction
thereof; radioactive materials including

                                       4


source, byproduct or special nuclear materials; asbestos or asbestos-containing
materials; chlorinated fluorocarbons; and radon.

            "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.

            "HIPAA" means the Health Insurance Portability and Accountability
Act of 1996, including, the Standards for Electronic Transactions, Privacy and
Security promulgated by the Department of Health and Human Services under 45 CFR
parts 160, 162 and 164.

            "INDEBTEDNESS" means with respect to the Company, at any date,
without duplication: (a) all obligations of the Company for borrowed money,
whether current, short-term or long-term, secured or unsecured, including all
principal, interest, premiums, fees, expenses, overdrafts and pre-payment and
other penalties with respect thereto; (b) all obligations of the Company
evidenced by bonds, debentures, notes or other similar instruments; (c) all
obligations of the Company to pay the deferred purchase price of property or
services, except trade payables incurred in the Ordinary Course of Business; (d)
all obligations of the Company to reimburse any bank or other Person in respect
of amounts paid under a letter of credit, banker's acceptance or similar
instrument; (e) all capital lease obligations; (f) any Liability of the Company
with respect to interest rate swaps, collars, caps and similar hedging
obligations; and (g) all Indebtedness of any other Person of the type referred
to in clauses (a) through (f) above directly or indirectly guaranteed by the
Company or secured by any assets of the Company. For purposes of this
definition, "CAPITAL LEASE OBLIGATIONS" means the obligations of the Company
that are required to be classified and accounted for as capital lease
obligations under GAAP, and the amount of such obligations at any date shall be
the capitalized amount of such obligations at such date determined in accordance
with GAAP together with all obligations to make termination payments under such
capital lease obligations.

            "INDEMNIFICATION CAP" has the meaning set forth in SECTION 9.4(a).

            "INDEMNIFICATION THRESHOLD" has the meaning set forth in SECTION
9.4(b).

            "INDEMNIFIED PARTY" has the meaning set forth in SECTION 9.3.

            "INDEMNIFYING PARTY" has the meaning set forth in SECTION 9.3.

            "INDEMNITY ESCROW" means the amount of Two Million Dollars
($2,000,000) placed into escrow by Buyer as a subescrow within the Escrow Amount
to cover any claims that arise out of Seller's obligations under SECTION 9.2.

            "INDEPENDENT ACCOUNTING FIRM" has the meaning set forth in SECTION
2.5(b).

            "INFORMATION PRACTICES" has the meaning set forth in SECTION 4.35.

            "INTELLECTUAL PROPERTY" means any or all of the following, and all
rights in, arising out of, or associated therewith:

            (a) (i) all patents, including design patents and utility patents;
(ii) all applications for grant of any such patents pending as of the date of
this Agreement or as of the

                                       5


Closing Date or filed within five years prior to the date hereof; (iii) all
registrations and recordings thereof, including applications, registrations and
recordings with the United States Patent and Trademark Office or any similar
office, agency or authority of the United States, any state thereof, the
European Union, any nation or political subdivision thereof or any other
Governmental Authority; and (iv) all reissues, divisions, extensions,
continuations or renewals thereof (collectively, the "PATENTS");

            (b) (i) all trademarks, service marks, trade names, corporate names,
business names, logos, trade styles, trade dress, slogans and other source or
business identifiers and other similar general intangibles, whether registered
or unregistered; (ii) all applications therefor and registrations or recordings
thereof, including applications, registrations and recordings with the United
States Patent and Trademark Office or any similar office, agency or authority of
the United States, any state thereof, the European Union, any nation or
political subdivision thereof or any other Governmental Authority; (iii) all
reissues, extensions or renewals thereof; and (iv) with respect to any Person,
the goodwill of such Person and its business, products and services appurtenant
thereto, associated therewith or symbolized thereby (collectively, the
"TRADEMARKS");

            (c) (i) all copyrights and mask work rights arising under the Laws
of the United States, any state thereof, the European Union, any nation or
political subdivision thereof or any other Governmental Authority, whether
registered or unregistered and whether published or unpublished; (ii) all
applications therefor and registrations and recordings thereof, including
applications, registrations and recordings with any such Governmental Authority;
and (iii) all reissues, extensions and renewals thereof (collectively, the
"COPYRIGHTS");

            (d) all domain names as Internet URLs and all registrations thereof
(collectively, the "DOMAIN NAMES");

            (e) all technical documentation, data, trade secrets, designs,
drawings, inventions, processes, formulas, know-how, operating manuals and
guides, plans, new product development, technical and marketing surveys,
material specifications, product specifications, samples, invention records,
research records, labor routings, inspection processes, equipment lists,
engineering reports and drawings, architectural or engineering plans, and all
other confidential business information;

            (f) all marketing and licensing records, sales literature, customer
and client lists and information, supplier lists, trade lists, sales forces and
distributor networks lists, databases and data collections, pricing and cost
information, advertising and promotional materials, service and parts records,
warranty records, maintenance records and similar records;

            (g) all computer software (including source code and executable
code) (collectively, the "COMPUTER SOFTWARE");

            (h) all rights and incidents of interest in and to all
noncompetition, non-solicitation or confidentiality agreements or similar
Contracts;

                                       6


            (i) all rights arising under, and rights to develop, use, sell,
license and distribute under, any and all licenses and other Contracts which
create rights in or to any of the foregoing; and

            (j) all rights to sue for past infringement of any of the foregoing.

            "INTERESTS" has the meaning set forth in the Recitals to this
Agreement.

            "INTERIM FINANCIAL STATEMENTS" has the meaning set forth in SECTION
4.10.

            "IRS" means the United States Internal Revenue Service.

            "KNOWLEDGE" means (a) with respect to the Company or Seller, the
actual knowledge of Donna Buckner, James Childs, Ellen Glover, Ed Grimes, Sarah
Otchet, Larry Rose, Urusa Salman, and Mike Snyder and (b) with respect to Buyer,
the actual knowledge of any director or officer of Buyer. For SECTION 4.23,
"Knowledge" of the Company shall also include the actual Knowledge of Gary
Sherbert.

            "LAW" means (a) any constitution, statute, code, ordinance,
regulation, treaty, rule, common law, policy, interpretation or guidance
document enacted, published or promulgated by any Governmental Authority; and
(b) with respect to a particular Person, the terms of any Order binding upon
such Person or its assets or properties.

            "LEASED REAL PROPERTY" has the meaning set forth in SECTION 4.16(b).

            "LIABILITY" means any liability, Indebtedness or other obligation,
whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated.

            "LIEN" means any charge, claim, mortgage, lease, sublease, occupancy
agreement or similar Contract, tenancy, right-of-way, easement, collateral
assignment, restrictive covenant, encroachment, burden, condition, Order,
community property interest, equitable interest, security interest, lien
(statutory or otherwise), pledge, hypothecation, option, right of first refusal
or other restriction, limitation, exception or encumbrance of any kind,
including any restriction on use, voting, transfer, receipt of income or
exercise of any other attribute of ownership.

            "LICENSED TRADEMARKS" has the meaning set forth in SECTION 6.12.

            "MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, operations, condition (financial or otherwise), results of operations,
rights, assets (including intangible assets) or liabilities of the Company or a
material adverse effect on the ability of the Company or Seller to consummate
and perform in a timely manner the transaction contemplated by this Agreement.

            "MATERIAL ADVERSE EVENT" means any one or more events, changes,
circumstances, conditions, violations or developments (whether or not arising in
the Ordinary Course of Business), which has had or have had or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.

                                       7


            "MATERIAL CONTRACTS" has the meaning set forth in SECTION 4.23(a).

            "OFFER AND ACCEPTANCE LETTERS" means the letters described on
Schedule 1.1 hereto between Buyer and certain officers of the Company describing
such officers' terms of employment with Buyer following the Closing.

            "ORDER" means any order, injunction (whether temporary, preliminary
or permanent), ruling, decree (including any consent decree), writ, subpoena,
verdict, charge, assessment, Consent or other decision entered, issued, made or
rendered by any court or other Governmental Authority or by any arbitrator.

            "ORDINARY COURSE OF BUSINESS" means, with respect to a particular
Person, an action taken by, or the conduct of, such Person that is:

            (a) consistent with the past practices of such Person in timing,
frequency, amount and otherwise and taken in the ordinary course of the normal
day-to-day operations of such Person;

            (b) not required to be authorized by the board of directors of such
Person (or by any Person or group of Persons exercising similar authority); and

            (c) similar in nature and magnitude to actions customarily taken by,
or the conduct of, such Person, without any authorization by the board of
directors (or by any Person or group of Persons exercising similar authority),
in the ordinary course of the normal day-to-day operations of other Persons that
are in the same line of business as such Person.

            "ORGANIZATIONAL DOCUMENTS" means, with respect to a particular
Person, (a) if such Person is a corporation, its certificate or articles of
incorporation, organization or formation and its by-laws; (b) if such Person is
a general partnership, its partnership agreement and any statement of
partnership; (c) if such Person is a limited partnership, its certificate of
limited partnership and its limited partnership agreement; (d) if such Person is
a limited liability company, its certificate or articles of formation or
organization and limited liability company or operating agreement; (e) any other
charter or similar document adopted or filed in connection with the creation,
formation or organization of such Person; and (f) any amendment to any of the
foregoing.

            "OWNED INTELLECTUAL PROPERTY" has the meaning set forth in SECTION
4.18(a).

            "PBGC" has the meaning set forth in SECTION 4.29(d).

            "PERMIT" means any permit, license, Consent, exemption, variance,
registration, security clearance or other authorization issued or granted by any
Governmental Authority.

            "PERMITTED LIENS" means any: (a) Liens for current Taxes not yet due
(other than Taxes arising out of the transactions contemplated by this
Agreement); (b) Liens of carriers, laborers, materialmen, mechanics, repairmen
or warehousemen, and other similar Liens imposed by Law and arising in the
Ordinary Course of Business for Liabilities not yet due; and (c) Liens of record
or other minor defects of title that do not and could not interfere with the use
of such real property or materially diminish the value thereof.

                                       8


            "PERSON" means any individual, firm, company, general partnership,
limited partnership, limited liability partnership, joint venture, association,
corporation, limited liability company, trust, business trust, estate,
Governmental Authority or other entity.

            "PLAN" or "PLANS" has the meaning set forth in SECTION 4.29(a).

            "PROCEEDING" means any action, claim, complaint, charge,
arbitration, audit, hearing, investigation, inquiry, suit, litigation or other
proceeding (whether civil, criminal, administrative, investigative or informal)
commenced, brought, conducted or heard by or before, or otherwise involving, any
Governmental Authority or arbitrator.

            "PURCHASE PRICE" has the meaning set forth in SECTION 2.2(a).

            "REAL PROPERTY LEASES" has the meaning set forth in SECTION 4.16(b).

            "REFERENCE TANGIBLE ASSET VALUE" means Six Million Six Hundred
Thousand Dollars ($6,600,000).

            "REGISTERED INTELLECTUAL PROPERTY" has the meaning set forth in
SECTION 4.18(a).

            "RESOLUTION PERIOD" has the meaning set forth in SECTION 2.5(b).

            "SEC" means the United States Securities and Exchange Commission.

            "SECURITIES ACT" means the Securities Act of 1933 and the rules and
regulations promulgated pursuant thereto.

            "SELECTED ACCOUNTING FIRM" has the meaning set forth in SECTION
2.5(a).

            "SELLER PARTY" means (a) prior to Closing, Seller and the Company,
and (b) from and after Closing, Seller.

            "SELLER" has the meaning set forth in the introduction to this
Agreement.

            "SELLER'S COUNSEL" has the meaning set forth in SECTION 3.2(xi).

            "SELLER'S INVESTMENT BANKER" has the meaning set forth in SECTION
4.33.

            "SUBSIDIARY" means with respect to any specified Person, any other
Person (a) whose board of directors or similar governing body, or a majority
thereof, may presently be directly or indirectly elected or appointed by such
specified Person, (b) whose management decisions and corporate actions are
directly or indirectly subject to the present control of such specified Person,
or (c) whose voting securities or equity securities are more than fifty percent
(50%) owned, directly or indirectly, by such specified Person.

            "TANGIBLE ASSETS ESCROW" means the amount of Five Hundred Thousand
Dollars ($500,000) placed into escrow by Buyer as a subescrow within the Escrow
Amount pending determination of the Closing Tangible Asset Value.

                                       9


            "TAX" or "TAXES" means, however denominated, all federal, state,
local, territorial, foreign and other taxes, levies, fees, deficiencies,
imposts, assessments, impositions or other government charges of whatever
nature, including all net income, gross income, estimated income, gross
receipts, business, occupation, franchise, real property, payroll, personal
property, sales, transfer, stamp, use, employment, social security,
unemployment, worker's compensation, commercial rent, withholding, occupancy,
premium, gross receipts, profits, windfall profits, deemed profits, recapture,
license, lease, severance, capital, production, corporation, ad valorem, excise,
custom, duty, escheat, built in gain pursuant to Code Section 1374 or similar
tax, including any interest, fines, penalties and additions (to the extent
applicable) thereon or thereto, whether disputed or not, and any obligations
with respect to such amounts arising as a result of being a member of an
affiliated, consolidated, combined or unitary group for any period or under any
Contract with any other Person, and including any Liability for taxes of a
predecessor.

            "TAX RETURN" means any report, return, amended return, statement,
document, form, claim, declaration or other information or filing (including any
schedules or attachments thereto and any amendments thereof) required to be
supplied to any taxing authority or jurisdiction (foreign or domestic) with
respect to Taxes, including information returns, where permitted or required,
combined or consolidated returns for any group of entities that includes the
Company, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.

            "TERM SHEET" has the meaning set forth in SECTION 5.7.

            "THIRD PARTY INTELLECTUAL PROPERTY" has the meaning set forth in
SECTION 4.18(a).

            "TRANSACTION DOCUMENTS" means this Agreement and all other
agreements, certificates, instruments and other documents being delivered
pursuant to this Agreement or pursuant to such other agreements, certificates,
instruments and other documents.

            "TRANSITION SERVICES AGREEMENTS" has the meaning set forth in
SECTION 6.14.

      1.2. CERTAIN INTERPRETIVE MATTERS.

            (a) GENERAL RULES OF CONSTRUCTION. In this Agreement, unless
the context otherwise requires:

                  (i) words of the masculine or neuter gender shall include the
      masculine and/or feminine gender, and words in the singular number or in
      the plural number shall each include the singular number or the plural
      number;

                  (ii) reference to any Person includes such Person's successors
      and assigns but, if applicable, only if such successors and assigns are
      permitted by this Agreement, and reference to a Person in a particular
      capacity excludes such Person in any other capacity;

                  (iii) reference to any agreement (including this Agreement) or
      other Contract or any document means such agreement, Contract or document
      as amended or

                                       10


      modified and in effect from time to time in accordance with the terms
      thereof and, if applicable, the terms hereof;

                  (iv) any accounting term used and not otherwise defined in
      this Agreement or any other Transaction Document has the meaning assigned
      to such term in accordance with GAAP;

                  (v) "including" (and with correlative meaning "include") means
      including without limiting the generality of any description preceding or
      succeeding such term;

                  (vi) relative to the determination of any period of time,
      "from" means "from and including," "to" means "to but excluding" and
      "through" means "through and including;"

                  (vii) "hereto", "herein", "hereof", "hereinafter" and similar
      expressions refer to this Agreement in its entirety, and not to any
      particular Article, Section, paragraph or other part of this Agreement;

                  (viii) reference to any "Article" or "Section" means the
      corresponding Article(s) or Section(s) of this Agreement;

                  (ix) the descriptive headings of Articles, Sections,
      paragraphs and other parts of this Agreement are included for convenience
      of reference only and shall not affect in any way the meaning or
      interpretation of this Agreement or any of the terms or provisions hereof;

                  (x) references to dollars or "$" in this Agreement shall mean
      United States Dollars;

                  (xi) reference to any Law or Order, means (A) such Law or
      Order as amended, modified, codified, supplemented or reenacted, in whole
      or in part, and in effect from time to time; and (B) any comparable
      successor Laws or Orders; and

                  (xii) any Contract, instrument, insurance policy, certificate
      or other document defined or referred to in this Agreement or in any other
      Transaction Document means such Contract, instrument, insurance policy,
      certificate or other document as from time to time amended, modified or
      supplemented, including (in the case of Contracts or instruments) by
      waiver or Consent and all attachments thereto and instruments and other
      documents incorporated therein.

            (b) ACKNOWLEDGMENT REGARDING NEGOTIATION AND PREPARATION OF
AGREEMENT. The parties hereto further acknowledge and agree that (i) this
Agreement is the result of negotiations between the parties hereto and shall not
be deemed or construed as having been drafted by any one party, (ii) each of the
parties hereto and its counsel have reviewed and negotiated the terms and
provisions of this Agreement (including any exhibits and schedules attached
hereto) and have contributed to its preparation, (iii) the rule of construction
to the effect that any ambiguities are resolved against the drafting party shall
not be employed in the

                                       11


interpretation of this Agreement, and (iv) the terms and provisions of this
Agreement shall be construed fairly as to all parties hereto and not in favor of
or against any party, regardless of which party was generally responsible for
the preparation of this Agreement.

                                    ARTICLE 2

                       PURCHASE AND SALE OF THE INTERESTS

      2.1. PURCHASE AND SALE OF THE INTERESTS. Upon and subject to the terms and
provisions of this Agreement, at the Closing, Buyer shall purchase and accept
delivery of all of the Interests from Seller, and Seller shall sell, assign,
transfer and deliver all of the Interests to Buyer, free and clear of all Liens.

      2.2. PURCHASE PRICE AND PAYMENT.

            (a) PURCHASE PRICE. The total purchase price for the Interests will
be Fifty-Three Million Four Hundred Thousand Dollars ($53,400,000) subject to
adjustment following the Closing pursuant to SECTION 2.4 (the "PURCHASE PRICE").

            (b) PAYMENT. At the Closing, Buyer shall:

                  (i) pay to Seller the Purchase Price minus the Escrow Amount
      (such net amount payable by Buyer to Seller at the Closing is sometimes
      referred to herein as the "CLOSING PAYMENT"); and

                  (ii) deliver to the Escrow Agent the Escrow Amount.

The Closing Payment will be paid to Seller by wire transfer to the account of
Seller, which account shall be designated by Seller in writing at least five (5)
days prior to the Closing.

            (c) ESCROW. The terms, conditions and procedures by which the Escrow
Amount shall be delivered to and disbursed by the Escrow Agent shall be set
forth in an Escrow Agreement in the form attached hereto as Exhibit A (the
"ESCROW AGREEMENT") to be entered into among Buyer, Seller, the Company and a
mutually agreed upon escrow agent (the "ESCROW AGENT").

      2.3. PAYMENT OF INDEBTEDNESS. At or prior to the Closing, the Company will
pay or cause the payment of all Indebtedness of the Company (out of the Purchase
Price if at the Closing) in exchange for written releases, payoff letters and
UCC-3s from each payee, as appropriate, each to be in a form reasonably
acceptable to Buyer (collectively, the "DISCHARGES"); provided, however, that
with respect to Indebtedness of Seller directly or indirectly guaranteed by the
Company or secured by the Interests or any assets of the Company, the Company
shall cause all such guarantees or security interests to be cancelled or
released pursuant to Discharges without obligating Seller to pay off all such
Indebtedness at Closing.

                                       12


      2.4. ADJUSTMENT TO PURCHASE PRICE.

            (a) CLOSING BALANCE SHEET. As soon as reasonably practicable, but
not later than forty-five (45) days following Closing, Buyer shall prepare a
draft of the Closing Balance Sheet and deliver it to Seller for review and
comment. As soon as reasonably practical following the preparation and delivery
of the draft Closing Balance Sheet by Buyer (but not later than thirty (30) days
following such delivery), one of the regional accounting firms listed on
Schedule 2.5 hereto, which Buyer and Seller mutually agree to jointly solicit
and select immediately after Closing (the "SELECTED ACCOUNTING FIRM"), shall
audit and deliver to Buyer and Seller (i) the Closing Balance Sheet; and (ii)
based on the Closing Balance Sheet, a calculation of the dollar value of the
Closing Tangible Asset Value. The Selected Accounting Firm shall audit the draft
Closing Balance Sheet prepared by Buyer and shall provide an opinion whether or
not such Closing Balance Sheet has been determined in accordance with this
Agreement and GAAP and shall calculate the Closing Tangible Asset Value in
accordance with this Agreement. The parties each agree to grant reasonable
access to all records of the Company, to each other and to the Selected
Accounting Firm, for purposes of this Section, and to follow such procedures and
make such submissions to the Selected Accounting Firm, as it may request in
auditing the draft Closing Balance Sheet. All documents prepared by the Selected
Accounting Firm shall be provided to Buyer and Seller and Buyer and Seller may,
at their option, participate in all meetings and communications with the
Selected Accounting Firm.

            (b) OBJECTIONS TO CLOSING BALANCE SHEET. The Closing Balance Sheet
and the Closing Tangible Asset Value as determined by the Selected Accounting
Firm shall become final and binding upon the parties unless, within sixty (60)
days following delivery to Seller and Buyer, either Seller notifies Buyer of its
objection thereto or Buyer notifies Seller, which objection, in each case, may
only be that the Closing Balance Sheet was not properly prepared or audited in
accordance with this SECTION 2.4. Any notice of objection shall specify in
reasonable detail the reasons for objection on a line item basis. If either
party so notifies the other party of its objection to the Closing Balance Sheet
and/or the Closing Tangible Asset Value, Seller and Buyer shall negotiate in
good faith to resolve any differences and amounts. If within thirty (30) days
(the "RESOLUTION PERIOD") following the receipt of such notice by the objecting
party any of such differences and amounts have not been resolved, the parties
shall submit the dispute to Pricewaterhouse Coopers LLP, or another mutually
agreed independent accounting firm selected by Buyer and Seller (the
"INDEPENDENT ACCOUNTING FIRM"), for a determination resolving such amounts and
issues in dispute. To the extent that the amount of the Closing Tangible Asset
Value is not in dispute, the parties shall, at the commencement of the
Resolution Period, cause appropriate amounts to be paid or released from the
Tangible Assets Escrow to Buyer or Seller, as appropriate. Buyer and Seller each
represent and warrant that no party or its Affiliates has or has had any
relationship with the Independent Accounting Firm in any capacity including, as
auditor, consultant or in a teaming relationship. The Independent Accounting
Firm will conduct its own review and evaluate those items or amounts in the
Closing Balance Sheet relevant to the calculation of the Tangible Asset Value
and shall determine only those items still in dispute at the end of the
Resolution Period and shall determine whether such items have been prepared in
accordance with the terms of this Agreement and with GAAP. The Independent
Accounting Firm will be granted reasonable access to all records of Seller
Parties and the parties agree to follow such procedures and make such
submissions to the Independent Accounting Firm as it may request in conducting
its review and making its determination under this SECTION 2.4(b).

                                       13


Each party agrees to execute, if requested by the Independent Accounting Firm, a
reasonable engagement letter. The Independent Accounting Firm's determination
shall be made within forty-five (45) days after its engagement (which engagement
shall be made no later than five (5) business days after the end of the
Resolution Period), or as soon thereafter as possible, shall be set forth in a
written statement delivered to Seller and Buyer and shall be final, conclusive,
non-appealable and binding for all purposes hereunder, provided that such
determination may be reviewed, corrected or set aside in an arbitration under
SECTION 10.13, but only if the arbitrators find that the Independent Accounting
Firm committed manifest error with respect to its determination. The
determination of the Independent Accounting Firm shall not be deemed an award
subject to review under the Federal Arbitration Act or any other statute. The
fees and expenses of the Independent Accounting Firm shall be shared by Buyer
and Seller in inverse proportion to the amount in dispute for which each of them
is successful.

            (c) PURCHASE PRICE ADJUSTMENT, PAYMENTS. Within ten (10) days of the
final determination of the Closing Balance Sheet and the Closing Tangible Asset
Value the Purchase Price shall be adjusted and, in accordance with this
Agreement and the Escrow Agreement, payments shall be made as follows:

                  (i) If the Closing Tangible Asset Value is greater than or
      equal to the Reference Tangible Asset Value, Buyer and Seller shall
      instruct the Escrow Agent to pay to Seller the Tangible Asset Escrow, and
      Buyer shall pay to Seller in cash an amount equal to the difference
      between the Closing Tangible Asset Value and the Reference Tangible Asset
      Value;

                  (ii) If the Closing Tangible Asset Value is not more than
      $500,000 less than the Reference Tangible Asset Value, Buyer and Seller
      shall instruct the Escrow Agent to pay to Buyer from the Tangible Asset
      Escrow the amount by which the Closing Tangible Asset Value is less than
      the Reference Tangible Asset Value and accordingly, shall instruct the
      Escrow Agent to pay any remaining balance of the Tangible Asset Escrow to
      Seller; and

                  (iii) If the Closing Tangible Asset Value is more than
      $500,000 less than the Reference Tangible Asset Value, Buyer and Seller
      shall instruct the Escrow Agent to pay to Buyer the entire Tangible Asset
      Escrow, and Seller shall pay to Buyer in cash the remaining amount by
      which the Closing Tangible Asset Value is less than the Reference Tangible
      Asset Value.

      2.5. ALLOCATION. Buyer shall prepare an allocation of the Purchase Price
(and all other capitalized costs) among the Company's assets in accordance with
Code Section 1060 and the Treasury regulations promulgated thereunder (and any
similar provision of state, local or foreign law, as appropriate). Buyer shall
deliver such allocation to Seller within sixty (60) days after the final
resolution of the Closing Tangible Asset Value as described in SECTION 2.4. Such
allocation shall become final and binding on the parties hereto fifteen (15)
days after Buyer provides such allocation to Seller, unless Seller objects in
writing to Buyer, specifying the basis for its objection and preparing an
alternative allocation. If Seller does object, Seller and Buyer shall in good
faith attempt to resolve the dispute within fifteen (15) days of written notice
to Buyer of Seller's objection. Any such resolution shall be final and binding
on the parties hereto. Any

                                       14


unresolved disputes shall be promptly submitted to the Independent Accounting
Firm for determination, with such determination being final and binding on the
parties hereto. Seller and Buyer will each pay one-half of the fees and expenses
of the Independent Accounting Firm related to any dispute arising from this
SECTION 2.5. Buyer, Seller, and the Company and their Affiliates shall report,
act, and file Tax Returns (including, but not limited to Internal Revenue
Service Form 8594) in all respects and for all purposes consistent with such
allocation agreed to by Buyer and Seller. Seller shall timely and properly
prepare, execute, file and deliver all such documents, forms and other
information as Buyer may reasonably request to prepare such allocation. Neither
Buyer nor Seller shall take any position (whether in audits, tax returns or
otherwise) which is inconsistent with such allocation unless required to do so
by applicable law. The parties hereto will revise the final allocation schedule
to the extent necessary to reflect any post-Closing payment made pursuant to or
in connection with this Agreement. In the case of any payment referred to in the
preceding sentence, Buyer shall propose a revised allocation schedule, and the
parties hereto shall follow the procedures outlined above with respect to
review, dispute and resolution in respect of such revision.

                                    ARTICLE 3

                                   THE CLOSING

      3.1. CLOSING AND CLOSING DATE. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned in
accordance with the terms and provisions of ARTICLE 8, the purchase and sale of
the Interests (the "CLOSING") shall take place at 10:00 a.m. (Boston time) on a
date to be designated by Buyer and Seller as promptly as practical after all of
the conditions to the respective obligations of the parties set forth in ARTICLE
7 shall have been satisfied or waived and, if applicable, the expiration of the
waiting period under the HSR Act (such date and time on and at which the Closing
actually occurs being referred to herein as the "CLOSING DATE"). The Closing
shall take place at the offices of Buyer's counsel, Nixon Peabody LLP, 100
Summer Street, Boston, MA 02110 ("BUYER'S COUNSEL").

      3.2. DOCUMENTS AND ITEMS TO BE DELIVERED TO BUYER BY SELLER PARTIES. At
the Closing, Seller Parties will deliver to Buyer:

            (i) Certificates or other documents representing the Interests, duly
endorsed for transfer in blank or accompanied by transfer powers duly executed
in blank, in proper form for transfer by Seller;

            (ii) A certificate in form and substance reasonably acceptable to
Buyer, dated the Closing Date, executed by the President of the Company, and
attested to by the Secretary of the Company, and certifying: (i) that attached
thereto is a true, correct and complete copy of the Organizational Documents of
the Company, including all amendments thereto, as in effect on the Closing Date;
(ii) that attached thereto is a true and complete copy of the resolutions duly
adopted by the managers of the Company authorizing the execution and delivery of
this Agreement and each of the other Transaction Documents to which the Company
is a party, and that such resolutions have not been modified, rescinded or
amended and are in full force and

                                       15


effect as of the Closing Date; and (iii) as to the incumbency of the Company's
managers and officers and their signatures;

            (iii) A certificate in form and substance reasonably acceptable to
Buyer, dated the Closing Date, executed by the President of Seller, and attested
to by the Secretary of Seller, and certifying: (i) that attached thereto is a
true, correct and complete copy of the Organizational Documents of Seller,
including all amendments thereto, as in effect on the Closing Date; (ii) that
attached thereto is a true and complete copy of the resolutions duly adopted by
the stockholders and directors of Seller authorizing the execution and delivery
of this Agreement and each of the other Transaction Documents to which Seller is
a party, and that such resolutions have not been modified, rescinded or amended
and are in full force and effect as of the Closing Date; and (iii) as to the
incumbency of Seller's officers and their signatures;

            (iv) A certificate, in form and substance reasonably acceptable to
Buyer, dated the Closing Date, executed by the President of the Company,
certifying that (i) the representations and warranties of the Company set forth
in this Agreement were true, correct and complete at and as of the date hereof
and the Closing Date (provided that representations and warranties which are
confined to a specific date shall speak only as of such date); and (ii) that the
Company has performed in accordance with the terms thereof each of its
agreements and obligations set forth in this Agreement and each of the other
Transaction Documents to which the Company is a party to be performed prior to
the Closing;

            (v) A certificate, in form and substance reasonably acceptable to
Buyer, dated the Closing Date, executed by the President of Seller, certifying
that (i) the representations and warranties of Seller and the Company set forth
in this Agreement were true, accurate and complete at and as of the date hereof
and the Closing Date (provided that representations and warranties which are
confined to a specific date shall speak only as of such date); and (ii) each of
Seller and the Company performed its respective or joint agreements and
obligations set forth in this Agreement and each of the other Transaction
Documents to which Seller or the Company is a party to be performed prior to the
Closing;

            (vi) Resignations of such managers and officers of the Company as
Buyer may request at least five (5) days prior to Closing;

            (vii) Certificates of good standing of the Company from the
Secretary of State of the State of Delaware and from the Secretaries of State of
each jurisdiction listed on Schedule 4.1 in which the Company is authorized to
conduct business as a foreign corporation, each dated not earlier than ten (10)
days prior to the Closing Date;

            (viii) A Certificate of Good Standing of Seller from the Secretary
of State of the State of Georgia;

            (ix) All Permits and other Consents listed or required to be listed
on Schedule 4.8, in form and substance reasonably acceptable to Buyer;

            (x) the Discharges duly executed by each payee;

                                       16


            (xi) An opinion of Alston & Bird LLP, counsel to Seller Parties
("SELLER'S COUNSEL"), dated as of the Closing Date and addressed to Buyer, in a
form reasonably satisfactory to Buyer;

            (xii) The Escrow Agreement, duly executed by an authorized officer
of each of Seller and the Company;

            (xiii) A Confidentiality and Non-Solicitation Agreement in the form
of Exhibit B attached hereto duly executed by James W. Childs;

            (xiv) The Transition Services Agreements duly executed by an
authorized officer of Seller; and

            (xv) Such other certificates and documents as Buyer or Buyer's
Counsel may reasonably request.

      3.3. DOCUMENTS AND ITEMS TO BE DELIVERED TO SELLER BY BUYER. At the
Closing, Buyer will deliver to Seller:

            (i) Against receipt of certificates or other documents representing
the Interests in accordance with SECTION 3.2(a), the Closing Payment and all
other amounts required to be paid by Buyer to Seller or the Escrow Agent
pursuant to SECTION 2.2;

            (ii) A certificate, in form and substance reasonably acceptable to
Seller, executed by an authorized officer of Buyer, dated the Closing Date, and
certifying (i) that attached thereto are true and complete copies of the
Organizational Documents of Buyer, including all amendments thereto, as in
effect on the Closing Date; (ii) that attached thereto are the By-Laws of Buyer,
as amended and in effect on the Closing Date; (iii) that attached thereto are
the votes duly adopted by the Board of Directors of Buyer authorizing the
execution, delivery and performance of this Agreement and each of the other
Transaction Documents to which it is a party, and that such votes have not been
modified, rescinded or amended and are in full force and effect as of the
Closing Date; and (iv) as to the incumbency of Buyer's officers and their
signatures;

            (iii) A certificate, in form and substance reasonably acceptable to
Seller, executed by an authorized officer of Buyer, dated the Closing Date, and
certifying as to the accuracy of Buyer's representations and warranties at and
as of the Closing and the performance by Buyer of its agreements and obligations
set forth in this Agreement and each of the other Transaction Documents to which
it is a party to be performed prior to the Closing;

            (iv) An opinion of Buyer's Counsel, dated as of the Closing Date and
addressed to Seller, in a form reasonably satisfactory to Seller Parties;

            (v) The Escrow Agreement, duly executed by an authorized officer of
Buyer; and

            (vi) Such other certificates and documents as Seller or Seller's
Counsel may reasonably request.

                                       17


                                    ARTICLE 4

                REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES

      Seller Parties, jointly and severally, hereby represent and warrant to
Buyer as follows:

      4.1. ORGANIZATION AND QUALIFICATION OF THE COMPANY. The Company is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware with all power and authority to own or
lease all of its properties and assets and to conduct its business as presently
conducted, and is duly qualified and in good standing as a foreign corporation
authorized to do business in each of the jurisdictions listed on Schedule 4.1,
which are the only jurisdictions in which the character of the properties owned
or held under lease by it or the nature of the business transacted by it makes
such qualification necessary. The Company is not an "investment company" as
defined in the Investment Company Act of 1940.

      4.2. SUBSIDIARIES. The Company (a) does not have any Subsidiaries and (b)
does not own, nor does it have the right or obligation to acquire, directly or
indirectly, any interest in or control over any Person.

      4.3. CAPITALIZATION. Except as set forth on Schedule 4.3, there are no
outstanding (a) membership or other ownership interests of the Company; (b)
securities of the Company convertible into or exchangeable for membership or
other ownership interests of the Company; or (c) subscriptions, options,
warrants, rights or other Contracts to acquire from the Company, and no
obligation of the Company to issue, any (i) membership or other ownership
interests of the Company, or (ii) securities convertible into or exchangeable
for membership or other ownership interests of the Company, and no obligation of
the Company to grant, extend or enter into any subscription, warrant, option,
right, convertible or exchangeable security or other similar Contract. The
ownership interests in the Company of the types described in clauses (a), (b)
and (c) of this SECTION 4.3, whether or not authorized, issued or outstanding,
are hereinafter sometimes referred to, collectively, as "COMPANY SECURITIES." No
Company Securities were issued in violation of the Securities Act or other
applicable Law. There are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any Company Securities. Except as
disclosed on Schedule 4.3, there are no voting trusts, agreements or other
Contracts relating to the ownership, voting or transfer of membership interests
of the Company to which the Company or Seller is a party. No Person other than
Seller owns of record or beneficially any Company Securities. Except for the
Liens set forth on Schedule 4.21 covering a security interest in the assets of
the Company and the Interests, all of which shall be satisfied and discharged
prior to Closing, the Company has not received any notice of any Lien or any
other claim or Proceeding against any Company Securities.

      4.4. AUTHORITY OF THE COMPANY. The Company has all requisite power and
authority to execute and deliver this Agreement and each of the other
Transaction Documents to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by the Company of this Agreement and
each of the other Transaction Documents to which it is a party, the performance
by the Company of its obligations hereunder and thereunder and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
authorized by

                                       18


the Managers of the Company and by the Board of Directors of Seller and except
for those conditions described in Sections 7.1(vi) and 7.1(vii), no other
proceedings on the part of the Company or Seller are necessary to authorize this
Agreement and each of the other Transaction Documents to which the Company is a
party, the performance of such obligations or the consummation of such
transactions.

      4.5. ORGANIZATION AND AUTHORITY OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia with all corporate power and authority to own or lease all of its
properties and assets and to conduct its business as currently conducted. Seller
has all requisite corporate power and authority to execute and deliver this
Agreement and each of the other Transaction Documents to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
Seller of this Agreement and each of the other Transaction Documents to which it
is a party, the performance of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by the Board of Directors of Seller and except for the
approval of the transactions contemplated by this Agreement by the shareholders
and lender of Seller, no other corporate proceedings on the part of Seller are
necessary to authorize this Agreement and each of the other Transaction
Documents to which Seller is a party, the performance of such obligations or the
consummation of such transactions.

      4.6. ENFORCEABILITY. This Agreement has been and each of the other
Transaction Documents to which the Company is a party has been (or will be at
Closing) duly and validly executed and delivered by the Company and (assuming
such agreements constitute a legal, valid and binding obligation of Buyer)
constitutes (or will constitute upon Closing following execution thereof) the
legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms. This Agreement and each of the other
Transaction Documents to which Seller is a party has been (or will be at
Closing) duly and validly executed and delivered by Seller and (assuming such
agreements constitute a legal, valid and binding obligation of Buyer)
constitutes (or will constitute upon Closing following execution thereof) the
legal, valid and binding agreement of Seller, enforceable against Seller in
accordance with its terms.

      4.7. ISSUANCE OF THE INTERESTS; SELLER'S TITLE TO THE INTERESTS. The
Interests are duly authorized, validly issued, fully paid and non-assessable.
Except as set forth on Schedule 4.7, Seller has good title to and is the lawful,
legal, record and beneficial owner of the Interests, free and clear of all Liens
and Buyer, at the Closing and upon payment of the Closing Payment, will receive
good title to the Interests, free and clear of all Liens.

      4.8. NO VIOLATION OR CONFLICT; CONSENTS. Except as disclosed on Schedule
4.8, neither the execution and delivery by Seller Parties of this Agreement, or
any of the other Transaction Documents to which any of Seller Parties is a
party, nor the performance by any of Seller Parties of their respective
obligations hereunder and thereunder, nor the consummation of the transactions
contemplated hereby and thereby will, directly or indirectly (with or without
notice or lapse of time, or both):

                                       19


            (i) violate, contravene, conflict with or breach any term or
provision of the Organizational Documents of the Company or Seller or any
resolution or vote adopted by the Board of Directors, stockholders, managers or
members of the Company or Seller;

            (ii) violate, contravene, conflict with, breach, constitute a
default under, require any notice under, or give any Person the right to cancel,
modify or terminate, or accelerate the maturity or performance of, any
obligation or other Contract or Consent to which any Seller Party is a party or
by which any of their respective assets or properties is bound;

            (iii) give any Person the right to cause an indemnity payment to be
made by the Company under, or result in the creation or imposition of any Lien
upon any property or assets of the Company under, any Contract, Permit, Consent,
Law or Order to which any of Seller Parties is a party or by which any of Seller
Parties has any rights or Liabilities or any of their respective assets or
properties is subject, bound or encumbered;

            (iv) give any Person the right to require the Company to purchase or
repurchase, redeem or acquire any Liabilities or Contracts of any kind;

            (v) violate, contravene or conflict with any of the terms,
conditions or requirements of, or require any notice to or filing with any
Governmental Authority or other Person under, any Permit, Law or Order
applicable to any of Seller Parties, or any of their respective assets or
properties;

            (vi) give any Governmental Authority the right to revoke, withdraw,
suspend, cancel, modify, or terminate any Permit held by the Company; or

            (vii) require any Permit or other Consent of, or filing with or
notification to, any Governmental Authority or other Person.

      4.9. DELIVERY OF DOCUMENTS; BOOKS AND RECORDS. The Company has delivered
or made available to Buyer the originals or true, correct and complete copies of
all Contracts, instruments and other documents, including all amendments,
supplements or modifications thereof and waivers currently in effect thereunder,
requested by Buyer, referred to in the schedules hereto or otherwise material to
the representations and warranties in this Agreement. The books of account,
minute books and other records of the Company, which have been made available to
Buyer for its inspection, are true, complete and correct. The minute books of
the Company contain true, accurate and complete copies of all Organizational
Documents of the Company and true, accurate and complete records of all meetings
and consents in lieu of meeting of the managers and members of the Company since
the date of its organization. At the Closing, all books of account, minute books
and other records of the Company shall be in the possession of the Company.

      4.10. FINANCIAL STATEMENTS. The Company has delivered to Buyer copies of
(a) the audited financial statements of the Company as and for the fiscal year
ended December 31, 2003, together with all related schedules and notes and
accompanied by the report thereon of the Company's Accountants (the "AUDITED
FINANCIAL STATEMENTS"); and (b) the unaudited financial statements of the
Company as of and for the six (6) month period ended June 30, 2004, together
with all related schedules and notes (the "INTERIM FINANCIAL STATEMENTS" and,
together with the

                                       20


Audited Financial Statements, the "FINANCIAL STATEMENTS"). The balance sheets
(including, where applicable, the related notes and schedules) included in the
Financial Statements fairly present the financial position of the Company as of
the date thereof, and the statements of income (or statements of results of
operations), stockholders' equity and cash flows (including the related notes
and schedules) included in the Financial Statements fairly present the results
of operations, stockholders' equity, and retained earnings and cash flows, as
the case may be, of the Company for the periods or as of the dates, as the case
may be, set forth therein, in each case in accordance with GAAP, including all
accruals and recognition of contract gains and losses in accordance with the
Company's estimates, except, in the case of the Interim Financial Statements,
the omission of footnote information. The Financial Statements reflect the
consistent application of accounting principles throughout the periods involved,
except as disclosed in the notes of such Financial Statements. No financial
statements of any Person other than the Company are required by GAAP to be
included in the Financial Statements.

      4.11. UNDISCLOSED LIABILITIES. To the Knowledge of the Company, the
Company has no Liabilities that were not reflected or reserved against on the
balance sheet included in the Interim Financial Statements or are not required
by GAAP to be reflected on the Interim Financial Statements. Since the date of
the Interim Financial Statements, the Company has not incurred any Liabilities
other than current Liabilities which (a) have been incurred in the Ordinary
Course of Business and (b) have not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

      4.12. ACCOUNTING PRACTICES. The Company makes and keeps accurate books and
records in accordance with sound business practices reflecting its assets and
maintains proper and adequate internal accounting controls that provide
reasonable assurance that (a) transactions are executed in accordance with
management's authorization and (b) transactions are recorded as necessary to
permit preparation of the Company's Financial Statements and to maintain
accountability for the assets of the Company.

      4.13. ABSENCE OF CERTAIN CHANGES. Except as disclosed on Schedule 4.13,
since April 30, 2004, (a) the Company has conducted its business only in the
Ordinary Course of Business and has not taken any of the actions prohibited by
SECTION 6.1, and (b) there has not occurred any Material Adverse Event.

      4.14. COMPLIANCE WITH LAW; NECESSARY PERMITS.

            (a) NO VIOLATIONS. The Company is not in violation of, conflict
with, default under or breach of (a) any Law or Order applicable to the Company
or by which any property or asset of the Company is bound or affected; or (b)
any Permit or other Consent to which the Company is a party or by which any
property or asset of the Company is bound or affected.

            (b) NO NOTICE. Without limiting the generality of the foregoing, the
Company has not received any notice or other communication (whether written or
oral), and no Proceeding is pending, or to the Knowledge of the Company,
threatened, from or before any Governmental Authority or other Person regarding
(i) any actual, alleged, possible or potential violation of, or failure to
comply with, any Law or Order or (ii) any actual, alleged, possible or potential
Liability for any remedial action of any nature.

                                       21


            (c) NECESSARY PERMITS. The Company has all material Permits
necessary or required to conduct its business except for those Permits the
absence of which are not likely to have a Material Adverse Effect. The Company
is in compliance with the terms of such Permits. No suspension or cancellation
of any of such Permits is pending, or to the Knowledge of Seller Parties,
threatened except for any noncompliance of which is not likely to have a
Material Adverse Effect.

      4.15. LITIGATION. Except as disclosed on Schedule 4.15, there is no
Proceeding, pending or, to the Knowledge of Seller Parties, threatened, against
or relating to the Company, or that otherwise relates to or may affect the
business of or assets owned or used by the Company, or that in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement or any of the other Transaction
Documents. The Company is not subject to any outstanding Order. There are no
Proceedings by any Governmental Authority pending to which the Company or Seller
is a party or of which any of their respective property is the subject, and, to
the Knowledge of Seller Parties, no such Proceedings are threatened or
contemplated.

      4.16. OWNED AND LEASED REAL PROPERTY.

            (a) OWNED REAL PROPERTY. The Company does not own any real property
in fee or otherwise, except for the leasehold interests of the Company in the
Leased Real Property.

            (b) LEASED REAL PROPERTY. Set forth on Schedule 4.16(b) is a true,
correct and complete list of all leases, subleases, licenses, occupancy
agreements and other Contracts under which the Company uses or occupies or has
the right to use or occupy any real property (the "REAL PROPERTY LEASES"). With
respect to the real property leased by the Company pursuant to the Real Property
Leases (the "LEASED REAL PROPERTY"):

                  (i) Leases. The Company has heretofore delivered to Buyer
      true, correct and complete copies of all of the Real Property Leases. Each
      Real Property Lease is valid, binding and in full force and effect, all
      rent and other sums and charges payable by the Company as tenant
      thereunder are current, and no termination event or condition or uncured
      default of a material nature on the part of the Company or, to the
      Knowledge of Seller Parties, on the part of any other party thereto exists
      under any Real Property Lease. All of the Real Property Leases will
      continue to be valid, binding and enforceable in accordance with their
      respective terms and in full force and effect immediately following the
      consummation of the transactions contemplated by this Agreement. The
      Company has a good and valid leasehold interest in, or license to use,
      each parcel of Leased Real Property leased by it or licensed by it, as the
      case may be, free and clear of all Liens, except Permitted Liens.

                  (ii) Improvements. All of the improvements on the Leased Real
      Property, including buildings, structural elements, mechanical systems,
      roofs or parking and loading areas (A) to the Knowledge of the Company are
      in good operating condition and repair and have been well maintained; (B)
      to the Knowledge of the Company are free from infestation by rodents or
      insects; (C) are adequate and suitable for the purposes for which they are
      currently being used.

                                       22


                  (iii) Compliance with Law; Permits. The Company has received
      no notice from any Governmental Authority of any violation of any law or
      order issues with respect to any of the Leased Real Property. All Permits
      required in connection with the use or occupancy of the Leased Real
      Property or required in connection with the operation thereof are
      presently in effect, and the Leased Real Property has been used and
      operated and maintained in accordance with applicable Laws and Orders.

            4.17. TANGIBLE PERSONAL PROPERTY. Set forth on Schedule 4.17 is a
true, correct and complete list of each item of tangible personal property with
an original cost in excess of Five Thousand Dollars ($5,000) used in connection
with the Company's business. Except as disclosed on Schedule 4.17, the Company
is in possession of and has good title to, or has valid leasehold interests in,
all tangible personal property used in the business of the Company. All such
tangible personal property is owned by the Company, free and clear of all Liens
(or will be free and clear at the Closing), or is leased under valid leases in
full force and effect, and in any case, is in good working condition and repair,
free from material defects (patent and latent) and is adequate and suitable for
the purpose for which it is currently being used. Except as specifically
indicated on Schedule 4.17, no Person other than the Company owns any vehicles,
equipment, computer systems, Intellectual Property or other tangible assets or
properties situated on the Leased Real Property or which are used in or are
necessary for the operation of the Company's business, except for leased items
described on Schedule 4.17 and for items of immaterial value. The tangible
personal property owned by the Company is sufficient for the continued operation
of the Company in the Ordinary Course of Business and for the conduct of its
business after the Closing Date in the same manner as conducted prior to the
Closing.

      4.18. INTELLECTUAL PROPERTY.

            (a) INTELLECTUAL PROPERTY RIGHTS. Set forth on Schedule 4.18(a) is a
true, correct and complete list of all (i) material Patents, Trademarks,
Copyrights, Domain Names and Computer Software (collectively, the "REGISTERED
INTELLECTUAL PROPERTY") included in the Intellectual Property that are owned or
held by the Company (the "OWNED INTELLECTUAL PROPERTY") and (ii) the
Intellectual Property owned or held by third parties that is otherwise used in
the business of the Company (the "THIRD PARTY INTELLECTUAL PROPERTY", together
with the Owned Intellectual Property, the "COMPANY INTELLECTUAL PROPERTY") and
identifies all license agreements and other similar Contracts in effect on the
date hereof pursuant to which any such Company Intellectual Property is licensed
to or from the Company. Except as otherwise indicated on Schedule 4.18(a), (i)
the Company is the sole and exclusive owner or holder of such Owned Intellectual
Property free and clear of any royalty or other payment obligation or Lien; and
(ii) there are no Contracts which restrict or limit the use by the Company of
such Company Intellectual Property.

            (b) USE AND PROTECTION OF INTELLECTUAL PROPERTY.

            (i) (A) the Registered Intellectual Property disclosed on Schedule
      4.18(a) is valid and enforceable; (B) the Company Intellectual Property is
      all of the Intellectual Property used by the Company or necessary for the
      Company to conduct its business as it is currently conducted; (C) to the
      Knowledge of Seller Parties, the Owned Intellectual Property does not
      violate any trade secret agreement and does not

                                       23


      infringe on any Patents, Trademarks, Copyrights or any other Intellectual
      Property of any Person in any country; (D) all use by, and disclosure of
      the Owned Intellectual Property to, any other Person has been pursuant to
      the terms of a written Contract with such Person and all use of Third
      Party Intellectual Property has been pursuant to the terms of a written
      Contract with such Person or is otherwise lawful; (E) all reasonable
      action necessary to protect the Owned Intellectual Property has been taken
      by the Company; (F) the Company has required all professional and
      technical employees and consultants, and other employees and consultants
      having access to the Company Intellectual Property, to execute Contracts
      under which such employees or consultants are required to convey to the
      Company ownership of all inventions and developments conceived or created
      by them in the course of their employment and to maintain the
      confidentiality of all such Company Intellectual Property; and (G) all
      maintenance and license fees, taxes, annuities and renewal fees have been
      paid and all other necessary actions to maintain the Registered
      Intellectual Property have been taken;

                  (ii) To the Knowledge of Seller Parties, the Company has not
      interfered with, infringed upon or misappropriated any Intellectual
      Property rights of any Person, and the Company has not received any
      written notice of a claim that any of the Owned Intellectual Property has
      expired, is not valid or enforceable in any country or that it infringes
      upon, conflicts with or misappropriates any Intellectual Property of any
      Person, and no such claims or controversies currently exist; and

                  (iii) Neither the Company nor Seller has given any notice of
      infringement to any Person with respect to any of such Intellectual
      Property or has become aware of facts or circumstances evidencing the
      infringement by any Person of any of such Intellectual Property.

            4.19. ACCOUNTS RECEIVABLE. Set forth on Schedule 4.19 is a true,
correct and complete list, as of July 15, 2004 of billed Accounts Receivable of
the Company and as of June 30, 2004 of unbilled Accounts Receivable of the
Company, which includes an aging of all Accounts Receivable and notes receivable
showing amounts due in 30-day aging categories. The Accounts Receivable and
notes receivable of the Company (i) represent valid obligations arising in the
Ordinary Course of Business from sales made or services actually performed by
the Company in the Ordinary Course of Business; (ii) are generally due within
forty-five (45) days after being accrued on the books of the Company; (iii) are
not subject to any defense, counterclaim or right of set-off, and (iv) to the
Knowledge of the Company, have not had the funding associated with them expired
or withdrawn.

      4.20. ACCOUNTS PAYABLE. Set forth on Schedule 4.20 is a true, correct and
complete list, as of July 15, 2004, of the accounts and notes payable of the
Company specifying in each case the payee, the face amount of each payable, the
age of each payable regardless of classification on the balance sheet account
and any defenses, set-offs or counterclaims that may exist with respect thereto,
which includes an aging of all accounts and notes payable showing amounts owing
in thirty (30) day aging categories. All accounts and notes payable of the
Company (collectively, the "ACCOUNTS PAYABLE") have been incurred or have arisen
only in the Ordinary Course of Business. Except as disclosed on Schedule 4.20,
there is no dispute between the Company or any payee with respect to any Account
Payable.

                                       24


      4.21. LIENS. Except for Permitted Liens and Liens disclosed on Schedule
4.21, the Interests are not subject to and neither the Company nor Seller has
granted, created or suffered to exist with respect to any of the Company's
assets or properties, any Lien.

      4.22. INSURANCE. Set forth on Schedule 4.22 is a true, correct and
complete list of (a) all insurance policies maintained by the Company or in
which the Company has an interest; (b) the names of the providers of such
insurance policies; and (c) all claims made under such policies since December
31, 2002, including all outstanding claims. Each such insurance policy is in
full force and effect and will continue to be in full force and effect with
respect to those policies maintained by the Company immediately following the
Closing. All premiums due and payable under all such policies have been paid,
the Company will not be liable for retroactive premiums or similar payments, and
the Company is otherwise in compliance with the terms of such policies. Since
December 31, 2002, the Company has not received any notice of cancellation,
termination or material premium increase with respect to any such policy which
was not replaced on substantially similar terms prior to the date of such
cancellation. The Company has previously provided Buyer with a true, correct and
complete copy of each such policy. All claims thereunder have been filed in a
due and timely fashion in the manner required by the policy or binder. Except as
set forth on Schedule 4.22, the Company does not have any self-insurance or
co-insurance programs.

      4.23. MATERIAL CONTRACTS.

            (a) GENERAL. Set forth on Schedule 4.23 is a true, complete and
correct list of each of the following Contracts to which the Company is a party
or by which the Company or any of its assets or properties is bound (together
with the Government Contracts and Government Bids listed on Schedule 4.24, the
"MATERIAL CONTRACTS"):

                  (i) all leases, subleases, licensees and other similar
      Contracts concerning the use, occupancy, management or operation of any
      Leased Real Property;

                  (ii) all Contracts under which the Company has granted or
      received any license or other right to use Company Intellectual Property;

                  (iii) all Contracts relating to the confidentiality,
      non-disclosure or ownership of any Company Intellectual Property or other
      rights or assets of the Company or any other Person;

                  (iv) all leases, subleases, licenses and other similar
      Contracts under which the Company has granted or received any license or
      other right to use any tangible personal property with an original cost in
      excess of over Five Thousand Dollars ($5,000);

                  (v) all Contracts for the sale of spare parts, materials,
      equipment or other personal property to the Company or for the furnishing
      of services to the Company under the terms of which the Company (A) is
      likely to pay or otherwise give consideration of more than $25,000 in the
      aggregate during any calendar year or other twelve-month period, (B) is
      likely to pay or otherwise give consideration of more than $50,000 in the
      aggregate over the remaining term of such Contract, or (C) cannot be

                                       25


      cancelled by the Company without penalty or further payment and without
      more than thirty (30) days' notice;

                  (vi) all Contracts for the sale by the Company of any product,
      inventory, parts, equipment or other personal property or the furnishing
      by the Company of services under the terms of which the Company (A) is
      likely to be paid or otherwise receive consideration of more than $25,000
      in the aggregate during any calendar year or other twelve-month period,
      (B) is likely to be paid or otherwise receive consideration of more than
      $50,000 in the aggregate over the remaining term of such Contract, or (C)
      cannot be cancelled by the Company without penalty or further payment and
      without more than thirty (30) days' notice;

                  (vii) all broker, distributor, dealer, manufacturer's
      representative, franchise, agency, sales promotion, market research,
      marketing, consulting and advertising and similar Contracts;

                  (viii) all promissory notes of the Company and other Contracts
      relating to any loan, capital financing or any other Indebtedness of the
      Company; all Contracts pursuant to which the Company has entered into any
      guaranties of any Indebtedness or other Liability of any Person, and other
      similar Contracts; and all Contracts relating to any loan or financing
      from the Company to any Person;

                  (ix) all Contracts pursuant to which the Company has granted
      to any Person a Lien on any of its assets or properties;

                  (x) all Contracts that limit or restrict, or purport to limit
      or restrict, the ability of the Company to compete in any line of business
      or with any Person or in any geographic area or during any period of time;

                  (xi) all Contracts between or among the Company, on one hand,
      and any of Seller or any Affiliate of Seller (other than the Company), on
      the other hand;

                  (xii) all management Contracts and Contracts with independent
      contractors or consultants, and other similar Contracts, that are not
      cancelable without penalty or further payment and without more than thirty
      (30) days' notice;

                  (xiii) all employment, compensation bonus, severance pay,
      termination pay, change of control and deferred compensation Contracts,
      and other similar Contracts, between the Company and any employee of or
      consultant to the Company;

                  (xiv) all collective bargaining agreements and other similar
      Contracts between the Company and any labor union or other labor
      organization;

                  (xv) all Plans and all Contracts providing for benefits under
      any Plan;

                  (xvi) all polices of insurance and other similar Contracts;

                  (xvii) all tax sharing Contracts;

                                       26


                  (xviii) all Contracts pursuant to which the Company acquired
      or has any right to acquire all or any substantial part of the business
      and properties or capital stock of any Person (including any acquisition
      structured as a sale of stock, sale of assets, merger, consolidation or
      share exchange), and any Contract pursuant to which any Person has the
      right to so acquire the Company; and

                  (xix) all other Contracts, whether or not made in the Ordinary
      Course of Business, which are material to the Company, or the absence of
      which would have a Material Adverse Effect.

            (b) DELIVERY OF MATERIAL CONTRACTS. The Company has previously
provided or made available to Buyer (i) a true, correct and complete copy of
each written Material Contract; (ii) a written summary of the material terms and
conditions of each oral Material Contract; and (iii) has made available all
material correspondence and reports related to each Material Contract or the
performance thereof.

            (c) BINDING ENFORCEABILITY AND EFFECT. Other than any Material
Contract which has terminated or expired in accordance with its terms, each of
the Material Contracts identified and disclosed on Schedule 4.23 is valid,
binding and enforceable in accordance with its terms and is in full force and
effect, and assuming all Consents required by the terms thereof or applicable
Law have been obtained, such Material Contracts will continue to be valid,
binding and enforceable in accordance with their respective terms and in full
force and effect immediately following the Closing.

            (d) NO VIOLATION, BREACH OR DEFAULT. The Company is not, nor has the
Company or Seller received any notice that the Company is, nor, to the Knowledge
of Seller Parties, is any other party to a Material Contract in violation,
breach or default in any material respect thereunder, and, to the Knowledge of
Seller Parties, there has not occurred any event that with the lapse of time or
the giving of notice or both would constitute such a violation, breach or
default since December 31, 2002. No party to any Material Contract has (i)
indicated to the Company its intention to amend or terminate the Contract, (ii)
alleged any failure to perform on the part of the Company or (iii) made any
claims against, or sought indemnification from, the Company as to any matter
arising under or with respect to such Material Contract, and, to the Knowledge
of Seller Parties, neither Seller, the Company nor any of its directors or
officers has been advised that any such claims may be asserted or initiated.
Except for Liens made in accordance with the Assignment of Claims Act, 31 U.S.C.
Section 3727, and the Assignment of Contracts Act, 31 U.S.C. Section 15, the
Company has not assigned or otherwise conveyed or transferred, or agreed to
assign, to any Person, any right, title or interest in or to any of the Material
Contracts, or any account receivable relating thereto, whether as a security
interest or otherwise.

            (e) FIXED PRICE CONTRACTS. With respect to each of the Material
Contracts that provides for a fixed price to be paid to the Company upon the
performance of the Company's services, (i) the estimate to complete set forth in
the Company's books represents the Program Manager's best estimate of all costs
expected to be incurred in order to secure final payment under the Contract;
(ii) all known risks related to delivery or cost have been set forth in the
Company's books; (iii) such Contract does not include retention or liquidated
damages

                                       27


provisions that could impose aggregate costs to the Company exceeding $10,000
per Material Contract; and (iv) except as set forth on Schedule 4.23, no work is
being performed on such Contract outside the scope of the Contract.

            (f) DELIVERABLES. Except as set forth on Schedule 4.23, with respect
to any Material Contract, (i) the acceptance of any deliverables has not been
contested; (ii) there are no outstanding requests for the removal of any of the
Company's personnel from the contract; (iv) no penalties of any type have been
assessed; and (v) there are no pending or to, the Company's Knowledge,
threatened, contract suspension, scope reduction or curtailment actions.

      4.24. GOVERNMENT CONTRACTS.

            (a) LIST. A true and correct list of each Government Contract which
is in effect as of the date of this Agreement and each Government Bid to which
the Company is a party and for which an award has not been issued thirty (30)
days or more prior to the date of this Agreement, is set forth in Schedule 4.24.
Schedule 4.24 sets forth a true and correct list of each Government Contract
which is in effect as of the date of this Agreement.

            (b) COMPLIANCE; NO DEFAULT. Except as set forth in Schedule 4.24, to
the Knowledge of Seller Parties: (i) the Company has fully complied with all
material terms and conditions of each Government Contract and Government Bid to
which it is a party as required; (ii) the Company has complied with all material
requirements of any statute, rule or regulation pertaining to such Government
Contract or Government Bid; (iii) all representations and certifications made by
the Company with respect to such Government Contract or Government Bid were
accurate in every material respect as of their effective date and as of the date
hereof and the Company has fully complied with all such representations and
certifications in all material respects; and (iv) no termination for default,
cure notice or show cause notice has been issued and remains unresolved.

            (c) INVESTIGATIONS; AUDIT. Except as set forth in Schedule 4.24: (i)
to the Knowledge of Seller Parties, none of the Company's employees, consultants
or agents is (or, to the Knowledge of Seller Parties, during the last five years
has been) under administrative, civil or criminal investigation or indictment by
any Governmental Authority with respect to the conduct of the business of the
Company; (ii) except for contract audits of a routine nature, there is not
currently pending, nor has there been pending within the last two (2) years, any
audit or investigation of the Company or any of its officers, directors,
employees or representatives with respect to any material alleged irregularity,
misstatement or omission arising under or relating to any Government Contract or
Government Bid by the Defense Contract Audit Agency of the United States,
General Accounting Office, Defense Criminal Investigative Service, the
Department of Justice or any United States Attorney Office, nor has any such
audit or investigation been threatened in writing; and (iii) during the last two
(2) years, the Company has not made any voluntary disclosure in writing to the
Government or any other Governmental Authority with respect to any material
alleged irregularity, misstatement or omission arising under or relating to a
Government Contract or Government Bid. Except as set forth in Schedule 4.24, the
Company has not had any such irregularities, misstatements or omissions arising
under or relating to any such Government Contract or Government Bid that has led
to any

                                       28


of the consequences set forth in clause (i) or (ii) of the immediately preceding
sentence or any other material damage, penalty assessment, recoupment of payment
or disallowance of cost.

            (d) CLAIMS; DISPUTES. Except as set forth in Schedule 4.24 there are
(i) no outstanding written claims against the Company or, to the Company's
Knowledge, any pending claims, either by any Governmental Authority or any prime
contractor, subcontractor, vendor or other third party arising under or relating
to any Government Contract or Government Bid to which the Company is a party,
and (ii) no written outstanding disputes between the Company, on the one hand,
and any Governmental Authority, on the other hand, under the Contract Disputes
Act or any other Federal statute or between the Company, on the one hand, and
any prime contractor, subcontractor or vendor, on the other hand, arising under
or relating to any such Government Contract or Government Bid.

            (e) SUSPENSIONS; DEBARMENTS. Except as set forth in Schedule 4.24,
none of the Company nor, to the Knowledge of Seller Parties, any of its
employees, consultants or agents is (or during the last five years has been)
suspended or debarred from bidding on contracts or subcontracts or doing
business with any Governmental Authority or is (or during such period was) the
subject of a finding of non-responsibility or ineligibility for government
contracting. Except as set forth in Schedule 4.24, to the Knowledge of Seller
Parties, the Company has conducted its operations in all material respects in
compliance with all requirements of all Laws pertaining to all Government
Contracts and Government Bids. No suspension or debarment action with respect to
Government Contracts has been threatened in writing or commenced against the
Company or any of its officers, directors or current employees. To the Knowledge
of Seller Parties, there is no valid basis, nor current specific circumstances
which with the passage of time could become a basis, for the Company's
suspension or debarment from bidding on contracts or subcontracts from any
Governmental Authority.

            (f) DISCLOSURES. Except as set forth in Schedule 4.24, to the
Knowledge of Seller Parties, the Company has not made any untrue statement of
material fact, or failed to state a material fact necessary to make the
statements therein contained, in light of the circumstances in which they are
made, not misleading, except for any untrue statement or failure to state a
material fact that would not result in any material liability to the Company as
a result of such untrue statement or failure to state a material fact in any
statement, representation or warranty, in any Government Contract, any
Government Bid or any exhibit thereto or in any certificate, statement, list,
schedule or other document submitted or furnished to any Governmental Authority
in connection with any Government Contract or Government Bid contained on the
date so furnished or submitted (or on any other date where such statement,
representation or warranty is deemed made or brought down as of a subsequent
date either under applicable Law or pursuant to the applicable Government
Contract or Government Bid or any exhibit thereto or in any written certificate,
statement, list, schedule or other document submitted or furnished to any
Governmental Authority in connection with such Government Contract or Government
Bid).

            (g) RATE SUBMISSIONS. Except as set forth in Schedule 4.24, the
final indirect rate submissions, including all support schedules, submitted to
any Governmental Authority with respect to Government Contracts of the Company
have been approved for all years prior to 2000. Except as listed on Schedule
4.24, the Company has submitted final invoices for all Contracts or option
periods with a period of performance ending prior to June 30, 2004.

                                       29


            (h) NATIONAL SECURITY. The Company is in compliance in all material
respects with all national security obligations, including those specified in
the National Industrial Security Program Operating Manual, DOD 5220.22-M
(January 1995).

            (i) PROCUREMENT. Except as set forth in Schedule 4.24, to the extent
required by Law, all Government Contracts have been awarded, and all Government
Bids have been submitted, under a full and open procurement process without
preferential treatment of any kind. None of the Government Contracts listed on
Schedule 4.24 are subject to termination by a Governmental Authority solely as a
result of the consummation of the transactions contemplated by this Agreement.

            (j) COST AND PRICING. To the Knowledge of Seller Parties, there
exists no basis for a claim of any material liability by any Government
Authority as a result of defective cost and pricing data submitted to such
Governmental Authority, including any such data relating to liabilities accrued
on the Company's books or in its financial accounts for deferred compensation to
any Company employees. To the Knowledge of Seller Parties, no audit or review of
any Government Contract or agreement will likely result in the disallowance of,
or claim for, any amount paid or payable to the Company under such contract or
agreement, whether as a result of excess payments, excess profit recapture or
otherwise.

            (k) FOREIGN NATIONALS. Except as set forth on Schedule 4.24, there
are no foreign nationals employed in any Government Contract nor are there any
employees or contractors working on Government Contracts outside of the United
States.

            (l) MANDATORY MODIFICATIONS. Seller has properly processed all
mandatory modifications issued by GSA including FX03, FX04 and FX06 and has
received fully-approved and executed modifications with respect thereto.

      4.25. RELATED PARTY TRANSACTIONS. Except as disclosed on Schedule 4.25,
neither Seller nor any, employee or Affiliate of the Company: (a) has any cause
of action or other claim whatsoever against, or owes any amounts to, the Company
except for claims of employees in the Ordinary Course of Business, such as for
accrued vacation pay or for accrued benefits under a Plan maintained by the
Company; (b) owns, directly or indirectly, in whole or in part, any tangible or
intangible property which the Company is using or which is necessary for the
business of the Company; (c) owns any direct or indirect interest of any kind
in, or is an Affiliate or employee of, or consultant or lender to, or borrower
from, or has the right to participate in the management, operations or profits
of, any Person that is (i) a competitor, supplier, customer, client,
distributor, lessor, tenant, creditor or debtor of the Company, (ii) engaged in
a business related to the business of the Company or (iii) participating in any
transaction to which the Company is a party; or (d) otherwise is or has been a
party to any Contract or transaction with the Company.

      4.26. CUSTOMERS AND SUPPLIERS.

            (a) CUSTOMERS. Set forth on Schedule 4.26 is a list of the ten (10)
largest customers of the Company (on a consolidated basis) for the most recent
fiscal year and set forth opposite the name of each such customer on Schedule
4.26 is the percentage of consolidated net

                                       30


sales attributable to such customer. Since December 31, 2003, no customer listed
on Schedule 4.26 has indicated that it shall stop, or materially decrease the
rate of, buying materials, products or services from the Company outside of
decreases which occur in the Ordinary Course of Business. Also set forth on
Schedule 4.26 is a true, correct and complete list of any additional customers
that the Company reasonably anticipates shall be among the ten (10) largest
customers for the current fiscal year. For purposes of this SECTION 4.26,
"CUSTOMER" shall mean any Person who or which has entered into a Contract with
the Company under which such Person has agreed to purchase, license or otherwise
acquire or distribute the Company's goods or services (without regard to the end
user of the goods or services in question).

            (b) SUPPLIERS. Since December 31, 2003, no material supplier of the
Company has indicated that it shall stop, or materially decrease the rate of,
supplying materials, products or services to the Company.

      4.27. EMPLOYEES; EMPLOYMENT AGREEMENTS.

            (a) EMPLOYEES AND CONSULTANTS. Set forth on Schedule 4.27 is a true,
correct and complete list of all employees of and consultants to the Company as
of June 30, 2004 (including each employee on leave of absence or on layoff
status) showing, in respect of each such employee, (i) job title and function,
(ii) date of hire, (iii) hourly wage rate or salary or other basis of
compensation, (iv) type of security clearance, (v) each bonus, hourly rate
increase and/or salary increase granted (or committed to be granted, whether in
connection with the transactions contemplated by this Agreement or any of the
other Transaction Documents or otherwise), since December 31, 2003, (vi) accrued
vacation, sick time or other paid time off, and (vii) service credited for
purposes of vesting and eligibility to participate in any Plan. Each employee of
the Company has all material licenses, authorizations and security clearances
necessary or required for such employee to perform his or her duties and
responsibilities on behalf of the Company. All employees of the Company are
citizens of, or are authorized in accordance with federal immigration laws to be
employed in the United States.

            (b) EMPLOYEE AND CONSULTANT AGREEMENTS. Set forth on Schedule 4.27
is a true, correct and complete list of each employment, compensation, bonus,
severance pay, termination pay, change of control and deferred compensation
agreement or similar Contract between the Company or Seller and any employee of
the Company (collectively, the "EMPLOYMENT AGREEMENTS"). Except as disclosed on
Schedule 4.27, neither the execution of this Agreement nor the consummation of
the transactions contemplated hereby will result in any payment being made or
coming due from the Company to any employee of, or consultant to, the Company
pursuant to any such Contract.

      4.28. EMPLOYEE RELATIONS.

            (a) LABOR ACTIVITIES. There has not occurred nor has the Company
been threatened with any strikes, slow downs, picketing, work stoppages,
concerted refusals to work overtime or other similar labor activities by
employees of the Company. The employees of the Company are not represented by
any labor union or other labor representative, and there are no collective
bargaining agreements or other labor contracts in effect with respect to such
employees. To the Knowledge of Seller Parties, there are no Persons attempting
to represent or

                                       31


organize or purporting to represent any employees of the Company. The Company
has complied and is complying with all Laws relating to the employment of labor,
including the provisions relating to wages, hours, collective bargaining and
employee health, safety and welfare.

            (b) EMPLOYEE LITIGATION. Except as disclosed on Schedule 4.28, there
are no Proceedings against the Company or, to the Knowledge of Seller Parties,
threatened, based on, arising out of, in connection with, or otherwise relating
to, the employment (or termination of employment) by the Company of any
individual, including individuals classified as independent contractors or
"leased employees" (within the meaning of Section 414(n) of the Code), or the
failure to employ any individual, including any Proceeding relating to
employment discrimination, equal pay, employee health, safety or welfare, sexual
harassment, immigration, wages and hours or workers' compensation

      4.29. EMPLOYEE BENEFIT MATTERS.

            (a) PLANS. Except as disclosed on Schedule 4.29(a), neither the
Company nor any ERISA Affiliate maintains, sponsors or contributes to, or has
any obligation to contribute to or have any Liability with respect to any plan,
program, policy or Contract which is an employment, consulting, severance pay,
termination pay, change in control or deferred compensation agreement, or an
executive compensation, incentive bonus or other bonus, employee pension,
profit-sharing, savings, retirement, stock option, stock purchase, stock
appreciation rights, phantom stock, fringe benefit, vacation, sick leave, life,
health, medical, disability or accident insurance plan, or other employee
benefit plan, program, policy or Contract, including any "employee benefit plan"
as defined in Section 3(3) of ERISA under which the Company has any Liability
(individually, a "PLAN," and collectively, the "PLANS"). Each such Plan is
identified on Schedule 4.29(a) to the extent applicable, as one or both of the
following: an "employee pension benefit plan" (as defined in Section 3(1) of
ERISA) or an "employee welfare plan" (as defined in Section 3(2) of ERISA).

            (b) PLAN LIABILITIES. Neither the Company nor any of its ERISA
Affiliates is subject to any Liability under Title IV of ERISA, Section 302 of
ERISA, Section 412 or 4971 of the Code, whether in respect of any Plan
maintained by the Company or by any other employer or Person or otherwise. No
event has occurred, and to the Knowledge of the Seller Parties, no circumstance
exists, in connection with which the Company or any of its ERISA Affiliates, or
any Plan, directly or indirectly, could be subject to any material Liability
under ERISA, the Code or any other applicable Law or under any Contract, Law or
Order, pursuant to or under which the Company has agreed to indemnify or is
required to indemnify any Person against any Liability incurred under, or for a
violation or failure to satisfy the requirements of ERISA, the Code or any other
statute, regulation or order applicable to any Plan.

            (c) PLAN ADMINISTRATION AND COMPLIANCE. With respect to each Plan:
(i) all payments due from the Company have been timely made and all amounts
properly accrued as liabilities of the Company which have not been paid have
been and will be properly recorded on the books of the Company; (ii) each such
Plan which is an "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) and intended to qualify under Section 401 of the Code has received a
favorable determination letter from the IRS with respect to such qualification,
its related trust has been determined to be exempt from taxation under Section
501(a) of the Code,

                                       32


and nothing has occurred since the date of such letter that has or is likely to,
and the consummation of the transactions contemplated hereby will not, adversely
affect such qualification or exemption; (iii) there are no Proceedings pending
(other than routine claims for benefits) or, to the Knowledge of Seller Parties,
threatened with respect to such Plan or against the assets of such Plan; (iv)
except as set forth on Schedule 4.29(c), such Plan can be terminated within
thirty (30) days, without payment of any additional contribution or amount by
the Company and without the vesting or acceleration of any benefits promised or
provided by such Plan; and (v) the Company has complied with, and such Plan
conforms in form and operation to, all applicable Laws, including ERISA and the
Code.

            (d) PROCEEDINGS. No Plan is under audit or is the subject of an
investigation or other Proceeding by the IRS, the U.S. Department of Labor, the
Pension Benefit Guaranty Corporation (the "PBGC") or any other Governmental
Authority. The Company and its ERISA Affiliates have paid all amounts due to the
PBGC pursuant to Section 4007 of ERISA.

            (e) EFFECT OF TRANSACTIONS. Except as disclosed on Schedule 4.29(e),
the consummation of the transactions contemplated by this Agreement and of the
other Transaction Documents (alone or together with any other event) will not
(i) entitle any Person to any benefit under any Plan, (ii) accelerate the time
of payment or vesting, or increase the amount, of any compensation or other
benefit due to any Person under any Plan, or (iii) result in the payment or
series of payments by the Company to any Person of an "excess parachute payment"
within the meaning of Section 280G of the Code, or any other payment which is
not deductible for federal income tax purposes under the Code, whether or not
such payment is considered to be reasonable compensation for services rendered.

            (f) NO CONTINUING LIABILITIES. Except as disclosed in the Financial
Statements, the Company has no material Liability with respect to an obligation
to provide benefits, including death or medical benefits (whether or not
insured) with respect to any Person beyond their retirement or other termination
of service other than (i) coverage mandated by Part 6 of Title I of ERISA or
Section 4980B of the Code or state law, (ii) retirement or death benefits under
any employee pension plan, (iii) disability benefits under any employee welfare
plan that have been fully provided for by insurance or otherwise, (iv) deferred
compensation benefits accrued as liabilities on the books of the Company, (v)
worker's compensation or similar benefits, (vi) accrued vacation or sick leave
or (vii) benefits in the nature of severance pay.

            (g) DELIVERY OF PLAN DOCUMENTS. The Company has delivered to Buyer,
with respect to each Plan for which the following exists:

                (i) a copy of the three most recent forms 5500 with respect to
      each Plan;

                (ii) the most recent copy of the Summary Plan Description,
      together with each Summary of Material Modifications, required under ERISA
      with respect to such Plan, all current material employee communications
      relating to such Plan, and, unless the Plan is embodied entirely in an
      insurance policy to which the Company or any of its ERISA Affiliates are a
      party, a true and complete copy of such Plan;

                                       33


                (iii) if the Plan is funded through a trust or any third party
      funding vehicle (other than an insurance policy), a true, correct and
      complete copy of the trust instrument or other funding agreement; and

                (iv) the most recent determination letter received from the IRS
      with respect to each Plan that is intended to be a "qualified plan" under
      Section 401 of the Code.

            (h) DELIVERY OF PLAN FINANCIAL STATEMENTS. With respect to each Plan
for which financial statements are required by ERISA, Seller Parties have
delivered to Buyer true, correct and complete copies of such financial
statements for the last three fiscal years of such Plan and other than
investment gains or losses or additional contributions or distributions since
the most recent financial statement there has been no material adverse change in
the financial status of such Plan since the date of such interim financial
statements.

            (i) NO NEW PLANS OR AMENDMENTS. The Company (and to the extent
liability could reasonable accrue to the Company, its ERISA Affiliates) have not
announced a plan or legally binding commitment to create any additional Plans or
to amend or modify any existing Plan, other than amendments required by Law or
those that would not materially increase costs under any such Plan.

            (j) COMPLIANCE. The Company and its ERISA Affiliates have complied
in all material respects with the provisions of Part 6 of Title I of ERISA and
Sections 4980B, 9801 and 9802 of the Code.

            (k) CERTAIN PLANS. Neither the Company nor any of its ERISA
Affiliates does and has never sponsored, maintained, contributed to, or incurred
an obligation to contribute to any Defined Benefit Plan, Multiemployer Plan or
to a Multiple Employer Plan. For these purposes, "DEFINED BENEFIT PLAN" has the
meaning set forth in Section 414 of the Code, "MULTIEMPLOYER PLAN" means a
multiemployer plan as defined in Section 3(37) and 4001 (a) (3) of ERISA and
"MULTIPLE EMPLOYER PLAN" means any plan sponsored by more than one employer,
within the meaning of Sections 4063 or 4064 of ERISA or Section 413(c) of the
Code.

            (l) NON-EXEMPT EMPLOYEES. The Company has complied with and is in
compliance with the Fair Labor Standards Act 29 U.S.C. Sections 201 et seq., and
all relevant state wage and hour Laws and in particular has (i) properly
classified employees as either exempt or non-exempt for purposes of determining
who is eligible for receiving overtime pay and (ii) paid all non-exempt
employees for any and all overtime work they have performed for the Company.

            (m) INDEPENDENT CONTRACTORS. Any Person who has provided or is
properly providing services to the Company and who has not or will not receive
an IRS W-2 form has been classified as an independent contractor in full
compliance with the Code and federal and state wage and hour Laws and the
Company has fully and accurately reported such independent contractors'
compensation on IRS forms 1099 when required to do so.

                                       34


      4.30. TAX MATTERS.

            (a) (i) Seller and the Company have timely filed all income and
      other material Tax Returns for all taxable periods ended on or prior to
      the date of this Agreement required to be filed by applicable Law and has
      paid all amounts due in respect of Taxes relating to periods covered by
      such Tax Returns (whether or not actually shown on such Tax Returns); all
      such Tax Returns are true, correct and complete in all material respects
      and accurately set forth all items required to be reflected or included in
      such Tax Returns by applicable Tax Laws; and as of the time of filing, all
      such Tax Returns correctly reflected the facts regarding the income,
      gains, losses, deductions, business, assets, operations, activities,
      status or other matters of the Company or any other information required
      to be shown thereon;

                  (ii) Neither Seller nor the Company have executed any waivers
      or comparable consents regarding the application of the statute of
      limitations with respect to any Taxes or Tax Returns;

                  (iii) Seller and the Company have withheld and paid all
      material Taxes required to have been withheld and paid in connection with
      amounts paid or owing to any employee, independent contractor, creditor,
      stockholder or other Person and has complied in all material respects with
      all information reporting and back-up withholding requirements, including
      maintenance of required records with respect thereto, in connection with
      amounts paid or owing to any employee, creditor, independent contractor,
      or other third party;

                  (iv) since December 31, 2002, no Proceeding has commenced,
      and, to the Knowledge of Seller Parties, prior to December 31, 2002, no
      Proceeding was commenced or threatened, by any Governmental Authority in a
      jurisdiction where the Company does not file Tax Returns that it is or may
      be subject to any Tax of that jurisdiction;

                  (v) there are no Liens with respect to any Taxes, other than
      Liens for Taxes not yet due and payable, upon any of the assets or
      properties of the Company;

                  (vi) Seller and the Company have paid in full or set up
      reserves in accordance with GAAP in respect of all Taxes for the periods
      covered by the filed Tax Returns described in subsection (i) of this
      Section 4.30, as well as all other Taxes, penalties, interest, fines,
      deficiencies, assessments and governmental charges that have become due or
      payable (including all Taxes that the Company is obligated to withhold
      from amounts paid or payable to or benefits conferred upon employees,
      independent contractors, creditors, stockholders and other Persons) on or
      prior to the date of the signing of this Agreement; and to the Company's
      Knowledge there is no proposed Liability for any Tax to be imposed upon
      Seller or the Company for which there is not an adequate reserve;

                  (vii) adequate provisions in accordance with GAAP have been
      made in the Financial Statements for the payment of all Taxes for which
      Seller may be liable for

                                       35


      the periods covered thereby that were not yet due and payable as of the
      date thereof, regardless of whether the Liability for such Taxes is
      disputed; and

                  (viii) Since the date of June 30, 2004, neither Seller nor the
      Company has incurred any liability for Taxes arising from extraordinary
      gains or losses, as that term is used in GAAP, outside the ordinary course
      of business consistent with past custom and practice.

            (b) The Company is not liable for any Taxes of any other Person,
whether pursuant to U.S. Treasury Regulation Section 1.1502-6 (or any comparable
provision of Law) or otherwise, and there is no Contract or intercompany account
system in existence under which the Company has, or may at any time in the
future have, an obligation to contribute to the payment of any portion of a Tax
(or pay any amount calculated with reference to any portion of a Tax) of any
group of corporations of which the Company is or was a part.

            (c) Set forth on Schedule 4.30(c) is a true, correct and complete
list of all income and other Tax Returns filed by Seller and the Company that
have been examined or audited by the IRS or other appropriate authority with
respect to the past three fiscal years of Seller and the Company, and a list of
all adjustments resulting from each such examination or audit. Except as set
forth on Schedule 4.30(c), no such examination or audit is in progress. Except
as set forth on Schedule 4.30(c), all deficiencies proposed as a result of such
examinations or audits have been paid or finally settled and no issue has been
raised in any such examination or audit that, by application of similar
principles, reasonably can be expected to result in the assertion of a
deficiency for any other year of Seller and the Company not so examined or
audited. Except for Taxes payable with Tax Returns not yet due and filed, there
are no grounds for any further Tax Liability, beyond amounts accrued with
respect to the years that have not been examined or audited.

            (d) None of the assets owned by the Company is property that is
required to be treated as owned by any other Person pursuant to Section
168(f)(8) of the Internal Revenue Code of 1954, as in effect immediately prior
to the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property"
within the meaning of Section 168(h) of the Code.

            (e) Seller is not a foreign person within the meaning of Section
1445 of the Code.

            (f) At all times since its organization, the Company has been
classified for United States federal income tax purposes as disregarded as an
entity separate from its owner within the meaning of Section 301.7701-3 of the
Treasury Regulations. The Company is not a party to any joint venture,
partnership or other arrangement that is treated as a partnership for federal
income tax purposes.

      4.31. ENVIRONMENTAL MATTERS. The Company (including its predecessors): (a)
except in compliance with applicable Law, have not engaged in or permitted any
operation or activity at or upon, or any use or occupancy of, any real property
for the purposes of or in any way involving, the handling, use, treatment,
disposal, dumping or storage of any Hazardous Materials on, under, in or about
any real property, or transported any Hazardous Materials to, from or

                                       36


across any real property; (b) is, and at all times has been, in compliance with
any and all applicable Environmental, Health and Safety Laws; (c) has received
and is, and at all times has been, in compliance with all Permits required under
any applicable Environmental, Health and Safety Law for the conduct of its
business; and (d) has not received notice of any actual or potential claim,
Proceeding or Liability involving the handling, use, storage, transportation,
disposal, release or threat of release of Hazardous Materials. There are no
facts or circumstances providing a basis for any material claim or Proceeding
against, or Liability of, the Company involving the handling, use, storage,
transportation, disposal or release of Hazardous Materials. The Company has
provided to Buyer copies of all documents, records and information available to
the Company concerning any environmental, health or safety matter relevant to
the Company, whether generated by the Company or others, including environmental
audits, environmental risk assessments, site assessments, documentation
regarding off-site disposal of Hazardous Materials, spill control plans, and
reports, correspondence, Permits related to environmental, health or safety
matters.

      4.32. BANKS; POWERS OF ATTORNEY. Set forth on Schedule 4.32 is a true,
correct and complete list setting forth the name of each financial institution
in which the Company has an account or safe deposit box, the title and number of
the account, the names of all persons authorized to draw thereon or to have
access thereto, and the names of any Person holding a power of attorney from the
Company.

      4.33. BROKERS. Except as disclosed on Schedule 4.33, no investment banker,
broker, agent, finder, advisor, firm or other Person, other than Houlihan Lokey
Howard & Zukin Capital (the "SELLER'S INVESTMENT BANKER") is, or will be,
entitled to receive any brokerage, finder's or other payment, fee or commission
in connection with this Agreement or the transactions contemplated hereby based
upon any Contract made by or on behalf of Seller or the Company or any of its
officers, directors or employees.

      4.34. CERTAIN BUSINESS PRACTICES. Neither the Company nor, to the
Knowledge of Seller Parties, any of the Company's directors, officers,
employees, consultants or agents has, in connection with or furtherance of the
business of the Company: (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful payments relating to political activity; (b)
made any unlawful payment to any foreign or domestic government official or
employee or to any foreign or domestic political party or campaign or violated
any provision of the Foreign Corrupt Practices Act of 1977; (c) consummated any
transaction, made any payment, entered into any Contract or taken any other
action in violation of Section 1128B(b) of the Social Security Act; or (d) made
any other unlawful payment or other arrangement which could cause the Company or
its affiliates to be disqualified or debarred from serving as a contractor,
directly or indirectly, for any Governmental Authority.

      4.35. PERSONALLY IDENTIFIABLE INFORMATION AND PRIVACY. To the Knowledge of
Seller Parties, the Company's collection, use, storage, transfer and disclosure
of any personally identifiable information ("INFORMATION PRACTICES"), and use by
third parties having authorized access to the Company's websites or other
records, conforms, and at all times has conformed, to all applicable Laws,
including applicable provisions of HIPAA and all applicable standards set forth
in any final regulations and orders promulgated under such Act, and all
contractual commitments of the Company to its customers, the viewers of the
Company's websites, and third

                                       37


parties relating to such practices. To the Knowledge of Seller Parties, the
Company's Information Practices have been consistent with all statements or
representations made to customers, potential customers and third parties,
whether orally or in writing, regarding such practices. Without limiting the
foregoing, to the Knowledge of Seller Parties, the Company has taken all
necessary and appropriate steps to comply with the regulations set forth in 45
C.F.R. Parts 160, 162 and 164 as promulgated by the U.S. Department of Health
and Human Services, and has obtained all written authorizations or assurances
required under such regulations.

      4.36. COMPLETE DISCLOSURE. No representation or warranty made by any of
Seller Parties in this Agreement, including the schedules hereto, or in any
certificate furnished or to be furnished to Buyer pursuant to this Agreement, or
in connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
a material fact necessary to make the statements or facts contained herein or
therein not misleading or necessary to provide Buyer with adequate and complete
information as to the Company or the businesses, operations, finances, assets
and liabilities of the Company.

                                    ARTICLE 5

                     REPRESENTATIONS AND WARRANTIES OF BUYER

      Buyer represents and warrants to Seller as follows:

      5.1. ORGANIZATION. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts with
all corporate power and authority to own or lease all of its properties and
assets and to conduct its business as presently conducted.

      5.2. AUTHORITY OF BUYER. Buyer has all requisite corporate power and
authority to execute and deliver this Agreement and each of the other
Transaction Documents to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by Buyer of this Agreement and each of
the other Transaction Documents to which it is a party, the performance by Buyer
of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors of Buyer and no other corporate proceedings
on the part of Buyer are necessary to authorize this Agreement and each of the
Transaction Documents to which Buyer is a party, the performance of such
obligations or the consummation of such transactions.

      5.3. ENFORCEABILITY. This Agreement and each of the other Transaction
Documents to which Buyer is a party has been duly and validly executed and
delivered by Buyer and (assuming such agreements constitute the legal, valid and
binding obligations of Seller Parties) constitutes the legal, valid and binding
agreement of Buyer, enforceable against Buyer in accordance with its terms.

      5.4. NO VIOLATION OR CONFLICT; CONSENTS. Neither the execution and
delivery by Buyer of this Agreement or any of the other Transaction Documents to
which it is a party, nor the performance by Buyer of its obligations hereunder
and thereunder, nor the consummation of

                                       38


the transactions contemplated hereby and thereby will, directly or indirectly
(with or without notice or lapse of time or both):

            (i) violate, contravene, conflict with or breach any term or
provision of the Organizational Documents of Buyer or any resolution or vote
adopted by the Board of Directors or stockholders of Buyer;

            (ii) violate, contravene, conflict with, breach, constitute a
default under, require any notice under, or give any Person the right to cancel,
modify or terminate, or accelerate the maturity or performance of, any
obligation or other Contract or Consent to which Buyer is a party or by which
any of their respective assets or properties is bound;

            (iii) give any Person the right to cause an indemnity payment to be
made by Buyer under, or result in the creation or imposition of any Lien upon
any property or assets of Buyer under, any Contract, Permit, Consent, Law or
Order to which Buyer is a party or by which Buyer has any rights or Liabilities
or any of their respective assets or properties is subject, bound or encumbered;

            (iv) give any Person the right to require Buyer to purchase or
repurchase, redeem or acquire any Liabilities or Contracts of any kind;

            (v) violate, contravene or conflict with any of the terms,
conditions or requirements of, or require any notice to or filing with any
Governmental Authority or other Person under, any Permit, Law or Order
applicable to Buyer or any of their respective assets or properties;

            (vi) give any Governmental Authority the right to revoke, withdraw,
suspend, cancel, modify, or terminate any Permit held by Buyer; or

            (vii) require any Permit or other Consent of, or filing with or
notification to, any Governmental Authority or other Person.

      5.5. BROKERS. No investment banker, broker, agent, finder, advisor, firm
or other Person acting on behalf of Buyer or its stockholders is, or will be,
entitled to any commission or broker's or finder's fees from any of the parties
hereto, or from any Person controlling, controlled by or under common control
with any of the parties hereto, in connection with any of the transactions
contemplated herein.

      5.6. INVESTMENT INTENT. Buyer is acquiring the Interests for its own
account and not with a view to its distribution within the meaning of Section
2(11) of the Securities Act. Buyer confirms that Seller and the Company have
made available to Buyer and its representatives and agents the opportunity to
ask questions of the officers and management employees of the Company and to
acquire such additional information about the business and financial condition
of the Company as Buyer has requested.

      5.7. FINANCING. Buyer has provided Seller with a true, complete and
correct copy of that executed Commitment Letter dated July 30, 2004, from Brown
Brothers Harriman & Co. pursuant to which it will provide an aggregate amount of
$92,000,000 to fund Buyer's purchase

                                       39


of the Interests (the "COMMITMENT LETTER"). As of the date hereof, the
Commitment Letter has not been withdrawn and, to Buyer's Knowledge, no
circumstances exist which would reasonably be likely to cause any of the terms
or conditions of the Commitment Letter to not be satisfied.

      5.8. LITIGATION. There is no suit, action, proceeding, claim or
investigation pending, or, to Buyer's Knowledge, threatened, against Buyer that
would affect the consummation of the transactions contemplated by this
Agreement.

                                    ARTICLE 6

                            COVENANTS OF THE PARTIES

      6.1. CONDUCT OF BUSINESS OF THE COMPANY.

            (a) COMPANY ACTION. During the period from the date of this
Agreement to the Closing, the Company shall, and Seller shall cause the Company
to: (i) conduct its operations in the Ordinary Course of Business; (ii) use
their reasonable best efforts to preserve intact its business organization, keep
available the services of its current managers, officers, employees, consultants
and agents; (iii) use their reasonable best efforts to preserve the goodwill of
and maintain satisfactory relationships with all customers, suppliers,
distributors, lessors, tenants, creditors, debtors, employees, consultants and
agents of the Company and any other Persons having business relationships with
the Company; and (iv) promptly advise Buyer in writing of any Material Adverse
Event. Without limiting the generality of the foregoing, during the period
specified in the preceding sentence, the Company shall not, and Seller shall
cause the Company not to, without the prior written consent of Buyer, which
consent shall not be unreasonably withheld:

                  (i) issue, sell, grant options or rights to purchase, pledge
      or authorize or propose the issuance, sale, grant of options or rights to
      purchase or pledge any Company Securities, or grant or accelerate any
      right to convert or exchange any Company Securities;

                  (ii) purchase, acquire or redeem, directly or indirectly, or
      amend the terms of any Company Securities;

                  (iii) split, combine or reclassify its membership interests or
      declare, set aside, make or pay any distribution (whether in cash or
      property);

                  (iv) make or offer to make (A) any acquisition of any interest
      in any assets or securities of any Person (whether by merger, stock
      purchase, asset purchase, lease, license or otherwise) or (B) any sale or
      other disposition or encumbrance of any of its assets or securities
      (whether by merger, stock sale, asset sale, lease, license or otherwise);

                  (v) except in the Ordinary Course of Business, enter into any
      material Contract or amend or cause the termination of any Material
      Contract, or grant any release or relinquishment of any rights under any
      Material Contract;

                                       40


                  (vi) (A) incur or assume any Indebtedness, except for
      short-term accounts payable and accrued liabilities (as such term is used
      in the Financial Statements) in the Ordinary Course of Business; or (B)
      enter into any financing arrangements or modify the terms of any existing
      Indebtedness or financing arrangements;

                  (vii) assume, guarantee, endorse or otherwise become liable or
      responsible (whether directly, contingently or otherwise) for the
      Liabilities of any other Person;

                  (viii) make any loans, advances or capital contributions to,
      or investments in, any other Person;

                  (ix) change any of the accounting principles or practices used
      by it (including changes in reserve or accrual amounts or policies) in a
      manner that would have a Material Adverse Effect;

                  (x) make, change or revoke any Tax election, settle or
      compromise any material Tax Liability, or amend any Tax Return;

                  (xi) propose or adopt any amendments to the Organizational
      Documents of the Company;

                  (xii) grant any equity-related performance or similar awards
      or bonuses;

                  (xiii) forgive any loans to any directors, officers or
      employees of the Company or any of their respective affiliates or
      associates;

                  (xiv) except in the Ordinary Course of Business, enter into
      any new, or amend any existing, Material Contract;

                  (xv) enter into any new, or amend any existing, employment,
      consulting, severance payment, termination payment, salary continuation,
      change of control or deferred compensation agreements or similar Contracts
      with any directors, officers or employees of the Company, or make any
      changes in the compensation or benefits payable to directors, officers or
      employees of the Company, except for regularly scheduled increases to
      employee compensation and benefits made in the Ordinary Course of
      Business;

                  (xvi) enter into any collective bargaining or other labor
      Contract;

                  (xvii) adopt, approve or enter into any new, or materially
      amend or modify, or terminate any existing, Plan or other employee benefit
      plan or Contract;

                  (xviii) adopt or approve any new, or amend, modify or
      terminate any existing, plan regarding the compensation of employees or
      consultants, including any compensation plan for sales employees;

                  (xix) hire or terminate any management level employees;

                                       41


                  (xx) settle or agree to settle any claim or Proceeding
      (including any claim or Proceeding relating to this Agreement or the
      transactions contemplated hereby) or pay, discharge or satisfy or agree to
      pay, discharge or satisfy any claim or Liability other than the payment,
      discharge or satisfaction of Liabilities (A) reflected or reserved against
      in-full in the Financial Statements, or incurred in the Ordinary Course of
      Business subsequent to June 30, 2004 or (B) in an aggregate amount not to
      exceed $20,000; or

                  (xxi) agree to take any of the foregoing actions or any action
      which would make any representation or warranty in this Agreement untrue
      or incorrect as of the date when made or as of a future date or which
      would result in any of the conditions set forth in ARTICLE 7 not being
      satisfied.

            (b) SELLER ACTION. During the period from the date of this Agreement
to the Closing, Seller shall not and Seller shall cause the Company not to (i)
take any action specified in SECTION 6.1(a) on behalf of or with respect to the
Company or (ii) take any action which would make any representation or warranty
in this Agreement untrue or incorrect as of the date when made or which would
result in any of the conditions set forth in ARTICLE 7 hereof not being
satisfied.

      6.2 ACCESS TO INFORMATION; CUSTOMER VISITS.

            (a) ACCESS. From and after the date of this Agreement, Seller
Parties shall: (a) afford Buyer and Buyer's commercial lenders and their
respective accountants, investment bankers, counsel and other authorized
representatives complete access (during regular business hours, upon reasonable
advance notice) to all officers, key employees, offices and other facilities,
and to all Contracts, books and records (including Tax Returns of the Company)
and other documents and data of the Company, and cause the Company's Accountants
to provide access to their work papers and such other information as Buyer may
reasonably request; (b) permit Buyer to make such inspections as Buyer may
require; and (c) cause the officers of the Company to furnish Buyer with such
financial and operating data and other information with respect to the business,
properties and personnel of the Company as Buyer may from time to time
reasonably request. Nothing contained in this Agreement shall affect the
continuing applicability of the Confidentiality Agreement. The access provided
pursuant to this SECTION 6.2 shall be subject to such measures as may be
reasonably required to minimize the disruption to the Company's business,
including Seller's having the right to be present at any meeting or telephone
call pursuant to this SECTION 6.2.

            (b) CUSTOMER VISITS. Prior to the Closing, the Company shall have
introduced, in the presence of Ellen Glover, Bill Hoover, Tom Kelly and/or Bob
Alford, as appropriate, to the senior representative of those customers listed
on the attached Schedule 6.2(b).

      6.3. REASONABLE BEST EFFORTS; COMPLIANCE WITH ANTITRUST LAWS.

            (a) CONSUMMATION OF TRANSACTION. Subject to the terms, conditions
and other provisions of this Agreement, each of the parties hereto agrees to use
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all

                                       42


things necessary, proper or advisable under applicable Laws and Orders to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement. In connection with and without
limiting the foregoing, Seller Parties and Buyer shall cooperate with one
another (i) in promptly determining whether any notices or filings are required
to be or should be given or made, or whether any Permits or Consents are
required to be or should be obtained under any Law or Order or whether any
Consents are required to be or should be obtained from other parties to any
Contract in connection with the consummation of the transactions contemplated by
this Agreement, and (ii) in promptly giving or making any such notices or
filings, furnishing information required in connection therewith and seeking to
timely obtain any Permits and Consents. Seller shall use its reasonable best
efforts to secure the Permits and Consents listed on Schedule 4.8. In case at
any time after Closing any further action is necessary or desirable to carry out
the purposes of this Agreement, the parties hereto (or as applicable, their
directors, officers, employees, consultants and agents) shall take all such
necessary action as may be reasonable in the context thereof. Buyer and Seller
agree to consult with each other as to the timing, manner and content of any
general communication to the employees of the Company with respect to the
transaction contemplated by this Agreement.

            (b) DEFENSE OF PROCEEDINGS. In the event that any Proceeding seeking
to challenge, block or otherwise frustrate the consummation of the transactions
contemplated hereby is commenced, whether before or after the Closing, the
parties hereto agree to cooperate and use reasonable best efforts to defend
vigorously against such Proceeding.

            (c) ANTITRUST LAWS. Buyer and Seller Parties shall cooperate in
making filings under the HSR Act and shall use their best efforts to take, or
cause to be taken, all actions necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement, including using its best efforts to resolve such objections, if any,
as the Antitrust Division of the Department of Justice or the Federal Trade
Commission or state antitrust enforcement or other Governmental Entities may
assert under the antitrust laws with respect to the transactions contemplated
hereby. Buyer and Seller Parties agree to use their best efforts to make any
filings required under the HSR Act within five (5) days of the execution of this
Agreement, and agree to request early termination of the waiting period relating
to any such filing. In the event an action is instituted by any Person
challenging the transactions contemplated hereby as violative of the antitrust
laws, each of Buyer and Seller Parties shall use its best efforts to resist or
resolve such action.

      6.4. NOTIFICATION OF CERTAIN MATTERS. Seller Parties shall give prompt
notice to Buyer, and Buyer shall give prompt notice to Seller Parties, of the
occurrence or non-occurrence of any event, the occurrence or non-occurrence of
which is likely (a) to cause any representation or warranty of such party
contained in this Agreement to be untrue, inaccurate or incomplete in any
material respect at or prior to the Closing, or (b) to result in any material
failure of such party to comply with or satisfy any condition, obligation,
covenant or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this SECTION 6.4
shall not limit or otherwise affect any representations and warranties or any
conditions, obligations, covenants or agreements under this Agreement, or the
rights or remedies available hereunder to any of the parties receiving such
notice. Should any of the events for which notice is provided pursuant to this
SECTION 6.4 require a change to any of the schedules delivered by Seller
Parties, Seller Parties shall deliver an amendment to the relevant schedule

                                       43


specifying such change. If Seller Parties have made accurate supplemental
disclosure in accordance with this SECTION 6.4 and Buyer nevertheless chooses to
close the transactions contemplated by this Agreement, Buyer shall not be
entitled to claim a Breach of the relevant representation or warranty in
connection with which such supplemental disclosure was made.

      6.5. PUBLIC ANNOUNCEMENTS. No party to this Agreement shall without the
express written approval of the other parties, which approval shall not be
unreasonably withheld, issue any press release or make any general internal
announcement or otherwise make any public statement with respect to this
Agreement, the sale of the Company or the Interests, or any of the other
transactions provided for in this Agreement or any of the other Transaction
Documents; provided, however, that nothing in this SECTION 6.5 shall be deemed
to prohibit any party from making any disclosure which its counsel in good faith
deems necessary or advisable in order to satisfy such party's disclosure
obligations imposed by Law.

      6.6. CONFIDENTIAL BUSINESS INFORMATION. Seller represents and warrants
that it has provided confidential information about the business of the Company
to other prospective purchasers only pursuant to a confidentiality agreement
that is substantially similar to the Confidentiality Agreement. Seller will
maintain confidentiality about the business consistent with past practice.
Seller will request destruction or retrieve from any other prospective
purchasers of the business any confidential information provided to them, and
Seller will enforce against other prospective purchasers its rights under the
confidentiality agreements it has entered into with them.

      6.7. EXCLUSIVE DEALING; ACQUISITION PROPOSALS. After the date hereof,
Seller Parties shall not (nor shall they permit any of the Affiliates,
employees, consultants or agents of the Company to), directly or indirectly, (a)
except as contemplated by this Agreement, solicit, encourage, initiate or
participate in any negotiations or discussions with respect to any offer or
proposal to acquire all or any substantial part of the business and properties
or membership interests of the Company (including any acquisition structured as
a sale of stock, sale of assets, merger, consolidation or share exchange) (a
"COMPANY ACQUISITION"), or (b) except as contemplated by this Agreement,
disclose any information not customarily disclosed to any Person concerning the
business, operations and assets or properties of the Company, afford to any
Person access to the assets, properties, books or records of the Company or
otherwise assist or encourage any Person in connection with any of the
activities referred to in clause (a) of this sentence. Seller will not, except
as contemplated by this Agreement, (a) transfer any Interests to any other
Person, or solicit, encourage, initiate or participate in any negotiations or
discussions with respect to any offer or proposal therefore, or (b) vote the
Interests in favor of any Company Acquisition.

      6.8. PREPARATION OF CERTAIN FINANCIAL STATEMENTS. Upon execution of this
Agreement the Company shall engage the Company's accountants to perform an audit
of the Company's 2002 fiscal year financial statements. All costs and expenses
of such audit shall not be reflected on the Closing Balance Sheet and shall be
paid by Buyer whether or not the Closing occurs. After the Closing, upon the
request of Buyer and at its expense, Seller shall reasonably cooperate with and
assist Buyer and Buyer's independent public accountants (the "BUYER'S
ACCOUNTANTS") in the compilation and preparation of all financial statements and
financial statement schedules of the Company (prepared in accordance with GAAP)
and reports of the

                                       44


Company's Accountants as may be necessary for Buyer to comply in a timely manner
with SEC reporting and disclosure requirements. Seller shall use its reasonable
best efforts to deliver to Buyer's Accountants and/or the Company's Accountants
all engagement letters and management representation letters, as may be
reasonably requested by Buyer or such accountants, which shall cover such
periods from January 1, 2003 through the Closing Date. In connection with the
foregoing, Seller shall use reasonable best efforts to cause the Company's
Accountants to cooperate with and assist Buyer and Buyer's Accountants in the
preparation of the financial statements contemplated by this SECTION 6.8.

      6.9. TRANSITION. Neither Seller nor the Company will take any action that
is designed or intended to have the effect of discouraging any director,
officer, employee, consultant, agent, lessor, licensor, franchisor, customer,
supplier, Governmental Authority or other Person having a business relationship
with the Company from maintaining the same business relationships with the
Company after the Closing as it maintained with the Company prior to the
Closing. Seller will refer all customer inquiries relating to the business of
the Company to Buyer from and after the Closing.

      6.10. CERTAIN TAXES.

      All Taxes incurred in connection with the sale of the Interests pursuant
to this Agreement (including any transfer, documentary, sales, use, stamp,
registration and other similar Taxes, New York City Transfer Tax and any similar
tax imposed by any other Governmental Authority), shall be shared equally by
Buyer and Seller. Each party will, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such Taxes, and, if required
by any applicable Law or Order, and will cause its Affiliates to, join in the
execution of any such Tax Returns and other documentation.

      6.11. NON-COMPETITION; NON-INTERFERENCE.

            (a) In order to induce Buyer to purchase the Interests pursuant to
this Agreement, Seller hereby covenants and agrees that for a five (5) year
period following the Closing Date, it will not directly or indirectly in any
capacity:

                (i) own, manage, operate, control or otherwise become interested
in any Person that offers information technology consulting services to any
department or agency of the U.S. federal government;

                (ii) offer information technology consulting services to any
department or agency of the U.S. federal government, whether on behalf of itself
or others;

                (iii) enter into any agreement or arrangement with any Person
pursuant to which such Person will offer information technology consulting
services to any department or agency of the U.S. federal government;

                (iv) contact or solicit any employee, consultant, independent
contractor, or agent of the Company with the intention or effect of encouraging
such party to terminate his or her employment, engagement, agency or other
relationship, as applicable, with the Company;

                                       45


                (v) persuade or attempt to persuade any customer of the Company
not to purchase any of the products or services provided by Buyer (and any
related or successor groups); or

                (vi) engage in any practice the purpose of which is to evade the
provisions of this SECTION 6.11.

            (b) It is the intent of the parties to this Agreement that the
provisions of this SECTION 6.11 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought and that any purchaser of Seller of substantially
all of Seller's assets also agrees to be bound by the provisions of this SECTION
6.11 as a condition to any such purchase. If any particular provisions or
portions of this SECTION 6.11 shall be adjudicated to be invalid or
unenforceable, such provisions or portion thereof shall be deemed amended to the
minimum extent necessary to render such provision or portion valid and
enforceable, such amendment to apply only with respect to the operation of such
provisions or portions in the particular jurisdiction in which such adjudication
is made.

            (c) The parties acknowledge that damages and remedies at law for any
breach of this SECTION 6.11 will be inadequate and that Buyer shall be entitled
to specific performance and other equitable remedies (including and injunction)
and such other relief as a court or tribunal may deem appropriate in addition to
any other remedies Buyer may have.

      6.12. TRADEMARK LICENSE. Pursuant to the terms and conditions of a
Trademark License Agreement substantially in the form of Exhibit C, (a) the
Company shall have the royalty-free, non-terminable, exclusive right to use the
trademarks "Impact," "Impact Innovations," and "Impact Innovations Group,"
(collectively, the "LICENSED TRADEMARKS") on or in connection with the operation
and promotion of the government contracts business (involving the provision of
information technology consulting services to departments and agencies of the
U.S. federal government) currently conducted by the Company following the
Closing Date; and (b) Seller shall not license, assign or transfer the Licensed
Trademarks to a third party who competes in the government contracts business
during the term of the Trademark License Agreement.

      6.13. 280G COVENANT. Prior to the Closing Date, Seller shall submit to a
shareholder vote the right of any "disqualified individual" (as defined in
Section 280G(c) of the Code) to receive any and all payments that could be
deemed "parachute payments" under Section 280G(b) of the Code, in a manner that
satisfies the shareholder approval requirements for the small business exemption
of Section 280G(b)(5) of the Code and any regulations (including proposed
regulations) promulgated thereunder. Such vote shall establish the "disqualified
individual's" right to the payment or other compensation. In addition, before
the Closing Date, Seller shall provide adequate disclosure to the shareholders
of Seller of all material facts concerning all payments that, but for such vote,
could be deemed "parachute payments" to a "disqualified individual" under
Section 280G of the Code in a manner that satisfies Section 280G(b)(5).

      6.14. TRANSITION SERVICES. On or before the Closing, the Company and
Seller will enter into an Application Support Service Level Agreement
substantially in the form of Exhibit D and an additional Employee Benefits
Transition Services Agreement (collectively, the

                                       46


"TRANSITION SERVICES AGREEMENTS"). Such Employee Benefits Transition Services
Agreement shall require Seller to continue to provide certain employee benefit
programs and/or administrative services (not, however, including any benefits or
administrative services under or pertaining to any Pension Plan as defined under
Section 3(2) of ERISA or any other employee benefit plan qualified under
sections 401(a) or 501(a) of the Code) to the employees of the Company, for such
minimum period of time, not to extend beyond 60 calendar days from the date of
Closing, as is necessary for Buyer to establish those employee benefit plans and
employment policies for such employees as it may deem appropriate. Such Employee
Benefits Transition Services Agreement shall allocate financial responsibility
for all benefits claims (including but not limited to medical care claims)
between the Company and Seller. Seller shall retain liability for all claims
whose date of service occurs before the Closing, but which are not reported
until some time thereafter. The Company shall be financially responsible for all
claims or other costs of any sort incurred on or after the date of Closing,
regardless of the nature of such claims, regardless of the party to whom such
claims are billed or addressed, and regardless of whether such claims are part
of a series of continuing treatments. It is the further intention of the parties
that the Employee Benefits Transition Services Agreement contain valid and
enforceable indemnification provisions in favor of Seller. The parties hereby
agree to negotiate in good faith the provisions of the Employee Benefits
Transition Services Agreement.

      6.15. GSA SCHEDULE RATES. Prior to Closing, the Company will (i) submit
the revised GSA proposal, and (ii) make the appropriate adjustments to the
invoices to customers using the GSA schedule in connection with the matters
described in Item 2 of Schedule 4.24.

      6.16. CERTAIN CONTRACTS. Prior to Closing, the Company will enter into an
amendment to the existing agreement between the Company and Allied Capital
extending the existing agreement for two years.

                                    ARTICLE 7

                              CONDITIONS TO CLOSING

      7.1. CONDITIONS TO OBLIGATIONS OF SELLER PARTIES. The obligations of
Seller Parties to close the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver by Seller at or prior to the Closing of
the following conditions:

            (i) Buyer shall have performed or complied with its obligations,
covenants and agreements contained in this Agreement (considered individually
and collectively) required to be performed or complied with at or prior to the
Closing;

            (ii) The representations and warranties of Buyer contained in this
Agreement (considered individually and collectively) shall be true, correct and
complete on and as of the date hereof and on and as of the Closing Date with the
same force and effect as if made on and as of the Closing Date (provided that
representations and warranties which are confined to a specific date shall speak
only as of such date);

            (iii) Seller Parties shall have received from Buyer the deliveries
referred to in SECTION 3.3;

                                       47


            (iv) No Law or Order shall have been enacted, entered, promulgated,
issued or enforced by any Governmental Authority of competent jurisdiction which
prohibits, restrains, enjoins or restricts the consummation of the transactions
contemplated hereby; provided, however, that the parties shall use reasonable
best efforts to cause any such Law or Order to be vacated or lifted;

            (V) Buyer shall have obtained the financing on terms contemplated by
the Commitment Letter;

            (vi) The Company's and Seller's lender shall have approved the terms
of this Agreement and shall have consented, in writing, to the Company's and
Seller's execution of this Agreement; and

            (vii) The shareholders of Seller shall have approved the
transactions contemplated herein.

      7.2. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to close
the transaction contemplated hereby shall be subject to the satisfaction or
waiver by Buyer at or prior to the Closing of the following conditions:

            (i) Seller Parties shall have performed or complied with their
obligations, covenants and agreements, including restrictive covenants,
contained in this Agreement (considered individually and collectively) required
to be performed or complied with at or prior to the Closing;

            (ii) The representations and warranties of Seller Parties contained
in this Agreement (considered individually and collectively) shall be true,
correct and complete, when made and on and as of the Closing Date with the same
force and effect as if made on and as of the Closing Date (without giving effect
to any amendment(s) to Seller Parties' disclosure schedules delivered pursuant
to SECTION 6.4 hereof);

            (iii) Seller shall have obtained the Consents listed or required to
be listed on Schedule 4.8;

            (iv) Buyer shall have received the deliveries referred to in SECTION
3.2;

            (v) No Law or Order shall have been enacted, entered, promulgated,
issued or enforced by any Governmental Authority of competent jurisdiction, and
no Proceeding shall have been commenced or threatened, which prohibits,
restrains, enjoins or restricts the consummation of the transactions
contemplated hereby; provided, however, that the parties shall use reasonable
best efforts to cause any such Law or Order to be vacated or lifted;

            (vi) Any filings or notifications listed on Schedule 4.8 which are
required to be given to any Person, but which do not require Consent with
respect to the transactions contemplated hereby, shall have been given on or
before the Closing Date;

            (vii) Buyer shall have obtained the financing on terms contemplated
by the Commitment Letter, unless the failure to obtain the financing was the
result of a failure by Buyer

                                       48


to perform any covenant or condition contained therein or herein or the
inaccuracy of any representation or warranty of Buyer.

            (viii) No Material Adverse Event shall exist or shall have occurred
since the date of this Agreement.

                                    ARTICLE 8

                                   TERMINATION

      8.1. TERMINATION. This Agreement may be terminated and the transaction
contemplated hereby may be abandoned at any time prior to the Closing, as
follows:

            (a) by mutual written consent of Buyer and Seller Parties;

            (b) by Buyer or Seller, if the Closing shall not have occurred on or
before September 1, 2004 (provided that the right to terminate this Agreement
under this SECTION 8.1(B) shall not be available to any party hereto whose
failure to perform or comply with any covenant or agreement under this Agreement
has been the cause of, or resulted in, the failure of the transaction to be
consummated on or before such date);

            (c) by Buyer or Seller, if any Governmental Authority of competent
jurisdiction shall have issued a final Order restraining, enjoining or
prohibiting the transactions contemplated by this Agreement and such Order is or
shall have become final and nonappealable;

            (d) by Seller if prior to the Closing Date there shall have been a
material breach of any of the representations, warranties, covenants or
agreements of Buyer contained in this Agreement which cannot be or has not been
cured within twenty (20) days after notice thereof to Buyer; or

            (e) by Buyer if prior to the Closing Date there shall have been a
Breach of any of the representations, warranties, covenants or agreements on the
part of the Company or Seller contained in this Agreement which cannot be or has
not been cured within twenty (20) days after notice thereof to Seller.

      8.2. EFFECT OF TERMINATION. If this Agreement is terminated in accordance
with SECTION 8.1, this Agreement shall hereafter become null and void and of no
further force or effect, except that the terms and provisions of this SECTION
8.2 and the following other Sections shall survive such termination and shall
remain in full force and effect:

                  SECTION 6.5 (Public Announcements),

                  SECTION 10.3 (Notices),

                  SECTION 10.4 (Entire Agreement),

                  SECTION 10.11 (Expenses),

                                       49


                  SECTION 10.12 (Governing Law), and

                  SECTION 10.13 (Resolution of Conflicts; Arbitration).

Notwithstanding the foregoing, any termination of this Agreement shall not
relieve any party hereto from any Liability for any Breach of its
representations, warranties, covenants or agreements contained herein. The
exercise of a right of termination under this Agreement by any party hereto
shall not be an election of remedies.

                                    ARTICLE 9

                                 INDEMNIFICATION

      9.1. SURVIVAL.

            (a) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties of the parties contained in this Agreement, including the schedules
hereto, shall survive the Closing and shall continue in full force and effect
for a period of eighteen (18) months following the Closing Date.

            (b) COVENANTS AND AGREEMENTS. All of the covenants and agreements of
the parties shall survive the Closing and continue in full force and effect
forever, or otherwise in accordance with their respective terms.

            (c) TIMELY CLAIMS. No party shall have any liability (for
indemnification or otherwise) based upon any claim for indemnification arising
out of the Breach of any representation or warranty contained in this Agreement,
including the schedules hereto, or in any of the other Transaction Documents, to
be fulfilled or complied with at or before the Closing unless such party is
given notice asserting a claim with respect thereto prior to the termination of
the applicable time period set forth under SECTION 9.1(a). Any representation or
warranty as to which a claim for indemnification (including a contingent claim)
shall have been asserted during the survival period shall continue in effect
with respect to such claim until such claim shall have been finally resolved or
settled.

      9.2. TERMS OF INDEMNIFICATION. Subject to the terms and provisions
of this Agreement,

            (a) Seller Parties, jointly and severally, shall indemnify Buyer
Parties against, and shall protect, defend and hold harmless Buyer Parties from,
all Damages arising out of, relating to, or resulting from (i) any Breach of any
of Seller's or the Company's respective representations, warranties, covenants
or agreements contained in this Agreement, including the schedules hereto or in
any of the other Transaction Documents, and (ii) notwithstanding any disclosures
made in this Agreement, including the disclosure schedules hereto or in any of
the other Transaction Documents, any Damages arising from (A) the matter
described in Item 3 of Schedule 4.24 or (B) the Contract described on Schedule
4.23(vi)(d).

            (b) Buyer shall indemnify Seller against, and shall protect, defend
and hold harmless Seller from, all Damages arising out of, relating to, or
resulting from (i) any Breach of

                                       50


any of Buyer's representations, warranties, covenants or agreements contained in
this Agreement or in any of the other Transaction Documents and (ii) the Offer
and Acceptance Letters and the termination of the agreements listed as Items 1
through 4 on Schedule 4.13.

      9.3. PROCEDURES WITH RESPECT TO THIRD-PARTY CLAIMS. Promptly after the
occurrence of any claim, assertion, event, action or proceeding against the
Company or any party hereto which could give rise to a claim for indemnification
under this ARTICLE 9, the party seeking indemnification (the "INDEMNIFIED
PARTY") shall give notice to the party from whom indemnification is sought (the
"INDEMNIFYING PARTY") if it wishes to assert a claim for indemnification under
this ARTICLE 9. The failure of the Indemnified Party to timely deliver such
notice shall not reduce the liability of the Indemnifying Party except to the
extent the Indemnifying Party demonstrates that the defense of the subject claim
has been prejudiced by such failure. The Indemnifying Party shall then be
entitled to participate in such action or proceeding and, to the extent that it
shall wish, to assume the defense thereof with counsel satisfactory to such
Indemnified Party (but prior to assuming such defense the Indemnifying Party
shall have acknowledged in writing its indemnification obligation hereunder).
After notice from the Indemnifying Party to the Indemnified Party of its
election to assume the defense of a claim, the Indemnifying Party shall not be
liable to such Indemnified Party under SECTION 9.2 for any fees of other counsel
or any other expenses, in each case subsequently incurred by such Indemnified
Party in connection with the defense thereof, other than reasonable costs of
investigation. If an Indemnifying Party assumes the defense of such an action
(a) no compromise or settlement thereof may be effected by the Indemnifying
Party without the Indemnified Party's consent (which shall not be unreasonably
withheld) unless (i) there is no finding or admission of any violation of law of
any violation of the rights of any person and no effect on any other claims that
may be made against the Indemnified Party and (ii) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party and (b) the
Indemnifying Party shall have no liability with respect to any compromise or
settlement thereof effected by the Indemnified Party without its consent (which
shall not be unreasonably withheld). If notice is given to an Indemnifying Party
of the commencement of any action and it does not, within 30 days after the
Indemnifying Party's notice is given, give notice to the Indemnified Party of
its election to assume the defense thereof (and in connection therewith,
acknowledges in writing its indemnification obligation hereunder), the
Indemnifying Party shall be bound by any determination made in such action or
any compromise or settlement thereof effected by the Indemnified Party.
Notwithstanding the foregoing, if an Indemnified Party determines in good faith
that there is a reasonable probability that any action may materially and
adversely affect it or its Affiliates other than as a result of monetary
damages, such Indemnified Party may, by notice to the Indemnifying Party, assume
the exclusive right to defend, compromise or settle such action, but the
Indemnifying Party shall have no liability with respect to judgment entered in
any action so defended, or a compromise or settlement thereof entered into,
without its consent (which shall not be unreasonably withheld).

      9.4. INDEMNIFICATION CAP AND THRESHOLD.

            (a) INDEMNIFICATION CAP. The maximum aggregate liability of Seller
Parties, for claims for indemnification made pursuant to in SECTION 9.2(a) shall
be limited to an amount equal to the amount of the Indemnity Escrow remaining in
escrow at the time a claim for indemnification is made (the "INDEMNIFICATION
CAP"). The maximum aggregate liability of

                                       51


Buyer Parties for claims for indemnification made pursuant to SECTION 9.2(b)
shall be limited to an amount equal to the Indemnification Cap.

            (b) INDEMNIFICATION THRESHOLD. No Buyer Party shall be entitled to
make any claim for indemnification pursuant to SECTION 9.2(a) unless and until
the aggregate amount of Damages with respect to all such claims that may be made
by Buyer Parties pursuant to this ARTICLE 9 as a result of a Breach of any of
Seller Parties' representations, warranties, obligations, covenants or
agreements set forth in this Agreement exceeds Five Hundred Thousand Dollars
($500,000) (the "INDEMNIFICATION THRESHOLD"), after which Seller Parties shall
be liable for the full amount of such Damages, subject to the Indemnification
Cap. No Seller Party shall be entitled to make any claim for indemnification
pursuant to SECTION 9.2(b) unless and until the aggregate amount of Damages with
respect to all such claims that may be made by Seller Parties pursuant to this
ARTICLE 9 exceeds the Indemnification Threshold, after which Buyer shall be
liable for the full amount of such Damages, subject to the Indemnification Cap.
Notwithstanding anything to the contrary set forth in this Agreement, claims for
Damages pursuant to SECTION 9.2(a)(ii) hereof shall not be subject to the
Indemnification Threshold.

            (c) APPLICABILITY OF INDEMNIFICATION CAP AND THRESHOLD.
Notwithstanding anything in this ARTICLE 9 to the contrary, neither the
Indemnification Cap nor the Indemnification Threshold shall apply to or against,
and the parties shall be liable under this ARTICLE 9 for, the entirety of any
Damages resulting from, arising out of, in the nature of, or caused by any
fraudulent, willful or intentional Breach by any party of any of its
representations, warranties or covenants set forth herein.

      9.5. ADDITIONAL INDEMNIFICATION PROVISIONS.

            (a) ACCURACY AND COMPLIANCE. The right to indemnification or other
remedy based on any representations, warranties, obligations, covenants and
agreements set forth in this Agreement, including the schedules hereto, or in
any of the other Transaction Documents, will not be affected by any
investigation conducted by Buyer prior to or after the date of this Agreement.
To the extent that as a result of Buyer's investigation prior to or after the
date of this Agreement Buyer has actual knowledge of facts contrary to the
statements made in any representation, warranty, covenant or agreement of the
Company or Seller set forth herein and completes the Closing without requiring
correction or amendment of such contrary statements, Buyer shall be estopped
from asserting reliance on such contrary representation, warranty, covenant or
agreement in connection with any post-Closing claim for indemnification pursuant
to ARTICLE 9 hereof.

            (b) INDEMNIFICATION FROM THE COMPANY. Notwithstanding any term or
provision of this Agreement to the contrary, upon the Closing, the Company shall
cease to be a Seller Party and shall cease to have any indemnification
obligations as a Seller Party hereunder and shall be treated as a Buyer Party,
and Seller Parties shall have no rights of recourse, whether for contribution or
otherwise, against the Company for any payments that Seller Parties make, or are
obligated to make, under this ARTICLE 9 or any other term or provision of this
Agreement.

            (c) MATERIALITY. Once it has been determined that there has been a
Breach of a representation, warranty, covenant or agreement, for purposes of the
measure of Damages

                                       52


pursuant to this ARTICLE 9, the extent of any inaccuracy in or Breach of any
representation, warranty, covenant or agreement contained in this Agreement,
including the schedules hereto, or in any of the other Transaction Documents,
shall be determined by reading the representation, warranty, covenant or
agreement that is inaccurate or Breached as if all materiality standards
contained in such specific representation or warranty or covenant, as applicable
(i.e., qualifiers such as "material", "in all material respects" or similar
qualifiers), but not any dollar amounts or thresholds, had been deleted from
such representation, warranty, covenant or agreement in their entirety.

            (d) OTHER RECOVERIES; INSURANCE. Notwithstanding anything herein to
the contrary, no party shall be entitled to indemnification or reimbursement
under any provision of this Agreement for any amount to the extent such party or
its Affiliates has been indemnified or reimbursed for such amount under any
other provision of this Agreement, the exhibits or schedules attached hereto, or
any document executed in connection with this Agreement or otherwise.
Furthermore, in the event any Damage related to a claim by Buyer are covered by
insurance, Buyer agrees to use commercially reasonable efforts to seek recovery
under such insurance and Buyer shall not be entitled to recovery from Seller
(and shall refund amounts received up to the amount of indemnification actually
received) with respect to such damages to the extent, and only to the extent,
Buyer recovers the insurance payment specified in the policy. Further still, all
indemnification payments payable under this SECTION 9.5 shall be reduced to the
extent that such event causing Damage has a specific reserve on the Closing
Balance Sheet.

            (e) NET OF TAX EFFECT. Any calculation of Damages for purposes of
this ARTICLE 9 shall be reduced to take account of any net Tax benefit actually
realized by the Indemnified Party as a result of any such Damages. Any payment
hereunder shall initially be made without regard to this paragraph and shall be
reduced to reflect any such net Tax benefit only after the Indemnified Party has
actually realized such benefit. For purposes of this Agreement, the Indemnified
Party shall be deemed to have "actually realized" a net Tax Benefit to the
extent that, and at such time as, the amount of Taxes required to be paid by the
Indemnified Party is reduced below the amount of Taxes that it would have been
required to pay but for deductibility of such Damages. The amount of any
reduction hereunder shall be adjusted to reflect any final determination with
respect to the Indemnified Party's liability for Taxes.

            (f) MITIGATION. The parties shall take all commercially reasonable
steps (to the extent then available or possible) to mitigate all Damages upon
and after becoming aware of any event which could reasonably be expected to give
rise to such Damages.

      9.6. EXCLUSIVE REMEDY. Except with respect to claims arising out of, in
the nature of, or caused by any fraudulent, willful or intentional breach by any
party of any of its representations, warranties or covenants set forth herein,
the indemnification provided in this ARTICLE 9 shall be the sole and exclusive
remedy after the Closing Date available to the parties for breach of any of the
terms, conditions, representations, warranties or covenants contained herein or
any right, claim or action arising from the transactions contemplated by this
Agreement. Nothing contained herein, however, shall preclude a party from
seeking injunctive relief or specific performance, under circumstances where
such relief might be appropriate, provided that the moving party shall not be
entitled to ancillary relief in the nature of damages or fee awards unless
specifically so provided for herein.

                                       53


                                   ARTICLE 10

                               GENERAL PROVISIONS

      10.1. PARTIES IN INTEREST; SUCCESSORS AND ASSIGNS; NO THIRD PARTY RIGHTS.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, and, nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, title, privilege, benefit, interest,
remedy or claim of any nature whatsoever under or by reason of this Agreement,
or any term or provision hereof.

      10.2. ASSIGNMENT. This Agreement and the rights, title, privileges,
benefits, interests, remedies and obligations hereunder may not be assigned by
any party hereto, by operation of law or otherwise; provided, however, that
Buyer may (a) assign any or all of its rights, title, privileges, benefits,
interests and remedies hereunder to any one or more of its Affiliates; (b)
designate any one or more of its Affiliates to perform its obligations hereunder
(in any or all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder); and (c) assign any or all of
its rights, title, privileges, benefits, interests and remedies hereunder to and
for the benefit of any lender to Buyer or the Company for the purpose of
providing collateral security; provided further, in the event Seller sells all
or substantially all of its assets remaining after the Closing to a third party,
Seller shall condition the closing of any such sale upon Seller assigning, and
such purchaser assuming, the obligations of Seller contained in SECTIONS 6.11
AND 6.14, and such assignment and assumption shall not require the prior consent
of Buyer as described in this SECTION 10.2.

      10.3. NOTICES. All notices, requests, claims, instructions and other
communications required or permitted under this Agreement shall be in writing
and shall be (a) delivered personally, (b) sent by national overnight courier,
with all costs and expenses therefor prepaid (c) sent by certified mail, postage
prepaid, return receipt requested, or (d) by facsimile transmission, with a
confirmation sent by one of the foregoing methods to the address of such party
as set forth below:

                  If to Buyer or to the Company after the Closing:

                  Dynamics Research Corporation
                  60 Frontage Road
                  Andover, MA 01810
                  Attn: General Counsel
                  Facsimile: (978) 474-9204

                  with a required copy (which copy shall not constitute notice
                  hereunder) to:

                  Nixon Peabody LLP
                  100 Summer Street
                  Boston, MA 02110
                  Attn: Michael L. Manning
                  Facsimile: (617) 947-1797

                                       54


                  If to the Company or to Seller before Closing:

                  J3 Technology Services Corp.
                  2500 Northwinds Parkway
                  Suite 200
                  Atlanta, GA 30004
                  Attn: James W. Childs
                  Facsimile: (678) 624-2505

                  with a required copy (which copy shall not constitute
                  notice hereunder) to:

                  Alston & Bird LLP
                  One Atlantic Center
                  1201 West Peachtree Street
                  Atlanta, Georgia 30309-3424
                  Attn: Teri Lynn McMahon
                  Facsimile: (404) 253-8190

                  with a required additional copy (which shall not
                  constitute notice hereunder) to:

                  CGW Southeast Partners
                  Twelve Piedmont Center, Suite 210
                  Atlanta, Georgia 30305
                  Attention: Michael Long
                  Facsimile: (404) 816-3258

                  If to Seller at or after Closing:

                  J3 Technology Services Corp.
                  2500 Northwinds Parkway
                  Suite 200
                  Atlanta, GA 30004
                  Attn: James W. Childs
                  Facsimile: (678) 624-2505

                  with a required copy (which copy shall not constitute
                  notice hereunder) to:

                  Alston & Bird LLP
                  One Atlantic Center
                  1201 West Peachtree Street
                  Atlanta, Georgia 30309-3424
                  Attn: Teri Lynn McMahon
                  Facsimile: (404) 253-8190

                                       55


                  with a required additional copy (which shall not
                  constitute notice hereunder) to:

                  CGW Southeast Partners
                  Twelve Piedmont Center, Suite 210
                  Atlanta, Georgia 30305
                  Attention: Michael Long
                  Facsimile: (404) 816-3258

or to such other address or facsimile number as such party may have furnished to
the other parties by notice in accordance with this SECTION 10.3.

      10.4. ENTIRE AGREEMENT. This Agreement (including the schedules hereto,
which are incorporated into this Agreement by this reference and made a part
hereof), together with the Confidentiality Agreement, and each of the other
Transaction Documents, constitutes the entire agreement among the parties with
respect to the subject matter hereof and thereof, and supersedes all prior or
contemporaneous agreements and understandings, whether written or oral, among
the parties hereto, or any of them, with respect to the subject matter hereof
and thereof.

      10.5. COUNTERPARTS AND FACSIMILE SIGNATURE. This Agreement may be executed
in any number of counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original, and
all of which, taken together, shall be deemed to constitute one and the same
instrument. This Agreement may be executed by facsimile signature.

      10.6. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced under any Law, Order or public
policy, all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.

      10.7. AMENDMENT. This Agreement may not be amended or modified except by a
written instrument, specifically referring to this Agreement and signed by each
of the parties hereto.

      10.8. WAIVER. Neither the failure nor any delay of any party to this
Agreement to assert or exercise any right, power, privilege or remedy under this
Agreement, any of the other Transaction Documents or otherwise, or to enforce
any term or provision hereof or thereof, shall constitute a waiver of such
right, power, privilege or remedy, and no single or partial exercise of any such
right, power, privilege or remedy shall preclude any other or further exercise
of such right, power, privilege or remedy or the exercise of any other right,
power, privilege or remedy. The rights, powers, privileges and remedies of the
parties to this Agreement are cumulative and not alternative. Any waiver of any
right, power, privilege or remedy hereunder or under any of the Transaction
Documents shall be valid and binding only if set forth in a written instrument
specifically referring to this Agreement and signed by the party or parties
giving such waiver,

                                       56


and shall be effective only in the specific instance and for the specific
purpose for which it is given. At any time prior to the Closing Date, Buyer with
respect to Seller Parties and Seller with respect to Buyer may, subject to and
in accordance with the provisions of this SECTION 10.8, (a) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any of the other Transaction Documents; and (b) waive compliance with any
of the conditions, covenants or agreements contained in this Agreement or in any
of the other Transaction Documents.

      10.9. FURTHER ASSURANCES. Each party shall do and perform or cause to be
done and performed all further acts and things and shall execute and deliver all
further agreements, certificates, instruments and documents as any other party
may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

      10.10. LEGAL COUNSEL. Each of the parties to this Agreement acknowledges
and represents that it has been represented by its own legal counsel in
connection with the negotiations and preparation of this Agreement and each of
the other Transaction Documents to which it is a party, and in connection with
the transactions contemplated hereby and thereby, with the opportunity to seek
advice as to its legal rights from such counsel. Each party hereto further
represents that it is being independently advised as to the tax consequences of
such transactions.

      10.11. EXPENSES. Except as set forth in SECTION 6.8, each of Buyer and
Seller Parties shall bear its own fees, costs and expenses incurred in
connection with this Agreement (including the preparation, negotiation and
performance hereof) and the transactions contemplated hereby (including fees and
disbursements of attorneys, accountants, agents, representatives and financial
and other advisors). Seller will pay all fees, costs and expenses of Seller's
Investment Banker. Buyer will pay one-half and Seller will pay one-half of the
HSR Act filing fee. The Company may bear such fees, costs and expenses of Seller
through the Closing Date, provided, however, that all such fees, costs and
expenses shall either be paid in full by the Company before the Closing Date or
reflected on the Financial Statements as current Liabilities, in which event
Buyer will cause the Company to pay such fees, costs and expenses promptly after
the Closing Date.

      10.12. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the Laws of the State of New York without regard to any
conflict of laws principles that would cause the application of the Laws of any
other jurisdiction.

      10.13. RESOLUTION OF CONFLICTS; ARBITRATION.

            (a) In the event of any dispute among the parties in connection with
this Agreement, including without limitation, disputes over a claim pursuant to
SECTION 9.2, disputes involving compliance with this Agreement, claims of fraud
or other claims arising out of the interpretation, construction, validity or
enforcement of this Agreement (the "CLAIMS"), Seller and Buyer shall attempt in
good faith to agree upon the rights of the respective parties with respect to
each of such claims. If Seller and Buyer should so agree, a memorandum setting
forth such agreement shall be prepared and signed by both parties.

                                       57


            (b) If no such agreement can be reached after good faith negotiation
(or in any event after sixty (60) days from the date of a notice setting forth
such dispute) resolving the Claims, the Claims shall be resolved by arbitration
unless the amount of the damage or loss is at issue in pending litigation with a
third party, in which event arbitration shall not be commenced until such amount
is ascertained or both parties agree to arbitration; and in either such event
the matter shall be settled by arbitration. The board of arbitration shall be
composed of three arbitrators (one to be chosen by Buyer, one to be chosen by
Seller and one to be chosen by the first two chosen arbitrators or in accordance
with the rules of the American Arbitration Association then existing if the
first two chosen arbitrators should fail to choose a third arbitrator within
thirty (30) days of their appointment). All three arbitrators shall be neutral
arbitrators. The arbitrators shall set a limited time period and establish
procedures designed to reduce the cost and time for discovery while allowing the
parties an opportunity, adequate in the sole judgment of the arbitrator, to
discover relevant information from the opposing parties about the subject matter
of the dispute, provided, however, that pre-hearing discovery shall be limited
to exchange or production of documents and other written information unless good
cause can be shown to allow the taking of depositions. If good cause is
demonstrated, the arbitrators shall determine the number of depositions that may
be taken. The arbitrators shall rule upon motions to compel or limit discovery
and shall have the authority to impose sanctions, including attorneys' fees and
costs, to the same extent as a court of law or equity, should the arbitrator
determine that discovery was sought without substantial justification or that
discovery was refused or objected to without substantial justification. The
decision of the arbitrators on the Claims shall be binding and conclusive upon
the parties to this Agreement. Such decision shall be written and shall be
supported by written findings of fact and conclusions which shall set forth the
award, judgment, decree or order awarded by the arbitrator. The arbitrators
shall not be empowered to award punitive damages or to modify any term or
provision of this Agreement.

            (c) Judgment upon any award rendered by the arbitrator may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Washington, DC under the commercial arbitration rules then in effect of the
American Arbitration Association, but without administration by the American
Arbitration Association. The arbitrators are empowered to make an award which
orders one of the parties to pay the attorneys' fees and expenses of the other
party, including the fees of the arbitrators.

            [The remainder of this page is intentionally left blank.]

                                       58


      IN WITNESS WHEREOF, the parties hereto have duly caused this Equity
Purchase Agreement to be executed, as an instrument under seal, as of the date
first above written.

                                  Buyer:

                                  DYNAMICS RESEARCH CORPORATION

                                  Signature:     _______________________________

                                  Printed Name:  _______________________________

                                  Title:         _______________________________

                                  Seller:

                                  J3 TECHNOLOGY SERVICES CORP.

                                  Signature:     _______________________________

                                  Printed Name:  _______________________________

                                  Title:         _______________________________

                                  The Company:

                                  IMPACT INNOVATIONS GROUP LLC

                                  Signature:     _______________________________

                                  Printed Name:  _______________________________

                                  Title:         _______________________________

                   Signature Page to Equity Purchase Agreement


Exhibits and Schedules to the Equity Purchase Agreement as listed in the Table
of Contents listed below have been omitted pursuant to Item 601(b)(2) of
Regulation S-K which the Registrant agrees to furnish supplementally to the
Commission upon request. The Registrant reserves the right to seek confidential
treatment of portions or such Schedules pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, and Rule 190 under the Commission's
Rules of Practice.

                      
Exhibit A                Escrow Agreement
                         Schedule A - Fee Schedule
Exhibit B                Confidentiality and Non-Solicitation Agreement
Exhibit C                Trademark License Agreement
Exhibit D                Transition Services Agreement
Schedule 1.1             Offers and Acceptance Letters
Schedule 2.5             Selected Accounting Firms
Schedule 4.1             Jurisdictions
Schedule 4.3             Capitalization
Schedule 4.7             Seller Title Exceptions
Schedule 4.8             No Violation or Conflicts; Consents
Schedule 4.13            Absence of Certain Changes
Schedule 4.15            Litigation
Schedule 4.16(b)         Leased Real Property
Schedule 4.17            Tangible Personal Property
Schedule 4.18(a)         Intellectual Property
Schedule 4.19            Accounts Receivable
Schedule 4.20            Accounts Payable
Schedule 4.21            Liens
Schedule 4.22            Insurance
Schedule 4.23            Material Contracts
Schedule 4.24            Government Contracts and Government Bids
Schedule 4.25            Related Party Transactions
Schedule 4.26            Customers
Schedule 4.27            Employees and Consultants
Schedule 4.28            Employee Litigation
Schedule 4.29(a)         Employee Benefit Plans
Schedule 4.29(c)         Plans That Cannot Be Terminated Within 30 Days
Schedule 4.29(e)         Effect of Transaction
Schedule 4.30(c)         Tax Matters
Schedule 4.32            Banks; Powers of Attorney
Schedule 4.33            Brokers
Schedule 6.2(b)          Customer Visits

EX-10.1

                                                                    Exhibit 10.1

                                     SECOND

                              AMENDED AND RESTATED

                                 LOAN AGREEMENT

                                  BY AND AMONG

                          DYNAMICS RESEARCH CORPORATION
                          DRC INTERNATIONAL CORPORATION
                           H.J. FORD ASSOCIATES, INC.
                              ANDRULIS CORPORATION
                          IMPACT INNOVATIONS GROUP LLC
                                as the Borrowers,

                                       and

                            THE LENDERS PARTY HERETO

                                       and

                         BROWN BROTHERS HARRIMAN & CO.,
                             as Administrative Agent
                                       and
                                 BANKNORTH, N.A.
                             as Documentation Agent
                                       and
                          KEYBANK NATIONAL ASSOCIATION
                             as Co-Syndication Agent
                                       and
                 FLEET NATIONAL BANK, a Bank of America company
                             as Co-Syndication Agent

                             as of September 1, 2004



                                TABLE OF CONTENTS

                                                                                                           
ARTICLE 1 - DEFINITIONS....................................................................................    2

ARTICLE 2 - AGENTED BORROWINGS.............................................................................   17

   2-1.     Designation of  Agent Borrower.................................................................   17
   2-2.     Operation of Loan Arrangement..................................................................   17
   2-3.     Loans Directly to Borrower.....................................................................   18
   2-4.     Continuation of Authority of Lead Borrower.....................................................   18
   2-5.     Concerning Joint and Several Liability of the Borrowers........................................   19
   2-6.     Indemnification................................................................................   21

ARTICLE 3 - THE REVOLVING CREDIT/LIBOR PROVISIONS..........................................................   21

   3-1.     Establishment of Revolving Credit..............................................................   21
   3-2.     Reductions of Commitment.......................................................................   22
   3-3.     Advances.......................................................................................   22
   3-4.     Risks of Value of Accounts and Inventory.......................................................   22
   3-5.     Procedures Under Revolving Credit..............................................................   22
   3-6.     The Loan Account...............................................................................   25
   3-7.     The Revolving Credit Note......................................................................   26
   3-8.     Payment of Loan Account........................................................................   26
   3-9.     Interest.......................................................................................   26
   3-10.    Duration of Interest Periods...................................................................   26
   3-11.    Changed Circumstances..........................................................................   27
   3-12.    Payments and Prepayments.......................................................................   28
   3-13.    Fees...........................................................................................   29
   3-14.    Fees For L/C's.................................................................................   29
   3-15.    Effect of Honor of L/C's.......................................................................   30
   3-16.    Additional Provisions Relating to L/C's........................................................   30
   3-17.    Indemnification................................................................................   33
   3-18.    Computation of Interest and Fees...............................................................   34
   3-19.    Overdue Payments...............................................................................   34
   3-20.    Automatic Payment..............................................................................   34
   3-21.    Additional Costs, Etc..........................................................................   34
   3-22.    Capital Adequacy...............................................................................   36
   3-23.    Lenders' Commitments...........................................................................   36
   3-24.    Replacement Lenders............................................................................   36

ARTICLE 4 - THE TERM LOAN AND THE ACQUISITION TERM LOAN....................................................   37

   4-1.     The Term Loan..................................................................................   37
   4-2.     The Acquisition Term Loan......................................................................   37
   4-3.     Interest Payments on Term Loan and the Acquisition Term Loan...................................   37
   4-4.     Principal Payments on the Term Loan and the Acquisition Term Loan..............................   38
   4-5.     Term Loan Advances.............................................................................   40
   4-6.     Administrative Agent's Records.................................................................   40
   4-7.     Interest Rate Protection.......................................................................   40

ARTICLE 5 - COLLATERAL SECURITY AND GUARANTIES.............................................................   41



                                      (i)


                                                                                                           
   5-1.     Security of Borrowers..........................................................................   41
   5-2.     Assignment of Claims Compliance Event..........................................................   41
   5-3.     Collateral Release Event.......................................................................   42

ARTICLE 6 - CONDITIONS PRECEDENT...........................................................................   43

   6-1.     Corporate Due Diligence........................................................................   43
   6-2.     Opinion........................................................................................   44
   6-3.     Officers' Certificates.........................................................................   44
   6-4.     Guaranties.....................................................................................   44
   6-5.     Collateral Interests...........................................................................   44
   6-6.     Perfection Certificates and UCC Search Results.................................................   44
   6-7.     Consents and Approvals.........................................................................   44
   6-8.     All Fees and Expenses Paid.....................................................................   45
   6-9.     Lockbox........................................................................................   45
   6-10.    Additional Documents...........................................................................   45
   6-11.    Consummation of Impact Acquisition.............................................................   45
   6-12.    Evidence of Dissolution of Subsidiaries........................................................   45
   6-13.    No Defaults under Applicable law or Material Agreements........................................   45
   6-14.    No Litigation..................................................................................   45
   6-15.    Representations and Warranties.................................................................   45
   6-16.    No Suspension Event............................................................................   45
   6-17.    No Adverse Change..............................................................................   46

ARTICLE 7 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS..............................................   46

   7-1.     Payment and Performance of Liabilities.........................................................   46
   7-2.     Due Organization - Corporate Authorization - No Conflicts......................................   46
   7-3.     Maintain Accounts..............................................................................   47
   7-4.     Trade Names....................................................................................   47
   7-5.     Locations......................................................................................   48
   7-6.     Title to Collateral............................................................................   48
   7-7.     Indebtedness...................................................................................   49
   7-8.     Insurance Policies.............................................................................   50
   7-9.     Licenses.......................................................................................   51
   7-10.    Leases.........................................................................................   51
   7-11.    Requirements of Law............................................................................   52
   7-12.    Maintain Properties............................................................................   52
   7-13.    Pay Taxes......................................................................................   52
   7-14.    No Margin Stock................................................................................   53
   7-15.    ERISA..........................................................................................   53
   7-16.    Hazardous Materials............................................................................   54
   7-17.    Litigation.....................................................................................   54
   7-18.    Dividends, etc.................................................................................   54
   7-19.    Guarantees and Investments.....................................................................   55
   7-20.    New Leases.....................................................................................   56
   7-21.    Mergers and Consolidations.....................................................................   57
   7-22.    Sale of Collateral.............................................................................   57
   7-23.    Protection of Collateral.......................................................................   58



                                      (ii)


                                                                                                           
   7-24.    Line of Business...............................................................................   58
   7-25.    Affiliate Transactions.........................................................................   58
   7-26.    Additional Assurances..........................................................................   59
   7-27.    Adequacy of Disclosure.........................................................................   59
   7-28.    Government Contracts...........................................................................   59
   7-29.    Capital Expenditures...........................................................................   60
   7-30.    Other Covenants................................................................................   60

ARTICLE 8 - INTENTIONALLY OMITTED..........................................................................   60

ARTICLE 9 - AMENDED AND RESTATED LOAN AGREEMENT............................................................   60

ARTICLE 10 - AGENTS AS BORROWER'S ATTORNEY-IN-FACT.........................................................   60

   10-1.    Appointment as Attorney-In-Fact................................................................   60
   10-2.    No Obligation to Act...........................................................................   61
   10-3.    Collateral Release Event.......................................................................   61

ARTICLE 11 - FINANCIAL AND OTHER REPORTING REQUIREMENTS/ FINANCIAL COVENANTS...............................   61

   11-1.    Maintain Records...............................................................................   61
   11-2.    Access to Records..............................................................................   62
   11-3.    Prompt Notice to Lender........................................................................   62
   11-4.    Financial Statements, Certificates and Information.............................................   63
   11-5.    Additional Financial Information...............................................................   65
   11-6.    Audits and Appraisals..........................................................................   65
   11-7.    Consolidated Operating Cash Flow to Total Debt Service.........................................   66
   11-8.    Consolidated Total Net Worth...................................................................   66
   11-9.    Leverage Ratio.................................................................................   66
   11-10.   Net Profit.....................................................................................   66

ARTICLE 12 - EVENTS OF DEFAULT.............................................................................   66

   12-1.    Failure to Pay.................................................................................   66
   12-2.    Failure to Make Other Payments.................................................................   67
   12-3.    Failure to Perform Certain Liabilities.........................................................   67
   12-4.    Failure to Perform Other Liabilities...........................................................   67
   12-5.    Misrepresentation..............................................................................   67
   12-6.    Default of Other Debt..........................................................................   67
   12-7.    Intentionally Omitted..........................................................................   68
   12-8.    Business Failure...............................................................................   68
   12-9.    Judgment.......................................................................................   68
   12-10.   Restraint of Business..........................................................................   69
   12-11.   Material Adverse Change........................................................................   69
   12-12.   Intentionally Omitted..........................................................................   69
   12-13.   Change in Ownership............................................................................   69
   12-14.   Casualty Loss..................................................................................   69
   12-15.   Material Agreement.............................................................................   69
   12-16.   Termination of Existence.......................................................................   69
   12-17.   Termination of Guaranty........................................................................   69



                                      (iii)


                                                                                                           
   12-18.   Challenge to Loan Documents....................................................................   70
   12-19.   Indictment - Forfeiture........................................................................   70

ARTICLE 13 - RIGHTS AND REMEDIES UPON DEFAULT..............................................................   70

   13-1.    Termination of Commitments.....................................................................   70
   13-2.    Rights and Remedies............................................................................   71
   13-3.    Distribution of  Collateral Proceeds...........................................................   72

ARTICLE 14 - NOTICES.......................................................................................   72

   14-1.    Notice Addresses...............................................................................   72
   14-2.    Notice Given...................................................................................   73

ARTICLE 15 - TERM OF AGREEMENT.............................................................................   74

   15-1.    Termination of Revolving Credit................................................................   74
   15-2.    Effect of Termination..........................................................................   74

ARTICLE 16 - GENERAL.......................................................................................   74

   16-1.    Successors and Assigns.........................................................................   74
   16-2.    Severability...................................................................................   74
   16-3.    Amendments; Course of Dealing..................................................................   74
   16-4.    Intentionally Omitted..........................................................................   75
   16-5.    Costs and Expenses.............................................................................   75
   16-6.    Copies and Facsimiles..........................................................................   75
   16-7.    Massachusetts Law..............................................................................   75
   16-8.    Consent to Jurisdiction........................................................................   76
   16-9.    Indemnification................................................................................   76
   16-10.   Rules of Construction..........................................................................   77
   16-11.   Intent.........................................................................................   78
   16-12.   Setoff.........................................................................................   78
   16-13.   Maximum Interest Rate..........................................................................   78
   16-14.   Waivers........................................................................................   79
   16-15.   Payments; Application..........................................................................   79
   16-16.   Receipt of Agreement...........................................................................   80

ARTICLE 17 - THE AGENT.....................................................................................   80

   17-1.    Authorization; Non-Reliance by Lenders; Reliance by Administrative Agent; Dispute Resolution...   80
   17-2.    Employees and Agents...........................................................................   81
   17-3.    No Liability...................................................................................   82
   17-4.    No Representations.............................................................................   82
   17-5.    Funding Procedures; Payments...................................................................   82
   17-6.    Holders of Notes...............................................................................   84
   17-7.    Indemnity......................................................................................   84
   17-8.    Administrative Agent as Lender; Limitation on other Agents' Liability..........................   85
   17-9.    Resignation....................................................................................   85
   17-10.   Notification of Suspension Events and Events of Default; Distributions of Notices and Documents
     by Administrative Agent...............................................................................   85



                                      (iv)


                                                                                                           
   17-11.   Duties in the Case of Enforcement..............................................................   86
   17-12.   Delinquent Lender..............................................................................   87
   17-13.   Assignment and Participation...................................................................   87
   17-14.   Pledge to Federal Reserve......................................................................   90
   17-15.   Consent or Approval............................................................................   90
   17-16.   Treatment of Confidential Information..........................................................   90
   17-17.   Consents, Amendments, Waivers, etc.............................................................   91
   17-18.   U.S. Patriot Act...............................................................................   93
   17-19.   Foreign Asset Control Regulations..............................................................   93



                                      (v)


SECOND AMENDED AND RESTATED LOAN AGREEMENT

                                             As of September 1, 2004

      THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT (hereinafter, the
"AGREEMENT") is made by and among

                  Brown Brothers Harriman & Co., (hereinafter, the
      "ADMINISTRATIVE AGENT"), a general partnership organized under the laws of
      the State of New York with offices at 40 Water Street, Boston,
      Massachusetts 02109

                  and

                  Banknorth, N.A., (hereinafter, the "DOCUMENTATION AGENT") a
      national banking association with offices at 7 New England Executive Park,
      Burlington, Massachusetts 01803

                  and

                  KeyBank National Association, (hereinafter, a "CO-SYNDICATION
      AGENT"), a Michigan corporation with offices at 127 Public Square,
      Cleveland, Ohio 44114, and

                  Fleet National Bank, a Bank of America company, (hereinafter,
      a "CO-SYNDICATION Agent"), national banking association with offices at
      100 Federal Street, Boston, Massachusetts 02110,

as Agents on behalf of Brown Brothers Harriman & Co., Banknorth, N.A., Key
Corporate Capital Inc., Fleet National Bank, a Bank of America company, and the
other financial institutions which may hereafter become parties to this
Agreement (each such party a "LENDER" and collectively the "LENDERS")

                  and

                  Dynamics Research Corporation (hereinafter, the "LEAD
      BORROWER"), a Massachusetts corporation, with its principal executive
      offices at 60 Frontage Road, Andover, Massachusetts, as agent for itself
      and each of

                  DRC International Corporation ("INTERNATIONAL"), a
      Massachusetts corporation with its principal executive offices at 60
      Frontage Road, Andover, Massachusetts;

                  H.J. Ford Associates, Inc. ("H.J. FORD"), a Delaware
      corporation with its principal executive offices at 60 Frontage Road,
      Andover, Massachusetts;

                                      -1-


                  Andrulis Corporation ("ANDRULIS"), a Delaware corporation with
      its principal executive offices at 60 Frontage Road, Andover,
      Massachusetts; and

                  Impact Innovations LLC ("IMPACT"), a Delaware limited
      liability company with its principal executive offices at 60 Frontage
      Road, Andover, Massachusetts;

      (Each of the Lead Borrower, International, H.J. Ford, Andrulis and Impact
      being sometimes hereinafter referred to individually as a "BORROWER" and
      collectively as the "BORROWERS")

in consideration of the mutual covenants contained herein and benefits to be
derived herefrom.

                                   WITNESSETH:

ARTICLE 1- DEFINITIONS.

      As herein used, the following terms have the following meanings or are
defined in the section of this Agreement so indicated:

      "ACCOUNTS": include, without limitation, "accounts" as defined in the UCC,
            and also all: accounts, accounts receivable, credit card
            receivables, notes, drafts, acceptances, and other forms of
            obligations and receivables and rights to payment for credit
            extended and for goods sold or leased, or services rendered, whether
            or not yet earned by performance; all "contract rights" as formerly
            defined in the UCC; all Inventory which gave rise thereto, and all
            rights associated with such Inventory, including the right of
            stoppage in transit; all reclaimed, returned, rejected or
            repossessed Inventory (if any) the sale of which gave rise to any
            Account.

      "ACCOUNT DEBTOR": has the meaning given that term in the UCC.

      "ACQUISITION DOCUMENTATION": means those documents, instruments and
            agreements which evidence the terms and conditions of the Impact
            Acquisition, including, without limitation, that certain Equity
            Purchase Agreement dated as of August 2, 2004, by and among the Lead
            Borrower, Impact and J3 Technology Services Corp.

      "ACQUISITION TERM LOAN": is defined in Section 4-2.

      "ACQUISITION TERM NOTE": is defined in Section 4-2.

      "ADMINISTRATIVE AGENT'S RIGHTS AND REMEDIES": is defined in Section 13-2.

      "AFFECTED LENDER": is defined in Section 3-24.

      "AFFILIATE": as applied to any Person, a spouse of such Person, any
            relative (by blood, adoption or marriage) of such Person within the
            third degree, any managing member, director or officer of such
            Person, any corporation, association, firm or

                                      -2-


            other entity of which such Person is a managing member, director or
            officer and any other Person directly or indirectly controlling,
            controlled by or under direct or indirect common Control with such
            Person.

      "AGENTS": collectively, the Documentation Agent, the Administrative Agent,
            and the Syndication Agent.

      "ANNUAL FEE": is defined in Section 3-13(c).

      "ASSIGNMENT AND ACCEPTANCE": is defined in Section 17-13(a).

      "ASSIGNMENT OF CLAIMS ACT": means, 31 U.S.C., Section 3727 et seq., and
            all rules and regulations promulgated in connection therewith, all
            as amended from time to time.

      "ASSIGNMENT OF CLAIMS COMPLIANCE EVENT": is defined in Section 5-2.

      "AVAILABILITY": is defined in Section 3-1(b).

      "BANKRUPTCY CODE": Title 11, U.S.C., as amended from time to time.

      "BASE RATE": shall mean, from time to time, the higher of (a) the "base
            rate" announced from time to time by the Administrative Agent, or
            (b) the Federal Funds Effective Rate plus one-half (.50%) percent
            per annum. Any change in such Base Rate shall be effective, for
            purposes of the calculation of interest due hereunder, when made
            effective generally by the Administrative Agent, notice of which the
            Administrative Agent shall endeavor to promptly provide to the Lead
            Borrower.

      "BASE RATE MARGIN": see Pricing Grid (as defined herein).

      "BASE MARGIN LOAN": any Revolving Credit Loan or any portion of the Term
            Loan or any portion of the Acquisition Term Loan bearing interest at
            the Base Rate.

      "BORROWERS": is defined in the Preamble.

      "BUSINESS DAY": any day other than (a) a Saturday or Sunday; (b) a day on
            which the Administrative Agent is not open to the general public to
            conduct business; or (c) a day on which banks in Boston,
            Massachusetts generally are not open to the general public for the
            purpose of conducting commercial banking business.

      "CAPITAL EXPENDITURES": any payment made directly or indirectly by any
            Borrower or any of their respective Subsidiaries for the purpose of
            acquiring or constructing fixed assets, real property or equipment
            which in accordance with GAAP would be added as a debit to the
            Consolidated fixed asset account of the Lead Borrower and its
            Subsidiaries, including without limitation amounts paid or payable
            under any conditional sale or other title retention agreement or
            under any lease or other periodic payment arrangement which is of
            such a nature that payment obligations of a borrower thereunder
            would be required by GAAP to be capitalized and

                                      -3-


            shown as liabilities on the Consolidated balance sheet of the Lead
            Borrower and its Subsidiaries.

      "CAPITAL LEASE": any lease which should be capitalized in accordance with
            GAAP.

      "CLOSING DATE": September 1, 2004.

      "COLLATERAL": is defined in Section 5-1(a).

      "COLLATERAL INTEREST": any interest in property to secure an obligation,
            including, without limitation, a security interest, mortgage, and
            deed of trust.

      "COLLATERAL RELEASE EVENT": is defined in Section 5-3.

      "COMMITMENT": as to each Lender the amount of the Revolving Credit, the
            Term Loan and the Acquisition Term Loan set forth on Exhibit 1.

      "COMMITMENT PERCENTAGE": as to each Lender the percentage of the Revolving
            Credit, the Term Loan, and the Acquisition Term Loan set forth on
            Exhibit 1.

      "COMPLIANCE CERTIFICATE": see Exhibit 11-4(c).

      "CONFIDENTIAL INFORMATION": is defined in Section 17-16.

      "CONSOLIDATED": with reference to any term herein, shall mean that term as
            applied to the accounts of the Lead Borrower and its Subsidiaries,
            consolidated in accordance with GAAP.

      "CONSOLIDATED OPERATING CASH FLOW": shall mean, the sum of (i)
            Consolidated Net Income before taxes, plus (ii) Consolidated
            Interest Expense, plus (iii) depreciation and amortization deducted
            in the calculation of Consolidated Net Income, minus (iv) income
            taxes paid in cash (net of any tax refunds actually received in
            cash) by the Lead Borrower and its Subsidiaries, minus (v) Capital
            Expenditures not funded by interest bearing Indebtedness, all as
            determined in accordance with GAAP.

      "CONSOLIDATED TOTAL FUNDED INDEBTEDNESS": means as of the date of
            calculation, the total outstanding Indebtedness under the Revolving
            Credit Loan, the Term Loan and the Acquisition Term Loan.

      "CONSOLIDATED TOTAL NET WORTH": shall mean the difference between Total
            Assets of the Lead Borrower and its Subsidiaries and Total
            Liabilities of the Lead Borrower and its Subsidiaries (in each
            instance, exclusive of pension asset gains or losses), plus all
            Subordinated Debt less the sum of:

                        (a) the value of minority equity interests of the Lead
                        Borrower and its Subsidiaries in unconsolidated,
                        affiliated entities; and

                                      -4-


                        (b) the aggregate amount of all loans made by the Lead
                        Borrower and its Subsidiaries to any officer, employee
                        or shareholder thereof.

      "CONTROL": Person(s) shall be deemed to Control another Person if such
            Person(s) directly or indirectly possess the power to direct or
            cause the direction of the management and policies of such other
            Person, whether through ownership of voting securities, by contract,
            or otherwise.

      "CONVERT, CONVERSION AND CONVERTED": the conversion of a Loan from one
            type to Loans of another type.

      "COSTS OF COLLECTION": includes, without limitation, all reasonable
            attorneys' fees and reasonable out-of-pocket expenses incurred by
            the Administrative Agent' or the Lenders' attorneys, and all
            reasonable out-of-pocket costs incurred by the Administrative Agent
            or any Lender in the administration of the Liabilities and/or the
            Loan Documents, including, without limitation, reasonable
            out-of-pocket costs and expenses associated with travel on behalf of
            the Administrative Agent or any Lender, which costs and expenses are
            directly or indirectly related to or in respect of the
            Administrative Agent's or any Lenders': negotiation, documentation,
            and amendment of any Loan Document; or efforts to preserve, protect,
            collect, or enforce the Liabilities, and/or the Administrative
            Agent' Rights and Remedies and/or any of the Lenders' rights and
            remedies against or in respect of any guarantor or other person
            liable in respect of the Liabilities (whether or not suit is
            instituted in connection with such efforts). The Costs of Collection
            are Liabilities and, at the Lenders' option and after written notice
            to the Lead Borrower, may bear interest at the rate which the
            Lenders may charge the Borrowers hereunder as if such had been lent,
            advanced, and credited by the Lenders to, or for the benefit of, the
            Borrowers.

      "DELINQUENT LENDER": is defined in Section 17-12.

      "DOCUMENTS OF TITLE": has the meaning given that term in the UCC.

      "EBITDA":for any period, the Consolidated Net Income of the Lead Borrower
            and its Subsidiaries for such period adjusted by adding back thereto
            amounts deducted in computing such Consolidated Net Income in
            respect of each of (a) Consolidated Interest Expense, (b) taxes in
            respect of income and profits of the Lead Borrower and its
            Subsidiaries, and (c) depreciation and amortization of the Lead
            Borrower and its Subsidiaries, as determined in accordance with
            GAAP.

      "ELIGIBLE ASSIGNEE": any of (a) a commercial bank, life insurance company
            or other entity organized under the laws of the United States, or
            any State thereof or the District of Columbia, and having total
            assets in excess of $1,000,000,000; and (b) a savings and loan
            association, savings bank or other entity organized under the laws
            of the United States, or any State thereof or the District of
            Columbia, and having a net worth of at least $100,000,000,
            calculated in accordance with generally accepted accounting
            principles.

                                      -5-


      "EMPLOYEE BENEFIT PLAN": as defined in ERISA.

      "ENCUMBRANCE": each of the following:

                  (a) any security interest, mortgage, pledge, hypothecation,
            lien, attachment, or charge of any kind (including any agreement to
            give any of the foregoing); the interest of a lessor under a Capital
            Lease; conditional sale or other title retention agreement; sale of
            accounts receivable or chattel paper; or other arrangement pursuant
            to which any Person is entitled to any preference or priority with
            respect to the property or assets of another Person or the income or
            profits of such other Person or which constitutes an interest in
            property to secure an obligation; each of the foregoing whether
            consensual or non-consensual and whether arising by way of
            agreement, operation of law, legal process or otherwise; and

                  (b) the filing of any financing statement under the UCC or
            comparable law of any jurisdiction.

      "ENVIRONMENTAL LAWS": each of the following: (a) any federal, state, local
            or municipal law, rule, order, regulation, statute, ordinance, code,
            decree or requirement which regulates environmental protection
            matters, including, without limitation, Hazardous Materials, as is
            now or hereafter in effect; and (b) the common law relating to
            damage to Persons or property from Hazardous Materials.

      "EQUITY ISSUANCE": shall mean the sale or issuance by any Borrower of any
            shares of its stock, options or warrants for the purchase of any of
            its stock, or other equity or equity instruments.

      "ERISA": the Employee Retirement Income Security Act of 1974, as amended.

      "ERISA AFFILIATE": any Person which is under common control with any
            Borrower within the meaning of Section 4001 of ERISA or is part of a
            group which includes any Borrower and which would be treated as a
            single employer under Section 414 of the Internal Revenue Code of
            1986, as amended.

      "EVENTS OF DEFAULT": is defined in Article 12.

      "EXCESS CASH FLOW": shall mean as of the last day of any fiscal year of
            the Borrowers on a Consolidated basis, an amount equal to EBITDA at
            such date, plus net decreases in Working Capital, or as the case may
            be, less net increases in Working Capital, at such date, minus the
            following, for such period without duplication in accordance with
            GAAP: (i) Consolidated Interest Expense, (ii) principal payments on
            the Acquisition Term Loan and the Term Loan (including any mandatory
            prepayments required thereunder made or required to be made during
            such period), (iii) Capital Expenditures made during such period,
            (iv) the aggregate of all federal, state and local taxes actually
            paid during such period, and (v) cash dividends permitted pursuant
            to Section 7-18 hereof.

                                      -6-


      "EXCESS CASH FLOW PAYMENT": is defined in Section 4-4(b).

      "EXISTING L/Cs": those L/Cs for the account of the Borrowers issued
            pursuant to the terms and conditions of the Existing Loan Agreement,
            and set forth on Exhibit BB hereto.

      "EXISTING LOAN AGREEMENT": is defined in Article 9.

      "FACILITY FEE": is defined in Section 3-13(a).

      "FEDERAL FUNDS EFFECTIVE RATE": for any day, the weighted average (rounded
            upwards, if necessary, to the next 1/100 of 1%) of the rates on
            overnight Federal funds transactions with members of the Federal
            Reserve System arranged by Federal funds brokers, as published on
            the next succeeding Business Day by the Federal Reserve Bank of New
            York, or, if such rate is not so published for any day that is a
            Business Day, the average (rounded updates, if necessary, to the
            next 1/100 of 1%) of the quotations for such date for such
            transactions received by the Administrative Agent from three Federal
            funds brokers of recognized standing selected by it.

      "FUTURE COMMITMENT": is defined in Section 17-12.

      "GAAP": principles which are consistent with those promulgated or adopted
            by the Financial Accounting Standards Board and its predecessors (or
            successors) in effect and applicable to that accounting period in
            respect of which reference to GAAP is being made.

      "GOODS": has the meaning given that term in the UCC.

      "GOVERNMENT CONTRACT": any contract, agreement or purchase order as to
            which any Borrower and the United States government or any agency or
            instrumentality thereof are parties or as to which any Borrower and
            any State or Commonwealth of the United States or any agency,
            instrumentality or political subdivision thereof are parties.

      "HAZARDOUS MATERIALS:" any (a) hazardous materials, including, without
            limitation, mold, hazardous waste, hazardous or toxic substances,
            petroleum products, which (as to any of the foregoing) are defined
            or regulated as a hazardous material in or under any Environmental
            Law described in clause (a) of the definition thereof, and (b) oil
            in any physical state.

      "IMPACT ACQUISITION": means the acquisition by the Lead Borrower of 100%
            of the equity interests in Impact from J3 Technology Services Corp.
            in accordance with the terms and conditions of the Acquisition
            Documentation.

      "INDEBTEDNESS": all indebtedness and obligations of or assumed by any
            Person on account of or in respect to any of the following: (i) in
            respect of money borrowed (including any indebtedness which is
            non-recourse to the credit of such Person but

                                      -7-


            which is secured by an Encumbrance on any asset of such Person)
            whether or not evidenced by a promissory note, bond, debenture or
            other written obligation to pay money; (ii) for the payment,
            deferred for more than Thirty (30) days, of the purchase price of
            goods or services (other than current trade liabilities of such
            Person incurred in the ordinary course of business and payable in
            accordance with customary practices); (iii) in connection with any
            letter of credit or acceptance transaction (including, without
            limitation, the face amount of all letters of credit and acceptances
            issued for the account of such Person or reimbursement on account of
            which such Person would be obligated); (iv) in connection with the
            sale or discount of accounts receivable or chattel paper of any
            Borrower; (v) on account of deposits or advances; and (vi) as lessee
            under Capital Leases. "Indebtedness" of any Person shall also
            include: (x) Indebtedness of any third party secured by an
            Encumbrance on any asset of such Person, whether or not such
            Indebtedness is assumed by such Person; (y) any guaranty,
            endorsement, suretyship or other undertaking pursuant to which such
            Person may be liable on account of any obligation of any third
            party; and (z) the Indebtedness of a partnership or joint venture in
            which such Person is a general partner or joint venturer.

      "INDEMNIFIED PARTY": is defined in Section 3-17.

      "INDEMNIFIED PERSON": is defined in Section 16-9.

      "INDEMNITY AGREEMENT": a certain Indemnification Agreement Regarding
            Hazardous Materials dated February 10, 2000, as amended, executed
            by, among others, the Lead Borrower, in favor of the Administrative
            Agent and the Documentation Agent.

      "INSTALLMENT AMOUNT": is defined in Section 3-17(a).

      "INTEREST EXPENSE": for any period, with respect to any Person, the
            aggregate amount (determined in accordance with GAAP) of interest
            paid or payable during such period by such Person in respect of all
            Indebtedness for borrowed money, Capital Leases and the deferred
            purchase price of property.

      "INTEREST PERIOD": (a) With respect to each LIBOR Loan, subject to
            subsection (c), below, the period commencing on the date of the
            making or continuation of or conversion to such LIBOR Loan and
            ending one, two, three or six months thereafter, as the Lead
            Borrower may elect in the applicable Notice of Borrowing or
            Conversion.

                  (b) With respect to each Base Margin Loan, the period
            commencing on the date of the making or continuation of or
            conversion to such Base Margin Loan and ending on that date (1) as
            of which the subject Base Margin Loan is converted to a LIBOR Loan,
            as the Lead Borrower may elect in the applicable Notice of Borrowing
            or Conversion, or (2) on which the subject Base Margin Loan is paid
            by the Borrowers.

                                      -8-


                  (c) Provided that the setting of Interest Periods is in all
            instances subject to the following:

                        (i) if any Interest Period with respect to a LIBOR Loan
                  would otherwise end on a day that is not a LIBOR Business Day,
                  that Interest Period shall be extended to the next succeeding
                  LIBOR Business Day unless the result of such extension would
                  be to carry such Interest Period into another calendar month,
                  in which event such Interest Period shall end on the
                  immediately preceding LIBOR Business Day;

                        (ii) if any Interest Period with respect to a Base
                  Margin Loan would end on a day that is not a Business Day,
                  that Interest Period shall end on the next succeeding Business
                  Day;

                        (iii) if the Lead Borrower shall fail to give notice as
                  provided in Section 3-10, herein, the Lead Borrower shall be
                  deemed to have requested a conversion of the affected LIBOR
                  Loan to a Base Margin Loan on the last day of the then current
                  Interest Period with respect thereto;

                        (iv) any Interest Period relating to any LIBOR Loan that
                  begins on the last LIBOR Business Day of a calendar month (or
                  on a day for which there is no numerically corresponding day
                  in the calendar month at the end of such Interest Period)
                  shall end on the last LIBOR Business Day of a calendar month;

                        (v) any Interest Period relating to any LIBOR Loan that
                  would otherwise extend beyond the Maturity Date of the
                  Revolving Credit Loans shall end on such Maturity Date; and

                        (vi) there shall be no more than six (6) Interest
                  Periods outstanding at any one time for LIBOR Loans.

      "INTEREST PAYMENT DATE": with reference to:

                  (a) any LIBOR Loan, (i) on the last day of each Interest
            Period, provided that interest on LIBOR Loans having an Interest
            Period of six months shall be payable on the last day of the third
            month of such Interest Period and on the last day of the Interest
            Period; and

                  (b) any Base Margin Loan (x) which is a Revolving Credit Loan,
            on the first day of each calendar month and on the Termination Date,
            and (y) which is a portion of the Term Loan and/or the Acquisition
            Term Loan, on the last day of each calendar quarter and on the
            Termination Date .

      "INVENTORY": includes, without limitation, "inventory" as defined in the
            UCC and also all: packaging, advertising, and shipping materials
            related to any of the foregoing, and all names or marks affixed or
            to be affixed thereto for identifying

                                      -9-


            or selling the same; Goods held for sale or lease or furnished or to
            be furnished under a contract or contracts of sale or service by any
            Borrower, or used or consumed or to be used or consumed in any
            Borrower's business; Goods of said description in transit: returned,
            repossessed and rejected Goods of said description; and all
            documents (whether or not negotiable) which represent any of the
            foregoing.

      "INVESTMENTS": all expenditures made and all liabilities incurred
            (contingently or otherwise), without duplication, for the
            acquisition of stock or Indebtedness of, or for loans, advances,
            capital contributions or transfers of property to, or in respect of
            any guaranties (or other commitments as described under
            Indebtedness), or obligations of, any Person. In determining the
            aggregate amount of Investments outstanding at any particular time:
            (a) the amount of any Investment represented by a guaranty shall be
            taken at not less than the principal amount of the obligations
            guaranteed and still outstanding; (b) there shall be included as an
            Investment all interest accrued with respect to Indebtedness
            constituting an Investment unless and until such interest is paid;
            (c) there shall be deducted in respect of each such Investment any
            amount received as a return of capital (but only by repurchase,
            redemption, retirement, repayment, liquidating dividend or
            liquidating distribution); (d) there shall not be deducted in
            respect of any Investment any amounts received as earnings on such
            Investment, whether as dividends, interest or otherwise, except that
            accrued interest included as provided in the foregoing clause (b)
            may be deducted when paid; and (e) there shall not be deducted from
            the aggregate amount of Investments any decrease in the value
            thereof.

      "INVESTMENT PROPERTY": has the meaning given that term in the UCC.

      "L/C": any letter of credit, the issuance of which is procured by the
            Lender for the account of any Borrower and any acceptance made on
            account of such letter of credit.

      "LEASE": any lease or other agreement, no matter how styled or structured,
            pursuant to which any Borrower is entitled to the use or occupancy
            of any space.

      "LENDER" OR "LENDERS": are defined in Preamble.

      "LEVERAGE RATIO": is described in Section 11-9.

      "LIABILITIES" includes, without limitation, all and each of the following,
            whether now existing or hereafter arising:

                  (a) Any and all direct and indirect liabilities, debts, and
            obligations of any Borrower to the Administrative Agent or any
            Lender, each of every kind, nature, and description arising under
            this Agreement or any of the other Loan Documents.

                                      -10-


                  (b) Each obligation to repay any loan, advance, indebtedness,
            note, obligation, overdraft, or amount now or hereafter owing by any
            Borrower to any Lender (including all future advances whether or not
            made pursuant to a commitment by any Lender), whether or not any of
            such are liquidated, unliquidated, primary, secondary, secured,
            unsecured, direct, indirect, absolute, contingent, or of any other
            type, nature, or description, or by reason of any cause of action
            which the Lender may hold against any Borrower arising under this
            Agreement or any of the Loan Documents.

                  (c) All interest, fees, and charges and other amounts which
            may be charged by the Administrative Agent or the Lenders to any
            Borrower and/or which may be due from any Borrower to any Lender
            from time to time arising under this Agreement or any of the Loan
            Documents.

                  (d) All costs and expenses incurred or paid by the
            Administrative Agent or the Lenders arising under this Agreement or
            any of the other Loan Documents (including, without limitation,
            Costs of Collection, reasonable attorneys' fees, and all court and
            litigation costs and expenses).

                  (e) Any and all covenants of any Borrower to or with the
            Administrative Agent or any Lender and any and all obligations of
            any Borrower to act or to refrain from acting, in each case, in
            accordance with this Agreement or any of the other Loan Documents.

      "LIBOR BUSINESS DAY": any day on which commercial banks are open for
            international business (including dealings in dollar deposits) in
            London for such other LIBOR interbank market as may be selected by
            the Administrative Agent in its sole discretion acting in good
            faith.

      "LIBOR LOAN": any Revolving Credit Loan or any portion of the Term Loan or
            any portion of the Acquisition Term Loan bearing interest at the
            LIBOR Rate.

      "LIBOR MARGIN": see Pricing Grid defined below.

      "LIBOR RATE": that per annum rate which is the aggregate of the LIBOR
            Offer Rate, plus the LIBOR Margin.

      "LIBOR OFFER RATE": that rate of interest (rounded upwards, if necessary,
            to the next 1/100 of 1%) determined by the Administrative Agent to
            be (i) the prevailing rate per annum at which deposits on U.S.
            Dollars are offered to the Lender by first-class banks in the London
            interbank market in which the Lender regularly participates at or
            about 10:00 A.M. (Boston time) three (3) LIBOR Business Days before
            the first day of the Interest Period, for a deposit approximately in
            the amount of the subject LIBOR Loan for a period of time
            approximately equal to such Interest Period, divided by (ii) one
            minus the Reserve Percentage.

      "LINE (UNUSED) FEE": is defined in Section 3-13(b).

                                      -11-


      "LINE FEE PERCENTAGE": see Pricing Grid defined below.

      "LOAN": any Revolving Credit Loan, Term Loan or the Acquisition Term Loan.

      "LOAN ACCOUNT": is defined in Section 3-6.

      "LOAN DOCUMENTS": this Agreement, the Notes, the Indemnity Agreement, the
            Security Documents, and each other instrument and document executed
            and/or delivered as contemplated by Article 6, below, and each other
            instrument or document from time to time executed and/or delivered
            in connection with the arrangements contemplated hereby, including,
            without limitation, any transaction which arises out of any cash
            management, depository, investment, letter of credit, interest rate
            protection, or equipment leasing services provided by any Lender or
            any Affiliate of any Lender, each may be amended from time to time.

      "MATERIAL ADVERSE CHANGE": any event, matter or condition which has or
            could reasonably be expected to have a material adverse effect on
            (a) the business, condition (financial or otherwise), assets
            (including intangible assets), properties, income or prospects of
            the Borrowers (taken as a whole), (b) the Borrowers' ability to pay
            and perform all of the Liabilities owing by them to the
            Administrative Agent and the Lenders in accordance with the terms
            thereof, and/or (c) the Collateral (or any material portion
            thereof).

      "MATURITY DATE": as to the Revolving Credit, September 1, 2009; as to the
            Term Loan, May 1, 2010, and as to the Acquisition Term Loan,
            September 1, 2009.

      "MOODY'S": Moody's Investor Services, Inc.

      "MORTGAGE": the Mortgage, Security Agreement and Assignment dated February
            10, 2000 made by the Lead Borrower in favor of the Administrative
            Agent, as amended and in effect covering the Real Estate, as
            amended.

      "NET INCOME": income (or loss), excluding extraordinary items of income
            (or loss), of a Person for the period in question (taken as a
            cumulative whole), after deducting therefrom all operating expenses,
            reserves and other proper deductions (including any minority
            interest expense), all determined in accordance with GAAP. For
            purposes hereof, the Consolidated Net Income of the Lead Borrower
            and its Subsidiaries shall include the Net Income of any other
            Persons acquired prior to the date that it either becomes a
            Subsidiary of such Borrower, is merged into or consolidated with
            such Borrower, or such other Person's assets are assigned, directly
            or indirectly, to such Borrower, provided that, in the case of each
            of the foregoing, (i) the Net Income of such other Person shall only
            be so included to the extent that such Net Income is attributable to
            such other Person or to such assets as are acquired from such other
            Person for the relevant period, all to the satisfaction of the
            Administrative Agent, and (ii) any discrepancies in accounting
            treatment between such Borrower and such other Person are conformed
            so as to make the foregoing determination, to the satisfaction of
            the Administrative Agent.

                                      -12-


      "NET PROCEEDS": the gross sales price generated by the sale of any asset
            or property outside the ordinary course of business or any Equity
            Issuance, less reasonable fees and expenses (including commissions)
            customarily incurred in similar arms-length sales and transfer taxes
            directly attributable to such sale or Equity Issuance less income
            taxes payable from such proceeds within sixteen months after such
            sale.

      "NOTE(S)": the Revolving Credit Notes, the Term Notes and the Acquisition
            Term Notes.

      "PERMITTED ACQUISITION": an acquisition by any of the Borrowers of 100% of
            the capital stock or other equity interests or substantially all of
            the assets of any Person provided the Lead Borrower certifies to the
            Lenders that (i) at the time of the contemplated acquisition or
            immediately thereafter, there is no then existing Event of Default;
            (ii) the Borrowers are in compliance with all financial covenants,
            calculated exclusive and inclusive of the contemplated acquisition,
            on a pro forma basis; (iii) the acquisition is within the Borrowers'
            current business plan and accretive to earnings within the following
            twelve (12) months; (iv) at the time of the contemplated
            acquisition, there has not occurred an Assignment of Claims
            Compliance Event; and (v) such acquisition shall not require total
            consideration from the Borrowers in excess of (a) $10,000,000 for
            any single acquisition, or (b) $15,000,000 in the aggregate in any
            calendar year (except for calendar year 2004, only, each of which
            amounts shall be exceeded as a result of the consummation of the
            Impact Acquisition).

      "PERMITTED LIENS": is defined in Section 7-6.

      "PERSON": any natural person, and any corporation, trust, partnership,
            limited liability company, joint venture, or other enterprise or
            entity.

      "PRICING GRID":



                               LEVEL I         LEVEL II        LEVEL III       LEVEL IV
                               -------         --------        ---------       --------
                                                                   
BASIS FOR PRICING

Leverage Ratio                 < 1.50         1.50 - 1.99      2.00-2.50        > 2.50

Base Rate Margin                    0%                  0%             0%         0.50%

LIBOR Margin -Acquisition
Term Loan                        1.75%               2.25%          2.75%         3.25%

LIBOR Margin - Revolving
Credit and Term Loan             1.50%               2.00%          2.50%         3.00%

Line Fee Percentage              0.25%              0.375%          0.50%         0.50%


                                      -13-


      Effective as of the Closing Date, pricing shall be set at Level IV.
      Changes in pricing shall be effective five (5) Business Days after
      delivery by the Lead Borrower to the Administrative Agent of its quarterly
      Compliance Certificate together with supporting financial information
      satisfactory to the Administrative Agent, provided, however, in no event
      shall changes in pricing be made, even if the conditions for another level
      are satisfied, until the Administrative Agent receives the quarterly
      Compliance Certificate together with supporting financial information
      satisfactory to the Administrative Agent, for the Borrowers' fiscal
      quarter ending December 31, 2004, and provided further that such
      Compliance Certificate reflects that the conditions for another level have
      been satisfied.

      "REAL ESTATE": the premises located at 60 Frontage Road, Andover,
            Massachusetts.

      "REEMPLOYMENT PERIOD": is defined in Section 3-17(a).

      "RELATED ENTITY": refers to (a) any Affiliate (other than directors and
            officers); and (b) any corporation, limited liability company trust,
            partnership, joint venture, or other enterprise which: is a parent,
            brother-sister, subsidiary, or affiliate, of any Borrower; could
            have such enterprise's tax returns or financial statements
            consolidated with any Borrower; could be a member of the same
            controlled group of corporations (within the meaning of Section
            1563(a)(1), (2) and (3) of the Internal Revenue Code of 1986, as
            amended from time to time) of which any Borrower is a member;
            Controls or is Controlled by the Borrower or any Affiliate of the
            Borrower.

      "RENEWAL / CONVERSION NOTICE": is defined in Section 3-10.

      "REQUIRED LENDERS": Any two or more Lenders holding in the aggregate at
            least sixty-six and two-thirds percent (66 2/3%) of the amounts
            outstanding on the Loans, or, if no amounts are outstanding, of the
            Commitment Percentages of the Total Commitment.

      "REQUIREMENT OF LAW": as to any Person: (a)(i) all statutes, rules,
            regulations, orders, or other requirements having the force of law
            and (ii) all court orders and injunctions, arbitrator's decisions,
            and/or similar rulings, in each instance ((i) and (ii)) of or by any
            federal, state, municipal, and other governmental authority, or
            court, tribunal, panel, or other body which has or claims
            jurisdiction over such Person, or any property of such Person, or of
            any other Person for whose conduct such Person would be responsible;
            (b) that Person's charter, certificate of incorporation, articles of
            organization, and/or other organizational documents, as applicable;
            and (c) that Person's by-laws and/or other instruments which deal
            with corporate or similar governance, as applicable.

                                      -14-


      "RESERVE PERCENTAGE": the decimal equivalent of the highest rate
            applicable to any Lender under regulations issued from time to time
            by the Board of Governors of the Federal Reserve System for
            determining the maximum reserve requirement of each Lender with
            respect to "Eurocurrency liabilities" as defined in such
            regulations. The Reserve Percentage applicable to a particular LIBOR
            Loan shall be based upon that in effect during the subject Interest
            Period, with changes in the Reserve Percentage which take effect
            during such Interest Period to take effect (and to consequently
            change any interest rate determined with reference to the Reserve
            Percentage) if and when such change is applicable to such loans.

      "RESPONSIBLE OFFICER": as to any Person, the president or chief executive
            officer of such Person or, with respect to financial matters, the
            chief financial officer or treasurer of such Person or, in either
            case, such other executive officers as may be designated from time
            to time by such Person in writing to the Administrative Agent.

      "REVOLVING LOAN CEILING": shall mean Thirty-seven Million Dollars
            ($37,000,000.00).

      "REVOLVING CREDIT": is defined in Section 3-1.

      "REVOLVING CREDIT LOAN": means any loan or advance made pursuant to the
            Revolving Credit.

      "REVOLVING CREDIT NOTE": is defined in Section 3-7.

      "SECURITY AGREEMENT": that certain Security Agreement by and among the
            Borrowers and the Administrative Agent, as agent for itself and for
            the benefit of the Lenders, pursuant to which, among other things,
            the Borrowers have granted to the Administrative Agent, for the
            ratable benefit of the Lenders, a security interest in substantially
            all of the assets of the Borrowers.

      "SECURITY DOCUMENTS": the Security Agreement, the Mortgage, and any other
            agreement, document or instrument now or hereafter securing the
            Liabilities.

      "S & P": Standard & Poor's Ratings Group, a division of the McGraw Hill
            Companies, Inc.

      "STATED AMOUNT": the maximum amount for which an L/C may be honored.

      "SUBORDINATED DEBT": (a) The existing Indebtedness of the Borrowers which
            is designated as "Subordinated Debt" in Exhibit 7-7 attached hereto,
            and (b) any other Indebtedness of a Borrower which matures in its
            entirety and by its terms (or by the terms of the instrument under
            which it is outstanding and to which appropriate reference is made
            in the instrument evidencing such Subordinated Debt) is made
            subordinate and junior in right of payment to the Liabilities by
            provisions reasonably satisfactory in form and substance to the
            Lenders, the Administrative Agent, and the Administrative Agent's
            counsel.

                                      -15-


      "SUBSIDIARY": any partnership, corporation, limited liability company,
            association, trust, or other business entity of which the Lead
            Borrower shall at any time own directly or indirectly through a
            Subsidiary or Subsidiaries at least a majority (by number of votes)
            of the outstanding Voting Interests.

      "SUSPENSION EVENT": any occurrence, circumstance, or state of facts which
            (a) is an Event of Default; or (b) would become an Event of Default
            if any requisite notice were given and/or any requisite period of
            time were to run and such occurrence, circumstance, or state of
            facts were not absolutely cured within any applicable grace period.

      "TERM LOAN": is defined in Section 4-1.

      "TERM NOTE": is defined in Section 4-1.

      "TERMINATION DATE": the earliest of (a) the Maturity Date, or (b) the
            occurrence of an Event of Default under Section 12-8 hereof, or (c)
            the date set by the Administrative Agent by notice to the Lead
            Borrower, which notice sets the Termination Date on account of the
            occurrence of an Event of Default other than as described in Section
            12-8.

      "TOTAL ASSETS": all assets of any Borrower determined in accordance with
            GAAP.

      "TOTAL COMMITMENT": shall mean the aggregate Commitments of the Lenders as
            set forth on Exhibit I annexed hereto.

      "TOTAL DEBT SERVICE": shall mean the sum of (i) required principal
            payments made on all interest bearing Indebtedness of the Lead
            Borrower and its Subsidiaries, plus (ii) Capital Lease payments of
            the Lead Borrower and its Subsidiaries, plus (iii) to the extent not
            included in the foregoing clauses (i) and (ii), Consolidated
            Interest Expense of the Lead Borrower and its Subsidiaries, all as
            determined in accordance with GAAP.

      "TOTAL LIABILITIES": all liabilities and obligations of any Borrower
            determined in accordance with GAAP.

      "UCC": the Uniform Commercial Code as presently in effect in Massachusetts
            (Mass. Gen. Laws, Ch. 106).

      "VOTING INTERESTS": stock or similar interests, of any class or classes
            (however designated), the holders of which are at the time entitled,
            as such holders, to vote for the election of a majority of the
            directors (or persons performing similar functions) of the
            partnership, corporation, association, trust or other business
            entity involved, whether or not the right so to vote exists by
            reason of the happening of a contingency.

                                      -16-


      "WORKING CAPITAL": for any period, the result of (x) the Consolidated
            current assets of the Borrowers and their Subsidiaries (exclusive of
            such Persons' cash and cash equivalents and the current portion of
            any deferred federal, state and local taxes included in the
            calculation of Consolidated current assets for such period), all
            determined in accordance with GAAP, minus (y) the Consolidated
            current liabilities of the Borrowers and their Subsidiaries
            (exclusive of the Consolidated liabilities arising out of
            Indebtedness of such Persons incurred and permitted under this
            Agreement and the current portion of any deferred federal, state and
            local taxes included in the calculation of Consolidated current
            liabilities for such period), all determined in accordance with
            GAAP.

ARTICLE 2- AGENTED BORROWINGS

      2-1. Designation of Agent Borrower. Each Borrower hereby designates the
Lead Borrower as the agent of that Borrower to discharge the duties and
responsibilities of the Lead Borrower as provided herein.

      2-2. Operation of Loan Arrangement.

            (a) Except as otherwise provided in this Article, Revolving Credit
Loans and requests for the issuance of L/Cs shall be requested solely by the
Lead Borrower as agent for each Borrower.

            (b) Any Revolving Credit Loan which may be made by the Lenders and
which is directed to the Lead Borrower is received by the Lead Borrower in trust
for that or those of the Borrowers who are intended to receive such advance. The
Lead Borrower shall distribute the proceeds of any such advances solely to the
Borrowers. Each Borrower shall be directly indebted to the Lenders for each
Revolving Credit Loan distributed to that Borrower by the Lead Borrower,
together with all accrued interest thereon, as if that amount had been advanced
directly by the Lenders to that Borrower (whether or not the subject advance was
based upon the accounts of the Borrower which actually received such
distribution), in addition to which each Borrower shall be obligated to the
Lenders in that amount on account of that Borrower's having guarantied the
Liabilities.

            (c) The Administrative Agent and the Lenders shall have no
responsibility to inquire as to the distribution of the Revolving Credit Loans
made through the Lead Borrower as described herein.

      2-3. Loans Directly to Borrower.(a) If, for any reason, and at any time
during the term of this Agreement,(i) any Borrower, including the Lead Borrower
as agent for the Borrowers, shall be unable to, or prohibited from carrying out
the terms and conditions of this Agreement (as determined by the Administrative
Agent in the Administrative Agent' sole and absolute discretion); or

            (ii) the Administrative Agent deems it inexpedient (in the
Administrative Agent's sole and absolute discretion) to continue making
Revolving Credit Loans and issue L/Cs to or for the account of any particular
Borrower, or to channel such Revolving Credit Loans and L/Cs through the Lead
Borrower,

                                      -17-


then the Lenders may make Revolving Credit Loans directly to, and issue L/Cs
directly for the account of, such of the Borrowers as the Administrative Agent
determines to be expedient, which Revolving Credit Loans or issuances of L/Cs
may be made without regard to the procedures otherwise included in this Article
2.

            (b) In the event that the Administrative Agent determines to forgo
the procedures included herein pursuant to which Revolving Credit Loans and L/Cs
are to be channeled through the Lead Borrower, then the Administrative Agent may
designate one or more of the Borrowers to fulfill the financial and other
reporting requirements otherwise imposed herein upon the Lead Borrower.

            (c) Each of the Borrowers shall remain liable to the Lenders for the
joint and several payment and performance of all Liabilities notwithstanding any
determination by the Administrative Agent to cease making Revolving Credit Loans
or issue L/Cs to or for the benefit of any Borrower.

      2-4. Continuation of Authority of Lead Borrower. The authority of the Lead
Borrower to request Revolving Credit Loans on behalf of, and to bind, the
Borrowers, shall continue unless and until the Administrative Agent acts as
provided in Section 2-3, above, or the Administrative Agent actually receives

            (a) written notice of: (i) the termination of such authority, and
      (ii) the subsequent appointment of a successor Lead Borrower, which notice
      is signed by the respective Responsible Officer of each Borrower then
      eligible for borrowing under this Agreement; and

            (b) written notice from such successive Lead Borrower (i) accepting
      such appointment; (ii) acknowledging that such removal and appointment has
      been effected by the respective Responsible Officer of such Borrowers
      eligible for borrowing under this Agreement; and (iii) acknowledging that
      from and after the date of such appointment, the newly appointed Lead
      Borrower shall be bound by the terms hereof, and that as used herein, the
      term "Lead Borrower" shall mean and include the newly appointed Lead
      Borrower.

      2-5. Concerning Joint and Several Liability of the Borrowers.

            (a) Each of the Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Lenders and the Administrative Agent under
this Agreement, for the mutual benefit, directly and indirectly, of each of the
Borrowers and in consideration of the undertakings of each other Borrower to
accept joint and several liability for the Liabilities.

            (b) Each of the Borrowers, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrowers, with respect to the
payment and performance of all of the Liabilities (including, without
limitation, any Liabilities arising under this Section 2-5), it being the
intention of the parties hereto that all of the Liabilities shall be joint and
several obligations of each of the Borrowers, without preferences or distinction
among them.

                                      -18-


            (c) If and to the extent that any of the Borrowers shall fail to
make any payment with respect to any of the Liabilities as and when due or to
perform any of the Liabilities in accordance with the terms thereof, then in
each such event the other Borrowers will make such payment with respect to, or
perform, such Liability.

            (d) The Liabilities of each of the Borrowers under the provisions of
this Section 2-5 constitute the full recourse Liabilities of each of the
Borrowers enforceable against each such Borrower to the full extent of its
properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstance whatsoever.

            (e) Except as otherwise expressly provided in this Agreement, each
of the Borrowers hereby waives notice of acceptance of its joint and several
liability, notice of any Loans made or L/Cs issued under this Agreement, notice
of the occurrence of any Event of Default, or of any demand for any payment
under this Agreement, notice of any action at any time taken or omitted by any
Lender or the Administrative Agent under or in respect of any of the
Liabilities, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement. Each of the
Borrowers hereby assents to, and waives notice of, any extension or postponement
of the time for the payment of any of the Liabilities, the acceptance of any
payment of any of the Liabilities, the acceptance of any partial payment
thereon, any waiver, consent or other action or acquiescence by any Lender or
the Administrative Agent at any time or times in respect of any Event of Default
by any of the Borrowers in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by any Lender or the Administrative Agent in respect of
any of the Liabilities, and the taking, addition, substitution or release, in
whole or in part, at any time or times, of any security for any of the
Liabilities or the addition, substitution or release, in whole or in part, of
any of the Borrowers. Without limiting the generality of the foregoing, each of
the Borrowers assents to any other action or delay in acting or failure to act
on the part of any Lender or the Administrative Agent with respect to the
failure by any of the Borrowers to comply with any of its respective
Liabilities, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
Section 2-5, afford grounds for terminating, discharging or relieving any of the
Borrowers, in whole or in part, from any of its Liabilities under this Section
2-5, it being the intention of each of the Borrowers that, so long as any of the
Liabilities hereunder remain unsatisfied, the Liabilities of such Borrowers
under this Section 2-5 shall not be discharged except by performance and then
only to the extent of such performance. The joint and several liability of the
Borrowers hereunder shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
membership, constitution or place of formation of any of the Borrowers, any
Lender or any Agent.

            (f) The provisions of this Section 2-5 are made for the benefit of
the Lenders and the Administrative Agent and their respective successors and
assigns, and may be enforced by it or them from time to time against any or all
of the Borrowers as often as occasion therefor may arise and without requirement
on the part of the Lenders or the Agent or such successor or assign first to
marshall any of its or their claims or to exercise any of its or their rights
against any of the other Borrowers or to exhaust any remedies available to it or
them against any of the

                                      -19-


other Borrowers or to resort to any other source or means of obtaining payment
of any of the Liabilities hereunder or to elect any other remedy. The provisions
of this Section 2-5 shall remain in effect until all of the Liabilities shall
have been paid in full or otherwise fully satisfied. If at any time, any
payment, or any part thereof, made in respect of any of the Liabilities, is
rescinded or must otherwise be restored or returned by any Lender or the Agent
upon the insolvency, bankruptcy or reorganization of any of the Borrowers, or
otherwise, the provisions of this Section 2-5 will forthwith be reinstated in
effect, as though such payment had not been made.

            (g) Each of the Borrowers hereby agrees that it will not enforce any
of its rights of contribution or subrogation against the other Borrowers with
respect to any liability incurred by it hereunder or under any of the other Loan
Documents, any payments made by it to any of the Lenders or the Agent with
respect to any of the Liabilities or any collateral security therefor until such
time as all of the Liabilities have been irrevocably paid in full in cash. Any
claim which any Borrower may have against any other Borrower with respect to any
payments to the Lenders or the Agent hereunder or under any other Loan Documents
are hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Liabilities arising hereunder or
thereunder, to the prior payment in full of the Liabilities and, in the event of
any insolvency, bankruptcy, receivership, liquidation, reorganization or other
similar proceeding under the laws of any jurisdiction relating to any Borrower,
its debts or its assets, whether voluntary or involuntary, all such Liabilities
shall be paid in full before any payment or distribution of any character,
whether in cash, securities or other property, shall be made to any other
Borrower therefor.

            (h) Each of the Borrowers hereby agrees that the payment of any
amounts due with respect to the indebtedness owing by any Borrower to any other
Borrower is hereby subordinated to the prior payment in full in cash of the
Liabilities. Each Borrower hereby agrees that after the occurrence and during
the continuance of any Default or Event of Default, such Borrower will not
demand, sue for or otherwise attempt to collect any indebtedness of any other
Borrower owing to such Borrower until the Liabilities shall have been paid in
full in cash. If, notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for the Agent and be paid over to the Agent for the pro-rata accounts of the
Lenders to be applied to repay the Liabilities.

      2-6. Indemnification. The Lead Borrower and each Borrower respectively
shall indemnify, defend, and save and hold the Administrative Agent and each
Lender harmless from and against any liabilities, claims, demands, expenses, or
losses made against or suffered by the Administrative Agent or any Lender on
account of, or arising out of, the Loans, the Administrative Agent and each
Lenders' reliance upon loan requests made by the Lead Borrower, or any other
action taken by the Administrative Agent and each Lender hereunder or under any
of the Loan Documents, except for any liability, claim, demand, expense, or loss
as to which a final judicial determination is made and from which no appeal is
available (in a proceeding in which the Administrative Agent and each Lender has
had an opportunity to be heard) that the Administrative Agent or any Lender had
acted in a grossly negligent manner, in actual bad faith or with willful
misfeasance.

                                      -20-


ARTICLE 3 - THE REVOLVING CREDIT/LIBOR PROVISIONS

      3-1. Establishment of Revolving Credit.

            (a) The Lenders hereby establish a revolving line of credit
(hereinafter, the "REVOLVING CREDIT") in the Borrowers' favor pursuant to which
each Lender, subject to, and in accordance with, this Agreement, severally
agrees to make Revolving Credit Loans and issue L/Cs and otherwise provide
financial accommodations to and for the account of the Borrowers, in each
instance up to the amount of such Lender's Commitment Percentage of
Availability, but in no event exceeding the maximum amount of such Lender's
Commitment. The amount available for borrowing under the Revolving Credit shall
be determined by the Lenders by reference to Availability, as determined by the
Lenders from time to time hereafter.

            (b) As used herein, the term "AVAILABILITY" refers at any time to up
to:

                        (A) the Revolving Loan Ceiling

                  Minus

                        (B) The then unpaid principal balance of the Loan
            Account

                  Minus

                        (C) The aggregate amounts then undrawn on all
            outstanding L/C's, acceptances or any other accommodations issued or
            incurred, or caused to be issued or incurred, by the Lenders for the
            account and/or the benefit of any of the Borrowers.

            (c) The proceeds of borrowings under the Revolving Credit shall be
utilized solely to pay transaction costs, for working capital purposes, for
repayment of draws under any L/C, for Permitted Acquisitions, and for general
corporate purposes.

      3-2. Reductions of Commitment. The Total Commitment with respect to the
Revolving Credit may be voluntarily reduced, at the Borrowers' option, in
minimum increments of $1,000,000.00, with any payment of interest, subject to
the payment of the Line (Unused) Fee described below.

      3-3. Advances. [Intentionally omitted].

      3-4. Risks of Value of Accounts and Inventory. [Intentionally omitted].

      3-5. Procedures Under Revolving Credit.

            (a) The Lead Borrower may request Revolving Credit Loans from time
to time under, in each instance in accordance with such procedures as may from
time to time be acceptable to the Administrative Agent, including, without
limitation, notice to the Administrative Agent of any requested borrowing by
11:00 A.M. Boston, Massachusetts time on the proposed day of the subject
Revolving Credit Loans.

                                      -21-


            (b) Subject to the provisions of this Agreement, a Revolving Credit
Loan duly and timely requested by the Lead Borrower shall be made and L/Cs shall
be issued pursuant hereto, provided that:

                  (i) The Availability will not be exceeded; and

                  (ii) The Revolving Credit has not been suspended as provided
      in Section 3-5(h).

            (c) (i) A Revolving Credit Loan or advance shall be deemed to have
been made under the Revolving Credit upon the charging of the amount of such
Revolving Credit Loan to the Loan Account.

                  (ii) There shall not be any recourse to, nor liability of, the
      Administrative Agent or the Lenders on account of any of the following:

                        (A) (1) Any reasonable delay in the Lenders' making of
            any Revolving Credit Loan requested under the Revolving Credit,
            and/or (2) any decline by the Lenders to make, any Revolving Credit
            Loan requested under the Revolving Credit while any Suspension Event
            or Event of Default has occurred and is continuing.

                        (B) Any delay in the proceeds of any such Revolving
            Credit Loan constituting collected funds.

                        (C) Any delay in the receipt, and/or any loss, of funds
            which constitute a Revolving Credit Loan, the wire transfer of which
            was properly initiated by the Administrative Agent in accordance
            with wire instructions provided to the Administrative Agent by the
            Lead Borrower.

                  (iii) The Administrative Agent may rely on any request for a
      Revolving Credit Loan or financial accommodation which the Administrative
      Agent, in good faith, believes to have been made by a person duly
      authorized to act on behalf of the Lead Borrower and may decline to make
      any such requested Revolving Credit Loan or to provide any such financial
      accommodation pending the Administrative Agent's being furnished with such
      documentation concerning that person's authority to act as may be
      satisfactory to the Administrative Agent.

            (d) A request by the Lead Borrower for any financial accommodation
under the Revolving Credit or of the issuance of an L/C or any other
accommodations shall be irrevocable and shall constitute certification by the
Lead Borrower and each Borrower that as of the date of such request, each of the
following is true and correct:

                  (i) There has been no Material Adverse Change in the
      Borrowers' financial condition taken as a whole, from the most recent
      financial information furnished the Lenders pursuant to this Agreement.

                                      -22-


                  (ii) Each representation which is made herein or in any of the
      Loan Documents is then true and complete as of and as if made on the date
      of such request (except to the extent such representation refers to a
      specific earlier date).

                  (iii) No Suspension Event is then extant.

            (e) The Borrowers shall immediately become indebted to the Lenders
for the amount of each Revolving Credit Loan under or pursuant to this Agreement
when such Revolving Credit Loan is deemed to have been made.

            (f) (i) The Lead Borrower may request that the Administrative Agent
issue L/C's for the account of any Borrower. Each such request shall be in such
manner as may from time to time be acceptable to the Administrative Agent, and
which may include, without limitation, (A) telephone notice to such person as
may be designated by the Administrative Agent or (B) written notice.

                  (ii) The Administrative Agent, in the Administrative Agent's
      discretion in each instance, may issue any L/C so requested by the Lead
      Borrower, provided that

                        (A) the aggregate Stated Amount, following the requested
            issuance thereof, would not exceed the Availability;

                        (B) the L/C (if so issued) is in form satisfactory to
            the Administrative Agent;

                        (C) after giving effect to the issuance of the requested
            L/C, the aggregate Stated Amount of all L/C's then outstanding, does
            not exceed $5,000,000.00; and

                        (D) the expiry of the L/C is not later than the Maturity
            Date of the Revolving Credit.

                  (iii) The Borrowers and/or the Lead Borrower shall execute
      such documentation to apply for and support the issuance of an L/C as may
      be required by the Administrative Agent.

            (g) The Administrative Agent, without the request of the Lead
Borrower, may advance under the Revolving Credit any amount which any Borrower
is obligated to pay to the Administrative Agent or for which any Borrower or the
Administrative Agent becomes obligated on account of, or in respect to, any L/C.
Such advance shall be made and even if such advance would result in
Availability's being exceeded. Such action on the part of the Administrative
Agent shall not constitute a waiver by the Administrative Agent or any Lender of
its rights under Section 3-6(e) below.

            (h) Upon the occurrence from time to time of any Suspension Event:

                                      -23-


                  (i) The Administrative Agent, with the prior written consent
      of the Required Lenders may, or shall, at the request of the Required
      Lenders, suspend the Revolving Credit immediately.

                  (ii) The Lenders shall not be obligated to make any loans or
      advance, or to provide any financial accommodation hereunder or to issue
      any L/C.

                  (iii) The Administrative Agent, with the prior written consent
      of the Required Lenders may, or shall, at the request of the Required
      Lenders, suspend the right of the Lead Borrower to request any LIBOR Loan
      or to convert any Base Margin Loan to a LIBOR Loan.

            (i) Subject to the satisfaction of all conditions precedent
hereunder, each Lender will make available to the Administrative Agent on the
proposed date of any Revolving Credit Loan by wire transfer of immediately
available funds not later than 1:00 P.M., Boston time, the aggregate amount of
its Commitment Percentage of such Revolving Credit Loan requested by the Lead
Borrower, and the Administrative Agent shall promptly advance such amounts to
the Lead Borrower in accordance with the terms hereof.

      3-6. The Loan Account.

            (a) An account (hereinafter, the "LOAN ACCOUNT") shall be opened on
the books of the Administrative Agent, in which Loan Account a record may be
kept of all Revolving Credit Loans made by the Lenders to the Borrowers under or
pursuant to the Revolving Credit and of all payments thereon.

            (b) The Administrative Agent may also keep a record (either in the
Loan Account or elsewhere, as the Administrative Agent may from time to time
elect) of all interest, fees, service charges, costs, expenses, and other debits
owed the Administrative Agent and each Lender on account of the Liabilities
under the Revolving Credit and of all credits against such amounts so owed.

            (c) All credits against the Liabilities shall be conditional upon
final payment to the Administrative Agent of the items giving rise to such
credits. The amount of any item credited against the Liabilities which is
charged back against the Administrative Agent for any reason or is not so paid
shall be a Liability and shall be added to the Loan Account, whether or not the
item so charged back or not so paid is returned.

            (d) Except as otherwise provided herein, all fees, service charges,
costs, and expenses for which the Borrowers are obligated hereunder are payable
within thirty (30) days of notice from the Administrative Agent to the Lead
Borrower. In the determination of Availability, the Administrative Agent may
deem fees, service charges, accrued interest, and other payments as having been
advanced under the Revolving Credit whether or not such amounts are then due and
payable.

            (e) The Administrative Agent, without the request of the Lead
Borrower, may advance under the Revolving Credit any interest, fee, service
charge, or other payment to which the Administrative Agent or any Lender is
entitled from any Borrower pursuant hereto

                                      -24-


(including, without limitation, any payment of principal and/or interest with
respect to the Term Loan and/or the Acquisition Term Loan) and may charge the
same to the Loan Account notwithstanding that such amount so advanced may result
in Availability's being exceeded. Any amount which is added to the principal
balance of the Loan Account as provided in this Subsection shall bear interest
at the interest rate applicable from time to time to the unpaid principal
balance of the Loan Account.

            (f) Any statement rendered by the Administrative Agent to the Lead
Borrower concerning the Liabilities shall be considered correct and accepted by
the Borrowers and shall be conclusively binding upon the Borrowers unless the
Lead Borrower provides the Administrative Agent with written objection thereto
within sixty (60) days from the mailing of such statement, which written
objection shall indicate, with particularity, the reason for such objection. The
Loan Account and the Administrative Agent's books and records concerning the
loan arrangement contemplated herein and the Liabilities shall be prima facie
evidence and proof of the items described therein.

      3-7. The Revolving Credit Note. The obligation to repay Revolving Credit
Loans, with interest as provided herein, shall be evidenced by certain notes
(hereinafter, collectively, the "REVOLVING CREDIT NOTE") payable to each Lender
in a principal amount equal to such Lender's Commitment Percentage of the
Revolving Credit, in the form of EXHIBIT 3-7, annexed hereto, executed by each
Borrower in favor of such Lender. Neither the original nor a copy of any
Revolving Credit Note shall be required, however, to establish or prove any
Liability on account thereof. In the event that a Revolving Credit Note is ever
lost, mutilated, or destroyed, the Borrowers shall execute a replacement thereof
and deliver such replacement to the subject Lender, subject to such Lender
providing a commercially reasonable indemnity in connection therewith.

      3-8. Payment of Loan Account.

            (a) The Borrowers shall repay the principal balance of the Loan
Account on the Termination Date (as to which, see Article 15, below).

            (b) The Borrowers, without notice or demand from the Administrative
Agent, shall pay the Administrative Agent that amount, from time to time, which
is necessary so that Availability is equal to or greater than $0.

            (c) The Borrowers shall repay the then entire unpaid balance of the
Loan Account upon the Termination Date.

      3-9. Interest.

            (a) Revolving Credit Loans shall initially bear interest at the Base
Rate or, at the Lead Borrower's option in accordance with the terms hereof, the
LIBOR Rate, as specified from time to time by the Lead Borrower in the
Renewal/Conversion Notice with respect to the subject Revolving Credit Loan or
as otherwise provided in this Agreement.

            (b) The Borrowers shall pay interest on each Revolving Credit Loan
in arrears on the applicable Interest Payment Date for that Loan and on the
Termination Date.

                                      -25-


            (c) Following the occurrence and during the continuance of any Event
of Default (and whether or not the Lenders exercise their rights on account
thereof), upon notice from the Administrative Agent to the Lead Borrower, the
outstanding principal balance of the Revolving Credit Loans shall bear interest
at a rate per annum equal to the Base Rate plus Two and 00/100 Percent (2.00%)
per annum.

      3-10. Duration of Interest Periods.

            (a) Subject to the limitation described herein, the Lead Borrower
shall have the option to elect an Interest Period to be applicable to a
Revolving Credit Loan, or any portion of the Term Loan, or any portion of the
Acquisition Term Loan by giving notice of such election (a "RENEWAL / CONVERSION
NOTICE") in the form of EXHIBIT 3-10, annexed hereto received no later than
10:00 Boston time One (1) Business Day before the end of the then applicable
Interest Period if such Loan is to be converted to a Base Margin Loan and Three
(3) Business Days before (and not counting) the end of the then applicable
Interest Period if such Loan is to be continued as, or converted to, a LIBOR
Loan; provided, however, that (a) any Conversion of LIBOR Loans may be made only
on the last day of the respective Interest Period for such Loans, and (b) no
loan may be Converted to a LIBOR Loan when any Event of Default has occurred and
is continuing. Each such Conversion Request shall be by telephone, telecopy,
electronic mail, telex or cable, in each case confirmed immediately in writing
in the manner specified for notices herein, and shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Loans to be
Converted, and (iii) if such Conversion is to LIBOR Loan the duration of the
initial Interest Period for such Loans. Each Conversion Request with respect to
LIBOR Loans shall be irrevocable and binding on the Borrowers.

            (b) If the Administrative Agent does not receive a notice of
election of, or conversion to, an Interest Period for a LIBOR Loan pursuant to
subsection (a) within the applicable time limits specified therein, the Lead
Borrower shall be deemed to have elected to convert such Loan in whole into a
Base Margin Loan on the last day of the then current Interest Period with
respect thereto.

            (c) The Lead Borrower shall not select, renew, or convert any
Revolving Credit Loan or any portion of the Term Loan or any portion of the
Acquisition Term Loan such that there are more than six (6) interest rates
applicable to the Revolving Credit Loans, the Term Loan, and the Acquisition
Term Loan in the aggregate which are LIBOR Loans at any one time.

            (d) LIBOR Loans shall each be in an amount of not less than Five
Hundred Thousand and no/100 Dollars ($500,000.00) and Five Hundred Thousand and
no/100 Dollars ($500,000.00) increments in excess of such minimum.

            (e) If after giving a Conversion Request, the Lead Borrower fails to
borrow or Convert any LIBOR Loan, the Lead Borrower shall indemnify the
Administrative Agent and each Lender against any loss or expense incurred by the
Administrative Agent and each Lender as a result of such failure, including,
without limitation, any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain a LIBOR Loan to be made by such Lender and the compensation as provided
for in Section 3-17, herein.

                                      -26-


      3-11. Changed Circumstances. In the event that:

            (a) On any day on which the rate for a LIBOR Loan would otherwise be
      set, the Administrative Agent shall have determined in good faith (which
      determination shall be final and conclusive) that adequate and fair means
      do not exist for ascertaining either such rate; or

            (b) At any time that the Administrative Agent shall have determined
      in good faith (which determination shall be final and conclusive) that:

                  (i) the continuation of or conversion of any Revolving Credit
            Loan or any portion of the Term Loan or any portion of the
            Acquisition Term Loan to a LIBOR Loan has been made impracticable or
            unlawful by (A) the occurrence of a contingency that materially and
            adversely affects the applicable market or (B) compliance by any
            Lender in good faith with any applicable law or governmental
            regulation, guideline or order or interpretation or change thereof
            by any governmental authority charged with the interpretation or
            administration thereof or with any request or directive of any such
            governmental authority having the force of law; or

                  (ii) the indices on which the interest rates for LIBOR Loans
            shall no longer represent the effective cost to the Lenders for U.S.
            dollar deposits in the interbank market for deposits in which they
            regularly participate;

      then, and in any such event, the Administrative Agent shall forthwith so
      notify the Lead Borrower thereof. Until the Administrative Agent notifies
      the Lead Borrower that the circumstances giving rise to such notice no
      longer apply, the obligation of the Lenders to make LIBOR Loans of the
      type affected by such changed circumstances or to permit the Lead Borrower
      to select the affected interest rate as otherwise applicable to any
      Revolving Credit Loans or any portion of the Term Loan or any portion of
      the Acquisition Term Loan shall be suspended. If at the time the
      Administrative Agent so notifies the Lead Borrower, the Lead Borrower has
      previously given the Administrative Agent a Renewal/Conversion Notice with
      respect to one or more LIBOR Loans, but such LIBOR Loans have not yet gone
      into effect, such notification shall be deemed to be void and the Lead
      Borrower may only borrow Base Margin Loans and shall furnish a substitute
      Renewal/Conversion Notice. Upon the expiration of the Interest Period for
      any LIBOR Loan which is outstanding on the date of such notification, the
      amount of such LIBOR Loan shall thereafter constitute a Base Margin Loan.

      3-12. Payments and Prepayments.

            (a) Base Margin Loans may be prepaid at any time and from time to
time without premium or penalty.

            (b) Any LIBOR Loan may be prepaid, upon not less than three (3)
Business Days' prior written notice to the Administrative Agent, without
penalty, provided that (1) each partial prepayment shall be in the principal
amount of $500,000.00 or an integral multiple thereof, (2) if such prepayment is
on any day other than the last day of the Interest Period

                                      -27-


relating thereto, such amount prepaid shall be accompanied by any additional
amounts necessary to compensate the Lenders for any costs incurred by the
Lenders in accordance with Section 3-17, herein, including any interest or fees
payable by the Lenders to lenders of funds obtained by then in order to make or
maintain its LIBOR Loans hereunder and (3) any amount prepaid shall be
accompanied by accrued interest on the principal repaid to the date of payment.

            (c) In the event that at the time of any such prepayment Loans are
outstanding of more than one type, the amount prepaid shall be applied first to
any Base Margin Loan prior to application to any LIBOR Loans.

            (d) Any premium due hereunder upon such prepayment shall be due and
payable upon any prepayment whatsoever, whether voluntary or involuntary, to the
extent permitted by law, and after acceleration of the unpaid principal balance
of the Liabilities after the occurrence and during the continuance of an Event
of Default.

      3-13. Fees.

            (a) As compensation for the Lenders' commitment included herein to
make loans and advances to the Borrowers and as compensation for the Lenders'
maintenance of sufficient funds available for such purpose, the Lenders shall
have earned a FACILITY FEE (so referred to herein) of $625,000.00 (to be shared
by the Lenders as agreed among the Lenders).

            (b) In addition to any other fee by the Borrowers on account of the
Revolving Credit, the Borrowers shall pay to the Administrative Agent, for the
pro rata benefit of the Lenders, a LINE (UNUSED) FEE (so referred to herein) in
arrears, on the first day of each quarter (or relevant pro rata portion thereof)
(and on the Termination Date). The Line (Unused) Fee shall be equal to the Line
Fee Percentage of the average difference, during the quarter just ended (or
relevant period with respect to the payment being made on the Termination Date)
between the Revolving Loan Ceiling and the unpaid principal balance of the Loan
Account.

            (c) In addition to any other fee by the Borrowers on account of the
Revolving Credit, the Borrowers shall pay the Administrative Agent, for its own
account, an annual fee (the "ANNUAL FEE") of $20,000.00 payable upon the Closing
Date and each anniversary hereof.

            (d) The Borrower shall not be entitled to any credit, rebate or
repayment of any Facility Fee, Arrangement Fee, Annual Fee, or Line (Unused) Fee
previously earned by the Administrative Agent or the Lenders pursuant to this
Section notwithstanding any termination of this Agreement or suspension or
termination of the Lenders' obligation to make Loans and advances hereunder.

      3-14. Fees For L/C's.

            (a) Prior to the issuance of any L/C, the Borrowers shall pay to the
Administrative Agent, for the pro rata benefit of the Lenders, a fee on account
of such L/C based upon the Administrative Agent's then current fee schedule for
like L/C's.

            (b) In addition to the fee to be paid as provided in Subsection (a),
above, the Borrowers shall pay to the Administrative Agent, on demand, all
issuance, processing,

                                      -28-


negotiation, amendment, and administrative fees and other amounts on account of,
or in respect to, each L/C.

      3-15. Effect of Honor of L/C's. The Borrowers shall reimburse the
Administrative Agent for the amount of any honoring of any L/C. Any such
honoring which is not so reimbursed on the Business Day when so honored shall
constitute a Revolving Credit Loan.

      3-16. Additional Provisions Relating to L/C's.

            (a) The obligations of the Borrowers with respect to L/Cs shall be
absolute and unconditional. The obligations of the Borrowers with respect to
L/Cs shall rank pari passu with the obligations of the Borrowers to repay all
other Liabilities. The Borrowers, the Administrative Agent and the Lenders
acknowledge and agree that all Existing L/Cs shall be deemed L/Cs issued
pursuant to this Agreement. The Administrative Agent's rights, powers,
privileges and immunities specified in or arising under this Agreement with
respect to L/C's are in addition to any heretofore or at any time hereafter
otherwise created or arising, whether by statute or rule of law or contract.

            (b) The Borrowers will

                  (i) promptly examine the copy of any L/C (and any amendments
      thereof) sent to it by the Administrative Agent;

                  (ii) promptly examine all instruments and documents delivered
      to it from time to time by the Administrative Agent; and

                  (iii) within three (3) Business Days of receipt thereof,
      provide the Administrative Agent with written notice of any irregularity
      or claim of non-compliance with the instructions of such person or entity.

The Borrowers are conclusively deemed to have waived any such claim against the
Administrative Agent and its correspondents unless such notice is so timely
given.

            (c) The Borrowers will

                  (i) procure promptly any necessary documentation, permits, or
      licenses for the import, export or shipping of the property in connection
      with which any L/C is issued;

                  (ii) comply with all foreign and domestic governmental
      requirements relating to the shipment or financing of such property; and

                  (iii) furnish such evidence that the above-noted requirements
      have been fulfilled as the Administrative Agent reasonably may require.

            (d) The Borrowers will jointly and severally indemnify the
Administrative Agent and each Lender for and hold harmless against any and all
claims, loss, liability, or damage, including attorneys' reasonable fees,
howsoever arising from or in connection with the

                                      -29-


surrender or endorsement of any bill of lading, warehouse receipt or documents
of title at any time held by the Administrative Agent, or any of its
correspondents in connection with any L/C.

            (e) As further security for the payment or performance of any and
all Liabilities, the Borrowers hereby

                  (i) recognize and admit, so long as the Collateral Release
      Event has not occurred, the Administrative Agent's security interest in,
      and, after the occurrence and during the continuance of an Event of
      Default, the Administrative Agent's unqualified right to the possession
      and disposal of, any and all shipping documents, warehouse receipts,
      policies or certificates of insurance, and other documents accompanying or
      relative to any L/C (whether or not such documents, goods, or other
      property have been released to or upon the order of the Lead Borrower
      under a security agreement or trust or bailee receipt) and in and to the
      proceeds of each and all of the foregoing; and

                  (ii) if any third party shall have joined in the application
      for the L/C, assigns and transfers to the Administrative Agent all right,
      title and interest of the Borrowers in and to all property and interests
      which any Borrower may now or hereafter obtain from such third party
      arising in connection with the transaction to which the L/C relates, to
      the extent that same can be lawfully assigned.

            (f) Following the occurrence and during the continuance of any Event
of Default, and provided the Collateral Release Event has not occurred, the
Administrative Agent, with power of substitution and revocation, may:

                  (i) sign, in the name of the Administrative Agent, and/or the
      name of any Borrower, any document called for from any Borrower and/or
      endorse, in the name of any Borrower, any and all notes, checks, drafts,
      Documents of Title, or other instruments or documents in which the
      Administrative Agent may at any time have any interest in connection with
      any L/C; and

                  (ii) perform any obligation or agreement in connection with
      any L/C which the Administrative Agent deems necessary or desirable to
      protect the Administrative Agent' and Lenders' rights, powers and remedies
      under this Agreement and the other Loan Documents.

            (g) None of the Administrative Agent's correspondents or any
advising, negotiating, or paying bank with respect to any L/C, shall be
responsible in any way for:

                  (i) performance by any beneficiary under any L/C of that
      beneficiary's or payee's obligations to any Borrower; or

                  (ii) the form, sufficiency, correctness, genuineness,
      authority of any person signing, falsification, or the legal effect of,
      any documents called for under any L/C if (with respect to the foregoing)
      such documents on their face appear to be in order.

            (h) The Administrative Agent may honor, as complying with the terms
of any L/C and of any drawing thereunder, any drafts or other documents
otherwise in order, but signed

                                      -30-


or issued by an administrator, executor, conservator, trustee in bankruptcy,
debtor in possession, assignee for the benefit of creditors, liquidator,
receiver, or other legal representative of the party authorized under such L/C
to draw or issue such drafts or other documents.

            (i) Unless otherwise agreed to, in the particular instance, the
Borrowers hereby authorize the Administrative Agent to (i) select an advising
bank, if any; (ii) select a paying bank, if any; and (iii) select a negotiating
bank.

            (j) All directions, correspondence, and funds transfers relating to
any L/C are at the risk of the Borrowers. The Administrative Agent shall have
discharged its obligations under any L/C which, or the drawing under which,
includes payment instructions, by the initiation of the method of payment called
for in, and in accordance with, such instructions (or by any other commercially
reasonable and comparable method). The Administrative Agent does not assume any
responsibility for any inaccuracy, interruption, error, or delay in transmission
or delivery by post, telegraph or cable, or for any inaccuracy of translation.

            (k) The Administrative Agent's rights, powers, privileges and
immunities specified in or arising under this Agreement are in addition to any
heretofore or at any time hereafter otherwise created or arising, whether by
statute or rule of law or contract.

            (l) Except to the extent otherwise expressly provided hereunder or
agreed to in writing by the Administrative Agent, and the Borrowers, the L/C
will be governed by the Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce, Publication No. 500, and any subsequent
revisions thereof.

            (m) If any change in any law, executive order or regulation, or any
directive of any administrative or governmental authority (whether or not having
the force of law), or in the interpretation thereof by any court or
administrative or governmental authority charged with the administration
thereof, shall either:

                  (i) impose, modify or deem applicable any reserve, special
      deposit or similar requirements against L/C's heretofore or hereafter
      caused to be issued by the Administrative Agent or any Lender or with
      respect to which the Administrative Agent or any Lender has an obligation
      to lend to fund drawings thereunder; or

                  (ii) impose on Administrative Agent or any Lender any other
      condition or requirements relating to any such L/C's;

and the result of any event referred to in clause (i) or (ii), above, shall be
to increase the cost to such Person of issuing or maintaining any L/C, then,
upon demand by such Person and delivery by such Person to the Lead Borrower of a
certificate of an officer of such Person describing such change in law,
executive order, regulation, directive, or interpretation thereof, its effect on
such Person, and the basis for determining such increased costs and their
allocation, the Borrowers within five (5) Business Days after receipt of such
notice shall pay to such Person, from time to time as specified by such Person,
such amounts as shall be sufficient to compensate such Person for such increased
cost. The Administrative Agent's or such Lender's determination of costs
incurred under clause (m) (i) or (ii) above, shall be conclusive and binding on
the Borrowers in the absence of manifest error.

                                      -31-


            (n) The obligations of the Borrowers under this Agreement with
respect to L/C's are absolute, unconditional, and irrevocable and shall be
performed strictly in accordance with the terms hereof under all circumstances,
whatsoever including, without limitation, the following:

                  (i) Any lack of validity or enforceability or restriction,
      restraint, or stay in the enforcement of this Agreement, any L/C, or any
      other agreement or instrument relating thereto.

                  (ii) Any amendment or waiver of, or consent to the departure
      from, all or any of the above.

                  (iii) The existence of any claim, set-off, defense, or other
      right which the Borrowers may have at any time against the beneficiary of
      the L/C.

      3-17. Indemnification. Each Borrower jointly and severally agrees to
indemnify the Administrative Agent and each Lender and to hold the
Administrative Agent and each Lender (each an "INDEMNIFIED PARTY") harmless from
and against any loss, cost or expense (including loss of anticipated profits)
that an Indemnified Party may sustain or incur as a consequence of (a) default
by the Borrowers in payment of the principal amount of or any interest on any
LIBOR Loans as and when due and payable, including any such loss or expense
arising from interest or fees payable by an Indemnified Party to lenders of
funds obtained by it in order to maintain its LIBOR Loans, (b) default by the
Borrowers in making a borrowing or conversion after the Lead Borrower has given
(or is deemed to have given) a Conversion Request, or (c) the making of any
payment of any LIBOR Loan or the making of any conversion of any such Loan to a
Base Margin Loan on a day that is not the last day of the applicable Interest
Period with respect thereto, whether due to voluntary prepayment, payment
realized from any guarantor after the occurrence of an Event of Default, or
otherwise, including interest or fees payable by an Indemnified Party to lenders
of funds obtained by it in order to maintain any such Loans. Such loss shall
include, without limitation, an amount calculated as follows:

            (a) First, the Indemnified Party shall determine the amount by which
      (i) the total amount of interest which would have otherwise accrued
      hereunder on each installment of principal so paid or not borrowed, during
      the period beginning on the date of such payment or failure to borrow and
      ending on the date such installment would have been due (the "REEMPLOYMENT
      PERIOD"), exceeds (ii) the total amount of interest which would accrue,
      during the Reemployment Period, on any readily marketable bond or other
      obligation of the United States of America designated by the Indemnified
      Party in its sole discretion at or about the time of such payment, such
      bond or other obligation of the United States of America to be in an
      amount equal (as nearly as may be) to the amount of principal so paid or
      not borrowed and to have a maturity comparable to the Reemployment Period,
      and the interest to accrue thereon to take account of amortization of any
      discount from par or accretion of premium above par at which the same is
      selling at the time of designation. Each sum amount is hereafter referred
      to as an "INSTALLMENT AMOUNT".

                                      -32-


            (b) Second, each Installment Amount shall be treated as payable as
      of the date on which the related principal installment would have been
      payable by the Borrowers had such principal installment not been prepaid
      or not borrowed.

            (c) Third, the amount to be paid on each such date shall be the
      present value of the Installment Amount determined by discounting the
      amount thereof from the date on which such Installment Amount is to be
      treated as payable, at the same annual interest rate as that payable upon
      the bond or other obligation of the United States of America designated as
      aforesaid by the Indemnified Party.

      3-18. Computation of Interest and Fees. Interest and all fees payable on
account of the Liabilities shall be computed daily on the basis of a year of 360
days and paid for the actual number of days for which due. If the due date for
any payment of principal is extended by operation of law, interest shall be
payable for such extended time. If any payment required by this Agreement or any
other Loan Document becomes due on a day that is not a Business Day, such
payment may be made on the next succeeding Business Day (or prior Business Day
in connection with a LIBOR Loan), and such extension shall be included in
computing interest in connection with such payment.

      3-19. Overdue Payments. Overdue amounts of principal, fees, costs,
expenses and charges under the Loan Documents shall bear interest from and
including the due date thereof until paid, payable on demand, at a rate equal to
the Base Rate plus Two and 00/100 Percent (2.00%) per annum.

      3-20. Automatic Payment. The Borrowers authorize the Administrative Agent
to automatically debit the Borrowers' demand deposit accounts with the
Administrative Agent on the Interest Payment Date or such other dates when due
for all principal, interest, fees, costs, commissions, service charges and
expenses due to the Lenders on account of the Liabilities.

      3-21. Additional Costs, Etc. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Lender by any central bank or other fiscal, monetary or
other authority (whether or not having the force of law), shall:

            (a) subject any Lender to any tax, levy, impost, duty, charge, fee,
      deduction or withholding of any nature with respect to this Agreement, the
      other Loan Documents, or the Loans (other than taxes based upon or
      measured by the income or profits of the Lender), or

            (b) materially change the basis of taxation (except for changes in
      taxes on income or profits) of payments to any Lender of the principal of
      or the interest on any Loans or any other amounts payable to the Lender
      under this Agreement or the other Loan Documents, or

                                      -33-


            (c) impose or increase or render applicable (other than to the
      extent specifically provided for elsewhere in this Agreement) any special
      deposit, reserve, assessment, liquidity, capital adequacy or other similar
      requirements (whether or not having the force of law) against assets held
      by, or deposits in or for the account of, or loans by, or commitments of
      an office of the Lender, or

            (d) impose on any Lender any other conditions or requirements with
      respect to this Agreement, the other Loan Documents, the Loan, or any
      class of loans or commitments of which any Loan forms a part;

      and the result of any of the foregoing is

                  (i) to increase the cost to any Lender of making, funding,
            issuing, renewing, extending or maintaining any of the Loans, or

                  (ii) to reduce the amount of principal, interest or other
            amount payable to any Lender hereunder on account of any of the
            Loans, or

                  (iii) to require any Lender to make any payment or to forego
            any interest or other sum payable hereunder, the amount of which
            payment or foregone interest or other sum is calculated by reference
            to the gross amount of any sum receivable or deemed received by such
            Lender from the Borrowers hereunder,

      then, and in each such case, the Borrowers will, upon demand made by such
      Lender at any time and from time to time and as often as the occasion
      therefor may arise, pay to such Lender such additional amounts as will be
      sufficient to compensate such Lender for such additional cost, reduction,
      payment or foregone interest or other sum, provided such Lender furnishes
      the Lead Borrower and the Administrative Agent with a copy of such request
      together with an explanation therefor and such Lender makes such request
      consistent with its practices relative to similar borrowers .

      3-22. Capital Adequacy. If any Lender shall have determined that the
adoption of any applicable law, rule, regulation, guideline, directive or
request (whether or not having force of law) regarding capital requirements, or
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender with any of the foregoing
imposes or increases a requirement by such Lender to allocate capital resources
to the Loans made, or to be made, hereunder, which has or would have the effect
of reducing the return on such Lender's capital to a level below that which such
Lender could have achieved (taking into consideration such Lender's then
existing policies with respect to capital adequacy and assuming full utilization
of such Lender's capital) but for such adoption, change or compliance, by any
amount deemed by such Lender to be material: (i) such Lender shall promptly
after its commercially reasonable determination of such occurrence give notice
thereof to the Lead Borrower together with an explanation therefor; and (ii) the
Borrowers shall pay to such Lender as an additional fee from time-to-time on
demand such amount as the Lender certifies to be the amount that will

                                      -34-


compensate it for such reduction. In determining such amounts, such Lender may
use any reasonable averaging and attribution methods.

      3-23. Lenders' Commitments.(a) The obligations of each Lender are several
and not joint. No Lender shall have any obligation to make any Revolving Credit
Loan in excess of the lesser of the following:

                  (i) that Lender's Commitment Percentage of the subject
      Revolving Credit Loan or of Availability,

                  (ii) that Lender's Commitment of the Revolving Credit.

            (b) No Lender shall have any liability to the Borrowers on account
of the failure of any other Lender to provide any Revolving Credit Loan nor any
obligation to make up any shortfall which may be created by such failure.

      3-24. Replacement Lenders.In the event that the Borrowers become obligated
to pay additional amounts or increased amounts to, or receive notice from, any
Lender pursuant to Section 3-11, 3-21 or 3-22 hereof (an "Affected Lender"),
then, unless such Affected Lender has theretofore removed or cured the
conditions which resulted in the obligation to pay such additional amounts or
increased amounts, and so long as no Event of Default then exists, the Borrowers
may, on thirty (30) Business Day's prior written notice from the Lead Borrower
to the Administrative Agent and the Affected Lender, cause the Affected Lender
to (and such Affected Lender shall) assign without recourse, such Affected
Lender's Commitment at such time together with all accrued but unpaid interest
and fees to either (x) another Lender willing to accept such assignment, or (y)
to an Eligible Assignee, to the extent available, in each instance pursuant to
the provisions of Section 17-13 below. Each of the Administrative Agent and the
Affected Lender shall reasonably cooperate with the Lead Borrower, without
recourse to either such Person, in effectuating the replacement of such Affected
Lender under this Section. The exercise by the Borrowers of their rights under
this Section shall be at the Borrowers' sole cost and expense and at no cost or
expense to the Administrative Agent, the Affected Lender or any of the other
Lenders. The terms of this Section shall not in any way limit the Borrowers'
obligation to pay to any Affected Lender compensation owing to such Affected
Lender pursuant to Section 3-21 or 3-22.

ARTICLE 4 - THE TERM LOAN AND THE ACQUISITION TERM LOAN.

      4-1. The Term Loan. Subject to the terms and conditions set forth in this
Agreement, each Lender severally agrees to lend to the Borrowers on the Closing
Date such Lender's Commitment Percentage of the term loan facility in the
aggregate original principal sum of $8,000,000.00 (the "TERM LOAN") to the
Borrowers pursuant to the Borrowers' Term Notes of even date (hereinafter,
collectively, the "TERM NOTE") payable to such Lender in a principal amount
equal to each such Lender's Commitment Percentage of the Term Loan, in the form
of EXHIBIT 4-1, annexed hereto, and repayable with interest as provided herein.
In the event that a Term Note is ever lost, mutilated, or destroyed, the
Borrowers shall execute a replacement thereof and deliver such replacement to
the subject Lender, subject to such Lender providing a

                                      -35-


commercially reasonable indemnity in connection therewith. The Term Loan is an
amendment and restatement of the Term Loan defined in the Existing Agreement.

      4-2. The Acquisition Term Loan. Subject to the terms and conditions set
forth in this Agreement, each Lender severally agrees to lend to the Borrowers
on the Closing Date such Lender's Commitment Percentage of the acquisition term
loan facility in the aggregate original principal sum of $55,000,000.00 (the
"ACQUISITION TERM LOAN") to the Borrowers pursuant to the Borrowers' Acquisition
Term Notes of even date (hereinafter, collectively, the "ACQUISITION TERM NOTE")
payable to such Lender in a principal amount equal to each such Lender's
Commitment Percentage of the Acquisition Term Loan, in the form of EXHIBIT 4-2,
annexed hereto, and repayable with interest as provided herein. Neither the
original nor a copy of any Acquisition Term Note shall be required, however, to
establish or prove any Liability on account thereof. In the event that an
Acquisition Term Note is ever lost, mutilated, or destroyed, the Borrowers shall
execute a replacement thereof and deliver such replacement to the subject
Lender, subject to such Lender providing a commercially reasonable indemnity in
connection therewith. The proceeds of the Acquisition Term Loan shall be used to
fund the Impact Acquisition.

      4-3. Interest Payments on Term Loan and the Acquisition Term Loan(a) At
the Lead Borrower's option and in accordance with the terms of this Agreement,
each of the Term Loan and the Acquisition Term Loan shall bear interest at the
Base Rate or the LIBOR Rate, as specified from time to time by the Lead Borrower
in the Renewal/Conversion Notice with respect to any portion of the Term Loan or
the Acquisition Loan or as otherwise provided in this Agreement.

            (b) Interest on the Term Loan and the Acquisition Term Loan shall be
payable in arrears on the applicable Interest Payment Date for that Loan and on
the Termination Date.

            (c) Following the occurrence and during the continuance of any Event
of Default (and whether or not the Lenders exercise their rights on account
thereof), upon notice from the Administrative Agent to the Lead Borrower, the
outstanding principal balance of each of the Term Loan and the Acquisition Term
Loan shall bear interest at a rate per annum equal to the Base Rate plus Two and
00/100 Percent (2.00%) per annum.

      4-4. Principal Payments on the Term Loan and the Acquisition Term Loan(a)
The Borrowers shall repay the outstanding principal balance of each of the Term
Loan and the Acquisition Term Loan as follows:

                  (i) Term Loan: Each of the Borrowers jointly and severally
      promises to pay to the Administrative Agent, for the pro-rata accounts of
      the Lenders, the principal amount of the Term Loan, in equal consecutive
      quarterly installments of $125,000.00 each, such quarterly installments to
      be due and payable on August 1st, November 1st, February 1st and May 1st
      of each calendar year, commencing on November 1, 2004. Each of the
      Borrowers further agrees to pay to the Administrative Agent, for the
      pro-rata accounts of the Lenders, interest on the unpaid principal amount
      of the Term Loan from time to time outstanding from the date hereof until
      payment in full thereof at the rates per annum and on the dates set forth
      in Section 4.3 above.

                                      -36-


            On the Maturity Date for the Term Loan (or such earlier date on
      which the Term Loan becomes due and payable pursuant to Article 12 below),
      the entire outstanding balance of the Term Loan (including without
      limitation, all unpaid principal, all accrued but unpaid interest and all
      unpaid fees, charges, costs and expenses) shall be immediately due and
      payable in full.

            The Borrower acknowledges that the original twenty (20) year
      schedule provided for in the Existing Agreement (and continued herein) for
      the periodic payment of unpaid principal of the Term Loan is longer than
      the time which will elapse until the Maturity Date for the Term Loan, and
      that a substantial balance or "balloon" payment of principal may be
      required on the Maturity Date for the Term Loan.

                  (ii) Acquisition Term Loan: Each of the Borrowers jointly and
      severally promises to pay to the Administrative Agent, for the pro-rata
      accounts of the Lenders, the principal amount of the Acquisition Term
      Loan, in equal consecutive quarterly installments of $1,964,286.00 each
      (except that the payment due on November 1, 2004 shall be in the amount of
      $1,309,524.00), based upon a seven (7) year amortization schedule, such
      quarterly installments to be due and payable on August 1st, November 1st,
      February 1st and May 1st of each calendar year, commencing on November 1,
      2004. Each of the Borrowers further agrees to pay to the Administrative
      Agent, for the pro-rata accounts of the Lenders, interest on the unpaid
      principal amount of the Acquisition Term Loan from time to time
      outstanding from the date hereof until payment in full thereof at the
      rates per annum and on the dates set forth in Section 4.3 above.

            On the Maturity Date for the Acquisition Term Loan (or such earlier
      date on which the Acquisition Term Loan becomes due and payable pursuant
      to Article 12 below), the entire outstanding balance of the Acquisition
      Term Loan (including without limitation, all unpaid principal, all accrued
      but unpaid interest and all unpaid fees, charges, costs and expenses)
      shall be immediately due and payable in full.

            The Borrower acknowledges that the seven (7) year schedule provided
      herein for the periodic payment of unpaid principal of the Acquisition
      Term Loan is longer than the time which will elapse until the Maturity
      Date for the Acquisition Term Loan, and that a substantial balance or
      "balloon" payment of principal may be required on the Maturity Date for
      the Acquisition Term Loan.

            (b) In addition to the principal payments required pursuant to
subsection (a) above, the Borrowers shall also make the following payments of
principal:

                  (i) commencing with the fiscal year ending December 31, 2005,
      the Borrowers shall pay annually to the Administrative Agent, for the
      ratable benefit of the Lenders, by no later than February 15 of each year,
      fifty percent (50%) of its Excess Cash Flow for the most recently
      completed fiscal year (each an "EXCESS CASH FLOW PAYMENT"). Each such
      Excess Cash Flow Payment shall be applied as follows:

                                      -37-


                        (A) First, to the outstanding principal balance of the
                  Revolving Credit Loans, provided, however, the outstanding
                  principal balance of the Revolving Credit Loans on the last
                  day of the subject fiscal year compared with the outstanding
                  principal balance of the Revolving Credit Loans on the last
                  day of the previous fiscal year does not already reflect such
                  a reduction;

                        (B) Second, to the outstanding principal balance of the
                  Acquisition Term Loan, in inverse order of maturity until the
                  Acquisition Term Loan is paid in full; and

                        (C) Third, to the outstanding principal balance of the
                  Term Loan, in inverse order of maturity until the Term Loan is
                  paid in full.

                        Application of each such Excess Cash Flow Payment shall
                  not postpone or relieve the Borrowers of their obligations to
                  make the scheduled principal payments required by subsection
                  (a) above; and

                  (ii) the Borrowers shall pay the Administrative Agent, for the
      ratable benefit of the Lenders, the net proceeds of (i) sales of assets
      not in the ordinary course of business, less reasonable fees and
      commissions and, as long as no Event of Default then exists, capital gains
      or other income taxes paid or payable as a result of any such sale or
      disposition (after taking into account any available tax credits or
      deductions), (ii) 50 % (100% if an Event of Default then exists) of any
      equity offerings, (iii) debt issuances (other than, if no Event of Default
      then exists, in connection with any indebtedness permitted by Section 7-7
      or refinancing thereof pursuant to Section 7-7(d), and (iv) casualty and
      condemnation proceeds (except to the extent utilized to replace or repair
      the property subject to the casualty as long as no Event of Default then
      exists). Such net proceeds will be applied first to the outstanding
      principal balance under Term Loan and the Acquisition Term Loan, on a
      pro-rata basis, in inverse order of maturity until the Term Loan and the
      Acquisition Term Loan are paid in full, and thereafter, to all accrued and
      unpaid interest and then outstanding principal due under the Revolving
      Credit. Application of each such payments required hereunder shall not
      postpone or relieve the Borrowers of their obligations to make the
      scheduled principal payments required by subsection (a) above.

            (c) The Borrowers may prepay all or any portion of each of the Term
Loan and/or the Acquisition Term Loan without premium or penalty as provided for
in Section 3-12, except for any amounts required to be paid pursuant to Section
3-17. No such prepayment shall postpone or relieve the Borrowers of their
obligations to make the scheduled principal payments required by subsection (a)
above. No amount repaid under either of the Term Loan or the Acquisition Term
Loan may be re-borrowed.

      4-5. Term Loan Advances. Each of the Term Loan and the Acquisition Term
Loan shall be fully funded on the Closing Date, and no further advances shall be
made under either of the Term Loan or the Acquisition Term Loan.

                                      -38-


      4-6. Administrative Agent's Records. The entries on the records of the
Administrative Agent concerning the Term Loan and the Acquisition Term Loan
shall be prima facie evidence of the aggregate principal amount outstanding
thereunder and interest accrued thereon. Any statement rendered by the
Administrative Agent to the Lead Borrower concerning the Term Loan and/or the
Acquisition Term Loan shall be considered correct and accepted by the Borrowers
and shall be conclusively binding upon the Borrowers unless the Lead Borrower
provides the Administrative Agent with written objection thereto within sixty
(60) days from the mailing of such statement, which written objection shall
indicate, with particularity, the reason for such objection.

      4-7. Interest Rate Protection. The Administrative Agent shall endeavor to,
and any Lender may also, offer interest rate protection agreements to the
Borrowers on the terms and conditions generally offered by the Administrative
Agent or such Lender, as the case may be, to its other similarly situated
borrowers. Any such interest rate protection agreements shall be collaterally
assigned to the Administrative Agent, for the ratable benefit of the Lenders
unless and until the Collateral Release Event occurs.

ARTICLE 5 - COLLATERAL SECURITY AND GUARANTIES.

      5-1. Security of Borrowers.

            (a) All of the Liabilities are to be secured by a perfected first
priority Collateral Interest (subject only to Permitted Liens entitled to
priority under applicable law) in all of the assets of the Borrowers and all
Subsidiaries of the Borrowers, whether now owned or hereafter acquired,
including the Real Estate, and any capital stock or other equity interests or
Investment Property owned by any Borrower (collectively, the "COLLATERAL").

            (b) The Liabilities shall also be guaranteed pursuant to the terms
of the Guaranty executed and delivered by each of the Borrowers.

      5-2. Assignment of Claims Compliance Event. Upon either (a) the occurrence
and continuance of any Event of Default, or (b)(x) the occurrence and
continuance of any of the following events described in either clauses (i) or
(ii) below (such events are hereinafter sometimes referred to as an "ASSIGNMENT
OF CLAIMS COMPLIANCE EVENT"), and (y) the delivery of written notice by the
Administrative Agent to the Lead Borrower) that an Assignment of Claims
Compliance Event has occurred, then the Borrowers shall, at the Borrowers' cost
and expense, promptly execute and deliver to the Administrative Agent such
documentation as shall be required, together with such documentation which the
Administrative Agent's counsel shall prepare and deliver to the Lead Borrower,
and take all such actions as the Administrative Agent may reasonably request in
order to comply with the Assignment of Claims Act with respect to all existing
and thereafter arising Government Contracts which are subject of the Collateral
Interest granted in favor of the Administrative Agent for the ratable benefit of
the Lenders pursuant to the Security Documents:

                  (i) At any time, the Borrowers permit their ratio of
      Borrowers' Consolidated Total Funded Indebtedness to the Borrowers'
      Consolidated trailing four

                                      -39-


      quarter EBITDA (tested on a pro forma basis in connection with
      contemplated acquisitions) to be greater than the following amounts during
      the following time periods:



           TIME PERIOD               MAXIMUM RATIO
           -----------               -------------
                                  
Closing Date through and including
December 31, 2004                    3.25 to 1.00

January 1, 2005 through and
including June 30, 2005              3.00 to 1.00

July 1, 2005 through and including
December 31, 2005                    2.50 to 1.00

January 1, 2006 and thereafter       2.00 to 1.00


                  (ii) At any time, the ratio of the Borrowers' Consolidated
      Operating Cash flow to Borrowers' Total Debt Service, calculated on a
      rolling four (4) fiscal quarter basis, is less than following, during the
      following time periods:



            TIME PERIOD                    MINIMUM RATIO
            -----------                    -------------
                                        
Closing Date through and including
December 31, 2005                           1.50 to 1.00

January 1, 2006 and thereafter              2.00 to 1.00


      Upon the occurrence of a Assignment of Claims Compliance Event, the
Borrowers jointly and severally agree to take any action and to execute and
deliver all documentation reasonably requested by the Administrative Agent in
order to allow the Administrative Agent to (i) provide notice of its security
interest in and right to payment under all Government Contracts (other than
Government Contracts which are classified or otherwise prohibit assignment), and
(ii) otherwise comply in all respects with the requirements of the Assignment of
Claims Act. In connection therewith, the Borrowers shall promptly notify the
Administrative Agent of any Government Contract entered into by any Borrower and
provide a detailed description of such contractual arrangement sufficient to
allow the Administrative Agent to comply in all respects with the requirements
of the Assignment of Claims Act. In addition, the Borrowers shall, at the
Borrowers' cost and expense, execute and deliver to the Administrative Agent
such additional documents, instruments or agreements as the Administrative Agent
may reasonably require (including such document, instrument or agreement which
the Administrative Agent's counsel

                                      -40-


shall prepare) to effectuate the foregoing. The failure to provide to the
Administrative Agent any such additional documents, instruments or agreements
within thirty (30) days after the Administrative Agent's request shall
constitute an immediate Event of Default hereunder.

      5-3. Collateral Release Event. Notwithstanding the provisions of Section
5-1 and 5-2, above, the Administrative Agent and the Lenders hereby agree that
upon the determination by the Administrative Agent that the Borrowers have
satisfied all of the following conditions (collectively, the "COLLATERAL RELEASE
EVENT"), which determination shall be made promptly by the Administrative Agent
exercising its commercially reasonable discretion, the Collateral Interests,
except for the Mortgage, shall be deemed released:

            (a) The Administrative Agent shall have received the financial
statements for the Borrowers' fiscal year ending December 31, 2005, which are
required to be delivered pursuant to Section 11-4(a) hereof, which financial
statements shall reflect that, (x) the consummation of the Impact Acquisition
shall not have resulted in a Material Adverse Change to the Borrowers when
compared to the financial condition of the Borrowers, on a Consolidated basis,
as of the Closing Date, and (y) the business operations of the Borrowers have
performed within, or in excess of, ninety percent (90%) of projected contract
revenues and ninety percent (90%) of projected EBITDA for such fiscal year,
based upon the annual financial projections for such fiscal year which the Lead
Borrower has provided to the Administrative Agent and which are entitled
"Statement of Projections, dated as of August 18, 2004";

            (b) The Leverage Ratio for the Borrowers' fiscal year ending
December 31, 2005, based upon the financial statements which are required to be
delivered pursuant to Section 11-4(a) hereof, is less than 2.00 to 1.00;

            (c) No Suspension Event then exists.

      The Collateral Release Event shall not be deemed effective until the
Administrative Agent has notified the Lead Borrower in writing that the
Borrowers have satisfied the conditions set forth above; provided, however, the
Administrative Agent shall promptly provide the Lead Borrower with such
notification if the Borrowers have in fact satisfied such conditions.

      To effectuate the foregoing termination and release, the Administrative
Agent will promptly execute and deliver to the Lead Borrower (or its counsel),
at the Borrowers' expense, any and all releases, UCC-3 termination statements
and other documents and instruments which the Lead Borrower (or its counsel) may
prepare and deliver to the Administrative Agent and its counsel, and which are
reasonably necessary and appropriate in order to terminate of record the
Collateral Interest granted to the Administrative Agent in all of the Collateral
(other than the Collateral Interest granted to the Administrative Agent pursuant
to the Mortgage).

ARTICLE 6 - CONDITIONS PRECEDENT.

      Precedent to the effectiveness of this Agreement, the establishment of the
financing arrangements contemplated hereby, the making of the first loan under
the Revolving Credit and the amendment and restatement of the Term Loan and the
funding of the Acquisition Term Loan, the documents respectively described in
Sections 6-1 through and including 6-11 each in form and substance satisfactory
to the Administrative Agent shall have been delivered to the

                                      -41-


Administrative Agent, and the conditions respectively described in Sections 6-13
through and including 6-17, shall have been satisfied:

      6-1. Corporate Due Diligence.

            (a) Certificates of corporate good standing issued by the respective
Secretary of State of the Borrowers' state of organization.

            (b) A Certificate of each Borrower's Assistant Clerk of the due
adoption, continued effectiveness, and setting forth the texts of, each
corporate resolution adopted in connection with the establishment of the loan
arrangement contemplated by the Loan Documents and attesting to the true
signatures of each Person authorized as a signatory to any of the Loan
Documents.

      6-2. Opinion. An opinion of counsel to the Borrowers in form and substance
satisfactory to the Administrative Agent.

      6-3. Officers' Certificates. A Certificate executed by the President and
the Treasurer of each Borrower and stating that, among other things, the
representations and warranties made by such Borrower to the Administrative Agent
and the Lenders in the Loan Documents are true and complete as of the date of
such Certificate, that no event has occurred which is or which, solely with the
giving of notice or passage of time (or both) would be an Event of Default, and
that certain provisions of this Agreement concerning the waiver of jury trial,
the designation of and submission to the exclusive jurisdiction and venue of
certain courts, and other various waivers and indemnifications have brought to
such Borrower's attention.

      6-4. Guaranties. The Administrative Agent shall have received unlimited
guaranties in form and substance acceptable to the Administrative Agent wherein
each Borrower shall unconditionally guaranty all Liabilities of the other
Borrowers to the Administrative Agent and each Lender.

      6-5. Collateral Interests. The Administrative Agent shall have received
all documents and instruments, including Uniform Commercial Code financing
statements required by law or reasonably requested by the Administrative Agent
to be filed, registered, published or recorded to create or perfect the first
priority Encumbrances in favor of the Administrative Agent intended to be
created under the Loan Documents and all such documents and instruments shall
have been so filed, registered, published or recorded to the satisfaction of the
Administrative Agent and an endorsement to the title insurance policy insuring
the Mortgage shall have been issued in form and substance reasonably
satisfactory to the Administrative Agent.

      6-6. Perfection Certificates and UCC Search Results. The Administrative
Agent shall have received from each of the Borrowers a completed and fully
executed perfection certificate and the results of UCC searches (and the
equivalent thereof in all applicable foreign jurisdictions) with respect to the
Collateral in form and substance reasonably satisfactory to the Administrative
Agent.

      6-7. Consents and Approvals. All necessary consents and approvals to the
transactions contemplated hereby shall have been obtained and shall be
reasonably satisfactory to the.

                                      -42-


Administrative Agent.6-8. All Fees and Expenses Paid All fees due at or
immediately after the first funding under the Revolving Credit and all costs and
expenses incurred by the Administrative Agent in connection with the
establishment of the credit facilities contemplated hereby (including the
reasonable fees and expenses of counsel to the Administrative Agent) shall have
been paid in full.

      6-9. Lockbox. The lockbox and account control agreements required under
Section 7-3 below.

      6-10. Additional Documents. Such additional instruments and documents as
the Administrative Agent or their counsel reasonably may require or request.

      6-11. Consummation of Impact Acquisition. The Impact Acquisition shall
have been consummated to the satisfaction of the Administrative Agent and the
Lead Borrower shall have provided the Administrative Agent with copies of the
final executed Acquisition Documentation, with all schedules and exhibits
thereto.

      6-12. Evidence of Dissolution of Subsidiaries. The Lead Borrower shall
have provided the Administrative Agent with certificates from the Massachusetts
Secretary of State which shall confirm that each of the following Subsidiaries
have been dissolved: (a) Dynamics Research Investment Corporation, (b) DRC
Encoder, Inc., (c) DRC Metrigraphics, Inc., (d) DRC Software, Inc., and (e) DRC
Telecom, Inc.

      6-13. No Defaults under Applicable law or Material Agreements. The
consummation of the transactions contemplated hereby shall not (a) violate any
Requirement of Law or (b) conflict with, or result in a default or event of
default under, any material agreement of any Borrower.

      6-14. No Litigation. Except as noted on EXHIBIT 6-17, there shall not
exist any litigation or other proceedings the result of which would have a
Material Adverse Change.

      6-15. Representations and Warranties. Each of the representations made by
or on behalf of any Borrower in this Agreement or in any of the other Loan
Documents or in any other report, statement, document, or paper provided by any
or on behalf of any Borrower shall be true and complete in all material respects
as of the date as of which such representation or warranty was made.

      6-16. No Suspension Event. No Suspension Event shall then exist.

      6-17. No Adverse Change. Except as noted on EXHIBIT 6-17, no event shall
have occurred or failed to occur, which occurrence or failure had or could
reasonably be expected to have a materially adverse effect upon the Borrowers'
financial condition, operating results, or cash flows from the Borrowers'
financial condition at June 30, 2004.

ARTICLE 7 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.

      To induce the Administrative Agent and the Lenders to establish the loan
arrangement contemplated herein and to make Loans and advances and to provide
financial accommodations

                                      -43-


under the Revolving Credit (each of which Loans shall be deemed to have been
made in reliance thereupon), and to amend and restate the Term Loan, and to make
the Acquisition Loan, the Borrowers, in addition to all other representations,
warranties, and covenants made by the Borrowers in any other Loan Document, make
those representations, warranties, and covenants included in this Agreement.

      7-1. Payment and Performance of Liabilities. The Borrowers shall pay each
Liability when due (or when demanded if payable on demand) and shall promptly,
punctually, and faithfully perform each other Liability.

      7-2. Due Organization - Corporate Authorization - No Conflicts.

            (a) Each Borrower presently is and shall hereafter remain in good
standing as a corporation, or limited liability company, as the case may be, in
the State referenced in the Preamble hereto and is and shall hereafter remain
duly qualified and in good standing in every other State in which, by reason of
the nature or location of such Borrower's assets or operation of such Borrower's
business, such qualification may be necessary, except for such States in which
failure to be so qualified and in good standing would not result in a Material
Adverse Change.

            (b) Each Subsidiary is listed on EXHIBIT 7-2, annexed hereto. Each
Subsidiary is and shall hereafter remain in good standing in the State in which
incorporated and is and shall hereafter remain duly qualified in each other
State in which, by reason of that entity's assets or the operation of such
entity's business, such qualification may be necessary, except for such States
in which failure to be so qualified and in good standing would not result in a
Material Adverse Change. The Borrowers shall provide the Administrative Agent
with prior written notice of any entity's becoming or ceasing to be a
Subsidiary.

            (c) Each Borrower has all requisite corporate power and authority to
execute and deliver to the Administrative Agent all and singular the Loan
Documents to which such Borrower is a party and has and will hereafter retain
all requisite corporate power to perform all and singular the Liabilities.

            (d) The execution and delivery by each Borrower of each Loan
Document to which it is a party; each Borrower's consummation of the
transactions contemplated by such Loan Documents (including, without limitation,
the creation of security and mortgage interests by such Borrower as contemplated
hereby) ; and each Borrower's performance under those of the Loan Documents to
which it is a party; the borrowings hereunder; and the use of the proceeds
thereof:

                  (i) Have been duly authorized by all necessary corporate
      action.

                  (ii) Do not, and will not, contravene in any material respect
      any provision of any Requirement of Law or obligation of such Borrower.

                  (iii) Will not result in the creation or imposition of, or the
      obligation to create or impose, any Encumbrance upon any assets of any
      Borrower pursuant to any Requirement of Law or obligation, except pursuant
      to the Loan Documents.

                                      -44-


            (e) The Loan Documents have been duly executed and delivered by each
Borrower party thereto and are the legal, valid and binding obligations of each
Borrower party thereto, enforceable against each Borrower party thereto in
accordance with their respective terms.

      7-3. Maintain Accounts. To permit the Administrative Agent to monitor the
Borrowers' financial performance and condition, each Borrower shall maintain all
of such Borrower's depository accounts with any of the Lenders or other
depository institutions disclosed to, and reasonably acceptable to the
Administrative Agent, with all significant deposits to be maintained with any
Lender; provided, however, for a period of six (6) months commencing on the date
hereof, the foregoing requirement shall not apply to those existing depository
accounts of Impact which during such period, the Borrowers will, in good faith,
work diligently to transfer to any of the Lenders (or another depository
institutions disclosed to, and reasonably acceptable to the Administrative
Agent); provided further, however, the aggregate outstanding principal balance
of any such existing depository accounts shall not exceed $500,000.00, at any
time. Upon the occurrence of an Event of Default which continues uncured or
waived, all third party depository accounts shall be transferred to, maintained
with, and controlled by the Administrative Agent. Any amounts not deposited
directly with the Lenders and received by any third party institution during any
transition shall be transferred on a daily basis to an account established and
controlled by the Administrative Agent.

      7-4. Trade Names.

            (a) The conduct by any Borrower of such Borrower's business does not
infringe on the patents, industrial designs, trademarks, trade names, trade
styles, brand names, service marks, logos, copyrights, trade secrets, know-how,
confidential information, or other intellectual or proprietary property of any
third Person, that could result in a Material Adverse Change.

            (b) Each Borrower owns and possesses, or has the right to use all
patents, industrial designs, trademarks, trade names, trade styles, brand names,
service marks, logos, copyrights, trade secrets, know-how, confidential
information, and other intellectual or proprietary property of any third Person
necessary for such Borrower's conduct of its business.

      7-5. Locations. The Collateral, and the books, records, and papers of the
Borrowers pertaining thereto, are kept and maintained solely at the chief
executive offices of the Borrowers stated in the Preamble of this Agreement, and
at those locations which are listed on EXHIBIT 7-5, annexed hereto, which
EXHIBIT includes all service bureaus with which any such records are maintained
and the names and addresses of each of the Borrower's landlords. So long the
Collateral Release Event has not occurred, the Borrowers shall not remove any of
the books, records, and papers of the Borrowers pertaining to the Collateral
from said chief executive offices or those locations listed on EXHIBIT 7-5.

      7-6. Title to Collateral. Each Borrower is, and shall hereafter remain,
the owner of all of its present and future assets free and clear of all
Encumbrances, other than the following ("PERMITTED LIENS"):

                                      -45-


            (a) the mortgages and security interests (including Capital Leases)
      referred to in EXHIBIT 7-6 attached hereto, or any renewal, extension or
      refunding of any such mortgage or security interest in an amount not
      exceeding the amount thereof remaining unpaid immediately prior to such
      renewal, extension or refunding;

            (b) liens for taxes and other amounts not yet delinquent or being
      contested in good faith as provided in Section 7-13; liens in connection
      with workmen's compensation, unemployment insurance or other social
      security obligations; liens securing the performance of bids or
      performance bonds, tenders, contracts, leases, statutory obligations,
      surety and appeal bonds, liens to secure progress or partial payments and
      other liens of like nature arising in the ordinary course of business;
      mechanics', workmen's, materialmen's, carrier's, warehousemen's, or other
      like liens arising in the ordinary course of business in respect of
      obligations which are not yet due or which are being contested in good
      faith; and other liens or encumbrances incidental to the conduct of the
      business of any Borrower or any Subsidiary or to the ownership of their
      respective properties or assets, which were not incurred in connection
      with the borrowing of money or the obtaining of credit and which do not,
      individually or in the aggregate, materially detract from the value of the
      properties or assets of the Borrowers and their Subsidiaries or materially
      affect the use thereof in the operation of their business;

            (c) Encumbrances in the nature of (i) zoning restrictions, (ii)
      easements, (iii) restrictions of record on the use of real property, (iv)
      landlords' and lessors' encumbrances on rented premises and (v)
      restrictions on transfers or assignments of leases, which in each case do
      not, individually or in the aggregate, materially detract from the value
      of the encumbered property or impair the use thereof in the business of
      any Borrower or any Subsidiary;

            (d) Liens in respect of judgments or awards, to the extent that such
      judgments or awards are permitted by Section 7-7(j);

            (e) Restrictions under federal and state securities laws on the
      transfer of securities;

            (f) Restrictions under foreign trade regulations, other governmental
      rules and regulations, and subcontracts on the transfer or licensing of
      certain assets of the Borrowers and their Subsidiaries;

            (g) Liens and security interests granted to third parties in
      connection with purchase money security interest or leases to secure
      amounts not to exceed $1,500,000 in the aggregate at any time outstanding;
      and

            (h) Liens and security interests granted to the Administrative Agent
      and the Lenders under the Loan Documents.

      7-7. Indebtedness. The Borrowers do not and shall not hereafter have any
Indebtedness with the exceptions of:

                                      -46-


            (a) Indebtedness to the Administrative Agent and the Lenders under
      this Agreement and the other Loan Documents;

            (b) Indebtedness existing as of the Closing Date of any wholly-owned
      Subsidiary to a Borrower or any other wholly-owned Subsidiary and of a
      Borrower to any wholly-owned Subsidiary; provided, however, that (i) all
      moneys due from a Borrower to any Subsidiary which is not a Borrower will
      be expressly constituted as a Subordinated Debt and (ii) no Borrower shall
      repay any such moneys due to any Subsidiary at any time unless no Event of
      Default exists and no event which, with the giving of notice or lapse of
      time or both, would constitute an Event of Default exists or will exist
      after such repayment;

            (c) Current liabilities of a Borrower or any Subsidiary (other than
      for borrowed money) incurred in the ordinary course of its business and in
      accordance with customary trade practices;

            (d) Existing Indebtedness of a Borrower or any Subsidiary referred
      to in EXHIBIT 7-7 attached hereto, and renewals and extensions thereof,
      provided that (i) the aggregate principal amount of such Indebtedness is
      not at any time increased, (ii) no material terms applicable to such
      Indebtedness shall be more favorable to the renewal or extension lenders
      than the terms that are applicable to the holders of such Indebtedness on
      the date hereof and (iii) the interest rate applicable to such
      Indebtedness shall be a market interest rate as of the time of such
      renewal or extension;

            (e) Indebtedness of a Borrower or any Subsidiary secured by
      Permitted Liens;

            (f) Indebtedness of a Borrower or any Subsidiary in respect of
      guarantees to the extent the underlying Indebtedness is permitted by this
      Section 7-7; and

            (g) Subordinated Debt;

            (h) Unfunded pension and benefit liabilities so long as each
      Borrower is in compliance with Section 7-15, provided that the Lead
      Borrower's excess of the present value of accrued pension benefits over
      the value of plan assets shall not exceed $10,000,000 as determined under
      the plan's assumptions for funding purposes.

            (i) To the extent payment thereof shall not at the time be required
      by Section 7-13, Indebtedness in respect of taxes, assessments,
      governmental charges and claims for labor, material and supplies;

            (j) Indebtedness in respect of judgments or awards (i) which have
      been in force for less than the applicable appeal period or (ii) in
      respect to which any Borrower or any Subsidiary shall at the time in good
      faith be prosecuting an appeal or proceedings for review, and in each case
      such Borrower or such Subsidiary shall have taken appropriate reserves
      therefor in accordance with GAAP;

            (k) Indebtedness in respect of deferred taxes arising in the
      ordinary course of business; and

                                      -47-


            (l) Any other unsecured Indebtedness in an amount not to exceed $
      1,000,000, in the aggregate at any time outstanding.

      7-8. Insurance Policies.

            (a) EXHIBIT 7-8, annexed hereto, is a schedule of all insurance
policies owned by any Borrower or under which any Borrower is the named insured.
Each of such policies is in full force and effect. Neither any Borrower nor, to
the knowledge of the Borrowers, the issuer of any such policy is in default or
violation of any such policy.

            (b) Each Borrower will maintain or cause to be maintained on all
insurable properties now or hereafter owned by such Borrower or any Subsidiary
insurance against loss or damage by fire or other casualty to the extent
customary with respect to like properties of companies conducting similar
businesses and will maintain or cause to be maintained public liability and
workmen's compensation insurance insuring such Borrower and its Subsidiaries to
the extent customary with respect to companies conducting similar businesses
and, upon request, will furnish to the Administrative Agent satisfactory
evidence of the same. In the event of the failure by any Borrower to maintain
insurance as required herein, the Administrative Agent, at its option, may
obtain such insurance at the cost and expense of the Borrowers. Each Borrower
shall furnish to the Administrative Agent certificates or other evidence
reasonably satisfactory to the Administrative Agent regarding compliance by such
Borrower with the foregoing insurance provisions.

            (c) All insurance carried by any Borrower shall name the
Administrative Agent as additional insured and as additional loss payee and
shall provide for a minimum of thirty (30) days' written notice of cancellation
to the Administrative Agent. Upon the occurrence of the Collateral Release
Event, this clause (c) of Section 7-8 shall immediately and automatically
terminate and shall have no further force or effect with respect to the
Collateral, except for the Collateral granted to the Administrative Agent for
the benefit of the Lenders pursuant to the Mortgage.

            (d) Each Borrower shall advise the Administrative Agent of each
material claim made by such Borrower under any policy of insurance which covers
the Collateral (except for claims with respect to the Collateral granted to the
Administrative Agent for the benefit of the Lenders pursuant to the Mortgage,
which claims are governed by Section 4-2 of the Mortgage) and will permit the
Administrative Agent, at the Administrative Agent's option in each instance, to
the exclusion of such Borrower, to conduct the adjustment of each such claim
while any Event of Default is then in existence, and so long as the Collateral
Release Event has not occurred.

            (e) Each Borrower hereby appoints the Administrative Agent as such
Borrower's attorney in fact, exercisable (x) so long as the Collateral Release
Event has not occurred, and (y) after the occurrence of an Event of Default, to
obtain, adjust, settle, and cancel any insurance described in this section and
to endorse in favor of the Administrative Agent any and all drafts and other
instruments with respect to such insurance, in each case during the continuance
of any Event of Default. Such appointment, being coupled with an interest, is
irrevocable until this Agreement is terminated by a written instrument executed
by a duly authorized officer of the Administrative Agent. The Administrative
Agent shall not be liable on

                                      -48-


account of any exercise pursuant to said power except for any exercise in actual
willful misconduct, gross negligence or bad faith. The Administrative Agent may
apply any proceeds of such insurance against the Liabilities, whether or not
such have matured, in such order of application as the Administrative Agent may
determine. Upon the occurrence of the Collateral Release Event, this clause (e)
of Section 7-8 shall immediately and automatically terminate and shall have no
further force or effect with respect to the Collateral, except for the
Collateral granted to the Administrative Agent for the benefit of the Lenders
pursuant to the Mortgage.

      7-9. Licenses. EXHIBIT 7-9, annexed hereto, is a schedule of all material
license, distributor, franchise, and similar agreements issued to, or to which
any Borrower is a party. Each of such agreements is in full force and effect.
Neither any Borrower nor, to the knowledge of the Borrowers, any other party to
any such agreement is in material default or violation of any such agreement and
no Borrower has received any notice or threat of cancellation of any such
agreement.

      7-10. Leases. EXHIBIT 7-10, annexed hereto, is a schedule of all presently
effective Leases and Capital Leases having an outstanding amount due in excess
of $100,000. Each of such Leases and Capital Leases is in full force and effect.
Neither any Borrower nor, to the knowledge of the Borrowers, any other party to
any such Lease or Capital Lease is in material default or violation of any such
Lease or Capital Lease and no Borrower has received any notice or threat of
cancellation of any such Lease or Capital Lease. Each Borrower hereby authorizes
the Administrative Agent at any time and from time to time after the occurrence
and during the continuance of any Event of Default to contact any of the
Borrowers' landlords in order to confirm each Borrower's continued compliance
with the terms and conditions of any Lease between such Borrower and that
landlord and to discuss such issues, concerning such Borrower's occupancy under
such Lease, as the Administrative Agent may determine. Borrower further
represents that the aggregate amount due under all other present Leases and
Capital Leases not set forth in EXHIBIT 7-10 does not exceed $500,000.

      7-11. Requirements of Law. Except as set forth on EXHIBIT 7-11, each
Borrower is in material compliance with, and shall hereafter comply with and use
its assets in material compliance with, all Requirements of Law. No Borrower has
received any notice of any material violation of any Requirement of Law which
material violation has not been cured or otherwise remedied.

      7-12. Maintain Properties. Each Borrower shall:

            (a) Keep the Collateral in good order and repair (ordinary
      reasonable wear and tear and insured casualty excepted).

            (b) Not suffer or cause the waste or destruction of any material
      part of the Collateral.

            (c) Not use any of the Collateral in violation of any policy of
      insurance thereon.

            (d) Not sell, lease, or otherwise dispose of any of the Collateral,
      other than as set forth in Section 7-22.

                                      -49-


      7-13. Pay Taxes.

            (a) Except as set forth in EXHIBIT 7-13, to the best of the
Borrower's knowledge, there are no examinations of or with respect to any
Borrower presently being conducted by the Internal Revenue Service or any state
taxing authority.

            (b) Except as set forth in EXHIBIT 7-13 and except as would not be
material, each Borrower has, and hereafter shall: pay, as they become due and
payable, all taxes and unemployment contributions and other charges of any kind
or nature levied, assessed or claimed against such Borrower or the Collateral by
any Person whose claim could result in an Encumbrance upon any asset of such
Borrower or by any governmental authority; properly exercise any trust
responsibilities imposed upon such Borrower by reason of withholding from
employees' pay; timely make all contributions and other payments as may be
required pursuant to any Employee Benefit Plan now or hereafter established by
such Borrower; and timely file all tax and other returns and other reports with
each governmental authority to whom each Borrower is obligated to so file,
provided that neither any Borrower nor any Subsidiary shall be required to pay
any such tax, assessment, charge, levy or claim if the amount, applicability or
validity thereof shall currently be contested in good faith by appropriate
proceedings promptly initiated and diligently conducted and if such Borrower or
such Subsidiary, as the case may be, shall have set aside on its books such
reserves, if any, with respect thereto as are required by GAAP and deemed
appropriate by such Borrower and its independent public accountants.

            (c) Except as set forth in EXHIBIT 7-13, subject to the Borrowers'
rights under subsection (b) above, in the event of the failure by any Borrower
to comply with subsection (b) above, the Administrative Agent, at its option,
may, but shall not be obligated to, pay any taxes, unemployment contributions,
and any and all other charges levied or assessed upon such Borrower or the
Collateral by any Person or governmental authority, and make any contributions
or other payments on account of any Borrower's Employee Benefit Plan as the
Administrative Agent, in the Administrative Agent's reasonable discretion, may
deem necessary or desirable, to protect, maintain, preserve, collect, or realize
upon any or all of the Collateral or the value thereof or any right or remedy
pertaining thereto, provided, however, the Administrative Agent's making of any
such payment shall not constitute a cure or waiver of any Event of Default
occasioned by such Borrower's failure to have made such payment..

      7-14. No Margin Stock. No Borrower is engaged in the business of extending
credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulations U. and X. of the Board of Governors of the Federal
Reserve System of the United States). No part of the proceeds of any borrowing
from any Lender will be used at any time to purchase or carry any such margin
stock or to extend credit to others for the purpose of purchasing or carrying
any such margin stock.

      7-15. ERISA. Neither any Borrower nor any ERISA Affiliate shall:

            (a) Materially violate or fail to be in material compliance with the
      terms of any Borrower's Employee Benefit Plan.

                                      -50-


            (b) Fail timely to file all material reports and filings required by
      ERISA to be filed by any Borrower that may result in material liability to
      any Borrower.

            (c) Engage in any non-exempt "prohibited transactions" or any
      "reportable events" for which reportable events notice to the Pension
      Benefit Guaranty Corporation is not waived pursuant to regulations
      (respectively as described in ERISA).

            (d) Engage in, or commit, any act such that a material tax or
      penalty could be imposed upon any Borrower on account thereof pursuant to
      ERISA.

            (e) Accumulate any material funding deficiency within the meaning of
      ERISA, except to the extent permitted by Section 7-7(h).

            (f) Terminate any Employee Benefit Plan such that a lien in any
      material amount could be asserted against any material assets of any
      Borrower on account thereof pursuant to ERISA

            (g) Be a member of, contribute to, or have any material obligation
      under any Employee Benefit Plan which is a multiemployer plan within the
      meaning of Section 4001(a) of ERISA that subjects it to a material
      potential withdrawal liability under Title IV of ERISA.

      7-16. Hazardous Materials.

            (a) Except as set forth on EXHIBIT 7-16, no Borrower has: (i) been
legally responsible for any release or threat of release of any Hazardous
Material or (ii) received notification of any release or threat of release of
any Hazardous Material from any site or vessel occupied or operated by any
Borrower and/or of the incurrence of any expense or loss in connection with the
assessment, containment, or removal of any release or threat of release of any
Hazardous Material from any such site or vessel.

            (b) Each Borrower shall: (i) dispose of any Hazardous Material only
in compliance with all Environmental Laws and (ii) not store on any site or
vessel occupied or operated by any Borrower and not transport or arrange for the
transport of any Hazardous Material, except if such storage or transport is in
the ordinary course of any Borrower's business and is in compliance with all
Environmental Laws.

            (c) Each Borrower shall provide the Administrative Agent with
written notice upon such Borrower's obtaining knowledge of any incurrence of any
expense or loss by any governmental authority or other Person in connection with
the assessment, containment, or removal of any Hazardous Material, for which
expense or loss any Borrower may be liable.

      7-17. Litigation. Except as set forth on EXHIBIT 7-17, there is not
presently pending or threatened by or against any Borrower any suit, action,
proceeding, or investigation which, if determined adversely to such Borrower,
would result in a Material Adverse Change upon the Borrowers' financial
condition, taken as a whole, or ability to conduct their business as such
business is presently conducted or is contemplated to be conducted in the
foreseeable future.

                                      -51-


      7-18. Dividends, etc. None of the Borrowers will pay any cash dividend or
make any other distribution other than stock dividends in respect of any class
of such Borrower's capital stock, except for distributions by any Borrower to
the Lead Borrower and, provided no Event of Default is then existing and would
not exist after giving effect to any contemplated redemption, the periodic
redemption of stock consistent with past practices and in no event to exceed the
lesser of (i) 25% of the Borrowers' Consolidated trailing four quarter EBITDA in
any fiscal year, or (ii) the difference between Consolidated Operating Cash Flow
and Total Debt Service in any fiscal year.

      7-19. Guarantees and Investments. None of the Borrowers will, nor will any
Borrower permit any Subsidiary to, make or permit to remain outstanding any loan
or advance to, or guarantee or endorse (except as a result of endorsing
negotiable instruments for deposit or collection in the ordinary course of
business) or otherwise assume or remain liable with respect to any obligation
of, or make or own any investment in, or acquire (except in the ordinary course
of business) the properties or assets of, any Person, except:

            (a) Extensions of credit by a Borrower or any Subsidiary in the
      ordinary course of business in accordance with customary trade practices
      (including the acceptance of promissory notes in respect of delinquent
      Accounts);

            (b) The presently outstanding Investments, loans and advances, if
      any, and the presently existing guarantees, if any, of any Borrower and
      its Subsidiaries all to the extent set forth on EXHIBIT 7-19 attached
      hereto; provided however, notwithstanding any provision contained in this
      Agreement to the contrary, it is hereby agreed that the Lead Borrower may,
      at any time, transfer, assign or otherwise contribute to its 401(k) profit
      sharing plan any or all of the Telica/Lucent Shares (as defined in EXHIBIT
      7-19);

            (c) Direct obligations of the United States of America or any
      department or agency thereof maturing not more than one year from the date
      of acquisition thereof;

            (d) Certificates of deposit, repurchase agreements, time deposits
      (including sweep accounts), demand deposits, bankers' acceptances, money
      market deposits or other similar types of Investments maturing not more
      than one year from the date of acquisition thereof and evidencing direct
      obligations of any Lender or any lender within the United States of
      America having capital surplus and undivided profits in excess of
      $50,000,000;

            (e) Investments in commercial paper maturing within ninety (90) days
      from the date of acquisition thereof and having, at such date of
      acquisition, rated at least P-1 by Moody's or A-1 by S&P, or carrying an
      equivalent rating by a nationally recognized rating agency ;

            (f) Any mutual fund or other pooled investment vehicle which invests
      principally in obligations described in subparagraphs (c), (d) or (e)
      above and having, at the date of investment in such fund or vehicle, one
      of the two highest credit ratings from Moody's or S&P;

                                      -52-


            (g) Equity investments by any Borrower's wholly-owned Subsidiaries
      in any other wholly-owned Subsidiary and of a Borrower in any of its
      wholly-owned Subsidiaries;

            (h) Guaranties by a Borrower of the other Borrowers' Indebtedness
      pursuant to the Revolving Credit Loans, the Term Loan and the Acquisition
      Term Loan;

            (i) Guarantees by a Borrower of Indebtedness and other obligations
      incurred by Subsidiaries to the extent permitted by Section 7-7;

            (j) Capital Expenditures to the extent permitted by Section 7-29;

            (k) Guarantees by any Borrower of any of the other Liabilities;

            (l) Any new Capital Leases permitted under Section 7-20;

            (m) Mergers or consolidations permitted under Section 7-21:

            (n) Any Investment relating to any deferred portion of the purchase
      price in connection with a permitted sale;

            (o) Permitted Acquisitions; and

            (p) Any other Investments or Guarantees in an amount not to exceed
      $2,000,000 in the aggregate outstanding at any time,

            provided, however, if after giving effect to any of the foregoing,
      any Borrower or any Subsidiary of any Borrower shall create a Subsidiary,
      and at such time, the Borrowers shall not have yet satisfied the
      provisions of Section 5-3, the Lead Borrower shall cause such Subsidiary
      to execute and deliver to the Administrative Agent and the Lenders such
      documentation as such Persons may reasonably require to (x) either (i)
      join this Agreement as a "Borrower", or (ii) execute a guaranty of the
      Liabilities, (y) amend the Security Agreement to add such Subsidiary as a
      party thereto, and (z) to otherwise effectuate the intentions of this
      Agreement and the other Loan Documents.

      7-20. New Leases. None of the Borrowers will, nor will any Borrower permit
any Subsidiary to, enter into any Capital Lease, except as permitted below or as
otherwise permitted under Sections 7-7 and 7-10. From and after the Closing
Date, none of the Borrowers will, and none of the Borrowers will permit any
Subsidiary to, enter into any new lease during any fiscal year (including any
new Capital Leases, but excluding renewals of any existing leases) as lessee if,
immediately after giving effect thereto, the aggregate rental obligations
(excluding payments required to be made by the lessee in respect of taxes and
insurance whether or not denominated as rent, and excluding payments incurred in
connection with a renewal of any existing lease) of all of the Borrowers and
their respective Subsidiaries under all such leases entered into during such
fiscal year after the Closing Date shall exceed $2,000,000 in the aggregate in
such fiscal year; provided, however, that to the extent rental obligations under
any lease are reimbursable by such Borrower's customer pursuant to a binding
contract between such Borrower and such customer, such rental obligations shall
be excluded from the foregoing provision of this sentence.

                                      -53-


Upon the reasonable request of the Administrative Agent, the Lead Borrower will
obtain a landlord's waiver reasonably acceptable to the Administrative Agent on
any existing or new leased location occupied by any Borrower.

      7-21. Mergers and Consolidations. None of the Borrowers will, nor will any
Borrower permit any Subsidiary to, enter into any merger or consolidation,
except the following:

            (a) Any wholly-owned Subsidiary of a Borrower may merge or be
      liquidated into a Borrower or any other wholly-owned Subsidiary of a
      Borrower so long as after giving effect to any such merger to which a
      Borrower is a party such Borrower shall be the surviving or resulting
      Person;

            (b) Mergers constituting Investments permitted by Section 7-19(g) so
      long as after giving effect to any such merger to which a Borrower is a
      party such Borrower shall be the surviving or resulting Person; and

            (c) Permitted Acquisitions.

      7-22. Sale of Collateral. Except as expressly permitted under Section
7-21, none of the Borrowers will, nor will any Borrower permit any Subsidiary
to, sell, lease or otherwise dispose of all or any substantial part of its
properties or assets, except the following, each of which may be effected with
the prior written consent of the Required Lenders, such consent not to be
unreasonably withheld:

            (a) Each Borrower and its Subsidiaries may sell or otherwise dispose
assets that are no longer used or useful in the business of the applicable
Borrower or Subsidiary, for fair market value that, when aggregated with all
other sales and dispositions pursuant to this clause, is in exchange for up to
$2,000,000 of gross sales proceeds received by a Borrower, provided, however,
that no Borrower shall dispose of any portion of its books and records,
regardless of whether a particular asset of property constitutes Collateral,
without the prior consent of the Required Lenders; provided further, however,
that immediately before and after giving effect to any such disposition, no
Event of Default exists. The Required Lenders' consent shall be requested no
less than ten (10) days prior to the scheduled closing date of a proposed sale.
The Net Proceeds of any sale shall be applied to the Liabilities as follows:

                        (A) First, to the outstanding principal balance of the
                  Revolving Credit Loans;

                        (B) Second, to the outstanding principal balance of the
                  Acquisition Term Loan, in inverse order of maturity until the
                  Acquisition Term Loan is paid in full;

                        (C) Third, to the outstanding principal balance of the
                  Term Loan, in inverse order of maturity until the Term Loan is
                  paid in full.

            Application of the Net Proceeds to the Liabilities shall not
postpone or relieve the Borrowers of their obligations to make the scheduled
principal payments required by Section 4-4(a), above.

                                      -54-


            (b) The Lead Borrower may sell, lease or otherwise transfer any of
its properties or assets to any other Borrower, provided that (i) the Borrowers
provide a notice thereof to the Administrative Agent prior to each such transfer
(which notice shall include a description and a good faith estimate of the fair
market value of the property or assets being so transferred and, to the extent
applicable, the revenues that were generated by such property or assets in the
immediately preceding fiscal year of the Lead Borrower), and (ii) immediately
before and after giving effect thereto no Event of Default exists; and

            (c) Each Borrower and its Subsidiaries may license products and
intangible assets for fair market value in the ordinary course of business.

      7-23. Protection of Collateral. Upon the occurrence and during the
continuance of any Event of Default after notice to the Lead Borrower, the
Administrative Agent, at the Administrative Agent's discretion, and from time to
time, may discharge any tax or Encumbrance on any of the Collateral, or take any
other action that the Administrative Agent may deem necessary or desirable to
repair, insure, maintain, preserve, collect, or realize upon any of the
Collateral. The Administrative Agent shall not have any obligation to undertake
any of the foregoing and shall have no liability on account of any action so
undertaken except where there is a specific finding in a judicial proceeding (in
which the Administrative Agent has had an opportunity to be heard), from which
finding no further appeal is available, that Administrative Agent had acted in
actual bad faith or in a grossly negligent manner. Each Borrower shall pay to
the Administrative Agent, on demand, or the Administrative Agent, in its
discretion, may add to the Loan Account, all amounts paid or incurred by the
Administrative Agent pursuant to this section. The obligation of the Borrowers
to pay such amounts is a Liability.

      7-24. Line of Business. The Borrowers shall not engage in any business
other than the business in which they are currently engaged or a business
reasonably related thereto.

      7-25. Affiliate Transactions. Except as expressly permitted under Section
7-21, the Borrowers shall not make any payment, nor give any value to any
Related Entity except for goods and services actually purchased by a Borrower
from, or sold by a Borrower to, such Related Entity for a price which shall

            (a) be competitive and fully deductible as an "ordinary and
      necessary business expense" and/or fully depreciable under the Internal
      Revenue Code of 1986 and the Treasury Regulations, each as amended; and

            (b) not differ from that which would have been charged in an arms
      length transaction.

      7-26. Additional Assurances. Each Borrower shall execute and deliver to
the Administrative Agent such instruments, documents, and papers, and shall do
all such things from time to time hereafter as the Administrative Agent may
request to carry into effect the provisions and intent of this Agreement; and to
comply with all applicable statutes and laws. So long as no Collateral Release
Event has occurred, each Borrower shall execute all such instruments as may be
required by the Administrative Agent with respect to the recordation and/or
perfection of the security interests created herein. A carbon, photographic, or
other reproduction of this

                                      -55-


Agreement or of any financing statement or other instrument executed pursuant to
this Section shall be sufficient for filing to perfect the security interests
granted herein.

      7-27. Adequacy of Disclosure.

            (a) All annual and quarterly financial statements of the Borrowers
furnished to the Lenders by the Borrowers for any period ending on or after
December 31, 2003 have been prepared in accordance with GAAP consistently
applied and present fairly the condition of the Borrowers at the date(s) thereof
and the results of operations and cash flows for the period(s) covered, except
that quarterly financial statements remain subject to year-end adjustments and
the addition of notes. There has been no change in the financial condition,
results of operations, or cash flows of the Borrowers since the date(s) of such
financial statements, other than changes in the ordinary course of business,
which changes have not been materially adverse, either singularly or in the
aggregate.

            (b) The Borrowers do not have any contingent obligations or
obligation under any Lease or Capital Lease which is not noted in the Borrowers'
financial statements furnished to the Lenders or has been otherwise disclosed in
writing to the Lenders prior to the execution of this Agreement.

            (c) To the best of each Borrower's knowledge, no document,
instrument, agreement, or paper (exclusive of projections delivered to the
Lenders by the Borrowers in good faith) now or hereafter given the Lenders by or
on behalf of the Borrowers or any guarantor of the Liabilities in connection
with the Lenders' execution of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein not misleading. Except as
set forth on EXHIBIT 6-17, there is no fact known to any Borrower which has
resulted in, or which, in the foreseeable future could result in, a Material
Adverse Change on the financial condition of any Borrower or any such guarantor
which has not been disclosed in writing to the Lenders.

      7-28. Government Contracts. Each Government Contract is valid, binding and
in full force and effect, and, other than as set forth on EXHIBITS 6-17 OR 7-28,
there is no event which has occurred or exists, which constitutes or which with
notice, the happening of any event and/or the passage of time, would constitute,
a default or breach under any Government Contract or would cause the
acceleration of any obligation of any party thereto or give rise to any right of
termination or cancellation thereof. Except as set forth on EXHIBITS 6-17 OR
7-28, the Borrowers have no reason to believe that the parties to the Government
Contracts will not fulfill their obligations thereunder in all material
respects.

      7-29. Capital Expenditures. None of the Borrowers will, nor will any
Borrower permit any Subsidiary to, make any Capital Expenditures during any
fiscal year of the Lead Borrower unless the aggregate amount of all Capital
Expenditures committed to be made by all Borrowers and their respective
Subsidiaries in such fiscal year does not exceed $7,000,000 in fiscal year 2004,
$6,000,000 in fiscal years 2005 and 2006, or $6,500,000 in any fiscal year
thereafter.

                                      -56-


      7-30. Other Covenants. No Borrower shall indirectly do or cause to be done
any act which, if done directly by such Borrower, would breach any covenant
contained in this Agreement.

ARTICLE 8 - INTENTIONALLY OMITTED.

ARTICLE 9 - AMENDED AND RESTATED LOAN AGREEMENT.

      This Agreement amends and restates in its entirety that certain Amended
and Restated Loan Agreement dated as of June 28, 2002, by and among certain of
the Borrowers, the Administrative Agent and others named therein, which in turn
amended and restated that certain Loan and Security Agreement dated as of
February 10, 2000 by and among certain of the Borrowers, the Administrative
Agent and others named therein (collectively, the "EXISTING LOAN AGREEMENT"). On
the Closing Date, the rights and obligations of the parties under the Existing
Loan Agreement shall be subsumed within and be governed by this Agreement;
provided, however, that each of the "Revolving Credit Loans" (as such term is
defined in the Existing Loan Agreement) outstanding under the Existing Loan
Agreement on the Closing Date shall, for purposes of this Agreement, be included
as Revolving Credit Loans hereunder and each of the "L/Cs" (as defined in the
Existing Loan Agreement) outstanding under the Existing Loan Agreement on the
Closing Date shall be L/Cs hereunder.

ARTICLE 10 - AGENTS AS BORROWER'S ATTORNEY-IN-FACT.

      10-1. Appointment as Attorney-In-Fact. Upon the occurrence and during the
continuance of any Event of Default (or after the occurrence of a Assignment of
Claims Compliance Event for the purposes of subsection (d), below), and so long
as no Collateral Release Event has occurred, each Borrower hereby irrevocably
constitutes and appoints the Administrative Agent as each Borrower's true and
lawful attorney, with full power of substitution. The rights and powers granted
the Administrative Agent by the within appointment include but are not limited
to the right and power to:

            (a) Sign change of address forms to change the address to which each
      Borrower's mail is to be sent to such address as the Administrative Agent
      shall designate; receive and open each Borrower's mail;

            (b) Endorse the name of any Borrower in favor of the Administrative
      Agent upon any and all checks, drafts, notes, acceptances, or other items
      or instruments;

            (c) Take all such action as may be necessary to obtain the payment
      of any letter of credit and/or banker's acceptance of which any Borrower
      is a beneficiary; and

            (d) After the occurrence of an Assignment of Claims Compliance
      Event, and whether or not an Event of Default shall have occurred, (i)
      take such actions as may be necessary to comply with the Assignment of
      Claims Act in order to perfect or protect the Administrative Agent's
      security interest in the Government Contracts, and (ii) exercise any
      additional rights and powers granted to Agents pursuant to the Security
      Documents.

                                      -57-


      10-2. No Obligation to Act. The Administrative Agent shall not be
obligated to do any of the acts or to exercise any of the powers authorized by
Section 10-1 herein, but if Administrative Agent elects to do any such act or to
exercise any of such powers, it shall not be accountable for more than it
actually receives as a result of such exercise of power, and shall not be
responsible to any Borrower for any act or omission consistent with its rights
and powers under the Loan Documents, to act except for any act or omission to
act as to which there is a final determination made in a judicial proceeding (in
which proceeding the Administrative Agent has had an opportunity to be heard)
which determination includes a specific finding that the subject act or omission
to act had been grossly negligent or in actual bad faith.

      10-3. Collateral Release Event. Upon the occurrence of the Collateral
Release Event, this Article and the appointment of the Administrative Agent as
such Borrower's attorney in fact shall immediately and automatically terminate
and shall have no further force or effect; provided, however, nothing contained
in this Section 10-3 shall affect the Administrative Agent's rights pursuant to
Section 7-7 of the Mortgage.

ARTICLE 11 - FINANCIAL AND OTHER REPORTING REQUIREMENTS/ FINANCIAL COVENANTS.

      11-1. Maintain Records. Each Borrower shall:

            (a) Keep proper books of account, in which full, true, and accurate
      entries shall be made of all of each Borrower's transactions, all in
      accordance with GAAP applied consistently with prior periods to fairly
      reflect the financial condition of each Borrower at the close of, and its
      results of operations for, the quarterly and annual periods or reporting.

            (b) Keep accurate current records of the Collateral in accordance
      with such Borrower's normal business practices.

            (c) Retain independent certified public accountants who are
      reasonably satisfactory to the Administrative Agent and instruct such
      accountants to fully cooperate with, and be available to, the
      Administrative Agent to discuss such Borrower's financial performance,
      financial condition, operating results, controls, and such other matters,
      within the scope of the retention of such accountants, as may be raised by
      the Administrative Agent.

            (d) Not change such Borrower's fiscal year.

            (e) Not change such Borrower's taxpayer identification number.

      11-2. Access to Records.

            (a) Each Borrower shall, upon reasonable advance notice, accord the
Administrative Agent and the Administrative Agent's representatives with access
from time to time as the Administrative Agent and such representatives may
require to all properties owned by or over which any Borrower has control,
except to the extent such information is classified. The Administrative Agent,
and such representatives, shall have the right, and each Borrower will

                                      -58-


permit the Administrative Agent and such representatives from time to time as
the Administrative Agent and such representatives may request, to examine,
inspect, copy, and make extracts from any and all of any Borrower's books,
records, electronically stored data, papers, and files, except to the extent
such information is classified. Each Borrower shall make the Borrowers' copying
facilities available to the Administrative Agent and such representatives for
reasonable copying of documents.

            (b) Each Borrower hereby authorizes the Administrative Agent and its
representatives to inspect, copy, duplicate, review, cause to be reduced to hard
copy, run off, draw off, and otherwise use any and all computer or
electronically stored information or data which relates to any Borrower (except
to the extent such information is classified), which information or data is in
the possession of any Borrower or any service bureau, contractor, accountant, or
other person, and directs any such service bureau, contractor, accountant, or
other person fully to cooperate with the Administrative Agent and its
representatives with respect thereto.

      11-3. Prompt Notice to Lender. The Lead Borrower shall provide the
Administrative Agent with written notice promptly upon the occurrence of any of
the following events, which written notice shall be with reasonable
particularity as to the facts and circumstances in respect of which such notice
is being given:

            (a) Any change in any of the Borrower's executive officers or
      directors.

            (b) Any material change to the terms of any material contract to
      which any Borrower is a party which could result in a Material Adverse
      Change in the business, operations, or financial status of any Borrower.

            (c) Any Material Adverse Change in the business, operations, or
      financial affairs of any Borrower.

            (d) The occurrence of any Assignment of Claims Compliance Event.

            (e) Any litigation which, if determined adversely to any Borrower,
      might result in a Material Adverse Change on the financial condition of
      any Borrower.

            (f) The distribution of any materials to the shareholders of any
      Borrower (qua such shareholders), which notice shall be accompanied by a
      copy of such filings.

      11-4. Financial Statements, Certificates and Information. Each Borrower
will furnish or cause to be furnished to each Lender:

            (a) Within one hundred twenty (120) days after the end of each
      fiscal year of the Lead Borrower, (i) the consolidated balance sheets of
      the Lead Borrower and its Subsidiaries as at the end of such year and (ii)
      the related consolidated statements of income and surplus and cash flow
      for such year, setting forth in comparative form with respect to such
      consolidated financial statements figures for the previous fiscal year,
      all in reasonable detail, together with the opinion thereon of independent
      public accountants selected by the Lead Borrower and reasonably
      satisfactory to the Lenders, which opinion

                                      -59-


      shall be in form generally recognized as unqualified and shall state that
      the financial statements have been prepared in accordance with GAAP
      applied on a basis consistent with that of the preceding fiscal year
      (except for changes, if any, which shall be specified and approved in such
      opinion) and that the audit by such accountants in connection with such
      financial statements referred to above only to the extent that the same
      are required to be prepared by GAAP or by the Securities and Exchange
      Commission or by any other applicable regulatory authority;

            (b) Within forty-five (45) days after the end of each of the first
      three quarterly accounting periods in each fiscal year of the Lead
      Borrower, (i) the unaudited consolidated balance sheets of the Lead
      Borrower and its Subsidiaries as at the end of such period, (ii) the
      related unaudited consolidated statements of income and surplus and cash
      flows for such period and for the period from the beginning of the current
      fiscal year to the end of such period, all in reasonable detail and signed
      by the chief financial officer or treasurer of the Lead Borrower;

            (c) Upon furnishing any financial statement required pursuant to
      Sections 11-4(a) or 11-4(b) (and monthly upon the failure of the Borrowers
      to comply with any covenant set forth in Section 5-2 for the purpose of
      determining the occurrence of an Assignment of Claims Compliance Event), a
      compliance certificate substantially in the form of EXHIBIT 11-4C attached
      hereto, in each case (A) as of the last Business Day of the immediately
      preceding reporting period, and (B) signed by the chief financial officer
      or treasurer of the Lead Borrower;

            (d) Together with the financial statements delivered pursuant to
      subparagraph (b) above, a summary of each Borrower's backlog of
      revenue-generating government contracts as of the date of such financial
      statements;

            (e) Upon each request for a Loan in connection with a contemplated
      acquisition, a covenant compliance certificate.

            (f) Promptly, but in not event later than ten (10) days, after the
      same become publicly available, copies of all periodic and other reports,
      proxy statements and other materials filed by the Lead Borrower with the
      Securities and Exchange Commission (including all form 10Q's and 10K's),
      or any governmental authority succeeding to any of or all of the functions
      of said Commission, or with any national securities exchange, or
      distributed to is shareholders generally, as the case may be (with the
      exhibits relating thereto to be provided, at the Lead Borrower's expense,
      upon the request of the Administrative Agent);

            (g) Promptly, but in no event later than ten (10) days, upon their
      becoming available, copies of any periodic or special reports filed by any
      Borrower or any Subsidiary with any federal, state or local governmental
      agency or authority, if such reports indicate any Material Adverse Change
      in the business, operations, affairs, or condition (financial or
      otherwise) of the Borrowers and the Subsidiaries, taken as whole, or if
      copies thereof are requested by the Administrative Agent, and copies of
      any notices and communications from any federal, state or local
      governmental agency or authority

                                      -60-


      which specifically relate to a Borrower or any Subsidiary, which could
      result in a Material Adverse Change;

            (h) Forthwith upon any officer of any Borrower obtaining knowledge
      of any condition or event which constitutes an Event of Default or which,
      after notice or lapse of time or both, would constitute an Event of
      Default, a certificate given by such officer specifying in reasonable
      detail the nature and period of existence thereof and what action any
      Borrower has taken or proposes to take with respect thereto;

            (i) Within forty-five (45) days of each fiscal year end of the Lead
      Borrower, annual financial projections for the next fiscal year; and

            (j) To the extent not prohibited by applicable law, such other
      information regarding the business, affairs and condition of the Borrowers
      and their respective Subsidiaries as the Administrative Agent may from
      time to time reasonably request. To the extent not prohibited by
      applicable law, each Borrower will permit the Administrative Agent or any
      Lender to inspect the books and any of the properties or assets of such
      Borrower and its Subsidiaries at such reasonable times as the
      Administrative Agent or such Lender, whichever is applicable, may from
      time to time request. All costs and expenses of the Administrative Agent
      or any such Lender in connection with or relating to any request made
      under this Section 11-4 shall, if no Event of Default has occurred and is
      continuing, be paid by the Administrative Agent or such Lender, whichever
      is applicable, making such request and, upon the occurrence and during the
      continuance of an Event of Default, be paid by the Borrowers.

      11-5. Additional Financial Information. In addition to the foregoing, the
Borrowers shall promptly, but in no event later than ten (10) days, provide the
Administrative Agent with such other and additional information (except to the
extent such information is classified) concerning the Borrowers, the Collateral,
the operation of the Borrowers' business, and the Borrowers' financial
condition, including original counterparts of financial reports and statements,
as Administrative Agent may from time to time reasonably request from any
Borrower, including, without limitation, such information with respect to the
status of the pending United States government audit of the Borrowers'
Government Contracts.

      11-6. Audits and Appraisals.

            (a) So long as no Assignment of Claims Compliance Event has occurred
and/or no Event of Default has occurred and is continuing, the Administrative
Agent may, from time to time, conduct commercial finance audits of the
Borrowers' books and records (in each event, at the Administrative Agent's
expense), such exams to be conducted not more than once during any one (1)
consecutive twelve (12) month period. After the occurrence of the Assignment of
Claims Compliance Event and/or an Event of Default which is continuing, the
Administrative Agent may, from time to time, conduct commercial finance audits
of the Borrowers' books and records (in each event, at the Borrowers' expense,
but not to exceed $5,000.00 per exam).

                                      -61-


            (b) (i) The Administrative Agent, at the expense of the Borrowers,
may participate in and/or observe each physical count and/or inventory of so
much of the Collateral as consists of Inventory which is undertaken on behalf of
the Borrowers.

                  (ii) Upon the Administrative Agent's reasonable request from
      time to time, but no more frequently than annually unless an Event of
      Default is existing, the Borrowers shall permit the Administrative Agent
      to obtain appraisals of the Borrowers' assets including, without
      limitation, the Real Estate, (in all events, at the Borrowers' expense)
      conducted by such appraisers as are satisfactory to the Administrative
      Agent.

            (c) The Administrative Agent, at the expense of the Borrowers, may
order environmental assessments of the Real Estate at such times as the
Administrative Agent may reasonably determine, provided that no more than one
such assessment be conducted at Borrowers' expense in any calendar year prior to
the occurrence of an Event of Default.

      11-7. Consolidated Operating Cash Flow to Total Debt Service. The
Borrowers shall at all times maintain a ratio of Consolidated Operating Cash
Flow to Total Debt Service of greater than 1.50 to 1.00 for each fiscal quarter
end, calculated on a rolling four (4) fiscal quarter basis, commencing with the
fiscal quarter ending as of September 30, 2004.

      11-8. Consolidated Total Net Worth. The Borrowers shall not at any time
permit their Consolidated Total Net Worth to be less than that amount which is
equal to the aggregate of (i) $55,000,000.00, plus (ii) an amount equal to fifty
percent (50%) of the Borrowers' Consolidated Net Income for each fiscal quarter
on a cumulative basis with no reduction for loss, plus (iii) an amount equal to
seventy-five percent (75%) of the Net Proceeds from (a) any Equity Issuance
after the date hereof and/or (b) the incurrence by the Borrowers of any
Subordinated Debt after the date hereof, on a cumulative basis, to be tested as
of the end of each fiscal quarter of the Lead Borrower, commencing with the
fiscal quarter ending as of September 30, 2004.

      11-9. Leverage Ratio. The Borrowers will not at any time permit their
ratio of Consolidated Total Funded Indebtedness to the Borrowers' Consolidated
trailing four quarter EBITDA (tested on a pro forma basis in connection with
contemplated acquisitions) (the "Leverage Ratio") to be greater than (a) 3.50 to
1.00 from the Closing Date through and including December 30, 2004, (b) 3.00 to
1.00 from December 31, 2004 through and including December 30, 2005, (c) 2.00 to
1.00 from December 31, 2005 through and including December 30, 2006, and (d)
1.50 to 1.00 thereafter, which ratio shall be tested as of the end of each
fiscal quarter, commencing with the fiscal quarter ending as of September 30,
2004.

      11-10. Net Profit. The Borrowers shall earn a Consolidated minimum net
profit, as determined in accordance with GAAP, of at least $1.00, measured
quarterly, commencing with the fiscal quarter ending as of September 30, 2004.

ARTICLE 12 - EVENTS OF DEFAULT.

      Upon the occurrence and during the continuance of any one or more of the
following events (herein, "EVENTS OF DEFAULT"):

                                      -62-


      12-1. Failure to Pay. The failure by the Borrowers to pay any principal
and/or interest amount under the Revolving Credit Loan, or the Term Loan, or the
Acquisition Term Loan within three (3) calendar days of when due; or

      12-2. Failure to Make Other Payments. The failure by the Borrowers to pay
when due any other Liabilities within three (3) Business Days of when due; or

      12-3. Failure to Perform Certain Liabilities. The failure by the Borrowers
to promptly, punctually and faithfully perform, discharge, or comply with any
Liability set forth under Sections 7-2, 7-6 (other than non-consensual liens
which shall be included within the scope of Section 12-4), 7-7, 7-8, 7-12(b),
7-12(c), 7-12(d) (so long as the Collateral Release Event has not occurred),
7-18, 7-19, 7-20, 7-21, 7-22, 7-29, 11-4, 11-7, 11-8, 11-9 and 11-10; or

      12-4. Failure to Perform Other Liabilities. Any Borrower shall default in
the observance or performance of any other agreement contained in this Agreement
or any other Loan Document (other than as provided in Sections 12-1, 12-2 and
12-3 above), and such default shall continue unremedied for a period of thirty
(30) calendar days after the earlier of (i) the date on which a Responsible
Officer of any Borrower first learns of such failure or (ii) the date on which
written notice of such failure shall have been given to any Borrower by the
Administrative Agent, plus such additional time as may be required to cure such
default because of delays which are beyond the control of the Borrowers, so long
as such default is susceptible of being cured and the Borrowers are acting in
good faith and are making diligent efforts to cure such default and are keeping
the Administrative Agent apprised of such efforts, provided, however: (a) it is
understood that any default which may be cured by the payment of money which the
Borrowers do not have shall not be considered a circumstance beyond the control
of the Borrowers; and (b) the entire cure period under Section 12-4 shall not
exceed the aggregate of sixty (60) calendar days and shall not apply to any
event which is otherwise an Event of Default pursuant to any other clause of
this Article 12; or

      12-5. Misrepresentation. Any representation or warranty now, or hereafter
made by any Borrower to the Administrative Agent or any Lender, in this
Agreement or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by any such
Borrower at any time under or in connection with this Agreement or any such
other Loan Document was not true or accurate in all material respects when given
or when deemed to have been given; or

      12-6. Default of Other Debt. Any Borrower or any Subsidiary shall default
in (i) the payment of any Indebtedness in respect of borrowed money (other than
the Liabilities), any Capital Lease or the deferred purchase price of any
property (which in each case shall not include the Borrowers' accounts payable
incurred in the ordinary course of the Borrowers' business) and such default (A)
shall continue after giving effect to any applicable grace periods and (B) shall
be in respect of an aggregate amount of principal (whether or not due) and
accrued interest exceeding $1,000,000; or (ii) the performance or compliance
with any term of any agreement or instrument relating to such Indebtedness and
such default (A) shall continue, without having been duly cured, waived or
consented to, beyond the period of grace, if any, specified in such agreement or
instrument, (B) shall be in respect of an aggregate amount of

                                      -63-


principal (whether or not due) and accrued interest exceeding $1,000,000, and
(C) shall permit the acceleration of such Indebtedness prior to its stated
maturity; or

      12-7. Intentionally Omitted.

      12-8. Business Failure. Any act by, against, or relating to any Borrower,
or its property or assets, which act constitutes the application for, consent
to, or sufferance of the appointment of a receiver, trustee, or other person,
pursuant to court action or otherwise, over all, or any part of any Borrower's
property; the granting of any trust mortgage or execution of an assignment for
the benefit of the creditors of any Borrower, or the occurrence of any other
voluntary or involuntary liquidation or extension of debt agreement for any
Borrower; the failure by any Borrower to generally pay the debts of such
Borrower as they mature; adjudication of bankruptcy or insolvency relative to
any Borrower; the entry of an order for relief or similar order with respect to
any Borrower in any proceeding pursuant to the Bankruptcy Code or any other
federal bankruptcy law; the filing of any complaint, application, or petition by
or against any Borrower initiating any matter in which such Borrower is or may
be granted any relief from the debts of such Borrower pursuant to the Bankruptcy
Code or any other insolvency statute or procedure, PROVIDED the Borrowers shall
have thirty (30) days in which to dismiss any such involuntary proceeding; the
calling or sufferance of a meeting of creditors of any Borrower; the meeting by
any Borrower with a formal or informal creditors' committee; the offering by or
entering into by any Borrower of any composition, extension, or any other
arrangement seeking relief from or extension of the debts of such Borrower, or
the initiation of any other judicial or non- judicial proceeding or agreement
by, against, or including any Borrower which seeks or intends to accomplish a
reorganization or arrangement with creditors; or

      12-9. Judgment. A final judgment which, with other outstanding final
judgments against any or all of the Borrowers and its Subsidiaries, exceeds an
aggregate of $1,000,000 shall be rendered against any Borrower or any Subsidiary
and if, within sixty (60) days after entry thereof, such judgment shall not have
been insured to the reasonable satisfaction of the Administrative Agent or
discharged or execution thereof stayed pending appeal, or if, within sixty (60)
days after the expiration of any such stay, such judgment shall not have been
discharged, or if any such judgment shall not be discharged forthwith upon the
commencement of proceedings to foreclose any lien, attachment or charge which
may attach as security therefor and before any of the property or assets of any
Borrower or any Subsidiary shall have been seized in satisfaction thereof; or

      12-10. Restraint of Business. The entry of any court order which enjoins,
restrains or in any way prevents any Borrower from conducting all or any
material part of its business affairs in the ordinary course; or

      12-11. Material Adverse Change. There shall have occurred a Material
Adverse Change (other than an event or condition to the extent disclosed on
Exhibit 6-17 or 7-28) that, to the extent curable, is not cured within thirty
(30) days following the date on which any Borrower has notice (actual or
constructive) thereof'; or

      12-12. Intentionally Omitted.12-13. Change in Ownership.

                                      -64-


            (a) Any change in the identity of any person currently acting as
chief financial officer or chief executive officer of any Borrower, unless the
subject Borrower shall engage a replacement officer reasonably acceptable to the
Administrative Agent within sixty (60) days of such officer's departure and/or
(b) any Person shall acquire 35 % or more of the capital stock of the Lead
Borrower and/or (c) the failure of the Lead Borrower to own 100% of the capital
stock of each of the other Borrowers; or

      12-14. Casualty Loss. The occurrence of any uninsured loss, theft, damage
or destruction to or of any of the Collateral in excess of $1,000,000.00; or

      12-15. Material Agreement. The default by any Borrower, or termination as
a result of any such default, under any material license, distributor, franchise
or similar agreement used or useful in the operation of the Borrowers' business,
including, without limitation, any license issued by any applicable licensing
authority, which would reasonably be expected to result in a Material Adverse
Change; or

      12-16. Termination of Existence. Except as expressly permitted hereunder,
the termination of existence, dissolution, winding up, or liquidation of the
Lead Borrower; or

      12-17. Termination of Guaranty. The termination, or attempted termination,
of any guaranty by any guarantor of the Liabilities; or

      12-18. Challenge to Loan Documents.

            (a) Any challenge by or on behalf of any Borrower or any guarantor
of the Liabilities to the validity of any Loan Document or the applicability or
enforceability of any Loan Document strictly in accordance with the subject Loan
Document's terms or which seeks to void, avoid, limit, or otherwise adversely
affect any security interest created by or in any Loan Document or any payment
made pursuant thereto.

            (b) Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's terms or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any Loan
Document or any payment made pursuant thereto; or

      12-19. Indictment - Forfeiture. Except as set forth on EXHIBITS 6-17 AND
7-28, the indictment of, or institution of any legal process or proceeding
against, any Borrower, under any federal, state, municipal, and other civil or
criminal statute, rule, regulation, order, or other requirement having the force
of law where the relief, penalties, or remedies sought or available include the
forfeiture of any property of such Borrower and/or the imposition of any stay or
other order, the effect of which would reasonably be expected to result in a
Material Adverse Change,

      then, and in any such event, so long as the same may be continuing, the
Administrative Agent may, with the consent of the Required Lenders, or shall, at
the request and instruction of the Required Lenders, and by notice in writing to
the Borrowers, declare all amounts owing with respect to this Agreement, the
Notes and the other Loan Documents to be, and they shall thereupon forthwith
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by the
Borrowers; provided

                                      -65-


that in the event of any Event of Default specified in Section 12-8 above, all
such amounts shall become immediately due and payable automatically and without
any requirement of notice from the Administrative Agent.

ARTICLE 13 - RIGHTS AND REMEDIES UPON DEFAULT

      In addition to all of the rights, remedies, powers, privileges, and
discretions which the Administrative Agent and/or the Lenders are provided prior
to the occurrence of an Event of Default, the Administrative Agent shall have
the following rights and remedies upon the occurrence and during the continuance
of any Event of Default.

      13-1. Termination of Commitments. The Administrative Agent may with the
consent of the Required Lenders, and shall if directed by the Required Lenders,
by written notice to the Lead Borrower, (i) declare the principal of and accrued
interest in respect of the Liabilities to be forthwith due and payable,
whereupon the principal of and accrued interest in respect of the Liabilities,
and all other amounts then due hereunder, shall become forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by each Borrower, and/or (ii) terminate the
Commitment of the Lenders, whereupon the Total Commitment of the Lenders (and
the Commitment of each individual Lender) to make Loans and issue L/Cs hereunder
shall forthwith terminate without any other notice of any kind; and with respect
to any event described in Section 12-8 above, the Commitments shall
automatically terminate and the principal of the Liabilities then outstanding,
together with accrued interest thereon and all other amounts then due hereunder,
shall automatically become due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by
each of the Borrowers, anything contained herein or in any other Loan Document
to the contrary notwithstanding. Without limiting any provision of this
Agreement or of any Loan Document, an Event of Default under this Agreement
shall also constitute an event of default under each of the Loan Documents.

      13-2. Rights and Remedies.

            (a) The rights, remedies, powers, privileges, and discretions of the
Administrative Agent hereunder (herein, the "ADMINISTRATIVE AGENT'S RIGHTS AND
REMEDIES") shall be cumulative and not exclusive of any rights or remedies which
it would otherwise have. No delay or omission by the Administrative Agent in
exercising or enforcing any of the Agent's Rights and Remedies shall operate as,
or constitute, a waiver thereof. No waiver by the Administrative Agent of any
Event of Default or of any default under any other agreement shall operate as a
waiver of any other default hereunder or under any other agreement. No single or
partial exercise of any of the Administrative Agent's Rights or Remedies, and no
express or implied agreement or transaction of whatever nature entered into
between the Administrative Agent and any Person, at any time, shall preclude the
other or further exercise of the Administrative Agent's Rights and Remedies. No
waiver by the Administrative Agent of any of the Administrative Agent's Rights
and Remedies on any one occasion shall be deemed a waiver on any subsequent
occasion, nor shall it be deemed a continuing waiver. All of the Administrative
Agent's Rights and Remedies and all of the Administrative Agent's rights,
remedies, powers, privileges, and discretions under any other agreement or
transaction are cumulative, and not alternative or exclusive, and may be
exercised by the Administrative Agent

                                      -66-


at such time or times and in such order of preference as the Administrative
Agent in its sole discretion may determine. The Administrative Agent's Rights
and Remedies may be exercised without resort or regard to any other source of
satisfaction of the Liabilities.

            (b) Without limiting the provisions of subsection (a) above, if and
only if (i) the Collateral Release Event has occurred, and (ii) an Event of
Default has occurred and be continuing, then on the Business Day that the Lead
Borrower receives notice from the Administrative Agent demanding the deposit of
cash collateral pursuant to this paragraph, the Borrowers shall deposit in a
cash collateral account, under the sole dominion and control of the
Administrative Agent, an amount in cash equal to 103% of the stated amount of
the outstanding L/Cs as of such date plus any accrued and unpaid interest
thereon. Each such deposit shall be held by the Administrative Agent as
collateral for the payment and performance of the Liabilities of the Borrowers.
The Administrative Agent shall have exclusive dominion and control, including
the exclusive right of withdrawal, over such cash collateral account. Other than
any interest earned on the investment of such deposits, which investments shall
be made at the option and sole discretion of the Administrative Agent at the
request of the Lead Borrower and at the Borrowers' risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such cash collateral
account shall be applied by the Administrative Agent to reimburse the
Administrative Agent for payments on account of drawings under L/Cs for which it
has not been reimbursed and, to the extent not so applied, shall be held first
for the satisfaction of the reimbursement obligations of the Borrowers for the
outstanding L/Cs at such time and thereafter be applied to satisfy other
Liabilities of the Borrowers under this Agreement.

      13-3. Distribution of Collateral Proceeds. In the event that, following
the occurrence and during the continuance of any Event of Default, the
Administrative Agent or any Lender, as the case may be, receives any monies in
connection with the enforcement of any the Loan Documents, or otherwise with
respect to the realization upon any of the Collateral, such monies shall be
distributed for application as follows:

            (a) First, to the payment of, or (as the case may be) the
      reimbursement of the Administrative Agent for or in respect of, all
      reasonable costs, expenses, disbursements and losses which shall have been
      incurred or sustained by the Administrative Agent in connection with the
      collection of such monies by the Administrative Agent, for the exercise,
      protection or enforcement by the Administrative Agent of all or any of the
      rights, remedies, powers and privileges of the Administrative Agent under
      this Agreement or any of the other Loan Documents or in respect of the
      Collateral or in support of any provision of adequate indemnity to the
      Administrative Agent against any taxes or liens which by law shall have,
      or may have, priority over the rights of the Administrative Agent to such
      monies;

            (b) Second, pro rata to each of the Lenders to all other
      Liabilities, provided, however, proceeds from the liquidation of the Real
      Estate shall be first applied to the Term Loan, pro rata, with the
      remaining balance, if any, to be applied to all other Liabilities on a pro
      rata basis;

                                      -67-


            (c) Third, upon payment and satisfaction in full or other provisions
      for payment in full satisfactory to the Lenders and the Administrative
      Agent of all of the Liabilities, to the payment of any obligations
      required to be paid pursuant to Section 9-615(a)(3) of the UCC, in effect
      from time to time; and

            (d) Fourth, the excess, if any, shall be returned to the Borrowers
      or to such other Persons as are entitled thereto.

ARTICLE 14 - NOTICES.

      14-1. Notice Addresses. All notices, demands, and other communications
made in respect of this Agreement (other than a request for a loan or advance or
other financial accommodation under the Revolving Credit) shall be made to the
following addresses, each of which may be changed upon seven (7) days written
notice to all others given by certified mail, return receipt requested:

If to the Administrative Agent:     Brown Brothers Harriman & Co.
                                    40 Water Street
                                    Boston, Massachusetts 02109
                                    Attention: Mr. John D. Rogers
                                    Fax: 617 772-1138
                                    E-Mail: john.rogers@bbh.com

      With a copy to:               Riemer & Braunstein LLP
                                    Three Center Plaza
                                    Boston, Massachusetts  02108
                                    Attention: Charles W. Stavros, Esquire
                                    Fax: 617 880-3456
                                    E-mail: cstavros@riemerlaw.com

If to any Borrower:                 Dynamics Research Corporation
                                    60 Frontage Road
                                    Andover, Massachusetts 01810
                                    Attention: Elise Caffrey, Treasurer
                                    Fax: 978-474-9204
                                    E-mail: ecaffrey@drc.com

      With a copy to:               Nixon Peabody, LLP
                                    101 Federal Street
                                    Boston, Massachusetts 02110
                                    Attention: Michael Manning, Esquire
                                    Fax: 617-345-1300
                                    E-mail: mmanning@nixonpeabody.com
      14-2. Notice Given.

                                      -68-


            (a) Notices shall be deemed given at the sooner of when actually
received or (i) if by mail: Three (3) days following deposit in the United
States mail, postage prepaid; (ii) By overnight express delivery: the Business
Day following the day when sent; (iii) By hand: If delivered on a Business Day
after 9:00 AM and no later than Three (3) hours prior to the close of customary
business hours of the recipient, when delivered (otherwise, at the opening of
the then next Business Day); and (iv) By facsimile or electronic transmission:
If sent on a Business Day after 9:00 AM and no later than Three (3) hours prior
to the close of customary business hours of the recipient, one (1) hour after
being sent (otherwise, at the opening of the then next Business Day).

            (b) Rejection or refusal to accept delivery and inability to deliver
because of a changed address or facsimile number for which no due notice was
given shall each be deemed receipt of the notice sent.

ARTICLE 15 - TERM OF AGREEMENT.

      15-1. Termination of Revolving Credit. The Revolving Credit shall be
terminated upon the Termination Date.

      15-2. Effect of Termination. Upon the Termination Date, the Borrower shall
pay the Administrative Agent, for the benefit of the Lenders, the then principal
balance of the Loans, together with any and all accrued and unpaid interest
thereon (whether or not then due). Following such payment, all provisions of
this Agreement, other than those contained in Article 3 which place an
obligation on the Lenders to make any loans or advances or to provide financial
accommodations under the Revolving Credit or to issue L/Cs shall remain in full
force and effect until all Liabilities (including the Revolving Credit, the Term
Loan, and the Acquisition Term Loan) shall have been paid in full.

ARTICLE 16 - GENERAL.

      16-1. Successors and Assigns. This Agreement shall be binding upon the
Borrowers and the Borrowers' representatives, successors, and assigns and shall
inure to the benefit of the Administrative Agent, the Lenders and their
respective successors and assigns provided, however, no trustee or other
fiduciary appointed with respect to the Borrowers shall have any rights
hereunder. In the event that any Lender assigns or transfers its rights under
this Agreement, subject to Article 17 below, the assignee shall thereupon
succeed such Lender to and become vested with all rights, powers, privileges,
and duties of such Lender hereunder and such Lender shall thereupon be
discharged and relieved from its duties and obligations hereunder.

      16-2. Severability. Any determination that any provision of this Agreement
or any application thereof is invalid, illegal, or unenforceable in any respect
in any instance shall not affect the validity, legality, or enforceability of
such provision in any other instance, or the validity, legality, or
enforceability of any other provision of this Agreement.

      16-3. Amendments; Course of Dealing.(a) This Agreement and the other Loan
Documents incorporate all discussions and negotiations among the Borrowers,
Agents and the Lenders, either express or implied, concerning the matters
included herein and in such other instruments, any custom, usage, or course of
dealings to the contrary notwithstanding. No such

                                      -69-


discussions, negotiations, custom, usage, or course of dealings shall limit,
modify, or otherwise affect the provisions thereof. No failure by the
Administrative Agent to give notice to any Borrower of such Borrower's having
failed to observe and comply with any warranty or covenant included in any Loan
Document shall constitute a waiver of such warranty or covenant or the amendment
of the subject Loan Document. No change made by the Administrative Agent in the
manner by which Availability is determined shall obligate the Administrative
Agent to continue to determine Availability in that manner.

            (b) The Borrowers may undertake any action otherwise prohibited
hereby, and may omit to take any action otherwise required hereby, upon and with
the express prior written consent of the Required Lenders or such other Persons'
consent as may be required by Section 17-17. No consent, modification,
amendment, or waiver of any provision of any Loan Document shall be effective
unless executed in writing by or on behalf of the party to be charged with such
modification, amendment, or waiver (and if such party is a Lender, then by a
duly authorized officer thereof). Any modification, amendment, or waiver
provided by the Required Lenders shall be in reliance upon all representations
and warranties theretofore made to the Lenders by or on behalf of the Borrowers
(and any guarantor, endorser, or surety of the Liabilities) and consequently may
be rescinded by the Lenders in the event that any of such representations or
warranties was not true and complete in all material respects when given.

      16-4. Intentionally Omitted.

      16-5. Costs and Expenses. The Borrowers shall pay on demand all Costs of
Collection and all reasonable expenses of the Administrative Agent in connection
with the preparation, execution, and delivery of this Agreement and of any other
Loan Documents, whether now existing or hereafter arising, including, without
limitation, all appraisal, inspection and other reports conducted in connection
with the underwriting of this Agreement and the loans contemplated hereby, and
all other reasonable expenses which may be incurred by the Administrative Agent
in preparing or amending this Agreement and all other agreements, instruments,
and documents related thereto, or otherwise incurred with respect to the
Liabilities.

      16-6. Copies and Facsimiles. This Agreement and all documents which relate
thereto, which have been or may be hereinafter furnished to the Lenders may be
reproduced by the Lenders by any photographic, microfilm, xerographic, digital
imaging, or other process, and the Lenders may destroy any document so
reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made in the
regular course of business). Any facsimile which bears proof of transmission
shall be binding on the party which or on whose behalf such transmission was
initiated and likewise shall be so admissible in evidence as if the original of
such facsimile had been delivered to the party which or on whose behalf such
transmission was received.

      16-7. Massachusetts Law. This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance, shall
be governed by the laws of The Commonwealth of Massachusetts.

      16-8. Consent to Jurisdiction.

                                      -70-


            (a) The Borrowers agree that any legal action, proceeding, case, or
controversy against the Borrowers with respect to any Loan Document may be
brought in the Superior Court of Suffolk County Massachusetts or in the United
States District Court, District of Massachusetts, sitting in Boston,
Massachusetts, as the Administrative Agent may elect in its sole discretion. By
execution and delivery of this Agreement, each Borrower, for itself and in
respect of its property, accepts, submits, and consents generally and
unconditionally, to the jurisdiction of the aforesaid courts.

            (b) Each Borrower WAIVES personal service of any and all process
upon it, and irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the Lead Borrower at the Lead
Borrower's address for notices as specified herein, such service to become
effective five (5) Business Days after such mailing.

            (c) Each Borrower WAIVES, at the option of the Administrative Agent,
any objection based on forum non conveniens and any objection to venue of any
action or proceeding instituted under any of the Loan Documents and consents to
the granting of such legal or equitable remedy as is deemed appropriate by the
Court.

            (d) Nothing herein shall affect the right of the Administrative
Agent to bring legal actions or proceedings in any other competent jurisdiction.

            (e) Each Borrower agrees that any action commenced by any Borrower
asserting any claim or counterclaim arising under or in connection with this
Agreement or any other Loan Document shall be brought in the Superior Court of
Suffolk County Massachusetts or in the United States District Court, District of
Massachusetts, sitting in Boston, Massachusetts, and that such Courts shall have
exclusive jurisdiction with respect to any such action, with the exception of
any counterclaim brought in action commenced by the Administrative Agent or any
Lender in a different forum, which counterclaim may be brought in such alternate
forum.

      16-9. Indemnification. Each Borrower shall jointly and severally
indemnify, defend, and hold the Administrative Agent and each Lender and any
employee, officer, or agent of the Administrative Agent and any Lender (each, an
"INDEMNIFIED PERSON") harmless of and from any claim brought or threatened
against any Indemnified Person by any Borrower, any guarantor or endorser of the
Liabilities, or any other Person (as well as from attorneys' reasonable fees and
expenses in connection therewith) on account of the Administrative Agent's and
such Lender's relationship with the Borrowers or any other guarantor or endorser
of the Liabilities (each of which may be defended, compromised, settled, or
pursued by the Indemnified Person with counsel of the Administrative Agent'
selection, but at the expense of the Borrowers) other than any claim as to which
a final determination is made in a judicial proceeding (in which the
Administrative Agent and any other Indemnified Person has had an opportunity to
be heard), which determination includes a specific finding that the Indemnified
Person seeking indemnification had acted in a grossly negligent manner, with
willful misconduct or in actual bad faith. This indemnification shall survive
payment of the Liabilities and/or any termination, release, or discharge
executed by the Administrative Agent in favor of the Borrowers.

      16-10. Rules of Construction.

                                      -71-


            (a) The following rules of construction shall be applied in the
interpretation, construction, and enforcement of this Agreement and of the other
Loan Documents:

                  (i) Words in the singular include the plural and words in the
      plural include the singular.

                  (ii) Headings (indicated by being underlined) and the Table of
      Contents are solely for convenience of reference and do not constitute a
      part of the instrument in which included and do not affect such
      instrument's meaning, construction, or effect.

                  (iii) The words "includes" and "including" are not limiting.

                  (iv) The words "may not" are prohibitive and not permissive.

                  (v) The word "or" is not exclusive.

                  (vi) Terms which are defined in one section of an instrument
      are used with such definition throughout the instrument in which so
      defined.

                  (vii) The symbol "$" refers to United States Dollars.

                  (viii) References to "herein", "hereof", and "within" are to
      this entire Loan Agreement and not merely the provision in which such
      reference is included.

                  (ix) Except as otherwise specifically provided, all references
      to time are to Boston time.

                  (x) In the determination of any notice, grace, or other period
      of time prescribed or allowed hereunder, unless otherwise provided (A) the
      day of the act, event, or default from which the designated period of time
      begins to run shall not be included and the last day of the period so
      computed shall be included unless such last day is not a Business Day, in
      which event the last day of the relevant period shall be the then next
      Business Day and (B) the period so computed shall end at 5:00 PM on the
      relevant Business Day.

                  (xi) References to "this Agreement" or to any other Loan
      Document is to the subject instrument as amended to the date on which
      application of such reference is being made.

            (b) The Loan Documents shall be construed and interpreted in a
harmonious manner and in keeping the intentions set forth in Section 16-11
hereof, provided, however, in the event of any inconsistency between the
provisions of this Agreement and any other Loan Document, the provisions of this
Agreement shall govern and control.

      16-11. Intent. It is intended that

            (a) This Agreement take effect as a sealed instrument.

                                      -72-


            (b) The Administrative Agent's or the Required Lenders' consent or
      the Lenders' consent to any action of the Borrowers which is prohibited
      unless such consent is given may be given or refused by the applicable
      parties in its sole discretion.

      16-12. Setoff. Regardless of the adequacy of any collateral, during the
continuance of any Event of Default, any deposits (general or specific, time or
demand, provisional or final, regardless of currency, maturity, or the branch of
where such deposits are held) or other sums credited by or due from any of the
Lenders to the Borrowers and any securities or other property of the Borrowers
in the possession of such Lender may be applied to or set off against the
payment of Liabilities and any and all other liabilities, direct, or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
of the Borrowers to such Lender. Each of the Lenders agrees with each other
Lender that if such Lender shall receive from the Borrowers, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Notes held by such Lender by
proceedings against the Borrowers at law or in equity or by proof thereof in
bankruptcy, reorganization, liquidation, receivership or similar proceedings, or
otherwise, and shall retain and apply to the payment of the Note or Notes held
by such Lender any amount in excess of its ratable portion of the payments
received by all of the Lenders with respect to the Notes held by all of the
Lenders, such Lender will make such disposition and arrangements with the other
Lenders with respect to such excess, either by way of distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in each Lender
receiving in respect of the Notes held by it its proportionate payment as
contemplated by this Agreement; provided that if all or any part of such excess
payment is thereafter recovered from such Lender, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.

      16-13. Maximum Interest Rate. Regardless of any provision of any Loan
Document, the Lenders shall never be entitled to contract for, charge, receive,
collect, or apply as interest on any Liability, any amount in excess of the
maximum rate imposed by applicable law. Any payment which is made which, if
treated as interest on a Liability would result in such interest's exceeding
such maximum rate shall be held, to the extent of such excess, as collateral for
the Liabilities.

      16-14. Waivers.(a) Each Borrower (and all guarantors, endorsers, and
sureties of the Liabilities) make each of the waivers included in subsection
(b), below, knowingly, voluntarily, and intentionally, and understands that the
Administrative Agent and each Lender, in entering into the financial
arrangements contemplated hereby and in providing loans and other financial
accommodations to or for the account of each Borrower as provided herein,
whether not or in the future, is relying on such waivers.

            (b) TO THE EXTENT PERMITTED BY APPLICABLE LAW,EACH BORROWER, AND
EACH SUCH GUARANTOR, ENDORSER, AND SURETY RESPECTIVELY WAIVES THE FOLLOWING:

                  (i) Except as otherwise specifically required hereby, notice
      of non-payment, demand, presentment, protest and all forms of demand and
      notice.

                                      -73-


                  (ii) Except as otherwise specifically required hereby, the
      right to notice and/or hearing prior to the Administrative Agent'
      exercising of the Administrative Agent' rights upon default.

                  (iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
      CONTROVERSY IN WHICH ANY AGENT OR ANY LENDER IS OR BECOMES A PARTY
      (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST, ANY AGENT,
      ANY LENDER OR IN WHICH ANY AGENT OR ANY LENDER IS JOINED AS A PARTY
      LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF,
      ANY RELATIONSHIP AMONGST OR BETWEEN ANY BORROWER OR ANY OTHER PERSON, ANY
      AGENT AND/OR ANY LENDER (AND EACH AGENT AND EACH LENDER LIKEWISE WAIVES
      THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH CASE OR CONTROVERSY).

                  (iv) Any defense, counterclaim, set-off, recoupment, or other
      basis on which the amount of any Liability, as stated on the books and
      records of the Administrative Agent, could be reduced or claimed to be
      paid otherwise than in accordance with the tenor of and written terms of
      such Liability.

                  (v) Any claim to consequential, special, or punitive damages.

      16-15. Payments; Application. All payments made by or on behalf of the
Borrowers hereunder or under any other Loan Document shall be paid by such
Person to the Administrative Agent in United States currency at the
Administrative Agent's address specified in Section 14-1 (or at such other
address as the Administrative Agent shall specify), in immediately available
funds, on), in immediately available funds, on or before 2:00 p.m. (Boston,
Massachusetts time) on the due date thereof. Payments received by the
Administrative Agent prior to the occurrence of an Event of Default will be
applied first to fees, expenses and other amounts due hereunder (excluding
principal and interest); second, to accrued interest; and third to outstanding
principal. After the occurrence of an Event of Default payments will be applied
to the Liabilities as the Administrative Agent determines in its sole
discretion; except that payments on account of the proceeds of the Collateral,
after the occurrence of an Event of Default, shall be applied as provided for in
Section 13-3.

      16-16. Receipt of Agreement. Each Borrower acknowledges receipt of a
completed copy of this Agreement.

ARTICLE 17 - THE AGENT.

      17-1. Authorization; Non-Reliance by Lenders; Reliance by Administrative
Agent; Dispute Resolution.(a) Each Lender appoints and designates Brown Brothers
Harriman & Co., as the "Administrative Agent" hereunder and under the Loan
Documents. Each Lender hereby authorizes the Administrative Agent (i) to execute
those Loan Documents and all other instruments relating thereto to which the
Administrative Agent is a party, and (ii) to take such action on behalf of each
of the Lenders and to exercise all such powers as are hereunder and under any of
the other Loan Documents and any related documents delegated to the

                                      -74-


Administrative Agent, together with such powers as are reasonably incident
thereto, provided that no duties or responsibilities not expressly assumed
herein or therein shall be implied to have been assumed by the Administrative
Agent. The relationship between the Administrative Agent and the Lenders is and
shall be that of agent and principal only, and nothing contained in this
Agreement or any of the other Loan Documents shall be construed to constitute
Administrative Agent as a trustee or fiduciary for any Lender. The
Administrative Agent shall not have any duties or responsibilities to, or any
fiduciary relationship with, any Lender except for those expressly set forth in
this Agreement. The Borrowers acknowledge that in certain instances any action
to be taken by the Administrative Agent may only be taken upon approval of the
Required Lenders or all the Lenders.

            (b) Each Lender represents to all other Lenders and to the
Administrative Agent that such Lender:

                  (i) Independently and without reliance on any representation
      or act by the Administrative Agent or by any other Lender, and based on
      such documents and information as that Lender has deemed appropriate, has
      made that Lender's own appraisal of the financial condition and affairs of
      the Borrowers and decision to enter into this Agreement.

                  (ii) Has relied upon that such Lender's review of the Loan
      Documents by that Lender and by counsel to that Lender as that Lender
      deemed appropriate under the circumstances.

            (c) Each Lender agrees that such Lender, independently and without
reliance upon the Administrative Agent or any other Lender, and based upon such
documents and information as such Lender shall deem appropriate at the time,
will continue to make such Lender's own appraisals of the financial condition
and affairs of the Borrowers when determining whether to take or not to take any
discretionary action under this Agreement.

            (d) The Administrative Agent, in the discharge of its duties
hereunder, shall not be required to make inquiry of, or to inspect the
properties or books of, any Person.

            (e) Except for notices, reports, and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder (as to which, see Section 17-10), the Administrative Agent shall not
have any affirmative duty or responsibility to provide any Lender with any
credit or other information concerning any Person, which information may come
into the possession of the Administrative Agent or any Affiliate of the
Administrative Agent.

            (f) Each Lender, at such Lender's request, shall have reasonable
access to all nonprivileged documents in the possession of the Administrative
Agent, which documents relate to the Administrative Agent's performance of its
duties hereunder.

            (g) The Administrative Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, telex, or
facsimile) reasonably believed by the Administrative Agent to be genuine and
correct and to have been signed or sent by or on behalf of the proper person or
persons, and upon advice and statements of attorneys, accountants

                                      -75-


and other experts selected by the Administrative Agent. As to any matters not
expressly provided for in this Agreement, any Loan Document, or in any other
document referred to therein, the Administrative Agent shall in all events be
fully protected in acting, or in refraining from acting, in accordance with the
applicable consent required by this Agreement. Instructions given with the
requisite consent shall be binding on all Lenders.

            (h) Any dispute among the Lenders and/or the Administrative Agent
concerning the interpretation, administration, or enforcement of the financing
arrangements contemplated by this or any other Loan Document or the
interpretation or administration of this or any other Loan Document which cannot
be resolved amicably shall be resolved in the United States District Court for
the District of Massachusetts, sitting in Boston or in the Superior Court of
Suffolk County, Massachusetts, to the jurisdiction of which courts each Lender
hereto hereby submits.

      17-2. Employees and Agents. The Administrative Agent may exercise its
powers and execute its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to its rights and duties under this Agreement and the other Loan
Documents. The Administrative Agent may utilize the services of such Persons as
said Administrative Agent in its sole discretion may reasonably determine, and
all reasonable fees and expenses of any such Persons shall be paid by the
Borrowers.

      17-3. No Liability. Neither the Administrative Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent or employee thereof, shall be liable for any
waiver, consent or approval given or any action taken, or omitted to be taken,
in good faith by them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Administrative Agent
or such other Person, as the case may be, may be liable for losses due to its
willful misconduct or gross negligence.

      17-4. No Representations. The Administrative Agent shall not be
responsible for the execution or validity or enforceability of this Agreement,
the Notes, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the Notes, or
for the value of any such collateral security or for the validity,
enforceability or collectibility of any such amounts owing with respect to the
Notes, or for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or instrument
hereafter furnished to it by or on behalf of the Borrowers or any of their
Subsidiaries, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or in
any instrument at any time constituting, or intended to constitute, collateral
security for the Notes. The Administrative Agent shall not be bound to ascertain
whether any notice, consent, waiver or request delivered to it by the Borrowers
or any holder of any of the Notes shall have been duly authorized or is true,
accurate and complete. The Administrative Agent has not made nor does it now
make any representations or warranties, express or implied, nor do they assume
any liability to the Lenders, with respect to the credit worthiness or financial
condition of the Borrowers or any Subsidiaries. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agents or any
other Lender, and based upon such

                                      -76-


information and documents as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.

      17-5. Funding Procedures; Payments.

            (a) The Administrative Agent shall advise each Lender, no later than
2:00 PM (Boston Time) (A) on a date on which any Revolving Credit Loan is to be
made to the Lead Borrower on that date, and (B) on the date of any request for
the making, Conversion or continuation of a LIBOR Loan. Such advice, in each
instance, may be by telephone or facsimile transmission, provided that if such
advice is by telephone, it shall be confirmed in writing. Advice of a Revolving
Credit Loan shall include the amount of and interest rate applicable to the
subject Revolving Credit Loan. Subject to that Lender's Commitment of the
Revolving Credit, each Lender, by not later than the end of business on the day
on which the subject Revolving Credit Loan is to be made, shall transfer that
Revolving Credit Lender's Revolving Credit Commitment Percentage of the subject
Revolving Credit Loan to the Administrative Agent.

            (b) Each Revolving Credit Lender shall make available to the
Administrative Agent, as applicable, as provided herein, that Lender's Revolving
Credit Commitment Percentage of the following:

                  (i) Each Revolving Credit Loan, up to the maximum amount of
      that Revolving Credit Lender's Revolving Credit Commitment of the
      Revolving Credit Loans.

                  (ii) Up to the maximum amount of that Lender's Revolving
      Credit Commitment of each drawing on a L/C (to the extent that such L/C
      Drawing is not "covered" by a Revolving Credit Loan as provided herein).

            (c) In all circumstances, the Administrative Agent may:

                  (i) Assume that each Lender, subject to Section 17-5(a),
      timely shall make available to the Administrative Agent that Lender's
      Revolving Credit Commitment Percentage of each Revolving Credit Loan,
      notice of which is provided pursuant to Section 17-5(a).

                  (ii) In reliance upon such assumption, make available the
      corresponding amount to the applicable Borrowers.

                  (iii) Assume that each Lender timely shall pay, and shall make
      available, to the Administrative Agent all other amounts which that Lender
      is obligated to so pay and/or make available hereunder or under any of the
      Loan Documents.

            (d) (i) A payment by the Borrowers to the Administrative Agent
hereunder or any of the other Loan Documents for the account of any Lender shall
constitute a payment to such Lender. The Administrative Agent agrees promptly to
distribute to each Lender such Lender's Commitment Percentage of payments
received by the Administrative Agent for the account of the Lenders except as
otherwise expressly provided herein or in any of the other Loan Documents;

                                      -77-


                  (ii) the amount of each Lender's Commitment Percentage of
outstanding Revolving Credit Loans shall be computed weekly (or more frequently
in the Administrative Agent's discretion) and shall be adjusted upward or
downward based on all Revolving Credit Loans and repayments of Revolving Credit
Loans received by the Administrative Agent as of 3:00 p.m., Boston time, on the
first Business Day following the end of the period specified by the
Administrative Agent (such date, the "Settlement Date");

                  (iii) the Administrative Agent shall deliver to each of the
Lenders promptly after the Settlement Date a summary statement of the amount of
outstanding Revolving Credit Loans for the period and the amount of repayments
received for the period. As reflected on the summary statement: (x) the
Administrative Agent shall transfer to each Lender its applicable Commitment
Percentage of repayments, and (y) each Lender shall transfer to the
Administrative Agent (as provided below), or the Administrative Agent shall
transfer to each Lender, such amounts as are necessary to insure that, after
giving effect to all such transfers, the amount of Revolving Credit Loans made
by each Lender with respect to Revolving Credit Loans shall be equal to such
Lender's applicable Commitment Percentage of Revolving Loans outstanding as of
such Settlement Date. If the summary statement requires transfers to be made to
the Administrative Agent by the Lenders and is received prior to 12:00 Noon,
Boston time, on a Business Day, such transfers shall be made in immediately
available funds no later than 11:00 a.m., Boston time, that day; and, if
received after 11:00 a.m., Boston time, then no later than 3:00 p.m., Boston
time, on the next Business Day. The obligation of each Lender to transfer such
funds is irrevocable, unconditional and without recourse to or warranty by the
Administrative Agent. If and to the extent any Lender shall not have so made its
transfer to the Administrative Agent, such Lender agrees to pay to the
Administrative Agent, forthwith on demand such amount, together with interest
thereon, for each day from such date until the date such amount is paid to the
Administrative Agent at the Federal Funds Effective Rate.

            (e) The Borrowers acknowledge that each Lender's responsibilities
hereunder are several and that each Lender shall only be responsible to fund up
to each Lender's Commitment Percentage. The Borrowers agree to release and hold
harmless any nondelinquent Lenders from any claims, damages or costs arising on
account of any failure of a Delinquent Lender to comply with the requirements of
this Agreement.

            (f) If in the opinion of the Administrative Agent the distribution
of any amount received by it in such capacity hereunder, under the Notes or
under any of the other Loan Documents might involve it in liability, it may
refrain from making distribution until its right to make distribution shall have
been adjudicated by a court of competent jurisdiction (provided that such action
by the Administrative Agent shall not create an independent default by the
Borrowers). If a court of competent jurisdiction shall adjudge that any amount
received and distributed by the Administrative Agent is to be repaid, each
Person to whom any such distribution shall have been made shall either repay to
the Administrative Agent its proportionate share of the amount so adjudged to be
repaid or shall pay over the same in such manner and to such Persons as shall be
determined by such court.

      17-6. Holders of Notes. The Administrative Agent may deem and treat the
payee of any Note as the absolute owner or purchaser thereof for all purposes
hereof until it shall have

                                      -78-


been furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.

      17-7. Indemnity. The Lenders ratably agree hereby to indemnify and hold
harmless the Administrative Agent from and against any and all claims, actions
and suits (whether groundless or otherwise), losses, damages, costs, out of
pocket expenses (including any expenses for which the Administrative Agent has
not been reimbursed by the Borrowers as required by Section 16-5), and
liabilities of every nature and character arising out of or related to this
Agreement, the Notes, or any of the other Loan Documents or the transactions
contemplated or evidenced hereby or thereby, or the Administrative Agent's
actions taken hereunder or thereunder, except to the extent that any of the same
shall be directly caused by the Administrative Agents' willful misconduct or
gross negligence.

      17-8. Administrative Agent as Lender; Limitation on other Agents'
Liability. In its individual capacity, Brown Brothers Harriman & Co. shall have
the same obligations and the same rights, powers and privileges in respect to
its Commitments and the Loans made by it, and as the holder of any of the Notes
as it would have were it not also the Administrative Agent. None of the
Documentation Agent or the Co-Syndication Agents, in such capacities, shall have
any right, power, obligation, liability, responsibility or duty under this
Agreement or any other Loan Document.

      17-9. Resignation. The Administrative Agent may resign at any time by
giving sixty (60) days' prior written notice thereof to the Lenders and the
Borrowers. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor to Administrative Agent. Unless an Event of Default shall
have occurred and be continuing, such successor Administrative Agent shall be
reasonably acceptable to the Borrowers in their reasonable discretion. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, after consultation
with the Lenders, appoint a successor Administrative Agent, which shall be a
Lender or which meets the requirements of subjection (a) of the definition of an
Eligible Assignee, and unless an Event of Default shall have occurred and be
continuing, such successor Administrative Agent being reasonably acceptable to
the Borrowers in its reasonable discretion. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation, the provisions of this Agreement and the other Loan
Documents shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent.
In addition, if at any time Administrative Agent shall no longer act as a Lender
hereunder (subject to the provisions of Section 17-13 below), unless same
results from a merger or other consolidation of the Administrative Agent with a
Lender, the Required Lenders shall have the right to appoint a successor
Administrative Agent subject to the provisions of this Section 17-9.

                                      -79-


      17-10. Notification of Suspension Events and Events of Default;
Distributions of Notices and Documents by Administrative Agent.(a) Each Lender
hereby agrees that, upon learning of the existence of a Suspension Event or an
Event of Default, it shall promptly notify the Administrative Agent thereof. The
Administrative Agent hereby agrees that upon receipt of any notice under this
Section 17-10 it shall promptly notify in writing the other Lenders of the
existence of such Suspension Event or Event of Default.

            (b) The Administrative Agent, to the extent that the Administrative
Agent has not done so, will forward to each Lender, promptly after the
Administrative Agent's receipt thereof, a copy of each notice or other document
furnished to the Administrative Agent pursuant to this Agreement, including
quarterly and annual financial statements received from the Borrowers pursuant
to Article 11 of this Agreement, other than any of the following:

                  (i) Routine communications associated with requests for
      Revolving Credit Loans and/or the issuance of L/C's.

                  (ii) Routine or nonmaterial communications.

                  (iii) Any notice or document required by any of the Loan
      Documents to be furnished to the Lenders by the Borrowers.

                  (iv) Any notice or document of which the Administrative Agent
      has knowledge that such notice or document had been forwarded to the
      Lenders other than by the Administrative Agent.

      17-11. Duties in the Case of Enforcement. In case that one or more Events
of Default have occurred and shall be continuing, and whether or not
acceleration of the Liabilities shall have occurred, the Administrative Agent
shall, if (a) so requested by the Required Lenders and (b) the Required Lenders
have provided to the Administrative Agent such additional indemnities and
assurances against expenses and liabilities as the Administrative Agent may
reasonably request, proceed to enforce the provisions of the Loan Documents
authorizing the sale or other disposition of all or any part of the Collateral
and exercise all or any such other legal and equitable and other rights or
remedies as it may have in respect of such Collateral. The Required Lenders may
direct the Administrative Agent in writing as to the method and the extent of
any such sale or other disposition, the Lenders hereby agreeing to indemnify and
hold the Administrative Agent harmless from all liabilities incurred in respect
of all actions taken or omitted in accordance with such directions, provided
that the Administrative Agent need not comply with any such direction to the
extent that the Administrative Agent reasonably believes its compliance with
such direction to be unlawful or, upon the advice of counsel, would be found to
be commercially unreasonable in any applicable jurisdiction. The Administrative
Agent may, in its discretion but without obligation, in the absence of direction
from the Required Lenders, take such interim actions as they believe necessary
to preserve the rights of the Lenders hereunder and in and to any Collateral
securing the Liabilities, including but not limited to petitioning a court for
injunctive relief, appointment of a receiver or preservation of the proceeds of
any Collateral. Each of the Lenders acknowledges and agrees that no individual
Lender may separately enforce or exercise any of the provisions of any of the
Loan Documents, including without limitation the Notes, other than through the
Administrative Agent.

                                      -80-


      17-12. Delinquent Lender. If for any reason any Lender shall fail or
refuse to abide by its obligations under the Agreement, including without
limitation its obligation to make available to the Administrative Agent its pro
rata share of any Loan, expenses or setoff (a "DELINQUENT LENDER") and such
failure is not cured within ten (10) days of receipt from the Administrative
Agent of written notice thereof, then, in addition to the rights and remedies
that may be available to Administrative Agent, other Lenders, the Borrowers or
any other party at law or in equity, and not at limitation thereof, (i) such
Delinquent Lender's right to participate in the administration of, or
decision-making rights related to, any Loan, this Agreement or the other Loan
Documents shall be suspended during the pendency of such failure or refusal, and
(ii) a Delinquent Lender shall be deemed to have assigned any and all payments
due to it from the Borrowers, whether on account of the outstanding Loans,
interest, fees or otherwise, to the remaining non-delinquent Lenders for
application to, and reduction of, their proportionate shares of the outstanding
Loans until, as a result of application of such assigned payments the Lenders'
respective pro rata shares of the outstanding Loans shall have returned to those
in effect immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency. The Delinquent Lender's decision-making and
participation rights to payments as set forth in clauses (i) and (ii)
hereinabove shall be restored only upon the payment by the Delinquent Lender of
its pro rata share of the Loans or expenses as to which it is delinquent,
together with interest thereon at the Default Rate from the date when originally
due until the date upon which any such amounts are actually paid.

      The non-delinquent Lenders shall also have the right, but not the
obligation, in their respective, sole and absolute discretion, to acquire for no
cash consideration, (pro rata, based on the respective Commitments of those
Lenders electing to exercise such right) the Delinquent Lender's Commitment to
fund any future Loan (the "FUTURE COMMITMENT"). Upon any such purchase of the
pro rata share of any Delinquent Lender's Future Commitment, the Delinquent
Lender's share in any future Loans and its rights under the Loan Documents with
respect thereto shall terminate on the date of purchase, and the Delinquent
Lender shall promptly execute all documents reasonably requested to surrender
and transfer such interest, including, if so requested, an Assignment and
Acceptance. Each Delinquent Lender shall indemnify Administrative Agent and each
non-delinquent Lender from and against any and all loss, damage or expenses,
including but not limited to reasonable attorneys' fees and funds advanced by
Administrative Agent or by any non-delinquent Lender, on account of an
Delinquent Lender's failure to timely fund its pro rata share of a Loan or to
otherwise perform its obligations under the Loan Documents.

      17-13. Assignment and Participation.

            (a) Conditions to Assignment by Lenders. Except as provided herein,
each Lender may assign to one or more Eligible Assignees (or to any third party
after the occurrence of an Event of Default and while same is continuing) all or
a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment Percentage and Commitment and the
same portion of the Loans at the time owing to it and the Notes held by it),
upon satisfaction of the following conditions: (a) each of the Administrative
Agent and the Borrowers shall have given its prior written consent to such
assignment (provided that, in the case of the Borrowers, such consent will not
be unreasonably withheld and shall not be required if an Event of Default shall
have occurred and be continuing), (b) each such assignment shall be

                                      -81-


of a constant, and not a varying, percentage of all the assigning Lender's
rights and obligations under this Agreement, (c) prior to the occurrence of an
Event of Default, each assignment shall be in an amount that is at least Ten
Million Dollars ($10,000,000.00) and is a whole multiple of Two Million Dollars
($2,000,000.00), and (d) the parties of such assignment shall execute and
deliver to the Administrative Agent, for recording in the Register, an
Assignment and Acceptance, substantially in the form of Exhibit AA hereto (an
"ASSIGNMENT AND ACCEPTANCE"), together with any Notes subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, (x) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder, and (y) the assigning Lender shall, to the extent provided in
such assignment and upon payment to the Administrative Agent of the registration
fee referred to in Section 17-13(c), be released from its obligations under this
Agreement.

            (b) Certain Representations and Warranties: Limitations, Covenants.
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:

                  (i) other than the representation and warranty that it is the
      legal and beneficial owner of the interest being assigned thereby free and
      clear of any adverse claim, the assigning Lender makes no representation
      or warranty, express or implied, and assumes no responsibility with
      respect to any statements, warranties or representations made in or in
      connection with this Agreement or the execution, legality, validity,
      enforceability, genuineness, sufficiency or value of this Agreement, the
      other Loan Documents or any other instrument or document furnished
      pursuant hereto or the attachment, perfection or priority of any security
      interest or mortgage;

                  (ii) the assigning Lender makes no representation or warranty
      and assumes no responsibility with respect to the financial condition of
      the Borrowers and its affiliates, related entities or subsidiaries or any
      other person primarily or secondarily liable in respect of any of the
      Liabilities, or the performance or observance by the Borrowers or any
      other person primarily secondarily liable in respect of any of the
      Liabilities or any of their obligations under this Agreement or any of the
      other Loan Documents or any other instrument or document furnished
      pursuant hereto or thereto;

                  (iii) such assignee confirms that it has received a copy of
      this Agreement, together with copies of the most recent financial
      statement provided by the Borrowers as required by the terms of this
      Agreement, together with such other documents and information as it has
      deemed appropriate to make its own credit analysis and decision to enter
      into such Assignment and Acceptance;

                  (iv) such assignee will, independently and without reliance
      upon the assigning Lender, the Administrative Agent or any other Lender
      and based on such documents and information as it shall deem appropriate
      at the time, continue to make its own credit decisions in taking or not
      taking action under this Agreement;

                                      -82-


                  (v) such assignee represents and warrants that (to the extent
      required herein) it is an Eligible Assignee;

                  (vi) such assignee appoints and authorizes the Administrative
      Agent to take such action as agent on its behalf and to exercise such
      powers under this Agreement and the other Loan Documents as are delegated
      to the Administrative Agent by the terms hereof or thereof, together with
      such powers as are reasonably incidental thereto;

                  (vii) such assignee agrees that it will perform in accordance
      with their terms all of the obligations that by the terms of this
      Agreement are required to be performed by it as a Lender; and

                  (viii) such assignee represents and warrants that it is
      legally authorized to enter into such Assignment and Acceptance.

            (c) Register. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar list (the
"REGISTER") for the recordation of the names and addresses of the Lenders and
the Commitment Percentage of, and principal amount of the Loans owing to the
Lenders from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrowers, the Administrative Agent and
the Lenders may treat each person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrowers and the Lenders at any reasonable time
and from time to time upon reasonable prior notice. Upon each such recordation,
the assigning Lender agrees to pay to the Administrative Agent a registration
fee in the sum of Three Thousand Five Hundred Dollars ($3,500.00).

            (d) New Notes. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Administrative Agent shall (a) record the information
contained therein in the Register, and (b) give prompt notice thereof to the
Borrowers and the Lenders (other than the assigning Lender). Within five (5)
Business Days after receipt of such notice, the Borrowers, at their own expense,
shall execute and deliver to the Administrative Agent, in exchange for each
surrendered Note, a new Note to the order of such assignee in an amount equal to
the amount assumed by such assignee pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained some portion of its obligations
hereunder, a new Note to the order of the assigning Lender in an amount equal to
the amount retained by it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an aggregate principal
amount equal to the aggregate principal amount of the surrendered Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be substantially in the form of the assigned Notes.

            (e) Participations. Each Lender may sell participations to one or
more banks or other financial institutions in all or a portion of such Lender's
rights and obligations under this Agreement and the other Loan Documents;
provided that (a) each such participation shall be in a minimum amount of Five
Million Dollars ($5,000,000.00), (b) prior to the occurrence of an Event of
Default each participant shall meet the requirements of an Eligible Assignee,
(c) any

                                      -83-


such sale or participation shall not affect the rights and duties of the selling
Lender hereunder to the Borrowers, and (d) the only rights granted to the
participant pursuant to such participation shall be rights against the assigning
Lender, and neither the Administrative Agent nor any other Lender shall have any
obligation, duty or liability to any such participant of any other Lender.

      17-14. Pledge to Federal Reserve. Any Lender may at any time pledge all or
any portion of its rights under the Loan Documents including any portion of the
Notes to any of the twelve (12) Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement
thereof shall release such Lender from its obligations under any of the Loan
Documents.

      17-15. Consent or Approval. With respect to any requested amendment,
waiver, consent or other action which requires the approval of the Required
Lenders or all of the Lenders, as the case may be, in accordance with the terms
of this Agreement, or if Administrative Agent is required hereunder to seek, or
desires to seek, the approval of the Required Lenders or all of the Lenders, as
the case may be, prior to undertaking a particular action or course of conduct,
the Administrative Agent in each such case shall provide each Lender with
written notice of any such request for amendment, waiver or consent or any other
requested or proposed action or course of conduct, accompanied by such detailed
background information and explanations as may be reasonably necessary to
determine whether to approve or disapprove such amendment, waiver, consent or
other action or course of conduct. Each Lender shall endeavor to promptly
respond to any such request.

      17-16. Treatment of Confidential Information. Each of the Lenders and the
Agents agrees to maintain the confidentiality of the Confidential Information
(as defined below), except that Confidential Information may be disclosed:

            (a) to its officers, directors, employees and representatives and
      only on a "need to know" basis (it being understood that the Persons to
      whom such disclosure is made will be informed of the confidential nature
      of such Confidential Information and instructed to keep such Confidential
      Information confidential);

            (b) to the extent requested by any regulatory authority purporting
      to have jurisdiction over it;

            (c) to the extent required by applicable laws or regulations or by
      any subpoena or similar legal process;

            (d) in connection with the exercise of any remedies hereunder or
      under any other Loan Document or any action or proceeding relating to this
      Agreement or any other Loan Document or the enforcement of rights
      hereunder or thereunder;

            (e) subject to an agreement containing provisions substantially the
      same as those of this Section, to (i) any assignee of or participant in,
      or any prospective assignee of or participant in, any of its rights or
      obligations under this Agreement or (ii) any actual

                                      -84-


      or prospective counterparty (or its advisors) to any swap or derivative
      transaction relating to the any Borrower and its obligations;

            (f) with the prior written consent of the Lead Borrower; or

            (g) to the extent such Information (i) becomes publicly available
      other than as a result of a breach of this Section or (ii) becomes
      available to the Administrative Agent or any Lender on a non-confidential
      basis from a source other than the Borrowers.

      For purposes of this Section, "Confidential Information" means all
information received from any of Borrowers or any subsidiary relating to any
Borrower or any Subsidiary or any of their respective businesses, other than any
such information that is available to Administrative Agent or any Lender on a
non-confidential basis prior to disclosure by any Borrower or any Subsidiary,
provided, however, that, in the case of Confidential Information received from
any Borrower or any Subsidiary after the date hereof, such Confidential
Information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of any Confidential Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Confidential Information as such Person
would accord to its own confidential information but no less than a reasonable
standard of care.

      17-17. Consents, Amendments, Waivers, etc.

            (a) Except as otherwise expressly set forth in any particular
provision of this Agreement, any consent or approval required or permitted by
this Agreement to be given by the Administrative Agent or the Lenders may be
given, and any term of this Agreement or of any other instrument related hereto
or mentioned herein may be amended, and the performance or observance by the
Borrowers of any terms of this Agreement or such other instrument or the
continuance of any Event of Default may be waived (either generally or in a
particular instance and either retroactively or prospectively) by the
Administrative Agent or the Required Lenders, as applicable, in their
discretion. Each such consent, amendment or waiver shall be in writing. No
waiver shall extend to or affect any obligation not expressly waived or impair
any right consequent thereon. No course of dealing or delay or omission on the
part of the Administrative Agent or any Lender in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No Loan made by
the Administrative Agent hereunder during the continuance of any Suspension
Event or Event of Default shall constitute a waiver thereof. No notice to or
demand upon the Borrowers shall entitle the Borrower to other or further notice
or demand in similar or other circumstances.

            (b) Notwithstanding anything to the contrary contained in this
Agreement, any provisions of this Agreement pertaining to the administration of
the Loans by the Lenders may be amended by an instrument in writing signed by
the Administrative Agent and the Required Lenders with no additional consent
required from the Borrowers.

                                      -85-


            (c) Notwithstanding the foregoing, the unanimous written approval of
all the Lenders (other than a Delinquent Lender) shall be required with respect
to any proposed amendment, waiver, discharge, termination, or consent which:

                  (i) has the effect of except as provided herein (a) extending
      any Maturity Date or the date of any amortization payment of any Note, (b)
      reducing the interest rate, extending the time of payment, or changing the
      manner of calculation, of interest or fees thereon, (c) increasing or
      reducing the principal amount thereof, or (d) otherwise postponing or
      forgiving any Indebtedness thereunder,

                  (ii) releases or discharges any material portion of any
      Collateral now existing or hereafter granted in accordance with the
      Security Documents, other than in accordance with the express provisions
      of the Loan Documents,

                  (iii) changes the definition of Required Lenders or reduces
      the percentages specified in the definition of Required Lenders,

                  (iv) except as otherwise provided in this Agreement, change
      the amount of any Lender's Commitment or Commitment Percentage,

                  (v) releases or waives any guaranty of the Liabilities or
      indemnifications provided in the Loan Documents,

                  (vi) changes to the definition of Collateral Release Event,
      Assignment of Claims Compliance Event, Consolidated Operating Cash Flow,
      Consolidated Total Net Worth, Consolidated Total Funded Indebtedness,
      EBITDA, Net Income, Permitted Acquisition or Total Debt Service;

                  (vii) amends, modifies or waives any provisions of this
      paragraph, or

                  (viii) amends, modifies or waives any term or condition of
      Sections 5-2, 5-3, 7-6, 7-19(o), 7-21(c),7-22, 7-29, 7-2211-7, 11-8, 11-9
      or 11-10.

            (d) Without the consent of the subject Agent, no such action shall
amend, modify or waive any provision of any Loan Document which relates to the
rights or obligations of the specific Agent.

      17-18. U.S. Patriot Act.Each Lender hereby notifies the Borrowers that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "Act"), it is required to obtain,
verify and record information that identifies the Borrowers, which information
includes the name and address of each Borrower and other information that will
allow such Lender to identify such Borrower in accordance with the Act.

      17-19. Foreign Asset Control Regulations.Neither of the advance of the
Revolving Credit Loans nor the use of the proceeds of any thereof (or any other
Loan) will violate the Trading With the Enemy Act (50 U.S.C. Section 1 et seq.,
as amended) (the "Trading With the Enemy Act") or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) (the "Foreign Assets Control Regulations") or any
enabling

                                      -86-


legislation or executive order relating thereto (which for the avoidance of
doubt shall include, but shall not be limited to (a) Executive Order 13224 of
September 21, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001))
(the "Executive Order") and (b) the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Public Law 107-56)). Furthermore, none of the Borrowers or their
Affiliates (a) is or will become a "blocked person" as described in the
Executive Order, the Trading With the Enemy Act or the Foreign Assets Control
Regulations or (b) engages or will engage in any dealings or transactions, or be
otherwise associated, with any such "blocked person".

                  {REMAINDER OF PAGE LEFT INTENTIONALLY BLANK}

                                      -87-


      IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS LOAN AND SECURITY
AGREEMENT AS AN INSTRUMENT UNDER SEAL AS OF THE DATE FIRST WRITTEN ABOVE.

                                                DYNAMICS RESEARCH CORPORATION
                                                         ("LEAD BORROWER")

                                                By______________________________
                                                Name:___________________________
                                                Title:__________________________

                                                DRC INTERNATIONAL CORPORATION
                                                      ("BORROWER")

                                                By______________________________
                                                Name:___________________________
                                                Title:__________________________

                                                H.J. FORD ASSOCIATES, INC.
                                                      ("BORROWER")

                                                By______________________________
                                                Name:___________________________
                                                Title:__________________________

                                      -88-


                                                ANDRULIS CORPORATION
                                                      ("BORROWER")

                                                By______________________________
                                                Name:___________________________
                                                Title:__________________________

                                                IMPACT INNOVATIONS GROUP LLC
                                                      ("BORROWER")

                                                By______________________________
                                                Name:___________________________
                                                Title:__________________________

                                                BROWN BROTHERS HARRIMAN & CO.
                                                      ("ADMINISTRATIVE AGENT AND
                                                      LENDER")

                                                By______________________________
                                                Name:___________________________
                                                Title:__________________________

                                                BANKNORTH, N.A.
                                                      ("DOCUMENTATION AGENT AND
                                                      LENDER")

                                                By______________________________
                                                Name:___________________________
                                                Title:__________________________

                                                KEYBANK NATIONAL ASSOCIATION
                                                      ("CO-SYNDICATION AGENT AND
                                                      LENDER")

                                                By______________________________
                                                Name:___________________________
                                                Title:__________________________

                                      -89-


                                                FLEET NATIONAL BANK,
                                                A BANK OF AMERICA COMPANY
                                                      ("CO-SYNDICATION AGENT AND
                                                      LENDER")

                                                By______________________________
                                                Name:___________________________
                                                Title:__________________________

                                      -90-


                                    EXHIBITS

      The following Exhibits to this Amended and Restated Loan Agreement are
respectively described in the section indicated.

                                                          
EXHIBIT 1         Commitments/Commitment Percentages            Article

EXHIBIT 3-7:      Revolving Credit Note                         Section 3-7

EXHIBIT 3-10:     Renewal/Conversion Notice                     Section 3-10

EXHIBIT 4-1:      Term Note                                     Section 4-1

EXHIBIT 4-2:      Acquisition Term Note                         Section 4-2

EXHIBIT 6-17:     Material Changes                              Section 6-17

EXHIBIT 7-2:      Related Entity                                Section 7-2(b)

EXHIBIT 7-5:      Locations                                     Section 7-5

EXHIBIT 7-6:      Permitted Liens                               Section 7-6

EXHIBIT 7-7:      Indebtedness                                  Section 7-7

EXHIBIT 7-8       Insurance Policies                            Section 7-8

EXHIBIT 7-9:      Licenses, Distributor Franchise Agreement     Section 7-9

EXHIBIT 7-10:     Leases                                        Section 7-10

EXHIBIT 7-11:     Legal Requirements                            Section 7-11

EXHIBIT 7-13:     Taxes                                         Section 7-13

EXHIBIT 7-16:     Hazardous Materials                           Section 7-16

EXHIBIT 7-17:     Litigation                                    Section 7-17

EXHIBIT 7-19:     Guaranties and Investments                    Section 7-19

EXHIBIT 7-28:     Government Contracts                          Section 7-28

EXHIBIT 11-4C:    Compliance Certificate                        Section 11-4

EXHIBIT AA:       Assignment and Acceptance                     Section 17-13

EXHIBIT BB:       Existing L/Cs                                 Article 1



                                      -91-

EX-10.2

                                                                    EXHIBIT 10.2

                            MASTER UNLIMITED GUARANTY

         MASTER UNLIMITED GUARANTY, ("Guaranty") dated as of September 1, 2004
by each of DYNAMICS RESEARCH CORPORATION, a Massachusetts corporation, DRC
INTERNATIONAL CORPORATION, a Massachusetts corporation, H.J. FORD ASSOCIATES,
INC., a Delaware corporation, ANDRULIS CORPORATION, a Delaware corporation, and
IMPACT INNOVATIONS GROUP LLC, a Delaware limited liability company (hereinafter,
singly a "Guarantor" and collectively, the "Guarantors"), in favor of BROWN
BROTHERS HARRIMAN & CO., a New York general partnership with offices at 40 Water
Street, Boston, Massachusetts, for itself and as Administrative Agent (the
"Agent") for each of the Lenders (defined below) which are and which may become
parties to the Loan Agreement (defined below). All capitalized terms used
herein, and not otherwise defined herein, shall have the meanings set forth in
the Loan Agreement. In consideration of the Agent's and the Lenders' giving, in
their discretion, credit or banking facilities or accommodations to each of
those persons described on Exhibit A annexed hereto and incorporated herein by
reference (each such person, together with its successors, individually a
"Customer" and collectively, the "Customers"), each Guarantor jointly and
severally agrees as follows:

1.       GUARANTY OF PAYMENT AND PERFORMANCE. Each Guarantor, jointly and
         severally hereby guarantees to the Agent and each Lender the full and
         punctual payment when due (whether at maturity, by acceleration or
         otherwise), and the performance, of all Liabilities of any Customer to
         the Agent or to any Lender in connection with that certain Second
         Amended and Restated Loan Agreement dated as of even date herewith (as
         same may be amended, modified or replaced, the "Loan Agreement"), made
         by and among the Customers, the Agent, Banknorth, N.A., as
         Documentation Agent, KeyBank National Association and Fleet National
         Bank, a Bank of America company, each as Co-Syndication Agents, and
         each of Brown Brothers Harriman & Co., Banknorth, N.A., KeyBank
         National Association and Fleet National Bank, a Bank of America
         company, as lenders, and such other lenders which may hereafter become
         parties to the Loan Agreement (each a "Lender" and collectively, the
         "Lenders"). This Guaranty is an absolute, unconditional and continuing
         guaranty of the full and punctual payment and performance of the
         Liabilities and not of their collectibility only and is in no way
         conditioned upon any requirement that the Agent first attempt to
         collect any of the Liabilities from any Customer or resort to any
         security or other means of obtaining their payment. Upon the occurrence
         and continuance of any Event of Default, the obligations of the
         Guarantor hereunder shall become immediately due and payable to the
         Agent and the Lenders, without demand or notice of any nature, all of
         which are expressly waived by each Guarantor. Payments by any Guarantor
         hereunder may be required by the Agent on any number of occasions.

2.       GUARANTORS' AGREEMENT TO PAY. Each Guarantor further agrees, as the
         principal obligor and not as a guarantor only, to pay to the Agent for
         the ratable benefit of

                                     - 1 -



         the Lenders, on demand, all costs and expenses (including court costs
         and legal expenses) incurred or expended by the Agent in connection
         with the Liabilities, this Guaranty and the enforcement thereof,
         together with interest on amounts recoverable under this Guaranty from
         the time such amounts become due until payment, at the rate per annum
         equal to the default rate set forth in the Loan Agreement applicable to
         the Liabilities after the occurrence and continuance of any Event of
         Default; provided that if such interest exceeds the maximum amount
         permitted to be paid under applicable law, then such interest shall be
         reduced to such maximum permitted amount.

3.       UNLIMITED GUARANTY. The liability of the Guarantor hereunder shall be
         unlimited.

4.       WAIVERS BY GUARANTORS; AGENT'S FREEDOM TO ACT. Each Guarantor agrees
         that the Liabilities will be paid and performed strictly in accordance
         with their respective terms regardless of any law, regulation or order
         now or hereafter in effect in any jurisdiction affecting any of such
         terms or the rights of the Agent with respect thereto. Each Guarantor
         waives presentment, demand, protest, notice of acceptance, notice of
         Liabilities incurred and all other notices of any kind, all defenses
         which may be available by virtue of any valuation, stay, moratorium law
         or other similar law now or hereafter in effect, any right to require
         the marshalling of assets of the Customers, and all suretyship defenses
         generally. Without limiting the generality of the foregoing, each
         Guarantor agrees to the provisions of any instrument evidencing,
         securing or otherwise executed in connection with any Liability and
         agrees that the obligations of the Guarantors hereunder shall not be
         released or discharged, in whole or in part, or otherwise affected by
         (i) the failure of the Agent to assert any claim or demand or to
         enforce any right or remedy against any Customer; (ii) any extensions
         or renewals of any Liability; (iii) any rescissions, waivers,
         amendments or modifications of any of the terms or provisions of any
         agreement evidencing, securing or otherwise executed in connection with
         any Liability; (iv) the substitution or release of any entity primarily
         or secondarily liable for any Liability; (v) the adequacy of any rights
         the Agent or any Lender may have against any collateral or other means
         of obtaining repayment of the Liabilities; (vi) the impairment of any
         collateral securing the Liabilities, including without limitation the
         failure to perfect or preserve any rights the Agent might have in such
         collateral or the substitution, exchange, surrender, release, loss or
         destruction of any such collateral; or (vii) any other act or omission
         which might in any manner or to any extent vary the risk of the
         Guarantor or otherwise operate as a release or discharge of the
         Guarantor, all of which may be done without notice to the Guarantor.

5.       UNENFORCEABILITY OF OBLIGATIONS AGAINST CUSTOMERS. If for any reason
         any Customer has no legal existence or is under no legal obligation to
         discharge any of the Liabilities, or if any of the Liabilities have
         become irrecoverable from any Customer by operation of law or for any
         other reason, this Guaranty shall nevertheless be binding on the
         Guarantors to the same extent as if the Guarantors at all times had
         been the principal obligor on all such Liabilities. In the event that
         acceleration of the time for

                                     - 2 -



         payment of the Liabilities is stayed upon the insolvency, bankruptcy or
         reorganization of any Customer, or for any other reason, all such
         amounts otherwise subject to acceleration under the terms of any
         agreement evidencing, securing or otherwise executed in connection with
         any Liability shall be immediately due and payable by the Guarantors.

6.       SUBROGATION; SUBORDINATION. No Guarantor shall exercise any rights
         against any Customer or any other Guarantor arising as a result of
         payment by any Guarantor hereunder, by way of subrogation or otherwise,
         and will not prove any claim in competition with the Agent or any
         Lender or its affiliates in respect of any payment hereunder in
         bankruptcy or insolvency proceedings of any nature; no Guarantor will
         claim any set-off or counterclaim against any Customer in respect of
         any liability of the Guarantors to any Customer or any other Guarantor;
         and each Guarantor waives (until the Agent and each Lender is paid in
         full) any benefit of and any right to participate in any collateral
         which may be held by the Agent or any such affiliate. The payment of
         any amounts due with respect to any indebtedness of any Customer now or
         hereafter held by any Guarantor is hereby subordinated to the prior
         payment in full of the Liabilities, provided that so long as no default
         in the payment or performance of the Liabilities has occurred and is
         continuing, or no demand for payment of any of the Liabilities has been
         made that remains unsatisfied, the Customers may make and the
         Guarantors may receive payments or performance of any obligations to
         Guarantors which are permitted under the Loan Agreement. Each Guarantor
         agrees that after the occurrence and during the continuance of any
         default in the payment or performance of the Liabilities, no Guarantor
         will demand, sue for or otherwise attempt to collect any such
         indebtedness of any Customer to any Guarantor until the Liabilities
         shall have been paid in full. If, notwithstanding the foregoing
         sentence, any Guarantor shall collect, enforce or receive any amounts
         in respect of such indebtedness, such amounts shall be collected,
         enforced and received by such Guarantor as trustee for the Agent and be
         paid over to the Agent on account of the Liabilities without affecting
         in any manner the liability of such Guarantor under the other
         provisions of this Guaranty.

7.       SECURITY; SET-OFF. Regardless of the adequacy of any Collateral, during
         the continuance of any Event of Default, any deposits (general or
         specific, time or demand, provisional or final, regardless of currency,
         maturity, or the branch of where such deposits are held) or other sums
         credited by or due from any of the Lenders to any of the Guarantors and
         any securities or other property of the Guarantors in the possession of
         such Lender may be applied to or set off against the payment of
         Liabilities and any and all other liabilities, direct, or indirect,
         absolute or contingent, due or to become due, now existing or hereafter
         arising, of the Guarantors to the Lenders. Each Lender, by its
         acceptance of this Guaranty, hereby agrees that any payment received by
         Lender hereunder shall be subject to the terms and conditions set forth
         in Section 16-12 of the Loan Agreement.

                                     - 3 -



8.       FURTHER ASSURANCES. Each Guarantor also agrees to do all such things
         and execute all such documents, including financing statements, as the
         Agent may consider necessary or desirable to give full effect to this
         Guaranty and to perfect and preserve the rights and powers of the Agent
         hereunder. In addition, each Guarantor agrees that it will not incur
         any indebtedness, other than any indebtedness permitted under the Loan
         Agreement.

9.       TERMINATION; REINSTATEMENT. This Guaranty shall remain in full force
         and effect until the Agent is given written notice of the Guarantors'
         intention to discontinue this Guaranty, notwithstanding any
         intermediate or temporary payment or settlement of the whole or any
         part of the Liabilities. No such notice shall be effective unless
         received and acknowledged by an officer of the Agent at the address
         provided for in Article 14 of the Loan Agreement. No such notice shall
         affect any rights of the Agent or any Lender or of any affiliate
         hereunder including, without limitation, the rights set forth in
         Sections 4 and 6, with respect to Liabilities incurred prior to the
         receipt of such notice or Liabilities incurred pursuant to any contract
         or commitment in existence prior to such receipt, and all checks,
         drafts, notes, instruments (negotiable or otherwise) and writings made
         by or for the account of the Customers and drawn on the Agent or any
         Lender or any of their agents purporting to be dated on or before the
         date of receipt of such notice, although presented to and paid or
         accepted by the Agent or such Lender after that date, shall form part
         of the Liabilities. This Guaranty shall continue to be effective or be
         reinstated, notwithstanding any such notice, if at any time, any
         payment made or value received with respect to a Liability is rescinded
         or must otherwise be returned by the Agent or any Lender upon the
         insolvency, bankruptcy or reorganization of any Customer, or otherwise,
         all as though such payment had not been made or value received.

10.      SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon each
         Guarantor, its respective successors and assigns, and shall inure to
         the benefit of and be enforceable by the Agent and its successors,
         transferees and assigns. Without limiting the generality of the
         foregoing sentence, (i) the Agent or any Lender may, to the extent
         permitted by such agreement or note, assign or otherwise transfer any
         agreement or any note held by it evidencing, securing or otherwise
         executed in connection with the Liabilities, or sell participations in
         any interest therein, to any other person or entity, and (ii) such
         other person or entity shall thereupon become vested, to the extent set
         forth in the agreement evidencing such assignment, transfer or
         participation, with all the rights in respect thereof granted to the
         Agent and such Lender herein.

11.      AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this
         Guaranty nor consent to any departure by any Guarantor therefrom shall
         be effective unless the same shall be in writing and signed by the
         Agent pursuant to the provisions of the Loan Agreement. No failure on
         the part of the Agent to exercise, and no delay in exercising, any
         right hereunder shall operate as a waiver thereof; nor shall any single
         or

                                     - 4 -



         partial exercise of any right hereunder preclude any other or further
         exercise thereof or the exercise of any other right.

12.      NOTICES. All notices and other communications called for hereunder
         shall be made in writing and, unless otherwise specifically provided
         herein, shall be deemed to have been duly made or given when delivered
         by in accordance with the provisions of Article 14 of the Loan
         Agreement.

13.      GOVERNING LAW; CONSENT TO JURISDICTION. This Guaranty is intended to
         take effect as a sealed instrument and shall be governed by, and
         construed in accordance with, the laws of The Commonwealth of
         Massachusetts. Each Guarantor agrees that any suit for the enforcement
         of this Guaranty may be brought in the courts of The Commonwealth of
         Massachusetts or any Federal Court sitting therein, consents to the
         non-exclusive jurisdiction of such court and agrees that a summons and
         complaint commencing an action or proceeding in any such court shall be
         properly served and shall confer personal jurisdiction if served
         personally or by certified mail to such Guarantor at its address
         provided in Article 14 of the Loan Agreement or as otherwise provided
         under the laws of The Commonwealth of Massachusetts. Each Guarantor
         hereby waives any objection that it may now or hereafter have to the
         venue of any such suit or any such court or that such suit was brought
         in an inconvenient court.

14.      MISCELLANEOUS. This Guaranty constitutes the entire agreement of the
         Guarantors with respect to the matters set forth herein. The rights and
         remedies herein provided are cumulative and not exclusive of any
         remedies provided by law or any other agreement, and this Guaranty
         shall be in addition to any other guaranty of the Liabilities. The
         invalidity or unenforceability of any one or more sections of this
         Guaranty shall not affect the validity or enforceability of its
         remaining provisions. Captions are for the ease of reference only and
         shall not affect the meaning of the relevant provisions. The meanings
         of all defined terms used in this Guaranty shall be equally applicable
         to the singular and plural forms of the terms defined.

15.      JURY WAIVER. THE AGENT (BY ITS ACCEPTANCE HEREOF) AND EACH GUARANTOR
         AGREE THAT NONE OF THEM, INCLUDING ANY ASSIGNEE OR SUCCESSOR SHALL SEEK
         A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER
         LITIGATION PROCEDURE BASED UPON, OR ARISING OUT OF, THIS GUARANTY, ANY
         RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP
         BETWEEN OR AMONG ANY OF THEM. NEITHER THE AGENT NOR ANY GUARANTOR SHALL
         SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A
         JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
         PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE AGENT AND THE GUARANTORS,
         AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NEITHER THE
         AGENT NOR ANY

                                     - 5 -



         GUARANTOR HAS AGREED WITH OR REPRESENTED TO THE OTHER THAT THE
         PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
         INSTANCES.

16.      AMENDED AND RESTATED GUARANTY. This Guaranty amends and restates any
         Guaranty executed and delivered previously by any Guarantor in
         connection with the Existing Loan Agreement.

                  [remainder of page left intentionally blank]

                                     - 6 -



         IN WITNESS WHEREOF, each Guarantor has executed and delivered this
Guaranty, or caused this Guaranty to be executed and delivered by its duly
authorized officer, as of the date appearing on page one.

                                                  DYNAMICS RESEARCH CORPORATION
WITNESS (as to all):

_________________________                         By____________________________
                                                  Name:_________________________
                                                  Title:________________________

                                                  DRC INTERNATIONAL CORPORATION

                                                  By____________________________
                                                  Name:_________________________
                                                  Title:________________________

                                                  H.J. FORD ASSOCIATES, INC.

                                                  By____________________________
                                                  Name:_________________________
                                                  Title:________________________

                                                  ANDRULIS CORPORATION

                                                  By____________________________
                                                  Name:_________________________
                                                  Title:________________________

                                                  IMPACT INNOVATIONS GROUP LLC

                                                  By____________________________
                                                  Name:_________________________
                                                  Title:________________________

                                     - 7 -



                                     Annex A

           DYNAMICS RESEARCH CORPORATION, a Massachusetts corporation,

           DRC INTERNATIONAL CORPORATION, a Massachusetts corporation,

               H.J. FORD ASSOCIATES, INC., a Delaware corporation,

                ANDRULIS CORPORATION, a Delaware corporation, and

       IMPACT INNOVATIONS GROUP LLC, a Delaware limited liability company

                                     - 8 -

EX-10.3

                                                                    EXHIBIT 10.3

                               SECURITY AGREEMENT

                                                               September 1, 2004

                  THIS AGREEMENT is made among

                  Brown Brothers Harriman & Co., as Administrative Agent for the
         Lenders party to the Loan Agreement (defined herein) (the "AGENT") with
         offices at 40 Water Street, Boston, Massachusetts 02109;

                  and

                  Dynamics Research Corporation (the "LEAD BORROWER"), a
         Massachusetts corporation with its principal executive offices at 60
         Frontage Road, Andover, Massachusetts, as agent for itself;

                  DRC International Corporation ("INTERNATIONAL"), a
         Massachusetts corporation with its principal executive offices at 60
         Frontage Road, Andover, Massachusetts;

                  H.J. Ford Associates, Inc. ("H.J. FORD"), a Delaware
         corporation with its principal executive offices at 60 Frontage Road,
         Andover, Massachusetts;

                  Andrulis Corporation ("ANDRULIS"), a Delaware corporation with
         its principal executive offices at 60 Frontage Road, Andover,
         Massachusetts; and

                  Impact Innovations Group LLC ("IMPACT"), a Delaware limited
         liability company with its principal executive offices at 60 Frontage
         Road, Andover, Massachusetts.

                  (Each of the Lead Borrower, International, H.J. Ford,
         Andrulis, and Impact being sometimes hereinafter referred to
         individually as a "BORROWER" and collectively as the "BORROWERS").

                  In consideration of the mutual covenants contained herein and
         benefits to be derived herefrom, and other good and valuable
         consideration, the receipt and sufficiency of which are hereby
         acknowledged, the parties hereto agrees as follows:

1.       - DEFINITIONS:

                  As used herein, the following terms have the following
         meanings or are defined in the section of this Agreement so indicated.

         "ACCOUNT DEBTOR": Has the meaning given that term in the UCC.

         "ACCOUNTS" and "ACCOUNTS RECEIVABLE" include, without limitation,
                  "accounts" as defined in the UCC, and also all: accounts,
                  accounts receivable, receivables, and rights to payment
                  (whether or not earned by performance) for: property that has
                  been or is to be sold, leased, licensed, assigned, or
                  otherwise disposed of; services rendered or to be rendered; a
                  policy of insurance issued or to be issued; a secondary
                  obligation incurred or to be incurred; energy provided or to
                  be provided; for the use or hire of a vessel; arising out of
                  the use of a credit or charge card or information contained on
                  or used with that card; winnings in a lottery or other game of
                  chance; and also all Inventory which gave rise thereto, and
                  all rights associated with such Inventory, including the right
                  of stoppage in transit; all reclaimed, returned, rejected or
                  repossessed Inventory (if any) the sale of which gave rise to
                  any Account.

         "AGENT": Is referred to in the Preamble.

         "AGENT'S RIGHTS AND REMEDIES": Is defined in Section 5.f.

                                     - 1 -



         "CHATTEL PAPER": Has the meaning given that term in the UCC.

         "COLLATERAL": Is defined in Section 2.a.

         "COLLATERAL INTEREST": Means any interest in property to secure an
                  obligation, including, without limitation, a security
                  interest, mortgage, and deed of trust.

         "CONTRACT RIGHTS": includes, without limitation, "contract rights" as
                  now or formerly defined in the UCC and also any right to
                  payment under a contract not yet earned by performance and not
                  evidenced by an instrument or Chattel Paper.

         "DEPOSIT ACCOUNT": Has the meaning given that term in the UCC and also
                  includes all demand, time, savings, passbook, or similar
                  accounts maintained with a bank.

         "DOCUMENTS": Has the meaning given that term in the UCC.

         "DOCUMENTS OF TITLE": Has the meaning given that term in the UCC.

         "ENCUMBRANCE": Each of the following:

                           (a)      A Collateral Interest or agreement to create
                  or grant a Collateral Interest; the interest of a lessor under
                  a Capital Lease; conditional sale or other title retention
                  agreement; sale of accounts receivable or chattel paper; or
                  other arrangement pursuant to which any Person is entitled to
                  any preference or priority with respect to the property or
                  assets of another Person or the income or profits of such
                  other Person; each of the foregoing whether consensual or
                  non-consensual and whether arising by way of agreement,
                  operation of law, legal process or otherwise.

                           (b)      The filing of any financing statement under
                  the UCC or comparable law of any jurisdiction.

         "EQUIPMENT": Includes, without limitation, "equipment" as defined in
                  the UCC, and also all furniture, store fixtures, motor
                  vehicles, rolling stock, machinery, office equipment, plant
                  equipment, tools, dies, molds, and other goods, property, and
                  assets which are used and/or were purchased for use in the
                  operation or furtherance of a Borrowers' business, and any and
                  all accessions or additions thereto, and substitutions
                  therefor.

         "EVENTS OF DEFAULT": Has the meaning given that term in the Loan
                  Agreement.

         "FIXTURES": Has the meaning given that term in the UCC.

         "GENERAL INTANGIBLES": Includes, without limitation, "general
                  intangibles" as defined in the UCC; and also all: rights to
                  payment for credit extended; deposits; amounts due to any
                  Borrower; credit memoranda in favor of any Borrower; warranty
                  claims; tax refunds and abatements; insurance refunds and
                  premium rebates; all means and vehicles of investment or
                  hedging, including, without limitation, options, warrants, and
                  futures contracts; records; customer lists; telephone numbers;
                  goodwill; causes of action; judgments; payments under any
                  settlement or other agreement; literary rights; rights to
                  performance; royalties; license and/or franchise fees; rights
                  of admission; licenses; franchises; license agreements,
                  including all rights of any Borrower to enforce same; permits,
                  certificates of convenience and necessity, and similar rights
                  granted by any governmental authority; patents, patent
                  applications, patents pending, and other intellectual
                  property; internet addresses and domain names; developmental
                  ideas and concepts; proprietary processes; blueprints,
                  drawings, designs, diagrams, plans, reports, and charts;
                  catalogs; manuals; technical data;

                                     - 2 -



                  computer software programs (including the source and object
                  codes therefor), computer records, computer software, rights
                  of access to computer record service bureaus, service bureau
                  computer contracts, and computer data; tapes, disks,
                  semi-conductors chips and printouts; trade secrets rights,
                  copyrights, mask work rights and interests, and derivative
                  works and interests; user, technical reference, and other
                  manuals and materials; trade names, trademarks, service marks,
                  and all goodwill relating thereto; applications for
                  registration of the foregoing; and all other general
                  intangible property of any Borrower in the nature of
                  intellectual property; proposals; cost estimates, and
                  reproductions on paper, or otherwise, of any and all concepts
                  or ideas, and any matter related to, or connected with, the
                  design, development, manufacture, sale, marketing, leasing, or
                  use of any or all property produced, sold, or leased, by any
                  Borrower or credit extended or services performed, by any
                  Borrower, whether intended for an individual customer or the
                  general business of any Borrower, or used or useful in
                  connection with research by any Borrower.

         "GOODS": Has the meaning given that term in the UCC, and also includes
                  all things movable when a security interest therein attaches
                  and also all computer programs embedded in goods and any
                  supporting information provided in connection with a
                  transaction relating to the program if (i) the program is
                  associated with the goods in such manner that it customarily
                  is considered part of the goods or (ii) by becoming the owner
                  of the goods, a Person acquires a right to use the program in
                  connection with the goods.

         "INSTRUMENTS": Has the meaning given that term in the UCC.

         "INVENTORY": Includes, without limitation, "inventory" as defined in
                  the UCC and also all: (a) Goods which are leased by a Person
                  as lessor; are held by a Person for sale or lease or to be
                  furnished under a contract of service; are furnished by a
                  Person under a contract of service; or consist of raw
                  materials, work in process, or materials used or consumed in a
                  business; (b) Goods of said description in transit; (c) Goods
                  of said description which are returned, repossessed and
                  rejected; (d) packaging, advertising, and shipping materials
                  related to any of the foregoing; (e) all names, marks, and
                  General Intangibles affixed or to be affixed or associated
                  thereto; and (f) Documents and Documents of Title which
                  represent any of the foregoing.

         "INVESTMENT PROPERTY": Has the meaning given that term in the UCC.

         "LEASEHOLD INTEREST": Any interest of a Borrower as lessee under any
                  Lease.

         "LETTER-OF-CREDIT RIGHT": Has the meaning given that term in UCC and
                  also refers to any right to payment or performance under an
                  L/C, whether or not the beneficiary has demanded or is at the
                  time entitled to demand payment or performance.

         "LOAN AGREEMENT": The Second Amended and Restated Loan Agreement,
                  dated of even date herewith, by and among the Borrowers, the
                  Agent, various banks and other financial institutions named
                  therein as lenders and others, all as the same may be amended
                  from time to time hereafter. Terms used herein which are
                  defined in the Loan Agreement are used herein as so defined.
                  In the event that the Loan Agreement is ever terminated or the
                  definition of any term used herein is deleted from the Loan
                  Agreement, then unless otherwise agreed in writing, such term
                  used herein which had been defined in the Loan Agreement shall
                  continue to be used herein as then most recently defined in
                  the Loan Agreement.

         "PAYMENT INTANGIBLE": As defined in the UCC and also any general
                  intangible under which the Account Debtor's primary obligation
                  is a monetary obligation.

         "PERMITTED LIEN": Has the meaning given that term in the Loan
                  Agreement.

                                     - 3 -



         "PERSON": Any natural person, and any corporation, limited liability
                  company, trust, partnership, joint venture, or other
                  enterprise or entity.

         "PERFECTION CERTIFICATE": Collectively, each Perfection Certificate
                  executed and delivered by each Borrower in connection with the
                  Loan Agreement.

         "PROCEEDS": Includes, without limitation, "Proceeds" as defined in the
                  UCC and each type of property described in Section 2.a hereof.

         "RECEIVABLES COLLATERAL": That portion of the Collateral which consists
                  of Accounts, Accounts Receivable, General Intangibles, Chattel
                  Paper, Instruments, Documents of Title, Documents, Investment
                  Property, Payment Intangibles, Letter-of-Credit Rights,
                  bankers' acceptances, and all other rights to payment.

         "REQUIREMENTS OF LAW": Has the meaning given that term in the Loan
                  Agreement.

         "SUPPORTING OBLIGATION": Has the meaning given that term in the UCC and
                  also refers to a Letter-of-Credit Right or secondary
                  obligation which supports the payment or performance of an
                  Account, Chattel Paper, a Document, a General Intangible, an
                  Instrument, or Investment Property.

         "UCC": The Uniform Commercial Code as adopted and in effect in the
                  Commonwealth of Massachusetts, as amended from time to time.

2.       - GRANT OF SECURITY INTEREST:

         a.       GRANT OF SECURITY INTEREST. To secure the Borrowers' prompt,
                  punctual, and faithful performance of all and each of the
                  Liabilities, each Borrower hereby grants to the Agent, for the
                  ratable benefit of the Lenders, a continuing security interest
                  in and to, and assigns to the Agent, for the ratable benefit
                  of the Lenders, the following, and each item thereof, whether
                  now owned or now due, or in which that Borrower has an
                  interest, or hereafter acquired, arising, or to become due, or
                  in which that Borrower obtains an interest, and all products,
                  Proceeds, substitutions, and accessions of or to any of the
                  following (all of which, together with any other property in
                  which the Agent may in the future be granted a security
                  interest, is referred to herein as the "COLLATERAL"):

                  i.       All Accounts and accounts receivable.

                  ii.      All Inventory.

                  iii.     All General Intangibles.

                  iv.      All Equipment.

                  v.       All Goods.

                  vi.      All Fixtures.

                  vii.     All Chattel Paper.

                  viii.    All Letter-of-Credit Rights.

                  ix.      All Payment Intangibles.

                  x.       All Supporting Obligations.

                  xi.      All books, records, and information relating to the
                           Collateral and/or to the operation of each Borrowers'
                           business, and all rights of access to such books,
                           records, and information, and all property in which
                           such books, records, and information are stored,
                           recorded, and maintained.

                                     - 4 -



                  xii.     All Leasehold Interests.

                  xiii.    All Investment Property, Instruments, Documents,
                           Deposit Accounts, money, policies and certificates of
                           insurance, deposits, impressed accounts, compensating
                           balances, cash, or other property.

                  xiv.     All insurance proceeds, refunds, and premium rebates,
                           including, without limitation, proceeds of fire and
                           credit insurance, whether any of such proceeds,
                           refunds, and premium rebates arise out of any of the
                           foregoing. ( through ) or otherwise.

                  xv.      All liens, guaranties, rights, remedies, and
                           privileges pertaining to any of the foregoing (
                           through ), including the right of stoppage in
                           transit.

provided, however, the term "Collateral" shall not include (i) any property for
which the grant of a security interest therein is prohibited by any applicable
Requirement of Law of any governmental authority; or (ii) any contract, license
or agreement which contains a provision that (A) prohibits the grant of a
security interest therein; or (B) provides a default may or shall occur
thereunder as a result of the grant of a security interest therein, unless any
required consents shall have been obtained.

         b.       COMMERCIAL TORT CLAIMS. If the Borrowers shall at any time,
                  acquire a commercial tort claim, the Borrowers shall promptly
                  notify the Agent in a writing signed by the applicable
                  Borrower of the brief details thereof and grant to the Agent,
                  for the ratable benefit of the Lenders, in such writing a
                  security interest therein and in the proceeds thereof, all
                  upon the terms of this Agreement, with such writing to be in
                  form and substance satisfactory to the Lenders.

         c.       EXTENT AND DURATION OF SECURITY INTEREST.

                  i.       The security interest created and granted herein is
                           in addition to, and supplemental of, any security
                           interest previously granted by any Borrower to the
                           Agent, if any, and shall continue in full force and
                           effect applicable to all Liabilities until both

                           a)       all Liabilities have been paid and/or
                                    satisfied in full; and

                           b)       the security interest created herein is
                                    specifically terminated in writing by a duly
                                    authorized officer of the Agent.

                  ii.      It is intended that the Collateral Interests created
                           herein extend to and cover all assets of each
                           Borrower.

                  iii.     Once all Liabilities have been paid and/or satisfied
                           in full and there is no further obligation on any
                           Lender to make any further financial accommodations
                           to or for the benefit of any Borrower, the Agent
                           agrees to release the Collateral from the security
                           interest and file, at the Borrowers' cost and
                           expense, such termination statements as may be
                           necessary or appropriate.

                  iv.      Notwithstanding any provision contained in this
                           Agreement to the contrary, upon the occurrence of any
                           Collateral Release Event (as defined in the Loan
                           Agreement), this Agreement and the security interest
                           granted to the Agent hereunder shall immediately and
                           automatically terminate and have no further force or
                           effect.

3.       - GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES:

                  As a further inducement to the Agent and each Lender, each
         Borrower, in addition to all other representations, warranties, and
         covenants made by any Borrower in any other Loan Document, make those
         representations, warranties, and covenants included in this Agreement.

         a.       ENCUMBRANCES.

                                     - 5 -



                  i.       The Borrowers are, and shall hereafter remain, the
                           owners of the Collateral free and clear of all
                           Encumbrances other than any Permitted Liens.

                  ii.      No Borrower has, and none shall have, possession of
                           any property on consignment to that Borrower.

                  iii.     No Borrower shall acquire or obtain the right to use
                           any Equipment, the acquisition or right to use of
                           which Equipment is otherwise permitted by this
                           Agreement, in which Equipment any third party has an
                           interest, except for:

                           a)       Equipment which is merely incidental to the
                                    conduct of that Borrowers' business.

                           b)       Equipment, the acquisition or right to use
                                    of which has been consented to by the Agent,
                                    which consent may be conditioned upon the
                                    Agent's receipt of such agreement with the
                                    third party which has an interest in such
                                    Equipment as is satisfactory to the Agent.

         b.       FURTHER ASSURANCES.

                  i.       All names under which each Borrower conducted its
                           business within the last five (5) years are set forth
                           in each Borrower's respective Perfection Certificate.

                  ii.      All Persons with whom any Borrower ever consolidated
                           or merged, or from whom any Borrower ever acquired in
                           a single transaction or in a series of related
                           transactions substantially all of such Person's
                           assets are set forth in each Borrower's respective
                           Perfection Certificate.

                  iii.     Except as provided for in the Loan Agreement, no
                           Borrower will undertake or commit to undertake any
                           action such that the results of that action, if
                           undertaken prior to the date of this Agreement, would
                           have been reflected on any of the Borrower's
                           respective Perfection Certificate.

                  iv.      No Borrower is the owner of, nor has it any interest
                           in, Collateral which is not subject to a perfected
                           Collateral Interest in favor of the Agent (subject
                           only to Permitted Liens) to secure the Liabilities.

                  v.       No Borrower will hereafter acquire any asset or any
                           interest in property which is not, immediately upon
                           such acquisition, subject to such a perfected
                           Collateral Interest in favor of the Agent to secure
                           the Liabilities (subject only to Permitted Liens).

                  vi.      Each Borrower shall execute and deliver to the Agent
                           such instruments, documents, and papers, and shall do
                           all such things from time to time hereafter as the
                           Agent may reasonably request to carry into effect the
                           provisions and intent of this Agreement; to protect
                           and perfect the Agent's Collateral Interests in the
                           Collateral; and to comply with all applicable
                           statutes and laws, and facilitate the collection of
                           the Receivables Collateral. Each Borrower shall
                           execute all such instruments as may be reasonably
                           required by the Agent with respect to the recordation
                           and/or perfection of the Collateral Interests created
                           or contemplated herein.

                  vii.     Each Borrower hereby authorizes the Agent to file
                           financing statements, without notice to the
                           Borrowers, with all appropriate jurisdictions in
                           order to perfect or protect the Agent's and Lender's
                           interest or rights hereunder, which financing
                           statements may indicate the Collateral as "all assets
                           of the Debtor" or words of similar effect, or as
                           being of an equal or lesser scope, or with greater
                           detail, all in Lender's discretion.

                  viii.    This Agreement constitutes an authenticated record
                           which authorizes the Agent to file such financing
                           statements as the Agent determines as appropriate to
                           perfect or protect the Collateral Interests created
                           by this Agreement.

                                     - 6 -



                  ix.      A carbon, photographic, or other reproduction of this
                           Agreement or of any financing statement or other
                           instrument executed pursuant to this Section b shall
                           be sufficient for filing to perfect the security
                           interests granted herein.

4.       - AGENT AS BORROWERS' ATTORNEY-IN-FACT:

         a.       APPOINTMENT AS ATTORNEY-IN-FACT. Each Borrower hereby
                  irrevocably constitutes and appoints the Agent (acting through
                  any officer of the Agent) as that Borrowers' true and lawful
                  attorney, with full power of substitution, exercisable
                  following the occurrence and continuance of any Event of
                  Default, to convert the Collateral into cash at the sole risk,
                  cost, and expense of that Borrower, but for the sole benefit
                  of the Agent and the Lenders. The rights and powers granted
                  the Agent by this appointment include but are not limited to
                  the right and power to:

                  i.       Prosecute, defend, compromise, or release any action
                           relating to the Collateral.

                  ii.      Sign change of address forms to change the address to
                           which each Borrowers' mail is to be sent to such
                           address as the Agent shall designate; receive and
                           open each Borrowers' mail; remove any Receivables
                           Collateral and Proceeds of Collateral therefrom and
                           turn over the balance of such mail either to the Lead
                           Borrower or to any trustee in bankruptcy or receiver
                           of the Lead Borrower, or other legal representative
                           of a Borrower whom the Agent determines to be the
                           appropriate person to whom to so turn over such mail.

                  iii.     Endorse the name of the relevant Borrower in favor of
                           the Agent upon any and all checks, drafts, notes,
                           acceptances, or other items or instruments; sign and
                           endorse the name of the relevant Borrower on, and
                           receive as secured party, any of the Collateral, any
                           invoices, schedules of Collateral, freight or express
                           receipts, or bills of lading, storage receipts,
                           warehouse receipts, or other documents of title
                           respectively relating to the Collateral.

                  iv.      Sign the name of the relevant Borrower on any notice
                           to that Borrowers' Account Debtors or verification of
                           the Receivables Collateral; sign the relevant
                           Borrowers' name on any Proof of Claim in Bankruptcy
                           against Account Debtors, and on notices of lien,
                           claims of mechanic's liens, or assignments or
                           releases of mechanic's liens securing the Accounts.

                  v.       Take all such action as may be necessary to obtain
                           the payment of any letter of credit and/or banker's
                           acceptance of which any Borrower is a beneficiary.

                  vi.      Repair, manufacture, assemble, complete, package,
                           deliver, alter or supply goods, if any, necessary to
                           fulfill in whole or in part the purchase order of any
                           customer of each Borrower.

                  vii.     Use, license or transfer any or all General
                           Intangibles of each Borrower.

         b.       NO OBLIGATION TO ACT. The Agent shall not be obligated to do
                  any of the acts or to exercise any of the powers authorized by
                  Section a herein, but if the Agent elects to do any such act
                  or to exercise any of such powers, it shall not be accountable
                  for more than it actually receives as a result of such
                  exercise of power, and shall not be responsible to any
                  Borrower for any act or omission to act except for any act or
                  omission to act as to which there is a final determination
                  made in a judicial proceeding (in which proceeding the Agent
                  has had an opportunity to be heard) which determination
                  includes a specific finding that the subject act or omission
                  to act had been grossly negligent or in actual bad faith.

5.       - EVENTS OF DEFAULT. RIGHTS AND REMEDIES UPON DEFAULT:

         a.       RIGHTS OF ENFORCEMENT. Upon and following the occurrence of
                  any Event of Default which consists of the entry of an order
                  for relief with respect to any Borrower and, at the option of
                  the Agent, upon the occurrence and during continuance of any
                  other Event of Default and at all times thereafter, the Agent
                  shall have all of the rights and remedies of a secured party
                  upon default under

                                     - 7 -



                  the UCC, in addition to which the Agent shall have all and
                  each of the following rights and remedies:

                  i.       To give notice to any of the Borrowers' customs
                           brokers to follow the instructions of the Agent as
                           provided in any written agreement or undertaking of
                           such broker in favor of the Agent.

                  ii.      To collect the Receivables Collateral with or without
                           the taking of possession of any of the Collateral.

                  iii.     To take possession of all or any portion of the
                           Collateral.

                  iv.      To sell, lease, or otherwise dispose of any or all of
                           the Collateral, in its then condition or following
                           such preparation or processing as the Agent deems
                           advisable and with or without the taking of
                           possession of any of the Collateral.

                  v.       To apply the Receivables Collateral or the Proceeds
                           of the Collateral towards (but not necessarily in
                           complete satisfaction of) the Liabilities.

                  vi.      To exercise all or any of the rights, remedies,
                           powers, privileges, and discretions under all or any
                           of the Loan Documents.

         B.       SALE OF COLLATERAL. Upon the occurrence and during continuance
                  of any other Event of Default, and subject to applicable law,

                  i.       Any sale or other disposition of the Collateral may
                           be at public or private sale upon such terms and in
                           such manner as the Agent deems advisable, having due
                           regard to compliance with any statute or regulation
                           which might affect, limit, or apply to the Agent's
                           disposition of the Collateral.

                  ii.      Unless the Collateral is perishable or threatens to
                           decline speedily in value, or is of a type
                           customarily sold on a recognized market (in which
                           event the Agent shall provide the Lead Borrower such
                           notice as may be practicable under the
                           circumstances), the Agent shall give the Lead
                           Borrower at least ten (10) days prior notice, by
                           authenticated record, of the date, time, and place of
                           any proposed public sale, and of the date after which
                           any private sale or other disposition of the
                           Collateral may be made. Each Borrower agrees that
                           such written notice shall satisfy all requirements
                           for notice to that Borrower which are imposed under
                           the UCC or other applicable law with respect to the
                           exercise of the Agent's rights and remedies upon
                           default.

                  iii.     The Agent and any Lender may purchase the Collateral,
                           or any portion of it at any sale held under this
                           Article.

                  iv.      If any of the Collateral is sold, leased, or
                           otherwise disposed of by the Agent on credit, the
                           Liabilities shall not be deemed to have been reduced
                           as a result thereof unless and until payment is
                           finally received thereon by the Agent.

                  v.       The Agent shall apply the proceeds of the Agent's
                           exercise of its rights and remedies upon default
                           pursuant to this Article 5.

         c.       OCCUPATION OF BUSINESS LOCATION. In connection with the
                  Agent's exercise of the Agent's rights under this Article 5,
                  the Agent may, at any time after an Event of Default has
                  occurred and is continuing, enter upon, occupy, and use any
                  premises owned or occupied by each Borrower, and may exclude
                  each Borrower from such premises or portion thereof as may
                  have been so entered upon, occupied, or used by the Agent. The
                  Agent shall not be required to remove any of the Collateral
                  from any such premises upon the Agent's taking possession
                  thereof, and may render any Collateral unusable to the
                  Borrowers. In no event shall the Agent be liable to any
                  Borrower for use or occupancy by the Agent of any premises
                  pursuant to this Article 5, nor for any charge (such as wages
                  for any Borrowers' employees and utilities) incurred in
                  connection with the Agent's exercise of the Agent's Rights and
                  Remedies.

                                     - 8 -



         d.       GRANT OF NONEXCLUSIVE LICENSE. Each Borrower hereby grants to
                  the Agent a royalty free nonexclusive irrevocable license to
                  use, apply, and affix any trademark, trade name, logo, or the
                  like in which any Borrower now or hereafter has rights, such
                  license being with respect to the Agent's exercise of the
                  rights hereunder including, without limitation, in connection
                  with any completion of the manufacture of Inventory or sale or
                  other disposition of Inventory.

         e.       ASSEMBLY OF COLLATERAL. At any time after an Event of Default
                  has occurred and is continuing, the Agent may require any
                  Borrower to assemble the Collateral and make it available to
                  the Agent at the Borrowers' sole risk and expense at a place
                  or places which are reasonably convenient to both the Agent
                  and the Lead Borrower.

         f.       RIGHTS AND REMEDIES. The rights, remedies, powers, privileges,
                  and discretions of the Agent hereunder (the "AGENT'S RIGHTS
                  AND REMEDIES") shall be cumulative and not exclusive of any
                  rights or remedies which it would otherwise have. No delay or
                  omission by the Agent in exercising or enforcing any of the
                  Agent's Rights and Remedies shall operate as, or constitute, a
                  waiver thereof. No waiver by the Agent of any Event of Default
                  or of any default under any other agreement shall operate as a
                  waiver of any other default hereunder or under any other
                  agreement. No single or partial exercise of any of the Agent's
                  Rights or Remedies, and no express or implied agreement or
                  transaction of whatever nature entered into between the Agent
                  and any person, at any time, shall preclude the other or
                  further exercise of the Agent's Rights and Remedies. No waiver
                  by the Agent of any of the Agent's Rights and Remedies on any
                  one occasion shall be deemed a waiver on any subsequent
                  occasion, nor shall it be deemed a continuing waiver. The
                  Agent's Rights and Remedies may be exercised at such time or
                  times and in such order of preference as the Agent may
                  determine. The Agent's Rights and Remedies may be exercised
                  without resort or regard to any other source of satisfaction
                  of the Liabilities.

6.       - GENERAL:

         a.       NOTICES. All notices, demands, and other communications made
                  in respect of this Agreement shall be as provided in the Loan
                  Agreement.

         b.       PROTECTION OF COLLATERAL. The Agent has no duty as to the
                  collection or protection of the Collateral beyond the safe
                  custody of such of the Collateral as may come into the
                  possession of the Agent.

         c.       SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
                  the Borrowers and their respective representatives,
                  successors, and assigns and shall enure to the benefit of the
                  Agent and each Lender and their respective successors and
                  assigns. In the event that the Agent or any Lender assigns or
                  transfers its rights under this Agreement, the assignee shall
                  thereupon succeed to and become vested with all rights,
                  powers, privileges, and duties of such assignor hereunder and
                  such assignor shall thereupon be discharged and relieved from
                  its duties and obligations hereunder.

         d.       SEVERABILITY. Any determination that any provision of this
                  Agreement or any application thereof is invalid, illegal, or
                  unenforceable in any respect in any instance or with respect
                  to any Borrower, shall not affect the validity, legality, or
                  enforceability of such provision in any other instance, or
                  with respect to any other Borrower, or the validity, legality,
                  or enforceability of any other provision of this Agreement.

         e.       POWER OF ATTORNEY. In connection with all powers of attorney
                  included in this Agreement, each Borrower hereby grants unto
                  the Agent (acting through any of its officers), exercisable
                  upon the occurrence and during the continuance of any Event of
                  Default, full power to do any and all things necessary or
                  appropriate in connection with the exercise of such powers as
                  fully and effectually as that Borrower might or could do,
                  hereby ratifying all that said attorney shall do or cause to
                  be done by virtue of this Agreement. No power of attorney set
                  forth in this Agreement shall be affected by any disability or
                  incapacity suffered by any Borrower and each shall survive the
                  same. All powers conferred upon the Agent by this Agreement,
                  being coupled with an interest,

                                     - 9 -



                  shall be irrevocable until this Agreement is terminated by a
                  written instrument executed by a duly authorized officer of
                  the Agent.

         f.       APPLICATION OF PROCEEDS. The proceeds of any collection, sale,
                  or disposition of the Collateral, or of any other payments
                  received hereunder, shall be applied towards the Liabilities
                  in such order and manner as provided for in the Loan
                  Agreement. The Borrowers shall remain liable for any
                  deficiency remaining following such application.

         g.       INTENT. It is intended that:

                  i.       This Agreement take effect as a sealed instrument.

                  ii.      The scope of all Collateral Interests created by this
                           Agreement be broadly construed in favor of the Agent
                           and that they cover all assets of each Borrower.

                  iii.     All Collateral Interests created by this Agreement
                           secure all Liabilities, whether now existing or
                           contemplated or hereafter arising.

                  iv.      All reasonable costs, expenses, and disbursements
                           incurred by the Agent in connection with such
                           Person's relationship(s) with any Borrower shall be
                           borne by the Borrowers.

         h.       MASSACHUSETTS LAW. This Agreement and all rights and
                  obligations hereunder, including matters of construction,
                  validity, and performance, shall be governed by the law of The
                  Commonwealth of Massachusetts.

         i. CONSENT TO JURISDICTION.

                  i.       Each Borrower agrees that any legal action,
                           proceeding, case, or controversy against any Borrower
                           with respect to any Loan Document may be brought in
                           the Superior Court of Suffolk County Massachusetts or
                           in the United States District Court, District of
                           Massachusetts, sitting in Boston, Massachusetts, as
                           the Agent may elect in the Agent's sole discretion.
                           By execution and delivery of this Agreement, each
                           Borrower, for itself and in respect of its property,
                           accepts, submits, and consents generally and
                           unconditionally, to the jurisdiction of the aforesaid
                           courts.

                  ii.      Each Borrower WAIVES personal service of any and all
                           process upon it, and irrevocably consents to the
                           service of process out of any of the aforementioned
                           courts in any such action or proceeding by the
                           mailing of copies thereof by certified mail, postage
                           prepaid, to the Lead Borrower at the Lead Borrower's
                           address for notices as specified herein, such service
                           to become effective five (5) Business Days after such
                           mailing.

                  iii.     Each Borrower WAIVES any objection based on forum non
                           conveniens and any objection to venue of any action
                           or proceeding instituted under any of the Loan
                           Documents and consents to the granting of such legal
                           or equitable remedy as is deemed appropriate by the
                           Court.

                  iv.      Nothing herein shall affect the right of the Agent to
                           bring legal actions or proceedings in any other
                           competent jurisdiction.

                  v.       Each Borrower agrees that any action commenced by any
                           Borrower asserting any claim arising under or in
                           connection with this Agreement or any other Loan
                           Document shall be brought solely in the Superior
                           Court of Suffolk County Massachusetts or in the
                           United States District Court, District of
                           Massachusetts, sitting in Boston, Massachusetts, and
                           that such Courts shall have exclusive jurisdiction
                           with respect to any such action.

                  {REMAINDER OF PAGE LEFT INTENTIONALLY BLANK}

                                     - 10 -



                  EXECUTED under seal as of the date first written above.

                                            DYNAMICS RESEARCH CORPORATION

                                            By:_________________________________
                                            Name:_______________________________
                                            Title:______________________________

                                            DRC INTERNATIONAL CORPORATION

                                            By:_________________________________
                                            Name:_______________________________
                                            Title:______________________________

                                            H.J. FORD ASSOCIATES, INC.

                                            By:_________________________________
                                            Name:_______________________________
                                            Title:______________________________

                                            ANDRULIS CORPORATION

                                            By:_________________________________
                                            Name:_______________________________
                                            Title:______________________________

                                            IMPACT INNOVATIONS GROUP LLC

                                            By:_________________________________
                                            Name:_______________________________
                                            Title:______________________________

                                     - 11 -



                                            BROWN BROTHERS HARRIMAN & CO.

                                            By:_________________________________
                                            Name:_______________________________
                                            Title:______________________________

                                     - 12 -

EX-10.4

                                                                    EXHIBIT 10.4

                                PLEDGE AGREEMENT

         THIS PLEDGE AGREEMENT (this "AGREEMENT") is dated as of the 1st day of
September, 2004 by and between DYNAMICS RESEARCH CORPORATION, a Massachusetts
corporation (the "PLEDGOR"), and BROWN BROTHERS HARRIMAN & CO., a New York
general partnership with offices at 40 Water Street, Boston, Massachusetts, for
itself and as Administrative Agent for each of the Lenders (defined below) which
are and which may become parties to the Loan Agreement (defined below) (the
"SECURED PARTY"). The Secured Party, in its capacity as Agent for the Lenders
hereunder, is sometimes hereinafter referred to as the "AGENT", which term shall
also be deemed to include any other party acting as agent for the Lenders
hereunder.

                              Preliminary Statement

         WHEREAS, the Pledgor and certain of its affiliates (such affiliates,
together with the Pledgor, being referred to herein singly as a "BORROWER" or
collectively, the "BORROWERS") and the Agent, Banknorth, N.A., as Documentation
Agent, KeyBank National Association, as Co-Syndication Agent, and Fleet National
Bank, a Bank of America company, as Co-Syndication Agent (collectively, the
"LENDERS" and each a "LENDER") have entered into that certain Second Amended and
Restated Loan Agreement of even date herewith (as amended, modified, extended
and/or supplemented from time to time, the "LOAN AGREEMENT"; capitalized terms
used but not defined herein shall have the meanings given to such terms in the
Loan Agreement) pursuant to which the Lenders have agreed, subject to the terms
and conditions set forth therein, to make certain loans to the Borrowers
(collectively, the "LOANS"); such Loans are evidenced by the Borrowers'
Revolving Credit Notes, Term Notes, and Acquisition Term Notes of even date
herewith payable to the Lenders (as such Notes may be amended, modified,
supplemented and/or extended from time to time, singly and collectively, the
"NOTE"); and

         WHEREAS, the obligation of the Agent and the Lenders to enter into the
Loan Agreement and make the Loans described therein is subject to the
conditions, among others, that the Pledgor shall execute and deliver this
Agreement and grant to the Secured Party the pledge and security interest
hereinafter described;

         NOW, THEREFORE, in consideration of the willingness of the Secured
Party and the Lenders to enter into the Loan Agreement and, subject to the terms
and conditions set forth therein, to make Loans to the Borrowers pursuant to the
Loan Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed as follows:

         1.       Security Interest. The Pledgor hereby deposits with and
pledges to the Secured Party, for the benefit of the Lenders, the shares of
capital stock (the "PLEDGED STOCK") listed in Schedule I attached hereto. The
Pledgor hereby pledges to the Secured Party, for the benefit of the Lenders, any
and all promissory notes in excess of $250,000.00 made payable to the Pledgor
(each, a "PLEDGED NOTE", and collectively, with the Pledged Stock and any
additional securities or collateral now or hereafter pledged hereunder, the
"PLEDGED COLLATERAL"). The Pledgor hereby grants to the Secured Party, for the
benefit of the Lenders, a security interest in and lien on all of the Pledged
Collateral as security for the due and punctual payment and performance of the
Secured Obligations described in Section 2 hereof. Simultaneously with the
execution of this Agreement, the Pledgor shall deliver to the Secured Party the

                                     - 1 -



original certificates evidencing the Pledged Stock and executed Stock Powers.
Notwithstanding any provision contained in this Agreement to the contrary, upon
the occurrence of any Collateral Release Event, this Agreement and the security
interest granted hereunder shall immediately and automatically terminate and
have no further force or effect.

         2.       Secured Obligations. The security interest hereby granted
shall secure the due and punctual payment and performance of the Liabilities (as
defined in the Loan Agreement) of the Pledgor (herein called the "SECURED
OBLIGATIONS").

         3.       Special Warranties and Covenants of the Pledgor. The Pledgor
hereby warrants and covenants to the Secured Party and each Lender that:

         a.       The Pledged Collateral is duly and validly pledged with the
                  Secured Party, for the benefit of the Lenders, in accordance
                  with law and the Pledgor warrants and will defend the Secured
                  Party's right, title and security interest in and to the
                  Pledged Collateral against the claims and demands of all
                  persons whomsoever.

         b.       The Pledgor has good title to the Pledged Collateral, free and
                  clear of all claims, mortgages, pledges, liens, security
                  interests and other encumbrances of every nature whatsoever
                  except as may be expressly set forth and permitted under the
                  Loan Agreement.

         c.       To the knowledge of the Pledgor, all of the Pledged Stock has
                  been duly and validly issued and is fully paid and
                  nonassessable.

         d.       The Pledged Stock includes all of the presently issued and
                  outstanding capital stock of each subsidiary of the Pledgor.

         e.       If Pledgor acquires any additional shares of capital stock
                  (including, without limitation, from the issuance of any
                  additional shares of capital stock of any subsidiary of the
                  Pledgor) or any other investment property or securities,
                  and/or if the Pledgor becomes the payee on any promissory note
                  or other instrument, after the date hereof, the same shall
                  constitute Pledged Collateral and shall be deposited and
                  pledged with the Secured Party, for the benefit of the
                  Lenders, as provided in Section 1 hereof simultaneously with
                  such acquisition.

         f.       So long as the Collateral Release Event has not occurred, in
                  the event that the Pledgor obtains a promissory note which
                  would constitute a Pledged Note hereunder, the Pledgor shall
                  promptly deliver such Pledged Note to the Administrative Agent
                  with such endorsements as the Administrative Agent shall
                  reasonably require.

         g.       The Pledgor will not sell, convey or otherwise dispose of any
                  of the Pledged Collateral except to the extent permitted in
                  the Loan Agreement, nor will the Pledgor create, incur or
                  permit to exist any pledge, mortgage, lien, charge,
                  encumbrance or any security interest whatsoever with respect
                  to any of the Pledged Collateral or the proceeds thereof,
                  other than liens on and security interests in the Pledged
                  Collateral created hereby or which are otherwise expressly
                  permitted under the Loan Agreement.

                                     - 2 -



         h.       The statements contained in the Preliminary Statement of this
                  Agreement are true and correct.

         4.       Distributions. Upon the dissolution, winding up, liquidation
or reorganization of any company whose capital stock or notes are included in
the Pledged Collateral, whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshaling of the assets and liabilities of any such company or otherwise, if
any sum shall be paid or any property shall be distributed upon or with respect
to any of the Pledged Collateral and an Event of Default shall have occurred and
be continuing, then such sum shall be paid over to the Secured Party to be held
as collateral security for the Secured Obligations. In case any stock dividend
shall be declared on any of the Pledged Collateral, or any share of stock or
fraction thereof shall be issued pursuant to any stock split involving any of
the Pledged Collateral, or any distribution of capital (including cash
dividends) shall be made on any of the Pledged Collateral, or any property shall
be distributed upon or with respect to the Pledged Collateral pursuant to a
recapitalization or reclassification, the shares or other property so
distributed shall be delivered to the Secured Party to be held as collateral
security for the Secured Obligations.

         5.       [Reserved].

         6.       Rights and Remedies of Secured Party. Upon the occurrence and
continuance of any Event of Default, such default not having previously been
remedied or cured within any applicable grace or cure periods, the Secured Party
shall have the following rights and remedies:

         a.       All rights and remedies provided by law, including, without
                  limitation, those provided by the Massachusetts Uniform
                  Commercial Code;

         b.       All rights and remedies provided in this Agreement; and

         c.       All rights and remedies provided in the Loan Agreement, the
                  Note, or in any other Loan Document, and any other agreement,
                  document or instrument pertaining to the Secured Obligations.

         7.       Right to Transfer into Name of Secured Party, etc. In case
there shall exist an Event of Default that shall be continuing after applicable
grace and cure periods, but subject to the provisions of the Uniform Commercial
Code or other applicable law, the Secured Party may cause all or any of the
Pledged Collateral to be transferred into its name or into the name of its
nominee or nominees. So long as no Event of Default shall exist and be
continuing, the Pledgor shall be entitled to exercise as the Pledgor shall deem
fit, but in a manner not inconsistent with the terms hereof or of the Secured
Obligations, the voting power with respect to the Pledged Collateral.

         8.       Right of Secured Party to Exercise Voting Power, etc. In case
there shall exist an Event of Default, which shall not have been remedied or
cured, the Secured Party, until such Event of Default has been remedied or cured
in accordance with the Loan Agreement, shall be entitled to exercise the voting
power with respect to the Pledged Collateral, to receive and retain, as
collateral security for the Secured Obligations any and all dividends or other
distributions at any time and from time to time declared or made upon any of the
Pledged Collateral, and to exercise any and all rights of payment, conversion,
exchange, subscription or any other rights, privileges or options pertaining to
the Pledged

                                     - 3 -



Collateral as if it were the absolute owner thereof, including, without
limitation, the right to exchange, at its discretion, any and all of the
Pledged Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the Pledgor or, upon the exercise of
any such right, privilege or option pertaining to the Pledged Collateral, and
in connection therewith, to deposit and deliver any and all of the Pledged
Collateral with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Secured Party may
determine, all without liability except to account for property actually
received, but the Secured Party shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing.

         9.       Right of Secured Party to Dispose of Collateral, etc. Upon the
occurrence and during the continuance of an Event of Default, such Event of
Default not having previously been remedied or cured within any applicable grace
or cure periods, the Secured Party shall have the right, unless the Event of
Default shall have been remedied or cured in accordance with the Loan Agreement
prior to taking any such actions, at any time or times thereafter to sell,
resell, assign and deliver all or any of the Pledged Collateral in one or more
parcels at any exchange or broker's board or at public or private sale. The
Secured Party will give the Pledgor at least ten (10) days' prior written notice
in accordance with Section 17 hereof of the time and place of any public sale
thereof or of the time after which any private sale or any other intended
disposition thereof is to be made. Any such notice shall be deemed to meet any
requirement hereunder or under any applicable law (including the Uniform
Commercial Code) that reasonable notification be given of the time and place of
such sale or other disposition. Such notice may be given without any demand of
performance or other demand, all such demands being hereby expressly waived by
the Pledgor. All such sales shall be conducted in a commercially reasonable
manner and shall be at such commercially reasonable price or prices as the
Secured Party shall deem best and either for cash or on credit or for future
delivery (without assuming any responsibility for credit risk). At any such sale
or sales the Secured Party may purchase any or all of the Pledged Collateral to
be sold thereat upon such terms as the Secured Party may deem best. Upon any
such sale or sales the Pledged Collateral so purchased shall be held by the
purchaser absolutely free from any claims or rights of whatsoever kind or
nature, including any equity of redemption and any similar rights, all such
equity of redemption and any similar rights being hereby expressly waived and
released by the Pledgor. In the event any consent, approval or authorization of
any governmental agency will be necessary to effectuate any such sale or sales,
the Pledgor shall execute, and hereby agree to cause the Pledgor to execute, all
such applications or other instruments as may be required. The proceeds of any
such sale or sales, together with any other additional collateral security at
the time received and held hereunder, shall be received and applied pursuant to
Section 13-3 of the Loan Agreement.

         The Pledgor recognizes that the Secured Party may be unable to effect a
public sale of all or a part of the Pledged Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, but may be compelled to
resort to one or more private sales to a restricted group of purchasers, each of
whom will be obligated to agree, among other things, to acquire such Pledged
Collateral for its own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges that private sales so
made may be at prices and upon other terms less favorable to the seller than if
such Pledged Collateral were sold at public sales, and that the Secured Party
has no obligation to delay sale of any such Pledged Collateral for the period of
time necessary to permit such Pledged Collateral to be registered for public
sale under the Securities Act of 1933. The Pledgor agrees that any

                                     - 4 -



such private sales shall not be deemed to have been made in a commercially
unreasonable manner solely because they shall have been made under the
foregoing circumstances.

         10.      Collection of Amounts Payable on Account of Pledged
Collateral, etc. Upon the occurrence and during the continuance of any Event of
Default, the Secured Party may, but without obligation to do so, demand, sue for
and/or collect any money or property at any time due, payable or receivable, to
which it may be entitled hereunder, on account of or in exchange for any of the
Pledged Collateral and shall have the right, for and in the name, place and
stead of the Pledgor, to execute endorsements, assignments or other instruments
of conveyance or transfer with respect to all or any of the Pledged Collateral.

         11.      Care of Pledged Collateral in Secured Party's Possession.
Beyond the exercise of reasonable care to assure the safe custody of the Pledged
Collateral while held hereunder, the Secured Party shall have no duty or
liability to collect any sums due in respect thereof or to protect or preserve
rights pertaining thereto, and shall be relieved of all responsibility for the
Pledged Collateral upon surrendering the same to the Pledgor.

         12.      Waivers, etc. The Pledgor hereby waives presentment, demand,
notice, protest and, except as is otherwise provided herein, in the Loan
Agreement or in any other Loan Document, all other demands and notices in
connection with this Agreement or the enforcement of the Secured Party's rights
hereunder or in connection with any Secured Obligations or any Pledged
Collateral; consents to and waives notice of the granting of renewals,
extensions of time for payment or other indulgences to the Pledgor, any other
Borrower, or to any third party, or substitution, release or surrender of any
collateral security for any Secured Obligation, the addition or release of
persons primarily or secondarily liable on any Secured Obligation or on any
collateral security for any Secured Obligation, the acceptance of partial
payments on any Secured Obligation or on any collateral security for any Secured
Obligation and/or the settlement or compromise thereof. No delay or omission on
the part of the Secured Party in exercising any right hereunder shall operate as
a waiver of such right or of any other right hereunder. Any waiver of any such
right on any one occasion shall not be construed as a bar to or waiver of any
such right on any future occasion. The Pledgor further waives any right it may
have under the constitution of The Commonwealth of Massachusetts (or under the
constitution of any other state in which any of the Pledged Collateral may be
located), or under the Constitution of the United States of America, to notice
(other than any requirement of notice provided herein) or to a judicial hearing
prior to the exercise of any right or remedy provided by this Agreement to the
Secured Party and waives its right, if any, to set aside or invalidate any sale
duly consummated in accordance with the foregoing provisions hereof on the
grounds (if such be the case) that the sale was consummated without a prior
judicial hearing. The Pledgor's waivers under this Section have been made
voluntarily, intelligently and knowingly and after the Pledgor has been apprised
and counseled by its attorneys as to the nature thereof and its possible
alternative rights.

         13.      Termination; Assignment, etc. This Agreement and the security
interest in the Pledged Collateral created hereby shall terminate upon the
earlier to occur of either of the following events (x) when all of the Secured
Obligations have been paid and finally discharged in full in cash (provided that
the Lenders are no longer obligated to make Loans under the Loan Agreement), or
(y) upon the occurrence of the Collateral Release Event. For all purposes of
this Agreement, no Event of Default shall be deemed to have been cured or waived
except as expressly provided in the Loan Agreement. No waiver by the Secured
Party or any Lender or by any other holder of Secured Obligations of any default
shall be

                                     - 5 -



effective unless in writing nor operate as a waiver of any other default or of
the same default on a future occasion.

         14.      Reinstatement. Notwithstanding the provisions of Section 13,
this Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any amount received by the Lenders or the Secured Party in
respect of the Secured Obligations is rescinded or must otherwise be restored or
returned by the Lenders or the Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Pledgor or any other Borrower
or upon the appointment of any intervenor or conservator of, or trustee or
similar official for, the Pledgor or any other Borrower or any substantial part
of their respective properties, or otherwise, all as though such payments had
not been made.

         15.      Governmental Approvals, etc. Upon the exercise by the Secured
Party of any power, right, privilege or remedy pursuant to this Agreement which
requires any consent, approval, qualification or authorization of any
governmental authority or instrumentality, the Pledgor will execute and deliver,
or will cause the execution and delivery of, all applications, certificates,
instruments and other documents and papers that the Secured Party may be
required to obtain for such governmental consent, approval, qualification or
authorization.

         16.      Reserved.

         17.      Notices. Except as otherwise provided herein, all notices to
the Pledgor or to the Secured Party shall be in writing and shall be deemed to
have been sufficiently given or served for all purposes hereof if given or
served in the manner provided for in the Loan Agreement.

         18.      Miscellaneous.

         a.       This Agreement shall inure to the benefit of and be binding
                  upon the Secured Party, the Lenders and the Pledgor and their
                  respective successors and assigns permitted under the Loan
                  Agreement (provided that the Pledgor shall have no right to
                  assign its rights and duties hereunder), and the term
                  "Lenders" shall be deemed to include any other holder or
                  holders of any of the Secured Obligations and the term
                  "Secured Party" shall be deemed to include any successor agent
                  for the Lenders. In case any provision in this Agreement shall
                  be invalid, illegal or unenforceable, the validity, legality
                  and enforceability of the remaining provisions shall not in
                  any way be affected or impaired thereby. This Agreement may be
                  executed in any number of counterparts and by the different
                  parties hereto on separate counterparts, each of which shall
                  be an original, but all of which together shall constitute one
                  instrument.

         b.       This Agreement is intended to be supplemental of the Security
                  Agreement (as defined in the Loan Agreement). All provisions
                  of the Security Agreement (as defined in the Loan Agreement)
                  shall apply to the Pledged Collateral and the Secured Party
                 shall have the same rights with respect to any and all
                  security interests in the Pledged Collateral granted the Agent
                  to secure the Liabilities hereunder as thereunder.
                  Notwithstanding the foregoing, in the event of a conflict
                  between this Agreement and the Security Agreement (as defined
                  in the Loan Agreement), the terms of this Agreement shall
                  control with

                                     - 6 -



                  respect to the Pledged Collateral and the Security Agreement
                  (as defined in the Loan Agreement) with respect to all other
                  collateral.

         19.      Governing Law; Jurisdiction, Waiver of Jury Trial.

         a.       This Agreement and all rights and obligations hereunder,
                  including matters of construction, validity, and performance,
                  shall be governed by the law of The Commonwealth of
                  Massachusetts.

         b.       Consent to Jurisdiction.

                  i.       The Pledgor agrees that any legal action, proceeding,
                           case, or controversy against the Pledgor with respect
                           to this Agreement or any other Loan Document may be
                           brought in the Superior Court of Suffolk County
                           Massachusetts or in the United States District Court,
                           District of Massachusetts, sitting in Boston,
                           Massachusetts, as the Agent may elect in the Agent's
                           sole discretion. By execution and delivery of this
                           Agreement, the Pledgor, for itself and in respect of
                           its property, accepts, submits, and consents
                           generally and unconditionally, to the jurisdiction of
                           the aforesaid courts.

                  ii.      The Pledgor WAIVES personal service of any and all
                           process upon it, and irrevocably consents to the
                           service of process out of any of the aforementioned
                           courts in any such action or proceeding by the
                           mailing of copies thereof by certified mail, postage
                           prepaid, to the Pledgor at the Pledgor's address for
                           notices as specified herein, such service to become
                           effective five (5) Business Days after such mailing.

                  iii.     The Pledgor WAIVES any objection based on forum non
                           conveniens and any objection to venue of any action
                           or proceeding instituted under this Agreement and
                           consents to the granting of such legal or equitable
                           remedy as is deemed appropriate by the Court.

                  iv.      Nothing herein shall affect the right of the Agent to
                           bring legal actions or proceedings in any other
                           competent jurisdiction.

                  v.       The Pledgor agrees that any action commenced by the
                           Pledgor asserting any claim arising under or in
                           connection with this Agreement or any other Loan
                           Document shall be brought solely in the Superior
                           Court of Suffolk County Massachusetts or in the
                           United States District Court, District of
                           Massachusetts, sitting in Boston, Massachusetts, and
                           that such Courts shall have exclusive jurisdiction
                           with respect to any such action.

         c.       The Pledgor makes the following waiver knowingly, voluntarily,
                  and intentionally, and understands that the Agent and the
                  Lenders in the establishment and maintenance of their
                  respective relationships with the Pledgor contemplated by the
                  within Agreement, is relying thereon. THE PLEDGOR, TO THE
                  EXTENT ENTITLED THERETO, WAIVES ANY PRESENT OR FUTURE RIGHT OF
                  THE PLEDGOR, OR OF ANY GUARANTOR OR ENDORSER OF THE PLEDGOR OR
                  OF ANY OTHER PERSON

                                     - 7 -



                  LIABLE TO THE AGENT OR THE LENDERS ON ACCOUNT OF OR IN RESPECT
                  TO THE LIABILITIES, TO A TRIAL BY JURY IN ANY CASE OR
                  CONTROVERSY IN WHICH THE AGENT OR THE LENDERS IS OR BECOMES A
                  PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR
                  AGAINST THE AGENT OR ANY LENDER OR IN WHICH THE AGENT OR ANY
                  LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR
                  CONTROVERSY ARISES OUT OF, OR IS IN RESPECT TO, ANY
                  RELATIONSHIP AMONGST OR BETWEEN THE PLEDGOR, ANY SUCH PERSON,
                  THE AGENT AND ANY LENDER (AND THE AGENT AND THE LENDERS
                  LIKEWISE WAIVE THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH
                  CASE OR CONTROVERSY).

                 {REMAINDER OF PAGE LEFT INTENTIONALLY BLANK}

                                     - 8 -



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

                                         BROWN BROTHERS HARRIMAN & CO.,
                                         for itself and as Agent for all Lenders

                                         By: ___________________________________
                                         Name:
                                         Title:

                                         DYNAMICS RESEARCH CORPORATION

                                         By: ___________________________________
                                         Name:
                                         Title:

                                     - 9 -



                                   SCHEDULE I

                              (to Pledge Agreement)

                    PLEDGED STOCK



Description                           No. of Shares               Certificate No(s).
- -----------                           -------------               ------------------
                                                            



                                     - 10 -

EX-10.5

                                                                    Exhibit 10.5

PATENT AND PATENT
APPLICATION SECURITY AGREEMENT

         This Patent and Patent Application Security Agreement (the " PATENT
SECURITY AGREEMENT") is made the 1st day of September, 2004, by Dynamics
Research Corporation, a Massachusetts corporation with its principal executive
offices at 60 Frontage Road, Andover, Massachusetts 01810 (the "COMPANY"), and
Brown Brothers Harriman & Co., with offices at 40 Water Street, Boston,
Massachusetts 02109, as administrative agent for itself and for each of the
other Lenders (defined below) as may become parties to the Loan Agreement
(defined below) (the "Agent").

                                    RECITALS

         WHEREAS, pursuant to the Second Amended and Restated Loan Agreement
dated as of the date hereof (as same may be amended, modified or replaced from
time to time, the "LOAN AGREEMENT"), made by and among the Company and certain
affiliates of the Company (singly, a "BORROWER" and collectively, the
"BORROWERS"), the Agent, as administrative agent for a syndicate of Lenders (the
"LENDERS"), BankNorth, N.A., as Documentation Agent, KeyBank National
Association and Fleet National Bank, a Bank of America company, each as
Co-Syndication Agents, and such Lenders, the Agent and the Lenders have agreed
to make certain loans (hereinafter, the "LOANS") available to the Borrowers;

         WHEREAS, under a certain Security Agreement of even date herewith (as
same may be amended, modified or replaced from time to time, the "SECURITY
AGREEMENT"), the Borrowers have created a security interest in each such
Borrower's assets to secure the liabilities and obligations of the Borrowers to
the Agent and the Lenders (as defined in the Loan Agreement) (hereinafter, the
"LIABILITIES");



         WHEREAS, as a condition, among others, to the continuation of the
credit facilities contemplated by the Loan Agreement, and to further secure the
Liabilities, the parties hereto shall execute this Patent Security Agreement.

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Company and the Agent agree as
follows:

1.       To secure the Liabilities, the Company hereby grants a security
         interest in favor of the Agent for the benefit of the Lenders, with
         power of sale, in and to the following and all proceeds thereof:

         a.       All of the Company's now owned or existing or hereafter
                  acquired or arising letters patent, patent applications, and
                  the inventions and improvements therein disclosed, and any and
                  all divisions, reissues and continuations of said letters
                  patent including, without limitation the patents listed on
                  EXHIBIT A annexed hereto and made a part hereof, together with
                  any goodwill connected with and symbolized by any such
                  patents.

         b.       All renewals of any of the foregoing.

         c.       All income, royalties, damages and payments now and hereafter
                  due and/or payable under and with respect to any of the
                  foregoing, including, without limitation, payments under all
                  licenses entered into in connection therewith and damages and
                  payments for past or future infringements or dilutions
                  thereof.

         d.       The right to sue for past, present and future infringements
                  and dilutions of any of the foregoing.

         e.       All of Company's rights corresponding to any of the foregoing
                  throughout the world.

         All of the foregoing letters patent, patent applications described in
         Subsection a, together with the items respectively described in
         Subsections b through and including e are hereinafter individually
         and/or collectively referred to as the "Patents".

2.       Until this Patent Security Agreement is terminated, the Company shall
         undertake the following with respect to each Patent to the extent
         prudent in the exercise of its reasonable business judgment and
         provided that any failure to do so does not have a material adverse
         effect on the Company and its subsidiaries on a consolidated basis:

         a.       Pay all renewal fees and other fees and costs associated with
                  maintaining the Patents and with the processing of the
                  Patents.

         b.       At Company's sole cost, expense, and risk, pursue the prompt,
                  diligent, processing of each Application for Registration
                  which is the subject of the foregoing assignment and not
                  abandon or delay any such efforts.

                                     - 2 -



         c.       At Company's sole cost, expense, and risk, take any and all
                  action which Company deems desirable to protect the Patents,
                  including, without limitation, but subject to Company's
                  discretion, the prosecution and defense of infringement
                  actions.

3.       Upon the occurrence of any Event of Default (as defined in the Loan
         Agreement), and until such Event of Default is cured, the Agent acting
         in its own name or in that of the Company may (but shall not be
         required to) act in the Company's place and stead and/or in the Agent's
         own right in connection with the obligations set forth in Section 2,
         above.

4.       The Company represents and warrants that:

         a.       The Patents listed on EXHIBIT A include all of the registered
                  Patents now owned by the Company.

         b.       No liens, claims or security interests have been granted by
                  the Company to any person or entity in such Patents other than
                  to the Agent or as otherwise permitted pursuant to the Loan
                  Agreement.

5.       In order to further secure the Liabilities:

         a.       The Company shall give the Agent written notice (with
                  reasonable detail) within thirty (30) days following the
                  occurrence of any of the following:

                  i.       The Company obtains rights to any new patents or
                           patent applications (other than Company's right to
                           sell products containing the patents of others in the
                           ordinary course of Company's business).

                  ii.      The Company becomes entitled to the benefit of any
                           patents or patent applications, whether as licensee
                           or licensor (other than Company's right to sell
                           products containing the patents of others in the
                           ordinary course of Company's business).

                  iii.     The Company enters into any new patent license
                           agreement.

         b.       The provisions of this Patent Security Agreement shall
                  automatically apply to any such additional property or rights
                  described in a, above, all of which shall be deemed to be and
                  treated as "Patents" within the meaning of this Patent
                  Security Agreement.

         c.       The Company hereby authorizes the Agent to modify this
                  agreement by amending EXHIBIT A to include any future patents
                  or patent applications, written notice of which is so given,
                  provided, however, the modification of said EXHIBIT A shall
                  not be a condition to the creation or perfection of the
                  security interest and Patent Security Agreement created
                  hereby.

6.       Upon the occurrence and during the continuance of any Event of Default
         (as defined in the Loan Agreement), the Agent may exercise all rights
         and remedies of a secured party under the Uniform Commercial Code as
         adopted in Massachusetts (Massachusetts

                                     - 3 -



         General Laws, Chapter 106), with respect to the Patents, in addition to
         which the Agent, subject to the terms of the Loan Agreement, may sell,
         license, assign, transfer, or otherwise dispose of the Patents. Any
         person may conclusively rely upon an affidavit of an officer of the
         Agent that an Event of Default and demand has occurred and is
         continuing and that the Agent is authorized to exercise such rights and
         remedies.

7.       Effective upon the occurrence and during the continuance of any Event
         of Default (as defined in the Loan Agreement) the Company hereby
         irrevocably constitutes and designates the Agent as and for the
         Company's attorney in fact:

         a.       To exercise any of the rights exercisable and powers
                  referenced in Section 2.

         b.       To execute all and singular such instruments, documents, and
                  papers as the Agent determines to be appropriate in connection
                  with the exercise of such rights and remedies and to cause the
                  sale, license, assignment, transfer, or other disposition of
                  the Patents.

         The within grant of a power of attorney, being coupled with an
         interest, shall be irrevocable until the within Patent Security
         Agreement is terminated.

8.       Any use by the Agent of the Patents as authorized hereunder in
         connection with the exercise of the Agent's right and remedies under
         the within Patent Security Agreement and the Loan Agreement shall be
         coextensive with Company's rights thereunder and with respect thereto
         and without any liability for royalties or other related charges from
         the Agent to the Company.

9.       The Agent hereby grants to the Company the right, prior to notice from
         the Agent following the occurrence and during the continuance of an
         Event of Default (as defined in the Loan Agreement), to sue for past,
         present and future infringement of the Patents including the right to
         seek injunctions and/or money damages, in an effort by the Company to
         protect the Patents against encroachment by third parties. The Company
         shall notify the Agent in writing of any such suit for enforcement of
         the Patents against a particular party. All reasonable costs arising in
         connection with any such suit for enforcement shall be borne by the
         Company.

10.      Following the earlier to occur of (x) the Collateral Release Event (as
         defined in the Loan Agreement), or (y) the payment and satisfaction of
         all Liabilities, and the termination of any obligation of the Agent or
         any Lender to provide loans or financial accommodations under the
         credit facility contemplated by the Loan Agreement, this Patent
         Security Agreement shall terminate and the Agent shall promptly execute
         and deliver to the Company, at the Company's cost and expense, all such
         instruments as the Company reasonably may request to evidence such
         termination and to the extent, if any, necessary to re-vest in the
         Company full title to the Patents and the associated goodwill, subject
         to any disposition thereof which may have been made by Agent pursuant
         hereto or pursuant to the Loan Agreement.

11.      The Company shall, at the request of the Agent, do any and all acts and
         execute any and all documents reasonably required by the Agent in
         connection with the protection, preservation, and enforcement of the
         Agent's rights hereunder.

                                     - 4 -



12.      The Company shall, upon demand, reimburse the Agent for all reasonable
         costs and expenses incurred by the Agent in the exercise of any rights
         hereunder (including, without limitation, reasonable fees and expenses
         of counsel).

13.      This Patent Security Agreement is intended to be supplemental of the
         Security Agreement. All provisions of the Security Agreement shall
         apply to the Patents, and the Agent shall have the same rights with
         respect to any and all Patents granted the Agent to secure the
         Liabilities hereunder as thereunder. In the event of a conflict between
         this Patent Security Agreement and the Security Agreement, the terms of
         this Patent Security Agreement shall control with respect to the
         Patents, and the Security Agreement shall control with respect to all
         other Collateral (as defined in the Loan Agreement).

                  [remainder of page left intentionally blank]

                                     - 5 -



         IN WITNESS WHEREOF, the Company and the Agent respectively have caused
this Patent Security Agreement to be executed by officers duly authorized so to
do on the date first above written.

Dynamics Research Corporation               Brown Brothers Harriman & Co.,
                    (The "Company")                                (The "Agent")

By_________________________________         By________________________________

Title______________________________         Title_____________________________

                                     - 6 -





                          COMMONWEALTH OF MASSACHUSETTS

County of Suffolk

         Then personally appeared before me _______________ who acknowledged
that such person is the duly authorized __________ of Dynamics Research
Corporation, and that such person executed the foregoing instrument as his free
act and deed on its behalf.

         Witness my hand and seal this _____ day of September, 2004.

                                               _________________________________
                                                            , Notary Public
                                                   My Commission Expires:

                          COMMONWEALTH OF MASSACHUSETTS

County of Suffolk

         Then personally appeared before me _________________, who acknowledged
that such person is the duly authorized Vice President of Brown Brothers
Harriman & Co., and that such person executed the foregoing instrument as his
free act and deed on its behalf.

         Witness my hand and seal this _____ day of September, 2004.

                                               _________________________________
                                                            , Notary Public
                                                   My Commission Expires:

                                     - 7 -



                                    EXHIBIT A

Company's now owned or existing or hereafter acquired or arising registered
patents and patent applications, including, without limitation:



   PATENT NO.                               TITLE TO PATENT
   ----------                               ---------------
                    
 (1)  6,567,429        Wide area multi-service broadband network
 (2)  6,387,724        Method of fabricating silicon-on-insulator sensor having
                       oxide sensing surface
 (3)  6,212,672        Software development system with an executable
                       working model in an interpretable intermediate modeling
                       language
 (4)  6,128,113        Transparent optical communications switch
 (5)  5,119,111        Edge-type printhead with contact pads
 (6)  5,081,471        True edge thermal printhead
 (7)  5,077,564        Arcuate edge thermal print head
 (8)  4,978,972        Modular thermal print head and method of fabrication
 (9)  4,954,225        Method for making nozzle plates
(10)  4,912,468        Non-linear error correction system
(11)  4,881,087        Printhead structure and method of fabrication
(12)  4,875,281        Method of fabricating a printhead
(13)  4,839,001        Orifice plate and method of fabrication
(14)  4,810,852        High-resolution thermal printhead and method of fabrication


                                     - 8 -

EX-10.6

                                                                    Exhibit 10.6

TRADEMARK AND TRADEMARK
APPLICATION SECURITY AGREEMENT

         This Trademark and Trademark Application Security Agreement (the "TM
SECURITY AGREEMENT") is made as of the 1st day of September, 2004, by Dynamics
Research Corporation, a Massachusetts corporation with its principal executive
offices at 60 Frontage Road, Andover, Massachusetts 01810 (the "COMPANY"), and
Brown Brothers Harriman & Co., with offices at 40 Water Street, Boston,
Massachusetts 02109, as administrative agent for itself and for each of the
other Lenders (defined below) as may become parties to the Loan Agreement
(defined below) (the "AGENT").

                                    RECITALS

         WHEREAS, pursuant to the Second Amended and Restated Loan Agreement
dated as of the date hereof (as same may be amended, modified or replaced from
time to time, the "LOAN AGREEMENT"), made by and among the Company and certain
affiliates of the Company (singly, a "BORROWER" and collectively, the
"BORROWERS"), the Agent, as administrative agent for a syndicate of Lenders (the
"LENDERS"), BankNorth, N.A., as Documentation Agent, KeyBank National
Association and Fleet National Bank, a Bank of America company, each as
Co-Syndication Agents, and such Lenders, the Agent and the Lenders have agreed
to make certain loans (hereinafter, the "LOANS") available to the Borrowers;

         WHEREAS, under a certain Security Agreement of even date herewith (as
same may be amended, modified or replaced from time to time, the "SECURITY
AGREEMENT"), the Borrowers have created a security interest in each such
Borrower's assets to secure the liabilities and obligations of the Borrowers to
the Agent and the Lenders (as defined in the Loan Agreement) (hereinafter, the
"LIABILITIES");



         WHEREAS, as a condition, among others, to the continuation of the
credit facilities contemplated by the Loan Agreement, and to further secure the
Liabilities, the parties hereto shall execute this TM Security Agreement.

         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Company and the Agent agree as
follows:

1.       To secure the Liabilities, the Company hereby grants a security
         interest in favor of the Agent for the benefit of each of the Lenders,
         with power of sale, in and to the following and all proceeds thereof:

         a.       All of the Company's now owned or existing or hereafter
                  acquired or arising trademarks, trade registrations, trademark
                  applications, service marks, registered service marks and
                  service mark applications including, without limitation, the
                  trademarks, registered trademarks, trade mark applications,
                  service marks, registered service marks and service mark
                  applications listed on EXHIBIT A annexed hereto and made a
                  part hereof, together with any goodwill connected with and
                  symbolized by any such trademarks, trademark applications,
                  service marks, registered service marks or service mark
                  applications.

         b.       All renewals of any of the foregoing.

         c.       All income, royalties, damages and payments now and hereafter
                  due and/or payable under and with respect to any of the
                  foregoing, including, without limitation, payments under all
                  licenses entered into in connection therewith and damages and
                  payments for past or future infringements or dilutions
                  thereof.

         d.       The right to sue for past, present and future infringements
                  and dilutions of any of the foregoing.

         e.       All of Company's rights corresponding to any of the foregoing
                  throughout the world.

         All of the foregoing trademarks, registered trademarks and trademark
         applications, and service marks, registered service marks and service
         mark applications described in Subsection a, together with the items
         respectively described in Subsections b through and including e are
         hereinafter individually and/or collectively referred to as the
         "TRADEMARKS".

2.       Until this TM Security Agreement is terminated, the Company shall
         undertake the following with respect to each Trademark to the extent
         prudent in the exercise of its reasonable business judgment and
         provided that any failure to do so does not have a material adverse
         effect on the Company and its subsidiaries on a consolidated basis:

                                     - 2 -



         a.       Pay all renewal fees and other fees and costs associated with
                  maintaining the Trademarks and with the processing of the
                  Trademarks.

         b.       At Company's sole cost, expense, and risk, pursue the prompt,
                  diligent processing of each Application for Registration which
                  is the subject of the foregoing assignment and not abandon or
                  delay any such efforts.

         c.       At Company's sole cost, expense, and risk, take any and all
                  action which Company deems desirable to protect the
                  Trademarks, including, without limitation, but subject to
                  Company's discretion, the prosecution and defense of
                  infringement actions.

3.       Upon the occurrence of any Event of Default (as defined in the Loan
         Agreement), and until such Event of Default is cured, the Agent acting
         in its own name or in that of the Company may (but shall not be
         required to) act in the Company's place and stead and/or in the Agent's
         own right in connection with the obligations set forth in Section 2,
         above.

4.       The Company represents and warrants that:

         a.       The Trademarks listed on EXHIBIT A include all of the
                  registered trademarks, Federal trademark applications,
                  registered service marks and Federal service mark applications
                  now owned by the Company.

         b.       No liens, claims or security interests have been granted by
                  the Company to any person or entity in such Trademarks other
                  than to the Agent or as otherwise permitted pursuant to the
                  Loan Agreement.

5.       In order to further secure the Liabilities:

         a.       The Company shall give the Agent written notice (with
                  reasonable detail) within thirty (30) days following the
                  occurrence of any of the following:

                  i.       The Company obtains rights to any new registered
                           trademarks, registered service marks or service mark
                           applications, (other than Company's right to sell
                           products containing the trademarks of others in the
                           ordinary course of Company's business)

                  ii.      The Company becomes entitled to the benefit of any
                           registered trademarks, trademark applications,
                           trademark licenses, trademark license renewals,
                           service marks, registered service marks, service mark
                           applications, service mark licenses or service mark
                           license renewals whether as licensee or licensor
                           (other than Company's right to sell products
                           containing the trademarks of others in the ordinary
                           course of Company's business).

                  iii.     The Company enters into any new trademark license
                           agreement or service mark license agreement.

         b.       The provisions of this TM Security Agreement shall
                  automatically apply to any such additional property or rights
                  described in a, above, all of which shall be

                                     - 3 -



                  deemed to be and treated as "Trademarks" within the meaning of
                  this TM Security Agreement.

         c.       The Company hereby authorizes the Agent to modify this
                  agreement by amending EXHIBIT A to include any future
                  trademarks, registered trademarks, trademark applications,
                  service marks, registered service marks and service mark
                  applications, written notice of which is so given, provided,
                  however, the modification of said EXHIBIT A shall not be a
                  condition to the creation or perfection of the security
                  interest and TM Security Agreement created hereby.

6.       Upon the occurrence and during the continuance of any Event of Default
         (as defined in the Loan Agreement), the Agent may exercise all rights
         and remedies of a secured party under the Uniform Commercial Code as
         adopted in Massachusetts (Massachusetts General Laws, Chapter 106),
         with respect to the Trademarks, in addition to which the Agent, subject
         to the terms of the Loan Agreement, may sell, license, assign,
         transfer, or otherwise dispose of the Trademarks. Any person may
         conclusively rely upon an affidavit of an officer of the Agent that an
         Event of Default and demand has occurred and is continuing and that the
         Agent is authorized to exercise such rights and remedies.

7.       Effective upon the occurrence and during the continuance of any Event
         of Default (as defined in the Loan Agreement), the Company hereby
         irrevocably constitutes and designates the Agent as and for the
         Company's attorney in fact:

         a.       To exercise any of the rights exercisable and powers
                  referenced in Section 2.

         b.       To execute all and singular such instruments, documents, and
                  papers as the Agent determines to be appropriate in connection
                  with the exercise of such rights and remedies and to cause the
                  sale, license, assignment, transfer, or other disposition of
                  the Trademarks.

         The within grant of a power of attorney, being coupled with an
         interest, shall be irrevocable until the within TM Security Agreement
         is terminated.

8.       Any use by the Agent of the Trademarks as authorized hereunder in
         connection with the exercise of the Agent's right and remedies under
         the within TM Security Agreement and the Loan Agreement shall be
         coextensive with the Company's rights thereunder and with respect
         thereto and without any liability for royalties or other related
         charges from the Agent to the Company.

9.       The Agent hereby grants to the Company the right, prior to notice from
         the Agent following the occurrence and during the continuance of an
         Event of Default (as defined in the Loan Agreement), to sue for past,
         present and future infringement of the Trademarks including the right
         to seek injunctions and/or money damages, in an effort by the Company
         to protect the Trademarks against encroachment by third parties. The
         Company shall notify Agent in writing of any such suit for enforcement
         of the trademarks against a particular party. All reasonable costs
         arising in connection with any such suit for enforcement shall be borne
         by the Company.

10.      Following the earlier to occur of (x) the Collateral Release Event (as
         defined in the Loan Agreement), or (y) the payment and satisfaction of
         all Liabilities, and the termination of

                                     - 4 -



         any obligation of the Agent or any Lender to provide loans or financial
         accommodations under the credit facility contemplated by the Loan
         Agreement, this TM Security Agreement shall terminate and the Agent
         shall promptly execute and deliver to the Company, at the Company's
         cost and expense, all such instruments as the Company reasonably may
         request to evidence such termination and to the extent, if any,
         necessary to re-vest in the Company full title to the Trademarks and
         the associated goodwill, subject to any disposition thereof which may
         have been made by the Agent pursuant hereto or pursuant to the Loan
         Agreement.

11.      The Company shall, at the request of the Agent, do any and all acts and
         execute any and all documents reasonably required by the Agent in
         connection with the protection, preservation, and enforcement of the
         Agent's rights hereunder.

12.      The Company shall, upon demand, reimburse the Agent for all reasonable
         costs and expenses incurred by the Agent in the exercise of any rights
         hereunder (including, without limitation, reasonable fees and expenses
         of counsel).

13.      This TM Security Agreement is intended to be supplemental of the
         Security Agreement. All provisions of the Security Agreement shall
         apply to the Trademarks and the Agent shall have the same rights with
         respect to any and all Trademarks granted the Agent to secure the
         Liabilities hereunder as thereunder. In the event of a conflict between
         this TM Security Agreement and the Security Agreement, the terms of
         this TM Security Agreement shall control with respect to the
         Trademarks, and the Security Agreement shall control with respect to
         all other Collateral (as defined in the Loan Agreement).

                  [remainder of page left intentionally blank]

                                     - 5 -



         IN WITNESS WHEREOF, the Company and the Agent respectively have caused
this TM Security Agreement to be executed by officers duly authorized so to do
on the date first above written.

Dynamics Research Corporation                Brown Brothers Harriman & Co.,
                        (The "Company")                          (The "Agent")

By_________________________________            By_______________________________

Title______________________________            Title____________________________

                                     - 6 -



                          COMMONWEALTH OF MASSACHUSETTS

County of Suffolk

         Then personally appeared before me ________________ who acknowledged
that such person is the duly authorized _________ of Dynamics Research
Corporation and that such person executed the foregoing instrument as his free
act and deed on its behalf.

         Witness my hand and seal this _____ day of September, 2004.

                                               _________________________________
                                                              , Notary Public
                                                      My Commission Expires:

                          COMMONWEALTH OF MASSACHUSETTS

County of Suffolk

         Then personally appeared before me __________________, who acknowledged
that such person is the duly authorized _____________________ of Brown Brothers
Harriman & Co., and that such person executed the foregoing instrument on its
behalf.

         Witness my hand and seal this _____ day of September, 2004.

                                               _________________________________
                                                            , Notary Public
                                                    My Commission Expires:

                                     - 7 -




                                    EXHIBIT A

                               U.S. Registrations

                           Mark            Registration No.
                           ----            ----------------

                                     - 8 -