10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the year ended December 31, 2001

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

For the transition period from                   to                  

Commission file number: 0-5404

HADRON, INC.

(Exact name of registrant as specified in its charter)

New York	11-2120726
(State or other jurisdiction of incorporation or organization)	(I.R.S.Employer Identification Number)

5904 Richmond Highway, Suite 300 Alexandria, Virginia 22303

(Address of principal executive offices)

Registrant’s telephone number including area code

(703) 329-9400

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.02 per share

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

The registrant’s revenues for the twelve months ended December 31, 2001 were $21,936,000.

As of March 13, 2002, the aggregate market value of the common stock of the registrant held by non-affiliates of the registrant (based upon the average bid and asked prices of the common stock as reported by the National Association of Securities Dealers Inc. through its Electronic OTC Bulletin Board) was approximately $7,384,300.

As of March 13, 2002, 14,394,340 shares of the common stock of the registrant were outstanding.

PART I

Item 1.    Business

Introduction

Hadron, Inc. (“Hadron” or the “Company”) supports homeland security through the design, implementation and support of innovative solutions that enhance the United States’ ability to detect, defend and respond to threats from hostile countries or terrorists. The Company specializes in three facets of homeland security: intelligence systems, bio-defense, and aerospace programs. The Company was incorporated in New York in 1964, and can be found on the Internet at www.hadron.com.

Change in Fiscal Year

On February 14, 2001, the Board of Directors of the Company approved a change of the Company’s fiscal year from the period of July 1 through June 30 to the period of January 1 through December 31, and declared the period of July 1, 2000 through December 31, 2000 the transition period.

Organizational Change

Prior to the acquisition of Analex Corporation on November 5, 2001 (see “Recent Developments”), the Company had four operating segments: Advanced Biosystems, Inc. (“ABS”), Avenue Technologies, Inc. (“ATI”), Engineering & Information Services, Inc. (“EISI”), and SyCom Services, Inc. (“SyCom”).

After the acquisition of Analex, EISI and ATI were merged into Analex in December 2001. ABS, Analex and SyCom continue to operate as wholly owned subsidiaries of the Company.

With the acquisition of Analex, the Company reorganized its internal operating structure. Hadron now has three operating segments: ABS continues to operate in the bio-defense market; the Homeland Security Group supports the United States intelligence community and is comprised of the businesses previously reported under the ATI, EISI, and SyCom operating segments; and the Aerospace Group supports NASA, Department of Defense (“DoD”), and other major aerospace contractors and is comprised on the business acquired as a result of the acquisition of Analex Corporation in November 2001.

The following table may help in understanding the organizational units for the relevant time periods discussed in this 10-K:

Operating Units as reported for the period ended 12/31/00 and prior fiscal years	Operating Units as reported for the fiscal year ended 12/31/01
Advanced Biosystems, Inc. (“ABS”)	ABS
Avenue Technologies, Inc. (“ATI”)	Homeland Security Group
Engineering & Information Services, Inc. (“EISI”)	Homeland Security Group
Sycom Services, Inc. (“SyCom”)	Homeland Security Group
Analex Corporation (“Analex”)	Aerospace Group

2

Further, the consolidated financial statements for 2001 include two months of the Aerospace Group, formerly Analex Corporation. The full-year pro-forma results for 2001 include twelve months of Aerospace Group operations, as if Analex had been acquired on January 1, 2001.

Operations

The Company has three operating units, the Homeland Security Group, Advanced Biosystems, Inc., and the Aerospace Group, whose descriptions follow:

Homeland Security Group

Since 1964, the Company has provided hardware and software engineering, systems integration, information technology solutions and independent quality assurance to support intelligence systems. The Company’s role in the support of the intelligence community brings specialized skills to a broad set of technical requirements. In the area of Intelligence, Reconnaissance and Surveillance (“ISR”), it provides solutions that enable the simulation of a realistic operational environment so that satellites and related systems can be tested prior to deployment. The Company performs verification and validation of test results to ensure the reliability of the data and also develops radar, modeling and simulation, and system software, all in support of testing, collecting, and analyzing data from various intelligence systems.

The Company is an independent expert in the design and testing of expendable launch vehicles (“ELV”) for the DoD and intelligence community. Its highly specialized expertise provides test analysis and independent validation and verification (“IV&V”) support in areas such as Structural Dynamics, Trajectory and Performance, Thermal System Performance, and Range Safety.

The Company provides IV&V services to the United States Air Force and the National Reconnaissance Office (“NRO”) in support of launches of the Atlas and Titan ELV’s. The Company’s contribution to the success of the program launches has earned two prestigious awards: the DoD’s David Packard Excellence in Acquisition Award, and the NRO’s Gold Medal Award.

The Company supports other intelligence agencies such as the National Security Agency and the Central Intelligence Agency by providing software development, systems integration, configuration management and network administration services. In addition, the Company develops and conducts training designed to better enable military personnel in the conduct of Human Intelligence Source Debriefings.

Advanced Biosystems, Inc.

3

The Company’s role in bio-defense began in 1999 when it established its Advanced Biosystems (“ABS”) subsidiary. Since then, a elite group of biologists, immunologists and other researchers have been conducting studies to develop effective defenses and treatments for anthrax and other biological warfare agents.            

ABS scientists play a significant role in advising Congress, members of the Bush administration, Defense officials and senior members of the medical community on strategies for bio-defense. ABS also provides training on the use of biological warfare agents, their effects, and defensive strategies to improve preparedness. ABS has been awarded almost $7 million in contracts with the U.S. Defense Advanced Research Projects Agency (“DARPA”) for development of non-specific-immunity based defenses against biological threat agents. ABS was awarded a grant from the National Institutes of Health (“NIH”) to study the role of certain cellular components in blocking the development of Anthrax.

Aerospace Group

The Aerospace Group, formerly Analex Corporation (“Analex”), provides high quality services to NASA, the DoD and major aerospace contractors such as Lockheed Martin and Northrop Grumman. The Company provides aerospace systems engineering in the design, development, analysis, test and operation of both hardware and software for aerospace systems. These systems include expendable launch vehicles, satellites, space-based experiments, and components and payloads associated with the International Space Station. The Company also supports a major aerospace firm in development of sophisticated airborne electronic sensors and systems.

The Company provides a broad scope of aerospace engineering services to support the programs of NASA Glenn Research Center (“GRC”), including development of next generation launch vehicles. Specific contributions include engineering design and development of aerospace systems, engineering support to research and technology development, engineering support to operations of experimental systems, and management support.

The Company supports GRC on the Microgravity Research Development and Operations Contract (“MRDOC”) in providing an automated laboratory environment aboard the International Space Station to enable research in the performance of fluids and combustion in the near-zero gravity of space. The Company participates in the design, development, manufacturing, test and delivery of the Fluids and Combustion Facility and associated payloads.

At the Kennedy Space Center, the Company supports the Payload and Ground Operations Contract (“PGOC”) by performing detailed analyses of ELV’s and mission assurance surveillance at launch vehicle facilities in support of NASA ELV programs.

Recent Developments

4

The Company entered into an Agreement and Plan of Merger dated as of October 31, 2001 (the “Plan”) with Analex Corporation and its equity holders pursuant to which Analex was merged with and into a wholly-owned subsidiary of the Company. Analex is a professional services and program management firm whose principal customers are NASA and the U.S. intelligence community. The merger was closed as of November 5, 2001.

Under the terms of the Plan, the shareholders representing all of the outstanding equity of Analex (the “Sellers”) exchanged their Analex equity on a pro rata basis for approximately $6,500,000 in a combination of cash and the satisfaction of certain liabilities of Analex as well as 3,572,143 shares of the Company’s Common Stock, par value $0.02 per share (“Common Stock”). Of these shares, 857,143 shares are subject to a provision by which the Company guarantees for a five-year period to reimburse the Sellers the difference between the price at which they sell such shares and a guaranteed sales price ranging from $1.60 to $2.20 per share, if such shares are sold within such period and if certain other conditions are satisfied. Approximately 1,700,000 of the 3,572,143 shares of the Common Stock issued to the Sellers and $600,000 of the Sellers’ proceeds are subject to various escrow and indemnification agreements to ensure Sellers’ compliance with various representation and warranties.

In addition, the Company issued promissory notes to certain Sellers totaling approximately $773,000 with a five-year term and entered into non-competition agreements with these Sellers for total payments of $540,000. The Company offered at-will part-time employment agreements to four officers of Analex, three of which contain incentive bonus provisions relating to the achievement of certain performance goals. Finally, while Analex must have at least a prescribed minimum tangible net worth at closing, the Company permitted Analex to have indebtedness at closing of approximately $2,400,000.

To finance the acquisition, the Company negotiated a new senior credit facility with Bank of America, N.A. in the amount of $7,500,000 (the “Credit Agreement”), comprised of (i) a five-year $3,500,000 term loan (the “Term Loan”) and (ii) a $4,000,000 revolving credit facility through November 2, 2006 (the “Credit Facility”). The principal amount of the Term Loan is amortized in sixty monthly installments of $58,333. Interest on each of the facilities is at the LIBOR rate plus an applicable margin as specified in the Credit Agreement. The Company has entered into an interest rate swap agreement for $2,950,000 of this debt, and interest rate payments will be fixed beginning in January 2002. The Company is subject to certain financial covenants pursuant to the Credit Agreement, including debt to EBITDA ratio, fixed charge coverage ratio, senior debt to EBITDA ratio, and net worth requirements. The Credit Facility and Term Loan are secured by the accounts receivable and other assets of the Company and its subsidiaries. In addition, Bank of America has required the Company to obtain personal guarantees in the amount of $2,000,000, which the Company has procured from two individuals (one of whom is a director of the Company) in exchange for an annual fee and the issuance of warrants to purchase the Company’s Common Stock at an exercise price of $0.02 per share with the number of warrants to be based on the duration of the guarantees and a formula related to valuing

5

the Company.

In addition, the Company issued 3,961,060 shares of Common Stock for aggregate consideration of approximately $3,868,000 through a private placement pursuant to Regulation D under the Securities Act of 1933 consisting of (i) the Company’s Common Stock at a price of $1.14 per share to purchasers who purchased less than $500,000 worth thereof or (ii) units consisting of Hadron Common Stock and warrants to purchase 0.2061 shares of Hadron Common Stock at an exercise price of $0.02 per share for each share purchased at a price of $1.14 per unit for purchasers who purchased $500,000 or more of the Company’s equity. Two of such purchasers are directors or affiliates of a director. All of these proceeds were directed to financing the acquisition of Analex.

On November 2, 2001, to assist in financing the acquisition, Dr. C.W. Gilluly, one of the Company’s directors, and J. Richard Knop, President of the Company’s investment banking firm, Windsor Group, exercised warrants and/or stock options to purchase an aggregate of 247,888 shares of Common Stock, resulting in proceeds of approximately $200,000.

General Information

The Company provides engineering, information technology, medical research and technical services to federal government agencies or major defense contractors. In general, the industry in which the Company operates includes a large number of competitors of varying sizes. Competition within the information technology and government contracting arenas is intense. Selection is based primarily on a combination of the price of services and evaluation of technical capability, as well as past performance, quality of service and responsiveness to client requirements.

The Company maintains a primary commitment to its direct and indirect government clients, while intensifying its business development efforts targeted towards additional government clients. The Company is continuing efforts to diversify its client base.

Direct and indirect contracts with government defense and intelligence agencies comprise the majority of the Company’s business base, and competition for government-funded projects continues to exert pressure on profit margins. However, the Company’s management continues its program of cost containment, primarily in the areas of indirect labor costs, overhead and general and administrative expenses, and therefore believes the Company is well positioned and competitive in its marketplace.

The revenues of the Homeland Security Group accounted for 57%, 79%, 98%, 96%, and 97% of the total revenues for 2001, the six-month periods ended December 31, 2000 and 1999 and the fiscal years 2000 and 1999, respectively. On a full-year pro-forma basis, the Homeland Security Group accounted for approximately 26% of the total 2001 revenues (see “Recent Developments”).

The revenues of ABS accounted for 22%, 21% and 3% of the total revenues for 2001, the six-month period ended December 31, 2000 and the fiscal year

6

2000. On a full-year pro-forma basis, ABS accounted for approximately 10% of the total 2001 revenues (see “Recent Developments”).

The revenues of the Aerospace Group, which became part of Hadron as a result of the Analex acquisition, accounted for 21% of the total revenues for 2001, respectively. On a full-year pro-forma basis, the Aerospace Group accounted for approximately 64% of the total 2001 revenues (see “Recent Developments”).

The Company’s funded backlog of orders believed to be firm as of December 31, 2001 and realizable during 2002 approximated $32 million. As of December 31, 2000, before the acquisition of Analex, the Company had approximately $15 million in firm backlog orders. Included in the firm backlog approximation are estimates of amounts the Company anticipates receiving under government contracts, some of which are indefinite delivery, indefinite quantity contracts, under which services are provided as ordered by the government. Not included in the backlog approximation are amounts from future years of government contracts under which the government has the right to exercise an option for the Company to perform services.

As of December 31, 2001, the Company (including its subsidiaries) employed approximately 450 people. The Company’s employees are not members of any union, and employee relations are believed by management to be generally good.

Raw materials, patents, licenses, trademarks, franchises and concessions are not materially important to the conduct of the Company’s business and the Company’s business is not seasonal.

Government Procurement

The principal customer for the Company’s services is the United States government. The Company’s sales to the U.S. government and its prime contractors represented approximately 99% of total net sales during the Company’s twelve months ended December 31, 2001, the six month periods ended December 31, 2000 and 1999, and the fiscal years 2000 and 1999, and are expected to continue to account for a substantial portion of the Company’s revenues for the foreseeable future. On a full-year pro-forma basis, government revenues also accounted for 99% of the total 2001 revenues (see “Recent Developments”).

The principal U.S. government customer is the DoD, which, directly or through its prime contractors, accounted for approximately 64%, 70%, 76%, 92% and 88% of the Company’s revenues in the twelve months ended December 31, 2001, the six month periods ended December 31, 2000 and 1999, and the fiscal years 2000 and 1999, respectively. On a full-year pro-forma basis, DoD revenues accounted for 43% of the total 2001 revenues (see “Recent Developments”).

The Company’s DoD government business from Northrop Grumman constituted approximately 26% of the total 2001 revenues of the Company, but only 12% on the 2001 full-year pro-forma basis (see “Recent Developments”).

7

The Company’s contracts with the U.S. government are subject to the availability of funds through annual appropriations, may be terminated by the government for its convenience at any time and generally do not require the purchase of fixed quantity of services or products. Reductions in U.S. government defense spending could adversely affect the Company’s operating results. While the Company is not aware of present or anticipated reductions in U.S. government spending on specific programs or contracts, there can be no assurance that such reductions will not occur or that decreases in U.S. government defense spending in general will not have an adverse effect on the Company’s revenues in the future. Contracts with the U.S. government are subject to audit by the Defense Contract Audit Agency (“DCAA”).

The Company has been a contractor or subcontractor with the DoD continuously since 1973 with periodic renewals. During this time, neither the Company nor its subsidiaries have experienced any material adjustment of profits under these contracts; however, no assurance can be given that the DoD will not seek and obtain an adjustment of profits in the future. All U.S. government contracts contain clauses that allow for the termination of contracts at the convenience of the U.S. government.

The preponderance of the Company’s technical and professional services business with the DoD and other governmental agencies is obtained through competitive procurement and through follow-on services related to existing business. In certain instances, however, the Company acquires such service contracts because of special professional competency or proprietary knowledge in specific subject areas.

The Company derives no revenues from foreign operations.

Item 2.    Properties

The Company owns no real estate. As of December 31, 2001, the Company leased a total of 68,373 square feet of office space. These leases expire between February 2002 and September 2006. (See Note 11 of the Notes to Consolidated Financial Statements.)

Item 3.    Legal Proceedings

No material legal proceedings are currently pending.

Item 4.    Submission of Matters to a Vote of Security Holders

None.

8

PART II

Item 5.    Market for Registrant’s Common Equity and Related Stockholder Matters

Common Stock is traded on the National Association of Securities Dealers’ (“NASD”) Electronic OTC Bulletin Board, under the symbol HDRN. The Company has no other class of common stock.

The range of high and low bid quotations for the Common Stock, as reported by the National Quotation Bureau, for each quarterly period during 2001, the six-month period ended December 31, 2000 and fiscal year 2000 is shown below:

Year Ended December 31, 2001	High	Low
First Quarter
(1/1 to 3/31/01)	1.44	81
Second Quarter
(4/1 to 06/30/01)	1.40	1.00
Third Quarter
(7/1 to 09/30/01)	2.50	1.06
Fourth Quarter
(10/1 to 12/31/01)	4.55	1.40

Period Ended December 31, 2000	High	Low
First Quarter
(7/1 to 9/30/00)	1.06	.63
Second Quarter
(10/1 to 12/31/00)	1.56	.75

Fiscal Year Ended June 30, 2000	High	Low
First Quarter
(7/1 to 9/30/99)	1.28	.63
Second Quarter
(10/1 to 12/31/99)	.75	.50
Third Quarter
(1/1 to 3/31/00)	2.00	.47
Fourth Quarter
(4/1 to 6/30/00)	1.56	.75

As of March 13, 2002, there were approximately 2,101 shareholders of record of the Company’s Common Stock. No cash dividends were paid during 2001 and past two fiscal years, and none are expected to be declared during 2002.

9

Item 6.    Selected Financial Data

	Year Ended 12/31/01		Six Months Ended 12/31/00		Unaudited Six Months Ended 12/31/99			Fiscal Year 6/30/00			Fiscal Year 6/30/99			Fiscal Year 6/30/98			Fiscal Year 6/30/97
	(In thousands of dollars, except per share amounts)
Total Revenues (1)	$	21,936	$	8,943	$	10,267		$	19,901		$	20,333		$	21,134		$	16,988
Operating Income (Loss)		454		190		(481	)		(421	)		63			888			128
Interest Expense, net of Interest income		217		112		167			324			78			56			84
Income (Loss) Before income taxes		216		85		(631	)		(724	)		48			819			57
Net Income (Loss) (1)		196		85		(631	)		(745	)		34			761			13
Income (Loss) per share
Basic		.03		.01		(.24	)		(.23	)		.02			.45			.01
Diluted		.02		.01		(.24	)		(.23	)		.01			.26			.01
At Period End:
Total Assets		26,400		5,784		6,127			5,951			6,690			3,507			2,712
Long-term Liabilities		5,839		412		1,040			702			2,160			53			169
Working Capital (Deficit)		73		266		(1,454	)		(13	)		(67	)		(186	)		(906	)
Shareholders’ Equity (Deficit)		11,175		2,002		(80	)		1,535			456			22			(811	)

(1) See Item 7 “Management’s Discussion and Analysis” for an explanation of events that materially affect comparability.            

10

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation, statements about the Company’s expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements included in this report are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. The forward-looking statements contained herein involve risks and uncertainties. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth in this report.

Critical Accounting Policies

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Company to make estimates and assumptions. The Company believes the following critical accounting policies affect significant judgments, estimates and assumptions used in the preparation of the consolidated financial statements.

Revenue

The Company uses the percentage of completion method to recognize revenues and costs on all contracts. Under this method of accounting, the Company expenses all contract costs as they are incurred and simultaneously recognizes an estimate of the revenues related to those costs. Contract costs include direct labor, direct materials, subcontract costs, as well as an allocated share of overhead and general and administrative costs. The Company uses different techniques for estimating and recording revenues depending on the type of contract. Revenues may differ from recorded estimates due to various factors, including favorable or unfavorable performance in comparison to estimated contract costs, unanticipated conditions, the resolution of contract claims or disputes and audits by government audit agencies. Revisions to costs and revenues recorded are recognized in the period in which the revisions occur. Revenues on cost-plus contracts are recorded as the sum of allowable costs incurred to date plus estimated earned fees, which are recognized based on the percentage that costs incurred bears to total estimated costs. Some of the fees on cost-plus contracts may be awarded or adjusted in accordance with performance incentive provisions. These incentive-fee awards or adjustments are included in revenues at the time they can be reasonably estimated. Revenues on fixed-price contracts are recorded based on the percentage of costs incurred to date compared to total estimated costs. Revenues on time and materials contracts are recorded based upon the agreed prices per direct labor hour

11

expended plus the cost of direct materials and subcontract costs incurred. In the normal course of business, the Company may be party to claims and disputes resulting from modifications and change orders and other contract matters. Claims for additional contract compensation are recognized when realization is probable and estimable.

Long-Lived Assets

In assessing the recoverability of long-lived assets, including goodwill and other intangibles, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. If these estimates or the Company’s related assumptions change in the future, the Company may be required to record impairment charges for these assets not previously recorded.

Contingencies

From time to time, the Company is subject to proceedings, lawsuits and other claims related to labor and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes to these contingencies as well as potential ranges of probable losses and establish reserves accordingly. The amount of reserves required, if any, may change in future periods due to new developments in each matter or changes in approach to a matter such as a change in settlement strategy.

Results of Operations

Comparison of Year Ended December 31, 2001 to the Unaudited Twelve Months Ended December 31, 2000

Revenues for the twelve months ended December 31, 2001 were approximately $21,936,000, an 18% increase from the twelve-month period ended December 31, 2000. This increase is primarily due to the addition of two months of revenues, totaling $4,658,000, generated by the Aerospace Group, formerly Analex Corporation, acquired in November 2001 (see “Recent Developments”), coupled with the increased revenues of ABS, partially offset by decreased revenues of the Homeland Security Group.

Costs of revenue for the twelve months ended December 31, 2001 were approximately $18,158,000, an increase of approximately 18% from the same period of the prior year. The increase is primarily due to the costs of revenue of the Aerospace Group, coupled with increased ABS costs, partially offset by decreased costs of the Homeland Security Group. Costs of revenue as a percentage of revenues were approximately 83% for the twelve months ended December 31, 2001 and 2000.

Selling, general and administrative expenses totaled approximately $3,324,000 for the twelve months ended December 31, 2001, compared with approximately $2,908,000 for the twelve months ended December 31, 2000. The $416,000, or 14% increase is primarily due to the addition of the Aerospace Group’s costs and the costs associated with the acquisition.

12

The Company had operating income of approximately $454,000 for the twelve months ended December 31, 2001, compared to operating income of approximately $250,000 for the twelve month period ended December 31, 2000. This $204,000 increase is primarily attributable to the profitability of the Aerospace Group partially offset by the Company’s acquisition costs.

Net income was approximately $196,000 for the twelve months ended December 31, 2001, compared to a net loss of approximately $29,000 for the twelve months ended December 31, 2000. The $225,000 increase resulted primarily from the $350,000 net income produced by the Aerospace Group, coupled with the $186,000 net income of ABS, partially offset by the $10,000 net loss of the Homeland Security Group and increased costs associated with the Analex acquisition.

Results of Operations

Comparison of Six Month Period Ended December 31, 2000 to the Unaudited Six Month Period Ended December 31, 1999

Revenues for the six months ended December 31, 2000 were approximately $8,943,000, a 13% decrease from the period ended December 31, 1999. This decrease is primarily due to the loss of billable personnel resulting from the hiring of certain of the Company’s technical employees by the Homeland Security Group’s major client, Johns Hopkins University’s Applied Physics Laboratory (“APL”), partially offset by additional revenue produced by ABS. The Company’s billable staff dedicated to the APL contracts decreased 83% between December 31, 1999 and December 31, 2000.

Costs of revenue for the six months ended December 31, 2000 were approximately $7,601,000, a decrease of approximately 13% from the same period of the prior year. The decrease is primarily due to the lowered personnel costs of the Homeland Security Group partially offset by costs associated with the increased ABS revenues. Costs of revenue as a percentage of revenues were approximately 85% for the six-month periods ended December 31, 2000 and 1999, respectively.

Selling, general and administrative expenses totaled approximately $1,153,000 for the six months ended December 31, 2000, compared with approximately $1,995,000 for the same period of the prior year. The $842,000, or 42%, decrease is primarily due to the Company’s aggressive cost reduction and containment program.

The Company had operating income of $190,000 for the six months ended December 31, 2000, compared to an operating loss of $481,000 for the period ended December 31, 1999. This $671,000 increase is primarily attributable to the Company’s aggressive cost reductions coupled with increases in the productivity of the Company’s billable staff.

Net income was $85,000 for the six months ended December 31, 2000, compared to a net loss of approximately $631,000 for the same period of the prior year. The $716,000 increase resulted from the same factors mentioned above.

13

Results of Operations

Comparison of Fiscal Year 2000 to Fiscal Year 1999

Revenues for the fiscal year ended June 30, 2000 were approximately $19,901,000, a 2% decrease from the prior fiscal year. This decrease is due to the loss of billable personnel resulting from the hiring of certain of the Company’s technical employees by the Homeland Security Group’s major client, APL, and the difficulties retaining and recruiting new technical employees at another Homeland Security Group’s major client, Northrop Grumman, partially offset by additional revenue produced by ABS.

Costs of revenue for the fiscal year ended June 30, 2000 were approximately $16,572,000, a decrease of approximately 7% from the prior fiscal year. The decrease is due primarily to the lowered personnel costs of the Homeland Security Group. Costs of revenue as a percentage of revenues were approximately 83% and 87% for the fiscal years ended June 30, 2000 and 1999, respectively. This 4% decrease is primarily due to increases in direct personnel of ABS, coupled with decreased company-wide indirect personnel.

Selling, general and administrative expenses totaled approximately $3,750,000 for the fiscal year ended June 30, 2000, compared with approximately $2,535,000 for the prior fiscal year. The increase is primarily due to the Company’s addition of key administrative personnel of ABS and the Homeland Security Group, totaling $362,000 and $364,000, respectively, along with the amortization of goodwill of approximately $344,000 associated with the purchase of Avenue Technologies, Inc. (“ATI”). The Company embarked on an aggressive cost reduction and containment program in the second half of fiscal year 2000 evidenced by a 26% decrease in general and administrative expenses between the first and fourth quarters of fiscal year 2000.

The Company had an operating loss of $421,000 in the fiscal year ended June 30, 2000, compared to operating income of $63,000 in the prior fiscal year. This $484,000 decrease is primarily due to the loss of billable personnel resulting from the hiring of certain of the Company’s technical employees by the Homeland Security Group’s major client, APL, and the difficulties retaining and recruiting new technical employees at Homeland Security Group’s client, Northrop Grumman, coupled with the addition of key administrative personnel hired to develop the Company’s initiatives in the areas of biological weapons defense and counterterrorism. In addition, the Company amortized the goodwill associated with the purchase of ATI. The Company’s net billable headcount at APL and Northrop Grumman decreased by 30 and 36, or 59% and 42%, respectively, during the fiscal year ended June 30, 2000 as compared with the prior year. The loss of billable personnel at APL is expected to continue as a result of the removal of hiring ceilings at APL.

Net interest expense increased approximately $246,000 between the fiscal year ended June 30, 1999 and the fiscal year ended June 30, 2000 due to higher outstanding borrowings during the year and increased debt associated with the acquisition of ATI.

14

The net loss for the fiscal year ended June 30, 2000 was approximately $745,000, compared to net income of approximately $34,000 in the prior year. The net loss resulted primarily from the loss of billable positions, as discussed above, coupled with the costs of retaining key technical professional personnel and diversifying business development efforts.

Capital Resources and Liquidity

The working capital at December 31, 2001 decreased by approximately $192,000 from December 31, 2000, primarily due to the Company’s purchase of Analex (see “Recent Developments”). While the Company paid off its previous bank obligations with United Bank, it added increased line of credit and term note facilities at Bank of America, issued promissory notes and non-competition agreements and inherited an extended payout settlement, as further discussed below.

These increases in debt were partially offset by Analex’ two month net income of approximately $350,000. On an adjusted full-year pro-forma basis, the net income of Analex was approximately $1,458,000 for 2001, which would have resulted in a company-wide increase to working capital of over $1,266,000.            

In the three months ended December 31, 2001, the Company recorded net income of $48,000 and EBITDA, as defined below, of $359,000, after add-backs for interest of $120,000, taxes of $20,000, depreciation of $45,000 and goodwill amortization of $126,000.

In the twelve months ended December 31, 2001, the Company recorded net income of $196,000 and EBITDA of $957,000, after add-backs for interest of $217,000, taxes of $20,000, depreciation of $146,000 and goodwill amortization of $378,000.

On an adjusted full-year pro-forma basis for 2001, the Company recorded net income of $910,000 and EBITDA of $2,346,000, after add-backs for interest of $823,000, depreciation of $235,000 and goodwill amortization of $378,000.

The Company believes that with anticipated increased earnings in the upcoming years, it will be able to sufficiently pay down its debt obligations.

EBITDA consists of earnings before interest expense, interest and other income, income taxes, deferred compensation, and depreciation and amortization. EBITDA does not represent funds available for the Company’s discretionary use and is not intended to represent cash flow from operations. EBITDA should also not be construed as a substitute for operating income or a better measure of liquidity than cash flow from operating activities, which are determined in accordance with accounting principles generally accepted in the U.S. EBITDA excludes components that are significant in understanding and assessing the Company’s results of operations and cash flows. In addition, EBITDA is considered to be relevant and useful information, which is often reported and widely used by analysts, investors and other interested parties.

15

Accordingly, the Company is disclosing this information to permit a more comprehensive analysis of the Company’s operating performance, as an additional meaningful measure of performance and liquidity, and to provide additional information with respect to the Company’s ability to meet future debt service, capital expenditure and working capital requirements.

Net cash used in operating activities was $435,000 during the twelve months ended December 31, 2001. Net cash used in operating activities in the twelve months ended December 31, 2001 was primarily the result of changes in working capital, partially offset by operating income.

Net cash used for investing activities during the twelve months ended December 31, 2001 was $6,254,000. Net cash used for investing activities in this period was for fixed asset purchases of $86,000 and the cash portion of the Analex acquisition of $6,168,000.

On November 2, 2001, to finance the acquisition of Analex, the Company entered into the Credit Agreement which provides the Company with a $4,000,000 Credit Facility through November 2, 2006 and a five-year $3,500,000 Term Loan. The principal amount of the Term Loan is amortized in sixty equal monthly payments of $58,333. Interest on each of the facilities is at the LIBOR Rate plus an applicable margin as specified in a pricing grid. The Company is subject to certain financial covenants pursuant to the Agreement, including debt to EBITDA ratio, fixed charge coverage ratio, senior debt to EBITDA ratio, and net worth requirements. The Credit Facility and Term Loan are secured by the accounts receivable and other assets of the Company. The Company was required by Bank of America to obtain personal guarantees in the amount of $2,000,000, which the Company procured from two individuals, the Company’s Board member Gerald R. McNichols and the Company’s Investment Banker J. Richard Knop. The compensation during the period of guaranty is in the form of cash and warrants.

In addition, the Company issued 3,961,060 shares of Common Stock for aggregate consideration of approximately $3,868,000 through a private placement pursuant to Regulation D under the Securities Act of 1933 consisting of (i) the Company’s Common Stock at a price of $1.14 per share to purchasers who purchased less than $500,000 worth thereof or (ii) units consisting of Hadron Common Stock and warrants to purchase 0.2061 shares of Hadron Common Stock at an exercise price of $0.02 per share for each share purchased at a price of $1.14 per unit for purchasers who purchased $500,000 or more of the Company’s equity. Two of such purchasers are directors or affiliates of a director. All of these proceeds were directed to financing the acquisition of Analex.

On November 2, 2001, the Company issued promissory notes to certain Analex sellers totaling $773,000 with a five-year term, bearing interest at 6%. The Company also entered into non-competition agreements with these Sellers for total payments of $540,000 over a three-year period. In addition, the Company entered into non-competition agreements with former employees totaling $352,000, on a discounted basis, payable over various periods.

16

With its purchase of Analex, the Company assumed a note payable to the Department of Justice (“DOJ”). The agreement provides for quarterly payments of $80,000 consisting of principal and interest at 7% through February 2006, with a final payment due in May 2006.

On November 2, 2001, to assist in financing the acquisition, Dr. C.W. Gilluly, one of the Company’s directors, and J. Richard Knop, President of the Company’s investment banking firm, Windsor Group, exercised warrants and/or stock options to purchase an aggregate of 247,888 shares of common stock, resulting in proceeds of approximately $200,000.

Contractual Obligations

The Company has contractual obligations to pay long-term debt, leases and other non-cancelable obligations. The following table aggregates the amounts of these obligations as of December 31, 2001:

Year	Long-term debt(1)		Operating Leases		Non-compete Agreements		Total
2002	$	1,276,600	$	1,022,600	$	261,900	$	2,561,100
2003		1,107,500		614,500		261,900		1,983,900
2004		1,122,800		590,700		261,900		1,975,400
2005		1,141,800		408,300		81,900		1,632,000
2006		1,015,500		48,300		10,900		1,074,700
Total contractual obligations	$	5,664,200	$	2,684,400	$	878,500	$	9,227,100

(1) Does not include line of credit.

Payments for long-term debt do not include interest payments. Lease commitments could require higher payments than shown in the table due to escalation provisions that are tied to various measures of inflation. The lease commitments reflect only existing commitments and do not include future requirements necessary to replace existing leases. In addition to the contractual obligations included above, the Company also has routine purchase order commitments for materials and supplies that are entered into in the normal course of business and are not in excess of current requirements. Also, pursuant to the purchase of Analex, the Company has guaranteed a minimum sales price ranging from $1.60 to $2.20 per share for 857,143 shares issued to the sellers, for various periods through 2006.

Recently Issued Accounting Standards

In June 2001, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards, or SFAS, No. 141, “Business Combinations,” and No. 142, “Goodwill and Other Intangible Assets.” Under the new rules, goodwill will no longer be amortized starting in 2002 but will

17

be subject to annual impairment tests. Other intangible assets will continue to be amortized over their useful lives. The Company applied these new rules to the Analex acquisition and will fully implement the new standards in 2002. If SFAS No. 142 had been adopted at the beginning of 2001, the absence of goodwill amortization would have increased 2001 income before taxes by approximately $337,000.

Income Taxes

The provision for income taxes has been limited to state taxes and the liability for alternative minimum tax as the majority of income for federal and state tax purposes has been offset by carrying forward net operating losses.

Management Changes

On January 16, 2001, Sterling E. Phillips, Jr. was appointed to the positions of President and Chief Executive Officer of the Company. Mr. Phillips was also elected to fill an existing vacancy and serve as a member of the Company’s Board of Directors. In connection with his appointments, Mr. Phillips purchased 66,667 shares of Common Stock for $0.75 per share. In addition, Mr. Phillips was awarded a five-year, non-qualified stock option to purchase 875,725 shares of Common Stock at the exercise price equal to 100% of the fair market value of the Common Stock on the grant date, exercisable in one-third increments over a two-year period. Pursuant to his employment agreement, Mr. Phillips has an initial base salary of $175,000 and is eligible for an annual bonus of up to $125,000 upon the successful completion of annual milestones as agreed upon by Mr. Phillips and the Board of Directors.

Jon M. Stout resigned as President and Chief Executive Officer of the Company effective January 16, 2001 and was appointed to the position of Chairman. Dr. C.W. Gilluly resigned as Chairman effective January 16, 2001 but continues to provide consulting services and serve as a member of the Company’s Board of Directors.

In 2001, the Company filled other executive positions. In April 2001, the Company appointed two individuals to its business development and marketing functions. In November 2001, it filled its Chief Financial Officer position and, with its acquisition of Analex, inherited management expertise in the aerospace segment of homeland security. In addition, the Company added two new board members, who have extensive business and finance expertise.

18

Item 7A.    Quantitative and Qualitative Disclosure about Market Risk

Market Risks and Hedging Activities

The Company’s outstanding bank debt bears interest at variable interest rates tied to LIBOR. The use of variable-rate debt to finance operations and capital improvements exposes the Company to variability in interest payments due to changes in interest rates. The Company uses an interest rate swap to reduce the interest rate exposure on these variable rate obligations. The Company does not hold any derivatives for trading or speculative purposes.

The Company’s $3.5 million term loan facility from Bank of America carries interest comprised of two components: floating-rate LIBOR plus a credit performance margin. The Company has entered into an interest-rate swap agreement with Bank of America whereby its obligation to pay floating-rate LIBOR is swapped into a fixed rate obligation at 4.25% beginning in January 2002. The Company continues to have the obligation to pay the credit performance margin in addition to its swapped 4.25% payment obligation.

Interest rate hedges that are designated as cash flow hedges hedge the future cash outflows on debt. Interest rate swaps that convert variable payments to fixed payments, interest rate caps, floors, collars and forwards are cash flow hedges. The unrealized gains/losses in the fair value of these hedges are reported on the balance sheet and included in accounts payable and other liabilities with a corresponding adjustment to either accumulated other comprehensive income/(loss) or in earnings depending on the hedging relationship. If the hedging transaction is a cash flow hedge, then the offsetting gains/losses are reported in accumulated other comprehensive income/(loss). Over time, the unrealized gains/losses held in accumulated other comprehensive income/(loss) will be recognized in earnings consistent with when the hedged items are recognized in earnings.

Under the interest rate swap, the Company pays the bank at a fixed rate and receives variable interest at a rate approximating the variable rate of the Company’s debt, thereby creating the equivalent of a fixed rate obligation. The following table summarizes the financial terms of the Company’s interest rate swap that begins January 1, 2002:

Notional Value	Variable Rate Received	Fixed Rate Paid	Effective Date	Expiration Date
$2,950,000	LIBOR	4.25%	1/1/02	12/1/04

The Company is exposed to market risks related to fluctuations in interest rates on its debt. Increases in prevailing interest rates could increase the Company’s interest payment obligations relating to variable rate debt. For example, a 100 basis points increase in interest rates would increase annual interest expense by $51,000.

19

Item 8.    Financial Statements and Supplementary Data

The information required by this item is set forth under Item 14(a), which information is incorporated herein by reference.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

20

PART III

Item 10.    Directors and Executive Officers of the Registrant

Item 11.    Executive Compensation

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13.    Certain Relationships and Related Transactions

The information required by Items 10, 11, 12 and 13 of Part III of Form 10-K have been omitted in reliance on General Instruction G(3) to Form 10-K and are incorporated herein by reference to the Company’s definitive proxy statement to be filed with the SEC pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended.

21

PART IV

Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)  (1)  Financial Statements

Report of Independent Auditors	F-1
Consolidated Balance Sheets as of December 31, 2001 and 2000	F-2
Consolidated Statements of Operations for the year ended December 31, 2001, the six-month period ended December 31, 2000, the unaudited six-month period ended December 31, 1999, and the fiscal years ended June 30, 2000 and 1999	F-4
Consolidated Statements of Shareholders’ Equity for the year ended December 31, 2001, the six-month period ended December 31, 2000, and the fiscal years ended June 30, 2000 and 1999	F-5
Consolidated Statements of Cash Flows for the year ended December 31, 2001, the six-month period ended December 31, 2000, the unaudited six-month period ended December 31, 1999, and the fiscal years ended June 30, 2000 and 1999	F-6
Notes to Consolidated Financial Statements	F-7

(a)  (2)  Financial Statement Schedules

All schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.

(a) (3) Exhibits

Exhibit No.
2.1	Stock Purchase Agreement dated as of December 18, 1998 among Jeannine Mantz, Hadron, Inc., and Vail Research and Technology Corporation (incorporated by reference to the Company’s Current Report on Form 8-K filed January 4, 1999).
2.2	Stock Purchase Agreement dated as of May 12, 1999 among Hadron, Inc., Avenue Technologies, Inc. and Six Nations, Inc. (incorporated by reference to the Company’s Current Report on Form 8-K filed May 27, 1999).

22

Exhibit No.
2.3	Agreement and Plan of Merger by and among Analex Corporation, certain Sellers, Analex Corporation Employee Stock Ownership Plan and Trust, Hadron, Inc. and Hadron Acquisition Corp., as of October 31, 2001 (portions omitted pursuant for an application for confidential treatment).
3.1	Articles of Incorporation (incorporated by reference to the Company’s Registration Statement on Form S-1, Registration No. T-77699, filed May 21, 1982).
3.2	Certificate of Amendment of Certificate of Incorporation of Hadron, Inc. dated August 12, 1993 (incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1993).
3.3	Amended and Restated Bylaws (incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1991).
10.1	Hadron, Inc. 1994 Employee Stock Option Plan, As Amended (incorporated by reference to the Company’s Proxy Statement dated October 28, 1994).
10.2	Hadron, Inc. 1997 Employee Stock Purchase Plan (incorporated by reference to the Company’s Proxy Statement dated October 28,1997).
10.3	Investment Banking Agreement dated January 7, 1999 between Hadron, Inc. and Boles Knop & Company, L.L.C. (incorporated by reference to the Company’s Current Report on Form 8-K filed January 28, 1999).
10.4	Amended Stock Purchase Warrant issued to C.W. Gilluly and dated June 2, 1997 (incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1999 and filed with the Commission on September 28, 1999).
10.5	Note Agreement between C.W. Gilluly and Hadron, Inc. dated February 15, 2000 (incorporated by reference to the Company’s Form 10-Q for the fiscal quarter ended March 31, 2000 and filed with the Commission on May 15, 2000).
10.6	Stock Purchase Warrant for the purchase of 430,000 shares of common stock issued to C.W. Gilluly by the Company dated February 15, 2000 (incorporated by reference to the Company’s Form 10-Q for the fiscal quarter ended March 31, 2000 and filed with the Commission on May 15, 2000).
10.7	Securities Purchase Agreement with Jon M. Stout, Patricia W. Stout, the Stout Dynastic Trust, J. Richard Knop and John D. Sanders and

23

Exhibit No.
	C.W. Gilluly dated March 30, 2000 (incorporated by reference to the Company’s Current Report on Form 8-K filed April 14, 2000).
10.8	First Amendment to the Hadron, Inc. 1997 Employee Stock Purchase Plan dated as of February 7, 2000 (incorporated by reference to the Company’s Form S-8 filed with the Commission on February 7, 2000).
10.9	First Amendment to the Hadron, Inc. 1994 Stock Option Plan, dated as of September 17, 1997 (incorporated by reference to the Company’s Form S-8 filed with the Commission on February 7, 2000).
10.10	Warrant issued to Jon M. Stout to purchase up to 235,161 shares of Hadron, Inc.’s Common Stock (incorporated by reference to the Form 8-K filed with the Commission on April 14, 2000).
10.11	Warrant issued to Patricia W. Stout to purchase up to 230,769 shares of Hadron, Inc.’s Common Stock (incorporated by reference to the Form 8-K filed with the Commission on April 14, 2000).
10.12	Warrant issued to Stout Dynastic Trust up to 1,015,380 shares of Hadron, Inc.’s Common Stock (incorporated by reference to the Form 8-K filed with the Commission on April 14, 2000).
10.13	Warrant issued to J. Richard Knop to purchase up to 462,690 shares of Hadron, Inc.’s Common Stock (incorporated by reference to the Form 8-K filed with the Commission on April 14, 2000).
10.14	Warrant issued to John D. Sanders to purchase up to 81,000 shares of Hadron, Inc.’s Common Stock (incorporated by reference to the Form 8-K filed with the Commission on April 14, 2000).
10.15	Voting Agreement among certain holders of the common stock of Hadron, Inc., C.W. Gilluly and Jon M. Stout, Patricia W. Stout, the Stout Dynastic Trust and J. Richard Knop dated March 30, 2000 (incorporated by reference to the Form 8-K filed with the Commission on April 14, 2000).
10.16	Severance Agreement between the Company and Donald Kellmel dated May 23, 2000 (incorporated by reference to the Form 10-K for the transition period ended December 31, 2000 and filed with the Comission on May 11, 2001).
10.17	Agreement between Dr. C.W. Gilluly and the Company dated July 1, 2000, relating to consulting services (incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2000 and filed with the Commission on September 28, 2000).
10.18	Consulting Agreement between S.A. Gordon Enterprises, Inc. and the Company dated August 14, 2000 (incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2000 and filed with the Commission on September 28, 2000.

24

Exhibit No.
10.19	Hadron, Inc. 2000 Employee Stock Option Plan (incorporated by reference to the Company’s Proxy Statement dated October 30, 2000).
10.20	Second Amendment to the Hadron, Inc. 1997 Employee Stock Purchase Plan dated as of February 7, 2000 (incorporated by reference to the Company’s Form S-8 filed with the Commission on May 8, 2001).
10.21	Form of Amendment to Consulting Agreement between C.W. Gilluly and the Company dated January 16, 2001 (incorporated by reference to the exhibits filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 filed with the Commission onAugust 14, 2001).
10.22	Form of Amendment to Employment Agreement between Jon M. Stout and the Company dated January 16, 2001(incorporated by reference to the exhibits filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 filed with the Commission on August 14, 2001).
10.23	Form of Employment Agreement between the Company and Sterling E.Phillips, Jr. dated January 16, 2001 (incorporated by reference to the exhibits filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 filed with the Commission on August 14, 2001).
10.24	Promissory Note between Peter C. Belford, Sr. and Hadron, Inc. dated November 5, 2001, pursuant to the Agreement and Plan of Merger between Hadron, Inc. and Analex Corporation.
10.25	Promissory Note between Lese Ann Kodger and Hadron, Inc. dated November 5, 2001, pursuant to the Agreement and Plan of Merger between Hadron, Inc. and Analex Corporation.
10.26	Promissory Note between Alex Patterson and Hadron, Inc. dated November 5, 2001, pursuant to the Agreement and Plan of Merger between Hadron, Inc. and Analex Corporation.
10.27	Employment Agreement of Peter C. Belford, Sr. dated November 5, 2001 (portions omitted pursuant to an application for confidential treatment).
10.28	Credit Agreement between Hadron, Inc. and Bank of America, N.A. dated November 2, 2001 (portions omitted pursuant to an application for confidential treatment).
10.29	Security Agreement between Hadron, Inc. and Bank of America, N.A. dated November 2, 2001.
10.30	Pledge Agreement between Hadron, Inc. and Bank of America, N.A. dated November 2, 2001.

25

Exhibit No.
10.31	Hadron, Inc. Term Loan Note between Hadron, Inc. and Bank of America, N.A. dated November 2, 2001.
10.32	Hadron, Inc. Revolving Credit Facility Note between Hadron, Inc. and Bank of America, N.A. dated November 2, 2001.
10.33	Form of Securities Purchase Agreement between Hadron, Inc., Gerald McNichols, Michael Besche, VBB Trust, S Co., LLC, RSSJ Associates, LLC, Norman Dreyfuss, Deepak Chopra, George Tonn and Frank Derwin dated November 2, 2001.
10.34	Form of Warrant to Purchase Shares of Common Stock of Hadron, Inc. issued in connection with Securities Purchase Agreement dated November 2, 2001.
10.35	Warrant to Purchase Shares of Common Stock issued to J. Richard Knop in Guarantee of Bank of America Loan dated November 2, 2001.
10.36	Warrant to Purchase Shares of Common Stock issued to Gerald McNichols in Guarantee of Bank of American Loan dated November 2, 2001.
10.37	Continuing and Unconditional Guaranty between Bank of America, N.A. and Subsidiaries (Advanced Biosystems, Inc.; Avenue Technologies, Inc.; Engineering and Information Services, Inc.; Sycom Services, Inc.; Vail Research and Technology Corporation; and Hadron Acquisition Corp.) dated November 2, 2001.
21	Subsidiaries of the Company.
23	Consent of Independent Auditors.

(b)  Reports on Form 8-K

On November 5, 2001, the Company filed a report on Form 8-K disclosing that it had entered into an Agreement and Plan of Merger dated as of October 31, 2001 with Analex Corporation and its equity holders pursuant to which Analex Corporation would be merged with and into a wholly-owned subsidiary of Hadron.

On January 4, 2002, the Company filed a report on Form 8-K/A amending its Current Report on Form 8-K dated November 5, 2001 by the addition of required financial statements.

26

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:  March 26, 2002		HADRON, INC.
By:	/s/    STERLING E. PHILLIPS, JR.	By:	/s/    RONALD B. ALEXANDER
	Sterling E. Phillips, Jr. Chief Executive Officer and President (Principal Executive Officer)		Ronald B. Alexander Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Signature	Title	Date
/s/    PETER C. BELFORD, SR.       Peter C. Belford, Sr.	Director	March 26, 2002
/S/    C.W. GILLULY         C.W. Gilluly	Director	March 26, 2002
/S/    GERALD R. MCNICHOLS          Gerald R. McNichols	Director	March 26, 2002
/S/    STERLING E. PHILLIPS, JR.         Sterling E. Phillips, Jr.	Director	March 26, 2002
/S/    JOHN D. SANDERS       John D. Sanders	Director	March 26, 2002
/S/    JON M. STOUT         Jon M. Stout	Chairman	March 26, 2002
/S/    SHAWNA L. STOUT         Shawna L. Stout	Director	March 26, 2002
/S/    GERALD R. YOUNG         Gerald R. Young	Director	March 26, 2002

27

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders

Hadron, Inc.

We have audited the accompanying consolidated balance sheets of Hadron, Inc. and subsidiaries as of December 31, 2001 and 2000 and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year ended December 31, 2001, the six-month transition period ended December 31, 2000 and for each of the two years in the period ended June 30, 2000. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Hadron, Inc. and subsidiaries at December 31, 2001 and 2000, and the consolidated results of their operations and their cash flows for the year ended December 31, 2001, the six-month transition period ended December 31, 2000 and for each of the two years in the period ended June 30, 2000, in conformity with accounting principles generally accepted in the United States.

As discussed in Note 2 to the consolidated financial statements, the Company adopted Statements of Financial Accounting Standards No. 141 and 142 for acquisitions subsequent to July 1, 2001.

/s/     ERNST & YOUNG LLP

McLean, Virginia

March 1, 2002

F-1

HADRON, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2001 AND 2000

	December 31,
	2001		2000
ASSETS
Current assets:
Cash and cash equivalents	$	83,100	$	234,900
Accounts receivable, net		9,152,800		3,237,300
Prepaid expenses and other		223,300		163,800
Total current assets		9,459,200		3,636,000
Fixed assets, net		260,600		284,800
Goodwill and other intangibles, net		16,488,600		1,809,600
Deferred finance costs		72,500		—
Other		119,400		53,500
Total other assets		16,941,100		2,147,900
Total assets	$	26,400,300	$	5,783,900

See Notes to Consolidated Financial Statements

F-2

HADRON, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2001 AND 2000

	December 31,
	2001			2000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,371,400		$	529,500
Note payable—line of credit		1,696,500			907,100
Notes payable		1,538,500			600,000
Other current liabilities		4,779,400			1,333,700
Total current liabilities		9,385,800			3,370,300
Notes payable		5,004,200			351,700
Other		835,200			60,000
Total long-term liabilities		5,839,400			411,700
Commitments and contingencies
Total liabilities		15,225,200			3,782,000
Shareholders’ equity:
Common stock $.02 par; authorized 20,000,000 shares; issued and outstanding—December 31, 2001, 14,375,975 shares and December 31, 2000, 6,450,913 shares		287,500			129,000
Additional capital		20,726,300			11,885,300
Deferred compensation		(22,300	)		—
Accumulated deficit		(9,816,400	)		(10,012,400	)
Total shareholders’ equity		11,175,100			2,001,900
Total liabilities and shareholders’ equity	$	26,400,300		$	5,783,900

See Notes to Consolidated Financial Statements

F-3

HADRON, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2001, THE SIX MONTH PERIOD ENDED

DECEMBER 31, 2000, THE SIX MONTH UNAUDITED PERIOD ENDED DECEMBER 31, 1999,

AND THE FISCAL YEARS ENDED JUNE 30, 2000 AND 1999

	Year Ended December 31, 2001			Six Month Period Ended December 31, 2000			Six Months Ended December 31, 1999 (Unaudited)			Fiscal Year Ended June 30, 2000			Fiscal Year Ended June 30, 1999
Revenues	$	21,936,000		$	8,943,400		$	10,267,300		$	19,901,300		$	20,333,200
Operating costs and expenses:
Costs of revenue		18,157,800			7,600,700			8,753,200			16,572,200			17,734,800
Selling, general and administrative		3,324,200			1,153,000			1,995,200			3,749,900			2,535,400
Total operating costs and expenses		21,482,000			8,753,700			10,748,400			20,322,100			20,270,200
Operating income (loss)		454,000			189,700			(481,100	)		(420,800	)		63,000
Other income (expense):
Interest income		8,600			—			600			8,100			2,600
Interest expense		(225,200	)		(112,000	)		(167,100	)		(332,600	)		(80,800	)
Other income (expense)		(21,800	)		7,100			16,600			21,800			63,500
Total other expense		(238,400	)		(104,900	)		(149,900	)		(302,700	)		(14,700	)
Income (loss) before income taxes		215,600			84,800			(631,000	)		(723,500	)		48,300
Provision for income taxes		19,600			—			—			21,300			13,900
Net income (loss)	$	196,000		$	84,800		$	(631,000	)	$	(744,800	)	$	34,400
Net income (loss) per share:
Basic	$	0.03		$	0.01		$	(0.24	)	$	(.23	)	$	0.02
Diluted	$	0.02		$	0.01		$	(0.24	)	$	(.23	)	$	0.01
Weighted average number of shares:
Basic		7,721,779			6,153,914			2,599,915			3,276,269			1,794,775
Diluted		9,588,029			7,118,895			2,599,915			3,276,269			2,579,439

See Notes to Consolidated Financial Statements

F-4

HADRON, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2001,

THE SIX MONTH PERIOD ENDED DECEMBER 31, 2000

AND THE FISCAL YEARS ENDED JUNE 30, 2000 AND 1999

	Common Stock			Additional Capital		Deferred Compensation			Accumulated Deficit			Total
	Shares	Amount
Balance—June 30, 1998	1,731,956	$	34,700	$	9,374,100	$	—		$	(9,386,800	)	$	22,000
Shares issued for services	75,000		1,500		73,500								75,000
Shares purchased pursuant to the Employee Stock Purchase Plan	75,896		1,400		99,200								100,600
Exercise of warrants	400,000		8,000		92,000								100,000
Shares issued upon conversion of debt	200,000		4,000		116,000								120,000
Exercise of options	4,666		100		3,500								3,600
Net income										34,400			34,400
Balance—June 30, 1999	2,487,518		49,700		9,758,300		—			(9,352,400	)		455,600
Shares purchased pursuant to the Employee Stock Purchase Plan	118,722		2,400		48,000								50,400
Exercise of warrants	220,000		4,400		50,600								55,000
Exercise of options	78,166		1,600		27,000								28,600
Shares issued upon conversion of debt	676,933		13,500		842,100								855,600
Shares issued pursuant to sale of common stock	2,250,000		45,000		790,000								835,000
Net loss										(744,800	)		(744,800	)
Balance—June 30, 2000	5,831,339		116,600		11,516,000		—			(10,097,200	)		1,535,400
Shares purchased pursuant to the Employee Stock Purchase Plan	19,180		400		13,900								14,300
Exercise of warrants	462,894		9,300		324,000								333,300
Exercise of options	62,500		1,200		25,300								26,500
Shares issued pursuant to sale of common stock	75,000		1,500		6,100								7,600
Net income										84,800			84,800
Balance—December 31, 2000	6,450,913		129,000		11,885,300		—			(10,012,400	)		2,001,900
Shares issued pursuant to sale of common stock	4,027,727		80,600		3,837,000								3,917,600
Shares and warrants issued pursuant to acquisition of Analex	3,572,143		71,400		4,687,200								4,758,600
Deferred stock compensation					38,800		(38,800	)					—
Amortizaton of deferred stock compensation							16,500						16,500
Shares purchased pursuant to the Employee Stock Purchase Plan	39,964		800		40,400								41,200
Exercise of options and warrants	285,228		5,700		237,600								243,300
Net income										196,000			196,000
	14,375,975	$	287,500	$	20,726,300	$	(22,300	)	$	(9,816,400	)	$	11,175,100

See Notes to Consolidated Financial Statements

F-5

HADRON, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2001, THE SIX MONTH PERIOD

ENDED DECEMBER 31, 2000, THE SIX MONTH UNAUDITED PERIOD ENDED

DECEMBER 31, 1999 AND THE FISCAL YEARS ENDED JUNE 30, 2000 AND 1999

	Year Ended December 31, 2001			Six Month Period Ended December 31, 2000			Six Month Period Ended December 31, 1999 (unaudited)			Fiscal Year Ended June 30, 2000			Fiscal Year Ended June 30, 1999
Cash flows from operating activities:
Net income (loss)	$	196,000		$	84,800		$	(631,000	)	$	(744,800	)	$	34,400
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation and amortization		146,200			67,500			36,700			113,300			56,200
Goodwill amortization		378,000			162,000			172,000			344,000			41,000
Deferred finance costs		37,500			—			—			—			—
Stock compensation expense		16,500			—			—			—			—
Changes in operating assets and liabilities:
Accounts receivable		(940,700	)		217,200			141,400			41,200			1,768,600
Prepaid expenses and other		(39,100	)		(35,000	)		89,800			81,300			(127,400	)
Other assets		(11,300	)		5,200			86,200			86,500			(67,100	)
Accounts payable		108,600			(250,200	)		(123,200	)		(137,400	)		(254,400	)
Other current liabilities		(327,100	)		(289,300	)		(135,700	)		(268,800	)		(968,400	)
Other long-term liabilities		—			(40,000	)		(20,800	)		37,400			(13,300	)
Total adjustments		(631,400	)		(162,600	)		246,400			297,500			435,200
Net cash provided (used) by operating activities		(435,400	)		(77,800	)		(384,600	)		(447,300	)		469,600
Cash flows from investing activities:
Property additions		(86,000	)		(132,800	)		(2,400	)		(41,600	)		(121,800	)
Purchase of Analex, net of cash acquired		(6,167,900	)		—			—			—			—
Purchase of Vail and ATI, net of cash acquired		—			—			—			—			(378,700	)
Net cash provided (used) by investing activities		(6,253,900	)		(132,800	)		(2,400	)		(41,600	)		(500,500	)
Cash flows from financing activities:
Proceeds from borrowings on bank and other loans		5,500,000			1,326,400			1,496,600			1,926,600			850,000
Proceeds from stock options and warrants exercised		243,300			359,800			58,800			83,600			103,600
Proceeds from employee stock purchases		41,200			14,300			36,700			50,400			100,600
Proceeds from sale of common stock		3,917,600			7,600			—			835,000			—
Payments on bank and other loans		(3,164,600	)		(1,380,600	)		(1,267,900	)		(2,544,700	)		(827,800	)
Net cash provided (used) by financing activities		6,537,500			327,500			324,200			350,900			226,400
Net increase (decrease) in cash and cash equivalents		(151,800	)		116,900			(62,800	)		(138,000	)		195,500
Cash and cash equivalents at beginning of period		234,900			118,000			256,000			256,000			60,500
Cash and cash equivalents at end of period	$	83,100		$	234,900		$	193,200		$	118,000		$	256,000

See Notes to Consolidated Financial Statements

F-6

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    The Company:

Hadron, Inc. (“Hadron” or the “Company”) supports homeland security through the design, implementation and support of innovative solutions that enhance the United States’ ability to detect, defend and respond to threats from hostile countries or terrorists. The Company specializes in three facets of homeland security: intelligence systems, bio-defense and aerospace programs.

Revenues from services performed under direct and indirect long-term contracts and subcontracts with government defense and intelligence agencies comprise the majority of the Company’s business. The majority of the Company’s technical and professional services business with governmental departments and agencies is obtained through competitive procurement and through follow-on services related to existing contracts. In certain instances, however, the Company acquires such service contracts because of special professional competency or proprietary knowledge in specific subject areas.

2.    Summary of significant accounting policies:

A.  Principles of consolidation:

The consolidated financial statements include the accounts of Hadron, Inc. and its three active wholly owned subsidiaries, Advanced Biosystems, Inc. (“ABS”), Analex Corporation (“Analex”), and SyCom Services, Inc. (“SyCom”)(the “Company”). All significant intercompany transactions have been eliminated.

B.  Risks and uncertainties:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable. The Company maintains its cash and cash equivalents principally in five United States (“U.S.”) commercial banks. Cash in excess of daily requirements is invested by the banks in one-day repurchase agreements of securities of U.S. government agencies. To date, the Company has not incurred losses related to cash and cash equivalents.

The Company’s accounts receivable consists principally of accounts receivable from prime contractors to agencies and departments of, as well as directly from, the U.S. government. The Company extends credit in the normal course of operations and does not require collateral from its customers.

F-7

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company has historically been, and continues to be, heavily dependent upon direct and indirect contracts from various U.S. government agencies. Contracts and subcontracts with the U.S. government are subject to audit by audit agencies of the government. Such audits determine, among other things, whether an adjustment of invoices rendered to the government is appropriate under the underlying terms of the contracts. All U.S. government contracts contain clauses that allow for the termination of contracts at the convenience of the government.

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

C.  Cash equivalents:

Cash equivalents represent amounts invested in highly liquid short-term investments with original maturities of three months or less.

D.  Fixed assets:

Furniture and equipment and leasehold improvements are stated at cost. The Company uses the straight-line method of depreciation and amortization over the estimated useful lives of the furniture and equipment (principally three to ten years) and over the lease term for leasehold improvements, if shorter.

Maintenance and repairs are charged to expense as incurred, and the cost of additions and betterments are capitalized. When assets are retired or sold, the cost and related accumulated depreciation are removed from the accounts and the gain or loss is included in operations.

Purchased software is capitalized at cost. Such costs are amortized using the straight-line method for a period of up to five years.

E.  Goodwill and Other Intangible Assets:

Goodwill related to the acquisition of Avenue Technologies, Inc. (“ATI”) in May 1999, was amortized using the straight-line method for a period of seven years. In 2001, the six-month periods ended December 31, 2000 and 1999 and the fiscal years 2000 and 1999, respectively, the Company recorded goodwill

F-8

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

amortization of $337,000, $162,000, $172,000, $344,000 and $41,000. As of December 31, 2001, the accumulated amortization of goodwill is $884,000.

In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, “Business Combinations”, and No. 142, “Goodwill and Other Intangible Assets”, effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. If SFAS No. 142 had been adopted at the beginning of 2001, the absence of goodwill amortization would have increased 2001 income before taxes by approximately $337,000.

Goodwill related to the acquisition of Analex in November 2001 is subject to SFAS 142, and accordingly has not been amortized. Other intangible assets identified in connection with the acquisition, including non-compete arrangements and contractual relationships, are amortized on a straight-line basis over their estimated lives ranging from three to ten years.

F.  Accounting for contracts:

Revenues on time and material contracts are recorded at the contracted rates as the labor hours and out-of-pocket expenses are incurred. Revenues from fixed-price and cost-plus-fixed-fee contracts are generally recorded on the percentage-of-completion method, determined by the percentage that incurred costs bear to estimated total costs or on engineering estimates. As soon as it is determined that it is probable a contract will result in a loss and the loss can be reasonably estimated, the entire estimated loss is charged to operations.

In accordance with industry practice, accounts receivable relating to long-term contracts are classified as current assets although an indeterminable portion of these amounts is not expected to be realized within one year.

G.  Income taxes:

The provision for income taxes has been limited to state taxes and the liability for alternative minimum tax as the majority of income for federal and state tax purposes has been offset by carrying forward net operating losses.

H.  Stock-based compensation:

F-9

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company accounts for stock option grants in accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and accordingly recognizes compensation expense for the difference between the fair market value and the exercise price on the grant date for the stock option grants.

I.  Reclassifications:

Certain prior period amounts have been reclassified to conform to the 2001 presentation.

3.    Accounts receivable:

The components of accounts receivable are as follows:

	December 31,
	2001			2000
Trade accounts receivable:
U.S. Government:
Amounts billed	$	5,252,000		$	875,000
Recoverable costs and profits—not billed		2,337,600			2,020,600
Total		7,589,600			2,895,600
Commercial, state and local governments:
Amounts billed		725,800			24,600
Recoverable costs and profits—not billed		988,600			468,300
Total		1,714,400			492,900
Total accounts receivable		9,304,000			3,388,500
Less: Allowance for doubtful accounts		(151,200	)		(151,200	)
Total accounts receivable, net	$	9,152,800		$	3,237,300

The following table summarizes activity in the allowance for doubtful accounts:

F-10

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Calendar year 2001		6 months 12/31/00		Unaudited 6 months 12/31/99			Fiscal year 2000			Fiscal year 1999
Beginning balance	$	151,200	$	151,200	$	253,700		$	253,700		$	209,800
Additions		—		—		—			—			93,900
Write-offs		—		—		(104,300	)		(102,500	)		(50,000	)
Ending Balance	$	151,200	$	151,200	$	149,400		$	151,200		$	253,700

The amount of customer retentions included in U.S. Government unbilled accounts receivable is $28,000 at December 31, 2001 and 2000.

Unbilled accounts receivable can be invoiced upon completion of contractual billing cycles, attaining certain milestones under fixed-price contracts, attaining a stipulated level of effort on cost-type contracts for government agencies, upon completion of federal government overhead audits and upon final approval of design plans for engineering services.

4.    Fixed assets:

The components of fixed assets are as follows:

	December 31,
	2001			2000
Computer hardware and software	$	747,400		$	688,500
Leasehold improvements		27,700			3,900
Laboratory equipment		141,400			113,300
Office equipment		150,800			136,900
Total fixed assets		1,067,300			942,600
Less: Accumulated
depreciation and amortization		(806,700	)		(657,800	)
Total fixed assets, net	$	260,600		$	284,800

5.    Debt:

The components of debt are as follows:

F-11

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	December 31,
	2001		2000
Current:
Line of Credit	$	1,696,500	$	907,100
Bank Term Note		700,000		500,000
Convertible Notes		101,700		—
Notes Payable Shareholder		154,500		—
Note Payable Other		100,000		100,000
Non-compete Agreements		261,900		—
Note to DOJ		207,300		—
Other		13,100		—
Subtotal current debt		3,235,000		1,507,100
Long-term:
Bank Term Note		2,741,600		250,000
Convertible Notes		—		101,700
Notes Payable Shareholder		618,100		—
Non-compete Agreements		616,600		—
Note to DOJ		1,025,500		—
Other		2,400		—
Subtotal long-term debt		5,004,200		351,700
Total debt	$	8,239,200	$	1,858,800

On November 2, 2001, to finance the acquisition of Analex, the Company entered into a Credit Agreement (“Agreement”) with Bank of America, N.A. The Agreement provides the Company with a $4,000,000 revolving credit facility (the “Credit Facility”) through November 2, 2006 and a five-year $3,500,000 term loan (“Term Loan”). The principal amount of the Term Loan is amortized in sixty equal monthly payments of $58,333. Interest on each of the facilities is at the LIBOR Rate plus an applicable margin as specified in a pricing grid. The interest rate at December 31, 2001 was 4.68% for the Credit Facility and 5.39% for the Term Loan. The Company is subject to certain financial covenants pursuant to the Agreement, including debt to EBITDA ratio, fixed charge coverage ratio, senior debt to EBITDA ratio, and net worth requirements. The Credit Facility and Term Loan are secured by the accounts receivable and other assets of the Company. The Company has entered into an interest rate swap agreement, and interest rate payments will be fixed beginning in January 2002.

The Company’s $3.5 million term loan facility from Bank of America carries interest comprised of two components: floating-rate LIBOR plus a credit performance margin. The Company has entered into an interest-rate swap agreement with Bank of America whereby its obligation to pay floating-rate LIBOR on debt totaling $2,950,000 is swapped into a fixed rate obligation at 4.25% beginning in January 2002. The Company continues to have the obligation to pay the credit performance margin in addition to its swapped 4.25% payment obligation.

F-12

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In addition, the Company was required by Bank of America to obtain personal guarantees in the amount of $2,000,000, which the Company procured from two individuals, the Company’s Board member Gerald R. McNichols and the Company’s Investment Banker J. Richard Knop. The compensation during the period of guaranty is in the form of cash and warrants.

On November 2, 2001, the Company issued promissory notes to certain Analex sellers totaling $772,600 with a five-year term, bearing interest at 6%. The Company also entered into non-competition agreements with these sellers for total payments of $540,000 over a three-year period. In addition, the Company entered into non-competition agreements with former employees totaling $352,000, on a discounted basis, payable over various periods.

With its purchase of Analex, the Company assumed a note payable to the Department of Justice (“DOJ”). The agreement provides for quarterly payments of $80,000 consisting of principal and interest at 7% through February 2006, with a final payment due in May 2006.

In May 1999, the Company issued three-year $998,000 convertible notes, interest payable at 6%, to the former shareholders of ATI in connection with the Company’s acquisition of ATI. The notes are convertible into 444,000 restricted shares of the Company’s Common Stock at $2.25 per share. These notes are subordinated to the Company’s obligations under the Term Note and the Credit Facility. In May 2000, the Board of Directors adopted resolutions providing for the conversion of the convertible notes on the basis of one share of Common Stock for $1.25 per share if tendered to Hadron for conversion before the close of business on June 30, 2000. At June 30, 2000, $846,000 of the convertible notes were converted into 677,000 restricted shares of the Company’s Common Stock at the $1.25 per share. As of December 31, 2001, two convertible notes totaling $102,000 remain.

In connection with the December 1998 purchase of Vail Research and Technology Corporation (“Vail”), the Company issued two non-interest bearing promissory notes of $300,000 and $100,000, respectively. The $300,000 non-interest bearing note was payable each month in the amount of $25,000 for twelve months. The $100,000 non-interest bearing promissory note was due and payable on the two-year anniversary of the closing date, less permitted deductions taken for contingent liabilities and uncollected accounts receivable. The Company is currently reviewing the permitted deductions and the status of the note payable.

F-13

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s future debt maturities at December 31, 2001 are summarized below:

Year	Debt Maturities
2002	$	3,235,000
2003		1,369,400
2004		1,384,700
2005		1,223,700
2006		1,026,400
Total minimum debt payments		8,239,200
Less: current maturities		(3,235,000	)
Total long-term debt	$	5,004,200

6.    Equity capital:

Pursuant to the November 2, 2001 acquisition of Analex, the Company issued 3,572,143 shares of the Company’s Common Stock to the shareholders representing all of the outstanding equity of Analex (the “Sellers”). Of the 3,572,143 shares, 857,143 shares are subject to a provision by which the Company guarantees for a five-year period to reimburse the Sellers the difference between the price at which they sell such shares and a guaranteed sales price ranging from $1.60 to $2.20 per share (“Guaranteed Shares”), if such shares are sold within such period and if certain other conditions are satisfied.

To finance the acquisition of Analex, the Company issued 3,961,060 shares of common stock for aggregate consideration of approximately $3,868,000 through a private placement consisting of (i) Hadron Common Stock at a price of $1.14 per share to purchasers who purchased less than $500,000 worth thereof or (ii) units consisting of Hadron Common Stock and warrants to purchase 0.2061 shares of Hadron Common Stock at an exercise price of $0.02 per share for each share purchased at a price of $1.14 per unit for purchasers who purchased $500,000 or more of Hadron’s equity. Two of such purchasers are directors or affiliates of a director. The warrants were exercised concurrent with the stock purchase.

On November 2, 2001, to assist in financing the Analex acquisition, Dr. C.W. Gilluly, one of the Company’s directors, and J. Richard Knop, President of the Company’s investment banking firm, Windsor Group, exercised warrants and/or stock options to purchase an aggregate of 247,888 shares of common stock, resulting in proceeds of approximately $200,000.

F-14

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On January 16, 2001, Sterling E. Phillips, Jr. was appointed to the positions of President and Chief Executive Officer of the Company. Mr. Phillips was also elected to serve as a member of the Company’s Board of Directors. In connection with his appointment, Mr. Phillips purchased 66,667 shares of Common Stock for $0.75 per share. As a result of this transaction, the Company recorded deferred compensation of $10,800, $5,400 of which was amortized during 2001. In addition, Mr. Phillips was awarded a five-year, non-qualified stock option to purchase 875,725 shares of the Company’s common stock at the exercise price equal to 100% of the fair market value of the common stock on the grant date, exercisable in one-third increments over a two-year period.

7.    Other current liabilities:

Other current liabilities include the following major classifications:

	December 31,
	2001		2000
Payroll and related taxes	$	2,599,900	$	696,000
Accrued vacation		1,162,700		277,000
Self-insured medical expense		88,300		88,300
Due to subcontractors		175,000		213,200
Deferred income		434,500		—
Other		319,000		59,200
Total other current liabilities	$	4,779,400	$	1,333,700

8.    Acquisitions:

Effective November 2001, the Company acquired Analex, a professional services and program management firm whose principal customers are NASA and the U.S. intelligence community, for approximately $12,898,000. The purchase price was satisfied with cash payments of $6,510,000, 3,572,143 shares of Common Stock valued at $4,723,000, the issuance of promissory notes of $773,000, non-compete arrangements of $892,000, and the satisfaction of other certain liabilities of Analex. The purchase price is subject to additional contingent consideration related to certain contract rights of up to $1,500,000. The acquisition of Analex should increase the Company’s presence in the intelligence community and provide an additional earnings base from which the Company can grow.

The fair value of the assets acquired and liabilities assumed approximated their book value of $5,058,000 and $6,647,000, respectively. The Company incurred financial, legal and accounting costs associated with the Analex purchase of approximately $570,000.

F-15

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Following is a condensed balance sheet reflecting the tentative purchase price allocation:

Cash	343,100
Accounts receivable and other assets	4,624,600
Goodwill and other intangibles	15,057,000
Other long term assets	90,300
Current liabilities	5,274,500
Long term debt and other liabilities	1,372,500

Resulting from the acquisition of Analex, the Company recorded goodwill and other intangibles of approximately $15,057,000. The purchase price has not yet been finalized due to certain contingencies associated with contract rights and other potential adjustments. Accordingly, the final purchase price allocation has not been completed.

Goodwill related to the acquisition of Analex in November 2001 is subject to SFAS 142, and accordingly has not been amortized. Other intangible assets identified in connection with the acquisition, including non-compete arrangements and contractual relationships, are amortized on a straight-line basis over their estimated lives ranging from three to ten years.

The following table sets forth adjusted pro forma results of operations of the Company for 2001, the six month period ended December 31, 2000 and the fiscal year 2000, as if Analex had been acquired on July 1, 1999. The proforma amounts do not reflect potential additional amortization resulting from finalization of the purchase price allocation.

	2001		Six months 12/31/00		Fiscal Year 2000
Net revenues	$	49,126,600	$	24,772,400	$	49,733,300
Net income (loss)	$	910,200	$	1,242,100	$	(650,500	)
Net income (loss) per share:
Basic	$	.06	$	.09	$	(.06	)
Diluted	$	.05	$	.08	$	(.06	)

Effective December 18, 1998, the Company acquired Vail, a privately held information and technology firm based in Annandale, Virginia, for approximately $1,580,000. On May 12, 1999, the Company acquired all the outstanding capital stock of ATI, a privately held information technology firm based in Alexandria, Virginia, for $2,503,000. Resulting from the acquisition of ATI, the Company recorded goodwill of approximately $2,287,000, which was being amortized, on a straight-line basis, over a 7-year period.

9.    Net income (loss) per share:

The following table sets forth the computation of basic and diluted earnings per share:

F-16

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	2001		6 mos 12/31/00		Unaudited 6 mos 12/31/99			Fiscal 2000			Fiscal 1999
Numerator:
Net income (loss)	$	196,000	$	84,800	$	(631,000	)	$	(744,800	)	$	34,400
Weighted average shares outstanding		7,721,779		6,153,914		2,599,915			3,276,269			1,794,775
Effect of dilutive securities:
Warrants		1,413,289		892,288		—			—			527,738
Employee stock options		452,961		72,693		—			—			256,926
Denominator for diluted earnings per share		9,588,029		7,118,895		2,599,915			3,276,269			2,579,439
Basic earnings per share	$	.03	$	.01	$	(.24	)	$	(.23	)	$	.02
Diluted earnings per share	$	.02	$	.01	$	(.24	)	$	(.23	)	$	.01

Shares issuable upon the exercise of stock options or warrants or upon conversion of debt have been excluded from the computation to the extent that their inclusion would be anti-dilutive.

10.    Income taxes:

The provision for income taxes for 2001, the six month periods ended December 31, 2000 and 1999, and the fiscal years 2000 and 1999 has been limited to state taxes and the liability for alternative minimum tax as the majority of income for federal and state tax purposes has been offset by carrying forward net operating losses.

The tax provision differs from the amounts computed using the statutory federal income tax rate as follows:

	2001		6 mos 12/00		6 mos 12/99		FY 2000		FY 1999
Tax expense at statutory rate-federal	35	%	35	%	(35	)%	(35	)%	35	%
State tax expense net of federal taxes	13		3		1		1		29
Permanent differences	63		158		17		17		38
Utilization of net operating loss carry forwards	(102	)	(196	)	17		20		(73	)
Tax expense at actual rate	9	%	0	%	0	%	3	%	29	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Deferred tax assets at December 31, 2001 and 2000 consist primarily of

F-17

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

temporary differences, including net operating loss carryforwards, which aggregate to approximately $2,314,000 and $2,187,000, respectively, and are fully reserved.

The Company has net operating loss (NOL) carryforwards for federal and state purposes available to offset future taxable income of approximately $5,013,000 as of December 31, 2001, which may be subject to limitations under Section 382 of the Internal Revenue Code. These NOL carryforwards expire at various dates beginning June 30, 2008.

11.    Commitments and contingencies:

Operating leases:

The Company leases real property and personal property under various long-term operating leases and sublease agreements expiring at various dates through 2006. Certain of the leases contain renewal options and require payment of property taxes, insurance and maintenance costs. The Company’s future minimum operating lease commitments inclusive of property taxes, insurance and maintenance costs at December 31, 2001 are summarized below:

Year	Lease Commitments
2002	$	1,022,600
2003		614,500
2004		590,700
2005		408,300
2006		48,300
Total minimum payments required	$	2,684,400

Rent expense, net of sublease income, included in the consolidated statements of operations is as follows:

Period	Rent Expense
2001	$	572,900
6 Months 2000		247,500
6 Months 1999(unaudited)		272,100
Fiscal Year 2000		530,300
Fiscal Year 1999		235,700

U.S. government contract audits:

F-18

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s revenues and costs related to contracts with agencies and departments of the U.S. government are subject to audit by the Defense Contract Audit Agency, which has completed the majority of its audits for the Company’s fiscal years through fiscal year 1997. It is the opinion of management that the results of such audits will not have a material effect on the financial condition or results of operations of the Company.

12.    Benefit plans:

Employee savings plan:

The Company sponsors a defined contribution savings plan under section 401(k) of the Internal Revenue Code. The Company’s contributions to the 401(k) plan are based upon a percentage of employee contributions. The Company’s discretionary contributions to the Plan were $432,000, $79,000, $69,000, $150,000 and $147,000 for 2001, the six month periods ended December 31, 2000 and 1999, and the fiscal years 2000 and 1999, respectively.

Employee stock purchase plan:

In December 1997, shareholders approved the Hadron, Inc. 1997 Employee Stock Purchase Plan (the “Plan”). In fiscal year 2000 and the six-month period ended December 31, 2000, amendments to the Plan were adopted to increase the number of shares reserved for issuance thereunder from 250,000 to 500,000. The purpose of the Plan is to secure for the Company and its shareholders the benefits of the incentive inherent in the ownership of Common Stock by present and future employees of the Company. The Plan is intended to comply with the terms of Section 423 of the Internal Revenue Code of 1986, as amended, and Rule 16b-3 of the Securities Exchange Act of 1934. The Plan is non-compensatory as defined by APB 25. Under the terms of the Plan, individual employees may pay up to $10,000 for the purchase of the Company’s common shares, at 85% of the determined market price. During 2001, the six month periods ended December 31, 2000 and 1999, and the fiscal years 2000 and 1999, employees paid approximately $41,000, $14,000, $37,000, $50,000 and $101,000, respectively, for the purchase of common stock under the Plan.

Employee deferred compensation plan:

In December 1998, shareholders approved the Hadron, Inc. Deferred Compensation Plan (the “Plan”). The Plan is intended to provide employees an option to defer a portion of their salary in order to provide for supplemental retirement benefits. As a requirement of this non-qualified plan, participant deferrals remain as unsecured liabilities of Hadron. Under the terms of the

F-19

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Plan, eligible employees can elect to irrevocably defer salary of up to $50,000 for the calendar year. If an employee elects to defer at least one and one-half percent of his/her gross salary, the Company contributes one-half percent of the participant’s gross salary to the participant’s supplemental account. Salary deferrals and Company contributions earn interest at the higher of six percent or the rate quoted for ninety-day Treasury Bills. During 2001, the six month periods ended December 31, 2000 and 1999, and the fiscal years 2000 and 1999, employees deferred approximately $10,700, $2,000, $54,000, $81,000 and $75,000, respectively, of which the Company matched approximately $3,000, $500, $3,000, $4,000 and $4,000 during these periods.

Other:

Pursuant to the acquisition of Analex, the Company assumed the Analex Corporation Employee Stock Ownership Plan and Trust (the “Analex ESOP”). The Analex ESOP was terminated as of the November 5, 2001, the effective date of the acquisition. The Company is in the process of obtaining a determination letter from the Internal Revenue Service. Following receipt thereof, the Analex ESOP will be liquidated.

13.    Stock option plan:

In December 2000, shareholders approved the Hadron, Inc. 2000 Stock Option Plan (“2000 Stock Option Plan”). The 2000 Stock Option Plan provides for the issuance of incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986 and non-qualified stock options to purchase an aggregate of up to 600,000 shares of Common Stock. The 2000 Stock Option Plan permits the grant of options to key employees, consultants and directors of the Company. The exercise price of the incentive stock options is required to be at least equal to 100% of the fair market value of the Company’s common stock on the date of grant (110% of the fair market value in the case of options granted to employees who are 10% shareholders). The exercise price of the non-qualified stock options is required to be not less than the par value of a share of the Company’s common stock on the date of grant. The term of an incentive or non-qualified stock option may not exceed ten years (five years in the case of an incentive stock option granted to a 10% shareholder). The vesting for each option holder are set forth in the individual option agreements. The 2000 Stock Option Plan honors all of the stock options outstanding under the Company’s 1994 Stock Option Plan, as amended (the “Plan”).

Information with respect to incentive and non-qualified stock options issued under both plans are as follows:

F-20

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	2001					6 mos. 12/31/00					6 mos. 12/31/99					Fiscal 2000					Fiscal 1999
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
	Unaudited
Outstanding at beginning of period		479,300		$	.98		395,400		$	.94		514,400		$	.90		514,400		$	.90		398,100		$	.59
Granted		1,272,800			1.29		204,500			1.04		109,500			.81		129,500			.91		135,400			1.98
Exercised		(64,300	)		1.31		(62,500	)		.42		(15,000	)		.25		(78,200	)		.37		(4,700	)		.76
Expired		(35,300	)		1.01		(58,100	)		1.47		(32,900	)		.94		(170,300	)		1.10		(14,400	)		1.69
Outstanding at end of period		1,652,500		$	1.20		479,300		$	.98		576,000		$	.90		395,400		$	.94		514,400		$	.90
Options exercisable at end of period		743,300		$	1.12		301,800		$	.96		494,700		$	.83		304,100		$	.75		404,700		$	.69
Weighted average fair value of options granted during the period	$	1.24				$	.95				$	.48				$	.42				$	1.25

The weighted average remaining contractual life of options outstanding at December 31, 2001 was 6.1 years. The range of exercise prices of options outstanding at December 31, 2001 was $.25 to $2.25.

The following table summarizes information about the stock options outstanding at December 31, 2001:

	Outstanding			Exercisable
Exercise Price	Number of Shares	Weighted- Average Exercise Price	Weighted- Average Remaining Contractual Life (years)	Number of Shares	Weighted- Average Exercise Price
0.25—0.75	97,500	$0.44	3.57	97,500	$0.44
0.76—1.30	617,100	1.07	9.06	313,400	1.03
1.31—2.25	937,900	1.39	4.33	332,400	1.42
	1,652,500			743,300

The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock Compensation” (SFAS No. 123). Had compensation cost for the Company’s stock option plan been determined based upon the fair value at the grant date for awards under the plan consistent with

F-21

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the methodology prescribed under SFAS No. 123, the Company’s net income/(loss) in the periods above would have been approximately $(320,600), $50,900, $(671,900), $(812,000) and $(69,000), or $(.03), $.01, $(.26), $(.25) and $(.04) per share on a diluted basis, respectively. The effect of applying SFAS No. 123 on the pro forma net income/(loss) as stated above is not necessarily representative of the effects on reported net income or loss for future years due to, among other things, (1) the vesting period of the stock options and (2) the fair value of additional stock options in future years.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing fair value model. The following weighted-average assumptions were used for grants: dividend yield of 0%; expected volatility of 1.115; expected life of the option term of 10 years and risk-free interest rate of 5.17%.

14.    Warrants:

The Company has issued warrants to certain parties to purchase its Common Stock in connection with certain debt and equity transactions. The range of exercise prices for warrants outstanding at December 31, 2001 was $.02 to $.75.

Information with respect to warrants issued is as follows:

	2001 Warrants		Price		6 months 12/31/00 Warrants		Price		6 months 12/31/99 Warrants		Price		Fiscal 2000 Warrants		Price		Fiscal 1999 Warrants		Price
	Unaudited
Outstanding at beginning of period	2,467,100				2,855,000				620,000				620,000				1,020,000
Granted	31,100		$	0.02	75,000		$	0.75	—				2,455,000		$	0.72	—
Exercised	(220,900	)		0.72	(462,900	)		0.72	(220,000	)	$	0.25	(220,000	)		0.25	(400,000	)	$	0.25
Expired	—				—				—				—				—
Outstanding at end of period	2,277,300				2,467,100				400,000				2,855,000				620,000

15.    Voting Agreement:

On March 30, 2000, a group of investors led by Jon M. Stout,

F-22

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Patricia W. Stout, the Stout Dynastic Trust (collectively the “Stouts”), J. Richard Knop (“Knop”) (the Stouts and Knop, being collectively the “Investors”) and John D. Sanders purchased certain of the Company’s securities pursuant to a Securities Purchase Agreement among the Company and the Investors (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Investors acquired 2,250,000 units, each consisting of one share of Common Stock and a warrant to purchase 0.9 share of Common Stock for a total of $877,500 in cash.

As further required by the Purchase Agreement, the Investors and others designated therein also entered into a Voting Agreement dated March 30, 2000 (the “Voting Agreement”). The Voting Agreement was entered into by and among certain affiliates of Boles Knop & Company, L.L.C. (the “Affiliates”), Dr. Sanders, C.W. Gilluly and the Investors (collectively, the “Voting Group”). The Voting Group agreed, for a period of five (5) years from March 30, 2000, to vote all of the voting shares over which they have voting control and to take all other actions within such Voting Group’s control (whether in his or its capacity as a stockholder, director, member of a board committee or officer of the Company or otherwise), including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings so that: (1) The authorized number of members of the Board will continue to be five unless and until such greater number is directed or approved by the Investors; (2) During the term of the Voting Agreement, the Investors shall be entitled to nominate a majority of the members of the Board (the “Nominees”) and the Stockholders shall vote their shares to elect such Nominees; (3) Any Nominee elected or appointed as a director will be removed from the Board (and thereupon from all committees of the Board), with or without cause, only upon the written request or consent of the Investors; (4) In the event that any Nominee designated hereunder for any reason ceases to serve as a member of the Board or any committee thereof during such representative’s term of office, the resulting vacancy on the Board or committee will be filled by a newly designated Nominee; and (5) Upon the written direction or consent of the Investors, the Company will take such actions as may be necessary and convenient to change the corporate domicile of the Company to the state of Delaware.

In addition, the Voting Agreement provides that with the exception of transfers made: (i) pursuant to open market sales in brokers’ transactions; or (ii) sales made after the Investors declined a right of first refusal to purchase such shares at the same price and terms, any attempt to transfer the Voting Group’s voting shares will be of no effect unless the person(s) to whom such shares are being transferred agrees in writing to be bound by

F-23

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the terms of the Voting Agreement.

16.    Fair value of financial instruments:

Accounts receivable, accounts payable, accrued expenses and other current assets and liabilities are carried at amounts which reasonably approximate their fair value. The estimated fair value of the Company’s variable rate debt approximates its carrying value of $5,138,000. It is not practicable to estimate the fair value of the Company’s notes payable to related parties and convertible notes payable due to their unique nature.

17.    Statement of cash flows—supplemental disclosures:

During 2001, the six month periods ended December 31, 2000 and 1999, and the fiscal years 2000 and 1999, the Company paid income taxes of $23,000, $12,000, $3,000, $4,000 and $57,000, respectively. The Company paid interest of $165,000, $110,000, $167,000, $325,000 and $51,000 during those same periods.

18.    Business segments and major customers:

Business segments:

Prior to the acquisition of Analex Corporation in November 2001, the Company had four operating segments: ABS, ATI, Engineering & Information Services, Inc. (“EISI”), and SyCom.

In December 2001, EISI and ATI were merged into Analex. ABS, Analex and SyCom continue to operate as wholly owned subsidiaries of the Company.

With the acquisition of Analex, the Company reorganized its internal operating structure. Hadron now has three operating segments: ABS continues to operate in the bio-defense market; the Homeland Security Group supports the United States intelligence community and is comprised of the businesses previously reported under the ATI, EISI, and SyCom operating segments; and the Aerospace Group supports NASA, Department of Defense (“DoD”), and other major aerospace contractors and is comprised on the business acquired as a result of the acquisition of Analex Corporation in November 2001.

The Company has four active reportable segments, comprising its individual operating units—ABS, the Homeland Security Group, the Aerospace Group and the Corporate Pool. Each of the operating segments provides engineering, information technology, medical research or technical services to federal government agencies or major defense contractors. The reportable segments are

F-24

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

distinguished by their individual clients, prior experience and technical skills.

Operating results are measured at the net income/(loss) level for each segment. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Interest on debt incurred in connection with an acquisition and applicable associated goodwill amortization is charged to the reportable segment. The Company’s corporate amounts consist primarily of certain activities and assets not attributable to the reportable segments.

Hadron, Inc.

Reportable Segments—FASB Statement 131

For the Year ended December 31 2001, the Six Months

ended December 31, 2000 and 1999 and the Fiscal Years

ended June 30, 2000 and 1999

F-25

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	2001			6 mos 2000			Unaudited 6 mos 1999			Fiscal 2000			Fiscal 1999
DESCRIPTION:
Trade revenues:
ABS	$	4,761,300		$	1,880,600		$	—		$	522,800		$	—
Homeland Security Group		12,516,500			7,062,800			10,065,500			19,164,000			19,745,700
Aerospace Group		4,658,200			—			—			—			—
Corporate		—			—			201,800			214,500			587,500
Total trade revenues	$	21,936,000		$	8,943,400		$	10,267,300		$	19,901,300		$	20,333,200
Interest income:
Homeland Security Group	$	—		$	—		$	600		$	8,100		$	200
Corporate		8,600			—			—			—			2,400
Total interest income	$	8,600		$	—		$	600		$	8,100		$	2,600
Interest expense:
Homeland Security Group	$	45,300		$	48,100		$	74,000		$	189,300		$	29,700
Corporate		179,900			63,900			93,100			143,300			51,100
Total interest expense	$	225,200		$	112,000		$	167,100		$	332,600		$	80,800
Depreciation and amortization expense:
ABS	$	47,300		$	10,600		$	—		$	—		$	—
Homeland Security Group		366,900			173,400			174,400			390,200			48,400
Aerospace Group		4,200			—			—			—			—
Corporate		143,300			45,500			34,300			67,100			48,800
Total depreciation and amortization expense	$	561,700		$	229,500		$	208,700		$	457,300		$	97,200
Income tax expense:
Homeland Security Group	$	—		$	—		$	—		$	20,000		$	13,000
Corporate		19,600			—			—			1,300			900
Total income tax expense	$	19,600		$	—		$	—		$	21,300		$	13,900
Net income/(loss):
ABS	$	186,200		$	4,300		$	—		$	(158,200	)	$	—
Homeland Security Group		(9,600	)		152,800			(490,500	)		(422,800	)		140,000
Aerospace Group		350,000			—			—			—			—
Corporate		(330,600	)		(72,300	)		(140,500	)		(163,800	)		(105,600	)
Total net income/(loss)	$	196,000		$	84,800		$	(631,000	)	$	(744,800	)	$	34,400
Assets:
ABS	$	1,017,200		$	335,900		$	—		$	387,200		$	—
Homeland Security Group		3,761,600			4,507,400			5,193,200			4,806,800			5,342,200
Aerospace Group		20,210,900			—			—			—			—
Corporate		1,410,600			940,600			934,000			757,100			1,347,500
Total assets	$	26,400,300		$	5,783,900		$	6,127,200		$	5,951,100		$	6,689,700
Fixed assets, net:
ABS	$	116,400		$	126,200		$	—		$	15,700		$	—
Homeland Security Group		100,000			146,700			114,100			95,600			110,800
Aerospace Group		36,800			—			—			—			—
Corporate		7,400			11,900			142,500			107,800			180,100
Total fixed assets, net	$	260,600		$	284,800		$	256,600		$	219,100		$	290,900

Major Customers:

Gross revenue from contracts and subcontracts with U.S. government agencies amounted to $21,885,000, $8,868,000, $10,160,000 $19,684,000 and $20,303,000, respectively, in 2001, the six months ended December 31, 2000 and 1999, and the fiscal years 2000 and 1999.

Revenues earned on sales to the Company’s major customers are as follows:

F-26

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Period	Department of Defense
2001	$	14,019,000
6 Months 2000		6,240,000
6 Months 1999 (unaudited)		7,791,000
Fiscal Year 2000		18,323,000
Fiscal Year 1999		17,826,000

19.    Selected quarterly information (Unaudited):

The following is a summary of the quarterly results of operations for the years 2001 and 2000:

	Quarter Ended:
	December 31, 2001		September 30, 2001		June 30, 2001		March 31, 2001
Revenues	$	9,211,200	$	4,137,300	$	4,357,600	$	4,229,900
Operating Income		139,600		124,200		106,500		83,700
Net Income		48,200		54,100		72,400		21,300
Net Income per share, basic	$	0.004	$	0.01	$	0.01	$	.003
Shares used in per share calculation, basic		11,284,468		6,536,276		6,517,780		6,505,728
Net Income per share, diluted	$	0.003	$	0.01	$	0.01	$	.003
Shares used in per share calculation, diluted		13,922,965		8,186,996		7,985,845		7,731,937

F-27

HADRON, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Quarter Ended:
	December 31, 2000		September 30, 2000		June 30, 2000		March 31, 2000
Revenues	$	4,239,700	$	4,703,700	$	4,879,200	$	4,754,800
Operating Income/(Loss)		53,600		136,100		261,900		(201,600	)
Net Income/(Loss)		22,200		62,600		203,900		(317,700	)
Net Income per share, basic	$	0.004	$	0.01	$	0.04	$	(.11	)
Shares used in per share calculation, basic		6,393,463		5,916,209		5,100,172		2,833,692
Net Income per share, diluted $ 0.003	$	0.003	$	0.01	$	0.03	$	(.11	)
Shares used in per share calculation, diluted		7,603,607		6,605,045		6,648,677		2,833,692

F-28

EX-2.3

Exhibit 2.3

AGREEMENT AND PLAN OF MERGER

by and among

ANALEX CORPORATION

(a Nevada corporation),

THE SELLERS IDENTIFIED ON EXHIBIT A ATTACHED HERETO,

ANALEX CORPORATION EMPLOYEE

STOCK OWNERSHIP PLAN AND TRUST,

HADRON, INC.

(a New York Corporation)

and

HADRON ACQUISITION CORP.,

(a Delaware Corporation)

Dated: October 31, 2001

TABLE OF CONTENTS

		Page
1.	THE MERGER	7
	1.1         The Merger	7
	1.2         Effective Time	7
	1.3         Effect of the Merger	7
	1.4         Certificate of Incorporation; Bylaws	7
	1.5         Directors and Officers	7
	1.6         Subsequent Actions	7
2.	PURCHASE PRICE, CLOSING BALANCE SHEET AND ESCROW AGREEMENT	8
	2.1         Conversion of Securities	8
	2.2         Payment of Purchase Price	8
	2.3         Closing Balance Sheet	11
	2.4         Form of Payments	13
3.	REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE SELLERS	13
	3.1         Organization	13
	3.2         Corporate Authorization; Corporate Documentation	13
	3.3         Intentionally Omitted	14
	3.4         Capitalization	14
	3.5         Binding Agreement	14
	3.6         No Breach	14
	3.7         Permits	15
	3.8         Compliance With Laws	15
	3.9         Title to and Sufficiency of Assets	15
	3.10       Condition of Personal Property	15
	3.11       Accounts Receivable	15
	3.12       Software	15
	3.13       Intellectual Property	16
	3.14       No Infringement	16
	3.15       Contracts	16
	3.16       Litigation	17
	3.17       Financial Statements	17
	3.18       Liabilities	17
	3.19       Tax Matters	17
	3.20       Insolvency Proceedings	18
	3.21       Employee Benefit Plans	18
	3.22       Insurance	19
	3.23       Environmental Matters	19
	3.24       Leased and Owned Premises	20
	3.25       No Other Agreement To Sell	21

i

		Page
	3.26       Transactions with Certain Persons	21
	3.27       Disclosure	21
	3.28       No Affiliates	21
	3.29       Employees	21
	3.30       No Suspension or Debarment	21
	3.31       No Debt	22
	3.32       Liability for Cost and Pricing Data	22
	3.33       Labor Relations	22
	3.34       Board and Stockholder Approval	22
	3.35       Brokers	22
	3.36       Powers of Attorney	22
	3.37       Absence of Changes	22
	3.38       Government Contracts	23
	3.39       Tax Advice	24
4.	REPRESENTATIONS AND WARRANTIES OF SELLERS	24
	4.1         Organization of Certain Sellers	25
	4.2         Buyer Common Stock and Promissory Notes	25
	4.3         Title to the Equity	25
	4.4         No Other Agreement to Sell	25
5.	REPRESENTATIONS AND WARRANTIES OF BUYER AND ACQUISITION CORP	25
	5.1         Organization	25
	5.2         Corporate Authorization	26
	5.3         Binding Agreement	26
	5.4         No Breach	26
	5.5         Litigation; Compliance with Law	26
	5.6         Capitalization	26
	5.7         Brokers	26
	5.8         Disclosure	27
	5.9         No Suspension or Debarment	27
	5.10       Buyer’s Accountant	27
	5.11       Federal Securities Laws	27
	5.12       Liability for Cost and Pricing Data	27
	5.13       Tax Advice	27
6.	COVENANTS	27
	6.1         Affirmative Covenants of Company and Sellers	27
	6.2         Negative Covenants of Company and the Sellers	28
	6.3         Adverse Developments	31
	6.4         Potential Breach	31
	6.5         Buyer Due Diligence	31
	6.6         Financial Statements	31

ii

		Page
	6.7         No Transfer of Equity; No Negotiations	31
	6.8         Confidentiality	32
	6.9         No Inconsistent Action	32
	6.10       Permits	32
	6.11       Contracts	32
	6.12       Taxes and Assessments	32
	6.13       No Section 338 Election	33
	6.14       Employees	33
	6.15       Company Due Diligence	33
	6.16       Buyer’s Financial Statements	33
	6.17       Securities Filings	33
	6.18       Further Action; Reasonable Efforts	34
	6.19       Transition	34
7.	CONDITIONS TO BUYER’S OBLIGATIONS	34
	7.1         Due Diligence	34
	7.2         Performance References	34
	7.3         Representations and Warranties	35
	7.4         Compliance with Covenants	35
	7.5         Key Employees	35
	7.6         Financing	35
	7.7         Board Consent	35
	7.8         DOJ Verification	35
	7.9         Closing Documents	35
	7.10       Receipt of Third Party Consents	35
	7.11       Governmental Consents, Approvals and Waivers	36
	7.12       Absence of Litigation	36
	7.13       No Material Adverse Effect	36
	7.14       Settlement of Claims	36
	7.15       Release of Liens	36
	7.16       Elimination of Debt	36
	7.17       Execution of Confidentiality and Non-Competition Agreements	36
	7.18       Employment with Buyer	36
8.	CONDITIONS TO COMPANY’S AND SELLERS’ OBLIGATIONS	36
	8.1         Representations and Warranties	36
	8.2         Buyer Financing	37
	8.3         Business Plans	37
	8.4         Compliance with Covenants	37
	8.5         Closing Documents	37
	8.6         Governmental Consents and Waivers	37
	8.7         Absence of Litigation	37
	8.8         Payment	37

iii

		Page
9.	CLOSING	37
	9.1         Timing	37
10.	CLOSING DOCUMENTS	38
	10.1       Closing Documents to be Delivered by Company and Sellers	38
	10.2       Closing Documents to be Delivered by Buyer	39
	10.3       Other Closing Documents	39
11.	TERMINATION; EFFECT	40
	11.1       Termination	40
	11.2       Effect of Termination	40
12.	INDEMNIFICATION	40
	12.1       Representations and Warranties	40
	12.2       Indemnification by Company and Certain Sellers	41
	12.3       Indemnification by Buyer	42
	12.4       Procedures for Indemnification	42
	12.5       Limitations on Indemnification	43
	12.6       Exclusive Remedies	44
13.	POST CLOSING MATTERS	44
14.	EXPENSES	49
15.	FURTHER ASSURANCES	49
16.	BENEFIT AND ASSIGNABILITY	49
17.	NOTICES	49
18.	WAIVER	51
19.	ENTIRE AGREEMENT	51
20.	COUNTERPARTS	51
21.	CONSTRUCTION	51
22.	EXHIBITS AND SCHEDULES	51
23.	SEVERABILITY	51
24.	CHOICE OF LAW	51
25.	PUBLIC STATEMENTS	51

iv

		Page
26.	ATTORNEYS’ FEES	52
27.	COUNSEL	52
28.	STOCKHOLDER REPRESENTATIVE	52
29.	JURISDICTION AND VENUE	53
30.	WAIVER OF TRIAL BY JURY	54

Exhibit A	Selling Equity Holders and Description of Equity Holdings
Exhibit 2.2(a)(ii)	Escrow Agreement
Exhibit 2.2(a)(iii)	Analex Pre-Closing Liabilities to be Paid through the Closing Purchase Price Payment
Exhibit 2.2(c)(i)	Form of Belford Note
Exhibit 2.2(c)(ii)	Form of Kodger Note
Exhibit 2.2(c)(iii)	Form of Patterson Note
Exhibit 2.2(e)	Determination of Cash Bonus Payment for [CONFIDENTIAL TREATMENT REQUESTED]
Exhibit 7.17(a)	Form of Non-Compete and Non-Disclosure and Non-Use Agreement Between Hadron, Inc. and Peter C. Belford, Sr.
Exhibit 7.17(b)	Form of Non-Compete and Non-Disclosure and Non-Use Agreement Between Hadron, Inc. and Lese Ann Kodger
Exhibit 7.17(c)	Form of Non-Compete and Non-Disclosure and Non-Use Agreement Between Hadron, Inc. and Alex Patterson
Exhibit 7.18(a)	Form of Employment Agreement: Peter C. Belford, Sr.
Exhibit 7.18(b)	Form of Employment Agreement: Lese Ann Kodger
Exhibit 7.18(c)	Form of Employment Agreement: Alex Patterson
Exhibit 7.18(d)	Form of Employment Agreement: David Nowak
Exhibit 10.1(f)	Form of Estoppel Certificate
Exhibit 10.1(h)	Cross-Receipt
Exhibit 10.1(l)	Indemnification Escrow Agreement
Schedule 3.1	Addresses of Places of Business and Location of Assets of Company during Past Five Years
Schedule 3.6	Government Consents
Schedule 3.8	Compliance with Laws
Schedule 3.9	Liens
Schedule 3.10	Personal Property
Schedule 3.11	Accounts Receivable
Schedule 3.12	Software
Schedule 3.13	Intellectual Property
Schedule 3.14	No Infringement
Schedule 3.15	Contracts

v

Schedule 3.16	Litigation
Schedule 3.17	Financial Statements
Schedule 3.18	Liabilities
Schedule 3.19	Tax Matters
Schedule 3.21	Employee Benefit Plans
Schedule 3.22	Insurance
Schedule 3.23	Environmental Matters
Schedule 3.24	Leased and Owned Premises
Schedule 3.26	Transactions with Certain Persons
Schedule 3.28	No Affiliates
Schedule 3.33	Labor Relations
Schedule 3.38	Government Contracts
Schedule 5.12	Liability for Cost and Pricing Data
Schedule 6.2	Negative Covenants of Company and the Sellers
Schedule 6.14	Employees

vi

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is entered into as of the 31st day of October, 2001, by and among HADRON, INC., a New York corporation (“Buyer” or “HADRON”), HADRON ACQUISITION CORP., a Delaware corporation (“Acquisition Corp.”), ANALEX CORPORATION, a Nevada corporation (“Company”), and each of the selling equity holders identified on Exhibit A attached hereto (each individually a “Seller” and collectively the “Sellers”), and the ANALEX CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST (the “ESOP”).

RECITALS

A.  Company operates a professional services firm offering design, development, analysis, verification and validation testing of critical hardware and software products and systems and other technical support services to the Federal Government as well as the aerospace, medical, and manufacturing industries and has a principal place of business in Ohio and operations in Florida, Arizona and Colorado (the “Business”).

B.  Sellers and ESOP own all of the issued and outstanding shares of common stock, $0.0001 par value (the “Common Stock”), Class A and Class B preferred stock, $0.0001 par value (the “Preferred Stock”), warrants (“Warrants”), convertible notes (“Notes”), options (“Options”) and other rights to purchase any equity (“Rights”) in the Company (collectively the “Equity”).

C.  The Equity is held by the Sellers and ESOP as more specifically set forth on Exhibit A attached hereto.

D.  The Board of Directors of Buyer, Acquisition Corp. and Company have each determined that it is fair to, and in the best interests of, their respective stockholders that Company be merged with and into Acquisition Corp., pursuant to the terms and conditions of this Agreement and the Delaware General Corporation Law (“Delaware Law”).

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants, conditions and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

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

“Accredited Investor” has the meaning set forth in Regulation D promulgated under the Securities Act.

“Acquisition Corp. Common Stock” shall have the meaning set forth in Section 5.6(b) hereof.

“Acquisition Corp. Preferred Stock” shall have the meaning set forth in Section 5.6(b) hereof.

“Affiliate” means any corporation, partnership, limited liability company, sole proprietorship or other entity that, directly or indirectly, Controls, is Controlled by, or is under common Control with or of, such entity. The term “Control” (including, with correlative meaning, the terms “controlled by” and “under common Control with”), as used with respect to any entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise.

“Applicable Percentages” shall have the meaning set forth in Section 12.1(b) hereof.

“Approved Debt” shall have the meaning set forth in Section 2.3(e).

“Assets” means all cash and cash equivalents, marketable securities, Intellectual Property, Personal Property and Software of Company, all Contracts, Leases and Property Warranties to which Company is a party, all Permits held by Company, and all other assets of the Company listed on the Financial Statements.

“Balance Sheet Adjustment” shall have the meaning set forth in Section 2.3(a).

“Belford Note” shall have the meaning set forth in Section 2.2(c) hereof.

“Benefit Plans” shall have the meaning set forth in Section 3.21.

“Bonus Payment” shall have the meaning set forth in Section 2.2(e) hereof.

“Business” shall have the meaning set forth in the Recitals hereof.

“Buyer Common Stock” shall have the meaning set forth in Section 5.6(a) hereof.

“Buyer’s Representatives” shall have the meaning set forth in Section 6.5 hereof.

“Cash Escrow Deposit” shall have the meaning set forth in Section 2.2(a) hereof.

“Certificates of Merger” shall have the meaning set forth in Section 1.2 hereof.

“Closing” shall have the meaning set forth in Section 9.1(a) hereof.

“Closing Balance Sheet” shall have the meaning set forth in Section 2.3(a) hereof.

“Closing Date” shall have the meaning set forth in Section 9.1(a) hereof.

“Closing Purchase Price Payment” shall have the meaning set forth in Section 2.2(a) hereof.

“COBRA” shall have the meaning set forth in Section 3.21(b) hereof.

2

“Code” means the Internal Revenue Code of 1986, as amended.

“Company IP” shall have the meaning set forth in Section 3.13(a) hereof.

“Company Pre-Closing Liabilities” shall have the meaning set forth in Section 2.2(a) hereof.

“Company’s Representatives” shall have the meaning set forth in Section 6.15 hereof.

“Confidential Information” shall have the meaning set forth in Section 6.8 hereof.

“Contracts” means any and all contracts, agreements, and leases, written or oral (including any amendments and other modifications thereto), to which Company is a party or which are binding upon Company and relate to the Assets or the Business, and (i) which are in effect on the date hereof, including, without limitation, those listed on Schedule 3.15 or Schedule 3.24, or (ii) which are entered into by Company in the ordinary course of business between the date hereof and the Closing Date.

“DCAA” shall mean the Defense Contract Audit Agency of the United States Government.

“DOJ” shall mean the United States Department of Justice.

“DOJ Obligation” shall mean the Company’s obligations under the terms of the Settlement Agreement by and among Analex Corporation, Xanalex Corporation, and Analex Systems, Inc. and the United States of America, dated as of July 12, 1994, as modified by the parties in 1999.

“Effective Time” shall have the meaning set forth in Section 1.2 hereof.

“Environmental Condition” shall refer to any material contamination or damage to the environment caused by or in any way relating to the use, handling, storage, treatment, recycling, generation, transportation, release, spilling, leaching, pumping, pouring, emptying, discharging, injection, escaping, leaching, disposal, dumping or threatened release of Hazardous Materials by Company. With respects to claims by employees, Environmental Condition shall also include the exposure of persons to Hazardous Materials at a work place of Company or any circumstance giving rise to a claim by an employee against the Company for violation of any public safety or worker health and safety law, ordinance, order, rule, regulation or similar provision having the force of law.

“Environmental Requirement” shall mean any federal, state, or local law, ordinance, order, rule, regulation or any contractual obligation relating to pollution, protection of the public health, protection of the environment, or the actual or threatened release, discharge, or emission of materials or waste into the environment.

“Environmental Noncompliance” shall mean any material violation of any Environmental Requirement.

3

“Equity” shall have the meaning set forth in the Recitals hereof.

“ERISA” shall have the meaning set forth in Section 3.8 hereof.

“ERISA Affiliate” shall have the meaning set forth in Section 3.21(b) hereof.

“Escrow Agreement” shall have the meaning set forth in Section 2.2 hereof.

“Escrow Deposit” shall have the meaning set forth in Section 2.2 hereof.

“Escrowed Buyer Common Stock” shall have the meaning set forth in Section 12.1(b) hereof.

“Final Closing Balance Sheet” shall have the meaning set forth in Section 2.3(b) hereof.

“Financial Statements” shall have the meaning set forth in Section 3.17 hereof.

“Further Adjustment Amount” shall have the meaning set forth in Section 2.3(c) hereof.

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.

“Government” shall mean the government of the United States of America, its agencies and instrumentalities.

“Governmental Authority” means any federal, state, local, foreign or other governmental or administrative body, instrumentality, department or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.

“Government Bid” means any offer to sell made by the Company prior to the Closing Date which, if accepted, would result in a Government Contract and for which an award has not been issued thirty (30) days or more prior to the date of this Agreement.

“Government Contract” means any prime contract, subcontract, teaming agreement or arrangement, joint venture, basic ordering agreement, pricing agreement, letter contract or other similar arrangement of any kind, between the Company, on the one hand, and (i) any Governmental Authority, (ii) any prime contractor of a Governmental Authority in its capacity as a prime contractor, or (iii) any subcontractor with respect to any contract of a type described in clauses (i) or (ii) above, 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.

“Guaranteed Buyer Common Stock” shall have the meaning set forth in Section 2.2(d) hereof.

“Hazardous Materials” shall mean any substance, material, liquid or gas defined or designated as hazardous or toxic (or by any similar term) under any Environmental Requirement,

4

including, without limitation, petroleum products and friable materials containing more than one percent (1.0%) asbestos by weight.

“Improvements” means any and all leasehold improvements and fixtures for which the Company was primarily responsible which is located on real property owned or leased by the Company.

“Indemnified Party” shall have the meaning set forth in Section 12.4(a) hereof.

“Indemnifying Party” shall have the meaning set forth in Section 12.4(a) hereof.

“Indemnification Escrow Agreement” shall have the meaning set forth in Section 12.1 hereof.

“Independent Third Party” shall have the meaning set forth in Section 2.3(b) hereof.

“Interim Period” shall have the meaning set forth in Section 6.16(b) hereof.

“Key Customers” shall mean all customers of the Company which individually represent $1 million or more of the Company’s revenue over the two year period prior to Closing.

“Key Employees” shall mean the following individuals: Heinz Wimmer, Steve Dolbey; Christopher Pestak; David Geyer; Alex Patterson and David Nowak.

“Knowledge” means (i) in the case of a party who is an individual, such party’s actual knowledge after reasonable investigation, and (ii) in the case of a party that is an entity, the actual knowledge of such party’s executive officers, directors and shareholders after reasonable investigation (collectively to be defined, for this section only, for Company to be limited to Alex Patterson, David Nowak, Lese Ann Kodger, and Peter C. Belford and for Hadron to be limited to Sterling Phillips).

“Kodger Note” shall have the meaning set forth in Section 2.2(c) hereof.

“Laws” shall have the meaning set forth in Section 3.6 hereof.

“Leases” means the office, equipment and operating leases described on Schedule 3.24 hereof.

“Leased Premises” shall have the meaning set forth in Section 3.24(a) hereof.

“Liens” means any and all mortgages, deeds of trust, collateral assignments, security interests, UCC financing statements, conditional or other sales agreements, liens, pledges, hypothecations, and other encumbrances on the Assets.

“Material Adverse Effect” means, with respect to any person or entity, any event, fact, condition, occurrence or effect (excluding general economic or government contracting industry conditions and trends), which is materially adverse to the business, properties, assets, liabilities,

5

capitalization, stockholders’ equity, financial condition, operations, licenses or other franchises or results of operations of such person or entity.

“Merger” shall have the meaning set forth in Section 1.1 hereof.

“[CONFIDENTIAL TREATMENT REQUESTED]” shall mean the [CONFIDENTIAL TREATMENT REQUESTED].

“Notices” shall have the meaning set forth in Section 17 hereof.

“Patterson Note” shall have the meaning set forth in Section 2.2(c) hereof.

“Permits” means any and all written licenses, franchises, certificates of occupancy, or orders of, any governmental authority, whether federal, state or local, or any other person, necessary for Company to own the Assets and conduct the Business as now being conducted (but does not include any approvals, authorizations or consents given or provided in the administration of Company’s Government Contracts or amendments thereto), including, without limitation, the Permits listed on Schedule 3.7.

“Permitted Use” shall have the meaning set forth in Section 13(a) hereof.

“Personal Property” means any and all of the machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, spare parts, and other tangible personal property which are owned or leased by Company and used or useful in the conduct of the Business or the operations of the Business including, without limitation, the Personal Property identified on Schedule 3.10, plus such additions thereto and deletions therefrom arising in the ordinary course of business between the date hereof and the Closing Date.

“Prime Interest Rate” shall mean the prime rate as quoted by The Wall Street Journal on the date in question.

“Principal Sellers” shall have the meaning set forth in Section 12.2 hereof.

“Property Warranties” means all of Company’s rights under any manufacturers’ and vendors’ warranties relating to the Assets.

“Purchase Price” shall have the meaning set forth in Section 2.1 hereof.

“Registered Intellectual Property” shall have the meaning set forth in Section 3.13(a) hereof.

“Selling Stockholder” shall have the meaning set forth in Section 13(d) hereof.

“Software” shall have the meaning set forth in Section 3.12 hereof.

“Stockholder Representative” shall have the meaning set forth in Section 28 hereof.

“Survival Period” shall have the meaning set forth in Section 12.1 hereof.

6

“Surviving Corporation” shall have the meaning set forth in Section 1.1 hereof.

“Tangible Net Worth” shall mean the excess of total Assets of the Company, as determined in accordance with GAAP consistently applied less all Assets of the Company which would be classified as non-identifiable intangible assets under GAAP consistently applied, including without limitation, good-will, over total liabilities of the Company as determined in accordance with GAAP consistently applied.

1.   The Merger.

1.1   The Merger.    Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with Delaware Law and Nevada Law, at the Effective Time (as defined in Section 1.2), Company will merge with and into Acquisition Corp. (the “Merger”). As a result of the Merger, the separate corporate existence of Company shall cease and Acquisition Corp. shall continue as the surviving corporation of the Merger (sometimes referred to as the “Surviving Corporation”) and a wholly owned subsidiary of Buyer.

1.2   Effective Time.    As promptly as practicable on the Closing Date, the parties shall cause the Merger to be consummated by filing a certificate of merger with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with the relevant provisions of Delaware law and a certificate of merger with the Secretary of State of the State of Nevada, in such forms as required by, and executed in accordance with the relevant provisions of Nevada law (collectively, the “Certificates of Merger”) and in such forms as approved by Buyer and Company prior to such filing (the time of the filing of the Certificates of Merger or the time specified therein being the “Effective Time”).

1.3   Effect of the Merger.    At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of Delaware Law and Nevada Law. Without limiting the generality of the foregoing, and subject thereto, of the Effective Time, except as otherwise provided herein, all the rights, privileges, powers and franchises of Acquisition Corp. and Company shall vest in the Surviving Corporation, and all debts, liabilities and duties of Acquisition Corp. and Company shall become the debts, liabilities and duties of the Surviving Corporation.

1.4   Certificate of Incorporation; Bylaws.    At the Effective Time, the certificate of incorporation and bylaws of Acquisition Corp., as in effect immediately prior to the Effective Time, shall be the certificate of incorporation of the Surviving Corporation.

1.5   Directors and Officers.    The directors of Acquisition Corp. shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation; and the officers of Acquisition Corp. shall be the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified.

1.6   Subsequent Actions.    If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to continue in, vest, perfect or

7

confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties, privileges, franchises or assets of either of its constituent corporations acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be directed and authorized to execute and deliver, in the name and on behalf of either of such constituent corporations, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties, privileges, franchises or assets in the Surviving Corporation or otherwise to carry out this Agreement.

2.   Purchase Price, Closing Balance Sheet And Escrow Agreement.

2.1   Conversion of Securities.    At the Effective Time, and upon all of the terms and subject to all of the conditions of this Agreement:

(a)  All of the Equity of Company (excluding any Equity described in Section 2.1(b)) issued and outstanding immediately prior to the Effective Time, all of which shall be beneficially owned and of record by the Sellers and ESOP as set forth on Exhibit A hereto, shall be converted into and exchanged for the right to receive, in the aggregate, the Purchase Price as set forth in Section 2.2. All such Equity of the Company shall cease to be outstanding and shall automatically be cancelled and retired and shall cease to exist and shall thereafter represent only the right to receive the Purchase Price. The holders of certificates previously evidencing Equity of the Company outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Equity, except for the right to receive the Purchase Price.

(b)  All shares of capital stock of the Company held in the treasury of the Company immediately prior to the Effective Time shall be cancelled and extinguished without any conversion thereof and no amount shall be delivered or deliverable in exchange therefor.

2.2   Payment of Purchase Price.

(a) (i) At the Closing, Buyer shall pay to Sellers and ESOP, as part of the purchase price, Four Million Nine Hundred Eighty-Five Thousand Dollars ($4,985,000) in the portions as indicated on Exhibit A (the “Closing Purchase Price Payment”). In the event that the amount of Company Pre-Closing Liabilities (as defined in Section 2.2(a)(iii)) paid by Acquisition Corp. at Closing under Section 2.2(a)(iii) is less than $1,525,000 the Closing Purchase Price Payment shall be increased by the amount of such reduction.

(ii) Out of the Closing Purchase Price Payment paid to the Sellers (other than Belford) and the ESOP, Buyer shall deposit with the Escrow Agent, to be held in escrow, $600,000 (the “Cash Escrow Deposit”) at closing. This $600,000 shall be allocated and credited to the Sellers (other than Belford) and the ESOP pro rata based on the percentage ownership of common shares of the Company. The Cash Escrow Deposit shall be subject to the

8

terms of this Agreement and an Escrow Agreement (the “Escrow Agreement”) attached hereto as Exhibit 2.2(a)(ii) which shall provide, in part, for the Escrow Deposit to be held and distributed as described in Section 2.3 and the Escrow Agreement.

(iii)  At Closing, Acquisition Corp. will pay or cause to be paid up to One Million Five Hundred Twenty-Five Thousand Dollars ($1,525,000) (or such lower amount as agreed to by Buyer and Sellers) to pay the Company’s pre-closing liabilities listed on Exhibit 2.2(a)(iii) (“Company Pre-Closing Liabilities”). In the event that the obligation to pay $750,000 to DCAA is deferred or subject to a repayment plan, Acquisition Corp. may make payments in accordance with such repayment plan.

(b) At the Closing, Buyer shall also issue to the Sellers, as indicated on Exhibit A, Two Million One Hundred Fifteen Thousand (2,115,000) shares of Buyer Common Stock, of which Two Hundred Thousand (200,000) shares of Buyer Common Stock held by the Sellers (as determined by the Sellers) shall be paid to the Escrow Agent to be held in escrow (collectively with the “Cash Escrow Deposit,” the “Escrow Deposit”), subject to the terms of this Agreement and the Escrow Agreement which shall provide, in part, for the Escrow Deposit to be held until the preparation of the Closing Balance Sheet (as defined in Section 2.3 below) and the acceptance of the Closing Balance Sheet by the Buyer.

(c)  At the Closing, Buyer shall also issue to Peter C. Belford, Sr. a promissory note in an aggregate principal amount of Six Hundred Forty-Three Thousand Eight Hundred Fifty Dollars ($643,850) (the “Belford Note”) and Five Hundred Thousand (500,000) shares of Buyer Common Stock. The Belford Note shall be in the form attached hereto as Exhibit 2.2(c)(i). At the Closing, Buyer shall also issue to Lese Ann Kodger a promissory note in an aggregate principal amount of Fifty-Seven Thousand Nine Hundred Fifty Dollars, ($57,950) (the “Kodger Note”) and Forty-Five Thousand (45,000) shares of Buyer Common Stock. The Kodger Note shall be in the form attached hereto as Exhibit 2.2(c)(ii). Buyer shall also issue to Alex Patterson a promissory note in the aggregate principal amount of Seventy Thousand Eight Hundred Twenty-Five Dollars ($70,825) (the “Patterson Note”) and Fifty-Five Thousand (55,000) shares of Buyer Common Stock. The Patterson Note shall be in the form attached hereto as Exhibit 2.2(c)(iii). Upon and in consideration for issuance of the Belford Note, Kodger Note and the Patterson Note, the Company and Belford, Kodger and Patterson shall cancel any existing indebtedness of the Company to Belford, Kodger and Patterson (except for any salary earned but not paid up to the Closing Date and any expense reimbursements due up to the Closing Date pursuant to the Company’s policies and procedures regarding expense reimbursements), and shall provide evidence of such cancellation to Buyer at Closing.

(d) At the Closing, Buyer shall also issue to the Sellers and ESOP, as indicated on Exhibit A, Eight Hundred Fifty-Seven Thousand One Hundred Forty-Three (857,143) shares of Buyer Common Stock (“Guaranteed Buyer Common Stock”). Buyer agrees, at Sellers’ option, to reimburse the Sellers for the difference, on a per share basis, between the guaranteed sales prices listed below and the Sellers’ actual sales price commencing on the following dates: (i) up to Two Hundred Fourteen Thousand Two Hundred Eighty-Six shares (214,286) at a sales price of $1.60 per share of Guaranteed Buyer Common Stock to be paid by Buyer from the six (6) month anniversary of Closing until the fifth anniversary of Closing; (ii) up to Two Hundred Fourteen Thousand Two Hundred Eighty-Six (214,286) shares at a sales price

9

of $1.80 per share of Guaranteed Buyer Common Stock to be paid by Buyer from the twelve (12) month anniversary of Closing until the fifth anniversary of Closing; (iii) up to Two Hundred Fourteen Thousand Two Hundred Eighty-Six (214,286) shares at a sales price of $2.00 per share of Guaranteed Buyer Common Stock to be paid by Buyer from the eighteen (18) month anniversary of Closing until the fifth anniversary of Closing; and (iv) up to Two Hundred Fourteen Thousand Two Hundred Eighty-Five (214,285) shares at a sales price of $2.20 per share of Guaranteed Buyer Common Stock to be paid by Buyer from the twenty-four (24) month anniversary of Closing, until the fifth anniversary of Closing. Buyer’s obligations hereunder shall apply only if each Seller complies with applicable federal and state securities laws in connection with the transfer of any Guaranteed Buyer Common Stock. If Sellers’ sell Guaranteed Buyer Common Stock prior to the above specified intervals, such shares sold by Sellers shall no longer be subject to Buyer’s obligations under this Section 2.2(d); provided, however, that the distribution by the ESOP of Guaranteed Buyers Common Stock to its beneficiaries shall not affect Buyer’s obligations under this Section 2.2(d), which obligations shall remain in effect as long as such shares are held by such beneficiaries. If Buyer or its assignee or designee offers, pursuant to proper Notice, at any time during the relevant interval, to purchase any or all of each of the Seller’s Guaranteed Buyer Common Stock at or above the relevant guaranteed price and such sale complies with federal and state securities laws, and the Seller(s) do not accept such offer or fail to respond to such offer within ten (10) business days of such offer, then the Sellers shall lose all rights to reimbursement by Buyer with respect to such Shares that Buyers offered to purchase. If Hadron consummates a Change in Control Transaction (as defined in the Belford Note attached as Exhibit 2.2(c)(i) hereto), then Buyer agrees at Sellers’ option to reimburse the Sellers for the difference, on a per share basis, between the guaranteed sales price at the next specified level and the Sellers’ actual sales price for Guaranteed Buyer Common Stock in the Change in Control Transaction.

(e)  Additional Payments.    In the event that the Company (or its successors or affiliates) is awarded the [CONFIDENTIAL TREATMENT REQUESTED] contract by [CONFIDENTIAL TREATMENT REQUESTED] pursuant to the current procurement, Buyer shall pay Peter C. Belford, Alex Patterson and David Nowak the amounts described herein. The additional payments shall only be payable if the [CONFIDENTIAL TREATMENT REQUESTED] is awarded to the Company. If the [CONFIDENTIAL TREATMENT REQUESTED] is less than or equal to approximately [CONFIDENTIAL TREATMENT REQUESTED] years with a total final evaluated price of $[CONFIDENTIAL TREATMENT REQUESTED] or more, including all options, Buyer shall pay a cash bonus payment of $1 million to Messrs. Belford, Patterson and Nowak, to be divided amongst those three individuals as determined by Exhibit 2.2(e) (“Bonus Payment”). Messrs. Belford, Patterson and Nowak shall enter into employment arrangements with Buyer at Closing as contemplated by Section 7.18. If the final evaluated price is less than $[CONFIDENTIAL TREATMENT REQUESTED] but at least $[CONFIDENTIAL TREATMENT REQUESTED], the Bonus Payment shall be $1 million multiplied by a percentage which is the value of the contract divided by $[CONFIDENTIAL TREATMENT REQUESTED]. If the final evaluated price is less than $[CONFIDENTIAL TREATMENT REQUESTED], no Bonus Payment shall be due or payable. Any Bonus Payment shall be paid by twelve (12) quarterly payments beginning three (3) months after contract start at [CONFIDENTIAL TREATMENT REQUESTED] with interest accruing at the rate of the prime rate printed in

10

The Wall Street Journal on the date the note is issued, as adjusted to the prime rate printed in The Wall Street Journal on the first business day of each of the following years, plus one percent (1%). Payments shall consist of equal payments of principal plus accrued interest. All amounts due to David Nowak, Alex Patterson, or Peter C. Belford as a result of this Section 2.2(e) shall be reduced by any amounts received by such individual pursuant to the employment agreements described in Section 7.18.

2.3   Closing Balance Sheet.

(a) Within thirty (30) days following the Closing, the Sellers and Company shall cause to be prepared and delivered to Buyer an unaudited balance sheet of the Company as of the Closing Date (the “Closing Balance Sheet”). The Company and Sellers shall cause the Closing Balance Sheet to be prepared in accordance with GAAP consistent with and using the same accounting principles, policies and methods as in the audited financial statements described in Section 3.17 with contract estimates at completion (“EACs”) and estimates to complete (“ETCs”) determined on a basis consistent with the method used for determination of the Company’s audited financial statements. Sellers shall bear the cost of preparing the Closing Balance Sheet. If the Tangible Net Worth of the Company as of the Closing Date as reflected on the Closing Balance Sheet, taking into account payment of the Company Pre-Closing Liabilities, is less than $80,000, then the Escrow Deposit shall be reduced on a dollar for dollar basis to the extent of any such deficiency. The amount by which the Tangible Net Worth of the Company as of the Closing Date is less than $80,000 taking into account payment of the Company Pre-Closing Liabilities, is hereafter referred to as the “Balance Sheet Adjustment.” The amount of any Balance Sheet Adjustment shall be deducted from the Escrow Deposit and paid to Buyer within two (2) days following determination of the “Final Closing Balance Sheet” (as defined in Section 2.3(b)), prior to release of the Escrow Deposit to the Sellers. The remainder of the Escrow Deposit shall thereafter promptly be paid by Escrow Agent to the Sellers in accordance with the terms of the Escrow Agreement. To the extent that Buyer decides not to pay off the DCAA liability as described in Section 2.2(a)(iii), then such amount shall be deemed paid off for purposes of determining the Closing Balance Sheet hereunder.

(b)  Upon receipt from Sellers of the Closing Balance Sheet, Buyer shall examine or audit, or to cause its representatives to examine or audit, the Closing Balance Sheet following the Closing at its own cost and expense. If Buyer or its representatives determine that the Closing Balance Sheet has not been prepared in accordance with GAAP consistent with and using the same accounting principles, policies and methods as in the Financial Statements, Buyer shall deliver a written notice describing such objections to the Sellers within ninety (90) days after Buyer’s receipt of the Closing Balance Sheet. If Buyer does not deliver such written notice within ninety (90) days after Buyer’s receipt of the Closing Balance Sheet, then the Closing Balance Sheet shall be deemed the “Final Closing Balance Sheet” as defined herein. Buyer and Seller’s Representative (by themselves or through their respective representatives) will use all reasonable efforts to engage in good-faith negotiations to resolve any such objections promptly after receipt by the Sellers of such notice. If a final resolution is not agreed to by Buyer and Sellers within ten (10) days after Sellers first receive notice of Buyer’s objections to the Closing Balance Sheet, the parties shall submit within ten (10) days thereof their disagreement to Arthur Andersen or another independent accounting firm as Buyer and the Sellers may mutually agree upon (the “Independent Third Party”) for resolution.

11

Either party, upon Notice to the other party, may submit their disagreement to the Independent Third Party. The Independent Third Party, acting as expert and not as arbitrator, shall review the Closing Balance Sheet and consider the written objections thereto, and shall resolve any such remaining objections and revise the Closing Balance Sheet if and to the extent necessary to bring it into conformity with GAAP consistent with and using the same accounting principles, policies and methods as in the Financial Statements (such balance sheet, as agreed to by Buyer and the Sellers or as revised following resolution by the Independent Third Party, the “Final Closing Balance Sheet”) and communicate the foregoing to Buyer and the Seller in writing, not later than thirty (30) days following the submission of such dispute to the Independent Third Party (unless Buyer and the Sellers agree or the Independent Third Party determines for cause that additional time is necessary to make the determination).

(c)  Subject to Section 2.3(a), in the event that the Tangible Net Worth of the Company, taking into account the payment of the Company Pre-Closing Liabilities, as reflected on the Final Closing Balance Sheet differs from the Tangible Net Worth as reflected on the Closing Balance Sheet, the parties shall re-determine the Balance Sheet Adjustment amount using the Final Closing Balance Sheet, and make any appropriate further adjustment to the Escrow Deposit prior to the release thereof to the Sellers (the “Further Adjustment Amount”).

(d)  The proceedings and determinations of the Independent Third Party shall not be subject to any arbitration law, including the Federal Arbitration Act. Except to the extent that any determination by the Independent Third Party was procured by fraud or exceeding the scope of the matters referred or referable to an Independent Third Party under Section 2.3(b), the determinations of the Independent Third Party shall for all purposes be conclusive, final and non-appealable, shall not be subject to judicial review under any circumstances and shall be binding on Buyer and the Sellers and their respective Affiliates, and each of Buyer and the Sellers and their respective Affiliates hereby waive the right to appeal any decision of the Independent Third Party, whether to a court of law or otherwise, or to seek to stay or vacate any determination of the Independent Third Party. The fees and expenses of the Independent Third Party incurred in the resolution of such objections shall be shared equally by Buyer and the Sellers; provided, however, (i) if such Independent Third Party concludes that no adjustment to the Closing Balance Sheet is required in accordance with GAAP consistent with and using the same accounting principles, policies and methods as in the Financial Statements described, Buyer shall pay the entire cost of such Independent Third Party, and (ii) if such Independent Third Party concludes that all adjustments to the Closing Balance Sheet requested by Buyer in the form of written objections are required in accordance with GAAP consistent with and using the same accounting principles, policies and methods as in the Financial Statements, the Sellers shall pay the entire cost of such Independent Third Party. In all cases, Buyer and the Sellers each shall provide each other, their respective representatives and the Independent Third Party full reasonable access to the books and records, any other information, including work papers of its accountants, and to any employees to the extent necessary for the preparation of all financial statements referred to in this Section 2.3.

(e)  The Company shall pay on or before the Closing all amounts payable for investment banking fees, accounting fees and legal fees (including those relating to the termination of the ESOP, as contemplated by Section 6.14(b) and expenses related to the transaction contemplated in this Agreement, and any severance or bonus payments due to any of

12

the Company’s employees or other agents as of Closing and all outstanding debt of the Company except for the DOJ Obligation (which shall not exceed $1,500,000), accounts payable and accrued expenses; capital lease obligations (current and long-term) in the ordinary course of business and Company’s line of credit with Summit Bank (a/k/a “Fleet Bank”) (which line of credit shall not exceed $1,500,000 and which may be used to pay off any outstanding indebtedness of the Company to the Principal Sellers (as defined herein), so long as the line of credit does not exceed $1,500,000) (collectively, the “Approved Debt”).

2.4   Form of Payments.    All payments hereunder shall be made by delivery to the recipient by depositing, by bank wire transfer, the required amount (in immediately available funds) in an account of the recipient, which account shall be designated by the recipient in writing at least three (3) business days prior to the date of the required payment; provided, that in the case of each payment to be made to Sellers hereunder, such payments shall be made based on the percentages applicable to each Seller as reflected on Exhibit A attached hereto. All payments made hereunder shall be made in United States Dollars.

3.   Representations And Warranties Of Company And The Sellers.

Company and each of the Sellers (except David Nowak) jointly and severally represent and warrant to Buyer the following matters. These representations and warranties, and the information in the Schedules referenced therein, are current as of the date of this Agreement except to the extent that a representation, warranty or Schedule states that such representation or warranty, or information in such Schedule, is current as of another date. Nothing in the Schedules shall be deemed adequate to disclose an exception to any representation or warranty unless the Schedule identifies the exception with reasonable particularity and describes the relevant facts related to the exception in reasonable detail.

3.1   Organization.    Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada and is qualified or registered to do business in each jurisdiction in which the nature of its business or operations would require such qualification or registration. Company has full corporate power and authority to carry on its business as now conducted and to enter into and to perform this Agreement. The addresses of Company’s principal office, all of Company’s additional places of business, and the locations of the Assets are listed on Schedule 3.1. Except as set forth on Schedule 3.1, during the past five (5) years, Company has not been known by or used any corporate, fictitious or other name in the conduct of the Business or in connection with the use or operation of the Assets.

3.2   Corporate Authorization; Corporate Documentation.

(a)  The execution and delivery of this Agreement by Company, and Company’s consummation of the transactions contemplated hereby, have been duly authorized by all requisite corporate action of Company.

(b) The copies of the Articles of Incorporation of Company and all amendments thereto, as certified by the Nevada Secretary of State, and the Bylaws of Company, as amended to date and certified by its corporate secretary, copies of which have heretofore been

13

delivered to Buyer, are true, complete and correct copies of the Articles of Incorporation and Bylaws of Company, as amended and in effect on the date hereof.

(c)  The minute books and records of the corporate proceedings of Company, copies of which have been delivered to the Buyer: (i) are the original minute books and records of Company; (ii) contain all proceedings of the stockholders, the board of directors and any committees thereof with respect to Company up to and including the date of this Agreement; and (iii) are true, correct and complete in all material respects. There have been no changes, alterations or additions to such minute books and records of the corporate proceedings of Company that have not been furnished to Buyer.

3.3   Intentionally Omitted

3.4   Capitalization.    The Equity represents all of the issued and outstanding capital stock of the Company and all of the convertible notes, options, warrants or other rights to purchase capital stock of the Company; has been duly and validly issued; is fully paid and nonassessable; is held of record by Seller; and was not issued in violation of any preemptive rights or rights of first refusal; (i) there are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to Company, nor are there any voting trusts, proxies or any other agreements or understandings with respect to the voting of any Equity; (ii) there are no other options, warrants or other rights to subscribe for or purchase any capital stock of Company or securities convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire any capital stock of Company; (iii) there are no contracts, commitments, agreements, understandings, arrangements or restrictions to which Company is a party or by which Company is bound relating to any Equity, whether or not outstanding, except as set forth in the Bylaws.

3.5   Binding Agreement.    This Agreement has been duly executed by the Company and such Seller and delivered to Buyer, and constitutes the valid and binding agreement of the Company and such Seller, enforceable against Company and such Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally and the exercise of judicial discretion in accordance with general equitable principles.

3.6   No Breach.    Subject to the necessity of obtaining approvals of or providing notice to certain governmental agencies listed on Schedule 3.6 and consents of third parties to certain Contracts listed on Schedule 3.15 and certain Leases listed on Schedule 3.24, the execution, delivery and performance of this Agreement by Company and such Seller will not violate or conflict with Company’s Articles of Incorporation or Bylaws, or any law, statute, rule, regulation, ordinance, code, directive, writ, injunction, decree, judgment or order (collectively, “Laws”) to which the Company, such Seller, the Equity or the Assets is subject, or by which Company, such Seller, the Equity or Assets may be bound, or (with or without giving notice or the lapse of time or both) breach or conflict with any contract, agreement, or other commitment to which Company or such Seller is a party or by which Company, such Seller, the Equity or the Assets may be bound or result in the imposition of a Lien on the Equity or the Assets.

14

3.7   Permits.    Company has all Permits required to own the Assets and conduct Business as now being conducted. All Permits of Company are valid and in full force and effect.

3.8   Compliance With Laws.    Except as set forth in Schedule 3.8, Company and Sellers have complied in all material respects with all Laws of any governmental (whether foreign, federal, state, local, or otherwise) agency, court or other body applicable to the Equity, the Business and the Assets. Specifically, but without limitation, Company and Sellers have, in the conduct of the Business, complied in all material respects with all applicable Laws relating to the employment of labor, including those concerning wages, hours, equal employment opportunity, pension and welfare benefit plans (including the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder (“ERISA”), and the payment of Social Security and similar taxes, and Company is not liable for any arrearages of wages or any tax penalties due to any failure to comply with any of the foregoing.

3.9   Title to and Sufficiency of Assets.    Company has good and marketable title to, or a valid leasehold interest in, all of the Assets free and clear of all Liens, except for the Liens described on Schedule 3.9. The Assets constitute all of the assets, rights and properties that are used in the operation of the Business as it is now conducted or that are used or held by Company for use in the operation of the Business. The Company owns all rights to the name “Analex” in Nevada and such name will be owned by the Company as of the Closing and become the property of the Surviving Corporation.

3.10   Condition of Personal Property.    All Personal Property used or useful in the operation of the Business, except for all of the Software, which is dealt with separately in Section 3.12, and except for any items of Personal Property with a book value of less than $5,000, is listed on Schedule 3.10 and, except as specifically indicated on Schedule 3.10 or with other minor exceptions, the items of Personal Property with a book value of $5,001 or more are in good operating condition and repair (reasonable wear and tear excepted), and are suitable for their intended use.

3.11   Accounts Receivable.    All accounts receivable of Company are reflected properly on all balance sheets included in the Financial Statements and are valid receivables that arose from sales actually made or services actually performed in the ordinary course of business. All billed accounts receivable set forth on Schedule 3.11, have been collected or are fully collectible according to their terms in amounts not less than the aggregate amounts thereof carried on the books of Company.

3.12   Software.    All computer software developed by Company was developed under Government Contracts. Current as of December 31, 2000, all computer software developed by Company (the “Software”) is listed on Schedule 3.12, identified by the particular Government Contract under which such computer software was developed. All commercial computer software that is owned by or licensed to Company is listed on Schedule 3.12 and identified separately as such; provided, that Government entities may have ownership rights in some of Company’s commercial computer software because that software was paid for in whole or part by Government entities under Government Contracts.

15

3.13 Intellectual Property.

(a)  Schedule 3.13 sets forth all patents, patents pending, registered trademarks, registered copyrights, registered service marks, registered trade names, computer programs and software owned, held or used by Company as of the date of this Agreement (the “Company IP”). Company does not hold or own any patents, registered copyrights, registered trademarks, registered service marks or registered trade names (collectively, “Registered Intellectual Property”) except those set forth in Schedule 3.13.

(b)   Except as disclosed on Schedule 3.13, (i) the Company owns or has the right to use all the Intellectual Property necessary or desirable for the Company to conduct its business as is currently conducted and consistent with past practice; (ii) to the Knowledge of Company and Seller, all of the Company IP is valid, enforceable and unexpired, is free of Liens, and has not been abandoned; and (iii) the Company takes all steps that it believes are reasonably necessary to protect, maintain and safeguard the Company IP.

3.14   No Infringement.     Except as specified on Schedule 3.14, Company and Sellers have no Knowledge of any facts or circumstances that may constitute (i) an infringement by Company of any patent, copyright, trademark, service mark or similar right of any other party or (ii) a misappropriation by Company of any trade secret, know-how, process, proprietary information or similar right of any other party. Neither Company nor Sellers has received any complaint, assertion, threat or allegation or otherwise has notice of any lawsuit, claim, demand, proceeding or investigation involving matters of the type contemplated by the immediately preceding sentence or is aware of any facts or circumstances that could reasonably be expected to give rise to any such lawsuit, claim, demand, proceeding or investigation. The Company has no knowledge that any of its employees are obligated under any contract (including licenses, covenants, or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of such employee’s best efforts to promote the interests of the Company or that would conflict in any material respect with the Business.

3.15   Contracts.    Schedule 3.15 identifies or describes all of the Contracts and Employee Manuals in effect as of the date of this Agreement currently in effect (other than (i) Leases, which are dealt with separately in Section 3.24 hereof and (ii) service and maintenance Contracts entered in connection with Company’s office equipment and machinery and certain other Contracts, for which the aggregate obligations under all such Contracts described in this clause (ii) does not exceed $5,000 per month). In addition, Schedule 3.15 separately identifies all Contracts (again, other than Leases) for which third party consents or waivers must be obtained prior to the Closing Date (or which have been obtained) in order for such Contracts to continue in effect according to their terms after the Closing Date. Company has provided Buyer access to true and complete copies of all written Contracts (including any and all amendments and other modifications to such Contracts). Except as listed on Schedule 3.15, Company has no written employment agreements with Company’s employees. All of Company’s oral Contracts are identified on Schedule 3.15, other than those oral Contracts which may be terminated at any time and which do not create for Company obligations in the aggregate in excess of $10,000 per year. Company has all the Contracts it needs to carry on the Business in all material respects as now being conducted. All of the Contracts are in full force

16

and effect, and are valid, binding, and enforceable in accordance with their terms, except to the extent that the enforceability thereof may be affected by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally or by court-applied equitable principles. Company is not in material breach, nor is any other party in material breach, of the terms of any Contract. Except as expressly identified on Schedule 3.15, Company has not received notice of an intention by any party to any Contract to terminate or materially change the scope of such Contract or amend the terms thereof. Consummation of the transactions set forth in this Agreement will not affect the validity, enforceability and continuation (all in accordance with the terms of the Contracts) of, or result in any material diminution in the value of, any of the Contracts.

3.16    Litigation.    Except as described on Schedule 3.16: (i) there is no litigation, proceeding (arbitral, administrative or otherwise), claim or notice of investigation of any nature pending or, to Company’s or Seller’s Knowledge, threatened against Company, the Business or the Assets, other than standard audits and other usual and customary reviews and investigations by Government agencies in connection with Company’s contracts; (ii) there are no writs, injunctions, decrees, arbitration decisions, unsatisfied judgments or similar orders outstanding against Company, the Equity, the Business or the Assets; (iii) there is no action, suit, proceeding or investigation which the Company intends to initiate; (iv) the Company has not received any notice that it is or was being specifically audited or investigated by any government entity, nor, has such audit or investigation been threatened.

3.17   Financial Statements.    Schedule 3.17 sets forth true, correct and complete copies of the audited balance sheet, income statement and statement of cash flows of Company for the fiscal years ended December 31, 1998, December 31, 1999 and December 31, 2000 and an unaudited balance sheet and statement of income for the period ended August 31, 2001 (the “Financial Statements”). The Financial Statements were prepared in accordance with the books and records of Company, and present fairly the financial condition of Company at the respective dates thereof. The Financial Statements have been prepared in accordance with GAAP, consistently applied throughout and among the periods indicated.

3.18   Liabilities.    Company has no liabilities, obligations or commitments of any nature (whether absolute, accrued, contingent or otherwise and whether matured or unmatured), including, without limitation, tax liabilities due or to become due, except liabilities that are reflected on the Financial Statements or Schedule 3.18.

3.19   Tax Matters.    Except as disclosed on Schedule 3.19 hereto: (i) Company has timely filed all tax returns and reports required to have been filed by it; (ii) all material information set forth in such returns or reports is true, accurate and complete in all material respects; (iii) Company has timely paid or made adequate provision for all taxes, additions to tax, penalties, and interest currently payable by Company; (iv) no unpaid tax deficiency has been asserted against or with respect to Company or any Seller by any taxing authority; (v) Company has collected or withheld all amounts currently required to be collected or withheld by it for any taxes, and all such amounts have been paid to the appropriate governmental agencies or set aside in appropriate accounts for future payment when due; (vi) Company is in compliance with, and its records contain all information and documents currently necessary to comply with, all applicable information reporting and tax withholding requirements; (vii) the balance sheets contained in the Financial Statements fully and properly reflect, as of the dates thereof, the

17

liabilities of Company for all accrued taxes, additions to tax, penalties, and interest; (viii) for periods ending after the date of the most recent Financial Statements, the books and records of Company fully and properly reflect its liabilities for all accrued taxes, additions to tax, penalties, and interest other than for corporate income taxes owed by Company for periods after the Closing arising solely as a result of the transactions contemplated by this Agreement; (ix) neither the Company nor any Seller has granted, nor is subject to, any waiver of the period of limitations for the assessment of tax for any currently open taxable period; (x) Company has not made or entered into, and holds no asset subject to, a consent filed pursuant to Section 341(f) of the Code and the regulations thereunder or a “safe harbor lease” subject to former Section 168(f)(8) of the Internal Revenue Code of 1954, as amended before the Tax Reform Act of 1984, and the regulations thereunder; (xi) Company is not required to include in income any amount for an adjustment pursuant to Section 481 of the Code or the regulations thereunder; and (xii) Company is not a party to, or obligated under, any agreement or other arrangement providing for the payment of any amount that would be an “excess parachute payment” under Section 280G of the Code. Schedule 3.19 describes all material tax elections, consents, and agreements affecting Company, and lists all types of taxes paid and tax returns filed by Company. No Seller is a “foreign person” for purposes of Section 1445 of the Code.

3.20   Insolvency Proceedings.    Neither Company, Sellers nor any of the Assets is the subject of any pending or threatened insolvency proceedings of any character. Neither Company nor Sellers has made an assignment for the benefit of creditors or taken any action with a view to or that would constitute a valid basis for the institution of any such insolvency proceedings. As of the Closing and after giving effect to the payment of the Company’s Pre-Closing Liabilities, the Company is not insolvent.

3.21 Employee Benefit Plans.

(a)  Schedule 3.21 contains a true and complete list and summary of all employee benefit plans, deferred compensation arrangements and bonus compensation plans or policies, stock option plans, employee stock ownership plans, all retirement, pension, profit sharing, bonus, severance pay, disability, health, vacation and sick leave benefits) maintained or sponsored by Company or under which Company has any current or future liability (collectively, “Benefit Plans”). Except as set forth in Schedule 3.33, Company is not a party to any collective bargaining agreement covering any of its employees. With respect to any Benefit Plan, (i) to the Knowledge of the Company, no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or threatened, (ii) no facts or circumstances exist that could give rise to any such actions, suits or claims, (iii) no administrative investigation, audit or other administrative proceeding by the Department of Labor, the Pension Benefit Guaranty Corporation, the Internal Revenue Service or other governmental agencies are pending, threatened or in progress, and (iv) each Benefit Plan which is intended to be qualified within the meaning of Code section 401(a) is so qualified, has received a favorable determination letter as to its qualification, and nothing has occurred, whether by action or failure to act, that could reasonably be expected to cause the loss of such qualification.

(b)  Except as set forth on Schedule 3.21, Company does not maintain, sponsor or contribute to, nor has Company maintained, sponsored or been obligated to contribute to, within the last six years, any “employee benefit plan” which is subject to Title IV of ERISA

18

and Section 412 of the Code. Neither Company nor any trade or business (whether or not incorporated) that is or has ever been under common control, or that is or has ever been treated as a single employer, with Company under Section 414(b), (c), (in) or (o) of the Code (each an “ERISA Affiliate”) maintains retiree life or retiree health insurance plans that are “welfare benefit plans” within the meaning of Section 3(l) of ERISA and that provide for continuing benefits or coverage for any participant or any beneficiary of a participant except as may be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (b) (“COBRA”) or at the sole expense of the participant or any participant’s beneficiary. Each of Company and any ERISA Affiliate that maintains a “group health plan” within the meaning of Section 5000(b)(1) of Code has complied in all respects with the notice and continuation requirements of Section 4980B of the Code, COBRA, Part 6 of Subtitle I of ERISA and the regulations thereunder.

(c)  No Benefit Plan exists that, as a result of the transaction contemplated by this Agreement, could result in the payment to any current or former employee or director of Company any money or other property or could result in the acceleration or provision of any other rights or benefits to any current or former employee or director of Company, whether or not such payment, right or benefit would constitute a parachute payment within the meaning of Code section 280G.

3.22   Insurance.    Schedule 3.22 lists all insurance policies (by policy number, insurer, location of property insured, annual premium, premium payment dates, expiration date and type of coverage) held by Company relating to the Assets, the Business and the properties and employees of the Business, copies of which have been provided to Buyer. With respect to each such insurance policy: (i) it is legal, valid, binding, enforceable and in full force and effect for the term of such policy; (ii) it will continue to be legal, valid, binding, enforceable and in full force and effect for the term of such policy; (iii) no party to such policy is in breach of such policy; and (iv) no party to such policy has repudiated any provision thereof.

3.23   Environmental Matters.

(a)   There are no investigations, inquiries, administrative proceedings, actions, suits, claims, legal proceedings or other proceedings pending or, to the Knowledge of Sellers or Company, threatened against Seller that involve or relate to Environmental Conditions, Environmental Noncompliance or the release, use or disposal of any Hazardous Materials on any real property connected with the Leased Premises or any other real property.

(b)   Except as could not reasonably be expected by Company to result in material liability to the Company under or relating to Environmental Requirements, there are no material amounts of Hazardous Materials that have been released or are being stored or are otherwise present on or under any real property constituting or connected with the Leased Premises during the period such Leased Premises were leased by the Company, and except as could not reasonably be expected to result in material liability to the Company under or relating to Environmental Requirements, material amounts of Hazardous Materials have not been released, stored or are otherwise present on or under any real property formerly owned, leased or operated by the Company during the period of the Company owned, leased or operated such real property. Each of the Leased Premises, during the period it was leased by the Company, has

19

been maintained in, and the Company is and has at all prior times otherwise been in, material compliance with all applicable Environmental Requirements.

(c)  The Company has not disposed of, or arranged to dispose of, Hazardous Materials in a manner or to a location that could reasonably be expected to result in material liability to the Company under or relating to Environmental Requirements.

(d)   Except as may be set forth on Schedule 3.23, the Company has not assumed, contractually or by operation of law, any material liabilities or obligations under any Environmental Requirements.

3.24   Leased and Owned Premises.

(a)  Leased and Owned Premises.    Schedule 3.24 contains a complete and accurate list of all premises leased by Company for the operation of the Business (the “Leased Premises”), and of all equipment used or useful in the operation of the Business that is leased by Company, and of all of Company’s office, equipment and operating leases (collectively, the “Leases”), and the respective terms of each Lease. The Company does not own any real property and has not owned any real property since January 1, 1995 except as disclosed on Schedule 3.24.

(b)  Leases Binding.    The Leases (i) are valid, binding and enforceable in accordance with their terms and are in full force and effect; (ii) no event of default has occurred which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default thereunder on the part of Company or Sellers; and (iii) Company and Sellers have no Knowledge of the occurrence of any event of default which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default thereunder by any other party. The current annual rent and term under each Lease are as set forth on Schedule 3.24. Schedule 3.24 separately identifies all Leases for which landlord consents or waivers must be obtained prior to the Closing Date in order for such Leases to continue in effect according to their terms after the Closing Date. The Company has not waived any material rights under any Lease. No event has occurred which either entitles, or would, on notice or lapse of time or both, entitle the other party to any Lease with the Company to declare a default or to accelerate, or which does accelerate, the maturity of any indebtedness of the Company under any Lease.

(c)  Improvements and Fixtures.    The Improvements, including without limitation all leasehold improvements and all fixtures on or at the Leased Premises are (i) structurally sound with no known material defects; (ii) in good operating condition and repair, subject to ordinary wear and tear; (iii) not in need of maintenance or repair except for ordinary routine maintenance and repair; and (iv) in conformity with all applicable Laws relating thereto currently in effect. None of the Improvements are subject to any commitment or other arrangement for their sale or use by any third parties, but under each of Company’s Leases of real property, the improvements become the property of the owner of such real property upon expiration of the term of each Lease. All of the Improvements on the Leased Premises are located entirely on such Leased Premises.

20

3.25   No Other Agreement To Sell.    The Company has no legal obligation, absolute or contingent, to any other individual or entity to sell the Equity, the Assets or the Business (in whole or in part), or effect any merger, consolidation or other reorganization of Company, or to enter into any agreement with respect thereto.

3.26   Transactions with Certain Persons.    Except as disclosed on Schedule 3.26, no partner, officer, director or employee of Company nor any member of any such person’s immediate family is presently, or within the past three (3) years has been, a party to any transaction with Company relating to the Business, including without limitation, any contract, agreement or other arrangement (i) providing for the furnishing of services by (other than as partners, officers, directors or employees of Company); (ii) providing for the rental of real or personal property from, or (iii) otherwise requiring payments to (other than for services or expenses as partners, officers, directors or employees of Company) any such person or corporation, partnership, trust or other entity in which any such person has an interest as a shareholder, officer, director, trustee or partner. Other than Contracts listed on Schedule 3.26, the Company does not have outstanding any Contract or other arrangement or commitment with any Seller nor any partner, director, officer, employee, trustee or beneficiary of the Company or any Seller that requires payment by the Company or requires the Company to provide benefits to any such Person in excess of $50,000 and that were not entered into in an arm’s-length transaction.

3.27   Disclosure.    No representation or warranty made by the Company or such Seller in this Agreement, nor any document, exhibit, statement, certificate or schedule heretofore or hereinafter furnished to Buyer pursuant hereto, or in connection with the transactions contemplated hereby, including without limitation the Schedules hereto, (i) contains or will contain any untrue statement of a material fact, or (ii) omits or will omit to state any material fact necessary to make the statements or facts contained therein not misleading.

3.28   No Affiliates.    Except as disclosed on Schedule 3.28, Company does not have any Affiliates and does not own any capital stock or other equity securities of any other corporation and does not have any other type of ownership interest in any other corporation, partnership, joint venture or other business organization or entity.

3.29   Employees.    Company has provided Buyer with a complete and accurate list of all employees of Company as of August 31, 2001, showing for each such employee as of that date the employee’s name, job title or description, salary level (including any bonus or deferred compensation arrangements other than any such arrangements under which payments are at the discretion of Company) and also showing any bonus, commission or other remuneration other than salary paid during Company’s fiscal year ending December 31, 2000, and describing any existing contractual arrangement with such employee (it being understood that employees that did not have a written contract are considered “at-will”).

3.30   No Suspension or Debarment.    Company has never been suspended or debarred from bidding on contracts or subcontracts for the Government. No suspension or debarment action with respect to Government contracts have been threatened or commenced against Company or any of its officers or employees. There is no valid basis, nor specific

21

circumstances which with the passage of time could become a basis, for Company’s suspension or debarment from bidding on contracts or subcontracts for the Government.

3.31   No Debt.    On and as of the Closing Date, the Company has no outstanding debt with the exception of the Approved Debt.

3.32   Liability for Cost and Pricing Data.    There exists no basis for a claim of any material liability by Company or Sellers by any Government entity as a result of defective cost and pricing data submitted to the Government, including, without limitation, any such data relating to liabilities accrued on Company’s books or in its financial accounts for deferred compensation to any Company employees.

3.33   Labor Relations.    The Company is not a party to any collective bargaining agreement or other contract or agreement with any labor organization or other representative of any of the employees of Company and neither Company nor any Seller has any Knowledge of any activities or proceedings of any labor union or other party to organize or represent such employees. Except as set forth in Schedule 3.33, the Company is in compliance in all material respects with all laws relating to the employment or the workplace, including, without limitation, provisions relating wages, hours, collective bargaining, safety and health, work authorization, equal employment opportunity, immigration and the withholding of income taxes, unemployment compensation, worker’s compensation, employee privacy and right to know and social security contributions.

3.34   Board and Stockholder Approval.    The Board of Directors of the Company has determined that the transactions contemplated by this Agreement are in the best interests of the Company and has resolved to recommend to such stockholders that they vote in favor thereof and the Sellers and Trustee on behalf of the ESOP have voted in favor thereof by the requisite vote.

3.35   Brokers.    No broker, finder or investment banker or other person is directly or indirectly entitled to any brokerage, finder’s or other contingent fee or commission or any similar charge in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any Seller. All such fees, commission or similar charges not paid by Company prior to Closing and not reflected in the Closing Balance Sheet shall be payable by the Sellers from the Closing Purchase Price Payment.

3.36   Powers of Attorney.    The are no outstanding powers of attorney executed on behalf of the Company.

3.37   Absence of Changes.    Since December 31, 2000, there has not been a Material Adverse Effect with respect to the Company except as reflected in this Agreement and the Schedules hereto, and neither the Sellers nor the Company has taken any action that would be prohibited by the terms of Section 6.2 if the consent of Buyer had not been first obtained by Company.

22

3.38   Government Contracts.

(a)  A true and correct list of each Government Contract which is in effect as of the date of this Agreement or entered into by the Company between the date of this Agreement and the Closing Date, and Government Bid to which the Company is a party, is set forth in Schedule 3.38.

(b) Except as set forth in Schedule 3.38, (A) 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; (B) the Company has complied with all material requirements of any statute, rule or regulation pertaining to such Government Contract or Government Bid; (C) 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 the Company has fully complied with all such representations and certifications in all material respects; and (D) no termination or default, cure notice or show cause notice has been issued and remains unresolved.

(c)  Except as set forth in Schedule 3.38, (A) to the Knowledge of Sellers and the Company, none of the Company’s employees, consultants or agents is (or 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; (B) to the Knowledge of Sellers and the Company, there is no pending audit and investigation of the Company or any of its officers, employees or representatives nor within the last five years has there been any audit or investigation of the Company or any of its officers, employees or representatives resulting in a material adverse finding with respect to any material alleged irregularity, misstatement or omission arising under or relating to any Government Contract or Government Bid; and (C) during the last five 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 3.38, 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 of the consequences set forth in clause (A) or (B) of the immediately preceding sentence or any other material damage, penalty assessment, recoupment of payment or disallowance of cost.

(d)  Except as set forth in Schedule 3.38, there are (A) no outstanding written claims against the Company, either by the Governmental Authority or any other Government or by 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 (B) no written outstanding disputes between the Company, on the one hand, and the Government or any other 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)  Except as set forth in Schedule 3.38, none of the Company nor, to the Knowledge of the Company and Sellers, any of its employees, consultants or agents is (or

23

during the last five years has been) suspended or debarred from doing business with the Government or any other 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 3.38, to the Knowledge of the Company and Sellers, since January 1, 1996, 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.

(f)  Except as set forth in Schedule 3.38, since January 1, 1996, no statement, representation or warranty made by the Company 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 the Government or any other 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 the Government or any other Governmental Authority in connection with such Government Contract or Government Bid) 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.

(g)  Except as set forth in Schedule 3.38, the rates and rate schedules submitted to the Government with respect to Government Contracts of the Company have been audited and closed out for all years prior to 1995.

(h)  The Company is in compliance in all material respects with all national security obligations, including, without limitation, those specified in the National Industrial Security Program Operating Manual, DOD 5220.22-M (January 1995).

(i)  Except as set forth in Schedule 3.38, all Government Contracts have been awarded, and all Government Bids have been submitted, under a competitive and open procurement process without preferential treatment of any kind. None of the Government Contracts listed on Schedule 3.38 are subject to termination by a Governmental Authority as a result of the consummation of the transactions contemplated by this Agreement.

3.39   Tax Advice.    The Company, the Sellers and the ESOP represent and warrant that each relied on independent third parties for all federal, state and local tax advice and neither solicited nor accepted any tax advice from the Buyer or any of its director, officers, employees or agents.

4.   Representations And Warranties Of Sellers.

Each Seller individually but not jointly represents and warrants to Buyer as follows.

24

4.1   Organization of Certain Sellers.    If the Seller is a corporation, the Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.

4.2   Buyer Common Stock and Promissory Notes.    Each of the Sellers (A) understands that the Common Stock and Promissory Notes have not been, and will not be, registered under the Securities Act (except as contemplated by Section 13(d) herein), or under any state securities laws, and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering, (B) is acquiring the Common Stock and/or the Promissory Notes solely for his, her or its own account for investment purposes, and not with a view to the distribution thereof, (C) is a sophisticated investor with knowledge and experience in business and financial matters, (D) has received certain information concerning the Buyer and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Common and/or the Promissory Notes, (E) is able to bear the economic risk and lack of liquidity inherent in holding the Common Stock and/or the Promissory Notes, and (F) except for the ESOP and David Nowak, is an Accredited Investor.

4.3   Title to the Equity.    Such Seller individually holds of record, owns beneficially and owns good, valid and marketable title to his or her portion of the Equity set forth next to his or her name on Exhibit A, free and clear of any and all Liens and, upon delivery of such Equity to Buyer on the Closing Date and upon Buyer’s payment of the Purchase Price, as adjusted (if necessary), good, valid and marketable title to such Equity, free and clear of all Liens will pass to Buyer; none of the Sellers are party to any option, warrant, purchase right or other contract or commitment that could require the sale, transfer or other disposition of his or her Equity; none of the Sellers are a party to any voting trust, proxy or other agreement or understanding with respect to the voting of any Equity, except for restrictions in the Company’s Bylaws.

4.4   No Other Agreement to Sell.    None of the Sellers has a legal obligation, absolute or contingent, to any other individual or entity to sell the Equity to which the Seller has title, the Assets or the Business (in whole or in part), or effect any merger, consolidation or other reorganization of Company, or to enter into an agreement with respect thereto.

5.   Representations And Warranties Of Buyer And Acquisition Corp.

Buyer and Acquisition Corp. represent and warrant to Company and Sellers, the following matters, current as of the date of this Agreement:

5.1   Organization.    Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of New York and has the corporate power and authority to carry on its business as now conducted and to enter into and perform this Agreement. Acquisition Corp. is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the corporate power and authority to carry on its business as now conducted and to enter into and perform this Agreement.

25

5.2   Corporate Authorization.    The execution and delivery of this Agreement, and Buyer’s consummation of the transactions contemplated hereby, have been duly authorized by all requisite corporate action, and the consummation of the transactions contemplated by this Agreement does not violate any Law.

5.3   Binding Agreement.    This Agreement has been duly executed by Buyer and Acquisition Corp. and delivered to Company and Sellers and constitutes the valid and binding obligation of Buyer and Acquisition Corp., enforceable against Buyer and Acquisition Corp. in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally and the exercise of judicial discretion in accordance with general equitable principles.

5.4   No Breach.    The execution, delivery and performance of this Agreement by Buyer will not violate Buyer’s Articles of Incorporation or Bylaws, or any Laws to which Buyer is subject, or by which Buyer may be bound, or (with or without giving notice or the lapse of time or both) breach or conflict with any contract, agreement, or other commitment to which Buyer may be bound. The execution, delivery and performance of this Agreement by Acquisition Corp. will not violate Acquisition Corp.’s Certificate of Incorporation or Bylaws, or any Laws to which Acquisition Corp. is subject, or by which Acquisition Corp. may be bound, or (with or without giving notice or the lapse of time or both) breach or conflict with any contract, agreement, or other commitment to which Acquisition Corp. may be bound.

5.5   Litigation; Compliance with Law.    There is no litigation, proceeding (arbitral or otherwise), claim or investigation of any nature, pending or, to Buyer’s Knowledge, threatened, against Buyer that reasonably could be expected to adversely affect Buyer’s ability to perform in accordance with the terms of this Agreement.

5.6   Capitalization.    The authorized capital stock of Buyer and Acquisition Corp. consists of the following:

(a)  the authorized capital stock of the Buyer consists of Twenty Million (20,000,000) shares of common stock, par value $.02 per share (“Buyer Common Stock”), of which Six Million Five Hundred Forty-Eight Thousand Eight Hundred Forty-Three (6,548,843) shares are issued and outstanding, Two Million Four Hundred Sixty-Seven Thousand One Hundred Six (2,467,106) shares are subject to warrants to purchase Buyer Common Stock and One Million Nine Hundred Forty-Four Thousand Seven Hundred Thirty-Two (1,944,732) are reserved for issuance pursuant to the Buyer’s stock option and employee stock purchase plans.

(b)  the authorized capital stock of the Acquisition Corp. consists of 1,000 shares of common stock, par value $0.01 per share (“Acquisition Corp. Common Stock”), of which 100 shares are issued and outstanding, and 100 shares of preferred stock, par value $0.01 per share, (“Acquisition Corp. Preferred Stock”), none of which are issued and outstanding.

5.7   Brokers.    No broker, finder or investment banker or other person is directly or indirectly entitled to any brokerage, finder’s or other fee or commission or any similar

26

charge in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer. All such fees, commissions or similar charges shall be payable by Buyer.

5.8   Disclosure.    No representation or warranty made by the Buyer in this Agreement, nor any document, exhibit, statement, certificate or schedule heretofore or hereinafter furnished to Company pursuant hereto, or in connection with the transactions contemplated hereby, including without limitation the Schedules hereto, (i) contains or will contain any untrue statement of a material fact, or (ii) omits or will omit to state any material fact necessary to make the statements or facts contained therein not misleading.

5.9   No Suspension or Debarment.    Buyer has never been suspended or debarred from bidding on contracts or subcontracts for the Government. No suspension or debarment action with respect to Government contracts have been threatened or commenced against Buyer. There is no valid basis, nor specific circumstances which with the passage of time could become a basis, for Buyer’s suspension or debarment from bidding on contracts or subcontracts for the Government.

5.10   Buyer’s Accountant.    Buyer has not, within the past five years of the date of this Agreement, utilized, engaged, or otherwise retained Arthur Andersen for any reason.

5.11   Federal Securities Laws.    Buyer is not in violation of any federal or state securities laws, or any other Law, and there is no claim or, to Buyer’s knowledge, investigation of any nature pending or threatened, against Buyer by the Securities and Exchange Commission or any state securities regulatory body.

5.12   Liability for Cost and Pricing Data.    Except as described in Schedule 5.12, there exists no basis for a claim of any material liability of Buyer by any Government entity as a result of defective cost and pricing data submitted to the Government, including, without limitation, any such data related to liabilities accrued on Buyer’s books or in its financial accounts for deferred compensation to any Buyer employees.

5.13   Tax Advice.    Buyer represents and warrants that it relied on independent third parties for all federal, state and local tax advice and neither solicited nor accepted any tax advice from Company or any of its directors, officers, employees or agents.

6.   Covenants.

Between the date of this Agreement and the Closing Date (except for the covenants set forth in Section 6.8, which shall also apply following the Closing Date, and except for the covenants set forth in Sections 6.12 and 6.13, which shall apply following the Closing Date in accordance with their terms):

6.1   Affirmative Covenants of Company and Sellers.    Company and each of the Sellers hereby covenants and agrees that, from the date hereof through and including the Closing Date, unless otherwise expressly contemplated by this Agreement or consented to in writing by Buyer, Company shall:

27

(a)  operate the Business and use the Assets only in the ordinary course of business, consistent with sound business practices with the intent of preserving the ongoing operations of the Business and the Assets;

(b)  use its best efforts to preserve substantially intact its business organization, maintain its rights and ongoing operations, retain the services of its respective principal officers and key employees and maintain its relationships with its respective principal officers and key employees and maintain its relationships with its respective principal customers and suppliers;

(c)  use its best efforts to maintain and keep its properties and assets in as good repair and condition as at present, ordinary wear and tear excepted;

(d)  use its best efforts to keep in full force and effect insurance comparable in amount and scope of coverage to that currently maintained;

(e)  operate its business and in all material respects in accordance with all applicable Laws;

(f)  furnish Buyer with unaudited balance sheets of the Company as of the end of each month ending after the date of this Agreement, and the unaudited statements of income for the respective months then ended within twenty (20) days after the end of such month, in each case prepared in accordance with GAAP to the Knowledge of Company and the Sellers as of such time and prepared in a manner consistent with prior accounting periods (except to the extent changes are required in order to conform to GAAP);

(g)  on or before Closing, pay all amounts payable for: (i) investment banking fees, accounting fees, legal fees (including those relating to the termination of the ESOP, as contemplated by Section 6.14(b)) and expenses related to the transactions contemplated in this Agreement and any severance or bonus payments due to any of the Company’s employees or other agents as of Closing; (ii) all of the Company’s outstanding debt except the Approved Debt;

(h)  furnish Buyer a weekly written statement of cash flows; and

(i)  use its best efforts to obtain by Closing all consents, waivers, approvals and authorizations required to be obtained, and all filings or notices required to be made by Company prior to consummation of the transactions contemplated in this Agreement. In connection therewith, Sellers and Company agree to communicate in writing and by telephone with all parties from which consents are required, including those listed in Schedule 3.15 and Schedule 3.24, requesting that such parties provide written consents to the transactions described herein to the extent required under the applicable Contract or Lease within four (4) business days of the date of this Agreement. Thereafter Sellers and Company shall diligently pursue such consents using their best efforts and communicate regularly with necessary parties and provide and execute any documents reasonably required with respect to such consents.

6.2   Negative Covenants of Company and the Sellers.    Except as expressly contemplated by this Agreement and except as set forth in Schedule 6.2 or otherwise consented

28

to in writing by Buyer, from the date hereof until the Closing Date, Company shall not do any of the following:

(a)  (i)  increase the periodic compensation payable to or to become payable to any of its employees, directors or officers, except for increases in salary, wages or bonuses payable or to become payable in the ordinary course of business and consistent with past practice and approved by Buyer; (ii) grant any severance or termination pay (other than pursuant to existing severance arrangements or policies as in effect on the date of this Agreement which has been disclosed to Buyer in Schedule 6.14) to, or enter into or modify any employment or severance agreement with, any of its directors, officers or employees; (iii) adopt or amend any employee benefit plan or arrangement, in each case except as may be required by applicable law; or (iv) make any loan to any directors, officers, employees or agents;

(b)  declare or pay any dividend on, or make any other distribution in respect of, outstanding shares of its capital stock;

(c)  (i)  redeem, repurchase or otherwise reacquire any shares of its capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock, or any options, warrants or conversion or other rights to acquire any shares of its capital stock or any such securities or obligations; (ii) effect any reorganization or recapitalization; or (iii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock;

(d)  issue, pledge, deliver, award, grant or sell, or authorize or propose the issuance, pledge, delivery, award, grant or sale (including the grant of any encumbrances) of, any shares of any class of its capital stock (including shares held in treasury), any securities convertible into or exercisable or exchangeable for any such shares, or any rights, warrants or options to acquire, any such shares;

(e) (i)  acquire or agree to acquire, by merging or consolidating with, by purchasing an equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets of any other person or (ii) make or commit to make any investments other than short-term liquid investments or investments that will be liquidated prior to Closing;

(f)  sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer or otherwise encumber or dispose of, any of its assets except for dispositions in the ordinary course of business and consistent with past practice which do not exceed $10,000 in the aggregate;

(g)  propose or adopt any amendments to its Articles of Incorporation or its Bylaws;

(h)  make any significant change in any of its methods of accounting except as may be required by law or GAAP;

29

(i)  incur any obligation for borrowed money, whether or not evidenced by a note, bond, debenture or similar instrument, except in the ordinary course of business under existing loan agreements or capitalized leases which obligation is fully paid off on or before Closing;

(j)  transfer to any person or entity any material rights to the Company Intellectual Property other than in the ordinary course of business consistent with past practice;

(k)  enter into or amend any agreements pursuant to which any other party is granted exclusive marketing or other exclusive rights of any type or scope with respect to any products or technology of Company;

(l)  make any individual capital expenditures, capital additions or capital improvements except in the ordinary course of business and consistent with past practice;

(m)  permit any Seller to transfer or otherwise dispose of any Equity;

(n)  enter into any new collective bargaining agreement;

(o)  make or change any Tax election, change any annual Tax accounting period, change any method of Tax accounting, file any amended Tax Return, enter into any closing agreement with respect to any Tax, settle any Tax claim or any assessment or surrender any right to claim a Tax refund;

(p)  except as required pursuant to Section 2.3(e), pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), except the payment, discharge or satisfaction of (i) liabilities or obligations in the ordinary course of business consistent with past practice or in accordance with the terms thereof as in effect on the date hereof or (ii) claims settled or compromised, or waive, release, grant or transfer any rights of material value or modify or change in any material respect any existing Contract, in each case, other than in the ordinary course of business consistent with past practice;

(q)  settle or compromise any litigation, other than litigation in an aggregate amount not in excess of $10,000 (provided such settlement documents do not involve any material non-monetary obligations on the part of the Company or Buyer);

(r)  make any payment to an Affiliate, except in accordance with the terms of any Contract or compensation to employees in the ordinary course of business or in accordance with Sections 6.2(a) or 6.2(b);

(s)  enter into any operating lease with an aggregate value in excess of $20,000;

(t)  make any capital expenditures, capital additions or capital improvements other than (i) expenditures for routine or emergency maintenance and repair in an amount not to exceed $10,000, or (ii) expenditures in the ordinary course of business consistent

30

with past practice in amounts not exceeding $100,000 in the aggregate; provided that such expenditures shall be without significant acceleration;

(u)  enter into or amend any Lease, Contract, commitment, understanding or other arrangement in each case involving annual expenditures or liabilities in excess of $10,000 (or, in the case of (x) Government Contracts, involving annual expenditures or liabilities in excess of $100,000 or (y) task orders or purchase orders under existing Government Contracts, involving annual expenditures or liabilities in excess of $150,000) or which is not cancelable within six months without penalty, cost or liability or which is otherwise material to the Company; provided, that all such permitted new Contracts or Leases shall be deemed to be included within the term “Contracts” as defined in Section 1 hereof;

(v)  submit any new Government Bid which, if accepted, is expected to result in a loss to the Company or would result in a Government Contract with a backlog value in excess of (i) $100,000, if a new Government Bid, or (ii) $150,000, if a task order or purchase order under an existing Government Contract; or

(w)  take, or offer or propose to take, or agree to take in writing or otherwise, any of the actions described in Section 6.2 which require the consent of Buyer or any action which would result in any of the conditions set forth in Sections 7 or 8 not being satisfied.

6.3   Adverse Developments.    Company and Sellers shall promptly notify Buyer of any Material Adverse Effect with respect to Company. Company and Sellers shall keep Buyer informed of all material operational matters and business developments with respect to the Business and its markets, including any competitive changes.

6.4   Potential Breach.    Each party will promptly notify the other party of the occurrence of any event, or the existence of any fact, of which such party becomes aware that results in the inaccuracy in any material respect of any representation or warranty of such party in this Agreement as of any time prior to the Closing, and such party will use its reasonable commercial efforts to cure such matter.

6.5   Buyer Due Diligence.    Company will provide Buyer, its counsel, accountants, financing sources and other representatives (“Buyer’s Representatives”) with full access to the books and records of Company and the Business, to the Assets and to the officers, employees, agents and accountants of Company with respect to matters relating to the Business upon reasonable notice and will provide Buyer and Buyer’s Representatives with such information concerning Company, the Equity, the Assets and the Business as they reasonably may request.

6.6   Financial Statements.    Between the date of this Agreement and the Closing Date, as soon as the same are available, Company will provide Buyer with copies of all regularly prepared financial statements of the Company.

6.7   No Transfer of Equity; No Negotiations.    No Seller, shall offer to sell, sell or agree to sell or otherwise dispose of any of the Equity. Company and Sellers will refrain, and will cause each other individual or entity acting for or on behalf of Company and Sellers to

31

refrain from taking, directly or indirectly, any action (i) to seek or encourage any offer or proposal from any person to acquire any of the Equity or the Assets, or (ii) to merge, consolidate, or combine, or to permit any other person to merge, consolidate or combine, with Company.

6.8   Confidentiality.    Buyer, Company and each Seller shall each keep confidential and not directly or indirectly reveal, report, publish, disclose or transfer any information obtained by each with respect to the other in connection with this Agreement and the negotiations preceding this Agreement, including, without limitation, the amount of the Purchase Price (the “Confidential Information”), and each will use such Confidential Information solely in connection with the transactions contemplated by this Agreement, and if the transactions contemplated hereby are not consummated for any reason, each shall return to the other, without retaining any copies thereof, any schedules, documents or other written information obtained from the other in connection with this Agreement and the transactions contemplated hereby and shall cause all of its officers, employees, agents, accountants, attorneys and other representatives to whom it may have disclosed such Confidential Information to do the same. Notwithstanding the foregoing limitation, no party to this Agreement shall be required to keep confidential or return any Confidential Information (other than the amount of the Purchase Price) that (i) is known or available through other lawful sources not bound by a confidentiality agreement with the disclosing party; (ii) is or becomes publicly known or generally known in the industry through no fault of the receiving party or its agents; (iii) is required to be disclosed pursuant to Law (provided the other party is given reasonable prior notice); or (iv) is developed by the receiving party independently of the disclosure by the disclosing party.

6.9   No Inconsistent Action.    None of Buyer, Company or the Sellers shall take any action which is materially inconsistent with its obligations under this Agreement, that would cause any representation to be untrue or misleading, that would make it impossible or impracticable for a condition herein to be satisfied, or that would hinder or delay the consummation of the transactions contemplated by this Agreement.

6.10   Permits.    Company shall maintain all Permits that continue to be necessary in order for Company to own the Assets and continue to conduct the Business as it is currently conducted in full force and effect, and will file timely, all reports, statements, renewals applications and other filings that are required to keep such Permits in full force and effect, and will pay timely all fees and charges in connection therewith that are required to keep the Permits in full force and effect.

6.11   Contracts.    Between the date hereof and the Closing Date, Company shall not, during the term of this Agreement, except for agreements involving consideration of less than $10,000, enter into any new Contracts without first obtaining Buyer’s prior written consent in each instance such consent not to be unreasonably withheld, conditioned or delayed; provided, however, that all such permitted new Contracts or agreements shall be deemed to be included within the term “Contracts,” as defined in Section 1 hereof.

6.12   Taxes and Assessments.    Except for DOJ Obligation, Company shall pay in a timely fashion all taxes or other public charges levied against it, or against the Business or the Assets.

32

6.13   No Section 338 Election.    Neither Buyer nor any Affiliate thereof shall (i) make an election under Section 338 of the Code or any similar provisions of state or local law in respect of the purchase of Stock or (ii) cause the Company to engage in any transaction that could cause the purchase of Stock of the Company to be treated as a purchase or sale of the assets of the Company for federal, state, local or foreign tax purposes.

6.14     Employees.

(a)  All existing bonus, severance, consulting, non-compete (except for the Geyer and Fithian non-compete agreements) or change of control agreements between the Company and present and former officers, employees and consultants, shall be terminated as of the Closing Date following consultation with Buyer and any termination payments due thereunder shall be paid by Company prior to Closing. All such agreements shall be disclosed on Schedule 6.14.

(b)  Company ESOP.    Company, Sellers and ESOP shall take all appropriate actions to assist Buyer to terminate the ESOP as soon as practicable following the Closing, including, but not limited to, Company providing any and all notices to ESOP participants as required by Federal and State laws. To the extent the ESOP has outstanding liabilities as of Closing that become obligations of Buyer (except obligations resulting from equity in the Company or ownership of Buyer Common Stock held by the ESOP as a result of the transactions contemplated by this Agreement) or Company, Sellers shall indemnify Buyer against any such claims, pursuant to Section 12 of this Agreement. Sellers agree to pay all expenses (including legal fees) relating to the termination of the ESOP prior to Closing.

(c)  Employees of Company who are employed by Buyer, the Company or any of its Affiliates following the Closing will be given full credit for their years of service with the Company before the Closing for purposes of vesting and eligibility to participate in benefit plans and programs of Buyer and its Affiliates that are made available to such employees after the Closing, to the full extent permitted by such benefit plans.

6.15   Company Due Diligence.    Buyer will provide Company, its counsel, accountants, financing sources and other representatives (“Company’s Representatives”) with full access to the books and records of Buyer, Acquisition Corp. and to the officers, employees, agents and accountants thereof with respect to matters relating to the business of Buyer and Acquisition Corp. upon reasonable notice and will provide Company and Company’s Representatives with such information concerning Buyer and Acquisition Corp. as they reasonably may request.

6.16   Buyer’s Financial Statements.    Between the date of this Agreement and the Closing Date, Buyer will provide Company with copies of all regularly prepared financial statements of the Buyer.

6.17   Securities Filings.    As promptly as practicable after the Closing Date, Buyer will make all filings required by any and all Laws in order to consummate the transactions contemplated herein, including but not limited to any filings pursuant to Federal and State securities laws.

33

6.18   Further Action; Reasonable Efforts.

(a)  Each of the parties shall use all reasonable efforts to take, or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary, proper or advisable under applicable laws or otherwise to consummate and make effective the transactions contemplated by this Agreement as promptly as practicable, including, without limitation, using all reasonable efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental entities and parties to contracts with Company and Buyer as are necessary for the transactions contemplated herein. In case at any time after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement, each party and the proper officers and directors of each party to this Agreement shall use all reasonable efforts to take all such action.

(b)  During the period after the date hereof but prior to the Closing (the “Interim Period”), each of the parties shall promptly notify the other in writing of any pending or, to the knowledge of such party, threatened action, proceeding or investigation by any governmental entity or any other person (i) challenging or seeking damages in connection with the transactions contemplated hereby or (ii) seeking to restrain or prohibit the consummation of the transactions contemplated hereby or otherwise limit the right of Buyer to own or operate all or any portion of the business or assets of Company.

(c)  During the Interim Period the Company and the Sellers shall be entitled to update their disclosure schedules to Section 3 to the extent information contained therein becomes untrue or incomplete or inaccurate after the date hereof due to events occurring after the date hereof other than as a result of a breach by Company or any of the Sellers of the covenants contained herein or therein.

6.19   Transition.    None of the Sellers nor Company will take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier, or other business associate of any of the Company from maintaining the same business relationships with the Company and the Buyer after the Closing as it maintained with the Company prior to the Closing. Each of the Sellers will refer all customer inquiries relating to the Businesses of the Company to the Company and/or Buyer from and after the Closing.

7.   Conditions To Buyer’s Obligations.

The obligations of Buyer to consummate this Agreement and Closing of the transactions contemplated hereunder are subject to the satisfaction of each of the following conditions on or prior to the Closing Date:

7.1   Due Diligence.    Buyer shall be satisfied, in its sole discretion, with the results of its due diligence investigation of the Company, which shall be completed by Buyer within sixty (60) days of the date of this Agreement or thereafter be deemed completed to the satisfaction of Buyer.

7.2   Performance References.    Buyer shall have received and be satisfied with, in its sole discretion, performance references and assurances of Contract continuation by the

34

Company’s Key Customers. Seller shall cooperate with Buyer in obtaining such performance references and Contract continuation assurances.

7.3   Representations and Warranties.    The representations and warranties of Company and Sellers to Buyer contained herein (and in any certificates delivered by Company and Sellers pursuant hereto) will be true and correct in all material respects (but subject to all qualifications as to Knowledge set forth in those representations and warranties) as of the Closing Date, in each case, as if made again on and as of such date and Company and Sellers shall deliver to Buyer a certificate attesting to the same.

7.4   Compliance with Covenants.    All of the covenants to be complied with and performed by Company and Sellers on or before the Closing Date shall have been duly complied with and performed in all material respects, and Company and Sellers shall deliver to Buyer a certificate attesting to the same.

7.5   Key Employees.    Buyer shall have negotiated satisfactory employment arrangements, as determined by Buyer in its sole discretion, with Key Employees of the Company to be retained by Buyer.

7.6   Financing.    Buyer shall have closed on satisfactory financing, as determined by Buyer in its sole discretion, in order to complete the transaction contemplated by this Agreement.

7.7   Board Consent.    Buyer shall have obtained consent of its Board of Directors, as may be required.

7.8   DOJ Verification.    Buyer shall have received sufficient verification, as determined in its sole discretion, as to the repayment schedule and lien on Company assets of the DOJ Obligation. Such repayment schedule shall be satisfactory to Buyer in it sole discretion.

7.9   Closing Documents.    On the Closing Date, Company and/or each of the Sellers shall have delivered to Buyer the duly executed closing documents as specified in Section 10.1 hereof.

7.10   Receipt of Third Party Consents.    For each of the Contracts and Leases for which the consent of a third party is required in order for such Contract or Lease, as the case may be, to continue in effect according to its terms (as indicated on Schedule 3.15 or Schedule 3.24 hereto), Company and Sellers shall have obtained all required consents of any such third parties without modification of any material provision of any such Contract or Lease. If all consents required under Section 7.10 of this Agreement are not delivered at the Closing, and Buyer and Acquisition Corp. determine in their discretion to complete the Closing, notwithstanding Section 18 of this Agreement, unless otherwise agreed by the parties any default of the terms of this Agreement by failure to deliver executed consents will be deemed waived by the Buyer and Acquisition Corp., and Sellers, the ESOP and Company shall not be liable for default under this Agreement for failure to provide such consents as long as Company and Sellers have complied with Section 6.1(i).

35

7.11   Governmental Consents, Approvals and Waivers.    The Company and/or the Sellers shall have received any Government consents, approvals and waivers required in order for the parties to complete the proposed transaction.

7.12   Absence of Litigation.    As of the Closing, no action, claim, suit or proceeding seeking to enjoin, restrain, or prohibit the consummation of this Agreement shall be pending before any court or any other governmental authority; provided, however, that this condition may not be invoked by Buyer if any such action, suit or proceeding was solicited or encouraged by, or instituted as a result of any act or omission of Buyer.

7.13   No Material Adverse Effect.    There shall not have been any Material Adverse Effect with respect to Company since the date hereof and Company and Sellers shall deliver to Buyer a certificate attesting to the same.

7.14   Settlement of Claims.    Except as listed on Schedule 3.16, Company and Sellers shall have settled any and all pending or threatened claims, litigation or proceedings against Company and Sellers that could have a Material Adverse Effect on the Business, the Assets or the Equity.

7.15   Release of Liens.    All Liens on the Assets, other than any Liens listed on Schedule 3.9 have been released and removed.

7.16   Elimination of Debt.    The Company shall have eliminated all of its outstanding debt except the Approved Debt.

7.17   Execution of Confidentiality and Non-Competition Agreements.    Lese Ann Kodger, Alex Patterson and Peter C. Belford, Sr. each shall have entered into a confidentiality and non-competition agreement with the Buyer substantially in the form attached hereto as Exhibits 7.17(a), (b) and (c).

7.18   Employment with Buyer.    Peter C. Belford, Sr., Lese Ann Kodger, Alex Patterson and David Nowak shall each have entered into a part-time employment agreement with Buyer in which each will provide employment services to Buyer for a period commencing on the Closing Date and terminating 365 days thereafter. Such employment agreements shall be in the form of Exhibits 7.18(a), (b), (c) and (d) hereof.

8.   Conditions To Company’s And Sellers’ Obligations.

The obligations of each of Company and Sellers to consummate this Agreement and Closing of the transaction contemplated hereunder are subject to the satisfaction of each of the following conditions on or prior to the Closing Date:

8.1   Representations and Warranties.    The representations and warranties of Buyer to Company and Sellers contained herein and in any certificates delivered by Buyer pursuant hereto shall be true and correct in all material respects (but subject to all qualifications as to Knowledge set forth in those representations and warranties) as of the Closing Date, in each case as if made again on and as of such date.

36

8.2   Buyer Financing.    The Sellers shall be satisfied, in their sole discretion, with Buyers’ financing arrangements and the projected impact of those arrangements on the value of the Buyers’ capital stock.

8.3   Business Plans.    The Sellers shall be satisfied, in their sole discretion, with Buyer’s business plans and the prospects for the value of Buyers’ capital stock

8.4   Compliance with Covenants.    All of the covenants to be complied with or performed by Buyer on or before the Closing Date shall have been duly complied with and performed in all material respects.

8.5   Closing Documents.    On the Closing Date, Buyer shall have delivered to Company and/or Sellers duly executed closing documents, as specified in Section 10.2 below.

8.6   Governmental Consents and Waivers.    Any Government consents, approvals and waivers required pursuant to Section 7.10 shall have been obtained.

8.7   Absence of Litigation.    As of the Closing, no action, claim, suit or proceeding seeking to enjoin, restrain, or prohibit the consummation of this Agreement shall be pending before any court or any other governmental authority; provided, however, that this condition may not be invoked by Company if any such action, suit, or proceeding was solicited or encouraged by, or instituted as a result of any act or omission of, Company.

8.8   Payment.    At the Closing, Buyer shall deliver to Sellers the Closing Purchase Price Payment, the number of shares of Buyer’s Common Stock referenced in Section 2.2(b), the Belford Note, pay the Escrow Deposit to the Escrow Agent, as provided in Section 2 hereof.

9.   Closing.

9.1   Timing.

(a)  The closing of the purchase and sale of the Stock (the “Closing”) shall take place on or before November 30, 2001, either on November 2, 2001 or on another date on or before November 30, 2001 which is mutually acceptable to the parties, such acceptance not to be unreasonably withheld (the “Closing Date”) at the offices of Holland & Knight, LLP, in Washington, D.C. or such other place as Buyer and Company may agree in writing.

(b)  If, as of the Closing Date, any condition precedent described in Section 7 or in Section 8 has not been satisfied, the party who is entitled to require such condition be satisfied may (in its sole discretion) notify the other party(ies) of the absence of such condition precedent at or before the Closing and simultaneously therewith postpone the Closing until a date ten (10) days after all such conditions have been (or are able to be) performed, but not later than November 30, 2001, and such postponed date shall constitute the new Closing Date for all purposes hereunder.

37

10.   Closing Documents.

10.1   Closing Documents to be Delivered by Company and Sellers.    On the Closing Date, Company and Sellers shall deliver to Buyer:

(a)  Certificates or other instruments representing the Equity, duly endorsed or accompanied by stock powers or other evidence of transfer duly executed in blank and otherwise in form acceptable for transfer on the books of Company, with all requisite stock transfer tax stamps attached;

(b)  The stock book, equity book, stock ledger, minute book and corporate seal of Company;

(c)  Copies of resolutions of Company’s Board of Directors authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby, in a form reasonably satisfactory to the parties, and of Company’s Articles of Incorporation and Bylaws, as amended, certified by Company’s corporate secretary;

(d)  A certificate executed by Company and each of the Sellers attesting that Company and each of the Sellers has complied with all conditions set forth in Section 7 hereof or indicating with specificity any respects in which those conditions have not been complied with, in a form reasonably satisfactory to the parties;

(e)  Opinions of legal counsel to Company and each of the Sellers, in a form attached mutually agreed to by the parties;

(f)  With respect to each Lease of real property for which a landlord consent is required prior to consummation of the transaction contemplated hereby, an estoppel certificate substantially in the form attached hereto as Exhibit 10.1(f) as of a date not earlier than May 15, 2001, with such changes as Buyer may consent to, from each landlord stating (i) attached to the certificate is a true and correct copy of the lease, together with all modifications and amendments thereto, and that there are no other modifications or amendments, oral or written, except as set forth in the attachment; (ii) the Lease is in full force and effect; (iii) to the best knowledge of landlord, neither landlord nor tenant is in default under the terms and conditions of the Lease (except for any defaults listed in an exhibit to the estoppel certificate); (iv) the amount of the base annual rent tenant currently is paying under the Lease; (v) the expiration date of the Lease term; and (vi) that Landlord consents to the transactions contemplated hereby.

(g)  An executed Escrow Agreement in the form attached as Exhibit 2.2(a)(ii);

(h)  An executed cross-receipt, in the form attached hereto as Exhibit 10.1(h);

(i)  An IRS Form W-9, completed by each Seller, in a form reasonably satisfactory to the parties;

38

(j)  Certificates from the State of Nevada and from each jurisdiction where Company is required to qualify to do business as a foreign corporation, dated no earlier than ten (10) days prior to the Closing Date, as to the good standing of Company in such jurisdictions;

(k)  Resignations, effective as of the Closing, of each director and officer of the Company other than those whom the Buyer shall have identified;

(l)  An Executed Indemnification Escrow Agreement in the form attached as Exhibit 10.1(l);

(m)  Evidence of cancellation of any existing indebtedness of the Company to any or all of the Sellers, as contemplated in Section 2.2(c) herein; and

(n)  All executed documents that evidence the consents required under Section 7.10.

10.2   Closing Documents to be Delivered by Buyer .    On the Closing Date, Buyer shall deliver to Company and Sellers:

(a)  the Closing Purchase Price Payment, plus the Escrow Deposit (which shall be delivered to the Escrow Agent), as set forth in Section 2 hereof;

(b)  certified copies of resolutions of Buyer’s Board of Directors authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby, in a form reasonably satisfactory to the parties, and of Buyer’s Articles of Incorporation and Bylaws, as amended, certified by Buyer’s corporate secretary;

(c)  an executed Escrow Agreement in the form attached as Exhibit 2.2(a)(ii);

(d)  an executed cross-receipt, in the form reasonably satisfactory to the parties;

(e)  a certificate executed by Buyer attesting that Buyer has complied with all conditions set forth in Section 8 hereof or indicating with specificity any respects in which those conditions have not been complied with, substantially in a form reasonably satisfactory to the parties; and

(f)  an executed Indemnification Escrow Agreement in the form attached hereto as Exhibit 10.1(l).

10.3   Other Closing Documents.    The parties will also execute such other documents and perform such other acts, before and after the Closing Date, as may be necessary for the implementation and consummation of this Agreement.

39

11.   Termination; Effect.

11.1   Termination .    This Agreement may be terminated at any time prior to the Closing Date:

(a)  by mutual written agreement of Sellers and Buyer;

(b)  by Sellers and Company, if the Closing shall not have occurred by November 1, 2001 and such failure is due to a failure of Buyer to fulfill the conditions set forth in Section 8 or a default by Buyer hereunder;

(c)  by Buyer, if the Closing shall not have occurred by November 1, 2001, and such failure is due to a failure of Company or Sellers to fulfill the conditions set forth in Section 7 or a default by Company or Sellers hereunder;

(d)  by Buyer, if Sellers or Company have committed a material breach of any provision of this Agreement that has not been cured within seven (7) days of written notice of such material breach; or

(e)  by Company and Sellers, if Buyer has committed a material breach of any provision of this Agreement that has not been cured within seven (7) days of written notice of such material breach.

11.2   Effect of Termination .    If this Agreement is terminated as provided in Section 11.1(a), (b), (c), (d) or (e), then all further obligations under this Agreement shall terminate, provided, however, that the confidentiality obligations of Buyer and Company described in Section 6.8 will survive any such termination, and no such termination will relieve Buyer or Company from liability for any misrepresentation or breach of any representation, warranty, covenant (except as provided below) or agreement set forth in this Agreement prior to such termination and the parties hereto shall be entitled to exercise any and all remedies available under law or equity in accordance with this Agreement. If Buyer terminates this Agreement solely as a result of the failure of Company or Sellers to fulfill the conditions set forth in Section 10.1(f) or (n) after complying with Section 6.1(i), Buyer’s sole remedy shall be termination of this Agreement.

12.   Indemnification.

12.1   Representations and Warranties .

(a)  Survival Periods.    All representations and warranties contained in this Agreement shall be deemed continuing representations and warranties, and together with the covenants to be performed prior to Closing herein, shall survive the Closing Date for a period of three (3) years after the Closing Date (the “Survival Period”); provided, however, that any claim for indemnification made by Buyer under this Section 12 as a result of Company’s or Sellers’ breach of any of the representations made by Company and Sellers in (x) Section 3.23 hereof shall survive for a period of five (5) years after the Closing Date, (y) Sections 3.2, 3.4, 3.34, 3.35, 4.3 and 4.4 hereof shall survive indefinitely and (z) Sections 3.19 and 3.21 hereof shall survive for sixty (60) days after the expiration date of the applicable statute of limitations

40

(including any extensions thereof) for any tax or ERISA claims respectively. Except for the foregoing, no claim for indemnification may be made under this Section 12 after the expiration of the Survival Period. Claims based on fraud, willful misconduct or breaches of covenants to be performed after Closing may be asserted up to the expiration date of any applicable statute of limitations. Any investigations by or on behalf of a party hereto shall not constitute a waiver of such party’s right to enforce any representation or warranty by the other party contained herein.

(b)  Escrow and Offset.    To secure the indemnification obligations of Company and Sellers set forth in this Section 12, at Closing one million five hundred thousand (1,500,000) shares of Buyer Common Stock (“Escrowed Buyer Common Stock”) to be transferred to Sellers as part of the purchase price hereunder shall be placed into escrow pursuant to the Indemnification Escrow Agreement in the form attached hereto as Exhibit 10.1(l). Such shares shall secure Seller’s indemnity obligations in Section 12.2. In addition, following the payment of indemnification claims through the use of the Escrowed Buyer Common Stock, the Buyer shall have the right to set off all or any part of any claims damages it may incur by notifying any Seller that the Buyer is reducing the amount or value of any consideration to be paid or otherwise transferred under Sections 2.2 and 7.17 above and the documents referred to therein. Such offset shall be applied by Buyer in the following percentages: 24.978% for Belford, 63.6935% for Kodger and 11.3285% for Patterson (the “Applicable Percentages”). This right may affect the timing and amount of any payments required under Section 2.

12.2   Indemnification by Company and Certain Sellers.    Subject to Section 12.5, Company (but only prior to the Closing) and Kodger, Patterson, and Belford (the “Principal Sellers”) shall indemnify and hold Buyer harmless against and with respect to, and shall reimburse Buyer for:

(a)  Any and all claims, losses, liabilities, or damages resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenants by Company or Sellers contained herein to be performed prior to Closing or as described in Section 13(e) or in any certificate delivered to Buyer hereunder, other than nonfulfillment of any covenants by the Company after the Closing Date;

(b)  Any and all claims, losses, liabilities or damages occurring after the Closing Date resulting from Company’s operation of the Business prior to the Closing Date which are not disclosed on the Financial Statements, in this Agreement or in the Schedules or Exhibits to this Agreement;

(c)  Any and all claims, losses, liabilities or damages arising out of claims for wages, salary or other employee benefits due employees of the Company arising or accruing prior to the Closing Date, including, but not limited to, vacation pay, sick pay, severance pay, health insurance, worker’s compensation and retiree pension and medical benefits which are not reflected on the Financial Statements and Closing Balance Sheet;

(d)  Any and all claims, losses, liabilities or damages arising out of, in the nature of or caused by any liability of the Company not disclosed on the Closing Balance Sheet resulting in a tax liability with respect to any tax year or portion thereof ending on or before the Closing Date or for any tax year beginning before and ending after the Closing Date;

41

(e)  The reasonable costs and expenses (including reasonable legal fees and expenses) incurred by Buyer of any and all actions, suits, proceedings, claims, demands, assessments, judgments, and investigations reasonably necessary to attempt to avoid the same or to oppose the imposition of any loss, liability or damage under this Section 12.2;

(f)  Any and all claims, losses, liabilities or damages relating to Environmental Conditions, Environmental Requirements or Hazardous Materials resulting from any event or condition occurring or existing prior to the Closing Date or any liabilities of the ESOP described in Section 6.14(b) above;

(g)  Any and all costs, fees and expenses incurred in connection with negotiating and executing the Agreement which became payable by Sellers or the Company after the Closing Date and which do not appear or are not included as a liability on the Closing Balance Sheet; and

(h)  Any and all claims, losses, liabilities or damages arising from the Pre-Closing liabilities of the Company liabilities listed on Exhibit 2.2(a)(iii) hereof.

12.3   Indemnification by Buyer.    Buyer shall indemnify and hold Sellers harmless against and with respect to, and shall reimburse Sellers for:

(a)  Any and all losses, liabilities or damages resulting from any untrue representation, breach of warranty, or nonfulfillment of any covenants by Buyer contained herein or in any certificate delivered to Company and Sellers hereunder; and

(b)  The reasonable costs and expenses (including reasonable legal fees and expenses) incurred by Company (if there is no Closing) and Sellers of any and all actions, suits, proceedings, claims, demands, assessments, judgments, and investigations reasonably necessary to attempt to avoid the same or to oppose the imposition of any loss, liability or damages under Section 12.3(a).

12.4   Procedures for Indemnification.    The procedures for indemnification shall be as follows:

(a)  The party claiming the indemnification (the “Indemnified Party”) shall promptly give notice to the party from whom the indemnification is claimed (the “Indemnifying Party”) of any claim whether between the parties or brought by a third party against the Indemnified Party, specifying (i) the factual basis for such claim, and (ii) the amount of the claim. If a claim relates to an action, suit, or proceeding filed by a third party against the Indemnified Party such notice shall be given by the Indemnified Party to the Indemnifying Party within ten (10) days after written notice of such action, suit, or proceeding shall have been given to the Indemnified Party.

(b)  Following receipt of notice from the Indemnified Party of a claim, the Indemnifying Party shall have thirty (30) days in which to make such investigation of the claim as the Indemnifying Party shall deem necessary or desirable. For the purposes of such investigation, the Indemnified Party agrees to make available to the Indemnifying Party and/or its authorized representative(s) the information relied upon by the Indemnified Party to

42

substantiate the claim. If the Indemnified Party and the Indemnifying Party agree at or prior to the expiration of said thirty (30) day period (or any agreed upon extension thereof) to the validity and amount of such claim, or if the Indemnifying Party does not respond to such notice, the Indemnifying Party shall immediately pay to the Indemnified Party the full amount of the claim; provided, that the amount held in escrow to secure Sellers’ indemnification of Buyer shall be paid in satisfaction of any claim payable by Sellers until that amount is exhausted (if it is).

(c)  With respect to any claim by a third party as to which the Indemnified Party is entitled to indemnification hereunder, the Indemnifying Party shall have the right at its own expense to participate in or, if it so elects, to assume control of the defense of such claim, and the Indemnified Party shall cooperate fully with the Indemnifying Party, subject to reimbursement for reasonable actual out-of-pocket expense incurred by the Indemnified Party as the result of a request by the Indemnifying Party to so cooperate. If the Indemnifying Party elects to assume control of the defense of any third-party claim, the Indemnified Party shall have the right to participate in the defense of such claim at its own expense.

(d)  If a claim, whether between the parties or by a third party, requires immediate action, the parties will make all reasonable efforts to reach a decision with respect thereto as expeditiously as possible.

(e)  If the Indemnifying Party does not elect to assume control or otherwise participate in the defense of any third-party claim, the Indemnifying Party shall be bound by the results obtained in good faith by the Indemnified Party with respect to such claim.

(f)  The indemnification rights provided in Sections 12.2 and 12.3 hereof shall extend to the shareholders, directors, officers and Affiliates of the Indemnified Party, although for the purpose of the procedures set forth in this Section 12.4, any indemnification claims by such parties shall be made by and through the Indemnified Party.

12.5   Limitations on Indemnification .    Notwithstanding any other provision of this Agreement:

(a)  Other than with respect to any indemnification claim made with respect to Sections 3.2, 3.4, 3.19, 3.34, 3.35 or 4.3 hereof or under Sections 12.2(d), 12.2(f), or 12.2(g), Sellers shall not have any indemnification payment obligations under this Section 12 unless and until the aggregate amount of losses, liabilities, damages, costs or expenses of any kind under Section 12 exceeds One Hundred Thousand Dollars ($100,000), provided, that once the aggregate amount of such losses, liabilities, damages, costs or expenses exceeds One Hundred Thousand Dollars ($100,000), Sellers shall be liable for all such losses, liabilities, damages, costs or expenses.

(b)  The aggregate maximum liability for indemnification obligations of Sellers shall be as follows: for Sellers’ obligations under Section 12.2 including, without limitation breaches of Sections 3.19, 3.21, and 3.23, Sellers’ fraud or willful misconduct, breach of Sellers’ covenants to be performed on or after the Closing and the reasonable costs and expenses (including reasonable legal fees and expenses incurred in connection therewith), the aggregate amount of $6,800,000 (minus the amount by which the Bonus Payment is less than

43

$1 million) for which Belford shall be obligated for 24.978%, Kodger for 63.6935% and Patterson for 11.3285%. Buyer agrees to assert any claims described in this Section 12.5(b) against Belford, Kodger and Patterson on a pro rata basis based on the percentages in the preceding sentence.

(c)  Sellers and Buyer agree that with respect to claims described in Sections 12.5(b) above, Buyer will pursue recovery for any such claims in the following order:

(i)  First, Buyer shall use the Escrowed Buyer Common Stock.

(ii)  Second, Buyer will set off unpaid amounts under the Belford Note, Kodger Note, Patterson Note, the Confidentiality and Non-Competition Agreements referred to in Section 7.17 and any amounts payable under Section 2.2(e) based on the [CONFIDENTIAL TREATMENT REQUESTED] award.

(iii)  Third, if amounts set off under subparagraphs (i) and (ii) above are insufficient to satisfy such claims, Buyer shall notify Sellers and Sellers shall have thirty (30) days to tender any of the Buyer Common Stock issued pursuant to Sections 2.2 to Buyer, which shall have a deemed value for purposes of this Section 12.5(c) of $2.00 per share regardless of the market value of such Shares; and

(iv)  Fourth, if after exhausting the remedies in subparagraphs (i), (ii) and (iii) above such claims remain unsatisfied, Buyer at its option, may pursue any or all available remedies at law.

12.6   Exclusive Remedies.    The remedies provided for in this Section 12 of this Agreement shall be the sole and exclusive remedies for any breach or inaccuracy of any representation or warranty in this Agreement or any certificate delivered at Closing; provided however that nothing herein is intended to waive any claims for fraud or willful misconduct or waive any equitable remedies to which a party may be entitled for fraud or willful misconduct.

13.   Post Closing Matters.

(a)  Books and Records.    Each party agrees that it will cooperate with and make available (or cause to be made available) to the other party, during normal business hours, all books and records, information and employees (without substantial disruption of employment) retained and remaining in existence after the Closing Date which are necessary or useful in connection with any tax inquiry, audit, or dispute, any litigation or investigation or any other matter requiring any such books and records, information or employees for any reasonable business purpose (a “Permitted Use”). The party requesting any such books and records, information or employees shall bear all of the out-of-pocket costs and expenses reasonably incurred in connection with providing such books and records, information or employees. All information received pursuant to this Section 13(a) shall be kept confidential pursuant to Section 6.8 (which shall continue to apply to this extent following the Closing Date) by the party receiving it, except to the extent that disclosure is reasonably necessary in connection with any Permitted Use.

44

(b)  Cooperation and Records Retention.    Company, Sellers and Buyer each shall (i) provide the other with such assistance as may reasonably be requested by either of them in connection with the preparation of any return, audit, or other examination by any taxing authority or judicial or administrative proceedings relating to liability for any taxes; (ii) retain and provide the other with any records or other information that may be relevant to such return, audit or examination, proceeding or determination; (iii) provide the other with any final determination of any such audit or examination, proceeding, or determination that affects any amount required to be shown on any tax return of the other for any period; and (iv) cooperate with respect to closing the books of Company and filing a tax return for Company as of the Closing Date, at Buyer’s or Company’s expense.

(c)  Promissory Notes.    The Promissory Notes will be imprinted with a legend substantially in the following form:

The payment of principal and interest on this Note is subject to certain set-off provisions set forth in an Agreement and Plan of Merger dated as of October     , 2001 (the “Merger Agreement”) among the issuer of this Note, the person to whom this Note originally was issued, and certain other persons. This Note has not been registered under the Securities Act of 1933, as amended. The transfer of this Note is subject to certain restrictions set forth in the Merger Agreement. The Company will furnish a copy of these provisions to the holder hereof without charge upon written request.

Each holder desiring to transfer the Promissory Notes first must furnish the Buyer with (i) a written opinion satisfactory to the Buyer in form and substance from counsel satisfactory to the Buyer by reason of experience to the effect that the holder may transfer the Promissory Notes as desired without registration under the Securities Act and (ii) a written undertaking executed by the desired transferee satisfactory to the Buyer in form and substance agreeing to be bound by the set-off provisions and the restrictions on transfer contained herein.

(d)  Piggyback Registration Rights.    If the Buyer at any time or from time to time subsequent to the date of this Agreement proposes to register any securities under the Securities Act either for its own account or the account of any selling security holders (other than pursuant to (i) a registration statement on Forms S-4 or S-8 or any successor or similar forms, (ii) a registration relating solely to a Commission Rule 145 offering, or (iii) a registration on any form that does not permit secondary sales), it will give written notice to each of the Sellers, Nowak and the ESOP of its intention at least twenty (20) days in advance of the filing of any registration statement with respect thereto. Upon the written request of any of the Sellers, Nowak or the ESOP given within five (5) days after receipt of such notice, the Buyer, subject to the restrictions below, will use commercially reasonable efforts to include in such registration, and in any underwriting involved therein, all the Buyer Common Stock received by the Sellers, Nowak or the ESOP pursuant to Section 2.2 included in such request. The method of disposition of such Buyer Common Stock shall be determined solely by the Buyer.

If the managing underwriter with respect to such offering requests in that the number of securities to be offered by any or all of the Sellers, Nowak or the ESOP be reduced because in the judgment of the managing underwriter the offering would be materially and adversely

45

affected, then such securities shall be reduced by such amount as the managing underwriter may determine so as to not materially and adversely affect the proposed offering.

The Buyer may require the Sellers, Nowak or the ESOP to furnish to the Buyer such information in writing regarding themselves and the distribution as the Buyer may from time to time reasonably request in writing in order to comply with the Securities Act. The Sellers, Nowak and the ESOP agree to notify the Buyer as promptly as practicable of any inaccuracy or change in information they have previously furnished to the Company.

The Buyer will promptly notify each of the Sellers, who include Buyer Common Stock in any registration statement (a “Selling Stockholder”) of the effectiveness of the registration statement and will provide each of the Sellers with such numbers of copies of the registration statement and the prospectus included therein as such Selling Stockholder may reasonably request. During the period such registration statement is required to remain effective, the Buyer will promptly notify each Selling Stockholder of the occurrence of any event as a result of which the registration statement or the prospectus contained in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading. Each Selling Stockholder agrees, upon receipt of such notice, forthwith to cease making offers and sales of any shares of Buyer Common Stock pursuant to such registration statement and deliveries of the prospectus contained therein. The Buyer agrees to notify each Selling Stockholder when each post-effective amendment to the Registration Statement has become effective or a supplement to any prospectus forming a part of such registration statement is effective. The Buyer will use its reasonable best efforts to qualify or register the Buyer Common Stock to be sold pursuant to this provision under the securities or “Blue Sky” laws of the fifty states and the District of Columbia; provided, however, that the Buyer shall not be obligated to qualify as a foreign corporation to do business under the laws of, or to file any general consent to service of process in, any such jurisdiction.

In connection with any registration of the Buyer Common Stock pursuant to this Agreement, to the extent permitted by law, the Buyer shall indemnify each Selling Stockholder and the Selling Stockholders shall indemnify the Buyer in the manner provided below.

The Buyer shall indemnify and hold harmless each Selling Stockholder and each of its officers, directors and partners, and such person controlling such Selling Stockholder against all losses, claims, damages or liabilities, joint or several, to which such Stockholder may become subject under the Securities Act insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement, prospectus or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation of any rule or regulation under the Securities Act or state securities laws applicable to the Buyer in connection with the registration, qualification or compliance relating to the Buyer Common Stock and the Buyer shall reimburse each such Selling Stockholder (or its officers, directors and partners, and person controlling such Selling Stockholder, if applicable) for any legal or other expenses reasonably incurred by such Selling Stockholder in connection with investigating or defending any such loss, claim, damage,

46

liability or action; provided, however, that the Buyer shall not be required to indemnify and hold harmless or reimburse such Selling Stockholder to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission in any document made in reliance upon and in conformity with written information furnished to the Buyer by or on behalf of such Selling Stockholder with respect to such Selling Stockholder and such Selling Stockholder’s Buyer Common Stock or the distribution thereof for use specifically in the preparation of such documents.

Each Selling Stockholder (or its officers, directors and partners, and person controlling such Selling Stockholder, if applicable) shall indemnify and hold harmless the Buyer, each of its directors and officers, and each person, if any, who controls the Buyer within the meaning of the Securities Act, against all losses, claims, damages or liabilities to which the Buyer or any such director or officer or controlling person may become subject, under the Securities Act insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement, prospectus or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation of any rule or regulation under the Securities Act or state securities laws applicable to the Buyer in connection with the registration, qualification or compliance relating to the Buyer Common Stock, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement, omission or alleged omission, or violation was made in reliance upon and in conformity with written information furnished to the Buyer by or on behalf of such Selling Stockholder (or its officers, directors and partners, and person controlling such Stockholder, if applicable) with respect to such Selling Stockholder and such Selling Stockholder’s Buyer Common Stock or the distribution thereof, for use in the preparation thereof; and provided, further, however, that the liability of each Selling Stockholder (or its officers, directors and partners, and person controlling such Selling Stockholder, if applicable) hereunder shall be limited to the net proceeds received by such Stockholder from the sale of Buyer Common Stock covered by the registration statement; and such Selling Stockholder shall reimburse the Buyer for any legal or other expenses reasonably incurred by the Buyer or any such director or officer or controlling person in connection with investigating or defending against any such loss, claim, damage, liability or action.

All expenses associated with or incurred in connection with any registration statement filed pursuant to this Agreement, including without limitation, registration or filing fees, accounting and legal fees, printing and mailing costs, shall be borne by the Buyer; provided that each Selling Stockholder shall be responsible for paying any underwriting discounts, fees or sales commissions or legal fees or expenses of counsel retained by such Selling Stockholder in connection with the sale of his, her or its Buyer Common Stock.

(e)  Tax Matters.

(i)  Periods Ending on or Before the Closing Date.    Buyer shall prepare or cause to be prepared and file or cause to be filed all Tax Returns (federal, state and local) for the Company for all periods ending on or prior to the Closing Date which are filed after the Closing Date. Buyer shall permit Sellers to review on each such Tax Return described in the

47

preceding sentence prior to filing. Sellers shall provide Buyer with all relevant information regarding the preparation and filing of such tax return, including but not limited to information regarding income, gain, loss, deduction or other tax items for such periods in a manner consistent with the tax returns previously filed by the Company. To the extent that any Taxes applicable to any period on or before the Closing Date are not included as a liability on the Closing Balance Sheet, any such amount shall be deducted from the Escrow Deposit, or if for any reason not paid to Buyer from such Escrow Deposit, the Principal Sellers shall indemnify Buyer for any such amount pursuant to Section 12 hereof. Buyer shall not be responsible for the payment of any of the Sellers’ individual taxes associated with the transactions contemplated by this Agreement.

(ii)  Periods Beginning Before and Ending After the Closing Date.    To the extent that any Tax Returns of the Company relate to any Tax periods which begin before the Closing Date and end after the Closing Date, Buyer shall prepare or cause to be prepared and file or cause to be filed any such Tax Returns. To the extent that any Taxes applicable to any period on or before the Closing Date are not included as a liability on the Closing Balance Sheet, any such amount shall be deducted by Buyer from the Escrow Deposit, or if for any reason not paid to Buyer from such Escrow Deposit, the Principal Sellers shall indemnify Buyer for any such amount pursuant to Section 12 hereof. For purposes of this Section, in the case of any Taxes that are imposed on a periodic basis and are payable for a taxable period that includes but does not end on the Closing Date, the portion of such Tax which relates to the portion of such taxable period ending on the Closing Date shall (i) in the case of any Taxes other than Taxes based upon or related to income or receipts, be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in the entire taxable period, and (ii) in the case of any Tax based upon or related to income or receipts be deemed equal to the amount which would be payable if the relevant taxable period ended on the Closing Date. Any credits relating to a taxable period that begins before and ends after the Closing Date shall be taken into account as though the relevant taxable period ended on the Closing Date. All determinations necessary to give effect to the foregoing allocations shall be made in a manner consistent with prior practice of the Company.

(iii)  Tax Sharing Agreements.    All tax sharing agreements or similar agreements with respect to or involving the Company shall be terminated as of the Closing Date and, after the Closing Date, the Company shall not be bound thereby or have any liability thereunder.

(iv)  Certain Taxes.    Any and all federal, state or local transfer, documentary, sales, use, stamp, registration, income, franchise taxes and any other taxes and fees (including penalties and interest) incurred by the Company, the Buyer or the Acquisition Corp. arising as a result of the transactions contemplated by this Agreement, including the merger of Analex Corporation into the Acquisition Corp. (the “Transaction Taxes”) shall not be an obligation of the Sellers but shall be an obligation of the Buyer or the Acquisition Corp. Any Transaction Taxes shall not be used to adjust the Closing Balance Sheet or considered an adjustment to the Final Closing Balance Sheet.

48

14.   Expenses.    Except as otherwise expressly provided in this Agreement, each party shall bear its own legal and other fees and expenses incurred in connection with its negotiating, executing and performing this Agreement, including, without limitation, any related broker’s or finder’s fees. Sellers shall bear all applicable taxes, if any, which are due as a result of the transfer of the Equity in accordance herewith. It is understood and agreed that some of the costs, fees and expenses will in the ordinary course of business not become payable until after the Closing Date.

15.    Further Assurances.     From time to time at or after the Closing Date, at the request of the other, Buyer and Sellers each will execute and deliver such other instruments of conveyance, assignment, transfer and delivery and take such actions as the other reasonably may request in order to consummate, complete and carry out the transactions contemplated hereby, including the execution and delivery of such instruments and agreements as may be reasonably necessary or advisable to fully effect the transfer of the Equity to Buyer.

16.   Benefit And Assignability .     This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns, and no other person or entity shall have any right (whether third party beneficiary or otherwise) hereunder. This Agreement may not be assigned by any party without the prior written consent of the other party; provided, however, that Buyer may assign all or any portion of this Agreement to any Affiliate of Buyer, provided that Buyer shall remain obligated for the payment of the Purchase Price and the performance of this Agreement.

17.   Notices .     All notices demands and other communications pertaining to this Agreement (“Notices”) shall be in writing addressed as follows:

If to Company:	Analex Corporation
	2000 Aerospace Parkway
	Brook Park, Ohio 44142
	Attention:  President
with a copy to:	Budish & Solomon, Ltd.
	30100 Chagrin Boulevard
	Suite 301
	Pepper Pike, Ohio 44124
	Attention: Michael Solomon, Esquire

49

If to Sellers:                             Lese Ann Kodger

                                                  1501 Minutemen Cswy.

                                                  Unit 202

                                                  Cocoa Beach, Florida 32931

                                                  Peter C. Belford, Sr.

                                                  10512 Bridle Lane

                                                  Potomac, Maryland 20854

                                                  David Nowak

                                                  5513 River Oaks Drive

                                                  Titusville, Florida 32780

with a copy to:                         Budish & Solomon, Ltd.

                                                  30100 Chagrin Boulevard

                                                  Suite 301

                                                  Pepper Pike, Ohio 44124

                                                  Attention:  Michael Solomon, Esq.

If to Buyer:                              Hadron, Inc.

                                                  5904 Richmond Highway

                                                  Suite 300

                                                  Alexandria, Virginia 22303

                                                  Attention:  President

with a copy to:                         Holland & Knight LLP

                                                  2099 Pennsylvania Avenue, N.W.

                                                  Suite 100

                                                  Washington, D.C. 20006

                                                  Attention:  William J. Mutryn, Esq.

If to Acquisition Corp:            Hadron Acquisition Corp.

                                                  5904 Richmond Highway

                                                  Suite 300

                                                  Alexandria, Virginia 22303

                                                  Attention: Chief Executive Officer

with a copy to:                         Holland & Knight

                                                  2099 Pennsylvania Avenue, N.W.

                                                  Suite 100

                                                  Washington, D.C. 20006

                                                  Attention:  William J. Mutryn, Esq.

Notices shall be deemed given five (5) business days after being mailed by certified or registered United States mail, postage prepaid, return receipt requested, or on the first business day after being sent, prepaid, by nationally recognized overnight courier that issues a receipt or other confirmation of delivery. Any party may change the address to which Notices under this

50

Agreement are to be sent to it by giving written notice of a change of address in the manner provided in this Agreement for giving Notice.

18.   Waiver .    Unless otherwise specifically agreed in writing to the contrary: (i) the failure of any party at any time to require performance by the other of any provision of this Agreement shall not affect such party’s right thereafter to enforce the same; (ii) no waiver by any party of any default by any other shall be valid unless in writing and acknowledged by an authorized representative of the non-defaulting party, and no such waiver shall be taken or held to be a waiver by such party of any other preceding or subsequent default; and (iii) no extension of time granted by any party for the performance of any obligation or act by any other party shall be deemed to be an extension of time for the performance of any other obligation or act hereunder.

19.   Entire Agreement .    This Agreement (including the Exhibits and Schedules hereto, which are incorporated by reference herein) constitutes the entire agreement between the parties with respect to the subject matter hereof and referenced herein, and supersede and terminate any prior agreements between the parties (written or oral) with respect to the subject matter hereof. This Agreement may not be altered or amended except by an instrument in writing signed by the party against whom enforcement of any such change is sought.

20.   Counterparts.    This Agreement may be signed in any number of counterparts with the same effect as if the signature on each such counterpart were on the same instrument. Facsimiles of signatures shall be deemed to be originals.

21.   Construction.    The headings of the Articles and Sections of this Agreement are for convenience only and in no way modify, interpret or construe the meaning of specific provisions of the Agreement.

22.   Exhibits And Schedules .    The Exhibits and Schedules to this Agreement are a material part of this Agreement.

23.   Severability.    In case any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions will not in any way be affected or impaired. Any illegal or unenforceable term shall be deemed to be void and of no force and effect only to the minimum extent necessary to bring such term within the provisions of applicable law and such term, as so modified, and the balance of this Agreement shall then be fully enforceable.

24.   Choice Of Law.    This Agreement is to be construed and governed by the laws of the Commonwealth of Virginia without regard for the choice of law rules utilized in that state.

25.   Public Statements.    Prior to the Closing Date, none of Buyer, Sellers or Company, without the prior written approval of the other party, shall make any press release or other public announcement concerning the transactions contemplated by this Agreement, except

51

to the extent required by Law, in which case the other party shall be so advised as far in advance as possible.

26.  Attorneys’ Fees.     If any party initiates any litigation against any other party involving this Agreement, the prevailing party in such action shall be entitled to receive reimbursement from the other party for all reasonable attorneys’ fees and other costs and expenses incurred by the prevailing party in respect of that litigation, including any appeal, and such reimbursement may be included in the judgment or final order issued in that proceeding.

27.  Counsel.     Each party has been represented by its own counsel in connection with the negotiation and preparation of this Agreement and, consequently, each party hereby waives the application of any rule of law that would otherwise be applicable in connection with the interpretation of this Agreement, including but not limited to any rule of law to the effect that any provision of this Agreement shall be interpreted or construed against the party whose counsel drafted that provision.

28.  Stockholder Representative.    

(a)  By the execution and delivery of this Agreement, including counterparts hereof, each Seller hereby irrevocably constitutes and appoints Lese Ann Kodger as the true and lawful agent and attorney-in-fact (the “Stockholder Representative”) of such Seller with full powers of substitution to act in the name, place and stead of such Seller with respect to the performance on behalf of such Seller under terms and provisions of this Agreement, as the same may be from time to time amended, and to do or refrain from doing all such further acts and things, and to execute all such documents, as the Stockholder Representative shall deem necessary or appropriate in connection with any of the transactions contemplated under this Agreement, including:

(i)  to receive all payments made by the Buyer to the Sellers under this Agreement;

(ii)  to agree upon or compromise any matter related to the Tangible Net Worth and any adjustments to the Purchase Price or other payments to be made;

(iii)  to act for the Sellers with respect to all indemnification matters referred to in this Agreement, including the right to compromise on behalf of the Sellers any indemnification claim made by or against the Sellers;

(iv)  to terminate, amend, or waive any provision of this Agreement; provided that any such action, if material to the rights and obligations of the Sellers in the reasonable judgment of the Stockholder Representative, shall be taken in the same manner with respect to all Sellers, unless otherwise agreed by each Seller who is subject to any disparate treatment of a potentially adverse nature;

(v)  to employ and obtain the advice of legal counsel, accountants and other professional advisors as the Stockholder Representative, in his sole discretion, deems necessary or advisable in the performance of his duties as the Stockholder Representative and to rely on their advice and counsel;

52

(vi)  to incur and pay out of the Purchase Price expenses, including fees of brokers, attorneys and accountants incurred pursuant to the transactions contemplated hereby, and any other fees and expenses allocable or in any way relating to such transaction or any indemnification claim, whether incurred prior or subsequent to Closing;

(vii)  to retain a portion of the Purchase Price as a reserve against the payment of expenses incurred in his capacity as Stockholder Representative; and

(viii)  to do or refrain from doing any further act or deed on behalf of the Sellers which the Stockholder Representative deems necessary or appropriate in his sole discretion relating to the subject matter of this Agreement as fully and completely as any of the Sellers could do if personally present and acting.

(b)  The appointment of the Stockholder Representative shall be deemed coupled with an interest and shall be irrevocable, and any other person may conclusively and absolutely rely, without inquiry, upon any actions of the Stockholder Representative as the acts of the Sellers in all matters referred to in this Agreement. Each Seller hereby ratifies and confirms all that the Stockholder Representative shall do or cause to be done by virtue of such Stockholder Representative’s appointment as Stockholder Representative of such Seller. The Stockholder Representative shall act for the Sellers on all of the matters set forth in this Agreement in the manner the Stockholder Representative believes to be in the best interest of the Sellers, but the Stockholder Representative shall not be responsible to any Seller for any loss or damage any Seller may suffer by reason of the performance by the Stockholder Representative of such Stockholder Representative’s duties under this Agreement, other than loss or damage arising from fraud in the performance of such Stockholder Representative’s duties under this Agreement.

(c)  Each of the Sellers hereby expressly acknowledges and agrees that the Stockholder Representative is authorized to act on behalf of such Seller notwithstanding any dispute or disagreement among the Sellers, and that any person shall be entitled to rely on any and all action taken by the Stockholder Representative under this Agreement without liability to, or obligation to inquire of, any of the Sellers. If the Stockholder Representative resigns or ceases to function in such capacity for any reason whatsoever, then the successor Stockholder Representative shall be the person which the remaining Sellers appoint; provided, however, that if for any reason no successor has been appointed within thirty (30) days, then any Seller shall have the right to petition a court of competent jurisdiction for appointment of a successor Stockholder Representative. The Sellers do hereby jointly and severally agree to indemnify and hold the Stockholder Representative harmless from and against any and all liability, loss, cost, damage or expense (including without limitation attorneys’ fees) reasonably incurred or suffered as a result of the performance of such Stockholder Representative’s duties under this Agreement except for any such liability arising out of the fraud of the Stockholder Representative.

29.  Jurisdiction And Venue.    

Each of the parties hereto by its execution hereof:

(a)  Irrevocably submits to the jurisdiction of any state court located in Fairfax County, the Commonwealth of Virginia and to the jurisdiction of the United States

53

District Court for the Eastern District of Virginia for the purpose of any suit, action or other proceeding arising out of or based on this Agreement, or the subject matter hereof; and

(b)  Waives to the extent not prohibited by applicable law, and agrees not assert, by way of motion, as a defense or otherwise, in any such proceeding brought in any of the above-named courts, any claim that it is not subject personally to the jurisdiction of such courts, that its property is exempt or immune from attachment or execution, that any such proceeding is brought in an inconvenient forum, that the venue of such proceeding is improper, or that this Agreement, or the subject matter hereof, may not be enforced in or by such court.

The parties hereto hereby consent to service of process in any such proceeding in any manner permitted by the laws of the Commonwealth of Virginia, and agree that service of process by registered or certified mail, return receipt requested, at its address specified in or pursuant to Section 17 is reasonably calculated to give actual notice.

30.  WAIVER OF TRIAL BY JURY.     THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR RISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY IN CONNECTION WITH SUCH AGREEMENTS.

(SIGNATURE PAGE FOLLOWS)

54

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

ANALEX CORPORATION

By:	/s/    PETER C. BELFORD
	Peter C. Belford
	President

HADRON, INC.

By:	/s/    STERLING E. PHILLIPS, JR.
	Sterling E. PhillIPS, JR.
	President and Chief Executive Officer

HADRON ACQUISITION CORP.

By:	/s/ STERLING E. PHILLIPS, JR.
	Sterling E. Phillips, Jr.
	Chairman and Chief Executive Officer

ANALEX CORPORATION EMPLOYEE

STOCK OWNERSHIP PLAN AND TRUST

By:	/s/    DAVID E. NOWAK
	David E. Nowak
	Trustee

SELLERS

By:	/s/    LESE ANN KODGER
	Lese Ann Kodger

By:	/s/    PETER C. BELFORD
	Peter C. Belford

By:	/s/    ALEXANDER PATTERSON
	Alexander Patterson

By:	/s/    DAVID NOWAK
	David Nowak

55

EX-10.24

Exihibit 10.24

HADRON, INC.

PROMISSORY NOTE

Alexandria, Virginia

$643,850.00 Issue Date: November 5, 2001

Maturity Date: November 5, 2006

FOR VALUE RECEIVED, the undersigned, HADRON, INC., a corporation organized under the laws of the STATE OF NEW YORK, (“Maker” or “Company”) hereby promises to pay to PETER C. BELFORD, SR. (“Holder”), the principal amount of $643,850.00 (the “Principal Amount”) in immediately available funds, at Holder’s address as set forth herein, or at such other place as the Holder may from time to time in writing designate in accordance with the terms set forth below:

1.  Notes.    This Promissory Note (“Note”) is one of several promissory notes issued pursuant to the Agreement and Plan of Merger (“Merger Agreement”) dated as of October 31, 2001 by and among Maker, Hadron Acquisition Corp., a Delaware Corporation, Analex Corporation, a Nevada corporation and each of the selling equity holders identified on Exhibit A attached thereto, and the Analex Corporation Employee Stock Ownership Plan and Trust. Terms not defined herein shall have the meanings set forth in the Merger Agreement.

2.  Interest Rate.    Interest shall accrue and be payable on the unpaid Principal Amount from the date of this Note until paid in full at the rate of six percent (6%) per annum (the “Rate”). Notwithstanding any provision of this Note, Holder does not intend to charge and Maker shall not be required to pay any amount of interest or other charges in excess of the maximum permitted by the applicable law of the Commonwealth of Virginia; if any higher rate ceiling is lawful, then that higher rate ceiling shall apply. Any payment in excess of such maximum shall be refunded to Maker or credited against the Principal Amount, at the option of Holder. In the event that any amount due hereunder is not paid when due, such unpaid amount shall from and after the due date thereof, bear interest at a rate of ten percent (10%) per annum (the “Default Rate”).

3.  Application of Payments.    All payments received hereunder shall be applied first to the payment of any and all expenses and/or charges payable hereunder, then to interest due and payable, with the balance applied to the Principal Amount.

4.  Payment Terms.    Payments of principal and interest in the aggregate amount of $37,502.00 shall be due and payable quarterly commencing on February 2, 2002, and continuing on the first day of each subsequent three-month period thereafter through February 1, 2006, for a total of twenty (20) consecutive quarters unless the Note is prepaid (in whole or in part) pursuant to Section 5 hereof or the Note is terminated pursuant to Section 6 hereof. This Note shall mature and any unpaid Principal Amount plus accrued interest shall be due and payable on November 1, 2006 (the “Maturity Date”); provided, however that this Note shall terminate upon the occurrence of a Change in Control Transaction (as defined below) and from and after the closing of such Change in Control Transaction, and except for the balloon payment described in Section 6 below, no further payment of principal or interest by Maker shall be required.

5.  Prepayment and Reduction in Principal Amount.

(a)  Commencing one year from the Date of this Note, the Maker may prepay this Note in whole or in part without penalty by offering in writing to purchase from Holder up to 500,000 shares of Maker’s Common Stock beneficially owned by Holder for $2.00 per share. If Holder agrees to sell the stock to Maker, upon payment by Maker to Holder of proceeds of such sale, the Principal Amount shall be reduced in an amount equal to the percentage of 500,000 shares repurchased by the Maker. There shall be no prepayment penalty as a result of any prepayment of the Principal Amount made in accordance with the terms of this subsection. If Holder declines to sell such stock to Maker or fails to accept Maker’s written offer within thirty (30) days of delivery of Notice, the Principal Amount shall be reduced by the same percentage as if Holder had sold the stock to Maker. In the event of a partial prepayment of the Principal Amount, future quarterly payments shall be adjusted proportionally to reflect any such prepayment and provide for equal quarterly payments for the remainder of the term hereof.

(b)  If the Holder sells or otherwise decreases his beneficial ownership of any of the 500,000 shares of Maker’s Common Stock beneficially owned by Holder issued to Holder in connection with closing of the Merger Agreement and represented by Certificate No. H04870 (the “Designated Shares”), the Principal Amount shall be reduced by a percentage equal to the number of shares of common stock sold or transferred divided by $500,000. Holder must provide notice to Maker of any sale or transfer of Maker Common Stock beneficially owned by Holder pursuant to Section 14 hereof. In the event of a partial prepayment of the Principal Amount, future quarterly payments shall be adjusted proportionally to reflect any such prepayment and provide for equal quarterly payments for the remainder of the term hereof.

6.  Balloon Payment.

(a)  If the Maker is (i) subject to a Change in Control Transaction prior to the Maturity Date in which the Maker’s Common Stock is valued at the closing date of the Change in Control Transaction at a price per share which is less than $2.00 or (ii) the Average Price (as defined below) of Maker’s Common Stock is less than $2.00 per share as of the close of business on the Maturity Date, then the Holder is entitled to the Balloon Payment. The Balloon Payment is equal to the product of: (a) 500,000 less the number of Designated Shares purchased by Maker or declined to be sold by Holder pursuant to Section 5(a) hereof or sold by Holder pursuant to Section 5(b) hereof and (b) the difference between $2.00 and the Average Price as of the close of business on the first business day prior to the Termination Date (as defined below). The Average Price is defined as the arithmetic average (mean) of the closing price (if Over the Counter, the closing last trade price) on the Termination Date and each of the nineteen (19) previous days during which Maker’s Common Stock was traded (a total of twenty trading days). If on any such date the Common Stock of Maker is not listed or admitted to trading on any national securities exchange and is not quoted by Nasdaq or any similar organization, the fair value of a share of Common Stock on such date shall be determined in good faith by mutual agreement of Holder and Maker. If the parties cannot agree on the fair value, the Holder and Maker shall appoint an arbitrator experienced in such valuations to make

2

such determination on their behalf. In the event of Change in Control Transaction, the Termination Date is defined as the closing date of such transaction. In the event this Note reaches maturity prior to the consummation of any Change in Control Transaction, the Termination Date is defined as the Maturity Date. Such payment shall be made, in immediately available funds, by or on behalf of Maker simultaneously with and as part of the consummation of the event listed in (i) or (ii) above and the making of such payment shall be considered payment in full under this Note, and the Note shall terminate immediately upon payment pursuant to this Section and be of no further force and effect.

(b)  A “Change in Control Transaction” shall be the happening of any one (1) of the following events: (i) the dissolution or liquidation of the Company; (ii) reorganization, merger or consolidation involving the Company, unless (A) the transaction involves only the Company and one or more of the Company’s parent corporation and wholly-owned (excluding interests held by employees, officers and directors) subsidiaries; or (B) the shareholders who had the power to elect a majority of the board of directors of the Company immediately prior to the transaction have the power to elect a majority of the board of directors of the surviving entity immediately following the transaction; (iii) the sale of all or substantially all of the assets of the Company to another company, person or business entity; or (iv) an acquisition of Company stock, unless the shareholders who had the power to elect a majority of the board of directors of the Company immediately prior to the acquisition have the power to elect a majority of the board of directors of the Company immediately following the transaction.

(c)  In the event that a Change in Control Event occurs prior to the Maturity Date in which the Maker’s Common Stock is valued at the closing date of the Change of Control Transaction at a price per share of $2.00 or more, then this Note shall terminate, be deemed paid in full and Maker shall have no further payment obligations hereunder.

7.  Events of Default.    Upon the occurrence and during the continuance of an Event of Default (as defined below) the Holder may declare the entire unpaid Principal Amount of this Note, together with interest accrued, immediately due and payable at the place of payment. The term “Event of Default” shall mean:

(a)  the failure to pay any installment of principal or interest due, including but not limited to a Balloon Payment, under this Note within five (5) business days after the day on which any such payment is due;

(b)  any of the following events shall occur: an order, judgment or decree shall be entered for relief in respect of or adjudicating the Maker bankrupt or insolvent; the Maker shall petition or apply to any tribunal for the appointment of, or taking of possession by, a trustee, receiver, custodian, or liquidator or other similar official of the Maker or any substantial part of its assets; or the Maker shall commence any proceeding relating to the Maker under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, or any such petition or application is filed or any such proceeding is commenced against the Maker

3

and such petition, application or proceeding is not dismissed within one hundred twenty (120) days.

8.  Non-Waiver.    The failure at any time of Holder to exercise any of his options or any other rights hereunder shall not constitute a waiver thereof, nor shall it be a bar to the exercise of any of his options or rights at a later date. All rights and remedies of Holder shall be cumulative and may be pursued singly, successively or together, at the option of Holder. The acceptance by Holder of any partial payment shall not constitute a waiver of any default or of any of Holder’s rights under this Note.

9.  Applicable Law, Venue and Jurisdiction.    This Note and the rights and obligations of Maker and Holder shall be governed by and interpreted in accordance with the law of the Commonwealth of Virginia. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Alexandria, Virginia, in accordance with the commercial rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that any party shall be entitled to seek specific performance of its rights hereunder or injunctive relief in any court of competent jurisdiction during the tendency of any dispute or controversy arising under or in connection with this Agreement.

10.  Partial Invalidity.    The unenforceability or invalidity of any provision of this Note shall not affect the enforceability or validity of any other provision herein and the invalidity or unenforceability of any provision of this Note to any person or circumstance shall not affect the enforceability or validity of such provision as it may apply to other persons or circumstances.

11.  Binding Effect.    This Note shall be binding upon and inure to the benefit of Maker and Holder and their respective successors, heirs and personal representatives.

12.  Costs/Attorneys Fees.    Upon the occurrence of an Event of Default, if this Note is referred to an attorney for collection or enforcement the Maker shall pay all of the Holder’s reasonable costs, fees and expenses, including all attorneys’ fees which relate to the collection of this Note provided that Holder substantially prevails in such collection or enforcement.

13.  Manner and Method of Payment.    All payments called for in this Note shall be made in lawful money of the United States of America. If made by check, or other payment instrument, such check, draft, or other payment instrument shall represent immediately available funds. Should any payment date fall on a non-banking day, Maker shall make the payment on the next succeeding banking day.

14.  Notices.    Any notice or demand required by or in connection with this Note shall be given by recognized overnight courier or hand delivery to the parties at their addresses specified on the first page of this Note, as such address may be modified by written notice of the parties. All notices and demands shall be considered to be effective upon the receipt thereof, or upon refusal to accept delivery by, the Maker or Holder, as applicable, regardless of the procedure or method utilized to accomplish delivery thereof to the Maker.

4

(a)    If to Maker:

Hadron, Inc.

5904 Richmond Highway

Suite 300

Alexandria, Virginia 22303

Attention: President

With a copy (which shall not constitute notice) to:

Holland & Knight LLP

2099 Pennsylvania Avenue, N.W.

Suite 100

Washington, D.C. 20006

Fax: (202) 955-5564

Attention: William J. Mutryn, Esq.

(b)    If to Holder:

Peter C. Belford, Sr.

10512 Bridle Lane

Potomac, Maryland 20854

With a copy (which shall not constitute notice) to:

Shaw Pittman, LLP

2300 N Street, N.W.

Washington, D.C. 20037

Attention: Victoria J. Perkins, Esq.

15.  Assignability.    This Note may not be assigned, sold, transferred or mortgaged by the Holder except to members of his immediate family or any trust or similar vehicle for the benefit of any such family member, at any time without the prior written consent of the Maker, which consent shall not be unreasonably withheld.

16.  Seal and Effective Date.    This Note is an instrument executed under seal and is to be considered effective and enforceable as of the date set forth on the first page hereof, independent of the date of actual execution and delivery.

17.  Tense; Gender; Defined Terms; Section Headings.    As used herein, the singular includes the plural and the plural includes the singular. A reference to any gender also applies to any other gender. Defined terms are capitalized throughout this Note. The section headings are for convenience only and are not part of this Note.

18.  Acknowledgement by Maker.    Maker acknowledges having read and understood, and agrees to be bound by, all terms and conditions of this Note, and hereby executes this Note intending to create an instrument executed under seal.

19.  Subordination.    This Note and the obligations evidenced hereby shall be subordinate to present and future senior debt of Maker. Concurrent with the execution of this

5

Note, Holder agrees to execute and deliver a subordination agreement with any Maker’s senior lenders (the “Senior Lender”) in a form reasonably required by Senior Lender. In addition, Holder agrees to execute substantially similar subordination agreements in favor of Maker’s future Senior Lenders if requested by such Senior Lenders while this Note is outstanding. The exercise of remedies upon an event of default under this Note may be limited by the terms of such subordination agreement.

20.  Set-off Under Merger Agreement.    Maker shall have the right to set-off against the payment of amounts due hereunder any amounts due to Maker by Holder under the Merger Agreement, including any amounts due under Section 12.5 (Indemnification Obligations). Prior to any such set-off, Maker shall deliver to Holder a written notice describing the amount of the proposed set-off and the reasons therefor. The payments represented by the proposed set-off shall be suspended until the claim or dispute that is the basis for the proposed set-off is either (i) resolved by the parties in writing or (ii) determined by an arbitrator or court pursuant to the Merger Agreement. Any payment or set-off determined upon resolution of any proposed set-off shall be made within ten (10) days following the resolution or determination of such claim or dispute.

(Signature page to follow)

6

IN WITNESS WHEREOF, Hadron, Inc., a New York corporation has caused this Convertible Note to be signed in its corporate name by its President or Chief Executive Officer and its corporate seal affixed hereto duly attested, by authority duly given, all as of the day and year first above written.

Attest:		HADRON, INC. a New York Corporation
By:	/s/    KAREN DICKEY	By:	/s/    STERLING E. PHILLIPS
	Karen Dickey Corporate Secretary		Sterling E. Phillips Chief Executive Officer
ACKNOWLEDGED AND AGREED:
		HOLDER:
		By:	/s/    PETER C. BELFORD, SR.
			Peter C. Belford, Sr.

7

EX-10.25

Exhibit 10.25

HADRON, INC.

PROMISSORY NOTE

	Alexandria, Virginia
$57,950.00	Issue Date: November 5, 2001
	Maturity Date: November 5, 2006

FOR VALUE RECEIVED, the undersigned, HADRON, INC., a corporation organized under the laws of the STATE OF NEW YORK, (“Maker” or “Company”) hereby promises to pay to LESE ANN KODGER (“Holder”), the principal amount of $57,950.00 (the “Principal Amount”) in immediately available funds, at Holder’s address as set forth herein, or at such other place as the Holder may from time to time in writing designate in accordance with the terms set forth below:

1.  Notes.    This Promissory Note (“Note”) is one of several promissory notes issued pursuant to the Agreement and Plan of Merger (“Merger Agreement”) dated as of October 31, 2001 by and among Maker, Hadron Acquisition Corp., a Delaware Corporation, Analex Corporation, a Nevada corporation and each of the selling equity holders identified on Exhibit A attached thereto, and the Analex Corporation Employee Stock Ownership Plan and Trust. Terms not defined herein shall have the meanings set forth in the Merger Agreement.

2.  Interest Rate.    Interest shall accrue and be payable on the unpaid Principal Amount from the date of this Note until paid in full at the rate of six percent (6%) per annum (the “Rate”). Notwithstanding any provision of this Note, Holder does not intend to charge and Maker shall not be required to pay any amount of interest or other charges in excess of the maximum permitted by the applicable law of the Commonwealth of Virginia; if any higher rate ceiling is lawful, then that higher rate ceiling shall apply. Any payment in excess of such maximum shall be refunded to Maker or credited against the Principal Amount, at the option of Holder. In the event that any amount due hereunder is not paid when due, such unpaid amount shall from and after the due date thereof, bear interest at a rate of ten percent (10%) per annum (the “Default Rate”).

3.  Application of Payments.    All payments received hereunder shall be applied first to the payment of any and all expenses and/or charges payable hereunder, then to interest due and payable, with the balance applied to the Principal Amount.

4.  Payment Terms.    Payments of principal and interest in the aggregate amount of $3,375.00 shall be due and payable quarterly commencing on February 2, 2002, and continuing on the first day of each subsequent three-month period thereafter through February 1, 2006, for a total of twenty (20) consecutive quarters unless the Note is prepaid (in whole or in part) pursuant to Section 5 hereof or the Note is terminated pursuant to Section 6 hereof. This Note shall mature and any unpaid Principal Amount plus accrued interest shall be due and payable on November 1, 2006 (the “Maturity Date”); provided, however that this Note shall terminate upon the occurrence of a Change in Control Transaction (as defined below) and from and after the closing of such Change in Control Transaction, and except for the balloon payment described in Section 6 below, no further payment of principal or interest by Maker shall be required.

5.  Prepayment and Reduction in Principal Amount.

(a)  Commencing one year from the Date of this Note, the Maker may prepay this Note in whole or in part without penalty by offering in writing to purchase from Holder up to 45,000 shares of Maker’s Common Stock beneficially owned by Holder for $2.00 per share. If Holder agrees to sell the stock to Maker, upon payment by Maker to Holder of proceeds of such sale, the Principal Amount shall be reduced in an amount equal to the percentage of 45,000 shares repurchased by the Maker. There shall be no prepayment penalty as a result of any prepayment of the Principal Amount made in accordance with the terms of this subsection. If Holder declines to sell such stock to Maker or fails to accept Maker’s written offer within thirty (30) days of delivery of Notice, the Principal Amount shall be reduced by the same percentage as if Holder had sold the stock to Maker. In the event of a partial prepayment of the Principal Amount, future quarterly payments shall be adjusted proportionally to reflect any such prepayment and provide for equal quarterly payments for the remainder of the term hereof.

(b)  If the Holder sells or otherwise decreases his beneficial ownership of any of the 45,000 shares of Maker’s Common Stock beneficially owned by Holder issued to Holder in connection with closing of the Merger Agreement and represented by Certificate No. H04875 (the “Designated Shares”), the Principal Amount shall be reduced by a percentage equal to the number of shares of common stock sold or transferred divided by $45,000. Holder must provide notice to Maker of any sale or transfer of Maker Common Stock beneficially owned by Holder pursuant to Section 14 hereof. In the event of a partial prepayment of the Principal Amount, future quarterly payments shall be adjusted proportionally to reflect any such prepayment and provide for equal quarterly payments for the remainder of the term hereof.

6.  Balloon Payment.

(a)  If the Maker is (i) subject to a Change in Control Transaction prior to the Maturity Date in which the Maker’s Common Stock is valued at the closing date of the Change in Control Transaction at a price per share which is less than $2.00 or (ii) the Average Price (as defined below) of Maker’s Common Stock is less than $2.00 per share as of the close of business on the Maturity Date, then the Holder is entitled to the Balloon Payment. The Balloon Payment is equal to the product of: (a) 45,000 less the number of Designated Shares purchased by Maker or declined to be sold by Holder pursuant to Section 5(a) hereof or sold by Holder pursuant to Section 5(b) hereof and (b) the difference between $2.00 and the Average Price as of the close of business on the first business day prior to the Termination Date (as defined below). The Average Price is defined as the arithmetic average (mean) of the closing price (if Over the Counter, the closing last trade price) on the Termination Date and each of the nineteen (19) previous days during which Maker’s Common Stock was traded (a total of twenty trading days). If on any such date the Common Stock of Maker is not listed or admitted to trading on any national securities exchange and is not quoted by Nasdaq or any similar organization, the fair value of a share of Common Stock on such date shall be determined in good faith by mutual agreement of Holder and Maker. If the parties cannot agree on the fair value, the Holder and Maker shall appoint an arbitrator experienced in such valuations to make

2

such determination on their behalf. In the event of Change in Control Transaction, the Termination Date is defined as the closing date of such transaction. In the event this Note reaches maturity prior to the consummation of any Change in Control Transaction, the Termination Date is defined as the Maturity Date. Such payment shall be made, in immediately available funds, by or on behalf of Maker simultaneously with and as part of the consummation of the event listed in (i) or (ii) above and the making of such payment shall be considered payment in full under this Note, and the Note shall terminate immediately upon payment pursuant to this Section and be of no further force and effect.

(b)  A “Change in Control Transaction” shall be the happening of any one (1) of the following events: (i) the dissolution or liquidation of the Company; (ii) reorganization, merger or consolidation involving the Company, unless (A) the transaction involves only the Company and one or more of the Company’s parent corporation and wholly-owned (excluding interests held by employees, officers and directors) subsidiaries; or (B) the shareholders who had the power to elect a majority of the board of directors of the Company immediately prior to the transaction have the power to elect a majority of the board of directors of the surviving entity immediately following the transaction; (iii) the sale of all or substantially all of the assets of the Company to another company, person or business entity; or (iv) an acquisition of Company stock, unless the shareholders who had the power to elect a majority of the board of directors of the Company immediately prior to the acquisition have the power to elect a majority of the board of directors of the Company immediately following the transaction.

(c)  In the event that a Change in Control Event occurs prior to the Maturity Date in which the Maker’s Common Stock is valued at the closing date of the Change of Control Transaction at a price per share of $2.00 or more, then this Note shall terminate, be deemed paid in full and Maker shall have no further payment obligations hereunder.

7.  Events of Default.    Upon the occurrence and during the continuance of an Event of Default (as defined below) the Holder may declare the entire unpaid Principal Amount of this Note, together with interest accrued, immediately due and payable at the place of payment. The term “Event of Default” shall mean:

(a)  the failure to pay any installment of principal or interest due, including but not limited to a Balloon Payment, under this Note within five (5) business days after the day on which any such payment is due;

(b)  any of the following events shall occur: an order, judgment or decree shall be entered for relief in respect of or adjudicating the Maker bankrupt or insolvent; the Maker shall petition or apply to any tribunal for the appointment of, or taking of possession by, a trustee, receiver, custodian, or liquidator or other similar official of the Maker or any substantial part of its assets; or the Maker shall commence any proceeding relating to the Maker under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, or any such petition or application is filed or any such proceeding is commenced against the Maker

3

and such petition, application or proceeding is not dismissed within one hundred twenty (120) days.

8.  Non-Waiver.    The failure at any time of Holder to exercise any of his options or any other rights hereunder shall not constitute a waiver thereof, nor shall it be a bar to the exercise of any of his options or rights at a later date. All rights and remedies of Holder shall be cumulative and may be pursued singly, successively or together, at the option of Holder. The acceptance by Holder of any partial payment shall not constitute a waiver of any default or of any of Holder’s rights under this Note.

9.  Applicable Law, Venue and Jurisdiction.    This Note and the rights and obligations of Maker and Holder shall be governed by and interpreted in accordance with the law of the Commonwealth of Virginia. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Alexandria, Virginia, in accordance with the commercial rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that any party shall be entitled to seek specific performance of its rights hereunder or injunctive relief in any court of competent jurisdiction during the tendency of any dispute or controversy arising under or in connection with this Agreement.

10.  Partial Invalidity.    The unenforceability or invalidity of any provision of this Note shall not affect the enforceability or validity of any other provision herein and the invalidity or unenforceability of any provision of this Note to any person or circumstance shall not affect the enforceability or validity of such provision as it may apply to other persons or circumstances.

11.  Binding Effect.    This Note shall be binding upon and inure to the benefit of Maker and Holder and their respective successors, heirs and personal representatives.

12.  Costs/Attorneys Fees.    Upon the occurrence of an Event of Default, if this Note is referred to an attorney for collection or enforcement the Maker shall pay all of the Holder’s reasonable costs, fees and expenses, including all attorneys’ fees which relate to the collection of this Note provided that Holder substantially prevails in such collection or enforcement.

13.  Manner and Method of Payment.    All payments called for in this Note shall be made in lawful money of the United States of America. If made by check, or other payment instrument, such check, draft, or other payment instrument shall represent immediately available funds. Should any payment date fall on a non-banking day, Maker shall make the payment on the next succeeding banking day.

14.  Notices.    Any notice or demand required by or in connection with this Note shall be given by recognized overnight courier or hand delivery to the parties at their addresses specified on the first page of this Note, as such address may be modified by written notice of the parties. All notices and demands shall be considered to be effective upon the receipt thereof, or upon refusal to accept delivery by, the Maker or Holder, as applicable, regardless of the procedure or method utilized to accomplish delivery thereof to the Maker.

4

(a)    If to Maker:

Hadron, Inc.

5904 Richmond Highway

Suite 300

Alexandria, Virginia 22303

Attention: President

With a copy (which shall not constitute notice) to:

Holland & Knight LLP

2099 Pennsylvania Avenue, N.W.

Suite 100

Washington, D.C. 20006

Fax: (202) 955-5564

Attention: William J. Mutryn, Esq.

(b)    If to Holder:

Lese Ann Kodger

1501 Minutemen Cswy.

Unit 202

Cocoa Beach, Florida 32931

With a copy (which shall not constitute notice) to:

Shaw Pittman, LLP

2300 N Street, N.W.

Washington, D.C. 20037

Attention: Victoria J. Perkins, Esq.

15.  Assignability.    This Note may not be assigned, sold, transferred or mortgaged by the Holder except to members of his immediate family or any trust or similar vehicle for the benefit of any such family member, at any time without the prior written consent of the Maker, which consent shall not be unreasonably withheld.

16.  Seal and Effective Date.    This Note is an instrument executed under seal and is to be considered effective and enforceable as of the date set forth on the first page hereof, independent of the date of actual execution and delivery.

17.  Tense; Gender; Defined Terms; Section Headings.    As used herein, the singular includes the plural and the plural includes the singular. A reference to any gender also applies to any other gender. Defined terms are capitalized throughout this Note. The section headings are for convenience only and are not part of this Note.

18.  Acknowledgement by Maker.    Maker acknowledges having read and understood, and agrees to be bound by, all terms and conditions of this Note, and hereby executes this Note intending to create an instrument executed under seal.

5

19.  Subordination.    This Note and the obligations evidenced hereby shall be subordinate to present and future senior debt of Maker. Concurrent with the execution of this Note, Holder agrees to execute and deliver a subordination agreement with any Maker’s senior lenders (the “Senior Lender”) in a form reasonably required by Senior Lender. In addition, Holder agrees to execute substantially similar subordination agreements in favor of Maker’s future Senior Lenders if requested by such Senior Lenders while this Note is outstanding. The exercise of remedies upon an event of default under this Note may be limited by the terms of such subordination agreement.

20.  Set-off Under Merger Agreement.    Maker shall have the right to set-off against the payment of amounts due hereunder any amounts due to Maker by Holder under the Merger Agreement, including any amounts due under Section 12.5 (Indemnification Obligations). Prior to any such set-off, Maker shall deliver to Holder a written notice describing the amount of the proposed set-off and the reasons therefor. The payments represented by the proposed set-off shall be suspended until the claim or dispute that is the basis for the proposed set-off is either (i) resolved by the parties in writing or (ii) determined by an arbitrator or court pursuant to the Merger Agreement. Any payment or set-off determined upon resolution of any proposed set-off shall be made within ten (10) days following the resolution or determination of such claim or dispute.

(Signature page to follow)

6

IN WITNESS WHEREOF, Hadron, Inc., a New York corporation has caused this Convertible Note to be signed in its corporate name by its President or Chief Executive Officer and its corporate seal affixed hereto duly attested, by authority duly given, all as of the day and year first above written.

Attest:		HADRON, INC. a New York Corporation
By:	/s/    KAREN DICKEY         Karen Dickey Corporate Secretary	By:	/s/    STERLING E. PHILLIPS         Sterling E. Phillips Chief Executive Officer

ACKNOWLEDGED AND AGREED:

HOLDER:
By:	/s/    LESE ANN KODGER         Lese Ann Kodger

7

EX-10.26

Exhibit 10.26

HADRON, INC.

PROMISSORY NOTE

Alexandria, Virginia

$70,825.00 Issue Date: November 5, 2001

Maturity Date: November 5, 2006

FOR VALUE RECEIVED,the undersigned, HADRON, INC., a corporation organized under the laws of the STATE OF NEW YORK, (“Maker” or “Company”) hereby promises to pay to ALEX PATTERSON (“Holder”), the principal amount of $70,825.00 (the “Principal Amount”) in immediately available funds, at Holder’s address as set forth herein, or at such other place as the Holder may from time to time in writing designate in accordance with the terms set forth below:

1.  Notes.    This Promissory Note (“Note”) is one of several promissory notes issued pursuant to the Agreement and Plan of Merger (“Merger Agreement”) dated as of October 31, 2001 by and among Maker, Hadron Acquisition Corp., a Delaware Corporation, Analex Corporation, a Nevada corporation and each of the selling equity holders identified on Exhibit A attached thereto, and the Analex Corporation Employee Stock Ownership Plan and Trust. Terms not defined herein shall have the meanings set forth in the Merger Agreement.

2.  Interest Rate.    Interest shall accrue and be payable on the unpaid Principal Amount from the date of this Note until paid in full at the rate of six percent (6%) per annum (the “Rate”). Notwithstanding any provision of this Note, Holder does not intend to charge and Maker shall not be required to pay any amount of interest or other charges in excess of the maximum permitted by the applicable law of the Commonwealth of Virginia; if any higher rate ceiling is lawful, then that higher rate ceiling shall apply. Any payment in excess of such maximum shall be refunded to Maker or credited against the Principal Amount, at the option of Holder. In the event that any amount due hereunder is not paid when due, such unpaid amount shall from and after the due date thereof, bear interest at a rate of ten percent (10%) per annum (the “Default Rate”).

3.  Application of Payments.    All payments received hereunder shall be applied first to the payment of any and all expenses and/or charges payable hereunder, then to interest due and payable, with the balance applied to the Principal Amount.

4.  Payment Terms.    Payments of principal and interest in the aggregate amount of $4,125.00 shall be due and payable quarterly commencing on February 2, 2002, and continuing on the first day of each subsequent three-month period thereafter through February 1, 2006, for a total of twenty (20) consecutive quarters unless the Note is prepaid (in whole or in part) pursuant to Section 5 hereof or the Note is terminated pursuant to Section 6 hereof. This Note shall mature and any unpaid Principal Amount plus accrued interest shall be due and payable on November 1, 2006 (the “Maturity Date”); provided, however that this Note shall terminate upon the occurrence of a Change in Control Transaction (as defined below) and from and after the closing of such Change in Control Transaction, and except for the balloon payment described in Section 6 below, no further payment of principal or interest by Maker shall be required.

5.  Prepayment and Reduction in Principal Amount.

(a)  Commencing one year from the Date of this Note, the Maker may prepay this Note in whole or in part without penalty by offering in writing to purchase from Holder up to 55,000 shares of Maker’s Common Stock beneficially owned by Holder for $2.00 per share. If Holder agrees to sell the stock to Maker, upon payment by Maker to Holder of proceeds of such sale, the Principal Amount shall be reduced in an amount equal to the percentage of 55,000 shares repurchased by the Maker. There shall be no prepayment penalty as a result of any prepayment of the Principal Amount made in accordance with the terms of this subsection. If Holder declines to sell such stock to Maker or fails to accept Maker’s written offer within thirty (30) days of delivery of Notice, the Principal Amount shall be reduced by the same percentage as if Holder had sold the stock to Maker. In the event of a partial prepayment of the Principal Amount, future quarterly payments shall be adjusted proportionally to reflect any such prepayment and provide for equal quarterly payments for the remainder of the term hereof.

(b)  If the Holder sells or otherwise decreases his beneficial ownership of any of the 55,000 shares of Maker’s Common Stock beneficially owned by Holder issued to Holder in connection with closing of the Merger Agreement and represented by Certificate No. H04880 (the “Designated Shares”), the Principal Amount shall be reduced by a percentage equal to the number of shares of common stock sold or transferred divided by $55,000. Holder must provide notice to Maker of any sale or transfer of Maker Common Stock beneficially owned by Holder pursuant to Section 14 hereof. In the event of a partial prepayment of the Principal Amount, future quarterly payments shall be adjusted proportionally to reflect any such prepayment and provide for equal quarterly payments for the remainder of the term hereof.

6.  Balloon Payment.

(a)  If the Maker is (i) subject to a Change in Control Transaction prior to the Maturity Date in which the Maker’s Common Stock is valued at the closing date of the Change in Control Transaction at a price per share which is less than $2.00 or (ii) the Average Price (as defined below) of Maker’s Common Stock is less than $2.00 per share as of the close of business on the Maturity Date, then the Holder is entitled to the Balloon Payment. The Balloon Payment is equal to the product of: (a) 55,000 less the number of Designated Shares purchased by Maker or declined to be sold by Holder pursuant to Section 5(a) hereof or sold by Holder pursuant to Section 5(b) hereof and (b) the difference between $2.00 and the Average Price as of the close of business on the first business day prior to the Termination Date (as defined below). The Average Price is defined as the arithmetic average (mean) of the closing price (if Over the Counter, the closing last trade price) on the Termination Date and each of the nineteen (19) previous days during which Maker’s Common Stock was traded (a total of twenty trading days). If on any such date the Common Stock of Maker is not listed or admitted to trading on any national securities exchange and is not quoted by Nasdaq or any similar organization, the fair value of a share of Common Stock on such date shall be determined in good faith by mutual agreement of Holder and Maker. If the parties cannot agree on the fair value, the Holder and Maker shall appoint an arbitrator experienced in such valuations to make

2

such determination on their behalf. In the event of Change in Control Transaction, the Termination Date is defined as the closing date of such transaction. In the event this Note reaches maturity prior to the consummation of any Change in Control Transaction, the Termination Date is defined as the Maturity Date. Such payment shall be made, in immediately available funds, by or on behalf of Maker simultaneously with and as part of the consummation of the event listed in (i) or (ii) above and the making of such payment shall be considered payment in full under this Note, and the Note shall terminate immediately upon payment pursuant to this Section and be of no further force and effect.

(b)  A “Change in Control Transaction” shall be the happening of any one (1) of the following events: (i) the dissolution or liquidation of the Company; (ii) reorganization, merger or consolidation involving the Company, unless (A) the transaction involves only the Company and one or more of the Company’s parent corporation and wholly-owned (excluding interests held by employees, officers and directors) subsidiaries; or (B) the shareholders who had the power to elect a majority of the board of directors of the Company immediately prior to the transaction have the power to elect a majority of the board of directors of the surviving entity immediately following the transaction; (iii) the sale of all or substantially all of the assets of the Company to another company, person or business entity; or (iv) an acquisition of Company stock, unless the shareholders who had the power to elect a majority of the board of directors of the Company immediately prior to the acquisition have the power to elect a majority of the board of directors of the Company immediately following the transaction.

(c)  In the event that a Change in Control Event occurs prior to the Maturity Date in which the Maker’s Common Stock is valued at the closing date of the Change of Control Transaction at a price per share of $2.00 or more, then this Note shall terminate, be deemed paid in full and Maker shall have no further payment obligations hereunder.

7.  Events of Default.    Upon the occurrence and during the continuance of an Event of Default (as defined below) the Holder may declare the entire unpaid Principal Amount of this Note, together with interest accrued, immediately due and payable at the place of payment. The term “Event of Default” shall mean:

(a)  the failure to pay any installment of principal or interest due, including but not limited to a Balloon Payment, under this Note within five (5) business days after the day on which any such payment is due;

(b)  any of the following events shall occur: an order, judgment or decree shall be entered for relief in respect of or adjudicating the Maker bankrupt or insolvent; the Maker shall petition or apply to any tribunal for the appointment of, or taking of possession by, a trustee, receiver, custodian, or liquidator or other similar official of the Maker or any substantial part of its assets; or the Maker shall commence any proceeding relating to the Maker under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, or any such petition or application is filed or any such proceeding is commenced against the Maker

3

and such petition, application or proceeding is not dismissed within one hundred twenty (120) days.

8.  Non-Waiver.    The failure at any time of Holder to exercise any of his options or any other rights hereunder shall not constitute a waiver thereof, nor shall it be a bar to the exercise of any of his options or rights at a later date. All rights and remedies of Holder shall be cumulative and may be pursued singly, successively or together, at the option of Holder. The acceptance by Holder of any partial payment shall not constitute a waiver of any default or of any of Holder’s rights under this Note.

9.  Applicable Law, Venue and Jurisdiction.    This Note and the rights and obligations of Maker and Holder shall be governed by and interpreted in accordance with the law of the Commonwealth of Virginia. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Alexandria, Virginia, in accordance with the commercial rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that any party shall be entitled to seek specific performance of its rights hereunder or injunctive relief in any court of competent jurisdiction during the tendency of any dispute or controversy arising under or in connection with this Agreement.

10.  Partial Invalidity.    The unenforceability or invalidity of any provision of this Note shall not affect the enforceability or validity of any other provision herein and the invalidity or unenforceability of any provision of this Note to any person or circumstance shall not affect the enforceability or validity of such provision as it may apply to other persons or circumstances.

11.  Binding Effect.    This Note shall be binding upon and inure to the benefit of Maker and Holder and their respective successors, heirs and personal representatives.

12.  Costs/Attorneys Fees.    Upon the occurrence of an Event of Default, if this Note is referred to an attorney for collection or enforcement the Maker shall pay all of the Holder’s reasonable costs, fees and expenses, including all attorneys’ fees which relate to the collection of this Note provided that Holder substantially prevails in such collection or enforcement.

13.  Manner and Method of Payment.    All payments called for in this Note shall be made in lawful money of the United States of America. If made by check, or other payment instrument, such check, draft, or other payment instrument shall represent immediately available funds. Should any payment date fall on a non-banking day, Maker shall make the payment on the next succeeding banking day.

14.  Notices.    Any notice or demand required by or in connection with this Note shall be given by recognized overnight courier or hand delivery to the parties at their addresses specified on the first page of this Note, as such address may be modified by written notice of the parties. All notices and demands shall be considered to be effective upon the receipt thereof, or upon refusal to accept delivery by, the Maker or Holder, as applicable, regardless of the procedure or method utilized to accomplish delivery thereof to the Maker.

4

(a)    If to Maker:

Hadron, Inc.

5904 Richmond Highway

Suite 300

Alexandria, Virginia 22303

Attention: President

With a copy (which shall not constitute notice) to:

Holland & Knight LLP

2099 Pennsylvania Avenue, N.W.

Suite 100

Washington, D.C. 20006

Fax: (202) 955-5564

Attention: William J. Mutryn, Esq.

(b)    If to Holder:

Alex Patterson

8257 Creekside Trace

Broadview Heights, Ohio 44147

With a copy (which shall not constitute notice) to:

Shaw Pittman, LLP

2300 N Street, N.W.

Washington, D.C. 20037

Attention: Victoria J. Perkins, Esq.

15.  Assignability.    This Note may not be assigned, sold, transferred or mortgaged by the Holder except to members of his immediate family or any trust or similar vehicle for the benefit of any such family member, at any time without the prior written consent of the Maker, which consent shall not be unreasonably withheld.

16.  Seal and Effective Date.    This Note is an instrument executed under seal and is to be considered effective and enforceable as of the date set forth on the first page hereof, independent of the date of actual execution and delivery.

17.  Tense; Gender; Defined Terms; Section Headings.    As used herein, the singular includes the plural and the plural includes the singular. A reference to any gender also applies to any other gender. Defined terms are capitalized throughout this Note. The section headings are for convenience only and are not part of this Note.

18.  Acknowledgement by Maker.    Maker acknowledges having read and understood, and agrees to be bound by, all terms and conditions of this Note, and hereby executes this Note intending to create an instrument executed under seal.

19.  Subordination.    This Note and the obligations evidenced hereby shall be subordinate to present and future senior debt of Maker. Concurrent with the execution of this

5

Note, Holder agrees to execute and deliver a subordination agreement with any Maker’s senior lenders (the “Senior Lender”) in a form reasonably required by Senior Lender. In addition, Holder agrees to execute substantially similar subordination agreements in favor of Maker’s future Senior Lenders if requested by such Senior Lenders while this Note is outstanding. The exercise of remedies upon an event of default under this Note may be limited by the terms of such subordination agreement.

20.  Set-off Under Merger Agreement.    Maker shall have the right to set-off against the payment of amounts due hereunder any amounts due to Maker by Holder under the Merger Agreement, including any amounts due under Section 12.5 (Indemnification Obligations). Prior to any such set-off, Maker shall deliver to Holder a written notice describing the amount of the proposed set-off and the reasons therefor. The payments represented by the proposed set-off shall be suspended until the claim or dispute that is the basis for the proposed set-off is either (i) resolved by the parties in writing or (ii) determined by an arbitrator or court pursuant to the Merger Agreement. Any payment or set-off determined upon resolution of any proposed set-off shall be made within ten (10) days following the resolution or determination of such claim or dispute.

(Signature page to follow)

6

IN WITNESS WHEREOF, Hadron, Inc., a New York corporation has caused this Convertible Note to be signed in its corporate name by its President or Chief Executive Officer and its corporate seal affixed hereto duly attested, by authority duly given, all as of the day and year first above written.

Attest:		HADRON, INC. a New York Corporation
By:	/s/    KAREN DICKEY         Karen Dickey Corporate Secretary	By:	/s/    STERLING E. PHILLIPS         Sterling E. Phillips Chief Executive Officer

ACKNOWLEDGED AND AGREED:

HOLDER:
By:	/s/    ALEX PATTERSON         Alex Patterson

7

EX-10.27

Exhibit 10.27

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into this 5th day of November, 2001, by and between HADRON, INC., a New York corporation, or any wholly-owned subsidiary so designated by HADRON, INC., (the “Company”) and PETERC.BELFORD,SR., an individual residing at 10512 Bridle Lane, Potomac, Maryland 20854 (the “Employee”).

RECITALS

WHEREAS, the Company desires to employ the Employee and the Employee has agreed to accept such employment on the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the premises and the mutual promises herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.  Employment.    The Company hereby employs the Employee and the Employee accepts such employment as President of Analex Corporation, a wholly-owned subsidiary of the Company (“Analex”).

2.  Term of Employment.    The term of the Employee’s employment under this Agreement shall be for the period commencing on the date hereof (the “Effective Date”) and expiring one (1) year from the Closing, as defined in the Agreement and Plan of Merger by and among Analex Corporation, Sellers (as defined therein), Analex Corporation Employee Stock Ownership Plan and Trust, Hadron, Inc. and Hadron Acquisition Corp. (the “Merger Agreement”). Upon mutual written agreement, the parties may extend the term of this Agreement.

3.  Duties.    The Employee is employed hereunder as President of Analex Corporation, a wholly-owned subsidiary of the Company, and is hereby engaged to provide the following services (the “Services”):

(a)  Direct the operations of Analex Corporation, as a wholly-owned subsidiary of Hadron, and perform such duties as are normally required for such position;

(b)  Assistance in the development, oversight and management of the Company’s efforts to secure the [CONFIDENTIAL TREATMENT REQUESTED] Contract (the “[CONFIDENTIAL TREATMENT REQUESTED] Contract”);

(c)  Assistance in the oversight of the Company’s response to any protests that may arise with respect to the [CONFIDENTIAL TREATMENT REQUESTED] Contract; and

(d)  Any other services as are reasonably requested by the Company.

4.  Scope.    Employee shall make himself reasonably available to perform the Services as requested by the President of Hadron and shall devote his best efforts, ability and attention to properly perform his duties pursuant to this Agreement. The President of Hadron

shall specify and approve the number of hours per month to be worked by Employee, subject to the reasonable satisfaction of Employee.

5.  Compensation and Benefits.

(a)  Salary.    For all of the services rendered by Employee to the Company, the Company will pay Employee compensation of $48.08 per hour, payable in periodic installments in accordance with the Company’s regular payroll practices in effect from time to time.

(b) Bonus Payment.    In the event the Company is awarded the [CONFIDENTIAL TREATMENT REQUESTED] Contract, Company shall pay Employee a Bonus Payment as described below. Such Bonus Payment is also referred to in Section 2.2(e) of the Merger Agreement. The Bonus Payment shall be payable if the [CONFIDENTIAL TREATMENT REQUESTED] Contract is awarded to the Company whether or not Employee is employed by the Company at the time of award unless Employee was terminated for gross misconduct. If the [CONFIDENTIAL TREATMENT REQUESTED] Contract is less than or equal to approximately [CONFIDENTIAL TREATMENT REQUESTED] years with a total evaluated price of $[CONFIDENTIAL TREATMENT REQUESTED] or more, including all options, Company shall pay a Bonus Payment of $200,000 to Employee. If the final evaluated price of the [CONFIDENTIAL TREATMENT REQUESTED] Contract is less than $[CONFIDENTIAL TREATMENT REQUESTED] but at least $[CONFIDENTIAL TREATMENT REQUESTED], the Bonus Payment to Employee shall be $200,000 multiplied by a percentage which is the final evaluated price of the [CONFIDENTIAL TREATMENT REQUESTED] Contract divided by $[CONFIDENTIAL TREATMENT REQUESTED]. If the final evaluated price of the [CONFIDENTIAL TREATMENT REQUESTED] Contract is less than $[CONFIDENTIAL TREATMENT REQUESTED], no Bonus Payment shall be due or payable. Any Bonus Payment shall be paid pursuant to a promissory note in the form attached hereto as Exhibit 1 which shall provide for twelve (12) quarterly payments beginning three (3) months after contract start at [CONFIDENTIAL TREATMENT REQUESTED] with interest accruing at the annual rate of the prime rate printed in The Wall Street Journal on the date the note is issued, as adjusted to the prime rate printed in The Wall Street Journal as of the first business day of each of the following yearly anniversary dates of the note, plus one percent (1%). Payments shall consist of equal payments of principal plus accrued interest. The original principal amount of the promissory note shall be equal to the Bonus Payment less all payments paid pursuant to section 5(a) hereof and less all applicable deductions pursuant to Section 5(c) hereof. All compensation due to Employee pursuant to Section 5(a) herein shall reduce, on a dollar-for-dollar basis, the Bonus Payment received by Employee hereunder.

(c)  Deductions.    The Company may deduct from any compensation paid to the Employee hereunder all applicable local, state, Federal or foreign taxes, including income tax, withholding tax, social security tax or other similar taxes. Employee is entitled to request elective deductions for health benefits, 401(k) and other employee-funded benefits offered by the Company from time to time.

6.  Reimbursement.    The Company agrees to reimburse the Employee for reasonable and necessary business expenses incurred by him subject to policies and guidelines of the Company in effect at the time the expenses are incurred. Such business expenses must be

2

authorized in advance by the President of Hadron or his designee. Such reimbursement will occur upon presentation by Employee of itemized bills, vouchers or accountings prepared in conformance with applicable regulations of the Internal Revenue Service and the policies and guidelines of the Company.

7.  Termination.

(a) Notwithstanding any provision of this Agreement to the contrary, Employee’s employment shall terminate upon his death, and the Company at any time may terminate his employment by giving him written notice of such termination (i) for cause, as hereinafter defined; (ii) if Employee shall violate any of any provision of that certain Non-Competition Agreement of even date herewith by and between the Company and the Employee; or (iii) if Employee shall become physically or mentally incapacitated and by reason thereof unable to perform his duties hereunder for a period of thirty (30) consecutive days. For the purpose of clause (i) of this subsection 7(a), “for cause” shall mean any of the following events: (w) the refusal or failure of Employee to submit to testing for the use of alcohol, drugs, or controlled substances, if requested by Company, or the results of such a test of Employee indicating any use of illicit drugs or controlled substances; (x) conviction in a court of law of any crime or offense involving money or other property of the Company or any of its affiliates or subsidiaries, or any felony; or (y) violation of specific directions of the President of the Company; or (z) failure or refusal to perform duties in a satisfactory manner and in accordance with this Agreement.

(b)  In addition, either party may terminate this Agreement on thirty (30) days prior written notice to the other party, with or without cause.

8.  Employee Confidentiality, Assignment of Inventions and Noncompetition Agreement.    Simultaneously with the execution of this Agreement, Employee will execute a Non-Competition Agreement.

9.  Miscellaneous.

(a)  Reservation of Authority.    Employee’s duties and authority shall at all times be subject to directives of the Company’s President and resolutions of the Company’s or Analex Corporation’s current Board of Directors.

(b)  Drug Testing.    Employee agrees that upon the request of the Company, Employee will promptly, without notice, submit to testing for the use of drugs or controlled substances.

(c)  Cumulative Remedies.    If either party breaches any provisions or covenants set forth in this Agreement, the other party shall be entitled to pursue any remedy available in law or in equity. The parties agree that remedies for breach of this Agreement are cumulative.

(d)  Assignment.    The Company may assign this Agreement at any time to any affiliate or subsidiary or to any successor in interest to the entire business of the Company. Employee may not assign this Agreement.

3

(e)  Notice.    Any and all notices, requests or other communications provided for herein shall be given in writing and sent by hand delivery or by recognized overnight delivery service or by registered or certified mail, return receipt requested, with postage prepaid.

(f)  Waiver.    No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in a writing signed by the parties hereto. No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by any other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

(g)  Entire Agreement.    This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. There are no other written, verbal, express, or implied agreements, understandings, or representations between the parties except as have been expressly set forth in this Agreement.

(h)  Choice of Law and Arbitration.    This Agreement shall be governed, construed and enforced in accordance with the internal laws, and not the laws of conflicts, of the Commonwealth of Virginia. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Alexandria, Virginia, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction thereof; provided, however, that either party shall be entitled to seek injunctive relief or specific performance of its rights hereunder in a court of competent jurisdiction during the pendency of any dispute or controversy arising under or in connection with this Agreement.

(i)  Validity.    The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

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

EMPLOYEE:
By:	/s/    PETER C. BELFORD, SR.
	Peter C. Belford, Sr.

COMPANY: HADRON, INC,
By:	/s/    STERLING E. PHILLIPS, JR.
	Sterling E. Phillips, Jr. President and Chief Executive Officer

4

EX-10.28

Exhibit 10.28

CREDIT AGREEMENT

among

HADRON, INC.

as Borrower

SUBSIDIARIES OF THE BORROWER

FROM TIME TO TIME PARTY HERETO

as Subsidiary Guarantors

and

BANK OF AMERICA, N.A.

as Lender

November 2, 2001

1.     DEFINITIONS; CONSTRUCTION	1
1.1.       Certain Definitions	1
1.2.       Construction	18
1.3.       Accounting Principles	18
2.     THE FACILITIES	18
2.1.       Revolving Credit Facility	18
2.2.       Term Loan	20
2.3.       Fees	21
2.4.       Making of Loans	21
2.5.       Interest Rates	22
2.6.       Intentionally Deleted	22
2.7.       Optional Prepayments of Term Loan	22
2.8.       Optional Prepayments of Revolving Credit Facility Loans	23
2.9.       Mandatory Prepayments	23
2.10.     Interest Payment Dates	23
2.11.     Payments Generally	23
2.12.     Additional Compensation in Certain Circumstances	24
2.13.     Taxes	26
2.14.     Intentionally Deleted	27
2.15.     Borrowing Base	27
2.16.     Letters of Credit	28
2.17.     Procedure for Issuance and Amendment of Letters of Credit	29
2.18.     Letter of Credit Drawings and Reimbursements	29
2.19.     Obligations Absolute	29
2.20.     Further Assurances	30
2.21.     Letter of Credit Applications	30
3.     REPRESENTATIONS AND WARRANTIES	31
3.1.       Corporate Existence and Qualification	31
3.2.       Authority: Noncontravention	31
3.3.       Financial Position: Solvency	31
3.4.       Payment of Taxes	32
3.5.       Accuracy of Submitted Information; Omissions	32
3.6.       Government Contracts	33
3.7.       No Defaults or Liabilities	33
3.8.       No Violations of Law	33
3.9.       Litigation and Proceedings	33
3.10.     Fiscal Year	33
3.11.     Pension Plans	33
3.12.     O.S.H.A. and Environmental Compliance	34
3.13.     Intellectual Property	35
3.14.     Existing or Pending Defaults; Material Contracts	35
3.15.     Title to Property	36
3.16.     Office Locations: Leases	36

i

3.17.     Labor Relations	36
3.18.     Absence of Undisclosed Liabilities	37
3.19.     Subsidiaries	37
3.20.     Intentionally Deleted	37
3.21.     Intentionally Deleted	37
3.22.     Margin Regulations	37
3.23.     Survival of Representation and Warranties	37
4.     CONDITIONS OF LENDING	38
4.1.       Conditions to Initial Loans	38
4.2.       Conditions to All Loans	41
5.     AFFIRMATIVE COVENANTS	42
5.1.       Basic Reporting Requirements	42
5.2.       Payment of Loan Obligations	46
5.3.       Insurance	46
5.4.       Payment of Taxes and Other Potential Charges and Priority Claims	46
5.5.       Preservation of Corporate Status	47
5.6.       Governmental Approvals and Filings	47
5.7.       Maintenance of Properties	47
5.8.       Avoidance of Other Conflicts	48
5.9.       Financial Accounting Practices	48
5.10.     Use of Proceeds	48
5.11.     Additional Credit Parties	49
5.12.     Maintenance of Certain Accounts with Lender	49
5.13.     Inactive Subsidiaries	49
5.14.     Government Contracts	49
5.15.     Landlord Waivers	50
5.16.     Interest Rate Swap	50
5.17.     Further Assurances; Additional Requested Information	50
6.     NEGATIVE COVENANTS	50
6.1.       Financial Covenants	50
6.2.       Intentionally Deleted	51
6.3.       Change of Operations	51
6.4.       Liens	51
6.5.       Indebtedness and Guaranty Obligations	52
6.6.       Loans, Advances and Investments	52
6.7.       Dividends and Related Distributions	53
6.8.       Sale-Leasebacks	53
6.9.       Mergers, Acquisitions, etc.	53
6.10.     Dispositions of Properties	54
6.11.     Dealings with Affiliates	54
6.12.     Intentionally Deleted	55
6.13.     Intentionally Deleted	55
6.14.     Limitation on Other Restrictions on Liens	55
6.15.     Limitation on Other Restrictions on Amendment of the Loan Documents	55
7.     DEFAULTS	55
7.1.       Events of Default	55

ii

7.2.       Consequences of an Event of Default	59
8.     MISCELLANEOUS	60
8.1.       Intentionally Deleted	60
8.2.       Holidays	60
8.3.       Records	60
8.4.       Amendments and Waivers	60
8.5.       No Implied Waiver; Cumulative Remedies	61
8.6.       Notices	61
8.7.       Expenses; Taxes; Indemnity	61
8.8.       Severability	63
8.9.       Prior Understandings	63
8.10.     Duration; Survival	63
8.11.     Counterparts	63
8.12.     Limitation on Payments	64
8.13.     Set-Off	64
8.14.     Successors and Assigns; Assignments	65
8.15.     Materiality	65
8.16.     Governing Law; Arbitration: Waiver of Jury Trial; Limitation of Liability	65

iii

THIS CREDIT AGREEMENT (this “Agreement”), dated as of November 2, 2001 is by and among HADRON, INC., a New York corporation (the “Borrower”), and the subsidiaries of the Borrower identified on the signature pages hereto and such other subsidiaries of the Borrower as may from time to time become a party hereto (the “Subsidiary Guarantors”), and BANK OF AMERICA, N.A., a national banking association (the “Lender”).

W I T N E S S E T H

WHEREAS, the Borrower has requested that the Lender extend credit to it in order to enable it to borrow on a committed revolving credit basis from and after the date hereof and at any time and from time to time prior to the Revolving Credit Facility Maturity Date (as hereinafter defined) in an aggregate principal amount not to exceed Four Million and 00/100 Dollars ($4,000,000.00) at any time outstanding; and

WHEREAS, the Borrower has requested that the Lender extend credit to it in order to enable it to borrow on a term loan basis in an aggregate amount not to exceed Three Million Five Hundred Thousand and 00/100 Dollars ($3,500,000.00); and

WHEREAS, the Lender is willing to extend such credit to the Borrower on the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, and intending to be legally bound hereby, the parties hereto hereby covenant and agree as follows:

1.   DEFINITIONS; CONSTRUCTION.

1.1.   Certain Definitions.

In addition to other words and terms defined elsewhere in this Agreement, as used herein the following words and terms shall have the following meanings, respectively, unless the context hereof otherwise clearly requires:

“Affiliate” of a Person (the “Specified Person”) shall mean (a) any Person which directly or indirectly controls, or is controlled by, or is under common control with, the Specified Person, (b) any director or officer (or, in the case of a Person which is not a corporation, any individual having analogous powers) of the Specified Person or of a Person who is an Affiliate of the Specified Person within the meaning of the preceding clause (a), and (c) for each individual who is an Affiliate of the Specified Person within the meaning of the foregoing clause (a) or (b), any spouse or direct lineal descendant of such Affiliate. For purposes of the preceding sentence, “control” of a Person shall mean (x) the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and (y) in any case shall include direct or indirect ownership (beneficially or of record) of, or direct or indirect power to vote, ten

1

percent (10%) or more of the outstanding shares of any class of capital stock of such Person (or in the case of a Person that is not a corporation, ten percent (10%) or more of any class of equity interest).

“Applicable Margin” for purposes of calculating the interest on each Loan, the Letter of Credit Fee and the Revolving Unused Fee, for any day shall mean the applicable percentage, as set forth on the Pricing Grid, corresponding to the Total Funded Debt to EBITDA ratio in effect as of the most recent Calculation Date. The initial Applicable Margins shall be based on Pricing Level III until the first Applicable Percentage Change Date for the Calculation Date occurring on December 31, 2001. Thereafter, determination of the appropriate Applicable Margins based on the Total Funded Debt to EBITDA ratio shall be made on each Calculation Date upon receipt by the Lender of the Required Financial Information for such Calculation Date. The Total Funded Debt to EBITDA ratio in effect as of a Calculation Date shall establish the Applicable Margins that shall be effective as of the date designated by the lender as the Applicable Margin Change Date. The Lender shall determine the Applicable Margins as of the Calculation Date occurring on December 31, 2001 and on each Calculation Date thereafter and shall promptly notify the Borrower of the Applicable Margins so determined and of the Applicable Margin Change Date. Such determinations by the Lender of the Applicable Margins shall be conclusive absent demonstrable error. If the Borrower fails to provide the Required Financial Information for a Calculation Date to the Lender, the Applicable Margins shall be based on Pricing Level IV as set forth in the Pricing Grid until such time as the Required Financial Information is provided whereupon the Pricing Level shall be determined by the then current Total Funded Debt to EBITDA ratio.

“Applicable Margin Change Date” shall mean, with respect to the Calculation Date occurring on December 31, 2001 and any Calculation Date thereafter, a date designated by the Lender that is not more than five (5) Business Days after receipt by the Lender of the Required Financial Information for such Calculation Date.

“Approved Subordination Agreement” shall mean any agreement pursuant to which any indebtedness of any Credit Party is specifically subordinated in right of payment to the prior payment of the obligations of the Credit Parties under this Agreement and the other Loan Documents.

“Assignment of Claims Act” shall mean the federal Assignment of Claims Act of 1940, as amended, and any successor statute of similar import, and regulations thereunder, in each case as in effect from time to time.

“Autoborrow Service Agreement” shall have the meaning set forth in Section 2.4(b).

“Borrowing Base” shall have the meaning set forth in Section 2.15(a).

2

“Borrowing Base/Non-Default Certificate” shall have the meaning set forth in Section 2.15(b).

“Business Day” shall mean any day other than a Saturday, Sunday, public holiday under the laws of the Commonwealth of Virginia or other day on which banking institutions are authorized or obligated to close in McLean, Virginia.

“Calculation Date” shall mean the last day of each fiscal quarter of the Borrower.

“Capital Expenditures” shall mean, for any period and with respect to any Person, all expenditures during such period by such Person which would be classified as capital expenditures in accordance with GAAP or are made in property which are the subject of a Synthetic Lease to which such Person becomes a lessee party during such period.

“Capitalized Lease” shall mean at any time any lease which is, or is required under GAAP to be, capitalized on the balance sheet of the lessee at such time, and “Capitalized Lease Obligation” of any Person at any time shall mean the aggregate amount which is, or is required under GAAP to be, reported as a liability on the balance sheet of such Person at such time as lessee under a Capitalized Lease.

“Cash Equivalent Investments” shall mean any of the following: (a) obligations fully backed by the full faith and credit of the United States of America maturing not in excess of one year from the date of acquisition, (b)commercial paper maturing not in excess of one hundred eighty (180) days from the date of acquisition and rated “P-1” by Moody’s Investors Service or “A-1” by Standard & Poor’s Corporation on the date of acquisition, and (c) the following obligations of any domestic commercial bank having capital and surplus in excess of Five Hundred Million and 00/100 Dollars ($500,000,000.00), which has, or the holding company of which has, a commercial paper rating meeting the requirements specified in clause (b) above: (i) time deposits, certificates of deposit and acceptances maturing not in excess of one (1) year from the date of acquisition, or (ii) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the type referred to in clause (a) above. In no event shall any investment as to which a Borrower is an issuer or a direct or indirect obligor be deemed a Cash Equivalent Investment.

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act, as amended, and any successor statute of similar import, and regulations thereunder, in each case as in effect from time to time.

“Change of Control” shall mean the occurrence of any of the following events: (i) after the Closing Date, Jon Stout, or Jon Stout and any other Person or Persons acting in concert, shall have acquired beneficial ownership, directly or

3

indirectly, of, or shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in his or their acquisition of or control over, voting stock of the Borrower (or other securities convertible into such voting stock) representing 50% or more of the combined voting power of all voting stock of the Borrower, (ii) after the Closing Date, any Person (other than Jon Stout) or two or more Persons (other than Jon Stout) acting in concert shall have acquired beneficial ownership, directly or indirectly, of, or shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of or control over, voting stock of the Borrower (or other securities convertible into such voting stock) representing 25% or more of the combined voting power of all voting stock of the Borrower, or (iii) during any period of up to 24 consecutive months, commencing after the Closing Date, individuals who at the beginning of such 24 month period were directors of the Borrower (together with any new director whose election by the Borrower’s board of directors or whose nomination for election by the Borrower’s shareholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors of the Borrower then in office. As used herein, “beneficial ownership” shall have the meaning provided in Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934.

“Closing Date” shall mean the date of the first Loan hereunder.

“Code” shall mean the Internal Revenue Code of 1986, as amended, and any successor statute of similar import, and regulations thereunder, in each case as in effect from time to time. References to sections of the Code shall be construed also to refer to any successor sections.

“Collateral” shall mean the property from time to time subject to or intended by the parties to be subject to the Liens of the Security Documents.

“Commitments” of the Lender shall mean, collectively, the Revolving Credit Facility Commitment and the Term Loan Commitment.

“Controlled Group Member” shall mean each trade or business (whether or not incorporated) which together with the Borrower is treated as a single employer under Section 4001(a)(14) or 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code.

“Credit Party” shall mean each of the Borrower and the Subsidiary Guarantors.

4

“Default” shall mean any event or condition which constitutes an Event of Default or with notice or the passage of time or both would, unless cured or waived, constitute an Event of Default.

“Department of Justice Debt” shall mean the obligations for the payment of money by the Borrower or any of its Subsidiaries under that certain Settlement Agreement effective as of July 12, 1994 between Analex Corporation, Xanalex Corporation and Analex Systems, Inc., and the United States of America, as amended by the First Modification to Settlement Agreement entered into August 30, 1999.

“Dollar,” “Dollars” and the symbol “$” shall mean lawful money of the United States of America.

“EBITDA” for any period shall mean the net earnings (or loss) after taxes of the Borrower for such period, (a) plus the sum of (i) the Interest Expense of the Borrower for such period to the extent deducted in calculating net earnings for such period, (ii) all charges against income for foreign, federal, state and local income taxes of the Borrower for such period, to the extent deducted in calculating net earnings for such period, (iii) the aggregate depreciation expense of the Borrower for such period, (iv) the aggregate amortization expense of the Borrower for such period, (v) losses from discontinued operations and extraordinary items and (vi) all other non-cash charges deducted in determining such net earnings, (b) minus the sum of (i) income from discontinued operations and extraordinary items and (ii) all non-cash items (other than accrual basis revenues) included in determining such net earnings, all as determined on a consolidated basis in accordance with GAAP.

“Eligible Billed Receivables” shall mean all rights to payment due to the Borrower which (a) constitute an “account” as defined in the Uniform Commercial Code as in effect in the applicable jurisdiction; (b) represent amounts due and owing (i) for products actually delivered or services actually performed or rendered by or on behalf of the Borrower pursuant to a written contract or written agreement now or hereafter entered into by the Borrower and a Person which is not an Affiliate of the Borrower, or (ii) as interim billings or progress payments in accordance with fixed price contracts between the Borrower and a Person which is not an Affiliate of the Borrower; (c) have been properly billed; (d) arise in the ordinary course of the Borrower’s business; (e) are not subject to any defense, set-off or counterclaim; and (f) are not Ineligible Receivables.

“Eligible Unbilled Receivables” shall mean rights to payment due to the Borrower arising out of work actually performed by the Borrower under Government Contracts which (a) constitute an “account” as defined in the Uniform Commercial Code as in effect in the applicable jurisdiction; (b) are eligible to be billed to the Government in accordance with the applicable Government Contract within thirty (30) days of the “as of” date of the applicable Borrowing Base/Non-Default Certificate (with no additional performance

5

required by any Person, and no condition to payment by the Government other than receipt of an appropriate invoice); (c) have not been billed to the Government solely as a result of timing differences between the date the revenue is recognized on the Borrower’s books and the date the invoice is actually rendered; (d) represent revenue recognized on the books of the Borrower not more than thirty (30) days prior to the “as of” date of the applicable Borrowing Base/Non-Default Certificate; (e) may, in accordance with GAAP, be included as current assets of the Borrower, even though such amounts have not been billed to the Government; and (f) are not Ineligible Receivables.

“Environmental Affiliate” shall mean, with respect to any Person, any other Person whose liability (contingent or otherwise) for any Environmental Claim such Person has retained, assumed or otherwise is liable for (by Law, agreement or otherwise).

“Environmental Claim” shall mean, with respect to any Person, any action, suit, proceeding, notice, claim, complaint, demand, request for information or other communication (written or oral) against, of or to such Person by or from any other Person (including any Governmental Authority, citizens’ group or present or former employee of such Person) alleging, asserting or claiming any actual or potential (a) violation of any Environmental Law, (b) liability under any Environmental Law or (c) liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, fines or penalties arising out of, based on or resulting from the presence, or release into the environment, of any Environmental Concern Materials at any location, whether or not owned by such Person.

“Environmental Concern Materials” shall mean (a) any explosive, radioactive material, hazardous material, hazardous waste, toxic substance, solid waste, pollutant, contaminant or any related material, raw material, substance, product or by-product of any substance specified in or regulated or otherwise affected by any Environmental Law (including any “Hazardous Substance” as defined in CERCLA or any similar state Law), (b) any toxic chemical or other toxic substance from or related to industrial, commercial or institutional activities, and (c) asbestos, gasoline, diesel fuel, motor oil, waste and used oil, heating oil and other petroleum products or compounds, polychlorinated biphenyls, radon and urea formaldehyde.

“Environmental Law” shall mean any applicable Law relating to (a) pollution or protection of the environment, including natural resources, (b) exposure of Persons, including employees, to Environmental Concern Materials, (c) protection of the public health or welfare from the effects of products, by-products, wastes, emissions, discharges or releases of Environmental Concern Materials or (d) regulation of the manufacture, use or introduction into commerce of Environmental Concern Materials including their manufacture, formulation, packaging, labeling, distribution, transportation, handling, storage or disposal. Without limitation, “Environmental Law” shall also include any Governmental

6

Approval required pursuant to any Environmental Law and the terms and conditions thereof.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, and regulations thereunder, in each case as in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections.

“Event of Default” shall mean any of the Events of Default described in Section 7.1.

“Excess Cash Flow” for any period shall mean EBITDA for such period, minus Interest Expense for such period, minus scheduled payments of principal on Indebtedness for such period, minus cash taxes for such period, minus cash Capital Expenditures for such period, minus optional prepayments of principal of the Term Loan for such period, and minus cash bonus payments for such period to employees of the Borrower related to the prospective [CONFIDENTIAL TREATMENT REQUESTED] contract with [CONFIDENTIAL TREATMENT REQUESTED] as defined in and described in Section 2.2(e) of the Merger Agreement.

“Fixed Charge Coverage Ratio” for any period shall mean the ratio of (a) EBITDA minus Capital Expenditures and cash taxes for such period to (b) Fixed Charges for such period.

“Fixed Charges” for any period shall mean the sum of (a) Interest Expense for such period, plus (b) the aggregate amount of all non-compete payments made by the Borrower for such period, plus (c) without duplication, scheduled payments of principal on Indebtedness and Capitalized Lease Obligations of the Borrower for such period, all as determined on a consolidated basis in accordance with GAAP.

“GAAP” shall have the meaning set forth in Section 1.3.

“Government” shall mean the United States government or any department or agency thereof.

“Government Contracts” shall mean written contracts between the Borrower and the Government.

“Governmental Approval” shall mean any approval, order, consent, authorization, certificate, license, permit or validation of, or exemption or other action by, or filing, recording or registration with, or notice to, any Governmental Authority.

“Governmental Authority” shall mean any government or political subdivision or any agency, authority, bureau, central bank, commission,

7

department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

“Guaranties” shall have the meaning set forth in Section 4.1(d).

“Guaranty Obligations” shall mean, with respect to any Person, without duplication, any obligations of such Person (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collections) guaranteeing or intended to guarantee any Indebtedness of any other Person in any manner, whether direct or indirect, and including without limitation any obligation, whether or not contingent, (i) to purchase any such Indebtedness or any property constituting security therefor, (ii) to advance or provide funds or other support for the payment or purchase of any such Indebtedness or to maintain working capital, solvency or other balance sheet condition of such other Person (including keep well agreements, maintenance agreements, comfort letters or similar agreements or arrangements) for the benefit of any holder of Indebtedness of such other Person, (iii) to lease or purchase property, securities or services primarily for the purpose of assuring the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless the holder of such Indebtedness against loss in respect thereof. The amount of any guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be in amount equal to the outstanding principal amount of the Indebtedness in respect of which such Guaranty Obligation is made.

“Hazardous Substance” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances, pollutants or contaminants as defined in CERCLA, HMTA, RCRA or any other applicable Environmental Law, rule, order or regulation.

“Hazardous Wastes” shall mean, without limitation, all waste materials subject to regulation under CERCLA, RCRA, or analogous state law, and/or any other applicable Federal and/or state law now in force or hereafter enacted relating to hazardous waste treatment or disposal.

“HMTA” shall mean the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.)

“Indebtedness” of a Person shall mean:

(a)  All obligations on account of money borrowed by, or credit extended to or on behalf of, or for or on account of deposits with or advances to, such Person (other than trade payables and accrued liabilities in the ordinary course);

(b)  All obligations of such Person evidenced by bonds, debentures,

8

notes or similar instruments;

(c)  All obligations of such Person for the deferred purchase price of property or services;

(d)  All obligations secured by a Lien on property owned by such Person, whether or not assumed (except inchoate Liens securing obligations not yet due and payable); and all obligations of such Person under Capitalized Leases or Synthetic Leases (without regard to any limitation of the rights and remedies of the holder of such Lien or the lessor under such Capitalized Lease or Synthetic Lease to repossession or sale of such property);

(e)  The face amount of all letters of credit issued for the account of such Person and, without duplication, the unreimbursed amount of all drafts drawn thereunder, and all other payment or monetary indemnification obligations of such Person associated with such letters of credit or draws thereon;

(f)  All obligations of such Person in respect of acceptances or similar obligations issued for the account of such Person; and

(g)  All obligations of such Person under any interest rate or currency protection agreement, interest rate or currency future, interest rate or currency option, interest rate or currency swap or cap or other interest rate or currency hedge agreement.

“Indemnified Parties” shall mean the Lender, its affiliates, and the directors, officers and employees of each of the foregoing.

“Individual Guarantors” shall mean Gerald R. McNichols and J. Richard Knop.

“Individual Guaranty” shall have the meaning set forth in Section 4.1(d).

“Ineligible Receivables” shall mean all receivables which are (a) evidenced by a promissory note or similar instrument, unless such note or instrument is endorsed in blank or to the order of the Lender and delivered to the Lender; (b) owed or payable by an account debtor who is more than ninety (90) days past due in the payment of fifty percent (50%) or more of the aggregate balance due from such account debtor to the Borrower (c) owed or payable by an account debtor other than the Government or a prime contractor under a contract with the Government with respect to which the Borrower is a subcontractor (including the Affiliates of such account debtor) whose accounts constitute more than 25% of the total accounts of the Borrower, to the extent of such excess; (d) owed or payable by an account debtor that is an Affiliate, stockholder or employee of the Borrower; (e) owing from any Person that is the subject of any (i) suit, lien, levy

9

or judgment which could reasonably be expected to affect the collectability of said account(s), or (ii) bankruptcy, insolvency or similar process or proceeding; (f) accounts owing from foreign account debtors; (g) unbilled as a result of cost variances, retainage provisions, “milestone” requirements or any other reason, except for timing differences; (h) bonded; or (i) deemed ineligible by the Lender, in its reasonable discretion.

“Intercompany Debt” shall mean any indebtedness which is owing by a Credit Party to another Credit Party.

“Interest Expense” for any period shall mean the total cash interest expense of the Borrower (including amortization of deferred financing fees, premiums or interest rate protection agreements and original issue discounts) for such period determined in accordance with GAAP.

“Law” shall mean any law (including common law), constitution, statute, treaty, convention, regulation, rule, ordinance, order, injunction, writ, decree or award of any Governmental Authority with applicable jurisdiction.

“Letter of Credit” and “Letters of Credit” shall mean, respectively, each and all of the standby letters of credit issued pursuant to this Agreement.

“Letter of Credit Application” shall have the meaning assigned to such term in Section 2.21 of this Agreement.

“Letter of Credit Fee” shall have the meaning set forth in Section 2.16(c).

“Letter of Credit Obligations” shall mean, at any particular time, the aggregate amount of all liabilities of the Borrower with respect to Letters of Credit, whether or not such liability is contingent, including (without duplication) the sum of (a) the aggregate amount of Letter of Credit Undrawn Availability then outstanding, and (b) the aggregate amount of all unpaid Letter of Credit Reimbursement Obligations.

“Letter of Credit Reimbursement Obligation” with respect to a Letter of Credit means the obligation of the Borrower to reimburse the Lender for Letter of Credit Unreimbursed Draws, together with interest thereon.

“Letter of Credit Undrawn Availability” with respect to a Letter of Credit at any time shall mean the maximum amount available to be drawn under such Letter of Credit at such time or thereafter, regardless of the existence or satisfaction of any conditions or limitations on drawing.

“Letter of Credit Unreimbursed Draws” with respect to a Letter of Credit at any time shall mean the aggregate amount at such time of all payments made by the Lender under such Letter of Credit, to the extent not repaid by the Borrower.

10

“LIBOR Rate” on any date shall mean the rate of interest (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate page 3750 (or any successor page) as the one (1) month London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) on the second Business Day preceding such date, as adjusted from time to time in the Lender’s sole discretion for then-applicable reserve requirements, deposit insurance assessment rates and other regulatory costs. If for any reason such rate is not available, the term “LIBOR Rate” shall mean the rate of interest (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO page as the one (1) month London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time), on the second Business Day preceding such date, as adjusted from time to time in Lender’s sole discretion for then-applicable reserve requirements, deposit insurance assessment rates and other regulatory costs; provided, however, if more than one rate is specified on Reuters Screen LIBO page, the applicable rate shall be the arithmetic mean of all such rates. For purposes of determining the interest rate applicable to the Revolving Credit Facility Loans, any change in the interest rate, by virtue of the LIBOR Rate as a component of the interest rate, shall take effect two Business Days after the date of the change in the LIBOR Rate as indicated on Telerate Page 3750 or Reuters Screen LIBO page, as the case may be. For purposes of determining the interest rate applicable to the Term Loan, the LIBOR Rate indicated on Telerate Page 3750 or Reuters Screen LIBO page, as the case may be, two Business Days before the first Business Day of each month shall be in effect on the first Business Day of such month and shall remain fixed as a component of the interest rate through and including the last day before the first Business Day of the next following month.

“Lien” shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security.

“Loan” shall mean any loan by the Lender to the Borrower under this Agreement, and “Loans” shall mean all loans made by the Lender under this Agreement.

“Loan Documents” shall mean this Agreement, the Notes, the Security Agreement, the Pledge Agreement, the Guaranties, the Subordination Agreements and all other agreements and instruments extending, renewing, refinancing or amending any indebtedness, obligation or liability arising under any of the foregoing, in each case as the same may be amended, modified or supplemented from time to time hereafter.

“Material Adverse Effect” shall mean: (a) a material adverse effect on the business, assets, properties, operations or condition (financial or otherwise) of the Borrower and its Subsidiaries, or (b) a material adverse effect on the ability of any Credit Party to perform or comply with any term or condition of any Loan

11

Document, or (c) a material adverse effect on the legality, validity, binding effect, enforceability or admissibility into evidence of any Loan Document or the ability of the Lender to enforce any provision, rights or remedies under or in connection with any Loan Document.

“Material Contract” shall mean a Government Contract and/or other contract or agreement of the Borrower for a term greater than six (6) months and involving an amount in excess of Five Hundred Thousand and 00/100 Dollars ($500,000.00).

“Merger Agreement” shall mean that certain Agreement and Plan of Merger dated October 31, 2001 among Analex Corporation, the Sellers identified on Exhibit A attached thereto, Analex Corporation Employee Stock Ownership Plan and Trust and Borrower.

“Multiemployer Plan” shall mean any employee benefit plan which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to which the Borrower or any Controlled Group Member has or had an obligation to contribute.

“Net Value” shall have the meaning set forth in Section 2.15(a).

“Net Worth” shall mean the Borrower’s total assets (including leaseholds and leasehold improvements and reserves against assets) less total liabilities (including accrued and deferred income taxes).

“Note” or “Notes” shall mean the Revolving Credit Facility Note or the Term Note, as the case may be.

“Obligations” shall mean all indebtedness, obligations and liabilities of the Credit Parties to the Lender from time to time arising under or in connection with or evidenced or secured by this Agreement or any other Loan Document, and all extensions, renewals or refinancings thereof, whether such indebtedness, obligations or liabilities are direct or indirect, otherwise secured or unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising. Without limitation of the foregoing, such indebtedness, obligations and liabilities include the principal amount of Loans, all Letter of Credit Obligations, interest, fees, indemnities or obligations respecting expenses under or in connection with this Agreement or any other Loan Document, and all extensions, renewals. refinancings and amendments thereof, whether or not such Loans were made or Letters of Credit issued in compliance with the terms and conditions of this Agreement or in excess of the obligation of the Lender to lend. The term “Obligations” shall include all obligations of the Borrower under any Swap Contract. Obligations shall remain Obligations notwithstanding any assignment or transfer or any subsequent assignment or transfer of any of the Obligations or any interest therein.

12

“PBGC” shall mean the Pension Benefit Guaranty Corporation established under Title IV of ERISA or any other governmental agency, department or instrumentality succeeding to the functions of said corporation.

“Pension Plan” and “Pension Plans” shall have the meanings set forth in Section 3.11.

“Pension-Related Event” shall mean any of the following events or conditions:

(a)  Any action is taken by any Person (i) to terminate, or which would result in the termination of, a Plan, either pursuant to its terms or by operation of law (including any amendment of a Plan which would result in a termination under Section 4041(e) of ERISA), or (ii) to have a trustee appointed for a Plan pursuant to Section 4042 of ERISA;

(b)  The PBGC notifies any Person of its determination that an event described in Section 4042 of ERISA has occurred with respect to a Plan, that a Plan should be terminated, or that a trustee should be appointed for a Plan;

(c)  Any Reportable Event occurs with respect to a Plan;

(d)  Any action occurs or is taken which would reasonably be expected to result in the Borrower or any Controlled Group Member becoming subject to liability for a complete or partial withdrawal by any Person from a Multiemployer Plan (including seller liability incurred under Section 4204(a)(2) of ERISA), or the Borrower or any Controlled Group Member receives from any Person a notice or demand for payment on account of any such alleged or asserted liability;

(e)  (i)  There occurs any failure to meet the minimum funding standard under Section 302 of ERISA or Section 412 of the Code with respect to a Plan, or any tax return is filed showing any tax payable under Section 4971(a) of the Code with respect to any such failure, or the Borrower or any Controlled Group Member receives a notice of deficiency from the Internal Revenue Service with respect to any alleged or asserted such failure, or (ii) any request is made by any Person for a variance from the minimum funding standard, or an extension of the period for amortizing unfunded liabilities, with respect to a Plan, or (iii) the Borrower or any Controlled Group Member fails to pay the PBGC premium with respect to a Plan when due and it remains unpaid for more than thirty (30) days thereafter; or

(f)  There occurs any “prohibited transaction” within the meaning of Section 406 of ERISA or Section 4975 of the Code involving a Plan.

13

“Permitted Liens” shall have the meaning set forth in Section 6.4.

“Person” shall mean an individual, corporation, limited liability company, partnership, trust, unincorporated association, joint venture, joint-stock company, Governmental Authority or any other entity.

“Plan” shall mean (a) any employee pension benefit plan within the meaning of Section 3(2) of ERISA (other than a Multiemployer Plan) covered by Title IV of ERISA by reason of Section 4021 of ERISA, of which the Borrower or any Controlled Group Member is or has been within the preceding five years a “contributing sponsor” within the meaning of Section 4001(a)(13) of ERISA, or which is or has been within the preceding five years maintained for employees of the Borrower or any Controlled Group Member and (b) any employee pension benefit plan within the meaning of Section 3(2) of ERISA (other than a Multiemployer Plan which is subject to Title I of ERISA by reason of Section 4 of ERISA and is subject to the minimum funding requirements of Section 302 of ERISA or Section 412 of the Code), of which the Borrower or any Controlled Group Member is or has been within the preceding five years an employer liable for contributions within the meaning of Section 302(c)(11) of ERISA or Section 412(c)(11) of the Code, or which is or has been within the preceding five years maintained for employees of the Borrower or any Controlled Group Member.

“Pledge Agreement” shall have the meaning set forth in Section 4.1(c).

“Pricing Grid” shall mean the pricing grid attached hereto as Exhibit C.

“Prime Rate” shall mean the rate of interest publicly announced from time to time by the Lender as its Prime Rate (the “Index”). The Prime Rate is set by the Lender based on various factors, including the Lender’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans. The Lender may price loans to its customers at, above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Lender’s Prime Rate. The Index is not necessarily the lowest rate charged by Lender on its loans and is set by Lender in its sole discretion. If the Index becomes unavailable during the term of this Agreement, the Lender may designate a substitute index after notifying the Borrower. The Lender will tell the Borrower the current Index rate upon the Borrower’s request.

“RCRA” shall mean the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et. seq.)

“Regular Interest Payment Date” shall mean the first day of each calendar month after the date hereof.

“Regular Term Loan Principal Payment Date” shall mean the first day of each calendar month after the date hereof.

14

“Releases” shall have the meaning set forth in Section 3.12.

“Relevant Date” shall have the meaning set forth in Section 1.3.

“Reportable Event” shall mean (a) a reportable event described in Section 4043 of ERISA and regulations thereunder, (b) a withdrawal by a substantial employer from a Plan to which more than one employer contributes, as referred to in Section 4063(b) of ERISA, (c) a cessation of operations at a facility causing more than twenty percent (20%) of Plan participants to be separated from employment, as referred to in Section 4068(f) of ERISA, or (d) a failure to make a required installment or other payment with respect to a Plan when due in accordance with Section 412 of the Code or Section 302 of ERISA which causes the total unpaid balance of missed installments and payments (including unpaid interest) to exceed One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00).

“Required Financial Information” shall mean, with respect to the applicable Calculation Date, (i) the financial statements of the Borrower required to be delivered pursuant to Section 5.1(a) or (b) for the fiscal period or quarter ending as of such Calculation Date, and (ii) the Compliance Certificate required by Section 5.1(e) to be delivered with the financial statements described in clause (i) above.

“Responsible Officer,” in the case of the Borrower, shall mean the Chief Executive Officer, Chief Operating Officer, Vice President of Finance or Chief Financial Officer of the Borrower.

“Revolving Credit Facility Available Amount” shall have the meaning set forth in Section 2.1(a).

“Revolving Credit Facility Commitment” shall have the meaning set forth in Section 2.1(a).

“Revolving Credit Facility Loans” shall have the meaning set forth in Section 2.1(a).

“Revolving Credit Facility Maturity Date” shall mean April 30, 2003.

“Revolving Credit Facility Note” shall mean the promissory note of the Borrower executed and delivered under Section 2.1(c), together with all extensions, renewals, refinancings or amendments thereof in whole or part.

“Revolving Unused Fee” shall have the meaning set forth in Section 2.3.

“Security Agreement” shall have the meaning set forth in Section 4.1(b).

“Security Document” shall mean each of the Security Agreement, the Pledge Agreement and all other agreements creating a Lien on any Person’s property to

15

secure the Obligations.

“Senior Debt” shall mean the aggregate outstanding principal amount of all Indebtedness (excluding (i) Indebtedness subordinated in right of payment pursuant to an Approved Subordination Agreement and (ii) Indebtedness consisting of obligations described in item (g) of the definition of Indebtedness), plus the outstanding principal amount of the Department of Justice Debt, provided, however, the Department of Justice Debt shall be excluded from Senior Debt at such time as it becomes subordinated in right of payment pursuant to an Approved Subordination Agreement.

“Solvent” means, with respect to any Person at any time, that at such time (a) the sum of the debts and liabilities (including, without limitation, contingent liabilities) of such Person is not greater than all of the assets of such Person at a fair valuation, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person has not incurred debts or liabilities (including, without limitation, contingent liabilities) beyond such Person’s ability to pay as such debts and liabilities mature, (d) such Person is not engaged in, and is not about to engage in, a business or transaction for which such Person’s property constitutes or would constitute unreasonably small capital, and (e) such Person is not otherwise insolvent as defined in, or otherwise in a condition which would render any transfer, conveyance, obligation or act then made, incurred or performed by it avoidable or fraudulent pursuant to, any Law that may be applicable to such Person pertaining to bankruptcy, insolvency or creditors’ rights (including, but not limited to, the Bankruptcy Code of 1978, as amended, and, to the extent applicable to such Person, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any other applicable Law pertaining to fraudulent conveyances or fraudulent transfers or preferences).

“Stock Payment” by any Person shall mean any dividend, distribution or payment of any nature (whether in cash, securities, or other property) on account of or in respect of any shares of the capital stock (or warrants, options or rights therefor) of such Person, including any payment on account of the purchase, redemption, retirement, defeasance or acquisition of any shares of the capital stock (or warrants, options or rights therefor) of such Person, in each case regardless of whether required by the terms of such capital stock (or warrants, options or rights) or any other agreement or instrument.

“Subordination Agreements” shall have the meaning set forth in Section 4.1(e).

“Subsidiary” shall mean, as to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not, at the time, any class or classes of such corporation shall have

16

or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries, and (b) any partnership, association, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than 50% equity interest at any time.

“Subsidiary Guarantors” shall have the meaning set forth in the preamble to this Agreement.

“Subsidiary Guaranty” shall have the meaning set forth in Section 4.1(d).

“Swap Contract” shall mean any document, instrument or agreement between the Borrower and the Lender or any affiliate of the Lender, now existing or entered into in the future, relating to an interest rate swap transaction, interest rate cap, floor or collar transaction, any similar transaction, any option to enter into any of the foregoing, and any combination of the foregoing, which agreement may be oral or in writing, including any master agreement relating to or governing any or all of the foregoing and any related schedule or confirmation, each as amended from time to time.

“Synthetic Lease” shall mean any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product of such Person where the transaction is considered Indebtedness for borrowed money for federal income tax purposes but is classified as an operating lease in accordance with GAAP for financial reporting purposes.

“Taxes” shall have the meaning set forth in Section 2.13(a).

“Term Loan” shall have the meaning set forth in Section 2.2(a).

“Term Loan Commitment” shall have the meaning set forth in Section 2.2(a).

“Term Loan Maturity Date” shall mean October 31, 2006.

“Term Loan Note” shall mean the promissory note of the Borrower executed and delivered under Section 2.2(c), together with all extensions, renewals, refinancings or amendments thereof in whole or part.

“Total Funded Debt” shall mean all Indebtedness (excluding Indebtedness consisting of obligations described in item (g) of the definition of Indebtedness), plus contingent and unconditional earn-out liabilities and contingent and unconditional non-compete liabilities, excepting any cash bonus payments to employees of the Borrower related to the prospective [CONFIDENTIAL TREATMENT REQUESTED] contract with [CONFIDENTIAL TREATMENT REQUESTED] as defined in and described in Section 2.2(e) of the Merger Agreement until such cash bonus payments are earned.

17

1.2.   Construction.

Unless the context of this Agreement otherwise clearly requires, references to the plural include the singular, the singular the plural and the part the whole; “or” has the inclusive meaning represented by the phrase “and/or”; and the terms “property” and “assets” include all properties and assets of any kind or nature, tangible or intangible, real, personal or mixed, now existing or hereafter acquired. References in this Agreement to “determinations”(and similar terms) by the Lender mean and include good faith determinations or estimates by the Lender (in the case of quantitative determinations) and good faith determinations or beliefs by the Lender (in the case of qualitative determinations), and references to “conclusive” determinations by the Lender shall mean determinations by the Lender, as the case may be, which are made in good faith and absent manifest error. The words “hereof,” “herein,” “hereunder” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The words “includes” and “including” (and similar terms) in this Agreement mean “includes without limitation” and “including without limitation,” respectively (and similarly for similar terms). The section and other headings contained in this Agreement and the Table of Contents preceding this Agreement are for reference purposes only and shall not control or affect the construction of this Agreement or the interpretation thereof in any respect. Section, subsection and exhibit references are to this Agreement unless otherwise specified. Each annex, exhibit and schedule to this Agreement constitutes part of this Agreement. Each of the covenants, terms and provisions of this Agreement is intended to have, and shall have, independent effect, and compliance with any particular covenant, term or provision shall not constitute compliance with any other covenant, term or provision.

1.3.   Accounting Principles.

(a)  As used herein, “GAAP” shall mean generally accepted accounting principles in the United States, as such principles shall be in effect at the Relevant Date. As used herein, “Relevant Date” shall mean the date a relevant computation or determination is or was to be made or the date of relevant financial statements, as the case may be.

(b)  Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters shall be made, and all financial statements to be delivered pursuant to this Agreement shall be prepared, in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP.

2.   THE FACILITIES.

2.1.   Revolving Credit Facility.

18

(a)  Revolving Credit Facility Commitment.    Subject to the terms and conditions and relying upon the representations and warranties of the Borrower herein set forth, the Lender agrees (such agreement being herein called the Lender’s “Revolving Credit Facility Commitment”) to make loans (the “Revolving Credit Facility Loans”) to the Borrower at any time or from time to time on or after the date hereof and to but not including the Revolving Credit Facility Maturity Date, subject, however, to the conditions that the aggregate principal amount of all Revolving Credit Facility Loans and all Letter of Credit Obligations at any time outstanding shall not exceed the lesser of (i) Four Million and 00/100 Dollars ($4,000,000.00), and (ii) the Borrowing Base at such time (the lesser of the amounts described in the foregoing clauses (i) and (ii) being referred to herein as the “Revolving Credit Facility Available Amount”). Notwithstanding anything herein to the contrary, the aggregate outstanding principal amount of all Revolving Credit Facility Loans and all Letter of Credit Obligations, plus the outstanding principal amount of the Term Loan shall not exceed the Borrowing Base.

(b)  Nature of Credit.    Within the limits of time and amount set forth in this Section 2.1, and subject to the provisions of this Agreement, the Borrower may borrow, repay and reborrow Revolving Credit Facility Loans hereunder.

(c)  Revolving Credit Facility Note.    The obligation of the Borrowers to repay the unpaid principal amount of the Revolving Credit Facility Loans made by the Lender and to pay interest thereon shall be evidenced in part by a promissory note of the Borrower dated the Closing Date (the “Revolving Credit Facility Note”), in substantially the form attached hereto as Exhibit A, with the blanks appropriately filled, payable to the order of the Lender in a face amount of Four Million and 00/100 Dollars ($4,000,000.00).

(d)  Loan Account.    The Lender will establish and maintain a loan account on its books (the “Loan Account”) to which the Lender will (i) debit (A) the principal amount of each advance of the Revolving Credit Facility Loans made by the Lender hereunder as of the date made, (B) the amount of any interest accrued on the Revolving Credit Facility Loans as and when due, and (C) any other amounts due and payable by the Borrower to the Lender from time to time under the provisions of this Agreement in connection with the Revolving Credit Facility Loans, including enforcement costs, fees, late charges, and service, collection and audit fees, as and when due and payable, and (ii) credit all payments made by the Borrower to the Lender on account of the Revolving Credit Facility Loans as of the date made, including funds credited to the Loan Account from the Collateral Account (as defined in the Security Agreement). All credit entries to the Loan Account are conditional and shall be readjusted as of the date made if final and indefeasible payment is not received by the Lender in cash or

19

solvent credits. Any and all periodic or other statements or reconciliations, and the information contained in those statements or reconciliations, of the Loan Account shall be presumed conclusively to be correct, and shall constitute an account stated between the Lender and the Borrower unless the Lender receives specific written objection thereto from the Borrower within thirty (30) Business Days after such statement or reconciliation shall have been sent by the Lender.

(e)  Maturity.    To the extent not due and payable earlier, the Revolving Credit Facility Loans shall be due and payable on the Revolving Credit Facility Maturity Date.

(f)  Termination; Reduction of the Revolving Credit Facility Committed Amounts.    The Borrower may terminate the Lender’s obligation to make Revolving Credit Facility Loans; provided that the Borrower shall have provided written notice thereof to the Lender at least five (5) Business Days prior to the termination date. On the termination date, the principal amounts of all Revolving Credit Facility Loans, together with interest on each such principal amount and any fees or expenses owed to the Lender to such date, shall be due and payable and all Letter of Credit Obligations shall be satisfied. The Borrower may from time to time prior to the Revolving Credit Facility Maturity Date reduce the Revolving Credit Facility Committed Amount of the Lender to an aggregate amount not less than the sum of the unpaid principal amount of the Revolving Credit Facility Loans then outstanding plus the principal amount of all Revolving Credit Facility Loans not yet made as to which notice has been given by the Borrower plus all Letter of Credit Obligations; provided that there shall be no Default. Reduction of the Revolving Credit Facility Committed Amount shall be made by providing not less than five (5) Business Days’ notice (which notice shall be irrevocable) to such effect to the Lender.

2.2.   Term Loan.

(a)  Term Loan Commitment.    Subject to the terms and conditions and relying upon the representations and warranties of the Borrower herein set forth, the Lender agrees (such agreement being herein called the Lender’s “Term Loan Commitment”) to make a loan (the “Term Loan”) to the Borrower on the Closing Date in the amount of Three Million Five Hundred Thousand and 00/100 Dollars ($3,500,000.00).

(b)  Nature of Credit.    The Borrower may not borrow any new amounts or reborrow amounts repaid with respect to the Term Loan.

(c)  Term Loan Note.    The obligation of the Borrower to repay the unpaid principal amount of the Term Loan and to pay interest thereon shall be evidenced in part by a promissory note of the Borrower dated the Closing Date (the “Term Loan Note”), in substantially the form attached hereto

20

as Exhibit B, with the blanks appropriately filled, payable to the order of the Lender in a face amount equal to Three Million Five Hundred Thousand and 00/100 Dollars ($3,500,000.00).

(d)  Scheduled Amortization; Maturity.    The principal amount of the Term Loan shall be amortized in 60 equal monthly payments of $58,333.33 each. Principal payments on the Term Loan shall be due and payable on each Regular Term Loan Principal Payment Date following the Closing Date. To the extent not due and payable earlier, the Term Loan shall be due and payable on the Term Loan Maturity Date.

2.3.   Fees.

(a)  Revolving Unused Fee.    The Borrower shall pay to the Lender for each day during the period set forth below a commitment fee (the “Revolving Unused Fee”) at a rate per annum equal to the Applicable Margin, multiplied by the following amount: for each day from and including the date hereof to but not including the Revolving Credit Facility Maturity Date, the amount (not less than zero) equal to (i) the Revolving Credit Facility Committed Amount on such day, minus (ii) the aggregate principal amount of all Revolving Credit Facility Loans, plus the aggregate Letter of Credit Obligations on such day. The Revolving Unused Fee shall be due and payable for the preceding period for which such fee has not been paid: (x) on the first Regular Interest Payment Date of each calendar quarter, and (y) on the Revolving Credit Facility Maturity Date.

(b)  Administration Fee.    An administration fee in the amount of Fifteen Thousand Dollars and 00/100 ($15,000.00) shall be paid each year, payable in advance in equal quarterly payments, beginning on the Closing Date and on the first day of each calendar quarter thereafter until the Obligations are paid in full and the Revolving Credit Facility Commitment is terminated.

(c)  Origination Fee.    An origination fee in the amount of Seventy-Five Thousand and 00/100 Dollars ($75,000.00) shall be paid on the Closing Date.

2.4.   Making of Loans.

(a)  Loan Requests.    Whenever the Borrower desires that the Lender make Revolving Credit Facility Loans, the Borrower shall provide notice to the Lender setting forth the following information:

(i)  The date, which shall be a Business Day, on which such proposed Loans are to be made; and

21

(ii)  The aggregate principal amount of such proposed Loans, which shall be in integral multiples of $50,000.

Unless any applicable condition specified in Article 4 has not been satisfied, on the date specified in such notice the Lender shall make the proceeds of the Loan available to the Borrower requesting such Loan in funds immediately available.

(b)  Automatic Loans.    In addition to the foregoing, the Borrower authorizes the Lender to make Revolving Credit Facility Loans, if all applicable conditions specified in Article 4 have been satisfied, in accordance with the terms of the Automatic Service Agreement between the Borrower and the Lender (the “Autoborrow Service Agreement”).

(c)  Swap Contracts and ACH Transactions.    If the Borrower fails to make a payment to the Lender under a Swap Contract or pursuant to an obligation arising from an ACH Transaction, the Lender may, but is not required to, advance such payment for the account of the Borrower and such advance shall be deemed to be a Revolving Credit Facility Loan. For purposes of this Section 2.4(c), “ACH Transactions” shall mean any transaction involving cash management or related services, including the transfer of funds through an automated clearinghouse by the Lender for the account of the Borrower.

2.5.   Interest Rates.

(a)  LIBOR Rate.    The unpaid principal amount of the Loans shall bear interest for each day until due at the LIBOR Rate plus the Applicable Margin.

(b)  360-Day Year.    All interest payable hereunder shall be calculated on the basis of a 360-day year, counting the actual number of days elapsed.

2.6.   Intentionally Deleted.

2.7.   Optional Prepayments of Term Loan.

Whenever the Borrower desires to prepay any part of the Term Loan, it shall provide a separate notice setting forth the following information with respect to each sum being prepaid:

(a)  The date, which shall be a Business Day, on which the proposed prepayment is to be made; and

(b)  The principal amount to be prepaid.

Notice having been so provided, on the date specified in such notice, the principal amounts of the Term Loan specified in such notice, together with interest on each such principal amount to such date, shall be due and payable. Any

22

prepayments made with respect to the Term Loan shall be applied in inverse order of maturity. In addition, within five (5) days after demand by the Lender, the Borrower shall pay to the Lender the amount of any Consequential Loss. “Consequential Loss” shall mean such amount as will compensate the Lender for any loss, cost, expense, penalty, claim or liability incurred by it as a result of the prepayment or the failure to make a prepayment, including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain the credit or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by the Lender in connection with the foregoing. For purposes of this paragraph, the Lender shall be deemed to have funded the credit by a matching deposit or other borrowing in the applicable interbank market, whether or not the credit was in fact so funded. The Lender shall deliver to the Borrower a certificate as to the amount of the Consequential Loss, which certificate shall be conclusive in the absence of manifest error.

2.8.   Optional Prepayments of Revolving Credit Facility Loans.

The Borrower shall have the right at its option from time to time to prepay the Revolving Credit Facility Loans in whole or part at any time without premium or penalty.

2.9.   Mandatory Prepayments.

(a)  Borrowing Base.    If at any time the aggregate outstanding principal amount of Revolving Credit Facility Loans, plus Letter of Credit Obligations, plus the outstanding principal amount of the Term Loan exceeds the Borrowing Base, the Borrower shall prepay a principal amount of the Loans, in an aggregate amount not less than the amount of such excess, concurrently with the delivery of any Borrowing Base/Non-Default Certificate which shows such an excess. Prepayments required by this Section 2.9 shall be applied as follows: to pay all accrued but unpaid interest on, and then the principal of, the Revolving Credit Facility Loans and then, to pay all accrued but unpaid interest on, and then the principal of, the Term Loan.

(b)  Excess Cash Flow.    Within 120 days after the end of each fiscal year of the Borrower (beginning with the fiscal year ending December 31, 2002), the Borrower shall prepay the Term Loan in an aggregate amount equal to 50% of the Excess Cash Flow for such prior fiscal year.

2.10.   Interest Payment Dates.

Interest on the Loans shall be due and payable on each Regular Interest Payment Date. After maturity of any part of the Loans (by acceleration or otherwise), interest on such part shall be due and payable on demand.

2.11.   Payments Generally.

23

(a)  Payments Generally.    All payments and prepayments to be made by the Borrower in respect of principal, interest, fees, indemnity, expenses or other amounts due from the Borrower hereunder or under any other Loan Document shall be payable in Dollars by 1:00 o’clock p.m., Charlotte time, on the day when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, and, upon any failure to make any such payment when so due and expiration of any applicable cure period with respect to such payment, an action therefor shall immediately accrue, without setoff, counterclaim, withholding or other deduction of any kind or nature. Such payments shall be made to the Lender in Dollars in funds immediately available. Any payment or prepayment received by the Lender after 1:00 o’clock p.m., Charlotte time, on any day shall be deemed to have been received on the next succeeding Business Day.

(b)  Interest on Overdue Amounts.    To the extent permitted by law, after there shall have become due (by acceleration or otherwise) principal, interest, fees, indemnity, expenses or any other amounts due from the Borrower hereunder or under any other Loan Document, such amounts shall bear interest for each day until paid (before and after judgment), payable on demand, at a rate per annum which for each day shall be equal to a rate per annum two percent (2%) above the rate otherwise applicable (or if no rate is applicable, whether in respect of interest, fees or other amounts, then four percent (4.0%) greater than the Prime Rate).

To the extent permitted by law, interest accrued on any amount which has become due hereunder or under any other Loan Document shall compound on a day-by-day basis, and hence shall be added daily to the overdue amount to which such interest relates.

(c)  Automatic Debit.    The Borrower has elected to authorize the Lender to effect payment of sums due under this Agreement and the other Loan Documents by means of debiting the Borrower’s account number 4124657128. This authorization shall not affect the obligation of the Borrower to pay such sums when due, without notice, if there are insufficient funds in such account to make such payment in full on the due date thereof, or if the Lender fails to debit the account. Without limiting the foregoing, the Borrower has authorized the Lender to effect payment of sums due under this Agreement in connection with the Revolving Credit Facility Loans in accordance with the Autoborrow Service Agreement.

2.12.   Additional Compensation in Certain Circumstances.

Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy Requirements, Expenses, Etc.    If any Law or guideline or interpretation

24

or application thereof by any Governmental Authority charged with the interpretation or administration thereof or compliance with any request or directive of any Governmental Authority (whether or not having the force of law) now existing or hereafter adopted:

(i)  subjects the Lender to any tax or changes the basis of taxation with respect to this Agreement, the Notes, the Commitments, the Loans, or payments by the Borrower of principal, interest, fees or other amounts due from the Borrower hereunder or under the Notes (except for taxes payable by the Lender based on the overall net income or gross receipts of the Lender imposed by the jurisdictions foreign, federal, state and/or local) in which the Lender’s principal office is located),

(ii)  imposes, modifies or deems applicable any reserve, special deposit or similar requirement against credits or commitments to extend credit extended by, assets (funded or contingent) of, deposits with or for the account of, other acquisitions of funds by, the Lender (other than requirements expressly included herein in the determination of the LIBOR Rate hereunder),

(iii)  imposes, modifies or deems applicable any capital adequacy or similar requirement (A) against assets (funded or contingent) of, or credits or commitments to extend credit extended by, the Lender, or (B) otherwise applicable to the obligations of the Lender under this Agreement, or

(iv)  imposes upon the Lender any other condition or expense with respect to this Agreement, the Notes, the Commitments or its making, maintenance or funding of any Loan, Letter of Credit, or any security for any thereof,

and the result of any of the foregoing is to increase the cost to, reduce the income receivable by, or impose any expense (including loss of margin) upon the Lender, or, in the case of clause (iii), any Person controlling the Lender, with respect to this Agreement, the Notes, the Commitments or the making, maintenance or funding of any Loan or Letter of Credit, (or, in the case of any capital adequacy or similar requirement, to have the effect of reducing the rate of return on the Lender’s or controlling Person’s capital, taking into consideration the Lender’s or controlling Person’s policies with respect to capital adequacy) by an amount which the Lender deems to be material, the Lender may from time to time notify the Borrower of the amount determined (using any averaging and attribution methods) by the Lender (which determination shall be conclusive) to be necessary to compensate the Lender for such increase, reduction or imposition. In making any such determination the Lender may take into account any special, supplemental or other nonrecurring items, may apply any averaging or attribution methods, and may make such determination prospectively or retrospectively.

25

Such amount shall be due and payable by the Borrower to the Lender five Business Days after such notice is given.

2.13.   Taxes.

(a)  Payments Net of Taxes.    All payments made by the Borrower under this Agreement or any other Loan Document shall be made free and clear of, and without reduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, and all liabilities with respect thereto, excluding

(i)  income, gross receipts or franchise taxes imposed on the Lender by the jurisdiction under the laws of which the Lender is organized or any political subdivision or taxing authority thereof or therein or as a result of a connection between Lender and any jurisdiction other than a connection resulting solely from this Agreement and the transactions contemplated hereby, and

(ii)  income, gross receipts or franchise taxes imposed by any jurisdiction in which the Lender’s lending offices which make or book Loans are located or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, deductions, charges or withholdings being hereinafter called “Taxes”). If any Taxes are required to be withheld or deducted from any amounts payable to the Lender under this Agreement or any other Loan Document, the Borrower shall pay the relevant amount of such Taxes and the amounts so payable to the Lender shall be increased to the extent necessary to yield to the Lender (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the other Loan Documents. Whenever any Taxes are paid by the Borrower with respect to payments made in connection with this Agreement or any other Loan Document, as promptly as possible thereafter, the Borrower shall send to the Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof.

(b)  Indemnity.    The Borrower hereby indemnifies the Lender for the full amount of all Taxes attributable to payments by or on behalf of the Borrower hereunder or under any of the other Loan Documents, any Taxes paid by the Lender, any present or future claims, liabilities or losses, including, without limitation, reasonable and documented attorneys’ fees, with respect to or resulting from any omission to pay or delay in paying any Taxes (including any incremental Taxes, interest or penalties that may

26

become payable by the Lender as a result of any failure to pay such Taxes), whether or not such Taxes were correctly or legally asserted. Such indemnification shall be made within five (5) days from the date the Lender makes written demand therefor.

(c)  The agreements in this Section 2.13 shall survive the termination of this Agreement and the other Loan Documents, and all other amounts payable hereunder.

2.14.   Intentionally Deleted.

2.15.   Borrowing Base.

(a)  Borrowing Base.    The “Borrowing Base” for the Borrower at any time shall mean the sum, at the date of the most recent Borrowing Base/Non-Default Certificate required to be furnished pursuant to Section 2.15(b), of

(i)  Ninety percent (90%) of the Net Value (as hereinafter defined) of Eligible Billed Receivables representing amounts due and owing from the Government (or from a prime contractor under a contract with the Government with respect to which the Borrower is a subcontractor), which are outstanding less than ninety-one (91) days from the date of original invoice; plus

(ii)  Eighty percent (80%) of the Net Value of Eligible Billed Receivables representing amounts due and owing from domestic account debtors (other than the Government), which are outstanding less than ninety-one (91) days from the date of original invoice; plus

(iii)  The lesser of (A) fifty percent (50%) of the Net Value of Eligible Unbilled Receivables and (B) $1,000,000; plus

(iv)  $2,000,000.

The “Net Value” of an Eligible Billed Receivable or an Eligible Unbilled Receivable shall be its face amount, net of any discount for prompt payment (and net of any other amount representing payment of finance charges, late charges, or interest (however denominated)), and net of any portion thereof which constitutes payment of sales, use or other taxes.

(b)  Borrowing Base/Non-Default Certificates.    On the Closing Date and monthly thereafter the Borrower shall furnish to the Lender a certificate (each, a “Borrowing Base/Non-Default Certificate”) substantially in the form of Exhibit D hereto, appropriately completed and signed by a Responsible Officer of the Borrower and setting forth the information required therein. Borrowing Base/Non-Default Certificates shall be

27

delivered to the Lender within twenty (20) days following the last day of each calendar month or at such other time as the Lender may specify in its sole and absolute discretion.

To the extent that the Borrower is required to deliver a Borrowing Base/Non-Default Certificate on a particular day, the Eligible Billed Receivables and the Eligible Unbilled Receivables reflected on such Borrowing Base/Non-Default Certificate, the Net Values applicable thereto, and the calculations of the Borrowing Base thereunder, shall be determined as of the last day of the month immediately preceding the date of such Borrowing Base/Non-Default Certificate or as of such other date as the Lender may specify. The Borrowing Base determined pursuant to any such Borrowing Base/Non-Default Certificate shall be effective until delivery of a subsequent Borrowing Base/Non-Default Certificate.

2.16.   Letters of Credit.

(a)  General.    Subject to the terms and conditions of this Agreement, and relying upon the representations and warranties herein set forth, the Lender shall issue for the account of the Borrower Letters of Credit at any time or from time to time on or after the date hereof. The Borrower shall not request any Letter of Credit to be issued (and the Lender shall not be obligated to issue any Letter of Credit) except within the following limitations: on the date of issuance of any Letter of Credit (and after giving effect to such issuance): the sum of the aggregate Letter of Credit Obligations plus the aggregate amount of all Revolving Credit Facility Loans outstanding shall not exceed the Revolving Credit Facility Available Amount.

(b)  Terms of Letters of Credit.    The Borrower shall not request any Letter of Credit to be issued (and the Lender shall not be obligated to issue any Letter of Credit) except within the following limitations: each Letter of Credit (i) shall have an expiration date no later than the earlier of (A) one year from the date of issue and (B) thirty (30) days before the Revolving Credit Facility Maturity Date and (ii) shall be denominated in Dollars. Subject to the terms and conditions of this Agreement, each Letter of Credit shall be subject to any other reasonable requirements for letters of credit normally and customarily imposed by the Lender.

(c)  Letter of Credit Fees.    The Borrower shall pay a fee (the “Letter of Credit Fee”), with respect to each Letter of Credit, in the amount of the Applicable Margin applied to the face amount of such Letter of Credit, payable before such Letter of Credit is issued. The Borrower shall also pay to the Lender such Letter of Credit administrative, amendment and other fees based on the Lender’s standard pricing for such fees, as amended from time to time.

28

2.17.   Procedure for Issuance and Amendment of Letters of Credit.

(a)  Request for Issuance.    The Borrower may from time to time request, upon at least three (3) Business Days’ notice, the Lender to issue a Letter of Credit by:

(i)  delivering to the Lender a written request to such effect, specifying the date on which such Letter of Credit is to be issued, the expiration date thereof, and the stated amount thereof, and

(ii)  delivering to the Lender an application, in such form as may from time to time be approved by the Lender (the “Letter of Credit Application”), completed to the satisfaction of the Lender, together with such other certificates, documents and other papers and information as the Lender may request.

If all conditions precedent to the issuance of a Letter of Credit are fulfilled, the Lender shall deliver the original of such Letter of Credit to the beneficiary thereof or as the Borrower shall otherwise direct.

(b)  Request for Extension or Increase.    The Borrower may from time to time request the Lender to extend the expiration date of an outstanding Letter of Credit or increase the Letter of Credit Undrawn Availability of such Letter of Credit. Such extension or increase shall for all purposes hereunder be treated as though the Borrower had requested issuance of a replacement Letter of Credit (except only that the Lender may, if it elects, issue a notice of extension or increase in lieu of issuing a new Letter of Credit in substitution for the outstanding Letter of Credit).

2.18.   Letter of Credit Drawings and Reimbursements.

The Borrower hereby agrees to reimburse the Lender, by making payment to the Lender in accordance with Section 2.11(a), on the date and in the amount of each payment made by the Lender under any Letter of Credit, upon notice (which may be by telephone) by the Lender to the Borrower of such payment, without further notice, protest or demand, all of which are hereby waived, and an action therefor shall thereupon immediately accrue. To the extent such payment is not timely made, the Borrower hereby agrees to pay to the Lender on demand, interest on any Letter of Credit Unreimbursed Draws for each day from and including the date of such payment by the Lender until reimbursed in full (before and after judgment), in accordance with Section 2.11(b), at the rate per annum set forth in Section 2.11(b).

2.19.   Obligations Absolute.

The payment obligations of the Borrower under Section 2.18 shall be unconditional and irrevocable and shall be paid strictly in accordance with the

29

terms of this Agreement under all circumstances, including, without limitation, the following circumstances:

(a)  any lack of validity or enforceability of this Agreement, any Letter of Credit or any other Loan Document;

(b)  the existence of any claim, set-off, defense or other right which Borrower or any other Person may have at any time against any beneficiary or transferee of any Letter of Credit (or any Persons for whom any such beneficiary or transferee may be acting), the Lender, or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or any unrelated transaction;

(c)  any draft, certificate, statement or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, unless payment by the Lender under such circumstances results solely from the gross negligence or willful misconduct of the Lender;

(d)  payment by the Lender under any Letter of Credit against presentation of a draft or certificate which does not comply with the terms of such Letter of Credit, or payment by the Lender under the Letter of Credit in any other circumstances in which conditions to payment are not met, except any such payment resulting solely from the gross negligence or willful misconduct of the Lender; or

(e)  any other event, condition or circumstance whatever, whether or not similar to any of the foregoing.

The Borrower bears the risk of, and neither the Lender nor any of its directors, officers, employees or Lenders shall be liable or responsible for any of, the foregoing matters, the use which may be made of any Letter of Credit, or acts or omissions of the beneficiary or any transferee in connection therewith.

2.20.   Further Assurances.

The Borrower hereby agrees, from time to time, to do and perform any and all acts and to execute any and all further instruments reasonably requested by the Lender more fully to effect the purposes of this Agreement and the issuance of the Letters of Credit hereunder.

2.21.   Letter of Credit Applications.

The representations, warranties and covenants by the Borrower under, and rights and remedies of the Lender under, any Letter of Credit application (a “Letter of Credit Application”) relating to any Letter of Credit are in addition to, and not in limitation or derogation of, representations, warranties and covenants by the Borrower under, and rights and remedies of the Lender under, this

30

Agreement, the Loan Documents, and applicable Law. In the event of any inconsistency between the terms of this Agreement and any Letter of Credit Application, this Agreement shall prevail.

3.   REPRESENTATIONS AND WARRANTIES.

To induce the Lender to enter into this Agreement, the Credit Parties represent, warrant, covenant and agree as follows:

3.1.   Corporate Existence and Qualification.

Each of the Borrower and the Subsidiary Guarantors is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, with all corporate power and authority and all necessary licenses and permits to own, operate and lease its properties and carry on its business as now being conducted, and as it may reasonably be expected in the future to be conducted. Each of the Borrower and the Subsidiary Guarantors is duly qualified and authorized to do business and is in good standing in each jurisdiction in which the nature of its activities or the character of its properties makes qualification necessary, except where the failure to be so qualified would not have a Material Adverse Effect. Schedule 3.1 states as of the date hereof the jurisdictions where the character of the properties owned or leased by each of the Borrower and the Subsidiary Guarantors or the nature of its business makes qualification to do business as a foreign corporation necessary.

3.2.   Authority: Noncontravention.

The execution, delivery and performance of the obligations of the Credit Parties set forth in this Agreement, the Notes and the other Loan Documents (a) have been duly authorized by all necessary corporate and/or stockholder action; (b) do not require the consent of any Governmental Authority; (c) will not violate or result in (and with notice or the lapse of time will not violate or result in) the breach of any provision of any Articles of Incorporation or Bylaws, any material indenture, instrument, agreement or other undertaking to which any Credit Party is a party or by which any Credit Party is bound, or any order or regulation of any Governmental Authority; and (d) except as provided for in this Agreement, result in the creation of a Lien upon any of the properties or assets of any Credit Party. When the Loan Documents are executed and delivered, they will constitute legal, valid and binding obligations of the Credit Parties, enforceable against the Credit Parties in accordance with their respective terms.

3.3.   Financial Position: Solvency.

(a)  The Borrower has heretofore furnished to the Lender consolidated and consolidating balance sheets as of December 31, 2000 and the related consolidated and consolidating statements of income, cash flows and changes in stockholders’ equity for the fiscal year then ended, as reported on by Ernst & Young, independent certified public accountant. Such

31

financial statements (including the notes thereto) present fairly in all material respects the financial condition of the Borrower as of the end of such fiscal year and the results of its operations and cash flows for the fiscal year then ended, all in conformity with GAAP.

(b)  The Borrower has heretofore furnished to the Lender unaudited interim consolidated and consolidating balance sheets as of June 30, 2001, together with the related consolidated and consolidating statements of income and cash flows for the applicable calendar periods ending on such date. Such financial statements present fairly in all material respects the financial condition of the Borrower as of the end of such period and the results of its operations and its cash flows for the period then ended, all in conformity with GAAP, subject to normal and recurring year-end audit adjustments and the lack of complete footnotes.

(c)  There has been no material adverse change in the business, properties or condition (financial or otherwise) of the Borrower or the Borrower and its Subsidiaries taken as a whole since the date of the June 30, 2001 financial statements.

(d)  On and as of the Closing Date and after giving effect to all Loans and other obligations and liabilities being incurred on such date in connection therewith, and on the date of each subsequent Loan or other extension of credit hereunder and after giving effect to the application of the proceeds thereof in accordance with the terms of the Loan Documents, the Borrower is and will be Solvent.

3.4.   Payment of Taxes.

Each of the Borrower and its Subsidiaries has filed all tax returns and reports required to be filed by it with the United States Government and/or with all state and local governments, and has paid in full or made adequate provision on its books for the payment of all taxes, interest, penalties, assessments or deficiencies shown to be due or claimed to be due on or in respect of such tax returns and reports, except to the extent that the validity or amount thereof is being contested in good faith by appropriate proceedings and the non-payment thereof pending such contest will not result in the execution of any tax lien or otherwise jeopardize the Lender’s interests in any part of the Collateral.

3.5.   Accuracy of Submitted Information; Omissions.

As of the date furnished, all documents, certificates, information, materials and financial statements furnished or to be furnished to the Lender pursuant to the Agreement or otherwise in connection with a Loan or Letter of Credit (a) are true and correct in all material respects; (b) do not contain any untrue statement of a material fact; and (c) do not omit any material fact necessary to make the statements contained therein or herein not, in light of the circumstances under

32

which they were made, misleading; it being understood that projections are merely reasonable estimates of future events, and are subject to uncertainties and that actual results during the period covered by the projections may differ from the projected results.

3.6.   Government Contracts.

No notice of suspension, debarment or termination for default has been received by any Credit Party and no cure notice (other than any immaterial cure notice under any GSA contract) has been received by any Credit Party in connection with any Government Contract currently in effect or other contract currently in effect pursuant to which any Credit Party is directly or indirectly acting as a subcontractor under or in connection with a Government Contract. All Government Contracts and all other contracts which constitute Material Contracts are listed on Schedule 3.6 attached hereto.

3.7.   No Defaults or Liabilities.

Neither the Borrower nor any of its Subsidiaries is in default in the performance of any obligation, covenant or condition contained in any Material Contract to which it is a party.

3.8.   No Violations of Law.

Neither the Borrower nor any of its Subsidiaries is in material violation of any applicable Laws; neither the Borrower nor any of its Subsidiaries has failed to obtain any material license, permit, franchise or other governmental authorization necessary to the ownership of its properties or to the conduct of its business, and each of the Borrower and its Subsidiaries has conducted its business and operation in compliance in all material respects with all applicable Laws.

3.9.   Litigation and Proceedings.

Except for the matters set forth on Schedule 3.9 attached hereto, no action, suit or proceeding against or affecting the Borrower or any of its Subsidiaries is presently pending, or to the knowledge of any Credit Party threatened, in any court, before any Governmental Authority, which involves the possibility of any judgment or liability in excess of One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00) and not fully covered by insurance and no Credit Party is aware of any existing basis for any such action, suit or proceeding. Neither the Borrower nor any of its Subsidiaries is in default with respect to any order, writ, injunction or decree of any Governmental Authority.

3.10.   Fiscal Year.

The Borrower’s fiscal year ends on December 31.

3.11.   Pension Plans.

33

(a)  The present value of all benefits vested under all “employee pension benefit plans” as such term is defined in Section 3(2) of ERISA, from time to time maintained by the Borrower (individually, a “Pension Plan” and collectively, the “Pension Plans”) did not, as of December 31, 2000, exceed the value of the assets of the Pension Plans allocable to such vested benefits;

(b)  No Pension Plan, trust created thereunder or other person dealing with any Pension Plan has engaged in a non-exempt transaction proscribed by Section 406 of ERISA or no Pension Plan or trust created thereunder has been terminated, and there has been no non-exempt “prohibited transaction” as such term is defined in Section 4975 of the Code, which could have a Material Adverse Effect;

(c)  There have been no “Reportable Events” (as that term is defined in Section 4043 of ERISA and the regulations thereunder) with respect to any Pension Plan or trust created thereunder after June 30, 1974; and

(d)  No Pension Plan or trust created thereunder has incurred any “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA or Section 412 of the Code) as of the end of any plan year, whether or not waived, since the effective date of ERISA.

3.12.   O.S.H.A. and Environmental Compliance.

(a)  Each of the Borrower and its Subsidiaries has duly complied in all material respects with, and its facilities, business assets, property, leaseholds and equipment are in compliance in all material respects with, the provisions of the Federal Occupational Safety and Health Act (“O.S.H.A.”), the Environmental Protection Act, RCRA and all other Environmental Laws where non­compliance with such Environmental Laws could result in a Material Adverse Effect; and there have been no citations, notices, notifications or orders of any such non-compliance issued to the Borrower or any of its Subsidiaries or relating to its business, assets, property, leaseholds or equipment under any such laws, rules or regulations;

(b)  Each of the Borrower and its Subsidiaries has been issued all required federal, state and local licenses, certificates and permits necessary or appropriate in the operation of its facilities, businesses, assets, property, leaseholds and equipment, unless the failure to obtain any such license, certificate or permit would not have a Material Adverse Effect; and

(c)  (i) There are no visible signs of releases, spills, discharges, leaks or disposal collectively (referred to herein as “Releases”) of Hazardous Substances at, upon, under or within any real property owned or any premises leased by the Borrower or any of its Subsidiaries, (ii) there are no

34

underground storage tanks or polychlorinated biphenyls on any real property owned or any premises leased by the Borrower or any of its Subsidiaries (except for storage tanks and polychlorinated biphenyls which exist and are maintained in compliance with applicable Environmental Laws, rules and regulations); (iii) to the knowledge of the Borrower, no real property owned or premises leased by the Borrower or any of its Subsidiaries has ever been used as a treatment, storage or disposal facility for Hazardous Waste (except for such use as could not reasonably be expected to result in material liability for the Borrower or any of its Subsidiaries) and (iv) no Hazardous Substances are present on any real property owned or any premises leased by the Borrower or any of its Subsidiaries, except for such quantities of Hazardous Substances as are handled in all material respects in accordance with all applicable manufacturer’s instructions and governmental regulations, and as are necessary for the operation of the business of the Borrower and its Subsidiaries. Each of the Borrower and its Subsidiaries, for itself and its successors and assigns, hereby covenants and agrees to indemnify, defend and hold harmless the Lender from and against any and all liabilities, losses, claims, damages, suits, penalties, costs and expenses of every kind or nature, including, without limitation, reasonable attorneys’ fees, arising from or in connection with (A) the presence or alleged presence of any Hazardous Substance or Hazardous Waste on, under or about any property of the Borrower or any of its Subsidiaries (including, without limitation, any property or premises now or hereafter owned or leased by the Borrower or any of its Subsidiaries), or which is caused by or results from, directly or indirectly, any act or omission to act by the Borrower or any of its Subsidiaries; and (B) the Borrower’s or any of its Subsidiaries’ violation of any Environmental Law.

3.13.   Intellectual Property.

All patents, patent applications, trademarks, trademark applications, copyrights, copyright applications, tradenames, trade secrets and licenses material for the conduct of the business of the Borrower and its Subsidiaries owned by each of the Borrower and its Subsidiaries, are valid and are listed on Schedule 3.13; there is no objection or pending challenge to the validity of any such patent, trademark, copyright, tradename, trade secret or license, except where such invalidity would not have a Material Adverse Effect; the Borrower is not aware of any grounds for any such challenge or objection thereto; except as hereafter may be disclosed to the Lender in writing, neither the Borrower nor any of its Subsidiaries pays a royalty to anyone in connection with any patent, trademark, copyright, tradename, trade secret or license; and each of the Borrower and its Subsidiaries has the right to bring legal action for the infringement of any such patent, trademark, copyright, tradename, trade secret or license.

3.14.   Existing or Pending Defaults; Material Contracts.

35

Except as set forth on Schedule 3.14 attached hereto, the Borrower is not aware of any condition, act, event or occurrence that would or reasonably could prejudice the Lender’s rights in connection with any Material Contract, including, without limitation, any pending or threatened suspension, debarment or other governmental action or proceeding, any pending or threatened litigation, and any other legal or administrative proceeding or investigation pending or threatened against the Borrower or any of its Subsidiaries in connection with any Material Contract.

3.16.   Office Locations: Leases.

Each of the Borrower and its Subsidiaries has good and marketable title in fee simple to all real property owned or purported to be owned by it and good title to all other property of whatever nature owned or purported to be owned by it, including all property reflected in the most recent audited balance sheet referred to in Section 3.3 or submitted pursuant to Section 5.1(a), as the case may be (except as sold or otherwise disposed of in the ordinary course of business after the date of such balance sheet), in each case free and clear of all Liens, other than Permitted Liens.

3.16.   Office Locations: Leases.

All office and other locations of the Borrower and its Subsidiaries as of the Closing Date are set forth on Schedule 3.16 attached hereto. All material leases and other agreements under which the Borrower or any of its Subsidiaries is the lessee are in full force and effect and constitute legal, valid and binding obligations of, and are legally enforceable against, the respective parties thereto. All necessary governmental approvals, if any, have been obtained for each such material lease or agreement, and there have been no threatened cancellations thereof or outstanding material disputes with respect thereto.

3.17.  Labor Relations.

There are no strikes, work stoppages, grievance proceedings, union organization efforts or other controversies pending, or to the Borrower’s knowledge threatened or reasonably anticipated, between the Borrower or any of its Subsidiaries and any union or other collective bargaining unit representing any employee of the Borrower or any of its Subsidiaries. Each of the Borrower and its Subsidiaries has complied and is in compliance with all applicable Laws relating to employment or the workplace, including, without limitation, provisions relating to wages, hours, collective bargaining, safety and health, work authorizations, equal employment opportunity, immigration, withholding, unemployment compensation, employee privacy and right to know. Except as set forth on Schedule 3.17, there are, as of the date hereof, no collective bargaining agreements or employment agreements between the Borrower or any of its Subsidiaries and any of its employees or professional services agreements not terminable at will. To the best of the knowledge of the Borrower, neither the

36

Borrower nor any of its Subsidiaries is the subject of any union organizational activities relating to its business or assets. The consummation of the transactions contemplated hereby will not cause the Borrower or any of its Subsidiaries to incur or suffer any liability relating to, or obligation to pay, severance, termination or other similar payments to any person or entity.

3.18.   Absence of Undisclosed Liabilities.

Neither the Borrower nor any of its Subsidiaries has any liability or obligation of any nature whatever (whether absolute, accrued, contingent or otherwise, whether or not due), forward or long-term commitments or unrealized or anticipated losses from unfavorable commitments or that has, or would be likely to have, a Material Adverse Effect, except (a) as disclosed in the financial statements referred to in Section 3.3 and (b) liabilities, obligations, commitments and losses incurred after June 30, 2001, in the ordinary course of business and consistent with past practices.

3.19.   Subsidiaries.

As of the date hereof, the Borrower has no Subsidiaries or owns interests in no other Person, except those set forth on Schedule 3.19. The Subsidiaries identified on Schedule 3.19 as inactive have no assets, no liabilities, no employees and transact no business.

3.20.   Intentionally Deleted.

3.21.   Intentionally Deleted.

3.22.   Margin Regulations.

Except as permitted by Section 6.6(d) hereof (i) no part of the proceeds of any Loan hereunder will be used for the purpose of buying or carrying any “margin stock,” as such term is used in Regulations G and U of the Board of Governors of the Federal Reserve System, as amended from time to time, or to extend credit to others for the purpose of buying or carrying any “margin stock” and (ii) the Borrower owns no “margin stock.” The Borrower is not engaged in the business of extending credit to others for the purpose of buying or carrying “margin stock.” Neither the making of any Loan nor any use of proceeds of any such Loan will violate or conflict with the provisions of Regulation G. T. U or X of the Board of Governors of the Federal Reserve System. as amended from time to time.

3.23.   Survival of Representation and Warranties.

All representations and warranties made herein shall survive the making of the Loans, and (except for (i) such representations and warranties as expressly relate to an earlier date and (ii) such representations and warranties as may have changed since the Closing Date, if the Lender has received notice of such change

37

and such change is acceptable to the Lender) shall be deemed remade as of the date of each request for an advance or readvance of any Loan proceeds or for the issuance or amendment or renewal of any Letter of Credit.

4.   CONDITIONS OF LENDING.

4.1.   Conditions to Initial Loans.

The obligation of the Lender to make any Loans on the Closing Date and to issue any Letter of Credit on the Closing Date is subject to the satisfaction, immediately prior to or concurrently with the making of such Loan or issuance of such Letter of Credit, of the following conditions precedent, in addition to the conditions precedent set forth in Section 4.2:

(a)  Agreement; Notes.    The Lender shall have received an executed counterpart of this Agreement, duly executed by the Credit Parties, and an executed Revolving Credit Facility Note and Term Loan Note, each conforming to the requirements hereof and duly executed on behalf of the Borrower.

(b)  Security Agreement.    The Lender shall have received the following, each of which shall be in form and substance satisfactory to the Lender:

(i)  Executed copies of the Security Agreement, duly executed on behalf of the Credit Parties, in substantially the form of Exhibit E (as amended, modified or supplemented from time to time, the “Security Agreement”);

(ii)  Evidence of the completion of all recordings and filings of or with respect to, and of all other actions with respect to, the Security Agreement as may be necessary or, in the opinion of the Lender, desirable to create or perfect the Liens created or intended by the parties to be created by the Security Agreement as valid, continuing and perfected Liens in favor of the Lender securing the Obligations, prior to all other Liens and evidence of the payment of any necessary fee, tax or expense relating to such recording or filing (including any filing with any United States Federal Governmental Authority as may be required by the Assignment of Claims Act);

(iii)  Evidence of the insurance required by the terms of the Security Agreement, containing the endorsements required by such Security Agreement and this Agreement; and

(iv)  A contemporaneous search of UCC, tax, judgment and litigation dockets and records and other appropriate registers shall have revealed no filings or recordings in effect with respect to the Collateral, except Permitted Liens (it being understood that such

38

acceptance does not limit the obligations of the Credit Parties with respect to the priority of the Liens in favor of the Lender), and the Lender shall have received a copy of the search reports received as a result of the search and of the acknowledgment copies of the financing statements or other instruments required to be filed or recorded pursuant to this subsection bearing evidence of the recording of such statements or instruments at each of such filing or recording places.

(c)  Pledge Agreement.    The Lender shall have received (i) executed copies of the Pledge Agreement in substantially the form of Exhibit F (as amended, modified and supplemented from time to time, the “Pledge Agreement”); and (ii) all stock certificates evidencing the stock pledged to the Lender pursuant to the Pledge Agreement, together with duly executed in blank undated stock powers attached thereto.

(d)  Guaranties.    The Lender shall have received the Guaranties in substantially the form of Exhibit G-1 (the “Subsidiary Guaranty”) and Exhibit G-2 (the “Individual Guaranties”) (together, as amended, modified and supplemented from time to time, the “Guaranties”), executed and delivered by the Subsidiary Guarantors and each of the Individual Guarantors, respectively.

(e)  Subordination Agreements.    The Lender shall have received executed copies of the Subordination Agreements in substantially the from of Exhibit H (as amended, modified and supplemented from time to time, the “Subordination Agreements”).

(f)  Acquisition of Analex Corporation.    The Lender shall be satisfied with the final terms and conditions of, and the documentation relating to, the acquisition of Analex Corporation by the Borrower.

(g)  Capitalization.    The capital structure of the Borrower and its Subsidiaries and the terms, conditions, amounts and holders of all equity, debt and other indebtedness, obligations and liabilities of each of them, shall be satisfactory to the Lender.

(h)  Cash Management.    The Lender shall have received such evidence as it shall have requested as to the Borrower’s satisfaction of the covenants set forth in Section 5.12.

(i)  Corporate Proceedings.    The Lender shall have received certificates by the Secretary or Assistant Secretary of each Credit Party dated as of the Closing Date as to (i) true copies of the articles of incorporation and by-laws of each Credit Party in effect on such date (which, in the case of articles of incorporation, shall be certified to be true, correct and complete by the Secretary of State or other Governmental Authority in each Credit

39

Party’s jurisdiction of incorporation not more than thirty (30) days before the Closing Date), (ii) true copies of all corporate action taken by each Credit Party relative to this Agreement and the other Loan Documents and (iii) the incumbency and signature of the respective officers of each Credit Party executing this Agreement and the other Loan Documents to which such Credit Party is a party, together with satisfactory evidence of the incumbency of such Secretary or Assistant Secretary. The Lender shall have received certificates from the appropriate Secretaries of State or other applicable Governmental Authorities dated not more than thirty (30) days before the Closing Date showing the good standing of each Credit Party in its state of incorporation and each state listed on Schedule 3.1 hereto.

(j)  Insurance.    The Lender shall have received evidence satisfactory to it that the insurance policies required by this Agreement and the other Loan Documents have been obtained, containing the endorsements required hereby and thereby.

(k)  Litigation.    There shall not be pending or threatened any action, suit, proceeding or investigation by or before any Governmental Authority which would, if determined adversely, have a Material Adverse Effect.

(l)  Compliance Certificate.    The Lender shall have received a Compliance Certificate in substantially the form set forth as Exhibit I, duly completed and signed by a Responsible Officer of the Borrower.

(m)  Financial Statements.    The Lender shall have received (i) audited consolidated and consolidating financial statements of the Borrower (including a balance sheet and statements of income, cash flows and changes in stockholders’ equity) for the fiscal years ended June 30, 1998, June 30, 1999, June 30, 2000 and December 31, 2000, (ii) unaudited consolidated and consolidating financial statements of the Borrower (including a balance sheet and statements of income and cash flows) for the six month period ended June 30, 2001, (iii) financial statements of the Individual Guarantors satisfactory to the Lender and (iv) such other financial information as the Lender may request, all of which shall be satisfactory to the Lender.

(n)  Field Examination.    The Lender shall have conducted a field examination of the Borrower satisfactory to the Lender and its legal counsel, including an examination of matters relating to litigation, taxes, labor and human resources, insurance, pension liabilities, owned and leased real estate, material contracts, debt agreements and environmental risk, and an audit of accounts receivable, inventory, accounts payable and financial controls and systems.

(o)  Working Capital.    The Lender shall be satisfied that the Borrower will have sufficient working capital. Without limiting the foregoing, after the

40

Lender has made the Loans to consummate the acquisition of Analex Corporation on the Closing Date, the difference between (i) the Revolving Credit Facility Available Amount and (ii) the aggregate principal amount of all Revolving Credit Facility Loans and all Letter of Credit Obligations, shall be at least One Million and 00/100 Dollars ($1,000,000.00).

(p)  Contract Status Backlog Report.    The Lender shall have received a contract status backlog report prepared as of September 30, 2001.

(q)  Legal Opinion of Counsel to the Borrower.    The Lender shall have received an opinion addressed to the Lender, dated the Closing Date, of Holland & Knight, counsel to the Borrower, in form and substance satisfactory to the Lender.

(r)  Officers’ Certificates.    The Lender shall have received certificates from such officers of the Credit Parties as to such matters as the Lender may reasonably request.

(s)  Fees, Expenses, etc.    All fees and other compensation required to be paid to the Lender pursuant hereto on or prior to the Closing Date shall have been paid or received, including the Seventy-Five Thousand and 00/100 Dollars ($75,000.00) origination fee required by Section 2.3(c).

(t)  Borrowing Base Certificate.    The Lender shall have received a Borrowing Base/Non-Default Certificate reflecting the Borrowing Base as of September 30, 2001.

(u)  No Material Adverse Change, etc.    No material adverse change shall have occurred in the business, operations, assets, properties, or condition (financial or otherwise) of the Borrower and its Subsidiaries since June 30, 2001.

(v)  Additional Matters.    The Lender shall have received such other certificates, opinions, documents and instruments as may be reasonably requested by the Lender. All corporate and other proceedings, and all documents, instruments and other matters in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be satisfactory in form and substance to the Lender in its reasonable discretion.

4.2.   Conditions to All Loans.

The obligation of the Lender to make any Loan and the obligation of the Lender to issue any Letter of Credit is subject to performance by the Credit Parties of their obligations to be performed hereunder or under the other Loan Documents on or before the date of such Loan or issuance of such Letter of Credit, satisfaction of the conditions precedent set forth herein and in the other Loan Documents and to satisfaction of the following further conditions precedent:

41

(a)  Notice.    Appropriate notice of such Loan or Letter of Credit shall have been given by the Borrower as provided in Article 2 (except in the case of a Revolving Credit Facility Loan made in accordance with the Autoborrow Service Agreement).

(b)  Representations and Warranties.    Each of the representations and warranties made herein and in each other Loan Document (except for (i) such representations and warranties as expressly relate to an earlier date and (ii) such representations and warranties as may have changed since the Closing Date, if the Lender has received notice of such change and such change is acceptable to the Lender) shall be true and correct in all material respects on and as of such date as if made on and as of such date, both before and after giving effect to the Loans or Letters of Credit requested to be made or issued on such date.

(c)  No Defaults.    No Default shall have occurred and be continuing on such date or after giving effect to the Loans or Letters of Credit requested to be made or issued on such date.

(d)  No Material Adverse Change.    No material adverse change shall have occurred in the business, assets, properties, operations, or condition (financial or otherwise) of the Borrower and its Subsidiaries since the Closing Date.

(e)  Regulation U.    If at the time the Borrower owns any “margin stock,” the Borrower shall deliver Form U-1 and take all steps necessary to comply with Regulation U.

Each request by the Borrower for any Loan or Letter of Credit shall constitute a representation and warranty by the Borrower that the conditions set forth in this Section 4.2 have been satisfied as of the date of such request. Failure of the Lender to receive notice from the Borrower to the contrary before such Loan is made or Letter of Credit issued shall constitute a further representation and warranty by the Borrower that the conditions referred to in this Section 4.2 have been satisfied as of the date such Loan is made or such Letter of Credit issued.

5.   AFFIRMATIVE COVENANTS.

Each Credit Party hereby covenants to the Lender as follows:

5.1.   Basic Reporting Requirements.

(a)  Annual Audit Reports.    As soon as practicable, and in any event within one hundred twenty (120) days after the close of each fiscal year, the Borrower shall furnish to the Lender consolidated and consolidating statements of income, cash flows and changes in stockholders’ equity of the Borrower for such fiscal year and a consolidated and consolidating balance sheet of the Borrower as of the close of such fiscal year, and notes to each, all in

42

reasonable detail, setting forth in comparative form the corresponding figures for the preceding calendar year. Such financial statements shall be accompanied by an opinion of independent certified public accountants of recognized national standing selected by the Borrower and satisfactory to the Lender. Such opinion shall be free of exceptions or qualifications not acceptable to the Lender and in any event shall be free of any exception or qualification which is of “going concern” or like nature or which relates to a limited scope of examination. Such opinion in any event shall contain a written statement of such accountants substantially to the effect that (i) such accountants examined such financial statements in accordance with GAAP and accordingly made such tests of accounting records and such other auditing procedures as such accountants considered necessary in the circumstances and (ii) in the opinion of such accountants such financial statements present fairly in all material respects the financial position of the Borrower as of the end of such fiscal year and the results of its operations and its cash flows and changes in stockholders’ equity for such fiscal year, in conformity with GAAP.

(b)  Quarterly Consolidated and Consolidating Reports.    As soon as practicable, and in any event within forty-five (45) days after the close of each fiscal quarter of each fiscal year, the Borrower shall furnish to the Lender unaudited consolidated and consolidating statements of income and cash flows of the Borrower for such fiscal quarter and for the period from the beginning of such fiscal year to the end of such fiscal quarter and an unaudited consolidated and consolidating balance sheet of the Borrower as of the close of such fiscal quarter, all in reasonable detail, setting forth in comparative form the corresponding figures for the same periods or as of the same date during the preceding fiscal year. Such financial statements shall be certified by a Responsible Officer of the Borrower as presenting fairly in all material respects the financial position of the Borrower as of the end of such fiscal quarter and the results of its operations and its cash flows for such fiscal quarter, in conformity with GAAP (but without physical inventory), subject to normal and recurring year-end audit adjustments and the lack of complete footnotes.

(c)  Intentionally Deleted.

(d)  Intentionally Deleted.

(e)  Compliance Certificates.    At the same time the financial statements required by Section 5.1(a) and Section 5.1(b) are furnished to the Lender, the Borrower shall deliver to the Lender a Compliance Certificate in substantially the form set forth as Exhibit I, duly completed and signed by a Responsible Officer of the Borrower.

(f)  Borrowing Base/Non-Default Certificates.    The Borrower shall provide Borrowing Base/Non-Default Certificates in accordance with Section

43

2.15(b), and at such time, the Borrower shall also deliver to the Lender a corresponding billed and unbilled accounts receivable aging report.

(g)  Certain Other Reports and Information.

(i)  Promptly upon their becoming available, and in any event within forty-five (45) days following the end of each calendar quarter, the Borrower shall deliver to the Lender a contract status backlog report prepared as of the last day of such quarter.

(ii)  The Borrower shall deliver to the Lender, within thirty (30) days of issuance, all accountants’ management letters (including a management letter stamped “draft”) pertaining to, all other reports submitted by accountants in connection with any audit of, and all other reports from outside accountants with respect to, the Borrower and its Subsidiaries (and, in any event, any independent auditors’ annual management letters, if issued, will be delivered to the Lender concurrently with the financial statements referred to in subsection (a) of this Section 5.1).

(iii)  The Borrower shall cause each of Gerald R. McNichols and J. Richard Knop to deliver to the Lender, within one hundred twenty (120) days following the end of each calendar year, a personal financial statement in form and substance satisfactory to the Lender.

(iv)  The Borrower shall cause each of Gerald R. McNichols and J. Richard Knop to deliver to the Lender, within fifteen (15) days after filing, a copy of his federal income tax return.

(v)  The Borrower shall cause each of Gerald R. McNichols and J. Richard Knop to deliver to the Lender, within forty-five (45) days following the end of each calendar quarter, a statement of investments as of the end of such quarter.

(h)  Further Information.    The Borrower will promptly furnish to the Lender such other information and in such form as the Lender may reasonably request from time to time.

(i)  Notice of Certain Events.    Promptly upon becoming aware of any of the following, the Borrower shall give the Lender notice thereof, together with a written statement of a Responsible Officer of the Borrower setting forth the details thereof and any action with respect thereto taken or proposed to be taken by the Borrower:

(i)  Any Default.

44

(ii)  Any material adverse change in the business, assets, properties, operations or condition (financial or otherwise) of the Borrower and its Subsidiaries.

(iii)  Any pending action, suit, proceeding or investigation by or before any Governmental Authority against or affecting the Borrower (or any such action, suit, proceeding or investigation threatened in writing).

(iv)  Any material violation, breach or default by the Borrower or any of its Subsidiaries of or under any agreement or instrument material to its business, assets, properties, operations, condition, financial or otherwise (it being expressly understood and agreed that the Borrower need not provide notice to the Lender pursuant to this Section 5.1(i)(iv) of the termination of any such agreement or instrument in accordance with its terms).

(v)  Any Pension-Related Event. Such notice shall be accompanied by: (A) a copy of any notice, request, return, petition or other document received by the Borrower or any Controlled Group Member from any Person, or which has been or is to be filed with or provided to any Person (including the Internal Revenue Service, the PBGC or any Plan participant, beneficiary, alternate payee or employer representative), in connection with such Pension-Related Event, and (B) in the case of any Pension-Related Event with respect to a Plan, the most recent Annual Report (5500 Series), with attachments thereto, and the most recent actuarial valuation report, for such Plan.

(vi)  (A) Any Environmental Claim made or threatened in writing against the Borrower or any of its Environmental Affiliates, or (B) the Borrower’s becoming aware of any past or present acts, omissions, events or circumstances (including any dumping, leaking, disposition, removal, abandonment, escape, emission, discharge or release of any Environmental Concern Material at, on or under any facility or property now or previously owned, operated or leased by the Borrower, its Subsidiaries or any of their respective Environmental Affiliates) which could form the basis of any such Environmental Claim, which Environmental Claim, in the case of either clause (A) or (B), if adversely resolved, would reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.

(j)  Visitation; Verification.    The Borrower and its Subsidiaries shall permit such Persons as the Lender may designate from time to time to visit and inspect any of the properties of the Borrower and its Subsidiaries to examine their respective books and records and take copies and extracts

45

therefrom and to discuss their affairs with their directors, officers, employees and independent accountants at such times and as often as the Lender may reasonably request; provided that prior to the occurrence and continuation of an Event of Default, (i) the Lender shall provide at least two days’ prior advance notice to the Borrower of its intention to visit or inspect any of the properties of the Borrower and its Subsidiaries; and (ii) all such visits or inspections shall be conducted during the normal business hours of the Borrower and without undue interference with the conduct of the Borrower’s business. Prior to the occurrence and continuation of an Event of Default, the Borrower shall reimburse the Lender for actual out-of-pocket costs and expenses of no more than two such visits or inspections in any calendar year; and any additional visits or inspections shall be at the sole cost and expense of the Lender. Following an Event of Default, the Borrower shall reimburse the Lender for all visits or inspections.

The Lender shall have the right to examine and verify accounts, inventory and other properties and liabilities of the Borrower and its Subsidiaries from time to time, and the Borrower shall cooperate with the Lender in such verification. Without limitation of the foregoing, the Borrower hereby authorizes its officers, employees and independent accountants to discuss with the Lender the affairs of the Borrower and its Subsidiaries.

5.2.   Payment of Loan Obligations.

The Credit Parties will duly and punctually pay all sums to be paid to the Lender in accordance with the terms and conditions of the Loan Documents, and will comply with, perform and observe all of the terms thereof.

5.3.   Insurance.

The Borrower shall, and shall cause each of its Subsidiaries to (a) maintain with financially sound and reputable insurers insurance with respect to its properties and business and against such liabilities, workers compensation, casualties and contingencies and of such types and in such amounts as are customary in the case of corporations engaged in the same or similar businesses or having similar properties similarly situated and naming the Lender as an additional insured and a loss payee, (b) furnish to the Lender from time to time upon request copies of the policies under which such insurance is issued, original certificates of insurance and such other information relating to such insurance as the Lender may reasonably request, and (c) provide such other insurance and endorsements as are required by this Agreement and the other Loan Documents.

5.4.   Payment of Taxes and Other Potential Charges and Priority Claims.

46

The Borrower shall, and shall cause each of its Subsidiaries to, pay or discharge

(a)  on or prior to the date on which penalties attach thereto, all taxes, assessments and other governmental charges imposed upon it or any of its properties;

(b)  on or prior to the date when due, all lawful claims of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons which, if unpaid, might result in the creation of a Lien upon any such property; and

(c)  on or prior to the date when due, all other lawful claims which, if unpaid, might result in the creation of a Lien upon any such property or which, if unpaid, might give rise to a claim entitled to priority over general creditors of such Credit Party in a case under Title 11 (Bankruptcy) of the United States Code, as amended;

provided that unless and until foreclosure, distraint, levy, sale or similar proceedings shall have been commenced it need not pay or discharge any such tax, assessment, charge or claim so long as (x) the validity thereof is contested in good faith and by appropriate proceedings diligently conducted, and (y) such reserves or other appropriate provisions as may be required by GAAP shall have been made therefor.

5.5.   Preservation of Corporate Status.

The Borrower shall, and shall cause each of its Subsidiaries to, maintain its status as a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and to be duly qualified to do business as a foreign corporation and in good standing in all jurisdictions in which the ownership of its properties or the nature of its business or both make such qualification necessary or advisable.

5.6.   Governmental Approvals and Filings.

The Borrower shall, and shall cause each of its Subsidiaries to, keep and maintain in full force and effect all Governmental Approvals necessary in connection with execution and delivery of this Agreement or any other Loan Document, consummation of the transactions hereon or therein contemplated, performance of or compliance with the terms and conditions hereof or thereof or to ensure the legality, validity, binding effect, enforceability or admissibility in evidence hereof or thereof.

5.7.   Maintenance of Properties.

The Borrower shall, and shall cause each of its Subsidiaries to, (a) maintain or cause to be maintained in good repair, working order and condition the properties

47

now or hereafter owned, leased or otherwise possessed by it (and make or cause to be made all needed and proper repairs, renewals, replacements and improvements thereto) which are necessary so that the business carried on in connection therewith may be properly conducted at all times and (b) maintain and hold in full force and effect all franchises, licenses, permits, certificates, authorizations, qualification, accreditations and other rights, consents and approvals (whether issued, made or given by a Governmental Authority or otherwise), necessary to own and operate its properties and to carry on its business as presently conducted and as presently planned to be conducted, except for any failure to comply with any of the foregoing which would not, either individually or in the aggregate, have a Material Adverse Effect.

5.8.   Avoidance of Other Conflicts.

The Borrower shall not, and shall not permit any of its Subsidiaries to, violate or be in conflict with, or be or remain subject to any liability (contingent or otherwise) on account of any violation or conflict with

(a)  any Law,

(b)  its articles of incorporation or by-laws (or other constituent documents), or

(c)  any agreement or instrument to which it is a party or by which it is a party or by which it or any of its respective properties may be subject or bound,

which violation or conflict, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

5.9.   Financial Accounting Practices

The Borrower shall, and shall cause each of its Subsidiaries to, make and keep books, records and accounts which, in reasonable detail, accurately and fairly reflect its transactions and dispositions of its assets and maintain systems of internal accounting controls sufficient to provide reasonable assurances that (a) transactions are executed in accordance with management’s general or specific authorization, (b)transactions are recorded as necessary (i) to permit preparation of financial statements in conformity with GAAP and (ii) to maintain accountability for assets, (c) access to assets is permitted only in accordance with management’s general or specific authorization and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

5.10.   Use of Proceeds.

The Borrower shall apply the proceeds of all Loans only for the following purposes: (a) on the Closing Date, for the purchase by the Borrower of all of the issued and outstanding stock of Analex Corporation, and (b) in the case of Revolving Credit Facility Loans, by the Borrower for general corporate purposes,

48

and working capital. The Borrower shall not use the proceeds of any Loans directly or indirectly for any unlawful purpose, in any manner inconsistent with Section 3.22, or inconsistent with any other provision of this Agreement or any other Loan Document.

5.11.   Additional Credit Parties.

As soon as practicable and in any event within 30 days after any Person becomes a direct or indirect Subsidiary of the Borrower, the Borrower shall provide the Lender with written notice thereof setting forth information in reasonable detail describing all of the assets of such Person and shall (a) cause such Person to execute a Joinder Agreement in substantially the same form as Exhibit J, (b) cause 100% of the capital stock of such Person to be delivered to the Lender (together with undated stock powers signed in blank) and pledged to the Lender pursuant to an appropriate pledge agreement in substantially the form of the Pledge Agreement and otherwise in form acceptable to the Lender and (c) cause such Person to (i) if such Person has any Subsidiaries, (A) deliver 100% of the capital stock of such Subsidiaries (together with undated stock powers signed in blank) to the Lender and (B) execute a pledge agreement in substantially the form of the Pledge Agreement and otherwise in form acceptable to the Lender, and (ii) deliver such other documentation as the Lender may reasonably request in connection with the foregoing, including appropriate UCC-1 financing statements, landlord’s waivers, certified resolutions and other organizational and authorizing documents of such Person and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to above), all in form, content and scope reasonably satisfactory to the Lender.

5.12.   Maintenance of Certain Accounts with Lender.

The Borrower shall maintain all its primary operating accounts, including all depository accounts (time and demand), collection accounts and disbursement accounts, with the Lender.

5.13.   Inactive Subsidiaries.

The Borrower shall cause its Subsidiaries identified on Schedule 3.19 as inactive to be dissolved or merged into a Credit Party (with the Credit Party as the surviving entity in such merger) and shall provide evidence of such dissolution or merger to the Lender within 90 days after the Closing Date.

5.14.   Government Contracts.

Documentation necessary for compliance with the Assignment of Claims Act will be executed and delivered by the appropriate Credit Parties with respect to each Government Contract which constitutes a Material Contract. Such documentation with respect to each Government Contract which constitutes a

49

Material Contract identified on Schedule 3.6 will be executed and delivered by the appropriate Credit Parties within 60 days after the Closing Date.

5.15.   Landlord Waivers.

Within 45 days after the Closing Date, the Borrower will provide to the Lender, in form and substance satisfactory to the Lender, such estoppel letters, waivers and consents as may be required by the Lender from landlords of each leased location of Collateral.

5.16.   Interest Rate Swap.

Within 30 days after the Closing Date, the Borrower shall have entered into an interest rate protection agreement satisfactory to the Lender for a notional amount of at least $3,000,000 and for a term of at least three years from the Closing Date. The Borrower is not required to enter into such agreement with the Lender.

5.17.   Further Assurances; Additional Requested Information.

The Borrower will provide to the Lender such further assurances and additional information, reports and statements respecting its business, operations, properties and financial condition and respecting its Affiliates and investments, as the Lender may from time to time reasonably request.

6.   NEGATIVE COVENANTS

Each Credit Party hereby covenants to the Lender as follows:

6.1.   Financial Covenants.

The Borrower hereby covenants to the Lender as follows, which covenants shall be based upon the consolidated financial statements of the Borrower:

(a)  Total Funded Debt to EBITDA Ratio.    The Borrower will maintain at all times during the following periods a Total Funded Debt to EBITDA ratio of not greater than the following:

Period	Maximum Total Debt to Ebitda Ratio
Closing Date – 06/30/02	4.0 to 1.0
07/01/02 – thereafter	3.0 to 1.0

(b)  Fixed Charge Coverage Ratio.    The Borrower will maintain at all times during the term of this Agreement a Fixed Charge Coverage Ratio of not less than 1.3 to 1.0.

50

(c)  Senior Debt to EBITDA Ratio.    The Borrower will maintain at all times during the term of this Agreement a Senior Debt to EBITDA ratio of not greater than the following:

Period	Maximum Senior Debt to Ebitda Ratio
Closing Date – 06/30/02	3.0 to 1.0
07/01/02 – thereafter	2.75 to 1.0

(d)  Net Worth.  The Borrower will maintain at all times during the term of this Agreement Net Worth equal to at least the sum of (i) $9,000,000 and (ii) sixty-five percent (65%) of net income (not to be reduced by net losses) during each fiscal quarter ending March 31, 2002 and thereafter.

The financial covenants referenced in this Section 6.1 shall be calculated and tested on a quarterly basis as of the last day of each quarter, and in the case of subsection (a), (b) and (c) of this Section 6.1, for the four fiscal quarter period then ended. Unless otherwise defined, all financial terms used in this Section 6.1 shall have the meanings attributed to such terms in accordance with GAAP.

6.2.   Intentionally Deleted.

6.3.   Change of Operations.

The Borrower shall not, and shall not permit any of its Subsidiaries to, change the general character of its business as conducted on the date hereof, or engage in any type of business not directly related to such business as presently and normally conducted.

6.4.   Liens.

The Borrower shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien on any of its property, or agree, become or remain liable (contingently or otherwise) to do any of the foregoing, except for the following (“Permitted Liens”):

(a)  Liens pursuant to the Security Documents in favor of the Lender to secure the Obligations;

(b)  Liens arising from taxes, assessments, charges or claims described in Section 5.4 that are not yet due or that remain payable without penalty or to the extent permitted to remain unpaid under the proviso to such Section 5.4;

51

(c)  Deposits or pledges of cash or securities in the ordinary course of business to secure (i) worker’s compensation, unemployment insurance or other social security obligations, (ii) performance of bids, tenders, trade contracts (other than for payment of money) or leases, (iii) stay, surety or appeal bonds, or (iv) other obligations of a like nature incurred in the ordinary course of business;

(d)  Liens securing Indebtedness permitted by Section 6.5(b), provided, however, that such Liens shall only extend to the property financed by the Indebtedness securing the same; and

(e)  Liens existing on the date hereof and specified on Schedule 6.4.

“Permitted Lien” shall in no event include any Lien imposed by, or required to be granted pursuant to, ERISA or any Environmental Law. Nothing in this Section 6.4 shall be construed to limit any other restriction on Liens imposed by the Security Agreement or otherwise in the Loan Documents.

6.5.   Indebtedness and Guaranty Obligations.

The Borrower shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness or Guaranty Obligations, or agree, become or remain liable (contingently or otherwise) to do any of the foregoing, except:

(a)  Indebtedness and Guaranty Obligations to or in favor of the Lender pursuant to this Agreement and the other Loan Documents;

(b)  Indebtedness of the Borrower or any of its Subsidiaries existing on the date hereof and listed in Schedule 6.5 (and extensions, renewals and refinancings thereof on terms no less favorable in any material respect than those existing before such extension, renewal or refinancing);

(c)  Purchase money Indebtedness (including Capitalized Leases) hereafter incurred by the Borrower or any of its Subsidiaries to finance the purchase of fixed assets provided that (i) the total of all such Indebtedness for all such Persons taken together shall not exceed an aggregate principal amount of $500,000 during any fiscal year; (ii) such Indebtedness when incurred shall not exceed the purchase price of the assets(s) financed; and (ii) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing; and

(d)  Intercompany Debt.

6.6.   Loans, Advances and Investments.

52

The Borrower shall not, and shall not permit any of its Subsidiaries to, make or suffer to exist or remain outstanding any loan or advance to, or purchase, acquire or own (beneficially or of record) any stock, bonds, notes or securities of, or any partnership interest (whether general or limited) in, or any other interest in, or make any capital contribution to or other investment in, any other Person, or agree, become or remain liable (contingently or otherwise) to do any of the foregoing, except:

(a)  Loans and investments existing on the date hereof and listed in Schedule 6.6 (and extensions, renewals and refinancings thereof on terms no less favorable in any material respect than those existing immediately before such extension, renewal or refinancing);

(b)  Receivables owing to the Borrower or any of its Subsidiaries arising from sales of inventory under usual and customary terms in the ordinary course of business;

(c)  Advances to officers and employees of the Borrower to reimburse expenses incurred by such officers and employees in the ordinary course of business;

(d)  Intercompany Debt; and

(e)  Cash Equivalent Investments.

6.7.   Dividends and Related Distributions.

The Borrower shall not, and shall not permit any of its Subsidiaries to, declare or make any Stock Payment, or agree, become or remain liable (contingently or otherwise) to do any of the foregoing, except

(a) dividends payable to a Credit Party; and

(b) dividends payable to holders of preferred stock, not to exceed $225,000 during any fiscal year.

6.8.   Sale-Leasebacks.

The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into or suffer to remain in effect any transaction to which the Borrower or any of its Subsidiaries is a party involving the sale, transfer or other disposition by the Borrower or any of its Subsidiaries of any property, with a view directly or indirectly to the leasing back of any part of the same property or any other property used for the same or a similar purpose or purposes, or agree, become or remain liable (contingently or otherwise) to do any of the foregoing.

6.9.   Mergers, Acquisitions, etc.

53

The Borrower shall not, and shall not permit any of its Subsidiaries to, (a) merge with or into or consolidate with any other Person, provided, however, (i) the Borrower may merge or consolidate with any of its Subsidiaries provided that the Borrower is the surviving corporation, and (ii) any Credit Party (other than the Borrower) may merge or consolidate with any other Credit Party (other than the Borrower), (b) liquidate, wind-up, dissolve or divide, (c) acquire any capital stock (or other equity interest) of any Person or all or any substantial portion of the properties of any going concern or going line of business, or (d) agree, become or remain liable (contingently or otherwise) to do any of the foregoing.

6.10.   Dispositions of Properties.

The Borrower shall not, and shall not permit any of its Subsidiaries to, sell, convey, assign, lease, transfer, abandon or otherwise dispose of, voluntarily or involuntarily, any material part of its properties, or agree, become or remain liable (contingently or otherwise) to do any of the foregoing, except the Borrower and any of its Subsidiaries may sell inventory in the ordinary course of business, sell or dispose of equipment in the ordinary course of business that is obsolete or no longer useable by or no longer useful to the Borrower or such Subsidiary in its business or sell or exchange any equipment so long as the purpose of such sale or exchange is to acquire replacement items of equipment which are the functional equivalent of the items of equipment so sold or exchanged.

By way of illustration, and without limitation, it is understood that the following are dispositions of property subject to this Section 6.10: any disposition of accounts, chattel paper or general intangibles, with or without recourse. For purposes of this provision, any transaction involving the disposition of properties having a value in excess of One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00) shall be deemed to be material. Nothing in this Section 6.10 shall be construed to limit any other restriction on dispositions of property imposed by the Security Agreement or otherwise in the Loan Documents.

6.11.   Dealings with Affiliates.

The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into or carry out any transaction with (including purchase or lease property or services from, sell or lease property or services to, loan or advance to, or enter into, suffer to remain in existence or amend any contract, agreement or arrangement with) any Affiliate of such Borrower or Subsidiary, directly or indirectly, or agree, become or remain liable (contingently or otherwise) to do any of the foregoing, except:

(a)  Officers and employees of the Borrower and its Subsidiaries may be compensated for services rendered in such capacity to the Borrower and its Subsidiaries; provided that the board of directors of the Borrower or a Subsidiary of the Borrower (including a majority of the directors having no direct or indirect interest in such transaction) approve the same (it

54

being understood that no compensation shall be paid to any director of any Borrower or a Subsidiary of the Borrower for service as a director).

(b)  Other transactions may be entered into with Affiliates in good faith and on terms no less favorable to the Borrower or any such Subsidiary than those that could have been obtained in a comparable transaction on an arm’s-length basis from an unrelated Person, provided that the board of directors of the Borrower or such Subsidiary (including a majority of the directors having no direct or indirect interest in such transaction) approve or ratify such transaction and determine that such terms are no less favorable to the Borrower or such Subsidiary than those that could have been obtained in a comparable transaction on an arm’s-length basis from an unrelated Person.

6.12.   Intentionally Deleted.

6.13.   Intentionally Deleted.

6.14.   Limitation on Other Restrictions on Liens.

The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into, become or remain subject to any agreement or instrument, except the Loan Documents, that would prohibit the grant of any Lien upon any of its properties.

6.15.   Limitation on Other Restrictions on Amendment of the Loan Documents.

The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into, become or remain subject to any agreement or instrument, except for the Loan Documents, that would prohibit or require the consent of any Person to any amendment, modification or supplement to any of the Loan Documents.

7.   DEFAULTS

7.1.   Events of Default.

An Event of Default shall mean the occurrence or existence of one or more of the following events or conditions (for any reason, whether voluntary, involuntary or effected or required by Law):

(a)  Any Credit Party shall fail to pay when due principal of any Loan or any Letter of Credit Reimbursement Obligation.

(b)  Any Credit Party shall fail to pay when due interest on any Loan, any fees, indemnity or expenses, or any other amount due hereunder or under any other Loan Document and such failure shall have continued for a period of three (3) Business Days.

(c)  Any representation or warranty made by any Credit Party in or pursuant to or in connection with this Agreement or any other Loan Document, or any

55

statement made by any Credit Party in any financial statement, certificate, report, exhibit or document furnished by such Credit Party to the Lender pursuant to or in connection with this Agreement or any other Loan Document, shall prove to have been false or misleading in any material respect as of the time when made (including by omission of material information necessary to make such representation, warranty or statement not misleading).

(d)  Any Credit Party shall default in the performance or observance of any of the covenants contained in Section 2.15, 5.1(g) or (j), 5.10 or 5.12 or Article 6.

(e)  Any Credit Party shall default in the performance or observance of any other covenant, agreement or duty under this Agreement or any other Loan Document and (i) in the case of a default under Section 5.1 (other than as referred to in subsection (g) or (j)) such default shall have continued for a period of ten (10) days and (ii) in the case of any other default such default shall have continued for a period of thirty (30) days following notice from the Lender.

(f)  Any Cross-Default Event shall occur with respect to Cross-Default Obligations; provided that if a Cross-Default Event would have occurred with respect to a Cross-Default Obligation but for the grant of a waiver or similar indulgence, a Cross-Default Event shall nevertheless be deemed to have occurred if a Credit Party directly or indirectly gave or agreed to give any consideration for such waiver or indulgence (including a reduction in maturity, an increase in rates or the granting of collateral). As used herein, “Cross-Default Obligation” shall mean any Indebtedness or Guaranty Obligation of a Credit Party or any agreement or instrument creating, evidencing or securing such Indebtedness or Guaranty Obligation. As used herein, “Cross-Default Event” with respect to a Cross-Default Obligation shall mean the occurrence of any default, event or condition which causes or which would permit any Person or Persons to cause or which would, with the giving of notice or the passage of time or both, permit any Person or Persons to cause all or any part of such Cross-Default Obligation to become due (by acceleration, mandatory prepayment or repurchase, or otherwise) before its otherwise stated maturity, or failure to pay all or any part of such Cross-Default Obligation at its stated maturity.

(g)  Any Credit Party is in default under any contract or agreement, financial or otherwise, between such Credit Party and any other Person, involving amounts in excess of One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00), and the other party thereto commences exercise of its rights and remedies under such contract or agreement as a consequence of such default.

56

(h)  One or more judgments for the payment of money shall have been entered against any one or more of the Credit Parties which judgment or judgments, exceed One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00) in the aggregate, and such judgment or judgments shall have remained unvacated, undischarged and unstayed for a period of thirty (30) consecutive days.

(i)  One or more writs or warrants of attachment, garnishment, execution, distraint or similar process exceeding in value the aggregate amount of One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00) shall have been issued against any one or more of the Credit Parties or any of their respective properties and shall have remained unvacated, undischarged and unstayed for a period of thirty (30) consecutive days.

(j)  Any Governmental Approval now or hereafter made by or with any Governmental Authority in connection with this Agreement or any other Loan Document is not obtained or shall have ceased to be in full force and effect or shall have been modified or amended or shall have been held to be illegal or invalid, and the Lender shall have determined (which determination shall be conclusive) that such event or condition, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

(k)  Any Security Document shall cease to be in full force and effect, or any Lien created or purported to be created in any Collateral pursuant to any Security Document shall fail to be a valid, enforceable and perfected Lien in favor of the Lender securing the Obligations, prior to all other Liens, or the Borrower or any Governmental Authority shall assert any of the foregoing.

(l)  Any Loan Document or term or provision thereof shall cease to be in full force and effect (except in accordance with the express terms of such Loan Document), or any Credit Party or Individual Guarantor shall, or shall purport to, terminate (except in accordance with the terms of such Loan Document), repudiate, declare voidable or void, or otherwise contest the legality, validity, binding effect or enforceability of, any Loan Document or any term or provision thereof, or any obligation or liability of the Borrower thereunder.

(m)  Any one or more Pension-Related Events referred to in subsection (a)(ii), (b) or (e) of the definition of “Pension-Related Event” shall have occurred; or any one or more other Pension-Related Events shall have occurred and the Lender shall determine (which determination shall be conclusive) that such other Pension-Related Events would reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.

57

(n)  A proceeding shall have been instituted in respect of any Credit Party or Individual Guarantor:

(i) seeking to have an order for relief entered in respect of such Credit Party or Individual Guarantor, or seeking a declaration or entailing a finding that such Credit Party or Individual Guarantor is insolvent or a similar declaration or finding, or seeking dissolution, winding-up, charter revocation or forfeiture, liquidation, reorganization, arrangement, adjustment, composition or other similar relief with respect to such Credit Party or Individual Guarantor, its assets or its debts under any Law relating to bankruptcy, insolvency, relief of debtors or protection of creditors, termination of legal entities or any other similar Law now or hereafter in effect, or

(ii)  seeking appointment of a receiver, trustee, liquidator, assignee, sequestrator or other custodian for such Credit Party or Individual Guarantor or for all or any substantial part of its property,

and such proceeding shall result in the entry, making or grant of any such order for relief, declaration, finding, relief or appointment, or such proceeding shall remain undismissed and unstayed for a period of sixty consecutive days.

(o)  Any Credit Party or Individual Guarantor shall become insolvent; shall fail to pay, become unable to pay, or state that it is or will be unable to pay, its debts as they become due; shall voluntarily suspend transaction of its business; shall make a general assignment for the benefit of creditors; shall institute (or fail to controvert in a timely and appropriate manner) a proceeding described in Section 7.1(n)(i), or (whether or not any such proceeding has been instituted) shall consent to or acquiesce in any such order for relief, declaration, finding or relief described therein; shall institute (or fail to controvert in a timely and appropriate manner) a proceeding described in Section 7.1(n)(ii), or (whether or not any such proceeding has been instituted) shall consent to or acquiesce in any such appointment or to the taking of possession by any such custodian of all or any substantial part of its property; shall dissolve, wind-up, revoke or forfeit its charter or liquidate itself or any substantial part of its property; or shall take any action in furtherance of any of the foregoing.

(p)  A Change of Control shall have occurred.

(q)  (i) A notice of debarment, notice of suspension or notice of termination for default shall have been issued under any Government Contract; (ii) the Borrower is barred or suspended from contracting with any part of the Government; (iii) a Government investigation shall have been commenced in connection with any Government Contract or the Borrower which could

58

reasonably result in criminal or civil liability, suspension, debarment, or any other adverse administrative action arising by reason of alleged fraud, willful misconduct, neglect, default or other wrongdoing; (iv) the actual termination of any Material Contract due to alleged fraud, willful misconduct, neglect, default or any other wrongdoing; or (v) a cure notice issued under any Government Contract shall remain uncured beyond (A) the expiration of the time period available to the Borrower pursuant to such Government Contract and/or such cure notice, to cure the noticed default, or (B) the date on which the other contracting party is entitled to exercise its rights and remedies under the Government Contract as a consequence of such default.

(r)  An event shall have occurred which gives the Lender the right or option to terminate any Swap Contract.

(s)  Either Individual Guarantor shall be in default with respect to its covenant to maintain Unencumbered Liquid Assets in accordance with its Individual Guaranty.

(t)  An event or condition shall have occurred which the Lender reasonably believes creates a Material Adverse Effect.

7.2.   Consequences of an Event of Default.

(a)  If an Event of Default specified in any subsection of Section 7.1 (other than subsection (n) and (o)) shall occur and be continuing or shall exist, then, in addition to all other rights and remedies which the Lender may have hereunder or under any other Loan Document, at law, in equity or otherwise, the Lender shall be under no further obligation to make Loans or issue Letters of Credit hereunder, and the Lender may by notice to the Credit Parties, from time to time do any or all of the following:

(i)  Declare the Commitments terminated, whereupon the Commitments will terminate and any fees hereunder shall be immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby waived, and an action therefor shall immediately accrue.

(ii)  Declare the unpaid principal amount of the Loans, interest accrued thereon and all other Obligations to be immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby waived, and an action therefor shall immediately accrue.

(iii)  Terminate any Swap Contract or exercise any rights provided thereunder or in connection therewith.

59

(iv)  Exercise any and all other rights and remedies under this Agreement or the other Loan Documents as the Lender may then have hereunder or thereunder, at law, in equity or otherwise.

(b)  If an Event of Default specified in subsection (n) or (o) of Section 7.1 shall occur or exist, then, in addition to all other rights and remedies which the Lender may have hereunder or under any other Loan Document, at law, in equity or otherwise, the Commitments shall automatically terminate and the Lender shall be under no further obligation to make Loans or issue Letters of Credit, and the unpaid principal amount of the Loans, interest accrued thereon and all other Obligations shall become immediately due and payable without presentment, demand, protest or notice of any kind, all of which are hereby waived, and an action therefor shall immediately accrue.

(c)  If an Event of Default shall occur, at the Lender’s request, the Credit Parties shall provide the Lender with cash collateral in the aggregate amount of Letter of Credit Undrawn Availability for all Letters of Credit.

8.   MISCELLANEOUS.

8.1.   Intentionally Deleted.

8.2.   Holidays.

Whenever any payment or action to be made or taken hereunder or under any other Loan Document shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day and such extension of time shall be included in computing interest or fees, if any, in connection with such payment or action.

8.3.   Records.

The Lender’s Revolving Credit Facility Committed Amount, the unpaid principal amount of the Loans, Letter of Credit Obligations, the unpaid interest accrued thereon, the interest rate or rates applicable to such unpaid principal amount, the duration of such applicability, the Revolving Unused Fee and the Letter of Credit Fee shall at all times be ascertained from the records of the Lender, which shall be conclusive absent manifest error.

8.4.   Amendments and Waivers.

Neither this Agreement nor any other Loan Document may be amended, modified or supplemented except in writing signed by the Lender and the Credit Parties and shall be effective only to the extent set forth in such writing, Any Default waived or consented to in any such waiver, amendment, modification or supplement shall be deemed to be cured and not continuing to the extent and for

60

the period set forth in such waiver or consent, but no such waiver or consent shall extend to any other or subsequent Default or impair any right consequent thereto.

8.5.   No Implied Waiver; Cumulative Remedies.

No course of dealing and no delay or failure of the Lender in exercising any right, power or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or exercise of any other right, power or privilege; nor shall any single or partial exercise of any such right, power or privilege or any abandonment or discontinuance of steps to enforce such a right, power or privilege preclude any further exercise thereof or of any other right, power or privilege. The rights and remedies of the Lender under this Agreement and any other Loan Document are cumulative and not exclusive of any rights or remedies which the Lender would otherwise have hereunder or thereunder, at law, in equity or otherwise.

8.6.   Notices.

(a)  Except to the extent otherwise expressly permitted hereunder or thereunder, all notices, requests, demands, directions and other communications (collectively “notices”) under this Agreement or any other Loan Document shall be in writing (including telecopied communication) and shall be sent by first-class mail, or by nationally-recognized overnight courier, or by telecopier (with confirmation in writing mailed first-class or sent by such an overnight courier), or by personal delivery. All notices shall be sent to the applicable party at the address stated on the signature pages hereof or in accordance with the last unrevoked written direction from such party to the other parties hereto, in all cases with postage or other charges prepaid. Notices to the Subsidiary Guarantors shall be given by giving such notice to the Borrower at the Borrower’s address. Any such properly given notice shall be effective on the earliest to occur of receipt, telephone confirmation of receipt of telecopy communication, one (1) Business Day after delivery to a nationally-recognized overnight courier, or three (3) Business Days after deposit in the mail.

(b)  The Lender may rely on any notice (whether or not such notice is made in a manner permitted or required by this Agreement or any other Loan Document) purportedly made by or on behalf of any Credit Party, and the Lender shall not have any duty to verify the identity or authority of any Person giving such notice.

8.7.   Expenses; Taxes; Indemnity.

(a)  The Borrower agrees to pay or cause to be paid and to save the Lender harmless against liability for the payment of all reasonable out-of-pocket costs and expenses (including reasonable and documented fees and

61

expenses of outside counsel, including local counsel, auditors, appraisers, and all other professional, accounting, evaluation and consulting costs) incurred by the Lender from time to time arising from or relating to (i) the negotiation, preparation, execution, delivery, administration and performance of this Agreement and the other Loan Documents, (ii) any amendments, modifications, supplements, waivers or consents requested by the Borrower (whether or not ultimately entered into or granted) to this Agreement or any other Loan Document, and (iii) the preservation and, following an Event of Default, enforcement of rights under this Agreement or any other Loan Document (including any such costs or expenses arising from or relating to (A) the creation, perfection or protection of the Lender’s Lien on any Collateral, (B) the protection, collection, lease, sale, taking possession of, preservation of, or realization on, any Collateral, including advances for storage, insurance premiums, transportation charges, taxes, filing fees and the like, (C) collection or enforcement of any outstanding Loan or any other amount owing by the Credit Parties hereunder or thereunder by the Lender, and (D) any litigation, proceeding, dispute, work-out, restructuring or rescheduling related in any way to this Agreement or the other Loan Documents).

(b)  The Borrower hereby agrees to pay all stamp, document, transfer, recording, filing, registration, search, sales and excise fees and taxes and all similar impositions now or hereafter payable in connection with this Agreement or any other Loan Documents or any other documents, instruments or transactions pursuant to or in connection herewith or therewith, and the Borrower agrees to save the Lender harmless from and against any and all present or future claims. liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such fees, taxes or impositions.

(c)  The Borrower hereby agrees to reimburse and indemnify each of the Indemnified Parties from and against any and all losses, liabilities, claims, damages, expenses, obligations, penalties, actions, judgments, suits, costs or disbursements of any kind or nature whatsoever (including the reasonable and documented fees and disbursements of counsel for such Indemnified Party in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not such Indemnified Party shall be designated a party thereto) that may at any time be imposed on, asserted against or incurred by such Indemnified Party as a result of, or arising out of, or in any way related to or by reason of, this Agreement or any other Loan Document, any transaction from time to time contemplated hereby or thereby, or any transaction financed in whole or in part or directly or indirectly with the proceeds of any Loan or Letter of Credit (and without in any way limiting the generality of the foregoing, including any grant of any Lien on any Collateral or any exercise by the Lender of any of its rights or remedies under this Agreement or any other Loan Document) or any Swap Contract; but excluding any such losses,

62

liabilities, claims, damages, expenses, obligations, penalties, actions, judgments, suits, costs or disbursements to the extent resulting from the gross negligence or willful misconduct of such Indemnified Party, as finally determined by a court of competent jurisdiction. If and to the extent that the foregoing obligations of the Borrower under this subsection (c), or any other indemnification obligation of the Borrower hereunder or under any other Loan Document or any Swap Contract, are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable Law.

8.8.   Severability.

The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

8.9.   Prior Understandings.

This Agreement and the other Loan Documents supersede all prior and contemporaneous understandings and agreements, whether written or oral, among the parties hereto relating to the transactions provided for herein and therein.

8.10.   Duration; Survival.

All representations and warranties of the Credit Parties contained herein or in any other Loan Document or made in connection herewith or therewith shall survive the making of, and shall not be waived by the execution and delivery of, this Agreement or any other Loan Document, any investigation by or knowledge of the Lender, the making of any Loan, or any other event or condition whatever. All covenants and agreements of the Credit Parties contained herein or in any other Loan Document shall continue in full force and effect from and after the date hereof so long as the Borrower may borrow hereunder and until payment in full of all Obligations. Without limitation, all obligations of the Credit Parties hereunder or under any other Loan Document to make payments to or indemnify the Lender shall survive the payment in full of all other Obligations, termination of the Borrower’s right to borrow hereunder, the assignment by the Lender of all of its rights and obligations under this Agreement, and all other events and conditions whatever.

8.11.   Counterparts.

This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which, when so executed,

63

shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.

8.12.   Limitation on Payments.

The parties hereto intend to conform to all applicable Laws in effect from time to time limiting the maximum rate of interest that may be charged or collected. Accordingly, notwithstanding any other provision hereof or of any other Loan Document, the Borrower shall not be required to make any payment to or for the account of the Lender, and the Lender shall refund any payment made by the Borrower, to the extent that such requirement or such failure to refund would violate or conflict with nonwaivable provisions of applicable Laws limiting the maximum amount of interest which may be charged or collected by the Lender.

8.13.   Set-Off.

Each Credit Party hereby agrees that if any Obligation of such Credit Party shall be due and payable (by acceleration or otherwise), and such Credit Party shall fail to pay the same beyond any cure period with respect thereto, the Lender shall have the right, without notice to such Credit Party, to set-off against and to appropriate and apply to such Obligation any indebtedness, liability or obligation of any nature owing to such Credit Party by the Lender, including all deposits (whether time or demand, general or special, provisionally credited or finally credited, whether or not evidenced by a certificate of deposit) now or hereafter maintained by such Credit Party with the Lender, in each case to the maximum extent permitted by Law. Such right shall be absolute and unconditional in all circumstances and, without limitation, shall exist whether or not the Lender or any other Person shall have given notice or made any demand to such Credit Party or any other Person, whether such indebtedness, obligation or liability owed to such Credit Party is contingent, absolute, matured or unmatured (it being agreed that the Lender may deem such indebtedness, obligation or liability to be then due and payable at the time of such setoff), and regardless of the existence or adequacy of any collateral, guaranty or any other security, right or remedy available to the Lender or any other Person. The Lender agrees promptly to notify such Credit Party after any such set-off and application made by the Lender; provided, however, that the failure to give such notice shall not effect the validity of set-off application. Each Credit Party hereby agrees that any branch, subsidiary or affiliate of the Lender shall have the same rights of set-off as the Lender as provided in this Section 8.13 (regardless of whether such branch, subsidiary or affiliate would otherwise be deemed in privity with or a direct creditor of such Credit Party). The rights provided by this Section 8.13 are in addition to all other rights of set-off and banker’s lien and all other rights and remedies which the Lender (or any such branch, subsidiary or affiliate) may otherwise have under this Agreement, any other Loan Document, at law or in equity, or otherwise, and nothing in this Agreement or any other Loan Document shall be deemed a waiver or prohibition of or restriction on the rights of set-off or banker’s lien of any such Person.

64

8.14.   Successors and Assigns; Assignments.

(a)  Successors and Assigns.    This Agreement shall be binding upon and inure to the benefit of the Credit Parties, the Lender, all future holders of the Notes, and their respective successors and assigns, except that the Credit Parties may not assign or transfer any of their rights hereunder or interests herein without the prior written consent of all the Lender, and any purported assignment without such consent shall be void.

(b)  Assignments.    The Lender may at any time assign all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including all or any portion of its Commitments and Loans owing to it and any Note held by it) to any Person. Upon such assignment, the purchasing Lender shall be a party hereto and shall have the rights and obligations of the Lender hereunder, and the Lender shall be released from its obligations under this Agreement to the extent so transferred (and, in the case of an assignment covering all or the remaining portion of the Lender’s rights and obligations under this Agreement, the Lender shall cease to be a party to this Agreement).

(c)  Financial and Other Information.    The Credit Parties authorize the Lender to disclose to any transferee and any prospective transferee any and all financial and other information in its possession concerning the Credit Parties and affiliates which has been or may be delivered to it by or on behalf of the Credit Parties in connection with this Agreement or any other Loan Document or its credit evaluation of the Credit Parties.

8.15.   Materiality.

Unless the context clearly indicates to the contrary, determinations regarding the materiality of any act, event, condition or circumstance shall be in the reasonable judgment of the Lender.

8.16.   Governing Law; Arbitration: Waiver of Jury Trial; Limitation of Liability.

(a)  Governing Law.

THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS (EXCEPT TO THE EXTENT, IF ANY, OTHERWISE EXPRESSLY STATED IN SUCH OTHER LOAN DOCUMENTS) SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES.

(b)  Arbitration; Jury Trial Waiver.

(i)  THIS PARAGRAPH CONCERNS THE RESOLUTION OF ANY CONTROVERSIES OR CLAIMS BETWEEN ANY

65

CREDIT PARTY AND LENDER, WHETHER ARISING IN CONTRACT, TORT OR BY STATUTE, INCLUDING BUT NOT LIMITED TO CONTROVERSIES OR CLAIMS THAT ARISE OUT OF OR RELATE TO: (I) THIS AGREEMENT (INCLUDING ANY RENEWALS, EXTENSIONS OR MODIFICATIONS); OR (II) ANY DOCUMENT RELATED TO THIS AGREEMENT (COLLECTIVELY A “CLAIM”);

(ii)  AT THE REQUEST OF ANY CREDIT PARTY OR LENDER, ANY CLAIM SHALL BE RESOLVED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (TITLE 9, U.S. CODE) (THE “ACT”). THE ACT WILL APPLY EVEN THOUGH THIS AGREEMENT PROVIDES THAT IT IS GOVERNED BY THE LAW OF A SPECIFIED STATE;

(iii)  ARBITRATION PROCEEDINGS WILL BE DETERMINED IN ACCORDANCE WITH THE ACT, THE APPLICABLE RULES AND PROCEDURES FOR THE ARBITRATION OF DISPUTES OF JAMS OR ANY SUCCESSOR THEREOF (“JAMS”), AND THE TERMS OF THIS PARAGRAPH. IN THE EVENT OF ANY INCONSISTENCY, THE TERMS OF THIS PARAGRAPH SHALL CONTROL;

(iv)  THE ARBITRATION SHALL BE ADMINISTERED BY JAMS AND CONDUCTED IN ANY U.S. STATE WHERE REAL OR TANGIBLE PERSONAL PROPERTY COLLATERAL FOR THIS CREDIT IS LOCATED OR IF THERE IS NO SUCH COLLATERAL, IN THE COMMONWEALTH OF VIRGINIA. ALL CLAIMS SHALL BE DETERMINED BY ONE ARBITRATOR; HOWEVER, IF CLAIMS EXCEED $5,000,000, UPON THE REQUEST OF ANY PARTY, THE CLAIMS SHALL BE DECIDED BY THREE ARBITRATORS. ALL ARBITRATION HEARINGS SHALL COMMENCE WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION AND CLOSE WITHIN 90 DAYS OF COMMENCEMENT AND THE AWARD OF THE ARBITRATOR(S) SHALL BE ISSUED WITHIN 30 DAYS OF THE CLOSE OF THE HEARING. HOWEVER, THE ARBITRATOR(S), UPON A SHOWING OF GOOD CAUSE, MAY EXTEND THE COMMENCEMENT OF THE HEARING FOR UP TO AN ADDITIONAL 60 DAYS. THE ARBITRATOR(S) SHALL PROVIDE A CONCISE WRITTEN STATEMENT OF REASONS FOR THE AWARD. THE ARBITRATION AWARD MAY BE SUBMITTED TO ANY COURT HAVING JURISDICTION TO BE CONFIRMED AND ENFORCED;

66

(v)  THE ARBITRATOR(S) WILL HAVE THE AUTHORITY TO DECIDE WHETHER ANY CLAIM IS BARRED BY THE STATUTE OF LIMITATIONS AND, IF SO, TO DISMISS THE ARBITRATION ON THAT BASIS. FOR PURPOSES OF THE APPLICATION OF THE STATUTE OF LIMITATIONS, THE SERVICE ON JAMS UNDER APPLICABLE JAMS RULES OF A NOTICE OF CLAIM IS THE EQUIVALENT OF THE FILING OF A LAWSUIT. ANY DISPUTE CONCERNING THIS ARBITRATION PROVISION OR WHETHER A CLAIM IS ARBITRABLE SHALL BE DETERMINED BY THE ARBITRATOR(S). THE ARBITRATOR(S) SHALL HAVE THE POWER TO AWARD LEGAL FEES PURSUANT TO THE TERMS OF THIS AGREEMENT;

(vi)  THIS PARAGRAPH DOES NOT LIMIT THE RIGHT OF ANY CREDIT PARTY OR LENDER TO: (I) EXERCISE SELF-HELP REMEDIES, SUCH AS BUT NOT LIMITED TO, SETOFF; (II) INITIATE JUDICIAL OR NONJUDICIAL FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL; (III) EXERCISE ANY JUDICIAL OR POWER OF SALE RIGHTS, OR (IV) ACT IN A COURT OF LAW TO OBTAIN AN INTERIM REMEDY, SUCH AS BUT NOT LIMITED TO, INJUNCTIVE RELIEF, WRIT OF POSSESSION OR APPOINTMENT OF A RECEIVER, OR ADDITIONAL OR SUPPLEMENTARY REMEDIES; AND

(vii)  BY AGREEING TO BINDING ARBITRATION, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM. FURTHERMORE, WITHOUT INTENDING IN ANY WAY TO LIMIT THIS AGREEMENT TO ARBITRATE, TO THE EXTENT ANY CLAIM IS NOT ARBITRATED, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF SUCH CLAIM. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.

(c)  Limitation of Liability.

TO THE FULLEST EXTENT PERMITTED BY LAW, NO CLAIM MAY BE MADE BY ANY CREDIT PARTY AGAINST THE LENDER OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, ATTORNEY OR AGENT OF IT FOR ANY SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY

67

CLAIM ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH (WHETHER FOR BREACH OF CONTRACT, TORT OR ANY OTHER THEORY OF LIABILITY). EACH CREDIT PARTY HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER SUCH CLAIM PRESENTLY EXISTS OR ARISES HEREAFTER AND WHETHER OR NOT SUCH CLAIM IS KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

[remainder of page intentionally left blank]

68

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

BORROWER: HADRON, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

ADDRESS FOR NOTICES TO BORROWER AND SUBSIDIARY GUARANTORS:

5904 Richmond Highway

Suite 300

Alexandria, Virginia 22303

Tel:  703-329-9400

Fax:  703-329-8187

SUBSIDIARY GUARANTORS: ADVANCED BIOSYSTEMS, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

AVENUE TECHNOLOGIES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

ENGINEERING AND INFORMATION SERVICES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

69

SYCOM SERVICES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

VAIL RESEARCH AND TECHNOLOGY CORPORATION
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

HADRON ACQUISITION CORP.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

70

LENDER: BANK OF AMERICA, N.A.
By:	/s/    ELAINE EATON (SEAL)
	Elaine Eaton Senior Vice President

ADDRESS FOR NOTICES TO LENDER:

8300 Greensboro Drive

Suite 550

McLean, Virginia 22102

Attn:  Commercial Banking

Tel:  703-761-8567   

Fax:  703-761-8246

71

INDEX OF EXHIBITS AND SCHEDULES

EXHIBITS

EXHIBIT A	—	Form of Revolving Credit Facility Note
EXHIBIT B	—	Form of Term Loan Note
EXHIBIT C	—	Pricing Grid
EXHIBIT D	—	Form of Borrowing Base/Non-Default Certificates
EXHIBIT E	—	Form of Security Agreement
EXHIBIT F	—	Form of Pledge Agreement
EXHIBIT G-1	—	Form of Individual Guaranty
EXHIBIT G-2	—	Form of Subsidiary Guaranty
EXHIBIT H	—	Form of Subordination Agreement
EXHIBIT I	—	Form of Compliance Certificate
EXHIBIT J	—	Form of Joinder Agreement
SCHEDULES
SCHEDULE 3.1	—	Corporate Existence and Qualification
SCHEDULE 3.6	—	Government Contracts
SCHEDULE 3.9	—	Litigation and Proceedings
SCHEDULE 3.13	—	Intellectual Property
SCHEDULE 3.14	—	Existing and Pending Defaults
SCHEDULE 3.16	—	Office Locations; Leases
SCHEDULE 3.17	—	Labor Relations
SCHEDULE 3.19	—	Subsidiaries
SCHEDULE 6.4	—	Liens
SCHEDULE 6.5	—	Indebtedness
SCHEDULE 6.6	—	Loans, Advances and Investments

72

EX-10.29

Exhibit 10.29

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “Agreement”)is dated as of November 2, 2001, by and among HADRON, INC., a New York corporation (the “Borrower”), the guarantors from time to time party hereto (the “Subsidiary Guarantors,” and together with the Borrower, each a “Debtor” and collectively the “Debtors”), and BANK OF AMERICA, N.A., a national banking association (the “Lender”).

WITNESSETH:

WHEREAS, pursuant to a Credit Agreement, dated as of the date hereof (as the same may be amended, modified or supplemented from time to time, the “CreditAgreement”)by and among the Borrower, the Subsidiary Guarantors and the Lender, the Lender has agreed to extend credit to the Borrower; and

WHEREAS, the obligation of the Lender to extend such credit under the Credit Agreement is subject to the condition, among others, that each Debtor grant to and create in favor of the Lender a security interest in all assets of each such Debtor as hereinafter provided;

NOW, THEREFORE, in consideration of the Debt (as hereinafter defined) and other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged by the Debtors, and in order to induce the Lender to extend credit under the Credit Agreement, the parties hereto, intending to be legally bound hereby, covenant and agree as follows:

1.  Certain Definitions.    In addition to the words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof otherwise clearly requires:

Words and terms defined in the Credit Agreement shall, unless the context hereof clearly otherwise requires, have the same meanings herein as therein provided.

“Accounts” shall mean (i)all rights of each Debtor, whether presently owned or existing or hereafter acquired or arising by or in favor of such Debtor, to payment for Goods sold or leased or for services rendered which are not evidenced by an Instrument or Chattel Paper, whether or not earned by performance; and (ii)all other property now or hereafter constituting an “account” as defined in the UCC.

“Agreement” shall mean this Security Agreement as the same may be amended, modified or supplemented from time to time.

“Chattel Paper” shall mean (i) a writing or writings which evidence both a monetary obligation and a security interest in or a lease of specific Goods, including any Instrument or series of Instruments evidencing such monetary obligations; and (ii) all

other property, including electronic chattel paper, now or hereafter constituting “chattel paper” as defined in the UCC.

“Collateral” shall mean, collectively, all of each Debtor’s present and future right, title and interest in and to the following property, whether now owned or held or hereafter existing or acquired and wherever located: (i) the Accounts, Chattel Paper, Commercial Tort Claims, Contract Rights, Deposit Accounts, Equipment, Inventory, Investment Property, Instruments, Documents, Letter-of-Credit Rights and General Intangibles; (ii) all Fixtures of every kind and description; (iii) all supporting obligations; and (iv) all products and Proceeds of the foregoing.

“Collateral Account” shall have the meaning set forth in Section 6(a).

“Commercial Tort Claims” shall mean all commercial tort claims (as defined by the UCC) now owned or hereafter acquired by each Debtor.

“Contract Rights” shall mean all rights of each Debtor to payment under any contract not yet earned by performance which are not evidenced by an Instrument or Chattel Paper.

“Debt” shall mean (i) all indebtedness, obligations and liabilities of the Borrower, whether of principal, interest, fees, expenses or otherwise, now existing or hereafter contracted or incurred under or in connection with the Credit Agreement or any other Loan Document, including without limitation all the Obligations; (ii) all indebtedness of the Borrower to the Lender evidenced by the Notes; (iii) all future advances made by the Lender for the protection or preservation of the Collateral, including, without limitation, advances for storage and transportation charges, taxes, insurance, repairs and the like; and (iv) any and all reasonable and documented costs and expenses, including reasonable and documented attorneys’ fees and legal expenses, paid or incurred by the Lender In connection with the collection of the amounts referred to in the preceding clauses (i), (ii) and (iii).

“Deposit Accounts” shall mean all deposit accounts (as defined by the UCC) now owned or hereafter acquired by each Debtor.

“Documents” shall mean all documents (as defined by the UCC) now owned or hereafter acquired by each Debtor.

“Equipment” shall mean all Goods now or hereafter owned by each Debtor whether now or hereafter deemed to constitute Fixtures, whenever acquired and wherever located, used or bought for use primarily in its business and not included in Inventory, together with all attachments, accessories and parts used or intended to be used with said Goods, whether now or hereafter installed therein or thereon or affixed thereto, as well as all substitutions and replacements thereof in whole or in part.

2

“Fixtures” shall mean all Goods that become so related to particular real estate that an interest therein arises under real estate law.

“General Intangibles” shall mean (i) all personal property (including things in action) now owned or hereafter acquired by each Debtor, other than Goods, Accounts, Chattel Paper, Contract Rights, Documents, Instruments and money; and (ii) all other property, including payment intangibles, now or hereafter constituting a “general intangible” as defined in the UCC.

“Goods” shall mean (i) all things now owned or hereafter acquired by each Debtor and wherever located which are movable or which are Fixtures, but does not include money, Documents, Instruments, Accounts, Chattel Paper or General Intangibles; and (ii) all other property now or hereafter constituting “goods”as defined in the UCC.

“Instruments” shall mean all (i) negotiable instruments; (ii) certificated securities; (iii) other writings which evidence a right to the payment of money which are not themselves security agreements or leases and which are of a type which are in the ordinary course of business transferred by delivery with any necessary endorsement or assignment, now owned or hereafter acquired by each Debtor; and (iv) other property now or hereafter constituting an “instrument” as defined In the UCC.

“Inventory” shall mean (i) all Goods now or hereafter owned by each Debtor, whenever acquired and wherever located, held for sale or lease or furnished or to be furnished under contracts of service, and all raw materials, work in process and materials now or hereafter owned by such Debtor, whenever acquired and wherever located, and used or consumed in its business; and (ii) all other property now or hereafter constituting “inventory” as defined in the UCC.

“Investment Property” shall mean all property now or hereafter constituting “investment property” as defined in the UCC, but does not include certificated securities.

“Item of Payment” shall mean each check, draft, cash, money, instrument, item and other remittance in payment or on account of payment of the Accounts.

“Letter-of-Credit-Rights” shall mean all letter-of-credit rights (as defined by the UCC) now owned or hereafter acquired by each Debtor.

“Perfection Certificate” shall have the meaning set forth in Section 5(a).

“Proceeds” shall mean whatever is received when Collateral or Proceeds are sold, exchanged, collected or otherwise disposed of, both cash and non-cash, including, without limitation, the proceeds of insurance payable by reason of loss of or damage to Collateral or Proceeds.

3

“Receivables” shall mean (i) all Accounts; and (ii) all Chattel Paper, General Intangibles and Instruments creating, evidencing or securing any right of each Debtor, whether presently owned or existing or hereafter acquired or arising, to payment of money.

“UCC” shall mean the Uniform Commercial Code as in effect on the date of this Agreement and as the same may be amended from time to time hereafter in any relevant jurisdiction.

2.  Security.    As security for the full and timely payment of the Debt in accordance with the terms of the respective instruments or agreements now or hereafter evidencing the Debt or pursuant to which the Debt is created, each Debtor hereby agrees that the Lender shall have, and each Debtor hereby grants to and creates in favor of the Lender, a security interest under the UCC in and to the Collateral.

3.  Lender Has Rights and Remedies of a Secured Party.    In addition to all rights and remedies given to the Lender by this Agreement, the Credit Agreement, the Notes and the other Loan Documents, the Lender shall have all the rights and remedies of a secured party under the UCC.

4.  Certain Provisions Applicable to the Collateral.    The parties agree that, at all times during the term of this Agreement, the following provisions shall apply to the Collateral:

(a)  Each Debtor represents and warrants that it has and will have good and marketable title to the Collateral from time to time owned or acquired by it, free and clear of all liens, encumbrances and security interests, except Permitted Liens. Each Debtor will take all reasonable steps to defend such title against the claims and demands of all persons whomsoever.

(b)  Each Debtor represents and warrants to the Lender that it does not currently own or hold any Documents, Instruments or Chattel Paper. In order to perfect the security interest granted by each Debtor hereby, each Debtor shall deliver to the Lender possession of any Documents, Instruments and Chattel Paper hereafter acquired by such Debtor (duly endorsed by such Debtor in blank), promptly upon its acquisition of the same.

(c)  Except as may be permitted by the Credit Agreement, the Debtors will not (i) sell, lease, transfer or otherwise dispose of any of the Collateral, (ii)borrow against the Collateral from any person, firm or corporation other than from the Lender pursuant to the Credit Agreement, (iii) create, incur, assume or suffer to exist any Lien on any of the Collateral, (iv)permit any levy or attachment to be made against any of the Collateral except any levy or attachment relating to this Agreement, (v)permit any financing statement to be on file with respect to any of the Collateral, except financing statements in favor of the Lender, or (vi)

4

permit any notice to be filed under the Assignment of Claims Act with respect to any of the Collateral, except for any such notice in favor of the Lender.

(d)  Risk of loss of, damage to or destruction of the Collateral is on the Debtors. The Debtors will insure the Collateral against such risks and casualties and in such amounts and with such insurers as are specified in the Credit Agreement. All such policies of insurance shall contain loss payable clauses in favor of the Debtors and the Lender as their respective interests may appear, and such policies or certificates evidencing the same shall be deposited with the Lender immediately upon the request of the Lender. Each Debtor agrees to notify the Lender promptly of any notice of cancellation of any such policy and agrees not to cancel, mortgage, pledge, hypothecate, sell, transfer or assign its interest in any such insurance or any rights to cancel such insurance or to obtain the return of the unearned premiums therefor to any person other than the Lender. If any Debtor fails to effect and keep in full force and effect such insurance or fails to pay the premiums thereon when due, the Lender may do so for the account of such Debtor and add the cost thereof to the Debt, and the same shall be payable to the Lender on demand (unless it has obtained reasonably satisfactory substitute insurance policies prior to the Lender’s obtaining such insurance). Each Debtor hereby assigns and sets over unto the Lender all moneys which may become payable on account of such insurance, including, without limitation, any return of unearned premiums which may be due upon cancellation of any such insurance, and directs the insurers to pay the Lender any amount so due. Following the occurrence and during the continuation of an Event of Default, the Lender, its officers, employees and authorized agents, are hereby irrevocably appointed attorneys-in-fact of each Debtor to endorse any draft or check which may be payable to such Debtor in order to collect the proceeds of such insurance or any return of unearned premiums. Such proceeds shall be applied to the payment or prepayment of the Debt in such order as the Lender may determine In accordance with the Credit Agreement. Any balance of insurance proceeds remaining in the possession of the Lender after payment in full of the Debt shall be paid to the Borrower or order.

(e)  Each Debtor assumes full responsibility for taking any and all necessary steps to preserve rights in respect of the Accounts, Chattel Paper, Contract Rights, Instruments, Documents and General Intangibles against all account debtors, obligors and other persons.

(f)  Upon the occurrence and during the continuance of any Event of Default, each Debtor shall promptly upon demand by the Lender assemble the Equipment and Inventory and make it available to the Lender at the place or places to be designated by the Lender which shall be reasonably convenient to all parties. The right of the Lender under this subsection (f) to have the Equipment and Inventory assembled and made available to it is of the essence of this Agreement

5

and the Lender may, at its election, enforce such right by a bill In equity for specific performance.

(g)  If any Debtor fails to maintain each item of Equipment and Inventory in accordance with the requirements specified in the Credit Agreement, the Lender may pay the cost of such repairs or maintenance and such taxes, levies or other impositions for the account of such Debtor (and shall provide notice to such Debtor of such payments) and add the amount thereof to the Debt, and the same shall be payable to the Lender on demand.

The Lender shall have no duty as to the collection or protection of the Collateral or any part thereof or any income thereon, or as to the preservation of any rights pertaining thereto, beyond exercising reasonable care in the custody of any Collateral actually in the possession of the Lender. The Lender shall be deemed to have exercised reasonable care in the custody and preservation of such of the Collateral as may be in its possession if it takes such action for that purpose as any Debtor shall request in writing, provided that such requested action shall not, in the judgment of the Lender, impair the Lender’s security interest in the Collateral or its rights in, or the value of, the Collateral, and provided further that such written request is received by the Lender in sufficient time to permit it to take the requested action.

5.  Certain Additional Matters.    Each Debtor represents, warrants, covenants and agrees that:

(a)  This Agreement is effective to create in favor of the Lender for the benefit of the Lender a legal, valid and enforceable security interest in all right, title and interest in and to the Collateral. When the financing statements indicated in the Perfection Certificate have been filed in the offices in the jurisdictions listed in the Perfection Certificate, this Security Agreement will constitute a fully perfected Lien on, and security interest in and to, the Collateral, subject only to Permitted Liens, and prior to all other Liens. Each Debtor shall, at its expense, promptly take any and all such other or further acts as the Lender may deem necessary or advisable to execute, acknowledge and deliver, and thereafter register, file or record, any document or instrument supplemental to or confirmatory of this Agreement (including financing statements and continuation statements) which may be necessary or desirable to preserve, perfect and continue perfected the Lender’s security interest in the Collateral, including, without limitation, the signing of financing and other similar statements.

(b)  Each Debtor has previously delivered to the Lender a certificate signed by such Debtor and entitled “Perfection Certificate” (the “Perfection Certificate”). Each Debtor represents and warrants to the Lender as follows: (i) such Debtor’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof, (ii) such Debtor is an organization of the type and organized in the jurisdiction set forth in the Perfection Certificate, (iii) the

6

Perfection Certificate accurately sets forth such Debtor’s organizational identification number or accurately states that such Debtor has none, (iv) the Perfection Certificate accurately sets forth such Debtor’s place of business or, if more than one, its chief executive office as well as such Debtor’s mailing address if different and (v) all other information set forth on the Perfection Certificate pertaining to such Debtor is accurate and complete.

(c)  Each Debtor covenants with the Lender as follows: (a) without providing at least 30 days prior written notice to the Lender, such Debtor will not change its name, its place of business or, if more than one, chief executive office, or its mailing address or organizational identification number if it has one, or the locations of the Collateral from those listed on the Perfection Certificate, (b) if such Debtor does not have an organizational identification number and later obtains one, such Debtor shall forthwith notify the Lender of such organizational identification number, and (c) such Debtor will not change its type of organization, jurisdiction of organization or other legal structure.

(d)  The Lender is hereby appointed attorney-in-fact for each Debtor to do all acts and things which the Lender may deem necessary or advisable to preserve, perfect and continue perfected the Lender’s security Interest in the Collateral.

(e)  Each Debtor hereby irrevocably authorizes the Lender at any time and from time to time to file in any UCC jurisdiction any initial financing statements and amendments thereto that (i) indicate the Collateral (A) as all assets of such Debtor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC, or (B) as being of an equal or lesser scope or with greater detail, and (ii) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including (A) whether such Debtor is an organization, the type of organization and any organization identification number issued to such Debtor and, (B) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates. Each Debtor agrees to furnish any such information to the Lender promptly upon request.

6.  Cash Management.

(a)  Each Debtor will deposit, or cause to be deposited, all Items of Payment to a bank account designated by the Lender and from which the Lender alone has power of access and withdrawal (the “Collateral Account”). Each deposit shall be made not later than the next Business Day after the date of receipt of the Items of Payment. The Items of Payment shall be deposited in precisely the form received, except for the endorsements of such Debtor where necessary to permit the collection of any such Items of Payment, such Debtor hereby agreeing

7

to make such endorsement. In the event such Debtor shall fail to do so, the Lender is hereby authorized by such Debtor to make the endorsement in the name of such Debtor. Prior to such a deposit, such Debtor will not commingle any Items of Payment with any of the other funds or property of such Debtor, but will hold them separate and apart in trust and for the account of the Lender.

(b)  In addition, if so directed by the Lender, following and during the continuance of an Event of Default, each Debtor shall direct the mailing of all Items of Payment from its account debtors to a post-office box designated by the Lender, or to such other additional or replacement post-office boxes pursuant to the request of the Lender from time to time (collectively, the “Lockbox”). The Lender shall have unrestricted and exclusive access to the Lockbox.

(c)  Each Debtor hereby authorizes the Lender to inspect all Items of Payment, endorse all Items of Payment in the name of such Debtor, and deposit Items of Payment in the Collateral Account. The Lender reserves the right, exercised in its sole and absolute discretion from time to time, to provide to the Collateral Account credit prior to final collection of an Item of Payment and to disallow credit for any Item of Payment which is unsatisfactory to the Lender. In the event Items of Payment are returned to the Lender for any reason whatsoever, the Lender may, in the exercise of its discretion from time to time, forward such Items of Payment a second time. Any returned Items of Payment shall be charged back to the Collateral Account, the Loan Account or other account, as appropriate.

(d)  The Lender will apply the whole or any part of the collected funds credited to the Collateral Account against the outstanding balance of the Revolving Credit Facility Loans and Obligations related thereto until paid in full or credit such collected funds to the depository account of the Debtors with the Lender (or an Affiliate of the Lender), as provided in the Autoborrow Service Agreement. During the period in which an Event of Default exists and is continuing, the Lender shall have the option to apply the whole or any part of the collected funds against the outstanding balance of the Term Loan or any Obligations related thereto.

7.  Events of Default.    If one or more of the Events of Default shall occur and be continuing or shall exist, then and in any such event, the Lender shall have such rights and remedies in respect of the Collateral or any part thereof as are provided by the UCC and such other rights and remedies in respect thereof which it may have at law or in equity or under this Agreement, including, without limitation, the right to (i) enter any premises where Equipment or Inventory is located and take possession of the same without demand or notice and without prior judicial hearing or legal proceedings, which each Debtor hereby expressly waives, and/or (ii) sell all or any portion of the Collateral at any broker’s board or at public or private sale, without prior notice to any Debtor except as otherwise required by law (and if notice is required by law, after ten days’

8

prior written notice), at such time or times and in such manner and upon such terms, whether for cash or on credit, as the Lender in its reasonable discretion may determine. The Lender shall apply the Proceeds of any such sale and any Proceeds received by the Lender first to the payment of the reasonable costs and expenses incurred by the Lender in connection with such sale or collection, including, without limitation, reasonable attorneys’ fees and legal expenses, second to the payment of the Debt in such order as the Lender may determine in accordance with the Credit Agreement until the Debt has been paid in full, and then to pay the balance, if any, as required by law.

8.  Amendments.    The provisions of this Agreement may from time to time be waived, modified, supplemented or amended with the written consent of the Debtors and the Lender. Any waiver, permit, consent or approval of any kind or character on the part of the Lender of or to any breach or default under this Agreement or any such waiver of any provision or condition of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing.

9.  Defeasance.    Upon the payment in full of the Debt, this Agreement shall terminate and be of no further force or effect; provided, however, that this Agreement shall not terminate so long as the Borrower may borrow under, or cause Letters of Credit to be issued under the Credit Agreement or any Letter of Credit remains outstanding. In connection with such termination, the Lender agrees to execute, at the Debtors’ expense, such agreements and financing statements (including UCC-3’s) as the Debtors reasonably request in order to evidence such termination. Until such time, however, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

10.  Severability.    If any provision of this Agreement shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, but this Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein.

11.  Waiver.    No delay or failure on the part of the Lender in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof or of any other right, remedy, power or privilege of the Lender hereunder or under the Credit Agreement or any instrument or instruments now or hereafter evidencing the Debt; nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights and remedies of the Lender under this Agreement are cumulative and not exclusive of any rights or remedies which it might otherwise have.

12.  Indemnification.    The Debtors will indemnify and save and hold the Lender harmless from and against any and all claims, damages, losses, liabilities or judgments which may be incurred or sustained by the Lender or asserted against the Lender, directly or indirectly, in connection with the existence of or the lawful exercise of any of the security rights with respect to the Collateral, except for matters which may result from

9

the gross negligence or willful misconduct of the Lender. The covenants contained in this paragraph shall survive the termination of the other provisions of this Agreement. In the event of any action at law or suit in equity in relation to this Agreement, the Debtors, in addition to all other sums which they may be required to pay, will pay a reasonable sum for attorneys’ fees incurred by the Lender in connection with such action or suit and all other expenses of collection.

13.  Survival.    All representations, warranties, covenants and agreements of the Debtors contained herein or made in writing in connection herewith shall survive the execution and delivery of this Agreement and shall continue in full force and effect from and after the date hereof until payment in full of the Debt.

14.  Notices.    All notices hereunder shall be given in accordance with, and become effective as provided by, Section 8.6 of the Credit Agreement.

15.  ARBITRATION.

A.  THIS PARAGRAPH CONCERNS THE RESOLUTION OF ANY CONTROVERSIES OR CLAIMS BETWEEN ANY DEBTOR AND LENDER, WHETHER ARISING IN CONTRACT, TORT OR BY STATUTE, INCLUDING BUT NOT LIMITED TO CONTROVERSIES OR CLAIMS THAT ARISE OUT OF OR RELATE TO: (I) THIS AGREEMENT (INCLUDING ANY RENEWALS, EXTENSIONS OR MODIFICATIONS); OR (II) ANY DOCUMENT RELATED TO THIS AGREEMENT (COLLECTIVELY A “CLAIM”).

B.  AT THE REQUEST OF ANY DEBTOR OR LENDER, ANY CLAIM SHALL BE RESOLVED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (TITLE 9, U.S. CODE) (THE “ACT”). THE ACT WILL APPLY EVEN THOUGH THIS AGREEMENT PROVIDES THAT IT IS GOVERNED BY THE LAW OF A SPECIFIED STATE.

C.  ARBITRATION PROCEEDINGS WILL BE DETERMINED IN ACCORDANCE WITH THE ACT, THE APPLICABLE RULES AND PROCEDURES FOR THE ARBITRATION OF DISPUTES OF JAMS OR ANY SUCCESSOR THEREOF (“JAMS”), AND THE TERMS OF THIS PARAGRAPH. IN THE EVENT OF ANY INCONSISTENCY, THE TERMS OF THIS PARAGRAPH SHALL CONTROL.

D.  THE ARBITRATION SHALL BE ADMINISTERED BY JAMS AND CONDUCTED IN ANY U.S. STATE WHERE REAL OR TANGIBLE PERSONAL PROPERTY COLLATERAL FOR THIS CREDIT IS LOCATED OR IF THERE IS NO SUCH COLLATERAL, IN THE COMMONWEALTH OF VIRGINIA. ALL CLAIMS SHALL BE DETERMINED BY ONE ARBITRATOR; HOWEVER, IF CLAIMS EXCEED $5,000,000, UPON THE REQUEST OF ANY PARTY, THE CLAIMS SHALL BE DECIDED BY THREE ARBITRATORS. ALL ARBITRATION HEARINGS SHALL COMMENCE WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION

10

AND CLOSE WITHIN 90 DAYS OF COMMENCEMENT AND THE AWARD OF THE ARBITRATOR(S) SHALL BE ISSUED WITHIN 30 DAYS OF THE CLOSE OF THE HEARING. HOWEVER, THE ARBITRATOR(S), UPON A SHOWING OF GOOD CAUSE, MAY EXTEND THE COMMENCEMENT OF THE HEARING FOR UP TO AN ADDITIONAL 60 DAYS. THE ARBITRATOR(S) SHALL PROVIDE A CONCISE WRITTEN STATEMENT OF REASONS FOR THE AWARD. THE ARBITRATION AWARD MAY BE SUBMITTED TO ANY COURT HAVING JURISDICTION TO BE CONFIRMED AND ENFORCED.

E.  THE ARBITRATOR(S) WILL HAVE THE AUTHORITY TO DECIDE WHETHER ANY CLAIM IS BARRED BY THE STATUTE OF LIMITATIONS AND, IF SO, TO DISMISS THE ARBITRATION ON THAT BASIS. FOR PURPOSES OF THE APPLICATION OF THE STATUTE OF LIMITATIONS, THE SERVICE ON JAMS UNDER APPLICABLE JAMS RULES OF A NOTICE OF CLAIM IS THE EQUIVALENT OF THE FILING OF A LAWSUIT. ANY DISPUTE CONCERNING THIS ARBITRATION PROVISION OR WHETHER A CLAIM IS ARBITRABLE SHALL BE DETERMINED BY THE ARBITRATOR(S). THE ARBITRATOR(S) SHALL HAVE THE POWER TO AWARD LEGAL FEES PURSUANT TO THE TERMS OF THIS AGREEMENT.

F.  THIS PARAGRAPH DOES NOT LIMIT THE RIGHT OF ANY DEBTOR OR LENDER TO: (I) EXERCISE SELF-HELP REMEDIES, SUCH AS BUT NOT LIMITED TO, SETOFF; (II) INITIATE JUDICIAL OR NONJUDICIAL FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL; (III) EXERCISE ANY JUDICIAL OR POWER OF SALE RIGHTS, OR (IV) ACT IN A COURT OF LAW TO OBTAIN AN INTERIM REMEDY, SUCH AS BUT NOT LIMITED TO, INJUNCTIVE RELIEF, WRIT OF POSSESSION OR APPOINTMENT OF A RECEIVER, OR ADDITIONAL OR SUPPLEMENTARY REMEDIES.

G.  BY AGREEING TO BINDING ARBITRATION, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM. FURTHERMORE, WITHOUT INTENDING IN ANY WAY TO LIMIT THIS AGREEMENT TO ARBITRATE, TO THE EXTENT ANY CLAIM IS NOT ARBITRATED, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF SUCH CLAIM. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.

16.  Governing Law.    The UCC shall govern the attachment, perfection and the effect of attachment and perfection of the Lender’s security interest in the Collateral and the rights, duties and obligations of the Lender and the Debtors with respect thereto. This Agreement shall be deemed to be a contract under the laws of the Commonwealth of Virginia and the execution and delivery hereof and, to the extent not inconsistent with the preceding sentence, the terms and provisions hereof shall be governed by and construed in accordance with the laws of said

11

Commonwealth. Unless the context otherwise requires, all terms used herein which are defined in the UCC shall have the meanings therein stated.

17.  Headings.    The headings of this Agreement are for convenience only and shall not be construed as a part of this Agreement.

18.  Counterparts.    This Agreement may be executed in counterparts, each of which when so executed shall together constitute one and the same agreement.

[Remainder of page intentionally left blank]

12

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

DEBTORS:
HADRON, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

ADVANCED BIOSYSTEMS, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

AVENUE TECHNOLOGIES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

ENGINEERING AND INFORMATION SERVICES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

SYCOM SERVICES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

13

VAIL RESEARCH AND TECHNOLOGY CORPORATION
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

HADRON ACQUISITION CORPORATION
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

LENDER:
BANK OF AMERICA, N.A.
By:	/s/    ELAINE EATON (SEAL)
	Elaine Eaton Senior Vice President

14

EX-10.30

Exhibit 10.30

PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (this “Agreement”)is dated as of November 2, 2001, by and among HADRON, INC., a New York corporation (the “Borrower”), the guarantors from time to time party hereto (the “Subsidiary Guarantors,” and together with the Borrower, each a “Pledgor” and collectively the “Pledgors”), and BANK OF AMERICA, N.A., a national banking association (the “Lender”).

WITNESSETH:

WHEREAS, pursuant to a Credit Agreement, dated as of the date hereof (as the same may be amended, modified or supplemented from time to time, the “Credit Agreement”)by and among the Borrower, the Subsidiary Guarantors and the Lender, the Lender has agreed to extend credit to the Borrower; and

WHEREAS, the Lender has required, as a condition precedent to its entering into the Credit Agreement and making extensions of credit to or for the account of the Borrower thereunder, that the Pledgors secure their respective obligations under the Credit Agreement and the other Loan Documents in accordance with the terms of this Agreement.

NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.  Definitions.    Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the Credit Agreement.

2.  Pledge and Grant of Security Interest.    To secure the prompt payment and performance in full when due, whether by lapse of time or otherwise, of the Secured Obligations (as defined in Section 3 hereof), each Pledgor hereby pledges and assigns to the Lender and grants to the Lender, a continuing security interest in any and all right, title and interest of such Pledgor in and to the following, whether now owned or existing or owned, acquired or arising hereafter (collectively, the “Pledged Collateral”):

(a)  Pledged Shares.    All of the issued and outstanding shares of capital stock of the Subsidiaries of such Pledgor set forth on Schedule I attached hereto (all certificates representing such shares and all options and other rights, contractual or otherwise, with respect thereto, collectively the “Pledged Shares”).

(b)  Additional Shares.    All of the issued and outstanding shares of capital stock of any Subsidiary which is hereafter formed or acquired by such Pledgor, including without limitation, the certificates representing such shares.

1

(c)  Other Equity Interests.    Any and all other equity interests of such Pledgor in any direct or indirect Subsidiary of the Borrower.

(d)  Proceeds.    All proceeds and products of the foregoing, however and whenever acquired and in whatever form.

Without limiting the generality of the foregoing, it is hereby specifically understood and agreed that a Pledgor may from time to time hereafter deliver additional shares of stock to the Lender as collateral security for the Secured Obligations. Upon delivery to the Lender, such additional shares of stock shall be deemed to be part of the Pledged Collateral of such Pledgor and shall be subject to the terms of this Agreement whether or not Schedule I is amended to refer to such additional shares.

3.  Security for Secured Obligations.    The security interest created hereby in the Pledged Collateral of each Pledgor constitutes continuing collateral security for all of the following, whether now existing or hereafter incurred (the “Secured Obligations”):

(a)  (i)  In the case of the Borrower, the prompt performance and observance by the Borrower of all obligations of the Borrower under the Credit Agreement, the Notes, this Agreement and the other Loan Documents to which the Borrower is a party; or

(ii)  In the case of any Pledgor which is a Subsidiary Guarantor, the prompt performance and observance by such Subsidiary Guarantor of all obligations of such Subsidiary Guarantor under the Credit Agreement, this Agreement and the other Loan Documents to which such Subsidiary Guarantor is a party, including, without limitation, its guaranty obligations arising under the Subsidiary Guaranty;

(b)  All other indebtedness, liabilities and obligations of any kind or nature, now existing or hereafter arising, owing from any Credit Party to the Lender, arising under the Loan Documents, whether primary, secondary, direct, contingent, or joint and several; and

(c)  All liabilities and obligations, now existing or hereafter arising, owing from any Credit Party to the Lender or any affiliate of a Lender arising under interest rate protection agreements, foreign currency exchange, commodity purchase or option agreements or other interest or exchange rate or commodity price hedging agreements.

4.  Delivery of the Pledged Collateral.    Each Pledgor hereby agrees that:

(a)  Certificates.    Such Pledgor shall deliver to the Lender (i) simultaneously with or prior to the execution and delivery of this Agreement, all certificates representing the Pledged Shares of such Pledgor and (ii) promptly upon the receipt thereof by or on behalf of such Pledgor, all other certificates and instruments constituting Pledged Collateral of such Pledgor. Prior to delivery to

2

the Lender, all such certificates and instruments constituting Pledged Collateral of such Pledgor shall be held in trust by such Pledgor for the benefit of the Lender pursuant hereto. All such certificates shall be delivered in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, in form provided in Schedule 2 attached hereto.

(b)  Additional Securities.    If such Pledgor shall receive by virtue of its being or having been the owner of any Pledged Collateral, any (i) stock certificate, including without limitation, any certificate representing a stock dividend or distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares, stock splits, spin-off or split-off, promissory notes or other instrument; (ii) option or right, whether as an addition to, substitution for, or an exchange for, any Pledged Collateral or otherwise; (iii) dividends payable in securities; or (iv) distributions of securities in connection with a partial or total liquidation, dissolution or reduction of capital, capital surplus or paid-in surplus, then such Pledgor shall receive such stock certificate, instrument, option, right or distribution in trust for the benefit of the Lender, shall segregate it from such Pledgor’s other property and shall deliver it forthwith to the Lender in the exact form received together with any necessary endorsement and/or appropriate stock power duly executed in blank in the form provided in Schedule 2, to be held by the Lender as Pledged Collateral and as further collateral security for the Secured Obligations.

(c)  Financing Statements.    Such Pledgor hereby authorizes the Lender to file such UCC financing statements the Lender may deem appropriate in order to perfect and protect the security interest created hereby in the Pledged Collateral of such Pledgor.

5.  Representations and Warranties.    Each Pledgor hereby represents and warrants to the Lender, that so long as the Credit Agreement is in effect or any amounts payable thereunder or under any other Loan Document or any Letter of Credit shall remain outstanding, and until all of the Commitments thereunder shall have terminated:

(a)  Authorization of Pledged Shares.    The Pledged Shares of such Pledgor are duly authorized and validly issued, are fully paid and nonassessable and are not subject to the preemptive rights of any Person. All other shares of stock constituting Pledged Collateral will be duly authorized and validly issued,fully paid and nonassessable and not subject to the preemptive rights of any Person.

(b)  Title.    Such Pledgor has good and indefeasible title to the Pledged Collateral of such Pledgor and will at all times be the legal and beneficial owner of such Pledged Collateral free and clear of any Lien, except for the security interest created by this Agreement and other Permitted Liens. There exists no “adverse claim” within the meaning of Section 8A-302 of the Uniform Commercial Code as in effect in the Commonwealth of Virginia (the “UCC”) with respect to the Pledged Shares of such Pledgor.

3

(c)  Exercising of Rights.    The exercise by the Lender of its rights and remedies hereunder will not violate any law or governmental regulation or any material contractual restriction binding on or affecting such Pledgor or any of its property.

(d)  Pledgor’s Authority.    No authorization, approval or action by, and no notice or filing with any Governmental Authority or with the issuer of any Pledged Stock of such Pledgor is required either (i) for the pledge made by such Pledgor or for the granting of the security interest by such Pledgor pursuant to this Agreement; or (ii) for the exercise by the Lender of its rights and remedies hereunder (except as may be required by laws affecting the offering and sale of securities).

(e)  Security Interest/Priority.    This Agreement creates a valid security interest in favor of the Lender in the Pledged Collateral of such Pledgor. The taking possession by the Lender of the certificates representing the Pledged Shares of such Pledgor and all other certificates and instruments constituting Pledged Collateral of such Pledgor will perfect and establish the first priority of the Lender’s security interest in the Pledged Shares of such Pledgor and in all other Pledged Collateral of such Pledgor represented by such Pledged Shares and instruments securing the Secured Obligations. Except as set forth in this Section 5(e), no action is necessary to perfect or otherwise protect such security interest.

6.  Covenants.    Each Pledgor hereby covenants, that so long as the Credit Agreement is in effect or any amounts payable thereunder or under any other Loan Document or any Letter of Credit shall remain outstanding, and until all of the Commitments thereunder shall have terminated, such Pledgor shall:

(a)  Books and Records.    Mark its books and records (and shall cause the issuer of the Pledged Shares of such Pledgor to mark its books and records) to reflect the security interest granted to the Lender pursuant to this Agreement.

(b)  Defense of Title.    Warrant and defend title to and ownership of the Pledged Collateral of such Pledgor at its own expense against the claims and demands of all other parties claiming an interest therein, keep the Pledged Collateral of such Pledgor free from all Liens, except for those created hereunder and the security interest created hereby and except for Permitted Liens, and not sell, exchange, transfer, assign, lease or otherwise dispose of Pledged Collateral of such Pledgor or any interest therein, except as permitted under the Credit Agreement.

(c)  Further Assurances.    Promptly execute and deliver at its expense all further instruments and documents and take all further action that may be necessary and desirable or that the Lender may reasonably request in order to (i) perfect and protect the security interest created hereby in the Pledged Collateral of such Pledgor; (ii) enable the Lender to exercise and enforce its rights and remedies hereunder in respect of the Pledged Collateral of such Pledgor; and (iii)

4

otherwise effect the purposes of this Agreement, including, without limitation and if requested by the Lender, delivering to the Lender irrevocable proxies in respect of the Pledged Collateral of such Pledgor.

(d)  Amendments.    Not make or consent to any amendment or other modification or waiver with respect to any of the Pledged Collateral of such Pledgor or enter into any agreement or allow to exist any restriction with respect to any of the Pledged Collateral of such Pledgor other than pursuant hereto or as may be permitted under the Credit Agreement.

(e)  Compliance with Securities Laws.    File all reports and other information now or hereafter required to be filed by such Pledgor with the United States Securities and Exchange Commission and any other state, federal or foreign agency in connection with the ownership of the Pledged Collateral of such Pledgor.

7.  Rights of the Lender.

(a)  Power of Attorney.    In addition to other powers of attorney contained herein, each Pledgor hereby designates and appoints the Lender and each of its designees or agents as attorney-in-fact of such Pledgor, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence and during the continuance of an Event of Default:

(i)  to demand, collect, settle, compromise, adjust, give discharges and releases relating to the Pledged Collateral, all as the Lender may reasonably determine;

(ii)  to commence and prosecute any actions at any court for the purposes of collecting any of the Pledged Collateral of such Pledgor and enforcing any other right in respect thereof,

(iii)   to defend, settle or compromise any action brought and, in connection therewith, give such discharge or release relating to the Pledged Collateral as the Lender may deem reasonably appropriate;

(iv)  to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Pledged Collateral of such Pledgor;

(v)  to direct any parties liable for any payment under any of the Pledged Collateral of such Pledgor to make payment of any and all monies due and to become due thereunder directly to the Lender or as the Lender shall direct;

(vi)  to receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time in respect of or arising out of any Pledged Collateral of such Pledgor;

5

(vii)  to sign and endorse any drafts, assignments, proxies, stock powers, verifications, notices and other documents relating to the Pledged Collateral of such Pledgor;

(viii)  to exchange any of the Pledged Collateral of such Pledgor or other property upon any merger, consolidation, reorganization, recapitalization or other readjustment of the issuer thereof and in connection therewith, deposit any of the Pledged Collateral of such Pledgor with any depository, transfer agent, registrar or other designated agency upon such terms as the Lender may determine; and

(ix)  to do and perform all such other acts and things as the Lender may reasonably deem to be necessary, proper or convenient in connection with the Pledged Collateral of such Pledgor.

This power of attorney is a power coupled with an interest and shall be irrevocable. The Lender shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Lender in this Agreement, and shall not be liable for any failure to do so or any delay in doing so. The Lender shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence or willful misconduct. This power of attorney is conferred on the Lender solely to protect, preserve and realize upon its security interest in Pledged Collateral.

(b)  Performance by the Lender of Pledgor’s Obligations.    If any Pledgor fails to perform any agreement or obligation contained herein, after the occurrence and during the continuance of an Event of Default, the Lender itself may perform, or cause performance of, such agreement or obligation, and the expenses of the Lender incurred in connection therewith shall be payable by the Pledgors on a joint and several basis pursuant to Section 11 hereof.

(c)  Assignment by the Lender.    To the extent permitted under Section 8.14 of the Credit Agreement, the Lender may from time to time assign the Pledged Collateral and any portion thereof, and the assignee shall be entitled to all of the rights and remedies of the Lender under this Agreement in relation thereto.

(d)  The Lender’s Duty of Care.    Other than the exercise of reasonable care to assure the safe custody of the Pledged Collateral while being held by the Lender hereunder, the Lender shall have no duty or liability to preserve rights pertaining thereto, it being understood and agreed that each Pledgor shall be responsible for preservation of all rights in the Pledged Collateral of such Pledgor, and the Lender shall be relieved of all responsibility for Pledged Collateral upon surrendering it or tendering the surrender of it to such Pledgor. The Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if such Pledged Collateral is accorded treatment substantially equal to that which the Lender accords its own property, it

6

being understood that the Lender shall not have responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Pledged Collateral, whether or not the Lender has or is deemed to have knowledge of such matters; or (ii) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral.

(e)  Voting Rights in Respect of the Pledged Collateral.

(i)  So long as no Event of Default (as defined herein) shall have occurred and be continuing, to the extent permitted by law, each Pledgor may exercise any and all voting and other consensual rights pertaining to the Pledged Collateral of such Pledgor or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement;

(ii)  Upon the occurrence and during the continuance of an Event of Default, upon written notice from the Lender, all rights of a Pledgor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to paragraph (i) of this Section shall cease and all such rights shall thereupon become vested in the Lender which shall thereupon have the sole right to exercise such voting and other consensual rights.

(f)  Dividend Rights in Respect of the Pledged Collateral.

(i)  So long as no Event of Default shall have occurred and be continuing and subject to Section 4(b) hereof, each Pledgor may receive and retain any and all dividends (other than stock dividends and other dividends constituting Pledged Collateral of such Pledgor which are addressed hereinabove) or interest paid in respect of the Pledged Collateral of such Pledgor to the extent they are allowed under the Credit Agreement.

(ii)  Upon the occurrence and during the continuance of an Event of Default:

(A)  all rights of a Pledgor to receive the dividends and interest payments which it would otherwise be authorized to receive and retain pursuant to paragraph (i) of this Section shall cease and all such shall thereupon be vested in the Lender which shall thereupon have sole right to receive and hold as Pledged Collateral such dividends and interest payments; and

(B)  all dividends and interest payments which are received by such Pledgor contrary to the provisions of paragraph (A) of this Section shall be received in trust for the benefit of the Lender, shall be segregated from other property or funds of such Pledgor, and shall be forthwith paid over to the Lender as Pledged Collateral in the exact form received, to be held by the Lender as Pledged Collateral and as further collateral security for the Secured Obligations.

(g)  Release of Pledged Collateral.    The Lender may release any of the Pledged Collateral from this Agreement or may substitute any of the Pledged

7

Collateral for other Pledged Collateral without altering, varying or diminishing in any way the force, effect, lien, pledge or security interest of this Agreement as to any Pledged Collateral not expressly released or substituted, and this Agreement shall continue as a first priority lien, security interest, pledge and charge on all Pledged Collateral not expressly released or substituted when any of the Secured Obligations remain outstanding with respect to the Lender.

8.  Advances by Lender.    On failure of any Pledgor to perform any of the covenants and agreements contained herein, the Lender may, at its sole option and in its sole discretion, perform the same and in so doing may expend such sums as the Lender may reasonably deem advisable in the performance thereof, including, without limitation, the payment of any taxes, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending against any adverse claim and all other expenditures which the Lender may make for the protection of the security hereof or which it may be compelled to make by operation of law. All such sums and amounts so expended shall be repayable by the Pledgors on a joint and several basis promptly upon notice thereof and demand therefor, shall constitute additional Secured Obligations and shall bear interest from the date said amounts are expended at the default rate provided in Section 2.11(b) of the Credit Agreement. No such performance of any covenant or agreement by the Lender on behalf of any Pledgor, and no such advance or expenditure therefor, shall relieve the Pledgors of any default under the terms of this Agreement or the other Credit Documents. The Lender may make any payment hereby authorized in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by a Pledgor in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP.

9.  Events of Default.    The occurrence of an Event of Default under and as defined in the Credit Agreement shall be an Event of Default hereunder (“Event of Default”).

10.  Remedies Upon Default.    If any Event of Default shall have occurred and be continuing:

(a)  Rights and Remedies.    The Lender may exercise in respect of the Pledged Collateral of any Pledgor, in addition to other rights and remedies provided for herein or otherwise available to it, all rights and remedies of a secured party on default under the UCC or any other applicable law.

(b)  Sale of Pledged Collateral.    Without limiting the generality of this Section and without notice (except as provided below), the Lender may, in its sole discretion, sell or otherwise dispose of or realize upon the Pledged Collateral, or any part thereof, in one or more parcels, at public or private sale, at any exchange or broker’s board or elsewhere, at such price or prices and on such other terms as

8

the Lender may deem commercially reasonable, for cash, credit or for future delivery or otherwise in accordance with applicable law. To the extent permitted by law, the Lender may in such event bid for the purchase of such securities. Each Pledgor agrees that any requirement of reasonable notice shall be met if notice, specifying the place of any public sale or the time after which any private sale is to be made, shall be personally served on or mailed, postage prepaid, to such Pledgor in accordance with the notice provisions of Section 8.6 of the Credit Agreement at least 10 days before time of such sale. The Lender shall not be obligated to make any sale of Pledged Collateral of such Pledgor regardless of notice of sale having been given. The Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(c)  Private Sale.    The Pledgors recognize that the Lender may deem it impracticable to effect a public sale of all or any part of the Pledged Shares or any of the securities constituting Pledged Collateral and that the Lender may, therefore, determine to make one or more private sales of any such securities to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such securities for their own account, for investment and not with a view to the distribution or resale thereof. Each Pledgor acknowledges that any such private sale may be at prices and on terms no less favorable to the seller than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sale perse shall not be deemed to have been made in a commercially unreasonable manner and that the Lender shall have no obligation to delay sale of any such securities for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act of 1933.

(d)  Retention of Pledged Collateral.    The Lender may, after providing the notices required by Section 9A-621 of the UCC or otherwise complying with the requirements of applicable law of the relevant jurisdiction, retain all or any portion of the Pledged Collateral in satisfaction of the Secured Obligations. Unless and until the Lender shall have provided such notices, however, the Lender shall not be deemed to have retained any Pledged Collateral in satisfaction of any Secured Obligations for any reason.

(e)  Application of Proceeds.    Upon the occurrence and during the continuance of an Event of Default, any payments in respect of the Secured Obligations and any proceeds of any Pledged Collateral, when received by the Lender in cash or its equivalent, will be applied in reduction of the Secured Obligations in such order as the Lender may determine in accordance with the Credit Agreement, and each Pledgor irrevocably waives the right to direct the application of such payments and proceeds and acknowledges and agrees that the Lender shall have the continuing and exclusive right to apply and reapply any and all such payments and proceeds notwithstanding any entry to the contrary upon

9

any of its books and records. The Pledgors shall remain liable to the Lender for any deficiency.

(f)  Deficiency.    In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the Lender is legally entitled, the Pledgors shall be jointly and severally liable for the deficiency, together with interest thereon at the default rate provided in Section 2.11(b) of the Credit Agreement, together with the costs of collection and the reasonable fees of any attorneys employed by the Lender to collect such deficiency. Any surplus remaining after the full payment and satisfaction of the Secured Obligations shall be returned to the appropriate Pledgors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto.

11.  Costs of Counsel.    If at any time hereafter, after the occurrence and during the continuance of an Event of Default or not, the Lender employs counsel to prepare or consider amendments, waivers or consents with respect to this Agreement, or to take action or make a response in or with respect to any legal or arbitral proceeding relating to this Agreement or relating to the Pledged Collateral, or to protect the Pledged Collateral of any Pledgor or exercise any rights or remedies under this Agreement or with respect to any Pledged Collateral, then the Pledgors agree to promptly pay upon demand any and all such reasonable costs and expenses of the Lender, all of which costs and expenses shall constitute Secured Obligations hereunder.

12.  Continuing, Agreement.    This Agreement shall be a continuing agreement in every respect and shall remain in full force and effect so long as the Credit Agreement is in effect or any amounts payable thereunder or under any other Loan Document or any Letter of Credit shall remain outstanding, and until all of the Commitments thereunder shall have terminated. Upon such termination of this Agreement, the Lender shall, upon the request and at the expense of the Credit Parties, forthwith release all of its liens and security interests hereunder. Notwithstanding the foregoing all releases and indemnities provided hereunder shall survive termination of this Agreement.

13.  Amendments; Waivers; Modifications.    This Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged or terminated except as set forth in Section 11.6 of the Credit Agreement.

14.  Successors in Interest.    This Agreement shall create a continuing security interest in the Collateral and shall be binding upon each Pledgor, its successors and assigns and shall inure, together with the rights and remedies of the Lender hereunder, to the benefit of the Lender and its successors and assigns; provided, however that none of the Pledgors may assign its rights or delegate its duties hereunder without the prior written consent of the Lender. To the fullest extent permitted by law, each Pledgor hereby releases the Lender, and its successors and assigns, from any liability for any act or omission relating to this Agreement or the Pledged Collateral, except for any liability

10

arising from the gross negligence or willful misconduct of the Lender, or its officers, employees or agents.

15.  Notices.    All notices required or permitted to be given under this Agreement shall be in conformance with, and be effective as provided by, Section 8.6 of the Credit Agreement.

16.  Counterparts.    This Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.

17.  Headings.    The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

18.  ARBITRATION.

A.  THIS PARAGRAPH CONCERNS THE RESOLUTION OF ANY CONTROVERSIES OR CLAIMS BETWEEN ANY PLEDGOR AND LENDER, WHETHER ARISING IN CONTRACT, TORT OR BY STATUTE, INCLUDING BUT NOT LIMITED TO CONTROVERSIES OR CLAIMS THAT ARISE OUT OF OR RELATE TO: (I) THIS AGREEMENT (INCLUDING ANY RENEWALS, EXTENSIONS OR MODIFICATIONS); OR (II) ANY DOCUMENT RELATED TO THIS AGREEMENT (COLLECTIVELY A “CLAIM”).

B.  AT THE REQUEST OF ANY PLEDGOR OR LENDER, ANY CLAIM SHALL BE RESOLVED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (TITLE 9, U.S. CODE) (THE “ACT”). THE ACT WILL APPLY EVEN THOUGH THIS AGREEMENT PROVIDES THAT IT IS GOVERNED BY THE LAW OF A SPECIFIED STATE.

C.  ARBITRATION PROCEEDINGS WILL BE DETERMINED IN ACCORDANCE WITH THE ACT, THE APPLICABLE RULES AND PROCEDURES FOR THE ARBITRATION OF DISPUTES OF JAMS OR ANY SUCCESSOR THEREOF (“JAMS”), AND THE TERMS OF THIS PARAGRAPH. IN THE EVENT OF ANY INCONSISTENCY, THE TERMS OF THIS PARAGRAPH SHALL CONTROL.

D.  THE ARBITRATION SHALL BE ADMINISTERED BY JAMS AND CONDUCTED IN ANY U.S. STATE WHERE REAL OR TANGIBLE PERSONAL PROPERTY COLLATERAL FOR THIS CREDIT IS LOCATED OR IF THERE IS NO SUCH COLLATERAL, IN THE COMMONWEALTH OF VIRGINIA.

11

ALL CLAIMS SHALL BE DETERMINED BY ONE ARBITRATOR; HOWEVER, IF CLAIMS EXCEED $5,000,000, UPON THE REQUEST OF ANY PARTY, THE CLAIMS SHALL BE DECIDED BY THREE ARBITRATORS. ALL ARBITRATION HEARINGS SHALL COMMENCE WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION AND CLOSE WITHIN 90 DAYS OF COMMENCEMENT AND THE AWARD OF THE ARBITRATOR(S) SHALL BE ISSUED WITHIN 30 DAYS OF THE CLOSE OF THE HEARING. HOWEVER, THE ARBITRATOR(S), UPON A SHOWING OF GOOD CAUSE, MAY EXTEND THE COMMENCEMENT OF THE HEARING FOR UP TO AN ADDITIONAL 60 DAYS. THE ARBITRATOR(S) SHALL PROVIDE A CONCISE WRITTEN STATEMENT OF REASONS FOR THE AWARD. THE ARBITRATION AWARD MAY BE SUBMITTED TO ANY COURT HAVING JURISDICTION TO BE CONFIRMED AND ENFORCED.

E.  THE ARBITRATOR(S) WILL HAVE THE AUTHORITY TO DECIDE WHETHER ANY CLAIM IS BARRED BY THE STATUTE OF LIMITATIONS AND, IF SO, TO DISMISS THE ARBITRATION ON THAT BASIS. FOR PURPOSES OF THE APPLICATION OF THE STATUTE OF LIMITATIONS, THE SERVICE ON JAMS UNDER APPLICABLE JAMS RULES OF A NOTICE OF CLAIM IS THE EQUIVALENT OF THE FILING OF A LAWSUIT. ANY DISPUTE CONCERNING THIS ARBITRATION PROVISION OR WHETHER A CLAIM IS ARBITRABLE SHALL BE DETERMINED BY THE ARBITRATOR(S). THE ARBITRATOR(S) SHALL HAVE THE POWER TO AWARD LEGAL FEES PURSUANT TO THE TERMS OF THIS AGREEMENT.

F.  THIS PARAGRAPH DOES NOT LIMIT THE RIGHT OF ANY PLEDGOR OR LENDER TO: (I) EXERCISE SELF-HELP REMEDIES, SUCH AS BUT NOT LIMITED TO, SETOFF; (II) INITIATE JUDICIAL OR NONJUDICIAL FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL; (III) EXERCISE ANY JUDICIAL OR POWER OF SALE RIGHTS, OR (IV) ACT IN A COURT OF LAW TO OBTAIN AN INTERIM REMEDY, SUCH AS BUT NOT LIMITED TO, INJUNCTIVE RELIEF, WRIT OF POSSESSION OR APPOINTMENT OF A RECEIVER, OR ADDITIONAL OR SUPPLEMENTARY REMEDIES.

G.  BY AGREEING TO BINDING ARBITRATION, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM. FURTHERMORE, WITHOUT INTENDING IN ANY WAY TO LIMIT THIS AGREEMENT TO ARBITRATE, TO THE EXTENT ANY CLAIM IS NOT ARBITRATED, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF SUCH CLAIM. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.

12

19.  Severability.    If any provision of this Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions.

20.  Entirety.    This Agreement and the other Loan Documents represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the Loan Documents or the transactions contemplated herein and therein.

21.  Survival.    All representations and warranties of the Pledgors hereunder shall survive the execution and delivery of this Agreement and the other Loan Documents, the delivery of the Notes and the making of the Loans and the issuance of the Letters of Credit under the Credit Agreement.

22.  Other Security.    To the extent that any of the Secured Obligations are now or hereafter secured by property other than the Pledged Collateral (including, without limitation, real property and securities owned by a Pledgor), or by a guarantee, endorsement or property of any other Person, then the Lender shall have the right to proceed against such other property, guarantee or endorsement upon the occurrence of any Event of Default, and the Lender has the right, in its sole discretion, to determine which rights, security, liens, security interests or remedies the Lender shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them orany of the Lender’s rights or the Secured Obligations under this Agreement or under any other of the Loan Documents.

23.  Joint and Several Obligations of Pledgors.    All payment obligations of the Pledgors hereunder shall be joint and several.

[remainder of page intentionally left blank]

13

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

PLEDGORS: HADRON, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

ADVANCED BIOSYSTEMS, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

AVENUE TECHNOLOGIES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

ENGINEERING AND INFORMATION SERVICES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

SYCOM SERVICES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

14

VAIL RESEARCH AND TECHNOLOGY CORPORATION
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

HADRON ACQUISITION CORP.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

LENDER: BANK OF AMERICA, N.A.
By:	/s/    ELAINE EATON (SEAL)
	Elaine Eaton Senior Vice President

15

SCHEDULE 1

TO AGREEMENT

Name of Pledgor    Hadron, Inc.

Name of Subsidiary	Number of Shares	Certificate Number
SyCom Services, Inc.	3,000	1
Engineering & Information Services, Inc.	1,000	2
Avenue Technologies, Inc.	751,288	32
	500,000	3
Advanced Biosystems, Inc.	1,000	2
Vail Research and Technology Corporation	1,000	3
Hadron Acquisition Corp.	100	1

16

SCHEDULE 2

TO AGREEMENT

Form of Irrevocable Stock Power

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to

the following shares of capital stock of             , a              corporation:

No. of Shares Certificate No.

and irrevocably appoints                                                       its agent and attorney-in-fact to transfer all or any part of such capital stock and to take all necessary and appropriate action to effect any such transfer. The agent and attorney-in-fact may substitute and appoint one or more persons to act for him. The effectiveness of a transfer pursuant to this stock power shall be subject to any and all transfer restrictions referenced on the face of the certificates evidencing such interest or in the certificate of incorporation or bylaws of the subject corporation, to the extent they may from time to time exist. This Stock Power is subject to the terms of that certain Pledge Agreement dated November 2, 2001.

a                                         corporation

Name:

By:

Title:

17

EX-10.31

Exhibit 10.31

HADRON, INC.

TERM LOAN NOTE

$3,500,000.00 McLean, Virginia

November 2, 2001

FOR VALUE RECEIVED, the undersigned, HADRON, INC., a New York corporation (the “Borrower”), promises to pay to the order of BANK OF AMERICA, N.A. (the “Lender”) on or before the Term Loan Maturity Date, and at such earlier dates as may be required by the Agreement (as defined below), the principal sum of Three Million Five Hundred Thousand and 00/100 Dollars ($3,500,000.00). The Borrower further promises to pay to the order of the Lender interest on the unpaid principal amount hereof from time to time outstanding at the rate or rates per annum determined pursuant to the Agreement, payable on the dates set forth in the Agreement.

This Note is the “Term Loan Note” referred to in, and is entitled to the benefits of, the Credit Agreement, dated as of November 2, 2001 by and among the Borrower, the Subsidiary Guarantors and the Lender (as the same may be amended, modified or supplemented from time to time, the “Agreement”), which among other things provides for the acceleration of the maturity hereof upon the occurrence of certain events and for prepayments in certain circumstances and upon certain terms and conditions. Terms defined in the Agreement have the same meanings herein.

If the Borrower fails to make any payment under this Note within seven days after the due date, the Borrower shall pay the Lender a late charge of five percent of the amount of the payment.

This Note is secured by and is entitled to the benefits of the Liens granted by the Security Agreement referred to in the Agreement.

The Borrower hereby expressly waives presentment, demand, protest and all other demands and notices (except as otherwise provided in the Agreement) in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Agreement, and an action for amounts due hereunder or thereunder shall immediately accrue, in each case except as otherwise expressly provided in the Agreement.

This Note shall be governed by, and construed and enforced in accordance with, the laws of Virginia, without regard to principles of choice of law.

HADRON, INC.
By:	/s/    STERLING E. PHILLIPS, JR.
	Sterling E. Phillips, Jr. Chief Executive Officer

EX-10.32

Exhibit 10.32

HADRON, INC.

REVOLVING CREDIT FACILITY NOTE

$4,000,000.00 McLean, Virginia

November 2, 2001

FOR VALUE RECEIVED, the undersigned, HADRON, INC., a New York corporation (the “Borrower”), promises to pay to the order of BANK OF AMERICA, N.A. (the “Lender”) on or before the Revolving Credit Facility Maturity Date, and at such earlier dates as may be required by the Agreement (as defined below), the aggregate unpaid principal amount of all Revolving Credit Facility Loans made by the Lender to the Borrower from time to time pursuant to the Agreement. The Borrower further promises to pay to the order of the Lender interest on the unpaid principal amount hereof from time to time outstanding at the rate or rates per annum determined pursuant to the Agreement, payable on the dates set forth in the Agreement.

This Note is the “Revolving Credit Facility Note” referred to in, and is entitled to the benefits of, the Credit Agreement, dated as of November 2, 2001 by and among the Borrower, the Subsidiary Guarantors and the Lender (as the same may be amended, modified or supplemented from time to time, the “Agreement”), which among other things provides for the acceleration of the maturity hereof upon the occurrence of certain events and for prepayments in certain circumstances and upon certain terms and conditions. Terms defined in the Agreement have the same meanings herein.

If the Borrower fails to make any payment under this Note within seven days after the due date, the Borrower shall pay the Lender a late charge of five percent of the amount of the payment.

This Note is secured by and is entitled to the benefits of the Liens granted by the Security Agreement referred to in the Agreement.

The Borrower hereby expressly waives presentment, demand, protest and all other demands and notices (except as otherwise provided in the Agreement) in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Agreement, and an action for amounts due hereunder or thereunder shall immediately accrue, in each case except as otherwise expressly provided in the Agreement.

This Note shall be governed by, and construed and enforced in accordance with, the laws of Virginia, without regard to principles of choice of law.

HADRON, INC.
By:	/s/    STERLING E. PHILLIPS, JR.
	Sterling E. Phillips, Jr. Chief Executive Officer

EX-10.33

Exhibit 10.33

FORM OF SECURITIES PURCHASE AGREEMENT

BY AND AMONG

HADRON, INC.

AND

THOSE INDIVIDUALS WHOSE NAMES

APPEAR ON THE SIGNATURE PAGES ATTACHED HERETO

November 2, 2001

TABLE OF CONTENTS

		Page
INTRODUCTION		1
ARTICLE I DEFINITIONS		1
Definitions		1
ARTICLE II PURCHASE AND SALE OF SHARES AND PURCHASE WARRANTS		2
2.1	Purchase and Sale of Units	2
2.2	Purchase Price	2
2.3	Payment Terms; Escrow of Funds	3
2.4	The Closing	3
2.5	Use of Proceeds	3
2.6	Transfer Taxes	3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY		3
3.1	Organization of the Company	4
3.2	Authority Relative to This Agreement	4
3.3	Capitalization of the Company; Validity of Shares	4
3.4	The Company Subsidiaries	5
3.5	No Violation	5
3.6	Consents and Approvals	5
3.7	Financial Statements	5
3.8	Absence of Change	6
3.9	Undisclosed Liabilities	6
3.10	Current Information	6

i

3.11	Litigation	6
3.12	Investment Banking; Brokerage	6
3.13	Reports and Financial Statements	6
3.14	Full Disclosure	7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASERS		7
4.1	Authority	7
4.2	Investment Status	7
4.3	Investment Banking; Brokerage Fees	7
ARTICLE V CONDITIONS TO OBLIGATIONS OF PURCHASERS		8
5.1	Representations and Warranties	9
5.2	Corporate Authorization	9
5.3	Approvals and Consents	9
5.4	Injunction, Litigation, etc	9
5.5	Delivery of Closing Documents	9
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE COMPANY		10
6.1	Representations and Warranties	10
6.2	Injunction, Litigation, etc	10
6.3	Delivery of Closing Documents	10
ARTICLE VII INDEMNIFICATION		10
7.1	Indemnification by the Company	11
7.2	Indemnification by Purchaser	11
7.3	The Company’s Obligations for Third Party Claims	11
7.4	Purchaser’s Obligations for Third Party Claims	12
7.5	Limitations on Indemnification	13

ii

7.6	Survival; Investigation	14
ARTICLE VIII GENERAL PROVISIONS		14
8.1	Incorporation by Reference	14
8.2	Public Announcements	14
8.3	Notices	14
8.4	Governing Law	14
8.5	Schedules	15
8.6	Headings	15
8.7	Counterparts	15
8.8	Miscellaneous	15
PURCHASER ALLOCATIONS		17

iii

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (“Agreement”), dated as of the 2nd day of November, 2001, is made by and among HADRON, INC. (the “Company”), a corporation organized under the laws of the State of New York and those individuals whose names appear on the signature pages attached hereto (each, a “Purchaser” and, collectively, the “Purchasers”).

INTRODUCTION

A.    The issued and outstanding capital stock of the Company consists, as of the date hereof, of 6,548,843 shares of common stock, par value $.02 per share (“Common Stock” or “Shares”); and

B.    The Company is seeking up to $3.5 Million in equity financing to finance in part the acquisition (the “Acquisition”) of Analex Corporation (“Analex”), a Nevada corporation providing design, development, analysis, and testing of products and systems for the aerospace, medical, hi-tech manufacturing, telecommunications, and information technology industries.

C.    In order to raise capital for the Acquisition, the Company is offering to issue and sell (i) Shares at a price of $1.14 per share to Purchasers who purchase less than $500,000 (or 438,506 Shares) of the Company’s securities and (ii) units (“Units”) consisting of Shares and warrants to purchase .2061 shares of Common Stock for each Share purchased, in the form of Exhibit A, at a price of $1.14 per Unit for Purchasers who purchase $500,000 or more worth of the Company’s securities.

D.    Each of the Purchasers desires to purchase, and the Company desires to issue and sell either (i) the number of Shares, set forth opposite the name of such Purchaser in Exhibit B hereto.

E.    The Shares and the Units may from time to time hereinafter be referred to as the “Securities.”

NOW THEREFORE, in consideration of the foregoing and the representations, warranties and agreements herein contained, the parties agree as follows:

ARTICLE I

DEFINITIONS

Definitions.    Defined terms have the meanings ascribed to herein. In addition, the following terms, as used herein, have the following meanings:

“Encumbrances” means liens, mortgages, charges, security interests, pledges, adverse claims, and other defects in title generally considered to be encumbrances. When referring to the

shares of stock of the Company, Encumbrances also means any preemptive rights, rights of first refusal or restriction of any kind.

“Governmental Authority” means any United States federal, state or local or any foreign or tribal government, governmental regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“Person” means an individual, a corporation, a partnership, an association, a labor union, a trust or any other entity or organization, including a government, a governmental body, a political subdivision or an agency of instrumentality thereof.

“Subsidiary” with respect to any party to this Agreement, means any corporation or other business entity, whether or not incorporated, of which at least 50% of the securities or interests having, by their terms, ordinary voting power to elect members of the Board of Directors, or other persons performing similar functions with respect to such entity, is held directly or indirectly by such party.

“To the knowledge of the Company” means the actual knowledge of the principal officers of the Company.

ARTICLE II

PURCHASE AND SALE OF SHARES

AND PURCHASE WARRANTS

2.1   Purchase and Sale of Units.    Upon the terms and conditions of this Agreement and in reliance on the representations and warranties set forth in Article III, at the Closing (as defined below) each Purchaser will purchase from the Company, and the Company will issue and sell to each of the Purchasers, either

(a)  The number of Shares of Common Stock set forth opposite the name of such Purchaser in Exhibit B hereto for a purchase price of $1.14 per Share; or

(b)  Units consisting of the number of Shares of Common Stock and Purchase Warrants set forth opposite the name of such Purchaser in Exhibit B hereto for a purchase price of $1.14 per Unit.

2.2   Purchase Price; Escrow.    The aggregate purchase price for all the Securities (“Purchase Price”) is                                                  Dollars ($            ), payable as set forth in Section 2.3. Each Purchaser shall pay that portion of the Purchase Price set forth opposite his/her name in Exhibit B attached hereto.

2

2.3   Payment Terms; Escrow of Funds.

(a)  Each Purchaser shall pay his/her portion of the Purchase Price by wire transfer of immediately available funds to an escrow account (the “Escrow Account”) established by the Company with the Bank of America (the “Bank”) as designated in writing by the Company to the Purchasers not less than three (3) days prior to Closing and Company will provide reasonable notice of such date to Purchasers.

(b)  The Company shall cause all amounts and monies constituting the Purchase Price (the “Proceeds”) to remain in the Escrow Account until such time as required for payment or transfer by the Company at Closing of the Acquisition. Pending disbursement of the Proceeds, the Company shall cause the Bank to invest the Proceeds in Permitted Investments. For purposes of this Section 2.3(b), “Permitted Investments” shall mean (i) interest–bearing bank accounts of, or certificates of deposit issued by, any commercial bank organized and doing business under the laws of the United States of America or any state thereof or (ii) interest–bearing obligations of the United States of America.

(c)  In the event that the Acquisition is not consummated for any reason, upon its determination (such determination to be made as soon as practicable) that the prospects for completing the Acquisition has been exhausted, the Company shall immediately cause the Bank to return to each Purchaser that portion of the Purchase Price set forth opposite his/her name as set forth on Exhibit B attached hereto together with all accrued interest thereon.

2.4   The Closing.    The closing (“Closing”) shall take place at the offices of Holland & Knight, LLP, 2099 Pennsylvania Avenue, Suite 100, Washington, DC 20006, on the closing date of the Acquisition (“Closing Date”).

2.5   Use of Proceeds.    The proceeds from the sale of the Units by the Company hereunder shall be used by the Company to finance the Acquisition.

2.6   Transfer Taxes.    All transfer taxes, fees and duties under applicable law incurred in connection with the initial sale and transfer of the Shares and Purchase Warrants under this Agreement, if any, will be borne and paid by the Company and the Company shall promptly reimburse the Purchasers for any such tax, fee or duty which any of them is required to pay under applicable law.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE COMPANY

The Company represents and warrants to the Purchasers, except as set forth in the attached disclosure schedules (the “Disclosure Schedules”), as follows:

3

3.1   Organization of the Company.    The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. The Company has the corporate power and authority to own all of its properties and assets and to carry on its business as now being conducted. The Company is duly qualified and in good standing to do business in each jurisdiction in which the failure to so qualify might have a material adverse effect upon the business or properties of the Company.

3.2   Authority Relative to This Agreement.    The Company has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by the Company of this Agreement, and the consummation by each of the transactions contemplated hereby, have been duly authorized by the Company’s Board of Directors, and no other corporate proceedings on the part of the Company are necessary with respect thereto. This Agreement has been duly executed and delivered by the Company. This Agreement constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as its terms may be limited by: (i) bankruptcy, insolvency or similar laws affecting creditors’ rights generally; or (ii) general principles of equity, whether considered in a proceeding in equity or at law.

3.3   Capitalization of the Company; Validity of Shares.

(a)  The authorized capital of the Company consists of twenty million (20,000,000) shares of Common Stock with a par value of two cents ($0.02). All of the issued and outstanding shares of capital stock of the Company are validly issued and outstanding, fully paid and nonassessable and free of preemptive rights. Except as disclosed in the Schedule 3.3 there are no options, warrants, convertible securities or other rights, agreements, voting agreements, arrangements or commitments of any character relating to the capital stock of the Company or obligating the Company to issue or sell any shares of capital stock of, or other interest in, the Company.

(b)  Except as disclosed in the Schedule 3.3, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of Common Stock or options or warrants to purchase Common Stock, or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person.

(c)  The stock register of the Company maintained by American Stock Trust and Transfer the Company, the Company’s Transfer Agent, accurately records (i) the name and address of each Person owning Shares of capital stock of the Company, and (ii) the certificate number of each certificate evidencing Shares of capital stock issued by the Company, the number of shares evidenced by each such certificate, the date of issuance thereof and, in the case of cancellation, the date of cancellation.

(d)  The Company’s total issued and outstanding capital stock is 6,539,144 shares of Common Stock as of September 30, 2001 (excepting only shares issued after

4

September 30, 2001, upon the exercise of options or warrants or conversion of convertible notes existing on such date) and the Company’s total issued and outstanding shares, together with any other shares of capital stock which may be issuable, on a fully-diluted, as-converted basis (including, but not limited to, any outstanding options, securities convertible into Common Stock and/or warrants), are 7,971,382 shares of Common Stock and equivalents as of September 30, 2001

3.4   The Company Subsidiaries .    Each Subsidiary of the Company is listed on Schedule 3.4 hereto. The Company has conducted its business solely through the Company and its Subsidiaries at all times. All assets, properties and rights relating to the Company’s business are held by and all agreements, obligations and transactions relating to the Company’s business have been entered into, incurred and conducted by, the Company and its Subsidiaries. Each Subsidiary of the Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has the corporate power to carry on its business as it is now being conducted or presently proposed to be conducted. Each Subsidiary of the Company is duly qualified and in good standing to do business in each jurisdiction in which the failure to so qualify might have a material adverse effect upon the business or properties of the CompanyCompany.

3.5   No Violation .    The execution and delivery by the Company of this Agreement will not: (i) violate or result in a breach of any provision of the Certificate of Incorporation or Bylaws of the Company; (ii) result in a breach, or default, or give rise to any right of termination, modification or acceleration or give rise to any Encumbrance under the provisions of any agreement or other instrument or obligation to which the Company is a party or by which the Company, the Shares, or any of the Company’s capital stock assets, properties or businesses may be bound; (iii) violate any law or Governmental Order applicable to the Company or the Shares; or (iv) cause the acceleration of vesting or rights to exercise stock options, warrants or to convert convertible securities of the Company.

3.6   Consents and Approvals .    Except as set forth in Schedule 3.6, there is no requirement applicable to the Company to make any filing with, or obtain the consent or approval of, any Person as a condition to the consummation of the Acquisition or the transactions contemplated by this Agreement.

3.7   Financial Statements .    The Company has previously furnished each Purchaser with true and complete copies of its audited financial statements, including the notes thereto for the fiscal years ending June 30, 1999, 2000 and 2001 and unaudited financial statements for the six (6) months ending December 31, 2000 (the “the Company Financial Statements”) together with the reports on such statements of the Company’s independent public accountants. Such Financial Statements present fairly the financial position of the Company as of such dates and the results of their operations and changes in financial position for such periods and have been prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a consistent basis.

5

3.8   Absence of Change.    Since December 31, 2000, there has not been any material adverse change in the financial condition of the Company and the Company’s Subsidiaries taken as a whole. Without limiting the generality of the foregoing, since that date none of the Company and the Company’s Subsidiaries has engaged in any practice, taken any action, or entered into any transaction outside the ordinary course of business the primary purpose or effect of which has been to generate or preserve cash.

3.9   Undisclosed Liabilities.    The Company and the Company’s Subsidiaries have not incurred any liabilities or obligations which are not reflected in the Company Financial Statements, other than those incurred subsequent to such date in the ordinary course of business and consistent with past practices of the Company and which do not and would not be reasonably expected to have a material adverse effect on the Company and the Company’s Subsidiaries taken as a whole. Reserves are reflected on the Company’s balance sheet dated December 31, 2000 for all liabilities of the Company in amounts that have been established on a basis consistent with the past practices of the Company and in accordance with GAAP.

3.10   Current Information.    The Company has previously delivered to the Purchasers non-public information relating to the business and affairs of the Company. At the time of delivery thereof none of such information contained, or will contain, any untrue statement of a material fact or omitted, or will omit, to state a fact necessary in order to make such statements made therein, in light of the circumstances in which they were made, not misleading.

3.11   Litigation.    There are no actions, suits, claims, investigations or proceedings pending or, to the knowledge of the Company, threatened against the Company, before any court, Governmental Authority or arbitrator, domestic or foreign, that has or can reasonably be expected to have a material adverse effect on the Company or which seek to prevent, restrict or delay the consummation of the Acquisition or the transactions contemplated by this Agreement. Furthermore, there are no judgments, orders or decrees of any such court, Governmental Authority or arbitrator, domestic or foreign, that has or can reasonably be expected to have any such effect.

3.12   Investment Banking; Brokerage.    There are no claims for investment banking fees, brokerage commissions, finder’s fees or similar compensation (exclusive of professional fees to lawyers and accountants) in connection with the transactions contemplated by this Agreement payable by the Company or the Company’s Subsidiaries based on any arrangement or agreement made by or on behalf of the Company the Company’s Subsidiaries.

3.13   Reports and Financial Statements.    The Company has filed all reports required to be filed with the Commission pursuant to the Exchange Act or the Securities Act (collectively, the “SEC Reports”). Such SEC Reports, as of their respective dates, complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, as the case may be, and none of the such SEC Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

6

3.14   Full Disclosure.    None of the representations and warranties of the Company made in this Article contains any untrue statement of material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASERS

Each Purchaser (for himself or herself only) represents and warrants to the Company as follows:

4.1   Authority.    Such Purchaser is legally competent to and has full right, authority and power to enter into this Agreement and each agreement, document and instrument to be executed and delivered by or on behalf of such Purchaser pursuant to or as contemplated by this Agreement and to carry out the transactions contemplated hereby and thereby. This Agreement and each agreement, document and instrument executed and delivered by such Purchaser pursuant to or as contemplated by this Agreement constitute, or when executed and delivered will constitute, valid and binding obligations of such Purchaser enforceable in accordance with their respective terms except as its terms may be limited by: (i) bankruptcy, insolvency or similar laws affecting to creditors’ rights generally; or (ii) general principles of equity, whether considered in a proceeding in equity or at law.

4.2   Investment Status.    Such Purchaser is an “accredited investor” as the term is defined in Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”). Such Purchaser is purchasing the Securities for his/her own account, for investment purposes only and not with a view to, or any present intention of, effecting a distribution of such securities or any part thereof except pursuant to a registration or an available exemption under applicable law. Such Purchaser acknowledges that his respective Securities and the shares of Common Stock which such Purchaser may acquire through exercise of the Purchase Warrants have not been registered under the Securities Act or the securities laws of any state or other jurisdiction and cannot be disposed of unless they are subsequently registered under the Securities Act and any applicable state laws or exemption from such registration is available. Such Purchaser is able to bear the economic risk of losing his or her entire investment in the Securities. Such Purchaser’s overall financial commitment to investments that are not readily marketable is not disproportionate to his or her net worth, and the purchase of the Securities will not cause his or her overall commitment to be excessive.

4.3   Investment Banking; Brokerage Fees.    Such Purchaser has not incurred or become liable for any broker’s or finder’s fee, banking fees or similar compensation relating to or in connection with the transactions contemplated hereby.

4.4  Information and Experience.    Such Purchaser has been furnished with sufficient written and oral information about the Company to allow it to make an informed investment decision prior to purchasing the Securities and has been furnished access to any additional

7

information that it may require. Such Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the Securities. Such Purchaser is fully familiar with the business proposed to be conducted by the Company and with the Company’s proposed use of the proceeds from the sale of Securities. The Purchaser has a pre-existing relationship with the Company and its affiliates which enables the Purchaser to be aware of the character and general business and financial circumstances of the Company and its management.

4.5  Reliance.    Such Purchaser understands that the Securities have not been registered under the Act, or under any state securities laws, on the grounds that the sale of the Securities to the Purchaser is exempt from registration. Such Purchaser further acknowledges that reliance on such exemptions is, in part, based upon the foregoing representations, warranties and covenants of such Purchaser.

4.6  Legends.

(a)  Such Purchaser understands and agrees that each certificate for Shares, and each certificate for Shares issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE “ACT”), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THE HOLDER OF THESE SHARES IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, THAT SUCH OFFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH LAWS.

(b)  Such Purchaser further understands and agrees that the legend requirements of this Section 4.6 shall terminate when either (x) the Shares in question shall have been effectively registered under the Securities Act and disposed of pursuant thereto or (y) the Company shall have received an opinion of counsel reasonably satisfactory to it that such legend is not required in order to insure compliance with the Securities Act of 1933.

ARTICLE V

CONDITIONS TO OBLIGATIONS OF PURCHASERS

8

The obligation of Purchasers to consummate the transactions contemplated by this Agreement shall be subject, to the extent not waived, to each of the following conditions.

5.1   Representations and Warranties.    Except for changes expressly contemplated by this Agreement, each of the representations and warranties of Company contained in this Agreement, which representations and warranties include the information in the schedules corresponding thereto, shall be true and correct in all material respects as of the date of Closing and Company shall have delivered to the Purchasers a certificate to that effect signed by an officer of the Company.

5.2   Corporate Authorization.    All corporate action required to be taken by the Company in connection with the transactions contemplated hereby shall have been taken, all documents incident thereto shall be reasonably satisfactory in substance and form to the majority of the Purchasers and the Purchasers shall have received such originals or copies of such documents as they may reasonably request.

5.3   Approvals and Consents.    The Company shall have made all filings with and notifications of governmental authorities, regulatory agencies and other entities required to be made by it in connection with the execution and delivery of this Agreement and the performance by them of the transactions contemplation hereby and the Purchasers shall have received copies of all required authorizations, waivers, consents and permits to permit the consummation of the transactions contemplated by this Agreement, in form and substance satisfactory to the Purchasers.

5.4   Injunction, Litigation, etc.    No order of any court or governmental agency shall be in effect which restrains or prohibits the consummation of the Acquisition or the transactions contemplated by this Agreement or which would limit or affect the ability of Purchasers to own and control a portion of the Company, and there shall not have been threatened, nor shall there be pending, any action or proceeding by or before any such court or governmental agency seeking to prohibit or delay or challenging the validity of the Acquisition or the transactions contemplated by this Agreement.

5.5   Delivery of Closing Documents.    At the Closing Date, the Company shall have delivered, or shall have caused to be delivered, to the Purchasers, all in form and substance satisfactory to the Purchasers, the following:

(a)  A certificate of the Secretary of the Company which shall certify the names of the officers of the Company authorized to sign this Agreement and the other documents, instruments or certificates to be delivered pursuant to this Agreement by the Company or any of its officers, together with the true signatures of such officers;

(b)  The certificates required under Sections 5.1 of the Agreement;

9

(c)  Stock certificates issued, or instructions to the Company’s Transfer Agent to issue stock certificates, in the names of the Purchasers for the shares set forth opposite each Purchaser’s name in Exhibit B;

(e)  For those Purchasers who are purchasing Units, Purchase Warrants issued in the names of the Purchasers as set forth opposite each Purchasers name in Exhibit B; and

(f)  Such other supporting documents and certificates as the Purchasers may reasonably request and as may be required pursuant to this Agreement.

ARTICLE VI

CONDITIONS TO OBLIGATIONS

OF THE COMPANY

The obligation of the Company to consummate the transactions contemplated by this Agreement shall be subject, to the extent not waived, to the satisfaction of each of the following conditions.

6.1   Representations and Warranties.    Except for changes expressly contemplated by this Agreement, each of the representations and warranties of the Purchasers contained in this Agreement shall be true and correct in all material respects as of the date of Closing, and the Purchasers shall have delivered to Company a certificate to that effect.

6.2   Injunction, Litigation, etc.    No order of any court or governmental agency shall be in effect which restrains or prohibits the consummation of the transactions contemplated by this Agreement and there shall not have been threatened, nor shall there be pending, any action or proceeding by or before any such court or governmental agency seeking to prohibit or delay or challenging the validity of the Acquisition or any of the transactions contemplated by this Agreement.

6.3   Delivery of Closing Documents.    At the Closing Date, the Purchasers shall have delivered, or shall have caused to be delivered, to the Company, all in form and substance satisfactory to the Company, the following:

(a)  Confirmation of all bank wire transfers of the entirety of the Purchase Price to the Escrow Account; and

(b)  The certificates required under Sections 6.1 of the Agreement.

ARTICLE VII

INDEMNIFICATION

10

7.1   Indemnification by the Company.    Subject to the limitations contained in this Article, the Company will indemnify and hold Purchaser harmless from any damage, loss, liability or expense including, without limitation, reasonable expenses of investigation and reasonable attorneys’ fees arising out of:

(a)  Any breach of a representation and warranty made by the Company in this Agreement; or

(b)  The breach of any agreement of the Company contained in this Agreement.

7.2   Indemnification by Purchaser.    Subject to the limitations contained in this Article, each Purchaser will indemnify and hold the Company harmless from any damage, loss, liability or expense including without limitation, reasonable expenses of investigation and reasonable attorneys’ fees arising out of:

(a)  Any breach of a representation and warranty made by such Purchaser in this Agreement; or

(b)  The breach of any agreement of such Purchaser contained in this Agreement.

7.3   The Company’s Obligations for Third Party Claims.    The obligation of the Company to indemnify Purchaser under the provisions of this Article with respect to claims resulting from the assertion of liability by Persons not parties to this Agreement (including governmental claims for penalties, fines and assessments) shall be subject to the following terms and conditions:

(a)  Purchaser shall give prompt written notice to the Company of any assertion of liability by a third party which might give rise to a claim for indemnification based on the foregoing provisions of this Article, which notice shall state the nature and basis of the assertion and the amount thereof, to the extent known, provided, however, that no delay on the part of Purchaser in giving notice shall relieve the Company of any obligation to indemnify unless (and then solely to the extent that) the Company are prejudiced by such delay.

(b)  If any action, suit or proceeding (a “Legal Action”) is brought against Purchaser with respect to which the Company may have liability under the foregoing provisions of this Article, the Legal Action shall be defended by the Company and such defense shall include all proceedings for appeal or review which counsel for Purchaser shall deem appropriate.

(c)  Notwithstanding the provisions of the previous subsection of this Agreement, until the Company shall have assumed the defense of any such Legal Action, the defense shall be handled by Purchaser. Furthermore, (A) if the Company fails to provide Purchaser with evidence acceptable to Purchaser that the Company has sufficient financial resources to defend and fulfill its indemnification obligation with respect to the Legal Action; or

11

(B)  if the Legal Action involves other than money damages and seeks injunctive or other equitable relief; the Company shall not be entitled to assume the defense of the Legal Action and the defense shall be handled by Purchaser. If the defense of the Legal Action is handled by Purchaser under the provisions of this subsection, the Company shall pay all legal and other expenses reasonably incurred by Purchaser in conducting such defense.

(d)  In any Legal Action initiated by a third party and defended by the indemnifying party (A) the indemnified party shall have the right to be represented by advisory counsel and accountants, at its own expense, (B) the indemnifying party shall keep the indemnified party fully informed as to the status of such Legal Action at all stages thereof, whether or not the indemnified party is represented by its own counsel, (C) the indemnifying party shall make available to the indemnified party, and its attorneys, accountants and other representatives, all books and records of the indemnifying party relating to such Legal Action and (D) the parties shall render to each other such assistance as may be reasonably required in order to ensure the proper and adequate defense of such Legal Action.

(e)  In any Legal Action initiated by a third party and defended by the indemnifying party, the indemnifying party shall not make any settlement of any claim without the written consent of the indemnified party, which consent shall not be unreasonably withheld. Without limiting the generality of the foregoing, it shall not be deemed unreasonable to withhold consent to a settlement involving injunctive or other equitable relief against the indemnified party or its assets, employees or business, or relief which the indemnified party reasonably believes could establish a custom or precedent which will be materially adverse to the best interests of its continuing business.

7.4   Purchaser’s Obligations for Third Party Claims.    The obligation of Purchaser to indemnify the Company under the provisions of this Article with respect to claims resulting from the assertion of liability by Persons not parties to this Agreement (including governmental claims for penalties, fines and assessments) shall be subject to the following terms and conditions:

(a)  the Company shall give prompt written notice to Purchaser of any assertion of liability by a third party which might give rise to a claim for indemnification based on the foregoing provisions of this Article, which notice shall state the nature and basis of the assertion and the amount thereof, to the extent known, provided, however, that no delay on the part of the Company in giving notice shall relieve Purchaser of any obligation to indemnify unless (and then solely to the extent that) Purchaser is prejudiced by such delay.

(b)  If any Legal Action is brought against the Company with respect to which Purchaser may have liability under the foregoing provisions of this Article, the Legal Action shall be defended by Purchaser and such defense shall include all proceedings for appeal or review which counsel for the Company shall deem appropriate.

(c)  Notwithstanding the provisions of the previous subsection of this Agreement, until Purchaser shall have assumed the defense of any such Legal Action, the

12

defense shall be handled by the Company. Furthermore, (A) if Purchaser fails to provide the Company with evidence acceptable to the Company that Purchaser has sufficient financial resources to defend and fulfill its indemnification obligation with respect to the Legal Action; or (B) if the Legal Action involves other than money damages and seeks injunctive or other equitable relief; Purchaser shall not be entitled to assume the defense of the Legal Action and the defense shall be handled by the Company. If the defense of the Legal Action is handled by the Company under the provisions of this subsection, Purchaser shall pay all legal and other expenses reasonably incurred by the Company in conducting such defense.

(d)  In any Legal Action initiated by a third party and defended by the indemnifying party (A) the indemnified party shall have the right to be represented by advisory counsel and accountants, at its own expense, (B) the indemnifying party shall keep the indemnified party fully informed as to the status of such Legal Action at all stages thereof, whether or not the indemnified party is represented by its own counsel, (C) the indemnifying party shall make available to the indemnified party, and its attorneys, accountants and other representatives, all books and records of the indemnifying party relating to such Legal Action and (D) the parties shall render to each other such assistance as may be reasonably required in order to ensure the proper and adequate defense of such Legal Action.

(e)  In any Legal Action initiated by a third party and defended by the indemnifying party, the indemnifying party shall not make any settlement of any claim without the written consent of the indemnified party, which consent shall not be unreasonably withheld. Without limiting the generality of the foregoing, it shall not be deemed unreasonable to withhold consent to a settlement involving injunctive or other equitable relief against the indemnified party or its assets, employees or business, or relief which the indemnified party reasonably believes could establish a custom or precedent which will be materially adverse to the best interests of its continuing business.

7.5   Limitations on Indemnification.

(a)  All damages to which the indemnified party may be entitled pursuant to the provisions of this Article shall be net of any insurance coverage in which the indemnified party receives the benefits with respect thereto.

(b)  The indemnification obligations of the Company and the Purchasers under Article V shall terminate one (1) year from the Closing Date, except with respect to any claims for indemnification as to which the indemnified party shall have given the indemnifying party written notice setting forth its claim with reasonable specificity (in contradistinction to generalized allegations) as to the nature thereof on or prior to one (1) year from the Closing Date.

(c)  Notwithstanding any other provision of the Agreement, the Company’s liability to each Purchaser under this Article V shall not exceed that portion of the Purchase Price actually paid by such Purchaser.

13

7.6   Survival; Investigation.    The representations and warranties of the Company contained in this Agreement shall survive any investigation by any Purchaser and shall not terminate until the first (1^st) anniversary of the Closing (the “Survival Date”) at which time they shall lapse. Notwithstanding the provisions of the preceding sentence, any representation or warranty in respect of which indemnification may be sought under Sections 5.1 and 5.2 shall survive the Survival Date if written notice, given in good faith, of the specific breach thereof is given to the Company prior to the Survival Date, whether or not liability has actually been incurred.

ARTICLE VIII

GENERAL PROVISIONS

8.1   Incorporation by Reference .    All documents filed with the United States Securities and Exchange Commission by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934 prior to the date of this Agreement shall be deemed to be incorporated by reference in this Agreement and to be a part hereof. More specifically, but with limiting the foregoing, the Company’s Annual Reports on Form 10-K (including the Company’s transitional Annual report on Form 10-KT) and Quarterly Reports on Form 10-Q as filed with the SEC on May 11, 2001 (10-KT), September 28, 2000 (10-K), August 14, 2001 (10-Q) and May 15, 2001 (10-Q) (collectively, the “Filings”) and each being attached hereto as Exhibits C, D, E, and F, respectively, are incorporated herein by reference and made a part hereof. In the event that any Purchaser has not had access to the Filings, the Company shall provide any Purchaser with a copy of any such Filing upon request.

8.2   Public Announcements.    The parties to this Agreement will consult with one another before issuing any press releases or otherwise making any public statements with respect to the Acquisition, this Agreement and the transactions contemplated hereby and will not issue any such press release or make any such public statement without the consent of the other unless such action is specifically required by law.

8.3   Notices.    Any and all notices, designations, consents, offers, acceptances or any other communication provided for herein shall be given in writing and shall be either hand-delivered or sent by recognized overnight express courier service or by United States mail (registered or certified, return receipt requested) to the parties at the following addresses: (i) if to the Company, to Hadron, Inc., Attention: Sterling E. Phillips, Jr., President, 5904 Richmond Highway, Suite 300, Alexandria, VA 22303, with a copy to HOLLAND & KNIGHT, LLP, 2099 Pennsylvania N.W., Suite 100, Washington, D.C. 20006, Attention: William J. Mutryn, Esquire; and (ii) if to the Purchaser, to the address appearing below, or to such other address as may be designated by the Purchaser in writing in accordance with this Section 6.2. Notice shall be deemed effective upon receipt or within five (5) days after deposit in the United States mail (properly addressed, with postage prepaid thereon), whichever is earlier.

8.4   Governing Law.    This Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Virginia without regard to its choice of law rules.

14

8.5   Schedules.    The information contained in any schedule or exhibit which is referred to in any section of this Agreement shall be deemed to have been disclosed in connection with, and to be incorporated into, that particular section only, and shall not be deemed a part of any other section.

8.6   Headings.    The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of the Agreement.

8.7   Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

8.8   Miscellaneous.    This Agreement: (i) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof; (ii) is not intended to and shall not confer upon any Person, other than the parties hereto, any rights or remedies; and (iii) shall not be assigned by operation of law or otherwise.

[Signature Pages to Follow.]

15

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed and their corporate seals to be hereto affixed and attested by their duly authorized officers.

COMPANY: HADRON, INC.
By:	/s/    STERLING E. PHILLIPS
	Sterling E. Phillips President and Chief Executive Officer

PURCHASER:

/s/    GERALD MCNICHOLS        

Gerald McNichols

/s/    MICHAEL BESCHE        

Michael Besche

VBB TRUST

/s/    MICHAEL A. BESCHE, TRUSTEE        

Michael A. Besche, Trustee

/s/    JON M. STOUT        

S Co., LLC

Jon Stout, General Partner

/s/    SHASHI A. GUPTA        

RSSJ Associates, LLC

Shashi A. Gupta, Member

/s/    NORMAN DREYFUSS        

Norman Dreyfuss

/s/    DEEPAK CHOPRA        

Deepak Chopra

/s/    GEORGE TONN        

George Tonn

/s/    FRANK DERWIN        

Frank Derwin

16

EXHIBIT B

PURCHASER ALLOCATIONS

Investors	Shares of         Common         Stock to be         Purchased         From the         Company	Warrants to         Purchase         Shares of         Common         Stock From         the Company	Aggregate         Purchase         Price
Gerald McNichols	438,596	90,407	$	500,000.00
Michael Besche	100,000			114,000.00
VBB Trust	100,000			114,000.00
RSSJ Associates, LLC	1,754,386	361,628		2,000,000.00
Norman Dreyfuss	100,000			114,000.00
Deepak Chopra	87,709			99,988.26
George Tonn	100,000			114,000.00
Frank Derwin	87,719			100,000.00

17

EX-10.34

Exhibit 10.34

EXHIBIT A

FORM OF UNIT WARRANT

EXHIBIT A

TO SECURITIES PURCHASE AGREEMENT

WARRANT

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR A VALID EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

(subject to adjustment hereinafter provided)

of

HADRON, INC.

This certifies that, for value received,              (“Holder”) is entitled, subject to the terms set forth below, to purchase from Hadron, Inc., a New York corporation (the “Company”), such number of shares of the Common Stock, par value $0.02 per share (“Common Stock”), of the Company, that are purchasable in connection with the exercise of the Warrant, as determined in Section 3 below, upon surrender hereof at the principal office of the Company referred to below, with the Notice of Exercise attached hereto as Attachment A duly executed and simultaneous payment therefor (at the Exercise Price as set forth in Section 2 below) in lawful money of the United States or otherwise as hereinafter provided. The number and Exercise Price of such shares of Common Stock are subject to adjustment as provided below. The term “Warrant” as used herein shall include the Warrant under this Warrant and any warrants delivered in substitution or exchange therefor as provided herein.

1.  Term of Warrant.    Subject to the terms and conditions set forth herein, the Warrant shall be exercisable, in whole or in part, for a period of five (5) years commencing on the date hereof.

2.  Exercise Price.    The exercise price at which this Warrant may be exercised shall be Two Cents ($0.02) per share of Common Stock (the “Exercise Price”).

3.  Issuance; Number of Shares; Exercise of Warrant.

3.1  Issuance with Securities Purchase Agreement.    This Warrant is issued in connection with that certain Securities Purchase Agreement, dated as of the              day of             , 2001, by and among the Company and those individuals whose names appear on the signature pages attached thereto.

FORM OF UNIT WARRANT

3.2  Exercise and Number of Shares.    Subject to the provisions of this Agreement, the Holder of this Warrant shall have the right to purchase from the Company (and the Company shall issue and sell to such Holder), in the aggregate, up to              shares of the Company’s Common Stock. This Warrant may be exercised in whole or in part in as many exercises as Holder may elect. The Exercise Price shall be payable by check for good and sufficient United States funds.

3.3  Delivery.    The Warrant shall be exercisable by (i) delivering to the Company the form of notice of exercise attached hereto as Exhibit A duly completed and signed by the Holder or by the duly appointed legal representative or duly authorized attorney thereof, and (ii) depositing with the Company the original of this Warrant, paying the aggregate Exercise Price for the number of shares of Common Stock in respect of which the Warrant is being exercised. Upon each partial exercise of the Warrant, a new Warrant evidencing the balance of the shares of Common Stock issuable hereunder will be issued to the Holder, as soon as reasonably practicable, on the same terms as the Warrant partially exercised. All payments due upon any exercise of this Warrant shall be made in cash or by check.

3.4  Time of Exercise.    This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise and the person entitled to receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on such date; provided, however, that in the event that the transfer books of the Company are closed on the date of exercise, the Holder shall be deemed to have become a stockholder of record on the next succeeding day that the transfer books are open and until such date, the Company shall be under no duty to cause to be delivered any certificate for such shares. As promptly as practicable on or after such date and in any event within ten (10) days thereafter, the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of shares issuable upon such exercise. In the event that this Warrant is exercised in part, the Company at its expense will execute and deliver a new Warrant of like tenor exercisable for the number of shares for which this Warrant may then be exercised.

3.5  Cashless Exercise.    Subject to the other provisions of this Agreement, in lieu of any cash payment required upon exercise of the Warrant, the Holder may elect to exercise this Warrant in full or in part by surrendering this Warrant in the manner specified in this Section 3 in exchange for the number of shares of Common Stock equal to the product of (i) the number of shares of Common Stock as to which the Warrant is being exercised multiplied by (ii) a fraction, (y) the numerator of which is the Fair Market Value of a share of Common Stock on the date of exercise less the Exercise Price, and (z) the denominator of which is the Fair Market Value of a share of Common Stock on such date of exercise.

4.  Payment of Taxes and Expenses.    The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of this Warrant and the Warrant Stock, unless any such tax or charge is imposed by law upon the Holder or upon the income or gain of Holder in connection with this Warrant, in which case such tax or charge shall be paid by the Holder. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issuance of any certificate for shares of Common Stock in any name other than

2

FORM OF UNIT WARRANT

that of the Holder, and in such case the Company shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid or it has been established to the satisfaction of the Company that no such tax or other charge is due.

5.  No Fractional Shares.    No fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.

6.  Replacement of Warrant.    On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, or surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

7.  Adjustments.

(a)  Adjustment.    The number of shares of Common Stock for which this Warrant is exercisable and the Exercise Price at which such shares may be purchased shall be subject to adjustment from time to time as set forth in this Section 7.

(b)  Stock Dividends, Subdivisions and Combinations. If at any time the Company shall:

(i)  pay or make a dividend on Common Stock payable in additional shares of Common Stock;

(ii)  subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock; or

(iii)  combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock;

then (A) the number of shares of Common Stock for which this Warrant is exercisable immediately after the happening of such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock immediately prior to the happening of such event would own or be entitled to receive after the happening of such event, and (B) the Exercise Price shall be adjusted to equal (1) the Exercise Price multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (2) the number of shares for which this Warrant is exercisable immediately after such adjustment.

(c)  Dividends and Distributions.    If the Company shall distribute to all holders of its outstanding shares of Common Stock evidence of indebtedness of the Company, cash (including cash dividends payable out of consolidated earnings or earned surplus) or assets or securities other than additional shares of Common Stock, including stock of a subsidiary but excluding dividends or distributions referred to in Section 7(b) above (any such evidences of indebtedness, cash, assets or securities, the “assets or securities”), then, in each case, the number

3

FORM OF UNIT WARRANT

of shares of Common Stock issuable after such record date to Holder upon the exercise of each Warrant shall be determined by multiplying the number of shares of Common Stock issuable upon the exercise of such Warrant immediately prior to such record date by a fraction, the numerator of which shall be the fair market value per share of Common Stock immediately prior to the record date for such distribution and the denominator of which shall be the fair market value per share of Common Stock immediately prior to the record date for such distribution less the then fair value (as determined in good faith by the Board) of the evidences of its indebtedness, cash or assets or other distributions so distributed attributable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination of stockholders entitled to receive such distribution. Any adjustment required by this Section 7(c) shall be made whenever any such distribution is made, and shall become effective on the date of such distribution retroactive to the record date for the determination of stockholders entitled to receive such distribution.

(d)  Reorganization, Reclassification, Consolidation or Merger.    If the Company shall (i) effect any reorganization or reclassification of its capital stock or (ii) consolidate or merge with or into, or transfer all or substantially all of its properties and assets to, any other person, in either case the Company shall give the holder at least thirty (30) days prior written notice of such action. During such thirty (30) day period, the Holder shall have the right to exercise this Warrant in whole or in part in accordance with the terms hereof. In the event that the Holder does not exercise this Warrant or any part hereof prior to the consummation of such transaction, then immediately upon the consummation of such transaction this Warrant and all rights hereunder shall immediately terminate without further notice to the Holder or further action on the part of the Company.

(e)  All calculations under this Section 7 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.

8.  No Rights of Stockholders.    Subject to this Warrant, the Holder shall not be entitled to vote, to receive dividends or subscription rights, or to be deemed the holder of Common Stock or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company, including without limitation any right to vote for the election of directors or upon any matter submitted to stockholders, to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise), to receive notices, or otherwise, until the Warrant shall have been exercised as provided herein.

9.  Transfer of Warrant.

9.1  Warrant Register.    The Company will maintain a register (the “Warrant Register”) containing the names and addresses of the Holder or Holders. Any Holder of this Warrant or any portion thereof may change its address as shown on the Warrant Register by written notice to the Company requesting such change, and the Company shall promptly make such change. Until this Warrant is transferred on the Warrant Register of the Company, the

4

FORM OF UNIT WARRANT

Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.

9.2  Exchange of Warrant Upon a Transfer.    On surrender of this Warrant for exchange, properly endorsed on the Assignment attached hereto and subject to the provisions of this Warrant and with the limitations on assignments and transfers as contained in this Section 9, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof.

10.  Reservation and Authorization of Common Stock.

(a)  The Company shall at all times reserve and keep available for issuance upon the exercise of this Warrant the maximum number of its authorized but unissued shares of Common Stock as could then potentially be required to permit the exercise in full of this and all outstanding Warrants. All shares of Common Stock issuable upon exercise of any Warrant and payment therefor in accordance with the terms of such Warrant shall be duly and validly issued and fully paid and nonassesable, and not subject to or privileged with any preemptive rights.

(b)  Before taking any action which would cause an adjustment reducing the Exercise Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take any corporate action which may be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of such Common Stock at such adjusted Exercise Price.

10.  Notices.    Any notice, request, consent or other communication required to be made hereunder shall be deemed to have been made: (a) in the case of personal delivery, on the date of such delivery; (b) in the case of mailing, on the third business day following the date of such mailing; and (c) in the case of facsimile transmission, when confirmed by facsimile machine report to the parties at the following addresses:

If to Holder:

If to Company:

5904 Richmond Highway

Suite 300

Alexandria, Virginia 22303

Attn: Corporate Secretary

Fax: 703/329-9409

11.  Legend.    Neither this Warrant nor the shares of common stock issuable upon exercise of this Warrant have been registered under the Securities Act of 1933, as amended, or under the securities laws of any state. Neither this Warrant nor the shares of common stock

5

FORM OF UNIT WARRANT

issued upon exercise of this Warrant may be sold, transferred, pledged or hypothecated in the absence of (i) an effective registration statement for this Warrant or the shares, as the case may be, under the Securities Act of 1933, as amended, and such registration or qualification as may be necessary under the securities laws of any state, or (ii) an opinion of counsel reasonably satisfactory to the Company that such registration or qualification is not required. The Company shall cause a certificate or certificates evidencing all or any of the shares of common stock issued upon exercise of this Warrant prior to said registration and qualification of such shares to bear the following legend:

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND SUCH REGISTRATION OR QUALIFICATION AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR A VALID EXEMPTION FROM REGISTRATION UNDER SUCH LAWS.

(c)  Termination of Restrictions.    The legend requirements of Section 11 shall terminate when either (i) the security in question shall have been effectively registered under the Securities Act and disposed of pursuant thereto or (ii) the Company shall have received an opinion of counsel reasonably satisfactory to it that such legend is not required in order to insure compliance with the Securities Act.

12.  Investment Covenant.    The Holder by his or her acceptance hereof covenants that this Warrant is and any common stock issued hereunder will be acquired for investment purposes, and that the Holder will not distribute the same in violation of any state or federal law or regulation.

13.  Amendments.    The terms and provisions of this Warrant may not be modified or amended, or any provisions hereof waived, temporarily or permanently, except by written consent of the Company and the Holder.

14.  Successors and Assigns.    This Warrant and the rights and duties of the Holder set forth herein may be assigned, in whole or in part, by the Holder. The obligations of the Company evidenced by this Warrant shall be binding upon its successors, but neither this Warrant nor any of the rights or duties of the Company set forth herein shall be assigned by the Company, in whole or in part, without having first received the written consent of the Holder.

15.  Governing Law.    This Warrant shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia without regard to the principles of conflicts of law thereof.

6

FORM OF UNIT WARRANT

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf and under its corporate seal as of the date first above written by one of its duly authorized officers and its execution hereof to be attested by another of its duly authorized officers.

Date:                     , 2001	HADRON, INc
	By:
		Sterling E. Phillips, Jr. President and Chief Executive Officer

Attested:

Print Name:

Corporate Secretary

7

UNIT WARRANT

ATTACHMENT A

NOTICE OF EXERCISE

To:    HADRON, INC. (the “Company”)

The undersigned hereby irrevocably elects to exercise the right of purchase thereunder,              shares of Common Stock of the Company, as provided for therein, and tenders herewith payment of the purchase price in full in the form of wire transfer, cash or a check in the aggregate amount of $            . If said number of shares shall not be all the shares purchasable under the within Warrant, a new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining of the shares purchasable thereunder less any fraction of a share paid in cash.

Please issue a certificate or certificates for such shares of Common Stock in the name of, and pay any cash for any fractional share to:

Name:

By:

Signature:

ASSIGNMENT

(To be executed only upon assignment of Warrant)

For value received,             , hereby sells, assigns and transfers unto              the within Warrant, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint              attorney, to transfer said Warrant on the books of the within-named Company, with full power of substitution of the premises.

Dated:             , 20            

By:

EX-10.35

Exhibit 10.35

ISSUED IN CONNECTION WITH BOA GUARANTY

WARRANT

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR A VALID EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

(subject to adjustment hereinafter provided)

of

HADRON, INC.

This certifies that, for value received, J. Richard Knop (“Holder”) is entitled, subject to the terms set forth below, to purchase from Hadron, Inc., a New York corporation (the “Company”), such number of shares of the Common Stock, par value $0.02 per share (“Common Stock”), of the Company, that are purchasable in connection with the exercise of the Warrant, as determined in Section 3 below, upon surrender hereof at the principal office of the Company referred to below, with the Notice of Exercise attached hereto as Attachment A duly executed and simultaneous payment therefor (at the Exercise Price as set forth in Section 2 below) in lawful money of the United States or otherwise as hereinafter provided. The number and Exercise Price of such shares of Common Stock are subject to adjustment as provided below. The term “Warrant” as used herein shall include the Warrant under this Warrant and any warrants delivered in substitution or exchange therefor as provided herein.

1.  Term of Warrant.    Subject to the terms and conditions set forth herein, the Warrant shall be exercisable, in whole or in part, for the longer of (i) the five (5) year period commencing on the date of this Warrant, or (ii) the third (3^rd) anniversary of the date of the last Subsequent Annual Return Allotment (as defined below) as determined under Section 3.2 hereof.

2.  Exercise Price.    The exercise price at which this Warrant, or any portion hereof, may be exercised shall be Two cents ($0.02) per share of Common Stock (the “Exercise Price”).

ISSUED IN CONNECTION WITH GUARANTY

3.  Issuance in Connection with Agreement to Provide Guaranty; Number of Shares; Exercise of Warrant.

3.1  Issuance in Connection with Agreement to Provide Guaranty.    Each of the Holder and the Company expressly acknowledge and agree that this Warrant has been issued in connection with the execution and delivery by the Holder of that certain Agreement to Provide Guaranty of even date herewith by and between the Company and the Holder (“Agreement”). The number of Shares that may be acquired pursuant to this Warrant shall be calculated on an annual basis (for each year the Guaranty remains outstanding) based upon One Hundred Ninety Thousand Dollars ($190,000) (the “Base Calculation Amount”) and the Fair Market Value of the Company’s Common Stock. For the purposes of this Warrant, “Fair Market Value” of Company’s Common Stock shall be equal to the average of the last sale per share price of Common Stock on each of the ten (10) trading days prior to date of calculation and adjustment of the of Shares to be included herein on the principal exchange of which the Common Stock may at the time be listed; or, if there shall have been no sales on such exchange on any such trading day, the average of the closing bid and asked prices on such exchange on such trading day; or, if there is no such bid and asked price occurred; or, if the Common Stock shall not be so listed, the average of the closing sales prices as reported by NASDAQ (including its bulletin board) at the end of each of the ten trading days prior to the date of exercise of this Warrant in the over-the counter market.

3.2  Calculation of Shares.    The aggregate number of Shares that the Holder of this Warrant shall have the right to purchase from the Company (and the Company shall issue and sell to such Holder) shall be calculated on the date of this Warrant and each anniversary of this Warrant that Holder’s Guaranty under the Agreement remains in effect (the “Allotment Date”) as follows: the number of Shares to which this Warrant applies (“Annual Allotment”) shall be the quotient of the Base Calculation Amount divided by the Fair Market Value per share on each Allotment Date. On each Allotment Date the Annual Allotment shall be added to the number of Shares covered by this Warrant immediately prior to such Allotment Date.

3.3  Exercise.    This Warrant may be exercised in whole or in part in as many exercises as Holder may elect. The Exercise Price shall be payable by check for good and sufficient United States funds.

3.4  Cashless Exercise.    Subject to the other provisions of this Agreement, in lieu of any cash payment required upon exercise of the Warrant, the Holder may elect to exercise this Warrant in full or in part by surrendering this Warrant in the manner specified in this Section 3 in exchange for the number of shares of Common Stock equal to the product of (i) the number of shares of Common Stock as to which the Warrant is being exercised multiplied by (ii) a fraction, (y) the numerator of which is the Fair Market Value of a share of Common Stock on the date of exercise less the Exercise Price, and (z) the denominator of which is the Fair Market Value of a share of Common Stock on such date of exercise.

2

ISSUED IN CONNECTION WITH BOA GUARANTY

3.5  Delivery.    The Warrant shall be exercisable by (i) delivering to the Company the form of notice of exercise attached hereto as Exhibit A duly completed and signed by the Holder or by the duly appointed legal representative or duly authorized attorney thereof, and (ii) depositing with the Company the original of this Warrant, paying the aggregate Exercise Price for the number of shares of Common Stock in respect of which the Warrant is being exercised. Upon each partial exercise of the Warrant, a new Warrant evidencing the balance of the shares of Common Stock issuable hereunder will be issued to the Holder, as soon as reasonably practicable, on the same terms as the Warrant partially exercised. All payments due upon any exercise of this Warrant shall be made in cash or by check.

3.6  Time of Exercise.    This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise and the person entitled to receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on such date; provided, however, that in the event that the transfer books of the Company are closed on the date of exercise, the Holder shall be deemed to have become a stockholder of record on the next succeeding day that the transfer books are open and until such date, the Company shall be under no duty to cause to be delivered any certificate for such shares. As promptly as practicable on or after such date and in any event within ten (10) days thereafter, the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of shares issuable upon such exercise. In the event that this Warrant is exercised in part, the Company at its expense will execute and deliver a new Warrant of like tenor exercisable for the number of shares for which this Warrant may then be exercised.

4.  Payment of Taxes and Expenses.    The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of this Warrant and the Warrant Stock, unless any such tax or charge is imposed by law upon the Holder or upon the income or gain of Holder in connection with this Warrant, in which case such tax or charge shall be paid by the Holder. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issuance of any certificate for shares of Common Stock in any name other than that of the Holder, and in such case the Company shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid or it has been established to the satisfaction of the Company that no such tax or other charge is due.

5.  No Fractional Shares.    No fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.

6.  Replacement of Warrant.    On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, or surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

3

ISSUED IN CONNECTION WITH BOA GUARANTY

7.  Adjustments.

(a)  Adjustment.    The number of shares of Common Stock for which this Warrant is exercisable and the Exercise Price at which such shares may be purchased shall be subject to adjustment from time to time as set forth in this Section 7.

(b)  Stock Dividends, Subdivisions and Combinations.    If at any time the Company shall:

(i)  pay or make a dividend on Common Stock payable in additional shares of Common Stock;

(ii)  subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock; or

(iii)  combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock;

then (A) the number of shares of Common Stock for which this Warrant is exercisable immediately after the happening of such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock immediately prior to the happening of such event would own or be entitled to receive after the happening of such event, and (B) the Exercise Price shall be adjusted to equal (1) the Exercise Price multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (2) the number of shares for which this Warrant is exercisable immediately after such adjustment.

(c)  Dividends and Distributions.    If the Company shall distribute to all holders of its outstanding shares of Common Stock evidence of indebtedness of the Company, cash (including cash dividends payable out of consolidated earnings or earned surplus) or assets or securities other than additional shares of Common Stock, including stock of a subsidiary but excluding dividends or distributions referred to in Section 7(b) above (any such evidences of indebtedness, cash, assets or securities, the “assets or securities”), then, in each case, the number of shares of Common Stock issuable after such record date to Holder upon the exercise of each Warrant shall be determined by multiplying the number of shares of Common Stock issuable upon the exercise of such Warrant immediately prior to such record date by a fraction, the numerator of which shall be the fair market value per share of Common Stock immediately prior to the record date for such distribution and the denominator of which shall be the fair market value per share of Common Stock immediately prior to the record date for such distribution less the then fair value (as determined in good faith by the Board) of the evidences of its indebtedness, cash or assets or other distributions so distributed attributable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination of stockholders entitled to receive such distribution. Any adjustment required by this Section 7(c) shall be made whenever any such distribution is made, and shall become effective on the date of such distribution retroactive to the record date for the determination of stockholders entitled to receive such distribution.

4

ISSUED IN CONNECTION WITH BOA GUARANTY

(d)  Reorganization, Reclassification, Consolidation or Merger.    If the Company shall (i) effect any reorganization or reclassification of its capital stock or (ii) consolidate or merge with or into, or transfer all or substantially all of its properties and assets to, any other person, in either case the Company shall give the holder at least thirty (30) days prior written notice of such action. During such thirty (30) day period, the Holder shall have the right to exercise this Warrant in whole or in part in accordance with the terms hereof. In the event that the Holder does not exercise this Warrant or any part hereof prior to the consummation of such transaction, then immediately upon the consummation of such transaction this Warrant and all rights hereunder shall immediately terminate without further notice to the Holder or further action on the part of the Company.

(e)  All calculations under this Section 7 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.

8.  No Rights of Stockholders.    Subject to this Warrant, the Holder shall not be entitled to vote, to receive dividends or subscription rights, or to be deemed the holder of Common Stock or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company, including without limitation any right to vote for the election of directors or upon any matter submitted to stockholders, to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise), to receive notices, or otherwise, until the Warrant shall have been exercised as provided herein.

9.  Transfer of Warrant.

9.1  Warrant Register.    The Company will maintain a register (the “Warrant Register”) containing the names and addresses of the Holder or Holders. Any Holder of this Warrant or any portion thereof may change its address as shown on the Warrant Register by written notice to the Company requesting such change, and the Company shall promptly make such change. Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.

9.2  Exchange of Warrant Upon a Transfer.    On surrender of this Warrant for exchange, properly endorsed on the Assignment attached hereto and subject to the provisions of this Warrant and with the limitations on assignments and transfers as contained in this Section 9, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof.

10.  Reservation and Authorization of Common Stock.

(a)  The Company shall at all times reserve and keep available for issuance upon the exercise of this Warrant the maximum number of its authorized but unissued shares of Common Stock as could then potentially be required to permit the exercise in full of this and all

5

ISSUED IN CONNECTION WITH BOA GUARANTY

outstanding Warrants. All shares of Common Stock issuable upon exercise of any Warrant and payment therefor in accordance with the terms of such Warrant shall be duly and validly issued and fully paid and nonassesable, and not subject to or privileged with any preemptive rights.

(b)  Before taking any action which would cause an adjustment reducing the Exercise Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take any corporate action which may be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of such Common Stock at such adjusted Exercise Price.

10.  Notices.    Any notice, request, consent or other communication required to be made hereunder shall be deemed to have been made: (a) in the case of personal delivery, on the date of such delivery; (b) in the case of mailing, on the third business day following the date of such mailing; and (c) in the case of facsimile transmission, when confirmed by facsimile machine report to the parties at the following addresses:

If to Holder:

J. Richard Knop

Windsor Group, LLC

Two West Washington Street

Middleburg, VA 20117

Fax: 540/687-8112

If to Company:

5904 Richmond Highway

Suite 300

Alexandria, Virginia 22303

Attn: Corporate Secretary

Fax: 703/329-9409

11.  Legend.    Neither this Warrant nor the shares of common stock issuable upon exercise of this Warrant have been registered under the Securities Act of 1933, as amended, or under the securities laws of any state. Neither this Warrant nor the shares of common stock issued upon exercise of this Warrant may be sold, transferred, pledged or hypothecated in the absence of (i) an effective registration statement for this Warrant or the shares, as the case may be, under the Securities Act of 1933, as amended, and such registration or qualification as may be necessary under the securities laws of any state, or (ii) an opinion of counsel reasonably satisfactory to the Company that such registration or qualification is not required. The Company shall cause a certificate or certificates evidencing all or any of the shares of common stock issued upon exercise of this Warrant prior to said registration and qualification of such shares to bear the following legend:

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR

6

ISSUED IN CONNECTION WITH BOA GUARANTY

HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND SUCH REGISTRATION OR QUALIFICATION AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR A VALID EXEMPTION FROM REGISTRATION UNDER SUCH LAWS.

(c)  Termination of Restrictions.    The legend requirements of Section 11 shall terminate when either (i) the security in question shall have been effectively registered under the Securities Act and disposed of pursuant thereto or (ii) the Company shall have received an opinion of counsel reasonably satisfactory to it that such legend is not required in order to insure compliance with the Securities Act.

12.  Investment Covenant.    The Holder by his or her acceptance hereof covenants that this Warrant is and any common stock issued hereunder will be acquired for investment purposes, and that the Holder will not distribute the same in violation of any state or federal law or regulation.

13.  Amendments.    The terms and provisions of this Warrant may not be modified or amended, or any provisions hereof waived, temporarily or permanently, except by written consent of the Company and the Holder.

14.  Successors and Assigns.    This Warrant and the rights and duties of the Holder set forth herein may be assigned, in whole or in part, by the Holder. The obligations of the Company evidenced by this Warrant shall be binding upon its successors, but neither this Warrant nor any of the rights or duties of the Company set forth herein shall be assigned by the Company, in whole or in part, without having first received the written consent of the Holder.

15.  Governing Law.    This Warrant shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia without regard to the principles of conflicts of law thereof.

7

ISSUED IN CONNECTION WITH BOA GUARANTY

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf and under its corporate seal as of the date first above written by one of its duly authorized officers and its execution hereof to be attested by another of its duly authorized officers.

Date:    November 2, 2001	HADRON, INC.
	By:	/s/    STERLING E. PHILLIPS, JR.
		Sterling E. Phillips, Jr. President and Chief Executive Officer
	HOLDER
	/s/    J. RICHARD KNOP         J. Richard Knop

Attested:

Print Name:

Corporate Secretary

8

ISSUED IN CONNECTION WITH BOA GUARANTY

ATTACHMENT A

NOTICE OF EXERCISE

To:    HADRON, INC. (the “Company”)

The undersigned hereby irrevocably elects to exercise the right of purchase thereunder,              shares of Common Stock of the Company, as provided for therein, and tenders herewith payment of the purchase price in full in the form of wire transfer, cash or a check in the aggregate amount of $            . If said number of shares shall not be all the shares purchasable under the within Warrant, a new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining of the shares purchasable thereunder less any fraction of a share paid in cash.

Please issue a certificate or certificates for such shares of Common Stock in the name of, and pay any cash for any fractional share to:

Name:

By:

Signature:

ASSIGNMENT

(To be executed only upon assignment of Warrant)

For value received,             , hereby sells, assigns and transfers unto              the within Warrant, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint              attorney, to transfer said Warrant on the books of the within-named Company, with full power of substitution of the premises.

Dated:             , 20            

By:

EX-10.36

Exhibit 10.36

ISSUED IN CONNECTION WITH BOA GUARANTY

WARRANT

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR A VALID EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

(subject to adjustment hereinafter provided)

of

HADRON, INC.

This certifies that, for value received, Gerald McNichols (“Holder”) is entitled, subject to the terms set forth below, to purchase from Hadron, Inc., a New York corporation (the “Company”), such number of shares of the Common Stock, par value $0.02 per share (“Common Stock”), of the Company, that are purchasable in connection with the exercise of the Warrant, as determined in Section 3 below, upon surrender hereof at the principal office of the Company referred to below, with the Notice of Exercise attached hereto as Attachment A duly executed and simultaneous payment therefor (at the Exercise Price as set forth in Section 2 below) in lawful money of the United States or otherwise as hereinafter provided. The number and Exercise Price of such shares of Common Stock are subject to adjustment as provided below. The term “Warrant” as used herein shall include the Warrant under this Warrant and any warrants delivered in substitution or exchange therefor as provided herein.

1.  Term of Warrant.    Subject to the terms and conditions set forth herein, the Warrant shall be exercisable, in whole or in part, for the longer of (i) the five (5) year period commencing on the date of this Warrant, or (ii) the third (3^rd) anniversary of the date of the last Subsequent Annual Return Allotment (as defined below) as determined under Section 3.2 hereof.

2.  Exercise Price.    The exercise price at which this Warrant, or any portion hereof, may be exercised shall be Two cents ($0.02) per share of Common Stock (the “Exercise Price”).

ISSUED IN CONNECTION WITH BOA GUARANTY

3.  Issuance in Connection with Agreement to Provide Guaranty; Number of Shares; Exercise of Warrant.

3.1  Issuance in Connection with Agreement to Provide Guaranty.    Each of the Holder and the Company expressly acknowledge and agree that this Warrant has been issued in connection with the execution and delivery by the Holder of that certain Agreement to Provide Guaranty of even date herewith by and between the Company and the Holder (“Agreement”). The number of Shares that may be acquired pursuant to this Warrant shall be calculated on an annual basis (for each year the Guaranty remains outstanding) based upon One Hundred Ninety Thousand Dollars ($190,000) (the “Base Calculation Amount”) and the Fair Market Value of the Company’s Common Stock. For the purposes of this Warrant, “Fair Market Value” of Company’s Common Stock shall be equal to the average of the last sale per share price of Common Stock on each of the ten (10) trading days prior to date of calculation and adjustment of the of Shares to be included herein on the principal exchange of which the Common Stock may at the time be listed; or, if there shall have been no sales on such exchange on any such trading day, the average of the closing bid and asked prices on such exchange on such trading day; or, if there is no such bid and asked price occurred; or, if the Common Stock shall not be so listed, the average of the closing sales prices as reported by NASDAQ (including its bulletin board) at the end of each of the ten trading days prior to the date of exercise of this Warrant in the over-the counter market.

3.2  Calculation of Shares.    The aggregate number of Shares that the Holder of this Warrant shall have the right to purchase from the Company (and the Company shall issue and sell to such Holder) shall be calculated on the date of this Warrant and each anniversary of this Warrant that Holder’s Guaranty under the Agreement remains in effect (the “Allotment Date”) as follows: the number of Shares to which this Warrant applies (“Annual Allotment”) shall be the quotient of the Base Calculation Amount divided by the Fair Market Value per share on each Allotment Date. On each Allotment Date the Annual Allotment shall be added to the number of Shares covered by this Warrant immediately prior to such Allotment Date.

3.3  Exercise.    This Warrant may be exercised in whole or in part in as many exercises as Holder may elect. The Exercise Price shall be payable by check for good and sufficient United States funds.

3.4  Cashless Exercise.    Subject to the other provisions of this Agreement, in lieu of any cash payment required upon exercise of the Warrant, the Holder may elect to exercise this Warrant in full or in part by surrendering this Warrant in the manner specified in this Section 3 in exchange for the number of shares of Common Stock equal to the product of (i) the number of shares of Common Stock as to which the Warrant is being exercised multiplied by (ii) a fraction, (y) the numerator of which is the Fair Market Value of a share of Common Stock on the date of exercise less the Exercise Price, and (z) the denominator of which is the Fair Market Value of a share of Common Stock on such date of exercise.

2

ISSUED IN CONNECTION WITH BOA GUARANTY

3.5  Delivery.    The Warrant shall be exercisable by (i) delivering to the Company the form of notice of exercise attached hereto as Exhibit A duly completed and signed by the Holder or by the duly appointed legal representative or duly authorized attorney thereof, and (ii) depositing with the Company the original of this Warrant, paying the aggregate Exercise Price for the number of shares of Common Stock in respect of which the Warrant is being exercised. Upon each partial exercise of the Warrant, a new Warrant evidencing the balance of the shares of Common Stock issuable hereunder will be issued to the Holder, as soon as reasonably practicable, on the same terms as the Warrant partially exercised. All payments due upon any exercise of this Warrant shall be made in cash or by check.

3.6  Time of Exercise.    This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise and the person entitled to receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on such date; provided, however, that in the event that the transfer books of the Company are closed on the date of exercise, the Holder shall be deemed to have become a stockholder of record on the next succeeding day that the transfer books are open and until such date, the Company shall be under no duty to cause to be delivered any certificate for such shares. As promptly as practicable on or after such date and in any event within ten (10) days thereafter, the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of shares issuable upon such exercise. In the event that this Warrant is exercised in part, the Company at its expense will execute and deliver a new Warrant of like tenor exercisable for the number of shares for which this Warrant may then be exercised.

4.  Payment of Taxes and Expenses.    The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of this Warrant and the Warrant Stock, unless any such tax or charge is imposed by law upon the Holder or upon the income or gain of Holder in connection with this Warrant, in which case such tax or charge shall be paid by the Holder. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issuance of any certificate for shares of Common Stock in any name other than that of the Holder, and in such case the Company shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid or it has been established to the satisfaction of the Company that no such tax or other charge is due.

5.  No Fractional Shares.    No fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.

6.  Replacement of Warrant.    On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, or surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

3

ISSUED IN CONNECTION WITH BOA GUARANTY

7.  Adjustments.

(a)  Adjustment.    The number of shares of Common Stock for which this Warrant is exercisable and the Exercise Price at which such shares may be purchased shall be subject to adjustment from time to time as set forth in this Section 7.

(b)  Stock Dividends, Subdivisions and Combinations.    If at any time the Company shall:

(i)  pay or make a dividend on Common Stock payable in additional shares of Common Stock;

(ii)  subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock; or

(iii)  combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock;

then (A) the number of shares of Common Stock for which this Warrant is exercisable immediately after the happening of such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock immediately prior to the happening of such event would own or be entitled to receive after the happening of such event, and (B) the Exercise Price shall be adjusted to equal (1) the Exercise Price multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (2) the number of shares for which this Warrant is exercisable immediately after such adjustment.

(c)  Dividends and Distributions.    If the Company shall distribute to all holders of its outstanding shares of Common Stock evidence of indebtedness of the Company, cash (including cash dividends payable out of consolidated earnings or earned surplus) or assets or securities other than additional shares of Common Stock, including stock of a subsidiary but excluding dividends or distributions referred to in Section 7(b) above (any such evidences of indebtedness, cash, assets or securities, the “assets or securities”), then, in each case, the number of shares of Common Stock issuable after such record date to Holder upon the exercise of each Warrant shall be determined by multiplying the number of shares of Common Stock issuable upon the exercise of such Warrant immediately prior to such record date by a fraction, the numerator of which shall be the fair market value per share of Common Stock immediately prior to the record date for such distribution and the denominator of which shall be the fair market value per share of Common Stock immediately prior to the record date for such distribution less the then fair value (as determined in good faith by the Board) of the evidences of its indebtedness, cash or assets or other distributions so distributed attributable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record date for the determination of stockholders entitled to receive such distribution. Any adjustment required by this Section 7(c) shall be made whenever any such distribution is made, and shall become effective on the date of such distribution retroactive to the record date for the determination of stockholders entitled to receive such distribution.

4

ISSUED IN CONNECTION WITH BOA GUARANTY

(d)  Reorganization, Reclassification, Consolidation or Merger.    If the Company shall (i) effect any reorganization or reclassification of its capital stock or (ii) consolidate or merge with or into, or transfer all or substantially all of its properties and assets to, any other person, in either case the Company shall give the holder at least thirty (30) days prior written notice of such action. During such thirty (30) day period, the Holder shall have the right to exercise this Warrant in whole or in part in accordance with the terms hereof. In the event that the Holder does not exercise this Warrant or any part hereof prior to the consummation of such transaction, then immediately upon the consummation of such transaction this Warrant and all rights hereunder shall immediately terminate without further notice to the Holder or further action on the part of the Company.

(e)  All calculations under this Section 7 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.

8.  No Rights of Stockholders.    Subject to this Warrant, the Holder shall not be entitled to vote, to receive dividends or subscription rights, or to be deemed the holder of Common Stock or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company, including without limitation any right to vote for the election of directors or upon any matter submitted to stockholders, to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise), to receive notices, or otherwise, until the Warrant shall have been exercised as provided herein.

9.  Transfer of Warrant.

9.1  Warrant Register.    The Company will maintain a register (the “Warrant Register”) containing the names and addresses of the Holder or Holders. Any Holder of this Warrant or any portion thereof may change its address as shown on the Warrant Register by written notice to the Company requesting such change, and the Company shall promptly make such change. Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.

9.2  Exchange of Warrant Upon a Transfer.    On surrender of this Warrant for exchange, properly endorsed on the Assignment attached hereto and subject to the provisions of this Warrant and with the limitations on assignments and transfers as contained in this Section 9, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof.

10.  Reservation and Authorization of Common Stock.

(a)  The Company shall at all times reserve and keep available for issuance upon the exercise of this Warrant the maximum number of its authorized but unissued shares of Common Stock as could then potentially be required to permit the exercise in full of this and all

5

ISSUED IN CONNECTION WITH BOA GUARANTY

outstanding Warrants. All shares of Common Stock issuable upon exercise of any Warrant and payment therefor in accordance with the terms of such Warrant shall be duly and validly issued and fully paid and nonassesable, and not subject to or privileged with any preemptive rights.

(b)  Before taking any action which would cause an adjustment reducing the Exercise Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take any corporate action which may be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of such Common Stock at such adjusted Exercise Price.

10.  Notices.    Any notice, request, consent or other communication required to be made hereunder shall be deemed to have been made: (a) in the case of personal delivery, on the date of such delivery; (b) in the case of mailing, on the third business day following the date of such mailing; and (c) in the case of facsimile transmission, when confirmed by facsimile machine report to the parties at the following addresses:

If to Holder:

Gerald McNichols

23349 Parsons Road

Middleburg, VA 20117-2817

If to Company:

5904 Richmond Highway

Suite 300

Alexandria, Virginia 22303

Attn: Corporate Secretary

Fax: 703/329-9409

11.  Legend.    Neither this Warrant nor the shares of common stock issuable upon exercise of this Warrant have been registered under the Securities Act of 1933, as amended, or under the securities laws of any state. Neither this Warrant nor the shares of common stock issued upon exercise of this Warrant may be sold, transferred, pledged or hypothecated in the absence of (i) an effective registration statement for this Warrant or the shares, as the case may be, under the Securities Act of 1933, as amended, and such registration or qualification as may be necessary under the securities laws of any state, or (ii) an opinion of counsel reasonably satisfactory to the Company that such registration or qualification is not required. The Company shall cause a certificate or certificates evidencing all or any of the shares of common stock issued upon exercise of this Warrant prior to said registration and qualification of such shares to bear the following legend:

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF

6

ISSUED IN CONNECTION WITH BOA GUARANTY

1933, AS AMENDED, AND SUCH REGISTRATION OR QUALIFICATION AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR A VALID EXEMPTION FROM REGISTRATION UNDER SUCH LAWS.

(c)  Termination of Restrictions.    The legend requirements of Section 11 shall terminate when either (i) the security in question shall have been effectively registered under the Securities Act and disposed of pursuant thereto or (ii) the Company shall have received an opinion of counsel reasonably satisfactory to it that such legend is not required in order to insure compliance with the Securities Act.

12.  Investment Covenant.    The Holder by his or her acceptance hereof covenants that this Warrant is and any common stock issued hereunder will be acquired for investment purposes, and that the Holder will not distribute the same in violation of any state or federal law or regulation.

13.  Amendments.    The terms and provisions of this Warrant may not be modified or amended, or any provisions hereof waived, temporarily or permanently, except by written consent of the Company and the Holder.

14.  Successors and Assigns.    This Warrant and the rights and duties of the Holder set forth herein may be assigned, in whole or in part, by the Holder. The obligations of the Company evidenced by this Warrant shall be binding upon its successors, but neither this Warrant nor any of the rights or duties of the Company set forth herein shall be assigned by the Company, in whole or in part, without having first received the written consent of the Holder.

15.  Governing Law.    This Warrant shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia without regard to the principles of conflicts of law thereof.

7

ISSUED IN CONNECTION WITH BOA GUARANTY

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf and under its corporate seal as of the date first above written by one of its duly authorized officers and its execution hereof to be attested by another of its duly authorized officers.

Date:    November 2, 2001	HADRON, INC.
	By:	/s/    STERLING E. PHILLIPS, JR.
		Sterling E. Phillips, Jr. President and Chief Executive Officer
	HOLDER
	/s/    GERALD MCNICHOLS         Gerald McNichols

Attested:

Print Name:

Corporate Secretary

8

ISSUED IN CONNECTION WITH BOA GUARANTY

ATTACHMENT A

NOTICE OF EXERCISE

To:  HADRON, INC. (the “Company”)

The undersigned hereby irrevocably elects to exercise the right of purchase thereunder,              shares of Common Stock of the Company, as provided for therein, and tenders herewith payment of the purchase price in full in the form of wire transfer, cash or a check in the aggregate amount of $            . If said number of shares shall not be all the shares purchasable under the within Warrant, a new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining of the shares purchasable thereunder less any fraction of a share paid in cash.

Please issue a certificate or certificates for such shares of Common Stock in the name of, and pay any cash for any fractional share to:

Name:

By:

Signature:

ASSIGNMENT

(To be executed only upon assignment of Warrant)

For value received,             , hereby sells, assigns and transfers unto              the within Warrant, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint              attorney, to transfer said Warrant on the books of the within-named Company, with full power of substitution of the premises.

Dated:                            , 20    

By:

EX-10.37

Exhibit 10.37

Date:  November 2, 2001

Continuing and Unconditional Guaranty

Lender: Bank of America, N.A. 8300 Greensboro Drive Suite 550 McLean, Virginia 22102 Attn: Commercial Banking Subsidiary Guarantors: ADVANCED BIOSYSTEMS, INC. AVENUE TECHNOLOGIES, INC. ENGINEERING AND INFORMATION SERVICES, INC. SYCOM SERVICES, INC. VAIL RESEARCH AND TECHNOLOGY CORPORATION HADRON ACQUISITION CORP. 5904 Richmond Highway Suite 300 Alexandria, Virginia 22303

“Borrower”: Hadron, Inc., a New York corporation.

1.  Guaranty.    FOR VALUE RECEIVED, and to induce Bank of America, N.A. (“Lender”) to make loans or advances or to extend credit or other financial accommodations or benefits, with or without security, to or for the account of Borrower, the undersigned “Guarantor”, if more than one, then each of them jointly and severally, hereby irrevocably and unconditionally guarantees to Lender the full and prompt payment when due, whether by acceleration or otherwise, of any and all Liabilities (as hereinafter defined) of Borrower to Lender.

The undertakings of Guarantor hereunder are independent of the Liabilities and Obligations of Borrower and a separate action or actions for payment, damages or performance may be brought or prosecuted against Guarantor, whether or not an action is brought against Borrower or to realize upon the security for the Liabilities and/or Obligations, whether or not Borrower is joined in any such action or actions, and whether or not notice is given or demand is made upon Borrower.

Lender shall not be required to proceed against Borrower, or any other person, or entity, whether primarily or secondarily liable, or against any collateral held by it, before resorting to Guarantor for payment.

This Guaranty is continuing and unlimited as to amount, and is cumulative to and does not supersede any other guaranties. This is the Subsidiary Guaranty described in the Credit Agreement (as hereinafter defined).

2.  Paragraph Headings, Governing Law and Binding Effect.    Guarantor agrees that paragraph headings in this Guaranty are for convenience only and that they will not limit any of

the provisions of this Guaranty. Guarantor further agrees that this Guaranty shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia and applicable United States federal law. Guarantor further agrees that this Guaranty shall be deemed to have been made in the Commonwealth of Virginia at Lender’s address indicated above, and shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia, or the United States courts located within the Commonwealth of Virginia, and is performable in the Commonwealth of Virginia. This Guaranty is binding upon Guarantor, his, their or its executors, administrators, successors or assigns, and shall inure to the benefit of Lender, its successors, endorsees or assigns. Anyone executing this Guaranty shall be bound by the terms hereof without regard to execution by anyone else.

3.  Definitions.

A.  “Credit Agreement” shall mean that certain Credit Agreement dated as of November 2, 2001, by and among Borrower, the Subsidiary Guarantors from time to time party thereto and Lender, and all other agreements and instruments extending, renewing, refinancing or refunding any indebtedness, obligation or liability arising under the same, as the same may be amended, modified or supplemented from time to time hereafter.

B.  “Guarantor” shall mean Guarantor or any one or more of them.

C.  “Liability” or “Liabilities” shall mean without limitation, all liabilities, overdrafts, indebtedness, and obligations of Borrower and/or Guarantor to Lender under the Credit Agreement and the other Loan Documents, and all sums payable under or by virtue thereof, including without limitation, all amounts of principal and interest, all expenses (including reasonable attorney’s fees and cost of collection) incurred in the collection thereof or the enforcement of rights thereunder (including, without limitation, any liability arising from failure to comply with state or federal laws, rules and regulations concerning the control of hazardous waste or substances at or with respect to any real estate securing any loan guaranteed hereby), whether arising in the ordinary course of business or otherwise. The term “Liability” or “Liabilities” shall include all Obligations (as that term is defined in the Credit Agreement). If Borrower is a partnership, corporation or other entity the term “Liability” or “Liabilities” as used herein shall include all Liabilities to Lender of any successor entity or entities.

D.  “Loan Documents” shall have the meaning ascribed to such term in the Credit Agreement.

E.  “Obligation” or “Obligations” shall mean all terms, conditions, covenants, agreements and undertakings of Borrower and/or Guarantor under the Credit Agreement and the other Loan Documents.

4.  Waivers by Guarantor.    Guarantor waives notice of acceptance of this Guaranty, notice of any Liabilities or Obligations to which it may apply, presentment, demand for payment, protest, notice of dishonor or nonpayment of any Liabilities, notice of intent to accelerate, notice of acceleration, and notice of any suit or the taking of other action by Lender against Borrower, Guarantor or any other person, any applicable statute of limitations and any other notice to any party liable on any Loan Document (including Guarantor).

2

Until such time as the Liabilities have been paid in full, all Commitments under the Credit Agreement have been terminated and no Person or Governmental Authority shall have any right to request any return or reimbursement of funds from the Lender in connection with monies received under the Loan Documents, each Guarantor also hereby waives any claim, right or remedy which such Guarantor may now have or hereafter acquire against Borrower that arises hereunder and/or from the performance by any other Guarantor hereunder including, without limitation, any claim, remedy or right of subrogation, reimbursement, exoneration, contribution, indemnification, or participation in any claim, right or remedy of Lender against Borrower or against any security which Lender now has or hereafter acquires, whether or not such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise.

Guarantor also waives the benefits of any provision of law requiring that Lender exhaust any right or remedy, or take any action, against Borrower, any Guarantor, any other person and/or property, including but not limited to the provisions of Sections 49-25 and 49-26 of the Code of Virginia (1950), as amended, or otherwise.

Lender may at any time and from time to time (whether before or after revocation or termination of this Guaranty) without notice to Guarantor (except as required by law), without incurring responsibility to Guarantor, without impairing, releasing or otherwise affecting the obligations of Guarantor hereunder, in whole or in part, and without the endorsement or execution by Guarantor of any additional consent, waiver or guaranty: (a) change the manner, place or terms of payment, or change or extend the time of or renew, or change any interest rate or alter any Liability or Obligation or installment thereof, or any security therefor; (b) loan additional monies or extend additional credit to Borrower, with or without security, thereby creating new Liabilities or Obligations the payment or performance of which shall be guaranteed hereunder, and the Guaranty herein made shall apply to the Liabilities and Obligations as so changed, extended, surrendered, realized upon or otherwise altered; (c) sell, exchange, release, surrender, realize upon or otherwise deal with in any manner and in any order any property at any time pledged or mortgaged to secure the Liabilities or Obligations and any offset thereagainst; (d) exercise or refrain from exercising any rights against Borrower or others (including Guarantor) or act or refrain from acting in any other manner; (e) settle or compromise any Liability or Obligation or any security therefor and subordinate the payment of all or any part thereof to the payment of any Liability or Obligation of any other parties primarily or secondarily liable on any of the Liabilities or Obligations; (f) release or compromise any Liability of Guarantor hereunder or any Liability or Obligation of any other parties primarily or secondarily liable on any of the Liabilities or Obligations; or (g) apply any sums from any sources to any Liability without regard to any Liabilities remaining unpaid.

5.  Intentionally Deleted.

6.  Waivers by Lender.    No delay on the part of Lender in exercising any of its options, powers or rights, and no partial or single exercise thereof, shall constitute a waiver thereof. No waiver of any of its rights hereunder, and no modification or amendment of this Guaranty, shall be deemed to be made by Lender unless the same shall be in writing, duly signed on behalf of Lender; and each such waiver, if any, shall apply only with respect to the specific instance involved, and shall in no way impair the rights of Lender or the obligations of Guarantor to Lender in any other respect at any other time.

3

7.  Termination.    This Guaranty shall be binding on each Guarantor until written notice of revocation signed by such Guarantor shall have been received by Lender, notwithstanding change in name, location, composition or structure of, or the dissolution, termination or increase, decrease or change in personnel, owners or partners of Borrower, or any one or more of Guarantors. No notice of revocation or termination hereof shall affect in any manner rights arising under this Guaranty with respect to Liabilities or Obligations that shall have been committed, created, contracted, assumed or incurred prior to receipt of such written notice pursuant to any agreement entered into by Lender prior to receipt of such notice. The sole effect of such notice of revocation or termination hereof shall be to exclude from this Guaranty, Liabilities or Obligations thereafter arising that are unconnected with Liabilities or Obligations theretofore arising or transactions entered into theretofore.

8.  Partial Invalidity and/or Enforceability of Guaranty.    The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision herein and the invalidity or unenforceability of any provision of any Loan Document as it may apply to any person or circumstance shall not affect the enforceability or validity of such provision as it may apply to other persons or circumstances.

In the event Lender is required to relinquish or return the payments, the collateral or the proceeds thereof, in whole or in part, which had been previously applied to or retained for application against any Liability, by reason of a proceeding arising under the Bankruptcy Code, or for any other reason, this Guaranty shall automatically continue to be effective notwithstanding any previous cancellation or release effected by Lender.

9.  Intentionally Deleted.

10.  Financial and Other Information.    Guarantor agrees to furnish to Lender any and all financial information and any other information regarding Guarantor and/or collateral requested in writing by Lender within ten (10) days of the date of the request. Guarantor has made an independent investigation of the financial condition and affairs of Borrower prior to entering into this Guaranty, and Guarantor will continue to make such investigation; and in entering into this Guaranty Guarantor has not relied upon any representation of Lender as to the financial condition, operation or creditworthiness of Borrower. Guarantor further agrees that Lender shall have no duty or responsibility now or hereafter to make any investigation or appraisal of Borrower on behalf of Guarantor or to provide Guarantor with any credit or other information which may come to its attention now or hereafter.

11.  Notices.    Notices under this Guaranty shall be given and deemed effective in accordance with the provisions of Section 8.6 of the Credit Agreement.

12.  Guarantor Duties.    Guarantor shall upon notice or demand by Lender promptly and with due diligence pay all Liabilities and perform and satisfy all Obligations for the benefit of Lender in the event of the failure of Borrower or any guarantor to perform any obligation or pay any liability or indebtedness of Borrower or any guarantor to Lender, or to any affiliate of Lender, whether under any note, guaranty or any other agreement, now or hereafter existing, as and when due (whether upon demand, at maturity or by acceleration).

4

13.  Remedies.    Upon the failure of Guarantor to fulfill its duty to pay all Liabilities and perform and satisfy all Obligations as required hereunder, Lender shall have all of the remedies of a creditor and, to the extent applicable, of a secured party, under all applicable law, and without limiting the generality of the foregoing, Lender may, at its option and without notice or demand: (a) declare any Liability due and payable at once; (b) take possession of any collateral pledged by Borrower or Guarantor wherever located, and sell, resell, assign, transfer and deliver all or any part of said collateral of Borrower or Guarantor at any public or private sale or otherwise dispose of any or all of the collateral in its then condition, for cash or on credit or for future delivery, and in connection therewith Lender may impose reasonable conditions upon any such sale, and Lender, unless prohibited by law the provisions of which cannot be waived, may purchase all or any part of said collateral to be sold, free from and discharged of all trusts, claims, rights or redemption and equities of Borrower or Guarantor whatsoever; Guarantor acknowledges and agrees that the sale of any collateral through any nationally recognized broker-dealer, investment banker or any other method common in the securities industry shall be deemed a commercially reasonable sale under the Uniform Commercial Code or any other equivalent statute or federal law, and expressly waives notice thereof except as provided herein; and (c) set-off against any or all liabilities of Guarantor all money owed by Lender or any of its agents or affiliates in any capacity to Guarantor whether or not due, and also set-off against all other Liabilities of Guarantor to Lender all money owed by Lender in any capacity to Guarantor, and if exercised by Lender, Lender shall be deemed to have exercised such right of set-off and to have made a charge against any such money immediately upon the occurrence of such default although made or entered on the books subsequent thereto.

Lender shall have a properly perfected security interest in all of Guarantor’s funds on deposit with Lender to secure the balance of any Liabilities and/or Obligations that Guarantor may now or in the future owe Lender. Lender is granted a contractual right of set-off and will not be liable for dishonoring checks or withdrawals where the exercise of Lender’s contractual right of set-off or security interest results in insufficient funds in Guarantor’s account. As authorized by law, Guarantor grants to Lender this contractual right of set-off and security interest in all property of Guarantor now or at anytime hereafter in the possession of Lender, including but not limited to any joint account, special account, account by the entireties, tenancy in common, and all dividends and distributions now or hereafter in the possession or control of Lender.

14.  Attorney Fees, Cost and Expenses.    Guarantor shall pay all costs of collection and reasonable attorney’s fees, including reasonable attorney’s fees in connection with any suit, mediation or arbitration proceeding, out of court payment agreement, trial, appeal, bankruptcy proceedings or otherwise, incurred or paid by Lender in enforcing the payment of any Liability or defending this agreement.

15.  Rights of Contribution.    The Guarantors hereby agree, as among themselves, that if any Guarantor shall become an Excess Funding Guarantor (as defined below), each other Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the succeeding provisions of this Section 15), pay to such Excess Funding Guarantor an amount equal to such Guarantor’s Pro Rata Share (as defined below and determined, for this purpose, without reference to the properties, assets, liabilities and debts of such Excess Funding Guarantor) of such Excess Payment (as defined below). The payment obligation of any Guarantor to any Excess Funding Guarantor under this Section 15 shall be subordinate and subject in right of payment to the prior

5

payment in full of the obligations of such Guarantor under the other provisions of this Guaranty, and such Excess Funding Guarantor shall not exercise any right or remedy with respect to such excess until payment and satisfaction in full of all of such obligations. For purposes hereof, (i) “Excess Funding Guarantor” shall mean, in respect of any obligations arising under the other provisions of this Guaranty (hereafter, the “Guaranteed Obligations”), a Guarantor that has paid an amount in excess of its Pro Rata Share of the Guaranteed Obligations; (ii) “Excess Payment” shall mean, in respect of any Guaranteed Obligations, the amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations; and (iii) “Pro Rata Share”, for the purposes of this Section 15, shall mean, for any Guarantor, the ratio (expressed as a percentage) of (a) the amount by which the aggregate present fair saleable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Guarantor (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder) to (b) the amount by which the aggregate present fair saleable value of all assets and other properties of the Borrower and all of the Guarantors exceeds the amount of all of the debts and liabilities (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of the Borrower and the Guarantors hereunder) of the Borrower and all of the Guarantors, all as of the Closing Date (if any Guarantor becomes a party hereto subsequent to the Closing Date, then for the purposes of this Section 15 such subsequent Guarantor shall be deemed to have been a Guarantor as of the Closing Date and the information pertaining to, and only pertaining to, such Guarantor as of the date such Guarantor became a Guarantor shall be deemed true as of the Closing Date).

16.  Preservation of Property.    Lender shall not be bound to take any steps necessary to preserve any rights in any property pledged as collateral to Lender to secure Borrower’s obligations and/or Guarantor’s obligations hereunder as against prior parties who may be liable in connection therewith, and Borrower and Guarantor hereby agree to take any such steps. Lender, nevertheless, at any time, may (a) take any action it deems appropriate for the care or preservation of such property or of any rights of Borrower and/or Guarantor or Lender therein; (b) demand, sue for, collect or receive any money or property at any time due, payable or receivable on account of or in exchange for any property pledged as collateral, to Lender to secure Borrower’s obligations and/or Guarantor’s obligations hereunder to Lender; (c) compromise and settle with any person liable able on such property; or (d) extend the time of payment or otherwise change the terms of the Loan Documents as to any party liable on the Loan Documents, all without notice to, without incurring responsibility to, and without affecting any of the obligations of Guarantor hereunder.

17.  ARBITRATION.

A.  THIS PARAGRAPH CONCERNS THE RESOLUTION OF ANY CONTROVERSIES OR CLAIMS BETWEEN GUARANTOR AND LENDER, WHETHER ARISING IN CONTRACT, TORT OR BY STATUTE, INCLUDING BUT NOT LIMITED TO CONTROVERSIES OR CLAIMS THAT ARISE OUT OF OR RELATE TO: (I) THIS GUARANTY (INCLUDING ANY RENEWALS, EXTENSIONS OR MODIFICATIONS); OR (II) ANY DOCUMENT RELATED TO THIS GUARANTY (COLLECTIVELY A “CLAIM”).

6

B.  AT THE REQUEST OF GUARANTOR OR LENDER, ANY CLAIM SHALL BE RESOLVED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (TITLE 9, U.S. CODE) (THE “ACT”). THE ACT WILL APPLY EVEN THOUGH THIS GUARANTY PROVIDES THAT IT IS GOVERNED BY THE LAW OF A SPECIFIED STATE.

C.  ARBITRATION PROCEEDINGS WILL BE DETERMINED IN ACCORDANCE WITH THE ACT, THE APPLICABLE RULES AND PROCEDURES FOR THE ARBITRATION OF DISPUTES OF JAMS OR ANY SUCCESSOR THEREOF (“JAMS”), AND THE TERMS OF THIS PARAGRAPH. IN THE EVENT OF ANY INCONSISTENCY, THE TERMS OF THIS PARAGRAPH SHALL CONTROL.

D.  THE ARBITRATION SHALL BE ADMINISTERED BY JAMS AND CONDUCTED IN ANY U.S. STATE WHERE REAL OR TANGIBLE PERSONAL PROPERTY COLLATERAL FOR THIS CREDIT IS LOCATED OR IF THERE IS NO SUCH COLLATERAL, IN THE COMMONWEALTH OF VIRGINIA. ALL CLAIMS SHALL BE DETERMINED BY ONE ARBITRATOR; HOWEVER, IF CLAIMS EXCEED $5,000,000, UPON THE REQUEST OF ANY PARTY, THE CLAIMS SHALL BE DECIDED BY THREE ARBITRATORS. ALL ARBITRATION HEARINGS SHALL COMMENCE WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION AND CLOSE WITHIN 90 DAYS OF COMMENCEMENT AND THE AWARD OF THE ARBITRATOR(S) SHALL BE ISSUED WITHIN 30 DAYS OF THE CLOSE OF THE HEARING. HOWEVER, THE ARBITRATOR(S), UPON A SHOWING OF GOOD CAUSE, MAY EXTEND THE COMMENCEMENT OF THE HEARING FOR UP TO AN ADDITIONAL 60 DAYS. THE ARBITRATOR(S) SHALL PROVIDE A CONCISE WRITTEN STATEMENT OF REASONS FOR THE AWARD. THE ARBITRATION AWARD MAY BE SUBMITTED TO ANY COURT HAVING JURISDICTION TO BE CONFIRMED AND ENFORCED.

E.  THE ARBITRATOR(S) WILL HAVE THE AUTHORITY TO DECIDE WHETHER ANY CLAIM IS BARRED BY THE STATUTE OF LIMITATIONS AND, IF SO, TO DISMISS THE ARBITRATION ON THAT BASIS. FOR PURPOSES OF THE APPLICATION OF THE STATUTE OF LIMITATIONS, THE SERVICE ON JAMS UNDER APPLICABLE JAMS RULES OF A NOTICE OF CLAIM IS THE EQUIVALENT OF THE FILING OF A LAWSUIT. ANY DISPUTE CONCERNING THIS ARBITRATION PROVISION OR WHETHER A CLAIM IS ARBITRABLE SHALL BE DETERMINED BY THE ARBITRATOR(S). THE ARBITRATOR(S) SHALL HAVE THE POWER TO AWARD LEGAL FEES PURSUANT TO THE TERMS OF THIS GUARANTY.

F.  THIS PARAGRAPH DOES NOT LIMIT THE RIGHT OF GUARANTOR OR LENDER TO: (I) EXERCISE SELF-HELP REMEDIES, SUCH AS BUT NOT LIMITED TO, SETOFF; (II) INITIATE JUDICIAL OR NONJUDICIAL FORECLOSURE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL; (III) EXERCISE ANY JUDICIAL OR POWER OF SALE RIGHTS, OR (IV) ACT IN A COURT OF LAW TO OBTAIN AN INTERIM REMEDY, SUCH AS BUT NOT

7

LIMITED TO, INJUNCTIVE RELIEF, WRIT OF POSSESSION OR APPOINTMENT OF A RECEIVER, OR ADDITIONAL OR SUPPLEMENTARY REMEDIES.

G.  BY AGREEING TO BINDING ARBITRATION, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM. FURTHERMORE, WITHOUT INTENDING IN ANY WAY TO LIMIT THIS AGREEMENT TO ARBITRATE, TO THE EXTENT ANY CLAIM IS NOT ARBITRATED, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF SUCH CLAIM. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS GUARANTY.

18.  Controlling Document.    To the extent that this Continuing and Unconditional Guaranty conflicts with or is in any way incompatible with any other Loan Document concerning this Obligation, any promissory note shall control over any other document, and if such promissory note does not address an issue, then each other document shall control to the extent that it deals most specifically with an issue.

19.  Execution Under Seal.    This Guaranty is being executed under seal by Guarantor.

20.  NOTICE OF FINAL AGREEMENT.    THIS WRITTEN CONTINUING AND UNCONDITIONAL GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[remainder of page intentionally left blank]

8

IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be executed under seal on this 2nd day of November, 2001.

9

Guarantor: ADVANCED BIOSYSTEMS, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer
AVENUE TECHNOLOGIES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer
ENGINEERING AND INFORMATION SERVICES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer
SYCOM SERVICES, INC.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer
VAIL RESEARCH AND TECHNOLOGY CORPORATION
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer
HADRON ACQUISITION CORP.
By:	/s/    STERLING E. PHILLIPS, JR. (SEAL)
	Sterling E. Phillips, Jr. Chief Executive Officer

10

EX-21

EXHIBIT 21

SUBSIDIARIES OF THE COMPANY

Name of Subsidiary	State of Incorporation
Advanced Biosystems, Inc.	Delaware
Analex Corporation	Delaware
SyCom Services, Inc.	Delaware
Vail Research and Technology Corporation (inactive)	Maryland

EX-23

Exhibit 23

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference of our report dated March 1, 2002 with respect to the consolidated financial statements of Hadron, Inc. included in the Annual Report on Form 10-K for the year ended December 31, 2001, in the following Registration Statements:

1. Registration Statement Number 333-37059 (Hadron, Inc. 1994 Stock Option Plan) on Form S-8

2. Registration Statement Number 333-42035 (Hadron, Inc. 1997 Employee Stock Purchase Plan) on Form S-8

3. Registration Statement Number 333-96297 (Hadron, Inc. 1994 Stock Option Plan) on Form S-8

4. Registration Statement Number 333-96299 (Hadron, Inc. 1997 Employee Stock Purchase Plan) on Form S-8

5. Registration Statement Number 333-60440 (Hadron, Inc. 1997 Employee Stock Purchase Plan) on Form S-8

6. Registration Statement Number 333-60442 (Hadron, Inc. 2000 Stock Option Plan) on Form S-8

/s/    ERNST & YOUNG LLP

McLean, Virginia

March 21, 2002