LOAN AGREEMENT

This Loan Agreement dated December 27, 2011 (the “Effective Date”) by and
between Horne International, Inc. (the “Borrower”), a Delaware corporation, with
offices located at 3975 University Drive, Suite 100, Fairfax, VA 22030 and
Darryl K. Horne (the “Lender”), with an address of 1732 Brookside Lane, Vienna,
VA 22182.

WHEREAS, the Borrower desires that the Lender make a loan in the amount of Fifty
Thousand Dollars ($50,000.00) to the Borrower; and

WHEREAS, the Lender is willing to make such a loan, subject to the terms and
conditions set forth herein;

NOW THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements herein contained and other good and valuable consideration receipt of
which is hereby acknowledged, the parties hereto agree as follows:

 
1.
Definitions.  . The following terms shall have the meanings herein specified:

1.1      "Common Stock" means authorized Common Stock of the Company.

1.2.      "Conversion Notice" shall have the meaning set forth in Section 3.

1.3      "Conversion Price" shall mean the per share price(s) at which some or
all of the Principal Amount plus all accrued interest thereon is converted or
convertible pursuant to Section 3.

1.4      "Event of Default" means an event specified in Section 6 hereof.

1.5      "Lender" means the Payee, and each endorsee, pledgee, assignee, owner
and   holder of this Note, as such; and any consent, waiver or agreement in
writing by the then Holder with respect to any matter or thing in connection
with this Note, whether altering any provision hereof or otherwise, shall bind
all subsequent Holders. Notwithstanding the foregoing, the Company may treat the
registered holder of this Note as the Holder for all purposes.

1.6      "Principal Amount" shall have the meaning set forth in the initial
paragraph.

1.7      "Person" means an individual, trust, partnership, firm, association,
corporation or other organization or a government or governmental authority.

 
2.
Amount and Terms of Loan.

 
2.1
The Loan.  The “Loan” hereunder shall mean the loan by the Lender to the
Borrower in the principal amount of Fifty Thousand Dollars ($50,000.00).

 
 
 

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2.2
The Note.  The Loan shall be evidenced by a promissory note which note shall be
executed by the Borrower as of the Effective Date.  Every term contained in the
Note shall be deemed incorporated into this Agreement.  To the extent any
provision of the Note shall be deemed to be inconsistent with the provisions of
this Agreement however, the provisions of this Agreement shall control.

 
2.3
Interest.  The outstanding principal balance of the Loan and any other
obligations arising under this Agreement shall bear interest at the rate of 7%
per annum.  Interest on the Loan shall be calculated on the basis of a 360 day
year and the actual number of days elapsed.  Accrued interest shall be paid on a
quarterly basis over the course of the loan on the last day of the quarter as
defined herein beginning on March 31, 2012.  The end of each fiscal quarter
shall be defined as March 31, June 30, September 30, and December 31.

 
2.4
Repayment of Principal.  Except as otherwise provided in this Agreement,
repayment of principal shall be due and payable as follows:

 
2.4.1
Payments shall be made on the last day of the fiscal quarter as defined herein
in equal installments of Six Thousand Two Hundred Fifty Dollars ($6250.00) plus
accrued interest as described herein.

 
2.4.2
In lieu of cash payments, the Lender shall have the option to convert the entire
principal loan balance to Horne International Inc. common stock as described in
paragraph 3 herein.

 
2.4.3
The Borrower may prepay any part or all of the Loan, including interest, without
penalty or premium at any time.

 
2.5
Acceleration.  Notwithstanding anything set forth in this Section 1, immediately
upon the occurrence of any Event of Default and during any continuance thereof,
the Lender may declare the Loan, all interest thereon and all other amounts and
obligations payable to be forthwith due and payable to the Lender or may take
any other action as provided herein.

 
3.
Conversion of the Note.

3.1  Election to Convert .  Lender may, at its option exercisable by written
notice (the "Conversion Notice") to the Company at any time prior to payment in
full hereof, elect to convert all or any part of the entire outstanding
principal amount of this Note into shares of Horne International Inc. Common
Stock at a conversion price equal to the greater of $.10 per share or thirty
percent (30%) below the market price on the date of conversion.

3.2   Delivery of Conversion Shares. The Capital Stock issued on conversion of
this Note (the "Conversion Shares") shall be delivered as follows:
 
 
 

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As promptly as practicable after conversion, the Company shall deliver to
Lender, or to such person or persons as are designated by Holder in the
Conversion Notice, a certificate or certificates representing the number of
shares of Stock into which this Note or portion thereof is to be converted in
such name or names as are specified in the Conversion Notice, together with, in
the case of conversion of the entire remaining principal balance hereof, any
cash payable in respect of a fractional share. Such conversion shall be deemed
to have been effected at the close of business on the date when this Note shall
have been surrendered to the Company for conversion, so that the person entitled
to receive such Conversion Shares shall be treated for all purposes as having
become the record holder of such Conversion Shares at such time.  In the event
that less than the entire outstanding principal of this Note is converted
hereunder, this Note shall not be surrendered for cancellation but shall have
the fact and amount of conversion recorded on the face of this Note by writing
acknowledged by Holder and the Company. If less than the entire principal
balance of this Note is converted, the amount of principal converted shall be
reduced to the nearest amount that results in no fractional shares.

3.3 Reservation of Shares. The Company agrees that, during the period within
which this Note may be converted, the Company will at all times have authorized
and in reserve, and will keep available solely for delivery upon the conversion
of this Note, Common Stock as from time to time shall be receivable upon the
conversion of this Note, free and clear of all restrictions on issuance, sale or
transfer other than those imposed by law and free and clear of all pre-emptive
rights. The Company agrees that the Conversion Shares shall, at the time of such
delivery, be validly issued and outstanding, fully paid and non-assessable, and
the Company will take all such action as may be necessary to assure that the
stated value or par value per share of the Conversion Shares is at all times
equal to or less than the Conversion Price.

 
4.
Representations and Warranties of Borrower.  The Borrower represents and
warrants to Lender as follows:

4.1           Authority.  The Borrower has the requisite legal capacity to own
its assets, to borrow money, to execute, deliver and perform each of the Loan
Documents to which it is a party and all other documents, certificates and
instruments delivered in connection therewith, and to effect and carry out the
transactions contemplated herein and therein.  Each Loan Document has been duly
authorized and, when executed and delivered, will be a valid and legally binding
instrument enforceable against Borrower in accordance with its terms.  The
execution and delivery of the Loan Documents and the consummation of the
transactions contemplated thereby will not violate (i) any law, order, rule or
regulation or determination of an arbitrator, court, or other governmental
agency, applicable upon the Borrower or any of the Borrower’s property or as to
which the Borrower or any of the Borrower’s property is subject, or (ii) any
provision of any agreement, instrument, or undertaking to which the Borrower is
a party or by which the Borrower or any of the Borrower’s property is bound and
will not result in the creation or imposition of any lien upon any of the
property of the Borrower other than those in favor of the Lender pursuant to the
Loan Documents.  No consents, approvals or other authorizations or notices,
other than those which have been obtained and are in full force and effect, are
required in connection with the execution and delivery of the Loan Documents and
the performance of any obligations contemplated thereby.
 
 
 

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4.2          Litigation.  There are no actions, suits, proceedings or
governmental investigations or inquiries pending, or to the best knowledge of
the Borrower, threatened against the Borrower or the Lender that could, if
adversely determined, have a material adverse effect on the performance of any
obligation contemplated in or arising under the Loan Documents.

 
4.3
No Defaults.

 
4.3.1
The Borrower is not a party to any contractual obligation the compliance with
which would have a material adverse effort or the performance of which, either
unconditionally or upon the happening of an event, will result in the creation
of a lien other than a lien granted pursuant to a Loan Document created in
accordance with this Agreement on the property or assets of the Borrower.

 
4.3.2
The Borrower is not in default under or with respect to any contractual
obligation owed by the Borrower and, to the knowledge of the Borrower no other
party is in default under or with respect to any contractual obligation owed to
the Borrower, other than those defaults which in the aggregate shall have no
material adverse effect on the Borrower, the Pledged Security or other property
and assets of the Borrower, or the Lender.

 
5.
Covenants of the Borrower.

 
5.1
The Borrower covenants and agrees that until full and complete performance by
the Borrower of all obligations arising under the Loan and the Loan Documents,
the Borrower shall:

 
a.
Cooperate with the Lender and execute  such further instruments and documents as
the Lender shall reasonably request to carry out to its satisfaction the
transactions contemplated by the Loan Documents;

 
b.
As soon as possible and in any event within two (2) business days after
acquiring knowledge thereof notify the Lender in writing of the occurrence of
any Default or Event of Default on this or any other obligation of the Borrower;

 
c.
Cause to be promptly delivered to the Lender copies of all written notices, and
notice of any oral notices, received by the Borrower with respect to the Pledged
Security;

 
d.
Promptly provide the Lender with such other information respecting condition or
operations, financial or otherwise, of the Borrower as the Lender may from time
to time reasonably request.

 
a.
The Borrower covenants and agrees that until full and complete performance by
the Borrower of all obligations arising under the Loan and the Loan Documents
have been satisfied by the Borrower, the Borrower shall not sell or transfer
shares of Borrower which may adversely affect the ability of the Lender to sell
or dispose of the Pledged Security in accordance with the terms of this
Agreement and the Loan Documents.

 
 
 

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5.2
Compliance with the Law.  The Borrower shall comply in all material respects
with all requirements of law, contractual obligations, commitments, instruments,
licenses, permits and franchises.

 
5.3
Payment of Taxes.  The Borrower shall pay and discharge, before the same shall
become delinquent, all lawful governmental claims, taxes, assessments, charges
and levies.

 
5.4
Indebtedness.  The Borrower shall not create or suffer to exist any indebtedness
except:

 
a.
The Loan;

 
b.
Current liabilities in respect of taxes, assessments and governmental charges or
levies incurred; and

 
c.
Indebtedness existing on the Effective Date; and

 
d.
Indebtedness not exceeding One Million Dollars ($1,000,000.00) in the aggregate.

 
6.
Events of Default.

 
6.1
Each of the following shall constitute an “Event of Default”:

 
a.
The Borrower shall fail to make any payment of principal or interest on the Loan
or other amounts due under the Loan Documents on the date which such payment is
due;

 
b.
The Borrower shall fail to perform any term, covenant or agreement contains
herein or the Borrower shall fail to perform any other term, covenant or
agreement contained herein or in any Loan Document and such failure shall
continue for fifteen (15) days after notice to the Borrower by the Lender;

 
c.
Any representation or warranty of the Borrower in any Loan Document shall prove
to have been false in any material respect upon the date when made;

 
d.
The Borrower shall (i) apply for or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee or liquidator; (ii) be
generally unable to pay the Borrower’s debts as such debts become due; (iii)
make a general assignment for the benefit of Borrower’s creditors; (iv) commence
a voluntary case under the United States Bankruptcy code; (v) file a petition
seeking to take advantage of any other law of any jurisdiction relating to
bankruptcy, insolvency or composition or readjustment of debts; (vi) a
proceeding or case shall be commenced, without the application or consent of the
Borrower, in any court seeking the liquidation of the Borrowers assets, or the
composition or readjustment of the Borrowers debts, the appointment of a
trustee, receiver, custodian, liquidator or the like, or any similar relief in
respect of the Borrowers under any law of any jurisdiction;

 
6.2
Remedies Upon Default.  Immediately upon the occurrence of any Event of Default
and during the continuance thereof, the Lender may declare the Loan, all
interest hereon and all other amounts and obligations payable under any Loan
Document to be forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by the
Borrower.

 
 
 

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7.
Miscellaneous.

 
7.1
Expenses.  Whether or not any advances are made pursuant to the Loan, the
Borrower agrees to pay all costs and expenses in connection with the
preparation, delivery, administration and enforcement of the Loan and the
perfection and continuation of the security interest in the Pledged Security.

 
7.2
Governing Law.  This Agreement and all other Loan Documents are contracts under
the laws of the Commonwealth of Virginia and shall for all purposes be governed
by and construed in accordance with the laws of the Commonwealth of Virginia
without regard to its principals of conflicts of laws.  The Borrower and the
Lender hereby submit to the jurisdiction of the Circuit Court for Fairfax
County, Virginia for the purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby.

 
7.3
Waivers.  No course of dealing between any of the Borrower and the Lender, nor
any failure to exercise, nor any delay in exercising, any right, power or
privilege of the Lender hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise or the exercise of any other right, power
or privilege.

 
7.4
Severability.  The provisions of this Agreement are severable.  If any clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision or part thereof in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction or any
other clause or provision in this Agreement in any jurisdiction.

 
7.5
Notices.  All notices and other communications made or required to be given
pursuant to the Loan Documents shall be in writing and shall be deemed given if
delivered personally or by facsimile transmission (with confirmation of
receipt), or delivered by overnight courier service, or mailed by registered or
certified mail, postage prepaid to the parties at the address stated above in
this Agreement.

 
7.6
Successors and Assigns.  This Agreement shall inure to the benefit of and shall
be binding upon the successors and assigns of the parties hereto; provided,
however, that the Borrower may not assign any rights or obligations hereunder
without the written consent of the Lender.

 
7.7
Counterparts.  This Agreement may be executed in counterparts, each of which
shall be deemed to be an original and all of which shall constitute one
document.

 
7.8
Termination.  This Agreement shall terminate upon irrevocable payment in cash in
full of all obligations or upon the conversion of the outstanding debt to Horne
International Inc. Common Stock, at which time the Lender will deliver or
release all of the Pledged Security being held hereunder to the Borrower.

 
7.9
Prior Agreements.  This Agreement supersedes all prior Loan Agreements and other
agreements, written or oral, pertaining to the subject matter herein.

 
 
 

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IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be duly
executed and delivered as of the day and year first written above.

BORROWER:
 
LENDER:
     
Signature on File /E Auld-Susott
 
Signature on File/ D Horne
Signature
 
Signature
     
Evan Auld-Susott, CEO
 
Darryl K. Horne
 
 
 
Printed Name and Title
 
Printed Name
     
12/29/2011
 
12/29/2011
 
 
   
Date
 
Date

 
 
 

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