Exhibit 10.1

AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

     It is hereby agreed as of the 8th day of November, 2004, by and between
HALIFAX CORPORATION, a Virginia corporation (“Halifax”), HALIFAX ENGINEERING,
INC., a Virginia corporation (“Engineering”), MICROSERV LLC, a Delaware limited
liability company (“Microserv”) and HALIFAX ALPHANATIONAL ACQUISITION, INC., a
Delaware corporation (“AlphaNational”; collectively with Halifax, Engineering
and Microserv, “Borrower”), and PROVIDENT BANK, a Maryland banking corporation
(“Bank”), of Baltimore, Maryland, and the successor by merger to Southern
Financial Bank that this Amended and Restated Loan and Security Agreement (the
“Agreement”) combines, amends and replaces the Security Agreement dated as of
March 6, 2002, Change in Terms Agreements dated as of March 12, 2002 and April
3, 2003 and ARTS Security and Finance Agreement dated as of September 9, 2003,
each executed by Halifax and Bank, as amended. The terms of the Agreement are as
follows:

I. DEFINITIONS

A.   Specific Definitions. The following terms have the following definitions
(each definition is equally applicable to the singular and plural forms of the
terms used, as the context requires):

1.   “Account Debtor” means any person or entity who is or who may become
obligated to make payments to Borrower, including, but not limited to, payments
owed to Borrower under, with respect to, or on account of Receivables.   2.  
“Assignment of Claims Act” means, collectively, the Assignment of Claims Act of
1940, as amended, 31 U.S.C. § 3727, 41 U.S.C. § 15, any applicable rules,
regulations and interpretations issued pursuant thereto, and any amendments to
any of the foregoing.   3.   “Borrowing Base” has the meaning ascribed to such
term in the Formula Advance Addendum executed the date hereof by and between
Borrower and Bank.   4.   “Collateral” means all of the now owned and hereafter
acquired assets, properties and property rights of Borrower with respect to
which Borrower has at any time granted a security interest or lien to Bank or
has at any time otherwise assigned or pledged to Bank as security for any of the
Obligations.   5.   “Equipment” means all of the now owned and hereafter
acquired machinery, equipment, furniture, fixtures (whether or not attached to
real property), vehicles, supplies and other personal property of Borrower other
than inventory, including any leasehold interests therein and all substitutions,
replacement parts and annexations thereto, and including all improvements and
accessions thereto and all spare parts, tools, accessories and attachments now
owned or hereafter acquired in connection therewith, and any maintenance
agreements applicable thereto, and all proceeds and products thereof, including
sales proceeds, and all rights thereto.   6.   “G.A.A.P.” means, with respect to
any date of determination, generally accepted accounting principles as used by
the Financial Accounting Standards Board and/or the American Institute of
Certified Public Accountants consistently applied and maintained throughout the
periods indicated.   7.   “Government” means the United States of America or any
agency or instrumentality thereof.   8.   “Government Contract” means any
contract with the Government under which Borrower is the prime contractor.   9.
  “Inventory” means all of Borrower’s now owned and hereafter acquired
inventory, wherever located, including, but not limited to, goods, wares,
merchandise, materials, raw materials, parts, containers, goods in process,
finished goods, work in progress, bindings or component materials, packaging and
shipping materials and other tangible or intangible personal property held for
sale or lease or furnished or to be furnished under contracts of service or
which contribute to the finished products or the sale, promotion, storage and
shipment thereof, all goods returned for credit, repossessed, reclaimed or
otherwise reacquired by Borrower, whether located at facilities owned or leased
by Borrower, in the course of transport to or from Account Debtors, placed on
consignment, or held at storage locations, and all proceeds and products thereof
and all rights thereto, including, but not limited to all sales proceeds, all
chattel paper related to any of the foregoing and all documents, including, but
not limited to, documents of title, bills of lading and warehouse receipts
related to any of the foregoing.   10.   “Line of Credit” means any line of
credit facility extended by Bank to Borrower pursuant to Paragraph II.A of this
Agreement and otherwise in accordance with the terms of this Agreement.   11.  
“Loan” means one or more credit facilities, including any Line of Credit,
provided by Bank to Borrower pursuant to the terms of this Agreement and all
accompanying Loan documents, including, but not limited to, one or more
promissory notes of Borrower payable to the order of Bank, as the same may be
amended, modified, extended, renewed, supplemented, restated or replaced from
time to time.   12.   “Maximum Line of Credit Amount” means Twelve Million
Dollars ($12,000,000).

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13.   “Obligations” means collectively the obligations of Borrower to pay to
Bank: (i) any and all sums due to Bank under or pursuant to the Loan or
otherwise under the terms of this Agreement or any accompanying Loan documents;
(ii) any and all sums advanced by Bank to preserve or protect the Collateral or
to preserve, protect, or perfect Bank’s security interests and liens in the
Collateral; (iii) the expenses of retaking, holding, preparing for sale, selling
or otherwise disposing of or realizing on the Collateral, or of any exercise by
Bank of Bank’s rights in the event of a default by Borrower, together with
Bank’s attorneys’ fees, expenses of collection, and court costs; and (iv) any
other indebtedness or liability of Borrower to Bank, whether direct or indirect
(by way of endorsement, guaranty, pledge or otherwise), liquidated or
unliquidated, joint or several, absolute or contingent, contemplated or
uncontemplated, or otherwise arising from any loan, note, letter of credit,
guaranty, overdraft, or any other duty owed by Borrower to Bank, now existing or
hereafter arising.   14.   “Other Obligor” means any person or entity that is
now or hereafter liable, directly, contingently or otherwise, upon or in
connection with any of the Obligations or that has granted any lien or security
interest to or for the benefit of Bank to secure any of the Obligations,
including, but not limited to, any guarantor, surety, endorser, or co-maker of
any of the Obligations.   15.   “Receivables” means all of Borrower’s now owned
and hereafter acquired and/or created Accounts, accounts receivable, contracts,
contract rights, Instruments, Documents, Chattel Paper, Deposit Accounts, notes,
notes receivable, drafts, acceptances, General Intangibles (including, but not
limited to, trademarks, tradenames, licenses, copyrights and patents), and other
choses in action (not including salary or wages), and all proceeds and products
thereof, and all rights thereto, including, but not limited to, proceeds of
Inventory and returned goods and proceeds arising from the sale or lease of or
the providing of Inventory, goods, or services by Borrower, as well as all other
rights of any kind, contingent or non-contingent, of Borrower to receive
payment, benefit, or credit from any person or entity, including, but not
limited to, the right to receive tax refunds or tax rebates.   16.   “VDOT
Contract” means Contract #844 between Halifax Technology Services Company
(predecessor by merger to Halifax) and Virginia Department of Transportation and
Virginia Retirement Systems for Provision of Services for Information
Technology/Enterprise Architecture, dated November 1, 1998, as amended.   17.  
“VDOT Vendor Liens/Assignments” means liens on or assignments of receivables
from the VDOT Contract given to vendors supplying equipment and software
provided by Borrower to the customer pursuant to the VDOT Contract, but only to
the extent they relate to the acquisition of such equipment and software.

B.   UCC Definitions. The terms “Accounts,” “As-Extracted Collateral,” “Chattel
Paper,” “Deposit Accounts,” “Documents,” “Electronic Chattel Paper,” “Fixtures,”
“General Intangibles,” “Goods,” “Investment Property,” Instruments, “
“Letter-of-Credit Rights,” “Payment Intangibles,” “Software” and “Tangible
Chattel Paper” have the respective meanings given to those terms in Maryland
Uniform Commercial Code — Secured Transactions, Title 9, Commercial Law Article,
Annotated Code of Maryland, as amended (“Article 9”).   C.   Accounting Terms.
The accounting terms used in this Agreement have the meanings customarily given
them in accordance with G.A.A.P., unless this Agreement expressly provides a
different meaning.

II. BASIC TERMS OF LOAN

A.   Line of Credit. Subject to the continued compliance of Borrower with the
terms of this Agreement and all other accompanying Loan documents and the
continued absence of any default by Borrower or any Other Obligor hereunder and
thereunder, Bank may advance to Borrower, for use by Borrower as hereafter
provided, such sums as Borrower may request, but which shall not exceed in the
aggregate at any one time outstanding the lesser of the Borrowing Base or the
Maximum Line of Credit Amount. Borrower shall not request any advance of
proceeds of the Line of Credit which exceeds the Maximum Line of Credit Amount
or the Borrowing Base or which would cause the aggregate amount of advances made
and outstanding under the Line of Credit to exceed the Maximum Line of Credit
Amount or the Borrowing Base. If the aggregate amount of advances made and
outstanding under the Line of Credit shall at any time and for any reason exceed
the Maximum Line of Credit Amount or the Borrowing Base, Borrower shall
immediately pay Bank the excess. Each advance shall be by automatic credit. Bank
shall make all advances by depositing funds in Borrower’s commercial account
number 20-65310679 or such Bank account as may be agreed upon by Borrower and
Bank. Borrower shall use the proceeds of the Line of Credit for short term
working capital purposes including the financing of Borrower’s contracts and
accounts receivable. Within such limitations and subject to all of the terms and
conditions set forth herein and in the other accompanying Loan documents,
Borrower may borrow, repay, and reborrow funds under the Line of Credit in
accordance with the terms and conditions of this Agreement.   B.   Advance
Procedure. With respect to each advance and all matters and transactions in
connection therewith, Borrower hereby irrevocably authorizes Bank to accept,
rely upon, act upon and comply with any oral or written instructions, requests,
confirmations and orders of any employee or representative of Borrower who is so
authorized or designated as a signer of Loan documents under the provisions of
Borrower’s most recent Banking and Borrowing Resolutions or similar document on
file with Bank. Borrower acknowledges that the transmission between Borrower and
Bank of any such instructions, requests, confirmations and orders involves the
possibility of errors, omissions, mistakes and discrepancies and agrees to adopt
such internal measures and operational procedures as may be necessary to protect
its interest. By reason thereof, Borrower hereby assumes all risk of loss and
responsibility for, releases and discharges Bank from any and all responsibility
or liability for, and agrees to indemnify, reimburse on demand and hold Bank
harmless from, any and all claims, actions, damages, losses, liability and
expenses by reason of, arising out of, or in any way connected with or related
to: (i) Bank’s accepting, relying and acting upon, complying with or observing
any such instruction, request, confirmation or order; and (ii) any such error,
omission, mistake, or discrepancy, provided such error, omission, mistake or
discrepancy is not the result of negligence on the part of Bank.   C.   Evidence
of Loan; Terms of Repayment. The interest rates on the Loan and the method of
calculating interest upon the Loan, the term of the Loan, the method and times
of repayment, and other conditions pertaining to the repayment of the Loan shall
at the option

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    of Bank be evidenced by Bank’s form of promissory note or as otherwise set
forth in appropriate writings between the parties as determined by Bank. The
Loans shall be subject to annual internal reviews of the Bank concurrent with
the delivery of the Borrowers’ annual modified financial statements, with the
next review expected to be completed by August 31, 2005. In the absence of a
promissory note or other applicable writing, the Loan shall be deemed to be
otherwise conclusively evidenced by Bank’s record of advances of proceeds of the
Loan and Bank’s record of receipt of repayments and other bookkeeping entries
reflecting the payment of principal and interest, and interest shall be deemed
to accrue at the interest rate reflected on Bank’s records.   D.   Statement of
Account. Bank may at any time or from time to time render a statement or
statements of account to Borrower for the Obligations or any portion thereof.
Each such statement shall be deemed to be correct and conclusively binding on
Borrower unless Borrower notifies Bank to the contrary in writing within thirty
(30) days from the date of any such statement which Borrower deems to be
incorrect.   E.   ARTS Fee. Borrower shall pay Bank a monthly ARTS fee of $1,000
per month. Bank may debit Borrower’s operating account to effectuate such
payment, payable in arrears.   F.   Unused Commitment Fee. Borrower agrees to
pay an unused commitment fee on any difference between the Maximum Line of
Credit Amount and the amount of advances under the Line of Credit, determined by
the average of the daily amount of credit outstanding during the specified
period. The fee will be calculated by multiplying such difference by one-quarter
percent (0.25%). This fee is due on December 31, 2004, and on the last day of
each following quarter until the Line of Credit has been terminated, payable in
arrears. Bank may debit Borrower’s operating account to effectuate such payment.
  G.   Commitment Fee. Prior to the execution of this Agreement, Borrower has
paid Bank a non-refundable commitment fee of Thirty Thousand Dollars ($30,000).

III. GRANT OF SECURITY INTEREST

A.   Collateral. As collateral security for all Obligations of Borrower to Bank,
and in consideration of advances from Bank to Borrower, Borrower (other than
Halifax) hereby grants and pledges to Bank, and Halifax hereby confirms and
restates its prior grant and pledge to Bank of, a continuing security interest
in all of the following property:

1.   All of Borrower’s Equipment;   2.   All of Borrower’s Receivables;   3.  
All of Borrower’s Inventory;   4.   All of Borrower’s now owned or hereafter
acquired Goods, Chattel Paper (including without limitation all Electronic
Chattel Paper and Tangible Chattel Paper), Instruments, Documents, Investment
Property, General Intangibles (including without limitation all Payment
Intangibles and Software), Deposit Accounts, Letter-of-Credit Rights,
As-Extracted Collateral and Fixtures.

Borrower also hereby grants and pledges (or with respect to Halifax, confirms
and restates its prior grant and pledge) to Bank of a continuing security
interest in: (i) all proceeds (including insurance proceeds) and products of the
above-described Collateral; (ii) any of Borrower’s assets in which Bank has been
or is hereafter granted a security interest under any other security agreements,
notes or other obligations or liabilities between Borrower and Bank; (iii) any
accounts, property, securities, Investment Property or monies of Borrower which
may at any time be maintained at, assigned to, delivered to, or come into
possession of, Bank, as well as all proceeds and products thereof; and (iv) all
of the books and records pertaining to any of the above-described items of
Collateral.

B.   Borrower’s Obligations. Borrower’s Obligations under this Agreement are
irrevocable, absolute and unconditional, and direct, immediate and primary.

IV. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants that:

A.   Accuracy. All information, financial statements and data submitted to Bank
by Borrower or any Other Obligor are true, accurate and complete in all material
respects.   B.   Authority. Halifax is duly organized and existing in good
standing under the laws of the Commonwealth of Virginia. Engineering, Microserv
and AlphaNational are each duly organized and existing in good standing under
the laws of the State of Delaware. Borrower is qualified to do business and in
good standing in all jurisdictions where it conducts its business or its
Receivables are located, and has all requisite power, authority, licenses and
permits to own its property and carry on its business, and Borrower shall
deliver to Bank a written opinion of counsel to such effect if requested by
Bank. None of the terms and conditions herein, or of any other agreement
executed by Borrower, are in violation of the charter or by-laws, or other
organizational documents of Borrower, any contractual obligation Borrower may
have with any third party, or any order or decree by which Borrower is bound,
and the execution and delivery of this Agreement have been duly authorized by
appropriate corporate, limited liability company or partnership action, and
Borrower shall deliver to Bank a written opinion of counsel to such effect if
requested by Bank.   C.   Litigation. No litigation or other proceeding before
any court or administrative agency is pending, or to the knowledge of Borrower,
is threatened against Borrower, the outcome of which could materially impair
Borrower’s financial condition or its ability to carry on its

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    business. Borrower is not the subject of any pending bankruptcy proceeding
nor subject to the continuing jurisdiction of a bankruptcy court as the result
of an approved plan of reorganization.   D.   Financing Statements. No financing
statement relating to any of the Collateral is on file in any place, except for
any financing statement (i) naming Bank of America or The Savings Bank of
Manchester as secured party (each of which shall be terminated within sixty (60)
days of the date of this Agreement), (ii) naming Bank as secured party or
(iii) which solely identifies VDOT Vendor Liens/Assignments.   E.   Assurance of
Title. Borrower is the owner of all of the Collateral, or, if proceeds of any
note or notes secured hereby are being used to purchase the Collateral, Borrower
shall be the owner thereof, free and clear of all claims, encumbrances, charges
and liens, except for VDOT Vendor Liens/Assignments, purchase money security
interests or as herein provided.   F.   Addresses. The principal place of
business of Borrower, the books and records relating to Borrower’s business and
the Collateral, and the Collateral (other than trunk stock) are located at the
address(es) set forth on Exhibit A to this Agreement.   G.   Hazardous
Substances. Borrower has never received any notification, citation, complaint or
notice of investigation relating to the making, storing, handling, generating or
transporting of any materials or substances which under applicable laws require
special handling in collection, storage, treatment or disposal (“Hazardous
Substances”), and Borrower does not own, make, store, handle, dispose of or
transport any Hazardous Substances in violation of any applicable laws.   H.  
ERISA. Borrower and each of its affiliates and subsidiaries (“ERISA Affiliates”)
which are under common control, or are part of a controlled group, within the
meaning of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), are in compliance with all applicable provisions of ERISA with regard
to each of its employee benefit plans (as defined in ERISA) (“Employee Benefit
Plans”). Neither a reportable event (as defined in ERISA) nor a prohibited
transaction (as defined in ERISA) has occurred with respect to any Employee
Benefit Plan of Borrower or any ERISA Affiliate. Immediately upon the occurrence
of any such reportable event, Borrower shall promptly furnish to Bank notice
thereof, as filed with Pension Benefit Guaranty Corporation (“PBGC”). Neither
Borrower nor any ERISA Affiliate has completely or partially withdrawn from any
multiemployer plan and no such multiemployer plan is in reorganization, all as
provided by ERISA. Borrower and each ERISA Affiliate has met its minimum funding
requirements and has no unfulfilled obligations under ERISA to contribute to any
Employee Benefit Plan. Borrower shall promptly notify Bank of any assertion by
PBGC of liability of Borrower or any ERISA Affiliate under Title IV of ERISA.
The failure of Borrower to pay within 30 days the amount of any liability under
Title IV of ERISA demanded by PBGC shall constitute a default hereunder.   I.  
Taxes. There are no unpaid Federal, State, city, county, or other taxes owed by
Borrower, there are no Federal, State, city, county or other tax liens presently
filed against Borrower, and there are no outstanding personal property taxes of
any kind.   J.   Debarment and Suspension. No event has occurred and, to the
knowledge of Borrower, no condition exists that may result in the debarment or
suspension of Borrower from any contracting with the Government, and neither
Borrower nor any affiliate of Borrower has been subject to any such debarment or
suspension prior to the date of this Agreement.   K.   Subsidiaries. Except for
Engineering, AlphaNational and Microserv, Halifax does not have any subsidiaries
with assets having a value in excess of $100. None of Engineering, AlphaNational
and Microserv has any subsidiaries with assets having a value in excess of $100.
  L.   VDOT Contract. Borrower has provided Bank a true and complete copy of the
VDOT Contract (including any amendments to the original contract).

V. COVENANTS

    Borrower covenants that:

A.   Costs. Borrower shall pay all costs and expenses incident to the making of
the Loan and perfection of Bank’s security interests hereunder, including, but
not limited to, all attorneys’ fees (to the extent not prohibited by law) and
all recordation costs and taxes incident to filing of financing statements and
continuation statements in respect thereof.   B.   Further Documents. Borrower
shall execute and deliver to Bank from time to time any instruments or
documents, including, but not limited to, financing statements, amendments,
continuation statements, mortgages, loss payable endorsements for insurance
policies, and assignments of insurance policies and proceeds, and shall do all
things necessary or convenient to carry into effect the provisions of this
Agreement. Borrower designates Bank or any of its officers as attorney-in-fact
to sign Borrower’s name on any such instruments or documents, to file the same
as may be appropriate, and to request and endorse Borrower’s name to any and all
requests described in Section 9-210 of Article 9. Borrower agrees that filed
photocopies of financing statements and continuation statements shall be
sufficient to perfect Bank’s security interest hereunder.   C.   Taxes. Borrower
shall pay and discharge, when due, all taxes, levies, liens, and other charges
on any of its assets and shall pay promptly, when due, all other taxes,
including withholding taxes.   D.   Laws. Borrower shall comply at all times
with all laws, ordinances, rules and regulations of any Federal, State,
municipal or other public authorities having jurisdiction over Borrower, the
Collateral or any of Borrower’s other assets, including, but not limited to,
ERISA and all laws relating to Hazardous Substances.

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E.   Name and Location. Borrower shall immediately advise Bank in writing of the
opening of any new place of business or the closing of any of its existing
places of business, and of any change in Borrower’s name or the location of the
places where the Collateral, or books and records pertaining to the Collateral,
are kept.   F.   Books and Records. Borrower shall maintain such records with
respect to the Collateral and the condition (financial and otherwise) and
operation of Borrower’s business as Bank may request from time to time, and
shall furnish Bank such information with respect to the Collateral, Account
Debtors, and the condition (financial and otherwise) and operation of Borrower’s
business, including, but not limited to, balance sheets, operating statements,
and other financial information, as Bank may request from time to time. Bank may
at any time and without prior notice to Borrower and without the consent of
Borrower directly contact Account Debtors and verify or confirm the status of
the Receivables. Borrower shall furnish Bank or cause to be furnished to Bank
such financial information with respect to any Other Obligor, including, but not
limited to, balance sheets, operating statements, personal financial statements
and other financial information, as Bank may request from time to time. Bank may
discuss the affairs, finances and accounts of Borrower with any of Borrower’s
officers and directors and its independent accountants.   G.   Field
Examination. Bank or any of its agents or representatives may from time to time,
during normal business hours, inspect, check, make copies of or extracts from
the books, records and files of Borrower, and visit and inspect Borrower’s
offices and any of the Collateral wherever located. Borrower shall make same
available at any time for such purposes, and shall pay all expenses related to
such inspections. Unless an Event of Default has occurred and is continuing,
such examinations will not be conducted more frequently than semi-annually.
Until the first full-scope field examination has been completed and its results
communicated to the Bank, Borrower’s advances under the Line of Credit shall not
exceed Ten Million Five Hundred Thousand Dollars ($10,500,000).   H.   Reporting
Requirements. In addition to such other information (financial and otherwise) as
Bank may require from time to time, Borrower shall submit to Bank all
information to be submitted pursuant to the Reporting Requirements Addendum
attached hereto, as amended from time to time.   I.   Misrepresentation.
Borrower shall not make or furnish Bank any representation, warranty, or
certificate in connection with or pursuant to this Agreement which is materially
false.   J.   Insurance. Borrower has and shall maintain insurance on all of its
assets and properties, including, but not limited to, the Collateral, at all
times and against hazards, with companies, in amounts and in form acceptable to
Bank. Borrower shall annually submit to Bank original insurance certificates
providing that such insurance policies have a Lenders Loss Payable Clause and
Additional Insured, and shall be noncancellable unless thirty (30) days prior
notice of cancellation is provided to Bank. In event of any loss thereunder, the
carriers named therein are hereby directed to make such payment for loss solely
to Bank, and not to Borrower and Bank jointly or to any other person. If any
insurance losses are paid by check, draft or other instruments payable to
Borrower or to Borrower and Bank jointly, Bank may endorse the name of Borrower
thereon and do such other things as Bank may deem advisable in order to reduce
the same to cash. In addition, Borrower shall maintain at all times, public
liability insurance and all other coverages required by Bank, naming Bank as
additional insured, with companies, in amounts and in form acceptable to Bank.
All loss recoveries received by Bank upon any insurance may be applied and
credited by Bank at its discretion to the Obligations.   K.   Bank’s Duty of
Care. Except as provided in this Paragraph V.K., Bank’s sole duty with respect
to the Collateral shall be to use reasonable care in the custody, use, operation
and preservation of the Collateral in its possession, and Borrower shall
reimburse Bank for all costs and expenses, including insurance costs, taxes and
other charges, incurred in connection with the custody, use, operation, care or
preservation of the Collateral, such reimbursement to be secured as provided
above in Paragraph III. In the event that Bank takes possession of the
Collateral by foreclosure as provided in Paragraph VII.C. herein or otherwise,
Bank may, but shall be under no obligation to, take such actions as it may deem
appropriate to protect the Collateral by insurance or otherwise, and any expense
so incurred shall likewise be reimbursed and secured as provided above in
Paragraph III. Bank shall incur no liability to Borrower for any failure to
provide adequate protection or insurance for the Collateral acquired by Bank.
Bank shall not be obligated to take any steps necessary to preserve any rights
in any of the Collateral against prior parties, and Borrower hereby agrees to
take such steps. Borrower hereby waives the defense of unjustifiable impairment
of collateral with respect to the Collateral and any other collateral for any of
the Obligations.   L.   Equipment. If the Collateral includes Equipment, then
the covenants in this Paragraph V.L. apply:

1.   Repair. Borrower shall keep and maintain the Equipment in good order and
repair and in working condition.   2.   Personalty. The Equipment shall be and
shall remain personal property and nothing shall affect the character of the
same or cause the same to become realty without the written consent of Bank, or
prevent Bank in its option from removing same from premises on which they may
become attached, in event of default hereunder.   3.   No Sale of Equipment.
Without the prior written consent of Bank, Borrower shall not sell or otherwise
dispose of any of the Equipment, except that items of Equipment may be sold or
exchanged if such Equipment either (a) is replaced in the ordinary course of
Borrower’s business to the satisfaction of Bank by Equipment of a similar value
and which is subject to a security interest of Bank that is prior to all liens
other than purchase money security interests or (b) has a fair market value (in
the aggregate) of less than Ten Thousand Dollars ($10,000).   4.   Vehicles. If
the Collateral includes a motor vehicle for which a certificate of title is
issuable, Borrower shall deliver to Bank the certificate of title issued with
respect to such vehicle and shall cause a statement of Bank’s security interest
to be noted as a lien on such certificate of title.

M.   Receivables. If the Collateral includes Receivables, then the covenants in
this Paragraph V.M. apply:

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1.   Bona Fide. Each and every Receivable shall (i) be bona fide, be for a
certain undisputed claim or demand for the amount Borrower represented to be
owing thereon, (ii) represent a sale and delivery of personal property sold or
work and labor done, (iii) not be subject to any set-off, counterclaim, or
contingent liability upon the fulfillment of any contract or condition
whatsoever, and (iv) shall not be subject to any prohibition or limitation upon
assignment except as required by the Assignment of Claims Act.   2.   Books. If
requested by Bank, Borrower shall make all necessary entries in its books to
disclose the grant of a security interest in Receivables to Bank, and permit
Bank to verify Receivables.   3.   Mail. Upon demand, Borrower shall open all
mail only in the presence of a representative of Bank, who may take therefrom
any remittance on Receivables securing the Obligations. Bank is also granted the
power of attorney to have mail delivered to Bank, and not to Borrower, and to
open all mail and take therefrom any remittance on any Receivables.   4.  
Signatures. Bank or its representative may endorse or sign the name of Borrower
on remittances in respect of Receivables, invoices, assignments, financing
statements, notices to Account Debtors, bills of lading, storage receipts, or
other instruments or documents in respect of Receivables or the property covered
thereby.   5.   Collections. Borrower shall notify all Account Debtors to make
payment of their Receivables to Bank for the deposit to the Cash Collateral
Account as herein provided. Each Account Debtor shall be instructed to pay its
Receivables (i) if by paper check, by mailing such check to the following
address: Halifax Corporation, P.O. Box 9002, Warrenton, VA 20188, and (ii) if by
electronic funds transfer, by wiring funds to Halifax Corporation, a/c #
76-65310763, Provident Bank ABA # 2520 7301 8. If Borrower receives any payment
of a Receivable, it shall receive such payments on accounts as agent of and for
Bank and shall transmit to Bank, on the day thereof, or at other mutually agreed
upon intervals, all original checks, drafts, acceptances, notes and other
evidences of payment received in payment of or on account of Receivables,
including all cash monies similarly received by Borrower. For such purpose,
Borrower does hereby grant to Bank access to any post office boxes in which mail
is received. Until delivery of all such remittances to Bank, Borrower shall keep
the same separate and apart from Borrower’s own funds, capable of identification
as the property of Bank, and shall hold the same in trust for Bank. Further,
Borrower agrees that Bank may pay, for the account of Borrower, any taxes,
levies, or other charges affecting Borrower’s assets, including, but not limited
to, Inventory or Equipment which Borrower fails to pay, including all other
taxes and levies, and any such payment shall constitute a liability of Borrower.
Bank shall have the right to receive, indorse, assign and deliver in Bank’s name
or Borrower’s name any and all checks, drafts and other instruments for the
payment of money relating to the Receivables, and Borrower hereby waives notice
of presentment, protest and non-payment of any instrument so endorsed. Borrower
constitutes Bank or Bank’s designee as Borrower’s attorney-in-fact with power
with respect to the Receivables: (i) to endorse Borrower’s name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment of
Collateral that may come into Bank’s possession; (ii) to sign Borrower’s name on
any invoices relating to any of the Receivables, drafts against Account Debtors,
assignments and verifications of Receivables and notices to Account Debtors;
(iii) to notify the post office authorities to change the address for delivery
of mail addressed to Borrower to such address as Bank may designate; (iv) to
receive, open, and dispose of mail addressed to Borrower; (v) to do all other
acts and things necessary, proper, or convenient to carry out the terms and
conditions and purposes and intent of this Agreement. The power of attorney
hereby granted, being coupled with an interest, is irrevocable while any of the
Obligations remain unpaid or unperformed. Bank may, without notice to or consent
from Borrower and without affecting Borrower’s obligations hereunder, sue upon
or otherwise collect, extend the time of payment of or compromise or settle for
cash, credit or otherwise upon any terms, any of the Receivables or any
securities, guaranties, instruments or insurances applicable thereto or release
the obligor thereon. Bank is authorized and empowered to accept the return of
any Collateral represented by any of the Receivables without notice to or
consent by Borrower, all without discharging or in any way affecting Borrower’s
liability to Bank. Bank does not, by anything herein or in any assignment or
otherwise, assume any of Borrower’s obligations under any contract or agreement
assigned to Bank, and Bank shall not be responsible in any way for the
performance by Borrower of any of the terms and conditions thereof.   6.   Cash
Collateral Account. All remittances in payment of the Receivables securing the
Obligations shall be deposited with Bank (or any other bank designated by Bank)
in an account designated as “Provident Bank (name of Borrower), Cash Collateral
Account”, if the Bank should desire. Such deliveries and deposits shall be made
daily and each deposit shall be accompanied by a report in such form as Bank
shall require. All funds held in the Cash Collateral Account may be applied
against the Obligations at the discretion of Borrower. In the event any checks
or drafts deposited in the Cash Collateral Account are dishonored, Bank is
hereby irrevocably authorized to debit any other account of Borrower at Bank in
an amount equal to the amount of the checks or drafts dishonored and deposit
such sums in the Cash Collateral Account. If thereafter the dishonored check or
draft is honored and Bank receives immediately available funds therefore, Bank
shall deposit such funds into the account of Borrower which was previously
debited. If any checks or drafts deposited in the Cash Collateral Account are
drawn on a financial institution located outside of the United States of
America, Bank is hereby irrevocably authorized to debit any other account of
Borrower at Bank in an amount equal to the United States dollar equivalent of
the amount of such checks or drafts and deposit such sums in the Cash Collateral
Account. Upon receipt of immediately available funds for any such checks or
drafts Bank shall deposit the collected funds into Borrower’s account at Bank
which was previously debited.   7.   Cancellation of Contracts. Borrower shall
notify Bank in writing of any cancellation of a contract having annual revenues
in excess of $250,000.   8.   Government Contracts. In the event any Receivables
arise out of contracts with the Government, Borrower shall assign to Bank all
Government Contracts with amounts payable of $100,000 or greater and in duration
of six (6) months or longer, and execute all other agreements, instruments and
documents and shall perform all further acts that Bank may require to ensure
compliance with the Assignment of Claims Act with respect to such Government
Contracts.

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9.   VDOT Contract Amendments. Borrower shall promptly provide Bank with copies
of all amendments to the VDOT Contract.   10.   VDOT Vendor Liens/Assignments.
Upon request, Borrower shall promptly provide Bank with copies of all documents
effectuating or related to any VDOT Vendor Liens/Assignments.

N.   Inventory. If the Collateral includes Inventory, then the covenants in this
Paragraph V.N. apply:

1.   Signatures. Bank or its representative may endorse or sign the name of
Borrower on remittances in respect to Inventory, assignments, invoices,
financing statements, notices to debtors, bills of lading, notices to suppliers,
storage or other instruments or documents in respect to Inventory or the
property covered thereby.   2.   Audit. Bank or its representative may from time
to time verify Inventory, through actual count or otherwise, and Borrower shall
make same available at any time for such purpose.   3.   Sales. So long as
neither Borrower nor any Other Obligor is in default of any of the Obligations,
Inventory subject to Bank’s continuing security interests may be sold by
Borrower in the ordinary course of business, but shall not otherwise be taken or
removed from Borrower’s premises.

O.   Investment Property. If the Collateral includes stocks, bonds or other
Investment Property of Borrower, then the covenants in this Paragraph V.O.
apply:

1.   Transfers. All certificates or instruments representing or evidencing such
investment property shall be in suitable form for transfer by delivery, shall be
in form and substance satisfactory to Bank and shall be delivered to and held by
or on behalf of Bank; Bank is hereby authorized, at its option and without any
obligation to do so, to transfer to or to register in the name of its nominee(s)
all of any part of such Investment Property, and to do so before or after
default or the maturity of the Obligations secured hereby, with or without
notice to Borrower; Bank shall have the right at any time to exchange
certificates or instruments representing or evidencing such Investment Property
for certificates or instruments of smaller or larger denominations; Bank shall
have control over any securities accounts or security entitlements which
constitute Collateral, pursuant to terms acceptable to Bank.   2.   Dividends.
In the event that a stock dividend is declared, or any stock split-up made, with
respect to any security pledged hereunder, or cash or other property is
distributed in connection with a partial or total liquidation or dissolution or
in connection with a reduction of capital, capital surplus or paid-in surplus,
or property other than cash is distributed as a dividend, all the certificates
for the shares representing such stock dividend or stock split-up, and all of
such cash and other property, shall be delivered, duly endorsed, to Bank as
additional security hereunder.   3.   Attorney-in-Fact. Borrower hereby appoints
Bank Borrower’s attorney-in-fact with full authority in the place and stead of
Borrower and in the name of Borrower or otherwise, from time to time in Bank’s
discretion to take any action and to execute any instrument which Bank may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
but not limited to, receiving, endorsing and collecting all checks and other
Instruments made payable to Borrower representing any dividend, interest
payment, or other distribution in respect of the pledged Investment Property or
any part thereof and giving full discharge for the same.

P.   Government Contract Audits. Promptly after Borrower’s receipt thereof,
Borrower shall furnish Bank with notice of any final decision of a contracting
officer disallowing costs aggregating more than $100,000 which disallowed costs
arise out of any audit of Government Contracts of Borrower.   Q.   Subsidiaries.
If any Borrower creates or acquires a subsidiary containing assets having a
value in excess of $100, Borrower shall cause such subsidiary to become a
Borrower or Other Obligor hereunder (in a form acceptable to Bank).   R.  
Change in Control or Sale. Without the prior written consent of Bank, Borrower
shall not permit a change in ownership of more than 25% of the stock or other
equity interests of Halifax, Engineering, AlphaNational, Microserv or any other
entity constituting a Borrower, or permit any such entity to enter into any
merger or consolidation, or sell or lease substantially all of its assets.   S.
  Sale or Assignment of Contract or Subsidiary. Without the prior written
consent of Bank, Borrower shall not sell or assign any or all interest in any
(i) contract or (ii) any subsidiary of Halifax, Engineering, AlphaNational,
Microserv or any other entity constituting a Borrower.   T.   Dividends. Without
the prior written consent of Bank, Borrower shall not make any distributions on
behalf of equity or pay any dividends.   U.   Payments of Debt. Without the
prior written consent of Bank, Borrower shall not make any payments of debt to
any person or entity, or make any distributions (including loans or withdrawals)
of any kind to any officers, employees or members, other than (i) purchase money
financings permitted hereunder, (ii) payments to employees (including loans and
travel advances) made in the ordinary course of business, (iii) payments to the
former shareholders of the predecessor by merger to Microserv pursuant to
certain notes dated August 29, 2003 in the original principal amount of $494,000
and maturing on February 1, 2005, and (iv) payments to the Bank.   V.   Further
Covenants. Without the prior written consent of Bank, Borrower shall not:
(i) other than purchase money security interests or VDOT Vendor
Liens/Assignments, pledge or grant any security interest in any Collateral to
anyone except Bank, nor permit any financing statement (except Bank’s financing
statement) to be on file in any public office with respect thereto; (ii) other
than purchase

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    money security interests or VDOT Vendor Liens/Assignments, permit or suffer
any lien, levy or other encumbrance to attach to any of the Collateral or to any
other assets of Borrower, except for liens and encumbrances in favor of Bank;
(iii) permit a material change in any Receivable, or a material change in the
terms of any contract giving rise to a Receivable; (iv) make any agreement,
compromise, settlement, bulk sale, lease or transfer of assets other than in the
normal course of business; (v) create, incur or assume any liability for
borrowed money, except borrowings from Bank, trade debt, and purchase money
financings not to exceed $250,000 in any one year; (vi) assume, guarantee,
endorse or otherwise become liable in connection with the obligations of any
person, firm or corporation, except by endorsement of instruments for deposit or
collection or similar transactions in the ordinary course of business; or (vii)
purchase or acquire substantially all of the assets or the obligations or stock
of any person, firm or corporation or other enterprises whatsoever, other than
the direct obligations of the United States or Bank.

VI.   EVENTS OF DEFAULT. The following shall constitute a default hereunder if
existing fifteen (15) days after written notice thereof has been given to the
Borrower; provided, however, that the occurrence of an event under Paragraphs
VI.D, VI.F, VI.H or VI.I or a failure by Borrower to make any payment hereunder
when due shall automatically be a default hereunder:

A.   Nonperformance. Default by Borrower under, or breach of any provision or
warranty of, this Agreement, any other instrument, agreement or document in
connection with any of the Obligations, or any other instrument, agreement or
document of Borrower with Bank, whether such instrument, agreement or document
presently exists or is hereafter executed; or default by any Other Obligor
under, or breach of any provision or warranty of, this Agreement, any other
instrument, agreement or document in connection with any of the Obligations, or
any other instrument, agreement or document of any Other Obligor with Bank,
whether such instrument, agreement or document presently exists or is hereafter
executed;   B.   Representations and Warranties. Any warranty, representation,
or statement made to Bank by or on behalf of Borrower or any Other Obligor
proving to have been incorrect in any material respect when made or furnished;  
C.   Financial Condition. A determination by Bank in good faith, but in its sole
discretion, that the financial condition of Borrower or any Other Obligor is
unsatisfactory; insolvency of Borrower or any Other Obligor; suspension of
business, or commission of an act amounting to business failure by Borrower or
any Other Obligor;   D.   Assignments. Any assignment made by Borrower or any
Other Obligor for the benefit of creditors;   E.   Judgments. The entry of any
final judgment against Borrower or any Other Obligor for the payment of money in
excess of $100,000.00;   F.   Bankruptcy. Institution of bankruptcy, insolvency,
reorganization or receivership proceedings by or against Borrower or any Other
Obligor in any State or Federal court or the appointment of a receiver,
assignee, custodian, trustee or similar official under any Federal or State
insolvency or creditors’ rights law for any property of Borrower or any Other
Obligor; provided that Borrower shall have sixty (60) days to dismiss any
involuntary bankruptcy proceeding to which it does not consent;   G.  
Extraordinary Acts. A dissolution, liquidation or reorganization of Borrower or
any Other Obligor which is a corporation, partnership, limited liability company
or other legal entity;   H.   Attachments. The levy upon or attachment of any
property of Borrower or any Other Obligor, or the recordation of any Federal,
State or local tax lien against Borrower or any Other Obligor that has not been
removed or satisfied within thirty (30) days;   I.   Change in Ownership. A
change in more than 25% of the ownership of Halifax without the prior written
consent of Bank;   J.   Cross-Default. The occurrence of any event which is, or
would be with the passage of time or the giving of notice or both, a default
under any indebtedness in excess of $100,000 of Borrower or any Other Obligor to
Bank or to any person other than Bank;   K.   Loss or Damage; Transfer or
Encumbrance. Any material loss, theft or substantial damage not fully insured
for the benefit of Bank to any of the assets of Borrower or any Other Obligor or
the transfer or encumbrance of any material part of the assets of Borrower or
any Other Obligor other than in the ordinary course of business of Borrower or
such Other Obligor;   L.   Debarment or Suspension. The debarment or suspension
of Borrower or any Other Obligor from any contracting with the Government; or  
M.   Financial Information. The failure of Borrower or any Other Obligor to
furnish Bank such financial information as Bank may require from time to time.

VII. REMEDIES

A.   Specific Rights and Remedies. In addition to all other rights and remedies
provided by law and the Loan documents, Bank, on the occurrence of any default,
may: (i) accelerate and call due and payable any and all of the Obligations,
including all principal, accrued interest and other sums due as of the date of
default; (ii) impose the default rate of interest provided in any promissory
note evidencing the Loan, with or without acceleration; (iii) file suit against
Borrower or against any Other Obligor; (iv) seek specific performance or
injunctive relief to enforce performance of the Obligations, whether or not a
remedy at law exists or is adequate; (v) exercise any rights of a secured
creditor under the Uniform Commercial Code, including the right to take
possession of the Collateral without the use of judicial process or hearing of
any kind and the right to require Borrower to assemble the Collateral at such
place as Bank may specify; (vi) cease making advances or extending credit to
Borrower and stop and retract the making of any advance which may have been
requested by Borrower; and (vii) reduce the Maximum Line of Credit Amount.
Borrower also hereby authorizes Bank, upon a default, but without prior notice
to or demand upon Borrower and without prior opportunity of Borrower to be
heard, to institute

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    an action for replevin, with or without bond as Bank may elect, to obtain
possession of any of the Collateral. In such action for replevin, a copy of this
Agreement verified by affidavit of Bank or sworn on behalf of Bank shall
constitute evidence of Bank’s right to possession of the Collateral.   B.  
Costs of Collection. Upon the occurrence of any default, Bank shall be entitled
to recover from Borrower reasonable attorneys’ fees, plus court costs and other
expenses which may be incurred by Bank in the enforcement or attempted
enforcement of its rights hereunder, whether against any third party, Borrower,
or any Other Obligor. Expenses recoverable from Borrower shall (to the extent
not prohibited by law) include costs of collection, including such portion of
Bank’s overhead as Bank shall allocate to collection and enforcement of the
Obligations in Bank’s sole but reasonable discretion, salaries, out-of-pocket
travel, living expenses and the hiring of agents, consultants, accountants, or
otherwise. All sums of money thus expended, and all other monies expended by
Bank to protect its interest in the Collateral (including insurance, taxes or
repairs) shall be repayable by Borrower to Bank on demand, such repayment to be
secured as provided in Paragraph III hereof.   C.   Foreclosure. Upon the
occurrence of any default, in addition to other remedies provided under the
Uniform Commercial Code, Bank at any time then or thereafter, in its discretion,
may lawfully enter any of Borrower’s premises or the premises where the
Collateral is located, and with or without judicial process, lawfully remove,
under Section 9-609 of the Uniform Commercial Code, the Collateral or records
thereof to such place as Bank may deem advisable, or require Borrower to
assemble and make any or all such Collateral available at such reasonable place
as Bank may direct, and realize upon (by public or private sale or in any other
manner) all or any part of the Collateral and, unless the Collateral is
perishable or threatens to decline speedily in value, or is of a type
customarily sold on a recognized market, Bank shall give Borrower, and other
parties entitled to notice, reasonable notice in writing before the sale of the
Collateral or any part thereof at public auction or private sale, in one or more
sales, at such price or prices, and upon such terms either for cash or credit or
future delivery as Bank may elect, and at any such public sale Bank may bid for
and become the purchaser of any or all of such Collateral; and/or Bank may
foreclose its security interest in the Collateral in any way permitted by law.
In connection with any notices to be given pursuant to this Paragraph VII.C., it
is agreed in all instances that five (5) business days notice constitutes
reasonable notice. Any such notice shall be deemed given when delivered or
deposited in the U.S. mail with first class postage. The net proceeds of any
such sale or sales and any amounts received in liquidation of the Collateral,
less all costs and expenses incurred in connection therewith, including the
costs of collection described in Paragraph VII.B above and, at the option of
Bank or as required by law, less any prior lien claims, shall be applied against
the Obligations in the order that Bank in its sole discretion shall decide, and
Borrower or other party entitled thereto shall be entitled to any surplus
resulting therefrom. No action taken by Bank pursuant hereto shall affect
Borrower’s continuing liability to Bank for any deficiency remaining after any
foreclosure. It is mutually agreed that it is commercially reasonable for Bank
to disclaim all warranties which arise with respect to the disposition of the
Collateral.   D.   Redemption. The purchaser at any such sale shall thereafter
hold the Collateral absolutely free from any claim or right of whatsoever kind
including any equity of redemption of Borrower, and such demand, notice or right
in equity are hereby expressly waived and released by Borrower.   E.   Offset.
Upon the occurrence of any default, Bank is authorized to charge the sum then
due to Bank against any and all monies held by or on deposit with Bank on
account of Borrower or its affiliates, and to offset any amounts against any
demand or depository accounts which Borrower, or its affiliates, may have with
Bank and to enforce such other remedies as may be available at law or in equity,
without necessity of election.   F.   Alternative Remedies. Bank may exercise
its rights and remedies hereunder either alternatively or concurrently with its
rights under any and all other agreements between Bank and Borrower and shall
have the full right to realize upon all available Collateral, collecting on the
same or instituting proceedings in connection therewith, until Bank receives
payment in full of all amounts owing to Bank under any of its agreements with
Borrower, including principal, interest, costs and expenses, and costs of
enforcement or attempted enforcement of this or any other agreement among or
between Bank and Borrower or any Other Obligors. Bank shall be under no
obligation to pursue Bank’s rights against any Other Obligor or any of the
collateral of any Other Obligor securing any of the Obligations before pursuing
Bank’s rights against Borrower, or the Collateral.

VIII.GENERAL PROVISIONS

A.   Continuity and Termination. This Agreement shall become effective
immediately and remain in effect so long as any of the Obligations are
outstanding and unpaid, provided that the security interests hereunder shall
continue in full force and effect and are noncancellable by Borrower prior to
the termination of this Agreement. This Agreement may be terminated by Borrower
upon actual delivery of written notice to Bank of such intention, and payment in
full of all then existing Obligations; provided, however, that such notice and
payment shall in no way affect, and this Agreement shall remain fully operative
with respect to, any Obligations (including contingent Obligations), or
commitments which may become Obligations, entered into between Borrower and Bank
prior to receipt of such notice or payment, whichever is later.   B.   Right of
Bank to Act with Respect to Other Obligors and Collateral. Borrower hereby
assents to any and all terms and agreements between Bank and any Other Obligor,
and all amendments and modifications thereof, whether presently existing or
hereafter made and whether oral or in writing. Bank may, without compromising,
impairing, diminishing, or in any way releasing Borrower from the Obligations
and without notifying or obtaining the prior approval of Borrower, at any time
or from time to time: (i) waive or excuse any default by any Other Obligor, or
delay in the exercise by Bank of any or all of Bank’s rights or remedies with
respect to such default; (ii) grant extensions of time for payment or
performance by any Other Obligor; (iii) release, substitute, exchange,
surrender, or add collateral of any Other Obligor, or waive, release, or
subordinate, in whole or in part, any lien or security interest held by Bank on
any real or personal property securing payment or performance, in whole or in
part, of the obligations of any Other Obligor; (iv) release any Other Obligor;
(v) apply payments made by any Other Obligor, to any sums owed by any Other
Obligor to Bank, in any order or manner, or to any specific account or accounts,
as Bank may elect; and (vi) modify, change, renew, extend, or amend, in any
respect Bank’s agreement with any Other Obligor, or any document, instrument, or
writing, embodying, or reflecting the same.

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C.   Waivers By Borrower. Borrower waives: (i) any and all notices whatsoever
with respect to this Agreement or with respect to any of the obligations of any
Other Obligor to Bank, including, but not limited to, notice of: (a) Bank’s
acceptance hereof or Bank’s intention to act, or Bank’s action, in reliance
hereon; (b) the present existence or future incurring of any of the obligations
of any Other Obligor to Bank or any terms or amounts thereof or any change
therein; (c) any default by any Other Obligor; and (d) the obtaining or release
of any guaranty or surety agreement, pledge, assignment, or other security for
any of the obligations of any Other Obligor to Bank; (ii) presentment and demand
for payment of any sum due from any Other Obligor and protest of nonpayment;
(iii) demand for performance by any Other Obligor; and (iv) defenses based on
suretyship or impairment of collateral.   D.   Information Concerning Collateral
or Other Obligors. Bank shall have no present or future duty or obligation to
discover or to disclose to Borrower any information, financial or otherwise,
concerning any Other Obligor or any collateral securing the Obligations.
Borrower waives any right to claim or assert any such duty or obligation on the
part of Bank. Borrower agrees to obtain all information which Borrower considers
appropriate or relevant to this Agreement from sources other than Bank and to
become and remain at all times current and continuously apprised of all
information concerning Other Obligors and any Collateral which is material and
relevant to the Obligations of Borrower under this Agreement.   E.   Other
Documents. The Obligations are or shall be evidenced by notes, guaranties,
addenda or other documents which are separate agreements and may be negotiated
by Bank without releasing Borrower, any Collateral or any Other Obligor. Without
limitation of the foregoing, Borrower may have executed and delivered to Bank a
Commercial Finance Addendum, a Reporting Requirements Addendum and/or a
Financial Covenants Addendum which modify and supplement this Agreement and
Borrower’s obligations hereunder. This Agreement specifically incorporates by
reference all of the language and provisions of such notes, guaranties, addenda
or other documents. Borrower consents to any extension of time of payment of any
Obligations. If there is more than one Borrower or Other Obligor, the obligation
of each of them shall be primary, joint and several.   F.   Remedies Cumulative.
All rights, remedies and powers of Bank hereunder are irrevocable and
cumulative, and not alternative or exclusive, and shall be in addition to all
other rights, remedies and powers of Bank whether in or by any other
instruments, agreements or any laws, including, but not limited to, the Uniform
Commercial Code, now existing or hereafter enacted.   G.   Non-Waiver. No
indulgence or delay on the part of Bank in exercising any power, privilege or
right hereunder or under any other agreement executed by Borrower to Bank in
connection herewith shall operate as a waiver thereof. No single or partial
exercise of any power, privilege or right shall preclude other or further
exercise thereof, or the exercise of any other power, privilege or right.   H.  
Governing Law; Severability. This Agreement shall be construed and governed by
the laws of the State of Maryland, If any part of this Agreement shall be
adjudged invalid or unenforceable as of any term of court, then such partial
invalidity or unenforceability shall not cause the remainder of this Agreement
to be or become invalid or unenforceable, and if a provision hereof is held
invalid or unenforceable in one or more of its applications, that provision
shall remain in effect in all valid or enforceable applications that are
severable from the invalid or unenforceable application or applications.   I.  
Litigation. In the event of any litigation with respect to this Agreement, the
promissory note(s) or other agreements evidencing and securing the Obligations,
the Collateral, or any other document or agreement applicable thereto, Borrower
waives all defenses (including the defense of statute of limitations). Borrower
consents to the jurisdiction and venue of the courts of any county or city in
the State of Maryland and to the jurisdiction and venue of the United States
District Court for the District of Maryland in any action or judicial proceeding
brought to enforce, construe or interpret this Agreement.   J.   Construction.
All accounting terms not otherwise defined in this Agreement shall be
interpreted in accordance with G.A.A.P. The captions are inserted only as a
matter of convenience and for reference and in no way define, limit or describe
the scope of this Agreement nor the intent of any provision thereof. If this
Agreement is signed by two or more parties as Borrowers, the term “Borrower”
shall mean each and every party signing this Agreement as a Borrower. The use of
singular herein may also refer to the plural, and vice versa, and the use of the
neuter or any gender shall be applicable to any other gender or the neuter.   K.
  Assignment. None of the parties shall be bound by any assignment not expressed
in writing. This Agreement shall inure to and be binding upon the heirs,
personal representatives, successors, and assigns of Borrower and Bank, and the
terms “Borrower” and “Bank” shall include and mean, respectively, the successors
and assigns of Borrower and Bank.   L.   Time. Time is of the essence of all
Obligations.   M.   Joint And Several Obligations. In the event there is more
than one Borrower hereunder, all obligations and liabilities under this
Agreement shall be joint and several obligations and liabilities of each
Borrower. In addition, all covenants and agreements of Borrower hereunder shall
be applicable to each Borrower individually and all Borrowers collectively. The
occurrence of any event or occurrence set forth herein as a default to any one
Borrower shall constitute a default under this Agreement as to all Borrowers.  
N.   Notices. Any notice or demand required or permitted by or in connection
with this Agreement or any other loan document shall be in writing and shall be
made by hand delivery, by Federal Express or other similar overnight delivery
service, or by certified mail, unrestricted delivery, return receipt requested,
postage prepaid, addressed to the respective parties at the appropriate address
set forth on the signature page hereof or to such other address as may be
hereafter specified by written notice by the respective parties. Notice shall be
considered given as of the date of facsimile or hand delivery, one (1) calendar
day after delivery to Federal Express or similar overnight delivery service, or
three (3) calendar days after the date of mailing, independent of the date of
actual delivery or whether delivery is ever in fact made, as the case may be,
provided the giver of notice can establish the fact that notice was given as
provided herein. If notice is tendered pursuant to the provisions of this
section and is refused by the intended recipient thereof, the notice,
nevertheless, shall be considered to have been given and shall be effective as
of the date herein provided. Notwithstanding anything to the contrary, all
notices and demands for payment from the holder actually received in writing by
Borrower shall be

Page 10 of 21

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    considered to be effective upon the receipt thereof by Borrower regardless
of the procedure or method utilized to accomplish delivery thereof to Borrower.

IX.   ADDITIONAL COVENANTS

A.   Conditions to Advances. Prior to or contemporaneously with any advance
hereunder, Liberty Bank shall release any lien it may have on Borrower’s assets.
  B.   Primary Depository. As long as this Agreement or any other credit
agreement between Borrower and Bank remains in effect, Borrower shall make Bank
its primary depository and cash management financial institution. All of
Borrower’s Operating accounts shall provide for automatic payments of interest,
late charges and service charges.

X.   ADDRESSES

     
Address of Chief Executive Office of Borrower:
  5250 Cherokee Avenue

  Alexandria, Virginia 22312

  Telephone: 703-658-2416

     
Address of Location of Books and Records
   
Relating to Collateral:
  5250 Cherokee Avenue

  Alexandria, Virginia 22312

  Telephone: 703-658-2416

XI.   Waiver of Trial by Jury. Borrower and Bank agree that any suit, action, or
proceeding, whether claim or counterclaim, brought or instituted by or against
either party hereto or any successor or assign of either party on or with
respect to this Agreement or any other Loan document or which in any relates,
directly or indirectly, to the Obligations or any event, transaction or the
dealings of the parties with respect thereto, shall be tried only by a court and
not by a jury. BORROWER AND BANK HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY
JURY IN ANY SUCH SUIT, ACTION, OR PROCEEDING. Borrower and Bank acknowledge and
agree that this provision is a specific and material aspect of this Agreement
between the parties and that Bank would not extend the Loan to Borrower if this
waiver of jury trial provision were not a part of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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          IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower
has executed this Agreement under seal as of the day and year first above
written at Baltimore, Maryland.

WITNESS OR ATTEST*:

*Note: Attestation of a corporate officer’s capacity to sign by another
corporate officer is required in all corporate transactions.

                  HALIFAX CORPORATION
 
           

  By:       (SEAL)

--------------------------------------------------------------------------------

     

--------------------------------------------------------------------------------

   
(Signature)
      Joseph Sciacca    

      Chief Financial Officer    
 
                HALIFAX ENGINEERING, INC.
 
           

  By:       (SEAL)

--------------------------------------------------------------------------------

     

--------------------------------------------------------------------------------

   
(Signature)
      Joseph Sciacca    

      Vice President, Secretary and Treasurer    
 
                MICROSERV LLC
 
           

  By:       (SEAL)

--------------------------------------------------------------------------------

     

--------------------------------------------------------------------------------

   
(Signature)
      Joseph Sciacca    

      Vice President, Secretary and Treasurer    
 
                HALIFAX ALPHANATIONAL ACQUISITION, INC.
 
           

  By:       (SEAL)

--------------------------------------------------------------------------------

     

--------------------------------------------------------------------------------

   
(Signature)
      Joseph Sciacca    

      Vice President, Secretary and Treasurer    
 
                5250 Cherokee Avenue     Alexandria, Virginia 22312    
Telephone: 703-658-2416     Facsimile: 703-658-2478     Federal Tax
Identification No. 54-0829246
 
                ACCEPTED AT FALLS CHURCH, VIRGINIA, AS OF THE DATE HEREOF:    
PROVIDENT BANK
 
           

  By:       (SEAL)
 
     

--------------------------------------------------------------------------------

   

      E Gaye Boyette    

      Senior Vice President    

Page 12 of 21

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FINANCIAL COVENANTS ADDENDUM

THIS FINANCIAL COVENANTS ADDENDUM (“Addendum”) is dated as of November 8, 2004,
by and between HALIFAX CORPORATION, a Virginia corporation (“Halifax”), HALIFAX
ENGINEERING, INC., a Virginia corporation (“Engineering”), MICROSERV LLC, a
Delaware limited liability company (“Microserv”), and HALIFAX ALPHANATIONAL
ACQUISITION, INC., a Delaware corporation (“AlphaNational”; collectively with
Halifax, Engineering and Microserv, “Borrower”) and, PROVIDENT BANK (“Bank”), a
Maryland banking corporation. This Addendum is given to supplement and amend the
Amended and Restated Loan and Security Agreement dated as of November 8, 2004,
by and between Borrower and Bank (“Loan Agreement”).

I.   DEFINITIONS. The following terms have the following definitions (each
definition is equally applicable to the singular and plural forms of the terms
used, as the context requires):

A.   “Current Assets” means, at any time, the aggregate amount of all current
assets, including, but not limited to, cash, cash equivalents, marketable
securities, receivables maturing within twelve (12) months from such time,
inventory (net of allowances for inventory valuation reserve), and prepaid
expenses but excluding officer, stockholder and employee advances and
receivables, all as determined in accordance with G.A.A.P.   B.   “Current
Liabilities” means, at any time, the aggregate amount of all liabilities and
obligations which are due and payable on demand or within twelve (12) months
from such time, or should be properly reflected as attributable to such twelve
(12) month period in accordance with G.A.A.P. Current Liabilities shall not
include deferred income tax liabilities.   C.   “Current Ratio” means the ratio
of Current Assets to Current Liabilities.   D.   “Debt Service Coverage Ratio”
means the ratio of EBITDA to the sum of (i) Interest Expense and (ii) the
current portion of long term debt for the prior quarter.   E.   “EBITDA” means
the sum of (i) the net income of Borrower, plus (ii) depreciation expense and
amortization, plus (iii) Interest Expense, plus (iv) taxes, all determined in
accordance with G.A.A.P.   F.   “G.A.A.P.” means, with respect to any date of
determination, generally accepted accounting principles as used by the Financial
Accounting Standards Board and/or the American Institute of Certified Public
Accountants consistently applied and maintained throughout the periods
indicated.   G.   “Interest Expense” means all finance charges reflected on the
income statement as interest expense for all obligations of Borrower to any
person, including, but not limited to, Bank, as shown on the balance sheet in
accordance with G.A.A.P.   H.   “Obligations” means the “Obligations,” as
defined in the Loan Agreement.   I.   “Subordinated Debt” means all obligations
of Borrower to any person, payment of which has been expressly subordinated to
all of the Obligations pursuant to a written agreement signed by Bank and the
holder of such debt.   J.   “Tangible Net Worth” means the net worth of Borrower
excluding all intangibles, including but not limited to, good will and
intangible assets, all determined in accordance with G.A.A.P.   K.   “Total
Liabilities” means all liabilities and obligations.

II.   FINANCIAL COVENANTS. Borrower shall remain in compliance with each of the
covenants set forth in the Paragraphs below.

Borrower’s Initials:

             
                   
  x   A.   Borrower shall at all times maintain Tangible Net Worth plus
Subordinated Debt of not less than $3,000,000, measured on September 30, 2004
and the last date of each subsequent quarter.
 
           
                   
  x   B.   Borrower shall maintain a ratio of Total Liabilities less
Subordinated Debt to Tangible Net Worth plus Subordinated Debt of not greater
than 6.8:1 on September 30, 2004 and the last date of each subsequent quarter.

Page 13 of 21

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  x   C.   Borrower shall at all times maintain a Debt Service Coverage Ratio
greater than or equal to 1.25:1 for the quarter ending on September 30, 2004 and
the last day of each subsequent quarter.
 
           
                   
  x   D.   Borrower shall maintain a Current Ratio equal to or greater than
1.4:1 on September 30, 2004 and the last day of each subsequent quarter.

III.   GENERAL PROVISIONS. This Addendum is hereby made a part of the Loan
Agreement.

IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower has
executed this Addendum under seal as of the day and year first above written.

WITNESS OR ATTEST*:

*Note: Attestation of a corporate officer’s capacity to sign by another
corporate officer is required in all corporate transactions.

              WITNESS/ATTEST:   HALIFAX CORPORATION
 
           

--------------------------------------------------------------------------------

           
(Signature)
  By:       (SEAL)

     

--------------------------------------------------------------------------------

   

--------------------------------------------------------------------------------

      Joseph Sciacca    
(Print Name)
      Chief Financial Officer    
 
                HALIFAX ENGINEERING, INC.
 
           

  By:       (SEAL)

     

--------------------------------------------------------------------------------

   

      Joseph Sciacca    

      Vice President, Secretary and Treasurer    
 
                MICROSERV LLC
 
           

  By:       (SEAL)

     

--------------------------------------------------------------------------------

   

      Joseph Sciacca    

      Vice President, Secretary and Treasurer    
 
                HALIFAX ALPHANATIONAL ACQUISITION, INC.
 
           

  By:       (SEAL)

     

--------------------------------------------------------------------------------

   

      Joseph Sciacca    

      Vice President, Secretary and Treasurer    
 
                ACCEPTED AT FALLS CHURCH, VIRGINIA     AS OF THE DATE HEREOF
 
                PROVIDENT BANK

  By:       (SEAL)

     

--------------------------------------------------------------------------------

   

      E Gaye Boyette    

      Senior Vice President    

Page 14 of 21

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FORMULA ADVANCE ADDENDUM

     THIS FORMULA ADVANCE ADDENDUM (“Addendum”) is dated as of November 8, 2004,
by and between HALIFAX CORPORATION, a Virginia corporation (“Halifax”), HALIFAX
ENGINEERING, INC., a Virginia corporation (“Engineering”), MICROSERV LLC, a
Delaware limited liability company (“Microserv”), and HALIFAX ALPHANATIONAL
ACQUISITION, INC., a Delaware corporation (“AlphaNational”; collectively with
Halifax, Engineering and Microserv, “Borrower”), and PROVIDENT BANK (“Bank”), a
Maryland banking corporation. This Addendum is given to supplement and amend the
Amended and Restated Loan and Security Agreement dated as of November 8, 2004 by
and between Borrower and Bank (“Loan Agreement”).

I.   DEFINITIONS. All capitalized terms used in this Addendum without definition
shall have the meanings assigned to them in the Loan Agreement. The following
terms have the following definitions (each definition is equally applicable to
the singular and plural forms of the terms used, as the context requires):

  1.   “Account Debtor” means any person or entity who is or who may become
obligated to make payments to Borrower, including, but not limited to, payments
owed to Borrower under, with respect to, or on account of Receivables.     2.  
“At Risk Work” means work performed under any Government Contract or any other
contract (i) for which funds have not been appropriated or allocated, (ii) that
has not been awarded or (iii) for which all required contract documents,
including any documents required to modify or renew a contract previously
awarded, have not been executed.     3.   “Borrowing Base” means: (i) an amount
of up to 85% of Eligible Billed Receivables; plus (ii) an amount of up to 50% of
Eligible Inventory; provided, however, that the portion of the Borrowing Base
constituting Eligible Inventory shall not exceed $6 million; minus (iii) such
reserves and allowances as Bank in its sole discretion may from time to time
deem necessary to protect the interests of Bank.     4.   “Eligible Billed
Receivables” means Eligible Receivables that have been billed to the appropriate
Account Debtor, are aged less than 90 days from the date of the initial invoice.
For the purposes of this definition, the term “initial invoice” shall mean the
first invoice relating to the applicable goods shipped or services rendered, and
not any subsequent invoice relating thereto.     5.   “Eligible Inventory” means
Inventory of Borrower which is deemed by Bank in Bank’s sole discretion to be
eligible to be included in the Borrowing Base. Inventory which is at any time
Eligible Inventory, but which subsequently fails to meet the requirements of
Bank for eligibility, shall cease for all purposes to be Eligible Inventory. In
addition to any other criteria for eligibility determined by Bank from time to
time, Inventory shall not be deemed to be eligible without the written consent
of Bank unless it meets the following minimum requirements: (i) it is owned by
Borrower and it is not subject to any lien, assignment or claim (including any
VDOT Vendor Liens/Assignments) except for the benefit of Bank; (ii) it is held
for sale or lease or for furnishing under contracts of service in the ordinary
course of Borrower’s business; (iii) it is new and unused or refurbished;
(iv) it does not constitute work in progress; (v) it is not stored with a
bailee, warehouseman or similar person or entity without Bank’s prior written
approval and without appropriate documentation acceptable to Bank; (vi) it is
not returned or repossessed merchandise; (vii) it constitutes finished goods;
(viii) it does not constitute raw materials; and (ix) it complies with any
additional criteria set forth from time to time in any written supplements to
this Addendum or the Loan Agreement. Eligible Inventory does not include any
Inventory delivered pursuant to the VDOT Contract. The value of Eligible
Inventory shall be determined by Bank in Bank’s sole discretion at the least of:
(i) Borrower’s net purchase cost or manufacturing cost; (ii) the lowest market
prices or (iii) any price ceiling established under applicable laws.     6.  
“Eligible Receivables” means Receivables of Borrower which are deemed by the
Bank in its sole discretion to be eligible to be included in the Borrowing Base.
A Receivable which is at any time an Eligible Receivable, but which subsequently
fails to meet the requirements of Bank for eligibility, shall cease for all
purposes to be an Eligible Receivable. In addition to any other criteria for
eligibility determined by Bank from time to time, a Receivable shall not be
deemed to be eligible without the written consent of Bank unless it meets the
following minimum requirements: (i) it is genuine and is in all respects what it
purports to be; (ii) it arises from goods sold or leased or from services
performed in the ordinary course of Borrower’s business and the delivery or
performance has been completed and unconditionally accepted by the Account
Debtor, without dispute, offset, contingency (other than final audits of costs
incurred under the Government Contracts) or allowance; (iii) Borrower has
possession of, or has delivered to Bank, receipts or other satisfactory
documentation evidencing delivery and acceptance; (iv) it is not subject to any
security interest, lien, assignment or encumbrance (including any VDOT Vendor
Liens/Assignments) except in favor of Bank; (v) it is not payable from an
Account Debtor who is the subject of any bankruptcy or insolvency proceedings,
and it is not in Bank’s opinion unlikely to be paid because of insolvency,
potential bankruptcy, death or any other reason; (vi) it is not subject to any
potential claim of a surety or bonding company; (vii) it does not arise from any
transaction with any affiliated entity or person of Borrower, or employee of
Borrower; (viii) it is not payable from any Account Debtor located outside of
the United States unless the transaction giving rise to the Receivable is
supported by a letter of credit, acceptance or other credit enhancement
acceptable to Bank; (ix) it does not arise from any sale on approval or
consignment, and it is not otherwise subject to any repurchase or return
agreement; (x) if the Account Debtor is the Government and Borrower is a prime
contractor, Borrower has as assigned its rights to receive payment to Bank in
compliance with the Assignment of Claims Act; (xi) other than with respect to
Receivables arising out of a Government Contract, the aggregate dollar amount of
Receivables due from the Account Debtor does not exceed $500,000 or any other
limit established by Bank in writing for the Account Debtor; (xii) less than
ninety (90) days have elapsed from the initial invoice date; (xiii) it is not
payable by an Account Debtor with respect to which 50% or more of the dollar
amount of that Account Debtor’s Receivables to Borrower have remained unpaid for
more than ninety (90) days from the date of invoice or more than ninety
(90) days from

Page 15 of 21

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      the due date of invoice; (xiv) it is not evidenced by chattel paper or
instruments unless Bank has agreed in writing that it may be deemed eligible and
all originals of such chattel paper or instruments have been endorsed and
delivered to Bank; (xv) it is not subject to any offset and is not payable by
any Account Debtor who is owed any sum by Borrower; (xvi) it does not include
At-Risk Work, cost overruns, progress payments, costs incurred in excess of
approved or allowed billing rates, rebilling or retainages; and (xvii) it
complies with any additional criteria set forth from time to time in any written
supplements to this Addendum or the Loan Agreement. Eligible Receivables do not
include any Receivables from the VDOT Contract assigned to or subject to the
lien of a third party.     7.   “Government” means the United States of America
or any agency or instrumentality thereof.     8.   “Government Contract” means
any contract with the Government under which Borrower is a prime contractor or a
subcontractor.     9.   “Inventory” means all of Borrower’s now owned and
hereafter acquired inventory, wherever located, including, but not limited to,
goods, wares, merchandise, materials, raw materials, parts, containers, goods in
process, finished goods, work in progress, bindings or component materials,
packaging and shipping materials and other tangible or intangible personal
property held for sale or lease or furnished or to be furnished under contracts
of service or which contribute to the finished products or the sale, promotion,
storage and shipment thereof, all goods returned for credit, repossessed,
reclaimed or otherwise reacquired by Borrower, whether located at facilities
owned or leased by Borrower, in the course of transport to or from Account
Debtors, placed on consignment, or held at storage locations, and all proceeds
and products thereof and all rights thereto, including, but not limited to, all
sales proceeds, all chattel paper related to any of the foregoing and all
documents, including, but not limited to, documents of title, bills of lading
and warehouse receipts related to any of the foregoing.     10.   “Receivables”
means all of Borrower’s now owned and hereafter acquired and/or created
accounts, accounts receivable, contracts, contract rights, instruments,
documents, chattel paper, notes, notes receivable, drafts, acceptances, general
intangibles (including, but not limited to, trademarks, tradenames, licenses and
patents), and other choses in action (not including salary or wages), and all
proceeds and products thereof, and all rights thereto, including, but not
limited to, proceeds of Inventory and returned goods and proceeds arising from
the sale or lease of or the providing of Inventory, goods, or services by
Borrower, as well as all other rights of any kind, contingent or non-contingent,
of Borrower to receive payment, benefit, or credit from any person or entity,
including, but not limited to, the right to receive tax refunds or tax rebates.

II.   COVENANTS. Borrower covenants that:

  A.   Eligibility of Receivables and/or Inventory. Within fifteen (15) days
after learning thereof, Borrower shall notify Bank of any event or circumstance
which disqualifies as an Eligible Receivable any Receivable reported to Bank as
an Eligible Receivable, and any event or circumstance which Borrower has reason
to know or believe would cause any Receivable reported to Bank as an Eligible
Receivable to be disqualified as an Eligible Receivable. Within fifteen
(15) days after learning thereof, Borrower shall notify Bank of any event or
circumstance which disqualifies as Eligible Inventory any Inventory reported to
Bank as Eligible Inventory, and any event or circumstance which Borrower has
reason to know or believe would cause any Inventory reported to Bank as Eligible
Inventory to be disqualified as Eligible Inventory. Bank may, at any time and
without prior notice to Borrower and without the consent of Borrower, directly
contact Account Debtors of Borrower and verify the existence and status of the
Receivables.

III.   REMEDIES. In addition to all other rights and remedies provided by law,
the Loan Agreement and the Loan documents, Bank, on the occurrence of any
default hereunder or thereunder, may reduce the Maximum Line of Credit Amount
and/or the Borrowing Base.   IV.   GENERAL PROVISIONS. This Addendum is hereby
made a part of the Loan Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

Page 16 of 21

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     IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower has
executed this Addendum under seal as of the day and year first above written.

WITNESS OR ATTEST*:

*Note: Attestation of a corporate officer’s capacity to sign by another
corporate officer is required in all corporate transactions.

              WITNESS/ATTEST:   HALIFAX CORPORATION
 
           

  By:       (SEAL)

--------------------------------------------------------------------------------

     

--------------------------------------------------------------------------------

   
(Signature)
      Joseph Sciacca    

--------------------------------------------------------------------------------

      Chief Financial Officer    
(Print Name)
           
 
                HALIFAX ENGINEERING, INC.
 
           

  By:       (SEAL)

     

--------------------------------------------------------------------------------

   

      Joseph Sciacca    

      Vice President, Secretary and Treasurer    
 
                MICROSERV LLC
 
           

  By:       (SEAL)

     

--------------------------------------------------------------------------------

   

      Joseph Sciacca    

      Vice President, Secretary and Treasurer    
 
                HALIFAX ALPHANATIONAL ACQUISITION, INC.
 
           

  By:       (SEAL)

     

--------------------------------------------------------------------------------

   

      Joseph Sciacca    

      Vice President, Secretary and Treasurer    
 
                ACCEPTED AT FALLS CHURCH, VIRGINIA     AS OF THE DATE HEREOF
 
                PROVIDENT BANK
 
           

  By:       (SEAL)

     

--------------------------------------------------------------------------------

   

      E Gaye Boyette    

      Senior Vice President    

Page 17 of 21

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Baltimore, Maryland
       
November 8, 2004
      $12,000,000 

PROMISSORY NOTE
(Revolving Line of Credit)

IMPORTANT NOTICE

THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH CONSTITUTES A
WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR AND ALLOWS THE CREDITOR TO
OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY FURTHER NOTICE.

     FOR VALUE RECEIVED, the undersigned (collectively “Borrower”) promises to
pay to the order of PROVIDENT BANK, a Maryland banking corporation (“Lender”),
at the Lender’s offices at 114 East Lexington Street, Baltimore, Maryland 21202
or at such other place as the holder of this Promissory Note may from time to
time designate, the principal sum of Twelve Million and NO/100 Dollars
($12,000,000), or so much as has been disbursed to the Borrower hereunder,
together with interest thereon at the rate or rates hereafter specified and any
and all other sums which may be owing to the Lender by the Borrower pursuant to
this Promissory Note. The following terms shall apply to this Promissory Note.

1.   INTEREST. The unpaid principal amount outstanding from time to time
pursuant to this Promissory Note shall bear interest at one-quarter percent
(0.25%) per annum above the rate of interest announced from time to time by the
Lender as its prime commercial lending rate of interest, it being understood
that such announced rate bears no inference, implication, representation, or
warranty that such announced rate is charged to any particular customer or
customers of the Lender. Interest on the principal amount outstanding shall be
adjusted daily with the rate for each day being the rate in effect at the close
of business on that day.   2.   CALCULATION OF INTEREST. Interest shall be
calculated on the basis of a three hundred sixty (360) days per year factor
applied to the actual days on which there exists an unpaid balance hereunder.  
3.   REPAYMENT.

(a) Principal: The principal balance of this Promissory Note and any accrued but
unpaid interest shall be paid in full by the Borrower in immediately available
funds on or before November 7, 2006.

(b) Interest: Accrued interest shall be paid by the Borrower, in arrears, in
immediately available funds on the first day of each successive month beginning
on December 1, 2004.

All amounts owed by the Borrower to the Lender shall be payable by preauthorized
debit of Account #20-65310679 and Borrower agrees to maintain a balance in such
account which is at least equal to the payment amount on each payment due date.

4.   LATE PAYMENT CHARGE. If any payment due hereunder (including any payment in
whole or in part of principal) is not received by the holder within fifteen
(15) calendar days after its due date, the Borrower shall pay a late payment
charge equal to five percent (5%) of the amount then due.   5.   APPLICATION OF
PAYMENTS. All payments made pursuant to this Promissory Note shall be applied
first to late payment charges or other sums owed to the holder, next to accrued
interest, and then to principal, or in such other order or proportion as the
holder, in the holder’s sole and absolute discretion, may elect from time to
time.   6.   PREPAYMENT. The Borrower may prepay this Promissory Note in whole
or in part at any time or from time to time without premium or additional
interest.   7.   DEFAULT. Upon a failure to pay any sum due pursuant to this
Promissory Note or a default in the performance of any of the covenants,
conditions or terms of the Amended and Restated Loan and Security Agreement,
dated the date hereof, executed by Borrower and Lender (the “Agreement”), or of
any other agreement or document made by any Borrower for the benefit of the
Lender or any holder (collectively with the Agreement and the “Loan Documents”),
the holder of this Promissory Note, in the holder’s sole and absolute discretion
and without notice or demand, may exercise any of the following rights, in
addition to any rights or remedies under applicable law or any of the Loan
Documents:

(a)   Default Rate of Interest. The holder may raise the rate of interest
accruing on the unpaid balance due under this Promissory Note by two
(2) percentage points above the rate of interest otherwise applicable until such
time as such default has been cured to the Lender’s entire satisfaction,
independent of whether the holder of this Promissory Note elects to accelerate
the unpaid principal balance as a result of such default.

Page 18 of 21

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(b)   Acceleration. The holder may declare the entire unpaid principal balance
plus accrued interest and all other sums due hereunder immediately due and
payable. Reference is made to the Loan Documents for further and additional
rights of the holder to declare the entire unpaid principal balance plus accrued
interest and all other sums due hereunder immediately due and payable. The
Borrower agrees that a default under this Promissory Note or a default by the
Borrower under any of the Loan Documents is a default by the Borrower under all
other liabilities and obligations of the Borrower to the holder, and that the
holder shall have the right to declare immediately due and payable all of such
other liabilities and obligations.   (c)   Confession of Judgment. The Borrower
authorizes any attorney admitted to practice before any court of record in the
United States to appear on behalf of the Borrower in any court in one or more
proceedings, or before any clerk thereof or prothonotary or other court
official, and to confess judgment against the Borrower, without prior notice or
opportunity of the Borrower for prior hearing, in favor of the holder of this
Promissory Note in the full amount due on this Promissory Note (including
principal, accrued interest and any and all penalties, fees and costs) plus
court costs and reasonable legal fees. In addition to all other courts in which
judgment may be confessed against the Borrower upon this Promissory Note, the
Borrower agrees that venue and jurisdiction shall be proper in the Circuit Court
of any County of the State of Maryland or of Baltimore City, Maryland, or in the
United States District Court For The District Of Maryland. For the purpose of
allowing the holder of this Promissory Note to file a confession of judgment in
the Commonwealth of Virginia to recover any sums of money due hereunder, the
Borrower hereby duly constitutes and appoints David Matuszewski its attorney in
fact to confess judgment against the Borrower in the Circuit Court for the
County of Fairfax, Virginia and in any other circuit court or court located in
the Commonwealth of Virginia, and the Borrower acknowledges and agrees that
jurisdiction and venue shall be proper in such court and in any other city or
county in the Commonwealth of Virginia The Borrower waives the benefit of any
and every statute, ordinance, or rule of court which may be lawfully waived
conferring upon the Borrower any right or privilege of exemption, homestead
rights, stay of execution, or supplementary proceedings, or other relief from
the enforcement or immediate enforcement of a judgment or related proceedings on
a judgment. The authority and power to appear for and enter judgment against the
Borrower shall not be exhausted by one or more exercises thereof, or by any
imperfect exercise thereof, and shall not be extinguished by any judgment
entered pursuant thereto; such authority and power may be exercised on one or
more occasions from time to time, in the same or different jurisdictions, as
often as the holder shall deem necessary or advisable.

8.   INTEREST RATE AFTER JUDGMENT. If judgment is entered against the Borrower
on this Promissory Note, the amount of the judgment entered (which may include
principal, interest, penalties, fees, and costs) shall bear interest at the
higher of the above described default interest rate as determined on the date of
the entry of the judgment, or the legal rate of interest then applicable to
judgments in the jurisdiction in which judgment was entered.   9.   EXPENSES OF
COLLECTION. If this Promissory Note is referred to an attorney for collection,
whether or not judgment has been confessed or suit has been filed, the Borrower
shall pay all of the holder’s costs, fees (including, but not limited to, the
holder’s attorneys’ fees, paralegal charges and expenses) and all other expenses
resulting from such referral.   10.   WAIVERS. The Borrower, and all parties to
this Promissory Note, whether maker, indorser, or guarantor, waive presentment,
notice of dishonor and protest.   11.   EXTENSIONS OF MATURITY. All parties to
this Promissory Note, whether maker, indorser, or guarantor, agree that the
maturity of this Promissory Note, or any payment due hereunder, may be extended
at any time or from time to time without releasing, discharging, or affecting
the liability of such party.   12.   NOTICES. Any notice or demand required or
permitted by or in connection with this Promissory Note shall be in writing and
shall be made by hand delivery, by Federal Express or other similar overnight
delivery service, or by certified mail, unrestricted delivery, return receipt
requested, postage prepaid, addressed to the respective parties at the
appropriate address set forth on the signature page hereof or to such other
address as may be hereafter specified by written notice by the respective
parties. Notice shall be considered given as of the date of facsimile or hand
delivery, one (1) calendar day after delivery to Federal Express or similar
overnight delivery service, or three (3) calendar days after the date of
mailing, independent of the date of actual delivery or whether delivery is ever
in fact made, as the case may be, provided the giver of notice can establish the
fact that notice was given as provided herein. If notice is tendered pursuant to
the provisions of this section and is refused by the intended recipient thereof,
the notice, nevertheless, shall be considered to have been given and shall be
effective as of the date herein provided. Notwithstanding anything to the
contrary, all notices and demands for payment from the holder actually received
in writing by the Borrower shall be considered to be effective upon the receipt
thereof by the Borrower regardless of the procedure or method utilized to
accomplish delivery thereof to the Borrower.   13.   LIABILITY; ASSIGNABILITY;
BINDING NATURE. If more than one person or entity is executing this Promissory
Note as a Borrower, all liabilities under this Promissory Note shall be joint
and several with respect to each of such persons or

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    entities. This Promissory Note may be assigned by the Lender or any holder
at any time. This Promissory Note shall inure to the benefit of and be
enforceable by the Lender and the Lender’s successors and assigns and any other
person to whom the Lender may grant an interest in the Borrower’s obligations to
the Lender, and shall be binding and enforceable against the Borrower and the
Borrower’s personal representatives, successors and assigns.   14.   INVALIDITY
OF ANY PART. If any provision or part of any provision of this Promissory Note
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Promissory Note and this Promissory Note shall be construed
as if such invalid, illegal or unenforceable provision or part thereof had never
been contained herein, but only to the extent of its invalidity, illegality or
unenforceability.   15.   MAXIMUM RATE OF INTEREST; COMMERCIAL LOAN.
Notwithstanding any provision of this Promissory Note or the Loan Documents to
contrary, the Borrower shall not be obligated to pay interest pursuant to this
Promissory Note in excess of the maximum rate of interest permitted by the laws
of any state determined to govern this Promissory Note or the laws of the United
States applicable to loans in such state. If any provision of this Promissory
Note shall ever be construed to require the payment of any amount of interest in
excess of that permitted by applicable law, then the interest to be paid
pursuant to this Promissory Note shall be held subject to reduction to the
amount allowed under applicable law, and any sums paid in excess of the interest
rate allowed by law shall be applied in reduction of the principal balance
outstanding pursuant to this Promissory Note. The Borrower acknowledges that it
has been contemplated at all times by the Borrower that the laws of the State of
Maryland will govern the maximum rate of interest that it is permissible for the
holder of this Promissory Note to charge the Borrower pursuant to this
Promissory Note. The Borrower warrants that this Promissory Note evidences a
commercial loan transaction within the meaning of Sections 12-101(c) and
12-103(e), Commercial Law Article, Annotated Code of Maryland, as amended, and
that no proceeds of such loan transaction are being used by the Borrower for any
consumer purpose.   16.   CHOICE OF LAW; CONSENT TO VENUE AND JURISDICTION;
ACTIONS AGAINST LENDER. This Promissory Note shall be governed, construed and
interpreted strictly in accordance with the laws of the State of Maryland. The
Borrower consents to the jurisdiction and venue of the courts of any county in
the State of Maryland or the courts of Baltimore City, Maryland or to the
jurisdiction and venue of the United States District Court for the District of
Maryland in any action or judicial proceeding brought to enforce, construe or
interpret this Promissory Note. The Borrower agrees to stipulate in any future
proceeding that this Promissory Note is to be considered for all purposes to
have been executed and delivered within the geographical boundaries of the State
of Maryland, even if it was, in fact, executed and delivered elsewhere. Any
action brought by the Borrower against the Lender which is based, directly or
indirectly, or in whole or in part, upon this Promissory Note or any matter
related to this Promissory Note or any other Loan Document shall be brought only
in the courts of the State of Maryland.   17.   WAIVER OF JURY TRIAL. The
Borrower (by its execution hereof) and the Lender (by its acceptance of this
Promissory Note) agree that any suit, action, or proceeding, whether claim or
counterclaim, brought or instituted by the Borrower, the Lender or any successor
or assign of the Borrower or the Lender on or with respect to this Promissory
Note or any other Loan Document or which in any way relates, directly or
indirectly, to the obligations of the Borrower to the Lender pursuant to this
Promissory Note or any other Loan Document, or the dealings of the parties with
respect thereto, shall be tried only by a court and not by a jury. The Borrower
and the Lender hereby expressly waive any right to a trial by jury in any such
suit, action, or proceeding.

     IN WITNESS WHEREOF, and intending to be legally bound hereby, the
undersigned execute this Promissory Note under seal, as Borrower, as of the date
first written above.

                      WITNESS/ATTEST:   HALIFAX CORPORATION
 
                   

      By:       (SEAL)    

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          Joseph Sciacca        
Name:
          Chief Financial Officer        

 

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      5250 Cherokee Avenue        

          Alexandria, Virginia 22312        

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                  MICROSERV LLC
 
           

  By:       (SEAL)

     

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      Joseph Sciacca    

      Vice President, Secretary and Treasurer    

      5250 Cherokee Avenue    

      Alexandria, Virginia 22312    
 
                HALIFAX ALPHANATIONAL ACQUISITION, INC.
 
           

  By:       (SEAL)

     

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      Joseph Sciacca    

      Vice President, Secretary and Treasurer    

      5250 Cherokee Avenue    

      Alexandria, Virginia 22312    

Notice Address For Lender:

Provident Bank
7799 Leesburg Pike
North Tower – Suite 200
Falls Church, Virginia 22043
Attention: E Gaye Boyette

With a copy to:

Provident Bank
Legal and Compliance Department
114 East Lexington Street
Baltimore, Maryland 21202
Attention: General Counsel

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