<PAGE>
                                
                          UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C.  20549
                                
                                
                          FORM 10-Q
                                
                                
[X]    Quarterly Report Pursuant to Section 13 or 15(d)
              of the Securities Exchange Act of 1934
                                
       For the quarterly period ended:  September 30, 1995
                                
[ ]    Transition Report Pursuant to Section 13 or 15(d)
                of the Securities Exchange Act of 1934
                                
                   Commission file number: 1-8443
                                
                                
                         TELOS CORPORATION
       (Exact name of registrant as specified in its charter)
                                
                                
        Maryland                              52-0880974
 (State of Incorporation)     (I.R.S. Employer Identification No.)
                                
                                
  460 Herndon Parkway, Herndon, Virginia            22070-5201
 (Address of principal executive offices)           (Zip Code)
                                
                                
                 Registrant's Telephone Number,
               including area code: (703) 471-6000


Indicate by check mark whether the registrant (1) has filed all
reports  required  to  be  filed by Section  13  or  15(d)  of  the
Securities Exchange Act of 1934 during the preceding 12 months  (or
for  such shorter period that the registrant was required  to  file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.   YES __X__      NO_____

As  of  November  13, 1995 the registrant had 23,076,753  shares  of
Class A Common Stock, no par value, and 4,037,628 shares of Class  B
Common  Stock, no par value; and 3,595,586 shares of 12%  Cumulative
Exchangeable Redeemable Preferred Stock, par value $.01  per  share,
outstanding.

No public market exists for the registrant's Common Stock.

Number of pages in this report (excluding exhibits):  17
<PAGE>
                                
               TELOS CORPORATION AND SUBSIDIARIES
                                
                              INDEX




                  PART I.   FINANCIAL INFORMATION



Item 1.   Financial Statements (Unaudited):

  Condensed  Consolidated Statements of  Income  for  the  Three
  Months and Nine Months Ended September  30, 1995 and 1994                   3

  Condensed Consolidated Balance Sheets as of September 30, 1995
  and December 31, 1994                                                       4

  Condensed Consolidated Statements of Cash Flows for  the  Nine
  Months Ended September 30, 1995 and 1994                                    5

  Notes to Condensed Consolidated Financial Statements                      6-9

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations                    10-14


                  PART II.   OTHER INFORMATION

Item 1.  Legal Proceedings                                                   15

Item 6.  Exhibits and Reports on Form 8-K                                 15-16

SIGNATURES                                                                   17
<PAGE>
                 PART I - FINANCIAL INFORMATION
<TABLE>
               TELOS CORPORATION AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                
                           (Unaudited)
                                
                     (amounts in thousands)
                                
<CAPTION>
                             Three Months Ended    Nine Months Ended
                               September 30,         September 30,
                               1995     1994       1995       1994
<S>                         <C>       <C>        <C>       <C>
Sales
 Systems and Services        $41,008  $25,348    $99,953    $83,891
 Field Engineering             8,411    8,771     24,949     26,040
 Consulting Services           6,710    6,644     19,790     17,958

                              56,129   40,763    144,692    127,889
Costs and expenses
 Cost of sales                46,987   34,683    120,141    105,644
 Selling, general and
  administrative expenses      6,778    7,291     17,890     19,737
 Goodwill amortization           525      794      2,114      2,383

Operating income (loss)        1,839   (2,005)     4,547        125

Other income (expenses)
 Other income                      7       30         16         44
 Interest expense             (1,428)    (984)    (4,043)    (2,619)

Income (loss) before taxes       418   (2,959)       520     (2,450)

Income tax benefit                 0      400          0          0 

Income (loss) before
 extraordinary item              418   (2,559)       520     (2,450)

Extraordinary item
 Loss from early debt retirement   0     (196)         0       (196)

Net income (loss)            $   418  $(2,755)   $   520    $(2,646)
</TABLE>
                                
                                
                                
                                
                                
                                
                                
                                
                                
 The accompanying notes are an integral part of these condensed
                    consolidated financial statements.
<PAGE>
<TABLE>
               TELOS CORPORATION AND SUBSIDIARIES
              CONDENSED CONSOLIDATED BALANCE SHEETS
                           (Unaudited)
                     (amounts in thousands)
                             ASSETS
<CAPTION>                                
                                   September 30, 1995  December 31, 1994
<S>                                     <C>                  <C>
Current assets
  Cash and cash equivalents             $   462              $   441
  Accounts receivable, net               37,722               40,345
  Inventories, net                        9,468                8,696
  Other current assets                    2,333                3,918
     Total current assets                49,985               53,400

Property and equipment, net of
  accumulated depreciation of $18,255
  and $16,769 respectively                2,496                3,483

Goodwill                                 24,709               26,822
Other assets                              3,299                3,167

                                        $80,489              $86,872


            LIABILITIES AND STOCKHOLDERS' INVESTMENT

Current liabilities
  Accounts payable                      $21,053              $20,302
  Other current liabilities               6,041               10,174
  Accrued compensation and benefits       9,430               10,272
  Senior credit facility                 32,037                    0
  Senior subordinated notes                   0                6,414
     Total current liabilities           68,561               47,162

Senior credit facility                        0               34,000
Subordinated notes                        7,120                    0
Other long-term liabilities               1,518                2,941
     Total liabilities                   77,199               84,103

Redeemable preferred stocks
  Senior redeemable preferred stock       4,410                4,192
  Class B redeemable preferred stock     10,042                9,497
  Redeemable preferred stock             15,114               14,263
     Total preferred stock               29,566               27,952

Stockholders' investment
  Common stock                               78                   78
  Capital in excess of par               11,002               12,095
  Retained earnings (deficit)           (37,356)             (37,356)
     Total stockholders' investment     (26,276)             (25,183)

                                        $80,489              $86,872
</TABLE>
 The accompanying notes are an integral part of these condensed
                   consolidated financial statements.
<PAGE>
<TABLE>
               TELOS CORPORATION AND SUBSIDIARIES
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Unaudited)
                                
                     (amounts in thousands)
<CAPTION>

                                                          Nine Months
                                                      Ended September 30,
                                                        1995       1994
<S>                                                   <C>        <C>
Operating activities:
  Net income (loss)                                   $   520    $(2,646)
     Adjustments to reconcile net income to cash
     provided by operating activities:
     Depreciation and amortization                      2,409      3,641
     Goodwill amortization                              2,114      2,383
     Loss on early debt repayment                           0        196
     Other noncash items                                 (450)       754
     Changes in assets and liabilities that used cash  (2,685)    (8,772)
     Cash provided by (used in) operating activities    1,908     (4,444)

Investing activities:
  Proceeds from sales of property and equipment             3          7
  Purchase of property and equipment                     (621)      (914)
     Cash (used in) investing activities                 (618)      (907)

Financing activities:
  (Repayment of) Proceeds from senior credit facility  (1,963)     7,430
  Proceeds from issuance of subordinated bridge notes   6,494          0
  Repayment of senior subordinated notes               (5,800)    (1,825)
     Cash (used in) provided by financing activities   (1,269)     5,605

  Increase in cash and cash equivalents                    21        254
  Cash and cash equivalents at beginning of period        441        744

  Cash and cash equivalents at end of period          $   462    $   998
</TABLE>











 The accompanying notes are an integral part of these condensed
                 consolidated financial statements.
<PAGE>
               TELOS CORPORATION AND SUBSIDIARIES
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)

Note 1.   General

     The accompanying condensed consolidated financial statements
of Telos Corporation ("Telos") (formerly C3, Inc.) and its wholly
owned  subsidiaries, Telos Corporation (California), Telos  Field
Engineering,  Inc.,  and Telos International  (collectively,  the
"Company") have been prepared without audit.  Certain information
and   note   disclosures  normally  included  in  the   financial
statements  presented  in  accordance  with  generally   accepted
accounting  principles  have  been  condensed  or  omitted.   The
Company  believes the disclosures made are adequate to  make  the
information  presented consistent with past  practices.  However,
these condensed consolidated financial statements should be  read
in  conjunction  with the consolidated financial  statements  and
notes thereto included in the Company's annual report on Form 10-
K for the fiscal year ended December 31, 1994.

      In  the  opinion of the Company, the accompanying condensed
consolidated  financial statements reflect  all  adjustments  and
reclassifications   (which   include   only   normal    recurring
adjustments)  necessary to present fairly the financial  position
of  the  Company as of September 30, 1995 and December 31,  1994,
and the results of its operations and its cash flows for the nine
months  ended September 30, 1995 and 1994.  Interim  results  are
not necessarily indicative of fiscal year performance because  of
the impact of seasonal and short-term variations.

Included in Systems and Services sales for the nine months  ended
September 30, 1995 are Product Sales of $46.1 million.

Certain  reclassifications have been made  to  the  prior  year's
financial  statements to conform to the classifications  used  in
the current period.
     

Note 2.   Accounts Receivable

      The  components of accounts receivable are as  follows  (in
thousands):
<TABLE>
<CAPTION>
                             September  30, 1995     December  31, 1994
   <S>                             <C>                    <C>  
   Billed accounts receivable      $28,597                $32,483
   Unbilled accounts receivable      9,790                  9,149
                                    38,387                 41,632
   Allowance for doubtful accounts    (665)                (1,287)
                                   $37,722                $40,345
</TABLE>
<PAGE>
               TELOS CORPORATION AND SUBSIDIARIES
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                         (Unaudited)

Note 3.   Debt Obligations

Senior Credit Facility

      On April 17, 1995, the Company refinanced its senior credit
facility ("Facility") with its existing lender.  The new Facility
remains a $45 million commitment with a maturity date of July  1,
1996.  Other terms and conditions of the Facility are similar  to
the Company's previous Facility except that certain financial and
non  financial covenants have been amended.  As the maturity date
of  the Facility is less than one year, at September 30, 1995 the
Company has classified the Facility as a current liability.   See
Note 5. Subsequent Events, below.

Senior Subordinated Note, Series A

      At  September  30, 1995, the Company had  $675,000  of  the
senior  subordinated notes, Series A, outstanding with  Mr.  John
R.C.   Porter   ("Porter"),   the   Company's   majority   common
shareholder.   The  Company  was  not  in  compliance  with   the
financial maintenance covenants of the senior subordinated notes,
Series  A  as of September 30, 1995.  Porter has agreed to  waive
such non compliance.

Senior Subordinated Notes, Series B

      On  June 8, 1995 the Company paid Union de Banques  Suisses
(Luxembourg) S. A. ("UBS") $5.8 million in outstanding principal,
$500,000 of accrued interest and $200,000 of legal and other fees
to retire the outstanding Series B-1 and B-2 notes and settle the
related claims of UBS.

      The  funds to pay UBS were loaned to the Company by certain
of  the  Company's  common shareholders.  In replacement  of  the
notes  held  by UBS, the lenders were issued Senior  Subordinated
Bridge  Notes aggregating approximately $6.5 million.  The  notes
have  a maturity date of October 1, 1996 and have interest  rates
ranging from 14% to 17%.  See Note 5. Subsequent Events, below.
<PAGE>
              TELOS CORPORATION AND SUBSIDIARIES
    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                       (Unaudited)

Note 4.   Preferred Stock

Senior Redeemable Preferred Stock

      The components of the senior redeemable preferred stock are
Series  A-1 and Series A-2 redeemable preferred stock  each  with
$.01 par value and 1,250 and 1,750 shares authorized, issued  and
outstanding,  respectively.  From July 1, 1995 through  June  30,
1997,  the  Series  A-1 and A-2 each carry a cumulative  dividend
rate  equal  to 11.125% per annum of its liquidation  value,  and
increases  to  14.125% per annum thereafter.  The  dividends  are
payable  semi-annually on June 30 and December 31 of  each  year.
The  liquidation preference of the preferred stock  is  the  face
amount  of the Series A-1 and A-2 Stock ($1,000 per share),  plus
all  accrued  and  unpaid  dividends.  The  Series  A-1  and  A-2
Preferred Stock is senior to all other present and future  equity
of  the  Company.  The Company is required to redeem all  of  the
outstanding  shares  of the Series A-1 and A-2  on  December  31,
2001,  subject to the legal availability of funds.  At  September
30,  1995  and  December  31, 1994 undeclared,  unpaid  dividends
relating  to Series A-1 and A-2 Preferred Stock were accrued  for
financial  reporting purposes in the amount  of   $1,410,000  and
$1,192,000, respectively.

Class B Redeemable Preferred Stock

     The Class B Redeemable Preferred Stock has a $.01 par value,
with  7,500 shares authorized, issued and outstanding.  The Class
B  Redeemable  Preferred Stock has a cumulative dividend  payable
semi-annually  at  June 30 and December 31.  From  July  1,  1995
through June 30, 1997, the dividend is calculated at a rate equal
to  11.125% per annum of its liquidation value, and increases  to
14.125%  per annum thereafter.  The Class B Redeemable  Preferred
Stock may be redeemed at its liquidation value together with  all
accrued  and  unpaid dividends at any time at the option  of  the
Company.   The liquidation preference of the preferred  stock  is
the  face  amount, $1,000 per share, plus all accrued and  unpaid
dividends.   The  Company  is  required  to  redeem  all  of  the
outstanding shares of the stock on December 31, 2001, subject  to
the  legal  availability  of funds.  At September  30,  1995  and
December  31, 1994 undeclared, unpaid dividends relating  to  the
Class  B  Redeemable Preferred Stock were accrued  for  financial
reporting  purposes  in the amount of $2,542,000  and  $1,997,000
respectively.

12% Cumulative Exchangeable Redeemable Preferred Stock

     A maximum of 6,000,000 shares of 12% Cumulative Exchangeable
Redeemable Preferred Stock, par value $.01 per share,  have  been
authorized for issuance.  The Company has issued 3,595,586 shares
of  12%  Cumulative Exchangeable Redeemable Preferred Stock  (the
"Preferred  Stock").  The Preferred Stock accrues  a  semi-annual
dividend at the annual rate of 12% ($1.20) per share, based on the
liquidation preference of $10 per share and is fully  cumulative.
<PAGE>
              TELOS CORPORATION AND SUBSIDIARIES
     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        (Unaudited)

     Through November 21, 1995, the Company has the option to pay
dividends  in  additional shares of Preferred Stock  in  lieu  of
cash.  Dividends are payable by the Company, provided the Company
has legally available funds under Maryland law and is able to pay
dividends under its charter, when and if declared by the Board of
Directors,  commencing  June  1, 1990,  and  on  each  six  month
anniversary  thereof.   Dividends in  additional  shares  of  the
Preferred  Stock are paid at the rate of 0.06 of a share for each
$.60  of  such dividends  not paid  in cash.  No  dividends  were
declared  or  paid  during  fiscal  years  1994,  1993 and  1992.
Cumulative undeclared  dividends as of  December  31,  1994  have
been accrued for financial reporting purposes  in the  amount  of
$2,871,000, under the assumption that such dividends will be paid
in additional shares of stock valued at an average market  value.
The Company has accrued these dividends  for the periods although
the  Company is uncertain  when  or  if  these  dividends will be
declared or paid.  Had the Company accrued cash dividends on  the
outstanding shares of stock  such  an  accrual would  approximate
$12.9 million.

Note 5.   Subsequent Events

      On  October 13, 1995, the Company issued to certain of  its
shareholders $14.4 million of Senior Subordinated Notes ("Notes")
in exchange for the $6.5 million Senior Subordinated Bridge Notes
held  by  these  shareholders, as well as  the  transfer  to  the
Company  of  certain  shareholders' deposits with  the  Company's
bank.   The Notes are classified as either Series B or Series  C.
Series  B Notes, which total $6.5 million and replace the  Senior
Subordinated Notes - Series B held by UBS,  are collateralized by
certain assets of the Company.  Series C  Notes  which total $7.9
million are unsecured.

     Both the Series B and Series C Notes have a maturity date of
October 1, 2000 and have interest rates ranging from 14% to  17%.
Additionally,  these notes have a cumulative payment  premium  of
13.5%  per annum payable only upon certain circumstances.   These
circumstances include an initial public offering of the Company's
common stock or a significant refinancing, to the extent that net
proceeds  from  either of the above events are received  and  are
sufficient to pay the premium.  Due to the contingent  nature  of
the premium payment, the associated premium expenses will only be
recorded  after  occurrence of a triggering event.   However  the
interest  portion  of  the notes will  be  treated  as  a  period
expense.
<PAGE>
Item 2.   Management's   Discussion  and   Analysis   of   Financial
          Condition and Results of Operations.

General

     In the first nine  months of 1995,  the  Company  had higher
revenues and  operating  profit when  compared to the first  nine
months of 1994.  The higher revenue and operating profit resulted
from  improved  performance of the  Company's  system integration
division   as   well   as  declines  in   selling,   general  and 
administrative expense.
     
     Total backlog from existing contracts was $1.3 billion as of
September 30, 1995, of which approximately $1 billion represented
the  maximum  value from awarded indefinite delivery,  indefinite
quantity  contracts  for computer equipment  and  services.   The
Company's  total backlog at December 31, 1994 was  $328  million.
The  significant increase in the backlog resulted from the  award
to  the  Company  of the Small Multi-user Computer  II  (SMC  II)
contract by the U.S. Army in September 1995.  The contract has  a
maximum potential value of $907 million.  Also in September,  the
Company  was awarded two additional system integration contracts,
totaling  approximately  $20  million,  with the  Defense  Supply 
Service and  U.S. House of Representatives.

      As of September 30, 1995, the funded backlog of the Company
totaled $97 million, an increase of $4 million from December  31,
1994.   Funded  backlog  represents aggregate  contract  revenues
remaining to be earned by the Company at a given time,  but  only
to  the extent, in the case of government contracts, funded by  a
procuring government agency and allotted to the contracts.

Results of Operations
     
     The  condensed consolidated statements of income include the
results  of operations of Telos Corporation and its wholly  owned
subsidiaries   Telos   Corporation  (California),   Telos   Field
Engineering  Inc.,  and Telos International  (collectively,  "the
Company"). The major elements of the Company's operating expenses
as  a  percentage of  sales for  the three and nine month periods
ended September 30, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>           Three  Months Ended       Nine  Months Ended
                        September 30,             September 30,
                        1995     1994            1995     1994
<S>                    <C>      <C>             <C>       <C>
Sales                  100.0%   100.0%          100.0%    100.0%
Cost of sales           83.7     85.1            83.0      82.6
SG&A expenses           12.1     17.9            12.4      15.4
Goodwill amortization     .9      1.9             1.5       1.8

Operating income         3.3     (4.9)            3.1       0.2
Other income               0      0.1               0         0
Interest expense        (2.5)    (2.4)           (2.8)     (2.1)
Income tax provision       0      1.0               0         0
Extraordinary item         0     (0.5)              0      (0.2)
Net income              0.8%     (6.7)%           0.3%     (2.1)%
</TABLE>
<PAGE>
Financial Data by Market Segment

      The Company operates in three market segments: systems  and
services  ( the "Systems and Services Group"), which consists  of
systems  integration  and  software services;  computer  hardware
maintenance  (the  "Field  Engineering  Group");  and  consulting
services (the "Consulting Services Group").

      Sales, gross profit, and gross margin by market segment for
the periods designated below are as follows:
<TABLE>
<CAPTION>
                     Three Months Ended         Nine Months Ended
                         September 30,            September 30,
                         1995     1994            1995     1994
                               (amounts in thousands)
<S>                    <C>      <C>            <C>       <C>                   
Sales:
 Systems and Services  $41,008  $25,348        $ 99,953  $ 83,891
 Field Engineering       8,411    8,771          24,949    26,040
 Consulting Services     6,710    6,644          19,790    17,958
    Total              $56,129  $40,763        $144,692  $127,889

Gross Profit:
 Systems and Services   $7,250   $3,248         $18,326   $14,294
 Field Engineering         661    1,441           2,567     4,876
 Consulting Services     1,231    1,391           3,658     3,075
    Total               $9,142   $6,080         $24,551   $22,245

Gross Margin:
 Systems and Services     17.7%    12.8%           18.3%     17.0%
 Field Engineering         7.9%    16.4%           10.3%     18.7%
 Consulting Services      18.4%    20.9%           18.5%     17.1%
    Total                 16.3%    14.9%           17.0%     17.4%
</TABLE>
     
     For  the  three month period ended September 30, 1995  sales
increased by $15.4 million, or 37.7%, to $56.1 million from $40.8
million  for  the comparable 1994 period.  Sales increased  $16.8
million, or 13.1%, from $127.9 million to $144.7 million for  the
nine months ended September 30, 1995 as compared to the same 1994
period.  These increases for the three and nine month periods are
primarily  attributable to the Systems and Services Group,  which
reported  increases in sales of $15.7 million and  $16.1  million
for the three and nine month periods, and to the Consulting Group
which  reported increased sales of $66,000 and $1.8  million  for
the  three and nine month periods, respectively.  These increases
were  offset by declines in sales in the Field Engineering  Group
of  $360,000 and $1.1 million for the respective three  and  nine
month periods.

     Within  the  Systems and Services Group, systems integration
sales  accounted  for  the majority of  the  increase,  as  sales
improved  $16.1 million and $19.8 million in the three  and  nine
month periods, respectively, due to increased order volume in the
first  three  quarters  of  1995.
<PAGE>
Increased  orders  in  systems  integration  were  due to the INS
contract, which has provided the Company  with  increased revenue
and enhanced  profitability, as well  as increased sales in other
business  lines   of  the   division.   Software  services  sales
experienced declines of $400,000 and $3.7 million  for the  three
and nine month  periods, respectively.  These  decreases in sales
were due to declines in  contract activity  on existing contracts
as well as  certain  contracts   not being  renewed  during 1995.
The revenue decline in the Field Engineering Group  is  primarily
due to lower  warranty revenue resulting from the low 1994 system
integration  sales as  well  as  delayed starts on certain of the
Group's recent contract awards.
     
     Cost of sales increased by $12.3 million, or 35.5%, to $47.0
million in the three month period ended September 30, 1995,  from
$34.7 million in the comparable 1994 period.  For the nine months
ended  September 30, 1995, cost of sales increased $14.5 million,
or  13.7%,  to  $120.1 million from $105.6 million for  the  same
period  in 1994.  These increases are the result of the increases
in sales for both periods.
     
     Gross  profit  increased $3.1 million  in  the  three  month
period to $9.1 million, from $6.1 million in the comparable  1994
period.   For  the nine month period, gross profit  increased  by
$2.3  million to $24.5 million from $22.2 million.  The  increase
in  both  periods is primarily attributable to the  higher  sales
volume previously discussed within the Systems and Services Group
and  the Consulting Services Group.  These increases were  offset
by  declines  in  gross profit for the Field  Engineering  Group,
attributable primarily to start-up costs associated  with  recent
contract  awards.   Gross margins were 16.3% and  17.0%  for  the
three  and  nine month periods of 1995 as compared to  14.9%  and
17.4% for the comparable periods of 1994.
     
     Selling,   general,  and  administrative  expense   ("SG&A")
decreased  for the three month period by approximately  $500,000,
to  $6.8 million in 1995 from $7.3 million in 1994 for the  three
month  period.   For the nine month period, SG&A  decreased  from
$19.7  million  to  $17.9  million, approximately  $1.8  million.
These decreases were primarily due to reduced expenses associated
with product initiatives, lower contract rebid efforts in 1995 as
compared  to 1994, and reduced expenses in certain administrative
cost areas.  SG&A as a percentage of sales decreased to 12.1% for
the  third  quarter  of 1995 from 17.9% in  the  comparable  1994
period.  SG&A as a percentage of sales for the nine month  period
ended  September 30, 1995 decreased to 12.4% from  15.4%  in  the
comparable 1995 period.  The decreases for both periods  are  due
to the higher sales volume and decreased costs.
     
     Goodwill amortization expense was $525,000 and $2.1  million
for  the  three and nine month periods ended September  30,  1995
compared  to  $794,000 and $2.4 million for the  three  and  nine
month  periods  ended  September  30,  1994.   The  reduction  in
goodwill  amortization is attributable to the completion  of  the
amortization of the goodwill created by the 1989 leveraged buyout
of  the  Company.  The Company continues to amortize its goodwill
balance  which resulted from the acquisition of Telos Corporation
(California).
<PAGE>
     
     Operating  income increased by $3.8 million to $1.8  million
in  the  three month period from $(2.0) million in the comparable
1994  period  and  increased $4.4 million to  $4.5  million  from
$125,000  for  the  nine  month  period,  as  a  result  of   the
aforementioned increases in sales and gross profit.
     
     Other  non-operating income was approximately $7,000 in  the
three  month period of 1995 compared to approximately $30,000  of
other  non-operating income in the comparable 1994  period.   For
the  1995 nine month period, non-operating income was $16,000  as
compared to income of $44,000 for the comparable 1994 period.
     
     Interest  expense increased approximately $444,000  to  $1.4
million  in  the  third  quarter of 1995  from  $984,000  in  the
comparable  1994  period.  Interest expense for  the  nine  month
period  ended September 30, 1995 increased $1.4 million  to  $4.0
million from $2.6 million in the 1994 period.  The variance is  a
result  of the increase in the outstanding balance of the  senior
credit facility and related interest rate, as well as an increase
in  the  outstanding balance of the subordinated debt and related
interest rate.
     
     The  Company  did not have an income tax provision  for  the
three month and nine month periods ended September 30, 1995 as  a
result  of utilization of net operating loss carryforwards.   For
the comparable periods of 1994, the Company had a tax benefit  of
$400,000 for the three month period and no tax provision for  the
nine month period.

Liquidity and Capital Resources

     For  the nine months ended September 30, 1995, the Company's
operating  activities  provided  $1.9  million  of  cash  to  the
Company.   This was primarily the result of increased net  income
and the Company's effort to improve receivable collections.  This
improvement in cash collections also resulted in the $2.0 million
reduction of the senior credit facility balance from December 31,
1994 to September 30, 1995.
     
     The  Company continues to have constraints on its  liquidity
as  it  funds  its  revenue growth and its product  and  bid  and
proposal  efforts.   The  Company has an active  cash  management
program   designed  to  monitor  and  control  significant   cash
commitments  as  well as to ensure sufficient funds  for  Company
operations and growth.
<PAGE>
     
     Recent  contract awards will ultimately require the  Company
to  expand  its  financial capability.  The short term  financing
requirement  from  these contract awards  can  be  met  with  its
current   facility.    The  Company  expects   to   address   the
requirements  of  longer  term  financing  and  a  larger  credit
facility in 1996.
     
     At  September 30, 1995, the Company had outstanding debt  of
$39.1  million,  consisting of $32.0 million  under  the  secured
senior   credit  facility  ("Facility")  and  $7.1   million   in
subordinated debt.  The Facility was refinanced on April 17, 1995
and  has a maturity date of July 1, 1996.  While the Company  has
classified  the Facility as a current liability as  of  September
30,  1995 due to the maturity date, the Company believes that the
Facility  will be extended once such discussions with its  lender
have been completed.

Subsequent Events

      On  October 13, 1995, the Company issued to certain of  its
shareholders $14.4 million of Senior Subordinated Notes ("Notes")
in exchange for the $6.5 million Senior Subordinated Bridge Notes
held  by  these  shareholders, as well as  the  transfer  to  the
Company  of  certain  shareholders' deposits with  the  Company's
bank.   The Notes are classified as either Series B or Series  C.
Series  B Notes, which total $6.5 million and replace the  Senior
Subordinated Notes - Series B held by UBS, are  collateralized by
certain assets of the Company.  Series C  Notes  which total $7.9
million are unsecured.

     Both the Series B and Series C Notes have a maturity date of
October 1, 2000 and have interest rates ranging from 14% to  17%.
Additionally,  these notes have a cumulative payment  premium  of
13.5%  per annum payable only upon certain circumstances.   These
circumstances include an initial public offering of the Company's
common stock or a significant refinancing, to the extent that net
proceeds  from  either of the above events are received  and  are
sufficient to pay the premium.  Due to the contingent  nature  of
the premium payment, the associated premium expenses will only be
recorded  after  occurrence of a triggering event.   However  the
interest  portion  of  the notes will  be  treated  as  a  period
expense.
<PAGE>
                   PART II - OTHER INFORMATION


Item 1.   Legal Proceedings

      Reference is made to Part II, Item 1 in the Company's  June
30,  1995  Form 10-Q and Part I, Item 3 in the Company's December
31, 1994 Form 10-K.  No reportable legal events or material legal
developments have occurred during the third quarter of 1995.

Item 6.   Exhibits and Reports on Form 8-K

    (a)  Exhibits:
    
       10.58  Series  B  Senior  Subordinated  Secured  Note  due
              October  1,  2000  as of October 13,  1995  between
              Telos  Corporation (Maryland) and  Drayton  English
              and International Investment Trust
       
       10.59  Series  B  Senior  Subordinated  Secured  Note  due
              October  1,  2000  as of October 13,  1995  between
              Telos  Corporation  (Maryland)  and  J.  O.  Hambro
              Investment Management, Ltd.
       
       10.60  Series  B  Senior  Subordinated  Secured  Note  due
              October  1,  2000  as of October 13,  1995  between
              Telos  Corporation  (Maryland) and  North  Atlantic
              Smaller Companies Investment Trust, PLC
       
       10.61  Series  B  Senior  Subordinated  Secured  Note  due
              October  1,  2000  as of October 13,  1995  between
              Telos  Corporation  (Maryland) and  Mr.  John  R.C.
              Porter
       
       10.62  Series  B  Senior  Subordinated  Secured  Note  due
              October  1,  2000  as of October 13,  1995  between
              Telos Corporation (Maryland) and Sir Leslie Porter
       
       10.63  Series  B  Senior  Subordinated  Secured  Note  due
              October  1,  2000  as of October 13,  1995  between
              Telos    Corporation    (Maryland)    and    Second
              Consolidated Trust, PLC
       
       10.64  Series  B  Senior  Subordinated  Secured  Note  due
              October  1,  2000  as of October 13,  1995  between
              Telos Corporation (Maryland) and Toxford Corp.
       
       10.65  Series  C  Senior  Subordinated Unsecured  Note due
              October  1,  2000  as of October 13,  1995  between
              Telos  Corporation (Maryland) and  Drayton  English
              and International Investment Trust
       
       10.66  Series  C  Senior  Subordinated Unsecured  Note due
              October  1,  2000  as of October 13,  1995  between
              Telos   Corporation  (Maryland)  and  J.O.   Hambro
              Investment Management, Ltd.
<PAGE>
       
       10.67  Series  C  Senior  Subordinated Unsecured  Note due
              October  1,  2000  as of October 13,  1995  between
              Telos  Corporation  (Maryland) and  North  Atlantic
              Smaller Companies Investment Trust, PLC
       
       10.68  Series  C  Senior  Subordinated Unsecured  Note due
              October  1,  2000  as of October 13,  1995  between
              Telos  Corporation  (Maryland) and  Mr.  John  R.C.
              Porter
       
       10.69  Series  C  Senior  Subordinated Unsecured  Note due
              October  1,  2000  as of October 13,  1995  between
              Telos Corporation (Maryland) and Sir Leslie Porter
       
       10.70  Series  C  Senior  Subordinated Unsecured  Note due
              October  1,  2000  as of October 13,  1995  between
              Telos    Corporation    (Maryland)    and    Second
              Consolidated Trust, PLC
       
       10.71  Series  C  Senior  Subordinated Unsecured  Note due
              October  1,  2000  as of October 13,  1995  between
              Telos Corporation (Maryland) and Toxford Corp.
    
       27     Financial Data Schedule
       
    (b)  Reports on Form 8-K:
    
         None
<PAGE>
    

                           SIGNATURES




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



DATE:                             Telos Corporation


November 14, 1995                 /s/  Lorenzo Tellez
                                  Lorenzo Tellez
                                  (Principal Financial Officer &
                                  Principal Accounting Officer)
<PAGE>
                        Telos Corporation
                          Exhibit Index
                                
 Exhibit
 Number                 Exhibit Name                                Page

 10.58      Series B Senior Subordinated Secured Note
            due  October 1, 2000 as  of  October  13,
            1995  between  Telos  Corporation (Maryland)
            and Drayton English and International Investment
            Trust                                                  20-25
 
 10.59      Series B Senior Subordinated Secured Note
            due October 1, 2000 as of   October   13,
            1995  between  Telos  Corporation (Maryland)
            and J. O. Hambro Investment Management, Ltd.           26-31
 
 10.60      Series B Senior Subordinated Secured Note
            due  October 1, 2000 as of   October   13,
            1995  between  Telos  Corporation (Maryland)
            and North Atlantic Smaller Companies Investment
            Trust,  PLC                                            32-37
 
 10.61      Series B Senior Subordinated Secured Note
            due  October 1, 2000 as of   October   13,
            1995  between  Telos  Corporation (Maryland)
            and Mr. John R.C. Porter                               38-43
 
 10.62      Series B Senior Subordinated Secured Note
            due  October 1, 2000 as of   October   13,
            1995  between  Telos  Corporation (Maryland)
            and Sir Leslie Porter                                  44-50
 
 10.63      Series B Senior Subordinated Secured Note
            due  October 1, 2000 as of   October   13,
            1995  between  Telos  Corporation (Maryland)
            and Second Consolidated Trust, PLC                     51-56
 
 10.64      Series B Senior Subordinated Secured Note
            due  October 1, 2000 as of   October   13,
            1995  between  Telos   Corporation (Maryland)
            and Toxford Corp.                                      57-62
 
 10.65      Series C Senior Subordinated Unsecured Note
            due October 1, 2000 as of   October   13,
            1995  between  Telos   Corporation (Maryland)
            and Drayton English and International Investment
            Trust                                                  63-68
 
 10.66      Series C Senior Subordinated Unsecured Note
            due October 1, 2000 as of October  13, 1995
            between Telos Corporation  (Maryland) and J.O
            Hambro Investment Management, Ltd.                     69-74
 
 10.67      Series C Senior Subordinated Unsecured Note
            due October 1, 2000 as of October  13, 1995
            between Telos Corporation  (Maryland) and North
            Atlantic Smaller Companies Investment Trust, PLC       75-80
<PAGE>
 
                        Telos Corporation
                     Exhibit Index (cont'd)
 Exhibit
 Number                 Exhibit Name                                Page


 10.68      Series C Senior Subordinated Unsecured Note
            due October 1, 2000 as  of  October  13,  1995
            between  Telos  Corporation (Maryland) and
            Mr. John R.C. Porter                                   81-86
 
 10.69      Series C Senior Subordinated Unsecured Note due
            October 1, 2000 as of October 13,  1995  between
            Telos   Corporation (Maryland) and Sir Leslie
            Porter                                                 87-92
 
 10.70      Series C Senior Subordinated Unsecured Note due
            October 1, 2000 as of October 13, 1995 between
            Telos Corporation  (Maryland) and Second
            Consolidated Trust, PLC                                93-98
 
 10.71      Series C Senior Subordinated Unsecured Note due
            October 1, 2000 as of October 13, 1995  between
            Telos Corporation (Maryland) and Toxford Corp.         99-104
 
 27         Financial Data Schedule                                105
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                          Herndon, Virginia
                                          October 13, 1995



    SERIES B SENIOR SUBORDINATED SECURED NOTE DUE OCTOBER 1, 2000

     FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of Drayton English &
International Investment Trust, or assigns, (hereinafter referred
to as "Drayton English" or "Lender"), at c/o INVESCO Asset Mgmt.
Ltd., 11 Devonshire Square, London, UK EC2M4YR or at such other
offices or at such other place or places as the holder hereof may
from time to time designate in writing, the principal sum of ONE
HUNDRED FIFTY-ONE THOUSAND SEVENTY-NINE DOLLARS AND 80/100
($151,079.80) on October 1, 2000 together with interest on the
principal amount hereof from time to time outstanding at the rate
hereinafter provided until paid in full.

     This is one of a series of the Company's Notes known as its
Series B Senior Subordinated Secured Notes Due October 1, 2000
(collectively referred to herein as the "Series B Notes"), all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series B Note issued to Sir Leslie Porter.  The Series B Notes
have been issued in the aggregate principal amount of
$6,493,581.93.

                     I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
<PAGE>
paid in full, on the first day of April, July, October, and
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock
of the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount
equal to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes,
accrued and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

         (i)   "Public Offering" shall mean the distribution and
               sale of the Company's common stock (some of the
               proceeds of which sale are available to the
               Company) pursuant to a registration statement
               (other than a registration statement on Form S-4 or
               Form S-8) which has been filed with the U.S.
               Securities and Exchange Commission and become
               effective.
<PAGE>
         (ii)  "Refinancing" shall mean a sale of securities of
               the Company which results in Net Proceeds to the
               Company in excess of $1,000,000, other than (a)
               obligations for borrowed money due and payable
               within one year which are not extended, renewed or
               refinanced beyond such due date; or (b) other
               obligations for money borrowed from NationsBank
               and/or its successors, substitutes and participants
               and their respective assigns and any refinancing
               thereof.

         (iii) "Net Proceeds" shall mean the proceeds to the
               Company after expenses of sale and distribution,
               including discounts, commissions and brokerage and
               legal fees.

         (iv)  "Payment Premium" shall, except as otherwise
               provided in S 1.4, mean an amount equal to 13 1/2%
               per annum,  compounded semiannually from and after
               the date hereof until paid, on the principal amount
               of this Note outstanding from time to time until
               the time of payment.

          (v)   "Merger" shall mean a merger, consolidation or
                other combination to which the Company or any
                subsidiary is a party, in which the Company is not
                the surviving corporation or which results in the
                acquisition of "beneficial ownership" of securities
                of the Company representing 50% or more of the
                total number of votes that may be cast for the
                election of directors by any "person" or "group"
                (as such terms are defined in Rule 13(d)
                promulgated under the Securities Exchange Act of
                1934, as amended), or a sale by the Company of all
                or substantially all of its assets.

          (vi)  "Dissolution" shall mean the adoption by the Board
                of Directors and/or the shareholders of the Company
                of a resolution to dissolve the Company and
                liquidate its assets, the filing by the Company of
                articles of dissolution or a similar application
                for dissolution with the appropriate officer of the
                state of incorporation of the Company, the entry of
                an order or other action by such state dissolving
                the Company, or the adoption by the Board of
                Directors or the shareholders of the Company of a
                plan of liquidation or a resolution approving a
                liquidating distribution of the Company's assets,
                whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series B Notes and the Series C Notes issued by the Company
contemporaneously herewith may request, in writing, that the
Company effect a Public Offering, at the Company's cost and
expense.  Upon receipt of any such request, the Company shall, as
expeditiously as possible, use its best efforts to effect a
Public Offering, with the objective of realizing Net Proceeds sufficient
to pay the then-outstanding principal balance of the Series B
Notes and the Series C Notes together with accrued, unpaid
interest thereon, and, to the extent not prohibited by applicable
law, a Payment Premium in an amount determined in accordance with
S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under
the laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are
obligated or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11 All payments made by the Company on account of the
Series B Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series B Notes outstanding at the time of any such payment.

     1.12 The Company agrees that within 60 days of the date
hereof it will enter into a security agreement with the holder
granting to a collateral agent, mutually acceptable to the Lender
and the Company, for the holders of the Series B Notes, a
perfected security interest in the Company's plant, property and
equipment, pursuant to documents and agreements in form and
substance reasonably satisfactory to the Lender.
<PAGE>
                      II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more
than five days after due date any amount of premium, if any, or
interest on this Note or the Series C Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed
by it under this Note or the Series C Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation
or warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit
Agreement") shall have occurred and be continuing, if (and only if) such
event results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder
as long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower
agrees to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit
is brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.
<PAGE>
                     III.  SUBORDINATION

     3.1  Payment of the principal of, interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined
in the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the
Series B Notes.

     This Note shall be construed and enforced in accordance
with, and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

     The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of
this Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                              Telos Corporation





                              By: /s/ William L.P. Brownley
                              Title:  Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                                 Herndon, Virginia
                                                 October 13, 1995



SERIES B SENIOR SUBORDINATED SECURED NOTE DUE OCTOBER 1, 2000

FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of J.O. Hambro Investment
Management, Ltd., or assigns, (hereinafter referred to as "J.O.
Hambro" or "Lender"), at 30 Queen Anne Gate, London, SWIH 9AL, United
Kingdom or at such other offices or at such other place or places
as the holder hereof may from time to time designate in writing,
the principal sum of SEVENTEEN THOUSAND SEVEN HUNDRED TWENTY-FIVE
DOLLARS AND 21/100 ($17,725.21) on October 1, 2000 together with
interest on the principal amount hereof from time to time
outstanding at the rate hereinafter provided until paid in full.

This is one of a series of the Company's Notes known as its
Series B Senior Subordinated Secured Notes Due October 1, 2000
(collectively referred to herein as the "Series B Notes"), all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series B Note issued to Sir Leslie Porter.  The Series B Notes
have been issued in the aggregate principal amount of
$6,493,581.93.

                                  I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
<PAGE>
paid in full, on the first day of April, July, October, and
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

          (i)    "Public Offering" shall mean the distribution and
                 sale of the Company's common stock (some of the
                 proceeds of which sale are available to the
                 Company) pursuant to a registration statement
                 (other than a registration statement on Form S-4 or
                 Form S-8) which has been filed with the U.S.
                 effective.
<PAGE>
          (ii)   "Refinancing" shall mean a sale of securities of
                 the Company which results in Net Proceeds to the
                 Company in excess of $1,000,000, other than (a)
                 obligations for borrowed money due and payable
                 within one year which are not extended, renewed or
                 refinanced beyond such due date; or (b) other
                 obligations for money borrowed from NationsBank
                 and/or its successors, substitutes and participants
                 and their respective assigns and any refinancing
                 thereof.

          (iii)  "Net Proceeds" shall mean the proceeds to the
                 Company after expenses of sale and distribution,
                 including discounts, commissions and brokerage and
                 legal fees.

          (iv)   "Payment Premium" shall, except as otherwise
                 provided in S 1.4, mean an amount equal to 13 1/2%
                 per annum,  compounded semiannually from and after
                 the date hereof until paid, on the principal amount
                 of this Note outstanding from time to time until
                 the time of payment.

          (v)    "Merger" shall mean a merger, consolidation or
                 other combination to which the Company or any
                 subsidiary is a party, in which the Company is not
                 the surviving corporation or which results in the
                 acquisition of "beneficial ownership" of securities
                 of the Company representing 50% or more of the
                 total number of votes that may be cast for the
                 election of directors by any "person" or "group"
                 (as such terms are defined in Rule 13(d)
                 promulgated under the Securities Exchange Act of
                 1934, as amended), or a sale by the Company of all
                 or substantially all of its assets.

          (vi)   "Dissolution" shall mean the adoption by the Board
                 of Directors and/or the shareholders of the Company
                 of a resolution to dissolve the Company and
                 liquidate its assets, the filing by the Company of
                 articles of dissolution or a similar application
                 for dissolution with the appropriate officer of the
                 state of incorporation of the Company, the entry of
                 an order or other action by such state dissolving
                 the Company, or the adoption by the Board of
                 Directors or the shareholders of the Company of a
                 plan of liquidation or a resolution approving a
                 liquidating distribution of the Company's assets,
                 whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series B Notes and the Series C Notes issued by the Company
contemporaneously herewith may request, in writing, that the
Company effect a Public Offering, at the Company's cost and
expense.  Upon receipt of any such request, the Company shall, as
expeditiously as possible, use its best efforts to effect a
Public Offering, with the objective of realizing Net Proceeds sufficient
to pay the then-outstanding principal balance of the Series B
Notes and the Series C Notes together with accrued, unpaid
interest thereon, and, to the extent not prohibited by applicable
law, a Payment Premium in an amount determined in accordance with
S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are
obligated or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11 All payments made by the Company on account of the
Series B Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series B Notes outstanding at the time of any such payment.

     1.12 The Company agrees that within 60 days of the date
hereof it will enter into a security agreement with the holder
granting to a collateral agent, mutually acceptable to the Lender
and the Company, for the holders of the Series B Notes, a
perfected security interest in the Company's plant, property and
equipment, pursuant to documents and agreements in form and
substance reasonably satisfactory to the Lender.
<PAGE>
                           II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series C Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series C Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.
<PAGE>
                     III.  SUBORDINATION

     3.1  Payment of the principal of, interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the Series
B Notes.

     This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

     The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                               Telos Corporation





                               By: /s/ William L.P. Brownley
                               Title:  Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                                Herndon, Virginia
                                                October 13, 1995



   SERIES B SENIOR SUBORDINATED SECURED NOTE DUE OCTOBER 1, 2000

     FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of North Atlantic Smaller
Companies Investment Trust, or assigns, (hereinafter referred to
as "North Atlantic" or "Lender"), at 30 Queen Anne Gate, London SWIH
9AL, United Kingdom or at such other offices or at such other
place or places as the holder hereof may from time to time
designate in writing, the principal sum of TWO HUNDRED TWENTY-NINE
THOUSAND SIXTY-FIVE DOLLARS AND 44/100 ($229,065.44) on October 1,
2000 together with interest on the principal amount hereof from
time to time outstanding at the rate hereinafter provided until
paid in full.

     This is one of a series of the Company's Notes known as its
Series B Senior Subordinated Secured Notes Due October 1, 2000
(collectively referred to herein as the "Series B Notes"), all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series B Note issued to Sir Leslie Porter.  The Series B Notes
have been issued in the aggregate principal amount of $6,493,581.93.

                                  I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
<PAGE>
paid in full, on the first day of April, July, October, and
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

          (i)    "Public Offering" shall mean the distribution and
                 sale of the Company's common stock (some of the
                 proceeds of which sale are available to the
                 Company) pursuant to a registration statement
                 (other than a registration statement on Form S-4 or
                 Form S-8) which has been filed with the U.S.
                 Securities and Exchange Commission and become
                 effective.
<PAGE>

          (ii)   "Refinancing" shall mean a sale of securities of
                 the Company which results in Net Proceeds to the
                 Company in excess of $1,000,000, other than (a)
                 obligations for borrowed money due and payable
                 within one year which are not extended, renewed or
                 refinanced beyond such due date; or (b) other
                 obligations for money borrowed from NationsBank
                 and/or its successors, substitutes and participants
                 and their respective assigns and any refinancing
                 thereof.

          (iii)  "Net Proceeds" shall mean the proceeds to the
                 Company after expenses of sale and distribution,
                 including discounts, commissions and brokerage and
                 legal fees.

          (iv)   "Payment Premium" shall, except as otherwise
                 provided in S 1.4, mean an amount equal to 13 1/2%
                 per annum,  compounded semiannually from and after
                 the date hereof until paid, on the principal amount
                 of this Note outstanding from time to time until
                 the time of payment.

          (v)    "Merger" shall mean a merger, consolidation or
                 other combination to which the Company or any
                 subsidiary is a party, in which the Company is not
                 the surviving corporation or which results in the
                 acquisition of "beneficial ownership" of securities
                 of the Company representing 50% or more of the
                 total number of votes that may be cast for the
                 election of directors by any "person" or "group"
                 (as such terms are defined in Rule 13(d)
                 promulgated under the Securities Exchange Act of
                 1934, as amended), or a sale by the Company of all
                 or substantially all of its assets.

          (vi)   "Dissolution" shall mean the adoption by the Board
                 of Directors and/or the shareholders of the Company
                 of a resolution to dissolve the Company and
                 liquidate its assets, the filing by the Company of
                 articles of dissolution or a similar application
                 for dissolution with the appropriate officer of the
                 state of incorporation of the Company, the entry of
                 an order or other action by such state dissolving
                 the Company, or the adoption by the Board of
                 Directors or the shareholders of the Company of a
                 plan of liquidation or a resolution approving a
                 liquidating distribution of the Company's assets,
                 whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series B Notes and the Series C Notes issued by the Company
contemporaneously herewith may request, in writing, that the
Company effect a Public Offering, at the Company's cost and
expense.  Upon receipt of any such request, the Company shall, as
expeditiously as possible, use its best efforts to effect a Public
Offering, with the objective of realizing Net Proceeds sufficient
to pay the then-outstanding principal balance of the Series B
Notes and the Series C Notes together with accrued, unpaid
interest thereon, and, to the extent not prohibited by applicable
law, a Payment Premium in an amount determined in accordance with
S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11 All payments made by the Company on account of the
Series B Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series B Notes outstanding at the time of any such payment.

     1.12 The Company agrees that within 60 days of the date
hereof it will enter into a security agreement with the holder
granting to a collateral agent, mutually acceptable to the Lender
and the Company, for the holders of the Series B Notes, a
perfected security interest in the Company's plant, property and
equipment, pursuant to documents and agreements in form and
substance reasonably satisfactory to the Lender.
<PAGE>
                              II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series C Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series C Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.
<PAGE>
                           III.  SUBORDINATION

     3.1  Payment of the principal of, interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the Series
B Notes.

     This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

     The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                             Telos Corporation





                             By: /s/  William L.P. Brownley
                             Title:   Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                               Herndon, Virginia
                                               October 13, 1995



SERIES B SENIOR SUBORDINATED SECURED NOTE DUE OCTOBER 1, 2000

FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of John Porter, or
assigns, (hereinafter referred to as "John Porter" or "Lender"),
at c/o PFM Ltd. 12 Hans Road, London SW3 1RT, United Kingdom or at
such other offices or at such other place or places as the holder
hereof may from time to time designate in writing, the principal
sum of THREE MILLION THREE HUNDRED SIXTY-ONE THOUSAND SEVEN
HUNDRED FORTY-FIVE DOLLARS and 92/100 ($3,361,745.92) on October
1, 2000 together with interest on the principal amount hereof from
time to time outstanding at the rate hereinafter provided until
paid in full.

This is one of a series of the Company's Notes known as its
Series B Senior Subordinated Secured Notes Due October 1, 2000
(collectively referred to herein as the "Series B Notes"), all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series B Note issued to Sir Leslie Porter.  The Series B Notes
have been issued in the aggregate principal amount of
$6,493,581.93.

                                  I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
<PAGE>
paid in full, on the first day of April, July, October, and
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

    1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

          (i)    "Public Offering" shall mean the distribution and
                 sale of the Company's common stock (some of the
                 proceeds of which sale are available to the
                 Company) pursuant to a registration statement
                 (other than a registration statement on Form S-4 or
                 Form S-8) which has been filed with the U.S.
                 Securities and Exchange Commission and become
                 effective.

          (ii)   "Refinancing" shall mean a sale of securities of
                 the Company which results in Net Proceeds to the
                 Company in excess of $1,000,000, other than (a)
                 obligations for borrowed money due and payable
                 within one year which are not extended, renewed or
                 refinanced beyond such due date; or (b) other
                 obligations for money borrowed from NationsBank
                 and/or its successors, substitutes and participants
                 and their respective assigns and any refinancing
                 thereof.

          (iii)  "Net Proceeds" shall mean the proceeds to the
                 Company after expenses of sale and distribution,
                 including discounts, commissions and brokerage and
                 legal fees.

          (iv)   "Payment Premium" shall, except as otherwise
                 provided in S 1.4, mean an amount equal to 13 1/2%
                 per annum,  compounded semiannually from and after
                 the date hereof until paid, on the principal amount
                 of this Note outstanding from time to time until
                 the time of payment.

          (v)    "Merger" shall mean a merger, consolidation or
                 other combination to which the Company or any
                 subsidiary is a party, in which the Company is not
                 the surviving corporation or which results in the
                 acquisition of "beneficial ownership" of securities
                 of the Company representing 50% or more of the
                 total number of votes that may be cast for the
                 election of directors by any "person" or "group"
                 (as such terms are defined in Rule 13(d)
                 promulgated under the Securities Exchange Act of
                 1934, as amended), or a sale by the Company of all
                 or substantially all of its assets.

          (vi)   "Dissolution" shall mean the adoption by the Board
                 of Directors and/or the shareholders of the Company
                 of a resolution to dissolve the Company and
                 liquidate its assets, the filing by the Company of
                 articles of dissolution or a similar application
                 for dissolution with the appropriate officer of the
                 state of incorporation of the Company, the entry of
                 an order or other action by such state dissolving
                 the Company, or the adoption by the Board of
                 Directors or the shareholders of the Company of a
                 plan of liquidation or a resolution approving a
                 liquidating distribution of the Company's assets,
                 whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series B Notes and the Series C Notes issued by the Company
contemporaneously herewith may request, in writing, that the
Company effect a Public Offering, at the Company's cost and
expense.  Upon receipt of any such request, the Company shall, as
expeditiously as possible, use its best efforts to effect a Public
Offering, with the objective of realizing Net Proceeds sufficient
to pay the then-outstanding principal balance of the Series B
Notes and the Series C Notes together with accrued, unpaid
interest thereon, and, to the extent not prohibited by applicable
law, a Payment Premium in an amount determined in accordance with
S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11 All payments made by the Company on account of the
Series B Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series B Notes outstanding at the time of any such payment.

     1.12 The Company agrees that within 60 days of the date
hereof it will enter into a security agreement with the holder
granting to a collateral agent, mutually acceptable to the Lender
and the Company, for the holders of the Series B Notes, a
perfected security interest in the Company's plant, property and
equipment, pursuant to documents and agreements in form and
substance reasonably satisfactory to the Lender.
<PAGE>
                              II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series C Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series C Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.
<PAGE>
                          III.  SUBORDINATION

     3.1  Payment of the principal of, interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the Series
B Notes.

This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                             Telos Corporation





                             By: /s/  William L.P. Brownley
                             Title:   Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                               Herndon, Virginia
                                               October 13, 1995



SERIES B SENIOR SUBORDINATED SECURED NOTE DUE OCTOBER 1, 2000

     FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of Sir Leslie Porter
(hereinafter referred to as Lender"), c/o Personal Financial
Management Ltd., 12 Hans Road, London SW3 1RT, England, at such
other offices or at such other place or places as the holder
hereof may from time to time designate in writing, the principal
sum of SEVEN HUNDRED NINE THOUSAND FOUR HUNDRED NINETY-SEVEN
DOLLARS AND 49/100 ($709,497.49) on October 1, 2000 together with
interest on the principal amount hereof from time to time
outstanding at the rate hereinafter provided until paid in full.

     This is one of a series of the Company's Notes known as its
Series B Senior Subordinated Secured Notes Due October 1, 2000
(collectively referred to herein as the "Series B Notes"), all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in this
Note.  The Series B Notes have been issued in the aggregate
principal amount of $6,493,581.93.

                        I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
paid in full, on the first day of April, July, October, and
January in each year.  Notwithstanding the foregoing, the rate of
<PAGE>
interest shall be increased to an amount necessary to result in a
payment to the holder of fourteen percent (14%) per annum net of
withholding for United States Federal Income Taxes, it being
contemplated that Borrower shall receive substantiation for
Federal Income Tax purposes of circumstances supporting
withholding at a rate no greater than seventeen and one-half
percent (17 1/2%) of interest hereunder.  The first interest
payment shall be due January 1, 1996 and shall include all
interest accrued from the date hereof until the date of such
interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6   Definitions.

          (i)    "Public Offering" shall mean the distribution and
                 sale of the Company's common stock (some of the
                 proceeds of which sale are available to the
                 Company) pursuant to a registration statement
<PAGE>
                 (other than a registration statement on Form S-4 or
                 Form S-8) which has been filed with the U.S.
                 Securities and Exchange Commission and become
                 effective.

          (ii)   "Refinancing" shall mean a sale of securities of
                 the Company which results in Net Proceeds to the
                 Company in excess of $1,000,000, other than (a)
                 obligations for borrowed money due and payable
                 within one year which are not extended, renewed or
                 refinanced beyond such due date; (b) other
                 obligations for money borrowed from NationsBank
                 and/or its successors, substitutes and participants
                 and their respective assigns and any refinancing
                 thereof.

          (iii)  "Net Proceeds" shall mean the proceeds to the
                 Company after expenses of sale and distribution,
                 including discounts, commissions and brokerage and
                 legal fees.

          (iv)   "Payment Premium" shall mean an amount equal to (a)
                 13 1/2% per annum, compounded semiannually from and
                 after the date hereof until paid, on the principal
                 amount of this Note outstanding from time to time
                 until the time of payment minus (b) the cumulative
                 amount payable by the Company on account of
                 withholding taxes with respect to interest payable
                 pursuant to Section 1.1 to the date of payment of
                 such premium.  For the avoidance of doubt, the
                 Payment Premium shall not itself be increased on
                 account of withholding taxes, but shall be subject
                 to, and the amount remitted to the holder reduced
                 by, any withholding tax to which the Payment
                 Premium is subject, with the result that the total
                 cost to the Company for interest, Payment Premium
                 and withholding taxes shall equal twenty-seven and
                 one-half percent (27 1/2%) per annum on the
                 principal outstanding from time to time to the date 
                 of payment of the Payment Premium.
<PAGE>
          (v)    "Merger" shall mean a merger, consolidation or
                 other combination to which the Company or any
                 subsidiary is a party, in which the Company is not
                 the surviving corporation or which results in the
                 acquisition of "beneficial ownership" of securities   
                 of the Company representing 50% or more of the
                 total number of votes that may be cast for the
                 election of directors by any "person" or "group"
                 (as such terms are defined in Rule 13(d)
                 promulgated under the Securities Exchange Act of
                 1934, as amended), or a sale by the Company of all 
                 or substantially all of its assets.

          (vi)   "Dissolution" shall mean the adoption by the Board
                 of Directors and/or the shareholders of the Company
                 of a resolution to dissolve the Company and
                 liquidate its assets, the filing by the Company of
                 articles of dissolution or a similar application
                 for dissolution with the appropriate officer of the
                 state of incorporation of the Company, the entry of
                 an order or other action by such state dissolving
                 the Company, or the adoption by the Board of
                 Directors or the shareholders of the Company of a
                 plan of liquidation or a resolution approving a
                 liquidating distribution of the Company's assets,
                 whichever shall first occur.

     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series B Notes and the Series C Notes issued by the Company
contemporaneously herewith may request, in writing, that the
Company effect a Public Offering, at the Company's cost and
expense.  Upon receipt of any such request, the Company shall, as
expeditiously as possible, use its best efforts to effect a Public
Offering, with the objective of realizing Net Proceeds sufficient
to pay the then-outstanding principal balance of the Series B
Notes and the Series C Notes together with accrued, unpaid
interest thereon, and, to the extent not prohibited by applicable
law, a Payment Premium in an amount determined in accordance with
S 1.4.
         
     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.
<PAGE>
     1.9     Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10  Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11  All payments made by the Company on account of the
Series B Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series B Notes outstanding at the time of any such payment.

     1.12  The Company agrees that within 60 days of the date
hereof it will enter into a security agreement with the holder
granting to a collateral agent, mutually acceptable to the Holders
and the Company, for the holders of the Series B Notes, a
perfected security interest in the Company's plant, property and
equipment, pursuant to documents and agreements in form and
substance reasonably satisfactory to the Lender.

                          II.  DEFAULT

     2.1   It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series C Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series C Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
<PAGE>
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2   If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3   Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.

                       III.  SUBORDINATION

     3.1   Payment of the principal of, interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the Series
B Notes.

     This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.
<PAGE>
     The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                        Telos Corporation



                        By: /s/  William L.P. Brownley
                        Title:   Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                               Herndon, Virginia
                                               October 13, 1995



SERIES B SENIOR SUBORDINATED SECURED NOTE DUE OCTOBER 1, 2000

FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of Second Consolidated
Trust, or assigns, (hereinafter referred to as "Second
Consolidated Trust" or "Lender"), at c/o Foreign & Colonial
Exchange House, Primrose Street, 8th Floor, London EC2A 2NY,
United Kingdom or at such other offices or at such other place or
places as the holder hereof may from time to time designate in
writing, the principal sum of FIVE HUNDRED FIFTY-SEVEN THOUSAND
EIGHT HUNDRED FORTY-ONE DOLLARS AND 55/100 ($557,841.55) on
October 1, 2000 together with interest on the principal amount
hereof from time to time outstanding at the rate hereinafter
provided until paid in full.

This is one of a series of the Company's Notes known as its
Series B Senior Subordinated Secured Notes Due October 1, 2000
(collectively referred to herein as the "Series B Notes"), all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series B Note issued to Sir Leslie Porter.  The Series B Notes
have been issued in the aggregate principal amount of
$6,493,581.93.

                           I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
<PAGE>
paid in full, on the first day of April, July, October, and
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

          (i)    "Public Offering" shall mean the distribution and
                 sale of the Company's common stock (some of the
                 proceeds of which sale are available to the
                 Company) pursuant to a registration statement
                 (other than a registration statement on Form S-4 or
                 Form S-8) which has been filed with the U.S.
                 Securities and Exchange Commission and become
                 effective.
<PAGE>
          (ii)   "Refinancing" shall mean a sale of securities of
                 the Company which results in Net Proceeds to the
                 Company in excess of $1,000,000, other than (a) 
                 obligations for borrowed money due and payable
                 within one year which are not extended, renewed or
                 refinanced beyond such due date; or (b) other
                 obligations for money borrowed from NationsBank 
                 and/or its successors, substitutes and participants
                 and their respective assigns and any refinancing
                 thereof.

          (iii)  "Net Proceeds" shall mean the proceeds to the
                 Company after expenses of sale and distribution,
                 including discounts, commissions and brokerage and
                 legal fees.

          (iv)   "Payment Premium" shall, except as otherwise
                 provided in S 1.4, mean an amount equal to 13 1/2%
                 per annum,  compounded semiannually from and after
                 the date hereof until paid, on the principal amount
                 of this Note outstanding from time to time until
                 the time of payment.

          (v)    "Merger" shall mean a merger, consolidation or
                 other combination to which the Company or any
                 subsidiary is a party, in which the Company is not
                 the surviving corporation or which results in the
                 acquisition of "beneficial ownership" of securities
                 of the Company representing 50% or more of the
                 total number of votes that may be cast for the
                 election of directors by any "person" or "group"
                 (as such terms are defined in Rule 13(d)
                 promulgated under the Securities Exchange Act of
                 1934, as amended), or a sale by the Company of all
                 or substantially all of its assets.

          (vi)   "Dissolution" shall mean the adoption by the Board
                 of Directors and/or the shareholders of the Company
                 of a resolution to dissolve the Company and
                 liquidate its assets, the filing by the Company of
                 articles of dissolution or a similar application
                 for dissolution with the appropriate officer of the
                 state of incorporation of the Company, the entry of
                 an order or other action by such state dissolving
                 the Company, or the adoption by the Board of
                 Directors or the shareholders of the Company of a
                 plan of liquidation or a resolution approving a
                 liquidating distribution of the Company's assets,
                 whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series B Notes and the Series C Notes issued by the Company
contemporaneously herewith may request, in writing, that the
Company effect a Public Offering, at the Company's cost and
expense.  Upon receipt of any such request, the Company shall, as
expeditiously as possible, use its best efforts to effect a Public
Offering, with the objective of realizing Net Proceeds sufficient
to pay the then-outstanding principal balance of the Series B
Notes and the Series C Notes together with accrued, unpaid
interest thereon, and, to the extent not prohibited by applicable
law, a Payment Premium in an amount determined in accordance with
S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
 of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11 All payments made by the Company on account of the
Series B Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series B Notes outstanding at the time of any such payment.

     1.12 The Company agrees that within 60 days of the date
hereof it will enter into a security agreement with the holder
granting to a collateral agent, mutually acceptable to the Lender
and the Company, for the holders of the Series B Notes, a
perfected security interest in the Company's plant, property and
equipment, pursuant to documents and agreements in form and
substance reasonably satisfactory to the Lender.
<PAGE>
                            II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series C Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series C Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.
<PAGE>
                          III.  SUBORDINATION

     3.1  Payment of the principal of, interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the Series
B Notes.

This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                         Telos Corporation




                         By: /s/  William L.P. Brownley
                         Title:   Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                                Herndon, Virginia
                                                October 13, 1995



SERIES B SENIOR SUBORDINATED SECURED NOTE DUE OCTOBER 1, 2000

FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of Toxford Corporation, or
assigns, (hereinafter referred to as "Toxford Corporation" or
"Lender"), at c/o Rabobank, P.O. Box 348, St. Andrews House, Le
Bordage, St. Peter Port, Guernsey , Channel Islands, or at such
other offices or at such other place or places as the holder
hereof may from time to time designate in writing, the principal
sum of ONE MILLION FOUR HUNDRED SIXTY-SIX THOUSAND SIX HUNDRED
TWENTY-SIX DOLLARS AND 53/100 ($1,466,626.53) on October 1, 2000
together with interest on the principal amount hereof from time to
time outstanding at the rate hereinafter provided until paid in
full.

This is one of a series of the Company's Notes known as its
Series B Senior Subordinated Secured Notes Due October 1, 2000
(collectively referred to herein as the "Series B Notes"), all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series B Note issued to Sir Leslie Porter.  The Series B Notes
have been issued in the aggregate principal amount of
$6,493,581.93.

                             I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
<PAGE>
paid in full, on the first day of April, July, October, and
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
 amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

          (i)    "Public Offering" shall mean the distribution and
                 sale of the Company's common stock (some of the
                 proceeds of which sale are available to the
                 Company) pursuant to a registration statement
                 (other than a registration statement on Form S-4 or
                 Form S-8) which has been filed with the U.S.
                 Securities and Exchange Commission and become
                 effective.
<PAGE>
          (ii)   "Refinancing" shall mean a sale of securities of
                 the Company which results in Net Proceeds to the
                 Company in excess of $1,000,000, other than (a)
                 obligations for borrowed money due and payable
                 within one year which are not extended, renewed or
                 refinanced beyond such due date; or (b) other
                 obligations for money borrowed from NationsBank
                 and/or its successors, substitutes and participants
                 and their respective assigns and any refinancing
                 thereof.
 
          (iii)  "Net Proceeds" shall mean the proceeds to the
                 Company after expenses of sale and distribution,
                 including discounts, commissions and brokerage and
                 legal fees.

          (iv)   "Payment Premium" shall, except as otherwise
                 provided in S 1.4, mean an amount equal to 13 1/2%
                 per annum,  compounded semiannually from and after
                 the date hereof until paid, on the principal amount
                 of this Note outstanding from time to time until
                 the time of payment.

          (v)    "Merger" shall mean a merger, consolidation or
                 other combination to which the Company or any
                 subsidiary is a party, in which the Company is not
                 the surviving corporation or which results in the
                 acquisition of "beneficial ownership" of securities
                 of the Company representing 50% or more of the
                 total number of votes that may be cast for the
                 election of directors by any "person" or "group"
                 (as such terms are defined in Rule 13(d)
                 promulgated under the Securities Exchange Act of
                 1934, as amended), or a sale by the Company of all
                 or substantially all of its assets.

          (vi)   "Dissolution" shall mean the adoption by the Board
                 of Directors and/or the shareholders of the Company
                 of a resolution to dissolve the Company and
                 liquidate its assets, the filing by the Company of
                 articles of dissolution or a similar application
                 for dissolution with the appropriate officer of the
                 state of incorporation of the Company, the entry of
                 an order or other action by such state dissolving
                 the Company, or the adoption by the Board of
                 Directors or the shareholders of the Company of a
                 plan of liquidation or a resolution approving a
                 liquidating distribution of the Company's assets,
                 whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series B Notes and the Series C Notes issued by the Company
contemporaneously herewith may request, in writing, that the
Company effect a Public Offering, at the Company's cost and
expense.  Upon receipt of any such request, the Company shall, as
expeditiously as possible, use its best efforts to effect a Public
Offering, with the objective of realizing Net Proceeds sufficient
to pay the then-outstanding principal balance of the Series B
Notes and the Series C Notes together with accrued, unpaid
interest thereon, and, to the extent not prohibited by applicable
law, a Payment Premium in an amount determined in accordance with
S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11 All payments made by the Company on account of the
Series B Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series B Notes outstanding at the time of any such payment.

     1.12 The Company agrees that within 60 days of the date
hereof it will enter into a security agreement with the holder
granting to a collateral agent, mutually acceptable to the Lender
and the Company, for the holders of the Series B Notes, a
perfected security interest in the Company's plant, property and
equipment, pursuant to documents and agreements in form and
substance reasonably satisfactory to the Lender.
<PAGE>
                              II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series C Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series C Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.
<PAGE>
                           III.  SUBORDINATION

     3.1  Payment of the principal of, interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the Series
B Notes.

This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                           Telos Corporation





                           By: /s/  William L.P. Brownley
                           Title:   Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                                 Herndon, Virginia
                                                 October 13, 1995



  SERIES C SENIOR SUBORDINATED UNSECURED NOTE DUE OCTOBER 1, 2000

     FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of Drayton English &
International Investment Trust, or assigns, (hereinafter referred
to as "Drayton English" or "Lender"), at  c/o INVESCO Asset Mgmt.
Ltd., 11 Devonshire Square, London, UK EC2M4YR or at such other
offices or at such other place or places as the holder hereof may
from time to time designate in writing, the principal sum of ONE
HUNDRED EIGHTY-THREE THOUSAND THREE HUNDRED THIRTY-TWO DOLLARS AND
40/100 ($183,332.40) on October 1, 2000 together with interest on
the principal amount hereof from time to time outstanding at the
rate hereinafter provided until paid in full.

     This is one of a series of the Company's Notes known as its
Series C Senior Subordinated Unsecured Notes Due October 1, 2000
(collectively referred to herein as the "Series C Notes", all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series C Note issued to Sir Leslie Porter.  The Series C Notes
have been issued in the aggregate principal amount of
$7,879,835.51.

                        I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
paid in full, on the first day of April, July, October, and
<PAGE>
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

          (i)    "Public Offering" shall mean the distribution and
                 sale of the Company's common stock (some of the
                 proceeds of which sale are available to the
                 Company) pursuant to a registration statement
                 (other than a registration statement on Form S-4 or
                 Form S-8) which has been filed with the U.S.
                 Securities and Exchange Commission and become
                 effective.
<PAGE>
          (ii)   "Refinancing" shall mean a sale of securities of
                 the Company which results in Net Proceeds to the
                 Company in excess of $1,000,000, other than (a)
                 obligations for borrowed money due and payable
                 within one year which are not extended, renewed or
                 refinanced beyond such due date; or (b) other
                 obligations for money borrowed money from
                 NationsBank and/or its successors, substitutes and
                 participants and their respective assigns and any
                 refinancing thereof.

          (iii)  "Net Proceeds" shall mean the proceeds to the
                 Company after expenses of sale and distribution,
                 including discounts, commissions and brokerage and
                 legal fees.

          (iv)   "Payment Premium" shall, except as otherwise
                 provided in S 1.4, mean an amount equal to 13 1/2%
                 per annum,  compounded semiannually from and after
                 the date hereof until paid, on the principal amount
                 of this Note outstanding from time to time until
                 the time of payment.

          (v)    "Merger" shall mean a merger, consolidation or
                 other combination to which the Company or any
                 subsidiary is a party, in which the Company is not
                 the surviving corporation or which results in the
                 acquisition of "beneficial ownership" of securities
                 of the Company representing 50% or more of the
                 total number of votes that may be cast for the
                 election of directors by any "person" or "group"
                 (as such terms are defined in Rule 13(d)
                 promulgated under the Securities Exchange Act of
                 1934, as amended), or a sale by the Company of all
                 or substantially all of its assets.

          (vi)   "Dissolution" shall mean the adoption by the Board
                 of Directors and/or the shareholders of the Company
                 of a resolution to dissolve the Company and
                 liquidate its assets, the filing by the Company of
                 articles of dissolution or a similar application
                 for dissolution with the appropriate officer of the
                 state of incorporation of the Company, the entry of
                 an order or other action by such state dissolving
                 the Company, or the adoption by the Board of
                 Directors or the shareholders of the Company of a
                 plan of liquidation or a resolution approving a
                 liquidating distribution of the Company's assets,
                 whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series C Notes and the Series B Senior Secured Notes issued
by the Company contemporaneous herewith may request, in writing,
that the Company effect a Public Offering, at the Company's cost
and expense.  Upon receipt of any such request, the Company shall,
as expeditiously as possible, use its best efforts to effect a
Public Offering, with the objective of realizing Net Proceeds
sufficient to pay the then-outstanding principal balance of the
Series C Notes and the Series B Notes together with accrued,
unpaid interest thereon, and, to the extent not prohibited by
applicable law, a Payment Premium in an amount determined in
accordance with S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment 
Premium, if any.

     1.11 All payments made by the Company on account of the
Series C Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series C Notes outstanding at the time of any such payment.

                         II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series B Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
<PAGE>
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series B Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.

                       III.  SUBORDINATION

     3.1  Payment of the principal, of interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
<PAGE>
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the Series
C Notes.

     This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

     The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                           Telos Corporation





                           By: /s/  William L.P. Brownley
                           Title:   Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                                  Herndon, Virginia
                                                  October 13, 1995



  SERIES C SENIOR SUBORDINATED UNSECURED NOTE DUE OCTOBER 1, 2000

     FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of J.O. Hambro Investment
Trust, or assigns, (hereinafter referred to as"J.O. Hambro" or
"Lender"), at 30 Queen Anne Gate, London, SWIH 9AL, United Kingdom
or at such other offices or at such other place or places as the 
holder hereof may from time to time designate in writing, the
principal sum of TWENTY-ONE THOUSAND FIVE HUNDRED NINE DOLLARS AND
19/100 ($21,509.19) on October 1, 2000 together with interest on
the principal amount hereof from time to time outstanding at the
rate hereinafter provided until paid in full.

     This is one of a series of the Company's Notes known as its
Series C Senior Subordinated Unsecured Notes Due October 1, 2000
(collectively referred to herein as the "Series C Notes", all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series C Note issued to Sir Leslie Porter.  The Series C Notes
have been issued in the aggregate principal amount of
$7,879,835.51.

                     I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
paid in full, on the first day of April, July, October, and
<PAGE>
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

          (i)    "Public Offering" shall mean the distribution and
                 sale of the Company's common stock (some of the
                 proceeds of which sale are available to the
                 Company) pursuant to a registration statement
                 (other than a registration statement on Form S-4 or
                 Form S-8) which has been filed with the U.S.
                 Securities and Exchange Commission and become
                 effective.
<PAGE>
          (ii)   "Refinancing" shall mean a sale of securities of
                 the Company which results in Net Proceeds to the
                 Company in excess of $1,000,000, other than (a)
                 obligations for borrowed money due and payable
                 within one year which are not extended, renewed or
                 refinanced beyond such due date; or (b) other
                 obligations for money borrowed money from
                 NationsBank and/or its successors, substitutes and
                 participants and their respective assigns and any
                 refinancing thereof.

          (iii)  "Net Proceeds" shall mean the proceeds to the
                 Company after expenses of sale and distribution,
                 including discounts, commissions and brokerage and
                 legal fees.

          (iv)   "Payment Premium" shall, except as otherwise
                 provided in S 1.4, mean an amount equal to 13 1/2%
                 per annum,  compounded semiannually from and after
                 the date hereof until paid, on the principal amount
                 of this Note outstanding from time to time until
                 the time of payment.

          (v)    "Merger" shall mean a merger, consolidation or
                 other combination to which the Company or any
                 subsidiary is a party, in which the Company is not
                 the surviving corporation or which results in the
                 acquisition of "beneficial ownership" of securities
                 of the Company representing 50% or more of the
                 total number of votes that may be cast for the
                 election of directors by any "person" or "group"
                 (as such terms are defined in Rule 13(d)
                 promulgated under the Securities Exchange Act of
                 1934, as amended), or a sale by the Company of all
                 or substantially all of its assets.

          (vi)   "Dissolution" shall mean the adoption by the Board
                 of Directors and/or the shareholders of the Company
                 of a resolution to dissolve the Company and
                 liquidate its assets, the filing by the Company of
                 articles of dissolution or a similar application
                 for dissolution with the appropriate officer of the
                 state of incorporation of the Company, the entry of
                 an order or other action by such state dissolving
                 the Company, or the adoption by the Board of
                 Directors or the shareholders of the Company of a
                 plan of liquidation or a resolution approving a
                 liquidating distribution of the Company's assets,
                 whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series C Notes and the Series B Senior Secured Notes issued
by the Company contemporaneous herewith may request, in writing,
that the Company effect a Public Offering, at the Company's cost
and expense.  Upon receipt of any such request, the Company shall,
as expeditiously as possible, use its best efforts to effect a
Public Offering, with the objective of realizing Net Proceeds
sufficient to pay the then-outstanding principal balance of the
Series C Notes and the Series B Notes together with accrued,
unpaid interest thereon, and, to the extent not prohibited by
applicable law, a Payment Premium in an amount determined in
accordance with S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11 All payments made by the Company on account of the
Series C Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series C Notes outstanding at the time of any such payment.

                        II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series B Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
<PAGE>
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series B Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.

                        III.  SUBORDINATION

     3.1  Payment of the principal, of interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
quivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
<PAGE>
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the Series
C Notes.

     This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

     The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                            Telos Corporation





                            By: /s/  William L.P. Brownley
                            Title:   Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                            Herndon, Virginia
                                            October 13, 1995


   SERIES C SENIOR SUBORDINATED UNSECURED NOTE DUE OCTOBER 1, 2000

     FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of North Atlantic Smaller
Companies Investment Trust, or assigns, (hereinafter referred to
as "North Atlantic" or "Lender"), at 30 Queen Anne Gate, London
SWIH 9AL, United Kingdom or at such other offices or at such other
place or places as the holder hereof may from time to time
designate in writing, the principal sum of TWO HUNDRED SEVENTY-
SEVEN THOUSAND NINE HUNDRED SIXTY-SIX DOLLARS AND 47/100
($277,966.47) on October 1, 2000 together with interest on the
principal amount hereof from time to time outstanding at the rate
hereinafter provided until paid in full.

     This is one of a series of the Company's Notes known as its
Series C Senior Subordinated Unsecured Notes Due October 1, 2000
(collectively referred to herein as the "Series C Notes", all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series C Note issued to Sir Leslie Porter.  The Series C Notes
have been issued in the aggregate principal amount of
$7,879,835.51.

                            I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
paid in full, on the first day of April, July, October, and
<PAGE>
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with
S 1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

          (i)  "Public Offering" shall mean the distribution and
               sale of the Company's common stock (some of the
               proceeds of which sale are available to the
               Company) pursuant to a registration statement
               (other than a registration statement on Form S-4 or
               Form S-8) which has been filed with the U.S.
               Securities and Exchange Commission and become
               effective.
<PAGE>
         (ii)  "Refinancing" shall mean a sale of securities of
               the Company which results in Net Proceeds to the
               Company in excess of $1,000,000, other than (a)
               obligations for borrowed money due and payable
               within one year which are not extended, renewed or
               refinanced beyond such due date; or (b) other
               obligations for money borrowed money from
               NationsBank and/or its successors, substitutes and
               participants and their respective assigns and any
               refinancing thereof.

        (iii)  "Net Proceeds" shall mean the proceeds to the
               Company after expenses of sale and distribution,
               including discounts, commissions and brokerage and
               legal fees.
  
         (iv)  "Payment Premium" shall, except as otherwise
               provided in S 1.4, mean an amount equal to 13 1/2%
               per annum,  compounded semiannually from and after
               the date hereof until paid, on the principal amount
               of this Note outstanding from time to time until
               the time of payment.

          (v)  "Merger" shall mean a merger, consolidation or
               other combination to which the Company or any
               subsidiary is a party, in which the Company is not
               the surviving corporation or which results in the
               acquisition of "beneficial ownership" of securities
               of the Company representing 50% or more of the
               total number of votes that may be cast for the
               election of directors by any "person" or "group"
               (as such terms are defined in Rule 13(d)
               promulgated under the Securities Exchange Act of
               1934, as amended), or a sale by the Company of all
               or substantially all of its assets.

         (vi)  "Dissolution" shall mean the adoption by the Board
               of Directors and/or the shareholders of the Company
               of a resolution to dissolve the Company and
               liquidate its assets, the filing by the Company of
               articles of dissolution or a similar application
               for dissolution with the appropriate officer of the
               state of incorporation of the Company, the entry of
               an order or other action by such state dissolving
               the Company, or the adoption by the Board of
               Directors or the shareholders of the Company of a
               plan of liquidation or a resolution approving a
               liquidating distribution of the Company's assets,
               whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series C Notes and the Series B Senior Secured Notes issued
by the Company contemporaneous herewith may request, in writing,
that the Company effect a Public Offering, at the Company's cost
and expense.  Upon receipt of any such request, the Company shall,
as expeditiously as possible, use its best efforts to effect a
Public Offering, with the objective of realizing Net Proceeds
sufficient to pay the then-outstanding principal balance of the
Series C Notes and the Series B Notes together with accrued,
unpaid interest thereon, and, to the extent not prohibited by
applicable law, a Payment Premium in an amount determined in
accordance with S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10  Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11  All payments made by the Company on account of the
Series C Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series C Notes outstanding at the time of any such payment.

                             II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series B Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
<PAGE>
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series B Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.

                        III.  SUBORDINATION

     3.1  Payment of the principal, of interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
<PAGE>
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the
Series C Notes.

     This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

     The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                                    Telos Corporation





                                    By: /s/  William L.P. Brownley
                                    Title:   Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                              Herndon, Virginia
                                              October 13, 1995



  SERIES C SENIOR SUBORDINATED UNSECURED NOTE DUE OCTOBER 1, 2000

FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of John Porter, or
assigns, (hereinafter referred to as "John Porter" or "Lender"),
at c/o PFM Ltd. 12 Hans Road, London SW3 1RT, United Kingdom or at
such other offices or at such other place or places as the holder
hereof may from time to time designate in writing, the principal
sum of FOUR MILLION SEVENTY-NINE THOUSAND, FOUR HUNDRED THIRTEEN
DOLLARS AND 36/100 ($4,079,413.36) on October 1, 2000 together
with interest on the principal amount hereof from time to time
outstanding at the rate hereinafter provided until paid in full.

     This is one of a series of the Company's Notes known as its
Series C Senior Subordinated Unsecured Notes Due October 1, 2000
(collectively referred to herein as the "Series C Notes", all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series C Note issued to Sir Leslie Porter.  The Series C Notes
have been issued in the aggregate principal amount of
$7,879,835.51.

                        I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
paid in full, on the first day of April, July, October, and
<PAGE>
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5  In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

      1.6  Definitions.

           (i)  "Public Offering" shall mean the distribution and
                sale of the Company's common stock (some of the
                proceeds of which sale are available to the
                Company) pursuant to a registration statement
                (other than a registration statement on Form S-4 or
                Form S-8) which has been filed with the U.S.
                Securities and Exchange Commission and become
                effective.
<PAGE>
          (ii)  "Refinancing" shall mean a sale of securities of
                the Company which results in Net Proceeds to the
                Company in excess of $1,000,000, other than (a)
                obligations for borrowed money due and payable
                within one year which are not extended, renewed or
                refinanced beyond such due date; or (b) other
                obligations for money borrowed money from
                NationsBank and/or its successors, substitutes and
                participants and their respective assigns and any
                refinancing thereof.

         (iii)  "Net Proceeds" shall mean the proceeds to the
                Company after expenses of sale and distribution,
                including discounts, commissions and brokerage and
                legal fees.

          (iv)  "Payment Premium" shall, except as otherwise
                provided in S 1.4, mean an amount equal to 13 1/2%
                per annum,  compounded semiannually from and after
                the date hereof until paid, on the principal amount
                of this Note outstanding from time to time until
                the time of payment.

           (v)  "Merger" shall mean a merger, consolidation or
                other combination to which the Company or any
                subsidiary is a party, in which the Company is not
                the surviving corporation or which results in the
                acquisition of "beneficial ownership" of securities
                of the Company representing 50% or more of the
                total number of votes that may be cast for the
                election of directors by any "person" or "group"
                (as such terms are defined in Rule 13(d)
                promulgated under the Securities Exchange Act of
                1934, as amended), or a sale by the Company of all
                or substantially all of its assets.
 
          (vi)  "Dissolution" shall mean the adoption by the Board
                of Directors and/or the shareholders of the Company
                of a resolution to dissolve the Company and
                liquidate its assets, the filing by the Company of
                articles of dissolution or a similar application
                for dissolution with the appropriate officer of the
                state of incorporation of the Company, the entry of
                an order or other action by such state dissolving
                the Company, or the adoption by the Board of
                Directors or the shareholders of the Company of a
                plan of liquidation or a resolution approving a
                liquidating distribution of the Company's assets,
                whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series C Notes and the Series B Senior Secured Notes issued
by the Company contemporaneous herewith may request, in writing,
that the Company effect a Public Offering, at the Company's cost
and expense.  Upon receipt of any such request, the Company shall,
as expeditiously as possible, use its best efforts to effect a
Public Offering, with the objective of realizing Net Proceeds
sufficient to pay the then-outstanding principal balance of the
Series C Notes and the Series B Notes together with accrued,
unpaid interest thereon, and, to the extent not prohibited by
applicable law, a Payment Premium in an amount determined in
accordance with S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11 All payments made by the Company on account of the
Series C Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series C Notes outstanding at the time of any such payment.

                             II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series B Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
<PAGE>
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed
by it under this Note or the Series B Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation
or warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit
Agreement") shall have occurred and be continuing, if (and only if) such
event results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

    2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder
as long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.

                           III.  SUBORDINATION

     3.1  Payment of the principal, of interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
<PAGE>
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the
Series C Notes.

     This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

     The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                                    Telos Corporation





                                    By: /s/  William L.P. Brownley
                                    Title:   Vice President, General Counsel


<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                               Herndon, Virginia
                                               October 13, 1995



  SERIES C SENIOR SUBORDINATED UNSECURED NOTE DUE OCTOBER 1, 2000

     FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of Sir Leslie Porter
(hereinafter referred to as Lender"), c/o Personal Financial
Management Ltd., 12 Hans Road, London SW3 1RT, England, at such
other offices or at such other place or places as the holder
hereof may from time to time designate in writing, the principal
sum of EIGHT HUNDRED SIXTY THOUSAND NINE HUNDRED SIXTY-ONE DOLLARS
AND 42/100 ($860,961.42) on October 1, 2000 together with interest
on the principal amount hereof from time to time outstanding at
the rate hereinafter provided until paid in full.

     This is one of a series of the Company's Notes known as its
Series C Senior Subordinated Unsecured Notes Due October 1, 2000
(collectively referred to herein as the "Series C Notes"), all of
ike tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in this
Note.  The Series C Notes have been issued in the aggregate
principal amount of $7,879,835.51.

                        I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
paid in full, on the first day of April, July, October, and
January in each year.  Notwithstanding the foregoing, the rate of
<PAGE>
interest shall be increased to an amount necessary to result in a
payment to the holder of fourteen percent (14%) per annum net of
withholding for United States Federal Income Taxes, it being
contemplated that Borrower shall receive substantiation for
Federal Income Tax purposes of circumstances supporting
withholding at a rate no greater than seventeen and one-half
percent (17 1/2%) of interest hereunder.  The first interest
payment shall be due January 1, 1996 and shall include all
interest accrued from the date hereof until the date of such
interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not prohibited
by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5  In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

          (i)  "Public Offering" shall mean the distribution and
               sale of the Company's common stock (some of the
               proceeds of which sale are available to the
               Company) pursuant to a registration statement
<PAGE>
               (other than a registration statement on Form S-4 or
               Form S-8) which has been filed with the U.S.
               Securities and Exchange Commission and become
               effective.

         (ii)  "Refinancing" shall mean a sale of securities of
               the Company which results in Net Proceeds to the
               Company in excess of $1,000,000, other than (a)
               obligations for borrowed money due and payable
               within one year which are not extended, renewed or
               refinanced beyond such due date; (b) other
               obligations for money borrowed from NationsBank
               and/or its successors, substitutes and participants
               and their respective assigns and any refinancing
               thereof.

        (iii)  "Net Proceeds" shall mean the proceeds to the
               Company after expenses of sale and distribution,
               including discounts, commissions and brokerage and
               legal fees.

         (iv)  "Payment Premium" shall mean an amount equal to (a)
               13 1/2% per annum, compounded semiannually from and
               after the date hereof until paid, on the principal
               amount of this Note outstanding from time to time
               until the time of payment minus (b) the cumulative
               amount payable by the Company on account of
               withholding taxes with respect to interest payable
               pursuant to Section 1.1 to the date of payment of
               such premium.  For the avoidance of doubt, the
               Payment Premium shall not itself be increased on
               account of withholding taxes, but shall be subject
               to, and the amount remitted to the holder reduced
               by, any withholding tax to which the Payment
               Premium is subject, with the result that the total
               cost to the Company for interest, Payment Premium
               and withholding taxes shall equal twenty-seven and
               one-half percent (27 1/2%) per annum on the
               principal outstanding from time to time to the date
               of payment of the Payment Premium.
<PAGE>
          (v)  "Merger" shall mean a merger, consolidation or
               other combination to which the Company or any
               subsidiary is a party, in which the Company is not
               he surviving corporation or which results in the
               acquisition of "beneficial ownership" of securities
               of the Company representing 50% or more of the
               total number of votes that may be cast for the
               election of directors by any "person" or "group"
               (as such terms are defined in Rule 13(d)
               promulgated under the Securities Exchange Act of
               1934, as amended), or a sale by the Company of all
               or substantially all of its assets.

         (vi)  "Dissolution" shall mean the adoption by the Board
               of Directors and/or the shareholders of the Company
               of a resolution to dissolve the Company and
               liquidate its assets, the filing by the Company of
               articles of dissolution or a similar application
               for dissolution with the appropriate officer of the
               state of incorporation of the Company, the entry of
               an order or other action by such state dissolving
               he Company, or the adoption by the Board of
               Directors or the shareholders of the Company of a
               plan of liquidation or a resolution approving a
               liquidating distribution of the Company's assets,
               whichever shall first occur.

     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series C Notes and the Series B Notes issued by the Company
contemporaneously herewith may request, in writing, that the
Company effect a Public Offering, at the Company's cost and
expense.  Upon receipt of any such request, the Company shall, as
expeditiously as possible, use its best efforts to effect a Public
Offering, with the objective of realizing Net Proceeds sufficient
to pay the then-outstanding principal balance of the Series B
Notes and the Series B Notes together with accrued, unpaid
interest thereon, and, to the extent not prohibited by applicable
law, a Payment Premium in an amount determined in accordance with
S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.
<PAGE>
     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11 All payments made by the Company on account of the
Series C Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series C Notes outstanding at the time of any such payment.

                            II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series B Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series B Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
<PAGE>
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.

                         III.  SUBORDINATION

    3.1  Payment of the principal of, interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the
Series C Notes.

     This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                                    Telos Corporation



                                    By: /s/  William L.P. Brownley
                                    Title:   Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                          Herndon, Virginia
                                          October 13, 1995



  SERIES C SENIOR SUBORDINATED UNSECURED NOTE DUE OCTOBER 1, 2000

     FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of Second Consolidated
Trust, or assigns, (hereinafter referred to as "Second
Consolidated Trust" or "Lender"), at c/o Foreign & Colonial
Exchange House, Primrose Street, 8th Floor, London EC2A 2NY,
United Kingdom or at such other offices or at such other place or
places as the holder hereof may from time to time designate in
writing, the principal sum of SIX HUNDRED SEVENTY-SIX THOUSAND
NINE HUNDRED TWENTY-NINE DOLLARS AND 88/100 ($676,929.88) on
October 1, 2000 together with interest on the principal amount
hereof from time to time outstanding at the rate hereinafter
provided until paid in full.

     This is one of a series of the Company's Notes known as its
Series C Senior Subordinated Unsecured Notes Due October 1, 2000
(collectively referred to herein as the "Series C Notes", all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series C Note issued to Sir Leslie Porter.  The Series C Notes
have been issued in the aggregate principal amount of
$7,879,835.51.

                           I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
paid in full, on the first day of April, July, October, and
<PAGE>
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

          (i)  "Public Offering" shall mean the distribution and
               sale of the Company's common stock (some of the
               proceeds of which sale are available to the
               Company) pursuant to a registration statement
               (other than a registration statement on Form S-4 or
               Form S-8) which has been filed with the U.S.
               Securities and Exchange Commission and become
               effective.
<PAGE>
         (ii)  "Refinancing" shall mean a sale of securities of
               the Company which results in Net Proceeds to the
               Company in excess of $1,000,000, other than (a)
               obligations for borrowed money due and payable
               within one year which are not extended, renewed or
               refinanced beyond such due date; or (b) other
               obligations for money borrowed money from
               NationsBank and/or its successors, substitutes and
               participants and their respective assigns and any
               refinancing thereof.

        (iii)  "Net Proceeds" shall mean the proceeds to the
               Company after expenses of sale and distribution,
               including discounts, commissions and brokerage and
               legal fees.

         (iv)  "Payment Premium" shall, except as otherwise
               provided in S 1.4, mean an amount equal to 13 1/2%
               per annum,  compounded semiannually from and after
               the date hereof until paid, on the principal amount
               of this Note outstanding from time to time until
               the time of payment.

          (v)  "Merger" shall mean a merger, consolidation or
               other combination to which the Company or any
               subsidiary is a party, in which the Company is not
               the surviving corporation or which results in the
               acquisition of "beneficial ownership" of securities
               of the Company representing 50% or more of the
               total number of votes that may be cast for the
               election of directors by any "person" or "group"
               (as such terms are defined in Rule 13(d)
               promulgated under the Securities Exchange Act of
               1934, as amended), or a sale by the Company of all
               or substantially all of its assets.

         (vi)  "Dissolution" shall mean the adoption by the Board
               of Directors and/or the shareholders of the Company
               of a resolution to dissolve the Company and
               liquidate its assets, the filing by the Company of
               articles of dissolution or a similar application
               for dissolution with the appropriate officer of the
               state of incorporation of the Company, the entry of
               an order or other action by such state dissolving
               the Company, or the adoption by the Board of
               Directors or the shareholders of the Company of a
               plan of liquidation or a resolution approving a
               liquidating distribution of the Company's assets,
               whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series C Notes and the Series B Senior Secured Notes issued
by the Company contemporaneous herewith may request, in writing,
that the Company effect a Public Offering, at the Company's cost
and expense.  Upon receipt of any such request, the Company shall,
as expeditiously as possible, use its best efforts to effect a
Public Offering, with the objective of realizing Net Proceeds
sufficient to pay the then-outstanding principal balance of the
Series C Notes and the Series B Notes together with accrued,
unpaid interest thereon, and, to the extent not prohibited by
applicable law, a Payment Premium in an amount determined in
accordance with S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11 All payments made by the Company on account of the
Series C Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series C Notes outstanding at the time of any such payment.

                            II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series B Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
<PAGE>
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series B Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.

                      III.  SUBORDINATION

     3.1  Payment of the principal, of interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the
Series C Notes.

     This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

     The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                                   Telos Corporation





                                   By: /s/  William L.P. Brownley
                                   Title:   Vice President, General Counsel
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED UNLESS  IT IS SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER SAID ACT AND LAWS.
THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR
INDEBTEDNESS DUE TO NATIONSBANK, N.A. AND/OR CERTAIN OTHER BANKS
OR FINANCIAL INSTITUTIONS, AS PROVIDED IN THE SUBORDINATION
AGREEMENT DATED AS OF OCTOBER 13, 1995 BY AND AMONG TELOS
CORPORATION, A MARYLAND CORPORATION, TELOS CORPORATION, A
CALIFORNIA CORPORATION, NATIONSBANK, N.A. AND THE HOLDERS
IDENTIFIED IN SCHEDULE A THERETO.

                                     Herndon, Virginia
                                     October 13, 1995



  SERIES C SENIOR SUBORDINATED UNSECURED NOTE DUE OCTOBER 1, 2000

     FOR VALUE RECEIVED, Telos Corporation, a Maryland
corporation, with offices at 460 Herndon Parkway, Herndon,
Virginia 22070 (hereinafter referred to as "the Borrower" or "the
Company"), promises to pay to the order of Toxford Corporation, or
assigns, (hereinafter referred to as "Toxford Corporation" or
"Lender"), at c/o Rabobank, P.O. Box 348, St. Andrews House, Le
Bordage, St. Peter Port, Guernsey, Channel Islands, or at such
other offices or at such other place or places as the holder
hereof may from time to time designate in writing, the principal
sum of ONE MILLION SEVEN HUNDRED SEVENTY-NINE THOUSAND SEVEN
HUNDRED TWENTY-TWO DOLLARS AND 79/100 ($1,779,722.79) on October
1, 2000 together with interest on the principal amount hereof from
time to time outstanding at the rate hereinafter provided until
paid in full.

     This is one of a series of the Company's Notes known as its
Series C Senior Subordinated Unsecured Notes Due October 1, 2000
(collectively referred to herein as the "Series C Notes", all of
like tenor, except as to the identifying number and principal
amount thereof and except for certain variations contained in the
Series C Note issued to Sir Leslie Porter.  The Series C Notes
have been issued in the aggregate principal amount of
$7,879,835.51.

                           I.  GENERAL TERMS

     1.1  Interest only shall be payable at the rate of fourteen
percent (14%) per annum, on the principal balance of this Note
from time to time outstanding from and after the date hereof, and
shall be due and payable quarterly, until the principal has been
paid in full, on the first day of April, July, October, and
<PAGE>
January in each year.  The first interest payment shall be due
January 1, 1996 and shall include all interest accrued from the
date hereof until the date of such interest payment.

     1.2  If not sooner paid, the outstanding and unpaid principal
balance shall be paid on October 1, 2000, together with accrued
and unpaid interest on this Note.  In addition, interest shall be
payable at the rate provided in Section 1.1 hereof on any Payment
Premium from the date such premium is due until paid in full.

     1.3  Principal, premium, if any,  and interest on this note
are payable in lawful money of the United States.  The principal
of this Note may be prepaid at any time after ten (10) days,
written notice to the Lender, in whole or in part, and shall be
accompanied by payment in cash of all accrued and unpaid interest
on the amount so prepaid, together with, to the extent not
prohibited by applicable law, a Payment Premium.

     1.4  In the event of a Public Offering of the common stock of
the Company, or in the event of a Refinancing, the principal then
outstanding shall become immediately due and payable, together
with, accrued and unpaid interest thereon, and, to the extent not
prohibited by applicable law, a Payment Premium in an amount equal
to the lesser of (i) the Net Proceeds of such Public Offering or
Refinancing or (ii) the amount determined in accordance with S
1.6(iv).  The Net Proceeds shall be applied toward the payment of
the outstanding and unpaid principal balance of the Notes, accrued
and unpaid interest thereon and, to the extent not prohibited by
applicable law, such Payment Premium.

     1.5   In the event of a Merger or Dissolution, the principal
then outstanding shall become immediately due and payable,
together with accrued and unpaid interest thereon and, to the
extent not prohibited by applicable law, a Payment Premium in the
amount determined in accordance with S 1.6(iv).

     1.6  Definitions.

          (i)  "Public Offering" shall mean the distribution and
               sale of the Company's common stock (some of the
               proceeds of which sale are available to the
               Company) pursuant to a registration statement
               (other than a registration statement on Form S-4 or
               Form S-8) which has been filed with the U.S.
               Securities and Exchange Commission and become
               effective.
<PAGE>
         (ii)  "Refinancing" shall mean a sale of securities of
               the Company which results in Net Proceeds to the
               Company in excess of $1,000,000, other than (a)
               obligations for borrowed money due and payable
               within one year which are not extended, renewed or
               refinanced beyond such due date; or (b) other
               obligations for money borrowed money from
               NationsBank and/or its successors, substitutes and
               participants and their respective assigns and any
               refinancing thereof.

        (iii)  "Net Proceeds" shall mean the proceeds to the
               Company after expenses of sale and distribution,
               including discounts, commissions and brokerage and
               legal fees.

         (iv)  "Payment Premium" shall, except as otherwise
               provided in S 1.4, mean an amount equal to 13 1/2%
               per annum,  compounded semiannually from and after
               the date hereof until paid, on the principal amount
               of this Note outstanding from time to time until
               the time of payment.

          (v)  "Merger" shall mean a merger, consolidation or
               other combination to which the Company or any
               subsidiary is a party, in which the Company is not
               the surviving corporation or which results in the
               acquisition of "beneficial ownership" of securities
               of the Company representing 50% or more of the
               total number of votes that may be cast for the
               election of directors by any "person" or "group"
               (as such terms are defined in Rule 13(d)
               promulgated under the Securities Exchange Act of
               1934, as amended), or a sale by the Company of all
               or substantially all of its assets.

         (vi)  "Dissolution" shall mean the adoption by the Board
               of Directors and/or the shareholders of the Company
               of a resolution to dissolve the Company and
               liquidate its assets, the filing by the Company of
               articles of dissolution or a similar application
               for dissolution with the appropriate officer of the
               state of incorporation of the Company, the entry of
               an order or other action by such state dissolving
               the Company, or the adoption by the Board of
               Directors or the shareholders of the Company of a
               plan of liquidation or a resolution approving a
               liquidating distribution of the Company's assets,
               whichever shall first occur.
<PAGE>
     1.7  At any time after the third anniversary of the date
hereof, the holders of a majority in outstanding principal amount
of the Series C Notes and the Series B Senior Secured Notes issued
by the Company contemporaneous herewith may request, in writing,
that the Company effect a Public Offering, at the Company's cost
and expense.  Upon receipt of any such request, the Company shall,
as expeditiously as possible, use its best efforts to effect a
Public Offering, with the objective of realizing Net Proceeds
sufficient to pay the then-outstanding principal balance of the
Series C Notes and the Series B Notes together with accrued,
unpaid interest thereon, and, to the extent not prohibited by
applicable law, a Payment Premium in an amount determined in
accordance with S 1.4.

     1.8  If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or legal holiday under the
laws of the Commonwealth of Virginia, or any other day on which
banking institutions in the Commonwealth of Virginia are obligated
or authorized by law or executive order to close, such payment
shall be made on the next succeeding business day in Virginia and
any such extended time of the payment of principal shall not be
included in computing compound interest in connection with such
payment.

     1.9  Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the mutilation, destruction, loss or theft
of this Note, the Borrower will make and deliver to the owner a
new note of like tenor in lieu of this Note so mutilated,
destroyed, lost or stolen.

     1.10 Payments made on account hereof shall be applied first
to accrued and unpaid interest, then to principal, then to
interest on any unpaid Payment Premium and then to the Payment
Premium, if any.

     1.11 All payments made by the Company on account of the
Series C Notes or any of them shall be made pro rata, in
proportion to the outstanding principal balance of each of the
Series C Notes outstanding at the time of any such payment.

                            II.  DEFAULT

     2.1  It is expressly agreed by Borrower that the following
shall be deemed to be Events of Default under this Note:  (a) the
failure to pay, when due, any amount of principal, or no more than
five days after due date any amount of premium, if any, or
interest on this Note or the Series B Notes, or (b) in the event
the Borrower files any petition, or any petition is filed against
it and not dismissed within sixty (60) days, under any bankruptcy
or insolvency law or for the appointment of a receiver for
<PAGE>
substantially all its assets or in the event the Borrower makes a
general assignment for the benefit of creditors, (c) or any
failure by the Borrower to perform or observe any of the other
covenants, agreements or provisions to be performed or observed by
it under this Note or the Series B Notes, and such default shall
not be rectified or cured within 10 days after written notice
thereof by the Lender to the Company, or (d) any representation or
warranty of the Company under the Bridge Notes Exchange and
Conversion Agreement of even date herewith shall be materially
false on the date it was made, or (e) an event of default as
specified in the Revolving and Reducing Senior Facility Credit
Agreement among the Company, Telos Corporation (a California
corporation) and NationsBank, N.A. (the "Senior Credit Agreement")
shall have occurred and be continuing, if (and only if) such event
results in acceleration of the maturity of the indebtedness under
such Senior Credit Agreement and such acceleration continues in
effect.

     2.2  If an Event of Default occurs, the Lender, at his
option, may accelerate this Note and may by written notice to
Borrower declare the entire unpaid principal amount of this Note
and all interest accrued and unpaid thereon to be immediately due
and payable whereupon the unpaid principal amount and all such
accrued interest shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any
kind.  The failure of the Lender to give such notice shall, in no
event, be deemed a waiver of any of the Lender rights hereunder as
long as the Event of Default continues.

     2.3  Upon default in the payment of the principal of this
Note or any other sum payable hereunder when due upon demand, at
maturity or by reason of acceleration of maturity, or upon the
occurrence of any other Event of Default hereunder Borrower agrees
to pay all reasonable costs of collection incurred by the holder
of the Note, including reasonable attorneys' fees, whether suit is
brought or not, and all other costs and expenses reasonably
connected with collection of the indebtedness evidenced hereby.

                      III.  SUBORDINATION

     3.1  Payment of the principal, of interest on and Payment
Premium on this Note are subordinate and subject in right of
payment to the prior indefeasible payment in full in cash or cash
equivalents of all Senior Indebtedness (as such term is defined in
the Subordination Agreement) in the manner and to the extent
provided in the Subordination Agreement, and each holder of this
Note by such holder's acceptance hereof, acknowledges and confirms
such subordination, represents and warrants that such holder has
<PAGE>
received and reviewed and become a party to the Subordination
Agreement, and covenants and agrees to comply with the provisions
of the Subordination Agreement applicable to holders of the
Series C Notes.

     This Note shall be construed and enforced in accordance with,
and governed by the laws of, the Commonwealth of Virginia without
giving effect to conflict of laws principles.

     The parties hereto, including the undersigned Borrower and
all guarantors and endorsers, hereby waive presentment, demand,
notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance and enforcement of this
Note, and assent to extensions of time of payment, or forbearance
or other indulgence without notice.

                                   Telos Corporation





                                   By: /s/  William L.P. Brownley
                                   Title:   Vice President, General Counsel
<PAGE>